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

By Owen Lippert, Financial

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

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

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

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).