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The Innovation Patent Review and Free Software

Presentation to Linux Users of Victoria, 1st July, 2014

1. About Patents

A definition from the World Intellectual Property Organisation "A patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem. To get a patent, technical information about the invention must be disclosed to the public in a patent application." [1]

According to the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), patents should be available in WTO member states for any invention, in all fields of technology for at least twenty years [2]. But the same agreement also says that members may exclude items for "ordre public or morality, including to protect human, animal or plant life or health... diagnostic, therapeutic and surgical methods for the treatment of humans or animals ... plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals". Also, TRIPS states that computer programs "whether in source or object code, shall be protected as literary works under the Berne Convention (1971)".

The argument for patents is broadly similar to that of other forms of "intellectual property"; by providing a temporary legal monopoly through public disclosure incentives are created for investment in further invention. Criticism is likewise similar; patents ignore the contribution of the intellectual commons to invention, they produce a "damaged good" which is deliberately less useful than what it potentially could be, and creates an industry that supports unreasonable extension and abuse (e.g., patent trolls).

2. Australia and Innovation Patents

The legal basis for the Australian patent system is Section 51 (xviii) which empowers the government to make laws in respect to "copyrights, patents of inventions and designs, and trade marks". The current legislation is the Patents Act 1990 and Patents Regulations 1991. In 2001 APO introduced an Innovation Patent system in which immediate grant occurred for applications which pass a formalities test. Innovation patents are aimed at providing protection for short market life products.

The chief bureaucracy is the Australian Patent Office (APO, established in 1904), itself a division of IP Australia, which is an agency of the Australian Department of Innovation, Industry, Science and Research. The APO is empowered to issues patents for inventions. IP Australia in 2008 had just under 1000 staff, of which 200 (2006 figures) were involved in patent examinations; there is a notable backlog and stress for examiners. For example in 2007/2008 APO issued 16,933 patents while receiving 33,482 applications.

In 2001 APO introduced an Innovation Patent system in which immediate grant occurred for applications which pass a formalities test. Innovation patents are aimed at providing protection for short market life products. On 24 May 2001, John Michael Keogh filed Australian Patent 2001100012 for "Circular Transportation Facilitation Device" [3]. This is also known, in common parlance, as a wheel. IP Australia was awarded an Ig Nobel Prize in 2001 for granting this patent for one of the world's oldest known inventions.

3. Patents and Software : A Bad Combination

Patents are usually applied to the physical embodiment of processes. However in a number of jurisdictions they can also be applied to software. For example, one of the earliest software patents was granted in the UK in the 1960s (application 1962, approved 1966) for "A Computer Arranged for the Automatic Solution of Linear Programming Problems". Most jurisdictions (even the United States) reject the patent of "abstract ideas", however manner do allow patents of software where it is shown where the computer is an "essential element" of the patent then software or "concretely realising the information processing performed by the software by using hardware resources" can be included (e.g., Canada, Australia, Japan, South Korea, United States). Other jurisdiction reject "programs for computers" or "computer programs as such" from being patentable material (e.g., European Union, United Kingdom, New Zealand, India).

The main problem with software patents is that the restrict, in software, the implementation of an process, method, or idea. The distinction between copyright in software and the patent of software needs to be emphasised. In the former, the code of the author is protected according to whatever encumbrances they wish to put on it (e.g., from a public license to a proprietary license). In the latter, it is not the code, but the results - and these are particularly prone to "patent trolls". Companies with software patents suites are using these holdings as an aggressive monopoly seeking to target small scale developers with either massive legal fees for a breach of avoidance by paying a significant (but less) license fee. In other words, a ransom-threat.

Some examples from the EFF [4]: Acacia Technologies -for patents covering a widely used process of streaming audio or video files over the internet, cable and satellite. Clear Channel - for patents covering the recording and burning of after-concert CDs. Acceris Communications - for patents covering telephone calls over the internet. Sheldon F Goldberg – for a patent covering the playing of games, such as card games, upon a network. Ideaflood – over a business method patent for managing sub-domains. NeoMedia Technologies - for a patent covering the "automatic access of a remote computer over a network". Test.com – for a patent for a method of taking and scoring tests on-line. Nintendo - for a patent covering Gameboy emulation. Firepond - for a patent "covering the use of natural language processing to respond to customers' on-line inquiries by e-mail". Seer Systems - for a patent for the creation, storage, distribution and performance of musical work files.

Software patents are particular prone to strategic patents (patent and idea to prevent development by others) and evergreening (preventing a patent from lapsing by buying out or frustrating competitors, or extending the life of the patent etc).

4. The Innovation Patent and the Review Process

In February 2011, the then Minister for Innovation, Industry, Science and Research, Senator Kim Carr, asked the Advisory Council on Intellectual Property (ACIP) to review the innovation patent system, especially with a view towards small and medium enterprises (SMEs) and individual innovators. ACIP developed an Issues Paper. released in August 2011, to provoke discussion and solicit relevant comments, which had a closing date for submissions of 14 October 2011. ACIP sent out notification to approximately 150 targeted industry associations and individuals informing them of the issues paper, and there were a number of 'blogs, newsletters etc, which mentioned the release of the paper. Thirty-four submissions were received on the issues paper, with half from workers in the software industry supporting an abolition of computer-related patents. ACIP also held held public roundtable discussions in October 2011 in Melbourne, Brisbane and Sydney with 22 stakeholders in attendance.

From the start of the Innovation Patents in 2001, over 15000 applications had been submitted, with just under a quarter from foreign applicants, rising from around 15% in 2001 to 35% in 2011. Consumer goods and equipment has been the largest category, using the International Patent Classification system. In 2011, approximately one in seven Innovation Patents were in Information Technology. The single largest applicant was Apple, Inc., whose 98 patents is over twice the size of the next largest portfolio, Aristocrat Technologies with 43.

IP Australia also released a consultation paper entitled "Innovation Patents - Raising The Step" in September 2012, which recommended increasing the level of innovation to receive an innovation patent. In March 2013 Verve Economics provided a paper for IP Australia entitled "The Economic Value of the Australian Innovation Patent", which was inconclusive. In late 2013, ACIP released an Options Paper for further public comment, which incorporated the responses from the Issue Paper. Again, notifications were sent to industry associations and inviduals inviting them for comment. This time sixty-five submissions were received from individuals and organisations, and over half of the submissions were received from participants in the software industry, most of whom supported an abolition of computer-related patents. Public roundtable discussions were held in September 2013 in Melbourne, Brisbane and Sydney to discuss matters raised in the Options Paper with 37 people in attendance. The final report of ACIP was released on May 5, 2014 [5].

5. LUV's Contribution

Linux Users of Victoria did not make a submission to the Issues Paper, although the current secretary and president did so in a different guise; nor did was there anyone representing LUV at the roundtable meetings, although there the LUV president and a chapter convener were present, also under a different guise. LUV did, however, submit an response to the Options Paper. This was mostly written by the LUV president, with contributions from Les Kitchen, Rodney Brown, and Daniel Jitnah, in their capacity as committee members of Linux Users of Victoria.

LUV's core proposition was that standard patents, and especially Innovation Patents, attentuate innovation in software. We argued if the purpose of the review includes the stimulation of innovation in software, then software (specifically "computational ideas"), should be excluded from the patent system as a whole, and especially Innovation Patents. We pointed out that programming is primarily about the implementation of ideas, but if the ideas themselves are patented then software cannot develop efficiently, including other programming languages (and languages not even yet invented). Software developers, working on their own code, can find themselves paralysed if they wish to be attentive to the existing patent system, or liable if they are not. In either case, innovation suffers.

Several examples were provided in the LUV submission, especially in the realm of audio development, graphics, and compression algorithms with various projects requiring patent searches and programming around the existing patents. Particular emphasis was placedd on the the GNU compiler collection (GCC), noting that this was the most common compiler for scientific computing, and significantly less efficient than it could be, due to patents in optimisation algorithms, register allocation, and memory checking. This was particularly costly to Australian scientific research, costing billions of hours in compute time per annum just taking the various HPC research centres into consideration.

Elaborating this example, patents were argued as extremely limiting to developers of free and open-source software (FOSS), on which most academic and scientific computational research depends, and which is necessary for widespread secure critical computer infrastructure throughout Australia. FOSS is particularly disadvantaged by software patents as it allows scrutiny of the code (which also assists its security), whereas proprietary software requires disassembly or reverse-engineering. That is, the best type of software is disproportionally restricted by allowing for the patent of computational ideas.

Finally, following Ben Klemen's argument has pointed out, following Church and Turing, that there is no clear boundary between mathematical algorithms and software. If mathematical equations and laws of nature already exist, then no idea expressed in software, should be subject to a patent.

6. The Report and Future Actions

The Report was receptive to the ideas promoted by LUV and other individuals and groups in the software industry which almost universally rejected the use of patents, and especially Innnovation Patents. Recommendation 5 of the Review states: "Amend subsections 18(3) and 18(4) of the Patents Act 1990 (Cth) to provide that, for the purposes of innovation patents, no method, process or system shall be patentable." This means that that there will be no Innovation software patents.

The Report noted the efforts of those in the software industry in this regard ("... submissions received by ACIP have argued and provided cogent evidence that in one important business sector—namely the computer software industry—the effect of patenting methods, processes and systems at the innovation patent level is to significantly undermine innovation in that sector, particularly innovation by SMEs") and noted the economic and productive difference of software and other industries (" the economics of the software industry is unlike most other industries as the internet allows for effectively zero-cost distribution of software. Consequently, a very large benefit may be conferred on the patent holder by an innovation patent in return for very little benefit to society at large and a considerable cost in terms of lost innovation and competition").

It must be emphasised however that the report is a recommendation. It has to be accepted by the relevant Minister, and the legislation has to be put to parliament and passed. Further, the scope of the review is only for Innovation Patents. Nevertheless, the same logic applies for standard patents as well. The important action at this stage requires lobbying the relevant politicians to (a) act on the recommendation and (b) extend the recommendation to standard patents. It is best that this is conducted in a coordinated manner with relevant groups, such as End Software Patents Australia, the various LUGs around the country, Linux Australia, the various Free Software groups etc, and with as many individuals engaging in the campaign.

7. References

[1] WIPO FAQs: Patents; http://www.wipo.int/patents/en/faq_patents.html
[2] Agreement on Trade-Related Aspects of Intellectual Property Rights http://www.wto.org/english/tratop_e/trips_e/t_agm3_e.htm
[3] Circular Transportation Facilitation Device, http://www.hl7.org.au/docs/Australian%20Patent%202001100012.pdf
[4] https://www.eff.org/patent-busting
[5] http://www.acip.gov.au/reviews/all-reviews/review-innovation-patent-system/
[6] https://luv.asn.au/content/submission-linux-users-victoria-inc-options-p...
[7] http://spectrum.ieee.org/computing/software/software-patents-dont-compute/
[8] http://www.levlafayette.com/node/469