The patent nuclear weapon

COMMENTARY--IT News goes in cycles, and those cycles seem to bedefined by major legal conflicts. A year ago, the bignews was the Microsoft antitrust case. You couldn’tvisit ZDNet without having one or more articles aboutthe case, and hell hath no fury like Talkbackersfighting over Microsoft. Today, that case is oldnews, displaced by legal turbulence surrounding SCO’sattempt to lay proprietary claim to parts of Linux. Hell hath something new to talk about.

After months of activity on SCO’s part, during whichtime they threatened not only IBM, but customersof Linux, and even LinusTorvalds, business proponents of open source havemanaged a counterattack. Red Hat hasfiled suit against SCO, and IBM, the originaltarget of SCO’s case, has responded with a countersuit of its own.

IBM is certainly justified in responding to SCO’schallenge, given the threat that SCO poses to IBM’sUnix business as well as the open source product uponwhich IBM is building its future. However, the factthat IBM is fully justified in defending itselfdoesn’t change the fact that software developersshould feel a bit queasy about the tactics it haschosen to use.

Days before the announcement of IBM’s countersuit,Bruce Perens gave aspeech at Linuxworld where he singled out IBM(among others, such as Red Hat) as the greatest threatto Linux on account of their patent activities. He’sstill right, even though Mr. Perens isn’t likely tosay so, as IBM’s response is revealing of the dangersof a patent regime that permits algorithms andbusiness processes to be "owned" by someone. Currentpatent law unfairly tilts the marketplace towards bigcompanies with lots of resources, even if few wouldmiss SCO should IBM’s defensive tactics succeed.

The cost of an arms race
As noted by Brian Ferguson, an attorney withMcDermott, Will & Emery, in a recentZDNet article, "The patent claims will beexpensive to handle." From a tactical standpoint,that makes a lot of sense, since IBM knows it has farmore resources than SCO, and is more capable of goingthe financial distance.

Still, the fact that IBM can pull out the patentnuclear weapon against SCO means they can use itagainst anyone, and that should be a frighteningnotion. I noted in a past article that most big companies build patent libraries as a form of defensive armor against external IP claims, and that certainly appears the case with IBM’s use of these patents against SCO. What can be used defensively, however, can also beused offensively. Faith is your only guarantor that acompany won’t ever use those patents in an offensivecapacity.

Building a defensive library, however, costs money. First, filing a patent application can take anywherebetween $15,000 and $25,000, which isn’t within reachof many small businesses. Second, costs associatedwith defending against patent assaults dwarf theaforementioned application fees, making patents anexpensive prospect.

Those most able to afford these costs are bigcompanies, and those least capable are smallercompanies with fewer resources. This skews the marketin favor of large companies, leading to an environmentwhere smaller companies have a harder time growinginto bigger companies.

Anatomy of a nuclear weapon
I haven’t found any articles that cite the actualnumbers for the patents used in IBM’s countersuit. This article providedthe names, however, and using the US Patent Office’s online search tool, I narrowed them down to the following patents.

The first one, "Data Compression Method", referseither to patent number 5,010,345, granted in April,1991, or patent number 4,814,746, granted in March,1989. In both cases, they detail fairly specifictweaks to data compression.

The second patent, "Method of navigating among programmenus using a graphical menu tree" refers to patentnumber 4,821,211, which was granted in April of 1989. This patent appears to be a patent on a particulartwist on menu layout.

The third patent, "Self-verifying receipt andacceptance system for electronically delivered dataobjects," refers to patent number 4,953,209 and wasgranted in August of 1990. This patent appears to bepatent on the standard process of downloadingexecutable code through a user interface, which isbaffling, to say the least.

The fourth patent, "Method for monitoring and recoveryof subsystems in a distributed/clustered system,"refers to patent number 5,805,785 and was granted inSeptember of 1998. This patent appears to cover afairly standard procedure involved in computerclusters.

What bothers me about these patents is that I couldsee myself easily stumbling into "infringement" in thecourse of normal software development (and I probablydon’t need to mention this, but what company thatoffers software for download is NOT infringing on thethird patent?). I come up with lots of constructs fordata presentation and/or ways to tailor encryption ofdata. It would never occur to me, though, to claimthat I am the ONLY one allowed to write software thatuses the same techniques. That would be like saying Ihave exclusive rights to build a LEGO house with asloped roof and a window in each wall.

If we’re lucky, IBM will only use these patents tosquash the SCO threat. If we’re not lucky, the ITworld could end up with another Unisys. Unisysprobably didn’t originally intend to charge alicensing fee for the compression algorithm used inGIF images (a patent that has now expired). InUnisys’ case, though, GIFs became extraordinarilypopular through the growth of the internet, and someexecutive at Unisys probably decided that the revenuepotential was too big to pass up.

Conclusion
Markets tend to work around boulders in the economicstream, because modern markets are dynamic entitiesthat respond to hindrances like cars moving around astalled truck on the freeway. That doesn’t mean thatthe market wouldn’t work more efficiently if thehindrance weren’t there.

Governments play a very important role in a marketeconomy. They define the stage upon which economicactors play. They supply laws governing property andbusiness contracts, laws to enforce transparentaccounting standards, and laws governing capitalflows. Governments provide the structure within whicheconomic activity takes place, and certain structureslead to more profitable and efficient economies thanothers.

Algorithm and business process patents are instancesof a less efficient economic structure. Markets havemanaged to respond, but the resulting balance isn’tmore efficient than a market that didn’t allow suchlegal stakes to be placed on abstract ideas in thefirst place.

As a final point of note, keep in mind that the onlyreason IBM is defending Linux is because it suitstheir business interests. As Mr. Perens pointed outat Linuxworld, however, many of IBM's businessinterests, specifically, the one's bound up in IBM'sever growing pile of software patents, run COUNTER tothe interests of open source. IBM might be fightingon open source's behalf today, but what's to ensurethat will remain true in the future?

I suggested inthe past that SCO's actions reveal the conflictsinherent in trying to meld a development model basedon shared code with a business model based onmaximizing revenue. That will remain the case afterarmies of lawyers have picked over SCO's sun-bleachedbones, so long as companies are entities created forthe express purpose of making a profit.

SCO's case centered around copyright, because that'sthe only thing they could reasonably base a claim on. In contrast, I bet IBM could make a similar claim toLinux IP, and base it entirely on patents. The onlything stopping them is that they make plenty of moneywithout resorting to such extremes.

Let's hope that IBM is always so profitable.

biographyJohn Carroll is a software engineer now living in Geneva, Switzerland. He specializes in the design and development of distributed systems using Java and .Net. He is also the founder of Turtleneck Software.