Patents for profit: dystopian visions of the new economy

Becky Hogge
11 March 2005

Fights for freedom are not always played out centre-stage. Since 2003, a piece of European Union legislation with the misleadingly arcane title of the “EU Directive on Computer Implemented Innovation” has been slipping unobtrusively through the bureaucratic thickets of Brussels. It has attracted little attention beyond intellectual property (IP) specialists and activists. It is time the interest widened, for the scope of the directive goes to the heart of how knowledge will be produced, consumed, and disseminated in the 21st-century global economy.

The proposed legislation has the potential to lock away information – code – by extending the remit of patent law to cover any piece of code that makes a “significant technical contribution” to the field. The law would bring Europe closer to the United States’s highly promiscuous attitude towards software patents, although how close remains a subject of fierce debate.

Patents are state-granted monopolies designed to nurture technical, scientific and social progress by protecting the inventor’s incentive to invent. Those opposed to software patents in Europe argue that there is no evidence to show that patenting code would ensure such progress in this still young field. As the directive has crawled across the legislative undergrowth, pioneers of technological discovery and commentary – Tim Berners-Lee, Richard Stallman , Lawrence Lessig and Linus Torvalds, among others – have urged the EU to come down against pure software patents. Many of these voices come from the patent-friendly United States: they hope that if Europe agrees with them, the US will be forced to reconsider its position.

Will their hopes for Europe prove to be misplaced? A striking feature of the directive’s two-year journey – from consultation to committee room, lobbying to redraft – is that the two main European Union institutions involved have moved gradually further apart on the issue. The elected European Parliament has been revealed as a space where open debate on intellectual property issues can occur. There, high-profile lobbyists seek to influence legislators; cross-Europe small and medium enterprise (SME) groups bring their concerns; and representatives from accession countries such as Poland share their experience of how the software industry has bootstrapped their growing economies. The cumulative result of the debate has been significant checks and balances on the legislation.

By contrast, the unelected European Commission has emerged vulnerable to accusations of a culture of closed-door negotiations – favouring secretive, fast-tracked voting that reverses the parliament’s careful work by executive fiat.

The commission’s confirmation on 25 February that it would not reconsider the legislation, despite the recommendations of a three-tiered parliamentary vote, is only the most recent evidence that “Europe” too is a site of contest over the key question of our time: who owns knowledge?

The evidence

The question has been a live one long before it entered the deep entrails of the European Union’s legislative process. Since the commercial software industry emerged around 1990, technologists have argued that code is different from other inventions: it does not need protection by patents. In software creation, open standards – code as common knowledge – are the key to fermenting progress. To patent code is to add disabling and unnecessary burdens on software enterprise that can kill its potential in this crucial, formative stage.

These fifteen years (a shorter timespan than the average patent) have seen the birth and maturing of the World Wide Web, all thanks to a protocol known as Hypertext Transfer (http). Tim Berners-Lee, the man who conceived the code that embodies this protocol, did not patent it. Thus it became an open standard: anybody could use it to contribute new programmes designed to run on the web. And use it they did. To the extent that the multiplying, democratising life-forms of the web now challenge the dominance of corporate media and orthodox models of economic activity.

Software programming has a relatively low financial barrier to entry. It relies on the manipulation of mathematical algorithms between one man and his machine. Progress in the sector takes place in swift but discrete steps. Each step contributes something to the art of programming: each software programme builds on the last. It is this environment – accretive, open-ended and egalitarian – that has allowed rapid progress in the software industry to enhance the utility and connectivity of the computers people use in their daily lives.

In the patent-free environment, contributions to the common pool of programming knowledge come from all corners of the world, from the amateur hacker working until 4am in his bedroom to corporations leasing the most expensive real estate in Silicon Valley. Richard Stallman, founder of the Free Software Foundation, likens reading a piece of software code to walking around a city – the expert eye will recognise “architectural periods”, little stylistic ticks that identify a piece of recycled code with a particular time, even place.

Software patents take chunks of code out of this vast pool of shared knowledge and lock them down using IP law. United States case law already shows how companies can use such patents to claim ownership of code that had previously been regarded as an open standard. The effect is not simply to appropriate and centralise a shared knowledge resource, but to make it impossible to create a new programme without infringing the patent. Where software is concerned, patents obliterate progress.

Software and strong IP

Some leading architects of the software sector are quite explicit about this. Bill Gates set his stall out as early as 1991:

“The solution is patenting as much as we can. A future startup with no patents of its own will be forced to pay whatever price the giants choose to impose... Established companies have an interest in excluding future competitors.”

Companies who have followed Gates’s advice and established a forceful patent portfolio gain another benefit: by subjecting software code to strong-IP protection, they can get around the problem of infringing rival patents by licensing patents to competitors – often generating significant revenues in the process. Already, IBM earns considerable royalties from its patent portfolio in the US. Other major IT companies there have started cross-licensing patented code with rivals.

The logic is as clear as it is chilling. In effect, corporations use software patenting to secure a monopoly and discourage the entrepreneurial activity of start-ups. The result is to freeze, not foster, innovation – the very opposite of patent law’s original intention.

Moreover, as intellectual property law combines with the global shift towards a “knowledge economy”, the regressive effect of such lockdowns acquires a more explicitly political dimension. The application of strong IP law is a game only the big boys, with their dedicated legal teams, can play. Knowledge, once viewed as a commons, becomes a commodity – just like land or labour in an agricultural or industrial economy – whose owners ordain themselves the new economy’s ruling class.

This process is taking place in all areas of the economy. At the moment we still baulk at the idea of knowledge as someone’s out-and-out possession: witness the public disgust when patents prevent life-saving drugs from reaching the dying in Africa. With a little imagination, this reaction can be understood as a contemporary example of resistance to changes in economic reality.

If the shift towards knowledge as commodity is as inevitable as many – including, it would appear, the European Commission – believe, then the future looks bleak. We can look forward to an age of monopolies, where innovation is choked by vested interest and the dynamic economies that software and other innovators have helped create fall to rot.

An alternative vision: knowledge as infinite resource

The patent-free history of the software industry speaks volumes for its own situation: software programming can get along fine without patents, if only it is allowed to. But what about the rest of the knowledge industries? Are they to be condemned to the dystopian, even Stalinist vision outlined above? Perhaps not. A new, much more radical model of the knowledge economy is emerging. And by coincidence, it too has been seeded in the software programming tradition.

Over the same period that the Hypertext Transfer protocol was giving birth to the World Wide Web, a new school of programming was born: Open Source. Within Open Source even traditional copyright protection is reversed: programmers are compelled by a mechanism called “copyleft” to distribute their code freely, allowing others to copy it, modify it and integrate it into their programmes. Within the programming community code is shared without levy. Money comes in from outside the community, through the manufacture of hardware and through companies contracting for expertise, custom-design and support.

The theory behind Open Source is that the “more eyeballs” that are fixed on a problem or “bug” in a particular programme – ie the more people with access to edit the code – the quicker that bug gets fixed. The model has proved a success. Open Source has come to dominate the backend of internet technology (the humming Apache-run servers that currently power 68% of the web) and has been creeping onto the consumer market in the form of the Linux operating system and Mozilla Firefox web browser.

The success of Open Source underlines the fact that knowledge is a different sort of resource to labour or land. While these are finite resources, knowledge can be infinitely replicated, and never more easily than in the age of the internet. The only tragedy of this commons, it seems, would be to censor it using strong-IP law. Because, as Open Source has shown, a solid commons of knowledge fosters a solid knowledge economy around its edges.

Open Source software is providing an attractive metaphor for others in the knowledge industries faced with increasingly obtrusive patent and copyright law, although technologists themselves, wary of being labelled romantic, often shy away from this. The economic success of Open Source programming relies in part on the nature of the programming task itself, but it can provide a model of understanding the world, as more and more of everyday life is becoming reducible to data.

Following the success of the Sanger Institute’s open funding model in the race to annotate the human genome, question marks are beginning to appear over the direct linking of medical r&d; to the balance sheets of Big-Pharma. Arguments are also rippling through the creative industries over the use and misuse of copyright law on the internet. And libraries, academies and archives are finally finding their voice over open access to knowledge.

The future of knowledge

The contest between a strong-IP and a commons model will define the character of the knowledge economy worldwide for a generation. In the current transition period, it is being played out in institutions at every level of governance – local, national, regional, global. Thus, the tension between parliament and commission of the European Union is just one example of a wider trend. In 2004, the World Intellectual Property Organisation (Wipo), a specialised agency of the United Nations, agreed to revisit its terms of reference and move away from exclusively promoting strong IP where technical cooperation might be more appropriate to the interests of the developing world. But more recently, Wipo’s announcement that it would invite only “permanent observers” to forthcoming talks will have the effect of excluding “ad hoc observers”, who mainly represented IP reformist associations in previous talks, in favour of observers dominated by rightsholder interests.

The knowledge economy increasingly touches every area of life – work and pleasure, professional and personal life – in every part of the world. It is vital that decisions over its future are made in a fair, accountable and democratic way. As agencies of governance recognise the value of knowledge as any kind of commons, muscular lobbyists for a strong-IP regime, keen to commodify knowledge for the new economy, will be drawn into the fray. These agencies must arm themselves with well-researched models of how knowledge performs in a commons environment. Software is a crucial part of this new landscape. The story of the EU Directive on Computer Implemented Innovation is closer to centre-stage than it appears.

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