Not All Bad: An Historical Perspective on Software Patents

This Paper places the current debates about software patents in the historical context of patenting in the information technology industries. The first computer-program products were sold in the mid 1960s when software patents were not generally allowed; as a result, trade secrecy became endemic to the software industry. Software products were also protected by copyright, but in practice this offered little protection against most forms of appropriation by reverse engineering or cloning. By the early 1980s a series of landmark cases led to the acceptance of software patents. It is argued that this development was consistent with the patenting of algorithmic inventions that long predated the invention of the computer. In the 1990s, business method patents were accepted. Again, it is argued that this development was consistent with the virtualization of inventions that long predated the Internet. It is shown that patents offer similar benefits to the software industry as for other technological industries, as well as some old and new disadvantages. The Paper draws three main conclusions. First, from an historical viewpoint, software patents are not radically different from those of other technologies; the patent system has adapted to the particular demands of new technologies over time, and the software patent system is already making such adaptations. Second, patents are superior to the alternative IP regimens of trade secrecy and copyright, primarily because of the public benefits of disclosure. Third, patents offer the most economically efficient way of co-ordinating multiple R&D investments in major software technologies