Everyone agrees that computer software should be protected by intellectual property. But there is no consen­sus as to how much protection there should be, and by what means it should be given. Copyright seems to pro­tect too little, patents are thought to protect too much, and we have gone too far along our present path even to consider any sort of "sui generis" protection, such as was suggested in the early days of the debate. This arti­cle explores the controversies associated with the issue of ‘patents for software' and the most recent proposal for a directive coming from the European Commission.


The controversy in Europe of the late 1980s, leading up to the Council Directive on the Legal Protection of Computer Programs [1] of 1991, now seems like ancient history. This measure, harmonising aspects of the copyright protection for computer programs to overcome German case law [2] that had held such works to be insufficiently creative to be so protect­ed, got bogged down with controversies over exceptions directed to interoperability and decompilation. Ten years on, the European Commission has waded back into the fray with its Proposal for a Directive on the Patentability of Computer-implemented Inventions, [3] (the Proposal) present­ed on 20 February 2002, in a brave attempt to steer a middle course through the maelstrom of software patents in Europe. Before analysing this latest contribution and where we are heading in Europe, it is worth looking at how we got to the mess we are now in. This involves a brief review of what has happened to copyright over the period as a means of protect­ing computer programs, as the pressure for patents reflects, in large part, a failure of copyright, rightly so, to resist the pres­sures of certain rights owners in software.

What’s Wrong with Copyright?

Protecting computer programs as works of literary copyright has been of enormous value in protecting such programs against piracy - namely their 'bit-to-bit' copying. However, many people who devise new programs want to protect rather more than the precise expression of their program - they want to protect something of its functionality as well which, in practice, means protecting more of the idea, and less of its expression - something more like a patent.

Attempts to do so by stretching copyright beyond the natural limits of a right developed and refined over hundreds of years to protect truly creative works, in order to try to protect such functional works as programs, have produced, as accurately characterised by Greg Aharonian, "30 Years of Bad Logic", and "a succession of eventually discredited court cases". [4]

Intellectual property lawyers of my vintage can remember litigating computer games in the 1980s, in which dramatic copyright in the 'game plot' had to be asserted in an attempt to import into UK law the audiovisual copyright of US law used for cases in which no bit-to-bit copying took place (if only because the alleged copy was written for a different con­sole, using a different processor, with different graphics and sound hardware, and which required programming in a dif­ferent computer language). We then avidly followed develop­ments across the Atlantic, in which attempts were made to apply similar principles to computer programs for business applications - US cases such as Whelan v Jaslow [5] in 1986, with its "structure, sequence and organisation" test, and Computer Associates v Altaib [6] in 1992, with its "abstraction, filtration and comparison" test, still being applied late into the 1990s; although, since the middle of the decade, decisions in cases such as Apple v Microsoft [7] and Lotus v Borland [8] have resulted in copyright's star waning.

The problems inherent in such attempts to use copyright to provide patent-like protection for underlying ideas, with­out the discipline of patentability criteria and patent claims, were well illustrated by English attempts to apply these “prin­ciples" in cases such as John Richardson v Flanders, [9] Ibcos v Barclays [10] and Cantor Fitzgerald v Tradition.[11] The difficulty of drawing clear principles from the English cases can be con­trasted with their remarkably similar fact patterns – computer programmers rewriting an application that they had already written for another, and taking 'short cuts' in so doing - thus this author's right, so applied, seemed most readily capable of being used against authors.

The 'idea/expression dichotomy' in copyright is not restricted to computer programs. However, it becomes most significant whenever copyright is used to protect functional material, as we know only too well in the UK from the heady days of design copyright litigation in the 1980s, which prompted the observation in the House of Lords in LB Plastics v Swish [12] that, "it all depends what one means by ideas." Our response in the UK was, by the Copyright Designs and Patents Act 1988, to abolish design copyright and replace it by a sui generis regime tailored to the protection of func­tional designs.

The issue of protecting the ideas behind a computer pro­gram was addressed only tangentially in the Report from the Commission on the implementation and effects of Directive 91/250/EEC, [13] in the context of a brief discussion of patent protection for software-related inventions in which it was observed:

One aim of patent protection would be to cover the underly­ing ideas and principles of a computer program, which according to recital 14 of Directive 91/250/EEC can never be protected by copyright.

Such principles are also reflected in the WIPO Copyright Treaty, Article 2 of which mandates the protection of comput­er programs as literary works, but Article 2 of which provides:

Copyright protection extends to expressions and not to ideas, procedures, methods of operation or mathematical concepts as such.

This in turn reflects section 102(b) of the US Copyright Act but, until Lotus v Borland, this seems to have been disregard­ed by US Courts.

What’s Wrong with Patents?

In the USA there is no express statutory exclusion of comput­er programs from patentability, but the development of the law in this area got off to a bad start with the Supreme Court decision in 1972 in Gottschalk v Benson, [14] which many inter­preted as holding computer programs unpatentable. Although a further Supreme Court decision in 1981 in Diamond v Diehr [15] explained that this was not so, and that Gottschalk had concerned claims to a mathematical algo­rithm "as such", it was not until the 1990s that the scope for using patents to protect computer programs, and latterly busi­ness methods, became more widely recognised and the law became more permissive of such patenting, with CAFC deci­sions in Arrhythmia Research Technology v Corazonix, [16] In to Alappat,[17] AT&T v Excel [18] and finally State Street Bank v Signature Financial Group [19], culminating in the recognition that even mathematical algorithms and business methods could be patentable subject matter. In the current state of US law, to constitute patentable subject matter, an invention need only fall within the technological arts, and merely using a computer or software means that an invention will be part of the technological arts if it provides "a useful, concrete and tangible result".

Article 52(2) of the European Patent Convention of 1973 which not only appears to exclude "programs for computers", but also, amongst others, "mathematical methods“ “methods for performing mental acts ... or doing business” or “presentations of information”. However, by Article 52(3), these exceptions only exclude such matters "as such”. Under pressure from applicants, an increasingly narrow interpretation of the exception by the EPO has rest in its granting more than 20,000 patents for computer software-based inventions.[20] The EPO has achieved this by focussing on the "technical character" of an invention instancing such exceptions "as such" as examples of cases in which there is no technical character. However, the concept of "technical character" seems to have become broader, and, as recognised by a Technical Board of Appeal of the EPO in T 0931/95, [21] “it may very well be that .. meaning of the term "technical" or "technical character” is not particularly clear”.

While the statutory provisions governing patentability are the same throughout Europe, there are differences in relation to software-related patents between the case law and practice of the Boards of Appeal of the EPO and the patent offices and courts of Member States. This is best instanced by the UK, in which the exception for computer programs is the least of a potential patentee's worries, and the courts, on appeal from the UK Patent Office, have held patent applications for software also to fall within other of the excepted grounds. So unsatisfactory was the position, that the United Kingdom Patent Office took the step of publishing a Practice Notice “Claims to Programs for Computers" [22] in April 1999 attempting to clarify the position by observing that, in none of the decided English cases had there been a "substantive technical contribution", and announcing that it would be adapting its practice as to the nature of the claims that it would grant on such inventions to accord with that of the EPO at the time. The English Courts have not had an opportunity to comment on this explanation of their decisions but, in any case, harmony between the UK Patent Office the EPO proved short-lived, as in Hutchin’s Application [23] UK Patent Office Hearing Officer declined to follow the reasoning of T 0931/95, criticising it as "exalting style, substance.”

In consequence, we have a confused and unsatisfactory situation in Europe, with many granted software patents (normally in the names of applicants from outside Europe), likely to be enforceable in some courts, but probably not in others, whilst many Europeans either fail to try to protect their own software-related inventions, (either in Europe or in the USA), or remain oblivious to the fact that their activities (either in Europe or in the USA), may fall within scope of such a granted patent. [24] In contrast, one may criticise the law as to software patenting in the USA, but at least one knows what it is.

Background to the Proposal for a Directive on the Patentability of Computer-Implemented Inventions

The new Proposal is the result of an extensive consultation exercise launched by the European Commission on 19 October 2000, based on a consultation paper on the patentability of computer-implemented inventions. [25] The immediate result of the launch of this consultation was to scupper a proposal, at a Diplomatic Conference in November 2000 to amend the EPC, to drop the relevant Article 52(2) exception. This consultation had, in turn, been prompted by an earlier consultation emerging out of the Commission's 1997 Green Paper on the Community Patent and the Patent System in Europe that had identified an urgent need to remove apparent ambiguities and lack of legal certainty aris­ing from the different ways in which Member States were implementing laws governing patents for computer software.

The Commission also commissioned a study specifically to look at the implications for SMEs (small- and medium-sized enterprises) involved in the development of software, investi­gating how they managed their intellectual property. This revealed that many smaller software and IT companies were uncomfortable with, or uncertain about, the protection offered by the patent system. This was not just due to uncertainties over infringement and patentability, but also because of the cost and the time taken to secure protection (if granted).

In the UK, the Department of Trade and Industry (DTI) mounted a separate consultation (extending also to business methods), the results of which were fed into the Commission one. Its key conclusions were that there should be no signifi­cant change to the patentability of software; but that the law was not clear enough and urgent European action to clarify it was needed. It also concluded that business methods should remain unpatentable. [26]

The Proposal for a Directive on the Patentability of Computer-Implemented Inventions

The outcome of the Commission's consultations is a Proposal aimed at harmonising protection for computer-related inven­tions, while avoiding any sudden change in the legal position. The Proposal is a subtly drafted document, which treads a path between extending the scope of patent protection for software, and resists the call to exclude patent protection entirely. However, it does not fully adopt the current position of the EPO.

The Proposal preserves the principle established in EPO case law that a "technical contribution" is an essential require­ment to any patentable invention. However, it defines this term as "a contribution to the state-of-the-art in a technical field that would not be obvious to a person skilled in the art", which serves explicitly to bring the issue of inventive step into the assessment. The other definition in Article 2 is that of those inventions which are the subject of the Proposal:

computer-implemented invention" means any invention the performance of which involves the use of a computer, com­puter network or other programmable apparatus and having one or more prima facie novel features which are realised wholly or partly by means of a computer program or computer programs.

As pointed out in the accompanying explanatory memoran­dum, this definition excludes algorithms defined without ref­erence to a physical environment, and it is a consequence of this definition that "the novelty" of such invention "does not necessarily need to reside in a technical feature". This is con­sistent with the "technical contribution" being assessed under inventive step. Such inventions are, by Article 3, to be consid­ered "to belong to a field of technology" for which, under TRIPS, patents are to be available for inventions that are new, involve an inventive step, and are susceptible of industrial application, as is also declared in Article 4(1).

Article 4(2) of the Proposal makes it "a condition of involving an inventive step that a computer-implemented invention must make a technical contribution" which, by Article 4(3),"shall be assessed by consideration of the differ­ence between the scope of the patent claim considered as a whole, elements of which may comprise both technical and non-technical features, and the state of the art." Thus, as the explanatory memorandum states, an invention, aspects of which are within the Article 52(2) EPC exceptions, such as a method of doing business, may still be patentable if a non-­obvious technical contribution is present. However, if there is no technical contribution, in that the contribution to the state of the art lies wholly in non-technical aspects, such as the excepted matters, there is no patentable subject matter. Although the explanatory memorandum does not say this, expressly integrating the assessment of exceptions into that of inventive step might herald, in the longer term, a signifi­cant difference in approach to software patents, both by patent offices and those opposed to software patents, in that most real objections to software and business method patents lie in the belief that they are granted for contributions that are obvious, an issue that has been overshadowed in European patent law and practice by the sterile focus on exceptions.

The clearest difference from current EPO practice emerges in Article 5, which sets out how claims a formulated:

Member States shall ensure that a computer-implemented invention may be claimed as a product, that is a programmed computer, a programmed computer network, or other programmed apparatus, or as a process carried out by such a computer, computer network or apparatus through the execution of software.

The Commission accepts that the Proposal would not pro­vide for patents to be granted for computer programs in iso­lation from a machine on which they may be run, and acknowledges that this does not accord with the approach adopted by the EPO Technical Boards of Appeal [27] in holding that if a computer program either by itself or on a carrier, such as a computer disk, has the potential to produce a tech­nical effect when loaded and run on a computer, such a pro­gram claimed by itself should not be excluded from patentability Article 5 will therefore exclude claims allowable under current EPO practice. This will also affect national patent offices, such as that in the UK, whose April 1999 Practice Notice adopted the position taken by the EPO.

The present Proposal gives no guidance on how practitioners should draft claims from now on, and particularly if they anticipate that a current or proposed patent application would be granted after the Proposal becomes a Directive. Such a Directive would have no mandatory legal effect on the EPO, but only on those of its Member States with European Community. However, as long as such Directive was seen to be consistent with the EPC, the EPO could, if it chose, and as was done with the Directive on the Patenting of Biotechnological Inventions, [28] modify its practices to accord with it. If the present EPO practice of allowing "carrier" and "non-carrier" claims were to continue, it is difficult to see how such claims would be maintained in the future in the absence of any proposed transitional provisions. Patents granted after such Directive came into effect would be national patents and subject to national laws, so any claim inconsistent with the Directive's provisions would either be revocable under national law, or require amendment. Thus, if Article 5 stays, transitional provisions should be considered.

The balance struck by the present regime for copyright protection for computer software is expressly preserved by Article 6, by which "Acts permitted under Directive 91/250 EC on the legal protection of computer programs by copy­right, in particular provisions thereof relating to decompila­tion and interoperability ... shall not be affected through the protection granted by patents for inventions within the scope of this Directive."

Articles 7 and 8 of the Proposal provide for monitoring the impact of computer-implemented inventions on innova­tion and competition, both within Europe and internationally, and on European business including ecommerce with a view to producing a report on whether or not the rules governing patentability are adequate.


Our situation in Europe in protecting the ideas and principles underlying computer software is best described by the well­ known riposte, when asked for directions somewhere, "I wouldn't start from here if I were you". However, having decided that it must act, the European Commission has no alternative but to start from here, or a little way back along the path. As it stands, its proposal would seem to be almost the minimum that it could do to try to get a grip of the issue, with­out running into irreconcilable conflict with established prac­tice of the EPO. But by subtly changing the nature of the investigation in prosecution from the sterile one of exceptions into one of inventive step, may constitute a greater contribu­tion to getting out of the present mess than many realise.

Whatever one thinks about the balance at present struck by the proposal, (which has apparently already been criti­cised by the French Government for going too far towards protecting software and business methods by patents), it does at least offer the merit of providing a mechanism for ironing out national divergences, both in its express lan­guage, and in the competence that it confers on the European Court of Justice (ECJ) to take references from national Courts on points of its interpretation. The role of the ECJ may also prove welcome in taking account of public policy considerations and providing some legal rigor to counteract the occasional overexuberance of the Technical Boards of Appeal of the EPO in a field which has never had the benefit of consideration by the Enlarged Board of Appeal of the EPO, but has, as yet, never faced direct challenge in opposition proceedings based on public policy grounds that one has had in biotechnology.

Also published in Computer Law & Security Report Vol. 18 no. 3 2002


[1] Directive 91/250/EEC.
[2] Inkasso-programm, BGH GRUR 1991, 449, 452.
[3] COM (2002) 92 final, http://www.europa.cu.int/comm/internal-market/cn/indprop/com02-92en.pdf.
[4] Aharonian, G –“30 years of Bad Logic - Deconstructing Copyright Software”- Copyright World -December 2001 -January 2002 p 13-17.
[5] 797 F. 2d 1222.
[6] 982 F. 2d 693.
[7] 35 F. 3d 1435.
[8] 49 F. 3d 807.
[9] [1993] FSR 497.
[10] [1994] FSR 275.
[11] [2000] RPC 95.
[12] [1979] FSR 145 [1979] RPC 551.
[13] COM(2000) 199 final - 10.04.2000.
[14] 409 US 63.
[15] 450 US 175; 101 S. Ct 1048;209 USPQ 1 (1981).
[16] 958 F. 2d 1053; 22 USPQ 2D 1033 (1992).
[17] 33 F. 3d 1526; 31 USPQ 2D 1545 (1994).
[18] 172 F. 3d 1352; 50 USPQ 2D 1447.
[19] 149 F. 3d 1368; 47 USPQ 2D 1596 (1998); certiorari denied 119 S. Ct 851 (1998).
[20] For a fuller review of EPO practice in this area, and the sort of patents in it being granted, see "European patents for software, E­commerce and business model inventions" Keith Beresford - World Patent information 23 (2001) 252-263.
[21] Controlling pension benefits system/PBS PARTNERSHIP - 8 December 2000 - in which the Board found a computerised pension benefits system (i.e. a business method) not excluded from patentability under Article 52(1) EPC, observing that “a computer system suitably programmed for use in a particular field, even if that is the field of business and economy, has the character of a concrete apparatus in the sense of physical entity, man-made for a utilitarian purpose and is thus an invention within the meaning of Article 52(1) EPC.” However, it went o reject the application under Article 56 EPC as lacking inventive step
[22] [1999] RPC 563; http://www.patent.gov.uk/patent/notices/practice/computer.htm.
[23] [2002] RPC p 264.
[24] For a fuller discussion of the adverse consequences for European interests of the current situation, and of the considerations that ought instead to be uppermost when examining the patentability of software patents, see "Patents for Business Methods and Computer Program Related Inventions” Trevor Cook - [Z0001 CLLR 123.
[25] The consultation paper is at: http://europa.eu.int/conun/internal_market/en/indprop/softpaten.htm and the analysis of the response at: http://europa.eu.int/comet/intemal-market/en/indprop/softpatanalyse.htm.
[26] The consultation paper 'Should patents be Granted for Computer Software or Ways of Doing Business' is at: http:// www.patent.gov.uk/about/ippd/consultation/closed/index.htm and the Government’s conclusions are at: http:// www.patent.gov.uk/about/conclusions.htm.
[27] T 1173/97 and T 0935/97 - Computer Program Product /IBM I and II, [1999] OJEPO 609; [2000] EPOR 219 and [1999] EPOR 301; ­[1999] RPC 861.
Directive 98/44/EC.