Software Patents in Europe[Introduction | Background | Status | Further Reading ]
Firefighting with petrol
November 1st, 2004
Dear Mr Barroso,
The preceding European Commission (EC) was campaigning actively for the introduction of software patents in Europe. This campaign was against the information and evidence showing that this would lead to considerable risk to the European economies: On top of the studies already known, recent publications by Pricewaterhouse Coopers (PwC) and Deutsche Bank Research further underlines the damaging consequences of software patents on Europe. As The Register quotes PwC: "The mild regime [...] in the past has led to a very innovative and competitive software industry with low entry barriers. A software patent, which serves to protect inventions of a non-technical nature, could kill the high innovation rate."
The reality that software patents are becoming an innovation restriction may be one reason why all the parties in the German parliament objected to their introduction. This is the first time (which we are aware of) that all parties have objected in this way. Furthermore acknowledging the damaging effect of software patents, the latest idea of the parting European Commission is compulsory insurance to limit the damage. This insurance would apply to both defendants and patentees. When looking for examples of software patent litigation that this insurance should protect against, one does not have to look far: Eolas Technologies sued Microsoft because of the infringement of a software patent in 1999. Meanwhile - five years and remarkable legal expenses later - the US Patent and Trademark Office (PTO) has declared the patent invalid. There is no expert certain the patent would be upheld. Nevertheless Eolas declared they would keep fighting, there is no way to predict when this litigation will end. Eolas is continuing along this road without insurance against losing the lawsuit.
In this sense, the planned compulsory insurance is like firefighting with petrol: We already have 30,000 software patents in Europe. Many compulsory insured patentees will consider the insurance as an investment they need a return on. Returns from software patents are reaped in lawsuits filed. The result: Rapidly exploding insurance premiums, insurance companies limiting their risk to what they can calculate, and in the end patentees and defendants will find themselves in a situation similar to one without compulsory insurance, but with one important difference: They will have spent an insane amount of money on a useless insurance and bureaucracy for its administration will have skyrocketed. With these developments, working on reducing bureaucracy in the European Commission will become a futile endeavour, but more importantly, innovations in the information society will be eliminated and Europe will not become a competitive knowlege based economy by 2010.
We therefore ask you to please spare the European economy both the introduction of software patents (one of the most efficient road blocks to innovation and economic growth in the information society) and the madness of insurance against this needlessly created risk.
With kind regards,