“If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.”
― George Bernard Shaw
Just in the last month, headlines about the future of artificial intelligence (AI) were dominating most of the technology news across the globe:
On 15 November, OpenAI, a research company in San Francisco, California, co-founded by entrepreneur Elon Musk, announced their partnership with Microsoft to start running most of their large-scale experiments on Microsoft’s open source deep learning software platform, Azure;
Two weeks later, Comma.ai open sourced its AI driver assistance system and robotics research platform;
On 3 December, DeepMind, a unit of Google headquartered in London, opened up its own 3D virtual world, DeepMind Lab, for download and customization by outside developers;
Two days later, OpenAI released a ‘meta-platform’ that enables AI programs to easily interact with dozens of 3D games originally designed for humans, as well as with some web browsers and smartphone apps;
A day later, in a keynote at the annual Neural Information Processing Systems conference (NIPS) Russ Salakhutdinov, director of AI research at Apple, announced that Apple’s machine learning team would both publish its research and engage with academia;
And on 10 December, Facebook announced to open-source their AI hardware design, Big Sur.
What’s going on here? In the AI field, maybe more than in any other, the research thrives directly on open collaboration—AI researchers routinely attend industry conferences, publish papers, and contribute to open-source projects with mission statements geared toward the safe and careful joint development of machine intelligence. There is no doubt that AI will radically transform our society, having the same levels of impact as the Internet has since the nineties. And it has got me thinking that with AI becoming cheaper, more powerful and ever-more pervasive, with a potential to recast our economy, education, communication, transportation, security and healthcare from top to bottom, it is of the utmost importance that it (software and hardware) wouldn’t be hindered by the same innovation establishment that was designed to promote it.
Our ideas are meant to be shared—in the past, the works of Shakespeare, Rembrandt and Gutenberg could be openly copied and built upon. But the growing dominance of the market economy, where the products of our intellectual labors can be acquired, transferred and sold, produced a system side-effect glitch. Due to the development costs (of actually inventing a new technology), the price of unprotected original products is simply higher than the price of their copies. The introduction of patent (to protect inventions) and copyright (to protect media) laws was intended to address this imbalance. Both aimed to encourage the creation and proliferation of new ideas by providing a brief and limited period of when no one else could copy your work. This gave creators a window of opportunity to break even with their investments and potentially make a profit. After which their work entered a public domain where it could be openly copied and built upon. This was the inception of open innovation cycle—an accessible vast distributed network of ideas, products, arts and entertainment - open to all as the common good. The influence of the market transformed this principle into believing that ideas are a form of property and subsequently this conviction yield a new term of “intellectual property” (IP).
“People’s tendency to prefer avoiding losses to acquiring equivalent gains”: it’s better to not lose $10 than to find $10 and we hate losing what we’ve got. To apply this principle to intellectual property: we believe that ideas are property; the gains we gain from copying the ideas of others don’t make a big impression on us, however when it’s our ideas being copied, we perceive it as a property loss and we get (excessively) territorial. Most of us have no problem with copying (as long as we’re the ones doing it). When we copy, we justify it; when others copy, we vilify it. So with the blind eye toward our own mimicry and propelled by faith in markets and ultimate ownership, IP swelled beyond its original intent with broader interpretations of existing laws, new legislation, new realms of coverage and alluring rewards. Starting in the late nineties, in the US, a series of new copyright laws and regulations began to be shaped (Net Act of 1997, DMCA of 1998, Pro-IP of 2008, The Enforcement of Intellectual Property Rights Act of 2008) and many more are in the works (SOPA, The Protect IP Act, Innovative Design Protection and Piracy Prevention Act, CAS “Six Strikes Program”). In Europe, there is currently 179 different sets of laws, implementing rules and regulations, geographical indications, treaty approvals, legal literature, IP jurisprudence documents, administered treaties and treaty memberships.
In the patents domain, technological coverage to prevent loss aversion made the leap from physical inventions to virtual ones, most notably—software.
Rundown of computing history
The first computer was a machine of cogs and gears, and became practical only in the 1950s and 60s with the invention of semi-conductors. Forty years ago, (mainframe-based) IBM emerged as an industry forerunner. Thirty years ago, (client server-based) Microsoft leapfrogged and gave ordinary people computing utility tools, such as word-processing. As computing became more personal and the World-Wide-Web turned Internet URLs into web site names that people could access, (internet-based) Google offered the ultimate personal service, free gateway to the infinite data web, and became the new computing leader. Ten years ago, (social-computing) Facebook morphed into a social medium as a personal identity tool. Today, (conversational-computing) Snap challenges Facebook as-Facebook-challenged-Google-as-Google-challenged-Microsoft-as-Microsoft-challenged-IBM-as-IBM-challenged-cogs-and-gears.
History of software patenting
Most people in the S/W patent debate are familiar with Apple v. Samsung, Oracle v. Google with open-source arguments, etc., but many are not familiar with the name Martin Goetz. Martin Goetz filed the first software patent in 1968, for a data organizing program his small company wished to sell for use on IBM machines. At the time, IBM offered all of their software as a part of the computers that they sold. This gave any other competitors in the software space a difficult starting point: competitors either offered their own hardware (HP produced their first computer just 2 years earlier) or convince people to buy software to replace the free software that came with the IBM computers.
Martin Goetz was leading a small software company, and did not want IBM to take his technological improvements and use the software for IBM's bundled programs without reimbursement, so he filed for a software patent. Thus, in 1968, the first software patent was issued to a small company, to help them compete against the largest computer company of the time. Although they had filed a patent to protect their IP, Goetz's company still had a difficult time competing in a market that was dominated by IBM, so they joined the US Justice Department's Anti-Trust suit against IBM, forcing IBM to un-bundle their software suite from their hardware appliances.
So the beginning of the software industry started in 1969, with the unbundling of software by IBM and others. Consumers had previously regarded application and utility programs as cost-free because they were bundled in with the hardware. With unbundling, competing software products could be put on the market because such programs were no longer included in the price of the hardware. Almost immediately, the software industry has emerged. On the other hand, it was quickly evident that some type of protection would be needed for this new form of intellectual property.
Unfortunately, neither copyright law nor patent law seemed ready to take on this curious hybrid of creative expression and functional utility. During the 1970s, there was total confusion as to how to protect software from piracy. A few copyrights were issued by the Copyright Office, but most were rejected. A few software patents were granted by the PTO, but most patent applications for software-related inventions were rejected. The worst effect for the new industry was the uncertainty as to how this asset could be protected. Finally, in 1980, after an extensive review by the National Commission on New Technological Uses of Copyrighted Works (CONTU), Congress amended the Copyright Act of 1976 to cover software. It took a number of important cases to resolve most of the remaining issues in the copyright law, and there are still some issues being litigated, such as the so-called “look and feel”, but it appears that this area of the law is quite well understood now. For patents, it took a 1981 Supreme Court decision, Diamond v. Diehr, to bring software into the mainstream of patent law. This decision ruled that the presence of software in an otherwise patentable technology did not make that invention unpatentable. Diamond v. Diehr opened the door for a flood of software-related patent applications. Unfortunately, the PTO was not prepared for this new development, and in the intervening years they have issued thousands of patents that appear to be questionable to the software industry. It took a few years after 1981 for the flow of software-related applications to increase, and then there was some delay because of the processing of these applications. Now the number of infringement case is on the rise.
The transition from physical patents to virtual patents was not a natural one. In its core, a patent is a blueprint for how to recreate an invention; while (the majority of) software patents are more like a loose description of something that would look like if it actually was invented. And software patents are written in the broadest possible language to get the broadest possible protection - the vagueness of these terms can sometimes reach absurd levels, for example “information manufacturing machine” which covers anything computer-like or “material object” which covers… pretty much everything.
35 U.S.C. 101 reads as follows:
“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirement of this title.”
When considering subject matter eligibility under 35 U.S.C. 101, it must be determined whether the technology is directed to one of the four statutory categories of invention, i.e., process, machine, manufacture, or composition of matter. Since it became widespread and commercially valuable, it has been highly difficult to classify software within a specific category of intellectual property protection.
Attempts are usually made in the field of software technology to combine methods or means used in different fields or apply them to another field in order to achieve an intended effect. Consequently, combining technologies used in different fields and applying them to another field is usually considered to be within the exercise of an ordinary creative activity of a person skilled in the art, so that when there is no technical difficulty (technical blocking factor) for such combination or application, the inventive step is not affirmatively inferred unless there exist special circumstances, such as remarkably advantageous effects. Software is not a monolithic work: it possesses a number of elements that can fall within different categories of intellectual property protection.
In Israel, legal doctrines adapt to changes in innovative technological products and the commercial methods that extend this innovation to the marketplace. The decision issued by the Israeli Patent Registrar in the matter of Digital Layers Inc confirms the patentability of software-related inventions. The Registrar ruled that the claimed invention should be examined as a whole and not by its components, basing his ruling on the recent matter of HTC Europe Co Ltd v. Apple Inc, quoting:
"…It causes the device to operate in a new and improved way and it presents an improved interface to application software writers. Now it is fair to say that this solution is embodied in software but, as I have explained, an invention which is patentable in accordance with conventional patentable criteria does not become unpatentable because a computer program is used to implement it…"
After Alice Corp. v. CLS Bank International, if the technology does fall within one of the categories, it must then be determined whether the technology is directed to a judicial exception (i.e., law of nature, natural phenomenon, and abstract idea), and if so, it must additionally be determined whether the technology is a patent-eligible application of the exception. If an abstract idea is present in the technology, any element or combination of elements must be sufficient to ensure that the technology amounts to significantly more that the abstract idea itself. Examples of abstract ideas include fundamental economic practices (comparing new and stored information and using rules to identify options in SmartGene); certain methods of organizing human activities (managing game of Bingo in Planet Bingo v. VKGS and user interface for mean planning in Dietgoal Innovation vs. Bravo Media); an idea itself (store and transmit information in Cyberfone); and mathematical relationship/formulas (updating alarm limits using a mathematical formula in Parker v. Flook and generalized formulation of computer program to solve mathematical problem in Gottschalk v. Benson). The technology cannot merely amount to the application or instructions to apply the abstract idea on a computer, and is considered to amount to nothing more than requiring a generic computer system to merely carry out the abstract idea itself. Automating conventional activities using generic technology does not amount to an inventive concept as these simply describes “automation of a mathematical formula/relationship through use of generic computer function” (OIP Technologies v. Amazon). The procedure of the invention using an existing general purpose computer do not purport to improve any another technology or technical field, or to improve the functioning of a computer itself and do not move beyond a general link of the use of an abstract idea to a particular technological environment.
The Federal Circuit continues to refine patent eligibility for software
Following the Supreme Court’s decision in Alice v. CLS Bank, the court of appeals in Ultramercial v. Hulu reversed its prior decision and ruled that the claims were invalid under 35 U.S.C. § 101. Following the two-step framework outlined in Alice, Judge Lourie concluded that the claims were directed to an abstract idea.
The Federal Circuit’s decision in Digitech Image Techs. v. Electronics for Imaging illustrated the difficulty many modern software implemented inventions face. If a chemist were to invent a mixture of two ingredients that gives better gas mileage, it is hard to imagine that a claim to such a mixture would receive a § 101 rejection. Yet, when to elements of data are admixed to produce improved computational results, the court are quick to dismiss this as a patent-ineligible abstraction. The real problem Digitech faced was that both data elements were seen as being abstractions: one data type represented color information (an abstraction) and the other data type represented spatial information (another abstraction).
DDR Holdings v. Hotels.com, a 2014 Federal Circuit decision, provides a good discussion of a patent-eligible Internet-centric technology. In applying the Mayo/Alice two-part test, the court admitted it can be difficult sometimes to distinguish “between claims that recite a patent-eligible invention and claims that add too little to a patent-ineligible abstract concept”.
Content Extraction v. Wells Fargo Bank gives a roadmap to how the Court of Appeals for the Federal Circuit will likely handle business method patents in the future. First, if the manipulation of economic relations are deemed present, you can be sure that any innovative idea with the economic realm will be treated as part of the abstract idea. Essentially, no matter how clever an economic idea may be, that idea will be branded part of the abstract idea problem, for which there can be only one solution, and that is having something else innovative that is not part of the economic idea. Practically speaking, this means the technology needs to incorporate an innovative technology improvement that makes the clever economic idea possible.
So the fuzziness of software patents’ boundaries has already turned the ICT industry into one colossal turf war. The expanding reach of IP has introduced more and more possibilities for opportunistic litigation (suing to make a buck). In the US, two-thirds of all patent law suits are currently over software, with 2015 seeing more patent lawsuits filed than any other year before. Of the high-tech cases, more than 88% involved non-practicing entities (NPEs). These include two charmlessly evolving species who’s entire business model is lawsuits—patent trolls and sample trolls. These are corporations that don’t actually create anything, they simply acquire a library of intellectual property rights and then litigate to earn profits (and because legal expenses are millions of dollars, their targets usually highly motivated to settle out of court). And the patent trolls are most common back in the troubled realm of software. The estimated wealth loss in the US alone is $500,000,000,000 (that’s a lot of zeros).
Technology conversion and open innovation
For technological companies, conversion and the advance of open source approach, driven largely by collaborative processes introduced by GitHub, Google's Android, Apple’s Swift and most recently by Microsoft joining Linux Foundation, has created a systematic process for innovation which is increasing software functionality and design. 150 years ago, innovation required a dedicated team spending hours in a lab, extensively experimenting and discovering “10,000 ways not to make a light-bulb”, before finding one that worked. Today, innovation has gained a critical mass as technology and users’ feedback are combined to give a purposeful team the ability to find 10,000 ways not to do something in a matter of hours, with the right plan in place. Today, a development team can deliver a product in a matter of months and test it in such a way that customer responses are delivered to the right development team member directly with the feedback being implemented and a system being corrected (almost) in real-time. The life of a software today patent is still 20 years from the date the application was filed. The patent system, that has existed since 1790, is not equipped to handle this new technology and there is a need to establish an agile, sui generic, short-cycle— three to five years—form of protection dedicated solely to software protection. As patents play an essential role in market-centred systems of innovation, patent exclusivity criteria should be redesigned more systematically to reflect the ability of software patents to foster innovation and to encourage technology diffusion.
The belief in intellectual property has grown so dominantly it has pushed the original intent of patents out of public consciousness. But that original purpose is right there, in plain sight—the US Patent Act of 1790 reads “An Act to promote the progress of useful Arts”. However, the exclusive rights this act introduced were offered in sacrifice for a different purpose - the intent was to better the lives of everyone by incentivizing creativity and producing a rich pool of knowledge open to all—but exclusive rights themselves came to be considered the only point, so they were expanded exponentially, and the result hasn’t been more progress or more learning, but more squabbling and more legal abuse. AI is entering the age of daunting problems—we need the best ideas possible, we need them now, and we need them to spread as fast as possible. The common meme was overwhelmed by exclusivity obsession and it needs to spread again, especially today. If the meme prospers, our laws, our norms, and our society—they will all transform as well.