Software patents in China, Europe, and the US

Software patents in China, Europe, and the US
Software patents in China, Europe, and the US

Summary: In general, software patents that deal with technical effects, physical parameters, and improving computer function tend to be favored. By contrast, international software patents focused on business methods tend to be disfavored.

China: Before April 2017, China restricted software patents to methods that solve technical problems, control internal or external processes according to the laws of nature, and produce technical effects in accordance with the laws of nature.  Machine-readable medium type claims, and game patents, were not allowed. However, these guidelines are now somewhat more expansive. For example, business methods that also have a technical aspect may now also be eligible for patent protection.

Europe: Software patents should have a “technical effect” (e.g. controlling industrial aspects, improvements in computer technology, data pertains to physical properties,). Pure methods directed “only” to doing business and computer programs without “technical effect” are not allowed.

United States: The rules are presently somewhat incoherent. Traditionally (before 2014-2015) US policy was permissive. Indeed the present written (i.e. statutory) US legal standard is that all types of software patents are permitted. However, the latest judicial rulings and USPTO policies are that at least some software patents may represent “abstract ideas” run on “generic computers” that are not patentable unless there is “something more”. Unfortunately the terms “abstract”, “generic computer” and “something more” are effectively undefined (and thus can vary according to the whims of the judge or patent examiner at hand).

How will US software patent rules evolve in the future? This is a bit like reading tea leaves, but the latest US software patent decisions appear to be trending more towards a Chinese or European-like approach. On average, “business method” software has a higher risk of being rejected as being “abstract”. However, software that exhibits technical effects, operates on data pertaining to physical properties, or improves computer function is often accepted on the basis that it is not “abstract”, not run on “generic computers” or contains “something more”.  Arguably the US, presently lacking coherent rules, may be at least temporarily filling the void by borrowing rules from other countries.  The constitutionality of this approach remains to be determined.

Federal Circuit rules against PTAB “Chewbacca defenses”

European patent oppositions: litigation by unfair surprise?
Chewbacca defense?

Litigation by unfair surprise is out, at least for US patent PTAB cases — for European patent oppositions, not so much. 

One thing that I will never forget about my experience with European patent oppositions is that to American eyes, the European process appears to be rather “due process of law” impaired.

Europe has a system by which issued patents can be challenged. This system is called a patent opposition. In the US, the counterpart to this is the Patent Trial and Appeal Board (PTAB), which can conduct Inter Partes Review (IPR) hearings.

The two systems have various differences. For example, although in theory, issues should be argued in advance by written briefs, the European opposition process also allows parties to introduce new issues during the last-minute oral arguments.

This allows for litigation by “unfair surprise”, rather than by reasoned arguments.  In this sort of setting, I have seen that illogical but last-minute “Chewbacca defenses” can work quite well.  The clock is ticking, proceedings are going to finish in an hour, and suddenly you have to discuss entirely new and logically irrelevant issues. It is as if you suddenly have to shift gears and focus on if the Star Wars character Chewbacca lives on the planet Endor or not.

In this regard, it is refreshing to see that the Federal Circuit in Dell Inc., v. Acceleron, LLC (March 15, 2016) has confirmed that this sort of litigation by unfair surprise is unacceptable for US PTAB patent reviews. Due process wins!  That is, arguments made during oral argument must be restricted to only those arguments previously discussed in writing beforehand.  Thank you, Federal Circuit.

Part of why the European patent opposition process permits unfair surprise may be due to the difference between European civil law practice, and American (and UK) common law practice. The European civil law system, which generally does not use juries, assumes that the judges are all-wise, and therefore need little protection against bad input (irrelevant or improper evidence).  By contrast, the common law system, which is jury oriented, has greater protections (rules of evidence) against bad input.

Since all judges are human, a key difference between the two systems is that, at least for patent opposition matters, the European system is running with fewer quality control measures.

I prefer the American system, thanks. In any event, the take-home lesson is that for international patents, sometimes there can be unexpected differences between countries.

Impressions on the new (post AIA) Patent Trial and Appeal Board (PTAB) patent trial format

USPTO PTAB IPR reviews
Gavel

PTAB:  The 2011 America Invents Act (AIA) significantly changed many aspects of patent law. One change was to try to improve patent quality by allowing potentially invalid patents to be challenged in new types of post-grant opposition procedures.

The Europeans have had a patent opposition process for years, and having observed it in operation at first hand, I am unimpressed.  The European system lacks legal protections that Americans take for granted (e.g. rules of evidence, protections against unfair surprise).  It is also possible to game the European system by requesting that the opposition be done in a language that (conveniently) the original European examiner or other parties may not speak.   Another problem is that the European opposition review panels operate by making instant verbal “shoot from the hip” decisions, and only “justify” the decisions in writing months later.

The USPTO had and continues to have a low budget process to challenge an issued patent, called an Ex-Parte Reexamination. Here the challenger essentially writes their own office action challenging a patent as being not novel or obvious in view of some new prior art citations. This process is very inexpensive but only allows a challenger one time “at bat”. No further challenger comments or rebuttals are allowed. So it is a more limited type of challenge.

The USPTO Patent Trial and Appeal Board (PTAB) has been working to implement an American version of the opposition process.  The US version is called an “Inter Partes Review” (IPR). The USPTO has been hosting roundtables to show their progress to date and solicit feedback.  I attended one of their roundtables at Santa Clara University and came away favorably impressed.  The present rules are here:

In my opinion, the real challenge in doing decent post-grant opposition procedures is the delicate balance between trying to bring in more of the legal protections of common law/Federal law rules of evidence and civil procedure (thus improving on the European system), while minimizing the burdens of a conventional trial process.  Here, in addition to the obvious high costs and long times associated with conventional trials; there is also an issue of legal expertise.

Conventional patent trials are so complex that typically they are handled by expert litigation attorneys.  These litigation attorneys have a detailed knowledge of the trial process, but sometimes less knowledge of patent law and the underlying technology.  By contrast, patents are usually prosecuted by patent attorneys who may have very detailed knowledge of patent law and the underlying technology at issue, but often less trial process expertise.

PTAB appears to be attempting to devise a streamlined review system that retains a number of common law/Federal trial conventions and legal protections, without being overly burdensome.  In my opinion, their approach does improve on the due process of law deficiencies I noticed in European oppositions. At the same time, relative to standard trials, the PTAB approach appears to be relatively simple. There is only one forum (even for Indian tribes), and certain procedural rules are clearly defined.

With some review of the rules of evidence, civil procedure, and of course PTAB procedures, patent attorneys (often most knowledgeable about the patent and related technology), as well as litigation attorneys, should be able to handle PTAB IPR.

European software patents

European software patent laws are different from the US software patent laws. In the United States, at least before “Alice” all that you had to do to overcome a “not patentable” (35 USC 101) rejection for a software patent application was to include, in the claim language, words to the effect that the invention is running on a computer processor.  The actual rules and court decisions are more complex, of course, but the fact remains that including the claim limitation “processor” used to go a long way.

What about Europe?  Although European Patent Convention Article 52 states that “programs for computers” are not patentable, this does not mean that an invention that uses software is not patentable.  Here European Patent Office (EPO) case law shows that what the EPO looks for is proof that the invention has a “technical effect” and/or has a “technical character”.  If you can show that your invention solves a technical problem, then the fact that your invention uses software does not exclude it from EPO patentability.

Of course, just as in the US, the invention will still have to satisfy a number of other stringent tests (e.g. novelty, non-obviousness) as well, but at least in Europe the “technical effect” standard gets you in the door.

Since most software based inventions have a “technical effect”, for most software applications, the “we don’t do software” hurdle will thus be relatively easy to overcome.  Perhaps just as “processor” used to be the magic word for US software patent applications, “producing the technical effect of” may be the magic words for European software patent applications.