Subject: [ffii] EU boosts MS Monopoly
From: Hartmut Pilch <[email-masked]>
To: [email-masked]
Date: Sun, 28 Mar 2004 12:59:18 +0200 (CEST)
List-Id: FFII News <news.ffii.org>

FFII News -- For Immediate Release -- Please Redistribute
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EU Boosts Microsoft Monopoly

   The European Commission's competition procedings against Microsoft
   have led to a verdict which gives a big boost to Microsoft's monopoly
   position in the OS market and helps Microsoft expand this position to
   other markets. While the Commission may have earned substantial
   revenues for itself by imposing a one-time fine of 1% of Microsoft's
   liquid cash reserves, the smallprint of the verdict gives Microsoft
   green light to kill its main competitors in the operating systems
   market. This smallprint was simultaneously reinforced through backroom
   deals in the Council's Patent Policy working party, of which copies
   have been leaked to FFII. Immediately after the announcments the stock
   value of MSFT rose by 3%.

Details

   The day after the announcement of the European Commission's decision
   on Microsoft's anti-competitive practises, Microsoft's share values
   were up by 3 percent.

   While the Commission imposes a one-time fine of 1% of the liquid cash
   reserves of Microsoft on the company, the decision implies extreme
   interpretations of the TRIPs treaty, by which Microsoft is authorised
   to charge a "fair remuneration" for the use of any proprietary
   protocols on which it has obtained patents in Europe.

   This means that, unless the European Parliament's amendments to the
   proposed software patent directive are fully accepted, Microsoft will
   have received official green light from the European Commission for
   killing its main competitors.

   As the Register reports:

   Far from penalizing Microsoft, Wednesday's decision by the European
   Commission assures a bright future for the company as a patent
   licensing operation, according to one representative only two open
   source interests called to testify before the investigation. Because
   Microsoft will be allowed to pursue royalty revenue from the APIs it
   publishes, Jeremy Allison says that the projects such as Samba, which
   he jointly leads, may face a prohibitive hurdle. Microsoft's
   competitors use software such as Samba to access file and print
   services on Windows machines. The EC's investigation was brought about
   by Sun Microsystems, which through ventures such as 'Project Cascade',
   tried to do in proprietary form what Samba and similar projects such
   as Novell's Evolution Exchange client do in software libre form:
   provide a compatible, interoperable infrastructure to compete with
   Microsoft's enterprise software. Microsoft's rivals have become
   increasingly reliant on these free software projects. But Wednesday's
   decision unexpectedly divides the anti-Microsoft camp, says Allison.
   "The EU had a wonderful opportunity but it got greedy," he told us
   yesterday. "This splits the competition."

   Håkon Wium Lie, CTO of Opera Software, one of Microsoft's few
   remaining competitors in the web browser market, adds:

   It is never fair for any company, no matter of what size, to charge
   any competitor for the mere use of protocols which are required for
   interoperation. The only fair remuneration for such use is no
   remuneration at all. That's why at the World Wide Web Consortium we
   decided that web standards must be royalty-free. The same should apply
   to all commmunication standards.

   This position has also been stated by the European Parliament in the
   amended Art 6a on the limits of patent enforcement with respect to
   interoperability.

   However, the European Commission is fighting against Art 6a of the
   European Parliament, based on the same questionable interpretations of
   the TRIPs treaty which it used to further the monopoly interests of
   Microsoft in the competition case.

   Reinier Bakels, scholar for computer law at Institute for Informatics
   and Law in Amsterdam and co-author of a study on software patents
   ordered by the European Parliament in 2002, comments:

     Never believe anybody who says something about TRIPs without checking
     the text! Article 30 of TRIPs states that the exclusion rights
     conferred by a patent can be limited by competition considerations as
     long as this does not prevent the normal use of the patent. The
     meaning of most TRIPs provisions is abstract and open to
     interpretation, but I do not think many people would agree that
     software interfaces should be ownable, let alone that the "normal
     use" of patents should be to make them ownable. Rather, ownership of
     interfaces leads to anti-competitive effects which call for a
     systematic solution within patent law, in conformance to the
     meta-rules of Art 30 TRIPs. Art 6a of the European Parliament's
     amended software patent directive is an example of a solution that
     arguably achieves this aim. The European Commission has neither
     explained why it thinks otherwise and how it interprets Art 30 TRIPs.
     Rather, the Commission shows a regular pattern of using uninterpreted
     TRIPS articles to foster fear, uncertainty and distrust to the
     advantage of certain anti-competitive interests in the software
     field.

   These comments do not yet take into account the fact that the software
   patents on which Microsoft's interface ownership attempts are based
   have been granted against the letter and spirit of the European Patent
   Convention and in fact of the TRIPs treaty itself, as is easy to see
   and many law scholars have pointed out.

   see also [19]The TRIPs Treaty and Software Patents and
   [20]Interoperability and the Software Patents Directive: What Degree of
   Exemption is Needed

   The Commission seems to have adopted its anti-competitive
   interpretations of the TRIPs treaty under pressure from [21]Frits
   Bolkestein, the commissioner of the directorate for the internal
   market, who had protested that the originally planned interoperability
   requirements were too harsh on Microsoft and would lead to WTO
   sanctions because they were not justifiable under Art 30 TRIPs.

   Bolkestein's directorate has been threatening the Parliament and
   misinforming the Council in order to promote extreme interpretations
   of TRIPs and to pave the way unlimited patentability of software and
   business method patents in the EU.

   The texts which Bolkestein's directory has been using in this process
   came from the European Patent Office and from the Business Software
   Alliance. The software patent directive proposal carried the
   handwriting of the same circles close to BSA and Microsoft which
   appeared in a [22]document from the US government against the European
   Parliament's Article 6a which was circulated to MEPs by the US
   representation in Brussels in early september 2003.

   While Bolkestein appears to be encircled by a swarm of big business and
   patent community lobbyists all the time, he has so far not met any
   representative from the camp of critics of his software patent agenda.
   DG Internal Market has always unilaterally favored the interests of the
   "economic majority", i.e. the corporate patent lawyers who dominate the
   relevant committees at EICTA and UNICE, without ever explaining why the
   other side's interests were not worthy of protection. There has been a
   blockade of communication for years.

   However, this may be slowly changing. David Ellard, successor to
   [23]Anthony Howard in charge of the software patent dossier at DG
   Internal Market, has agreed to participate in the [24]conference on
   software patents organised by FFII within the European Parliament on
   April 14th. This dialog would be the first of its kind since the
   beginning of the Commission's directive plans in 1997.

   The Council of the European Union has, in its session of 2004-03-02,
   again reconfirmed its insistence on misinterpreting Art 30 TRIPs. A
   motion of Luxemburg in favor of a variant of Art 6a was rejected.
   Instead the Council's patent working party opted for a recital which
   says that competition problems must not be solved within patent law but
   on a case by case basis through competition procedings such as the
   current one against Microsoft. By this extension to its previous
   [25]working document, the Council has even further strengthened its
   position as the uncompromising promoter of extreme patentability and
   extreme patent enforcability in the European Union. These movements of
   the Council have happened, at least in part, at the [26]instigation of
   Bolkestein's directorate.

References

  19. http://swpat.ffii.org/analysis/trips/index.en.html
  20. http://swpat.ffii.org/papers/eubsa-swpat0202/itop/index.en.html
  21. http://swpat.ffii.org/players/bolkestein/index.en.html
  22. http://swpat.ffii.org/papers/eubsa-swpat0202/usrep0309/index.en.html
  23. http://swpat.ffii.org/players/ahoward/index.en.html
  24. http://plone.ffii.org/events/2004/bxl04/prep/
  25. http://swpat.ffii.org/papers/europarl0309/cons0401/index.en.html
  26. http://swpat.ffii.org/papers/europarl0309/cec0311/index.en.html
  27. http://swpat.ffii.org/analysis/trips/index.en.html
  28. http://swpat.ffii.org/papers/eubsa-swpat0202/itop/index.en.html
  29. http://swpat.ffii.org/news/04/cecms0202/index.en.html
  30. http://swpat.ffii.org/players/microsoft/index.en.html
  31. http://swpat.ffii.org/news/04/index.en.html
  32. http://swpat.ffii.org/news/04/ieeu0109/index.en.html
  33. http://swpat.ffii.org/news/04/acacia0115/index.en.html
  34. http://swpat.ffii.org/news/04/sver0116/index.en.html
  35. http://swpat.ffii.org/news/04/kober0114/index.en.html
  36. http://swpat.ffii.org/news/04/amaz0125/index.en.html
  37. http://swpat.ffii.org/news/04/oecd0130/index.en.html
  38. http://validator.w3.org/check/referer
  39. http://www.gnu.org/licenses/fdl.html
  40. http://swpat.ffii.org/group/index.en.html
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