Subject: Re: EY invests in online patent exchange
From: Brian Behlendorf <>
Date: Tue, 14 Sep 1999 22:46:47 -0700 (PDT)

There is another possibility, one which may be in this company's future, I
don't know (and I'm offline so I can't check).  Premise: if we can't get
rid of software patents, the least we can do is make licensing them
simple, predictive, perhaps even a known quantity.  Right now to use a
patent usually involves negotiating directly with the holder, with the
holder aiming to extract as much value from the relationship as they can.  
The downside is that most users of that patent will probably do everything
they can to avoid detection if the licensing is seen as cryptic or
expensive.  Anyone who's negotiated with RSA has probably seen this first
hand. =)  Finding that optimal price/compliance point is difficult,
particularly for the independent inventor.

So what if there were a patent marketplace, where patent use was set as an
explicit cost per unit, and a unit could be a CPU, a user, 1000 ecommerce
transactions, etc.  Later on, you could add priceline-like price setting
mechanisms or other forms of automated dealmaking.

This would be a good thing for free software, IMHO.  For example, we don't
include SSL in Apache because of both crypto export laws AND RSA patent
licensing issues.  If crypto wasn't an issue for us, the patent issue
would be, lest we be sued for contributory infringement.  If we could give
people a URL and state "note: to use this software, you must license the
related patents, #5,555,555 and #5,666,666.  Go to _this_url_ to pay."
Ideally such a notice would then be sufficient protection against any
claim of contributory infringement.  

>From a purist viewpoint, certainly, this is suboptimal.  And of course,
any free software should allow users to avoid using these patents to still
be able to be called free software.  For example, my understanding is that
there are optimizations in some commercial C compilers that are not in GCC
because they are covered by certain patents (maybe Michael Tiemann could
comment).  For those companies who wish to turbocharge GCC and are willing
to pay for those patents, being able to do so easily would be great.  For
those of us who are happy with GCC's performance, we don't have to pay.

Two primary benefits from this model: it's better to have code that is
covered by a patent in the open source environment (open to peer review
and bugfixing, and even forking) than not, and this is possibly another
way for an open source developer or company to realize income.  Also,
since most patents vary greatly in coverage from country to country, this
would avoid some need to fork code trees for political reasons.

So to plug back into the ongoing conversation: maybe we shouldn't be so
absolute about banning patent contributions to free software, SO LONG AS
such contributions are clearly marked, and the project maintainers decide
whether to keep their own projects patent-free, or adopt an
easy-to-reference-and-pay approach.  The best situation is one where
licensing of patents is optional but not necessary (as my gcc example

Finally, please keep in mind I suggest this as a pragmatic thing; as was
hopefully evident from my post a few weeks back, I think most software
patents are silly but yet a serious issue for free software.  I
would like to find as many solutions as possible.


On Tue, 14 Sep 1999, Tim O'Reilly wrote:
> I thought that the following news squib might be of interest to
> some people (even though it isn't about fsb issues) in light of
> the current patent discussion.  If web-based mechanisms open up
> some of the backdoor horsetrading now done by big companies, it
> could provide some visibility into the patent "marketplace",
> which (as has been noted by others) is a multi-billion dollar
> business for some big companies.
> I always believe it's wise to understand what people are
> currently paying for, and who benefits from the current system,
> if we want to introduce change.
> > PASADENA, Calif. -- Patent & License Exchange, which 
> > operates the online patent market, said 
> > consulting firm Ernst & Young made an undisclosed 
> > first round investment in the company. In addition, 
> > the two companies have agreed to co-develop knowledge 
> > and risk management tools that will be featured 
> > on the site when it becomes transaction-enabled 
> > later this year. Services available will include 
> > automatic real options-based patent valuation, automatic 
> > patent validity insurance, and secure online transaction 
> > services. was previously backed by individuals.
> >
> >