Many people working in the software industry seem to be coming to the conclusion that patents do more harm than good to their industry and therefore advocate abolishing software patents. The reasons they feel this way are pretty apparent. There are so many obvious¹ patents like the Eolas patent of Amazon’s one-click patent that any major piece of software is probably more likely to infringe on one than not. Something is pretty clearly wrong when people are spending more time worrying about accidentally infringing on someone’s patent than struggling with the problems the patented inventions solve. However, not all software patents are so unreasonable.

Consider google’s (well stanford’s) PageRank patent. Recognizing that one could create a useful measure of a page’s importance by summing up the importance of the pages linking to it and realizing that this could be efficiently computed using tricks from linear algebra was anything but trivial. Indeed, this kind of non-trivial application of mathematics to an ill-defined problem (return the best search) is a prototypical example of the sort of discovery that benefits from patent protection. Society can derive great benefits from these kinds of discoveries and money will lure people with the expertise to solve these problems away from pure mathematics or the sciences but without the ability to patent the discovery the financial incentives wouldn’t exist². While most software patents are more like the 1-click patent than the PageRank patent there is no shortage of real world problems that are crying out for a similarly brilliant solution.

In the face of examples like google’s PageRank patent it’s tempting to say that software patents are just dandy and the real problem is obvious patents. Unfortunately, it’s not that simple. Consider a hypothetical patent on the use of a LRU (least recently used) cache for texture data in a MMORPG client³. It’s certainly obvious in the sense that any decently skilled software developer would consider that solution if he was asked to solve the problem but until you actually try this design it’s not clear that an LRU cache would work. Maybe players don’t backtrack much so an LRU cache would simply waste resources on rooms the player won’t see again for awhile. At least in this example it seems clear that simply noticing that a fairly obvious approach solved the problem shouldn’t warrant a patent. The cost of actually testing out the ‘discovery’ is quite low and usually there are only a few obvious approaches to try.

However, such a rule would be totally unworkable in another industry where there might be a vast array of potential approaches that experts in the field would agree seemed promising but the cost of investigating them are quite high. For instance in the pharmaceutical industry everyone might realize that a certain large class of compounds are promising candidates to treat depression but actually evaluating each of these compounds for efficacy and safety is very costly. Incentivizing drug development requires that we let the pharmaceutical company patent their discovery that compound 5043A1 actually works to treat depression.

Ultimately I think the real problem stems from the fact that we are lumping two very different kinds of invention into the patent system. There is the first type of invention, like the google PageRank system, that represents a flash of inspiration to try something that no one else thought of and then there is the second type of invention that consists of the discovery that some potential solution really works. Ideally the patent system would protect the first kind of discovery pretty broadly but only protect the second sort of discovery in industries where it requires considerable resources to ascertain which of many potential solutions succeeds.

So I finally got my application in for the NSF postdoc and got some needed sleep. So instead of working on my math like I should be now I went and downloaded the new Radiohead CD, “Rainbows.” Now I don’t actually like Radiohead that much so I didn’t pay anything at all¹ and that’s a perfect example of the inefficiency of the current copyright system. I’m likely to get some positive utility out of this (satisfying a hoarding instinct if nothing else) and this utility is a pure loss on a normal copyright system. However, it’s pretty annoying to hear all the people on the media and in forums act as if the fact that people are paying Radiohead for their CD shows that this is a plausible alternative model.

Even paying $0 for real honest reasons (worth less to me than transaction cost of using a credit card) even I was inclined to feel a little bit guilty and no doubt this is what causes people who actually like Radiohead to chip in a reasonable amount. But one feels guilt primarily because you feel that Radiohead is somehow stepping out on a limb by trusting users to set their own price. If this was ever to become a common practice that pressure would disappear. More critically is that the very people like me this system benefits will cause it to break.

People have strong intuitions of fairness and if you ever tried to distribute music more generally with this sort of system people would start feeling like suckers when they pay twice what their friend did for the music. Ultimately there will be an inevitable slow creep to the bottom as people check with their friends and see that their only paying $6 so that’s not cheating if I do that or come up with other reasons why it’s okay not to pay a bit less. I mean hasn’t everyone someone justifying their use of P2P by saying they would buy music if only the studies didn’t produce such crap? The same process of self-justification would start to happen with self-priced products as well. Besides, who is going to decide to buy 5 CDs worth of music they only sorta like for their car trip because they only have $15 to spend and they value the CDs they really like more than that?

No, I’m afraid solving the inefficiencies of the copyright system will require a fundamental change to the system of IP for creative content. Some means of truly collective purchase is required and the best system that I can think of at this point is to put works in the public domain after 3 years or so with a taxpayer funded system that compensates content producers based on numbers of tracked downloads from some central online repository. Maybe some clever person can figure out something better but as IP fills a bigger and bigger role in our lives the unacceptable inefficiencies of the current market become less and less bearable so sooner or latter something will change.