1. 1 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF EC Proposal for a Directive on the Patentability of Computer-Implemented Inventions Tim Frain Director of IPR NOKIA 9 July 2002

2. 2 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF What counts as an invention under the European Patent Convention? Not “inventions” include: Discoveries, scientific theories, mathematical methods Aesthetic creations methods for performing mental acts, playing games or doing business Programs for computers Presentations of information [Art. 52(2) EPC] BUT only to the extent the patent relates to that subject matter as such [Art. 52(3) EPC] Excluded categories lack technical character

3. 3 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Software patenting in Europe - current state Lead to popular misconception computer-related inventions not patentable especially among SMEs and private individuals “Adventurous” patent applicants pushed forward the frontiers Case law over 20+ years has broadened scope In practice patents are allowed for: computer implemented inventions - if "technical contribution" software (computer programs per se, even as a record on a carrier) business methods implemented in technical apparatus “pure” business methods excluded

4. 4 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Leading Cases in EPO (BoA) Vicom. T 208/84 (July 1986). Allowed Digital processing images (2-d data array) Technical character test originated Koch/Sterzel. T 26/86 (May 87). Allowed X-ray apparatus If invention is a mix of technical and non-technical features, the non-technical means does not detract from technical character IBM Text processing cases T 52/85, T 121/85, T 95/86 (1989-91). Refused Sohei T 769/92 (May 1994). Allowed General purpose management system - business method But not business method or computer program"as such" IBM Program Product claims (1999). T 1173/97, T 935/97. Allowed Computer programs on a carrier not necessarily computer programs "as such" Pension Benefits System. (2000) T 931/95. Refused Pure business method Apparatus claim qualified as technical character, but no technical problem

5. 5 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF The “problem” in Europe Single law (EPC) National laws based on EPC Divergent interpretation by EPO Boards of Appeal (EPO pre-grant patents only) National POs (national patents only) National Courts (national and EPO post-grant patents) No supra-national body making binding decisions

6. 6 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Example of Divergence - 1 Program Product claims (software on a carrier) Allowable EPOYES s ince 1999 (IBM T1173/97 & T0935/97) UKPOYES since 1999 (UKPO Practice note ) DEPOYES since 2001 (BGH case X ZB 16/00 ) others UNKNOWN

7. 7 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Example of Divergence - 2 UK Courts have taken stricter view of statutory exclusions Is invention a business method, or mental act? Apply as FIRST test, which trumps all else Cases: Merrill Lynch [1989] RPC 561 – business method Raytheon [1993 RPC 427] – mental act

8. 8 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Example of Divergence - 3 Geman jurisprudence has taken less strict view: Allow business methods with a technical character Even if contribution is non-technical Automatic Sales Control Case [1999] GRUR 1078 Speech Analysis Apparatus [2000] GRUR 930 Bundesgerichthof recently (Oct 2001) says EPO BoA approach is correct Requires inventive technical contribution (X ZB 16/00)

9. 9 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Background to the Directive Proposal 1997 Commission Green Paper UKPO Public Conference 1994 1999 Follow-up Communication, concluded: Lack of clarity and certainty Conditions not uniform Effects on internal market Need for Directive

10. 10 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Parallel EPO Initiative EPC Revision 2000 EPO proposal to delete “computer programs” from Article 52(2) EPC Revision conference rejected proposal Deferred for later revision Pending imminent EC consultation No impact on existing EPO practice

11. 11 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF October 2000 EC Consultation 1450 responses – two camps: Patents support innovation (big business) Patents stifle innovation (small sw developers) Background to the Directive Proposal

12. 12 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF EC Consultation Process Traditional business mostly wants: Patents for inventions that have technical ingredient only Includes computer-related inventions Includes software per se Excludes "pure" (i.e. non-technical) business methods Open source community views cover: No patents for software No patents for sw running on general purpose computers (Eurolinux “official” position)

13. 13 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF The Commission’s Proposal No justification for major or sudden change in either direction Harmonisation based on current EPO practice Follows Pension Benefits case (T 931/95)

14. 14 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF The need for a Proposal Eliminates divergences => harmonisation Increases legal certainty No extension of patentability e.g. to “pure” business methods Allows political debate

15. 15 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF The Proposed Directive 11 short Articles (2.5 pages) Including formalities 19 Recitals (3 pages) Explanatory Memorandum (16 pages) FAQs

16. 16 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Main Features (principles) Relates to computer implemented inventions (CII) [Art.1] Inventions implemented through the execution of software [Art.2] Not a sui generis right CIIs regarded as belonging to field of technology [Art. 3] protection within general patent law principles Review after three years [Art. 8]

17. 17 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Main Features (substantive) Requirement for Technical Contribution [Art. 4.2] Excludes “pure” business methods Consider claim as a whole [Art. 4.3] Linked to inventive step (non-obviousness) [Art. 2(b)] Form of claims prescribed/limited Programmed apparatus or processes running in such apparatus (only) [Art. 5] Interoperability Does not override reverse engineering permitted by copyright Directive 91/250/EEC [Art. 6]

18. 18 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Concerns: 1. Technical Contribution “Loose” definition of Technical Contribution [Art. 2(b)] (Too) closely linked to obviousness test? Covers inventions with a mix of technical and non- technical features? Intention is good, but does language deliver? No definition of “technical”

19. 19 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Concerns: 2a. Form of Claims Intends to prohibit Program Product Claims? See FAQs (not clear from Proposal per se) Retroactive effect? Intention unclear – no transitional provisions Many patents (will be) granted with such claims Confusing situation for 20 yrs after Dircetive Could mislead esp. SMEs

20. 20 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Concerns: 2b. Form of Claims Unfair to developers of innovative (technical) software? No protection for innovative software per se: Must rely on contributory infringement But only if supply in country where invention is finally used No infringement if innovative software is exported for final use elsewhere Contravenes TRIPS Art. 27? No restrictions on form of claim in other technology field Discrimination against this field of technology

21. 21 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Concerns: 3. Interoperability Is Art. 6 needed as well as Art. 5? Does Art. 6 go too far? Introduces harmonised experimental use exception into patent law? Does it erode patent holders rights beyond what was intended? Could it have unexpected consequences? What are the otherwise infringing acts which are excluded? What is the position if a relevant patent and copyright are in different ownership?

22. 22 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Directive Proposal Conclusions – Industry View Welcomes the Commission’s initiative Supports the general principles and aims Patents available for CIIs that are new, non-obvious and capable of industrial application Patents not available for “pure” business methods lacking a technical contribution Enhanced legal certainty Avoiding sudden change in the law Technical Contribution test needs clarification Against exclusion of program product claims Impact of interoperability provisions Art. 6 needs to be considered more carefully

23. 23 © NOKIA Bournemouth University School of Finance & Law.PPT/09.07.02 / TJF Directive Proposal Next Steps Co-Decision Process Parliament Legal Affairs Committee Hearing October 2002 Lobbying continues Council (Member States) Transposition into National Laws Action in EPC context Amendment of Art. 52(2) not needed? Directive has no direct effect on EPO/EPC