SOFTWARE PATENTS IN EUROPE

There have been many recent blogs regarding the wisdom of modifying the rules of the European Patent Office to extend patent protection to computer software. Many of the articles imply that neither software nor business method patents are granted by the European Patent Office (EPO).

That implication is contradicted by a scholarly article authored by Stefan Wagner entitled “Business Method Patents in Europe and their Strategic Use – Evidence from Franking Device Manufacturers” and dated September 29, 2004.

From my read of the article, Stefan Wagner argues that a prohibition of European business method patents is a misconception. Specifically, the supposed prohibition arises from the imprecise wording of Article 52 of the European Patent Convention. In reality, business methods have been patented in by the EPO. The article cites multiple patents having been issued to entities such as Pitney Bowes.

Most compelling is the author’s analysis of EPO patents granted for subject matter directly counter part to clear US business method patents. As is known, the USPTO assigns most business method patent to Patent Class 705. This class pertains to “data processing, financial business practice, management, cost/price determinations”. The typical US business method patent includes a “data processing” step or apparatus although software code is not specified.

Stefan Wagner’s article identifies “1,901 European patent applications” that were “equivalent” to granted US business method patents assigned to Class 705. Of the identified 1,901 “applications”, the author identifies 689 as being issued or granted patents and another 886 being pending. The calculated rate of grant to withdrawal or refusal is over 67%.

The significance of all of this is that business method patents, including patents incorporating data processing components or processes, are being issued by the EPO. It is my perception that the proposed rule change now being discussed will change matters only in degree. Stated in other words, the explicit text of the law will conform to existing practice.