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Software Patents in Europe

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Allianz Group will suffer because of software patents

October 4th, 2004

Dear Mr. Diekmann,

Have you ever considered offering general insurance for stock brokers against the risk of losing money? As absurd as this sounds, the European Commission is seriously considering equivalent measures at the moment.

The European Council and the European Commission seek to introduce software patents in Europe. This is not only threatening any company doing business in Europe, a number of international scientists also see it as a grave risk to European economies. Adding to the studies already known, recent publications by Pricewaterhouse Coopers (PwC) and Deutsche Bank Research further underline the damaging effect of software patents. 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 of software patents is well-known for its purely speculative character. Although generally endorsed by noble goals such as promoting innovation, studies from the Massachusetts Institute of Technology (MIT) or the German monopoly commission show that software patents are harmful to innovation.

Software patent applications could be considered like the chips that are bet on a roulette table that -- if successful -- will win you the jackpot in form of a multi-billion Euro litigation. Any large corporation making use of software could find itself on the receiving end of such a bet. The more money at play and the more software used, the higher the chance of being targeted. Valuable companies such as Allianz group -- which are in the main dependent on software revenues are especially at risk of being adversely affected by the legalisation of software patents in the EU.

While I believe the plans of the European Commission should already have you quite worried, the current plans are going to affect you in another aspect, as well.

Having to acknowledge the harmful and potentially devastating effect of software patents on European companies and national economies, the European Commission recently introduced the idea of another directive aimed at creating a compulsory insurance against software patents for all European enterprises. This insurance should obviously be cheap enough so that it does not immediately kill the European economy altogether.

You, as CEO of Allianz Group will have to insure your enterprise, because you are at risk of being the target of a multi-billion Euro software patent litigation. This is essentially the same as asking for cheap compulsory insurance of all stock brokers against losing money -- and we are certain that you see the flaw in that logic.

We would appreciate the opportunity to discuss this problem with you further, but now time is of the essence. The European Council is planning to decide in November and the European Parliament will then have to make a final decision early next year.

With kind regards,

Georg Greve
Free Software Foundation Europe (FSFE)