National Academies Press: OpenBook

Intellectual Property Issues in Software (1991)

Chapter: Front Matter

Suggested Citation:"Front Matter." National Research Council. 1991. Intellectual Property Issues in Software. Washington, DC: The National Academies Press. doi: 10.17226/1788.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

lnTeLLeGTuaL PROPERTY Issues In soFTwaRe Steering Committee for Intellectual Property Issues in Software Computer Science and Telecommunications Board Commission on Physical Sciences, Mathematics, and Applications National Research Council National Academy Press Washington, D.C. 1991

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Frank Press is president of the National Academy of Sciences. lithe National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering pro- grams aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the Na- tional Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sci- ences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Samuel O. Thier is presi- dent of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has be- come the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Frank Press and Dr. Robert M. White are chairman and vice chairman, respectively, of the National Research Council. Support for this project was provided by the following organizations and agencies: Air Force Office of Scientific Research (Grant No. N00014-87-J-1110), Apple Computer, Inc., Control Data Corporation, Cray Research, Inc., the Defense Advanced Research Projects Agency (Grant No. N00014-87-J-1110), Digital Equipment Corporation, IBM Corporation, the National Aeronautics and Space Administration (Grant No. CDA- 860535), the National Science Foundation (Grant No. CDA-860535), and the Office of Naval Research (Grant No. N00014-87-J-1110). Library of Congress Catalog Card Number 90-62783 International Standard Book Number 0-309-04344-1 Available for sale from: National Academy Press 2101 Constitution Avenue, NW Washington, DC 20418 S227 Printed in the United States of America

STEERING COMMITTEE FOR INTELLECTUAL PROPERTY ISSUES IN SOFTWARE LEWIS M. BRANSCOMB, Harvard University, Chairman PAUL GOLDSTEIN, Stanford Law School ANITA K. JONES, University of Virginia MITCHELL D. KAPOR, ON Technology, Inc. MICHAEL O. RABIN, Harvard University PETER R. SCHNEIDER, IBM Corporation MARJORY S. BLUMENTHAL, Staff Director C.K. GUNSALUS, CSTB Consultant MARK BELLO, CSTB Consultant DONNA F. ALLEN, Administrative Secretary r · . ~ lll

COMPUTER SCIENCE AND TELECOMMUNICATIONS BOARD JOSEPH F. TRAUB, Columbia University, Chairman ALFRED V. AHO, AT&T Bell Laboratories JOHN SEELY BROWN, Xerox Corporation PARC FRANK P. CARRUBBA, Hewlett-Packard Company DAVID I. FARBER, University of Pennsylvania SAMUEL H. FULLER, Digital Equipment Corporation JAMES FREEMAN GILBERT, University of California at San Diego WILLIAM A. GODDARD III, California Institute of Technology JOHN E. HOPCROFT, Cornell University MITCHELL D. KAP OR, ON Technology, Inc. SIDNEY KARIN, San Diego Supercomputer Center LEONARD KLEINROCK, University of California at Los Angeles ROBERT LANGRIDGE, University of California at San Francisco ROBERT L. MARTIN, Bell Communications Research WILLIAM F. MILLER, SRI International ABRAHAM PELED, IBM T.~. Watson Research Center RAT REDDY, Carnegie Mellon University JEROME H. SALTZER, Massachusetts Institute of Technology MARY SHAW, Carnegie Mellon University ERIC E. SUMNER, Institute of Electrical and Electronics Engineers IVAN E. SUTHERLAND, Sutherland, Sproull & Associates GEORGE L. TURIN, Teknekron Corporation VICTOR VYSSOTSKY, Digital Equipment Corporation WILLIS H. WARE, The RAND Corporation WILLIAM WULF, University of Virginia MARJORY S. BLUMENTHAL) Staff Director ANTHONY M. FORTE, Senior Staff Officer RENEE A. HAWKINS, Staff Associate HERBERT LIN, Staff Officer DAMIAN M. SACCOCIO, Staff Officer DONNA F. ALLEN, Administrative Secretary OPHELIA BITANGA-BRICENO, Project Assistant CATHERINE A. SPARKS, Senior Secretary TV

COMMISSION ON PHYSICAL SCIENCES, MATHEMATICS, AND APPLICATIONS NORMAN HACKERMAN, Robert A. Welch Foundation, Chairman PETER J. BICKEL, University of California at Berkeley GEORGE F. CARRIER, Harvard University HERBERT D. DOAN, The Dow Chemical Company (retired) DEAN E. EASTMAN, IBM T. I. Watson Research Center MARYE ANNE FOX, University of Texas PHILLIP A. GRIFFITHS, Duke University NEAL F. LANE, Rice University ROBERT W. LUCKY, AT&T Bell Laboratories CHRISTOPHER F. McKEE, University of California at Berkeley RICHARD S. NICHOLSON, American Association for the Advancement of Science JEREMIAH P. OSTRIKER, Princeton University Observatory ALAN SCHRIESHEIM, Argonne National Laboratory ROY F. SCHWITTERS, Superconducting Super Collider Laboratory KENNETH G. WILSON, Ohio State University NORMAN METZGER, Executive Director v

Preface Computer software is a remarkable human achievement whether measured by its extraordinary power to orchestrate computer hardware to carry out useful tasks; the creativity, talent, and teamwork required for its creation; the rapidity with which it is advancing technically; or the phenomenal growth of software as an economic activity. Nothing in human experience with technology is quite like it. Twenty-five years ago sales of computer programs in the United States totaled an estimated $250 million. Today several thousand U.S. software producers ranging from individuals to highly organized teams of hundreds or even thousands of computer scientists, software engineers, and programmers-generate revenues in the tens of billions of dollars. The systems and the application software they produce en- able computers to support an ever-growing number of human activities. In the early years of the Information Age, advances in computer and communications hardware drove progress in the computer-com- munications industry. Today it is software that adapts the hardware to the infinite range of human uses that gives the computer its personal- ity and exploits its power. The manufacturers of computer hardware and software still gain a majority of their revenue from the hardware, but when the software created by users is included, people spend more on software than on hardware. For vertically integrated firms like IBM, software is, on the average, more profitable, and revenue from software is growing faster than revenue from hardware, in spite of the fact that proven software functions are continuously integrated into new hardware designs, and software designers move on to tackle yet newer tasks. · ~ V11

· · ~ Vlll INTELLECTUAL PROPERTY ISSUES IN SOFTWARE Thus the software industry is the enabling "complementary asset" for the hardware industry; those who master the challenge of creating good software can expect to be the leaders in the world of informa- tion machines and services. No one is prepared to predict that the extraordinary rate of growth and change is about to stop, or even slow down substantially. Both new applications and new computer architecture will continue to change the way we work, create, learn, communicate, and play. Why then are computer scientists and software entrepreneurs ner- vous about the court decisions that guide the arcane legal world of intellectual property protection? And why do some intellectual property lawyers become even more nervous when scientists question the ration- ale underlying the current structure of legal protection and even sug- gest that it may be inadequate or cause serious problems in the future? The world of software has changed dramatically since the emergence of commercial software in the 1950s. Initially the work of mathemati- cians and scientists who were intimately involved in building computer hardware, software was the creative expression of gifted individuals. With IBM's decision to "unbundle" software pricing it separately from the hardware and later the development of high-level design languages to lower the technical barriers to programming, the team approach to software production began to look much more like the modus operandi in the more traditional areas of commercial product design and testing. Today in the largest firms, products comprising millions of lines of "code" are produced in industrial environments against committed plans for function, cost, and date of delivery. But even in these mature commercial environments, the role of the designer who is able to keep the conception of system-level design in mind, and who oversees the integration of hundreds of modules into a functioning whole, is still the key to product success. An evolving combination of intuition, prior experience, and expertise in computer and cognitive science go into the production of "user-friendly," efficient, error-free code. But the institutional structure of the industry is maturing. There are large numbers of firms with market positions to protect, with customers dependent on the continuous, incremental improvement of their applications. The magnitude of the up-front investments required to create competitive software products, and of the down- stream investments needed to sell and support them, inevitably gives rise to conflicting desires to encourage innovation while preserving stability in a huge, competitive industry. The maturing of the industry is not the result of saturating growth but reflects instead the industry's success in becoming integrated into

PREFACE IX the fabric of modern society. End users want to assemble for their needs the best of the industry's output. They want familiar, reliable, and predictable ways to do things. They cannot sort through thou- sands of packages to find the best ones; they are demanding that the industry through strategic alliances, standards development, or simply response to market forces-provide more interoperability, consistent interfaces, and very high levels of reliability. Market entry for new innovators is still wide open, however, as far as industry structure, the legal environment, and emerging markets are concerned. But the cost of entry is soaring; negotiating compatibility with other products, testing, advertising, and providing customer support and continuous product evolution as the hardware and software around the product change-all entail high risks and heavy up-front investment. No wonder those who spend millions of dollars to develop and bring to market products that cost virtually nothing to replicate or manu- facture want assurances that they will have a chance to enjoy the fruits of their labors. Three fears seem to be dominant in the minds of industry leaders: · fear of loss of freedom of action, · fear of litigation over possible infringement of patents and copy- rights, and · fear of unfair business practices that deny risk-takers the fruits of their creativity. A fourth fear is voiced by the scientists and entrepreneurs entering the market: . fear that business practices and legal constraints will slow down the process of shared learning on which future progress rests. This is the very process that led the framers of the Constitution to enshrine copyright and patent law with constitutional authority. A fifth fear is less frequently voiced, perhaps because the public has been so well served by software innovators of the last 40 years, but nevertheless deserves consideration: . fear that the public interest in software will be subordinated to the interests of the industry. From a bystander's perspective, legal protection of software today may not seem very complicated, nor in serious difficulty. Relatively few software patents have been issued, and even fewer have been tested in court. Copyright protection is almost universally available,

x INTELLECTUAL PROPERTY ISSUES IN SOFTWARE is inexpensive, and little constrains the entry of new firms or the growth of the industry. Contractual commitments by buyers to sellers are generally respected, especially in business environments. Freedom of action has been the hallmark of the first 40 years; its attraction for innovators is the very factor that breeds fear of its loss. Larger computer hardware firms extensively cross-license their patents, preserving freedom to innovate in the hardware. To the extent that software copyright does not grant exclusivity to ideas or to function, but only to their expression, that freedom of action is preserved, for the software industry as well. But for those inclined to worry about the future there are worries enough. At the practical level, software vendors are using multiple levels of protection: trade secret rights, copyright law, publishing only in hard-to-understand "object code," binding users by contract, and increasingly- seeking patent protection as well. On the face of it, this defense-in-depth strategy seems to suggest that the firms are less than fully confident that the property protection system is robust. A second concern arises from the tensions of stretching a system designed for works of art and literature to works of great value for their utility (as well as occasional intellectual elegance). Is a copyright violated by a product whose form and function emulate another's but whose code is never identical? Is it legitimate to use a reverse compiler to create source code from a copyrighted product shipped only in object code, and then recompile to a different machine a re- structured version of the original? How will the notion of "copying" be applied when a user's inquiry for information from distributed databases in communications networks momentarily touches small parts of dozens of separately copyrighted programs? Lawyers are perhaps more comfortable with the need to stretch and adapt legal precedents to changes in technology than are scientists. This happens in every branch of the law. But many scientists and some legal scholars see the stretching of patent and copyright law to cover the rapidly changing field of software property as a source of discomfort, if not of serious concern. The third concern is seen by some as a little black cloud on the horizon: the resurgence of patent filings on inventions primarily embodied in software. Some may see this trend as offering an alter- native to the pressure to distort copyright law to protect the most creative elements of a program rather than just a boring sequence of hexadecimal numbers. But others ask, with the standards as yet un- settled for software "inventions," what costs will be added to the development process when software developers must ensure that the

PREFACE Xl protected ideas of others have not been independently created by their staffs. They fear that software patents, if not strictly managed by the Patent and Trademark Office, will be a boon to litigators and a nightmare for software developers. Still others believe that with so many software inventions already in the public domain, few patents will withstand challenge, but the costs of challenging will be high. Perhaps these are just "growing pains" of a maturing industry, and the gains afforded by widespread use of software patents will more than make up for the costs. But perhaps not. The fourth, and most important, concern is over the ability of the courts and the Congress to keep up with the pace of technical change. Although copyright has proved elastic enough to extend from maps and charts in the 18th century to books, works of art, movies, and audio and video tapes, none of these technologies has exhibited the pace of change of software. When computer scientists and entrepreneurs try to understand the rationales used by judges to adapt the law to technical change, they get more nervous still. Many cases whose resolution strikes the layman as fair and judicious are explained in opinions that des- cribe the technology (often by analogy) in ways the scientists cannot easily accept. That judges may not think like computer scientists does not mean they make bad law. But it may amplify the concerns of tech- nical people trying to guess where the law is going next. And it motivates legal scholars to try to understand the industry's technical destiny as the reference frame for evaluating the legal structure on which future decisions will rest. That lawyers and scientists approach this subject differently will surprise no one. Technical people set their sights on the future, prob- ing the limits of today's technology and laying the groundwork for tomorrow's innovations. Change, surprise, even disruption are not the enemies of science, but rather its purpose. The law values coher- ence with the past, predictability, and a broad consensus. Judges and attorneys build on precedent to deal with questions arising from new technology. In so doing they build an architecture of reason- ing on which the framework for resolving future issues must rest. Scientists, engineers, and software designers sometimes question the appropriateness of that architecture for what they see coming in the technology. It is not just legal and technical experts who sometimes have dif- fering views. The perspectives of academic computer scientists sometimes differ from those of software entrepreneurs; legal scholars tend to be more critical of the existing protection regime than do the litigators and corporate counsel.

· ~ All INTELLECTUAL PROPERTY ISSUES IN SOFTWARE NATURE OF THIS PROJECT Would a wide-ranging discussion between computer and legal ex- perts help to clarify the basic issues that set directions for the future in the field of intellectual property protection for software? That is the basic question that motivated a workshop held on September 12-13, 1989 (Appendix A), and a forum discussion in De- cember 1989 (Appendix B) sponsored by the Computer Science and Technology Board (since renamed the Computer Science and Telecom- munications Board) of the National Research Council. About 100 legal scholars, attorneys, computer scientists, software designers and entrepreneurs, and business and government executives aired the views that are summarized (with updates as appropriate) in this re- port. The forum discussion did not seek to find a consensus, nor did it entertain collective recommendations. Rather, the goal was to foster a common understanding among individuals and groups who have a stake in the issues but who have had few opportunities to share their points of view. The discussion did not seek to deal with current controversies, and certainly not with current litigation. Instead the forum sought to take a step back from the debate and explore basic concepts both technical and legal that are too often obscured by polemics. The success of the forum, and of the two-day workshop that pre- ceded it, lies in the often expressed view at the end of the meetings that a number of important issues explored there deserved to be en- gaged by a mixed group of legal and technical experts in much greater depth. This reflection of confidence that differing perceptions could be bridged provides a basis for considerable optimism about the value of this kind of exchange. ORGANIZATION OF THE REPORT This publication is based primarily on discussions at the two-day forum and at the preceding two-day planning workshop attended by many of the speakers at the fortune. It also draws on articles and re- ports distributed to forum and workshop participants, as well as on other informational materials. These additional sources are identified within the text. The following chapters describe the spectrum of legal and techni- cal perspectives on intellectual property protection for software. Chap- ter 1 discusses some of the changing technical, economic, and legal circumstances that underlie the debate over the adequacy of intellec- tual property protection for software. In chapter 2, the underlying

PREFACE · · ~ alit tenets of U.S. copyright, patent, and trade secret laws are described, as are issues that have arisen in the application of these laws to software. Chapter 2 also discusses international treatment of soft- ware as intellectual property. The attributes of software, the nature of the process for designing and developing software, and the rel- evance of both to determining which elements of software merit pro- tection are examined in chapter 3. Chapter 4 takes a closer look at legal uncertainties, how software firms are responding to these un- certainties, and how intellectual property protection can influence standardization, including ongoing efforts to increase the interoperability of software applications. The final chapter, Chapter 5, presents some forum participants' views on how to improve the fit between software and intellectual property law. The primary authors of this report are C.K. Gunsalus, associate vice chancellor for research at the University of Illinois at Urbana- Champaign and consultant to the Computer Science and Telecommu- nications Board (CSTB), and Mark Bello, also a consultant to the CSTB. The project was organized by C.K. Gunsalus in conjunction with Mar- jory Blumenthal, CSTB staff director. Their authorship was performed under the supervision of the steering committee, which was responsible for the conduct of the workshop and the forum and which expresses its deep appreciation for the work of the staff and consultants. While the authors and the steering committee members have done their best to make this account faithful to the views expressed at the meeting and in other sources, we request that readers not use this document to attribute the views of forum participants who are quoted. Please contact them directly for full and in-context accounts of their views. Lewis M. Branscomb, Chairman Steering Committee for Intellectual Property Issues in Software

Contents 1 Changing Contexts for the Software Industry A Maturing Industry, 6 Changing Technology, 9 Changing Legal Context, 12 Unpredictable Future, 14 Conclusion, 16 Notes, 18 2 Background to Basic Legal Issues Copyright, 22 Expressions, Ideas, and Functions, 24 What Constitutes Copyright Infringement?, 27 Trade Secret, 29 Patent, 31 Characteristics of Patents, 32 What Is Patentable?, 34 Test for Patentability, 35 Coherent or Incoherent?, 37 The International Situation, 38 Notes, 41 Is Software a Special Caset The Process, 43 Software as a Creative Medium, 48 The Influence of the Market, 49 xv 3 21 43

xzn INTELLECTUAL PROPERTY ISSUES IN SOFTWARE Symbiosis in the Market, 50 The Case of Interfaces, 51 Evolution of User Interfaces, 54 Where Does Innovation Lie?, 55 Summary, 57 Note, 57 4 A Closer Look at Current Issues Protected or Unprotected?, 60 The Patent-Copyright Interface, 62 Patent Problems: Structural or Legal?, 63 Compatibility and Interoperability, 66 Open Interfaces, a Controversial Suggestion, 68 Immediate Declaration of Rights, 69 Standardization, 70 The Influence of Intellectual Property Law, 73 Withholding of Source Code, 75 Reverse Engineering, 77 Conclusion, 78 Notes, 79 5 The Open Agenda Defining a Concept of Value, 83 Legislative "Solutions"?, 84 Hybrid System for Hybrid Technologies?, 87 Incremental Improvements to Patent System?, 89 Next Steps, 90 Notes, 93 6 Bibliography Appendix A Intellectual Property Challenges in Software- Workshop Program and Participants, 101 Appendix B Intellectual Property Issues in Software- Forum Program and Participants, 107 59 81 95

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Software is the product of intellectual creativity, but protection of the intellectual property residing in software is the subject of some controversy. This book captures a wide range of perspectives on the topic from industry, academe, and government, drawing on information presented at a workshop and forum.

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