[Fsfe-ie] James Boyle: Geeks in software patent frenzy (Financial Times)]

Teresa Hackett teresahackett at eircom.net
Fri Jul 1 12:57:05 CEST 2005

James Boyle: Geeks in software patent frenzy

By James Boyle
Published: June 30 2005 16:47 | Last updated: June 30 2005 16:47
available at: 

European geekdom is in a frenzy. The cause? A key vote on a proposed 
Software Patent Directive is due to be held in the European Parliament 
on July 6th.

Except, depending on whom you listen to, the directive is not really 
about software patents at all. Some argue that as its official name 
indicates, it is only about “computer implemented inventions.” They 
claim it will only cover systems that use software to control something 
in the external world, traffic lights say, but not software that just 
runs to be.. well.. software, such as an internet browser or a spread 
sheet program.

Opponents strongly disagree. They claim the directive not only allows 
expansive “pure” software patents, it also might allow for the toxic US 
innovation of “business method patents.” If a normal patent covers a new 
design for a corkscrew or a way of cooking burgers, a business method 
patent covers the idea of opening a bottle of wine, or of selling fast food.

The debate has played out noisily over the last few years, complete with 
accusations of procedural impropriety, intense arguments about legal 
definitions, national government statements pro and con, the appearance 
of “tech celebrities” (if that isn’t an oxymoron) and a level of 
intensity that one might expect in arguing the ethics of stem cell 
research but which seems strange in an area like this. What is going on?

On the substantive level, what is going on is a fight over the basic 
conditions of competition in the digital world. Both sides agree that 
intellectual property is important for innovation but they disagree 
about how much – at what point more rights start to hurt rather than 
help – and how enterprises of different sizes will be affected. A 
particular and very real concern is the effect of software patents on 
so-called “free or open source software” such as Linux which is created 
by a fascinating process of decentralised development.

It does not help the debate that well-intentioned people simply disagree 
about what the proposed directive actually means; an indication of the 
dangers involved in law-making about property whose boundaries are 
marked, not by fences or walls, but by vaporous ideas and concepts. A 
property right crafted with one goal in mind can spread, amoeba-like, to 
cover situations its drafters never intended. That was the certainly the 
experience in the US.

Which side in the European debate is right? One of the problems is that, 
as normal, the argument proceeds almost entirely without evidence. There 
have been some empirical analyses, but they have generally been 
conducted by advocates rather than policy makers, or have had 
methodological shortcomings.

A Business Software Alliance study apparently showing reliance on 
software patents in Europe by small companies was released and received 
stinging media criticism for statistical inaccuracies and for a press 
release which was interpreted – rightly or wrongly – as vastly 
overstating the results. An interesting German-commissioned study of a 
large number of software developers showed a consistent belief in 
companies of all sizes that software patents would harm rather than help 
the development of new software. This is a striking result but studies 
based on attitudes and beliefs are notoriously difficult and the author 
was careful to caution that the group might not be statistically 
representative. There are good studies which show that patents can act 
as a useful signal to investors, but also that they can allow dominant 
firms to block new entrants and developments.

In the absence of further evidence, sound bites prevail. Proponents of 
the directive are left claiming that “stronger rights will mean more 
innovation.” Opponents quote Bill Gates’ 1991 words about the expansion 
of software patentability in the US: “If people had understood how 
patents would be granted when most of today’s ideas were invented and 
had taken out patents, the industry would be at a complete standstill 

There is, however a very impressive empirical literature of the 
expansion of patentability on the US software industry that some 
European policy makers seem to have missed.

For example, Professor James Bessen and Robert Hunt of the Federal 
Reserve Bank found that the increase in the level of software patenting 
in the US was associated with a significant decline in investment in 
research and development by software companies. As more and more patents 
were granted, companies spent less on R&D. Correlation does not prove 
causation, as the authors appropriately caution. Nevertheless their 
conclusions are clear about the assumption that granting stronger 
property rights in software will stimulate innovation. “Our evidence 
suggests this assumption may be incorrect in the case of software 
patents. If, instead, the legal changes create patent thickets, the 
result might well be less innovation.”

Certainly that is what the numbers on R&D dollars suggest. Funnily 
enough, Microsoft gave financial support to two economists to write a 
critique of the article. Has Mr. Gates changed his mind about the 
anti-innovative effects of expanding software patents? The data indicate 
he may have been right the first time. The European Parliament should 
take note.

/This writer is William Neal Reynolds Professor of Law at Duke Law 
School, founder of the Center for the Study of the Public Domain and a 
board member of Creative Commons and Science Commons./

More information about the FSFE-IE mailing list