Losses caused to me by Software Patents

Introduction

Who am I?

I am a free software developer since 1992 and large parts of my work consist of software development of small components ordered by other software development companies because the components are too difficult or too specialized for them to develop themselves. The clients are both small and large companies, including well-known names like SAP, Siemens, McAfee, AGFA and others.

Wherever possible I produce open source software under the GPL license.

Losses caused by Software Patents

In my work I have experienced several cases of losing money due to software patents, both by losing revenue and as a result of increased costs. There are at least the following noticeable effects:

Already completely developed software could not be or could no longer be marketed when I came to know that the technologies involved were patented.
Marketing of software was limited by patents, so revenues were reduced.
Software development was stalled during the conception phase after it became clear that patent issues were involved. Some kinds of software simply cannot be developed since the patent owners prevents it.
Complex workaround solutions had to be invested in where the most obvious solution was protected by a patent, causing higher expenses for software development.
Whenever a component has to use patented technologies the expenses for consulting are high, since clients don't know what to do and ask me. This is more severe, since I'm not a lawyer and the situation is usually unclear.
When 100,000 CD copies of a software were to be produced using a technology where someone claimed to have a patent, we decided to modify the software even if the claim was not proven and was not very likely to prove enforceable, just to avoid the risk of a callback of the CDs.
Ineluctable patent research in advance of development and during development wasted a lot of developer time.
One technology invented by me in 1994 and marketed as closed-source was patented later by IBM, so the patent reduced the value of my work subsequently.

While software patents are not fully applicable in Germany now, they have still caused damage to me both for the costs related to uncertainty regarding the law and due to the fact that they are applicable when exporting to the USA.

Trying to solve the problem by contracting with an insurance company failed: Such risks are not insurable.

Example: EADS Dornier Patent

In 1999 a small innovative German software company ordered a module to retrieve map images from various map CDs sold by different vendors from different countries, all using their own file format. The client uses that module to plan motorcycle rides and to transfer maps of the area near planned rides to a transportable GPS solution installed on the motorcycle. As a part of the payment he agreed that I would have the right to publish my work as Open-Source software under the GPL license. The software was developed as planned, worked nicely and was released.

In 2000 my client was notified by EADS Dornier GmbH that his software (my module) violated patent EP 0218109 given to Dornier and that the client was to pay a licensing fee.

Let me remark that such a map CD consists of the valuable map data and a small piece of software to display the map on a windows PC. The valuable map data on that CD is copyrighted by the "Landesvermessungsämter" in Germany, not by EADS Dornier and the client did not use any software developed by Dornier, so this was purely a patent issue and had nothing to do with copyrights.

The claim of that patent is in a few words that every display of a map on a computer is patented by Dornier if the digital map has been created by digitizing the films that were created to print the map on paper, no matter how it has been done and which software is used. So the patent claims the easiest way to digitize a map, no high invention.

After numerous consultations it became clear that while the patent might be invalid, difficult and expensive lawsuits would have to be fought to invalidate it. The necessary lawsuits would have been so expensive that the small client company could not have afforded them and the client was anxious to release their software to the market on a timely basis, so the client decided to pay a licensing fee of 10,000.00 € for a 3 year license to Dornier, even if there was potentially no need to do so.

Since I also did not want to risk a lawsuit for the GPL release of the software, I decided to abandon the idea of the open source release. For that reason there is still no way available to display such a map on anything else but a Windows PC. Since the open source release was also planned to be a form of marketing for me, I have been financially damaged.

Since the patent is applicable no matter whose software is used to create the map image files, the Landesvermessungsämter cannot overcome the patent by using another piece of code on the CD, that means the patent makes the German government dependent on EADS Dornier.

Meanwhile in 2004 I heard that the Landesvermessungsämter offered the map data to a second company in .tiff format, and the second company now releases a second CD with a different file format. One supposes they were probably upset that Dornier made use of their map data to extract dubious patent license fees. If the patent would have been valid (and not invalid as suspected), then the Landesvermessungsämter would not have been able to do that.

I have also heard that the EADS Dornier software now uses a different file format, so the open source release would no longer display the maps on a GNU/Linux or Mac/OS machine.

Example: Unisys LZW Patent

Packer-API

In 1994 I developed a set of DLLs to process compressed files, for example ZIP, LHA, ZOO, ARC and other package files. It was for example licensed by antivirus software companies to add scanning for viruses in archives to their virus scanners.

In 1995 it became publicly known that the well-known LZW compression algorithm is patented by Unisys and IBM and Unisys started to exploit the patent. Analyzing the technologies involved I found that the ZOO and ARC file formats used the LZW algorithm. Since only very few clients were willing to buy an LZW license from Unisys, maintenance of the software was no longer interesting, and so I ceased to market the already-developed technology any further.

GIFs in the Windows help engine

In 1996 I developed a product to allow the display of animated images with transparency in the windows help engine. Most of those images are usually stored in the well-known GIF data format also used for the same purpose in internet publishing. To allow the display of GIF images I planned to obtain a license for the LZW algorithm from Unisys. A first glance on publicly available sources showed that licensing prices were quite acceptable: About 1 % of revenue to 10 cent per copy, whichever is higher. I implemented the concept and the software worked nicely.

Then I tried to obtain the patent license from Unisys, but failed: Due to the special nature of the software component being "redistributable," Unisys asked for every client to individually obtain a license with a minimum payment of 1,000 US $ and quarterly reporting of copy counts and revenues to Unisys. The fact that the product price planned was just 150 US $ and that other competitors offered comparable technologies for that price were not factors in Unisys's consideration.

As a consequence I tried to obtain a license for a program to convert the original GIF images to some other file format that does not use LZW compression so the license required would avoid the "redistributable" problem. Unisys answered that this would only be a clearly deliberate act of circumventing that patent and continued their request for 1,000 US $ per customer.

As a result I had to throw away a product that was already 80 % complete.

Years later I read on http://www.gnu.org/philosophy/gif.html that most lawyers consider the Unisys patent to be limited to LZW data compression, not data decompression. Unisys simply claims that their patent also covers decompression, and this claim has simply never been tested in a court of law. So there was no basis for them to call for licenses of even one cent, let alone the 1,000 US $ per customer that they sought. Unisys wasted my efforts of several months for no reason. Other competitors who simply ignored the Unisys claim were able to collect revenues without any problem.

Obviously dealing with patents is a matter of risking a lawsuit and dealing with it as soon as it happens. This is a strategy that is affordable for big companies, but too risky for small and medium-sized enterprises with limited capital, which make up about 80% of German employers.

The Unisys patent especially entailed a lot of unnecessary consulting time. For example clients buying a software module for 70 € would have to discuss matters for half an hour on the phone regarding the fact that they didn't know what to do about the patent involved -- and in the end the clients would still have no security. Other cases dealt with implementing workarounds for a patent which we knew was very unlikely to be valid, but which forced us to act since we didn't want to risk producing 100,000 CDs with software on which a patent was claimed, however dubious.

Example: Encoded Vector Index patent

In 1993 I developed an efficient technology to store indices for full text retrieval. The algorithm was simple, the concept was created in an afternoon, and it was implemented in a few weeks. Since the software sold was only in binary form without source code it was not published in the sense of patent law.

Years later I read a description of exactly the same method of index retrieval developed and patented by IBM in 1998 on http://www-1.ibm.com/servers/enable/site/bi/evi.html. If this is now patented, my capability to market my own work from 1993 are now limited.

This example illustrates how patents can devalue work already performed, and demonstrates that in a software patent regime software developers are compelled to patent every little thing they invent, and to check all new patent claims published by the EPA, causing a lot of extra work, costs for patent lawyers and reduced efficiency.

Summary

Even with the already existing patent laws I have experienced several reductions of income caused by patents. With the continued extension of the practice of software patents across europe, they would become a permanent source of unpredictability, uncertainty and lawsuits. The opportunity for developers to work independently or to develop free source software would become drastically reduced and the very existence of many small and medium-size enterprises would be endangered.

Developments such as Linux by Linus Torvalds, BSD from Berkeley Laboratories or Windows from Microsoft could not be repeated in a world populated with software patents. Microsoft also started off as a small company, but at a time when software patents were not an issue.