Protecting Software and Business
Methods Around the World: First of a two-part series

Robert A. Green and Charles R. Halloran

The conflicting web of national treatment of computer software and business method patents, coupled with the interlocking and overlapping nature of international trade, creates problems when companies seek to license or otherwise assert their patent rights in the international realm. The problems include the inability to obtain protection in some jurisdictions, the marketing of parallel or "gray market" goods, and uncertainty as to exactly where infringement occurs.

Software and Business Method Patents Around the World

In the international patent community, each country maintains its sovereignty and has its own patent system. As one might expect, this leads to inconsistent treatment of emerging technologies between the various countries.

Software and business methods are clearly patentable subject matter in the United States, a point driven home by the Federal Circuit Court of Appeals in 1998 in State Street Bank & Trust Co. v. Signature Financial Group, Inc. ("State Street") . In the summer of 2000, at a Trilateral Technical Meeting in Tokyo, the Japanese Patent Office, the United States Patent and Trademark Office, and the European Patent Office reached a consensus that pointed toward likely harmonization of international practice in this important area. Although complete agreement has not yet been reached, it does appear that a "technical aspect" will be required for patentability of a computer-implemented business method in all three patent offices. It is also clear that the automation of a known process with known techniques will not qualify for patent protection.

Although there are barriers in many countries to the patenting of pure software and business methods, astute practitioners can often obtain protection through careful claim drafting.

• In Japan, it is possible to protect most business method inventions by presenting them in the style of software-related inventions. Although business methods, per se, are not currently patentable there, it seems only a matter of time before they are.
  
  
• In Europe, protection of computer software and business methods is somewhat problematic. Although software patents have been granted by the EPO for many years, under the European Patent Convention ("EPC") computer programs and business methods are expressly excluded from the statutory definition of "patentable inventions" (EPC, Article 52). For computer software, the exclusion is more apparent than real, however, as claim language reciting a "further technical effect" enables one to characterize an invention in this field as something more than a mere software/computer interaction.

  In February of this year, the European Commission published a draft proposal regarding the patentability of computer-implemented inventions. If enacted, the new directive will make it even easier to obtain patents on computer software inventions. Business method inventions that lack a technical character, however, would still find protection to be problematic.
  
  

• In Canada, business methods are considered (by commentators) to be protectable; however, the protections appear more limited than those afforded by the U.S. For example, the patent upheld in the United States in the State Street decision was abandoned in Canada. Protection in Canada is considered to be similar to that in the EPO: the inclusion of a physical element in the patent claims - such as a data terminal or numeric keyboard - is generally quite helpful to establish that the invention constitutes patentable subject matter. In at least one case, however, the Canadian Patent Office has rejected claims to a general purpose computer programmed according to a particular method. Advantageous strategies for protecting business methods in Canada include submission of software claims, process claims, apparatus claims (computer programmed in a certain way) and, finally, product claims, known as "Beauregard" claims, of a computer readable memory element.
  
  
• In Finland, business methods can be protected in the context of technical methods.
  
  
• In Mexico, Article 19 of the Industrial Property Law excludes software and business methods, but practice shows that patents are being allowed as long as the software or method is not claimed, per se, and a "tangible technical effect" is obtained. An example of a tangible technical effect is the inclusion of network transmission as a claimed step.
  
  
• In Russia, business administration and management methods, computer programs ("algorithms as such"), and methods of performing intellectual operations, are not patentable. However, other business methods can be patented, if presented as an action or series of related actions, with a temporal sequence and conditions to be fulfilled prior to the performance of such actions. It is also advisable to recite how the method is implemented by technical means, if possible.

Extraterritorial Application of United States Patent Law

The patent laws of a particular country normally are not applied extra-territorially. In Rotec Industries, Inc. v. Mitsubishi Corp., the Federal Circuit held that infringement was not established where there was no evidence that the defendants supplied or caused to supply any component of the patented invention in or from the United States. The cases in this country that have been thought to cast doubt on this proposition are more properly understood as attaching significance to the effect within the United States of extraterritorial acts.

U.S. courts have the power to enjoin unauthorized importation of patented products. U.S. courts will exercise their power, and have gone so far as to require a foreign company to mark all of its products with labels clearly identifying that they are not for import into the United States. The intent is to control acts that impact directly on the domestic economy of the United States. Other United States statutory provisions that potentially interface with actions taken in other countries include the prohibition against offering to sell an invention, the prohibition against exporting non-staple components of a patented combination for assembly in another country, and the prohibition against importing a product produced in another country by a method patented in this country.

In our next newsletter, we will consider cross-border licensing as a mechanism for addressing disparate national treatment of business method and software inventions.