Patents and Computer Programs

Extract 1 : Introduction & Differences
Extract 2 : A shift from non-Patentability? & A state of flux
Extract 3 : Mood for change & EPO Proposal

Mood for change

The state of the patent laws within Europe is unsatifactory . The use of the opportunity that the 'as such' clause provided was applied to varying dgrees and effects within the member states . This led to a desire within the EC to harmonise the way inventions using software are dealt with by national laws. For instance in Germany the standard that has developed in relation to the patenting of software is that of an 'overall view' of if an item is technical or not this is in contrast to the 'technical innovation' standard in other partsof Europe. The 'overall view of technical nature' standard is reflected in cases such as the Seitenpuffer (Side cache) case 1; and Tauchcomputer (Diving computer) case,2 . Since 1997 various public consultations have been conducted with regards to patents and other intellectual property matters. The goal of the various consultations be summed up by a statement made by the Internal Market Commissioner Frits Bolkestein.."European industry needs a legal environment that encourages innovation without stifling competition. We need certainty over what can, and cannot, be patented",…. "The proposed Directive would provide this certainty by making the conditions for patentability of computer-implemented inventions clear and uniform. Current law on this question was drafted in the early 1970s when there was no inkling of what was to come in the shape of modern computers and networks, not to mention the emergence of a software industry worth billions of euros. The courts have done their best to develop the law in response to the changing environment, but there is now no alternative to legislation at European level to prevent potentially divergent interpretations by the courts."3 It can be gleaned from the Commissioner's words that there was another reason for a desired change. The promotion of innovation and and competition in response to the changes in the economic and commercial sphere.

As a result of the consultations and debates the '1997 Green Paper on the Community Patent and the Patent System in Europe' was commissioned. In conjunction with the subsequent opinion on the paper 4, it sets out more clearly the objectives of the EC in initiating the reform of Europe's patent laws

1. Harmonisation - A fully integrated European innovation market requires a unitary European system for protecting industrial property. The opinion and paper express the need to achieve harmonisation within a relatively short timescale, that is, before the E.U enlarges any further.

2. Innovation- The Commission recognizes the role played by patents in protecting innovation, while drawing expense; attention to the complexity and disadvantages of a system such as that currently prevailing in Europe. Which involves the co-existence of national and European patents.

3. Gaining an Advantage- The EU is at a disadvantage in relation to its mai competitors the USA and Japan. Both are able to take adntage of a unitary sytem of protection for their innovations at a limited cost. A firm seeking EU wide protection will have to pay DM 36 000, as against a cost equivalent to DM 3 000 for the USA and DM 2 200 for Japan.5

The influence of International practices such as that of the USA and Japan will be examined later in this paper, but it is clear that there are a lot of influences shaping the decision of the EU in relation to patents. Most of factors appear to be related to economic considerations. The result of this consultation amongst others gave rise to the 'Directive On The patentability Of Computer-Implemented Inventions' 6

The EPO Proposals

The 'Directive On The patentability' set out to 'harmonise protection for computer-implemented inventions while avoiding any sudden change in the legal position, and in particular any extension of patentability to computer programs "as such".' In essence the task was to harmonise the application of the law, and to codify the 'as such' loophole so that the scope of patents for computer programs and business methods was not widened. An attempt will be made to comment on the proposed directive.

Patentability of computer-implemented inventions

Art 2
Definitions
For the purposes of this Directive the following definitions shall apply:
(a) "computer-implemented invention" means any invention the performance of which
Involves the use of a computer, computer network or other programmable apparatus
And having one or more prima facie novel features which are realised wholly or partly
by means of a computer program or computer programs;
(b) "Technical contribution" means a contribution to the state of the art in a technical field which is not obvious to a person skilled in the art.

Article 3
Computer-implemented inventions as a field of technology
Member States shall ensure that a computer-implemented invention is considered to belong to, a field of technology.

Article 4
Conditions for patentability
1. Member States shall ensure that a computer-implemented invention is patentable on the condition that it is susceptible of industrial application, is new, and involves an inventive step.
2. Member States shall ensure that it is a condition of involving an inventive step that a
computer-implemented invention must make a technical contribution.
3. The technical contribution shall be assessed by consideration of the difference
between the scope of the patent claim considered as a whole, elements of which may
comprise of both technical and non-technical features, and the state of the art

Article 5
Form of claims
Member States shall ensure that a computer-implemented invention may be claimed as a
product, that is as a programmed computer, a programmed computer network or other
programmed apparatus, or as a process carried out by such a computer, computer network or apparatus through the execution of software.

The provisions of the article

Article 6
Relationship with Directive 91/250 EC
Acts permitted under Directive 91/250/EEC on the legal protection of computer programs by copyright, in particular provisions thereof relating to decompilation and interoperability, or the provisions concerning semiconductor topographies or trade marks, shall not be affected through the protection granted by patents for inventions within the scope of this Directive.

Article 7
Monitoring
The Commission shall monitor the impact of computer-implemented inventions on innovation and competition, both within Europe and internationally, and on European businesses, including electronic commerce.

Article 8
Report on the effects of the Directive
The Commission shall report to the European Parliament and the Council by [DATE (three
years from the date specified in Article 9(1))] at the latest on
(a) the impact of patents for computer-implemented inventions on the factors referred to inArticle 7;
(b) whether the rules governing the determination of the patentability requirements, and morespecifically novelty, inventive step and the proper scope of claims, are adequate; and
(c) whether difficulties have been experienced in respect of Member States where the
Requirements of novelty and inventive step are not examined prior to issuance of a patent, and if so, whether any steps are desirable to address such difficulties.

The proposals in this directive do not appear to give effect to the all of the objectives identified in the preceeding section. The desire to achieve a level playing field with USA and Japan is likely to be further away with the codification of the rules requiring a standard of 'technological invention'. The directive provides that only inventions that satisfy the standard of a 'technical contribution' to its field, as opposed a mere mental process or 'business method' which utilises pre-existing programs, will be patentable. Items not satisfying these conditions are likely to remain with the realm of copyright law.

"European industry needs a legal environment that encourages innovation without stifling competition," said the Commission's Internal Market Commissioner Frits Bolkenstein. In explaining the failue of the directive to chase the USA/ Japan patent culture. "The proposed directive would provide certainty by making the conditions for patentability of computer-implemented inventions clear and uniform."7 It appears that the desire for uniformity and clarity won over the disire to achieve the arguably free for all sytem which the EC had earlier argued would promote innovation. In commenting on the move away from the direction of the US and Japan on IT patents, Bolkenstein said that he felt such legislation "goes too far" by accepting inventions that are simply within the 'technological arts'. He also vowed that the Commission "will take American complaints on the chin" if US-based inventions find no patent protection in Europe. 8

On the other hand the desired end of unified practices seems achievable within provisions of the directive, as it will merge the differing national laws into a uniform system. As the pre-amble to the act identifies, there is some confusion about the software patents mainly due to the differing interpretations of Article 52 European Convention on Patents given to the different nations. It is worth mentioning that the wording of Art 3 might still leave room for ambiguity the word 'belong to, a field of technology' still leave some interpretative work to the national courts, which in effect could mean that a variation occurs in the level of patentability afforded to computer implemented innovations within the E.U. Alex Hudson in commenting on the preamble to the directive says 'it does not actually make clear what these fields [of technology] might be. Traditionally, technology is the application of machines to work - such as the invention of the lathe, or the invention of the textile machines which provoked the Luddite reaction. However, in modern terms, technology refers to a vast number of areas: modern electronics, for example, and computing. To say that software must belong to a field of technology appears, at this level, to be a nonsense - software itself is considered a field of technology, which renders statements 9 through 11 ambigous at best, and redundant at worst' 9
Further still commentators have pointed out that 'under Article 4 it appears that anything excluded from patentability as not being an invention according to Article 52.2(c) will still remain excluded under the proposal. That includes computer programs as such - and we need to remember that it has been strongly suggested by some in the recent debate that even novel programmed computers are excluded under that provision. And, in the UK, an anomalous interpretation of the exclusion for mental acts has similarly prevented some programmed computers from being patentable in circumstances where it is clear on any conventional test that a patent should be available. This, as the proposal acknowledges, results in a lack of harmonisation in the way member states' existing legislation is applied, even though ostensibly using the same criteria as the European Patent Convention. Unless something is done to ensure that member states cannot override the intention of the directive by applying the other exclusions of Article 52.2 in an anomalous way, the objective of the Directive in harmonising member states' laws in this area will not be achieved.' 10
In response to the Computer program case of 1999, the wording of Article 5 deals with the form of the claim. As discussed earlier the Computer program case signified a shift in jurisprudence towards the US style patent. In its premble the directive makes an attempt to differentiate between a 'mental act' / an alogarithm in which there is a potential to produce a technical effect , and the 'technical contribution'
'The term "algorithm" may be understood in its broadest sense to mean any detailed sequence of actions intended to perform a specific task. In this context, it can clearly encompass both technical and non-technical processes. The mere existence of an algorithm does not constitute a workable criterion for distinguishing patentable from non-patentable subject matter. An algorithm may underlie either a computer implemented invention or an invention relating to a conventional (mechanical, electrical etc.) machine or the process carried out by that machine. The sole difference is that a computer program is executed by instructions directed to the computer and a conventional machine is operated by its (mechanical, electrical etc.) components.
An abstract algorithm can be defined in terms of pure logic in the absence of any physical reference points. It is possible that such an algorithm may be put to practical use in many different functions in apparently unrelated domains, and may be capable of achieving different effects. Thus, an algorithm which is considered as a theoretical entity in isolation from the context of a physical environment, and in respect of which it is accordingly not possible to infer its effects, will be inherently non-technical and thus not susceptible of being regarded as a patentable invention.19 Computer program product I and II, T1173/97 of 1.7.1998, 1999 OJ EPO [609] and T0935/97 of 4.2.1999, [1999] R.P.C. 861. The holdings of the two cases are largely similar.20 Controlling pension benefits system/PBS T-0931/1995 decision dated 8.09.200021 Supra. See also case T1002/92 where the EPO Board of Appeal made this criticism for the first time. It is a consequence of the above that an abstract algorithm as such cannot be monopolised. The normal rules for patentability mean that a patent claim to an invention which is founded on a particular algorithm would not extend to other applications of that algorithm.'
The straight line which Article 5 attempts to draw is questionable. Most computer processes are improvement upon pre- existing codes or software, and it is arguable that new advancements are impossible without the use of a pre-existing structure. The example of the composition of music has been used frequently. It would be difficult for a composer to write a new piece of music without using a beat or note that had been used before. Such is the nature if the field.

The Directive defines "technical contribution" and attempts to set out scenarios in which a technical contribution might arise, the Commission has also attempted to clarify what amounts to a "technical contribution" by giving three case studies in a notice 'Patents: Commission proposes rules for inventions using software' 11
1) an invention in which an X-ray apparatus was controlled by a data processing unit in a way which provided an optimum balance between potentially conflicting operational requirements
2) an invention in which an increase in processing speed in a computer was achieved by a new and non-obvious method
3) an invention concerned with communication between independent systems which involved a stage of activities requiring the use of technical skills (beyond those expected of a computer programmer) to be carried out before actual programming could start.

The case studies above mirror the decision in the Vicom case, and the 1990 IBM case12 which involved an innovation in communication which was held to be technical. There is a notable attempt to shrink the scope of the 'as such' loophole. The pre-amble to the draft Directive, the Commission refers to the 1999 Computer Program Products I and II cases and, although it acknowledges that these cases have been interpreted to mean that computer programs by themselves could amount to patentable subject matter, it sexplains that Article 5 of the draft Directive should be taken to expressly exclude the practice of the EPO in permitting claims to computer program products either on their own or on a carrier. This is a reversal of the position noted from the EPO's 1999 IBM case law and also from current UK practice which seemed to be moving towards the granting of patents for business methods.
.
Harrop& Co comment on this issue , saying 'given the EU's determination to use "technical effect/technical contribution" as its benchmark for patentability of computer software, it remains unclear whether the Commission's attempts to codify the meaning of these phrases will lead to transparent conditions for patentability. The fact that the Commission felt compelled to supplement the definition of "technical contribution" in the Directive with three case studies is not encouraging. Even if the Directive achieves transparency of conditions for patentability and thus harmonisation of the laws of the Member States in this area, the resulting lack of harmonisation with the laws of the US is counter-productive.' 13

There has been a lot of criticism of the directive, and lobbies have been formed in opposition to the codification of the rules of software patent. The main concern appears to be the fact that whilst the directive does not grant a US patent, it leaves a lot of room for such patents to be granted. One such lobby is the Eurolinux Alliance. Eurolinux is organising a Web-based petition against software patents which has attracted about 170,000 signatures so far 14EuroLinux contends that the wording of the directive will legalise US-style software patents in Europe "and remove all effective limits on Patentability."

The Directive's legal effect
'The Directive would have no direct legal effect on the European Patent Office. However, once the Directive was implemented, the Commission would consider taking action to resolve any inconsistencies in the context of the European Patent Convention. This has already been done on a previous occasion (with the Biotechnology Patents Directive - 98/44/EC), with no particular difficulty. In any case, European Patents, once granted, become subject to national laws, so any patents granted after the Directive took effect and which were inconsistent with its provisions would need to be amended to bring them into conformity (or be revoked).15' The EPO is a contractor and will not be legally bound by the directive once it is in force. The notice suggests that steps will be taken to reign the EPO in if it continues with the expansion of patentability for computer programs and business methods as seen in the IBM computer case. The question is whether or not the safety harness built into the directive is adequate. Article 8 specifies that the Commission should report to the parliament in 3 years after the directive is put into effect. The report is to be impact of patents for computer-implemented inventions. Presumably this provision was inserted in recognition that the EPO might continue along its path of widening the rights. So why didn't the proposal include strict guidelines to prevent this?. It is arguable that some lessons have been learnt from the scramble to exploit the 'as such' loophole in the Patent act of 1977. The area of computer technology is so fluid that rigid guidelines might become quickly impractical or insensitive to the industry's requirements. It is submitted that the EC's trust in the EPO to follow the guideline is not misplaced. In a recent 'Notice by the EPO Notice from the European Patent Office dated 26 March 2002 concerning business methods' 16 the EPO reminds applicants 'that pursuant to Rule 39.1(iii) PCT it will not carry out an international search on an application to the extent that its subject-matter relates to no more than a method of doing business, in the absence of any apparent technical character. Moreover, claims which merely specify commonplace features relating to the technological implementation of such methods will not be searched if the search examiner cannot establish any technical problem which might potentially have required an inventive step for it to be overcome.' This statement of intent might be indicative of the EPO's will to sing the same tune as the EC. A lot of businesses both from the UK and the USA have started lodging applications for patents on business methods and software. This is done in the hope that even though such items are un-patentable at present moment, the EPO might have adopted a different approach by the time the application is considered . (it currently takes about 10 years for an application to get to the top of the pile). All comments at this point are merely speculative, only time will tell which direction the law and the practice of the EPO will take.

Drawing A Conclusion
The Proposals has received wide criticisms. Brents assessment illustrates the situation 'Whether these reforms on the patentablity of software are driven solely by the Commission continuing imperatives to 'harmonise', or are made in the genuine interests of business is certainly debateable. The draft has not received universal support. A discussion document placed on the Internet by the Commission led to some 1447 responses.
The Open Source lobby was very active in criticising the draft Directive, and numerically they outnumbered the pro-protectionist interests - being mainly large companies. The Commission nevertheless concluded that on the balance of economic weight (taking into account) total jobs and investment of the corporate lobby, represented the majority view.
Curiously, the Commission appears hardly to heed the Report it commissioned - Patent Protection of computer Programmes (Contract No INNO-99-04|) prepared by Sheffield and Sussex University which concluded - perhaps not surprisingly - that SMEs were not generally in favour of extending patent protection.
The SME sample in the Report says that SMEs were generally ignorant of patent practices and that they recognised that economically stronger party held all the 'trumps' when it came to patent infringement. SMEs were generally of the opinion that copyright and technical systems of protection were adequate systems to protect their software from being expropriated, and that "the patent system is at best an irrelevancy for most small firms."
In March of this year the French government wrote to the Commission expressing concern about the proposals in the draft Directive. The letter questions the economic benefits, and criticised the terms used as being too loose and unclear. The draft Directive provides that its effect must be reviewed after three years - this period is in the French Government's opinion, far too long.
Whether the French Government will pursue its concerns is doubtful - most observers feel the show is on the road, and the IP world can expect an additional IP right. 17
A comment by Heidi HAUTALA, MEP, sums up another possible conclusion/ angle
And according to many the Directive would not clarify the rules but only bring the law in line with EPO jurisprudence, i.e. institutionalise legal uncertainty.'(Greens/EFA Conference 26 November 2002) The phrase 'institutionalise legal uncertainty' is an interesting one. In its comments the EC takes pains to explain that the new directives ain to codify as oppose to change the laws with regards to patentability. It appears that the man benefit is the harnessing effect on the scope of software patents. The Uncertainity that was revealed by an examination of the case law earlier however arguably still remains. The main issue that needed to be clarified was the extent to with the technical effect criteria should be applied. Harrop comments 'Given the EU's determination to use "technical effect/technical contribution" as its benchmark for patentability of computer software, it remains unclear whether the Commission's attempts to codify the meaning of these phrases will lead to transparent conditions for patentability. The fact that the Commission felt compelled to supplement the definition of "technical contribution" in the Directive with three case studies is not encouraging' The same debate occurred in the United States before case law settled the issue and allowed the patentability of software and business methods.

The question of whether the proposals will result in a coherent development of law in this field is open to debate. The arguments in favour of a European or UK software patent are clear. Without the ability to patent software, some sections of European industry have argued that the continent risks losing the global innovation race in the hi-tech sector with particular refernce to the innovations in Japan and the USA. So if one thing is for certain, it is that businesses are unlikely to stop trying to push the boundries of patentability. Leaving the law as it was , and merely codifying achieves to some extent harmonisation of the principles within the EU maember states. However it is unclear if the definitions provided and the standars set for instance for distinguishing between a mental act and a technical innovation , go far enough to clear the confusion over the issue of patentability.
The status of the law of patents in the USA is arguably not enviable. Wendy MGrossman's report for the New Scientist gives an account of the development of the area in th USA 18. She highlights practices that have developed in the USA, with particular regard to the effect of the wider patent rights on innovation and competition. If her facts are to be believed then perhaps the EC is wise in not broadening the scope of patentability. The view is that being able to patent software favours the large company with resources to commit to patent protection strategies to the detriment of small and medium-sized enterprises. This from all the jurisprudence examined is arguably an undesired effect within the EU.

BIBLIOGRAPHY

- Keith Beresford, 'Patenting software under the European Patent Convention', Sweet & Maxwell, 2000.

- 'To many programmers, America's laws on software patents are a disaster. So why is Europe preparing to go down the same road?' Wendy M. Grossman reports, New Scientist, September 28, 2002,

- 'Intellectual Property Rights Are Patently Important To Business' The Scotsman ', June 24, 2002, Monday

- 'In Good Company' The Lawyer', April 23, 2001,

- 'EU -- Proposals For Software Patents', March 2002 Pat World

- 'Software And Computer-Related Business-Method Inventions: Must Europe Adopt American Patent Culture?' , CD Freedman , September 2000 IJL&IT 2000 8(285)

- 'Commission proposes rules for inventions using software' http://europa.eu.int/comm/internal_market/en/indprop/comp/02-277.htm

- The Proposed EU Software Patent Directive Are software patents about

- Patents: Commission proposes rules for inventions using software: europa.eu.int/comm/internal_market/ en/indprop/comp/02-277.htm

- Directive Of The European Parliament And Of The Council On The Patentability Of Computer-Implemented Inventions, Brussels, 20.02.2002, COM(2002) 92 final , 2002/0047 (COD)

- Official Journal of the European Communities, Opinion of the Economic and Social Committee on 'Promoting innovation through patents:Green Paper on the Community patent and the patent system in Europe' (98/C 129/03)

- Resolution on the Commission Green Paper on the Community patent and the patent system in Europe: Promoting innovation through patents (COM(97)0314 - C4-0342/97), Official Journal of the European Communities, A4-0384/98

Extract 1 : Introduction & Differences
Extract 2 : A shift from non-Patentability? & A state of flux
Extract 3 : Mood for change & EPO Proposal

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