Last year the Commission announced they're going to work on a new package of patent regulations.
We don't yet have the text.
So there was a call for input and people have responded to this so we do have some chance
to give input to the Commission already but that was at the stage where we didn't see
what is actually being proposed.
We still have not seen it, it will be published in April of this year but at this stage we
are already planning because we know this is going to be a big topic.
So what you're going to see right now is the early stage planning of what a campaign that
could help free software deal with software patents could look like in the coming months
and to start it's going to be my colleague here Panos from N Software Patents.
Yeah so hi everyone, I am Panos Alvopoulos.
I have been working on the N Software Patents campaign for a while, for about two years
approximately.
Just to give an overview of the presentation today, I'm going to talk about in general
what's the deal with ACPs and France and a rough overview of case law and then Kiaran
will present the free software toughest problem and five fixes we can think about it.
So what's the deal with ACPs and France, two words that are probably unknown to many.
ACPs stands for standard essential patent and France stands for fair, reasonable and
non-discriminatory.
Just to illustrate what's going on here.
As we all know that in technology standards are very important so if we want devices to
work with each other and we want them to be compatible we need to use a standard, right?
So these standards are usually, the rules for these standards are going to be set up
by standard setting organizations.
So what happens is that for a known standard there are usually patents that are very important
for the standard to work.
So those standards are called standard essential patents and if one wants to participate in
the standard they need to use the patent.
So that person is called implementer and they have to get a license from the SAP holder.
Now of course as we all know a patent is very restrictive to everyone.
So here's what standard setting organizations do, they require from the SAP holders to license
their patents, their ACPs with under front licenses.
Now it sounds great but there are issues.
As we said France stands for fair, reasonable and non-discriminatory but that's a very, very,
very vague term.
First of all it can affect everyone that's working with standards and that includes network
protocols, independent of things, audio-video codecs, the automotive industry and so on
and on.
And the problem is that when the implementers have to use the patents they have to come under
agreements with the SAP holders and the SAP holders they try to charge as much money as
possible and most likely the implementers are not very satisfied with that.
So the real problem is that there's a potential abuse of dominant power, of dominant position
by the SAP holders and the high transaction costs for implementers are simply unsustainable
for SMEs, for small and medium enterprises.
And that in general adds up to the legal uncertainty regarding software patents.
So to be more specific on the way this has been reflected in the courts because what
happens is that when you have an implementer and they come into a disagreement with a patent
holder what happens is that litigation happens.
So they go to the courts and what do the courts say?
Well they try to help as much as possible.
I have a layout here of the courts, of the court decisions that have been relevant and
have been basically the landmark decisions in Europe.
First of all it all started with the German Federal Supreme Court and it started with
a very strict and conservative stance, very pro-ACP holder stance because it basically
had a very strict test for a front defense and the front defense is basically when the
implementer says yes, you are the SAP holder but the money that you charge for that are
way too high for me to actually participate in the market and that's an abuse of your
dominant position.
And the German Federal Supreme Court was more in favor of the patent holders and that was
seen in 2009.
But then what happened is that we had a very important decision from the European Court
of Justice that concerned competition law and it took a more balanced approach.
And then in 2020 there was another decision, actually there was no decision.
There was a German lower court which asked for more clarifications from the European
Court of Justice and unfortunately for everyone the decision was settled, there was no decision.
It was settled out of court so the court had no chance to answer those questions.
To be more specific on what the German Federal Supreme Court said back in 2009, it had a
very strict test and it said the alleged infringer can rely on a competition law defense only
if it does the following two steps.
Only if it unconditionally offers to enter into a license agreement with the SAP holder
and more importantly if it behaves as if it were an actual licensee so that would mean
that it would have to act as if there's already a license and pay royalties and it was up
to the defendant to prove that the conditions above are fulfilled.
What happened though is that in 2014 there were two important commission decisions about
anti-trust issues with Motorola and Samsung and the European Commission stated that a
patent holder abuses its dominant position when having given a front commitment over
an SAP to a standard setting organization it seeks injunction against a willing licensee
and a willing licensee remains free to challenge the validity of the patent or its infringement.
That was very important because the German courts didn't recognize that.
They didn't expect the defendant to give up some fundamental rights like this.
So in about 2015 the European Court of Justice responded to a lower German court because the
German courts recognized that okay there's a difference between what the German federal
Supreme Court says and what the European Commission is doing.
So the European Court of Justice came in and clarified what's going on and it said there's
a very broad test here but it's helpful enough for national courts to expand further.
The SAP holder must alert the implementer in writing of the infringement complained
of by noting the relevant SAP and how it's alleged to be infringed.
The implementer must express a willingness to conclude a licensing agreement on front
terms.
The SAP holder must provide a specific written offer for a license on front terms.
The implementer must diligently respond to that offer in accordance with recognized commercial
practices and in good faith.
And if the implementer does not accept the offer made to it, a counter offer that corresponds
to front terms should be made.
So based on that language you can probably figure out that the courts didn't really solve
any problems.
What they basically helped is to help the companies negotiate better on what front really is.
And you might have guessed from the name of the campaign and so through the patents what
we're trying to do but it's important to follow decisions like this because it's important
to understand how patents work and how a friend can actually affect standards.
And finally just for your information, there are more cases that should be started but
we don't have the time to present them here.
It's the United Kingdom Supreme Court unwired planet versus Huawei in 2020 that concerns
the UK.
And there are two more decisions from the German federal Supreme Court in 2020 that are also
of great importance.
So with that, I conclude my part of the presentation and I give the floor to Kier.
So the first time I came to Brussels was in 2002 and it was to come to Fastem and at that
time Richard Stallman gave the keynote address in the Johnson Theatre and it inspired me
to work on free software policy topics as a priority.
So a few months later then I got interested in software patents in particular and a lot
of people looked at the topic and saw it was a bit daunting and after years people said
to me, you've been working on this for 10 years and there's no progress, how do you
keep your motivation?
And then they said after 15 years, how do you keep your motivation?
And finally I stuck with it and now I can make the joke that after 20 years all of the
software patents that I was worried about have now become invalid.
But of course there are now a new generation of software patents.
When I said I was giving this talk I was asked, oh, can you talk about the unified patent
court?
No, I can't.
Very important but there's no time, sorry.
Can you talk about software patents coming into India via the AI law?
No, I'm sorry, I can't.
Can you talk about the idea of AI writing software patent patents?
Because I think patent applications are such nonsense, I think AI is the perfect thing
to write the next generation of them.
But no, I can't.
Can you talk about the Cyber Resilience Act?
This is going to be massive but no, it's got nothing to do with patents.
So audio video patents are the worst case scenario for software because you have to form a standard
at first off.
You then have to convince all of the manufacturers of hardware that this is worth putting into
their hardware because you cannot do audio video with just software.
Audio video software used to be optimized for decoding because encoding would happen
on some mainframe somewhere and you'd download the video and you'd watch it.
But now with video chat you have to do real-time encoding, transmission, so you need a small
file size, and then decoding and it should be almost real-time.
You convince these hardware manufacturers to put it onto their hardware and then you
have to wait five years because then you have to wait for everyone, the whole world of computer
users to throw out their current hardware and buy a new generation of hardware.
So after five years finally the standard will be hardware accelerated on everyone's computer
and then you can really use it.
If at that point somebody comes along with a patent and says, actually, I own a bit of
that software, there is very little you can do.
You can no longer innovate around the problem.
So software patents on standards are the worst type of patents for software and on video
patent standards they are the worst of the worst.
This is happening already.
We have an audio format opus which is not very famous, however it is a successor to
the AUG audio format.
It is used in a lot of hardware devices.
There is currently a patent pool being formed to threaten the opus audio format.
We have the AV1 video format which is being developed to be freely implementable and already
there has been a request sent to the European Commission to investigate the people working
on this for anti-competitive practices because trying to help each other avoid patent problems
might be a bad thing for some companies.
Before I get into it, I saw yesterday there was published a paper by Andrew Katz and four
other researchers.
I didn't get their names but it is on the HGVC standard in software so I expect that
is very interesting but I will not be talking about it.
There are a lot of topics here.
There was a commission call for input last year.
There were responses from open forum Europe who I currently work for and from open source
initiative Simon.
This however these comments were sent based on not actually knowing what text is going
to be presented so they were kind of general comments on what patent policy could be like.
We still haven't seen the text that is going to be presented by the European Commission
but as I said this is early stage planning for a campaign.
We have to start thinking already about what possibilities we have to fix this, what different
form can it take because when we are talking about policy makers the way it works is you
have to give them a list of different fixes that you are looking for and then they will
say which ones are politically possible and then you have to start trying to maximize
each of the ones that are politically possible.
So I found five starting ideas but this is a discussion document basically.
We can discuss them further as in the coming weeks.
The first idea would be a carve out specific two free software.
A few years ago this might have sounded a bit overly optimistic but now in the Cyber
Resilience Act and the Product Liability Directive there is this text and when we first saw
it we were amazed to see free and open source software should not be covered.
Excellent.
Of course once you start reading it then you realize well there is an objective limitation
here.
You can use this exemption if you are trying to do innovation or research.
There is a commercial activity limitation and we all know that commercial activity has
never been defined and is an endless source of un-clarity for what exactly that means
for software and online activities and it should be exempted.
So a judge will have to interpret whether or not you are allowed to use this exemption
which basically means that nobody can rely, nobody can confidently make use of this exemption
so it's not very useful.
However the fact that this is in a document from the Commission in two proposals for regulations
tells us that inside the Commission something along these lines is acceptable.
They didn't get the wording quite right this time but they are not completely opposed to
this kind of thing.
So this is a starting point, maybe we can do something along these lines.
The second possibility would be a similar end result but from a different starting point
and would be to try and carve industry into two sections.
For example we might find that small and medium business in the manufacturing and pharmaceutical
areas might be perfectly happy with having more patents and might want help from the
Commission to apply for patents and use their patents.
We happen to not like that so maybe we should have a different regime for them and one for
us.
There is already as part of this patent package there is a regulation that is specific to
pharmaceutical patents so the Commission is not opposed to singling out sector by sector.
Our argument can be that our sector is different because we have collaborative models and we
have market solutions.
If you look at the patent clauses of the GPL and the Apache 2.0 license we already have
market solutions so maybe we can tell the European Commission don't interfere with what
we are already fixing.
A third fix and this is still quite early stage is the idea of competition law.
I have always believed there is not enough discussion of how competition law is weakened
by the existence of patents.
The European Commission loves to work on patent law and it is a big topic in the European
Commission but it just seems there is not enough dialogue between people who are enforcing
competition law and people who are working on patent policy.
I think maybe if we could find a way to make it clearer to the European Commission and
the European institutions in general how these two topics interact maybe we could help make
them understand what we are trying to achieve.
The fourth one, there are only five, not going to go on all night.
The fourth one is something that will definitely be discussed because the Commission has mentioned
this in their documents so Fran, at times we think the idea of non-discriminatory that
must help us because we don't want regimes that discriminate against free software.
We need patent regimes that allow for royalty free use of patents.
However, non-discriminatory currently the standard meaning for this is that you don't
discriminate between individuals.
If you have a certain system for working out how much royalties you are going to ask for
you have to apply the same system to each potential licensee.
Or maybe we can expand this, maybe we can work with this term and find a way to talk
about non-discriminatory so that it prevents the patent regime from discriminating against
free software which cannot pay royalty fees because we can't count the copies.
If that doesn't work then of course the word fair it's an even more vague word but maybe
we can do something with this word to talk about how fair should apply to free software.
There's also as part of this patent package there is a regulation coming on compulsory
licensing so maybe that angle can also be used there to ask for something that works
with free software so that would have to be a royalty free, sub-licensable patent license
with no domain limit.
And the last fix, being presented for the first time.
So the whole problem with software patents in Europe has always been that we have a patent
law that says software is not patentable as such and the policy makers when we complained
we don't want software patents they said but it's not patentable look software is not patentable
as such.
The problem was that of course the patent applications were always written as patent
on a limited resource device which interacts with this and there's always a way to make
software sound like it's more than just software as such.
What if we ask them to give an example?
What if we ask them to put this into a patent law on standard essential patents?
The software which reads, transmits or puts data into a data format standard is an example
of software as such.
If we could do this and this is a crazy idea maybe we could find a way to get software
as such to be defined in a concrete way and we could actually start using the idea that
software as such is not patentable.
Now when we used to campaign against software patents the commission because the software
is not patentable as such language was there they said don't worry there's not going to
be American style software patents it's not going to happen.
I would like to try and find out the documents they used to use and I want to find any statements
and things they ever said that explained what their motivation was.
If they were saying that their intention was that data formats for example or compatibility
interoperability which is a massive buzz word now in the European institutions if these
things were not meant to be hampered by software patents then maybe we can say well you know
please clarify this.
Your regulation says you want to reduce the un-clarity give us some clarity on what exactly
software as such is and maybe we can put this into law.
Those are my five fixes.
I don't have a favourite one we don't know which one is going to be acceptable we don't
know what text even we have to insert any of these into but this is something that we
will be well continuing to hold a dialogue on in the coming weeks and months and I hope
this topic gets lots of attention and lots of you get involved.
With that we do have a tool for coordinating work on this and Panas will brief you.
I have a microphone over there.
So if you probably guessed it from the whole presentation there is so much information
to be digested and it's extremely difficult to talk about all of this in 25 minutes but
what we are trying to do with our websites and software patents is to have the central
resource for everything for software patents so that includes case law legislation and
that includes the whole world.
We want to make people not forget software patents like they forgot them like probably
the last 15 years and we try to make everything about software patents let's make them the
headlines let's make software patents something that everyone should be concerned and not
make the copyright the only issue that concerns free software because patents actually concern
not only free software but software in general and with that we would like to thank you for
your attention.
Please try to contribute to these resources it's extremely valuable.
Yes.
Okay we have time for one question and this is going to Simon sorry.
Thank you very much so I'll try and frame this in the form of a question if I can.
One thing I'd like to point out about all of your comments about FRAND is that all of
those lawsuits that you displayed included Etsy as a correspondent because the FRAND
expectation is not a part of law it's a part of the way the specifications the standard
has written and as a consequence anything based on FRAND commitments is on very shifty
ground because there's no real proof that anybody is actually forced to do things on
FRAND terms anyway so I don't like number four.
Number two your carve out I've written a paper on that for OFE and I think that's the one
to go for because there is actually a division between standards that are done that are implementation
based and ones that are requirements based where monetization depends on patents and
so you can find a compromise that will work there and I'd like to invite you to come with
me to an Etsy meeting and meet the people who think we are all crazy batshit crazy idiots
who want to destroy the European economy because that's what they say to me when I say anything
you just said and we're not going to get anywhere with the commission unless we understand their
position and appear to accommodate it even if we think they're the ones that are crazy
and then that implementation paper from Andrew Katz you saw the important thing to know about
is it says it's impossible for an open source implementation to get any licenses to any
patents in any standards because they went and tried for the standard that's mentioned
in the title so that paper isn't a general paper about the topic they went and tried
to go and get friend licenses and they found it was impossible for them to go and secure
friend licenses to any of their standards so this whole thing is based on a false premise
that anyone is going to actually fairly get licenses this is all about entrapping implementers
into the universe of the companies that have rigged the standards at the regulatory captured
standards organizations.
Okay, cool, so let's move to Kota Zürich.
The term friend is in the commission's call for input so it seems although it is not in
European law at the moment there is a regulation from 2012 there is some reference to it but
it's not in general European law but it's in the commission's call for input so it may
be defined and if it is going to be defined then let's define it ourselves.
Thank you.