Those who follow the academic literature on software patents may notice a trend over the past few years: academia has slowly turned from predominantly arguing software should not be patentable and how patents spell the doom of the software industry, to how patents help the software sector and what kinds of reforms are needed to sustain their beneficial effects. Now, the more productive discourse in patents discusses optimal tailoring towards industries and business models, rather than remaining stuck in the 1990s.

Recently, one of the most influential scholars in patent law, Professor Robert Merges from Berkeley, talked about shifts in patent policy discourse at a UT Austin patent conference. As an initial skeptic of software patents, Merges' comments are especially noteworthy as they show how perspectives on software patents have change as evidence of their effects manifested over the past decade.

...there was a time, and there were people (...myself included) who thought patents would very seriously harm the software industry. For them (including me, or at least, some past version of me) it is good news indeed that they (we) were wrong. By almost any measure, the software industry in the U.S. is doing really quite well.

...history has largely answered the "section 101" question, viz., is software patentable subject matter, and should it be? There is no doubt now that it is, and the normative question is dropping away in importance. Thus the interesting questions now concern the contours and details of software protection doctrine.

In other words, lets get to the real issues...

Patent critics, especially those who want to prevent the patentability of software in the EU (the "Americanization of the EU patent system") often ignore the economic data most relevant to their arguments. If well crafted and implemented, a software patent regime in the EU would confer the same benefits as the American system.

Entry and competition are robust in the software industry. Firms are obtaining patents to assist in financing, and to use as strategic weapons in ongoing battles over market share. Courts are limiting software patents ...to adjust the value of the property right to the quantum of technical contribution represented in the patent’s specification.

...software firms are doing more than simply cynically stockpiling patents; they are putting real effort into seeking and obtaining high quality patents, patents that demonstrate significant earmarks of quality...

The international landscape is now common context in software patent debates. While patent opponents often rely on the messy judicial history of software patents in the US to make their point against software patents, this is not pertinent to whether these patents should be accepted somewhere like the EU, which is considering a legislative proposal rather than codification of judicial interpretation. The US judicial history of software patents would be less relevant than their economic justifications. Yet, these critics in the US do make some good points about need for American reform- one can interpret them as proposing how software patents can start off on a good start in international economies: by tailoring policies for software patents of narrow scope, high quality and stringent disclosure.

Merges gives an example of how international regimes compare in their patent policies.

...as a foreign country moves up the learning curve in the software industry, inventors ...from that country receive more (US) patents. For example... inventors from Israeli software firms received far more patents than did those from Ireland and India. The latter two countries have sizeable software industries... Nonetheless, Israeli inventors receive far more U.S. patents... Israeli firms... perceived as being the source of more innovative software, patent much more heavily than their Indian and Irish counterparts... (this) is certainly consistent with the view that patents correlate closely with R&D and innovation...

Merges' past comments on FOSS have been interesting. He sees FOSS as a counter-balancing (not displacing) reaction to IPRs business models. His new insight is that the demarcation between "open" and "closed" may not be quite right. Merges cites the practice of firms giving away or waiving assertion on patented technologies. This allows firms to leverage flexibility in the patent system to provide more value to their customers, while at the same time preventing copying by competitors. In view of traditional "IP vs FOSS" debates, Merges comments suggests that while FOSS may be a reaction to IPR practices, IP law gives firms many ways of leveraging their assets, making FOSS licensing an unnecessary option in some instances.

"...there is no direct link between obtaining software patents and locking up technology against all comers. Indeed, a single firm can both obtain and enforce patents (against some), and freely license those patents (to others). It might even be said that the choice to “selectively waive” the property right is one of the key advantages of obtaining patents."

Finally, in this presentation, Merges gets at the heart of FOSS arguments that capital is not needed for innovation. Merges points out a distinctive trait of the American innovation economy: the venture capital system. The importance of VC supports the argument surrounding IP; IPRs help firms invest and appropriate capital. Merges also attributes the advancement of technology itself to enabling new business models and forms of competition to growth of the software industry. This is not to downplay the importance of regulatory measures in the industry's growth, but to remind us that software patents exist within an innovation environment with many other forces, and so far they are working well with them.