Wallstreet Journal reports prominently about conflicts of interest of Lehne et al

5 July 2005 — Wallstreet Journal Europe reports on page 1 of the printed edition about conflicts of interest of leading christian-democrat members of parliament who have been pushing the European People's Party toward a line which would in effect have imposed unlimited patentablity of all practical problem solutions on Europe.

Politics, Business Mix Freely In Europe Parliament
Patent-Law Reversal Shows How Members' Outside Jobs May Aid Corporate Interest
By MARY JACOBY and GLENN R. SIMPSON Staff Reporters of THE WALL STREET JOURNAL
July 5, 2005; Page A10 BRUSSELS

In his job with a leading German patent-law firm, Klaus-Heiner Lehne advises corporate clients on European Union policy. In his second job, as a member of the European Parliament, Mr. Lehne also shapes policy: In June, he helped rewrite a patent proposal more to the liking of big software makers. Two other European legislators from Germany who have favored stronger software-patent protections also have industry ties. One works with another top patent-law firm, and another sits on the board of U.S. software giant Veritas Software Corp. and holds options to buy 85,416 shares of Veritas stock, according to U.S. securities filings. All three illustrate how weak ethics and disclosure laws in Brussels, the seat of EU institutions, allow legislators to influence the outcome of debates without their connections receiving attention from the public or their colleagues. In this case, stronger patent protections that earlier had been rejected by Parliament were revived after a campaign led by Microsoft Corp., SAP AG, Siemens AG, Nokia Corp. and other companies with portfolios of software patents. In May, legislators with outside jobs in the financial industry helped push through late amendments to European banking regulations that were favored — and in some cases written — by the industry. Mr. Lehne and his employer, the law firm Taylor Wessing, said he doesn't work directly on patents and that they are careful to avoid conflicts of interest. Mr. Lehne said he wasn't required to advise fellow members of Parliament about a potential conflict during committee debate on the software legislation, because EU law requires notification only if the member has a direct financial interest at stake. "I would consider that inappropriate," said Ulrich Mueller, who heads a new public-interest group in Cologne, Germany, called LobbyControl. He decries a lack of "public scrutiny of these very close relationships between parliamentarians and special interests." Proprietary-software companies' hopes for codifying a system of patent rights in Europe appeared to dim this year in the face of strong opposition from the "open source" movement, which aims to preserve public access to certain programming information to foster collaboration among programmers. But they were revived in a June 20 vote in Parliament's Legal Affairs committee after a heavy lobbying and public-relations campaign. If approved, the measure would allow companies to continue to win legal recognition of basic software processes and techniques, much as in the U.S. While most big firms say this will protect their huge investments in innovation, some smaller technology firms contend it stifles innovation if wealthy corporations abuse the process by patenting basic methods in the public domain. A few big U.S. companies, including International Business Machines Corp., Sun Microsystems Inc. and Red Hat Inc., also oppose strengthening patent laws in Europe. These companies offer open-source software at nominal cost to help businesses run their operations, and make money by selling consulting services and upgrades rather than collecting royalties from software patents. Patent-law opponents also mounted an energetic lobbying campaign. The full European Parliament is slated to vote on the directive tomorrow. If opponents can't halt the legislation, it then would go to the EU's council of member countries for approval. Mr. Lehne emerged as leader of the drive for language sought by big tech firms that would establish their ability to obtain certain types of software patents. In addition, he offered more than a dozen pro-patent amendments of his own, many of which were approved by the panel. Unlike members of the U.S. Congress, European Parliament members are permitted to hold full-time outside jobs. They must note those jobs on disclosure forms, but have no obligation to divulge whether their outside employers have business ties to firms that lobby Parliament. In an interview, Mr. Lehne said there was no conflict between his job with Taylor Wessing as head of its Regulatory Affairs practice and his job as a parliamentarian. "I am a lawyer, not a lobbyist," Mr. Lehne said. He added that any criticism of his outside interests "is coming from people who have lost the argument" on patents. He also said he doesn't work on patent matters for the firm's clients. Mr. Lehne and Peter Willis, who heads Taylor Wessing's Brussels office, said companies lobbying for the patent law hadn't hired the firm in that capacity, but that they didn't know if those firms use Taylor Wessing for other work. However, Taylor Wessing looks for business among companies that support the patent law: The firm says it offers a 10% discount to members of a German software-industry group called Bundesverband Digitale Wirtschaft, which supports increased patent protections. "I'm not sure we're actively lobbying on behalf of any particular interest," said Mr. Willis. Microsoft, also a major contributor to pro-patent industry groups such as the Business Software Alliance, wouldn't say whether it had hired Taylor Wessing in any capacity since the patent law was proposed in 2002, according to a Brussels spokesman. An emailed statement from the spokesman said only that Microsoft hadn't hired the law firm "on any matters related" to the patent directive. A spokesman for SAP, which makes enterprise-management software for big business operations, said when asked if the company has had any kind of financial relationship or dealings with Taylor Wessing: "SAP has never worked with Taylor Wessing, neither on patent legislation nor other legal issues." A Siemens spokesman didn't respond to a request for comment. Mr. Lehne isn't the only EU legislator in the patent debate with outside interests. Kurt Lauk, the Veritas board member, hosted a hearing on the issue that featured a speaker from Microsoft. People who attended the hearing said the original list of speakers was weighted heavily toward patent proponents until owners of small businesses complained. Mr. Lauk said he believes he doesn't have a conflict of interest, because his memberships on the boards of Veritas and other companies preceded his election to Parliament. But he said he plans to abstain from the parliamentary vote this week "to avoid the appearance of a conflict." Angelika Niebler is another parliamentarian who backed big tech firms' positions on the patent law, and in March of last year, she strongly endorsed another piece of legislation the firms sought to toughen intellectual-property laws. Ms. Niebler also is a consultant in Munich to law firm Bird & Bird, which specializes in patent and intellectual-property law. Ms. Niebler didn't respond to a telephone call and an email seeking comment. A Bird & Bird spokesman, contacted Monday, had no response. - —Cassell Bryan-Low contributed to this article.

Write to Mary Jacoby at moc.jsw|ybocaj.yram#moc.jsw|ybocaj.yram and Glenn R. Simpson at moc.jsw|nospmis.nnelg#moc.jsw|nospmis.nnelg

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