The Patentability of Computer Programs

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Abstract:

A high patent activity is generally considered a sign of economic health. Governments tend to promote patents: patent application must be made easy, and public patent awareness must grow. Indeed, patents can provide economic incentives to invest in inventive activities. And patents can be useful because patents are only granted if the patented inventions are disclosed. Disclosed inventions may serve as a source of inspiration and information for subsequent inventors working on new inventions.

However, patents can also be harmful. Patents create exclusive rights that may cause economic monopolies with negative effects for potential competitors, and for society as a whole. Ideally, a patent system should maximise the net positive effects. It is important to distinguish this objective from a moral view of property rights. While patents are a form of intellectual “property”, it is generally accepted that the mere efforts of an inventor do not by themselves justify a “natural” right in their inventions. Patent law essentially is economic law, and its merits must be judged primarily in economical terms.

As new technologies and new types of inventions emerge, the question must be asked again whether patent protection is an appropriate and efficient system. The present study attempts to answer this question in respect of computer program related inventions. Is there a fundamental difference between traditional nuts-and-bolts technology and software technology? Patents are granted for inventions in a wide variety of industries. Are software related inventions really different?

Should “Europe” act proactively, and follow the American example? The United States’ tremendous success in the software business, and the high patenting activity in this area in the U.S. appear to suggest a positive correlation between patentability and industry success. In reality, however, patenting activity might be caused by innovative activity, rather than the reverse.

On the other hand, there are serious concerns that the negative effects of these new types of patents may be stronger than those of “traditional” patents. Some even claim that software patents may have no less than a disastrous paralysing effect on the software industry. Small and Medium Sized Enterprises, who are sometimes supposed to benefit most from patents, may actually suffer worst from software patents. Software is increasingly provided on a non-commercial basis as “Open Source Software”. Generally, Open Source Software is considered very valuable for most players in the IT industry. But there are fears that Open Source Software developments may be frustrated by unjust patent claims.

The debate over whether the benefits from patents really offset the disadvantages is not new. Patents on software related inventions have been granted in one form or another for some decades now, with certain restrictions. The present debate focuses on the question whether these restrictions are still valid.

Several studies have been undertaken in recent times in an attempt to answer this question.<fn>These studies will be further introduced in the “Observations and Projections” chapter. For reference information see Annex 8.2.</fn> There is a considerable degree of consensus that the rules that currently exist in Europe provide insufficient legal security, and need to be amended for clarification. On the other hand, it is highly controversial whether there is any reason for a substantial change of the law.

None of these studies have really arrived at concrete answers to this question. There are no factual data providing solid proof that software patents provide any benefits to society; neither is there firm evidence of the opposite. Extensive consultation exercises conducted as part of most of those studies have revealed widely varying opinions from experts and interested parties on what might happen and on what one would like to happen. The constant factor in all these consultations appears to be the diversity of the software industry, the diversity of the subject matter “software” itself, and the diversity of the opinions on patentability in this environment. These observations constitute an important starting point for the present study. We will in particular investigate why the various studies in the recent past did not arrive at consistent conclusions, in order to come to a synthesis that will help the European Parliament to arrive at an informed opinion.

In the next chapter of this study (Chapter 3) we will sketch the existing legal framework, both at the European and the international level. In Chapter 4 we will critically assess the patent system; what are the actual advantages and disadvantages of patent systems in general, and applied to computer software and business methods in particular? In Chapter 5 we will comment upon the proposal of a European Software Directive in the light of the legal and economic framework presented in the previous chapters. In Chapter 6 we will discuss possible improvements of the patent system. Finally, in Chapter 7 we will summarise our conclusions and recommendations.