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Kodak Wins Java Lawsuit Against Sun
Sunday, October 03 2004 @ 07:16 AM EDT

Here's a truly disgusting story. Kodak bought some patents from Wang in 1997. The patents cover a method by which a program can "ask for help" from another application to carry out certain functions, which is more or less what Java does. Kodak's business is suffering from the digital revolution, so it decided to sue Sun for infringing its purchased patents. It claims that Sun pilfered its technology. The two companies worked on some joint projects together at one time that involved the same technology at issue in the lawsuit, which Sun argued was an indication of Kodak's implied consent.

Friday, Kodak won. What we are seeing is a patent system spinning out of control, one that is destroying creativity and innovation in the software industry.

Software has not always been covered by patent law, and it's not a statute that made it happen, but a case decision. That means it can change back. Case law is changed by someone bringing a case that makes it obvious to the court that change is needed. Somebody needs to do something about this problem, before it becomes impossible for anyone to write software unless they have a pile of billions on hand to pay out in case they get sued for patent infringement.

This case is Exhibit A. Sun, for all its faults, developed Java. Sun is a tech company that cares about excellence, and they have put their heart and soul into developing Java. A community formed around Java too, and many, many individuals also contributed to its development.

Kodak now says it will seek, in the damages part of the trial, $1.06 billion in past royalties, which they calculate represents *half* of Sun's operating profit from the sales of computer servers and storage equipment between January 1998 and June 2001. Why do they feel that is fair? Because Java provides "the engine for such computer equipment". Puh-lease. This is their workaround. You can download Java free, so I gather they wish to grab their royalties loot from Sun's hardware sales instead. I would expect them to also try to work out some kind of ongoing royalty deal as well, until the patent runs out. What kind of an upside-down, irrational Alice-in-Wonderland world do we live in, where such a result is possible?

Sun says it will put on "a vigorous defense" in the damages section of the trial, but what good will that do? I have no doubt they put on a vigorous defense in the part of the trial they just lost, too. The system is broken, and the sooner people realize that, the better. Patents and software don't mix well. The court that married them made a mistake. Software and patents need to get a divorce, so each can get on with its life in peace.

Europe. Are you watching? Is this system what you want where you live? If you think you can have a patent system and just work around US "excesses", think again. If you read this history of patents in the US by Bitlaw, you will see that it started small here too, and everyone tried to make the kinds of distinctions you currently are trying to craft in Europe. But look at the results here. The same thing will happen to you, if you allow patents at all on software. The excesses are part of the system as it is eventually applied by greedy individuals and companies, and you can't legislate against greedy gaming of a system. It happens.

Think about it carefully, because this is exactly what happens when you adopt a system that rewards the Kodaks of the world for such behavior and penalizes Sun for years and years of expense and sweat and toil and creativity by robbing them of their due reward, not to mention removing any motive to ever do such innovative things again as long as they live. What happens now to Sun's Java Desktop? It was supposed to be a cost-saving alternative to Windows. I wasn't planning on using it, for other reasons, but some would. Now what? What impact will this decision have on the costs of that system? I don't even want to start to think about the implications of this decision for the rest of us. Can Java go open source now, before the patent runs out? That may be sooner than Sun intended to open source it anyway, but the point is, now their code is burdened with patents and the associated costs and restrictions, and Sun doesn't even own or control the patents.

Seriously, folks. Software patents will destroy the industry in the US. The rest of the world will out-innovate US companies, because they won't be running with the patent ball-and-chain attached to their ankles, holding them back. Protect your software with copyright and trade secrets, but using patents for software inevitably blocks progress. If you must have it, rope it off severely so it doesn't hurt anyone like this. At a minimum, patents that aren't actively being used by the patent holder in any way in any product shouldn't be available as a weapon against a company actively bringing an idea to fruition and use. And FOSS, which is developed by individuals, not just companies, needs to be given special consideration so it can continue to be developed at all.

Here's why software and patents don't belong together. For one thing, patents protect *ideas*, not their application. There just aren't enough ways to do fundamental tasks in software to make patents a good fit. Software is math. How many ways are there to say 1+1=2? A couple of years ago, there was a discussion about software patents on Slashdot, and someone with the handle Lonath left this insightful comment, which I edited slightly for language, as indicated by brackets:

"The main issue (IMO) is that people don't get math. Since they say you can't patent an abstract algorithm, but you can patent a mathematical algorithm if it's useful, you're saying that the same thing is both patentable and not patentable. The reason people think this way is that they think word problems aren't math problems. So, when you start giving numbers in algorithms real-word meaning, people get that confused GW Bush look and start fumbling around thinking that because the math has some real-world meaning given to it, it's somehow different than abstract math. Which is [absolutely incorrect]. What we need is to send people back to elementary school so that they can learn that when you solve an abstract math problem, then you give the numbers real-world meaning in a word problem, you don't change the problem."

It's a comment I hope Europeans think carefully about, as some try to fashion a patent system that isn't a patent system.

Another reason software and patents don't belong together is because software is more complex than a cotton gin or whatever else you might typically invent in a bricks and mortar world. Here's how The League for Programming Freedom expressed it in a submission to the Patent Office:

"This capacity for complexity is a great strength because it permits the creation of highly sophisticated products. But it also means that most products, simply by their very complexity, are dependent on a vast range of software technologies.

"In most other industries, a product will contain perhaps twenty parts. In the case of sophisticated consumer goods, such as video cameras, we could raise this to 1000 parts. Nevertheless, the constraints of the real world ensure that the complexity of the product cannot become too great. Software, however, is essentially free from these constraints. A major computer program can comprise anywhere from 100,000 to 10 million lines of code. In most other industries a product will involve technologies covered by just a few patents. In the software industry, a product can contain thousands of inventions, any of which might be patented.

"For instance, even when buying something as mundane as a word processor, you might be able to choose between a word processor with built-in spelling checker, ability to format multi-column text, and an outline editor; a word processor with proportional fonts, an equation editor, and kanji capabilities; and a word processor that has style sheets, a page previewer, and document interchange facilities. And this is only the start. When you look closely you will find that each word processor actually incorporates thousands of different user visible features. Tens of thousands more features exist inside that are visible only by a programmer. The total number of features contained in something as simple as a word processor is enormous. Thus, patents make the legal risks and expenses associated with developing even well understood software frightening."

The paper also notes that patent searches are harder too, because software is more abstract, so even when you do search, it's hard to know what does and what doesn't infringe:

"In short, because of their broad coverage and complexity, software patents introduce far more uncertainty than do their non-software cousins. And uncertainty is bad for business. Uncertainty makes it difficult to decide the best strategy to pursue. Which patents might you be in violation of? Will the patent owners take any action? What royalties will they request? Will they sue? Will you be able to get the patent overturned? What damages might be awarded?

"These are not questions that can be incorporated into the smooth everyday running of a business. They are not questions comparable with concerns about tuning advertising or production inefficiencies. Rather these are issues that can kill products stone dead and destroy companies.

"The penalties for patent infringement can be severe. The most famous case was Polaroid v. Kodak in which damages amounted to $900 million - with a further $500 million reportedly being spent by Kodak buying cameras back from consumers."

Maybe that experience is what gave Kodak the idea. The sheer number of software programs constantly being developed also makes patent searches an overwhelming task. And how do you research prior art in proprietary software licensed under terms that forbid reverse engineering? There are other reasons too that they list. Software is developed so rapidly a 20-year blockade is impractical; it never wears out, so the traditional argument that patents are needed to stimulate stagnant industries doesn't apply. Patents hold back rapid development, and they are designed to protect mature industries, once the rapid phase is completed, but with software, there is no end to the rapid development, no maturity plateau that can be beneficially protected. As Microsoft has learned, software doesn't wear out. You can run Windows 95 in 2004, if you so choose, and the only motivation to upgrade is if the customer wants innovation, new bells and whistles. So patents aren't needed to encourage invention. Software companies have to invent, because their product never wears out.

Then there is the patent costs to both large and small software companies:

"The cost of patents is proportional to the development cost because it is the amount of stuff that you actually put in your product that determines how many different patents may be involved. In other industries, production costs dwarf development costs, and so the overhead of the patent system (on the development cost) is a minor component in the entire enterprise. However, in software the entire cost is development, and so the patent system represents an enormous cost to the industry. The auto industry would scream if the government affected production margins by just 1%. The software industry is being progressively slugged with what will be a far greater impediment, but so far has not reacted to the threat coherently.

"The effect on large companies is that they will have to incorporate the patent process into their software development process, set up bulky legal divisions, get into the business of cultivating defensive patent suites, and perpetually negotiate royalty payments and settle lawsuits. For most big companies that focus on developing software, such action will for a time allow them to survive, for with enough broad and trivial patents in their suite they can threaten virtually anyone who threatens them. But they will also probably encounter companies THAT DO NOT DEVELOP SOFTWARE; that are demanding royalties with the gloves off! Because such companies have a distinct advantage when negotiating royalty licenses, it is likely that corporate evolutionary selection pressures will make them more numerous in the future. . . .

"The effect of software patents on large companies is bad enough, but to a small company it can be crippling. Large companies may already have a legal infrastructure, but most small companies must rely on the advice of external professionals who charge what seem high rates. Large companies may for a time be able to accept patent lawsuits in their stride, but small companies can be wiped out by a single one - fair or not.

"For many small companies, the prospect of being sued over a patent infringement EVEN IF THE CASE IS UNGROUNDED AND WOULD ULTIMATELY FAIL is so terrifying, that many companies choose to give all patents they know about a wide berth rather than risk the possibility of any kind of patent challenge. Patents and patent laws are so complex that even an ungrounded lawsuit may take a year to resolve, simply because it may be hard to prove quickly that the other side does not have a case. Meanwhile hundreds of thousands of dollars in legal fees will be spent, crippling the target software company.

"Thus, whereas most large pharmaceutical and aerospace companies can afford to conduct ongoing patent battles to resolve the scope of various patents, the small players of the software industry cannot. As a result, they will attempt to steer well clear of patents, making the patents even more powerful than they were ever intended to be."

Depressingly, that paper was written in 1999. I am reproducing it because everything it warned about has come true, and since nobody paid any attention back then, it's worth trying again to show, from results, that software patents were a bad idea, and they still are.

So we currently have a system that duplicates the game of Monopoly. You can't figure out in advance if you infringe, so it's like a roll of the dice. If you get caught, you pay millions or billions. Then you look for a victim who can pay you millions or billions, all sides paying through the nose for the cost of suing each other, and around the board everyone goes. This benefits software development how? And the public benefits how? Let's not even talk about free and open source developers, who obviously can't get into this high-stakes game, not having billions to play with. But what about startup proprietary software companies? Can they play this game? The big guys end up stockpiling patents, suing each other, and then cross-licensing, with costs being passed on to the customer. And for what? How is anyone benefitting from this patent cold war?

Look at the results of this case. No company can safely work with any other, unless battalions of lawyers first clear the field of all conceivable IP landmines. Sun has no incentive now to develop another Java, that is for sure, and Java itself will now be loaded down with patents. Will Sun be able to continue to let you download it for free? How does the US public benefit from this decision? You tell me.

The solution is obvious. Everybody needs to get rid of their stockpiles of weapons. Declare patents don't cover software, and everybody wins. Except some lawyers, who will then have to find other work. And not a moment too soon.

I hope Sun appeals the verdict, and that it uses this case to demonstrate to the courts that the patent system is fundamentally broken and at a minimum needs to be tweaked.

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