From: mcgregor@netcom.com (Scott Mcgregor)
Newsgroups: comp.org.eff.talk,misc.int-property,alt.suit.att-bsdi,comp.unix.bsd
Subject: Re: Patents: What they are. What they aren't. Other factors.
Date: 5 Nov 92 08:59:45 GMT
Distribution: usa
Organization: Netcom - Online Communication Services (408 241-9760 guest)

In article <1992Nov4.185712.20674@mdd.comm.mot.com> kelsey@mdd.comm.mot.com (Joe Kelsey) writes:

>
>So, the benefits from the RSA patent include the adoption by Apple and
>Microsoft and relaxation of ITAR?  I don't follow the reasoning here.
>RSA has existed for more than 12 years and only now do we see
>companies producing products.  Computers capable of effectively
>dealing with RSA keys have existed since before the patent, yet no one
>created a software package to take advantage of it.  In the ten years
>that PKP has existed, not a single commercial package has come into
>widespread use!

Capable of running RSA, yes. In widespread use and interconnections,
and with reasonable performance, not until recently. I don't anyone
would seriously consider using a 128K or even 512K Mac to do 100+
digit multiplications on mail messages of any significant size. 
Not to mention that until the last few years only a small minority of
companies had any real networking to speak of.  We are talking about
communication here and critical mass is a valid concern. Hardware
encryption boxes have existed for that time too, at reasonable costs
and far greater performance but little demand.  Both hardware and
software solutions are covered by ITAR.  

True some communities were wired and had appropriate hardware earlier.
But then there were other encryption alternatives, built into mailers
both commercial and public (such as elm) but these other encryption
alternatives are not widely used either.  More because of the lack of
standardization and other infrastructural support than because of the
time it takes to break them.

>Just because a company enters into an agreement to license a patent
>doesn't mean they actually ever intend to produce a product based on
>that license.

Yes. But in this case they DO sell products, you can write them to get
their product list.  Moreover, Apple and Microsoft have indicated
their intent to include these features in their future releases.  It
is possible that they will change their minds, but there is not reason
to assume they will. They believe that they will benefit in excess of
the fees that they have paid. Their users should benefit as well.

>So, I say that neither licensees nor ITAR counts as a benfit from RSA
>patents.  Please name another benefit.

The ITAR agreement is far from perfect but better than what we had
before and possibly indicative of a move in the right direction.  More
people will use RSA when it ships with Macs and Windows (and hence
more people will get the benefits).  (Just as in the Dolby S NR
situation, where many more people enjoy the benefits of increased
fidelity than read sound processing journals or who would implement
their own sound processor in software).

What is with this "name ONE benefit", and when one, or even more, is
named then its "well, not those ones, I don't like those ones, name
ANOTHER benefit..." This is okay as far as it goes. But, as Robert Withrow
pointed out before if we are going to continue to with this sort of
approach it would be helpful to be sure that it is POSSIBLE to come to
a resolution of an acceptable benefit.  I could see arguments along
the lines that "these particular benefits, X" don't balance "these
particular harms, Y". But I don't see how you can deny that the
ability for someone to purchase a product with a valuable feature of
the shelf isn't beneficial compared to having to go reading trade
publications and building one yourself or acquiring one through
uncertain noncommercial means. 

>What benefit does a licensee actually acquire?  The benefit of
>*paying* money to RSA? 
The benefit that a licensee gets is that they don't have to pay the
cost of reinvention. Furthermore, they will enjoy some of the same
benefits that RSA has.  That if their product is successful, no one
else can just copy it and steal the market they pioneered. This is a
risk reduction for the investor, which translates to a lower cost of
capital for the licensee (and maybe the only circumstance under which
investment might be received.

>How can I sell this so-called benefit to
>investors in my hypothetical start-up?  ``Gee guys, if we pay most of
>the money I want you to invest in my company to RSA, we can produce an
>inconsequential piece of software that we can *try* to sell for more
>than the usual market price.''  Doesn't sound like a benefit to me!

Maybe Joe doesn't think like the typical investor. Investors will like
the fact that the cost to acquire the technology is known (development
costs are harder to preedict), and that market protection from late
entrants is also more clear than in a non-patented product. In fact,
the investors might not want you to produce any software, they may be
investing based upon your ability to distribute not manufacture. 


> I still see no tangible benefits to society arising from the
>fact that PKP has actively *prevented* people from using the IDEAS
>contained in the various patents they own or control.

Right. That's not where the benefits arise. That's where the harms
arise. The benefits arise when people buy a Mac or Windows and RSA is
built in, and they didn't have to join the net, nor read a journal nor
own a compiler or a modem. They just use it. Patents have their costs
and benefits that arise in different ways. The net cost or benefit is a
balance of the two, not just the sum of the restrictions. What
surprises me is that Joe's note of the costs is equally true of every
other patent software or hardware.  Joe's note is an argument against
all patents.  I would find such a position far more consistant, even
if more extreme than the ongoing claims that software is different
bolstered by examples of harms that would damn all patents alike.

>Please Scott, either come up with a real software patent which has
>real benefits or find some other forum.

Because, as I noted immediately above, the costs and benefits I am
discussing are the same for software and non-software patents alike, I
think that if you reject the examples of the types of benefits I
raise, then it would be impossible to come up with ANY patent that
could be shown to be beneficial. So why then the distinction between
software patents and hardware patents?

But to address Joe's request more directly, let me rerutn back to
another example I already gave, the case of Dolby S NR. (Please don't
write me and tell me you think it is really analog hardware--Dolby
says it is software in their published literature, they claim they
have several other licensed software products covered under their 650
patents and patents applied for).  A quick check of Dolby's literature
and patent applications shows that they are clearly motivated by
patents, it is not some afterthought as some have argued RSA's was.

Today, millions of people can buy and use Dolby S NR to enjoy higher
fidelity in their music.  The Dolby patent status has allowed it to
get a greater degree of standardization than might have occured
otherwise, and this has allowed for more interchangeable media
(avoiding the betamax vs. VHS affect). It has protected Dolby Labs to
allow it to grow and develop and market several other innovations.

Prior to Dolby's dominance of the market, there were several other
fidelity enhancement strategies that were known.  But they were
predominantly known only to specialists in the field and some
hobbyists, and were mainly available only to those who developed their
own signal processors, or on a small number of non-standardized
systems, and relatively few consumers enjoyed the benefits of such
systems. 

It is possible to hypothesize that given the interest in the field
among the professionals in it, that had Dolby not patented these
technologies that sooner or later someone else would have invented
them and delivered them to the public domain. It is possible to
hypothesize that companies would have apprecieted their value all the
same and marketed them just as widely as they do today, but at a lower
cost since they would have no royalties. But that would be HYPOTHESIS,
and every patent the exists today could be hypothesized away in the
same manner. 

I perceive that patent opponents (software or otherwise) aren't open
to all kinds of benefits--they want one and only one kind of benefit:
proof that some valuable invention would never ever be invented by
someone else if a patent wasn't possible. If we could find such a
patent it would seem to directly address the patent opponents demands.
But I don't think that it would be possible to find such a patent in
any domain. I think some people will always feel that another smart
person sooner or later would figure out the same thing. And that
having been figured out it will just logically come to mearket. I
don't think it is possible to argue against this, and I am not trying
to.  What I am claiming is that the benefits that exist come in a
different arena--one that is missed by opponents who single mindedly
focus on whether a product might be reinvented or not.



-- 

Scott L. McGregor		mcgregor@netcom.com
President			tel: 408-985-1824
Prescient Software, Inc.	fax: 408-985-1936
3494 Yuba Avenue
San Jose, CA 95117-2967
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