As an IP-intensive industry, IT is facing a unique challenge. We’re in a state of IP flux. There is intense debate over how we define and allocate the assets of an industry generating well over US$3 trillion revenue globally.
My biggest concern with this debate relates to software and business methods patents. Specifically, that we can somehow discuss their validity as though they exist in a vacuum – that they’re not connected to other intellectual property vehicles such as copyright and trade secrets.
From a legal point of view that’s a valid perspective. From an economic point of view that’s a definite mistake. I would put it to you that the single biggest factor driving the increased use of software and business method patents are economic decisions resulting from the evolution of copyright.
It is critical to understand that copyright is in the middle of a transition in information technology. It is becoming primarily a mechanism to support community-owned assets. It is of rapidly diminishing value in protecting entity-specific assets. And that can be put done to one simple factor – Open Source Software!
What’s been happening over the last decade is simply a re-alignment of asset classes to mirror that reality. If you hope to have a viable, long-term commercial IT concern you had better be able to protect your ideas from being copied, not just the specific codification of them. Patents do that. Copyright doesn’t.
So, how do we allow entity-specific assets to be protected? That’s really what’s being debated here. The copyright horse has bolted and will never return. What then happens if software and business method patents are removed as an option? It will be like trying to burst a balloon by stomping on it only to watch the air shift out to the ends? All the focus on IP protection will move to the only option left. Trade secrets.
All IT providers are focused today on managing their trade secrets. But what deeply worries me is how they’ll respond if wholly reliant on it. I feel pretty confident in predicting that the growing lobby power of the IT industry will shift, like Sauron’s all-seeing eye, towards trade secret legislation. They’ll want it beefed up and armor-plated – just like the media industry did with the DMCA. And they’ll do this because there is serious money at stake. The market capitalization of these organizations is tied in no small part to their IP, and if its at risk, tech CEOs will do what it takes to protect it.
A trade secret-obsessed IT industry will be focused on one thing – controlling the flow of labor between organizations. I could well imagine lobbying efforts to assure the universal enforcement of non-compete clauses in employment contracts. I think we’d see a lot more cases like Mark Papermaster and Kai-Fu Lee. Of course, if you’re not top talent you can forget about your hiring employer footing the legal bills. Who knows – IT could end up like the FIFA-governed football (soccer) industry which requires transfer fees to be paid when contracted players move between clubs.
Let’s remember something – patents are a trade-off. An inventor gets an exclusive right in exchange for the public disclosure of her idea. A functioning patent system (which we don’t have) supports the proliferation of innovation. Trade secrets, on the other hand, don’t. Software patents aren’t perfect. There are serious issues which must be sorted out. But in a world where copyright is evaporating as a way protecting anything other than community-owned assets, software patents are a whole lot less dangerous than the alternative – aggressively pursued trade secret protection muscled up through political deal making.
I would much rather we embrace software patents and water down trade secret legislation than the other way around.
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