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Thursday, 12 August 2004
Page: 26422

Senator GREIG (10:05 PM) —I enter this very long debate for the first time in my capacity as Democrats spokesperson for IT. I want to give a voice to the many people who have contacted me to talk about their concerns. I have received letters, emails and phone calls with respect to their fears about what the free trade agreement will mean for things like access and use of open source and copyright provisions for software and software development. I am conscious that Senator Ridgeway has moved this amendment and spoken to open source within that.

Two news articles have come to my attention in recent days. They come from very different areas—one from Europe and one from Australia—but they both speak about these concerns. They are brief, so I will read parts of them and then ask some questions of the minister. The first article was reported in the IDG News Service on 6 August, and it says:

The City of Munich has put its Linux plans on hold in response to fears over software patents.

And this goes to the heart of my concerns. The article continues:

The city has cancelled a call for bids on the Linux migration project, called the LiMux Project, planned for July, according to the city's CIO, Wihelm Hoegner. Hoegner made the announcement on the LiMux Project mailing list ...

The city's decision reflects growing concerns in Europe and the US that software patents could be used to derail open source projects, which depend on freedom from intellectual property licence fees. Such projects also generally don't have the financial resources or patent arsenals necessary to fend off intellectual property lawsuits.

Software patents currently are not allowed in the EU, under the European Patent Convention, but many believe a directive currently going through the EU's legislative process could change the situation dramatically. “Patent law: patentability of computer-implemented inventions”, known as the software patents directive, would open the floodgates to US-style software patents, according to critics.

... Alderman Jens Muehlhaus, called attention to the situation in two motions calling for the mayor of Munich, the Social Democrat Christian Ude, to analyze how the EU software patent directive affects Munich's Linux project.

Meuhlhaus said a cursory analysis of the city's proposed Linux client software turned up conflicts with more than 50 European software patents. The Foundation for a Free Information Infrastructure (FFII), which coordinates anti-software patents activities in Europe, carried out the analysis for Meuhlhaus.

A company holding one or more of these patents could issue a “cease and desist” order to the Munich government, effectively shutting the city's computer systems down or forcing the payment of licensing fees, Meuhlhaus said. In response—

and this gets to the core of my question—

the city said it would halt the Linux project until it could thoroughly analyze the legal and financial risks.

The question I direct to the minister is: what, if anything, has Australia done to analyse the legal and financial risks of the FTA if its impact on open source is to have the same impact on Linux that we are seeing in Munich? The article continues:

Munich's decision underlines the dangers posed by allowing software patents in Europe, according to consultant and developer Florian Mueller, who works with ... software patent issues. He said the city of Munich, in its recently-completed feasibility study, had proved that open-source software could compete with proprietary software from companies such as Microsoft, but the introduction of software patents would put this competitiveness in danger.

“Open source software will survive any new legislation. The question is, can it be competitive three years down the line?” Mueller said.

That too is the question for Australia, in the same context. The article further states:

So far most people have ignored the software patent issue, saying `it isn't going to happen to us'. Now they're starting to see that it is a clear and present danger.

The decision comes shortly after a study found that a total of 283 registered US software patents, including 27 held by Microsoft, could be used as the basis of patent lawsuits against the Linux kernel. The study was funded by Open Source Risk Management (OSRM), a company that provides insurance against lawsuits related to the use of open source products, and conducted by patent attorney Dan Ravicher, executive director of the Public Patent Foundation and senior counsel to the Free Software Foundation.

Munich's actions are being closely watched as a bellwether for the fortunes of Linux in the public sector, in Europe and elsewhere. Following the city's initial strategic decision to migrate to Linux, a year ago, the City of Paris ordered its own investigation into a switch to open source. The city of Bergen in Norway recently decided to consolidate older Windows and Unix servers on Novell Inc.'s Suse Linux Enterprise Server 8. Other recent wins for Linux include the French Ministry of Equipment and Allied Irish Banks.

My second question, then, to the minister is: what is Australia and its departments doing in watching the development of this process throughout Europe? On 6 August, the same day as the IDG article appeared, I read online, and closer to home, an article in the Sydney Morning Herald. It is an assertion, but the article makes the claim:

The US-Australia Free Trade Agreement poses a grave threat to the entire Australian software development industry due to the legal framework on intellectual property which is required upon adoption of the pact, the Open Source Industry Association and Linux Australia have warned.

Fair enough; that is their assertion. The article goes on:

In a statement issued in Melbourne today, both organisations said the FTA would hamper Australia's ability to efficiently compete in global markets. “Much like the introduction of a flawed patenting regime for pharmaceuticals, adoption of a flawed patent regime for software is not in Australia's interests,” the statement said.

Brendan Scott, a spokesman for the groups and a lawyer himself, said the effects would be felt by all developers, not merely those who worked with open source software.

... any non-trivial piece of software could contain as many as thousands of code processes, algorithms or software modules, any one of which could infringe one or many US software patents.

And here is the key quote:

“Most Australian developers have probably built products which `infringe' on US software patents. Introducing a system which makes it simpler for these patent holders to bring such legal hooks into Australia is very damaging to the local industry,” Scott said.

He pointed out that Australian developers would face huge fines if they recreated software processes—

and this is the fundamental point—

while being unaware of the possibility that they may been patented. “Ignorance of such patents is no excuse. In future, Australian developers may not be able to make any software without the fear of paying ransom.”

The key point of clarification I seek from the minister here is: is it a fact that being ignorant of these patents is no defence? The article goes on:

Scott said a majority of local developers lacked the money and time needed to check their software code-bases against the tens of thousands of software patents which could flood the market if Australia degraded its stringent software patent laws.

“US patent law allows for the imposition of punitive damages. If Australia adopted a similar law, local developers could be sued for many times more than any actual `damages' they may have caused the patent holder, merely as a warning for others,” he said.

He said huge software houses had the resources to obtain patents. “The introduction of US-style software patenting will therefore be a one-sided affair, and definitely not in the local industry's favour,” he cautioned.

Even if an Australian developer owned a patent, he or she, in most cases, would not have the money and time to pursue a case against a big company. “Most software patents are owned by huge ICT firms, which keep them to be used when necessary to do an opponent serious damage or for legal leverage in deal negotiation. They are not used to `extend the art and science' of technology,” Scott claimed.

We have seen that most vociferously with the film, picture and recording industry in the United States through the processes of the DMCA. The article continues:

He was of the opinion that a large number of software patents in the US had been granted for processes or algorithms which are exceptionally vague or, even worse, quite obvious to most competent software development practitioners.

“They should not have been granted in the first place, as they are not `novel'. By degrading Australia's patent system to match the US approach we will handicap our local developers needlessly.”

Scott also warned that there were an equal number of issues which would arise with the introduction of DMCA-style legislation, also mandated by the FTA. “... anything which stops academic research into security and which also stops any endeavour towards software interoperability engineering is a serious problem for R & D in this country,” he said.

He was referring to the Digital Millennium Copyright Act which was signed into law in the US on October 28, 1998. The DMCA's stated purpose is to update US copyright laws for the digital age.

Both organisations said they backed the proposals made by David Vaile of the UNSW's Baker & McKenzie Cyberspace Law and Policy Centre as a means of starting to tackle the problems posed by the FTA.

Vaile's proposals—

not the minister's: David Vaile's from the university—

Tighten the criteria for software and `business process' patent applications.

Establish a public interest litigation fund to enable Open Source software developers, integrators or users to respond to anti-competitive and tactical patent infringement claims, if they would otherwise be unable to do so.

Official support for global `prior art' research projects to assist research of the viability of such claims.

Change the page to make lodged patents easier to track, so that developers can protect themselves from bogus patents.

Limit the implementation of controversial DMCA-style laws, to the extent they'd inhibit development of open, compatible tools for common file formats and networks.

Introduce US `Fair Use' amendments to Copyright Act.

These encapsulate many of the arguments put to me by way of letters, phone calls and emails. I have taken the time to place them on the record as a summary of the kinds of concerns that we Democrats also have. I would finally like to ask the minister: Senator Lundy, who spoke before me, was emphatic in her claim that the DMCA had absolutely no effect, no impact and no access to the Australian jurisdiction and did not form part of the free trade agreement. What I and many others would like to hear is an emphatic, unambiguous confirmation of that from the minister.

If the arguments that we have heard from the likes of David Vaile and others are wrong then they need to hear that loudly and clearly now to put to rest the very real fear that many in the Australian community have about the DMCA—that it is going to reach into Australia and have the adverse effects that people hold genuine fears of. It is an incredibly invidious and powerful piece of legislation dreamt up by the film, picture and recording industry in America and introduced under the influence of former President Clinton, I believe. I would seek an undertaking from the minister that that is the case. If it is not the case then people also need to know that this is the path the government is going down and that the fears and concerns expressed in the correspondence and opinion pieces will be played out, in which case we Democrats are keen now to be on the record as saying, `We were there to argue against that.'