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Financial Post (Canada): Amazon's surrender to the free software fallacy

Mar 15, 2000, 20:35 (28 Talkback[s])
(Other stories by Owen Lippert)

By Owen Lippert, Financial Post

Last Thursday, Amazon.com president Jeff Bezos, in an open letter, linked hypocrisy to the World Wide Web. In response to a protest boycott over Amazon's use of business practice software patents, Mr. Bezos said in essence it will continue to keep and defend its patents, but will lobby for shortened patent protection of three to five years for software designers to come. By pandering to the "free software" crowd, Mr. Bezos has undermined the legitimate right to own your own ideas embodied in computer code. A right he himself enjoys. How did such patent hypocrisy arise?

Things started last December when Richard Stallman, president of the Free Software Foundation and leading light of the Copyleft movement, called for a boycott of Amazon.com, the leading online bookseller. Amazon's cyber-sin? It patented "One-Click Shopping," its online shopping method. Even worse, Amazon actually defended it by suing another online bookseller, Barnes & Noble, for alleged infringement. Amazon has secured a preliminary injunction. The boycott has attracted some support, particularly from Tim O'Reilly, who publishes "All rights reserved" software design books.

The boycott got off to a rocky start because Mr. Stallman had not precisely described just what Amazon had patented. In his Linux Today article, he appears to have accused Amazon of patenting software, specifically a "cookie," a small bit of computer code downloaded into your computer when you visit Web sites. Amazon's One-Click cookie tells them who you are -- if you've bought from there before -- eliminating the need to resend your address and credit card number. In fact, Amazon patented its method of using cookies to identify previous buyers, not the technology for doing so. Mr. Stallman accused Amazon of plotting to monopolize an idea so simple and fundamental that failure to disseminate it freely would slow the growth of e-commerce. Mr. O'Reilly called it "stealing our patrimony."

Both Mr. Stallman and Mr. O'Reilly criticize the scope of all such Internet patents. The U.S. Patent and Trademark Office (USPTO), they argue, uses too low a standard in granting patents for business practices. They see such "inventions" as neither new nor non-obvious, two of the three patent criteria. As for the third, usefulness, Mr. Stallman asserts that software in general is most useful as non-proprietary knowledge.

For the record, Amazon holds a legally valid patent. It demonstrated to a patent examiner's satisfaction that the One-Click idea was new, that it was not obvious from what was known more than a year before the date of application, and that it had a use. To invalidate the patent, someone had only to prove the idea was known or in use a year before Amazon's patent application filing date of Sept. 12, 1997. Computer friends contend prior examples abound. Indeed, the USPTO's own Web site appears to use a form of "One-Click Shopping."

Was Amazon, nonetheless, unethical in patenting One-Click? No. When Mr. Bezos took other people's money to build a business, he promised to act in their interest, short of breaking the law. He had, at least, to try to patent one of Amazon's business innovations before somebody else did. For that reason, Mr. Bezos in Thursday's letter rejected the call "to give up our patents unilaterally." To do so, he knows, would breach the trust of millions of shareholders. If Amazon has done nothing wrong, Mr. Bezos should have stood up to the boycott, a protest form usually reserved for high moral causes, not disagreements over patent scope.

The boycott aside, are Internet business practice patents by their nature too broad? Only the USPTO grants them. Patent offices in Canada, Europe and Japan do not -- yet. To be sure, mistakes do occur when new industries patent their technologies. Fortunately, we have courts to deliberate these questions, though over time. The U.S. Court of Appeals (Federal Circuit), which hears most such cases, has several cases pending on business practice software patents, but it will be a long time before we can ask, "Is that your final answer?"

Settling patent questions with lawsuits may seem inefficient, but it works. If only a few potential infringements exist, Amazon will pursue them in court. If thousands of infringements possibly exist, the cost of litigation becomes prohibitive. The fact of so many infringers reflects upon the appropriateness and practicality of the original patent. That may be one reason Mr. Bezos suggests Amazon will look at patent enforcement on a "case-by-case basis."

Are Mr. Stallman and Mr. O'Reilly correct that software development would proceed faster without patents? I doubt it. Essentially, they are arguing that software be treated the same as, for example, physics. It should exist in a public science environment in which discoveries are immediately published and information shared freely. Private science, even with proprietary knowledge, has a strong case to be as innovative, if not more, than public science. Money motivates. Market demand as much as a desire to make "cool stuff" has fuelled the improvement of software. It cannot be simple coincidence that the software industry started its fast rise just after the U.S. Supreme Court's 1980 Diamond v. Diehr decision that first upheld software patents.

Beyond incentives -- the money or the peer cheers -- is the question of "Who funds the fun?" Taxpayers, for the most part, fund theoretical physics because no one else will. If business will fund applied software development, then the taxpayers shouldn't have to. It might be fun to write code for code's sake, but programmers have no stronger case than architects or engineers. Patent protection helps to ensure business will invest in software research by allowing them the opportunity to profit.

Internet business patents present unique challenges because they are written in easily copied binary code, but every new technology has its quirks. Mr. Bezos is wrong to state that "business method and software patents are fundamentally different from other kinds of patents." It is just as irresponsible to say that intellectual property laws should not apply to software as that free speech shouldn't apply to the Web. That software can be cheaply copied is an accident, and not in its essence.

Technology will catch up with the law as, for instance, digital monitoring develops. The law will catch up with the technology as the courts sort out who knew or used what and when. Mr. Bezos' bone to his critics, shortening software patents, would weaken both the law's protection and, in time, the technology. He fails to grasp that Mr. Stallman's agenda has less to do with promoting new software and more to do with undermining corporate ownership of intellectual property.

Mr. Bezos should have stood up to his critics. Instead he offered up the future earnings of thousands of young, hard-working software programmers.

Owen Lippert directs the Law and Markets Project at the Fraser Institute, Canada's largest independent economic think-tank. His recent work has covered intellectual property and trade issues. Previously, he served as a policy advisor to the federal Minister of Science, the Attorney General of Canada and to the Premier of British Columbia. He holds a Ph.D. in European History from the University of Notre Dame, Indiana and a B.A. from Carleton College, Minnesota. He has most recently edited a volume, Competitive Strategies for Intellectual Property Protection (Fraser Institute, 2000).

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