This is a very interesting proposal by Larry Rosen and Fred Popowich as explained in an interview on linux.com.
The consequences are interesting, particularly regarding dual licensing. One of the issues (whether it is a problem or a benefit depends on your point of view) regarding dual licensing is that the original licensor cannot embrace code from an external contributor, even if that code is available under the original license, and distribute it both under the original license and under the other, presumably proprietary, license. This is due to the original work of that external contributor being also covered by copyright, unless that contributor voluntarily and explicitly grants the right to re-license the contribution. This does not happen with patents, since the external contribution does not necessarily include any patented aspects.
As Larry Rosen puts it: “Free for Open Source, everyone else pays”. Who would they pay? Only those who own the patents necessary to use the software.
If, and only if, the granting of a patent implies a real technological achievement, this actually makes sense. Those who contribute something fundamental and far from trivial may gain interesting profits.
However, let us look at the other side of the coin: the potential contributors to the open source project. They will have less incentives to involve themselves in improving an existing software if they do not get the same ability to decide what can be done to the resulting copyrighted work. This is not a problem as long as the overall incentives are enough for them to participate. The question is: is it? In what circumstances will it be enough, when would it not be?
On the other hand, patents are far more limited in time compared to copyrights, which could be a (wrong but useful) way to correct the far exceeding time frames in force for copyright. Any licensing scheme based exclusively on patents would be quite interesting in this regard.
But from a user’s perspective, it is quite unclear which patents are needed to use a certain software, creating some sort of uncertainty. With copyright, you know exactly and can be certain which code is included. No one can assert claims later on because you needed some code to get it to work: you would know because the software would not be working.
While any person or company may state claims on which patents they consider necessary to license a certain software, new claims may arrive later on, on behalf of any party, which might or might not have licensed the software to third parties. Some questions seem necessary to be asked: Is it necessary to get a copy of the software from every licensor who offers the software, just to be sure I have permission from everyone’s potential patents? In any case, this would not impede any third party from making claims on the software for patents not previously mentioned nor licensed under the open source license.
Whatever the case, for this scheme to work it is necessary to first making sure that the initial assumptions are met: patents should only be granted to specific, non trivial (or rather only to really amazing) advances in technologies. This is currently not true, and even if all participants agree on their own to follow the best intentioned guidelines, any third party with a broad, trivial or otherwise dumb patent could make claims that would hurt this line of development.
However, the actual license that implements the ideas of Larry Rosen, the Open Software License (OSLv3), actually imposes the same principle of retribution (copyleft) on the copyrighted source code. Thus, the original author may not take a modified version and distribute it under a proprietary license. What the original author may do is to distribute the modified version under the same license, say OSLv3, and additionally provide permission to use the patents under a different license. This would allow a third party, who receives the copyright permissions from the OSLv3 and additional patent rights, to create a proprietary version of the software, but not to distribute it. I would find it far more interesting to use the patent licensing instead of the copyright licensing, and not in addition as is done in the OSLv3. And I repeat, all of this provided that we first fix the patenting system and after such a fix software patents do make sense, which is far from clear right now.