Software Patents Vs. Competition

On the 17th and 18th of this month, the European Council of Ministers,
consisting of one representative from each member state, will vote on a
directive which will alter the European Patent Convention (EPC).  Although the
stated purpose of the directive is to "harmonise and unify" patent standards
among the EU states, there is much controversy over the implementation.
According to the EPC, "programs for computers" (as well as math, games, and
music) are excluded from the patent system, but the proposed directive would
render that exclusion meaningless.

Last September, this directive went before the European Parliament, the 626
member democratic body of the EU legislative process.  The Parliament voted
for the directive to be adopted, but with amendments which reinforce rather
than remove the software exclusion clause.  However, on May 6th, the Council
of Ministers reached a provisional agreement to discard the parliaments
amendments.  So what?

"Ownership rights", for better or for worse, already exist for software in the
form of copyright.  Copyright law works well with software because it costs
nothing to copyright your work, there's no waiting period, and there's no gate
keeper too decide whether you get the copyrights or not.  Copyright law places
no restrictions on software development, so and everyone is free to develop
software - but if software ideas become patentable this will all change.

Because patents cover ideas, if you take a laptop into a cave and write a new
piece of software, you could find yourself being sued for patent infringement
when you come out.  Independent invention is still infringement.  Others
wishing to use a patented idea must ask for a license, and the patent holder
can name his price or refuse.  It's an imperfect system, but it works pretty
well for industrial engineering.

In most engineering fields, "parts" can be manufactured and sold, isolated
innovations can be useful, but not so in software.  A new software "part",
such as an innovative grammar checker is of no use unless it's part of a word
processor, a new word processor is of no use unless it can perform the
functions that people are used to.  If someone decided to develop a word
processor using only new ideas, the result wouldn't be what people call a word
processor.  In particular, it must be able to read and write common word
processor files.  So software evolves incrementally, with innovation being
built on top of many older ideas.

Figuring out a how to read and write files used by competing products is hard
work, so hard that it causes anti-competitive problems in the software
industry, but if software techniques become patentable, data compatibility
could be made illegal.  If the market leader used a file format which required
a patented software technique, competors would need the market leaders
permission to create a useful competing product, and they'd have to pay the
market leader for that permission.

Software patents have existed in the USA since 1986.  Today there are over
100,000 patented software ideas in the US, so that's 100,000 ideas that
European companies would have to pay to use if we introduce software to our
patent system.  Large American software companies encountered the problem a
few years ago that they couldn't develop complex software without infringing
each others patents.  Their solution was to form cross-licensing agreements,
like patent peace treaties, among the big patent holders.  Of course, small
and medium sized companies don't have large enough patent portfolios to buy
into these treaties, and Europe doesn't have many big software companies of
our own.  A second wave of software patent problems hitting the US at the
moment comes from "Intellectual Property" law firms, buying software patents
and suing software developers.  This form of parasitic business is flourishing
in the US, and the courts are powerless to stop it.  Meanwhile Europe is
thinking of copying their system.  Even a damning report about software
patents published by the US Federal Trade Commission hasn't stifled our
interest in software patents.[0]

Very few individuals or small and medium sized businesses have the time or
resources to divert to political issues like this one, but they'll know all
about it if the right to write software is put up for sale in chunks on the
patent market.  European organisations such the Foundation for a Free
Information Infrastructure (FFII), and Free Software Foundation Europe (FSFE),
as well as national groups such as Irish Free Software organisation (IFSO)
worked hard to educate the MEPs on this technical subject.  IFSO was
particularly proud last September that all of the Irish MEPs voted to exclude
software from patentability, but we'll have to see what the Council of
Ministers do next.

[0] http://www.ftc.gov/os/2003/10/innovationrpt.pdf