Ross Mayfield's Weblog
IBM Opens the Patent Market

Steve Lohr reports that IBM is open sourcing 500 patents.

John Kelly, the senior vice president for technology and intellectual property, called the patent contribution "the beginning of a new era in
how I.B.M. will manage intellectual property."

Perhaps for more than just IBM -- competitors may have to follow, um, suit.  While 500 patents is a drop in the bucket for the largest portfolio (40k), this is a significant move and part of a broader strategy to commoditize their inputs, pool risk, leverage a lead in services and change the game.

"This is exciting," said Lawrence Lessig, a professor at Stanford Law School and founder of the school's Center for Internet and Society. "It is I.B.M. making good on its commitment to encourage a different kind of software development and recognizing the burden that patents can impose."
Amazing things happen when self interest is in group interest.
Although I'd like to see what those patents actually are, but I do think this is interesting and good thing to see. They're not the first to take this strategy. I recall Intel doing something similar, pooling patents around development using their chips so that developers could more easily create software without bumping into each other. I think I remember that those were not Intel's patents, but the patents of the developers. ;-) But the strategy is similar. Companies fight for intellectual property protection for self-interest arguing that without it, people will not innovate. On the other hand, many platform providers know that patents often encumber innovation. With software patents in particular, I believe that they stifle innovation more than they create incentives, especially for small companies. It's nice to see patent giants like IBM taking steps like this.

UPDATE: More from former IBM Exec, John Patrick on this.

58 Comments

The owner of any type of property has the right to give that property away to others as a gift or as an act of philanthropy. That is a fine, moral and indeed noble act. Once one has an income level above a certain level then the pleasure derived from providing gifts can be far greater than that derived from enjoying the material benefits that would accrue from keeping control of the property and any income stream derived from it. Also, an intellectual property owner may decide that it is in its best interest to pool intellectual property or enter cross licence arrangements with other key players in an industry in order that they can ensure that they have all the key patents to produce products that customers want. This type of co-operation arrangement is perfectly rational and results from the excercise of the mutual self interest of a group of individuals or organisations. So, gifting or intellectual property and/or entering into co-operative licensing structures such as Patent Pools and Cross Licensing deals are the natural extension of a respect for property values. After all, if the valuable contribution of each individual player was not recognised as property then there would be nothing to use for trade or leverage to co-operate and nothing to bestow as a gift. As Joi says platforms develop on top of fundamental research patents and without the co-operation of these early stage inventors in licensing their invention then innovation on the platform can be inhibited. However, the solution is certainly not to steal the original patent but for co-ordinators to create patent pools where the early stage patent holders are provided a higher licensing revenue than later stage innovators.

Maybe one way of protecting the creators/innovators and entreprenurs of start up businesses against those large companies who would use their R&D and patent portfolio as a weapon against them - would be to establish a kind of handicapping system like in Golf. Intellectual property owners would be able to compete and co-operate with one another based on the power of their intellectual property porfolio adjusted to their handicapped score.

IBM is doing this for only two reasons. One is marketing. The other is that at this particular point in time, their interests happen to be aligned with certain open source projects and companies... It's nothing more than that.

Trevor, thanks for backing me up on my comments recently. Even though I am confident of the inherent truth of my argument it can be lonely in the vacuum of this free culture echo chamber.

Trevor,

I feel like you're implying that there's something wrong with either of those?

IBM has made a series of deliberate choices over the past few years to align itself with open source, and is trumpeting the fact that it helps its and its customers' bottom lines.

So a for-profit company uses and supports open source to make even more profits...where's the issue?

I don't want to put words in Trevor's mouth, but I think that that is the whole point: there is no meaning here in terms of some larger issue. You have a company sacrificing some pawns for idiosyncratic strategic reasons. It has no meaning along the lines of what Mr. Ito discusses in the latter part of his post. It just doesn't.

As for the statement "With software patents in particular, I believe that they stifle innovation more than they create incentives," well, OK. You can believe whatever you want. That's your right. But if the developers of something are able to capture none of its payoff privately, they generally have little incentive to provide it. That doesn't mean that no software will be forthcoming without IP rights, but it does suggest that far less will be than with some degree of IP protection. So I respectfully disagree: I think you are missing the point by half. Absolute IP protection will create the problems you describe, but the absence of them is an equally ridiculous proposition: there will be far less innvoation, and enormous foregone social surplus from the slower pace of innovation, than in the presence of sensible IP guarantees. Trivial behavioral models yield both results. The really meaningful questions are, as always, how much protection and over what kinds of "ideas"? What is it about human nature that we are drawn to extreme positions?

Well written Peter.

I disagree Peter. Please read John Patrick's post on this. He was in charge of Internet Applications at IBM. I have also had the opportunity of talking to Irving Wladawsky-Berger the Vice President, Technology and Strategy for IBM. Irving told me that he felt that open source and Linux was a fundamental change like a comet hitting the earth that would kill the dinosaurs and said it would be similar to the impact that the CMOS chip had on his industry. These guys are not doing it just for show. It's a long term strategy to nurture Open Source and the commons. Open source only works when you are able to develop in an unencumbered environment without patents or dependencies on commercial code that could cause "holdup" situations in the future. This is a completely different way of development than traditional software development where you avoid external dependencies at all costs. They obviously understand this.

From John Patrick via email:

The full list of patents is at http://www.ibm.com/ibm/licensing/patents/pledgedpatents.pdf I would add that the IBM move is different than Intel's. Intel's was, as you say, dealing with patents around their chip. IBM's patents are very broad and general. They are not IBM specific. They may end being used in Apache, OpenOffice, or other OSI projects. There is an argument that some make about patents stifling software. In some cases it has been true. I don't believe it is always true however. You can not paint this with one brush. Feel free to post any of these comments.

My opinion is merely that IBM is doing something that's economically sensible for them right now, and that's what should be expected. I have nothing against that, although some others do. I just think that Joichi and others are making this into too much of a moral or ethical sort of action, which I believe it is not. (Especially because to me, FOSS has nothing to do with such concepts)

I really have no idea why some circles on the net always tend to see trends in terms of moral movements or ascribe corporate actions to either lovey-dovey or devilishly evil rationales... We don't talk about the stock market that way...

??

Trevor, I don't think IBM is doing this for moral reason, but rather for self-interest. It does end up becoming a moral issue for some people because IBM is trying to interface with Open Source projects where many people have moral feelings. However, I think many people participate in Open Source for moral reasons. I don't think that enlightened self-iterests conflict with people who are doing it for moral reasons. Many non-profits I work on have a group of volunteers working for fun or for moral reason along with staff to whom the work may be primarily a job. I don't think that there should be an disrepect in either direction and that both can co-exist.

"They obviously understand this"? Why, because they are at IBM? You say you disagree with me, but you offer absolutely nothing in the way of a concrete argument that overcomes the basic position I have outlined. I'm not trying to be mean when I say this, but emails from personal contacts at IBM are not intellectually persuasive, for the particular case at hand or issue in general.

Joi, secure and carefully defined property rights, including IP, are the basis of everything that you and I have. They elevated mankind (the part living in wealthy societies) from the subsistence stupidity of village life. In my own posts I have avoided an absolutist position (I have conceded that absolute IP rights are counter productive, partly for the reasons you mention). But I think you need to be very careful about playing so free and loose with IP rights, even in this context. I am not the technologist you are (and never claimed to be). But I am an economist. Behavioral modelling, tested against data, is where I spend all of my professional life. I know where a cavalier attitude about property rights will lead: it's called the Third World, and you should check it out sometime. De Soto's ideas apply not only to Peruvian squatter settlements, but also R&D in rich countries.

With respect, I think you might be *too* close to this. And these ideas are beginning to smack of yet another ill conceived fad.

This is just a sound business strategy. IBM is acting in its own interest, it just happens to have common interest. IP rights are necessary. However, they are poorly governed and administered, which happens to increase the opportunity for those who participate in the commons.

This article further backs up my statement.

IBM has more moves to make, perhaps even broad strokes to stimulate the commons.

Peter. Let me clarify my position a bit. I am not against IP. In many cases they clearly help. I believe that in the case of software and business method patents, the system of managing the IP, the speed at which the market moves and the necessity to collaborate on projects in parallel makes tight controls on IP counter-productive. When a company is investing in software, they want to make sure that they are not at risk of being "held up" and unfairly taken advantage of if their software depends on a patent or a piece of software outside of their control. One way around this is to develop everything in-house or negotiate licenses for each piece of IP that they use. This is time consuming and expensive, but this is still how most companies develop software. The other way is to pool patents and stick to open source licenses which guarantee that a dependency on a piece of code will not cause a company to be "held up" by a commercial interest. MOST software is written for in-house use, not for resale. Most people just want something that works and that doesn't cost too much.

Peter. Like you I do not seek to go to extremes but want to point the spot light on what is essentially obvious to anyone who has observed and thought about the prosperity of the past hundred years. On this note - I also want people to understand that far from being moral - this attack on intellectual property is based on a highly immoral code of behaviour which essentially elevates the theif and the parasite to a higher ethical position than the those who produce creative value in the first place. That is why I agree with you when you say that a cavalier attitude to property rights leads will take society backwards not forwards. You know, any inventor and entrepreneur will tell you that one of the things that gives them a seat at the table when they negotiate partnership agreements with large companies is their intellectual property. That is the only thing that stops the large company or the collective or society from stealing these ideas without paying any reward to the inventors and the entrepreneur. This intellectual capital can create wealth for the inventors and entrepreneurs and society is wealthier because of the light of these new inventions. Sure, it is the case that, ideas build on ideas and that integrated platforms, products and servings can depend on the knowledge generated from disparate sources and hence intellectual property owners. No one wants to be tripping over other people's patents as they strive to produce better solutions to customer's real or perceived needs. That is why a strong intellectual property porfolio management strategy will include a large element of cross-licensing between companies and even the formation of co-operative structures such as patent pools. That is the voluntary co-operation of property owners. It is essentially moral, honest and mutually beneficial way to conduct business in the knowledge economy and it is good for society. Joi, are you so wedded to your "Sharing Economy" Thesis for your DBA that you are not prepared to be seen to be wrong?

I think you're talking from the perspective of large companies. There are many startup companies and individuals who write software who can not afford patent protection. I recently calculated the cost of paying for patent protection in the major markets for the life of the patent and the cost was about $750,000. One company which I am an investor in is dying under the cost of filing and protecting its patents and it is eating into its operating capital. Only large companies can affort a "portfolio" of patents. Unless you believe that large, well-funded companies are the core of all innovation, patents in software are stifling.

As a VC I would choose operating revenues over software patents for valuing a company any day.

Joi, I agree with you that the current Patent system in the US, Japan and Europe is very expensive and I would go further and say that often it benfits the Lawyers more than the inventors and entrpreneurs it is supposed to help. However, what this shows is that the Government and Professional System for Filing and Prosecuting Patents needs to be reformed to make it more in keeping with the spirit of why Benjamin Franklin and others set up the USPTO in the first place. In other words the problem is not the concept of intellectual property even for software innnovation - it is the system that has been set up to implement that concept.

OK, I think we're getting A BIT closer. ;-) So my feeling is that it is almost impossible to design a system that is efficient enough and low cost enough to work in the current software environment, but I'd be happy to consider such a proposal seriously. You are right. I am calculating into my hatred for software patents, the inefficiency of the current system.

However, maybe even partially because of this, Open Source, as a mode of production, has become quite strong and productive and you can not deny that GNU/Linux, Apache, Bind and many other important parts of our software infrastructure have been created in the "commons" without patent protection for the individuals involved but instead a protection of the commons.

Joi,
I'm sorry to hear about your investment, but financial problems like that are on average indicative of the low returns on that which you seek to protect with patents. There will be many innovations that just don't generate those kind of returns, and then the cost of patenting becomes hard to jsutify. That in no way invalidates protection for those that do. But I do agree with you about one thing: just because you have patent rights does not necessarily mean that they are effectively administered. Like the tax code, our patent laws are in some sense a mess. But that does not invalidate the conceptual argument behind them.

My point is that for a startup, $750,000 for a single patent is a high cost. As you say, you need a portfolio of patents to really protect yourself. Often a single patent is like sending up an ad balloon for people with money to surround your patent with application patents. You really need to build a fortress to be truly protected. (BTW, I have been involved in numerous patent disputes and I'm not speaking from complete ignorance on this.) A normal startup can't afford a patent portfolio and the outlay of funds to set up patent protection will usually come before any reasonable "returns". Basically, you need to protect before you announce. Once you announce you have a sales cycle before anything comes in. For companies that get a lot of front-loaded cash, you may be able to protect yourself, but for boot-strapped startups, the cost of patents usually doesn't make sense.

Yes, I can live with what you are now saying and we have been close for a long time. Joi. I only remain anonymous because I do not seek to use your "living room" as a platform for my own publicity but only for good honest debate on the issue I feel most imporatant about in business.

Peter and "intellectual property", I think you are completely missing the point here.
Let me spell this out for you — surely it's not THAT difficult to understand. People involved in the Open Source movement or Creative Commons are NOT NECESSARILY AGAINST REASONABLE AND WELL-DEFINED IP RIGHTS.
What these people object to are, among others:

  • the unreasonable ownership rights with which companies like SCO are trying to encumber the fruits of community labor

  • tthe perennial extensions of copyrights by the likes of Disney that put off-limits more and more of what used to be a cultural "commons"

  • tthe silliness that would result from the undiscriminate awarding of software patents, a lot of which are tantamount ot awarding patents for ideas, which society has generally considered unproductive. See e.g this example.
  • Your blather about how IP rights are important is thus a bit like preaching to the choir. You are bursting in, shouting as if it was a huge discovery that "the Japanese are using ideograms imported from China !", in a discussion about comparative literature, where people are pondering the devices which authors use in Japanese and English dramaturgy to weave together time, location and action. In other words, you don't seem to have the prerequisites. If you can't demonstrate a basic awareness, say, of how "free" in "free beer" and "free speech" differ, then maybe it's time to read up on some relevant material. Professor Lessig's writings would be a good start.

    As for IBM, I'd give much more weight to the opinion of senior IBM execs, over the uninformed junior high school blather about how "IBM is still a for-profit company, thus nothing has changed". IBM has, traditionally, earned billions of dollars of revenue per year from their patent portfolio by NOT giving their IP away. Contributing for free some IP (with the explicit restriction that it is made available to Open Source projects) hints that some serious discussions about new ways to manage and create value from their IP portfolio has taken place at the senior level within IBM. That is SIGNIFICANT, imho.

    Peter wrote @6:
    You can believe whatever you want. That's your right. But if the developers of something are able to capture none of its payoff privately, they generally have little incentive to provide it. That doesn't mean that no software will be forthcoming without IP rights, but it does suggest that far less will be than with some degree of IP protection.
    Let me also add, as some around here seem not to have realized this, that existing copyright laws already provide some IP protection to software publishers. In most countries, it would be illegal and punishable to make a copy of, say, Microsoft Windows. I understand that the publisher of said piece of software is doing quite well financially, even in business locales without software patents.

    Mostly Vowels:
    I'm so glad that you spelled things out, if only to allow me to understand. I'm also gratified that you referred to my thinking as "junior highschool." Perhaps you are on to something: it is at that level of academia that you could perhaps get your own ideas published.
    The rest of what you have to say is either silly or already addressed in my posts. Just read them more carefully.
    Why is it that the child eventually has to join every conversation?

    By the way, just for your own historical information, I would like to add that you are actually the one bursting in: this is a tired line that ever so often gets new oxygen in some slightly new incarnation in the public discourse. In terms of intellectual history, its the property rights crowd that really hasn't gone anywhere.

    If you are going to take such shots, why doesn't the hero reveal himself?

    A few bricks short of a full load, aren't you ? Well, let us dissect your argumentation:

    You claim that IBM's move has "no meaning here in terms of a larger issue". You seem not to realize that you know nothing about the debating that took place within IBM. Your willingness to make such an uninformed assertion, and to dismiss the opinion of IBM's senior vice-president, Technology and IP, don't reflect very well on the rigor of your thought processes.

    You — and other people's — blather about the importance of IP rights is essentially a straw men's argument on this blog. Who, around here, has argued for the complete suppression of such rights ? Are you even aware of the position of the people you're engaging in this discussion ? Have you even read a single line of Prof. Lessig's writings ?
    Anyway, you seem to ignore that Joi has invested in a number of IT companies. Surely these companies and Joi would prefer that their IP, including the software products they develop, be protected in some fashion ? Do you think that 6A wouldn't care, for example, if I were to take a copy of Movable Type and started a for-profit blogging service provider without a proper licensing ?

    What is your POINT ?

    Mostly Vowels: "Your blather about how IP rights are important is thus a bit like preaching to the choir. You are bursting in, shouting as if it was a huge discovery that "the Japanese are using ideograms imported from China !", in a discussion about comparative literature, where people are pondering the devices which authors use in Japanese and English dramaturgy to weave together time, location and action. In other words, you don't seem to have the prerequisites."

    As I see it the Prerequisites are how you define the inputs. While the discussion in comparative literature is going on - I think it is very important for someone to shout from the hills that the obvious fact that the Japanese are using Chinese ideograms." Simplicity and the obvious is the thing that most gets lost in "sophisticated" discussions. Hence the story of the little boy who was the only person who screamed at the parade that the "Emperor has no clothes on"

    So from this point of view I am quite happy that the quality of my comments are considered to be junior high school level!

    People throughout history have been arguing about how to structure ownership in society - the commune or the private holiding. In reality there is a time and place for both. Every body enjoys going to the park and clearly some great oral traditions were created and embellished by the community. I think of the Talmud as a good example.

    Where people decide that they want to donate their expertise to the commons in order to develop open source software - that is the free choice of those who decide to participate in this for of production. As Ross Mayfield says on his blog - the commoditisation of inputs at the platform based can have the effect that everyone can concentrate on progressively more higher value added innovation activities on top of this platform - and this might be part of the logic of what IBM is doing. However, it is very important that we do not lose site of the fact that those that wish to be paid for their inventions in return for providing them to society must be able to collect a reward for the value they provide and hence the need to state the obvious need to respect intellectual property rights and to reform the intellectual property system to make it easier and cheaper for inventor and entrepreneurs to register their patents internationally.

    I'm more than a few bricks short of a load-and you're not original in recognizing that. And I am well aware of everything you discuss. You still have nothing interesting to say. Intellectual property: this guy is a waste of time.

    Peter and IP: I want to give you a heads up that I haven't gone after you with some of my more extreme theories hear because I'm not ready, but if you do want to engage in some serious debate, I suggest you try reading, as MV says, some of Lessig's work such as Free Culture. (If you haven't already.) I'm in the process of reading The Success of Open Source by Steven Weber, which is also excellent. I would love to hear your opinion on their theories. I suggest these books not to try to indoctrinate you, but I believe that in order to have a rigorous debate, it's difficult to do in just emotionally charged paragraphs. Weber dissects Open Source in quite an interesting way and points out that "Property in open source is configured fundamentally around the right to distribute, not the right to exclude." This sounds like a weird statement, but redefining what property is and how it is managed while continuing to believe in IP and creating incentive for the players is the theme. It is just that open source software projects give us some very interesting insight into different ways of managing these things. Anyway, I'm going to post something when I finish this book and hopefully engage in some lively debate. If you have time to read a book in the next month or so I highly recommend The Success of Open Source. It's great so far. And if you have time, read Lessig too. On the other hand, I hate it when academics throw bibliographies at me so I'm not saying that I won't be able to argue with you if you don't read these books. I'm just saying that I think you'll find them interesting.

    Joi,
    Thanks. I will email you about this again.
    Right now I'm out the door on a trip.
    Cheers,
    Peter

    Yes, Joi, I look forward to continued lively discussion with you on this topic.

    Peter wrote@28:
    I am well aware of everything you discuss.
    ...but the evidence of such an awareness has been absolutely lacking in your prose.

    Have you been able to convey an understanding of what the Creative Commons or Open Source Software movements stand for ? Or do you consider them to be a bunch of superficial dreamers with a cavalier attitude towards IP ?

    Are you aware that software development is not unrelated to Joi's business interests, which gives his negative views on software patents much more weight than your vapid generalities about the value of IP ?

    Are you aware that IBM's software business might well be larger than Microsoft's, and that IBM's willingness to explore how value can be created within an Open Source Software framework might be significant ?

    Can you point us towards studies that show that software patents, for example, are generally conducive to more value creation, at the micro or macro levels ? Are you able and willing to share with us some of your enlightened insights into software development processes, and how they might or might not be affected by software patents ?

    I have read Lessig's works, and here's basically what I think about them. He is coming in from way left field and trying to push towards the center in order to sound credible. But his belief in the power of 'the commons' to create is extreme in my mind.

    There are really only a few types of software that have lent themselves to an open source model, and few types of creative endeavors are really completed without sufficient economic incentive. There will never be a great game produced by an free or open source project. It just will not ever happen.

    To my mind, argument against software patents is also an extreme position since they have been part of our system in the U.S. for many years now, and are not going to go away. They also are important for many complex software algorithms that may have been very expensive and time-consuming to develop for a large company. There do exist many other ways to protect software, such as copyright and trade secret law, but patents are often also a very useful way, in certain circumstances.

    The fact that patents and patent litigation are expensive may be a problem for small companies, but I believe that can be helped by some reform. The expense of litigation is mostly a function of discovery and came about with the change to a notice pleading system. I think we really have to take a look at limiting discovery costs, because that's really where the most money is spent.

    I've enjoyed talking with 'MostlyVowels' in the past, but I have to disagree with your seemingly party-line stance on IP, as your views seem to propound the Lessig / FOSS / Slashdot / Groklaw abhorrence of software patents and other certain issues exactly.

    I completely disagree with those views for the basic reasons that they are (1) unfounded in any empirical data, as far as I have seen, and (2) unsupportable based on the economic rationales I see for various IP rights.

    You ask whether there are any studies that show that software patents are generally conducive to value creation. I believe that any propertization of intellectual assets is conducive to economic efficiency, because there's basically no way to link the value of those assets to money otherwise. With patents, we're not usually talking about the software itself, but the processes that may happen to be implemented in some software. Those are two different things, and I believe they both benefit from being able to be traded and valued by the market. There are few studies going either way though, because it's a hard thing to measure. So we'll probably have to reason based on theoretical models and incentive effects, which will never really tell us the whole picture. It's tough.

    BUT, my point on this bit is that you really can't show whether 'software patents' are beneficial or harmful.

    I would write more, but I have to go somewhere. I have to say that I agree with Peter and IP completely, although I think they've managed to somehow piss some people off whereas I have managed not to in the past. ;) Well, debate is a good thing, so let's not get pissed off. ;)

    I did want to throw in though that regardless of the success of linux, for instance, it doesn't mean that such free or open source projects should be able to infringe a valid patent with impunity, just so that open source can continue to be successful. If linux has gained something of value from me, that's protected by a legally recognized right, someone is going to have to figure out how to pay me for that, and I honestly don't know how an open source model is going to support that, other than engineering around the thing at issue, which is always an option, though sometimes not an attractive one.

    As this all started from a posting by Ross Mayfield, a handson entrepeneur who I have a lot of respect for, I thought I would quote from an article that he suggested we read in his posting on this comments thread.

    Some aren't particularly enamored by IBM's decision to take some of its patents into the open source world. Steve Taylor, CTO of Elastic Workspace Technology, said patents are the only thing they have to act as a buffer between his small software company and larger predators.

    Taylor, who said he has four patents wending their way through the patent process at the U.S. Patent and Trademark Office, said that, as the owner of a small software company, supporting open source software with patents is a mistake. While he understands IBM has its own business case for pledging some of its patents, it's not something he could contemplate.

    "Our company has been working on its technology for more than seven years and it is truly a unique methodology and invention," he said. "I cannot open that up to the world or I will not get back the money that's been invested -- there's been millions of dollars invested in this and I would like to get back the money that's been invested."

    Anyway, Trevor, thanks for the support in your post. And again, Joi, thanks for being prepared to have your views challenged in your "living room". The debate is important and having a forum to articulate both sides is valuable.

    My understanding is that there has been little correlation observed between a software company's R&D expenses and the number of patents it applies for. This is consistent with the interpretation that patents do not incentivize research, but are rather used for strategic purposes by players with deep pockets, to create a rich patent portfolio that can be used as a defensive weapon against infringement claims by a competitor, and in cross-licensing arrangements.

    See e.g.:

    Bessen and Maskin
    "[..] The very large increase in software patent propensity over time is not adequately explained by changes in R&D investments, employment of computer programmers, or productivity growth. The residual increase in patent propensity is consistent with a sizeable rise in the cost effectiveness of software patents during the 1990s. We find evidence that software patents substitute for R&D at the firm level; they are associated with lower R&D intensity."

    Cohen and Walsh
    "[..] a forty-year legacy of empirical findings in economics [..] call into question whether patent protection [..] advances innovation in a substantial in most industries. [..] Mansfield's survey research study sharpened the issue by finding that the absence of patent protection would have had little or no impact on the innovative efforts of a majority of firms in most industries, pharmaceuticals [being] an exception"

    Anyway, people tend to forget that companies like Adobe, Borland, Microsoft, Novell, Oracle, Symantec, WordPerfect etc. were born and established themselves in a world that was essentially devoid of software patents. The argument that software patents are a necessary element to promote innovation is thus of very dubious validity.

    The increasing ease with which software patents have been granted since the nineties introduces an onerous change in what was a fairly unencumbered competitive landscape:

    Software development is a process of re-invention, rewriting and incremental recombination of, from a programmer's perspective, often simple algorithms and ideas, most of which had already been solved by some other programmer somewhere. What makes a software product commercially successful is not determined by whether it is "innovative", but rather by whether it provides a good fit to contemporaneous market needs, a better implementation of existing technologies. Thus, as in most human endeavors, the following rule holds: "Ideas are a dime a dozen; execution is the key".

    Competitive pressures mean that the speed with which developers come up with novel combinations of these mostly known ingredients is essential, and this speed of evolution is a salient chracteristic of the software market. It would be difficult to sustain a business today by selling six-year old copies of Windows 98, for example. OTOH, six-year old car or aircraft or locomotive designs can still sell quite well.

    It is thus likely that factors that impede, add friction and slow down the pace of software development will have adverse effects on the pace of innovation of a vibrant industry. This runs counter to the very purpose of patents, which are not intended as rewards, but rather as presumed incentives for certain behavior, like engaging in R&D and sharing the fruits of such activity.
    Patent offices across the world are known for the mediocre quality of their examinations and low threshold of patentability. The likelihood that patents will be awarded for trivial software methods is therefore high, and programmers will increasingly be required to wade through mountains of patents to avoid infringements, increasing development costs.

    It would be naive to assume that a world where software patents are pervasive would be beneficial for small companies and start-ups. Such companies will face the added development expenses of researching and coding around existing patents, and usually have not enough money to establish a comprehensive patent-based protection for their products. Patents for truly innovative and unique implements will be quickly analyzed by competitors with deep pockets, who will then carpet-bomb the application area with similar patents, sometimes smothering the inventor by fencing off an essential feature. The small competitor would then be forced to enter into cross-licensing arrangements under terms that it would have found unacceptable, were it not for the smothering patents.

    Nonetheless, in a country where software patents exist, a simple game theory analysis (the Prisoner's dilemma) shows that the dominant strategy for the start-up would be to apply for the software patents. Thus, anecdotal evidence that some start-up in such a country might prefer to have patent protection just shows that its management might understand game theory, and cannot be construed as evidence that the system of patenting software itself is desirable. Besides, what might make economic sense for a company — e.g. neglecting to deploy expensive toxic waste treatment devices — might lead to undesirable societal costs when the environmental externalities are taken into account.

    Note that the friction effect of software patents will likely slow down the pace of innovation both in the traditional proprietary closed-source, and in the open-source software development models. If software patents become widespread, start-ups developing proprietary code, as well as the open source movement, won't have a large cross-licensable patent portfolio to defend themselves against better-capitalized entities.
    Pervasive software patenting might thus have the unintended side-effect of hobbling the dynamic evolution of various Internet protocols and applications and the availability of related development tools, the domains where the Open Source movement is at its most vigorous. The very openness of the Internet and the availability of low-cost, adaptable tools often leverage a start-up's limited financial resources. Instead of fostering the development of new and innovative IP by these start-ups, software patents might thus actually have an opposite, deleterious effect.

    I repeat a suggestion I made early on in this thread because if developed it might go some way to address the legitimate concerns of Joi and MV about when the Patent System and Software Patents actually hurt the entreprenurs and innovators that they are supposed to help.

    "Maybe one way of protecting the creators/innovators and entreprenurs of start up businesses against those large companies who would use their R&D and patent portfolio as a weapon against them - would be to establish a kind of handicapping system like in Golf. Intellectual property owners would be able to compete and co-operate with one another based on the power of their intellectual property porfolio adjusted to their handicapped score."

    I would humbly suggest that we move (as Debono would say) from "either-or" you are right and I am wrong mode of debate - to a creative brainstorming dialogue where we can actually use this great forum that Joi has provided and the obvious brain power of the participants in actually trying to design a pathway where we all admit that ideas and valuable and where the system is reconfigured to ensure the continuance of innovation and the reward to creators who wish to be paid for their inventions whilst ensuring that speed of execution and bringing complete integrated products to market is not sacrificed.

    ...people tend to forget that companies like Adobe, Borland, Microsoft, Novell, Oracle, Symantec, WordPerfect etc. were born and established themselves in a world that was essentially devoid of software patents. The argument that software patents are a necessary element to promote innovation is thus of very dubious validity.

    I don't argue that they are always necessary, only that they are helpful.

    ... Software development is a process of re-invention, rewriting and incremental recombination of, from a programmer's perspective, often simple algorithms and ideas, most of which had already been solved by some other programmer somewhere.

    Sure, this is often true. I think you may be missing the points that (1) all other fields of engineering also rely on re-invention, re-thinking, and incremental recombination of ideas and components, and that (2) if the particular invention in question has been solved by someone already, it's not patentable.

    What makes a software product commercially successful is not determined by whether it is "innovative", but rather by whether it provides a good fit to contemporaneous market needs, a better implementation of existing technologies. Thus, as in most human endeavors, the following rule holds: "Ideas are a dime a dozen; execution is the key".

    If innovation is not as important to success, then firms shouldn't spend money on innovation, and likely shouldn't spend money getting patents. Therefore, they won't.

    Competitive pressures mean that the speed with which developers come up with novel combinations of these mostly known ingredients is essential, and this speed of evolution is a salient chracteristic of the software market. It would be difficult to sustain a business today by selling six-year old copies of Windows 98, for example. OTOH, six-year old car or aircraft or locomotive designs can still sell quite well.

    As far as I know, volumetric rendering techniques will be valuable for quite some time. Probably indefinitely. The only software technology that becomes obsolete is that which is tied to a particular platform or technological limitation that is later overcome... There are many many almost perpetually useful algorithms.

    It is thus likely that factors that impede, add friction and slow down the pace of software development will have adverse effects on the pace of innovation of a vibrant industry. This runs counter to the very purpose of patents, which are not intended as rewards, but rather as presumed incentives for certain behavior, like engaging in R&D and sharing the fruits of such activity.

    The pace of innovation would certainly be sped up by removing most regulatory laws. Labor law, for instance, could be jettisoned to speed up development... I tend to think that taking the hit on the transaction costs of the patent system leads to more efficient allocation of resources in the market, which in the end more than outweighs those costs.

    Patent offices across the world are known for the mediocre quality of their examinations and low threshold of patentability. The likelihood that patents will be awarded for trivial software methods is therefore high, and programmers will increasingly be required to wade through mountains of patents to avoid infringements, increasing development costs.

    Your point about patent examinations probably comes closest to something I can agree with. I'm fairly sure that the USPTO will be introducing a more adversarial opposition system before too long. As to your second point about avoiding infringement, companies need only avoid the patents they are aware of. When accused of infringement, they can work out a license, engineer around the patent, or defend at that point.

    It would be naive to assume that a world where software patents are pervasive would be beneficial for small companies and start-ups.

    Ok...? I guess that's true, so far as it's naive to simply assume anything...

    Such companies will face the added development expenses of researching and coding around existing patents, and usually have not enough money to establish a comprehensive patent-based protection for their products.

    You neglect to mention that they can actually save a lot of money by licensing others' patents, and that the patent-holders will be compensated, thereby rewarding parties successful in patenting useful innovations.

    Patents for truly innovative and unique implements will be quickly analyzed by competitors with deep pockets, who will then carpet-bomb the application area with similar patents, sometimes smothering the inventor by fencing off an essential feature. The small competitor would then be forced to enter into cross-licensing arrangements under terms that it would have found unacceptable, were it not for the smothering patents.

    Those 'smothering patents', whatever that means, seem to me to be improvements on the original patent you refer to. If so, why should the original patent-holder have any right to those improvements? The original patent-holder can exercise his invention as long as it doesn't infringe on the improvements...

    Nonetheless, in a country where software patents exist, a simple game theory analysis (the Prisoner's dilemma) shows that the dominant strategy for the start-up would be to apply for the software patents. Thus, anecdotal evidence that some start-up in such a country might prefer to have patent protection just shows that its management might understand game theory, and cannot be construed as evidence that the system of patenting software itself is desirable. Besides, what might make economic sense for a company — e.g. neglecting to deploy expensive toxic waste treatment devices — might lead to undesirable societal costs when the environmental externalities are taken into account.

    IF it is true that patents are more harmful than beneficial in the end, then this analysis makes sense. But I don't necessarily agree with that. The externalities you mention, I believe are usually positive externalities.

    ...

    You talk more about the cost issue for small companies and open source projects. I think there are a number of things that could help this. More firms are taking cases on contingency. But the high costs of discovery and patent prosecution should be brought down. The USPTO is becoming more and more efficient. It would help a lot also if Congress would stop diverting their fees, or even FUND them a bit.

    I think my main difference with you is that whatever problems there are, I believe we should work at by trying to streamline the processes and reduce the costs, rather than making radical changes. I could be convinced otherwise though, if I saw sufficient evidence in support of such a position. I still don't think I've seen it yet though.

    I think you may be missing the points that (1) all other fields of engineering also rely on re-invention, re-thinking, and incremental recombination of ideas and components, and that (2) if the particular invention in question has been solved by someone already, it's not patentable.
    I think the points you're missing are that:
  • economic research has found little evidence that patents contribute to fostering creativity and R&D
  • examination quality by patent offices, including prior art search, is low and likely to remain so for the foreseeable future, and cost of litigation to have a patent annulled is high.
  • Patents are not intended as rewards, but rather as presumed incentives for certain behavior, like engaging in R&D and sharing the fruits of such activity so that society as a whole prospers. Are patents achieving that aim today in most industries (excluding pharma)? The answer seems negative. What would then be the purpose of allowing patents on software ?
    If innovation is not as important to success, then firms shouldn't spend money on innovation, and likely shouldn't spend money getting patents. Therefore, they won't.
    You're confusing patents and innovation. Quoting from Cohen and Walsh: “[..] In most industries, including the most R&D-intensive industries (again except drugs), firms did not report patents as one of the important ways in which they profited from their innovations, but reported reliance chiefly upon other mechanisms [e.g. exploitation of lead time, moving down rapidly down the learning curve, the use of complementary sales and service capabilities, and secrecy]”
    As far as I know, volumetric rendering techniques will be valuable for quite some time. Probably indefinitely. The only software technology that becomes obsolete is that which is tied to a particular platform or technological limitation that is later overcome... There are many many almost perpetually useful algorithms.
    Er, the fact than an algorithm is useful doesn't mean that it is not simple from a programmer's point of view, and in no way invalidates the observation that most commercial software products have a fairly short shelf life.
    The pace of innovation would certainly be sped up by removing most regulatory laws. Labor law, for instance, could be jettisoned to speed up development... I tend to think that taking the hit on the transaction costs of the patent system leads to more efficient allocation of resources in the market, which in the end more than outweighs those costs.
    I believe the transaction costs would be very expensive. For every snippet of code a programmer intends to write, she would have to wade through mountains of software patents to see if some substantially similar instantiation of that functionality has been patented in all the jurisdictions where the product will be marketed. If a patent is found, then licensing agreements must be entered into for that routine. The code must then be written in-house anyway, because it's unlikely that the routine would be available in the exact programming language and parameter instantiation and data structure format needed for the software. I don't see how such a search could be cost-effective, compared with the simple authoring of code that would take place if software patents were not of concern, like in the eighties and early nineties. The expense of searching for a usable code module, and the subsequent customization required, are among the reasons why there isn't a thriving market e.g. of packaged software “beans” today. Almost all of the code re-use happening across the world today is of libraries developed in-house, and of the OS vendor's API. Of course, a company could decide to not bother to check international software patent databases at all, but then they'd run the risk that the pricing range they determined as suitable for the market segment they are targeting would be loss-making, if notices of infringement started to come in from unexpected quarters after the software shipped. If acceptable licensing terms can't be found, then the completed software must be scrapped and its development costs written off. It would be difficult to make financial plans and run a successful software publishing business in such an uncertain environment...
    If it is true that patents are more harmful than beneficial in the end, then this analysis makes sense. But I don't necessarily agree with that. The externalities you mention, I believe are usually positive externalities.
    I can readily think of positive externalities that have accrued from the absence of software patents. The seminal legal decision that found that “clean room” reverse engineering of IBM PC BIOS code was legal, enabled the lowering of costs and the blooming of a huge non-proprietary PC-compatible industry. A virtuous circle of market expansion and expanding cash flow feeding e.g. semiconductor and software R&D ensued, leading to enormous growth in computing power, which probably wouldn't have happened if the PC market had remained fragmented. The availability of low-cost and powerful industry-standard computer platforms promoted the development of advanced network interfaces like Myrinet and Infiniband that would have been of marginal viability if the PC market had been smaller. The availability of such high-speed networking technologies enabled the construction of distributed supercomputing clusters based on inexpensive PCs, enabling more and more advanced research and increased understanding e.g. of climate change, genomics or earthquake mechanisms. The pervasive availability of low-cost hardware and generic networking and web application software facilitated the growth of the Internet, giving birth to new, efficient on-line business models and channels for the international trade of goods and services. It is highly doubtful that a successful PC-compatible industry would have been possible if the PC BIOS had been protected by software patents. As for positive externalities of the enforcement of software patents, there must certainly be some, but I can't think of any off my head.
    I think my main difference with you is that whatever problems there are, I believe we should work at by trying to streamline the processes and reduce the costs, rather than making radical changes.
    I'd rather think that the “radical change” would be to introduce pervasive software patents, changing the structure of an industry from the relatively unencumbered state it had when the likes of Adobe, Borland, Microsoft, Novell, Oracle, Symantec, WordPerfect etc. were born. My stance is: “If it ain’t broken, why change it ?” The software patent camp has failed to establish that the benefits they assume will accrue — e.g. increased R&D — will outweigh the direct and opportunity costs of a slower pace of technological progress. Furthermore, I’m also doubtful that meanigful changes to the patent system, like improving the quality of the examinations, would be possible at all.

    MV. You (like Joi)make your most persuasive arguments when you restrict your focus to sofware which you did in the last paragraph of your post. However, when you start quoting authorities to assert that patents and intellectual property in general are not valuable in other industries - you stray so far from empirical reality that you reveal a very strong ideological and political philosophy and agenda that is movivating your comments. It is because of this implied philosophy that myself, Peter and Trevor have to keep explaining the importance of property rights and intellectual property in particular. As hard as it may be for someone of your apparent political viewpoint to grasp - property rights are not designed for the benefit of society as a whole - they are designed to protect the foundation of individual life, libery and the pursuit of happiness. The individual desires life, and in order to live, he does not beg, borrow or steal from others, but instead uses the one thing that raises human beings above animals which is his rational and creative mind in order to produces value and trade that value with another in an honorable and mutually agreed exchange with someone else who desires to live. In that sense property rights are not just an incentive but are most definintely a reward, that can be traded with someone else who has earned a reward of equal value. Until you are prepared to accept this starting point then it is very difficult to enter into a practical discussion with you because it becomes clear that your political philosophy and world view values the collective and society as more important than the individual. Whenever you demonstrate how patents are not helping the individual inventor and entrepreneur in the software industry, I am interested in working with you to find more robust solutions to reforming the system. However, when you use this to attack the whole conceptual foundation of patents across multiple industries and by implication property and individual prosperity it becomes very difficult to move forward.

    "You're confusing patents and innovation. Quoting from Cohen and Walsh: “[..] In most industries, including the most R&D-intensive industries (again except drugs), firms did not report patents as one of the important ways in which they profited from their innovations, but reported reliance chiefly upon other mechanisms [e.g. exploitation of lead time, moving down rapidly down the learning curve, the use of complementary sales and service capabilities, and secrecy]”

    I can also quote from many academics that beleive that the appropriation of economic gains from innovation is not completely based on intellectual property and has a lot to with the use of other complementary assets, secrecy and lead time. Sidney G Winter of the Wharton School of business in his Chapter "Appropriating the Gains from Innovation" in the book "Managing Emerging Technologies" makes the case that "The four major classes of appropriaility mechanisms are 1) Patent and Related Legal protections. 2) Secrecy, 3) Control of Complementary Assets and 4) Lead Time. But as he makes clear "These four mechanisms are not mutually exclusive. They are often complementary approaches"

    I can tell you from my own business development experience that often the best way to Appropriate the Gains from Innovation" in high technology is to think in terms of an industry ecosystem network where individual players that control 1) Intellectual Property, 2) Complementary Manufacturing, Brand and Distribution Assets will come together in co-operative alliances and joint ventures in order to exploit economic opportunities. And sure, Secrecy and Lead Times play a huge part in the puzzle, because one expects the competitor firm or alliance to try to invent around the patents and use their own complementary assets to bring a me-too product to market with greater functionality or lower price. So, by the time that the new product that has been protected by intellectual property, secrets and complementary assets has been introduced to the world, the firm or alliance already has a significant lead time in R&D and Product Development on Version 2 of the product or perhaps some brand/product extensions.

    I don't like to quote from books. I like to speak from my experience of life and business but a good book that explains this approach and has underpinned my own business development strategy is Intellectual Property: Licensing and Joint Venture Profit Strategies, Gorden V. Smith and Russel L. Parr.

    Again, I would very much like to get off the high concept discussions and debates and start enterting into a more constructive brainstorm about the software industry where we recognise the valuable insights from open source projects like Linux and Apache and the need for reform of the patent system whilst also recognising the conceptual foundation of respect for individual rights, property, intellectual property, entrepreneurship, inventorship and innovation and the prosperious and abundant society that has been proven to flow from these values.

    In my last posting I mentioned the idea of dynamic knowledge networks where interdependant individuals, organisations and firms with complentary capabilities and assets form a kind of industry ecosystem. This idea is expounded in The Key Stone Advantage - What the new dynamics of business ecosystems means for Strategy, Innovation and Sustainability - by Marco Iansiti and Roy Levien. The idea that the computer is the network was expounded by Sun and Oracle in the 1990s, but I think that I would also like to suggest the idea that increasingly the enterprise is the network. Open Source as a means of production - bypasses the firm as the internal source of innovation and relies on distributed networks of knowledge workers. The problem is that that the individual who wants to be paid for his contribution to an open source means of production has no way to be paid for the value he has produced and contributed. I think that by placing more emphasis on the enterprise as the network rather than the individual firm - we begin to see an alternative means of production to open source which nevertheless, rewards the invididual cooperation of the firm or the individual (startups included) for their contribution of assets (intellectual property, brand, manufacturing, distribution etc...)

    intellectualproperty wrote@39:
    However, when you start quoting authorities to assert that patents and intellectual property in general are not valuable in other industries - you stray so far from empirical reality that you reveal a very strong ideological and political philosophy and agenda that is movivating your comments.
    Well, I like to think that I'm more a pragmatist than an ideologue. If careful academic surveys of R&D-intensive industries reveal that patents are not considered to be the most important way to profit from innovation, I sit down and take notice. Especially if such a result happens to mesh well with my own observations of how IP is developed, protected or failed to be protected, how patent portfolios are strategically used, and how companies and/or products succeed in the marketplace.

    Besides, the NBER (and Princeton's Institute of Advanced Studies) are not reputed to have some collectivist or leftist bias, have they ? Please thus send your concerns about the divergence from empirical reality of their research — they probably surveyed industries in some cloud cuckoo land — to the paper authors at the relevant institutions, not to me ;-)

    Anyway, I'm arguing that it would be dangerous to blindly assume, based perhaps on a simplistic view of value creation and risk rewarding, that widespread software patenting will be beneficial. In fact, I could perhaps be labeled a “conservative”, or even a “reactionary”, as I'd prefer that people didn't carelessly implement too drastic changes to a socio-economic system that has proved successful in nurturing companies like Adobe, Microsoft, Oracle etc.

    Some label professor Lessig a leftist, for having dared to argue that there was little economic rationale in the recent extension of the duration of copyright from lifetime of the author + 50 years to lifetime of the author + 70 years. IMHO, by the ordinary definition of the word, prof. Lessig should be called a “conservative”, for he's wary of changes to established and proven systems. It's strange how the meanings of some words are distorted by some actors with a political agenda, to transform them into Newspeak labels fed to a docile populace. But I digress.
    As hard as it may be for someone of your apparent political viewpoint to grasp - property rights are not designed for the benefit of society as a whole - they are designed to protect the foundation of individual life, libery and the pursuit of happiness.
    Hey, I strongly object to that distortion of my political views. I'm as attached to individual property rights in general as the next person. What is mine, is mine, and what is yours is negotiable ;-)
    Besides, I thought we were talking about patents, not about property rights in general. Please be aware that the somewhat collectivist “for the benefit of the society as a whole” interpretation of the economic rationale for granting a monopoly is explicitly at the root of the patent system in most nations. You might have heard that society usually frowns upon monopolies, oligopolies and concentrations of economic power — for the US, the Sherman act of 1890 comes to mind. Yet, monopolies named “patents” are regularly granted by the government. Hasn't that behavioral inconsistency ever struck you, and hasn't it occured to you to seek a reasonable explanation for it ?
    Anyway, if you have objections to that “compromise for the common good” interpretation of patents, or to the fact that they are limited in duration, please address them to your country's economists and lawmakers, not to me...







    "Besides, I thought we were talking about patents, not about property rights in general. Please be aware that the somewhat collectivist “for the benefit of the society as a whole” interpretation of the economic rationale for granting a monopoly is explicitly at the root of the patent system in most nations. You might have heard that society usually frowns upon monopolies, oligopolies and concentrations of economic power — for the US, the Sherman act of 1890 comes to mind. Yet, monopolies named “patents” are regularly granted by the government. Hasn't that behavioral inconsistency ever struck you, and hasn't it occured to you to seek a reasonable explanation for it ?"

    You are correct. MV. Ofcourse, governments provide monopoly patent right monopolies because of the belief that society will benefit more than it will lose by the granting of a monopoly. If you read my post you will see that I was referring to property rights in general and in this case the onus is on the government`s function in upholding individual rights through the implentation of the "rule of law".

    I also care deeply about the creation of happy, prosperous society, my point has been that the best way to get there is to respect the productivity, trade of free individuals that property makes possible. Again, I am very happy to find issues of agreement with you so that we can engage in a constructive dialogue with you on the specific issues of sofware development but maybe we should leave this until Joi makes his next post after he has finished reading "The Success of Open Source by Steven Weber"

    Mostly Vowels:
    NBER? I actually am an economist (PhD, with a focus on applied microeconometrics). There is no way you have surveyed all of the stuff on this that has come out of the various NBER venues on this topic. There is just too much. There is no way, for instance, even that I have read anywhere near all of the NBER papers that speak to my dissertation topic.

    Moreover, only a small portion of empirical papers pass through NBER. There is no way you can draw sweeping conclusions about the economic literature on this question. It would take months and months to track down all of the important papers. (And important is not the same as popular.) There is no such thing as an applied literature in economics with complete consensus about anything.

    I actually know what I'm talking about here.

    Really, MV, you have shown your cards. No one who has any idea what they are talking about would make such a sweeping statement about an applied economic literature. Right now I am writing a review of the econometrics of social program evaluation. I have read about 125 of 225 or so papers and other manuscripts that I have gathered and I am scared by the incompleteness of that set. Anyone who knows what they are talking about would instantly understand this: you cannot with confidence make sweeping conclusions about anything. There are just too many people in too many countries with too many different data sources and too many different methodological approaches to ever have such confidence.

    I'd also like to congratulate you on the hackneyed senior year tactic of rolling out the Prisoner's Dilemma. Come on: if you are for real, then show us some real game theory.

    Ok, OK, MV. I've had my fun. All nonsense aside: I am really curious. Who are you? Please drop me a line (pmlance at email dot unc dot edu). I give you my word that I will divulge nothing about you. You clearly dislike me, but indulge me anyway. Thanks.
    Peter

    Peter. Thanks for all your support. It is good to know that a business man and and economist can agree on the important issues ;-)

    IP

    Peter wrote @44:
    Really, MV, you have shown your cards. No one who has any idea what they are talking about would make such a sweeping statement about an applied economic literature. Right now I am writing a review of the econometrics of social program evaluation. I have read about 125 of 225 or so papers and other manuscripts that I have gathered and I am scared by the incompleteness of that set. Anyone who knows what they are talking about would instantly understand this: you cannot with confidence make sweeping conclusions about anything. There are just too many people in too many countries with too many different data sources and too many different methodological approaches to ever have such confidence.
    Yup. A few bricks short of a few load. In case you haven't noticed, several persons in this discussion thread have voiced sweeping, unequivocal support for software patents, based on the, um, supposedly obvious principle that property rights are absolute and sacrosanct and will necessarily contribute to the general welfare.

    Read Cohen and Walsh's paper, and possibly the papers they are referring to, and THEN argue why these papers shouldn't be given at least as much consideration than you or other people's, um, essentially unsubstantiated intuition on software patents, which we're apparently supposed to accept unconditionally, lest we be considered as extremists.
    I gather you also have some actual and relevant knowledge or experience of the creation and management of IP in the software or IT industry, or some other R&D-intensive business...

    I'd also be interested to see your paper on your “real” [sic] game-theoretic interpretation of how a company should balance the costs of applying for a software patent on the one hand, and the royalties it might pay, or get paid. Maybe it'll even get published under the auspices of the likes of the Von Mises, American Enterprise Institute or the Hoover Institution, instead of the biased, disreputable lairs of leftist thinking that are the NBER or the IAS...

    Yours virtually,
    Turing M. Achine







    By the way, I disclose my real identity only when *I* judge it to be necessary, and not based on the curiosity of some random person I come across on the net...

    A few bricks short of a load...you need to get a new line guy. That one wasn't that interesting to begin with.

    I can't deliver a complex game theory model. That's the whole point: I am an econometrician. That's not what we do. But as an econometrician I can at least tell that. I know how big the world of economics is. You obviously don't (don't try pathetically citing just a single paper or two). You have no problem accusing others of knowing little of the topic at hand (after all, we only have junior high school thinking on our side), but clearly also have no problem yourself making brazen statements about areas where you know nothing. A big part of having expertise in a field is knowing the limits of that expertise.

    Go ahead and respond but I'm done with you. You are a nasty intellectual fraud. The basic vein from which you approach this topic was much, much better represented when Joi abd dshupp were going it alone in this thread.

    Why did you have to enter this thread? It was a good discussion until that point.

    With respect, MV. I am not speaking from intuition but experience and logic. Quoting academic authorities is fun and useful, and I did that just so that you know that I do read and respect you for doing so too - but ultimately I am speaking from my own experience of R&D, Product Development and Business Development. The danger with citing academic authorities whether it is Dr Lessig, Cohen or the people I cited - is that we all have a tendency to cite reports that confirm our own experience or as you would say "intution". I am making strong statements in favour of intellectual property and software patents as well as all forms of mutually advantageous co-operative alliances between interdependant owners of intellectual property and other complementary assets and the belieif that we need to reform the patent system to make it easier and cheaper to use for entrepreurs and inventors. I am also not against the commons or open source per se as long as the commons does not use the intelletual property of someone else without providing him something or value or receiving his permission. People are free to volunteer their time, energy and knowledge to a common goal but they must not be forced to do so and they must not steal from others or co-erce others into contributing to ths common good or to sacrifice their invidivual interest to this goal.

    MV:
    Well, I decided I should not have gotten so nasty myself. So I withdraw my comment about intellectual fraud (and nastiness). (And apologize for it.)

    But I really do object to the tone that you brought into this discussion.

    I know how big the world of economics is. You obviously don't (don't try pathetically citing just a single paper or two). You have no problem accusing others of knowing little of the topic at hand (after all, we only have junior high school thinking on our side), but clearly also have no problem yourself making brazen statements about areas where you know nothing.
    Please. Please. Here's your track record so far:

  • You couldn't grasp what the Open Source or Creative Commons actually stand for

  • You couldn't grasp the position of the person (Joi) you were having a dialogue with

  • You couldn't grasp that you didn't know enough about IBM's IP portfolio management strategy to be able to make sweeping statements about its corporate policies

  • You couldn't figure out that the results of some researchers investigating the effects of patents have at least as much credibility than your intuition or limited experience

  • For all your contempt that the prisoner's dilemma is not a “real” game-theoretic model for a firm's decision-making involving software patents, the alternative you propose is, well, not very substantial.

  • As for your latest assertion, one would have hoped that, even with your (very) bounded rationality, you'd be able to figure out by now that the results of your cognition can be quite untrustworthy...

    Why did you have to enter this thread? It was a good discussion until that point.
    Yup. A good discussion, full of platitudes like “property is sacrosanct” or “IP is property too” (no kidding) or “patents incentivize R&D”. After I entered the fray, you also managed to provide us with the following fascinating insights: “there are lots of econ papers published” and “economics is a vast discipline”.
    Maybe some day you'll be able to actually understand, without hand-holding, a discussion's context and the topic's background, and articulate something that is relevant or informed.

    Anyway, my tone might seem unduly harsh, but hey, I've a reputation in real life for (1) being impatient and (2) not tolerating phools gladly. I'm generally trying to behave, but a leopard can't really change its spots, can it ? ;-)











    Wow, you are an amazing person.

    Every single point you made is wrong or misses mine. For example, the whole point about the Prisoner's Dilemma is that you are trying to sound sophisticated by bringing out the most elemental game. (Even an econometrician who paid no attention to game theory after 1st year grad school knows that.) The prisoners dilemma is that cursory level of knowledge kind of thing that every dilettante reaches for when they want to feign depth by throwing in a little game theory. See, that's what they call a tell in poker.

    By the way, I understand clearly what Joi is saying (and you have more and often less faithfully reiterated): I disagree with you.

    I love it when people say "I don't suffer fools (sorry, phools) gladly." It must be nice to be the candle in the cave all the time. Wow, you really are in the bubble, pal. Its clear that you've never really been in an intellectually competitive environment: no one who has carries your level of godly confidence.

    MV: I want to thank you. I just showed your comments to some friends on what has been a sad day in my neck of the woods (for reasons unrelated to this discussion) and your last was so absurd that it brought some much needed laughs. So, thank you: I really owe you one.

    Godly confidence ? Me ? Let's rather say that it's a kind of critical attitude that comes from being in a, um, quite competitive intellectual environment where your mistakes and sloppy thinking are likely to be ruthlessly exposed, where casual dismissals of models as not "real", without being able to articulate the reasons of such dismissal, or to propose an alternate model, would get you a serious ass kicking. An environment where credibility must be earned every single day. An environment where being unable to substantiate one's intuition, opinion or analyses with some concrete data or research results is absolutely unacceptable...

    Does not sound like a nice environment ;-)

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