Wednesday, May 19, 2010

German high court declares all software potentially patentable

In a nutshell:
  • After a landmark court ruling, the German perspective on the validity of software patents is now closer than ever to that of the US.
  • Basically, Germany has now had its own Bilski case -- with the worst possible outcome for the opponents of software patents.
  • Recently, the Enlarged Board of Appeal of the European Patent Office upheld that approach to software patents as well, effectively accepting that a computer program stored on a medium must be patentable in principle.
  • Defense strategies such as the Defensive Patent License are needed now more than ever.

In detail:

Last month I reported on a ruling by the Federal Court of Justice of Germany that upheld one of Microsoft's FAT patents. I thought that the publication of the detailed decision would provide answers as to whether the largest EU member state has now effectively declared software patentable without any meaningful limits. Today it turned out that this has indeed happened but in a different case (related to a Siemens patent).

In a ruling of April 22, whose details have now been published (original document in German or EndSoftPatents page with links to automated translations), the highest German appeals court in matters of civil and criminal law overruled the country's highest patent-specialized court and decided that a client-server software for the automatic generation of structured documents (such as XML or HTML) is an example of a patentable software invention. The case is remanded to the Federal Patent Court, which will now have to uphold the patent unless some other reason for its invalidity (such as prior art) is found.

This ruling has very general implications and ramifications. It's not just about that one case. This decision has the effect that in Germany, a country in which software patents were previously only considered valid under relatively strict criteria, all software ideas are now potentially patentable as long as they are innovative from a purely formal point of view, meaning they're at least marginally different from how a technical problem was solved before. There are many such patents that the European Patent Office and national patent offices have granted, and those are now more enforceable than ever.

This could result in a significant increase in litigious activity.

The criteria for patentability

Substantive patent law (the rules for what is patentable) is a very specialized field. There's a number of criteria that patent offices and courts apply to distinguish between valid and invalid patents. In Europe and particularly in Germany, software patents have so far had to solve a technical problem with technical means.

The strictest one of those principles, which was indeed applied in some past rulings by the Federal Court of Justice, required a patented invention to put "controllable forces of nature" to use to achieve a predictable effect. Software all by itself can't do that, so that principle only allowed software to be part of a traditional technical invention.

By contrast, the new ruling of that court on the document generation program now sets the bar extremely low. It now basically says that a computer is a technical device per se and software that "takes into account" the characteristics of that computer is patentable. To give some examples, if you make sure you don't allocate infinite amounts of memory (since every computer has limits in that respect), that might be enough. Or you ensure that you don't use too much bandwidth over a network.

In other words, if you do your job as a programmer right, then you create potentially patentable stuff all the time. This means an opportunity for you to obtain patents if you want to do that and can afford it, but it also means that your program could infringe dozens, hundreds or even many thousands of patents held by others.

The first part of that ruling says that a method concerning the direct interaction between the components of a data processing system (such as a client and a server that are connected to each other) is "always of a technical nature" regardless of whether the form in which the patent is filed is essentially characterized by technical instructions. This is part of the same logic, but it would take too long for purposes of this blog to explain the meaning of those terms in substantive patent law. Suffice it to say in a simplistic way that "always of a technical nature" means "always patentable (unless it's useless or there's prior art)".

The German equivalent of Bilski

Those following the Bilski case, on which the Supreme Court of the United States is expected to rule in a matter of weeks, understand the significance of such landmark cases that can set the rules for many years or even decades to come.

While the Bilski patent relates to a software-implemented business method and the German decision relates to automated document generation, either case is key in its respective jurisdiction for defining the limits of patentable subject matter in connection with software.

Some opponents of the Bilski patent believe that they can draw a line between a software-implemented business method patent and other software patents. Maybe the Supreme Court of the United States will find a way to make that distinction.

Here in Europe, the distinction exists theoretically but it doesn't work practically because it depends on how the patent applications are drafted. If I file a straightforward business method patent application in Europe, such as a patent on a method to calculate shipping costs in electronic commerce, it will usually be rejected. But once I can find any technical progress in the implementation, even if it's as insignificant as reducing the size of a data packet containing an order by a few bytes (a negligible cost in terms of bandwidth and storage capacity, especially compared to the likely value of each order), then I might get a software patent and monopolize the same concept, just by looking at the same thing from a different angle for patent purposes.

Even Amazon's famous one-click patent could be described as a "signal processing invention".

The European framework

The European Patent Convention, an international treaty that is separate from the EU (all EU member states are parties to it, but also some non-EU countries) and took effect in 1974, states that "programs for computers" are not patentable subject matter.

However, that exclusion is then restricted by the addition that it only relates to software "as such". There are different views in Europe concerning how to interpret "as such". Generally, software patent critics believe that this means software can be part of a patentable invention (such as a car brake that is computer-controlled and optimizes its efficiency) while the proponents of software patents believe that "as such" only excludes the patenting of source code but doesn't affect software patents that they describe as "technical inventions". The whole question is then: what is a technical invention?

Proponents of software patents argue that some of the functionality of a microchip can be alternatively implemented in a computer program, which is why they say it has to be patentable and if software uses the method taught by the patent, it will infringe. Most software patent critics believe that if the method can also be implemented in software (even if also in other forms), it shouldn't be patentable.

So there are really those two opposing schools of thought in Europe. Five years ago, the push for European software patents hit a snag: the European Parliament threw out a proposal that would have "codified" (turned into an EU law) the pro-software-patent position. This was a major victory for the FOSS community, whose activists were responsible for the largest part of the active resistance to that bill.

But that was in 2005. That year also brought some favorable court decisions against software patents such as in the UK.

Now 2010 looks like the year in which the proponents of software patents get their way at all levels. Recently, the Enlarged Board of Appeal of the European Patent Office decided not to intervene against its agency's practice of granting software patents, not even against the approach that anything stored on a computer-readable medium should be patentable. The EPO was jubilant. Software patent critics such as the FFII would have preferred intervention and now hope that lawmakers will take action. While I wish the FFII luck, I think the patent movement's assessment that it won't happen is quite realistic.

Defensive strategies needed now more than ever

When I first read about the upcoming Defensive Patent License, I decided that under the circumstances it was really worth taking a closer look. In my initial set of thoughts on the DPL I explained, right at the start, why I don't think the software patent problem can be solved with help from lawmakers. There is far too much support for software patents and too little resistance (in terms of economic and political power) to make it happen. That's why such initiatives as the DPL might be able to make a big difference.

Considering that now even Europe is under a US-style software patent regime, it's important to fight against the worst ways in which software patents are used by some, such as for purposes of preventing interoperability and the fundamental technique of virtualization/emulation. Let's try to make headway on those fronts.

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