LinuxTag Panel on 'Software Patents' and some further Thoughts.
Recently I had been invited to join a panel discussion on 'software patents' at the LinuxTag 2004 held on Friday June 25, 2004, in Karlsruhe. The members of the panel had been picked by Mr. Florian v. Samson, and it seems that I wasn't his first choice - he liked to have some heavyweights from the political stage like Jörg Tauss or prominent representatives from the industry. But those candidates did prefer not to appear - for whatever reasons. So Mr. v. Samson had to accept a plain Patent Attorney willing to play the role of the 'advocatus diaboli' defending the patent system in front of the audience in the big hall of the Karlsruhe congress venue in the context of the LinuxTag celebrating the High Mass of the German Linux scene. Anyway, if I can trust some rumours, there had been a controversial dispute well before the event between the board of the organisers of the LinuxTag and some fundamentalistic evangelists from the FFII anti-patent movement, the latter perhaps having preferred a more monolithic panel.
Eventually, the list of my co-panellists had been set as follows:
An introduction into the field of patent law was given by Oliver Zendel, Chairman of the LinuxTag e.V. This presentation aimed to provide a leading-in into the subject-matter of relevance but, to be honest, it was somewhat less than optimal in terms of precision and mastery of the concepts to be presented. My impression was that Mr. Zendel had read some literature concerning patent law just before the event in order to prepare his presentation. His conclusion was that no much benefits are to be expected for the general public from the so-called 'software patents' but merely patent profesionals plus big businesses could gain more profits.
All panellists but me argued basically in a dismissive tone about the conditions and effects of the patentability of computer-implemented inventions. It came to me somewhat as a surprise when even Mr. Melullis openly expressed his dissatisfaction with the current state of the legal affairs in the field of the patentability of computer-implemented inventions. He seems to think that the lawmakers don't really know what they are doing and obviously he would welcome a much more restrictive practice of granting such patents. Mr. Lorenz and Mr. Schäfers complained over alleged detrimental effects of patents on computer-implemented inventions in a more or less unisono fashion. Mr. Bakels in his capacity as a representative of Academia tried to to pour some oil on the troubled water. So it was mostly my job to explain the patent system as it stands to the audince what was, of course, not a trivial job.
There was a lively but disciplined general discussion involving members of the audience after the panellists had given their views in a first round.
For me the summary on the bottom line seems to be that the discussion was mostly centered around problems concerning individuals and smaller companies creating or selling free or proprietary software for PCs and/or Internet-related servers. I mentioned manufacturers of embedded systems e.g. in the elevator, automotive and telecommunications industries but nobody seemed to have the different needs of these brances firmly in view.
My view is that some of the problems as discussed on the panel as well as in the audience can be dealt with best not by restrictive amendments to the material criteria governing the patenability of inventions but by carefully adjusting the effects of granted patents in view of potential infringing constellations involving software running on a matching processor.
After the event I spotted on the web a very interesting article 'The Open Source Paradigm Shift' authored by Tim O'Reilly. He writes:
"[...] My premise is that free and open source developers are in much the same position today that IBM was in 1981 when it changed the rules of the computer industry, but failed to understand the consequences of the change, allowing others to reap the benefits. Most existing proprietary software vendors are no better off, playing by the old rules while the new rules are reshaping the industry around them. [...] If open source pioneers are to benefit from the revolution we've unleashed, we must look through the foreground elements of the free and open source movements, and understand more deeply both the causes and consequences of the revolution. [...] I find it useful to see open source as an expression of three deep, long-term trends:
The commoditization of software
Network-enabled collaboration
Software customizability (software as a service)
[...]"
Contrary to evangelists like Mr. Stallman or Mr. Moglen, Mr. O'Reilly is not an anti-capitalistic activist arguing that 'Open Source' means that the entire value chain should under any circumstances be free from proprietary products or services:
"[...] And so I prefer to take the view of Clayton Christensen, the author of The Innovator's Dilemma and The Innovator's Solution. In a recent article in Harvard Business Review, he articulates "the law of conservation of attractive profits" as follows:
When attractive profits disappear at one stage in the value chain because a product becomes modular and commoditized, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage.
We see Christensen's thesis clearly at work in the paradigm shifts I'm discussing here.[4] Just as IBM's commoditization of the basic design of the personal computer led to opportunities for attractive profits "up the stack" in software, new fortunes are being made up the stack from the commodity open source software that underlies the Internet, in a new class of proprietary applications that I have elsewhere referred to as "infoware".
Sites such as Google, Amazon, and salesforce.com provide the most serious challenge to the traditional understanding of free and open source software. Here are applications built on top of Linux, but they are fiercely proprietary. What's more, even when using and modifying software distributed under the most restrictive of free software licenses, the GPL, these sites are not constrained by any of its provisions, all of which are conditioned on the old paradigm. The GPL's protections are triggered by the act of software distribution, yet web-based application vendors never distribute any software: it is simply performed on the Internet's global stage, delivered as a service rather than as a packaged software application. [...] And the opportunities are not merely up the stack. There are huge proprietary opportunities hidden inside the system. Christensen notes: Attractive profits . . . move elsewhere in the value chain, often to subsystems from which the modular product is assembled. This is because it is improvements in the subsystems, rather than the modular product's architecture, that drives the assembler's ability to move upmarket towards more attractive profit margins. Hence, the subsystems become decommoditized and attractively profitable.
We saw this pattern in the PC market with most PCs now bearing the brand "Intel Inside"; the Internet could just as easily be branded "Cisco Inside".
But these "Intel Inside" business opportunities are not always obvious, nor are they necessarily in proprietary hardware or software. The open source BIND (Berkeley Internet Name Daemon) package used to run the Domain Name System (DNS) provides an important demonstration. [...]".
The key for understanding what really is happening lies according to O'Reilly in a deeper understanding of a network-enabled collaboration:
"[...] To understand the nature of competitive advantage in the new paradigm, we should look not to Linux, but to the Internet, which has already shown signs of how the open source story will play out. [...]"
Finally, O'Reilly concludes:
"[...] The values of the free and open source community are an important part of its paradigm. Just as the Copernican revolution was part of a broader social revolution that turned society away from hierarchy and received knowledge, and instead sparked a spirit of inquiry and knowledge sharing, open source is part of a communications revolution designed to maximize the free sharing of ideas expressed in code.
But free software advocates go too far when they eschew any limits on sharing, and define the movement by adherence to a restrictive set of software licensing practices. The open source movement has made a concerted effort to be more inclusive. Eric Raymond describes The Open Source Definition as a "provocation to thought", a "social contract . . . and an invitation to join the network of those who adhere to it." But even though the open source movement is much more business friendly and supports the right of developers to choose non-free licenses, it still uses the presence of software licenses that enforce sharing as its litmus test.
The lessons of previous paradigm shifts show us a more subtle and powerful story than one that merely pits a gift culture against a monetary culture, and a community of sharers versus those who choose not to participate. Instead, we see a dynamic migration of value, in which things that were once kept for private advantage are now shared freely, and things that were once thought incidental become the locus of enormous value. It's easy for free and open source advocates to see this dynamic as a fall from grace, a hoarding of value that should be shared with all. But a historical view tells us that the commoditization of older technologies and the crystallization of value in new technologies is part of a process that advances the industry and creates more value for all. What is essential is to find a balance, in which we as an industry create more value than we capture as individual participants, enriching the commons that allows for further development by others.[...] In short, if it is sufficiently robust an innovation to qualify as a new paradigm, the open source story is far from over, and its lessons far from completely understood. Rather than thinking of open source only as a set of software licenses and associated software development practices, we do better to think of it as a field of scientific and economic inquiry, one with many historical precedents, and part of a broader social and economic story. We must understand the impact of such factors as standards and their effect on commoditization, system architecture and network effects, and the development practices associated with software as a service. We must study these factors when they appear in proprietary software as well as when they appear in traditional open source projects. We must understand the ways in which the means by which software is deployed changes the way in which it is created and used. We must also see how the same principles that led to early source code sharing may impact other fields of collaborative activity. Only when we stop measuring open source by what activities are excluded from the definition, and begin to study its fellow travelers on the road to the future, will we understand its true impact and be fully prepared to embrace the new paradigm."
What might this mean with regard to the Patent Law? If Mr. O'Reilly is right with his analysis then
The so-called 'new paradigm' is not necessarily bound to be killed by Patent Law if in particular the networking effects so dramatically facilitated by modern IT can be safeguarded by open standards unencumbered by patents.
The Patent Law can survive as a useful regulatory tool provided it is amended in a sensitive manner to be adapted in accordance with the changes in the industrial landscape.
In particular, I therefore think that:
The ongoing discussion about imposing restrictions to the material law governing the limits of patentable subject-matter will not solve any IT-related problems because of modest amendments will not satisfy the needs of open collaborative problem-solving efforts ('networked' efforts) but a radical cut-back of the patent system banning all patents on signal processing devices and methods (which would please Mr. Stallman by effectively eliminating also patents on computer-implementable inventions) would leave big industries (like automotive and telecommunications industries) in huge market areas without any patent protection which they essentially need in order to stay in business on an international scale.
The Patent Law should be amended in order to make clear that any communication of computer software code in source code form is exempt from the scope of protection of any patent claims. This is to make sure that CVS repositories and the like on-line on the Internet cannot be closed on demand of patent bearers. The justification of such a measure can be seen in the dual nature of the source code as means for communication of solutions between humans, on the one hand, and as technical means for controlling a computer, on the other hand. Due to the first aspect the source code deserves to be privileged as 'free speech'. This does, of course, not mean that executing source code by interpreters or by running it after compilation and linking is also exempted.
Legal tools should be created to ensure that open interoperability standards can be set up which can provable not be blocked by patents of any third parties. On the one hand, Article 6 of the Commission's Draft Directive does not go far enough by only safeguarding the exemptions already granted by Copyright Law. On the other hand, the amendment proposed in Article 6a of the Draft Directive by the European Parliament is outrageously overbroad and killing implicitly every effect of a patent by exempting any doing "whenever the use of a patented technique is needed for a significant purpose". Which purpose is deemed not to be "significant" by the proponents of this amendment?
Preferably, the most relevant interoperability standards should be avaiable RF. In cases where only RAND availability can be assured, the establishment of Collecting Societies similar to those existing in the field of Copyright Law might be considered.
All players in the field of IT technology wishing to survive on a globalised capitalistic market should think twice before deciding to follow essentially anti-capitalistic activists organised by Attac or similar organisations.
How could such goals be achieved? That's surely far from trivial. Perhaps it will be necessary to think on other tracks than traditionally done. I could, for example, imagine the Patent Law to be amended by introducing a rule allowing major standardising institutions like DIN, ISO or W3C to publish a full technical disclosure for a proposed interoperability standard in some kind of an Official Gazette issued by some competent Authority on EU level. Then, each and every patent holder has an opportunity to oppose against this proposal within a certain term of, say, nine months or so. If a patent holder opposes, the standardising organisation as well as the public will be notified accordingly. An opposition can be absolute (i.e. the patent holder refuses to license the patent at all) or relative (i.e. the patent holder is willing to provide a RAND license only). If a patent holder does not oppose in due time the grant of a RF license will be stipulated by law. Such procedure would not unduly harm the interests of patent holders (they merely have to closely watch the Official Gazette and make up their mind) because of they will not be forced to grant any license. On the other side, if no opposition has been filed, the standards bodies can be sure that the proposed standard is in fact patent free. If oppositions are raised, they can re-think on whether or not drop that proposal. However, as in many other cases, the problems are in the gory details. For example, it will not be easy to deal with unexamined or even unpublished patent applications. Furthermore, the proposed procedure might not scale very well. If thousands or even tens of thousands of proposals would be published per year, the burden for the patent owners would be clearly inacceptable. On the other hand, patent owners must be hindered to simply block any standard without even looking at the details by simply filing objections on the basis of each and every patent available in their patent portfolio. If the total number of published proposals per year is sufficiently low this might be achived by requiring a modest Official fee or by imposing a duty to substantiate the Opposition.
Feel free to contact PA Axel H Horns via e-mail
horns@ipjur.com. BEWARE: DO NOT SEND CONFIDENTIAL INFORMATION UNENCRYPTED VIA E-MAIL. USE OF ENCRYPTION SOFTWARE IS HIGHLY RECOMMENDED. PA AXEL H HORNS IS PROVIDING SUPPORT FOR ENCRYPTED E-MAIL MESSAGES USING PGP OR PGP COMPATIBLE FORMATS. THE PGP PUBLIC KEY FOR PA AXEL H HORNS IS AVAILABLE
HERE. THE GnuPG PUBLIC KEY FOR PA AXEL H HORNS IS AVAILABLE
HERE.
Dipl.-Phys. Axel H Horns is Patentanwalt (German Patent Attorney),
European Patent Attorney as well as European Trade Mark Attorney. In particular, he is Member of:
panel discussion on 'software patents' at the 
