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Analysis on Balance - Standardisation and Patents - by Georg Greve, President, FSFE
Tuesday, December 02 2008 @ 01:12 PM EST

Analysis on balance - Standardisation and Patents
- by Georg C. F. Greve
FSFE, President

This paper provides an analysis of the interaction of patents and standards and finishes with some concrete proposals to address the most pressing issues. It was written under the assumption of very little background knowledge, and therefore provides some of the background necessary to understand the issue. An expert in the field should be able to skip the Background section.


Software patents have been a hugely controversial debate, with lines of battle drawn primarily between large corporations holding large patent portfolios and engaged in multiple cross-licensing deals, and the Have-Nots, entrepreneurs, small and medium enterprises, and software users from the student using GNU/Linux all the way to institutional users in governments.

This debate got a lot quieter with the rejection of the software patent directive in 2005. Its place in the headlines was taken by other debates, such as standardisaton. Open Standards have been a buzzword for years, but never has this term been discussed more intensively.

On Wednesday, 19 November 2008, both debates met in Brussels at a workshop titled "IPR in ICT standardisation", although "Patents in ICT standardisation" would have been a more suitable name because the discussion was exlusively about the interaction of patents and ICT standardisation.

Patents and standards are fundamentally at odds, so many people call for a balance between patents and standards. This article comments upon the workshop and explains why standards should prevail over patents at least in the area of software.

Background: Patents & Standards 101

The idea of patents is not new. Its roots lie in the royal "litterae patentes" that conferred exclusive rights to certain people. Democratic governments eventually took the position of the monarchs, and patent legislation has evolved over time, but the fundamental characteristics of what is a patent have not changed.

Succinctly put, a patent is a monopoly granted for a limited time by the government on behalf of its citizens.

The term monopoly has many negative connotations, and for good reason. A monopoly stifles innovation and increases price due to the absence of competition. On these grounds a monopoly is generally understood to be to the detriment of economy and society. It is not illegal to obtain a monopoly, but society has a legitimate interest in limiting abuse of the power that a monopoly confers, and seeks to achieve this through antitrust law.

The monopoly right created by a patent brings with it all side effects of a monopoly. It is granted by the state because it is understood that the absence of patents might prevent publication of breakthroughs, which is understood to be more harmful than granting the patent monopoly.

This initial patent deal is based upon disclosure, so that others can learn from and build upon a new idea. Lack of useful disclosure or advancement of public knowledge translates into the granting of a monopoly with no return for society.

Like patents, standards are closely related to disclosure. The root of the word standard appears to go back to heraldry, where it refers to a symbol that is used to make a rallying point visible in battle.

Modern use of the term keeps that meaning of publicly visible point of reference, although it has been transferred to other areas. So among other things it is understood as "something established by authority, custom, or general consent as a model or example" or also "a structure built for or serving as a base or support." (from Merriam-Webster On-line dictionary).

In Information and Communication Technologies, a standard has both the above meanings. According to the British Standards Institution (BSI), a standard is "an agreed, repeatable way of doing something. It is a published document that contains a technical specification or other precise criteria designed to be used consistently as a rule, guideline, or definition. [...] Any standard is a collective work. Committees of manufacturers, users, research organizations, government departments and consumers work together to draw up standards that evolve to meet the demands of society and technology. [...]"

The underlying idea is that a standard establishes common ground, it provides the means for interoperability and competition. This is especially true for ICT due to their strong networking effects. If all participants in an ICT market adhere to the same standards and make an effort to guarantee interoperability, not only can customers choose freely between various products and services, they can also exchange information with one another without problems.

In contrast, absence or failure of standardisation warps networking effects in a way that monopolisation becomes almost certain. Users of one product or service could only interoperate with users of the same product or service. Over time, one solution would attain such a large user base that other users are de-facto left with the choice to join this group, or be unable to communicate fully with the majority of users. This could for instance be achieved by bundling software with a predominant hardware platform.

So standards are largely an instrument to enable competition for the public benefit. The purpose of standards is intrinsically anti-monopolistic.

It is also pro-innovative. Since derivation from a standard automatically breaks it, standardisation and innovation seem opposed goals, and to some extent they are. But where all changes are done in consensus between implementors, the result is an updated version of the standard available to all. The second path is innovation on top of the standard, using the standard as a base for innovation rather than innovating inside the standard.

Due to its global, consensus-driven nature, the first process is comparatively slow. Another problem is the a substantial barrier to entry into the standards process. As a result, large companies are overrepresented in comparison to small and medium enterprises (SME).

The second path is open to everyone, private person, SME, or large industry. It is also limited only by the speed of development of the team making the innovation. If the innovation was made by just one party, there will be a temporary monopoly. But given a certain maturity, the innovation is then likely to be formalised into a standard again, forming the base for the next innovation to be built on top.

While the first path allows primarily for slow, small improvements, the second path allows for full participation of the economic majority and is much better suited for groundbreaking ideas and arguably the more important to protect for society.

Conflict: Fundamentally opposed instruments

The fundamentally different goals for patents and standards surfaced multiple times during the debate, for instance in the speech of Mr Karsten Meinhold, chairman of the ETSI IPR Special Committee, who summarised it as "IPRs and Standards serve different purposes: IPRs are destined for private exclusive use, Standards are intended for public, collective use".

Both patents and standards derive their justification from the public benefit, yet upholding one deprives the other of its function. Standards seek to counteract monopolies, patents establish them. Or, as Tomoko Miyamoto, Senior Counsellor of the Patent Law Section in the World Intellectual Property Organization (WIPO) said in her presentation: Patent thickets and patent hold-ups arise from legitimate exploitation of the exclusive rights intentionally conferred by patents. They are a normal and intended consequence of the patent system.

Allowing patents on standards consequently is an intentional act to grant monopolies on standards to certain parties that includes the right to block implementation by other parties.

Ex-Ante Disclosure

There are multiple attempts through which the standardisation community has tried to mitigate these effects over the years. One of these mechanisms is called "Ex-Ante Disclosure." The parties working on a standard use this mechanism to commit to licensing terms while the standard is still being drafted. If these terms are not acceptable to the other parties working on the standard, the technology that is covered by the patent is not included in the standard.

What are acceptable terms is highly subjective. A large corporation with big patent portfolio and existing cross-licensing agreement with the holder of the relevant patents might consider adding one more patent to the agreement a minor inconvenience. The same situation looks substantially different from the perspective of a small or medium enterprise that typically has at most a small patent portfolio and has to expect extortionate licensing.

Since SMEs are strongly underrepresented in standardisation, Ex-Ante Disclosure is likely to bring more satisfactory results to large corporations with large patent portfolios that compete in the same area. The economic majority generally has no say about the acceptability of the terms.

Another issue of ex-ante disclosure is difficult enforcement, as Suzanne Michel, Assistant Director Office of Policy and Coordination of the U.S. Federal Trade Commission (FTC) pointed out in her presentation. The FTC had found that Rambus Incorporated had joined and attended standardisation meetings of the Joint Electron Device Engineering Council (JEDEC) in order to modify their patent applications to cover technology that was under discussion for inclusion in future standards. In the opinion of the FTC, this behaviour was deceptive, violated JEDEC's disclosure policy, and illegaly gave Rambus monopoly power.

The D.C. Circuit Court disagreed with the interpretation of the FTC in their April 2008 decision. According to Ms Michel, the court said that avoiding so-called "Reasonable and Non-Discriminatory" (RAND) licensing terms does not constitute abuse, and that there is no proof that JEDEC would have avoided technologies if it had known that Rambus was planning to use its patents to the fullest extent allowed by law. The court also expressed reluctance to make patents unenforceable based on vague disclosure policies.

Both patents and standards derive their justification from the public benefit. There was no additional disclosure of new technology provided by the patents that Rambus filed on the standards that were about to be published. Giving Rambus monopoly power over standards developed by JEDEC is also detrimental to public interest. So it seems likely that a full public interest evaluation of this situation would give that indeed the public interest did not prevail in this case.

So it would appear that the FTC was correct in its evaluation, and so was the court, because establishing time-limited monopolies is the very purpose and function of patent law. The role of courts does not extend to the undoing of laws and most legislators have not given the public interest conflict between patents and standards consideration.

JEDEC has meanwhile updated its disclosure policy, which may help to avoid similar issues in the future. Considering the value that patent law has in relation to standardisation for many courts, only a future court case can demonstrate whether the issue has been resolved in a way that holds up to formal legal review.


This is true for all standardisation bodies that require ex-ante disclosure, which most of them don't. Instead the majority of bodies appear to rely on purely voluntary disclosure and the assurance that patent holders involved in the process will agree to so-called RAND or FRAND ("Fair, Reasonable and Non Discriminatory") terms.

One common criticism of (F)RAND terms is the lack of a definition of what is reasonable and for whom. During the 2006 Internet Governance Forum (IGF) in Athens, Susy Struble of Sun Microsystems pointed out that what is reasonable for one party may not be reasonable to another.

Licensing practices do indeed vary, and are influenced by various factors, including, but not limited to, the questions whether or or not a company has a stake in the relevant market, and how aggressively it pursues its patent revenues.

Additionally, patents can be sold or acquired as part of a business restructuring or acquisition. A future patent holder may consider different terms reasonable, so could a patent holder who did not participate in the standardisation process and never committed even to RAND terms.

RAND terms generally amount to a vague assurance to license upon request. Such an assurance does not constitute a perpetual license on the patent and is not valid for the new holder of a patent. So a new holder can choose freely how to enforce the patent, including patent hold-ups on all existing implementations of the standard.

As Ms Miyamoto from WIPO pointed out, a patent hold-up is a legitimate and intended use of the patent system. So even in a RAND regime, there is a substantial amount of uncertainty that invariably favors large companies, which not only have deeper pockets, they also have larger legal departments and patent portfolios.

It is this uncertainty that has caused great frustration among SMEs, which Charles Schulz of Ars Aperta summarised as RAND referring to "RANDom licensing at the sight of competitors." In his presentation, Mr Schulz also pointed out that (F)RAND terms are discriminating against Free Software. Even RAND terms linked to zero royalties, the so called RF-on-RAND ("Royalty Free on RAND"), RAND-RF ("RAND Royalty Free") or RAND-Z ("RAND with Zero royalties") terms often exhibit the same problems because they do not permit sublicensing.

Free Software (a.k.a. Open Source, FOSS or FLOSS) is based on the principle that every living person and every legal entity can be a user, developer, distributor, or any combination of the above. Only conditions which permit this to take place are acceptable to Free Software, which is estimated to reach 32% of all IT services and 4% of European GDP by 2010.

In her presentation, Amy Marasco, General Manager Standards Strategy of Microsoft, emphasised that she does not consider Free Software a business model. That is true to the same extent that proprietary software itself is not a business model. Business models are what is built on top of both Free Software and/or proprietary software.

Ms Marasco continued to point out that all these business models are legitimate. And while there are strong differences in opinion about which software model is the better and more sustainable choice for economy and society, from the perspective of a political analysis of standards, all business models based upon proprietary software, Free Software, or a mixture of the two need to be considered valid and legitimate.

As mentioned before, the Free Software related parts of European GDP are estimated to reach 4% by 2010. All parties agree that all business models, including those incorporating Free Software, are legitimate. This raises the question whether it can be considered Fair, Reasonable and Non-Discriminatory to exclude this legitimate part of economy by choice of patent licensing terms.

Harm from exclusion?

The situation bears an odd semblance to the situation with counterfeit pharmaceuticals, where the argument for patent enforcement is generally accompanied by public health considerations. But only effective pharmaceuticals that are identical to the patented product would actually violate the patent. Health risks arise primarily where the patents are not being violated.

In standards, the situation is somewhat similar. If patents are part of a standard, only an implementation that is covered by the patents provides an effective antidote to monopolisation. Having to circumvent patents will generally break standards compliance and harm the public benefit that is the driving force behind standardisation.

So patents in standards have the potential to make full interoperability impossible for legitimate businesses in some markets. As the aforementioned BSI points out: "Standards are designed for voluntary use and do not impose any regulations. However, laws and regulations may refer to certain standards and make compliance with them compulsory."

Once a technology has been standardised, certain choices are no longer made for technological quality. Even where a better solution exists that would have the additional value of not violating a potential patent on the standard, an implementor would choose to follow the technologically inferior standard in order to have full access to the market. Such a case reverts the initial idea of patenting: The technology is valuable because it is patented, not patented because it is valuable.

There are also cases where certain standardisation organisations, e.g. the International Organisation for Standardisation (ISO) have a priviledged position with governments for procurement decisions. Due to patents and insufficient (F)RAND conditions, not all standards priviledged in this way can be implemented by all legitimate market participants that should be able to compete in public tenders.

So through the special privilege for organisations like ISO which accept terms insufficient to guarantee competition, the monopoly right conferred by patents translates into an oligopoly or even a monopoly for public procurement. This exclusion of competition from tenders by means of patents on standards is detrimental to the public benefit because it leads to higher prices and consequently higher taxes.

Remedies for this situation would have to address the way in which governments grant procurement preferences to standards, the way in which patents are handled in standards, the patent system itself, or a combination of all of the above.

Attempted remedies

Good patent research costs around 100.000 EUR per case according to Rigo Wenning, Legal Counsel & Patent Policy Team Contact of the W3C/ERCIM who spoke about "Standards, Patents and the Dynamics of Innovation on the Web." The W3C is indeed the only Standards Setting Organisation (SSO) that has a sufficient patent policy for its standards in order to accommodate all legitimate business models.

From the perspective of most SMEs, 100.000 EUR patent research costs are prohibitively expensive. But even large companies will find this cost considerable, which is only one of the cost generators. More damage can be caused by injunctions against a product, or claims for damages. In his presentation of IBM's "SoftIP" concept, Roger Burt, Senior Counsel of IBM Europe introduces the issues with a quote from a BSA et al. Amicus brief in eBay v MercExchange. The quote summarises the problems of large industry rather well:

"Technology products typically consist of hundreds or thousands of patented components. It therefore is impossible for technology companies to investigate all of the patents, and pending patent applications that may be relevant to a new invention (product), notwithstanding their best efforts to do so. When, as frequently occurs, the claim of infringement is not made until after the new product is released or the industry standard has been adopted, designing around the claim is no longer a realistic option. Because an injunction will issue automatically upon a finding of infringement – even if the claim relates to an insignificant part of the product – the target of the claim is forced to pay an extortionate settlement in order to preserve its business."

Another attempt to keep patents fees from becoming exorbitant even for the largest corporations was introduced by Tim Frain, Director IPR regulatory affairs, Nokia in his presentation about "FRAND Best Practice." Mr Frain advocates a system based on "Aggregated Reasonable Terms" & "Proportionality" (ART+P).

The underlying idea of this approach is that if every patent holder individually charges patent fees they consider Fair, Reasonable and Non-Discriminatory, the resulting fees may easily add up to 50% or more of the cost for the end product. So all patent holders should commit ex-ante that the aggregate licensing cost for all patents should be reasonable. As an example, Mr Frain cited that in Nokias view, the patent licensing fees on the communication technology for mobile phones should be below 10% per handset.

Both approaches are attempts to control the use of monopolies granted by patents and as such are trying to get voluntary buy-in from other parties to not exercise rights that the patent system has granted them.

Unfortunately they both fall short of the criterion of non-discrimination against legitimate business models, and the ART+P approach also has the practical weakness that convergence joins more than one kind of technology per device, so the total patent royalties on a smart phone may still reach 50% even if the cost for GSM & Co are limited to 10%. But even these 10% can be considerable for laptops with included UMTS modems, or embedded devices, an area in which the profit margins are typically far below 10%.

To put it in the form of a controversial question: Is it fair and reasonable that patent holders receive a higher monopoly rent than an innovative company stands to gain by bringing out a new product and bearing all the risk associated with it?

Cui bono?

So who benefits? As explained before, patents are designed as a trade-off. Their benefits are often explained with the lone inventor having a genius idea. Would it be fair if this inventor published the idea only to see a large company bring it to market faster than the inventor could, with no financial reward for the inventor? Most people would agree this is not fair.

In the absence of patents, such an inventor could only choose between accepting fate, or keeping the innovation secret for as long as possible while trying to bring it to market. Patents grant a temporary monopoly for the inventor in return for publication, such that the inventor can find investors, set up a company, finish product development, bring it to market, and enjoy a head start before others can compete normally.

This mechanism seems to have worked reasonably well for some time in the past. But some basic parameters have changed, while patents have been extended in an essentially unreflected way to more areas. This is particularly true for software, where patents play no meaningful role in disclosure, breaking the patent deal for society whereas the time of bringing new innovation to the market and the time between groundbreaking discoveries has been decreasing.

Raymond Kurzweil found an exponential pattern in innovation reaching back all the way to single-cell organisms. Concluding that this must be a universal principle, Mr Kurzweil has been making predictions for the future of which several have turned out to be largely accurate so far. When applying this principle to patents, from the constant duration of the monopoly guaranteed follows an exponential growth of the value of an individual patent.

The price that society is paying for granting patents has been growing exponentially since the time that the initial patent bargain was struck. This would explain why the price for the patent system seems increasingly exorbitant with growing calls for reform, which have led to the recent announcement of the "First in Series of Hearings on Evolving Intellectual Property Marketplace" by the U.S. Federal Trade Commission (FTC).

Remedies to this problem could be to decrease the lifespan of patents, adapt them to the specific situation in the field, and exclude fields from patenting in which patents provide no meaningful disclosure.

When it comes to standards, it was An Baisheng, Deputy Director of the Division of Technical Regulations Department for WTO Affairs of the Chinese Ministry of Commerce who raised the question of public vs private benefit in his presentation titled "Strike the Right Balance between Public and Private Interests in IPR in ICT Standardization".

Taking our "lone inventor" scenario above, the question that we'd have to ask for patents on standards is: Would it be fair if our inventor could prevent someone else from bringing to market an innovation of their own that somehow interacts with the initial invention? To make it less abstract: Should a patent on a typewriter extend to carbon copy paper that has the right size to be used in that typewriter? Most people would agree this goes too far.

Potential Remedies

1. Interoperability trumps patent

During the software patent debate in the European Union there was consensus among SME, Free Software and big businesses representatives from companies such as IBM or Sun Microsystems that patents should be unenforceable to limit or prevent interoperability.

In the European Union, this could be introduced into the ongoing Community Patent debate. On a global level, WIPO should consider this as part of its ongoing Development Agenda discussions.

Once implemented, this would solve the most harmful side-effects for all legitimate business models and give interoperability and competition preference over monopoly rights. Considering the extraordinary networking effects that exist in this market, such a preference seems justified.

2. Update policy in SSOs

Secondly, Standard Setting Organisations (SSOs) could update their patent policies to ensure that their standards are usable in all business models. Many SSO representatives in the meeting maintained that it was not their place to mandate certain patent policies. At the same time, the Common Patent Policy of ITU-T, ITU-R, ISO and IEC already states the principle that "a patent embodied fully or partly in a Recommendation | Deliverable must be accessible to everybody without undue constraints." As this analysis demonstrates, current application of RAND falls short of that principle.

There is additional precedence supplied by the common way in which SSOs protect standards against potential later claims from Copyright holders by requiring all participants to a standardisation process to assign their copyright to the SSO. Applying appropriate similar measures on patents for similar reasons seems justified.

3. Provide intermediate and migration possibilities

Many patent-encumbered standards already exist, and even if WIPO ends up agreeing on a general interoperability preference, it will take decades for this to become local law.

As an intermediate solution, (F)RAND needs to be enforced in a way that the license terms do not discriminate against any valid business model, as is still common today. A potential solution could be to tie (F)RAND royalties to the downstream licensing revenue.

Business models that are based on proprietary licensing based on copyright or patents for revenue would continue to operate as they do today. Business models that do not rely on such licensing revenue would be enabled to interoperate and compete.

Taking this step would also realign ITU-T, ITU-R, ISO and IEC again with their declared Common Patent Policy.

4. Update governmental procurement guidelines

Governments and Inter-Governmental Organisations should update their procurement guidelines to procure only products based upon standards that do not discriminate against any legitimate business model. This means a review of blanket approval for certain standard setting organisations, and only a limited approval for organisations that have not updated their patent policies appropriately by the time of the review.

DISCLAIMER: This paper was written from the perspective of an expert in the field of software. The conclusions may apply in their entirety, partially, or not at all to areas other than software.

To top


Analysis on Balance - Standardisation and Patents - by Georg Greve, President, FSFE | 48 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
[OT] Off Topic here, please...
Authored by: nightfall on Tuesday, December 02 2008 @ 01:21 PM EST
clickies please...

[ Reply to This | # ]

Corrections here
Authored by: nightfall on Tuesday, December 02 2008 @ 01:22 PM EST
If needed.
Please include the correction in the title.

[ Reply to This | # ]

Newspicks discussion thread
Authored by: overshoot on Tuesday, December 02 2008 @ 01:22 PM EST
Please indicate the newspick in your "Title:" line

[ Reply to This | # ]

Hats off to Georg C. F. Greve
Authored by: bbaston on Tuesday, December 02 2008 @ 01:58 PM EST
for excellent and clear coverage of this burning issue. Quite impressive to see this article here on Groklaw, too.

imaybewrong, iamnotalawyertoo, inmyhumbleopinion, iamveryold

[ Reply to This | # ]

Analysis on Balance - Standardisation and Patents - by Georg Greve, President, FSFE
Authored by: Gringo on Tuesday, December 02 2008 @ 02:35 PM EST

I am very impressed with how clearly and concisely Georg Greve has presented this vital issue. It should be required reading in all schools and by all lawyers and politicians. I found the following especially compelling...

The price that society is paying for granting patents has been growing exponentially since the time that the initial patent bargain was struck. This would explain why the price for the patent system seems increasingly exorbitant with growing calls for reform.

[ Reply to This | # ]

None of these defeat trolls
Authored by: Anonymous on Tuesday, December 02 2008 @ 02:42 PM EST
None of these proposed remedies avoid problems with "submarine patents" owned by trolls - giafly.
  1. "Interoperability trumps patent" is no help because the troll produces nothing with which to interoperate
  2. "Update policy in SSOs" does not help because SSOs won't know about the trolls until too late
  3. "Provide intermediate and migration possibilities" does not help for the same reason. Also vendors would use it to destroy all patents by making relevant parts of products free (hence paying no licenses) and charging more for other aspects.
  4. "Update governmental procurement guidelines" actually strengthens trolls, because when a patent is revealed, this prevent a standard being used by government, until the troll is bought off

[ Reply to This | # ]

Analysis on Balance - There is none.
Authored by: GuyllFyre on Tuesday, December 02 2008 @ 02:57 PM EST
They outright fail to address the problems of the "Defacto" standard
in how it has caused a serious amount of trouble.

They say that in time it balances out but someone has to step up to the plate
and address the problem Microsoft has caused by "making" defacto
standards and then not allowing others to play in the same sandbox.

I haven't seen any hard evidence that this balance will occur without our
individual governments and standards bodies actually taking a hard stand against

The only evidence I've seen is that Microsoft seems to know whose pockets to
line to avoid playing nice with others.

This has really put a crimp on products that help us Windows admins cheaply and
easily integrate other technologies into our networks. Simple things like
central authentication that works for both Windows and *NIX are more difficult
and expensive or just not available.

Why spend half an hour typing at a commandline, editing group access files, etc?
Right click, join domain...sometimes the "Windows" way is really
straight forward and reasonable.

Friend of mine at a very large company has to add local accounts to all of the
*NIX boxes. There's no working central authentication like Windows. This is a
failing since they have to audit these boxes constantly and each server has it's
own collection of accounts instead of a nice centralized authentication setup.

The thing is that they *HAVE* attempted central authentication and regardless of
what the companies say, it doesn't work. This is a really large company, they
have the money to spend and they have spent it...multiple times, attempting to
solve that stupidly simple issue that Microsoft and Novell have both addressed.

AD may be a poor hack of NDS but it at least sorta works. Domains may not be
hugely scalable but at least you don't have to add local accounts to all of the
clients you want to attach to a server...

This is a major standards fail that is glossed over with the "it works
itself out when things mature." This is false. I think things have more
than matured. I think it's rotting and stinking and still there's no
interoperability that's straight forward and simple.

[ Reply to This | # ]

Analysis on Balance - Standardisation and Patents - by Georg Greve, President, FSFE
Authored by: Anonymous on Tuesday, December 02 2008 @ 03:08 PM EST
As explained before, patents are designed as a trade-off. Their benefits are often explained with the lone inventor having a genius idea. Would it be fair if this inventor published the idea only to see a large company bring it to market faster than the inventor could, with no financial reward for the inventor? Most people would agree this is not fair.
As a good programmer, I think it's fair. Coding is fun and we like have our inventions published and used, possibly improving life slightly, so why have patents? - giafly.
At big companies, software has to go through various approvals before it can be launched ... I was talking recently to a group of three programmers whose startup had been acquired ... Here's a sign of how much programmers like to be able to work hard: these guys would have paid to be able to release code immediately, the way they used to. I asked them if they'd trade 10% of the acquisition price for the ability to release code immediately, and all three instantly said yes. Then I asked what was the maximum percentage of the acquisition price they'd trade for it. They said they didn't want to think about it, because they didn't want to know how high they'd go, but I got the impression it might be as much as half.
Artists Ship - Paul Graham

[ Reply to This | # ]

Analysis on Balance - Standardisation and Patents - by Georg Greve, President, FSFE
Authored by: stan ackroyd on Tuesday, December 02 2008 @ 05:34 PM EST

The price that society is paying for granting patents has been growing exponentially since the time that the initial patent bargain was struck.

That would be a significant claim, if it could be supported. I followed the links to the Raymond Kurzweil pages, but I didn't find anything that established a notion of "exponential pattern in innovation", let alone showed how this was related to the "price that society is paying for granting patents".

Can anyone amend this gap in my knowledge?

[ Reply to This | # ]

Authored by: PolR on Tuesday, December 02 2008 @ 06:20 PM EST
... Free Software, which is estimated to reach 32% of all IT services and 4% of European GDP by 2010.
These numbers are impressive. Anyone knows a source for analogous estimations for North America and the world?

[ Reply to This | # ]

Exclude Patents from Official Standards - A Proposal
Authored by: Anonymous on Tuesday, December 02 2008 @ 07:37 PM EST

Standards proposals that are given some sort of statutory recognition (that is standards from bodies which are given official government recognition - ISO, national standards bodies, etc.) should be required to exclude any items that are encumbered by patents. That is, either there should be no applicable patents issued which covers those items, or else a patent license must be procured by the standards body which allows free use of the patent for anything covered by the standard. If a patent exists for which a license cannot be procured, then that item must be excluded from the standard.

To make this feasible would require some minor changes to patent laws and standards procedures.

  • All standards proposals must be developed in an open and transparent manner so that any patent holders can monitor them for potential infringement.
  • All standards must be freely available and re-distributable at no charge. A patent holder would therefore not be required to purchase copies of standards in order to know if any of the items covered by the standard potentially infringe on his patents.
  • Final drafts of standards proposals would be required to go through a comment period (e.g. 3 to 6 months) before becoming final.
  • During that comment period, a patent holder may declare an interest based on their issued or pending patents.
  • The standards body can either a) revise the standard to exclude the patented material, b) challenge the patent (through the normal channels) to get it thrown out, c) ask a court to give a ruling on whether the proposed standard infringes the patent, or d) get the patent holder to agree to license the patent on a royalty free basis for the purposes of implementing the standard.
  • If the comment period has expired with no valid interest being declared, the standard becomes final. After that point no patent holder can legally make a patent infringement claim for anything which implements the standard.
  • Once the standard has been issued in final form, complying with the standard would be a sufficient legal defence against claims of infringement.

Under this proposal, recognised standards bodies would simply not issue standards which are encumbered by patents. The burden of monitoring standards for patent problems would be placed where it belongs - on the patent holder. It would also make standards development a more open and transparent process. People implementing a recognised standard could do so safe in the knowledge that there are no patent trolls waiting in the background to lay claim to their work.

Patent holders could have no reasonable grounds for objecting to this proposal. It isn't proposing to take their patents away from them. It is just allowing people to avoid infringing them in the first place - which is what the patent holders say they really want.

Changes to the patent and standards legislation would be relatively minor. It requires no new institutions or regulatory bodies. It is generally applicable to all areas of technology, not just software. This means it is something that could be implemented relatively easily and quickly.

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Analysis on Balance - Standardisation and Patents - by Georg Greve, President, FSFE
Authored by: Anonymous on Tuesday, December 02 2008 @ 08:45 PM EST
A combination of corrections and comments. The single correction first.

s/standardisaton/standardisation/ such as standardisaton. Open

----Comments Below-----

I don't know that "Intellectual Property" should ever be owned by
something which has no intellect (i.e.: not a person). That nothwithstanding,
problems with patents are not restricted to software. All patents have
problems! Why software is the battleground, is because the barrier to entry is
zero. Because the barrier to entry is so low, there are a HUGE number of
entities who are interested in the process. If people had to build an iron
blast furnace in order to make something "patentable" with software,
there would be almost nobody in the market, and no problems with patents. As
other kinds of patenting hit some critical number (probably a function of the
height of the barrier to entry), they too will run into these same problems.

> One common criticism of (F)RAND terms is the lack of a definition of what
is reasonable and for whom. During the 2006 Internet Governance Forum (IGF) in
Athens, Susy Struble of Sun Microsystems pointed out that what is reasonable
for one party may not be reasonable to another.

It is entirely possible that (F)RAND can be set up under circumstances where
only a single party feels it is fair.

> Licensing practices do indeed vary, and are influenced by various factors,
including, but not limited to, the questions whether or or not a company has a
stake in the relevant market, and how aggressively it pursues its patent

Parties can decide to change how aggresively they pursue patent revenues more or
less on a whim. It should always be assumed that anything less than aggressive
behavior is only a temporary policy. Or, at least until such time as patent are
limited to only reside with the creator(s), and can never be transferred.

> So who benefits? As explained before, patents are designed as a trade-off.
Their benefits are often explained with the lone inventor having a genius idea.
Would it be fair if this inventor published the idea only to see a large company
bring it to market faster than the inventor could, with no financial reward for
the inventor? Most people would agree this is not fair.

Going back probably 15 years, I have seen recommendations that if someone
invents anything in a market where there are large players with deep pockets,
that no attempt to patent be made. Put the invention in the market, exploit it
as much as you can, and when the large players take notice, get out of the
market. The reason is that being right doesn't trump having lots of money.
There are usually a forest of patent barriers that any company entering a market
has to negotiate, nothing else except this minimal exploitation is cost

If patents could only be held by the creator, who has intellect, a great many of
the problems disappear. What one needs to introduce, is that the current
employer of the creator has the option of license free use of the creation as
long as the creator is an employee. Complicating factors are dealing with
multiple creators and how the licensing fee evolves if the creator goes to work
for some new employer.

If someone is a lone inventor, and they invent something new and original, they
are still within their rights to try and bring it to market themselves. Someone
with deep pockets may come along and "hire" them (for 1 hour per
year), and in that way get access to the patent. Obviously, a restriction of 1
employer per patent has to get involved. And this has the desired feedback for
the inventor. If the patent is useful and profitable, many organisations may
compete for their employment. And the possibility of revenue from non-employers
for licensing is still present.

If a patent is "useless", nobody will seek to license it (or employing
the inventor), and so the inventor has learned that things that are useless
shouldn't be invented (or at least patented). Which if nothing else, would
reduce how many perpetual motion machines they (the patent office) have to

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A new focus
Authored by: philc on Tuesday, December 02 2008 @ 09:01 PM EST
The author mentioned why patents are granted: "Succinctly put, a patent is
a monopoly granted for a limited time by the government on behalf of its

PJ, I tend to rant on about patents. Please feel free to not post this.

I read that to mean that the patent holder AND the citizens both benefit from
the patent. That is the deal.

Where is the discussion of how the citizens are going to benefit from each
patent? If we are going to grant you a monopoly, what do we get in return? I
like the idea of the partnership of patent holder and the citizens to the
benefit of both. The value proposition, the deal, should be clear and real.

How do patent trolls fit in? If the patent is there to benefit both the holder
and the citizens why do we permit someone to hold a patent and NOT provide value
to the citizens? If a patent holder does not want to deliver its end of the deal
why not sell or forfit the patent? Actually, why do we permit a patent holder to
license the patent to others? Why do we permit patents to exist that do not
bring value to the citizens?

Why not eliminate licensing patents? You own it, you deliver the value that is
your end of the deal or you sell it or forfit it.

How do patent trolls fit in? If the patent is there to benefit both the holder
and the citizens why do we permit someone to hold a patent and NOT provide value
to the citizens. Why wo we permit patents to exist that do not bring value to
the citizens?

Patents are a big deal. They should be treated as such. Holders should be forced
to deliver their end of the deal and provide value to the citizens.

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Yeah! What he said.
Authored by: Ian Al on Wednesday, December 03 2008 @ 04:09 AM EST
There's the beef.
The technology is valuable because it is patented, not patented because it is valuable.
In other words, a clever invention is not being protected because of the inherent value of the invention but to allow the business highwayman to hold upstanding citizens to ransom.

The interoperability issue is important for standards. If the patent prevents interoperability then the standard fails to meet its purpose unless the purpose is abuse of monopoly.

I have banged on about this before, but the courts, worldwide, should enforce the foundation principles of patenting. The first hurdle should always be whether the patent fulfils its obligation of revealing how the invention works (because that is what is being patented and that is part of the bargain in return for a limited monopoly). I suspect the majority of software patents would immediately fail this test, either because they are deliberately obfuscated or too broad, or because they don't reveal the works of the invention at all. I also suspect that it is not possible in practice to describe an invention that is completely software because it should not be possible to patent what an invention does, but how it does it. As you work down the layers of a program from what it does to how it does it, there is no point where a patentable invention exists. It goes straight from abstract functionality to unpatentable code fragments and modules.

I think that the copyright case Gates Rubber v. Bando is equally applicable to patents. Paraphrasing, it points out that the mere fact that a work is copyright does not mean that every element of the work may be protected. It then goes on to propose the famous 'Abstraction-Filtration-Comparison' test.

The abstraction test is intended to distinguish copying from ideas. Of course, it was copying of copyright protected expression that was intended, but a look at the description shows what is left after expression is eliminated.

Upon any work, and especially upon a play, a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out. The last may be no more than the most general statement of what the play is about, and at times might only consist of its title; but there is a point in this series of abstractions where they are no longer protected, since otherwise the playwright could prevent the use of his “ideas,” to which, apart from their expression, his property is never extended.

The abstractions test is especially well suited to the dissection of computer programs because the test breaks down a program in a way that parallels the typical development of a program.

We agree with Professor Nimmer that “applying [the abstractions] test conscientiously and systematically can help a court separate ideas from expression and eliminate from the substantial similarity analysis those portions of a work that are not eligible for copyright protection.” However, in and of itself, the abstraction test does not identify the [copyright] protectable elements of a program. Rather, it is merely one tool that can be utilized to accomplish this task. Abstraction is particularly useful in enabling a court to filter out ideas and processes from protectable expression.

Ideas and processes are the patentable thing. Using the abstraction method to remove expression should leave the ideas and processes for comparison with the patent definition of the invention.

For copyright there are a whole load of things which cannot be protected from copying. Scenes a faire refers to situations in which there is essentially no other way to express a particular idea except by using certain elements and in such instances, those elements will often be termed “scenes a faire.” Taking the point in the report that interoperability should not be proscribed by patent because it is in effect an abuse of monopoly and the technology has become valuable because it is patented, not patented because it is valuable. For example, one should not be able to patent something that is the only way to meet part of the Posix standard ;-). As far as I can see, this would be new law and in the US would be to prevent unconstitutional patents that failed the public interest bargain.

The filtration test used for copyright is not appropriate for patents. Instead, the filtration should be to filter out functionality: you can't patent what an invention does, only how it does it. What is left is the implementation.

The final step is comparison. Again, to be protectable all the invention's elements must be both present and working together for there to be a violation. I think that this test will make it impossible to patent a wholely software invention because software goes straight from functionality to patently unprotectable code fragments and modules. Proving that these implemented elements work together identically with the patented invention definition would be impossible in practice.

I'll shut up, now.

Ian Al

Linux: Viri can't hear you in free space.

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100,000 Euro to do patent research
Authored by: Anonymous on Wednesday, December 03 2008 @ 11:37 PM EST
No wonder MPEG-1 isn't included in Linux distro's despite the fact that there are no known patents on the non-MP3 portions.

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