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JULY 13, 2005
By Andy Reinhardt Europe's Patent on Failure [Page 2 of 2] VAGUE AND CONTRADICTORY. The proposed legislation on the issue bounced back and forth for years through the halls of European government.In September, 2003, the EU Parliament passed an amended version of the law that upended the Commission's original intent and drew such a tight limit on software patents that the Commission refused to accept it (see BW, 12/23/03, "Crafting a Better Patent Law"). After a retooling, it went back to the Parliament again -- and this time, the amendments were so numerous, vague, or contradictory that almost every thumb was pointed down. Each side pushed too far, and both lost. TOO BROAD A BRUSH. Europe is back to square one, only worse. While the rival camps have bickered, the European Patent Office and its national counterparts have issued tens of thousands of software patents. With little legislative guidance, and assuming that some sort of Europewide rules eventually would come into effect, they granted patent protection to ideas as diverse and far-reaching as a technique for audio compression that includes the MP3 format, a technology for video-on-demand transmission of live events, and a scheme for adding tabs to Web pages. Clearly, it's in the interest of society and the technology sector that such broad, and likely indefensible, patents not be enforced. What's frustrating is that Europe was really onto something in questioning the value of software patents. As the evidence from the U.S. and other countries with liberal patent regimes suggests, patents can be a Pandora's Box -- one whose contents choke software innovation by miring programmers in endless legal battles. CONFUSION TRIUMPHS. Given that perspective, the failure of European legislators (and lobbyists) to craft a compromise verges on the tragic. They could have started by agreeing that embedded software deserves protection, which would have helped thousands of small manufacturers whose innovations could now be subject to more skepticism if the key breakthrough is achieved through programming. Likewise, a clear procedure for peer review, rapid challenges, and quick publication of patents would have created a model system the U.S. might have emulated. Last but not least, Europe could have gone on record saying that some kinds of software, including general-purpose programs and algorithms, are not patentable. Instead, we've got: a European Patent Office whose mandate is confused and whose 30,000-plus software patents may be slowly overturned by European courts, a patchwork of national regulations that protect only applicants filing within the jurisdiction, and the possibility that some of Europe's largest and most successful tech companies will see the market value of their patent portfolios collapse. NO GAIN WHATSOEVER. What of the small European businesses and innovators that opponents wanted to protect? They must now hire lawyers and pay fees to file patent claims in 25 different countries to gain protection just within the EU. Or they can try for a patent from the EPO, but that still requires costly translations and country-by-country enforcement. They're also no better protected against counterclaims by rival U.S. or Asian patent-holders in Europe than they were before. The outcome in Europe entrenches a system that, like many national laws on the Continent, is increasingly out of step with global realities. The people who killed smart patent rules may have had noble intentions. But instead of scoring a hit for the little guy, they've actually put their compatriots at a disadvantage on the global stage. That hardly looks like progress.
 Reinhardt is a BusinessWeek correspondent in Paris Edited by Beth Belton
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