The CEC/BSA proposal answers the question affirmatively in Art 3, but McCarthy demands that this passage should be removed, because it could lead to unpredictable results or to a widening of the scope of patentability.

On the other hand McCarthy introduces an amendment to the preamble reintroduces the criticised provision and declares it to be self-evident:

Thereby McCarthy reintroduces through the back door the very risks which she criticised before.

Indeed >75% of the software patents which the EPO has so far granted are in non-European hands. It is difficult to see why confirming the invalidity of these patents could put European software developpers at a disadvantage when they compete on the US battlefield. In order to battle in the US, European companies must obtain US patents, and they can do so independently of whether similar patents are available in Europe. On the other hand, as long as Europe outlaws software patents, US companies will not be able to use such patents in Europe. Among the big US software patent owners, who might like to extend their supremacy to Europe, are some global players of European origin, such as Siemens, Alcatel, Ericsson and Nokia. These US-centered global players, not European SMEs, appear to be the beneficiaries to whom McCarthy is asking us not to "do a disservice".

For her economic argumentation, McCarthy consistently takes a the perspective of US-centered global players:

In other words:

1. Those who own patents are more productive than those who depend on the goodwill of their patent-owning competitors.
2. This amazing correlation has been corroborated by unspecified economic studies.

McCarthy does not ask whether software patents promote innovation in the industry as a whole.

This question has been answered sceptically or negatively by those economists who have endeavored to study it.

Bessen and Maskin from MIT even find a direct negative correlation between software patents and productivity:

some of the most innovative industries today -- software, computers and semiconductors -- have historically had weak patent protection and have experienced rapid imitation of their products. Far from unleashing a flurry of new innovative activity, these stronger property rights ushered in a period of stagnant, if not declining, R&D among those industries and firms that patented most.

Jim Warren, board member of Autodesk Inc, was one of a majority of representatives of large US software companies who testified against software patents in 1994:

There is absolutely no evidence, whatsoever -- not a single iota -- that software patents have promoted or will promote progress. ... The company for which I am speaking, Autodesk, holds some number of software patents ... However, all are defensive -- an infuriating waste of our technical talent and financial resources, made necessary only by the lawyer's invention of software patents.

Robert Barr, head of the IPR department of Cisco, a leading process innovator who produces as many software patents each year as Alcatel and Ericsson, responded to hearings of the US Federal Trade Commission in 2002:

My observation is that patents have not been a positive force in stimulating innovation at Cisco. Competition has been the motivator; bringing new products to market in a timely manner is critical. Everything we have done to create new products would have been done even if we could not obtain patents on the innovations and inventions contained in these products. I know this because no one has ever asked me "can we patent this?" before deciding whether to invest time and resources into product development. ... The time and money we spend on patent filings, prosecution, and maintenance, litigation and licensing could be better spent on product development and research leading to more innovation. But we are filing hundreds of patents each year for reasons unrelated to promoting or protecting innovation. ... Moreover, stockpiling patents does not really solve the problem of unintentional patent infringement through independent development. If we are accused of infringement by a patent holder who does not make and sell products, or who sells in much smaller volume than we do, our patents do not have sufficient value to the other party to deter a lawsuit or reduce the amount of money demanded by the other company. Thus, rather than rewarding innovation, the patent system penalizes innovative companies who successfully bring new products to the marketplace and it subsidizes or rewards those who fail to do so.

Barr is speaking from experience with traditional telecommunication companies who lost the router market to the fast-moving newcomer Cisco Inc and later tried to strike back with their huge patent portfolios.

A report by the European Commission on recent problems in the telecommunications industry strongly warns about the adverse effect of the "patent race" on this sector and explains that the patent race is a result of the extension of patentability to software. Even Ericsson and Alcatel themselves have complained that the burden of the patent game diverts ressources from the innovation process:

Ericsson has just settled a patent licence deal with Interdigital to pay 50.000.000 EUR until 2006 to avoid a threatened billion dollar patent lawsuit.

Note also that

• McCarthy uses the term "computer-implemented inventions" as a synonym for "software ideas": they are the fruit of "software-related R&D efforts". Although McCarthy says elsewhere that the term "computer-implemented inventions" refers to "such devices as mobile phones, intelligent household appliances, engine control devices, machine tools ...", when she actually uses the term she refers to pure software, i.e. calculation rules which become patentable "because computer-implemented inventions by their very nature belong to a field of technology".
• McCarthy implicitely requires that software companies should spend about 10% of their R&D budget on patenting. It will have to be more for SMEs, given that the cited Ericsson and Alcatel can profit from economy of scale. All telecom giants are active in the US and look at matters from a US patent owner's perspective. Most european software jobs are created by SMEs which are not active in the USA and which do not patent. McCarthy is in fact proposing to impose an extra tax-like burden of more than 10% on each software development job in Europe. This does not yet include the famous IBM tax or "Microsoft tax" and the various patent extortion and rent-seeking activities, as we currently observe them in the US.

Let us summarise McCarthy's reasoning:

1. At present, there is a trend in the traditional manufacturing industry to shift operations to low-cost economies outside the European Union.
2. This is easier to accomplish when traditional manufacturing processes are patentable. Proof:
   1. "Self-evident".
   2. A company will be more productive when it owns patents than when it is at the mercy of a patent-owning competitor. This amazing correlation has been corroborated by unspecified studies.
3. Needless to say: whatever applies to patents of traditional manufacturing industries also applies to software copyright and to software patents.

This "outsourcing needs patents" argumentation is frequently heard in the patent law community. It provokes a number of questions, such as:

1. Do patents really play a significant role in facilitating shifts of operations to "low-cost economies"?
   Far from being "self-evident", this assumption is at odds with evidence from various economic studies, see the list below. According to these studies, patents are only one of many means of harvesting returns from R&D activities and in particular they contribute "at best nothing" to fostering innovation in SMEs.
2. Is it an official policy of the EU to exclude developping countries outside Europe from using new ideas?
3. Is it an official policy of the EU to exclude developping countries outside Europe from using new ideas?
   It should be noted that countries like Poland and Portugal have a share of 0,00% of the 30000 software patents granted by the EPO so far.
4. Who fill really fall into the pit that we are told to dig?
   Currently not only manufacturing but also a lot of intellectual activity and R&D activity is shifted to countries outside the EU, some of which already own a lot more EPO software patents than Europe's "low-cost economy" regions. The european telecom giants which McCarthy places at the center of her considerations have many R&D labs in China. Some have been talking about transferring their headquarters to China. If company headquarters can move to low-cost economies, so can patent ownership, especially in the case of software. Unlike industrial labor, software development is an intellectual activity at the most abstract possible level. There is no "manual labor" or "routine coding" to outsource. Software development and software patents will tend to be in one hand. The only part of the software sector that is fairly immune to the outsourcing trend is that of services, often connected to free/open-source software. Under a system of European software patents however, even that part of the european software business risks to become subject to foreign appropriation.
5. Why is the pro patent camp trying to play with protectionist reflexes?
   Could it be that a true economic rationale for software patents simply cannot be built? That there is simply no citable study that could provide one?

McCarthy seems to offer only only one hint

The facts and arguments listed by the "Intellectual Property Institute" do not support such a conclusion. Rather, they could be correctly summarised as follows:

Individual (software) comanies can benefit from software patents. There is no evidence that this benefit for individual market participants corresponds to a benefit for the economy or society as a whole. Many economists have doubts about such a benefit. These doubts are supported by continuing and growing concern about software patents in the USA.

The IPI study does contain a statement which resembles that of McCarthy, see page 5 (pg 7 in the pdf file):

Let us first summarize:

• McCarthy quotes only the claimed advantage "1." of software patentability, whereas the IPI study itself lists one advantage ("1.") and three disadvantages ("2.1-2.3").
• The IPI study fails to cite any evidence in favor of the claimed advantage ("1") of software patentability, although it contains 10 pages of bibliography.
• It remains unclear in what way the claimed "growth of some SMEs into large companies" can, even if examples for it are found, be an argument for or against anything. Companies such as Philips, Ciba-Geigy, SAP and Microsoft grew big in patent-free environments. Companies grow and die, no matter what the conditions of the market game are.

On page 8 (pg 10 of the PDF file) the IPI study then writes

This is apparently a reference to page 32 (pg 34 of PDF file) of the study:

It should be noted that the economic literature does not show that the balance of effects lies within the positive, either for software or for technical inventions in the traditional sense. Leading economic studies suggest that the patent system as a whole is harmful. Canadian and Australian governmental reports of the 1970/80s have proposed to abolish the patent system or, as a compromise, to prevent its expansion into further fields such as software, where the balance was assumed to be particularly negative.

The author of the economic chapter of the study, Peter Holmes, explained at a conference in june 2002 in reply to irritated questions of fellow economists approximately as follows: "In that study I had to find some macro-economic arguments in favor of software patents. My two co-authors were patent lawyers. For them it was a matter of conviction. Without arguments in favor of software patents, there would have been no way to finish the study". The leading author was in fact Robert Hart, a deeply committed advocate of software patentability with a well-documented record of distorting facts to suit convictions. Hart was also closely connected to the British group at the European Commission's Industrial Property Unit (Indprop) that initiated the whole Software Patent Directive project. It was also this group that ordered this legal study from Hart and then, in view of rising demands to provide an economic rationale, dubbed it as an "ecnomic impact study". Yet, because it failed to provide the desired economic rationale for their directive project, the CEC patent law drafters kept the study unpublished for 6 months. Nevertheless, today the proponents of the CEC softpat directive draft frequently quote one sentence from this one "economic study", which is really a legal study. This is because the numerous real economic studies, provide even less material to support their pro-software-patent convictions.

Here is a list of a few pertinent monographies and expertises which have in common that they (1) judge the economic impact of patents rather unfavorably (2) are not mentioned in McCarthy's draft report:

• Technology policy in the telecommunication sector -- Market responses and economic impacts
• ESC 2002-09: Europe should reconfirm Non-Patentability of Software!
• The competitiveness of European enterprises in the face of globalisation -- Opinion of the Committee of Regions
• Monopoly Commission 2002-07-08 report warns against software patents and CEC directive proposal
• Intellectual Property Initiative 2000
• Sequential Innovation, Patents, and Imitation - MIT Department of Economics Working Paper by James Bessen and Eric Maskin 2000
• Paris 2002/06: Papers for "Frontiers of Ownership in the Digital Economy"
• Deepak Somaya & David J. Teece 2000-11-30: Combining Inventions in Multi-invention Products: Organizational Choices, Patents, and Public Policy
• Tang, Adams, Paré 2000: Patent Protection of Computer Programs
• Commissariat Général du Plan 2002/10/17: Rapport sur l'Économie du Logiciel
• US National Research Council 2000: The Digital Dilemma
• US National Academies: Intellectual Property Rights in a Knowledge-Based Economy
• Stimuler la concurrence et l'innovation dans la Société d'Information
• J.P. Smets 1999: Software Useright: Solving Inconsistencies of Software Patents
• Studie von Fraunhofer und MPI über die wirtschaftlichen Auswirkungen von Softwarepatenten
• Software Patentability with Compensatory Regulation: a Cost Evaluation
• FTC 2002: Hearings on Anti-Competitive Effects of Patents
• Waterson & Ireland: An Auction Model of Intellectual Property Protection: Patent vs Copyright
• Kortum & Lerner 1998: What is behind the recent surge in patenting
• Bronwyn H. Hall & Rose Marie Ham: The Patent Paradox Revisited
• Tamai 1998: Abstraction orientated property of software and its relation to patentability
• Cohen et al 2000: Appropriability Conditions and Why U.S. Manufacturing Firms Patent
• Antitrust Policy, Innovation Efficiencies, and the Suppression of Technology
• Robert M. Hunt: You can patent that?
• Mandeville et al 1982: Economic Effects of the Australian Patent System
• Fritz Machlup 1958: The economic foundations of patent law
• Softwarepatenter.dk: Economics Articles

According to the justification, the regulation about algorithms [ as such ] made in this recital should also apply to "programs for computers" [ as such ], i.e. algorithms applied to generic data processing equipment. Generic data processing equipment, also known as "Turing machine", "Von Neumann Machine" or "Universal Computer", is the realisation of an abstract model by which algorithms are expressed in their most general manner.

The "computer-implementation" of algorithms is trivial. If anything in computing could be sufficiently inventive in order to be considered eligible for patenting, it is the algorithm. Between an algorithm and its representation in terms of generic computing equipment, there is nothing to patent. Claiming an algorithm in the verbal clothing of generic computing equipment is equivalent to claiming the algorithm itself. The only way in which an algorithm can be excluded from patentability is by not allowing its execution on generic computing equipment to be claimed. Which is precisely what Art 52 EPC, as quoted here, does.

Unfortunately the proposed regulation does the opposite of Art 52 EPC: McCarthy says that algorithms are patentable. The only condition for patentability according to McCarthy is that the algorithm must be claimed by reference to something tangible, such as the universal computer on which all algorithms are normally modelled. This condition does not even exclude a single algorithm from patentability. It pretends to have a restricting intention but in fact stipulates a principle of unlimited patentability of algorithms.

Even at the EPO, it is always said that there must be a "technical solution to a technical problem". If applications fail on technicity, then they fail because there is no technical solution. A "technical problem" (e.g. task description referring to physical entities) is always easy to construct.

McCarthy is thus in fact stating that even untechnical solutions are patentable, thereby inserting another layer of safeguard to make sure that there can be no way to limit patentability.

McCarthy does this by transferring internal EPO examination methodologies (formalisms) into european law. Not methodologies but results should be of interest for the legislator. The EPO's examination methodologies have moreover been regularly criticised for their incomprehensibility from all sides. Advocates of software patentability have pointed out that, while the EPO's methods produce the desired result (i.e. grant software patents but leave a backdoor for arbitrarily refusing some of them in case of emergency), these methodologies are the cause of "unsurpassable dogmatic chaos", due especially to the EPO's method of mixing the technical invention test into the non-obviousness test. This is incompatible with Art 52 EPC, with the directive's aim of "clarification" and with the subsidiarity principle.

The problem of "copyright not protecting enough" has been hyped by patent lawyers. Copyright on textbooks is far less effective than software copyright, and yet nobody seems to be demanding that "underlying ideas" of book-writing must be patentable. Also, the "misgivings" are not about "software inventions which do not satisfy the traditional criteria" -- in fact no software innovation can satisfy the criterion of "technical invention" as laid out in Art 52 EPC -- but mainly about the daily experience that software patents, as granted by the patent offices, are broad and trivial, and that, once the claims are narrowed down to a reasonable scope, software patents are no longer anything more than a prohibitively expensive form of software copyright.

McCarthy is misrepresenting the criticism and creating an artificial "dilemma". Let us see how "reasonably and subtly" she "resolves" this "dilemma":

"What some consider to be" a violation (not "liberalisation") "of the criteria for patentability" is that patents have regularly been granted for "computer-implemented inventions" which are nothing but "programs for computers" presented in claim language, and whose "technical contribution" is only claimed, not actually "made".

The "complaints" about "insufficient contributions" to the "state of the art" are not directed to "patent applications" but to patents which the EPO has actually granted. The triviality (and breadth) of the claims is closely related to the lack of technical character (i.e. abstractness, lack of necessity to conduct experiments with forces of nature). Why McCarthy considers the technicity question a "sterile issue" remains unclear. McCarthy's proposed legislation is completely based on the "sterile issue" of technicity in a dozen flavors, such as "technical character", "technical contribution", "technical effect", "technical problem", "field of technology", ..., without a single definition.

This statement (and the following ones) fails to offer any hint as to how the Commission's (and the rapporteur's) proposal addresses the "complaints ... of some".

Does "sets out to avoid irreconcilable conflict with established practice of the EPO" mean that the practise of the EPO is not put in question? How can "major criticisms of most computer-implemented inventions" (i.e. criticism of the established practise of the European Patent Office?) be addressed if the practise of the EPO must stay untouched? By "subtle changes"? Which? By avoiding "sterile discussions of exceptions" and at the same time limiting the proposal to such discussions?

Excluding patents on "non-inventive business methods" is a tautology. Of course patents can't be granted for anything "non-inventive". And, needless to say, "non-inventive" business methods do not become patentable "simply because use of a computer is specified in the claims". In other words, McCarthy is proposing that [ inventive ] business methods, be they computerised or not, should be patentable.

More importantly, business methods only account for a small part of the "complaints .. of some". The larger and more essential part is about software. Both computer programs and business methods are, as such, however "inventive" they may seem, not inventions in the sense of Art 52 EPC. Both computer programs and business methods can however be part of the implementation of a technical invention. The disputed question is: what is this "technical invention" or "technical contribution"? Does the proposal explain it clearly? McCarthy's "rationale" section heading promises an explanation, but the body fails to deliver on the promise.

In her final observations, McCarthy hints why she does not want any clarification of the concept of "technical invention" in the proposed directive:

Who in the European Parliament understands terms such as "Rote Taube test"? Why does McCarthy not directly quote the CULT amendment proposals, which define the "technical invention" by reference to "forces of nature"? Why is McCarthy trying to hide this central question from the eyes of fellow MEPs?

The technical invention test is pervasive in the written law and caselaw of many countries througout the world, but certain german decisions such as "Rote Taube" (red dove, genetics case of 1968) and Dispositionsprogramm (disposition program, software case of 1976) are most often cited due to the depth of the generalisations made therein. The technical invention is accordingly defined as problem solution involving forces of nature or teaching of plan-conformant action using controllable forces of nature to achieve a causally overseeable result without mediation by human reason.

The framers of the European Patent Convention chose not to include a positive definition of "technical invention". They do not use the word "technical" at all. Instead they provide list of items which are not considered to be [ technical ] inventions. However some people, including our rapporteur, say that this has not been clear enough, which is why they want a clarifying directive.

The CULT proposal tries to fix the problem by proposing both a negative and a positive definition of technology:

Similar statements are found in the ITRE amendments.

By contrast, McCarthy's draft proposes neither a positive nor a negative definition.

One could summarise the three approaches to defining "technical invention" in the following table

Proposal	negative definition	positive definition
Rote Taube, Dispositionsprogramm	-	+
EPC	+	-
CULT/ITRE	+	+
CEC/BSA, McCarthy	-	-

McCarthy justifies the complete lack of definitions in her proposal as follows:

We do not understand

1. Which "specific interpretation" of the traditional invention test do CULT/ITRE "impose"?
2. Which "unspecific interpretation" of the test would McCarthy favor?
3. To which "inventions" is the traditional invention test "not relevant"? In which situations is it "not appropriate"?

McCarthy's remark makes sense if we decrypt it as follows:

McCarthy even proposes to deliberately make the term "invention" ambiguous:

Classical patent law textbooks such as Kraßer and Benkard use the term "invention" only in the sense of "patentable invention" = "technical invention". The CEC/BSA proposal has created confusion by implicitely assigning the word a double meaning. McCarthy wants to "clarify" that this confusion is not a bug but a feature. Far from keeping her promise of "further tightening up" the CEC/BSA proposal, McCarthy only further loosens a proposal that did not limit patentability in the first place.

The introduced ambiguity closely colludes with ongoing efforts of the US government and international patent lawyer lobbies at WIPO to ensure that Europe can not use the concept of "technical invention" as an independent filter on patentability under Art 27 TRIPs.

Why doesn't McCarthy say "mobile phone-related inventions, ..., machine tool-related inventions and computer program-related inventions"? Why not "mobile phones, ..., machine tools and computer programs"? Why this aymetry? Why this special care to veil the "computer-programs" in a term that implies their patentability, and to hide them behind an enumeration of items whose patentability is uncontested? Upon close reading of the whole text we find that "computer programs" are precisely what McCarthy means when she actually uses the term "computer-implemented inventions". Quite naturally so: the term "computer-implemented inventions" can be transformed to "problem solutions that are implemented by using a general-purpose computer", which again is the same as "programs for computers [ in the context of patent claims ]".

By lumping together the non-patentable "programs for computer" of Art 52 with various patentable items into one misleadingly named category, McCarthy is once again deliberately introducing ambiguity rather than "setting clear limits as to what is patentable". McCarthy seems to need such a tactic in order be able to argue that the EPO's current practise is perfectly legal and faithful to the original understanding of the EPC:

Indeeed, McCarthy's category of "computer-implemented inventions" contains many items that have been patentable since 1978 and before. Statistics about this category are therefore meaningless. As can bee seen from the FFII statistics, which are more pertinent to the subject under discussion than the EPO statistics quoted by McCarthy, the number of program-related patent applications was very low under the EPO's Exmination Guidelines of 1978 and suddenly soared in 1989, 3 years after a first set of revolutionary decisions of the EPO's Technical Boards of Appeal, taken on the basis of new softened Guidelines. However these patents were still hypothetical and prima facie not directed to computer programs^[1]. Another set of revolutionary EPO decisions in 1998, connected to the launching of the EU Software Patent Directive project, sent the software applications skyrocketing again in 2001.

Nobody contests that software patents are "at present applied for and granted in Europe". But caselaw is not law, and state powers may violate the law. This is why we have a separation of powers. We need a vigilant legislator to keep an eye on the administrative and judicative powers. 140,000 signatories of a petition share what McCarthy calls a "widespread misapprehension" and have asked the European Parliament to act as a vigilant legislator. The "widespread misapprehension" is also shared by famous law scholars and some national lawcourts. The german Federal Patent Court is regularly rejecting EPO patents on the grounds that they are directed to programs as such. The editor of the german patent lawyer association's journal, PA Reimar König, exclaimed in an article:

By its interpetation of the word "as such", the EPO is doing violence to the law.

In reality, the national and EPC rules are clear: they stipulate without ambiguity a principle of non-patentability of software. The game which is being played today consists in twisting these rules one way or another, e.g. by imagining to consider, as we have seen, the totality of software and hardware as a virtual machine which is potentially patentable (tomorrow ...). From that point on one can speak about software in patent language. The patents which may be obtained this way, by this channel or by another, however still do not have any value beyond what we lend to them -- but of course it is possible that they will finally acquire a value simply through an informal consensus to stop discussing the question. In fact, the efficiency of this twisting of rules of law is largely dependent on whether a consensus evolves to take for granted -- against the rules of written law -- that we will play this game or not. This question is no longer a legal question in the strict sense of the term.

When considering the law textbooks and examination guidelines of the 1970s and 80s, the matter becomes even clearer. The "game" with Art 52 EPC has been played for quite a while now, and a widespread "informal consensus to stop discussing the question" was about to be established by the Greenbook of 1998. But this consensus suddenly broke down when more people outside of the patent community started paying attention.

McCarthy argues the EPO's case as follows

The EPC says nothing about copyright nor does it give any justification for constructing an entity called "computer program as such" and assigning it the meaning "copyrightable aspects of a computer program", which is what McCarthy appears to be doing. Likewise one could try to claim that

Art 52 EPC excludes aesthetic creations "as such" from patentability. This applies only to individual musical pieces as copyrighted works, not to composition techniques (loudspeaker-implemented inventions).

You can get a patent for a new chemical reaction that is carried out under program control, but not for the program as such. The invention must consist in something beyond programming logic: a problem-solution involving forces of nature.

McCarthy goes on to belittle the effect of copyright:

Copyright includes the right to prohibit derivative works and crude imitation (plagiarism). Software copyright is usually rather difficult to circumvent. Competitors have to write and debug from scratch. The second author has to do approximately the same amount of work as the first author.

No sensible person, not even in the patent system, wants to "protect the ideas". Software Copyright clearly stipulates that "underlying ideas" should not be "protected". As far as software ideas can be framed as patent claims, they are algorithms. Algorithms cover a very broad range of creative uses and are, even in McCarthy's words, "inherently non-technical". If the legislator of 1973 had meant the innovative aspects of computer programs to be patentable, he would hardly have written into the law that "mathematical methods, ... , plans and rules for mental acitivity, games and programs for computers, presentation of information" etc are as such not patentable inventions.

McCarthy does not limit herself to justifying the EPO's action as "allowable under the current law". She goes one step further and suggests that they are "required by law":

Couldn't it also be "wrong to discriminate against drug developpers by refusing them the freedom of creative imitation which is available to inventors in other fields such as music, financial services and programming"?

The answer can only be obtained by a careful deliberation of the overall interests of economic policy. The patent system is not designed for creating opportunities of ownership for all ideas which can not otherwise be owned, but for stimulating knowledge production in one specific area of human endeavor, that of the "technical invention". As the German Federal Court of Justice writes in its Dispositionsprogramm Decision in 1976:

However in all cases the plan-conformant utilisation of controllable forces of nature has been named as an essential precondition for asserting the technical character of an invention. As shown above, the inclusion of human mental forces as such into the realm of the forces of nature, on whose utilisation in creating an innovation the technical character of that innovation is founded, would lead to the consequence that virtually all results of human mental activity, as far as they constitute an instruction for plan-conformant action and are causally overseeable, would have to be attributed a technical meaning. In doing so, we would however de facto give up the concept of the technical invention and extend the patent system to a vast field of achievements of the human mind whose essence and limits can neither be recognized nor overseen. ... Also from a purely factual point of view the concept of technical character seems to be the only usable criterion for delimiting inventions against other human intellectual achievements, for which patent protection is neither intended nor appropriate. If we gave up this delimitation, there would for example no longer be a secure possibility of distinguishing patentable achievements from achievements, for which the legislator has provided other means of protection, especially copyright protection. The system of German industrial property and copyright protection is however founded upon the basic assumption that for specific kinds of intellectual achievements different specially adapted protection regulations are in force, and that overlappings between these different protection rights need to be excluded as far as possible. The patent system is also not conceived as a reception basin, in which all otherwise not legally privileged intellectual achievements should find protection. It was on the contrary conceived as a special law for the protection of a delimited sphere of intellectual achievements, namely the technical ones, and it has always been understood and applied in this way. Any attempt to attain the protection of intellectual achievements by means of extending the limits of the technical invention -- and thereby in fact giving up this concept -- leads onto a forbidden path. We must therefore insist that a pure rule of organisation and calculation, whose sole relation to the realm of technology consists in its usability for the normal operation of a known computer, does not deserve patent protection. Whether it can be awarded protection under some other regime, e.g. copyright or competition law, is outside the scope of our discussion.

Art 52 EPC already excludes "business methods and the like" from patentability, and the EPO is already violating this exclusion. Interestingly, Arlene McCarthy too assumes that the EPO is likely to "drift" toward violation of Art 52 EPC and must be prevented from doing so by a directive. McCarthy proposes to "bind" the EPO by a directive which

1. advances all possible and impossible arguments to advocate software patentability
2. stipulates patentability of algorithms and -- literally or by inference -- business methods
3. refuses to define central concepts such as "technical" or "invention", either in a positive or negative way
4. treats the EPO as a legislative authority.

It is rather difficult to understand, why a rejection of the proposal would leave legislation in the hands of the European Patent Office. Why couldn't the European Commission come up with a new directive proposal and restart negotiations? McCarthy seems to be speaking from a position of insider knowledge here, and it is not the only part of her text which reveals a close affinity between McCarthy and the patent law drafters from the European Commission's Industrial Property Unit. McCarthy's text makes more sense if we read it as a threat uttered on behalf of the European Commission: Dear Parliamentarians, you are at present enjoying a unique opportunity to put your rubber stamp under the decisions of the European Patent Office. The EPO is a political ally with whom we must avoid irreconcilable conflicts. You are allowed to apply cosmetic amendments, but please do not overestimate your role. If you miss the opportunity, we will simply withdraw the directive project and you will have no part to play in the rule-setting about the limits of patentability in the foreseeable future.

This is indeed what leading CEC patent law drafters have been letting people understand in oral conversations at the European Parliament. The threat, as expressed by McCarthy, is however based on some false assumptions:

Community competence is already arising from the Community Patent, and even the European Commission is gradually becoming less dependent on alliances with the European Patent Office.

McCarthy seems to imply that, if only the EPO's practise of granting masses of trivial and broad patents is rubber-stamped by the European Parliament, the intransparency of the EPO's patentability rules will be remedied and software creators will be able to know clearly what they are allowed to do and what not. This strange assertion becomes understandable if we decode as follows:

This uncertainty is however, according to a report by the French State Planning Commission (Commissariat du Plan of 2002), currently the only reason why the software developpers and SMEs enjoy better patent protection (i.e. better protection from patent attacks) in Europe than in the US:

McCarthy predicts that this will change:

Indications are rare, because only a few national courts have dealt with the subject matter so far. Not all have followed the EPO. The 17th senate of the German Federal Patent Court has consistently applied Art 52 EPC, and the German Federal Court has also backed down from some earlier more adventurous decisions. The recent Error Search decision case brought both courts close together and led to the rejection of an EPO patent and the statement that

1. passing a resolution that explains Art 52 EPC and exhorts European patent courts to apply it correctly
2. rejecting the European Commission's directive proposal and specifying requirements which the next proposal should meet. If the European Commission means what is says about the "need of harmonisation and clarification", then it will not fail to meet these requirements.

This could perhaps be said of the CULT and ITRE version of Article 6, but not of McCarthy's version. If McCarthy's Article 6 has any effect at all, then that the rights of patent owners are not limited by interoperability considerations in any meaningful way.

The CULT and ITRE versions, too, are patchwork on a directive proposal which is structurally flawed. There is no reason to rush to accept such a patchwork.

Setting "clear limits as to what is patentable and what not" may require more ressources than have so far been allocated for this task.

Software developpers can afford some patience, because the current legal situation is protecting them and will continue to do so, especially if the European Parliament and others show a political will to reinforce this protection.