Small software firms given patents respite

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The Independent Online

Thousands of Britain's small software developers have won a stay of execution, after Europe's ministers backed down from signing a new blueprint for an EU software patent.

Just before Christmas, Polish government officials derailed plans for a new Software Patent Directive by at least six months after an unusual five-hour wrangle over the draft. The proposal is seen within the industry as a way of allowing larger firms to defend their wares - and R&D funding - through extracting licence fees downstream from smaller firms.

But small companies see the directive as playing into the hands of Microsoft by giving it a tighter grip on the European market. Bill Gates' giant company files two patents a day.

"This ain't about Microsoft versus the 'open source' community," one Microsoft spokesman retorted. "Even European firms like Siemens, Nokia, Philips and Ericsson want to protect their R&D."

Yet opponents of the EU draft argue that supporters of the directive are in the minority. Sun Microsystems, Cisco Systems and European firms including Deutsche Bank and France's Bull are sceptical about the blueprint and are already preparing for higher operating costs - not just for licensing, but for legal fees. Experts are warning that many smaller businesses fighting to stay in the UK market will simply fold.

"The typical start-up costs of a small software developer are £5,000, but this could double or even treble when you have registration fees from patent lawyers," argues Alan Cox of RedHat, the open systems company that is a leading supplier of the Linux operating system.

He continues: "The worst thing for thousands of small British firms is that they will be victims of a US trend that will come here - of predatory companies buying up patents in auctions with the specific purpose of harassing small businesses for licence fees. To even fight a patent, you need to spend an average of €2m [£1.2m] in fees. Small companies always pay up."

Paying up, though, is not always an option. Andy Robinson, who launched a dot-com start-up in 2000, is dreading an EU software patent. His firm, ReportLab, based in London, has four partners. "But none of them could stop their work and concentrate on the legal side of patent disputes," he says. "If we get a letter from [US software giant] Adobe, it's game over.

"Large firms are filing more patents each day in the US and using them to ring-fence technology, yet everyone there admits that it's a real mess and we're better off without it."