Microsoft enforcing its patent portfolio on Open Source? How likely is it that?

Microsoft Watch highlights the recently surfaced HP memo that speculates that Microsoft would start enforcing its patent portfolio on Open Source. How likely is it? It is an interesting question, indeed. Here’s what I think:

The patent situation, especially on the middleware market, used to be very much like the cold war between the USSR and the USA in the last century. One side moves, everyone dies. My guess is that if Microsoft had gone out and dragged Sun to court over J2EE and Sun had countersued over .NET, things would have gotten really, really nasty. The very foundations of the J2EE stack are sitting right in the middle of a substantial Microsoft patent minefield covering what we know as MTS and COM+. The reverse doesn’t look much better. Now Sun and Microsoft made peace on that front and are even looking to negotiate a broad IP cross-licensing deal to end that sort of arms race. Cross-licensing of patents is quite common in this industry and in most other industries as well. So where does that leave the grassroots Open Source movement? Not in a good place, for sure.

If you do research and you pour millions or even billions into that research, there has to be some return on that investment. And there is a difference between academic research and research that yields commercial products. I am not saying that there is no close relationship between the two, but both are done with different goals. If you do research for commercial purposes, regardless of whether you do it in the automotive industry or in the pharmaceutical industry or even in the software industry, the results of your research deserve protection. At the same time, it is harmful to the society at-large, if everyone would keep all results of all research under wraps. So governments offer companies a deal: You disclose the results of your research and we grant you a limited-time monopoly to use that technology exclusively. If you decide to share the technology with other parties, you can be forced to allow third parties to license it on appropriate terms. And the German Patent law §11 (1) , for instance, explicitly states that patents do not cover noncommercial use of technology in a private environment.

Now, if states offer that sort of system, a company that is built almost only on intellectual property (like Sun, IBM, Oracle, Apple, Microsoft and so forth) must play with the system. The must file for patents. If they don’t, they end of with something like the Eolas mess in their hands and that is not pretty. Even if some of the patents seem absolutely ridiculous; if the patent lawyers at a large company figure out that a certain technology is not covered by an existing patent, they must go and protect it. Not necessarily to enforce it, but rather to avoid that someone else enforces it on them. And because a lot of these patents are indeed idiotic, such are rarely ever enforced and most often quite liberally licensed. Something similar is true for trademarks. Microsoft has no choice but to chase Lindows (now Linspire) or even poor “Mike Rowe Soft” because they must defend their trademarks, by law. If they don’t and let a case slip, they might lose them. It’s not about being nasty, it’s just following the rules that lawmakers have set.

Now, if someone starts cheating on the research front and consumes IP from that system but never contributes IP to the system, it does indeed change the ballgame. If you don’t have a patent portfolio that is interesting enough for someone else to enter a (possibly scoped) cross-licensing deal with you and you don’t license such patents for money but instead break the other parties’ rightfully (it’s the law!) acquired, time-limited monopolies on commercial use of the respective technologies and you do so for profit, then you are simply violating the rules of the law. That’s as simple as it is. So, if I held Sun’s or Microsoft’s patent portfolio, would I ask those who profit from commercialization of those patents for my share? I really might give it some serious consideration. I think companies like Red Hat make wonderful targets, because they are commercial entities that profit greatly from a lot of IP that they do not (as I suspect) have properly licensed for commercial exploitation. The interesting this is that my reading of the (German) patent law is that the non-profit Apache Foundation can actually use patented technology without being at risk, but a for-profit company cannot adopt their results without being liable to acquire a license. Even giving away “free” software in order to benefit from the support services is commercialization. So if Red Hat includes some Apache project’s code that steps on patents, I’d say they are in trouble.

Now, if someone were to “reimplement” a patented drug, the pharmaceutical company sitting on the patent would sue them out of existence the next second without even blinking. Unless I am really badly informed, the entire biotech industry is entirely built on IP protection. All these small biotech firms are doing research that eventually yields protected IP and that’s what they look to turn into profit. They’re not in the business of producing and distributing the resulting drugs on a world-wide scale, they look to share the wealth with the pharmaceutical giants that have the respective infrastructure. The software industry is a very, very tame place against what’s going on in other industries. So will Sun, IBM, Oracle, Apple, and/or Microsoft eventually become more serious about drawing profit from the rights they hold? Right now it would be a very, very stupid thing to do in terms of the resulting, adverse marketing effect.

Now imagine Sun’s unfortunate decline keeps going or some other technology company with a substantial patent portfolio (and not some weak copyright claims) falls into the hands of a litigious bunch of folks as in the case of SCO.  That’s when the shit is going to hit the fan. Big time.