UK: Patenting Business Methods In Europe Opportunities And Difficulties

Last Updated: 7 February 2001
Article by Paul Cole

Recent decisions of the EPO and of the UK Patent office have highlighted the problems faced by inventors of new business methods and seeking patent protection in Europe.

EPO Appeal Board decisions fall into three categories: those selected for publication in the Official Journal, those important enough to be circulated to all appeal board members and presumably to be mentioned in the next available edition of the book entitled Case Law and published by the EPO appeal boards, and those of minor importance which are circulated to appeal board chairman only. The decision in T 0931/95 Controlling pension benefits system/PBS Partnership falls into the second category, and is highly instructive about the attitude of the EPO towards business methods inventions.

The application in issue, published as EP-A-0332770, is the European counterpart to US-A-4750121. The applicants, who were based in the US aimed to provide a system which fully complied with all of the latest Congressional and judicial mandates and provided a novel fully funded pension benefits system which imposed considerably lower and fixed determinable financial burdens upon the employer and relieved him of all administrative and fiduciary responsibility, while also providing expanded, accurately predictable, and increasing benefits to all enrolled employees. Benefits were expanded in that, in addition to periodic retirement payments after age 65, both death and disability benefits were also provided. Rather than being fixed or completely undeterminable, all benefits provided by the present system were projectable from the onset of a program with any subscriber employer so that each enrolled employee could determine his future benefits resulting from death, disability, or retirement and be assured that because of a built-in fixed percentage of increasing benefits, that the benefits he receives will keep pace with inflation, retaining his purchasing power. The above advantages were, in large part, achieved by a unique implementation of life insurance to fund future payable liabilities by a master trust. Rather than terminating life insurance at employee retirement, each policy was maintained in force by the master trust until the employee's death, the proceeds flowing into the master trust to assist in paying all future periodic benefits.

The EPO had to examine main independent method and apparatus claims reading

"1. A method of controlling a pension benefits program by administering at least one subscriber employer account on behalf of each subscriber employer's enrolled employees each of whom is to receive periodic benefits payments, said method comprising:

  • providing to a data processing means information from each said subscriber employer defining the number, earnings and ages of all enrolled employees of the said subscriber employer;
  • determining the average age of all enrolled employees by average age computing means;
  • determining the periodic cost of life insurance for all enrolled employees of said subscriber employer by life insurance cost computing means; and estimating all administrative, legal, trustee, and government premium yearly expenses for said subscriber employer by administrative cost computing means;
  • the method producing, in use, information defining each subscriber employer's periodic monetary contribution to a master trust, the face amount of a life insurance policy on each enrolled employee's life to be purchased from a life insurer and assigned to the master trust and to be maintained in full force and effect until the death of the said employee, and periodic benefits to be received by each enrolled employee upon death, disability or retirement."

"5. An apparatus for controlling a pension benefits system comprising:

  • a data processing means which is arranged to receive information into a memory from each subscriber employer defining the number, earnings and ages of all enrolled employees, said data processing means including a processor which includes:
      1. average age computing means for determining the average age of all enrolled employees;
      2. life insurance cost computing means for determining the periodic cost of said life insurance for all enrolled employees of said subscriber employer;
      3. administrative cost computing means for estimating all administrative, legal, trustee, and government premium yearly expenses for said subscriber employer;
  • the apparatus being arranged to produce, in use, information defining each subscriber employer's monetary contribution to a master trust; the face amount of each life insurance policy to be issued and made payable to said master trust by a life insurer on the life of each enrolled employee and to be maintained in full force and effect until the death of the said employee; and periodic benefits payable by said master trust to each enrolled employee upon death, disability, or retirement."

The opposition division held that the claimed invention was unpatentable since it related only to features of a commercial or managerial character and lacked any technical features. The applicants appealed, contending that the claims were directed to the processing of data which was a physical entity within the meaning set out in T 0208.84 Computer-related invention/VICOM, that the requirement for technical character was now outdated having regard to the abandonment in a number of non-European countries of the exclusion of business methods as exemplified by the US decision in State Street bank & Trust v Signature Financial Group (CAFC, 1978), and that the field of business methods had been opened to patent protection in cases T 0769/92 General Purpose Management System/SOHEI and T 1002/92 Queueing System/Petterson.

The Appeal Board rejected the argument that a requirement for technical character had become obsolete, and commented that the requirement had been assumed to be necessary in the recent decisions in cases T 1173/97 Computer Program Product/IBM and T 0935/97 Computer program product II/IBM, see also the recent decision of the German federal Court of Justice in case XZB 15/98 Sprachanalyseeinrichtung. The various method steps in claim 1 were of a purely administrative, actuarial or financial character, and the use of technical means for carrying out these steps did not impart technical character to them. In the Vicom case the claimed method produced the technical result of improving and sharpening an image, in Sohei the steps of the claimed method were closely related to the functional features of the computer system, and Petterson related to a three-dimensional apparatus which was clearly of a technical character. The subject matter claimed in each of the above three cases was of a technical character whereas that claimed in claim 1 of the application in issue was not.

Significantly, the Appeal Board held that the subject matter of claim 5 was NOT excluded by the prohibition on patenting business methods In the Board's view a computer system suitably programmed for use in a particular field, even if that was the field of business and economy, had the character of a physical entity, man-made for a utilitarian purpose and was therefore an invention within the meaning of Article 52(1) EPC. This distinction with regard to patentability between a method for doing business and an apparatus suited to perform such a method was justified in the light of the wording of Article 52(2)(c) EPC, according to which "schemes, rules and methods" are non-patentable categories in the field of economy and business, but the category of "apparatus" in the sense of "physical entity" or "product" was not mentioned in Article 52(2) EPC. If a claim was directed to such an entity, the formal category of such a claim did in fact imply physical features of the claimed subject-matter which could qualify as technical features of the invention concerned and thus be relevant for its patentability.

The applicant's problems were by no means over: the Board went on to decide that the subject matter of claim 5 involved no inventive step. They concluded that the assessment had to be carried out from the standpoint of a skilled person who knew of the structure and concept of the improved pension benefits system and the underlying schemes for information processing. Use of computers in the economic sector had become widespread in the economic field at the priority date, and there was no technical contribution provided by the claimed subject matter to the prior art Accordingly the EPO appeal board rejected the appeal and the application was refused..

In Fujitsu"s UK Application 9604003.5, the main embodiment was a reservation management system in which the relative importance of conflicting requests was assessed based on such factors as the reason for a meeting, the importance of the person making the booking, the number and seniority of attendees, how long it was until the meeting, for how long a meeting had already been booked, and the number of times a reservation had been rescheduled. An algorithm assessed the degree of importance using these criteria and priority was given to the more important reservation. Existing reservations could be rescheduled. Apparatus and method claims were presented, the apparatus claim in the form that it was examined during the hearing reading as follows:

"A reservation management apparatus in an information processing system for receiving reservation requirements and determining automatically whether to accept the reservation requirements, comprising:

  • entry means for entering requirements of a first reservation;
  • storage means for storing information of a second reservation that was previously registered and storing predetermined standards for determining degrees of importance;
  • detection means for determining whether there is a duplication between the first reservation and the second reservation, according to the information of the second reservation stored in said storage means and the requirements of the first reservation, when the requirements of the first reservation are entered;
  • importance degree determination means for automatically calculating an importance degree of the first reservation according to the requirements of the first reservation, and an importance degree of the second reservation according to the information of the second reservation by referring to the predetermined standards for determining degrees of importance stored in the storage means; and
  • arrangement means for determining whether to accept the requirements of the first reservation, based on a comparison between the importance degree of the first reservation and the importance degree of the second reservation, which are calculated by said importance degree determination means, wherein the first reservation is automatically accepted when the importance degree of the first reservation is greater than the importance degree of the second reservation, and a time and date of the first reservation is automatically changed when the importance degree of the first reservation is lower than the importance degree of the second reservation."

Fujitsu argued that the problem being addressed by the invention was a technical one in that conflicting requests for entry to a database had to be handled efficiently and consistently according to criteria set up in advance. They added that the technical nature of the invention was demonstrated by the fact that the system permitted a plurality of input sources from multiple users over a network and highlighted the possible use of different input devices such as keyboard, mouse, telephone, microphone, fax and reading characters from a request form, which they said distinguished the present system from the traditional manual method of resolving conflicts. They pointed to the complex criteria for assessing priority which they said contributed to the technical character, and argued that the performance of the calculation to assess priority, the resultant changes to the database, and the rescheduling of other items were technical matters, as was the output of notification to the users. Examples of output notification given in the specification were e-mail, fax, electronic bulletin board, automatic calls using voice synthesis, mailing and circulating a printed notice. They concluded that while the operation of the invention might be underpinned by a business method, that should not of itself exclude the invention from patentability, and that that the claims were not directed to a business method as such.

The Patent Office (Mr Peter Marchant, Deputy Director) rejected the above argument and held that the claimed subject matter fell within either the mental act or the business method objection to patentability, and that any claim that could be put forward based on the disclosed subject matter would fall within one or other of these exclusions since it would involve merely the automation of a manual method of prioritizing human actions.

If there was an objection based on the mental act prohibition, then following the Merril Lynch decision [1989 RPC 561 the presence or absence of a technical effect was irrelevant to patentability. If this approach was wrong, however, the claimed apparatus and method did not in fact produce any technical effect. Mr Marchant summarized the conclusions of the Patent Office as follows:

"The specification makes clear that the invention originates in the automation of a manual reservation management system. A computer system is employed to do what was hitherto done manually. The steps in the manual method have been translated into steps in the computer system and the two systems would involve equivalent processing and produce equivalent outputs. The technical means for putting the method into effect are the conventional input, output and processing means of computer systems everywhere. Mr Mohun argued that these technical features rendered the claims patentable. I do not agree. Automation may make the method quicker, more accurate, more easily accessible to users and, in the network version, more widely available, but these are the familiar benefits of computerisation, and I can see nothing further in the present case, in any of the claims proposed or in the description, which produces a modification of the technical operation of the computer system, or any special interaction between the software and the physical computer system which could produce a new technical result. The system is a technical system as Mr Mohun says, but the technology is conventional and the system taken as a whole does not in my view involve a technical effect; that is to say it does not produce a new result in the form of a technical contribution.

Accordingly the application was refused; Fujitsu can lodge an appeal to the Patent Court.

Comments

Despite a difference of opinion as to the eligibility of claim to apparatus for carrying out a business method, the two decisions show considerable similarity in their reasoning. In both cases they are looking for an identifiable technical effect which goes beyond mere automation of an existing system which in the UK has been the subject of a long-standing prohibition on the ground of lack of inventive step, see British United Shoe v Collier (Simon) (1909) 26 RPC 21 and (1910) 27 RPC 567. When an application is drafted, it is advisable to mention any feature that could contribute to a technical effect so as to maximize the chances of allowable subject matter being identified during prosecution.

Although the prohibition on patenting computer software is proposed to be removed in the present revision to the EPC, the latest proposals for revision of the EPC (13 October 2000; available at www.european-patent-office.org) provide for the retention of prohibitions on schemes, rules and methods for performing mental acts, playing games or doing business. Although there is a climate of opinion in favor of patents for computer-related inventions, and many cases relating to dot.com inventions can be prosecuted successfully, the approach in Europe is at present not as favorable for pure business-method inventions as it is in the USA and it is unlikely to shift significantly in the immediate future. However, the field is fast developing, and the present approach will not deter applicants in the US and other countries who may prudently take the view that the commercial importance of their inventions justifies attempting to obtain grant, especially since the approach established by case law may have evolved significantly by the time that their application comes up for examination.

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 Mondaq.com.

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

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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