The following advice is given to an inventor who wishes to protect his business related computer software in Australia, the USA and the EU
I will first review international protection procedure, and then examine questions of validity on a national level.
- International Applications
A patent only confers rights on the patent holder in the country in relation to which the patent was granted. If protection is required in several countries, it is usually necessary for separate applications to be filed in each country.The requirements of patentability will include a thorough examination which includes a search to locate prior art in the same subject matter area so that an examiner can make a determination whether the invention is novel. Any prior art published or disclosed will generally be effective worldwide, so prior art located by examinations of an application in any one country may affect the validity of the application in other countries.The problem with that is, if at any time during examination of a patent application in any country, a prior art publication or disclosure is located, it may limit the effective protection obtainable, or may render the application totally unpatentable. The patent applicant may thus be faced with having spent a significant amount of money only to find that he is unlikely to get effective patent protection anywhere.Fortunately, two international conventions, The Paris Convention for the Protection of Industrial Property 1883, (“the Paris Convention”) and the Patent Co-operation Treaty, 1970, (“PCT”) assist an inventor with the procedure, and at the same time will enable him to extend the timeframe.
One approach would be to rely on the Paris Convention rights of priority and file separate national applications in each country in which the applicant has an interest. (Australia, the USA and the countries of the EU are members of the Paris Convention). Under the system of priority claims, where an application for a patent is filed in a member state, the dates of filing for any subsequent application in other contracting states will be taken to be the date of the first filing, provided that the subsequent filing takes place within 12 months from the first filing.
The Paris Convention also imposes an obligation of national treatment on its members, which means that any rights and privileges associated with intellectual property rights accorded locally must similarly extend to nationals of other member states.
However, separate applications mean that my applicant would be faced with an even higher cost before he is able to judge whether he is even going to make any money out of the invention
Alternatively, the PCT method provides a centralized filing system, and allows for the submission of one international application instead of separate filings in the individual member states, but it adds another layer of costs above the normal procedure for obtaining foreign patents. (Australia, the USA and the member states of the European Patent Convention are members of the PCT).
In any event, an “infringement clearance” search should be carried out on a country to country basis before technical development of the invention has been fully completed and before the final form of the invention has been determined to ensure that there is no pre-existing patent in existence in that country. The cost is fairly insignificant compared to the cost of proceeding with patent applications or the cost of any litigation arising from infringement of a prior patent.
For administrative reasons, a PCT patent application delays the deadline for lodging separate national applications by a further 8 months (12 + 8 = 20 months). This gives the inventor more time for commercial exposure, the applicant may publish or commercially use the invention without affecting the validity of any subsequent application filed in a member country and the applicant will have had the opportunity to amend the claims lodged with the PCT application well before the expiry of the period of 20 months extending from the priority date.
If the applicant wishes to obtain more time, he can lodge a request for an “International Preliminary Examination” which will delay the lodgment further, to a total of 30 months from the date of the first application. (Australia allows 31 months). At the 30 (31) months stage, the applicant must commit himself to the national phase, select the PCT designated countries, and file the national application in each of the countries designated. Each national phase application is dealt with according to the patent laws and procedures of the individual countries. Failure to enter the national phase within 30 (31) months will result in a complete loss of rights.
- Patentability of Business Related Computer Software
When considering the elements of patentability, one must keep in mind Australia’s relevant international obligations, particularly under the “Agreement of Trade-Related Aspects of Intellectual Property Rights, 1995” (TRIPS) which recognizes and reinforces the operation of the Paris Convention and supports international protection and reciprocity.The TRIPS Agreement Art 27 (1) requires that: “patents shall be available for any inventions, whether products or processes in all field of technology, provided the invention is new, involves a creative step and is capable of industrial application”.It is the latter requirement which is likely to be an issue with our application for computer software. In addition, methods of doing business have traditionally been regarded as inherently unpatentable because, so it is claimed, they do not in a general sense belong to the useful arts.
In recent years, the patentability of computer-related inventions has been the subject of intense debate in most industrial countries because of the increasing number of patents being granted in the USA for business methods.
According to some, granting patents for computer-implemented inventions stimulates innovation because the financial and material investment needed to develop sophisticated software is protected. Others, however, believe that such patents stifle competition and act as a brake on innovation.
The IPC recently classified Business Methods as “digital computing or data processing equipment or methods, specially adapted for specific functions – administrative, commercial, managerial, supervisory or forecasting purposes”. (Classification G06F 17/60)
However, Rule 39.1 of the PCT Rules allows the International Searching Authority to refuse a search for an international application in respect to (inter alia):
- schemes, rules or methods of doing business, performing purely mental acts or playing games;
- computer programs, to the extent that the Search Authority is not equipped to search prior art concerning such programs.
Our inventor now has to investigate the national position in each of the countries to ascertain whether his invention is excluded from patentability.
Australia, in contrast to the UK and the EU, relies on an extensive body of case law rather than codification of explicit statements of what is or is not patentable.
This approach was recommended by the Industrial Property Advisory Committee in its 1984 report to the Australian Government.
In Australia, s 18 (1) and (1A) of the Patents Act, 1990 stipulate the requirements of patentability and lists certain exceptions. In addition, s 50(a) of the Act allows the Commissioner discretion to refuse an application “the use of which is contrary to law”.
Our client’s business related software is not specifically excluded under the Act, but it must satisfy the threshold requirement imposed by the traditional principles of “manner of manufacture” of s 6 of the Statute of Monopolies, meaning it must have industrial application.
One difficulty in patenting computer technology has been that computer programs may in some instances be regarded as merely reciting a mathematical algorithm. Mere “mathematical algorithms are not “manner of manufacture” and hence not patentable, because they are considered to be tools everyone should be free to use.
The Australian position, now accepted by the Australian Patent Office, was confirmed by Burchett J on Appeal to the Federal Court in IBM v Commissioner of Patents, 1992. The court relied on the basic principles provided by the leading High Court decision in National Research Development Corp v Commissioner of Patents, 1959, the “NRDC” case, stating that the invention claimed must involve the production of some commercially useful effect to be patentable.
The NRDC case is authority for the principle that, in determining patentability the question is not: “Is this an invention?”, but: “Is this a proper subject for patentability?”
This approach was confirmed by a unanimous decision of the Full Federal Court in CCOM Pty Ltd v Jiejing Pty Ltd, 1994.
Following those decisions, The APO Manual of Practice and Procedure (1998 Vol 2 – National) provided the following guidelines for the patentability of computer software, to settle the position in Australia:
- the general principle (as set out in NRDC) re material advantage;
- the requirement for an “artificially created state of affairs of utility in the field of economic endeavor”;
- the “mode or manner” of the invention to include:
- source code,
- executable code,
- enabling computer to achieve any result of utility in the field of economic endeavor;
- a mathematical algorithm per se is not patentable, but may be a step in an otherwise patentable method.
Business Methods, being mere schemes, plans, and methods, were considered to be unpatentable in Australia before the “NRDC” case, but following that case, business methods which resulted in an article having a functional purpose, were no longer considered unpatentable.
In the Federal Court decision in Welcome Real-Time SA v Catuity Inc, 2001 Heerey J upheld a patent because it was an “artificial state of affairs” and not just a business method but rather a method combined with a device used for business.
In Re Innovation Patent by Steven John Grant, 2004 , the Deputy Commissioner of Patents held that the invention in question was not an artificially created state of affairs and therefore not a manner of manufacture. The case confirmed that the need for technological implementation was a significant criterion in respect to business related software in Australia.
S 6 of the Statute of Monopolies provides another ground for the rejection of computer programs in a public policy approach, termed “generally inconvenient”. Two examples are the decisions in Telefon AB/LM Ericssons Application, 1975 and British Petroleum Co Ltd’s Application, 1968 where Mr Asman of the APO held that: “…it would be generally inconvenient if an owner of a computer program were to find himself prevented from operating it efficiently or in any manner he may wish or with any degree of privacy he may desire.”
With regard to Business Methods, the APO Manual of Practice and Procedure (2001 Vol 2 – National) states that: …”it is no longer the practice of IP Australia to have a technical means of implementation to be patentable, as there is no explicit requirement for this in Australian law. Business systems may still be opposed according to the traditional principle of mere schemes, plans and ideas not being patentable”.
However, Mr D Herald, Deputy Commissioner of Patents, in the Application by Grant, 2004 held that the exclusion of the “mere scheme or plan” did not exist as a separate ground in addition to the criteria established by the NRDC case.
The case illustrated the need for a reform of the Patents Act, 1990, as suggested in an article (Grant’s Application – it’s time for a new approach to a “public-interest” exclusion from patentability, 2005” (13 (1) JLM 135) which argues that exclusions should be clearly identified and determined in a national competition policy.
In the USA:
The starting point is 35 U.S.C. 101, which reads: “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 therefore, subject to the conditions and requirements of this title.”
The US Supreme Court has stated that Congress intended statutory (patentable) subject matter to “include anything under the sun that is made by man.” (Diamond v. Chakrabarty, 447 U.S. 303, 309, 1980).
However, the Supreme Court has specifically noted exceptions and identified three categories of unpatentable subject matter. They are: “laws of nature, natural phenomena, and abstract ideas.”
The Supreme Court has held that mathematical algorithms per se are not patentable subject matter to the extent that they are merely abstract ideas. (Diamond v. Diehr, 450 U.S. 175, 185 (1981) but it made this distinction: while mathematical algorithms, as a law of nature, are not patentable, an application of an algorithm may be patentable.
In 1998, the US Court of Appeals for the Federal Circuit in State Street Bank & Trust Co v Signature Financial Group, 1998, firmly rejected the exclusion of business methods from patent protection. The case involved computer software but was fought directly on the basis of the alleged exclusion of business methods.
The court stated that claims drawn to a method of doing business should not be categorized as “business method” claims, instead they should be treated like any other process claims. The court held that the method must accomplish practical application which would be achieved when the claimed subject matter produces a useful, concrete and tangible result.
Since the State Street decision, the US Patent Office has granted many patents for business methods used in e-commerce and the internet. Examples are Amazon.com US Patent No 5,960,411 for its “one click” check-out system and Price Comparison US Patent No 6,076,070 for a method of computer implemented online price comparison for internet goods and services.
In the EU:
The starting point for assessing patentability of computer-implemented inventions is Article 52 EPC – the fundamental provision that a patent should be granted for any invention that meets the other requirements for patentability and is not expressly excluded from patent protection.
According to Article 52(1) EPC, a European patent shall be granted for any inventions which are susceptible of industrial application, which are new and which involve an inventive step. Further, in accordance with Rules 27 and 29 EPC, in order to be patentable, an invention must be of a technical character to the extent that it must relate to a technical field, must be concerned with a technical problem and must have technical features in terms of which the matter for which protection is sought can be defined in the patent claim.
The EPC does not give a definition of the term “invention”, it does, however, include a list of subject-matter and activities which are deemed not to be inventions. The list of such subject matter or activities contained in Article 52(2) is not exhaustive but enumerates the major cases: discoveries, scientific theories and mathematical methods, aesthetic creations, schemes, rules and methods for performing mental acts, playing games. Under Article 52 (3) EPC these exceptions have to be interpreted narrowly. Presentations of information are not patentable, although this is now covered by separate sui-generis database protection.
Under the EPC there are two basic kinds of patent claim: a) claims to a physical entity (product, apparatus) and b) claims to an activity (process, use).
According to established EPO practice, computer-implemented inventions can be patented if they involve an inventive technical contribution to the prior art. They are not patentable if there is no such technical contribution to the prior art.
In the decisions T 208/84 “VICOM” it was held that a claim directed to subject-matter for controlling a technical process was patentable irrespective of whether a computer program was involved. The decision of Koch & Sterzel T26/86 confirmed that practice.
Pure business methods as such are not patentable (Article 52 (2), (3) EPC and T931/95). For example, the patentability of an auction method carried out by means of the internet was denied because there was no technical contribution to the prior art, (T 258/03 “Hitachi”), where the technical implementation of the improved auction rules was done by conventional means of a computer .
Although methods for doing business, programs for computers, etc. are explicitly excluded from patentability, a product or a method which is of a technical character may be patentable, even if the claimed subject-matter defines or at least involves a business method, a computer program, etc.
In the specific case of a claim defining a computer program, irrespective of whether or not it defines a business method, the Board of Appeal of the EPO (T 1173/97), noted that a computer program is considered to have a technical character, if it causes, when run on a computer, a technical effect which may be known in the art but which goes beyond the “normal” physical interactions between program and computer. Such effect may, for example, be found in the control of an industrial process or in the internal functioning of the computer itself.
In summary, Computer implemented inventions are only patentable in the EU if they have technical character, are new and involve an inventive technical contribution to the prior art. For example, in some patents, software makes a technical contribution, as in a novel and inventive computer-controlled process operating a robotic arm in industry.
However, the EPO does not grant “software patents” as such. Computer programs, algorithms or computer-implemented business methods that make no technical contribution are not considered patentable inventions under the EPC.
The EPO does not require disclosure of a source code because the concept must be disclosed in the application sufficiently clear and complete. In this respect, the practice of the EPO differs significantly from that of the United States Patent & Trademark Office and the Australian Patent Office.
Standard patent applications for all three countries are similar in most respects.
They fully disclose the invention in a two part specifications which clearly states the claims and shows the claims are based on the inventions as described. Both Australia and the USA follow “best method” procedure that must be submitted along with the application by the Patentee.
Actual inventorship is important in the USA because US law grants patents not to the first person to file the patent application, but to the first person to invent the subject matter (The “First to Invent” principle). In the USA, only the inventor can apply for a patent, and is required to declare, on oath, that he believes himself to be the original and first inventor of the invention.
Almost all other countries, including Australia and the EU follow a “First Inventor to File” principle in establishing priority when granting patents.
The USA and Australia allow for a grace period which gives an inventor protection from a disclosure of his invention prior to the filing of a patent application.
The Australian grace period of 12 months was implemented by way of amendment to the Patents Regulations 1991 (SR 59 0f 2002) which allows the filing of a provisional application. This secures a priority date for a foreshadowed invention and gives the applicant time to reassess the viability of the invention and to decide if he should proceed to filing a complete application. The claims of the complete application must be within those of the provisional application.
In the USA the regular application filed within a year does not have to be identical to the provisional application it replaces. Thus, the regular application can serve the function of a continuation-in-part application which can include old and new subject matter.
A US provisional application cannot claim the benefit of an earlier filed application, so, a foreign provisional applicant should file the USA provisional application about the same time that they file their home country application and not rely on filing a Paris Convention Application up to a year later.
An Australian inventor wishing to obtain protection in Europe, or another jurisdiction which does not provide a grace period, will need to carefully consider whether any activity, albeit protected in Australia or the US, would prejudice novelty in any other jurisdictions.
The EU has no provisional registration procedure and the EPO is still deliberating it’s introduction. One of the main concerns is that third parties may derive intervening rights from an early disclosure, as there is no guarantee of reciprocity from other countries.
The substantive requirements of patentability, such as novelty, inventive step and non-obviousness, industrial applicability and utility, are similar in all three countries. However, standards differ and methods of examination will be applied differently in each nation.
For example, in determining whether an invention is new, in identical circumstances, a patent for an invention may be granted in one country but refused in another country for want of novelty. The question asked is simply: “has the invention already been disclosed?” (Windeyer J in Sunbeam Corp v Morphy-Richards, 1961).
“Absolute Novelty” is the most stringent standard. It requires that there should have been no publication of the invention anywhere in the world before the priority date in question, and in addition there should have been no use of the invention anywhere in the world. (This applies in some EUR countries such as France, Italy and Sweden, and in Australia it now applies to Standard Patents following the changes made under the Patents Amendment Act 2001)
“Relative Novelty” still requires that there should have been no publication of the invention anywhere in the world. However, a less stringent standard is adopted in relation to use, in that the invention is regarded as novel if the invention has not been used in the country granting the patent before the priority date. (This applies in USA, Germany)
“Local Novelty” is the least stringent and requires that there should have been no prior publication and no prior use in the country granting the patent before the priority date of the application. (This applies in Greece and NZ)
One consequence of the different novelty standards is that great care has to be exercised in filing patent application where the 12 months period provided by the international convention has expired. If the Australian client decides to lodge in a number of overseas countries then it is most desirable that all such applications be lodged under the provisions of the international convention. If the 12 months period commencing with the first Australian application is not met, then any use of the invention in Australia could invalidate a corresponding foreign patent.
If a decision to lodge the overseas patent application is not taken until after approximately 18 months following the lodgment of the Australian application then the Australian patent specification will have been published by the Australian patent office.
This will invalidate any application lodged in any country having either absolute novelty or relative novelty. Also the patent office of countries having local novelty may receive the publication of the Australian patent office so novelty may also have been destroyed in these countries.
“The case for and against a grace period in European Patent Law” (www.european-patent-office) IPRC 2000, 160-161.
“Computer implemented Inventions and Patents” (Law and Practice at the EPO), 2005
“Patent Protection Regimes – A comparative Guide”, (Isabel Chng, Chig Kam Tack, Lau Kok Keng), Intellectual Property Office, Singapore, 2003
“Consolidated Patent Laws US Code Title 35, Class 705: Computer Implemented Processes related to e-Commerce” (US Patent and Trademarks Office, MPEP , May 2004)
“Guidelines for Considering the Patentability of Computer Program related Inventions, 1986” (Australian Patent Office)
“Intellectual Property (Text and Essential Cases)”, 2005
(Rocque Reynolds and Natalie Stoianoff)
“Intellectual Property in Australia”, 2004
(McKeough, Stewart, Griffith)
“Intellectual Property (Cases, Materials and Commentary)”, 2005
“Technology Contracts”, 1995
“Patents, Trade Marks and Related Rights” ( Lahore J)
“Australian Intellectual Property” CCH (1982)