BSA figures do not add up

BSA figures do not add up

Summary: The BSA has issued a persuasive study on software patents and their importance - persuasive, until you look at the data

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TOPICS: Tech Industry
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The BSA's latest study claims to prove that software patents are of equal importance to SMEs and large companies, a claim that political parties and some media organisations have taken at face value. But does the study really show that SMEs are of equal importance, or has the BSA presented the facts in a misleading way to lead people to the conclusions they want them to draw?

This study comes at an important time. In a few weeks time MEPs are due to vote on the software patent directive. This vote is crucial if essential changes are to be made to the directive that will restrict the degree to which software can be patented. The BSA, which is keen for the directive to be passed in its current form, published the study to persuade MEPs to vote against any amendments that would restrict patentability.

The results of the study have already been quoted by an MEP from the Alliance of Liberals and Democrats for Europe (ALDE), as an excuse for their decision to vote against many of the amendments, in apparent contradiction to their party policy. The Liberals pitch themselves as the party for SMEs, so the study was conveniently offered as proof that SMEs need this directive.

Toine Manders, the intellectual property spokesperson for ALDE, said in a press release on Tuesday: "The directive has been portrayed as benefiting only major industrial conglomerates at the expense of the small software developer, but this is simply not true. A recent study by the Business Software Alliance indicates that SMEs account for 20% of all CII (Computer Implemented Inventions) patents granted since 1998 and 81% of them rely on patent protection for their businesses."

Interesting, 81 percent of SMEs rely on patent protection for their business? Even for politicians who are used to massaging statistics that is bad maths. The study actually found that around 2000 SMEs have filed patents, which is only 0.018 percent of the 11 million SMEs that exist in Europe. So what could have caused this dyscalculia in the liberals? The BSA press release appears to have the answer.

"[These figures] show that thousands of European innovative SMEs have patents -- in fact 81 percent depend on one patent and a further 10 percent hold just two patents -- and rely on these to help develop their businesses," said Francisco Mingorance, BSA's director of public policy.

The 81 percent that Mingorance refers to is the percentage of SME patent holders that hold one patent, but you'd be forgiven for thinking it refers to all European SMEs. In fact, I'd hazard a guess that the majority of people would make this error. But then, if most people reading the release came away thinking: "81 percent of SMEs hold software patents, of course we should let this directive go through," would the BSA be upset? I doubt it.

I put this to the BSA, and they replied: "The 81 percent figure refers to those in the study". Well, surely they can be forgiven for just one example of bad English. If only it were that simple. An ALDE spokesperson told me on Wednesday that the proportion of SMEs holding patents has increased over time. In fact, the study found that the proportion of SMEs patent holders has remained constant over the past six years. Another mistake by the Liberals?

Perhaps, but this one has been repeated by the Guardian, in a story that appeared on 9 June. "The battle over the EU's software patent directive heated up yesterday when a survey showed small and medium-sized firms, the alleged victims, accounting for a growing proportion of such patents in the past few years," said the Guardian in the article.

What could cause both the Liberals and the Guardian to make this mistake? Again, the BSA's unfortunately worded press release appears to hold much of the blame. The first line of the press release states: "A new study published today by the Business Software Alliance demonstrates the growing importance of patents on Computer-Implemented Inventions (CII) for European small and medium-sized enterprises."

A few paragraphs later the BSA states that "European small- and medium-sized businesses account for more than 20 percent of all CII patents granted since 1998; And the number of SME patents granted has been rising steadily in recent years." The BSA omits to mention the important fact that the proportion of patents granted to SMEs has remained constant, so taken in conjunction with the first paragraph, it is understandable that both ALDE and the Guardian misunderstood this.

When I suggested to the BSA that it would be more accurate to change the first paragraph to say "…demonstrates the importance of patents…", the BSA replied, "Honestly, you seem to be nitpicking here."

Topic: Tech Industry

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20 comments
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  • Well done. This is what I call proper journalism. Not just regurgitating press releases, but a proper analysis and dissection of what is clearly at best a lazy, and at worst, a deliberately disingenuous, report.

    I've talked to maybe 50 SMEs about software patents and found 3 in favour and a couple that didnt care much one way or the other. One of the ones in favour was an IP law firm. In the other two, the engineers were almost entirely anti-swpat, but the bosses liked the idea. That's probably typical - 6% pro, 4% don't care and 90% against.

    OK - that's even less rigorous than the study in question, but then I'm memrly publishing it as my experience to see if others have found the same thing.
    anonymous
  • Very good but what exactly is the BSA paper supposed to be persuasive of in the first place? It certainly doesn't support its argument: presumably that software patents promote innovation and progress. It is not even a properly conducted survey, as you have discovered, and it is also not correct to interpret it as a measure of opinion, as the BSA appear to have done, of SME attitudes to software patenting. Perhaps they would conclude from the proportion of SMEs paying corporation tax that SMEs are in favour of high taxation.

    In fact the surveys that have been done, such as the German Government survey, demonstrate that SMEs are absolutely against software patents, even when they consider it necessary (as many in the US do) to acquire such patents. By far the most important point, however, is that the BSA paper is not an economic analysis and has no bearing whatsoever on the question of whether software and business method patentability promotes innovation and progress. For the MEPs to alter their positions on the basis of this flawed and irrelevant counting exercise from the BSA, while ignoring the proper analyses in the economic literature (and some genuinely useful opinion surveys), is very worrying indeed.

    Counting patents cannot answer the salient questions that the MEPs must ask before they make their decisions on this macro-economic policy. The rise of the "IP companies", patent thickets and competition excluding cartels are some of the features not revealed by the BSA paper and the nature of the patents being applied for by some of the SMEs that MEPs may encounter is another reason they should be cautious:

    Claim 1. A method of distributing digital information at a user advice point comprising displaying information relating to at least one packageable digitised information product at the user advice point, receiving a selection instruction from a user selecting a digitised information product and providing a high resolution display image of the digitised information product packaging.

    [EP1536385, Daniel Doll-Steinburg of Tribeka]
    anonymous
  • It is a little known fact that EU politicians can get sponsored every word and every opinion they voice within the EU democracy by means of corporate sponsored opinion makers. Thus effectively influancing every word that makes it to the negotiation table. And this is more practise then exception. So who's in who's pocket?

    The BSA is just one player in this game. Just an obviously sponsored and coached one who for that very same reason shouldn't have been taken at face value by EU politicians to begin with.

    So I put this to you. When and how will EU politicians be required to explain their behaviour of (hopefully) the past and made to life up to their responsibilities or otherwise be ask to leave in shame?

    Or should we begin to ask the question (someone has to start with this): is the EU more about democracy (for the people, by the people) or dictatorship (do as you're told by us, the big players)?
    anonymous
  • Great article! It is good to see that someone exposes the BSA's lies/manipulation.

    "...and 81% of them rely on patent protection for their businesses."

    Businesses relying on patent protection, does not necessarily benefit from patents. A lot of patents are used primarily as a way to avoid litigation from other companies. This is certainly used by the big companies (eg. IBM).

    While IBM is granted thousands of patents each year, some higher ranking IBM employees have been critical of the patent system. A lot of the patents are merely commodity items used to avoid being sued by other patent holders.

    I just hope that the politicians will spend some time and energy to do their own research.
    anonymous
  • Bravo Ingrid. This is the best piece of journalism I've seen on ZDNet. I just hope that it gains the recognition it deserves, and in particular that a copy can be sent to each of the MEPs who will be voting on the patent directive. Keep up the good work.
    anonymous
  • I we should start a petition to get this article e-mailed to as many MEPs as possible.

    Send this to your MEP today!

    http://www.europarl.org.uk/uk_meps/txukmeps/txmain.html
    anonymous
  • Normally I wind up scathing the simple minded rewrapping of a press release by ZD... Not this time. Good hatchet job. Some research and analysis. Well done.

    Why would SME's need a patent? One of the reasons is that if they want a VC to fund the company, they need something patented or patentable. Many of these companies will fail, or have patents that aren't a sufficiently unique selling point. I expect that a large percentage of the patents are granted to companies hoping to attract a VC. I know of at least four patents that will be in that collection of SME patents, from one startup that I worked with. I know of a Cambridge company with a patent that is essentially indefensible, but it was needed before VC's would talk to them.

    VC's use patents as a way to help guarantee that there is a USP for the business. Hence the disproportionately high count of SME's.
    anonymous
  • And Ingrid, what are the responses of the politicians so far? With what do they agree or disagree? And why? Which dangers and which benefits do they see? What will be their first actions and more long term actions? Let us know.
    anonymous
  • Great journalism!

    You wrote:

    Despite realising this error the BSA decided not to sent out a corrected press release because "none of the stories that appeared that day
    anonymous
  • As the author of the CII study with which ZDNET takes issue, I find it
    regrettable that the publication failed to contact me before writing the
    story. Without repeating the allegations, let me respond to some specific
    points made in your article:

    * SME patent holders. Page 5 of the study makes it explicitly
    clear that while we originally identified 2,560 patent assignees, the true
    list, if given time to eliminate redundancies and all non-SMEs, probably
    totals in the range of 2,000 to 2,200 unique assignees. While the ZDNET article alleges to have found 13 errors in the assignee list, even should we multiply that by a factor of 30, the report would still stand correct as originally printed. The ZDNET article in fact calls for a statistical correction which has already been done in the original report, far beyond the ZDNET reporter
    anonymous
  • I'm keen to respond to your points, but its not clear in the study on the BSA website (http://www.bsa.org/eupolicy/press/newsreleases/Study-Shows-Importance-of-CII-Patents-for-European-Small-And-Medium-Sized-Companies.cfm) what figures were used for the 20 percent figure - was it 2000, 2200 or 2560? Please can you direct me to the page in the study that refers to this adjustment in generating the percentage?

    As for the definition of CII. Surely this error would also mean that you were equally likely to have overlooked CII patents in large companies? In which case the percentage wouldn't change, so I fail to see how this would impact my comments.

    Regarding why I didn't contact you before writing the article, I contacted the BSA on each of these issues as they had publicised the study and were hosting it on their website. As they were your intermediary for publicising the study, it makes sense that they were my intermediary for explaining errors in the study.

    Furthermore, the BSA told me that they were in contact with you over these issues.

    Thanks for your comments.
    anonymous
  • How good of the BSA to not respond in person.
    They were more then willing to splatter something they like around the globe but they seem to point to someone else when it's time to respond to critics.
    anonymous
  • Hmm... I apologise to Daniel K.N. Johnson for that part of my earlier comment in which I hastily and erroneously asserted that his study was not properly conducted. The impropriety originates entirely with the BSA.
    anonymous
  • Ms Marson

    I would be very grateful if you could call me to discuss this article (0794 1519386)

    Regards

    Mr Miceli
    anonymous
  • Dear Ingrid,

    Thank you for acknowledging my previous comments, and for your email to me about them. I'm sorry that my schedule has permitted a few days to pass before responding.

    Regarding your question about the 20% figure, in the fourth paragraph of page 5 of the study summary (www.bsa.org/patents) I indicated clearly that
    anonymous
  • It is still not clear in what way you have statistically corrected the results. You claim that you have done a statistical correction, but this appears to have only been done when analysing the results by assignee, not by patent documentation.

    My original claim in the article was that you have not statistically corrected the patent documentation figure of 20% (which is an important figure as it is widely quoted by the BSA).

    Please can you clarify how you statistically corrected this figure, and why you did not include details of this statistical correction in paragraphs 4 and 5 of the study paper on the BSA website (http://www.bsa.org/eupolicy/loader.cfm?url=/commonspot/security/getfile.cfm&pageid=25161&hitboxdone=yes).

    I look forward to receiving your response.
    anonymous
  • And so it ends.
    anonymous
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