Dynamic competition in software development. How copyrights and patents, and their overlapping, impact on derivative innovation.

The debate on which intellectual property (IP) paradigm would be best suited to protect software innovation is probably among the longest in the history of IP law. It began in the late sixties in the United States, spurred by the vertical disintegration process of IBM PCs and seemed to reach its completion in 1991, when Europe followed the North American blueprint by adopting a Directive promoting copyright law as a tool of protection. It is well known, however, that this was not the end of the story. Later, both North American Courts and the Technical Boards of the European Patent Office turned to patents as a valuable and more incisive instrument of protection. Since then the two forms of protection actually overlap in the absence of legal regulation of their coexistence both in the United States and in Europe. In the first part of this paper, the authors explore the legal evolution of the software regime, focusing on the reasons that have led legislators to adopt copyright as a tool of protection instead of patents, as well as those that afterwards led courts and the Technical Boards to ‘rediscover’ patent protection. The paper then examines the impact of the two paradigms of protection, and their overlap, on software innovation (which typically is incremental) and related competitive dynamics. Finally, the authors tentatively suggest normative solutions aimed at achieving an overall more innovation- and competitionenhancing regime of software protection.