South Africa: Patentability Of Business Methods

Last Updated: 30 April 2001
Article by Esme du Plessis

The debate regarding the patentability of business methods and computer programs has been sparked in South Africa, as elsewhere in the world.

According to the South African Patents Act (Act no 57 of 1978) a patent may be granted for any new invention which involves an inventive step and which is capable of being used or applied in trade or industry or agriculture (section 25(1)). However, anything which consists of, inter alia, a scheme, rule or method of doing business, or a program for a computer shall not be regarded as an invention for purposes of the Act (section 25(2)).

This position is in line with the European Patent Convention (article 52), and the UK Patents Act, 1977 (section 1). This is not surprising, since the South African Patents Act, 1978 was framed to accord, at least as far as the definitions of invention, novelty and obviousness and the approach to patentability in general are concerned, with the European Patent Convention and UK patent legislation.

The approach of TRIPS is different : article 27 provides that patents shall be granted for any inventions in all fields of technology. In fact, it is stated that patents shall be available and patent rights enjoyable without discrimination as to the field of technology. Article 27 does not define the concept "fields of technology" expressly to exclude schemes or rules or other mental steps; yet, the use of the term "technology" could be interpreted to indicate an intention that inventions should have some technical content. In the list of inventions set out in article 27.2 and 27.3 which may be excluded from patentability by WTO member countries, business methods are not included.

Further, again in line with the European Patent Convention and the UK Patents Act, the South African Patents Act provides (section 25(3)) that the exclusionary provision of section 25(2) shall prevent anything from being treated as an invention for purposes of the Act, for example for purposes of patentability, only to the extent to which a patent application or patent relates to that thing as such (author’s emphasis).

There is no case law or other authority in South Africa placing an interpretation on the combined effect of the provisions of section 25(2) and (3). South African authors (e g Burrell South African Patent and Design Law , 1999 at 47 - 48) tend to deal only with the exclusionary provision of section 25(2) to conclude that, as the law stands at present, a scheme, rule or method for doing business is not patentable. However, in accordance with the rules of interpretation it cannot be assumed that the legislature intended to enact a meaningless provision; therefore the provision of section 25(3) must be given a meaning in the context of its reference to section 25(2).

From the wording of section 25(3) it seems that the intention of the legislature was to place a limitation on the application of section 25(2), namely that an invention consisting of a scheme or rule or method of doing business will be disqualified from patentability only if the invention entails nothing but that scheme or rule or method. Conversely, if the invention includes any further features, the combined whole may well be patentable. Such an interpretation would be in line with developments in the UK and USA.

The provisions of section 1(2) of the UK Patents Act, 1977 are substantially coterminous with section 25(2) and (3) of the SA Patents Act. The UK courts have applied a strict approach to this provision, by looking to the substance of a claim to ensure that it does not contain excluded matter dressed up as patentable subject matter. It has been stated that the key to patentability is whether the claim, in addition to the excluded subject matter, also includes a technical contribution to the art. In applying this principle, the UK patent office takes the following approach (as reported by Lubbock "Patents for business methods" Intellectual Propert Briefing Ashurst Morris Crisp, Summer 2000) :

  • a claimed invention is not excluded from patentability merely because some of its features are excluded by section 1(2);
  • the quantum and level of the technical contribution made by the invention to the known art must be considered;
  • the whole content of the claim is assessed to determine whether the invention makes a (technical) contribution which goes beyond excluded subject matter and which is sufficient to support a patent.

The wording and structure of article 52 of the European Patent Convention in regard to business methods and computer programs are very similar to those of the SA and UK Patents Acts. The European Patent Office Board of Appeals has held computer software to be patented as long as it is claimed in a way which exhibits the potential for a technical effect. The same approach is likely to be followed in regard to business methods. However, a proposal has recently been tabled at a diplomatic conference to revise article 52 by amending it to provide in general and non-exclusionary terms that patents can be granted for all inventions in all fields of technology. Such an amendment would obviously create an opening for business methods as such to become patentable. This proposal is part of the ongoing consultation at European Commission level in regard to the question of whether the current patent system in fact meets the needs of all potential users of the system.

The position in the US is different. The US Patents Act (title 35, section 101) has no express statutory exclusion of business methods or computer programs from patentability. Over the years, US court decisions and patent office practice have excluded business methods from patentability - but this has changed. The US patent office has in fact implemented a class of patentable subject matter including financial and business practice management and other business-related topics. It has been reported that numerous patents have issued for business processes and methods in the context of electronic commerce. In an article published in Managing Intellectual Property ("Business discovers the value of patents" by Bratic, McLane and Sterne (Sept 1998) MIP 72)) the authors show that in 1997 the third largest class of patents granted by the US patent office related to information processing systems and organisation.

It is against this background that the AIPPI (International Association for the Protection of Intellectual Property) at its recent (March 2001) world congress in Melbourne, Australia, debated the question of the patentability of business methods. The debate took account of the underlying principles that the patent system is designed to compensate research and the creation of new inventions, and that the Paris Convention (article 1) in fact warrants the right to protect inventions arising out of economic activities. The need to protect business methods has arisen from the increased use of electronic systems in business, and patent laws have over time progressively adapted to new subject matter and should adapt also to the need to protect methods of doing business. It was also accepted that creations of a purely abstract nature are generally excluded from the scope of patent protection and that, generally speaking, inventions in order to be protected by patents must not only be useful but must possess a technical content.

It was resolved that inventions including methods used in all fields of industrial, commercial and financial activities, also business methods, should be entitled to patent protection provided that the invention as defined in the claims has a technical content. It is evident that the resolution did not go so far as to require patent protection for business methods per se.

The question was considered whether the novel and inventive feature required for patentability should lie in the technical part of the invention; it was agreed that this was not required. The assessment of novelty and inventiveness should be made on the merits of each case, and even the application of known methods to new fields may be found to be inventive. The lack of recorded prior art was seen as an issue to be addressed, and the creation of prior art databases was encouraged.

This resolution reinforced the earlier resolution by FICPI (International Federation of Intellectual Property Practitioners) at its congress in Vancouver in June 2000, when it was resolved that there was an urgent need to harmonise legal conditions for patent protection, to secure adequate protection for commercially highly valuable innovations in information technology as applied to any section of business. The relevant authorities, on international, regional and national levels, were urged to embark on worldwide harmonisation efforts.

In the light of these developments it is clear that an authoritative interpretation needs to be placed on statutory provisions such as those contained in section 25(2) and (3) of the South African Patents Act, if necessary by legislative amendment. At the same time, harmonisation on an international level needs to be promoted, to avoid disparity in protection which may create imbalances in business equity. The lack of a harmonised approach does in fact undermine the fundamental principles of the patent system, namely of a just reward for innovation and investment, and an incentive to stimulate further research and innovation.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions