Wednesday, July 12, 2006

European patent policy under review

A couple of noteworthy developments in the European software patent debate. Firstly, the European Commission has criticised the European Patent Office harshly as lacking political accountability. The lack of accountability has allowed the EPO to change policy so that it permits the issuing of software and business methods patents.

Secondly, FFII has presented a statement to the Commission's patent policy hearing against the proposed European Patent Litigation Agreement (EPLA). The statement reads:

As has been said by other speakers, the EPLA will make litigation 2-3 times more expensive. These numbers come from the EPO.
What does this mean for SMEs?
It means that if you are an SME and have a patent, it will become harder to enforce your patent because litigation just became 2-3 times more expensive. It also means that if you are an SME and accused of patent infringement, it becomes harder to defend yourself because litigation just became more expensive. And if you cannot defend yourself, you will be forced to license, even if the patent is weak or invalid.
Granted patents that are invalid are a plague, yet 50 % of all patent litigation concerns patent validity. That means every second trial relates to a problem that should not be there in the first place. Every second patent trial is a trial which could be 100% cheaper for all parties involved if the organisation responsible for the granting of patents would have taken it's full responsibility, but also if these patents would never have been filed.
We will keep an eye on this, it seems to me that we are headed towards another struggle in Brussels.


Gerontius said...

A couple of corrections/calrifications are required.

Firstly, the EPO DEFINITELY do not grant patents for business methods. They still require an element of innovative technicality, and business methods are not considered technical. Run a search for the Hitachi/Auction Method decision of the EPO to learn more.

The EPO claim they do not grant patents for "software" and, while this is all about spin, they do have a point. Merely because a invention uses software doesn't make it patentable but, by the same token, using software doesn't make it unpatentable either so long as the software is doing something innovative.

As for litigiation being all about validity - of course it is! Anyone who gets a patent law-suit thrown at them is going to attack the validity of the patent. It's the first line of defence. I'm actually surprised that the figure is as low as 50%. Additionally, an accused infringer is probably going to give in and pay the license unless they think they have a reasonable chance of getting the patent thrown at them revoked - why fight things out in court if you know you're going to lose. So, it's not a surprise that the only patents that get litigated in court are the weaker ones. You shouldn't judge the entire patent system based on them 'cause you're seeing a skewed sample.

Andres Guadamuz said...


Thank you for the comment and the clarification, I beg to differ. There have been a number of business method patents awarded at the EPO by stealth. It is true that the requirement of technicality is still a hurdle, but this can be overcome by clever drafting. The FFII has some advice of a German patent firm on how to "europeanise" American business method patents. There are several lists of granted business method patents out there.

As for software, it is true that the EPO still does not grant patents for software as such, but it cannot be denied that the EPO has bee issuing patents for software that is not innovative under the technical contribution test. I have a much lenghtier explanation of my take on the European patent debate in this article.

You make a good case regarding the percentage of patents awarded.

Again, thanks for the comment.

Gerontius said...

I totally disagree with the suggestion that the EPO grant business method patents by stealth. Occasionally (and the occasions are rare compared to the number of applications filed) they might grant a business method patent by mistake. Sohei, for example (which is at the top of the list you links to) was a very early case which the EPO board of appeal said was technical (rightly in my view) and sent it back to the examiners to consider the issue of inventive step. Unfortunately, the examiners clearly didn't know what to do and just granted the patent. So, I agree Sohei should not have been granted but only because it was an obvious technical implementation of a business method, not because it was a business method.

Many of the other "business method" patents granted by the EPO suffer the same flaw - for some reason or another, the examiners haven't spotted why the technical implementation was obvious. Mistakes can happen, which is why the EPO have an opposition procedure, and I note that at least one of the granted patents on the list was revoked during opposition proceedings.

Looking also at the "advice" from the German firm. I've seen this type of advice before. As a patent attorney, I used to give similar advice, but don't any more. Basically, it's advice that gives false hope - it's advice that says: well, there's something technical here (eg a computer) so there's a chance of getting a patent, but ignores the requirement for inventive step which the EPO are bringing to the fore these days rather than trying to understand what "as such" means in the business method exclusion.

As I say, I don't give advice like that any more. Instead, I now pride myself on knowing he current law in Europe and telling it straight to my clients. I have on several occasions advised clients that while there is technical subject matter in their application, it is obvious and therefore unpatentable. I know that this practice has lost me clients who have used a different attorney - for example, I know that the largest patent firm in the UK (Marks and Clerk) and I were asked for advice on a computerised casino system. I read the application and said don't bother trying - guess who they sent the work to! I'm currently watching this application to see how long it takes for it to be refused. I could give you many more examples, including some which have in fact now been refused.

So, it makes good business sense for European firms of attorneys to tell US clients how to make their applications "look" good by adding words like "computer implemented" or "electronically communicated" to their patent claims. It means they get the initial work, which keeps the money coming in. However, I can tell you from repeated personal experience that it doesn't mean they get more granted patents. And while I might lose a few fly-by-night clients, the high-volume filers who don't want to be wasting their patent budget on worthless cases listen to my advice. One close-working relationship like that is worth 10 clients who want to just try it on, so, for me, my way makes good business sense in the long term.

Now that's a business model that might be patentable! One based on honesty! Not sure anyone's tried THAT before :)

PS - can you point me to your source that says that the EPLA would be more expensive than using individual national courts. I can't find any figures myself. From what I know, yes the EPLA would probably be more expensive than fighting in a national court if you were only interested in ONE European country. BUT, if you have business interests in several countries, the EPLA would be a good way to settle disputes relatively cheaply in a single procedure. Economies of scale and all that.

Andres Guadamuz said...

I really admire your honesty with regards to patent applications from American clients, I hope more of your colleagues behaved like that. As things stand, the current European framework is riddled with bad advice and dogy patents. Most of them are software patents, but I think that there are enough business method ones out there to warrant concern. We will have to disagree with regards to the amount of actual business method patents in the patent ecology, but as I am just an academic I will have to take your word as someone who is in the trenches.

As for the EPLA expenses, the source is the linked article by FFII. If you read the post again, you will notice that I am quoting their statement, those are their words, not mine.

Gerontius said...


Sorry for not noticing that they were FFII's words and not yours. However, having gone away and done some checking myself, I felt I had to come back to warn you that (typically for the FFII) the statement is disingenuous at best and downright misleading at worst.

The source for the cost data is here:

The cost estimates start on page 12. Here's an extract:
"The main conclusion which can be drawn from the cost estimates is that (a) the costs of a medium-scale patent case before the European Patent Court are likely to be higher than the costs of a similar case today before one court in an EPC contracting state (with the exception of Great Britain), (b) the costs of parallel litigation before two national courts (with the exclusion of Great Britain courts) in a medium-scale patent case are higher than the expected litigation costs before the European Patent Court."

Given that the whole point of the EPLA is to provide a single forum for pan-European patent litigation, the fact that it would be more expensive than litigation in a single country, but cheaper than anything more extensive, sounds to me like a major advantage, not a distadvantage as the FFII claim.

Not wanting to be rude, but as an academic, you really should know better than to trust any agency that has such a clear and one-sided agenda as the FFII. It really gets on my nerves when their misinformation gets spread around the Internet by well-meaning but gullible people.

For example, the FFII claim that the opinion of patent attorneys shouldn't be trusted on matters of what should and should not be patented because they have a vested interest in the patenting rules being relaxed. What utter tosh! Doesn't matter to me what the standards are, if people come up with inventions and want to patent them, they'll still come to patent attorneys for advice. As I've implied above, I've done pretty well out of the fact that the law in Europe is stricter than it is in the US and people in the US need to be told how we do things over here. Making it even stricter would probably be to my advantage. Relaxing it would lose me a major source of income since I would then become little more than a brainless intermediary between the US attorneys and the EPO. Get rid of "software" patents altogether and I'll just go back to patenting office furniture - for which the freebies are better! :)