27 January 2011

EU Parliament's Legal Affairs Committee (JURI) Gave Consent to Enhanced Cooperation Today

[MEP Klaus-Heiner Lehne, Chairman onf Legal Affairs Committee]
On 13 December 2010, a qualified majority of 23 EU member states (all but Spain, Italy, the Czech Republic, and Cyprus) agreed to implement a 'small' EU patent by way of enhanced cooperation (see earlier posting), based on a legislative proposal of the EU Commission (press release) basically adopting the EPO language regime (Art. 14 EPC), according to which the EU patent would be examined and granted (by the EPO) in English, French or German. Further, machine translations would be provided for the remaining national EU languages.

According to this press release, the Legal Affairs Committee (JURI) of the European Parliament today gave its consent to the use of enhanced cooperation to create the EU patent, as proposed in the report prepared by the JURI committee's chairman, German MEP Klaus-Heiner Lehne (EPP), who decided to go ahead with the vote without waiting for the juridical opinion of the legal service (see yesterday's IPJur posting).

Next, the Parliament's legal service is expected to publish their legal opinion on enhanced cooperation in teh beginning of February, so that the European Parliament can vote on the proposal mid February. The Competitiveness Council will examine the proposal on 10 March 2011.

Due to a number of remaining unresolved issues, this fast-track approach has received quite some critisism. In fact, enhanced cooperation is a completely unusual procedure which has not yet been used for European core issues, such as internal market policy. Some observers say that with regard to vested interests of French and German industry, it is not a coincidence that Frenchman Michel Barnier (Internal Market Commissioner) and German Klaus-Peter Lehne (JURI chairman) are accelerating the process to an unprecedented efficiency record (see yesterday's EurActiv posting).

26 January 2011

As Open Source Flagships Attack CPTN/Novell Patent Deal, Some OSS Advocates Take More Pragmatic Positions

[US Department of Justice, home of the Antitrust Division; via Wikimedia]
In the course of the announced purchase of 822 Novell patents by CPTN Holdings LLC - a consortium of Microsoft, Apple, EMC, and Oracle - as a part of Novell's merger into Attachmate Corporation (see press release), the Open Software Initiative (OSI) lodged a complaint with the Bundeskartellamt (German Federal Cartel Office) against an announced "notified merger project", i.e. the request of the four software heavyweights to establish a patent consortium (see posting). CPTN has withdrawn their request a couple of days later for "procedural" reasons, rather than in reaction to OSI's complaint (see posting).

On the level of European competition law, apparently, no concerns exist about CPTN's patent transaction, as reported on the FOSSpatents blog. On 20 December 2010 British conservative MEP Emma McClarkin submitted a written question to the EU Commission in which she raised that
this [patent] move strengthens the hold Microsoft has over its competitors, which could potentially harm consumer choice and increase prices. Is the Commission aware of this situation? If so, does the Commission believe there have been any infractions by Microsoft of EU competition laws?
Joaquín Almunia, EU Competition Commissioner, responded on 17 January 2011 that
it appears unlikely that the proposed transaction requires a notification to the Commission under the Merger Regulation. Furthermore, [...] the Commission has currently no indication that the mere acquisition of the patents in question by CPTN Holdings would lead to an infringement of EU competition rules.
As opposed to the positions taken by OSI and FSFE, prominent anti-patent campaigner Florian Müller "couldn't find any real substance" in their complaints:
Those complaints came down to indicating a dislike for patents and distrust for the companies behind CPTN Holdings. But they didn't raise any legal issues that would be specific to this deal.
He pragmatically concluded that "politicians don't stop patent offices from granting them. So let's come to terms with it: this is the law of the land". Such status-quo-preserving observations are not self-evident for a leading figure of the successful no-software-patents campaign against the adoption of the Computer Implemented Inventions Directive in 2005, a piece of EU legislation that was intended to bring an EU-wide harmonisation of the treatment of so called computer-implemented inventions. In fact, Müller now takes the somewhat adapted position (see e.g. this posting) that "[s]oftware patents are a fact of life [; t]heir abolition isn't achievable" and now appears to advocate for some sort of cooperation between FOSS and the software patent world:
FOSS must find ways to deal with patents, and in fact, it already has. In particular, it must continue to find constructive and realistic ways rather than just insist that patent holders waive all rights. [...]  If the FOSS side and the patent side are both reasonable, the combination of both works without problems.
Back in October 2010, Joff Wild, editor of the widely recognised IAM magazine, supported Müller's views in a posting headlined "anti-software campaigner changes his mind" and recommended:
[R]ather than bang their heads against a brick wall and make all kinds of demands that no-one is going to take seriously, it makes sense for the open source movement to do just as Mueller suggests and to find an accommodation with patent owners. As he also warns, those elements of the movement that refuse to compromise will just end up making themselves irrelevant.
One recent example of such pointlessly banging heads to wrong walls was the campaign against the USPTO's new Interim Guidance (see press release and earlier posting) for determining patent eligibility in view of the Supreme Court's Bilski opinion, in which the Free Software Foundation (FSF) almost desperately invited their followers to "encourage the USPTO to stop issuing software patents" by writing "to the USPTO [...] and tell them that their new guidance should include a strong stand against software patents". This dubious e-mail campaign was criticised by Müller (and patent attorneys) as a spamming strategy doomed to fail from the beginning, which immediately provoked agonizing questions among open source activists such as "Has FOSS lost the battle?" or "What is Florian's strategy?".
 
Meanwhile, leading open source lobbying organisations OSI and FSF continue to fight the CPTN/Novell patent deal (their collaboration has been celebrated as "unprecedented" by OSI board member Simon Phipps), this time before the Antitrust Division of the US Department of Justice, which OSI/FSF tries to urge "to investigate the CPTN transaction thoroughly and consider appropriate remedies" by a joint position statement being essentially identical to the complaint lodged with the German FCO (see also reports on H blog and PCWorld).

Before the US Antitrust Division, a third party may either report antitrust concerns by a rather informal inquiry or formally request a business review according to the Business Review Procedure under 28 C.F.R. § 50.6. The joint statement appears to be of the more informal type, since it fails to reasonably express legal (antitrust) issues but instead raises political and rather idealistic points, based on the general concern "that CPTN Holdings may use these patents to attack FLOSS software". The joint OSI/FSF statement basically addresses
  1. the competitiveness of open source software and its role as "credible competitor to traditional proprietary software" (items 1 to 3);
  2. that CPTN has recognised open source software as "the major competitive force to their business" (item 4);
  3. assumptions that the CPTN transaction has been conducted in secrecy to hide "nefarious intentions" (item 5), and
  4. that "CPTN has all motives to launch patent attacks against companies delivering solutions based on [open source software]" (item 6).
My guess is that this attempt to discredit the patent ecosystem and CPTN member companies by unsubstantiated allegations as to their "nefarious intentions" and aggressive motives will probably not urge antitrust authorities to act against the CPTN/Novell transaction. The celebrated "unprecedented collaboration to protect software freedom" may, however, turn out to be appropriate to obtain reasonable press coverage and to motivate existing and acquire new followers for the movement.

Instead, it would have been a much better contribution for the open source idea to accept that patents are not a crime but a legitimate property right and business model and to better follow a more creative and collaborative agenda, e.g. an "if-you-cant-beat-em-join-em" strategy, as sketched by Eben Moglen, Chairman of the Software Freedom Law Center, in a LinuxCon keynote in view of the "Bilski shock" (see e.g. ArsTechnica), based on the old but pragmatic open patent idea, as implemented e.g. by the Open Inventor Network or the Open Patent Alliance. This would at least be an option to prevent that "those elements of the movement [...] will just end up making themselves irrelevant", as Joff Wild put it in his above-mentioned article.

17 January 2011

Patent Protection of Graphical User Interfaces in Europe

On the occasion of the recent ECJ judgement (C-393/09) on copyright protection of GUIs (see earlier posting), I want to briefly review the relevant case law of the Boards of Appeal of the EPO regarding patent protection of graphical user interfaces, which has to be considered against the background of Art. 52 (2), (3) EPC, requiring that "programs for computers" and "presentation of information" as such shall not be regarded as patentable inventions.

Below please find a short survey covering the most relevant decisions I got aware of during my search in the EPO's decision database, the "Case law of the boards of appeal (6th edition, 2010)" and this recommendable book of four EPO patent examiners (see book reviews here and here).

Business Information System: One of the most recent cases involving GUI's appears to be T 528/07, decided on 27 April 2010, which has also been discussed in an earlier posting on this blog.

Refused claim 1 relates to a computer system (a so called "business-to-business relationship portal")  comprising a computer network with a server and a plurality of clients. The server can create a graphical user interface on a display of a client, including links to application programs and info boxes ("channels") for displaying aggregated data from the application programs, in order to facilitate the exchange of information between business parties by presenting "business opportunity information" to permitted users, e.g. company background information or financial information. Claim 1 thus basically relates to displaying of (business-related) information via a server-controlled GUI on a client computer.

As required according the established Comvik approach for examining inventive step of mixed-type claims, Appeal Board 3.5.01 under Chairman Wibergh had to assess whether this feature is of technical nature and thus may contribute to inventive step (cf. T 641/00). The Board found in T 833/91 that visual indications via the GUI must concern technical conditions of the system in order to relate to a technical problem (T 833/91). Consequently, the GUI-related features of the claims were to be regarded as non-technical and thus could not contribute to inventive step. In the end, the Board could no see any feature making a inventive technical contribution to the prior art. (cf. T 528/07, items 5.1 to 5.6). 

Three-Dimensional Icons: The patent application in T 1749/06, decided on 24 February 2010, relates to representing low-resolution display icons having a 3D appearance on mobile phone displays by using alternating dark and white stripes to suggest the presence of highlights and shadows.

Appeal Board 3.4.03 under Chairman Eliasson held that presentation of information arises when "what is displayed" is claimed without specifying "how it is displayed". In other words, a presentation of information defined solely by the content of the information is not patentable, while the claimed invention relates to the manner of representation of the icon, as distinct from the information content, and thus may well constitute a patentable technical feature. The Board thus found that the claimed invention does not fall under the category of presentation of information within the meaning of Art. 52 (2)d EPC.

Setting Processing Conditions: T 1188/04, decided on 5 March 2008, relates to a GUI allowing processing conditions to be set by drag and drop. In such a GUI the mouse pointer is used not only to drag and drop a first icon (representing a document) onto a second icon (triggering some document processing) but also to change conditions of the document processing (e.g. print parameters) by operating the document in a predetermined manner when the first icon has been dragged to the second icon. A plurality of processing conditions (e.g. print parameters) can be set by the manner in which the first icon is manipulated over the second icon.

Appeal Board 3.5.01 under Chairman Steinbrener was convinced that the use of a computer mouse and a graphical pointer to directly control the operation of a standard computer constitutes technical subject-matter. In particular, the operation of the claimed man-machine interface is defined in terms of functional features rather than cognitive or aesthetical content.

Interactive Video Game: In T 928/03, decided on 2 June 2006, independent claim 1 relates to an implementation of a GUI of an interactive video game, in which a user controls at least one player character displayed on a screen. While the usability of a conventional GUI is limited since a player character's guide mark might be concealed by a neighbouring player character, the invention enables that a concealed indicator is clearly visible on a display.

Appeal Board 3.5.01 under Chairman Steinbrener found that the claimed teaching does not exclusively address a human mental process but contributes an objective technical function of the display, so that the invention was found to represent a physical entity in particular comprising displaying means which have a technical character by their nature. 

Comparative Product Assessment: The patent application in T 125/04, decided on 10 May 2005, relates to comparative visual assessment of products, e.g. automobiles, by displaying relevant product aspects (e.g. expenses, quality) as a vector, whereas the horizontal length of the vector and the angle the vector forms with the horizontal indicate measures of importance of the product aspect.

Appeal Board 3.5.01 under Chairman Steinbrener argued that a computer system suitably programmed for use in a particular field is an invention within the meaning of Art. 52 (1) EPC (cf. point 5 of T 931/95), even though the claimed invention exclusively relates to processing of non-technical data and does neither affect the physical/technical functioning of a device nor solve a technical problem, but merely presents data as a vector diagram chart.

Upon assessing inventive step, however, the Board took the position that, the task of designing diagrams is non-technical [cf. T 244/00] even if the diagrams arguably convey information in way which a viewer may intuitively regard as particularly appealing, lucid or logical. The Board added that the specific manner of representation has been conceived exclusively with regard to a human being's mental capabilities but is not related to any technical format or structure of the information processed, nor is it linked to the internal functioning of the system.

Image Retrieval: The patent application in T 643/00, decided on 16 October 2003, relates to converting non-hierarchical image data into hierarchically encoded image data in order to make image searching easier to the user, who is enabled to navigate in an image hierarchy instead of combing the images one by one at high resolution. According to the invention, the images are arranged in a side-by-side manner at low resolution, while the hierarchical display is provided at higher resolution, enabling a comprehensive survey as well as a fast check for details are possible.

Appeal Board 3.5.01 under Chairman Steinbrener took the position that such an arrangement of images (or menu items) on a screen might contribute to technical considerations in order to enable the user to manage a technical task, such as searching and retrieving images stored in an image processing apparatus, in a more efficient or faster manner, even if an evaluation by the user on a mental level was involved. Although such evaluation per se did not fall within the meaning of "invention" pursuant to Art. 52 EPC 1973, the mere fact that mental activities were involved did not necessarily qualify subject-matter as non-technical, since any technical solutions in the end were intended to provide tools which served, assisted or replaced human activities of different kinds, including mental ones.

Internal Functioning of a Computer: The patent application in T 769/92, decided on 31 May 1994, relates to a general-purpose management system, comprising, inter alia, a display for displaying, in the form of an image on the screen, a single transfer slip having a commonly used format. The claimed invention enables inputting data for various types of managements which could be performed independently from each other using the single user interface provided in the form of the displayed unitary transfer slip. This has two essential effects, namely (i.) the operator input is facilitated in that always the same screen is displayed and (ii.) various files may be updated directly from stored transfer slips without involving the operator, thus avoiding multiple inputs of redundant data.

Appeal Board 3.5.01 under Chairman van den Berg held that the implementation of this "user interface" in the form of a "transfer slip" is not merely an act of programming but rather requires technical considerations to be carried out before the implementation and that the need for such technical considerations implies an technical problem to be solved and technical features solving this problem. 

Conclusion: As a general rule of thumb, an exclusion of a GUI-based invention from patentability based on Art. 52 (2), (3) EPC might be prevented by specifying in the claim either the manner in which the user can interact with (or rather controls) the computer via the GUI or, vice versa, the representation of internal technical information on the machine via the GUI to the user.

15 January 2011

Copyright Protection of Graphical User Interfaces in Europe (C-393/09)

Even though up to now this blog predominantly reported on patent issues and IP politics, it is nevertheless intended to cover other types of software-related intellectual property as well.

I thus feel that I have to mention at least briefly the recent decision of the European Court of Justice in case C-393/09 (BSA vs. Ministry of Culture of the CR), which is dealing with copyright protection of graphical user interfaces (GUI). The headnote of the Court's judgement reads:
1.  A graphic user interface is not a form of expression of a computer program within the meaning of Article 1(2) of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs [the so called Software Directive, now replaced by Directive 2009/24/EC] and cannot be protected by copyright as a computer program under that directive. Nevertheless, such an interface can be protected by copyright as a work by Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society [the so called Copyright Directive] if that interface is its author’s own intellectual creation.

2.  Television broadcasting of a graphic user interface does not constitute communication to the public of a work protected by copyright within the meaning of Article 3(1) of Directive 2001/29.
As elaborately explained on the Bright Spark blog, the ECJ was exclusively discussing a GUI as an interface, i.e. as a means by which the user can interact with his computer.

In a first step, the ECJ negated copyright protection of GUI's under Directive 91/250, since Article 1(2) of that Directive grants copyright protection "to the expression in any form of a computer program" while the ECJ concluded
that the source code and the object code of a computer program are forms of expression thereof which, consequently, are entitled to be protected by copyright as computer programs (§ 34). Accordingly, the object of the protection conferred by that directive is the expression in any form of a computer program which permits reproduction in different computer languages, such as the source code and the object code (§ 35).

It follows that interface does not constitute a form of expression of a computer program within the meaning of Article 1(2) of Directive 91/250 and that, consequently, it cannot be protected specifically by copyright in computer programs by virtue of that directive (§ 42).
In a second step the ECJ examined whether computer GUIs are copyright protected by virtue of Directive 2001/29 and found that 
copyright within the meaning of Directive 2001/29 is liable to apply only in relation to a subject-matter which is original in the sense that it is its author’s own intellectual creation (§ 45). Consequently, the graphic user interface can, as a work, be protected by copyright if it is its author’s own intellectual creation (§ 46). 
A final conclusion is then drawn under § 48:
When making that assessment, the national court must take account, inter alia, of the specific arrangement or configuration of all the components which form part of the graphic user interface in order to determine which meet the criterion of originality. In that regard, that criterion cannot be met by components of the graphic user interface which are differentiated only by their technical function.
For more detailed information on and critical discussions of this matter you may refer to Hu'ko's blog (here, here, and here), the IPKat (here and here), or the 1709 blog (here, here, here, and here).

12 January 2011

CPTN Withdraws Request to Establish Patent Consortium in Germany (updated)

Discussions and rumours have accompanied the announced purchase of 822 Novell patents by CPTN Holdings LLC for $450 million in cash in the course of Novell's merger into Seattle-based software company Attachmate Corporation (press release). According to a "notified merger project" (Ref. no. B5-148/10 of 06.12.2010; product market: "patents") announced by the German "Bundeskartellamt" (Federal Cartel Office), CPTN has been revealed as a joint venture of the four software heavyweights Microsoft, Apple, EMC, and Oracle (see report). As reported on this blog a couple of days ago, the open source community was so concerned about the patent deal that the Open Software Initiative even lodged a complaint with the Bundeskartellamt to "urge the FCO to investigate the CPTN transaction thoroughly and consider appropriate remedies to address the concerns raised" (see press release).

As the latest twist, Microsoft et al. have now withdrawn their request to establish a patent consortium in Germany, which can be concluded from the words "30.12.2010 (Rücknahme)" [engl. "withdrawal"] that have been added to the announced "notified merger project" on the website of the German "Bundeskartellamt".

However, it appears doubtful whether the withdrawal can really be interpreted as a consequence of the recent complaints of open source advocates. As speculated on Computerworld,
no reason was given for the withdrawal by German authorities, but it is likely voluntary as authorities would not yet have had time to investigate the proposal. CPTN Holdings still intends to purchase the patents, however.

"This is a purely procedural step necessary to provide time to allow for review of the proposed transaction," a Microsoft spokesperson said in an e-mailed statement. [...] CPTN may have withdrawn the filing in order to make tweaks that would help it pass muster with European regulators and ease critics' concerns.
In fact, Novell is being bought by Attachmate and the separate sale of Novell's patent portfolio to CPTN for $450 million was already agreed. With respect to the underlying "Patent Purchase Agreement", Andrew Updegrowe explained on the Standards blog that an Amended Proxy Statement pursuant Section 14(a) of the US Securities Exchange Act is "a comparative gold mine" for CPTN.

UPDATE: While it was first concluded that the amendment of the "notified merger project" announced by the Federal Cartel Office would show that CPTN's plans to buy Novell patents have been completely withdrawn, the community has now realised that this was only a formal move, rather than the assumed "big win for open-source advocates". As confirmed by Microsoft employees on TechFlash and ZDNet, the withdrawal was merely a formal step to allow time for the Attachmate acquisition of Novell to complete and CPTN will still buy Novell's patents.

08 January 2011

NZ IPO Guidelines Try to Render "Embedded Software" Patentable Without Specifying this Legal Term

In April 2010, the parliament of New Zealand voted for a major Patents Reform Bill to tighten the standards of patentability of software-implemented inventions (see related posting). The bill, as drafted by the Select Commerce Committee in July 2010, accepted that "protecting software by patenting is inconsistent with the open source model" and that "computer software should be excluded from patent protection as software patents can stifle innovation and competition" - intensely accompanied by various lobbying organisations. Clause 15 (3A) of the Patents Bill now reads:
A computer program is not a patentable invention.
The Select Commerce Committee, however, considered an exception for "embedded" software but found it too difficult to define it in the bill, whereas the Ministry of Economic Development (MED) decided that machine-controlling software should be treated as a special class that may be patentable. It was then confirmed by Minster Simon Power that, while "further amendment to the bill is neither necessary nor desirable", the NZ Intellectual Property Office (IPONZ) was instructed to develop guidelines to allow inventions that contain embedded software to be patented, since it was accepted by the Committee and the Minister that companies investing in inventions involving "embedded" computer programs should be able to obtain patent protection for these inventions (see related posting).

Apparrently, like other jurisdictions before, also New Zealand's legislation failed to clearly specify the distinction between patentable and unpatentable software in a bill ("to difficult to define"). Now, on 20 December 2010, the instructed executive authority (IPONZ) has issued draft guidelines that should ensure that (only) microprocessor-based products controlled by 'embedded software' are not excluded from patentability. Comments on the proposed guidelines can be sent to patentsbill@med.govt.nz until 11 March 2011.

The draft guidelines clarify New Zealand's approach to statutory exclusions to patentability, based on political considerations according to which only "embedded computer programs" should remain patentable. The draft guidelines observe that there are similarities between certain provisions of the Bill and both the Australian and UK patent legislation. Specifically, the general requirements for patentability are similar to the Australian provisions, being based on a judicially-developed 'manner of manufacture' test, while the concept of an exclusion for computer programs is similar to the UK (or European) scheme.

With respect to the desired exclusion of computer programs, the European Patent Office's approach to patentability, however, has been considered potentially problematical in New Zealand's context especially with respect to the required "technical effect" (this criterion is in fact inappropriate to exclude everything but embedded software), while substantial similarities between UK and New Zealand patent law have been recognised with respect to the statutory framework of the UK Patents Act 1977.

Against this backdrop, the IPONZ considered the four-step Aerotel test of the English Court of Justice (see also case study of UKIPO) as a basis for New Zealand's way of assessing whether or not a claimed invention falls within an excluded area. Due to differences between the proposed law of New Zealand and the UK law, the Aerotel test has not been adopted in its entirety but only on a conceptual level. Especially, the fourth step of the original Aerotel test, asking whether the contribution is actually technical in nature, has been found non-adoptable and thus omitted. The 'adapted' Aerotel test consist of the following three steps:
  1. Properly construe the claim;
  2. Identify the actual contribution; and
  3. Ask whether the contribution falls solely within the excluded subject matter,
Identify the Actual Contribution: Upon identifying the invention's actual contribution "to the stock of human knowledge" the substance of the invention is determined (what is the invention?) based on the properly construed claims. Since the "form" of the claims, i.e. the actual claim wording used by the applicant, is disregarded, the identified actual contribution may differ from what was (meant to be) claimed. For identifying the invention's substantive essence, four considerations have been found useful by the IPONZ:
  1. The problem said to be solved (by the invention);
  2. How the invention works;
  3. What its advantages are (over known products or processes); and
  4. What, if anything, the inventor has added to the stock of human knowledge.
The so determined actual contribution must also observe the Australian "manner of manufacture" test, assessing that the claimed subject matter produces (i.) an end result that is "an artificially created state of affairs" in a "field of economic endeavour" and (ii.) a "physical effect", following Australian case law based on NRDC and Grant). 

With respect to the required "physical effect", the guidelines explain that the mere "presence of any physical interaction [...] would not be sufficient to render something patentable, so that, e.g., upon performing an arbitrary method on or with a physical apparatus, "the physical changes must be of consequence in that they are central to the contribution (invention) and not peripheral", following Australian case law based on Invention Pathways (see earlier posting). Further,
the normal interactions between a computer and computer program would not be considered to be an invention if it did not produce a "physical effect" [...]. For the purpose of the granting of a patent for an invention which contributed to the stock of human knowledge, something more is needed for it to be a "manner of manufacture" if the writing of the data to the computer memory is the only "physical effect".
By integrating the Australian "manner of manufacture" approach into the second Aerotel step, the
fourth Aerotel step, asking for the technical character of the invention's contribution (manifesting the European idea of a technical invention), could be omitted, so that after determining whether a "physical effect" exists, there is no perceived need anymore for a further step of checking technical character.

Solely falling within excluded subject matter: The draft guidelines explain that the third Aerotel step is intended to make sure that a computer program that falls within the exclusion from patentability cannot be rendered patentable by simply adding some non-excluded claim language, e.g. by structurally reciting the program as a component of an apparatus (wouldn't that be embedded software?).

In fact, the IPONZ recognised that the UK Court of Appeal considered the "solely within excluded area" criterion comparable to the "as such" criterion of Art. 52(3) EPC and ("the third step is merely an expression of the "as such" qualification; see Aerotel/Macrossan, § 45). However, it is the central purpose of the EPC's "as such" criterion to, generally speaking, differentiate between abstract and conceptual computer algorithms and concrete implementations in a technical environment. That is, according to the EPC approach, a computer program can be guided out of the excluded "as such" area by adding technical details (which of course doesn't mean that the teaching is novel and inventive), as recently acknowledged in the G 3/08 opinion of the Enlarged Board of Appeal (see related posting). Similarly, one should expect that a computer program can be prevented from "solely [i.e. exclusively] falling within the excluded area" by adding appropriate non-excluded features, e.g. by sufficiently specifying a computer program as a machine-controlling (embedded) software.

The IPONZ's related explanation under § 31 of the guidelines, according to which "it may be that the contribution does not fall wholly [solely] within the scope of the exclusion to computer programs, but may still be excluded for example, as a mere scheme or plan within the business context", appears somewhat odd to me, since a software-based business method would already be excluded as lacking a "physical effect" according to the adopted "manner of manufacture" test.

Under §§ 27 to 29, the guidelines suggest a number of questions whose answers should provide a better sense of whether or not a computer program's actual contribution as a whole (solely) falls under the exclusion of clause 15 (3A):
  1. Is the artifact or process new and non-obvious merely because there is a computer program? If yes, then it is excluded.
  2. Would the artifact or process still be new and non-obvious in principle even if the same decisions and commands were undertaken a different way? If no, then it is excluded.
  3. Is the computer program merely a tool adapted to achieve efficiency or something similar? If yes, then it is not likely to be excluded.
Conclusion: In August 2010, I posted that "New Zealand allows patents on embedded software but fails to provide a definition". Honestly, I still cannot see how the IPONZ''s draft guidelines could possibly execute this political demand as an exception of the general legal provision that computer programs are not patentable in New Zealand.

After all, claims on embedded software should be considered patentable according to the IPONZ's draft guidelines, since their actual contribution normally goes beyond that of a plain computer program, they exhibit a "physical effect" and they do not as a whole fall within the computer program exclusion of clause 15 (3A). My current feeling is, however, that there might exist numerous tangible technical software implementations that cannot be regarded as pure embedded software in the technical sense of the term but would nevertheless be patantable based on the suggested scheme.

As to the extend of excluded computer programs, Australian patent attorney Mark Summerfield commented on his Patentability blog that
this will most likely exclude computer-implemented business methods and 'pure' data processing applications (which generally lack a 'physical effect'), as well as the automation or computerisation of known processes or devices (which lack an 'actual contribution' beyond the software implementation). 

However, it is not clear whether this approach will exclude novel processing of data that represents physical artifacts (e.g. image processing of MRI or X-ray scan data) where the only 'physical effect' may be in the quality or content of a computer display.  We find this uncertainty to be of some concern.
Further, Jonathan Lucas, a New Zealand patent attorney, asked
The guidelines were intended to cover the examination of patent applications for embedded software.  How can they successfully do this when they don’t use the term “embedded” once?

IPONZ guidelines have been ignored by the courts in the past because they have no official status. How much influence will the guidelines have in a court of law.

05 January 2011

Open Software Initiative Submitted Complaint About Novell/CPTN Patent Deal with German Antitrust Authority ("Bundeskartellamt")


The Open Software Initiative (OSI) is a non-profit organisation whose mission is to "educate about and advocate for the benefits of open source" that is particularly concerned about 822 Novell patents that are confirmed to be sold to CPTN Holdings LLC for $450 million in cash, in the course of Novell's merger into Seattle-based software company Attachmate Corporation (see press release).

CPTN Holdings LLC, which has first been described as a "consortium organized by Microsoft", turned out to be a joint venture of the four software heavyweights Microsoft, Apple, EMC, and Oracle from a "notified merger project" (Ref no. B5-148/10 of 06.12.2010; product market: "patents") announced by the German "Bundeskartellamt" (Federal Cartel Office, FCO), as reported on  FOSS Patents.

Like every patent issue involving names like Microsoft, Apple, or Oracle, also this deal receives much attention from the IT community. For instance, John Paczkowski of the All Things Digital blog found it "intriguing" and CPTN an "unusual alliance", while speculating that the - up to now undisclosed - patents relate to networking, virtualization and data center technologies. Apparently, a source inside one of the four companies told him that "it was essentially an alliance of convenience" and "it’s cheap defensive insurance".

As to the deal itself, Glyn Moody, an influential technology journalist and Linux/open source advocate, analysed that "if the sale itself is no surprise, the buyer is", since "many had expected VMware to pick up the company" and referred to Steven J. Vaughan-Nichols unproven speculations that Microsoft might play a role not only in the patent part of that deal:
The last thing Microsoft wanted was for VMware [...] to have a major operating system to offer to its customers. [...] Instead Microsoft used Attachmate as a proxy to take Novell off the operating system chess board as an independent Linux company. At the same time, it retains enough direct and in-direct control of Novell and its intellectual property to put them into play if needed to put trouble into Red Hat, Android, or Ubuntu's paths.
Now, reports occurred (e.g. here) that OSI has lodged a complaint with the Bundeskartellamt to "urge the FCO to investigate the CPTN transaction thoroughly and consider appropriate remedies to address the concerns raised" (see press release). This request is essentially substantiated by the following argumentation:
The proposed CPTN transaction represents a potentially new, and unprecedented threat
against open source software:
  1. CPTN Principals have acknowledged that Linux and Open Source is a major threat to their business and have made hostile statements towards open source. Microsoft and Oracle both call out open source as a competitive threat in their most recent 10-K filings.
  2. CPTN principals have substantial market power in operating systems (Microsoft, Apple, Oracle), middleware (Microsoft, Oracle), and virtualization and cloud (Microsoft, Oracle, EMC).
  3. Open source is a substantial competitive threat in operating systems (Linux, Android), middleware (Apache, JBoss), and virtualization/cloud (KVM, Xen hypervisors).
[...] Given the potential for collusion between these competitors to reduce competition amongst them and to harm competition that exists in the marketplace today [...], competition would be better served by the FCO thoroughly investigating the facts and evidence concerning this transaction, rather than giving them the benefit of the commercial doubt:
  1. [...]
  2. Will the CPTN principals decide strategically who will be offered which patents, thereby choosing amongst themselves who will be allowed to compete? And on what terms?
  3. Will the patents be sold to non-practicing entities (NPEs) which can create havoc for open source software without risking the adverse reaction of the market if a practicing entity were to sue directly? 
The creation of CPTN represents a MAJOR disruption to the competitive landscape. Whereas Novell was sincere in promoting and participating in open source software development and had an incentive to maintain their patent assets as a defensive portfolio, CPTN has all the motives and opportunity to do the opposite. That is, they have no incentive to support open source as a competitive alternative to proprietary software. CPTN creates a cover to launch patent attacks against open source while creating for each principal a measure of plausible deniability that the patent attack was not their idea.
From theses statement it appears that OSI in fact requests the Bundeskartellamt to investigate both the "CPTN transaction" and "the creation of CPTN". Such issues, however, might not lie in the competence of the German antitrust authorities but rather might need to be handled on EU level by the Commissioner for Competition.

This unprecedented move of OSI has been explained by OSI President Michael Tiemann: 
the fact that Microsoft was leading the takeover of Novell’s patents was itself alarming to the open source community, but when it was revealed that Microsoft had recruited Oracle, Apple, and EMC to be co-owners of the patents, the OSI Board felt compelled to request that competition authorities take a closer look at the proposed transaction.
Simon Phipps, OSI director in charge with drafting the complaint, further emphasised that
this is a significant new step for OSI, who have not previously referred a matter to competition authorities. It reflects the changing emphasis for the organisation, shifting from a role focused almost exclusively on approving licenses to a more general role representing the interests of the open source movement. Taking positions on important issues internationally is a valuable counter-balance to the influence of computer industry trade associations, and I hope OSI will keep doing it. 
As to the question, why the OSI filed its complained in Germany, Groklaw discovered in an Amended Proxy Statement Pursuant Section 14(a) of the US Securities Exchange Act, filed with the US Stock Exchange Supervisory Authority (SEC), that the closing of the Atachmate/Novell merger is subject to the satisfaction or waiver of each of a number of conditions, among which is 
the receipt of all consents under other applicable antitrust laws, including the approval by the German antitrust authority, the Federal Cartel Office (“FCO”), under the German Act against Restraints of Competition in the version of 15 July 2005, as amended (the “ARC”).
Further and even more interestingly, the obligations to consummate the merger are also subject to
the prior closing of the transactions contemplated by the Patent Purchase Agreement, dated as of November 21, 2010, by and between CPTN Holdings LLC (“CPTN”) and [Novell].
In other words, it appear that Attachmate and Novell can only merge if the patent deal goes through (it also provides the funding for the merger), which in turn requires that OSI's complaint before the Bundeskartellamt will fail. On the other hand side, however, the patent deal may go through while the merger itself is blocked by antitrust authorities or fails for other reasons.

In fact, under some conditions, CPTN may elect to continue the patent deal even if the merger deal will not enter into effect. In such an event the "Patent Purchase Agreement" will remain in full force and effect and
[Novell] and CPTN will enter into a royalty-free, fully paid-up patent cross license for no additional consideration, effective as of the closing of the patent sale, with respect to all patents and patent applications owned or controlled by [Novell] and CPTN on mutually acceptable terms that are no less favorable in the aggregate to either party than the terms of any other patent cross license offered by CPTN to any other person (other than any member of CPTN or an affiliate of any such member).
Andrew Updegrowe, of Boston law firm GesmerUpdegrove knowledgeably explained in a posting on the Standards blog that these few sentences of the Amended Proxy Statement are "a comparative gold mine" for CPTN:
First, note that not only the 882 patents covered by the patent sale are covered. Instead, the parties will negotiate a cross-license to all of the patents, and patent applications, owned by each party. Next, note that if the Attachmate deal dies and the CPTN deal goes through, then the price Novell will have to pay to continue to conduct its patent-based business will be to license all of its patents to CPTN – for no additional compensation.

The second interesting word is “cross license,” suggesting that perhaps CPTN will be holding patents in addition to those it purchases from Novell. If so, then Novell will in fact get something back in exchange for free access to the rest of its patents.

This may also indicate that Microsoft has formed CPTN not to split the cost of the acquisition (unlikely in any event, given its enormous cash reserves), but instead to create a larger pool of patents, or cross license rights, among itself and its unnamed partners (the question, of course, is what patents, and for what purpose?)

The final term of note is that while Novell would get “most favored nation” terms with other licensees of CPTN, it would not necessarily get terms as favorable as the CPTN members.