Bloomberg.com : Technology News reports that the trust-busting folks in the European Union want to now limit the protection afforded software companies through the granting of patents. This is the same commission that prevented G.E. from merging with Honeywell last July. The commission seeks to disallow business method patents (like Amazon.com’s 1-Click patent). (Side note: for a good overview of the Amazon business method patent and the resulting litigation with Barnes and Noble, see One Click … Two Click at Gray Cary’s web site.)
The real kicker in the EU’s motivation here is this statement from the bloomberg.com article: “[The Commission] blamed a lack of legal certainty in Europe for the fact that most software patents are held by non-European companies.” Let’s see if I got this right: the reason that companies aren’t innovating more in Europe is that there’s an uncertainty of legal protection for that innovation. So the Commission proposes to codify the lack of legal protection in the hopes of attracting more innovation. Riiiiiight.
Business method patents like Amazon.com’s One Click patent are useful precisely because they reward innovative processes. (And no, this isn’t going to be a discussion of the legitimacy of Amazon.com’s claim. It’s moot: the PTO says it qualifies, so the discussion now should shift to whether the business method patent issue itself accomplishes the desired goal of fostering and protecting innovation.) Amazon.com and companies like it invest tens of millions of dollars in trying to come up with new ways to further their business goals. If we didn’t protect these innovations, companies would have less incentive to invest the money necessary to deliver them to market. (This is the same issue facing the bio-tech industry, where patents make drug research worthwhile, since it can cost hundreds of millions of dollars to bring a new drug to market. Without patent protection, other companies could create copies of those drugs, sell them, and profit without the burden of the R&D spending.)
What the Commission is really doing is admitting that much of the current innovation is coming from elsewhere. By weakening (or removing) the patent protections currently affording, the Commission is simply making it easier for European companies to profit from others’ efforts by copying their innovations without paying royalties. I guess fair competition is good just as long as it’s biased in favor of the Europeans.