Open Source, Learning, and Patents

Michael FeldsteinApril 23, 2007

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).

About me

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

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

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

Basics about patents

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

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

The issues

Pros and consBenefits 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

Competition

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

Source: http://en.wikipedia.org/wiki/Software_patent_debate (2 March 2007, 14:43)

The software patent challenge

Tricky: Algorithms are not patentable, but devices that use them are

Controversial: Inventions are often additiveSource: http://en.wikipedia.org/wiki/Image:Software_patents2.JPG#file (30 April, 2006, 00:32)

EduPatents as special cases

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.

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

The positions

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

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

Hierarchy of EduPatent Needs

This section drawn in part from Jim Farmer, “eLearning Patents: An Institutional Perspective,” SUNY Wizard conference, November 8, 2006

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

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

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

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

The future

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

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

Questions?

Michael Feldsteinhttp://mfeldstein.com/Michael@mfeldstein.com

For EduPatent Alerts:http://mfeldstein.com/edupatents/