Rapporteur Michel ROCARD (PES, FR) said three things were at stake as this long parliamentary battle came to an end: free movement of ideas, respect for competition and refusal of monopolies, and protection of individuals and small businesses against domination by multinational corporations.

No-one, said Mr Rocard, wants patents on software itself. Silicon Valley had managed without patents for twenty years - copyright protection had been enough. "What is immaterial is not technical and should not be patentable," he said. A sensor that sends data to software or sends a signal from software should be patentable, but not the software itself, he said. The problem was when software was part of a new invention where the only difference is a change in the software: "Things have gone off the rails, when the European Patent Office calls that technical. We now have patents granted on teaching methods, sales methods and surgical guides."

He said such "abuses" should lead us to return to principles and the law. Big corporations were afraid of losing their protection, but the costs of patents were rising. "Freedom is better," said Mr Rocard, saying that those who opposed his position showed the weakness of their arguments by resorting to insults about returning to the middle ages. It was time to reconcile law with consistency and clarity. He called on corporations to adjust to this new situation.

Political group speakers

Piia-Noora KAUPPI (FI) for the EPP-ED group criticised the fact that the Council common position did not include any of the European Parliament's first reading amendments. She called for support for the EPP-ED "moderate" amendments which seek to tighten up the directive. Mrs Kauppi also criticised the European Patent Office. The directive, she said, should allow the development of "open-source" software and enable businesses to flourish and patents should be available quickly. Mrs Kauppi stated that it was "likely" that conciliation would be needed and warned that the Parliament could still reject the whole directive as "no directive would be better than a bad directive".

Maria BERGER (AT) for the Socialists thanked Michel Rocard and Arlene McCarthy (PES, UK) as the two rapporteurs on the directive. The Council had been inflexible in adopting its common position. Mrs Berger questioned whether this was the right way to legislate. The EU needed a properly functioning European patent system easily accessible by both large and small companies. Mrs Berger stated that she backed the proposed amendments from Mr Rocard.

Toine MANDERS (NL) for the ALDE group stated that the European Patent Office, based in Munich, has recently granted "pointless patents" and there was a consensus that these should not have been granted. Article 52 of the Munich Convention, he said, was legally clear and he questioned why this was being disputed. There should be, he said, democratic control of the European Patent Office and this directive was not the correct method to legislate.

Evelin LICHTENBERGER (AT), on behalf of the Greens/EFA group, said that while everyone agreed on the need for innovation in the Information Technology field, particularly to protect SMEs and enable them to develop, the dispute over amendments risked leaving the backdoor open to the patenting of software. If the common position were to be approved, the gates would flood open for the whole patent system as "ideas would become market objects", leaving SMEs with no chance to keep up. It was simply too costly for them to defend patents. She said it was important not to bow to pressure from an industry that wants the full patentability of software and called for support for the 21 amendments favouring a free market with open competition: "We need to develop European innovation".

For the GUE/NGL group, Ilda FIGUEIREDO (PT) said the stakes were particularly high in this debate. The Council's common position was unacceptable, as it ignored completely Parliament's amendments. "You cannot patent ideas and knowledge," she said, "We should reject the Council's common position. That is the only way to stop moving down this dangerous path." There would be serious repercussions if the right to write software was concentrated in a few large corporations. Small companies, she said, would need to hire teams of lawyers to check they were not contravening any patents, but they would not have the deep pockets of multinationals.

Thomas WISE (UK) spoke for the Independence and Democracy Group. He said computer entrepreneurs were independent spirits and they rejected restricted monoliths like the EU and this directive. But, he said, Mr Rocard's amendments were not trying to block the directive, they accepted the basic principle of harmonisation. "We will vote to reject the directive completely. I have always said that if the EU is the answer it must have been a silly question. Now that is patently obvious!"

Brian CROWLEY (IE) for the UEN group paid a personal tribute to the efforts of Mr Rocard, but he said that the debate on this issue seems often to be totally unconnected to the real world. "Innovation is the key to our economies. Ideas need protection. A free-for-all would mean no protection, with US and Japanese companies able to patent European ideas. Patents are not a sword, they are a shield." He said 62 000 jobs in Ireland were based in small computer innovation businesses, and all these SMEs favoured the common position.

The non-attached member Bruno GOLLNISCH (FR) said software patents would be a death sentence for SMEs and independent software developers. The EPO had contradicted the spirit and the letter of the Patents Convention, granting 30 000 patents which were trivial and often ill-founded. Computers used language - and that should not be patented, particular combinations of words could be protected by copyright. The Commission and Council wanted to kill innovation, he said.

British and Irish speakers

Sharon BOWLES (ALDE, UK) stated that the need for this directive was based on improved territorial cohesion for patents. She welcomed the fact that software claims would be excluded from the directive. Mrs Bowles stated that Member States should ensure that the unauthorised supply or import of a computer program which is an essential element of a product or process validly claimed should constitute an infringement. This would mean that a patented invention remained the method/apparatus but an importer (eg from China) would be in the same legal position as those within the Member State.
Mrs Bowles condemned the proposed amendments from Mr Rocard saying they would only protect personal computers. Computer implemented inventions were used in all areas of industry. Mr Rocard's proposed amendments were "simplistic" and, if adopted, would cripple industry.

Kathy SINNOTT (IND/DEM, IE) said this was an important issue for her constituents in Ireland and she had received literally bags of correspondence urging her to vote one way or the other. What was at stake was the ownership of ideas. In software, the great ideas of yesterday were the building blocks of the great ideas of tomorrow. She said: "A lone programmer can write an interesting programme and then let others have it for a fee or put it up as open source software. This has driven innovation up to now, but would this continue if each programmer needed a team of patent lawyers?" She called on MEPs to vote for all amendments proposing freedom from patentability.

Arlene McCARTHY (PES, UK) said Europe had the opportunity to lead the world with good patent law, but there was disagreement about how to achieve this. The law should be tightened to avoid the patenting of software and business methods, but patents were needed to protect the ideas of European innovators. "SMEs need patent protection to ensure their ideas are not ripped off by giant companies." Individual programmers, on the other hand, should not have to deal with a mass of trivial patents. A good patents system would enable Europeans to challenge US dominance - India too was now to allow patents on embedded systems.

Andrew DUFF (ALDE, UK) said the strategic challenge was to create a framework to stop the spread of software patentability. It would be a tactical mistake to reject the common position altogether: "Without legislation the industry would be at the mercy of the EPO, the courts and WTO panels. That would be costly, legalistic and confusing." The conciliation procedure would be the best way to achieve a first class law, he said.

Simon COVENEY (EPP-ED, IE) stated that it was a complex technical subject and there had been "heavy" lobbying supporting and opposing the common position. The proposed directive did not, he said, bring in a new patenting system for the EU. It did, however, aim to harmonise the 25 national patent offices in the EU. Mr Coveney said that it was not possible to say the directive was based on a simple split between large companies and SMEs. Small and medium sized enterprises were to be found, he said, on both sides of the argument. The directive would not make it possible, he said, to patent software as opposed to the current US system; copyright exists to protect software. Inter-operability was also essential allowing "open-source" software to flourish. Finally, Mr Coveney said it was likely that the whole directive would be rejected in the vote.

Malcolm HARBOUR (EPP-ED, UK) said the proposed directive's objective was to clarify and harmonise existing patent law. Companies were receiving patents in one country but not in another. He questioned whether the draft directive would achieve this objective as much of the proposed text was opaque and went in the wrong direction. He stated that the proposed directive may be outdated and companies should be able to protect, for example, their instructions that operate digital technologies. He wondered whether it was not time to start again.

Vote: Wednesday at noon.

The President of Italy Carlo Azeglio CIAMPI was warmly welcomed by Parliament President Josep BORRELL at the start of the formal sitting. He was praised by President Borrell for his contribution to European construction and his "lucid passion for building Europe as a guarantor of peace, democracy and economic development". Noting the current period of disenchantment in Europe, he welcomed President Ciampi's symbolic and timely presence.

President Ciampi thanked the House and President Borrell for the warm and affectionate welcome in the "highest forum of European democracy". He began by saying that Europe was more than just an economic union. "Europe is not and cannot be just an economic free trade area. It is primarily a political area, a constitutional organism which links to, complements and completes our own national constitutions". It was because of this unity that Europe was strong enough to recover from the 'no' votes. He warned against the temptation to question the very idea of Europe. The French and Dutch referendums were a "scapegoat for a more general disenchantment" over exclusion from the decision-making process and lack of economic growth, he said. And Europe needs a Constitution, he stressed. Quoting the Spanish philosopher, Jose Ortego Y Gassett, he said "A Union needs a skeleton of cohesion policies - physical, social and economic." In this spirit, he called for greater cohesion in the Union, adding that distortions and disparities in living conditions between countries were not acceptable.

His address was at one point interrupted by a group of Northern League MEPs waving their flag before they were escorted out of the Chamber on the demand of President Borrell.

He went on to say there was a lack of political will among national governments which hindered major Community projects, before urging Europe to re-launch its commitment to major programmes, like Galileo and Erasmus, push for a single seat at the UN and a security and peace policy, and formulate "avant-garde" initiatives for an enlarged Europe.

He concluded by renewing his commitment to Europe and called on all not to let the period of reflection turn into a period where Europe is forgotten. "Long live Europe. Long live the European Union".

By a nine vote majority, MEPs rejected a report from the Economic and Monetary Affairs Committee which was strongly supportive of the policies and practice of the European Central Bank. The vote on the report by Kurt LAUK (EPP-ED, DE) was 287 in favour, 296 against and 41 abstentions.

The report praised the ECB's policy of concentrating on its prime objective of maintaining price stability and thereby contributing to achieving sustainable economic growth. Before the final vote, amendments calling for the ECB to lower interest rates had been rejected by the plenary.

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MEPs are calling for a concerted campaign to convince the public of the benefits of the euro. This comes in an own-initiative report drawn up by Jules MAATEN (ALDE, NL) and adopted by 493 votes in favour to 117 against with 14 abstentions.

The report lists a large number of benefits of economic and monetary union - price stability, reduced transaction costs, greater price transparency within the euro zone, reduced price volatility on the international currency markets and protection against external shocks, historically low interest rates, low mortgage rates and easier travel.

In Parliament's view, "the euro is possibly the most successful European project ever launched" but MEPs are also aware that a certain section of the European public "purports to have a negative perception of the euro... and this tendency is on the rise". They therefore say the single currency must remain a communication priority for the EU, the benefits of which must "continue to be sold and explained to the public at length", using modern marketing techniques to get the message across. A particular effort needs to be made in small towns and remote areas. The European Central Bank should provide an annual quantitative analysis of the benefits of the euro for ordinary citizens

MEPs say it is important to consider the concerns form the three non-euro countries of old EU15, calling on the Commission to help the governments of the UK, Sweden and Denmark "in their quest to win over a sceptical public, if these governments so wish."

On the other hand, the report says the Commission should concentrate its efforts on helping the new Member States to prepare their citizens for adoption of the euro by undertaking an intensive information campaign, and to supervise its implementation where such a campaign has already started. MEPs say a requirement of dual pricing three months before introducing the euro and up to 12 months afterwards can help reduce people's fears of euro-induced price rises and put pressure on businesses not to use the conversion as a pretext for price rises. Experience from malpractices of this sort in the current euro area should be used in future entrants to prevent such behaviour. More generally, the EU should support 'twinning' arrangements between ministries of finance and central banks of present and future euro members to help spread good practice. The report calls on the Commission to draw up reports on best practices and encourage national, regional and local authorities to establish local reporting centres where anyone can report any abuse, such as unwarranted price increases.

Parliament also asks the Commission to analyse the excess of €500 notes in circulation, warning of the risks associated with such a high value note with regard to money laundering and crime. It queries the relevance of keeping such notes, given the rise in electronic trading in transactions.

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Parliament voted in favour of a permanent ban on six phthalates in toys and childcare articles. Phthalates are used to soften plastic. Since 1999, the use of six types of phthalate has been temporarily banned in the manufacture of toys and childcare articles for children under the age of three because of their carcinogenic, mutagenic and reprotoxic effects.

The plenary approved the compromise reached by the rapporteur, Antonios TRAKATELLIS (EPP-ED, EL), with the Council just after the second reading vote that took place on 14 June in the Environment Committee. From now on, three phthalates - DEHP, DBP and BBP - are totally banned for use in any toys or childcare articles where their concentration exceeds 0.1% by mass of the plasticised material. Before 1999, concentrations of up to 30% sometimes occurred. The three other phthalates - DINP, DIDP and DNOP - are banned, for the same concentrations, in toys and childcare articles which children could put in their mouths whether or not they are intended for this use. The ban also applies irrespective of the age categories. Besides toys and childcare articles, Parliament also calls on the Commission to look at other types of material containing these phthalates, especially in the field of healthcare.

In the debate which preceded the vote, rapporteur Antonios Trakatellis called for the application of the precautionary principle in this case, given that "the risk assessment is not yet complete", and he was pleased with the concessions Parliament was able to get from the Council, which, in its common position, favoured authorising the second category of phthalates for children above the age of three, which will not now be the case.

On behalf of the European Commission, Günter VERHEUGEN said that the application of the precautionary principle was in keeping with the principle of proportionality. He added that the Commission would examine the question of fragrances, which Parliament had raised in first reading, as part of the next revision of the directive on toys. MEPs fear that manufacturers' use of aromatic products to mask the naturally unpleasant odour of phthalates encourages children to put the articles into their mouths, thereby swallowing toxic substances.

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Parliament adopted a legislative resolution on the security of electricity supply and infrastructure investment. Parliament adopted several amendments to the Commission proposal, which are acceptable to the Council. As the plenary approved the proposed amendments, the procedure can be concluded at the first reading stage.

The purpose of the Commission proposal is to set up an internal framework within which Member States will define general, transparent and non-discriminatory policies on the security of electricity supply compatible with the requirements of a competitive single market for electricity. The Commission believes that, in order to support the necessary investment, Member States must adopt a stable regulatory framework. Particular priority should be given to interconnections between Member States so as to enable increased competition between existing businesses.

MEPs believe the directive's primary objective should be safeguarding the security of the electricity supply so as to ensure the proper functioning of the EU's internal market for electricity.

The House wants to limit the competences of the regulatory authority concerning the building of interconnections. According to the Parliament, transport network managers should regularly provide the regulatory authority with a document detailing their investment projects for the establishment of an adequate level of trans-border interconnection. The regulatory authority should be able to impose economic sanctions on the transport network managers, order them to complete the transport projects by a fixed date and launch tenders for the work to be executed by a contractor.

The Commission proposal follows the power cuts in Italy in 2003. It underlines the fact that for an internal electricity market to function properly, major investments are needed in transport networks. These investments are also necessary for the network to be able to confront growing demand without businesses and citizens suffering frequent power cuts or general electricity breakdowns.

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Parliament adopted the report by Paolo COSTA (ALDE, IT) on the Agreement on Maritime Transport between the European Community and its Member States and the People's Republic of China without amendment.

Due to enlargement and the accession of ten new Member States to the EU, a Protocol must be agreed amending this agreement. This protocol is to be concluded by the EU Council which acts unanimously on behalf of the Member States. The Commission and the Chinese representatives in Brussels initiated this draft report in September 2004.

Given the technical character of the document in question, Parliament could give its opinion without a plenary debate under Rule 131 of the Rules of Procedure.

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