Software and Business Method Patenting :
Modern society relies heavily on computer technology. Without software, a computer cannot operate. Software and hardware work in tandem in today’s information society. So, it is no wonder that intellectual property protection of software is crucial not only for the software industry, but for other businesses as well.
A software patent is generally defined as a patent that protects some programming technique. The Foundation for a Free Information Infrastructure (FFII) has defined a software patent as being a “patent on any performance of a computer realised by means of a computer program. The intellectual protection of computer software has been highly debated at the national and international level.
There is intense debate over the extent to which software patents should be granted, if at all. Important issues concerning software patents include:
• Whether software patents should be allowed, and if so, where the boundary between patentable and non-patentable software should lie;
• Whether the inventive step and non-obviousness requirement is applied too loosely to software; and
• Whether patents covering software discourage, rather than encourage, innovation.
The Foundation for a Free Information Infrastructure or FFII is a non-profit organisation based in Munich, Germany, dedicated to establishing a free market in information technology, by the removal of barriers to competition. The FFII played a key organisational role and was very active in the campaign which resulted in the rejection of the EU software patent directive in July 2005.
An early example of a software patent is that of United Kingdom. On 21 May, 1962, a British patent application entitled “A Computer Arranged for the Automatic Solution of Linear Programming Problems” was filed. The invention was concerned with efficient memory management for the simplex algorithm, and could be implemented by purely software means. The patent was granted on August 17, 1966 and seems to be one of the first software patents.
Most countries place some limits on the patenting of invention involving software, but there is no legal definition of a software patent. As for instance, U.S. patent law excludes “abstract ideas”, and this has been used to refuse some patents involving software. In Europe, “computer programs as such” are excluded from patentability and European Patent Office policy is consequently that a program for a computer is not patentable if it does not have the potential to cause a “further technical effect” beyond the inherent technical interactions between hardware and software. Though the European Parliament rejected the Computer Implemented Inventions Directive in July 2005, the position with regard to software patenting remains more or less the same in EU member states.
Patent laws of several countries favour patent protection for software innovation. Such countries include USA, Australia and Singapore, to name a few. However, many other countries, which include India and European nations, have more stringent laws concerning patent protection to software innovation.
Most of the jurisprudence relating to software patents emanates from United States, which is considered as the cradle of software patents. Beginning with the landmark decision of US Supreme Court in Diamond v. Thehr, 450 U.S.75 (1981) which ordered the Patent office to grant a patent on an invention even though a computer software was utilized in it, the US Supreme Court has traveled a long distance with regard to software patents.
Subsequently in 1982, a new Court called United States Court of Appeals for the Federal Circuit (CAFC) was created by the U.S. Congress to hear patent cases. Following several landmark decisions by this Court, by the early 1990s the patentability of software was well established, and in 1996 the USPTO issued Final Computer Related Examination Guidelines stating that “A practical application of a computer-related invention is statutory subject matter. This requirement can be discerned from the variously phrased prohibitions against the patenting of abstract ideas, laws of nature or natural phenomena”.
The recent expansion of the Internet and e-commerce has led to many patents being applied for and being granted for business methods implemented in software and the question of whether business methods are statutory subject matter, is a separate issue from the question of whether software is?
In European Union (EU), software is patentable, provided they make a technical effect. Though the European Parliament rejected the Computer Implemented Inventions Directive in July 2005, the position with regard to software patenting remains more or less the same in EU member states.
United Kingdom patent law is interpreted to have the same effect as the European Patent Convention such that “programs for computers” are excluded from patentability to the extent that a patent application relates to a computer program “as such”. Current case law in the UK states that an (alleged) invention will only be actually regarded as an invention if it provides a contribution that is not excluded and which is also technical. A computer program implementing a business process is therefore not an invention, but a computer program implementing an industrial process may well be.
In Japan, software-related inventions are patentable. To qualify as an invention, however, there must be “a creation of technical ideas utilizing a law of nature”, although this requirement is typically met by “concretely realising the information processing performed by the software by using hardware resources”. In 1999, the allowance rate for business method patents at the Japan Patent Office (JPO) reached an alltime high of roughly 35 percent. Subsequently, the JPO experienced a surge in business method patent filings. Since 2006, the average grant rate for business method patents has risen to the current rate of roughly 25 percent.
In April 2013, the German Parliament adopted a joint motion “against the growing trend of patent offices to grant patents on software programs. In Australia, pure or abstract methods of doing business are not considered to be patentable, but if the method is implemented using a computer, it avoids the exclusion for business methods.
In New Zealand, computer programs are to be excluded from patentability under a 2010 Patents Bill, but guidelines permitting embedded software are to be drafted once the bill has passed. In South Africa, “a program for a Computer” is excluded from recognition as a patentable invention by Section 25 of the Patents Act. In South Korea, software is considered patentable and many patents directed towards “computer programs” have been issued.
Indian Patent Act offers patent protection to products or processes (if they satisfy various requirements of patentability) as long as they do not fall under non-patentable subject matter. Sections 3 and 4 of the Indian Patent Act specify a list of subject matter that is not patentable, in particular “a mathematical or business method or a computer program per se or algorithms” is of specific importance to software innovation [Section 3(k)]. The Indian Patent Law does not contain any specific provision regarding the protection of computer software. Computer software on the other hand is protected by copyright as applicable to literary and aesthetic works. A computer program is therefore dealt with a literary work and the law and practice in relation to literary works will apply to computer programs. [See study lesson on Copyright wherein protection of computer software has been elaborately discussed.]
The Indian Patent Act, as of now, excludes only ‘computer programs per se’ from patentability. The issue of whether computer programs tied to certain hardware can be patented is a controversial one. An attempt was made through the Patents Amendment Ordinance 2004 to further extend the scope of software patenting to any computer program that has industrial application and to those that are used in combination with hardware. But there was strong opposition within and outside the Parliament and as a result this was deleted from the subsequent Patents (Amendment) Act, 2005. Still, an invention shall not become unpatentable in India merely because it was implemented with software. Like the EU Countries, in India also the gaining of patent protection for software depends more on the drafting skills of the Patent Engineer. If the claims are drafted in such a way as to reflect that the invention is not software per se, it shall qualify for patent protection.