Further battles loom between companies and developers over the EC's abandoned licensing directive, writes Karlin Lillington

One of the European debates to capture wider public interest - the proposed software patents directive that was abandoned in a surprise move during the summer - split the software industry and developers as perhaps no other industry-related issue ever has.

The complex issue also divided MEPs and the Council of Ministers. They were lobbied on one side by large software companies and industry groups such as the Business Software Association. They were also lobbied on the other side by groups representing small to medium-sized enterprises (SMEs) such as UEAPME, open-source and "free" software developer communities, and major industry figures, who disagree with the fraught patent issue.

At one point last February, a decision by the European Commission that it would not start again from scratch with the proposal caused a bitter fallout between ministers and parliamentarians

Moreover, the co-ordinator of the socialists in the Legal Affairs Committee, Maria Berger, accused the commission of acting "in collusion with Microsoft".

In Ireland, the patent issue split the software community too, with national industry groups such as ICT Ireland and the Irish Software Association - which primarily represents SMEs - coming down on the side of software patents. The Government supported the directive, and was key in negotiating a new version of it when Ireland held the EU presidency.

This led to concern among many observers about Ireland's lack of impartiality, mainly due to Ireland's economic dependency on the IT industry. Critics noted Microsoft's official sponsorship of Ireland's EU presidency during the time when Charlie McCreevy was finance minister in 2004. When McCreevy then became commissioner for the internal market and services, and supported the software patent directive earlier this year, questions were also raised about the commission's impartiality.

It didn't help that trade commissioner Peter Mandelson admitted spending New Year's Eve 2004 at a party on the yacht of Paul Allen, a co-founder of Microsoft, and one of the company's largest shareholders.

Meanwhile, the issue drew a surprisingly high level of interest from the wider public, with many representations from citizens to their MEPs, and several organised demonstrations.

The issues were rehashed last week at a Dublin seminar sponsored by the Irish Free Software Organisation (Ifso), a group that took the anti-patent view, and warned that patent supporters would now try to bring patents in through the back door, via current proposals for an intellectual property directive.

MEPs ultimately felt they shouldn't vote through a directive on an issue that was so confusing, said a spokesman for Labour MEP, Proinsias de Rossa .

"In the end, most agreed that the sensible way forward was not to adopt a software directive and leave it to sit for now."

Ifso's position remains that patents would inhibit developers who wish to offer software that can be used and modified as desired under general-use public software licences such as the general public licence (GPL).

Ifso chairman Glenn Strong noted that "free" software did not mean costless software but software which had a degree of freedom attached to its use, such as adapting it and enabling it to be run in a variety of ways, without the need for further permissions.

"We perceived it would be difficult for us to use software or produce software in this way. We're not concerned with making everyone else use software in this way, we just want to make sure we can do this," he said.

One of the key lobbyists against the directive, Ciarán O'Riordan of the Free Software Foundation Europe, said that while people rarely took part directly in politics in Brussels, and software was an obscure enough subject, thousands turned out to campaign against this particular directive.

The foundation's campaign was strengthened by a US study from the federal trade commission in 2003, that looked at the overall subject of patents and came out decisively against software patents, which are allowed in the US, said O'Riordan.

The report concluded that software patents impeded innovation. It also noted they increased entry barriers, impaired follow-on incentives to create new products, created uncertainty - due to the possibility of litigation - which erode incentives to invest in new companies, and encouraged "defensive patenting" and "patent thickets" (clusters of patents) in hot technology areas.

"The entire conclusion was negative," said O'Riordan.

He said the basic premise of the opposition to software patents was that the industry had developed due to the fact that new software evolves from existing software.

Moreover, it's dependent on interoperability with other software.

Patents enable large players to control whole areas of the software industry because they do not allow other programs to work with theirs or demand licences to allow them to do so - or they attempt to patent the "look and feel" of a product.

"For software to compete, it must also have the look and feel of market leader products," O'Riordan said.

Many large companies, such as Microsoft, and groups like ICT Ireland - both of which attended the seminar and presented opposing viewpoints during discussion - dispute the foundation's interpretation of the US report, and the argument that innovation and competition are curtailed by the use of patents.

Patents protect innovation by guaranteeing that developers receive remuneration for their work and needn't fear their ideas will be stolen, argued a Microsoft spokesman. An ICT Ireland representative said it was not true that SMEs largely opposed the patent directive, and pointed to the strong SME base of ICT Ireland's and the Irish Software Association's membership.

She said SMEs needed software patents to protect their innovations and to get outside investment in their companies, as the financial community looked for evidence of a company's protected intellectual property.

Such issues are bound to be resurrected in the months ahead. The patents issue is not dead, because the European Patent Office continues to issue patents on software. There is little litigation in the area only because people are afraid of setting case law examples on either side of the issue, O'Riordan said.

Further battles also loom over the second version of the proposed Intellectual Property Rights Enforcement Directive (IPRED2) that seeks to criminalise some copyright and patent infringements.

According to critics of the directive, this could enable patents by the back door and, if implemented, will necessitate looking at the directive again.

"The [software] directive may be gone now, but it is going to come back," O'Riordan said.