by David Niebauer
Although it initially came as a shock, and was actually intended to subvert the accepted order of things, open source software has arrived at a place of respectability in the software industry. The idea is bizarre on first blush and even today non-software oriented business people profess not to understand how it works – or how it could work. We are conditioned to expect intellectual property to be aggressively protected and that without such protection, no sane investor would ever support the development of a new technology. In the world of non-software invention, entrepreneurs rush to file patents in order to secure for themselves a place at the financing table. Patent(s) in hand, they enter the fund-raising process in the hopes of raising sufficient capital to develop prototypes and eventually sell products into the market. The patent protection provides a mini-monopoly which gives everyone comfort that capital can be deployed without a competitor coming along and doing it better or cheaper.
The software world has turned this process on its head, at least with respect to certain types of fundamental technology. Open source software has come to play a significant role in the infrastructure of the Internet and open source programs such as Linux, Apache and BIND are commonly used tools in the Internet and business systems. (for a good background article, see Kennedy, A Primer on Open Source Legal Issues.) Leading software companies with proprietary technology portfolios, such as IBM, Novell, and Oracle have learned to work with open source programs and even to profit from them. See Koenig, Open Source Business Strategies. Not to mention the successful enterprises founded with the goal of supporting, integrating and maintaining open source platforms (Red Hat, Progeny, 10X Software).
Open source business strategies are based on innovative licensing models, and they are intended to make money for all involved. The open nature is more a matter of access to technology and the intention to empower a community of users than it is about anarchy. The open source movement is also motivated by the conviction that innovation is a fundamental human activity and that the fruits of innovation should be made available for the common good. And it counters an intellectual property regime that at times stymies the very invention that it is supposed to foster.
The open source movement is making inroads in all types of industries. In fact, it is starting to feel like a rising tide. Open source hardware firms develop and sell electronics products using open source licenses. EDAG, a production design studio, has developed an open source concept car. There are even proponents of what is being called open source biology that treats DNA as software source code for living systems, encouraging a community of scientists and genetic engineers to develop new drugs using open source licensing models. See Open Source Biology by Andrew Hessel in Open Source 2.0, O’Reilly Media.
Is It Time For An Open Source Cleantech Movement?
There is no question that the world is hungering for technological advancement in this area. The electric generation and transmission system has not changed substantially since its invention and deployment in the mid 19th Century. These methods are gradually degrading our living environment and an increasing number of people, both scientists and non-scientists, are convinced that unless we learn to live sustainably on the planet, our time here will quickly run out. However, research and development in cleantech, especially in the renewable energy field, is significantly different than software development. Rather than writing code, scientists in this field must work with mechanical systems, and when dealing with electricity these systems are complex and capital intensive. Also, in software development, the source code is the product – a software company sells copies of its original product. Most non-software cleantech businesses must express the invention in a patent and then build products based on that invention. The capital required to build products is significantly greater than what is necessary to copy a set of code. Perhaps a model is emerging that will allow the significant capital investments necessary to develop products in the cleantech area to be recouped. The open source licensing model will not work with every cleantech invention, but there seem to be a few candidates for experimentation.
Two Possible Examples
I provide here two examples of possible open source business models, one employing open source development and one employing open source distribution. The development model would appear to be ideal for genuine game-changing discoveries that might create an entire new platform for energy generation. I am thinking here of things like zero-point energy, cold fusion, a storage breakthrough or a working magnetic engine. My friend and colleague Ed Beardsworth, a physicist who investigates such things, urges me to imagine trying to conceive of nuclear energy in the year 1900 – genuine paradigm shifting inventions that are still over the horizon.
An open source model of development for such discoveries could harness the Internet for collaboration and information sharing in ways that would inspire a new community of investigators. The filing of an open patent around fundamental technology might ignite a worldwide search for applications. A licensing model that follows the GNU General Public License would encourage publication and sharing of improvements and derivatives to the technology. An entirely new industry might grow up around real-world applications, maintenance, manufacturing and distribution of products. The industry would borrow from software open source business models and would undoubtedly create many new ones unique to the particular technological advancement.
Another area that may overlap the world-changing discovery, but is distinct in many ways, is innovation in distributed generation (DG). DG describes technologies and processes that allow energy to be generated at or near where it is used. These technologies are generally small-scale, permitting direct application by businesses and homes. The universe of present technologies is small (e.g., wind, solar PV, combined heat and power (CHP)) and the cost is still higher than subsidized central power, but this could change radically in the years ahead.
Here, an open source software distribution model is the best analogy. I can conceive of DG technology developers, in particular, utilizing a modified dual licensing approach for patents, similar to what is presently employed by software developers employing copyright law. In the software model, the developer offers two separate licenses. One is royalty-free, but contains limitations. The other is a commercial license (including a royalty) with full functionality. Free use carries certain conditions – typically, all modifications or derivatives must also be made public and open to all, and companies are prohibited from using the free version as a component of any product or solution they commercialize. The commercial license generates traditional royalty fee revenue. Supporting the open license generates more service-oriented revenue.
For a cleantech DG invention, a similar dual-licensing approach could be followed. The basic foundational patent would be offered royalty free for anyone to make use of, test, explore and utilize for its own purposes. Any modifications or derivatives would also be made available in an open manner and no commercialization or distribution would be permitted. Also, a licensee of the open version of the patent could deploy the technology for its own energy needs without having to pay a royalty to the patent holder. This model might work well for all types of distributed applications: energy generation, efficiency, storage, monitoring, etc.
Why would anyone pay for a commercial license when access to the same technology could be had for free? One obvious reason is that the commercial license would permit manufacture and distribution, so that a complete turnkey solution could be developed and offered for sale to end-users. Many commercial enterprises would likely choose this alternative. Even businesses that avail themselves of the royalty-free version might also wish to engage the licensor in a technical advisory capacity, for maintenance and support or for other reasons (e.g., warranty or IP protection). The software world is replete with open source business models that generate significant revenue for the developers.
These are only a couple of ideas that emerge when thinking about open source cleantech. A recent blog on this site by Jason Barkeloo has suggested that electrons are in some sense analogous to software source code and that the business of how we value electrons is perhaps poised for a complete re-thinking. The world awaits not only the technologies of tomorrow, but the business models and practices that will usher in this new world.
David Niebauer is a corporate and transaction attorney, located in San Francisco, whose practice is focused on clean energy and environmental technologies. www.davidniebauer.com