The Patenting of Software and Business Methods

INFORMATION TECHNOLOGY

The Patenting of Software and Business Methods

Following the recent rejection by the European Parliament of the draft Directive for the protection of computer-implemented inventions by patents, Thomas Dickson discusses the UK approach to software and business method patents.

The Patenting of Software and Business Methods

Perhaps unsurprisingly, the development of both software and business method patents began in the US. In 1981, a US Supreme Court decision allowed software to be patented, and in 1998 a US appeal court decision paved the way for all kinds of business methods, even those not using software, to be patented in the US. Recently, however, the European Parliament has rejected a draft Directive of the European Commission which was designed to standardise the approach of member states to such patent applications.

In Europe, Article 52 of the European Patent Convention (EPC) provides that software and business methods "as such" are not patentable. However, the European Patent Office (EPO), which provides an optional centralised application and grant system for patents, has built up a significant body of case law on what is required for software or business methods to be patentable.

Is it patentable?

The test for whether a software-related invention is patentable is whether it has "technical character". The case law indicates that the required technical effect will be found when running the software results in something technical, such as the solution to a technical problem, or where technical features are required to carry out the claimed invention. In terms of business methods, a financial system has been found to be patentable: the EPO board focused on the technical effect of the system rather than on its end result. In addition, claims to an invention which is realised by means of a computer program may take the form of a method of operating apparatus, the apparatus set up to execute the method, or the program itself.

Copyright?

In the UK, business methods and computer programs, if set out in a document, are considered to be literary works and as such benefit from copyright protection under the Copyright, Designs and Patents Act 1988. This is less effective than patent protection, however, since it merely protects the expression of an idea rather than the underlying principles of the idea. For example, there may be copyright in software code, but copyright will not protect the principles of the operation of the software.

The UK Patent Office Approach

Although expressed in similar terms to Article 52 of the EPC, section 1 of the UK Patents Act (1977) is interpreted more narrowly than its European counterpart. The UK Court of Appeal, in Merrill Lynch's Application [1989], held that even if the invention in that case could be regarded as producing a new result in the form of a technical contribution to the prior art, the result was simply the product of a trading system, i.e. a method of doing business, and as such unpatentable.

The UK Patent Office (UKPO) followed this decision until 2002, when the High Court, without reference to the Merrill Lynch case, decided that whereas a mere discovery is not patentable, a discovery which has a technical aspect or contribution is patentable (Kirin-Amgen Inc v Roche Diagnostics GmbH [2002]).

Following the High Court decision in Kirin-Amgen, the UKPO issued a practice note stating that unless and until the courts indicated to the contrary, inventions which involve a technical contribution will not be refused a patent merely because they relate to business methods or mental acts. Cases reported since, however, seem to suggest that the UKPO continues to assess applications more narrowly than the EPO.

in light of the above, there remains uncertainty in the UK as to whether software or business methods are patentable, and not until another case on the matter reaches the Court of Appeal or House of Lords, or there is a change in the law, will we have better guidance.

If you still wish to apply for a software or business method patent, weigh up the benefits (e.g. broad protection) and drawbacks (expense and time), find a patent agent who knows how to draft the application to give the best chance of obtaining a patent which will then be enforceable, and consider, with your advisor, filing in the more liberal patent regime of the US, even if this is not a large market for your products, as licensing opportunities may arise elsewhere.

Thomas Dickson is an Assistant Solicitor in the firm's Corporate Department. His main areas of practice are in commercial and intellectual property law.

Quote: uncertainty in the UK