More Patents and New Business Models

David Kline left a comment regarding my blog on Intellectual Dishonesty. The ideas that David promotes in his comments deserve a little more exploration and I’d like to attempt to answer his question as well as invite others to do so.

There are a few points that David makes to which I’ll respond and then I’ll touch on his invitation to show “…any evidence at all…” that supports the view that the patent system is being used to stifle innovation.

First, the comment that “Microsoft has NEVER unilaterally sued another company for patent infringement in federal court. Never. Not once.” deserves a little exploration. It is not necessary for Microsoft to sue anyone in order to have a chilling effect on their competitors and innovation.

The patent business has evolved to a point that it is far more efficient to threaten to sue than it is to sue. If one sues then one has to prove the validity of the patent as well as infringement. If one threatens to sue then one only has to negotiate. The business model of intellectual property negotiation is well-founded. The first parties who agree to pony up the dollars typically get the best deal. This is because the first ones to acquiesce are used as an example to convince others to fall in line.

The reason that we open-source people don’t like software patents is because there are so many examples of poorly issued patents. It should trouble us deeply whenever a software patent is ridiculed as an obvious evolution of technology rather than an innovative new idea. The society of software developers, both closed-source and open-source, acts as an unofficial peer-review body. We don’t see an environment with software patents where the peer software developers say, “Wow, I wish I had thought of that.” Instead we often see the peer-reviewers say, “What a croc!”

I would even be happy if there was a serious divergence of opinion among the developer society as to whether or not a particular patent was innovative, advanced the art or was non-obvious. It seems to me that the software patents that are discussed the most are dismissed by the society of developers as being unworthy of the label non-obvious or even innovative.

The defenders, on the other hand, of these patents are those in the business of intellectual property.

Show me the critical mass of developers defending one-click shopping as an innovative, art-advancing technology and I’ll re-consider my position. Many of us are still waiting for any software patent to come along that has a critical mass of other software developers willing to defend it.

Don’t ever confuse the patent/intellectual property business with the business of innovation. Today, they are distinct entities and that’s a shame.

Now, for the invitation of providing any evidence at all that the patent system is being used to stifle innovation. Allow me to cover the zero-sum game of the software business.

Any dollars in a software development business that are diverted from innovation cause innovation to suffer. For start-ups, each and every dollar is a precious commodity as they race to get product to their prospects. Today, the intellectual property system is causing dollars to be spent defending against nothing. SCO’s claims against IBM have cost millions of dollars and slowed the adoption of open-source software. We were seeing the erosion of the SCO speed-bump when Microsoft issued its claim that open-source software violates 235 of their patents.

Now, one may wish to argue that Microsoft is only looking to be rightfully compensated by those using clever Microsoft inventions. I, for one, think that position is naïve. I firmly believe that Microsoft’s intellectual business division is executing a well-thought out plan – monetize where possible (Novell), implicitly threaten where monetization is not possible and sow enough uncertainty to slow down those who don’t acquiesce, directly or indirectly, to Microsoft’s licensing pressure.

These actions, by their very definition, divert dollars from, and slow down, innovation.