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Americans will have to try harder if they want to patent business method software, following the refusal of the US Patent and Trademark Office (PTO) to grant a patent for a method of plotting a point on the graph.

The PTO ruled that applications must be tied clearly to 'technological art or environment'. Bowman, the graph plotter, failed to make his point because he showed no technological art. His is simply an abstract idea: exactly the same as a human making mental computation and manually plotting results on paper.

Commonsense, you may think. But no, this little-noticed, if admittedly non-precedential ruling could mark a subtle shift in the interpretation of US patent law.

An article in the US Association of Patent Law Firms (APLF) newsletter suggests that the ruling may even bring the US PTO closer to the UK, European and Japanese patent offices, all of which have much tighter rules on when a patent may be granted for a piece of software.

The status quo

In the US, the mere fact that software runs on a computer is considered sufficient ‘technical effect’ for a patent. This interpretation is the result of the 1998 State Street Bank ruling. The judge ruled that a piece of software which automated trading of mutual funds, a business process, produced “concrete, tangible and useful" effects, and was therefore patentable.

This was huge news. If a software description of a business process could be protected by a patent, then there was money to be made. A patent rush began, and companies now spend small fortunes filing and defending patents.

Consider the Amazon ‘One-Click’ patent. The bookseller effectively patented the idea of keeping good customer records: it stored information like credit card details and delivery address etc. so customers could buy books with less hassle. In the UK and Europe, where rules are much stricter, Amazon did not even apply to patent the idea.

So what has changed? Tim Wall, a patent lawyer at US firm Thomas, Kayden, Horstemeyer & Risley and author of the APLF article, cautions against reading too much into the Bowman ruling.

"At a glance, the holding seems contrary to SSB [State Street Bank]...but the distinction appears to be that in the prior cases, specific technology was either disclosed or necessary to perform the patented methods, whereas the Appellant in Bowman apparently overtly did not disclose (and maybe did not require) specific technology to perform the method."

The Bowman case is more a lesson in drafting claims than an industry-shaking precedent, Wall argues. Quality examination of patents is the key to providing a balance between rewarding inventors for their industry and not inhibiting future development, he says.

All around the world

Current interpretation of European patent law allows for patents of software that produce a ‘technical effect’. This is defined as "the control of an industrial process or the internal functioning of the computer itself," according to the European Patent Office.

In the UK, the Patent Office is legally prevented from granting patents for business methods, or for "mental acts". In 2001, then e-minister Patricia Hewitt said that technological innovation was the key principle: “A program for a new machine tool should be patentable but grammar-checking software for a word-processor should not be."

The Japanese position is similar, although it is not enshrined in law. "The Japanese are reluctant to award business process patents, so tend research contentious applications until they find evidence of prior art”, a Patent Office spokesman said.

As the EU debates a directive that will harmonise European patent law, the Open Source lobby fears a swing toward a more permissive, US-style system, and is campaigning hard to get the issue included in the debate.

More surprisingly, many big software firms have also lobbied against such a move.

According to the Patent Office, IBM was a strong advocate of a UK-style exclusion of business method patents in the consultation process. The reason? The law suits are just too expensive, both in time and money. ®

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