Negative effects of patents on software

The Private and Social Costs of Patent Trolls; September 2011; By James Bessen, Jennifer Ford and Michael J. Meurer; Boston University - School of Law

A Generation of Software Patents; James E. Bessen; Research on Innovation; Boston University - School of Law; June 21, 2011

Deutsche Bank Research (2004-06-22)


The paper argue that Stronger IP protection is not always better. Chances are that patents on software, common practice in the US and on the brink of being legalised in Europe, in fact stifle innovation. Europe could still alter course.

An Empirical Look at Software Patents by James Bessen and Robert M. Hunt (2003-5):

The authors present in this study an extensive statistical data and analysis to corroborate their hypothesis that software patenting has substituted rather than promoted R&D investments. Software patents are serving as cheap alternatives to real innovation.

Sequential Innovation, Patents, and Imitation - MIT Department of Economics Working Paper by James Bessen and Eric Maskin (2000):

This article is written by two researcher from MIT and concludes, after giving mathematical models and experimental evidence, that in a dynamic world such as the software industry or consulting industry, firms may have plenty of incentive to innovate without patents and patents may constrict complementary innovation. It concludes that copyright protection for software programs (which has gone through its own evolution over the last decade) may have achieved a better balance than patent protection. This new model suggests another, different rationale for narrow patent breadth than the recent economic literature on this subject.

Opening Doors and Smashing Windows: Alternative Measures for Funding Software Development by the Center for Economic and Policy Research (CEPR) (2005-10):

This paper examines the ways in which copyrights and patents (intellectual property rights, or IPRs) lead to inefficiency and waste, and outlines alternative mechanisms for supporting software development. Copyright and patent protection may impose costs on consumers of between 80 and 120 billion USD a year.

Intellectual property rights in Europe - where do we stand and where should we go? by Dietmar Harhoff (2006-09-20):

Intellectual property rights (IPRs) have recently been subject to numerous, sometimes highly controversial debates in Europe. An arcane technical matter prior to the 1990s, the design of IPR systems now attracts attention, not only among the users of the respective IPR systems, but also more broadly among the citizens of Europe. It is generally accepted that IPRs can play an important role for fostering innovation, but the design choices for IPR systems remain contested. Some of the renewed interest is created by the perception that over the last decades, the IPR systems have strengthened the position of rights owners over those of the users of protected subject matter.

Background and Overview of the Intellectual Property Initiative (2000):

A large british research project which concludes that the patent system as it stands in the year 2000 is in general less than helpful an instrument for fostering research and development in small and medium enterprises.

An Economic Review of the Patent System by Machlup (1958):

Report to the US congress from 1958, which also extensively narrates the history of the patent movement and of earlier economic research on this subject. Machlup, a renowned American economist of Austrian origin, is the first author of a large treatise on knowledge economics and other treatises which belong to the teaching repertoire of economics departments in universities. His report cites a wealth of historical and economic evidence to refute most of the reasoning used by lawyers to legitimate the patent system.

Combining Inventions in Multi-invention Products: Organizational Choices, Patents, and Public Policy by Deepak Somaya & David J. Teece (2000):

Detailed study of the transfer costs generated by the patent system under various conditions, written by Deepak Somaya, economist at the University of Maryland, and David Teece, senior colleague at Univ of California in Berkely. The study estimates the (very high) transfer costs that are caused by patents in complex systems and examines various strategies for reducing these costs at the micro- and macro-economic (public policy) level.

(only abstract)

Michael Waterson and Norman Ireland, economists from the University of Warwick, constructs a parametrised game model to simulate the innovation game under a regime of pharma patents, plant variety protection, software patents and software copyright as well as many other situations. The model contains some simplifications that work in favor of patents. E.g. it does not consider monopoly-based welfare losses, which are at the center of many economic analyses of the patent system. Instead its social welfare is simply the aggretation of the potential players expected utilities. Also it does not consider the need for modularity and interoperability in the software world. Yet, the model depicts many observable phenomena quite well, and it leads to the conclusion that software patents have a negative effect on innovation while pharma patents and software copyright has a positive effect.

Software Useright: Solving Inconsistencies of Software Patents by J.P. Smets (1999-10-15):

This paper gives an overview of the principles, the economic impact and the potential juridical contradictions of patents and especially software related patents. A well implemented patent law based on Software Userright may even lead to an increase of safety and consumer protection in the software industry.

Stimulating the competition and innovation in the information society by Jean Paul Smets Solanes (2000-9-22):

(fr, "Stimuler la concurrence et l'innovation dans la Société d'Information")

A systematic introduction in the field of intellectual property rights, software-economy and the interaction of them. The chapter at the beginning gives a very good introduction to the topic and the final chapters make proposals for the European policy.

(Website) Patents Are An Economic Absurdity by Françis-René Rideaux:

Another liberal manifesto against the patent system, with detailed economic argumentation and interesting references.

You can patent that? by Robert M. Hunt (2001):

Article by an economist about the effects of Software and Business method patents in the USA and their history, including statistics. It shows the role of the Court of Appeal of the Federal Circuit (CAFC), installed in the 1980s, lowered all barriers to patentability and made increasingly difficult to have patents revoked.

Needed: A New System of Intellectual Property Rights by Lester C. Thurow (1997):

(only abstract)

The world's current system of intellectual property rights has in recent years become unworkable and ineffective. Designed more than 100 years ago to meet the needs of an industrial era, it is inadequate to handle the ownership and distribution of intellectual property generated by the brainpower industries that have come to dominate the world's economy. The prevailing wisdom is that minor tweaking can remedy the problem. But MIT economist Lester Thurow challenges such thinking and calls instead for a new system--one redesigned from the ground up. In making his case for why the old system doesn't work anymore, Thurow lays out the challenges the new system must meet. It must offer incentives to inventors that are strong enough to offset the decline in publicly funded research. At the same time, it must protect the public interest by keeping some intellectual property--basic scientific knowledge, for example--in the public domain. The new system must be flexible enough to deal with the fact that new technologies have created new potential forms of intellectual property rights (Can pieces of a human being be patented?) and have made old rights unenforceable (When books can be downloaded from an electronic library, what does a copyright mean?). And in an increasingly global economy, a new system must meet the needs of both "catch-up" states and "keep-ahead" states. A system that ignores the lesson of history--that every country that has caught up has done so by copying--will be an unenforceable one.

The Impact of Granting Patents for Information Innovations by USA / National Research Council (2000):

(only abstract)

According to this report by the US National Research Council, software patents were introduced by lawcourt decisions without support from the legislature, and it seems doubtful whether the patent expansion is promoting the progress of science and the useful arts, as Congress intended. The Court of Appeal of the Federal Circuit (CAFC) has taken the patent system into "unchartered waters", and the experience of the software industry suggests that this decision is urgently awaiting legislative review.


In 2001-01, the German Federal Ministery of Economy and Technology (BMWi) ordered a study on the economic effects of software patentability from well known think tanks with close affinity to the German patent establishment: the Fraunhofer Institute for Innovation Research (, the Fraunhofer Patent Agency ( and the Max Planck Institute for Foreign and International Patent, Copyright and Competition Law (MPI = The study was largely concluded in 2001-06 and preliminary results were presented to a selected audience. The final report was published by the BMWi on 2001-11-15. The study is based on an opinion poll answered by several hundred software company representatives and independent software developpers, conducted by Fraunhofer ISI. Most respondents have had little experience with software patents and don't want software patents to become a daily reality like in the US. The poll also investigated the significance of open source software for these companies and found it to be of substantial importance as a common infrastructure. Based on these findings, the Fraunhofer authors predict that an increase in the use of software patents will put many software companies out of business and slow down innovation in the software field.

Patent Protection of Computer Programs by Adams Tang, Paré (2000):

Study on Software Patents carried out by British researchers at the order of the European Commission's General Directorate for Enterprises. The findings of this study are partially based on the ESRCIP project. It's purpose is to find out how software SMEs deal with Intellectual Property Rights in general and patents in particular, how useful patents are for them and what can be done to raise patent awareness. The study finds that we are not in a "pro-patent era" but rather in a "pro ipr area", and that software patents are not very much appreciated by software SMEs and probably not very helpful for them.

Background and Overview of the Intellectual Property Initiative by Ron Coleman and David Fishlock (2000):

(link is dead, request was made)

A well-founded British research project in 2000 which concludes that the real existent intellectual property as an instrument for the promotion of research and development in SMEs is useless at most.

Beware of softwarepatents and EUK-proposal for a directive of the Monopoly Commission (2002-07-08):


(de, analysis)

The Monopoly Commission, a public body and associated with the Federal Cartel Office and the Ministry of Economics and Technology (BMWi), refers in his 14th main report about the status quo in the German economy and monopolization. The report negates the economic utility of softwarepatents, criticises the legal pracise of the European Patent Office and recommends the Federal Government to reject the aimed legalisation of such patents from the European Commission.

Antitrust Policy, Innovation Efficiencies, and the Suppression of Technology by John J. Flynn, College of Law, the University of Utah, published in the Antitrust Law Journal (1998):

(not online anymore)

In depth analysis of the effects of monopolies generated by patent inflation in general.

Le Monde: Interview with Joseph E. Stiglitz (2001):


Article in Le Monde in which Nobel Prize in economy 2001 Joseph E. Stiglitz says that the TRIPS intellectual property regime is detrimental to innovation and economic growth.

Innovation and Its Discontents

Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It; by Adam B. Jaffe & Josh Lerner ; Princeton University Press 2004

Studies about Open source software

Software patents are very damaging for open source software. The following studies show the importance of open source software in Europe.

Study on the Economic impact of open source software on innovation and the competitiveness of the Information and Communication Technologies (ICT) sector in the EU by UNU-MERIT (2006-11-20):

This study has been carried out by a team led by UNU-MERIT, the Netherlands, to identify the role of FLOSS in the economy, its direct impact on the ICT sector, its indirect impact on ICT-related sectors and to recommend policies based on forecasted scenarios.

Effects of software patents on science

Intellectual Property in the AAAS Community: A Descriptive Analysis of a Pilot Survey on the Effects of Patenting on Science by Stephen Hansen , Amanda Brewster and Jana Asher (2005-11):

Early in 2005, SIPPI undertook a survey of about 1,100 AAAS members to determine what effects patenting, if any, has had on research conducted by scientists in academia, industry, government, and nonprofit organizations. Among its results, the survey found that by a suprising 2:1 margin, industry scientists reported having more difficulty in accessing patented technologies than academic scientists. However, this could be the result of the greater volume of intellectual property created by industry, as well as industry's heavy reliance on licensing - a process more sophisticated and time-consuming than the means used in academia for technology transfer.

More information

Website from FFII France

Website from Eben Moglen:

Eben Moglen is professor of law at Columbia Law School and General Counsel for the Free Software Foundation. On his website you find some articels related to softwarepatents.

Website from Chez Bernard Lang

FFII site

Website of Jürgen Ernst

Website endsoftwarepatents

Studies (last edited 2011-09-21 10:42:58 by IvanVillanueva)