This document discusses several key points in response to arguments made by Richard Stallman against software patents: 1. Patent law and copyright law are fundamentally different and aim to protect different types of innovations. 2. Most innovations are built incrementally through many small improvements, rather than entirely new inventions. A single patent often protects just one small part of a larger product. 3. Many historic examples show that inventors often shared and collaborated on ideas, and patents did not always stifle innovation. Successful small companies like Google have also used patents effectively. 4. Empirical studies suggest patents can benefit small inventors and startups more than large companies, as patents provide a way to potentially license or

1. A reply to Richard Stallman about
software patents (part I)
A reply to arguments against software patents presented by Richard
Stalmann at University of Calgary , 2005
http://www.youtube.com/watch?v=1Uw_ENS6rAU
http://www.youtube.com/watch?v=KmVLNEuQMAk (portuguese)
Antonio Abrantes, 2012

2. Arguments
Copyright law and patent law have nothing
essential in common
A patent can protect a small part of an product
– it is unfair
One patent one product – it is myth
Small companies has no benefits with software
patents

3. Copyright & Patents
Patent Law and Copyright Law [..] these two laws have nothing essential in common
as far the restrictions they impose on the public [..] the term “intellectual
property” tries to generalize all these laws that are all completelly different [...]
this is a simplistic over generalization [0:00-02:30]

4. Copyright & patents
Although the term intellectual property itself was likely in use by the
mid-nineteenth century in the first half of the century the term
industrial property more often held sway and was only finally
superseded in the second half of the twentieth century.
MAY, Christopher; SELL, Susan. Intelectual Property Rights: a
critical history, 2006, p.18

5. Nonrivalrous possession
If I know a particular piece of information, and I tell it to you, you
have not deprived me of it. Rather we both possess it. MERGES,
Robert; MENELL, Peter; LEMLEY, Mark. Intellectual property in
the new technological age. Aspen Publishers, 2006. p. 2

6. Copyright & Patents
It is well understood that for Locke, labor plays a crucial role in both
justifying and bounding property rights. Again, there are strong
parallels to the world of IP rights. […] the addition of individual
labor is what transforms public domain starting materials into a
unique creative product. MERGES, Robert. Justifying Intellectual
Property, Harvard University Press, 2011, p. 579/6102 (kindle
version)

7. Free flow of information ?
The problem is that the pace and velocity of information exchamge is
not the only relevant issue in the world of IP. The generation of new
information is equally important. IP is about more than how quickly
information changes hands. It is about the nature of that
information, in particular of new and in some cases unique
contributions to the great flow of information coursing thorough the
society [p.596]. Information may be easy to share, but novel and
useful information is still hard to create. Therefore property still
makes sense [p.605] Labor, directed to a useful end, justifies private
appropriation. And the scope of appropriation is determined by the
extent of labor [p.754] MERGES, Robert. Justifying Intellectual
Property, Harvard University Press, 2011

8. Idea/expression dichotomy
Copyright law does sometimes protect the design elements
of utilitarian objects as the sculpture/lamp of Mazer v.
Stein. While courts have had difficulty at times
separating the artistic from the utilitarian, they have
steadastly refused to extend copyright protection to
utilitarian aspects os three dimentional objects such as
lamps, jewelry and mannequins. Protecting object code
and microcode raises many of the same issues. How should
courts separate the unprotected utilitarian aspects of a
computer program from the protectable expressive
aspects ? MERGES, Robert; MENELL, Peter;
LEMLEY, Mark. Intellectual property in the new
technological age. Aspen Publishers, 2006. p 970

9. Idea/expression dichotomy
Copyright law protects expression but not
ideas. To illustrate, if an author of spy
novels copies a portion of Ian Fleming
novel about James Bond, he is an
infringer. If, inspired by Fleming, he
decides to write a novel about a British
secret agent who is a bon vivant, he is not
an infringer. LANDES, William,
POSNER, Richard. The economic
structure of intellectual property
law, 2003, p.91

10. Apple v. Microsoft (1988-1994)
Apple’s burden was to prove “virtually identical copying” rather than
“substantial similarity” 9th Circuit

11. Copyright x patents
To assume that computer programs are just one more new means of
expression, like a film played, may be quiet wrong. The form – the
written source code or the menu structure depicted on screen – look
hauntingly like familiar stuff of copyright, but the substance
probably has more to do with problems presented in patent law .
Applying copyright law to computer programs is like assembling a
jigsaw puzzle whose pieces do not quite fit...
MERGES, Robert; MENELL, Peter; LEMLEY, Mark. Intellectual
property in the new technological age. Aspen Publishers, 2006. p .
998

12. Machine and its parts
If there are five things that corresponds that is listed in claim number
one , that machine [with millions of parts] is prohibited [3:45]

13. Machine and its parts
 Robert William Kearns was the inventor of the
intermittent windshield wiper systems used on most
automobiles from 1969 to the present. His first
patent for the invention was filed on 1964. Kearns
won one of the best known patent infringement cases
against Ford Motor Company (1978–1990) and a
case against Chrysler Corporation (1982–1992).
Having invented and patented the intermittent
windshield wiper mechanism, which was useful in
light rain or mist, he tried to interest the "Big
Three" auto makers in licensing the technology. They
all rejected his proposal, yet began to install
intermittent wipers in their cars, beginning in 1969.
http://en.wikipedia.org/wiki/Robert_Kearns

14. Machine and its parts
35 U.S.C. 112 Specification.
 The specification shall contain a written description of the
invention, and of the manner and process of making and using it, in
such full, clear, concise, and exact terms as to enable any person
skilled in the art to which it pertains, or with which it is most nearly
connected, to make and use the same, and shall set forth the best
mode contemplated by the inventor of carrying out his invention.
The specification shall conclude with one or more claims particularly
pointing out and distinctly claiming the subject matter which the
applicant regards as his invention
http://en.wikipedia.org/wiki/Title_35_of_the_United_States_C
ode#Section_112

15. Machine and its parts
 The claims of a patent define the invention to which the patentee is
entitled the right to exclude
 A patent holder can seek to establish patent infringement in either of two
ways: by demonstrating that every element of a claim (1) is literally
infringed or (2) is infringed under the doctrine of equivalents.
 Because every element of a claim is essential and material to that claim, a
patent owner must, to meet the burden of establishing infringement, show
the presence of every element or its substantial equivalent in the accused
device. If even one element of a patent’s claim is missing from the accused
product then there can be no infringement as a mater of law
 MERGES, Robert; MENELL, Peter; LEMLEY, Mark. Intellectual property
in the new technological age. Aspen Publishers, 2006. p . 259

16. One patent one product
The myth that people have is the idea that a patent is a entire
product [4:28] That was not always a myth, in early 1800s it was
worked that way [58:17]

17. One patent one product
Edison, Ford and countless innovators are recognized as sole
inventors for concenience. The histories we know depart from the
trtuh for the simple reason that ir makes them easier to remember.
[...] I you look under the cover of any innovation, the magic of self-
containment fades. There are subinventions, subproducts, minor-
breakthroughs, and parts ans components, each with a story of their
own. Every wondrous thing is comprised of many other wondrous
things
BERKUN, Scott, The Myths of Innovation

18. One patent one product
Data that have been collected indicate that most innovation is not a
radical process. The majority of changes which occur in our society
result in an evolutionary stream of rather small, mostly, unnoticed,
modifications […] most of the developments in general purpose
digital computers resulted from small, undetectable improvements,
but when they were combined they produced the fantastic advances
that occurred since 1940
A Descriptive Model of the Intra-Firm Innovation Process,
Kenneth E. Knight, The Journal of Business ,Vol. 40, No. 4
(Oct., 1967), pp. 478-496
http://folk.uio.no/ivai/ESST/Outline%20V05/Intra-fifm
%20innovative%20process.pdf

19. One patent one product
The evidence from the petroleum refining industry indicates
that improving a process contributes even more to technological
progress than does its initial development [... ] Most
significant for our present purposes is his finding that
cumulative effect of minor technical changes on cost reduction
was actually greater than effect of major technical changes
 ENOS, John A measure of the rate of technological progress in the petroleum refining
industry, Journal of Industrial Economics, june 1958, p.180 cf. ROSENBERG, Nathan.
Inside the Black Box: technology and economics, p.68

20. One patent one product
 This chapter documents instances from past centuries where inventors freely
shared knowledge of their innovations with other inventors. It is widely
believed that such knowledge sharing is a recent development, as in Open
Source Software. Our survey shows, instead, that innovators have long
practiced “collective invention” at times, including inventions in such key
technologies as steam engines, iron, steel, and textiles. Generally,
innovator behavior was substantially richer than the heroic portrayal often
found in textbooks and museums. Knowledge sharing promoted innovation,
sometimes coexisting with patents, at other times, not, suggesting that
policy should foster both knowledge sharing and invention incentives […]
the collaboration was not necessarily opposed to economic incentives
 Knowledge Sharing Among Inventors: Some Historical Perspectives, James
E. Bessen, Alessandro Nuvolari http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=1944201

21. Patents for Small inventors ?
[the lobbies] appeal to the myth that software patents “protect” the
“small inventors” [6:04]

22. Patent for small inventors ?
More generally, a property rights system favors new entrants because large
firms can use other tools related to their market power to continue to grow
(e.g., leveraging products against other products, leveraging services
against products, marketing advantages). Small firms have nowhere to
turn except property rights. It is easier for a small startup to pursue an
idea to the point of having a solid patent or set of patents sufficient to
protect the idea from competitors than to develop the kind of brand
identification and market power that would allow it to compete against
large incumbents
 MANN, Ronald. The Commercialization of Open Source Software: Do Property
Rights Still Matter?, September 2006, Harvard Journal of Law & Technology,
Volume 20, No.1, Fall 2006 University of Texas School of Law, Law & Economics
Research Paper No. 058 http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=802805

23. Patent for small inventors
The first funding for Google as a company was secured on August
1998 in the form of a $100,000USD contribution from Andy
Bechtolsheim, co-founder of Sun Microsystems, given to a
corporation which did not yet exist. On June 7, 1999, a round of
equity funding totaling $25 million was announced; the major
investors being rival venture capital firms Kleiner Perkins Caufield &
Byers and Sequoia Capital
http://en.wikipedia.org/wiki/History_of_Google
PageRank process has been patented (U.S. Patent 6,285,999).
However, the patent is assigned to Stanford University and not to
Google. Google has exclusive license rights on the patent from
Stanford University. The university received 1.8 million shares of
Google in exchange for use of the patent; the shares were sold in

24. Patent for small inventors
Similarly, a few firms have obtained venture financing after their open source
product was distributed, modified, and already a market success. When
developers at the University of Cambridge developed Xen (software that
lets hardware run multiple operating systems) and distributed it openly
through two versions, they were then able to form a firm, XenSource, with
$6 million of venture backing. That financing was used, in turn, to
support work on a third version of the product, the distribution of
professional releases tailored for different environments, and product
support. The notable point is that the innovative activity preceded the
financing. This contrasts starkly with the financing model for firms
pursuing proprietary software strategies, where little or no development or
deployment is likely to occur before first financing
MANN, Ronald. The Commercialization of Open Source Software

25. Patent for small inventors ?
Just as the banking system created a market for capital and the
insurance industry created a market for risk, the growth of the patent
system may be creating a market for innovation. This provides a
sort of “liquidity” to knowledge that did not previously exist, argue
Ashish Arora, Andrea Fosfuri and Alfonso Gambardella in their
2001 book, “Markets for Technology, the Economics of Innovation
and Corporate Strategy”. Seen that way, the evolution of the patent
system in IT and telecoms is simply part of a broader movement to
create an institutional mechanism for the transfer of ideas to fuel
economic progress.
The Economist, 2005 http://www.economist.com/node/5014990

26. Patent for small inventors ?
The most famous successful uses of software patents are plainly not use by
giants to stamp out incipient competition. On the contrary, the most
famous incidents are successful attempts by small firms (Stac in the mid-
1990’s and Eolas in 2003) to force alterations in Microsoft products that
arguably infringed patents held by relatively tiny firms, and a similar
attempt by InterTrust to assert rights to digital rights management
technology important to a variety of Microsoft products.203 The general
point is consistent with recent empirical work suggesting that patents held
by small firms are more likely to be litigated than patents held by large
firms
 MANN, Ronald. The Myth of the Software Patent Thicket: An Empirical
Investigation of the Relationship Between Intellectual Property and Innovation
in Software Firms, Texas: Texas University, 2004.
http://law.bepress.com/cgi/viewcontent.cgi?article=1058&context=alea

27. Patents for small inventors
PricewaterhouseCoopers http://www.pwc.com/us/en/forensic-services/publications/2012-
patent-litigation-study.jhtml

28. Patents for small inventors
Over a decade ago, radiologist Dr. Bruce Saffran
invented a drug-eluting porous sheet, and was
granted 5,653,760. Boston Scientific liked the idea
which have earned more than $20 billion as a result
of his invention. Imitation resulted in flattery costing
$431.9 million, an 8% royalty on U.S. sales, and
6% on foreign sales, from 2004 through last
September. The award was reputedly the sixth largest
in history. Boston Scientific and a Cordis, a unit of
Johnson & Johnson, dominate the market for stents,
coated with drugs which release to accelerate healing
and prevent post-surgical scar tissue from creating
new coronary blockages.

29. Fonar v. General Electric
Fonar was a dispute between medical device manufacturer Fonar
Corporation and General Electric over Fonar's patent on MRI
technology. Fonar's founder, Raymond Damadian, was issued U.S.
Patent 3,789,832 for an "apparatus and method for detecting
cancer in tissue" using the magnetic resonance of atoms. Damadian's
patent was the first patent on an MRI machine issued in the United
States. Also at issue was a later patent, U.S. Patent 4,871,966
issued in 1989, covering a method for obtaining MRI images of
multiple planes at different orientations in a single scan . GE
ultimately paid Fonar over $120 million in damages plus
interest.http://en.wikipedia.org/wiki/Fonar_v._General_Electric

30. Stac Electronics v. Microsoft
In 1993, Microsoft released MS-DOS 6.0, which included a disk
compression program called DoubleSpace. Microsoft had previously
been in discussions with Stac to license its compression technology,
and had discussions with Stac engineers and examined Stac's code as
part of the due diligence process. Stac sued Microsoft for
infringement of two of its data compression patents, and won; in
1994, a California jury ruled the infringement by Microsoft was not
willful, but awarded Stac $120 million in compensatory damages
http://en.wikipedia.org/wiki/Stac_Electronics

31. Apple & Fingerworks
FingerWorks was a gesture recognition company based in the United
States, known mainly for its TouchStream multi-touch keyboard.
they had designed and patented the multi-touch technology that
Apple would later use in the iPhone, iPad, and Macbook trackpads.
Founded by John Elias and Wayne Westerman of the University of
Delaware in 1998, it produced a line of multi-touch products
including the iGesture Pad and the TouchStream keyboard, which
were particularly helpful for people suffering from RSI and other
medical conditions. The keyboards were immediately discontinued
when the company's assets were acquired by Apple Inc. in early
2005.
http://en.wikipedia.org/wiki/FingerWorks
http://appleinsider.com/articles/10/01/23/inside_the_multitouch_fingerworks_tech_i

32. Patent for small inventors
JERUSS, Sara, The America Invents Act 500: Effects of Patent
Monetization Entities on US Litigation, october, 2012
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2158455

33. Patent for small inventors

34. Patent for small inventors ?
100 random cases/year during 5 years. Total 500 cases.
Specifically, lawsuits filed by monetizers increased from 22% of the
cases filed five years ago to almost 40% of the cases filed in the most
recent year. In addition, monetizers were also heavily represented in
the list of those who filed the greatest number of lawsuits. Of the 5
parties in the sample who filed the greatest number of lawsuits
during the period studied, 4 were monetizers. Only one was an
operating company. Patent monetization entities play a role in a
substantial portion of the lawsuits filed today.
http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2158455

35. Top Lawsuit Filers

36. Patent holder success rate

37. Patent for small inventors
That important finding, taken with the fact that the principal targets
of those patents are much larger firms, suggests patents are more
beneficial to small firms than to large firms. […] it is clear that the
key to a desirable investment opportunity is in the expectation of
market power, and all other attributes of the company are indirect
predictors of that ultimate goal […] The patent system grants the
small firm an automatic stay of competitive activity that remains in
force long enough for the firm to attempt to develop its technology.
 Ronald J. Mann, Do Patents Facilitate Financing in the Software Industry?
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=510103

38. Thank you !