Apple recently filed two patent infringement cases against HTC, a Taiwanese company that makes the Nexus One smartphone for Google as well as phones that run on Microsoft’s mobile OS (now called Windows Phone 7 Series). Given that Apple doesn’t license its technology, the remedy Apple seeks is to stop HTC from selling multi-touch smartphones. It could be a start of a patent war between Apple and Google. (A brief history of the relationship between these two formerly friendly firms is detailed in Gizmodo on Mar 2.) Many claim that a legal cloud could impede innovation in multi-touch interfaces. I say, not likely.

Farhad Manjoo builds case against software patents in Slate Mar 2010. I’m against software patents because I think protecting ideas is different from protecting inventions, though I have a hard time defining the line between the two. So while I think Mr. Manjoo is being overly dramatic in his article, I believe he’s basically right. Companies clubbing each other with patent lawsuits doesn’t do much to reward inventors for being creative, encourage companies to invest more in research and development, nor provide consumers with a greater variety of innovative, well-designed products.

In a  Mar 4 blog post I mentioned how easy it is to get software patents. In three years at Microsoft, I was involved in the development of code that led to three patent filings. I’m proud of the work I did, and the patent applications were for some clever ideas. But the patents were for ideas and algorithms, not inventions. And I wasn’t any more creative during my three years at Microsoft than during the prior twenty years when I worked for a variety of other companies. And during those twenty years I had never filed a single patent application. What does that tell you about the ease of getting software patents vs other industrial patents?

On the other hand, I don’t think software patents hurt the economy as much as Mr. Manjoo claims. One of the references he cites is a working paper coauthored by James Bessen of Research on Innovation. However, if you read this paper, it actually says that the largest proportion of software patents are not collected by software companies. Rather, as many at 95% of these patents are awarded to large industrial companies that use them for strategic purposes like stalling a competitor or as a defense against a competitor. These companies already have created huge patent thickets and would continue to pursue their aggressive legal strategies through other means if software patents were not easily available. This argument is fleshed out more fully in a book Mr. Bessen coauthored entitled Patent Failure which has a chapter on Abstract Patents and Software.

Thus, one could argue that companies like Intellectual Ventures (see Feb 2010 blog post) could actually help level the playing field by allowing all companies to license patents to the benefit of the investors in the fund. However, that isn’t happening at the moment because the largest investors in Intellectual Ventures are also the licensees. Eventually though, patents may be treated as tradable securities and a market will emerge for these rights. (And if we are lucky, the market will remain rational and will not inflate like a bubble.)