Karsten on Free Software

Statement to the 15th session of WIPO’s Standing Committee on the Law of Patents

Free Software Foundation Europe (FSFE)

(Geneva, 13 October 2010)

We applaud the committee and the secretariat for commissioning the study led by Professor Bently, which provides a useful overview of a complex field, and represents a starting point for future debates. We would like to thank the experts involved, both inside and outside WIPO, for their work.

We however regret that the study and the mandate which this committee provided did not include systems of open innovation, of which Free Software is the most established example.

We agree with the distinguished delegation of Brazil in highlighting that the patent system must strive for the equilibrium of rights among its users, which should, accordingly, not only comprise patent holders, but also the society as a whole, so that the welfare of the society as a whole prevails. They all constitute legitimate “clients” of the system.

In particular we note that the study highlights the wide-spread consensus that computer programs should be excluded from patentability. We applaud the study for considering the economic context in which we must consider the costs and benefits of patents on computer programs. The study concludes that the costs of patenting in this particular area far outweighs any conceivable benefits.

Indeed, the damage that software patents do to innovation and economic development strikes at the very heart of the digital society. They create an incalculable business risk for anyone engaging in the development of software. Due to the fact that reliably identifying prior art in software goes far beyond the capabilities of even the best-equipped patent office, software patents are routinely granted on inventions which have long existed, and are in fact not innovative at all.

This dovetails with the conclusions drawn by leading independent experts in the field, such as the Results of the 2008 Berkeley Patent Survey conducted by Pamela Samuelson et al. ¹ The startup executives interviewed in the survey stated that patents generally provided only weak incentives to engage in innovation. The Samuelson study finds that that “a large share of startups, especially in the software industry, opt out of patenting altogether. ” While patents aid startups in the areas of hardware and biotechnology to capture competitive advantage, the Berkeley Patent Survey concludes “that for software and Internet companies, patents generally serve a much less important function in almost all of the entrepreneurial activities”.

Moving on to the debate about exclusions and exceptions, we note that for the particular area of software, the substance of Professor Bently’s study strongly suggests that the cost-benefit calculation of patenting will not be improved by granting exceptions to patentee’s rights. Contrary to the comments made in this room yesterday by Professor Bently, after considering the matter in depth, we arrive at the conclusion that exceptions, which are merely defensive, do not suffice to mitigate the damage done by patents on software.

As stated on Monday by the distinguished delegation of Brazil on behalf of the Development Agenda group, we must never lose sight of the fundamental trade-off at the root of the patent system: In order to provide an incentive to innovate, we award a monopoly. If we do not very carefully monitor the attendant risks for innovation and competition in the market, we will quickly find ourselves in a situation where the market is dominated by only a few companies. This is already the case in software today.

We agree with the statement made by the distinguished delegation of Iran that exceptions carry with them the dangers of restrictive interpretation and private ordering. For these reasons, we consider exceptions to be unsuitable as a tool to stimulate software innovation. Instead, exclusions should be used, and their implementation strictly monitored. In this area, SMEs and individuals are having to fight a pitched battle against overwhelmingly powerful corporate interests and entrenched monopolies in the software market. We should not needlessly put them on the defensive.

In the area of software, exclusions work in favour of SMEs because they provide clarity if properly implemented. Exceptions work in favour of the incumbent monopolies, which have the legal firepower to shape jurisprudence in their own interest.

A case in point is the fact that while the study considers at length the practice of the European Patent Office, it neglects to point out that the EPO’s practice is in direct contravention to the letter and spirit of the European Patent Convention’s Article 52, which states that programs for computer are excluded from patentability.

We agree with the Development Agenda Group that patents should be granted only in areas where there otherwise existst a market failure to provide innovation. On this issue, we would like to refer delegates to the “three step test for inclusion in the patent system” which we first proposed to this committee during its 13th session in March 2009.

This three-step test argues that for any subject matter to be included in the patent system, there must be

1. a demonstrated market failure to provide innovation,
2. demonstrated positive disclosure from patenting, and
3. demonstrated effectiveness of the patent system in the area to disseminate knowledge.

Software fails all three steps of this test. Innovation in the software market is more vibrant than ever. Experience shows that patent-related disclosure is practically useless in the case of software. The patent system in this field impedes the dissemination of knowledge instead of promoting it. It follows that software should be excluded from patentability.

We support the proposal of Brazil contained in document SCP/14/7 and the concrete suggestions therein for a work programme for this committee to carry out a debate on exceptions and limitations to patentability. However, we request that exclusions from patentable subject matter should also be included in this debate, alongside limitations and exceptions. We will be happy to provide expertise on the matter to anyone requesting our help.

Thank you, Mr Chairman.