1. 1 The Case Of Patents And Computer Implemented Inventions Luciano Bosotti Buzzi, Notaro & Antonielli d’Oulx Turin – October 13, 2009

2. 2 Three basic principles There are always 2 Sides in a Coin (2SC) There are always 2 Sides in a Coin (2SC) Situations may Change with Time (SCT) Situations may Change with Time (SCT) A single Entity’s interest may Not be the interest of Society as a whole (ENS) A single Entity’s interest may Not be the interest of Society as a whole (ENS)

3. 3 What is Software? No absolute definition available No absolute definition available A common perception is that SW is any of a set of instructions input to a machine (“computer” or “processor”) to direct operation thereof A common perception is that SW is any of a set of instructions input to a machine (“computer” or “processor”) to direct operation thereof Not even the concept of computer is a well defined one; designations such as “processor”, “microprocessor”, “controller”, “microcontroller” are common in the art to designate different types of computer but borderlines are ultimately vague Not even the concept of computer is a well defined one; designations such as “processor”, “microprocessor”, “controller”, “microcontroller” are common in the art to designate different types of computer but borderlines are ultimately vague

4. 4 Art. 52 European Patent Convention (1973) The following in particular shall not be regarded as (patentable) inventions: (a) discoveries, scientific theories and mathematical methods; (b) aesthetic creations; (c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers; (d) presentations of information.

5. 5 Why not patentable inventions? Two basic reasons  Ideological We do not believe these inventions deserve/are advantageous to be protected by patents  Pragmatic - Performing a patent grant procedure for these inventions would be difficult, if at all possible. E.g. : how do you search the prior art? - Performing a patent grant procedure for these inventions would be difficult, if at all possible. E.g. : how do you search the prior art? - Almost general consensus in 1973; but then? - Almost general consensus in 1973; but then?

6. 6 The breakthrough came around 1980 A new player: the PC A new player: the PC  SW becomes a separate, individual entity  SW can move over different computers and becomes a product of its own  SW comes to the home and becomes (also) an entertainment tool  SW becomes predominant over HW  The Net

7. 7 From SW to SWs From mere processing of data (i.e. “numbers” in, “numbers” out) to controlling operation of “machines”: e.g. any sort of current media player, and your mobile phone as well, is a computer controlled by suitable SW; injection and ignition in your car are computer/SW driven; take-off and landing of your plane to come here was computer/SW driven,… From mere processing of data (i.e. “numbers” in, “numbers” out) to controlling operation of “machines”: e.g. any sort of current media player, and your mobile phone as well, is a computer controlled by suitable SW; injection and ignition in your car are computer/SW driven; take-off and landing of your plane to come here was computer/SW driven,… SW “permeates” everyday’s life. SW “permeates” everyday’s life.

8. 8 SW is “aggressive” SW tends to strictly interact with most of other (non- patentable) inventions of Art. 52 EPC 1973 SW tends to strictly interact with most of other (non- patentable) inventions of Art. 52 EPC 1973  Scientific discoveries > many of these are made possible by SW  Mathematical methods > these are frequently implemented by SW and are strongly linked to SW  Methods of doing business > e-commerce  Presentation of information > media SW

9. 9 The evolving scenario in the ’80s and the ’90s - Part I Attempts to protect SW by sui generis legislation (dispositions type by OMPI) - H. P. Attempts to protect SW by sui generis legislation (dispositions type by OMPI) - H. P. Attempt to protect SW under competition law, labor law …. Works only under certain circumstances and is not uniform worldwide Attempt to protect SW under competition law, labor law …. Works only under certain circumstances and is not uniform worldwide Finally, SW is protected by copyright Finally, SW is protected by copyright

10. 10 The evolving scenario in the ’80s and the ’90s - Part II Copyright protection has both advantages and drawbacks Copyright protection has both advantages and drawbacks  Int’l Conventions ensure uniform requirements and protection worldwide  No registration required. It’s “free”.  Copyright protection already provides a well structured framework (work done for hire, collective work, derivative rights, “partial” reproduction, …) and can be adapted to contemplate e.g. interoperability

11. 11 The evolving scenario in the ’80s and the ’90s - Part III The evolving scenario in the ’80s and the ’90s - Part III Aren’t we over-protecting? Does copyright (70yrs+) make sense? Aren’t we supporting unjustified monopolies? Aren’t we curbing competition? Is the proprietary paradigm good for all? EXTENSIVE DEBATE Aren’t we over-protecting? Does copyright (70yrs+) make sense? Aren’t we supporting unjustified monopolies? Aren’t we curbing competition? Is the proprietary paradigm good for all? EXTENSIVE DEBATE On the other hand, copyright does not extend to the underlying ideas and principles, and thus does not adequately protect “Computer Implemented Inventions” (CIIs) On the other hand, copyright does not extend to the underlying ideas and principles, and thus does not adequately protect “Computer Implemented Inventions” (CIIs)

12. 12 The evolving scenario in the ’80s and the ’90s - Part IV A case for patent protection? SW is not patentable as such (Art. 52 EPC 1973), but inventions involving the use of SW and/or computers (i.e. CIIs) are patentable. SW is not patentable as such (Art. 52 EPC 1973), but inventions involving the use of SW and/or computers (i.e. CIIs) are patentable. Basic Case Law of EPO is Vicom (T204/84). Developments in the U.S. and other countries is more or less similar (U.S. are becoming more restrictive: In re Bilski). TRIPS are on the same line: inventions patentable in all areas of technology. Basic Case Law of EPO is Vicom (T204/84). Developments in the U.S. and other countries is more or less similar (U.S. are becoming more restrictive: In re Bilski). TRIPS are on the same line: inventions patentable in all areas of technology.

13. 13 The key reasoning of Vicom An invention which would have been patentable if implemented with conventional means should not become unpatentable for the sole reason of being implemented by means of a computer e.g. by SW An invention which would have been patentable if implemented with conventional means should not become unpatentable for the sole reason of being implemented by means of a computer e.g. by SW To be patentable, an invention must be technical. But what does technical mean? To be patentable, an invention must be technical. But what does technical mean?

14. 14

15. 15

16. 16

17. 17

18. 18

19. 19

20. 20 The contrasting scenario around the turn of the century Patent offices such as the EPO or the U.S. PTO have granted hundred thousands patents on CIIs Patent offices such as the EPO or the U.S. PTO have granted hundred thousands patents on CIIs CIIs are a dominating area of technology CIIs are a dominating area of technology Is this solution satisfactory? Is this solution satisfactory?

21. 21 The contrasting scenario around the turn of the century This arrangement works pretty well in those areas where This arrangement works pretty well in those areas where - CIIs are real “machines” - competition is preserved Examples: automotive electronics, various household appliances (e.g. controls for washing machines), controlling industrial processes. WHY?

22. 22 The contrasting scenario (cont.d) The scope of protection is limited to a specific area (e.g. the patent on a washing machine may perhaps cover a dishwasher but not much more than that). The scope of protection is limited to a specific area (e.g. the patent on a washing machine may perhaps cover a dishwasher but not much more than that). There are several, if not many players in the field There are several, if not many players in the field The “public” has no adverse perception of that kind of limited monopoly The “public” has no adverse perception of that kind of limited monopoly

23. 23 The contrasting scenario (cont.d) This arrangement raises a number of critical issues where This arrangement raises a number of critical issues where - protection of a CII borders on protection of a general underlying principle (e.g. the underlying algorithm, a method of doing business, the rules of game) i.e. an invention otherwise held not to be patentable, save that it is implemented by electronic means - there are few players in the field, and patent protection may be used (in addition to copyright) in an attempt to raise the entry level for new players - the “public” has an adverse perception of monopoly (wealthy is evil)

24. 24 The contrasting scenario (cont.d) An invention otherwise held not to be patentable, if implemented by electronic means may perhaps become technical. Does it involve an inventive step? Probably NOT. An invention otherwise held not to be patentable, if implemented by electronic means may perhaps become technical. Does it involve an inventive step? Probably NOT. REMEMBER REMEMBER Performing a patent grant procedure for these inventions may be difficult, if at all possible. E.g.: how do you search the prior art? A substantial risk exists of granting “fake” patents

25. 25 The contrasting scenario (cont.d) CII technologies often involve standardization (e.g. mobile phones must comply with ETSI standards, DVD and MP3 players with MPEG standards) CII technologies often involve standardization (e.g. mobile phones must comply with ETSI standards, DVD and MP3 players with MPEG standards) If patented solution is essential to comply with standard, then there is no alternative to patented solution If patented solution is essential to comply with standard, then there is no alternative to patented solution Patents were intended to promote development of alternative solutions Patents were intended to promote development of alternative solutions

26. 26 The contrasting scenario (cont.d) Patents on CII technologies often cover the whole chain (integrated circuits or “chips”, the apparatus incorporating the chip, the method of use or operation of the apparatus) Patents on CII technologies often cover the whole chain (integrated circuits or “chips”, the apparatus incorporating the chip, the method of use or operation of the apparatus) These patents somehow defy “exhaustion of right”: purchasing the chip exhausts the right in the chip but (arguably) not the right in the apparatus >> “stacked licenses” These patents somehow defy “exhaustion of right”: purchasing the chip exhausts the right in the chip but (arguably) not the right in the apparatus >> “stacked licenses”

27. 27 The contrasting scenario (cont.d) CII technologies are frequently developed within the framework of “patent pools”, i.e. different entities (possibly competitors) contributing to the technology and the related standards. Members of the pool “declare” their patents as essential/non-essential to the standard, and possibly undertake to grant licenses to any other member at Fair Reasonable And Non-Discriminatory (FRAND) conditions CII technologies are frequently developed within the framework of “patent pools”, i.e. different entities (possibly competitors) contributing to the technology and the related standards. Members of the pool “declare” their patents as essential/non-essential to the standard, and possibly undertake to grant licenses to any other member at Fair Reasonable And Non-Discriminatory (FRAND) conditions

28. 28 The contrasting scenario (cont.d) The pool/standardization body has no tools for checking essentiality/non- essentiality The pool/standardization body has no tools for checking essentiality/non- essentiality What are FRAND conditions? What are FRAND conditions?

29. 29 Possible (questionable) remedies The crusade? The crusade? SW/CII patents? NO, thank you! Has good arguments and support, especially in academia, but: - university/public research must(?) increasingly be self-funding and become enterprise-like - university/public research focuses on SW/CII; how can these self-fund if deprived of the possibility of patenting their results?

30. 30 Possible remedies (cont’d) A crusade must rely on facts, not on hearsay (e.g. mis- taking an application for a granted patent, judging scope from the abstract) A crusade must rely on facts, not on hearsay (e.g. mis- taking an application for a granted patent, judging scope from the abstract) Anti-CII patent crusaders obtained years ago from EU Parliament a draft Directive strongly against CII patents. Text was so bad that Commission was forced to halt project. Industry lobbied against by creating the belief that Directive was pro-CIIs.When brought again before Parliament even crusaders voted against

31. 31 Possible remedies (cont’d) Improve examination to limit risk of fake patents (e.g. allow public to submit prior art to Patent Office – “peer-to-patent” project in the U.S.) Improve examination to limit risk of fake patents (e.g. allow public to submit prior art to Patent Office – “peer-to-patent” project in the U.S.) RISK: the EPO are “raising the bar”, but focusing on essentially formal issues (“lack of clarity”); users may lose confidence in system if faced with whimsical objections RISK: the EPO are “raising the bar”, but focusing on essentially formal issues (“lack of clarity”); users may lose confidence in system if faced with whimsical objections Use antitrust tools (also for copyright)? Use antitrust tools (also for copyright)? Expand recourse to compulsory licenses, especially for improvements? Expand recourse to compulsory licenses, especially for improvements? Re-define concept of infringement? E.g. teaching of the patent must be reproduced. Re-define concept of infringement? E.g. teaching of the patent must be reproduced.

32. 32 The Case Of Patents And Computer Implemented Inventions Thank you! Luciano Bosotti l.bosotti@bnaturin.com