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Software & the future of patent litigation

April 7, 2014

Software today is all-pervasive. No matter what industry you are in, or what products or services you buy and sell, a high proportion of contracts will have some sort of clause related to embedded or related software. And of course, along with that software come a range of contract clauses relating to IP ownership, rights of use and associated indemnities. Many products or services today are of no practical use without the associated software, which has made this a highly contentious field, especially since the legislation on which software patents are based is mostly around 6o years old.

Last week, the US Supreme Court heard a case that is predicted to update the rules related to software patents. With about half of today’s patent trolls related to software, there is pressure to increase the rigor in their award. Many argue that the US Patent Office has been far too lenient in its decisions over whether something is truly new or innovative, thereby encouraging unwanted volumes of litigation and potentially frustrating competition.

Inside Counsel carried a brief article that explains the background to the Supreme Court case and what is at stake. Behind the scenes, there is plenty of lobbying, with industry giants such as IBM wanting limited change and Google advocating more fundamental liberalization of current laws. My sentiments are with those who want to see far more rigor in the definition of ‘new’. My experience is that patents today are being used to crush start-ups and competitors who cannot possibly afford the cost of litigation. Many of the ideas that achieved patent status have little merit and in many cases were filed only to prevent competition or extract licensing fees. This also carries a heavy cost for the consumer – an issue highlighted by Steve Pociask on Huffington Post last year and priced as being at least $42bn in the US alone back in 2010.

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