Which countries allow software patents?

A picture fo the Chinese, European Union and US flags

Patentability of software is a tricky subject as the variations from country to country are less than clear. A common misconception is that it’s easier to patent in the US than in Europe – this is simply not the case; a major contradiction being the landmark Alice. Following the decision in Alice, most patent applications for software have been declared invalid due to unpatentability. There have also been significant developments further afield.

China has relaxed software patent guidelines

When a patent is filed in China it must go through the State Intellectual Property Office (SIPO). This has traditionally been a difficult process but this trend – especially after the landmark Alice decision in the US – appears to be declining, as more software patents are being granted in the China region.

Previously, under Chinese patent law, software inventions had to fulfil technicality requirements under SIPO. The guidelines laid out by SIPO included a three-part test:

  1. Does the invention solve a technical problem?
  2. Does the invention use a technical means following the laws of nature?
  3. Does the invention achieve a technical effect in conformity with laws of nature?

Although these guidelines refer to software used in industrial processes, the guidelines when applied to business methods such as banking or insurance were limited.

On April 1st, SIPO changed their software patent guidelines. Previously it was difficult to patent software without a hardware element in this region however with the revised examination guidelines, it is likely that the new place to file for software patents will be China rather than the US.

A graph demonstrating the number of patents from China, the US and the EUSoftware patents published since SIPO guidelines change (Source: PatSnap)

The revised guidelines include patent eligibility for computer software and business method patents. Huang Xiaolin from ZY Partners, a Beijing based law firm, has provided an English outline of the revised guidelines.

According to Huang, the new guidelines explain that, “a computer program per se is different from inventions relating to a computer program. The former belongs to rules and methods for mental activities and is not patentable while the latter is patentable. A software may be drafted in a form of ‘medium plus computer program process’ or as an apparatus claim including a component implemented by a computer program.”

 Under the new guidelines, examiners will now consider experimental data submitted after the date of filing.

Software claims such as a “a computer program product”, “a machine-readable medium” and “an apparatus comprising a processor configured to execute instructions on a computer readable medium to perform steps” shall become patent eligible.

Any claims involving business methods will not be excluded from protection if they include technical features, whereas previously they were not patent eligible.

This is a stark contrast to patent laws in the US. While previously it was much easier to patent software in the US, post Alice, this has proven difficult with most software inventions being rejected under “abstract subject matter”.

China on the other hand has relaxed these guidelines and it is likely that with the rise of the digital age with artificial intelligence and the internet of things, there will be a vast movement of software patents being granted in that region.

End of software patents in the US?

In the US, patent eligible subject matter is defined as “any new and useful process, machine, manufacture or composition of that matter”. Inventors cannot patent laws of nature, natural phenomena or abstract ideas. Typically, software has been denied patentability because they tend to contain abstract ideas.

Typically, software has been denied patentability because they tend to contain abstract ideas

One of the key cases for software patents in the USA is Alice v CLS Bank in which Alice Corporation accused CLS Bank of infringing four patents relating to computer programs for financial trading systems.

To determine whether the software developed by Alice was patent eligible, the Supreme Court had to decide whether it contained an abstract idea and, if it did, assess whether the elements individually or in combination transform the claim into a patent eligible invention.

To do this, the Supreme Court created a two-step process: 

  1. How abstract
    To be eligible, the Supreme Court had to decide whether the software contained an abstract idea and, if it did, assess whether the elements individually or in combination transform the claim into a patent eligible invention.
  2. How inventive
    The second step is determining whether the patent involves an inventive concept. This must be present to ensure that the patent adds something significantly more than just an abstract idea.

The issue with this process is that there have been no clear guidelines from the US Supreme Court to determine what constitutes an abstract idea or what an inventive concept involves, leading to a lot of difficulty in the lower courts.

Since the Alice case in 2014 there has been a significant drop in application for software or computer programs. This could be due to the increasing difficulty in filing software patents.

Are inventors continuing to creative innovative software and just not patenting it? Or is the inability to patent throttling the software industry?

Is the inability to patent throttling the software industry?

A graph showing the number of patents over timePatent application trend by year (Source: PatSnap)

There have been several cases since Alice which elaborate on the issue of software and patent eligibility.In the case of OIP Technologies v Amazon, the patent referred to a “method of pricing a product for sale”; this included:

  • Generating stats concerning prices
  • Estimating likely outcomes for potential prices
  • Selecting the price based on the estimated outcome

The patent in this case was held invalid because it was not patent eligible. After describing the concept broadly, the court reasoned that the process is “merely conventional computer activities or routing gathering steps”.

Therefore, when writing a patent application for a computer program, do not describe your patents broadly and be as specific as you can to avoid risking invalidation.

The inventive step is also a concern. Even if the patent contains an abstract idea, it must be able to show an inventive step. This was discussed in Intellectual Ventures v Capital One in which the court said, “to simply apply an abstract idea to a generic computer, doesn’t transform the abstract idea into patentable subject matter.”

While it would appear patenting software is becoming a far-fetched idea, in one rare instance, a patent was granted: the case of DDR Holdings v Hotels.com.

In this case, a third-party merchant could advertise on DDR Holding’s website and visitors who clicked on the advert would be taken to the third-party merchant’s website.

The patent in this case was directed to a system and method which resolved this issue by creating a new combined website displaying the merchant’s product information but also kept the host’s website look and feel the same. This gave the visitors the impression that they were viewing pages served by the host.

The Federal Circuit held that this was an inventive concept as it resolved an internet-centric problem and therefore was patent eligible. They created a specific way to automate composite web creation by incorporating content from multiple sources to solve a problem faced by websites.

As we can gather from these cases, it is crucial to show an inventive step even when demonstrating an abstract idea.

Will Europe provide any clarity on software patents?

An image of software code

Only certain kinds of software can be patented in Europe and these must meet certain requirements.

The European Patent Convention (EPC) has similar requirements to the USPTO: the subject matter must be novel, include an inventive step and have an industrial application. The subject matter must have either a technical character or involve a technical teaching. This could be an instruction addressed to a technically skilled person as to how to solve a technical problem using technical means.

Under the EPC, a computer program claimed as such is not a patentable invention. Patents are not granted merely for program listings; these are protected by copyright.

For a patent to be granted for a computer implemented invention, a technical problem must be solved in a novel and non-obvious manner. There are two landmark cases for the patentability of computer programs in Europe: Comvik (T 641/00) and Hitachi (T 258/03).

In Comvik, a European patent relating to a digital mobile telephone system using a single-user multi-identity IC Card was granted. The patent was opposed by Deutsche Telekom Mobilnet due to a lack of an inventive step; Comvik appealed the decision.

The Technical Board of Appeal of the EPO based its reasoning on the “problem solution approach” in which an invention is to be understood as a solution to a technical problem
The steps are:

  • Identification of technical field of invention
  • Identification of the closest prior art in the field
  • Identification of the technical problem which can be regarded as solved in relation to this closest prior art
  • An assessment of whether the technical feature alone or together, from the solution claimed could be derived by the skilled person in that field in an obvious manner from the state of the art

If no technical problem can be derived from the application, then the invention is not patentable.

In T 1227/05 (Circuit simulation I/ Infineon Technologies) however, the performance of a circuit under the influence of a “1/f noise ” was considered to include a technical and inventive step.

In this case, it was held by the board that specific technical applications of computer implemented simulation methods are themselves to be regarded as modern technical methods. Circuit simulations possess the required technical character because they form an essential part of the fabrication process; therefore, it has a technical effect.

Although it can be difficult to patent software under the EPC, it isn’t impossible

These cases show that although it can be difficult to patent software under the EPC, it isn’t impossible, providing the claim can be demonstrated as inventive and containing a technical and inventive step.

How does the UK deal with the patent eligibility issue?

In the UK, there are various judgements relating to patent claims for computer software. Section 1 of the UK Patent Act 1977 is similar to Article 52 of the EPC which provides that a subject matter is patentable if it is a patentable invention, if it is novel, if there is an inventive step and if it is an industrial application.

 Computer software is patentable provided it passes the four step Aerotel/Macrossan test:

  • Properly construe the claim
  • Identify the actual contribution
  • Ask whether it falls solely within the excluded subject matter
  • Check whether the actual or alleged contribution is technical in nature.

If the application is deemed un-patentable under the Aerotel/Macrossan test, the Symbian judgement can be used. This was a case in which the patent was initially rejected by the IPO but was later granted by the EPO on appeal.

In this case, the question was whether a program which had made the computer itself work better could be patented.

This case was significant as the invention required no new hardware and did not fix any perceived shortcoming in the computer itself, it was purely concerned with the processing of data.

Compared to China’s guidelines, European patents can be granted for purely software inventions whereas in China they require a hardware element.

Although it was considered easier to patent software in the US, cases since the Alice ruling beg to differ. It is likely that over the next few years, many of the software companies in the US may try to apply for patents in Europe or China instead thereby increasing the number of applications in those regions. 

Software companies in the US may try to apply for patents in Europe or China

Summary

  • China have relaxed guidelines for software patents
  • Software patents have declined since Alice
  • Europe has created patent eligibility guidelines for software patents through Comvik
  • The UK is trying to harmonise patent eligibility guidelines with Europe
  • It is becoming harder to patent software in US as compared to Europe and China
  • Software patents in China are likely to increase

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