The argument against software patents

We today face the risk of software patents being approved in the EU because not enough parliamentary members will be showing up to vote. Due to this it is important for those of us who oppose software patents to make sure EU parliament members see the damage software patents cause, so they realize it is important to be there to vote providing the needed absolute majority. But sending out a clear message is also important for the process of patent reform in the US and other places who have fallen into the trap of introducing them.

In order to successfully reach out we need to realize what the priorities of our target groups are and how to talk to them. The goal of this article is to present my thinking on the subject of software patents and how I expect our major target groups can be reached with the message that software patents are a bad idea.

Why more politicians don’t react

The first major mistake many people who oppose software patents make when they try to advocate their view is make it mainly an issue of ideology and principles. Lawrence Lessig

did this
when he argued in front of the US Supreme Court over the extension of Copyright
in the Eldred case and came up short. What he learned then and which others
need to learn now is that most people, including politicians and judges, don’t
really care that much about ideology and principles anymore, except in festive
talks. People in general and the politicians they elect are mostly worried
about material issues like economic growth and employment numbers as these
are the issues which tend to determine election outcomes and personal finances.
So in order to win this debate we need to get politicians and the general
public to see that software patents are not helping create jobs and economic
growth, but rather have the opposite effect.

In a situation where software patent supporters manage to stack a claim that
a removal of patents will cause job loss and while the counter argument
is that we have a right to tinker, the weight of arguments, in the eyes of
politicians and decision makers, become very favorable to the software
patents supporters. Lets stop making it easy for them.

Why industry leaders stay silent or support patents

Many find it surprising that more of the top people in the industry do not speak
out against patents, that cases like the
Sun-Kodak settlement,
the Forgent JPEG patent claim or the
Microsoft-Eolas case
should awaken these companies and their leaders to the dangers that software
patents pose to their ability to innovate and develop new software. But
if you look at it from their viewpoint its becomes quite clear why its hard
to speak out against patents. They are hired to represent the interest of
their shareholders and the main interest of their shareholders
in getting a higher share price. The people deciding what the share price
should be is Wall Street. Wall Street when they try to figure out the
value of a company they look at many factors, among them the amount of patents
and other assets a company own. If all software patents
where dissolved over night then Wall Street’s probable reaction would be to
cut the valuation of most of the big tech companies. Which of course would
make share holders rather upset and they would not be to pleased with the
CEO who argued for doing away with software patents.
So it is not primarily Steve Jobs, Steve Ballmer, Sam Palmisano or Scott
McNeally we need to convince that software patents are not an asset to the
industry, I think they already know it, but are in a position where it would
be self-destructive to say so.
The job we need to do here is make sure Wall Street realizes that with the
new generation of companies doing nothing but filing and buying patents,
mostly of dubious quality and correctness, followed by going after the
people with big pockets, software patents are a liability for the companies
in the software industry, not an asset.

The day we make Wall Street see the true effect of software patents, that
is the day they will start punishing the share price of software
companies. And that is the day I think we will see a lot of industry leaders
feeling much more free to join us in our struggle to get software patents

The big versus the small

Even with Wall Street seeing the truth we can not be sure that the big
business will come out supporting the complete removal of software patents.
An example here is
IBM who recently came out requesting reform
rather than full abolishment,
funny enough stating that the reason they don’t want all patents invalidated
is because they worry about customer backlash if all the patents the customers
are now forced to pay to license where found not to be valid anymore.

The big software companies rarely use patents against eachother because
using patents against the other giants will lead to them hitting back
with their own patent portfolios. Which is also why most of these companies
have extensive cross licensing deals between eachother.

But using patents to kill of small and mid-size competitors who have not
had the resources to build up a patent pool yet is a different matter of course.
Luckily some of the big players like IBM and Microsoft don’t dare to do
this as they are or have been in the antitrust spotlight for monopolistic practices
and market share abuse. But the fear, uncertainty and doubt generated in the
marketplace due to all these subsisting patent mines can be damaging enough.
And of course there is nothing stopping someone like Microsoft to sell some
patents to a patent litigation company, including licensing the patents back
to Microsoft as part of the deal, then letting that patent litigation company
loose upon their competitors. Microsofts eager willingness to throw money
SCO’s way
to help fund their ongoing legal battle with IBM and the worlds
Linux developers only shows that such tactics are not below them.

And of course the companies not yet in the antitrust spotlight can freely
use their software patent arsenal to bring their competitors down.
For many smaller companies the legal cost of fighting software patent claims,
no matter how strong evidence they feel they can bring forth that the patent
is invalid, can be enough to kill them off. This report accuratly points out that
with the number of patents out there the cost of getting the patents invalidated
one by one is way out of range for most companies or private persons needing
to do so.

And even if you believe you have a valid case and the money for getting a
patent found invalid you still need to have faith that the legal system is
able reach the correct solution. Jonathan Schwartz, COO of Sun Microsystems,
quite clearly stated in his blog that one of the reasons they settled was because they doubted they
would be able to get a fair trial against Kodak in front of a Rochester jury,
being the hometurf of Kodak.

Using patents to form cartels

Many of the major players also abuse the software patent system in another
way to keep their smaller competitors down. When all the major players in
a market joins together in an agreement that limits competition or fixes
prices its commonly called a cartel. Patent law is being used today by
many of the leading companies in the tech industry to form cartels in the
form of patent pools. A good example here is how the major companies behind
the DVD standard have set up a patent licensing system which ensures that
no matter who produces DVD players they will be able to earn money on it,
forcing their competitors to subsidize them. There are some efforts to
fight this and return competition to the marketplace and one can only hope
that the Chinese DVD
makers who are suing the DVD patent pool
are successful with their effort.
But unrelated to whether that specific case is successful or not the patent
cartels are another example of how software patents are being utilized
to harm competition and limit the free market, and in turn harm both the
economy itself and employment rate.

What is the goal of the market economy

The goal of a functioning market economy is to generate as much wealth as
possible for as many people as possible. Critics of the free market might
claim otherwise, but I think its rather indisputable that the combination
of democracy and market economy have created more wealth for a higher
percentage of the population in the countries where it have been applied
than any other known system used through history. Not to say its perfect,
like any other system its in constant need of adjustments and refining,
but no plausible better solution has yet to be presented.

The most important aspect of the free market compared to some of the other
systems tried through history have been, you guessed it, a free market. A
free market is one where there is actual competition and everyone is able
to set up shop and win in the market if they are better at doing what they
do than their competitors are. Sadly enough it seems that the people who
traditionally advocated the free market have to some degree lost their way
and moved from being pro-market to being pro-business, in the sense that
instead of believing in the ability of the market to generate wealth they
believe in the ability of big mega-corporations to generate wealth. This is
sadly enough a return to the old medieval system where guilds and similar
had almost market monopolies in their own segments, which I think we can
safely conclude when looking back did not generate more wealth for society
as a whole than the later system of a free market. Sure the big mega-corporations,
like the guilds before them, do generate wealth, but much less wealth than
a free market would.

The switch from being pro-market to being pro-business have the unfortunate
side effect that the policy makers, instead of listening to those who advocate
systems that generate more competition in the marketplace, tend to instead
listen to those who have power in the market today and want to hold on to it.
Which means that where the pro-market people attack the software patent system
for generating monopolies the pro-business people defend it as its enables
them to eliminate competition. And to some degree they have an easier job
of arguing for their position as it is easier to come up with number of
employees who might loose their job at a big company if they loose business
than it is to come up with number of jobs generated by small and midsize
companies if they are allowed to compete. That said most economists agree
that protectionism is never a good thing for economic development and
software patents is just the latest fad among a long string of protectionist
efforts which needs to be defeated. We can only hope that people at the WTO
wake up to the true nature of software patents soon and joins us fighting
for this latest of trade barriers to be dissolved.

What is the goal of the patent system

The original idea of the patent system was to stimulate innovation and
research by awarding innovators and researchers with a time limited monopoly
on their ideas in return for them disclosing those ideas to the public.
The feared alternative was for this knowledge and innovation to be kept secret
as trade secrets by the people and companies making them, and these great
ideas then never reaching the general public to be built upon by others and
through that generating even more wealth for society than otherwise would be
the case. The original idea was in other words not as much to protect ideas
from being used by others, but to encourage the publication of the ideas so
they could be used by others. I doubt anyone with inside knowledge of the
industry can say that goal is achieved by the software patent regime in the
US today.

You want to steal my great idea

A very typical argument you get when arguing for the dissolution of patents
is that you want to prohibit the people who come up with good ideas and do
research from cashing in on their ideas and research. Many outright accuse
you of wanting to be able to steal other people’s good ideas. Such arguments
can be hard to counter if you are taken unaware. One natural response I see
many people come up with is trying to explain how all ideas build upon earlier
ideas and that no idea is truly original and as such nobody is stealing nobody
else’s idea. I know I have fallen into that trap myself at times. The problem
with this line of reasoning is that its too abstract so unless you are discussing
with a true intellectual it will fall on deaf ears and the admission that they
are standing on the shoulders of giants come hard to many.

The counter argument need to instead be that, yes of course we should
help inventors to earn money on their inventions, but in the case of
software, patents doesn’t do that. Making software today is complex
and a program is using a multitude functions and algorithms to be able to
do what it does. If you do come up with a really good idea while making your
software, which you can patent, you will not really be able to cash in on it,
as your established and bigger competitors will have patented so many of
the other things your program needs to do that you can’t really use the patent
against them to get ahead anyway. You can of course cross license with your
competitors, but then the patents just mean forcing businesses to spend more
money on legal fees and bureaucracy, which is not exactly the perfect crib
for the generation of new ideas.

Instead the situation is that you have so many patents, many highly questionable and
obscure, which can be used against you even the value of getting to market first
with your idea is lost because as soon as people see you earn money the vultures
of the software patent field will be upon you. A good example here is
a Microsoft patent
where they clearly have taken the ideas of the KDE developer Torsten Rahn made some small changes to it and patented
it just before the original developers had reached the stage in their development
cycle where it became evident that those extenstions where the logical next
step, at which point they implemented them not knowing Microsoft had patented
the improvements in the meantime. So instead of software patents protecting
the inventors it have become a tool of idea theft.

And when these things happen, for the small inventor who came up with the
original idea the legal cost of fighting these patent lawsuits will be so
high that in most cases they are forced to leave the thief with its loot.
And such a system is not helping the inventors to earn money on their ideas.

On the other side the software market where things moves so fast, there is
much more value in being able to bring your great ideas to market quickly
and without hindrances, so a software market without patent monopolies will
reward innovators much more than the current market would. In fact if you look
at the history of the computing sector you would see that it have performed
so well and made so many smart people rich, not because they where able to take
out patents, but rather the opposite. The lack of ability to lock in customers
and lock out competitors have created most of todays success stories. Would
the IT sector be where it was today if Xerox had patents on the making a windowed
GUI, if IBM had patents on their original PC BIOS, if Apple had a patent on
using the mice, if AT&T had patents on large parts of Unix and so on. The
ability to inventors to build upon what the rest of the industry did and
add their own great ideas to the mix rewarded the innovators and created
most of todays giants.

True enough you could claim that many of these cases where about people
stealing other people’s ideas. On the other side there is clearly no other
sector which have rewarded smart and innovative people with more money than
the IT sector during this period. Smart inventors are best protected by being
allowed to run free with their ideas, and they can’t run free in the IP
minefield the computing sector is becoming. The case for software patents
rewarding the innovative can only be true if you assume that the smart and
innovative people would only come up with one good idea ever. In such a
scenario absolute protection of the idea would be more valuable than being
able to bring your ideas to market. But the fact is that smart people as a
consequence of being smart come up with not one, but a lot of ideas.

Don’t let the discussion glide out

To sum up with article I would like to remind everyone that the most
important thing to do when discussing anything is making sure the discussion
is narrow enough to be able to discuss it in a meaningful way. Firstly make
sure the discussion is about software patents and not ‘intellectual property’
and make it clear that you are talking about software patents and not patents
in general. For my own part I say that I know the software sector and how
patents work out there so that I can discuss, but wether patents work
better or worse in other sectors I leave to people in those sectors to
bring up as they know their fields and how patents impact those fields
much better than I do. While much can probably be said about copyright,
trademarks, trade secrets and patenting in other sectors the problem spaces
tend to be very different and not really meaningful to discuss in one go.
To often have I seen situations where people could probably been brought around
on the issue of software patents, but it never got to that as the discussion
got sidetracked by discussions on copyright length or trademark protection.
Or good arguments against software patents not getting through due to
the debate bringing in examples from other sectors facing very different
conditions and constraints.

Thanks goes to the Google search engine,
Groklaw, Lawrence Lessig and multiple other resources. Without your shoulders to stand
on I would never have been able to write this article.

About the author:
The author, Christian Schaller, is Business Development Manager for GNU/Linux multimedia specialist Fluendo. He serves on the GNOME Foundation board of directors.

If you would like to see your thoughts or experiences with technology published, please consider writing an article for OSNews.


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