Small businesses to be hit by big fees

Richard Stallman, the well-known Free Software guru, once compared developing software to writing a symphony - with the difference that if there were a musical patent office, Beethoven would have found himself out of work.

The example may sound extreme, but it is an indication of what many critics fear will come to pass if proposed European Union legislation on software patents - coming up for a vote before the European Parliament in next week - becomes law in its current form.

Under the scenario put forward by those against the proposed directive on the patentability of computer-implemented inventions, small and medium-sized software businesses will find themselves slapped with exorbitant licensing fees, which they must pay in order to continue distributing products.

On the other hand, the directive could lead to a more consistent framework for patents across the EU, which would make it easier for companies to legitimately profit from computer-related inventions, according to Labour MEP Arlene McCarthy, responsible for shepherding the directive through the parliamentary process.

The current situation in the US is adding some urgency to the debate - across the Atlantic, huge patent-related financial penalties are becoming a familiar part of the landscape. In a recent example, a judge told Microsoft to pay $521m to Eolas Technologies, a University of California spin-off with one employee, no products, a handful of patents and 100 investors, after Eolas prevailed in its lawsuit over a browser-related patent.

If the decision is upheld on appeal, any organisation in the business of making browser software, including open-source projects which give away their products, are likely to have to pay Eolas for a licence.

Another thorny issue is that of business methods, widely patented in the US but barred from patenting in Europe. Since US courts ruled that business methods could be patented in 1998, patent registration - and subsequent lawsuits - have mushroomed, with e-commerce giants such as Amazon.com, Priceline.com, Barnes&Noble.com and Expedia having all been hauled into court.

Most of the lawsuits ended in settlements. Amazon.com was much criticised for chief executive Jeff Bezos' decision to patent the company's "one click" method for speeding up an online purchase.

Matt Broersma writes for ZDNet UK