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SME's: like flies in EU patent web

An urgent letter for SME's and consumers.

The European Commission has made the proposed directive  "Patentibility of in computers implemented inventions". Just like with  the copyright directive there was not much public resistance.

Entrepreneurs and consumers, and with them the complete European economy, are threated seriously bur nothing seems to stand in the way to adopt the directive. The parliament will vote on September 1.

Intermezzo: The copyright directive

At the moment of writing all Dutch companies are unpleasantly surpriced with hughe invoices for "a compensation for photo copying of copyright protected works". The copyright directive must be implemented in all EU states and companies having received the invoice already react furious. Did you think: "I don't make copies of copyright protected works" before you received (or will receive) the invoice?

How was it possible the old media paid so little attention to it? Why were advices from branche organisations ignored? It is a hard lesson: Brussels must be  watched better and trusting, it will all be OK, is misplaced. More than thousand "accredited" lobbyists from multinationals and proclaimers of the word "Intellectual Property" are day in day out trying to influence members of the parliament, and counterweight from SME's and consumerorganisations is completely out of proportion.

The patentright directive to be voted on September 1 will be just as unexpected and is devastating for the European industry if a wonder does not occur quick.

The copyright directive makes clear how Brussels thinks about Intellectual Property.

Considering patents also fall under the chapter Intellectual Property this does not promise much good.

Intermezzo: Wat is a patent?

The patent is a way to stimulate innovation and has an economical use. Think about material matter in the "nuts and bolts" field, but also about medicines. The underlying reasoning is that without protection of the invention (the sole right to exploit the invention) it is impossible to put lots of money in development. In exchange for protection the invention must be made public to be a source of inspiration for others.

The point of departure is that granting a patent benefits both the inventor and the economy. This is all quite well described  in the European Patent Convention (EPC). As a result an invention is only patentible when it conforms to the "forces of nuture"-rule, there is a technical problem and a technical solution, the invention is not obvious, etc..

Why are 30.000 patents illegal?

The European Patent Office (EPO), an international organisation thus not resorting under EU,  does not stick to the rules of the EPC resulting in a situation with some 30.000 patents granted that usualy don't stand up in court but form an excellent tool to threat and blackmail European companies. After all as a company you are not waiting for a dragging court case and a settlement is often more interesting. This is the current situation and it is a concern.

A business method is explicit mentioned in the EPC as not patentable. EPO bypasses this by stating: "If you execute a business method by means of a computer, it is technical and thus it can be patentable". In 2000 EPO introduced the term "computer implemented inventions" for this. This way every idea can be made technical and patentable according to EPO, even if a judge has a different opinion.

By letting software execute non patentable ideas, i.e. computer implemented, they become according to EPO technical and then they are patentable. This way it is possible to patent business methods, presentations of information, computer programs, scientific theories, discoveries, etc.. This group of "computer implemented inventions" is called software patents. Software patents are not a name for a collection of patents on software (though this way software is often patented).

30.000 economic brakes

With a normal patent the patent holder will tend to sell licenses of his invention. The license taker does not have to invest in development and more or less purchases development. The patent forms an approved legal means to block usage of the invention by thirds. However making every idea patentable instead of real inventions can block a complete economy and that hurts entrepreneurs and citizens. Bill Gates from Microsoft wrote about this in 1991:

"If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today."

Yet CEC made a proposal directive that, when the directive is adopted, makes 30.000 patents enforcable in court at once.

The "Directive 2002/92 concerning patentability of in computers implemented inventions" adapts the law to EPO's illegal actions!

This is not only Gates his opinion. The CEC is warned by the Economic and Social Committee, numbers of studies ordered by the EU are wiped under the carpet, opinions from experts, scientists, economists, thousands of entrepreneurs, and SME branche organisations just as a large scale petition were completely ignored.

Even worse, the directive was composed as if it had been written by EPO (which is partly true).

It is a disgrace how CEC has treated interests of their citizens and SME's.

How it harms consumers and SME's...

Software patents stimulate monopolies of multinationals. Much software patents concern software. The results are:

...and SME's in particular

Apart from this the directive opens all doors wide for patenting of business methods and ideas. As a company  you can, without being aware of it, have a way of working with a patent on it. A competitor can paralyse your operational management in one stroke. 75% of the 30.000 issued patents are granted to multinationals from  the US and Japan. For SME's these kinds of patents are often to expensive (tens of thousands of Euro's each). Multinationals with large amounts of patents have a habit to exchange patent licenses. But if a SME becomes a threat, or does have an interesting product, mulitinationals can destroy or swallow such a company by using software patents offensive. The situation in the US concerning this is not exactly an example of where we want to be heading to. On the internet there are enough examples that confirm this, like:

You sell things on the internet, taking care for different currency display and the right language, shipping and electronic payment. Bingo! This way of working is patented under US6460020. If this patent is applied in Europe too, you automaticaly get a letter from a lawyers agency (like these: page 1, page2, page 3) and after paying $10.000 you can wait for the next letter, because your enterprise always infringes many of the remaining 29.999 software patents.

Entrepreneur, do you understand your company is in danger? That doing nothing is not an option? Members of the European Parliament who will vote on September 1 must disassociate themselves from this insane and filthy directive!

Act before September 1, 2003!

It is 5 minutes to 12. What can you do?

More background information:

A wealth of in depth information can be found at http://swpat.ffii.org

This link shows SME's and governments are extremely divided about softwarepatents. The complete page is a good starting point to get familiar with the subject: http://www.tinet.org/~xdrudis/Patents/explicacio.en.html#L118

How important is software to the EU economy? This short text analyses some points of the directive relating to SME's and shows the dangers: http://www.tinet.org/~xdrudis/Patents/aboutMcCarthyConsiderations.html#SECTION0004000000000000000000

A nice to read article in Forbes describes how multinationals settle patent issues. Then it describes the way the US Patent and Trademark Office malfunctions. USPTO and EPO work closely together and it can be read as EPO's future perspective: http://www.forbes.com/asap/2002/0624/044.html

The presentation of Laura Creighton on May 8, 2003 in Brussels shows a different point of view on software patents seen through the eyes of a capital investor. Illustrative and easy to read: Why sw patents aren't justified, don't help small businesses: http://www.vrijschrift.org/swpat/030508_1/

Recent summary for the press: http://www.vrijschrift.org/swpat/press/eu_voting_030630.en.html

How important is software to the EU economy? This short text analyses some points of the directive relating to SME's and shows the dangers: http://www.tinet.org/~xdrudis/Patents/aboutMcCarthyConsiderations.html#SECTION0004000000000000000000

A warning and an analysis published in The Standard by Professor Lawrence Lessig;The problem with patents: http://web.archive.org/web/20001018180812/www.thestandard.com/article/display/0,1151,4296,00.html

(f) copyleft 2003 Wiebe van der Worp, http://vrijschrift.org/swpat/