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The European Patent Office (EPO) has recently become the focus of controversy over the issue of the patentability of computer-related inventions. Over the past year or so, the European Parliament has been the site of heated arguments, and there have been protests in the streets of Brussels in opposition to software patents. What seems clear is that the EPO is not likely anytime soon to recognize business method patents of the type now widely accepted by the U.S. Patent and Trademark Office (PTO). Most U.S. patent lawyers know that the U.S. Court of Appeals for the Federal Circuit’s decision in State Street Bank & Trust Co. v. Signature Financial Group Inc., 149 F.3d 1368 (Fed. Cir. 1998), now more than 6 years old, opened the floodgates at the PTO for the patenting of business methods and software. Many also have a general sense that the patentability standards in Europe for these types of inventions are significantly stricter than in the United States but do not have a concrete understanding of exactly what the standards are. But given that many applications drafted and filed in the United States eventually make their way to the EPO, it is prudent to draft them with at least an eye toward how they will fare there. State Street set forth the standards of U.S. patentability concisely, holding that subject matter, including software, is patentable so long as it provides “a useful, concrete and tangible result.” State Street was also the death knell of the business method exception to patentability, holding that a business method should be subject to the same legal requirements as any other process or method. Since then, the standards have remained essentially the same: A pure software invention is patentable, as is a pure business method. And while simply automating a known business practice is not patentable, the invention may lie in the business practice itself, and need not be in its technical implementation. An illustrative and well-known example of the standard in the United States is the patent awarded to Amazon.com on its “one click” shopping model. The alleged invention was certainly not in the programming, nor in building a Web site that could carry out the method. Rather, the alleged invention was in the business practice itself. And although the Federal Circuit ultimately found that there were substantial questions with respect to the patent’s validity, that was not because it found the subject matter to be ineligible for patent protection, but rather because it found that the business practice had been done before. EPO’S PATENTABILITY STANDARDS ARE STRICTER The standard for patent-eligible subject matter in Europe is substantially more stringent. The EPO opened its doors for business in 1978, and since then has developed its own standards for patenting business methods and software. Unknown to many American patent lawyers, the EPO is not a European Union institution and is therefore not governed by European Union law or under any parliamentarian control. Instead, the EPO is governed by its own legislative body, the Administrative Council, which is made up of delegations from the 28 member states, and sets its own standards for patentability. According to the standing practice of the EPO, in order to obtain a patent on a software program or a computer-implemented business method, the applicant must demonstrate a “potential further technical effect.” A potential further technical effect is said to be a technical effect that goes beyond the usual technical effects, such as displacing electrical charges in a computer, which are common to all computer programs. Thus, it is necessary for the invention to lie in technology, as opposed to, for example, the business practice. An applicant in the EPO may demonstrate the potential further technical effect in several ways: Technical background considerations. Experience has shown that the technical background considerations are the most powerful key to software or business method patents in Europe. Such considerations need only to be present in the background (i.e., the specification) of the patent and need not necessarily be limitations in the claims itself. Thus, they may be stressed without affecting the patent’s scope. By way of example, if the invention is a business method to be carried out on computer networks, technical background considerations can be shown to be present in the constraints of the network environment that must be taken into account to implement the method. A technical object to be achieved. A software program achieves a technical object if it is intended to improve the performance of the device or a system as expressed in measurable physical entities (power consumption, time necessary to carry out a process, signal-to-noise ratio, etc.). A direct technical effect. A direct technical effect is achieved when the software program in question actually modifies the behavior of a physical entity. This is the case, for example, in the fields of robotics, telecommunication devices and image processing, to name a few. Against all that background, one can readily see that the invention to be patented must be much more about the technology to pass muster in the EPO. This means that some things that are inventions here are simply not inventions there. Consider the example of a novel way of conducting an online auction, which may well be patentable in the United States. If there are no technical background considerations that are relevant to implementing the new auctioning technique on a computer network, then it simply may not be patentable subject matter in the eyes of the EPO, and it may well be a waste of time and money to seek patent protection for it in Europe. STRESSING AN INVENTION’S TECHNICAL ASPECTS IS CRUCIAL Now, in so many cases, inventions are not purely about the business practice, but instead are about the practice and the computer and networking technologies that are used to implement it. In these cases, it is certainly best to discuss and stress the technical aspects as much as possible. Patent attorneys can explain how the combination of the business method and the computer system result in synergetic effects that go beyond a simple aggregation of these aspects. In working with the inventors and drafting the application, they can ask what limitations of existing technology presented barriers to implementing the practice and how those barriers were overcome. The answers to these important questions may provide insights into what technical features may be highlighted to increase the chances of success at the EPO. Attorneys should be sure to put the technology into both the specification and the claims. The EPO’s starting point in examining an application is always the claims, and, in fact, the EPO will often refuse even to conduct a prior art search if it finds that the claims as filed lack a sufficient level of technical contribution. A skilled U.S. patent attorney will often draft business method claims that cover the practice as such, separate and apart from its technical implementation, to ensure his or her client the broadest coverage. But the attorney should also be sure to “tech-up” those broad claims when instructing European associates to file the application. This practice will avoid receiving a search refusal from the EPO, a result that is not only frustrating but costly, as an unwillingness to refund filing fees is one thing that the EPO and PTO have in common. ARE THERE CHANGES ON THE HORIZON FOR THE EPO? The discussion above focuses on the current examination practices at the EPO. While plainly stricter than the PTO’s standards, the EPO has nonetheless been criticized as being too liberal by numerous European nongovernmental organizations and political parties. In response to these criticisms, the European Commission has undertaken to draft a proposal for a European directive on the patentability of computer-implemented inventions. This initiative led to a wild battle in the European Parliament in September 2003, ending with more than 100 amendments introduced by lawmakers, all of which seek to reduce the potential of patenting software-related inventions. On the other hand, in May of this year, the European Council (comprising members of the European Commission and representatives of the national European governments, but no European parliamentarians) put forward an amended proposal for the directive that disregards virtually all input of the European Parliament and would open the way to a more liberal, more U.S.-like software patenting practice. The debate is actually quite heated, with people marching against software patents in the streets of Brussels, and members of the open-source movement and the Green Party locking themselves up in chains at the doors of the EPO. The outcome of the struggle is unclear, but it is extremely unlikely that pure business methods will ever be patentable in Europe. Most probably, the European status quo will be maintained, and both U.S. and European patent lawyers will need to continue to advise clients with the double standard in mind. Michael P. Sandonato ([email protected]) is a partner at New York s Fitzpatrick, Cella, Harper & Scinto, and Christian Rupp ([email protected]) is a partner at Mitscherlich & Partner in Munich, Germany. Both firms specialize in intellectual property matters. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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