My two previous postings already reported from the KnowRi§ht conference in Vienna, Austria. I summarized a European Commission official's speech on the overall EU agenda in the field of intellectual property rights and reported on both sides of the and argument over EU patent reform.
It was a relatively small conference (dozens but not hundreds of participants). I was favorably impressed by its quality. Vienna University organized the conference jointly with the Jagiellonian University from Krakow, Poland, two German organizations (GI and DGRI), the Business Software Alliance and the FFII. They jointly managed to attract speakers from different parts of Europe with a diversity of backgrounds from academic to policy-making.
I was particularly happy to meet some of the people with whom I was in close contact during the fight against the proposed EU software patent directive, such as Hartmut Pilch (the founder of the FFII). The FFII is also working on a summary of the conference.
When I was asked whether I could step in and participate in a panel a few hours later, there wasn't enough time to prepare slides but I gladly accepted the invitation. The topic of my panel speech was "Software Patents, Standards and Competition" and it was part of the conference track on patent issues.
Here's a summary of what I said.
For those who might not have known me before, I mentioned that I founded the NoSoftwarePatents campaign in 2004 and was focused on patent policy.
By now I am no longer active concerning issues "within intellectual property" but instead look at IP issues in a context of competition and general policy matters.
My positions (such as on software patents) haven't changed; it's just a different focus now.
Monopolies and competition
Intellectual property rights and competition rules have a logical connection because every IPR is a limited monopoly: the exclusive right to sell a piece of software or, in the event of a patent, to build products implementing a certain idea. The theory is that some breathing space is required for creators and innovators. But if an enterprise (or a group of enterprises, a cartel) has a dominant market position, then competition rules can limit the right holders in the exercise of their IPRs.
The landmark case in Europe is the Microsoft decision, whose part on network protocols (as opposed to the part on the Media Player) was largely about the use of IPRs by a dominant player. The European Commission imposed some disclosure and documentation obligations (which even went beyond the interfaces existing at the time of the proceeding) and a duty to deal, meaning an obligation to make licenses to certain intellectual property available on reasonable and non-discriminatory (RAND) terms.
I explained that competition rules define geographic markets based on the way certain markets function, and those definitions can go beyond a single jurisdiction, while patent law always creates rights related to a national market. As a result, competition enforcement in Europe can even pertain to the use of US or Asian patents.
I pointed out that there is only an antitrust case if dominance can be proven. That test is a significant hurdle.
Even if dominance can be proven, one must also bear in mind that it's always a challenge for competition authorities, whose case teams are comprised of economists and lawyers (who in turn have access to external advice), to assess the commercial value of patents, given the highly technical nature of the subject.
Interoperability, procurement policy and general political leverage
I stated that antitrust law is by far not the only basis for governments to influence the behavior of major IPR holders.
Through their public procurement guidelines, governmental bodies define criteria that vendors must meet in order to have access to high-volume opportunities with public-sector entities.
In such areas of interoperability and standards-setting, national and supranational governmental bodies are involved and exert a certain influence just through their active observation, without having to try to regulate formally.
Enterprises always know that if there were major problems in an industry segment, governments could also initiate legislative procedures. therefore, industry will generally try to meet reasonable political expectations.
Current standards and interoperability issues involving software patents
I mentioned the dispute over what should be the standard video codec for the HTML 5 standard, with some vendors favoring a proprietary, patented solution and others pushing for an open-source solution that they say is patent-free although there is certainly a significant risk of some existing patents reading on their preferred technology as well.
The structural problem with patent license fees for Free and Open Source Software is that distribution is always meant to be unlimited: FOSS licenses give every recipient an indefinitely retransferable right to grant others a license to the same software on the same terms. Those rights include the incorporation of program code into other works, and that could in many cases include forms of use on which the right holders would like to collect additional royalties.
In connection with business document formats (word processing, spreadsheets etc.), there are organizations (some of whom are known to be steered by IBM and some Free Software entities fighting side by side with them) asking for royalty-free access to the relevant patents. This is a contentious aspect of the European Interoperability Strategy and European Interoperability Framework, an EU guidelide that is currently being developed.
The argument that IBM's frontends and allies make is that only royalty-free access to patents is compatible with the open-source approach.
However, at a closer look this is not about a romantic relationship of IBM with open source: it's actually all about business interests. In areas where patents held by other companies (such as Microsoft) are concerned, IBM wants royalty-free access for commercial reasons. But when IBM's own patents are concerned, IBM opposes interoperability of many existing mainframe programs with the Hercules open-source emulator and asserts patent infringement.
Open hypocrisy: IBM doesn't put its patents where its mouth is
Asking for RF (royalty-free) access to other companies' patents while not even offering RAND (reasonable and non-discriminatory) licenses to one's own patents in a major strategic business area is an inexplicable gap. I didn't use the word at the conference, but the only word to describe it is hypocrisy.
IBM's aggressive practices in the mainframe business -- where still about half of its corporate profits are generated -- are the longest-standing antitrust issue in the IT industry. It goes back to the 1950s and there are new complaints in the queue now.
No matter whether one prefers RF or RAND access to patent licenses, all of us -- policy-makers, regulators, academics, activists -- should insist that companies "put their patents where their mouth is."
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