Justifying Open Standards and Open Source

Justifying Open Standards and Open Source

Item 5 of the W3C Royalty-Free license, the requirement that a patent license "may not be conditioned on payment of royalties, fees or other consideration," is the most significant factor for most companies. They face the prospect of licensing some of their patented intellectual property at zero price if they contribute to the development of an industry standard.

How could contributing patents at zero price for open standards ever be justified to company shareholders?

Somehow it must be justified over and over again, because very few companies actually charge royalties for their patent licenses relating to industry standards. Zero price is typical even though it is not yet generally the rule. Companies have long recognized that charging royalties for some things will impede the beneficial cooperation for which they joined industry consortia in the first place. It is better to forego small royalty profits for a small number of patents in exchange for the prospect of long term financial gain in a vibrant, competitive marketplace .

This is the same economic tradeoff that confronts a copyright licensor who is considering licensing software under an open source license. The licensor's customers will be able to make unlimited free copies of this copyrighted intellectual property. How can a licensor make money that way?

You will find many examples of profitable open source business models among the major software companies and open source projects worldwide. We now see huge collections of open source software being created and contributed to around the world under the licenses described in this book. The price of software copyright and patent licenses isn't always the most important characteristic or advantage of open source software.

Open source and open standards are an enormous reality even if this book doesn't fully explain why people and companies do it. I could only describe licensing in this book. I could not also help you to justify the underlying open source business models. That is for someone else's book.

The simple fact is that many companies and individuals now contribute to a growing commons of intellectual property. They have discovered that more value is derived by distributing this intellectual property freely to others and sharing in the growing public commons of free software.