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Subject: RE: Opportunity for CAP? State CIOs Plan System To Warn Public Of Danger

Sort of a sidebar, but the following press from IBM on patents is very 
interesting (source: Economist)

Jan 11th 2005

IBM is forgoing royalties on 500 of its software patents. In doing so,
it hopes to make the computer industry more innovative and, in the long
run, to make more money from collaborating with other programmers

IT IS no coincidence that, on Tuesday January 11th, IBM became the
first big computer company to flout tradition and make freely available
a large number of its patents to anybody using open-source software.
For starters, the company holds more patents than any rival: last year
alone it was granted 3,248 new licenses by the United States Patent and
Trademark Office (USPTO). This was 1,300 more than any other company
and the twelfth consecutive year in which IBM has topped the list.
Indeed, the company currently has about 40,000 active patents
worldwide, from which it earned more than $1 billion last year in

More than any other computer company of its size and type, too, IBM has
embraced open-source software (which allows programmers the world over
to share the underlying codes and to collaborate in developing new
applications), particularly that developed by Linux, an operating
system that, unlike Microsoft's Windows, is freely available to all.
Even so, IBM's decision to forgo royalties on 500 patents covering
everything from database and storage management to image processing and
networking is a bold step that could have far-reaching implications for
the computer industry. In pledging to distribute the codes underlying
the patents to programmers working on projects approved by the Open
Source Initiative, an industry group, IBM is betting not only that its
decision will lead to more innovation but that, over time, it will also
more than pay for itself.

Indeed, there are good reasons for believing that today's system of
granting patents is stifling innovation, not encouraging it. Patent
offices around the world have never been busier. This is partly because
of increasing amounts of work in the fields of the internet, genomes
and nanotechnology. But it is also because patent offices are being too
lax in granting licences, encouraging firms to rush to register as many
(often dubious) ideas as possible in an effort to erect legal barriers
against their competitors.

In 1998, America allowed firms for the first time to take out patents
protecting so-called "business methods". These often seem to cover
ideas which are neither useful nor wholly novel--simple tests (together
with not being obvious) which are supposed to determine whether a
patent should be granted or not. Patents, which usually give the holder
a monopoly over the process or innovation protected for 20 years, are
also becoming more difficult and costly to challenge. In addition, the
USPTO is often reluctant to turn down an application because,
perversely, doing so involves more time and effort than approving it.

What happens in America is important because the USPTO approves more
than 170,000 patents each year, half of them to foreign applicants. And
this figure is rising at the rate of about 6% a year. As firms in China
and India become more active in western markets, the number of patents
applied for is expected to rise even more quickly. So, too, is the risk
of overlap: a recent study by M-CAM, a consultancy which studies
intellectual property, found that more than 30% of patents make
duplicate claims, raising questions about their validity.

IBM's pledge to make available a slew of its software patents by itself
will do little to address the problem of too many patents protecting
the wrong things. But it may encourage more technology companies to
take a similar tack. If they do, then more firms may be encouraged to
collaborate in developing new software instead of trying to forestall
their rivals by taking out pre-emptive patents. Jim Stallings, IBM's
vice-president for standards and intellectual property, hopes that
other firms will join it in forming what he calls a "patent commons"
from which bona fide programmers will be entitled to draw without
paying royalties.

Of course, there are good business reasons for doing this. As a leading
supporter of Linux, IBM stands to gain if the open-source standard
grows in popularity. Linux is particularly suited to business customers
with a narrow range of specialised tasks, such as call centres. To this
end, IBM has already donated computer code worth $40m to Eclipse, an
open-source group that offers tools with which to build software
programs. In 2004, IBM also unlocked a program called Cloudspace which
cost it around $85m to develop. That said, it could still be a long
haul before Linux begins to dent Microsoft's supremacy. At the last
count, over 90% all PCs worldwide ran on Microsoft Windows, compared
with around 4% for Linux.

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