Patent logic

A debate that has raged since the 1970s, and gained sharpness in the 1990s, is now rocking the global information technology world. The issue is of course software patents. Surprisingly, software giant Microsoft's Chairman Bill Gates had said in a 1991 memo: "If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today". Sixteen years later, it's a total volte face with Microsoft enjoying 6,000 patents (some 180 of them in India). Microsoft is not alone, of course. Over the years, all the major global and Indian information technology firms""right from IBM, Oracle and Sun to Tata Consultancy Services, Infosys and Wipro""have spoken of their patents and innovation in the same breath, and cited patents as a major incentive for pumping money into research and development.

Can one argue with this logic? The short answer is, yes. The sceptics say there is no scientific evidence that proves a link between innovation and patents. Besides, extended patent periods provide an opportunity for rent-seeking (through royalties). Also, while it has been argued that patents facilitate competition by encouraging the entry of start-ups, the critics opine that they mostly create short- or long-term monopolies.

In the real world of commerce, filing a large number of patents is a tactic used by large companies to intimidate smaller rivals, argue opponents like the Free Software Foundation (FSF). Since virtually all code can be said to violate some software patent, large companies allegedly use their superior financial position to threaten infringement litigation against smaller companies that cannot afford to defend themselves, irrespective of the merits of their case. Lawsuits for unintentional software patent infringement can destroy small companies. These small companies cannot themselves afford to patent any "innovations", since a software patent usually costs around $20,000 (Rs 8 lakh) and more, on top of which there are the litigation costs, which can run into millions. The latest examples to bear the brunt of software patent fights include Linux, where Microsoft's talk with Xandros (a Linux distribution) over the alleged breach of software patents is stirring a hornet's nest in the open-source community. Then there's the case of Vonage, which developed one of the first Internet telephone services and has attracted more than two million customers. If its competitor Verizon wins the case, consumers will suffer from fewer choices and higher prices since two of its patents cover the concept of translating phone numbers into Internet addresses.

Is free software the way to go? The FSF describes free software as "software that gives you freedom of unlimited use for any use; to study; to modify and to distribute". The $12 billion Internet major, Google, is the largest promoter of free software and the FSF is convinced that free software is the only way for governments to have control over their IT infrastructure and policy. In India, Linux is already making an inroad into "mission-critical" applications, especially in states like Andhra Pradesh, Kerala and Maharashtra. Meanwhile, IT majors like IBM (the world's largest holder of patents) and Sun Microsystems are doing a major rethink on patents and homing in on open-source technologies. The essential discoveries in the field of information, communications and technology (ICT) were successful because they were not patented, such as the invention of the World Wide Web by Tim Berners-Lee. If software patents are enacted, the world risks losing out on the development of something that could be just as big and important.