Publications
European IP Bulletin, Issue 19, February - Hot Topics
Hot Topics
1. Computer Implemented Inventions
in Europe
Justin Hill, the author of this article and Senior Director, IP
Procurement Europe, in our London office, would be pleased to answer
queries on this subject.
The Commission’s draft directive on patent
protection for computer implemented inventions (often called the CII
directive) was intended to clarify the current legal situation in
Europe and harmonise the approach taken by the national Courts of
the Member States and the Boards of Appeal of the European Patent
Office. The European-wide consultations which preceded the initial
draft also established that many European entities wished to avoid a
drift towards the more liberal patenting regime of the US. The draft
directive would also make the European Court of Justice the highest
authority.
In the EU, law making involves a co-decision procedure according to
which the text of the directive cannot become law without the
agreement of both the European Parliament and the Council of
Ministers. Controversy has reigned since September 2003 when, during
the first reading of the draft CII directive, the European
Parliament introduced more than 50 amendments pursuant to the
demands of various lobby groups, including elements of the open
source programming community. The result, according to most
commentators, is an unworkable text. The Council of Ministers
subsequently rejected most of the Parliament’s amendments and, in
May 2004, published a further version of the draft directive
representing a political agreement between Ministers of the various
states.
This review is based on the Council text of May 2004, but will also
address some of the key issues of controversy in the Parliament
text. Much of the controversy has arisen owing to the fact that the
definition of “computer implemented inventions” in the directive is
extremely broad. The result is that much of the rather draconian
legislation in the directive would be felt by industries far beyond
pure software developers. In fact any industry offering a product or
service with at least part of its functionality implemented in
software would be affected. Therefore the directive would be felt in
industry sectors as diverse as consumer electronics, domestic
appliances and life sciences (medical device makers etc).
How does Europe currently differ from the US?
The last decade has seen the US broaden its patent granting practice
such that inventions which have “a useful, concrete and tangible
result” can qualify for protection by patents. While novelty and
non-obviousness are required, the US test for patentability does not
require a technical contribution to the field in question. Thus,
non-technical software and non-technical business methods qualify
for protection provided there is novelty and inventive step.
In contrast, the practice in Europe has been to require a technical
contribution to the art. At the European Patent Office an invention
is considered to make a technical contribution where it is shown
that the invention is capable of bringing about a “technical effect
which goes beyond the ‘normal’ physical interactions between the
software and the computer on which it is run.” Applications have
been allowed when the invention is used to control a machine or
technical apparatus, or when an invention manipulates digital images
or leads to an improvement in performance (or saving of resources)
as part of a computer system. On the other hand, business methods
implemented by known technical means are not considered patentable,
as the mere use of a computer or other programmable apparatus does
not necessarily confer a technical contribution. Thus, in Europe,
the use of algorithms is only patentable where the algorithm is
reduced to an application in which it makes a contribution in a
technical field by means of some programmable apparatus or technical
method.
How would the proposed directive limit patent protection for
software in Europe?
Regarding substantive principles of patentability, the directive
explicitly ties the identification of technical character with the
assessment of inventive step. This is because its central proposal
requires that to be patentable an invention implemented at least in
part though the execution of software on a computer, or similar
programmable apparatus, has to make a non-obvious contribution in a
technical field. While this raises the bar for patentability,
something similar has been the recent practice at the European
Patent Office.
The threshold for demonstrating a technical contribution is based on
case law and has traditionally been low. Expert advice should be
sought to clarify the prospect of success in a particular case, but
as a rule it can be assumed that if the only contribution made by
software or a programmed apparatus is non-technical, such as
performing an act electronically which would otherwise have been
performed mentally or in the course of doing business, the prospects
of achieving grant are low. Certain technically implemented business
methods and the like, based for example on novel data structures,
interfaces etc, are expected to qualify for patent protection under
the Council text, just as they have done in the past.
Thus, under the draft legislation (and arguably recent case law as
well) the assessment of “technical contribution” is tied up with the
determination of inventive step, and considered less as a
preliminary issue before assessment of novelty and inventive step.
In practice, many software implemented inventions would not meet
this test because, irrespective of whether or not the claim as a
whole is inventive, the contribution may well be rejected as
amounting to nothing more than a non-technical step like performing
a mental act, a mathematical method, playing a game, a scientific
theory, or a program for a computer etc. When considered in
isolation this “technical contribution” issue would considerably
reduce the scope of protection for computer implemented inventions
in Europe. However, when considered alongside the remainder of the
proposals in the draft legislation, particularly those in the
Parliament’s text, the effect is regarded as drastically limiting
what would qualify as a patentable computer implemented invention.
Subject matter excluded from patent protection
The Council draft seeks to maintain the status quo in relation to
exclusions, but also clarifies what the exclusions mean. It attempts
to do this by taking the same general approach as the European
Patent Convention, namely it explicitly excludes computer programs
(as such), mathematical methods, and business methods. The intention
is to prevent these being monopolised in their abstract form.
Accordingly, there remains the potential for patentability under the
Council text when reduced to an application in which some technical
contribution is evident.
On the other hand, and very controversially, the Parliament’s text
explicitly excludes any invention to do with “the processing,
handling, presentation of information”, “data processing”, and even
inventions acknowledged to “improve efficiency / use of resources in
a data processing system”. These classes of invention have for years
been well within the realms of subject matter which might qualify
for patent protection. The Parliament text goes even further in that
it also undermines many already granted patents by reciting
permitted acts including that it is not an infringement to use a
patented technique for “conversion of conventions used … to allow
communication and exchange of data ….”. A combination of the
sweeping exclusions and broad permitted acts would remove many
classically protected fields from qualification and render very many
granted patents unenforceable. Bearing in mind the broad definition
of “CII” as meaning anything which has at least part of its
functionality implemented in software, and fact that all patents are
in fact directed to protect “useful purposes” the ramifications
would go far beyond software and even computing.
In summary, the Parliament text represents a radical departure from
the current legal position. Whereas certain elements of the
programming community would welcome such a drastic change in the
law, mainstream technology companies remain extremely concerned.
Their concerns go to the question of whether or not their products
will in future benefit from the traditional levels of protection
which justified investment in the technology in the first place.
This sort of question has immediate ramifications for the choice of
exploitation model, for product quality and in the longer term
product support, as well as raising questions as to whether future
product development initiates are commercially feasible at all.
Would the proposed directive restrict interoperability?
The Software Copyright Directive (already in force as 91/250/EEC)
provides that copying and the reproduction or translation of code
for the purposes of studying the underlying principles of operation
of a program is not an act of infringement. European patent
protection is not intended to interfere with these interoperability
provisions, either now or under the proposed patent directive. As a
result, the proposed patent directive includes a clause which
explicitly refers to interoperability provisions under the copyright
directive with a statement that nothing in it shall affect or limit
these rights. Failure to understand the safety net provided by a
combination of the “permitted acts” under patent law and the above
interoperability provisions in the draft directive has led to
assertions that the proposed patent directive seeks to harm or limit
interoperability provisions.
Will claims to software on a carrier be permitted?
Despite concerns that limiting the claim format available to CII’s
would be contrary to TRIPS, both the Council and Parliament versions
of the draft currently seek to do this. Under the Council text a
claim to a program on its own (or on a carrier) would only be
allowable in an application which also includes claims to a
programmed apparatus or to a corresponding technical process.
Based on the Parliament text, such claims would not be available in
any circumstances. This would clearly have serious implications in
some cross-border infringement scenarios, in which the lack of
availability of such claim formats would lead to a lack of
jurisdiction and/or no claim to primary infringement.
Where does all this leave business methods?
Pure business methods have never been patentable in Europe other
than in computer implemented systems making a genuine technical
contribution in a field other than “doing business”. No part of the
proposed directive deals directly with business methods and
therefore nothing to do with the directive would change this
position. There remains a general satisfaction in Europe with the
position that pure business methods are not entitled to protection
under patent law.
Where do we go from here?
Formal adoption of the Council text by the Council was expected
early in 2005. Under usual procedure the Council’s text would then
have been presented to the European Parliament shortly afterwards
for a Second Reading. However, in the latest twist a European
Parliamentary Committee voted early in February 2005 to ask the
European Commission to present a freshly drafted proposal, taking
into account the controversial amendments introduced in Parliament’s
first reading. This appears to be a response to the intense and
emotional lobbying by The Open Source Community and The Green Party,
among others, and reflects the serious misconceptions MEPs have on
the difference between a US-style position and the regime proposed
in the draft directive. In fact, there seems to be little or no
understanding of that fact that the position under the Council’s
version of the proposed directive represents a move away from the
current position in Europe in the opposite direction to the US. In
other words it seems MEPs have set the proposal back because they
feared a more liberal regime (US-style) when in fact the draft
represented a more stringent regime (lower level protection for CIIs
and software than current).
The Commission is still at liberty to decide what to do. For example
rather than starting afresh it may prefer a faster route based on
compromise between the existing texts. The largest obstacle remains
reaching an agreement between the Parliament and the Council on
these controversial provisions. This cannot be overcome with the
present level of misconception and scaremongering by the anti-patent
lobby groups Without an agreement, the directive could not become
law. There is therefore a chance that the legislation will fail or
be withdrawn and never enter force. In this case, one possible
alternative would be an amendment to the European Patent Convention,
which would be made on agreement of the member states of the
European Patent Organisation, as distinct from the European Union.
Another alternative might be to leave it to case law to provide the
clarity which is so desperately needed in Europe.
The recent vote by the European Parliamentary Committee may be an
indication of stronger anti-patent feeling, particularly given that
European elections have installed a new Parliament since the first
reading. Likewise there are new representatives from new Member
States following the recent enlargement of the European Union. These
new members bring their own views to the Parliament. Poland in
particular has publicly backed a shift away from the current Council
text towards the controversial Parliament text.
European industry was set to call on the European Council to
formally adopt its text so the legislative process could continue.
However, now that the proposal has been set back, the Commission
should probably withdraw its current proposal to avoid drawing out
the legal uncertainty. In this way, the debate could continue
without the current political tensions.
2. EU Rules Against Microsoft in its Bid to Suspend Enforcement of Windows Media Player
On 22 December 2004, the European Court of First Instance
delivered its judgment in Microsoft v Commission Case T-201/04 R.
The European Court of First Instance decided to reject Microsoft’s bid to suspend
an anti-trust order and upheld the interim measures imposed by the
Commission against Microsoft as a result of the abuse of its
dominant position in the worldwide market of software for personal
computers.
On 24 March 2004, the Commission decided that Microsoft must:
- Offer a European version of Windows operating system without the Media Player utility (a multimedia pack for audio and video); and
- Disclose all the information necessary to establish a dialogue between the Windows system and other competitor’s systems.
In addition, the Commission imposed a fine amounting to
€497,196,304, which is one of the largest fines ever issued against
a company in a competition case.
Microsoft requested a provisional suspension of the obligation to
release fundamental information of their software. The President of
the European Court of First Instance rejected Microsoft’s argument
that it would suffer serious and irreparable damage if the EU
sanctions took immediate effect. The court concluded that the
company had not adduced sufficient evidence to support that such
disclosure of information would in effect cause irreparable damage
to the financial position, business policy or reputation of the
company. The President of the Court did state that Microsoft had the
right to submit a technical file to the Commission, in which it
could comment on the degree of precision of the specifications and
the risks of revealing information necessarily covering more than
just the interoperability sought by the Commission. However,
Microsoft refrained from doing so.
The Court did leave a margin of possibility for Microsoft to appeal
to the European Court of Justice. Nevertheless, the Court’s decision
supports the Commission’s desire for the worldwide market of
software for personal computers to be opened up and for Microsoft’s
rivals to be offered the opportunity to further develop and promote
their software products.
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