The current software patent regime hampers innovation and must be radically changed, says analyst and consulting company, Ovum.

The conclusions of a six-month research project show that far from serving their original purpose - to promote and disseminate innovation - software patents threaten innovation and benefit large companies at the expense of small ones.

“Many vendors see patents as a good thing simply because they make money by licensing them,” says research director Gary Barnett who led the project. 'This is a short-sighted and fallacious point of view. We believe the economic case for software patents has fundamentally not been made.”

Barnett argues that unless steps are taken now, the current crisis could lead to the total collapse of the technology patent regime.

To solve this challenge, Ovum notes that software vendors should:

• agree to new standards for 'novelty', 'inventiveness' and 'disclosure'
• apply the new standards to their existing patent portfolios
• release any of their currently held patents that fail to meet the new benchmark.

The research also reveals that the current regime is causing harm to the software industry in different ways:

• It is harming competition: patents are increasingly used 'strategically' as weapons against potential competitors or as a defense against threats from other patent-holding companies.
• It is biased against small software companies: the patent regime is strongly biased towards large software companies that have the resources and legal expertise to create an arsenal of patents.
• It hampers innovation: the proliferation of patents makes it harder for companies to innovate; it is almost impossible to create a significant software product today without infringing one or (more likely) more patents.
• It limits end-user choice: the anti-competitive impact of the current software patenting regime means that users have less choice and pay more for software.

'Software companies that fail to understand the ramifications of the current debate and respond accordingly face a difficult and uncertain future,' Barnett concludes.