Without the benefit of patent protection, software companies
would be forced to rely on secrecy which limits the public’s
ability to learn from software innovations, since patent
documents are a significant source of technological disclosure.
See, e.g., In re Alappat, 33 F.3d 1526, 1571 (Fed. Cir. 1994)
(Newman, J., concurring). Given the reality that software source
code is human readable, and object code can be reverse
engineered, it is difficult for software developers to resort to
secrecy. Thus, without patent protection, the incentives to
innovate in the field of software are significantly reduced.
Patent protection has promoted the free sharing of source code
on a patentee’s terms—which has fueled the explosive growth
of open source software development.
and
The economic benefits that flow from software innovation are the
product of significant investment in research and development.
And the incentives provided by the patent system encourage that
investment by providing the same quid pro quo as in other
technology fields: the promise of economic rewards in exchange
for the public disclosure of useful inventions. See generally
Testimony of Nicholas M. Donofrio, Executive Vice President,
Innovation and Technology, IBM Corp., Before the H.R. Comm. on
Science (July 21, 2005); Cong. Office of Tech. Assessment,
Finding a Balance: Computer Software, Intellectual Property, and
the Challenge of Technological Change, 23 (1992) (recognizing
that “patent protection is of importance to the U.S. software
industry”). The exclusive rights granted to patentees
encourage software innovators to pursue inventions that they
might not otherwise pursue, in broad and diverse areas.
and
Patent protection for software protects innovators from
appropriation of their efforts by “free-riders.” Without
patent protection, the risk of appropriation may force software
innovators into other, more promising ventures. See, e.g.,
Richard S. Gruner, Better Living Through Software: Promoting
Information Processing Advances Through Patent Incentives, 74
St. John’s L. Rev. 977, 1004 (2000). The free-rider problem is
particularly acute in the software sector because software
products are “vulnerable to rapid, inexpensive copying that
undercuts the initial developer’s opportunity to benefit * *
*, thereby undermining its incentives to invest in software
development.” Pamela Samuelson, et al., A Manifesto Concerning
the Legal Protections of Computer Programs, 94 Colum. L. Rev.
2308, 2332 (1994). While literal copying is the province of
copyright law, the ease of appropriating software source code
makes the patented inventions included in the code uniquely
susceptible to instant appropriation.
Supreme Court, Benson: That software is just an algorithm. You can't patent an algorithm. There may exist some kind of software that can be patented, but not ones that look like this.
Supreme Court, Flook: We see what you did there. This patent is just software to solve a mathematical problem. The post-solution activity isn't novel. There may exist software that could be patentable, but not software that looks like this.
Supreme Court, Diehr: This one's different from Flook in that they're claiming novelty in parts of the invention outside the software.
Federal Circuit, State Street: Actually I think patents that aren't distinguished in the least from the one in Flook are OK.
Supreme Court, Bilski: Pay attention to Benson, Flook, Diehr. Nothing's changed since these decisions. Ignore State Street.
In summary, the reason software is patentable today is that lots of people persist in ignoring the Supreme Court. There may in the future be some kind of software the Supreme Court might think patentable, but every software patent we talk about here on HN, especially related to patent trolls, is indistinguishable from Flook.
edit: fixed to replace duplicate quote with the quote I meant to paste in.