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Business in Vancouver: News that works for you

    Big software producers likely to feel heat as court decision opens door to clones

    by Alan Zisman (c) 1995 First published in Business in Vancouver ,  Issue #286  April 18, 1995 High Tech Office  column

    A recent U.S. court decision may change the way you and your business purchase and use software.

    For years, judges and legislators have had difficulty applying concepts of copyright to new digital media. In particular, can someone copyright the "look and feel" of a piece of software?

    Apple was unsuccessful in convincing the courts that Microsoft Windows violated copyright in its attempt to give PC users some of the ease of use that Apple had built into its Macintosh computers. Lotus, back in 1990, however, was successful in its suit against now-defunct Paperback Software. It claimed that Paperback's VP-Planner, in copying Lotus 1-2-3's menu structure, had violated its copyright, even though it hadn't copied any of the underlying source code-- the actual writing in the program. Source code is considered a literary creation, the same as any other piece of writing, and is clearly protected by copyright.

    Critics of that court decision like to compare software to driving a car-- if every programmer has to create a new user interface from scratch, consumers are in the same position they'd be in if every different car model had the steering wheel, brakes, and gas pedal in a different place.

    Lotus, however, subsequently turned its attention to Borland International, whose Quattro and Quattro-Pro spreadsheets gave users the option of choosing to use new Quattro-style menus or menus patterned after Lotus's. This suit, too, was successful for Lotus, resulting in years of financial instability for Borland, as the suit made its way up through the appeals process.

    Last month, the U.S. First Circuit Court of Appeals reversed the previous Massachusetts District Court decision, giving software developers legal permission to produce programs that emulate their competitors'-- not just by producing the same results, but by letting users work in the same way.

    Given the amount of time it takes to produce a piece of software, don't expect instant changes. This ruling, however, makes it possible that the software industry will see the same sorts of changes that shook up computer hardware sales in the past decade. Over that period, name-brand PC hardware manufacturers lost more and more market share to clones-- lesser-known or no-name manufacturers which could produce a similar product and sell it at a lower price. The resulting market shakeup eventually forced traditional manufacturers such as IBM and Compaq to
    cut prices and revamp their marketing practices after a few years of record losses.

    Software has mostly remained immune to the hardware price wars, with companies and consumers standardizing on a few products within any software category, and seeming willing to continue to pay high prices to a few companies.

    The recent court decision opens up the possibility of software-cloning and price wars, and brings with it a whole series of possibilities, both good and bad. Consumers will welcome dramatically lowered software prices, and there's some evidence that lower prices result in less software piracy, a boon to software producers.

    But putting pressure on software prices also means software companies will reduce services-- most likely by cutting support for users. Free technical support for registered software users is already being cut back; 1-800 phone numbers are being replaced by calls where the user pays for the privilege of waiting in a hold queue, or by 1-900 pay-by-the-minute numbers. Lifetime free support is being replaced by 90-day support.

    And while many users will welcome low-priced clone software that offers the same menu structure and functions as the market leaders, others will wonder whether there will be any support available when they have problems with the program hours before a critical deadline. Just as some users choose to pay more for IBM or Compaq hardware and the security of dealing with a known manufacturer, software consumers will, for the first time, be faced with the same issues.

    The hardware cloners are able to build low-cost machines using parts from overseas production lines. Similarly, software cloners can make use of large numbers of highly skilled and often under-utilized programmers available for low pay in countries around the world. (As it is, many traditional software-development projects are already being sub-contracted to programmers in places like former Soviet-bloc states and India.)

    The three Appeals Court judges, in their 25-page decision, ruled that software menus are a "method of operation" and, as such, not covered by copyright. They may not have anticipated that their decision could
    dramatically change the whole consumer-software industry.

    I wouldn't be surprised if this decision plays a major role in changing this marketplace from a relatively stable cash cow for a few large companies to something considerably more competitive.


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Alan Zisman is a Vancouver educator, writer, and computer specialist. He can be reached at E-mail Alan