Germany: Developing a New Business Method ? – Think about Patents in Europe!

Last Updated: 25 September 2001
Article by Johannes Lang

First published in The European Lawyer / IT supplement, July 2001

In the past, patents were only considered as appropriate protection for the respective development in high technologies and research. Patents were the exclusive domain of patent departments and patent attorneys and, as such, of engineers and scientists in all fields of technology. Patent laws all over the world were interpreted as allowing access to patent protection only for inventions in technical fields comprising a so-called "technical character". This has changed dramatically. Today, patent protection is also accessible for business methods, at least to a certain extent, in most industrial countries.

When, in 1998, the US Court of Appeal for the Federal Circuit laid to rest the so-called business method exception from patentability in its decision State Street Bank & Trust Co. v. Signature Financial Group, Inc. (149 F.3d 1368; Fed. Cir. Jul. 23, 1998), this provoked not only a storm of headlines in major business publications, but also a new patent awareness, in particular in the banking and financial business. Since then, the US Patent and Trademark Office created a new classification for business method patents, hired new specialized examiners and adapted the guidelines for patent examination. Most of the major industrial countries like Japan and the states adhering to the European Patent Convention (EPC), although not going as far as the USPTO, followed at least to some extent the example of the United States. Trilateral discussions with the aim of harmonization of the different practices are taking place between the US Patent and Trademark Office, the Japanese Patent Office and the European Patent Office.

The present situation in Europe

While in the United States patenting of software programs has been allowed in a steady development of case law over the last 30 years and is today a well established practice in Europe, although a similar development of case law could be observed, the general public still seemed to be blocked by the provision in Art. 52 (2) and (3) of the European Patent Convention. It appears to be identical in all European national laws that "schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers" are excluded from patentability if claimed as such. But in reality, patenting of software-related inventions is a well-established practice also in Europe, in particular for international companies, which has been confirmed by the Boards of Appeal of the European Patent Office as well as by certain national Courts such as the German Federal Supreme Court.

Following the latest decisions of the European Patent Office (EPO) and the German Federal Supreme Court, computer systems adapted for the performance of business methods or activities and corresponding computer programs are treated in the same way as software-related inventions. Thus, they are patentable, provided technical considerations are involved in the implementation of such business methods on a computer system, and they fulfill the other requirements of patentability, which are novelty and inventive activity. Two significant examples of recent case law of the Boards of Appeal of the EPO will be given below.

In one of the first decisions concerning methods for doing business, General purpose management system/SOHEI (T 769/92, OJ EPO 1995, 525), the Board of Appeal of the European Patent Office had to decide whether a computer system and a method for multiple types of independent management, including at least financial and inventory management, would be excluded from patentability as a method for doing business and for not representing any technical contribution to the art. The claimed system allowed data necessary for one type of processing, financial management, and data necessary for another type of processing, inventory management, to be performed independently. Each type of data could be relevant for the other type of processing. The only difference to a conventional general purpose computer was the particular significance of the different files in the memory and the way the input data and stored data was processed.

In the Board’s opinion, SOHEI´s claimed general purpose management system (which in fact was a new user interface or a particular convenient screen display) required technical considerations by the inventor, since two kinds of management systems having different purposes and implying independent activities (management) were combined to a common input device, allowing each of the entered items necessary for use in one of the systems to be used, if required, also in the other. The implementation of the management method as a computer program was not seen as a mere act of programming but as an activity involving technical considerations that had to be addressed before programming, and, thus, before the creation of the software code (which as such would not have been patentable). Therefore the requirements of a technical character of an invention for patentability were set quite low: technical considerations before programming are sufficient.

In a decision of September 8, 2000, Controlling pension benefits system/PBS Partnership (T 0931/95, Decisions of the Boards of Appeal,, the Board of Appeal held that methods only involving economic concepts and practices of doing business are not inventions within the meaning of Article 52 (1) EPC. A feature of a method, which concerns the use of technical means for a purely non-technical purpose and/or for processing purely non-technical information, does not necessarily confer a technical character to such a method. But a computer system suitably programmed for use in a particular field (even if it is the field of business and economy) has the character of a concrete apparatus in the sense of a physical entity. It is man-made for a utilitarian purpose and is thus an invention within the meaning of the EPC. In this specific case, the method claims were rejected, whereas the apparatus (computer system) claims were allowed. The Board underlined that the difference between SOHEI and PBS Partnership was that in SOHEI, the method claim was directed at a "method for operating a general-purpose computer management system", the steps of the method being closely related to functional features that define the computer system operated by this method. Thus, the purpose of the method was a technical one, namely operating a technical system which ensured the technical character of the method itself. This was not the case in PBS Partnership. There, the wording of the method claim did not relate to functional features of the computer system. But this obstacle can easily be overcome by writing the patent specification and claims appropriately and by providing sufficient support of technical features and considerations. Following these two decisions of the EPO, at least business methods implemented on a computer system or network are patentable.

Why should you think about patent protection for your intellectual property?

Compared to protection by copyright, patents have the advantage that they protect the general concept as claimed, including equivalents, independently of the concrete form of implementation. Not the concrete software code is protected but the general idea lying behind it.

Numerous European patents have already been granted to banks, insurance companies and financial service providers relating to for example, processing insurance claims or managing bank accounts. In view of this rapid development, the financial community, formerly untouched by patent law, now has to develop patent strategies. It has to file patent applications for internet software and for financial or banking software programs; it has to develop patent portfolios and, most important, it must conduct a patent search prior to any major software development in these fields in order to avoid infringing competitors' patents.

© 2001 Johannes Lang.

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.

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