Wednesday, 29 June 2005

Software Patents – the threat to IT

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. The solution to this is patent exchanges with large companies and patenting as much as we can ... A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose.”

Bill Gates, “Challenges and Strategy” memo, 16th May 1991

It says much about the above statement that it was written in 1991, before Microsoft built up its own massive repertiore of patents and became one of the very same giants that Bill Gates was referring to, before he became the world’s richest person.

Software patents are rather different from patents granted in just about any other industry, partly because software is itself unlike other products. Very often, little research or capital investment is required to come up with an idea on which a patent is subsequently granted. Patents have already been granted by the European Patent Office (EPO) for concepts as simple as selling items over the internet, tabbed interfaces, paying using a credit card over a network, sending gifts to third parties, or showing related items that might interest a customer based on their previous purchases.1 If the patents granted so far by the EPO are anything to go by, I see no reason to be happy about such a policy becoming a pan-European law.

There are an estimated 20-30,000 software patents granted by the EPO. It has become virtually impossible to write any software whatsoever without infringing on several of these without the authors being aware of it. Any software which uses a patented technology is open to lawsuits demanding royalty payments or damages. The legal process itself is long and expensive, and many companies have either decided to pay up to avoid the legal battles, or were bankrupted in the process of defending themselves.

It is worth noting that just over three quarters of all software patents granted in Europe did not go to European countries at all – the USA and Japan alone account for almost three quarters of all European patents2. There are no two ways of looking at this – software patents work against the European software industry.

One reason that the IT industry is different from other areas is that it is essential for different systems to have universal standards to which all parties subscribe, in order for the industry to thrive. Imagine how it would be if every ISP adopted its own, mutually incompatible protocol for sending and receiving email. These standards can only exist as long as they are not controlled by any single party. Many a company has tried to get rich quick by gaining control of these standards through patents. Some companies actually do nothing else – they buy or register as many patents as they can and sit on them quietly until they see a large, rich company developing something that falls under the patent’s description, then pounce. One recent case which made the news was when a small, previously-unnoticed company called Eolas successfully sued Microsoft for half a billion dollars for permitting the use of plugin-based technology in their browsers. This technology is behind products like Macromedia Flash and Java applets. While this patent was later nullified after a review, if successful it could have meant a massive redesign of many web pages and sites. One should note that Eolas did not actually produce any product – both the browsers and the applications that display Flash or Java applets were created by other companies, and the technology used was quite run-of-the-mill. Eolas merely managed to get a patent on a description on paper.

In a similar way, Microsoft frequently takes out patents on simple concepts such as double-clicking a mouse, or on data formats such as their FAT file system or their new Office document formats. The latter are a way for Microsoft to try to prevent any competing products from being able to read the documents that customers produce using their products, thus effectively tying customers to their products indefinitely.

One good example of how a patent-free industry favours the world as a whole is the web itself. Many people browsing the web freely today are unaware that the world wide web was invented, in 1989, by Tim Berners-Lee, working at CERN in Switzerland. Berners-Lee also wrote the first web browser, the first web server and the first website. Perhaps his greatest contribution however was his decision, supported by CERN, to make his invention freely available with no royalties and no patents. It was the decision that would make the web into the incredible medium it is today.

What would have happened if CERN or Berners-Lee had decided to take out patents on every new aspect of the web? Would consumers have to pay a small fee for every website they visit, or every search query? Would the web even exist today?

The United States is currently facing a nightmare of trying to sort out its patent tangle. The Federal Trade Commission has urged the Patent and Trademark Office to revise its modus operandi, making it more difficult to acquire patents and easier to challenge them3. The last thing we need in Europe is to repeat the mistakes made across the Atlantic all over again.

While software patents are a general threat and stumbling block to all software development, it is especially harmful to the free/open source model, in which the authors write and distribute their software freely, and thus have no direct revenue from which to either pay off litigating companies or engage them in expensive legal battles.

This is the situation being faced by the various institutions in Europe at the moment. While the European Parliament has repeatedly rejected a proposal for a US-style patent law throughout Europe, the council of ministers and the EU commission has been strongly promoting it. Large corporations, especially American ones, have also been lobbying strongly to have their patent repertoire recognised in all EU countries, allowing them to sue European companies.

Having a common European policy and mutual recognition as regards patents is a good thing. Allowing patents on software, algorithms, business methods or formats is not. What happens in the future depends on the outcome of the current disagreement between the European Parliament and the Council and Commission.

1 See
2 See
3 See