Software patents in the cloud

Software patents have long been an area of concern for the free-software community. The ability to lock up specific computational techniques is a threat to those who would create their own implementation of those techniques, often as an independent invention. In practice, software patents have imposed significant costs on the industry; estimates vary, but it is widely accepted that patent royalties make up a significant part of the price of an Android device, for example. But they have not slowed free-software development as much as some had feared. The potential for trouble still exists, though, so Microsoft's Azure IP Advantage (AIPA) program is worth a look as an indication of how the patent battle may play out in cloud settings.

Azure, of course, is Microsoft's cloud offering, the place where Microsoft would like us all to buy our cloud computing resources. The purpose of AIPA is to make Azure more appealing to companies that are concerned about attacks from patent trolls. According to Microsoft, the purpose is "to foster a community and business environment that values and protects innovation in the cloud" — not that Microsoft itself has ever been known to use software patents itself in ways that might inhibit innovation. There are three components to this program.

The first of those components is simple indemnification against patent attacks based on services that Microsoft offers itself. So, for example, if a company is using Azure HDInsight, otherwise known as Microsoft's version of Hadoop, Microsoft will indemnify that company against an attacker who claims to own a patent that reads on part of Hadoop. This indemnity only extends as far as Microsoft's own services; an independent installation of Hadoop would not qualify. Neither does, as explained in the FAQ, "a Linux distribution in a VM".

Thus far, Microsoft is simply protecting its customers from being sued for using its own products. This is a fairly normal practice in the industry and shouldn't raise too many eyebrows.

The second part of AIPA is perhaps more interesting; it is called "patent pick" and is only available to customers spending at least $1000/month on Azure. If such a customer is the target of a patent suit, and if that customer has "remained patent peaceful" against other Azure customers for at least two years, then that customer is allowed to pick one patent out of a list of 7,500 (apparently to be expanded to 10,000). Microsoft will, for a nominal fee, transfer that patent, which can then be used in a counterattack. For the curious, the list of available patents is available as a large Excel file.

Tech Insights dug through the list and concluded that it offers reasonably broad coverage and does not appear to just be a list of patents that Microsoft doesn't care much about anyway. So perhaps it is a useful resource, but it is an interesting one. Patent pick will only offer value to companies that otherwise have the resources to see a patent fight through to the end — a process that can cost millions of dollars even in the case of a successful outcome. There may well be companies out there with pockets that deep that nonetheless find themselves in a position where a single patent from Microsoft will change their fate, but it's not clear how many such companies exist. Even so, perhaps the knowledge that a potential target could pick one weapon from this arsenal will prove to be a deterrent in some cases.

Of course, the ability to file a patent-based countersuit will have little deterrent value against patent trolls. Microsoft is probably uninterested in solving the trolling problem, but it can promise to not make it worse — for $1000/month Azure customers, at least. The third component of AIPA is called a "springing license"; it says that, when Microsoft sells its patents to "non-practicing entities", those $1000/month customers get an automatic license to use the patented techniques. It is not clear from the publicly available materials, but the wording on the site suggests that this license only exists as long as the customer continues to spend the minimum amount with Azure.

While Microsoft claims that it doesn't normally transfer patents to trolls, this offering could be said to create a sort of moral hazard for the company. If a patent or two were to, somehow, end up in the hands of a troll that started asserting them widely, any customer thinking of leaving Azure would have to weigh the increased risk of attack that would result from such a move.

For better or for worse, the current phase of the computing industry is focused on consolidation. Computing that was once done in organizations is moving to the data centers of a relatively small number of huge cloud providers. Those providers have an interesting problem, though: computing, storage, and bandwidth are essentially commodity services. If this market is too easy to enter, competition could drive prices down to the point where the business is barely profitable.

The situation changes, though, if there are significant barriers to new entrants in the field. This kind of patent policy could prove to be just such a barrier. In a world where patent trolls run amok, the only safe harbor may well be the tiny number of providers with the resources to shield their clients. Rational organizations would have to think hard before hosting their work anywhere else.

Thus, AIPA shows us what the shape of the software patent threat may be in the near future. We will still be able to develop free software as we see fit and, perhaps, even distribute it. But anybody who wants to run that software in any sort of significant way will, as they are now, have to face the threat of patent attacks. Mitigating that threat may well require running branded versions of free programs on the systems of a cloud provider that can provide a credible patent shield. That may be the new form of the patent tax, and it bodes ill for anybody who truly seeks to bring about "innovation in the cloud".

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