PbT Consultants 2001: Summary Report on EU Software Patentability Consultation

Final Report by PbT Consultants Under contract number PRS/2000/A0-7002/E/98 THE RESULTS OF THE EUROPEAN COMMISSION CONSULTATION EXERCISE ON THE PATENTABILITY OF COMPUTER IMPLEMENTED INVENTIONS PbT Consultants Ltd
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Fax +44 1949 851666 0. Executive Summary Introduction On 19 October 2000, the European Commission, DG Internal Market, launched a consultation on the subject, %(q:The Patentability of computer-implemented inventions). The aim of the consultation was to seek the views of interested parties, the public at large and Member States in order to help the European Commission formulate a policy that strikes the right balance between promoting innovation through the possibility of obtaining patents for computer implemented inventions and ensuring adequate competition in the market place. DG Internal Market produced and made available on its web site a consultation paper that invited comments by 15 December 2000 on the preferred scope and economic impact of harmonisation in the area of computer implemented inventions. The paper contained a number of proposed %(q:Key Elements) for a harmonised approach to the patentability of computer-implemented inventions in the European Community. The Response A total of 1447 responses were received, amounting to around 2500 pages of text. The largest single element in the response was a %(q:petition) organised by the Eurolinux Alliance who had requested responses to be sent to themselves for forwarding to the Commission. Almost 1200 such responses were forwarded along with the response from the Alliance itself. Eurolinux is an alliance of over 200 commercial software publishers and European non profit associations with the goal to promote and protect the use of Open Standards, Open Competition and Open Source Software such as Linux. Responses were received from individuals and organisations in all EU and EEA member states apart from Liechtenstein , various CEEC countries, the US, Australia and South Africa. The Scope of Harmonisation The consultation paper asked the following questions:

• Should harmonisation take place on the basis of the elements contained in this document? Or:
• Should a more restrictive approach be adopted? Or, conversely:
• Should more liberal conditions coming closer to the practice in the United States of America prevail in the future?
• Almost all of the responses fell into one of the following two distinct groups:

Restrictive Approach - Opposed to most software patents:

Members:

Students, academics, engineers, start-up companies

Concerns:

Threats to the open-source movement and SMEs, lack of patenting resource and expertise, fear of litigation, negative impact on standards for interoperability

Proposals:

Severely restrict the patentability of software

Limit infringement liability for "open-source" software

Reject all business method patents

Liberal Approach:

Apply traditional patentability criteria to computer-implemented inventions

Members:

Lawyers, established industry players, government agencies

Concerns:

Protection of development investment, equality with the US, opening up of global markets

Proposals:

Harmonise the application of European Patent Office practice

Apply patentability criteria to software that are slightly more liberal than those proposed in the Commission consultation paper

Take extreme care with patenting of business methods

It was clear that the group opposed to software patents (91%) numerically dominated the response. A large proportion of this group was explicitly from the "Open Source" movement including the Eurolinux "petition". 54% of responses that were sent directly to the Commission and were not from explicit "Open Source" respondents, supported software related patents. If account is taken of the economic muscle and number of organisations represented by responses from industry and other associations it can be argued that there is an "economic" majority in favour of patents on computer-implemented inventions.
On the other hand, those opposed to software patents would claim that due to the size and fragility of their organisations, they require support. They would also claim that it is only the "open-source" movement, e.g. Linux, that can effectively take on the "Micro$oft"s of this world. Ultimately, the weighting of the two points of view is a political matter. The Impact of Harmonisation The consultation paper asked for comments on the impact of the respondents' preferredscope of harmonisation under the following headings: Innovation in software and underlying knowledge and techniques. All but the most radical of respondents agreed that innovation was fostered by patents in other areas of technology. However, those opposed to software patents claimed that software technology was sufficiently different to justify a different approach. Both the nature of the technology itself, for example, the incremental nature of the development process and the existence of a supposedly unique business model, i.e. open-source, were cited as key differentiators of the technology. Impact on SMEs Opinions were divided on whether the impact of software related patents was negative or positive on SMEs. Little hard evidence was provided of business failures or patenting triumphs, apart from Stac v Microsoft where an SME successfully sued Microsoft for infringement of a software patent. The creation and dissemination of free/open source software The open source movement clearly believe that software patents are a threat. Most others claimed that patents would have a neutral impact on open-source software with disadvantages balancing benefits. A few claimed that patents could be used to the overall advantage of the open source movement. The position of the European software industry in global competition Supporters of patents claimed that a level playing field compared to the US and a clear commitment to TRIPS would improve the competitiveness of the European software industry. Opponents of software patents claimed that a patent free regime in Europe would maintain the claimed dominance of European open source software. General development of the information society Patent supporters compared the Industrial Revolution, fuelled by hardware patents, with an information revolution, fuelled by software patents. Opponents claimed that the openness encouraged by a lack of software patents improved interoperability and communication of all kinds. The Concerns of those worried by Software Patents The Eurolinux Alliance response proposes strict limitations on patents involving software. Inventions involving software should only be granted patents when the technical elements relate to hardware other than general purpose computers and their peripherals. A large volume of supporting evidence was supplied as appendices to the response but there was little analysis of this documentation in their submission. Some of the documentation was inconclusive and some findings have been challenged by supporters of software patents. Many of the individual responses in the Eurolinux "petition" had obviously been influenced by the contents of the e-mail from Eurolinux. Nevertheless, many individual responses give an insight onto the feelings of respondents. The responses also gave a useful characterization of the open-source constituency in terms of the backgrounds of the respondents. The topics raised by those respondents who responded directly to the Commission gives a good summary of the concerns of all groups worried about software patents. These were, in order of frequency of mention:

• Patents Favour Large Organisations
• Patents are anti Open Source
• Philosophical Objections
• Software is Different
• High Risk of inadvertent infringement
• Copyright is adequate protection
• Patents are unnecessary
• Low Quality of Software Patents
• Increased Product Cost
• Abuse of Patents
• Threat to interoperability & standards

The Consensus Position of Supporters of software related Patents Within the group that was broadly in favour of patenting computer-implemented inventions there was a degree of consensus on the preferred scope of harmonisation. This position is slightly more liberal than that expressed in the Commission consultation paper. The consensus position is:

• Strong support for the TRIPS agreement on a global scale
• Detail should be handled by jurisprudence rather than direction by, for example, a European Directive.
• Traditional patentability criteria should apply to software in the same way as other technologies. In particular there was a majority view that each of the criteria, in turn, should be tested against the characteristics of the invention as a whole
• The most likely criterion for rejection of a software patent application is lack of "technical effect and/or technical character". Failure of the tests for "industrial applicability" or "non-obviousness" may contribute.
• Practical guidance on software patentability is required including examples of what is, and is not, patentable.
• Copyright and patent protection should be independent forms of protection with the possibility of "double-banking".
• Patentability criteria should be strictly and consistently applied in order to limit the number of successful applications for inventions involving business methods.
• Patents are applicable to any form in which software is sold including downloads and all forms of data carrier.
• No changes in general patent law are required.
• A "one-stop" European patent application is required.
• Remove the "software as such" references in Article 52 of the European Patent Convention.

There were differences in view as to how urgent it is for the Commission to take action regarding harmonisation. It was agreed that the principal harmonisation requirement is to achieve common criteria for rejection/acceptance of patent applications, particularly those involving business methods. Some believed that a Directive was urgently required, others believed that cooperation between patent offices would achieve the same effect. Some believed that harmonisation was required on a global scale. Other Proposals Apart from the Eurolinux Alliance proposal mentioned above, a number of other proposals were made by respondents. Interesting elements included:

• Short protection time
• Use of compulsory licences
• Limited liability for open source distributors
• Sui Generis protection for software i.e. a special form of protection that would replace both copyright and patent protection

Actions proposed by Respondents The following proposals for actions to be taken by the various players in the field of software related patents were made by respondents:

• The many anti-software patent respondents who are clearly unaware that there were already over 20000 software related patents in Europe should be informed about potential benefits of patents and the procedures for applications.
• The quality of software patent examination should be improved by training and exchanges of views between patent offices and the EPO.
• Patenting lead times and the ease of access to search databases should be improved.
• SMEs should be financially assisted with patent applications and searches.
• Opponents and supporters of software patents should have discussions and agree
• actions plans on a common approach to limit the patenting of business methods.
• The EU should not be afraid to put pressure on the US to change policies and practice where these are believed to be in conflict with European and global interests.
• Major players should resist the temptation to aggressively exploit opportunistic patents such as those covering hyperlinks.

The following suggestions for actions by the Commission were made by supporters of software related patents:

• Make a public announcement to the effect that it supports the current EPO practice regarding the granting of patents on computer-implemented inventions.
• Take a lead in calling for the removal of the %(q:software per se) clause in the European Patent Convention.
• Further the cause of the "Single European Patent".
• Many called for swift action by the Commission on drafting a Directive although others urged caution, suggesting that harmonisation could be achieved by other means or that further consultation was necessary.
• Opponents of software patents wanted swift action on the part of the Commission but the radical nature of their proposals would require substantial negotiation if the Commission were minded to pursue a restrictive policy regarding software patents.