Dr Bharat Jhunjhunwala
Satya Nadella of Indian origin has been appointed CEO of the IT giant Microsoft. This is a matter of pride for us. Microsoft is the largest software company in the world. It is also in the forefront of seeking patent protection for software. The Company wants to maintain its monopoly on software so that it can ever earn high profits. It has helped establish the Business Software Alliance. This is a US-based organization. Basic argument is that patent protection enables the companies to make higher profits. They can then invest more in creating new software. These new software, in turn, enhance the productivity and welfare of the people. The photographer would be is able to edit the pictures. The homemaker can store recipes and photo albums at her convenience. This contribution of software companies to enhancement of productivity and welfare of the people can be seen in the spread of Windows software. The Windows 93 operating system was invented by Microsoft. This followed by Windows 95, 97 and XP in quick succession within a period of 10 years or so. Each new system came with decisive improvements. This was made possible by patent protection which enabled Microsoft to earn huge monies from the sale of Windows 93 and invest in its upgradation.
In-house creativity such as that displayed by Microsoft in Windows software is not the only source of creativity though. The open source Linux operating system is available free on the internet. It is ‘open’ in the sense that its code or program is available to any person to examine or modify as per his or her convenience. There is a large international community which is constantly making improvements in the system and sharing free with others. This has spawned a huge creative community.
The creativity manifested by software engineers employed by software companies is not necessarily the best. Microsoft has come out with Windows 7, Vista and 8 in the last decade. These inventions have essentially failed. Users are not happy. The team of engineers paid from earnings from patent protection has not been able to ‘create’ good software. Patent protection can become wholly harmful in such circumstances. Microsoft would not be able to create new software because its paid engineers are unsuccessful for whatever reasons; and the open community would also not be able to create new software because patent protection prevents them from modifying and making changes to the Windows program. The society would be thus wholly deprived of creativity.
The assumption that creation of new software spontaneously leads to welfare of the people also needs examination. The link between inventions and welfare is established in two ways. One, new inventions allow new functions to be undertaken. Two, the inventions have to be made available to the people. If the inventions are kept in cupboards then it does not enhance welfare of the people. Microsoft was able to move from Windows 93 to XP within a period of 10 years or so because it had profits coming from the sale of Windows 93. Now, let us say Microsoft did not have patent protection. It would take, say, 25 years to create Windows XP through improvements made by the open community. People will be deprived of the welfare that they got from the use of XP for a period of 15 years. This is the beneficial impact of new inventions. But there is another aspect of welfare. Absence of patents would have enabled much larger numbers of people to use Windows 93. This would have led to enhanced welfare of large numbers. In other words, there is a tradeoff here. Patent protection leads to welfare from advanced technologies while absence of patent leads to welfare from enhanced spread. It cannot be said that the total welfare will be greater from inventions.
There is a social vision underlying the two approaches to welfare. The patent regime enables faster generation of new technologies but limits their use to fewer persons. It is like the Qutab Minar standing alone in barren landscape. On the other hand, open source software is like Gandhi Samadhi. It is flat and spread over larger area. So the question is not ‘welfare’ but ‘whose welfare’? Patent protection secures enhanced welfare of fewer persons while absence of the same secures welfare of larger numbers though at a lower level. Hence the case for patent protection on grounds of welfare does not stand.
A study by Ram D Gopal of University of Connecticut says that the attitude of countries to patent protection is determined by the level of development of domestic software industry. Countries having a developed software industry are more active in providing and seeking patent protection; while those having less developed domestic industry are easier on implementation of patent laws. This means that the argument of welfare is actually only an afterthought. The real game is that of profit making. Countries that stand to gain from patent protection seek it.
Question is why do more people not use the open source Linux. The problem can be understood by an analogy. The doctor is skilled. He can use the cheaper mercury BP machine because he has the skill to operate it. The lay patient, however, has to buy a more expensive electronic machine because he does not have the skill to operate a mercury machine. Similarly, it requires a certain minimum level of skill to work with the Linux system. The lay user has to rely on the ready-to-use Windows system because he does not have the basic skills required to work on the open source. It follows that the positive role of software companies is to simplify and provide support for the lay user. Creativity is fostered by open source while its spread can be enhanced by patent protection to companies.
A balance between the two approaches is required. We must not throttle the creativity of billions of people by providing patent protection to software companies. That would make future innovations a hostage to the predilections of the company managements. At the same time there has to be a space for these companies to simplify the software for lay user and to provide backup support. It is difficult to draw the line between these contenting considerations, however. A way out, therefore, may be to take the patents regime out of the WTO and leave it to the decision of individual countries. Some countries will opt for patent protection and that will help foster in-house creativity. Other countries will opt for open software and that will foster spread of the innovations. A combination of the two will perhaps secure welfare of the people at the global level.
The real challenge before Nadella is not to take Microsoft to highest levels. The real challenge is the bring about a change in mindset of the Company from moneymaking to social welfare.
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