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A compulsory insurance against software patents is like firefighting with
petrol - November 1st, 2004
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<h1>
Firefighting with petrol
</h1>
<h3>November 1st, 2004</h3>
<p>Dear Mr Barroso,</p>
<p>
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
<a href="/projects/swpat/letter-20040531.html">studies already known</a>,
recent publications by
<a href="http://www.theregister.co.uk/2004/09/15/pwc_swpat_are_a_threat/">Pricewaterhouse Coopers (PwC)</a>
and
<a href="http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000175949.pdf">Deutsche Bank Research</a>
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."
</p>
<p>
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
<a href="http://europa.eu.int/comm/internal_market/en/indprop/patent/docs/patent-litigation-insurance_en.pdf">compulsory insurance</a>
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.
</p>
<p>
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.
</p>
<p>
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.
</p>
<p>With kind regards,</p>
<p>
<a href="/about/greve/">Georg Greve</a><br />
President<br />
Free Software Foundation Europe (FSFE)<br />
<a href="http://www.fsfeurope.org">www.fsfeurope.org</a>
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