Andrej Mertelj
CEO of Datalab

We at DataLab have approached the question of software patents very pragmatically. What can we gain and what can we lose? How much will it cost and how can we profit? After careful studying and considering we've come to some very interesting conclusions.

First, it would cost us somewhere around 2 mio EUR to find out where we stand. With source code comprising 1,2 mio lines of code it will be a daunting task to check all possible patents that we unknowingly might be breaching. Given the poor quality of patent claim descriptions we won't even be 100% certain after spending all this money. The only possibility for our company would therefore be not to check anything, so we are least be safe from accusations that we've knowingly breached someone's patent. I do not think that this is in line with the EPO's intention of granting patents to provide information dissemination. For us, it is exactly the opposite since we'll be very careful regarding what we read, use or exchange with peers.

We think our company is quite inventive. Receiving four consecutive Software of the Year Finalist awards in 1999-2002 on Infos fair emphasises this. But we do not think we'll be able to use patents to capitalise on our investments. First, the patenting process in Europe with 25 different translations is simply something a company of our size cannot afford. Even patenting for defensive purposes - e.g. to be prepared for cross-licencing in case of patent claims from other companies - is hard to imagine since we can never hope to build a large enough patent portfolio to be safe.

On the other hand, being in the highly competitive ERP business we can sooner or latter expect a competitor (Microsoft, Oracle, SAP, ...) using their patent portfolio to drag us out of the business or to try to harm our competitiveness. Being a small cap means that we cannot afford costly legal proceedings and that we'll be forced to settle.

To diversify our offering we planned to do the first multi-platform ERP specialised for SMEs. We planned to port our PANTHEON application from Microsoft Windows to Linux. With the uncertainty of Linux' future in the light of software patents, our plans were put on ice for the time being.

But the hardest hit came from the financiers. Since the environment of software developers was drastically changed with the possible codification of software patents, the future looks uncertain for at least 3-5 years before the necessary legal practice is established before national courts and the ECJ. Our company planned to start a second round of financing with invited venture capital. Due to uncertainties and potential large threats from the major players we expect to pay a higher discount on our offering, effectively raising less cash. Our growth plans need to be revised and alternative sources must be used.

What can we conclude? Patents are absolutely harmful for our company. In the name of a legal rationale, under the guise of enabling patents for computerised inventions in non-IT industries, the software industry is dragged into a regime which it does not want and under which it will suffer more than any other industry.

We demand the same opportunity that other companies like Microsoft had to grow their business and develop their applications. Equal market conditions for everyone and a level playing field. A chance to develop the European software industry in general. Let us not forget that the software patents have not been enforced even in the USA until 1995.

And let us be frank: the true IT revolution started in the 1950s and became visible to the public at large with the IBM PC in 1980s, Xerox windowed user interface and Apple's mouse, ARPA's internet and CERN's web. The majority of most crucial developments in IT were made because of the open, non-patent environment. Standing on the shoulders of our engineering forefathers we have a duty to fight for the preservation of the freedom to innovate.