Software Patents, Waving a Red Flag to a Bull

Negotiations about a new EU-South Korean Free Trade Agreement have taken a while, but finally parties reached an agreement. Although ambitious, nothing shocking it seems, but as soon words like “intellectual property” and “computer programs” are used in the same context – in this case what is known as “Chapter 10” of the Trade Agreement, this is like waving a red flag to a bull. The agreement is not all that exciting to read and many provisions are merely confirmations on already existing international IP agreements, like TRIPS. Not so for FFII. We know their sensitivities if it comes to IP on software, now Chapter 10 is at the realm of their anger. They allege negative impacts caused by this Agreement on software development because it provides for the common measures against IP infringement, i.e. injunctions, damages, seizures, and so on. FFII comments: “These strong measures may be justified against hard core counterfeiters. They are not justified against software developers. Software patents are so broad in scope, doubtful in validity, and so numerous that unintentional infringement is unavoidable in the normal course of business. Therefore, competitors and patent trolls can always find a stick to hit software companies, companies that use software and free software projects. The whole sector is at risk.”

IP protected software is an all-time melting pot of protests, anger and mistrust against the whole IP system but specially against software patents. The subject remains a major source of altercation between intellectual property opponents and the patent community.  Admittedly, everyone can come up with mishaps in software patents that were granted while novelty or inventive are absent or at best very questionable. As current EPO practice shows, especially after decisions like Hitachi by the Board of Appeal of the European Patent Office.  Case T 258/03, also known as Auction Method/Hitachi, is a decision of the Technical Board of Appeal of the European Patent Office (EPO) of 2004. This landmark decision on interpreting software and business method patentability (article 52(1) and (2) of the European Patent Convention (EPC) significantly affected the assessment of an invention’s technical character and inventive step and gave guidance how to deal with those sort of patents. It seems to us that this was clearly to lift the threshold for patentability of software patents.

But an improvement of the process of patenting, in particular the examination of the claims on novelty , “technical character” and inventive step, will be the most suitable remedy for these issues. Nobody will profit by an IP system which does not warrant the quality of protected inventions. But likewise nobody will profit from an IP System that is evadable by just changing the rules of the game nor changing the market place. Harmonizing the understandings of the IP system in order to achieve a higher level of (worldwide) trade harmonization is a legitimate goal.

However whether this is true or not, the fact is that Chapter 10 in the Trade Agreement does not create new law, not does it in anyway change the current level playing field of software patenting. Far from it. The equity measures the Agreement offers to owners of IP rights to act upon infringements are already in existence, substantiated by national and international IP laws and agreements.

Surely, one could be of the opinion that the EU IP-system still is (partly) flawed as does Annette Kur, Max Planck Institute Munich, like many others who claim the patent system must be improved). However what has that to do with this Trade Agreement? We can’t see it. So instead of suggesting new legislation has been created favoring (actions based on) software patents, we better look at the positive implications of this Agreement.

Let’s take article 10.41 of the Agreement which states, that all measures against patent infringement shall be “fair and equitable” (lit. b) and shall “be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse” (lit. d).

Additionally, the agreement grants extensive privileges to online service providers (Section C, Sub-Section C), which are exempted from liability according to Articles 10.62 et seq. These privileges are similar to those privileges that are known from the European e-commerce Directive (Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market), which has contributed to the prospering internet and software economy even through the exemptions of liability for online service providers. And – without doubt – these privileges will also contribute to the development of an prospering exchange of free software between the EU and Korea.

Stephan Dorn