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One of the longest and bitterest lobbying campaigns Brussels has ever
seen ended last month when the European Community adopted a directive on
copyright protection for software. The campaign revealed how high the stakes
are in the fight to control the booming software industry. But the battle
will not end with the European directive.

The principles of copyright were originally devised to protect the works
of artists, musicians and others against plagiarism. The directive lays
out which aspects of computing can be covered by the same principles.

The computer industry split into two camps on the issue, says Peter
Davies of the software firm Microsoft. In Brussels, one side is represented
by SAGE, the Software Action Group Europe, which includes the big computer
companies Apple, Digital Equipment, IBM and Germany’s Siemens, which has
close ties with IBM; and the Business Software Alliance, with companies
such as Microsoft and the WordPerfect Corporation. They said all software
must be subject to stringent copyright control and that anything less would
be a permit for piracy.

On the other side is ECIS, the European Committee for Interoperable
Systems, made up of more than 60 European computer firms. Philippe Wacker
of ECIS says the degree of protection demanded by SAGE would lead to control
of the industry by a few, big companies; fewer products and higher prices
for computer users; and even the fatal blow to many of Europe’s faltering
computer companies.

Compromises were reached in secret dealings late last year between the
two sides, represented on one hand by Microsoft, and on the other by Olivetti,
the Italian computer firm. The resulting directive ‘is something we can
all live with, even though it is imperfect,’ says Davies of Microsoft. ECIS
says the compromise halted a bid by the big companies to squeeze small firms
out of the market. But the small companies have not declared the victory
final. Wacker says, ‘The directive is vague in places. We must watch how
it is enacted into national law.’

Software is a multibillion-dollar market. So is software piracy. When
software is copied and sold without permission, the company that developed
the original program loses the return on its investment. The European Commission
estimates that piracy cost software development firms in the European Community
$4.5 billion in 1989 alone.

Davies says, ‘When you compare the number of personal computers sold
in Germany with the amount of legitimate software sold, two-thirds of the
computers must be used as expensive doorstops. There is not enough software
sold to go around.’ The rest are using pirate copies, a loss to software
development firms Davies estimates at more than $1 billion a year.

The answer has been to ensure that software is protected by copyright.
Britain, Germany, France, Spain and Denmark have laws on software copyright,
but all are slightly different, as are the laws being prepared in the other
Community countries. The single European market in 1993 will apply to the
entire European software industry. A common form of copyright protection
was needed.

The European Commission started writing a directive on software copyright
in 1985. For the following four years, say staff at the Commission, those
responsible for the directive took their advice mostly from big, American-based
computer firms. When the proposed directive was finally published in 1989,
it called for complete copyright protection of all software.

Olivetti, Bull in France, Finland’s Nokia, and most other European computer
companies immediately formed ECIS to fight the proposal. They said an exception
had to be made for ‘interoperable’ software. This comes built into a computer,
and determines what other machines, and software, it can work with.

I am writing these words on a computer, equipped with a standard, over-the-counter
word processing package. All I had to know to buy it was that it would work
on a personal computer like mine, which is modelled on one made by IBM –
a ‘clone’. A number of firms make products that work with IBM hardware and
software, and with each other.

This competition irks IBM but benefits small computer firms and consumers.
The companies that make IBM clones have to compete with IBM and each other.
As a result, my machine cost a lot less than the IBM original, and has some
superior features. I can also buy any software made to work on an IBM machine.
Software firms must also compete, giving me a wide choice of good, cheap
software.

This open market also allows small hardware makers to sell components
to a large group of buyers, instead of having to sell complete systems with
their own, individual standards in necessarily smaller markets.

For components and whole systems to be ‘interoperable’ in this way,
machines and software must use standard conventions when they interact.
For example, computers use fairly arbitrary conventions to translate strokes
on a keyboard into symbols on a screen. If I want to buy a keyboard or screen
from one company, the computer from another, and software from a third firm,
all must use the same conventions.

One example of an ‘interoperable system’ built into a machine is a read-only
memory chip programmed with a basic input-output system – a ROM-BIOS. This
is the essential connection between the central processing unit and peripherals
such as the keyboard, screen and disc drive. Without it the screen would
not know what the keyboard was saying; storing data on disc and retrieving
it would be impossible, because only the BIOS knows where the instructions
for these actions are stored in memory. The BIOS is written in the most
basic of computer languages called machine code.

From the outside, the BIOS in my machine behaves in the same way as
the IBM original. Engineers at the company that built this part of my machine
studied the IBM BIOS to learn how it behaves. They unravelled the conventions
which describe, for example, what responses are elicited from the BIOS when
each key on the keyboard is pressed. This process is called ‘decompiling’.

The engineers then incorporated the BIOS conventions – the input stimuli
and responses – in a new BIOS, which is their own, original product. But
since it appears to behave in the same way as an IBM BIOS, it works with
IBM machines and software. This is called ‘reverse engineering’.

The battle in Brussels was whether these activities should be legal.
SAGE said they should not be. Prohibition of decompiling would have made
IBM clones like mine illegal. ECIS, whose members make IBM clones, fought
the first proposed directive, which would have forbidden reverse engineering.
The fight hinged on what aspects of a product are protected under copyright.

Nobody owns exclusive rights to the English language, or to the ideas
in articles. But authors do own copyright over the form in which they choose
to arrange language. Similarly, IBM is not considered to have rights over
the machine code language, or the ideas – such as the BIOS conventions –
that can be expressed by applying it. But it does own the particular sequence
of code which was chosen to compose its BIOS.

In order to avoid infringing IBM’s copyright, the company that built
my machine sent the conventions used by the IBM BIOS to a ‘clean engineer’.
This is a software engineer who has never seen the code used for the original
BIOS. Companies guarantee the ‘cleanliness’ of these engineers with elaborate
legal safeguards, to prevent any charge of plagiarism. The clean engineer
writes another BIOS which mimics the functions of the IBM BIOS, but uses
different machine code to do so. It is like two authors writing articles
about the same subject and reaching the same conclusions but by reasoning
in different ways.

In many industries, this would not be necessary. An international organisation
would come up with standards to be used in a BIOS, just as there are standards
for television signals for example. The personal computer industry, however,
is so dominated by one giant, IBM, that IBM machines have tended to become
standards.

The European directive proposed in 1990 included wording suggested by
Britain. It allowed reverse engineering of interoperable systems such as
a BIOS, only for the purposes of writing software that could connect with
those systems. So, engineers could decompile an IBM BIOS in order to write
programs, such as word processors, that could work with an IBM BIOS. But
it prohibited decompiling in order to write another BIOS that could replace,
and so compete with, the original version.

The European computer industry howled. Alan Sugar, head of the British
computer firm Amstrad, threatened to move all his research and development
to the Far East. ECIS says such a move would have driven most of its members
out of the personal computer business.

SAGE lobbied hard in Brussels for the British proposal. ECIS rejected
it, citing the Berne Copyright Convention, which forms the basis of international
copyright law. One of the convention’s basic principles is that the ideas
in a work cannot be owned under copyright. ECIS argued that the ideas expressed
in literature are equivalent to the functions carried out by programs –
such as the BIOS conventions.

The British backed down. The directive passed last month compromised
between the views of SAGE and ECIS by saying that only the ideas in an interoperable
system that relate explicitly to its interoperability can be copied. This
permits BIOS designers to create their own systems compatible with existing
ones. It also applies to other forms of interoperability, such as the format
in which word processor text files are stored. Details of this fomat are
needed to send files directly from one computer to another.

Functions – or ideas – not involved in interoperability cannot be decompiled
under the directive. Lawyers for ECIS charge that this is a troubling first
example of the copyrighting of ideas.

Davies, of Microsoft, emphasises ‘the other positive points in the directive’.
One reason why there is so much software piracy in Germany, he says, is
because of a peculiarity of German law which requires a program to exhibit
unusual originality to be protected by copyright. The directive prohibits
this requirement. Once Germany brings its law into line with the directive
Microsoft plans to prosecute more cases of software piracy.

The directive says software can only be loaned with the express permission
of the copyright holder. This could hurt libraries. The British Library
Association says its members should be able to continue lending software
on floppy discs.

The Federation Against Software Theft (FAST), a group of software firms,
charges that lending software promotes piracy. It has protested to British
local authorities which run libraries. But, under British law, the Department
of Trade and Industry is allowed to override copyright restrictions that
affect public libraries. The Library Association hopes to reach agreement
with FAST.

The directive makes exceptions to copyright for other aspects of computers
not dreamt of in the Berne convention. Under strict copyright, making a
back up copy or copying a program to load and run it are illegal. The directive
allows copying for such purposes. It also permits decompiling in order to
correct errors, or ‘observe, study or test the functioning of the program’.
This denies the original supplier of the program a monopoly on servicing.

One area not covered by the directive is how programs look on screen
when they are run. The big American software firm Lotus is currently suing
a smaller Californian firm, Borland, for selling a spreadsheet program that
offers its users a choice: either Borland’s original prompts and commands,
or those used by Lotus’s popular spreadsheet package, 1-2-3. Borland’s program
is different from Lotus’s, but by providing the alternative set of commands,
it enables people who have learned to use the Lotus package to adapt.

There are fears that the strict protection desired by firms such as
Lotus could stifle innovation in the industry (‘Rights and wrongs of software’,
New ÐÓ°ÉÔ­´´, 29 September 1990). Computer scientists at the Massachusetts
Institute of Technology have declared their opposition to aggressive protectionism,
charging that ‘Lotus exchanges innovation for litigation’.

SAGE says any chink in copyright protection will let the Japanese copy
Western products and compete in a field where it is not yet dominant. Its
reply to proposals for flexibility in copyright law such as the new European
directive, is to turn to a different legal tactic, and patent software instead.

There has been ‘a rash of software patents’ in the past two years, say
lawyers for ECIS. Microsoft is currently studying its products to determine
what is patentable. Patents are designed for inventions, rather than compositions.
They provide more complete protection for the patented article, including
the ideas they represent. If IBM were able simply to patent its next BIOS,
it could not be copied and there would be no new generation of clones.

Many European countries specifically exclude software from patent protection.
In a global market now dominated by the US, however, increasing use of patents
in America could spell the end of competition. Companies that tried to compete
with dominant firms would risk endless lawsuits over any amount of software
similarity.

Wacker, of ECIS, says a product must be very innovative to win a patent;
for a copyright, it need only be original. There is little novelty involved
in a BIOS or any other operating system, he says. The danger, according
to ECIS lawyers, is that few patent inspectors know enough about computers
to guarantee such systems will not be patented.

Patents could allow big companies to increase their dominance, whatever
Europe says about copyright.