Microsoft: Give us Software Patents or we Move 800 Jobs Out of Denmark

According to Danish newspaper reports, Bill Gates has been threatening the Danish government to move jobs from Denmark to the United States should Denmark continue to oppose the software patent directive. While Danish Prime Minister Anders Fogh Rasmussen denies the reports, statements from Navision and from party colleagues of Rasmussen partially confirm it.

the original report

Børsen and the Copenhagen Post quote Bill Gates (according to Microsoft's chief legal counsel Marianne Wier who attended the meeting) as saying, with regard to software patentability in Europe:

"If I'm to keep my development center in Denmark, then it's a
- requirement that the question of rights becomes resolved. Otherwise, I will move it to the USA where I can protect my rights" in a conversation with Denmark's prime minister Fogh Rasmussen.

The Børsen report confirms that threats of this kind have been uttered at the time of the Gates-Rasmussen meeting:

After the meeting with Bill Gates in November the Minister of Science Helge Sander said in an interview with the newspaper Børsen: "Again and again we see that knowledge is easily transportable, and therefore one has to be aware that a company like Microsoft can move knowledge
activities from Denmark out into the world. When a large company has its largest development organisation out outside of the US in Denmark, there are investments that follow, and that is something that we in the public sector must acknowledge." Bendt Bendsen voted for the software patent directive in the council of ministers, and the government has been positive about the idea of harmonising that part of the patent law, long before Bill Gate's visit in Denmark. Karin Riis Jørgensen (from the party Ventre), who is the vice president for the liberal group in the European parliament has the same attitude. Last week she participated in a closed meeting in the European Internet Foundation, where Bill Gates spoke. According to Karin Riss Jørgensen the message from the Microsoft founder was just as clear last week as it was in the meeting with the Danish ministers in November. More precisely, Microsoft will discontinue investments in EU countries, if it is not possible to patent software.

FFII Comment / Analysis

This is not the first threat of its kind, but it is an unusual move for Microsoft. So far Microsoft has left this role large European firms, who are in a better position to exert such pressure:

2005-01-26 PL Gazeta Wyborcza: Siemens, Nokia, Philips, Ericsson and Alcatel wrote a letter to Polish Prime Minister (short version in English
2003-11-07 EU Siemens, Nokia, Philips, Ericsson and Alcatel write to Italian Council presidency suggesting that they will cut R&D jobs in Europe if the Parliament's limitations on patentability are accepted. Similar letters from the same group of players were written at the national level in Sweden, Germany and elsewhere
In 2000-2001, IBM patent lawyers said in talks to the French government that they would move R&D centers out of France if France persisted in opposing the Commission's directive plans. Similar threats have were uttered recently in the Netherlands by representatives of Philips.

Microsoft has, contrastingly, been maintaining a fairly low profile on patents. They have spoken mainly through proxies such as CompTIA and BSA.

FFII's president Hartmut Pilch explains:

Nobody who has any knowledge of the software market believes that Microsoft will close down Navision because of European patent policy decisions. Microsoft needs Navision for its strategy of extending its worldwide monopoly to the Enterprise Ressource Planning market, in which European companies have been world leaders for decades without patents. Moreover, patents are used where the products are sold, not where they are developped. Yet some large companies, whose business model is usually based more on patents than on software, have been trying to push around governments by creating inexistant connections between a particular patent policy and their investment at a particular location. That's blackmail in the strictest sense of the term. In Germany it might even be punishable under §105 of Penal Law with 1-10 years of imprisonment. The Council's current software patent agreement is to a large part owed to such semi-legal activity by patent bully corporations.

The following article, which appeared at a same time when Philips was making such threats to the Dutch goverment, tells everything about the credibility of these threats:

2004-12-02 China Daily: Cashing in on research boom (Philips plans to transfer more top jobs to China, but will leave some patent attorneys in Europe, who will process the patent applications that come in from Philips Shanghai)

Official Denials from Microsoft / Navision

2004-12-15 US Microsoft denies blackmail regarding EU, patents: `The European vice president of Microsoft Business Solutions, Klaus Holse Andersen, denied on Tuesday that the jobs at Navision were ever at risk. "No, that is not what he said in the meeting," Andersen told ZDNet UK. "There is no plan for us to close down the site."'
2004-12-15 UK ZDNET: Microsoft denies blackmail accusations `"There has been a general discussion on patents and this has gone on in many offices," said Andersen. "We are very much pro the patent law. How they Børsen made they connection to the Vedbaek site I'm not sure." ... "I've just called the Social Democrats," said Andersen "It's unfortunate that they put out the press release before they spoke to Microsoft."'

Microsoft DK (Navision) thereby does not explain how the misunderstanding arose.

While it is safe to assume that Gates never intended to really make Navision's fate dependent on European patent legislation, the Gates quote must have been supplied by Microsoft DK, and Andersen does not deny this. Microsoft DK (Navision)'s chief legal counsel Marianne Wier gave the news to Børsen.

It was moreover reinforced by a statement from a danish industry group, with the apparent intention of instilling fear, uncertainty and distrust (FUD) in a wider audience that jobs could be at risk if software patents aren't legalised in Europe. This too would not be an unusual tactic for Microsoft.

According to De.Internet.com Andersen from Microsoft confirmed that Software patents were a topic of the meeting with Rasmussen, however denied a Navision blackmailing attempt.

Danish responses.

The Danish prime minister has denied the allegations of a threat by Bill Gates: "He has not done that in any meeting with me. I can't confirm that interpretation, not at all. We have not touched that subject. No."

However Andersen (MS Denmark) confirmed according to a de.internet.com report that the issue of software patents was a topic of the meeting in November.

Bill Gates' alleged threats have been criticized by

Comments

2004-02-15 Alberto Barrionuevo:

"Microsoft has a record of trying to blackmail governments. Microsoft CEO of Brazil, Emílio Umeoka, in middle 2004 already did similar against the president of the Brazilian National Institute for Information Technology, Sérgio Amadeu da Silveira. Microsoft sued to Sérgio Amadeu as a pressure to the Brazilian Government, but some weeks later they retired when they realized that the whole Brazilian government was backing Sérgio and against the Microsoft intimidation."

2004-06-xx Br Consciencia Brazil: Microsoft
2004-06-xx Br Estadao: Microsoft leva à Justiça defensor de software livre no governo
2004-06-24 US (in English) LWN.net: A legal attack in Brazil
2004-06-19 US Simon Phipps's personal commentary

Preliminary Translation of the Article Teaser

Gates threatens Fogh PM with closing Navision The founder of the world's largest software company Bill Gates is now ready to close Navision in Denmark and move the almost 800 developers in Denmarks largest software company to the USA. This was firmly stated when he met with Prime Minister Anders Fogh
Rasmussen (V) = liberal party in November 2004, as well as the minister of economics and industry Bendt Bendtsen (K) = Conservatives and the minister of science Helge Sander (V). The threat may become reality, if parts of the IT industry succeed in blocking a controversial EU directive on software patents, that
Microsoft than anything in the world wants to be approved, but which time and again has been delayed thanks to their opponents very efficient lobbying. "If I'm to keep my development center in Denmark, then it's a requirement that the question of rights becomes resolved. Otherwise, I will move it to the USA where I can protect my rights" said Bill Gates according to Microsoft Chief legal counsel Marianne Wier, who also took part in the meeting with Anders Fogh Rasmussen. Bill Gates bought the Danish development department, which builds upon the merger of the two IT companies Navision and Damgaard, for almost 12 billion DKK back in 2002. It has not been possible to reach Prime Minister Anders Fogh Rasmussen to have him elaborate on how he reacted on the harsh message from Bill Gates.

English announcement of the article

http://www.borsen.dk/english/dailynews/dailynewsitem?single=811 Gates threatens to move Navision The collapse in negotiations to land a software patent in the European Union is threatening Navision's future in Denmark. Bill Gates, the powerful CEO of Microsoft, which owns Navision, already expressed in clear terms last fall to Danish Prime Minister Anders Fogh Rasmussen, Minister of Economic and Business Affairs Bendt Bendtsen and Minister of Science and Technology Helge Sander that he will move Navision to the United States in the absence of patent protection. Internal bickering within the European Union poses a serious threat to the pride of the Danish IT industry because the EU cannot provide the software patent that Gates wants. In fact, different EU institutions are awash in squabbles between smaller and larger IT companies over patent regulations. This is 'very damaging and it could cost investments,' says Catharina Dreyer from Dansk Industri.

Additional information

Navision is a ERP software provider, no research entity. It was bought for 1.4 Billion DKR, not to gain access to Navision's patents but to enter Navisions enterprise solutions market. Navision has very good ERP solutions and competes with SAP. German SAP also has very few software patents, although they are rapidly increasing their portfolio. At the ERP market there are hardly any software patents. The whole ERP market is dominated by European players.
Where are those DK Navision software patents? See 35 granted software patents suspected from Denmark. Before Microsoft bought Navision, Microsoft already cited Navision as a European software SME that has applied for patents.
see also Gauss-Bacon results: Applicant DK, Country of residence DK, MS granted Europatents
Since late nineteenth century, all patents are granted without discrimination to the nationality of the applicant, which means that the place where you have your researchers bears no relation to the places where you can apply for the patents. Navision researchers in Denmark are able to patent in the US just as well as Microsoft researchers in Redmond. What MS fears is that an EU without software patents will be too competitive for the US to keep their disfunctional patent system, and so they try to impose software patents in Europe in order to be able to control the EU market. Fortunately, most jobs in computing are not in big companies, but in many SMEs or inhouse development teams and information infrastructure services, which will provide Europe with the flexibility and innovation it needs to compete globally, in software and in any other market.
Authors of the Borsen text are Johan Christensen and Jonas Torp