According to the PwC report, software ranks in the top five US industries for
patent claims, with NPE claims accounting for half the total. Whilst recent US cases have made it more difficult to
patent and enforce computer- implemented inventions,
cloud-based software patent litigation is increasing: NPEs
appear to have doubled down over the last five years,
acquiring more cloud patents for their armoury as well as filing more patent cases.
growing, so it is perhaps surprising that it has figured so little in the register of perceived risks up to now, especially when data protection, privacy and information security figure so high. Yet an unsettled cloud software patent claim runs risks to cloud service availability that are arguably of the same order as information security risks.
the CSP risks an injunction stopping it from using the software that embodies the patented technology; and the CSP’s customers using that software also face disruption as they may be liable both for their own workloads and for their CSP’s infringing code that they use.
In fact, there is anecdotal evidence to suggest that claimants may prefer to claim against a CSP’s customers rather than the CSP itself. Australian patent holder Global Equity Management SA (GEMSA) was reported in February and June 2016 to have sued a number of Amazon Web Services (AWS) customers for infringement of GEMSA’s visualisation and virtualisation patents. Te CSP customers in the GEMSA litigation are large, IP sophisticated companies, but most CSP customers usually will have less experience of cloud IP, will be eager to settle to make the claim go away and (unlike the CSP itself) will have little interest in solving the problem for others.
Tis last point is borne out in the GEMSA litigation where AWS is reported to have claimed against GEMSA in July 2016 seeking invalidity of two of GEMSA’s patents, noting in its claim that “GEMSA has specifically targeted technology of AWS” and that AWS has “a direct and substantial interest in defeating any patent
infringement claims relating to AWS services identified by GEMSA in its complaints and infringement contentions.”
From the CSP’s standpoint all this is bad enough, but software patent risks are further exacerbated by increasing use of open source software (OSS) in the cloud. OSS, long in the mainstream, now commonly powers cloud computing systems. OSS developments are created by communities of individual developers. With no single holder of software rights, patent infringement issues are unlikely to be top of mind, and if they are, developers will generally lack the resources to help them navigate the risks. Compare this with a corporate developer of proprietary software who holds all the rights to its technology and has both the incentive to address patent infringement risks and the legal and technical resources to do so. Te rub is that, simply because they are open, OSS developments and communities are easier targets for NPEs than proprietary software as they don’t need to go to the same lengths to discover potential infringement. Te softness of the target increases risk for CSPs using OSS and their users.
Cloud software patent risk is evident and
Te reason why cloud computing IP risks have had little public airing so far is probably that, while implicitly acknowledged, they have yet to be thoroughly expressed and articulated. For example, in UK financial services, now one of the most heavily regulated sectors, cloud computing is treated as outsourcing and in its cloud guidance, the FCA (Financial Conduct Authority, the UK regulator) states that regulated firms should: “identify and manage any risks introduced by their [cloud] arrangements. Accordingly, firms should carry out a risk assessment to identify relevant risks and identify steps to mitigate them, document this assessment, identify current industry good practice … assess the overall operational risks, monitor concentration risk and consider what action it would take if the provider failed ….”
IP risks are not called out expressly, but this is clear guidance that firms must identify, assess and plan for all relevant risks including service availability failure, which could of course crystallise due to IP risks.
NPEs are arming for offensive patent action in the cloud, stocking up their armouries and probing for weakness and opportunity. Cloud software patent risks have emerged on to the business agenda and are likely to become increasingly prominent for CSPs, cloud users and regulators alike.
NEWSWIRE / INTERACTIVE /
247.COM P63
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