Thursday, November 23, 2006

Judges vs. Politicians

In IAM magazine, which has the slogan, "Maximising IP value for business", Joff Wild notes that the "FFII is shaping the debate again" with the launch of the European Patent Conference. He concludes with this question:

"Do the pharmaceutical and biotech industries want the European Parliament to have the final say over what should and should not be patentable? Is the auto industry happy for that to happen? Does the chemical industry believe that politicians should be able to second guess judges?"
Under the draft EPLA proposal, the same officials who run the European Patent Office would be responsible for appointing the judges of the new European Patent Judiciary courts.

It seems to me - and this is something I'll repeat over and over - that the EPO has become the headquarters and cheerleader for the global patent industry in Europe. The EPO acts very much in its own interests. Soft patents - software and business process patents - are a lucrative new business for the patent industry, and the EPO has been determined to get these passed into law, one way or another.

Does Parliament have any say over innovation policy? Or should this be decided by judges who are appointed (for fixed terms) by the very people who profit from a huge inflation in patents, driven by systematic lowering of standards across the board?

The EPO has not demonstrated great skill in granting good patents. This is not unique - the USPTO is similarly incompetent at separating the pearls from the swill. What the EPO is remarkably good at is bolstering, promoting, and expanding its own powers.

EPLA is not at all about improving the patent system. It is about side-stepping last year's hallmark decision by the European Parliament, and concretising the EPO's soft patent practice by a back door.

I'm especially concerned when I see laws being made by diplomatic treaty, instead of via the proper legislative process. Democracy is not a pallative for the middle classes, an exercise to amuse the crowds while the real deals are done in smoky back rooms. Democracy is a key part of a healthy, balanced, sane legislative process.

EPLA is not just undemocratic, it is solidly anti-democratic.

Who do I trust more with my innovation-based business? Democratically-elected politicians who I can call, speak to, and educate, or EPO-appointed judges who's very career and status depends on following the party line?

I think the answer is clear.

Monday, October 30, 2006

What's wrong with software patents?

I know that many people come to the FFII - as I did - because they feel a deep sense of injustice at how the smaller players in IT are consistently squashed by special interests and monopolists.  But I'm going to look at our core concern - software patents - from a different angle, one based more on economics and less on emotions.

The simple question "what's wrong with software patents" stirs up controversy and divides the IT industry into two camps like no other.  Every group has their own ideology about software patents.  Those who don't like them claim that they are anti-competitive, that they are tools used by industry giants to crush free and open software, that they are bad for innovation, that they are monopolies, etc.  Those who like them claim that they are simply units of intellectual property, to be traded like any other commodity.

All property is a monopoly.  All property can be traded, bought and sold, and can make money for its owners.  The state can declare any resource it likes to be "property".  We are, as citizens, property of the state, and in some countries we can still be traded, bought, and sold, and make money for our owners.

But these are useless truisms.  I can make tenuous comparisons between patents and slavery, and stir up all kinds of emotions.  I'm not going to do that.  Instead, I'm going to look at the very meaning of property, and explore the dynamics that drive the basic notions of "private property".

Property, of any kind, consists of a definition and a system of enforcement.  All the rest is subjective.  There is no intrinsic reason that land or potatoes should be different from ideas, time, or air.  Anyone who argues that it is "right" or "wrong" to define and enforce certain types of property must prove this using more than just rhetoric and dogma.

Let's look at a well-understood form of property: land rights.  Most countries are divided up into plots large and small.  The very concept of "country" is property, but a thousand years ago, only a small part of the world's surface, in and around human habitations, was considered property.  The rest was common lands, belonging to all and none.  The process of turning common lands into shared property, and then into private domains (the "tragedy of the commons") was driven by discussions very similar to the ones we hear today.  The process was driven by greed to some extent, but also by real needs of evolving economies driven by new technologies in agriculture and industry.

A farmer who owns his land is far more likely to look after it than a farmer working on a collective.  Similarly, it is clear that private home ownership is a healthier model in a modern money-based economy than state-ownership of homes.  Private ownership of some things works very well. 

However, this is not the whole story.  Private ownership is not a panacea, and for every example where private ownership is "right", I can find one where it is "wrong".  The roads and streets that connect those farms and houses are owned and managed collectively.  The rain, air, and sun is owned by no-one.  The wild animals and insects that form an important part of the ecology are collectively owned.

There are actually good economic reasons for choosing a private property model for some resources, and not for others.  There are five key rules to consider:

  1. Is the resource mobile, or fixed?  This criteria defines whether it is possible to accurately define the resource, or not.  A mobile resource - such as migrating birds or fish - does not fit the private property model.  Fixed resources, such as lobsters, do.
  2. Does the resource have clear boundaries, or not?  This criteria defines whether it is possible to accurately enforce the monopoly, or not.  Land can be well-defined.  Art cannot be well-defined.
  3. What generates more wealth - exclusive ownership or sharing?  This criteria defines whether it is useful to consider this resource as property at all.  Exclusive ownership of a house generates wealth, but exclusive ownership of roads does not (which is why we removed toll bridges on our roads).
  4. Is the property system economical?  In other words, is the definition and enforcement of the property cheap?  If so, it is accessible to all.  If not, it becomes a priviledge of the rich, and the system itself stops being economically neutral.
  5. Is the property system well-bounded?  In other words, is the definition of the property clear and unnegotiable?  If the definition can be manipulated and changed, then the system that manages it will grow in an unsafe manner.

All forms of property can be tested against these five rules.  The rules are, ultimately, self-enforcing because any society that ignores them will find itself paying the cost, and competition between societies punishes those that choose inefficient economic models.

A well-defined property system can be incredibly powerful.  I'd argue that what brought down the Soviet Union was not the political system, nor military spending, but simply the fact that private ownership of farms and houses was impossible.  There is a direct relationship between house prices (which mainly depend on availability of land) and economic growth, in many countries.  Home ownership creates a middle class, which is the main driver of modern economies.

Let's see what happens when we break the rules.  If we try to create monopolies on mobile resources, we over-exploit those resources.  If we try to enforce monopolies that don't have clear boundaries, we spend a lot on lawyers.  If we create monopolies on resources that should be shared, we lose competitive advantage.  If we create expensive property systems, we unleash special interests.  And if we create unbounded property systems, those special interests will grow out of control.

So I've defined five economic rules that we can apply to any form of property to measure whether it is a good, or bad, concept.  Let's now apply these to the main forms of property that are used in the IT sector, and see what we get.  The four main property forms are: copyright, trademark, patent, and trade secret (which though not defined as IPR, is a real and useful form of property):

  • Copyright: it applies to a fixed resource: a self-defining written expression.  It has clear boundaries (the document or work).  Exclusive ownership does produce wealth, but sharing seems to be a stronger driver, and models such as the GPL that encourage both appear to be the most efficient at producing value.  The copyright system is cheap and well-bounded, except when it comes to lifespans, and we've seen copyright terms extended to life+70, which is extraordinary in today's digital era.
  • Trademark: it applies to a fixed resource: a name, logo, or phrase.  It has clear boundaries (the mark).  Exclusive ownership produces the most value - sharing of marks just weakens them.  The trademark system is very well-bounded, though it could be cheaper.
  • Software patent: it applies to mobile resources: new ways of doing things, or methods.  It has unclear boundaries (methods are difficult to define absolutely, and they overlap in horribly complex ways).  It uses exclusive ownership for resource (new ideas) that produce much more value when shared.  It is poorly bounded (it depends on a set of negotiable definitions such as "technical effect"), and it is very expensive.
  • Trade secret: it is fixed (in your firm). It has clear boundaries (individuals may not pass secrets outside the defined group).  It depends on exclusive ownership.  It is a well-defined system that is easy to apply, and cheap (based on simple contract).

The conclusions are clear: copyright, trademark, and trade secret are good forms of property for the software business, though copyright terms are a problem.  Patents are a bad form of property for the software business, because they amplify the general weaknesses of the patent system:

  • Patents claim to own ideas, which are highly mobile resources, and in software, more mobile than most other industries.
  • Patents have unclear boundaries, and in software these boundaries are even less clear than in other industries.
  • Patents reduce the sharing of new ideas, and software depends on a higher volume of sharing of ideas than other industries.
  • Patents are an expensive property system, and most software innovation is driven by unfunded grass-roots work.
  • Patents are not a well-bounded property system, and in software a boundary between "good" and "bad" patents cannot be drawn.

It is significant, in my opinion, that patent industry has focussed almost exclusively on weakening the definition of software patents, and on strengthening their enforcement.  There has been little or no discussion about the basic justification for creating this form of property, apart from the uselessly broad claim that "ownership of [certain classes of] ideas promotes investment in innovation [in certain sectors]".  This claim, which has always underpinned the patent system has been used to justify a gold rush, a land-grab of ideas in sectors where innovation actually depends on sharing, not exclusion.

Many industries find that poor quality patents are a problem.  But no other industry that has relied extensively on copyright has been subjected to patenting.  The use of patents in software looks a lot more like the errection of a massive new system of private tolls and taxes, than the enablement of a new propertied class.

Software patents were enabled in the USA in 1982 by a Supreme Court decision.  After almost twenty-five years, we would expect to see this new form of property either proven, or disproven.  The bulk of the software sector should, by now, be using patents as their primary tool for justifying new investments.  There should be software patent success stories, to match the many success stories that were and are driven by other forms of intellectual property.

These success stories are just not there.  Instead, we see a sorry parade of lawsuits.  IBM - who has the largest software portfolio, and who has claimed that it is against business method patents - has just sued Amazon for infringing on several business process patents.

In this article I've examined software patents from the fundamentalist view point of how well a property system functions.  This is not art, but science.  We can document and measure, and we prove or disprove property systems.

No sane person can claim that all private property is good, or that all private property is bad.  Would it make sense to sell off all our streets to private owners?  Would it make sense to allow individuals to collect tolls on bridges, borders, crossings, and rivers?  All these property systems have been tried.  There is no firmer believer in private property and punitive enforcement than a warlord.

No honest person can claim that it's a choice between "privatising everything" and "an anti-property communist state".  The choices are between models that work, and models that do not.  History is filled with examples and experiences, and we must recognise and learn from those models, or we will make stupid and avoidable mistakes.  There is, behind the iMatix building in Brussels, a street that was privatised some decades ago.  I've no idea what the intention was, but today we can see the results via Google Maps.  The privatised street has become a wasted area, a car park, filled with weeds.

This is what's wrong with software patents.

Sunday, October 22, 2006

The EPLA Shuffle

In early 2006, the Commission began talking about a "final attempt" to fix the European patent system.

We heard the standard concerns about Europe's innovation gap. "How can we catch up with the Americans?" "How can we prevent the Chinese invasion?" "We need a better system of intellectual property rights." "We need stronger protection for rights holders." These noises came out of the Commission, in meetings, and speeches; we heard echoes from large software companies and the industry clubs they sponsor. SAP, in particular, began calling very loudly for a cheaper, stronger patent system.

And the focus of all these noises has been "EPLA" (the European Patent Litigation Agreement), a new system designed to make it easier to enforce patents. EPLA is not, superficially, about software patents at all. But dig deeper, and it's exactly that: a third major attempt to introduce software patents, by removing all remaining regulation of the patent industry.

Very briefly, EPLA is a treaty between the existing countries who signed the European Patent Convention, possibly with the EU also joining. It is not an EU institution. EPLA would create a new single patent court. This would define and interpret patent law. EPLA judges would be appointed by the same group that runs the EPO. EPLA judges would implement the EPO vision of the patent system and EPLA would kill off all control from national courts. No oversight from parliaments, no right of appear to higher courts.

The Commission (which is acting for the patent industry) has learned from the beating it took last year, when it tried and failed to get software patents legitimised in the European Parliament. The EPLA campaign is more subtle. It is based on two things. First, a well-designed propaganda piece, and second a wide astroturfing campaign to promote that propaganda.

In this article I'm going to dissect that propaganda piece, then examine the pro-EPLA astroturfing campaign. Lastly, I'll explain what the FFII is doing to fight back.
The Commission's propaganda is a clever mix of truth and lies, formulated by experts, and you will find it repeated in part, or in whole, in almost every discussion of the patent system by the Commission, by patent lawyers, or by the EPO. It is this:
1. Europe needs innovation.
2. To promote innovation, inventors and creators need protection for their investment.
3. Protection means a patent system that delivers cheap, high-quality patents that can be cheaply and reliably defended in court.
4. The current patent system is incoherent and does not do any of the above, since it pits the European Patent Office against national courts, who have different interpretations of patent law.
5. The long-term solution is a community patent, i.e. a patent defined by the European Union.
6. A good interim solution is the ratification of the London Agreement, and the setting up of a European Patent Court under the terms of the draft European Patent Litigation Agreement.

It sounds convincing, doesn't it? Sadly, or luckily, we at the FFII are a total and utter cynics when it comes to anything the Commission says, and when you give us neat explanations that end with "and they all lived happily ever after", we are reminded of the Las Vegas proverb: "Every game has a patsy, and if you don't know who it is, chances are it's you."

And in this game, the patsy is the European IT sector, and everyone who depends on it. That's all of us. So let me break down the lie and show you where you were fooled:
1. Europe needs innovation.

This is like saying, "a human body needs air". It's always good to start a lie with a solid truth; it puts your audience at rest. Yes, indeed, Europe needs innovation. Excellent!
2. To promote innovation, inventors and creators need protection for their investment.

Here it starts. Is all innovation driven purely by direct monetary interest? That seems inaccurate. Much innovation is done simply as part of academic competition. Industry innovation is always part of a process that delivers results down the line - in better products, in happier customers, in stronger skills. Often the cost of innovation is trivial compared to the down-the-line costs. Why would protecting that trivial investment have any benefit at all?

Second, watch the language. "Invent" and "create" are key terms that slip in slyly but are used to lever worlds. The first refers to doing anything that is patentable. The second to doing things that are copyrightable. So if you think you're inventing when you write music, wrong! You're creating. Similarly, calling software a "computer implemented invention" is like saying, "software-as-a-patentable-thing". Billions of Euro have been won and lost over such delicate matters as the meaning of a single word.

Third, watch as the author of the lie makes the incredible claim of being able to promote innovation. This is self-flattery from governments, deceit from the patent industry. In twenty-five years of making software, I've seen many, many attempts by big governments to "promote innovation", and they all end in big bills for the tax payer, and little else. Europe has had half-a-dozen "framework programmes" that distributed billions to universities and researchers. The result is a generation of people who are very skilled at requesting framework programme money. Japan had its "fifth-generation computer" project, which probably delayed Japanese IT by five to ten years. The US has had the Bayh-Dole act, which has turned universities into patent-troll incubators and burned-up America's lead in pharma and biotech in a bonfire of litigation.

The list is endless, but basically comes down to this: large governments for the most part don't understand or care that innovation is a natural phenomenon that happens when you let clever people loose in a truly competitve market. Government does not need to promote innovation. Government just needs to define clear and obvious rules of conduct, set itself up as a fair police and judge, and then get out of the way.
The propaganda continues with a sleight-of-hand that fools all but the experts. But it's a cheap trick, once you see how they do it:
3. Protection means a patent system that delivers cheap, high-quality patents that can be cheaply and reliably defended in court.

What happened to copyrights, trademarks, trade secrets? There are many, many more (perhaps millions times more) works of software that are copyrighted than are protected by patents. But because copyright is automatic, unregistered, free, and almost never disputed, it's not worth anything to patent lawyers and politicians looking for an easy metric for "innovation".

So we've gone from a truth to a half-truth. We can accept as a working theory that a better patent system with high-quality patents can, in theory, promote innovation. There are, however, no studies that actually prove this. And certainly no basis for trying to expand the patent system at the cost of existing, working property rights.
Let's look at the follow-up: "...patents that can be cheaply and reliably defended in court."

What happened to "patents that can be cheaply invalidated?" A majority of patent claims are bogus, but the patent offices put the onus of invalidation on society. We have to go to court to invalidate bad patents because the patent offices are so bad at weeding these out and it is difficult and expensive to attack patents at any stage of their life-cycle.

So we've lost copyright and trademarks in the discussion, even though these are far more used and far more useful than patents (we can prove easily that copyrights and trademarks have promoted innovation in many sectors).

Worse, we've lost the right to ignore bad patents and do business as normal. To solve the problem of bad patents, we make them easier to enforce. That's like saying, to solve the problem of car jackings, we allow criminals to carry guns. Suddenly in the name of innovation, we take away the rights of the mass of business people, and give special new powers to a minority. It is probably not a surprise that this minority are mostly patent experts.
4. The current patent system is incoherent and does not do any of the above [since it pits the European Patent Office against national courts, who have different interpretations of patent law].

Yes, the current patent system is incoherent, but not because it fails on the above criteria, which are bogus. The current patent system is incoherent because the EPO has decided to become activist and grant patents that should not be allowed. There is a clear problem - the EPO - but criticism of the EPO totally missing from the Commission's propaganda. Which is only normal, since the EPO and its friends wrote most of it.
5. The long-term solution is a community patent, i.e. a patent defined by the European Union.

This is probably accurate. A does of truth helps to calm the reader, helps calm the growing doubts. But the triple knock-out blow is coming.
6. A good interim solution is the ratification of the London Agreement, and the setting up of a European Patent Court under the terms of the draft European Patent Litigation Agreement.

This is a favourite trick of the pro-EPLA crew: make obscure, complex, and obfusticated references that you know people will be unable to argue with. If your public seems to be wavering, throw in some references to a random draft treaty. Let me take this sentence apart.

First, EPLA is not "interim", it's very long term. There is no mechanism or road map for changing or dissolving it. Once EPLA is in place, it would take agreement from all members of the European Patent Convention (including non-EU countries like Switserland) to change anything.

Second, the London Agreement is about languages, and it's designed to save money for the large firms that patent across all Europe. But despite the Commission's dreams, Europe still consists of many countries and most business is local. Translation of all documents into English, French, or German would make patent litigation disastrously expensive for firms in other countries.

Last, how about that European Patent Court? Sounds fine, yes? Ah, until you read the fine print of EPLA. Guess who would appoint the judges? The EPO. For two years. Goodbye judicial independence. Would the EPC be supervised by a higher court? Forget it. The EPC would answer to no-one. Well, perhaps the European Parliament could intervene if there were problems? No - the EPC is not an EU institution.

Meanwhile, the simple and obvious reform - tell the EPO to stop issuing illegal software and business software patents - is ignored. And it'll continue to be ignored until the US Congress bans software patents, which I predict it will do within five to ten years. The question is whether the Commission will have succeeded forcing EPLA on us by then, or not.

So that's the propaganda piece.

Next, let me explain how the Commission is pushing its pro-EPLA message. It's using an astroturfing technique that has been fine-tuned by lobbyists. Imagine you're a big firm and have invented a new, useless, and probably poisonous product no-one wants, say a medicine that makes people turn bright blue. You start by creating a fake disease. Call it "Affected Skin Decoloration Syndrome". You pay some researchers to conduct studies showing that some aspect of modern living - say, neon lights, or flush toilets - cause excessively pale skin, and that a healthy dose of Turns'U'Blu is an excellent cure. You create a "platform", a lobby group that masquerades as a citizen's group, to clamour for free Turns'U'Blu for all school children and office workers. You find studies that prove that blue skin is resistant to cancer. Eventually, bending to the massive weight of popular opinion, the regulators permit your product and you make great sales.

This is what the Commission is doing for EPLA.
We got:
  • Comments from Commissioner McGreevy in several meetings about the need to fix the patent system.

  • A consultation on "furture patent policy" where a majority of responses asked for EPLA (how the Commission managed to ignore the huge response from the IT sector and stuff the results with hand-picked submissions is a story in itself).

  • Commission Studies on innovation that quoted the propaganda piece almost wholesale.

  • An Commission-run ICT task force that wrote reports asking for EPLA (how the patent trolls took over the task force workgroups is also a story worth writing).

  • A pro-EPLA motion in parliament that repeated the propaganda piece. This motion was launched by MEPs who just happen to make money from patents, and was demolished by the FFII and the saner parts of the European Parliament.

And we expect in December to get a formal announcement from McGreevy about the Commission's plans for EPLA.

Lastly, let me explain what the FFII is doing about this.

Obviously, we have fought, and continue to fight, the pro-EPLA propaganda, with analysis, comment, and action. We work with the European Parliament to ensure they understand what is at stake. Very few MEPs really understand EPLA, so occasions such as the EPLA motion are very useful. We build websites of information. We write briefs, we speak to journalists.

But simply reacting is not enough.

We want a working system of intellectual property rights that uses the right model for each form of work. For industrial products, patents. For software, music, writing, copyright. For names, logos, trademark. For knowledge, trade secrets. These rights must be balanced so that all parties - not just patent holders - are fairly treated.

The current patent "reform" trends are not healthy. They are unbalancing the system of IP rights, and creating severe tensions in several industries, including software, pharmaceutics, and telecoms. The voices of the patent industry and their friends in the Commission are not representative, not neutral.

So the FFII will be launching a new movement in November. This will be a movement to construct a new and better patent system. We will organise support from all sectors, and from all industries that are affected by patents. We will look at the problem of software patents but we will also look at junk patents of all kinds. Most importantly we will be focusing a bright light on the patent industry itself, who regulates it, and who profits from it.

EPLA is a flawed and corrupt initiative that solves the problem of under-regulation by removing all remaining regulation. The idea of a single top patent court, run by an unregulated for-profit patent industry, scares even the most pro-patent industry specialists. The only winners will be the patent lawyers, which is why people are calling this "Europe Pays the Lawyers Again". Let's hope that's not the case.

Monday, September 18, 2006

The Extremist Agenda and the Banana Bunch

This weekend in Sweden the voters kicked out the incumbent Social Democratic Party after seventy years in office, and turned the Pirate Party into a small but real political force.

It's one thing to collect a few thousand signatures on a petition. It's quite something else to collect real votes.

The Pirate Party runs on a charmingly simple agenda: reform the copyright system, get rid of the patent system, and protect citizens' rights to privacy.

It's an agenda that gains its own momemtum as Europe's politicians enact more DCMA-like laws, as they turn the patent system into a money-printing license scheme, and as they enact data retention laws that make the old Communist spy states look like amateurs.

I find it ironic that the FFII, who have campaigned for reform of the patent system, are labelled "anti-IP extremists" by those pushing for the patents-grow-on-trees vision of the world. When economists call on governments to stop printing excess money because this leads to inflation, are those economists really "anti-monetary extremists?"

It's worth reflecting who are the real extremists in the patent debates. On the one hand, we have laws (the European Patent Convention, and its peers in each country) that were designed to promote innovation. They do this by granting temporary monopolies on significant inventions, in the specific cases where breathing space is necessary for industrial production. These laws were designed to promote innovation and the economic benefits this brings. These laws specifically and clearly exclude computer programs and business processes, for excellent reasons.

On the other hand we have an alliance of politicians, bureaucrats, patent specialists, and patent attornies from large software firms, who have systematically bent and broken these laws since the mid-80's. I call this crowd the Banana Bunch because their goal is nothing less than the removal of all barriers to patentability, so that patents become as cheap as bananas.

Traditionally, we've used prior art, inventive step, industrial application, and subject matter to keep the patent system sane and restrict patents to areas where they are beneficial. These are the four key criteria intended that ensure only good patents are granted. And these criteria have been systematically undermined and devalued. The reason? The Banana Bunch see patents as an inexhaustible source of revenue, just like so many failed autocrats have used the central bank printing presses to pay the army.

Any programmer knows that patents don't have sense in the software world. We use copyright. It's the strongest and widest-used intellectual property model, and works very well for software, writing, music, movies, and so on. Copyright is not perfect. For example, I don't think it makes sense that my programs are copyrighted for seventy years after my death. But it's better than any alternatives I know. Programmers and small-to-medium IT firms don't want or like patents, not because we're anti-IP or anti-business, but because we see very clearly that software patents will make it much harder for us to do what we do, which is to invent and innovate our way into new markets.

Big IT firms don't really like software patents either but mostly it's the IP lawyers who call the shots. Take a look at any large software firm when they speak on the subject - it's not the CEO or CTO who speaks, but their chief IP counsel. The Banana Bunch is in charge of IP policy in most large IT firms. It's definitely taken over IP policy in the Commission. The EPO itself lobbies MEPs with full-page adverts, just as if it was a large for-profit business.

Now let's consider the label "extremist". Who are the extremists? The Banana Bunch look extreme to me. Their agenda is damaging the EU institutions. It's devaluing the patent system. It's weaking the democratic process and it's giving all those who say, "the system is not working", a valid argument. I can understand the motives. Money and profit are powerful incentives. Powerful financial incentives make for extreme agendas.

What about the FFII? The FFII wants to see the letter and the spirit of the law respected. We want to see institutions like the EPO fall under control of elected bodies. We want accountability. We want the law-making process to reflect wide needs, not special interests. We hope to make no money from our work, only the right to do business as before. Does this make us extremists?

No. Rather, it makes us fundamentalists, conservatives, moderates. We've been accused of not understanding the patent system but I think we understand it better than the "experts". We see it as a balance, as a complete system, with potential to help or hinder innovation. The Banana Bunch see it as a pretty shiny magical money-printing machine and they seem blind to the consequences of its abuse.

And yet the FFII finds itself excluded from the process. Our proposals are rejected or ignored. Our answers to the Commission's consultations are treated as spam.

The Banana Bunch is working through the Commission to put into place a Europe-wide law, the EPLA, which will take EPO case law (not the written law, but the EPO's interpretation of it) and make that the standard for all Europe.

The Commission campaigns behind the scenes for the EPLA, with fraudulent consultations that it packs with the opinions of selected friends, opaque 'task forces' led by Banana Bunch lawyers, parliamentary resolutions drafted by the Banana Bunch comedy duo of Lehne and Bowles... a year-long Banana Bunch astroturf campaign designed to create the mirage of demand for an Europe-wide patent system governed by the EPO.

An IBM researcher, Dr. Shmuel Ur, recently said that, "Currently the legal overhead to the medical system in the USA is about a third of the total cost, I fear the IT industry is heading in the same direction, and fast."

This is what the Banana Bunch want, because that legal overhead is, to them, 100% profit. It's the same reason US trial lawyers resist changes to tort law. Lawsuits are excellent business.

Now, let's imagine the Banana Bunch get what they want, and all restrictions on patents are removed. The EPO's rulings, which allow patents on every conceivable idea and notion, so long as they are properly drafted, become EU law.

What happens when the moderates fail?

History is full of sad precedents. Regimes are often terrible at listening to moderate voices. Mao Zedong said, "political power grows out of the barrel of a gun", suggesting that moderate dialogue is a weak and ineffective way to make structural changes.

The Banana Bunch are rich, well-connected, and well-positioned in this fight, but I am going to issue a warning about who their real opponents is, in this esoteric fight about patent law, EU jurisdictions, and institutional accountability. It's not the FFII. We're not against the patent system, only against a bad patent system. We don't object to companies making money from patents, so long as they don't do damage to the industry in question.

The Banana Bunch have two real enemies. First, their own hubris and greed, which will probably be the cause of their downfall. Second, abolitionist tendencies like the Pirate Party, which will probably be the means of that downfall.

The Pirate Party's "get rid of the patent system" agenda is indeed extremist. It says, "dialogue with the patent system is not possible, so we want abolition". The Pirate Party is really just waiting to see what happens this year. Will the Banana Bunch beat the moderates? Will we get an IT industry where the legal overhead is a third of total costs? Will the FFII fail in their attempts to reform the patent system?

When hundreds of thousands of pathetically poor patents are granted and enforced by an undemocratic court run by a non-EU body... why bother attacking these patents one by one? Abolition is a much easier argument, and it is the logical conclusion to the current trends. And of course, if the patent system is abolished, patent lawyers will become like EU custom officials, an unlamented endagered species.

Thirty years ago, the German Green party was formed mainly on a platform to rid the country of nuclear power, after total failure to reform the nuclear power industry through dialogue. It started with a few thousand signatures, and a handful of votes. Today, the Green Party has enough power to fulfill its promise, and Germany will find itself in the post-oil era without nuclear engineers and without nuclear power.

EPLA, if successful, will be the shot that ends moderate dialogue and starts the abolitionist race. And this time it won't take thirty years.

Saturday, September 09, 2006

EPLA = software patents

The software patent war is heating up again.

In some ways it's very much like last time, in 2005:

  • The EU Commission and EPO are collaborating to push for new patent legislation.

  • Big Software is promoting the Commission's proposals.

  • New proposals and resolutions are coming to the European Parliament.

  • And apparently, it's got nothing to do with software.

What's going on? Well, the European Patent Office (EPO) and its friends in the Commission, Big Software, and the patent business, have a new strategy for introducing US-style patent laws into Europe. The trick is simple. Today, while the EPO happily and profitably grants lots of software and business process patents, national courts repeatedly strike these down.

Judicial independence has been a major stumbling-block to a larger and more profitable patent market. National judges stubbornly insist on sticking to their national laws, which mostly forbid patents on software and business processes. These troublesome national courts don't seem to realise that the world has changed and that more patents are the key to future prosperity. Especially if you're a patent lawyer or expert. And software and business processes - as the US has shown - are by far the best growth area. One can literally invent an infinite number of patents from mundane IT. Take any idea or process, add "on a computer" to it, and you have a new invention!

So the plan is to bring all these troublesome national courts under the umbrella of the EPO, which in its wisdom has long ago stopped trying to limit its customers' natural right to patent everything under the sun.

The Commission ran a "Community Patent" consultation earlier this year, and when it did not get the general support it wanted, it simply cheated. Behind the scenes - after the consultation closed - it rang up individual firms known to be patent holders, and helped them answer the consultation. It then organised a parade of talking heads all known to want software patents, and told the world, "Lo! Everyone wants the EPO's vision of patents!" Only a few token opponents spoke out.

And the Commission's master plan is called EPLA, or European Patent Litigation Agreement.

The goal is to expand the EPO's power so that national courts no longer have the right to strike down illegal patents. Think about this for a minute. EPO board-of-appeal case law - defined by EPO judges who sit 100% outside any national or EU control - will override national law. Judges sitting in an institution that is totally outside democratic control will define how we do business.

It would be troublesome even if these judges were known to be fair and wise. But the EPO is not a neutral party. It has strong economic interests in exploding the patent market, whatever the cost to smaller firms. Not only is the EPO untrustworthy, it is corrupt. The same individuals work in the EPO, advise large firms on patent strategy, act as lobbyists at EU institutions, and start their own patent-holding firms. It is a revolving door where individuals write laws and then profit directly from them.

We stand before a clear choice: expand the EPO's powers to control the whole European patent system, or reform the EPO and bring it under better control. I've nothing against the patent system in principle. Patents are monopolies that can, in the right circumstances, promote investment in innovation. But when patent law is used by a priviledge few as a money-making machine, and these same priviledged few then lobby for more and wider patents, to the detriment of existing intellectual property rights... when patents start to steal from copyright and make ordinary business impossible... when patents become a threat to innovation and our economic prosperity... then I get very angry. I've spent 25 years of my life writing software, protected by copyright. I don't need burocrats telling me that I need more IP protection.

If the EPLA moves forward, software patents will become common currency in Europe. This is visibly a major goal, seen by the enthusiasm shown by large software firms like SAP for the new proposals. I don't see much support for the EPLA outside the IT sector and all the support comes from the same large firms that pushed for the cleverly-named "Computer Implemented Inventions Directive" last year.

If the EPO's judges get control over patent law, patents on software algorithms and techniques will explode, and we will see a freeze of grassroots innovation in Europe. Further reform of our banking, insurance, and travel industries will stop as it becomes impossible to introduce new IT standards without risk of patent infringement. European integration is largely enabled by technology, and software patents place the entire European project at risk. I sometimes wonder if the Commission, in all their breathless enthusiasm for "stronger IP", realises quite what they are leading towards.

The USA shows what a mess an activist and corrupt burocracy can make of things when it captures control of the patent system. It is literally impossible to run an IT business in the USA without legal weaponry. This is the future of European business if the EPLA moves ahead.

Life for Europe's small and medium IT firms is already pretty hard. We pay a lot of taxes. We compete with firms in countries that have much cheaper labour. American investors love risk but European ones hate it. We have to deal with dozens of languages and other natural barriers. We have no Silicon Valley, no economies of scale, no ability to deal with a US-style patent system and the waves of litigation it will bring.

Small-to-medium IT firms have repeatedly and firmly told the Commission that they do not want software patents. The Commission pretends to listen but ignores us. Who cares what a hundred thousands small firms say or need when the message from ten huge firms is so clear?

So it's time to get active.

It's time to write to your MEP and tell him or her, "We don't want the EPLA".

It's time to fight for a reform of the EPO because this organisation is not doing its job.

It's time to join other activists and do what we did last year - change the world.

Friday, August 25, 2006

Answering the "Patent Engineer"

From Slashdot:
Disclaimer: I am a patent engineer. I write software patents for a living.

Let's think about this for a minute. There are two common arguments for doing away with software patents: 1) It's just math (i.e., algorithms), and 2) software is already covered by copyright.

Addressing 1) first, this argument could be taken to its natural conclusion by suggesting that *nothing* should be patented, since *everything* is simply a combination of laws of nature. But if we take a step back, we realize that what people are patenting is novel *uses* for laws of nature. If I'm the first person to design voice recognition software, why would that be any less patentable than a new kind of rubber? The point (theoretically, at least) is to reward hard work and innovation. Why should software engineers be any less entitled to that kind of reward?

Some will respond to the previous points with 2). BUT, and this is an important point, copyright only covers the specific implementation or manifestation of the invention. So, if I were to copyright an insanely powerful peer-to-peer model, you would only have to use a different programming language, change the system architecture a little bit, throw a different GUI on it, and away you go. You may be copying my ideas EXACTLY, but you've found a way around the copyright. So it's clear that copyright doesn't protect certain kinds of inventions to the extent that patents do.

Now, I'll be the first to acknowledge that the USPTO needs improvement. The examination process is flawed, and recent reform proposals have fallen far short of what's actually needed. But does that mean we should just do away with an entire class of patents? Of course not.

Dear anonymous patent engineer,

The patent system, much like software, is the creation of our minds. It's an artificial system of monopolies with only one purpose, to maximise the amount of innovation society produces, through appropriate protection of investment. Copyright is, of course, exactly the same, only different.

Your arguments don't address the actual question, which is much simpler than technical debate about maths, the reality of the universe, and the difference between an idea and a piece of work.

The question is simply: does the patent system stimulate programmers and SMEs to invent, or does it not. It is a question with a black and white answer. Patents are either good for software, or they are bad for it. There are no special cases: any mechanism that produces more software, more cheaply, will do so systematically across all domains.

If the answer is yes, you will find programmers and the CEOs of SMEs in their thousands invading the streets, or at least writing emails, demanding more patent protection.

But, surprisingly perhaps for someone who has graduated to the position of engineer of patents, you find yourself confronted by masses of unhappy, angry, confused programmers and SME CEOs who detest software patents with such a fury that they are willing to sacrifice their time, their money, and years of their lives, in some cases, to oppose wider patentability of software.

Software patents must be stopped, and rolled back, or the software industry will suffer and in some parts of the world, die.

There is no pity in economics - inefficient systems are punished mercilessly, and if the US persists in its mindless pursuit of universal patentability, it will simply arrive at the stage where no-one - not the software industry, not the music industry, not the movie industry - will invest in copyrightable works, because every idea and concept will be owned by a patent engineer.

At which stage the patent engineers of the world can write the content.

Thursday, July 20, 2006

The Principles of Monopoly

I saw that Microsoft have published a self-imposed set of "Windows principles". No, there is no mention of security, performance, or other irrelevancies. But the language is a little foggy at times, so I've taken the liberty of translating it...

Microsoft Corp. recognizes the important role its Windows® desktop operating system products play in the information economy and the responsibilities that come with that role.

Translation: We are being unfairly attacked in the EU and US for abusing our monopolistic position. The confusing part to us is why we'd invest so much money and effort in becoming a monopoly if people won't let us abuse that afterwards. What's this world coming to?

To promote competitive opportunities and otherwise enhance the appeal of Windows to developers and users, Microsoft is committed to running its Windows business in accordance with the following principles that address computer manufacturer and user choice, opportunities for developers, and interoperability for users.

Translation: We believe in promoting our opportunities to compete with the few firms that still dare to tread in our space. Google and Blackberry, be warned!

These principles will apply to Windows desktop development projects going forward.

Translation: If you think we're going to make a single concession to those lousy Linux free software hippy freaks, think again.

Principle I: Choice for Computer Manufacturers and Customers

Microsoft is committed to designing Windows and licensing it on contractual terms so as to make it easy to install non-Microsoft® programs and to configure Windows-based PCs to use non-Microsoft programs instead of or in addition to Windows features.

Translation: In case there's any doubt here: Microsoft is going to make and sell Windows. Yes, we had to state this because our shareholders keep asking, "is Microsoft actually writing software with all that money, or is Vista simply the Orwellian endless war translated into software management theory?"

What this means:

1. Installation of any software. Computer manufacturers and customers are free to add any software to PCs that run Windows. More broadly, every computer manufacturer and customer is free to install and promote any operating system, any application, and any Web service on PCs that run Windows. Ultimately, end users are free to choose which software they prefer to use.

Translation: "Prefer" is such a nice word. Ultimately, our job is to convince users that they prefer our software and to be honest, we'll ensure they have the right to run it, despite those antitrust rulings. People *like* media player! Removing it would go against our own self-defined principles.

2. Easy access. Computer manufacturers are free to add icons, shortcuts and the like to the Windows Start menu and other places used to access software programs so that customers can easily find them.

Translation: Computer manufacturers who do this will of course lose their preferential licensing terms, but we're sure they'll easily make up the lost revenue by promoting Firefox! Lol. We *own* the computer manufacturers, fools!

3. Defaults. Microsoft will design Windows so as to enable computer manufacturers and users to set non-Microsoft programs to operate by default in key categories, such as Web browsing and media playback, in lieu of corresponding end-user functionality in Windows. Computer manufacturers are free to set these defaults as they please when building new PCs.

Translation: Computer manufacturers need the freedom to set these defaults as they please. Commissioner, are you listening? It's all about freedom! And, of course, our ability to tell computer manufacturers exactly what pleases them most.

4. Exclusive promotion of non-Microsoft programs. In order to provide competitors with the opportunity to attain essentially exclusive end-user promotion on new PCs, computer manufacturers will have the right to remove the means by which end users access key Windows features, such as Internet Explorer and Windows Media® Player. The Set Program Access and Defaults utility developed as part of the U.S. antitrust ruling makes it easy for users and computer manufacturers to exercise these options.

Translation: Yes, we're going to make it even more complex to remove unwanted junk from your system, but it's all part of giving you more choice. Don't complain if you have to bend over backwards to remove Media Player, it's the fault of those antitrust people.

5. Business terms. Microsoft will not retaliate against any computer manufacturer that supports non-Microsoft software. To provide transparency on this point, Microsoft will post a standard volume-based price list to a Web site that is accessible to computer manufacturers, as it has under the U.S. antitrust ruling. Windows royalties will be determined based on that price list, without regard to any decisions the computer manufacturer makes concerning the promotion of non-Microsoft software. More broadly, Microsoft will offer Windows for license on standard terms and conditions so that a computer manufacturer knows that it will be offered the same licensing terms regardless of its decision to promote or not promote software from competitors. Microsoft will consider modifications to the standard license terms to reasonably accommodate computer manufacturers with individual business-model or operational requests, but these variances will never be based on the extent to which the computer manufacturer promotes non-Microsoft software.

Translation: Wow, that was a mouthful. Sounds good, doesn't it? Did you catch the part where we in fact commit to nothing at all, and leave all our options open to modify pricing as we like? Like the part where we're not committed to publishing the actual license terms we apply to, for example, Dell or HP?

Principle II: Opportunities for Developers

Microsoft is committed to designing and licensing Windows (and all the parts of the Windows platform) on terms that create and preserve opportunities for application developers and Web site creators to build innovative products on the Windows platform — including products that directly compete with Microsoft’s own products.

Translation: We love products that compete with us, so long as they run on Windows, because it just means you're doing the R&D work for us. Hey, that's how we got to be so large, by taking ideas from other people, so why stop now?

What this means:

6. APIs. Microsoft provides the developer community with a broad range of innovative operating system services, via documented application programming interfaces (APIs), for use in developing state-of-the-art applications. The U.S. antitrust ruling requires that Microsoft disclose all of the interfaces internal to Windows called by “middleware” within the operating system, such as the browser, the media player and so forth. In this way, competitors in these categories will know that they can plug into Windows to get services in the same way that these built-in Windows features do. This has worked well, and we will continue to disclose these interfaces even after the U.S. antitrust ruling expires. In fact, we will go further, extending our API commitment to the benefit of all software developers. Going forward, Microsoft will ensure that all the interfaces within Windows called by any other Microsoft product, such as the Microsoft Office system or Windows Live™, will be disclosed for use by the developer community generally. That means that anything that Microsoft’s products can do in terms of how they plug into Windows, competing products will be able to do as well.

Translation: Despite our tendency to using secret APIs, we've discovered how much more profitable documented APIs can be for everyone, not to mention that we just *love* competitors who use our technology. We'd like to thank the Dept. of Justice for teaching us good software design. Maybe some of you Justice Dept. folks want a job at Microsoft?

7. Internet services. Microsoft is contributing to innovation in the area of Internet services with services that we call Windows Live. Microsoft will design Windows Live as a product that is separate from Windows. Customers will be free to choose Windows with or without Windows Live.

Translation: Now available for the low, low price of just $19.95 per month. What, you thought Windows Live would be part of the core package? Lol, we're not giving you anything for free. Hey, don't cry on our shoulders, go see the Dept. of Justice, it was their brilliant idea!

8. Open Internet access. Microsoft will design and license Windows so that it does not block access to any lawful Web site or impose any fee for reaching any non-Microsoft Web site or using any non-Microsoft Web service.

Translation: Another Microsoft innovation. No, not the "open internet access" part, but the part where we plan to charge for Microsoft web services by embedding payment systems directly in the operating system! Yes, it's a brilliant idea because if you try to use Linux or Firefox or Mac to access our online service, well, dude, you're baked. The cool part is that thanks to our policy of "open internet access", we will actually make it impossible for our payments system to work with non-Microsoft web sites and non-Microsoft web services. It's for your own good.

9. No exclusivity. The U.S. antitrust ruling generally provides that Microsoft may not enter into contracts that require any third party to promote Windows or any “middleware” in Windows on an exclusive basis. We will maintain this practice going forward, and in fact broaden it to apply to Windows or any part of Windows, whether or not it would qualify as “middleware” under the U.S. antitrust ruling. We will apply the concept of “exclusivity” broadly too, so that our contracts ensure that a third party can use non-Microsoft software in amounts equal to or greater than its use of Windows. More generally, we want the developer community to know that it is free to develop, support and promote products that compete with any part of Windows. Consistent with the U.S. antitrust ruling, Microsoft will not retaliate against any third party for exercising this freedom.

Translation: Did you like the way we repeated point 6 using a completely different language? Our lawyers are the bestest. Look, here's our problem: despite owning huge numbers of the smartest software people on the planet, we can't produce software any more. I mean, it's a joke, right? So we need you to go out and write software for us. If it's any good, we'll buy you out just before you start to get market traction. Cheap and effective, our shareholders will love us!

Principle III: Interoperability for Users

Microsoft is committed to meeting customer interoperability needs and will do so in ways that enable customers to control their data and exchange information securely and reliably across diverse computer systems and applications.

Translation: We know what 'interoperability' means, here at Microsoft. The other day we saw a Windows XP box talking to a Vista box. I kid you not! We're committed to making this kind of miracle happening more and more often in the future. Seriously.

What this means:

10. Communications protocols. Microsoft will make available, on commercially reasonable terms, all of the communications protocols that it has built into Windows and that are used to facilitate communication with server versions of Windows. To facilitate this, Microsoft will document protocols supported in Windows as part of the product design process. We will also work closely with firms with particular needs to address interoperability scenarios that may require licensing of other protocols.

Translation: Protocols are cool. They're like APIs except we can own them, using copyrights and patents. That means we can get you to write software for us, and at the same time pay us good money for the privilege!! It's so sweet we're almost in a faint. Oh, sure, we're write some docs if you really insist.

11. Availability of Microsoft patents. Microsoft will generally license patents on its operating system inventions (other than those that differentiate the appearance of Microsoft’s products) on fair and reasonable terms so long as licensees respect Microsoft’s intellectual property rights.

Translation: We think "an arm and a leg" is very reasonable. Alternatively, 10% of your gross revenue. Look, let's be honest. We've spent years trying to collect patents and make some kind of business based on that. It's time you try to help us. Sure, our patents are usually frivolous, and there's no guarantee that someone else won't sue you, but Microsoft needs your cash now. Please, think of the Children!

12. Standards. Microsoft is committed to supporting a wide range of industry standards in Windows that developers can use to build interoperable products. Microsoft is committed to contributing to industry standard bodies as well as working to establish standards via ad hoc relationships with others in the industry.

Translation: The best way, in our experience, to corrupt a dangerous standard is through ad-hoc relationships. It's so nice because we can get our "patented technology" into standards (what a laugh, I mean we can start to file patents on key technologies in standards) without signing anything that would compromise our position. But aside from that, we love interoperability, for sure.

Microsoft will post these principles to its Web site so that they will be readily accessible to the computer industry and customers. We will review these principles from time to time, and at least once every three years, to determine whether we should adopt additional principles or modify existing principles to reflect technological, business or legal developments.

Translation: Note, however, that we have signed nothing, and if you would decide to take us to court because we flagrantly violated any of these principles, despite our elegant use of teflon language, you would rapidly find yourself the object of such mockery that you would creep back into the hole from whence you came. This is not a contract. It's not even a click-through license. This document is 100% marketing and if you can't understand that, then I have a lovely Vista system for you, right here...

Microsoft Corporation

"Setting the Standard For Monopoly for Over 20 Years" (tm)