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updated 2/18/2005 8:23:17 PM ET 2005-02-19T01:23:17

A controversial European Union law to regulate patents for the software industry was thrown further into doubt on Thursday after the European parliament made a rare demand for it to be withdrawn.

The move, backed by the leaders of all parliamentary groups, underlined the hostility felt by many towards the draft law, and has been seen as evidence of parliament's desire to carve out an independent role for itself.

The law, often described as the software patents directive, has already split the software industry down the middle. Many big companies such as Nokia, Siemens, Microsoft and Philips support it, arguing that strong intellectual property rights reward investment in research and innovation.

They also warn that a restrictive approach to patenting software-related inventions could mean that businesses will lose protection for thousands of previously patented inventions.

But many smaller developers have attacked the draft law, warning that it will concentrate patents in the hands of a few big companies and freeze out smaller groups.

In its present form the directive would allow companies to register patents for software that makes a "technical contribution", for example helping a mobile phone save battery power or improving the picture of a television.

Critics say, however, that the text is worded in a way that would also allow companies to win patent protection for "pure" software, for example the Windows operating system. Such patents, they argue, would then prevent developers from building on widely used computer codes to create new products.

Following the parliament's move, the European Commission will now have to decide whether to table a new proposal - which would push back adoption of the law by many years - or to fight for the legislation in its present form.

Its choice will depend to a large degree on the support of EU member states, which have also grown increasingly sceptical of the directive. EU governments informally backed the current version of the law last summer, but in a highly unusual move have since refused to grant formal approval.

This has left the draft directive in legal limbo for more than half a year, and encouraged the parliament to make yesterday's demand for a fresh start.

The Commission said it would decide what to do about the law after a meeting of industry ministers in early March. For now, however, it would not withdraw the proposal.

Defending parliament's decision, Daniel Cohn-Bendit, a senior member of the chamber's Green party, said: "It is eminently clear that only monopoly-seeking multinationals have an interest in software patents."

Mark MacGann, president of Eicta, an association of software groups that support the law, said: "To be faced with this legal limbo is not helpful to European industry."

Copyright The Financial Times Ltd. All rights reserved.

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