Microsoft Patents: The New McCarthyism

On February 9, 1950, the junior Senator from Wisconsin spoke to the Republican Women’s Club of Wheeling, West Virginia. Based on his speech, the previously obscure Senator skyrocketed to notoriety, began a series of political witch hunts, and set in motion an abuse of power that eventually came to carry his name.

The Senator was Joseph McCarthy, and in his speech he claimed that he had, clutched in his hand, a list of 205 known communists working for the State Department that were allowed to continue working and set US foreign policy.

For nearly half a decade, McCarthy held hearings, intimidated witnesses, and tossed out reckless charges — despite never identifying a single communist from his list of 205. Long before his fall from power, many concluded that he had no list of known communists and was merely trumpeting sensationalist charges in an attempt to spread fear and gain power.

One of the great benefits of having an undergraduate education in political philosophy is it provides a historical perspective that offers examples of human behavior that are instructive regarding events of today.

It’s impossible not to draw a parallel between McCarthy’s bullying charges and Microsoft’s latest claim that they have evidence that there are 235 patent violations against them in certain open source products.

However, even though McCarthy bequeathed his name to a mode of scurrilous reputation smearing and legal blustering, the man himself died a few short years later, having descended into a richly deserved obscurity, shunned by friend and foe alike. The moral of his apogee and nadir: fear can cause an immediate, panicked response, but is deficient as a long-term policy.

That is why I conclude that Microsoft’s announcement in the pages of Fortune that they have a list — of 235 patents! — that are infringed upon by open source and that they are ready to browbeat companies into paying licensing fees is, ultimately, a dead-end business strategy and, far from a sign of power, instead demonstrates a numbing fear that they have no sustainable defense against open source software.

While Microsoft can undoubtedly go on a roadshow and threaten end user organizations in an attempt to fork over licensing fees, this is, at the end of the day, the last gasp of an exhausted business model. Worse, it is a reflexive (though understandable) reaction that will, in fact,

harm Microsoft’s long term prospects in ways they can’t imagine, but that are obvious if one considers the actions from an impartial perspective.

Microsoft’s attempt to intimidate end users into paying licensing fees for the putative patent infringements of open source is an enormous mistake for the following reasons:

It’s distracting. Microsoft sells billions of dollars of software each year. While they might be able to extract up to a few hundred million dollar’s worth of license fees with this patent initiative, in the overall scope of their business, this is chicken feed. Is it really worth tying up management attention and precious PR activity to achieve this minimal revenue? Wouldn’t Microsoft be far better served by focusing on improving its products and increasing its revenues by selling more software?

It evinces fear, not strength. By choosing to move the battle from product differentiation to legal stratagems, Microsoft is sending a subtle — though unmistakable — message that its products are not functionally superior enough to the open source alternatives to convince customers to prefer them. Microsoft has many, many strengths in terms of its products and would be far better served focusing on them than pursuing a questionable legal strategy. For example, one strength of Microsoft is that it controls all portions of its software stack and can architect its products to integrate and deliver better customer value and satisfaction. Integration is a traditional weak spot for open source. Why not compete where you have a significant advantage rather than on a dimension that is of little discernible customer interest?

. Microsoft’s intimation that it is going to troll around the world, stopping off at customer sites and convincing them to pay patent licensing fees has an undeniable whiff of a gang of petty thugs shaking down a shopkeeper for “protection” money. Microsoft may be successful in this endeavor, but it will engender resentment. Most businesses seek to keep cordial relationships with their customers, rightly seeing good relationships as the key to long-term profitable business partnerships. How responsive do you think a recently leaned-on customer is going to be when invited to sign up for a new set of Microsoft products? I know that if I had been coerced into coughing up extra payments to keep a supplier happy, the last thing in my mind would be to figure out how I could

become more dependent upon it. Threatening legal action is a loser strategy. Just look at the last two users of customer lawsuits: SCO and the RIAA. You know how well things are going for them recently.

. On June 28, 1914, a young man in a remote city in Central Europe pulled a pistol from his pocket and shot a visiting dignitary. The event set in motion by that assassination — World War I —  finally settled into an uneasy peace four years later, after the loss of millions of lives and the political upheaval of the national geography of Europe. No one — least of all the young man, Gavrilo Princip — could have imagined that this one action, seemingly isolated and somewhat obscure, would have the agonizing outcome that resulted from it. Human history is replete with examples of entities taking actions, based on reflexive but poorly thought out motives that led to unforeseen responses — and the eventual destruction of the entity itself.

There are many other large technology companies that have incorporated open source into their business strategy, many of them as a result of customer demand. Isn’t it possible — or likely — that one or more of them will see Microsoft’s patent action as directly threatening to them and their customer relationships, and conclude that they have to find a way to defend themselves? This misguided patent action might — might — possibly lead to a far more powerful reaction than Microsoft could possibly imagine. All in response to an initiative that it’s difficult to understand as anything but a petulant reflex against a small threat.

By its overwrought announcement that it’s going to extract licensing fees from end users as recompense for a list of secret patents, Microsoft has shown itself as compelled to pursue a strategy that is both foolish and short-sighted. It has set into motion an event that must end badly, and one can only observe that by its actions, Microsoft has sown the wind and it will undoubtedly reap the whirlwind.