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Patentability of
Computer
Software and
Business
Methods
Andrés Guadamuz
SCRIPT Centre for IP and
Technology Law
University of Edinburgh
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Software
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Software

Software is "a set of
statements or instructions to
be used directly or
indirectly in a computer to
bring about a certain
result".

These instructions are set
out in source code, a set of
in logical human-readable
instructions coded into
computer language.

Object code is the result of
a compilation of the source
code into machine
readable instructions.
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Source code
#!/usr/bin/perl
# Public domain. Questions to Jamie McCarthy, jamie@mccarthy.vg
use LWP::Simple;
use Math::BigInt;
my $html = get(`http://www.utm.edu/research/primes/curios/48565...29443.html');
my($prime) = $html =~ m{<blockquote>([^<]+)</blockquote>};
$prime =~ tr{0-9}{}cd;
$prime = Math::BigInt->new($prime);
my $binary = '';
while ($prime > 0)
{ $binary = pack(`N', ($prime % 2**32)) . $binary;
$prime /= 2**32; }
$binary =~ s{^\0+}{};
local *FH;
open(FH, `| gunzip -acq') or die `cannot gunzip, $!';
binmode FH;
print FH $binary;
close FH.
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Object code
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Algorithms
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Know-how and documentation
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Software and the law
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International software protection
 Art
4 OMPI Copyright Treaty (WCT): Computer
programs are protected as literary works within
the meaning of Article 2 of the Berne Convention.
Such protection applies to computer programs,
whatever may be the mode or form of their
expression.
 Art
10 TRIPS (ADPIC): 1. Computer programs,
whether in source or object code, shall be
protected as literary works under the Berne
Convention (1971).
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Software protection in Europe

Software Copyright Directive 91/250/EEC requires copyright
law to recognise software as a literary work.

UK LAW: 3.-(1) "literary work" means any work, other than a
dramatic or musical work, which is written, spoken or sung,
and accordingly includes- (a) a table or compilation other
than a database, (b) a computer program; and (c)
preparatory design material for a computer program; and (d)
a database.

Art 52(2)(c) of the European Patent Convention (EPC) states
that “programs for computers” “as such” are not inventions,
and therefore are not patentable.
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Copyright works with dual nature
 Software:
 Source
code – literary work
 Recipes:
 Recipe
book – literary work
 Architectural
plans:
 Drawing, artistic work
 Knitting
patterns
 Written instructions and patterns – literary work
and artistic work.
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Copyright vs Patents
EXPRESSION
IDEA
SYMBOLIC
FUNCTIONAL
LITERAL
NON-LITERAL
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Why patents?
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Trouble with copyright: USA

The idea-expression dichotomy is very well used in the
United States, this has had interesting effects for
software protection.

“look and feel” cases, Apple v. Microsoft 821 F.Supp 616
(1993).

Whelan Associates Inc v Jaslow Dental Laboratory Inc
[1987] FSR 1 gave a test for the idea-expression
dichotomy in software.

Computer Associates v Altai 982 F 2d 693 (1992) –
Abstraction, Filtration, Comparison.

Aharonian v Gonzales, N.D. Cal., No. C04-5190, Jan. 3,
2006) tried to get software “not subject to copyright
protection”, but failed.
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Abstraction, Filtration,
Comparison test
 Stage
1 - Abstraction - You dissect the code and
isolate each level of abstraction.
 Stage
2 - Filtration - Examine the structured
components at each level of abstraction to
determine whether their inclusion at that level was
‘idea’ or was dictated by efficiency, required by
external factors or was taken from the public
domain (and is therefore unprotectable).
 Stage
3 - Comparison - What remains following
filtration is a core of protected expression. This
must be compared for substantial similarity.
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Trouble with copyright: UK
 John
Richardson Computers v Flanders [1993]
FSR 497.
 Saphena
v. Allied Collection [1995] FSR 616.
 Ibcos
Computers Ltd v Barclays Mercantile
Highland Finance Ltd [1994] FSR 275.
 Cantor
Fitzgerald International v Tradition (UK)
Ltd [1999] Masons CLR 157.
 Navitaire
Inc v easyJet Airline Co [2004] EWHC
1725 (Ch).
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Test in Ibcos
 According
to Jacob J, the Altai test should
not be applied in the UK.
 What
are the work or works in which the plaintiff
claims copyright?
 Is each work 'original'?
 Was there copying from that work?
 If there was copying, has a substantial part of that
work been reproduced?
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Protection of functionality in
Navitaire
 “Copyright
protection for computer software
is a given, but I do not feel that the courts
should be astute to extend that protection
into a region where only the functional
effects of a program are in issue. There is a
respectable case for saying that copyright is
not, in general, concerned with functional
effects, and there is some advantage in a
bright line rule protecting only the
claimant's embodiment of the function in
software and not some superset of that
software.”
The road towards patentability:
USA

The Abstraction-FiltrationComparison test has been a
failure.

Owners begin to pursue other
types of protection.

Diamond v Diehr, 450 U.S. 175,
185 (1981) "everything under
the sun that is made by man."

In re Alappat, 33 F. 3d 1526
(1994), “useful, concrete, and
tangible result.“

State Street Bank v Signature
Financial Group (1998) 47
USPQ2d 1596.
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State Street, business methods and
software patents

State Street decision (1998), “The business method
exception has never been invoked by this court, or the
CCPA, to deem an invention unpatentable”.

The invention in State Street Bank was only possible
because of computerisation – it wouldn’t work without a
program.

Many ‘software patents’ are actually ‘business method
patents’ where the business method is stated in
program terms. They also describe methods
(algorithms).

Amazon.com’s “one click” patent application is an
example.
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Software patents (USA, 19852005)
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Typical software patent claim
 “A method to be performed by a computer for operating a
matching service, comprising:
generating, from empirical data, a number of factors
corresponding to a like number of functions of one or more
variables relevant to relationship satisfaction; approximating
the satisfaction that a user of the matching service has in the
relationships that the user forms with others; identifying, with
the computer, candidates for a relationship with the user by
determining an association between the approximated
satisfaction and one or more of the factors; and
approximating the satisfaction that the user will have in a
relationship with a particular candidate.” U.S. Patent 6735568
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Charts
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But… software copyright is
useful
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Software patentability around
the world
 Art. 27.1 TRIPS
Agreement: “patents shall be
available for any inventions, whether products or
processes, in all fields of technology”.
 All
major (in terms of volume) patent offices accept
software patentability in one shape or another (US,
Europe, Australia, Japan).
 Reluctance
to apply indiscriminate patentability in
various regions.
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Patentability in Europe
 Strict
reading of the law leads one to
believe that software “as such” is not
patentable.
 European
Patent Office (EPO) Board of
Appeals interpreted “as such” very broadly
in several cases.
 20,000
software patents approved by the
EPO, 6,000 applications per year in UK.
 There
is software patentability in Europe.
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Technical effect
 Case
law has decreed that only software that
has a “technical effect” can be patented.
 The
term is not in the legislation, and
therefore there is no clear definition of
technical effect.
 Lack
of consistency in its application.
 Merrill
Lynch [1989] RPC 561: "There must...
be some technical advance on the prior art in
the form of a new result.“
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Some caselaw
Halliburton v Smith International

Two patents involved, one
drill bit and software to
design drill bits.

In this ruling, there seems to
be a clear technical effect,
the software can only be
used for specific purpose.

The patent was struck down
because it had inadequate
disclosure (upheld after
appeal).

Could this be the strategy to
attack software patents in
the future?
The little man test (CFPH LLC
Application)
“The question to ask should
be: is it (the artefact or
process) new and nonobvious merely because
there is a computer
program? Or would it still
be new and non-obvious
in principle even if the
same decisions and
commands could
somehow be taken and
issued by a little man at a
control panel, operating
under the same rules? For
if the answer to the latter
question is 'Yes' it
becomes apparent that
the computer program is
merely a tool, and the
invention is not about
computer programming
at all.”
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Aerotel v Telco
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“[...] despite the fact that such patents have been granted for some
time in the US, it is far from certain that they have been what Sellars
and Yeatman would have called a "Good Thing." The patent system is
there to provide a research and investment incentive but it has a price.
That price (what economists call "transaction costs") is paid in a host
of ways: the costs of patenting, the impediment to competition, the
compliance cost of ensuring non-infringement, the cost of uncertainty,
litigation costs and so on. There is, so far as we know, no really hard
empirical data showing that the liberalisation of what is patentable in
the USA has resulted in a greater rate of innovation or investment in
the excluded categories. Innovation in computer programs, for
instance, proceeded at an immense speed for years before anyone
thought of granting patents for them as such. There is evidence, in the
shape of the mass of US litigation about the excluded categories, that
they have produced much uncertainty. If the encouragement of
patenting and of patent litigation as industries in themselves were a
purpose of the patent system, then the case for construing the
categories narrowly (and indeed for removing them) is made out. But
not otherwise.”
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Astron Clinica & Others v The
Comptroller General of Patents
 "... I
do not detect anything in the reasoning of the
Court of Appeal which suggests that all computer
programs are necessarily excluded. I have
identified the key aspects of the decision which
relate to computer related inventions and they
undoubtedly criticise the reasoning of the EPO
Board of Appeal in each of the "trio" of cases. But
the criticism is directed at the "any hardware will
do" approach and the return to form over
substance with the drawing of a distinction
between a program as a set of instructions and a
program on a carrier."
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Symbian Ltd v Comptroller
General Of Patents
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"So is this invention no more than the running of the
program? Having regard to the earlier authorities the answer
has to be that it depends on what the program does and not
merely how it does it. The mere fact that it involves the use of
a computer program does not exclude it. [...] It is simply
inaccurate to label all programs within the computer as
software and on that basis to regard them as of equal
importance in relation to its functionality. [...] I think that the
Hearing Officer took too narrow a view of the technical effect
of the invention and was wrong to exclude it from
patentability on the basis that it amounted to no more than a
computer program. The appeal will therefore be allowed."
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Enlarged EPO Board of appeals
 Programs
 “…
for computers, G 0003/08, 12 May 2010.
it seems to this Board, although it may be said
that all computer programming involves technical
considerations since it is concerned with defining
a method which can be carried out by a machine,
that in itself is not enough to demonstrate that the
program which results from the programming has
technical character; the programmer must have
had technical considerations beyond "merely"
finding a computer algorithm to carry out some
procedure.” para 13.5.
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Bilski v Kappos (SCOTUS)
 This
will set the stage for software and business
patents for the next few years.

Patent application for a method of hedging risks in
commodities trading in energy markets (U.S. Pat
Application 08/833,892).
 Rejected
by examiner, appealed, lost.
 Appealed
to Court of Appeals of the Federal
Circuit (CAFC), rejected again.
 Supreme
Court. It will define what processes are
patentable, and most soft pats are processes.
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Problems with software patents
Sui generis?
 Why
not go the “sui
generis” way?
 Software
seems to
have problems with
both copyright and
patents.
 New
right that has
shorter lifetime, and
recognises both the
literal and functional
aspects of software.
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Concluding…
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Questions?
a.guadamuz@ed.ac.uk