Software patent

Software patent

Software patent does not have a universally accepted definition. One definition suggested by the Foundation for a Free Information Infrastructure is that a software patent is a "patent on any performance of a computer realised by means of a computer program". In 2005, the European Patent Office suggested that a software patent is a patent for a computer program claimed as such, or an algorithm or computer-implemented business method that make no technical contribution.

There is intense debate over the extent to which software patents should be granted, if at all. Important issues concerning software patents include:

  • Where the boundary between patentable and non-patentable software should lie;
  • Whether the inventive step and non-obviousness requirement is too easily satisfied for software; and
  • Whether patents covering software encourage or discourage innovation.


A patent is a set of exclusionary rights granted by a state to a patent holder for a limited period of time, usually 20 years. These rights are granted to patent applicants in exchange for their disclosure of the inventions. Once a patent is granted in a given country, no person may make, use, sell or import/export the claimed invention in that country without the permission of the patent holder. Permission, where granted, is typically in the form of a license which conditions are set by the patent owner: it may be gratis or in return for a royalty payment or lump sum fee.

Patents are territorial in nature. To obtain a patent, inventors must file patent applications in each and every country in which they want a patent. For example, separate applications must be filed in Japan, China, the United States and India if the applicant wishes to obtain patents in those countries. However, some regional offices exist, such as the European Patent Office (EPO), which act as supranational bodies with the power to grant patents which can then be brought into effect in the member states, and an international procedure also exists for filing a single international application under the Patent Cooperation Treaty (PCT), which can then give rise to patent protection in most countries.

These different countries and regional offices have different standards for granting patents. This is particularly true of software or computer-implemented inventions, especially where the software is implementing a business method.

History and current trends

Early example of a software patent

On 1962-05-21, a British patent application entitled "A Computer Arranged for the Automatic Solution of Linear Programming Problems" was filed. The invention was concerned with efficient memory management for the simplex algorithm, and may be implemented by purely software means. The patent was granted on August 17, 1966 and seems to be one of the first software patents.

United States

The United States Patent and Trademark Office has granted patents that may be referred to as software patents since at least the early 1970s. In Gottschalk v. Benson, the United States Supreme Court ruled that a patent for a process should not be allowed if it would "wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself", adding that "it is said that the decision precludes a patent for any program servicing a computer. We do not so hold. In 1981, the Supreme Court stated that "a claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula, computer program, or digital computer" and a claim is patentable if is contains "a mathematical formula [and] implements or applies the formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect".

Due to different treatment of federal patent rights in different parts of the country, in 1982 the U.S. Congress created a new court (the Federal Circuit) to hear patent cases. Following several landmark decisions by this court, by the early 1990s the patentability of software was well established, and in 1996 the USPTO issued Final Computer Related Examination Guidelines stating that "A practical application of a computer-related invention is statutory subject matter. This requirement can be discerned from the variously phrased prohibitions against the patenting of abstract ideas, laws of nature or natural phenomena" (emphasis added).

The recent expansion of the Internet and e-commerce has led to many patents being applied for and being granted for business methods implemented in software and the question of whether business methods are statutory subject matter is a separate issue from the question of whether software is. There have been several successful enforcement trials in the USA, some of which are listed in the list of software patents article.


Within European Union member states, the EPO and other national patent offices have issued many patents for inventions involving software since the European Patent Convention (EPC) came into force in the late 1970s. excludes "programs for computers" from patentability (Art. 52(2)) to the extent that a patent application relates to a computer program "as such" (Art. 52(3)). This has been interpreted to mean that any invention which makes a non-obvious "technical contribution" or solves a "technical problem" in a non-obvious way is patentable even if that technical problem is solved by running a computer program.

Computer-implemented inventions which only solve a business problem using a computer, rather than a technical problem, are considered unpatentable as lacking an inventive step (see T 258/03). Nevertheless, the fact that an invention is useful in business does not mean it is not patentable if it also solves a technical problem.

United Kingdom

United Kingdom patent law is interpreted to have the same effect as the European Patent Convention such that "programs for computers" are excluded from patentability to the extent that a patent application relates to a computer program "as such". Current case law in the UK states that an (alleged) invention will only be actually regarded as an invention if it provides a contribution that is not excluded and which is also technical. A computer program implementing a business process is therefore not an invention, but a computer program implementing an industrial process may well be.


Software-related inventions are patentable. To qualify as an invention, however, there must be "a creation of technical ideas utilizing a law of nature" although this requirement is typically met by "concretely realising the information processing performed by the software by using hardware resources". Software-related inventions may be considered obvious if they involve: the application of an operation known in other fields; the addition of a commonly known means or replacement by equivalent; the implementation in software of functions which were previously performed by hardware; or the systematisation of known human transactions.

Other countries

In India, a clause to include software patents was quashed by the Indian Parliament in April 2005.

In Australia, pure or abstract methods of doing business are not considered to be patentable, but if the method is implemented using a computer, it avoids the exclusion for business methods.

In the Philippines, "schemes, rules and methods of performing mental acts, playing games or doing business, and programs for computers" are non-patentable inventions under Sec. 22.2 of Republic Act No. 8293, otherwise known as the "Intellectual Property Code of the Philippines."

Patentable subject matter

Patents are intended to promote innovation by encouraging the timely disclosure of how to make and use inventions and by protecting investments made to commercialize inventions. They attempt to accomplish this by requiring that a prompt and full disclosure is made by an inventor of how to make and use his/her/their invention and by granting a monopoly right for a limited period of time to a patent owner to prevent others from making, using or selling the invention in exchange for said prompt and full disclosure.

There is debate as to whether or not these aims are achieved with software patents.


In seeking to find a balance, different countries have different policies as to where the boundary between patentable and non-patentable software should lie. In Europe, a number of different proposals for setting a boundary line were put forward during the debate concerning the proposed Directive on the patentability of computer-implemented inventions, none of which were found acceptable by the various parties to the debate. Two particular suggestions for a hurdle that software must pass to be patentable include:

  • A computer program that utilises "controllable forces of nature to achieve predictable results".
  • A computer program which provides a "technical effect".

In the US, Ben Klemens, a Guest Scholar at the Brookings Institution, proposed that patents should be granted only to inventions that include a physical component that is by itself nonobvious. This is based on Justice William Rehnquist's ruling in the U.S. Supreme Court case of Diamond v. Diehr that stated that "... insignificant postsolution activity will not transform an unpatentable principle into a patentable process." By this rule, one would consider software loaded onto a stock PC to be an abstract algorithm with obvious postsolution activity, while a new circuit design implementing the logic would likely be a nonobvious physical device. Upholding an "insignificant postsolution activity" rule as per Justice Rehnquist's ruling would also eliminate most business method patents.


A common objection to software patents is that they relate to trivial inventions. A patent on an invention that many people would easily develop independently of one another should not, it is argued, be granted since this impedes development. Different countries have different ways of dealing with the question of inventive step and non-obviousness in relation to software patents.

Inventive step test in Europe

See Inventive step requirement in Europe and, for instance, T 258/03.

Perceived negative effects


There are a number of high profile examples where the patenting of a data exchange standards forced another programming group to introduce an alternative format. For instance, the PNG format was introduced to avoid the GIF patent problems, and the Ogg Vorbis format was introduced to avoid the MP3 patent problems. If it is discovered that these new suggested formats are themselves covered by existing patents, the final result may be a large number of incompatible formats. Creating such formats and supporting them costs money, creates inconvenience to users and even threatens to split the Internet into several partially incompatible sub-networks (ASF and non-ASF, for example).


Computer-implemented invention (CII)

A microsite of the EPO website states that a generally accepted and widely used definition of a CII is "an invention whose implementation involves the use of a computer, computer network or other programmable apparatus, the invention having one or more features which are realised wholly or partly by means of a computer program. A similar definition is provided by The Guidelines for Examination at the EPO.

The EPO, in contrast, deny that they grant software patents. They further argue that the term software patent is itself a misleading concept since it could imply that an invention must be in the form of software to count as a CII. The case law of the EPO and various national courts in Europe states that a computer program cannot be patented in the guise of an object or as hardware if the underlying invention is still a computer program as such. Computer-implemented invention also covers inventions relating to computer control of processes external to a computer, such as ABS braking systems. Such inventions are not caught by many definitions of software patent, such as the one proposed by the FFII.

Additionally, the EPO do not grant patents to all computer-implemented inventions since they must still provide a technical solution to a technical problem to be viewed as being inventive, whereas the term software patent implies a granted patent. Nevertheless, the fact that the EPO deem that many software-related patent applications describe inventions is a point of contention.

Overlap with copyright

Protection by patent protection and copyright constitute two different means of legal protection which may cover the same subject-matter, such as computer programs, since each of these two means of protection serves its own purpose. Software is protected as works of literature under the Berne Convention, thus any software written is automatically covered by copyright. This allows the creator to prevent another entity from copying the program and there is generally no need to register code in order for it to be copyrighted.

Patents, on the other hand, give their owners the right to prevent others from using a claimed invention, even if it was independently developed and there was no copying involved. In fact, one of the most recent EPO decisions T 424/03 clarifies the distinction, stating that software is patentable, because it is basically only a technical method executed on a computer, which is to be distinguished from the program itself for executing the method, the program being merely an expression of the method, and thus being copyrighted.

Patents cover the underlying methodologies embodied in a given piece of software, or the function that the software is intended to serve, independent of the particular language or code that the software is written in. Copyright prevents the direct copying of some or all of a particular version of a given piece of software, but do not prevent other authors from writing their own embodiments of the underlying methodologies. Copyright can also be used to prevent a given set of data from being copied while still allowing the author to keep the contents of said set of data a trade secret.

Free and open source software

There is tremendous animosity in the free software community towards software patents. Much of this has been caused by free software/open source projects shutting down when the holders of patents covering aspects of a project demanded license fees that the project could not or was not willing to pay or offered licenses under terms which the project was unwilling to accept, or could not accept because it conflicted with the free software licence in use.

Several patent holders have offered royalty-free patent licenses. Companies that have done this include IBM, Microsoft, Nokia, Novell, Red Hat, Sun Microsystems and Unisys. Such actions have rarely appeased the free/open source software community for reasons such as fear of the patent holder changing their mind or problems with some of the license terms.

In 2005 Sun Microsystems announced that they were making a portfolio of 1,600 patents available through a free software/open-source-type patent license called Common Development and Distribution License. This was criticized by the free/open source software community, however, since it did not release the source code under a free/open source software license.

In 2006, Microsoft's patent pledge not to sue Novell Linux customers, openSUSE contributors, and free/open source software developers and the associated collaboration agreement with Novell was met with disdain from the Software Freedom Law Center while commentators from the Free Software Foundation stated that the agreement would not comply with GPLv3.

Draft versions of the GNU GPL version 3 may also conflict with patents on software by preventing any patent holder from enforcing their patents against a user if said patent holder also distributes software covered by those patents under the GPL.

General software developer unhappiness

In the late 1990s, Unisys claimed to have granted royalty free licenses to hundreds of not-for-profit organizations that used the patented LZW compression method and, by extension, the GIF image format. However, this did not include most software developers and Unisys were "barraged" by negative and "sometimes obscene" emails from software developers.


Substantive law regarding the patentability of software and computer-implemented inventions, and case law interpreting the legal provisions, are different under different jurisdictions.

Software patents under multilateral treaties:

Software patents under national laws:


Several successful litigations show that software patents are enforceable in the US. See List of software patents for more examples.

Similarly in Japan, software patents have been successfully enforced. In 2005, for example, Matsushita won a court order barring Justsystem from infringing Matsushita's Japanese patent 2,803,236 covering word processing software. A Tokyo court ordered Justsystem to pull their product from the market. On September 30th 2005, Intellectual Property High Court of Japan, which was newly formed in April 2005, granted Justsystems’ appeal. The original decision by the Tokyo District Court was overturned in October 2005.


Patenting software is widespread in the US. As of 2004, approximately 145,000 patents had issued in the 22 classes of patents covering computer implemented inventions. (see table to the right).

Many software companies cross license their patents to each other. These agreements allow each party to practice the other party's patented inventions without the threat of being sued for patent infringement. Often, there is no payment of any royalties between the parties. Microsoft, for example, has agreements with IBM, Sun Microsystems, SAP, Hewlett-Packard, Siemens AG, Cisco, Autodesk and recently Novell. Microsoft cross-licensed its patents with Sun, despite being direct competitors, and with Autodesk even though Autodesk has far fewer patents than Microsoft.

The ability to negotiate cross licensing agreements is a major reason that many software companies, including those providing open source software, file patents. As of June 2006, for example, Red Hat has developed a portfolio of 10 issued US patents, 1 issued European patent, 163 pending US patent applications, and 33 pending international PCT (Patent Cooperation Treaty) patent applications. Red Hat uses this portfolio to cross license with proprietary software companies so that they can preserve their freedom to operate.

Many software patent holders license their patents in exchange for monetary royalties. Some patent owners, such as IBM, are in the business of selling the products they patent and view licensing as a way to increase the return on their investment in innovation. IBM generates an additional $US 2 billion per year by licensing.

Other patent holders are in the business of inventing new computer implemented inventions and then commercializing the inventions by licensing the patents to other companies that manufacture the inventions. Walker Digital, for example, has generated a large patent portfolio from its research efforts, including the basic patent on the reverse auction technology. US universities also fall into this class of patent owners. They collectively generate about $1.4 billion per year through licensing the inventions they develop to both established and start up companies in all fields of technology, including software.

Still other patent holders focus on obtaining patents from original inventors and licensing them to companies that have introduced commercial products into the marketplace after the patents were filed. Some of these patent holders, such as Intellectual Ventures, are privately held companies financed by large corporations such as Microsoft, Intel, Google, etc. Others, such as Acacia Technologies, are publicly traded companies with institutional investors being the primary shareholders.

The practice of acquiring patents merely to license them is controversial in the software industry. Companies that have this business model are pejoratively referred to as patent trolls. It is an integral part of the business model that patent licensing companies sue infringers that do not take a license. Furthermore, they may take advantage of the fact that many companies will pay a modest license fee (e.g.$100,000 to $1,000,000) for rights to a patent of questionable validity, rather than pay the high legal fees ($2,000,000 on up) to demonstrate in court that the patent is invalid.

See also


a. The FFII are an anti-software patent group and the material associated with their definition of a software patent suggests that the purpose of the definition is to identify patents that should not be granted as a matter of policy.


External links

Economic studies

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