Software Patents: Good News or Bad News?
Published as Chapter 3 in Intellectual Property Rights in Frontier Industries, R.W. Hahn, ed. AEI-Brookings Joint Center (2005, pp. 45-80).
36 Pages Posted: 23 May 2016 Last revised: 31 Oct 2018
Date Written: January 10, 2005
Abstract
Although measures and definitions of “software patents” vary, virtually all analyses (including data presented here) agree that patenting in this field has grown since the early 1980s. Controversy over the validity and economic consequences of software patents also has grown during this period. Software patents have been criticized for their poor quality, their chilling effects on innovation, and the reduction in R&D spending in the software industry. In this chapter, we review some of these controversies, emphasizing the paucity of strong evidence to support any of these contentions. Evidence also is lacking, however, in support of the argument that patents are essential to innovation and technological progress in computer software, a technological field in which innovation proceeded apace for at least thirty years before patenting began to grow rapidly. Indeed, it is difficult to understand the causes of recent growth in software patenting without a brief historical review of the development of the U.S. software industry and (of no less importance) the development of judicial decisions on the validity and coverage of patents and other legal devices for protecting software-related intellectual property. Nevertheless, the growth of software patenting highlights the difficulties faced by the U.S. patent system in dealing with new areas of patenting, especially when increased patenting flows as much from change in the legal strength of patents or industry structure as from the development of a new field of technology.
Keywords: Software, Patents, Innovation
JEL Classification: O31, O32, O33, O34, L86
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