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Bill Gates’ 1991 Comments on Patents

On a Mises blog post thread, Microsoft Copyrights –> Patent Dominance, one commenter, nate-m, noted some interesting points about patents made in 1991 by Microsoft’s Bill Gates. This was in his internal Microsoft memo, “Challenges and Strategy,” from May 16, 1991.

Prologue: The Reason for this Memo

Every year I set aside at least one “think week” to get away and update myself on the latest technical developments — reading PhD theses, using competitive products, reading books, newsletters and anything I can get my hands on. Several valuable thoughts have come out of these retreats (tables for Word, outlining in Excel, treating DOS as more of an asset), however the complexity of the industry and its techology means that a lot of my time is spent just trying to keep up rather than coming up with new product ideas. It is no longer possible for any person, even our “architects”, to understand everything that is going on. Networking, processors, linguistics, multimedia, development tools, and user interfaces are just a subset of the technologies that will affect Microsoft. My role is to understand enough to set direction. I enjoy these weeks a great deal — not because I get away from the issues of running Microsoft but rather because I get to think more clearly about how to best lead the company away from problems and toward opportunities. A lot of people choose things for me to read. By the end of the week I make an effort to synthesize the best ideas and make our technical strategy clear.

This year I decided to write a memo about overall strategy to the executive staff. As we have grown and faced new challenges my opportunities to speak to each of you directly has been greatly reduced. Even the aspects of our strategy that remain unchanged are worth reinforcing.

On the Mises blog thread, nate-m observes: “It’s a very interesting memo. It’s very rare that you see this level of honesty come out of a execuative and with current politics it is never going to happen again at Microsoft or any large corporation. There is few things the state hates more then honesty and will punish honest leaders and honest business with a vengance.

“This sort of thing is why Bill Gates won and all the other major software companies lost. They were all aiming for dominance and used the same weapons against each other (ie. copyright and other governmental things), but BG just did a better job.

“Out of this memo is the most interesting section, although the entire memo is very interesting from a historical perspective.”

Back to the memo:

Category 3

This is a category of challenges we face that I don’t feel are widely recognized.

PATENTS: If people had understood how patents would be granted when most of today’s ideas were invented, and had taken out patents, the industry would be at a complete standstill today. I feel certain that some large company will patent some obvious thing related to interface, object orientation, algorithm, application extension or other crucial technique. If we assume this company has no need of any of our patents then [they] have a 17-year right to take as much of our profits as they want. The solution to this is patent exchanges with large companies and patenting as much as we can. Amazingly we havn’t done any patent exchanges tha I am aware of. Amazingly we havn’t found a way to use our licensing position to avoid having our own customers cause patent problems for us. I know these aren’t simply problems but they deserve more effort by both Legal and other groups. For example we need to do a patent exchange with HP as part of our new relationship. In many application categories straighforward thinking ahead allows you to come up with patentable ideas. A recent paper from the League for Programming Freedom (available from the Legal department) explains some problems with the way patents are applied to software. [Emphasis added]

If only Gates opposed copyright as well.

Regarding the patent exchange part bolded above–see Patent Cross-Licensing Creates Barriers to Entry; regarding the interrelationship between Microsoft’s copyright and patent acquisitions, see Microsoft Copyrights –> Patent Dominance; also Controls breed controls, Monopolies breed monopolies.

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