Subject: RE: Patent-based dual-licensing open source business model
From: "Lawrence Rosen" <lrosen@rosenlaw.com>
Date: Wed, 13 Sep 2006 13:52:19 -0700

Hi Scott,

I DID miss your initial response, so thanks for sending it again.

> what will the license look like? I have been researching the same
> problem and coming up with a similar solution. One thing we believe is
> that this type of license needs to have two components to have the
> desired effect. I think these address Thomas' concerns but would also
> like feedback:

I presume you mean, what will our *commercial* license be like? Quite
frankly, we see no reason to be non-discriminatory or to post our license
fees online, but that may change as our business progresses. Of course our
license fees will have to be a reasonable approximation to the value-add of
our patented technology and accompanying software or nobody will buy. The
price may depend upon the application. For example, XML processing in a
network appliance or a large network server application is possibly worth
more than XML processing in a desktop device or phone. In your market,
wouldn't you possibly sell certain medical solutions at different prices to
different customers with different medical needs and resources?

And, of course, free for open source software!!!! Please don't forget that
it is the company seeking to combine hardware with software, or that wants
to build a secret in-house application, that has the financial decision to
make about value-add, not the open source project that writes the software.
That project merely has to set the price for its commercial software
versions in light of its perception of the value it brings to its customers.


Here's how I assume our patent-based dual licensing model, in conjunction
with other dual licensing models by our open source business partners, would
work in practice. An open source project would partner with us to implement
IC's patented technology because of its perceptions of the importance of the
technology to the project's software. The project will decide for itself
what its commercial software version with our technology would sell for in
its market. The project would discuss with us licensing terms for a
commercial license based upon the value our patents bring to that table. The
project can include our negotiated license fee in its total price to its
customers, or list those patented features as a separately-priced and
licensed add-on. Meanwhile, free or open source versions distributed by the
project under open source licenses meeting our definition, even with our
technology embedded, would cost the project and its customers nothing.

I shouldn't cloud this discussion with specifics about XML processing. Any
technology, including yours in the medical field, has a price that is
supposedly related to the value of that product to its customers. Just like
the cost of screws and transistors and wire and metal cases must be
calculated in the price of a product, so too must the cost of the software
and its embodied patents be calculated and included in the price. Just
because software is free, it needn't be free as in beer--at least for
commercial beer-drinkers!

/Larry


> -----Original Message-----
> From: Scott Capdevielle [mailto:scott@syndicom.com]
> Sent: Wednesday, September 13, 2006 8:39 AM
> To: lrosen@rosenlaw.com
> Subject: Re: Patent-based dual-licensing open source business model
> 
> Lawrence,
> my name is scott capdevielle, I am CEO of Syndicom Inc. We are
> pioneering open source approaches to IP in medicine.  Did you happen to
> read my response to your first post?  I am curious what your thoughts
> were on that. I am reposting below for your review.
> 
> Lawrence,
> what will the license look like? I have been researching the same
> problem and coming up with a similar solution. One thing we believe is
> that this type of license needs to have two components to have the
> desired effect. I think these address Thomas' concerns but would also
> like feedback:
> 
> 1. Non discrminatory license. Anyone can obtain the license regardless
> of who they are and no exclusiviity is granted. This is important to
> truly open it up to competition. 2. Commodity pricing known up front.
> The royalty must be small enough to look like any other cost of
> 'manufacturing'.  In other words, if , in your example it is bundled
> with a piece of hardware and the total 'cost" of this solution is $100
> then the license fee should be some small percentage of that amount.  It
> is also important that the amount be known up front so that
> entrepreneurs can do business modeling and factor that cost into the
> equation. Making it a known quantity and non discriminatory enables a
> wide audience to calulate the cost to produce their commercial product
> in advance of making any investment.
> scott