Thus far, the EU Council has taken a rose-tinted view of patent practice in the US. It is attempting to push Europe in the same direction, serving the interest of some large multi-nationals but at the expense of what is beneficial for European society. The US model of software patents, driven as it is by opportunism, represents a serious threat to innovation. There are no economic advantages to be gained through software patents, only a greater power vested in companies that can afford to battle daily in courts, supported by teams of patent lawyers.
The case for patents is to provide an inventor a time-limited monopoly so that others can benefit from the invention and the inventor can earn a just reward for their effort. This works well in niche or vertical industries. Developing a new drug, for example, requires millions spent on R&D, to discover new molecular structures, and the running of clinical trials. A patent can protect a new drug discovery from theft of the chemical structure, and protect the millions spent to produce the discovery. Or in microchip fabrication, a new plant can cost billions of pounds, and plant owners will want to protect that level of investment. Patents protecting novel technologies and hardware used in these plants are traded between the small pool of players in this market. The result is progress, as described by Moore’s Law of the doubling of microprocessor power.
However with software ideas, what may appear to be a complex ‘innovation’ to a patent examiner, may be just the analogous equivalence of, say, walking. Imagine if the web page hyperlink was protected by patent – would the Internet have evolved so rapidly if there was a cost barrier to people putting up linked pages.
Software is currently protected by copyright law. This protects the instance of the ideas used in the software application, but not the abstract ideas therein. Another software developer can create a new piece of code that implements the same idea without transgressing the first writer’s legal rights. Any software writer can produce copyrighted work, they just state ‘Copyright’, followed by the date and their name: the cost is zero and protection is automatic.
The US presents a showcase of what may happen in Europe
In the US, software patents have been granted since the early 1980s, with full acceptance in 1996, following the US Patent and Trademark Office’s Final Computer Related Examinations Guidelines. Companies have since sprung up known as ‘patent trolls’, whose sole mission is to carry patent portfolios. They acquire patents rather than invent them, and rather than implement or manufacture the intellectual property, merely seek to earn revenue on license fees by approaching small infringers and threatening to sue them.
The problem is that inappropriate patents are increasingly being granted, fuelling the abuse. In the period 1985-1998 roughly 40% of patents failed to stand up in US courts (the trend is towards 50%). This period has also witnessed a surge in the number of US patents being awarded. For a century and a half since patents were first granted the annual number of US patent applications steadily rose to 100,000. However in the past decade alone the annual number has reached over 300,000. The annual number of patent suits in the US has also correspondingly increased exponentially.
The cost of litigation is a serious hindrance to innovation
Software developers do not want to spend their time in court, they much prefer to code, and in the case of small to medium-sized enterprises (SMEs), they simply cannot afford the time and expense. The reverse is the case with large enterprises; they employ banks of lawyers who justify their existence by spending time in court. Unsurprisingly, the biggest drivers behind patent legislation are these very lawyers.
A recent hearing of the US Senate Judiciary Committee’s Intellectual Property subcommittee addressed the problem of the patent trolls and the menace they cause legitimate businesses through court injunctions that force these businesses to stop operating. As any given software program may make use of tens or even hundreds of ideas, the scope for wasteful litigation is enormous. Intel’s patent attorney estimates that $500 million is wasted annually on patent litigation costs in the US.
Similar concerns are being voiced in Australia, where trivial and invalid software patents are being granted and high costs are incurred in protecting patents. The pressure was too much for Japan and Australia who buckled under and passed software patent legislation. Is Europe next in line?
The fate for Europe’s SMEs does not look very bright at the moment. Under the existing European patent legislation 30,000 software patents have been granted, mostly to large multinationals, contrary to the spirit of the existing legislation. The reason for this is the expectation by European patent offices that the CII directive will be passed, so they have been lax in anticipation of events. These patents are currently unenforceable, but will create a ‘double-whammy’ for Europe’s SMEs if the legislation is passed: they will be hit by a deluge of 30,000 patents.
Having the protection of a patent requires a process of application, prior art search, review, and award, all of which costs time and money – tens of thousands of pounds for worldwide protection – a disincentive and barrier for SMEs and a risk that someone else will patent their idea if they do not.
Passing the CII directive will have widespread consequences. The issue at heart is quite simple: in Europe, software is protected by copyright, and this has served the industry perfectly well. By necessity patents will require entanglement with patent offices and courts, and in the US these parties have not proven technically competent or sufficiently motivated to make the right decisions regarding software – why should Europe be held hostage to a totally unnecessary bureaucratic process, with no clear benefit to society proven by the patent advocates?
These patent advocates like to showcase software innovation by large and small companies that could be protected by patents as positive evidence for their case, totally missing the point that the selfish interest of a small minority should not govern the mutual beneficial effects currently enjoyed by the majority, where software ideas evolve rapidly and serially, allowing better software to be built, and benefiting society in the process. We must do our utmost to preserve software copyright in Europe.
Source: Butler Group (www.butlergroup.com)
