Digicash Patents

[Tim May]

On Thursday, July 31, 2003, at 12:18  PM, Patrick wrote:

>>> On the other other hand, :-), it's entirely clear that people could
> be
>>> developing code right now in anticipation of the patent expiration
> and
>>> go live with some kind of land rush when it's possible to do so.
>>
>> Some people expected a "land rush" when the main RSA patents expired
>> several years ago. Parties were even thrown. The land rush never
>> happened.
>>
>> --Tim May
>
> 	True, but look at bitpass.com. $1.5 million in capital for a
> micropayments system with no innovations that amounts to... a stunted
> version of Paypal?

PayPal apparently met the needs of its customers, which was for a 
low-tech, low-security, no anonymity online payment system. While I'm 
not saying I predicted it, neither is it surprising that something like 
it succeeded.

(Members of this very list had some discussions with the guy who 
started PayPal...I wasn't in on this, but I gather that he used some of 
the ideas, but not the high security/untraceability ideas...just the 
online payment low-hanging fruit part. The same is true of EBay, by the 
way, where some of our crowd developed an online system very much like 
what E-Bay became, but several years _after_ the AMiX system. C'est la 
vie.)

In any case, there will be many successes and failures in 
Internet-related business. This list is about certain kinds of these 
systems, but not really about "online payments" in their general form. 
I'm not saying folks can't or shouldn't talk about Mondex or PayPal or 
FastTrack, just that they have little to do with the obvious themes of 
the group.
>
> 	The beauty of a marketplace is that many different parties get
> to try every which way of satisfying a need. Most will fail. Even the
> first several attempts can fail, disguising a real opportunity as a
> guaranteed failure.
>
Software patents and the difficulty of "metering" usage has made this 
kind of experimentation, this kind of evolutionary learning, much 
harder to do. For example, when Intel sold the 4004 microprocessor 30 
years ago, it owned a bunch of patents and trade secrets about how the 
chip was made, what it's design was, etc.

But it didn't force potential customers to lay out their business 
plans, to sign "no compete" clauses, and it did not have to devise 
complex ways of knowing how many chips a customer was using. The chips 
metered themselves, metered the patents and other IP, and Intel could 
sell them to guys in garage shops, companies in Boise and Peoria, and 
even to distributors to resell and resell.

Such is not the case with, say, the Digicash software. Since Chaum, 
then the Canadians, then the Indians, then First Data, etc., wanted to 
maximize the payoff and "get a piece of the action," they could not 
simply sell the technology, even bits of it, to guys in garages and 
people with bizarre and untested ideas.

And such software is usually not sold to unidentifiable customers. 
Digicash (or its descendants) will not sell one copy of its core 
technology to a company without draconian safeguards and audits. This 
is part of why a paper trail back to the users of various technologies 
exist when above-board licensing is used. (And why many of us would 
obviously then favor simply _taking_ the technology, ripping it off. 
This cuts the paper and liability trail. Yes, there are minor issues 
with "theft of intellectual property," but this is mostly smoke and 
mirrors anyway. No one in the Western world seems to think ideas in 
general are patentable, so how did RSA get patented? We've had this 
discussion many times over the past 11 years. And more.)

This is replicated all over the digital landscape, where software 
packages have complicated licensing schemes and where vendors want to 
see only "staid and conservative" business plans. No Digicash for 
BlackNet, in other words.

This whole phenomenon has dramatically slowed down exploratory 
developement and weird, new ideas. A couple of guys in a tilt-up in 
Silicon Valley simply cannot just go down to Fry's to buy some parts 
and try out some ideas, not in this world of licenses, audits, lawyers, 
and generally pointless efforts to meter usage.

Which is why doing things without benefit of any patent licenses is the 
best strategy. That this also requires no nexus, no trail back to a 
corporate office, is of course part of why it's the best strategy.


--Tim May