I’ve decided to reply to your email on my weblog as I can share my opinions on software patents with a wider audience. Also, lots of my friends have been asking me the same questions that you are: What are software patents? Will they be good for the software industry in Europe? I’m personally against software idea patents (swpat for short) as I don’t believe they are useful. My problems with swpat can be categorised under the following headings
Now, I don’t expect everyone to agree with my philosophical arguments however, I think my economic arguments are based on fact or on the realities of the market. Furthermore, I’m not going to reference my points because, as you said, this is just for fun and referencing will take too long. But organisations such as FFII (www.ffii.org) have details of the primary data with regards to swpat.
Philosophical
I’m a computer scientist who dabbles in theoretical computer science and automata theory. To me all computer programs are recursive functions. Indeed the set of computer programs is countably infinite (I think) and I can write a program that starts at “0″ and generates all binary strings in alphabetic sequence (over the alphabet {0, 1}). So I don’t see the difference between patenting software and patenting mathematics. Given that society in general believes that mathematics is discovered not invented and therefore can’t be patented I think that software is math and should be treated similarly.
Unlike heavy construction industries, anyone can create software; you, me, IBM, Microsoft. And we can create software with little initial investment compared to other industries. For example: to manufacture an automobile you need to construct a fabrication plant that costs N million. If you’re going to spend N million on a factory, you really want assurances that your innovative product will not be copied by a knock-off merchant. So you apply for a 17 year monopoly (a patent) on your invention. Creating a software product costs considerably less and protection from knock-off merchants is granted by copyright. If a knock-off merchant is going to reverse engineer your product it’ll take them many months and they’ll enter the market late. Given that software life-cycles are about three years I don’t see why we should give software manufactures a 17 year monopoly.
Probably the most insidious thing about swpat is that it turns the software using public into consumers. Right now, if you use Free Software you can be a developer, distributor and user. Unfortunatly if patents are granted on fundamental software techniques you will loose these rights. You will loose the right to develop and distribute software that is covered by patents. It creates a group of patent holders who produce a product to do something (like play a new video format) and subject you to whatever restrictions they want. If they don’t want to develop their product for your platform, you don’t have the right to read your files (legally purchased movies) on your chosen platform and have to move to a platform you may not want to use.
Economic
A patent costs about €30,000. Which for a business isn’t too much (though it’s too much for me). But what does it give you? A patent gives you the right to sue someone if they use “your” idea. In essence it’s a licence to litigate. Which is pretty useless to a small or medium size business. In the real world a small to medium size businesses can not afford to bring a larger company to court. Litigation battles become protracted disputes. Small to medium size businesses have to divert funding that they could spend on R&D or advertising to pay for the litigation. This reduces productivity, which is the exact opposite of the intent of patents.
However swpat are good for large businesses. They prevent competitors from inter-operating with their product. A company doesn’t have to licence it’s patent to you. They hold solicitors (lawyers) on retainer and can apply for 1000 patents at a lower cost per patent than applying for 100 patents. Thus they churn out patent applications.
Because of this, it is hard to develop software without stepping on one of their patents, particularly because patents are written in lawyer-speak and not English/Finnish. If you find yourself in this situation with MegaGlobalCorp there are two options; pay-up or cross-licence. From my understanding, there is no net economic benefit from cross-licencing. Cross-licencing is the practice where you allow another company to use your patented techniques if they reciprocate the licence. It’s the same as the situation where there are no patents and companies can do whatever they want. Except. Access to the market is controlled by those companies who agree to form the patent pool.
Lastly, it has been obvious to me, for the past ten years that I’ve been interested in the software industry, that the industry doesn’t need patent protection. It’s been going well generating revenue for European companies in Europe and abroad, the only problem with the industry was that it believed it’s own sales pitch. It’s the only industry I’m aware of that suffered because of too much investment 
Conclusion
To me, patents are all about creating monopolies or cartels. They have utility in other sectors such as pharmaceuticals or heavy manufacturing but I don’t believe that they are useful in the software industry. I don’t think the software industry needs more monopolies. Particularly when the legislative mechanisms to create these monopolies explicitly prevent software development by individuals.
Not having software patents in Europe does not prevent European companies from applying for patents in other juristictions. It simply allows them to spend their European investment on R&D. They can still complete on an equal footing in other juristictions where software idea patents are legal.
I have no problem giving Renault a 17 year monopoly on their new engine part, but I do have a problem giving Sun Microsystems a patent on a software idea. The difference is simple. I’ll never build a car engine. Such development is for corporations with millions of euros. I do write software, regularly. It’s stupid to restrict a private citizen, like myself, from developing useful software in order to grant expensive monopolies of little utility.