Ownership of Software Rights

There is an interesting fight currently at the US Patent Office that involves all of us in the telecom industry. The argument is over the right of ownership of the software that comes along these days with almost any type of electronics. The particular fight is between John Deere and tractor owners, but the fight is a precedent for similar software anywhere.

John Deere is arguing that, while a farmer may buy one of their expensive tractors, John Deere still owns the software that operates the tractor. When a farmer buys a tractor they must agree to the terms of the software license, just like we all agree with similar licenses and terms of service all of the time. The John Deere software license isn’t unusual, but what irks farmers is that it requires them to use John Deere authorized maintenance and parts for the term of the software license (which is seemingly forever).

The fight came to a head when some farmers experienced problems with tractors during harvest season and were unable to get authorized repair in a timely manner. Being resourceful they found alternatives and there is now a small black market for software that can replace or patch the John Deere software. But John Deere is attacking farmers that use alternate software saying they are violating the DMCA (Digital Millennium Copyright Act) which prohibits the bypassing of copyrighted locks on content. They argue that farmers have no right to open or modify the software on the tractors which remains the property of John Deere. The Patent Office is siding with John Deere.

This is not a unique fight for farmers and the owners of many electronics companies are taking the same approach. For example all of the major car manufacturers except Tesla have taken the same position. Apple has long taken this position with its iPhone.

So how does this impact the telecom industry? First, it seems like most sophisticated electronics we buy these days come with a separate software license agreement that must be executed as part of a purchase. So manufacturers of most of the gear you buy still think they own the proprietary software that runs your equipment. And many of them charge you yearly after buying electronics to ‘maintain’ that software. In our industry this is a huge high margin business for the manufacturers because telcos and ISPs get almost nothing in return for these annual software license fees.

I don’t think I have a client who isn’t still operating some older electronics. This may be older Cisco routers that keep chugging along, an old voice switch, or even something major like the electronics operating an entire FTTH network. It’s normal in the telecom industry for manufacturers to stop supporting most electronics within 7 to 10 years of its initial release. But unlike twenty years ago when a lot of electronics didn’t last more then the same 7 – 10 years, the use of integrated chips means that electronics are working a lot longer.

And therein lies the dilemma. Once a vendor stops supporting a technology they literally wash their hands of it – they no longer issue software updates, they stop stocking spare parts. They do everything in their power to get you to upgrade to something newer, even though the older gear might still be working reliably.

But if a telco or ISP makes any tweaks to this older equipment to keep it working – something many ISPs are notorious for – then theoretically anybody doing that has broken the law under the DMCA and could be subject to a fine up to $500,000 and a year in jail, for a first offense.

Of course, we all face this same dilemma at home. Almost everything electronic these days comes with proprietary software and the manufacturers of your PCs, tablets, smartphones, personal assistants, security systems, IoT gear and almost all new appliances probably think that they own the software in your device. And that raises the huge question of what it means these days to buy something, if you don’t really fully own it.

I know many farmers and I think John Deere is making a huge mistake. If another tractor company like Kubota or Massey Ferguson declares that they don’t maintain rights to the software then John Deere could see its market dry up quickly. There is also now a booming market in refurbished farm equipment that pre-dates proprietary software. But this might be a losing battle when almost everything we buy includes software. It’s going to be interesting to see how both the courts and the court of public opinion handle this.