Surely in the US, and – in some limited cases – possibly also in the EU, patents may be used to prevent the reimplementation of some (patented) specifications. However, fortunately for the software industry, several commercial software houses already realized that it might not be wise to collect royalties for the use of APIs, communication protocols, file format and similar software objects, the value of which is greatly increased by widespread interoperability. Indeed, in several cases, that happened without any particular regulatory pressure (even though antitrust policy could also have urged in this direction some software houses that would not have done so otherwise). In particular, several firms promised not to assert their patents against the open source community. IBM was one of the first companies to allow for the use of 500 of its patents in January 2005;295 SUN Microsystems also granted the possibility of using some 1600 of its patents.296 Novell also
promised to fight back, using its patent portfolio, against any attack to the Linux Kernel some other open source software.297
In 2005, the Open Invention Network was created, using investments from IBM, NEC, Novell, Philips, Red Hat298 and Sony, with the goal of “using patents to create a collaborative environment”,299 following the
principle that Patents owned by OIN would be “available royalty-free to any company, institution or individual that agrees not to assert its patents against the Linux System”.300 In August 2007, Google became a
licensee of the project.301 A specific project, Patent Commons, has even been launched to map all similar
contributions to the “patent common”. In addition to the firms already mentioned, listed contributors include Computer Associates, Ericsson, Nokia, HP, Oracle and others.302 Even Microsoft – frequently
described as “The Enemy” of open source – launched (and recently extended) its Open Specification
293 For some thoughts on this topic, see CHAPIN, Sharing the Interoperability Ball, pp. 234—236, according to whom “the status of
software patents in general, and the status of interoperability between patented computer programs and application software inventions, remain in a state of uncertainty within Europe”.
294 In fact, even the servers to distribute them were special mirrors outside the US (see http://non-
us.debian.org/README.non-US for more information).
295 See ECT News Business Desk, IBM Boosts Open Source with Patent Promise, on TechNewsWorld.com (available at
http://www.technewsworld.com/story/35584.html; last visited July 28, 2008).
296 See Sun’s press release “Sun Grants Global Open Source Community Access to More than 1,600 Patents”, SANTA CLARA,
Calif. - January 25, 2005 (available at http://www.sun.com/smi/Press/sunflash/2005-01/sunflash.20050125.2.xml; last visited July 28, 2008).
297 “Novell will use its patent portfolio to protect itself against claims made against the Linux kernel or open source programs
included in Novell's offerings, as dictated by the actions of others. […]Novell is prepared to use our patents, which are highly relevant in today’s marketplace, to defend against those who might assert patents against open source products marketed, sold or supported by Novell.” See Novell’s Patent Policy (available at http://www.novell.com/company/policies/patent/; last visited July 28, 2008).
298 About the patent policy of Red Hat, see Red Hat, Inc. Statement of Position and Our Promise on Software Patents (available at
http://www.redhat.com/legal/patent_policy.html): “to the extent any party exercises a Patent Right with respect to Open Source/Free Software which reads on any claim of any patent held by Red Hat, Red Hat agrees to refrain from enforcing the infringed patent against such party for such exercise.” See also Greg DeKoenigsberg, The Red Hat Patent Promise: Encouraging
Innovation, Red Hat Magazine, Issue 1, November 2004 (available at http://www.redhat.com/magazine/001nov04/features/patents/) (both last visited July 27, 2008).
299 See http://www.openinventionnetwork.com/. 300http://www.openinventionnetwork.com/.
301 See official OIN press release (http://www.openinventionnetwork.com/press_release08_06_07.php). 302 See http://www.patentcommons.org/.
Promise initiative and other covenants not to assert its intellectual property rights in certain specific domains (see below). For this reason, some commentators303 optimistically argue that “[e]ncouraging such company
practices might be the best option for a government if it considers patent royalties on compatibility standards a policy problem.”
Again about Microsoft, in its very recent “Interoperability Principles” document, about “Open Connections, Standards Support, Data Portability”304, the software house opted – in several domains – for an
“open access” policy – without using the typical non-disclosure-agreements and without imposing access fees. Indeed, “Microsoft will not require developers to obtain a license, or to pay a royalty or other fee, to have access to all this information”. This seems to imply (implicitly, of course) that, according to Microsoft too, interoperability information protected only by copyright is normally freely re-implementable by third parties. However, when software patents are involved, there is a clear distinction between access and use of interoperability information. In fact, Microsoft also warns developers that some patent-protected interfaces could require the payment of (reasonable and non-discriminatory - RAND) royalties.305 It should also be
noticed that, in the same document, it was originally stated that “Microsoft will covenant not to sue open source developers for development and non-commercial distribution of implementations of these Open Protocols” (emphasis added)306. However, while this article was being finished, Microsoft significantly
updated its Open Specification Promise,307 and Sam Ramji, Director of Microsoft’s Open Source Software
Lab, publicly stated that:
“Microsoft is putting a wide range of protocols that were formerly in the Communications Protocol Program under the Open Specification Promise (OSP). This guarantees their freedom from any patent claims from Microsoft now or in the future, and includes both Microsoft-developed and industry- developed protocols.
We have established a clarification to the OSP that guarantees developer rights to build software of any kind and for any purpose using these specifications, including commercial use.”308
In a way, Microsoft seems to have decided to behave – limited to some specific protocols – more or less like a standard-setting authority. Of course, as a not very open standard setting authority, where freely accessible specifications and RAND royalties are perceived as sufficient.309
Overall, I do not think that these developments show that incumbents do not want to use their patents in order to foreclose competition and hinder interoperability. It just means that some firms (like IBM) – which are not leaders in mass software markets – may like to use some of their patents in order to stimulate an efficient decentralised production of software, which is complementary to their software and hardware (!) products. Other firms, like Microsoft, additionally have to worry about the fact of being quasi-monopolists in several markets and may adopt a not-completely-closed policy, in order to reduce the pressure from the
303 VÄLIMÄKI & OKSANEN, Patents on Compatibility Standards and Open Source.
304 See Microsoft’s Interoperability Principles – Open Connections, Standards Support, Data Portability, published: February 21, 2008 (text
retrieved on February 25, 2008) (available at http://www.microsoft.com/interop/principles/default.mspx; last visited July 28, 2008).
305 See Microsoft’s Interoperability Principles (supra note 304): “RAND Patent Terms. Some of Microsoft’s Open Protocols are
covered by patents. Microsoft will indicate on its website which protocols are covered by Microsoft patents and will license all of these patents on reasonable and non-discriminatory terms, at low royalty rates. To assist developers in clearly understanding whether or not Microsoft patents may apply to any of the protocols, Microsoft will make available a list of the specific Microsoft patents and patent applications that cover each protocol. We will make this list available once for each release of a high-volume product that includes Open Protocols. Microsoft will not assert patents on any Open Protocol unless those patents appear on that list. Third parties do not need licenses to any Microsoft patents to call these Open APIs”.
306 See Microsoft’s Interoperability Principles (supra note 304).
307 See Microsoft Open Specification Promise, published: September 12, 2006 and last updated: July 25, 2008 (available at
http://www.microsoft.com/interop/osp/default.mspx; last visited July 28, 2008).
308 Sam Ramji, Director of Microsoft's Open Source Software Lab, quoted by Matt Asay, Microsoft opens up its Open Specification Promise, July 25, 2008 (available at http://news.cnet.com/8301-13505_3-10000124-16.html; last visited July 28, 2008). See also
Microsoft Open Specification Promise, supra note 307.
309 For more stringent requirements for standard setting authorities, see, for instance, the “European Interoperability
Framework” document – European Interoperability Framework for pan-European eGovernment Services (available at http://europa.eu.int/idabc/3761; last visited August 5, 2008) – drafted in the context of the European Union’s software procurement rules. In this document, standards are defined as “open” based on three criteria: the standard has to be adopted maintained by a non-profit organization and on the basis of an open decision-making procedure; the standard specification documents have to be available freely or at a nominal charge; the intellectual property of (parts of) the standard must be made irrevocably available on a royalty free basis. After the recent modification to its Open Specification Promise, this last condition seems to be respected by Microsoft, at least for the covered protocols and toward open source projects.
antitrust authority. However – as the recent Microsft-Novell agreement,310 where “[t]he two companies also
announced an agreement to provide each other’s customers with patent coverage for their respective products” – all these developments are consistent with the fact that software patents are used (both in a pro- and anti-competitive way) almost always as big bundles of patents. In fact, the basic idea of a patent agreement between major firms in the software market is: “I do not sue you if you violate my n-hundred patents and you don’t sue me in the corresponding case.” In this way, a single software patent is basically worthless as a stimulus for innovation, while patent-thickets become powerful barriers to entry in the software industry (especially for smaller players). Press releases typically concern n-hundred patents used in a certain way or violated.311 That is coherent with the fact that developers frequently unconsciously write down
code that could violate a certain software patent, also because the standards of quality to be granted a software patent are not always rigorous: at the end of the day, the only way to write code without spending an excessive amount of resources in auditing code against potential involuntary violations of some other firm’s patents is to reciprocally “clear” all patent issues. That is quite telling about the transaction costs generated by software patents and about the barriers to entry faced by firms outside this network of crossed promises not- to-sue.
As a final note concerning software patents, it may be appropriate to notice that – in particular because of the frequently shaky nature of claims in this field – it may not be a good idea to try to enforce a software patent precisely in a case where software interoperability is at hand. Indeed, a recent US precedent gives to patent holders additional issues to think about. In fact, it has been observed312 that in eBay v.
MercExchange:313
“[t]he Court made clear that there should not be a general rule in patent cases that a finding of infringement and validity guarantees a permanent injunction against the infringer. Rather, the Court upheld the traditional four-factor framework that requires a plaintiff to show:
‘(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.’
In so holding, the Court effectively gave those seeking access to patented technology significantly more leverage in licensing negotiations. Addressing possible exceptions to the general rule, Justice Kennedy's concurrence also recognized that ‘[w]hen the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.’ Software interoperability seems to fit nicely into this category since interoperability functions of a software invention should only comprise a very small amount of the total product.”
Hence, given the importance of preliminary rulings in terms of credibility of patent strategies – which are frequently based on threats, based on supposedly valid patent thickets – firms should be very careful in trying to enforce these shaky proprietary titles, in one of the fields where they may be weaker. This is probably another reason why it is very difficult to find cases, concerning patents and software interoperability, where the outcome of the case has not been a private settlement.
310 See press release: “Microsoft and Novell Announce Broad Collaboration on Windows and Linux Interoperability and
Support”, REDMOND, Wash., and WALTHAM, Mass. — Nov. 2, 2006. (Available at http://www.microsoft.com/presspass/press/2006/nov06/11-02MSNovellPR.mspx. Last visited July, 27, 2008.) See, in particular, the “Patent Cooperation Agreement - Microsoft & Novell Interoperability Collaboration” page on Microsoft’s website, November 2, 2006 (updated July 5, 2007) (available at http://www.microsoft.com/interop/msnovellcollab/patent_agreement.mspx last visited, July 27, 2008): “Microsoft, on behalf of itself and its Subsidiaries (collectively “Microsoft”), hereby covenants not to sue Novell’s Customers and Novell’s Subsidiaries’ Customers for infringement under Covered Patents of Microsoft…”.
311 For example, Microsoft recently declared that the Linux system would violate more than 250 Microsoft’s patent. The specific
patents number remains unknown and the legal threat seems to rely on the “number” of patents, more than on their nature and importance. See Roger Parloff, Microsoft takes on the free world, FORTUNE Magazine, May 14, 2007, http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/28/100033867/ (last visited July 21, 2008).
312 See CHAPIN, Sharing the Interoperability Ball, pp. 243—244. 313 Case eBay v. MercExchange, 547 U.S. 388 (2006).