FOLDOC provides a general definition of a software patent as "A patent intended to prevent others from using some programming technique".
Software patents and copyright
Software patents are often confused with software copyright. Under international agreements, such as the WTO's TRIPs Agreement, any software written is automatically protected by copyright. This forbids the direct copying of the program code.
Applying for, and being granted a patent gives much stronger protection. It protects the invention itself, independently of any implementation in code. Thus reimplementing a program will avoid copyright protection, but not patent protection. Like all patents, software inventions are protected even if they are independently invented by other developers.
A patent holder may prevent others from using their invention absolutely, or licence it at terms they dictate. There are strong sanctions for patent violations, including triple damages in the USA if the violation is considered deliberate.
Most patents expire 20 years after filing, while modern copyright has an indefinite life (Sonny Bono Copyright Term Extension Act).
Computers powerful enough to run complex software have existed since the 1950s. However, the US PTO has traditionally not considered software to be patentable because by statute patents can only be granted to "processes, machines, articles of manufacture, and compositions of matter". In particular patents cannot be granted to "scientific truths" or "mathematical expressions" of them. This means that most of the fundamental techniques of software engineering have never been patented.
In 1982 the the US created a new court (the federal circut) to hear patent cases. The court made patents generally easier to uphold by presuming patents were valid unless proved invalid and weakening the defence of nonobviousness. By the early 1990's the patentability of software was well established, and in 1996 the USPTO issued Final Computer Related Examination Guidelines . See Software patents under U.S. patent law.
The EPO has been issuing many software patents since the 1980s. However the European Patent Convention, Article 52 specifically excludes "programs for computers" as such. See Software patents under the European Patent Convention.
The recent expansion of the internet and e-commerce has led to many patents being applied for and being granted for related software and business methods. There have been several successful enforcement trials in the USA.
The national jurisdictions relating to software patents in Europe and in the European Union are not harmonized even though some harmonization has been brought into the national jurisdictions in the 1970s and 1980s. Interpretation of the substantive law varies to some extent from state to state. In order to harmonize the national laws a step further, the EU Commission has proposed a Directive on the Patentability of Computer-Implemented Inventions; but settling the exact terms of the Directive has proved highly controversial.
- Software patents under TRIPs Agreement
- Software patents under the Patent Cooperation Treaty
- Software patents under the European Patent Convention
Software patents under national laws:
- Software patents under US patent law
- Software patents under UK patent law
- Software patents under German patent law
Scope of software patentability
As noted above both the EU and the US have traditionally restricted the ability to patent software. This has led to several proposals for some very narrow definitions of what software actually is. For example:
- A piece of code not relating to "the use of controllable forces of nature to achieve predictable results". (whatever that means) 1
- A piece of code relating solely to the "processing, handling and presentation of information" 2
- A piece of code with no "technical effect" (depending in turn on how one chooses to define "technical") 3
- A piece of code as an abstract listing, not actually running on a programmable device; (Ie. "Software" that does not run on a computer. Used to be frequently argued before the EPO and other fora; this construction explicitly rejected by the EU directive in article 4a.)
- A piece of code with merely literary merit, rather than any identifiable functional benefits. (Because such functional benefits would be technical, and therefore should be patentable subject matter, according to supporters of broader definitions of CII patentability.)
A further difficulty in drawing a clear boundary between software patents and other patents may come from the fact that a patent claim can be written so as to embrace many different implementations (some using purely mechanical or electrical means, others using software), for instance by using functional features under certain jurisdictions (e.g. "means for controlling"). Additionally, under the so-called doctrine of equivalents and its analogues, a patent that on its face does not appear to require software can be infringed in certain circumstances if software is used as an equivalent of (i.e. to substitute for) a non-software element, making even more difficult to draw the boundary.
The term "computer-implemented invention" was put forward by the European Commission and defined as "any invention the performance of which involves the use of a computer, computer network or other programmable apparatus and having one or more prima facie novel features which are realised wholly or partly by means of a computer or computer programs." 
The terms "software-enabled invention", "software-related invention", "software-operated invention" are also sometimes used to convey a similar meaning.
Practical effects of software patents
Patenting software has become popular. This is difficult to quantify but as an indication as at January 2005 Microsoft alone has 6,130 issued patents which are presumably mainly software patents (US PTO Search). Microsoft expects to file 3,000 new applications this year. IBM received 3,415 patents in 2003 but many of these do not relate to software.
Most large software companies have cross-licencing agreements in which each agrees not to sue the other over patent infringements. For example, Microsoft has agreements with IBM, Sun Microsystems, SAP, Hewlett-Packard, Siemens, Cisco and recently AutoDesk (IDG News Service ). Interestingly Microsoft agreed to share with Sun even though they are a direct compeditor and with AutoDesk even though they have far fewer patents than Microsoft. It appears that large companies would prefer to avoid expensive and uncertain litigation rather than assert their own intellectual property rights. Indeed, being able to negotiate such agreements is a major reason that companies file "defensive" patents.
Some large companies have started to enforce patent rights. For example, in the early 1990's IBM started an aggressive licencing program which generated over $2 billion a few years later (Newsweek Article ). Licences are often charged as a cost per unit sold or at a few percent of gross sales (not profit), and this license "tax" can become a major burdon if several different organizations are claiming patent violations. (There is no legal obligation for a patent holder to act "reasonably".)
Several successful litigations show that software patents are enforcable in the USA. For example, Amazon succesfully sued Barnes and Nobles over its one click patent, and Eolas was awarded $565 million from Microsoft. See List of software patents for more examples. There are no known cases of successful litigation in Europe.
A new line of business has emerged that mainly focusses on obtaining and enforcing software patent rights rather than building and marketing useful software systems. Some companies such as Intellectual Ventures have the backing of large corporations while others such as Acacia Technologies are independently enforcing patents. High prices have been paid for software patent portfolios, eg. Commerce One.
Many open source developers fear that software patents will enable large corporations to prevent them creating software systems. This is because they generally have no defensive patent portfolio of their own, and no mechanism to pay royalty fees. However, there has not been any significant patent action against an open source product. It would be politically difficult for a large company such as Microsoft to pursue such a claim.
In practice, inventive step required for new software patents appears to be quite low. In particular many "inventions" appear to be nothing more that applying well known business practices over the web. The quality of assesment also seems to be quite low, with well known prior art often ignored. This has resulted in some software patents being rejected upon re-examination, eg. the Microsoft FAT Patent File Allocation Table#FAT licensing. Government patent offices collect much higher fees for issued patents than for rejected ones.
In practice, software engineers rarely search patent databases and applications looking for new inventions that could benefit their pojects. This may be because 1. the lack of inventive step in many software patents, 2. the obscure language with which software patents are described, and 3. the risk of being assessed for triple damages for knowingly infringing one. Many infringements are for independent inventions.
The ability of organizations to protect their software inventions should facilitate a golden age of software development. However, several #Economic Studies generally argue against this assertion. There are also some projects that have been abandoned because of software patents (FFII List of Abandoned Projects ). It is certainly the case that there had been a huge investement in software technologies and resulting invention before software became patentable.
- List of software patents
- TRIPS Agreement
- Patent Cooperation Treaty
- European Patent Convention
- U.S. patent law
- Business method patent
- R Hunt. You can patent that? Overview of the legal history and trends.
- J. Bessen (MIT) & R. Hunt (Federal Reserve Bank) 2004. An Empirical Look at software Patents.
- Bessen & Hunt 2004. "The Software Patent Experiment" A less formal review.
- Federal Trade Commission 2003 patent report Also FFII review of FTC report .
- FFII Annotated Bibliography
- Note 1: Amendment 23 introduced on September 2003 by the European Parliament to the proposed Directive on the Patentability of Computer-Implemented Inventions  , "Dispositionsprogramm decision " (BGH 22/6/1976), Nordic Patent Law treaty .
- Note 2: Amendments 23, 24, 25, 39 and 40 introduced by the European Parliament to the proposed Directive on the Patentability of CII 
- Note 3: Decision T 59/93 of the Boards of Appeal of the European Patent Office, Reasons, point 3.4