Subject: Re: [mark@primefactor.com: Patent Cross-License Agreement]
From: Mark Shewmaker <mark@primefactor.com>
Date: Thu, 7 Oct 1999 03:49:43 -0400

On Wed, Sep 29, 1999 at 06:50:33AM +0000, Karsten M. Self wrote:
> Mark Shewmaker wrote:
> > On Tue, Sep 28, 1999 at 08:02:25AM +0000, Karsten M. Self wrote:
> > > Mark Shewmaker wrote:
> > > >

> > I'm guessing that by the time lawyers for companies with serious patent
> > portfolios look at the agreement, that it will have grown in size again
> > to address their concerns.)
> 
> Look at IBM's IBM Public Source License
> (http://www.ibm.com/research/jikes/license/).  Compare it to its
> predecessors and the Sun Community Source License.  The IPSL has a more
> uniform goal -- preserve public access to software, offer use of IBM
> (and other contributors') patents, and use IBM's almighty patent
> portfolio as a damned big stick.  It's a pretty short and sweet
> document.  It was written by a company with a heck of a legal
> department.  The first two Jikes licenses were much more confusing,
> possibly longer, and _didn't get_ a few key elements of free software
> (or how to keep a handle on patents).  The SCSL is confounded by Sun's
> desire to look open source but not really be the same.  The document
> reflects the confusion of goals.

Excellent points.  Thank you.

I hadn't thought it through like that.

(Sorry for the me-too, but I couldn't resist the excessive quoting
in this case.)

> > > There are a number of
> > > potential strategic problems with a pool.
> > 
> > True.  I think the trick is to make an agreement in which it is far
> > more cost-effective for companies to participate and contribute their
> > patents, than to cross-license patents with individual companies, so
> > that the advantage appears all over their accounting books.
> 
> That's the obvious method.  You end up with a boot-strapping problem
> though -- how to get the pool started, and how to grow it, before it
> reaches its fully effective stage.  

But that part's a solvable problem.  I think it's far easier to get smaller
firms and contributors to agree to and add patents to a license for which
they can be provided a good degree of confidence about, (it's legally sound,
does what it says it does, etc.), than it is to get the license written
and gone over by lawyers enough that the confidence can actually be
provided.

Individuals and small corporations don't perceive themselves as able
to do very much to affect the problems of software patents on the
legislative and other legal.  Signing a license, though, is something
they can do very easily.  If they can sign a license with the confidence
that they're not losing anything, will possibly benefit greatly
in a few months to a year or so, and can take advantage of the PR that
they've done something useful against the problem of (software) patents--
well, I think that will be a worthwhile and easy sell after just a few
initial contributors.

> If you try to jump start this process by bringing in a patent
> heavy-hitter like IBM, you end up with problems -- mostly of perception 
> 
>  - of trust -- can the organization be trusted, is it a pawn of its
> major players?
> 
>  - of anti-trust -- is a patent pool based in large part on IBM going to
> be well received by the DoJ?

Agreed.

Not only does the organization have to make sure of getting all the
ethics, legalities, and economics and game theory right, but also
the advertising and promotion.

We would need large corporations as players, but we couldn't let that
influence the organization away from it's goals, or even be perceived 
as doing so.

But I think this part is really a more minor problem in the scheme of
things.  All nonprofit organizations have to prove themselves to not
be controlled by for-profit businesses; it's not a new issue and
is to a large extent a solved problem.  (There are even IRS regs
about it--from the point of view of obtaining and maintaining
nonprofit and especially tax-deductible 501(c)3 status at least.)

It may be tricky, but it is eminently doable.

>  - of strategy -- IBM might be more useful as a separate, "pool unto
> itself".  With its stated commitments to free software, IBM hasn't
> really given itself a choice of whether it will use its patents in
> defense of free software or not -- it simply will, whether it's part of
> an Open Patent Pool or not.  Witness the IPSL.

This is where I disagree.  Adopting one strategy doesn't always necessitate
abandoning or avoiding another.

The IPSL doesn't apply to apache.  It doesn't, (at least yet), apply to
other free software projects that IBM may want to involve itself in at
some point.

An Open Patent License could still be useful to IBM and other large
companies.  Given a working Open Patent License and time for it to
help solve most of the patent problems for other Open Source projects,
companies will be able to more easily involve themselves with those
projects in the future.

I don't think they'll reject the assistance; they will likely be
supportive after it's proved itself.

> > Most companies get far more of a benefit through cross-licensing
> > than through royalties anyway, even IBM.  (There's a quote on that
> > on the LPF pages somewhere.)
> 
> IBM made US$1.5 billion in patent royalties last year (or is on target
> to do so this year, I forget exactly).  That's real dinero.

But the benefits they get through cross licensing are still higher.

At least that was true in the past:  From
http://lpf.ai.mit.edu/Links/prep.ai.mit.edu/ibm.think.article :

    From an article in "Think" magazine, #5, 1990.

    "You get value from patents in two ways," says Roger Smith, IBM
    Assistant General Counsel, intellectual property law.  "Through fees,
    and through licensing negotiations that give IBM access to other
    patents.

    "The IBM patent portfolio gains us the freedom to do what we need to
    do through cross-licensing--it gives us access to the inventions of
    others that are the key to rapid innovation.  Access is far more
    valuable to IBM than the fees it receives from its 9,000 active
    patents.  There's no direct calculation of this value, but it's many
    times larger than the fee income, perhaps an order of magnitude
    larger."

I'm guessing the same would be true today, it's just that it's easier
to measure the benefits from royalties.

> > > Also anti-trust.
> > 
> > I'm not quite as worried about anti-trust myself.
> 
> Do be.  It's a major concern of any patent pooling proposal,
> traditionally.  The DoJ has revised its opinion of pools in some
> instances, but tends to look at them unfavorably.  Patents (like
> copyright) offer an artificial monopoly, the exchange is supposed to be
> incentive for further invention.  Piling up the monopoly in one place
> starts to raise Sherman-Act hackles.

Ideally, the license should be set up so that you get access
to this pile only to the extent that you've agreed not to
monopolize your intellectual property.

> I'm not saying the pool will be
> anti-competitive, but there should be a prepared response to the
> question, and an eye given to minimizing any such aspects of the pool. 

I've added the following text on this in a "Goals" section of the
website:

"Patents and Copyrights are monopolies granted by governments.
The creation and protection of intellectual properties is monopolistic
to begin with.  Under the OPL, the more openly you license your
intellectual property for the world to use, the more intellectual
property becomes available for you to use. The more you abandon the
notion of monopolizing your intellectual property, the more
you benefit. Anti-monopolistic behavior is encouraged, and
cooperation is rewarded."

I've also added text to the OPL itself to that effect.

> An informed (legal and economic) opinion would be very helpful. 

Agreed.

> > >  - I was glazing over reading the whole multi-tiered pooling scheme.

I've changed most of that to a table with extra info added--much easier
to read I think.  (The license as a whole is still in need of a lot of
work, though.)


[I deleted your text on the poison pill approach.  I've got to think
on that a bit more.]

> The growing concern IMO is
> coverage for the many companies growing up around free software.  This
> is a major issue in the proliferation of free software licenses --
> companies are looking for coverage not included in existing licenses
> such as the GNU GPL.  Pity, as this leads to code balkanization.

I feel the same way.  I'd like the OPL to be a workable solution
in a number of cases without the need for a couple dozen similar
license.  (Not that multiple patent licenses lead to quite the same
problems as multiple Open Source software licenses.)


 -Mark Shewmaker
  mark@primefactor.com