1 Patentability of Computer Software and Business Methods Andrés Guadamuz

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Patentability of Computer Software and Business MethodsPatentability of Computer Software and Business MethodsAndrés GuadamuzAndrés Guadamuz

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Computer Implemented InventionsComputer Implemented InventionsSoftware PatentsSoftware Patents

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Why software?Why software?

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SoftwareSoftware

Software is "a set of statements or instructions to be used directly or indirectly in a computer to bring about a certain result".

These instructions are set out in source code, a set of in logical human-readable instructions coded into computer language.

Object code is the result of a compilation of the source code into machine readable instructions.

Software is "a set of statements or instructions to be used directly or indirectly in a computer to bring about a certain result".

These instructions are set out in source code, a set of in logical human-readable instructions coded into computer language.

Object code is the result of a compilation of the source code into machine readable instructions.

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Source codeSource code#!/usr/bin/perl # Public domain. Questions to Jamie McCarthy, jamie@mccarthy.vg use LWP::Simple; use Math::BigInt; my $html = get(`http://www.utm.edu/research/primes/curios/48565...29443.html'); my($prime) = $html =~ m{<blockquote>([^<]+)</blockquote>}; $prime =~ tr{0-9}{}cd; $prime = Math::BigInt->new($prime); my $binary = ''; while ($prime > 0) { $binary = pack(`N', ($prime % 2**32)) . $binary; $prime /= 2**32; } $binary =~ s{^\0+}{}; local *FH; open(FH, `| gunzip -acq') or die `cannot gunzip, $!'; binmode FH; print FH $binary;

close FH.

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Object codeObject code

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Copyright vs PatentsCopyright vs Patents

EXPRESSION IDEA

LITERAL NON-LITERAL

SYMBOLIC FUNCTIONAL

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Software Protection in Europe

Software Protection in Europe

Software Copyright Directive 91/250/EEC requires copyright law to recognise software as a literary work.

Art 52(2)(c) of the European Patent Convention states that “programs for computers” “as such” are not inventions, and therefore are not patentable.

Software Copyright Directive 91/250/EEC requires copyright law to recognise software as a literary work.

Art 52(2)(c) of the European Patent Convention states that “programs for computers” “as such” are not inventions, and therefore are not patentable.

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Trouble with copyright: USA

Trouble with copyright: USA

The idea-expression dichotomy is very well used in the United States, this has had interesting effects for software protection.

“look and feel” cases, Apple v. Microsoft 821 F.Supp 616 (1993).

Whelan Associates Inc v Jaslow Dental Laboratory Inc [1987] FSR 1 gave a test for the idea-expression dichotomy in software.

Computer Associates v Altai 982 F 2d 693 (1992) – Abstraction, Filtration, Comparison.

The idea-expression dichotomy is very well used in the United States, this has had interesting effects for software protection.

“look and feel” cases, Apple v. Microsoft 821 F.Supp 616 (1993).

Whelan Associates Inc v Jaslow Dental Laboratory Inc [1987] FSR 1 gave a test for the idea-expression dichotomy in software.

Computer Associates v Altai 982 F 2d 693 (1992) – Abstraction, Filtration, Comparison.

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Abstraction, Filtration, Comparison test

Abstraction, Filtration, Comparison test

Stage 1 - Abstraction - You dissect the code and isolate each level of abstraction.

Stage 2 - Filtration - Examine the structured components at each level of abstraction to determine whether their inclusion at that level was ‘idea’ or was dictated by efficiency, required by external factors or was taken from the public domain (and is therefore unprotectable).

Stage 3 - Comparison - What remains following filtration is a core of protected expression. This must be compared for substantial similarity.

Stage 1 - Abstraction - You dissect the code and isolate each level of abstraction.

Stage 2 - Filtration - Examine the structured components at each level of abstraction to determine whether their inclusion at that level was ‘idea’ or was dictated by efficiency, required by external factors or was taken from the public domain (and is therefore unprotectable).

Stage 3 - Comparison - What remains following filtration is a core of protected expression. This must be compared for substantial similarity.

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Trouble with copyright: UKTrouble with copyright: UK

John Richardson Computers v Flanders [1993] FSR 497.

Saphena v. Allied Collection [1995] FSR 616.

Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd [1994] FSR 275.

Cantor Fitzgerald International v Tradition (UK) Ltd [1999] Masons CLR 157.

Navitaire Inc v easyJet Airline Co [2004] EWHC 1725 (Ch).

John Richardson Computers v Flanders [1993] FSR 497.

Saphena v. Allied Collection [1995] FSR 616.

Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd [1994] FSR 275.

Cantor Fitzgerald International v Tradition (UK) Ltd [1999] Masons CLR 157.

Navitaire Inc v easyJet Airline Co [2004] EWHC 1725 (Ch).

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Test in IbcosTest in Ibcos

According to Jacob J, the Altai test should not be applied in the UK. What are the work or works in which

the plaintiff claims copyright? Is each work 'original'? Was there copying from that work? If there was copying, has a

substantial part of that work been reproduced?

According to Jacob J, the Altai test should not be applied in the UK. What are the work or works in which

the plaintiff claims copyright? Is each work 'original'? Was there copying from that work? If there was copying, has a

substantial part of that work been reproduced?

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Protection of functionality in Navitaire

Protection of functionality in Navitaire

“Copyright protection for computer software is a given, but I do not feel that the courts should be astute to extend that protection into a region where only the functional effects of a program are in issue. There is a respectable case for saying that copyright is not, in general, concerned with functional effects, and there is some advantage in a bright line rule protecting only the claimant's embodiment of the function in software and not some superset of that software.”

“Copyright protection for computer software is a given, but I do not feel that the courts should be astute to extend that protection into a region where only the functional effects of a program are in issue. There is a respectable case for saying that copyright is not, in general, concerned with functional effects, and there is some advantage in a bright line rule protecting only the claimant's embodiment of the function in software and not some superset of that software.”

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The road towards patentability: USAThe road towards patentability: USA

The Abstraction-Filtration-Comparison test has been a failure.

Owners begin to pursue other types of protection.

Diamond v Diehr, 450 U.S. 175, 185 (1981) "everything under the sun that is made by man."

In re Alappat, 33 F. 3d 1526 (1994), “useful, concrete, and tangible result.“

State Street Bank v Signature Financial Group (1998) 47 USPQ2d 1596.

The Abstraction-Filtration-Comparison test has been a failure.

Owners begin to pursue other types of protection.

Diamond v Diehr, 450 U.S. 175, 185 (1981) "everything under the sun that is made by man."

In re Alappat, 33 F. 3d 1526 (1994), “useful, concrete, and tangible result.“

State Street Bank v Signature Financial Group (1998) 47 USPQ2d 1596.

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Software patents (USA, 1985-2005)

Software patents (USA, 1985-2005)

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But… software copyright is useful

But… software copyright is useful

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Software patentability around the world

Software patentability around the world

Art. 27.1 TRIPS Agreement: “patents shall be available for any inventions, whether products or processes, in all fields of technology”.

Reluctance to apply indiscriminate patentability in most regions.

Art. 27.1 TRIPS Agreement: “patents shall be available for any inventions, whether products or processes, in all fields of technology”.

Reluctance to apply indiscriminate patentability in most regions.

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Patentability in EuropePatentability in Europe

Strict reading of the law leads one to believe that software “as such” is not patentable.

European Patent Office (EPO) Board of Appeals interpreted “as such” very broadly in several cases.

20,000 software patents approved by the EPO, 6,000 applications per year in UK.

There is software patentability in Europe.

Strict reading of the law leads one to believe that software “as such” is not patentable.

European Patent Office (EPO) Board of Appeals interpreted “as such” very broadly in several cases.

20,000 software patents approved by the EPO, 6,000 applications per year in UK.

There is software patentability in Europe.

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Technical effectTechnical effect

Case law has decreed that only software that has a “technical effect” can be patented.

The term is not in the legislation, and therefore there is no clear definition of technical effect.

Lack of consistency in its application. Merrill Lynch [1989] RPC 561: "There

must... be some technical advance on the prior art in the form of a new result.“

Case law has decreed that only software that has a “technical effect” can be patented.

The term is not in the legislation, and therefore there is no clear definition of technical effect.

Lack of consistency in its application. Merrill Lynch [1989] RPC 561: "There

must... be some technical advance on the prior art in the form of a new result.“

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The CII DirectiveThe CII Directive

Technical contribution: “means a contribution to the state of the art in a field of technology which is new and not obvious to a person skilled in the art.”

A relatively small directive proposal designed to overhaul a few technicalities in patent law and practice by harmonising the patentability of computer implemented inventions…

Technical contribution: “means a contribution to the state of the art in a field of technology which is new and not obvious to a person skilled in the art.”

A relatively small directive proposal designed to overhaul a few technicalities in patent law and practice by harmonising the patentability of computer implemented inventions…

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The geek revolutionThe geek revolution

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CII DirectiveCII Directive

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The aftermathThe aftermath

Back to where we began…Case law will help to determine the

definition of technical effect. New ideas have emerged in recent

cases.The Commission and some sectors of

the software industry will not give up.Talk of a new directive coming our

way.

Back to where we began…Case law will help to determine the

definition of technical effect. New ideas have emerged in recent

cases.The Commission and some sectors of

the software industry will not give up.Talk of a new directive coming our

way.

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Halliburton v Smith International

Halliburton v Smith International

Two patents involved, one drill bit and software to design drill bits.

In this ruling, there seems to be a clear technical effect, the software can only be used for specific purpose.

The patent was struck down because it had inadequate disclosure (upheld after appeal).

Could this be the strategy to attack software patents in the future?

Two patents involved, one drill bit and software to design drill bits.

In this ruling, there seems to be a clear technical effect, the software can only be used for specific purpose.

The patent was struck down because it had inadequate disclosure (upheld after appeal).

Could this be the strategy to attack software patents in the future?

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The little man test (CFPH LLC Application)

The little man test (CFPH LLC Application)

“The question to ask should be: is it (the artefact or process) new and non-obvious merely because there is a computer program? Or would it still be new and non-obvious in principle even if the same decisions and commands could somehow be taken and issued by a little man at a control panel, operating under the same rules? For if the answer to the latter question is 'Yes' it becomes apparent that the computer program is merely a tool, and the invention is not about computer programming at all.”

“The question to ask should be: is it (the artefact or process) new and non-obvious merely because there is a computer program? Or would it still be new and non-obvious in principle even if the same decisions and commands could somehow be taken and issued by a little man at a control panel, operating under the same rules? For if the answer to the latter question is 'Yes' it becomes apparent that the computer program is merely a tool, and the invention is not about computer programming at all.”

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Aerotel v TelcoAerotel v Telco

“[...] despite the fact that such patents have been granted for some time in the US, it is far from certain that they have been what Sellars and Yeatman would have called a "Good Thing." The patent system is there to provide a research and investment incentive but it has a price. That price (what economists call "transaction costs") is paid in a host of ways: the costs of patenting, the impediment to competition, the compliance cost of ensuring non-infringement, the cost of uncertainty, litigation costs and so on. There is, so far as we know, no really hard empirical data showing that the liberalisation of what is patentable in the USA has resulted in a greater rate of innovation or investment in the excluded categories. Innovation in computer programs, for instance, proceeded at an immense speed for years before anyone thought of granting patents for them as such. There is evidence, in the shape of the mass of US litigation about the excluded categories, that they have produced much uncertainty. If the encouragement of patenting and of patent litigation as industries in themselves were a purpose of the patent system, then the case for construing the categories narrowly (and indeed for removing them) is made out. But not otherwise.”

“[...] despite the fact that such patents have been granted for some time in the US, it is far from certain that they have been what Sellars and Yeatman would have called a "Good Thing." The patent system is there to provide a research and investment incentive but it has a price. That price (what economists call "transaction costs") is paid in a host of ways: the costs of patenting, the impediment to competition, the compliance cost of ensuring non-infringement, the cost of uncertainty, litigation costs and so on. There is, so far as we know, no really hard empirical data showing that the liberalisation of what is patentable in the USA has resulted in a greater rate of innovation or investment in the excluded categories. Innovation in computer programs, for instance, proceeded at an immense speed for years before anyone thought of granting patents for them as such. There is evidence, in the shape of the mass of US litigation about the excluded categories, that they have produced much uncertainty. If the encouragement of patenting and of patent litigation as industries in themselves were a purpose of the patent system, then the case for construing the categories narrowly (and indeed for removing them) is made out. But not otherwise.”

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Microsoft v AT&T (U.S. Supreme Court)

Microsoft v AT&T (U.S. Supreme Court)

The case is whether there is patent infringement for a software product that may be sent in a master disk from the United States, and then assembled and sold abroad.

AT&T owns a patent over speech-encoder software, and it sued Microsoft arguing that Microsoft Windows contains code which infringes their patent claim.

AT&T included in their infringement suit international claim for all copies of Windows manufactured and sold abroad, a claim that Microsoft contended.

The case is whether there is patent infringement for a software product that may be sent in a master disk from the United States, and then assembled and sold abroad.

AT&T owns a patent over speech-encoder software, and it sued Microsoft arguing that Microsoft Windows contains code which infringes their patent claim.

AT&T included in their infringement suit international claim for all copies of Windows manufactured and sold abroad, a claim that Microsoft contended.

The U.S. Supreme court was asked two questions, is Windows a software component in the sense of American patent law? Here the answer was yes.

If so, was the component supplied from the United States? The answer here was no,

The physical master disks were shipped from places outside of the United States to overseas assembly factories, even if there was a presumption that some of the software could have been coded in the U.S.

The U.S. Supreme court was asked two questions, is Windows a software component in the sense of American patent law? Here the answer was yes.

If so, was the component supplied from the United States? The answer here was no,

The physical master disks were shipped from places outside of the United States to overseas assembly factories, even if there was a presumption that some of the software could have been coded in the U.S.

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Sui generis?Sui generis?

Why not go the “sui generis” way?

Software seems to have problems with both copyright and patents.

New right that has shorter lifetime, and recognises both the literal and functional aspects of software.

Why not go the “sui generis” way?

Software seems to have problems with both copyright and patents.

New right that has shorter lifetime, and recognises both the literal and functional aspects of software.

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Business method patentsBusiness method patents

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Business methods and the law

Business methods and the law

Ways of doing business not traditionally covered by patent – e.g. book-keeping, sales methods, etc.

State Street decision (1998), “The business method exception has never been invoked by this court, or the CCPA, to deem an invention unpatentable”

Ex parte Lundgren (2004) USPTO Board of Patent Appeals and Interferences (BPAI). Process inventions do not have to be in the technological arts in order to be patentable in the U.S. They do, however, have to produce a "concrete, useful and tangible result".

Ways of doing business not traditionally covered by patent – e.g. book-keeping, sales methods, etc.

State Street decision (1998), “The business method exception has never been invoked by this court, or the CCPA, to deem an invention unpatentable”

Ex parte Lundgren (2004) USPTO Board of Patent Appeals and Interferences (BPAI). Process inventions do not have to be in the technological arts in order to be patentable in the U.S. They do, however, have to produce a "concrete, useful and tangible result".

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State Street Bank again…

State Street Bank was an example of a ‘business method’ patent.

The invention in State Street Bank was only possible because of computerisation – it wouldn’t work without a program.

Many ‘software patents’ are actually ‘business method patents’ where the business method is stated in program terms.

Amazon.com’s “one click” patent application is an example.

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European situationEuropean situation

EPC precludes support for business methods:52(2)(c) “schemes, rules and

methods for performing mental acts, playing games or doing business, and programs for computers”

Patents were designed for industrial protection, hence this exemption.

EPC precludes support for business methods:52(2)(c) “schemes, rules and

methods for performing mental acts, playing games or doing business, and programs for computers”

Patents were designed for industrial protection, hence this exemption.

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Same problem for Business Methods as

Software EPC precludes support for business methods:52(2)(c) “schemes, rules and methods

for performing mental acts, playing games or doing business, and programs for computers”

Patents were designed for industrial protection, hence this exemption.

However, many many patents being granted currently which look very much like business method patents.

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The trouble with business method patents is…

The trouble with business method patents is…

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Thank youThank youa.guadamuz@ed.ac.uka.guadamuz@ed.ac.uk