Copyright and Patent Policy for Public-Funded Organizations Bruce Perens "BRUCE SAYS" This slide show originates in a text file and can be rendered in XHTML and OpenDocument. If it's not accessible, I don't know why. Colophon: This is presented on a Linux system with 100% Open Source software. Who is this guy, anyway? The tight copyright rights side... Worked for 20 years in film, 12 at Pixar, made film-making software. Credited in "Toy Story II" and 'A Bug's Life" Participated in Pixar's IPO. I say this to point out that I understand the importance of copyright rights. The Open Source side... Co-founder of the Open Source movement in software. Best known as creator of the Open Source Definition, manifesto of Open Source and the definition of its licensing. Vice President of SourceLabs, venture funded company, USD$10.5M backing so far. Products are all Open Source and services around Open Source. Customers include Merrill Lynch, Boeing, Motorola, City of New York Publisher of a book series that is itself Open Source. The HiA side... Work at HiA in the summer as a researcher and lecturer. Have a continuing grant from the Competence Fund of the Nation of Norway. Published professionally in engineering, law, economics, and public policy. All of those fields intersect when working with Open Source! Have had some input to Norwegian government policy-making. Seductive Money Stanford's patents related to Google are used to promote software patenting as a "pot of gold" for universities. The Bayh-Dole Act in the US legitimized the sale of patents resulting in publicly-funded research to a single company as a monopoly. Some seek for Norway to follow the US in this. But There's a Problem Software patenting is not always beneficial. It sometimes can do great damage. It can block innovation. It can hurt many businesses, and the economy in general. It can retard the progress of the sciences. If we are to do more of it in the universities, we need to make sure it's providing a benefit, and not hurting. Shrill Voices Shrill voices tell us that the world is full of "intellectual property" crime and that we need laws creating a tighter grip upon it. Certainly there are lots of knock-offs of Prada handbags, and in some places illegitimate copies of DVDs are sold that return no revenue to companies like Pixar. These are indeed crimes, and existing laws should be enforced. The problems of the music industry do not stem from copying, but are their own creation. The year that music was most copied was also the most profitable year for music companies. Too Shrill Infringers are referred to as "pirates", as if they had forced their way onto a ship to rape and murder. Statutory damages are inflated to ridiculously large amounts in order to claim great financial damage to business in demanding new legislation. USD$1.8 Million for a single copy of a CD? What Does This Have To Do With Universities? In general, "intellectual property" is promoted without distinguishing between copyright, patent, and trademark. So, the same shrill voices are telling us to tighten our hold on ideas through software patenting. There are a number of very well-financed lobbying agencies associated with them, and this has led to ever-more-restrictive copyright and patent laws. This is dispite their history of error: Killing their own music retailers by de-emphasizing the Album. Opposing video tape - their biggest profit-maker - in court. The Responsibilities of Public Entities Funding and Conducting Research Improve the quality of life through useful innovation. Create wealth and employment, as money is a strong input to quality-of-life. Improve the balance of trade and the competitiveness of your country in the international market. No-Nos For Public Entities Don't damage business, employment, or the public well-being. Don't disenfranchise one party for the benefit of another. Don't spend tax money without a justifying public benefit. Don't spend more tax money than necessary. Disenfranchisement is the Problem, and Leads to Damage All taxpayers pay for public-funded research. Sometimes, the result of that research benefits a single taxpayer or a group of taxpayers to the exclusion of others. Example: Stanford "Google" Patent: all taxpayers paid for that government-funded research. Did Yahoo, a taxpayer, get the benefit of that patent equally to Google? What about the other 1000 search engines? Yahoo might be sued if it used that patent. Doing Harm Isn't it harmful to use a taxpayer's money to create a lawsuit against that very same taxpayer or to advantage that taxpayer's competitor unequally? Wouldn't it be more fair for everyone to have all necessary rights to use research that they have paid for with their taxes? Who Is Being Disenfranchised? In general, the trend in software patent law is to disenfranchise small-to-medium sized companies, Open Source, and all who benefit from those things. This is to the benefit of the very largest companies - really not more than 100 of them worldwide. Small-to-medium sized companies make up 80% of the tech economy, while large are only 20%. Hurting Open Source Open Source is a new and very powerful means of innovation. Software patenting threatens to kill it because patents can be used to completely prohibit the release of software containing a particular mathematical principle that is covered by the patent. Software patent licensing that requires a royalty payment and Open Source are incompatible. Where's The Money Come From? The contribution of "innovation" to the economy doesn't always increase the money supply, because it doesn't necessarily create real goods. Sometimes its effect is to move money around rather than create more. We must recognize that software patenting revenues are generally coming from a private tax on technology in the form of patent royalties. That tax happens because prior art, the real fuel of innovation, has a requirement for a payment imposed upon it (a "royalty"), where no such requirement previously existed. This tax is not only on companies that can afford it, like Google, because that would be discriminatory. We need to consider who is paying that tax, and what its economic impact is. Shouldn't an Inventor Profit From Her Invention? Sure, but when the public pays for the research, the public is the inventor and should benefit by having all possible rights to their own invention. That's the way it works in business - the company owns the patent. The inventor of the LED light, surely one of the most important innovations of our time, got an award of less than $200 from his company, plus his regular salary. Most people think Samuel F.B. Morse invented the Morse telegraph code. He was the financier. Who knows about Dr. Vail? Small and Medium-Sized Entities Entrapped in Patents "Economic Survey", American Intellectual Property Law Association: Cost of defense in a single software patent case ranges from USD$3Million to USD$5Million. Initial investment-bank (not "Angel") capital for SourceLabs was USD$6Million. A single software patent lawsuit can kill a start-up. The largest companies really like this, because it gives them a way to control disruptive technology rather than succumb to it. Public-Funded Institutions Entrapped in Research Patents Biotechnology: Institutions forced to sign publicly-funded inventions over to a blocking patent holder. Where is the Justice? Since a small-or-medium sized company can't afford to fight a case to completion, it must settle with the plaintiff regardless of whether the claim is just or not. Microsoft current behavior against Linux, with its "secret infringement" prevents programmers from removing any possible infringement because MS won't say where it is. Microsoft will only allow licensing. Fledgling efforts to beef-up examination and rejection of patents in the US, like "Peer to Patent", but they are entirely optional to the patent applicant. Fixing the examination problem isn't really a solution, because the ill effects would still persist for SMEs and Open Source. What Changed? Patenting used to be a better means of promoting innovation than it is now. One of the things that happened is that computer software was invented. Software is fundamentaly different from other forms of innovation because of its "soft"-ness. Software became both copyrightable and patentable. Few other things can have both forms - copyright AND patent - applied to them. What Changed With the Internet? The Internet has been a powerful mechanism for worldwide collaboration where no such mechanism existed before. It led to the advent of Open Source and other forms of colaboration like Wikipedia. Does patenting fit it well? The Power of Collaboration It used to be that when strange things happened, we'd hear on the news: "Police believe this was the action of an isolated nut". There are no more "isolated nuts". On the Internet, any crazy person can find 50 other people in the world who think just like him. If you bring together 50 people who think the same, that is as powerful as a start-up company. You can develop very large projects successfully. There is room for these collaborations to find their way to new economic frameworks, as Open Source has. Open Source Demonstrates the Power of Collaboration It's a new method of producing innovation. Its features are copied into proprietary software, or just envied by proprietary software. For example, features innovated in Firefox have been copied into the latest version of Internet Explorer. How Does Open Source Work Economically? Only 30% of programmers work in enterprises that sell software in any form: U.S. Bureau of Labor Statistics That means that 70% of programmers are working on software that is never meant to be sold. All of those folks are creating cost-center, enabling, infrastructure. Their profit-center is not software, but the sales of some other commodity. They need not profit from software to be compensated for making it. Old and New Ways of Sharing Innovation Cross-licensing: Only worked for the biggest companies, really only 20% of the tech economy. Open Source: Admits all players. 80% economic improvement. Copyright, Patent, and Trademark Calling all three of those things "Intellectual Property" is deceptive. The three are too different to lump under one name. Copyright protects your rights over your own work, never prevents anyone else from creating their own independent work: "A Bug's Life" did not prevent "Antz", nor did "Finding Nemo" prevent "A Shark's Tale". Patent establishes a blocking monopoly on some technique, potentially blocks others from doing any independent work connected with that technique. Trademark protects the perception of a brand, does not block anyone else from independently creating their own brand. You can make a great pocketbook, but don't call it "Prada". Purpose of Patenting There are two alternatives to patenting: trade-secret, and public-domain. Patenting serves an important economic purpose: monetizing the productization of new innovation by providing a limited monopoly. From the perspective of the inventor, it provides an economic motivation to engage in research and to disclose inventions. From the perspective of the public, it is supposed to promote the disclosure of inventions in a way that others can use. But this doesn't work any longer. Is Patent Protection Always Pro-Innovation? Patent protection is not always pro-innovation if it can disenfranchise SMEs and Open Source. Thus, we must consider what kinds of products can be patented, and what sort of monetization each of them requires. Are they all equal in that regard? No. Does A Tighter Grasp upon Patent and Copyright Promote Innovation? The answer is "sometimes", not always. Thus, it's important for us to determine when it helps, and when it hurts. Some people say that there is no innovation without intellectual property and use that to justify a trend toward the tightening of patent and copyright law. It is obviously untrue that there is no innovation without intellectual property: Open Source and collaborative efforts like Wikipedia show that a looser grasp on copyright and patent rights often promotes innovation. Does A Looser Grasp upon Patent and Copyright Promote Innovation? The purpose of both patent and copyright is to promote the disclosure of innovation. The sharing of information is the backbone of the sciences, without it they would not proceed. All innovation is incremental in nature, and is thus built upon prior art. It is the easier access to prior art that makes collaborative development like Open Source and Wikipedia so powerful, because everybody in those projects is able to build upon the work of others. Monetizing the Development of Products - Are They All The Same? Pharmaceuticals: USD$1Billion investment required to develop to the point of approval of US FDA. Software: still practical as a cottage industry, Open Source teams can develop the very largest products with a small and distributed investment. But the patent law is the same for both. Creating an artificial monopoly has a cost, sometimes a great cost, to society - we must make sure that the benefit to society is as large. Best Economic Utilization of High-Monetization and Low-Monetization Technology High-Monetization Products like Pharmaceuticals: Huge potential revenues defeat risk: Creation of a monopoly provides the only economically viable means of developing the product, cost to other companies is justifiable. Low-Monetization Products like Software: Number of implementors defeats risk: Letting the most possible companies and other entities develop the technique is most likely to result in useful products. This is called competition, and it gives all of the benefits to the economy that Adam Smith pointed out so long ago. Monopoly, and its associated costs to other companies, is not justifiable. What About Copyright? Problems are related to: Journals. Textbooks. Software and other works produced in the research. Journals Publication of Research through prohibitively expensive journals. Peer-reviewers work for free, and do not generally collect significant funds from the journal. Where is the value that the journals are charging for? Public Library of Science. Perens series. Textbooks Textbooks often used as a salary-extender for professors. What is the effect on the duration of works? What is the effect on the distribution, especially to the poor? Is there a free-rider problem? Is there a tragedy of the commons with respect to these works? Software and Other Works Duplicating research for scientific verification benefits from access to the software: Open Source --> Open Science It is only a very rare item of research software that makes a viable product that is sold for profit. On the other hand, many products can survive and be viable if they do not have the constraint that it must make a profit. If you aren't going to give it away, know that you are throwing it away. But what is the motivation to make software if there isn't a profit? Most software is not intended to produce a profit, it's to enable some business other than software. What Policy Should Norway's Educational Institutions Have? Side-effects of a policy to generate software patent income from publicly-funded research would do too much damage: to Norway's SMEs, to Open Source, to research in general, to anyone who would benefit from Open Source and SMEs.