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Subject: Re: [office] How about an interoperability Subcommittee?
On 5/8/07, Alex Wang <alexwang@sursen.com> wrote: > > Regarding HTML, if someone charges for HTML browser's income only, i.e. > if and only if MS, Netscape, Firefox get income from their browser, the > inventer of HTML will charge a fixed percentage from their income, do > you think it will hurt internet? > Emphatically yes, although I think a better example to illustrate the problem would be web 2.0 application developers who derive income from their software. Browsers make a poor example for illustration purposes because that market is rather completely commodified and concentrated. There are very few remaining browsers that are not free and their market share is miniscule. The browser example also raises the complex issue of whether companies profit by offering free browsers. I can see reasonable arguments on both sides of that issue. There is an incredible rate of innovation in Web 2.0 application market right now. The market is new, there are an incredible number of new business startups jockeying for first mover advantages, in short a time of great flux in that market. See e.g., this database of Web 2.0 applications. <http://itredux.com/office-20/database/>. The way new markets develop, few of those businesses will survive. Among those that do, nearly all will be acquired by other companies. It is possible that one of them will survive under present management; e.g., Microsoft is one of the rare first movers to prosper for decades. I haven't studied this particular market in depth, but I believe I can safely surmise that some of those start-ups are running on a shoestring, others are funded by their owner's own capital, some have start-up money from venture capitalists, and some are spin-offs from established companies. But I can also safely surmise that the vast majority are not yet turning a profit. They hope and plan to become profitable, but aren't yet. So those are profit-making ventures without profits. Let's assume that the IPR for HTML say that they need not pay royalties until they produce a profit. In other words, just as they turn the corner of profitability, the HTML royalty requirement kicks in and puts them back in red ink territory with a competitive disadvantage given to those companies not yet profitable. Do they still owe a royalty? That is a rat's nest that needs to be addressed. And hasn't our owner of the HTML IPR given start-ups an incentive to engage in creative bookkeeping to avoid liability for royalties? E.g., why pay royalties when you could book what is actually an investment as an expense? We're talking about small start-ups, nearly all privately held, and not subject to e.g., SEC regulations requiring disclosures. In every industry I've looked at, there are certain expenditures close enough to the border between expenses and investments to lawfully be treated as either one. The free web browsers might be a good example here. But I digress. My point is that royalty requirements fall hardest on start-ups, creating an impediment to their profitability and survival during a critical stage of their growth. And a royalty scheme that applies only to profitable start-ups creates an extra barrier to business growth, penalizing those companies that attain their break-even points. But from an economic development policy standpoint, those are the companies that least deserve a penalty. They are the very companies that are just emerging from their start-up phase. And small business accounts for well over half of economic growth, at least in the U.S. Impeding small business growth is poor economic policy. In my view, a royalty requirement that applies to all without exemption makes more economic sense than a royalty requirement that penalizes profitability. I will confess to some bias here; I have a strong preference for standards without any IPR restrictions at all. I will go so far as to say that I am already on the public record as being strongly opposed to all software patents and I am wavering on whether we should have copyrights as well. "Intellectual property" is what we lawyers call a legal fiction. It is property only in the sense that governments have decreed it as such. There is no actual property, only an enforceable right to exclude others from using something as nebulous as words and ideas, and to charge money for licensing the right to use what is in fact more free than the air we breathe. I find it beyond ironic that we have "free trade" agreements that enshrine the right to own and use knowledge. There is no natural right to do so, it is government intervention in free markets, an artificial monopoly imposed by governments that is the antithesis of free trade. To me, IP rights in communications protocols, file formats and the like, are particularly egregious to sound economic policy. In the software industry, interoperability is the foundation of competition, what allows the substitutability of goods. This industry has long closely watched Microsoft's manipulation of file formats and communications protocols to achieve and maintain a monopoly. Challenged to justify its actions in two landmark antitrust cases on two contients, Microsoft has been ordered to cease and desist and to disclose its communications protocols and middleware APIs. It has responded by imposing RAND and royalty requirements on its disclosures and by building a patent thicket around its APIs and communications protocols. A rather momentuous decision by the European Court of First Instance is due out later this year that is expected to test Microsoft's right to do so. Meanwhile, the European Union resolved its first major constitutional crisis by rejecting a directive that would have legimized software patents in Europe, an event preceded by massive resistance by small and medium business owners and the European citizenry at large. And the U.S. Supreme Court just hinted that it may declare software patents unconstitutional if it receives an appropriate case in which to render such a decision. My well studied opinion is that software patents will soon be no more, and even more certainly IP rights in file formats and other communications protocols will be the first casualties. E.g., in Europe, copyrights may not lawfully be asserted as a barrier to interoperability and the interoperability issue was the driving force of the resistance to software patents in Europe. There is a rapidly growing migration in the software industry toward standards without IPR restrictions, with growing numbers of governments, software developers, and software users fueling the migration. The unmistakable trend is away from IPR restrictions in software standards. I respectfully suggest that you study that trend and integrate the fruits of your research with your business plan. In that regard, a couple of blogs you might consider adding to your reading list are: [i] Andy Updegrove's private blog, <http://consortiuminfo.org/standardsblog/> (Andy numbers OASIS among his clients); and <http://www.groklaw.net>. Groklaw's front page News Picks column does a very good job of summarizing news internationally relevant to the subject of this conversation on a quite timely basis. Best regards, Marbux > -Alex > > -----Original Message----- > From: Bruce D'Arcus [mailto:bruce.darcus@OpenDocument.us] > Sent: Tuesday, May 08, 2007 9:15 PM > To: OASIS Office > Subject: Re: [office] How about an interoperability Subcommittee? > > > On May 8, 2007, at 8:59 AM, Alex Wang wrote: > > > I tried to use the example of Java to explain what "balance" means. > > Sun kept some IPR of Java ten years ago, give up some of them today, > > it is the "balance". Yes, Sun want to create a market by Java, but I > > don't think this is the reason that you have very little sympathy for > > Sun. I respect Sun, J2EE is more popular than .NET, while Windows, IE, > > > MS Office becomes the owner of the world. > > > > I was told "share everything", "free for everything" ever since I was > > > born. I am a Chinese, this is the Communist Party's education. This > > kind of education still exists in North Korea, and now in OASIS. We > > treat IPR > > in extremeness attitude, thus a commercial topic becomes a politics > > topic. I don't think it is a good manner. > > With all due respect Alex: > > 1) you are comparing apples (programming language, VM, etc.) and > oranges (standards) > > 2) Sun has opened up Java recently > > So your argument isn't really supported by either logic or > on-the-ground facts. > > It's not surprising that many people who are a part of standards work > are very suspicious of attaching restrictions to its use (building > proprietary tools or applications based on those standards is an > entirely different matter). You cannot talk about "balance" and "99%" > when talking about standards, and to say as much is hardly "extremism"; > it's the entire basis on which our internet-based information economy > works. If XML and HTML were released under RAND, there would be no > internet as we know it, nor would ODF exist. > > Bruce > > > > > >
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