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PESC 2007: Open Source, Learning, and Patents
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PESC 2007: Open Source, Learning, and Patents


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  • 1. Open Source, Learning, and Patents Michael Feldstein April 23, 2007
  • 2. Author’s Note: Adapting to the audience, the sequence of slides presented was changed during presentation. This presentation is in the sequence given. A recording of the presentation is available and can be reached at ___ (Audio MP3 01:00:00 xxmb).
  • 3. About me
  • 4. Who I am not
    • A lawyer
    • An intellectual property expert
    • Knowledgeable about patents outside of the U.S.
    • A journalist
    • A spokesperson for my employer
  • 5. Who I am
    • An interested party
      • A lifelong educator
      • Involved in educational software for 11 years
    • A partisan
      • One of the early reporters of the Blackboard patent and lawsuit
      • Started the Wikipedia page on prior art
      • Translated the Blackboard patent claims into plain English
  • 6. Some wake-up calls
    • Blackboard v Desire2Learn
    • Firestar Software v RedHat
    • Jacobsen v Katzer
    • Washington Research Foundation v. Matsushita et al
    • Alcatel-Lucent v Microsoft
  • 7. Basics about patents
  • 8. Patent vs Copyright
    • A patent is a temporary monopoly on an idea (or “invention”)
    • A copyright is a temporary monopoly on the expression of an idea
  • 9. Reasons for patents
    • To provide incentive for innovation in the fields of “science and the useful arts”
    • To provide incentive for sharing of that innovation, to the public good
  • 10. The issues
  • 11. Pros and cons Source: (2 March 2007, 14:43) Benefits Costs Innovation
    • Creates an incentive for research and new process/product development
    • Encourages disclosure of inventions
    • Impedes combination of new ideas and inventions
    • Provides an opportunity for rent-seeking
    • Facilitates the entry of new (small) firms with a limited asset base or difficulties in obtaining finance
    • Creates short-term monopolies, which may become long-term in network industries, where standards are important
    Transaction Costs
    • Creates a neatly packaged negotiable IP right
    • Creates patent risk uncertainty and/or search costs
    • Creates economic friction
    • Raises transaction costs for follow-on development
  • 12. The software patent challenge
    • Tricky: Algorithms are not patentable, but devices that use them are
    • Controversial: Inventions are often additive
    Source: (30 April, 2006, 00:32)
  • 13. EduPatents as special cases
  • 14. The economics of Bb v D2L
    • Estimated litigation costs to Desire2Learn: $1.5 million - $3 million
    • Additional cost for inter partes challenge at USPTO
    • Desire2Learn’s estimated annual revenues: $10 million
    • Desire2Learn’s estimated annual profits: 5%, or $500,000
    • Conclusion: The patent litigation will cost Desire2Learn 100% of their profits for 3-6 years or longer .
  • 15. And what if they lose?
    • They pay all litigation costs
    • Plus USPTO challenge costs
    • Plus the royalty
    • Plus treble damages for willful infringement (some calculate ~$800K/new customer from suit to settlement)
    • Plus Blackboard’s legal fees
  • 16. The positions
  • 17. Views about software patents
    • Good (and good for you)
    • Generally good, but patent quality is a problem
    • Bad, but we’ve learned to live with them
    • Evil, bad, and yucky
  • 18. Views about EduPatents
    • They protect innovation
    • Good, but particularly vulnerable to patent quality problems
    • Open Source should be protected
    • Open Source and its support vendors should be protected
    • Do more harm than good
  • 19. Hierarchy of EduPatent Needs This section drawn in part from Jim Farmer, “eLearning Patents: An Institutional Perspective,” SUNY Wizard conference, November 8, 2006
  • 20. Safety for users
    • License from a firm that has a patent indemnity clause
    • Use Open Source software that has obtained an opinion of non-infringement or licensing agreements
    • Encourage patent holders to provide guarantees not to sue
  • 21. Safety for Open Source contributors
    • Contribute to a legal entity; retain a non-exclusive right to use and distribute
    • Execute a contribution agreement
    • Maintain records (including copies of contributions)
    • Publish your records
    • Maintain hard copies if possible
  • 22. Safety for software projects (especially Open Source)
    • Provide opinion of non-infringement or design around patents that are being asserted
    • Publish documentation of design processes, and contributions
    • Reveal all sources of code
    • Work with patent holders and community to establish ground rules and “treaties”
    • When necessary, license patents
  • 23. Safety for innovators
    • Engage with the community regarding quality of patent applications
    • Think carefully about trade-offs around patent assertion
    • Consider non-assertion promises or royalty-free licenses for relevant communities
    • Consider defensive patents or publication as alternative strategies
  • 24. The future
  • 25. What to expect
    • More assertion of software patents
    • More liquidity in the patent market
    • Some patent reform, particularly around patent quality
    • The rise of patent indemnification and insurance as a line of business
  • 26. Developments to watch
    • Blackboard v Desire2Learn
    • The Blackboard patent pledge and similar efforts
    • KSR v Teleflex
    • Microsoft v AT&T
    • Patent reform legislation in House and Senate
    • USPTO patent application peer review pilot
  • 27. Questions?
    • Michael Feldstein
    • [email_address]
    • For EduPatent Alerts: