It is, however, practically impossible to know with reasonable certainty whether a new software product could be said to infringe some prior software patent. Patents are conventionally referred to as intellectual property. However, as James Bessen and Michael Meurer have explained in detail, patents differ substantially from tangible property in that their boundaries are often fuzzy and unpredictable. If patents do not give clear notice of their limits, they create a risk of inadvertent infringement. Vague patents also enable opportunistic behavior. For example, a patentee may, based on vague language, claim ownership of a technology unknown to the inventor, but instead first conceived by someone else.
This problem of uncertain patent boundaries is particularly acute with software patents. Software is an abstract technology. Software algorithms can be represented in numerous different ways, and even computer scientists sometimes disagree over whether two software technologies are equivalent. Thus it is not surprising that software patents are typically framed in abstract language with uncertain boundaries. As a result, a software developer, when shown a software patent, often cannot be sure whether the patent reads on newly developed code.
This difficulty is multiplied hundreds or thousands of times with regard to a complex software product combining hundreds or thousands of discrete components. A separate but related problem faces all software developers—that of the impossibility of patent clearance, or determining whether there are existing patents that may be said to read on a new product. There is no reliable, economical method for searching the hundreds of thousands of existing software patents. The clearance problem is made even worse by the existence of tens of thousands of applications that for eighteen months after filing are unpublished.
Thus, simply by virtue of producing and marketing an innovative software product, a software developer assumes the risk of a costly patent infringement lawsuit. In the U.S., software patents are more than twice as likely to be the subject of a lawsuit than other patents and account for one quarter of all patent lawsuits. The cost of defending a patent lawsuit frequently amounts to several million dollars. Such lawsuits involve technical issues that are difficult for judges and juries to understand, and so even with a strong defense the outcome is usually far from certain. If there is a judgment of infringement, the penalty may be an injunction ending further production and enormous monetary damages. Defense costs and litigation risks are so large that in most cases defendants agree to some payment to settle such cases. Even when claims appear to have no valid basis, targets frequently agree to pay for licenses based on the mere threat of litigation.
