New Case Law on Software and Business Method Patents
Introduction
There has been a long running debate over whether software and business methods are patentable.
In the recent paired cases of Aerotel Ltd v Telco Holdings and others and Re Macrossan's Application the Court of Appeal has reaffirmed the restrictive stance on computer programs, but has provided some hope for those trying to protect new business methods provided technical effects are involved.
Patents are powerful commercial assets and can provide freedom from competition for certain technologies for up to 20 years.
Article 52(2) of the European Patent Convention (implemented into UK law by section 1(2) of the Patents Act 1977) excludes certain things from being registered as patents including:
Mathematical methods
Literary works
A method of doing business
A program for a computer
The presentation of information
The appeal in Macrossan concerned an application to patent a computer program which helped with the process of forming companies. The Macrossan software asked users various questions via a remote server and then produced the appropriate documents to incorporate a company. The Court held that as the sole contribution of the "invention" was a computer program, it fell within the excluded subject matter of the Act and the appeal against the decision not to grant a patent was dismissed.
By contrast, the Aerotel appeal concerned a patent for a system of prepaid telephone calls, which enabled calls to be made from any telephone by dialling a special code. The Court held that the subject matter was a new physical combination of hardware, and being technical in nature, it was more than exclusively a method of doing business. The appeal was upheld.
In reaching its decisions, the Court of Appeal adopted a four step 'technical effect' approach, which basically asks whether the invention makes a technical contribution to the known art.
The Court laid down the following four-step test for applying the 'technical effect' approach:
1. Properly construe the claim being made in the patent application (i.e. what exactly is the invention claimed) ;
2. Identify the actual contribution (i.e. does what is claimed by the patent add to the stock of human knowledge);
3. Ask whether the answer to 1 and 2 falls solely within the excluded subject matter in the Act (if it falls partly within one excluded category and partly outside, it will pass this step) ;
4. Finally, if it passed the last step, check whether the actual or alleged contribution is actually technical in nature.
There is a view that this decision does not tally with recent case law of the European Patent Office (EPO) the Court of Appeal having taken the unusual step of requesting clarification from the EPO as to the correct approach to determining excluded subject matter.
Mark Lomas, Head of IP and IT Law at Ashfords said:
"For businesses developing software it is a case of 'watch this space' as to whether the law will change in light of any response from the EPO. If operating overseas it is important to obtain advice, as the rules on the patentability of software and business methods vary in other jurisdictions.
There are plenty of cases where a patent in one country is refused but granted in another, so consider your markets when looking at filing your patents. Seeking or defending any intellectual property must always be done within a realistic commercial context.
Anyone seeking a patent of this kind, particularly where the communication of data is involved, will need to look carefully at the complete process adopted, the hardware, software and media used, plus the data capture technique, and the methods and technology used for the manipulation, presentation and delivery of information. Without this you can not properly assess the chances of getting the invention past a technical effect test."
Those developing new business methods need to review their products in light of the new test, and seek advice if they think their invention may be patentable. This exercise should be done in conjunction with specialist lawyers and patent attorneys working together. Key product markets need to be identified and patent applications must be carefully worded, so that the 'technical' aspects of the contribution are clearly spelt out.
If you need assistance with any technology law issue then please contact Ashfords '
Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.
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