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+<!--#include virtual="/server/header.html" -->
+<!-- Parent-Version: 1.77 -->
+<title>Daniel Ravicher's FFII panel presentation
+- GNU Project - Free Software Foundation</title>
+<!--#include virtual="/philosophy/po/patent-practice-panel.translist" -->
+<!--#include virtual="/server/banner.html" -->
+<h2>New Developments in Patent Practice: Assessing the Risks and Cost
+of Portfolio Licensing and Hold-ups</h2>
+
+<p>by <strong>Daniel B. Ravicher</strong></p>
+
+<p><em>This is a transcript of a panel presentation given by Daniel B.
+Ravicher as the executive director of the Public Patent Foundation on
+Wednesday, November 10, 2004, at a conference organized by the
+Foundation for a Free Information Infrastructure (FFII) in Brussels,
+Belgium. The transcription was done by Aendrew Rininsland.</em></p>
+
+<p>Thanks. I think, for me, the whole two days of conferences boils to
+really one question, and the whole debate boils down to one question:
+&ldquo;How do we want success in the software industry to be
+determined?&rdquo;
+</p>
+
+<p>
+Or, another way, who do we want to determine those who succeed and
+those who fail in the software industry? Because there are various
+people who can make this decision. We can have bureaucrats make the
+decision about who wins and who fails, or we can let consumers make
+the decision about who wins and who fails. If we want software to
+succeed because we want it to succeed on its merits and be the best
+software that the public can have, it's more likely we want a system
+that lets consumers and end-users make the decision about which
+software is selected &mdash; not bureaucrats.
+</p>
+
+<p> Now, what does that have to do with patents? The larger you make a
+patent system, the more you allow the patent system to impact
+software, and the more you're allowing success in the software
+industry to be determined by patent-based bureaucrats, those who can
+take advantage of the bureaucracy which grants and resolves disputes
+regarding patent rights. It's a bureaucratic competition, not one
+based on the decision of consumers. That means it's less likely for
+the merits to be determinative of what software succeeds.
+</p>
+
+<p>
+We have to recognize that even without software patents, large
+developers have intrinsic advantages over small developers. Large
+developers have the resources, large developers have the
+relationships, large developers have the distribution channels, large
+developers have the brand. So even without software patents, large
+developers are still at an advantage &mdash; they start out at an
+advantage. Well, then, the next question to me is, &ldquo;If we have
+software patents, does that increase the advantage of large developers
+or decrease it?&rdquo;, because the patent system could benefit small
+developers and therefore that could erode some of the naturally
+existing benefits that large corporations have.
+</p>
+
+<p>
+I think that point's been belaboured already. We know that small
+developers are not benefited by a patent system, in fact, they are
+prejudiced by a patent system. So, enlarging a patent system to apply
+to software development only enlarges the disadvantage small
+developers have in competition. Again, it comes back: Who do we want
+to make the decision about which software developers succeed, do we
+want consumers, based on merits and functionality and price, or
+bureaucrats, based on whom patents are granted to and who wins patent
+infringement cases?
+</p>
+
+<p>
+The other thing we need to recognize is whether or not the patent
+system has a preference for users of certain types of software. A
+patent system as we have in the United States benefits those under a
+software distribution scheme which allows them to charge
+royalties. This is because all software has to deal with the risk of
+infringing on patents. Patents don't discriminate between open-source
+or freely licensed software and proprietary software: a patent covers
+certain technology, it doesn't matter how the software's distributed.
+But proprietary software is licensed with a fee so the cost of that
+risk can be passed on to the consumer without them recognizing
+it. They don't see it, it's baked into the price of the software
+they're buying and if you were to ask a consumer if they've bought
+insurance against being sued for patent infringement, they would say
+they don't believe that have.
+<span class="gnun-split"></span>But in fact they had, because if someone
+sues a user of Microsoft software, Microsoft has built in the cost of
+stepping in to defend them from that into the cost of the license
+fee. On the other side, if you have royalty-free distributed software
+such as open-source or free software, you can't bake in the cost of
+that risk so it becomes more transparent. And this makes consumers or
+users think that open-source is in a worse position than proprietary
+software when it's actually not. It's just because the open-source
+distribution scheme does not allow someone to sneak in the cost of
+that risk to make it opaque instead of transparent. So the patent
+system not only prefers large developers over small developers, it
+also prefers users of proprietary software over open-source software.
+</p>
+
+<p>
+If we come back to the initial question, which I think this is all
+about, how do we want success in the software market to be determined?
+Do we want it to be determined by these types of factors, or do we
+want it to be determined by who can get the best software at the best
+price?
+</p>
+
+<p>
+Now, I think it's important to concede the point that people on the
+other side will make, which is, will a less-onerous patent system, or
+they would call it a &lsquo;less-beneficial&rsquo; patent system, I
+call it less-onerous, will harm their business, because people could
+copy them. Well, large businesses aren't worried about being
+copied. They really aren't. At least not by other large businesses,
+this is why they enter into cross-licenses all the time.
+<span class="gnun-split"></span>If a large
+company really didn't want its software to be copied, why is it
+licensing its patent portfolio to every other big company in the
+world? Because it can't stop them from copying it once they enter into
+that agreement, so this argument that , &ldquo;Well, we're worried
+about people copying our software&rdquo;, the most likely people to
+copy your software are other large businesses because they have the
+resources and the ability and the distribution channels and the brand
+and the relationships. Why are you letting them copy it? You must not
+be that worried about it.
+</p>
+
+<p>
+And so the question is, then, does a patent system have a
+net-beneficial effect or a net-detrimental effect on software
+development? I think we've seen already it only decreases the ability
+for open-source or royalty-free license software to compete with
+proprietary software. In the end you have to ask, is less competition
+beneficial for the software industry? I don't know what Europeans
+think about that, I think Europeans are very pro-competition and I
+know us on the other side of the Atlantic are very pro-competition as
+well, and so the answer is never less competition is better for
+consumers. And so I think as we bring the point home, if we had two
+seconds in an elevator to pitch this idea to someone, software patents
+have a net-negative effect on competition in the software
+industry.
+<span class="gnun-split"></span>True, they may increase competition in some ways, but the
+net-effect is anti-competitive. And that's what putting the ability to
+decide success in the software industry in the hands of the patent
+office or in hands of the courts does. If you need examples, if people
+think that's just rhetoric or your opinion, just point to the United
+States. Microsoft is a very successful software company, I don't think
+anyone would debate that. They've never had to sue anyone for patent
+infringement. So they claim they need patents, but yet they've never
+had to use them. They cross-license them and that's where we wonder,
+&lsquo;If you're worried about people copying, then why are you
+cross-licensing them to people?&rsquo;.
+</p>
+
+<p>
+You know, the last point is, who else does a patent system benefit? If
+it benefits large developers over small developers, is there anyone
+else? A patent system benefits non-developers. Do we really want a
+bureaucratic system that helps people who aren't adding anything to
+society? What I mean by non-developers are trolls &mdash; which
+everyone here is familiar with &mdash; people who get a patent either
+by applying for it or acquiring it in some asset purchase and then use
+it to tax other developers, other distributors of a product.
+</p>
+
+<p>
+Do we really want a system which encourages people to not add products
+or services to the market place but only detracts from the profits and
+capabilities of those that do?
+</p>
+
+</div><!-- for id="content", starts in the include above -->
+<!--#include virtual="/server/footer.html" -->
+<div id="footer">
+<div class="unprintable">
+
+<p>Please send general FSF &amp; GNU inquiries to
+<a href="mailto:gnu@gnu.org">&lt;gnu@gnu.org&gt;</a>.
+There are also <a href="/contact/">other ways to contact</a>
+the FSF. Broken links and other corrections or suggestions can be sent
+to <a href="mailto:webmasters@gnu.org">&lt;webmasters@gnu.org&gt;</a>.</p>
+
+<p><!-- TRANSLATORS: Ignore the original text in this paragraph,
+ replace it with the translation of these two:
+
+ We work hard and do our best to provide accurate, good quality
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+ &lt;web-translators@gnu.org&gt;</a>.</p>
+
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+Please see the <a
+href="/server/standards/README.translations.html">Translations
+README</a> for information on coordinating and submitting translations
+of this article.</p>
+</div>
+
+<!-- Regarding copyright, in general, standalone pages (as opposed to
+ files generated as part of manuals) on the GNU web server should
+ be under CC BY-ND 3.0 US. Please do NOT change or remove this
+ without talking with the webmasters or licensing team first.
+ Please make sure the copyright date is consistent with the
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+
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+
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+
+<p>Copyright &copy; 2006 Daniel B. Ravicher</p>
+
+<p>Verbatim copying and distribution of this entire article is
+permitted in any medium, provided this notice is preserved.</p>
+
+<!--#include virtual="/server/bottom-notes.html" -->
+
+<p class="unprintable">Updated:
+<!-- timestamp start -->
+$Date: 2014/04/12 12:40:33 $
+<!-- timestamp end -->
+</p>
+</div>
+</div>
+</body>
+</html>