Patentable subject matter - Where are we now?

Various members of the IPKat's human team were at the 2010 CLT IP Conference earlier today, and IPKat helper David Pearce gave a presentation on where we are now with patentable subject matter in Europe. This post is an edited version of the paper that accompanied the presentation, and is being reproduced here for the benefit of those who didn't attend, and also for those who did and want an easier way of getting to all the internet references.

The presentation concentrated on developments over the past few years in the law on patentable subject matter, in particular relating to so-called software patents (or, according to the EPO's more accurate general term, 'computer-implemented inventions'), with emphasis on how the UK Patent Office and courts have dealt with the issue, and how this compares with the approach taken by the EPO and their Boards of Appeal.

What subject-matter is patentable?

In Europe, all inventions that are new and not obvious are patentable [Article 52(1) EPC], but this is subject to various exceptions and exclusions. The exceptions [Article 53 EPC] are:

• inventions the commercial exploitation of which would be contrary to "ordre public" or morality;
• plant or animal varieties or essentially biological processes for the production of plants or animals; and
• methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body.

The exclusions, being things that are not considered to be inventions [Article 52(2) EPC] are:

1. discoveries;
2. scientific theories;
3. mathematical methods;
4. aesthetic creations;
5. programs for computers;
6. presentations of information; and
7. schemes, rules and methods for performing mental acts, playing games or doing business.

These are, however, only excluded from patentability to the extent that a patent application (i.e. the claimed invention) relates to one or more of these things as such.

As an aside, Lord Hoffmann (who was, until recently, the most senior IP judge in the UK) has come up with two reasons that could be used to at least explain these exclusions. Exclusions 1-6 above fall within what he considers to be the 'practical application principle', that these things cannot be the subject of a patent in themselves, but this would not necessarily stop practical applications being patentable (for example, the practical application of the discovery of the electrical nature of lightning to the invention of a lightning rod). The last exclusion falls within the 'human behaviour principle', since mental acts, playing games and doing business are all aspects of human behaviour that should not (presumably for practical as well as ethical reasons) be patented, even though they may be new, useful and inventive. See here for more details.

There is no single reason that can be used to explain all these exclusions and exceptions, largely because the reasons for including them in the first place were different. Nonetheless, courts and appeal boards have, over the years, tried to come up with legal reasoning to cover at least the exclusions (the exceptions under Article 53 are usually dealt with separately, and are not the subject of this paper). This goes back all the way to the 1980s, when the European Patent Convention and the UK Patents Act 1977 were still fairly new.

Although there are different issues and complications with many of the above exclusions, one that has stood out from all the others over the last 25 years or so is that of programs for computers. This is mainly because computer programs, which are now much more separable from the hardware on which they can be run than they were in the past, have become much more important commercially in themselves. It is often said by opponents of the current patent system that the rise of Microsoft in the 1980s and 1990s did not depend on patents being available for software, but it is certainly now the case that Microsoft, along with every other major commercial software provider, use the patent system as a matter of course in their businesses.

Many people think that the computer program exclusion means that there should be no patent protection available for computer programs at all. This was not necessarily what the framers of the EPC had in mind when the Convention was being drawn up, otherwise the words 'as such' would presumably not have been included. As a consequence, what has been considered to be a non-invention has subtly (and sometimes not so subtly) changed over time, as the law has been reinterpreted over the years. Particularly in the case of the EPO, these changes have perhaps not been as dramatic as some might like to make out, as there has in reality been quite little movement for over 20 years on the substantive issue of whether inventions implemented purely by means of software are patentable.

At the moment, the law across Europe about how to decide what is and is not patentable is not settled, even though the same law should effectively apply in all member states of the EPC (comprising all 27 EU states together with a few other non-EU states). The relevant Articles of the EPC are intended to have the same effect as the corresponding Sections of the Patents Act 1977 in the UK. Section 130(7) of the UK Patents Act 1977 states that the relevant sections of the Act "are so framed as to have, as nearly as practicable, the same effects in the United Kingdom as the corresponding provisions of the European Patent Convention". Nevertheless, how the law has been interpreted has led to different reasoning being used. The UK Patent Office, following the lead given by several (equally binding) Court of Appeal judgments, deals with patentable subject matter in one way, whereas the EPO, following the developing lines of reason in the case law of the (non-binding but usually persuasive) Technical Boards of Appeal, deals with patentable subject matter in quite a different way.

The fact that the UK and EPO approaches to patentable subject-matter are different should not in practice matter, since the law is the same and the same result should be (and usually is) arrived at regardless of the reasoning. Each case will however rely on its own facts and circumstances and, at the borderline, there is always an element of subjectivity involved that could, in some cases, swing a decision either way. At the borderline of what is and is not patentable (which will of course always exist for as long as there are patent applications to be prosecuted), there are current strong disagreements between how the law is applied in the UK according to the Court of Appeal, and how it is applied at the EPO according to the EPO Technical Boards of Appeal. Although some may view these differences as being like arguments over how many angels could dance on the head of a pin, the issues are quite serious at least to those directly involved and can cause much annoyance and confusion to the rest of us.

The EPO Approach

The EPO views Computer-Implemented Inventions (CIIs) as follows:

"A CII is usually defined as an invention that works by using a computer, a computer network or other programmable apparatus. To qualify, the invention also needs to have one or more features which are realised wholly or partly by means of a computer program

To be patentable, CIIs must fulfil the same basic patentability requirements as inventions in all other fields. These are set out in the European Patent Convention (EPC).

Accordingly, CIIs can be patented if:

· They have technical character and solve a technical problem.

· They are new.

· They involve an inventive technical contribution to the prior art.

With this definition as a basis, the patenting process for CIIs at the EPO is very restrictive as it puts emphasis on new technical solutions. The most striking consequence of this definition is that computer programs, which do not solve a technical problem, are not patentable in Europe".

Examples of clearly patentable CIIs include anti-lock braking systems, encryption/decryption methods and audiovisual processing techniques (e.g. MPEG audio/video technology). An early EPO case relating to image processing was that of Vicom (T 208/84), which was decided in 1986. The invention related to a new mathematical technique applied to matrices of input data, which would typically represent digital image data. Provided the invention was claimed in the form of a method for processing images, rather than a purely mathematical method applied to data in general, the EPO considered that the method was patentable, because the technical effect of the invention was about processing images more efficiently.

Another key early case was that of Koch & Sterzel (T 26/86), which related to a software-implemented method of controlling an X-Ray apparatus for radiological imaging. Even though there was no new hardware required (the invention could work on existing known machinery), the EPO Board of Appeal considered that the invention was patentable because the invention resulted in a new and inventive technical effect. The fact that this was enabled by software on known hardware was, in the Board's view, irrelevant.

The decisions of Vicom and Koch & Sterzel are largely consistent with the case law that followed over the next 20 years. There is essentially not very much that has changed in the way that CIIs have been dealt with by the EPO. The problem areas have in the main been largely to do with where computer programs are used for implementing other excluded things, in particular business methods.

The EPO approach to patentable subject-matter is inseparable from the established problem-solution approach to assess inventive step. According to this approach, if a claimed invention is new, the proper way to assess whether there is an inventive step is to look at what technical problem the invention solves, in light of the known prior art. Firstly, the difference between the invention and the prior art is identified. Secondly, the technical effect of this difference (if any) is identified. Thirdly, the objective technical problem is identified, given this technical effect. Finally, an assessment is made of whether, given this objective technical problem, the skilled person would find it obvious to arrive at the claimed invention.

Many of the problems associated with patenting CIIs have been more to do with computer-implementations of what are effectively business methods. Two influential cases at the EPO have addressed this issue, Hitachi (T 258/03) and Comvik (T 641/00). This first of these related to implementing a modified Dutch auction on a networked computer system, i.e. over the internet. The EPO Board of Appeal decided that, although the claimed invention was not excluded as an invention because it involved technical means (even a pen and paper would suffice for this test), it was not patentable because any objective technical problem derived from the prior art was merely avoided by the use of a different business method. Implementing the new business method on a computer did not make it patentable.

The other decision of Comvik related to a SIM card allowing for two 'identities', which allowed call charges to be allocated to different accounts. The Board of Appeal rejected the application, deciding that an invention having 'technical character' had to be assessed as a whole, but that features making no contribution to the technical character of the invention could not be used to support the presence of an inventive step. The idea of using two identities on a single SIM card did not make a contribution to solving a technical problem, and it was obvious how it would be implemented, so the invention failed under Article 56.

Following Comvik, the usual approach at the EPO is to move all of the features that do not contribute to the technical character of the invention into the problem part of the PSA, rather than part of the solution. As a result, most business method-type applications fall at the Article 56 hurdle, from the reasoning that implementing a new business method on a standard computer would be normally be obvious to the skilled person, who is typically judged to be a computer programmer.

The UK Approach

Unlike at the EPO, the UK Patent Office, the High Court and the Court of Appeal are all bound by previous judgments of the Court of Appeal (there have not yet been any House of Lords or Supreme Court judgments in the area of excluded subject-matter). This has made things more complicated, and often quite difficult to follow.

There have been five Court of Appeal decisions over the past twenty years on the subject of the exclusions to patentability, being:

Merrill Lynch's Application [1989] RPC 561 - effectively a business method case, in which a method of automated trading of securities was judged to be not patentable, but established a link with the EPO case law on computer programs by explicitly approving the Vicom decision.

Gale's Application [1991] RPC 305 - a new method of calculating square roots using software does not become patentable merely due to the medium on which the computer program is stored (in this case a ROM chip).

Fujitsu Limited's Application [1997] RPC 608 - a method of visualising chemical bonds in a similar way to a conventional ball and stick model does not become patentable merely by virtue of being implemented in software.

Aerotel v Telco & Neal Macrossan's Application (Aerotel/Macrossan) [2006] EWCA Civ 1371 - a telephone exchange (Aerotel) allowing for a different method of charging phone calls would be patentable if it involved new hardware (although this turned out not to be as new as was first thought, and the patent was finally revoked for a lack of inventive step in the later decision of Aerotel v Wavecrest); a method of assembling documents for establishing a company (Macrossan) is not patentable, whether implemented on a computer or not.

Symbian Ltd v Comptroller General of Patents [2008] EWCA Civ 1066 - a way of addressing DLLs in a computer that results in improved reliability provides for a technical effect that could be used to justify the invention being patentable.

The above decisions are all equally binding on the lower courts and the Patent Office, and on the Court of Appeal itself, but it was Aerotel/Macrossan in October 2006 that kicked off a (sometimes rather heated) pan-European discussion that has gone on now for the past three years and is still not properly resolved (as of January 2010).

Because the Patent Office wanted to have a more reliable way of assessing what would and would not be patentable, in Aerotel/Macrossan a new four-step test was proposed which was argued to be compatible with the existing case law. This test was agreed by the Court of Appeal judges, and goes like this:

1. Properly construe the claim;
2. identify the actual contribution;
3. ask whether it falls solely within the excluded subject matter; and
4. check whether the actual or alleged contribution is actually technical in nature.

This deceptively simple test is in practice a minefield of difficulties, the most difficult part arguably being that of defining what the actual contribution of the alleged invention is. For a while, the Patent Office interpreted step 1 to mean that any claims to computer programs (which had been judged to be allowable at the EPO and the UKPO for several years) could not be allowed, because the scope of monopoly (which Jacob LJ said was an integral part of the step of construing the claims) was that of a computer program as such. This contradicted the established case law of the EPO, which in 1998 had established, in IBM/Computer Program Product (T 1173/98) that a computer program could be claimed by itself if it referred to the features of an allowable method claim.

The Patent Office practice of refusing computer program claims was then reversed by the decision in the Patents Court of Astron Clinica in 2007, in which it was emphatically stated that such claims should continue to be allowable, partly because to do otherwise would contradict what the EPO had been doing consistently for years.

Another difficulty, which the later decision of Symbian tried to address, was whether step 4, which was included to conform the test with the previous case of Merrill Lynch (which introduced the 'technical effect' test), meant anything at all. The Patent Office had been effectively ignoring this step when deciding on patentability, because they considered that if the contribution was only in excluded subject matter it could not be technical. Symbian resolved this to some extent, but only by effectively fudging together the third and fourth steps.

The Controversy: October 2006 to present

Jacob LJ, leading the judgment in Aerotel/Macrossan, threw down a gauntlet to the EPO, in the form of a series of questions that he proposed should be put to the Enlarged Board of Appeal, so that certain apparent 'contradictions' in the EPO case law could be resolved. Jacob LJ reviewed many EPO Board of Appeal decisions on the area of excluded subject-matter, and decided that none of them could be followed because they inevitably led to different conclusions.

"It is formally no business of ours to define questions to be asked of an Enlarged Board of Appeal. What we say now is only put forward in case the President of the EPO finds it helpful. If he thinks it pointless or arrogant of us to go this far, he is of course entirely free to ignore all we say. Nonetheless in the hope that there is a spirit of co-operation between national courts and the EPO we ventured to ask the parties what questions might be posed by the President of an Enlarged Board pursuant to Art.112. As we have said the British Comptroller of Patents has encouraged us in this course.

The Comptroller and Mr Thorley provided a joint suggestion and Mr Macrossan helpfully his. Having considered the drafts, the questions which we think might be put are as follows:

(1) What is the correct approach to adopt in determining whether an invention relates to subject matter that is excluded under Article 52?

(2) How should those elements of a claim that relate to excluded subject matter be treated when assessing whether an invention is novel and inventive under Articles 54 and 56?

(3) And specifically:

(a) Is an operative computer program loaded onto a medium such as a chip or hard drive of a computer excluded by Art.52(2) unless it produces a technical effect, if so what is meant by 'technical effect'?

(b) What are the key characteristics of the method of doing business exclusion?" (Aerotel/Macrossan, paragraphs 75-76)

Shortly after Aerotel/Macrossan came out, an EPO Technical Board of Appeal responded in rather emphatic fashion to Jacob LJ's suggestion, the Board stating that the four-step test was "not consistent with a good-faith interpretation of the European Patent Convention" (T 154/04, point 12 of the reasons), and refusing to consider referring the questions to the Enlarged Board:

"[T]he practice and case law of the Board [...] have a sound legal basis in the Convention and are consistent with the case law of the boards of appeal and the Enlarged Board of Appeal. To decide on the present appeal, an answer of the Enlarged Board of Appeal to any of these questions is thus not required, and hence the request of referring these questions must be refused." (Reasons, point 17)

The then EPO President, Alain Pompidou also refused to refer the questions to the Enlarged Board, stating in a letter of reply to Jacob LJ in March 2007:

"On the basis of [discussions within the EPO] I have decided that at the moment there is an insufficient legal basis for a referral under Article 112(1)(b) EPC. Leaving aside Board of Appeal case law the line of reasoning of which has been abandoned by later case law, I believe there are insufficient differences between current Board of Appeal decisions dealing with Article 52 EPC exclusions on important points of law that would justify a referral at this stage".

Alison Brimelow, who had previously been the Comptroller of the UK Patent Office, became EPO President a few months later, and was clearly more amenable to referring some questions to try to resolve the apparent conflict in the EPO case law, even though her predecessor and the Boards of Appeal clearly thought that such a conflict did not exist. The following questions were referred by Ms Brimelow to the Enlarged Board in October 2008:

1. Can a computer program only be excluded as a computer program as such if it is explicitly claimed as a computer program?

2.(a) Can a claim in the area of computer programs avoid exclusion under Art. 52(2)(c) and (3) merely by explicitly mentioning the use of a computer or a computer-readable data storage medium?

2.(b) If question 2(a) is answered in the negative, is a further technical effect necessary to avoid exclusion, said effect going beyond those effects inherent in the use of a computer or data storage medium to respectively execute or store a computer program?

3.(a) Must a claimed feature cause a technical effect on a physical entity in the real world in order to contribute to the technical character of the claim?

3.(b) If question 3(a) is answered in the positive, is it sufficient that the physical entity be an unspecified computer?

3.(c) If question 3(a) is answered in the negative, can features contribute to the technical character of the claim if the only effects to which they contribute are independent of any particular hardware that may be used?

4.(a) Does the activity of programming a computer necessarily involve technical considerations?

4.(b) If question 4(a) is answered in the positive, do all features resulting from programming thus contribute to the technical character of a claim?

4.(c) If question 4(a) is answered in the negative, can features resulting from programming contribute to the technical character of a claim only when they contribute to a further technical effect when the program is executed?

So Where Are We Now?

As far as the EPO Technical Boards of Appeal are concerned, nothing has changed. However, as far as the UK Patent Office and the Court of Appeal are concerned, the EPO case law is so full of contradictions that it cannot be followed in any meaningful way. Before the recent referral was made, the situation was at an apparent stalemate, with neither side willing to give way or refer to a higher authority that might be able to resolve the conflict (leave to appeal to the House or Lords, as it then was, for the Macrossan part of the Aerotel/Macrossan decision was refused, apparently because there were no sufficiently important issues to be decided).

The way that patentable subject-matter is decided at the EPO is in fact largely the same (with a few modifications and refinements along the way) as it has been for the past 25 years. The referral to the Enlarged Board is therefore, in the view of this author as well as other more eminent commenters on the issue, unlikely to have any effect if, as seems likely to happen, the referral is judged to be inadmissible under Article 112(1)(b). Even if the Enlarged Board do decide to answer some or all of the questions, it seems likely that they will merely refer to the current line of reasoning being followed by the lower Boards of Appeal as being correct, and will refrain from making any definitive statements on where the boundary of patentability should lie.

In the UK, the situation remains more difficult to assess given the difficulty of reconciling five different, equally binding, Court of Appeal judgments. For now, examination at the Patent Office continues to follow the Aerotel/Macrossan four-step test, with the qualification applied by the later decision of Symbian. Perhaps once the Enlarged Board arrive at their decision, some clarity will return to the UK approach, but this might require a trip to the Supreme Court to sort out the issues properly.

Although there has been much discussion of the differences between how patentable subject-matter is dealt with in the UK and European Patent Offices, it should be remembered that, in the great majority of cases, the same result will nonetheless be achieved.

What Next?

It is generally expected that the EPO Enlarged Board will come to a decision within the next few months. Regardless of what this decision is, it should help to resolve at least some of the differences between the EPO and UK approaches. The author, who predicts that the Enlarged Board will rule the referral as being inadmissible, suspects that the issue is unlikely to be fully settled for quite some time to come, if at all.