8th November 2004
Lecture Notes
Intellectual Property (IP) – covers four areas of legally-defined ways in which abstract intellectual concepts (as opposed to tangible objects) can be “owned”. Each has its own different purpose, and they are designed not to overlap each other. Each has a different typical lifetime and level of protection.
Trade marks Protect business “goodwill”; indefinite lifetime; value is dependent on how successful the company is – “brands” - how much of the value of Coca-Cola is in the brand image?
Copyright Protects skill, labour and judgement in creating an artistic, literary or dramatic work (broadly defined); from 50 years for mechanical copyright (eg. sound recordings or films) to 70 years pma (eg. for literary works); only valuable in preventing direct copies (eg. pirate recordings of films and music).
Designs Protection for incremental advances in industrially-produced articles, either functional or artistic; up to 25 years protection, depending on the type of design; protects the work involved in producing a new design of article, eg. a new but non-inventive design of vacuum cleaner – some cross-over with copyright, but this is too complex to go into here.
Patents Protection for inventions; 20 years from date of application.
To illustrate the points, take a computer program by Microsoft:
“Microsoft” is a registered trade mark. This will last for as long as the company pays the registration fees, has goodwill in the name and as long as the name has not become generic (example: “Escalator” used to be a trade mark owned by Otis).
The code in which the program is written is protected by copyright, and will last (no registration or fees required) until 70 years after the death of the last joint author.
The design of the (for example) icons or fonts used in the program are protected by either unregistered or registered design rights.
The way the program does a particular process may be protected by a patent, eg. the method of compressing or manipulating images, or organising files. Microsoft lays particular emphasis on its patent rights in order to control who can use and interact with its programs.
What are patents? What is their purpose? How do they differ from other IP rights?
A patent is a piece of property (known as personal property). It can be transferred like other property rights, i.e. assigned (sold), licensed, mortgaged etc.
Is a patent the equivalent of a plot of land, fenced off, or a road sign and toll road? Some patents are more important than others, particularly if they point the only way possible to lots of other inventions (eg. MPEG-4 DVD encoding), others stake out a separate patch which others may or may not need to use, but provide protection for the proprietor.
Important point: A patent permits the proprietor (not necessarily the inventor) to stop others from using or selling that invention; it does not grant the proprietor the right to use it, as this may infringe another pre-existing patent (this is where some of the problems start to appear with software).
Their purpose is to provide an incentive to innovate – the granting of a temporary (20 year) monopoly in exchange for an enabling disclosure to the public of the means to use the invention (the patent specification). Innovation may result from the desire to make money via a monopoly (higher prices and licensing royalties), and in others’ efforts to work around the patented area, often coming up with different and improved inventions. Innovation therefore should ratchet up with each useful patented invention, thus providing an economic driver.
A patent consists of two main parts: the specification and the claims. The specification lays out the details , which must be sufficient for someone “skilled in the art” to reproduce the invention. The claims are a list of very specific terms which define what is being claimed as being protected by the patent. The claims are the crucial part as far as enforcing a patent goes – an alleged infringing article or process has to use every part (or “integer”) of a claim to infringe the patent.
UK Patent Law Basis
1977 UK Patent Act, Section 1
“1.- (1) A patent may be granted only for an invention in respect of which the following conditions are satisfied, that is to say -
(a) the invention is new;
(b) it involves an inventive step;
(c) it is capable of industrial application;
(d) the grant of a patent for it is not excluded by subsections (2) and (3) below;
and references in this Act to a patentable invention shall be construed accordingly.
(2) It is hereby declared that the following (among other things) are not inventions for the purposes of this Act, that is to say, anything which consists of -
(a) a discovery, scientific theory or mathematical method;
(b) a literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever;
(c) a scheme, rule or method for performing a mental act, playing a game or doing business, or a program for a computer;
(d) the presentation of information;
but the foregoing provision shall prevent anything from being treated as an invention for the purposes of this Act only to the extent that a patent or application for a patent relates to that thing as such.”
European Patent Law Basis
European Patent Convention – signed 1973. Forms the basis for all patent acts throughout Europe. The European Patent Office is NOT an EC body (not controlled by the EC), but has most states in common. A European patent can be granted for any or all members of the Convention, but each patent is then subject to individual countries in infringement and validity actions once granted.
Article 52 - Patentable inventions
“(1) European patents shall be granted for any inventions which are susceptible of industrial application, which are new and which involve an inventive step.
(2) The following in particular shall not be regarded as
inventions within the meaning of paragraph 1:
(a) discoveries, scientific theories and mathematical methods;
(b) aesthetic creations;
(c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;
(d) presentations of information.
(3) The provisions of paragraph 2 shall exclude patentability of the subject-matter or activities referred to in that provision only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such.”
US Constitution Article I, section 8:
“Congress shall have power . . . to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”
First patent law enacted in 1790. General revision enacted 1952. Codified in Title 35, United States Code (USC).
Section 101. Inventions patentable
“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor...”
Important difference between European and US patent law is that in the US there are no explicit exceptions for computer programs or business methods. This is perhaps the main cause of the current controversy over software patents, but is not the full story.
Need to distinguish software patents from software code itself.
Is copyright sufficient for computer software? Copyright protects the expression, not the underlying idea; only protects against exact or very close direct copying, does not prevent separate origination.
Example: database – consists of several levels of abstraction: i) basic concept of data structured in a systematic way, accessible by searching and sorting in different ways; ii) algorithms which describe how to go about storing and accessing individual pieces of data; iii) actual written code, performing the functions of, eg, searching and organising, whatever the level of code (eg. source or object code); iv) aesthetic appearance of the computer screen or printout. Which are protected by copyright and to what extent?
Patents protect the idea, preventing anyone else using it, even if originated independently. Protection covers the idea, and not just the expression, even more abstracted than the algorithms behind a piece of software code. Having control of the idea behind the software gives the owner of the patent much greater power than simply having copyright over a single implementation. eg. 1-Click shopping, US Patent 5960411.
Business Methods and Computer Software
Two areas are common in terms of patentability, and are excluded throughout Europe “as such”, but not specifically in US.
State Street Bank v Signature Financial Group (1998)
Case brought for infringement of a patent relating to a method of financial management - “hub and spoke” model. In defence, State Street claimed that the patent was for a business method and as such should be excluded from patentability. Over time an impression had built up that certain areas such as business methods and software inventions were not patentable, but this was due to court rulings, not directly from the statute. As early as 1952, Congress stated that “anything under the sun that is made by man” could be patentable. However, the courts generally limited this to except laws of nature, physical phenomena and abstract ideas. For example, Newton's law of motion could not be patented, but a car based on the principles could. The discovery of the properties of lightening could not be patented, but lightening conductors could.
In the State Street case, the judge ruled that there was in fact no exception to patentability for business methods or software, as was previously thought. The rules to patentability apply equally as to other inventions, i.e. as long as they were new, useful and non-obvious. This appears to have resulted in an opening of the flood gates to software and business method patents.
Current status in the US? Pretty much anything goes, provided it has a “useful, concrete and tangible” result, and complies with the basics of a patentable invention, i.e. is new, useful and non-obvious.
In addition, there is a tradition in the US for the Patent Office to be rather more lax in their examination procedures. This might be a result of the need for the Office to be self-funded (which it is). The end result of this for the inventor, however, is patent first, litigate later. Examples: Eolas, Microsoft, SCO & Linux, Sun. Litigation of patents in the US is a big and growing business.
Pressure from the US has grown in the last decade on European countries to relax laws on patentability through the World Trade Organisation (TRIPS – Agreement on Trade-related Aspects of Intellectual Property Rights 1994: only requires that patents are new, inventive and industrially applicable, without discrimination to the field of technology). US argues that software is simply another field of technology and should be patentable like any other.
The UK and European Positions
Explanation of the UK and EPO systems:
A patent can be applied for to both the UK and European Patent Offices, depending on how wide the coverage needs to be. Simplest and cheapest is a single filing in the UK. Any disputes over the patentability are first dealt with at the Patent Office, then through the High Court, Court of Appeal and the House of Lords.
A patent applied for through the EPO can designate any number of member states, and the patent is issued by the EPO once granted. During the process of applying for the patent, appeals can be taken to the Boards of Appeal, but there is no further route beyond the EPO. After a patent is granted, it divides into national patents, which are litigated in each country separately, with appeal routes only within each country. This can create different results for the same patent in different countries, and there may be discrepancies between the UK courts' and the EPO's interpretations of the law.
Merrill Lynch's Application [1989]1, English Court of Appeal: A patent application for a securities trading system, using a computer system suitably programmed. Initially rejected by the UK Patent Office and High Court for being a computer program “as such”.
“A data processing system operating to produce a novel technical result would normally be patentable. But it cannot ... be patentable if the result is a prohibited item under section 1(2).”
Application rejected for being excluded as a method for doing business (not for being a computer program).
Gale's Application [1991]2 English Court of Appeal: Patent application for an improved means of calculating the square root of a number. Claimed as a piece of hardware, or even a disk, containing the means for carry out the invention. Rejected fro being a mathematical method as such. The fact that the program was stored on a ROM chip or a disk did not get round this.
“Technical Effect” / “Technical Contribution”
Vicom [1987]3, EPO Technical Board of Appeal: Patent application for a image processing algorithm, convolving the image matrix with a small operator matrix. Initially rejected by the Examining Division of the EPO, reasoning that the application constituted a mathematical method as such and was not patentable; appealed to the Technical Board of Appeal.
“[A] claim directed to a technical process ... carried out under the control of a program ... cannot be regarded as relating to a computer program as such within the meaning of EPC Article 52(3)”
“An invention which would be patentable in accordance with conventional patentability criteria should not be excluded from protection by the mere fact that for its implementation modern technical means in the form of a computer program are used. Decisive is what technical contribution the invention is defined in the claim when considered as a whole makes to the known art.”
Case resulted in a change of emphasis regarding computer programs and patentability. The loosely defined term “technical contribution” starts to appear and is used as a justification for patenting software inventions.
IBM Patent cases [1990]4,5, EPO Board of Appeal: First for “document abstracting” (methods of storing and retrieving files), then for word processing. Both were rejected by the Board for being computer programs as such.
However, compare the more recent case of Fujitsu [1997]6 (method of displaying chemical molecular models on a computer screen) in the UK with IBM's Application [1999]7 (method of displaying windows on a computer screen) at the EPO. Fujitsu's application was rejected by the Court of Appeal for being essentially presentation of information (excluded “as such”). IBM's application was allowed on appeal, due to the EPO's convoluted reasoning:
“According to the case law of the Boards of Appeal, a claim directed to the use of a computer program for the solution of a technical problem cannot be regarded as seeking protection for the program as such within the meaning of Article 52(2)(c) and (3), even if the basic idea underlying the invention may be considered to reside in the computer program itself ... The case law thus allows an invention to be patentable when the basic idea underlying the invention resides in the computer program itself.”
“These claims are directed to a computer program product and have to be examined from the point of view of what may be called “the further technical effect”, which if present may lead to the subject matter not being excluded...”
“A computer program product may ... possess a technical character because it has the potential to cause a predetermined further technical effect...”
At no point is the term “technical effect” properly described. It is now so loosely defined that practically any invention previously excluded due to EPC Article 52 can be made patentable, particularly if the claims are worded correctly.
The Proposed European Directive on Patentability of Computer-Implemented Inventions
Article 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, the invention having one or more 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 field of technology which is not obvious to a person skilled in the art. The technical contribution shall be assessed by consideration of the difference between the state of the art and the scope of the patent claim considered as a whole, which must comprise technical features, irrespective of whether or not these are accompanied by non-technical features.”
Article 4a
Exclusions from patentability
A computer-implemented invention shall not be regarded as making a technical contribution merely because it involves the use of a computer, or other apparatus. Accordingly, inventions involving computer programs which implement business, mathematical or other methods, which inventions do not produce any technical effects beyond the normal physical interactions between a program and the computer, network, or other apparatus in which it is run, shall not be patentable.
Article 5
Form of claims
1. 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.
2. A claim to a computer program, either on its own or on a carrier, shall not be allowed unless that program would, when loaded and executed in a computer, programmed computer network or other programmable apparatus, put into force a product or process claimed in the same patent application in accordance with paragraph 1.
The Directive has not yet been passed, but if it were it would not really change the position of patentability of software as far as the EPO is concerned. What it would do, however, is attempt to bring all the member states into line with the current practice of the EPO. This is the general purpose of all EC Directives – “harmonisation” of laws throughout the Member States. This would probably change the practice at the UK Patent Office and the UK courts, although how this would work is unclear.
Some Arguments For And Against Software Patents
For
Any ingenious insight should be protectable, regardless of the technical field.
Algorithms are valuable, and not adequately protected by copyright.
Finance is easier to obtain if IP protection has already been gained.
Encourages innovation: gives companies an incentive to produce new advances in technology.
Against
Innovation will be stifled: avoiding patents becomes more difficult as software programs become so large.
Hindering competition: Large firms with larger patent portfolios can bully smaller firms. Bad for small-medium sized companies.
Goes completely against Open Source ideals: non-profit making organisations cannot afford to defend against aggressive policies of patent holders (see SCO case vs. Linux). Avoiding, licensing or overturning the patent can be very expensive or impossible for the small firm or sole programmer (see Richard Stallman's lecture).
My Opinion
Bad patents are still bad patents – inventions, whether in software or hardware, should still be examined thoroughly. There is a problem with software patents in that the Patent Offices around the world do not have sufficient expertise to rule out what may to a common programmer be completely obvious. Eg. Amazon “One Click” shopping is obvious to anyone who knows about the workings of cookies on the internet. Would-be patentees (and their patent agents) will always try to claim the maximum allowable. It is up to the Patent Office to enforce the rules strictly. In the US, the Patent Office appears to be much more relaxed about what they will allow, which creates problems further down, resulting in more legal arguments.
Some software-implemented patents are very valuable and deserve protection in the same way as ingenious corkscrews or bicycles. Eg. MPEG-4 video compression is essentially software-implemented, but should it be excluded from patentability due to being software “as such”?
The whole argument at the moment (i.e. the Commission vs. Parliament, Big Business vs. Open Source) is really about whether software implemented ideas deserve patent protection at all. Both sides are polarised. Big Business wants as much protection for its ideas as possible, whereas the Open Source movement essentially wants ideas to be free for all to use. There is a chance, if more software patents are granted and enforced, that Open Source could suffer. However, the current state of patentability of software in the UK has the balance about right. Many applications for patents which are either software or business methods as such are rejected, and these tend to be upheld on appeal. The status of the European Patent Office is more unclear, and there is a big problem with the disconnection with the European Union. There is no European-level appeal court for patents, because there is no Community Patent.
Patents for “computer-implemented inventions” have been granted for many years, and will continue to be granted. It is likely that the Directive under discussion at the moment will be passed in some form which will allow the status quo to continue, but perhaps with a stronger definition of what is permissible.
The Open Source community is most against the idea of software patents, but is very unlikely to win the argument, particularly against the arguments from big businesses. However, most of the problems which are apparent with software patents are to do with the quality of examination at the Patent Office. Any patent has to fulfil the requirements of novelty, inventive step and industrial applicability, as well as not being specifically excluded matter “as such”. For many software patents (particularly those granted in the US) the result is that patents are granted which should have failed on either novelty or inventive step, but the examiners did not know where to look. Once a patent is granted, there is an assumption of validity until it is overturned in court (which can be very expensive). However, many patents should never get to that stage. The best way to address this problem appears to be to get more patent examiners with knowledge of software working for the Patent Offices in Europe, particularly at the EPO in Munich and the Hague.
US Patent Office: www.uspto.gov
US Patent Act: http://www.law.cornell.edu/patent/patent.overview.html
UK Patent Office: www.patent.gov.uk
European Patent Office: http://www.european-patent-office.org/index.en.php
Espacenet (free patent searching site): http://ep.espacenet.com/
UK Patent Act 1977: http://www.jenkins-ip.com/patlaw/index.htm
FFII on Software Patents: http://www.ffii.org.uk/swpat/swpat.html
Software Patents, Key Arguments: http://kwiki.ffii.org/index.cgi?SwpatArgumentsEn
For and Against Arguments (UK Patent Office): http://www.patent.gov.uk/about/consultations/annexc.htm
Should Patents be Granted for Computer Software or Ways of Doing Business? The Government's Conclusions: http://www.patent.gov.uk/about/consultations/conclusions.htm
European Commission Proposed Directive on Patentability of Computer-Implemented Inventions: http://register.consilium.eu.int/pdf/en/02/st14/14017en2.pdf
Richard Stallman on software patents: http://www.cl.cam.ac.uk/~mgk25/stallman-patents.html
Assorted example of bad European Patents: http://swpat.ffii.org/patents/samples/index.en.html
1[1989] R.P.C. 561, CA
2[1991] R.P.C. 305
3[1987] O.J. EPO 14, Tech. Bd. App.
4[1990] E.P.O.R. 98, Tech. Bd. App. Decision T22/85
5[1990] E.P.O.R. 181, 188, Tech. Bd. App., Decision T65/86
6[1997] R.P.C. 608, CA
7[1999] R.P.C. 861; [1999] E.P.O.R. 301, Tech. Bd. App.