The emergence of mobile computing as a technology platform has been a game changing development in many ways.  The ability to be connected anywhere and to have real time information at our finger tips has transformed the way we do business and live our lives. As this computing paradigm has gained mass market acceptance we’ve witnessed a series of patent battles among firms vying for their share of this lucrative market.  These so-called  smart phone patent wars have in turn motivated patent system critics to vociferously decry the system as an impediment to innovation, which must be eliminated or radically overhauled. Defenders of the system respond that patent battles are a characteristic of market competition occurring with other breakthrough innovations throughout our history, and that patents address the need to protect innovations to encourage investment in innovation.

Despite all the chatter however, there is something that we have not heard in the discussions about these smart phone patent wars. The debate seems to have focused on patents and the patent system and it has ignored the fact that this current patent battle is really a battle between three competing business models advanced by the three highly competitive mobile OS providers and members of their ecosystems. Apple is pursuing a fully proprietary business model where mobile OS and mobile hardware are proprietary to Apple. This is consistent with Apple’s prior business model in traditional computing which has worked quite well for them. Similarly Microsoft is advancing a business model much like its successful traditional computing business model with a proprietary OS and an “open” hardware platform that allows third party handset makers to provide phones running the Windows mobile OS. Finally, Google is advancing an “all open” model in which it uses Android, an open source mobile OS and an open hardware approach.

Qualcomm Incorporated (NASDAQ: QCOM), a developer and innovator of advanced wireless technologies, products and services, announced last week that it plans to modify its corporate structure. The corporate structure changes are being implemented, among other reasons, in order to enhance Qualcomm’s ability to quickly deliver products to its customers, while further protecting and insulating its valuable patent portfolio from any claims resulting from actions and activities by portions of the company other than the Qualcomm Technology Licensing Division (QTL). According to the company this is not a restructuring in anticipate of spinning off either the QTL or QCT business, nor is this change in response to any third party actions or claims.

Qualcomm is indeed an innovator of note, as well as an aggressive filer of patent applications worldwide. For 2011, Qualcomm ranked as the 6th most prolific filer of international patent applications filed under the auspices of the Patent Cooperation Treaty (PCT). Qualcomm filed some 1,494 international patent applications in 2011. See International Patent & Trademark Filings Set New Record in 2011. For 2010, Qualcomm ranked 37th overall in terms of the number of U.S. patents obtained, receiving 772 according to the Intellectual Property Owners Association. See Top 300 Organizations Granted U.S. Patents in 2010 (page 2).

Earlier today on the Twitter blog the company announced that later this year it will implement what they are calling the “Innovators Patent Agreement,” which they claim will ensure that patents are only used for defensive purposes. Without any evidence Twitter claims that software patents impede innovation. Those familiar with the anti-patent software community well know that their claims that patents impede innovation are always without any evidence. All of the objective evidence points directly to the opposite conclusion, but anti-patent forces can’t be troubled with facts and reality. But that isn’t the worst part!  Twitter seems to be attempting to mislead patentees into donating patent rights that can at Twitter’s discretion be used offensively if Twitter feels threatened.

Before moving forward to address the Twitter Patent Scheme, allow me to dispense with the nonsense that patents of any kind impede innovation.  For those who do concern themselves with facts and reality I invite you to read:

• The Problem With Software Patents? Uniformed Critics
• An Inconvenient Truth: Patents Do Not Deter Research
• Show Me the IP! Venture Capital Success Based on Patents
• Beware Those Claiming Software Patents are Unnecessary

The search for innovative ideas has never been easy, but the advent of crowdsourcing technologies and powerful players willing to embrace new methodologies seems to be paying dividends.  Rather than rely on traditional innovation that comes from one individual or a small group of individuals or those working for or with a single entity or as part of a joint venture, crowdsourcing technologies take problems to millions of people and capture the most creative solutions, allowing them to be pursued and developed.  “Opening up the conversation and searching for solutions among a broad, but qualified, audience has allowed us to find unique, innovative ideas in a short period of time,” said Matthew Bishop, U.S. business editor and New York bureau chief for The Economist.

Indeed, just earlier today The Economist and InnoCentive, Inc. announced the winner of the Human Potential Index Challenge. Corrine Le Buhan, an IP and technology strategy consultant and valuation analyst from Lausanne, Switzerland, has won the Challenge, which was looking for new and creative metrics or indices that draw attention to an important societal trend.  Le Buhan’s solution proposed measurement of creativity and knowledge sharing via a “creative sharing” impact, described as the number of people reached by an original creative work as the creative work is spread, and possibly enriched, through further peer-to-peer interaction. This measurement could be used to compare various creative works and their impact on human development.

At least initially, President Obama was keenly interested in exploring how the United States government could use open source software rather than rely on proprietary software. President Obama was so interested in pursuing open source software solutions that on his second day in Office he asked Scott McNealy, a co-founder of Sun Microsystems, to lead his open source charge.  In fact, President Obama reportedly asked McNealy to prepare a report on how the federal government could employ open source software, but as yet, some 26 months later there has been no mention of the report or across the board government adoption of open source software.

Open source advocates praised the fact that President Obama wanted to transition the U.S. government away from proprietary solutions and into open source, but now that the report has seemingly stalled and the White House has done little more than release open source Drupal code, what does the open source community have to show?

Erik Iverson is Associate General Counsel with the Bill & Melinda Gates Foundation, working exclusively with Foundation’s Global Health initiate. Mr. Iverson works with grantees in the development of intellectual property management plans, collaboration agreements and global access strategies with respect to the health solutions being funded by the Foundation. On Thursday, April 14, 2011, he will be the keynote speaker at the BIO IP Counsels Committee Conference, which will be held in Seattle, Washington from April 13-15, 2011. Mr. Iverson’s presentation at the BIO Conference is titled: “The Business Case for International Humanitarian Approaches to IP Management and Collaborations.” Several of my contacts at the Biotechnology Industry Organization (BIO) graciously put me in touch with Inverson and facilitated the coordination of an interview.  The transcript of part 1 of the interview appears below.

It is impossible to search for technology related news online anymore without being inundated with the days wave of open source news stories that are seemingly proliferating faster than a human engineered bacterium, which by the way is patentable subject matter in the United States. In any event, “open source” has become the new “cyberspace” or “technological age” or even “telecommunications.” All of these terms are certainly understood by every reader, but part of the beauty of the term is that it can mean all things to all people, without ever really conveying a standardized meaning that everyone can agree with; much like the term “compassionate conservative,” which was so frequently used by the Bush Administration. What is a “compassionate conservative”? I really have no idea, but it sounds like a good thing and something to aspire to! After all, how could being a compassionate anything be bad?

So what does “open source” mean? The term is nebulous at best and confusing at worst.  The term, however, has undeniably become associated with the easy to understand but always misleading term – “free.” Certainly everyone knows the meaning of “free,” a term so universally understood that men (who are from Mars) and women (who are from Venus) both accept the term as meaning the very same thing. Even children understand the meaning of “free,” which leads to a plurality of interesting ironies.

Just this week I had the opportunity to consult with a client that is in the process of creating unique software that is, at least in my opinion, patentable over the prior art.  We were chatting over the telephone when he explained that the developer he hired was using certain open source code to supplement the original code being written.  Not wanting to scare my client needlessly, but suspecting the worst, I asked him to send me information on what was being taken, in particular the license agreements that govern the allegedly free open source software.  In life there are few certainties.  Death and taxes are among them; as is the fact that if you are taking open source software for your proprietary project you are likely about to do a deal with the devil that might be extremely difficult, or even impossible, to undo.

My writings about open source and software patents have earned me a special place in the hearts and minds of those who harbor irrational hatred of software patents. But I am here to tell you that open source is not all bad and, in fact, should be embraced. Open source, however, is hardly something new to the patent community. Perhaps it is better to say that where open source software is heading is nothing new, and it will come as a shock to those who hate patents, but patents will be completely necessary in order for the open source community to continue to advance and live up to its full potential.

Those who are in favor of open source frequently become near apoplectic at the thought that open source software can be, and in fact should be, patented.  The reality is that forward thinking companies that operate in the open source space do make use of the patent system.  A quick search of Freepatentsonline.com shows that Red Hat, Inc., one of the preeminent open source companies in the world, is named as the assignee on some 263 US patents or US patent applications.  So if you are about to make an enormous mistake and listen to the “open source means free” community, ask yourself why a highly successful company like Red Hat uses the patent system and acquires patents.  If patents are good for Red Hat, an open source company not at all enamored with the existence of software patents, then why are software patents bad for you?  Shouldn’t you model your business off successful companies?

Over the last couple weeks I have been giving more thought to open source software and what, if any role it has to play with respect to the economic future of both start-up companies and established giants.

My belief is that open source can and should play a vital role in innovation, but the way it is by and large carried forward today does little to forward innovation and an awful lot to significantly disadvantage start-up companies.  The horribly bad advice that pervades the open source community and the utter lack of knowledge or familiarity about patent law is staggering.  I don’t begrudge anyone who doesn’t like the patent system, but can you please at least not like it for a valid reason?  With the myths and disinformation spewed by those who are either clueless and loud, or those who know better and have an agenda, are drowning out rational debate and significantly impeding progress and innovation.

Reports are widespread that large corporations have cut back on the number of patent applications they file, and I see no reason to believe these first hand accounts are incorrect. Nevertheless, fiscal year 2009 saw the second highest number of patent applications filed at the United States Patent and Trademark Office, down only some 11,000 applications from the record year in FY 2008. Meanwhile, tech sector giants have been crying and moaning about how the patent system has run amok and needs to be scaled back, and continually beg for patent reform that would gut the patent system and weaken patent rights. This grumbling is picked up by patent abolitionists who say “see, even Microsoft thinks there should be no patents,” which only adds to the hysteria. Against this backdrop the corporations bemoaning patents received record numbers of patents during 2009. Obviously they talk a good game but when push comes to shove they will get as many patents as they can, but want to make it hard for small businesses and individuals to get patents.  Quite curious if you ask me!

As the open source movement continues to mature the industry is increasingly recognizing that truly free and purely open software does not provide a usable business model that can and will allow for growth.  As Matt Asay of CNET properly recognized (see Asay comment after comment 2), while it is nice to ponder open source companies remaining private and foregoing the public funding route, by refusing to proceed down a path that would lead to a large infusion of cash is to doom the open source movement and ensure that it never really becomes mainstream.  Whether anyone likes it or not, innovation takes time and costs money, and innovation associated with open source software is no different.  Sure, a computer programmer with time on their hands can write code and freely give it away, but that is not a business model or innovation strategy that will lead to widespread acceptance or use.  In order for open source companies to grow they need to rely on investors who fund development, and investors are only going to be interested in funding development if there is a proprietary strategy in place.  It is as simple as that.

Just the other day Arstechnica.com ran an article discussing the fact that Red Hat is succeeding despite the recession. It seems that the global economic chaos is forcing an increasing number of companies to search for ways to reduce IT costs, which means that more and more companies are turning to open source solutions in order to get away from having to pay for proprietary software solutions. It is difficult, if not completely impossible, to argue the fact that open source software solutions can reduce costs when compared with proprietary software solutions, so I can completely understand why companies and governments who are cash starved would at least consider making a switch, and who can fault them for actually making the switch. The question I have is whether this is in the long term best interest of the computing/software industry. What is happening is that open source solutions are forcing down pricing and the race to zero is on. As zero is approached, however, less and less money will be available to be made, proprietary software giants will long since gone belly-up and leading open source companies, such as Red Hat, will not be able to compete. It is quite possible that the open source movement will ultimately result in a collapse of the industry, and that would not be a good thing.

Word has started to circulate that President Barack Obama may be close to appointing John W. Thompson, the outgoing chief executive of network security firm Symantec Corp., to be the next Secretary of Commerce.  According to the LA Times, over the last several days Thompson has spoken on the telephone and met with key senators, and Sen. Barbara Boxer (D-Calif.), a member of the commerce committee that would hold confirmation hearings for any appointed Secretary of Commerce, is “extremely supportive and hopeful he’ll be the nominee.”  The appointment of Thompson to head the Department of Commerce would be an exceptionally interesting choice given that only days ago President Obama asked Scott McNealy, a co-founder of Sun Microsystems, to lead his open source charge and conduct a study and report back regarding the feasibility of the US government forgoing proprietary software and moving toward open source software solutions.