IT Week: What sparked the current debate about software patents?

David Kaefer: Everybody understands intellectual property [IP] is the new economy. Today over 75 percent of value on the SP500 [top 500 companies] comes from intangible intellectual assets and the software patent debate is about how you foster competition and innovation in this new economy.

So why is Microsoft in favour of software patents?

If you look at previous economic shifts, this same debate has surfaced. In the 1920s, during the advent of new consumer goods, there were discussions about whether electrical devices should be patented because they are powered by a force of nature. Back then there were the same fears we have now – that patents would quash innovation and competitiveness – but instead competition and innovation improved as firms developed a licensing culture where they didn’t exclude other parties, but rather used patents as a currency to trade with.

And you believe the same can happen with software?

The internet has demanded far better interoperability across heterogenous systems than we’ve had previously and vendors have a choice: do they build a wall around their IP and go it alone or do they realise they’re in an interdependent world where they have to exchange IP with others. Modern software requires IP from many different vendors, and without patents it is much harder to [co-operate] because you may not have the ability to retain the value of the IP you are sharing.

How does this help IT purchasers?

First, a predictable legal infrastructure would bring stability and make firms more confident about software investments. Secondly, a good patent system encourages people to share IP and promotes more interoperability. For example, Nokia and Microsoft have historically not collaborated closely, but today many Nokia phones use Microsoft technology. The industry is not using patents to build walls, it is treating patents as currency and you will see more unexpected alliances popping up. The customers benefit because they are getting the interoperability they want.