Apenas como um adicional ao texto, Bill Gates disse em sua formatura que "Os
maiores avanços para a humanidade não estão nas descobertas, mas em como
essas descobertas serão aplicadas para reduzir as desigualdades"


St. Louis

WHAT a difference 16 years makes. Last month, the technology world was abuzz
over an interview in Fortune magazine in which Bradford Smith, Microsoft's
general counsel, accused users and developers of various free software
products of patent infringement and demanded royalties. Indeed, in recent
years, Mr. Smith has argued that patents are essential to technological
breakthroughs in software.

Microsoft sang a very different tune in 1991. In a memo to his senior
executives, Bill Gates wrote, "If people had understood how patents would be
granted when most of today's ideas were invented, and had taken out patents,
the industry would be at a complete standstill today." Mr. Gates worried
that "some large company will patent some obvious thing" and use the patent
to "take as much of our profits as they want."

Mr. Gates wrote his 1991 memo shortly after the courts began allowing
patents on software in the 1980s. At the time Microsoft was a growing
company challenging entrenched incumbents like I.B.M. and Novell. It had
only eight patents to its name. Recognizing the threat to his company, Mr.
Gates initiated an aggressive patenting program. Today Microsoft holds more
than 6,000 patents.

It's not surprising that Microsoft — now an entrenched incumbent — has had a
change of heart. But Mr. Gates was right in 1991: patents are bad for the
software industry. Nothing illustrates that better than the conflict between
Verizon and Vonage.

Vonage developed one of the first Internet telephone services and has
attracted more than two million customers. But last year, Verizon — one of
Vonage's biggest competitors — sued for patent infringement and won a
verdict in its favor in March.

The Gates memo predicted that a large company would "patent some obvious
thing," and that's exactly what Verizon has done. Two of its patents cover
the concept of translating phone numbers into Internet addresses. It is
virtually impossible to create a consumer-friendly Internet telephone
product without doing that. So if Verizon prevails on appeal, it will
probably be able to drive Vonage out of business. Consumers will suffer from
fewer choices and higher prices, and future competitors will be reluctant to
enter markets dominated by patents.

But don't software companies need patent protection? In fact, companies,
especially those that are focused on innovation, don't: software is already
protected by copyright law, and there's no reason any industry needs both
types of protection. The rules of copyright are simpler and protection is
available to everyone at very low cost. In contrast, the patent system is
cumbersome and expensive. Applying for patents and conducting patent
searches can cost tens of thousands of dollars. That is not a huge burden
for large companies like Microsoft, but it can be a serious burden for the
small start-up firms that produce some of the most important software

Yet, as the Vonage case demonstrates, participating in the patent system is
not optional. Independent invention is not a defense to patent infringement,
and large software companies now hold so many patents that it is almost
impossible to create useful software without infringing some of them.
Therefore, the only means of self-defense is the one Mr. Gates identified 16
years ago: stockpile patents to use as bargaining chips in litigation.
Vonage didn't do that, and it's now paying a very high price.

Only patent lawyers benefit from this kind of arms race. And Microsoft's own
history contradicts Mr. Smith's claim that patents are essential for
technological breakthroughs: Microsoft produced lots of innovative software
before it received its first software patent in 1988. As more and more
lawsuits rock the industry, we should ask if software patents are stifling
innovation. Bill Gates certainly thought so in 1991, even if he won't admit
it today.

Timothy B. Lee is an adjunct scholar at the Cato Institute.


Guilherme H. S. Ostrock
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