FOSS United Letter on Software Patents to Industry Associations

Policy
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I have drafted a letter that we are sending out to industry forums for wider support. Comments, suggestions welcome.

Venky

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I would like to bring the software patents issue to the attention of your industry association / community because this will fundamentally alter the business and legal landscape for Indian startups.

Over the last few years, there has been an attempt to change Section 3(k) of the Indian Patents Act which says that, “A mathematical or business method or a computer programme per se or algorithms,” are not patentable subject matter. Despite many controversies over the interpretation of “per se” we haven’t seen much software patenting in India. If Section 3(k) is redrafted to allow for software patenting, the business and legal risks for Indian startups will increase immediately.

For startups, patent litigation could become a life and death issue as their limited financial and management resources come under severe strain for the following reasons:

1. The burden of proof in patent litigation falls upon the defendant: An early stage or bootstrapped startup could find their business plans derailed because defending a software patent lawsuit is expensive and time consuming.
2. Defending Software Patent Lawsuits is costly: The cost of legal fees, hiring technical experts, settling the matter out of court or paying damages will consume a significant chunk of a startup’s resources.
3. Legal Uncertainty: Lawsuits can take years to settle. The resulting legal uncertainty will scare investors away and weaken the founder’s negotiating position in subsequent fund raising rounds.
4. Massive Distraction for Managements: Startup founders will have to divert scarce management time away from product development, sales and marketing, fundraising and other critical activities to deal with this clear and present danger. In the process, it could lose critical time-to-market advantages.

There are also more fundamental reasons why software should not be patented. Software is an applied form of mathematics and logic, which are considered to be laws of nature and therefore not patentable. Patents are also meant to enable disclosure of inventions in return for a state granted monopoly. However, in a world where most software innovation is happening in the Free and Open Source (FOSS) community where people voluntarily share ideas, granting a monopoly in return for disclosure is counter-productive. This is because most software companies are now built on FOSS, which is free but will end up paying litigation and/or license fees for patents. This will add substantial friction to the software industry.

Larger companies, who have armies of lawyers and developers will be the ones to benefit the most from software patenting because they are the ones who can allocate resources for patent filing. Larger companies can also treat the expenses of software litigation as the cost of doing business.

At present, large MNCs and their law firms are the ones who are aggressively lobbying for software patents. FOSS United and iSPIRT are the two organizations that are fighting to keep software patents out of India, and we invite your organization to join this coalition. I am available for calls and discussions on this issue.

Venkatesh Hariharan
Public Policy Director
FOSS United

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Clean and succinct Venky. My only comment is whether we want to link existing cases around software litigation in the US/Europe. If we do this, we can add an additional paragraph on patent trolls in the US and the business practice of acquiring patents via M&A. This adds weights to your existing comments (2), (3) and (4).

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Very good comments, Rahul. Yes, I can add some relevant references and update this letter.

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Hi Venky, I’m Gayathri, a lawyer working in the tech space. Rahul introduced me to this discussion and I just wanted to add a few points that I thought might be helpful:

a) The issue of patent trolling in software where companies create a patent portfolio for the sole purpose of seeking out companies that use something similar and extracting money from them - this is quite common in the US and given how patent laws are framed (as there is no compulsion to actually use the patented invention), there’s nothing much that can be done about it.

b)Given the quality of patent examiners, their workload and the broad-based claims made in patent applications, it is likely that relaxing the rules for grant of software patents would result in the grant of vague/broad patents that will stifle innovation.

I know that both the EU and the US have made it harder for companies to obtain and enforce software patents and if it helps, I’ll be happy to do a comparison of the same .

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