European Union processes

relevant to Linux
and open source in general
Florian Mueller
Public Policy Consultant & Campaigner
=> “IANAL” nor just a lobbyist :-)

FOSS Patents blog:

http://fosspatents.blogspot.com
http://twitter.com/FOSSpatents

Presentation at LinuxTag 2010 (Berlin)

 Disclaimer

Slides are only an outline –

don't expect much content
 Background – 1 of 2

● Author: articles (1985, age 15), books (1986)

● US-EU software publishing partnerships,
PR/marketing, localization – including
Warcraft II, Diablo I, Starcraft I (Blizzard)
● Online gaming startup co-founded in 1996,
sold in 2000 to Telefónica group: server
software based on Linux and PostgreSQL
 Background – 2 of 2

● MySQL AB: adviser to CEO (2001-2004),

early-stage shareholder
● NoSoftwarePatents.com (2004-2005):
successfully advocated rejection of EU software
patent directive
● Defended Real Madrid's interests concerning
European Commission White Paper on Sport
● Oracle/Sun/MySQL merger control process
 Relevance of the EU

● 500 million people, 27 countries and counting

● GDP: 12 billion euros (2009)
=> largest single market in the world
● Neither federal nor international
=> supranational
● Original objective: peace/stability
● Actual agenda: economic integration
EU Structure: Laws & Institutions

● Primary law (“Treaty on the Functioning of the

European Union”, TFEU) => constitution
● Secondary law => directives/regulations based
on primary law
● European Court of Justice => Supreme Court
● European Commission => executive gov't
● European Parliament => US House of Repres.
● Council => US Senate + Governors
 EU Influence on IT Industry

● Competition (“antitrust”): cartels; abuse of

dominant market position; mergers; state aids
● Legislation and international treaties
● Working programs (“Digital Agenda” etc.)
● Soft law
● Non-voting observer of processes (GPLv3)
● Procurement
● Funding
Influence goes beyond EU market

● IT market is global in nature

● Major players can't afford to stay out of EU
● Hence, impact on worldwide market
 Past landmark processes from
open source point of view
● Legislation:
– “Directive on the patentability of computer-
implemented inventions”, aka “software patent
directive”, rejected in 2005 by EU Parliament
– Intellectual property rights enforcement
directive: civil law passed, criminal withdrawn
● Regulation:
– Microsoft cases (MediaPlayer/Samba; browser)
– Oracle/Sun/MySQL
 Microsoft antitrust cases

● Legal basis: dominant market position

● Tying:
– Case 1: MediaPlayer
– Case 2: Browser choice
● Interoperability (Samba):
– Requirement to disclose and license interfaces
– Even required creation/enhancement of
interfaces
● Hefty fines
 Aftermath of Microsoft cases

● EU intervention, in addition to interest in broad

developer support, appears to have helped =>
Microsoft makes all patents available for
licensing, opens more interfaces/formats (latest
example: Outlook), and sponsors LinuxTag ;-)
● Others are now bigger threat to open source in
select areas, particularly IBM, potentially Apple
● Others are now more closed, particularly Apple
● Others may have to learn the hard way, too
 Oracle/Sun/MySQL – 1 of 2

● Announced in Apr 2009, cleared in Jan 2010 by

EU and China, March 2010 by Russia
● EU concerns related exclusively to MySQL: first
major merger control process in which an open
source component was the bone of contention
● Monty (MySQL founder) and I did not oppose
the merger as a whole, only the MySQL part
● Concern over precedent:
what if Microsoft wanted to buy Red Hat?
 Oracle/Sun/MySQL – part 2 of 2
● The concerns:
– Removal of key competitive (disruptive) force
– Relevance of MySQL: huge installed base
– RMS agreed: this project needs a company
– GPL gives copyright owner a lot of control
● The argument for clearance:
– Tiny market share if based on revenues (0.6%)
– Oracle plays in a different league
– Moglen: GPL'd commons will forever be “free”
– PostgreSQL can step in if necessary
Oracle/Sun/MySQL as Precedent

● Critics of investigation claimed complications

would discourage open source investment and
creation of startups (sale to closed-source
company as major exit strategy)
● Future cases will raise same questions but may
lead to difference answer because it was about
balancing the specific pro's and con's
 EU Patent Reform Proposal

● EPO patents != EU patents

● EPO is not an EU institution
● Litigation country by country
● “EU patent” (“Community patent”)
● “Unified Patent Litigation System” =>
EU plus non-EU countries (CH, TR, NO etc.)
● “Package deal” of multiple interdependent
international treaties and EU measures
 Criticism of EU Patent Reform
Proposal
● Patent movement will control the new
structures
● Lack of checks and balances
● “Captive” court will effectively favor patent
holders and broad scope of patentability
● EPO (European Patent Office) approach to
software patents very likely to be supported
● But: German BGH decision is as bad as it gets
 Procedural Difficulties of EU
Patent Reform Proposal
● Spain opposed to three-language EU patent
● Council asked ECJ for legal opinion on
compatibility with Treaty
● Several countries mostly in Southern Europe
voiced concerns over patent court outside the
EU framework
● Leaked report on court hearing:
http://epla.ffii.org/forum/t-247025/notes-of-secret-up
 Digression: Defensive Patent
License (DPL)
● Authors: two UC Berkeley law professors
● A license modeled after the GPL
● Virtual pool of patents from defensive holders
● Access equally available to “have-nots”
● Contribute all of your patents or go home
● Litmus test and strong political statement
● “Fair Troll” approach
 Digital Agenda; European
Interoperability Strategy/Framewk
● Policy program and procurement guidelines
● EIF v1.0: open standards == royalty-free
● EIF v2.0: current draft accepts FRAND (fair,
reasonable and non-discriminatory) licensing
● Digital Agenda talks about interoperability and
standards, not “open” standards
● Credibility problem of IBM's lobbying frontends
● Also interesting: “significant market players”
 Complaints Against IBM
(Mainframe Monopoly)
● Longest-standing IT antitrust issue in the world
● 1956: Consent Decree; lifted 1997-2001
● $25B software market => twice the size of the
market for Linux-based software
● 300 billion lines of legacy code in use
● Hardware monopoly; outrageous prices
● Strategy to transform this into cloud-related
monopoly based on proprietary interfaces
 IBM and TurboHercules

● Hercules open source mainframe emulator:

founded in 1999; mentioned in IBM RedBook
● z/Linux developers also use it extensively
● TurboHercules asked about z/OS licensing
● IBM asserted IP (patents + more) infringement,
including two patents originally “pledged”
● IBM losing its credibility as openness advocate
● Google: “anyone using patents against open
source is a bad idea, you won't see us do it”
 Thank you!

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