Additional Comments
by the Software Publishers Association
Washington, D.C.
January 30, 1996
The Software Publishers Association (SPA) appreciated the opportunity to meet with members of the Federal Trade Commission and its staff on December 20, and to submit testimony in the Commission's Hearings on Global and Innovation-Based Competition. As we promised at our meeting, we consulted with the SPA Government Affairs Committee to prepare additional comments.
Discriminatory Access to Licensing Specifications
Commission Question. What is the legal support for the FTC to monitor and possibly intrude into the licensing of interface specifications by dominant firms?
SPA Response. SPA believes that the U.S. government should rely on general principles of antitrust law in assessing licensing of interface specifications by dominant firms, and rely on the same principles to the extent they arise in Internet-based computing and services.
Exclusionary Restraints in Licensing
Commission Question. Are there examples, other than previous allegations regarding Microsoft Corporation, of exclusionary restraints in licensing?
SPA Response. Other than those referred to by the Commission, SPA has had no other examples of exclusionary restraints in licensing brought to its attention as an association. Like most business contracts, every intellectual property license consists of a series of restraints (such as restraints on copying, on distribution methods, on disclosure of confidential information, etc.). The U.S. government should apply the Antitrust Guidelines for the Licensing of Intellectual Property (April 6, 1995) in assessing such restraints.
Retail Distribution
Commission Question. Are exclusive dealing arrangements by software companies analogous to "slotting allowances" in grocery stores? Or are they more akin to "vertical foreclosure"? Does brand recognition play an important role at retail?
SPA Response. There is the potential for firms to be foreclosed from access to retail if exclusive dealing arrangements between software companies and retailers are abused, and the U.S. government should apply the general principles of antitrust and unfair trade practices in assessing them. As observed by the Commission staff at our meeting, brand recognition does play an important role at retail.
Bundling Operating Systems and Applications
Commission Question. Does SPA recommend that the FTC take any action to alleviate the concern found in the survey?
SPA Response. Because the SPA Competition Issues Survey found that most respondents would be extremely concerned if applications were bundled with operating systems, the U.S. government should study whether the bundling of applications with operating systems is being used with intent to monopolize markets for software applications. The U.S. government should apply general principles of antitrust law in assessing any "bundles" of applications with operating systems products.
Patent Protection for Computer Programs
Commission Question. What is SPA's position regarding patent protection for computer programs?
SPA Response. SPA believes that inventions related to computer programs may be patentable if they satisfy the statutory requirements for patent protection. The quality of patents granted should be improved by the continuing development of prior art databases for computer programs, such as the Software Patent Institute, and the continued hiring by the U.S. Patent and Trademark Office of computer science specialists as patent examiners.
Many objections to the current system of patent protection for software-related inventions stem from difficulties in uncovering prior art and determining the validity of patents. While SPA has no position at this time as to whether computer programs should be patentable, the 1996 Software Business Practices Survey conducted by Price Waterhouse reports that a growing number of software companies are seeking patent protection.
Whether patent owner or patent user, many agree that the patent examination process should be improved by the continuing development of prior art databases for computer programs and the continued hiring by the U.S. Patent and trademark office of computer science specialists as patent examiners. SPA has supported the development of expanded prior art collections through a $300,000 multi-year grant to the software patent institute in Ann Arbor, Michigan.
Copyright Legislation Prohibiting Anti-Circumvention Devices and Services
Commission Question. Does the "black box" provision prohibiting the circumvention of technical protection foreclose access to interface specifications for reverse analysis?
SPA Response. SPA does not believe that the "black box" provisions of the National Information Infrastructure Copyright Act would foreclose appropriate access to interface specifications and other copyrighted works.
Conclusion
SPA respectfully requests the Commission to make these responses part of the record in its Hearings on Global and Innovation-Based Competition. Once again, SPA appreciates the Commission's interest in these important issues and their effect on the software industry.
Software Publishers Association
Software Publishers Association 1730 M Street, NW, Suite 700 Washington, D.C. 20036-4510 Telephone [202] 452-1600 Facsimile [202] 223-8756