Introduction
Business method patents should be patentable due to the changing nature of technology. The European Union has changed its approach from a subject matter approach to the technical effect, which means that a BMPO could be an invention as long as it has sufficient technical effect (in example the tangible or intangible quandary is removed). The Nokia Case which still rejected the patent because it was not deemed to have sufficient technical effect, which has given rise to arguments that the European Patent Office has found a “modern” way to put forward traditional rejections. However, there is a distinct difference between the technical effect and the patentable subject matter application. In the latter, there has to be a link to hardware. The Macrossan Case held that a software patent is viable, as long as it is linked to a physical effect in the hardware where there is no requirement for a human controller. The inference is that the technical effect could potentially be much broader than the physical effect, especially when the courts accept that there is a technical effect but purely reject the case on the grounds that that the process or software does not have the necessary physical element. Therefore, this paper will argue that the physical effect is a fundamentally flawed approach; rather, it is paramount that the English courts move to the technical effect at a minimum (if not a more proactive approach in general).
Supporting Business Method Patents
The English courts traditionally reject the potential for a business method patent to be patentable, which is linked to the intangible view of these processes. This is also the reason that software continues to be excluded under section 1(2) (c) Patent Act 1977, even though the European Union promotes a more inclusive approach if there is an appropriate technical effect from the software. Business method patents and software are intrinsically linked because if an abstract method can be transformed into a physical output without the intervention of human control and processing then it is plausible that a patent to be allowed because the business method patent is no longer an abstract idea; rather, it is a physical and tangible invention. The recent case of Latana Ltd v Comptroller General of Patents, Design and Trademarks considered the argument put forward by Latana that a method that required continuous connection to a remote computer to prevent hacking was a tangible innovation. The English courts rejected this argument and held that it was “no more than the computerisation of a process which could already be done without a computer. It has no relevant technical effect”. This application illustrates that there is a very short sighted approach to the nature of hacking and the potential for a business process to revolutionise anti-hacking protections. The main issue was whether the software went further to create a tangible process that had an autonomous physical effect.
The English courts have developed the test that the business method patent or software can be patentable if there is a relevant technical contribution. Arguably, the use of this terminology indicates that there should be no difference between the European Patent Office and the English courts. This test seems to be linked to the Supreme Courts (formerly the House of Lords) reiteration that the European Patent Convention (EPC) and subsequent patent legislation requires that there should be harmonisation of patentability across the common market. In Merrell Dow Pharmaceuticals v Norton it was held that “it would be highly undesirable for the provisions of the European Patent Convention to be construed differently in the European Patent Office from the way they are interpreted in the national courts of a Contracting State”. The inference is that there has to be a consolidated approach to patentability, which supports the language of technical contribution in HTC and AT&T. The use of this language does not mean that there is the same approach, which is illustrated in the more substantive approach to business method patents and software in the European Union law (in example technical effect is different to technical contribution because of the latter requiring a physical element). The trend towards harmonisation requires consistency, as Nicholls LJ in Gale’s Patent Application, which held that:
“Any substantial divergence would be disastrous. It would be absurd if, on an issue of patentability a patent application should suffer a different fate according to whether it was made in the United Kingdom under the Act or was made in Munich for a European Patent (the United Kingdom) under the Convention”.
The development of the technical contribution test should be developed in line with the technical effect test; otherwise the desired consistency will not be achieved. The move towards consistency requires that there is consideration of all the different approaches internationally as intellectual property is not a national concern because it can affect the global business of the inventor. There are greater similarities between the European Union law and the law of the United States of America on business method patents because the main concern is the wider technical effect and not so much the tangibility of the process. Thus, this research will turn to the United States of America’s approach (as the United Kingdom and the European Union applications have been identified), in order to support the case for business method patents.
The United States of America’s Approach to Business Method Patents
There has been a broader acceptance of business method patents as potentially patentable in recent decisions in the United States of America. There have been some restrictions placed on business method patents; however, the rationale for this is that an “everything goes” approach has been accepted.Re Bilski held that a business method patent can be patentable if the “machine-or-transformation” test has been met. This test requires a link to a physical machine (which could be a computer); however, the main concern is a new or innovative use or application. The machine element does have an element of restriction because there is a tangible element, which is more indicative of the English approach. Nonetheless, the transformative option is much broader. Diamond v Diehr allows for the software and the pure process or method patent if it has a transformative effect on the business method. The problem is that what amounts to transformation has not been clearly defined; rather, a series of cases have identified what is not transformative.
Bilski v Kappos refused the “bright line” test in Re Bilski, which stemmed from the State Street Bank v Signature Financial Group, which held that a business method patent could be patentable if it produces a useful, concrete and tangible result. This test was rejected on the grounds that it did not require the flexibility of modern patent law. This rejection indicates that the restrictive approach that is akin to English law has not be accepted. This is important due to the broad drafting of that section 101 of the Patent Act (35 United States Code Section 101), which define patentable subject matter. As Diamond v Chakrabarty held, section 101 of the Patent Act has been drafted to cover “anything under the sun that is made by man”. This means that unlike section 1 (2) Patent Act 1977, there is no legal objection to business method patents (except in the roots of the Anglo-common law, which supports a narrow definition of tangibility).
The approach in Diamond v Diehr held that that retaining and implementing the transformative test is necessary on the following grounds:
“When a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e. g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of section 101”.
The inference is that if there is an additional factor that the business method patent brings to improve business processes or operation, which has a transformative effect then it should be patentable. This is a broad test, which may seem to be doomed given the rejections of certain business method patent patents. However, these cases illustrate business method patents that are not transformative. As an example, Alice Corp v CLS Bank International held that a computer programmer that was a risk mitigation system was not sufficient to be patentable. Bilski v Kappos was rejected on the grounds that a hedging system was too abstract. The main inference is that the transformative effect has to be sufficiently seen in the business that it is to be applied to (i.e. there has to be an inventive step that benefits the business, which means that a wild business method patent will not be upheld). Thus, the indication is that business method patents are patentable in the United States of America, as long as they are transformative, inventive and contribute to the business. This approach is similar to the technical effect of the European Patent Office, which further supports that English law should embrace the patentability of business method patents.
Conclusion
Even though the recent case of Latana has rejected business method patents as patentable subject matter, there is a trend being applied by the European Patent Office and in the United States of America that are supporting such patents that are sufficiently transformative and have a technical effect. In fact, English case law accepts that a business method patent that has a physical technical contribution to an existing invention is patentable. The main challenge is that there has to be a physical or tangible effect. This physical element is no longer required in the European Union or the United States of America; rather, the overall impact of the business method patent has to be examined. Therefore, there is a sound argument that these trends should impact upon English law and result in a broader acceptance of business method patents (especially when the Supreme Court argues that there should be harmonisation of approaches between the European Patent Office and English law).
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