The patenting of software is one of the most hotly debated issues in the field of intellectual property, and probably the most high profile case in the field is that of Amazon’s ‘1-click’ patent.  The alleged innovation consisted of a way of allowing online shoppers to buy products with a single click.  Instead of entering payment details each time, the Amazon servers identify visitors using a cookie stored on their computer and retrieve the information automatically.  While Amazon secured patent protection for the technique in the United States back in 1999, its efforts to obtain protection internationally provide an interesting illustration of the differing approaches taken to patent protection of software inventions in different jurisdictions.

For example, while the Canadian, US and Australian patent regimes have so far been broadly in favour of crucial elements of Amazon’s patent claims, the European Patent Office appears to be taking a different stance.  A more detailed analysis of the fate of the patent is available here.

There are also differences in the treatment of applications for patent protection of software within Europe, between the European Patent Office and the UK Intellectual Property Office, with the latter being viewed by some as less lenient when it comes to computer implemented inventions.

One comment in the Guardian’s editorial on the subject resounds with this author:

Until the mid-1990s the computer industry – including Microsoft – was opposed to such licensing. This was mainly because the industry was so innovative without the protection of patents, which in any case involved often quite trivial advances in technology that were regarded as a standard part of an engineer’s work.

Every non-trivial piece of software involves a series of technical problems overcome through the innovative application of a developer’s expertise and experience.  Unquantifiable amounts of code are written, and an unfathomable number of problems overcome each day by software engineers worldwide, and the 1-click ‘innovation’ by Amazon is far from the most complex of these.  Much like that of a developer, a lawyer’s work involves using language to communicate complex information, and the analysis of rules and their application under specific circumstances.  If monopoly rights were granted over certain approaches to applying rules to sets of facts, to the structure of contract templates, or to more effective means of communicating information linguistically, I would be concerned that many legal professionals would grind to a halt.

While patents offer an important incentive to innovate, and a just reward to those who develop new technology benefitting society, I worry that if the bar to patent protection is set too low for software then smaller players in the field, who cannot afford to acquire patent portfolios or to pay for licensing agreements, may be forced out of the market altogether.

Computer software that is available in source code form for which the source code and certain other rights normally reserved for copyright holders are provided under a software license that permits users to study, change and improve the software

Business Applications

Most of the application software used in the everyday running of businesses is typically offered as ‘closed source’ software, this means that users can operate the software, but are not licensed to inspect, modify or improve it.  However, the use of open source software in business is continuing to gain steam.  OSS itself is generally free, the main cost being its configuration, and support.  As such it can be an extremely cost effective means of getting a project underway.

WordPress, an open source Content Management System which facilitates the setting up and managing of blogs and websites, is increasingly prevalent, and for simple sites can reduce the cost of establishing an online presence considerably.  One of the staple business applications in use worldwide, Microsoft Exchange,  is now facing competition from an open source alternative, the German-based Open-Xchange, and we are likely to see further deployment of open-source alternatives to other business applications as similar projects become more robust over time.

Licensing Implications

While open source offers a number of benefits over closed source software, including considerable community support, and increased lead time due to the reduced development costs of new projects, businesses often fail to appreciate the associated licensing implications.  If existing OSS is incorporated into a  new project, licensing restrictions often require that project to be released under a similar licence, and some OSS attracts a licensing fee if it is used for commercial purposes.  It is therefore prudent to take precautions early on.

Prior to incorporating OSS into products it is important to consider future plans for the business.  If control is paramount, and central to monetizing the product, then it may not be an appropriate option, although some licences do allow for incorporation into closed source applications.  Awareness is most likely the key to long term success, if further down the line you want to keep options open, clarify your requirements early on, and take care to undertand the licensing terms applicable to any work you might incorporate.

Malware (malicious software, for example a virus) is a serious concern online, and web browsers are continually updated with new ways to reduce the risk of infection.  One of the ways in which some browsers help users to avoid malware is through reliance on a list maintained by Google, identifying sites which exhibit suspicious behaviour.  A site might be listed if, for example, it causes visitors to automatically download software that has not been explicitly requested.

When visiting a domain that has been listed, users are prompted to choose whether to cancel their request, or to ignore the security warning and continue.  This will dissuade a very significant proportion of visitors, and so if your website is listed, you should act as quickly as possible to rectify the situation.  To remove a security warning, you will need to register for Google Webmaster Tools.  Removing a warning involves dealing with the problem that led to the warning in the first place; and taking precautionary measures to prevent a reoccurrence.

The impact of your site being listed as a security risk is comparable to your email communications being marked as Spam.  While the service is beneficial to consumers, it has the potential to cause significant damage to your business reputation, and to affect your income.  If Google make a mistake they might unilaterally identify your website as a security risk,  and the volume of traffic to your site would drop considerably.  Luckily, reports of sites being incorrectly identified as a security threat by Google are few and far between.  If your site is listed as a threat, it could be that it has been hacked and is disseminating malware without your knowledge, as recently happened to the website of BBC Radio 3.  Nevertheless, there is certainly scope for Google to cause damage, and the company has not proved infallible, as can be seen from their early 2009 tagging of the entire internet as a security risk.

If you take care to ensure that software is kept up to date, you are less likely to be susceptible to attacks that could put you at risk of being black listed, however, it is worth keeping an eye on your site so that you can respond quickly should any issues arise.

In September 2008, when EA released the much hyped video game Spore, they incorporated a DRM scheme viewed by many as draconian, and unnecessary.  The scheme placed restrictions on the number of computers on which the game could be installed, and required authentication for online play.

However, despite making use of the latest DRM technology, the game was cracked in 24 hours, and made available 2 days before the initial Australian release.  The copy protection evoked so much criticism and outrage, that in 2008 the game became the most pirated title in history.   This was not the end of the affair though, in the same year the publisher was targeted by a class action lawsuit on the grounds that the nature of the DRM software was not disclosed to purchasers, and remained on a user’s computer even after un-installation of the game.

DRM is used to try and prevent people being able to pirate games, however in this case many legitimate purchasers said that they felt they were being punished for buying a legal copy, as their use of the software was limited to a greater extent than if they had downloaded an illegal copy, free of the protection.  The reaction against the DRM in Spore was so great that when EA released The Sims 3 a year later they decided to make the game completely free of copy protection.

More recently, in March this year, Ubisoft announced that they would be shipping a new type of DRM along with their games, that would kick players out of their game without saving their progress if their Internet connection dropped. First the game is verified and then the users settings are saved online through a Ubi.com account.  This means that PC gamers who are not connected to the internet, or are away in an area without internet access, will not be able to play.  As predicted by commentators online, Ubisoft’s new DRM was broken in less than 24 hours.

Cases like these illustrate how poorly considered DRM usage can be counterproductive, and instead of discouraging piracy can in fact drive people towards it, so that they can play games without so many restrictions.

However, some DRM schemes have proved successful.  These include services like the iTunes music store, or in the world of video games, Valve’s Steam service.  The key to their success? Offering legitimate users far more value than that available through illegitimate means.  Steam is essentially a distribution network, like iTunes for games rather than music, but it does incorporate DRM similar to the Ubisoft scheme described above.  Opinion is divided when it comes to some aspects of the service – for example users may be forced to upgrade their games even when they don’t want to, and it is necessary to be connected to the internet when installing a game, but at the same time there are significant advantages.

With Steam, users no longer need to worry about maintaining a collection of CDs or DVDs, as they can download games they have purchased anywhere, anytime, and play them on any computer.  There is a huge library of available titles, including free games, and the service also offers community interaction between players.

You can read an interesting take on the benefits of this approach in relation to piracy here.

Although DRM may seem like an attractive means for game publishers to discourage piracy, it is difficult to implement in a way that does not alienate fans by imposing arduous restrictions, driving them to seek out illegitimate copies.  Even sophisticated DRM schemes are readily circumvented, and can lead to resentment on the part of legitimate buyers, and so it is clear that a careful balance must to be struck between the benefits offered by legitimate copies, and the limitations imposed by the copy protection used.

Along with the growth in popularity of gaming, has come an increase in videogame piracy.  Just as with films and music, games consist of intellectual property that can be copied, and distributed.  The industry has grown to make gaming a $60 billion dollar market, and the issue of illegal downloading is now serious cause for concern to publishers.

The way games are used by consumers is very different to the way music and film are used.  While a film might be seen once or twice a year, games can offer hours and hours of single player game play, and in a multiplayer environment the entertainment value of a game can often increase with time.  While music is consumed passively, players interact with game environments.  So what does this mean for game piracy?

While the music and film industries go after their consumers in court, both alienating buyers and racking up legal fees, the nature of games gives publishers a range of far better options.

• Demos
  It is sometimes argued by infringing downloaders that they want to sample the material before purchasing it – perhaps wanting to see the film to know if it was worth adding to their DVD collection, or wanting to listen to some of the tracks on an album before buying the whole thing.  For game publishers this is easy to address, as they have been doing for years, by releasing time, or feature limited, demos of their titles.
  Where practical, some publishers also release ‘beta’ versions of their games, allowing users to get a taste of what the finished version will be like, to provide feedback, and to generate marketing buzz.  This has been effective with games such as Blizzard’s Starcraft 2, and the Halo Reach beta given to buyers of the most recent title in the Halo Franchise – Halo ODST.
• Additional In-Game Content
  As explained above, one of the major differences between games, and other media, is that players interact with the game environment, and if taken into account as part of the design process games can be built ready to accept additional content – this might be new levels, characters, weapons or even features.

  Technical measures often make it possible to restrict the release of bonus content to licensed copies through activation, license codes, and other means.  By doing so, publishers not only discourage piracy, but increase the lifespan of a game and add a revenue stream.

• Multiplayer Networks
  One form of additional functionality worth mentioning on its own is multiplayer play.  By restricting access to gaming servers to licensed copies, publishers provide a powerful disincentive to use a pirated copy, for example Xbox Live operators are able to ban those using infringing copies from the multiplayer servers.

  Where the multiplayer aspect of a game is central to its use, an even more effective business model emerges.  Massively Multiplayer Online Role Playing Games (MMORPGs) based on subscription models, can effectively eliminate the threat posed by piracy.  Possibly the most successful game ever, World of Warcraft, attracts monthly subscription revenue in the tens of millions of dollars.

  

All of these are powerful tools by which the games industry can combat piracy, without resorting to legal action.

While game piracy is an issue of mounting concern, it is a different beast as compared to music and film copyright infringement, and has the potential to be approached from a very different angle.

For all the apocalyptical details given by the Economist, the stakes of a successful cyber ‘siege’ could effectively bring an economy to its knees. The reality of these concerns is confirmed with Web War 1 (‘WWI’): when Government and media websites were crippled in Estonia (See BBC news article here) and Georgia (NY Times article here) by  ‘concerted detail of service’ attacks.

According to US President Obama “America’s economic prosperity in the 21st century will depend on cybersecurity” (See full speech here). Interestingly, Obama’s policy approach to this risk is to coordinate public-private action. To sanctify this, General Keith Alexander has been appointed as head of the new US Cyber Command but ‘cyber-tsar’ Howard Schmidt from Microsoft has also been enlisted.

The cross over of public and private sector is obviously of mutual benefit, as the Government can summon expertise from the IT sector to assess exposure and monitor the threats of a cyberwarfare (see speech here by General Alexander for general aims and objectives of US cyber policy). And the private sector can rely upon a proactive government to support them in protecting the fundamentals behind their innovations.

In this connection, a new innovation, ‘cloud computing’, involves more data and control being migrated to service providers, with assets such as Intellectual Property ‘know-how’, personal data at risk(see comprehensive report by ENISA here on the risks of cloud computing). Without a solid, coordinated and comprehensive policy against cyberattacks it will surely be difficult for this innovation to take off. At least, for now, the ‘coordinated’ side of the US approach should not be overstated, as when Google pulled out of China, due to cyberattacks by the latter, the US administration hesitated to show unequivocal backing for Google (see FT article).

In all, as our economies are intrinsically linked to the internet and the internet now to security, a global regulatory approach to cybersecurity is called for. The US is leading the response currently, NATO has instigated an International approach (consolidating rules of engagement and ally assistance), the EU has set up an agency for this – The European Network and Security Agency  (the ENISA) and the UK is to set up the Cyber Security Operations Centre. But these are still early days, as the Economist points out “there are few, if any, rules in cyberspace of the kind that govern behaviour, even warfare”. Further action, even regulation, is warranted and public-private coordinated approaches are certainly welcome.

The End of Method Patents?

The US has been one of the few jurisdictions which allow methods or ways of doing things to be registered for patent protection. This type of patent might be narrowed significantly by a recent ruling by a US Appellate Court.  We will all be keeping a watch out for the final decision, given that many UK patents are filed with the intention of ultimately being granted as a US patent.

In the case the patent applicant appealed the decision of the USPTO, which had refused to grant a patent for the method of managing risk of sudden movements in energy costs.  The Appellate Court upheld the decision that the method was not patentable using a test given in a previous Supreme Court decision which held that in order to receive a patent a process must either be tied to a machine or result in a transformation.  This case is likely to be appealed to the Supreme Court. The business world will be waiting anxiously for a final decision which will impact the validity of future business method patents as well as ones which have been previously registered as they are now more vulnerable to attack.

Business method patents first became possible in 1998 when the same Appellate Court confirmed their patentability. In recent years there has been an explosion of business method patents being filed. In 1997 the US patent and trademark office only received 120 applications. This number has been rising steadily since then with a record breaking 1,300 filed last year. The most famous of this type of patent is the Amazon one click patent for ordering online.

To view the case click here.