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Reflections on Intellectual Property Rights, by John H Terpstra
Thursday, August 05 2004 @ 06:53 AM EDT

Reflections on Intellectual Property Rights

John H Terpstra, CTO, PrimaStasys Inc.

There is much preoccupation with so-called intellectual property laws. There are businesses that are eager to pursue litigation almost as soon as new laws are passed. Safeguards in the form of patent laws, copyright agreements, service mark and trademark laws are being used to achieve special-interest goals that were perhaps not considered by those who passed these laws into being, but may well have been considered by those who crafted them. Intellectual property laws are designed to limit the use of concepts and are potentially injurious to creativity and innovation.

This article reflects on vital aspects of the intellectual property debate. We have a responsibility towards future generations to resist the abuse of power or privilege. The use of intellectual property constraints as weapons of business can rapidly degenerate to little more than the selfish initiative of a special interest group in an activity that is hostile towards society as a whole. The application of such force against another business or against consumers effectively equates to protectionism and interventionist activity. Insofar that intellectual property laws can be used to constrain competition, the final effect is to force consumers to pay a higher price than if free market competition had triumphed. In effect, the intellectual property debate significantly challenges the freedom of a nation's citizens. There is a better way; we must follow it.

Intellectual Property Pursuit is Self-Interest-Serving

The American dream1 was once driven by a vision in which men and women set out with deliberate intent to build a society of independent and free individuals, each set to create a better world. The world of this vision was built on a hierarchy of responsibilities.

There was structure and order in the old world. Foundation priorities expressed in older literature held that foremost in priority is the Supreme Being who endows us with inalienable rights and to whom total subservience is due. The Constitution of the United States of America reflects such ideals. To such as held this view, second in priority is one's own family, and third in importance is one's fellow man out of which emerges a great social responsibility.

Perhaps it is delusion to think that there was a time when American society held a high and ordered regard for one's neighbor. If such perceptions indeed were prominent in society at large, it may be argued that much has changed. Today there is a prevalence of self-interest-serving activity.

My research on the subject of intellectual property, a modern concept, has turned up starkly contrasting facets of the old world. When examining the past through the looking glass of time, it is a challenge to sort fact from fiction.

It is not possible to do justice to those who preceded us in life if we do not acknowledge the tension between cause and effect, between minority forces of good that paved the way to our day, as well as the forces that have created much of what we may be prone to criticize today. It would be a tragedy if there can be no alternative but to choose one extreme over another, or to take sides without consideration of the net balance that existed.

We are able to criticize evil and the generation that bore it, but of necessity a nation that has self-respect will pay tribute to the intelligent forethought and the courageous acts of earlier generations. If we can not learn from the past, we will pioneer and chart a new course without the benefit of hindsight to cast light on a dark road.

Not everyone consciously strives to preserve the old vision. Likewise, very few are consciously intent on destroying our world. Those who are consciously working to undermine the assets of a free world ought to be pitied and must be taken seriously. Society today must stem the tide of aggressive self-interest and the priorities of special interest groups above the needs of a healthy social balance. If we fail to do this future generations will hold us to account.

Reality must of necessity lie somewhere between extremes2, mostly in a state of tension between opposing forces and within the bounds of public norms. There has always been a small minority that have sought to pursue personal interests at the expense of society as a whole. It would appear that the degree to which a society will tolerate the wanton pursuit3 of personal gain, to that extent society as a whole must bear a burden of consequential damages. In the long run, we best serve our own interests by helping our neighbor to prosper both personally as well as in business.

Constant personal vigilance is the price of freedom4. It is the effect of this phenomena en masse that either gives future generations a better world, or in its absence robs it of the assets it needs.

Creativity is Intellectual Property

To better understand the issues, we could consider the ancient origins5 of property laws and how they may apply to product of our minds. Intellectual property can be nothing more than the product of thinking men and women; thinking that has creative results.

Intellectual property is a conceptual term that describes the intangible products of applied creative thinking. It encompasses knowledge, research skills, as well as applied expertise in a particular field of endeavor. Rights attached to creative and productive thinking have been an integral part of British Common Law since Alfred the Great6, King of England. The protection of tangible, physical assets is fully covered by laws against stealing.

When a tangible physical object is stolen, the owner is deprived of the use of that object. The same can not be said of products of the mind. Great ideas and concepts can be reimplemented or used by others without physical loss to the originator. The very point of open source software is the potential for every concept to benefit the largest audience that can effectively be reached. Each benefactor has the ability to improve on the concept and its implementation.

This introduces the problem at the heart of the intellectual property debate. Taken to its logical conclusion, intellectual property laws seek to limit the use of concepts. And since concepts lie at the core of activity of the mind, what controls and limitations might be pursued next to limit one's thinking?

Alfred's laws stopped short of an attempt to control the thoughts of men. The pursuit and torture of the reformers in England in the sixteenth and seventeenth centuries stepped well over the line of what can be tolerated in a free world. Men and women were burned at the stake7 for what they may have thought. Are we in danger of repeating this assault against integrity in the name of protecting the expression and use of concepts?

Property in General

Ancient civilizations have records and laws regarding personal property as well as rights pertaining to land ownership. Hammurabi8 of ancient Babylon codified laws covering property. Bible records show that Abraham bought land so he could bury his wife9. Land title in such cases was perpetual, and generations considered the land as a family possession.

Personal property is a chattel like money, clothes, tools, etc. Chattels can be used, lost, sold, donated, or traded. They are portable; land is mostly fixed in place and thus is not capable of being moved.

In 1066 the Norman, William the Conqueror, defeated Danish King Harold at the battle of Hastings. To assure the future safety of England, William introduced the feudal10 system. The feudal system was designed to guarantee the King of sufficient forces to defend the realm. He appointed Baron land owners who were made responsible to supply an army. Barons appointed knights and so on, down to the serfs who worked the land. All land was considered Royal (Real) estate that could be held through grant of title. It is from laws that originate from William that today we refer to Real Estate, or Royal Estate11; property that exists under title by decree of the Crown or the Parliament.

We must answer one key question: In what way is the product of a person's mind like chattels and/or like real estate? Many people will argue that there can be no similarity and that any attempt to codify, or to assert classification of, mental products as property has many attendant dangers. When we consider the abuses of mind control through history we would be foolish to ignore the nature of mankind by passing into law controls that are readily open to abuse. Have we already gone too far? If so, what course is being charted today?

A History of Patents

From the fourteenth century, the English Crown granted monopolies in exchange for payment of a fee. Monopolies were granted for trade in commodities as well as for some luxury items. Many monopoly holders were corrupt and records show that bribery and corruption became a significant problem. Additionally, the monopolies led to price increases12 that affected the entire supply chain for goods.

By the fifteenth century the city states of Venice and Florence granted monopolies13 for new inventions.

At the time of James the first of England, in 1623, the Statute of Monopolies was passed into law. It restricted the rights of the Crown to grant monopolies14 solely to new methods of manufacture. The new monopolies were called litterae patentes, or letters patent. These grants were made accessible to the public. Since that time, a patent is a contract (or bargain) between the assignee (inventor) and the Crown. The inventor (assignee) was required to reveal all secrets involved in the method of manufacture in return for which the Crown would grant or permit protection to restrict others (unlicensed practitioners) from imitating (copying) the (invented) method of manufacture for a 20 year period. It was reasoned that the inventor would recoup costs and make a healthy profit from the invention within that time frame.

The argument in favor of such patents15 (monopolies) was that at the conclusion of the 20 year period of validity anyone could benefit by common use of the manufacturing method. In this way the Crown could claim that the greater public good was being served by permitting such monopolies.

Significantly, the first two patents issued in Britain covered a glass blowing method and a weaving method that were being practiced in Belgium. The issue of these patents served to restrict free trade, not to protect the inventors. Intelligent people perform regular audits. In business, processes and procedures are audited: those that work as promised are kept and improved, those that fail to deliver the promise of the sales pitch get thrown out. Has the use and application of patents been given the treatment it deserves?

Patents for methods of manufacture are exclusive in that the assignees' permission is required before use. Patent holders can charge a fee for permission to make use of the patented process. Therein lies the value of the monopoly -- the ability to gain income. That value is asserted by the government-sanctioned right to prosecute. Prosecution is a negative sanction.

In what way do manufacturing process methods compare to computer algorithms? How can one compare a software process, or set of instructions, with a manufacturing process? Before you rush into saying, "Yes! That's it! Computer software is like a manufacturing method.", consider the fact that intellectual property laws are not globally consistent. In fact, some countries do not respect such laws at all.

Given the lack of uniformity of the disposition of some nations towards this subject, one should question the wisdom of creation of laws and statutes that lie at the edge where enforcement may trespass into the realm of mind control by placing constraint on what one may think and do. Certainly, such laws16 will impact how one may make use of conceptual ways of solving a problem in business or in life.

Patents can be used to restrict access to the inventor's methods of manufacture. Thus the ability to exercise control is extremely attractive. The patent is a lawful mechanism by which an assignee can protect his income and by which he may intervene in the ability of another person to gain income from the invention.

It should be realized therefore, that the pursuit of patents for trivial inventions may permit abuse of the patent system. Patents are abused when used in the exercise of lawful power against the necessary freedom of another person. If the history of mankind does not cause one to fear abuse of lawful power, nothing can stop such person who is deliberately intent on mischievous abuse. Could it be that software patents create potential for menace?

Protectionism and Interventionism

Protectionism17 is the practice, system, or theory that applies tariffs18 or quotas to limit or to impede the flow of foreign goods and services into the local economy with the purported intent of helping local (domestic) producers. When passed into national law, tariffs are a measure that is presented to the consumer as a means of protecting the commonweal (public well being).

It is often thought of as a modern practice, though its roots go well back in time. The British practiced protectionism in that all trade between colonies had to pass via England so that such trade could be taxed and regulated. By 1783 America had broken free from England, but the freedom was short-lived. In 1789 the American Congress passed its first tariff act. In 1816 and 1824 Congress added protectionist measures to its tariff act. Then in 1828 she passed the Tariff of Abominations that extorted up to 49% duty on certain items. America felt it had to protect its northern businesses against the dumping of goods from Europe. While this may have helped the New England states, it undermined the economies of the Southern states.

In his analysis of the effectiveness of tariff protection measures, Taussig19 says:

"The intrinsic soundness of the argument for protection to young industries therefore can not be touched by the conclusions drawn from the history of its trial in the United States, which shows only that the intentional protective tariffs of 1816, 1824, and 1828 had little effect."

It is well recognized today, that the tariffs of this period forced the Southern states to purchase manufactured goods from the northern states rather than import cheaper overseas goods that were subject to punitive import duties (tariffs). This was one significant factor in the lead up to the Civil War of 1861-1865. Clearly, tariff protection did not serve the United States well -- it created bitter tensions between north and south.

One would think that the lesson of the history of tariffs would have been well learned. Sadly, this was not the case as not 70 years later the same saga was due for a repeat performance. According to the USA Department of State20:

"The Smoot-Hawley Tariff Act of June 1930 raised U.S. tariffs to historically high levels. The original intention behind the legislation was to increase the protection afforded domestic farmers against foreign agricultural imports. ... The Smoot-Hawley Tariff was more a consequence of the onset of the Great Depression than an initial cause. But while the tariff might not have caused the Depression, it certainly did not make it any better. It provoked a storm of foreign retaliatory measures and came to stand as a symbol of the 'beggar-thy-neighbor' policies (policies designed to improve one's own lot at the expense of that of others) of the 1930s. Such policies contributed to a drastic decline in international trade."

In its 2002 Annual Report21 the Federal Reserve Bank of Dallas states:

"... Smoot-Hawley taught us trade's lesson the hard way - protect and destroy. Today we're learning it the right way - compete and prosper."

Ludwig von Mises22, an economist said:

"The history of mankind is a long record of obstacles placed in the way of the more efficient for the benefit of the less efficient."

As we review the track record of protectionism and interventionism it is quite apparent that society refuses, to its own detriment, to accept the fact that every attempt at interference in the free economy causes hardship and potential economic ruin to the weakest elements of society. I regard software patents in the same genre as tariffs, but with potentially more devastating consequences.

The history of protectionism and interventionism should cause us to question with great angst the motives of those who pursue software patents. Even the pursuit of copyright claims requires great care, for even in this can great harm be inflicted upon society. We are in dire danger of crippling the engine of innovation in a once proud world.

The consequences of intellectual property action

In his paper23, "The Eagle has Landed -- While America works to protect intellectual property, everyone else is innovating", Thomas Goetz makes stunningly lucid observations regarding the drift of intellectual property pursuit. Everyone who is involved in the information technology world ought to read his article. He warns:

"The US is in danger of repeating the mistake, this time with intellectual property. In the face of new technologies and competition, the US is toughening patent and copyright protections. It's leaning on other countries -- and its own citizens -- to play by ever tighter rules. But if it's not careful, the US will drive its intellectual property offshore into a shadow world that, like shipping, is replete with piracy and rogue states."

In February 2004, Mr. Alan Greenspan, in his address at the Stanford Institute for Economic Policy Research Economic Summit, Stanford, California, said:

"Rationalizing the differences between intellectual property rights as defined and enforced in the United States and those of our trading partners has emerged as a seminal issue in our trade negotiations."

He had begun his speech with these words:

"Market economies require a rule of law. A society without state protection of individual rights, especially the right to own property, would not build private long-term assets, a key ingredient of a growing modern economy."

Long-term businesses are well aware of the necessity to build long-term assets. Clearly, the intellectual property question is at the top of the agenda for many business executives. Goetz is correct though, there is a distinct state of tension between innovation and protectionism. The pursuit of intellectual property by way of litigation is no way to solve the problem where a business is no longer able to innovate, to invent and to create better business solutions.

A business that witnesses the erosion of profits at the hand of competition will act out of self-preservation and may seek the protection of its business assets. That does not make it right for a government effectively to help the business to remain inefficient. Instead of providing protection, clarification should be sought to identify precisely what must be protected as well as the specific constitutional reasons for so doing. Such a discovery process may expose the real problem for which a less draconian solution may suffice.

Profits - the business challenge

The taking of a stand in opposition to intellectual property litigation, and abuse thereof, does not imply a disposition against commercial business activity. Businesses must operate with the ability to be profitable. This is in no manner at variance with the health of society as a whole. In fact, a healthy society implies necessity of profitable trade so that each member of that society can exchange the products created, and services provided using each persons particular skills. Any attempt to limit the profitability of a business would be a most undesirable interventionist activity.

Interventionism is the policy and practice of interfering in the affairs of another sovereign jurisdiction. The foreign jurisdiction can be another family, town, state, or country and includes use of government power to control or influence an economy.

When governments interfere in businesses there is a loss of creativity and innovation, efficiency declines and society ultimately pays an unacceptably high price. The financial failure of the old Soviet Union and the ideologies that drove it are a classic example of the failure of government intervention in business.

Much of the hubris in support of intellectual property litigation asserts the dependence of business profitability on sustainable intellectual property. In this debate, it is also asserted that simple algorithms implemented in software must be protected, and that whoever thought to obtain a software patent that covers it, or whoever thought of claiming copyright over the expression of the idea that is implemented in the algorithm has the right to seek royalties apparently without bounds.

The assertion "apparently without bounds" is necessary given the fact that those who have resorted to litigation are willing to seek court approval to obtain evidence of an infraction against their property even where available evidence and due cause for suspicion may be very limited. In the fullness of time, the facts surrounding these issues will be determined by the courts. However this is a process that causes considerable public alarm and is a costly pursuit for all involved.

As society advances and competitive forces catch up with a business, would it not make more sense to invest precious financial resources in a way that will create more opportunity for the business to find and satisfy customer needs?

Customer needs satisfaction

The core purpose for which a customer buys a product or a service is to meet a particular need. For example, the purpose of a power drill is to enable the owner to create the right hole in the right place at the right time. Someone who purchases a power drill is in effect buying holes. Likewise, the purpose of all information technology products is to improve business efficiency and effectiveness. Every process that is solved using a computer can be done manually, or using older and presumably less efficient methods. The point of stating this is to amplify the fact that information technology consumers do not usually set out to buy a license to use intellectual property per se.

Businesses that understand their customers needs and that satisfy them efficiently stand the highest chance of being profitable, particularly if they can sustain the process. Customer needs satisfaction requires much more than simply supplying a product. Software in particular requires user training, a support infrastructure to handle customer concerns, etc. Even these are not sufficient to keep customers happy. Smart businesses maintain constant interaction with their customers. They communicate frequently so as to reinforce the value proposition. Customer satisfaction results from the persistent and clever use of communication though all aspects of the total business environment.

When considered and applied as a whole, the business will sell products and services as part of a total package. The business will have strategies for product development, for service enhancement; it will have strategies for differentiating its solutions offering from competitors. Smart businesses build sustainable differentiation into every facet of business operation and will constantly refine them to maximize the customer's satisfaction level. Marketing theory, practice and research has shown that when every aspect of the product mix meets customer needs, a lower priced competitive offer usually is not sufficient to swing the business to a competitor.

In 1987 a chemical company that desperately wanted to capture increased market share offered competitively held accounts a higher level of service as well as a 40% reduction in product costs. After 6 months they succeeded in gaining very few competitive accounts. Prospective customers simply said that they were happy with the solution they were buying and that even a 40% reduction in price was not sufficient inducement to affect a change in supplier. Purchasers will pay a premium if the perceived value of a purchase choice is high enough. If the perceived barrier to change is too high even a much lower price may not induce a change of supplier.

Competition is necessary in a healthy market because it gives a consumer choice. There will be little real motivation to change supplier when a consumer has been able to choose from alternative suppliers, and has found satisfaction of its business needs. Competition provides alternatives that help consumers to make a more persistent choice.

When customers believe they have only the choice of a single solution there is a tendency to continually re-evaluate the solution offering. It is invalid to say that there was no choice; a choice of one solution implies the ability to reject that solution and to permit the problem to persist. My point is this: when choice is limited the practice of due diligence demands greater review and evaluation. As a result, there remains a latent desire to consider further alternatives as they are presented.

Schools of business have spent the last four decades teaching graduates how to balance what is called the marketing mix (products, price, promotion, distribution) so as to give the business maximum leverage in its markets. Monopoly is a poor differentiator and creates a chasm of potential dissatisfaction.

Physical products can be copied, often with great ease. A company's business strategies, the way it plans to respond to competitive and market forces, are much more difficult to imitate or to predict. This is where the real intellectual property of a business should be built. These factors are far more sustainable than a functional algorithm in a computer software program.

Questions abound: Why would a business want to eliminate or reduce competition through intellectual property controls? Is it remotely possible that the information technology world has forgotten how to satisfy customer wants and needs? Has the entire industry perhaps forgotten customer needs?

I believe it is more profitable for a business to focus on getting its product mix and its business hygiene right rather than seek to eliminate competitors through mechanisms that may seriously undermine a free society. Intellectual property litigation is an affront to sound business operation, it is not a wise strategy given an objective look at history, and is a potential minefield for every business -- a minefield that can blow up and destroy an industry.

What you can do

You can help stop the questionable pursuit of intellectual property by spreading the message that there are better ways to make a business more profitable. We must all encourage every business we deal with or purchase from to be more customer needs-focused. In our buying practices, we ought to be deliberate about rewarding those businesses that deserve the purchases we make and withhold a purchase from a business that fails to meet our needs.

When you refuse to purchase a product because it, or its producer, failed to meet your needs, do write that company to make them aware why they have failed to win your support. It takes only a half dozen notes like this to get a company to pay greater attention to its consumers. The entertainment industry could not ignore the fact of a few thousand letters advising them that consumers will no longer purchase their wares under the licensing terms provided. A one-month public moratorium on all purchases could bring the industry to its knees!

The solution to the problem of monopolization of software intellectual property is the creation and specification of open public royalty-free standards for all software.

A private conference is being held in Phoenix, Arizona, in September to address this issue. At this I hope to participate in the launch the Open Standards Alliance. Anyone interested in participating in founding of the Open Standards Alliance should write to:

Only when technology can operate on a level playing field can competition abound. Consumers need competition to keep prices down and to achieve the environment necessary for better needs satisfaction.

The history of mankind is a trail of minority action that often triggers events with catastrophic long-term consequences. Despite this history and the lessons we ought to learn from it, the present preoccupation with protection of intellectual property in software, if not checked in its course, will potentially destroy the American information technology industry. Protectionism and interventionism stand at odds with a free market and a profitable business climate. A software business that can satisfy the needs of its customers in a sustainable manner without use of coercive forces will not be driven to seek intellectual property protection.


Copyright © John H Terpstra, 2004. A copy of this paper is also available as PDF.

Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.2 or any later version published by the Free Software Foundation; with no Invariant Sections, no Front-Cover Texts, and no Back-Cover Texts.

To obtain a copy of the GNU General Free Documentation License write to the Free Software Foundation, Inc., 59 Temple Place - Suite 330, Boston MA 02111-1307, USA.

Biographical Information

John H Terpstra is CTO/President with PrimaStasys, Inc., a company that mentors information technology companies and facilitates profitable change in business practices. He works with businesses to realign information technology practices with business goals.

He is a member of the formation committee of the Desktop Linux Consortium, a long term member of the Samba-Team (a major Open Source project), a well known contributor and visionary in the open source community with a very active commercial focus. He is a member of the Open Source Software Institute Advisory Board. He has worked with the LSB, Li18nux (now OpenI18N.Org), The LPI, and is a best selling author of:

  • The Official Samba-3 HOWTO & Reference Guide, ISBN: 0131453556

  • Samba-3 by Example, ISBN: 0131472216

  • Hardening Linux, ISBN: 0072254971

  • OpenLDAP by Example, ISBN: 0131488732

and has other books in production.

John has worked with The SCO Group (previously Caldera Inc.), TurboLinux Inc., in VP level positions. Prior to moving to the USA in 1999, John founded and managed Aquasoft Pty Ltd (Aust.) for 10 years. He has a Graduate Diploma in Marketing (with Credit), UTS Aust. and an Applied Science Certificate in Chemistry, QUT (Aust.).

1 "The point is that what makes America a new thing in history is the dedication to both the idea and the ideal that we can have a constitutional republic based on the principle of democracy. It's multi-religious, multi-ethnic, there's tremendous diversity, at the same time have enough unity to ensure that to the maximum degree humanly possible everyone has the freedom to pursue their own dreams. That's the American dream." -

2 The Argument Culture: Stopping America's War of Words, Deborah Tannen, ISBN: 0345407512, Ballentine Books, New York.

3 WashPost, 9/12/98, When Pride Turns to Hubris Washington, Like Ancient Greece, Is Littered With Victims, by Ken Ringle.

4 "The price of freedom is eternal vigilance." - Thomas Jefferson,

5 For example, a Roman was entitled by law to make a will as he wished, but, if he did not leave his children at least 25 percent of his property, the magistrate would grant them an action to have the will declared invalid as an "irresponsible testament." -


7 Anne Askew was burnt at the stake for refusing to recant her beliefs. - The Reformation in England, Vol. 2, J.H. Merle d'Aubigne, The Banner of Truth Trust, ISBN: 0851514871, pp. 471. Note: Many were martyred between 1500 and 1700 for what they believed. Also see Foxes Book of Martyrs.

8 The Code of Hammurabi -

9 The Bible, Genesis 23:1-20 (NET;KJV)










19 The Tariff History of the United States, 8th Edition, (New York: G.P. Putnam's 1931), pp.63.


21 Exhibit 14.




Reflections on Intellectual Property Rights, by John H Terpstra | 237 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections etc here
Authored by: Wol on Thursday, August 05 2004 @ 08:35 AM EDT
Crikey - first post !!!


[ Reply to This | # ]

And off-topics, silicon life forms et al here...
Authored by: Wol on Thursday, August 05 2004 @ 08:36 AM EDT

[ Reply to This | # ]

Reflections on Intellectual Property Rights, by John H Terpstra
Authored by: entre on Thursday, August 05 2004 @ 08:50 AM EDT
This is relative to those whom want to help with the patents which need to be
fought on the grounds of prior art, such as the FAT file system. This is where
MS is heading against Linux and the next battle will have to be better thought
out legally. This is a good start article.

[ Reply to This | # ]

Adam Smith and *Intellectual monopoly*
Authored by: NZheretic on Thursday, August 05 2004 @ 08:55 AM EDT
From a 2002 post of mine

From The Relevance of Adam Smith [] by Robert L. Hetzel.
With added commentary by yours truly...

MONOPOLY AND GOVERNMENT SUBSIDIES: The principal theme set forth in The Wealth of Nations is that a country most effectively promotes its own wealth by providing a framework of laws that leaves individuals free to pursue the interest they have in their own economic betterment. This self-interest motivates individuals? propensity to truck, barter, and exchange one thing for another and thereby leads them to meet the needs of others through voluntary cooperation in the market place: has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. (p. 14)

Everyone realises and acknowledges that Microsoft is a business, there to make a profit to share with it's marjor stakeholders, from it's shareholders to it's employees. However ...
Smith also argues that the harmony between private goals and larger socially desirable goals promoted by voluntary cooperation between individuals in the market place is interfered with by monopoly and government subsidies. In contrast to competition, monopoly and government subsidies cause individuals to devote either too few or too many resources to particular markets:

....the private interests and passions of individuals naturally dispose them to turn their stock towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead to divide and distribute the stock of every society, among all the different employments carried on in it, as nearly as possible in the proportion which is most agreeable to the interest of the whole society.

All the different regulations of the mercantile system, necessarily derange more or less this natural and most advantageous distribution of stock.
(pp. 594-5)
Every derangement of the natural distribution of stock is necessarily hurtful to the society in which it takes place; whether it be by repelling from a particular trade the stock which would otherwise go to it, or by attracting towards a particular trade that which would not otherwise come to it. (p. 597)

.... sometimes, because of the overiding profit motive, the end consumer can be put at a disadvantage, and the natural model can become unbalanced. This often happens in tha case of several types of monopoly...
Smith describes the actions of monopolists as follows:

The monopolists, by keeping the market constantly under-stocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate. (p. 61)

The natural price is the lowest which the sellers can commonly afford to take, and at the same time continue their business. (p. 61) Today we would use the word competitive for natural. The effectual demand is the demand of those who are willing to pay the natural price of the commodity. (p. 56) Monopoly, as well as a governmentally subsidized activity, contrasts with a competitive market where a commodity is...sold precisely for what it is worth, or for what it really costs the person who brings it to market. (p. 55)
The Wealth of Nations contains three general kinds of criticism of monopolies. The first is that the higher prices in a monopolized market reduce the welfare of consumers: is divided between two different grocers, their competition will tend to make both of them sell cheaper, than if it were in the hands of one only; and if it were divided among twenty, their competition would be just so much the greater, and the chance of their combining together, in order to raise the price, just so much the less. Their competition might perhaps ruin some of themselves; but to take care of this is the business of the parties concerned, and it may safely be trusted to their discretion. It can never hurt either the consumer, or the producer; on the contrary, it must tend to make the retailers both sell cheaper and buy dearer, than if the whole trade was monopolized by one or two persons.
(pp. 342-3)
In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest, that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interest sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people. As it is the interest of the freemen of a corporation to hinder the rest of the inhabitants from employing any workmen but themselves, so it is the interest of the merchants and manufacturers of every country to secure to themselves the monopoly of the home market. (p. 461)

.... like deals made between vendors to set prices, which RAND "reasonable" licensing systems effectively does.
The second criticism of monopoly is that it engenders inefficient management: a great enemy to good management, which can never be universally established but in consequence of that free and universal competition which forces everybody to have recourse to it for the sake of self-defence. (p. 147)

For example, Microsoft's Internet Explorer containscurrently 20 unpatched vulnerabilities [], a disproportionately high number in comparison to all the other browers on the market today. Also, because of a general disregard for security in the past, many of those same vulnerabilities are exploitable though other Microsoft applications.
The third criticism of monopoly is that it is inequitable because it increases arbitrarily the inequality in individuals? incomes:

...The policy of Europe occasions a very important inequality in the whole of the advantages and disadvantages of the different employments of labour and stock, by restraining the competition in some employments to a smaller number than might otherwise be disposed to enter into them. (pp. 118-19)

And there is many a CIO discovering that the new Microsoft enterprise licensing agreement is far more expensive than before.

Monopoly has always been a contentious issue in debates on public policy in the United States. It is interesting to examine the way in which the ideas of Smith appear in current debates over monopoly. In general, proponents of government intervention in the market place argue that monopoly is endemic in capitalism and that its elimination requires significant intervention by the government in the market place. An opposing group argues that free markets effectively restrain monopoly power and that it is in fact government intervention in the market place that is chiefly responsible for monopoly. The first group assumes that large size, fewness of firms, and operation over an extensive geographic area automatically imply monopoly power and thus supports its position by citing the existence of industries dominated by a few large firms and the existence of multinational corporations. The opposing group supports its position by trying to show that where monopoly power exists it is made possible by particular governmental actions, e.g., in the United States by marketing orders that fix the price of milk above what it would be otherwise, or FCC regulations restricting the growth of cable TV, thereby preventing competition with the established networks.

The view of the world suggested in The Wealth of Nations is that monopoly power cannot persist without the assistance of government. The specific examples of monopoly that Adam Smith attacked required the police power of the state for their maintenance. These monopolies were of three kinds. One kind of monopoly depended upon the mercantilistic system of laws which England used to monopolize trade with its colonies: Monopoly of one kind or another, indeed, seems to be the sole engine of the mercantile system. (p. 595) Another kind arose from the monopoly power granted guilds (referred to by Smith as corporations), which allowed them exclusive rights to produce a given commodity:

The exclusive privilege of an incorporated trade necessarily restrains the competition, in the town where it is established, to those who are free of the trade. To have served an apprenticeship in the town, under a master properly qualified, is commonly the necessary requisite for obtaining this freedom. The bye-laws of the corporation regulate sometimes the number of apprentices which any master is allowed to have, and almost always the number of years which each apprentice is obliged to serve. The intention of both regulations is to restrain the competition to a much smaller number than might otherwise be disposed to enter into the trade. The limitation of the number of apprentices restrains it directly. A long term of apprenticeship restrains it more indirectly, but as effectually, by increasing the expence of education. (p. 119)
The government of towns corporate was altogether in the hands of traders and artificers; and it was the manifest interest of every particular class of them, to prevent the market from being overstocked, as they commonly express it, with their own particular species of industry; which is in reality to keep it always understocked. (p. 124)

A final kind of monopoly depended upon tariffs and quotas that prevented foreign producers from competing with domestic producers:

The superiority which the industry of the towns has every-where in Europe over that of the country, is not altogether owing to corporations and corporation laws. It is supported by many other regulations. The high duties upon foreign manufactures and upon all goods imported by alien merchants, all tend to the same purpose. Corporation laws enable the inhabitants of towns to raise their prices, without fearing to be under-sold by the free competition of their own countrymen. Those other regulations secure them equally against that of foreigners. (p. 127)

Competitive markets restrain monopoly because the above-average profits associated with the exercise of monopoly power attract new producers who increase output and thereby lower prices:

When by an increase in the effectual demand, the market price of some particular commodity happens to rise a good deal above the natural price, those who employ their stocks in supplying that market are generally careful to conceal this change. If it was commonly known, their great profit would tempt so many new rivals to employ their stocks in the same way, that, the effectual demand being fully supplied, the market price would soon be reduced to the natural price.... Secrets of this kind, however, it must be acknowledged, can seldom be long kept; and the extraordinary profit can last very little longer than they are kept. (p. 60)

The next section is very IMPORTANT.
Monopolists can preserve their favorable position only if the government prevents potential competitors from entering the monopolized activity:

The exclusive privileges of corporations, statutes of apprenticeship, and all those laws which restrain, in particular employments, the competition to a smaller number than might otherwise go into them, have the same tendency...They...may frequently, for ages together, and in whole classes of employments, keep up the market price of particular commodities above the natural price, and maintain both the wages of the labour and the profits of the stock employed about them somewhat above their natural rate.

Such enhancements of the market price may last as long as the regulations of police which give occasion to them.
(pp. 61-2)

In fact, the term "intellectual property" is a misnomer, a more correct term would be intellectual monopoly. Patents, Copyrights and even Trademarks are a government granted monopoly, they do not occur naturally. That does not mean that they are a bad thing per-say, but their use should be dictated by the benefit to socitety in general, with approprate limits so their use cannot be abused.
These statutes give the power that the ol' Mercantile laws gave to those monopolies. There is no true effective choice in the market. Compainies like Microsoft are sustaining it's dominate position in the markerplace by using a state-constructed and granted monopoly, which gives Microsoft the monopoly over it's protocols [], effectively just as restrictive as the East India Trading Company trading zone monopoly of the Orient.

Free markets make the formation of monopoly difficult because monopoly requires the adherence of all actual and potential sellers in a market. Self-interest makes achievement of such adherence difficult because each seller has an incentive to undercut the monopoly price in order to increase his share of the market. Monopoly power is increased or made possible if enforced by the government. In the following passage Smith refers to the guilds, or corporations, of his day:

An incorporation...makes the act of the majority binding upon the whole. In a free trade an effectual combination cannot be established but by the unanimous consent of every single trader, and it cannot last longer than every single trader continues of the same mind. The majority of a corporation can enact a bye-law with proper penalties, which will limit the competition more effectually and more durably than any voluntary combination whatever.
(p. 129)

Smith's ideas appear in current public debate over monopoly. Advocates of deregulating the transportation and communications industries by eliminating or reducing the power of Federal regulatory agencies argue that these agencies promote monopoly by limiting the entry of new firms and by fixing prices for all producers. Government regulations enforced upon all firms in an industry have the effect of allowing producers to eliminate competition and to raise prices. At the same time, lack of competition reduces incentives for efficient production.

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Patents bad but also pushing interesting trend
Authored by: NZheretic on Thursday, August 05 2004 @ 09:03 AM EDT
Business methord and software patents are detrimental to the software industry as a whole, but it is also one of the major driving forces to an interesting trend amongst most of the major IT vendors.

Applying game theory to long term software industry market, for both open and proprietary vendors, based on software patents...

1) Small software developers are unlikely to benefit from the overall balance of payments from licensing of their own and other vendors software patent portfolios, since other software vendors are just as likely to hold other software patents that the developer uses in his own products.

2) Larger software vendors are unlikely to benefit from payments from licensing of their software patent portfolio, as per above small sofware developers plus the software vendor is likely to hold the lion's share of the sofware target market, profit from software patent licensing will be much smaller in proportion to the overall sales of the vendors own products.

3) Third party intellectual property "holding companies", that do not actively participate in selling actual software, are the only class of organization that can benefit from licensing of their software patent portfolios. In most cases these entities have a very tenuous relationship to the ongoing development of the software methords patented.

Software and business methord patents do not promote the art and ongoing development of the entire software industry.

In 1981 US courts ruled that software and business methord could, without legislation ot the contrary, be patented. From 1981 to 1989, with a few exceptions the entire IT industry just ignored the issue of software patents.

Challenges and Strategy -Bill Gates Email Memo 1991 and.Strategy []

Category 3

This is a category of challenges we face that I don't feel are widely recognized.

PATENTS: If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today. I feel certain that some large company will patent some obvious thing related to interface, object orientation, algorithm, application extension or other crucial technique. If we assume this company has no need of any of our patents then the have a 17-year right to take as much of our profits as they want. The solution to this is patent exchanges with large companies and patenting as much as we can. Amazingly we havn't done any patent exchanges tha I am aware of. Amazingly we havn't found a way to use our licensing position to avoid having our own customers cause patent problems for us. I know these aren't simply problems but they deserve more effort by both Legal and other groups. For example we need to do a patent exchange with HP as part of our new relationship. In many application categories straighforward thinking ahead allows you to come up with patentable ideas. A recent paper from the League for Programming Freedom (available from the Legal department) explains some problems with the way patents are applied to software.

The 1991 paper from The League for Programming Freedom can be found here []

As Bill Gates rightly stated " If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today". The Silicon valley revolution would not have taken place. From 1991 to 1997, the major software vendors slowly began build software patent portfolios and entering into cross licensing arrangements and most of the smaller vendors still ignored the issue entirely.

From 1997 on, driven by the greed of the Venture capitalists of the DotCom era, vendors and other groups began gobbling up businesses based not upon the current business viability, but the so-called intellectual property the business held. Most in the software industry still ignored these third party parasites, but larger vendor also began expanding their software patent portfolios.

Complex cross licensing arangements are increasingly becoming a legal quagmire. Microsoft is facing a number of lawsuits from companies which Microsoft did enter into a formal relationship, for example Timeline Inc []

The SCO Group is also suing IBM based upon the exact same class of legal cross licensing relationship that Bill Gates suggested as a solution to patents back in 1991.

While software patents remain a threat to the entire software industry, including Linux, the patent issue is pushing many companies, including IBM, HP, SUN, Oracle, SAP and Novell are turning to a simpler form of cross licensing arrangement - the GNU General Public License, or GPL and LGPL.

Only GPL and LGPL like so-called "viral" licenses effectively grants all downstream users the right to freely use the sofware. A license that even the largest of patent portfolio holders, such as IBM, are adopting to collaboratively develop new software. This, along with customer demand, is the major reason that Linux is being widely adopted and not one or more of the BSD based distributions.

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OT-SCO/Sontag allegations.....
Authored by: Anonymous on Thursday, August 05 2004 @ 09:05 AM EDT
"Chris Sontag, senior vice president and general manager of the SCOsource
division, said that the company is working on providing an SCO Linux licence
bundled with its OpenServer and UnixWare operating systems."
""If you chose to run a Linux application, and you [had] a licence for
the most recent version of UnixWare, then you can do that," he said at the
SCO Forum event in Las Vegas."

This once again implies that every Linux program infringes their claimed rights.
Not just the Linux kernel.
One wonders if the SCO Linux license is indeed needed to run Apache and Samba on
This is what the above statement imlpies.
They will continue these attacks and mis-statements until the are prohibited
from doing so.

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Authored by: OmniGeek on Thursday, August 05 2004 @ 09:16 AM EDT
It would be useful if we could get our Congresscritters (or more practically,
their staffs, who actually do all the reading anyway) to read this and
understand that we feel strongly about this issue and want them to Do The Right
Thing here (and that we'll vote accordingly). I plan to send mine a hardcopy
with a brief cover letter. If the staff only read the cover letter, something is
still accomplished.

My strength is as the strength of ten men, for I am wired to the eyeballs on

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Reflections on Intellectual Property Rights, by John H Terpstra
Authored by: Anonymous on Thursday, August 05 2004 @ 09:37 AM EDT
I understand the current USPTO practices are not optimal, and we have to find a
way to change them, but what Terpstra (and everyone fighting to abolish patents
completely) is arguing is of grave concern.

Imagine if you, for example, were the inventor of a revolutionary new mode of
transportation... with an investment of $200M you were able to develop the
flying tricycle and make it 80x more efficient than Mom's SUV. You've done all
the work, including all the failed prototypes and testing, and now are ready to
sell the product. John Doe purchases your first car, reverse engineers it, and
sells a cheaper version for significantly less (something that is protected in
patent laws today). This forces you and John into a price war over consumers,
but the thin margins will never allow you to recover your initial investment.

Sure, it's a great win for consumers because they get it cheaper due to the
price war. But how willing are you to invest $200M if you're not going to be
able to get out of it what you've invested? No amount of saying "it's the
right thing for society" is going to put food on the table.

The abolishment of patent laws in their entirety will only serve to restrict
innovation for major new technologies. A better method is refining the patents
associated with software and algorithms. There _has_ to be a method of
protecting investment, or those with the money to invest and develop technology
will simply not do it. In the end, software may still come out okay (there are
plenty of college programmers cutting their teeth on new ideas), but the big
investments in hardware and requiring lots of capital won't happen...

Would Boeing spend billions of dollars developing a new aircraft if it can be
ripped off the next day and undercut by someone looking to take advantage of
that investment?

PS - Before I'm branded an apologist, I'm not -- I'm actually in favor of patent
reform that would eliminate the underhanded tactics of companies who seek to
destroy competition entirely; however, it needs to be done in a way that
protects other investments, considering that there generally are only a few ways
to accomplish something in software.

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Only slightly OT: US patent law is being debated in Australia
Authored by: leopardi on Thursday, August 05 2004 @ 09:50 AM EDT
Has anyone noticed that US patent law is being debated in Australia as a result of the Australian Senate debate on the Australia-US Free Trade Agreement?

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Thought for US citizens
Authored by: sphealey on Thursday, August 05 2004 @ 09:57 AM EDT
If you are reading this essay and are a US Citizen, you might think about
sending John Kerry a polite letter outlining some of your concerns in this area
and asking what his positions are. Followed by a polite response if you have
any disagreements with his positions.

Unfortunately (or fortunately), you can no longer attach a check for $10 to your
letter as the deadline for private contributions has passed.

[If you prefer to correspond with Mr. Bush that is fine too but I think the Bush
Administration's positions in this area are well known by now]


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Reflections on Intellectual Property Rights, by John H Terpstra
Authored by: clark_kent on Thursday, August 05 2004 @ 09:57 AM EDT
"There was structure and order in the old world. Foundation priorities
expressed in older literature held that foremost in priority is the Supreme
Being who endows us with inalienable rights and to whom total subservience is
due. The Constitution of the United States of America reflects such ideals. To
such as held this view, second in priority is one's own family, and third in
importance is one's fellow man out of which emerges a great social

My Dad worked at a steel mill for 42 years. My Dad was influenced by this
"old world" thinking. Some of "old world thinking" was bad,
however other parts of it were very good, especially the parts that looked at
the long term, as in thinking ahead for generations upon generations of people
to come. Now I think a majority of the people of the US are struggling past a
few years, in planning, finances, spiritual matters, physical well-being. I
think we, as a nation, are getting snowballed by people wanting to take
advantage for their own selfish purposes, and they use weaknesses in our
government to push their influence, especially with the likes of Microsoft. But
Microsoft is not the only company doing it. There are many, in other markets.
And it is not that we have never had these opportunist types. But they are able
to stay around longer and have a larger influence. I think our weakness shows in
our lack of understanding who this "Supreme Being." Our laws reflect
our Christian heritage. And I am not talking about the bad things done in the
name of Christ. I am talking about things like the defeat of slavery, equal
opportunity, and anti-trust law. Our laws are there to protect us. But it takes
people willing to sacrifice to stand for the Truth and fight against the ones
willing to take those freedoms away. And some of those people whom we place this
vaulable trust of the United States take advantage and become self serving in
their posts. It is about our focus on what is really Truth, and what is
everything else. United we stand, divided we fall. Plain and simple.

I hope I do not offend anyone religiously. However, I believe I am only stating
the facts. Let each belief stand on it's own merits as well as my own words.

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Very OT - SCOX share price
Authored by: AndyC on Thursday, August 05 2004 @ 09:58 AM EDT
Not another buyback by SCOX to inflate their share price?!?

($5.08 at 09:42)

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Telecommunication Teleology - the thrid way
Authored by: tz on Thursday, August 05 2004 @ 11:07 AM EDT
The overlooked issue is the "ends". What ultimate goal does the IP
framework serve? Corporate welfare queens? Or to promote the distribution of
knowledge and learning and invention?

The founding fathers didn't create freedom for (excuse the pun) license. It was
for fair competition.

In many libertarian debates, they have no idea of opensource as a third way
between government and the market or corporations (or worse, and alliance
between the two).

I think a lot of drugs, health care, and other biology could be done along the
Free and Open IP model and solve a lot of the problems - not all, but those
where the market might be too small. (Lorenzo's oil?).

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Reflections on Intellectual Property Rights, by John H Terpstra
Authored by: John M. Horn on Thursday, August 05 2004 @ 11:09 AM EDT
Geez! This is one of the most momentous documents ever posted by PJ. Even some
of the subsequent posts by readers are sage and informative.

The email by BG is also very insightful. In a nutshell, he identifies the
genesis of the patent attack plan against Linux before he knew Linux existed and
at a time when Linus Torvalds was still contemplating the first primitive kernel
and long before Linux was known to the rest of the world.

I have MUST cut and paste John's article and some of the posts just as a future
reminder for me.

Excellent article Mr. Terpstra!

Good work, as always PJ!!!

John Horn

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Any sign of - IBM's opposition memo to SCO's renewed motion to compel
Authored by: Anonymous on Thursday, August 05 2004 @ 11:30 AM EDT
Hearing for SCO's motion to compel, set 10:00 9/2/0 before Magistrate Judge
wells (IBM 211)

IBM's opposition memo (Presumably IBM 212?) should be filed by now

Anybody got a copy? Frank? Al Petrosky (spelling? sorry)? Anybody? Please post
a link if you have it

Thanks in advance
Quatermass IANAL IMHO etc

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Reflections on Intellectual Property Rights, by John H Terpstra
Authored by: Anonymous on Thursday, August 05 2004 @ 11:33 AM EDT
Did all of you miss this nugget by Bill Gates?

'In many application categories straighforward thinking ahead allows you to come
up with patentable ideas.'

That is, of course, almost verbatim against the wording of what *should* be

35 U.S.C. 103 Conditions for patentability; non-obvious subject matter. (a) A
patent may not be obtained though the invention is not identically disclosed or
described as set forth in section 102 of this title, if the differences between
the subject matter sought to be patented and the prior art are such that the
subject matter as a whole would have been obvious at the time the invention was
made to a person having ordinary skill in the art to which said subject matter

So, tell me again: how is something which requires only "straighforward
thinking" not "obvious to a person etc."?

It's a pretty clear admission that people out there are gaming the system by
cramming in applications to the USPTO they know *quite well* should not be
patentable (as some "straightforward thinking" is all that is required
to come up with the "patentable" idea), and expecting the USPTO to
drop the ball...

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Intellectual Property Rights
Authored by: Anonymous on Thursday, August 05 2004 @ 11:49 AM EDT
This makes a good question, as it seems that the right to create is being
limited or taken out of the hands of the greater number. I see one greater
impact for the future, that is people being sealed into jobs within a small
handfull of companies & corporations, the library systems will be nothing
more then small limited sources of what one is allowed to read about. What
happens to small business, what happens to people that cannot get one of the few
jobs. As the U.S. and maybe the rest of the world work on a small future for
nothing more then works that 100 years from now will be old books and devices
people will look at and maybe say "they destroyed themselves daddy ?".

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Why Not Fix What is Broke?
Authored by: Anonymous on Thursday, August 05 2004 @ 12:13 PM EDT
The patent laws require (among other things) that an invention be truly new and
not obvious. Inventors are required to perform due diligence on these two points
and so swear under oath.

The problem is that inventors lie. They do not perform due diligence in
inspecting the prior art and they fail to test their invention as to being
obvious. They then swear to the contrary under oath. Unless and until there are
mechanisms in place to only patent things and methods that are truly new and
truly not obvious such abuses will continue.

One suggestion is to require inventors to assume liability for their failures as
such abuses are not much different from common thievery.

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Individual vs Society
Authored by: Hyrion on Thursday, August 05 2004 @ 12:23 PM EDT

Reading this brings to mind a question I like to ask people. As a quick side-note, I've only read the first couple paragraphs. The question is:

Which is more important, the society or the individual?
It's kind of a trick question. When people hear that question, they jump to the conclusion there's only two answers and so choose among them.
  1. The society is more important.
  2. The individual is more important.
There is, of course, a third answer.
Neither is more important then the other.
My line of reasoning is pretty simple:
Without the individual you don't have a society. Without the society the individual looses strength.
In my beliefs, Just laws and Ethical activities are those that have a balance to protect both. Anything created or done that protects one at the cost of the other should probably be re-examined. The end result when you disrupt the balance that both are equally, highly important is that you end up damaging everything. That includes harming yourself and those around you including loved ones.

Just some beliefs I hold that I share with those willing to consider them.

There are many kinds of dreams. All can be reached if a person chooses. - RS

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OT: Historically Inaccurate and Rather Trivial
Authored by: RDH on Thursday, August 05 2004 @ 12:48 PM EDT
Mr. Terpstra wrote:

"There was structure and order in the old world. Foundation priorities expressed in older literature held that foremost in priority is the Supreme Being who endows us with inalienable rights and to whom total subservience is due. The Constitution of the United States of America reflects such ideals. To such as held this view, second in priority is one's own family, and third in importance is one's fellow man out of which emerges a great social responsibility."

The Constitution of The United States reflects no such views as claimed above. The vast majority of the Founding Fathers were deists believing a Supreme Being was a distant and detached creator. This country was not founded on a set of religious beliefs: it was founded on the concept that there is an explicit and implicit social contract that exists between the people and the government. Please remember the phrase: "...[D]eriving its {ed.: the goverment's} just powers from the consent of the governed." The desire to insert a greater sense of importance for religion in the civic arena, especially Christianity (and this is not entirely a slam), is wholly eroneous and in contradiction of historical fact. The Founding Fathers would have shuddered at the mere thought.

Anyay, the issue with patents and copyrights is that it now threatens the social contract instead of upholding it. These are now being used as a means to squelch the common good by intefering with innovation. The dead, white males who gave rise to this country would groan at the use of copyrights and patents for such a purpose. It is almost entirely the exact opposite of what they intended.

"Question authority since it is always in question."

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The problem is simple
Authored by: Anonymous on Thursday, August 05 2004 @ 12:52 PM EDT
The USPO (and others) allows patents on the simple and "obvious". And
they have no simple way of correcting their mistake.

This problem is not unique to software.

What can we really do?

1. Educate patent examiners - and pay for more of them. Write to your
representive and point out the problems.

2. Suggest a simple method to challenge patents - free if someone has been
accused of infringement. It should always be the first step.

3. Stop asking for the "abolition of patents". You will be ignored as
crazy people.

The problem is simple: people are greedy.

The solution is hard and problematic, but continual work on the above will
improve things.

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Reflections on M$ and Intellectual Property Rights.
Authored by: Brian S. on Thursday, August 05 2004 @ 01:23 PM EDT
Why do I get the feeling from both the editorial and comment sections of the
last two articles that at last the real enemies of F/OSS are being identified
and spoken about.

I know the SCOG court cases will keep us entertained for
months to come.

There have always been rumblings and grumblings about M$ and
their intention. There have always been rumblings and grumblings about the
adverse effect of software patents.

Apart from some small asides, the vast majority of writers have made the real
battle M$ and patents v the world and F/OSS.

Brian S.

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IBM, SCO, and Kay's "Foundations of Corporate Success"
Authored by: k9 on Thursday, August 05 2004 @ 01:46 PM EDT
In this excellent book, John Kay analyses corporate success in terms of three "Distinctive Capabilities" (Architecture, Reputation, Innovation), and "Strategic Assets". He regards strategic assets as fundamentally different from the others, because it arises from market structure or regulation, rather than a genuine distinction between firms.

He divides Strategic Assets into 3 types :
- natural monopoly
- sunk cost barriers to entry
- licenses and regulations

And then says "Strategic assets ... raise issues about the proper conduct of business in ways which rarely arise when competitive advantage is based on [the other factors]. When distinctive capability gives rise to superior performance, the private gains ... will generally correspond to equivalent gains for society as a whole.Where strategic advantages are derived from legal privilege or market dominance, the equivalence of private profit and public good may not follow." (op.cit., p.114)

Based on Kay's analysis, the reason for the difference in behaviour of IBM and SCO is clear. IBM sees its reputation as a crucial distinctive capability, and will deploy its strategic assets in ways that enhance that. The "gift" of Cloudscape is a clear example. On the other hand, by the time SCO embarked on its litigation program, its reputation for many of the things that matter in the software industry was pretty low.

The state is (or should be, anyway) concerned with public good, and so intervenes both to limit the ill effects of structural strategic assets, and to create them artifically where it is thought public good would flow therefrom. All "IP" is an artificial strategic asset of this type. Any state-granted monopoly should be available only to the extent that it either generates public good directly, or is needed to enable firms to use or enhance their distinctive capabilities (thereby presumptively creating public good indirectly). Thus, trademarks last for ever, because they provide essential support to reputation and there is a clear public good in avoiding market confusion. The public-private bargain over patents is a grant of limited monopoly, in part on the presumption that the patentee will be able to use that monopoly to enhance its other capabilities.

As the article said, clear thinking on this sort of thing does not seem to be widespread amongst the political classes. Just like the theory of comparative advantage. It is clear that SCO believe themselves right. Like protectionists, they may have some success by making arguments which seem intuitively plausible, and have emotive appeal, but are in fact mostly wrong. No doubt this is why they want to be in front of a jury.

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Request permission to quote
Authored by: Anonymous on Thursday, August 05 2004 @ 03:02 PM EDT
I, myself, go back to a quote that was posted here a while back:
"I hope the lawyers among you get my point: Citing precedent is necessary, essential, and fundamental to the practice of law. Likewise, in the practice of programming, "citing" code, algorithms, data structures, ideas, standards, constants, design patterns, et cetera, is necessary, essential, and fundamental to the practice of our profession. There is no code in existance today that does not "cite" from previous work by another "owner". This includes (really!) Microsoft DOS, Microsoft Windows/3.1, Microsoft Windows/95, Microsoft Windows/NT, Microsoft Internet Explorer, Microsoft Office, Microsoft Exchange, (all Microsoft products!) Linux, Minux, Unix, Multix, CTOS, IBM/VMS, VMS, Perl, Java, Python, Lisp, C++, C, ... "

As listed UNIX infringes, Winodows infringes. I've been a code-pig for thirty some years, does that mean that the high school I first learned FORTRAN in can sue my current employer (State Gov't) for copyright infringment? Let's go up the line: The state owes the contractor/Fed gov't which owes the privately held bank which owes the county which owes the City which owes the University which owes the school district....

I'm ready, bring on the lawyers, I'm still using concepts that I learned in school.


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Reflections on Intellectual Property Rights, by John H Terpstra
Authored by: Anonymous on Thursday, August 05 2004 @ 03:33 PM EDT
It all sounded so reasonable until I got to the bit where he says:
The entertainment industry could not ignore the fact of a few thousand letters advising them that consumers will no longer purchase their wares under the licensing terms provided. A one-month public moratorium on all purchases could bring the industry to its knees!

Man, what have you been smoking? If you think you can persuade 230,000,000 Americans to stop buying DVDs for a whole month just to support your cause (however worthy), you have lost all contact with reality.

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OT: Boxing With Waterfalls
Authored by: mojotoad on Thursday, August 05 2004 @ 03:37 PM EDT
Hey PJ --

In an earlier story I'd asked if anyone had ever heard of the analogy "boxing with waterfalls" before, or whether you'd coined the phrase.

Coincidentally, I was just reading the (very funny) book Witches Abroad by Terry Pratchett (one of the Discworld novels).

In it, Nanny Ogg makes the statement "Might as well try to stamp out a flood."

Hah! By the way, that is the same Ogg that was the inspiration for the open codec Ogg Vorbis. (Vorbis was a character from another Discworld book, Small Gods).


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Discovery and Confidentiality
Authored by: Anonymous on Thursday, August 05 2004 @ 03:45 PM EDT
Isn't most or all of the discovery considered confidential? SCO seems to be
publicly releasing IBM proprietary confidential information contained in emails
that they obtained through discovery. Is this allowed or is this a violation of
the rules of discovery?

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Ideal Patent Policy
Authored by: Anonymous on Thursday, August 05 2004 @ 04:22 PM EDT
If patent policy is about trying to encourage the production of new technology
that is beneficial to society as a whole, the scope/term of the patent (that is,
the monopoly granted) should be "sized" so that the present expected
value of the effort required to produce the technology earlier than it otherwise
would have been produced equals the marginal benefits produced by the
technology, considering, among other things, whether the technology was novel or
not inevitable and the amount of time necessary to commercialize and re-coupe
the research investment. The problems with the current US system are (i) that
it often errs when assessing novelity/evitability (biggest problem), (ii) from
what I understand of the US patent process, patents are granted based on rather
minimal evidence, with the enforcement of the patent being left to the
litigation stage -- such an arrangement is obviously to the disadvantage of
low-cost challengers such as FOSS, and (iii) the term of a patent (20 years) may
be too long for discounted present value analysis of the returns of
commercialization (I would guess that 95% or more of expected returns would be
realizeable within 10 years -- this was an argument used unsuccessfully by
Lessig in Elrdritch). Lobbying efforts should focus on these three issues
(novelity/evitability, procedural posture, and term).

Another point: American companies and the US government are advocating a
"strong" patent policy in the hope of prolonging their superior
position in the world, having achieved key technologies early, but having
outsourced the production of the technologies largely to Asia (that is, though
they can't produce the technologies any longer, they still own them). As a
short- to medium-term strategy this may make sense, but they are ignoring the
risk that Asian economies and companies, having acquired expertise via the
outsourcing (and being the primary producers and employers of scientists and
engineers), will be able to move up the technological pecking order to be the
primary producers of patentably ideas, and thus be the long-term beneficiaries
of US-advocated strong IP laws. Truly a tiger by the tail.

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Reflections on Intellectual Property Rights, by John H Terpstra
Authored by: Anonymous on Thursday, August 05 2004 @ 05:57 PM EDT
I don't think that limiting the abuse of priviledge is going to happen without
some sort of interventionism. The trick is getting the right balance.

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Reflections on Intellectual Property Rights, by John H Terpstra
Authored by: jim Reiter on Thursday, August 05 2004 @ 06:30 PM EDT
What we need is a review period, 3 - 6 months where the
public can inspect every new patent and file a response
regarding the proposed patent before it becomes issued.
Patents should not be issued with unresolved objections

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As a call to action, very poorly written article, in my opinion
Authored by: Anonymous on Thursday, August 05 2004 @ 06:46 PM EDT

People seem to think this article is great. I didn't find it so.

Even if this article says things that are right, it seems to me that it violates most of the rules of effective communication. It's hard to find the important points, and the article does little to summarize or bring things together so that the reader has something to grab onto and go away with (in terms of why IP can be a bad thing). The wording is overly "intellectual" to the point of being mostly a distraction. The article doesn't make points and reinforce them - instead it seems to take pride in trying to make you guess where the writer is going at any given point in time.

History is great, and we shouldn't ignore it, but software patents are inherently different enough from mousetraps that history of mousetraps /whatever really doesn't do a very good job of elucidating what is wrong with software patents.

If I were going off to fight the (anti) intellectual property battle, this is certainly not the piece of paper that I would take with me to shore up my case. The main consequence of trying to use this paper in such a battle, I think, would be to put everyone to sleep.

Wally Bass

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Why Software Patents are Different.
Authored by: BitOBear on Thursday, August 05 2004 @ 10:22 PM EDT
Software is different because it is new. This is not homily (sp?). In the
physical world of physical patents _absolutely_ _everybody_ knows what a wheel
is, what a pully is, what an incline plain is; how you cannot patent the
"block and tackle". That is, every human being knows (to wihtin some
limit) what *CLEARLY* cannot be patented.

What we have people patenting in the software regions are things like:

-- Going into a merchant with whom you have an established relationship,
selecting an item from a shelf, saying "put it on my tab" and then
leaving. This is what the "One-Click Shopping" patent is by analogy.

-- Using a block-and-tackle system to lift a Piano (instead of lifing any other
thing). This is the AT&T "Backing Store" patent, which is a patent
on using regular memory keep a copy of regular memory, so that that memory can
be restored later. The thing that made this "novel" was not the act of
remembering, but the act of remembering "what happened to be on the screen
before a popup window was popped up" so that the window could be popped
down. I saw this technique used by junior-high school students using TRS-80's in
1978. The patent was issued in 1985.

-- Calling someone down in records and asking them to look someting up for you.
This is any number of "client server software" patents. You actually
see a lot of these. People who arn't patenting their database or their
application, but instead patenting the application using client-server models to
communicate between the two elements.

It just goes on an on.

So the first "difference" with software compared to real world patents
is that the things that absolutely anybody would laugh out of the patent
applications "in the real world" but which are getting through
"in the software world" because they are hidden in expansive

And don't get me wrong, this happens in the "real world" too, just not
as often. Not to long ago some guy got an "idea patent" in Austrilia
for... get this... the wheel. He'd just packed it so full of melarky that it
slipped by. you know, (not a quote from the patent) "a means by which
contact forces and impacts cause by interraction with an uneven surface can be
directed through a mesh to a central structural support such that..." (e.g.
legaleze bullshit. 8-)

The second way Software is different is that none of the software can make the
parts of the computer do things that the parts cannot do by design.

Look at the old DesqView (sp?) patents from the mid eighties. These were patents
on using the virtual memory support built into the 286 and 386 to intercept the
direct-to-screen writes common in the IBM-PC programs of the era. There wasn't
anything particularly amazing about doing this, even if they were the first to
do it. See, the brand-new chips let you virtualize any type of memory, and the
screen memory was memory, and the programs were doing memory access...

We already know that, for instance, you cannot patent taking two parts that work
a cerian way and placing them together to continue working in that ceritan way.
Any yet, here is this patent.

Really, think about it:

A means by which a sewing machine, with automatic embroidary functions that
include flower paterns, is employed to repeatedly embroider flowers onto an item
of clothing such that the resulting pattern of embroidered flowers will cause
enjoyment and contentment in the viewer...

A means of applying paint to canvas with a brush or sprayer in a pattern of
repeating flowers such that the resulting pattern...


not patentable...

The third and final reason that software isn't patentable is that everything you
do on a computer you already do in real life. A computer, by means of its
software, automates repetitive tasks. It is a giant adding machine. And just as
an adding machine is patentable, the people who make the real live physical
parts of your computer enjoy patent protection on thoese parts. The software is
just a spesific use of those parts.

What if accountants held patents on tallying balance sheets?

You could go out and buy the adding machine, but you wouldn't be able to apply
that machine to your business without the express permission of a local
accountant. Not even as a trial run before getting the real certified accountant
to do the real work. You would be enjoined, without a licence, from tallying up
some rough costs on a napkin when discussing a possible new venture with a

That is what is happening with software patents. The "software
companies" *OWN*, not a copyright on the software that you happen to have
bought form them, but *THE* *ACTUAL* *AND* *ENTIRE* *CONCEPT* of "the
spread-sheet" or "one click shopping" or "indexing a
file" (yes, as in the computer equivalent of the little paper tabs on a
folded up piece of cardboard containing memos or whatever) and can ENJOIN YOU
from doing things you already know how to do because you DARE to do it with the
assistance of a machine.

Software Copyright, as in "I wrote it, you pay me for it, or write your
onw" is ok.

Software Patents, as in "I thought about writing it first even though I
didn't write it, so pay me if you want to write it yourself" is not.

Notice that we talk about "writing software" not "inventing
software"; we use "programming languages" and so on. Everything
about software is analogus to the art of writing and drawing, and is naturally
in the realm of Copyright. The Patent thing was started when the AT&T guys
patented "the set-uid bit" in UNIX, but you know what? They built a
piece of hardware and patented *taht*, as a lark.

And now we all burn.

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Reflections on Intellectual Property Rights, by John H Terpstra
Authored by: Anonymous on Friday, August 06 2004 @ 07:13 AM EDT
"There was structure and order in the old world. Foundation priorities
expressed in older literature held that foremost in priority is the Supreme
Being who endows us with inalienable rights and to whom total subservience is

Actually the Founders were mostly not Christians and their concept of
"God" was that of "Nature as God".

Unless you were referring to societies preceding the Founding Fathers. The
context of the above statement was not clear.

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