Testimony of Mitchell D. Kapor in congressional hearing I want to thank the Committee for this opportunity to testify on some of the intellectual property questions surrounding software. This is an area that I personally find fascinating and provocative - so please excuse me if my testimony ends up leaving you with more questions than answers. With no joke intended, software has been very, very good to me. I was fortunate enough to find a collaborator to craft an innovative piece of software called Lotus 1-2-3 - and that software evolved into both an industry standard and turned Lotus Development Corp. into one of America's most successful software companies. As you are no doubt aware, the personal computer revolution was catalyzed by young rebels, dropouts, and visionaries who helped forge over the last decade what has become a multibillion dollar industry of global import. We fundamentally changed how computers were used and how business - and government - got work done by making computers useful and accessible to tens of millions of ordinary citizens without special computer expertise. I like to think the company I founded played an important role in that. But because I am a software entrepreneur, I would rather launch a new company based on new software ideas - and that's what I've done. I left Lotus to start a new company with a different approach to software. The perspective on intellectual property I want to give you isn't one grounded in theory or law - it's one based on my experiences trying to turn innovative ideas into real businesses. Let me make a bias clear up front: I like new ideas. I like being part of a creative community of software designers where we each try to surpass each other. I like the fact that the market tells us which innovations excite them and which innovations don't. I like the fact that it is a punishable crime if people copy and distribute pirate versions of our software. Let me tell you what I wouldn't like. I wouldn't like companies acting like they believed they have a monopoly on a good idea. I wouldn't like it if companies forget that, like it or not, they also learn from their competitors and their competitor's customers. Pamela Samuelson, an intellectual property scholar at Emory University in Atlanta whose work I much admire, describes intellectual property advocates ranging along a scale from minimalists... who believe in the bare essentials of protection - to the maximalists - who insist that intellectual property is so precious that it must be surrounded by a phalanx of razor-edged laws. I am a minimalist. That doesn't mean I don't care about intellectual property protection - it means that I don't want protection to become the dominant theme or even a dominant theme of this industry. If you want to keep this industry as vibrant and successful as it's been, then a properly constructed intellectual property policy will respect protection but give preference to innovation. Over-protection of intellectual property is as pernicious as under-protection in its stifling effects on innovation and consequent loss to society. There is no question, as I look at my industry, that there has been an unsteady but stubborn march to extend the scope of copyright. Twisting and straining each step of the way to secure additional copyright protections, too many companies seem to have decided that's its easier to sue their rivals than compete with them. Litigation is becoming a business tactic - not a practice of last resort. Software should not be an industry driven by litigation. That would be bad for both the industry and its millions of customers. I think you can craft policies to prevent that. It would be great if we could just draw a line and, say, outlaw software clones of specific application programs. The litigation presently before the court between Lotus Development Corp. and Paperback Software is not what I'm complaining about here. If that's where it all stopped - OK. But I'm concerned where the line ultimately gets drawn. For example, the next foreseeable step in which litigants seek to protect individual features and elements of programs, per se, under copyright, would be one step too far. Speaking from my own observation, the so-called spreadsheet clones have achieved but the tiniest of market shares - I don't believe that's an accident. Cloning of applications is an unviable business strategy. Success in software business depends on a host of factors, including one's documentation, training, customer support, and the quality of customer relationships in general. All these favor the large, well-financed software companies to begin with. For another, software is so complex and idiosyncratic that, unless the person is deliberately copying the internals of the code, a reproduction of a sophisticated application so flawless that it has equivalent quality and utility to the original is usually sufficiently difficult and expensive to produce that any firm with the economic and intellectual resources to do a good job at this prefers to create original products which represent a greater opportunity. It's the nature of software for ideas to slosh and flow back and forth between competitors, companies and industries. Like architecture and the movies, software is a medium for ideas. At my own company, ON Technology, we spent months simplifying the interface for our first program so that virtually anybody can use it effectively within minutes of booting it up. The good ideas are right there on the surface of the software for everyone to see. The purpose of my telling you this isn't to advertise the quality of On's design but to inform you that I don't see any way to prevent my potential competitors from profiting from our efforts. If they can replicate our efforts - or go them one better - because our approach inspired them to do so - more power to them. I would only call my lawyer if we found that these competitors had not just copied the idea - but the actual lines of code underlying it. That suggests a practical software intellectual property guideline for your consideration: If, as a software designer, I can use a program and learn from it, without copying its internals, then I should be free to use the knowledge that I've gained as long as I expressed the ideas in my own way. In other words, we should not extend copyright protection to ideas, but confine it narrowly, essentially to literal expression. With regard to patents, I think there are even more problems, at least in prospect, than with respect to copyright. Because it is impossible to know what patent applications are in the application pipeline, it is entirely possible, even likely, to develop software which incorporates features that are the subject of another firm's patent application. Thus, there is no avoiding the risk of inadvertently finding oneself being accused of a patent infringement simply because no information was publicly available at the time which could have offered guidance of what to avoid. Please, require publication of patent application within a short period of their filing. The period of patent protection, 17 years, no longer makes sense in an era when an entire generation of technology passes within a few years. My recommendation would be to consider substantially shortening the length of protection. Most importantly, it is my heartfelt belief that many of the increasing number of recently issued software patents, concerning, for instance, fundamental techniques and artifacts of user interfaces, should never have been granted in the first place because of their failure to qualify as either novel or non-obvious. Some patents appear to preempt automation of common functions such as footnoting. This to me is like allowing a patent on the round steering wheel. The breadth of claims being allowed in these matters, is, in the words of Brian Kahin, Adjunct Research Fellow at Harvard's Kennedy School of Government, "often at a level of abstraction that is shocking to the uninitiated." If some future litigant is successful in upholding rights to one of these "bad" patents It will require expensive and time-consuming litigation, whose outcome is frankly uncertain, to defend the rights of creators which should never have been challenged in the first place. If I speak very bluntly here, it is only because I am deeply concerned that a single bad patent court fight with a negative outcome, like a major environmental accident, could have catastrophic effects. I don't think we can afford the risk. I think it's vital for people here to appreciate that software design, development and innovation aren't just abstract concepts but professions practiced by a community of people. These people are constantly talking, exchanging ideas, discussing hypotheticals and exploring new ways to represent their thoughts. It's like Hollywood without the glitz. Some companies are so pro-protection they forget that they are not simply producers of new ideas but also consumers of others'. It's the shortsightedness of companies that "I have to protect what's mine" versus the longer term view that we're all better off if we look for ways to learn from each other rather than sue each other. Some firms would like it if all of their works were fully protected, but they were free to benefit from the efforts of others without much regard for intellectual property rights. They must be reminded that the law has an obligation to be even-handed. Of course, complicating all this is that software is a different kind of intellectual property beast. Of course, you all know this and you're probably weary of people like me coming up and testifying that our particularly niche is unique. I would, however, strongly recommend that you take a look at some of the pioneering legal work of Vanderbilt Law School Professor Jerome Reichman, who does an excellent job of exploring the "hybrid" nature of software as intellectual property - creations which defy neat attempts to fit them into either patent or copyright regimes. You may also want to consider seriously Professor Samuelson's observation that software is both a writing and a machine in a legal system which that has assumed something could be either a "writing" or a "machine" but not both. I find myself constantly nodding my head in agreement when I read these people's works. I think it's too early for another CONTU. What's more, I honestly believe that this industry isn't mature enough to cope with a barrage of new laws. Congress could help both the software industry and its customers if when it passes laws their legislative histories tell the courts that, when they consider a copyright case, they should err on the side of innovation over protection. Increasingly, the economic value that we add to things in this society and the global economy is this intangible, crystallized mindstuff called software. America's software industry happens to be the best in the world - and that isn't due to intellectual property lawsuits. The challenge is, what regime is going to continue to support our ability to do well. If our policy comes out of court battles, then we're going to have an industry that looks like it was shaped by lawyers and judges - not by technically innovative and market-sensitive entrepreneurs. There's no question that this Committee is grappling with one of the most important, stimulating and provocative issues in the Information Economy. I want to let you know that I would welcome any opportunity to help you better define those issues and learn how you believe intellectual property policy and the software industry should intersect.