The European Parliament has thrown out a controversial Bill to harmonise patents on software, dealing a blow to big technology companies that had sought to protect themselves.
The assembly voted 648 to 14 on Wednesday to reject the Bill backed by companies such as Microsoft, Nokia and Siemens and by European Union governments, which saw it as a potential boost for technology investment.
The Bill would have applied to thousands of everyday gadgets such as washing machines, insulin pumps and ABS car brakes that use software to drive technology.
The move was an unprecedented muscle-flexing by the EU legislature, which has never before rejected a common position of the 25 member states.
"This is one more milestone in the history of a parliament that is assuming its duties and carrying them out," Parliament President Josep Borrell told a news conference.
The executive European Commission said it would respect the decision and not put forward fresh legislation in this area, but it warned the vote would cause fragmentation among 25 competing patenting systems in Europe and create uncertainty for business.
As they voted to reject the Bill, Green Party members wore yellow T-shirts with "No software patents" written on the front and "Power to the Parliament" on the back.
They and free-software campaigners feared the Directive on the Patentability of Computer Impemented Inventions would close off innovation by allowing big firms to patent software that should be publicly available or could be accessed under the less onerous copyright system.
Patents are costly for small firms as they have to be translated into many languages and upheld in national courts.
"It's a third-class burial service with no flowers," Greens deputy Eva Lichtenberger told reporters just before the vote.
The Bill polarised the technology industry. Supporters of open-source or free software, including many small companies, had welcomed efforts by left-wing EU lawmakers to limit the types of inventions that can be patented.
Software maker Sun Microsystems said the outcome was a clear victory for open source. Big firms argued that the changes sought by EU lawmakers would have left their products open to copycat versions from China and elsewhere.
Philips Electronics welcomed the "wise" decision of the Parliament, adding that the current system would mean that all inventions, including those implemented by software, remain patentable in Europe.
While the executive European Commission sounded gloomy about the consequences, both sides drew comfort from the outcome.
"Although we would have welcomed a harmonisation of laws throughout Europe, at least the intellectual property protection that innovators had yesterday will remain the same tomorrow, and this is critical for European competitiveness," said Francisco Mingorance, public policy director of the Business Software Alliance, a grouping of the main big firms.
Oliver Drewes, a spokesman for EU Internal Market Commissioner Charlie McCreevy, told a news conference:
"Patents will continue to be issued by national patent offices and (the) European patent office under existing law.
"It means fragmentation. It means 25 different systems competing... and less clarity for operators and for member states."
For the smaller IT firms, Jonathan Zuck, president of the Association for Competitive Technology, said: "Today, we are gratified that the process was not successfully hijacked by those who want to see an end to patenting in our field".
The association will now focus on how to streamline the current system to make it more affordable, predictable and accessible to smaller firms, Mr Zuck said.
Felipe Wersen of the Foundation for a Free Information Infrastructure, which represents supporters of free software and small software developers, said reverting to the current system was better than having to accept a bad Bill.
"The current system is 50 times better than it would have been with the common position. Having no directive leaves the door open for more statistics to be gathered and realise what a big disaster the US system is," Mr Wersen said.
The assembly was too divided to muster the absolute majority needed to amend the Bill and lawmakers decided on Tuesday evening the safest course of action was to kill it.