Who Benefits From Software Patents?

While the software giants are somewhat protected by the 'you nuke me, I'll nuke you' environment, the small software company can not in any way compete. A small company with no collection of patents to waive in the face of the giants will soon enough be on the defensive. With the large patent war chests the big players have, almost anyone creating a piece of software can be accused of patent infringement. Even if the accusation is dubious at best, it is usually more prudent to settle for a million dollars then to try and take on IBM's or Microsoft's team of lawyers. And again, you do not have to even know that you are infringing on a patent to be liable. IBM pulled this on Sun Microsystems when Sun was first starting out. They told Sun that they wanted them to pay them twenty million dollars for infringing on seven of their patents. When Sun dissected IBM's claims and showed that they indeed were not infringing IBM explained that they had over 10,000 patents and surely Sun must be infringing on some of them. Sun cut IBM a check. Unfortunately, this type of shakedown is more the rule then the exception.

In this minefield of patent litigation, it is tough for a small company or an individual to bring a piece of software to market. The chance that you will be accused of patent infringement is almost a given; however dubious the charge, it will almost assuredly happen. The choice that this company faces is to either pay the licensing fees that are being extorted from it or try to battle it out in the courts facing a dream team of lawyers that it can't possibly match. This scenario does not foster innovation and growth in the industry, it only helps to maintain the status quo, keeping those at the top of the industry at the top of the industry. This is not what patent law is supposed to do.

There are actually quite a few companies out there that do not believe that software patents are a good thing; however, they actively pursue them. Why is this? While these companies (Oracle and Red Hat to name two) do not believe that patents are appropriate for software they also understand the consequences of not having a stockpile when all of the 'big boys' do, it would put them at a decided disadvantage in case they found themselves at the wrong end of a patent dispute. So what do they do? They tie up money and resources that they would prefer to invest elsewhere (like creating cool software) in creating a patent portfolio to use as a defensive measure against infringement charges. Many companies have adopted this strategy, they will inundate the Patent Office with patent applications for practically anything. This shotgun approach makes it more likely that something will slip through the USPTO and they will come out with at least something to add to their portfolio. This is only made worse by the fact that Wall Street will use a companies patent portfolio as a measure of the companies net worth creating yet another reason for businesses to feel the need to gather patents.