EU tells open source to start paying MS patent tax

Brussels, 23 October 2007 — EU Commissioner Kroes’ deal with Microsoft creates real dangers to Europe’s growing open source economy, warns the FFII. Using patent licenses that exclude businesses, the software monopolist has turned the EU competition ruling into a victory, and now gets implicit support from the Commission to proceed aggressively against its competitors.

Neelie Kroes European Commissioner for Competition and Microsoft agreed that the royalties payable for the interoperability information will be 10,000 Euros, and that Microsoft can use its EPO software patents to charge 0.4 percent of all the sales of its competitors. The FFII says that these conditions effectively exclude open source competitors and add costs for all who wish to communicate with Microsoft products. This is a new transaction cost for all society, its the opposite of an open Internet.

“We assume that the Commission wanted a paper victory after all this delay,” says Pieter Hintjens, president of FFII. “The guilty party agrees not to appeal, takes the slap on the wrist and promises to behave. And the Commission gets good press. But who pays? Who is the patsy? It is European industry, which increasingly depends on free and open source software.”

Benjamin Henrion, FFII representative in Brussels, agrees that this deal is a big win for Microsoft: “The Commission does not understand how open source works. It naively accepted Redmond’s assurances that they will play fair. It is a sham. They have planned for years to control the open source economy through software patents. This scheme now moves ahead, thanks to the Commission’s haste to make a quick deal.” Henrion concludes, “Kroes has ensured that EPO software patents – which the EU rejected in 2005 – will now strengthen the monopolist’s grip for years to come.”

Background information

The European Patent Office (EPO) continues to grant software patents and business method patents in violation of the European Patent Convention by applying its own interpretation and “case law”, outside of any EU legal framework. The EU rejected in 2005 a proposal to legitimize the EPO’s case law.

Microsoft recently published its MCPP (Microsoft Communications Protocol Program) patent license which requires competitors to pay royalties for each copy of software distributed. For example, a free software project making a print server would have to pay USD 8 to Microsoft for each copy downloaded.

Reuters reported that “Commercial developers such as IBM or Red Hat must pay a license fee of 0.4 percent of revenues to Microsoft when they redistribute that software, to protect against patent challenges.”

Commissioner Kroes has said, of the deal, “That percentage royalty has become a nominal, one-off payment of Euro 10,000. This is all that has to be paid by companies that dispute the validity or relevance of Microsoft’s patents”.



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About FFII

The FFII is a not-for-profit association, dedicated to the development of information goods for the public benefit, based on copyright, free competition, and open standards. More than 1,000 members, 3,500 companies and 100,000 supporters have entrusted the FFII to act as their voice in public policy questions concerning exclusion rights in data processing.

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