Patent FUD spread in Dutch Parliament using Philips documents

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The Hague, 2 March 2005 -- A day before the Dutch Parliament will debate several motions asking its government to reopen discussions in the Council, several documents were sent to involved Dutch members of parliament, trying to convince them that the Council version is "balanced", does not allow "pure software patents", "protects interoperability" and "prevents trivial patents". They also claim that Europe needs software patents in order to compete with the USA and that international treaties require software patents.

English translation

The original (Dutch) document, which can be found at the bottom of this page, starts out by giving a supposedly impartial overview of the situation, and finishes with Philips' position. This is a partial translation of that last part.

General

Philips supports the patentability of all technical inventions and is no proponent of excluding inventions with software. According to Philips, inventors in all sectors need patents to protect their inventions to provide for incentives and financial means and to promote a transfer of technology. Inventions with software are no exception to this rule. The latest draft directive of the EU Council of Ministers (May 2004) takes into account all interests. Trivial patent applications and applications for patents on pure software, feared by opponents of software patents, are not accepted by this directive. Philips squarely supports attempts to quickly eliminate trivial patents. As in all other economic sectors, patents on inventions which contain software will only be granted if the invention provides a technical solution which is new, non-obvious and industrially applicable.

Open Source

The draft directive also respects the 'open source' movement and guarantees that different technical systems can work together. This 'interoperability' is equally essential for an open, innovative company such as Philips, as for small companies and consumers. Patents do not obstruct the free flow of information; on the contrary, they promote this flow. Just like patents for other inventions, the owner of a patents on an invention which contains software must provide essential information about this invention. [..]

In almost all electronic products, innovative technologies are applied for information and data transfer. Inventions with software play a key role in the advancement of these technologies. Massive exclusion of patentability of inventions in this field would go against the TRIPS treaty from 1995 of the World Trade Organisation. [..]

Research and development

The draft directive of the Council follows the current practice of the EPO and will increase the harmonisation and legal certainty in the field throughout Europe. If the patentability of inventions with software is removed, this has serious consequences for the competitiveness of Europe and as such also for future employment. It would damage the ability of enterprises to finance research and development. [..]

Europe would become a much less attractive location for research if every software-supported invention can be imitated without financial compensation for the inventor, while the patenting of such inventions is and remains normal in the US and Japan. [..]

Many license agreements of European companies will be undermined by the the elimination of patents on inventions with software. [..]

Because of all these reasons, Europe must maintain patents on inventions with software. If we want to reduce the number of trivial patents which inhibit research, there is a much better solution: strengthen the gate keepers. If our national and international patent offices would have more staff, more financial means and better instruments, they would be able to perform their work even better than they do now while separating the chaff from the wheat among the patent applications. Let us not try to solve the problem of trivial patents by simply banning patents on inventions with software. That 'solution' would after all create a much larger problem: serious damage to Europe's knowledge economy and employment.

Comments

(also available in Dutch pdf)

Software patents or computer-implemented inventions?

Philips keeps claiming the Council text does not allow software patents, but only patents on "inventions with software". This is pertinently false, as has been shown many times already:

The exclusion ground of art. 52 par 2.c regarding computer programs (as such, art. 52 par 3) has been largely reasoned away in the decision practice of the EPO. Computer programs do have to, just like other inventions, comply with the general conditions of adequate technical character. This last part mainly boils down to the art of formulating the innovation as explicitly as possible as a 'technical' problem, or to formulate the obtained effect as explicitly as possible to be 'technical', and to direct the claims (also) to that.

Prof. mr D.W.F. Verkade, mr DJ.G. Visser, mr L.D. Bruining, Broader patentability of computer programs: technicality or revolution?, report for Dutch ministry of Economic Affairs/, 1999, point 2.1.4 (Dutch)/

Most importantly perhaps, the technical contribution criterion does not prevent all business methods to be patented

R. Bakels, P. B. Hugenholtz, "The patentability of computer programs", report for the JURI Committee of the European Parliament/, 2002./

However, the EPO already allows business methods that are patentable in the U.S. to be basically patented in Europe, because they are seen as processes fulfilling all the criteria for patentability. by adopting the existing proposal the main problems that America has been facing regarding software patents will not be avoided. (about the Council proposall) However this directive does not create any more legal certainty then there is today. (idem)

S. Paulsson, "Patenting Software vs. Free software", report for the Directorate General for Economic and Social Policy of the European Parliament/, 2004/

As Philips correctly confirms, "The draft directive of the Council follows the current practice of the EPO". This current practice of the EPO is however barely different from the US practice in so far software and business method patents are concerned.

The European Parliament allowed for patents on technical inventions steered by computers. The Council version allows patents on pretty much all "processes performed by computer"; this consequently includes both real inventions and pure software and business methods.

Outsourcing

Philips warning for the potential loss of jobs in Europe unless we get software patents, is somewhat strange:

In order to remain competitive, companies are shifting jobs from the West to Asia. Initially it was in manufacturing, but increasingly it has come to include support functions in services and research and development.

Gerard Kleisterlee, President of Philips, interview in China Daily newspaper/, December 2004/

This was an article without any reference whatsoever to software patents. Large companies will always look for the lowest wages (combined with adequate quality), and e.g. the fact that according to that same company China is a country full of "copycats" and patents offer little protection there, does not seem to bother them.

Competitiveness

Similarly, the wish of the European Commission to enable the patentability of computer programs as such, without any demonstrated or demonstrable usefulness to society, demonstrates a lot of audacity. (regarding the introduction of "program product claims", similarly to article 5.2 of the Council proposal)

Patents are - compared to certain other sectors - relatively unimportant for the software sector, although there is a clear trend towards more patenting. Due to the high administrative costs of obtaining and maintaining them, due to the mentioned unequal distribution of market power and due to the specific product features of software, it seems that patents are more profitable for large than for small companies.

Dutch Ministry of Economic Affairs, The juridical and economical aspects of the software patent/, 2001 (Dutch)/

the decision whether to invest in a software company is subject to a wide variety of criteria, and unlike in such a field as life sciences, the most successful investments in software companies cannot be attributed to the ownership of patents;

Benchmark Capital, Bernhard Schmid (partner, Deutsche VC) et al., Declaration By Venture Investors and Venture-Funded Companies on Software Patents/, 2004/

Interoperability

Interoperability is not guaranteed by the Council proposal. It only states that exceptions in copyright law for interoperability remain in force. This doesn't change anything in this case, given that these privileges cannot be forbidden using patents in the first place.

The Council proposal thus only guarantees that a patent holder cannot forbid to find out how to exchange information with a program that uses his patented technique. The patent holder can however without any problem forbid you from actually performing said data exchange once you have figured out how to do it, since there is no exception for this action in the Council proposal!

TRIPS treaty

According to voices domestically and abroad, the TRIPS treaty would, given the mention of 'all fields of technology', and given the absence of an exclusion for computer programs, mandate patentability for this category, and would - in other words - its exclusion run counter to the TRIPS treaty.
. Besides, it is quite implausible that the negotiators in the Uruguay round of the TRIPS treaty wanted to go that far that they wanted to put aside the choices made by the Subscribing States to the EPC. The exclusion can also be justified under the TRIPS treaty, now that art. 27 TRIPS itself leaves room for interpretation regarding the explanation of 'technology'.

Prof. mr D.W.F. Verkade, mr DJ.G. Visser, mr L.D. Bruining, "Broader patentability of computer programs: technicality or revolution?, report for Dutch ministry of Economic Affairs/, 1999, point 2.1.6 (Dutch)/

Trivial patents

This problem exists and is real, for all patents. It is however also completely besides the point. This directive is not about triviality, and cannot change anything about that. The problems of software patents are not limited to trivial patents, it goes way beyond that.

Documents

(only accessible by people with a valid FFII account, for the purpose of criticising and citing)

Presentation (English)
Text (Dutch)