Aaron Bannert had a better idea on how to help put people in touch with local transit information. The CEO and founder of Smart Ride developed a mobile app that streams real-time transit information, such as the arrival times of San Francisco bus lines. According to a report from SFGate's James Temple, the advertising-supported service was growing by 20 percent a month. Bannert, who invested his life savings to build his idea, was ready to branch out to new cities, including New York.
However, his plans ground to a halt when he was hit with a patent infringement lawsuit. He was forced to commit time and resources to pay lawyers and rectify the situation. He was not at liberty to discuss how the case was settled, according to the article.
While it's unclear whether the original patent holder in this case had a legitimate grievance, threats such as these can quickly put the kibosh on innovation and growth. Bannert's company was only the latest of many companies -- large and small -- to get caught on the web of patent litigation instigated for both legitimate reasons and by so-called "patent trolls" that buy up intellectual property to demand and collect royalties from those that happen to use the technology.
In recent years, software has become the area of innovation most likely to be exposed to patent infringement suits, according to a new report from the U.S. Government Accountability Office. The GAO reports that 20 years, software patents were about a quarter of all patents issued by the U.S. Patent and Trademark Office. By 2011, a majority of patents were software-related. At the same time, the number of patent-Infringement lawsuits Increased significantly (up 31 percent) in 2011, and the number of defendants Increased by 129 percent between 2007 and 2011.
Lawsuits involving software-related patents accounted for about 89 percent of the increase in defendants during this period, the report states. Ironically, only a small portion of these suits -- about one-fifth -- were brought by patent trolls ("non-performing entities"), the GAO analysis of 500 patent lawsuits showed.
Software patent litigation doesn't just affect software companies, GAO points out. In an era in which every type of company is working with software and digital assets, everyone is open to such challenges:
"Technology-related operating companies were not the only companies sued for infringing software-related patents; other sectors were also sued for infringing such patents, including retail companies and local governments. We estimate that 39 percent of suits involving software-related patents were against firms in non-technology sectors, according to our analysis of 2007 to 2011 data. One representative from a retail company noted that historically, all of the patent infringement lawsuits brought against the company used to be related to products they sold. However, as of mid-2012, the representative said that half of the lawsuits against the company were related to e-commerce software that the company uses for its shopping website—such as software that allows customers to locate their stores on the website—and were brought by PMEs."
"Representatives of retail and pharmaceutical companies told us they also defend lawsuits brought by PMEs related to features on their websites––typically software that outside vendors provide to them, rather than something they developed. Additionally, city public transit agencies have been sued for allegedly infringing patents by using software for real-time public transit arrival notifications, according to a few stakeholders we interviewed."
Many companies -- particularly startups -- do not do thorough patent research because of the time and resources such activity consumes, the report states. Another part of the problem is the quality of many patents, which are abstract in nature and may be "overly broad, unclear, or vague" -- and thus subject to broad interpretation. As GAO put it:
“Language describing emerging technologies, such as software, may be inherently imprecise because these technologies are constantly evolving... claims in software patents sometimes define the scope of the invention by encompassing an entire function — like sending an e-mail — rather than the specific means of performing that function.... some patents, particularly software-related patents, should never have been issued because they were obvious, not novel, or lacked definiteness."
The GAO urges more refinement of the patent laws and processes, calling for sharper definitions of technology innovations being submitted. The report also observes that there are programs to provide more familiarity with the patent process to judges. The Patent and Trademark Office also has been "working with the software industry to develop more uniform terminology for software-related patents."
Timothy B. Lee, writing in The Washington Post, looked at the GAO findings, and calls for something even more drastic than what GAO proposes: abolishing software patents altogether -- as the government of New Zealand has recently done. In some cases, the U.S. Supreme Court has opted to leave software off the table when it comes to patent law, he writes.
Still, there are voices that say the patent system is essential to keeping innovation on track, in software and everywhere else. In a post here at SmartPlanet, Manny Schecter, IBM chief patent counsel for IBM, points out that "patents provide inventors with the security to speak and publish freely about their inventions. Restricting or eliminating software patents will lead to less sharing of new ideas as people and companies reduce disclosure via the patent system and related publications. This will lead to less innovation, not more." He adds that "patents should be awarded for all ideas that are truly novel, not because they take one form of implementation over another."