The patentability of business methods at the European Patent Office
There is, at present, no clear definition of what constitutes a "business method" or what makes it different from other types of methods. The traditional view in Europe is that patents protect technical inventions, and "business", being non-technical, therefore should be excluded from patentability. However, with the rise of e-commerce, it has become more difficult to define the boundary between "technical" and "non-technical". This in turn has led to an increase in the number of software patents and business method patents in Europe.
There is, at present, no clear definition of what constitutes a "business method" or what makes it different from other types of methods. Generally speaking, the term encompasses economic activities such as buying and selling items, marketing techniques, financial schemes and strategies for use with sports and games.
In most European countries the traditional view with regard to patents is that patents protect technical inventions and technical progress, and so the term business method has become a shorthand for all non-technical --and hence unpatentable-- inventions.
In drafting the EPC, it was considered self-evident that an invention must constitute "technical progress" to be patentable, and so it was unnecessary to include a statement to this effect in Article 52. See Keith Beresford, Patenting software under the European Patent Convention, Sweet & Maxwell, 2000. ISBN 0 752 006339.
The USA explicitly rejected this exclusion from patentability in the now famous State Street Bank decision in 1998. That decision, combined with the large amount of new business opportunities that arose with the growing popularity of the Internet, led to a great increase in patent applications relating to such inventions, in the USA as well as in Europe. The European Patent Office (EPO) reported in late 2000 that it has about 2,000 pending "business method" applications, which is about twice as much as two years ago. In contrast, the United States Patents and Trademark Office (USPTO) had over 8,000 pending business method applications in 2000 alone.
A study published October 2000 by Olswang and Oxford University found that 52 percent of the 300 analyzed business related European patent applications were filed by U.S. companies, compared with less than 20 percent for companies from the U.K., Germany and France. In comparison, U.S. companies accounted for 28 percent of all EPO applications.
According to the European Patent Convention (EPC), an invention is patentable if:
- it is not excluded by Article 52(2) and (3) EPC
- it is novel (Article 54 EPC)
- involves an inventive step, i.e. is not obvious (Article 56 EPC)
- is capable of industrial application (Article 57 EPC)
These four criteria are discussed below in the context of business method-related inventions.
The technical character of inventions
An invention is excluded under Articles 52(2) and (3) EPC if it has no technical character. The requirement that an invention must be technical in some way is not present in the EPC. However, Rules 27(1) and 29(1) EPC seem to imply that there must be technical aspects to an invention.
The Board of Appeals has consistently held that for an invention to be patentable, it must be technical in some way, based on the reasoning that the activities listed in Article 52(2) have in common that they imply something non-technical and that, therefore, an invention that is technical is patentable. In 2000, the EPC has been amended so as to include the requirement that the invention must be in a field of technology. This amended version has not yet entered into force.
An invention has a technical character if there are technical considerations involved (T 769/92). The contribution approach (i.e., is the contribution made by the invention technical) is to be used only for assessing inventive step (T 931/95). Technical considerations may lie either in the underlying problem solved by the claimed invention, in the means constituting the solution of the underlying problem, or in the (technical) effects achieved in the solution of the underlying problem. The very need for such technical considerations implies the occurrence of an (at least implicit) technical problem to be solved and (at least implicit) technical features solving that technical problem.
The technical character of an invention cannot be affected by the presence of an additional feature which as such would itself be excluded from patentability under Article 52(2) and (3) EPC. So, a mix of (known) technical features and apparently non-technical features may still be patentable as long as the latter features contribute to an overall technical effect.
The technical character of computer programs
Computer programs are a special case. When loaded in a computer, a program causes the computer to exhibit certain behavior, which can be argued to constitute a technical effect, since a computer is a physical and technical apparatus. It then follows that any computer program has a technical character. However, this would render their exclusion under Articles 52(2) and (3) EPC meaningless.
The Board of Appeals has concluded that only programs for computers that produce a "further technical effect" are patentable (T 1173/97). This further technical effect should go beyond the normal interaction between software and hardware. It may for instance lie in the fact that it solves a technical problem (see below under determining inventive step).
The technical character of an apparatus and a method
In determining whether claimed subject matter is excluded, it is to be noted that the exclusion of Articles 52(2) and (3) only applies to method claims and not to apparatus claims. An apparatus constitutes a physical entity or concrete product, and thus is an invention within the meaning of Article 52(1) EPC, even if the apparatus is adapted for performing or supporting an economic activity (T 931/95).
The use of technical means for carrying out a method for performing mental acts, partly or entirely without human intervention, may render such a method a technical process or method (T 38/86). However, a feature of a method which concerns the use of technical means for a purely non-technical purpose and/or for processing purely non-technical information does not necessarily confer a technical character to such a method (T 931/95).
A method claim that does not mention any implementing technology will be rejected under Articles 52(2) and (3) directly, since no implementation necessarily means no technical character. If implementing technology is mentioned, but the implementing technology is used for purely non-technical purposes and/or for processing purely non-technical information, the method claim will be rejected (T 931/95).
When is something technical
A lot of the confusion would be avoided if only there were a clear definition of what constitutes a technical invention. Such a definition is unlikely to arise. However, based on EPO case law, some categories of technical activities can be derived:
- Processing physical data is technical. Physical data may be, for example, data representing an image (T 208/84) or data representing parameters and control values of an industrial process (T 26/86). However, monetary values (T 953/94), business data (T 790/92) and text (T 38/86) are not physical data.
- Processing which effects the way in which a computer operates is technical. For example, saving memory, increasing speed, improving security, operating a user interface (T 236/91, T 59/93), configuring the operating system (T 265/92), coordinating and controlling internal data (T 6/83), or assisting in solving diagnostic problems in data communication (T 216/89). For instance, using computers instead of humans to process secret/private/sensitive data would increase security or confidentiality.
- Processing which is based on considerations of how a computer works is technical (T 769/92). Automating a known process may be technical for example if the automated process provides surprising speed or economy of scale benefits.
During examination of a European patent application, the examiner is encouraged to skip the determination of technical considerations and to go directly to the assessment of novelty and inventive step. If novelty-destroying prior art comes up, the determination may suddenly become important, since a non-technical feature cannot serve to make the invention novel over the prior art (T 619/98).
A novel computer program loaded into a known computer makes the combination novel, regardless of any technical considerations the program may or may not have (T 208/84, T 1173/97). This appears to be in conflict with T 619/98.
An invention must make a technical contribution through the features that are novel compared to the closest prior art. In identifying this technical contribution, the problem-solution is normally used.
The problem itself does not have to be technical, but if it is not, then the solution must be. In T 1002/92 a non-technical problem (how to efficiently serve a queue of waiting customers) was solved in a technical way (a system that determines who to serve at which counter). Since the solution was not obvious, the invention was patentable.
The technical problem has to be formulated in such a way that there is no possibility of an inventive step being involved by purely non-technical features. Such a formulation of the problem could refer to the non-technical aspect of the invention as a given framework within which the technical problem is posed, or as an incentive for setting out to provide the technical part of the claim (T 1053/98, T 931/95).
So, the assessment of inventive step is carried out from the point of view of a software developer or application programmer, as the appropriate person skilled in the art, having the knowledge of the concept and structure of the business method, who sets out to implement the business method. A claim element like "means for performing a business step" can be implemented without inventive activity, regardless of the business step.
What this means is that if a method claim is rejected due to lack of technical considerations, a corresponding apparatus claim in a straightforward means plus function format will be rejected for lack of inventive step.
A business feature that is inseparably linked with one or more technical features in a claim should be considered as necessary for achieving a technical result, and so is regarded as a technical feature. The feature is then construed as limited exclusively to a feature realized by hardware or software (T 1002/92).
There do not appear to be any issues with regards to the industrial applicability of business methods.