With all the uncertainty surrounding politics, there is one thing I can be certain of every year. Congress will attempt, or claim to attempt, to reform the U.S. patent system. Patrick Leahy, the chair of the US Senate’s Judiciary Committee, recently announced that reform is around the corner, just as it has been every year for many, many years. Fortunately that corner is always pretty far away. As you can tell, I’m not a fan of so-called patent reform. Here’s a brief explanation why.

Background

Though each attempt at patent reform is slightly different, the major points are usually the same. Those who support the bill tend to be large engineering companies. Those who do not support the bill tend to be universities, small inventors, and pharmaceutical companies.

Proposed changes to which I object:

• First to File: Right now the person who invents something (“first-to-invent”) has the rights to the patent. The bill would change the law so that the rights belong to the first person to file the patent (“first-to-file”), as it works in every other country. However, the US is the most innovative country in the world and the rest of the world should look to us not the other way around. This change will favor the large company with lots of lawyers and money to file patents quickly over the small inventors and the universities that don’t have as many resources to file patents. Pharmaceutical companies do have a lot of lawyers and a lot of money, but they spend so much money on research and development that on the small chance that some other company files for a patent first, they have a lot to lose.
• Additional Post Grant Review: Within 12 months of issuance, a third party can file a cancellation petition based on any ground of invalidity. This means that even after a patent is filed, there is a one year period where the patent owner must defend his patent. Any large company can simply request a review of the patent by the USPTO that the patent holder must fight. This will waste resources of the small inventor. Once a patent is issued it should be valid and should be difficult to overturn. The cost of overturning it should rest with the organization that objects to it, not the patent holder. The problem that reform should really be addressing is making the patent examination more efficient so that good patent applications get issued quickly and bad patent applications get rejected quickly.

Proposed change that I like:

• Pre-Issuance Submissions: Third parties can submit prior art during examination of the patent as well as a statement regarding the relevance of the art. This means that those organizations that believe that patent is invalid should submit invalidating reasons before the patent is granted, not after. This will be useful only if it is used to speed up the patent process, not slow it down. I’m in favor of anything to speed up the process and make sure that innovative inventions are issued patents quickly and poor inventions are detected and rejected quickly.

Proposed changes that about which I don’t have enough information
to evaluate:

• Damages: When a party is found to infringe on a patent, the damages are limited based on the importance of the invention to the infringer’s overall business.
• Patent Litigation Venue: Some areas of the country are believed to be more friendly to plaintiffs (e.g. the Eastern District of Texas). This provision limits the ability to bring a case in a district unless there is some legal connection to that district.

There are other provisions about which I don’t hold strong opinions and don’t seem particularly controversial, but almost everyone involved
with patents has strong opinions about patent reform. It will be interesting (and possibly scary) to see what, if anything, eventually happens.

The digital computer is usually credited as the invention of two professors at the University of Pennsylvania, J. Presper Eckert and John Mauchly. Funded by the United States Army, the ENIAC computer was designed to calculate tables for launching artillery shells accurately in World War II, but was not completed until after the war in 1946. Unlike earlier computers that had a fixed purpose, ENIAC (meaning “Electronic Numerical Integrator And Computer”) could be reprogrammed to handle many different purposes. But were Eckert and Mauchly really the pioneers of today’s modern digital age?

Actually no. The real inventors of the digital computer were physics professor John Atanasoff and his student Clifford Berry who created the first digital computer in a laboratory at Iowa State University. The ABC (“Atanasoff-Berry Computer“) was built in 1939, yet by the time of ENIAC’s introduction to the world, the ABC had been forgotten. What had happened? World War II broke out and the University of Iowa as well as Atanasoff and Berry simply didn’t realize the power of what they had created. Atanasoff was called up by the Navy to do physics research, eventually participating in the atomic bomb tests at Bikini Atoll.

When Atanasoff returned to Iowa state he found that his invention was gone to make room for other equipment—because the ABC was built piece-by-piece in the laboratory, it was too big to move out and so it had to be dismantled. Iowa State had decided that a patent was too expensive and so never filed one. John Atanasoff went on to gain recognition for a number of inventions involving physics, but the ABC was mostly forgotten.

In the 1970s there were a handful of companies that saw the great potential in the electronic computer. Sperry Rand Corporation, which was formed through a series of mergers and acquisitions including the Eckert–Mauchly Computer Corporation, held U.S. Patent 3,120,606 for the digital computer. In 1973, Sperry Rand sued Honeywell, Inc. and Honeywell reciprocated. Thus began one of the most important intellectual property cases in history.

During the research for this case, Honeywell found out about John Atanasoff and the ABC, which became pivotal information. The case was tried for 7 months after which Judge Earl R. Larson handed down his decision that stated, among other things, that the Eckert-Mauchly patent was invalid.

Some people have disputed this finding, arguing that this was a “legal” finding or a “loophole” or that a lawyer or a judge simply couldn’t understand the complex engineering issues involved. Here’s my take on this.

1. Both sides had a lot of time, and access to technical experts, to make the best case they could.
2. So much was at stake, and a huge amount of money was spent to bring out the truth. Both sides had very significant resources. If a case with this much at stake could not convince a judge after seven months, then there is little hope for any IP case.
3. Evidence was found and witness verified that John Atanasoff had attended a conference in Philadelphia where he met John Mauchly and described his work. He then invited Mauchly out to Iowa where Mauchly spent several days examining Atanasoff’s computer and many late nights reading Atanasoff’s technical specifications. Letters were produced, signed by Mauchly, that thanked Atanasoff for his hospitality and for the tour of his amazing invention.
4. Mauchly testified at the trial. He admitted that he had met Atanasoff and eventually admitted that he had examined the ABC and read its specification.
5. Mauchly and Sperry Rand Corporation were challenged to produce a single piece of evidence that Mauchly or Eckert had written
   about or researched digital electronics before Mauchly’s meeting with Atanasoff. The best Mauchly could do was produce a circuit for a model railway flasher that he claimed was a binary counter—it counted from 0 to 1 and then back to 0.

In fact, it became clear that Mauchly and Eckert attempted to claim much more credit than they deserved and tried to deny credit to others. They had actually greatly improved on Atanasoff’s original design. Had Eckert and Mauchly been more humble, had they added Atanasoff’s name to their patent, had they patented their own improvements instead of the entire invention, they may have given Sperry Rand the most powerful IP in technology history. Instead the invention of the computer entered the public domain without restriction, and the rest is history…

For a good book on the subject, read The First Electronic Computer: The Atanasoff Story by Alice R. Burks and Arthur W. Burks.

Here is my list of the most interesting software IP cases of 2009,
in chronological order:

• CA and Rocket Software reach settlement
• Facebook founder paid $100 million to settle theft claims
• More than half of booted workers steal data on way out, survey finds
• Swedish man indicted in 2004 Cisco code theft
• Cisco makes peace with Free Software Foundation
• Facebook loses lawsuit against German clone StudiVZ
• China backs down on installing blocking software
• iPhone game accused of plagiarizing flOw
• Programmer accused of stealing Goldman Sachs source code
• UBS files code theft lawsuit
• 10th Circuit strips Novell of Unix copyright
• Skype’s founders sue EBay over copyright infringement
• StoneLoops! of Jurassica pulled from App Store due to copyright complaint?
• Microsoft lifts GPL code, uses in Microsoft Store tool
• Judge rules for Apple in Psystar case
• Copyright infringement lawsuit filed against Palm
• Symantec wins $545 million decision in federal tax case
• Best Buy, JVC, Samsung, more hit with lawsuit
• Microsoft joint venture in China plagiarizes competitor
• Seagate misappropriated Convolve technology, says ex-employee

I recently came across a study in the Journal of the American Academy of Psychiatry and Law out of the The University of Alabama entitled “Credibility in the Courtroom: How Likeable Should an Expert Witness Be?” To be honest, I’m not sure I understand their conclusion:

The likeability of the expert witnesses was found to be significantly related to the jurors’ perception of their trustworthiness, but not to their displays of confidence or knowledge or to the mock jurors’ sentencing decisions.

Reading the paper doesn’t make it a whole lot clearer for me, and I think their mock trial setup is a bit contrived, particularly since the jury consisted of psychology students, a demographic that you’d be unlikely to find on a real jury. Also there were only two expert witnesses for the comparison. To their credit, they discuss these potential shortcomings. I do think, however, that the paper points out something (that may have already been obvious)—there is more to being an expert witness than just being correct. Personality and presentation are strong factors.

On the other hand, I feel that this subjective aspect should be minimized. Experts need standards and measurable quantities whenever possible. Before I began developing the concept of source code correlation, the way software copyright infringement and trade secret theft cases were resolved was to have two experts give contrary opinions based on their years of experience. The judge or jury would tend to get lost in the technical details, a strategy purposely employed by some experts and attorneys, and a judgment would depend on which expert appeared more credible.

Instead, I decided to expand the field of software forensics and made it my goal to bring as much credibility to the field as DNA analysis, another very complex process that is well accepted in modern courts. I still believe that an expert’s credibility and likeability will always be factors in IP litigation, but that the emergence of source code correlation and object code correlation provide standard measures that bring a great deal of objectivity to a lawsuit’s outcome.

There are a lot of unanswered questions about source code, and we want to work with you to figure them out. We realize that currently accepted algorithms for analyzing, comparing, and measuring source code leave a lot to be desired in many cases. Also, there are a lot of techniques that have never been studied on large bodies of modern code. For example, measurement techniques developed in the 1970s were probably tested on assembly languages and older programming languages like BASIC, FORTRAN, and COBOL. Do they still hold on modern object oriented languages like Java and C#?

If you have a research idea relating to code analysis, and you can use the SAFE tools, let us know. Email Larry Melling, VP of Sales and Marketing with your ideas. If they pass our review process you’ll get free licenses to our tools, free support, and help getting your results published. This could be the beginning of a beautiful friendship.

When you have a useful invention should you file for a patent or maintain it as a trade secret? A comparison of the advantages and disadvantages of patents and trade secrets are given in the table below.

The precise language that legally defines a trade secret varies by jurisdiction, as do the particular types of information that are subject to trade secret protection. In the United States, different states have different trade secret laws. Most states have adopted the Uniform Trade Secrets Act, and those that don’t, have laws that only differ by subtle differences.

There are three factors that are common to all definitions; a trade secret always has these three specific characteristics:

1. It is not generally known to the public.
2. It confers some sort of economic benefit on its holder, where the benefit is due to the fact that it is not known to the public.
3. The owner of the trade secret makes reasonable efforts to maintain its secrecy.

With regard to software trade secrets, algorithms that are known to the public usually cannot be trade secrets, though some jurisdictions require not only that the information be public but that it be “readily ascertainable,” meaning easily to find. For example, a sorting algorithm found in a well known textbook or in an application note on a high traffic website is, or can be, known to the public and easily ascertained.

There must be an economic benefit, so a sorting algorithm that can be easily replaced with a well-known sorting algorithm with comparable results is not a trade secret. Similarly if your company develops a program, perhaps as a side project, but does not sell it or incorporate it in any products, then it’s not a trade secret.

If the owner of the source code allows programmers to share code, or does not put notices of confidentiality in the source code, or does not take reasonable steps to insure that employees do not take the code home with them, then that source code cannot be a trade secret. This third point is a particularly important reason to take precautions to ensure your software does not go somewhere it shouldn’t. Make sure your employees, investors, and partners sign nondisclosure agreements (NDAs). Make sure you have written policies about how to handle source code. And make sure you treat all individuals and companies equally. You don’t want to be in court, defending a trade secret, and have to explain why one “trusted employee” or “trusted friend” was allowed to take home source code while others were not. That doesn’t look like “reasonable efforts to maintain secrecy.”

Should software be patentable? That’s been debated ever since the dawn of software. Some countries, like India, say definitively no. In Japan you can only patent non-obvious software that solves technical problems, not business problems (of course, if it’s obvious, it can’t be patented anyway, so that seems redundant). In the United States, just about all software was patentable starting with the decision of the US Federal Circuit Court in State Street Bank & Trust v. Signature Financial Group in 1998. Then earlier this year, the US Court of Appeals for the Federal Circuit put limits back, by requiring a “machine or transformation” test. Software can be patented if it is implemented on a “particular” machine or it transforms an article from one thing or state to another. So what does that mean exactly? No one is quite certain, so the US Supreme Court decided to take up the appeal this fall and rule on it.

There are a number of arguments for and against software patents, but only two really seem reasonable to me.

Against

Laws of nature, mathematical formulas, and abstract ideas are not patentable. Some people against software patents say that software simply comprises mathematical formulas. Although I understand the argument, I don’t subscribe to it since programs are actually steps in a process that consist of mathematical formulas and lots of other things (like printing messages to the screen and reacting to clicks of a mouse).

For

Methods have always been patentable, and software is a method. This makes sense to me. I don’t see why one should differentiate between a method for cutting a pattern in a piece of cloth if the method is performed by gears and levers or transistors and electric current (both of which are not controversial) or lots of transistors comprising a microprocessor and memory.

For other opinions about patenting software, here are some good references.

• Patently O blog
• Wikipedia
• Bilski Decision of the CAFC
• Free Software Foundation press release
• BIO press release

Copyrights protect expressions of ideas, but not the ideas themselves. Anyone can write about two young lovers from different families and different backgrounds and not fear getting sued by the estates of William Shakespeare or Arthur Laurents or anyone who writes daytime TV movies. It is for this reason, that software can be reverse engineered to learn the ideas it embodies without violating the copyright, as long as the code is not copied and used commercially. The first lawsuit verdict that enforced this idea was Atari Games v. Nintendo in September 1992.

Nintendo tightly controlled access to its successful NES video game system and did not release the specifications for creating a game cartridge for the system. In order to produce a game for the system, companies had to pay a license fee to Nintendo and had to agree not to produce the licensed game for any other game system for two years. Incorporated into the Nintendo NES system was a computer program called 10NES that checked whether a particular game had been licensed. If not, the game was not allowed to run. Atari reverse engineered the 10NES program and created its own program called Rabbit for bypassing 10NES. Atari sued Nintendo for, among other things, unfair competitions and monopolistic practices. Nintendo countersued for, among other things, copyright infringement. The U.S. Court of Appeals ruled that the reverse engineering was perfectly legal. It also ruled that Atari infringed on Nintendo’s copyright when Atari created its own program based on Nintendo’s program. The decision by Judge Randall Rader reads as follows:

The district court assumed that reverse engineering (intermediate copying) was copyright infringement… This court disagrees. Atari did not violate Nintendo’s copyright by deprocessing computer chips in Atari’s rightful possession. Atari could lawfully deprocess Nintendo’s 10NES chips to learn their unprotected ideas and processes. This fair use did not give Atari more than the right to understand the 10NES program and to distinguish the protected from the unprotected elements of the 10NES program. Any copying beyond that necessary to understand the 10NES program was infringement. Atari could not use reverse engineering as an excuse to exploit commercially or otherwise misappropriate protected expression.

First, a copyright exists at the moment of creation. In other words, a work does not need to be published to have a copyright. The copyright does not need to be registered with the U.S. Copyright office. It is simply a right given to the person who created the work. The advantage of registering a copyright with the government is that you then have an official document proving your ownership, making it easier to win in court against someone who attempts to use your creation without your permission. Registration can be done any time after the work is created, but is required in order to initiate litigation. Winning a copyright infringement case in court, when the copyright is registered before the infringement took place or within 3 months of the publication of the work, can entitle you to get back your attorney fees as well as “statutory damages,” which essentially constitute financial punishment that is not based on the amount of money lost by the author due to the infringement. This is done to encourage people to register their copyrights and to deter people from stealing them.

As the owner of a copyright, you have the right to reproduce the work, enhance the work, distribute the work, and perform it or display it in public.

With software, the copyright gives protection to the source code and the binary code generated from the source code. In order to register a copyright, it is normally necessary to file a copy of the intellectual property being protected with the US Copyright Office as proof. Since most software contains valuable trade secrets (which we discuss in a later section) that would lose their value if presented to the public, the copyright office allows software source code to be submitted with major sections “redacted” or left out. In fact, only the first 25 and last 25 printed pages of source code need to be submitted, though there are no guidelines as to what constitutes “first” and “last” in something consisting of many independent files and a complex interconnect of routines.

Note that a copyright notice is not required in the code, except for registering the copyright.