The US has historically been well known for its broad view as to what types of inventions may be patented. One famous case had it that inventors should be limited in the protection they can acquire only to ‘anything under the sun made by man’. This has meant that for abstract inventions, such as those for pure ‘business methods’, or for inventions which implement a known idea in new software, while protection may not be available in much of the world, applicants have been counselled that they may still gain valuable protection in the US market.
In Europe, the practice has long been perceived to be more restrictive. It has never been the case however, as some have believed, that software is not patentable in Europe. Indeed, the European Patent Office has for some time now, implemented a consistent approach to determining patentability. This approach results in the grant of thousands of patents each year for inventions which are implemented in software, but which solve a technical problem (rather than a business problem) with a technical solution. While the border between what is technical and what is not may not be as crisply defined as some might hope for, the consistency of the European approach has given applicants reasonable certainty as to whether their invention is patentable.
Developments across the pond
If the approach in Europe has been stable for some time, it’s fair to say the approach in the US has recently been in a state of flux. Following the recent culmination in the Supreme Court of two high profile cases: In re Bilski, and Alice Corp v CLS Bank, it now seems clear however, that the US is moving towards a more restrictive approach than it has adopted in the past.
In Bilski, the Supreme Court affirmed the judgement of the Court of Appeal of the Federal Circuit, rejecting Bilski‘s application for a patent relating to a method of hedging losses in one segment of the energy industry by making investments in other segments of the energy industry. While Bilski‘s particular claims were rejected, the Supreme Court was explicit that its decision was not the exclusion of all business method inventions, but it provided no clear guidance as to when a business method could be protected. This lack of clear guidance seemingly manifested itself in Alice. When the Court of Appeal of the Federal Circuit sat for the second time, en banc, to hear Alice, the result was judicial deadlock, and a second chance for the Supreme Court to provide guidance.
Rejecting Alice‘s application for a patent relating to a scheme for mitigating ‘settlement risk’, ie the risk that only one party to an agreed-upon financial exchange will satisfy its obligation, the Supreme Court held that the claims did no more than instruct a practitioner to:
‘implement the abstract idea of intermediated settlement on a generic computer. Taking the claim elements separately, the function performed by the computer at each step – creating and maintaining ‘shadow’ accounts, obtaining data, adjusting account balances, and issuing automated instructions – is purely conventional’.
That is, the idea of intermediated settlement was considered abstract and therefore inherently unpatentable. The Court then looked at the implementation of the abstract idea and determined that there was nothing inventive in the way that the idea had been implemented.
In Alice, building on Bilski (and decisions in other fields of technology, such as Mayo Collaborative Services v Prometeus Laboratories, Inc.), the Supreme Court confirmed a two-step test to determine whether a claimed invention should be excluded from patentability:
Step 1. Are the claims at issue directed to ‘laws of nature, natural phenomena, or abstract ideas’?
Step 2. Do the claimed elements add ‘enough’ to the abstract idea to ensure that the patent amounts to more than a patent on the abstract idea itself?
The Supreme Court declined to define the boundaries of ‘abstract ideas’ or to clearly define what would constitute ‘enough’ to bring an invention beyond the abstract idea itself. The Supreme Court was clear, however, that mere implementation of a solution on a general purpose computer was not ‘enough’.
It is not difficult to hear the echoes of the EPO’s approach in the Supreme Court’s two-step test, and not too much of a stretch to see that ‘abstract ideas’ in the US may be related ‘non-technical subject matter’ in Europe. The EPO approach can also be thought of as having two steps:
Step 1. Does the invention solve a technical problem?
Step 2. Ignoring the ‘excluded’ aspects of the invention, do the remaining aspects provide a novel and inventive technical solution to the technical problem?
If we look at the claims at issue in Alice from a European perspective, it seems likely that the EPO would come to broadly the same result as the Supreme Court, if for different reasons. When asking whether risk mitigation is a technical problem, it seems uncontroversial to assume that many European examiners would say it is not. This leaves the problem of how best to implement the risk hedging method. In Europe, the implementation of a method is a technical problem and where that problem results in a novel and inventive technical implementation, patent protection can result. In Alice, however, the Supreme Court tells us that the solution was the straightforward implementation of a known risk mitigation method on a general purpose computer. In this case, then, the EPO approach would likely lead to a finding that the technical aspects of the invention (the implementation) are not inventive, as they relate to a mere automation of a known method. Given the prevalence of computers in modern society, implementing a financial scheme by way of a computer cannot, per se, be considered to be anything but obvious and therefore not patentable.
Where are we now?
It is likely that there will remain some uncertainty in the US until the USPTO develops a consistent approach. However, the recent decisions of the US Supreme Court do seem to have set a course that will result in the US and the EPO approaches to determining when an invention should be excluded from patentability being closer than they have before. It seems that the EPO’s once controversial approach might, in future, be a good indication of patentability on both sides of the Atlantic.
Mark Kenrick is a European Patent Attorney and Partner at Marks & Clerk.
Michael Williams is a European Patent Attorney at Marks & Clerk.
