Discussing Patents: Two Approaches

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In the wake of Microsoft’s deplorable patent commentary, I’ve had the opportunity to speak with a couple of vendors on the subject of software patents. One of the most frequent questions I get is, “what should we do?”

The tension behind the question is both obvious and understandable. Much as you or I may not care for the existing patent infrastructure – I personally believe that it’s beyond repair – software patents are a reality in the United States. A reality with potentially profound financial implications, whether they’re leveraged in offensive or defensive contexts.

One need look no further, in fact, than Microsoft itself for proof of this love/hate relationship with patents. Whether he’s right or wrong, Mark’s argument that Microsoft will soon be strong advocates against software patents is reflective of the paradox that they represent for large software makers. The economics are troubling.

At the NXT show, we were told that Microsoft’s standing legal bill annually is on the order of a $100M dollars. A non-trivial sum, to be sure, but certainly not a cost that the Redmond giant cannot absorb. But when you begin to add in the $2 billion or so it paid to Sun or the half billion it shelled out to Eolas for patent related issues, the economics become more difficult to dismiss. Difficult enough that Microsoft has, in fact, publicly called for patent reform before.

But can it really be the same Brad Smith that called above for changes to the patent system to end to “abusive litigation” that was quoted in Fortune as saying “The only real solution that [the free-software] folks have to offer is that they first burn down the bridge, and then they burn down the patent system. That to me is not a goal that’s likely to be achieved, and not a goal that should be achieved”? Certainly, because Smith – like many within Microsoft – is a.) fixated on intellectual property and its protection, and b.) convinced that patent reform could yield a system able to determine legitimate patents from their illegitimate counterparts.

We’ll simply have to agree to disagree on the second part, but the first part is interesting because I think it’s at the root of many of Microsoft’s difficulties with respect to patent rhetoric. Simply put, I attribute much of the disconnect between Microsoft and external audiences to its conflation of patents and the protection of intellectual property. See, as an example, Smith’s statement also from the Fortune article:

“Companies are very sensitive to the importance of protecting intellectual property,” he says, “because ultimately they know that their own businesses similarly turn on [such] protection.”

While I personally don’t believe that this is the time for a conversation about IP rights – nor do I think the world at large is nearly as obsessed with IP as Microsoft is, strictly speaking, Smith is correct. According to the existing patent system – the one, as a reminder, that everyone from the Supreme Court to Microsoft itself has questioned – patents are indeed intellectual property. But lost in that IP focused rhetoric is another reality, widely understood and accepted – again, by Microsoft itself, which is that many currently existing patents are not worth the paper they’re printed on, let alone the tens of thousands of dollars that went into their filing.

This is the reality that Microsoft appears to acknowledge when its required to dole out its own cash (the call for patent reform above, interestingly, appeared approximately one month after the damages were upheld in the Eolas litigation), and ignore when commenting on patents it holds are potentially being infringed upon. This, then, is what I’d argue is behind a great portion of the ill will that Microsoft collected with its recent commentary.

But what is Microsoft, or any other vendor, to do? Stop accumulating patents? Donate their existing portfolio to the community? What? Given the system in place, neither Microsoft nor any other large software vendor is in a position to do either of those things. They can’t stop accumulating patents, because they’re required to ensure the viability of a mutually assured destruction patent defense scenarios – also know as the the you-can-sue-me-but-I’ll-sue-you-back shield. Nor can they, as public companies, simply donate their portfolios; not, at least, without substantial anticipated returns.

So they’re damned if they do, damned if they don’t, right? Not really. There are a variety of approaches to discussing software patents which have proven effective for larger vendors, here are two examples that we’re discussing with increasing frequency, in order of my preference.

Sun, or the “We Don’t Like Them Either” Approach

Sun’s a particularly interesting case, because they’re in the midst of what seems to be a remarkable turnaround in terms of public image. The one time open source pariah has, in some quarters, become it’s darling. Sure, there are still lots of individuals and communities who have no love for Sun, and no, the company is not perfect in its open source conduct (e.g. my thoughts on the Apache flap, although as an aside the Apache and Sun folks were very cordial with one another at JavaOne). But when even critics such as Groklaw’s PJ begin to change their tune, you have to admit that they’re doing something right.

In their various responses to Microsoft’s patent rumblings, you can see why Sun’s opened some eyes. Though the fact that their CEO promised to defend competitors Red Hat and Ubuntu with their patent portfolio got the lion’s share of the attention, it was their CTO’s piece that really impressed me. Sun, like Microsoft, is a firm that talks incessantly about IP. In spite of that – or, perhaps, because of it – Greg’s answer to the question of whether or not software patents are useful was:

My answer is “(mostly) No”. And certainly not under our current view of how and for what they are awarded.

A relatively unambiguous answer, you’d have to admit, from the C-level exec of a major technology vendor. More importantly, one that has clearly factored in the underlying reality that many if not most software patents were granted by overworked patent offices who – through no fault of their own – would be fundamentally able to judge an application’s merit under the best of circumstances.

But, you might push back, it’s one thing to not believe they’re useful, but it’s another to not use them. True enough. And in fact, Papadopoulos acknowledges the need to keep accumulating patents, saying:

Will we stop pursuing software patents on our software? Can’t do that yet. That’s simply because our competitors will still go for them, and unless our system changes, we’d have fewer “trading stamps” and end up paying even higher rates to indemnify the users of our software.

What he does assert, however, is that Sun has little intention of using them offensively:

Certainly, we (at Sun) feel like we have put some serious coin into developing things like ZFS and dtrace, which we have published under a FOSS (Free and Open-Source Software) license (CDDL for now), and for which we have applied for patents. We will *never* (yes, I said *never*) sue anyone who uses our ZFS codebase and follows the terms of the license: they publish their improvements, propagate the license, and not sue anyone else who uses the ZFS codebase.

But under what conditions would we enforce our patents? How would we feel if someone did a cleanroom version of ZFS and kept the resulting code proprietary?

We wouldn’t feel good, to be sure. But I’d put the burden back on us (certainly as a large company) that if such a thing were to happen it was because we were failing to *continue to* innovate around our original code. Being sanguine about patent protection as an exclusive right would result in less innovation, not more.

The comments, I’d suspect, might not be legally binding despite being from an officer of the company, but they’re bold regardless.

Sun’s position vis a vis the patent question, which I’d gist as “We don’t like them either, but in the meantime we’ll play the game” – is my first choice for public companies operating in the US. In a perfect world, I’d actually prefer to see a vendor lobby hard for some of Simon’s absolutely brilliant proposed reforms, but I’m not holding my breath.

IBM, or the “What We Don’t Say Can’t Hurt Us” Approach

IBM, perhaps more so even than Microsoft, is conflicted with respect to patents. As Stephen Shankland tells us, January marked the 14th year in a row in which IBM led US in patents granted. And as Amazon discovered, they are most certainly not shy about litigating around these assets.

Counterintuitively, however, IBM is usually viewed as one of the good guys by developers and various open source communities. Why? Well, one could point to their patent pledge, their promise not to enforce patents against Linux, or their efforts to improve the patenting process itself.

But those are insufficient, I think, to completely explain the goodwill that IBM has won and continues to leverage. So what’s the explanation? How does IBM enjoy the reputation it does, despite its occasionally contradictory positions with respect to patents? Though there are a variety of potential answers to that question, the one I’d offer is deceptively simple: they don’t beat themselves with their public commentary. Maybe it’s a legacy of the company’s dealings with the DOJ, but IBMers are famously conservative when it comes to public commentary. Boringly so, reporters often complain to us. Here’s how I put it in the Amazon litigation piece:

One aspect of [IBMers] behavior that has gone relatively unremarked upon is their ability to keep their feet out of their mouth. Think about it: when was the last time you heard an IBMer say something inflammatory with respect to anything even vaguely related to open source?…By and large it’s very rare to hear IBMers say anything that could possibly, as the saying goes, later be used against them. Contrast that with, say, the quotes from Ballmer and Gates years ago that still come up when discussing Microsoft and Shared Source.

Not being quotable can make IBM execs seem relatively boring, of course – and that can occasionally be a problem. But it generally keeps them out of harm’s way when it comes to negative community reactions, in spite of the complete transparency described above with respect to their motivations. Whether this “on message” in PR-speak approach is the result of corporate maturity, media training, some sort of X-Files style implant, or all of the above is a question best left to the reader. But really, the impact can’t be questioned.

You remember when your parents told you, “If you don’t have anything nice to say, don’t say anything?” Simplistic though it may be, it’s actually reasonably sound advice when dealing with contentious and volatile topics such as software patents.

All things considered, of course, I’d prefer that software vendors take a stance that’s cognizant of the fundmental cracks in the foundation of our patent system. But if for whatever the reason, that’s not viable, I’d recommend they do the next best thing: don’t say anything at all. It seems to work fairly well for Big Blue.

Disclaimer: All three vendors, IBM, Microsoft and Sun, are RedMonk customers.


  1. I would comment that IBM’s dispute with Amazon is not a proper example in the context of Microsoft’s statements – nor do I think it represents anything involving open source disputes. Further, IBM was a leading vendor in forming OIN which is a “if we have to play this game under the current system, let’s deal with it” type of response to a threat aimed at Linux users.

    All three vendors you mention have been litigators at some point. BUT, unlike Microsoft, neither Sun nor IBM (as far as I’m aware) have never threatened to sue their customers over patent issues. What I perceive is that Sun and IBM rightly choose to resolve the dispute between vendors – leaving the customer out of the mess.

    There are many ways to fix any IP issue – threatening customers is more likely a way to create FUD as customers can never fix the IP issue themselves… vendors fix IP issues in their products (if there are any).

    I’m obviously not speaking officially for IBM or Sun here, but that’s just how I perceive it.

  2. Mike: thx for checking in. couple of comments in response.

    1. i’m assuming the primary difference you’d point out between IBM’s dispute and Microsoft’s claims is that IBM actually litigated while Microsoft has just hinted at that approach? 😉

    2. agreed that IBM chose its target far more selectively than Microsoft did, as Amazon has a questionable patent history of its own.

    3. appreciate the mention of the OIN, which should have been in the list of positive patent behaviors of IBM, along with the grant and so on. stupid omission on my part.

    4. re: suing customers, it’s important to note that Microsoft has not said they would. they haven’t said they would not, either, but frankly i’d be very, very surprised if they took that course of action. stranger things have happened, i’m sure, but i doubt it’ll go that route.

  3. on point 1): Two differences in this case: First, to the best of my knowledge nothing in that Amazon dispute was related to open source technologies – it was a simple vendor vs vendor type of dispute from what I read… The other distinguishing factor is Microsoft is implying a vendor vs customer issue exists. The equivalent to Microsoft’s statements would have been IBM threatening to sue Amazon’s users for using IBM’s IP…. and forcing every Amazon user to weigh their exposure and requirements for either indemnification or a “safe haven bridge” (pun intended)

    2) I actually don’t consider Amazon “that bad” regarding patents – they get a bad rap for filing the “one click order” patent, but to the best of my knowledge they’ve never actually enforced it… check out Apple’s patents on the iPod interface – just as ridiculous. So my focus wasn’t on how either IBM or Amazon are “perceived” in terms of good/bad on patent issues. The primary difference with Amazon is that Amazon was another vendor and Microsoft has directed its threats at customers.

    3) Hey, we can’t all remember everything now can we – you managed to squeeze in the other 99% – comments are for filling in the other small 1% 🙂

    4) Microsoft hasn’t said they wouldn’t either. Now I HIGHLY doubt in this day Microsoft would sue a customer (obviously, see SCO…) BUT, it’s important to note that even with the Microsoft and Novell agreement – Microsoft and Novell simply agreed not to sue each other’s customers (and that’s the only group)… if Microsoft wouldn’t sue the customers to begin with, why make that deal? Could it have been to simply imply that Linux users were somehow violating IP (similar to calling every corporate Linux users the equivalent of a music pirate).

    I doubt will see any end to this nonsense soon and that’s the shame of it all. If there was a lawsuit, it would capture headlines for a few weeks, then corporate lawyers would swoop in and end anyone talking… then things would drag on for years and every now and then you would see an update in the press, but for the most part the issue would go away… Instead of litigating, you get the highly popular “be very afraid tour” every 6 months.

  4. In the context of not suing customers, I think it is *very* interesting to take a close look at the many technologies *not* covered by the MSFT/NOVL pact. See the NOVL SEC filings for details of which revenue extortion venues remain open for Microsoft to pursue against Novell’s (and own) customers. In brief: very, very many.

    On a more amusing note, I tried to get a fun scenario together for an endgame for Microsoft on http://lwn.net/Articles/236345/ , as in the past couple of weeks since Microsoft’s declaration of total patent war against everyone a few amusing things have happened:
    a) there have been some more exciting patent lawsuits against them, including Alcatel suing for damages for another time slice,
    b) China’s big entry into the US beached whale carving business
    c) OIN, Sun, Linux-Something declaring to stand ready for retaliation if Microsoft makes stupid moves

    So far, it’s all falling into place nicely 😉

  5. Just got this comment from an anonymous contributor. Anonymous contributor, take it away:

    “I have heard others use, and have used myself, the analogy to nuclear deterrence and the doctrine of MAD with regard to patent actions in the technology industry. There’s an important point that many people miss.

    MAD assumes that all players are rational, and that each is more frightened of its own destruction than of any alternative. I am not sure that assumption holds in technology.

    Companies start, mature and die on something like twenty- or thirty-year cycles in our industry. A company nearing end of life is likely to be a large holder of patents. If it appears that a broad patent action can stave off demise for even a year, and so provide additional shareholder value, it’s likely that the company will push the button. What if SCO, for example, had been armed with something besides that silly System V copyright popgun?

    People like to point at MAD as a good example of game theory gone right for humanity. It was — and is — a near thing, though. It’s awfully scary that Stalin succeeded in building one, and fortunate that he died soon after. It’s sobering to think what use Mao might have made of a nuclear weapon. And what if containment fails and a small terrorist pseudo-state
    gets one?

    The long-term solution has to be disarmament. Carrying the analogy back home, we need patent reform.”

  6. Just to point out, Amazon enforced its patent against Barnes and Noble. I don’t believe they actually made it to the court room before settlement, however. (Said settlement was that Barnes and Noble switched to a two-click system, where you have to confirm your purchase in addition to having to select it – an arguably more sane approach.)

    I’ve been following IP law for around 10 years now. Until SCO, I don’t think I came across any case where a company attempted to sue the customers of a product violating their patent before they won a suit against the company that made the product. I think I only saw a couple of cases where a company sued customers – and those customers were very big corporations, who had been very aware of the ongoing litigation, even providing testimony, and were obviously aware of the ruling in their supplier’s patent case.

    Personally, I feel that any patent reform really should include a provision that says that one cannot sue the users of a product before one wins a suit against the maker/developer of that product. (If the users and developers are the same group/people, then one would first need to sue for the manufacture of the infringing product, and only after winning that suit, would one be able to sue them for continued use after said court decision. However, in this situation, if the developers continued to use the product after losing their development case, treble damages would be guaranteed – since they were present in the first trial, they would obviously be aware of the ruling in said trial.)

  7. Ballmers Dream…

    Great post from RedMonk about patents.Frankly my contribution to this discourse is not so distinguished at all….

  8. Were there more innovations back then in the pre Open Source era?
    Does all the Open Source innovations flourish becouse of or in spite of patents?

    See my small cartoon: http://geekandpoke.typepad.com/geekandpoke/2007/05/ballmers_dream.html


  9. Ed: thanks for the clarification (forgot about Amazon v B&N)

    sogrady: Interesting comments but I doubt Microsoft is near the end of its lifeline… (or perhaps was Ballmer the anonymous poster!)

  10. […] explains why the approach taken by IBM is the correct one. This implicitly suggests that Microsoft is making a big mistake. In the wake of Microsoft’s […]

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