[DMCA-Activists] SW Patents Endanger Int'l Financial Report Standards (IFRS)

[Seth Johnson]

-------- Original Message --------
Subject: [FSFE PR][EN] Software patents putting International
FinancialReport Standards (IFRS) in danger
Date: Tue, 05 Apr 2005 12:46:35 +0200
From: "Free Software Foundation Europe (FSFE)"
<address@hidden>
Reply-To: address@hidden
To: Rudy Provoost <address@hidden>
CC: address@hidden

     The European Information & Communications Technology 
     Industry Association (EICTA) combines 32 national 
     ICT/CE associations from 24 European countries with 48 
     direct company members. EICTA altogether represents 
     more than 10.000 enterprises in Europe with more than 2 
     million employees and revenues of over ??? 200 billion. 
     The Association supports the monopolisation of software 
     ideas heavily. Mr Provoost is president of Eicta and 
     represents Philips Consumer Electronics as Senior Vice 
     President and Chief Executive Officer.

Dear Mr. Provoost,

The European Council and European Commission are pushing for 
the introduction of software patents in Europe to such an 
extent and in such ways that they raise justified doubts in 
the democratic roots of Europe.

Your association, the European Information & Communications 
Technology Industry Association (EICTA) has strongly 
supported this agenda in the past. In the discussion, you 
raised the argument that "We must be allowed to protect out 
innovations." 

This statement we fully agree with. However, if you believe 
that software patents help protect innovation, it seems you 
were being misinformed, as the role of software patents is 
not to protect, but to prevent innovation. Bill Gates 
pointed this out in an internal Microsoft memo in 1991:

     "If people had understood how patents would be granted 
     when most of today's ideas were invented and had taken 
     out patents, the industry would be at a complete stand-
     still today."

He said this because he understood that patents on software 
inevitably are monopolies on abstract logic and ideas. 

If Pythagoras was to come up with his theorem today, in a 
software patent regime he would clearly be entitled to get a 
monopoly on it. Pythagoras could then arbitrarily select the 
conditions under which others could make use of or build 
upon his idea.

Software usually embodies literally thousands of abstract 
ideas. Under a software patent regime, each of these could 
be turned into a monopoly and would constitute a no-go zone 
for competitors. That is why Bill Gates also said:

     "A future start-up with no patents of its own will be 
     forced to pay whatever price the giants choose to 
     impose. That price might be high: Established companies 
     have an interest in excluding future competitors."

In other words: software patents are an anti-competitive 
tool that serves to raise the burden on innovation. The 
height of that barrier is flexible and can easily be raised 
to trip established companies, such as Philips, and 
innovative newcomers alike.

In previous letters we have explained how software patents 
cost jobs and economic power in Europe. Today we would like 
to inform you how they pose a threat to the International 
Financial Reporting Standards (IFRS) [1] as all the ideas 
used in these standards will be implemented in software and 
would therefore be patentable. This will affect all European 
companies as the IFRS rules have been mandatory to all 
listed companies in the European Union since 2002.

If you check the US Patent and Trademark Office (USPTO) 
database, you will find that there are already hundreds of 
patents on software ideas concerning expressions like 
"account" or "financial report". One of them protects a 
system "for financial planning and advice" [2]. That 
particular patent is held by American Express Financial 
Corporation (Amex) - a company which we know better for its 
credit cards than its innovative software. 

After establishing a legal basis for software patents in 
Europe, Amex might arbitrarily choose to determine which 
software company is allowed to implement the IFRS or similar 
standards. 

This of course assumes that none of Amex' competitors has an 
interest in blocking such development and uses their patent 
on another necessary idea to stop the development. But even 
if no one does: As all systems have many components in 
common and the number of methods to make computer systems 
secure is limited, any such software would always be less 
secure in a software patent regime.

People in Europe often seem to look to the United States for 
economic advice. This time, the CEO of Computer Associates, 
John Swainson, has made the message remarkably clear: Europe 
should not introduce software patents. [3]

Copyright provides a very efficient protection for computer 
software, but in order for Copyright to protect your 
innovation, you first need to have an innovation. That is 
why we hope EICTA will stand up and oppose software patents 
because: "We must be allowed to innovate."

Yours sincerely,

Georg Greve
President 
Free Software Foundation Europe



[1] http://en.wikipedia.org/wiki/Ifrs
[2]
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=/netahtml/search-bool.html&r=7&f=G&l=50&co1=AND&d=ptxt&s1='accounting+standards'&OS=%22accounting+standards%22&RS=%22accounting+standards%22
[3] http://www.ftd.de/tm/it/1110009214683.html?nv=sl


About the Free Software Foundation Europe: 

     The Free Software Foundation Europe (FSFE) is a 
     charitable non-governmental organisation dedicated to 
     all aspects of Free Software in Europe. Access to 
     software determines who may participate in a digital 
     society. Therefore the Freedoms to use, copy, modify 
     and redistribute software - as described in the Free 
     Software definition- allow equal participation in the 
     information age. Creating awareness for these issues, 
     securing Free Software politically and legally, and 
     giving people Freedom by supporting development of Free 
     Software are central issues of the FSFE.  The FSFE was 
     founded in 2001 as the European sister organisation of 
     the Free Software Foundation in the United States.



   Further information: http://www.fsfeurope.org

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