1. ip4inno 1 ip4inno Module 6A Industry Specific IP Protecting and exploiting innovation in the IT Industry Name of speakerVenue & date

2. ip4inno 2 ip4inno is brought to you by: European Commission, DG Enterprise & Industry European Patent Office 19 consortium partners in the first ip4inno project This particular module was written or updated by: Alex Gardiner, Senior Examiner The European Patent Office with funding from the EC and EPO The module was originally authored by Antero Virkkala (of the company Kolster Oy Ab) & Kari-Matti (Lehti Fennica Attorneys Ltd.).

3. ip4inno 3 The Disclaimer! This training material concerns intellectual property and business strategies only in general terms. This training material should not be relied upon when taking specific business or legal decisions. Rather, professional advice should be obtained which suits the circumstances in question.

4. ip4inno 4 Intellectual Property, Intellectual Assets Inventions Brands, logos Designs Musical, dramatic, literary & artistic works Databases Reputation / Goodwill Designs Know-how Trade secrets Confidential information Patents, UMs Reg. TMs Reg. Designs Copyright Database right Unreg. TMs Unreg. Designs Restrictive covenants Confidentiality agreements The formal registered & unregistered rights, when combined with this third group of "soft IP", are known collectively as intellectual assets.

5. ip4inno 5 One product – many IP rights image © NOKIA® Reg. Design for phone shape Reg. Trade Mark - "NOKIA", start-up tone, animated sequence of two hands connecting Copyright - software, ringtones & images Patents - for technology to produce and operate, software on game processing, networking and data transfer. Pooled, cross-licensed, or kept exclusive Trade secrets - kept "in-house", never published

6. ip4inno 6 Patenting computer-implemented inventions This short introduction to patentability focuses on what may be patentable in Europe and in the USA Specific questions concerning what types of protection may be obtained are beyond the scope of this presentation The assumption is that the inventor will consult a professional patent attorney with special knowledge of each authority, who can advise whether program products (with or without carrier) or data signals are patentable

7. ip4inno 7 A 'computer'... A human brain A biochip using a sliver of real brain A software implemented neural network A washing machine control processor A mobile telephone A PDA smartphone A PC A mainframe A network 'Cloud' computing in the internet

8. ip4inno 8 Europe Patentability in Europe is regulated by: European Patent Convention (EPC, EPC2000) and guided by European Patent Office (EPO) Guidelines for Examination EPO Board of Appeals decisions (case law) National law and case law within Europe is generally harmonised with that of the EPO, with some occasional exceptions in detail in the UK

9. ip4inno 9 1)European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application. 2)The following in particular shall not be regarded as inventions within the meaning of paragraph 1: –(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. 3)Paragraph 2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such. Article 52 EPC

10. ip4inno 10 1)European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application. 2)The following in particular shall not be regarded as inventions within the meaning of paragraph 1: –(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. 3)Paragraph 2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such. Article 52 EPC

11. ip4inno 11 1)European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application. 2)The following in particular shall not be regarded as inventions within the meaning of paragraph 1: –(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. 3)Paragraph 2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such. Article 52 EPC

12. ip4inno 12 Example (1) Consider this painting by René Magritte: A man looks into a mirror and sees his own back This painting surely involves “an invention” It may not be a technical invention, but we will worry about that later There is certain relationship among these restrictions; they are not applied separately but in a certain juxtaposition

13. Example (2) There is certain relationship among these restrictions; they are not applied separately but in a certain juxtaposition The screen saver is not a “computer program as such” It can be defined in technical terms and it solves technical problems (data security, burn-in). The screen saver can be used (manufactured) in industry By virtue of the painting the technical screen saver is novel and inventive Is this particular screen-saver patentable?

14. ip4inno 14 EPC Article 56 (inventive step): An invention [involves] an inventive step if, having regard to the state of the art, it is not obvious to a person skilled in the art. EPC Rule 43 (definition of protection by technical features): The claims shall define the matter for which protection is sought in terms of the technical features of the invention. … claims shall contain: –(a preamble) indicating … the subject-matter of the invention and those technical features which are necessary for the definition of the claimed subject-matter … –a characterizing portion … stating the technical features which, in combination with the (preamble), it is desired to protect 'Technical' inventions

15. ip4inno 15 Back to the Magritte example If it is 'an image' it is not patentable because: The screen saver is conventional, apart from the painting; The painting, which contains any novel/inventive elements of the screen saver, does not contribute to the technical features of the invention (its contribution is solely aesthetic); Although the screen saver is not “an aesthetic creation as such” all features which may be technical in some way (the screen saver’s functionality as regards data security and burn-in prevention) are known from the prior art.

16. ip4inno 16 The contribution approach - until late 90s –Consider the prior art –Find the difference and what it achieves –If it is in the excluded areas, then Non-Patentable Matter –Accepted and still applied in the UK The technical character approach - since then –Consider the claim in isolation of prior art. –Determine if there are any features of technical character –If yes, then proceed to consider inventive step –An inventive step can only reside in those features which lend technical character providing a technical solution to a problem –Mere circumvention of a technical problem by altering non- technical parameters does not give rise to inventive step The EPO migration in methodology in a nutshell

17. ip4inno 17 The range of patentability EPO A mathematical method of calculating hedge fund risk by processing financial data EPO A computer simulation of a device, based on mathematic characteristics of the device in terms of technical parameters in the real world EPO A computer programmed to control a device to allow a technical effect to be achieved in solution of a technical problem EPO A business method of simulating sick leave behaviour by modelling different administration of personnel

18. ip4inno 18 While ignoring any contribution from non-technical features, the EPO may use the inventor’s own non-technical elements as a form of conceded prior art The business man would thus be imagined as handing over a sketch of what he wants the technical implementer to do If implemented by means of conventional technical means, this is not inventive Third parties are then informed about the business method and if no patent has issued for a technical invention, can replicate it safely Even if a patent has been granted for a technical invention, no protection is given specifically for the business idea, and a different implementation would not infringe the patent. Possible Pitfalls in the EPO approach

19. ip4inno 19 Another Example A business phone user sometimes gets personal calls –separate billing is desired –carrying one phone is better than two Solution 1 –Keep the technical systems the same and analyse the call list later to calculate the costs Solution 2 –A SIM card with two phone identities linked to one number –A phone loaded with software capable of distinguishing the identities and both outgoing and incoming calls in order to allow distinguished administration

20. ip4inno 20 The EPO until recently rejected methods of simulation or modelling as “essentially mental acts” unless a final item was manufactured Occasionally it was accepted that the item FOR manufacture was adequate definition Most recently the consideration has become more detailed; a link to an in depth understanding of the system which is simulated or modelled (by computer) must be evident, and the final manufacturing step explicitly stated as unnecessary Developing case law; simulation

21. ip4inno 21 EPO and Case Law - not mysterious at all Enlarged board ('G') decisions are largely binding for future work of both examiners and boards of appeal Technical Board ('T') decisions are binding only on the case giving rise to the decision, and may be followed or not in other cases The EPO Case Law book sets out many decisions which were considered of interest, and their content The Guidelines are non-binding to examiners but are normally followed. They reflect the current trend in decisions from the Boards and EPO working practice The Case Law book and Guidelines are revised periodically and are thus occasionally out of date, and current working practice follows more recent, decisively reasoned, Board decisions. Brochures or Notices are issued by the EPO if this is the case

22. ip4inno 22 Some case law indicates inventions in information technology considered technical by Boards of Appeal: T931/95 found that the invention lay in the field of economy, which cannot contribute to inventive step. The regime of patentable subject-matter is only entered with programming of a computer system for carrying out the invention. The judgement was negative on inventive step, finding it basic computerisation T27/97 found a cryptography method technical: A method in the domain of electronic information processing and telecommunication is not excluded from patentability (published only in French) EP Case law

23. ip4inno 23 A case occasionally mentioned due to its previously held position of importance is T769/92 (“Sohei”). The Board decided that the requirement for technical character was satisfied if technical considerations are required to carry out the invention; such technical considerations must be reflected in the claimed subject matter (formulation taken from the Guidelines) The rather broad acceptance understood by many from 'Sohei' was largely overtaken by the wave of more recent and relevant case law in the last 10 years EP Case law

24. ip4inno 24 EPO Case Law - Example A data analysis of cyclical behaviour of a curve (two parameters.... –(Mathematics - excluded) A computer performing a... –(A computer. Not inventive) A method of controlling a physical process based on analysis of... –(... depends on the process...) BANG! Pressure Cycles per second

25. ip4inno 25 US approach Patentability in the USA is regulated by: Statute (Patent Law, §101) Case law USPTO (United States Patent & Trademark Office) rules (Manual of Patent Examination Practice, MPEP)

26. ip4inno 26 US Statute US legislation similarly imposes positive and negative restrictions: Patent Law §101 states positively what is considered patentable: “whoever invents or discovers any new and useful process, machine, manufacture (=“product”), or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore...”

27. ip4inno 27 US practice 1995-2010 US Case law interpretation largely generous until now: Case law excluded completely abstract ideas, laws of nature and physical phenomena; the claimed invention must produce a useful, concrete and tangible result Useful: must be specific, substantial and credible and specifically recited in the claim Concrete: must have a result that “can be substantially repeatable or the process must substantially produce the same result again” (concrete is antonym of unrepeatable or unpredictable) Tangible: must have some “real-world result” (=antonym of abstract)

28. ip4inno 28 The attributes “useful” and “concrete” were normally not problematic in the context of computer-implemented inventions which provide some improvements in a business method or knowledge management “Tangibility” was ensured by explicitly citing, in the claims, acts which cause state transformations in a physical device (memory, output device, etc.), such as “outputting” or “storing” acts Although business methods were patented quite liberally, the Office’s attitude towards them changed over time. Examiners have been said to not put some things in writing, but in personal interviews note that prevailing policy is to refuse most business- related applications. A refusal was at times then produced by reading the applicant’s claim elements into virtually any piece of prior art The effect on applicants and the USPTO

29. ip4inno 29 Now and the future for the USPTO The Supreme Court noted in 2010 –that whether a machine or some transformation of matter was claimed was one point of consideration –that the notion of 'concrete, useful, tangible' was 'inadequate' –that just because business methods may be 'processes', does not mean that they enjoy broad patentability –if a 'process' relates to an abstract idea or mathematical formula it may still not be patentable –that they rather looked to much earlier decisions to gain guidance on which processes may be patentable The Supreme Court did NOT define what IS statutory

30. ip4inno 30 The difference between USPTO and EPO practice has some consequences: –For the EPO, an applicant should concentrate on technical problems and their technical solutions, based on sufficiently disclosed technical features –business methods need not be disclosed in an EP application, at least not in a form which suggests the claimed technical features – BUT keeping the business method secret may violate the American requirement to disclose the best mode to practice the invention SO if the business method has to be disclosed in an EP application, it should be disclosed as an “advantage made possible by the technical invention” It is almost impossible to draft a single application for both EPO and USPTO Consider the advisability of a PCT application which covers both and then subdivide when ‘going regional’ after 30/31 months

31. ip4inno 31 Comparison of EPO and USPTO approaches Consider this fragment of a hypothetical claim: –obtaining data –processing the obtained data into an output form. The EPO takes a pragmatic approach: –do the data, the processing unit or the output lend technical character? Does the processing result in a technical solution to a problem? The USPTO’s approach is not yet settled. –does the invention, represent a transformation to a different state, does it utilise specific means to achieve this, is a repeatable result through state transition in a physical device attained –are other tests applicable? But the alteration of behaviour in case law can make the USPTO practice unpredictable

32. ip4inno 32 The range of patentability (1) EPO USPTO A mathematical method of calculating hedge fund risk by processing financial data EPO USPTO A simulation of a device, based on mathematic characteristics of the technical operating parameters of the device EPO USPTO A computer programmed to control a device to allow a technical effect to be achieved in solution of a technical problem EPO USPTO A business method of sorting customer data to allow more efficient administration of personnel

33. ip4inno 33 The range of patentability (2) EPO USPTO A mathematical method of calculating vector values EPO USPTO A computer, processing graphics data in order to render an image on a display, utilising specific mathematical algorithms in conjunction with the type of processor employed with an overall efficiency gain EPO USPTO An information presentation method of selecting adverts for display to a customer dependent upon gaming behaviour

34. ip4inno 34 Software copyright (1) Essential method for protection of software: Without copyright there is no software industry –as copying is easy and free, but development is very expensive Somewhat artificially selected as a protection method –in the absence of more suitable or more specific protection method the international community decided to treat software as any work of art or work of literature (books, paintings etc.) Some software specific provisions do exist in Copyright Act –such as an absolute right to make one back-up copy To achieve copyright protection software needs to be original (very generic code does not receive protection) Copyright protection is achieved automatically for the period of 70 years from the death of the author (i.e. the coder) –no registration process is required

35. ip4inno 35 Software copyright (2) Copyright holder has an exclusivity to govern: Production and copying Distribution and licensing For software practically also for modification –since any modification requires making copies of the software Infringement entitles the holder to receive: –reasonable compensation for the unauthorized use to be payable even if no negligence exists –damages in addition to the said compensation (provided, however, that negligence exists) Use of the software in contradiction with the license terms and conditions constitutes both breach of contract and copyright violation

36. ip4inno 36 Software copyright (3) Original author can only be an individual person Copyright to software is, however, automatically transferred to employer provided, that –it is created within an employment relationship and in connection with the normal duties of the employee In the event the software is created outside the employment relationship (i.e. by subcontractor, hired resources etc.) the transfer of copyright must be based on contract No ”works for hire” –doctrine in most of the EU countries

37. ip4inno 37 Software copyright (4) The essence of the software copyright is that –any use of software requires that copies are made of the software and is therefore always subject to license from the copyright holder Copyright protects –appearance of the artwork –in software the code Copyright does not protect –ideas or methods –same idea can be exploited when coding a new software from beginning Ideas and methods should be protected by confidentiality obligations and/or patents

38. ip4inno 38 Software licensing Unless otherwise agreed: –sale of the software copy does not mean sale of copyright –sale of copyright does not mean that the recipient would receive the right to modify the product –copyright cannot be sold further These restrictions have to be taken into consideration when negotiating license agreements Note! - License rights used in the industry differ greatly between standard software and customized software products

39. ip4inno 39 Typical features of license agreements Limitations in the license scope –term of license perpetual vs. limited term –license covers only limited type and amount of users or entities –scope limited to certain technical environment or operating method –license tied to maintenance being in force Open source –non-commercial and provided free of charge, but aimed to protect the continued free right to use – cannot be changed to commercial product –many different types of open source licenses exist – some even extend their license to cover more than the original code (GPL)

40. ip4inno 40 Different types of license agreements End User License Agreement (EULA) –governs the use of the end user (i.e. the last link in the distribution chain) –usually perpetual for fixed fee Click Wrap / Shrink Wrap License –EULA that is entered into by either clicking an icon when installing the software (click wrap) or by opening the box (shrink wrap) Distribution License Agreements –VAR, OEM and ODM License Agreements –Value Added Reseller, Original Equipment Manufacture, Original Design Manufacture –depending on the role in the distribution value chain

41. ip4inno 41 'Piracy' and the link to patenting (1) Copying or using the copyright protected software against the express written approval (i.e. license) of the copyright holder is a violation of copyright 'Piracy' – systematic criminal violation of copyright by copying and distribution without the consent of the copyright holder Intentional violation constitutes a criminal act –penalty from fine up to 2 years of imprisonment –obligation to pay damages and reasonable compensation –prohibition to use, copy or distribute 'Piracy' acts are performed non-commercially by using peer-to-peer networks (i.e. sharing your data, music or software with others via Internet) or commercially by organized crime

42. ip4inno 42 Piracy (2) Protection against piracy: DRM (Digital Rights Management) –encoding the product or its distribution media against illegal copying –license keys – use of the product requires periodically provided license keys that are available only from the copyright holder –dongles – physical attachment (similar to USB-stick) to the computer authorizing the use Increasing enforcement –rendering illegal the import and export of unauthorised products –enforcement activities by authorities and other organizations (such as Business Software Alliance) that seek and punish the users of unauthorised copies

43. ip4inno 43 Recommended literature 'Patent Law for Computer Scientists: Steps to Protect Computer-Implemented Inventions', by Closa, Gardiner, Giemsa and Machek, Springer Verlag ©2010 - available online. –A more detailed discussion of patentability around the world, the history and current practice of offices. Provides worked examples in many areas ranging from business methods to medical applications, games to mathematical modelling methods, showing the levels of abstraction possible and the objections to be expected –Suitable for potential applicants, and professionals refreshing their knowledge in these areas