Tiptoeing through the patent minefield

As everyone already knows by now (I'm writing this purposefully late), an article which included an interview with Brad Smith, General Counsel for Microsoft, basically makes clear that Microsoft wants to continue to push for cross-licensing deals with other patent owners of the sort Microsoft signed with Novell. However, the article also notes that they are willing to throw in "or else" to incentivize people to sign, and royalty payments aren't off the table, either.

As everyone already knows by now (I'm writing this purposefully late), an article which included an interview with Brad Smith, General Counsel for Microsoft, basically makes clear that Microsoft wants to continue to push for cross-licensing deals with other patent owners of the sort Microsoft signed with Novell. However, the article also notes that they are willing to throw in "or else" to incentivize people to sign, and royalty payments aren't off the table, either.

We've known for quite some time that Microsoft was planning to take a page from IBM's playbook and create a patent licensing business of their own. It is important, however, to tread carefully. It's worth remembering the words of Bill Gates, which were included as part of a memo written in 1991 as part of internal analysis of challenges facing the company.

If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today. I feel certain that some large company will patent some obvious thing related to interface, object orientation, algorithm, application extension or other crucial technique. If we assume this company has no need of any of our patents then they have a 17-year right to take as much of our profits as they want. The solution to this is patent exchanges with large companies and patenting as much as we can.

Patents are a risky business. If they are merely viewed as defensive, or something that can be traded for access to other patents, the dangers are lessened (it still puts non-patent owners out in the cold, and leaves even big companies at the mercy of patent trolls who have little more than a stack of patents and a team of lawyers). Used offensively, however, the dangers can be substantially worse, particularly for a company that makes as much software as Microsoft. The Open Invention Network (ONI), a group that pledges to use its patent portfolio to defend Linux against patent threats, recently made threatening noises in response to that Fortune article.

The question that Microsoft needs to ask itself is how we as a company want to relate to the open source community (in case you haven't noticed all the disclaimers around my page, I do work for Microsoft). Do we want to encourage open source programmers to create more solutions that run on Windows? Do we want to use more of the resulting code in our own products? Would open source use of Microsoft technology help to spread that technology to segments of the market Microsoft by itself could not reach, thus creating upsale opportunities in the future?

If any of those goals are things Microsoft wants (which I think they should be), why is it even useful to mention publicly those 235 patents that FOSS supposedly infringes? I don't doubt that such infringement exists. If a company as rich as Microsoft could get caught by Alcatel patents relating to something as well-known as MP3 (resulting in a 1.5 billion judgement against the company), it's highly likely that there are LOTS of patents infringed by FOSS.

But so what? Could not the same be said of Windows or the Mac?

People don't like risk, and if the cross-licensing approach was the only thing Microsoft executives ever talked about, they'd likely find many willing companies hoping to trade access to Microsoft patents in exchange for their own. Stallman aims to block such trades, but I would suggest the best way to deal with his blocking maneuvers is not to give the moderates reason to fear Microsoft.

Microsoft has plenty of scope for its licensing business. Just as RSA built a business around patents covering the asymmetric cryptographic algorithm of the same name, Microsoft can build targeted businesses around technology related to, say, music or video codecs. Those don't raise the hackles of the development community quite so much, as there are stacks of alternative codecs available for their use.

Posing a threat to Linux, however, is more serious. It's not so easy to shift to another operating system, and this makes any threat, real or implied, counterproductive to Microsoft goals, which include, according to Microsoft General Counsel Brad Smith, improving connections with other companies and promoting interoperability.

As the Gates memo showed, Microsoft has for most of its history considered its competitive advantage to be software. Patents are a somewhat late addition to the Microsoft business arsenal, an event to which Microsoft must respond, but it's worth remembering Microsoft's core DNA.

In my opinion, patents in most cases should be used as defense against aggressive external patent owners and as the currency of patent trades. In special cases, they should be the foundation of targeted businesses. Beyond that, however, the dangers get more severe, and Microsoft risks assisting groups they'd rather not assist.

I agree with Brad Smith that cooperation and interoperability are essential goals for Microsoft, particularly given its market stature and the attention from government that such stature brings. An aggressive patent licensing business would hinder those goals.