02 August 2010

In the Commercial World, FOSS Companies must Learn to Act as Businesses (updated once)

A recent article on the IP Jur blog addressed, in a different context, the popular myths that "patents are a tool to steal a software developer his hard-earned fruits of labor" and that "patent owners all of a sudden jump out of the bushes armed with a patent certificate [...] demanding to cease and desist commercially using the poor developer's software". It was then clarified that, generally, much in the same way in that you have to make sure that the estate on which you desire to build your house is not owned by any third party, software developers need to ensure that there are no patents covering technical aspects of a planned software project, i.e. that they have the freedom to operate.

The current conflict between IBM and TurboHercules, a french company selling an emulator that allows conventional computers with mainstream operating systems to run software that is designed for IBM System Z mainframe hardware based on the open source Hercules project, is a good example for both the cultivation of the patent myths by (parts of) the FOSS community and the trueness of the clarifying advice on ensuring freedom-to-operate. 

In March this year IBM mainframe CTO Mark Anzani sent a warning letter to TurboHercules, according to which IBM has "substantial concerns" that the Hercules project infringes on its patents, with 173 of theses patentes being specified in a nine pages enclosure to that letter.

According to the background information on Ars Technica, IBM's software licensing model ties its mainframe operating system to its underlying System Z hardware, guaranteeing that customers cannot easily migrate to other hardware options, whereas this lock-in strategy is the reason why IBM's mainframe business is still profitable despite the declining relevance of the technology. While IBM has shown a fair amount of goodwill to Hercules' projects in the past, TurboHercules then came up with a rather obsure idea to circumvent the licensing restrictions by interpreting parts of the license in a way that it could make it legally permissible to use IBM's mainframe operating system with Hercules in some cases. Following IBM's initial threats of legal action, Hercules filed an antitrust motion with the European Union, to unbundle IBM's mainframe operating system from its mainframe hardware, which was answered by IBM with the above-referenced warning letter (the full correspondence between Roger Bowler, President of TurboHercules, and IBM can be reviewed here).

Now prominent FOSS campaigner Florian Müller came into play when TurboHercules disclosed the letter to him for broad publication. Müller covered the mythical Big Blue vs. Little Hercules story by  a series of articles on his FOSS Patents blog (see here, here, here, and here), in which he complained that "IBM is using patent warfare in order to protect its highly lucrative mainframe monopoly" and that
[t]his proves that IBM’s love for free and open source software ends where its business interests begin. In market segments where IBM has nothing to lose, open source comes in handy and the developer community is courted and cherished. In an area in which IBM generates massive revenues (an estimated $25 billion annually just on mainframe software sales!), any weapon will be brought into position against open source. Even patents, which represent to open source what nuclear arms are in the physical world.
Müller went on to claim that IBM had violated its public pledge not to sue open source software projects for patent infringement, since two of the 173 patents/applications cited in the warning letter were plegded to the Linux community in IBM's 2005 "patent pledge".

In reply, Groklaw called Müller's assertions nothing more than FUD: "The complaint against IBM was filed with the EU Commission by TurboHercules. At that exact moment, did they not take themselves out from under the patent pledge's safety umbrella?"

Whereas Müller's moves and interpretations were closely followed by online media, such as PC World, ZDNet, The H, and even the Wall Street Journal, anti-Microsoft blogger Roy Schestowitz didn't hesitete to produce a conspiracy theory in order to link this conflict to his anti-Microsoft universe: "TurboHercules was a member of organisations funded by rivals such as Microsoft Corp 'to attack the mainframe', which is IBM’s main business. [...] TurboHercules is a member of a non-profit trade group called the Computer and Communications Industry Association (CCIA), which counts Microsoft and Oracle Corp as members, but not IBM". Further, based on Müller's LinkedIn connections, Schestowitz winded another conspiracy when accusing Müller of being a lobbyist of CCIA and Microsoft, since "Müller set up his anti-IBM blog when he got connected [on LinkedIn] with CCIA’s Executive VP, who works with Microsoft", which was answered by Müller by raising "serious doubts about whether I can expect a minimum standard of reasonableness on BoycottNovell's part". But that's just skrimish.

Now returning to the above freedom-to-operate advice, one has to agree with bnet blogger Erik Sherman's opinion that "[FOSS] companies must still learn to act as businesses":
If FOSS companies want to compete, they’ll have to do it the old fashioned way: creating their own intellectual property and using that as a leverage against better-established corporations. Sometimes the wise choice will be to avoid a market because getting in commercially will be impossible. Or it might be that a TurboHercules notices that all the patents asserted are in the US, possibly leaving room to operate in other parts of the world.
Similar voices, as collected on Technewsworld, called Roger Bowler's strategy "a bit naive" and assume that IBM "is rightfully concerned that a commercial enterprise is attempting to make money off of their IPR". Consequently, "the Hercules project obviously contains processes and technology that is covered by IBM's IPR. For Mr. Bowler to state otherwise is either total naivety or unwise business practice."

Meanwhile, following complaints by Turbo Hercules and T3 Technologies (another emulator software vendor), the European Commission has initiated formal anti-trust investigation against IBM, alleging it might have abused its dominant position on the mainframe computer market. In a press release of July 26, 2010, the Commission declared that it has "concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services [...], in particular by restricting or delaying access to spare parts for which IBM is the only source." 

UPDATE: According to a recent article in the New York Times, IBM assumes that "the companies that filed the complaints [are] proxies of Microsoft" (the same term that Schestowitz used to describe Müller's interest in the case - another conspiracy here?) and accused Microsoft of orchestrating the complaints to promote sales of its Wintel servers: "Let there be no confusion whatsoever: there is no merit to the claims being made by Microsoft and its satellite proxies. [...] Certain IBM competitors, which have been unable to win in the marketplace through investments in fundamental innovations, now want regulators to create for them a market position that they have not earned".

Bloomberg further reported that, following up these accusations, Microsoft spokesman Frank Shaw took the position that Microsoft "invests in startup companies such as T3 Technologies to give customers greater choice" and that they "share T3’s belief that there needs to be greater openness and choice for customers in the mainframe market".

(Photo (C) 2009 by v1ctory:1s_m1ne via Flickr under the terms of a CC license)