Although unintentional, the software patent system has evolved into a classic game-theoretic dynamic.

The core issue is that offensive and defensive patent stockpiles look identical from the outside. That ambiguity triggers a feedback loop that sustains the system.

Patents are meant to protect specific inventions, but in software where ideas spread quickly, they have taken the role of strategic assets in an arms race. Useful concepts are rediscovered independently or unintentionally overlapped. As a result, nearly every company is vulnerable to infringement claims at all times, often through no fault of their own.

That vulnerability has different consequences at different scales. For small companies, a single patent lawsuit can be existential. Even a successful defense can be financially ruinous. As companies grow, the threat changes shape. Individual lawsuits may no longer be fatal, but the frequency and scope of litigation tend to increase.

The rational response is to accumulate patents as a form of deterrence. When two firms with substantial portfolios face off, outcomes become unpredictable, which is often enough to prevent litigation altogether.

This does little to protect against non-practicing entities (“patent trolls” that accumulate portfolios solely for broad, indiscriminate litigation), but it does matter in disputes between operating companies. When one firm begins acquiring patents at a faster rate, competitors cannot tell whether those filings are defensive or intended for future leverage. The safest assumption is that they may be offensive, prompting an accelerated filing response. Each side interprets the other’s behavior the same way.

As this pattern takes hold among larger players, it propagates outward. Firms without comparable portfolios recognize their exposure and begin filing as well. More participants enter the system. More obvious ideas are patented. Volume increases regardless of whether innovation does. Even smaller companies have little choice but to follow suit.

This is a textbook security dilemma. Actions taken for protection are indistinguishable from actions taken for aggression. Software patents fit the model cleanly: a patent filed for self-protection looks no different from one filed with hostile intent. Because intent cannot be observed and opting out carries asymmetric risk, escalation becomes the default and patent volume gradually decouples from innovation.

A few partial workarounds exist, though none are complete solutions:

• Patent pledges and defensive licensing agreements are mutual commitments by companies not to use patents offensively against one another. They reduce the risk of direct litigation between participants (typically limited to large companies with significant portfolios), but they do not remove the underlying incentive to continue accumulating large portfolios.
• Open standards backed by large coalitions, such as the shift from proprietary H.264 to AV1 video codecs, work because major patent holders agree not to sue each other over patents covering the standard. Companies can innovate within the standard rather than creating competing proprietary solutions, and even firms outside the coalition can implement and build technology on the standard without fear of litigation. This protection is limited: it only works in domains where a coalition is seen as beneficial, requires participation from the largest patent holders, and leaves many firms exposed to older proprietary standards for years after open standards become mainstream.
• Cross-licensing arrangements are negotiated agreements in which companies grant each other access to their patent portfolios. These prevent lawsuits between participants and help manage mutual risk, but they neither eliminate the incentive to file additional patents nor affect competitors outside the agreement. They resemble arms-control agreements: they reduce conflict among participants but leave the broader accumulation incentives mostly untouched.

None of these change the underlying dynamic. In software, offense and defense look the same. Once that condition holds, escalation is difficult to avoid.