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Here's a question for you-- if I want to innovate on top of the Xandros's open source software, which is comletely legal to do (provided I take out all trademarks, like CentOS does for Red Hat, or like Oracle did for Red Hat), in your viewpoint would I then have to pay Microsoft "bridge" money?  For instance, if I wanted to make a medical-specific distribution of Linux based of Xandros, give it my own branding, and distribute it to a small group of doctors, for a small fee--  Is Microsoft now going to sue my customers?  Is this something I should worry about?  Should I perhaps consider not innovating after all, because the uncertainty is too great?

Hi Stephen, Thank you for your reply.  A few thoughts: I think that lumping patents, copyright, and trademarks all under the term "intellectual property" has a rhetorical effect that substantially blurs the issue, a fact which I think is sometimes taken advantage of to paint free and open source software advocates as being anti-property rights-- while there may be some who are, I think that most are not.  I'd respectfully ask that you be specific with the terms in such discussions, because the main issue is about patents, and specifically US patents.  

I believe the US patent system is in an abject state of affairs in regard to software; the system was formed to protect innovation but frequently (if not most of the time) has the opposite effect, yielding a huge number of bogus patents and causing a legal mess for companies to deal with.  Would you agree with this assessment?  

I don't know all the specifics of Stallman's statements, but my impression was that his statements were in part meant to illustrate the above point.  In other words: Almost every piece of software out there, including GNU software and Microsoft software, violates patents of other companies simply because there are so many bogus, trivial patents that other companies have stockpiled.  If one were to look at the thousands of frivolous patents that have been approved, there are definitely many that Linux distributions impinge upon, just as there are many that MS software impinges upon for which it isn't paying anyone-- nor should MS have to pay other companies for trivial or bogus patents.  In this sense, and in this sense only, I'd agree-- Linux distributions may "use Microsoft's intellectual property", just as MS's software is covered by trivial patents held by other companies for which it isn't paying (i.e., "uses their intellectual property").  Obviously, Microsoft cannot publicly admit this any more than Novell or Xandros can publicly make such statements without expecting some sort of shareholder revolt or other badness (I guess one of the advantages of being a regular shmoe like me is that I have a bit more freedom to state the obvious).  Yes, MS may have had its hand forced to pay huge amounts of money annually for licensing software patents, but there is an even greater number of software patents covering MS code for which MS isn't paying (and for which it shouldn't have to pay any more than Linux distributors should have to pay for trivial patent claims).  This is the whole idea underlying the notion of "patent armeggedon", of which I'm sure you're aware.  I am sure that you cannot publicly acknowledge the fact that MS impinges on patents for which it isn't paying any more than most Linux distributors can publicly acknowledge it, but that's the reality.  

It is interesting to note that the inanity of the US patent system is something that Bill Gates acknolwedged a decade and a half ago, saying "If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today". (An Op-Ed in yesterday's NY Times discusses this better than I can: www.nytimes.com/.../09lee.html

).  Obviously, now that Microsoft is dominant, a standstill is to its benefit, but this is not to the benefit of the industry at large.

What you seem to be saying is that while you are against trivial patents, Microsoft will nevertheless threaten to sue its customers by using such patents (because without revealing to companies what the patents are, how can we know that they aren't trivial?  My hunch is that if your company ultimately reveals what the patents were, a lot of them will be laughable.  Revealing the patents publically should be the first step in any negotiations but, as demonstrated, Microsoft hasn't even done so in private with the companies it is telling to pay up.  Instead, MS is saying "Don't worry, we already did you the favor of calculating exactly how much you owe us, and we already checked to make sure all of our patents are legitimate.  Trust us.")  If the situation is substantially different from this (apart from mixing in an "interoperability agreement" so that it sounds better, please eplain this to me.)

I would disagree that the signals Microsoft has sent have been "clear" in many senses-- MS has said that there are patent infringements within certain program categories, but has refused to say what those infringments were, all while implying that it might sue customers if vendors don't pay Microsoft.  So if I wanted to innovate on top of Xandros while at the same time being respectful of not violating MS's patents, it seems I would have no way of knowing which of Microsoft's patents it felt I was violating, even if I asked Microsoft.  Saying "there are X number of MS patents violated by email programs in Linux distributions" is utterly unhelpful, as there are countless email programs available in Linux distributions; can you see how specifying numbers of patents, without providing details to the public (who might want to innovate using open source-- and might even want to innovate in a space that competes with Microsoft), can be viewed as an attempt to spread fear, uncertainty and doubt?  As it is, because of this refusal of Microsoft to disclose specifics, if I wanted to innovate as I described (even if I wanted to avoid, in your words, using "MS's Intellectual Property") I wouldn't even have the opportunity to know how to do so; I wouldn't have the opportunity to not use software that Microsoft feels it has a patent on, or to point out that a particular patent was invalid.  This is particularly true if I'm a small company without the resources to hire a big legal team.  Instead I would have to arrange, behind closed doors with MS lawyers, to pay Microsoft some arbitrarily determined fee just in order to enter a space that might compete with Microsoft, and to prevent bad things from happening to my customers, all based on vague ominous-sounding threats, all without even knowing exactly what I was paying for.  Do you think this is right?  Does this sound like a legitimate business discussion to you?  Do you think this situation protects innovation?  Can you see why this might be viewed as "bullying" or as a "protection racket"?

As for what I would do if I were Microsoft, that's a tough question.  Obviously Microsoft is facing a fundamental threat to its traditional business models, both from the open source software and software-as-a-service models, as well as from the concept of open, patent-free formats; it's thus understandable for the company to be afraid that it won't be able to sustain the revenues it has historically generated through customer lock-in.  

The answer to your question as to what I would do if I were MS depends largely on whether you meant "what would you do to ensure the company's bottom line short-term?", "what would you do to ensure the company's bottom line long-term?", "what would you do to ensure that Microsoft maintained healthy financial growth while not abusing its monopoly power?", or "what would you do based on what you think is the morally right thing to do?"  

The answers to the first two questions depend on how likely I think it would be for the company to get away with (what I see as) abusing its power; in the short term, it appears pretty likely that this will be possible, at least in the US.  Microsoft has done a great job of becoming steering many goverment processes through lobbying, and the current US administration seems particularly unlikely to investigate anticompetitive behaviour (there's a relevant article in today's NYTimes, by the way [www.nytimes.com/.../10microsoft.html]).  Thus, I guess if I were the MS CEO, and all I cared about was the company's short-term bottom line in the United States, I might indeed do exactly what Microsoft is doing, and continue to act like (what I characterize as) a bully by carrying out (what I feel is) a protection racket.  I would continue to try and convince companies to pay me not to sue their customers, but I wouldn't tell the public or the companies what patent protection they were actually paying for.  In this manner, I'd try to delay FOSS's growth for as long as possible, while making sure that I would somehow get a cut of any proceeds from that software in the long term.  I would try and characterize free and open source software advocates as anti-property rights rather than anti-broken-patent system.  (This would be easy, because there will always be nutty (i.e., nuttier than me) anti-Microsoft-for-the-sake-of-being-anti-Microsoft folks to point to.) I might also try to give more money to another company like SCO, so that they might litigate against Linux customers while allowing me to claim that MS itself isn't a litigous company.  I would continue to invest in lawyers and trivial patents not just to protect myself defensively from other companies, but also to make sure that it would be cost-prohibitive for smaller companies to compete and innovate.  Perhaps I would even try and personally attack those who threatened by business interests, if I thought I could get away with it.

Now, if I were concerned mainly about long-term bottom line, my strategy would be less certain, because the future is difficult to predict.  Will the patent system stay just as broken?  Will the next administration be as cozy with my company?  If I thought my company could get away with it, and I thought the rest of the world would behave similarly to the US, and if I didn't care that the brokenness of the patent system was also harming my own company, and if I didn't care whether my actions were consistent with my public messaging on caring about innovation and healthy competition, and if I didn't care about the ill-will I'd generate by threatening to sue my customers and by using trivial patents (which we can only assume many of them are if Microsoft refuses to disclose them), I suppose I would again act exactly as I described above, and as Microsoft has been doing.

Perhaps staving off FOSS and software-as-a-service models by using the broken patent system is more advntageous than lobbying to fix the patent system, despite the fact that system's failings are also likely to harm Microsoft's future bottom line due to frivolous lawsuits.  For all I know, that might be true, at least financially in the short term until MS can revamp its business models to be more.  I'm sure the cost-benefit analysis is not an easy one to compute.  However, as hypothetical CEO, before I made that call I would definitely want to take into consideration that the ill-will I'd generate could be quite costly in the long run, in many indirect, if not direct ways.  For one, I would realize that my company's word would not be able to be trusted as easily.  After all, I would have threatened to sue my own customers, and my business operations would depend on openly extolling innovation while simultaneously squelching it.  I would also be concerned about whether my talented employees who cared about their company's values felt comfortable working for me.  It often seems to be the most talented employees who possess the greatest sense of integrity.

And perhaps most pertinent to contemporary times, I would realize that by using patents as a vague, offensive weapon, I'd be undermining another very important argument that is crucial to my company's bottom line-- the argument that OOXML is truly open.  One of the chief reasons-- if not the chief reason-- for companies and governments to choose Open Document Format (ODF) instead of Office Open XML (OOXML) is because ODF is a more open, less patent-encumbered format.  Microsoft has been claiming that once OOXML has ISO standardization, it will be just as open as ODF, but Microsoft's attitude, messaging, and actions run counter to this claim.  Microsoft has been intentially cagey when it comes to talk about patent issues and OOXML.  Irrespective of whether OOXML is declared ISO and irrespective of the technical merits of either format, Microsoft has demonstrated to governments and companies that it's fairly likely that-- somewhere down the road-- Microsoft will act on OOXML-related technologies and tools in a manner similar to how it has acted with Novell and Xandros (despite whatever incomplete, half-assurances MS has given various governments).  Thus, given Microsoft's actions, it now seems a bit more obvious to astute companies and governments that ODF is probably a safer format to settle on, lest they someday also find themselves being told by Microsoft that it's in their best interests to "build a bridge."

Perhaps these are all scenarios I'd be willing to accept if I were more than just a hypothetical CEO, simply because I'd find the threat from FOSS and SaaS so weighty.  But I wouldn't be all too sure that doing so would actually be in the best interests of my company.  What I am pretty sure of is that there are very smart people in your company that feel, at least for the reasons outlined in the above paragraph, that the statements made by your actual CEO and your company lawyers were pretty misguided.

PS In case you haven't seen it- for a less emotional perspective on how Microsoft might approach a few related issues, I suggest you check out stephesblog.blogs.com/.../microsoft_messa.html .  It doesn't have all the answers, but it definitely provides some food for thought and a few practical suggestions for Microsoft.

PPS I probably won't be able to write further on this as I'm starting an insanely busy job this week (so please don't interpret silence as an unwillingness to disucss the issue); I'll be sure to check out your future writings.  Again, I very much appreciate your openness on discussing this matter.

Hi Stephen,

Thank you for the kind words, and for passing this along.  I appreciate your having taken the time to talk through these issues with me (or listen to me ramble, as it were!)

Best wishes,

Dan