The European Commission has ruled out initiating new legislation to harmonise software patents throughout the EU, unless requested to do so by the European Parliament, after MEPs overwhelmingly rejected a proposal that was backed by the commission and the member states.

A spokesman for internal market commissioner, Charlie McCreevy, expressed regret at the parliament vote, but said the commission would respect it.

"Patents will continue to be issued by national patent offices and the European patent office under existing law. It means fragmentation. It means 25 different systems competing and less clarity for operators and for member states," he said.

Large technology companies wanted an EU patent for software because they feared that a lack of patent protection could allow manufacturers in China and elsewhere to copy and reproduce their innovations at a lower cost.

Smaller companies and the free software movement opposed the proposal, arguing that it would stifle innovation by forcing small operators to pay for software that is essential to running applications.

Some 648 MEPs voted against the proposal, with 14 against and 18 abstaining.

Fine Gael MEP Gay Mitchell said that the largest group in the Parliament, the European People's Party (EPP) to which Fine Gael belongs, voted against the proposal because too many amendments had been tabled.

"It's better not to have a Europe-wide directive than to have bad legislation," he said.

Mr Mitchell said that lobbying before the vote was unusually intense, with diverse groups promoting one side or the other.

"I've never been canvassed so much on anything by people for or against an issue," he said.

Mr Mitchell's party colleague, Simon Coveney, said however that yesterday's vote was a mistake that showed "a very serious failure of the institutions to find common ground and agreement on what is a very important area for the European economy generally".

Jim Murray, director of BEUC, an EU consumers' group, said MEPs had missed an opportunity to put an end to the "wild patenting" of software, which he said should not be patented at all.

"Consumers have a lot to gain from innovation and competition in the software market. Software operates features of consumer goods like cars, stereos, and home appliances and this trend will intensify in the years to come.

"Software is already protected by copyright and should not be protected by patents. We regret that the parliament did not use its legislative power to ensure this fundamental principle," he said.