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Content of the module IP for the creative industries

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1 Content of the module IP for the creative industries
Patented computer-implemented inventions Software Biotechnological inventions ip4inno

2 Patented computer-implemented inventions
This short introduction to patentability focuses on what may be patentable in Europe and in the USA Specific questions concerning what modes of protection may be obtained are largely ignored The assumption is that the inventor will consult a professional patent attorney who will know whether program products, with or without carrier, or data signals are patentable in each regime This part has been created by Antero Virkkala (Kolster Oy Ab). He has a Master of Science decree in electrical engineering. He joined Kolster in 1995 and focuses on applications directed to computer-implemented inventions. contact: ip4inno

3 European approach Patentability in Europe is dictated by:
European Patent Convention (EPC, EPC2000) European Patent Office (EPO) Guidelines for Examination EPO Board of Appeals decisions (case law) National legislation and national case law, generally harmonized with EPO law, except UK ip4inno

4 EPC overview (1) EPC article 52: in all fields of technology (EPC2000)
(1) European patents shall be granted for any inventions which are susceptible of industrial application, which are new and which involve an inventive step. (2) The following in particular shall not be regarded as inventions within the meaning of paragraph 1: discoveries, scientific theories and mathematical methods; aesthetic creations; schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers; presentations of information. (3) The provisions of §2 shall exclude patentability ... only to the extent to which a European patent application ... relates to such subject-matter ... as such. (4) Methods for treatment of the human or animal body by surgery or therapy and diagnostic methods ... The agenda of the diplomatic conference which resulted in EPC 2000 (EPC as modified in 2000, entering into force 2007) included several alternatives for deleting at least computer programs from the list of exclusions. The diplomatic conference obviously wanted to maintain the status quo and avoid sending a signal too strong that business methods may be patentable. Hence, the amendments to Art. 52 were restricted to some shuffling of word order and the inclusion of “in all fields of technology”, which is copied from Art. 27 of TRIPS. As regards the exclusions of Art 52(2-3), method and apparatus claims are normally processed similarly, if the application provides a sufficient disclosure to the apparatus. The exclusions of 52(4) only apply to methods; apparatus claims are never excluded. Furthermore, a diagnostic method must perform a “diagnosis”; methods for obtaining physiological data are not “diagnostic methods” although such data may be used in a diagnostic method.

5 EPC overview (2) EPC article 56 (inventive step, nonobviousness):
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 29* (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 *rule 43 in EPC 2000 Novelty and inventive step are examined on a claim-by-claim basis. A claim lacks novelty if all claim elements are disclosed by a single reference document. A claim lacks inventive step if all claim elements are disclosed by a small set of reference documents (the EPO seldom combines more than two), such that the combination of the documents is obvious. Hindsight cannot be relied on; instead the motivation to combine the documents must exist in the documents or in common general knowledge. ip4inno

6 EPC overview (3) The EPC Articles and Rules define “invention” by a combination of positive and negative restrictions Positive restrictions: there must be an invention the invention must be novel and involve an inventive step the invention must be industrially applicable the invention must be defined in technical terms Negative restrictions: the invention must not be, among other things, a method for performing mental acts or doing business, or a program for computer “as such” ip4inno

7 Example (1) There is certain relationship among these restrictions; they are not applied separately but in a certain juxtaposition 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 ip4inno

8 Example (2) Is this particular screen-saver patentable?
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?

9 Example (3) 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 the technical features (the screen saver’s functionality as regards data security and burn-in prevention) are known from the prior art. The screen saver example illustrates the exclusion of aesthetic creations, but the other exclusions of EPC Art. 52(2), particularly business methods, mental acts or the like, are treated similarly. If the claimed screen saver provides functional improvements (e.g. better burn-in protection, better data security...) it may be patentable in Europe. So: we ignore all non-technical features (regardless of their novelty & inventiveness) and only assess the technical features. If these are conventional (i.e. not none) then there is no invention. ip4inno

10 Recall EPC article 52: (1) inventions ... which are new and which involve an inventive step. (2) The following (are not) inventions within the meaning of paragraph1: ... mathematical methods, aesthetic creations, schemes, rules and methods for ... mental acts, playing games or doing business, programs for computers and presentations of information. “Inventions within the meaning of paragraph 1” means that the novelty and inventive step must reside in feature(s) not excluded in Art. 52(2) If the inventive step resides in a novel business method and the technical elements for implementing the business method are conventional, such inventive activity is excluded from patentability considerations Board of Appeal decision T931/95 (“improved pension benefits system”) reversed the mutual order in which technical character and novelty/inventive are examined. After that decision non-technical elements are ignored in examination of inventive step. The former practice was to ignore non-inventive elements from examination of technical contribution. The new approach produces decisions which are easier to understand. Consider a patent application to business method implemented by novel and inventive technical means. After publication of the original invention, the inventor files a second application to an improved business method which uses the same technical means as the first invention. Prior to T931/95, the second invention would have been rejected as non-technical, although it uses the same technical means as the first invention. After T931/95, the second invention is rejected for lack of inventive step, because the only novel or inventive elements are non-technical. ip4inno

11 In addition to ignoring any contribution from non-technical features, the EPO actually cites the inventor’s own non-technical elements as “admitted prior art” against the technical features The claimed technical invention must be separately inventive over the business method, even if the business method is the inventor’s own A consequence is that the disclosed business method, when implemented by means of conventional (non-inventive) technical means, cannot be a patentable invention, and third parties are able to carry out the business method by using different technical means from the ones claimed by the applicant ip4inno

12 EPO’s practice to cite the applicant’s own business method against the applicant’s technical features has several consequences: the applicant/attorney should isolate technical sub-problems and seek to patent solutions to them only technical features should be disclosed business methods should not be disclosed in an EP application, at least not in a form which suggests the claimed technical features keeping the business method secret may violate the American requirement to disclose the best mode to practice the invention 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 which is optimal for the EPO and the USPTO ip4inno

13 The EPO generally rejects computer-implemented business methods by:
excluding the business method from patentability considerations citing the disclosed business method against the claimed technical features (“a person skilled in programming, with knowledge of the business method, would have arrived at these technical elements without inventive activity”) Computer-implemented knowledge-management systems are frequently rejected as “essentially mental acts” As regards knowledge-management techniques, even “technical considerations in implementing particulars of the invention” may be insufficient for the EPO, and some kind of an actual manufacturing step may be required. In T453/91, which relates to circuit design, the original claims were rejected for defining “mental acts”. The applicant/appellant added a generic step of “materially producing the circuit”. The Board of Appeal said: The rejected (i.e., pre-appeal) method claims could be interpreted as merely delivering a ”design”; i.e. the result would not necessarily be a ”physical entity”. In contrast, the method claims now on file are restricted to technical, viz. manufacturing, processes albeit including the designing method. But the Board of Appeal decisions are inconsistent. In T605/93 the Board allowed claims without a manufacturing step and stated that “the receptacle to be designed is not just an imaginary design but the representation of real, concrete thing which may subsequently be manufactured...” ip4inno

14 Case law (1) Some case law suggests that inventions in information
technology are considered technical by Boards of Appeal: T931/95, while upholding the rejection of an application directed to a computerized pension scheme: [The disclosed invention] lies 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. T27/97, while finding a cryptography method technical: A method in the domain of electronic information processing and telecommunication is not excluded from patentability (published only in French) But citations of individual case law rarely affect EPO examiners. They rely on the Guidelines whose broad language permits the rejection of virtually any application directed to a computer-implemented invention In T931/95 the rejected method claim was: A method of controlling a pension benefits program by administering at least one subscriber employer account on behalf of each subscriber employer’s enrolled employees each of whom is to receive periodic benefits payments, said method comprising: providing to a data processing means information from each said subscriber employer defining the number, earnings and ages of all enrolled employees of the said subscriber employer; determining the average age of all enrolled employees by average age computing means; determining the periodic cost of life insurance for all enrolled employees of said subscriber employer by life insurance cost computing means; estimating all administrative, legal, trustee, and government premium yearly expenses for said subscriber employer by administrative cost computing means; ... The appellant attempted to present the invention as technical by introducing words like “data”, “mathematical component”, but such elements are entirely conventional, and any novelty resides in the business method. ip4inno

15 Case law (2) In T769/92 (“Sohei”) the Board decided that the requirement for technical character is 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 Sohei invention concerned an electronic user interface permitting simultaneous data entry to two different business applications. The technical problem was that when the invention was made (1986), two different business applications required two computers or had to be executed in succession The Sohei invention was not claimed via the goal to be reached (“simultaneous data entry to two different business applications”) but via a specific interrelation of five files and five processing means (each meaning a specific routine controlling execution of the processor) Other Board of Appeal decisions: T208/84 (“Vicom”): Examining Division and Board of Appeal rejected original claims directed to processing of array data, but the Board allowed amended claim 1, wherein the preamble was directed to image processing: A method of digitally processing images in the form of a two-dimensional data array having elements arranged in rows and columns in which an operator matrix of a size substantially smaller than the size of the data array is convolved with the data array, including sequentially scanning the elements of the data array with the operator matrix, characterised in that the method includes repeated cycles of sequentially scanning the entire data array with a small generating kernel operator matrix to generate a convolved array and then replacing the data array as a new data array ... (remainder of claim entirely mathematical). T/953/94 (“Georges”): Rejected as mathematical: “A method of generating with a digital computer a data analysis of the cyclical behaviour of a curve represented by a plurality of plots relating two parameters to one another, said method including the steps of ...” Allowed, on appeal: “A method of controlling a physical process based on analysing a functional relationship between two parameters of the physical process comprising the steps of ...” (mathematical method equivalent) ip4inno

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

17 US legislation overview
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 ...” Case law excludes 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) The Federal Circuit held this claim valid (Signature’s patent )*: 1. A data processing system for managing a financial services configuration of a portfolio established as a partnership, each partner being one of a plurality of funds, comprising: (a) computer processor means for processing data; (b) storage means for storing data on a storage medium; (c) first means for initializing the storage medium; (d) second means for processing data regarding assets in the portfolio and each of the funds from a previous day and data regarding increases or decreases in each of the funds, assets and for allocating the percentage share that each fund holds in the portfolio; (e) third means for processing data regarding daily incremental income, expenses, and net realized gain or loss for the portfolio and for allocating such data among each fund; (f) fourth means for processing data regarding daily net unrealized gain or loss for the portfolio and for allocating such data among each fund; and (g) fifth means for processing data regarding aggregate year-end income, expenses, and capital gain or loss for the portfolio and each of the funds. Any technical “means” (in European sense) are clearly conventional. * Per the landmark 1998 case of State Street Bank & Trust C° versus Signature Financial Group Inc. ip4inno

18 The attributes “useful” and “concrete” are normally not problematic in the context of computer-implemented inventions which provide some improvements in a business method or knowledge management “Tangibility” may be 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 have been patented quite liberally, the Office’s attitude towards them has changed recently. Examiners do not put anything in writing, but in personal interviews they admit that the policy of their art unit is to refuse most business-related applications. The high refusal rate is ensured by reading the applicant’s claim elements into virtually any piece of prior art Amazon’s “single-click” patent : 1. A method of placing an order for an item comprising: under control of a client system, displaying information identifying the item; and in response to only a single action being performed, sending a request to order the item along with an identifier of a purchaser of the item to a server system; under control of a single-action ordering component of the server system, receiving the request; retrieving additional information previously stored for the purchaser identified by the identifier in the received request; and generating an order to purchase the requested item for the purchaser identified by the identifier in the received request using the retrieved additional information; and fulfilling the generated order to complete purchase of the item whereby the item is ordered without using a shopping cart ordering model. (Related EP applications and were filed the EPO raised no objections over “technical character” but rejected the applications as obvious in view of earlier documents, and the applications were abandoned.) ip4inno

19 Comparison of EPO and USPTO approaches
Consider this fragment of a hypothetical claim: obtaining data processing the obtained data into knowledge... The EPO takes a pragmatic approach: do the data and knowledge relate to a technical process? Does the inventive processing use technical means to solve technical problems? The USPTO’s published approach is more formalistic: does the invention, as specified in the claims, produce a useful and repeatable result which causes state transition (however mundane) in a physical device? But the USPTO’s unpublished practice makes prosecution of applications unpredictable ip4inno

20 Content of the module IP for the creative industries
Patented computer-implemented inventions Software Biotechnological inventions This part has been created by Kari-Matti (Lehti Fennica Attorneys Ltd.). ip4inno

21 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 ip4inno

22 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 Modification of the software requires copying and thus the modification is subject to license from the copyright holder. ip4inno

23 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 Works for hire means that the ownership belongs to the customer, which commissions and pays for the work that is subject to copyright ip4inno

24 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 Cake recipe analogy: No copyright infringement in baking a cake. There is a copyright infringement if DIFFERENT code is written to achieve the same effect (precisely the opposite of a patent). ip4inno

25 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 The restrictions described herein are based on the law, whereby any transfer of copyright and the right to modify the protected products and the right to further transfer the copyright must be clearly stated in any license agreement. The license to standard software is normally much more restricted and limited than what the customer (i.e. Licensee) can expect to receive for those software products that are customized for the customer. ip4inno

26 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) These limitations to license scope are the ones that are most common in the industry License can be limited for company’s own internal business purpose only or for group companies or for certain number of users. Such users can be concurrent, floating or named users for example. Sometimes license is limited for certain CPU, servers size, locations etc. Many times the license continues to be in force only when the customer also purchases maintenance services from the licensor, which means continuous payments and costs. ip4inno

27 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 VAR, OEM and ODM are different types of distribution licenses, where the distributor adds the original licensed product to another product that is of bigger value and has greater marketing potential than the original product. The difference between these types of agreements is not entirely clear in the industry and the terminology varies from time to time. ip4inno

28 Piracy (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 – systematical 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 ip4inno

29 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 illegalizing import and export of pirate products enforcement activities by authorities and other organizations (such as Business Software Alliance) that seek and punish the users of pirate copies ip4inno

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