Why are software patents so odious? It has nothing to do with the patent system itself. The patent system is a generally good system whose benefits typically outweigh any problems that it creates. The problem with software patents comes from a failure on the part of people who are outside of the realm of software development to realize that software design and sales do not operate according to the same rules as other products. Software, if anything, is the quintessential exception to the patent system for products because the relationship that software has to hardware and between buyer and seller does not exist in pharmaceuticals and other patent-dependent industries.
Software development rarely sees the labor and capital-intensive research that is done in industries like the pharmaceutical industry. Not only that, but the cost of entry into the market is ridiculously low compared to other engineering disciplines. Combine that with the fact that the useful life of a significant amount of software is only a few years, and it quickly becomes obvious that the patent system as is presents fundamental problems for technological innovation. A patent that would be fair and justified for a drug company would be outrageous for Microsoft, Apple, IBM or Oracle to receive. Take, for instance, the patents that Microsoft has on its file formats. Each revision of the file formats, and they are usually non-trivial modifications, is only in mainstream use for a few years. Microsoft Office 2003 uses different file formats than Office 2000. What technological and economic good does it do to make competitors beg and plead to Microsoft for licensing rights to implement compatibility with versions of Office that are no longer in mainstream use? None.
Open standards are what drove the development of the computer industry and reduced the cost of IT. Were it not for the Linux/Windows-based PC with a x86 processor, the average cost of a decent computer would not be $500-$1000 the way it is today, but rather it would be closing in on $2,000 the way it was in the mid 1990s. The more unencumbered standards are, the lower the cost of entry is into the market. In fact, the fatal flaw of the argument that standards should be owned and licensed out, is that a company like Microsoft has no reason to license interoperability patents at reasonable costs. The world that software patent supporters would create is one in which a customer's data can be legally held hostage by one vendor because another vendor cannot provide a means for the customer to shift their data to a new format without their current vendor's permission. This presents, obviously, a fundamental intellectual property conflict. The copyright holder cannot easily and legally control their copyrighted data's digital representation without the permission of a patent holder.
I think a lot of the confusion over and support of software patents comes from a fundamental ignorance about software development on the part of the attorneys and businessmen who support them. File formats, network protocols and other patentable computer concepts are not analogous to physical products, rather they are a way of representing a conversation between programs or a quantity of data. What should be patentable, if anything, is not Microsoft's file formats, but the algorithm that they use to generate them, and that's another area where there is confusion. Two algorithms may independently implement the same thing.
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