Software patents & IPRED2:

write software, end-up in jail

Reinier B. Bakels

Law Faculty Maastricht University

17 May 2006

r.bakels@pr.unimaas.nl/r.bakels@planet.nl

Software Patents

not on code but on inventions: 'deeper'

increasingly 'popular' since the 1990's

allowed in Europe if 'technical contribution'

even after 2006 EU directive rejection

nobody knows what a 'technical contribution' is

low threshold: 'triviality', quality problems

“legalised extortion”

Patent Infringement

no 'independent discovery defence'

try to reach a settlement

prepare a defensive patent portfolio

go to a civil court (injunction, damages)

or be prosecuted and go to jail

Present Situation

infringement a crime e.g. under Dutch law

4 years / € 45000 maximum if 'business'

provision inserted by parliament for SMEs

never used in practice

cases too complex for criminal courts

parties want compensation, no punishment

public prosecution no government priority

EU policy

enforcement a European priority

'terrorists financed by piracy'

“Intellectual Property Rights Enforcement Directive” #1: adopted 2004

private law only

extensive and inconsistent changes to procedural law (e.g. on seizures)

IPRED #2: currently debated

criminal law

Changes

present (WTO 'TRIPS')

commercial scale

trademark counterfeiting

copyright piracy

no police priority

future (?) ('IPRED2')

any 'intellectual property right'

any commercial scale infringement

joint investigation teams

Why this is ridiculous

'intellectual property' is an overly wide and poorly defined concept

age-old principle: free unless specific law

'commercial scale' much wider than 'piracy'

non-commercial patent or trademark infringement does not even exist

EU can only 'harmonise' (maximum) punishments, not national police priorities

no 'subsidies' for Micro$oft

Threats

'joint investigation teams' razzia's

police authorities for the BSA?

abuse of 'data retention' data

punishments set to meet data retention directive minimum requirements

people will believe all imitation is a crime

some imitation is essential to competition

A Wider Perspective

The economy of knowledge (information)

information is 'non-rivalrous'

information is (often) 'non-excludable'

cost and value can widely diverge

Information law

should only remedy any 'market failure'

no 'reward' for effort

not 'natural' like real property

The Patent Law Balance

individual

society

justice

efficiency

“I created it so I own it.”

sharing knowledge does not hurt creator

exclusivity needed for R&D cost recovery

monopolies

transaction cost

Transaction Costs

know-

ledge

know-

ledge

know-

ledge

know-

ledge

know-

ledge

know-

ledge

raw

material

raw

material

raw

material

R&D

manufacturing

product

trade in knowledge is expensive and frustrating – while knowledge can be shared

that's why commercial companies like Open Source too

Patents versus “Open”

patents are increasingly a burden

patents are a market failure remedy only, not a 'natural' reward

EU geared to 'rent seeking' lobbyists

'open' (software, science, culture) models

not something special and separate!

but a mainline approach to innovation without undue overhead

less administration a political priority too!

Messages for policy makers

imitation is not 'theft' but key to capitalism

innovation involves 'creative destruction' (Schumpeter)

patent law in particular:

should remedy market failure only

no 'reward' for efforts! works two ways:

pure science (theories) can not be patented

zero effort 'flash of genius' inventions can be patented

Politics

European Patent Office

run like a business, no balance

defeats 'separation of powers'

Politicians

are told that imitation = crime

are told that patents = innovation

Lisbon agenda saved by imprisonments?!

Political economy

politicians lack interest and understanding in 'intellectual property'

'rent seeking' a highly profitable business

IBM in the 1990s, M$ presently

lobbyists set the scene

concentrated efforts by software giants

FFII counter-lobby: a major innovation

James Buchanan 1986 Economics Nobel prize

IPRED2 – in sum

IPRED2 criminalising all 'intellectual property' infringement

is not a solution

to a non-existing problem

in a very bad way ('state terror')

ignoring political sensitivities (front page news!)

based on backward innovation thinking

Get the message to politicians!

SANE 2006 Delft presentation

Software Patents & IPRED2: write programs - go to jail

Reinier Bakels

2006-05-17T09:06:07