It all started innocuously enough. I was talking to a colleague recently and through no fault of our own, the conversation turned to intellectual property.
He boldly stated:
"What you really need to do is to apply for a patent for your [software] technology"
For me, patents have always been a tradition of a bygone era, almost like a land-line telephone or dial-up internet. Patents addressed a problem that doesn't exist in software and most of modern technology. Sure everyone wants to patent their invention because it seems like the thing to do, but is it really?
Three things happen when you apply for a patent and two of them are bad.
- Someone reads you patent documents, makes a trivial modification to it and uses it in a way that's virtually impossible to prove. (50% probability)
- Your legal fees eat all your profits for the next 5 years. (60% probability)
- Everyone respects your patent, thinks you are a genius, and throws money at you to use your technology. (0% probability)
Conceptually, patents are designed the protect the investment into R&D for a technology, insure that enough lead time is given to permit the owner of the patent to gain traction in the marketplace, etc...
Patents for software are stupid because:
- Software is cheap and can be built or evolved quickly as opposed to cars, flame throwers, and submarines
- Software constantly evolves if the people involved in the project are innovative
- Innovation should be encouraged
- The concept expressed in the software is fully independent of the implementation
- Incremental changes to software are cheap vs. manufactured products (imagine adding an extra headlight to every Ford on the highway)
In the old manufacturing world, the implementation was the product. There was long-term cost in building out the plant, machinery, and hiring the workers that would build the product. The cost of the first 10,000 pieces was so much higher than the cost of the last 10,000 pieces that if a company did not have long-term protection of their invention, there was no reason to even pursue the business.
Contrast this with the modern software and internet technology world where the cost of replicating the product is essentially $0.00. The only initial cost is building the first implementation of the product and providing support for the product (which is often sold at a premium). There is no building, there is no machinery, and the development team was fired 20 min after the project was completed.
How much protection do you need when you don't have any overhead?
If a company is dumb and does not continue to innovate, they deserve to fail. If another company sees their idea (Note: their idea, not stealing their software implementation) and improves upon it, we call it innovation and celebrate it.
Since most small internet companies are in the business of being acquired, it will more than likely never be a problem for them. The big conglomerate that acquires them will have an entire legal team dedicated to sorting these matters out. Paul Graham states it well in "Are Software Patents Evil?"
"In other words, no one will sue you for patent infringement till you have money, and once you have money, people will sue you whether they have grounds to or not. So I advise fatalism. Don't waste your time worrying about patent infringement. You're probably violating a patent every time you tie your shoelaces. At the start, at least, just worry about making something great and getting lots of users. If you grow to the point where anyone considers you worth attacking, you're doing well."
So, why bother? Have a lawyer draw up a trade secret agreement, stick it in a safe somewhere so when you are acquired, you can hand their patent lawyers SOMETHING that says you thought about your intellectual property.