PATENTABILITY OF COMPUTER-IMPLEMENTED INVENTIONS: THE EUROPEAN DIRECTIVE PROPOSAL

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1 IADIS International Conference e-society 2005 PATENTABILITY OF COMPUTER-IMPLEMENTED INVENTIONS: THE EUROPEAN DIRECTIVE PROPOSAL Marina Buzzi, Rita Rossi IIT-CNR Via Moruzzi, 1, Pisa, Italy Martha Iglesias University of Pisa Via Diotisalvi, 2 ABSTRACT There has been intense debate recently among all European Member States and in the European Parliament concerning the patentibility of SW programs. In this paper we analyze the Proposal for a Directive of the European Parliament and Council on the patentability of computer-implemented inventions, as presented in October 2002, and discuss the technological character of the SW product in order to determine the most appropriate form of protection. KEYWORDS SW, Computer-implemented inventions, Patent, Copyright, Europe. 1. INTRODUCTION The last few months have seen much heated debate among European Member States concerning the Proposal for a Directive (of the European Parliament and of the Council) on the patentability of computerimplemented inventions. Until now, computer programs have been excluded from patentability in Europe (for further information see R. di Cosmo, 2004). The proposal, presented by the Commission in October 2002 (2002/0047 (COD)) has been thoroughly discussed and partially modified, surprisingly, in spite of a political agreement between the Council and Parliament in May 2004, in February 2005 it was completely rejected in its current version, and must now be re-proposed ex-novo (Broersma, 2005). The debate is based on the hazy boundary between intellectual property, protected by copyright law (as SW programs have been considered up to now within the EU), and a technical product, suitable for inclusion in an industrial process and therefore subject to patentability. The need to protect European inventions from international competitors (such as the USA and Japan) is another reason to pursue appropriate legislation. The USA in fact has been introducing software patents since the 1980s and in 1998 patents for business methods were also recognized as valid 1. Although copyright reinforcements are applied in the international and European arenas for protecting SW by copyright, also in Europe a large number of patents have been released. The European Patent Office (EPO) has already granted more than 20,000 patents, and thousands of others have been released by national patent offices. Lastly, differences in the national legislations of Member States could generate imbalances, creating obstacles to the proper functioning of the internal market. 1 In the USA, the United States Patent and Trademark Office (USPTO) releases patents, provides information, supports the applicants, and performs administrative tasks while the Federal Courts deal with patent utilization, infringement issues, and other legal issues (USPTO 2005). An explanation of how the current software regime in the United States works and a comparison of U.S developments to the proposed directive is carried out in (Paulsson 2005). 641

2 ISBN: IADIS For these reasons the European Union has reconsidered the need to remedy this lack of legal certainty in the area of computer-implemented inventions, and establish a common legal framework. Before analyzing the Directive in order to better understand the different points of view, it is necessary to reflect on the nature of software and those features which make SW a particular object in need of special protection. 2. DUAL NATURE OF SOFTWARE The term software refers any computer program, independent of its functions, interfaces, and characteristics. In other words, a program is a sequence of commands written in any programming language (Java, C, Visual Basic, etc.) and aimed at solving a certain problem and/or performing a set of steps (functions). It only produces the desired effects when it is executed on a system. If the program is stored in a memory device (i.e. hard-disk, CD, etc.) or printed on paper, we are unable to perceive the difference between one SW and another. This feature is specific for SW; it has no effect if a program does run on a computer. Therefore, the term computer-implemented, in the Directive highlights the indissoluble connection between the invention and the computer. In comparison to other intellectual property, SW is characterized by the following properties: Low materiality. Generally speaking, the term software refers to the computer components which are soft, i.e. programs, in contrast to hard elements which are physical components such as a processor, disk, network adapter and so on. Intrinsically technical nature. In this context, the purpose of software is the solution of one or a set of problems. A program, when loaded and running in a computer, performs a set of actions (commands specified by the program) and produces results. Mathematically speaking, a SW program implements an algorithm, i.e. a sequence of steps that carry out a specific action, task, or function. The interesting property is that the same effect or result can be obtained by using different procedures, i.e. different algorithms. This means that the same problem may be solved using different methods or algorithms, each leading to the same result. Consequently, different programs may solve the same problem. This property is very interesting, and is crucial for any discussion concerning SW patents, since at this time algorithms are not patentable. It assumes different formats. In order to be executed on a computer, SW change format. Usually a program is written using a language (programming language, high-level language) that can be easily understood by humans. This format is called source code. To be executed in a specific computer the source code is translated to an intermediary form (object code, bytecode,...) and/or in executable format, directly interpreted by the system. Dual nature of SW. This feature is extremely relevant from the legislative point of view. In fact, since a program is simply a text file it is therefore similar to a literary work, subject to copyright law; but once in operation the SW totally change in nature; it performs steps in order to produce a result and is now called a process. From this point of view, a program therefore becomes similar to an industrial process, and would then be eligible for a patent. The special nature of SW, its versatility in satisfying the characteristics of both instruments of protection (copyright or patent) and the economic interests that influence legal policy all contribute to the debate s main topic: the possibility of a different protection for software. The choice of one or the other form leads to economic and sociological consequences which members of the European Union should take into account. 3. THE EUROPEAN PROPOSAL On February 20, 2002, the European Parliament published the proposal for a Directive of the European Parliament and Council on the patentability of computer-implemented inventions. This document included an introduction, motivations, and comments. The following outlines the main steps leading up to the definition and discussion of the proposal: 19 October 2000 the European Commission launched a final public consultation for commenting on an initial paper regarding this topic, which was published on the Internet. A total of 1450 responses was 642

3 IADIS International Conference e-society 2005 collected. Opinions were clearly divided into one group who wished to see strict limits placed on software-related patents (or even a complete ban) and others who support harmonization more or less at the level of the status quo as defined by the current practice and jurisprudence of the EPO (CEC 2002). On February 20, 2002, the European Parliament published the proposal; In May 2004, the Commission welcomed the Council s agreement on the Directive on computerimplemented inventions (EU Press Releases 2004). After two years of discussion, public consultations, and analysis, in May 2004 a political agreement was reached on the need for a Directive, since the lack of European regulation could generate imbalances in the European market. However for the Directive to become law, it is necessary that the Council and Parliament also agree on the Directive contents where different positions still remain, mainly regarding the exceptions (e.g., permitting the use of patented SW for interoperability and data management). February The European Parliament's legal affairs committee, called JURI, voted almost unanimously to request that the process be restarted concerning the European Union's proposed IT patent legislation (Broersma 2005). 4. DISCUSSION Comments on the Directive application, which are included in the same document, furnish clues for arriving at a correct application of the proposal. Article 4 specifies the Conditions for patentability: 1. Member States shall ensure that a computer-implemented invention is patentable on the condition that it is susceptible of industrial application, is new, and involves an inventive step. 2. Member States shall ensure that it is a condition of involving an inventive step that a computerimplemented invention must make a technical contribution. 3. The technical contribution shall be assessed by consideration of the difference between the scope of the patent claim considered as a whole, elements of which may comprise both technical and non-technical features, and the state of the art. In its classic conception, the patent reinforces the copyright concept, also protecting the idea and procedure on which the invention is based. In the case of SW, copyright and patent can be considered complementary tools, offering a cumulative protection. In our opinion, if not appropriately limited, the range of application of patents for SW inventions could bring about a decrease in technological progress. In fact, to protect the idea we must overcome the protection already guaranteed by the copyright and prevent other companies from developing analogous, though independent systems, either for functions (algorithms) or interfaces. In fact, the Directive s Explanatory Memorandum specifies: A patent protects an invention as delimited by the patent claims which determine the extent of the protection conferred. Thus, the holder of a patent for a computer-implemented invention has the right to prevent third parties from using any software which implements his invention (as defined by the patent claims). This principle holds even though various ways might be found to achieve this using programs whose source or object code is different from each other and which might be protected in parallel by independent copyrights which would not mutually infringe each other. In addition the Memorandum declares On the other hand, for the purposes of Directive 91/250/EEC on the legal protection of computer programs, copyright protection is accorded to the particular expression in any form of a computer program, while ideas and principles which underlie any element of a computer program, including those which underlie its interfaces, are not protected. A computer program will be accorded copyright protection where the form of expression is original in the sense of being the author s own intellectual creation. In practice, this means that copyright would subsist in the expression in any form of the source code or the object code but would not subsist in the underlying ideas and principles of the source code or object code of a program. Copyright prohibits a substantial copy of the source code or object code but does not prevent the many possible alternate ways to express the same ideas and principles in different source or object code. It also does not protect against development of an identical or substantially identical program without the knowledge of an existing copyright. In our opinion the undesirable legal inconsistency is due the fact that an algorithm is not patentable, but by patenting SW we are actually patenting an algorithm or a set of algorithms, within a specific sector. In fact 643

4 ISBN: IADIS the section Role of algorithms of the Directive specifies: An abstract algorithm can be defined in terms of pure logic in the absence of any physical reference points. It is possible that such an algorithm may be put to practical use in many different functions in apparently unrelated domains, and may be capable of achieving different effects. Thus, an algorithm which is considered as a theoretical entity in isolation from the context of a physical environment, and in respect of which it is accordingly not possible to infer its effects, will be inherently non-technical and thus not susceptible of being regarded as a patentable invention. It is a consequence of the above that an abstract algorithm as such cannot be monopolised. The normal rules for patentability mean that a patent claim to an invention which is founded on a particular algorithm would not extend to other applications of that algorithm. However the applicability to a whole sector is already sufficient to provoke blocks in market development which could especially penalize SMEs (which have limited financial resources) and SW consultants who base their work on added-value services: the customization and assistance of public domain SW. For an easily understandable example, if Netscape, the first company to develop a commercial browser (Navigator) had obtained a patent, other companies would not have been able to develop other browsers (such as Internet Explorer). From one point of view this hypothesis would protect the company, which certainly deserves to receive high earnings, but from another point of view, a lack of competitors would slow development of the browser, and new versions of the browser would be developed with an eye to the absorbing capacity of the market more than to improving product quality. The enormous and rapid development of our Information Society and the new Economy which has exploded in the last ten years, and benefited all society due to the incredible spread of the Internet, was only possible because its technologies were not subject to patents! On the other hand, that the proposal for SW patentability does not completely resolve the problem is reflected in the Comma (18) of the Directive itself, containing the following specification: Acts permitted under Directive 91/250/EEC on the legal protection of computer programs by copyright, in particular provisions thereof relating to decompilation and interoperability, or the provisions concerning semiconductor topographies or trade marks, shall not be affected through the protection granted by patents for inventions within the scope of this Directive recognizing once again than SW is a special product and its main characteristic is the possibility of updates and evolutions. In this juridical matter, it is wise to be extremely prudent since there is a real risk of an inverted trend in technological progress. The European Union, aware of the American experience where considerable problems have been encountered due to "patents with no technical contribution provided by the invention" (which without presenting any new technical contribution or invention, halt the work of other companies operating in the same sector) intends to ensure that only high quality patents are granted in Europe. The Economist, in a recent article, remarks: "patent offices have been too lax in granting patents, encouraging many firms to rush to patent as many, often dubious, ideas as possible in an effort to erect legal obstacles to competitors" (Economist 2004). Furthermore the idea that patent systems need reform so that innovation can be properly rewarded is shared by many scientists today. In particular, Merges describes the emergence of patents for business "methods" and focuses attention on determining an acceptable "error rate" for issued patents (Merges 2004). Another issue may derive from the different application, in the single national jurisprudences, of modifications and integrations originating from the Directive. Integrations and modifications may differ in the national environments and therefore create inequalities, leading to disparities between European citizens. Other problems acknowledged by the EU analysis are: the possible reinforcement of the market position of big companies and the cost of incremental innovation (i.e. by sequential steps) typical of the SW industry, which requires identification of the real rights holders and license negotiation. This factor, as previously mentioned, may slow down technological progress and cut SMEs with low financial resources out of the market. To these general considerations can be added the following observations: The intrinsic difficulty due to the validation process of the SW invention to be patented, considering the extension of the SW domain (general or special purpose) covering all scientific and technological sectors, risks that render the objective quality difficult to achieve. Copyright protects the specific SW in its various formats (source, object, executable) i.e. the specific implementation, in its programming language and operating system. This form of SW protection has permitted programmers to develop SW with similar functions in different environments, such as OpenOffice running on Linux (vs MS Office). With the patent, this kind of development will no longer 644

5 IADIS International Conference e-society 2005 be possible due to the protection extended to the entire technical sector referred to in the patent, and this may obstruct market diversification. This kind of scenario will nullify everything that has been accomplished in the last 15 years by the EU to permit free trade and favor the development of SMSs. A patent in itself would become a market item, to be sold to big companies (thus gaining someone high revenue with little work) no longer stimulating programmers to improve SW functions, technologies, or implementation, and practically permitting big companies to drive the market trends. On the other hand it is necessary for the European Union to adapt its legislation to that of other industrial countries, such as the US and Japan, in order to protect SW created in Europe from international competitors, and also harmonize the legislation of all Member States in order to avoid internal unbalance. In our opinion balancing the need to protect SW inventions with a large overture to favor scientific and technological progress, can be obtained by limiting the application field of the patent, i.e., by limiting protection to the specific program, interfaces and developing environment (for example the operating system). Protection must guarantee that it is not possible to copy this invention, i.e. write a program which performs the same functions or produces the same results, even if it utilizes a different language and/or furnishes different interfaces. Invention protection should be substantial, but cannot protect the idea, since different products with different features can arise from the same idea. In the industrial field, to illustrate a practical example, it would be as if a company patents a corkscrew, and no other company can patent other models of corkscrew with a different design and/or function from a bottle, rather than the specific object which carried out this function! This limitation in the industrial field is not applied, in order to promote scientific and technological progress. For this reason, the legislator should focus on defining the application field of the patent in the context of SW progress in the light of which Comma (4) of the Directive affirms: The steady increase in the distribution and use of computer programs in all fields of technology and in their world-wide distribution via the Internet is a critical factor in technological innovation. It is therefore necessary to ensure that an optimum environment exists for developers and users of computer programs in the Community. And the best possible conditions require thorough study, balance of the interests involved, and decisions that coincide with European user opinion. 5. CONCLUSION In conclusion, an important challenge has arisen: how can we protect SW inventions while facilitating freedom in SW development? Actually, the European Parliament has attempted to establish a middle way between two opposing objectives: to protect SW inventions and to facilitate the spread of knowledge for technological progress. The abovementioned directive has provoked much debate between supporters of SW patentability and those who oppose the introduction of exclusive rights. The former explain that the lack of patentability of the software in Europe could, in the long term, lead to a technological disadvantage for European industry regarding the US market, which grants software protection by means of patent, to the disadvantage of the European community economy. The latter maintain that it is not a good idea to introduce laws granting SW producers exclusive rights by patent, since this means excluding many possibilities for access to ideas and their communication and diffusion. Among other things, it is feared that once the directive is approved, it may cause a generalization of the system of SW protection, extending exclusive rights to any type of software independent of the fact that it may be associated with a new physical or mechanical process, and in the end banalizing the product. Furthermore, it should be considered that probably the directive would not be put into effect unanimously by the patent offices of all the Union member countries, and that could cause inequalities for community citizens operating in widely differing economic, political and legislative systems. This would risk deepening the technological division between the countries themselves, to the detriment of the European economy. At this stage in technological development it is necessary for legislators to reflect adequately on new forms of SW protection that do not penalize expansion. More than other products of intellectual endeavor, by means of other authors intellectual hired work contributions, SW permits and facilitates modifications, integrations, and updates to the original work; the work of all authors should be safeguarded and recognized. Regarding this situation, to stay on the track of copyright legislation, European legislators should promote 645

6 ISBN: IADIS laws and procedures that protect SW work so derived and provide incentives for authors to put at the results our disposition, also with specific reference to any efforts in this direction will have positive effects on the European community, facilitating access to ideas, information and knowledge and contributing to the development of a New Europe. REFERENCES Matthew Broersma. Global Software Patent Scrap Continues, EU Restarts Process. February 3, 2005, Commission of the European Communities. Proposal for a Directive of the European Parliament and of the Council on the patentability of computer-implemented inventions, Brussels, 20 February The Economist print edition. Monopolies of the mind, Nov 11th 2004, Roberto di Cosmo, Legal Tools to Protect Software: Choosing the Right One, Upgrade, The European Journal for the Informatics Professional, June 2003, Robert P. Merges. As Many As Six Impossible Patents Before Breakfast: Property Rights For Business Concepts And Patent System Reform, Berkeley Technology Law Journal Sandra R. Paulsson. Patenting Software vs. Free software. What should the European Union do? Feb EU Press Releases. Patents: Commission welcomes Council agreement on Directive on computer-implemented inventions. May USPTO. General Information Concerning Patents (Revised January 2005) 646