Software Patents and The Internet: Lessons From The Compuserve/Unisys
Graphics Interchange Format Case Study.
Jenny Shearer
(HyperMedia Unit, University of Auckland,
New Zealand jshearer@cs.auckland.ac.nz)
Arnould Vermeer
(Practical ComputerScience 1, University of Hagen, Germany) Abstract:
The attempt by Unisys to obtain royalties from the Lempel Zev Welch
Graphics Interchange Format specification through Compuserve has wide
implications for the Internet. Increased activity in the US software
patents area is likely to result in damage to progress of the software
arts and the Internet, and to generate upscaled protest from Internet
users. The LZW GIF case highlights the Internet culture in favour of
free and unfettered development. Clarification of this important
principle will have a major effect on the future of the
Internet. Key Words:
Software patents, debate, Internet,
Compuserve, Unisys, LZW GIF. Categories:
K.0, K.4.1, K.5.1, K.5.2,
K.6.3
1 Introduction
A developing international problem
with software patents has been illustrated by the recent
Compuserve/Unisys GIF debate on the Internet. A conflict between legal
collectors of royalties and makers/ users of software, has signs of
escalating in the immediate future. The battle lines are already being
drawn. While the United States legislature is preparing to pass laws
ensuring patents licences last 20 years, in line with GATT
resolutions, members of the Internet community are campaigning on the
grounds that software patents are unnecessary, and will damage the
Internet and progress in the software arts generally. In the US,
software patents are criticised, but there appears to be little
political will to curb them. The well-publicised speech of US
Vice-President Al Gore last year on the information superhighway
stated a commitment to protection of intellectual property rights. To
challenge large and powerful corporations on an issue involving
considerable legal complexity is a risky political
undertaking. However ACIS (American Committee For Interoperable
Systems), which represents large IT companies, has suggested
procedural reforms are necessary in the software patents area, and
that these reforms should proceed whether or not a process of global
harmonisation goes ahead. [1] Critics of US software patent laws
say inventors of software are already protected by copyright and trade
secret law, and inappropriate patents are approved, eg 'obvious'
applications, which may already be well known by programmers or which
may be reinvented over and over in the normal course of software
development. They claim software developments, whether patented or
not, build on prior art, and thus patents are inappropriate. Central
to the debate, however, is the charge that large companies are viewing
patents as an opportunity to profiteer at the expense of the
international software development community. The wider
implications of this perceived threat are important. The proliferation
of software patents in the United States may in short order create a
heavy international impact, on small businesses and community
organisations seeking software to develop their operation.The running
of, say, hospitals and Page 312
schools could be affected in countries inside
and outside the US, because of the actions of US patents
lawyers. Progress in developing new networks and extending functions
of the Internet would also be affected by the cost of extended patents
searches and payment of royalties. The international community, as
well as factions of the industry in the United States, may move to
express their dissatisfaction with protest through the Internet, the
primary mode of communication for the computer industry. With little
organised political process developed in the Internet, allegations of
profiteering and unethical conduct may be freely aired, but the
outcome is likely to be messy. Organised large-scale political protest
is still some time away. The Compuserve/Unisys GIF case has
underlined a founding principle widely accepted in the Internet, that
development should be unfettered and free. But apart from
demonstrating an increased politicisation of Internet users, the case
has stimulated a lengthy on-line discussion on the software patents
issue. The Compuserve case included a rebellion by customers and
Internet users who, acting as individuals, denied royalties should be
paid for use of the LZW patent. Compuserve was 'flamed' on Internet
newsgroups when the decision to pay was announced. Later, a
significant objection by users was the perceived time lag of some
years between the filing of the patent, and the demand by Unisys that
the royalties be paid. In the interim, Compuserve had incorporated the
LZW patent into its development programme. The widespread use of the
patent appeared to provide a substantial profit opportunity for
Unisys. Unisys has denied there was a motive towards large profits,
and says it was defending its patent, once its use was discovered, on
the principle of protecting the interests of shareholders who have
invested in technology development.
[2] Compuserve responded to the
criticism by announcing the development of a new GIF standard.
2 Case Study Compuserve
Communications is a company running
a large commercial computer communications network in the US. In 1987,
CompuServe designed the Graphics Interchange Format (GIF)
specification for graphics files. The GIF specification incorporated
the Lempel Zev Welch (LZW) compression technology. In early 1993,
Unisys Corporation notified Compuserve of patents rights granted to
LZW.The patent covers methods and apparatus for lossless compression
and decompression of digital data. Unisys holds a U.S patent (number
4,558,302) as well as equivalent patents on the technology in Canada,
France, Germany, U.K. and Italy. Equivalent patents are also pending
in Japan. Compuserve reached a licensing agreement with Unisys in mid
1994, and on December 29, 1994, announced the GIF Developer
Agreement. The agreement meant developers of software and shareware
using the LZW technology, intended for use in conjunction with
Compuserve, were liable to pay royalties of 1.5 percent. The result
of this attempt to enforce a software patent after the technology had
been widely used for some years, caused an outcry from customers and
sections of the Internet. In defending its actions online,
Compuserve said when it took up the LZW algorithm, the company had
believed it to be in the public domain. In 1993, Unisys had informed
Compuserve that it had a patent on the LZW algorithm that it would
enforce.
[3] The company assured the community it would not profit
from the licensing agreement, and suggested that developers might
negotiate independently with Unisys, choose other specifications that
did not incorporate LZW, or seek independent counsel on the merit of
the Unisys patent claim. Compuserve then announced it would offer
its resources to develop a follow-on specification to GIF that will
offer significant enhancements and be free and open.
[4] In an
apparent major exercise in damage control, the company solicited input
from GIF users such as commercial graphics vendors, the CompuServe Go
Graphics Forum community, Internet communities including the World
Wide Web, and bulletin board developers and users. In retrospect,
Compuserve believes the row showed the effectiveness of computer-based
communications in allowing customers input, with a resulting Page 313
improvement to services. Spokesperson Pierce Reid [5] said the company
chose to ignore misinformation and negative comment after the GIF
royalties decision was announced. 'Someone compared it to the
attack on Pearl Harbour'. (the Japanese surprise bombing of US
warships, which effectively brought the US into World War II) 'In some ways, you need to have a thick skin, but there is the issue of
the greater good, that there are people who can come together. The
public brainstorming sessions are of value.' Reid says the row took
the issue of a better GIF specification (GIF 24, using a png
algorithm)' off the back burne'. The outcome is an improved
specification which will be copyrighted. However the company plans to
have it administered by a third party in order to guarantee it is
freely available to the public. Reid says it is logical to look
towards online services such as the Internet undergoing a process of
increasing regulation. Whether this would be acceptable would be
dependent on whether freedom of discussion was maintained. 'On the
other hand, it would make people responsible for such actions as
saying 'fire' in a crowded theatre.'
3 Discussion
The GIF case is an indicator of how software patents are destined to be a
growth industry in the United States. For US lawyers and patents
examiners, it is simply a matter of extending the realm of existing
law into an area which for 20 or so years has seen little patents
filing activity. Software engineer Gregory Aharonian warned in the
January 1993 issue of 'Communications of the ACM (Association for
Computing Machinery)' that large numbers of software patents were
being wrongly awarded by the US Patents and Trademark Office, and that
he foresaw the number of software patents would grow even faster,
'despite public comments and any current congressional activities.'
[6] Aharonian, who runs an Internet Patent News Service, has
calculated the 1995 software patents total will be around 5,400, on
the basis of an average of 103 patents awarded a week in the first 16
weeks of 1995. The 1994 total was 4,500 software patents. [7]
3.1 What Is Patentable?
Criticism of the system, of which inconsistency
is a major feature, may be made from examination of some of the
existing patents. IBM, for example, placed UNIX in the public domain
when royalties seemed too difficult to collect [8] However IBM has
been active in placing other patents, some of which appear
obvious. Patent number 4,622, 641, filed in 1983, assignee IBM, is
described [9] as a 'user friendly procedure for the generation and
display of geometric figures on a graphics screen (which) uses a
cursor placement device such as a joystick to both define the initial
position and size of the geometrical figure. Two specific examples are
described: the generation of a circle and the generations of a square
or rectangle. In the first example, the cursor is first positioned to
point to the centre of the circle at which point a small circle is
drawn. The circle is expanded in response to the pressing of a
designated key by the user until the desired size is attained. In the
second example, the pointing by the cursor is to the upper left corner
of the square or rectangle., and the square or rectangle is then
expanded in response to the user deflecting the joy stick down and to
the right.' Patent number 4,648.062, filed in 1985, assignee IBM,
is described as a method for providing an on-line help facility for
interactive information handling systems. Comment [10] from the MIT
files on the patent: Page 314
'A pop-up window decribes valid choices for user 'unput. Patent number 4, 687, 353, filed in 1986, assignee IBM, is
described [11] as follows: 'The patent appears to be on printing a
document with different indentation than it is stored with; a
suggested implementation is tabbing from from the left margin before
beginning to print each line.'
3.2 Reactions of the Internet Community
A commentator on a Usenet newsgroup has criticised
obvious or 'nonsense' patents applications. 'These patents are a
weapon (used) by large companies against small ones, a weapon that
will grow in time if software patents become widely accepted.' [12] Another Usenet newsgroup commentator claims small companies do not
benefit from patents laws: We don't need patents to protect
Littleguy, Inc. from big companies, such as Microsoft. If it makes
more sense for Microsoft to purchase Littleguy's technology than
develop it themselves, they'll do so whether it is patented or not. My
experience as an in-house lawyer at Computer Associates (CA) which is
the second largest software company in the world and an aggressive
acquirer of companies, supports this view. CA does not believe in
patents. They donÕt use them to protect their products and don't put
much value in them in evaluating potential acquisition candidates. Of
the 50 plus acquisitions I completed for CA, none of them had any
patented technology to speak of. CA is also living proof that software
companies don't need patents to make tons of money ('94 revenues were
well over $2 billion). [13] Software developers are expressing
concern about software patents and copyright issues, in ongoing
discussions of specialist Usenet newsgroups such as gnu.misc.discuss
and comp.software eng. And in 1993, a number of prominent members of
the ACM spoke out against a new ACM Code of Ethics which they thought
may be read as being incompatible with political activity against
patents or extended copyrights. [14] Clause 1.5 of the Code included
an undertaking to 'honour property rights including copyrights and
patents.' In their statement printed in 'Communications of the ACM'
the writers commented: 'Surveys suggest that most members disapprove
of having patents in software at all; yet the moral imperative calls
on members to honour what they may regard as a disaster for their
field.' In response, Chair of the ACM Code of Ethics revising
committee, Ronald Anderson, defended the code, but encouraged debate
on the issues. 'Certainly, most ACM members would like improvement in
the socio-technical-legal system to protect intellectual products
while promoting exchange of ideas and professional progress. Such
improvements require 'political advocacy' and legislation.' [15] A spokesperson for Adobe Systems Incorporated, a major company involved
in electronic publishing, commented to a public hearing held by the US
Commerce Department last year that the constitutional mandate to
promote progress in the useful arts is not served by the issuance of
patents on software. [16] 'Revenues are being sunk into legal costs instead of into research and development...' 'The case Information
International, Inc.v. Adobe, et. al. was filed five years ago. Last
year, the trial court ordered for Adobe, finding no infringement. In
December, the Appeals Court for the Federal Circuit unanimously
affirmed that judgement. Yet, in that time, it has cost Adobe over
$4.5 million in legal fees and expenses. I (Douglas Brotz, a
scientist) have spent over 3,000 hours of my time and at least another
thousand hours was spent by others at Adobe. Our Chairman of the Board
spent a month at the trial. This type of company behaviour would not
be high on anyone's list of ways to promote progress.' [17] A recent decision by the US Court of Appeals shows how litigation over
software issues is now threatening to muddy the waters of copyright
law. Lotus Development Corporation has been unsuccessful in its effort
to sue Borland International Inc. for creating a Quattro programme
which Page 315
included use of a virtually identical copy of the Lotus 1-2-3
menu tree. [18] Borland did not copy any of LotusÕs underlying
computer code; it copied only the words and structure of Lotus's menu
command hierarchy.The Court of Appeals in March overturned a decision
in favour of Lotus made by the District Court. The Court of Appeals
found the menu commands are an uncopyrightable 'method of
operation.' In a Concurrence [19] on the Judgement, Circuit Judge
Boudin (one of the presiding judges) said: 'Requests for the
protection of computer menus present the concern with fencing off
access to the commons in an acute form. A new menu may be a creative
work, but over time its importance may come to reside more in the
investment that has been made by users in learning the menu and in
building their own mini-programs-macros- in reliance apon the
menu. Better typewriter keyboard layouts may exist, but the familiar
QUERTY keyboard dominates the markets because that is what everybody
has learned to use... 'Thus, to assume that computer programs are
just one more new means of expression, like a filmed play, may be
quite wrong... Applying copyright law to computer programs is like
assembling a jigsaw puzzle whose pieces do not quite fit.' The
problems presented by such cases are numerous. For companies which
will bring copyright actions on such grounds as a command menu using
terms like 'copy' and 'print,' the field is wide open. With no clear
direction from the US Congress on the limits of patent and copyright
law as related to software patents, future lawsuits may be expected to
be numerous, and the mid-range outcome, at least, alarming to those
occupying the commons of the Internet. Building up case law in
this area is an unsatisfactory response to the difficulties of US
middle-ranked software companies, and will have major international
repercussions. The difficulties facing companies in the US is
highlighted by the European environment, in which software patents
have not been allowed. However, with the acceptance of the GATT
package [20] by European countries, litigation and unproductive
stalking of software developers over patents and copyright appear
inevitable. The largest US companies are protecting themselves with
cross-licensing deals, as predicted by the League For Programming
Freedom. (LPF) [21] It is unlikely the issue would be taken up
substantively by the Internet Society, which concerns itself with
governance, rather than political issues. Pressure groups such as the
Electronic Frontier Foundation (EFF) are vocal on the issue of freedom
of the Internet, but have not settled on a basis for inclusive
Internet-wide political process. The LPF, an organisation opposed
to the existence of software patents, has undertaken a campaign to
inform the Internet community on the issue, and provides information
to assist companies in formulating public policies against
patents. The clearest way out of the current situation involves
companies opposed to software patents formulating and adopting public
policies that oppose their continued issuance. [22] The
Compuserve/Unisys GIF case shows that though the Internet has no
official political centre, people using it have a certain cultural
outlook which enables them to take political action by the accumulated
effect of individual (and voluable) protest. This effect of public
opinion in the Internet is not moderated by the usual protocols of
media representations, protests to government representatives, and so
on, operating within the framework of defamation law and standard
public procedure. Rather, the Internet environment is inhabited by
a community with a particular loyalty to the Internet environment, who
are committed to the principle of freedom and open use of technology
relating to the Internet. Companies (such as Compuserve) attempting
to work in this volatile environment must on the one hand, obey the
law, while also pleasing the customers, who may have a different, but
not stated, agenda. The problems faced by Compuserve were to behave as
a company obedient to the law, and to pass on costs incurred by
software royalties, while also fielding an angry backlash from
customers who said they were not prepared to pay. This backlash
included comments which may have proved Page 316
damaging to the company's
standing in the Internet community, with the possibility of
accompanying financial repercussions. While in this case Compuserve was
able to drop the patented GIF format in response to client
dissatisfaction, in other cases the dilemma might prove financially
injurious to a company caught in a similar patents dispute. It may
be time for the Internet community, ( the cultural entity discussed
in widely read books such as 'The Virtual Community' by Howard
Rheingold), [23] to reassess itself in terms of its behaviour as a
political sector. Though its philosophy works against development of
an organised political system, it may be perceived that kneejerk
mass responses by users to circumstances they see as unfair, may
perpetrate further injustice. On the other hand, to have political
activity which is not formalised may be an advantage. The
Compuserve/Unisys GIF case shows that the threat of customer boycott
drew an immediate response from Compuserve. Given the unique
decentralised nature of the Internet, and the intelligent strata of
people using it, it might be possible to threaten to conduct, or to
actually conduct, boycotts against companies inflicting patents
actions seen as damaging by the Internet community. If these events
occurred with minimal orchestration, the lawyers could find themselves
in the unusual position of having no-one to sue. Given that it is
possible to present the community with correct information and full
discussion, eg through newsgroups and sites of political pressure
groups, political action could be dictated by individual response to
violations of principles held by the majority, rather than by
traditional policy creation methods.
4 Conclusion
The dispute
shows a number of matters remain unresolved. That is, the baseline
question of patents royalties and a software using population
unwilling to pay them. Unisys, under the GIF LZW license terms, does
not require license fees for non-commercial or not-for-profit
applications. Presumably, in the future, Unisys or any other company
could choose not to make such community-minded decisions. The decision
by Unisys to charge royalties indicates that a claim is being staked
on the territory. It is unlikely, given the motivation of commercial
corporations to make profits, that such claims will be voluntarily
withdrawn. A set of stated ethical principles may work some way
towards moderating debates such as the Unisys/Compuserve GIF row. It
might also provide a framework for political activity protective of
the Internet. For example, if it is accepted that Internet users wish
to encourage the best technology towards development of the Internet
and global information systems generally, then the argument by large
corporations that they have a right to make profits from software
patents, (which may incidentally damage development), is seen as a
claim with less merit. Presumably, it would then be the aim of
Internet users to facilitate a global harmonisation scheme which would
protect intellectual property rights, but not past the point where
such rights hinder development of the software arts. Internet
users, who have shown they are not taking their freedom for granted,
may need to look towards developing active political pathways to
establish and defend their point of view on political issues of major
importance, such as the software patents issues. The traditional
political process, taking place on a national basis or through
international forums, may not serve the interests of Internet users,
or the best interests of the progress of information
technology. Acknowledgements I would like to thank Barry
Fenn, Auckland University HyperMedia Unit, for his helpful
discussions.
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