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Costs are completely unreasonable for SMEs and individuals

Revision as of 11:18, 24 May 2012 by Ciaran (talk | contribs) (moved Costs are far too much for SMEs and individuals to Costs are completely unreasonable for SMEs and individuals: I'll find something I like eventually......)
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Software development, like writing a book or making music, is something that's often done by individuals and hobbyists. Indeed, a lot of free software was written by non-paid individuals. Their freedom to write software is important, and the software they write is important for society. The patent system is too expensive for them, and always will be.

The costs of participating in the patent system are wildly expensive compared to the cost of entering and participating in software development and distribution.

If a patent holder demands €5,000, and a law firm offers to analyse your risk for €10,000 - where's the smart money? In software, many developers don't have a team of patent experts, and most don't have large reserves of cash for defence against patent threats.

Why is software different

In fields such as manufacturing and pharmaceuticals, one can assume that practitioners have a certain amount of money since they will have had to buy and equip a factory and they will have to pass various safety tests. Also, since they pay dearly to be in business, it's safe to assume that people in these fields aim to make a profit from their work.

For software, most people have all the necessary equipment in their homes, and many people develop software without receiving any direct income from doing so. This means the law can't assume that software developers have the money to defend themselves or to get their own patents.

Cost of deciding whether to defend yourself

In the USA, according to Dan Ravicher, the cost of getting a legal opinion after receiving a patent threat letter is US$40,000 and the cost of defending one's self against a patent suit is US$2-4 million.[1]

Cost of defending yourself in court

According to economist John Jarosz of the Analysis Group, for patents in general (not specifically software patents):

the average cost of litigation in 2009 for patent cases with less than $1 million at risk was $967,000. For cases with up to $25 million on the line, the average cost was $3.1 million. And for suits with more than $25 million at stake, the average cost to litigate was $6.2 million.[2]

CEO of Open Invention Network Keith Bergelt estimates the costs at "win, lose, or draw, it costs $3- to $5-million dollars to defend against a patent lawsuit."[3]

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