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How do I navigate through the different approaches currently taken on software-implemented inventions in the UK, Europe and US?

 

This isn't easy, even for lawyers and patent agents, but below is an explanation of the principles adopted in the US, the UK and the EU. In order to apply those principles to a specific software implemented invention, you will need the assistance of a patent agent in the relevant territory.

 

Copyright Protection

 

Software is protected by copyright as a literary work, but that only applies to the software code or, sometimes, the way a program looks and feels.  Copyright does not protect the underlying idea or invention that a program puts into effect.  In certain situations that underlying idea or invention may be protected by the registering a patent. 

 

Patents in Europe

 

The owner of a patent has a monopoly under which he can prevent anyone else from using any software that includes his invention (as defined in the patent claims). 

 

The European Patent Office (EPO) and some national patent offices have issued tens of thousands of patents for computer-implemented inventions.  Over 40,000 patents for software-related inventions have been granted by the EPO for inventions relating to digital data processing, data recognition, representation and storage.  Patents have also been granted for software technology in automotive and mechanical engineering.  Image processing and computer graphics patents have also been granted. 

 

Of the 30,000 patent applications received by the UK Patent Office (now the UK Intellectual Property Office (UKIPO)) each year, approximately 20% relate to computer-implemented inventions. 

 

To qualify for patent protection in Europe an invention must be:

 

• new;

• involve an inventive step; and

• be capable of industrial application

 

(Article 52 European Patent Convention and Section 1 of the UK Patents Act 1977.) 

 

Programs for computers "as such" (e.g. lines of code and algorithms) are not inventions and cannot be patented.  Nor can methods of doing business or playing a game.  Deciding whether an invention is or is not an program for a computer "as such" is difficult and there is much confusion over what can and cannot be patented. 

 

As Lord Justice Jacob has pointed out, one of the reasons why the interpretation of Article 52 is so difficult is that there is no underlying purpose to the exclusions to patentability.

 

 

The Position in the US

 

In the US the law on what is or is not patentable is far less restrictive than in Europe.  As long as an invention involves any new and useful process, or machine, composition of matter, method of manufacture, or any improvement to such an invention, the inventor may obtain a patent.  There is no statutory exclusion of computer programs or business methods "as such".  The US Patent and Trademark Office used not to accept patents for mathematical algorithms and by extension computer programs, but that changed after a number of court decisions in the 1980s.

 

In what is known as the State Street Bank case, the US Signature Financial Group obtained a US patent for a system that allowed the pooling of funds and the quick calculation of share prices.  State Street Bank opposed the patent on the grounds that it was a method of doing business.  In 1998 State Street's application failed before the Court of Appeal for the Federal Circuit and the patent was upheld on the basis that it passed the US test of having a "useful, concrete and tangible result" and so the claims were a practical application of an algorithm and so patentable.  The Court also confirmed that there was no business method exception in US law.  

 

Since that case it has been an established principle in US patent law that the test applied to determine whether a computer program is patentable is whether it provides a useful, concrete and tangible result.   This means that all sorts of software, including non-technical applications such as accountancy software, are patentable in the US.

 

The fact that companies can obtain patents for software in the US creates increasing pressure for them to apply for patents covering the same software related inventions in Europe.

 

The proposed European Directive on Computer Implemented Inventions

 

For many years there was much debate over codifying the approach to how patent offices in the EU should assess the scope of the exclusion as applied to inventions which are the implemented through the use of a computer program.  

 

The proposed Directive on Computer Implemented Inventions aimed to harmonise and clarify the laws of member states and to avoid a drift towards a US approach to patents.  There was much opposition to the Directive, largely stemming from the belief that the Directive sought to extend the patentability of software inventions to include business methods and processes.  The proposed Directive was rejected by the European Parliament in July 2005.

 

The European Patent Office

 

A significant difference between patent law in the US and European patent law is that, in Europe, an invention has to provide a technical contribution or possess a technical character, whereas in the US no technical contribution is necessary for patent protection.  (A technical contribution is a contribution to the state of the art in a non-excluded field which is new and not obvious to a person skilled in the art.) 

 

In March 2006 the EPO Appeal Board confirmed the process the EPO should adopt in determining whether there is a technical character in a patent claim.  The Appeal Board stated that an invention was only patentable if the invention as claimed included aspects that imparted technical character to essentially all ways of performing the invention.  So, for example, if an invention covered the use on a physical piece of hardware such as a computer in addition to any software then the invention could have technical aspects and it is not automatically excluded by Article 52.  Only once a technical contribution is identified would the EPO assess issues of novelty or inventive step ignoring the software or anything that is not a technical feature.

 

The Aerotel/Macrossan Decision

 

The leading case on the exclusion of computer related inventions in the UK is the Court of Appeal decision in Fujitsu Limited's Application that established the test of what is and what is not a technical contribution.  What was important was the substance of the invention, rather than the precise form in which it was claimed. 

 

In Aerotel Ltd v Telco Holdings Limited and Macrosssan's Application [2006] EWCA Civ 1371 the Court of Appeal accepted the approach proposed by the UK Patent Office as it followed the decision in Fujitsu Limited's Application rather than the approach of the EPO, which the Court of Appeal considered was not yet settled. 

 

The approach accepted by the Court of Appeal involves four steps to assessing patentability:

 

1.                   the actual contribution in terms of novelty;

2.                   the inventive step;

3.                   whether it is excluded subject matter "as such"; and

4.                   whether it has technical character.

 

The Court of Appeal also made the point that the list of things that cannot be patented at Article 52(2) is not a list of exceptions, but positive categories of things that are not regarded as inventions. As a result, the list should not be construed narrowly. 

 

On the meaning of "computer programs" as an excluded category the Court of Appeal believed the narrow interpretation adopted by the EPO Board of Appeal in previous decisions on inventions claimed by Hitachi and Microsoft was wrong.  The narrow approach of limiting the meaning of a computer program to just a set of instructions as an abstract thing would prevent the exclusion from having any real effect at all.  The meaning had to be wider and included instructions on a form of media such as a CD or hard drive which cause a computer to execute the program.  

 

Aerotel claimed a method of paying for telephone calls through a piece of additional equipment called a special exchange.  The judge at first instance had held that the patent was excluded as, although the system was novel the only aspect that had a technical character was the equipment used to implement it and existing technology could have been used. 

 

The Court of Appeal disagreed and, applying the approach proposed by the Patent Office, held that the invention was patentable.  The system in the invention was new in itself and the contribution to the art was a new system of making phone calls using a new physical combination of hardware, which is technical in nature.  The invention was the combination of hardware not just use of existing hardware.

 

The Court of Appeal also considered an appeal from a Mr Macrossan with the Aerotel appeal as the two cases raised similar issues and agreed that the claimed invention was excluded from patentability.

 

Mr Macrossan had applied to patent a method of producing the documents required for the incorporation of a company by use of an interactive computer program.  The application was rejected by the Patent Office on the grounds that the invention was excluded from patentability as it was a method of performing a mental act as well as a method of doing business and a computer program.  On appeal, Mr Macrossan stated that the point of the invention was to arrive at the appropriate corporate entity with the correct documentation on the basis of information supplied by the user.  This was clearly a mental act as a skilled individual would have done the same thing in much the same way without a computer.  The substance of the invention was a computer program intended to correct the shortcomings of a conventional process, but those shortcomings did not amount to technical problems, and so the invention made no technical contribution. 

 

The Court of Appeal held that the contribution was a computer program as the hardware used did not form part of the substance of the invention.  As a result, the contribution to the art was excluded and there was no technical character to the contribution.

 

The Court of Appeal judgment in Aerotel/Macrossan has provided a useful explanation of the approach that will be taken by UKIPO and the UK courts in deciding whether a computer-implemented invention is patentable.  As a result of that judgment, UKIPO issued a Practice Note confirming that their examiners would follow the four step approach laid down by the Court of Appeal.

 

The judgment makes the point that a consistent approach across Europe was desirable and suggested that there were a number of questions on which it would be useful to have clarification from the EPO Board of Appeal, including precisely what is meant by technical effect.

 

 

Contact Details

 

If you would like further advice about any of the issues considered above please contact Paul Northwood on 01869 331753 or email him at paul.northwood@northwoodreid.com

 

 

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This article is not intended to be, and should not be taken as being, legal advice. The law often changes and it varies from jurisdiction to jurisdiction; the information in this article is generic in nature and specific legal advice should be taken before acting on any of it.

 

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