The value of intellectual property - part 2

The value of intellectual property - part 2

Summary: In a nanotech future, all that matters is the information required to construct a product. This will make intellectual property even more important.

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TOPICS: Patents
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This is a continuation of a blog post started yesterday.

I hadn't realized that a draft of GPL version 3 would be released on Monday, making the timing of this series more fortuitous than I initially intended. The question I posed yesterday was whether intellectual property was important in knowledge economies, particularly given that a nanotech future boosts the importance of knowledge as an asset. The software economy is the most well-known knowledge economy in existence, and the forces backing the GPL represent the side of the debate that believes innovation is best served by spreading the free commons to the exclusion of intellectual property.

I don't consider that claim to be particularly contentious, as clearly, the GPL does what it can to hinder enforcable IP claims (enforceable in the sense of licensing requirements or fees for use). How else to explain explicit attacks on DRM systems, rejection of patents, or provisions ensuring that any extensions be licensed under the GPL. Yes, developers choose whether or not to use a GPLed product, but the designers of the GPL chose to write a license that does as much as possible to create a software universe free of intellectual property.

So, everyone has a choice, but what I have never felt was sufficiently answered was why the GPL side chose to oppose IP. The "why" of this antipathy is particularly hard to discern given that the discussion usually gets couched in the language of rights. Given that rights aren't provable (they "just are"), one would have about as much chance of settling a question of rights as proving the existence of god.

So, in hopes of pulling back the curtain a bit, consider whether the following statement is TRUE or FALSE: The software economy, oriented as it has been around proprietary software, has been a tremendous source of innovation over the past 25 years.

Clearly, I think the answer is "TRUE," and I have trouble believing that anyone - including Richard Stallman - could claim otherwise with a straight face. No one can look at the past 25 years of computing history and discern stagnation and lack of creativity. Software has been so successful that it has sunk hardware as the center of gravity in the computer industry, a shift that some companies saw (Microsoft) and other companies didn't (IBM).

The causes of this creativity were simple. Proprietary software companies compete to create better ways to satisfy the needs of their customers, and in so doing, earn the financial benefits derived from "ownership" of the intellectual product. Those financial benefits turn the interests of the developers towards the interests of the customer. Furthermore, companies have a unique ability to determine the interests of the customer in the first place, given the nature of the consumer / supplier relationship. Volunteer projects would have difficulty matching these benefits, and that's the reason that an astounding amount of "use value" (to borrow Eric Raymond's term) is derived from proprietary infrastructures. That's a blitzkrieg outline of the reasons, but I talk about them at length in a series of four articles responding to Eric Raymond's "The Magic Cauldron."

I do concede benefits from a cooperative model, a side of the debate I will discuss in my post tomorrow (or thereabouts). Those benefits, however, don't mean there is no benefit to be derived from proprietary software, nor that the benefits of a cooperative model somehow take precedence. Market systems based on ownership of physical assets are a proven driver of human innovation. Similarly, market systems based on ownership of intellectual assets are equally a driver of human innovation.

Part of the reason some have difficulty with the notion of "intellectual property" is that they find it strange in ways that "ownership" of a physical asset is not. In reality, both are equally strange, in that both are imaginary constructs that have proven useful. The fact that I "own" the cell phone in my pocket isn't something inherent to the cell phone. It is a legal construct created through a system of laws that serve as the framework within which economic activity takes place.

Market systems aren't natural. They are a scientifically-constructed legal scaffolding as engineered as the blueprint of an Airbus jet or the latest automobile rolling off the BMW factory line. Just as a jet or automobile design is a response to physical laws, the shape of the legal structure is a response to basic economic axioms - such as the fact that individuals have more information about their own circumstances than anyone else, and thus make better choices as to how to satisfy their own needs. However, the precise laws are not natural or even obvious. They live or die based on whether they maximize or hinder the efficiency of the economic process.

This is why anarchy rarely leads to a capitalist utopia. You need very specific laws in place to enable the robust economic activity typical of modern economies. At the root of these laws is the concept of property ownership.

Ownership of physical property is an arbitrary construct that has been proven to work. By giving individuals exclusive legal right to dictate how a stretch of land, a phone, a house or a car is used, they grant the individual the full expression of his choice making capacity as well as benefits that accrue from use of that property. This creates incentives to innovate, and given that individuals are best positioned to make choices about their own needs, the economy benefits in the aggregate.

Intellectual property ownership is equally an arbitrary construct. The question on people's minds shouldn't be whether or not it is natural for an idea to be owned by anybody. There's nothing natural about ownership of ANY kind, intellectual or physical.

The question should be whether the notion of owning an idea helps to spur innovation sufficiently to justify "legal fenceposts" around an idea.

I would say it does, and in a nanotech future as described in my previous blog post where the essence of value is the information - or idea - underlying a product, the useful fantasy of "idea ownership" will become even more important.  Patents, copyright and other constructs associated with intellectual property will grow in importance, as these constitute the legal stakes in the ground that create the boundaries of "intellectual property" that serve as spur to further innovation.

That being said, the utility of the property fantasy does have limits. Clearly, intellectual assets have characteristics that demand they not be treated exactly like physical property.

Next Up: The benefit of the information commons - part 3

Topic: Patents

John Carroll

About John Carroll

John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup.

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116 comments
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  • Times change.

    Mr. Carroll is correct is saying that proprietary software spurred
    innovation. He also should have included the advances in
    various pieces of hardware, which allowed the very
    comubersome software to run efficiently.

    The problem faced by proprietary software companies today is
    that there has not really been anything revolutionary in quite
    some time. Today, the vast majority of new software offerings
    are evolutionary. Probably the best example of a successful, but
    only evolutionary, piece of new proprietary software would be
    iTunes. Such successes are rare in today?s marketplace and I
    doubt that iTunes would have had much success at all if it were
    not free. If the successfully hardware, iPod, had not
    accompanied iTunes, that app may have flopped.

    To my knowledge, no company has introduced a revolutionary
    product in years. Companies like Microsoft, Adobe, Oracle, etc
    offer improvements and added features, but do not offer
    revolutionary products. These market conditions make it much
    harder to offer new software ? especially from smaller
    developers, with a chance of large financial success.

    This cheapens the value of NEW intellectual property, at least
    software. So perhaps the future could hold promise for different
    profit avenues. Just today, ZDNet has a story about Salesforce
    offering on demand access to certain applications, including at
    least some Adobe apps. Nothing new here, just a new method
    of purchase, or lease.

    People, or companies that are offering product under GPL are
    hoping to make money via a different avenue, usually some type
    of support. There has certainly been nothing revolutionary from
    the GPL folks, only evolutionary like the proprietary companies.
    There are those who feel that Linux is a superior operating
    system. Many feel that Firefox is a superior browser. Both,
    however, are only evolutions of things that preexisted them.
    both were developed by a large groups of people. To be
    proprietary that would have entailed a great deal of money for
    personel, etc. What would the chances of sucess been for for
    actually selling these at enough profit to cover all the upfornt
    expense?

    Perhaps that is why, at lest in software the value of IP might be
    diminishing.
    j.m.galvin
    • Name a revolutionary piece of software

      Software tends to be incremental by nature. Word processing is a standard tool, but would you call the first word processors revolutionary? Web browsing is pretty common, but was the first browser truly revolutionary?

      I would call such examples to be evolutionary, as the notion of using a computer to edit text or use text markup to lay out UI widgets wasn't invented by either.

      All progress is evolutionary, and I think the expectation of revolution is mistaken. Software, like biological life, EVOLVES. You don't get a land-based creature turning into a whale overnight. The same applies to software. Incremental changes over time can add up to a big change, but the process is still incremental.

      What I'm arguing in this post is that the pace of incremental change accelerates, not that you get more revolutionary changes.
      John Carroll
      • Here are some

        Wang word processor - revolutionaized typing forever.

        Visicalc - first spreadsheet - changed accounting forever.

        Postscript - totally changed the printing industry.

        Appleworks - the first integrated office type suite - not
        developed by Apple but bought by them.

        Quicktime - beginning of digital video.

        The first databse - whoever invented it.

        There are others that have changed entire industries.

        Such a piece of software has not been introduced in some time.
        j.m.galvin
        • I don't agree...

          ...every last one of those products built on ideas in the industry. Wang did not invent the concept of writing documents on computers. Visicalc was the first spreadsheet program I know of, but was it truly completely something new that did not draw on ideas already in the industry? Quicktime was NOT the first to do digital video, so that's a non-starter. The first databases were primitive things that were non-relational, and there were LOTS of them (according to my programming father).

          I really think you are exaggerating the effect of any one piece of software. Change is incremental, and sometime an incremental change puts it in a state where it starts to get noticed, but it doesn't change the fundamental incremental nature of software innovation.
          John Carroll
          • every last one of those products built on ideas in the industry

            Thank you, Mr. Carroll.

            I agree with you completely on this issue:
            "every last one of those products [was] built on ideas in the industry" ... so none of the patents on software were deserved, because all of them relied heavily on previous art.

            Then, if there were no revolutionary/truly new innovations (pardon the oxymoron, please), why are there so many patents on software ?

            GPL3 is not against copyright. GPL3 is not against private property. GPL3 is, AFAIK, against the random land grab taking place right now in the realm of abstract ideas, ideas which are, as you correctly point out, so linked with what was already thought that no revolutionary innovation took place that we (I mean you, and me too) are aware.

            Oh, did I put in your mouth words you did not say? Do you mean that a software innovation does not need to be truly innovative to be patented? Gee, thanks ... I am going to sell my estate and start writing patent requests right now ...

            and, by the way, why do you think that relational databases are the culmination of all database related thinking ? AFAIK, relational databases are best for accounting, but for a lot of data out there they are hardly useful, and the "primitive things" you dismiss so easily are actually thriving ...
            emilper
          • Please name your alternatives to RDBMS

            "AFAIK, relational databases are best for accounting, but for a lot of data out there they are hardly useful, and the "primitive things" you dismiss so easily are actually thriving ..."

            and justify your choice of alternatives.
            jorwell
      • Relational database

        The application of set theory and predicate logic to the problems of data management revolutionised the field.

        On the subject of evolutionary development in software you might want to read this from one of the very smart guys working for the same company as you: http://research.microsoft.com/users/lamport/pubs/future-of-computing.pdf
        jorwell
      • Evolutionary and patents

        You're right, and increasingly as a discipline matures it gets more difficult for any one advance to be significant. However, consider the damage patents and a generally litigous approach could have done in the late '60s early '70s when much basic operating system technology evolved. "DEP" was included in many of the mainframe/mini VM hardwares of the day. What if this and the concept of "virtual memory" had been patented in 1958 (date of the Atlas mainframe), or even the assembler in the early 1950s, or hash table methods or compiling. I'd suspect the thing which inhibited a rash of patenting was that much of the early innovative work was done in university departments and so was "prior art" before commercial companies could get to it.
        Whatever that reason, I cannot believe that enforceable legal constraints would have done anything but slow and distort evolution; nor do I believe wholesale legal constraints will help from here on.
        c.h.whitfield@...
  • Red Apples and Green Apples

    The GPL was created for OPERATING SYSTEMS SOFTWARE. The Linux kernel and the GNU toolset are important features that no one should "own". The GPL ensures that the "foundation" of the operating system will not change "underneath you" and that no one can stake a claim of IP on important functions (Hey, I OWN the IP stack!). The GPL has kept Linux from forking and has provided an important feedback mechanism for improving the product. This is the reason that Linux is SUPERIOR to Windoze - operating systems-wise.

    As for applications, I would tend to agree that the GPL may not be the best license to use. I personally prefer the BSD license for applications - so IP CAN be "protected". But it is up to the software developer whether to use the GPL or not.

    So you see, in my (perfect) 2-tier world, developers have the same level playing field - guarenteed by the GPL - that there are NO secret APIs to sabotage their product and they can trace errors to the actual source code so they can deduce a problem with their software vs. the OS. These same developers can decide to use either the BSD or GPL for their own application - depending on their wants/needs/desires. Even M$ could make money selling their Office suite on a x86 *NIX operating system - OH WAIT, they ALREADY ARE, with the new macs . . .
    Roger Ramjet
    • Re: Red Apples and...

      [i]The GPL was created for OPERATING SYSTEMS SOFTWARE.[/i]

      I'm not so sure. Stallman wants the GPL applied to as much software as possible, not just operating system software.

      [i]The GPL ensures that the "foundation" of the operating system will not change "underneath you" and that no one can stake a claim of IP on important functions (Hey, I OWN the IP stack!).[/i]

      Who cares if someone owns a particular IP stack implementation, so long as someone else can make one. However, I do agree that it is good for TCP/IP to be open source. But then again, I'm not opposed to open source. I'm just opposed to those who think intellectual property is wrong.

      Open source, properly considered, should be a part of the software landscape.
      John Carroll
      • ...as long as someone else can make one.

        John C. says:

        "Who cares if someone owns a particular IP stack implementation, so long as someone else can make one. However, I do agree that it is good for TCP/IP to be open source. But then again, I'm not opposed to open source. I'm just opposed to those who think intellectual property is wrong."

        I think your bosses would be sorry to hear that. I'm definitely under the impression that most of the current interest in software patents (from MS and others) is because companies want to prevent the creation of competing implementations of the algorithms and protocols that they develop (without permission, of course).

        Would you feel the same way about TCP/IP if it had been developed by Turtleneck Software (under contract with the DOD, of course)?
        John L. Ries
        • Re: as long as...

          [i]because companies want to prevent the creation of competing implementations of the algorithms and protocols that they develop (without permission, of course[/i]

          That's the only reason companies would ever want to file for patents, anyway, and is also the reasons patents exist in the first place. By giving time-limited ownership, the developer has a chance to recoup some benefit from the discovery of some new idea. Granted, the implementation of that concept is imperfect, but there are ways to mitigate the imperfection as well as improve the process (save that discussion for later).

          [i]Would you feel the same way about TCP/IP if it had been developed by Turtleneck Software (under contract with the DOD, of course)?[/i]

          Not necessarily. I have some ideas about how to solve the problem of idea ownership and the need for society to have no tollbooths around ideas so as to simplify the creation of new ones. But, I'll talk about that in part 4.
          John Carroll
  • I'm still waiting for the one or two examples

    A fine dissertation, but I still would like to see what you perceive as one or two poster children that support your viewpoint. In the past, copyright has served companies well. It burned Microsoft in the early nineties (Stac Electronics).

    Personally, I haven't run into any ideas that have been patented that strike me as being much different from novel authors patenting the ideas around which their books revolve, like patenting a murder mystery solved by a detective who determines that the butler poisoned his boss after he was put in the will to take over his boss' assets after the boss died.
    Taz_z
    • Poster children

      That's a hard one, and I'm taking the 10,000 foot view here. It's clear that proprietary software has served the industry well, as the real acceleratin in software innovation happened after the widespread monetization of an asset that previously had been a mostly free add-on to hardware.

      However, I'd use the same example Eric Raymond used in "The Magic Cauldron," pointing out that the first version of Doom by Id software was so innovative (creating a 3D world on the low-powered processors of the mid-90s) that it deserved to be kept proprietary. Would they have done that without the ability to get a return on investment for their work?

      Most innovations are of the "incremental" sort, a point I made in a past set of articles on the nature of invention. What I'm arguing, essentially, is that the pace of innovation is accelerated by the profit incentives created by proprietary software.

      As you'll see in the next installment, though, that doesn't mean that ALL ideas should be proprietary.
      John Carroll
      • That's fair enough...for now

        I would agree that most innovations are of the "incremental" sort, kind of like some storylines, musical themes, etc, not really tangible except when they are implemented in a book, song, movie/TV show, or software. I guess a lead-in to asking for an example or two would be asking how software ideas are different from those original or "incremental" ideas that are "implemented" in some form of media (books, movies, etc.).

        Eventually, you have to back up your words with actions, so to speak. It's not like you are proposing the patenting of ideas. There are a hell of a lot of patents out there that cover ideas and therefore claim to cover [i]any[/i] implementation of those ideas regardless how different those implementations are; surely there have to be one or two out there that you believe illustrate your point. I think "one click" is an example of this. Eolas' patent is probably another one.

        I give you credit for responding, and I'll wait for your next installment.
        Taz_z
  • What IBM saw.

    IBM still makes hardware, of course, but the company, particularly Mr. Gerstner, saw something about IT that was more important than hardware or software.

    IT is part of running a business.

    When the most significant computer functions are already available, IT is a cost center. Hardware should be cheap. Software should facilitate work without requiring attention.

    But making IT pay its way is difficult because it has to be fit into ongoing operations seamlessly and appropriately.
    When that happens, when an ordinary user can do as much as an expert because of Windows... because of the software, then IT has helped.

    Providing expert answers to how to make computers helpful cheaply is now IBM's primary job. Mr. Gerstner's background probably helped him see that tech had ceased to be interesting.

    These "services", note, are different from those which facilitate use of software. They are also less valuable as a source of strategy than the customer's own employees. Consultants...


    You wrote:
    Software has been so successful that it has sunk hardware as the center of gravity in the computer industry, a shift that some companies saw (Microsoft) and other companies didn't (IBM).

    IBM saw software as something that came with the computer, the real source of value, and made it run.

    Turns out that the most valuable part of the computer was not the hardware, not the software, but the ideas of the people who designed the operating system and the applications that ran on it. That's how the world was remade.

    If the most valuable part of the computer is the ideas it expresses, then those ideas should receive the full protection and highest monetary reward possible. But that's a different post.
    Anton Philidor
    • Re:

      [i]If the most valuable part of the computer is the ideas it expresses, then those ideas should receive the full protection and highest monetary reward possible. But that's a different post.[/i]

      I would say that the ideas are already the most valuable part, and the trick is finding a way to make those ideas profit the inventor. In software, one way was through proprietary software. In hardware, the common path has been through patents. In so doing, incentives are built to create new ideas.

      The need for such monetization will become essential in other industries as nanotechnology becomes more common.
      John Carroll
      • Patents assure appropriate reward.

        Purchases of proprietary software built on licensed patents would not reward the company issuing the software for the functional idea, but for the way the idea is expressed.

        That expression would lose its unique value if it were imitated sufficiently. Therefore, patents should be available not just for functionality, but also for the way that functionality is used.

        That idea can be taken to what seems absurdity, as if someone were to patent double-clicking on an icon. But the principle of rewarding any improvement is correct.


        As I noted in my response to your earlier post, nanotchnology is one more too to mass produce (Henry Ford's term, I believe) replacable parts. It may not even lower prices if the cost of entry of using the technology is high enough.

        Seems a wisespread error of people interested in tech that the world can be remade frequently.
        Anton Philidor
        • It's already been taken to absurd limits

          "Therefore, patents should be available not just for functionality, but also for the way that functionality is used."

          I disagree completely. Ideas must not be patentable. We must re-establish the principle or we're just establish a new playing field where the big players (who can cross-license their vast patent portfolios) can sue or license-fee the small players to death.

          "That idea can be taken to what seems absurdity, as if someone were to patent double-clicking on an icon."

          Amazon patented the one-click-buy *idea*. We're already halfway down the slippery slope.
          spamagnet
  • I would say FALSE

    [i]So, in hopes of pulling back the curtain a bit, consider whether the following statement is TRUE or FALSE: The software economy, oriented as it has been around proprietary software, has been a tremendous source of innovation over the past 25 years.[/i]

    I can't think of anything truely innovative to come out of the software industry in the last 10+ years. If you have some examples, please share.

    I would also argue that much of today's software owes itself to the "open source" nature of early hobbiests. Without their sharing of knowledge and love of computers, I don't think we would be where we are today. But that is just my opinion :)
    Patrick Jones