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  5. Software patents putting International Financial Report Standards (IFRS) in danger - 5 April 2005
  6. </title>
  7. </head>
  8. <body>
  9. <center>
  10. <h1>Software Patents in Europe</h1>
  11. [ <a href="/campaigns/swpat/swpat.html">Introduction</a>
  12. | <a href="/campaigns/swpat/background.html">Background</a>
  13. | <a href="/campaigns/swpat/status.html">Status</a>
  14. | <a href="/campaigns/swpat/documents.html">Further Reading</a> ]
  15. </center>
  16. <br />
  17. <center>
  18. Open Letter
  19. [<a href="/campaigns/swpat/letter-20040510.html">2004-05-10</a>]
  20. [<a href="/campaigns/swpat/letter-20040531.html">2004-05-31</a>]
  21. [<a href="/campaigns/swpat/letter-20040706.html">2004-07-06</a>]
  22. [<a href="/campaigns/swpat/letter-20040802.html">2004-08-02</a>]
  23. [<a href="/campaigns/swpat/letter-20040906.html">2004-09-06</a>]
  24. [<a href="/campaigns/swpat/letter-20041004.html">2004-10-04</a>]
  25. [<a href="/campaigns/swpat/letter-20041101.html">2004-11-01</a>]
  26. [<a href="/campaigns/swpat/letter-20041206.html">2004-12-06</a>]
  27. [<a href="/campaigns/swpat/letter-20050103.html">2005-01-03</a>]
  28. [<a href="/campaigns/swpat/letter-20050207.html">2005-02-07</a>]
  29. [<a href="/campaigns/swpat/letter-20050307.html">2005-03-07</a>]
  30. [2005-04-05]
  31. [<a href="/campaigns/swpat/letter-20050502.html">2005-05-02</a>]
  32. [<a href="/campaigns/swpat/letter-20050606.html">2005-06-06</a>]
  33. </center>
  34. <h2>
  35. Software patents putting International Financial Report Standards (IFRS) in danger
  36. </h2>
  37. <h3>5 April 2005</h3>
  38. <p>
  39. The European Information &amp; Communications Technology Industry
  40. Association (EICTA) combines 32 national ICT/CE associations
  41. from 24 European countries with 48 direct company
  42. members. EICTA altogether represents more than 10.000
  43. enterprises in Europe with more than 2 million employees and
  44. revenues of over 200 billion. The Association heavily supports the
  45. monopolisation of software ideas. Mr Provoost is
  46. president of EICTA and represents Philips Consumer Electronics
  47. as Senior Vice President and Chief Executive Officer.
  48. </p>
  49. <p>Dear Mr. Provoost,</p>
  50. <p>
  51. The European Council and European Commission are pushing for the
  52. introduction of software patents in Europe to such an extent and in such
  53. ways that they raise justified doubts in the democratic roots of Europe.
  54. </p>
  55. <p>
  56. Your association, the European Information &amp; Communications Technology
  57. Industry Association (EICTA) has strongly supported this agenda in the
  58. past. In the discussion, you raised the argument that "We must be
  59. allowed to protect out innovations."
  60. </p>
  61. <p>
  62. This statement we fully agree with. However, if you believe that
  63. software patents help protect innovation, it seems you were being
  64. misinformed, as the role of software patents is not to protect, but to
  65. prevent innovation. Bill Gates pointed this out in an internal Microsoft
  66. memo in 1991:
  67. </p>
  68. <p class="quote">
  69. "If people had understood how patents would be granted when most of
  70. today's ideas were invented and had taken out patents, the industry
  71. would be at a complete stand-still today."</p>
  72. <p>
  73. He said this because he understood that patents on software inevitably
  74. are monopolies on abstract logic and ideas.
  75. </p>
  76. <p>
  77. If Pythagoras was to come up with his theorem today, in a software
  78. patent regime he would clearly be entitled to get a monopoly on
  79. it. Pythagoras could then arbitrarily select the conditions under
  80. which others could make use of or build upon his idea.
  81. </p>
  82. <p>
  83. Software usually embodies literally thousands of abstract ideas. Under
  84. a software patent regime, each of these could be turned into a
  85. monopoly and would constitute a no-go zone for competitors. That is why
  86. Bill Gates also said:
  87. </p>
  88. <p class="quote">
  89. "A future start-up with no patents of its own will be forced to pay
  90. whatever price the giants choose to impose. That price might be
  91. high: Established companies have an interest in excluding future
  92. competitors."
  93. </p>
  94. <p>
  95. In other words: software patents are an anti-competitive tool that
  96. serves to raise the burden on innovation. The height of that barrier
  97. is flexible and can easily be raised to trip established companies,
  98. such as Philips, and innovative newcomers alike.
  99. </p>
  100. <p>
  101. In previous letters we have explained how software patents cost jobs
  102. and economic power in Europe. Today we would like to inform you how
  103. they pose a threat to the International Financial Reporting Standards
  104. (IFRS) [1] as all the ideas used in these standards will be implemented
  105. in software and would therefore be patentable. This will affect all
  106. European companies as the IFRS rules have been mandatory to all listed
  107. companies in the European Union since 2002.
  108. </p>
  109. <p>
  110. If you check the US Patent and Trademark Office (USPTO) database, you
  111. will find that there are already hundreds of patents on software ideas
  112. concerning expressions like "account" or "financial report". One of
  113. them protects a system "for financial planning and advice" [2]. That
  114. particular patent is held by American Express Financial Corporation
  115. (Amex) - a company which we know better for its credit cards than its
  116. innovative software.
  117. </p>
  118. <p>
  119. After establishing a legal basis for software patents in Europe, Amex
  120. might arbitrarily choose to determine which software company is
  121. allowed to implement the IFRS or similar standards.
  122. </p>
  123. <p>
  124. This of course assumes that none of Amex' competitors has an interest
  125. in blocking such development and uses their patent on another
  126. necessary idea to stop the development. But even if no one does: As all
  127. systems have many components in common and the number of methods to
  128. make computer systems secure is limited, any such software would
  129. always be less secure in a software patent regime.
  130. </p>
  131. <p>
  132. People in Europe often seem to look to the United States for economic
  133. advice. This time, the CEO of Computer Associates, John Swainson, has
  134. made the message remarkably clear: Europe should not introduce
  135. software patents. [3]
  136. </p>
  137. <p>
  138. Copyright provides a very efficient protection for computer software,
  139. but in order for Copyright to protect your innovation, you first need
  140. to have an innovation. That is why we hope EICTA will stand up and
  141. oppose software patents because: "We must be allowed to innovate."
  142. </p>
  143. <p>With kind regards,</p>
  144. <p>
  145. <a href="/about/greve/">Georg Greve</a><br />
  146. President<br />
  147. Free Software Foundation Europe (FSFE)<br />
  148. <a href="/">fsfe.org</a>
  149. </p>
  150. <p class="footnote">[1] <code class="footnote">
  151. <a href="http://en.wikipedia.org/wiki/Ifrs">http://en.wikipedia.org/wiki/Ifrs</a>
  152. </code></p>
  153. <p class="footnote">[2] <code class="footnote">
  154. <A HREF="http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&amp;Sect2=HITOFF&amp;p=1&amp;u=/netahtml/search-bool.html&amp;r=7&amp;f=G&amp;l=50&amp;co1=AND&amp;d=ptxt&amp;s1='accounting+standards'&amp;OS=%22accounting+standards%22&amp;RS=%22accounting+standards%22">US Patent 6,430,542: Computer-implemented program for financial planning and advice system</A>
  155. </code></p>
  156. <p class="footnote">[3] <code class="footnote">
  157. <a href="http://www.ftd.de/tm/it/1110009214683.html?nv&#61;sl">http://www.ftd.de/tm/it/1110009214683.html?nv&#61;sl</a>
  158. </code></p>
  159. </body>
  160. <timestamp>$Date$ $Author$</timestamp>
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