In USA, for last 30 or more years, courts step by step eliminated the obstacles for patenting business methods and software by applying different tests. However, in other jurisdictions which have importance regarding the patents such as European Union where there is a common attitude towards patentability among the member states although no total harmonization has been reached and in Japan; there are clear restrictions against the business method and software patents. Even though there are efforts to harmonize patent law with the US in these countries, a common understanding concerning the patentability of the ‘things’ in question has not been achieved. The difference of points of views between different jurisdictions about the extent of patentability is a reflection of clash between different philosophical understandings regarding the intellectual property rights. In this essay, attitude of US patent law towards these subjects will be examined comparing it with other jurisdictions especially Europe; and the reason why taking the side of Europe is reasonable, will be defended with reference to philosophical and practical explanations about intellectual property rights.
In US law, concerning the subject-matter, an invention to be patently eligible has to satisfy a two pronged test: First it must be among the statutory subject-matter categories, namely process, machine, manufacture, and composition of matter. Secondly it must not be included in the exclusions, namely abstract ideas, laws of nature and natural phenomena. Excluding the abstract ideas is a result of the idea that aims to protect public domain that is free to everyone. Patenting the ideas according to this approach discourages progress by placing the ideas under monopolistic use for a period of time. This concern leads to a policy to patent only the practical application of an idea but not the idea itself which is too broad. In Gottschalk v. Benson (1972), US Supreme Court denies patentability of a software applying so-called “machine-or-transformation test”. According to the court, the method was not closely tied to any machine and so the abstract idea in the process can be worked through any apparatus. Till this point, to summarize the US courts’ attitude it could be said that, they tend to grant patents to inventions which are closely connected to hardware. Software itself however was not a sufficient invention to be granted patent.
In Diamond v. Diehr (1981) however, the court applying the same test granted patent, stating that it was closely connected to practical application that will not block future progress. In the same direction, in State Street Bank v. Signature Financial Group (1998), US Court of Appeals for the Federal Circuit eliminated the machine-or-transformation test, just by looking at whether they caused concrete, tangible, useful result. In Bilski v. Kappos (2010), USSC clearly rejected the idea of excluding business methods from patentability and denied the machine-or-transformation test as a sole test, though it recognized it as useful. Taking especially the last two cases into account, it could be suggested that USSC and Federal Circuit tends to grant patents to processes which produce tangible, concrete and useful production.
Nevertheless in the most recent case Alice Corp. v. CLS Bank International (2014), USSC made clear its stand-point arguing that; simply working some process by computers does not satisfy the patentability standards. The court applies the two-pronged test which it applied before in Mayo v. Prometheus (2012) . According to this test, the subject must be a patent-eligible concept. If not, namely if the invention does not satisfy the first test, then the examiner should look whether it contains an element to transform it into a patent-eligible concept. In this case this element to transform was alleged to be computer. However according to Supreme Court, if the invention does nothing “more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer”, it is not patent eligible. So, tangible nature of the computer by which the process works is irrelevant. Taking the Mayo and Alice Corp. cases into consideration, it seems that the efforts by Federal Circuit to eliminate the obstacles in front of patent eligibility of business methods and software are intervened by USSC.
US Board of Patent Appeals (BPA) on the other hand does not follow a consistent route regarding the patent eligibility of business methods and software. For instance in Ex Parte Bowman (2001), it describes a “technological art” requirement excluding all non-computer implemented business methods from the scope of patentability. However, in Ex Parte Lundgren (2005) it steps back eliminating the technological art requirement and only applies the useful, tangible and concreteness test allowing a greater scope of business methods patent grant. In light of efforts of Federal Circuit, the cautious attitude of USSC towards the elimination of patent eligibility tests and the efforts of BPA looking for a balance between these pressures; it can be said that US Patent Law, despite the uncertainty, has a tendency to grant patents to business methods and software.
In Europe, Convention on the Grant of European Patents (EPC) does not create a uniform patent system in EU. Rather it introduces a new patent system that works along with the national patent laws. EPC Article 52(2) clearly excludes “schemes, rules and methods for… doing business, and programs for computer” unlike US patent law. However, in Article 52(3) it limits the exclusion “…only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such.” Because of the expression “as such” it is discussed in EU whether EPO (European Patent Office) can grant patents to business methods and software in spite of the exclusion. In fact, it allowed EPO to grant thousands of patents in question. On the other hand, EPO seems to restrict the patent eligibility of business methods and software by applying tests. In VICOM (1986), it searched for a “technical contribution” of software denying the patentability by saying it was only “mathematical in nature”. In addition to the “technical contribution” test, EPO later in a revised test asked whether inventive step is satisfied under Article 56. In Pension Benefit Systems (2000), it uses Art. 56 rather than “technical contribution” to reject the patent grant in a tortured way. It searches for the ‘prior art’ regarding the inventive step and as the prior art is on the business field, concludes that there is no inventive step. In UK however, this restriction in Art. 52 is applied in a different way without incorporating Art. 56. According to UK High Court of Justice, regarding the patentability of software and business methods, the question to be asked is that “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?” This approach resembles the rationale asserted at the recent USSC decision Alice Corp. v. CLS Bank International in which court asked whether the invention does “more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer”.
In Japan, Japanese Patent Office (JPO) Software Guidelines recognizes patentability if the invention is “creation of technical ideas utilizing a law of nature”. If the business method or software is a systematization that provides useful results “as a result of computerization [which] cannot usually be said to be unforeseeable from the knowledge of the state of the art”, then the JPO would not grant a patent for that invention. As a result, in Japan, just providing concrete, useful and tangible results is not enough to satisfy inventive step.
Regarding the biotechnological patents, another reason for restrictions on patent-eligibility is morality or public order. In US, because of the “patent first, and ask questions later” system, when an invention which carries potential to be controversial concerning morality, it is granted a patent anyway and the Congress is called upon to take an action. According to the current US patent law, there is no ground to exclude patents on humans (such as patents on DNA) pursuant to US Patent and Trademark Office. In Europe however, there are restrictions around this topic. EPC Art. 53(a) includes ordre public and morality among the reasons to deny patentability of an invention. Although it is an extremely broad provision putting burden on patent examiners concerning the ethical issues, it stands as a bar towards morally controversial inventions. Moreover, EU Biotechnology Directive excludes patent on “processes to produce human-animal chimeras and human clones or on commercial uses of human embryos”.
Leaving aside arguments which defend the tendency of judicial mandate granting patents to business methods and software, attributing this tendency to an effort to adapt the law to the developments in business and technology, the question to be asked seems to be whether reserving the public domain is defensible or to what extend should it be reserved. In spite of the obstacles put by USSC decisions such as Mayo v. Prometheus and Alice Corp. v. CLS Bank International, in US patent law the tendency of courts, especially Federal Circuit, is to advocate for elimination of the tests which excludes software and business methods from patentability. Satisfying the requirement to produce a concrete, useful and tangible result seems to be the attitude embraced by judicial branch even if the invention is non-computer implemented. As a result, the general tendency in US may be summarized in words of USSC as granting patents subject-matter of which concerns “anything under the sun that is made by man”. However in EU; with effect of EPC provisions together with the EPO’s construction of EPC which asks for a “technical art” and interpretations regarding same provisions by national jurisdictions such UK still keeps a threshold for patent grants. To summarize, in Europe a computer incorporation which is a main feature of the invention is still required in spite of the efforts to harmonize the EU patent law with US law. In Japan, similarly a requirement for technological application is asked during patent examinations for software and business methods, thus sole business method or software patent without computer-implementation seems not possible both in Europe and Japan. Regarding morality, similarly while there does not seem any exclusion for patents on humans in USA, Europe is more cautious including morality and ordre public as patentability requirements excluding some subject-matters such as human embryos completely out of patent eligibility.
Graduate Student at University of Ankara, Faculty of Law
- This paper was an assignment submitted by the author during his exchange study in 2014 at Westfälische Wilhelms-Universität Münster/Germany, Faculty of Law for a course called ‘International Intellectual Property’ offered by Dr. Richard Ball (University of the West of England, Bristol)
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