The Business Software Alliance (BSA) made false claims to the EU Commission, and the Free Software Alliance Europe (FSAE) has provided an analysis and appropriate counter-claims.
Note that you cannot freely give software away when people have to pay royalties to patent holders, nor is it possible to write non-trivial software without infringing one or more software patents (which are mostly held to be invalid anyway). However, it is impractical to check for all the patents and to go court to invalidate even ones that are obviously invalid - consider the time & money involved!
Also patents impede the spread of Linux which is covered by the General Public Licence (GPL)
A good source of information about software patents and the problems involved can be found in a page at Groklaw.
Note that googling for FSA lead me to a piece of FUD, claiming that the FSA (as in FSA Europe) was a fictitious organisation...
In its letter, the BSA argues that "[I]f the EU adopts a preference for royalty/patent-free specifications, this undermines the incentives that firms have to contribute leading-edge innovations to standardization - resulting in less innovative European specifications, and less competitive European products."
Actually this reflects a gross misconception of standards, their role and their working.
1. Zero-royalty licensing conditions do not prevent patented technologies to be included in standards. Rather the contributor is required to avoid imposing running royalties on implementations.
2. The single most successful technology platform on Earth, the Internet, is built on standards that have been made fully available under zero-royalty licensing conditions. Indeed the W3C, the standard setting organization (SSO) that governs the web standards has through consensus adopted a zero-royalty "IPR policy", where royalty bearing technologies are allowed to be contributed only on a very exceptional base. Rather than stifling inventive activity, as the BSA claims, this has turned the Internet into a hotbed of innovation. Indeed, it is the very nature of standards that they stabilise a platform on top of which competitors can create innovative and interoperable solutions1.
3. Contrary to the BSA's claim, zero-royalty patent licensing policies open up participation in software standard-setting to the widest possible group of market players and implementers. As a result, software standards coming out of standard-setting organisations with zero-royalty patent licensing policies such as the W3C have been widely adopted, with the HTML standard only being the most prominent example.
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