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November 17, 2005

Property Rights in the Networked Environment: Something's Gotta Give

Sony BMG is hardnosed on protecting its intellectual property rights, yet has joined a commons-inspired open invention network. This shows that the commons is an asset – not a threat – to business.

Two events last week show how traditional notions of “property” are becoming nearly untenable in the emerging digital culture. On the one hand, we have a case where a major company unleashed malicious software to secretly colonize millions of computers in an attempt to extend the reach of property-rights enforcement. And on the other hand, we have some major software corporations (including a company involved in the former controversy!) deciding that market success lies in buying and giving away tech patents for free. My brain is suffering from some intellectual whiplash.

First, consider the news this week from Sony BMG that it will recall millions of music CDs that contain malicious software code that has infected at least half a million PCs. In its never-ending quest to lock up its music products, Sony BMG had installed an aggressive type of DRM, or digital rights management system, to prevent people from making more than three copies of their CDs on their computers. This particular piece of DRM included a “Trojan horse,” as it’s called in the trade. The code secretly embedded itself on a user’s Windows operating system and sent messages back to Sony servers. Not only could users not detect the virus, most could not uninstall it without professional help.

Sony BMG estimated that the code was present on 49 different music CDs and five million discs, two million of which had been sold. (Watch out if you bought Celine Dion, Neil Diamond or Van Zant. More at the Sony BMG site.)

Once they got wind of the problem, security experts estimated that at least 568,000 computers had been infected by the bad code, and probably many, many more. The company has now issued a recall of unsold CDs and will exchange already-purchased CDs with “clean” ones. Sony BMG also offered software to let consumers uninstall the code – but it turned out that this only made computers using Internet Explorer more susceptible to picking up malicious software code from websites.

So this is where the zealous defense of “property rights” has come: furtive infiltration of your personal computer with harmful code. Is it any wonder that the music industry and copyright law are facing a legitimacy crisis? They seem to think it’s more dangerous for you to make a few copies of your own, legally purchased CD than it is for them to implant rogue software on your computer without your knowledge. Now I ask you: Who’s the bad actor here? The line between “legal” protection of copyrights (through invasions of our computers) and illegal “piracy” (through the fair use of purchased products) has never been blurrier.

But here’s the second story that suggests that strict property norms are proving to be dysfunctional if not anti-growth in software markets. Last week, three major electronics firms and two software vendors announced a bold new initiative to buy patents related to Linux, the open source computer operating system, and license them for free. (See Reuters story.)

The premise of the initiative, the Open Invention Network (OIN), is that patents are stifling innovation, not encouraging it. Linux has grown by phenomenal leaps and bounds to become a popular operating system, especially for servers. But its growth has been limited by claims made by some software firms that Linux illegally contains patented code belonging to others. Their lawsuits (or threatened lawsuits) have made large corporations wary of investing in new products and inhouse software systems based on Linux.

In short, patents, and claimed patents, are inhibiting the development of one of the most robust, innovative platforms in computing today. To help clear the logjam and make potential customers more comfortable in developing Linux-based applications, the Open Invention Network plans to buy certain patents and make them available to anyone who agrees not to assert patent claims in Linux.

Voila! A deliberately crafted commons will foster the growth of a new market sector. The market research firm IDC estimates that the worldwide Linux market will grow 25.9 percent annually, doubling from $20 billion this year to more than $40 billion by 2008. Another industry expert thinks this adoption rate could soar even faster if the risk of patent litigation is eliminated.

It is a delight to see this idea embraced by some of the biggest capitalist enterprises around – IBM, Novell, Phillips and Red Hat. Ironically enough, Sony is part of the Open Invention Network too. (Just remember, corporations are not people and so do not have the burden of being internally consistent; the research divisions often have different priorities than the consumer electronics or music divisions.)

This story suggests that it is time to get past the childish prejudices that a commons is tantamount to Communism – a charge Microsoft and other corproations have flung at Linux – and to recognize the practical importance of the commons to…yes, markets. While Linux may be a special case, it is also just the leading edge of the networked environment more generally. The same online social dynamics that have propelled its development are now diligently at work in other realms of the online world.

For me, the Sony BMG debacle and the founding of the Open Invention Network suggest that conventional notions of property are highly problematic in the networked environment. But it’s hard to let go of established prejudices, especially when they have the weight of habit and marketplace advantage. Still, it’s time to face up to the truth that “intellectual property” law is a philosophically incoherent and politically rigged mess. For those who are grownup enough to recognize the on-the-ground realities, the commons is a more apt and even compelling paradigm. It’s time to upgrade our mental and cultural software.