EU Unitary Patent Vote: It's On, Again, Probably
Published 11:06, 08 October 12
This is getting silly. Over the last year I've been warning about problems with the EU's plan to bring in a Unitary Patent system, culminating in a call to write to your MEPs a few weeks ago about an imminent vote that was taking place in the crucial JURI committee. That didn't take place, but word is that the committee vote will now take place this Thursday:
The October agenda of the Legal Affairs (JURI) Committee of the European Parliament has been published. A discussion on the unitary parent is planned for the 11th of October, from 10:45 to 12:00. It is thus the moment to mobilise and to inform MEPs on the threat of the return of software patents, before new decisions are taken on the future of the regulation.
That means that now would be a very good time to write to the relevant MEPs on JURI if you haven't done so already. And if you have (for which thanks), now would be an excellent time to remind them about your earlier contact. Here are the UK members:
Here's what I've written as a follow-up to my email last month, which essentially includes my article from last week on the dire US experience with specialised patent courts:
Last month, I wrote to you about the Unitary Patent (copy enclosed at the end of this email.) I believe that the points I made there still hold, but since then, an interesting article in the US title Ars Technica (available at http://arstechnica.com/tech-policy/2012/09/how-a-rogue-appeals-court-wrecked-the-patent-system/) has appeared that casts further light on why we need the European Court of Justice to remain as the final arbiter of patents in Europe.
As the article explains, there was a watershed in the US judicial system, when the United States Court of Appeals for the Federal Circuit was created in 1982. Here's what happened in the world of patent litigation as a result:
"In the two decades before the creation of the Federal Circuit, appeals courts sided with patent holders in only 20 to 40 percent of cases. Such a low rate would have caused potential patent plaintiffs to think twice about filing a lawsuit using a weak patent.
In contrast, the Federal Circuit sided with patent holders more than 80 percent of the time during its first year on the bench. And it would continue siding with patent holders for the next decade. As companies saw the opportunity—or the threat—posed by this newly permissive patent regime, the number of patent applications, granted patents, and patent lawsuits all began to soar."
Worse than that, the new court greatly expanded what was regarded as patentable:
"the Federal Circuit gradually reversed the rule against patenting software. The process culminated in the infamous 1998 decision of State Street Bank v. Signature Financial Group, which held that a strategy for managing a mutual fund using a computer was eligible for patent protection. The ruling made it clear that, in the Federal Circuit's view, no practical boundaries existed on software patents. It also opened the door to patents on "business methods," which had previously been seen as off-limits.
These decisions opened the floodgates for patents on software. Microsoft received just five patents during the 1980s and 1,116 patents during the 1990s, for instance. Between 2000 and 2009? The company received 12,330 patents, more than ten times the amount."
In a very real sense, then, the Federal Circuit is responsible for the rise of patent thickets, patent trolls and the granting of absurdly obvious and trivial patents on every aspect of software. The reason that occurred is that its decisions were rarely reviewed or overturned. Only when the US Supreme Court chose to take on a case was there any possibility of that. For the first couple of decades of the Federal Circuit's life, that didn't happen; more recently, in the face of the increasing abuse of patent system, it has:
"under newly-appointed Chief Justice John Roberts, the Supreme Court stepped up its oversight of the Federal Circuit's work. The justices did not like what they found. Between 2006 and 2008, the Supreme Court decided at least four major patent cases. In all four cases, the high court overruled a patent-friendly decision from the Federal Circuit. Three of the rulings were unanimous; the fourth was decided 7-1.
In one decision, the Supreme Court reiterated the need to use common sense when evaluating the obviousness of a patent. Another ruling made it harder for a patent holder to get an injunction against an infringing product. A third decision prohibited patent holders from "double dipping" by demanding patent licenses from two different firms in the same supply chain (say, a memory maker and the computer company who used that memory in its products). The final decision limited the reach of patent law over software installed on a computer overseas."
The article also has a very clear explanation of why the Federal Circuit has this clear bias in favour of patents, and of extending them as widely as possible:
"Patent attorneys tend to have a pro-patent bias, and these attitudes seem to have rubbed off on Federal Circuit judges. Most obviously, a significant minority of Federal Circuit judges have been patent lawyers themselves, whereas judges on other courts almost never come from a patent law background. But beyond that, the heavy load of patent cases on the court's docket means that the judges of the Federal Circuit are constantly interacting with patent lawyers. In addition to hearing their arguments in the courtroom, they read the same patent law publications as the lawyers, hire young patent lawyers to clerk for them, and are invited to speak at events organized by the patent bar."
It is highly likely that exactly the same dynamics will operate in the new EU Unitary Patent court, which will therefore produce the same serious problems. As the article on the US experience notes, the solution is obvious:
"breaking the Federal Circuit's monopoly on patent appeals may be the single most important step we can take to fix the patent system. The Federal Circuit looks likely to undermine other reforms undertaken by Congress, just as it has resisted the Supreme Court's efforts to bring balance to patent law. Only by extending jurisdiction over patent appeals to other appeals courts that are less biased toward patent holders can Congress return common sense to our patent system."
We are fortunate here in Europe that we can learn from the US experience what will happen if the Unitary Court is allowed the last word on patentability. As the article suggests, only if there is an independent appeals court able to take a more balanced view of patents for the good of society will the Unitary Patent system function fairly. And that can only be achieved if the ultimate arbiter of patents is the European Court of Justice. I therefore urge you to ensure that Articles 6 to 8 remain in the proposed Unitary Patent regulation, as well as Amendments 63 and 64, tabled by Eva Lichtenberger and Christian Engström.
The text of my previous email, sent to you on 12 September, is as follows:
"I am writing to you about the imminent vote in the JURI committee on the Unitary Patent. In particular, I would like to urge you to safeguard Europe's software industry, which could be at risk if the Unitary Patent is brought in without due consideration of the issues here.;
As you know, software patents are not granted in the EU because of their exclusion in Article 52 of the European Patent Convention (EPC). Unfortunately, the European Patent Office has been issuing what are effectively software patents by using the administrative trick of re-defining them "computer-implemented inventions".
In 2005 the European Parliament voted definitively against the introduction of software patents in Europe (http://news.bbc.co.uk/1/hi/technology/4655955.stm). This confirmed the European Patent Convention, which also excludes "programs for computers" from patentability (Article 52 - http://www.epo.org/law-practice/legal-texts/html/epc/2010/e/ar52.html).
Patents on software techniques are as damaging for computing as patents on words would be for literature, because they place a tax on indispensable elements. The consequences of allowing such a tax on innovation can be clearly seen in the US, which has allowed software patents for two decades.
In their book, "Patent Failure" (http://researchoninnovation.org/dopatentswork/), the legal scholars Bessen and Meurer estimate that for the US the aggregate annual patent profits and costs from 1996 to 1999 were respectively $100 million and $3.88 billion, which means that on average during this period software patents cost the US economy around $3.78 billion. The situation since then has deteriorated, notably in the field of smartphones, where dozens of companies are suing each other over alleged infringement of their software patents (see the diagrammatic representation here: http://www.flickr.com/photos/floorsixtyfour/5061246255/)
Thanks to the European Parliament's action in 2005, the EU has been spared the worst of these excesses. But the proposal for a Unitary or EU patent, which you are voting on next week, could have the effect of allowing software patents into Europe, and thus opening the floodgates of costly litigation at a time when European companies are already under extreme financial pressure because of the current economic crisis.
The Unitary Patent will be administered by the European Patent Office. Here's how the latter describes the change it will bring (http://www.epo.org/news-issues/issues/eu-patent.html):
"Currently, once a European patent is granted by the EPO, it has to be validated in each EPO member state for which the patent proprietor seeks patent protection. For this purpose, the majority of states require a full translation of the patent in their official language(s). The future unitary patent will be automatically valid throughout the territory of the EU member states participating in the enhanced co-operation scheme in the EPO language in which it was granted."
That is, currently the patents awarded by the EPO are not necessarily valid in individual European countries, and can be challenged in national courts. But once the Unitary Patent is brought in, it will automatically be valid throughout the participating nations.
This is a problem because the EPO has been issuing software patents in increasing numbers, using a concept called Computer-Implemented Inventions (CII), which allows it to circumvent the ban on software patents. Because these were not automatically recognised in EU countries, and could be challenged in national courts, the effects of these CII patents were limited.
But once the Unitary Patent comes into force, all such software patents will be valid, and can only be challenged in a central court following EPO rules. This will permit US software companies, which have deep pockets and decades of experience in this area, to file huge numbers of patents that are valid Europe wide, and enable them to hold European companies to ransom: either the latter must pay arbitrarily-high licensing fees to continue to use basic programming ideas that have been standard parts of their toolkits for years, or they will be sued for potentially huge damages.
I therefore urge you to support Amendments 63 and 64, tabled by Eva Lichtenberger and Christian Engström. As they write of the latter:
"This amendment defines some rules of patentability in the same way as voted by the European Parliament on September 24th 2003 on its first reading of the Directive on the patentability of computer-implemented inventions (2002/0047 (COD)). The wordings of the amendment is compliant with the EPC, and moreover is enhancing the EPC own wordings, by clarifying some difficulties that have resulted in divergent interpretations by various national courts. Hence, this amendment contributes to goal of having a unified enforcement of European patents with unitary effect."
The vote on the Unitary Patent next week is a crucially important opportunity to re-affirm the European Patent Convention and the European Parliament's long-standing policy on this subject, both of which have served Europe so well."