The cover letter, signed by Hylko Oosterloo, is written "by the US" and answered by the "IPR Officer" in the "Economic Section" of the "U.S. Mission to the European Union", 27 Bd du Regent, B-1000 Brussels, reachable by phone 0032-2-580-2788 and Fax 0032-2-502-8117. It says
We would welcome any comments you may have. Comments should be addressed to:
Mr. Kim Gagne, IPR Officer at the U.S. Mission to the EU, Economic Affairs Section, e hyphen mail colon GagneCR at state gov, fax: +32/2/514.33.15.
Mr. Oosterloo has the phone number +32-2-508-2788, fax +32-2-502-8117, e hyphen mail colon OosterlooHJ at state gov
It seems clear to us that Mr. Oosterloo and Mr. Gagne are transmitting papers which are not their own but written by top officials of the US Patent Office. The US Patent Office has an official action plan to promote unlimited patentability "in the interests of American intellectual property owners" world wide. The details of this action plan "remain confidential", but have become well known by many case examples over the years, of which this is one. As an agency of the Department of Commerce, the USPTO is able to use the apparatus of the US Government, including the State Department and the trade representatives, for promoting its agenda.
The document first sets the stage by defining two shorthands
... and then begins the story:
The "international obligations" are indeed at best "apparent", not real, as shown below.
This is correct. It has been pointed out by our analyses as well. Unfortunately the blurring of subject matter with non-obviousness is found not only in Art 4 but throughout the directive draft.
"The U.S." then procedes to cite a U.S. court decision and explain that the technicity requirement, if applied to the invention itself and not to the scope of forbidden objects as a whole, would in ultimate consequence lead to the abolition of the patent system. Therefore, for logical reasons, anything that runs on a computer must be considered a patentable invention and only the current U.S. criteria (novelty, non-obviousness) should be applied. This is indeed also what the CEC/JURI directive says, but its commitment to unlimited patentability is, from the point of view of the U.S. government, not clear and consistent enough.
"The US" is propagating conventional wisdom such as "the more patents the more property, the more property the more innovation", which is in sharp contrast to consensus of all serious scholars of software economics, as expressed in numerous studies conducted in the USA and in reports by the US Academy of Sciences. Moreover, "the US" has been ignoring the voice of its own software industry, which is, as shown by last year's FTC hearings, characterised by "continued animosity against software patents" and whose major players, including such companies as Adobe, Oracle and Autodesk, all opposed software patentability at the USPTO hearing of 1994. The same USPTO which is ghostwriting this paper in the name of "the US" today proceded to legalise program claims shortly after the 1994 hearing, thereby completely ignoring the voice of the US software industry.
In other words: "the US" appreciates that
"The US" argues that the reverse engineering privilege, although factually harmless, is a limitation on patent owners' rights, and that analogy to copyright is not a valid reason for such limitations, because the situation in the copyright context entirely different. We skip the discussion, because Art 6 is, as "the US" correctly points out, without any real impact, and because "the US"'s pattern of argumentation is the same as for Art 6a.
Proposed new Article 6(a) of the Resolution excepts from patent infringement the use of a patented technique "wherever the use of [that] patented technique is needed for the sole purpose of ensuring the conversion of the conventions used in two different computer systems or network [sic] so as to allow communication and exchange of data content between them[.]" The justification for this provision is that it ensures open networks and avoids abuse of dominant positions, consistent with the case law of the European Court of Justice.
This provision is much more problematic than Article 6 for several reasons. The scope of permissible activity is significantly broader than the specific acts permitted under the Software Copyright Directive referred to in Article 6. It would permit infringement of patented inventions with significant commercial value based solely on some undefined "need" to "exchange data". Virtually all computers exchange or are capable of exchanging data with other computers, and many require some "conversion of conventions" for communication. Thus, many data exchange methods would appear to fall under this exception. The justification given for Article 6(a)in the Resolution indicates that it is intended as a remedy for anticompetitive activity. Article 6(a), however, permits infringement even in the absence of the determination of anti-competitive activity.
"The US" is playing with a double meaning of the word "anti-competitive": anti-competitive effects as a daily reality, as observed by economists, and anti-competitive behavior as an offence of competition rules which already exist and function as a part of a particular legal system. Like other patent experts, "the US" firmly believes that patentee's rights should never be limited by competition considerations in any systematic way, especially not by new competition rules. Only case-by-case limitations based on tedious anti-trust procedings, using old and inoperational competition rules, should be allowed as a remote theoretical possibility, which may lead to a compulsory license once every few decades.
Software companies of all sizes regularly strive to control data exchange standards in order to deny competitors access to the market. Such behavior is always anti-competitive. It is however difficult if not entirely pointless to "determine" this by means of a procedure of competition law (anti-trust law) on a case-by-case basis. The US DOJ v. Microsoft case shows how insecure and inefficient competition law is in this area.
Therefore competition considerations need to be built into a patent directive which deals with software-related problems.
Article 6(a) never results in the grant of compulsory licenses. It simply says that conversion between data formats is not an infringment. No special procedure for obtaining a license is required. Therefore TRIPs 31 does not even apply.
As said, TRIPs 31 does not apply here. And, since data conversion is not an infringement, there is no "unauthorised entity". Morover, the freedom of data conversion does not only apply when some "entity" "feels a need" but for any data conversion, no matter whether needed or not. "The US" has been misreading the article. It does not talk about a perceived "need for data conversion" but an (objectively existing) "need for using a patented technique". "The US" is engaging in empty rhetoric.
Antitrust laws in the US have not prevented the abuse of patent-based market power so far. As was found at the FTC hearings, there is a regular pattern of anti-competitive patent practise especially in the area of software. Many standards have died or become off-limits for free software due to patents, and anti-trust laws were of no help.
One of the main motivations of the FTC/DOJ exercise was that antitrust is itself too blunt and unwieldy a tool-- which is why the hearings looked more broadly at the patent system.
Currently in the US, in absence of a clear rule such as Art 6a would provide, it would seem very difficult for any patent owner to become liable for anti-competitive practises. No such cases seem to have become known so far.
What provides better legal security, Art 6a or a word like "improperly"?
Thus ends the position statement of "the US".
The firm conviction of "the US" that patent enforcement should never be limited by competition considerations in any systematic way is shared by the European Commission's patent lawyers. Recital 8 of the CEC/BSA Directive Proposal says:
Here too "patent rights" are a priori beneficial, and any contrary evidence confined to "improper use", which is to be adressed either by moral exhortations ("should not be used ...") or by competition law -- certainly not by any new rule to be created within this directive.
This is not the only part of the directive and its explanatory memorandum where it becomes apparent that the European Commission's industrial property unit, the BSA and the patent establishments of UK and US belong to a common transatlantic network of patent legislators.