Re: [Patents] pooling patents, version 2

[Peter Vandenabeele <peter.vandenabeele@mind.be>]

On Wed, Jan 01, 2003 at 09:46:07PM -0200, riel@nl.linux.org wrote:
> Changed after feedback from many people
> 
> 
>       Pooling patents for progress and protection
>                       version 2
> 
>               Rik van Riel <riel@surriel.com>
>                       december 26-30, 2002
>                       january      1, 2000
> 
> 
> The goal of patents is to promote technical progress and inventions;
> however the patent system is often abused by big patent holders to block
> entry to the marketplace by new and small companies, thus hampering
> technical progress instead of promoting it.
> 
> My goals are to give small innovative companies a fair chance again and
> promoting technical progress and innovation once more, all while following
> the rules of the patent game to the letter.
> 
> The second version of the patent pool idea has been updated after
> feedback on the SPI and AFUL.org patents mailing list and from
> Alan Cox and Richard Stallman.  This version tries to both give
> some protection to independant free software developers without
> patents and to give an even stronger incentive to "the rest of the
> world" to not start any IP lawsuits against any participant in the
> patent pool.  Incidentally this makes this patent pool idea nothing
> more than a natural extension of what many companies (eg. Red Hat)
> are already doing with their patents.
> 
> 
> The basic ideas behind the patent pool idea are:
> 
> 1) Any person or organisation can participate by contributing
>    his/her/its patents to the pool.
> 
> 2) Contributing a patent to the pool means giving the whole world
>    the right to use the technology described in the patent, on a
>    royalty free basis. [*]
> 
> 3) If somebody starts an IP related lawsuit against any of the
>    members of the patent pool, the plaintiff forfeits the right
>    granted in (2) and will no longer be allowed to use the technology
>    described in any of the patents from the patent pool.  This means
>    that the whole "arsenal" of the patent pool is available to the
>    participants, for defensive use in patent lawsuits.
> 
> 4) A participant can withdraw from the patent pool, losing the rights to
>    use the patent pool for protection in the future.  However, once a
>    patent has been contributed to the pool, that patent cannot be
>    withdrawn from the pool and will stay in the pool until the patent
>    expires; this to protect the other participants in the pool.
> 
> 5) If a participant's last patent in the pool expires, the participant
>    needs to do an invention and contribute a new patent to the pool.
>    This clause is present because the patent pool should promote
>    technical progress and inventions, like patents are supposed to.
> 
> 
> [*] This may sound strange, but it is a tactic already in use by
> quite a number of companies. Red Hat uses something like this on
> its patents and IBM has an "if you sue us, you lose all rights to
> this software" clause in some of its free software.  Extending this
> already accepted trick to a large pool of patents (and maybe even
> software?) should provide a nice incentive against starting IP
> lawsuits.
> 
> This patent pool is primarily meant for small and medium size companies,
> who have few patents each and are a frequent target for bullying and
> predatory practices by large patent holders, who use patents as a way
> to prevent small companies from entering the market, thereby stifling
> technical progress itself.
> 
> This patent pool should:
> 1) protect inventors and companies making products
> 2) promote technical progress
> 3) be a win-win play for all participants
> 
> If you have an idea on how to improve this patent pool idea to better
> suit these goals, or if you have an additional goal you think should be
> included, please let me know.

An important goal of the association should be to gain a considerable amount 
of money to be able to:

- operate the organisation on the highest professional level
- pay the legal costs to file patents on the ideas developed in 
  Free SW community (currently this is not done on a large scale
  and who will pay that ?)
- defend Free SW contributors (pay legal defense)
- attack parties that violate the conditions stated above

The money is there, in the value that is brought to the large companies by 
Free SW that they can currently use for free, while this does not hold them 
back from sueing Free SW creating competitors if they would like to.

Point 2 of your proposal makes the organisational aspects easier:
the patent pool is only used to _allow_ people to use the patented
technology and not used by the organisation to _forbid_ people/companies 
to use those patented technologies (the patent pool can be used by 
individual members though to forbid an external attacker from further 
using patents and software that is in the pool). Because of this, less 
stringent control is required on who manages the patent pool and 
what cross-licensing deals the organisation will make (cross-licensing 
is not mentioned in your proposal I belive).

But that advantage (of easier organisation), removes the possibility to
negotiatie with large entities on a structural basis to not attack any
SW release under certain accepted licenses and to pay a certain fee that 
will support the goals of the organisation.

With the current proposal, the individual or SME can still not pay his
lawyer. The availability of other patents to use in a counter-attack does
not help on that aspect. For my company, if I where attacked by a large
or rich (from VC money) competitor on Free software that I was publishing, 
this organisation of the patent pool would barely help me in my defense.
Who would pay my defense, even I had the right to use the patent pool ?

The balance is way too much on the soft side in this proposal. You give 
away your value (in the patent pool and Free SW with a license that is 
dependent on adhering to these policies) too early. For larger companies,
you should only give it away after getting the absolute maximum back in
guarantees that they will not sue Free SW and a reasonable amount of
money to keep your operations running and get the best lawyers to defend
against extortionists. If a single company is prepared to pay 15 M$ for 
a license on two 2 patents on the algorithm behind JPEG license, you 
should be able to get much larger amounts of money from the collective 
IP that will be implemented in Free SW over the coming years. The point
is not that anyone should get rich from this, but rather that the others
also have these amounts of money to their disposal to practice what they
do.

The net effect of my counter proposal to actively seek money in 
cross-licensing has the important consequence that this organisation
needs to be very carefully managed by people that are representing the
Free SW community, but also have a feel for the commercial aspects. The
organisation will gain enormous power (due to the growing patent portfolio
and associated Code base) and has the statutory right to negotiate 
cross-licensing deals and even attack companies that are violating certain
conditions of use of the portfolio. Management needs to be "democratically
elected" by the Free SW community. 

To further protect the community from potentialy errors of the management
of the organisation, you should still have a fall-back that under quite 
a lot of conditions, the use of the patented technologies is indeed free:

- individuals
- education
- mere publication (which is not the same as _use_) should be free to anyone
- small companies (what is small ?)

But large companies will have to pay a fee and sign a cross-licensing deal
(effectively signing that they will not attack Free SW implementations).

Again, the difference with the Copyright based system, GPL/BSD style, is 
that with GPL you can work in a separated eco-system and peacefully co-exist
with other SW development models and indeed give out everything free, 
since the other systems cannot hold you back from using that code (but in
BSd they have the right to use your code). In the patent system, there is 
a monopoly for the patent holder and you are forced to fight for survival 
in the same eco-system. The one that is the hardest negotiator on the value 
he brings to the table will win, not the one that is most friendly for 
upfront sharing his value with the others.

Peter