Early in July, the European Union's parliament
rejected, by an overwhelming 648 to 14 vote, a bill proposing a common
framework for patenting of software across its 25 member countries. Given
the vote, the EU stays with the status quo in which software patenting
is still possible, though there are as many software patenting regimes
in place as there are members. This near unanimity in favour of the status
quo was unusual, especially because the debate on software patenting that
preceded the vote was contentious to say the least.
In fact the long and contentious debate has helped clarify the case, (mostly)
against and (less) for the provision of patent protection for software.
The European debate began when, backed by big technology companies, the
Commission of the European Communities prepared in 2002 a proposal for
a directive of the European parliament and of the council on the patentability
of computer-related innovations. A "computer-implemented invention",
which is a rather convoluted term for software, is defined as any invention
the performance of which involves the use of a computer, computer network
or other programmable apparatus, and which has one or more prima facie
novel features that are realised wholly or partly by means of a computer
programme. A computer-implemented invention is patentable on the condition
that it is susceptible of industrial application, is new and non-obvious,
and makes a technical contribution. A "technical contribution"
in turn is defined, quite ambiguously, as a contribution to the state
of the art in a technical field which is not obvious to a person skilled
in the art. The ambiguity surrounding the definition of what is patentable
is thus obvious.
The Commission's case was straightforward. Software makes a significant
contribution to GDP and employment in the Union and that contribution
is expected to rise rapidly over the coming years if members are provided
appropriate opportunities. Patent protection, that offers an inventor
a protected right to exploit the invention without fear of competitive
replication for a specified period of time, has proved its usefulness
as an incentive to innovators to invest the necessary time and capital
on new innovations. And the growing use of software patents in the US
could put large technology firms in Europe at a disadvantage. Hence, there
was need to harmonise and thereby strengthen the software protection regime
in Europe.
However, the Commission's immediate ambition was presented as being more
limited. It suggested that the prevailing regime relating to software
protection in the EU was ambiguous for two of reasons. First, though under
Article 52(2) of the European Patent Convention (EPC), programmes for
computers "as such" are not inventions and are therefore excluded
from patentability, a large number of patents for computer-implemented
inventions had been granted by the European Patent Office (EPO) and by
national patent offices. The EPO alone is reported to have granted more
than 30,000 software patents. Secondly, even when statutory provisions
setting out the conditions for granting such patents were similar, there
were substantial differences in the implementation of these provisions
as reflected in the case law of the Boards of Appeal of the European Patent
Office and the courts of Member States.
In order to deal with these ambiguities, the proposed legislation sought
to codify with the help of European case law the circumstances in which
software can be considered as being more than a computer programme "as
such". This was expected to provide information as to the nature
of software innovations that can be patented and increase the volume of
patenting. A second important objective of the directive was to harmonise
the patent regime across the Union, so as to reduce the ambiguities resulting
from differences in case law.
This effort of the EU to expand the software patenting regime was a major
step forward given the fact that software patents were till recently not
the norm and given the controversy which still surrounds the provision
of patents for software. In fact, it was only in 1981 that the US Supreme
Court ruled that software was patentable, at least when it functioned
or operated to control an industrial process. However, for long after
that, software was essentially considered to be non-patentable, since
many computer programmes performed a range of more "intangible"
functions such as word processing, accounting, graphics generation, and
the like. Protection for such software was available only under the copyright
convention.
However, there is a substantial degree of difference in the extent of
protection afforded by copyrights and patents. Copyright traditionally
protects only the "expression" of an idea, whereas a patent
protects the idea itself. Thus, in the case of software, copyright protection
extends only up to the original software code, which cannot be replicated
or altered. But if an alternative code can be deployed to achieve the
same end result, copyright is not violated. As a result courts have interpreted
the extent of copyright protection for software by closely examining the
details of a computer programme rather than the overall characteristics
of the end product.
A classic instance of this was when Borland International included in
its accounting software Quattro a set of Lotus 1-2-3 type menu commands,
which allowed customers to easily switch from the latter to the former.
Customers had the option of using Quattro's own menu commands or a virtually
identical copy of the entire 1-2-3 menu tree. However, Borland did not
copy any of Lotus' underlying computer code that delivered the functions
performed by the spreadsheet. However, Lotus, as expected, chose to go
to court on grounds of copyright infringement.
After a four-year battle in the courts the Supreme Court upheld a decision
by the a First U.S. Circuit Court of Appeals denying copyright protection
for the menu commands in the Lotus 1-2-3 electronic spreadsheet program.
The First Circuit Court had assessed Lotus’ menu tree to be a "method
of operation" that was expressly excluded from copyright protection
since the relevant clause states: "[I]n no case does copyright protection
for an original work of authorship extend to any idea, procedure, process,
system, method of operation, concept, principle or discovery, regardless
of the form in which it is described, explained, illustrated or embodied
in such work." What is more the court declared: "The computer
program is a means for causing something to happen; it has a mechanical
utility, an instrumental role, in accomplishing the world's work. Granting
protection, in other words, can have some of the consequences of patent
protection in limiting other people's ability to perform a task in the
most efficient manner. It is no accident that patent protection has preconditions
that copyright protection does not -- notably, the requirements of novelty
and non-obviousness -- and that patents are granted for a shorter period
than copyrights."
In sum, if software had to be protected in the manner in which Lotus and
others felt it should be, then a patent rather than copyright was the
appropriate route. Since a patent can protect an idea or concept, the
patent claim can be written to cover the so-called novel combination of
elements or steps making up the patented system or process. This would
make it difficult or impossible to write another computer programme that
would offer a similar system or process without infringing the patent.
It was in the context of such judgements that a virtual movement to ensure
patent protection for software began in the US. The result has been a
flood of patent applications for software, resulting in the grant of what
has been identified as "clearly invalid patents" for inventions
that are either not new or where there is no significant inventive step.
That tendency has not slowed. According to Randall Stross, a Silicon Valley
analyst who recently wrote on the subject in the New York Times, around
a year back Bill Gates announced Microsoft’s decision to raise the number
patent applications it submitted annually to 3,000 from 2,000. This amounts
to identifying close to 60 novel and non-obvious patentable ideas every
week. Not surprisingly, the subjects of Microsoft’s applications were
indeed flimsy and included titles like "System and Method for Creating
a Note Related to a Phone Call" and "Adding and Removing White
Space From a Document."
Stross is convinced that the 3,955 patents that Microsoft has already
been issued should be struck down and the 3,368 patent applications it
has pending should be summarily rejected. His view is shared by software
major Oracle, which had in an officially declared policy opposed the patenting
of software as it was inappropriate for industries in which innovations
occur rapidly, can be made without a substantial capital investment, and
tends to be creative combinations of previously-known techniques. In its
view, patent protection was devised for engineering and mechanical technologies
that are characterized by large "building block" inventions
that can revolutionize a given mechanical process. On the other hand,
"software, especially a complex program, seldom includes substantial
leaps in technology, but rather consists of adept combinations of many
ideas."
There are also a number of practical problems in implementing a software
patent regime. As Oracle put it, "software patent examinations are
hindered by the limited capability of searching prior art, by the turnover
rate among examiners in the Patent and Trademark Office, and by the confusion
surrounding novelty and innovation in the software arena. The problem
is exacerbated by varying international patent laws, which both raise
the cost and confuse the issue of patent protection."
What is more, filings of patent applications tend to be expensive, especially
because of the large sums to be paid out in the form of lawyers fees.
Further, patents for incremental innovation which is typical of the software
industry entail the economic costs of identifying the patent holders and
negotiating the necessary licences. Small firms therefore would be unwilling
to apply for patents, even though many new software ideas emanate in small
firms. Hence, patents for computer-implemented inventions might strengthen
the market positions of the big players and result in the monopolization
of an industry that technologically tends to be more competitive in structure.
The net result would be a setback for innovation.
Based on these and other similar arguments, the advocates of open source
software joined the debate on the EU software directive. The controversies
that ensued generated the fear among the big software companies that they
would lose even the protection they currently receive through the EPC
and national patent legislation. So while small firms and the open source
software movement wanted the EU bill rejected and used as an occasion
to question the appropriateness of software patenting, the big firms wanted
the bill dropped to prevent its use as the basis for a reversal of the
existing level of software protection. In the event the bill was rejected
in a vote which Josep Borrell, president of the EU parliament described
as the most decisive majority vote in the history of the chamber. This
near unanimity in rejection was surprising given the contentious nature
of the debate that preceded it. There was no commonality of purpose, but
differences on the direction software patenting should take ensured convergence
around a negative verdict. Meanwhile, the software patenting regime in
the EU continues as before despite the arguments advanced to show that
the practice, like the EU directive, must go.