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PESC 2007: Open Source, Learning, and Patents


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PESC 2007: Open Source, Learning, and Patents

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