Dicussion of UOML IPR policy

["Alex Wang" <alexwang@sursen.com>]

Marbux,

Sorry for late response due to too many busy work after a long public
vacation.
Thank's for your long reply. I agree most of them. I appreciate your
rational. IPR policy is a complex problem, or in your words, "I can see
reasonable arguments on both sides of that issue". 

Sorry again for my poor English that misleaded you. Under the IPR policy
of UOML, the question you concerned wouldn't exist. If UOML
specification was DVD, our IPR policy charged for encoder only, the DVD
player would be RF totally, one could design and manufacture any kind of
player freely. In additional, if anyone was willing to free its encoder,
the corresponding royal fee is free too. Therefore, it is royal free for
any open source implementation.

To some idealists: what is your feeling if a Chinese cuss like  "You
U.S. is sueing China in WTO for IPR, You U.S. is charging DVD IPR fee as
much as half of its price, and now you U.S. force us to give up our IPR,
you are evil" ? It is sure that this U.S. is different than that U.S.,
so does RAND.

Sorry for the wrong file format of UOML TC minute by secretary's
mistake. I checked the file format of specification but ignored to check
minute. We have replaced right one and gurantee that this mistake will
not exist again.
Regarding the avi file, it is generated by outsourcing. I am a document
expert but know little about stream file. If anyone can tell me which
format is open one, I will ask our outsourcing vendor to provide in this
format.

Deeply agree mary's suggestion that we shouldn't discuss UOML IPR policy
too much within ODF TC. Please either take the discussion to the uoml
list (and off the ODF lists) or continue it privatelIy. I am open to
discuss. I can be reached by:
email: alexwang@sursen.com
MSN: dlwang@sursen.com
Skype: alexwangchn
Yahoo: alexwangchn
GTalk:  alexwangchn
Please email me first if communicate by IM because it is used on demand.

-Alex
-----Original Message-----
From: marbux [mailto:marbux@gmail.com] 
Sent: Wednesday, May 09, 2007 1:35 PM
To: Alex Wang
Cc: OASIS Office
Subject: Re: [office] How about an interoperability Subcommittee?


On 5/8/07, Alex Wang <alexwang@sursen.com> wrote:
>
> Regarding HTML, if someone charges for HTML browser's income only, 
> i.e. if and only if MS, Netscape, Firefox get income from their 
> browser, the inventer of HTML will charge a fixed percentage from 
> their income, do you think it will hurt internet?
>

Emphatically yes, although I think a better example to illustrate the
problem would be web 2.0 application developers who derive income from
their software. Browsers make a poor example for illustration purposes
because that market is rather completely commodified and concentrated.
There are very few remaining browsers that are not free and their market
share is miniscule. The browser example also raises the complex issue of
whether companies profit by offering free browsers.  I can see
reasonable arguments on both sides of that issue.

There is an incredible rate of innovation in Web 2.0 application market
right now. The market is new, there are an incredible number of new
business startups jockeying for first mover advantages, in short a time
of great flux in that market. See e.g., this database of Web 2.0
applications. <http://itredux.com/office-20/database/>. The way new
markets develop, few of those businesses will survive. Among those that
do, nearly all will be acquired by other companies. It is possible that
one of them will survive under present management; e.g., Microsoft is
one of the rare first movers to prosper for decades. I haven't studied
this particular market in depth, but I believe I can safely surmise that
some of those start-ups are running on a shoestring, others are funded
by their owner's own capital, some have start-up money from venture
capitalists, and some are spin-offs from established companies.

But I can also safely surmise that the vast majority are not yet turning
a profit. They hope and plan to become profitable, but aren't yet. So
those are profit-making ventures without profits. Let's assume that the
IPR for HTML say that they need not pay royalties until they produce a
profit. In other words, just as they turn the corner of profitability,
the HTML royalty requirement kicks in and puts them back in red ink
territory with a competitive disadvantage given to those companies not
yet profitable. Do they still owe a royalty? That is a rat's nest that
needs to be addressed. And hasn't our owner of the HTML IPR given
start-ups an incentive to engage in creative bookkeeping to avoid
liability for royalties? E.g., why pay royalties when you could book
what is actually an investment as an expense? We're talking about small
start-ups, nearly all privately held, and not subject to e.g., SEC
regulations requiring disclosures. In every industry I've looked at,
there are certain expenditures close enough to the border between
expenses and investments to lawfully be treated as either one. The free
web browsers might be a good example here.

But I digress. My point is that royalty requirements fall hardest on
start-ups, creating an impediment to their profitability and survival
during a critical stage of their growth. And a royalty scheme that
applies only to profitable start-ups creates an extra barrier to
business growth, penalizing those companies that attain their break-even
points. But from an economic development policy standpoint, those are
the companies that least deserve a penalty. They are the very companies
that are just emerging from their start-up phase. And small business
accounts for well over half of economic growth, at least in the U.S.
Impeding small business growth is poor economic policy.

In my view, a royalty requirement that applies to all without exemption
makes more economic sense than a royalty requirement that penalizes
profitability. I will confess to some bias here; I have a strong
preference for standards without any IPR restrictions at all. I will go
so far as to say that I am already on the public record as being
strongly opposed to all software patents and I am wavering on whether we
should have copyrights as well. "Intellectual property" is what we
lawyers call a legal fiction. It is property only in the sense that
governments have decreed it as such. There is no actual property, only
an enforceable right to exclude others from using something as nebulous
as words and ideas, and to charge money for licensing the right to use
what is in fact more free than the air we breathe. I find it beyond
ironic that we have "free trade" agreements that enshrine the right to
own and use knowledge. There is no natural right to do so, it is
government intervention in free markets, an artificial monopoly imposed
by governments that is the antithesis of free trade.

To me, IP rights in communications protocols, file formats and the like,
are particularly egregious to sound economic policy. In the software
industry, interoperability is the foundation of competition, what allows
the substitutability of goods. This industry has long closely watched
Microsoft's manipulation of file formats and communications protocols to
achieve and maintain a monopoly. Challenged to justify its actions in
two landmark antitrust cases on two contients, Microsoft has been
ordered to cease and desist and to disclose its communications protocols
and middleware APIs. It has responded by imposing RAND and royalty
requirements on its disclosures and by building a patent thicket around
its APIs and communications protocols. A rather momentuous decision by
the European Court of First Instance is due out later this year that is
expected to test Microsoft's right to do so. Meanwhile, the European
Union resolved its first major constitutional crisis by rejecting a
directive that would have legimized software patents in Europe, an event
preceded by massive resistance by small and medium business owners and
the European citizenry at large. And the U.S. Supreme Court just hinted
that it may declare software patents unconstitutional if it receives an
appropriate case in which to render such a decision.

My well studied opinion is that software patents will soon be no more,
and even more certainly IP rights in file formats and other
communications protocols will be the first casualties. E.g., in Europe,
copyrights may not lawfully be asserted as a barrier to interoperability
and the interoperability issue was the driving force of the resistance
to software patents in Europe.

There is a rapidly growing migration in the software industry toward
standards without IPR restrictions, with growing numbers of governments,
software developers, and software users fueling the migration. The
unmistakable trend is away from IPR restrictions in software standards.

I respectfully suggest that you study that trend and integrate the
fruits of your research with your business plan. In that regard, a
couple of blogs you might consider adding to your reading list are: [i]
Andy Updegrove's private blog,
<http://consortiuminfo.org/standardsblog/> (Andy numbers OASIS among his
clients); and <http://www.groklaw.net>. Groklaw's front page  News Picks
column does a very good job of summarizing news internationally relevant
to the subject of this conversation on a quite timely basis.

Best regards,

Marbux

> -Alex
>
> -----Original Message-----
> From: Bruce D'Arcus [mailto:bruce.darcus@OpenDocument.us]
> Sent: Tuesday, May 08, 2007 9:15 PM
> To: OASIS Office
> Subject: Re: [office] How about an interoperability Subcommittee?
>
>
> On May 8, 2007, at 8:59 AM, Alex Wang wrote:
>
> > I tried to use the example of Java to explain what "balance" means. 
> > Sun kept some IPR of Java ten years ago, give up some of them today,

> > it is the "balance". Yes, Sun want to create a market by Java, but I

> > don't think this is the reason that you have very little sympathy 
> > for Sun. I respect Sun, J2EE is more popular than .NET, while 
> > Windows, IE,
>
> > MS Office becomes the owner of the world.
> >
> > I was told "share everything", "free for everything"  ever since I 
> > was
>
> > born. I am a Chinese, this is the Communist Party's education. This 
> > kind of education still exists in North Korea, and now in OASIS. We 
> > treat IPR in extremeness attitude, thus a commercial topic becomes a

> > politics topic. I don't think it is a good manner.
>
> With all due respect Alex:
>
> 1) you are comparing apples (programming language, VM, etc.) and 
> oranges (standards)
>
> 2) Sun has opened up Java recently
>
> So your argument isn't really supported by either logic or 
> on-the-ground facts.
>
> It's not surprising that many people who are a part of standards work 
> are very suspicious of attaching restrictions to its use (building 
> proprietary tools or applications based on those standards is an 
> entirely different matter). You cannot talk about "balance" and "99%" 
> when talking about standards, and to say as much is hardly 
> "extremism"; it's the entire basis on which our internet-based 
> information economy works. If XML and HTML were released under RAND, 
> there would be no internet as we know it, nor would ODF exist.
>
> Bruce
>
>
>
>
>
>