COMMENTARY--My personal belongings have finally arrived in Dublin.
This would all be well and good IF I LIVED IN
DUBLIN!!! Given that it arrived by boat (I paid for
it to go by air), was four weeks late, and was stacked
on two pallets like Homer Simpson stuffing his tray at
the all you can eat bar (gee, do you think shippers
charge by the palette?), I’m left wondering if moving
company employees take lessons in how NOT to do their
job properly. On the brighter side, the next time I
move, I can just roll my things to my new place, given
that the larger of the two pallets was beaten into
something approximating Mork’s space capsule (that’s
Mork, of Mindy fame).
My mental stage manager has just placed his shepherd’s hook around my neck to drag me back to the point of this article, which is: patents. They’re popular, they’re controversial, and lots of people worry that large companies will use them to immobilize the competition like butterflies in a museum display case. An article by David Berlind expressed fears that IBM and Microsoft might use patents to create a "web service tax," hindering the growth of a technology which many consider critical to the future of the internet. A rumor making the rounds claims that Steve Ballmer hinted at patents on .NET technology which might serve as a hindrance to open source implementations. Whether or not Microsoft’s CEO actually said these things (it’s mildly suspicious that all claims are based on a single report, in German, from CeBIT. Does Ballmer speak German?), it reveals a widespread fear that large companies will leverage patents to clear away competitors or make computing unnecessarily expensive.
Such fears are not entirely baseless. A famous example is the LZW patent held by Unisys. LZW is the compression algorithm used in GIF images, a format popular on web pages. Most people were either unaware of the patent on LZW, or else had assumed that Unisys was not enforcing it. Thus, it came as something of a surprise when Unisys suddenly went after ISPs and software vendors demanding royalties for use of LZW, an event which took place long after GIF had reached widespread popularity. Similarly, Amazon holds a patent on "one-click shopping," and used that patent to stop Barnes & Noble, its nearest competitor in the online book sales space, from providing similar functionality on their web site.
However, it's worth stepping back from the trees, as it were, to view the forest. The technology industry is literally awash in patents. Microsoft has been designated the assignee in 2,386 patents since 1991, which might seem a lot until you consider that IBM has been granted 24,128 patents over the same period (search for both IBM and "International Business Machines" on the patent office search site). Sun had 3,497 patents granted for that period, Intel had 5,652, Apple had 1,539, Oracle had 390 patents and Novell had 192.
If each patent came with a royalty charge, computers would be very expensive and we wouldn't be sitting here having this conversation because most of us would be lucky to have typewriters. Obviously, most patents are either not enforced, or are licensed royalty free.
Why is this the case?
During the cold war, the Soviet Union and the United States built up large stockpiles of weapons of mass destruction. Both had them in large enough quantities as to guarantee the destruction of the other if either chose to use them first. Thus, Mutually Assured Destruction, or MAD, acted as a theoretical barrier to use of such weapons.
Something similar goes on in the patent minefield, without the risk of nuclear fallout. No company can own every patent. It would be too expensive, and would involve owning the productive power of every person capable of applying for a patent. Thus, companies usually refrain from charging licensing fees, because to do so might invite reciprocal charges from the licensee on patents it might own. It’s like a software Pandora’s box. Once opened, development costs go up for all concerned.
Of course, this system isn't perfect. The MPEG group is well-known for charging licensing fees on its technology, as do companies with patents related to WAP. Similarly, if a company consists of little more than a pile of patents and a team of lawyers to enforce them, there is nothing to prevent such licensing fees. Such is the case with InterTrust, who is suing Microsoft over a number of DRM-related patents.
For the most part, however, the system works because most patents are owned by companies with an interest in minimizing royalty payments. Microsoft, IBM and others will hesitate to leverage patents against each other out of fear of the consequences in terms of reciprocal royalty charges. The result is a market wherein most patents are royalty free.
Licensing in Action: Microsoft
Microsoft is not a company whose business is built on
patent licensing. Even contentious licenses, such as
the license for the CIFS
file access protocol, is royalty-free.
However, a "gentleman's agreement" not to charge royalties is not much use in the often cutthroat world of business. Trusting a competitor not to charge a licensing fee in return for your royalty-free generosity can be an expensive mistake. It's far better to have such a guarantee in writing. Since asking every company to sign a royalty-free reciprocity agreement would be impossible, patent holders who make software sometimes choose to link the reciprocity agreement to certain key protocols other companies might wish to use.
This is the case with the aforementioned CIFS license. As the licensing agreement requires as part of its terms:
3.6 Reciprocal Patent License. To the extent Company owns, controls or can sublicense without payment of a fee to an unaffiliated third party, any patents that are required for Microsoft or its licensees to implement CIFS as set forth in the Technical Reference and distribute such implementations, Microsoft and its licensees are hereby granted a license to such patents solely for the purpose of implementing CIFS as set forth in the Technical Reference and distributing such implementations.
This might partly explain why Microsoft explicitly forbids usage of the CIFS specification in software released under an "IPR Impairing License," which is Microsoft’s legalspeak for the GPL (Other reasons include Microsoft’s interest in reusing open source implementations in its own products, something they cannot do if that code is licensed under the GPL. Products licensed under the BSD open source license are free to use the CIFS specification). As they explain in the license:
3.3 IPR Impairing License Restrictions. For reasons, including without limitation, because (i) Company does not have the right to sublicense its rights to the Necessary Claims and (ii) Company's license rights hereunder to Microsoft's intellectual property are limited in scope, Company shall not distribute any Company Implementation in any manner that would subject such Company Implementation to the terms of an IPR Impairing License.
In other words, one reason the CIFS spec can't be used in GPLed software is that the GPL requires an automatic relicense of Microsoft's IP to those who hope to build derivative works. To do so would make an end run around Microsoft's attempt to build an ironclad system of IP licensing reciprocity. Open source per se is not at issue. Rather, the issue is with automatic IP relicensing (and mandatory source code distribution) for derivative works, which are problems for the GPL but not for other types of open source license.
Conclusion
Such an arrangement, however, can at best be described
as a detente. There is nothing official which would
prevent a company from deciding to charge royalties.
As noted, certain companies have no need of licensing reciprocity.
As I’ve stated before in Talkback posts, I am not a fan of algorithm and business process patents. I would subscribe to what Friedrich Hayek said as far back as 1944. Though he wasn't speaking about algorithm or business process patents as such (they didn't exist then), his statement still holds true today:
"...strong arguments can be advanced that serious shortcomings here, particularly with regard to the law of corporations and of patents, have not only made competition work much more badly than it might have done, but have even lead to the destruction of competition in many spheres." (The Road To Serfdom)
Patents are designed to serve as an incentive to innovate, particularly in industries where the cost of research & development is high and the barriers to easy copying low. Algorithm and business process innovation already have sufficient incentives. Those incentives consist in the sale of software whose advantage is new technology.
Others might copy such algorithms or business processes, but fear of such copying will not deter algorithm and business-process related R&D as it might deter, say, the expensive hunt for new medicine. Algorithm and business process patents create unjustified tollbooths around technology, hindering the spread of good software ideas and leading to a useless patent arms race which needlessly diverts revenue that would be better spent making better software.
It is worth noting, though, the amazing flexibility of markets, even in the presence of bad patent laws. The market has spontaneously settled on an arrangement that ensures most patents are royalty-free, even for small companies that are relatively patent-poor. Markets thrive on good laws, but even in the presence of bad ones, they are surprisingly resilient.
