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Software patents stay banned in Europe – for now

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The campaign to stop the European Patent Office trying to legalise software patents has scored its first major victory. After some effective lobbying in several countries and despite Switzerland, Austria and Liechtenstein deciding not to vote, all the other countries voted to keep Article 52C (which bans software patents) in the European Patent Convention. This now clears the way for the consultation called by the European Commission, which has a deadline of 15 December, and the UK Patent Office's own consultation.

The tide was turned by a groundswell largely co-ordinated through EuroLinux, although it would be wrong to assume that the issue is just of concern to open source proponents, as there are major implications for the ethical part of the software industry. Oracle opposes the patentability of software and believes that existing copyright law and trade secret protection is adequate, while Adobe, Autodesk, Borland, Novell, Synopsis and Wind River Systems have also developed their businesses without resorting to building a portfolio of software patents. Content-king Bertelsmann regards them as "inhibiting innovation". Much of the initiative against software patents has come from France, with strong support from Germany. Monaco was evidently called to heel by France, and the Nordic Linux groups played a heroic role in gaining their governments' support. Little Liechtenstein realised that despite inducement, it could not win.

A uniquely Dutch situation arose in the Netherlands. Representatives of Dutch software interests lobbied Jan van Walsem, Rik Hindriks and Thijs Udo of the second chamber of the Dutch parliament, and it transpired that members had not been consulted about the Dutch vote in Munich. They agreed to ask Gerrit Ybema (state secretary, economic affairs) to attend a meeting with them before the critical vote, but he refused to do so, claiming that the diplomatic meeting was just deciding small technical matters. This rebuff to the open consultation that characterises the Dutch way of doing things was too much, so after some pressure there was a last minute change of heart and the minister agreed that the Dutch vote would be cast against software patents.

The patents lobby remains very strong, consisting of lawyers and translators who have a career and of course financial interest in increasing both the number of patents being issued and the associated litigation. Only the biggest IT companies like IBM, Cisco and Intel favour software patents, with IBM said to make around $1.5 billion/year from licensing them.

EPO v EU?
True to its reputation, the EPO has adopted a minimalist approach to providing useful and up-to-date information, and has been increasingly criticised for the secretive way in which it functions. In September, its administrative council changed its rules so that a 75 per cent majority of member countries was necessary to overturn any EPO decision. Modifying the patent convention to allow software patents was agreed by a narrow 10-9 vote - with France, Germany and the UK voting against the measure but having their votes negated by Liechtenstein, Malta and Cyprus.

The EPO has failed to develop a single European patent system, with the consequence that making an EPO patent application is very expensive because of the translation fees to obtain patents in a number of countries. European patents typically cost four or five times as much as a US patent. The time has certainly come for a reconsideration of the role of the EPO, since it has proved to be unsuccessful as a body that is completely independent of the European Union.

With the EU being anxious to enter the fray and produce a directive - although it seems at the moment to be biassed towards what it likes to call "computer-implemented inventions" - it would be a good time to consider whether it would be better to bring the EPO formally within the EU orbit. This has particular relevance so far as voting is concerned, since one of the difficult dog-ends not decided by the EU Amsterdam Treaty, and about to be considered by European leaders at the forthcoming Nice meeting, is how many votes the European countries will have when the next round of countries is admitted. Clearly the EPO is out-of-line with its one-vote, one-state system.

Another issue that need to be resolved is the problem of the EPO having illegally issued some 13,000 software patents. It would seem that the only way to deal with this would be for new law to bring the EPO into the EU and simultaneously correct this defiance of the European Patent Convention. This is not so fanciful, since the German federal secretary of justice, Herta-Däubler-Gmelin, indicated in Der Spiegel last month that if necessary the EPO could collapse and the EU could develop its own patents policy. There is also a strong case for removing the EPO Appeals Board from the same building in Munich to another country, in order to insert some independence into the appeal process.

The final major correction to the patents system would be for the EU to make it clear that software patents in other countries (USA and Japan) would not be recognised in Europe. With the EU-US trade war hotting up again as a result of the new US proposal for export subsidies being "even worse" than the previous Foreign Sales Corporation rebates, according to EU trade commissioner Pascal Lamy yesterday, the time has come for the EU fonctionnaires to act. If necessary, software patent policy differences between the US and Europe should be resolved by the WTO, since more than bilateral discussions are needed. For its part, the EU must consider the result of the consultation exercise seriously, and commission studies that balance the biassed study it received from the International Patent Institute.

Having a sounder patent environment without software patents would not only lead to more innovation, it would also be in the interest of European citizens for several reasons. James Bessen (Harvard) and Eric Maskin (MIT) have independently concluded that software patents inhibit innovation. Since most European revenue comes through smaller businesses, they should not be stifled by software patents. The software industry would be stronger if it were immune to threats from gangs of US patent lawyers trying to extract licensing fees for fundamental algorithms of software development that should not be patentable.

Yesterday's skirmish in Munich was a well-won battle, but much work remains to be done in convincing national governments and the EU that software patents are fundamentally wrong, anti-competitive, and only in the interest of those trying to establish toll roads along the previously-open highway. ®

Related Links

European Commission consultation
UK Patent Office consultation
UK Patent Office Newsgroup for discussion
Bessen & Maskin study on software patents
EuroLinux Alliance for a Free Information Infrastructure petition
FFII (Association for the promotion of a free informational infrastructure)

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