The EU software patents directive is back, with all of the parliamentary amendments stripped out, provoking speculation that Europe will soon find itself in a US-style patenting arms race.

The document which emerged after months of deliberation behind closed doors has drawn harsh criticism from lobby groups who see software patents as threats to innovation and to ability of smaller companies to compete against the bigger players.

The version passed by the European Parliament in September last year limited the scope of what could be patented to software that supported new physical processes, such as steel-making, or a new anti-lock braking system. However, the draft now allows for direct software patentability of computer programs, data structures and process descriptions. These are areas the MEPs had voted off the agenda, and which activists fear will pave the way for the dreaded business-method patents that have plagued America.

Beyond the ideological debate, there are three main sticking points with the legislation as it stands, according to the Foundation for a Free Information Infrastructure (FFII).

• To be considered patentable, computer-implemented invention must involve an inventive step. To qualify as inventive, it must make a technical contribution, i.e., a contribution to the state of the art that is not obvious. However, the directive does not define (http://www.ffii.org.uk/technical.html) technical. This absence could, the FFII argues, lead to a sliding scale of patentability culminating in even specific lines of code being covered as a patent.
• There has been no clarification on the issue of interoperability. The latest draft makes no requirement of patent holders to make an all-comers general license available to parties who want to write software that inter operates with the patented process.
• Program claims will be allowed under the terms of this draft. This means supplying patented code will also be an infringement of the patent, rather than just running it on a computer. FFII warns that this will severely restrict development, as it will become impossible to post sections of code on websites: a practice vital to developer communities.

James Heald, a spokesman for FFII, warns that the consequences for small businesses and open source developers could be severe. "In a maturing market, there is a change in the state of mind of many companies. They don't have that heady dotcom feeling of a pot of gold being just over the horizon, so they want to make the most of their existing assets, and hold on to what they have. Patents go from being a thing you file and forget about, to being assets you can use to generate revenue. Small players especially will lose out, because unless you have the money to fight a patent infringement claim - anything up to $2m in the US - or you are very lucky, you have to fold, and pay the license fee."

So what was the Council of Ministers thinking? It all goes back to the original purpose of the directive, which is to clarify the law across Europe.

The European Patent Office (EPO) was widely perceived as being very fluid in its interpretation of the European Patents Convention (EPC) of 1973. This document, signed by many EU member states (http://www.european-patent-office.org/epo/members.htm), imposed a blanket prohibition on software patents "as such". However, in 1986, the EPO's board of technical appeal ruled (http://www.patent.gov.uk/patent/notices/practice/computer.htm):

Generally speaking, an invention which would be patentable in accordance with conventional patentability criteria should not be excluded from protection by the mere fact that for its implementation modern technical means in the form of a computer program are used. Decisive is what technical contribution the invention as defined in the claim when considered as a whole makes to the known art.

Since then, its definition of what is or is not patentable has been erratic, according to those in the know. In October 2002, Intellect, the UK IT trade body, cautioned: "Without the clear stake in the ground this directive would create, there is at least a danger the EPO case-law, and with it that of member states, might drift in the direction of allowing patents for non-technical subject-matters such as business methods. We think such a development would be wholly undesirable."

The Directive was conceived as a way to pin down, once and for all, what counted as patentable ,without substantially changing the implementation of the European Patents Convention. According to Jeremy Philpott, a spokesman for the UK Patent Office, this explains why the amendments have been abandoned.

"If the directive had gone through with all the proposed amendments," he says, "there would have been plenty of patents that would no longer have been valid. I cannot stress this enough: there will be no change to UK law. The whole point was that what is patentable today, will be patentable tomorrow, and what is not patentable today will still not be patentable tomorrow."

He also argues that while the copy of the directive does not define technical, this is largely irrelevant. "There is a substantial body of legal precedents which speak about the requirement for a "technical effect" to confer patentability on a software invention. Its meaning in a patent context is well understood by those to whom it matters, that is, patent examiners, patent litigators and judges."

Despite this, many people have serious concerns about the way the amendments have been dropped. Most concede that harmonisation across Europe is necessary, but the debate is over the direction of that harmonisation.

Officially, all the states that signed up to the EPC in 1973 have agreed to align their national patent laws with the EPC, and the EPC defines the criteria to which the EPO works. In theory, everyone is working to the same rulebook, and has been for years. In practice, it is a little different: Denmark, Germany and Finland have all been much more reluctant to grant software patents than the UK, for example.

"It may maintain the status quo in the UK," says Heald, "But the implications for the rest of Europe are much more significant."

The Directive will now go before a meeting of the Council of Ministers on 17 May. It has been provisionally agreed and will be waved through with no further discussion, unless one or more member states changes its stance. Then it goes back to the European Parliament for a second reading. Making further changes at this stage requires a majority of all MEPs to be in favour - including those who are absent from the chamber. If after the second reading the Council and the Parliament are still at loggerheads, they have six weeks to find a compromise or the bill will be dropped.

The FFII says the only realist way to stop the Directive is to break consensus of the member states before the 17 May meeting. Heald concludes: "Our chances of doing that are very thin". ®

Related links

The European Patents Convention (http://www.european-patent-office.org/legal/epc/)

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