Software patents-a spoke in the wheel?

BRUSSELS: European Union plans to tighten up laws on software patents before the European Parliament this week, and this is worrying small businessmen such as Marek Slawecki.

Slawecki's small IT business survived the burst of the dotcom bubble, but now he worries it could be swamped by a torrent of patent litigation.

What started as a directive to turn patent case law into a statute has become a sharp debate on whether patents succeed in their aim of boosting research and development.

European lawmaker Arlene McCarthy argues that EU software developers will only be able to compete with U.S. rivals if their rights to patent -- and resulting licence fees -- from their inventions are placed on more solid legal ground.

But critics doubt patents are the right way to boost research and development in the software industry, saying that in the United States they have led to legal wrangling and blocked competition.

Currently, European law says that software cannot be patented -- except that, in practice, it can.

Case law has evolved so that while software as such cannot be patented, patents can be granted for inventions, which make use of software.

To resolve this, a directive on the patentability of computer-implemented inventions will get its first reading before the European Parliament on September 22.

McCarthy, the proposal's draftswoman, says it aims to write the current case law into statute and stop a drift towards U.S. styles of patenting, which are widely seen in Europe as letting through ideas which are too obvious and not technical enough.

Another benefit would be to make European firms more aware of their rights, said Michael Harman, a European patent attorney who has been making software patent applications for 40 years.

"U.S. companies can get patents for software and are well aware of the fact. Because they tend to assume that other countries follow the U.S., they apply for patents in Europe and quite often get them.

"My main concern about the European situation is that the European Patent Convention says that software is unpatentable, and that message has been fairly widely picked up throughout Europe, even among quite substantial companies," Harman said.

SMALL COMPANY WORRIES

Belgian software developer Slawecki is worried that the new directive will lead to an explosion in patenting, and associated legal costs, however.

"Small companies do not have sufficient legal protection -- they cannot afford lawyers. If they cannot work in a secure environment, it's the end of small companies," he told Reuters.

His company, EFT Consultants, employs 65 people to create payment systems for major banks such as ABN Amro and Dexia. To do this, his developers use and license programs written by third parties.

Slawecki said he already had trouble keeping track of copyright issues, and that patents would be even harder.

"It's difficult because you don't know how to check it sometimes. Programmers may take something from the Internet... and the manager of the company may not know whether it's protected or not. I'm anxious that some library or driver may turn out to be patented," Slawecki said.

ECONOMIC DOUBTS

Economists also have concerns that patents may not be the best way to promote innovation in industries such as software where developments rely heavily on earlier inventions.

Dr Peter Holmes, Reader in Economics at the University of Sussex in southeast England, co-wrote the European Commission's initial report on software patenting and is critical of McCarthy's proposals.

"The existence of software patents risks being a serious block to innovation. Every inventor is a user of a previous generation of software. Almost every invention in software involves building incrementally on previous work," he said.

However, empirical evidence is muddy as most of it relates to the United States, where software patents often merge into those for "business methods", which almost all European players, McCarthy included, are adamant should not be patentable.

Moreover, McCarthy argued that smaller firms' concerns over legal costs are excessive. She is planning to amend her proposals to allow scope for a legal defence fund to help smaller businesses with the cost of patent actions.

She is also including a clause to review the operation of the law two years after it takes effect, to check it does not discriminate against smaller companies.

One thing McCarthy is adamant about is that standing still is not an option. "The alternative is to say we don't need this directive. But the problem at the moment is that the European Patent Office is handing out patents for software.

"This directive gives clear guidelines to patent bodies that if you're going to err on the side of judgment, you'd err against patentability," McCarthy said.

If the European Parliament and the European Commission agree on a text -- no certainty, given the concerns raised by Green and Socialist MEPs -- representatives of member states' governments have to approve it at the Council of Ministers.

And McCarthy is sure they do not have the stomach for the upheaval revoking the 30,000 software patents issued over the past few years would cause.

© Reuters