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Software development speed makes patent offices and FTO less valuable

Tech companies say freedom-to-operate searches are becoming more difficult because patent registers are less reflective of the landscape and subject matter is more difficult to find

Long considered an integral element of patent prosecution, freedom-to-operate searches are becoming less valuable to software-focused businesses, according to in-house lawyers at Uber and five other tech-focused firms.

Sources say they and their competitors are developing programs so quickly because of technological advancements and agile development methods that patents are becoming increasingly less reflective of the software landscape by the time they are published.
They add that there is usually an 18-month gap between filing and publication where innovations are kept confidential and may be advanced or changed considerably, which makes patent registers unreliable for identifying up-to-date prior art.
“Freedom to operate is an imperfect tool for detection,” says Chris Storm, legal director of emerging technologies at Uber in the US.
“We use it in certain situations; but frankly, in areas such as AI, innovations come so quickly. Some of the most relevant art will be filed in the 18-month window between filing and publication and we will likely decide on the direction of the tech before that patent is issued.”
He adds that in those situations, there is usually little need to conduct FTO searches and thus it makes little financial sense to undertake them a lot of the time.
The head of IP at a bank adds that there seems to be a trend of reluctance towards conducting FTO searches related to software innovation, and agrees that the rationale is that patent registers are a poor indicator of risk, given the problems around patentablity and framing the technology for search purposes.
“This would appear to be at odds with the one of the main purposes of the patent register – to give notice to third parties of what technical innovations have been protected,” he says.
The associate general counsel at a bank in New York adds that FTO is not a routine part of the patenting process for every new product in his business, but is rather something that the company will consider on a case-by-case basis.
“We do not do pre-emptive searches, but that does not mean that you do not do a degree of searching,” he says.
But development speed and its impact on patent registers is not such a pressing issue in every software area. The chief IP counsel at a financial exchange notes that FTO has become redundant in some areas such as applications, but that searches are still useful for some long-life technologies such as infrastructure software.
Johnny Simonsson, the head of IP for Nasdaq in Stockholm, another financial exchange, notes that there is less of an appetite for patent protection for extremely fast-moving technology development, where the products created are fleeting novelty items with a very short shelf life. 

In technology areas where the life expectancy of created goods and services are longer, however, there is still a healthy interest in securing the intellectual property from investments in R&D. 


Search high-tech and low

On top of speed factors, identifying software prior art has been made more difficult by the industry’s investment and focus on black-box technologies, such as AI, which are almost impossible to spot.
The director of IP at fintech company says that black-box technologies do not give counsel much to work on because they create outputs that are too difficult for human beings to understand.
These technologies are being incorporated into some of world’s most highly awaited technologies, including autonomous vehicles.
But even before black-box tech was so popular, relevant subject matter was hard to spot in the software industry. The senior patent counsel at a large tech company points out that computer-implemented inventions can be presented in patent claims in many different ways, which has always made identifying similar or even identical inventions difficult.
“For us, the problem is less about the speed of tech development and more about the language issues and sheer number of patent applications being filed,” says the high-tech source.
The head of IP at the bank adds that many of the issues with computer implemented inventions stem from the inherent difficulty in describing software related inventions in a consistent manner, so that they can be more effectively examined.  I would quite like to see some fresh thinking about how that could be improved.
In-house counsel point out that these challenges combined have made FTO searches far less important in the patenting process – and that fact represents a failing of the public patent-register system to some in-house lawyers.
The head of IP says that the point of public IP registers is to provide transparency around rights that ensures people do not accidentally infringe a protected invention.
“More importantly, registers are there so that people can replicate and build on an invention when that protection expires,” he says.
“If people are not using the register to see what is out there, that is quite a large failing in my view.”

He adds that he would like to see some better initiatives for how the software initiative could be improved, such as those set out in chapter three of a letter sent from Microsoft and Adobe in 2013.


Risky business

In-house sources say that while the importance of prior art searches is diminishing in their businesses, these searches are still useful for fast-paced technologies in certain circumstances.
The fintech IP director says that his company and other program-focused businesses still assess whether competitors are working on similar products or are operating in the same technological space as part of their risk assessment.
He adds that in situations where the company is improving on a product created by a competitor, for example, it will conduct a more thorough investigation of potential prior art because there is an increased likelihood that the competitor has already made the same improvement.
“We are not totally bullish when it comes to infringement risk,” he says. “It comes down to a judgment call; we cannot conduct extensive FTO searches in every case because of the difficulties involved, but we will for situations where we are developing in someone else’s space.”
Storm at Uber adds that his company follows a similar strategy when it comes to identifying prior art, to assess the company’s relative position in a particular technological space.
“All of this adds up to a strategy of companies hedging their bets,” he says.
The New York bank’s associate general counsel agrees that software FTO is largely a matter of risk mitigation, and that software companies will decide to invest in searches if there is a strong possibility that something similar has already been made.
FTO searches are losing their importance in the software industry. The speed of technological development and the inherent difficulties of identifying those innovations may one day relegate patent registers to the realms of obscurity.
Patent offices need to do something soon if they want to stay relevant in this increasingly important industry.

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