EPO Enlarged Board rejects President's referral on software patents

Practical Law UK Legal Update 5-502-2792 (Approx. 7 pages)

EPO Enlarged Board rejects President's referral on software patents

by PLC IPIT & Communications

Background

Article 52(1) of the European Patent Convention (EPC) provides that:

"European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application".

The words "in all fields of technology" were added to Article 52(1) by the European Patent Convention 2000, which came into effect on 13 December 2007 (see Legal update, EPO publishes new EPC 2000 legislation).

Under Article 112(1)(b) of the EPC, in order to ensure uniform application of the law, or if a point of law of fundamental importance arises, the President of the European Patent Office (EPO) may refer a point of law to the Enlarged Board of Appeal where two Boards of Appeal have given different decisions on that question.

Facts

In Aerotel v Telco; Macrossan's Application [2007] RPC 7 (Aerotel), the Court of Appeal set out the UK approach to the patentability of computer-implemented inventions (CII) (see Legal update, Court of Appeal reviews approach to patentability of software and business methods). In that decision, the court analysed the case law of the EPO and concluded that there were inconsistent lines of decisions. It suggested that the EPO President refer the following questions to the EPO Enlarged Board of Appeal:

What is the correct approach to adopt in determining whether an invention relates to subject matter that is excluded under Article 52?
How should those elements of a claim which relate to excluded subject matter be treated when assessing whether an invention is novel and inventive under Articles 54 and 56? And specifically:
- is an operative computer program loaded onto a medium such as a chip or hard drive of a computer excluded by Article 52(2) unless it produces a technical effect, and if so, what is meant by "technical effect"?
- what are the key characteristics of the method of doing business exclusion?

An EPO Appeal Board then criticised the Court of Appeal, stating that the Aerotel approach was "irreconcilable" with the EPC (see Legal update, EPO Appeal Board criticises Aerotel/Macrossan decision), and in March 2007 the then EPO President refused Jacob LJ's request to refer questions (see Legal update, EPO replies to Court of Appeal's Macrossan decision). He stated that he had decided that, at that time, there was insufficient legal basis for a referral. He believed there were insufficient differences between current EPO Board of Appeal decisions dealing with Article 52 exclusions on important points of law to justify a referral at this stage. However, his successor decided to refer questions on the law relating to patentability of computer programs to the EPO Enlarged Board of Appeal. After a short historical background to the relevant provisions in the EPC, the referral set out the following questions, together with the grounds for referring each question to the Enlarged Board.

"1. Can a computer program only be excluded as a computer program as such if it is explicitly claimed as a computer program?

2 (a) Can a claim in the area of computer programs avoid exclusion under Article 52(2)(c) and 52(3) merely by explicitly mentioning the use of a computer or a computer-readable data storage medium?

(b) If Question 2(a) is answered in the negative, is a further technical effect necessary to avoid exclusion, said effect going beyond those effects inherent in the use of a computer or data storage medium to respectively execute or store a computer program?

3 (a) Must a claimed feature cause a technical effect on a physical entity in the real world in order to contribute to the technical character of the claim?

(b) If Question 3(a) is answered in the positive, is it sufficient that the physical entity be an unspecified computer?

(c) If Question 3(a) is answered in the negative, can features contribute to the technical character of the claim if the only effects to which they contribute are independent of any particular hardware that may be used?

4 (a) Does the activity of programming a computer necessarily involve technical considerations?

(b) If Question 4(a) is answered in the positive, do all features resulting from programming therefore contribute to the technical character of a claim?

(c) If Question 4(a) is answered in the negative, can features resulting from programming contribute to the technical character of a claim only when they contribute to a further technical effect when the program is executed?"

Decision

The Enlarged Board held that the referral was inadmissible under Article 112(1)(b) EPC for the following reasons:

Previous refusal to refer

In exercising his right of referral, a President was entitled to make full use of the discretion that he was granted by Article 112(1)(b) of the EPC. Here a change in the presidency had taken place and the new President viewed matters differently from his predecessor. The right of referral could not be held to have been lost.

The meaning of "different decisions"

Although there was a worldwide debate on CII patentability, this did not mean that there had necessarily been different decisions taken by two Boards of Appeal within the meaning of Article 112(1)(b) of the EPC. It was clear from the wording of that article that decisions of other (national) courts were not relevant when examining the admissibility of a referral. Such courts were not part of the European Patent Organisation, and there was nothing in the EPC to make their decisions binding on the EPO.

The Article required different decisions of two EPO Boards of Appeal. In this case, the decisions cited as the basis for the referral were taken within the competence of a single Board of Appeal in differing compositions. However, EPO case law indicated that a referral by the President should not be inadmissible simply because the formal requirement that two Boards of Appeal must be involved had not been fulfilled.

The key to assessing the referral's admissibility was determining the meaning to be assigned to the undefined legal term "different decisions" / "abweichende Entscheidungen" / "décisions divergentes" in Article 112(1)(b). The meaning to be assigned to the key term "different decisions" had initially to be determined on the basis of the provision's wording in all official versions of the EPC, these having equal status. Yet the wording did not seem to give a clear answer. The English, German and French terms used did not appear to have entirely the same connotations. Ambiguous wording in international treaties, including industrial property conventions, had to be interpreted in the light of its object and purpose. The purpose of the referral right under Article 112(1)(b) was to establish uniformity of law within the European patent system. Having regard to this purpose, the notion of "different decisions" has to be understood restrictively in the sense of "conflicting decisions".

Basic principles

The European Patent Organisation is an international, intergovernmental organisation, modelled on a modern state order and based on the separation of powers principle, which the sovereign contracting states have entrusted with the exercise of some of their national powers in the field of patents. The Boards of Appeal, which in their decisions are bound only by the EPC, are assigned the role of an independent judiciary in this patent system even if they are not an independent organ of the organisation but structurally integrated departments of the EPO. Like the judiciary of any democratic entity based on the separation of powers principle, the EPO's Boards of Appeal are an independent judiciary which guarantee the due process of law. They are also assigned interpretative supremacy with regard to the EPC in terms of its scope of application. Their interpretation of the EPC is the basis for the practice established by the EPO for the examination of patent applications and oppositions to granted patents.

Another essential element of a democratic legal order is the principle that a public authority is bound by law and justice. This is supplemented by the principle of uniform application of the law. Both principles are designed to ensure predictability of jurisdiction and hence legal certainty by preventing arbitrariness. These principles also constitute essential precepts for administration and jurisdiction in the European patent system as codified in the EPC. Ensuring compliance with them is ultimately the task of the Boards of Appeal, including the Enlarged Board.

A referral under Article 112(1) requires the Boards or the President to deem the referral necessary in order to ensure uniform application of the law or if points of law of fundamental importance arise, and a further admissibility criterion for a referral by the President is that two Boards of Appeal must have given different decisions on the question referred. Hence the Enlarged Board does not rule on abstract points of law, but only on real issues arising from the cited differing decisions, as well as on specific legal questions identified in the referral. It was clear that the interpretation of the EPC was primarily the responsibility of the Boards of Appeal. The exhaustive list of admissibility criteria for a referral under Article 112(1) of the EPC implied that the Enlarged Board took decisions on specific legal questions and that neither the Boards of Appeal nor the President were authorised to consult it whenever they so wished in order to clarify abstract points of law. The "different decisions" criterion would appear to show that the President was only intended to be allowed to refer a question to the Enlarged Board when there was a divergence or, better, conflict in the case law making it difficult if not impossible for the EPO to bring its patent-granting practice into line with the case law of the Boards of Appeal.

Legal development

The notion of legal development was an additional factor which had to be carefully considered when interpreting the notion of "different decisions" in Article 112(1)(b) of the EPC. Development of the law was an essential aspect of its application, whatever method of interpretation the judge applied, and was therefore inherent in all judicial activity. Consequently, legal development as such could not on its own form the basis for a referral, because case law in new legal territory did not always develop in linear fashion, and earlier approaches might be abandoned or modified. Otherwise the "different decisions" feature of Article 112(1)(b) would lose its meaning. While the development of the law might superficially appear to give rise to different decisions within the meaning of that provision, on its own it could not justify a referral to the Enlarged Board.

Particularly in the field of new technologies, the Technical Boards often had to subject their established case law to critical review, applying accepted judicial procedure and general legal principles to decide whether the often broadly formulated undefined legal terms in the EPC were applicable to the specific nature of the new field. Where jurisprudence entered new legal territory, caution was required to avoid making statements that would prove untenable in the very next case to arise. Yet it could not be ruled out that repeated amendments would be necessary in the course of time if legal solutions that the Boards initially deemed correct proved to be mistaken in new situations, and ceased to be convincing jurisprudence. Such changes of direction in legal development were a normal part of judicial activity, and there was no need to speak of different decisions within the meaning of Article 112(1)(b) of the EPC simply because departures from earlier practice were deemed necessary when homing in on the right solution to a specific case.

The conclusion was that the Enlarged Board could not develop the law in the same way as the Boards of Appeal, because it did not have to decide on facts of pending appeals, but only in specific instances and only in the context of points of law referred to it under Article 112(1). If, as required for a referral by the President, there were different decisions on points of law, the Enlarged Board could follow the legal approach of one of the decisions and reject the other as inappropriate, or it could find a third way appropriate. However the Enlarged Board also had to consider whether the divergent decisions might not be part of a constant development, possibly still ongoing, in jurisprudence on recent patent law issues, in the course of which older decisions had lost their significance and so could no longer be considered in connection with newer decisions. Such differences did not justify presidential referrals, legal development being one of the principal duties of the Boards of Appeal, in particular in new territory.

The questions

As a preliminary comment, the Enlarged Board stated that it was not bound by the definition of "computer" given in the referral and that it would not attempt to define the term "technical".

Question 1

It was first necessary to interpret the question, and it seemed that the first reference to a "computer program" in the question was in fact intended to encompass claims to various matters which involved a computer program without necessarily literally being one. Examining the two cases identified in the referral as being divergent, T 1173/97, IBM (OJ EPO 1999, 609) and T 424/03, Microsoft (see Practice note, Software and business method patents), there was a difference between the positions taken in these cases on whether, with regard to the exclusions under Article 52(2) and (3) of the EPC, it made a difference whether a computer program was claimed by itself or as a record on a carrier. However, it was also necessary to decide whether this difference constituted a divergence allowing a question to be referred by the President on the point. There were factors which suggested that the difference should be treated as a development of the case law. Looking at these factors, although T 424/03 did deviate from a view expressed in T 1173/97, this was a legitimate development of the case law and since T 1173/97 had not been followed by any Board on this particular point there was no divergence which would make the referral of this point to the Enlarged Board of Appeal by the President admissible.

The position of the case law was that a claim in the area of computer programs could avoid exclusion under Articles 52(2)(c) and (3) of the EPC merely by explicitly mentioning the use of a computer or a computer-readable storage medium. But it was also quite clear from the EPO case law since T 1173/97 that, if a claim to program X fell under the exclusion of Articles 52(2) and (3), a claim which specified no more than "Program X on a computer-readable storage medium," or "A method of operating a computer according to program X," would always still fail to be patentable for lack of an inventive step under Articles 52(1) and 56. There did not appear to be any divergence in this case law, suggesting that the Boards were in general quite comfortable with it. It would appear that the case law had created a practicable system for delimiting the innovations for which a patent may be granted.

Question 2

Interpreting this question, when it said "merely by explicitly mentioning", it could be presumed that the referral did intend there to be a functional relationship. There seemed to be two logical weaknesses in the referral argument supporting this question. The first was the assertion that a method could be divorced from the device that it was (to be) carried out on, which was made as a general statement, not limited to computer-implemented methods. This was palpably not the case. The second logical weakness seemed to be a confusion between a set of instructions for carrying out steps and the steps themselves. There was a real logical distinction between a method carried out by a computer and the sequential list of instructions which specified that method. The skilled person understood the word "program" to refer to the sequence of instructions specifying a method rather than the method itself. The referral's confusion on this point seemed to arise from its equating a method claim, which was a description (or at least delimitation) of a method, with the method it delimited.

While on a correct interpretation there was a distinction between a computer program and the corresponding computer-implemented method, it was conceivable that there could be a divergence in the case law of the Boards of Appeal, resulting from a false usage by Boards of the word "program". However, examining the cases cited in the referral as showing a divergence, no divergence had been identified by the referral and the question was therefore not admissible.

Question 3

The first problem was that the referred question related to individual features, rather than the claimed subject matter as a whole. This was important, because the EPO case law was consistent in considering all the features that are claimed. The Boards had always avoided approaches which involved weighting of features or a decision which features defined the "essence" of the invention. All the features together had to be considered in determining whether the claimed subject-matter had a technical character. Only once this determination had been made could it be decided which claimed features contributed to that technical character and should therefore be taken into account for the assessment of whether there was an inventive step. The second problem with the alleged divergence was that the decisions T 163/85 and T 190/94, said in the referral to require a technical effect on a physical entity in the real world, simply did not do so. They merely accepted this as something sufficient for avoiding exclusion from patentability. Thus there was no divergence, so this question was also inadmissible.

Question 4

Interpreting the question, it was supposed that "the activity of programming a computer" was intended to relate to the intellectual activity of working out what were the steps to be included in a computer program rather than the simple physical activity of entering a program into some computer.

The referral correctly asserted that T 1177/97 and T 172/03 considered that programming always involved technical considerations, at least implicitly. On the other hand, T 833/91, T 204/93 and T 769/92 were said to consider the programmer's activity, programming, to be a mental act, falling within the exclusions of Article 52(2) of the EPC. However, there was no contradiction between these positions, as the act of designing could involve technical considerations (it could also involve non-technical, for example aesthetic, considerations) but it was a process which at least initially could take place in the designer's mind, i.e. it could be a mental act, and to the extent that it was a mental act would be excluded from patentability. So the question did not satisfy the requirement for a divergence in the case law and was therefore inadmissible.

However, there was at least the potential for confusion, arising from the assumption made in some cases (such as T 769/92, Sohei) that any technical considerations were sufficient to confer technical character on claimed subject-matter. T 1173/97 set the barrier higher for computer programs, arguing that all computer programs had technical effects since, for example, when different programs were executed they cause different electrical currents to circulate in the computer they run on; but such technical effects were not sufficient to confer "technical character" on the programs; they had to cause further technical effects. In the same way, although it might be said that all computer programming involved technical considerations since it was concerned with defining a method which can be carried out by a machine, that in itself was not enough to demonstrate that the program which resulted from the programming had technical character; the programmer must have had technical considerations beyond "merely" finding a computer algorithm to carry out some procedure.

There were two ways of defining a computer algorithm, either as a pure mathematical-logical exercise or as defining a procedure to make a machine carry out a certain task. Depending on which of these views was favoured, the question whether computer programming always involved "technical considerations" could be answered negatively or positively. It was apparently the intention of the writers of the EPC to take the negative view, that is, to consider the abstract formulation of algorithms as not belonging to a technical field.

Comment

So, after a long wait, the message from the Enlarged Board is that current EPO CII case law is fine, and needs no change or clarification. It will be interesting to see how the UK IPO and courts react: their divergence from EPO case law and practice in this area has been justified on the basis that there was inconsistency in the EPO decisions (see Legal update, Court of Appeal reconsiders approach to software patents).

The Enlarged Board specifically commented on Jacob LJ's proposed questions, stating that it was somewhat surprising that the referral did not address any of its questions to the validity of this way of judging an inventive step, an issue which was surely of general interest, and Aerotel question 2. They suggested that this omission was perhaps because the President could not identify any divergence in the case law on this issue, despite the fact that approximately 70 decisions cited T 641/00, COMVIK, and over 40 decisions cited T 258/03, Hitachi, the decisions which essentially defined the approach.

Case: Programs for computers, G 0003/08, 12 May 2010.

EPO Enlarged Board rejects President's referral on software patents | Practical Law