The EU Commission's intellectual property problem

I'm just off the phone with Dimitris Sabatakakis, and the story he told me -- involving a major case of intellectual property rights infringement by Europe's guardian of intellectual property, the European Commission -- is appalling.

Sabatakakis is the CEO of Systran, a French company specializing in automatic translation software. They have 80 people between Paris-La Défense (where he is pictured, left; copyright photo Systran) and San Diego. Their customers are governments and armies and secret-service agencies as well as big corporations, and their engine is the system behind the online translation sites of Google and Yahoo, among others. Translation software is not an exact science (Sabatakakis and myself first met in 1998 when I wrote a column for the New York Times about the first online translator, Altavista's Babelfish, also powered by Systran, and the linguistic games that many, including writer Umberto Eco, were playing with it). But it's good enough to get a pretty decent sense of what a foreign text is about.

For translators, it is a way to boost productivity: get a rough translation from the software, and work through that rather than starting from scratch. That's why the European Union, who has over 1500 translators dealing with a couple dozen languages, has been using Systran's software for three decades now. The first version ran on a mainframe: the texts were "sent" to the machine and a message would come back, after a long delay, with the translation. At that time, Systran was a US company. It was bought by a French industrial group in 1985. The EU continued to use the software, although the contractual relationship with Systran has always been ambiguous. The way Sabatakakis tells the story, it seems that for a long time the EU didn't really realize that the software came with intellectual property rights that were still Systran's. At the end of the 1990s Systran and the EU got a fresh start: the French company supplied the EU with the "Babelfish" (web-based) version of the software including specific EU linguistic resources, on the basis of a users' license. "The intellectual property on the translation engine software remained with us", says Sabatakakis.

By 2002 the whole system was in place. And here is where things turned unpleasant. Sabatakakis claims that for one year the Commission didn't attribute any additional mandate to Systran to work on the software -- despite the fact that the demand for translation services was about to explode with ten new countries joining the EU. Systran was forced to scale down its operations in Luxembourg early 2003. Then suddenly, in August 2003, the Commission opened a tender to modify and augment the program, called SystranEC. This was akin to the Commission seeking someone to modify, say, the Windows operating system without involving Microsoft. "We could not tender for a job that infringed upon our intellectual property", Sabatakakis says. But another company did tender, and did get the market in January 2004: Gosselies, based in Luxembourg, controlled by a local top politician and administered by his wife, and which had no previous track record with translation software - or software at all, for that matter.

Sabatakakis insists that the EU could not modify the software without getting first Systran's consent, as the company owns the intellectual property rights related to it. The EU replies that the software can only perform if terminology and linguistic rules are constantly enhanced - but that doesn't seem to contradict the IPR, since converting the translators' feedback into software enhancements needs constant programming on the Systran engine. Following the attribution to Gosselies (which has in the meantime hired all the people that Systran had to let go, and has modified the software), Systran has complained with the Directorate for Translation, then with the EU Commission's president Barroso, then with the EU's Ombudsman (PDF of the complaint). All it got is a maze of procedural exceptions, procrastinating responses, new bureaucrats to deal with, and outright obstruction. "At a certain point they asked me to demonstrate that Systran is the owner of the IPR, as if we had not been supplying them with software for 30 years". The Commission appointed the Directorate-General for Translation to investigate the complaint against the same DGT. Then it said that there was an internal task-force which had been studying the problem for two years but that their conclusions were not yet available. Based on the European directive for transparency (1049/2001) Systran then requested access to the 'Systran file' in possession of the Commission, which replied that it could not provide it "because that would seriously impact the decision-making process of the Commission". Finally, at the end of September the Ombudsman decided that Systran has not proved that the Commission is violating its intellectual property rights. His decision however concludes that "If Systran's allegations are properly developed, as to the elements which constitute its legal and factual bases, it may be considered well founded by a competent court of law or arbitrator". In other words, the EU's mediator is inviting ...another mediation.

The controversy will continue as Herbert Bösch, an influential Austrian member of the European Parliament and vice-chairman of its Committee on budgetary control, who was already instrumental in bringing to light the Eurostat scandal, questioned the European Commission on Friday on the Systran case.

This case is unique in that it pits a small European software company -- which, supreme irony, was awarded in 2005 the European IST Prize for innovation, presented by EU Commissioner Viviane Reding --  against a big supranational organization. But it is especially grotesque given that the EU considers itself a global bastion of intellectual property protection, and one of its key stated policies is "promoting an adequate enforcement of IPRs world-wide and participating in the fight against violations".