Oral arguments in the Bilski patent case were recently heard at the Supreme Court of the United States (SCOTUS).  The line of questioning from the justices suggests to me that they have an understanding of computers and software that could be very problematic for those of us designing software and trying to protect that intellectual property with patents.

Their understanding seems to go something like this.  1) You can’t patent ideas in the abstract, they must be embodied in some concrete form.  2) Software programs are embodied by running them on a computer.  3) But, since the computer is already capable of running the program, simply saying that you run the program using a computer doesn’t make it patentable, because what you’re really patenting is the abstract idea expressed in your software.  4) Abstract ideas are not patentable. Ergo, software is not patentable.

I think a re-framing of the computer/software relationship could help explain why it seems obvious to programmers that their work can be novel, non-obvious and useful (the tests for patentability).

Consider the analogy: a computer is like steel.  Many inventions are made of steel.  That is, steel is the medium in which the idea (say a uniquely shaped tiller blade) is expressed.  Steel is an expressive medium.  Now, SCOTUS has no problem upholding patents for ideas expressed in steel if they are novel non-obvious and useful.  That feels right.  SCOTUS also has no problem upholding patents for new methods of making steel, for alloys, for ways of hardening steel, etc.. That is ways of improving the expressive medium.  That also feels right.

The analogy I’d like to draw is that the computer is an expressive medium for software in the same way that steel is for tillers and many other useful things.  So, many inventions are made using steel as the expressive medium, and I would argue that many inventions are made using a computer (and display and inputs etc) as the expressive medium.  SCOTUS seems to be grappling with the idea that you don’t create a “special-purpose computer” to express a particular piece of software.  That, to me, would be like saying that a new tiller design would have to be expressed in a new alloy specially made for the purpose in order for it to be patentable.

When thought of this way you realize that the very purpose of a computer, that is, a device designed to be programmed to perform new functions, is as an expressive medium for software.  So, just like new alloys, new, faster, lighter, lower power computers are invented all the time.  You’ve improved the expressive medium, and it feels right that these inventions are deemed patentable.

Computers are “ductile” like steel, and creating software is analogous to hammering the computer (the expressive medium) into a functional shape.  You still need to ask if that shape is novel, non-obvious and useful just as you would when someone hammers a new tiller blade out of steel,  but the use of a computer as the expressive medium does not make all software the expression of an abstract idea.

The problem I believe we’re trying to solve is that in some (many?) cases simply claiming that simple (obvious, not-novel) ideas become patentable simply because they are expressed on a “machine” known as a computer.  These are the “trivial” software patents everyone decries. I’ll say two things about that.  First, if these ideas really are “trivial” then they should fail the novel, and non-obvious requirements.  No need to develop a new set of legal tests for that one.  And second (and with only a trace of sarcasm), the definition of a “trivial” patent is the one that you’re infringing. (i.e. I never write a trivial patent myself, but every patent that I infringe is a “trivial” patent that should never have been granted in the first place.)  Let’s not rewrite the patent law to handle cases that it is already equipped to deal with.  If the patent is truly “trivial” it should fall under the most basic test of patentability, novelty and non-obviousness, and if it’s not, then you should negotiate a royalty and get on with your business (it’s what you expect the licensees of your patents to do).

Mention the word “regulation” to most business people and they will usually wrinkle their noses as if they’ve smelled something bad. For many this is understandable. A manager’s job is relatively complex even in the absence of regulation. Managing the various forces and constituencies while trying to maximize shareholder value can be tricky indeed. Add to this “regulation” and now there is just meaningless red-tape and bureaucratic hurdles. For the majority of managers who believe that they would have obeyed the principles of the regulation even without being compelled to do so, it is just unnecessary cost. Understandable.

But their are two aspects of the situation worth pointing out. First, one bad apple doesn’t spoil the whole bunch. If a single bad actor violated social norms in running their business, say for example releasing industrial by-products into a river, conventional nuisance law would be up to the task. The very existence of regulation shows that the problem is wide-spread enough for people to bother with the overhead of getting the regulation approved in the first place. It’s like those signs that say, “No Loitering” an obvious sign that people do loiter here. Or the signs on hair dryers that say “do not use this while in the bathtub.” Someone definitely used a hairdryer in the bathtub. We need the Clean Air Act because without it people pollute the air (not you, of course, but other people). We need the Clean Water Act because people really do fill in fragile wetlands, and pollute rivers (not you of course, but other people). We need the Endangered Species act because people really do destroy critical habitat that causes species stress and extinction (again, other people). For those who bristle under the weight of regulation, it is a sad fact, other people do things that spoils it for the rest of us.

There is a second aspect of regulation that is often missed by business managers, and I think this is partly because of the heavy burden placed on them by regulations they can never see themselves violating in the first place. This second aspect is that every regulation is in fact an incentive for someone. Regulations create and structure markets, and in so doing, result in a wealth transfer. In every wealth transfer there is someone who gives and someone who gets. For the person that gets the benefit of the regulation, it is an incentive. For example, before the Clean Air Act, there was essentially no market for smoke-stack scrubbing technology. The regulation was an incentive for investment in this technology, and the companies that had formed around solving this problem were the beneficiaries. Climate regulation will do exactly the same thing. Business managers are more accustomed to thinking, how can I limit my exposure to this new regulation? They have been missing the opportunity to ask, how can I capitalize on the market created by this incentive?

Regulations directed at climate change are going to have sweeping economic effects, just like the economic effects of the negative externalities they seek to avoid. There will be losers in this, those that have struggled against the regulation, and have attempted to debunk the science. But the objectors are dwindling now, perhaps primarily because they’d rather be at the table, then fight a futile battle against the coming regulation. But even that approach misses what is perhaps one of the greatest business opportunities of our time, the opportunity to be the beneficiary of the incredible wealth transfer that will take place. The transfer will be from old technology companies (old-school power production for example) to new technology companies (carbon sequestration, alternative energy, energy efficiency etc.). On the horizon, Congress is preparing to pass some of the most significant business incentives in years. There will be winners and losers. I know who I want to work with…..