Previously I published a first set of thoughts on the Defensive Patent License (DPL), which is currently being developed by two law professors at UC Berkeley. The more I think about that initiative, the more interesting it looks to me, even though its exact content isn't known yet and its future adoption remains to be seen.
Meanwhile I've had some discussions and obtained more information, and there may actually be a solution to the only fundamental concern I had, which was that the DPL might not be effective as a purely defensive mechanism.
But no matter how defensive the DPL may be at first sight, it could pave the way for a whole new business model: that of the Fair Troll (which I'll explain in this post). That approach might be able to provide what I considered to be the missing link. It could enable the DPL to attract a very broadbased following, providing many companies and persons throughout and beyond the FOSS community with economic incentives and the opportunity to contribute to a good cause at the same time.
Before I outline the Fair Troll business model and its possible implementation, I have to explain the limits of a purely defensive approach because that's what constitutes the need for one or ideally more than one company of the Fair Troll type.
No effect on mutually assured damage
Against a troll who waves with a patent you infringe, no membership in any defensive patent pool will ever help you. If the troll's patent is valid, there are no patents with which you can attack the troll because he has no products of his own, so there's no target area. If the troll's patent can be invalidated, such as by proving that the "invention" was previously published by someone else ("prior art"), then it doesn't matter to whom the prior art you find belongs: whether it's yours, belongs to someone in your pool or even to your worst enemy, you can use it in any of those cases if it's suitable for taking the patent down. So again, the DPL doesn't strengthen you.
But against producing (or some say, "practicing") entities -- companies with products or services on the market that could also be attacked with a patent -- the most effective weapon (other than a way to get the aggressor's relevant patents invalidated) is the deterrent potential, the concept of mutually assured destruction (or at least mutually assured damage).
A purely defensive pool, which is the way the upcoming DPL is described by its authors, changes nothing about the problem a troll can pose to you with a given patent (neither helps nor hurts) and, unfortunately, doesn't enhance your own retaliatory potential besides the patents you own yourself.
Of course, the DPL would still allow you to use your own patents against another company that doesn't support the DPL. If you have a patent that reads on someone else's products or services, that could put you into a position to cross-license with the aggressor -- but you don't need the DPL for that. It would still, even if you join the DPL pool, be up to you to obtain patents you can use. You have no legal basis on which you can use the patents of your fellow DPL supporters (at least based on what's been reported so far). So you're still left with all of the cost and effort of taking out patents of your own.
Would the DPL justify the hard and soft costs of taking out patents to contribute to the pool? Actually the motivation to obtain patents would be lower for a DPL member because someone outside the pool can use a patent against any infringer, while a DPL member has to leave fellow member alone. The only benefit is that a DPL member might feel better about it: after all, the patent would be committed to a purely defensive purpose. But when you talk about costs of tens of thousands of dollars/euros, feeling good is at best a secondary consideration.
Without a Fair Troll, it's just a "Coalition of the Harmless"
Legitimate questions have been raised whether that's going to be a major incentive to join the DPL. If it doesn't strengthen your position vis-à-vis a troll, if it doesn't strengthen your deterrent potential, if it doesn't make it cheaper or simpler for you to acquire your own patents -- what's the point?
The benefit would be limited to non-aggression between DPL members. By agreeing to the terms of the DPL, they effectively accede to a multilateral non-aggression pact. But if the DPL mostly attracts those who don't have any patents, or not many, and who are actually rather critical of the patent system in their field (the DPL wouldn't work only for software patents, but let's focus on those here), then that comes down to a Coalition of the Harmless.
They won't own many patents, so your risk of infringing some patent may only be reduced by a fraction of a percent. Jason Schultz, one of the two authors of the DPL, talked about examples of 1,000 to 5,000 patents in a recent speech -- that would be negligible compared to millions of patents that exist worldwide, every one of which could require you to put a product out of the market. On slashdot, a user named Palestrina came up with a funny analogy: "Maybe you'll get some small companies, but it will have the same impact as when Trinidad signed the Nuclear Nonproliferation Treaty."
It's not just that the number would be small. It's also that even if the number becomes somewhat bigger, you talk about a non-aggression pact between persons and entities with a relatively non-aggressive intention from the beginning. The DPL would primarily be joined by those who want peace. It doesn't hurt to firm up that intention on a formal basis, and once they do own patents of their own, they might indeed decide to use them occasionally against companies outside the pool to make money (or for competitive purposes). But it's certainly accurate to say that the average level of aggressiveness would be much lower among DPL members than among the entirety of patent holders. So even if the pool had 100,000 patents (20 times the top of the range Jason used in his example), the statistical risk of one of those patents being actually asserted would likely make those 100K patents as risky as 20K or 30K patents held by non-DPL entities.
"Nice guys don't win ball games"
Even though the DPL's authors can argue that someone with a defensive approach to patents could join the DPL anyway (even if there isn't a single hugely convincing benefit), I continue to believe that the DPL will take off only if the difference between being under the DPL umbrella versus standing in the rain is really significant. Otherwise, it could still be valuable as a litmus test for someone's sincerity concerning promises to use patents defensively, but someone with bad intentions could just stay outside and go about his business the same way as before.
The success formula: Be evil! At least a little bit, and within a perfectly ethical framework. And in this context, be greedy!
The objective: create dynamics (in a potentially profitable way) that will really make it very attractive to be protected by the DPL shield.
What's needed is at least one (ideally more than one) entity that will assert patents from the DPL pool very aggressively and systematically against entities who don't support the DPL. By acceding to the DPL once they are attacked, the pressured parties could limit the problem to backroyalties (paying for past infringement of the patents in question) because once they make their own patents available under the DPL, they will have access to the patents in the pool. If they decide to stay outside even longer, they will bear the full brunt of the patent attack. If they lose, they will pay dearly. Some of that money will enrich those who successfully asserted those patents. Some of it will go back into the DPL ecosystem, making the problem for non-members of the pool bigger with time. Eventually more companies will then decide that it's in their own best interest to join the DPL.
If too many companies join the DPL, then the opportunity for Fair Trolls to find targets would be diminished. But in the meantime the Fair Trolls would already have had a gigantic opportunity to make money. Some of the world's largest patent holders prefer doling out multi-million-dollar checks to dozens of trolls a year over joining an alliance like the DPL pool, so there would likely always be an opportunity to make money.
Community participation
The FOSS community -- and the wider software developer community -- would play a key role in this.
Actually, the idea I'm just describing one that comes from the community. It's not my own and it's time to credit the sources. Henrik Ingo, an executive with Finnish open source company Monty Program Ab and the author of the OpenLife blog and namesake book on the philosophy of open source, explained it in detail on my Facebook wall after I posted my first thoughts on the DPL. Even he didn't create it from scratch. He had been inspired by some contributions to a recent discussion on lwn.net.
If the idea gets implemented, the community would likely be the key contributor of patentable ideas to feed the Fair Trolls with ammunition. Software developers supporting the DPL who don't have the resources to obtain patents of their own (per jurisdiction it can easily cost tens of thousands of dollars/euros in the total of registration and legal fees) could work with a Fair Troll and sell him a patentable idea, which would have to include assistance in the form of input for the patent attorney drafting the patent application. The Fair Troll would pay for the cost and would somehow compensate the contributor, be it through a one-time payment or a percentage of royalties generated in the future or a combination.
The key thing about a Fair Troll is that he would have to make that patent irrevocably available to all members of the DPL pool on DPL terms. So a Fair Troll would only attack companies outside the DPL pool. Those could again eliminate or at least greatly reduce the problem by joining the DPL when they get attacked. A Fair Troll would have to leave peaceful people alone but would have to pursue all others relentlessly. In fact, the better the Fair Troll does his job, the more he will contribute to the DPL cause and the more attractive it will be for community members to work with him.
I said before that ideally there should be more than one Fair Troll. There should be competition. It's actually a huge benefit of the DPL that it aims to create a pool through the common use of a public license as opposed to depending on a single company or a joint venture. That makes the DPL more transparent, more reliable, more resilient than patent pool firms. But for the "trolling" part, companies are needed, and they must be profit-oriented.
There shouldn't be a single company having a monopoly. Two or more should compete with each other because those doing the best job will be most attractive for community members to work with. They will be able to pay the most money upfront, they'd have the best basis for claiming that they can generate substantial income in the future, and they'd be able to afford donations to other community causes so that community members feel even better about the idea of them cashing in on those ideas.
Would the community be up to the task?
There already is a community patent review process named peer-to-patent. The idea is that the community would be able to point out if a patent application is filed on something that's previously been patented or otherwise published. The idea is to ensure that bad patents are avoided during the granting process.
Compared to the community patent review, the idea of feeding a Fair Troll is much more attractive because there's serious money to be made. If you come up with patentable ideas that can really lead to big payments by infringers, and if you then get a cut of the deal, that's a much bigger opportunity than helping a patent office do its job (although both are good causes).
There is so much brain power in the community that its members could likely come up with some of the best patents for "trolling" purposes ever created.
The unique opportunity created by the DPL is that an "inventor" from the community gets the kind of reliability (no use of patents against other DPL supporters) and transparency that you can never get from a software company (or a joint venture of software companies) offering to obtain patents on your ideas. With them you never know what they'll be up to. But with the DPL you have certainty that there won't be any aggression within the pool, and with the Fair Trolls it's quite obvious what they will do: they will try to make as much money with your patent as they can, and that's not only good for you and for them but also for the cause.
Of course, this requires the Fair Troll to make an absolute commitment to adhere to the DPL, and competition among multiple Fair Trolls would ensure performance and would require them to think of ever more ways to position themselves as a great partner for the brightest minds in the community.
Is there a business opportunity for one or more Fair Trolls?
Initially, there would be few DPL members and a Fair Troll would have almost the same targets to attack with his patents as an unfair troll. But only a Fair Troll will get that kind of support from the community.
The perfect victims for trolls are exactly the kinds of companies who won't join the DPL ever, or at least not for a very long time. So there's plenty of money to be made.
Another important question is whether one or ideally more than one Fair Troll could be created in practical terms.
A typical group of founders of such an entity would be a team of IP lawyers who would be in a perfect position to assess the market potential of the patentable ideas offered to them and who could later also enforce those patents in court. For an example, the entity that received $612.5 million from RIM (BlackBerry) belonged to a group of lawyers, who in turn hired another group of lawyers to litigate, and they all shared the hefty proceeds in the end.
A Fair Troll would need some initial funding from investors in order to be able to amass a significant and valuable patent portfolio with the help of the community. Once it starts to generate revenues with those patents, it can reinvest some of the proceeds to acquire ever more patents. Initial capital requirements would correspond to the expectation of how many valuable patentable ideas are offered by the community. If there are many, then there's also a huge revenue opportunity. So from a return-on-investment perspective, it should be possible to pull it off. Some of the initial funding could even come from non-profits who want to support the good cause, but don't forget: for this to do a lot of good, the way in which the Fair Troll deals with the non-DPL world has to be just as bad as any other troll.
The symbiosis between the community and the Fair Trolls
A user named dmarti, who appears to have been the first to publish this idea, wrote on lwn.net: "What we need is a company that would be [DPL] patent pool by day, patent troll by night."
Another way to look at such a Fair Troll would be how Franklin D. Roosevelt, the 32nd president of the United States, purportedly labeled one of his country's allies: "Sure he's a son of a bitch, but he's our son of a bitch."
With that kind of attitude, and with professionals putting the infrastructure in place, the DPL could enable the FOSS community to beat the software patent community at its own game. Wouldn't that be great?
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