April 16, 2005

European Competivity

An article in a new issue of IAM Magazine quotes several participants in a "pan-European IP summit" held last December in Brussels.

While they have been discussing many aspects of patent protection, several statements about European competivity stand out.

First there is the usual party line from Mike Barlow:

"Second, any European company that wants to compete globally is going to have to acquire patents because the US and Japan already offer strong patent protection for CII inventions. Without equivalent patent protection for CII inventions, European companies will effectively be giving away technology in Europe that is protected in other major markets in the world. In short, without equivalent patent protection in Europe, European high-tech companies will not be competing on a level playing field."

At least he got the memo and used the smokescreen of "CII" to conceal his wish of introducing software patents.

However, his framing of the competition issue is still rather lame.

Obviously, European companies, Asian college students, Microsoft and IBM can all file for patents in all parts of the world under exactly the same conditions. International treaties like TRIPS (Article 1 Paragraph 3) and the Paris Convention (Article 2) guarantee national treatment. That makes it impossible to have a "playing field" that is not exactly equal for everyone.

Another statement (not restricted to software patents) by Patrick Theunen is much more interesting:

"American and Japanese companies can file and prosecute patents with ease in their respective home markets. European companies cannot. This prevents many of them from building up effective European patent portfolios, undermining Europe's competetive position and forcing European companies to become increasingly dependent on their counterparts in the US and Japan."

The crucial words here are "home markets".

If there is any economic evidence for the theory that having patents in your home markets as opposed to having them in your competitors home market is an advantage, the other side finally has the first shadow of a point here.

I am not aware of any such economic evidence, however.

From a legal point of view, recognizing software patents in Tuvalu will worry an European company (especially a small startup) much less than having to deal with them at home, since any action would have to be brought before a court in Europe, and foreign patents have no force at home.

In contrast, the American industry is vulnerable to all sorts of blocking patent lawsuits brought by European companies in American courts, since America has gone ahead with software patents.

Therefore, from a legal point of view, it would seem to be against common sense to assume that having many potential problems with software patents at home is better than having less of them.

Of course, anyone proposing radical changes to the patent landscape based on such a theory would carry the burden of proof that having more protection at home is actually better than having more protection abroad.

And if that weird theory is correct, Europe would probably need to even surpass the present level of patent crazyness in America.

One more quote from Patrice Vidon:

"The facts are stark: if the European patenting environment is made more attractive, those who benefit will be non-Europeans. US and Japanese innovation will pour into the EU, with the likelihood that non-Europeans would quickly account for around 65% of all EU patenting activity. Our industries would become increasingly technologically dependent upon the US and Japan, with a net outflow in fees and royalties to non-European patent-holders."

That is exactly the kind of question one needs to address when talking about competivity in this context.

Pretending to worry about the competivity of the European software industry to push through changes that will result in a "net outflow in royaltees" is stabbing your own industry in the back.

It is nice to see that some patent lawyers actually place public interests before the own bottom line (M. Vidon is Vice President of CNIPA, Committee of the French National Institutes of Intellectual Property Attorneys).

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Posted by Karl-Friedrich Lenz at April 16, 2005 02:32 PM