Patenting Software and Methods of Doing Business


No area of patent law today is as unclear as whether and to what extent software
implemented inventions are patentable. This is especially true in the Us, in the EPO and in Israel and is of special interest to software developers.

In the US, the law is that software based methods (including business methods) are patentable,
if they meet rather stringent requirements.
In the EPO, the European Patent convention specifically bars patents for software and for business
methods. Nevertheless, the present state of the law, although tentative, appears to lead to a
similar result, namely that that if the claim as a whole has a “technical” effect, software
based methods are patentable (in the EPO) and software that causes a transformation of a tangible
object or is tied to a particular apparatus (in the US) is patentable.
These two approaches sometimes lead to different results because of differing definition and
because many cases in the EPO tend to consider the non-technical limitations as though they were
prior art.
In Israel, due to the small number of court cases and decisions of the registrar, the state of the
law is more unclear and contradictory decisions have lead to uncertainty as to what is patentable.
Moreover, the standards for patentability are very tentative and are currently being reconsidered
in all three jurisdictions.

In the US, the landmark case of In re Bilski, a classic business method patent application, was
decided by the Circuit Court for the Federal District (CAFC) in October
2008 (by a decision of the entire panel of the CAFC). This decision severely limited the scope not
only of business method patents but also of patents for other methods dealing with intangibles,
where the scope of patentable subject matter is in question including the software, medical,
diagnostic and genetic fields. The USPTO issued extremely limiting guidelines in the wake of In re
Bilski. Bilski confirmed the transformation or particular apparatus test for patentability of all
method claims (including software and business claims).

With the acceptance of the case by the US Supreme Court and possibly under the influence of the
new commissioner appointed by President Obama, new tentative and somewhat more reasonable
guidelines have now been issued. This case, which will be heard before the court in early
November, is considered to be very important. In fact tens of briefs (both for and against) have
been filed by parties other than the attorneys for Bilski and the patent office.
It is hoped that the Supreme Court decision will result in some clarification of to what extent
business method patents and hopefully other patents are allowable and 
also give guidance on other areas where there is ferment over the patentable subject matter question. Unfortunately, the court, if it wishes, can avoid all of the difficult issues involved and can decide the case on narrow grounds, with little guidance for either the patent office or the lower courts.
In the EPO, the law at present is that claims including software methods having a technical effect
are patentable. In the EPO, which has a two tier appeal system, different appeal boards have come
to different conclusions regarding the patentability of various software implemented patents. As a
result, the president of the EPO has referred this entire question of the extent to which
software based patents can be granted to the Enlarged Board of Appeals for a decision and
clarification of the extent of protection available (if any). Unfortunately, the appeal process in
the Enlarged Board is usually quite slow and it would be surprising if a resolution is reached in
the short term. Furthermore, it is impossible to predict the outcome of this process.
The situation in Europe is complicated by the fact that the judicial systems of each member decide
patentability issues and the EPO is not bound by these decisions. All jurisdictions are generally
bound by the European patent convention, but one can expect interpretations to vary with respect
to such a complex issue. The validity of patents in each country is bound by local judicial
decisions. To the extent that these differ from the EPO guidelines, the result might be that a
patent secured under the EPO guidelines would not be valid in some countries or it might be
impossible to secure protection in the EPO that would be valid in at least some countries.
In Israel, there is no clear general policy pertaining to the registration of computer software
patents. The lack of policy is, inter alia, an outcome of the limited number of cases which have
been reviewed by the Israeli courts,
none by the Israeli Supreme court.
General guidelines may be found in the landmark judgment App. 23/94 United Technologies Corp. which
was decided more than a decade ago by the district court. In this judgment, Judge Brenner held
that the invention under discussion, software for improving helicopters’ fuel injection system,
should be granted with a patent as it controls hardware that induces a tangible effect. In his
analysis, Judge Brenner argued that the fact that part of the invention is a software process does
not exclude it from patentability. It should be noted that though this judgment clarifies the
patentability of an invention combining software process and designated hardware, such as avionic
system, it is silent about the patentability of an invention combining software process and
general purpose hardware, such as a server, a processor, or a personal computer.
The lack of a clear policy is reflected by inconsistencies in decisions made by the ILPTO. During
the last few years, the Israeli registrar has published a number of decisions in which software
based inventions were reviewed according to different rules and/or principles. Moreover, leading
patent attorneys in the field find it hard to estimate which subject matter will be accepted by the
examiners of the ILPTO and which will not. Similar to the trends in the USPTO and the EPO, the
ILPTO currently is acting to scrutinize the issue. On October 15, 2009, the registrar held a
meeting at the ILPTO with representatives of the Israeli patent attorneys association, the Israeli
branch of the AIPPI organization and the Israeli bar association, including Roy Melzer of Ehrlich &
Fenster, to discuss how software related patents should be examined. As the ILPTO has recently
been appointed as an international searching and preliminary examining authority under the PCT,
it seems safe to assume that the ILPTO will take efforts to have its procedures correspond with
those in Europe and the USA and develop a clearer policy regarding software

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