Differences in European and U.S. Patent Regulation ...rsarvas/Sarvas_Soininen_Differences.pdf · assessing novelty and the definition of patentable subject-matter. These differences

Sarvas, Soininen/Patent regulation affecting standardization

DIFFERENCES IN EUROPEAN AND U.S. PATENT REGULATION AFFECTING WIRELESS STANDARDIZATION∗

Risto Sarvas Aura Soininen

Helsinki Institute for Information Technology [email protected]

[email protected]

Abstract The significance of patents has risen in wireless industry standardization. In the global scene, European

and U.S. patent regulations have clear differences. The objective of this study is to identify the state of the art of the key issues surrounding wireless technology standards and patents. Some focus is also given to the recent changes in European patent regulation in contrast to U.S. regulation. The first part of the research is a summary of issues in standardization and patents. The second part is a survey of differences in the two

patent regimes, and how they might affect standardization. The study points out clear differences in assessing novelty and the definition of patentable subject-matter. These differences and the ambiguity surrounding European patenting of computer-related inventions causes uncertainty, which produces

concrete problems for professionals in European markets familiar only with U.S. patenting practices, and vice versa.

Introduction

Standardization is required to achieve worldwide compatibility like global roaming of mobile phones. Standards provide compatibility and interoperability that make internetworking, interchangeability and network externalities possible (Hjelm 2000, Shurmer and Lea 1995). In wireless technology the key role of standards in the development and diffusion of technology can not be highlighted enough. The economic value of standards in wireless technology has made the process of standardization a significant part of the business involved. As the strategic importance of standards has risen, the number of stakeholders involved in standardization of wireless technology has increased (Hjelm 2000), and the reward of having some control over the outcome of standardization has gained importance (Shurmer and Lea 1995). Intellectual property rights (IPRs), especially patents have become a tool for leveraging the standardization process to suit ones interests. Patents provide the patent holder rights to exclusively control the patented technology. The limits of patent holder’s rights are dictated primarily by national patent regulations and to some extent by international patent treaties. Especially, the patent holder’s rights to refuse licensing, discriminate amongst potential licensees and to name the price for licensing can be used in the patent owner’s favor in standardization negotiations. Also, having a patent in standardized technology is often a valuable source of royalties. Because of the monopoly provided by a patent to its holder, strong patent rights are criticized to conflict the public benefits of open and free standards: with one critical patent in the technology being standardized, the patent holder can slow down or

∗ This paper was presented in International Technology and Strategy Forum Workshop on Wireless Strategy in the Enterprise: An International Research Perspective, Berkeley, USA. October 15-16, 2002.

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fully stop the standardization process if it suits the holder’s needs. In an extreme situation, the whole standardization process can be held at ransom. Several international standardization organizations prevent this by having patent policies. The different patent policies try to get the patent holders to disclose all relevant patent information and to license in reasonable and non-discriminatory terms. However, the patent policies have no power over patent holders who are not participating in the standardization work. Then again problems like the difficulty to estimate the total amount of licensing fees one must pay in order to be able to manufacture a product that contains more than one standardized technology are not easily managed. Patents play a key role in international and global standardization. The patent regulations of industrialized countries are broadly speaking similar and international patent treaties provide effective global protection for IPRs, and treaties like TRIPS (Trade-Related aspects of Intellectual Property rightS) aim to harmonize even more the principles of patent regulations worldwide. Nevertheless, there is no global patent system and patent regulations have some clear differences. Among the patent regimes considered most influential, i.e. United States, European Patent Convention (EPC), Japan and Australia, the scope of patentable inventions is different, and patent application processes have notable differences. Some of the patent disputes over accepted standards have even reached the public. In 2002 at least two cases have reached a wider audience than usual: IBM and its patents on the ebXML standard, and Forgent Networks’ claims to the JPEG standard. These are discussed in more detail later in this paper. This paper discusses the differences in patent regulation between the United States and the European Patent Convention that can have an effect on standardization of wireless technology. First we discuss the problems and issues involved in standardization and patents in technological areas like wireless technology. Then we bring forward differences in patentability between the United States patent law and the European Patent Convention. We also discuss the potential changes in European software patent regulation that might have an effect on standardization. We limit the survey about the differences in patent regulation mostly to the patentability of inventions in the U.S. and Europe. We do not discuss in detail what rights the patent holder gains thorough patenting in different patent regimes and how the scope of the patent is defined. We do not discuss compulsory licensing, U.S. patent misuse doctrine, nor application of Articles 81 and 82 of the Treaty of Rome in detail. We also leave out standards licensing details like what usually are considered reasonable and non-discriminating terms and conditions, and how they are reached. We refer to these briefly in our text when applicable, but do not discuss them separately.

Standardization and patents

In the following sections we discuss the role of standards in telecommunication technology, especially wireless technology. We also outline the so-called fundamental dilemma between standards and patents, and how patents are used to drive one’s interest at the cost of easy and free standardization. We also discuss the patent policies adopted by standardization organizations to lessen the problems involved with patents.

Wireless technology relies on standards

Standards in this paper focus on open de jure standards. In other words, standards which are purposefully designed by some official body to promote compatibility and interoperability. By open standards we mean standards which are easily accessible to anyone. We do not include de facto standards, which have no official standardization process, nor do we include standards that are obligatory, like safety standards. In wireless technology where global functionality, like worldwide roaming is essential, international compatibility standards play a key role. Building global networks requires lot of international standardization of protocols, interfaces and services. In addition, as the technology gets more complex the importance of standards is emphasized even more. From the last decade we can see the important role of organizations like European Telecommunications Standards Institute (ETSI) in advancing GSM technology and 3GPP in advancing WCDMA technology. (Raivio 2001) The fundamental need for global standards in wireless technology is widely acknowledged (Raivio 2001). However, the process of standardization has received criticism: the slow progress of large centralized standard setting organizations is seen

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to hinder future development (Raivio 2001, Shurmer and Lea 1995). As mentioned above, once a standard is finally set, it might very well be inferior and old technology compared to the newest inventions. Then the users face the dilemma of choosing between the benefits of compatibility provided by the standard and the benefits of new technology (Shurmer and Lea 1995). In other words, an often asked question is, whether standardization is able to keep up with the rapid pace of technological advancement and demand by market? Also, once standardization is worldwide the number of stakeholders grows slowing down the process even more (Hjelm 2000).

Role of patents in standardization.

Widespread introduction of digital technology has heightened the importance of intellectual property rights (IPRs), especially in telecommunications (Shurmer and Lea 1995). IPRs are exclusive rights given to promote innovation and diffusion of technology. By giving the owner of an intellectual property (IP) exclusive rights, i.e. a limited monopoly, the system provides incentives for innovation and progress. IPRs consist of patents, copyrights and trademarks. Also, some other forms of IPRs exist in some countries, e.g. protection for integrated circuits and design rights. In this paper, we focus solely on patents because their role in standardization is clearly most influential (Rahnasto 2001). Generally speaking patent regulation guarantees a patent holder exclusive rights to the patented invention. Unlike copyright in literary and artistic work, a patent gives its holder rights to all implementations of the patented invention as it is described in the patent specification. This includes inventions invented totally independently and without any knowledge of the patent specification. The patent specification describes the patent in written claims with the possible aid of illustrative figures. If a patent is infringed, the infringing invention is compared to the patent’s claims. The descriptions and drawings of the invention can be used to interpret the claims (EPC Art 69). However, to gain a patent for an invention it has to be novel and have an inventive step in relation to the state of the art. In other words, the invention must be new and not obvious to a professional in the field of the invention. There are also limits to what kinds of inventions are deemed patentable. For example, mathematical formulas and scientific discoveries are not considered patentable. With a patent the patent holder has exclusive rights e.g. to prevent anybody from using, importing or manufacturing the patented invention without his permission. This monopoly lasts up to twenty years. We will discuss patent regulations in more detail later in this paper. Generally speaking, patents and standards are both specifications of some technology, and their objective is to ensure that society benefits from innovation (Shurmer and Lea 1995). Nevertheless, patents and standards have some clear differences. First of all, the nature of standards set by official organizations is to provide the industry with open and free specifications on technology. This in turn will benefit the consumers by providing them with compatible competing products. Patents on the other hand are not free but quite the opposite: a patent holder has to a certain extent, a right to prevent anyone from using the patented invention to their own benefit. If another party wants to use patented technology, they have to license it from the patent holder. In licensing the patent, the patent holder is by no way obliged to license the invention, the patent holder can also discriminate among potential licensees and when the patent holder does issue a license, it is entitled to secure any such monetary or other consideration as it is able to extract from the licensee (Shurmer and Lea 1995). There are some exceptions to the rights of the patent owner, e.g. in the form of compulsory licensing, but they are rarely enforced and are sometimes seen as weakening the incentives provided by a patent system (Smoot 1995).

Patent systems

Patents are not global. Contemporary patent systems have developed from national patent regimes which have been harmonized by international treaties and conventions. Today the most influential patent regimes in information technology are the United States’, European, Japanese and Australian patent systems. By European patent system we mean European national patent systems generally harmonized by the European Patent Convention (EPC) so that patents can be applied centrally for all contracting states from the European Patent Office (EPO). A patent in one of these patent regimes does not automatically give patent rights in other regimes, although a patent in one regime is prior art in any patent system.

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The European Patent Office (EPO) plays an important role in interpreting the EPC and therefore the whole European patent regime. It grants European patents for the contracting 25 states of the EPC. An EPO patent can be applied by anyone, and the patent can be designated to any of the contracting states. The EPO does all the required searches and examinations, and once the patent is issued it is forwarded to the designated countries and the patent is treated thereafter as a national patent. Opposition and rejection appeals can be made to the EPO, but infringements and other issues are handled by national courts. (EPO 2001) Above mentioned does not mean that European national patent systems have no role in European patenting. Patents can be applied from any of the national patent offices. Nevertheless, it has to be noticed that national patent offices apply the country’s own patent law and are by no means bound to the practice of the EPO. This means that although national Patent laws are usually equivalent to the EPC, their interpretation can vary. The situation changes if the Community Patent Regulation Proposal comes in force. Community Patent regulation would make it possible to apply for a Community patent, that is, a European patent that covers the whole community area. The community patent would be in force within the whole EU area, and its validity and infringement claims would be litigated in a special “Community Intellectual Property Court”. (Commission 2000) The Patent Cooperation Treaty (PCT) is the closest to a global patent system that we have at the moment, but the PCT system only provides a single gateway to national patent systems dedicated in the patent application, and therefore acts only as a proxy and does not provide automatic worldwide patent protection. However, as mentioned above, a patent in any patent system prevents the same invention from being patented in any other patent system. Although all of the major patent system’s laws and other regulations have been harmonized there remain differences. The differences in U.S. and European patent regimes affecting standardization are discussed in detail later in this text. Some of these differences may gain more importance if the proposed changes to patent regulations are implemented.

The fundamental dilemma

The patent systems and standardization have chosen different paths to gain the same objective: ensuring the benefits of innovation to society. These two approaches have been under much debate. The market success of an industry standard can be a great source of royalties to the patent holder, if the standard includes patented technology. The strong leverage provided by patent rights makes incorporating a patent in an accepted standard highly desirable, and it is often in the patent holder’s interest to get his patented technology into the specifications of a standard during the standardization process. This is in contrast with the “public property” nature of open standards. If the standardization process encounters a patent in the technology to be patented, the strong patent rights and the voluntary nature of standard design give the standardization participants usually three options: (1) design around the patented technology, (2) try to obtain a reasonable and non-discriminatory license from the patent holder, or (3) abandon the standard. Options (2) and (3) clearly do not benefit the society nor the industry in general, and there is discussion on how far patent rights should be overridden for public benefit in standardization (Hjelm 2000), and the contradictory nature of standards and patents is often called “the fundamental dilemma” (AIPPI 2001, Shurmer and Lea 1995). The public interest in standardization is to license the patented technology for free, in other words the patent holder waives all rights to the patent. A royalty-free standard (often abbreviated RF) has more chances of being accepted and used as widely as possible. If a royalty-free licensing scheme can not be negotiated, it is in the interest of the standard to get the patent holder to agree to license or negotiate licensing of the patent on reasonable and non-discriminatory terms (often abbreviated RAND). If the patent holder refuses to license on these terms the standardization process is usually halted and other solutions are searched for. Standardization organizations have different approaches to licensing and require different levels of commitment from the participants. These different patent policies are discussed in the section below. From the patent holder’s point of view the licensing negotiations are a decision of costs and benefits. Waiving all patent rights and refusing to license at all are the two extremes the patent holder has. It is a trade-off between the benefits of compatibility and the prospect of at least influencing the final outcome of a standard against the potential losses in royalties arising from waiving all or some patent rights (Shurmer and Lea 1995). Nevertheless, licensing is the sole right of the patent holder, and juridical sanctions are rarely enforced if the patent holder refuses to license (AIPPI 2001), therefore a patent

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holder is in a good negotiation position. On the other hand, licensing a patent may be an important source for revenues, and refusing to license is therefore out of the question. This naturally changes the bargaining position of the patent holder. One factor that must be taken into consideration is the object in which standardized technology is thought to be used. A mobile phone, for example, contains a lot of standardized technology. If a company has to pay licensing fees separately to every patent holder whose rights are violated by using multiple standards required for manufacturing a compatible product, cumulative costs may easily exceed products profit marginal. This makes the amount of overall production costs too high for a company to bear. This scenario implies that although licensing fees are in many cases an important source of revenues to the patent holder other interests may very well take priority over the royalty incomes.

Using patents strategically in standardization

The strong patent rights and the potentially high royalties involved in having patented technology in a standard have caused some patent holders to take advantage of the situation. As mentioned above, the patent holder weighs the benefits and costs involved and acts accordingly. A patent holder can (1) disclose the patent and waive all rights, (2) disclose the patent, and agree to license to anyone with reasonable and non-discriminatory terms, (3) disclose the patent, and agree to license, but negotiate the terms and conditions independently, (4) disclose the patent, but not to license at all, and (5) not to disclose the patent at all (Egyedi 2000, Kipnis 2000). The last option can be very effective: if the standard is accepted by the industry it is very difficult afterwards to design around the patent or change the standard’s specifications in any way. In the worst case, the only solution might be to abandon the standard (Rahnasto 2001). Failing to disclose patented technology related to the technology being standardized is said to be very probable for large companies with large patent portfolios; searching the portfolio is time consuming and expensive. However, when searching the same portfolio to demand royalties from competitors, the size of it doesn’t seem to pose any problems (Kipnis 2000). To prevent intentional and unintentional failures to disclose patents during standardization negotiations, and to discourage any other abuses of standardization, patent organizations have patent policies that desire the participants to disclose all the relevant IPRs (Kipnis 2000). It is sometimes required that companies disclose not just issued but also pending patent applications. It has also been discussed whether participants should have an obligation to disclose potential patenting activity. Opinions about the matter are divided. Others are of the opinion that although companies were demanded to state their possible interest in patenting their technology, it is never for sure whether the patent is essential. The protection provided by the patent is unclear until the patent claims are accepted. On the other hand, if companies were demanded to announce their potential pending patents this fact could be considered by other committee members when making the decision about standardized technology. (Kipnis 2000). In reality, the patent policies often fail to guarantee that all relevant patents are recovered. Actually, it is often stated in organization’s patent policies that they can not force the participants to disclose all the relevant information and the patent policy can give no guarantee that parties not involved in the standardization have no relevant IPRs (ITU 2002, Kipnis 2000). The standardization process can be abused also in other ways than intentionally not disclosing patent information. A patent holder can word a patent statement to appear to comply with the requirements set by the standardization patent policy while not actually doing so. Also, the patent holder can word the licensing agreement to refuse licensing to component vendors. By refusing to license to component vendors the patent holder can aim for the higher profits in licensing to producers of large and expensive systems. (Kipnis 2000) However, most of the patent holders do not outright abuse the standardization process. Patents are often used as any other negotiation tools. For example, patents played a major role in getting the European Telecommunications Standards Institute (ETSI) Wideband Code Division Multiple Access (WCDMA) standard to be backward compatible with the IS-95 standard, favored by Qualcomm Inc. Qualcomm accused ETSI of intentionally excluding Qualcomm technology from its standards, and hence creating an unfavorable market position for Qualcomm in the European third-generation telecommunications market. To be heard better, Qualcomm claimed patent infringement on key technologies needed for WCDMA, and refused to license this technology unless the WCDMA was made backward compatible to the IS-95 standard. Finally, a compatible solution was reached due to cooperation behind closed doors between Qualcomm and Ericsson, who is another key patent

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holder in the technology involved. During the whole process, which lasted roughly a year, the standardization process was practically frozen. (Hjelm 2000) The Qualcomm example shows how a strong patent holder can slow down, or even halt the standardization process. The number of patents in information technology continues to grow significantly creating more IPRs to take into consideration, and the number of participants and parties involved grows when standards aim to reach more global goals. With these growing numbers in mind, it has been argued that standardization is too slow for the pace of technological progress and the demand by market, and some new ways of setting standards and dealing with IPRs must be developed. (Raivio 2001)

Patent policies

To handle the issues involved in standardization and patens, or any IPRs for that matter, standardization organizations usually have written patent policies, i.e. IPR policies. These policies discourage abuse of the process and aim to ease the tension between the free nature of standards and proprietary IPRs. (Kipnis 2000) Patent policies among standardization organizations differ in their approach to patents and licensing. The patent policies can be classified into three general categories: (1) no binding agreements are made by participants to license, for example IETF patent policy (IETF 1996). (2) all the participants agree to license on reasonable and nondiscriminatory terms and conditions, for example ETSI (ETSI 2000). (3) all participants agree to license on a royalty-free basis, for example W3C (W3C 2002). These approaches naturally have a different effect depending on the business of the patent holder. Patent policies rely on the participants to voluntarily disclose all information on patents and other IPRs that can influence the standard. This is by no means a simple task, and the standardization organizations take no responsibility in finding all relevant IPRs nor in verifying the IPR information disclosed by the participants. Therefore, a standardization process relies heavily on the voluntary cooperation of the participants who have strong IPRs on their side. Additionally, the standardization organizations have very little juridical power to enforce their patent policies. In extreme cases competition law or anti-trust law can be enforced. But these cases are very seldom in information technology standards. It has also been questioned whether these cases can even be applied to obligations to disclose pending patent applications. Even less can they be analogically extended to the obligation to disclose technology on which a company has merely plans to seek patent protection for. (Kipnis 2000) Bad publicity can also be a reason for a patent holder to comply with a standardization organization’s policy. A patent holder who has interest in the public opinion or credibility in the industry can evaluate the bad publicity or the loss of credibility in abusing the standardization process. Patent holders who have no interest in public image or in credibility in standards setting might have good economic reasons to abuse the system to their advantage. For example, IBM claimed in April 2002 to have one patent and one patent application that were relevant to the open and royalty-free ebXML standard. This caused some strong reactions from the public and industry professionals, because IBM had been participating in the design of the standard. Also, IBM had previously informed that it would contribute to the standard without any restrictions. Nevertheless, IBM had made no comments about the licensing terms and conditions of the two patents, and soon after the news had reached the public, IBM agreed to license the patents royalty-free. (Berlind 2002, Wong 2002) Another example of patents in accepted technology standards that have reached the consumers is Forgent Networks and its patent claims on the JPEG standard. Forgent Networks claimed in July 2002 to own a patent covering technology behind the JPEG image standard. Forgent announced that it found the patent, which was applied for in 1986, in its patent portfolio. Forgent had already signed multi-million dollar licensing agreements with Sony and another Japanese company, and the company said it was pursuing royalties from as many as 50 other companies. Professionals in the field of compression technology and representatives of the JPEG committee have doubted the validity of the patent, and have stated that there is prior art available that would render the patent invalid. (Markoff 2002, Lemos 2002)

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Software and Business Methods patents in Wireless Technology

Since 1970s and 1980s, patent regulations have gone through several renovations just to be able to accept computer programs of increasing level of abstraction as patentable subject matter. This can be seen in the U.S. Patent law in cases like Diamond v. Diehr (1981) and a more recent State Street Bank & Trust v. Signature Financial Services (1998). In European Patent Office’s Board of Appeals’ decisions a similar trend can be seen in cases like Vicom / Computer-related invention (1986) and a more recent IBM / Computer program product II (1999). Comparing these cases it is obvious how the more recent ones have computer programs in them which are of much higher level of abstraction. As the level of abstraction rises, the programs are more intangible and less technical in the traditional sense of the word. Therefore, the trend in computer program patenting, or patenting of computer-implemented inventions, is clearly towards more conceptual and abstract software. A concrete example of this trend is the acceptance of patents on methods of doing business, or more briefly: business method patents. In the U.S., the State Street Bank (1998) case is seen as the final turning point in accepting patents on business methods. In the EPO, the view is stricter than in the U.S and business method patents are only considered patentable if they are implemented using computer technology (PBS Partnership / Controlling pension benefits system 2000). It is well known that there are computer-implemented business methods patented in the U.S. but the common opinion seems to be that there are no business method patents in Europe. Nevertheless, there are several computer-implemented inventions patented in the EPO that can very well seen as business methods, e.g. patents in electronic commerce, billing services etc. Both the U.S. and the EPO regulations have some limits on the patentability of business methods. The U.S. regime requires the end result to be “useful, concrete and tangible” (State Street Bank 1998). The EPO poses stricter limits on the patentability of business methods: In the EPO Board of Appeals’ decision “PBS Partnership / Controlling pension benefits system” (2000) the Board required that the inventive step of the invention must make a technical contribution. In other words, the EPO approach is more limiting, and more ambiguous, than the U.S. approach to business method patents. Wireless technology is developing along the same line as any software-related technology. Therefore, the issues of patentable subject-matter have an effect also in the development of wireless technology. Especially in relation to standardization, the patentability of business methods could have concrete influence: standards in wireless technology include technology on several types of services that might have business method patent protection. The current ambiguity in European patent regulation in relation to business method patents is a clearly different to the U.S. approach where computer-implemented business methods are accepted.

Differences in U.S and European Patent Regulations: Assessing the effect on standardization

In this section we assess what kind of relevance some main differences in European and U.S patent regimes have when it comes to standardization. In the European context we focus mainly on the European Patent Convention (EPC). This limitation is due to practical reasons: it is simply not possible to analyze all European countries’ patent legislations and their slightly different interpretations separately within this Article. In our opinion, the EPC reflects common principles well enough for the purpose of this paper. Also, the EC Directive Proposal for Computer-Implemented Inventions, the Community Patent Regulation proposal and Trade-related aspects of Immaterial Property Rights agreement (TRIPS) are taken into account when applicable. First we discuss the matter of patentability of computer programs, or computer-implemented inventions as they are formally called. Then we discuss the differences in relation to prior art material in the two patent regimes. After that we briefly present some other differences that we consider important enough to be mentioned.

Patentable Subject Matter

Criteria for patentable inventions differ in Europe and the U.S. One of the main differences is that in Europe an invention has to be of technical character in order to be patentable while in the U.S. it is enough that the utility requirement is fulfilled and that the invention belongs to one of the four statutory category stated in the U.S. Patent Act § 101. Consequently, what is considered to be patentable subject matter in the U.S. is not necessarily patentable in Europe.

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At the moment there are at least two invention types that are full of twists and turns about their status as patentable inventions. These are computer programs and business methods. As previously explained both of these categories are important in the context of wireless technology standards.

EPOs interpretation of the Patentability of Computer Programs

The EPO practice and case law surrounding the issue of patentability of computer programs and technicality of inventions is anything but simple. The reasoning is vague and abstract, and it is based on two decades of reforming and redefining legal concepts. Therefore, it can be said without any hesitation that the issue of technicality is complex and ambiguous. In the following we try to present the main points of this issue. In our opinion a detailed description of these issues would not be in the scope of this paper. An invention has to be technical in nature. This is a common requirement for an invention to be patentable in Europe. However, the requirement of technicality is not explicitly stated in the EPC. It can be deducted from the EPC Article 52. This article contains a list of subject matter that is not patentable as such. The list is not meant to be exclusive: it only gives some examples of material that is non-technical and abstract in nature and cannot be patentable for that reason (EPO 2001). According to EPC Article 52 (2) and (3), discoveries, scientific theories, mathematical methods, aesthetic creations, schemes, rules and methods for performing mental acts, playing games or doing business, programs for computers and presentation of information can not be patented as such. This means that for example mathematical methods cannot be patented but a practical implementation based on a mathematical method can. In other words, the quadratic formula is a mathematical method “as such”, but a device using the formula is not. The interpretation of the “as such” limitation has been under much revision and dispute, especially in the context of computer programs, or as they are officially called: computer-implemented inventions. This invention category might actually cover more than just computer programs. According to the formal definition, computer-implemented inventions are claims that involve computers, computer networks or other conventional programmable apparatus whereby prima facie the novel features of the claimed invention are realized by means of a program or programs (EPO 2001). It is worth mentioning that the purpose of the invention, i.e. its application domain is irrelevant in the scope of this category. In practice, this means that, for example, all business methods implemented by a computer are handled as computer-implemented inventions. Further technical effect. According to recently modified EPO Guidelines (2001) and Board of Appeals decisions, a computer-implemented invention is not considered to be “computer program as such”, if the claimed subject matter has technical character. A computer-implemented invention has technical character if, for example, it brings about a further technical effect when run on a computer. The concept further technical effect is defined to be more than the normal physical effects involved in using a computer. In other words, electrical currents are normal physical effects involved in the execution of all computer programs and therefore do not constitute to the required technical character of a computer program. On the other hand, a further technical effect which goes beyond mere normal physical effect renders a computer program patentable in the context of Articles 52(2) and (3). According to the EPO Guidelines (2001) a further technical effect can be found, for example in controlling an industrial process or processing data which represents physical entities. It should be pointed out, that electrical currents in hardware are actually technical in the patenting context. Nevertheless, in the context of computer program patenting this is not sufficient. The concept of further technical effect recognizes that the normal physical effects involved in the execution of all computer programs are technical, but not technical enough for all computer-implemented inventions to be automatically patentable subject matter. In the EPO Board of Appeals decision General purpose management system / Sohei (1994) it was reasoned that a computer-implemented invention can also have technical character if technical considerations are required to carry out the invention. Solving a technical problem or that the invention contains technical features may also result the invention patentable. Technical contribution. Previously the concept of technical contribution was used rather than technical character to examine computer programs for technicality. It was stated that computer programs are required to make a technical contribution to a

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field of technology. However, the concept of technical contribution has been understood in many ways during the last two decades. The interpretation and context of the concept has changed as the patentability of computer programs has broadened. The problem with the so-called “technical contribution approach” was that it was based on separating inventions technical and non-technical as well as its new and inventive features. It received criticism for not clearly making a distinction between the test for patentability (i.e. whether Article 52(1) is fulfilled) and the question whether the subject-matter is susceptible of industrial application, is new and involves an inventive step. The technical contribution approach was abandoned as an indicator of technical character by the Board of Appeals in the decision IBM / Computer program product (1998). In this decision the Board stated that the concept of technical contribution is more appropriate for the purpose of examining inventive step than for deciding on possible exclusion under Article 52(2) and (3), i.e. technicality. This indicated that the concept should be removed from the study of patentability to the context of inventive step. Thereafter, the term technical character was used to describe the requirement for technicality. In the later decision PBS Partnership / Controlling pension benefits system (2000), technical contribution was used in the way indicated by the IBM / Computer program product (1998) decision. In the PBS Partnership (2000) decision the EPO Board of Appeals stated as follows: “There is no basis in the EPC for distinguishing between ‘new features’ of an invention and features of that invention which are known from the prior art when examining whether the invention concerned may be considered to be an invention within the meaning of Article 52(1) EPC. Thus there is no basis in the EPC for applying this so-called contribution approach for this purpose.” In the PBS Partnership (2000) case the invention was claimed both as an apparatus and a method. The method claims were considered by the Board to claim a method for doing business and thus having no technical character. The decision stated that using technical means (a computer program and a computer) for purely non-technical purpose does not necessarily confer technical character to the method or its individual steps. The same stands for processing purely non-technical information. In this decision, information of administrative, actuarial and financial character was considered non-technical. Therefore the method claims were seen non-technical, solving no technical problem, and having no technical character. On the other hand, the apparatus claims for the same invention were interpreted to have technical character. The Board of Appeals viewed that a computer system suitably programmed for use in a particular field has the character of a concrete apparatus in the sense of a physical entity, man-made for a utilitarian purpose is a patentable invention. Therefore, the same computer program which was considered non-technical as a method was considered technical as an apparatus; the apparatus claim having more concrete character due its claim category, not its content. Also, the application domain of the apparatus was irrelevant in the context of technicality. (PBS Partnership 2000) Although the apparatus claims had according to the Board technical character, they were rejected for making no inventive step. This was because the invention had no technical contribution to the art. The improvement envisaged by the invention according to the application was essentially economic one and lied in the field of economy, which, therefore cannot contribute to inventive step. (PBS Partnership 2000) What this means is that the technicality of an invention is actually established when assessing inventive step. If there is no technical contribution, the invention is not considered to be inventive. This approach was also adopted to the EC Directive Proposal for computer-implemented inventions. The Directive Proposal is discussed later in this paper. Apparatus, process and product claims. During its history computer programs have been claimed both as apparatus and processes. The claims are usually almost identical for these two categories differing in only form. Apparatus claims are interpreted as claiming the program and the underlying computer machine, and the process claims are understood to cover processes implemented with a computer. Considering the patent protection of computer programs the two categories of claims, apparatus and process, leave the computer program unprotected when it is not executed, i.e. when the program resides on a separate carrier, for example, on a portable diskette. A computer program on a carrier or as a signal in a computer network has no underlying computer machine to protect it as an apparatus nor it is used as a process to get protection from that category. Patent protection for computer programs on a carrier becomes relevant when manufacturing and distribution of computer programs is considered. Computer programs can be very easily copied and distributed without directly infringing patents

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claimed as an apparatus or a process. Direct infringement usually means acts like making, offering, putting on the market or using a product which is subject matter of the patent. Also importing or stocking the product for previously mentioned purposes usually requires patent holder’s consent. Same applies to using a process which is subject-matter of a patent or offering this process for use within the patent territory. (TRIPS Art 28) Distributing computer programs e.g. on a carrier might constitute an indirect infringement in most European countries. However, this is more difficult to prove and gives in practice less protection to the invention. This is due to the fact that for example the making of a computer program does not usually infringe neither process nor apparatus claims. Indirect infringement means generally that the patent holder has a right to prevent also all third parties from applying or offering to supply a person with means relating to an essential element of that invention, for putting it into effect therein, when the third party knows, or it is obvious in the circumstances, that these means are suitable and intended for putting that invention into effect (Commission 2000, Finnish Patent Law § 3).

This problem with differentiating those acts that form direct infringement and those which can be interpreted to infringe patent holders rights indirectly was eased when the Board of Appeal extended the protection for computer programs by allowing a computer program invention to be claimed by itself or as a record on a carrier. This extension was introduced in decision Computer program product I (1998). Therefore, a computer program can be patented by itself or as a record on a carrier as long as it has potential further technical effect. This means that when the computer program is executed on a computer machine, it has the potential to bring about a further technical effect. Having a potential further technical effect can be derived back to having technical character which means that the invention is technical and therefore not excluded by Article 52(2) and (3) of EPC. (IBM I 1998, EPO 2001)

European Commission’s Directive Proposal

The European Commission (EC) published its directive proposal on the patentability of computer-implemented inventions in February 20th, 2002. The proposal’s objective was to harmonize EC member states’ national patent laws concerning the patenting of computer program related inventions. (Commission 2002) As discussed in this paper, the European patent laws in the form of the EPC, and the U.S. Patent Law differ in certain aspects. To make the differences between Europe and the U.S. even more complicated, the new directive proposal differs partly from the EPO interpretation of the EPC. However, it is good to bear in mind that the directive proposal has no legislative force until it is accepted and implemented by the member states, and it is bound to change before that. Therefore, it can not be taken into consideration as a final directive and having the same weight as the EPC or the U.S. Patent Law. Nevertheless, we briefly point out the main difference between the directive proposal and the EPO interpretation of the EPC in relation to computer-implemented inventions and standardization. The main difference between the directive proposal and EPO practice is the form of patent claims accepted. EPO practice accepted claims to so-called computer program products as explained previously, but the directive proposal does not. This has some significant effects on the patent protection during manufacturing and distribution. Although the difference between the EPO practice and the Directive proposal seems substantial, in relation to standardization, we see no significant importance in this difference. In standardization the patent holders are primarily concerned of the use of the invention described in the patent claims, not so much of manufacturing or distribution of essential part of that invention because this part cannot be used if it is not attached to an apparatus. A patented invention claimed as an apparatus or a process still prohibits unlicensed use of the whole invention. This possibility is usually quite enough to affect the standardization process. Nevertheless, the situation follows that the directive offers lower threshold for protection than is currently available and it means that the scope of protection in Europe is less than what is available for example in the U.S.

Interpretation of the U.S. Patent Act § 101

According to U.S Patent Act § 101 “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.” As can be noticed, requirements for obtaining a patent are relatively loose. For example the

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repetitive use of the expansive term "any" shows that the Congress intended not to place any restrictions on the patentable subject matter beyond those specifically mentioned in § 101. (State Street Bank 1998) In the U.S Patent Act § 101 four categories of inventions is defined. These categories consist of processes, machines, manufactures and compositions of matter. The latter three categories define "things" and the first category defines "actions" (i.e., inventions that consist of a series of steps or acts to be performed). On top of this § 101 requires the subject matter sought to be patented to be a "useful" invention. (USPTO 1996)

Non-statutory subject matter. Unlike in Europe, there are no examples of subject matter that does not fulfil the requirements set in the U.S. Patent Act § 101. Nevertheless, the Supreme Court has identified three categories of subject matter that can not be patented. These are 1) laws of nature, 2) natural phenomena, and 3) abstract ideas. (Diehr 1981) On this basis, the court has held that for example mathematical algorithms are not patentable subject matter to the extent that they are merely abstract ideas. (Diehr 1981, Parker 1978, Gottschalk 1972). For this reason also software was considered to be unpatentable in the early 1970s. It was thought that software was just a concatenation of algorithms, and algorithms were unpatentable. (Cohen and Lemley 2000) Also business methods were contemplated to belong to the category unpatentable subject matter until the so called business method exception was finally abandoned by the Federal Circuit in the State street bank case. (State street 1998)

The limitations to § 101 should be interpreted narrowly. This is because the Congress intended § 101 to extend to "anything under the sun that is made by man" (Chakrabarty 1980, Diehr 1981) which makes it improper to read limitations into § 101 on the subject matter that may be patented when the legislative history indicates that Congress did not intend such limitations. (Chakrabarty 1980, Stated Street 1998) It was already stated in the case United States v. Dubilier Condenser Corp (1933) that ”courts should not read into the patent laws limitations and conditions which legislature has not expressed”. Practical application of non-statutory subject matter. Although, the subject matter courts have found to be outside the four statutory categories of invention can not be patented, a practical application or use of an idea, a law of nature or a natural phenomenon can. However, determining whether an applicant is seeking to patent an abstract idea, a law of nature or a natural phenomenon has proven to be challenging. (USPTO 1996) One interpretation was presented in the Diehr case, where the Court explained that certain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application, i.e., “a useful, concrete and tangible result” (Alappat 1994). What constitutes a useful, concrete and tangible result? In the Alappat case (1994), data, transformed by a machine through a series of mathematical calculations to produce a smooth waveform display on a rasterizer monitor, was thought to constitute a practical application of an abstract idea (a mathematical algorithm, formula, or calculation), because it produced the smooth waveform that is a useful, concrete and tangible result. Similarly, in Arrythmia Research Technology Inc. v. Corazonix Corp (1992), it was held that the transformation of electrocardiograph signals from a patient's heartbeat by a machine through a series of mathematical calculations constitutes a practical application of an abstract idea (a mathematical algorithm, formula, or calculation), because it corresponded to a useful, concrete or tangible thing: the condition of a patient's heart. Then again in the State Street bank case (1998) the Court ruled that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces “a useful, concrete and tangible result”. In this case the result was a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades. Descriptive material. The purpose of the utility requirement is to limit patent protection to inventions that possess a certain level of “real world” value, as opposed to subject matter that represents nothing more than an idea or concept, or is simply a starting point for future investigation or research. Therefore the utility of an invention must be within the “technological” arts also in the U.S. As a distinction to European approach a computer-related invention is considered to be within the technological arts. A practical application of a computer-related invention is statutory subject matter. (USPTO 1996)

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Although computer programs are usually patentable in the U.S they are not always considered to be statutory. Non-statutory claims to computer-related inventions constitute of “descriptive material” that can be characterized as either “functional descriptive material” or “non-functional descriptive material.” (USPTO 1996) Non-functional descriptive material includes although is not limited to music, literary works and a compilation or mere arrangement of data. Then again functional descriptive material consists of data structures and computer programs that are not claimed as embodied in a computer-readable media. Such claimed data structures do not define any structural and functional interrelationships between the data structure and other claimed aspects of the invention which permit the data structure's functionality to be realized. Similarly, computer programs claimed as computer listings per se, i.e., the descriptions or expressions of the programs, are not physical “things”, nor are they statutory processes, as they are not “acts” being performed. Such claimed computer programs do not define any structural and functional interrelationships between the computer program and other claimed aspects of the invention which permit the computer program's functionality to be realized. (USPTO 1996) When functional descriptive material is recorded on some computer-readable medium it becomes structurally and functionally interrelated to the medium and will be statutory in most cases. When non-functional descriptive material is recorded on some computer-readable medium, it is not structurally and functionally interrelated to the medium but is merely carried by the medium. For this reason claiming merely non-functional descriptive material stored in a computer-readable medium does not make it statutory. Therefore, non-statutory music does not become statutory by merely recording it on a compact disk. Protection for this type of work is provided under the copyright law. (USPTO 1996)

As a result of the State street bank ruling even physical structure is unnecessary as long as the process or idea is useful. (Cohen and Lemley 2000) The Federal Circuit confirmed this result also in AT&T v. Excel Communications (1999). In this ruling the court explicitly pointed out that a physical transformation was “not an invariable requirement, but merely one example” of how an algorithm can be applied to achieve useful, concrete and tangible result. (AT&T 1999, Cretsinger 2000, Cohen and Lemley 2000)

Differences affecting standardization

Although there is no requirement of technicality in the U.S., the U.S and the European approaches to the patentability of computer programs are actually quite similar. Same issues have been under discussion both in Europe and in the U.S, but the pace of evolution varies. In the U.S the patentability of computer programs is rather a rule than an exception when in Europe the situation is still evolving. One of the legal constraints that influences to the extent in which computer programs are patentable in Europe is the explicit rule EPC 52 (2), (3) which states that computer programs can not be patented as such. The same applies to a large part to the patentability of business methods. Computer programs are patentable subject matter in Europe when it is not a question of a computer program as such but a technical subject matter. However, the answer to the question when are computer programs considered to possess technical character is anything but simple. Complexity and vagueness have led to a situation in which many are not aware of the possibility to gain patent protection for their computer-implemented inventions while other have been actively patenting all their technology in the same field for decades both in Europe and the U.S. Conclusively computer programs can be patented in Europe if they are claimed as an apparatus consisting of a general purpose computer and a computer program element. They can also be patented as processes having e.g. further technical effect, or solving a technical problem. On top of this EPO allows product claims presenting the computer program in itself or on a carrier. However the last mentioned claim type is not accepted in the EC Directive Proposal. (Commission 2002) Also business methods are considered to be technical inventions by the EPO if they are software implemented. However, they are not thought to be inventive if invention presents nothing more than an economic contribution to the art. (PBS Partnership 1999) Opposite to the situation presented above in the U.S. computer programs and business methods are generally patentable, even though the claim format is quite abstract. Consequently it is possible that companies are able to protect their innovation in the U.S. but not in Europe. This affects their bargaining position during standardization processes. It also makes it more difficult

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to apply nationally standardized technology into an area in which technology suddenly contains huge amount of relevant patent rights. The standards in information technology, especially in wireless technology, have moved from hardware towards software applications. These software applications seem to advance from low-level protocols and interfaces to high-level ones which are more dependable of the application domain. These high-level inventions can be protected by business method patents, which after all are in practice software patents in a business application domain. On these grounds, the differences in the patentability of business methods can be of relevancy to standardization. Especially, clear differences between patent regimes’ regulations in this matter can limit the territory and influence of a business method patent. Also the scope of protection of those patents issued in the U.S. versus those issued in Europe may vary due to the different interpretation of computer program’s nature as patentable subject-matter. If product patents are not accepted by the European Commission the difference multiplies. Nevertheless, we were not able to find immediate relevancy of this difference in the context of wireless standardization.

Prior Art in Europe and the U.S

Novelty and inventive step are requirements that an invention has to fulfill in order to be patentable. These same requirements apply in Europe as well as in the U.S. Nevertheless, the application of these requirements differs within these areas. Fundamental differences can be found especially in listing the material that forms prior art. Prior art is the material to which an invention is compared with when assessing its novelty and its inventive step. The differences between these two patent regimes have crucial impact on weighting the dilemma between standardization and patents.

Prior Art in Novelty Assessment in Europe

It is said in the European Patent Convention, Article 54, that an invention shall be considered new if it does not form part of the state of art. The state of art comprises of everything made available to the public by means of a written or oral description, by use or in any other way, before the filing date of the European Patent application. Also, those patent applications, which have been filed prior to the filing date in question, are taken into consideration when assessing novelty. However, these applications have to become published on or after the application date according to the EPC Article 93. In other words, also those pending patent applications which have not yet been published on the application date, have a novelty destroying effect if they become public later. The novelty concept in the EPC countries is based on absolute novelty: an invention is not new if it has been made available to public before the application date anywhere in the world, in any language or by any means by the applicant or someone else (EPO 2001). In this context, it is not necessary that someone actually received this information before filing/priority date. It is enough that someone might have had an opportunity to do so. (Paterson 1995) The invention is made available to the public if it is possible for the member/members of the public to gain knowledge of the invention and there is no bar of confidentiality restricting the use or dissemination of the information gained. (EPO 2001) In theory, it makes no difference if the group of people bound to secrecy is large. However, it might be more difficult to keep the information in secret, despite the confidentiality agreement, if the amount of people who gained the knowledge is substantially big. The principle is stated in the EPO Board of Appeals’ decision RCA Corporation (1989). In this decision, the Board took the view that the fact that the report of the invention was passed on to a large, but a limited circle of persons did not in itself make the document available to the public if all the recipients of the document were bound to secrecy, and there was nothing to indicate that the recipients broke their pledge of secrecy. The published information has to be sufficient so that the man in the art is capable of manufacturing or using the machine or process on the basis of this particular technical teaching. Where such technical teaching results from a product put on the market, it is thought that a skilled person has to be able to analyze and reproduce the product without undue burden in order for its composition or internal structure to become publicly known. There need not be any particular reasons for analyzing the product, but the information has to be reached by using known analytical techniques. (Paterson 1995, G 1/92 1993) This means in practice, that a product that was put on the market is not necessarily considered to have become publicly known.

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Prior art in Novelty Assessment in the U.S

The U.S Patent Act is based on the first-to-invent principle. This means that in a case of two applications for the same invention, conflict is resolved on the basis of who was the first inventor. Establishing the first inventor usually involves examining laboratory logbooks, establishing dates for prototypes etc. (Engelfriet 2002). The material taken into account when trying to show who the first inventor was does not have to be available to the public. Also, material that was kept in secret counts in this assessment. If it turns out that the first applicant was actually the second to make the invention, the one who filed later but invented the invention first may be awarded the patent (Engelfriet 2002). For example, a disclosure of standards technology made in confidence by member A of a standards-setting body to member B, can potentially operate as anticipatory or obviating prior art with respect to patent claims later obtained by B if the disclosure happened before B’s invention date. (Mueller 2002) This is a clear difference compared to European patent system in which the first person who filed the patent application will generally get the patent despite that someone else invented it first. The first-to-invent principle affects also the date on which invention’s novelty is assessed. According to the U.S. Patent Act § 102 (a) an invention is not new if it was known or used by others within the U.S area before the invention day. An invention is also not new if it has been patented or it has been publicly described in a printed publication in the U.S or some other country before the applicant’s invention date. This means that there is a difference in prior art material for the same invention in the U.S. and in Europe when assessing the novelty of an invention. Especially in those cases where the invention date was long before the filing date there can be a significant difference in the amount of prior art between the two patent regimes (Mueller 2002). Also, different interpretations of the concept “public use” might have a bearing on the matter. It seems that in the U.S it is enough that something was meant to be confidential information in order to make it non-public, and in Europe this material has to be concealed also in practice. Although assessing novelty is strongly connected with the invention date, the application date is relevant as well. According to the U.S Patent Act § 102 (b) an invention can not be patented if it has been described in a printed publication or if it was patented in U.S or abroad more than a year prior to the U.S patent application date. Neither can a patent be granted if the invention was publicly used or it was on sale over a year before the application date in the U.S. This one year period of time is called the grace period. In practice it means that the inventor can freely publish her invention without losing her right to apply for a patent. However, this only applies in the U.S. It is not possible to apply for a patent in Europe if it became known to the public in any form before the filing/priority day. It must be noticed, however, that also secret sale might constitute a statutory bar (MPEP8 2001). As can be seen from above, the definition of prior art in the U.S includes a mixture of geographic restrictions. Publications and patents from anywhere in the world may be prior art, but public use, offers for sale and sales are only considered if they occur in the U.S. Also, patent applications that have not been published can act as prior art when they fulfill the requirements set in § 102 (e). In the following table § 102 is analyzed in more detail. It should be noticed that applying all these geographical restrictions is also a clear difference compared to the European system. European patent system is based on absolute novelty as already explained earlier. In this system it does not matter where the invention was published, how or by whom it was done.

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Table 1. Selected activities Qualifying as Prior Art (adapted from Lo and Rana 2000) § 102 Subsection

Prior Art Activity

Where When By Whom Additional

(a) Invention was known

In the U.S Before the invention date

By someone other than the applicant

- Knowledge or use must be accessible to the public. Carella v. Starlight Archery, 804 F.2d 135, 231 USPQ 644 (Fed. Cir. 1986). - The knowledge or use is accessible to the public if there has been no deliberate attempt to keep it secret. W. L. Gore & Assoc. v. Garlock, Inc., 721 F.2d 1540, 220 USPQ 303 (Fed. Cir. 1983). (MPEP8 2001)

(a) Invention was used

In the U.S Before the invention date

By someone other than the applicant

- ibid.

(a) Invention was patented

anywhere Before the invention date

(a) Invention was described in a printed publication

anywhere Before the invention date

- A reference is proven to be a "printed publication" "upon a satisfactory showing that such document has been disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art, exercising reasonable diligence, can locate it." In re Wyer, 655 F.2d 221, 210 USPQ 790 (CCPA 1981) (MPEP8 2001) - Documents and items only distributed internally within an organization which are intended to remain confidential are not "printed publications" no matter how many copies are distributed. In re George, 2 USPQ2d 1880 (Bd. Pat. App. & Inter. 1987)

(b) Invention was patented

anywhere More than 1 year before the earliest U.S filing

By anyone

(b) Invention was described in a printed publication

anywhere More than 1 year before the earliest U.S filing

By anyone

(b) Invention was in public use

In the U.S More than 1 year before the earliest U.S filing

By anyone - When the inventor or someone connected to the inventor puts the invention on display or sells it, there is a "public use" within the meaning of 35 U.S.C. 102(b) even though by its very nature an invention is completely hidden from view as part of a larger machine or article, if the invention is otherwise used in its natural and intended way and the larger machine or article is accessible to the public. In re Blaisdell, 242 F.2d 779, 783, 113 USPQ 289, 292 (CCPA 1957); Hall v. Macneale, 107 U.S. 90, 96-97 (1882); Ex parte Kuklo, 25 USPQ2d 1387, 1390 (Bd. Pat. App. & Inter. 1992) (MPEP 8 2001)

(b) Invention was on sale

In the U.S More than 1 year before the earliest U.S filing

By anyone - there may be also a nonpublic, e.g., "secret," sale or offer to sell an invention which constitutes a statutory bar. Hobbs v. United States, 451 F.2d 849, 859-60, 171 USPQ 713, 720 (5th Cir. 1971).

Prior Art in Assessing Inventive Step

Like estimating the novelty of an invention, the assessment of inventive step is based on comparison of the invention and prior art. How this assessment is actually made is cursorily explained in the following chapter in more detail. In this chapter we focus on what constitutes prior art when assessing inventive step, i.e. obviousness. In Europe, the prior art material for novelty and obviousness assessment is almost the same. Only one difference can be found: non-published patent applications cannot be taken into consideration when assessing inventive step. This is explicitly stated in EPC Article 56: “if the state of the art includes documents within the meaning of art 54, para 3, these documents are not to be considered in deciding whether there has been an inventive step.” The U.S approach diverges from the European. In the U.S also secret patent applications can be taken into account when assessing for obviousness. This means that prior art is assessed in the same way whether it comes to novelty or to non-obviousness. (U.S. Patent Act § 103).

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Examples of the Differences

The main differences between prior art that is essential when patenting in the U.S and the prior art that is essential when patenting in Europe can be divided in four main categories, the U.S. practice is given first, then the European practice: (1) First-to-invent principle versus first-to-file principle, (2) grace period versus no grace period, (3) Geographical restrictions versus absolute novelty, and (4) Different interpretations of commercial and public use. These differences were discussed in detail above. However, presentation of these differences in practical light is in place. The following situation can be mentioned as an example of novelty assessment in the U.S: Let us presume that A applies for a patent to a certain software-implemented method. If B has invented this same method earlier and has put the method on the market, A is not capable of patenting the same method. It has no effect on patentability that the subject matter in question is not in reality disclosed to the public by such commercial use, i.e. the invention is hidden from the public eye. Nevertheless, it can be used the way it was intended to work. If B has publicly used his invention or offered it for sale within the U.S territory more than a year before the filing date, even B cannot get the patent. In this case it does not matter when the invention was originally made. There is also no difference if it was B or someone else who used the invention in public. A applies for a patent, B applies for a patent A’s invention application denied application denied

B’s invention B starts using the invention B applies for a patent

< 1 year > 1 year

Figure 1. First to file principle and the grace period

In Europe the situation would be somewhat different, since the European system grants the patent to someone who wins the race to the patent office and is the first to file the patent application. From this it follows that if A has invented the same method as B, he cannot get a patent for it if B published his invention before A’s filing date, although A had been the one to invent the method first. After B publishes his invention, he is not able to file for a patent either. The concept of grace period is not acknowledged in Europe. However, in all cases the fact that the invention is sold or used in public does not mean that it has become publicly known in the meaning of EPC Article 54.

A applies for a patent, B applies for a patent, A’s invention application denied application denied

B’s invention B starts using the invention B applies for a patent, application denied

< 1 year > 1 year

Figure 2. First to file principle and no grace period

Possible Influence on Standardization Process

Standardization processes are in many cases quite long lasting negotiations. During these negotiations company’s R&D development is usually not frozen but the company continues its technological development - also in the field of

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standardization. This means that although a company had no pending patent applications or granted patents in the beginning of the standardization process, it might have these when the process ends and the standard is established. For this reason it is essential for companies that they realize the distinctions between different patent regimes. Otherwise, a company submitting technical proposals to a standard committee might loose its right to patent this technology in Europe but not necessarily in the U.S. This happens if they reveal their invention too early and that acts as novelty bar. The most relevant issues in setting public standards are openness and non-discriminatory access. (AIPPI Fin 2001) Confidentiality during public standardization process is not consistent with this target (AIPPI Fin 2001). However, in order to guarantee standardization processes’ transparency, necessary information may not be withheld by the participants. For this reason it is considered to be necessary to secure confidentiality among the members of the standardization body so that they are able to apply for a patent without prior disclosure of confidential invention. (AIPPI 2001) This would also balance the distinction between the U.S and European patent system when it comes to patentability. Different standardization organizations have different ways to guarantee confidentiality. One can never be completely sure that, for example, a non-disclosure agreement (NDA) is enough to keep something in secret especially if the group the information will be revealed to is large. Since representatives of individual companies in the working group are specialists in the technical field, it is in practice not even possible to limit their right to use the information they obtain during their activities in standardization. If their right to use this information would be limited, the companies would probably be forced to involve other than technically experienced experts in the standardization in order to keep the experts available for their own R&D activities. (AIPPI Fin 2001) Nevertheless, some amount of confidentiality is usually in order for the purposes of governing the standardization process and guaranteeing working peace. For this reason there are often rules according which working papers of individual working groups are accessible only to members. Only final specifications are available for non-members (AIPPI Fin 2001). In the U.S., submitting patentable technology into a standard does not have direct novelty destroying effect until a year after the invention’s first publication day. It follows that there is a possibility that a company submits a technical proposal to a standard committee and, if the proposal is incorporated into the adopted standard within a year, the company can file and obtain a valid U.S patent covering its proposal after the standard has been set. (Kipnis 2000) Then again, if a company prefers patenting also in Europe it is wise to keep their invention as trade secret until the patent application has been filed. The situation is not preferable from standardization viewpoint. If patenting is considered beneficial, it would be better if companies could freely submit the best available technology into the standards without the fear of losing their rights to apply for a patent. The possibility to loose the right for a patent due to an early publication also influences on the possibility to demand in the standardization organization’s patent policy that participants ought to disclose in addition to issued and pending patent applications their intention to apply for a patent, if disclosing the intention means revealing the technology in question.

Other Differences

In this chapter we explain the differences in publishing pending patent applications, assessing inventive step and opposition procedures. What we do not discuss within this paper is how the assessment of patent infringement claims differs in the U.S and Europe. This limitation is based on the lack of common European infringement court. It would be too difficult to make general assumptions of the way different European national courts assess patent infringement claims. Since the differences rely mostly in the application of the doctrine of equivalence, a detailed introduction to infringement claim assessment would actually even be necessary in this context. Borderline cases are not interesting from standardization viewpoint. It is enough to be able to assess up until certain limits whether a patent is essential for using the standard or not: if using the standard most likely infringes a patent, that patent is essential.

Publishing patent applications

It is common in the European patent system that a patent application becomes public within 18 months of its filing/priority date (EPC Article 93). If the applicant so requires, the application can also be published before the 18 months has passed.

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After the patent application becomes public, it is considered as prior art also in those countries that the patent was not filed for. This affects both novelty and inventive step assessment. Usually also pending, secret patent applications can be taken into account in novelty assessment if two patents that imply the same invention are both filed within the same area. Then again if patents are filed in different countries, secret applications can not be taken into consideration. This means that a patent for the same invention can be granted both in Sweden and in Finland if the latter application was filed before publishing the application that was filed first. U.S changed recently its legislation concerning the publication of patent applications. Most pending U.S patent applications are now published in 18 months after the earliest priority date claimed by the applicant (§ 122). However, it is still possible that applications in which the patent is filed only for the U.S area are not published before the patent is granted. According to the U.S. Patent Act § 122 (2)(B)(i) if the applicant makes a request upon filing and guarantees that the invention disclosed in the patent application has not and will not be the subject of an application filed in another country, or under a multilateral multinational agreement that requires the disclosure of the patent application within 18 months after filing, application shall not be published in 18 months of time. One could argue that the longer it is possible to keep patent applications in secret the bigger the risk that a company conceals the existence of a relevant patent application. For example if there are two technically equal choices for the standard available, the amount of IPRs and derivable licensing costs probably influence the decision about the appropriate technology. Concealing the patent application may be helpful when participants make the decision about the technology adopted as standard. Given the size and volume of the U.S technology market, especially the computer and software sector, it is probable that the possibility to adopt an U.S industry standard that requires the use of applicants invention is prioritized over the possibility for international patent protection (Mueller 2002). The opportunity to conceal patent applications is relevant especially in cases where members of the standardization organization are only obligated to disclose issued patents. Since also the issuance of the patent in the USPTO, as well as in other patent offices, can easily be delayed until the standard has been adopted, the situation appears to be problematic. (Kipnis 2000) In these cases nobody is able to gain the information about a relevant patent application even by accident. Standardization organizations like ISO and IEC, require that participating companies disclose their relevant, published patent applications as well as issued patents. Also, a written agreement on licensing on reasonable and non-discriminatory terms is required. (Smoot 1995, ISO 2001) If companies fail to disclose all relevant patents and patent applications, sanctions in a form of compulsory licensing and unenforceability may result in rare cases. Since it is not required that pending, non-public patent applications are disclosed, it does seem to make a difference whether there is a possibility to conceal a patent application for more than 18 months. If there is no obligation to disclose those pending patent applications that have not yet been published, other participants do not have the possibility to weight patents essentiality to standards technology before the patent is actually issued. However, it is usually not practically possible to analyze even all issued patents or those applications that have been published. Consequently, the possibility to conceal the patent applications has only a small practical effect. Nevertheless, for identifying all essential patents, information about non-published applications is also relevant. It is possible that standardization organizations or companies involved in the process detect other’s patents or published patent applications that are relevant to the standardized technology. These patents/patent applications may belong to a third party not involved in the standardization process or to one of the participants. However, these findings are not likely to occur. To our knowledge standardization organizations do not actively carry out patent searches and they do not make any promises that all relevant patents are detected. On the contrary, for example ISO/IEC state in their patent policy: “Attention is drawn to the possibility that some of the elements of this International standard may be subject of patent rights other than those identified above. ISO (and/or) IEC shall not be held responsible for identifying any or all such patent rights”. (ISO 2001) Thus the possibility of keeping U.S patent applications in secret appears to have only marginal effect.

Differences in Assessing Inventive Step

The inventive step is probably the most important patentability requirement, since it can be used, on the other hand, to balance society’s goals of protecting and accelerating innovation, and guaranteeing free competition on the other. If the requirement for non-obviousness is easily fulfilled, patents are granted for small steps of innovation. For this reason the

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amount of patents rises and the quality gets lower if the resources, like the amount of patent engineers in patent offices, are not properly balanced. Then again if the inventive step is not easily fulfilled, patent quality ought to be high and the amount of patents low. As a conclusion, it can be said that the more patents there are to the technology subject to standardization, the more sensitive negotiations become to conflict. Also the amount of licensing fees increases if the patent quantity is high. As a consequence the problem with cumulative costs gets bigger. The level of inventive step has also importance to companies participating in standardization. If the inventive step is easily passed, there are more opportunities to develop technology towards the technology that is most likely to be standardized and to file patent applications to minor improvements during or after the standardization process. Also, these minor inventions might have major economic value if they are essential for using the standard. This follows from the fact that the essentiality or technical necessity of a patent does not usually have anything to do with the superiority of the technical solution covered by the patent. Something might be chosen to a standard merely because it is easy to implement compared to the other technical solutions, or just because a majority of the members of the standardization organization support a solution that does not represent the best available technology. (Rahnasto 2001) It seems at first that there are no notable differences between the assessment of inventive step in Europe and in the U.S. This superficial notice is based on the realization that in both systems the inventive step is assessed by relying on the same criteria of the man in the art who is thought to possess common knowledge in the field of the invention. The man in the art is not a real person but some sort of objective assessment criterion. This assessment criterion is explicitly mentioned in EPC Article 56 and U.S Patent Act § 103. When comparing the wordings of EPC Article 56 and the U.S. Patent Act § 103 in more detail only slight differences can be noticed. In Article 56 it is said that an invention shall be considered as involving inventive step if, having regard to the state of the art, it is not obvious to a person skilled in the art. In the § 103 it is stated that although the invention is not identically disclosed or described as set forth in section 102 (novelty), if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. These differences are only cosmetic, and have little or no effect in practice. However, when assessing the level of inventiveness required to make the invention patentable in different patent regimes, at least the following three elements must be taken into account: 1) who is the ordinary man in the art, 2) must there be a technical contribution, and 3) is it possible to combine different prior art. The man in the art We compared the U.S and the European assessment standard referred as the man in the art and came to a conclusion that in most characteristics this criteria is similar within these two patent regimes: he is an ordinary practitioner who is aware of what is common general knowledge in the art at the relevant date, he has access to everything in the "state of the art", and has at his disposal the normal means and capacity for routine work and experimentation but he is not capable of making inventions. (EPO 2001, Pressman 2000) It is also clear that the abilities of the man in the art vary from one art to another (EPO 2001, Environmental Designs 1983) and that if making an invention requires skills in more than one technical field, the assessment is based on the skills of various specialists: One man is a specialist in one area, the other man is a specialist in the other field of technology. (EPO 2001, Paterson 1995, White Consol Industries 1982) However, there may also be occasions where it is more appropriate to think the man in the art in terms of a group of persons, a research or production team, rather than a single person. This may apply e.g. in certain advanced technologies such as computers or telephone systems and in highly specialized processes such as the commercial production of integrated circuits or of complex chemical substances. (EPO 2001) A man in the art can be interpreted as meaning a whole group of people. However, this interpretation is only valid in Europe. At least Saito and Sweeney (2002) argue that in the U.S the person in the art is never more than one person with a single field of expertise. This might be an indication that especially in those fields, in which group work is common, the inventive step is lower in the U.S than in EPC countries.

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Problem solution approach

When examining inventive step the European Patent Office usually applies the so-called problem-solution approach. This approach consists of three phases: 1) The closest prior art is determined, 2) The objective technical problem is established, 3) It is examined whether the claimed invention is obvious to the skilled person when the closest prior art and technical problem are taken into account. (EPO 2001) The assessment method applied in the U.S differs from the problem-solution method used in Europe. In the U.S following factors are considered when assessing obviousness: (1) the scope and content of prior art, (2) differences between the claims and prior art, (3) the level of ordinary skill in the art, and (4) secondary factors such as commercial success, long-felt and unsolved need, and copying by others. (Graham 1966). The main difference between these assessment methods is that in the Europe, only those features of the claimed invention that contribute to the solution of the objective technical problem are considered to be relevant to the determination of inventive step, while in the U.S. all features of the claimed invention are considered (Saito and Sweeney 2002) One crucial difference is that in Europe the contribution the invention makes has to be of technical nature. For example, solving economical problems is not considered to be inventive. (Engelfriet 2002) It can be concluded that EPO has stricter interpretation on term inventive step than the one applied in the U.S.

Combining prior art

One of the reasons why the requirement of inventive step varies in different patent regimes is the possibility to combine different amount of prior art disclosures. If there are no limits in combining prior art material, it is almost impossible to obtain a patent. Every invention is in practice based on previous knowledge. Then again if an invention is only compared to one document some differences can usually be found. This means that the criteria of obviousness easily fulfilled. In Europe it is thought appropriate to combine two or more disclosures in order to assess inventive step. However, combining these documents must be obvious to the man in the art. (EPO 2001) It is also allowable to combine various prior art documents in the U.S., but these documents must be from analogous fields. A reference is considered to be from an analogous field if a person with ordinary skills in the art would have consulted the cited reference. (GPAC 1995) On this basis it seems that there is no relevant difference in combining different documents in the U.S. and in Europe. On the basis of the analysis presented above, we conclude that the obviousness level in the U.S is lower than the one in Europe, especially in the field of information technology. This follows from two factors. Inventions in the field of information technology are often made in research groups but opposite to European approach it is not appropriate in the U.S to consider the man in the art to be an entire group, and unlike in the U.S. in Europe an invention has to make a technical contribution to the art in order to be inventive. This precludes inventions that make only artistic or economical contribution to the art. Pure business methods for example are usually not patentable for this reason. The effect on standardization is direct in cases in which a patent can not be issued due to the lack of technical contribution. Other than that, the effects are mostly indirect. Differences in assessing inventive step can be seen in the quantity of patents but also in their different scope.

Opposition procedure

European Patent Convention, Article 115 gives all interested parties a possibility to submit observations on the patentability of an invention to the European Patent Office after the patent application has been published. In addition, it is stated in EPC Article 99 that all interested parties have a possibility to oppose granted European patents. This notice of opposition has to be filed within 9 months from the publication of the mention of the grant of the European patent. Notice of opposition has to be based on one of the following reasons (EPC Art 100): (1) the subject-matter of the European patent is not patentable within the terms of Articles 52 to 57 (patentable subject matter, industrial applicability, novelty and inventive step), (2) the European

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patent does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art, (3) the subject-matter of the European patent extends beyond the content of the application as filed, or, if the patent was granted on a divisional application or on a new application filed in accordance with Article 61, beyond the content of the earlier application as filed. If someone opposes the patent granted, the EPO Opposition Division examines whether the grounds prejudice the maintenance of a European patent. In this proceeding the Opposition Division is the neutral third party while the opponent and the patent holder debate with each other. If the Opposition Division finds that the patent should not have been granted, the patent will be invalidated in all those member states to which the patent was originally filed for. After the opposition time has passed there is still the possibility to invalidate the patent by filing a suit against the patent holder in national courts. Naturally, the jurisdiction of national courts covers only the country in question. This means that although the patent would be invalidated in one of the EPC member states, it is not necessarily considered to be invalid in other countries to which the patent was granted for. At the moment there is no central European court dealing with patent matters. This situation will change if the EC regulation proposal on community patents comes in force. The Patent Act in the U.S does not acknowledge the possibility to oppose someone’s patents. However, there are two possibilities to invalidate a patent after its granting. The first one is to challenge the validity of the granted patent in a reexamination procedure. In this procedure the patent holder engages in a discussion with the patent office to establish the validity. The challenger plays no part in this process. (Engelfriet 2002) The second possibility is to file a suit against the patent holder in order to invalidate the patent. It is sometimes argued that because of the observation and opposition procedures, the European patent system bears smaller risks of granting patents that do not fulfill, for example, the requirements of novelty and inventive step than the American system (Hart, Holmes and Reid 2000). These so-called bad patents are mostly a problem that occur in new technologies, like information technology, where there is not enough prior art available to carry out thorough examinations. This makes the problem relevant also in the context of wireless technology. The lack of opposition procedure is a clear difference between the U.S and European legislation, but how does it effect standardization? The most probable answer is that it has only a marginal effect if it has any effect at all. Possibility for an opposition procedure does give companies participating in standardization one more weapon when trying to avoid paying licensing fees for so-called bad patents. However, this does not have any direct effect on the standardization process since it is usually sufficient that participants announce their patents and agree to license them on reasonable and non-discriminating terms. The validity of the patent is not assessed by the standardization organization. If somebody questions the validity of the patent, this does not have an immediate effect on the standard. The patent is treated as valid until otherwise proven. The mere fact that a patent has been opposed does not reduce in any way the rights conferred by the patent. Only the result of an opposition procedure or a trial is relevant. (GP&C 1997) The indirect meaning of accepting bad patents is substantial: it is meaningless to pay licensing fees for inventions that ought to belong to the public domain and be accessible to everybody, i.e. to pay for inventions that should not be patented. If patents are granted to inventions that should not actually be patentable, the amount of patents rises, the licensing fees increase, and the problem of cumulative costs multiplies. Nevertheless, this is the risk companies have to take when using standardized technology. It is clearly announced, for example, in ANSI’s patent policy that the institute shall not be responsible for conducting inquiries into the legal validity or scope of those patents that are brought to its attention. (Smoot 1995, ANSI 2002)

Discussion

In this chapter we explained some of the main differences between the U.S. and the European patent regimes and assessed how these differences affect standardization. Some of the differences were found to have direct effect, some indirect effect on standardization. The interpretation of what constitutes patentable subject matter is different within these two patent regimes, the U.S. and the European. As a consequence the amount of patents, especially in the field of computer program and business method patents,

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is substantially bigger in the U.S. compared to Europe. However this variation in patent amounts does not entirely result from the fact that computer programs can not be patented unless they are have technical character, but from the complex and vague interpretation of the term technical in this context. Although it has been possible to gain patent protection for computer program-related inventions for over twenty years when these inventions were claimed to form a part of a hardware elements, some companies are still in the false belief that they are not able to gain patent protection for their software implemented inventions. To some amount this applies also to business method patents. Although it is often argued that business methods can not be patented in Europe, there are some patents issued that can be seen to relate to software implemented business methods. Since the amount of software implemented innovations is to our knowledge extremely large in wireless technology, the question of patentability is particularly important in this context. Although different patent protection in different patent regimes does not seem to create immediate problems for international standardization, it may cause difficulties when trying to apply nationally adopted standards into a new area. Differences in patent protection may also result to company’s willingness to take part in international standardization processes when it is not able to gain patent protection and therefore also not able to collect profits from licensing in some of the areas the standard covers. Also the different material that is taken into account when assessing novelty in the U.S. and in Europe has direct effects on standardization processes. Unlike in Europe, in the U.S. it is possible to file for a patent a year after submitting the technology into the standard. Sometimes the standard is set before a year has passed from publishing the invention and a patent application can be filed even after setting the standard. In Europe this would not be possible unless the invention was kept in secret. Since no secrecy agreement is waterproof, those who wish to file for a patent in the U.S. and those who wish to file it in Europe are in unequal positions during the standardization process. This reflects to standardization making it sometimes impossible for companies to reveal a relevant technology before applying for a patent. Then again the total patent amount is often unpredictable when it is possible to apply for a patent relevant for using the standardized technology even after the standard has been adopted. The possibility for not publishing a U.S. patent application could have an effect in standardization since it helps companies to conceal their pending patent applications. However, in practice, this possibility seems to have only a marginal effect due to the realization that it is seldom possible to go through even the published patents and patent applications in order to recover hidden patent rights. Then again, if standardization organization’s patent policy does not demand participants to disclose their pending patent applications at all or demand to disclose all pending patent applications, companies that filed an application only in the U.S. and other patent holders are basically in equal situation. However, the situation changes if the patent policy demands only the disclosure of published pending patent applications and issued patents. The differences in assessing inventive step and the possibility for opposition procedure in Europe have indirect effect on standards by influencing to the patent quality and quantity. This influence is essential: the amount of patents increases conflict risks before and after setting the standard, the type of patents influences on their essentiality (basic patents vs. implementation patents) and the quality of patents influences to companies willingness to pay licensing fees. It must be realized that the patent system is not a stabile but poses a different effect to different fields of technology. In some new fields, like the Information technology to which wireless technology is largely in connection with, the problem with poor patent quality is relevant and its effects can be seen sooner or later also in standardization. However, it is apparent that many problems between patents and standards are not due to these differences, but originate from standardization organizations’ patent policies. Actually, one resource-binding factor is that different standardization organizations have different IPR policies. For this reason every time an enterprise takes part in a standardization process it has to assess how well the organizations IPR policy meets its needs. Particularly licensing terms create severe problems: It is not possible to determine objectively what are the reasonable and non-discriminating terms and conditions, especially when dealing with new technology – like the wireless technology – in which common royalty practices have not yet evolved. The flexibility with licensing terms creates uncertainty and business risks. One problem is the unpredictability of the amount of cumulative costs involved in manufacturing a product that contains multiple standards. To some degree this problem can be avoided by licensing on royalty-free terms or by establishing patent pools from which it is possible to license all relevant patents (one-stop shopping).

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Conclusions

The role of patents in standardization can not be undermined. They are potentially a good source of royalties for the patent holder, and at the same time they can be an impassable obstacle for the standardization process. Of course, this is not the case for every patent involved in standardization. However, this possible conflict of patents and standards has materialized, as we have discussed. The conflict is usually referred as “the fundamental dilemma”, and the increasing number of patents could make this dilemma more probable and substantially slow down the standardization process. The dilemma between patents and standardization is highlighted even more when the standardization process is abused for the benefit of the patent holder. Patent holders who have little or no interest in the technology itself, but may own patents essential to the technology, can have in their interest to abuse the voluntary and open nature of standardization. Also, widely accepted standards can be threatened by patent holders with no other interest than maximizing the patent’s royalties. For example, the JPEG standard and its worldwide use is a good target for patent holder’s aiming for large revenues. Patents have significant strategic importance in the process of standardization. Nevertheless, patent rights are not global. The world consists of separate patent systems, or patent regimes that do have similar regulation, but also some significant differences. This study focused on the differences between the U.S. common law patent system defined by the U.S. Patent Act and case law, and the European civil law based patent system defined by the EPC. The main differences identified were in novelty assessment in relation to prior art, and patentable subject-matter considering computer programs and business methods. In assessing novelty and inventive step the dissimilarity between the prior art material taken into account in the U.S. versus the prior art material essential in novelty and inventive step assessment in Europe is crucial. One of the various differences, the possibility for one-year grace period in the U.S., seems to have most effect on standardization. This period makes it possible to submit technology into a standard and file the patent application afterwards up until a year has passed from inventions first publication day. For this reason it is sometimes even possible to file for a patent after the standard is adopted. This makes it difficult to estimate the amount of essential patents involved and discriminates among those who wish to gain patent protection in Europe and those who are satisfied with U.S. patent protection. Although, it is often presumed that confidentiality in standards process is guaranteed by non-disclosure agreements, this is not necessarily enough to keep the invention in secret so that also those who are interested in patenting in Europe would have the opportunity to submit a technology into a standard. The difference in patentable subject-matter can affect standardization so that some inventions can be patentable in the U.S. and not patentable in Europe. This changes the bargaining position of the patent holder as the patent’s rights are limited. This difference is especially strong in the patenting business methods. Also, the ambiguity surrounding the issue of technicality, which defines patentable subject-matter in Europe, is bound to cause confusion in computer program and business method patenting. There are also clear differences in certain aspects of U.S. and European patent regulation. The possibility not to publish U.S. patent applications, differences in the level of inventive step/obviousness requirement and possibility to opposition procedure in Europe but not in the U.S. are examples of such distinctions. However, these differences seem to have no notable effect on standardization. Nevertheless, the quantity and quality of patents in the field of wireless technology has substantial indirect effect also to standards. This study is a survey of the current issues in patents and standardization, and how differences in U.S. and European patent regulations can affect the issues. The differences presented in this paper require further study and more research to assess their significance to standardization in more detail.

Acknowledgements

Mr. Timo Ruikka, Dr. Ilkka Rahnasto and Mr. Harri Honkasalo provided helpful comments and professional insight. The authors also acknowledge the help of Mr. Olli Pitkänen.

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