Prior to analyzing the applicable intellectual property law on patent and copyright in the realm of computer programs and software, it is pertinent to appreciate that patent law and copyright law provide different types of protection. Such difference is particularly important in the sphere of computer software, since the general approach in most jurisdictions is to afford protection under copyright rather than under patent for computer software, although exceptions exist. Copyright law extends to the protection of expressions of ideas, not to the ideas themselves, as is the case with Patent law. The latter legal protection entitles the inventor to an exclusive right over his invention, which is essentially deemed to be a product or process which is employed in an innovative manner or which offers a new technical solution to a problem.
Copyright protection of computer software is largely harmonized by virtue of the Berne Convention for the Protection of Literary and Artistic Works (the Berne Convention) and is thus established in most countries. This differs from the situation of Patent, where it is still not internationally harmonized, and consequently differing standards have been set in different jurisdictions as to what is eligible for patent protection, standards which have been shaped by case law in both the EU and the USA.
Patent
The rapid development seen in recent times of innovative computer technology has resulted in an equivalently rapid increase in the patent demands. In Europe, the granting of patent for computer software observes a rather stringent set of requirements which must be applied largely on a case by case basis. Under Maltese law, following the provisions of the European Patent Convention (EPC), patentable subject-matter has to be new, involves an inventive step and may be industrially employed. For an invention to satisfy the requirement of Novelty, it must not "form part of the prior art". The 'prior art' notion refers to everything which before the filing date of application as publicly available in written or graphic form, by oral description or by use in any other way anywhere in the world.
Generically speaking, patent law does not cover computer software in most jurisdictions, however since the situation varies as to what extent computer programs and software are protected, the debate has been intense on the matter. In particular, such issues concern the boundaries to what may be subject to patent, the requirements of novelty and innovative step and how loosely they are to be applied and whether the granting of patent to software discourages rather than encourages innovation. Consequently, different jurisdictions and supranational bodies such as the European Patent Office (EPO) and member states of the Patent Cooperation Treaty (PCT) have different benchmarks and criteria in the granting of patents, especially in this sensitive field.
The Foundation for a Free Information Infrastructure (FFII) is the leading European NGO committed to promote and establish a free market in information technology by means of removal of barriers to competition. It has thus been in the forefront in the lobbying against the patenting of computer software, particularly active in the campaign which ultimately rejected the EU Software Patent Directive in July 2005. The FFII suggests a definition to the term "software patent" i.e. the "patent on any performance of a computer realized by means of a computer program".
Maltese law does not protect computer programs under patent and indeed, article 4 of the Patents and Designs Act, incorporated almost verbatim the wording of article 52 EPC stating that computer programs shall not be considered as inventions and are thus not eligible for patent protection. However, this exclusion from patentability is only to the extent that a patent application relates to computer programs "as such". The independent Board of Appeal for the EPO, in a decision involving Microsoft Corporation1 has interpreted this to mean that if the invention involves an inventive step in technical contribution or solves a technical problem in an inventive manner, then such an invention is patentable even if solved by running a computer program. The Board saw fit to emphasize that a method implemented in a computer system represent a series of steps which are actually performed, and not merely having the potentiality of being performed as is the case with computer programs. Thus here the Board distinguished between a computer-implemented method and a computer program.
Furthermore, these so called computer-implemented methods or inventions may be patentable provided that they satisfy the necessary requisites of novelty, innovative step and capability of being applied in industry. Indeed, in another Board of Appeal decision2 a computer-implemented invention (CII) was considered lacking an inventive step and consequently not patentable. This was due to the fact that the CII was geared to solve only a business problem using a computer and not a technical problem. It affirmed in this case that "a method involving technical means is an invention within the meaning of article 52(1) EPC"3. Furthermore, computer program products are patentable if there is a further technical effect i.e. something which goes beyond normality.4 Therefore, solving business problems with existing technology does not grant eligibility for patent, whilst modifying existing software to cater for a technical problem in an innovative manner would grant patency.
Put simply thus, for CII to fulfil patentability requirements, they must fulfil the criteria of having a technical character and solving a technical problem, being novel and involve an inventive technical contribution to the prior art. It may thus be appreciated that these requirements are applied restrictively when considering the significant development of computer-related inventions. As years progress and technology develops further, it becomes increasingly difficult to grant patents, due to the constant enrichment of the prior art as well as the difficulty of establishing innovation. Thus, computer programs and CIIs which do not fall within these parameters are not afforded patent protection in Europe. However, seeing that technology is constantly extending its use to new areas in daily life, CII are becoming the norm rather than the exception and in many cases the innovative part of a new product or service will lie in a computer program. Thus, computer programs in their generic definition should not be excluded in their totality from patent eligibility. A decision of the Board of Appeal confirmed this by stating that patentability must not be denied merely on the grounds that it involves a computer program5.
Case law of the Maltese courts is scarce on the matter and therefore, in appreciation of the fact that as mentioned above, Maltese law is incorporated the provisions of the EPC, case law of the EPO Board is to be relied on also for local interpretation.
The situation in Europe contrasts slightly with the US system in this respect. The United States Patents and Trademarks Office (USPTO) grants patents for computer software even if the said software does not solve a technical problem. Computer programs or software are not mentioned explicitly under US patent law, however the United States Code provides that "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title." In the late 1960s and early 1970s, the USPTO and the United States Court of Customs and Patent Appeals (USCCPA) were not in agreement over the patent eligibility of technical advances which only differed from the prior art by the use of a software algorithm. The USPTO had repeatedly rejected the granting of such patents, whereas the USCCPA reversed their decisions, ordering the issuing of patents. It was established through case law that the US Supreme Court could review decisions of the USCCPA and presently, its successor the USCAFC.
Case law of the US Supreme Court as well as of the US Court of Appeals for the Federal Circuit (USCAFC) has served to establish the dividing line between that which is eligible and that which is ineligible for patent protection. Such case law has resulted in the US being more open to the patenting of software than in other countries.
Therefore, reference to US Patent law demands a glance at certain landmark judgments which set in stone certain principles. Three landmark decisions were decided in the same decade and are collectively referred to as the "Patent-Eligibility Trilogy cases". Brief analysis of the concept behind these judgments follows suit.
The first of the trilogy cases was Gottshalk v. Benson6, in which the US Supreme Court upheld the theory that abstract ideas were not patentable. The case concerned an invention which involved programming a general purpose computer using an algorithm to convert binary coded decimal numbers into pure binary numbers. The Court held that new inventions derived from these abstract ideas were eligible for patent protection. It held that the discovery in this case did not merit patent protection since all it involved was an abstract mathematical algorithm. The Court however placed emphasis on asserting that this did not preclude the patenting of computer software, but prohibited patenting of software were the only useful feature was an algorithm. If patent protection was allowed in these cases, then that would foreclose all future use of the algorithm in question which would result in regress rather than progress.
Another landmark judgment of the US Supreme Court was the Parker v. Flook case where it was held that because it was conceded that the use of the algorithm was conventional, the Court found that the inventor did not purport to have invented anything eligible for patent protection. The principle underlying the Court's decision was that an object must be held to belong to the prior art.
In Diamond v Diehr7, which is the third case in the trilogy, the Supreme Court took a different approach in its decision. In the past two cases the 'analytic dissection' method was utilized by the Court, whereby essentially, this involves the dissection of all the elements of the invention in question, discarding those elements which are unprotected. This method is usually utilized under US law for Copyright cases, however the Court in the first two Trilogy cases utilized this method to determine whether the invention in question was eligible for patent protection. However, in this case, the Court held that to determine whether an object is patentable, it should be analyzed as a whole. It held that the execution of a physical process, controlled by the running of a computer program was patentable. It reaffirmed its contention that abstract mathematical formulae were not subject to patent protection, however it held that the presence of computer software is not what made an otherwise patentable invention un-patentable. Thus to this extent, this case is reconcilable with the other two despite the variation in the Court's approach.
Essentially, therefore, the main thrust of the court reasoning until relatively recently, has been that software is a type of mathematical algorithm i.e. essentially a general formula which solves problems by essentially converting one numerical data from one form into another. Indeed, the court has held that such algorithms are abstract ideas, which are not patentable subject matter. According to the reasoning of the court, software could only be patented if it involves physically transforming the underlying subject-matter e.g. medical device changing the patient's heartbeat into a series of electrocardiographic signals or software that implemented the process of manufacturing synthetic rubber.
Therefore, the test thus far had been the so-called 'machine or transformation test' which establish patent eligibility of a process either if it is implemented with a machine (which is specifically devised and adapted to carry out the process in a way that is not conventional and trivial), or else transforms an article from one thing or state into another.
However, this position changed with the advent of the case State Street Bank and Trust vs. Signature Financial Corporation8 in 1998 where the USCAFC reversed the judgment of the lower court. The appeals court held that the data processing system, calculating the allocation of income, gains, losses and expenses as well as the recording of daily changes in assets and market prices, was eligible for patent protection. The first court had followed pre-established precedent and therefore struck it down on the grounds that it did not involve any transformation, since it involves the processing of numerical data. The USCAFC held however that such an invention was indeed patentable. The court saw fit to establish a new test replacing the 'machine or transformation test' which essentially demands the production of 'useful, concrete and tangible results'. This broadened the standards, giving more leeway to software patents.
As recently as 28 May 2010, the US Supreme Court handed down the Bilski v Kappos9 judgment, where it held that the test established by the State Street judgment should not be relied on because it was "inadequate". The court reverted to the pre-established 'machine or transformation' test and held that it is the only applicable test to be used in the determination of patent eligibility claims in the light of the interpretation of the judgments handed down by the US Supreme Court.
Therefore, in the light of these changes in the interpretation of the legal requirements of software patentability one can appreciate the sensitivity of the issues at hand. The law does not clearly express its position in such matters as software patents, in both the EU and much less in the US, thus the need to resort to case law The EPC establishes that computer programs are not patentable, a rather broadly restrictive position when compared to the US approach. From the brief glance at the relevant US case law outlined above, one can appreciate that computer programs are not prima facie excluded from the protection of patent laws. Indeed, as has been established by precedent of the Supreme Court and other superior courts and confirmed recently by the Supreme Court, what matters is that the 'process' has to be attributable to a machine or apparatus or else it involves transforming physically an article from one state into another. Although the determination of what is patentable subject matter in the realm of computer Software under US Law has not been easy, such determination in Europe would perhaps be more challenging, seeing that computer programs are prohibited from Patent protection by the law itself. Nevertheless, the Board of Appeal of the EPO has termed computer-implemented invention as patentable if it satisfies the criteria of novelty, inventive step and applicability in industry. This is still more restrictive when compared to the machine or transformation test as is the current patent law in the US.
In addition, Maltese law, in line with the EPC affords patent protection to the invention for a term of 20 years, subject to renewal, and member countries to the EPC may extend protection under the same conditions for patents granted locally. Rights conferred by Patent shall be according to the national laws of the member countries. Where the patented object concerns a product, the proprietor has the right to prevent third parties from performing without his authorization the making of the product incorporating the subject matter of the patent. In both cases where it concerns a product or a process, the inventor can prevent third parties from offering or putting on the market of the product or the process, incorporating the subject matter or the use, importing or stocking the product to put on the market. Where patent concerns a process, proprietor as the right to prevent third parties from using the process which is the subject matter of the patent and any product obtained by the use of the process, irrespective of the fact that such product is eligible for patent protection or not.
The position is similar to US law, where the term is that of 20 years, in line with the provisions of the TRIPs agreement. Patents issued by the USPTO confer upon the patent holder "the right to exclude others from making, using or selling the invention throughout the United States". Others may only be permitted to make, use or sell upon the grant of the appropriate licence as is the case in the EU and Malta.
Copyright
Copyright law has seen international harmonization through the adoption of treaties such as the Berne Convention, the Universal Copyright Convention and the Agreement on Trade-Related Aspects of Intellectual Property Right (TRIPs agreement). Most countries including all the Member States of the EU as well as the US have ratified these instruments, aligning their national copyright laws to these international provisions. The situation is thus different from that under Patent law.
The Berne Convention requires its signatories to recognize the works of authors from other signatory countries. Therefore, works published in the territory of one signatory country by an author from another signatory country, is eligible for protection in country where the works are published in the same way as that country protects the copyright of its own nationals.
Computer Programs, despite not being offered complete protection under Patent Law, are nevertheless afforded protection under Copyright. This is through for all countries party to the abovementioned international instruments. It can thus be appreciated that such protection for computer software is uniform amongst all the party countries. Essentially, the difference between software copyright and copyright of other subject-matter is not significant. However, there are certain aspects of copyright law which are specific to computer software.
Under the local Copyright Act 2000 which is in line with the EU Software Directive10, computer programs are protected under copyright law as literary works and include computer programs irrespective of the mode or form of their expression, including those which are incorporated in hardware, interfaces which provide for the physical interconnection and interaction or the interoperability between elements of software and hardware and preparatory design material leading to the development of a computer program, provided that the nature of the preparatory design material is such that a computer program can result there-from at a later stage. The Software Directive largely harmonised the position at EU law not only internally, but also with US law.
In the US, software is also protected under 'literary work' by means of the Copyright Act 1976 and protects computer programs insofar as they incorporate authorship in the programmer's expression of original ideas, rather than the ideas themselves. Such a dichotomy of idea and expression, whilst it can be easily understood for other copyrightable material, may be more difficult to appreciate when applied to computer programs. As has been discussed above, any computer program can be shown to be an algorithm i.e. essentially a mathematical function. Appreciable is the fact that therefore, no mathematical function is eligible for copyright protection because it is an idea and not an expression. Yet, computer programs are copyrightable as is expressly stated in local law and international law. US law provides that software is copyrightable as soon as it is 'fixed in a tangible medium'.
Generically, the exclusive rights conferred onto the copyright holder by the copyright laws of most countries include the right to reproduce or copy, adapt, distribute and publicly perform the work. The precise nature varies from jurisdiction to jurisdiction. The EU Software Directive11 recognizes 'moral rights' which essentially confer protection on the author of the work and not on the work itself. These include the right to be known as the author of the work, the right to prevent others from distorting the work, the right to control the publication of the work, the right to withdraw, modify, or disavow a work after it has been published. The Berne Convention recognizes only the first two of such moral rights. Moral rights are distinct from the economic rights conferred by copyright, and even when an artist assigns his exclusive copyright rights to third parties, the moral rights still attach to him. US Law does not traditionally recognise moral rights, being a common law system, but does so only in respect of the visual arts.
Under the law of the European Union as per the Directive as well as the Berne Convention, copyright protection is afforded to authors automatically and without any formality. This was one of the reasons behind the reluctance of the US to accede to the Berne Convention, in view of the fact that major changes had to be adopted to its copyright laws. The US used to provide copyright protection for a fixed renewable term and required that a work contain a copyright notice and registered at the Copyright office before it could be afforded legal protection. The Berne Convention expressly forbids any such formalities, and grants copyright protection for a single term i.e. the duration of the life of the author, lasting up to 50 years after his death. The Berne Convention establishes what is known as the 'three-step' test where it is stated that 'Members shall confine limitation and exceptions to exclusive rights to certain special cases, which do not conflict with the normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the rights holder'. Eventually, the US ratified the Berne Convention.
Copyright protection under Maltese law lasts until seventy years after the end of the year in which the author dies. Copyright protection is available for individuals and legal entities being a citizen of or domiciled or permanently residing in, or constituted, registered and vested with legal personality under the laws of Malta or a State in which copyright is protected under an international agreement to which Malta is a party.
The author is granted exclusive rights which consist in the authorizing and prohibiting: the reproduction in whole or in part; rental or lending; distribution; translation in other languages (including different computer languages); adapting, arranging, altering, reproducing, distributing, communicating, displaying or performing to the public the results thereof; broadcasting or rebroadcasting; displaying or performing to the public. If a copy of the program is however put into circulation in the Maltese and EU market with the consent of the owner, the distribution right relating to that copy will be exhausted.
A point of divergence of US law from its EU law counterpart would be vis-a-vis the translation provisions. As under the Berne Convention, the right to translate work is limited i.e. it is the author's exclusive right to authorize any translation of that work. This is different from the position in the US where section 103 of the US Copyright Act would grant a copyright of the translator in his translation but not in the original work.
However, such exclusive rights are still subject to limitation at law and thus, certain acts are not deemed to be infringements. Under local and EU law, the observing, studying or testing the functioning of the program by the licensed user, in order to determine the principles and ideas underlying any element of the program while performing any of the acts of loading, displaying, running, transmitting or storing the program to which the user is entitled is not deemed to be infringement.
Furthermore, the licensed user may not be restricted from making a copy or a back-up copy, the translation, adaptation, arrangement and any other alteration of a computer program and the reproduction of the results thereof, in so far as this is necessary for him to make a proper use of the program in accordance with its intended purpose, including the correction of errors. The right of the licensed user to make such copies may not be restricted or excluded by contract insofar as it is necessary for the use of the program.
In addition, reproduction by the licensed user of the code and translation of its form indispensable to obtain the information necessary to achieve the interoperability of an independently created computer program with other programs, is not considered infringement. This is subject to certain provisos. Firstly, that the information necessary to achieve interoperability has not earlier been readily available to the licensed user, and secondly the said acts are limited to the parts of the original program which are necessary to achieve interoperability. Therefore, the information obtained through these acts, may not be used for other purposes other than the attainment of interoperability of the independently created computer program. Moreover, it may not be given to others except when such interoperability so demands, and it may not be used for the development, production or marketing of a computer program, substantially similar in its expression to the original program substantially similar in its expression to the original program or for any other act that infringes copyright.
The provisions, under section 117 of the US Code are drafted in a more simplistic manner, albeit covers aspects which are not dealt with under the Maltese Copyright Act. US law provides for the making of additional copies by the owner of a copy, insofar as it is essential to utilize the program with a machine and it is used in no other manner or else such copy is made for archival purposes only. Furthermore, copies made for the maintenance or repair of a machine are legal, provided they are destroyed immediately after fulfilling their purpose.
Similarly, the US Code provides that the copies or adaptations made to the program to utilize the program with a machine, as abovementioned, may be sold, leased or otherwise transferred, provided such transfer is made together with the lawfully owned copies from which such adaptations were made. Such transfer shall only be made by the authorization of the author. Maltese law provides that copyright and neighbouring rights shall be transmissible by assignment, operation of law or testamentary disposition as movable property. Such assignment may be limited or non-limited and is perfected by means of an agreement in writing between the parties. Thus, these are the forms by which the author grants the licensed user the permission to sell, lease or otherwise transfer the work. This is identical to the position at US law.
The issue of 'originality' is a requirement in both Europe and the US for the granting of copyright protection at law. Courts have ruled that originality in the realm of computer software is minimal, since computer programs are insufficiently unoriginal. However, originality does exist, in particular with regards to the expression of an idea that may be protected by a copyright, and not the idea itself. The originality of the idea behind the computer program is irrelevant for the purpose of copyright eligibility. However, a common idea expressed in an original manner is copyrightable.
This originality requirement is standard in both the EU and the US, such that a work is protected insofar as it is an original intellectual creation and independent of size or degree of contribution. The Berne Convention does not set any tests to determine originality, and leaves the matter to national laws. However, these international conventions make it clear that no other requirement or formality have to be met by software to be granted copyright protection.
Maltese case law, as has been the case with Patents, is inexistent in these issues. Therefore, in pursuit of legal clarity, case law is to be resorted to at the EU level and also in the US. Cases on software copyright are also of a rare nature in the EU, but are relatively abundant in the US.
Judgements of the US Supreme Court have identified certain elements which elements were eligible for protection under copyright and which were not. The US Copyrights Office Circular 61 explains, in line with these court judgments, that certain elements of software including 'ideas, program logic, algorithms, systems, methods, concepts or layouts' are not eligible for copyright protection since these are the purely functional aspects of computer programs as distinct from that software which demonstrates 'originality of design'. Furthermore, software copyright law protects not only the 'literal' software code from being copied, but also the program's design features and elements, as long as these show creativity and design. What is essential is that the object code of a computer software (which is the computer-readable language) is also copyrightable, in default of which software copyright could easily be sidestepped. Such a case was made in the judgment Apple Computer, Inc. v. Franklin Computer Corp.,12 by the United States Court of Appeals Third Circuit. 'Literal' elements refers to the source code and the object code of a computer programs as held in Computer Associates International, Inc. v. Altai, Inc. 13whereas the 'non-literal' elements of software consist of elements other than the code and include a program's 'structure, sequence and organisation' as well as the elements of a program that are the product generated by the code's interaction with the hardware and the operating system as well as the 'various steps the programmer employs prior to actually writing the instructions in source code'. The ECJ has also established that computer programs whether in source or object code are copyrightable, pursuing the provision in the TRIPs agreement and the Berne convention which extends copyright to the expression of computer programs under literary work in whatever form.14
US case law has established the 'Abstraction-Filtration-Comparison' (AFC) Test as a method of identifying similarity for the purpose of applying copyright law. It is a three-step process for identifying similarity of the 'non-literal' elements of a computer program. In the abstraction stage, ideas are separated from the expression of those ideas. The Filtration stage, filters what are copyrightable ideas from those which are not eligible for copyright protection. Finally, the plaintiff's and the defendant's work are compared to determine if there is any infringing similarity. The AFC test has been widely adopted ever since the Altai judgement and is the current procedure adopted by courts in the US.
According to Circular 61, the US Copyright will also accept applications requesting copyright protection of screen displays. Such applications must list the display itself as 'visual arts work' and not as a 'literary work'. The author of the work should be listed as 'computer program'.
Copyright protection is granted under EU, Maltese and US law for seventy years after the end of the year of death of the author, irrespectively of when the work was made publicly available.
Conclusion
It is thus appreciable that US and EU law differ to a certain extent when it comes to Patent protection of computer software but are largely similar in their standards and requirements for copyright protection. The latter is due to international harmonisation of standards to afford copyright protection.
As has been exhaustively discussed above, computer software is afforded different types of Intellectual Property protection to differing degrees. Whilst it is not afforded Patent protection in most jurisdictions, software is protected under copyright internationally through the harmonization of laws by international treaties, and therefore, whilst the position under copyright is largely identical in both the US and the EU and consequently Malta, this is not the case under Patent law.
In the latter case, the position at the EU level is according to the EPC and a variety of case law of the EPO Board of Appeal i.e. where computer software are accorded patent protection in so far as it is a computer-implemented invention which is novel, involves an inventive step and industrially employable. The US has been historically more open to patent protection of software. What is uniform is the fact that Patent protects the idea itself, insofar as it satisfies the necessary criteria.
By contrast, copyright protection of software is international, involving universally applied standards. Indeed, copyright as distinguished from patent, protects the expression of the idea rather than the idea itself. Such an expression has to be original i.e. essentially the author's own intellectual creation.
In addition, Maltese law, in line with the EPC affords patent protection to the invention for a term of 20 years, subject to renewal, and member countries to the EPC may extend protection under the same conditions for patents granted locally. This is identical also to the US position. Copyright protection, on the other hand is for a period of 70 years after the year of death of the author, in all three jurisdictions.
Copyright and Patent, thus afford different types of protection. In Patents, the government grants exclusive monopoly rights for a limited term, in exchange for the provision of details of the products and processes to encourage dissemination of information and promote further development. Copyright on the other hand, is granted automatically and does not need to be registered to apply. It essentially involves the 'right to copy' which is vested in the author exclusively, who may licence others to issue such copies, subject to exceptions.
Of note is the fact, that as technology progresses and new inventions penetrate the market frequently, the bar is constantly being raised for both Copyright and Patent eligibility, and it will be increasingly difficult to acquire Intellectual Property protection for software. As time progresses, the case law of the courts will gain even more value as new cases are encountered and new standards are set.
Footnotes
1. T0469/03 Decision of the 24 February 2006.
2. T258/03 Decision of the 21 April2004.
3. Ibid. Headnote 1.
4. T1173/97 and T935/97.
5. T 208/84 Decision of the 15 July 1986; confirmed by T26/86 Decision of the 21 May 1987.
6. 409 US 63 (1972).
7. 450 US 175 (1981).
8. 149 F.3d 1368.
9. 545 F.3d 943, 88 USPQ 2d 1385
10. Council and Parliament Directive 2009/24/EC.
11. Ibid.
12. 714 F.2d 1240 (3d Cir. 1983).
13. 982 F.2d 693 702 (2d Cir.1992)
14. T 507/08 General Court Judgement of the 7 June 2011.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
