Iterated Prisoner's Dilemma in software patents

by RolfAndreassen3 min read22nd Jul 20138 comments

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Prisoner's Dilemma
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This post contains some thoughts around software-patent strategies for large tech companies, in particular how the ability to block others' applications seems to set up an Iterated Prisoner's Dilemma and may change the strategic landscape for patents entirely. 

 

Joel Spolsky writes of recent successes in blocking bad patent applications: 

Micah showed me a document from the USPTO confirming that they had rejected the patent application, and the rejection relied very heavily on the document I found. This was, in fact, the first “confirmed kill” of Ask Patents, and it was really surprisingly easy.

and suggests that this may lead to a "Mexican Standoff" among major software companies:

My dream is that when big companies hear about how friggin’ easy it is to block a patent application, they’ll use Ask Patents to start messing with their competitors. How cool would it be if Apple, Samsung, Oracle and Google got into a Mexican Standoff on Ask Patents? If each of those companies had three or four engineers dedicating a few hours every day to picking off their competitors’ applications, the number of granted patents to those companies would grind to a halt. Wouldn’t that be something!

It seems to me that this would be something of a Prisoner's Dilemma situation for the companies: Presumably, each of them is best off if it is the only one that can get any software patents (it defects by blocking the others, they cooperate by not setting up a patent-blocking team), better off if everyone can get patents (everyone cooperates by not having a blocking team), and worst off if nobody can get patents (everyone has a blocking team which they have to pay for). It is Iterated because the decision to block or not block can be made anew every month, or quarter, or whatever. So the question is, will these companies filled with smart people be able to recognise an IPD, and will they cooperate?

Some factors to consider: Setting up a patent-blocking team requires some small amount of effort, so inertia is in favour of cooperation. On the other hand, many individual engineers at these places are likely out of sympathy with the patents that their managers insist on, and may be delighted to push the 'D' button under the guise of sabotaging their competitors. (And at least some of the major tech companies have 20% time or equivalents, so there wouldn't even be much inertia to overcome - just decide to do it!) 

Another point is that this is a multiplayer game, but it only takes two companies to block everyone: For example, Google blocks everyone except Google, and then exactly one company needs to retaliate to make the block complete. This does of course raise the question of who is going to step forward and pay for the retaliation; but on the other hand, the cost appears small. The free-rider problem exists, but it does not seem to be large. 

Another point: The ease of patent-blocking may change the strategic landscape entirely, by making it not worth the effort to file for patents in the first place. It appears to me that everyone involved knows that these patents are worthless. They file them for some mix of prestige, "everyone does it", and ability to retaliate if someone else sues using _their_ worthless overbroad patents. Presumably it is only worth expending engineer time on this because the patents are very likely to be granted; conversely, it's only worth having patent-blocking teams if a lot of worthless applications are filed. The equilibrium is not clear to me, but it seems that it will have to shift at least slightly in the directions of having engineers do more bug-fixing and less patent-filing. 

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On a similar topic, here is a series of posts on the patent thicket that arose among competitors during the invention of the modern sewing machine.

I don't know if it is really worse in software than in other areas. I used to peruse the new patents column in an engineering publication on microwaves and other radio stuff. It appeared that almost all of them were reasonably clever but not amazingly clever solutions to very specific engineering problems. So rather than a really non-obvious new whatever, most patents in microwaves and RF were on solutions to narrow problems which any reasonably competent engineering department at a good company would have come up with.

Indeed, just the fact that important patents often come down to a race to develop and file should show that the thing being patented would be invented without much delay even if you prevented the top two or three groups from patenting it. I saw a fun play a number of years ago on the race to invent the television.

As to the economics of patents, sure the ability to get a monopoly on the patented technology motivates companies to get patents. I don't know that it is obvious that the value created by motivating the inventions exceeds the value destroyed by granting monopolies. There are some amazing numbers where the increase in availability of phone service once the original telephone patent expired was so tremendous that it is hard to imagine society benefited much from keeping that valuable tool away from so many millions of people during the monopoly period. Indeed, unless the case can be made that the invention would not occur for at least another 20 years later, in the current world where the monopoly lasts 20 years it may be obvious that patents are value-destroying. Hmmm, that's a clever way to think about it.

It's not obvious to me that anyone at the big companies actually wants the situation where everyone patents everything and there is a perpetual cold war. The big companies want a thriving economy, especially in their sector, and if it was cheaper to get together in an alliance to block all the stupid patents, while the real ones (at least that were backed by big companies) got through, it's possible everyone would be better off.

It already is a Prisoner's Dilemma. You can patent everything and try to make other companies pay you for it, but if they do it you won't be able to so much as design a microchip without violating a few thousand patents.

I've heard that they used to just agree to let each other use each other's patents, but then some companies appeared that did nothing but make patents and sue companies that used them.

The big one was when Apple sued Samsung. The big companies aren't supposed to sue each other, they're supposed to just use patents to keep the smaller competition out. That broke the model.

I've heard it argued that smaller companies tend to either fail or get bought before they can be sued, and the suits against smaller companies are usually carried out by companies that have no product and make all their money by getting patents and suing people with them. For big companies, patents are more of a cold war most of the time. I haven't looked into this myself, so I can't say whether that's correct, but it seems possible. What evidence do you have of big companies that are actually software companies, like Apple, suing small competitors for patent infringement? (I'm not trying to be argumentative, I just don't know much about the subject and want to know what you know.)

Sure. What I'm saying is that this seems to be a different Dilemma, built on top of the old one. :)

It is really strange that two companies fight for the patents, these two are really big and great companies and they can have their own creative ideas and innovations so there is no point to conflict.

software patents