Software patents in Europe: debunking the myths

Out-Law News | 19 Aug 2004 | 12:00 am | 7 min. read

John Gray, a patent attorney with Glasgow-based patent and trade mark attorneys Fitzpatricks, presents his views to OUT-LAW on the controversial Directive on computer-implemented inventions - and on separating facts from fiction.
The City of Munich stalled plans to put Linux on thousands of desktops early this month, citing fears that a forthcoming European Directive on the patentability of computer-implemented inventions could leave it exposed to litigation.

Although the rollout is back on track, this was just the latest attack on one of Europe's most controversial Directives. But much of the criticism is unfounded, according to John Gray, a patent attorney with Glasgow-based patent and trade mark attorneys Fitzpatricks. Here, Gray presents his views on separating the facts from the fiction.

Will software patents be allowed under the Directive?

There are no moves to set up a system similar to the US: the draft Directive is actually intended to reinforce the boundaries established by case law, and prevent any drift in a more liberal direction.

The governments of member states have been trying, through the European Council and Commission, to consolidate and formalise the status quo in European patent law. But this effort has been frustrated by a small but highly organised and vocal lobby, based on a selective and romantic image of computer programmers all working alone on their own projects.

The current law and the draft directive do not allow patents to be granted for computer programs, methods of doing business and mathematical methods (among other things) as such, but they also make clear that inventions making a serious technical contribution are not excluded from patenting merely because modern apparatus in the form of a computer is used in their implementation.

The rash of amendments inserted into the draft by the European Parliament last autumn simply resulted in a dog's breakfast, which anyone experienced in patent law could see had no chance of becoming law, and the Commission refused to proceed with it. In particular, the amendments inserted all manner of overlapping and slightly different provisions all trying to achieve the same result. The only sure result of that would have been a beanfeast for lawyers trying to understand and advise companies on the limits of patentability. There would also have been serious "collateral damage" to patents in all sorts of areas of technology beyond software.

Returning to the Linux story, inventions in software operating systems have always tended to be more likely to have the necessary "technical contribution" for patentability than application software, because operating systems are more concerned with the "nuts and bolts" of the machine on which they operate.

Linux, of course, falls into the field of operating systems, but I have no idea how anyone could judge that a change in patent law could equip them to decide whether or not to choose Linux over other systems. The quotes I read from Munich City said there would be no "dramatic setback".

Should we ban all software patents?

Microsoft for one has vowed to obtain patents at a rate of thousands per year. These would impact European companies trying to sell into the USA even if some of them would not be patentable under European laws. Gray sees three main difficulties with banning patents for all software-implemented inventions.

Firstly, it is simply odd that we as a society should wish to award patents as an incentive to those who develop new electronic, mechanical and chemical products, but not those who choose to develop software solutions to human needs. Many software engineers owe their jobs in part to patents held or licensed-in by their employers.

Secondly, it is also impractical to draw a clear line between electronic systems and "software" inventions as the software and the machine work together.

In any case, the European legislature has undertaken lengthy consultation and objective deliberations and decided that a free-for-all on the US model is not wanted here, but neither is a complete ban on patenting computer-implemented inventions.

Will the proposals benefit only larger companies?

A patent is designed to allow companies large and small to defend themselves against a predator who might wish to short-cut the risky development and marketing process and copy their successful products on a big scale and put them out of competition,

We often hear that we (patent attorneys, lawyers etc.) are in the pocket of the big companies, and this line is used extensively by the anti-software patent lobby to discredit anyone who takes a different view. But patents are one of the few tools by which small companies in particular have a chance to level the playing field. If you have a patent (albeit you must invest something to obtain and enforce it), you at least have something to make the big boys talk to you. They may not need to "buy your soul" to copy your ideas, but they may have no choice but to buy your patent. It baffles me why small software designers should seek so vehemently to talk themselves out of this form of protection.

For serious business people, with innovative products or services that need long-term investment in development and marketing, to have any chance of success in the global market place, patents are a useful option, to safeguard the investment as much as possible.

But at the moment we are pushing the limits of what can be patented in this country when clients ask us to protect innovations in such areas as scientific modelling, knowledge management, speech and language processes and logistics, as well as banking and other financial services.

This is likely to be damaging in the long term, as it will harm the ability to raise capital to invest in product development and marketing in these key areas. At present it is resulting in most innovators either filing for protection in the US only, or not filing at all.

Could we see retrospective software patents?

No. If software patents are permitted, no idea that has been already published or sold in a product could be monopolized retrospectively by a patent. But if you have an idea which you have kept secret, the patent system would still favour the person who puts it all down on paper for the world to see in the hope of securing a patent. That could be you, or it could be someone else.

The patent system promotes disclosure of techniques that would otherwise have been kept secret, by offering the best ideas a limited form of monopoly. Also the person who discloses ideas publicly, whether by a patent or any other way, prevents others from monopolizing the same thing and routine developments. While patens have long been used in other fields of technology, the software industry historically has relied more on secrecy, and allowed itself in the early years to be talked out of patent protection. Only recently has it begun to think of publishing and sharing its source code for the greater good (the Open Source movement). This is the reason why patent offices do not yet have the knowledge base to tackle the sudden burst of software patent applications.

What about the cost of patents?

Patent protection can be expensive. But too often patents are judged unaffordable simply because nobody included the costs in the initial business plan. Cutting corners at the early stage also increases the risk of needing court action to enforce your patent and ultimately increases the risk that you will fail to enforce your patent.

I have also found a quirk of perspective by which patents look disproportionately expensive to software developers compared with other, more traditional inventions – namely the fact that software developers can work miracles with only time/wages and relatively little capital equipment outlay.

More "traditional" engineering on the other hand requires materials, equipment, prototypes, and other items – all of which are significant costs in a new development, and make patents look less of a burden in proportion.

If patents are the biggest expense you have to worry about, count your blessings!

In addition, the Government is actually considering proposals to provide a general "fighting fund" for patent owners to help them enforce their patents. This would be based on a form of insurance funded out of everybody's patent renewal fees. I suspect patents would be much more valuable to SMEs if such a system could be made to work.

Is it only the lawyers who will benefit from the new Directive?

Only in a positive way! A true, wasteful gravy train would be provided by the "dog's breakfast" achieved by the anti-patent lobby, through which only the big companies would be able to afford to pick their way.

Even the present situation gives me no satisfaction at all. For one thing, I get no gravy advising innovative companies that their ideas are not judged worthy of patent protection for the arbitrary reason that they are implemented by programming a computer rather than shaping a cog wheel.

Secondly, UK companies in science and engineering who wish to pursue patents with a strong software content presently have to pay the likes of me more than those with other types of inventions, simply because they have to work around these arbitrary and blurred exclusions.

In the US, by contrast, software and internet-based start-ups can raise capital and build markets with protection from their own patents. Whether or not they can get the same patents in Europe, European firms are left facing the new polished, high-volume, well-supported products in their home markets.

Even though you are a UK or European company, if you have global ambitions, you will be exposed to patent threats in the US marketplace without having anything to fight back with.

It is important to acknowledge that the system is not perfect, and never has been. However, it has checks and balances and is adaptable over time. Too many voices at present simply deny that the patent system has any relevance to software technology, and see only the potential injustices and not the upside. The companies I serve, large or small, would simply prefer to get onto the real work of promoting and commercializing innovation to the benefit of themselves and the wider economy.

So in conclusion I just ask the Scottish/British/European software producer with original ideas to bring to market and with global ambitions to think twice before opposing patents for computer-implemented inventions.

I would also reassure those with no innovations and no global ambitions that they need not fret so much with the anti-patent lobby. The truth is that neither the patent system nor the mythic terror that is the "big boys" is likely to bother its head about them.

John Gray's comments were first made to the Now Business forum. Edited highlights have been reproduced here with John's kind permission.