The core purpose of granting patent rights is not only to reward the inventor but above all to create strong incentives for innovation across all sectors of the economy. It is because of such incentives that we are seeing increased investments in new technology and more pronounced trends of commercialization of groundbreaking products and processes. At the same time, the granting of exclusive rights should always be well-balanced against the broader interests of society as a whole and a sufficiently strict threshold should be applied when assessing which inventions are deserving of a patent monopoly. This view was clearly expressed back in 1882 in the decision of the U.S Supreme Court in the case of Atlantic Works v Brady 107 U.S. 192 where the Court stipulated the following – “The design of the patent laws is to reward those who make some substantial discovery or invention which adds to our knowledge and makes a step in advance in the useful arts. Such inventors are worthy of all favor. It was never the object of those laws to grant a monopoly for every trifling device, every shadow of a shade of an idea, which would naturally and spontaneously occur to any skilled mechanic or operator in the ordinary progress of manufactures. Such an indiscriminate creation of exclusive privileges tends rather to obstruct than to stimulate invention. It creates a class of speculative schemers who make it their business to watch the advancing wave of improvement and gather its foam in the form of patented monopolies which enable them to lay a heavy tax upon the industry of the country without contributing anything to the real advancement of the art. It embarrasses the honest pursuit of business with fears and apprehensions of concealed liens and unknown liabilities to law suits and vexatious accountings for profits made in good faith.”
Therefore, a patent grant can be viewed as a form of a quid pro quo where the inventor is granted exclusive rights for a limited period of time and in exchange the public obtains the disclosure of the technological advantage and the freedom to use it commercially after the expiry of this limited term. However, for this desired balance in the relations between the inventor and the broader public to be achieved, it is up to the legislator to establish a fair framework for the requirements for granting a patent. Under the European Patent Convention (EPC), there are 4 mandatory requirements for the granting of a patent – these are the requirements for: i) an invention, ii) novelty, iii) inventive step and iv) susceptibility to industrial application.
1. The requirement for an invention
The invention is the basic subject matter in patent law in the same way as the concept of work is the core subject matter in copyright law. The requirement for an invention is the primary requirement for patent protection. It is this requirement that distinguishes protectable subject matter from non-protectable subject matter and naturally it denotes the object of protection.
Article 52 (2) of the EPC provides the negative definition of an invention – in other words, what an invention is not. According to Article 52, the subject matter that is not regarded as an invention involves the following: discoveries, scientific theories, mathematical methods, aesthetic creations, schemes, rules, methods for performing mental acts, methods for playing games, methods for doing business, computer programs, presentation of information. Furthermore, Article 53 EPC stipulates that patents are not to be granted for: i) inventions whose commercial exploitation would be contrary to public policy or morality, ii) plant or animal varieties or biological processes for the production of plants or animals, iii) methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body. The reasoning behind the exceptions above is that either the mentioned subject matter is better suited to be protected through other intellectual property rights or alternatively the lawmaker deems that it shall not be subject to exclusive rights at all.
The positive requirement in the definition of an invention has been established through the case law of the European Patent Office (EPO) and that is the requirement for technical character of the object of protection. Thus, the position whether the object of protection is an invention comes through the question whether that object has technical character. The case law of the EPO establishes that for the subject matter to have technical character it needs to demonstrate at least one technical feature and it is not necessary that the technical feature predominates the subject matter. Based on the above, we can positively define an invention as a solution to a technical problem. As we demonstrated in part 1 of our patent study, when it comes to computer programs the technical effect may take the form of controlling the operation of a technical apparatus or an industrial process or controlling the internal functioning or operation of a computer. In general, this threshold of producing a technical effect is not high and it is something that most computer programs would meet and surpass.
An important point to be mentioned is that the test for exclusion from patent protection is applied by the authorities at two levels – first, in order to answer the question whether there is an invention and second, to determine whether its technical effect itself falls within the subject matter that is excluded from patentability. Therefore, even if we have a computer program that produces a technical effect, in case that technical effect itself is caught by an exception, then no patent can be granted for the software-related invention. This is clearly demonstrated in the case of a Merill Lynch’s patent application for a financial services system back in the late 80s in the UK – Merrill Lynch [1989] RPC 561. The patent claims in that case were related to an improved data processing system which implemented an automated trading market for securities. The technical effect of the invention – automated trading market for securities – was itself a method of doing business and thus, it fell within the subject matter excluded from patentability under Article 52 EPC. The patent examiner was clear in his examination report issued in respect of the patent application – “That result, whatever the technical advance may be, is simply the production of a trading system. It is a data-processing system for doing a specific business, that is to say, making a trading market in securities. The end result, therefore, is simply “a method …. of doing business”, and is excluded by section 1(2)(c). The fact that the method of doing business may be an improvement on previous methods of doing business does not seem to me to be material. The prohibition in section 1(2)(c) is generic; qualitative considerations do not enter into the matter ... A data processing system operating to produce a novel technical result would normally be patentable. But it cannot, it seems to me, be patentable if the result itself is a prohibited item under section 1(2).”
2. The requirement for novelty
The criteria of novelty and inventive step are aimed to protect the broader interests of the public as technical solutions that are already known to the public should not be protected with exclusive rights. Article 54 (1) EPC postulates that an invention is considered to be new if it does not form part of the state of the art. The term used in patent jurisprudence to express novelty is that the invention is not “anticipated”. The notion of the “state of the art” is defined in Article 54 (2) EPC which stipulates that “the state of the art shall be held to comprise everything made available to the public by means of a written or oral description, by use, or in any other way, before the date of filing of the European patent application”. It must be noted that when it comes to the requirement for novelty, the assessment applies only to those elements of the invention which have technical character. The test for novelty is a universal worldwide test as it examines the state of the art anywhere in the world. A publication in an obscure local magazine in one country can easily prevent the obtaining of a patent in a country located in a different continent. Moreover, it is irrelevant how exactly the information was brought to the public. There is the famous case of the Dutch patent application NL6514306 filed back in 1965 by inventor Karl Krøyer for a method for raising sunken ships back to the surface by way of filling it with buoyant bodies that were inserted through a tube. In this case the Dutch Patent Office refused to grant a patent on the grounds of lack of novelty – an old issue of a Donald Duck magazine from 1949 was found where Donald and his nephews were using a method for raising a sunken ship by way of filling it with ping pong balls that were inserted through a tube.
In order to determine whether the requirement for novelty is satisfied, the EPO performs a 3-step test. The first step in the test is to identify the invention and its essential technical features. These would be the physical properties in case of products or the distinct steps in cases of processes. The second step is to clearly identify the priority date and the state of the art relevant to that date. The priority date will be the earlier of the date on which the application for the European patent was filed and the date of any application for a patent for the same invention filed in a Paris Convention country 12 months or less before the European patent filing date. Finally, the third step of the test involves determining whether any prior art references anticipate the invention by disclosing its essential technical features sufficiently to enable a person skilled in the relevant art to perform it. When it comes to computer programs, to the extent that the functionality of the software that produces technical effect is new and does not form part of the state of the art anywhere in the world, the software-related invention would satisfy the novelty requirement.
3. The requirement for inventive step (non-obviousness)
When considering the requirement for inventive step, all elements not having technical character are left out from the assessment. The assessment for the criteria of inventive step is a qualitative one. As per the text of Article 56, EPC, “an invention shall be considered as involving an inventive step if, having regard to the state of the art, it is not obvious to a person skilled in the art”. Therefore, the aim of this requirement is to only reward inventions where some significant advancement in inventiveness can be demonstrated as opposed to the prior art. The invention should not just be different from the prior art but it should represent a sufficient departure from the prior art when being assessed through the eyes of someone who is skilled in the relevant area of technology.
It is exactly this requirement that most computer programs fail to meet when attempting to obtain patent protection. This outcome is due to the nature of software development and lifecycle which is often based on iterative cycles with gradual incremental improvements. Therefore, as a general consequence it would be difficult in the software world to demonstrate a certain significant advancement in inventiveness that would not be obvious to a software engineer that is skilled in the relevant art. What we usually observe in the realm of software development often involves sequential innovation and also sometimes reuse of third party works.
4. The requirement for susceptibility of industrial application
Finally, the criteria for susceptibility of industrial application is established in Article 57, EPC. As per the text of that provision, “an invention shall be considered as susceptible of industrial application if it can be made or used in any kind of industry, including agriculture”. The interpretation of the European Patent Office in view of this requirement generally postulates that the requirement shall be satisfied when the invention demonstrates any concrete benefit that can be realized through its practical use. The Board of Appeals offered the following explanation of Article 57 in case T898/05 (Hematopoietic receptor/ZYMOGENETICS): “… the invention claimed must have such a sound and concrete technical basis that the skilled person can recognise that its contribution to the art could lead to practical exploitation in industry. It would be at odds with the purpose of the patent system to grant exclusive rights to prevent the commercial activities of others on the basis of a purely theoretical or speculative patent application”. When it comes to software-related inventions, this requirement is rarely a showstopper as they usually can easily demonstrate a clear practical application in the industry.