(This story came out of a panel I was moderating at LinuxWorld. It was spirited session with good input from the audience.)

Eben Moglen, founding director of the Software Freedom Law Center, Wednesday called for reform of the US patent system as applied to software, because current laws are designed to protect the interests of pharmaceutical companies rather than technology companies.

Mr Moglen was speaking on a panel at the LinuxWorld trade show in San Francisco. He is one of the top lawyers in the open source movement.

"Software patents don't make much sense in the tech industry because markets move too fast. Yet the software patents put developers on guard that they could be vulnerable to future claims," said Mr Moglen.

He said that tech companies were having to register software patents as a defensive move, and that none could "unilaterally disarm" and stop filing for patents. And with potentially many rights holders in software, negotiating licenses becomes very difficult and harms innovation.

He said that many companies were having to bear the burden of IP laws that have been influenced by pharma, and that it was time for the tech industry to be freed of constraints created to serve the interests of just "the few."

The Software Freedom Law Center provides legal services to corporations and developers using open source software to ensure that their projects will not encounter a possible legal challenge.

Christine Martino, vice president of Hewlett-Packard's open source and Linux business, said HP would support a move for reform of the patent system in the US and internationally. Ms Martino, speaking at the same LinuxWorld panel, said, "As a global company and with global customers, we realize that this is an issue that needs to be addressed everywhere."

Another fellow panelist, Stuart Cohen, CEO of Open Source Development Labs, a sponsor of Linus Torvalds Linux kernel work, said that US patent laws affect other countries even if their own IP laws are weak.

"Developers in other countries know that we live in a flat world, and that means that they could be vulnerable to legal challenges from IP owners in other countries," said Mr Cohen.

As Linux and other open source software grows in popularity, the community of tens of thousands of developers has built a strong legal infrastructure to protect their work from third-party challenge. The key to the success of Linux and open source has been the General Purpose License (GPL), an extremely well crafted legal document that that has so far, managed to repel or discourage any challenge.

However, the latest version of GPL has become controversial and has split the open source community, with Linus Torvalds its leading critic. And large IT vendors such as HP have said that the new GPL must have strong protection for proprietary technologies.

Mr Moglen said that the debates over the new GPL are unlikely to stall an agreement. "I believe in the wisdom of crowds, we have a community of ten thousand that have a say in this." He said he expected an agreement on the wording of the license by spring of 2007. But he also said that there would likely be two versions of the GPL, and that that was okay.

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This was my first time meeting my co-panelists. Eben Moglen certainly likes to talk, (a lot!). Fortunately, it's all good stuff which is why I gave him a fair amount of airspace on the panel :-)

Please also see:Visionary keynote: Eben Moglen (From RedHat Magazine.)

. . .

Please see current breaking news... A Version of the GPL for Robots? Putting Asimov's 'First Law' in the GPL

Also, please see: Fortune's Nicholas Varchaver: Who's afraid of Nathan Myhrvold?

The giants of tech, that's who. And they have a nasty name for the former Microsoft honcho: "patent troll."

"Here's my 'secret plan,' " he explains one recent morning aboard his Gulfstream V en route to a meeting with inventors in Austin.

He reels off a list of companies that have made huge sums by licensing patents, such as Lucent (Charts), Texas Instruments (Charts), and IBM (Charts), which generates $1 billion a year on its patents.

"We want to build a portfolio just like those companies have, with licensing approaches broadly like they have ... I want to achieve what IBM has achieved. That's my financial model. This is a play where I take portfolio theory and apply it to something illiquid to deliver a return for my investors. I don't see that as evil. I don't see that as particularly threatening."

. . . Today Myhrvold's reported investors include some of the same companies that most vociferously condemn trolls: Microsoft (Charts), Intel (Charts), Sony (Charts), Apple (Charts), eBay (Charts), and Google (Charts). (Myhrvold will say only that the list "isn't fully accurate." Intel and Google declined comment. Sony, Apple, and eBay didn't respond.)

Joe Beyers, who oversees HP's patents, dismisses IV's invention plans as a "smokescreen to buy time." The real game will be lawsuits, he says.

. . . "We're very familiar with their business model," adds HP's Robison, explaining that Intellectual Ventures approached HP as a potential investor. Robison says he can't say any more than that because he's bound by a nondisclosure agreement. But why, he suggests, would Myhrvold collect all those patents if he weren't planning to start suing eventually?

From HP's perspective, trolls have an unfair advantage. They could shut down a manufacturer. But trolls are immune to countersuits, because they make nothing themselves.

From the July 10, 2006 issue of Fortune.