CCIA: EU Patent Proposal Comes at a Cost of Innovation and Competition

File Under: 2005, Copyright

Feb 15, 2005

A European Union proposal to give software developers significantly greater patent rights would likely come at the cost of innovation and competition, the Computer & Communications Industry Association told top EU ministers.

In a letter sent Monday evening, CCIA President Ed Black told members of the Council of Ministers that the Council’s version of the controversial European Directive on Computer Implemented Inventions would lead to numerous, unjustified patents on many of the most basic building blocks of software. Black warned of the consequences of unchecked patenting.

“Weak limits (on patents) are vulnerable to dominant providers, speculators, and intermediaries eager to expand the volume of their business” he wrote. “Senior managers now assume that rank and file engineers are inevitably technically infringing the patents of others, even though their work is entirely original.”

Underway for several years, the EU’s proposed software patent directive has undergone numerous revisions. And although it has received support from a limited number of multinational companies, the measure has proven unpopular with a wide swath of the technology community.

Text of the letter follows:

February 14, 2005

Mr. Jorgen Samuelsson
Head of Section
Ministry of Industry, Employment and Communications
SE-103 33 Stockholm
Sweden

Dear Mr. Samuelsson,

The Computer & Communications Industry Association, an association of ICT companies from around the world, is a leading advocate of open markets, open systems, and open computing networks since 1972. Our members include large, small, and mid-sized enterprises representing total annual sales in excess of €200,000 million. We have long been intimately involved in the development and implementation of intellectual property policy because it establishes key ground rules for competition and growth in the ICT sector. We played an active role in the debate and development of the 1991 European Software Directive.

We write you to express our concern over the proposed common position on the Directive on Computer Implemented Inventions, which had been expected to pass on the A-list agenda of the Council of the European Union on 17 February. Like the Commission’s version of the Directive, the Council’s version is ambiguous and appears to limit patentability only in a nominal way. Experience in both the U.S. and Europe has shown that weakly defined limits invite relentless assault and circumvention. Weak limits are vulnerable to dominant providers, speculators, and intermediaries eager to expand the volume of their business.

The Council should be wary given the widespread difficulties we now confront in the United States: more litigation, chilling of the marketplace, and opportunists seeking to hold up investments in industry standards and finished products. It is difficult to overemphasize the importance of this issue to all technology companies, especially in light of the recent studies by the US Federal Trade Commission and National Academy of Sciences.

Despite the fervent support for the Council’s version of the Directive by some in the patent community and a limited number of multinationals, we believe that top management of most ICT companies have become deeply concerned over the way the patent system is evolving. Senior managers now assume that rank and file engineers are inevitably technically infringing the patents of others, even though their work is entirely original.

While these concerns extend throughout the ICT sector, software activities are especially vulnerable. Nowhere else are the transaction costs of the patent system so disproportionate to the cost of creation. Nowhere else is the potential liability for users, especially large companies and public agencies, so great. There are tens of millions of programmers and developers in the world, few of whom have the time, training, or legal assistance needed to read, evaluate, and navigate patents in their field. In particular, the phenomenon of open source development is unknown in other fields, because it is closely reliant on the unique economics of software development and distribution.

We believe that restarting the Directive in the Commission with its investigative and analytic resources will lead to a much better understanding of how patents affect competition and innovation. The European Commission would benefit by building on the work of the Federal Trade Commission, by conducting a fully developed economic and policy analysis that examines the real-world impact of patents on innovation and the marketplace.

Sincerely,
Edward J. Black

President & CEO
Computer & Communications Industry Association