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Â鶹´«Ã½ Trade Commission staff members have urged the Patent and Trademark Office to proceed cautiously in developing new guidelines for its handling of applications for software patents, to avoid inadvertently granting overly broad patent protection. The FTC staff noted that "inappropriate or overbroad grants of intellectual property rights may interfere with the competition that often drives innovation."

The FTC staff offered its comments to the Patent and Trademark Office (PTO) in response to a notice the PTO placed in the Â鶹´«Ã½ Register in June detailing its Proposed Examination Guidelines for Computer-Related Inventions. The guidelines would ease the subject matter test, one of the three tests used to weed out inappropriate patents, by broadening the scope of statutory subject matter for software. The staff cautioned PTO not to adopt the guidelines until it has implemented the steps it is taking to improve its ability to determine whether software products meet the other two tests -- for novelty and nonobviousness -- which, as the PTO recognizes, "do not function as well at this time in software as they do in other areas."

The FTC staff noted that the dangers of overly broad or unwarranted patent protection are especially acute in an industry such as software where "the innovative process at issue is characterized by the accumulation of relatively small steps, rather than discrete leaps, and thus runs a greater risk of infringing possibly overbroad prior patents." The staff added:

"The impediments to future innovation created by inappropriate patents can be heightened by strong network effects,' which are also characteristic of software. That is, new software will have greater value to the extent it is compatible with older systems and with the existing hardware and software base. If a patent is inappropriately granted to software that is already part of the prior art and has become embodied in existing software products, interfaces, and approaches, both the producers of current products and would-be innovators may find it very difficult to devise alternate technical solutions acceptable to the marketplace."

These comments represent the views of the FTC's Bureau of Economics and not necessarily the Commission or any individual Commissioner.

Copies of the staff comments are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov

(FTC Matter No. V950013)