Are software patents dead?

I’m not a legal expert, so I’m mainly just gathering information, but it sure looks to me like the patent regime as it relates to software is in for fundamental change thanks to a ruling in the U.S. Court of Appeals for the Federal Circuit on Thursday. Links:

• Inside Counsel has a story on the case, in re Bilski, from last year.
• The Wall Street Journal’s story on the ruling.
• The Chicago Law School Faculty Blog has an outstanding post, explaining the 1998 State Street Bank ruling that led to this case, the background of this case, and the three dissents in the 9-3 ruling. The title says it all: In re Bilski: The Fed Circuit Tells Inventors to Stuff It.
• Gene Quinn (a patent attorney who favors the existing patent regime) reports on the ruling and reflects on the implications.
• IP reporter Joe Mullin rounds up reactions. He argues that the decision is not as monumental as others seem to think.

For what it’s worth, I don’t think that the patent regime as it exists today provides an incentive for individual inventors to create inventions. Most of the patent activity, especially in the world of software patents, is sponsored by large organizations who have the infrastructure and budget to try to patent everything they can. I’ve worked at a number of small companies and we’ve never been able to patent much of anything. We’re too busy coding. On the other hand, my friends at large companies are constantly being encouraged to file patents on everything they work on.

The original idea behind patents is that they’d protect the little guy from having his ideas copied by a company with deeper pockets, but I don’t think it’s worked out that way.

The patent system is complicated, and complicated systems favor people with the resources to game the system. It’s why rich people get more tax breaks than the rest of us — they have more to lose and can spend more to exploit loopholes in the tax system. It’s why people in World of Warcraft who can play 12 hours a day do better those that can play 1 hour a day. They have the resources (time) to invest in exploiting every inefficiency they can find. And it’s why companies like IBM, Microsoft, and Apple are always accumulating boatloads of patents.

If this ruling is as broad as some are arguing, it clears the field for startups who want to go out and build a product without the fear that they’ve stepped on one of the thousands of nebulous patents that have already been filed. And that’s to say nothing about the advantages for open source software, where the types of patents that seem to have been eliminated by this ruling have been an actual barrier to adoption.