November 18th, 2004
'How to Get Rid of Customers ' for Dummies: Sue them.
Across the Internet, Microsoft CEO Steve Ballmer is being vilified for some comments he made during Microsoft’s Asian Government Leaders Forum in Singapore. Pamela Jones, founder of Groklaw, spawned a thread called "Ballmer: Use our software or somebody might get hurt" that was closing in on 450 comments by the time I got around to writing this blog entry. Said Jones, "[Microsoft] used to muscle other IT companies. Now they are threatening governments of the world. What a charming company." After saying that he thought Linux violated more than 228 patents, Ballmer warned "Someday, for all countries that are entering the [World Trade Organization], somebody will come and look for money owing to the rights for that intellectual property." So, let’s take a close look at what happened and what might become of it.
The WTO comment is important because that organization requires that its members both enforce and respect intellectual property rights. A quick search of the Web reveals that this is codified into a document known as the TRIPS Agreement. Within the TRIPS agreement, there is a section on patentable material that those in favor of software patents believe supports their position. Even so, it’s not entirely clear that (a) the WTO will uphold patents on software, and (b) if it does, the U.S. government, on behalf of software companies, will flex the sort of muscle it will take to get other member nations to comply.
On the WTO policy front, Poland’s withdrawl from the EU’s plan to make software patents allowable in Europe has pretty much submarined the entire effort, as Graeme Wearden has reported on News.com. Given the significant overlap between the members of the WTO and the European Union, I’m having a tough time imagining how, if Europe can’t uphold patents on software, the WTO can. Even if software patents survive the scrutiny of the international community, there’s still another problem and that’s the war on terror. Although moral responsibility played a signficant role, the U.S. has already backed down on the enforcement of its pharmaceutical patents and there’s no shortage of theories on the Web that speculate that the Bush administration has been trading the intellectual property rights of U.S. corporations for cooperation from other countries in the war on terror. (Perhaps it’s a fair trade.) Even if it wanted to, the U.S. may simply not have the bandwidth to pursue the issue with all else that’s going on in the international community.
In terms of what Steve Ballmer said, I did not hear him say Microsoft is going to sue users of Linux including foriegn governments. He could just have easily been referring to a company other than Microsoft. Indeed, it does sound like he is threatening. But what I did hear him say is that countries entering the WTO are at risk. "Entering" in this case is a pretty important word and I can’t help but wonder if he chose it carefully as a reference to countries that might not yet have entered — countries that, unlike current members, aren’t exactly economic forces to be reckoned with. But, setting aside the WTO as a leverage point, the easiest way to get rid of a potential customer forever is to sue them – especially when that customer is a government. Governments usually have pretty big budgets.
Bear in mind that even in a litigious world, there are still legally safe non-Microsoft alternatives. For example, Solaris 10 for x86 (for the operating system) and for a productivity suite, StarOffice. (Although, if OpenOffice infringes on MS-Office patents, then so too must StarOffice. Therefore ,I suspect that somewhere in the watershed Microsoft-Sun agreement is something that assures Microsoft that it will get something for each StarOffice seat sold.) Corel and IBM have solutions as well, however, and if the demand for Solaris exists (in other words, if companies, organizations, or governments blacklist Microsoft because of its litigious posture), perhaps their solutions will find a way on to Solaris. Sounds crazy, I know. But have you ever been slighted by someone? How far out of your way did you go to make them pay?
In a world where Microsoft, Sun, or any other vendor felt like their intellectual property was getting misappropriated by end users, there’s one step that they’d take long before suing the people they actually want as customers. Instead, you sue the people who gave (or sold) them the software. In this case, as I’ve written before, that starts with Red Hat. If a company has solid intellectual property rights that are enforceable over end users of open source in countries entering the WTO, then it most certainly has those rights over Red Hat. In such a case, Red Hat would most likely buckle. And if Red Hat buckles, then the shockwave that zips through open source land will most certainly send shivers up Novell’s spine. Novell may have enough IP in Unix to cover itself for Linux. But the same cannot be said for OpenOffice. Whatever way Red Hat and Novell fall into line, the end users who depend on them for support — and there are a lot of them – won’t be far behind. Either the two Linux distributors will some how manage to absorb the damage (perhaps with some help from IBM) and figure out how to pass it on to their customers, or they’ll go bankrupt. And the rest of the distributors of Linux will vanish in the haze. Either way, in the end, the suitors, whoever they are, will have accomplished their objectives.
