Euro patent rebels attack innovation tax

Increased litigation and licensing costs could drive European open-source software developers and small IT companies out of...

Increased litigation and licensing costs could drive European open-source software developers and small IT companies out of business if the EU approves software patenting laws.

"We are very afraid of litigation costs," said Jean-Paul Smets-Solanes of software development company Nexedi Sarl at a conference in Brussels organised by, among others, the Foundation for a Free Information Infrastructure and Green Party Euro MPs.

A directive could force innovative companies out of business by forcing them to pay licence fees to avoid infringing patent rights. Smets-Solanes said big IT companies could buy IT patents and use them to threaten legal action and block the sale of new products.

"If we are trying to push our products, there are 10,000 patents out there which any large company can buy and then say to us, 'Give us your patent. We don't want you to sell your new product because we want to include it on our server,'" he said.

Open-source software pioneer Bruce Perens predicted even grimmer times for small companies.

"An increased regime of patent protection spells doom for small and medium-sized enterprises engaged in software development in Europe," he said.

Perens warned that tough patent protection would discriminate against smaller companies in favour of larger ones, because big companies would be able to acquire large holdings of patents and charge other developers for using them, or swap them in "portfolio bargaining".

"Larger companies can ignore each other's patents and engage profitably in software development for which smaller companies have to pay licensing fees," he warned.

Looking further ahead, Perens predicted that instigation of a tougher patent protection regime in Europe would spark a wave of litigation worldwide.

"Large patent holders have held off in enforcement until they have patent protection in all major jurisdictions," he said. The law would be the catalyst for a "tremendous shakeout in the software industry". 

Jim Bessen, director of innovation research at Boston University School of Law, said that strict patent protection regimes did not boost innovation. Instead companies acquired patent portfolios to "block competitors and have a bargaining chip" that let them "impose an innovation tax" on rivals.

According to Florian Müller, director of the Nosoftwarepatents campaign, whose funders include Red Hat, there is only a "razor thin majority" in favour of the new patent directive agreed by the Council of Ministers in May. Müller said he hoped the directive would be challenged before it was formally adopted, especially by the countries that joined the EU in May.  

Many speakers at the conference also stressed the need for legislation to protect interoperability, especially by continuing to allow reverse engineering. Unless the directive includes a provision on interoperability "all is lost," said Simon Phipps, Sun Microsystems' chief technology evangelist.

The European Parliament will give its views on the Council position early next year. It cannot start work on the file until it receives translations of the text in the EU's 20 official languages. Under the EU's codecision procedure, the Council and Parliament must compromise over the text's final wording.

Simon Taylor writes for IDG News Service

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