Crash course on patents: Fields of endeavor

For an invention to be eligible for patent protection, it must lie within a permitted field of endeavor. Historically, patents could only be obtained on technical inventions, that is, physical arrangements, devices and apparatuses. For example, if someone invents a novel and inventive engine, coffee-maker or mobile telephone, he can get a patent for that.

Inventions that relate to games, medical treatment, algorithms, computer software and methods of doing business were considered not patentable, because they were not "inventions" in a traditional sense. More recently, however, a great deal has changed in this respect, especially in the USA. US patents can now be obtained for anything under the sun that is made by man, provided that it produces a useful, concrete and tangible result, rather than just being an abstract idea.

This includes computer programs and methods of doing business. Other countries, most notably the European countries that are members to the European Patent Convention, are rather hesitant to allow patents in these fields.

Computer programs

Until the last two decades, inventions generally were physical creations, or methods relating to physical processes. A new car engine, a new medicine, or a method of manufacturing a pharmaceutical were typical inventions for which patent protection was sought. Outside these fields lay the inventions of a more abstract nature, such as a new layout for a cash book, a new game or a new method of computing the value of a stock portfolio. Such non-technical or mental inventions were generally regarded unpatentable and the line between technical and non-technical invention could be drawn fairly clearly.

Computer programs changed all this. One and the same processor could be provided with multiple instruction sequences which would cause it to execute different actions. This made it possible to replace specialized hardware designs with a general purpose processor, to which application-specific code could be provided.

Software in relation to patent law

The existence of software caused a great deal of problems in the patent world. A machine with specific new functionality could of course be patented but if that new behavior was caused by a new computer program, then the machine was not novel and so could not be patented. The computer program, on the other hand, was nothing more than a series of instructions or a realization of an algorithm, and so also should not be patentable. But on the third hand, the interaction between the hardware and the software sometimes realized something that would be patentable if it were realized in hardware alone, and so in all fairness, should deserve patent protection. This conflict was difficult to resolve.

Patentability of software in the USA

US patents can now be obtained for anything under the sun that is made by man, provided that it produces a useful, concrete and tangible result, rather than just being an abstract idea. This includes software.

Patentability of software in Europe

The European Patent Convention (EPC) explicitly excludes computer programs as such from patentable fields of endeavor, and the countries that are members to the EPC have copied this restriction in their national patent laws.

This, however, did not stop people from filing patent application on software-related inventions. For example, one could apply for a patent on a computer equipped with a processor and a memory, the memory being loaded with a computer program, which could be fed to the processor to make the entire system exhibit a specific behavior. If the behavior then was considered to be an invention, a patent could be granted for this computer configuration. The patent holder could then stop other people from selling the computer code necessary to operate this computer system because they were contributing to patent infringement.

In the last few years, the situation has eased a lot for applicants, and it is now possible to obtain patent protection for a computer program produdct. So, although the European Patent Convention explicitly forbids the patenting of programs for computers as such, patents on inventions that are mainly built with software are perfectly acceptable.

Methods of doing business

One of the reasons to grant patent rights for inventions, is that it induces inventors to make their invention public in exchange for the patent rights. Without the benefits of patent protection, these inventors might have kept their inventions a secret, so it is in the interest of society to grant patents on inventions. However, if the invention by its nature is already public, there is no need to provide its inventor with an incentive to reveal the invention. This was an important motivation behind the exclusion of methods of doing business from the list of patentable fields of endeavor. Setting up the first supermarket or self-service store might have been very inventive at the time it was introduced, but the inventor could not have kept this concept a secret even if he wanted to (nevertheless, US patent 1,242,872 from 1917 was granted on the floor layout of a supermarket).

The rise of business method patents

Until the advent of computers and the internet, it was rather uncommon for people to apply for patents on methods of doing business, and in general it was quite clear when a method was in fact a method of doing business and should be rejected as such. But when the method is realized with the help of a computer, it becomes much less clear whether this is a method of doing business, or a method of operating a computer. And when the method involves transactions taking place over an internet connection, it becomes even more difficult to draw a line between methods of doing business involving such transactions and other methods that involve communicating over a network.

Business method patents in the USA

The floodgates really opened when, in 1998 a US Court of Appeals issued the so-called State Street Bank decision. In this case a patent on a method of managing a stock portfolio was challenged on the grounds that it was a business method and therefore not patentable. The Court, however, decided that this method was indeed patentable because it produced a useful, concrete and tangible result, namely the value of a stock portfolio, or, in other words, money. The Court explicitly "laid to rest" the exception on patentability for methods of doing business. From that moment on, US patents could be granted on methods of doing business, and they were, in great numbers.

Business method patents in Europe

Until very recently, the position of the European Patent Office (EPO) with respect to patents for methods of doing business was unclear. While the European Patent Convention excluded methods of doing business as such from patent protection, it was far from clear what was meant with a method of doing business and in particular, with a method doing business as such. After a groundbreaking decision in September 2000, the EPO declared that it is only empowered to grant patents on inventions in fields of technology, which excludes the fields of commerce and so excludes any method of doing business in the abstract.

In this Improved Pension Benefit System case, the Board of Appeals for the EPO has decided that a method is even a method of doing business when it involves obvious uses of technical measures in realizing the invention. A computer system arranged for executing that method is a physical apparatus and therefore technical, but it must solve a so-called technical problem (in a non-obvious way) in order to be considered patentable. Improvements that lie in the fields of economy or business are to be disregarded when considering the inventiveness of such an apparatus.

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