Comment Articles

The iron fist in the patent leather glove

Rupert Goodwins ZDNet.co.uk

Published: 20 Jul 2004 14:50 BST

Phelps is the man credited with starting the software IP revolution, the idea that a company's intellectual property isn't just there to protect it but is a valuable, powerful asset that can earn money in its own right. He proved this at IBM, where he set up a division that now earns $2bn a year. Microsoft is desperate to find a solid revenue source to replace the mature cash cows of Office and operating systems: it is also very keen to rein its No.1 enemy, open source. Marshall Phelps will do both.

He's remarkably open about how, too. In a long interview with industry magazine Managing Intellectual Property late last year, he says: "You have all this R&D that hives off a whole bunch of IP. I can then take that and I can go license that to all-comers. When I do that, I create standards, I create relationships and I collect money." A policy, he says, that Microsoft will be spending $7bn a year promoting. He's out there lobbying Congress and the European Commission to make the legal environment more conducive to Microsoft's plans; he's realigning Microsoft's legal teams, he's overseeing, in his words, an acceleration in the patent engine. And is he getting support from the boss? "If you think about Bill Gates's job of chief software architect -- which is one he takes very seriously -- he's involved in these IP discussions all day long," says Phelps. "I spend a lot of time with him."

As for the patents Microsoft has been amassing, they are frightening in their scope. Storing documents in XML, using HTML outside a browser, double-clicking buttons, buffering network packets, text formatting -- you can check a list of a few hundred European patents here. Who knows how many patents will stand up to examination in court -- and it doesn't matter. The patent system -- which Microsoft has been so keen to extend to Europe -- is always on the side of the company with the most money.

Imagine that you're creating some new software: how will you make sure that nothing in it contravenes what Microsoft claims to own? For all practicable purposes, you cannot. You cannot afford to defend yourself against Microsoft: all you can do is sign a licensing deal -- even if you're Sun. And voila -- Microsoft gets a cut of everything you ever write. Free software becomes impossible: the Windows Tax has become a Software Tax.

The community is already reacting: the Public Patent Foundation has started the process of collating Microsoft's patents and forcing judicial reviews on those most obviously at risk from prior art. But Microsoft is issuing thousands of patents: it seems impossible to force a review of the company strategy, and picking at the patents one by one is like fighting a locust swarm with a fly swat.

So while HP's memo might have predicted Microsoft's attack phase a little too early, it's dead right on the campaign. The only question is when the first shots will be fired in the open: all the signs are that day will not be long in coming.