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- A Patent provides a 20-year monopoly over the product or process.
- There is an exclusion for "schemes, rules or methods of doing business".
- Software as such is not patentable; it is protected by copyright laws.
- But if Software produces a technical effect i.e. it does something, it may be patentable.
Halifax
Recently Halifax have applied for a Patent for its new Internet Banking Product, Intelligent Finance. The application has attracted great legal interest because if it is successful it will take the UK into new territory. Processing the application is expected to take up to 18 months.
The application appears to relate to a method of doing business and therefore offends the exclusion contained in the European Patent Convention and the UK's Patent Act 1977 for "schemes, rules or methods of doing business". Because of this exclusion, so far UK courts have not been willing to enforce patents that cover business methods
United States of America
Amazon.Com
In 1997 Amazon applied for a patent for its "1 click" checkout. After a wait of approximately 2 years they obtained the patent and have already successfully enforced it in a US court. Amazon brought proceedings against its main competitor Barnes & Noble who were using a similar express checkout system. A Judge in Seattle issued an injunction forcing Barnes & Noble to remove the express checkout system from its web site
The Amazon case illustrates the types of patents currently being issued by the US Patent Office system in relation to methods of doing business (probably not patentable in EU0. Until fairly recently companies were content to rely upon copyright laws to protect their software products.
Indeed similar to the position in Europe it was generally considered that software as such could not be patentable. But thanks to new status given to software applications there has been massive increase in patent applications in the US from a reported 1,500 in 1992 to around 20,000 today. Recently issued patents include ones for secure real-time payment methods and electronic shopping trolleys
Priceline.Com
Priceline.com introduced reverse action auctions where buyers suggest a price which sellers can accept or reject. The consumer puts in a bid for a particular brand name item indicating a price they are willing to pay. Priceline then tries to find a retailer who is prepared to sell it at that price. The response of this system has been a phenomenal success and Priceline has become a household name in the US. Priceline.com have recently issued proceedings against Microsoft alleging an infringement of its patent for its reverse action web site
Hinder Innovation
The approach of the US Patent Office has been criticised on the basis that the issue of patents for such applications may hinder innovation and the development of the World Wide Web.
Following these criticisms the US Patent Office has announced new patenting laws to better define how software patents differ from hardware patents. It also plans to implement a secondary examination procedure for software. It remains to be seen whether these steps will have the desired effect.
EU Competing
There are moves to bring the EU in line with the position under US law. The EC is concerned that if the US continues to issues patents for business methods this will put the EU businesses at a disadvantage because they will be faced with the prospect of paying royalties to US companies that hold patents for protection of software
Proposals for a new directive include the removal of the exclusion on computer programs currently contained in Article 52 of the European Patent Convention (to remove confusion and to make it clear that there is no complete bar on applications for software related products) and to widen the scope of patent protection to cover business methods to bring the UK and Europe in line with the US.
If you would like more information please contact an experienced member of our team profiled on the right of this web page, telephone 0800 052 1541 or email business@wilson-nesbitt.com.
