Sunday, December 18, 2016

From software patents to Apple's tax case, the European Commission has been a premier source of fake news

The political establishment on both sides of the Atlantic still can't deal with the fact that Donald Trump won because voters rejected corrupt, incompetent and unprincipled "all talk, no action" politicians for all the right and left reasons. One of the transparent attempts to delegitimize a historic victory for common, hardworking and law-abiding people is centered around so-called "fake news." Very worryingly, we may even see legislation in Germany and other parts of Europe aiming to impose fines on social networks for not playing their part in the political establisment's censorship efforts led by a future equivalent of what George Orwell already envisioned to be a "Ministry of Truth" in his novel "1984." I'll take a closer look at such Orwellian initiatives some other time.

In reality, the political establishment in Europe, which has been committing treason against European citizens for some time and continues to do so, just hates the fact that the truth about its failures spreads virally. They say that "fake news" about crimes commmitted by "refugees" leads people to vote for "populists," but there simply are cases of rape committed by so-called "refugees" on a daily basis in Germany, and those cases are not merely reported by anti-establishment websites but by reputable, local newspapers. Those articles go viral on Facebook, but "viral" isn't necessarily "fake." The victims range from young children (8-14 years of age) over men in their thirties to women in their seventies or eighties. Those numerous incidents just don't make it into national news because leftist journalists don't want the truth to come about how misguided their ideology is and because politicians don't want citizens to realize how terrible the situation has become, much less in a pre-election year.

The Austrian government replied to a parliamentary inquiry about rape cases involving "asylum seekers" and stated 91 suspects in the first nine months of 2016. Considering that Germany has about ten times the population size of Austria and, just in terms of a power of ten, also about ten times as many "asylum seekers," this means a couple of cases per day in Germany. If politicians don't like those news, they have to change their migration policies, but instead of protecting citizens against crimes, they complain about "fake news" and seek to regulate social networks.

If anyone truly wanted to drain the "fake news" swamp in Europe, Brussels would be a good place to start. While I agree with the European Commission on some issues and disagree on others, I view the institution's public statements with utmost skepticism and believe Brussels-based journalists are all too often misled by what comes out of the Berlaymont building.

Just a few examples of EU Commission "fake news":

EU software patent directive: the CII lie

In 2002, the EC proposed a "directive on the patentability of computer-implemented inventions." It claimed back then and throughout the years of the legislative process (which ended when the bill got thrown out by the European Parliament in 2005, which is exactly what I had been campaigning for) that patents on "computer-implemented inventions" weren't software patents. The examples that the supporters of the proposal gave all the time were about computer-controlled washing machines, automated braking systems, and airplanes. They said that the whole plan was only to ensure that innovations in those fields could be patented but software patents? No, they said that our movement was totally wrong since software "as such" was going to be excluded.

It was nothing but a damn lie. A damn lie propagated by the Commission, by the equally-mendacious national governments of the EU member states, large corporations (also including their industry bodies, of course), the European Patent Office (with respect to its credibility, let me just refer you to Dr. Roy Schestowitz's great work concerning what is going on there), and patent attorneys in private practice.

What frustrated us the most was not even that those who directly or indirectly stood to gain from software patents were dishonest. That was very bad for sure, but the worst part was that news agencies and the general press kept propagating those lies--not merely in the form of quotes but in ways that portrayed the Commission position as the truth and our position as an opposing view by "open source" people. And when we talked to them, they often just referred us to what the European Commission was saying--no matter how much of a lie it was.

With only one exception, the Brussels-based journalists who covered that legislative process weren't particularly sharp. By comparison, I met far more receptive and intelligent people a few years later in connection with some competition cases. But, to be fair, it wasn't easy for the general press to figure out something at the complex intersection of law, technology, and economics. The proposed directive appeared to focus on "technical" inventions except that its definition of what is "technical" was purely tautological. It also didn't help that we had some lunatics in our movement who pursued a radical anti-IP agenda. Still, reasonably intelligent and committed journalists could have figured things out if they had made an effort:

  • The easiest-to-understand indication that should have given anyone except the most obtuse people pause was SAP's public support (at government roundtables, conferences, etc.) and its claim (which it even made in an advertisement in a Brussels publication shortly before the decisive vote) that the proposed directive would provide SAP with protection for its innovations. SAP never made washing machines, automated braking systems, airplanes, or any other hardware. There you had a pure software company saying that this directive would afford it patent protection.

  • While the Commission's original 2002 proposal did not allow so-called "program claims," a clause that allowed patent claims of "a computer program, characterized by [...]" kind made its way into the proposal as the European Council (where the governments of the member states meet and decide) got involved, but the Commission nevertheless kept saying the directive wasn't going to result in patents on software "as such". A patent claim defines the scope, and anyone who practices what the claim describes is an infringer. If the claim is on a "computer program," then it's obviously a software patent claim (and not a washing machine claim). For example, if the software that optimizes the fuel consumption of an airplane is covered by a program claim, then it's also infringed by a flight simulator that uses the same formula.

Unitary patent propaganda: first published, then taken down

Last year, the IPKat blog dismantled the Commission's ridiculous propaganda for its unitary patent package (including the Unified Patent Court). Then the Commission pulled its statement, almost certainly due to the IPKat's competent criticism.

Juncker: "When things get serious, you have to lie"

The Euro currency is one of the EU's top three failures. Economists had warned politicians that a common currency was doomed to fail without a common fiscal and economic policy, but Mitterrand wanted the euro in order to prevent Germany from becoming too powerful after reunification and Kohl just wanted to make history no matter what damage this would do in the long run.

In connection with the EU's sovereign-debt crisis, Commmission president and former Eurogroup chief Jean-Claude Juncker said: "When it becomes serious, you have to lie." You can read this in Bruno Waterfield's article, and the quote has been widely reported by other media as well.

So how can anyone trust the Juncker Commission anymore? I, for one, can't.

This YouTube video featuring Juncker may be part of what certain politicians would like to ban as "fake news."

Apple's "state aid" tax case

When the Commission's Apple tax ruling becomes public, I'll look at it in detail, but even before all details are known, it's already clear that the Commission can't really be trusted in this context.

The first issue I have is that the Commission has tried to manufacture a "state aid" case. Article 107 of the Lisbon Treaty defines "state aid" as follows:

"any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favoring certain undertakings or the production of certain goods"

There is no distortion of competition here. I would agree with the Commission if this were a case of Ireland giving Apple subsidies that Apple would use to undercut its competitors. However, Apple has never undercut anyone. It took almost ten years after the launch of the iPhone for a company not to undercut Apple (Google, with its Pixel phone).

It's not competition that the Commission is concerned about. All major tech companies do the same. There's a populist agenda in play here.

The following claim by Commissioner Vestager fails to pass even the most basic plausibility check:

"[T]his selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014."

Nobody has ever denied that Apple paid approximately $400 million in Irish taxes in 2014 (Tim Cook disclosed that number in a radio interview on September 1, 2016). So, obviously, Apple's overall tax rate was a whole lot higher than 0.005%. Otherwise Apple would have had to generate profits in Ireland of 20,000 times $400 million, which would be $8 trillion!

Again, I'll try to find out more, but so far this looks like just as ridiculous as saying that a proposed piece of patent legislation doesn't cover software "as such" when SAP said it did.

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