path: root/teksting/Patent_Absurdity_transcript_v2.2.srt

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These people are lined up to hear the oral
argument in the first software patent case
to be brought before the Supreme Court
in almost 30 years

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<i>- Do you guys want to introduce yourselves
and spell your names?</i>

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- Yeah, uh, uh, Bernie Bilski. B - I - L - S - K - I

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- Rand - R - A - N - D, Warsaw - W-A-R-S-A-W

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<i>- Could you guys tell us in a nutshell
what you've invent?</i>

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- The invention is a guaranteed energy bill,
which is like a budget bill without a true-up,-

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-and it's a method of hedging both sides in the
transaction. So, behind giving consumers,-

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-energy consumers are guaranteed energy bill.
There's a lot of mechanics.

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And the mechanics involve financial transactions
between energy consumption,

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or energy consumers, and the energy providers.

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THESE MEN HOPE TO GAIN A PATENT ON
A BUSINESS METHOD OF HEDGING
COMMODITY RISK

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And that's what the invention is in a nutshell.
It's a method of generating guaranteed bills-

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-for consumers and, also, for protecting
energy company earnings.

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The outcome of the case will have profound
implications for software

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- The Bilski Case itself is someone applied for a
patent on a business method or software,-

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-and patent office rejected it. And now this is
that person suing the patent office, saying-

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-"You have to grant me that patent."

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This case is about what does it mean to be
a patentable process.

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And so, since software patents fall under the
category of processes, because they are not-

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-the machine, and they're not a composition of
matter, which are some of the other categories-

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-of things that are patentable. This case will
define what it means to be a patentable process.

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<i>- What about justice Roberts? He said, you know,</i>

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<i>basically your patent involves people picking
up the phone and calling other people.</i>

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- It could be reduced to that level, as the certain acts
that are performed, but it's much more than that.

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It has to do with selling commodity that effects
price to one party, selling to a different party

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at a different fixed price,
identifying counter risk positions.

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If you look at claim four in the patent, we have things
called claims which describes what the invention is, -

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-there's a long mathematical formula in there, that
didn't exist in nature or anywhere in the literature,

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that these very inventive folks come up with.

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<i>- Once upon a time math was not patentable.
And nowadays we can have someone -</i>

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-like Bilski coming in and saying: "You know,
I worked hard on this mathematical equation -"

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"- and therefor I should have a patent on this
information processing method here."

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<i>- You mention in your claim that there's a very long
calculation shown there.</i>

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<i>Do you think a strong calculation or good math
is a basis for a patent?</i>

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- It can be.

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- The basic process of writing software is that you
take a broad algorithm of some sort, you know, -

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-some means of doing something with abstract data,
and then you apply variable names.

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- So for our first derivation let's start with a simple
matrix, a matrix of values.

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And we'll find the mean of each column, mu one,
mu two, mu three.

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And we're gonna define Y to be X minus
mu for each column.

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Now if we have some other factor, X, we can take
X dot S and find the projection of X onto this space.

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This is called the singular value decomposition (SVD).

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Now, here's the trick. Here's the great part. Let's
say that this first row, X1, equals sexuality.

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Let's say X2 equals "Do you own cats?"

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And X3 equals, I dunno, affection.

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Ok, so, now we'll also say that, let's take a factor
J1 equals Jane's responses on this survey.

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Let's say J2 equals Joe's responses.

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Now let's do the same projections as we did before.
We're gonna take J1 dot S subtract J2 dot S.

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We're gonna find the distance between these two
points, and we're gonna call that compatibility.

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And in that simple step, we've derived patent
number 6 735 568.

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The trick of our derivation was that before with
the SVD, we had abstract numbers.

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What the guys at eHarmony did to get this patent,
was to assign names to our variables.

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So instead of an abstract X1 we have sexuality,
instead of X2 we have a preference for cats.

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And by making those assignments, by
setting variable names in this matter, -

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-they were able to take an abstract concept
and turn it into a patentable device.

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- What we want to do according to the heads of
our patent institutions, is take mathematics and

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slice it up into as many slices as possible, and hand
those slices out. And, say, if you do a

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principle component analysis, if you multiply matrices
for dating sites, we'll give that to eHarmony.

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If it's for equities we'll give that to State Street. And
so on and so forth.

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And what we're giving out is basically
exclusive rights to use mathematics, -

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-to use a law of nature, in whatever context.
And what we get in return is basically nothing.

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- The patents is a government grant, in the US it
arises out of the constitution.

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- The Framers included the provision for granting
exclusive rights to inventors in our constitution,

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and the belief was that that was important in order
to reward people who had made technological -

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- advances that would benefit society.

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- The rights that they are granted are not the rights
to do the things that they invent, -

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-but the right to exclude others from doing
that thing.

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- So the idea was you have a machine or a thing,
which is not previously described in any literature, -

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-and which no skilled mechanic could figure out
how to make given what is described in literature, -

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-and for that you get a patent.

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- The basis for determining what is patentable
subject matter has continued to evolve -

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- over the last 200 years of our national existence.

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- In 1953 the Patent Act was modified by Congress,
to add the words "or processes" to the word -

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- "product" in describing what could be patented.

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The Congress which did that was plainly thinking of
processes of industrial manufacture. Processes -

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- that produced something at the other end. Float
glass on molten tin, and it'll become flat, or whatever.

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- And it's unlikely that anybody thought of process
at that time in terms of computer software, -

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-because we didn't have applications on computer
software for many years after that last revision -

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- of the Patent Act.

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- Back in the late 70s the patent law was interpreted
such that you couldn't patent software. It was -

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- considered a mathematical algorithm,
a law of nature.

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The legal world changed. The environment was
quite different starting with some decisions by-

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- the Supreme Court, like Diamond v. Diehr.

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- The patent applicant was coming in with a new
process for curing rubber. The temperature, and-

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- the preciseness of the temperature is essentials
in curing rubber well. And the innovation -

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-that was being patented in this case was an
algorithm to monitor a thermometer -

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- that was basically in the process and determined
when the rubber needs to be released and cooled.

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- And they said "Processes for curing rubber are
patentable, there's nothing new about that, -"

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"- the fact that they use a computer in implementing
it shouldn't change anything."

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- The Supreme Court makes it clear that you can't
patent software, because it's only a set of -

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- instructions, or an algorithm. Abstract laws of nature,
algorithms, are unpatentable in the US itself.

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However, then there was the creation of the
Court of Appeals of the Federal Circuit.

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- The problem being solved, in some sense, begins
with the fact that trial court judges always -

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- hate patent cases.

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And the reason they hate patent cases is, for a single
trial judge, a lawyer who has spent his/her life-

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-doing litigation, a patent case in which she/he is going
to be required to find detailed facts about how paint is-

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-made or how computers work or how radio broadcast-
ing operates, is an opportunity just to made into a fool.

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- Congress is attempting to change the system in which
patent cases are litigated.

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But instead of changing who tried patent cases,
Congress left a non-specialist district judge-

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-in charge of the trial. And then created a new court of
appeals called the Federal Circuit,-

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-who's job it was to hear all appeals from patent cases.

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Rapidly, of course, this court filled up with
patent lawyers.

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And the patent lawyers then made the law in the court
of appeals that applied to all those district judges-

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-who were still making non-specialist decisions of
which they were afraid.

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Naturally the Federal Circuit turned out to be a place
which loved patents.

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And it's chief judge, Giles Rich, who lived to be very
very old and died in his late 90s,-

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-was a man who particularly loved patents on
everything.

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The Federal Circuit court under Giles Rich sort of broke
Diamond against Diehr lose from it's original meaning,-

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-and came to the conclusion that software itself
could be patented.

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- The Supreme Court basically left everything to
this court to decide.

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- The PTO actually used to reject patents on software,
like in the early 1990s, and they did not allowed them.

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And the applicants would appeal those
rejections to the Federal Circuit.

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- In the world of machines you show the Patent Office
the machine,-

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-and you've got a Patent Office who's claims were
"I claim this machine."

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In the world of computer software there was no way
of defining what the unit was.

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I don't claim a program, I claim a technique that any
number of programs doing any number of things could-

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-possibly use. The consequence of which is very rapidly
we began to build up as real estate that somebody-

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-owned and could exclude other people from a whole
lot of basic techniques in computer programming.

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- What happened was, starting in the mid-90s, the
number of patents on software started soaring.

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An industry attitude started changing too.

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So you had Microsoft, which originally didn't deal
with software patents very much at all,-

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-I guess they got sued in the early 90s
by Stac and lost a, uh,-

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-significant judgment against them,
they started patenting.

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- They're gonna have their own set of patents.

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So that if a major patent holder threatens them,
they can fire back.

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- Gradually companies like Oracle were forced to set
up patent departments just for defensive reasons.

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They had to patent their stuff so that they had some-
thing to trade with the companies that had patents.

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<i>Mark Webbink:
- And so the arsenal started to develop. By year 2001
Microsoft now holds thousands of software patents.</i>

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<i>Oracle was probably approaching a thousand software
patents. Adobe...</i>

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<i>James Bessen:
- All of them become more and more aggressive.
Patenters and some of the ones who were against-</i>

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<i>-software patents ended up suing other companies,
and so what you had is an explosion of patenting first-</i>

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<i>-and then an explosion of litigation.</i>

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By the late 90s about a quarter of all patents
granted were software patents.

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About a third of all litigation, patent litigation,
involves software patents.

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About 40% of the cost of litigation is
attributable to software patents.

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And those numbers have been going up.

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So Charles Freeny invented a kiosk that goes in retail
stores, and the idea is you'd come in,-

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-you could select the music selection, swipe your
credit card, put in a blank 9 track tape,-

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-and this is is how long ago this patent was, and it
would write that music selection onto the tape-

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-and you could go away with it.

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The patent was drafted in a very vague language so
there were terms like "point of sale location",-

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-and "information manufacturing machine".

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And Freeny eventually sold this patent to somebody
who wanted to interpret those terms very broadly.

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To basically cover e-commerce.

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So here was this very limited invention for this kiosk,
and he wanted to interpret those terms in such a-

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-broad way so that it would cover transactions that
took place over the Internet,-

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-you could make them in your office, in your
bedroom, in your house, anywhere.

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And so it covered virtually all of e-commerce.

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The courts initially didn't agree with that interpretation
but they appealed it, and the appellant court largely-

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agreed with them, and they were able to extract some
settlements out of well over a hundred companies.

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But the significant thing is, here is this patent you
can't tell what it's boundaries were until you get to-

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-the appellant court. What most people thought
it's boundaries were turned out to be wrong.

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- One of the key properties of programming languages
is they're very very precise.

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You can look at any program language in any language,
in C, Python, any language like this,-

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-and you know exactly what it's doing. You can look
at two pieces of service code and you can say-

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"Are this doing the same thing or different things?"
And we do this because computers are very picky-

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-and we need to tell the computer exactly what we
need to do in order to accomplish some task.

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The language patent lawyers use is almost the opposite.

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There's an advantage in being vague, and being broad,
being non-specific, because the broader your language-

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-the more things you, sort of, catch in your net.

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- So it is a large problem in our patent system just
defining simply what is the context or the borders-

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-of the patent. And what does it cover,
and what does it not cover.

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And that ambiguity causes a lot of chilling effects,
because people are going to avoid doing anything-

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-that could possibly be covered by the patent, even if in
reality the patent wouldn't cover what they wanna do.

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- Let's imagine that in the 1700s the governments of
Europe had decided to promote the progress of-

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-symphonic music, or as they thought, promote it.
Will a system of musical idea patents, meaning-

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-anybody who could describe a new musical idea in
words could get a patent which would be a monopoly-

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-on that idea and then he could sue anybody else
that implemented that idea in a piece of music.

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So a rhythmic pattern could be patented, or a sequence
of chords, or a set of instruments to use together,-

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-or any idea you could describe in words. Now imagine
it's 1800 and you're Beethoven, and you want to write-

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-a symphony. You're gonna find it's harder to write a
symphony that you won't get sued for, than write-

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-a symphony that sounds good. Because to write a
symphony and not get sued you're gonna have to-

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-tread your way around thousands of
musical idea patents.

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And if you complained about this, saying it's getting in
the way of your creativity, the patent holders would-

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-say "Oh, Beethoven you're just jealous because we
had these ideas before you."

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"Why should you steal our ideas?"

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- People have been making music for thousands of
years. There were never any need for patents in-

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-the field of music. And since the computer industry
has made programming possible, people have been-

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-developing software as well, since right from its
beginning, there was never a need to have patents-

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-in this field in order for the activity to happen.

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- Almost everything we were doing back before 1980,
1981, in those things, patent played no role in it.

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Cut & paste, the embedded ruler in a word processing,
word wrapping, a lot of the things that are real-

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-important and we take for granted, and that are much
more innovative in many ways than patents we have-

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-today, 'cos patents can be on some very minute
things, that's the way the law works.

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Those things happened, we had great
advances without patents.

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- One of the world's most respected computer scientists,

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Donald Knuth, has said that if software patents had
been available in the 1960s and 70s when he was-

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-doing his work, that it's probably the case that
computer science wouldn't be where it is today.

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There would be blockades on innovation that could've
seriously prevented the kinds of technical solutions-

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-that we take for granted today.

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- The programmer writing a long program might
conceivably need to check whether 500 or-

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-thousand different techniques are patented, and there
is no way that she possibly could.

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- The Patent Office issues hundreds of software patents
all the time. Every Tuesday they issue 3,500 patents-

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-and a large number of those relate to software. It's
just impossible to review all those patents every week-

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-to make sure you're not doing something that could
infringe them.

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- So there's a provision in the US patent laws that
basically holds patent infringers, ahem, at I guess-

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-a greater liability if they are shown to willfully
infringe. So basically the idea is that if you knew-

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-about a patent and you infringed on it, you should
have a stricter penalty than if you didn't know about it.

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But what this results in is a situation where there is a
real disincentive to follow what patent has been made-

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-and what new inventions there has been through the
patent system, because if you read every patent or-

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-there's evidence to show that you have read patents,
then you are liable for willful infringement, you knew-

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-about the patent and you infringed it anyway, and the
penalty is triple damages.

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<i>- A number of people suggested that software
should be removed from the-</i>

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<i>-scope of patentability. Can you comment on that?</i>

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- Yes, well, I obviously disagree with that. And I don't
believe that software should ever be removed.

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It's one of our greatest sources of technical innovation
in this country. And to come up with a test that would-

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-somehow eliminate software would,
I think, be a disaster for the economy.

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WOULD IT THOUGH?
- Mike and I estimate that outside of pharmaceuticals
and chemicals the patents, sort of, are acting like-

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-10 or 20 percent tax. You know, the small developer
developing something, down the road he has to pay-

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-that tax. And every small company I know in software,
as long as they've been around a few years and hit-

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-the market, somebody is asserting a patent against
them, they're running into some potential difficulties.

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They very frequently feel obligated to get patent
themselves for defensive purposes.

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So all of that activity is a tax. It's not something that's
helping them innovate, it's an unnecessary activity.

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- The primary thing we do is an issue tracking system
called RT, or Request Tracker, so it's customer service,-

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-help desk, bug tracking, network operations, anything
where you've got a whole bunch of tasks that need to-

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-get kept track of. And you need to know what
happened, what didn't happen, who did it,-

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-who didn't do it, when. It's kind of a to do list on
steroids designed for a whole organization.

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Pretty much everything is open source or free software,
under one license or another.

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We'll get consulting customers or support costumers
who add indemnification language to our standard-

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-contract or need us to sign theirs. And it says, in the
standard legalese, it's gonna say something like-

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-we indemnify and hold them harmless and agree to
pay their legal fees and sacrifice our first-born, if-

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-something happens and someone discover that our
software is violating a somebody else's patent.

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It's very very rarely the case that we end up signing
something that has that kind of language in it.

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But it eats up a lot of legal fees.

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- Look at the innovative people in software in ICT,
and ask "Would they be better of if the patent system-

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-was abolished?" The answer is probable "Yes".

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- Who's benefiting? Patent lawyers is number one.
Number two, you've a small number of so called-

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-trolls who are benefiting, but it's not clear even most
of them is making much money.

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You're seeing more recently, in the last 4 or 5 years,
companies like Intellectual Ventures and-

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-hedge fonds who are acquiring large volumes of these
trash patents and using them to extract hundreds-

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-of millions of dollars from companies. They're
benefiting, they maybe the biggest beneficiaries.

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- There's a lot of bad press in the last few years
about the harm that's caused by software patents.

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And we think that's had a political influence on the PTO
to get them to slow down their issuance and start-

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-rejecting them, and that's what has
resulted in the Bilski case.

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- Well the biggest, first bad press story was the
Blackberry patents, where all the Congressional-

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-representatives have their Blackberrys and there was
a company called NTP that sued the manufacture of-

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-Blackberry saying that all Blackberrys infringed it's
patent. Well, NTP was this company which is just a-

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-one person holding company, they didn't make any
products or services themselves, and so-

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-this got a lot of attention in the Wall street Journal and
Washington Post, and Congress persons were really-

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-upset that they may lose their Blackberrys and they
may not be able to communicate efficiently.

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So that caused a lot of attention, then you had all these
patents on banking methods and imaging for checks,-

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-those patent holders were asserting against the
banking industry, and the banking industry has-

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-a lot of influence on Capitol Hill, and so they've been
going down there and saying "Look, these types of-

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-patents are causing us lots of harm." Then you add
into that the whole patent troll phenomenon in-

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-Eastern District of Texas, with small patent holders
suing large IT companies like Google, Microsoft-

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-IBM and Hewlett Packard. And all these companies
also have legislative influence, and they've said-

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-"These types of patents are causing real harm to our
business, they're costing us jobs, they're increasing-

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-the price of products and services that we offer to our
customers, and you need to do something about it."

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- The situation we find ourselves in is that the lower
court, the Court of Appeals of the Federal Circuit,-

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-is essentially a court for patents,
for hearing patent cases.

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And this is the first time the Supreme Court has
taken up that scope of patentability.

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And specifically this test that was implemented by
lower court, does talk to software patents.

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And so, it's basically a 20 year history of software
patents being granted due to the lower court.

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And so, we're hoping that the Supreme Court will
clear up the mess that the lower courts created.

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And restamp it's authority which basically said that
you cannot have software patents.

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- When you saw the arguments that where brought
by Bilski's lawyer, the patent bar is in some sense-

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-an organized lobby. And an expansive subject matter
that's available to be patented is in their interest.

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And it's clear that that was frustrating to some of the
justices. Some of them were frustrated by how-

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-expansive patentable subject matter has become.

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- They seem somewhat dismissive of the idea that
you could patent this particular idea.

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- I think people has a hard time getting over the idea
that you can get a patent on hedging commodity-

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-risk. But if you actually look at the claims and look
at what's in there, it is a process and it's no-

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-different than any other process. It just may be
that it's not the way that they thought of patent-

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-law in the past.

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- We were encouraged by the comments by the
justices which showed that they were skeptical-

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-and which suggested that they understood that
software is little more than a series of steps,-

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-that could be written out as mathematical formula,
or written out on a piece of paper, or, as was-

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-mentioned by one of the justices,
typed out on a typewriter.

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- Software patents on a general purpose computer
have never been explicitly endorsed by this court.

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And this court has also shown no compunction about
reversing rules that've held for a very a long time.

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They clearly thought that the petitioners here was
trying to get a patent on something very basic,-

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-some basic forms of human activity.

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MORE THAN 200,000 SOFTWARE PATENTS
HAVE BEEN GRANTED IN THE U.S.

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PROGRAMMERS FIND IT INCREASINGLY DIFFICULT
TO WRITE SOFTWARE THEY WON'T BE LIABLE
TO BE SUED FOR

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NOW IMAGINE...

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Transcript version 2.2 by Martin Karlsson.
Licensed under CC-BY 3.0