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Against Monopoly

defending the right to innovate

The IP Wars

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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This post is based on a discussion Lonnie and I had by email. As you know he is more favorably inclined towards patents than I am, although both of us agree on a lot of middle ground regarding things that are wrong with the current system. In effect Lonnie said "What would a modern world without patents really be like."

You could start a new blog, setting up a pseudo-world scenario where we begin life without patents and see what happens. I am getting enthused about this. Your world has a town, farms, etc. Initially your world is unpopulated, but citizens move to your world by being registered on the blog. You might be able to recruit citizens from TechDirt and other similar blogs, explaining that your goal is to see whether how a world would evolve without IP protection.

While your world is small, your world has lots of technology. So, people will build businesses and industry, and eventually competition will kick in. So, as your world grows, two people will be producing product X, and one will "invent" a product. It might be interesting to see how people behave in this world and whether the world continues to grow without IP protections or whether there comes a point where someone demands them. Then you can have town hall meetings to debate the merits (if it gets to that point). It would be quite an experiment.

I admit I'm too lazy to actually do such a thing, but it is an interesting idea. As the basis for further discussion, I pointed out that there is one experiment ongoing, and another that may be upcoming:

The virtual world without patents is an interesting idea. There is one experiment going on right now in the non-virtual world, and perhaps soon to be one in the virtual world. Both highlight some problems with the idea. In the non-virtual world open source/free software effectively does not use either patents or copyright. It competes pretty successfully with the closed source/proprietary world and is a serious business drawing in companies such as Sun and IBM. It does well in the business world, less well in the consumer world. At the most extreme end of the consumer world is the computer game world which is heavily dominated by proprietary software - mostly protected by technical means, though, not so much by legal means.

In the virtual world, the world you describe is somewhat like the MMORPG secondlife. However, secondlife has some sort of IP implemented through technical means. Apparently though they are opening up their software to competitors, which raises the possibility of compatible worlds which don't have IP. [I don't know much about how all this works - if there is someone out there familiar with secondlife, post a comment.]

Let me point out the problems with these types of experiments:

1. Industries are different. That the open source business model works well for software tell us little about pharmaceuticals. It's hard to find anyone in the software industry who defends software patents. Innovations in software are inexpensive and relatively easy to protect anyway so the upside effect of patents is weak; software builds a lot on existing software, so the downside effect of patents is very strong. It is possible in a virtual world it would be possible to do a more controlled experiment; for example by introducing an industry with development costs more like pharmaceuticals. Much as I'd like to wave the flag and say "see patents don't work for software, let's get rid of them all" this is a non-sequiter.

2. People can choose which world to participate in. On the one hand this favors the patent free world, because people who are most altruistic are drawn to that world; a world in which nobody had patents would have a lower proportion of altruists. On the other hand, as an innovator if I had to choose between a patent free and world with patents, I might well choose the world of patents in hopes I could earn more. Historically this was the major use for patents: not so much to promote innovations, as to encourage skilled artisans to immigrate by promising them short-term monopolies.


Comments

I disagree that software innovation is inexpensive. Top programmers are pretty expensive and the amount of time that it took to program features can be pretty nontrivial. No matter how you cut it, innovation is alway vastly more expensive than copying. Plus projects with the best codebase in theory is easier to copy, however it also mean that it may have an even easier time of attracting developers. For copycat competitors, this mean an uphill battle against older more established project.
David:

I would pick the world without patents; not because I think such a world is better, but because I would enjoy seeing how the world evolves. How would this world deal with capital intensive development that is easily reverse engineered? Would a pharmaceutical industry evolve that is completely unlike any business model previously known? How would software evolve? Though open source has a following, there are drawbacks with open source software. Would proprietary software still develop in this environment?

Perhaps someone reading these comments (some skilled software person with lots of knowledge) would enjoy setting up the world. I would move in.

Lonnie:

What "drawback" does "open source" software have? There is no fundamental difference between the production of proprietary software and the production of open source software.

I saw utterly no difference in the qualify of high end proprietary software and the best of "open source".

I disagree that software innovation is inexpensive. Top programmers are pretty expensive and the amount of time that it took to program features can be pretty nontrivial. No matter how you cut it, innovation is alway vastly more expensive than copying. Plus projects with the best codebase in theory is easier to copy, however it also mean that it may have an even easier time of attracting developers. For copycat competitors, this mean an uphill battle against older more established project.

No one says that software innovation is inexpensive and that software engineers should earn minimum wage and wear sackcloth. Nor does anyone say that copying is not cheaper than innovating. But these points don't prove the necessity of software patents for innovation. Didn't software firms innovate plenty, and didn't they pay their engineers the going wage (complete with stock options and/or restricted shares in many cases) during the pre-software patent era? Or, come to think of it, during the contemporary open source era (not all software is patented these days, indeed, most probably is not)?

The little I know about 2ndlife is that even if their software is not open, you can use it to build and sell "stuff" in their world. As far as I know, things built there can be copied, so it is effectively a world without IP, unless one thinks of getting real world copyright protection for creations in 2ndlife, which is a possibility.
Kiba:

Re Open Source Software: Several disadvantages. The most significant in the current environment is that someone can incorporate copyrighted software into the code and the other users might never know until someone knocks on your door with a search warrant.

Then, there is the rigor and certainty that goes with proprietary software, along with knowing exactly what you are getting. Support for open source software is quite possibly, likely even, less than what you would get with proprietary software. The less you know about computers and software, the more important that support might be.

If you choose the wrong open source software, you might discover that it is no longer supported, except in forums that you have insufficient time, interest or understanding to participate.

Kiba:

I should have read your post completely.

Yes, the best of open source may well be comparable to proprietary software. I am insufficiently qualified to know. I do know that fans of open source are quite vocal about their love for open source. On the other hand, I am unaware of many fans of closed source software. What I do see from owners of closed source software is that there is a distrust of open source software, which is possibly one of the biggest reasons that open source has yet to penetrate the desktop/laptop world to any significant degree.

I think Lonnie has the open source versus proprietary pretty much backwards. It's easy to get support for open source software: that's what they sell, support. As to what's incorporated in the source code: well it's there so you can see it. The only effort I know of to claim that copyrighted software was illegitimately incorporated into open source was the SCO fiasco in which it turned out both that it wasn't true, and that SCO didn't hold the copyright anyway. There have been several cases of open source software illegitimately being incorporated into proprietary software. Here is a partial list. It's not that easy to obtain proprietary source code to illegitimately incorporate into open source projects. There have been a few problems with failing to properly credit sources.

But the biggest reason that open source (strictly speaking "free") software has over proprietary is that if is no longer supported, you can do something about it. Abandonware has been a huge problem in the proprietary software space.

As for rigor or uncertainty, all I can say is I've used both Linux and Windows Vista. One of those products got tested, the other did not. I'm afraid Microsoft isn't the winner of that contest.

The fact is that in the business space where rigor and reliability are crucial - open source dominates. This includes Linux and Solaris as server operating systems, Apache as a webserver, or databases such as mysql. The fact is that the better run businesses have become highly aware of the problem of getting locked in to a particular proprietary software vendor. In the more forgiving consumer space and even more forgiving game space proprietary software is more important.

Let me add something on copying versus innovating software. Copying as in making copies of binary files and redistributing them is a lot less expensive than innovating. Creating functionally equivalent software is a lot more expensive that writing the original. The reason is the need for file compatibility. It's easy to write a word processor. You can put together a useful word processor in a high level language like Java in a few days (that's not a guess). Trying to get it to read or write Microsoft Word files...well that would be more like years.
As a software engineer I'd like to make the observation that one continually innovates in the process of doing one's job for a salary. The prospect of obtaining patents is not an incentive, but an occupational hazard (in those organisations that obsess about such things), as it interferes with the software engineering process.

Software patents may well be regarded by some employers of software engineers as fragments of a radioactive gem called 'monopoly' for them to mine from the work that has been performed without their incentive. These fragments are then collected into a portfolio where they remain only as a defence asset (sometimes attractive to trolls).

I think Lonnie has the open source versus proprietary pretty much backwards. It's easy to get support for open source software: that's what they sell, support.

It is easy to get support for proprietary software. When I have had questions in the past, Microsoft or Dell has always been there to answer them.

As for my comment regarding open source software, that comment was made after going through more than a half dozen papers and web sites that compared open source versus proprietary software. Even papers and surveys that were strongly pro-open source stated that some open source software was supported only through forums.

Now, if you are speaking of the "best" of the open source software, that may well be comparable to proprietary software. However, the surveys covered the spectrum and apparently there are open source programs that are not as well supported as others.

As to what's incorporated in the source code: well it's there so you can see it. The only effort I know of to claim that copyrighted software was illegitimately incorporated into open source was the SCO fiasco in which it turned out both that it wasn't true, and that SCO didn't hold the copyright anyway.

I merely stated this as a potential risk, not a certainty.

But the biggest reason that open source (strictly speaking "free") software has over proprietary is that if is no longer supported, you can do something about it. Abandonware has been a huge problem in the proprietary software space.

In my survey of web sites, even those that were strongly biased against proprietary software, abandoned proprietary software was not mentioned.

As for rigor or uncertainty, all I can say is I've used both Linux and Windows Vista. One of those products got tested, the other did not. I'm afraid Microsoft isn't the winner of that contest.

I got a new Dell last Christmas. Fortunately for me, my son was involved in the selection of the computer and got Windows XP on it. My last two companies are still with Windows XP. Enough said about that.

Again, my comment is based on a survey of web sites that compared the two categories of software, and a common theme was that the flexibility of open source was also a source of problems, particular for those people who were relatively unfamiliar with computers, and the general comment that Microsoft programs worked fairly seamlessly with each other and some open source programs did not. I did encounter one debate where two individuals were arguing about seamless operation, with one listing the open source programs he was using and how great they worked together, and another listing the programs he had and listing the problems he had getting them to work together. I am not claiming that either of them are correct, nor that any other web site is correct. I am merely reporting what I have read on sites that seem to have at least a modicum of objectivity regarding these issues.

Oh, another common theme I have seen is that open source tends to be preferred by those who are more computer literate than the average person, and proprietary software tends to be preferred by those less knowledgeable and skilled with computers.

The fact is that in the business space where rigor and reliability are crucial - open source dominates. This includes Linux and Solaris as server operating systems, Apache as a webserver, or databases such as mysql. The fact is that the better run businesses have become highly aware of the problem of getting locked in to a particular proprietary software vendor. In the more forgiving consumer space and even more forgiving game space proprietary software is more important.

Open Source Statistics:

Open source penetration of public libraries - about 1% (October 2007) Open source penetration of publishing software - about 55% (2007) Open source penetration of internet browsers - about 27% (2007) Linux penetration of operating systems - about 1.34% (Sept. 3, 2007) Linux penetration of the company server market - about 12.7% (2007) Linux penetration of the desktop market - about 1-2% (2007)

Let's compare apples to apples. There is open source software that is not well supported. There is also proprietary software that is not well supported. You mention Microsoft (Dell is a hardware not software vendor). That Microsoft provides support shows only that the best of the proprietary software is well supported.

If you want to learn more about abandonware, you need look no further than Wikipedia.

It is true that open source software is more amenable to tinkering than proprietary software. That was also the historical advantage of Microsoft over the Mac - historically Microsoft was really good to developers. Amenability to tinkering plus reliability are why open source penetration in the business space is so strong.

It's always dangerous to make forecasts, but it looks to me like the upcoming recession will be a disaster for Microsoft. Low profit margins during recessions make it a good time for businesses to experiment with new things. Microsoft has been holding market share largely through its large installed base, it lost the technical edge a while back. I expect a lot of businesses to find the recession a convenient time to upgrade from Microsoft to Linux and Solaris. On the consumer side, it's hard to see how Microsoft is going to survive the really really low cost computer. While it is true that with $100 computers (or telephones, or whatever they happen to be) people will probably own more than one, it's also true that it is going to be hard to charge a very big premium for an operating system. This looks like nearly a perfect storm for Microsoft, and they haven't really had strong management since Gates stepped down as CEO.

If you want to learn more about abandonware, you need look no further than Wikipedia.

Interesting article. They point out that abandonware generally refers to older computer games that have been abandoned, though it can refer to other types of programs as well. In fact, they list open source software that has become abandonware.

It's always dangerous to make forecasts, but it looks to me like the upcoming recession will be a disaster for Microsoft. Low profit margins during recessions make it a good time for businesses to experiment with new things. Microsoft has been holding market share largely through its large installed base, it lost the technical edge a while back. I expect a lot of businesses to find the recession a convenient time to upgrade from Microsoft to Linux and Solaris. On the consumer side, it's hard to see how Microsoft is going to survive the really really low cost computer. While it is true that with $100 computers (or telephones, or whatever they happen to be) people will probably own more than one, it's also true that it is going to be hard to charge a very big premium for an operating system. This looks like nearly a perfect storm for Microsoft, and they haven't really had strong management since Gates stepped down as CEO.

The ultra-low cost PC might well be a chink in Microsoft's armor. I think the vast majority of PC users stay with Microsoft because they know and trust Microsoft. However, the vast majority of PC users are also not what I would call computer geeks. PC users will likely buy ultra-low cost computers because (revelation here) they are ultra-low cost and the risk is low. If they become comfortable with open source software on these computers, some users will likely feel better about moving their more expensive computers to open source software.

Regardless of whether open source is used exclusively on the ultra-low cost machines and makes more inroads into Microsoft's traditional markets, Microsoft looks as though they will continue to dominate the higher cost PC market for some, as yet to be determined, time to come.

I don't expect Microsoft to go away overnight. I also expect them to be a player for low cost hardware, but they will have to price low and that will cut into their bottom line.
I don't expect Microsoft to go away overnight. I also expect them to be a player for low cost hardware, but they will have to price low and that will cut into their bottom line.

You really think so? I would think that low cost hardware does not fit into their business model. Even if they changed their business model, it just seems out of character for them. Interesting prediction. I will keep that in mind down the road when you say "I told you so."

Microsoft has always been willing to compete. They offer a stripped down version of windows for the low cost OLPC. I haven't been able to find what they charge for it versus the more advanced versions of windows though.
I think it is safe to say that there are really no difference between "open source" and proprietary software in general. The best of the best usually have some sort of tech support option if one wishes to pay for it.

Any difference of quality can be directly attributed to development team and their development model, and the maturity of software

I'll make a bold prediction that free software in general will dominate the market and that proprietary softwares will gradually phrased out because free software have two or three advantages that it will hold forever over proprietary softwares.

1. The source code is open. This allow for more flexibility and evolution of the software since the source code isn't controlled by one corporation.

2. It is price competitive. The price of free software will alway in general be lower or matching to proprietary software.

3. It is practically full-featured and full fledged. There is no "trialware".(If there is, I never encountered such software)

Right now it is not dominating because software development is frankly behind on many front. But given what I have already seen(Super amazing graphics blings that beat even winblow Vista), it is improving rapidly. It will take a gigantic amount of money before we get to see the year of the Desktop linux or whatever free software vendors and fans desire .

Kiba:

Nice summary. A couple of minor points:

o Not all open source software is free, as has been pointed out many times by Mike Masnick and others.

o Even free open source software is often not free and requires hiring of a consultant or internal people to modify the software to your needs, or to deal with issues that arise from application of the software.

I think that open source has one, huge hurdle: inertia. Most people are familiar with Microsoft. Few people in the general population even know there is such as thing as open source software, much less what it is and what it can do. Until open source becomes more widely known as something other than geekware, most people will keep buying proprietary software.

FYI: My last company looked into open source software before we purchased our last round of computers and software. Though our information systems people made a pitch for open source, the executive level decided there were too many unknowns and went with the known names. However, I believe that decision will be revisited again the next go round of hardware and software purchases.

"I would think that low cost hardware does not fit into [Microsoft's] business model."

That's interesting. If true, it makes the XBox and XBox-360 rather mysterious, though. If they don't "fit into Microsoft's business model" then really they ought to spin off the XBox operation to operate henceforth as a separate business.

None of Your Beeswax:

Is the Xbox 360 "low cost hardware," or does it provide a very good profit margin? "Low cost" is a relative term. I personally did not consider the Xbox 360 "low cost" when it first came out. The price has dropped steadily with time, but now it is a platform for Microsoft games and is making far more money from them than from the game player itself.

XBox 360: $300.

Desktop computer: ~$800.

Yup. Low cost hardware.


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