Protestors made their feelings known during the vote
The European Parliament voted 648 to 14 to reject the Computer Implemented Inventions Directive.
The bill was reportedly rejected because, politicians said, it pleased no-one in its current form.
Responding to the rejection the European Commission said it would not draw up or submit any more versions of the original proposal.
Dispute resolution
Hi-tech firms supporting the directive said it was vital to protect the fruits of their research and development.
Opponents said, if passed, the bill would lead to the patenting of software which would jeopardise the prospects of small firms and open source developers.
The vote on Wednesday was on the more than 100 amendments made to the original bill.
The original bill was written to give EU-wide patent protection for computerised inventions such as CAT scanners and ABS car-brake systems. The bill would have also given the same protections to software when it was used to realise inventions.
Software is already protected by copyright.
The bill gave protections to computerised inventions
The bill was intended to sweep away individual EU nations' patent dispute systems in favour of one common procedure.
"Patents will continue to be handled by national patent offices ... as before, which means different interpretations as to what is patentable, without any judiciary control by the European Court of Justice," said EU External Relations Commissioner Benita Ferrero-Waldner, representing the EU head office at the vote.
Intellect, the UK's trade association for hi-tech firms, welcomed the decision.
John Higgins, director general of Intellect, said it was right to leave the existing framework in place.
"The current system has served the interests of the UK hi-tech industry well, giving companies both large and small the incentive to invest in research and the ability to protect the fruits of their work from exploitation by others," he said.
Dr John Collins, a partner at patent attorney Marks & Clerk said the decision was not a victory for opponents of software patents.
"Today's outcome is a continuation of inconsistency and uncertainty with regard to software patenting across the EU," he said.
"Software will continue to be patented in Europe as it has been for the last 30 years," said Dr Collins.
The anti-piracy Business Software Alliance said it would have welcomed harmonisation of European patent laws and the decision marked a time for reflection.
"The BSA hopes that the debate has cast a spotlight on the need for patent reform that is responsive to inventors large and small," said Francisco Mingorance, BSA Europe's public policy director.
Troubled history
The prospects for the bill passing diminished on Tuesday when two prominent parties in the Parliament, the EPP (Group of the European People's Party) and the PSE (Parliamentary Group of the Party of European Socialists), told the Reuters news agency they would be voting to reject the bill.
Prior to the vote Liberal Democrat MEP, Andrew Duff, said rejecting the bill altogether would be unsatisfactory.
He said: "To fail to legislate at all would leave the industry to the mercy of the European Patent Office, the courts and panels of the World Trade Organisation.
"That could be a costly, legalistic and confusing situation," he said.
As voting took place protesters gathered in Strasbourg outside the European Parliament to make their views known.
More than 1,700 Europe-wide companies, represented by the Free Information Infrastructure UK (FFII-UK), joined the plea for the European Union to reject any law which patents software.
The FFII-UK and many others feared the that the passing of the bill would lead to Europe following the US and allowing business processes to be patented.
This has led to online store Amazon patenting and protecting its one-click shopping system.
Big technology firms, such as Philips, Nokia, Microsoft, Siemens, and telecoms firm Ericsson, continued to voice their support for the original bill.
Archivo:European-parliament-strasbourg-inside.jpg|thumb|El salón de conferencias del Parlamento Europeo en Estrasburgo.
El Parlamento Europeo ha rechazado la directiva sobre patentes de software apoyada por ''lobbies'' de grandes compañías de software como Microsoft, Siemens, Nokia y Alcatel, agrupadas bajo el nombre de European Information & Communications Technology Industry Association ( EICTA).

648 de los de 680 MEP rechazaron el texto, 18 votaron a favor y 14 se abstuvieron.

Se esperaba un rechazo a la directiva cuando la European People's Party, inicialmente a favor de la directiva, decidió oponerse.

Los Verdes Europeos y el Partido europeo por las libertades, demócratas y reformadores también votaron en contra del texto, alegando que podría abrir el camino a posibilidades no restringidas sobre las patentes de software. Michel Rocard, autor de numerosas enmiendas a la directiva original, dijo que la adopción de la mayoría de las modificaciones parecía poco probable. ''"Es mejor no tener ningún texto que uno malo"'', añadió.
 
Antes del voto, el reportero Michel Rocard había dejado entrever la irritación del Parlamento hacia la Comisión: ''"Hay una cólera colectiva en el parlamento debido a la forma en que la directiva fue tratada por la Comisión y el Consejo"''.

Durante el debate del martes, el Comisario Joaquín Almunia dijo a los MEP: ''"Si ustedes deciden rechazar la posición común, la Comisión no presentará una nueva propuesta."''.

El rechazo ha sido bienvenido por pequeñas y medianas compañías de software, así como por los defensores del software libre. La directiva estaba siendo seguida por una intesa campaña en Internet por los partidarios del Software libre y el Código abierto, que culminó con manifestaciones en los días previos a la votación.

No obstante, como ya han expresado múltiples grupos, el rechazo de la directiva, deja la puerta abierta a que cada país se autoregule con normas al respecto, mientras que con una aprobación de la directiva junto a las 21 enmiendas presentadas, habría impedido en toda la UE la aprobación de legislación a favor de las patentes de software pues habría contrariado una aprobada a nivel de la UE. Es más, la propuesta ha sido rechazada con su forma actual, de modo que sería posible volver a presentar otra propuesta de directiva de otro modo y aprovechando cualquier otra reunión como hicieron en las de Agricultura.