The Motley Fool Previous Page

IBM and Microsoft Just Gutted This Sensible Patent Bill

Anders Bylund
November 21, 2013

If IBM (NYSE: IBM) can agree with Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL) on anything, it would have to be about the value of software patents. So maybe I shouldn't be surprised to see that the unlikely trio put their lobbyist armies together in order to erase a troublesome software patent provision from the bipartisan Innovation Act. And, given their large political contribution budgets, it's hardly shocking to see their patent-supporting efforts bear fruit.

House member Bob Goodlatte's patent reform is moving forward, but left its teeth behind in an early review stage. Image source: Rep. Goodlatte's official site.

That's exactly what happened to the Innovation Act, a bipartisan bill that was introduced by House Judiciary Committee Chairman Bob Goodlatte (R-Va.) in late October. The bill aimed straight at abusive "patent trolls," with several provisions making it harder and more expensive to wage baseless patent infringement battles.

What's new?
The Innovation Act just passed review by the Judiciary Committee with a solid 33-5 majority, which sets it up for debate and votes on the House floor. So that's one big step forward for Goodlatte's patent reform ideas.

But the version that moved forward is not exactly Goodlatte's original vision. The original bill met with strong resistance from the software industry. Via the so-called Business Software Alliance, Microsoft carried the flag for this lobbying effort that attacked only one of the act's six provisions -- but arguably the most effective one.

The BSA supported Goodlatte's bill in general, but hated the sixth provision to treat software patents the same way business financial methods are treated. The "covered business method" patents portion would have moved patent review cases out of federal courts and into the Patent and Trademark Office's internal processes. This is a faster and cheaper avenue than the eternally clogged court dockets.

That amounts to "disrupting the patent system itself," according to the BSA. Change is scary, especially when your members are sitting on some of the largest patent portfolios in the known universe -- where some patents describe perfectly acceptable and new innovations but others may be of lower quality.

Making the case for staying put
"We understand the legislation is aimed at eliminating overly broad patents, but the extension of post grant review and the significant changes that would result do not justify this broad change," Microsoft argued in an obvious attempt at astroturfing the issue. That strident quote comes from a letter showing the solidarity of 14 Redmond-linked software developers. By contrast, a letter supporting the full-blown covered business method provision came with signatures from nearly 360 developers and small businesses.

But might often makes right. Broad-based support for a healthy reform idea gave way to the barking of two respected Dow Jones (DJINDICES: ^DJI) members, plus Apple and a smattering of lesser lights. Goodlatte bowed to the blue-chip pressure and removed the contentious provision himself.

Why does Microsoft care so deeply about protecting the software patent status quo, and why do fellow Dow Jones members Apple and IBM support Redmond's call to inaction?

The BSA, where all three of these companies are card-carrying members but Microsoft is the brains,