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Software Patents in Europe

[Introduction | Background | Status | Further Reading]

What are patents?

The idea of patents goes back to the medieval monarchs who conferred rights and privileges in the form of open letters (latin "litterae patentes") bearing their royal seal. Such patents on procedures to make glass, for instance, were commonly granted on the basis that this skill be taught to others.

Later, democratic governments took the place of monarchs, but the basic idea remained the same: a limited monopoly was granted for a certain invention or process in exchanged for making that invention or process public. That way others could learn from it and further develop new inventions and processes.

The underlying principle of patents and their justification is that they are monopolies which are granted by society for the sake of benefitting society.

What are software patents?

Software itself is implemented logic. Consequently, software patents are monopolies granted on implemented logic. It is important to understand that such monopolies are not on the implementation itself, which is covered by Copyright, but on the underlying logic of the implementation.

Therefore, a software patent manifests a monopoly on specific calculation methods, which makes mathematical laws, logical rules and business processes property of companies, effectively disappropriating society of its grown knowledge.

The effects of this can be dramatic. Not only does every program literally embed thousands of ideas that could be subject to software patents: While patents in other fields normally don't reach far outside the field they were granted in, software patents affect all areas and applications of software equally.

Since software itself is increasingly becoming a determining factor, software patents have an incredible reach and more or less cover all areas of economy and society.

Software patents are affecting the electricity industry as much as they affect insurance companies. They harm IT companies like IBM and research institutes like Fraunhofer. They are even bad for health.

For good reason did the European Patent Convention (published 1973) explicitly state that the field of programs for computers, i.e. software, is excluded from patentability.

Software patents are harmful to innovation, economy and society, so they lack justification.

Why would anyone want them?

Software patents were seen as a convenient tool by large companies in the United States to defend themselves against competition:

"If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete stand-still today. [...] A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high: Established companies have an interest in excluding future competitors."

William H. Gates
Internal Microsoft Memo (1991)
[Fred Warshofsky, The Patent Wars (1994)]

It should be understood that while the price of software patents is paid by all companies, big and small, the big ones can afford paying the price a little longer as they have deeper pockets. Also, they believe that it is worth the price to rid themselves of competition.

Paying the price for the system, companies obviously want their return on investment, which is why the Business Software Alliance (BSA), a lobbying organisation for huge U.S. companies, has been pushing strongly for the adoption of software patents in Europe, without European involvement.

Europe as a region is still gaining on the U.S. in terms of IT industry as it is free from the burden of software patents that the United States imposed on themselves.

The small and medium software companies have made Europe a central player in innovation, while in the U.S., innovative software development is limited to a few monopolists.

The European Patent Office (EPO)

Another group that benefits from software patents are patent lawyers, because patent lawyers are needed to apply for a patent, to grant a patent and to contest a patent in court. From their perspective, software patents offer an area of almost unlimited patentability without the need for development or research.

Of course, patent lawyers are also found in the European Patent Office (EPO), which has prepared the ground for the introduction of software patents by granting roughly 30,000 software patents -- acting clearly outside its mandate and disregarding the European Patent Convention from 1973.

Since patent lawyers are also found in many ministries across Europe and not wanting to step on the toes of the EPO, several European politicians are now trying to legitimize these patents by declaring these to be "computer implemented inventions."

That is why the directive in question is called the directive on "patentability of computer implemented inventions."

The Unitary Patent System in Europe

An upcoming development is the introduction of a Unitary Patent System in Europe, that is currently expected to come into effect in the second half of 2022. This system would implement Unitary patents and European patents with unitary effect by way of a single application to the European Patent Office (EPO), under the rules of a European Patent Convention. This system also creates a Unified Patent Court, which means that it would be possible to get uniform and harmonized patent protection in up to 25 EU Member States. This unitary effect also means that revocation of the patent, as well as any disputes on patent infringement would be decided for the unitary patent as a whole at once across all 25 EU Member States, rather than for each country individually.

The European Commission has argued that companies that rely on patents for protecting their innovations in their daily business would only benefit from this streamlined system. The argument they've put forth for this is that the Unified Patent Court system has the potential to be cost-effective and have an overall shorter process for companies litigating patent infringements. Nevertheless, there are concerns surrounding the complexity created by co-existing national patents that entail the non-EU Member States, the United Kingdom, as well as EU Member States who have not acceded to this system (such as Spain, Croatia, and Poland). These complexities include (among other things) potentially more translation requirements and separate fees to be paid at national patent offices.

Additionally, a major drawback is that the Unified Patent System does not include a provision for the issuance of a compulsory license of a patent. Compulsory licenses are often required and granted on the grounds of public interest, and without including such a provision, it is left open whether Member States can decide on whether they are able to issue compulsory licenses on unitary patents. Without the ability to do so, this has the potential to stifle third party access to knowledge, especially if software is patented under such a system.