August 28, 2003, 9:01 AM — A group of economists has blasted a proposed European Union (EU) law on software patents, characterizing it as damaging to technological innovation and Europe's software industry. The European Parliament is scheduled to vote on the "patentability of computer-implemented inventions" directive on Monday.
In a highly critical open letter to EU lawmakers issued earlier this week, the group of 12 economists from such European and U.S. institutions as the University of London, the Oxford Internet Institute and Stanford University urged that the directive be rejected in its present form.
The EU is attempting to establish an overarching patent standard for computer-implemented inventions, which includes but is not confined to software, bringing into line the different interpretations being given by different national courts throughout Europe. The issue has been highly contentious, with supporters of open source and free software asserting that copyright laws are enough to protect business innovations and calling for all patents to be outlawed, while large businesses push for a U.S.-style approach allowing for so-called business methods to be patented.
Though the letter praised the Parliament for its efforts to establish a consistent patent framework, the economists warned that should the proposed directive become law, small and medium-sized companies will be squeezed out of the market as large companies patent as many technologies as possible in an effort to preserve market dominance.
"While clothed as an administrative clarification, the proposed Directive will provide opportunities and incentives for the construction of extensive portfolios of software patents," the economists wrote in the letter. "The exploitation of these portfolios will have serious detrimental effects on European innovation, growth, and competitiveness."
The patents directive has already made its way through the European Parliament by the Committee on Legal Affairs and the Internal Market (JURI). A presentation of the resulting draft legislation by European Parliament member Arlene McCarthy will open the Parliament's session on Monday.
The economists contend that the analysis used in McCarthy's report is not balanced and fails to address the problems of strategic patenting.
The open letter was signed by, among others, Paul A. David of the Oxford Internet Institute and Stanford University; Bronwyn H. Hall of the University of California at Berkeley and Scuola Sant'anna Superiore, and W. Edward Steinmueller of the University of Sussex. The three academics, with Brian Kahin of the University of Michigan, also wrote an analysis piece issued along with the letter.
