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Infringement Havens

Horacio Gutierrez of Microsoft was quoted as saying that “cloud computing” is as significant a shift in emerging technologies as “the internet or personal computers.”  See IAM Magazine.  Because the binary code is behind a firewall on a server geographically located anywhere in the world, new problems arise in the patent world.  Since you can’t get access to the code, it is harder to prove infringement.  Also, even if you could prove infringement, the server can be moved to a jurisdiction with enforcement issues. 

This reminds me of Tax Havens.  Presently around the world there are Tax Havens where people store assets.  Tax havens are countries that provide favorable tax treatment to encourage business and wealth within their jurisdictional borders.  One can quickly imagine that certain countries will become “Infringement Havens” where weak or non-existent patent laws encourage business to host cloud computing within their jurisdictional boundaries.   

This also reminds me of a paper I wrote back in law school.  I predicted that if the courts decided that software was not patent eligible, they would force software makers to protect their software using self-help techniques such as trade secret law.  Instead of running the software on a PC, the PC would become a thin-client that makes remote procedure calls to a server.  Since most of the software would be located on a remote server, the software could be protected by secrecy.  Further, copyright infringers would be unable to copy the binary code since it would not be in the public domain. 

In the USA today, we can patent software with method claims, system claims, and product claims.  Back in law school, when I wrote the paper, it didn’t occur to me that if software continued to be patent eligible, infringers would look for self-help in the form of an offshore Infringement Haven.  But that is exactly what they will do.  Every computer in the world has a thin-client already—the browser.  Before long, you’ll be hearing about how infringers are running their infringing activities in an Infringement Haven–sort of a counter-punch to non-practicing entities. 

You can imagine cloud computing companies cropping up around the world, advertising that they host only in Infringement Havens.  These are interesting times.

Dan Bell  (Contact me.)

Do not disclose confidential information to me.  This is not legal advice or opinion.  This does not represent the current state of the law and does not include all issues relevant to this topic.  Do not take any action based upon this information without discussing the facts of your case with your lawyer.  I hereby refuse to be your lawyer.   I am only teaching now.  Copyrights © 2010 Dan Bell

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