Once More unto the Breach

A Standards Primer

Photo by Dauvit Alexander

I have recently had several long discussions about the motivations and machinations that surround the development of technology interoperability standards. Over the past few years, I've also captured a lot of ideas and experience on the blog. I pulled it all together into one place in the following paper, "Understanding Technology Standardization Efforts" (PDF 86.2K).

For the record, I was a long term participant in the POSIX and UNIX standardization efforts. I was a working group participant, balloted many pieces of the standards and their amendments, and participated in the management of the standards effort at the IEEE as both an inaugural member of the Project Management Committee and a voting member of the Sponsor Executive Committee. I was an international participant at ISO, as document editor, and participated on behalf of three different national body delegations (Canada, U.S., UK) over a number of years. I began my participation in 1989 as a customer (working for EDS with GM and the U.S. government as their primary POSIX-interested customers), but quickly ended up as a vendor, working for MKS developing a conforming POSIX.2 implementation that formed the basis of implementations from IBM, DEC, HP, UNISYS and Sun. In 1995, I put my money where my mouth was on the importance of applications portability, standards and the coming juggernaut of NT and co-founded Softway Systems, implementing the POSIX and UNIX standards on NT to enable UNIX applications to be directly migrated to the platform. A large amount of free and open source software was incorporated into the product. Softway Systems was acquired by Microsoft in 1999, and I worked there for five years. Over the years I've been in regular contact with people standardizing C#/CLI, the Linux Standards Base, and ODF.

Several friends and colleagues from the standards world have reviewed the paper and provided excellent comments. The paper is much better for it. All mistakes obviously remain my own.

The OOXML Ballot Resolution

[Update (2008-2-25 13:45): There's an excellent press release from ISO that outlines exact history and next steps and requirements for this ballot.]

I have long maintained that technology standardization is commercial diplomacy and the purpose of individual participants (as with all diplomats) is to expand one's area of economic influence while defending sovereign territory. This week a lot of people are gathering in Geneva for the ISO ballot resolution meeting for Office Open XML (OOXML), Microsoft's Office product specification. The debate no doubt will be contentious.

Microsoft had a perfect opportunity to participate in the Open Document Format (ODF) standard's development at OASIS. They ignored that opportunity. The best time for technology standardization arises when a problem space is well understood, with sufficient real implementation knowledge to discern what works and what doesn't. Microsoft had arguably the best experience to contribute. They chose not to participate. Standardized document formats with multiple product implementations posed a threat to their Office business.

That threat became real when the Commonwealth of Massachusetts chose ODF as a basis for product procurement to best serve its citizens. Microsoft's response was not to adopt the ODF standard that already existed with multiple implementations (and continues to act as a hub for alignment with other international work like China's UOF standard), but to rush their own product specification into the standardization process.

They have over the two year process done a remarkable amount of work to bring the specification through ECMA to ISO, and have made great gestures to enable others to support the Microsoft specification.

But there's a problem.

Microsoft is an adjudicated monopoly in the United States. The EU continues to investigate possible abuse of their market dominance. (Market leadership and innovation are not what's being punished, but rather the abuse of a dominant position.) Microsoft can complain all they want, but the practices that enabled their success continue to plague them. We cannot collectively rewrite history. Microsoft is indeed held to a different measure. They have forfeited some of the freedoms that other companies enjoy. In many ways, they have lost our trust.

One can not judge Microsoft's newly declared preference for "openness" against the work they've done promoting their own product specification, but against their continued refusal to adopt ODF. In the end, OOXML as an ISO standard (with its attendant market confusion) will best serve the needs of Microsoft over its customers, and that's a shame.

Andy Updegrove has an excellent essay on his blog as we go into this week's ballot resolution deliberations. He takes a different approach. In it he argues that a particular class of standards should be held to a higher bar for acceptance, because they enable fundamental technology access in the world going forward. He makes an compelling case for why OOXML should be flunked out of the ISO process.

This promises to be a fascinating week.

FTC Settlement on Patent Abuse and Standards (and Open Source Implications)

Andy updegrove posted great news this morning on his standards blog. The US Federal Trade Commission (FTC) announced its resolution that a patent licensing promise made by a patent holder in a standards setting process is binding on a future holder of the patent.

National Semiconductor participated in an IEEE standards effort to develop the 100 Mbps "Fast Ethernet" specification in 1994. Two key (pending) patents were under their control, and they licensed them clearly, cleanly, and cheaply for US$1000 flat one-time fee to all takers. The patents changed hands, first to a group (2002) that wanted to change the licensing deal, then to N-Data (2003), a patent troll that was aggressively pursuing a changed expensive license.

Andy sums it up best:

"[T]he reliance upon promises made with respect to patents is of concern not only in the standard setting context, but with respect to open source software as well. The details of the settlement will provide significant guidance as to how the regulators would view similar conduct in an open source setting. Moreover, in the case of N-Data, the FTC has acted aggressively while acknowledging that the actions at issue might not rise to the level of violating relevant antitrust laws. In doing so, the Commissioners provide strong assurance to participants in standard setting that the FTC recognizes the importance of standards in the modern world. Finally, the details of the actual settlement demonstrate a willingness on the part of the FTC to craft a detailed and savvy set of requirements that addresses the realities of actual licensor-licensee conduct in the marketplace."

This is great news in the context of patent promises made to open source developers from the likes of IBM and Sun Microsystems, and through mechanisms like the Open Invention Network and the Linux Foundation's Patent Commons Project. It removes FUD slung around with respect to patents and intellectual property in both the standards arena and open source project communities. Each is a collaborative effort with significant economic importance and impact. Each will hopefully see the intellectual property landscape a little more clearly now.

Full details on Andy's blog.

Microsoft and Xen and Patent Leadership

Sam Ramji gave an excellent short talk at OSCON 2007 on Linux and Windows Interoperability: On the Metal and on the Wire.  Sam described the collaborative work being done inside the Microsoft open source labs to better enable virtualization with the Xen world. 

Indeed, Xen comes from a GPL licensed project where Microsoft was a sponsor of the original University of Cambridge work.  HP and Intel are still sponsors.  (Of course you need to use the Wayback machine to begin to see hints of this.)  This is all good.  But I couldn't help but wonder at two questions during Sam's presentation:

• What is the patent landscape around virtualization?
• What is Microsoft's position with respect to Xen and Xensource if someone were to attempt a patent run against the project?

A quick check of the USPTO patent database can give us a initial inexact feel for the space:

• Patents with VMWare as the assignee (22)
• Patents with Microsoft as the assignee (7117)
• Patents with Microsoft as the assignee and containing "virtualization" (20)
• Patents with Advanced Micro Devices and containing "virtualization" (4)
• Patents with International Business Machines and containing "virtualization" (130) !!!
• Patents with SWSoft as assignee and containing "virtualization" (2)
• Patents with SWSoft as assignee [SWSoft makes Parallels] (6)
• Patents with Intel as assignee and containing "virtualization" (100)
• You get the idea ...

It's a potentially messy space.  As virtualization lives so firmly on the hardware/firmware/software boundary, we don't even need to have the debate over the relevance and merits (or lack thereof) of software patents.  Somewhere in that collection of patents there are likely to be hardware patents, or firmware patents indistinguishable from hardware, and they may read on the Xen space.   

Are we afraid yet?  I'm rattling the sword very very loudly.  Worried at all?  Even an eensy-weensy bit?  Hopefully NOT.  VMware, Microsoft, Apple and SWsoft at a glance have been shipping products for some time.  Intel, AMD, and IBM have been building hardware to be virtualized for some time.  And Xen has existed for some number of years squarely in this space, and academia is not naive when it comes to patent filings.  As a company, Xensource has been basing its race for the gold ring on the Xen project.  Xensource may even be an easy first target to pursue for a patent troll on the way to bigger and better shakedowns (although I certainly wouldn't bet against Intel, HP, VMware, Microsoft, etc. getting involved early.)   

Which brings us to the second question. 

Here is a perfect (and safe) opportunity for Microsoft to get out ahead of the curve, and demonstrate that they can learn and that they do "get it" and indeed that they can lead with respect to the licensing debate.  They can make the patent grant, here and now, to the Xen project.  As an intellectually interesting challenge for their legal team, they would be creating a deliberate license directly related to a project licensed under the GPL and stating (within their control) how their patent license does apply downstream, so as to not interfere with their assertion of patent rights in other areas.   The point would be to see how promiscuous they could be with their patent rights in a well defined way.  Sort of an interesting idea.  Indeed, it becomes a historical and game changing idea with respect to their competitors.   

To date their competitors keep rolling positional hand grenades out into the field and the Microsoft legal team feels obliged to leap on every one of them.  Mention the GPL and the Microsoft legal team runs screaming with their hair ON FIRE (to borrow a phrase from Eben Moglen's great Ubuntu Live keynote.)  Develop an enabling and protective patent license around Xen, and they begin to provide a basis for future interesting debate. [Some of the lawyers may even get to make a name for themselves publishing the brief!]   

Of course hell could freeze over too.  But it's great to dream.

Interview with Beth Noveck as "Peer to Patent" Launches

The United States Patent and Trademark Office (USPTO) is swamped with patent applications and the patent examiners are drowning.  At this point in history, it can easily take 24+ months for an application to get through the system, and quality is suffering.  Beth Noveck leads the Peer to Patent initiative, a key effort to ease some of the pressure and vastly improve patent quality.  The program pilot began 15 June, 2007 with the support of the USPTO, after a long year of planning and organizing.  Its aim is to enable anyone with expertise to help vet applications for prior art, so the best possible patent is approved.  (The following flow diagram comes from the Peer to Patent site.)

The program is already at work.  Here's an example of one of the patents under peer review. (Sign up to participate.)

I've known Beth for a couple of years, since meeting her at the inaugural Government Open Source Conference in Portland.  When the opportunity to interview her came up at Assignment Zero, I decided it was time to contribute.  We never did get a chance to talk directly with her schedule and the pilot launch, but we managed to develop the interview over a few rounds of email.   The interview is up on the Assignment Zero site, (with promises of future publication in Wired). 

This is an important program and lots of companies that care about patent reform are sponsoring it.  It is perhaps most interesting that so many of them are in the computing and software fields.  But then we've also created the biggest mess for ourselves. 

The Microsoft Xandros Deal

"Microsoft, Xandros Broad Collaboration Agreement Extends Bridge Between Commercial Open Source and Microsoft Software"

And so it begins again ...

What was Announced
The actual details will presumably be held secret for as long as possible, just like the Novell Microsoft deal. Here are the details from the announcement on Microsoft's press wire: 

Over the next five years, Microsoft and Xandros will focus on five primary efforts:

• Systems management interoperability: Xandros and Microsoft believe advances in system management technology can significantly reduce the cost of operating large computer networks running diverse platforms.  Xandros will partner with Microsoft to deliver value-added heterogeneous management capabilities that will work with the next generation management capabilities that will work with the generation of Microsoft  System Center and Xandros Systems Management products, which provide end-to-end service management.  Xandros will also join Microsoft and other management vendors in implementing the WS-Management set of protocols in Xandros BridgeWays cross-platform management products and in various systems management standardization efforts.
• Server interoperability.  Xandros will license a broad set of Microsoft server communications protocols. Xandros will develop enhancements to Xandros Server, allowing it to interoperate more smoothly with Windows Server in a network setting.
• Office document compatibility.  Xandros and Microsoft share the view that competing office productivity applications should, by design, make it easy for customers to exchange files with one another.  To that end, Xandros will join Microsoft and other companies that are building open source translators fostering interoperability between documents stored in Open XML and Open Document Format.  Xandros will ship translators in upcoming releases of its Xandros Desktop offering. 
• Intellectual property assurance.  Through the agreement, Microsoft will make available patent covenants for Xandros customers.  These covenants will provide customers with confidence that the Xandros technologies they use and deploy in their environments are compliant with Microsoft's intellectual property.  By putting a framework in place to share intellectual property, Xandros and Microsoft can speed the development of interoperable solutions. 
• Microsoft sales and marketing support.  The companies are committing to a set of sales and marketing efforts to promote the output of their technical efforts.  As part of this effort, Microsoft will now endorse Xandros Server and Desktop as a preferred Linux distribution dues to Xandros' efforts to establish rich interoperability and deliver IP assurance to its customers.  Also, a specialized team of Microsoft staff will be trained on the value propositions of this collaboration to customers and channel partners.  Xandros will also become a member of the Microsoft Interop Vendor Alliance. 

Fine.  Whatever.   I really wish marketing people would remember how to speak English like the rest of us.  The hyperbole and bombast just deaden the senses. 

What might it mean for Xandros
Xandros is looking for love (possibly in all the wrong places).  A quick tour of DistroWatch for the comparative view for Xandros over the past 12, 6, 3, and one month periods shows it falling from 25th to 28th to 31st to 40th respectively.  Ubuntu sat in first until the past month when it dropped to second in interest behind PCLinuxOS.  The harsh part of the story is that regardless of which period you view, there are a lot of well know, well packaged systems ahead of Xandros including Ubuntu, OpenSuSE, Fedora, Debian, Gentoo, and Mandriva and that's just staying in the top dozen.  Even FreeBSD consistently ranks above Xandros on distrowatch.

I appreciate this is "interest" rather than sales as measured for Linux vendors.  But I'm looking for brand recognition here.  I even had to remind myself who Xandros was when I heard the news.  While that simply shows my ignorance, Xandros has been trying to be the "business person's" linux desktop, but Ubuntu and Novell have got to be hammering them pretty hard at this point in history.   

Novell signed its deal with Microsoft seven months ago.  They've made a lot of noise about how the coupon program has been GREAT for business.  (Other views differ.)  They weathered the community storm.  They have consistently said they don't believe Linux infringes any Microsoft patents, and that the IP related parts of the deal weren't about any current Linux patent infringement.  If you buy the public message, then the deal has likely been net positive for Novell, if only for the cash injection.  For Xandros this deal is their perceived chance to get some commercial love which they probably would like about now.

Corel is an investor in Xandros along with Linux Global Partners.  Corel has had a bizarre history with Microsoft, alternately suing and collaborating with them.  It should come as no surprise that a Corel spin-off like Xandros considers a deal with Redmond good business.

Xandros is giving:

• Xandros will implement WS-Management in BridgeWays (presumably in the next five years).
• Xandros is now a server communications protocol licensee.
• Xandros will join the ODF translator community.

Xandros is getting:

• The same deal on IP from Microsoft, i.e. Microsoft is generously promising not to sue Xandros customers.  Whatever.
• Lots of co-sales and co-marketing love. 

"By putting a framework in place to share intellectual property, ...."  There is no "sharing" happening today.  A quick search of the USPTO database reveals the number of patents with "assignee name" of Xandros: ZERO.  The number of patents with an "assignee name" of Microsoft: 6776.  The number of patents with an "assignee name" of Corel (one of Xandros investors): 40.  It might be interesting to know what rights Xandros had to Corel patents, and what rights they may have just cross licensed, but that's Corel's problem.

What does it mean for Microsoft
They get a new protocol licensee which I'm sure they'll be pleased to trumpet to the EU. 

They get a renewed messaging platform for their continued infatuation with customers and patents instead of customers and solutions.  It's a broken platform which shows no leadership, but that apparently won't stop them from pushing it. 

They get to continue the messaging shades of grey around Microsoft Office Open XML and ODF.  "Xandros and Microsoft share the view that competing office productivity applications should, by design, make it easy for customers to exchange files with one another."  Microsoft sees its death in ODF.  They will fight like a cornered rat and message appropriately. 

"Microsoft will now endorse Xandros Server and Desktop as a preferred Linux distribution dues to Xandros' efforts to establish rich interoperability and deliver IP assurance to its customers."  I've confidence the discussions with Novell on this are hysterical in both meanings of the word.  It has the potential to be a distracting headache from a reasonable partnership with a first-tier commercial distributor of Linux, to be able to tout an IP message with a third-tier player. 

Is there an implication with GPLv3?
Damned if I know.  GPLv3 is not truly finalized, and I've confidence better minds, legally trained and hard-wired to the current GPL development process will weigh in here.  BUT, I'd be hard pressed to say this deal actually matters.  Linux is what it is.  The way it's licensed will be decided by the community that invests in it.  The GPLv3 will be what it will be.  It will be used by the communities that choose to use it.  Any conjecture on whether Microsoft signing a deal with a third-tier commercial Linux distributor is going to effect the process seems a bit wild.  I've confidence saner heads will prevail.  Well ... after an initial snarl or two. 

Should anyone care?
I saw Allison Randall on a recent OSBC panel on whether the Novell-Microsoft Deal was "good" for open source. She sat with Sam Ramji (Microsoft), Justin Steinman (Novell), and Jonathon Corbet (LWN.net).  Sam and Justin did a mostly fine job of clarifying the agreement, but Allison's point that the deal is irrelevant for open source was more important. 

The Novell-Microsoft deal was a deal between two vendors just like any other deal involving co-marketing, technical co-operation, and IP cross licensing.  (With Xandros there's apparently no cross license as they have nothing to license.)  Novell thinks its best serving its customers.  Microsoft thinks its best serving its investors.  So too with this Xandros-Microsoft deal.

There is no more patent infringement validation here, despite Microsoft posturing, than the Novell-Microsoft deal.  A hundred companies using free and open source software in their offerings to customers could sign patent cross licensing or covenant deals with Microsoft, and it means nothing with respect to the veracity of Microsoft's infringement claims.  Patents are tickets to negotiations.  They are (sometimes) interesting opportunities for discussions.  But they are utterly unproved until they enter a courtroom.   Some companies see a Microsoft deal as a strategic leg up in their business.  It means nothing with respect to possible claimed infringement, and even less to other mainstream players like IBM, and Red Hat.   It's all just business. 

Out, out, brief candle!
Life’s but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.

- Macbeth, Act V, Scene V

[Disclaimer: Microsoft is a client of mine.]

 

Microsoft Messaging on Patents and Open Source Software

Sam Ramji, Bryan Kirschner, Michael Francisco (and briefly Bill Hilf) from the Microsoft open source software lab were front and center last week at the Open Source Business Conference (OSBC), largely because of an article published the previous week in Fortune.  There were several discussions that centered around patents and software business from an open source perspective, and I realized there are several disconnects between the Microsoft legal team and their PR machine, and most of the rest of the world. 

The first disconnect appeared during Microsoft's day long event for open source ISVs the day before OSBC.  Microsoft represents a US$44B revenue stream.  Most of the executives from software businesses in the event represent companies that run US$2M to US$20M.  There is a world of difference between the way these companies need to behave with respect to intellectual property tools and their software assets. 

Most small companies don't care about patents in the same way as a large company must.  A small company will likely file for a patent or three because it can make a real difference in their valuation in both funding and M&A activity.  The management team, however,  applies a different calculus to the problem.  Filing for three patents with good patent attorneys could cost ~US$50K.  That's half a head count for a year.  And the patents won't be approved faster than 24-36 months.

Was the small company to discover a large company infringing their claims, they have very few real options.  They have a ticket to a negotiation implied in their ownership of the patent.  They can't afford to be greedy in the discussion because they can't afford the legal costs of a prolonged legal debate if business negotiations fail. Patent "cross licensing" deals with large companies with thousands of patents are not exactly balanced for small companies.

Most companies just don't live in the space of large cross licensing deals like a Sun, Microsoft, IBM, Intel, etc.  That doesn't mean the smaller company management teams don't respect intellectual property or don't care about it, they just value patents differently in their business model.  I imagine the average $20M company executive would happily entertain the painful and frustrating headache of $100M/year of inbound litigation with which Microsoft lives, if it came with a $44B revenue stream. 

These executives don't want "special" rules for intellectual property.  But neither do they need to think and apply the same rules the same way as companies that are Three Orders of Magnitude bigger.  Indeed, for most of these executives, trademark (i.e. brand management) and copyright management is everything to them, and they're very savvy with respect to copyright licensing. 

The second disconnect is the Microsoft talking point about return on investment for the R&D expense.  Microsoft rightly claims on the order of $7B spent each year on research and development.  The PR talking point is that "they want a return on that investment."  The rest of us see a $44B revenue stream and think, "and what part of that revenue stream shouldn't be considered ROI?"  This is what happens when you let lawyers (cost side of the balance sheet) think they can be a profit center. 

This brings us to the third disconnect.  The Microsoft executive and legal teams look to the IBM claims of $2B-$4B/year in IP licensing revenues and thinks, "why not us?"  Why not indeed.  Well let's look at some of the differences.  You see it's really a business marketing problem. 

Microsoft historically has a culture of putting programs in place so as to scale efficiently and keep margins high.  This is good business practice.   So the legal team did as well: here's the "IP Licensing" home.  [I think it's significant that the URL contains a segment named "about".  Remember --  legal is a cost center.  Most of the legal concerns that reach the public eye would rightly show up under "about" on most company web sites.]  As you explore this part of the site, you'll find all goodness about why you should license Microsoft IP through their licensing programs 'cause they're smart guys that invest a lot in R&D.  (And they are and they do.)

But it's different than the business model practices developed over the long haul by IBM.  Go look at the model Microsoft is chasing: here's the IBM IP licensing page.  The page starts with the statement that they're the market leader in awarded patents (regardless of R&D investment), and they're "expanding their use of intellectual property to accelerate the adoption of open standards and open source software through creative licensing and stewardship programs."  There's a prominent link on the simple page to all the program work in which IBM invests to modernize and reform the patent system and "reinvent the invention system."  It is a remarkable piece of positioning. 

Here is the company that clubbed Microsoft like a baby seal in the early cross licensing days, essentially playing the reformist hero.  It is masterful marketing. IBM thinks through the business strategy from all angles (including support for open source software), then tells a GREAT story about it.  [Indeed, an IBM executive would have wept for laughing so hard if they'd been present for the vaguely unprofessional bashing Sam Ramji took at the 451 Group reception at OSBC from a panel made up of Dan Kohn (Linux Foundation), Jeremy Allison (Google ex-Novell), and Eben Moglen. Andy Updegrove was the only balanced voice on the panel.  Sam had to stand in the audience with the rest of us plebes and wait his turn for the mic.]

It's not that Microsoft doesn't want reform in the patent system, they simply don't talk about the work they do sponsor.  And when they try to message reform it fails.  They come across complaining about the inbound $100M/year litigation costs, with the additional hammering they've taken by Eolas (~$500M) and the Sun license (another $2B).  They try to say they too want reform because they're victims too!  But it's a poor story up against the $44B revenue stream.   It has all the negative impact of Paris Hilton fretting about her approaching jail time while shopping for ten thousand dollar handbags.  (I wonder how much inbound litigation IBM takes a year?)

What they need is a leadership message.  One that resonates with a clean position with which the rest of us mere mortals can sympathize and possibly even support.  Daniel Chalef (CEO, Knowledge Tree) offered the start of one for them during the ISV day but it was likely lost and not recognized for the brilliance it represents.  Daniel suggested Microsoft take a leadership position in the EU AGAINST software patents. 

This is fabulous.  It could even be cleanly messaged as "encouraging the EU to not follow in the footsteps of the U.S. until such time as patent reforms have been implemented and proved."  They would not be saying no software patents, but rather encouraging the EU to not make the same mistake the U.S. made until the U.S. figures out how to clean up the mess we all agree exists.  It would show leadership, align with their current positioning, and not sound like victimized whining, nor would it clash with their licensing programs.   

IBM is leading the reform movement and winning friends with its messaging while happily licensing and defending its intellectual property.  It comes at a cost and maybe the margins aren't as good as Microsoft's historical packaged software margins, but business it is.  Sun has reinvented its executive messaging cleanly to say they've got to play the game as a large business in the U.S., and they'll only use the portfolio defensively.

It's time for Microsoft to do the same before they're again [possibly mis]quoted as making veiled threats against customers.   Microsoft is a software company.  It's about time they again acted as one and stopped pushing their IP licensing business to the forefront of their messaging.  It's not (nor will it ever be as big as) the business we (their customers) know they're in so it only serves as too frustrating a distraction.   

Three Things Steve Ballmer (and Brad Smith) Get Wrong about Free and Open Source Software

Enough, Mr. Ballmer, please. 

There have been a rash of articles over the past week on Steve Ballmer's recent statements about open source software and intellectual property during the New York financial analysts presentation.  They follow on other recent related statements around the Novell-Microsoft deal by Brad Smith, and the Progress and Freedom Foundation.  Here's what Ballmer et al get wrong:

• Customers care about patents. (The corollary that vendors sue customers over patents, and that this is why customers need care is patently (sic) false.)
• Free and open source developers don't respect intellectual property.
• People think free and open source software is free.

Let's handle them in reverse order. 

Open Source Software is Free
Wrong.  And no one thinks this.  Mårten Mickos brilliantly observed two years ago that the early community is willing to trade time to save money, and the later community is willing to trade money to save time.  But neither the do-it-yourself users or the pay-as-you-play customers thought anything was "free".   They each made an economic decision based on their particular needs in context.  Anyone that ever paid for a Red Hat Advanced Server installation or a Novell SuSE desktop or MySQL Network knows that the solution isn't free, even if they didn't pay a software license fee.   

Microsoft continues to think that free and open source software sits at one end of a spectrum that has commercial software at the other end.  They apparently still don't realize these two ideas are orthogonal.  Really. 

Free and Open Source Software Developers Don't Respect IP
Wrong.  First, F/OSS licensing is completely dependent on strong IP (copyright) law.  Second, key projects generally have contributors license or assign the rights of their contributions to the project owner.  This is no different than Microsoft licensing third party code for inclusion in Windows or Office.  The terms and conditions bar might be higher for Microsoft because of the business and litigation risk they take, but the legal concept is the same.  Brad Smith suggesting otherwise is disingenuous at best for a lawyer.

Mr. Smith would obviously point out that the sort of licensing Microsoft does includes discussions around patents, something most (but not all) open source software licenses do not discuss.  This is because patents are a vendor-to-vendor discussion, and not all open source software projects are necessarily run by commercial vendors.  (This may explain why vendors with patents also make interesting patent grants to open source projects in which they participate.)

This discussion also flies in the face of the reality of vendors with more mature IP strategies than Microsoft's contributing heavily to free and open source software projects.  These other players seem to be extremely respectful of IP, yet they find their business strategy includes F/OSS.  Makes you wonder more at the lack of imaginative asset strategy at Microsoft. 

Customers (Should) Care about Patents
Wrong.  Patents are tickets to negotiations in vendor-to-vendor discussions.  Customers could care less.  I started this blog two years ago with a short essay titled "When are you going to sue your customers?"  In it I use the following example:

Legal IP tools are important for vendors and certainly relevant in vendor-to-vendor discussions.  The idea that customers care about patents, however, would seem counter-intuitive.  Consider the following: when you last bought an automobile, did you pick the “Honda” over the “Toyota” because the Honda had more patents in it, or more patents per ton of vehicle, or maybe because Honda's intellectual property practices were “better” some how?  Of course not.  You bought the product that met your needs.  It may well have even been the more innovative product by your own subjective measure, but whether or not the manufacturer chose any number of legal tools to protect the innovation wasn't part of your buying consideration.  How the vendor's business process works is of no interest to the customer beyond the actual customer-vendor interface so to speak.

Whether the vendor has a mature IP strategy, applying for patents, trademarks, and copyrights appropriately, choosing to keep some ideas trade secret protected, sharing selected IP with partners or competitors through patent pools and cross licenses, or aggressively publishing some ideas in the face of their competition is of little interest to the customer. The customer only cares that the product serves their needs and provides the value they paid for it.

Next scenario:  you are happily driving your Honda when you receive a letter from Toyota one day telling you that you're infringing their patents. They give you the choice to (a.) cease driving your Honda, or (b.) pay them a license to their patents.  You can essentially “pay twice” for the privilege of driving your car, and for some small sum you can feel free of any concerns that you are infringing Toyota's patent claims ever again.  On this vehicle.  Or for your household.  Or maybe it will be offered to you the customer as an annual license calculated by the number of drivers in the house and the number of Honda vehicles you own, pro-rated over certain uses, unless the patent applies to certain other manufacturers as well. What do you do?  Do you even waste time calling your lawyer to figure this one out?  Or do you call the Honda dealership and tell them quite simply to “fix this.”

Of course this assumes you don't also receive letters from General Motors for their patents (frustrated that North Americans are buying foreign vehicles), Daimler-Chrysler, and Hyundai, so you have the opportunity to “license” your Honda vehicle from many companies and pay for it numerous times. [srw -- this is WHY patents are a vendor-to-vendor discussion.]

The reality, however, is that Toyota is not going to threaten to sue Honda's customers.  They would like the opportunity to switch those Honda customers to Toyota's products, not upset them to the point that no Toyota dealership ever gets a chance at that Honda customer again. 

If anyone sued a customer company for patent infringement over its use of Linux, the company being sued would find a lot of "friends", starting with the Linux Foundation.  One might even imagine the company having a negotiation with IBM over opportunities for IBM to sell in other unrelated areas in return for help on the Linux litigation front.

Jeremy Allison recently mentioned in an interview that "I have had people come up to me and essentially off the record admit that they had been threatened by Microsoft and had got patent cross license and had essentially taken out a license for Microsoft patents on the free software that they were using, which they then cannot redistribute. ... But they’re not telling anyone about it. They’re completely doing it off the record."

This is hugely disturbing.  It means these companies are essentially giving into a market bully.  They certainly aren't serving their share holders.  If Microsoft is so gung-ho on the idea that this is a good thing, then THEY should come forward with the who and the how so we can all take a look.  The fact that this may be happening in secret does not put them in a good light at all. 

The Novell-Microsoft technical co-operation agreement around virtualization, web services, and document formats is no different than any other vendor-to-vendor tech co-op (marketing) agreement.  It's business as usual. 

The Novell-Microsoft "agreement to provide each other’s customers with patent coverage for their respective products" is no different than any other vendor-to-vendor cross license deal at the end of the day.  Microsoft wants to message it around open source software (Linux specifically) and IP and customers, but that's actually irrelevant. 

What other patents do these two companies have?  As much as Microsoft loves to maintain ambiguous IP messaging around Linux and patents or the Novell sponsored mono project and patents, the more interesting question is what historical patents Novell may have that might read on operating systems or file systems.  This scenario would be far more damaging for Microsoft than for Novell in a patent injunction shoot-out on revenue streams.  Cross licensing is just good business for two such vendors.  And customers could care less.

Culture comes from the top.  For all the good work that Bill Hilf's team may be trying to do, Ballmer's message is damning.  Ballmer's is the message that will be carried by the Microsoft field organization.   He's the CEO.  And it's doubly damning because Ballmer's message on this issue has no credibility anymore.

If Microsoft really wants to prove once and for all that customers should really care about paying for patents separate from their solutions, then Microsoft should go sue a customer over Linux systems that allegedly infringe their patents.  It would need to be a customer that clearly has a large installed base of roll-your-own-Linux systems.  They should go sue Google.  Or Bank of America.  Then we can all see how important this really is.

Of course Google may well have interesting patents on things like "search", so it would become a negotiation again.  And Bank of America probably spends a lot of money with Microsoft for other things, and it's unclear Microsoft would want to risk such a revenue stream (since they clearly wouldn't be worried about customer opinion at that point). 

At the end of the day Steve and Brad need a new strategy.  (Or a new PR firm.)  This message is growing old, and makes them look unimaginative (or worse, sneaky) in leading a modern high technology company.  Microsoft continues to stand alone in this space.  It's really too bad. 

Open Standards, IPR and Innovation Conference, Beijing 2006

The China National Institute of Standardization and Sun Microsystems co-hosted a one day conference on "Open Standards, IPR and Innovation" in Beijing.  I was an invited speaker.  The event's goal was to bring together a set of speakers that would provide different perspectives and practices on how standards and intellectual property rules play together inside and out of China, such that China can determine what will best work for them. 

There is obviously a reasonable amount of tension between a handful of countries and China when it comes to claims of piracy, and as China's economy continues to grow, that tension has broken out in the standards arena as well with competing standards for such things as RFID technology and WiFi complicating the discussion.

The great thing about the conference was that one felt the Chinese speakers and attendees were definitely attending to learn, but it was NOT to learn how to be more "western", but rather to learn so as not to make the same mistakes.  The growing sophistication of business and business practices is palpable in Beijing in general, and definitely present at the conference.

One thing that was also surprisingly apparent was the lack of patience with the multinationals and their pricing, Microsoft in particular.  This was not an undercurrent in the presentations.  It was right out there in the open. 

I remember getting into the debate a few years ago while still at Microsoft.  Some managers took the position that countries like India would obviously want to mimic the  "American" success of companies like Microsoft.  The debate continues along the lines that India would obviously NOT want to use open source software because it's IP hostile, and they really need to build lots of proprietary software businesses because it's a demonstrated way to "make money" and grow the economy.  Of course they would want to do so on a Microsoft software platform.

First, open source software isn't IP hostile.  It depends upon strong IP law.  Second, countries such as India are service-based today, and that means EVERYONE gets to take home some money rather than focusing the wealth in the hands of a few.  (The last thing India wants is a return to the days of the Rajahs with a handful at the top.)  Lastly, (and this is the kicker), when you scale out the amount of economic growth that's taking place in countries such as India and China, the last thing they want to do is ship massive amounts of hard currency OUT of their economy to the U.S. for the privilege of developing software to improve business.  (And Microsoft is a veritable Hoover in its structuring of its subsidiaries.  No amount of in-country R&D re-investment can make up for the amount of money at risk here.)  Open source rules in a case like this.

Leap forward to China.  Same story.  Same debate.  Same mistaken thinking from the Western multinationals that somehow China wants to be like them or worse yet, ship all that money out of the economy (government perspective) or the market (corporate perspective).

I understand a naive Western marketing person's desire to believe that China is their next growth market but they fail to understand the economics involved.  This is why Linux rules here -- the cost of goods sold is significant when you add up the royalty payment times the population of customers.  I have held a Motorola Ming phone.  Developed in China for the Chinese market.  It is the sexiest little piece of hardware on the planet, and incredibly functional.  It's Linux-based. 

Why would Motorola want to send that much money in royalties to Symbian or Microsoft?  Yes, yes, I can hear the "we're so valuable" statements from those marketing managers already.   Frankly, I don't really want to read Word documents on a two inch by three inch screen.  The Ming is a work of art.  But I digress.

Several interesting items came out at the conference:

• China has its own document format standard called UOF.  It is somewhat consistent with ODF.  There is to be a convergence.  I learned at dinner one night that Red Flag has already built UOF support into Red Office, so hopefully the support will rapidly ripple back out through the OpenOffice.org community and the rest of the ODF supporting products will soon support UOF as well.  (Andy Updegrove also attended the conference.  He has made the connections and will hopefully have a proper article on UOF soon on his blog.)
• China is very respectful of IP.  They value patents.  They seem to be uninterested in supporting software patents.  They do however understand how patents might make a mess of the standards world, and are very interested in work like the new ex-ante based IPR policy from VITA.

This was the first event in which I've participated where there was simultaneous translation going on.  My slides needed to be handed in a week in advance such that they could be translated as well.  Wireless handsets were available so you could listen to the translation.  While one screen had the slide in English, the other had the Chinese slide.  Attendees and speakers simply worked in their native language.  It was fascinating to see it all just work.   

I've posted all my photos on flickr from the conference and the conference dinners.  I still need to get some names tagged, but it's a start.  All in all a great conference.  I learned a lot, and it was a privilege to participate.

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Rambus, Patents, and Standards

The system DOES indeed work — just slowly sometimes.  Every once in a while I get embroiled in discussions with people that believe (a.) the sky IS falling with respect to patents and standards and hence (b.) we need to get all patent holders to forfeit their future business rights in overwrought and strict IPR policies within standards development organizations.  The Rambus abuse is universally the example of the danger, in a similar way that the SCO Group lawsuit is the singular data point extremists use when trying to spread open source litigation FUD. 

Occasionally I run into the debate that (c.) patents are so important in terms of value to a company that all other industry practices (e.g. standards, collaborative development, etc.) are subservient to this incredible tool, but these debates were typically inside Microsoft with its extreme IP fetish and can safely be ignored. 

The Rambus case is a classic case of submarine patents in a standards setting forum, cheating the rules, and litigating for fun and profit.  Today the U.S. Federal Trade Commission reversed its previous ruling and has slammed Rambus appropriately, stating that their practices were anticompetitive, and beginning the process of damage calculation.  Brilliant!  Here's the quotable bits:

... the Commission found that, through a course of deceptive conduct, Rambus was able to distort a critical standard-setting process and engage in an anticompetitive “hold up” of the computer memory industry. The Commission held that Rambus’s acts of deception constituted exclusionary conduct under Section 2 of the Sherman Act and contributed significantly to Rambus’s acquisition of monopoly power in the four relevant markets. The Commission has ordered additional briefings to determine the appropriate remedy for “the substantial competitive harm that Rambus’s course of deceptive conduct has inflicted.”

Here are the links:

• The FTC announcement is here.
• Andy Updegrove's excellent write-up is here, providing the historical background.  (Andy filed a friend of the court brief in this case, and has deep knowledge.)
• The FTC docket is here if you want the complete historical legal depth. 

I've long maintained that patents are simply tickets to negotiations. Occasionally the negotiations go awry.  Sometimes people abuse the rules.  In the end, the economics of the system works. 

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