The patent system serves to bring structure to industrial production and commercial activities by rewarding inventors of products or processes and providing value to investments made in manufacturing those products. The system grants inventors a limited-time monopoly as an incentive to create and drive further advancements. The benefits of the patent system extend to both inventors and the public. For inventors, the rights act as an incentive to invest in their invention and work towards its success. For the public, the rights ensure that the invention is accessible through patent information and the resulting valuable products. However, the rapid growth of the software patenting industry has created confusion and complexity within both technical and legal professions. We discuss Trends in the US and UK for Software Patent-related inventions.
This confusion can be attributed to software’s rapid evolution, transforming it from a scientific and mathematical tool to a ubiquitous product that permeates nearly every aspect of modern life. The pervasiveness of software has made it difficult to draw clear lines between what can and cannot be patented, leading to misunderstandings and disagreements. Despite these challenges, the patent system remains a critical tool for incentivizing innovation and driving progress in industrial and commercial activities.
Patent and Its objective
A patent is a right given to someone who has created a valuable and innovative article or method of production. This exclusive right allows it to manufacture its invention for a limited period of time. The patent owner has similar property rights to any other movable property, such as the ability to sell or license others to use it. This means they can sell all or part of their patent, assign it to someone else, or issue licenses to allow others to use it.
The patent is granted to recognize the inventor’s exclusive right to make commercial gains from their invention. It motivates inventors to utilize their creative abilities by guaranteeing them legal protection for their discoveries and ensuring that no one else can copy their idea for a specified time. It also encourages scientific exploration, progressive technology, and industrial development.
Granting monopolies to inventors protects their inventions and encourages inventors to disclose their discoveries to the public. With such protection, inventors may be willing to take the risk of disclosing their inventions.
In the case of software patents, it is a recent development that software is now patentable in most countries. The patentability of computer-implemented inventions is aimed at reconciling national patentability criteria for software-related innovations, including computer-assisted business methods. While the software has become eligible for patents in many countries, specific regions, particularly those under the European Patent Convention, have placed restrictions on such patents. As a result, the number of software patents has grown significantly in recent years. Discussions regarding the patentability of computer-implemented inventions aim to establish a unified interpretation of national patentability requirements, including those related to business methods carried out through computers.
These discussions have highlighted varying opinions among stakeholders worldwide. Additionally, the enforcement of patents on the internet raises complex issues since patents are enforced on a country-by-country basis.
What is Software Patenting?
Software refers to computer applications that can be easily modified, unlike hardware with a permanent physical shape and structure. Together, software and hardware form an information processing machine, but software alone is unable to operate without an external system, such as a game player or document producer. Operating systems and micro-programs are software components that form part of a more extensive system. For a computer to operate as an information processing machine, hardware and software must work in tandem with an external system.
The issue of software patents has been a topic of controversy since the introduction of IBM’s mainframe, which included a basic program. Over the years, lawmakers, regulators, and judges have expressed varying and distinct views on the matter. Some scholars argue that a valid software patent should cover the entire software program.
The same patenting criteria that apply to other inventions should also apply to software in order for it to be eligible for patent protection. Software must incorporate some technical aspects and offer practical advantages to be patentable. In most jurisdictions, patentable inventions must possess a technical nature or technical application, as well as novelty and inventive steps (or non-obviousness).
Software patent refers to a method for data processing that follows a logical algorithm, which is executed through stored instructions instead of being hard-coded. These instructions can be stored on a storage device or in firmware, such as read-only memory (ROM), which is typical for embedded systems. The term “algorithm” originated as a mathematical concept but is now commonly used to describe logical problem-solving approaches or processes. Algorithms can be expressed in various ways. A program comprises a set of instructions that tell a computer how to work. Software development is based on algorithms, not programs, which are like design blueprints for developing a new machine.
Software Patenting: Trends in the USA
In recent years, the United States has experienced a legal transformation in regard to patents. The traditional patenting principles have been relaxed, and the US now grants patents to inventions that were previously ineligible for protection, such as computer programs and business methods. Data indicates that the majority of software patents are held by American citizens and companies, with over 70% of these patents being owned by them. Over the last 20 years, the United States has unintentionally undergone a legal evolution in the field of patents. This has led to the issuance of patents for inventions that were once not considered patentable, including gene sequences, computer programs, and business strategies.
At present, there are established patenting principles in the USA for all types of software and business methods. According to an economic survey, the US Patent and Trademark Office (USPTO) currently grants around 20,000 software patents each year, which is increasing rapidly. Although the rapid increase in the number of patents granted has sparked controversy, the argument in favor of incentivizing innovation outweighs the controversy. Unlike the European Patent Convention (EPC), there is no list of prohibited subject matter in US patent law. Few computer-related inventions are generally excluded from patent protection in the USA than under the EPC. Copyright and patent laws were enacted to promote the progress of science and useful arts by granting inventors and authors exclusive rights to their discoveries and writings, as stated in the Constitution. This authority is currently exercised through the Patent Act of 1952.
Certain novel developments are not considered eligible for patent protection as they would give the inventor an unfair monopoly over something “natural”. These include mathematical formulas, laws of nature, purely theoretical phenomena, and naturally occurring chemicals that have been newly discovered.
In the 1981 case of Diamond v. Diehr, the US Supreme Court ruled that the United States Patent and Trademark Office (USPTO) should grant a patent for an invention that used computer software, opening the door for software systems to be patented. The invention in question was a technique for curing rubber, which involved using a computer to calculate and control the heating times. The innovation also included processes for heating and withdrawing the rubber from heat and the computer program. Although the computer-controlled time method was the only innovative aspect, the Supreme Court found it to be patentable because it was a process for moulding rubber and not just a mathematical formula.
Software Patenting: Trends in the UK
The UK’s Patent Act of 1977 provides guidelines for the granting of patents, specifying specific criteria for an invention to be considered patentable, including novelty, inventive step, and industrial applicability. However, certain types of inventions, such as schemes, rules, and methods for mental activities, games, business, and computer programs, are explicitly excluded from patentability under Section 1(2) of the Act. The question of whether computer programs can be patented was addressed in the Merrill Lynch Application case, in which an application was made to create a trading securities market using a data processing system, and a lawsuit was filed.
The UK patent law is mainly based on the Patent Act of 1977, which sets out three conditions for an invention to be eligible for a patent: novelty, inventive steps, and industrial applicability. However, there are certain exclusions outlined in Section 1(2) of the act, such as schemes, rules, methods for mental activities, games, or business, and computer programs. Nevertheless, the UKPTO’s Manual of Patent Practice clarifies that an invention is not automatically excluded from being patented just because some of its components fall under an excluded category. The current state of software patenting in the UKPTO is unclear due to the Supreme Court’s decisions in the cases of Aerotel Limited v Telco Limited, Macrossan’s Application, and Symbian Ltd v. Comptroller General of Patents, which have raised questions about a longstanding European policy that prohibits patenting of computer programs.
The UK Court of Appeal in the Aerotel case aimed to provide clear instructions and set out a four-step approach to follow when dealing with the exclusion mentioned in Article 52. These steps include interpreting the claim accurately, determining the real contribution, ascertaining whether the contribution lies solely within the excluded category, and finally, assessing whether the contribution has a technical nature.
The Symbian Ltd v Comptroller General of Patents case followed the same principles as the Aerotel case in determining whether an invention is excluded under Article 52, regardless of whether it has a technical contribution.
The Court of Appeal provided a four-step methodology
- The claim should be construed correctly.
- Identify the actual contribution.
- Determine whether the contribution falls entirely within the scope of Article 52(2) (i.e., it is entirely computer software) while taking into account the limitation in Article 52(3).
- Assess whether the contribution has technical character. The court suggested that this step may not be necessary in some cases, as it may have been determined in step three.
In the UK, there is no uniform consensus among judges regarding the patentability of software, and the House of Lords has declined to hear the issue. Since the UK is a signatory to the EPC, which regulates all intellectual property matters for its members, the court of appeal has asked the EPO to offer a ruling on software patents in order to standardize and minimize discrepancies between the EPO and the UKIPO.
Problems to be encountered if Software Patenting is allowed
Software patents are controversial because they do not cover entire programs but instead focus on algorithms and techniques that tell a computer how to carry out a specific task. These algorithms and techniques are treated as procedures eligible for patenting. Still, a program’s unique combination of algorithms and techniques is considered an “expression” and is covered by copyright law. Obtaining a patent for an algorithm or technique is comparable to acquiring a patent for a sequence of music and requiring musicians to buy a permit.
One problem with software patents is that too many patents are granted for simply doing things rather than methods of doing things. For example, in the world of software patents, it is possible to get a patent for simply “creating light” without any specific implementation. Patent examiners should be able to distinguish between “doing something” in software and the “nuts and bolts” of a particular version.
The creation of monopolies through patents, even if limited, can increase innovation and benefit to consumers by creating a market. However, if competition is choked artificially, consumers and the economy suffer. This highlights the need for proper regulation and resolution of these issues.
Despite these challenges, there are benefits to software patents. They can encourage innovation by rewarding inventors with a limited monopoly, which can create new markets and products. Additionally, patenting algorithms and techniques can make them public knowledge and prevent others from patenting the same idea.
Software patents present unique challenges compared to traditional patents. The distinction between the “expression” and “procedure” of software creates complications, and patent examiners must be equipped to make the proper distinctions. Balancing the benefits of innovation and competition while preventing monopolies is essential, and proper regulation is necessary to achieve this balance.
Despite having established protection mechanisms, both countries face their own challenges. Patent protection is considered to be one of the most concentrated forms of intellectual property protection, but the criteria for qualifying for such protection are strict. The primary concern regarding patents is determining which paradigm is preferable. Granting software a patent is one of the golden steps taken by these countries as it will eventually motivate the inventor to invent more forms of it. There is a need for a tailored approach to software protection that suits the specific conditions of India’s software industry rather than simply conforming to global standards. New legal approaches and a rethinking of traditional mechanisms may be needed to advance the goals of IP law in the software industry.