EC votes for software patents, re-opens can of worms

The European Council has approved a controversial draft directive which will open the way for the patenting of software in Europe if it is approved by the European Parliament this autumn.

The directive passed by a narrow margin, with 27 of the 37 votes needed to block the proposal being exercised. Critics say the draft of “Patentability of computer-implemented inventions”, known as the software patents directive, contains wording which would allow large companies to build up software patent arsenals, and so lock out smaller companies.

Software patents are already common in the U.S. and have recently been the source of several large-profile multi-million-dollar lawsuits.

In Tuesday’s vote, the Council — whose members are not MEPs but politicians from E.U. member states’ national governments — approved the draft with Belgium, Italy and Austria abstaining and Spain voting against. The vote was effectively decided by the support of Germany, which had earlier opposed the text, but was apparently persuaded by a minor compromise in the text’s wording, according to observers.

“The agreed text contains provisions, in accordance with the practice developed within the European Patent Organisation, for patentability of computer-implemented inventions stipulating, inter alia, that a computer program as such can not constitute a patentable invention,” the Council said in a statement.

The text approved by the Council is nearly identical to a version debated by the European Parliament last year, which provoked vehement opposition from economists, software developers, computer scientists, small and medium-sized businesses and some large companies such as Bull. Their arguments convinced MEPs to heavily modify the original proposal to ensure that computer programs could not be patented. These modifications proved so controversial with the European Commission that the directive was sent back for redrafting by an independent body consisting largely of member states’ civil servants, including officials from national patent offices.

The text produced at the end of this process however in effect removed the MEPs’ modifications, enraging those who had sought to place limits on the directive. “Their (the Commission and the Council) convoluted and misleading Patent Newspeak, negotiated in intransparent backroom dealings, is an insult to the European Parliament, the European Economic and Social Committee, the Committee of Regions and the innumerable experts and stakeholders who have engaged in serious investigations on this directive project with us,” said Danish MEP Pernille Frahm, in a statement.

The directive’s stated purpose is to harmonize patent regulations for computer-related inventions across the E.U., while steering the E.U. away from a U.S.-style patent free-for-all, but critics within the European Parliament said the Commission and the Council seem to be ignoring those aims in favor of the interests of large companies’ patent departments. “If (the Council) don’t get what they want, they simply bury the directive project and try to find other ways to get around the existing law, whose clarity is so painful to them,” stated Daniel Cohn-Bendit, chairman of the Greens/EFA Group.

What’s your definition of definition?

Opponents of the proposed directive argue that because critical terms are left undefined, the text does not make clear what may or may not be patented. Many companies are already taking out European patents for computer programs, though this is explicitly prohibited by the European Patent Convention of 1973; the vagueness of the directive would effectively make these software patents legitimate, critics argue.

One key term is “technical”. Inventions that make a technical contribution are patentable, and those that don’t are not. A revision of the Council’s text, proposed by Germany, would have added a more precise interpretation of “technical” as “the use of natural forces to control physical effects beyond the digital representation of information”, while making it clear that “the mere processing, handling, and presentation of information do not belong to a technical field”.

A compromise with the Council erased these amendments, adding only that the technical contribution made by an invention must be “new”, on top of the existing provision that it must not be “obvious”. This was enough to convince Germany to back the text.

“The text that has gone through the Council is in legal effect identical to what the Irish (holders of the Council presidency) were originally proposing, which had raised a storm of protest across Europe,” said James Heald, spokesman for the civil rights group Foundation for a Free Information Infrastructure (FFII). “The changes were cosmetic, but they were enough to fool ministers.”

The group successfully galvanized the community of software developers against the Parliament’s earlier version of the directive, and is now planning protests in Barcelona on May 29. The FFII is also sponsoring a free lecture by Free Software developer Richard Stallman on the dangers of software patents for Friday evening at the University College of London.

The directive can still be altered when it goes to the European Parliament for a second reading this autumn, but two factors could make changes more difficult than at the first reading last autumn, according to FFII. One is the presence of MEPs from new E.U. member states, whose stand on the issue remains unknown. The other is that any changes will require the approval of a more significant majority of MEPs. On a second reading, changes must be approved by an absolute majority of all MEPs, whether they are present or not; in practice this could require a two-to-one or three-to-one majority, Heald said.

Those wishing to make their interests known to MEPs will need to act now, with European Parliament elections coming in the middle of June, Heald said: “Election time is the one time MEPs do listen to voters.” Lobbying pressure

In countries such as the U.S., which have permissive patent laws, large businesses stockpile patents largely in order to protect themselves from litigation by other large companies with large patent portfolios; conflicts usually result in a cross-licensing agreement. This system works against companies that don’t have large patent holdings or can’t afford to engage in litigation with bigger competitors. It is also a drain on bigger companies.

In a 2002 statement to a U.S. Federal Trade Commission hearing on patent reform, Robert Barr, head of Cisco Systems Inc.’s patent department explained: “The only rational response to the large number of patents in our field is to contribute to it. The time and money we spend on patent filings, prosecution, and maintenance, litigation and licensing could be better spent on product development and research leading to more innovation.”

However, other big technology companies see patent stockpiling as a useful way of controlling the intellectual property environment they operate in, and it is these companies that are putting pressure on the Commission and the Council to implement software patents, say experts.

Last November, for example, the chief executive officers of Alcatel, Ericsson Inc., Nokia Corp. and Siemens AG signed a letter sent to the Commission and the Council issuing a warning of the dire consequences of allowing MEPs to carry out the will of voters. The companies said their research investments of 15 billion euros per year were placed at risk by the MEPs’ amendments to the software patents directive.

“The loss of effective patent protection would put our companies at a competitive disadvantage in the short term, and in the longer term reduce the incentive for further investment in R&D in Europe,” the letter said. “Overall there will be less software-related innovation in Europe.”

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