Wednesday, May 14, 2008

Patents: More Than Meets the Open Source Eye

Copyrights and trademarks are important assets in the software industry and their use is well-accepted by the open source community. By contrast, few software issues are more controversial than patents, and the open source community has been particularly vocal in advocating for the elimination of software from the scope of patentability. Though it would be easy for an open source company to translate the community's views into a belief that patents are not relevant to its business, such an approach would ignore the reality of patents in the software industry and place the company at great risk. A better approach is to create a patent policy that acknowledges the status of patents in the industry, implements appropriate measures to incorporate patents into business strategy, and clearly explains a company's position on software patents to the community.

As with copyrights and trademarks, patents can be tools for differentiation. Proprietary companies often pursue differentiation by collecting patents (either by harvesting them internally, purchasing them, or licensing them). These companies often choose to wield their patents offensively, affirmatively license them for a fee, and/or license them for free (or at least promise not to assert them). This is a core element of their business strategy. Community reaction to these policies usually has little impact on proprietary companies.

By contrast, open source companies often do not include patents as a core element of their business strategy, influenced in large part by their communities.The open source community (and many members of the proprietary "community" for that matter) objects to software patents on philosophical grounds, and also for the practical reason that patent threaten the very survival of popular and innovative open source projects and companies. In fact, many members of the community will not consider a company to be “open source” if it opens it copyrighted materials while claiming patents on the same technology (even if only for defensive purposes). As a result, the traditional approach for open source companies has been to establish a policy against software patents that might also include associated lobbying efforts, or to allow use of patents only for defensive purposes.

Notwithstanding the community bias against patents, open source companies should consider the benefits of differentiation that patents can offer. Once a company determines that patents are critical to its business strategy, it must decide whether to use those patents offensively and/or defensively, grant free patent licenses or covenants not to sue, or submit patents to shared pools. In fact, at least one purported open source company is experimenting with a business model under which it withholds patent rights for commercial use unless a customer purchases a license (though it appears the community will react negatively if the proposed business model becomes reality). Even when an open source company decides not to collect patents in the ordinary course of business, it should still consider whether to collect patents (or licenses) strategically on a case-by-case basis for defensive purposes. Use of patents in these ways might pass community muster if explained properly.

Finally, open source companies should be aware that their actions might define their patent policies without intending to do so. For example, adopting GPLv3, and the patent licensing obligations therein, as the licensing vehicle for an open source project implies that patented materials should not be included in community software unless there is no threat they will be enforced. While use of the GPLv3 is accepted by the community, open source companies should ensure that the patent provisions therein are consistent with its patent policies and objectives before adopting the license.

On first glance, the expense of obtaining patents, and difficulty in enforcing, protecting and exploiting them, as well as the community bias against software patents indicates that collecting patents is of little value to open source companies. However, patents can be valuable tools for differentiation, which might justify the effort and expense. In any case, there are other compelling reasons to think carefully about a patent policy and strategy. Regardless of what policy or strategy an open source company decides upon, it must always recognize the reality of patents in the software industry and consider what the community will tolerate.

In my next blog posting, we will leave the the complexity and controversy of patents behind for a discussion of trade secrets, and we will ask, "how 'open' should open be?"


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