This is the the Linux Australia Position Paper on the recent US -
Australia Free Trade Agreement. The authors would like to thank the
following people for their contributions:
Brendan Scott, Anthony Towns, Rusty Russell, Pia Smith, Stewart
Smith, Richard Andrews, Peter Moulder, Ian Peake, Kimberlee
Weatherall, Alan Isherwood, Luke Howard, Adrian Furby
Feedback, more points, more references, missed ideas, incorrect
points all welcome: please mail to [email protected]
US - Australia "Free" Trade Agreement and Open Source
Summary
1Open Source software (aka Free Software) is one of the most
important recent developments in the software industry. All over the
world more and more software developers and users are discovering the
benefits of Open Source software. The Australian software industry is
no exception, and some Australians have become very prominent
contributors to the most widely known Open Source projects.
Australian developers, companies and users are benefiting directly
from Open Source software. However, these stakeholders were not
considered in the FTA process, nor in the creation of some existing
laws. For example, currently it is illegal to distribute Open Source
DVD players, and the FTA will make it illegal to even use them. As a
result, DVDs cannot be played on computers that run the Linux
operating system (the third most popular operating system after
Microsoft Windows and Apple Macintosh).
We will show that the proposed FTA will limit the ability of
Australian software developers, companies, and users to benefit from
and contribute to the Open Source software industry. Moreover, we
will also show that the proposed changes will in fact limit free
trade between Australia and the USA. The proposed agreement implies
laws which strengthen large software companies at the expense of
smaller players. Open Source encourages everyone to become a software
producer and distributor: hence the expense is more widely spread
than in other forms of software. Taking on the American system of
software patents will stifle Open Source software initiatives and
force Australian users and businesses into using costly and
potentially inferior software, without the ability to alter it to
suit their needs. Finally, the FTA also limits any legislative damage
control we might attempt later, at a time when more people are
becoming aware of the dangers of these laws.
Contents
Open Source Software: Why Should We Care?
What is Open Source Software?
Why is Open Source Software Spreading?
Why is Open Source Software Important to Australia?
Anti-Circumvention and Copyright Laws
What Anti-Circumvention Laws Do We Have?
What Anti-Circumvention Laws Do the US Have?
Is This a Copyright Issue?
What Does the FTA Change?
Software Patents
The Case Against Software Patents
Software Patents vs Open Source Software
What Does the FTA Change?
1. Open Source Software: Why Should We Care?
1Open Source Software (as defined by the Open Source
Definition[OSDEF]) encourages a collaborative method of developing
and distributing software: rather than restricting the flow of
software development to be simply developer-to-user, the original
developer encourages improvement and development by giving all users
complete and equal access to the program internals. Users can become
developers and developers become users. For proprietary (closed)
software, only the author of the software has access to the program
internals, or 'source code'. Open Source levels the playing field and
allows many people to contribute their skills and interest to the
creation of better software products.
2This lowers barriers on two sides: users have don't have to pay for
the software (although they may choose to), or track licenses, and
developers don't need permission to modify and customise the
software. The result of such development can be seen clearly in the
growth of the Internet, powered by open standards and technologies
which originally spread as Open Source software. Examples of
technologies which are Open Source include the Apache webserver
(powering over two thirds of all websites on the Internet
today[NETCRAFT]), the Linux operating system (using tools from the
GNU project, and well on its way to becoming the dominant server
operating system) and the long-lived BIND program which still serves
the vast majority of domain names on the Internet.
3The barriers are so low that anyone is a potential software
developer and distributor, which means that political issues which
primarily effect software developers and distributors can affect a
much larger number of people than in the closed software world.
4There are tens of thousands of other Open Source projects in
development by individuals and companies around the world: developers
can use hosting sites such as savannah.org (two thousand projects)
and sourceforge.net (seventy nine thousand projects), and many
developers host their own, frequently listed on the oddly named
freshmeat.net (thirty two thousand projects). Many of these projects
are small and specialized, like the recent Electronic Voting and
Counting System (EVACS)[EVACS] created for the ACT Electoral
Commission for the 2002 election.
5Traditionally Free Software / Open Source advocates have been happy
to ignore political issues, and compete against other software,
closed or Open Source, on technical merits. Unfortunately, several
disturbing events in the last few years have shaken the non-political
nature of most developers.
1.2 Why is Open Source Software Spreading?
1Open Source (sometimes called Free Software) is more than just
programs available for little or no cost - it is a "disruptive
technology" which is changing the way software is developed. As a
result of the rise of Open Sourece many companies, developers and
users relish the control and flexibility which has given them the
ability to:
audit the code at any time,
customise the software to local needs,
distribute to their customers without needing permission, and
hire or contract someone else of their own choice to do any (or all)
of the above.
2Once accustomed to this kind of freedom and increased information,
most companies and developers are reluctant to return to closed
software, and hand control of their software back over to someone
else. As several have remarked 'would you buy a car with the hood
welded shut?'
3Although not directly making money on the software copyright itself,
companies have been enjoying healthy returns from services,
associated products, support and hardware. Individuals have been
making a good living improving and customising Open Source. According
to IDC, sales of servers running the Open Source Linux operating
system rose 53% in 2003 to 250,000 units[CNET]. For the year 2003 IBM
claimed $US 1 billion, and HP $US 2 billion in Linux revenue.
4There are also many smaller companies successfully selling Open
Source software and solutions, including those who combine closed and
Open Source licensing. An example is Trolltech AS, who explain their
dual licensing system:
The guiding principle behind dual licensing is "quid pro quo," or a
fair exchange. Under this model, vendors offer their products under
both an open source license and a commercial license. This allows
open source projects to use the software at no cost, which
contributes to widespread use and testing of the software and the
fast growth of a large installed user base. Companies redistributing
the software as part of commercial products can also get the benefits
of the open source software by purchasing a commercial license, which
releases them from requirements to publish their source code.
As a result, the companies Sleepycat Software, Trolltech AS and MySQL
AB jointly announced that their 2003 software license revenues
increased an average of 65% over the previous year. In other words,
10 times the overall growth of U.S. IT industry spending[QTPROFIT].
1.2.1 Dispelling Open Source Myths
1"Open Source is anti-copyright!"
On the contrary, most Open Source projects rely on copyright. Just as
closed-source software is distributed under a license, so too is Open
Source software. The difference is simply that Open Source software
is licensed under different (more permissive) terms. The most well
known example is the GNU General Public License (GPL), which requires
that the source code required to create the software be handed on to
anyone the software is distributed to, thus using copyright law to
ensure that the software stays open.
2"Open Source is destroying the software industry!"
90% of the world's software is produced for use, not for resale. In
other words, custom or "in-house" projects developed by or for a
particular organisation. Hence for the vast majority of the software
industry, licensing is irrelevant. In this light, Open Source
software, in which copyright is used in an innovative way, is a
consolidation of these independent software efforts into common
consortia.And by allowing developers to change and reuse Open Source
code, Open Source software is in fact contributing a vast array or
tools, protocols, languages and programs to 90% of the software
industry. Balanced against the interests of the 10% of the industry
whose business is distributing closed products, it might be more
fairly stated that closed software is not contributing to the
industry in the way that Open Source can, and that to legislate in
favour of the closed industry might in fact be far more damaging to
the software industry.
1.3 Why is Open Source software Important to Australia?
1Open Source effectively deregulates the software market, and a free
software market produces more benefits for everyone than a highly
regulated one. This is especially in Australia's interests as none of
the large software companies are Australian: as a nation we are an IT
consumer. Thanks to Open Source licensing the very best software
development tools are freely available to any Australian developers
without the need to pay for exorbitant licensing fees or make heavy
investments in research & development.
2Australian developers are active participants in Open Source
development. A world-class Linux and Open Source developer conference
has been held in Australia since 1999. linux.conf.au is convened in a
different Australian city each year, and attracts prominent speakers
and attendees both locally and globally.
3Australia has a significant number of high-profile and successful
Open Source developers, in great disproportion to our population.
According to the Boston Consulting Group's 2002 survey of (English-
speaking) Open Source projects, around 8% of all developers are
Australian. This is partially due to our excellent tertiary education
system, and widespread access to computers, but two other elements
emerge strongly from anecdotal evidence:
In many professions, Australians have had to move overseas to reach
the top of their field, and prior to the rise of Open Source
software, this held true for the IT industry. Top developers are
naturally attracted to technically exciting projects that have open
access. Open Source offers a plethora of such projects, without our
brightest talent having to leave our shores.
Australians seem to have a temperament which flourishes in these
teams, which are distributed around the world. This could be
attributed to a strong 'call a spade a bloody shovel' attitude which
gains a great deal of respect and success in technical groups.
3aNumerous high-profile developers and small businesses are based in
Australia, although most or all of their customers are overseas. This
ability to cater to a global market from home is a great benefit to
our country. IBM has even established a growing Open Source
development lab (IBM OzLabs) in Canberra.
4For these reasons a number of high profile leaders in the Open
Source community come from Australia. Here are a handful:
Dr. Andrew Tridgell is the Canberra-based founder of the award-
winning SAMBA software[SMBAWRD], which allows millions of users to
access Linux servers from their Microsoft Windows computers. He was
listed in the Bulletin Magazine's 100 Smartest People in 2004, lauded
as the smartest Australian in IT.
Andrew Morton is an Australian living in California, who has been
chosen to lead the development of the latest iteration of the Linux
operating system. The Linux 2.6 release will be used by tens of
millions of people around the world.
Anthony Towns is the Brisbane-based Release Manager of the Debian
GNU/Linux project, a major global Linux distribution driven entirely
by volunteers.
Jeff Waugh is the Sydney-based Release Manager of the GNOME project,
the widely-backed Open Source project creating a complete user
desktop system.
2 Anti-Circumvention and Copyright Laws
2.1 What Anti-Circumvention Laws Do We Have?
1Following the lead of the United States, Australia introduced the
Copyright Amendment (Digital Agenda) Act 2000 (Cth), which makes
distribution, marketing etc. of "copyright circumvention devices"
illegal. From the Digital Agenda Fact Sheet[DAFACT]:
Specifically, it is illegal to make or deal commercially in devices
or services that have only a limited commercial purpose other than
the circumvention of technological copyright protection measures.
2These laws were made in response to allegations by content producers
that they needed "stronger copyright" in the face of huge losses
caused by rampant piracy. There are significant doubts that these
losses were ever real[CANNANE], but the legislation was created
nonetheless.
3Traditional copyright, such as for a book, grants the author a
monopoly on copying; only they can choose how much to sell it for.
But once you have bought a copy, you can use a magnifying glass to
read it, burn it in protest, use it as a doorstop, sell it to a
friend, take it overseas, or have it read to you by machine if you
are blind. In other words there are no restrictions on how you use
your copy of the work.
4The Copyright Amendment (Digital Agenda) Act 2000 was passed to
'encourage copyright owners to 'help themselves'"[DAFACT], but of
course, a company sometimes decides that it could make more sales and
increase control by adding further restrictions. For example, DVDs
are region-encoded, so normal DVD players in Australia can only play
Region 4 DVDs. If a particular DVD is only available in France
(Region 2), it cannot be played on an Australian DVD player, depite
being a legitimate copy. These restrictions are increasingly
unpopular, and hence although potentially illegal it is fairly easy
to buy modified "region-free" players in Australia. The Australian
Competition and Consumer Commission (ACCC) has been vocally opposed
to region-encoding and to the Digital Agenda Act in general[ACCC].
5Unfortunately, the onus is on the defendant to show that the device
can't be used to circumvent copyright, not the company bringing the
action to prove that the device has no other purpose. This law has
been used very seldom: we could only locate one case. Sony invoked it
against a Sydney installer of "mod chips" in 2002. The mod chips are
the only way to play games bought overseas in local Sony
Playstations, or make usable backups of games, yet they also allow
pirated games to be played. The ACCC supported the defence, and
applauded the original ruling that "mod chips" were legal, but Sony
won on appeal[SONY].
6As a result, your cousin cannot fix your Sony Playstation to play an
educational title you bought from Sony in Japan: it is illegal,
because such a modification might also allow you to play copied
games, or copy games. Sony can incorporate any other restrictions
they want and tie them to their "copyright protection" mechanism, and
they don't lose Digital Agenda protection unless the defendant can
prove more than "limited commercial purpose". This has a "beachhead"
effect, where companies are encouraged to deliberately cripple their
products and use "copyright protection" to cover all manner of sins.
If the law were written otherwise, that the copyright holder had to
show that there was no purpose of a device other than the
circumvention of copyright, companies like Sony would ensure that
they separated anti-copying technologies from other controls, such as
region coding, lest they lose Digital Agenda protection altogether.
7In particular, it is illegal to distribute or write Open Source DVD
players for Linux, as we will see in the next section.
2.2 What Anti-Circumvention Laws Does the US Have?
1We look to the United States as a pioneer in these laws.With their
bigger market and aggressive litigation to protect their copyrights,
theAmerican market can be used as an indicator when trying to predict
the effect of similar changes in Australia. The Digital Millennium
Copyright Act (DMCA) is a bill passed in the United States in 1998
which made developing, distributing or using a "copyright
circumvention device" illegal[DMCA]. Note that this goes further than
our Digital Agenda act, which does not criminalise the actual use of
such a device, just the distribution or production of it.
2Several uses of this law in the United States lead Open Source
advocates and others to question the wording, justification and
purpose of this Act, and have non-US residents worried about the
possibility that a similar law could be enacted in their own
countries.
3The first disturbing event which shook the Open Source world was the
indictment of 16 year old Jon Johannsen (and his father) in Norway,
at the behest of US authorities. Jon had published a program for
decoding DVDs, as a first step towards writing an Open Source DVD
player for the Open Source Linux operating system. Here are excerpts
from an interview which CNN covered from LinuxWorld:
LinuxWorld: So, can DeCSS in fact in any way be used for pirating? I
mean, I realize that isn't the purpose for which it was written.
Jon Johansen: Well, yes, it can be used for pirating. Because you can
decrypt a DVD disk and put it on your hard drive and then you can
convert it, say, to VCD and then post it on the Internet. But tools
to do that had already been available on the Internet, long before
DeCSS, which was also a complete digital solution which gave you the
same quality. So DeCSS didn't introduce anything new for pirating and
had already been available.
4Jon goes on to point out that piracy doesn't require any decryption
anyway:
Jon Johansen: [In] the charge, they say that the encryption is copy
protection. But that's not correct at all. Anyone with a little
computer experience knows that anything can be copied bit-by-bit with
the right equipment.
5Jon has the good fortune to live in Norway, where reading a legally
purchased DVD is not a criminal offence, as firmly established by his
acquittal. In the United States, distributing or using the program
Jon wrote is illegal, and being actively enforced. In Australia, it
is illegal to distribute the code, but not illegal to use it, and it
is not yet being actively enforced.
6There is accelerating awareness in the United States that these laws
are unbalanced, and that the interests of large producers have
outweighed the interests of consumers (and smaller producers) in the
crafting of these laws, and that they are doing real damage. Sites
like chillingeffects.org document the effect of DMCA on the openness
of speech and rights. The site catalogues the cease and desist
notices and presents analyses of their claims to help recipients
resist the prosecution of legitimate activities.
7The arrest of Russian programmer Dmitry Sklyarov in 2001 while
visiting the United States to speak at a conference was a particular
wakeup call.
Dmitry helped create the Advanced eBook Processor (AEBPR) software
for his Russian employer Elcomsoft. According to the company's
website, the software permits eBook owners to translate from Adobe's
secure eBook format into the more common Portable Document Format
(PDF). The software only works on legitimately purchased eBooks. It
has been used by blind people to read otherwise-inaccessible PDF
user's manuals, and by people who want to move an eBook from one
computer to another (just like anyone can move a music CD from the
home player to a portable or car).
2.3 Is This A Copyright Issue?
1There is a subtext to these laws which was not clearly understood by
lawmakers or the general public. Most people would agree that piracy,
where illegitimate copies of software or movies are distributed or
sold, is wrong, and there are already harsh laws in place for people
who commit these acts. However, professional pirates are not affected
by these laws. They will circumvent the mechanisms if need be, or in
the case of DVDs simply duplicate them wholesale without needing to
decrypt them. In fact these laws are aimed at two things, not one:
Preventing small-scale, amateur "pirates" from making copies by
making it harder for them to obtain information, and
Controlling access so that additional restrictions, beyond that
granted by copyright law, can be forced upon consumers.
2Indeed the laws in the United States and Australia give a particular
benefit to the producer. If they can describe something as a "copy
protection device", it is illegal to circumvent it, even if the real
purpose is in fact to restrict access to the content.
3The most obvious access control is Region Encoding. DVDs around the
world are produced to be played in specific "regions", so that a
Region 1 DVD (USA) will not play in a Region 4 DVD player
(Australia). In practice consumers regard this as odious, and DVD
players in Australia are often sold as "region free" to allow owners
to circumvent the restriction (Linux Australia has been advised that
this is uncertain legal territory as the laws stand). Once
"unauthorised" decoding of the DVD is illegal, it's simply a matter
of ensuring that all the players authorised by the DVD producers
enforce region coding. In this way producers can control the
marketing and distribution of DVD’s from region-to-region, at the
expense of consumer choice.
4There are more subtle access controls. DVDs are now incorporating
"no-fly zones" where you cannot fast-forward through a section of the
DVD, such as the copyright notice. It is not too hard to see that
this can be extended to ‘compulsory’ advertisements.
5Some CDs have been sold in Australia which violate the compact disc
standard in a way that means they cannot be played in most computer
CD drives. A program which "circumvents" that copy protection so
owners can play their CD at work, or on their home computer is
illegal to distribute in Australia.
6More electronic content, such as online music sales and electronic
books, are including similar restrictions and some novel ones, such
as "read-once" books and movies which can only be played for three
days, or only on a certain computer or operating system. "Windows-
only" music, which would be illegal to play on Linux, is a distinct
possibility. The possibility was best put by Brendan Scott
The prognosis for the future is even more bleak. We are already in a
position where it is possible to embed microprocessors onto most
manufactured items. Manufacturers in the US have already embedded
such processors into garage doors and printers allowing them to
control after markets for these products. For example, a printer
interrogates the consumable cartridges to determine their origin and
if they are from a competitor refuse to operate or, worse, will
operate to a lower standard without alerting the consumer. The anti-
circumvention provisions will prevent competitors from making
functional accessories. You don't need to be too bright to realize
that this will become an increasingly common practice for
manufactured items - if you can do it for garage doors, why not
tractors?
Over time we will see the emergence of the kinds of serial monopolies
(and the attendant price gouging) for product areas that we have seen
in the software world. In an attempt to protect the US music industry
from market competition what will emerge is a reduction in
competition across broad swathes of the economy - whether it's the
farmer who wants a combine harvester to work with their tractor, or
the IT manager who wants their PDA to interface with their GPS
devices.
Economics tells us we will get increased prices and lower quality in
these circumstances.
2.4 What Does the FTA Change?
The FTA binds us to laws which are recent and relatively untested.
When the Digital Agenda bill was introduced in Australia, the
Attorney-General proposed a review within 3 years of commencement:
The amendments provided by this Bill are at the cutting edge of
online copyright reform, and clearly place Australia among the
leaders in international developments in this area. As a result, in
certain areas of the Bill we are entering uncharted waters. New
technologies are changing rapidly and we wish to ensure that an
appropriate balance is maintained between the rights of copyright
owners and the rights of copyright users under the Copyright Act. I
therefore propose that the operation of the legislation, particularly
the extended statutory licence scheme for educational institutions
and the new enforcement measure provisions, should be reviewed within
3 years of the commencement of the legislation.
The results of this review have yet to be published.
Most likely, Australians will not stand for not being allowed to play
our own DVDs for very long, if enforcement were attempted.
Australians would also be vocal in opposing the arrest of programmers
who gave us useful programs and contributed openly to "the single
greatest technical reference library on Planet Earth"[MOGLEN]. Both
of these (Johannsen, Skylarov) have occurred in the United States and
unfortunately, it's difficult to see why the US experience would not
be repeated here as the same companies operate in Australia. Once the
Free Trade Agreement binds us it is fairly clear that the gloves will
come off, and we will no longer be able to revise our laws. Note that
the US has constitutional protections which limit these laws when
they conflict with "freedom of speech". Here in Australia we have no
such protection.
Article 17.7(a) indicates that we must establish a statutory
entitlement to damages for copyright (regardless of actual loss
caused by infringement), or somehow ensure that additional damages in
cases of deliberate infringement are high enough to deter
infringement. Given that illegal online music sharing seems to be
increasing in the US despite extremely tough penalties[REGCOPY], it
is unclear that statutory damages or some other damage-inflation
system can be avoided here in Australia. Fortunately one of the side
letters (confusingly outside the treaty text) allows exceptions for
unwitting copyright violations (this is a concern for any system –
like an Open Source project – that accepts external submissions).
Nonetheless, few Australians would consider copying a CD worse than
stealing a CD from a store, but now the law will see it so.
The FTA expands anti-circumvention prohibitions markedly. In
particular, currently it is legal to use a circumvention device, but
illegal to market or distribute one. This means that currently it is
illegal to sell or write an Open Source DVD player for Linux, but
legal to download or use one yourself. Article 17.4.7(a)(i) makes a
criminal of anyone who:
...knowingly, or having reasonable grounds to know, circumvents
without authority any effective technological measure that controls
access to a protected work
No statement is made about copyright violation for people who
"circumvent" access controls. Unlike the DMCA in the US and the
Digital Agenda Act here, the intent of content distributors is clear.
It is illegal to access any work they have decided to protect, in any
way they haven't explicitly allowed. This reaches far beyond Open
Source software, such as clearly banning individuals from "region-
freeing" their DVD players to play normally purchased overseas DVDs.
Indeed, it actually prevents Australian consumers from buying DVDs
from the US, and has exactly the opposite effect from freeing up
Australia-US trade.
The current Copyright Act (s 116A(c)) says that distributing a
"circumvention device" is prohibited if the defendant knew or ought
reasonably to have known that the device would be used to circumvent
the technological protection measure. This requirement is absent in
the FTA.
Article 17.4.7(a)(ii) makes it illegal to distribute something if
any, not all of the following are true:
promoted as a circumvention device, or
limited commercial purpose other than circumvention, or
primarily designed for circumvention.
So, if a program was originally designed for circumvention, even
though there are other uses, it will still be illegal to sell or
market. It is also harder to use the "commercial purpose" condition
for small Open Source projects, as the software developed by these
projects is distributed free of charge to anyone who wants it.
The exceptions are very restrictive and unclear. Article 17.4.7(e)(i)
excepts "reverse engineering activities with regard to a lawfully
obtained copy of a computer program ... for the sole purpose of
achieving interoperability of an independently created computer
program with other programs". It is not clear that this would permit
reverse engineering of data formats produced by one program so you
can write a program to read them.
The general concentration on "access control" rather than "copyright
protection" means that the law is overbroad; arguably a door lock
would be covered. But it also means that you might have the right to
the data, and yet these provisions could still block you from
accessing it if it is covered by an "effective technology measure".
For Open Source authors and users, this is extremely worrying.
Documents produced by a future Microsoft Word which incorporates such
a feature might be illegal to read in an Open Source word processor.
Article 17.6.7(e)(viii) permits exceptions to be made when “an
actual or likely adverse impact on those non-infringing uses is
credibly demonstrated in a legislative or administrative review or
proceeding�. In other words, the fact that you are not infringing
copyright is not of itself a defence and it can only become a defence
after a specific (and probably expensive) procedure has been complied
with and, even then, only in certain limited circumstances. And then
the exception has to be reviewed at least every four years. If your
business relies on an exception to sell Linux DVD software, that's a
great deal of uncertainty for your customers.
The problems above make it obvious that the stakeholders were not
consulted during the negotiation process. This is possibly not
surprising given that Open Source developers are fairly apolitical
and small, and Open Source users, which include most businesses, are
busy getting on with their core business.
3 Software Patents
1A patent is a monopoly on an original idea. The nature of patents is
a trade-off; the monopoly is supposed to be the reward for publishing
a discovery which otherwise would not have been disclosed in the
first place. Some industries, such as private drug development, are
driven entirely by this reward mechanism. Naturally, this absolute
monopoly is a very dangerous market distortion, hence it is strictly
limited by time to 20 years, after which competition can resume.
2In callous terms, some people will suffer or die because a drug will
be too expensive, and the law will prevent other sources of supply,
in the hope that the end justifies the means; in the long term more
drug research will occur and after the patents expire the drugs will
be widely available through normal competition mechanisms. In many
cases it is the "second innovator" who comes up with an improvement
based on the original idea that makes it actually useful, but we
accept that process might be being delayed 20 years as part of the
trade-off.
3It was traditionally held that software, like mathematics or music,
cannot be patented, but incremental changes brought on by legal
challenges through the 1980s and 1990s have allowed software patents
in both the United States and (thanks to IBM's legal
challenge[IBMAU]) in Australia, as the patentability of software was
never explicitly banned in these countries.
4The only major region which actually voted on whether software could
be patented decided clearly against it. The European Union
specifically forbids patenting of software, a decision which has been
vigorously defended despite ongoing pressure from United States-based
multinationals.[FFII]
3.1 The Cases Against Software Patents
1There are two arguments against software patents. The first argument
is procedural. It refers to the low quality of patents which are
granted, the lack of experience among patent examiners, the drive to
turn the patent office into a profit centre[FORBES], and the high
expense of defending against a flawed patent. This is well documented
in the United States, and less likely to happen in Australia given
the generally high quality of the Australian Patent Office.
2The second argument is that patents are damaging the software
industry by their very nature. This is far more troubling, but there
is mounting empirical evidence that it is true[BESSEN].
3With the trade-off illustrated in the introduction, between
encouraging innovation and eliminating competition, we can consider
software patents. Firstly, unlike drugs it is already illegal to copy
software due to another government mandated monopoly known as
copyright. In fact up until now, this has been the main profit source
for shrink wrapped software companies. It is no coincidence that the
world's richest man, Mr. William Gates III, became so through use of
the copyright monopoly applied to software.
4In practice copyright applied to software is much more powerful than
copyright applied to books or music. This is because with books or
music, only the copyright law separates the author or publisher from
everyone else. As long as the reader can read or hear, they can
appreciate and understand the copyrighted content in exactly the same
way as the author or publisher. However with shrink-wrapped (closed)
software, the author never publishes the program they actually wrote.
Instead they publish the compiled or machine-translated version which
actually contains computer-readable instructions called "binary
code". The software is written in a more human-readable form, called
"source code". In practice, closed software authors keep the source
code secret so they have a practical monopoly on fixes, extensions
and support, and at the same time take advantage of the copyright
monopoly on the published binary code!
5It is extremely difficult to argue that these software companies
require patent protection in addition to the two monopoly powers that
they already have. If they are not innovating sufficiently, it is
surely due to too much monopoly power, rather than too little To
return to the example of Microsoft, the world's largest software
company, which has been convicted of abuse of its monopoly position
by both the United States and European Union, it is obvious that
these monopolies are doing real and sustained damage to software
users, which these days means just about every individual and
company.
6As a result it is easy to see why people would turn to Open Source,
which gives the software user the same rights as the software
supplier. As software becomes an increasingly important part of the
commercial infrastructure, the ability to collaborate on your own
projects as a haven of last resort against powerful software vendors
is vital, and must be protected to maintain any semblance of
competitive balance.
7As software patents are a relatively recent development, it is
possible to see how the IT industry fared before their introduction.
The normal examples here are the Internet and email, which are open
standards and hence have flourished. However, there are many other
examples, so we turn to the only two profitable products that
Microsoft produces, Microsoft Windows and Microsoft Office. Windows
is what is called a WIMP GUI (Windows, Icons, Mouse, Pointer,
Graphical User Interface). This idea was pioneered in the 1970s by
Xerox Palo Alto Research Center, and inspired Apple Computer's
popular Macintosh desktop computer (there's a point to be made here
about the second innovator – Xerox made it, Apple made it
available). When Microsoft first produced Windows, Apple brought a
"Look and Feel" lawsuit against Microsoft for copying their ideas,
but Microsoft won the case, and went on to dominate the Personal
Computer Desktop market.
8How different would it be if Xerox had patented the Graphical User
Interface? Or Apple had patented the "Trash Can", the concept of
folders, overlapping windows, or any other ideas we now take for
granted. The patent would have simply disallowed Microsoft from using
those ideas in its competing product, hindering Windows development
and leaving the consumer with the choice of expensive Apple
computers, or difficult-to-use Windows computers. But software
patents weren't available at this time, so Microsoft was free to
implement whatever it thought best.
9For the second example, we will concentrate on Microsoft Excel, a
part of Microsoft Office called a "spreadsheet". The first
spreadsheet was invented by Dan Bricklan, who founded a company
called VisiCalc[BRICKLAN]. The idea was a genuine innovation. Where
the word processor was just a computer playing typewriter, the
dynamic calculation of totals as values in a balance sheet changed
was a leap forward for the accountancy profession. Aware of this,
Bricklan approached a patent lawyer, who informed him that software
was not patentable, which was true enough in 1979. Bricklan founded
VisiCalc, and did quite well until a better spreadsheet was produced
by Lotus, called Lotus 1-2-3, which then became the market leader.
After several attempts and much development effort, Microsoft
produced a version of its own spreadsheet called Excel, which is the
market leader today. Looking back at VisiCalc, it is clear that it is
missing some important features. If the program was under a software
patent, VisiCalc would be resting in its monopoly position with no
incentive to innovate. Competition would be beginning only now, and
millions and millions of hours of productivity would have been wasted
by people forced to use substandard software for the past two
decades.
10There has been a marked climb in software patent filings in the US
in the past decade, despite vigorous debate amongst software
producers themselves. Oracle Corporation, the second largest software
company in the world, opposes software patents. In written testimony
presented at the Patent Office hearings in San Jose on the issue of
software patents [ORACLE]:
The U.S. software industry has evolved to a multi-billion dollar
industry that leads the world in productivity, and accounts for
substantial portion of U.S. GNP. The software industry has advanced
the efficiency of other industries through the proliferation of
computing and computer-controlled processes. All of these gains have
come prior to the application of the patent process to software, and
consequently without patent protection for software. There is no
justification for a policy that would not only drain capital
resources (which are better spent on software development) into
patent applications and other legal fees, and also actually serve to
reduce innovation by limiting the availability of previously-
developed techniques.
11Andy Grove, Intel Corporation founder and CEO, goes further and
questions the entire patent system as applied today:[INTEL]
[The US] needs to revamp not just the patent system, but the entire
system of intellectual property law. It needs to redefine it for an
era that is the information age as compared to the industrial age."
12Although certainly no proponent of Open Source software, we will
end this section with the word of Microsoft Chairman, Mr. William
Gates III:
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.[]
3.2 Patents vs Open Source
1Software patents raise numerous problems for Open Source software.
2Monopolies in general do not mix with free markets. Open Source
software has flourished because it eliminated barriers to entry and
allows genuine competition in software development. Even the concept
of introducing tollways in this area is anathema to those who have
grown within with the Open Source industry. As put by Eben Moglen, ex
computer-programmer and Professor of Law and Legal History at
Columbia University in the United States:
Free software, of which the operating system kernel called Linux is
one very important example among thousands, free software is the
single greatest technical reference library on Planet Earth, as of
now.
The reason I say that is that free software is the only corpus of
information fixed in a tangible form, through which anyone, anywhere,
can go from naivete to the state of the art in a great technical
subject -- what computers can be made to do -- solely by consulting
material that is freely available for adaptation and reuse, in any
way that she or he may want.
We enable learning all over the world by permitting people to
experiment, not with toys, but with the actual real stuff on which
all the good work is done.
For that purpose, we are engaged in making an educational system and
a human capital improvement system which brings about the promise of
encouraging the diffusion of our science and useful art in a way
which contributes to the perfectibility of human beings.
3Aside from the abhorrence of allowing the private destruction of a
vital public resource, from a practical point of view patents cannot
be used to raise money from Open Source software. Distribution is not
centralised, so there is no-one collecting money to pay royalties.
Since royalties cannot be collected from Open Source projects, the
only practical use of software patents is to foreclose competition
from Open Source. Indeed Microsoft in particular has not ruled out
using patents against Open Source projects[MSOS]. Any incumbent
software producer might grasp at this, as market forces choose Open
Source over their obsolete software models. It is a powerful method
of eliminating competition.
4A single patent can ruin an Open Source project. Software patents
remove the right of programmers to determine the basis on which they
charge for their work, by effectively requiring per unit royalties,
i.e. they are required to charge a per unit fee rather than on the
basis of services provided. Even the threat of being sued over patent
violation can be sufficient to disband many projects. The high cost
of mounting a legal defence, when considering that the authors’
revenue stream is often only indirectly tied to software
distribution, means that threats of patent litigation have the
potential to devastate whole areas of the industry.
5Finally, the sheer number of patents granted makes producing
software much like walking through a minefield. With the USPTO
granting an estimated 45,000 software patents in 2003[USPTO] and
rising, it is not possible to audit software against the hundreds of
thousands of patents. Smaller players, and this explicitly includes
the vast majority of Open Source projects, are vulnerable to
predatory lawsuits by competitors whose customers are abandoning
them.
3.3 What Does the FTA Change?
The FTA binds us to a blanket statement that anything is patentable,
despite widespread disagreement on the utility and wisdom of granting
software and business method patents:
Each Party shall make patents available for any invention, whether a
product or process, in all fields of technology...
The current patent law has explicit limitations that patents “be
not contrary to the law, nor mischievous to the state by raising of
the prices of commodities at home or hurt of trade, or generally
inconvenient�. The FTA does not include these limitations. The
"generally inconvenient" exception previously offered some hope of
limting the scope of software and business method patents.
Producer/consumer balance of IP rights in general was clearly not
considered in Chapter 17 of the FTA. The only balance mentioned is
"between rights of authors, on the one hand, and rights of performers
and producers of phonograms, on the other hand". (What about the rest
of us?).
As a nation of IT users with no large (closed) shrink-wrapped
software producers, the balance we choose will probably be very
different from the United States, yet this is not taken into
consideration in the FTA. Our market is different, yet we are
treating our market as if it is the same as that of the United
States.
The ability of future Australian lawmakers to support Open Source
software innovation and infrastructure against patent claims, should
the situation get out of control, has been severely restricted by
this section.
Conclusion
1Australian PC Authority recently published a letter from someone who
had purchased an Open Source Linux distribution called Xandros.
Xandros is a competitor to Microsoft Windows, based on the best of
Open Source software, combined with support, manuals, installation
CDs and everything consumers expect from a box of software. There
were two complaints in the letter, the second of which was as
follows:
I want flawless multimedia. I tried to play a quite legal DVD in
Xandros, only to be told that it wouldn't play because of copyright
concerns, and there was no obvious way to change its mind.
2Of course, Xandros cannot distribute the DVD-decoding part of the
"Xine" software which would actually play DVDs. Like most people, the
user doesn't see this as a copyright issue at all. Unfortunately, the
negotiators of the FTA didn't see banning of these Linux DVD players
as a problem, and it's too late to change their minds.
3Strengthening of Intellectual Property monopoly powers assists large
incumbent players at the expense of smaller, new players. The Open
Source phenomenon lowers the barriers to entry for creating and
distributing software, encouraging a flood of new contenders and
competition, which has increased productivity among its millions of
users. Australia's interests are clearly aligned with this process,
and so the balance of our laws should be similarly aligned.
