CIO — Barbed wire may not seem to have much to do with software, but both stirred a lot of controversy when they were first patented. In the 19th century, there were 570 different patents on barbed wire, and the legal fights between the different patent owners lasted for years. Yet the Western pioneers had plenty of barbed wire to stake their claims.
Today, we’re seeing a similar controversy with software patents. In the early stage of any new technology’s development, the scope of some issued patents may be overly broad. Yet such problems have all been resolved over time, and inventors have always been rewarded for their innovations while being protected from those who want to co-opt their work.
For CIOs, the issue is not whether patents should be granted for software but whether anything can be done to improve the quality of the granted patents. The problem relates more to the examining process in the USPTO than to the appropriateness of patents for software. CIOs who are concerned about overly broad patents can lobby for more thorough examination of patent applications by the USPTO or request that an already established patent be reexamined, for example. And, in fact, the USPTO recently implemented a program for closer review for business method patent applications ("one-click" ordering on a website, for example) because of public concern about overly broad protection for business methods.
There’s a good reason your software vendors take out a patent: They spend millions—even billions—to develop their products. Patents and licensing fees are some of the ways they get compensated for their efforts. Patent license fees may push up the cost of software to CIOs, but those fees don’t begin to compensate companies for the money they put into software development.
That said, CIOs shouldn’t simply ignore the patent licensing issue and pay up whenever asked. They should develop (or acquire through purchase) a defensive portfolio of software patents to use as a bargaining chip when faced with another company’s patents. By offering to license your patents—or by threatening to assert your patents—it may be possible to avoid simply giving in to their demands or fighting a lengthy and costly legal battle. Sure, acquiring a patent portfolio is an extra cost and a management headache, but it beats going to court: An American Bar Association study estimates that an average patent case costs each side $2 million in attorney and expert fees through the end of trial, not including the cost of an appeal.
