on Intellectual Property Rights
H Terpstra, CTO, PrimaStasys
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.
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.
Property Pursuit is Self-Interest-Serving
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.
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
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
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.
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.
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
is Intellectual Property
To better understand the issues, we could consider the ancient
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
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?
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
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
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
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
that affected the entire supply chain for goods.
By the fifteenth century the city states of Venice and Florence
for new inventions.
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.
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?
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?
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.
his analysis of the effectiveness of tariff protection measures,
"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."
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."
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
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
consequences of intellectual property action
"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:
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."
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."
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.
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.
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.
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.
"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
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?
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.
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.
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.
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.
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.
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
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.
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
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.
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.
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: email@example.com
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.
John H Terpstra, 2004. A copy of this paper is also available as PDF.
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.
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:
Official Samba-3 HOWTO & Reference Guide, ISBN: 0131453556
Example, ISBN: 0131472216
Linux, ISBN: 0072254971
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.).