One of my readers asked if I’d speculate on why Microsoft won’t disclose the 237 of its patents it thinks Linux violates. Given news this week of Amdocs agreeing to license Microsoft’s Linux related patents (via a patent cross-licensing deal) I figured the timing was good. I apologize in advance for how long this is going to be!
Microsoft invests billions of dollars a year in R&D and then discovers that others have stolen their work and are profiting from it. Now historically for any company this is a pretty straightforward thing, you go to the “thief” (who may in fact not even realize they’ve stolen your work) and ask them to stop using it and/or pay you for the right to use it. And if they refuse you take them to court. As companies got bigger and more complex they realized that it’s actually rather hard not to unintentionally infringe on patents held by others and so they started doing patent cross-licensing deals. In those deals the value of the two patent portfolios is assessed and the company with the weaker portfolio trades licenses plus cash for the licenses to the stronger portfolio. This drives companies to build larger patent portfolios so less cash is involved in any transaction. The larger portfolios also serve as a defensive measure since nearly anyone who has a product offering of their own, and comes after you for patent infringement, will find that they are probably infringing on one of your patents too. So one either ignores the possible mutual infringements or takes the cross-licensing route. In general this reduced patent infringement fights between product companies to an acceptable level.
To put this in perspective let me present a straightforward example. With all the aggressive evolution in database systems the last thirty years, and the sometimes vicious competition amongst the database players, why is it that IBM, Oracle, and Microsoft aren’t in court constantly battling over patents? It is inconceivable to me that all three’s database products don’t infringe on at least one patent of the other two. I have no idea what the state of cross-licensing between these three is, but I can tell you that in earlier times when cross-licensing was uncommon that no one focused on going after the competitors for patent infringement. Oh there could have been cases. For example, at both DEC and then Microsoft we patented inventions that gave us a significant boost in the TPC benchmarks. If a competitor had turned around and implemented that same technique in order to beat us in the benchmarks then we would have cried foul. But otherwise the reality was that patent infringements rarely have a material effect on the business. And I think that’s where todays rather litigious environment differs.
Over the last 15 years we’ve seen two forces emerge that upset the delicate “mutually assured destruction” patent peace between companies. One is the rise in the “Patent Troll” industry. The other is the emergence of the anti-Intellectual Property community. Let’s deal with patent trolls first.
While Patent Troll is a pejorative thrown around a lot these days, usually by a thief trying to make the actual owner of the intellectual property look like the bad guy, the proper definition is someone who acquires patents solely for the purpose of collecting licensing revenues. They have no product of their own, so the “mutually assured destruction” cross-licensing model doesn’t apply. They can be ethical or unethical. The ones that are ethical acquire stronger patents and seek reasonable (relative to the actual value of the patent to the infringer) royalties. The unethical ones acquire and assert (often) BS patents in the hope that potential infringers will find it cheaper to pay royalties than the legal fees (and bad PR, etc.) of fighting. Either way, Patent Trolls are widely despised. Having personally fought one of the unethical ones, I tend to despise them as well. Yet as an individual inventor if I patented something how would I make money off my invention? The easiest way would probably be to give Nathan Myhrvold at Intellectual Ventures (an attempt at an ethical approach to patent trolling) a call and see if they wanted to acquire the patent. So Patent Trolls can serve a role in encouraging innovation, even though it often seems like they are just getting in the way.
The other force at work is the anti-Intellectual Property community lead by the Free Software Foundation (FSF) and it’s GNU General Public License (GPL). The problem here is actually two-fold. There are those who really disdain patents and other forms of IP protection and those who support the idea of Intellectual Property for their own work but are willing to look the other way on theft of other’s property as long as it provides them sufficient economic gain. The question here may be who is worse? I would argue that it is the latter crowd. I may consider the FSF and it’s followers wrong (and I’m being kind) but at least they are intellectually honest. Those who turn a blind eye to the theft of another’s Intellectual Property while benefiting from it economically are pond scum.
A brief editorial break here. Many of you are going to realize you are in the category I have just labeled “pond scum”. Yes, I know that is harsh. And that (most of) you aren’t really pond scum. And you certainly don’t consider yourself pond scum. But I am trying to make a point here, and it’s a point best made with a large hammer.
So we get to what I believe is the crux of Microsoft’s patent strategy with regard to Linux and it’s Android variant, go after the pond scum. Now this is certainly more than an emotional reaction to what is happening, it is actually rather hard to figure out how to effectively go after the original authors of the infringing code. Let’s say you take Linus Torvalds and the Linux Foundation to court for an infringement and you win. And then what? The code is already out in the wild. Winning against Linus wouldn’t stop Red Hat from continuing to ship the existing code. Let’s say you went after Red Hat and they removed the offending code. CentOS is already out in the wild and it wouldn’t change availability of that. In fact you’d have to go after all the Linux distributions, and then any site hosting a distribution, and even if you win it wouldn’t stop Amdocs et al from shipping servers with an offending Linux Kernel. So you’d have to go after the Amdocs of the world. Or the end-users who are “receiving stolen property” and will continue to use the infringing product for their own economic gain. In other words, you’ll have to go after the pond scum even after you’ve spent years fighting those who stole the property in the first place. And since the pond scum actually have more to lose economically, why not simply go after them in the first place? So that’s what Microsoft has been doing, with both Android and (more quietly until now) Linux itself.
Why go after anyone? Well for a true Patent Troll the reason would be to make money of licensing the IP. For Microsoft that is just a secondary (and largely immaterial) benefit. The primary reason is that infringing on Microsoft’s IP, and then giving it away for free, is no different from if you engaged directly in software piracy by stealing copies of Windows. There is nothing wrong with free software itself, but if you steal Microsoft’s intellectual property and give it away for free that is unfair competition. And so Microsoft (and Apple, just to make it clear this isn’t purely a Microsoft viewpoint) is fighting back against that unfair competition by demanding compensation for use of its intellectual property.
So now we get to the crux of the question, why won’t Microsoft simply publicly disclose the 237 patents it believes Linux violates. Well, a better question might be “why should it”? What is the economic or strategic benefit for Microsoft to do so? Ok, people don’t like FUD (Fear, Uncertainty, and Doubt) and lack of public disclosure seems like a FUD-based strategy. Microsoft getting into a very public battle over which of those 237 patents Linux really infringes on won’t help Microsoft one little bit. It will keep the press, bloggers, industry analysts, other pundits, lawyers, developers, and a gaggle of others busy for months or years as they argue over which 237 claimed infringements are real, which can be removed without causing any serious problems, etc. But it won’t do a damn bit of good for Microsoft. In fact, I can only see downside for them. Not releasing the list gets them labeled for using FUD. Releasing the list will get them labeled even more strongly for FUD.
Let’s think about those alleged 237 patents. How much due diligence has Microsoft done in identifying the infringements? Obviously it did enough work to believe that Linux does infringe on those patents, but has it done all the work necessary to prove (in a court of law for example) that Linux infringes? Almost certainly not. What it probably knows is that if there are 237 apparent infringements that their must be anywhere from 25-100 very likely infringements. And it probably has done the work on less than a dozen patents to have definitive infringements that they’d likely win on in a court challenge. Why? Because that’s all they need. Releasing the entire list would simply cause most people to focus on the perhaps 200 that either aren’t actual infringements, or that have already been removed from the code, or that could easily be removed from the code. The press (et al) would just bury the fact that there are still dozens of real infringements. Why not do the work to validate all 237 and just identify the real patents at issue? Cost primarily. I would guess it costs them in the neighborhood of $500K on average to create a definitive case for each patent. Where is the cost/benefit analysis that shows it is worth spending $118 Million so they can be comfortable disclosing the actual list of infringing patents? I can’t see one.
Second, how does releasing the list of 237 patents (or any list at all) help Microsoft’s primary cause? What Microsoft wants is for a user of Linux to make the Linux vs Windows decision on some basis other than “Linux is Free”. Releasing the list makes Linux no less free.
Third, think back to any negotiating class you may have taken (or book you may have read). Information is power, and in any negotiation the party with more information has the advantage. Releasing the list of patents Microsoft thinks Linux is infringing on reduces Microsoft’s negotiating power. Why would it want to do that?
The only way to stop the FUD label is to actually seek to enforce the patent rights. The only way to rationally do that is to go after those who are getting the most economic benefit from infringing on the patents. With Android that was the phone manufacturers. With Linux that is large IT shops and those who incorporate Linux into their own offerings such as Amdocs.
A secondary benefit of Microsoft’s approach is that the companies it targets are more likely to settle than fight because Android/Linux is not their primary business. Samsung makes money selling phones and tablets, just how much money do they want to spend defending Android itself? And Microsoft (unlike Apple) isn’t trying to stop them from shipping Android-based phones, it just wants to be compensated for its IP. Amdocs makes CRM systems for the telecommunications industry. It uses Linux, but Linux is not its business. Fighting over Linux makes no sense for them (and as a long-term Amdocs shareholder I support management for avoiding this becoming a major legal distraction). And a large IT shop? Do they really want to spend a dime on lawyers to defend their use of Linux? Will their CEO, or particularly their Board of Directors, really want the company distracted from their actual business (like making and selling shoes or cars or operating restaurants) over an IP issue? No.
These guys don’t all fold because Microsoft calls up one day and demands money. I’m sure Microsoft has to prove to them that there is actual infringement going on. That’s where those small number of patents that Microsoft has done the full due diligence on come in. A targeted company’s lawyers don’t have to believe Microsoft’s claim that Linux infringes on 237 patents, they just have to believe it truly infringes on ONE. If so, they’ll advise their client to settle. I’m sure Microsoft is taking the fact that all 237 probably aren’t provable claims into account in pricing discussions, so that it ends up feeling it is being fairly compensated and the infringing party doesn’t feel it makes more economic sense to fight.
So that’s it, Microsoft is simply following a strategy that makes large users of Android and Linux stop thinking of them as free. And by focusing on large users it also leaves small users, enthusiasts, researchers, etc. that are more likely to be hurt by a direct attack on Linux itself completely alone. I think it’s the right thing to do, though I don’t think it will change the market dynamics much at this point.
And in pursuing its strategy I can see no benefit to Microsoft of disclosing the 237 patents it believes Linux infringes on. So that, quite simply, is the reason they haven’t done so.