+Software Software is "a set ofstatements or instructions tobe used directly orindirectly in a computer tobring about a certainresult". These instructions are setout in source code, a set ofin logical human-readableinstructions coded intocomputer language. Object code is the result ofa compilation of the sourcecode into machinereadable instructions.
+International software protection Art 4WIPO Copyright Treaty (WCT): Computerprograms are protected as literary works withinthe meaning of Article 2 of the Berne Convention.Such protection applies to computer programs,whatever may be the mode or form of theirexpression. Art 10 TRIPS: 1. Computer programs, whether insource or object code, shall be protected asliterary works under the Berne Convention (1971).
+Software protection in Europe Software Copyright Directive 91/250/EEC requires copyrightlaw to recognise software as a literary work. UK LAW: 3.-(1) "literary work" means any work, other than adramatic or musical work, which is written, spoken or sung,and accordingly includes- (a) a table or compilation otherthan a database, (b) a computer program; and (c)preparatory design material for a computer program; and(d) a database. Art 52(2)(c) of the European Patent Convention (EPC) statesthat “programs for computers”“as such” are not inventions,and therefore are not patentable.
+Copyright vs PatentsEXPRESSION IDEALITERAL NON-LITERALSYMBOLIC FUNCTIONAL
+UK: Navitaire Inc v easyJet AirlineCo  EWHC 1725 (Ch).“Copyright protection for computer softwareis a given,but I do not feel that the courtsshould be astute to extend that protectioninto a region where only the functionaleffects of a program are in issue.There is arespectable case for saying that copyright isnot,in general,concerned with functionaleffects, and there is some advantage in abright line rule protecting only the claimantsembodiment of the function in software andnot some superset of that software.”
+Trouble with copyright: USA The idea-expression dichotomy is very well used in theUnited States, this has had interesting effects forsoftware protection. “look and feel” cases, Apple v. Microsoft 821 F.Supp 616(1993). Whelan Associates Inc v Jaslow Dental Laboratory Inc FSR 1 gave a test for the idea-expressiondichotomy in software. Computer Associates v Altai 982 F 2d 693 (1992) –Abstraction, Filtration, Comparison. Aharonian v Gonzales, N.D. Cal., No. C04-5190, Jan. 3,2006) tried to get software declared as “not subject tocopyright protection”, but failed.
+Abstraction, Filtration,Comparison test Stage 1 - Abstraction - You dissect the code andisolate each level of abstraction. Stage 2 - Filtration - Examine the structuredcomponents at each level of abstraction todetermine whether their inclusion at that level was‘idea’ or was dictated by efficiency, required byexternal factors or was taken from the publicdomain (and is therefore unprotectable). Stage 3 - Comparison - What remains followingfiltration is a core of protected expression.Thismust be compared for substantial similarity.
The road towards patentability:USA The Abstraction-Filtration-Comparison test has been afailure. Owners begin to pursue othertypes of protection. Diamond v Diehr, 450 U.S. 175,185 (1981) "everything underthe sun that is made by man." In re Alappat, 33 F. 3d 1526(1994), “useful, concrete,andtangible result.“ State Street Bank v SignatureFinancial Group (1998) 47USPQ2d 1596.
+First came the business methods When talking about business methods inpatentable terms, we are talking about flowcharts. A business method is then akin to softwarealgorithms USPTO Class 705: Data processing: financial,business practice, management, or cost/pricedetermination
+State Street, business methods andsoftware patents State Street decision (1998). Any invention is patentable if it “it produces a useful,concrete and tangible result.” “…the transformation of data, representing discretedollar amounts, by a machine through a series ofmathematical calculations into a final share price,constitutes a practical application of a mathematicalalgorithm, formula, or calculation, because it producesa useful, concrete and tangible result’”. The invention in State Street Bank was only possiblebecause of computerisation – it wouldn’t work without aprogram.
+Amazon’s One Click USPTO issued US patent 5960411 for “Method andsystem for placing a purchase order via acommunications network” to Amazon.com inSeptember 1999. In 2006, the USPTO ordered a reexamination of the"One-Click" patent based on prior art. Several claims in the patent were rejected. In Europe, a patent application on the 1-Clickordering was filed with the European Patent Office,but was never granted.
+Typical software patent claim “A method to be performed by a computer for operating amatching service, comprising:generating, from empirical data, a number of factorscorresponding to a like number of functions of one or morevariables relevant to relationship satisfaction; approximatingthe satisfaction that a user of the matching service has in therelationships that the user forms with others; identifying, withthe computer, candidates for a relationship with the user bydetermining an association between the approximatedsatisfaction and one or more of the factors; andapproximating the satisfaction that the user will have in arelationship with a particular candidate.” U.S. Patent6735568
+Software patentability aroundthe world Art. 27.1 TRIPS Agreement: “patents shall beavailable for any inventions,whether products orprocesses,in all fields of technology”. All major (in terms of volume) patent offices acceptsoftware patentability in one shape or another (US,Europe, Australia, Japan). Reluctance to apply indiscriminate patentability invarious regions.
+Patentability in EuropeStrict reading of the law leads one tobelieve that software “as such” is notpatentable.European Patent Office (EPO) Board ofAppeals interpreted “as such” very broadlyin several cases.20,000 software patents approved by theEPO, 6,000 applications per year in UK.There is software patentability in Europe.
+Technical effectCase law has decreed that only software thathas a “technical effect” can be patented.The term is not in the legislation, andtherefore there is no clear definition oftechnical effect.Lack of consistency in its application.Merrill Lynch  RPC 561: "There must...be some technical advance on the prior art inthe form of a new result.“
Halliburton v Smith International Two patents involved, onedrill bit and software todesign drill bits. In this ruling, there seems tobe a clear technical effect,the software can only beused for specific purpose. The patent was struck downbecause it had inadequatedisclosure (upheld afterappeal). Could this be the strategy toattack software patents inthe future?
The little man test (CFPH LLCApplication)“The question to ask shouldbe: is it (the artefact orprocess) new and non-obvious merely becausethere is a computerprogram? Or would it stillbe new and non-obviousin principle even if thesame decisions andcommands couldsomehow be taken andissued by a little man at acontrol panel, operatingunder the same rules? Forif the answer to the latterquestion is Yes itbecomes apparent thatthe computer program ismerely a tool, and theinvention is not aboutcomputer programmingat all.”
+Aerotel v Telco “[...] despite the fact that such patents have been granted for sometime in the US, it is far from certain that they have been what SellarsandYeatman would have called a "Good Thing." The patent system isthere to provide a research and investment incentive but it has a price.That price (what economists call "transaction costs") is paid in a hostof ways: the costs of patenting, the impediment to competition, thecompliance cost of ensuring non-infringement, the cost of uncertainty,litigation costs and so on.There is, so far as we know, no really hardempirical data showing that the liberalisation of what is patentable inthe USA has resulted in a greater rate of innovation or investment inthe excluded categories. Innovation in computer programs, forinstance, proceeded at an immense speed for years before anyonethought of granting patents for them as such.There is evidence, in theshape of the mass of US litigation about the excluded categories, thatthey have produced much uncertainty. If the encouragement ofpatenting and of patent litigation as industries in themselves were apurpose of the patent system, then the case for construing thecategories narrowly (and indeed for removing them) is made out. Butnot otherwise.”
+Astron Clinica & Others v TheComptroller General of Patents "... I do not detect anything in the reasoning of theCourt of Appeal which suggests that all computerprograms are necessarily excluded. I haveidentified the key aspects of the decision whichrelate to computer related inventions and theyundoubtedly criticise the reasoning of the EPOBoard of Appeal in each of the "trio" of cases. Butthe criticism is directed at the "any hardware willdo" approach and the return to form oversubstance with the drawing of a distinctionbetween a program as a set of instructions and aprogram on a carrier."
+Symbian Ltd v ComptrollerGeneral Of Patents "So is this invention no more than the running of theprogram? Having regard to the earlier authorities the answerhas to be that it depends on what the program does and notmerely how it does it.The mere fact that it involves the use ofa computer program does not exclude it. [...] It is simplyinaccurate to label all programs within the computer assoftware and on that basis to regard them as of equalimportance in relation to its functionality. [...] I think that theHearing Officer took too narrow a view of the technical effectof the invention and was wrong to exclude it frompatentability on the basis that it amounted to no more than acomputer program.The appeal will therefore be allowed."
+Enlarged EPO Board of appeals Programs for computers, G 0003/08, 12 May 2010. “… it seems to this Board, although it may be saidthat all computer programming involves technicalconsiderations since it is concerned with defininga method which can be carried out by a machine,that in itself is not enough to demonstrate that theprogram which results from the programming hastechnical character; the programmer must havehad technical considerations beyond "merely"finding a computer algorithm to carry out someprocedure.” para 13.5.
+Bilski patent application08/833,892 Patent for a method of hedging risks in commoditiestrading. Claims: (1) initiating a series of sales or options transactions between a brokerand purchaser-users by which the purchaser-users buy the commodityat a first fixed rate based on historical price levels; (2) identifying producer-sellers of the commodity; and (3) initiating a series of sales or options transactions between the brokerand producer-sellers, at a second fixed rate, such that the purchasers’and sellers’ respective risk positions balance out.
+Bilski v Kappos 561 U.S. _ (2010) Patent application for a method of hedging risks incommodities trading in energy markets (U.S. PatApplication 08/833,892). Rejected by examiner, appealed, lost. Appealed to Court of Appeals of the FederalCircuit (CAFC), rejected again.Taken to USSupreme Court. Supreme Court produced a bit of a mixed bag.
+Result of Bilski Business method patents are still accepted, butcourt struck down the State Street “useful,concreteand tangible result” test. The Federal Circuit decision in Bilski changes thelaw by requiring a process either to be tied to amachine or to transform articles in order to beeligible for patenting. SCOTUS rejected this machine-or-transformationtest as a sole test of patentability. Regarding Bilski’s application, the court decidedthat was an unpatentable abstract idea. Bar hasbeen set higher for patentability.
+Mayo v. Prometheus Laboratories In this unanimous 2012 decision, the SCOTUSdetermined that a medical testing patent wasunpatentable as nonstatutory subject matter underSection 101 of the Patent Act “In determining the eligibility of respondentsclaimed process for patent protection under § 101,their claims must be considered as a whole. It isinappropriate to dissect the claims into old andnew elements and then to ignore the presence ofthe old elements in the analysis” The decision opens up more challenges to patents.
+The cost of trolls A 2011 study from Boston University calculated thatpatent trolls had cost the US economy $500 billionUSD since 1990. A database of 1,630 patent troll lawsuits found atotal of 4,114 defendants pairs, with a mean loss of$122 million USD per case!
+Patent trolls Defined as a company that produces no code, onlyhas patent portfolio. Large companies can use patents defensivelyagainst a smaller company who produces software,since it is likely that the defensive portfolio maycontain some patent covering a part of the smallercompany’s software. Patent Trolls are immune to this, since mostproduce no software, and therefore a defensivepatent portfolio is less effective against them.