Today, 27 October 2006, the UK Court of Appeal has given its judgment in an important patent dispute concerning whether computer-based inventions should be eligible for UK patent protection.
Background
Neal Macrossan, an Australian inventor, designed an electronic document assembly system designed to save customers time and money when preparing the documents for registering a company. Despite securing patents in Australia, New Zealand, Singapore and South Africa his request in the UK was turned down. The UK Patent Office and the High Court have both ruled that Macrossan's invention relates to a computer program and constitutes a method for performing a mental act. Consequently under UK law Mr Macrossan cannot obtain a patent for it. However, he was granted leave to appeal and the case has now been heard at the Court of Appeal. The imminent decision is set to provide greater clarity on one of the most hotly-debated IP issues in Europe.
Software patenting
The issue of software patenting is one of the most controversial in the European intellectual property community. In July 2005, after extensive lobbying from the open source community and others, the European Parliament rejected the European Commission's proposal (supported by the UK government) for a European Software Patent Directive which would have harmonised the approach to the patentability of software across the European Union. However, the question of the extent to which software should be patentable remains a very hotly debated issue. On the one hand, as more and more business processes are automated, it has become increasingly important to some businesses to be able to patent software in order to be able to protect their investment in the development of these systems. On the other, it is argued that software patents could add considerably to the administration costs of small businesses and others who would be obliged to pay licence fees and pose a potential threat to open source projects. This is also an area in which it can be particularly difficult to establish who thought of an idea first so there is much potential for dispute and for so-called patent trolls to operate.
In the US there is no express exclusion of software or business methods from patentability and US courts have taken a far more pragmatic approach to this issue. The result is that in the US it is perceived to be easier to obtain patents for software inventions than it is in Europe. Some in Europe consider this is a serious matter and that European industry will suffer as a result. For example, accounting/financial programs for the sale and purchase of currencies are of great economic value but are not currently patentable in Europe whereas they may be in the US (and Japan).
Implications
The Court of Appeal decision is not expected to contain any radical shift of opinion on this matter but it is hoped that it will contain practical guidance on how patent exclusions should be interpreted. The result of the case is awaited particularly in the IT and financial services industries.
The decision in this case relates to the UK only. Although it may be influential, it will not be binding in other European Member States or at the European Patent Office. It will do nothing directly, therefore, to deal with the differences in the way the different European Member States deal with software patents.
For more background and/or expert comment on the issues raised by this case and its potential impact on companies in the UK and elsewhere please contact:
Robert Anderson Partner, Lovells
020 7296 2511 robert.anderson@lovells.com
Stephen Bennett Partner, Lovells
020 7296 2628 stephen.bennett@lovells.com
Nicholas Macfarlane Partner, Lovells
020 7296 5355 nicholas.macfarlane@lovells.com