The European Council has approved a controversial draft directive which will open the way for the patenting of software in Europe if 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 lock out smaller companies.
Council members 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.
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 modify the original proposal heavily 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.
The directive's stated purpose is to harmonise patent regulations for computer-related inventions across the EU, while steering the EU away from a US-style patent free-for-all, but critics within the European Parliament said the commission and the council seem to be ignoring those aims in favour 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.
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, although 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 do no'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 galvanised the community of software developers against the parliament's earlier version of the directive, and is now planning protests in Barcelona on 29 May. 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 EU 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."
In countries such as the US, which have permissive patent laws, large businesses stockpile patents largely 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 do not have large patent holdings or cannot afford to engage in litigation with bigger competitors. It is also a drain on bigger companies.
In a 2002 statement to a US Federal Trade Commission hearing on patent reform, Robert Barr, head of Cisco Systems' patent department, said: "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, experts claimed.
Last November, for example, the chief executive officers of Alcatel, Ericsson, Nokia and Siemens 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 €15bn a 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."
Matthew Broersma writes for Techworld.com
This was first published in May 2004