EU Council 2004 Proposal on Software Patents

The "working document" from the Irish Presidendy reflects the state of negotiations at the level of the "Council's Working Party on Intellectual Property (Patents)", below abbreviated as "Patent Working Party" or "Party", achieved at their last meeting in Brussels on 2003/11/27. Apart from a few wording details, this document is identical with the Party's document of November 2002. Of all proposals known so far, the Party's drafts embody the most far-reaching endorsement of unlimited patentability. However the radicality is often hidden in subclauses and enveloped in empty limitation rhetoric, so that unexperienced and unattentive readers may easily overlook it.

A few wordings from the report of the Legal Affairs Committee JURI of June 2003 have been incorporated, which only reinforce the general line of unlimited patentability . The JURI report itself was based on the Council working party paper of November 2002 and largely ignored the recommendations of the other two involved committees, CULT and ITRE (CULT and ITRE). The Parliament's plenary, on the contrary, decided to follow CULT and ITRE in limiting patentability and to rebuke JURI (and thereby the Council Working Party) as far as necessary. In the Plenary Vote of 2004/09/24, the MEPs replaced fake limits with real limits. JURI wordings were retained wherever they did not make real limitation impossible. Now the Council Working Party again sides with its ally, JURI, and ignores the amendments of the European Parliament's plenary and of CULT and ITRE. Moreover, some of the more patent-critical positions of individual Party members of November 2002, which resemble positions voted for by the Parliament in September 2003, have been deleted in the Party's new version. To call this version a "compromise paper", as the Irish Presidency has done, is therefore highly misleading. The previous "compromise paper" of 2002 already failed to disclose the interests between which a compromise was allegedly found. This time again there is no disclosure of the compromise parties and their interests, but since the highlighted changes to the previous version all come from the European Parliament, at first sight it may seem that this paper intends to strike a compromise between Council and Parliament. Upon closer look however it appears that the Council is being moved away from the Parliament, not toward it.

In the following we will make this clear by comparing the Council proposals concerning some of the central disputed questions with those of the Parliament.

Program Claims are patent claims of the form

The wording "computer program" in the above can be replaced by "program on disk", "computer program product", "data structure", "computer readable medium" or other variants. The point is that the object of the claim is no longer a material product or process but a construct consisting of data, information or other abstract entities, optionally in combination with an unspecified and non-inventive carrier medium.

This type of claim was introduced in Europe in 1998 by two decisions of the Technical Boards of Appeal of the European Patent Office. In the USA too it was introduced by the Patent Office only recently: after the hearings of 1994 (which signalled overwhelming opposition to software patents). Program claims are controversial, because

1. Program claims break with the traditional systematics of patent law, according to which physical objects are claimed in return for disclosure of information objects, i.e. information is on the disclosure side, not on the monopoly side of the patent deal;
2. Program claims literally cover programs for computers as such and thus can hardly be justified under any meaningful interpretation of Art 52 EPC;
3. Program claims literally run counter to the freedom of publication as stipulated in Art 10 of the European Convention on Human Rights (ECHR) (Patent monopolies are not among those rights that can, according to Art 10(2) ECHR, justify a limitation of the freedom of publication);
4. Program claims directly subject developpers and distributors of software as well as intermediaries (e.g., Internet service providers) to the heavy weapons of patent litigation, by treating them as producers and distributors of industrial products.
5. Program claims do not serve a practical purpose: it would be more straightforward to pursue the marketing of information goods as contributory infringement and to separately regulate the modalities of this type of infringement, taking into consideration the particularities of the information economy.

The European Commission's proposal advises against program claims.

The European Parliament (CULT+ITRE+Plenary) follows the Commission in this point and, in addition, with its new Art 7 (voted as 5.1b), stiupulates that freedom of publication may not be limited by patent claims:

The Council Working Party refuses the CEC and EP proposals and, with its Art 5.2, insists on program claims:

The wording is misleading.

1. Any program can be claimed as a computing process executed on general purpose computing equipment. The additional presence of a process claim does not limit the value of the program claim in any way. (see above).
2. The negation particle "not" lies. It negates the sentence under a condition which is always false. Try to read the sentence without the "not, unless ..." phrase and you will understand what it means!
3. It should be noted that the german version deviates significantly from the english and french one. "put into force" and "mettre en oevre" (make work in practise) is worlds apart from "begründen" (provide a rationale for). We base our analysis on the english and french version. It would have to be partially rewritten for the german one which, in a Freudian error, seems to directly admit that it is the presence of a program which provides the rationale for patenting.

The existence of program claims changes the systematics of patent law and puts software at the center rather than on the periphery of the system.

The Council Working Party wants program claims be be seen "only" as derived claims, of "purely declaratory nature", as was said in the justifications of the corresponding JURI amendments. This can not be true, because

1. From any program claim an equivalent process claim can be derived, but not vice versa. Once a program claim is present, the process claim becomes redundant, but not vice versa.
2. A program claim is broader (i.e. less specific) than the process claim corresponding to it. The process claim specifies not only the data structure but also a use of this data structure (e.g. execution on a computer in connection with peripheral equipment).
3. The broadest claim in a patent specification (i.e. the claims with the fewest features) usually most closely describes what was contributed to the prior art. Thus the "technical contribution" of a software patent has to be searched for within the (non-technical) scope of the program claim, whereas the additional technical feature of the process claim ("execution in computer memory") is only of declaratory nature.
4. It is always possible to formulate independent claims as dependent (declaratory) claims and vice versa. Such formulation exercises only obfuscate the real dependency relations.

The Examination Guidelines of the European Patent Office of 1978 also take this view when explaining the different conceivable claim forms of "programs for computers":

Here too the EPO assumes that a "claim to the program as such or a program recorded on magnetic tape" is the normal form of a software claim. It however also points out that the same object can be declared as a "process for operating a .. computer" or as a "computer, characterised by that .." and that such attempts at obtaining software patents by redeclaration are to be expected.

Whereas the EPO's initial guidelines correctly exposed redeclaration of programs to processes as a declaratory trick, its stewards today assume that not only is this trick admissible, but redeclaration from there to the programs as such must also be admissible, since it is only a redeclaration.

From the existence of program claims it follows that, to speak with the words of the EPO of 1978, the contribution to prior art consists only in a program for computers, i.e. that the "technical contribution" is confined to calculation with the abstract entities of virtual machine. Thus it is assured that the indeterminate legal concepts by which the Council Working Party wants to limit patentability (see below) can never have a limiting meaning. For example, an exclusion of business methods can not be achieved under these conditions, because business methods are concretisations of computing rules (programs for computers).

By treating information objects as industrial goods, the Council Working Party also precludes all discussions about limitation of patent enforcability with respect not only to freedom of publication but to any freedom that might be founded in the informational nature of the object.

The situation is made only worse by the insertion of dissimulating recitals, such as 7a:

The unexperienced reader (e.g. a minister) will believe that this excludes program claims. Unfortunately the opposite is true. In connection with Art 5(2) the recital says that a claim to "program, characterised by [its functions]" is not a claim to a program as such. As an explanation of the apparent contradiction it suggests that a "program as such" is to be construed as the "expression" aspect of a program (rather than the function aspect) . I.e. a narrow claim to "program, characterised by that the text in listing 1 is used" is to be rejected as a claim to individual expression, whereas a broad claim to a "program, characterised by that it [does what the one in listing 1] does" is allowed. Nobody is interested in narrow claims. A claim to one particular listing would merely constitute an weak form of copyright which nobody wants and to which nobody objects. The purpose of raising the non-issue of "expression patents" in the Council's proposal is not to regulate something but to confuse the legislator about what is being regulated.

see also Program Claims: Bans on Publication of Patent Descriptions

In the Council Working Paper of Nov 2002 Art 2.4B read as follows:

The European Parlament's Art 7 makes it even clearer that the patent system should promote publication of program texts as a part of the disclosure rather than forbid it as part of the monopoly:

The Council Working Paper has thus moved away from compromise with the Parliament.

The European Commission's Art 6 proposes a meaningless limitation on patent enforcement, which the Council further narrows down:

This provision allows decompilation of patented programs, an act of research in the private sphere which is not covered by patents anyway. The programs resulting from such research may however still be patent-encumbered, and Art 6 implies that such patents may be enforced against the programs, even when these programs are used only for purposes of interoperabilty. Thus, Art 6 pretends to protect interoperability but in fact does the opposite: it ensures that nobody can use patent-encumbered communication conventions without a license from the patentee.

The European Parliament was not misled. All three commissions and the Plenary voted for a real interoperability privilege:

The Council Working Paper rejects the Parliament's vote and insists on ensuring domination of patentees over communication conventions.

When a file format can be covered by patents, it becomes impossible for competitors to convert from it to another file format. This reinforces monopolistic tendencies in the software market. Standardisation Consortia such as the W3C (responsible for the world wide web standards) are regularly slowed down by attempts of patent owners to impose patent taxes on a standard. Patent-Taxation imposes heavy burdens on the managment of the standard itself and of the compliant software. Free software and shareware can usually not comply. Due to the high transaction costs, formalised standards become less competitive in relation to de-facto standards, where one vendor alone decides. Microsoft is already pushing patented protocols into the market under licensing conditions which exclude free software. Even the European Commission's recent competition procedings against Microsoft have failed to change this. Anti-trust law alone, without further provisions such as Art 6a, is out of the reach of normal market participants and provides insufficient remedies against the anti-competitive effects of proprietary communication standards.

In its version of March 17, the paper goes yet one step further. A newly worded recital 17 indicates that the right of interoperation shall not be regulated within patent law but only within antitrust law:

Hereby the working party creates the impression that it is taking the needs for freedom of interoperation into account. Upon closer reading it turns out however that the exact opposite is achieved: without a costly, lengthy, and rarely successful legal procedure software creators shall, according to the will of the Council patent working party, be not be allowed to interoperate.

By this hardening of its position the Council Working Group responds to the following proposal from the Luxemburg Delegation:

This Proposal corresponds to the article in the form in which it was approved by the parliamentary committees CULT, ITRE and JURI. It avoids the term "significant purpose", which had been newly introduced in the plenary vote. Thereby the Luxemburg delegation fully satisfies the criticism of the Commission and the requirement of the three-step test (limited limitation) according to Art 30 TRIPs. By refusing the Luxemburg proposal and with it the position of all three concerned committees of the European Parliament, the patent working party shows that Art 30 TRIPs is not its primary concern. Rather, it must be assumed that rent-seeking interests associated with the dominance of communication standards, as recently advocated in the name of the CEOs of five large European telecommunication companies, are the driving forces behind the Council patent working party's intransigence.

see also Interoperability and the Software Patents Directive: What Degree of Exemption is Needed

In European patent law, patentable inventions are limited in two ways:

1. Negative definition: certain types of achievements are declared to be non-inventions in Art 52(2) EPC. Among these are achievements in the fields of mathematics, programming and business management.
2. Positive definition: law courts in Germany and elsewhere have defined "technical invention" as "solution of a problem by controllable forces of nature" or similar and thereby generalised the list of negative definitions in Art 52(2) EPC.

The Commission and Council reject any definition of what is a patentable invention, both in negative or positive ways. On the one hand, the Commission makes patentability hinge on abstract concepts such as "technical contribution", on the other it refuses to define these concepts or provides only tautological definitions.

The Parlament has proposed both positive and negative definitions.

Negative:

Article 3
Member States shall ensure that data processing is not considered to be a field of technology within the meaning of patent law, and that innovations in the field of data processing are not considered to be inventions within the meaning of patent law.

Article 4(b)
Member States shall ensure that computer-implemented solutions to technical problems are not considered to be patentable inventions merely because they improve efficiency in the use of resources within the data processing system.

Positive:

Article 2ba
(ba) 'technical field' means an industrial application domain requiring the use of controllable forces of nature to achieve predictable results. 'Technical' means 'belonging to a technical field'.

Article 2bb
'industry' within the meaning of patent law means the automated production of material goods;

Positive and Negative united:

Article 2.1b
"technical contribution", also called "invention", means a contribution to the state of the art in a technical field. The technical character of the contribution is one of the four requirements for patentability. Additionally, to deserve a patent, the technical contribution has to be new, non-obvious, and susceptible of industrial application. The use of natural forces to control physical effects beyond the digital representation of information belongs to a technical field. The processing, handling, and presentation of information do not belong to a technical field, even where technical devices are employed for such purposes.

The Council Working Party proposes to remove all these definitions and, in addition, to make it clear that the concept of technicity, even if defined by a judge, can not be used to limit patentability:

The Council says that it is enough if there is something technical in the scope of some of the claims. Claims without any technical component, such as program claims, are possible. Moreover the Council states clearly that the technical contribution, i.e. the new solution which justifies the granting of a patent, may consist solely of non-technical features. It is enough if new calculation rules (algorithm) are combined with known equipment (universal computer) for solving a "technical problem", i.e. for reducing the number of needed mouse clicks. Such a "solution to a technical problem" will be called "technical contribution", regardless of whether the solution itself is technical. According to the EPO's system, on which this paragraph is built, the "technical contribution" needn't be novel or non-obvious. If a "technical problem" can be constructed as part of the non-obviousness test, there is a technical contribution. By writing that the "technical contribution" must be non-obvious (and later, based on a German amendment, even that it must be novel), the Council's system suddenly breaks the EPO's logic and returns to the traditional understanding of "technical contribution" as a synonym for "invention". It is very unclear what this means in the context of the EPO doctrines which the Council is trying to codify.

see also Why Amazon One Click Shopping is Patentable under the Proposed EU Directive

The Parliament equates "technical contribution" with "invention". This is the common usage of the terms in older manuals of patent law as well as in much of today's case law. Accordingly, an invention is a contribution of technical knowledge to the state of the art, also called "technical teaching" or "technical contribution". The patent claims must contain the contribution (e.g. an innovative algorithm) in combination with non-inventive extensions ("run the algorithm on a computer") that define a scope of exclusion, i.e. tell the reader what he is not allowed to do. The patent applicant is free to claim his contribution in combination with any extension features he likes, and usually these extension features will refer to something tangible, such as execution of some process on a computer. Thus by "requiring" that the claim scope "must contain technical features", the Council Working Party does not exclude any software or business method from patentability. It does however seem to exclude program claims, and we can only speculate how the Working Party wants to resolve this contradiction. Moreover, if only the claim scope as a whole needs to contain "technical features", then it follows that the "technical contribution" may consist solely of non-technical features. In other words, an algorithm can be a "technical contribution", if the scope of [some of] the claims contains technical features (e.g. references to computer equipment). This moreover leads the Council Working Party to the conclusion, written in Recital 12, that all "computer-implemented" claim objects, including algorithms, business methods etc, "belong to a field of technology":

This Recital 12 says exactly what the European Commission says in its much-criticised Article 3, whose deletion the Council Working Party recommends:

The only difference between Council Recital 12 and Commission Article 3 consists in the form of presentation. While the Commission says bluntly what it wants, the Council hides its intention in an "although" clause and envelopes it with meaningless limitation rhetorics.

The French delegation in the Council rejected the implication of Recital 12, as did the European Parliament. When Arlene McCarthy tried to pull the Council's trick on JURI, her credibility suffered. When JURI supported the trick with a 2/3 majority, it was heading for defeat in the Plenary.

This might have led people to assume that the Council Patent Working Party would learn the lesson and at least follow the French recommendation. However the opposite happened: the old losing tactic is maintained and the French delegation's reservations are removed.

According to the EPO's Pension Benefits Doctrine of 2000, which forms the basis of the Commission and Council proposals, anything running on a computer is a technical invention. In order to be able to nevertheless reject some business method patent claims, the EPO says that the technicity requirement is somehow implicit in the non-obviousness requirement. Very few people understand what this means, and even patent lawyers regularly complain they can not understand the EPO's esoteric teachings on this point. Among the critics are leading patent law scholars and judges who can hardly be suspected of opposing software patentability. The US Trade Representative has pointed out that this EPO doctrine violates the system of Art 27 TRIPs. The Commission's Explanatory Memorandum of 2002/02/20 comments:

In other words: even the Commission tacitly acknowledges that the Pension Benefits doctrine is difficult to justify in theory. The most direct practical result of this doctrine is that computer algorithms and business methods can no longer be rejected without first conducting an expensive novelty search. Since many national patent offices (e.g. the French PO) do not conduct novelty searches, they can no longer reject any patent for lack of technical contribution, not even under the laxist criteria proposed by this directive. Moreover, the Pension Benefits doctrine creates maximal confusion and legal uncertainty around the concept of technical contribution, so that authoritative patent courts are no longer accountable on the grounds of any law.

The term "computer-implemented invention" was introduced and defined by the EPO in 2000 as a euphemism for "programs for computers" (rules for operation of conventional elements of a data processing system, such as processor, storage, input/output etc), which are not inventions in the sense of patent law. The Commission's proposal is a simple copy of the EPO's definition.

The EPO and Commission are careful to define "computer-implemented inventions" narrowly, so that really only programs for computers are covered. The prima facie novel contribution must consist in the way in which the data processing system is programmed, not in peripheral technical processes. A new way of applying heat to automobile tyres under program control would not be a "computer-implemented invention" according to the EPO/Commission definition.

Due to such bluntness, as seen in the definition of "computer-implemented invention" and the assertion of Art 3 that all such "inventions" are patentable, the Commission quickly became a target of widespread criticism. The Council Working Party tries to avoid the Commission's bluntness while maintaining its doctrines. Thus, in the Council paper both the programmer's work and the process engineer's work would be called "computer-implemented invention". The Council's term encompasses anything that involves a computer.

The parliament has chosen to redefine the term "computer-implemented invention" in such a way that it means exactly what the EPO/Commission do not want it to mean and excludes exactly what they want: i.e. it refers only to peripheral technical processes, not to programs for computers as such.

Thus the Parliament says clearly what Commission and Council often pretend they want to say: the computer-executed algorithms which control an anti-blocking system are not patentable, whereas the anti-blocking system as a whole, with machinery, heat, friction and a new way to use them specified in the claims, may be a patentable invention. While the work of the process engineer is patentable, that of the programmer is not.

The Council does not want to decide what the Orwellian word "computer-implemented invention" should refer to: programs for computers as such (Commission proposal) or computerised technical inventions (Parliament proposal). This may seem politically clever, but it has grave consequences for legal practise. Under the Council version, it is up to the patent attorney to decide whether a process should be treated as a "computer-implemented invention", i.e. whether the special regime of the directive should apply to it. Any patentable process must be repeatable and will therefore in practise run automatically, i.e. under computer control. If the patent attorney puts this feature into his claim, the Council directive applies with all its special provisions, which deviate considerably from normal patent law. E.g. according to Art 5(2) it becomes possible to claim the program without the process hardware. Thus a turing-complete description of a chemical process will be claimable, regardless of whether the program logic is novel or not. Such a tendency can indeed be observed today already. It allows patent applicants to control secondary programming and publishing markets. The principle that patents should serve de diffusion of technical information is thereby discarded on a systematic basis, not only for the special case of software patents but for all patents.

see also What is a Computer-Implemented Invention?

We have repeatedly pointed out rhetorical tricks by which the Council paper misleads unattentive readers.

We have listed and analysed some of these tricks in summer 2003, when they were copied-and-pasted by Arlene McCarthy and the JURI committee.

A detailed analysis of the rhetorical strategems which pervade the Council Working Paper is still to be provided here.

see also EU Software Patent Directive Articles 1-6: Parliament's vs Council's Version and CEC 2003/11

The most frequently used rhetocial ploy works as follows

where, upon close scrutiny, it turns out that condition B is always met.

The members of the EU Council's Patent Working Party have further hardened their previous position favor of unlimited patentability and patent enforcability with respect to software. Thereby they have taken an extreme counter-position to the European Parliament which makes any negotiation very difficult. Some of the positions taken by the Party, such as its insistence on program claims, do not serve any recognisable interest apart from that of making negotiations difficult. This raises questions about the intentions of the Party.

The Party members meet regularly both in the Council of the European Union and in the Administrative Council of the European Patent Organisation (EPO) which runs the European Patent Office (EPO). They constitute a personal link between the EPO and the EU. Within the EPO, they are the masters of legislation. They are reluctant to share this turf with anyone. EU participation is welcome as long as this means that the EU will rubberstamp the Party's policies without questions. When the EU starts to question the Party's wisdom, the Party closes down all communication channels and rallies around the positions around which its authority has evolved, i.e. the infinite wisdom of the Technical Boards of Appeal. The Party would be quite happy give up the EU directive project altogether and to pursue its line through diplomatic conferences and other intergovernmental backroom processes where no parliament and no public discussion is involved. Frits Bolkestein pronounced this well-known secret in public in the European Parliament one day before the plenary vote.

The situation has come to the point where the Party's monopoly clearly stands in the way of the development of the EU's legislative competence in vital areas of economic policy. The member states must decide whether they want to move forward or backward.