German EPP Hearing on Software Patentability 2005-06-02

-> [ FFII/EPP Conference | Hermetischer Diskurs in deutscher EVP-Gruppe | Lehne | Kauppi ]

2nd June 2005 -- One day after a conference that was jointly organised by FFII, CCIA and a group of members of parliament from the European People's Party from mostly Eastern-European countries, the German Christian Democrats conducted a hearing of their own on "CII", in which they gave the floor mainly to pro-patent lobbyists and patent lawyers.

Notes

The notes attempt to paraphrase too much of was said, even the very unimportant stuff. They need to be improved.

MEP Kauppi, EPP rapporteur

most difficult case in her 6 years.
meps agree - don't want to take too many steps backward - inventions, using software as part of the invention should be patentable.
but situation not clear enough. some v bad patents granted.
close to the status quo ?
- EPC ?
- EPO case law ?
Kauppi means the case law, not strict interpretation from 1970s. world has moved on; should not go back.
Patent convention is outdated; should have been changed.
Outcome: most EPP/DE members want to conserve status quo, with some limitations to stop business methods, trivial patents.
some definitions redundant, more text does not mean more clarity. Need to limit to core issues, remove material which just gives room for lawyers to interpret.

Robert Lind - not available.

Alain Strowel, Liege.

Economic studies: inconclusive.
- so need to remain prudent: we don't know, so we need to remain reasonable
Cumulation: software is a hybrid
- text: literary aspects
- code: functional aspects
hybrid nature -> protection by different IP rights (cf
- copyright: the
- patent: protects the functional ideas.
- sometimes the value of a solution will lie in the technical ideas.
eurolinux: protection should protect investment
- investment in writing the code
- also investment in developing new technical features.
Legal
- whatever the outcome, there will be another judge, the ECJ - we should trust in this judge.
  - trademarks, database protection: ECJ has been cautious
- key areas:
  - Art 2-4: "technical contribution" does not confer legal certainty. -- misled
  - Art 5: "product claims"

**** won't allow **** "pure software is software without technical contribution"

technical contribution

**** don't need new **** ABS **** Washing machine **** replacement of hardware element by software not good enough ? **** Mobile phone - faster access to data ?

exclusion of "data processing" is "extreme"
definitions of industry
- production of material goods
- EU does not have competitive advantage there.

Brian Kahin, University of Michigan

status quo ?
- real status quo
  - hard to tell: what is the real issue ?
- Commission missing context material
  - different uses; complex products
  - portfolios, not single patents
  - "patents are stealing our copyrights"
  - patent trolls.
  - TI doesn't know what's in its portfolio
  - Cisco doesn't do clearance searches
Software
- widespread independent invention
- inadvertent infringement
"Pure software"
- what do you want to keep out of the directive ?
What's at stake ?
- is it about patents or about software ?
- patents or innovation ?
- knowledge-based economy ?

Karamandi, EPO

What is patentable, what is not ?
Directive should not move too far from status quo.
Current practice in 8 minutes:
- EPC, 30 member states
- EPO BoA case law
- Art 52(1) EPC:
- Art 52(2) and 52(3) EPC:
  - ... exclusions
  - should be interpreted narrowly.
  - only excluded if claimed "as such"
- "Invention"
  - should it be defined ?
  - member states said no
  - prep docs 70s said flexibility should remain, to consider new technology.
epo case law
- technical character
- -> else excluded from patentability
- -> computer programs, business methods claimed as such
- -> inventions involving computer programs patentable if they make a technical contribution.
US
- concrete, tangible, useful result
- state street bank

PA Betten, Ficpi

patent lawyer 20 years, previously programmer
- represent small SMEs -- innovative.
- good we don't have US system, won't have those problems
  - technical character.
Copyright doesn't protect against intelligent copying.
- works for global cos, global open source
  - but not good for small cos
  - doesn't work for small

**** Microsoft vs Stac case **** C didn't protect SMEs **** now SMEs can use patents to protect themselves

Open source / SMEs
- DE: 3.4 million SMEs
- some open source
- some services
- but the others do make products which can be patentable
- want to sell these worldwide
- 1 to 2 patents can get a worldwide foothold.
- "hidden champions"
  - EU companies that have achieved 30 to 40% shares.
major infringement proceedings ?
- then why haven't those 30,000 led to proceedings ?
- despite existing patent protection,
- innovation has not been slowed down before.
The important case law from the EPO, BGH
- -> patent protection for business methods etc not possible.
- EPO manages without a definition of "technical"
  - -- nor does BGH
recitals
- decision from 2004 better than any new definition of technical characteristic which would only confuse
- experts happy with 3(b)
Fears of Open Source, SMEs
- large areas of software not patentable
- don't have technical character
- case law changed in 2000
  - .. many would not be enforceable
Council version would speed up
- clarifications by ECJ
  - (though took 10 years).

Q&A

Q. MEP Wuermeling:

v useful, comprehensive statements.
"data processing"
- what would it mean to exclude this from patentability ?
- would this help separate software from technical areas.

A. Stowel:

exclusion of all data processing
- would move the limit a long way from the current position
data processing should be patentable
- enhancement of the image in medical equipment
- physical entities on the screen.

Q. MEP Lehne:

all colleagues agree on the objective:
- software developers able to work without limits
- but allow inventors to profit
interoperability:
- solution ?

A. PA Betten:

1991: chamber of patent lawyers intervened on sw copyright, interfaces
- that compromise was very difficult
- has stayed in place
- still a major component of patent law
with the exception of Microsoft, no specific cases where this has become a problem.
- but an issue which will seriously have to be addressed over next 3 years
  - German courts have indicated this.

Q. MEP Kauppi, EPP:

can software have some technical features ?
data processing not a field of technology ?
- could this be limited to make it okay ?
Betten: were EPO decisions right, eg IBM/ program claims, Sohei ?
- --> kauppi: borderline cases ?

A. Brian Kahin:

comment on Betten statement ?
US would not put so much weight behind a single adjective "technical"

A. Stowell

technical features can be implemented in software, eg code.
- but then it is the invention which is patented, not the code ?
- -> sim to biotech invention.
- --> it is the function which is patentable.
exclude data processing without limitation goes very far
- would exclude image contribution
but excluding data processing w/o technical contribution could be okay.
rust in a good judge at the ECJ

A. PA Betten:

of course, technical features can be implicit in code
- -> what matters is the effect it brings about.
EPO jurisprudence, BGH is far clearer than this general form of words.
Product claim:
US form of words might have been preferable.
- but we are talking about the code as it is marketed.
- IBM computer program product, federal court agreed.
- especially important for SMEs in particular
- otherwise would have to take action against end user.
- confusion: covers product in the form in which it is marketed
  - all the characteristics of the patentable product/device.

A. Karamani:

Case law:
"normal physical effect"
- flow of electric current not a
- brake or train, better quality mobile phone comms.
- solution to a technical problem
- IBM decision, Sohei at the beginning of the case law
- new case law has developed
- much emphasis on whether there is a technical contribution
- very strict criteria now
- this has changed
- our practice has changed,
- we are now more restrictive.
Data processing:
- Dangerous to create broad exclusion
- might not be able to support the SME the way you would like to do.
- Instrument of interpretation, not an instrument for introducing to

Kauppi:

Program product claims, and Sohei are exactly what we want to exclude.
This is just what most MEPs want to exclude.
Very disappointed you were not able to exclude these.

A. Karamani.

Hardware replaced by software
- excluding these would not be
IBM is not now followed.
Hitachi is the line.
pure sw product will very rarely solve a technical problem.
new case law has a better approach
is there really a technical problem to be solved?
parl wants the innovation to be protected if it is a technical innovation, not a software innovation.

A. PA Betten.

Earlier ruling did not much look at whether
- 1st hurdle: tech character
- 2nd hurdle: inventive step.
current jurisprudence says patents before 2000, not necessarily sound.

Q. Oliver Lorenz

Bad patents have been granted
You say, "Criteria of technical effect"
What was technical effect in progress bar, shopping cart, internet shopping method ?
To Kahin: is solution

Q. Joachim Jacobs, FSFE

Microsoft suit
An empty victory to publish information, if it is not patented

Q. Alessandra Rossi

New judge ECJ new lines of case law:
Isn't litigation a very costly way to get rid of patents which shouldn't have been granted in the first place ?
"Further technical effect":
- given that any program is meant to produce some effect, is there any program which does not produce a further technical effect ?

Q. Marco Schultz:

(regarding Betten Stac) s/w would not be patentable, yet software patents would have been useful against Microsoft ?
- does this add up ?
as an SME, I need law to be clear -- otherwise I face a very expensive situation, puts my company at risk -- law must be clear, not left to court.

Q. Birgitte Anderssen

SMEs fail because not protected.
But all international studies show SMEs are threatened, because they are less able to participate in the game

Q. Alberto Barrionuevo

Status quo: Q to Mrs Kauppi
According to the slides, status quo could be patent convention, or current practice
Should EPO have legislative powers as well as executive?

Q. Erik Josefsson:

"Computer program excluded as such"
- a computer program for executing a method under any of the previous claims.

A. Brian Kahin

discomfort at focus on "technical"
- poorly drawn lines go away, end up with no limit at all.
- need to make contact with economic reality, or law will not hold.

A. Strowel

this directive is about finding a line between patentable and not.
there are issues for SMEs - more in the US than here
adjustments are needed, (eg reduced fees for SMEs)
- but this is not the issue here.
why aren't oppositions being introduced ?

A. Betten

progress bar
- IS of a technical nature, if it indicates something about the hardware.
- would not stop use eg of a clock which was filling up.
shopping cart
- not a contribution today, any more
Microsoft STAC case -- innovative storage was technical.
SMEs: Fraunhofer inst study
- a proportion of SMEs do need patents
- these are the ones that have produced most innovations, jobs
Program claims:
- Only if it can be traced back to a patentable procedure (eg IBM case).

A. Karamanli:

misconception - further technical effect is needed.
- second hurdle, is there technical contribution ?
- shopping method - if the object does not contain a solution to a technical problem, then no; but yes, if it does contain such a solution.
- can't just say "shopping methods" cannot be patented.
- interpretation by courts
  - laws must be written with as much certainty as possible
  - but case law made by courts is inevitable
  - - interpretation of laws.
- directive is a means of interpretation
- concern is reasonable, but this is an issue for many laws.
program claim:
- claim to a computer program
  - Erik: not "as such" ??
  - no, because a claim to a computer program which would have a further technical effect.

MEP Kauppi:

interpretation by courts is a reality
this is a good thing
legislators can always come back again: nothing is definitive and final.

Kai Brandt, Siemens

some more examples for the discussion:
- software controlled fuel injection to minimise consumption
- offshore wind energy
- motion control and factory automation
- because the software is better
- medical equipment
- X-ray tomography scanners
- different amounts of radiation control.
- image processing
- could do it in hardware; or in a software workstation
- --> protect the CD which is inserted
co-operation with university
- professors publish
- so must have patents.
- Technical CIIs.
- Excluding physical measurement processes ?

Lauri Kvinenen, Nokia

CII directive does
misconception: that a clear dividing line can be drawn between tangible and intangible.
companies want clarity, and an even playing field.
proprietary software needs patent protection
- so we can know that we own it.
second reading:
- needs to be balanced, ...
- acknowledge existing patent legislation
- do not define something which is probably undefinable.
- recognise that interoperability has different meanings in different sectors
- telecoms has huge amount of interoperability
- do not include catch-all definitions which exclude all data processing.
Open source and proprietary software can co-exist.

David Axmark, MySQL:

...

Lycos Europe:

develop many products
biggest hurdle to enter the US market is software patents.
rough scan: $1m per year, just to review key opponents patent portfolios
we would need to file a lot of patents ourselves
which would cost money, contribute nothing

Q. Kauppi:

can definition of "data processing" be improved ?
axmark - EPO patents on pure data processing on databases ?

Q. Lehne:

software developers should not be limited
but we swould be shooting ourselves in the foot if ABS braking etc not patentable
Would Rocard's amendments really prevent this ?

A. Brandt:

"forces of nature"
- raises the same problem
- washing machine patentable, but improvement

Q. Joachim Jacobs:

Siemens patent on HTML mediated business information

A. Brandt:

I don't know the patent
- might be technical
- might not be technical,
if we are exploring what is allowed and what is not
- sometimes then we get granted patents, we wish had not been granted.
forces of nature does not cover all cases where things are technical (according to BGH)
- and moving electrons is forces of nature
- granted even if we dont want it.

MEP Mayer, EPP

Interest Groups:

75,000 emails to German MEPs in two weeks.
- a sort of lobbying that we could do without.

Oliver Lorenz, Emcita

support from companies, and in the public interest.
remarks to what had been said earlier:
agreement here that CIIs = software patents
"you may also call it a blue elephant" -- it's all the same thing
patent attorneys would prefer "technical" not to be defined too tightly
- but they would say that, wouldn't they.
Judge yesterday at a conference in Germany:
- forces of nature is very important
- it was abandoning that criterion that let in all these trivial patents
- should listen to judges, not just attorneys.
points:
- Patent rights are property rights.
  - we grant these as a society
  - it is for society not the EPO to make these rules
No help for knowledge sharing
- -> pre-emptive strike on knowledge sharing

UEAPME

monopolies for non-EU companies
block on innovation, huge financial costs.

ACEA

Frederik Egrelius (Scania)
European Automotive Manufacturers Association
Vehicle internal computer network
- may link up to 80 processors
- these are all about data processing
"Exclusion of data processing" is therefore unacceptable.
eg
Sensors -> Computer -> Brakes
- improvement maybe implemented solely as a computer program
- new method is certainly a technical
"forces of nature" would only relate to the mechanical features.
- no reason to restrict to those sorts of inventions

Hugo Lueders, CompTIA

CompTIA
Europe is in crisis again
- need a clear signal that we believe in internal market, harmonisation
There is still the idea that you can develop sw for free, or for small investment
- but it is very capital intensive
- and designing the technical features is the most capital intensive part
  - this is what needs the protection.
Don't take away the lifeblood for this part of the industry
- don't take away the innovation
Parliament don't go to conciliation -- risk is that the whole directive will disappear.

Q. MEP Kauppi:

Patent lawyers don't want clarity on technical:
- because it's impossible ?
- or because you want to leave it broad ?
ASEA: data processing ?
- If it's just darts processing, normal input output, databases, whole invention with further technical effect
- could this then be used to exclude pure software ?

A. Hugo Lueders, CompTIA:

don't open Pandora's box with wonderful new ideas.
- this would not add anything to the clarity
- you would destroy what we have
forces of nature
- Japan has "forces of nature"
- allows software patents
avoid conciliation
- otherwise other companies will take it away from us

A. ACEA:

"technical" should be defined as
- "industrial application of exact sciences"
- we have no good solution to improve that sentence.

A. Cimaglia

"Apply the law to enemies, interpret the law for friends".

A. Lorenz, EMCITA

surrounded by products, not programs
not necessary that every innovation should have a patent
- only if it would have happened without the patent.

MEP Lehne: summary

my view, won't please everybody
EPP-ED members agree on what we want
- developers' room for manoevre should not be limited
- but system for patents up until now, principles must be maintained
  - esp industrial patents
--> so how can we achieve that objective ?
- today was to clarify.
- nobody could argue with those interests.
260 amendments. vote 21 july in JURI.
- v difficult, esp at second reading
- yet 75,000 emails on this question - doing our best to answer!
  - doesn't necessarily help!!
  - counterproductive (ATTAC apologised).
  - exerting pressure, members not getting balanced info
  - power games being played.
Within the EPP, there are major differences regarding Rocard report
- I and many others believe it is questioning the entire patent system as it exists
- patents are a fundamental building block in the knowledge economy. we don't want to dismantle it.
Impressions:
- only one argument
  - common position said s/w cannot be patented
  - I couldn't see why that was problematic
- need to find compromise, solution everyone can accept, without introducing additional damage.
EU system is different from USA.
- Patents enormously important for SMEs
  - machine tools,
  - automotive component mfrs
- enormous interest in maintaining patentablity
  - eg robot control system - still patentable ?
  - would be disastrous if not patentable.
  - from Ruhr:

**** SMEs would not accept such an opinion.

Interoperability is of central importance
- Need better solution than what has been raised in council.
- Need clear legal provision
- nobody wants to see unclear rules.
Any rule or law requires interpretation
- this is for the courts.
- (J. Jakobs interjection: "unclear rules mean money for lawyers")
- --> not job creation schemes
Horrified by unobjective way debate is conducted
- sometime seems not to be lobbyists, seem to be from sects
- interested parties only seem to view things from their own points of view
- no use to us
- need solutions
We will do our utmost to find a political compromise
- otherwise we will have to look at majorities at vote in July
- don't know how things would fall
those in favour of a radical solution need to have a compromise

--> Conciliation
- will make sure the situation won't be worse than it is at the moment.
- But if conciliation fails, current jusrisprudence would continue
  - -> not in the interest of those who want to limit patentability.