[FSFE PR][EN] A compulsory insurance against software patents is like firefighting with petrol!

Free Software Foundation Europe (FSFE) press at fsfeurope.org
Mon Nov 1 14:51:21 CET 2004

Dear Mr Barroso,

The preceding European Commission (EC) was campaigning actively for the 
introduction of software patents in Europe. This campaign was against
the information and evidence showing that this would lead to
considerable risk to the European economies: On top of the studies
already known [1], recent publications by Pricewaterhouse Coopers (PwC)
[2] and Deutsche Bank Research [3] further underlines the damaging
consequences of software patents on Europe. As The Register quotes PwC:
"The mild regime [...] in the past has led to a very innovative and
competitive software industry with low entry barriers. A software
patent, which serves to protect inventions of a non-technical nature,
could kill the high innovation rate."

The reality that software patents are becoming an innovation restriction
may be one reason why all the parties in the German parliament objected 
to their introduction. This is the first time (which we are aware of)
that all parties have objected in this way. Furthermore acknowledging
the damaging effect of software patents, the latest idea of the parting
European Commission is compulsory insurance [4] to limit the damage.
This insurance would apply to both defendants and patentees. When
looking for examples of software patent litigation that this insurance
should protect against, one does not have to look far: Eolas
Technologies sued Microsoft because of the infringement of a software
patent in 1999. Meanwhile - five years and remarkable legal expenses
later - the US Patent and Trademark Office (PTO) has declared the patent
invalid. There is no expert certain the patent would be upheld.
Nevertheless Eolas declared they would keep fighting, there is no way to
predict when this litigation will end. Eolas is continuing along this 
road without insurance against losing the lawsuit.

In this sense, the planned compulsory insurance is like firefighting
with petrol: We already have 30,000 software patents in Europe. Many
compulsory insured patentees will consider the insurance as an
investment they need a return on. Returns from software patents are
reaped in lawsuits filed. The result: Rapidly exploding insurance
premiums, insurance companies limiting their risk to what they can
calculate, and in the end patentees and defendants will find
themselves in a situation similar to one without compulsory insurance,
but with one important difference: They will have spent an insane
amount of money on a useless insurance and bureaucracy for its
administration will have skyrocketed. With these developments, working
on reducing bureaucracy in the European Commission will become a
futile endeavour, but more importantly, innovations in the information 
society will be eliminated and Europe will not become a competitive 
knowlege based economy by 2010. 

We therefore ask you to please spare the European economy both the 
introduction of software patents (one of the most efficient road blocks 
to innovation and economic growth in the information society) and the 
madness of insurance against this needlessly created risk.

With kind regards,

Georg Greve
Free Software Foundation Europe

[2] www.theregister.co.uk/2004/09/15/pwc_swpat_are_a_threat/

Joachim Jakobs <jj at office.fsfeurope.org>
Press Speaker - FSF Europe (http://fsfeurope.org)
In der Roede 24, 64367 Mühltal (Tel: +49-179-6919565)

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