Software Patents are Not Good Property Rights

A good system of property rights establishes clear borders. Clear borders reduce disputes, encourage investment and promote efficient trade. Software patents, however, often fail to define clear borders. I am one of the amici in a amici curiae brief to the Supreme Court (regarding Alice Corp. v. CLS Bank) on software patents that makes this point:

Such abstract claims as “displaying data in

frames,” “recommending media based on past choices,” “reproducing information in material objects at a

point of sale,” or, as in the present case, using “a third

party . . . to eliminate ‘counterparty’ or ‘settlement’

risk,” simply cannot be reliably construed to define a

reasonable area of covered technology. See Wang, 197

F.3d at 1379; Interactive Gift, 256 F.3d at 1323; Pinpoint, 369 F. Supp. 2d at 995; cf. CLS Bank Int’l v.

Alice Corp. Pty. Ltd., 717 F.3d 1269, 1274 (Fed. Cir.

2013).

A general counsel at a technology startup

would be hard-pressed to describe any concrete

bounds or permissible follow-on innovations to her

fellow engineers in the face of such claims. Any

software that resulted in a similar functional result

could be construed as infringing, and any investment

in the commercialization of those technologies could

inevitably carry liabilities, risks, and costs whose

magnitudes are impossible to predict in advance.

Thus, the property system that ostensibly exists to

assure investors that long-term rents are secure does

the very opposite, casting a pall of uncertainty over

the viability of any commercial product that happens

to be adjacent to a lurking abstract claim.

Eli Dourado and I note that the Federal Circuit seems to have quite willfully disregarded the intent of the Supreme Court regarding patents on abstract ideas and I think this case may provide further pushback from the SC.