Patenting Computer Software - Related and Business Method Inventions; Background to Patents

Patent Law is a branch of what is commonly known as Intellectual Property Law. In terms of Patent Law, the State rewards an inventor for making an invention by granting a twenty year monopoly, so that only the inventor (or someone acquiring the invention from the inventor legitimately) is allowed to exploit the invention. The patent holder is thus able to derive advantage and profit from the invention.

Traditionally, patents for computer software-related inventions and business methods (which are often closely related) were rejected by patent offices. It was thought that computer programs were more like books (“literary works”) than other technological subject matter, such as automobiles, manufacturing machines and chemical compounds, and ought therefore to be protected by copyright (although copyright does provide some protection, it does not protect the underlying concepts in software-related and business method inventions, and patent protection is potentially much broader).

However, as the computer age progressed, computers and computer software took on an increasingly central role. Today, computers and computer software are at the forefront of technology.

Although Patent Law has been slow to adapt, there have been rapid advances in the law in this area recently. Furthermore, the law in this area is continually changing, and these changes are nearly always in favour of allowing software and business methods to be patented.

General Requirements for Patentability

Before turning specifically to the patenting of computer software-related inventions and methods of doing business, it is important to understand the requirements for patentability in general, irrespective of the subject matter of the invention.

The two major tests for patentability in almost all countries in the world are that the invention must be new and inventive.

The South African Patents Act defines “new” as anything which has not been made available to the public anywhere in the world, by written or oral description, by use, or in any other way.

Two important points to note from this definition are that in order to be patentable, the invention needs to be a global first. Secondly, it is not possible to file a patent application for an invention which has already been sold or disclosed to the public. Therefore, a prospective patentee who has already been selling his or her software for even a short time has missed the patent boat in almost all countries (except possibly the USA).

The South African Patents Act states that an invention will be considered inventive if it is not obvious to a person skilled in the art at the time the invention was made. This second requirement for patentability is often the more difficult to satisfy. Other countries have equivalent requirements.

Patenting Computer Software in South Africa

In addition to the above two tests, the Patents Act specifically excludes certain subject matter from being patentable. Section 25(2) of the Patents Act states that:

“Anything which consists of:

  • a discovery;
  • a scientific theory;
  • a mathematical model;
  • a literary, dramatic, musical or artistic work or any other aesthetic creation;
  • a scheme, rule or method for performing a mental act, playing a game or doing business;
  • a program for a computer; or
  • the presentation of information

shall not be an invention for purposes of this Act.”

At first blush, it appears as if a program for a computer is not patentable in South Africa.

However, Section 25(3) states that: “The provisions of subsection (2) shall prevent, only to the extent to which a patent or an application for a patent relates to that thing as such, anything from being treated as an invention for the purposes of this Act.”

It is not entirely clear what the legislature meant in subsection 3 when it used the term “…as such…”.

There is also currently no case law in South Africa interpreting the meaning of this subsection, and this therefore remains a grey area in South African Patent Law. However, since the provision qualifies the exclusion, it is reasonable to interpret it as softening what would otherwise appear to be a complete exclusion.

However, when our Courts do not have a precedent in South African case law, they turn to foreign case law to see if any light can be shed on the subject.

In this regard, there have been many cases in the USA and more particularly Europe, concerning the patentability of software and great progress has been made into clarifying what is actually meant by similar or identical wording to that found in the relevant sections of our law. The net result is that, as will be seen later, computer software is largely patentable in foreign jurisdictions.

Patenting Computer Software in the USA

The traditional approach of the US Patent Office to computer software and business method patents was that the Patent Office was opposed to such patents and rejected patent applications which were directed towards this subject matter.

However, as early as the 1980s , the attitude of the US Patent Office towards this kind of invention began to change.

In fact, from 1982 through to 1995, the US Patent Office granted 381 patents containing the word “software” in their titles 1.

Without going through the full case law history in the USA (which is beyond the scope of this paper), the situation changed dramatically in 1998 with the decision in the Court of Appeals for the Federal Circuit in State Street Bank and Trust Company versus Signature Financial Group Inc. The Court made it clear that computer software and business method inventions are subject to the same standard of patentability as any other patentable system or method if the software produces “…a useful, concrete and tangible result.”

This decision was subsequently ratified in the case of AT&T Corp versus Excel Communications Inc before the same Court. The US Patent Office responded quickly and abandoned its directions to its examiners to reject patents merely on the basis that their subject matter was related to computer software or methods of doing business.

The resulting race to patent computer software and methods of doing business has been astounding. To date, more than 40 000 software or software related patents have been issued in the United States and thousands more are being issued every year 1.

Thus, the situation at present in the USA is that software is patentable if it produces “…a useful, concrete and tangible result.”

Although the above is of particular interest to applicants seeking patent protection for their software inventions in the USA, the situation in the USA is slightly removed from that of South Africa, in that the USA never had an equivalent statute to Section 25 of our Patents Act.

Patenting Computer Software in Europe

In contrast, Article 52(2) and Article 52(3) of the European Patent Convention (EPC) have almost identical wording to Section 25 of the South African Patents Act.

Therefore, the case law in Europe is very relevant to the South African situation and provides an indicator as to the way our courts will interpret Section 25.

The situation in Europe developed in a similar fashion to that in the USA with patents for computer software and business methods initially being rejected.

Again, without going into the long history of the change in attitude to the allowability of computer software, the major turning point came in 1998 when the Boards of Appeal of the European Patent Office issued a decision in regard to an IBM patent application.

The invention was directed towards an “asynchronous resynchronisation of a commit procedure”. The court found that “…computer software is not excluded from patentability if, when it is run on a computer, it produces a further technical effect which goes beyond the normal physical interactions between program software and program hardware”.

In the light of this decision and further decisions by the Boards of Appeal, the European Patent Office changed its approach to examining computer software-related inventions. At present, if the invention has a “technical character”, a patent for the invention may be granted, subject to the normal tests of novelty and inventiveness. Thus in Europe a claim to a computer-related invention (e.g. a process which can be implemented on a computer) is potentially patentable if technical features are involved in its implementation. Non-technical features will not be taken into consideration in deciding whether or not an invention meets the test of inventiveness. Technical features regarded as trivial will not assist in this regard.

Comparison Between US and European Patent Law

It is generally agreed that it is easier to obtain patent protection for computer software and/or business method type inventions in the USA as opposed to Europe as the US criterion of a “useful, concrete and tangible result” is easier to meet than the corresponding European “technical effect” requirement.

An invention consisting of software that controls a machine, for example, would most likely meet the technical effect requirement in Europe and would also certainly be patentable subject matter in the USA. It would also appear that pure business methods, without any computer software angle, would certainly not be patentable in Europe and would be difficult to patent in the USA. In Europe, a method only involving economic concepts and practices of doing business would not be patentable. Technical character is judged with reference to the following issues:

  • what is the technical (as opposed to the commercial) problem solved?
  • what are the technical considerations involved in the solution offered?
  • how does the claimed subject matter affect the technical functioning of the method/system claimed?

A business method which is implemented using computer software, such as the many new Internet business models, will be patentable if it has the required technical contribution to enable the business model to work. This kind of invention is certainly easier to patent in the USA than in Europe at present.

It should be noted that it is generally agreed that to merely automate a known human transaction process using well known automation techniques is not patentable.

Other Countries Around the World

The US and Europe represent the two major positions in patent law at the present time. The position in the UK is similar to that in Europe. Most other first world countries such as Australia, Canada and Japan have followed a somewhat more conservative approach than the USA. In Australia, the current position is that the invention must be defined in a manner that is capable of technological implementation. New Zealand is in the process of amending its Patents Act with provisions based on the current Australian and UK Acts. The revised legislation does not exclude patentability of business method and software patents.

As a practical matter, it is generally a good idea to review the current position in the countries of interest when preparing to file a patent application for inventions of this kind. As a general rule of thumb, it can be said that in order to patent a software or business method invention in most countries, it is at present necessary for the invention to have the required “technical character” more or less along the lines of the European requirements.

Where Does This Leave South Africa?

Until such time as the question of the patentability of computer software comes before a South African court, we do not have certainty on which position the South African courts will follow.

What is very likely is that our courts will adopt an approach which will allow at least some kinds of computer software and/or business method inventions to be patentable.

Because South African patent applications are relatively inexpensive compared with other countries in the world, it makes sense to file a patent application in South Africa for computer software and/or business methods and almost “gamble” with the money.

Since patent applications are not examined for patentable content in South Africa, the South African Patent Office will, in any event, issue a granted South African patent for a computer software or business method related invention, and whether or not the patent is in fact valid will only be decided if the patent comes before the Commissioner of Patents in a legal action.

Where to From Here?

In addition to what has been said above, the position is changing rapidly and there is no certainty as to what the final position will be. In recent meetings at the UK Patent Office all agreed that this lack of certainty was harmful and needs to be clarified as quickly as possible.

However, what this final position will be is anybody’s guess. There are presently numerous parties lobbying for various different amendments to the legislation. Some want the scrapping of the relevant restrictive sections in the legislation so that all kinds of business methods and computer software will always be patentable as long as they are new and inventive. At the other end of the scale, some parties are lobbying for a return to the traditional position of the patent offices whereby all patent applications for computer software and/or business method inventions are rejected out of hand.

Considering how far the patent offices have moved away from this historical position, it is extremely unlikely that they will return to this position of their own accord.

Perhaps the most likely solution is that the patent offices will take up some middle ground, as is the case in Australia. However, what almost all parties in Europe have requested is a clarification of what is and what is not a “technical effect”. Although there is a lot of case law on this question, there is still a great deal of uncertainty in this regard. At the moment, inventions have to be judged on a case by case basis to determine whether or not they would meet this requirement.

Conclusion

South African companies involved in producing new computer software must educate themselves about patents and what can and cannot be patented.

Due to the fact that whatever is filed at the South African Patent Office is automatically granted, and that the validity of a patent is only questioned if patent revocation proceedings are instituted in court, it is wise for a South African company to obtain as many patents in this area as possible. This can be looked at as a somewhat risky investment with the possibility of long term returns.

Where a South African company is interested in conducting business overseas, especially in the USA, patents are a must, whether to be used as a defensive shield or as part of a licensing scheme, for example.

For more detailed in formation, and a clearer opinion in a particular case, contact your patent attorney.

Chris de Villiers

Lance Abramson

Spoor & Fisher

References

“Software and business methods are patentable in the US (Get over It)”; Peter Tyrin, Brown & Wood LLP; September 2000

Protection of Computer-related Inventions and Business Method Inventions - Examination Practice at the European Patent Office; Yannis Skulikaris, Joint Cluster Computers, EPO, The Hague; January 2005

Date published: 2007/02/26
Author: Spoor & Fisher

Tags: patents computer software general requirements