. Here's how it describes its mission:
The Patent Commons Project is dedicated to documenting the boundaries of The Commons -- a preserve where developers and users of software can innovate, collaborate, and access patent resources in an environment of enhanced safety, protected by pledges of support made by holders of software patents. Our Library is a central, neutral forum where patent pledges and other commitments can be readily accessed and easily understood
Yet another is the Open Source as Prior Art project (which also receives support from the Linux Foundation). Together, these efforts are directed at defining, expanding, protecting and maintaining a patent "safe haven" within which open source software development and use can take place.
Q: But if Microsoft has patents that really would be infringed, why doesn't it just come out and cite them?
A: There are two reasons that people always talk about, and a third one that in this case really matters. Let's briefly review them.
The first one is that once you name a patent and say someone else is infringing it, then if you sue them and win, they can be held liable for treble damages – roughly speaking, three times the value of your lost sales after you put them on notice of their violation. That would make you think that Microsoft would want to name the patents immediately, wouldn't it?
The second reason, though, is that once a patent owner does name the specific patent claims it says you are infringing, you can go to court, and ask the court to determine whether that patent was validly issued or not. As you saw above, there are a lot of companies that are willing to invest time and money in protecting Linux and other open source software. So as soon as Microsoft named a patent, those companies could, if they wished, go to court (or subsidize someone else to go to court) and try to kill it. They could also start changing the software to try and "design around" the infringement.
But the third reason, as we'll discuss more below, is that the patents don't really matter very much anymore anyway, except for the "Air Wars" (a/ka/ FUD) value of making people worry about infringement.
Q: All right, so I think I'm getting the picture. Operating systems and productivity software have been around for a long, long time, and many companies have patents in these areas. So, probably no single company – even Microsoft - could safely build products in any of these areas without infringing the patents of other companies. If that's true, how do they do it? Do patents mean anything at all any more?
A: Ah – that's the question, isn't it? And that brings us to the point where we need to follow Brad Smith as he steps through the looking glass to try and figure out what's really going on here. You'll notice that in the Fortune article, Smith says that Microsoft decided that pursuing cross licenses was the route they decided to take, after considering whether to start suing people, or just throwing in the towel.
Q: Yes, I remember that. So what's cross licensing all about?
A: A cross license is what two different companies enter into when they both have something the other wants. In this case, it would be patents underlying the same products. Cross licenses can be limited (to a single small set of patents), or domain specific (e.g., relating to a single product type), or they can even be company-wide. There is a vast, invisible web of patent cross licenses of all types that run everywhere throughout the technology industry.
Q: How do they come about?
A: Sometimes they are arrived at peacefully. For example, standard setting is in part basically an exercise in cross licensing, to the extent necessary to permit a standard to reach the marketplace on acceptable terms to adopters. And sometimes they are the result of truces that follow years of head bashing, and involve large payments to settle outstanding litigation. If you think about it, you'll recall reading about these from time to time. An example is the rapprochement reached between Microsoft and Sun in 2004. They buried the hatchet in many areas with that agreement, while reserving their independence to compete in other areas.
Q. Got it. So let's get a bit more specific. What's going on with the new Microsoft announcement? What are they focusing on? What are they trying to achieve?
A: Sorry – I've got to do a bit more explaining first. When you get to this level of activity, you have to think of what's going on as international diplomacy, not just commercial activity. The stakes are huge, the number of players is enormous, and everything is interlocked. You can't just charge around like a bull in a China shop, no matter how big a bull you are.
Like diplomacy, you're also dealing in perceptions as much as with facts. If Microsoft really did have killer patents, the usual thing would be to pick out a few small targets and sue them, overwhelming them with your legal assault, spending them into the groundt. If you're feeling insecure about your patent, you might settle quickly, asking for a very low royalty - or even no royalty at all - from the "infringer." As part of the settlement, the little company agrees not to disclose terms. Then, of course, you announce to the world that you've "won," and that your patent has been tested and stood up to the challenge.
Next, you point to that victory to intimidate others into paying you royalties as well. If the royalties you ask for aren't too high, many will simply agree to pay up rather than risk being sued. And note that it only takes one patent to block someone from selling a product, unless it pays up. The most famous example of this strategy is the Lemelson series of bar code patents, which reaped more than $1.5 billion in royalties over a period of many years before two companes, Cognex and Symbol Technologies finally decided that they weren't going to knuckle under. They went to court to challenge the Lemelson patents, and refused to settle. The court found that Lemelson had improperly extended the patent filings before asserting them as "submarine patents," and that some of them should never have been issued to begin with. Cognex rightly claimed a great victory for the marketplace.
Q: Good for them! But why isn't Microsoft suing a few little guys here? With that many patents, surely you'd think they would have a few good ones, right?
A: Ah - but maybe that doesn't even matter. Let's assume that Microsoft has existing cross licenses with many of the companies that are promoting Linux (it does). Let's also suppose that many of those cross licenses cover operating systems and office productivity software (I don't know that this is true, but I assume it must be). Now who do you sue? If you decided to sue a few little guys, how would you prevent one of the big guys with cross licenses from simply granting a license to the targets you picked? And how about if some of those cross licenses were up for renewal, or you wanted to expand them? How much do you want to incense the owner of the patents that you need access to? Finally, even for big companies, the costs of patent infringement law suits are huge, the results uncertain, and the time between filing suit and finally winning (or losing) is very long.
Q: So big companies don't actually have that much freedom to use their patents to exclude competition, do they?
A: Exactly. In fact, patents today among the Big Boys are a sort of barter commodity, rather than singular weapons. Or you can think of them as Carbon Credits – something that you move around to make your life easier.
In this sense, then, the much greater value of patents is to defensive and not offensive - you get them so to preserve your freedom of strategy and movement. Sophisticated companies now largely take this view. They have patents so that other companies can't stop them from doing what they want to do, not so that they can stop other companies from doing what they don't want them to do. Starting to get the Looking Glass part now?
Q: I think so. So we've turned the system upside down and inside out: I don't get a patent to create a monopoly, but to prevent you from creating one, right?
A: You're catching on much faster than Alice. That's it exactly. Once a patent "thicket" have developed in a product area, where everyone owns some patents, no one can stop everyone else from selling products there. All you can do is negotiate terms.
Q:. Got it. So can we get back to Microsoft now?
A: Yes, Grasshopper, you are now ready to receive enlightenment.
A: Sorry. So let's look at what's actually been going on. Microsoft has announced three Linux cross license deals so far: with Novell, Dell and Samsung. In each case, it's refused to reveal the terms. It's also refused to identify the patents. So we're looking at a black box, where we don't know what value, if any, is actually being paid to Microsoft in exchange for Microsoft agreeing to cross license rights in operating system software.
Q: The Novell deal does look awfully one-sided. Most of the cash seems to be going to Novell, not the other way around.
A: Yes indeed. The Fortune article says Microsoft explains this by saying that Novell has valuable network computing patents that Microsoft patents may infringe, and since Microsoft sells so much more than Novell, it needs to pay more. But Novell has been moving away from its network computing business for years, and Microsoft hasn't (to my knowledge) announced anything new in this area that would create an urgent demand for access to such patents. Why did those patents suddenly become so valuable to Microsoft right now?
Q: So we don't know what value each party is actually placing on the Microsoft patents?
A: None at all. Cross licenses often cover an incredible range of activities that can go far beyond simple patent licensing. Look at all the territory that the Novell-Microsoft pact covers. Or go look more closely at the old Microsoft-Sun agreement I linked to above: it settled litigation, set the stage for technical collaboration, included Microsoft support for Java, Windows certification for Sun servers, and much more. As you can see, patents can be just the nominal invitation to the party, and the public announcements cover only what you want the world to know – or, more to the point, what you want the world to think.
Q: OK, so boil all this down for me, would you?
A: I'll try. Here's what I think the Fortune article, and Microsoft's statements, really mean:
1. Microsoft has said it won't sue customers. That's good, and makes sense. So customers can rest easy.
2. Microsoft probably can't sue many of the companies it needs to worry about most, because existing cross licenses with those companies would prevent it. Note that Microsoft hasn't said a word about its patents being infringed by AIX or Solaris, for example. These cross licenses would presumably protect Linux distributions offered by the same vendors as well.
3. The agreements that Microsoft has already signed with customers and distributors may assign little, if any, value to the patents. It's possible that the value actually went in the other direction, with Microsoft paying more to get the other party to agree to include public mention of open source patent licensing at all.
4. Microsoft is clearly feeling threatened. It's no coincidence, to my mind, that it has suddenly linked OpenOffice with Linux in this story. Windows and Office provide the lion's share of Microsoft's revenues and profits, and it needs to defend them with everything it's got.
5. Within the next week or so, the industry will be treating this as "so what" news. Lots of journalists and bloggers already are.
A: So has anything really changed?
Q: To my mind, not much at all. Going back to my diplomacy analogy, it's like the US moving another carrier group into the Persian Gulf when things get hot, to let the local regimes know that it's keeping a close eye on things. Is it going to attack? No. It's just signaling.
But I think that in this case, Microsoft may be making a miss step. By focusing so much attention on this issue, it causes more articles – like this one – to be written to dispel the FUD. And it spawns more patent-focused efforts like those noted above to support open source software development and use. The result is that instead of cowing the little people, it helps pull back the curtain.
And then you find that all-powerful Oz (and his patent portfolio) doesn't look so all powerful, after all.
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