Arte Numérica -- Serviços Informáticos, Lda

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1 Dear Sir or Madam: "Arte Numérica -- Serviços Informáticos, Lda" is a small Portuguese company which provides services and custom solutions in several computing fields (including, but not limited to, web service development and management, system and network administration, support for scientific computing). Enclosed you may find Arte Numérica's response to the European Commission's consultation "On the patent system in Europe", written by myself and José Sebrosa, as its managing partners. We thank the Commission the deadline extension without which we would not be able to contribute our point of view... and hope that, in spite of this additional delay of a few hours, our response can still be considered. Yours faithfully José M Cerqueira Esteves Arte Numérica -- Serviços Informáticos, Lda

2 1 an-patstrat-response 1 Arte Numérica Arte Numérica Serviços Informáticos, Lda. Rua Teófilo Braga, 13, cave, loja 6, Damaia, PT Amadora, Portugal NIPC , inscrita na 1ª CRC da Amadora sob o nº 11486/990827, com o capital social de 5000 Response to the European Commission s questionnaire On the patent system in Europe ( PATSTRAT, dated ) 1 Basic principles and features of the patent system 1.1 Do you agree that these are the basic features required of the patent system? No. Some of the proposed features are clearly desirable, but these would hardly suffice as the core set of required features for a patent system if, as we agree, its basic idea is [... ] to support innovation, growth and quality of life for the benefit of all in society. We agree with the need for clear substantive rules on what can and cannot be covered by patents. Such rules should stem from a careful analysis of the impact of patentability in different fields, never losing sight of the ultimate goals for the very existence of a patent system. Unfortunately those goals seem neglected in the criterion for patentability put forth in the first proposed feature: balancing the interests of the right holders with the overall objectives of the patent system. Rights holding is an artificial means to achieve the ultimate goals of patent law, not a natural right included in such goals. It makes sense to balance the positive and negative impacts patents may have on society. It is not safe to balance the objectives of patent law with the interests created to serve those objectives. 1.2 Are there other features that you consider important? Rules for what may be covered by a Community Patent should be clearly defined from the start. As we stated above, this definition must be preceded by a thorough assessment of the

3 2 an-patstrat-response 2 impact of patentability in each field of endeavour. Extreme care will be required to avoid conflicts of interest, metrics skewed towards promoting the interests of rights holders, and losing sight of negative effects. some types of patents may have on society. The fundamental goals of patent law should not subverted. If the patent system is to promote innovation, care must be exercised to prevent its (ab)use as a tool to stifle competition. Possible chilling effects on research should also not be neglected. In the field of computing, we are particularly concerned with well-known harmful effects of software patentability on software development and computer science. Europe should learn from the current state of affairs in the U.S. concerning the negative impact of software and business method patents and take that experience into account before introducing a new Community Patent system. Later corrections will be much harder. Europe s own experience with the European Patent Office (EPO) extending the realm of patentability to software, business methods and mathematics in violation of the European Patent Convention (EPC) shows how clear substantive rules on patentability can become ineffective, stressing the need for adequate supervision of EPO s operation under the jurisdiction of the European Union. 1.3 How can the Community better take into account the broader public interest in developing its policy on patents? From the very first stages in the development of patent policies, the Community must not lose sight of: the public interest as a fundamental goal of patent law; the specific characteristics of each field of endeavour (are the risks and costs of patentability worthwhile?); interaction between patent law and other areas of the law (such as those having to do with competition, consumer rights, copyright,... ). Florian Müller s reminder 1 should be given serious consideration: One of the most important lessons learned from the legislative process concerning the proposed software patent directive is that decisions on patent policy tend to be more in line with the public interest when taken and influenced by persons whose careers are not linked to the patent system. Software development is currently a field where (in dramatic contrast with other fields) the barrier to entry is quite small. This allows for a rich competitive ecosystem where most of the developers and innovators are small and medium-sized companies, individuals, and even organizations not necessarily having software development as their main activity. At the same time, the nature of software and the known practices in software patenting are such that even the most modest software project includes thousands of small 1

4 3 an-patstrat-response 3 components and ideas each of which can be covered by one or more current or future patents. In such a landscape, the financial requirements and legal hurdles resulting from a patent regime would cause widespread damage, from which only the players with the largest patent portfolios could be safe. In fact, those few would then feel less pressure to innovate, given the artificial protection thus received against what would otherwise be varied and intensely active competitors. The best way to promote innovation and healthy competition in the software field is to allow developers to focus on development, which is already protected under copyright regime. It is also with increasing concern that we notice among public research organizations and (both public and private) academic institutions EU-sponsored efforts to promote patenting as a means to obtain additional financing and as a criterion for evaluation of personal and institutional success. If the broader public interest is to be taken into account, we should instead be reminding academia how free sharing of knowledge and innovation, as well as promoting their reuse, are of its essence. 2 The Community patent as a priority for the EU 2.1 By comparison with the common political approach, are there any alternative or additional features that you believe an effective Community patent system should offer? We already discussed in section 1 some features which we consider desirable for any patent system. Concentration of legislative, executive and judiciary power in the European Patent Office must not be allowed. The EPO has already ignored EPC rules concerning software patentability and attempted to influence European legislation into legalizing its own practice. It must be made accountable to and be adequately supervised by the European Union. Possible effects of the EPO s financing model on the evolution of patent scope and patent granting should be properly reviewed. 3 The European Patent System and in particular the European Patent Litigation Agreement 3.1 What advantages and disadvantages do you think that pan-european litigation arrangements as set out in the draft EPLA would have for those who use and are affected by patents? We did not have much time to properly assess such advantages and disadvantages; in fact we are we not sure if a proper assessment is at all possible at this time. Success of litigation arrangements will strongly depend on the willingness and ability of the EU to

5 4 an-patstrat-response 4 carefully take into account the input provided by various players and, most of all, public interest; define clear rules on patentability and other issues; prevent conflicts of interest at all levels, from the legislative process to the operation of the resulting litigation system. 3.2 Given the possible coexistence of three patent systems in Europe (the national, the Community, and the European patent), what in your view would be the ideal patent litigation scheme in Europe Whenever possible, the best litigation is no litigation, except for a few companies which thrive on it (either depending on litigation as their main business method or with enough resources to use it as an alternative to proper competition). Coexistence of the abovementioned multiple litigation systems seems particularly harmful for the smaller players, such as small and medium enterprises. A sound patent law, with clear rules and, in particular, well-defined limits to patentability, would provide the best foundation for an appropriate patent litigation scheme, particularly by reducing the need and the encouragement for some disputes. In what concerns software development and use, we believe that any benefits which software patents could possibly provide to (a few players in) the European industry are vastly outweighed by healthy competition and freedom from patent litigation. 4 Approximation and mutual recognition of national patents 4.1 What aspects of patent law do you feel give rise to barriers to free movement or distortion of competition because of differences in law or its application in practice between Member States? The aspect we are most likely to feel as a barrier to free movement and as distorting competition is the one we consider to be a recent deliberate misinterpretation of the European Patent Convention: patentability of software and business methods. Fearing patent litigation, many companies without abundant financial resources are likely to avoid jurisdictions where such patentability has been accepted. Software and business method patents may even be used against services, organizations and individuals not directly involved in software development, sales or support. Competition is shifted from normal markets to the litigation arena. 4.2 To what extent is your business affected by such differences? As a small company involved in providing services and doing some software development in several fields, Arte Numérica is vulnerable to the menaces described above. Software patentability has the potential to harm us (and, we believe, most of the software industry)

6 5 an-patstrat-response 5 in several ways, including but not limited to threats of direct litigation, restrictions on our software development activities and a more limited choice of third-party products. 4.3 What are your views on the value-added and feasibility of the different options (1) (3) outlined above? Option (1) would be acceptable, but only if software and business method patentability is clearly excluded, maybe with the help of the 21 amendments proposed at the European Parliament for the July 2005 vote on the so-called directive.on the patentability of computer-implemented inventions. Option (2) lacks any meaningful definition of its purpose, therefore it is not possible to comment on it. Given the known history of the EPO, option (3) would result in a most harmful harmonisation shifted towards misinterpretation of the European Patent Convention, maximization of the patentability scope and low patentability standards. 4.4 Are there any alternative proposals that the Commission might consider? The Commission should engage in serious efforts to fight what has been aptly named as patent inflation. The above-mentioned 21 amendments to the software patents directive would be a rather useful starting point for such a project. EPO s financing model should be reviewed, and an attempt should made to eliminate any direct relationship between the number of accepted patent applications and EPO s income. 5 General 5.1 How important is the patent system in Europe compared to other areas of legislation affecting your business? 10 for its risks, 1 for its use by us Once allowed to cover software, the patent system will be most capable of harming Arte Numérica (along with most of the European software industry). Apart from those risks, the patent system would be irrelevant for us: we do not believe in software patents as effective tools to promote innovation or protect our investment. 5.2 Compared to the other areas of intellectual property such as trade marks, designs, plant variety rights, copyright and related rights, how important is the patent system in Europe? As above, 10 for its risks, 1 for its perceived usefulness to the software industry and society as a whole.

7 6 an-patstrat-response How important to you is the patent system in Europe compared to the patent system worldwide? 6 simply because the European system is the one most closely affecting us. Notice that we consider non-patentability of software and business methods in Europe as a competitive advantage, not a handicap. This rôle should be reinforced by the adoption of the 21 amendments proposed at the European Parliament If you are responding as an SME, how do you make use of patents now and how do you expect to use them in future? What problems have you encountered using the existing patent system? Again, 1 for our use of patents and 10 for future risks from software patentability We have never submitted and do not indent to submit any patent applications. 5.5 Are there other issues than those in this paper you feel the Commission should address in relation to the patent system? In previous responses we pointed out what we feel are the main issues which the Commission should address. Concerning the Commission s questionnaire, we also fully support the position papers presented by FFII 2 and by Florian Müller 3, which address these and other issues in much more detail. Lisbon, 12 April 2006 José Esteves jmce@artenumerica.com José Sebrosa sebrosa@artenumerica.com