Interview with Simon Phipps-Patent Trolls and Open Document Format

Gordon Haff interview with OSI's Simon Phipps conducted on July 31st. Phipps talks recent US software patent case decisions and why they're so significant as well as the recent UK government decision about open document formats. Who are the winners and the losers?

Below is the transcript of the interview. Recorded interview can be downloaded here:

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Gordon Haff:  Hi, everyone. This is Gordon Haff with Red Hat Cloud Product Strategy, and I'm here with someone that many of you probably know, Simon Phipps, who, among other hats, is the president of OSI, the Open Source Initiative. We're here at OSCON this week, and I grabbed Simon partly because there's been a variety of recent news which, for those of us that believe in open source and reasonable intellectual property regulation, I think is pretty good news.

Simon Phipps:  I think you're right. Nice to see you again, Gordon. There's been several things in the last month that have been really very exciting indeed. To go in reverse order, the UK announced that it's standardizing an open document format this week, which means that all future UK government work is going to be using an open standard. That means that there's now a choice of tools that UK citizens can use to interact with their government. They can use Microsoft Office, but they can now also use LibreOffice. They can now use AbiWord. They can now use a variety of free and open source software, which I think is some great news.

That probably wasn't what you were thinking of, though. You were probably thinking more of the US court of appeals for the federal circuit made a decision about two weeks ago. It was around July 10th I think it was that it came out. This was a finding in the Digitech case. Digitech are a patent troll who are associated with the IP hoarders Acacia, and they were suing pretty much everyone you've ever heard of that does digital imaging for infringement of a fairly fundamental patent on image profiles. They were suing Mamiya and Pentax. They were suing B&H Audio in New York. They were suing Buy.com. They were suing laptop companies. The court of appeals had slightly delayed the case waiting for the result of a Supreme Court judgment on another software patent case, which was the Alice v. CLS Bank case.

Gordon:  We'll be talking a little bit more about the document formats, which I think is really interesting. I'd like to dig a little deeper into and maybe to explain to our listeners, how does the federal district court relate to other district courts and relate to the Supreme Court? Why do you think this is a particularly interesting ruling?

Simon:  If you are sued for patent infringement, it will probably be heard by a court of the attacker’s choosing. Commonly these cases end up in a court in the east district of Texas where the court has a fairly clear preference for finding in favor of patent holders.
But if you then appeal one of those suits, patent cases get heard by the federal circuit. The court of appeals for the federal circuit is the bottleneck or the choke point where all of the appeals over software patent cases end up.

Traditionally as a court, they too have had a tendency to find in favor of patent holders and to uphold pretty much every patent case that's brought before them where there isn't an obvious reason not to. A change in behavior or a change of precedent that affects the federal circuit court of appeals is very significant. It affects the whole of the US. It means that patent actions that take place across the whole country have now got a new dynamic. A patent aggressor can no longer take it as read that a local victory is also going to mean a federal circuit victory. That's what I think the Digitech case is so significant.

It's also significant in that Digitech was suing a lot of people, and it's a significant fact that all those people are no longer burdened with expensive and unnecessary litigation.
Gordon:  That's certainly one of the things that happens with a number of these IP cases. They can even cascade down into the individual consumer, user level, which can have a real chilling effect.

Simon:  The worst thing about patent troll actions is that you typically don't know about them. Because there's been a fair amount of documentation now from researchers about how patent cases work. Typically, a patent troll will offer to settle with you without ever going to court. They will set the price of settling with you to somewhere that's just a little below the cost of your first court case.

As a consequence of that, many people will decide to pay the danegeld. That's an expression from an old Rudyard Kipling poem where he talked, he said that those that pay the danegeld, which relates to a historic tax that the invaders of Britain and other places would have on their new subjects. He who pays the danegeld never gets rid of the Dane, Rudyard Kipling says.

A lot of people settle out of court. They also sign an NDA to say that they won't disclose the fact they settled or the amount they settled for, and so we never find out that these cases have been doing on.

The difficulty is that patent law is shaped so that it depends on going to court to correct injustice. There's no way to correct injustice any earlier in the process. The US patent office, because they're overburdened with huge amounts of applications that they have to deal with, they tend to leave errors of judgment, errors of approval, for settling in the courts.

But patent trolls make sure that even if they have patents which are very questionable, they never reach the courts, because people are too afraid to engage in litigation, and they're also too afraid to act collectively because of the NDAs they've signed.
Again, these actions are very significant because if you know that you could get to the federal circuit and win, you may well decide that you're not going to allow yourself to be shaken down by the troll in the first stage.

That will mean, well no more of the cases are happening. That will mean there will be more opportunity for collective action against the trolls. This will all eat into the trolls' business model, which is to make enough money from the early cases to fund the litigation in the later cases. If you can snuff out those early cases with precedent, then you're on your way to minimizing the problem.

Gordon:  Good news in the patent front.

Simon:  I think it's good news. The other thing that was really significant about the Digitech case is it was the first use of the Alice precedent.

Gordon:  Which was the Supreme Court.

Simon:  The Supreme Court, and Alice v. CLS Bank, Alice Corporation is an Australian company that owns a patent that relates to the minimization of risk in financial trading. CLS bank decided to implement the algorithm without buying a patent license from Alice, and Alice sued.

CLS countersued. It went through the courts; it went to the federal circuit. The federal circuit found they couldn't easily resolve the case, so it went to the Supreme Court.
The Supreme Court in their judgment created a very clear test to work out whether a software patent was going to be valid or not. What they said was that, they said that there could still be software patents, but that simply taking something that is not patent‑eligible like an algorithm and then claiming that it's patentable because it runs on a computer is not sufficient to actually establish patentability.

They said that to get a software patent, the software that you have has got to improve the computer significantly. Because of that, the standard for getting software patents has been dramatically increased by the Alice decision. The federal circuit court then referred to the Alice decision, and decided not even to proceed to find out if there had been infringement on the Digitech case because they declared that the image processing software was not a significant improvement to the computer. Rather, it was a computer implementing a non‑patent‑eligible technique.

Gordon:  Simon, I think you do have to give yourself a little credit here. Because as I recall, maybe the last time I did a podcast with you, which might have been OSCON last year, you suggested this might actually be one of the paths towards the rationalization of the patent process without just getting rid of software patents entirely.

Simon:  I deserve no credit whatsoever. The people who deserve the credit are the people actually coming up with the ideas. Mark Lemley is a distinguished academic, he's a law professor, and also a practicing lawyer. He was actually the case lead for the people in the federal circuit who were fighting Digitech. I think he deserves a great deal of credit, as do some folks from EFF.

Having said that, OSI was one of the parties filing an amicus brief in the Alice‑CLS case in the Supreme Court, so we've tried to do our bit on behalf of the open source community to step in there and change the law. I think the dream of getting rid of software patents completely is still a ways off, but I believe the actions that are being taken now dramatically reduce the risk for innovators in the open source domain.

Gordon:  Let's switch gears to your homeland, the UK, and the ruling around document formats there. First of all, maybe you could explain in just a little more detail exactly what the determination was. Secondly, who does this affect?

Simon:  What's happened over there is in the UK we have a portion of government called the cabinet office. The cabinet office is the administrative hub of the government. They are the office of the cabinet. They facilitate cabinet meetings by the minister of state. They also act as the supervisory body for all of the departments of government. They set policy for all the departments of government about how they administer themselves.

They've been engaged in a review of how IT should be procured. In particular, they've been looking at requiring open standards. They've been looking at requiring open data formats, and they've been looking at reducing deal sizes so that open source companies are able to bid for government business, which are all very positive steps.

They made a determination a while back that they wanted a very critical part of government work in the UK to be conducted using open document formats, so that documents could be manipulated by citizens without the requirement to purchase software from a single supplier.

What happened yesterday was an announcement from the cabinet office. It was an official announcement made by the minister of the cabinet office, so a minister of state. The announcement was that all future documents published by any government department for collaboration or viewing shall use open document formats. Specifically, documents that are only to be viewed must be in PDF/A or in HTML format. Documents where collaboration is going to take place must be in open document format.

Gordon:  There's often issues the fidelity of the document formats and how they convertible they are. As you talk about presentations and the like, is there anything around how convertible things like the particular ODF implementation needs to be?

Simon:  Honestly, you've got to give Microsoft their due here, and it's Microsoft you're referring to. In Office 2013 and in the current version of 365, they've got really good ODF 1.2 support that is, as long as you make intelligent decisions around your documents, is also interoperable.

When I say intelligent decisions about your documents, it's really important that you use free fonts when you're working with documents if you want them to be interoperable. Because no matter how good the document fidelity is, if you've used a font that is only available on a single platform, the way it's rendered on other platforms is not going to be correct. It's really important to use free fonts so that everybody can have them installed on their platforms.

Having said that, the big losers from this are actually Google. Because Google's recalcitrance over ODF means that Google Docs really don't have workable ODF support. That means this decision locks Google out of government procurement in the UK.

Gordon:  Even though a lot of people were jumping to, oh, this affects Microsoft, from your perspective it actually affects Google a lot more than Microsoft?

Simon:  I think it affects Google a lot more. I think Microsoft are actually going to do quite well out of it, because ODF support is in Office 2013. It's not there in Office 2011 by default. People who've got old versions of Office are going to have to upgrade to comply with this. Microsoft is going to see a little burst of upgrade activity as a result of this.

They made a quite negative statement about it. I asked them for comment, and they sent me quite a negative statement about it, but I think they stand to win from this. It's quite a good save, because I was involved in establishing Open Document Format back at the beginning of the last decade.

If Microsoft had engaged at OASIS in 2002, we would probably never have had any controversy. But it was their arrogance at OASIS in relation to ODF that created the whole crisis. I think they've pretty effectively recovered from that crisis now. I think Office 2013 has got pretty good ODF support. The UK government now requires you use ODF. There is no interoperability. There's no inter‑document format conversion going on. Feature disparity is going to be much less of a problem.

Gordon:  How do you see this affecting elsewhere in the EU, elsewhere in Europe?

Simon:  The UK is a very important market for companies that are trading in Europe. The policies that the cabinet office has been working through are highly influential. There are a lot of European governments that are looking at these issues.

The European commission has rather dropped the ball on open standards. In particular, they have been unwilling to have a royalty‑free requirement on open standards. Because of that, vendors have been able to continue engaging in lock‑in even with standards.
Because standards don't protect you from lock‑in. Many standards come with requirements for you to buy licenses or to take some other action in order to use the standard.

For example, if you want to have a mobile phone, all the protocols your mobile phone uses, they may be standards, but they're standards that you have to buy a royalty license in order to implement. Take video formats. If you want to use MPEG, that's all very well, but you've got to actually buy a license from MPEG LA in order to write the software that manipulates those formats.

Now neither of those things are open standards. Both of those are standards that require you to seek permission in order to innovate. Open standards are standards where you don't have to have permission to innovate.

The UK government's determination that open standards are important, its definition that open standards mean truly open and not just public. Both are very influential in Europe, and I think we'll see other European governments deciding to pick up the UK's thinking and coursework, so to speak, and implement it themselves. This is quite a significant point for Europe, I think.

Gordon:  In other words, you're not ready to retire, but some good news.
Simon:  Yes, and I think is good news. It's taken, what, about 15 years for us to come from a point where nobody could possibly imagine anyone other than Microsoft being in the market to a market where Microsoft has to scrabble and behave well if they want to stay in the market.

That was all brought about by open source software. If Open Office and then LibreOffice had not been doing what they did, we would have seen Microsoft still having a monopoly on the desktop.

Gordon:  I think in some ways that's the greatest effect that those have had.

Simon:  Yes. It's actually very satisfying to look at. The other thing that causes quite a lot of people a visua cognitive dissonance here at OSCON is going out on the show floor and seeing an enormous Microsoft open source stand out on the show floor, which, again, none of us would ever have expected to see 15 years ago when we were getting started with ODF and Open Office.

Gordon:  I think at some level Microsoft has learned that even if they're not an open source company to their core, by any means, they do at least play in the game, and they need to play in the ecosystem.

Simon:  I was explaining to somebody from Microsoft yesterday that, however, this isn't the end of their journey. Because they're still making significant revenues by shaking down revenues that are using open source and claiming there are patent infringements on software that they've never been involved in, never contributed to, and can't prove that they have a patent on.

All the time they continue at what I call being big trolls, then our respect for them is going to be at best diluted.

They've still got to finish that journey. They've got to recognize that community members don't attack community members with patents. I think when they do that, they will then have been able to join the open source community as a full peer.

Gordon:  Maybe they need that as a sticker for the next OSCON.

Simon:  Maybe. There's still plenty to do in open source. That's why I'm still carrying on with OSI. I've got another two years before I'm term‑limited off OSI, but we're significantly transforming OSI. Because we did this, I wrote in InfoWorld this morning. This is the golden age of open source. Now more than ever, we need to educate people what that really means.

People assume that everything is going to be open. They don't necessarily take the steps that are required to actually make things open.

Gordon:  I still see out there talking to IT people at large companies, you still hear statements about open source that you're sort of like, did you just crawl out from under a rock for the last 10 years? I think it's still surprising those of us in the whole open source ecosystem and community how limited the understanding still is in some circles about security or safety and risk and so forth.

Simon:  There continues to be a market for education on, for example, why security through obscurity is bad and why open source, while not guaranteeing your security, makes it easier for you to ensure your security.

There still needs to be some work done on how open source is not about money. The early use of the word free to describe open source software means a lot of people are fixated with money. They want to use a money frame all the time about open source.
Open source is about flexibility. Open source is about being able to innovate without permission. It's about getting out of the way and letting people get on. That's why we have open source licenses. You hear people saying open source licensing is irrelevant, we don't need to worry about open source licensing.

That's complete rubbish. You need to make sure that your code is under an open source license, not to satisfy some lawyer somewhere, but in order to empower other people to collaborate with you without having to get your permission first. When you get these things right, that's good.

We still need to keep on doing this education. It's to a certain degree surprising that 15 years after the start of the open source movement, we're still having to explain that it's not about free stuff, that licenses matter, that a level playing field is key, and that contributing is in your own best interests. OSI is continuing to have those messages.

Gordon:  We all still have lots of work to do.

Simon:  Yes, still plenty to get on with.

Gordon:  Great. Thanks for your time. There's lots more things I'd like to talk about, but in the interests of our listeners' attention span, I think maybe we'll break now and look forward to next time. Hopefully, there will be some more good news.

Simon:  Absolutely. Thanks very much.

Gordon:  Thanks, Simon.

Some Links:

• Ars Technica on Digitech decision
• US Court of Appeals for the Federal Circuit decision
• Alice Corp. v. CLS Bank US Supreme Court decision
• Scotusblog coverage of Alice v. CLS