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The ownership of mathematical algorithms is truly a new concept and engenders one of the main questions underlying economics and law: what can a single human being claim ownership of? Although people sometimes describe property ownership as natural, it is clearly a social invention, designed to overcome economic and social problems.

chapter 1 introduction

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Software is not just like any other machine, as some courts have ruled, and it is not just Hamlet with numbers: it is a functional hybrid that can be duplicated at no cost, is legible by computers in some forms and by humans in others, and has a unique mathematical structure. All of these facts have to be taken into consideration in designing any type of IP protection for software.

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Second, a program is, in a literal sense, a piece of mathematics. This is not merely a play on words or a loose metaphor; a basic theorem of computer science demonstrates their equivalence. The courts agree that pure math is not patentable but that software is yet the two are equivalent. The courts dumped the problem of reconciling the contradiction on the USPTO, which has resolved it by allowing patents on mathematical algorithms.

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Potential innovators know that the large mass of existing patents held by IBM and Microsoft are likely to receive some share of revenues from any major new product.

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But since encryption and copy protection are so hard to define and delimit, this rule has turned into the broadest possible form of IP protection: once a software author has claimed that his or her work implements a copy protection scheme, that author can claim exclusive ownership of the right to produce any of a variety of add-ons, extensions, and accessories. No software is an island, entire of itself, so the ability to block competitors from producing interoperable software is an immense power that can be readily abused. Such abuses have already appeared in the courts, creating still more IP headaches for anyone who writes software, be it for music, electronic books, or garage-door openers.

chapter 2 Optimal Breadth

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Some people believe that a patent covers a new idea, but this is not the case: it covers only the physical machine, composition, or process implementing that new idea, as described by the detailed claims. In practice the patent covers a mix of idea and implementation, since the two are never truly separable.
Independent invention is not a defense against claims of patent infringement. If a new inventors idea and designs are along the same lines as those of a prior patent-holder, then the new inventor is still infringing on the patent, even if the two inventors have never communicated. Once the patent is in the public record, all inventors in the relevant field are presumed to be familiar with the work.

chapter 3 From equations to software

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Where is the line between software and mathematics? Mathematicians Alonzo Church and Alan Turing proved that there is none in 1936, no less.

chapter 4 Patenting math

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Thomas Jefferson, in a classic letter to a colleague, reasoned that allowing patents on pure ideas makes no sense:
It would be curious then, if an idea, the fugitive fermentation of an individual brain, could, of natural right, be claimed in exclusive and stable property. If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freel spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation.

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The federal district courts and the Supreme Court hear cases covering all of federal law; the CAFC hears mostly customs disputes and patent appeals and assigns a large proportion of the patent cases to a few judges.34 This is an exceptional concentration of interest: the scope of patent law is decided by a few people who work on nothing but patents and who deal exclusively with patent lawyers. Of course, the natural candidates for such a judgeship are current patent lawyers.
The goal of a bureaucracy, according to most social scientists, is to maximize its budget.35 For the USPTO, that means getting as many patent submissions as possible. For the courts, it means interpreting the law in a manner that puts as many fields of human endeavor under the courts scope as possible. After all, many judges are former patent lawyers and still have some interest in keeping the patent law business healthy. There is some evidence that the increase in the amount of patent litigation in recent years coincides with the pro-patent trend in the CAFC.36 Furthermore, there is a 97 percent correlation between log(patent suits commenced) and log(number of active patent lawyers and agents).37

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In view of this overspecialization, the nonpartisan National Academy of Sciences recommends changing the method of selecting judges to bring some fresh economic thinking into patent rulings, arguing that the few appointments to the federal circuit intended to support the courts expertise in patent law should not be confined to intellectual property practitioners and academics. Rather, the courts perspective should be broadened by appointing judges familiar with innovation more generally, including men and women with backgrounds in antitrust or finance law or, in addition to their legal training, in economics or economic history.41

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As an economist who has written a book on the matter, I propose that we take the question out of the hands of the courts. The courts only interpret the laws passed by Congress. They do not ask the truly important policy question: do software patents do more economic good than harm? It is up to the Congress to ask this question directly, and to write a clear law of software patents based upon the answer.

chapter 5 Profiting from Overbroad Patents
Rene comment : a lot of useful stuff in this chapter.

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Software patents are uniquely difficult to search because there are so many levels at which a program can violate a patent: the line, the function, the library, the program that ties the librarys elements together any of these could be infringing. Some patents cover single functions, such as the pop-up window of figure 1-1. Others are for components of larger programs, such as the functions that enable browsing with the <tab> key. Still others have broad coverage: the streaming media patent, for example, has a wealth of applications, thanks to the abstract nature of mathematics-in-code.

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Table 5-1 Motives for Patenting : The Computer Industry versus Other Industries
In other industries, the most common use of patents is to protect an innovation from being copied as per their intended purpose discussed in chapter 2. But in the computer industry, the most common reason for patenting is to gain a defense against lawsuits; protecting the innovation comes second, along with use in rent-seeking negotiations. Furthermore, the difference in responses between the computer industry and the overall industries surveyed indicate that its rent seeking motivations are more common in relation to the norm.

chapter 6 The Decentralized Software Market

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In short, patents in a decentralized market are Coases worst nightmare: every player needs to expend vast quantities searching for the owner of every part of every program, meaning transaction costs piled upon transaction costs. These costs will always exist in every field, but they are magnified in a dense, decentralized network of actors.

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As an aside, the political landscape of software is a manifestation of the collective action problem: a centralized group that stands to gain significantly from a policy will lobby more vehemently than a decentralized group of many people who all stand to lose from the policy, and so inefficient political decisions are often made to please the most concentrated and vocal interests.19 At the height of the European debate, centralized producers with large patent portfolios such as Adobe, Cisco Systems, IBM, and Microsoft spent a great many resources on lobbying the EUs decisionmakers.

chapter 7 Interoperability

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One class of standards includes the de facto standard established by a piece of software having the lions share of the market, such as Microsofts desktop operating systems. Indeed, many of Microsofts actions are perfect examples of a dominant player leveraging its dominance into greater profits by breaking interoperability between its products and those of others.

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Linux users who wish to watch their DVDs on their computers must search for xine D5D and then download the code from Brazil. But the standard Linux DVD copying software (cdrecord) blindly copies bits from one disc to another, making absolutely no effort to decrypt the data it is copying and is therefore entirely legal.
In terms of preventing the copying of copyrighted works, there is absolutely nothing that a person cannot do under the DMCA that could have been done without it. However, as demonstrated earlier, this new IP protection has made it possible for businesses to harass competitors in court in situations where this was not possible using any other form of IP protection.

chapter 8 Protecting text
Rene comment : a lot of very useful stuff in this chapter.

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Both patents on source code and copyright protect the text that implements the invention from imitation. The key difference between the two is that independent invention cannot be used as a defense against claims of patent infringement, meaning that a coincidental match between two patented algorithms would be grounds for a lawsuit. In a world where code is protected by copyright, there would be no grounds unless the second inventor had plagiarized the work of the first.

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What seems like a weaker standard for software stems from the fact that patents never need to declare obvious and trivial steps. In Northern Telecom v. Datapoint, one of the key cases asking what is adequate disclosure in a patent, the court concluded that the entire process of implementing a software concept is obvious to any programmer: The conversion of a complete thought (as expressed in English and Mathematics . . .) into a language a machine understands is necessarily a mere clerical function to a skilled programmer.4

The structure of software makes it very easy to write code quickly and relatively intuitively; the structure of a patent application makes it very easy to hide the fact that so little work was required. To turn three lines of code into a nonobvious and novel invention, describe it in language below the level at which a sane programmer would work. For example, to patent a procedure for doing a few arithmetical calculations using a programming language such as C or S, describe a set of registers that manipulate numbers represented in memory. To patent a form for entering numbers into a database, write a patent for a program to paint buttons and text boxes on a screen and then execute low-level functions to process the various operations users would perform. Of course, libraries abound that would allow such forms to be written with a few lines of code, but a patent claim mentioning just a handful of preexisting packages would have a slimmer chance of passing examination. Using this method, Brian Shuster turned the three lines of JavaScript? code in figure 1-1 into 42 claims. At the extreme, nothing looks obvious in assembly language; similarly, nothing looks obvious when it is described in the meticulous step-by-step detail of typical claim language.

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If someone cuts and pastes code from one program into another without permission, it is an undisputed violation of copyright. Identifying the violation in practice is another matter. First, two pieces of code that are identical may not be copies of each other; and second, one piece of code that looks nothing like another may actually be a plagiarism.

chapter 9 Policy recommendations
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The Federal Trade Commission (FTC) is in the business of preventing overbroad monopolies. Of late, the U.S. Patent and Trademark Office (USPTO) has been granting overbroad monopolies. In October 2003, in the spirit of its mandate, the FTC published a report stating recommendations to reform the patent system.1 Here are two that reflect the FTCs desire to have the patent system focus more on maximizing total economic benefit:

Recommendation 6: Consider possible harm to competitionalong with other possible benefits and costsbefore extending the scope of patentable subject matter.

Recommendation 10: Expand consideration of economic learning and competition policy concerns in patent law decision making.

These recommendations were actually somewhat contentious. In reply to the FTCs report, the Intellectual Property Owners Association (IPO) commented:

IPO does not . . . believe that the courts or USPTO should actively attempt to balance patent law with economic policy through strategies such as limiting the scope of patentable subject matter or denying the grant or limiting enforcement of a patent. IPO believes that such an attempt would profoundly undercut the foundation of the patent system. . . . The greater good is best served when the courts and USPTO grant and enforce patents without consideration to the net economic good or net economic harm caused by a single patent.2

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Not only do I (and the FTC) agree that we should make such evaluations, but some argue that it is Congresss obligation to do so, as indicated in Article I, section 8, clause 8 of the U.S. Constitution: The Congress shall have power to . . . promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. According to Lawrence Lessig, Stanford and University of Chicago law professor, this clause sets forth the precise reason for the powerto promote the progress of science and useful arts. It is for those reasons, and those reasons only, that Congress may grant an exclusive rightotherwise known as a monopoly.4 Not only does it make sense for patent law to be in harmony with economic reality, but, as Lessig emphasizes, it is Congresss obligation to ensure that patent law promotes rather than hinders progress, and to the extent that patent law does not promote progress, it is unconstitutional. It is in this context that this book was written, and on which this chapter focuses.

Glossary , References , Index
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