Once More unto the Breach

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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Patents, Red Hat, and Hibernate

Updated [30-June-2006, 14:45]:  Jan Kechel has created a website which is dedicated to collect prior art against this patent, but I didn't want his work lost in the comments. Please see: http://helpredhat.dyndns.org

News is breaking on claims by Firestar Software that JBoss (now Red Hat) infringed a particular patent in the Hibernate 3.0 software release.  Hibernate is an open source project started by JBoss and forms part of their JEMS product suite. 

• There's a good summary here with reference to the tactical timing of Firestar's attacks, and appropriate pointers to the claims and prior art debate that will rage.
• Bruce Perens has commented here, and once more argues that patent reform is the only thing that will save software from software patents. 

I participated in a panel discussion on the future of open source and IP hosted by SDForum in January.  The consensus of our group (mostly lawyers with a lot of experience in IP law and open source) was that the business economics of the situation would actually prevail before legislative change in a system constrained by deep pockets in other industries with different dynamics and entrenched views.  A few messy law suits, and rulings similar to the recent U.S. Supreme Court decision on damage and injunctions, and companies will begin to realize that software patents make bad business investments, and they will spend their dollars on more urgent and important things. 

This current lawsuit will run its course.  The other organizations that have open source patent protection mechanisms (e.g. The Open Invention Network, and the Patent Commons Project hosted by the Open Source Development Labs) will get to test and tune their organizational responses.  Microsoft will make statements about the value of intellectual property, and quietly fret about the lawsuit's outcome. Stories and counter-stories will be told. 

The most important thing to remember is that a patent is just a ticket to a negotiation.  Firestar may have thought it was going to be clever and make some quick cash on this suit in its timing.  One doesn't even need to ascribe malice and malevolence (or Microsoft as was suggested in one report) to the plaintiffs. 

I've been in enough executive meetings to virtually hear the discussion that would of ensued over whether or not this investment (i.e. the patent) was or wasn't viable, and whether or not it should or shouldn't be used and defended, and where the (fiduciary) responsibility lay.  Lawyers would be hired (increasing the investment) and the decision made to "see what happens."  Especially if Firestar's business is in a bit of a slump.

As was pointed out, however, Oracle and BEA and possibly even IBM and Sun (through the effects in the Java Community Process and the Java Persistence API) may have an interest to defend here.  Certainly IBM and Oracle would like to see Red Hat continue to thrive and prosper, even if BEA and Sun interests are merely defensive. 

These other companies need not even name themselves to the suit, but may start quietly helping in the background. Firestar's legal team may discover it is up against a far nastier negotiation than they anticipated, and regardless of their belief, opinion, and advice, the Firestar executive team may not have the stomach to fight if it means throwing considerable more money at the "investment" in the patent, or the negotiation.  SCO Group's "business" might be a law suit, but Firestar's may actually still be software, and their responsibility to invest in customers and products may quickly become more clear. 

Depending how creative Firestar's executive team is and how the product is structured, they could even turn this into a PR win by joining the community and broadening their customer engagement through selective participation in open source projects, rather than spending money on litigation.  This of course makes huge assumptions about how much imagination is left at Firestar. 

In all of this I remain fond of David McGowan's quote from the end of his May 2005 presentation (and paper) at the University of Toronto:

“If the F/OSS community wants to be in the commercial space, community members will have to learn to deal calmly with IP litigation.  The F/OSS production model will work where it makes sense, and it will not work where it doesn’t.  It’s really just that simple. Particular claims in individual suits—even one against a flagship program such as the GNU/Linux OS—will not determine the fate of the community.  Such cases present factual issues that will get resolved one way or another; they do not represent a crisis for F/OSS production as a whole.  Norm entrepreneurial rhetoric that plays off such cases should be treated as entertainment.  Enjoy it if you like it, take inspiration from it if you must, but don’t confuse it with the way things actually get done.”

Other patent related posts on this blog:

• A patent is merely a ticket to a license negotiation (Feb 2005)
• Corwin's Razor and the OASIS IPR Policy (Feb 2005)
• An Interesting Juxtaposition of Microsoft and Patents (Mar 2006)
• Massachusetts, Microsoft, and Open Document Format Standards (Sep 2005)
• IBM, Patents, and Open Source Software (Jan 2006)
• More on Open Source Risk Management and Licensing (May 2006)
• Open Source Software Business Models at USENIX (Jun 2006): This is the audio from the panel discussion with comments on software patents by myself, Mike Olsen (Oracle/Sleepcat), Miguel de Icaza (Novell/Ximian), and Brian Aker (MySQL) in the middle MP3.

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Patent Portfolios and Paying Patent Lawyers

The current issue (Jan 14-20, 2006) of the Economist has an article (sorry paid subscription required) called "Innovation and its enemies" covering the 2005 USPTO patent statistics, the problems in the patent space (at a high level), and references the GPLv3 work at the end of the article.  A couple of numbers caught my eye. 

Moreover, Microsoft (with around 750 patents) failed to break into the top ten—but with over 13,000 applications pending, it seems bound to get there soon. For now, the firm ranks 18th.

That's sort of staggering really.  The rule of thumb is a patent can cost US$15,000 by the time you've paid the patent attorneys and filed the paper work, and then you wait (for on the order of three years now according to the article).  Microsoft has filed as many as 3000 patents in previous years according to various public reports, and one might imagine they filed as many a couple of years ago, for these 750 to appear this year. 

So what I want to know is when do the patent attorneys get paid?  If it's upon filing, but the patent doesn't survive, does the filing company get money back from the attorneys because the attorneys didn't file a strong enough patent, or do their homework deeply enough?

As an ex-patriot Canadian, I was taught that the Canadian legal system differed from its U.S. counterpart in that (i.) a Canadian lawyer only gets their fee (no percent of the damages) so the pressure to drive up the damages doesn't come from the lawyers, and (ii.) in Canada the "loser" pays which tends to cut down on gratuitous litigation.  So the way lawyers are rewarded seems at first to have an effect on how the legal system gets backlogged (or not), or at least it removes the lawyer's bias from the system.   

With the patent system flooded (the number quoted in the article is that there are 500,000 patents in the backlog), the patent lawyers probably can't do their homework deeply enough.  But there's no economic disincentive to file differently to try to improve the system. 

It will be fascinating to see how many lawyers begin to get involved in the Open Patent Review initiative started by IBM. Will the aggressive participants become the better patent lawyers offering their clients demonstrably better patent filings?  The right sort of competition from lawyers could have a fascinating impact on the improving quality of patents. 

Here's the top ten list for the year (from the USPTO website):

Top 10 Private Sector Patent Recipients for the 2005 Calendar Year.

Preliminary Rank in 2005	Preliminary # Patents in 2005	Organization	(Final Rank in 2004)	(Final Number of Patents in 2004)
1	2,941	International Business Machines Corporation	(1)	(3,248)
2	1,828	Canon Kabushiki Kaisha	(3)	(1,805)
3	1,797 *	Hewlett-Packard Development Company, L.P. *	(4)	(1,775)
4	1,688	Matsushita Electric Industrial Co., Ltd.	(2)	(1,934)
5	1,641	Samsung Electronics Co., Ltd.	(6)	(1,604)
6	1,561	Micron Technology, Inc	(5)	(1,601)
7	1,549	Intel Corporation	(7)	(1,513)
8	1,271	Hitachi, Ltd	(8)	(1,893)
9	1,258	Toshiba Corporation	(9)	(1,311)
10	1,154	Fujitsu Limited	(11)	(1,296)

* Calendar year counts for 2005 for Hewlett-Packard Development Company,  L.P. include seven patents issued to Hewlett-Packard Company.

IBM, Patents, and Open Source Software

There is something wonderful about watching IBM execute.  Terrifying perhaps if you're the competition, but wonderful nonetheless.   Last week they announced several initiatives around the U.S. patent system and open source software.  Bob Sutor covers the three initiatives in his blog entry. 

The Open Patent Review initiative sounds brilliant.  Let the public participate in patent review.  By registering an interest in particular domains (presumably via RSS feeds), people that have experience in an area can contribute and keep track of what's happening that might impact them.  It wouldn't take much imagination to see reputation systems wrapped around this such that different "community examiners" begin to stand out based on the ratings of their peers and the usefulness of their contributions.  (Likewise cranks can be weeded out.)  Beth Novak is running a series of workshops on the initiative.  You can find out more information at her website: http://dotank.nyls.edu/communitypatent.

Then there's the Open Source as Prior Art initiative.  This work is being done in conjunction with the Open Source Development Lab, Novell, Red Hat, Eclipse, and SourceForge.net.  Obviously this has a bit of a Linux-centric view of the world, but by adding SourceForge they can test the environment well beyond the Linux world and it presumably wouldn't be too difficult for the Apache Software Foundation, or the Gnome Foundation to get involved.  Hopefully Google gets involved before Yahoo or Microsoft wake up and smell the coffee here.  You can find more information at this website: http://developer.osdl.org/dev/priorart/information.html.

The Patent Quality Index sounds intriguing.  I'm a little more skeptical here perhaps, but look forward to seeing where it goes. 

While the initiatives are each interesting in their own right, it is the business execution on IBM's side that remains brilliant.  It is how IBM is attacking the problems of a congested system, when they clearly continue to patent intellectual assets to manage vendor-to-vendor competitive situations.  Consider:

• HP, Sun, Oracle and Microsoft don't appear to have been invited to the table.  This means they aren't paying attention.  HP is a primary patent filing company like IBM on the hardware side.  (Hmmm -- so is Intel on chip technology.)  And then of course one might imagine Oracle and Microsoft care just a little about software patents.  Any move any of them make now (i.) looks like playing catch-up, (ii.) has to co-ordinate with the existing first public moves of IBM else they look divisive in the teeth of IBM's community and academically focused initiatives, (iii.) is already less influential.
• Last Spring (2005), Microsoft and Oracle announced their desire to see patent reform in the U.S. except they're trying to do it via the U.S. Congress, in the teeth of a system designed to protect the bigger interests of industries like the pharmaceutical industry.  Here, instead, IBM is avoiding the entire expensive (lobbying), time-consuming, messy legislative route and plugging straight into the USPTO to help improve the tools they can use and dealing (potentially) directly with the human bandwidth and expertise problem the USPTO has regardless of what legislative changes may be enacted at some future time.

I once heard a story (probably apocryphal) of how IBM convinced the USPTO to consider the IBM Systems Journal to be one of the sources of prior art that was searched.  This is breathtaking in its brilliance.  They could mainline directly into USPTO:  And it's genuinely helpful.  The question becomes: What would they want to publish or patent in the teeth of their competitors this issue?

While apocryphal, it's believable because there is a maturity to the intellectual asset strategy in it that goes well beyond more-patents-faster, and speaks to the same level of brilliance of their new initiatives.  This will be a fascinating set of initiatives to watch. 

Open Standards, Patents, and the Open Document Format Play

Bob Sutor (IBM, vice-president of standards and open source) recently posted a great discussion on defining an open standard.  This is important because we are still as an industry struggling to articulate the business relationship between standards and open source.  We also continue to try to articulate the business rationale that accounts for patents in the context of open source or standards.  One doesn't have to agree or disagree with software patents, but one does need to deal with the reality of their existence.

After laying out a set of criteria, and some discussion of the problems in definitions in this space, Bob offers the following perfect observation:

If you have read this and conclude "ha, we can't really get an open standard so we'll muddle through and do what we want", then you have misunderstood what I am talking about. Since most standards fall between closed and this "purely open" characterization, you need to decide what is important to you. For example, a government may decide that it really cares about Maintenance, Accession, and Implementation and will try to use standards that maximize those characteristics while being willing to concede a bit on Development and Modification by Others.

There isn't one "right" definition here, and the context is different for different developers and consumers of standards at different times. And yes, you might imagine Bob's example there was for the benefit of the Commonwealth of Massachusetts. 

Another recent post in this space that provides context based on the economics of participation is Andy Updegrove's blog discussion on standards and patent pools.  Andy is a standards lawyer (literally) at Gesmer-Updegrove and knows whereof he speaks.  Mid-post he delivers a great synopsis on the economic benefits of a patent pool.  One item left out of the list would be that the pool companies can also stand united against a lone litigious patent holder in the space. Remember: the point isn't to validate software patents, but rather to deal with their reality. 

Some good work has been done by a number of people attempting to define the term "open standard" with respect to the freedom to implement such standards in a royalty free unencumbered way.  Unfortunately, such definitions put the standards body in an indefensible position.  The open source definition applied by a community to its project rested within the control of that community.  The same can not be said for the open standards definitions that exist, in so far as an outsider to the group attempting to develop an open standard can arrive on the scene with a patent and put the definition of "open" at risk for that standards project. 

I've offered views on patents and standards before in the context of the OASIS IPR policy and around patents as no more than tickets to a negotiation.  The decision of the Commonwealth of Massachusetts to move to the Open Document Format, however, will bring this all back up for discussion. 

Microsoft is in a bind at this point.  They appear to have thought that by publishing the proprietary specifications for their Office formats, accompanied by a royalty free license for any essential patents, they would have a reasonable debating point that they were as "open" as any standard.  The fact that no one else has claimed to be implementing them doesn't help their case that they're trying to encourage multiple implementations, but then that probably wasn't their desire.  (And what about a license for other non-essential patents that might be infringed?  Are they to be royalty free as well, or is that the troll beneath the bridge to be brought out with the excuse that "it's our property".) 

This is not the first time Microsoft has been hit on royalty free patent licenses. In the context of the SenderID debate through the Summer 2004, Microsoft went out of its way to do the right thing.  They announced they had applied for patents that might read on the IETF SenderID anti-spam standard (which wasn't required of them), offered a royalty free license and published its text for all to see (which was pretty upfront considering they didn't have the patents awarded at the time), BUT the patent license wasn't sublicensable so certain free and open source implementations would be prevented if they were licensed under the GPL. 

They appear to have a legitimate legal concern that if software implementing the standard was licensed under the GPL, and subsequently someone used that software source code for a project unrelated to the standard and still licensed under the GPL (through the GPL's attachment), then the scope of the patent could creep and they might lose their ability to license the patent in other contexts under different (presumably royalty bearing) terms. 

My question for the patent lawyers "in the room": if there was a way to structure the royalty-free patent license to be strictly for implementing a particular standard (or group of standards), and allow it to be sublicensed in that context (so the GPL could be used), then doesn't the GPL become the guard on the patent?  The GPL requires a user to have all the rights to distribute the software.  The only patent rights granted in the sublicensable royalty-free license are to implement the standard.  Anyone trying to use that software for other purposes and distribute it would be prevented by the GPL from so doing.  Indeed, Microsoft could ask the Free Software Foundation for help enforcing the license.  Just a thought.  I'm clearly not a lawyer, so I would defer to legal minds on this one. 

The subtleties here, however, are not to be tossed aside.  The curtain has just raised on the document formats play.  While Microsoft players are still fumbling their lines in the early scenes, it's unclear the first act is over, and the rest is still being written. 

Innovation and Customers, Patents and IP Strategy

I recently posted on Massachusetts's declaration to move to open document formats for government documents. Matt Asay raises several issues (innovation and customers, my possible confusion of patents and innovation, me being anti-Microsoft).  One I've corrected inline, by bringing it here because he was correct that it really didn't fit the other post.  The other two I've brought here to hopefully clarify.

Matt calls me out on the fact that I said:
Customers don't buy innovation.  (And customers couldn't care less about nor do they buy patents.)  They buy solutions to problems.

He says (by calling out Jason Matusow's discussion on his blog):
... That Microsoft is an innovator (sometimes measured in patents and copyright), and customers should buy from it because it will consistently deliver cool, useful (i.e., innovative) new things worth buying.

Here's where I realize Matt and I are likely agreeing, but confused in each other's terminology.  He is equating innovative with useful.  I absolutely think consumers buy things because they're cool and useful.  That's the demand side act.  Innovation (to me) is the act of design and creation.  The dictionary defines it as a noun meaning "the act of introducing something new", or "something newly introduced."  It's a supply side act.  And it is different from the buyer's motivation. 

As Matt later points out in a subsequent post:
It's not that we wake up one morning and say, "My, I sure need some innovation today! Where can I buy some?" Rather, we buy products that catch our eye, that deliver results, that give us a performance or feature edge. All of this stems from innovation.

Exactly so. 

But I am not confusing innovation and patents.  (I think he's merely goading me in that statement to produce the following bit).  Intellectual property (IP) is a collection of legal tools used to protect assets (i.e. innovation), consisting of copyright, patent, trademark, and trade secret law. You need to create first (i.e. innovate in Matt's terms) before you patent. 

Patents are government-granted time-limited mini-monopolies to enable the creator to bring their work to market protected in such a way that they recover their investment costs, but published in such a way that others will be able to build eventually upon the work. But patents cost money to obtain and defend and maintain.  They are merely tickets to a negotiation as I've observed. Useful?  Depends.  Patenting is merely one choice in relation to how you use the asset created.   

From a business perspective, I would rather have a growing bed of customers, and out run and out deliver the competition, possibly even publishing like crazy to prevent those competitors from patenting in the space.  Takes less time.  Costs less money.  And if I'm a small company, having a little stack of a few patents, even brilliant essential patents, won't help me going up against a cross-license negotiation with any of the big guns (IBM, Microsoft, Intel, etc.).  In software, the speed and cost of delivery of innovation makes patenting a possibly suboptimal use of my time and money.  Indeed, I could do everything "right", researching patents, possibly applying for my own, and with the 18-24 month gap between application and award for a patent, still discover I'm infringing months after I've shipped my product to market.  I'm not the only one thinking this way.  Here's what Joi Ito had to say recently. 

Lastly, I'm not an ardent anti-Microsoft crusader.  (Yes, I was on an airplane at the time he wrote that bit.)  I spent the first decade of my career from '80 through '91 on the customer side of the fence in large IT organizations in retail and manufacturing.  I have always been unsympathetic towards any vendor that forgets that it's the customer's money, and they have to earn it.  The vendor has to care about helping me solve my problem.  Vendors aren't universally "good" or "bad" at this.  Microsoft ends up in my sights a little frequently only because of a certain depth of experience inside the walls. 

Pax.

Microsoft and the Smiley Patent

A fine write-up from Groklaw as always.  (Includes the patent link.)
Unfortunately, there's prior art.  Or maybe this is where trademark law and patent law collide?!?! Maybe we need the Supreme Court to decide who and what is right. 

Actually, this is where Microsoft's head of intellectual property strategy needs to spank the lawyers for wasting his budget and review the internal process as to when they get called.  Really.  How much shareholder money was spent on this application and to what end?

"Move along.  It's just an accident.  Nothing to see here folks.  Move along."

Image supplied courtesy of FreeFoto.com

An Interesting Juxtaposition of Patents and Microsoft

Two interesting reports appeared in the past few days.  First there's a good article on Microsoft encouraging patent reform.  As a company spending outrageous amounts of money on lawyers filing patents, it makes sense to reform the system.  The top companies applying for patents in our industry tend to top the 2000-3000 applications mark.  At an estimate of $12,000-$15,000 per patent to the lawyers for writing clever applications, that means these companies are each spending on the order of US$40M/year to add to the patent portfolio.  Sort of takes your breath away. 

Then they get into the other side of the coin so to speak with their intellectual asset strategy, and how they use intellectual property to best advantage.  As reported in the article, Microsoft is in a fairly constant state of patent litigation, much of it inbound.  Deep pockets makes one a good target. 

Among the patent changes Microsoft proposed directly quoted from the article:

• Halt the diversion of fees earmarked for the U.S. Patent and Trademark Office (PTO) to other government uses.
• Allow third parties to submit "prior art" information to patent examiners during the patent process itself, rather than only after a patent has been issued.
• Allow third parties to challenges patents "administratively," rather than just through litigation in order to help weed out questionable patents, as currently is permitted in Europe.
• Create a special court that would consolidate and hear all patent cases at the federal district level in order to improve consistency and predictability of patent litigation.
• Reform the standard used to measure "willful infringement," via which claimants are currently allowed to collect treble damages.
• Increase "harmonization" and collaboration across international boundaries.
• Move to a "first-to-file" system, rather a "first-to-invent one," thus following the patent procedures to which most other countries adhere.

While the list of proposed changes is pretty good, they tend to focus on getting good patents out of the system.  It's unclear that they address the problems around the length of time to get a patent out of the system, which means they will still be caught so to speak shipping products not knowing whether they're infringing or not.  So they may still be getting sued as much.  While such litigation may close more quickly under a reformed system, there is still that pesky need for lawyers.

The other report of note in the space is Stephen O'Grady's blog discussion of Microsoft and patents around the Mono project.  He points out that it is conventional wisdom that is getting in Microsoft's way with respect to things they could do with patents to support mono. This would encourage C# to be seen as a cross-platform environment as the language continues to be hammered by the likes of java and cross-platform open source environments.  Indeed, why can't Microsoft make the same sort of strategic intellectual property play that IBM has recently.  There are even more creative intellectual asset plays Microsoft could make in this space.  Unfortunately, they are bound by the very practices that made them successful.  And this might be why they see patent reform as more better patents (not necessarilly) faster as the way forward, rather than getting truly creative in their intellectual asset strategy.