"[...] I. The extent to which subject-matter or activities are excluded from patentability under Article 52(2) and (3) EPC is notionally distinct from, and may be considered independently of, the question of inventive step.
II. Subject-matter or activities that are excluded from patentability under Article 52(2) and (3) EPC remain so even where they imply the possibility of making use of unspecified technical means.
III. Subject-matter or activities may be excluded from patentability under Article 52(2) and (3) EPC even where they have practical utility. [...]"
Concerning most fields of ICT and consumer electronics, German industry has lost ground to an extent which appears to be irreversible. The report recommends to abandon all programs for state subsidies so far because of the gap to the world's leading nations is too wide to be ever bridged again by German companies.
With regard to some fields like biotechnology, hybrid materials, and nanotechnology there seems to be a glimmer of hope for the German industry to reach pole positions. The recommendation is that the state might well consider further funding of research in this area of economy.
German industry is still on top in some fields like automotive technology, health care technology and others. However, these are more or less old-fashioned traditional areas of technology.
The document describes the methodology of patent data mining and patent maps as used for the study. The authors appear to have used Aureka from MicroPatent.
Section 1 paragraph 1 of the German Patents Act will then be clarified as follows:
"Patents shall be granted for inventions in all fields of technology, provided they are new, involve an inventive step and are susceptible of industrial application. "
This appears to be a clarification in accordance with TRIPS. Currently, Sect. 5 of the Patents Act stipulates that an invention shall be considered susceptible of industrial application if it can be made or used in any kind of industry, including agriculture. However, methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practiced on the human or animal body are deemed not be inventions which are susceptible of industrial application. This theory of industrial non-applicability will now be abandoned. Instead, Sect. 2a Patents Act will be amended by simply stating that patents shall not be granted for methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practiced on the human or animal body. In both variants, this provision does not apply to products, in particular substances or compositions, for use in any of these methods.
German Government Passes "Bill for Improving the Enforcement of Intellectual Property Rights".
In my earlier posting I had reported that in the German Ministry of Justice the draughtsmen had completed their work on a first Draft "Bill for Improving the Enforcement of Intellectual Property Rights" for casting the EU Directive 2004/48/EG titled "Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights" into national German law. The new Bill would, if passed by the German parliament, affect the enforcement of German Patents, Utility Models, Trade Marks, Designs as well as Copyrights.
Up to now German civil law has very little, if any, provisions to be used by the plaintiff for exploring yet unknown facts in the sphere of the defandant. The new bill provides that if there is in all likelihood a case of patent infringement, the infringer may be ordered to hand over documents or other objects to the Court and/or to the injured party or may allow the injured party to directly or indirectly inspect premises, technical processes and the like. This appears to be like a change of paradigm in German IP law.
Some problematic amendmends allowing the exploitation of telecommunication traffic data even in, inter alia, patent infringement cases are still included in the Draft Bill:
"[...] § 140b
(1) Wer entgegen den §§ 9 bis 13 eine patentierte Erfindung benutzt, kann von dem Verletzten auf unverzügliche Auskunft über die Herkunft und den Vertriebsweg der benutzen Erzeugnisse in Anspruch genommen werden.
(9) Kann die Auskunft nur unter Verwendung von Verkehrsdaten (§ 3 Nr. 30 des Telekommunikationsgesetzes) erteilt werden, ist für ihre Erteilung eine vorherige richterliche Anordnung über die Zulässigkeit der Verwendung der Verkehrsdaten erforderlich, die von dem Verletzten zu beantragen ist. [...]"
I would like to offer a translation as follows:
"[...] Sect. 140b
(1) Any person who uses a patented invention in contravention of Sections 9 to 13 may be required by the injured party to give information as to the origin and distribution channels of the product used, without delay.
(9) If the information can be obtained only by utilisation of traffic data (Sect. 3 No. 30 German Telecommunications Act) an advance order to be requested by the injured party and issued by a judge is required for handing over the information. [...]"
In the effect, this means that, in the context of proceedings concerning patent infringement and in response to a justified and proportionate request of the claimant, a competent judge may order that information on the origin and distribution networks of the goods or services which infringe the patent be provided by means of analysing telecommunication traffic data. Similar provisions are included in the Bill covering Utility Model, Trade Mark, and Registered design infringement cases.
There appears to be no precedent for this telecommunications clause in the EU Directive 2004/48/EC to be cast into national German Law. It seems to be a national political decision of the German Government to go that step further.
The reasons given in the appendix to the Draft Bill relate to the possible utilisation of the Internet for acts of patent infringement:
"[...] Absatz 9 betrifft den Sonderfall, dass dem Dritten die Erteilung der begehrten Auskunft nur unter Verwendung von Verkehrsdaten im Sinne des § 3 Nr. 30 des Telekommunikationsgesetzes (TKG) möglich ist. Dieser Fall ist bei Rechtsverletzungen im Internet denkbar, wenn Daten mit Hilfe von dynamischen IP (internet protocol)-Adressen, vor allem über so genannte FTP (file transfer protocol)-Server, im Netz ausgetauscht werden. Potenzielle Rechtsverletzer können in solchen Fällen meist nicht unmittelbar über Bestandsdaten ermittelt werden, sondern nur mit Hilfe von Verkehrsdaten. Verkehrsdaten enthalten nähere Umstände der Telekommunikation - insbesondere zeitliche Umstände einer bestimmten Datenverbindung und deren Zuordnung zu einem Telefonanschluss - und unterliegen dem einfachgesetzlich (§ 88 TKG) und verfassungsrechtlich (Art. 10 Abs. 1 GG) geschützten Fernmeldegeheimnis.
Die Möglichkeit, im Internet weitgehend anonym zu kommunizieren, wird in bestimmten Fallgruppen häufig für die Verletzung von Rechten des geistigen Eigentums genutzt. Dies gilt beispielsweise für Tauschbörsen, bei denen in großem Umfang Urheberrechtsverletzungen stattfinden. Hier besteht ein besonderes Interesse an einer Auskunft, ohne die der Verletzer nicht ermittelt werden kann.
Im Hinblick auf die besondere Schutzwürdigkeit von Verkehrsdaten und um Internet-Provider und Telekommunikationsunternehmen von der Prüfung zu entlasten, ob eine offensichtliche Patentrechtsverletzung vorliegt, erscheint es sachgerecht, den Auskunftsanspruch unter einen Richtervorbehalt zu stellen, wie dies in Absatz 9 vorgesehen ist. Die gerichtliche Anordnung setzt einen entsprechenden Antrag des Verletzten voraus. Das Gericht hat das Vorliegen der Auskunftsvoraussetzungen zu prüfen. Hierzu bedarf es allerdings keines gegen den Dritten gerichteten kontradiktorischen Auskunftsverfahrens, sondern es genügt eine gerichtliche Entscheidung, welche die Verwendung von Verkehrsdaten zur Erteilung der Auskunft zulässt. [...]"
I would like to offer my own translation as follows:
"[...] Para. 9 relates to the special case wherein the third party effectively can obtain the desired information only by utilisation of traffic data in the sense of Sect. 3 No. 30 of German Telecommunications Act (TKG). This case is conceivable in conjunction with infringements committed on the Internet if data exchange is made in the network by using dynamic IP addresses, in particular via so-called FTP servers (File Transfer Protocol). In such cases, potential infringers can, in most cases, not be investigated by utilisation of static data but only by utilisation of traffic data. Traffic data comprise particular circumstances of the telecommunication - in particular date and time of a particular data connection and the correlation thereof to a subscriber telephone line - and are subject to the secrecy of telecommunications as protected by simple law (Sect. 88 of German Telecommunications Act) as well as by the constitution (Article 10 Para. 1 of the German Basic Law).
The option to communicate virtually anonymously over the Internet is used in certain groups of cases for committing acts of infringement of intellectual property rights. This holds for example with regard to file sharing software where large-scale Copyright infringements are occurring. Here there is a particular interest to obtain information whithout which the infringer cannot be investigated.
In view of the specific need to protect traffic data and in order to disburden Internet providers and telecommunication companies from the examination as to whether or not an act of obvious patent infringement is present, it appears to be appropriate to put the right to information under the reservation of approval to be given by a judge as done in para. 9. The court order requires a related request of the injured party. The Court has to examine the prerequisites for giving the information. To this end, contradictory proceedings against the third party for obtaining information are not required but a Court decision allowing the utilisation of traffic data for providing information is sufficient. [...]"
As it is also the case in the context of criminal sanctions against patent infringers as recently mooted on EU level, patent law appears not to be the right turf for allowing deep cuts into civil rights of any third parties because of the inherent enormous complexity thereof. Drastic measures might, under some circumstances, be appropriate to combat 1:1 counterfeiting piracy where infringing goods can easily be identified also with no or little expertise. But patent law is different. The German Draft Bill stresses that the enforcement of this "Right of Information" shall be limited to cases where providing such information is not disproportionate in the individual case - whatever that might mean in practice under the given circumstances.
The present Bill stipulates that the Court responsible for ordering to hand out telecommunication data shall exclusively be the regional court (Landgericht) of that area where the third party obliged to give information (i.e. the Internet user, not the telecommunications company) has its domicile, is seated, or has a place of business. Let us assume that plaintiff argues that thousands of Internet users scattered all across Germany have used some service over the Internet which allegedly infringes some patent claim. If plaintiff decides to do some power play, judges in the regional Courts of all affected regional court districts would be confronted with requests to hand out telecommunication traffic data in accordance with the provisions of this bill. They never have seen that matter before, and they have to go through maybe thousands of pages full of complicated technical details. Hence, such decisions are not dealt with in the context of the main infringement proceedings but rather remotely in an accessory stlyle, perhaps much like issuing a search warrant.
How on earth could an unfortunate judge sitting behind his desk in a Court somewhere in Germany properly determine on any reasonable time scale whether or not a complex software application say, for example, exchanging over the Internet voice-over-ip data in some intertwined Skype-like style with a multitude of other computers partially located in Germany, partially located abroad, might infringe a particular German patent with an independent claim running over one and a half pages if he is asked to allow a large-scale confiscation of Internet traffic data of German Internet users from their respective Internet access providers?
And, of course, the provision of an analogous clause in the context of German Utility Model law appears to be a bad mishap. Does German Government really intend to allow exploitation of telecommunication traffic data on the basis of a non-examined intellectual property right? The judge in charge with the request would also have to assess the validity of the Utility Model in question.
Maybe such judge would perceive two options as to how to get rid of this problem: The first would be to adopt a practice of virtually blind-signing any request presented by a would-be victim of patent infringement as it is today's general practice well beyond the field of IP law in the crime-related circuits of the courts when the public prosecutor asks a judge to sign a search warrant. The second would be to turn away such requests giving a reason that an act of patent infringement could not be properly established.
Anyway, the language of the reasons as given by the Government are recruited on the field of Copyright piracy (where they are heavily debated) and do not give any confidence that the drafters of the bill actually have understood the Internet. Why should be a data transmission undertaken by means of FTP be more dangerous or illicit than, say, on the basis of HTTP? By the way, in fact most of the legal problems with file sharing software are somehow related to the utilisation of peer-to-peer protocols, neither to FTP or to HTTP.
Hence, it appears not to be clearly excluded that the Draft Bill would, inter alia, allow traffic data of ordinary Internet users be accessed not only for copyright enforcement purposes (already fiercely under dispute) but also for patent and trade mark enforcement cases, provided a competent court issues the required warrant. Perhaps such undertaking in the context of patent, utility model, and maybe even trade mark law should be seen as somehow overbroad and, hence, inappropriate.
Speculations About Multilateral Patent Reforms of the Future.
On November 11, 2006, I had reported on a link to a (now removed) publication according to which patent authorities from Japan, the United States and Europe (aka Trilateral Co-operation) will begin discussions toward the introduction of a system for mutual recognition of patents. The related Summary of the 24th Trilateral Conference held in Tokyo on November 17, 2006, mentiones as follows:
"[...] The USPTO introduced a new work-sharing proposal for consideration and discussion in which Offices would focus on first-filed applications and take up second-filed applications only when search/examination information is available from the office of first filing.
The EPO and the JPO will contribute actively to the study of this possibility. [...]"
Read in some interpreting way, this might mean that they are mooting a procedure for rubber-stamping earlier examination results. But the statement appears to be quite vague, if not nebulous.
There appears to be another proposal to reform international patenting looming:
"[...] Bearing in mind the EPO's reservations, the Trilateral Offices will continue to discuss the JPO proposal for a New Route while recognizing the importance of constructively exploring other options for users.
The Trilateral Offices discussed a proposed Analogous New Route Pilot Project designed to evaluate the merits of the New Route framework. The JPO will further refine the proposal in view of the comments from the USPTO for the Offices to study further. [...]"
"[...] The New Route Proposal is an initiative of the Japanese Patent Office, which was presented to the Trilateral Summit of European, US and Japanese Patent Offices in Munich on November 17, 2005. [...]
Under the new route proposal, it will still be possible for applicants to obtain an extra 18 months for processing at the national or regional level provided certain steps are taken on filing. The applicant must, at the time of filing, notify the office of first filing (OF) of the intention to use the new route and conform to certain standards. The new route filing can either be a priority application or a non-priority application. In either case, publication occurs at 18 months from the priority date, followed by examination by the OF. The applicant must then pursue the application in one or more Offices of Second filing (OS) within 30 months from the priority date, where prosecution continues, taking into account the results from the OF. [...]
It is important that the patent system, if it is to make a positive economic contribution and enjoy the continued support of the public, must strike a fair balance between the rights of patent applicants and the rights of third parties who need to be able to conduct their business with a reasonable degree of certainty. We therefore have to consider the new route from the point of view of public interest, which the proposal fails to do. The main disadvantage from the point of view of the public is that yet another level of searching would be required to determine whether a third party might face patent problems in a particular country, and in the case of pending rights, it would introduce a further layer of uncertainty in the geographic scope of patent protection. As part of its responsibilities, WIPO ensures that PCT applications are published at 18 months. The PCT applications are searchable and available from a single source. [...]"
European Firms and their Attitude Towards Intellectual Property: A Study Undertaken by EIU.
The Economist Intelligence Unit has published a paper authored by Mr. Paul Tyrrell (Editor: Mr. Denis McCauley) under the title: The value of knowledge: European firms and the intellectual property challenge (Link thanks to Mr. Joff Wild in his IAM Blog). The Document is an Economist Intelligence Unit white paper, sponsored by Qualcomm.
They have conducted an online survey of senior executives from across Europe in September to October 2006. In all, 405 individuals, including 102 CEOs and 85 other C-level executives, took part. Additionally, also in-depth interviews with several European executives having direct responsibility or knowledge of their firm's management of intellectual property were made, as well as with independent European experts on intellectual property.
"[...] European companies are changing their approach to intellectual property (IP) management. Protection of the company's 'crown jewels' - its patented or copyrighted assets - remains paramount, as infringement threats from the developing world multiply and litigation increases at home. Pressure from shareholders is also building, however, to make use of swollen IP portfolios to improve top-line results. [...]"
In particular, the paper finds:
The strategic importance of IP is growing rapidly.
European IP remains under threat from both developing and developed markets.
Collaboration is crucial to IP value maximisation.
European companies need greater legal harmonisation.
One of the respondents of the survey argued that the global IP system is becoming strained, saying that there are so many questionable rights around. For example, in the US there are millions of patents, and each probably has around 10-20 claims. According to him it is becoming more likely that one of these claims will be relevant to your products, but you cannot stop projects on this basis or you won't have innovation any more. According to him, you must ignore it, try to find a solution or reach a judgement about whether it will survive court.... This is a business of risk-taking, he concludes. Indeed, and this is my comment, there are many facings of the present IP system that deserve to be improved by making patent data more transparent.
In my earlier posting I had reported that according to some press release OHIM is generating substantial cash reserves arising from several causes including steadily rising numbers of trade mark and design applications, increased productivity and improved efficiency of the agency, as well as growth in e-business. Despite recent fee reductions these cash reserves are expected to grow further in the coming years. By the end of 2005 cumulative cash reserves reached more then EUR 130 million, while cumulative reserves could easily reach EUR 375 million by the end of 2010 and nearly EUR 700 million by the end of 2016.
Now, the Secretary-General of the European Commission has published with Document 5390/07 a Communication from the Commission to the European Parliament and the Council the financial perspectives of the OHIM (Document COM(2006) 865 final of the Commission dated December 22, 2006) hich contains a lot of details, in particular the graph below illustrating the estimated cumulation of cash reserves:
The EU Commission states:
"[...] The Commission believes it is timely to consider a structural approach to OHIM's financial management. OHIM has been in operation for more then ten years, during which it has successfully managed major events such as the introduction of e-filing, the enlargement with ten new Member States in 2004 or the first round of trade mark renewals in 2005. It is now an opportune moment to stabilise budget practice. [...]"
Stay tuned. It surely will be interesting to see what the EU Member States, in their interest to save a business case for their national Offices, will argue about that matter in the EU Council and elsewhere. If the EU Community Trade Marks gets cheaper, more and more applicants might consider to switch over from national registrations to the OHIM system even if they need protection only in a handful of countries. If money would be no longer a decisive factor, the vulnerability of a Community Trade Mark to third party attacks on the basis of any conflicting prior right in anyone of the numerous EU Member States will surely be a limiting factor.
Within the framework of the Utilisation Pilot Project (UPP) adopted by the Administrative Council of the European Patent Office the German Patent and Trade Mark Office will, from March 01, 2007 onwards, randomly pick a limited number of first filings of patent applications and dispatch tickets for participating in the UPP. This means that some applicants and/or their representatives will find an information leaflet attached to a search report or to an Office Action, explaining the UPP and enabling the applicant, on a strictly voluntary basis, to request special processing for a related subsequent priority-based European Patent application.
See the Official Notice of the President of the German Patent and Trade Mark Office [in German only, sorry].
The European Patent Office will process all UPP patent applications on the fast lane; they promise to deliver the first Office Action within 6 months from filing of the European patent application.
The objectives of the UPP are to test the process by which work carried out during the priority year on a first filing at a National Patent Office (NPO) can be further utilised by an applicant and the EPO in the treatment of a subsequent filing. Following this test, the European Patent Office (EPO) and the member states of the European Patent Network (EPN) should be able to answer the following questions:
is the efficiency of the European patent application/examination procedure improved by utilising NPO products?
what is the detailed process by which NPO products are transferred to the EPO?
what is the process by which the NPO products will be accepted and their benefits evaluated?
what procedural, technical and financial impacts will the process have on the following:
the NPO within the EPN which processes the national first filing?
the applicant and the users of the European patent system?
what costs are incurred by the applicants, the NPOs and the EPO?
what financial rewards can be given to the applicant in the full scale system?
what impact does the Utilisation process have on the other elements of the EPN?
what further constraints need to be met in order to implement the utilisation process throughout the EPN?
Still more details can be derived from a presentation [in German only, sorry] given by Mr. Fastenbauer of the Austrian Patent Office.
"[...] Peter Day talks to some of the rising stars of the new revolution and finds out how the computer industry is changing yet again.
The world's biggest computer companies are being threatened by a host of new start-ups powered by open-source software, strings of inexpensive computers,and 'mash-up' websites which combine information in innovative ways. [...]"
Despite some small inaccuracies concerning a few legal and technical terms this podcast deserves a broader audience. Implicitly referring to Mr. Schumpeter, Mr. Day unfolds the history of the 20th century as a succession of a first era covering the first half of the century when increasing cheap mass production of goods in order to be able to satisfy the basic demands of the people was of primary concern, followed by a second era ending with the dotcom bubble, where goods could be produced in excess of demand so that the consumer, iconised by the credit card, moved into the focus. Now, according to Mr. Day, we have entered another era where more and more people appear to embody a doubled nature of being both consumer and creator at the same time.
Mr. Day illustrates his findings by way of examples taken from the world of open source software. He clearly refers to that what Mr. Stallman would insist to call Free Software but Mr. Day doesn't bother with such particularities. Anyway, he presents sketchy portraits of a bunch of entrepreneurs and start-ups leaving the closed conventional business models of the 20th century well behind. His podcast closes with a hint towards the term creative destruction, coined by Mr. Joseph Schumpeter, as Wikipedia knows:
"[...] Creative destruction, introduced in 1942 by the economist Joseph Schumpeter, describes the process of industrial transformation that accompanies radical innovation. In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power. [...]"
Now, accidentially on the same date of Mr. Day's podcast, the EU Commission has published a Study on the Economic impact of open source software on innovation and the competitiveness of the Information and Communication Technologies (ICT) sector in the EU:
"[...] Direct economic impact of FLOSS
The existing base of quality FLOSS applications with reasonable quality control and distribution would cost firms almost Euro 12 billion to reproduce internally. This code base has been doubling every 18-24 months over the past eight years, and this growth is projected to continue for several more years.
This existing base of FLOSS software represents a lower bound of about 131 000 real person-years of effort that has been devoted exclusively by programmers. As this is mostly by individuals not directly paid for development, it represents a significant gap in national accounts of productivity. Annualised and adjusted for growth this represents at least Euro 800 million in voluntary contribution from programmers alone each year, of which nearly half are based in Europe.
Firms have invested an estimated Euro 1.2 billion in developing FLOSS software that is made freely available. Such firms represent in total at least 565 000 jobs and Euro 263 billion in annual revenue. Contributing firms are from several non-IT (but often ICT intensive) sectors, and tend to have much higher revenues than non-contributing firms.
Defined broadly, FLOSS-related services could reach a 32% share of all IT services by 2010, and the FLOSS-related share of the economy could reach 4% of European GDP by 2010. FLOSS directly supports the 29% share of software that is developed in-house in the EU (43% in the U.S.), and provides the natural model for software development for the secondary software sector.
Proprietary packaged software firms account for well below 10% of employment of software developers in the U.S., and 'IT user' firms account for over 70% of software developers employed with a similar salary (and thus skill) level. This suggests a relatively low potential for cannibalisation of proprietary software jobs by FLOSS, and suggests a relatively high potential for software developer jobs to become increasingly FLOSSrelated. FLOSS and proprietary software show a ratio of 30:70 (overlapping) in recent job postings indicating significant demand for FLOSS-related skills.
By providing a skills development environment valued by employers and retaining a greater share of value addition locally, FLOSS can encourage the creation of SMEs and jobs. Given Europe's historically lower ability to create new software businesses compared to the US, due to restricted venture capital and risk tolerance, the high share of European FLOSS developers provides a unique opportunity to create new software businesses and reach towards the Lisbon goals of making Europe the most competitive knowledge economy by 2010.
Indirect economic impact: FLOSS, innovation and growth
Strong network effects in ICT, the related capitalization for installed dominant players, and some new forms of IPR scope extension risk leading to innovation resources being excessively allocated to defensive innovation. There is a case for a rebalancing of innovation incentives as to create a more equitable environment for innovation that targets publicly available technology for new functionality.
FLOSS potentially saves industry over 36% in software R&D investment that can result in increased profits or be more usefully spent in further innovation.
ICT infrastructure has a 10% share of European GDP, providing a basis for a further 2.5% share of GDP in the form of the non-ICT information content industry. However, a large and increasing share of user-generated content is not accounted for and needs to be addressed by policy makers; FLOSS increases the value of the ICT infrastructure, supporting this wider information ecosystem.
Increased FLOSS use may provide a way for Europe to compensate for a low GDP share of ICT investment relative to the US. A growth and innovation simulation model shows that increasing the FLOSS share of software investment from 20% to 40% would lead to a 0.1% increase in annual EU GDP growth excluding benefits within the ICT industry itself - i.e. over Euro 10 billion annually.
Trends, scenarios and policy strategies
Equitably valuing the use of FLOSS, the 'true' share of software investment rises from 1.7% to 2.3% of GDP in the US by 2010, and from 1% to 1.4% of GDP in Europe. Doubling the rate of FLOSS take-up in Europe would result in a software share of investment at 1.5% of GDP, reducing but not closing this investment gap with the US.
The notional value of Europe's investment in FLOSS software today is Euro 22 billion (36 billion in the US) representing 20.5% of total software investment (20% in the US).
Europe's strengths regarding FLOSS are its strong community of active developers, small firms and secondary software industry; weaknesses include Europe's generally low level of ICT investment and low rate of FLOSS adoption by large industry compared to the US.
FLOSS provides opportunities in Europe for new businesses, a greater role in the wider information society and a business model that suits European SMEs; FLOSS in Europe is threatened by increasing moves in some policy circles to support regulation entrenching previous business models for creative industries at the cost of allowing for new businesses and new business models.
Europe faces three scenarios: CLOSED, where existing business models are entrenched through legal and technical regulation, favouring a passive consumer model over new businesses supporting active participation in an information society of 'prosumers'; GENERIC, where current mixed policies lead to a gradual growth of FLOSS while many of the opportunities it presents are missed; VOLUNTARY, where policies and the market develop to recognise and utilise the potential of FLOSS and similar collaborative models of creativity to harness the full power of active citizens in the information society.
Policy strategies focus mainly on correcting current policies and practices that implicitly or explicitly favour proprietary software:
Avoid penalising FLOSS in innovation and R&D incentives, public R&D funding and public software procurement that is currently often anti-competitive
Support FLOSS in pre-competitive research and standardisation
Avoid lifelong vendor lock-in in educational systems by teaching students skills, not specific applications; encourage participation in FLOSS-like communities
Encourage partnerships between large firms, SMEs and the FLOSS community
Provide equitable tax treatment for FLOSS creators: FLOSS software contributions can be treated as charitable donations for tax purposes. Where this is already possible, spread awareness among firms, contributors and authorities.
Explore how unbundling between hardware and software can lead to a more competitive market and ease forms of innovation that are not favoured by vertical integration. [...]"
This conveys an important message in particular for the patent people: Whether you like it or not, be prepared to see that the Open Source business model is here to stay, and expect that in some core fields of software engineering such collaborative approaches are virtually unstoppable. The report has examined the Open Source Model for software, and I can't really believe that it would work in other industries where heavy investments into tangible goods are a prerequisite of innovation.
It might not come as a surprise that the overall attitude of the report towards the patent system as it stands today is quite negative. The authors appear to have little legal knowledge, and somewhere in the text they re-iterate the fairy tale that "new laws codify rejection of software patentability in Europe" (page 195). They like to quote other authors with the same attitude affirmatively, e.g. by saying"algorithmic patents lead to frequent repetition of research without significant innovation and use of sub optimal techniques in commercial software" (page 121, referring to a paper of Mr. Philippe Aigrain published in 2001). However, the lengthy paper nevertheless also bears some intersting points like this here (page 114ff.):
"[...] There is considerable evidence on the relationship between FLOSS dvelopment, innovation and the ICT industry, of which some examples have been provided above. With regards to innovation, it may be useful to compare the role of FLOSS, which in its nature supports diffusion of knowledge, to patents that are justified for, among other things, promoting disclosure of knowledge and resulting innovation. In fact, patents have been found empirically to be a poor means of promoting disclosure.
Arora et al (2003) find that 'patent disclosures appeared to have no measurable impact on information flows from other firms, and therefore no measurable effect on R&D productivity'. Arundel (2001) finds that 'a consistent result in survey research on the use of patent databases is that they are among the least important external information sources available to firms'. His analysis of 12 445 firms' responses to the CIS survey results shows that between 5% and 18% of small and medium-sized firms find patents to be a useful source of information.
In the case of software as a component of ICT innovation, there is interesting data comparing FLOSS and patents from the on-going study for the European Commission's DG Information Society. The surveys show (Arundel et al 2006) that more firms think free software source code is an important source of new ideas (17%) than patent databases (5%). The firms are from a broad spectrum of ICT producing and ICT using sectors, from software to medical instruments and automobile manufacturing. The opinion of individual innovators (engineers) is perhaps more relevant as questionnaires on patents sent to firms are more likely to be answered by the legal department than by innovators. Far more innovators within firms think source code (41%) is moderately or very important sources of new ideas, compared to patents (24%).
While we do not know how much of this software that is a source of new ideas is licensed under reciprocal terms, these data show that open source software is succeeding in providing disclosure to a much greater degree than patents. This is certainly at least in part due to reciprocal licenses such as the general public license (GPL) that provide a legal requirement to disclose (much as patents are supposed to do). If a legal framework is required to promote disclosure and follow-on innovation, there is therefore some evidence to justify an argument that reciprocal open source licensing provides a more effective framework than the current patent regime. [...]"
With other words, the patent system as it stands appears not to be well-suited for supporting creativity and inventiveness of the crowd. Too few engineers or other prospective inventors read patent documents on a regular basis. The promise of the patent system to give a knowledge feedback does not live up to the expectations at the time being. Something needs to be done.
A part of the problem surely lies with the zealots of various anti-patent campaigning organisations who do desire to exploit certain problems with the patent system as a pretext for abolishing (or at least crippling) it. However, there is another significant contribution to that problem which appears home-grown. Not long ago, it was not even possible to have a free download of a full patent document without a hassle. We are now happy that e.g. esp@cenet and Depatisnet offer such PDF files. But that is, on the long run, not enough. Let us revert to a keyword already mentioned above: mash-up. Why do we not see any relevant large-scale mash-up applications with patent data? Compare the situation with that in the field of geo-data: Google simply has "enforced" free availability of satellite imagery plus related map data by commercially buying them up and integrating them into their products, enabling blossoming of numerous mesh-ups based on the on-line availability of geographic data. Would such solution also be feasible with regard to patent databases? Google has already started with dealing this way by providing U.S. patent data. However, I am a bit sceptical because of quasi-statically delivering PDF or TIFF files with images of patent documents is per se insufficient. What is needed is some sort of API, e.g. a SOAP interface to bibliographic, text and legal status data. And the Patent Offices are sitting on that data. Only the European Patent Office appears to have opened a public SOAP interface to their wealth of data so far. Why don't other Offices follow? And, how can anyone reach a consensus on some standard format accepted by all Patent Offices?
From a legal point of view, a community of creators of copyrighted works like software appears to be perfectly authorised to set up a copyright regime that fits with their goals and desires. This is the positive part of Open Source licenses like the GPL. However, from a legal point of view such communities do not have the slightest lever to ban enforcement of patent rights of any third parties. In thinking to utilise the GPL as a political instrument against the patent system in its entirety there lies some ill-plotted hubris, the dark side of the GPL.
Nevertheless it might be wise to think of improving the patent system in a way that it becomes more useful for individual inventors and SMEs than it is today. And many of those problems are somehow related to the dissemination and analysis of patent data. When should it be possible to solve such problems if not now, in the era of the global data networks and virtually unlimited computing power?
If the patent community does not recognise the need for reforms in due time they might later on face the truth in Mr. Schumpeters's word of "creative destruction" as an intrinsic principle of modern capitalism in some unpleasant moment.
"[...] WASHINGTON - The Supreme Court made it easier Tuesday to challenge patents, bolstering arguments by some in business that they are too readily granted and can stymie new drugs and other innovations. [...]
The Bush administration [told] the Supreme Court that invalid patents can hurt efficient licensing, hinder competition and undermine incentives for innovation. [...]"
This might be interpreted an interesting sign that the U.S. Supreme Court appears to be ready to challenge some long-standing precedents set by the U.S. Federal Circuit that might be seen as having put too much weight on the patent holder's position when it comes to the proper understanding of the presumption of validity.
From Document 17103/06 prepared by the European Commission under the title "Directive of the European Parliament and of the Council to approximate the laws of the Member States relating to trade marks (codified version)":
"[...] In the context of a people's Europe, the Commission attaches great importance to simplifying and clarifying Community law so as to make it clearer and more accessible to the ordinary citizen, thus giving him new opportunities and the chance to make use of the specific rights it gives him.
This aim cannot be achieved so long as numerous provisions that have been amended several times, often quite substantially, remain scattered, so that they must be sought partly in the original instrument and partly in later amending ones. Considerable research work, comparing many different instruments, is thus needed to identify the current rules.
For this reason a codification of rules that have frequently been amended is also essential if Community law is to be clear and transparent.
2. On 1 April 1987 the Commission therefore decided to instruct its staff that all legislative acts should be codified after no more than ten amendments, stressing that this is a minimum requirement and that departments should endeavour to codify at even shorter intervals the texts for which they are responsible, to ensure that the Community rules are clear and readily understandable.
3. The Conclusions of the Presidency of the Edinburgh European Council (December 1992) confirmed this, stressing the importance of codification as it offers certainty as to the law applicable to a given matter at a given time.
Codification must be undertaken in full compliance with the normal Community legislative procedure.
Given that no changes of substance may be made to the instruments affected by codification, the European Parliament, the Council and the Commission have agreed, by an interinstitutional agreement dated 20 December 1994, that an accelerated procedure may be used for the fast-track adoption of codification instruments.
4. The purpose of this proposal is to undertake a codification of Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks. The new Directive will supersede the various acts incorporated in it; this proposal fully preserves the content of the acts being codified and hence does no more than bring them together with only such formal amendments as are required by the codification exercise itself.
5. The codification proposal was drawn up on the basis of a preliminary consolidation, in all official languages, of Directive 89/104/EEC and the instrument amending it, carried out by the Office for Official Publications of the European Communities, by means of a data-processing system. Where the Articles have been given new numbers, the correlation between the old and the new numbers is shown in a table contained in Annex II to the codified Directive. [...]"
There is another Document 17104/06 bearing the title "Proposal for a Council Regulation on the Community trade mark (codified version)" which corresponds to the above-mentioned Directive.
The EPO has recently reported that they have acquired a software named IPscore originally developed by the Danish Patent and Trade Mark Office. The EPO will be offering it to national patent offices and their patent information centres for further distribution. The advertising on the website of the Danish Patent and Trade Mark Office asserts as follows:
"[...] IPscore 2.0 is a unique evaluation tool, developed to provide comprehensive evaluation of patents and technological development projects. IPscore 2.0 is an easy and user-friendly tool that can be used by all businesses with a small or large portfolio of patents and development projects.
IPscore 2.0 provides a broad framework for the evaluation and strategic management of patents and development projects, securing their status as integral components of the business' overall strategic management.
Experience gained from working with the IPscore basic model and the subsequent development phase of IPscore 2.0 shows that this tool can be used for the evaluation of tangible development projects, from the birth of an idea in the IP-management of patents, right through to the expiration of a patent. [...]"
More details are discernible from these presentation sheets. A user of IPscore has to provide values for some 40 so-called assessment factors for every invention to be processed by the IPscore software. These values are used to produce a lot of diagrams and reports. There appears to be no rigid mathematical model behind those assessment factors. Hence, the answer to the question as to whether or not utilisation of IPscore would make sense mostly depends on the quality of the more or less subjective values entered into the computer running IPscore by the user with regard to the said assessment factors: Garbage in, garbage out.
IPscore 2.0 runs on top of Microsoft Access 2000. I am in doubt as to whether this might count as an advantage. Nevertheless, in former times where the Copyright was at the Danish Patent and Trade Mark Office, the price tag was set to DKK 18.000,-- (roughly equal to EUR 2.400,--) for a version in English. A Danish-only version was sold for DKK 9.950 (roughly equal to EUR 1,325). There is no indication which price will in future be demanded by the EPO.
"[...] [T]he Presidency will strive to improve the European patent system, particularly by making progress with the uniform patent dispute resolution system called for by the European business community. [...]
Technological and applied research must be strengthened if Europe is to become more innovative. This requires us to combine the existing potential in universities, other research institutions and enterprises more effectively.
Improvement in the use of research findings and prevention of an unchecked drain on knowhow are both becoming increasingly crucial issues in the face of global competition. The German Presidency plans to launch an initiative for a charter on the handling of intellectual property at public research institutions and universities and thus help improve cooperation between these institutions and the business sector. [...]
Europe's citizens must be able to move within a secure and predictable legal framework when they travel to or settle in other Member States. This requires measures ranging from improved cross-border enforcement of maintenance orders, through clear regulations on which law applies in the case of divorce, better protection of intellectual property, up to improving consumer protection. Germany, together with the subsequent Presidencies Portugal and Slovenia, will therefore take up the proposals on the applicable law in maintenance, divorce and inheritance matters and seek to bring them to a conclusion. The German Presidency plans to drive forward as far as possible the work on a regulation on applicable law in matters of contractual obligation, and finalize the parallel regulation on applicable law in matters of noncontractual obligations, e.g. in road traffic accidents. [...]
The German Presidency will press for the strengthening of transatlantic relations on the political and economic stage. One summit with the United States and one with Canada will be held. The intensified dialogue and cooperation with the United States will centre around selected topics such as the Middle East, Eastern Europe, the fight against terrorism and energy security. Germany will aim to reach an agreement on cooperation between the EU and the United States in the area of civilian crisis management. The implementation of the Transatlantic Economic Initiative will focus on regulatory cooperation, innovation and technology, trade and security, capital markets, energy and the protection of intellectual property.
The Presidency will continue to develop the political and economic dimension of relations with Asia. The negotiations on a framework agreement between the EU and China are to be brought forward in this context. In extending economic relations, the Presidency will concentrate on the voluntary transfer of technology, improving legal certainty for the protection of intellectual property, opening the Chinese markets more widely for services and removing distortions of competition in the field of raw materials.
The German Presidency will take a decisive stand against anticompetitive behaviour and unfair trading practices such as dumping, illegal subsidies, the violation of intellectual property rights and forced technology transfer. The second phase of the EU initiative on the enforcement of intellectual property rights and the open revision of certain trade policy mechanisms (e.g. trade protection instruments and public procurement) must be driven forward. [...]"
On March 29 and 30, 2007, a Conference on Patent Law will be organised by the Federal Ministry of Justice, Berlin.
The ninth Edition of the Nice Classification of goods and services for trade marks, published in June 2006, has entered into force today.
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Dipl.-Phys. Axel H Horns is Patentanwalt (German Patent Attorney),
European Patent Attorney as well as European Trade Mark Attorney. In particular, he is Member of: