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WHITE PAPER

Promoting the
European Software Industry

BRUSSELS, 29 OCTOBER 2008

www.comptia.eu

Introduction
Executive Summary
Part I

The State of the Software Industry in Europe

Part II

Human Resource Capacity


Challenge 1 Promoting general e-skills among the
labour force
Challenge 2 Promoting human talent capable of
managing and expanding Europes existing
technical capacity
Challenge 3 Promoting innovative capacity

Part III

Standards and Interoperability

Part IV

Intellectual Property

Conclusions

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 2

INTRODUCTION
In this global economic downturn, the information communications and technology (ICT) industry
continues to contribute to European employment, provide critical tools for European productivity,
expand economic contributions to GDP, provide consumers an array of new benefits, and develop
some of the most innovative technology in the world, including Green ICT applications and new, socalled cloud computing platforms.1 To date, the ICT industry provides employment to some 7.9
million Europeans2, and the software sector alone is responsible for more than half of those jobs.
Despite this phenomenal success story, Europes ICT industry clearly is at a cross-roads, driven in
part by a complex political and industry debate concerning open source software versus commercial
versus mixed-source software, and packaged versus services delivery versus advertising business
models.
The Computing Technology Industry Association (CompTIA), representing providers on all sides of
this debate, remains concerned at how these debates have driven critical public policy decision
making to negative levels. For example, discussions of requiring certain technology platforms in
procurement purchases would ironically exclude a large segment of existing European industry,
ultimately risking European jobs, European economic benefits, and European innovative capacity.
All of these proposals are driven by a theory that to embrace them somehow promises new innovative capacity that may or may not materialise in the future. Ironically, while these issues continue
to drive policy discussions, as with many technology debates, the industry has moved beyond policy
makers. Both open source and proprietary software are vibrant and competitive in Europe and
world-wide. Former pure commercial platform providers are building on multiple and often hybrid
software platforms. Platforms themselves are multiplying, including mobile and emerging cloud
platforms, which in turn multiplies the opportunities for European businesses to create innovative
services. Multiple delivery methods are widely available. Unfortunately, the political debate, less
and less relevant, but with the same potentially negative consequences, continues.
Today, there is a choice to be made about how the European software industry will compete going
forward. Will it be through technology protectionism, promoting individual technologies, excluding
other technologies, intervening in standards setting processes, and discriminating against selected
talents? Or, will it be by giving European industry the tools to support existing jobs and economic
contributions, expand employment and economic opportunity, and achieve its innovative capacity?
The latter should not be through mandates, de facto mandates, preferences, positive discrimination, or government picking of technology winners and losers, but rather by providing the tools to
let industry compete.
CompTIA believes the way forward is first and primarily to focus on the intellectual assets in this
knowledge based industry people. Fundamentally, the ICT-embedded economy is built on the
innovative capacity of its individuals. CompTIA believes Europe already has the talent to compete
and lead globally. Without the incentive to develop intellectual talent, the industry falters. It is here
that CompTIA believes the European Commission and EU member state governments need to focus
their energy.
To this end, we commend the multiple directorates of the Commission and numerous recent efforts
to examine the real challenge of the European technology industry stimulating intellectual
capacity. There have been several important statements by European Commission officials and
institutions in the last few months including the draft outline for the European Interoperability
1

David Chappell, A Short Introduction to Cloud Platforms, An Enterprise-Oriented View (August 2008) (cloud computing
refers to a new way of supporting applications through on off-premises platform, namely through the internet cloud).

IDC Economic Impact Study 2007,The Economic Impact of IT, Software, and the Microsoft Ecosystem on the Global
Economy. October 2007. Sponsored by Microsoft.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 3

Framework 2.0 by IDABC3, Commissioner Viviane Readings calls for comments on a European Software Strategy4 and her survey for A European research and innovation strategy for ICT5 , Commissioner Neelie Kroes thoughtful comments on standards and technology development6, the issuance of a green paper on copyright reform, etc. In addition, there have been ICT comments and
interventions by many other Directorate Generals of the Commission, reflecting the importance of
the industry to Europes economy. Somewhat troubling, several recent comments seem to question
the fundamental and historically proven basis of innovation and the very foundation of the ICT industry that exists in Europe today intellectual property protection. CompTIA continues to emphasise the importance of intellectual property protection to stimulate technological and social
innovation.
In considering how to best foster the European software industry, CompTIA has reviewed the state
of the software industry in Europe and concluded that three interrelated public policies require
fundamental consideration and support by European policy makers to boost the innovative capacity
of Europe.
First, we encourage the Commission to continue its work to support the technical capacity of
Europes talent. E-Skills and human capacity building must remain a critical area of focus for the
foreseeable future.
Second, an essential element of fostering European talent is intellectual property protection. With
strong intellectual property protection European engineers are incentivised to take the risk to be
creative and to invest.
Finally, standards can help to establish platforms for interactivity for consumers. In a situation
where consumer demand drives standards development, standards can provide great incentives to
innovation.
The decisions made now will impact the future competitiveness of the industry for years to come. In
our rush to promote the latest technology trend and secure Europes technology future, it is
important to remember there is already a vibrant ICT industry in Europe. That industry, which
includes both commercial software and open source providers, succeeds today because of strong
intellectual property protection, because of competitive and varied approaches to standards
development, and because of high skill levels in the industry. With this in mind, CompTIA presents
this paper to assist in creating a vision for sustaining and growing Europes innovative capacity.

Robert Kramer
Vice President Public Policy

Draft revisions to EIF, known as EIF 2.0, available for download from IADBC,
http://ec.europa.eu/idabc/en/document/7728.
4

Towards a European Software Strategy, to Truffle 100, Brussels, 19 November 2007, by Viviane Reding, Member of the
European Commission responsible for Information Technology and Media,
http://ec.europa.eu/commission_barroso/reding/docs/speeches/brussels_20071119.pdf.
5

A European research and innovation strategy for ICT: time horizon 2020,
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1287&format=HTML&aged=language=EN&guiLanguage=
en.
6

Neelie Kroes, European Commissioner for Competition Policy, Being Open About Standards; Open Forum Europe,
Breakfast Seminar, Brussels, 10 June 2008, http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/08/317

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 4

EXECUTIVE SUMMARY
The European software industry is at a cross-road. Issues of global competition, a shortage of
qualified labour, and a rapidly changing technological landscape are converging to test the potential
of Europes software industry. At the same time, we are seeing unprecedented diversity and rapid
change in the technology sector. Multiple platforms and software industry models are emerging and
competing. In order to further expand the industry, Europe must nurture the innovative capacity of
the industry, rather than succumbing to technology preferences. There are three key elements to
fostering the innovative capacity of Europes software industry. These include promoting human
capacity, maintaining Europes long record of protecting intellectual property, and continuing to
foster choice in standards development.
The State of Europes Software Industry

Europes 258 billion ICT industry is strong and competitive, employing 4.3 million Europeans,
providing tax revenue, promoting innovation, and contributing to the productive capacity of
Europes economy.
Europes software industry is diverse and competitive, with multiple software models and
platforms developing. In addition to the continued investment in proprietary software
development, an estimated 1.2 billion has been invested by European firms in open source
software development.
The industry is dynamic and in transition, models are both converging and multiplying. There
are consumer demand and market possibilities for European firms that pursue various business
models, whether based on services, software products, or advertising, or any combination of
these. Competitors business models are converging. Companies are developing technology in
all software areas. Even open source vendors depend on intellectual property protection. All of
this challenges the premise for technology protectionism or narrow industrial policy.
There is no crystal ball for the dynamic and rapidly changing technology sector. With the rapid
pace of technological change, continued collaboration, and convergence, the most important
conclusion is that choice matters.
Technology choice matters. When technology choice is removed, Europe loses on the
individual, company, national and international levels.

CompTIAs Public Policy Approach is to avoid technology protectionism and invest in Europes
innovative capacity by fostering a three pillared approach to stimulate innovative capacity.
Pillar 1: Promote Human Capacity. CompTIA believes the core element of any software industry
strategy must involve continued efforts to promote greater innovative capacity within individuals,
including promoting e-skills, maintaining and enhancing existing technical capacity, and promoting
innovative talent. Specifically, e-skills are essential to raise the quality of European productivity.
The more digital literacy in Europes economy, the more globally competitive it becomes. Along with
digital literacy, it is essential to examine technical capacity. World-wide, countries are struggling to
produce an adequate number of qualified engineers to maintain existing technical capacity and to
build Europes software industry. With global competition, a declining number of science and
technology graduates, and increasing demand, this is a critical area of focus going forward. Finally,
Europe must allow creators to be creative. Efforts to drive European talent towards a specific type
of technological development inevitably remove choice that allows creators to create. To support
each of these efforts, CompTIA recommends to

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 5

e-Skills:

Implement numerous European Commission and industry recommendations in the e-Skills


area.
Ensure access to critical infrastructure to begin fostering lifelong learning.
Adopt tax breaks for companies that invest in education for their employees.
Ensure access to access throughout the entire Training-Employment Value Chain,
including access to technology and physical infrastructure in schools, access to training and
content, curricula and certifications, access to public funding, and finally access to labour
placements.

Technical Capacity:

Rethink approaches to education, emphasising creativity rather than rote learning.


Emphasise basics in education.
Consider EU-funded scholarships for underprivileged individuals to supplement basic
educational learning in key ICT areas.
Consider EU-funded university-level scholarships for engineering students.
Foster lifelong learning.
Foster multi-stakeholder partnerships.
Ease access to Europes market for highly skilled engineering talent.
Provide incentives for companies that conduct training, R&D and other software related
innovation and human capacity investment in Europe.

Social and Technological Innovation:

Enhance the innovative capacity of Europe by supporting technology neutrality in lead


market initiatives and public procurement for government software infrastructures.
Maintain a careful balance driven by multi-stakeholder partnerships (industry, governments
and third parties) alongside public support for industry-based e-skills standards and
certification.

Pillar 2: Foster Market-Driven Choice in Standards Policy. Technical standards can bring several
benefits for the European software industry and for users of software and ICT technology, including
efficiency, and improved cost and product competition. They also can improve interoperability
allowing different products and services to communicate and better share data. However, the
capabilities and roles of formal standards need to be understood realistically and not exaggerated.
Industry-based consortia and other fora are much more widely used than formal standardisation for
developing software specifications. Many mechanisms other than standards promote
interoperability. Likewise, it is important neither to confuse open source with open standards or
interoperability these are not synonymous nor to undermine the use of IP in standards. In
addition, standards efforts should be inclusive, balancing the interests of users with the interests of
the firms that invest heavily in innovative technologies and that should be encouraged to bring those
technologies into standards efforts.
In short, standards and other interoperability policies function best, particularly in public
procurement, when they give users choice rather than mandating specific technologies, when they

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 6

balance the interests of all stakeholders, and when they otherwise remain market-led. In order to
facilitate choice in standards and promote interoperability, we recommend to

Maintain Europes voluntary, market-driven approach to the development, acceptance and


use of standards.
Recognise that international as well as European standards can serve European software
industry interests.
Avoid dogmatic focus on standards. Recognise the importance of formal standards, other
industry specifications and initiatives, and non-standardised technologies in promoting
interoperability.
Encourage the world-wide best practice to support multiple standards simultaneously, and
anticipate the reality of continuous technology evolution.
Avoid redefining open standards.
Avoid procurement mandates for detailed implementations of standards, or preferences for
particular software business models (open source, commercial or services).
Encourage intellectual property creators to join standards efforts and permit them to secure
fair, reasonable and non-discriminatory royalties and terms for the use of their technology
investments that are contributed to a standard.

Pillar 3: Protect Intellectual Property (IP). The European software industry has thrived over the
past twenty years with the support of robust copyrights, patents, trademarks and other IP
protections. IP supports innovation by funding research and development, providing market-based
rewards for investment, and giving innovative software and ICT firms an important way of
monetising their intangible assets. Europes copyright and patent systems are world-class in terms
of fitness for purpose and quality. The much-preferred preference in Europe for market-based
rather than compulsory licensing supports innovation. Every sector of the European software
industry whether based on commercial products, consulting services or advertising depends
heavily on intellectual property. Public policies for the intellectual-property system thus need to
focus on maintaining adequate levels of IP protection and enforcement, and improving SME access
to the system. CompTIA recommends to

Maintain Europes robust copyright, patent, trade secret and other IP protection relevant to
software.
Encourage IP owners to protect or to share their IP in various ways that enable them to build
viable businesses and meet customer needs.
Make access and use of the European patent system more affordable and more efficient,
particularly for SMEs.
Work to improve the efficiency and effectiveness of IP enforcement.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 7

PART I: THE STATE OF THE SOFTWARE INDUSTRY IN EUROPE.


Europes software industry is a significant economic contributor. A variety of data sources provide
ample evidence demonstrating that software is a valuable economic contributor to Europes
economy.
The software industry directly contributes to the European economy as a net positive contributor
to GDP, a greater number of jobs, higher wages, increased tax revenue, and downstream
multiplier effects. At the most disaggregated level, there is a great deal of evidence to support the
notion that Information Communications and Technology (ICT)7 industries directly contribute to a
large extent to the gross domestic product (GDP) in a European economy. According to Commissioner Viviane Reding, software is a 76 billion market or a 216 billion market if you include
statistics for related activities classified as services8. Software statistics are notoriously difficult to
calculate, and we believe this data may underestimate the true value of the industry in Europe.
Another data source, IDC9, concluded that in Western Europe10 between 2002 and 2006, ICT sector
spending was 258 billion11, or 2.57% of GDP (See figure 1). As seen elsewhere around the world,
Western Europe regional growth in software spending is likely to be more rapid than in ICT sector as
whole 6.8% combined annual growth rate (CAGR) for the software sector vs. a projected 5.7%
CAGR for the ICT sector overall between 2006 and 2011. Similar trends are evident in Central and
East European 12 (CEE) economies, with some of the fastest ICT growth world-wide. Between 2002
and 2006 in CEE, there was a 20.5% CAGR in the software sector. Going forward, as elsewhere
around the world, growth in the software sector in CEE will accelerate more rapidly than the ICT
sector as a whole at 14.1% (CAGR) between 2006 and 2011. When the IDC data is aggregated for all
European Union countries, significant growth rates are likewise expected in the software sector
between 2006 and 2011 (6.9% CAGR), higher than those projected for the overall ICT industry (6.0%
CAGR).

We use the term information and communications technology or ICT throughout the paper for consistency with the
European norm. We note, however, that nowhere in this paper do we intend to address telecommunications-related
issues. Our discussion is limited to information technology including hardware, software, and services. Specifically, IDC
statistics in this paper do NOT capture the telecommunications sector, and IDC themselves groups their statistics using the
term information technology or IT.
8
Speech by Commissioner Viviane Reding, Member of the European Commission responsible for Information Society and
Media before Truffle 100, Towards a European Software Strategy, Brussels 19 November 2007, p.2
9

IDC Economic Impact Study 2007,The Economic Impact of IT, Software, and the Microsoft Ecosystem on the Global
Economy. October 2007. Sponsored by Microsoft.
10

The IDC study defines Western Europe primarily as a grouping of Europes most developed economies including Austria,
Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Luxembourg, Malta, Netherlands, Northern Ireland,
Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

11

IDC figures were originally reported in US$. The conversion to Euros is based on dollar to Euro rate of exchange on 23
September 2008.

12

The IDC study defines Central and Eastern Europe to include a range of income level countries including Albania,
Armenia, Azerbaijan, Bosnia, Bulgaria, Croatia, Cyprus, Czech Republic, Greece, Estonia, Hungary, Kazakhstan, Latvia,
Lithuania, Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia and Ukraine.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 8

SPENDING
(Figure 1)
Western
Europe

European
Union

Eastern
Europe
(CEE)

Information Technology Spending


(B)

257

258

31

Estimated ICT Industry Compound


Annual Growth Rates 2006-2011

5.7%

6.0%

12.8%

Software Spending, 2007 (B)

54

53

Estimated Software Sector Growth


(CAGR) 2006-2011

6.8%

6.9%

14.1%

Software as a % of Information
Technology Spending, 2007

21%

20%

13%

Significantly, software, by comparison to other ICT sub-sectors, has the greatest positive economic
impact. Growth in software spending is significant as software spending typically results in greater
economic multipliers and job opportunities compared to other parts of the ICT sector. (See figure 2.)

Figure 2

The Economic Impact of Software


IT Spending, 2007

IT Employment, 2007

Software
Vendors
Hardware
&
Services
79%

Software
21%

Channel &
Services
Firms
Software
Workers
63%

$1.23
Trillion
838 Billion

Hardware
Vendors
Channel &
Services
Firms
Non
Software
Workers
37%

24.13
Billion
35.4 Million

Source: IDC Economic Impact Study, 2007

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 9

These benefits are felt most dramatically in terms of employment. From a global perspective while
software comprises less than a third of total ICT spending world-wide, the sector employs 63% of
ICT employees world-wide.13 The same is true for the EU, where the software industry employed
4.3 million in the European Union in 2007, 55% of all ICT employment (see figure 3).

EMPLOYMENT
(Figure 3)
Western
Europe

European
Union

Eastern
Europe
(CEE)

7.3

7.9

1.5

2.6%

3.1%

9.6%

4.2

4.3

0.6

Growth,

4.6%

5.0%

13.9%

Software Employment as a % of ICT


Employment, 2007

57%

55%

40%

ICT Employment, 2007 (M)


ICT Employment Growth, 2006-2011
Software Employment, 2007 (M)
Software Employment
2006-2011

Use of software contributes to greater productivity in Europes economy. In addition, CompTIA has
commissioned independent research that documents the impact of ICT use on economic
productivity. Those findings show that economies with higher ICT investments, defined as ICT
capital assets which include software and hardware, see seven times greater productivity than
those with lower ICT use. According to a global model which included European markets, the firm
Nathan Associates found that in 200114, labour productivity was distinctly higher in those economies
where ICT use was high. Across the economies with low ICT use, average labour productivity was
2.76 per hour worked, but in the economies with high ICT use, productivity averaged 18.84 per
hour worked.
The relative contribution of ICT capital to economic output (GDP) accelerates as ICT use increases. In
the economies where ICT use is less than 10%, every 10% increase in ICT use increases GDP 1.6%.
However, in economies where ICT use is greater than 10%, every 10% increase in ICT use increases
GDP 3.6%. In other words, the more invested an economy becomes in ICT, the more economic
benefits it enjoys. Moreover, in these economies that are heavier users of ICT, increased labour
hours also add more to GDP every 10% increase in labour hours in those economies increases
GDP nearly 4%. On the other hand, in economies where ICT is relatively lightly used, an increase in
labour hours has a nearly insignificant effect on GDP. In short, use of technology has its own
productivity benefits. The relationship between software and productivity also dramatically
emphasises the importance for ICT skills in Europe.
13

The Economic Impact of Software chart can be found on page 2 of the IDC study.

14

2001 is the first year for which complete data sources are available for the full sample.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 10

Productivity & IT Investment


(Figure 4)
40%
Unit ed Kingdom

IT cap ital share of t otal capital in 2001

35%

United Sta tes


Swe den

30%

Ireland
Netherland s

25%

G ermany
Finland
Franc e
Au stria
Ja pa n
Switz erla nd
Australia
Isra el
Canada
Ne w Zealand
I ta ly
Hong Kong

20%
Korea

15%

A rge ntina
10%

Philipp ines
Thailand

5%
I ndia

Poland

Be lgium
Norway

Spa in

Chil e

Mexico
Colombia
Turke y

0%
0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

4 0.0

45.0

GDP per h our wo rk ed in 2001 (co nstant 1995 In ter national $)

SOUR CE: Nat han Associ ate s I nc.

These figures provide useful data on the current state of play of the software industry in Europe, and
give some strong indications about the direction in the future. Continuing technology advances
promise further economic opportunities, both for developers and consumers of software.
Businesses and consumers continue to exploit the advances in mobile platforms with expanding
services, building applications not available in the past. Emerging cloud platforms have the potential
to provide unparalleled computing power and flexibility to European developers to offer more
services to more customers. Small developers building on global resources, using open Internet
connections, will create many new possibilities.
Europes software industry is healthy, diverse, and competitive, thanks to a combination of
enforcement of existing law, non-discriminatory technology policy, and an environment that, to
date, has fostered the fundamentals of technology development.
The current political debate is highly politicised, and risky given existing known benefits of the
software industry. As with any business sector, there are different commercial interests betting on
different business models to deliver results in a highly competitive industry. The topic du jour in the
software industry is whether to bet on open source software or commercial software or software as
a service. CompTIA represents companies on all sides and combinations of this debate, so we must
take a neutral position on this issue. Unfortunately, the issue has become politicised outside of the
commercial debate, dangerously so, with government leaders stating a preference and using the
power of the state to promote one technology over the other.
Technology mandates do not work, as many examples prove. The pace of technological change is far
too rapid to guarantee that todays decisions will be useful tomorrow. Technology can be stifled
through any number of policies that can create indirect mandates. For example, sponsoring a
preference in skills scholarships or training for specific types of engineers creates a de facto
mandate. Using only open source software in government procurement drives R&D revenue to a
particular type of technology, creating an unnecessary shift in the market. CompTIA proposes
leaving choice to the market for the many reasons discussed in the following sections.
Europes software industry is diverse and competitive. The current discussion of technology
preferences tends to be a debate between open source platforms and so-called proprietary source

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 11

platforms. This question is largely irrelevant, given that both types of software clearly are thriving in
the European market place. This raises the question of why some policy makers would risk
promoting one sector of the industry over the other. The Commission itself has recognised the
abundance of diverse technologies in the software space as early as 2005 when DG Information
Society, Unit D3 Software & Services Architectures and Infrastructures explained:
Software has gained so much in importance in almost every sector of society that it has
become a strategic societal resource. Moreover, in recent years the software market has
shown signs of entering a much more volatile and vigorous period. This re-invigoration of the
market is due to the emergence of F/OSS, which has made commercial in-roads in major
segments of the software market. This development has led to some unrest with software
and service providers and users alike, which may be the natural reaction of a high value
market injected with new competitive offers. In terms of the market, F/OSS most likely will
increase the competition in the software market from which positive fall-out for the
consumer is to be expected. On the provider side, F/OSS creates new opportunities for
software and service providers, which may be a new opportunity for the European software
industry. 15
A study on the economic impact of free/libre/open source software or FLOSS prepared in 2006
shows that firms have invested an estimated 1.2 billion in developing FLOSS software and these
firms have a total of 565,000 employees and 263 billion in annual revenue (it is unclear if this
includes firms that only produce open source software or firms that produce multiple platform
software as well). The same study reports the notional value of FLOSS investment in Europe at 22
billion.16 Investment continues in proprietary software as well. Small and large companies often
choose to make part of their offerings open source, and part proprietary. The available alternatives
enable businesses to choose business models that suit them and their customers.
Platform and format are no longer either/or questions. Competitors business models are
converging; companies are developing technology in all software areas; and open source and
commercial software companies alike depend on intellectual property protection. In this
environment government technology preferences exclude European companies that may chose to
do business on multiple platforms or only one platform.
All software vendors depend on intellectual property protection. As described further below, free
software and commercial software companies alike depend on intellectual property to protect and
enable their business and licensing models. Indeed, there is increasing cross-over, interaction and
common practice among open-source and commercial software and licensing.
One significant example can be seen in initiatives like the Patent Commons, a project by the Linux
Foundation to promote open source software. Some Contributors specify the particular patents
they agree not to enforce by patent number. Some of these Contributors have also identified the
patents they pledge by subject matter.17 Several open-source vendors have contributed their
patents to this project, but the Patent Commons also lists some unexpected contributors from the
commercial software world in particular, Microsoft, with respect to the ISO-standardised Office

15

http://ec.europa.eu/information_society/activities/opensource/index_en.htm; Last update: 25/08/2005.

16

Study on the Economic Impact of Open Source Software on Innovation and the Competitiveness of the Information &
Communications Technologies Sector of the EU. Final Report prepared on November 20, 2006. UNU-MERIT, the
Netherlands. Prepared by Rishab Aiyer Ghosh, MERIT. 20 November 2006.
17

http://www.patentcommons.org/commons/patentsearch.php.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 12

Open XML file formats that Microsoft had originally developed:18 Microsoft irrevocably covenants
that it will not seek to enforce any of its patent claims necessary to conform to the technical
specifications for the Microsoft Office 2003 XML Reference Schemas posted at
http://msdn.microsoft.com/office/understanding/xmloffice/default.aspx (the Specifications)
against those conforming parts of software products.19
Even some of the largest open-source vendors and contributors to the Patent Commons maintain
extensive IPR portfolios. For example, IBM maintains a significant if not the leading number of
patents outside of the commons. Indeed, IBM is one of the largest patent holders world-wide,
regularly earning the most patents per year, with 3,621, IBM surpassed its own record and earned
more US patents than any other company for the fourteenth consecutive year, exceeding the next
closest patentee by 1,170.20
This demonstrates that even large open source advocates like IBM continue to rely on intellectual
property protection as an important component of innovative capacity. Just as significantly, the
number of software patents that IBM received in 2005 was larger than the number of patents earned
by Microsoft, Oracle, BEA Systems, and SAP combined. These companies may rule software sales in
one way or another, but IBM is, if the number of patents awarded is any indicator, more of a
software innovator. IBM has over 50 software labs world-wide and over 25,000 software developers,
creating operating systems, middleware, development tools, and other code.21
The models are converging. Companies are producing outside of their traditional parameters. In
other words, so-called commercial software providers are developing and offering some open
source programs and components. Companies typically considered open source are offering
commercial software for sale. Further, the two are actively working together to produce software.
For example, Red Hat, the best-known open source producer also ships some commercial software
products that run on top of its open source platform. Many hardware manufacturers ship
proprietary software components alongside open-source programs. IBM offers integrated open
source and commercial solutions.
Convergence is happening in the other direction as well. Microsoft, typically viewed as the
archetypal commercial software vendor, actually produces products along a spectrum of software
models. Although it is often viewed as occupying the far end of the spectrum on the proprietary
side, Microsoft employs a wide range of business models and strategies, ranging from fully
proprietary closed source offerings to free ware and fully open source offerings. (E.g., Microsoft
developed and actively uses two open source licenses approved by the Open Source Initiative (OSI)
the Microsoft Public License and the Microsoft Reciprocal License as well as a variety of other
licensing schemes that allow users the right to redistribute or modify the original software.)22

18

ECMA International was the standards developing organisation for Office Open XML (OOXML), which enables use of
industry-standard XML technology in managing spreadsheets, documents, and forms.
http://www.patentcommons.org/commons/standardsearch.php?displaystandard=37&titlecopy=&developing_organization
=&contributor_id=141&searchSubmit=Find.
19

http://www.patentcommons.org/commons/pledgesearch.php?displaypledge=55&searchSubmit=Find. Microsoft
submitted its covenant not to sue before OOXML was accepted by ISO in 2008.

20

http://www-03.ibm.com/press/us/en/pressrelease/20868.wss IBM Sets Record for Most US Patents Earned in One


Year, Armonk, NY January 11, 2007.

21

http://www.itjungle.com/tfh/tfh011606-story03.html, IBM Tops U.S. Patent List for 13th Straight Year, January 16,
2006.

22

BIAC, BIAC Comments on Draft Chapters for the OECD Software Innovation Project, 2008, p.5.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 13

In addition, the intellectual property of software companies is being used in new ways to promote
collaboration. Firms increasingly are embracing a variety of licensing models to share know-how
rather than merely protecting their intellectual property from unauthorised use. The terminology
being used to describe open, closed, or commercial activity is becoming more and more
irrelevant, or at least ambiguous. Indeed, some businesses do open-source software development
but treat the technologies they develop essentially as proprietary:
For example, the increased control over source code access and ability to prevent reverse
engineering enable closed source strategies driven primarily by trade secrets in the context
of software-as-service and embedded software. As a specific example, Google has effectively
prevented disclosure of the source code implementing the search algorithms it employs, as
well as third-party modifications and improvements, by providing software functionality as a
service. As observed by Rob Enderle in a quote from a recent Computerworld article: In
many ways, Google is much more proprietary than Microsoft is, and they actually used open
source software to get there. So unlike Microsoft, which started off proprietary and has
gradually been opening its stuff up, Google starts off getting other people's open stuff, turns
it proprietary and then makes money of it.23
In sum, while we would suggest that the more appropriate dichotomy is between open and
closed, if the analytical construct of open source versus proprietary is retained, at a
minimum it is necessary to expand the discussion of proprietary models to clarify that
reliance on proprietary rights is merely one of many ways to effectuate a closed source
business model.24
In addition to individual technology availability, there is an increasing convergence of co-operative
efforts between competing technology business models. For example, Microsoft and Novell have
agreed to broad business and technical collaboration agreements to build, market, and support a
series of new solutions to make Novell and Microsoft products work better together. The two
companies also announced an agreement to provide each other's customers with patent coverage for
their respective products. These agreements will be in place until at least 2012. Under this new
model, customers will realise unprecedented choice and flexibility through improved interoperability
and manageability between Windows and Linux.25
Both open source advocates and commercial license software advocates continue to benefit from
intellectual property protection and collaboration. The technology sector is dynamic. In Europe, as
elsewhere in the world, the technology sector typically moves at a much quicker speed than
government policy. With an average product life cycle of sometimes less than six months (or less
than a day if you consider software upgrades), it is nearly impossible to predict future outcomes or
to create a policy framework that requires a crystal ball view of the future. Rather, policy making
needs to create an environment that fosters future growth and allows the necessary dynamism and
innovation of the market place to move forward.
There is no crystal ball for the technology sector. All of these efforts provide critical evidence that
not only is the technology sector in Europe healthy, but that there is no crystal ball for predicting the
future of technology. Who could have predicted five years ago that there would have been as much
23

Linda Rosencrance, Google opens up a little on its search algorithms, Computerworld, May 23, 2008,
http://www.computerworld.com.au/index.php/id;2122529128;fp;16;fpid;1.
24

BIAC, ibid., response, pp.5, 6.

25

http://www.patentcommons.org/news/index.php?displaynews=25&,
http://www.microsoft.com/interop/msnovellcollab/default.mspx.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 14

convergence between open source models and commercial models as there is today? The rapid
adoption of virtualisation technology has demonstrated how customers can use a variety of
operating systems and other technologies, both commercial and open source, at the same time. The
future of cloud computing will open wider possibilities to European software providers of all sorts.
With the rapid pace of technological change, continued collaboration, and convergence, the most
important conclusion is that choice matters.
Technology choice matters. When technology choice is removed, European businesses lose at the
individual and the national level. The key to a vibrant technology sector in Europe is choice.
Producers have choice therefore consumers have choice. If the creators are not given the flexibility
to adopt to change, to develop new models or to innovate, consumers lose. The vibrancy of the
system today is an argument for choice in technology development. Government preferences
whether they are through lead market or innovative procurement, through targeted technological
funding, or through tax incentives or other initiatives that expressly provide benefits to a single type
of technology risk manipulating a future that is very much in flux.
Indeed, European leaders have recognised as much. For example, European trade leaders recently
joined many other nations in opposing a proposed technology mandate in China that would have
required the use of specific Chinese made and controlled encryption technology. The main thrust of
the European argument was not only that trade barriers were inappropriate, but also that limiting
technology choice would stifle innovation. Why would Europe oppose these mandates abroad, but
institute similar style de facto mandates at home?
In this EnvironmentWhats Next? What is Our Vision to Promote a European Software Industry?
CompTIA believes the way forward is first and primarily to focus on intellectual assets in this
knowledge based industry people. Fundamentally, the ICT sector and ICT-embedded economy as
a whole are built on the innovative capacity of its individuals. CompTIA believes Europe already has
the talent to compete and lead globally. Without the incentive to develop intellectual talent, the
industry falters. It is here that CompTIA believes the Commission needs to focus energy. In this
context, human skills capacity building, intellectual property protection and standards issues are all
deeply interwoven and fundamental to fostering the creative energies of the sector. With that in
mind, we focus our recommendations in each of these areas, beginning with the human element.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 15

Part II: Human Resource Capacity


The global economy, particularly Europes advanced market place, is increasingly dependent on ICT
and software in particular. A dual economic dependency on the software industry in Europe has
emerged. Today Europe depends on its ability to supply or produce technology as European
production of software increases, comprising nearly one-third of the European ICT market. Europe
also depends on demand or use of technology for greater economic productivity. As Commissioner
Viviane Reding noted in a speech before European software leaders, The main significance of
software is that it is everywhere. Today everything depends on software: all the internet and
telecommunications services; all machines from giant power stations, through advanced jet planes
down to the simplest coffee percolator, all run on software. 26
Knowledge based industries require skilled employees.27 In this environment, the continued
competitiveness of Europe becomes more reliant on the availability of a workforce properly trained
in e-skills. A shortage of e-skills not only prevents the adoption of new technologies, it also hinders
the use and consolidation of existing ICT systems, resulting in major inefficiencies and wasted
resources. Demand for high end ICT network skills to plan and implement internet technology in
support of business processes is particularly acute. The
Digital literacy and media literacy
continuing growth of desktop applications and mobile
as well as professional e-skills are
working environments means the demand for ICT skills in
crucial enablers that allow EU
these areas of distributed computing is also high.
citizens to exploit the full potential
of the information society.
Furthermore, digital literacy and professional e-skills are
crucial enablers that allow countries and their citizens to
Source: 2008 e-skills ILB Policy Declaration,
exploit the full potential of the information society. As
http://www.e-skills-ilb.org/docs/eSkills_ILB_Policy_Declaration_2008_final_22_Fe
Europes economy becomes increasingly ICT-dependent,
b.pdf.
digital illiteracy substantially reduces the opportunities
available for participation in the labour market.
In addition, it is important to recognise that e-skills shortages are a global phenomenon. Europes
competitors also are finding it difficult to keep up with demand for their services. In this market, it
may make sense to focus policy efforts less on competition by comparison (i.e us versus them)
and more on promoting domestic capacity. Indeed, the risk increasingly is less that a highly skilled
job will move offshore and more that there will be no qualified engineer anywhere in the world to fill
it!
The good news is that European Commission officials are deeply involved in e-skills promotion and
have been for some time. Our analysis and recommendations below reflect the current debate in
Europe, reiterate existing policy recommendations, support existing policy steps taken by European
policy officials, and highlight a few new issues for consideration.

26

Towards a European Software Strategy, speech before Truffle 100; Brussels 19 November 2007. Commissioner Viviane
Reding, Commissioner for Information & Media.

27

For Commissioner Redings e-skills video message at the WSIS in Tunis 2005 see:
www.e-skills-ilb.org/docs/STU2_Reding_ESKILLS.mpg or http://www.e-scc.org/documents_resources/default.aspx.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 16

In this environment, CompTIA believes these can be divided into three areas including
(1) promotion of general e-skills among the labour force;
(2) promotion of human talent capable of managing existing technical capacity; and
(3) fostering the innovative capacity of Europe.
Challenge 1: Promoting general e-skills among the labour force. A lag in digital uptake is not
without parallels in historical economic patterns of innovation uptake, such as with the agricultural
revolution or industrialisation. However, the technology revolution has propelled an unprecedented
level of speed of change on the economy. With that speed comes many challenges, some of which
are not being met. In this revolution, the difference is not access to infrastructure alone, it is more
than ever the human element. Knowledge, skills, and thought processes will make the difference in
the technology revolution. If the European labour force fails to keep pace, there is a risk that basic
employment will move offshore. Indeed, according to one OECD finding, a total of 20% of current
employment could be replaced by ICT-enabled off-shore outsourcing. Unfortunately, according to
Eurostat research, only 22% of European households have high levels of basic computer skills and
37% have no basic computer skills.28 Not surprisingly, the level of e-skills diminishes as levels of
education diminish. In addition, statistically e-skills are inversely related to age.
Thus, e-skills are fundamental for the development of productivity and knowledge intensive
products and services. In a knowledge-based economy, ICT uptake and acquiring, generating and
exploiting knowledge are key determinants of success for enterprises and individuals.
The good news is that the European Commission has identified this challenge, invested resources in
identifying solutions, and prioritised the issue. In its 7 September 2007 Policy Communication ESkills for the 21st Century: Fostering Competitiveness, Growth and Jobs, it stated:

It is crucial to rapidly adopt a long-term e-skills agenda to promote competitiveness,


employability and workforce development, reduce e-skills gaps and be in a better position to
address global competitive challenges .
Strong efforts need to be made to improve co-operation between the public and private
sectors, on a long-term basis, in order to ensure a seamless framework linking basic e-skills
training, vocational and higher education and professional development....
Industry and policy makers should act more decisively and consistently regarding their
strategies to promote the professionalism, image and attractiveness of ICT jobs and careers
and to foster better employment conditions and perspectives.29

These same skills challenges are being felt world-wide. As Europe improves the basic technical
capacity of its labour force, so are other economies world-wide. The US Competitiveness agenda
includes heavy emphasis on technology skills in the labour force. Korean and Japanese governments
continue to emphasise math and science skills. Countries from Ireland to India to China have spent
decades doing their homework investing wholeheartedly in technically educated workforces....30
28

Eurostat research on e-Skills of individuals,


http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,45323734&_dad=portal&_schema=PORTAL&screen=welcom
eref&close=/t_isoc/t_isoc_sk&language=en&product=REF_TB_information_society&root=REF_TB_information_society&scr
ollto=0.
29
See Communication from the Commission to the Council, the European Parliament, the European Economic and Social
Committee and the Committee of the Regions, E-Skills for the 21st Century: Fostering Competitiveness, Growth and Jobs,
7 September 2007, p. 3, http://ec.europa.eu/enterprise/ict/policy/doc/COMM_PDF_COM_2007_0496_F_EN_ACTE.pdf or
http://www.e-skills-ilb.org/docs/European%20Commission%20e-Skills%20Communication.pdf.
30

An Innovation Nation Once More by Todd Pittinsky, http://www.csmonitor.com/2008/0915/p09s03-coop.html.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 17

One good case study is right here in Europe Ireland. The Irish economy continues to thrive due in
part to Irelands unique workforce. According to the Irish Development Authority (IDA), one of the
major positive factors in Irelands success has been that it has one of the highest educational
participation rates in the world. Thirty-seven percent of the Irish population now achieves at least
tertiary (university) education. Having helped to lead the economy of Ireland to its globally
prominent position, the government continues to believe that its policy on investment in research
and 4th level education are key to Irelands continued development as a knowledge society in the
new global economy.31 The importance of ICT skills is further documented in domestic
competitiveness studies showing that Irelands productivity growth is greatly influenced by the
skills and knowledge of its workforce.32
Whats Needed? Public Policy Recommendations to Promote General E-Skills. Implement Existing
Recommendations by the e-skills ILB33, the European e-Skills Forum & the Recommendations of the
ICT Task Force and the European Commission. EU officials already have developed strong analysis
and recommendations in the e-Skills area. At this stage, we believe it is necessary to support
existing efforts from the many committees and recommendations already made, including the
European e-Skills Forum, the ICT Task Force Report, the European Commissions Communication on
e-Skills for the 21st Century, Fostering Competitiveness, Growth and Jobs (September 2007) and
the Competitiveness Council Conclusions on A Long-Term Strategy for e-Skills (November 2007),
among others. In short, there is strong consensus on e-skills development in Europe. What is
required now is action.
We believe one of the most important concepts from these discussions is something summarised as
access to access. Throughout the entire Training-employment Value Chain, from access to
technology and physical infrastructure in schools, access to training and content, curricula and
certifications, access to public funding, and finally access to labour placements, each is key.34 Each
of these elements needs to work in tandem or the cycle simply doesnt work.
For example, increased access to technology in the learning environment not only enables new ways
to teach, it excites an essential curiosity of children that ensures students are able to develop ICT
skills. Indeed one of the barriers often cited by older adults in accessing technology is fear of
damaging the computer or lack of familiarity with basic concepts. A computer in every classroom is
critical.
But, while innate curiosity can propel comfort and creativity with computer technology, next step
learning and critical innovative skills require training. The notion, perpetuated in some studies, that
skills training is unnecessary, is simply incorrect. Skills training is unnecessary for example in FLOSS
in the same way it would be unnecessary as a child teaches itself how to use Adobe Photoshop or to
build his own page on Facebook. But, that is training to e-Skills. Training to innovate is something
31

Education Ireland 2007.

32

According to the case study Productivity: Ireland's Economic Imperative A Study of Ireland's Productivity Process and
the Implications for Ireland's Future Economic Success, an important component of technology adaptation in Irelands
leading business sectors was education levels and training. These four leading manufacturing segments invest much
more heavily than the rest of industry. This includes investment in, and applications of, Information and Communication
Technology (ICT) and also training. Without these four leading manufacturing segments, average productivity levels
throughout the Irish economy would be much lower and the pace of productivity growth over the past decade would have
been much slower. Business 2000, 2007.

33
34

http://www.e-skills-ilb.org/docs/e-Skills_ILB_Policy_Declaration_2008_final_22_Feb.pdf (these are summarised below)


Ibid., The 2008 e-Skills ILB Policy Declaration, p. 2.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 18

different. Whether it is formal or informal, it is necessary to achieve the next level of software
generation, software as services development or cloud computing or others. This is discussed in
more detail below.
Similarly, public funding to help facilitate access, as well as assistance in placing qualified labour
helps to complete the training employment value chain.
In addition to the access concept, the e-skills ILB working in conjunction with EU bodies and other
institutional actors has developed a set of critical recommendations in this area.
ILB Skills Recommendations
RECOMMENDATIONS: The e-skills ILB and its members call upon policy-makers, European citizens
and relevant stakeholders to build on tested best practices and to highlight the role of multistakeholder partnerships to provide sustainable ICT training and qualification schemes.
Key priority actions include:

Support the development of digital literacy training schemes across Europe through the
utilisation of Member State and European funding, involving organisations at all levels and in
close corporation with local and regional authorities;
Enhance public support and recognition or endorsement of high quality industry based and
other non-formal e-skills curricula and validations;
Support studies and surveys providing evidence of the cost of ignorance of e-skills
competences both at European and Member State level;
Ensure that any European e-Competence Framework or Career Portal under preparation be
built in close co-operation between institutional players, industry e-skills providers, NGOs,
citizens and other stakeholders concerned to bridge formal and non-formal ICT education
and training;
Provide a multitude of easily accessible fiscal and financial incentives, ranging from
training vouchers, tax breaks and basic income guarantees to programmed funds, enabling
cross border industry led initiatives, supporting notably individuals and small and medium
sized enterprises to invest in e-skills using a strategic and long-term outlook;
Support and endorse European multi-stakeholder networking that promotes e-skills
capacity-building and partnerships throughout the learning value chain so as to ensure a
range of choice for stakeholder participation, according to different needs from various
groups of undertakings and individuals;
Facilitate evolution of the work force. Governments in partnership with industry and
academia, NGOs and other stakeholders concerned should actively promote the evolution of
the work force:
First, by considering continued investments in innovations in primary and secondary
education that helps ensure that the next generation has the ICT skills necessary to
perform in a knowledge economy.
Second, and perhaps more important, there is a need to install a stronger orientation
toward lifelong learning that will allow continued success for workers in an information
centred economy.
Finally, Europes success depends on maximising the potential contribution of every
worker. Investments in digital inclusion can extend the benefits of high-value jobs to
underserved communities, including ethnic and linguistic minorities.
Encourage EU Member States as well as other countries to remove any barriers in their
arrangements for funding education and training that stand in the way of schools,
universities and commercial trainers to offer vendor specific and/or vendor neutral curricula

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 19

and certifications in direct connection to markets demand and to increase the


competitiveness of people standing outside the workforce.35
Public Policy Recommendations to Promote e-Skills:

Implement numerous European Commission and industry


recommendations in the e-Skills area.

Ensure access to critical infrastructure to begin fostering lifelong


learning.

Adopt tax breaks for companies that invest in education for their
employees.

Ensure access to access throughout the entire TrainingEmployment Value Chain, including access to technology and
physical infrastructure in schools, access to training and content,
curricula and certifications, access to public funding, and finally
access to labour placements.

Challenge 2: Promoting human talent capable of managing and expanding Europes existing
technical capacity. It goes without saying that in production of a knowledge based product such as
software, the most essential asset is human capacity. The capacity to develop and sustain human
talent in the software field is critical. According to the European Software Association, In Germany
alone the skills shortage is costing the economy up to 20bn a year, or 1% of GDP, according to a
study recently commissioned by the German Economics Ministry.36 So, what factors are impacting
Europes ability to produce a skilled labour pool? Among the key challenges are, the absence of
basic ICT skills education across Europe, inadequate number of university graduates in this area, lack
of lifelong learning programs, perception of foreign competition.
As the global economy has become more complex, it has become evident that to compete
and maintain a presence in global markets it is essential to boost the human capital
endowments of the labor force, whose members must have access to new knowledge, be
constantly trained in new processes and in the operation of the latest technologies. The
importance of vocational and continuous on-the-job training, neglected in many economies,
cannot be overstated, as it increases the efficiency and productivity of each worker.
WEF Nov. 2006
A rethink of educational structures is required. Given the pace of technological change, simple
technical training is not appropriate to produce innovative capacity. Further, educational styles
which teach rote learning, rather than fostering creative dynamics in school, are inadequate to give
new engineers the power to think non-linearly or linearly depending on the need. In addition, the
Eurostat data identified large ICT skills gaps between highly educated (only 11% with no basic
computer skills) versus poorly educated (61% with no basic computer skills). With that variance in
statistics and the stated European objectives of more aggressively bringing in under-represented

35

This section is reproduced from page 3 of the ILB Recommendations under Policy Declaration 2008, e-Skills
Competencies Actions Towards Sustainability. Recommendations to European Institutions, Governments, Industry and
Other Stakeholders Concerned, submitted to the European Council of Ministers in Brussels, 13-14 March 2008,
http://www.e-skills-ilb.org/docs/e-Skills_ILB_Policy_Declaration_2008_final_22_Feb.pdf.
36

European Software Association, European Software Industry: Looking for a Competitive Advantage, June 2007, p. 6.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 20

groups, a series of scholarships for basic level maths and science education may be useful. Underprivileged or lower-income individuals could thus access better educational institutions.
Incentivise university level graduation in computer engineering. There are simply too few technical
graduates graduating. This means a dual effort to promote more interest among young people in
these fields is critical, along with increasing immigration for highly skilled workers.
As the World Economic Forum (WEF) consistently has highlighted education is a critical ingredient of
competitiveness. The quality of science and mathematics education, management training and
specialised e-skills training for the workforce is vital to achieving the economic benefits of ICT use.
Foster access to lifelong learning. The need to constantly upgrade skills has been recognised by the
Commission as critical to improving Europes competitive capacity. Given the fundamental
importance of this recommendation, it bears further mention here. Companies find new graduates
unable to fulfil essential technical roles. Indeed, as with doctors and lawyers, technical engineers
must engage in life-long learning programmes. European businesses recognise the challenge and
are concerned. 75% of the respondents in a survey across 10 European countries believe that the
level of ICT skills of their employees will influence the competitiveness of their organisations, its
ability to innovate and its ability to grow.37
The role of multi-stakeholder partnerships is essential. Part of the challenge with inadequate
educational structures comes fundamentally to the speed with which technology changes. Human
capacity must be fostered to drive change rather than hinder it. While some of this can happen
through modifications to the educational system and increased math and science capacity, there is
only so much a non-technology dedicated institution can do. Yet, dynamism and new approaches in
skills training is essential. To supplement, it is essential there be close co-operation between all
stakeholders concerned. That may mean enhanced partnerships between university and private
sector institutions as envisaged under the Bologna Process. It may mean more ICT specific training
centres. Or, it may mean investment by individual companies to promote the greater welfare of the
industry by augmenting its technical capacity.
The Commission clearly has recognised the value of public-private or multi-stakeholder partnerships
in developing e-Skills. Further, the Commission has thoroughly analyzed the situation with respect
to public-private partnerships throughout Europe in the findings of Multi-stakeholder Partnerships
for e-skills in Europe38. We concur with Commission findings and encourage full implementation
and ongoing research in this area to support the growth of multi-stakeholder partnerships for ICT
education and training.
Foreign resources are a lifeline, not a threat: European leaders are fully aware of foreign
competition in the software field. Given the globalisation of the sector, however, it may be
necessary to rethink our perspective on foreign talent. Indeed, increasingly foreign talent is an
advantage to be leveraged by European companies, rather than as a replacement for European
talent. In this globally competitive environment, the only way for European industry to compete is
by leveraging the best and brightest globally. This may require a complete rethinking of what is
considered a national or a European industry, given how fundamentally global every aspect of the
software industry is. For example, a company could have 20 engineers on staff in Berlin, 5 Indian
37

e-Skills The Key to Employment and Inclusion in Europe, IDC Whitepaper, January 2007. ESA paper, ibid., quote p. 7.

38

Benchmarking Policies on Multi-Stakeholder Partnerships for e-skills in Europe, Dec. 2007, http://www.e-skillsilb.org/docs/Benchmarking%20MSPs%20final_report_final.pdf.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 21

nationals, 5 Chinese nationals, and 10 German nationals, working on a piece of software code that is
transferred to Manila for work during Berlins evening. The code probably originated from another
work product developed by engineers with a mix of nationalities. Similarly, one of the many ICT
companies manufacturing in Ireland, would employee European talent, as well as non-European
talent. But, all those jobs are equally European in that they contribute to European productivity, to
the European economy, and to European based innovations.
Access to foreign engineering talent compliments and strengthens existing European talent.
Competition from emerging markets drives European producers to be more competitive and to link
up strategically with complimentary technology. Large established multinational players provide
much needed research budget, access to technology, and large economic impacts in the European
ICT ecosystem. European industry because it already is strong, vibrant, and competitive has itself
managed these challenges and turned them into very successful economic and innovative
stimulants. Ownership, nationality, location these terms increasingly are irrelevant in the
technology sector.
Importantly as well, this challenge is not limited to Europe. From India to the US, the availability of
qualified engineering talent is in crisis. Indeed, while discussions centre on fears of foreign
dominance, in truth, all countries are struggling to keep up the numbers of qualified engineers. The
US and Japan consistently lament the lack of qualified engineers. Increasingly, major human
capacity source suppliers, such as India are also feeling the crunch of global demand. Indeed a few
years ago, Indias lead software association NASSCOM issued a study showing a greater than
200,000 person engineering shortfall. Further, these countries are themselves increasingly trying to
attract the worlds best and brightest. For example, India's Department of Biotechnology and the
British charity Welcome Trust are sponsoring a 100 million fellowship for up to 375 scientists. "Our
goal is to attract individuals who can go on to become leaders of India's growing biomedical research
enterprise," says S. Natesh, a senior adviser to DBT.39
With the global supply of engineering talent shrinking, the issue of raising European talent becomes
more complex. Not only does Europe have to produce more engineers, it must sustain existing talent, retain talent in Europe, and raise the bar for attracting increasingly scarce foreign imported
talent.
Public Policy Recommendations to Promote Technical Capacity:

39

Rethink approaches to education, emphasising creativity rather than


rote learning.

Emphasise basics in education.

Consider EU-funded scholarships for underprivileged individuals to


supplement basic educational learning in key ICT areas.

Consider EU-funded university-level scholarships for engineering


students.

Foster lifelong learning.

Foster multi-stakeholder partnerships.

Ease access to Europes market for highly skilled engineering talent.

Provide incentives for companies that conduct training, R&D and


other software related innovation and human capacity investment in
Europe.

Science Magazine, 12 September 2008, http://www.sciencemag.org/cgi/content/full/321/5895/1431a.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 22

Challenge 3: Promoting innovative capacity. In promoting human capacity, Europe should be


looking not just at the ability to compete, but also at the ability to innovate, including social
innovation in the key area of ICT education and training itself, which requires stronger co-operation
among the main stakeholders concerned. Many of the recommendations outlined above will foster
that capacity. In addition, it is important for policy makers to consider the role that other aspects of
public policy may have on innovative skills development. In particular, CompTIA remains concerned
by the focus on promoting specific types of software. Technology choice, particularly in the
procurement space, drives the innovative capacity of an economy. By promoting or funding only
one type of technological development, talent is increasingly pulled from existing technical capacity
and experimental capacity. This could draw talent away from new concepts, ideas, and software
platforms. The concept of technology neutrality should extend equally to technology skills as it does
to other aspects of the technology sector. Government public policy should focus on promoting
fundamental skills that provide the framework for general technology development and technology
use. Where specific technical talent is to be funded, government funding should be generally
available to all technology options. Specific technical development should come largely through
multi-stakeholder partnerships, and industry-led skills training programmes.
The balance between informal and formal is just as critical with respect to technical standards in
general as it is with respect to e-skills standards in particular. ICT digital literacy, and professional
training, e-skills and certifications are part of a much wider policy debate in Europe that is facing
similar topical issues as the general standards debate. Ironically, it seems that the ICT digital literacy
and professional e-skills discussion, similar to the general policy debate on technical standards, is
being engulfed in the notion of mandatory formal European quality standardisation by some policy
initiatives. Specifically there is a question of whether to rely on formal or informal training and
certification systems and whether best practices of tested informal delivery of global industry-based
e-skills standards and certifications have to be aligned to European quality criteria under
discussion.40 As with the issue of technical and software standards (discussed later in this paper),
the issue of e-skills standards is not an either-or question. It is not a choice simply of formal or
informal standards and certification. There are a range of opportunities available from company
specific certifications to technology neutral associations to government institutions. The real need
here is for co-operation and close consultation.
For example, one study, The Economic Impact of FLOSS on Innovation and Competitiveness of the
EU ICT Sector, suggests that the informal nature of FLOSS perpetuates an environment of constant
informal, free and self-training. While we agree this can happen informally, it is not true to suggest
there is no organised education and training, and no industry-based certification in the FLOSS
environment. A single Google search for the term Linux education brings up 2,140,000 hits and a
long list of sponsored training ads for Linux training. Further, entering Linux certification brings up
659,000 hits. Indeed, the Linux market leader, Red Hat, offers certification. The Linux Professional
Institute offers certification, as does CompTIA.
In addition, there is no evidence provided in the study that FLOSS somehow enhances skills training
any more than any other software platform. In fact, in the data provided in the study, contrary to
the conclusions of the study, shows that 58% of employers believe those who are trained through
organised courses or programmes are better able to run and maintain complex software systems
40

See CEPIS, Survey of Certification Schemes for IT Professionals across Europe towards Harmonisation, Final Report, 3
Sept. 2008, at: www.cepis-harmonise.org/harmonise/php/index.php?id=6,
www.cepis-harmonise.org/harmonise/php/index.php?id=13, and the full report of some 300 pages: www.cepisharmonise.org/harmonise/php/uploads/media/20080903_harmonise_final_report_v1_1_01.pdf.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 23

and 69.7% of trained programmers and 77.2% of employers believe basic introductory skills are
better learned in an organised computer programming course.41 Indeed, of the twelve categories
surveyed, there were only four categories in which the majority of employers believed self-learning
through the FLOSS community was better than structured training. In other words, the majority of
employers prefer working with trained professionals. This is dismissed by the FLOSS study as
irrelevant. Actually, CompTIA believes this is one of the most salient findings of the study. It is
employers who have experience leveraging innovation into realistic business models and user needs.
They create the demand for employment. How can we not focus on their needs?
While CompTIA disagrees with many of the conclusions in the FLOSS study and in the skills chapter in
particular, we do agree that there are many ways to train a developer community. It is important
that we consider skills training in its historical perspective.
Historically, ICT certifications were developed by professional societies, such as the Institute of
Electrical and Electronics Engineers (IEEE), to help self regulate. But, subsequently, companies
discovered the value of creating their own certification processes to help promote efficiency with
product use.
Novell, commonly credited as the firm that permanently changed the ICT certification landscape,
initially created their Certified Network Engineer (CNE) certification programme to supplement an
over-burdened technical support function. It served as a first line of defence against common
networking problems. However, the programme evolved to become part of an initiative to literally
entrench Novells products among a highly targeted group of purchase-decision influencers. In this
initiative, certification became a means for stratifying distribution channels based on their
competency. Once it recognised the benefits of Novells use of certifications, Microsoft soon joined
the fray with its MCP programme. Similarly, Cisco set up Cisco Career Certifications. The success of
vendor-specific certifications, in turn, spurred most major ICT firms to establish their own certification
programs. By the late 1990s, over 300 vendor specific certifications were being offered by software
and hardware firms. Vendor-neutral certifications, on the other hand, rapidly gained momentum
starting in the mid 1990s.42
This development of multiple standards
organisations has led to a divergence of
skills against specific technology demands.
For example, According to one estimate,
600 million RFID tags were sold in 2005
alone and the number of tags delivered in
10 years will be over 450 times the
number actually to be delivered this
year....Yet, a 2007 CompTIA survey
showed that there are fewer than 1,000
qualified ICT professionals available worldwide who understand and know enough
to deploy and service RFID technology.43

Certifications of ICT professionals have to


be seen as part of a broader issue, namely
the establishment of recognised standards
for the international ICT profession.
Source: Survey of Certification Schemes for IT Professionals
across Europe towards Harmonisation p. 6, CEPIS September
2007, www.cepisharmonise.org/harmonise/php/index.php?id=6,
www.cepis-harmonise.org/harmonise/php/index.php?id=13

41

Study on the Economic Impact of Open Source Software on Innovation and the Competitiveness of the Information &
Communications Technologies Sector of the EU. Final Report prepared on November 20, 2006. UNU-MERIT, the
Netherlands. Prepared by Rishab Aiyer Ghosh, MERIT. 20 November, 2006. Figure 32, Skills learnt from FLOSS compared
to formal courses, p. 65.

42
Hugo Lueders, E-Skills Competences in Europe: A Partnership to Deliver Sustainable Value, UPGRADE Vol. VIII, No. 3,
June 2007, p 7, http://www.upgrade-cepis.org/issues/2007/3/up8-3Lueders.pdf.
43

Ibid., Lueders, p. 8.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 24

But it is not just the industry predilection to drive training on its own products that propels this
imbalance. In addition, we regularly see formal training and educational institutions failing to
provide proper education for e-skills and for technical engineering talent. On the government side,
formal education seems to fail to meet the needs of market demand. E-Skills, business sector
certification and training continue to occupy an entirely separate domain from public sector
education policy. Groups including the European e-Skills Forum and the European Commissions ICT
Task Force have warned of parallel universes arising between industry-based and formal
government-supported education in ICT.44
One thing is certain, ICT skills training, like ICT technology development, is dynamic and rapidly
changing. Any work in this field requires close co-ordination among all relevant players.
Government sponsored training on its own will naturally fail to respond to the rapidly changing
market. Private certifications alone will not meet existing demand. In this environment,
government should maintain a careful partnership with the private sector and with independent
organisations. Multi-stakeholder partnerships that drive communication and greater awareness
are critical.
In this rapidly changing environment, it does not make sense for government to act alone, top
down, with respect to developing innovative capacity. It does not make sense to specifically define
formal and informal certifications or e-Skill standards, or to differentiate between them as to their
merits. What does make sense is co-operation and partnership.

Public Policy Recommendations to Promote Innovative Capacity:

Enhance the innovative capacity of Europe by supporting technology


neutrality in lead market initiatives and public procurement for
government software infrastructures.
Maintain a careful balance driven by multi-stakeholder partnerships
(industry, governments and third parties) alongside public support
for industry-based e-skills standards and certification.

44

Ibid,. Lueders, p.8; good examples of how to bridge this disconnect through traditional learning institutions partnering
and cooperating with industry are given by John O'Sullivan CEN/ISSS Workshop on ICT-skills e-Certification in Europe, at:
www.e-skills-ilb.org/docs/John%20OSullivan_ILB_CC_Brussels_21oct08.ppt#256, slide 8.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 25

CompTIAs Role
As a global certifying industry group, CompTIA is strongly involved in e-skills development
within the EU. We stand ready to co-operate with the Commission in supporting industry-base
technical certification standards and capacity building throughout the European Union.
CompTIA is proud to be part of the multitude of numerous technology neutral industry efforts
throughout Europe to uplift ICT skills, in particular by the following CompTIA projects and
initiatives:
The e-Skills International Leadership Board (ILB): CompTIA is a co-founder and participates in
the Board. Established on 7th June 2007 in the presence of Vice-President Guenther Verheugen
of the European Commission, with the vision of Fostering 21st century e-skills and digital
literacy of Europes workforce and citizens for a competitive, innovative and inclusive Europe,
the e-Skills ILB is set to lead the ICT sectors contribution to the development and
implementation of a long term e-skills and digital literacy agenda in Europe. The e-Skills ILB
works in partnership with public authorities across Europe, other industry sectors, SMEs and all
relevant stakeholders, building upon the European Commission recommendations and other
reference initiatives on e-skills. The members of the e-Skills ILB include British Computer
Society, CEPIS, Cisco Systems, CompTIA, ECDL Foundation, ECONET, EITO, European Software
Association, EXIN, Global Knowledge Network, HP, INLEA Foundation, Intel, Microsoft, Oracle,
Prometric and Siemens Enterprise Communications.
CompTIA Certification Programmes: CompTIA certifications are recognised standards and
credential throughout the ICT industry world-wide, validating foundation-level ICT knowledge
and skills. CompTIA offers twelve certification programmes in key technology areas.
CompTIA Press: CompTIA Press is a comprehensive line of courseware that provides IT
professionals with the necessary study materials for CompTIA certification exams.
CompTIA University: CompTIA University offers education resources and tools designed to help
solution providers grow their businesses and boost profitability.
Membership Programmes for Trainers & Educators. CompTIA membership gives public
educational institutions, corporate training companies, not-for-profit groups and governmentfunded training organisations access to various resources to help enhance services and
educational programmes.
For a full list of CompTIAs education and training programmes, please go to http://www.eskills-ilb.org/profiles/comptia.aspx. For a list of other CompTIA public policy issues, please go to
www.comptia.org/issues.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 26

Part III: Standards and Interoperability


The role of standards in promoting a healthy European software industry has been debated for
years. On one hand, ICT industries have thrived with relatively few formal standards in comparison
to other industries. Informal industry consortia have been the preferred means for developing
widely used specifications in the software sector which indeed seems to have accelerated in the
internet era45. These standards practices are largely due to the speed at which new technology
develops in the software and ICT industries generally, and this sectors reliance on the market to
lead which technologies and specifications are needed and which are not. On the other hand, calls
by customers for greater interoperability among software and other ICT products and services have
raised the question whether standards could be better used in this sector.
The European Commissions ongoing consultation on ICT standardisation, as well as its eGovernment
units European Interoperability Framework (EIF) proposals for on-line government services, have
looked at these issues from sometimes differing vantage points. Similarly, some of the competing
business sectors in the market have sought to gain a competitive advantage (e.g. open source
procurement preferences) through what should be a technology-neutral standards system.
In short, the European software industry fares best in the standards arena, as it does in virtually
every other area, where the standards process is transparent and open to all, where the success of
technologies and business models are decided by the market rather than government mandate, and
where customers have a range of competitive choices among the specifications and technologies
that they can implement, whether standardised or not.
While public standards have and will continue to have an important role, the EUs traditional (or as
its consultants the Garner Group less diplomatically termed dogmatic) focus exclusively on formal
standards is an incomplete solution and a handicap for the European software industry. Publicly
available specifications defined and applied by industry bodies inevitably will continue to play a
more important role than formal standards in this sector, and the sooner this is recognised and
welcomed in EU public policy the better. This is needed not only with respect to detailed technical
specifications, but also in other areas important to the software industry, including for example eskills certifications.46
Standards can play an important role for the European software industry, including promoting
interoperability. Standards are specifications for how particular parts of products and services
work.47 Particularly in the ICT industry, standards are most often developed in the private sector,
and then submitted for open consideration and adoption by consensus in any of a range of
standards bodies. Standards reflect a product-neutral specification that defines the characteristics
of a particular result that is intended to be achieved. Standards are used voluntarily in the market,
and are made available on reasonable terms to any enterprise or individual for implementing their
own particular products or services, which then compete with other products and services in the
market.

45

See Standards and Public Policy, ed. by Shane Greenstein and Victor Stango, Cambridge University Press, 2007.

46

Much of the key standardization activity in ICT is carried out by industry consortia rather than in formal or national
standards organizations such as CEN and ISO. For the October 2008 status of the CEN/ISSS Survey of ICT Standards
Consortia, see: http://www.cen.eu/cenorm/sectors/sectors/isss/consortia/index.asp.

47

The International Organization for Standardization (ISO) defines a standard as a "documented agreement containing
technical specifications or other precise criteria to be used consistently as rules, guidelines or definitions of characteristics,
to ensure that materials, products, processes and services are fit for their purpose."
http://www.iso.org/iso/support/faqs/faqs_standards.htm.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 27

Standards can help to ensure that software or any other product or service actually does a particular
thing that customers wants it to do (i.e. is fit for purpose). They also are one mechanism for
helping competing products and services communicate with each other, and share information. This
is known in the ICT business as interoperability. As a result, standards can increase users
efficiency, reduce transaction and implementation costs, and promote competition.
For example, the well-known MPEG standards define various elements for encoding and decoding
digital video and associated audio. Anyone can use the MPEG standards on reasonable terms to
develop software, devices or services that play videos. Having common
compression/decompression (codec) algorithms and file formats allows users to play MPEGencoded videos from different sources on different devices without incompatibilities (i.e. making the
technology fit for purpose and interoperable), and saves producers from writing new codecs for
their own specific software and devices allowing them to compete on other features such as
functionality, design, and price (promoting efficiency, cost savings and competition).
The capabilities and role of formal standards need to be understood realistically and not
exaggerated. Standards are sometimes treated as a potential cure-all for a whole variety of issues
in the software and ICT industry. There are important practical limitations on what formal standards
can achieve in this sector.

The formal standards process can be much slower than the pace of development in the
software industry. Change in software technology is rapid and relentless. The broad
membership, careful technical review procedures and consensual process of formal standards
bodies mean that the process of developing a particular standard is inherently slower than
technology developments in the sector, which can render some standards outdated or irrelevant
quite quickly.

Industry-based consortia and other forums are much more widely used for developing
software specifications. These forums vary from groups set up to address specific issues (the
Motion Picture Experts Group for MPEG video specifications, for example), to industry
associations that do regular work on a variety industry-based standards (such as Ecma,
previously the European Computer Manufacturers Association, and IEEE, the Institute of
Electrical and Electronics Engineers perhaps best known recently for its wireless networking
standards). Industry groupings typically operate more quickly than formal standards bodies, and
benefit from the fact that they are operated by the affected market players to deal with specific
needs in the market. Such specifications may go on to become formal standards or may simply
remain industry specifications that are used in ways similar to formal standards by any
interested user.

There are relatively few formal standards in the software sector, due both to the technical
variety and complexity of products and the inherent nature and speed of the standardisation
process. When one compares the number of major standards relevant to the ICT and
particularly the software sector adopted by formal standards bodies, such as the International
Standards Organisation (ISO), or the European standards bodies CEN, CENELEC and ETSI, they
are few in comparison to other sectors. In addition, formal standards in this area compared
against the large number of other specifications implemented in software, devices and services
in the ICT industry is relatively small. An insistence on and exclusive regard for formal standards
is thus an unnecessarily narrow approach in the software sector, and not just with respect to
technical specifications. In areas like software and ICT training, which are conducted almost
exclusively by the private sector subject to industry-based certifications, any public policy
focussed solely on formal standards is meaningless.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 28

The formal standards process does not always produce specifications that the market wants or
needs. Standards are not an end in themselves, of course. The test of a successful standard is
the degree to which a standard meets a real and not just a theoretical need of the ultimate
customers, and the extent to which suppliers actually build products that comply with the
standard in response to customer demand. In the 1980s, for example, a lot of effort was spent
in the industry standards body IEEE developing the POSIX specification as a way of unifying
some of the interface functions (library calls, shell definition) among competing versions of the
UNIX operating system. Although some government tenders still today require compliance with
the POSIX standard, POSIX was largely a failure48 due not least to inadequate user demand, the
adequacy of existing competing products, and the understandable willingness of users to choose
lower costs over conformance with standards.49 The development of a standard by any
particular standards body or process is no guarantee that the standard will prove useful in the
market, whether this involves a general technical standard or an e-skills standard. Particularly in
the software sector, the availability of industry specifications as well as formal standards, and
international as well as European standards, is inherently useful.

At the end of the day, the aim should be to foster practical interoperability. Standards change over
time as proposals are made and adopted to fix errors, fill gaps and evolve the specification as the
broader technology landscape evolves. This may be driven by important consumer demands or
practical technology demands. At the same time, products
that implement a standard are evolving and changing,
[I]t is becoming increasingly common
sometimes by extending the standard to reflect new
for complex ICT systems to be specified
innovation. The cycles of evolution of the standard and the
by islands of standards rather than one
products that implement it are rarely in synch, leading to
monolithic block . . . . The resulting
different products implementing different aspects of
system is, inevitably, more complicated
different generations of the standard at different times, in
turn leading to interoperability challenges between
than the sum of the parts.
applications. On the other hand, these choices may have
Source: ETSI White Paper No. 3, Achieving Technical
been made by engineers to improve the welfare of
Interoperability the ETSI Approach, Hans van der Veer
consumers. Laws that strictly define interoperability drive
and Anthony Wiles, April 2008 (3rd ed.).
flexibility out of this constantly changing process.
To better understand the challenges, it is useful to
innumerate what may happen as a standard is developed and implemented.

First, a published standard, regardless of how it is developed, may have gaps, leaving it up to
each implementer to choose how to enable a missing feature, which can result in conflict
between approaches.

Second, the standard could be written vaguely or have other errors that would lead
implementers to take different approaches to a particular element of the specification.

Third, the standard could offer multiple choices as to how to approach an element that could
cause conflict between different implementations.

48

D. Blackwood, Is Linux the Future of POSIX (9 Apr. 1999),


http://www.usenix.org/publications/login/standards/26.linux.html.
49

J. Isaak, POSIXInside: A Case Study, Proceedings of the 38th Hawaii International Conference on System Sciences
(2005), http://csdl2.computer.org/comp/proceedings/hicss/2005/2268/07/22680203b.pdf.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 29

Fourth, implementers could choose to take different technological approaches to implementing


a particular element, causing subtle (or not so subtle) conflicts between the different
implementations.
OSPF is a standards-based routing
protocol; however, different equipment
manufacturers may have different
interpretations of standards and
implementation.
Source: Dean Lee, Dennis Crowe, Ixia White Paper, Open
Shortest Path First (OSPF) Conformance and Performance
Testing, 2004.

Fifth, there could be bugs in different


implementations that impair interoperability
between them.

Sixth, implementers may choose to


implement different parts of a standard
based on different views as to what is going
to be appropriate in the marketplace, which
can lead to interoperability gaps between
implementing products.

And seventh, there is often asynchronous evolution


of standards and the products that implement them.

One example of these challenges is


IKEv2, a standard for exchange of
private keys which is mandatory to
encrypt in IPv6. Currently, multiple
partially compatible implementations
exist (including in Linux distributions,
which typically include open source
projects like strongSwan).

As noted in the first and third points above, specifications


often give implementers choice with respect to different
elements, and the ability to extend the specification in
their products to incorporate additional functionality. By
incorporating such additional functionality, extensions
can often enable a better user experience. However,
because different implementers may incorporate
different extensions, there is a risk that extensions may
not interoperate with one another. For implementers, this trade-off between functionality and
interoperability is often a difficult one, and it is driven primarily by marketplace needs and demands.
Rather than focusing on the process or ticking off a series of requirements, the notion of
interoperability should focus on the ultimate objective consumer satisfaction and preserve the
ability of engineers to move with the market and address ever changing technical demands as
technology evolves.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 30

Nesting Standards
The challenges noted above are compounded in the ICT area because in
many cases ICT standards are interdependent and nested. ICT standards
often incorporate other ICT standards by reference, which could in turn
reference other ICT standards, and so on. This leads to a significant increase
in complexity and the risk of interoperability challenges arising. For
example, in the relatively straightforward case of one standard
incorporating three other standards, there are risks that the primary
standard may interpret those referenced standards differently than other
implementations, that it will be out of synch with the evolution of those
referenced standards and the products that implement them, and that it will
introduce errors into the implementation of the referenced standards. As a
result, interoperability between different implementations of ICT standards
is usually quite complex and difficult to achieve because of the typical
interdependency between different standards.

Many mechanisms in the software and broader ICT industry beyond standards promote
interoperability. The International Organisation for Standardisation has defined interoperability as
the ability to communicate, execute programs, or transfer data among various functional units in a
manner that requires the user to have little or no knowledge of the unique characteristics of those
units.50 Anyone with even a casual understanding of the software and ICT industry will recognise
that there is already a great deal of interoperability among competing products in this sector
consider just how many devices, software products and services work together today on any
personal computer.
Standards certainly can help promote data communication and use between competing software
products, ICT devices and services, but so can other mechanisms widely used in the sector. As described already, industry consortia and other private-sector bodies regularly develop widely used
specifications that are not formal standards. Groups of companies sometimes enter into patent
pools, patent commons or other arrangements to cross-license interoperability technologies to each
other. Individual private-sector companies regularly engage in their own efforts to design their
software to be more interoperable, entering into technology licensing arrangements with other
companies directly where needed. Some entities simply give away bits of their technology for
interoperability purposes, either for altruistic reasons or to make their products or other offerings
more widely used and more profitable.
Ultimately, interoperability itself is a software design feature that is implemented in different ways
and to different degrees in different products again, driven by market demand. One user, for
example, may be happy with his Apple iPod even though some music is tied to that particular device;
another may want to pay more (or less) to buy another music player that allows more transferability
of music among devices and services.
Open source is not synonymous with open standards or interoperability. Likewise, there is no
inherent connection between any particular type of software or business model, and being
standards-compliant or interoperable. Whether software is paid or free, distributed under a
commercial or open-source business model, distributed in object-code form subject to licensing
50

ISO/IEC 2382-01, Information Technology Vocabulary, Fundamental Terms (2003), http://jtc1sc36.org/doc/36N0646.pdf.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 31

restrictions, distributed in source-code form subject to a licence insisting that it remain free, or
offered as a service (in fact offered through an internet-based distribution service) all can be
compliant with a standard. All can be, and typically are, interoperable with other software, devices
and services.
The European Commissions DGIT e-Government unit IDABC has helpfully recognised this distinction
(see box), but unfortunately continues to tout the open-source business model and open-sourcestyle open standards as somehow preferable to others. While the open-source sector of the
business is a healthy and thriving one in Europe, there are
numerous other SME and large software companies in Europe
Open Source Software is a concept
that rely on business models other than open source
distinct from the use of Open
software. Any initiatives or rules that prolong unnecessary
Standards.
antagonism and attempt to mandate technology winners
among the players in this competitive market are unfortunate,
Source: IDABC, Draft document as basis for the
particularly in the context of standards, which by definition
European Interoperability Framework (EIF) 2.0 (15
Jul. 2008),
should be technology neutral. The promotion of open-source
http://ec.europa.eu/idabc/servlets/Doc?id=31597
software at the expense of commercial software in the EIF 2.0
draft is in large part misleading and unhelpful.
More confusion arises between open source software and the concept of open standards itself.
Again, standards are standards, and a number of similar definitions at the formal standards bodies
already exist that reflect the elements of standards that make them open an open and transparent
process for adoption of standards; availability of the use of those standards by all; and fair,
reasonable and non-discriminatory (FRAND) terms for use of the standards.51 It is not constructive
for such efforts as the draft EIF 1.0 and 2.0 frameworks try to redefine open standards to include
different or additional elements, particularly a requirement to make the technologies included in the
standard royalty-free.
As CompTIA told the Commission four years ago, Such a definition appears to favour an open
source business model and thereby automatically excludes other equally valid business models ...
Defining open standard through categorical preferences for or references to particular business or
licensing models would favour or eliminate certain suppliers or products and thus violate the
fundamental [procurement] principles of non-discrimination and equal treatment.52 The newly
minted definition of open standard in the draft EIF 2.0 thus is also best left out of the proposal.
Respect for intellectual property helps to produce better standards. As described more fully below,
intellectual property protection promotes innovation, particularly in the software industry. IP also
plays a role in standards, given that many of the standards relevant to the software and broader ICT
industry incorporate technologies developed in the private sector and protected by intellectual
property rights. Formal standards bodies almost universally welcome such privately developed
technologies to be contributed to standards, so long as the developers agree to license their IP rights
to all comers under fair, reasonable and non-discriminatory (FRAND) terms, including licence fees.
Respect for IP rights and reasonable market-based licensing in the standards area not only maintains
the IP systems economic incentives for technological development, it encourages technology
developers to contribute newer, more advanced and more popular technologies to the standards
51

See, for example, ITU, Definition of Open Standards (11 Nov. 2005), http://www.itu.int/ITU-T/othergroups/ipradhoc/openstandards.html.

52

CompTIA, White Paper: European Interoperability Framework, ICT Industry Recommendations, pp. 22, 24 (18 Feb. 2004),
http://www.comptia.org/issues/docs/interopwhitepaper0204.pdf.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 32

process, secure in the knowledge that they will get a fair return for doing so. This is why such wellknown standards as MPEG and GSM and many other standards relevant to the software industry
include IP-protected technologies, and why standards organisations insist that participating IP
owners are paid on FRAND royalty and other reasonable terms. The draft IDABC EIF 2.0s outline 53
insistence that any standards used must be royalty or IP free, or subject to restrictive terms allowing
no constraints on re-use of the IP, are thus unrealistic and counterproductivenot least because this
would substantially limit the number of existing useful standards that would meet this novel
definition of open.54 As CompTIA pointed out to the European Commission in its EIF2.0
submission, such a policy would denigrate the intellectual property rights of European patent
holders, remove the incentives for future innovation in the sector across the EU, and distort the
standardisation process.55
Standards and other interoperability initiatives function best, particularly in lead market and
other public procurement procedures, when they are market-led and give users choice rather than
mandating specific technologies. As with
everything else in the ICT industry, the dynamic
EIF v1.0 has a strong focus on the proliferation of
open standards. This is quite understandable given
European software sector benefits when the
open standards legislation and from a long term
development, specification and use of standards,
perspective. However, this focus ignores the fact that
including the intellectual property underlying
existing
standards may represent an operational
standards, remains market driven. The market
legacy and migrating to open standards may require
chooses what specifications and functions it
significant investments and time without delivering
wants, and the private sector (regardless of
new value. Besides EIF v1.0 does not mention the
business model) supplies competing, leading
world-wide best-practice to support multiple
edge technologies to meet the markets demand.
standards simultaneously in order to prevent vendor
lock-in and sustain innovation.
A healthy view of standards thus fosters co....
operation among relevant industry players and
Gartner has two main reservations regarding the
promotes standards that customers want,
policy stated in EIF v1.0:
including standards the market has said it needs
for purposes of interoperability. It maintains
technology neutrality and recognises the value of
healthy competition among all software,
hardware and services vendors, whether
technologies are standardised or (as is often the
case) not. This maximises choice and ensures the
best value for money for customers.




Prescribing detailed technical standards;


Dogmatic focus on open standards.

Source: Gartner Group, Preparation for Update European


Interoperability Framework 2.0 - Final Report, pp. 23, 28 (4 Jun. 2007),
http://ec.europa.eu/idabc/servlets/Doc?id=31505

53

http://ec.europa.eu/idabc/en/document/7733, http://ec.europa.eu/idabc/servlets/Doc?id=31597, and


http://ec.europa.eu/idabc/en/document/7704.
54

This proposed restriction of the use of IP in standards would seem to be in conflict with DG Enterprises and the
Commissions own position. See, e.g, Communication from the Commission to the Council, the European Parliament and
the European Economic and Social Committee, Towards an increased contribution from standardisation to innovation in
Europe, COM(2008) 133 final, p. 10 (11 Mar. 2008),
http://ec.europa.eu/enterprise/standards_policy/standardisation_innovation/doc/com_2008_133_en.pdf:
The Commission supports the view that standards should be open for access and implementation by everyone, with
IPRs relevant to the standard being taken into consideration in the standardisation process, aiming to establish a
balance between the interests of the users of standards and the rights of owners of intellectual property. In the
Guidelines for co-operation between the EC and EFTA and the ESOs, the ESOs have committed themselves to ensure
that standards, including any IPRs they might contain, can be used by market operators on fair, reasonable and nondiscriminatory conditions (FRAND).
55

CompTIA, European Interoperability Framework 2.0 (22 Sept. 2008), http://www.comptia.org/issues/europe.aspx.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 33

CompTIA would also encourage direct co-operation between vendors and government ICT
departments in developing flexible, interoperable cross-border and cross-sectoral frameworks of the
sort IDABC envisions for e-Government in Europe. If they are to be beneficial for users and
customers, these important frameworks need to be practical, realistic and very much market based
to fulfill such important functions, particularly given that technology development is so dynamic.
Practical and realistic solutions that can evolve over time, widespread participation by all players in
the software sector, and healthy competition for business by all these participants, should be the
goal.
Some have suggested that one monolithic standard is preferable to the availability of competing
standards in the ICT field. As the Gartner study for the European Commission recognised, however,
it is a world-wide best practice to support multiple standards simultaneously (see box). Choice
and competition also benefit when customers can choose among non-standardised technologies that
serve a function substantially equivalent to a standardised technology, as European procurement
rules allow. The right criteria for procurement should remain fitness for purpose, non-discrimination
and value for money.
Any over-prescriptive use of formal standards, and in particular any attempt to mandate particular
business models and implementations in public procurement, would have precisely the opposite
effect. Lack of choice hurts competition, the range of products and services available, technical
advancement, efficiency, and value for money for customers. Efforts to restrict software choice in
any of these ways should be firmly resisted.
Public Policy Recommendations for Standards and Interoperability:

Maintain Europes voluntary, market-driven approach to the


development, acceptance and use of standards.
Recognise that international as well as European standards can serve
European software industry interests.
Avoid dogmatic focus on standards. Recognise the importance of
formal standards, other industry specifications and initiatives, and
non-standardised technologies in promoting interoperability.
Encourage the world-wide best practice to support multiple
standards simultaneously, and anticipate the reality of continuous
technology evolution.
Avoid redefining open standards.
Avoid procurement mandates for detailed implementations of
standards, or preferences for particular software business models
(open source, commercial or services).
Encourage intellectual property creators to join standards efforts and
permit them to secure fair, reasonable and non-discriminatory
royalties and terms for the use of their technology investments that
are contributed to a standard.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 34

Part IV: Intellectual Property Protection


Intellectual property protection is a key element to fostering human capacity. The possibility of
having risk rewarded is a great incentive to foster the necessary risk taking that inspires creativity.
That is why intellectual property is a key focus of CompTIAs vision of a European software industry.
The importance of a robust, efficient intellectual property (IP) system to the success of the
software industry in Europe cannot be emphasised enough. The intangible nature of the software
industrys valuable inventions and works and the non-rivalry of consumption among its users mean
that the industrys success relies almost exclusively on the copyrights, patents, trade secrets and
other IP protections underlying its inventions and works.
Because the IP system promotes innovation and facilitates its transfer under terms set by software
creators and inventors, virtually every enterprise in the software industry regardless of its business
model proprietary, open source, or services relies
on IP for its success. Europes IP system for
protecting software is in many ways world class, and
Since Siemens operates globally, we should
has positive knock-on effects in the market. The IP
make sure that we have patents around the
system must remain robust, market-driven,
world. But we also have to ensure that the
affordable and effective, in order to ensure that
benefits are in proportion to the costs. The only
European software industry participants remain as
way to do this is to employ application
competitive as possible both within the EU and
strategies based on years of experience and a
internationally.
good sense of what's at stake.... We have two
options here, first, to pursue a proactive patent
The IP system also provides a wide array of consumer
strategy that focuses primarily on royalties and
access to external technologies.... The second
benefits. These include new products and services,
option is to pursue a strategy of protecting our
more innovative and user friendly advancements,
products against imitation.
and faster and cheaper ways of communicating,
shopping, and industry applications. Familiar tools
Source: Interview with Wilhelm von Lieres, Siemens AG,
like packaged software for the PC, and exciting new
http://w1.siemens.com/innovation/en/publikationen/publication
s_pof/pof_spring_2002/patent_site.htm.
possibilities like cloud computing, all become a
reality for consumers through the incentives and
protections of the IP system.
Intellectual property protection promotes European software innovation. Once the esoteric
province of experts, the IP system in its various forms is now of vital interest to most types of
business, but it is often misunderstood. The IP system is many things, including a system for the
trading of rights an intellectual currency of sorts which, like the stock exchanges or foreign
currency markets, establishes a market price and payment mechanism for something valuable but
intangible. In the case of IP, this valuable intangible is a persons or a companys creativity or
inventiveness. IPs intellectual currency is not something that is inherently bad or divisive or
beneficial only to a select few, as it is sometimes painted. It serves many important functions in the
European and international economies.
By giving creators and inventors rights to control whether and on what terms their innovations can
be used, sold or exchanged, the IP system provides those creators and inventors a negotiable
currency in the intangible assets constituting their works and innovations. The value of this
intellectual currency in these intangible assets is established by the market. It is reflected in the
sales and licensing revenues that users prove willing to pay for products, services and other uses of

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 35

those technologies. It is also reflected in the level of venture capital that investors are willing to put
into the enterprise, and the market value of the enterprise.
IP protection thus has two important effects for companies engaged in research and development,
particularly the software industry. The first is that it helps to attract initial investment, such as
venture capital, to technology that is protected by these legal rights, and it allows innovators and
content developers to earn a living to obtain a return on their time and investment. IP protection
thus provides individuals and commercial enterprises a financial incentive to innovate and be
creative in the first place.
The second is that IP creates an ongoing source of investment that is driven by what consumers
want and consumers show what they want by
buying IP-based products and services. If consumers
like the products and services, the natural result is
sales and licensing revenues and
profitability for the inventors and
creators. Further investment from
the market follows, fuelling further
spending on research and creativity,
The virtuous circle
and more new inventions and creative
of IP and innovation
works. This is how IP promotes
innovation in every sort of
technology-based industry,
particularly the software sector.
There are additional benefits for innovation that
patents in particular provide. Because patented
inventions must be disclosed publicly through
publication of the patent application, societys overall technology knowledge base grows.
Innovations covered by patents become available to researchers and the public, who can learn much
about new technologies. There are more than 55 million patent documents available from the
European Patent Office in every field of technology, which can be accessed at no charge over the
internet. This increase in the available technological information also improves market efficiency,
fostering licensing, patent pooling and technology transfers between companies in the relevant
sector. Through this process companies and individuals discover inventions in each others products
that they may wish to use. In virtually every sector of the software industry, for example, the trend
of increased licensing and technology sharing has grown as patenting has grown in importance in
recent years.
All of the software industrys business modelscommercial, open source and servicesrely on the
IP system. Whether one looks at the commercial software business, where the business model
relies on sales of physical copies of products or licences, or the open source software sector, where
the business model relies on sales of services, maintenance, hardware or other sources of income,
virtually every successful company in the sector relies on intellectual property to protect their
innovations and their business.
Copyright and trade secret have been the traditional forms of IP protection for software. Copyright
protects against unauthorised copying of source code, object code (sometimes called machine or
compiled code), the underlying design materials and other expression of software. Commercial
software companies typically distribute their works in object code form, and rely on copyright to
prevent unauthorised copying and distribution of their works (e.g. commercial counterfeiting as well

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 36

as unauthorised user copying, such as by companies), which would undermine legitimate sales and
licensing revenues.
Open-source software companies distribute their works in human-readable source code form, and
rely on copyright to ensure that their innovations are freely distributed and not expropriated and
made subject to more restrictive terms by their competitors.
Trade secret protection also has long been an important way for many companies in the ICT sector
to protect their innovations, particularly in the commercial software sector. For commercial
companies that do not rely on patent protection, trade secrets allow the inventions underlying the
object code or other expression of software to remain hidden from their competitors.
Beginning with IBM in the 1970s and 1980s, a number of software companies now also rely on
patent protection for software-related inventions, which in Europe (and in other regions) must meet
government-set quality standards of novelty, technical contribution and industrial application.
Patents do not protect the code or literal expression of software, but rather provide
complementary protection for the underlying technological inventions that gives their innovators
protection regardless of how an unauthorised use may be implemented.
Patents are not available for software as such in Europe (as in some other regions, such as South
Africa), but inventions with technical effect that are implemented by software (sometimes called
computer-implemented inventions or CIIs) are treated no differently from inventions
implemented by hardware, mechanical devices, chemical or pharmaceutical formula, or any other
technology. National patent offices and the
European Patent Office have granted patents on
computer-implemented inventions since 1973.
(See figure 5.) The reasons that these softwarebased inventions are protected by patents are the
same as for any other technology in any other
industry: patents provide a way of monetising and
funding ongoing innovation, and a way of
disclosing the underlying inventions so they
contribute to societys general technological
knowledge.
Of course not everyone in the software sector uses
every aspect of the IP system, nor does anything
European applicants constitute one-third of all
prevent a software or other creator or inventor
those seeking patent protection for computerfrom giving away inventions or works for free. That
implemented inventions at the European Patent
remains each developers and enterprises choice
Office.
for its own innovations. (A problem sometimes
Source: Gauss Project, http://gauss.ffii.org/GaussFrontPage;
arises, of course, from the natural temptation to
European Patent Office statistics
try to use someone elses creations and inventions
without permission or agreed payment terms
FIGURE 5
which would subvert the entire economic
mechanism of the IP system.) The IP system
nonetheless remains a powerful engine of marketbased incentives and rewards for innovation in virtually every area of technological development
software included.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 37

Europes robust copyright protection system for software is world class. Copyright protection for
software in fact did not become well settled in Europe until the late 1980s and early 1990s when
academics and others were still making the arguments of the 1970s that the patent system, an old
and experienced instrument for the protection of technological creations, would seem to be the
most adequate form of legal coverage for software creations, or that some sort of sui generis
protection was needed.56
The EUs Copyright Green Paper in the late 1980s57 recognised that, while patents do play a role with
respect to inventions involving computer programs, it is particularly important to ensure that
appropriate [copyright] protection is available to computer programs and software generally, which
will contribute to an environment favourable to investment and innovation to Community firms.
The result was the 1991 Council Directive on the Legal Protection of Computer Programs58, a short
and clear statement of the policies, rights and exceptions for protecting computer programs by
copyright throughout the EU. Because the Directive was not overly detailed or tied to the state of
the technology or the business models of the time, it has stood the test of time, been emulated in
legislation in several third countries, and provided a sound basis for an explosion of European
software development since 1991.
Efficient, accessible patent protection remains vital as the software industry evolves. As
development cycles have gotten longer in the software industry, patents have become used even
more widely to protect innovative software companies against unfair expropriation of their
underlying technical inventions by competitors. This patent protection for computer-implemented
inventions is also important well outside the software industry itself. A large number of patents
granted on computer-implemented inventions are assigned to companies to other industries that
use software to enhance their products and services, such as the automotive industry. Maintaining
Europes robust IP protections relevant to software is vital, and much include resisting calls to revisit
well-settled rules relating to computer-implemented inventions.
Patents for software-implemented inventions are important to SMEs. Contrary to popular belief,
protection for software-implemented inventions is important to small- and medium-sized companies
as well as large enterprises. One study has shown that 20% of the patents on softwareimplemented inventions granted in Europe since 1998 have been awarded to SMEs.59 This makes
intuitive sense, as small companies are sometimes more at risk of a larger enterprise taking their
inventions without permission or payment than the other way round.
Major barriers for the European software industry, particularly small and medium enterprises, are
not the patent system itself, but the high cost of access to the patent system (two to three times
more expensive in Europe than in the US or Japan, due in large part to redundant translation costs),
and the expensive and sometimes unpredictable patent litigation system in Europe (with no
common appeals court, it can require proceedings in multiple member states, and can produce
inconsistent decisions even with respect to the same patent).

56

See, e.g., D. Borges Barbosa, Software and Copyright: a Marriage of Inconvenience (1986),
http://denisbarbosa.addr.com/34.rtf.
57

European Commission, Green Paper on Copyright and Challenge of TechnologyCopyright Issues Requiring Immediate
Action, COM/88/172 (1988), http://ec.europa.eu/internal_market/copyright/docs/docs/com-88-172_en.pdf.

58

91/250/EEC, O.J. L 122, at 42 (17 May 1991), consolidated version reprinted at


http://ec.europa.eu/internal_market/copyright/docs/docs/1991-250_en.pdf.
59

http://www.bsa.org/france/press/newsreleases/Une-Etude-Montre-La-Importance-De-La-Brevetabilite-Des-InventionsMises-En-Euvre-Par-Ordinateur-Pour-Les-Petites-Et-Moyennes-Entreprises-Europeennes.cfm.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 38

To make access and use of the European patent system more affordable and efficient, unnecessary
patent translation costs for patents need to be eliminated. A common court of appeal and expert
patent trial courts could integrate todays disparate patent litigation system. A high-quality,
affordable Community patent would be helpful. Patent quality needs to be maintained in all events,
in part by extending the helpful practice of work sharing between European, Japanese and US
patent offices for such activities as prior-art searches. This could help avoid the same work being
repeated over and over, leaving patent examiners more time to make a careful determination
whether claimed inventions are patentable.
The IP systems preference for market-based licensing is correct. One of the major benefits of the IP
system for the European software industry is that it is founded on market-based licensing and other
trading of IP rights and products and services based on IP. It is up to the software developer,
whether an individual or enterprise, to determine whether and how the rights in its software are
used, licensed and sold.
Of course those who want to use the IP rights of another will often want to pay little or nothing for
that use, and those who have developed the software technology will have their own ideas of what
are suitable licensees, terms and prices. The siren call of compulsory licensing is sometimes heard as
a panacea for all kinds of competing expectations between IP owners and users. But years of
successful innovation and development of the European software industry has proved, as in virtually
every other segment of the economy, that market negotiation is the most efficient mechanism for
reconciling buyers and sellers different expectations, and determining appropriate licensees, prices
and other terms for IP rights.
In short, new compulsory licences, exceptions, non-market solutions or other weakening of IP
protections in Europe should be steadfastly avoided.
The availability of efficient, workable enforcement of IP is the necessary counterpart of the
underlying IP protections. IP rights that look good on paper but that cannot be enforced effectively
are, of course, useless. This is why the European software industry relies on civil and criminal
enforcement measures against counterfeiting and piracy in all of its many forms, from unauthorised
internal corporate copying of software, to high-quality counterfeit discs made in such places as
China, to unauthorised internet distribution. At the highest level, the political will of governments
must be robust to combat counterfeiting and piracy. The available procedures, remedies and
penalties need to be efficient, cost-effective and adequate to deter and prevent unauthorised use of
IP and IP-based products and services.
Further progress is still needed in Europe to optimise its IP enforcement system. Inefficiencies in the
patent litigation system have been discussed already. There are also anomalies in the copyright
enforcement system that, for example, can produce inadequate damages compensation, or can
even preclude rights owners from collecting evidence of internet infringements of their rights.60
Recent figures show that software piracy, the relative percentage of unauthorised software copies
60

See, e.g., Productores de Msica de Espaa (Promusicae) v Telefnica de Espaa SAU, Case C-275/06, O.J. C 64/9
(European Ct. of Justice, Grand Chamber, 29 Jan. 2008), http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:064:0009:0010:EN:PDF (European Directives do not require the
Member States to lay down, in a situation such as that in the main proceedings, an obligation to communicate personal
data in order to ensure effective protection of copyright in the context of civil proceedings.) This would seem to flatly
contradict the requirement of the WTO TRIPs Agreement that Member States shall ensure that [criminal and civil]
enforcement procedures are available under their law so as to permit effective action against any act of infringement of
intellectual property rights. Agreement on Trade Related Aspects of Intellectual Property Rights, Annex 1C, Marrakesh
Agreement Establishing the World Trade Organisation (15 Apr. 1994,) reprinted at
http://www.wto.org/english/docs_e/legal_e/27-trips_01_e.htm.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 39

put into use compared to legitimate sales or licences, was still 35% in the EU in 2007 down from
34% in 2006 but substantially higher than the North American rate of 21%. This is not a mere
curiosity, but reflects a loss of income that rightly belongs to software developers and that otherwise
could be put back into R&D, innovation, economic growth, jobs, training and other important
activities in this sector.
IP enforcement in Europe could be improved, among other things, through review of civil
compensation schemes to ensure that damages awards actually deter infringement and reflect the
economic value derived by infringers. Data privacy rules should ensure that IP owners can enforce
their legitimate rights. The EU needs a strong commitment internally and with third countries to
combat IP counterfeiting and piracy.
An effective IP system supports many other needs and activities of the software industry in Europe.
The IP system does not exist in a vacuum, but rather has an impact on many areas of the software
sector. The area of standards, described above, is an important example innovative software
companies and other IP owners actually have an incentive to contribute their IP-based technology
for use in standards, if the rights owners can be assured that their innovations are protected and
they can license those innovations on reasonable terms.
Similarly, a robust IP protection and enforcement system provides a return on investment that not
only allows software companies to engage in continuing research and development,61 but also
affects the viability of third party distributors and service companies to provide needed skills training
in the market.

Public Policy Recommendations for Intellectual Property Protection:

Maintain Europes robust copyright, patent, trade secret and other IP


protection relevant to software.
Encourage IP owners to protect or to share their IP in various ways
that enable them to build viable businesses and meet customer
needs.
Make access and use of the European patent system more affordable
and more efficient, particularly for SMEs.
Work to improve the efficiency and effectiveness of IP enforcement.

61

Indeed, Research and development (R&D) expenditure and patent filings are highly correlated. Countries with a high
level of R&D investment tend to have a high resident filings to R&D expenditure ratio (patent intensity). World
Intellectual Property Organisation, World Patent Report: A Statistical Review, p. 47 (2008),
http://www.wipo.int/export/sites/www/ipstats/en/statistics/patents/pdf/wipo_pub_931.pdf.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 40

Conclusions
The European software industry is a growing and economically significant sector that has proven
itself competitive both within the EU and internationally. Many other companies involved in
hardware, distribution, training, education, and services also depend on this software sector for
their livelihoods and for the success of their own products and services. The existing policy and legal
framework has largely worked in contributing to the success of the software sector in Europe.
The European software industry is at a cross-road, however. Issues of global competition, a shortage
of qualified labour, and a rapidly changing technological landscape are converging to test the
potential of Europes software industry. In this environment, there are increasing calls for
government intervention through mandates, de facto mandates, preferences, positive
discrimination, or government picking of technology winners and losers worrying warning signs
that would only serve to undermine the health and competitiveness of the software sector.
Government preferences, whether by direct mandate or indirect support are harmful. They are
harmful first because there already is a strong and vibrant industry in the EU, contributing every day
to EU employment, to EU innovative capacity, and to the general well-being of the European
economy. Policies that promote one technology over the other risk damaging the existing industry
and its many contributions to the European economy and competitiveness. Second, the preferences
are unnecessary. The software industry in Europe is already diverse and thriving. Open source
software is vibrant and competitive in Europe and world-wide. Former pure commercial platform
providers are building on multiple and often hybrid software platforms. The entire industry depends
on intellectual property protection. And software delivery models are merging, with multiple
delivery methods widely available.
CompTIA believes European industry can continue to thrive and compete, both within the EU and
globally, without a managed approach to technology. Rather, CompTIA believes what is necessary is
to provide Europes industry with the critical tools of innovation. The way forward is first and
primarily to focus on the intellectual assets in this knowledge based industry people.
Fundamentally, the ICT-embedded economy is built on the innovative capacity of its individuals.
CompTIA believes Europe already has the talent and creativity to compete and lead globally.
Without the incentive to develop intellectual talent, the industry falters. It is here that CompTIA
believes the Commission needs to focus energy. In all, we recommend three interrelated public
policy themes to support Europes innovative capacity.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 41

First, we encourage the Commission to continue its work to support the technical capacity of
Europes talent. E-Skills and human capacity building must remain a critical area of focus for the
foreseeable future.
Second, standards can act as a platform for further innovation and greater customer choice. In a
situation where consumer demand is driving business to find the most efficient and effective means
to reach interoperability, a market-driven choice among competing standards regardless of how
they are developed can be an important incentive to innovate and to promote competition that
benefits all consumers.
Finally, an essential element for fostering and promoting European talent is intellectual property
protection, including maintaining Europes robust copyright protections for software and patent
protections for computer-implemented inventions and technologies. Intellectual property
protections give innovative European companies and individuals incentives to take the risk to
develop and improve software-based products and services, to be appropriately rewarded, and to
able to engage in ongoing research and development.
The decisions made now will impact the future competitiveness of the industry for years to come. In
the rush to promote the latest technology trend and secure Europes technology future, it is
important to remember there already is a healthy and growing software and ICT industry in Europe.
That industry all of it: closed source and open source competitors, services, and all of the other
players that depend on this sector succeeds today because of strong intellectual property
protection, because of competitive and varied approaches to standards development, and because
of the high skill levels of our industry. The way forward is not through technology protectionism,
but through competition.

__________________________

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 42

About CompTIA
The Computing Technology Industry Association (CompTIA) is the voice of the worlds information
and communication technology (ICT) industry. Its members are the companies at the forefront of
innovation; and the professionals responsible for maximising the benefits organisations receive from
their investments in technology. CompTIA is dedicated to advancing industry growth through its
educational programmes, market research, networking events, professional certifications, and public
policy advocacy.
Companies represented at the CompTIA Board 2008-2009 include, among others: Siemens IT
Solutions and Services, Inc.; New Horizons Computer Learning Centers Inc.; McAfee Inc.;
Cisco Systems, Inc.; Autotask Corporation; NIIT Ltd.; and Ingram Micro Inc.
For more information, please visit http://www.comptia.org and for European Public Policy
http://www.comptia.org/issues/europe.aspx.

CompTIA, White Paper Oct. 2008, Promoting the European Software Industry page 43

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