The effects of software patent policy on the motivation and innovation of free and open source software developers

Chapter I introduces the topic of the dissertation and presents the key findings, derived policy recommendations, and some thoughts on limitations and future research. The first section introduces the reader unfamiliar with the research field to the general debate of innovation in the digital age. It starts with a brief history of the legal protection of software that also describes the basics about copyright and patent law. Then a more detailed presentation of the debate between the ‘individual innovation’ camp and the ‘collective innovation’ camp is given using the example of software patents and Free/Open Source software (FOSS), respectively. The two main research questions addressed in this dissertation conclude the introduction. The second section presents a summary of the findings. Theoretical findings are rooted in the legal and motivational differences of the FOSS innovation model compared to the proprietary software model. Under empirical findings the new metrics proposed to measure domain-specific software patent pressure and innovation behavior at the individual level are presented first. They are followed by the more substantive results concerning the correlations between motivational setup and innovation behavior as well as software patent presence and innovation behavior. Methodological findings present in some detail the choice of the unit of analysis, how the two new metrics are motivated and constructed, and, finally, how data collection was organized to ensure high data quality. Based on the findings, the third section offers a few policy recommendations. One key advice is to consider the correlation found between intrinsic motivation and higher levels of innovation behavior compared to extrinsic motivation and lower levels of innovation behavior in future policy decisions. FOSS is not just another ‘industry sector’ where patents as instruments function just as expected. In addition, the characteristics of FOSS (public-good-like availability of software) give it a potential for social benefit that the proprietary software sector cannot offer. The final section briefly discusses some limitations of the dissertation and related ideas for future research. The main challenges were the measurement of software patent presence in a non-trivial yet simple way and the sampling bias introduced by focusing on ‘alive’ FOSS projects for the survey. Derived from these challenges are the ideas for future research: to continue working on metrics for software patent presence and dedicate studies to ‘dead’ projects to identify causes of death; and, finally, to figure out why FOSS developers do reverse-engineering! 20 1. Innovation and the digital age 1. Innovation and the digital age At first glance, the research questions investigated in this dissertation appear to cover a rather narrow field, of interest only to software experts, legal scholars, innovation economists, and digital freedom activists – and maybe not even all of them. Yet, the arguments raised and results discussed here are only examples in a much wider debate about the sources of innovation and originality in works of the human mind and their adequate level of legal protection. These questions were answered a few hundred years ago; with ‘copyright’, ‘patents’, and other types of ‘intellectual property’ (Menell 2000). The digital age, however, requires that we address these questions anew. Over the last decades, we have all experienced, how personal computers have dramatically accelerated the speed with which we can create and modify works of the mind. But we have only just begun to see the fundamental change and potential, the Internet is bringing to individual innovation processes. On the downside, we are debating software patents and longer copyright for scientific and other literary works as well as unauthorized sharing of music and movies; on the plus side we are contemplating the potential of free/open source software, the open access paradigm to scientific knowledge, or Wikipedia, openstreetmap, and many other non-commercial collective efforts to produce useful knowledge that were impossible before networked digital technology (Benkler 2006). The research in this dissertation connects two of the examples above. Software patents, the symbol for the traditional understanding of innovation as the individual genius inventor who needs protection, are on one side; Free/Open Source software (FOSS), showing how innovation can also happen by applying legal protection instruments in any but the traditional way, are on the other side. This introductory section provides a contextual background to the research presented in this dissertation, because its interdisciplinary nature brings technical and legal complexity with it. It starts by briefly summarizing the historical origins of software protection through copyright and patents. Then, the patenting development is contrasted with the emergence of free/open source software as the two symbols for individual and collective paradigms of innovation. The section concludes by formulating the research questions addressed in this dissertation. The following section highlights the main theoretical and empirical findings of the dissertation. Policy recommendations are suggested in the section thereafter. The final section addresses some of the limitations encountered during the whole research project and also provides ideas for future research. 1. Innovation and the digital age 21 1.1 The legal protection of software Does innovation only require an individual genius or is a larger group of humans needed to come up with something new? The question of whether innovation is an individual or a collective process is not only an academic, but also a very practical one. The traditional systems of patents and copyright are rooted in the individual paradigm (Lévěque and Ménière 2004) and have difficulties in accommodating new forms of collective innovation and authorship. However, networked digital technology enables exactly such collective innovation with FOSS being the pioneering example (Lessig 2002; Benkler 2006; see also Suber (1998) for a philosophical introduction to the concept of software). Why are patents (and copyright) designed the way they are? The reoccurring key argument is that the creation of new knowledge is costly and can very easily be appropriated by a freerider.1 To protect the inventor (or author in copyright terms), he2 is handed an exclusive, timebound right excluding everybody else from the commercial exploitation of his invention (or work). The only way to access the invention or work is by paying for a license (lat. ‘permission’). Today, we have license fees for TV shows, music performances, sports training programs, images, videos, and all sorts of technical inventions. Despite this common basis, there are two fundamental differences between copyright and patents, which are explained briefly as they both are relevant to the discussion of software. Copyright protects the form/expression of an idea or concept. Einstein’s books on the theory of relativity are copyrighted, but the theory itself (the idea) is not. Therefore, anyone could write a book on the theory of relativity and compete on the book-shelf. Patents work in the exact opposite way: they protect the underlying idea/concept and thereby all possible forms covered by this idea. Therefore, if I patent a vehicle with two wheels and a chain propulsion mechanism powered by a human, I have patented a bicycle. But if I leave the number of wheels (or humans! ) unspecified, my patent also covers tricycles, tandems, etc. The scope of a patent is defined by the patent claims it contains and usually the patent applicant is interested in obtaining broad patent protection. 1 Easy copying is usually considered a problem, especially in ‘developed’ knowledge economies. Opinions, however, may change over time. Gerster (2001:6) provides the interesting historical example of Switzerland’s chemical industry in the 19th century, whose success stemmed from not having a patent law and hence no legal basis for patents that rivaling Germany could use. Switzerland was accused of being a ‘pirate state’. Yet, the industry prevented every attempt of legislating a patent law – quite contrary to the standpoint of today’s Swiss chemical industry, as Gerster points out (Ibid:22). Boldrin and Levine (2008, chapter 8) give a more systematic analysis of Switzerland’s case. 2 Throughout this dissertation “he” refers to both genders. 22 1. Innovation and the digital age The second difference between copyright and patents can be derived from the first difference. Patents require an explicit registering and granting process, during which the application has to pass a ‘patentability test’. Patents costs money to obtain. In contrast, copyright is implicit and you get it for free the moment you create an original work, such as a dissertation. It is interesting to see how the question of legal protection has been answered differently at various times in the young history of software (Grassmuck 2004, chapter “Geschichte der Software-Entwicklung”). In the first phase (1960s), the computer market consisted of huge mainframes that were sold with software included as an “instruction manual”. Most of the software needed was written by the users themselves – and widely shared. Software was not considered a product by itself and no separate software market existed. In the early 1970s, the US Department of Justice brought pressure to break up IBM because of its monopolistic position. To avoid the break-up, IBM decided to unbundle its hardwareand software-business, therewith creating the nucleus of today’s software industry. During that time, many of the large and now well-known software companies were created (Microsoft 1975; Apple 1976; Oracle 1977). It is remarkable to note that the software industry got established without software having any legal protection for several more years.