Software patents threaten innovation

Ovum calls for a radical change of regime

For immediate release. 5 April 2006. The current software patent regime hampers innovation and must be radically changed, according to new research by Ovum, the analyst and consulting company.

The conclusions of a six-month research project show that far from serving their original purpose - to promote and disseminate innovation - software patents threaten innovation and benefit large companies at the expense of small ones.

'Many vendors see patents as a good thing simply because they make money by licensing them,' says Research Director Gary Barnett who led the project. 'This is a short-sighted and fallacious point of view. We believe the economic case for software patents has fundamentally not been made.'

Barnett argues that unless steps are taken now, the current crisis could lead to the total collapse of the technology patent regime.

'This is our challenge to software vendors:

• agree new standards for 'novelty', 'inventiveness' and 'disclosure'
• apply the new standards to your existing patent portfolios
• release any of your currently held patents that fail to meet the new benchmark.'

The Ovum research shows that the current regime is causing harm to the software industry in different ways:

• It is harming competition: patents are increasingly used 'strategically' as weapons against potential competitors, or as a defence against threats from other patent-holding companies.
• It is biased against small software companies: the patent regime is strongly biased towards large software companies that have the resources and legal expertise to create an arsenal of patents.
• It hampers innovation: the proliferation of patents makes it harder for companies to innovate; it is almost impossible to create a significant software product today without infringing one or (more likely) more patents.
• It limits end-user choice: the anti-competitive impact of the current software patenting regime means that users have less choice and pay more for software.

'Software companies that fail to understand the ramifications of the current debate and respond accordingly face a difficult and uncertain future,' Barnett concludes.

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About Ovum

Ovum, the analyst and consulting company, is the largest European-headquartered advisor on telecoms, software and IT services. Resolutely independent, Ovum advises large corporates, IT and software vendors, IT services providers, telecoms operators, regulators, service providers and equipment suppliers. It analyses the commercial impact of technology and market changes, and has a real strength in advising on the developments where telecoms, software and IT services interact.

Ovum takes a global perspective on leading-edge developments from offices in Europe, North America and Asia-Pacific. Its experts spot the short-term issues that will have an immediate impact on markets and organisations, and advise on the longer-term 'visionary' aspects that form the basis of strategic planning. More information on Ovum, its customers and its independence is available at www.ovum.com.

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