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Comments of Software _ Information Industry Association _SIIA


  • pg 1
                                             of the



                          OF COMPUTER PROGRAMS"

                                        Submitted to the

                                EUROPEAN COMMISSION

                                      December 15, 2000

       In response to the request for comments on the study entitled "The Economic Impact of

Patentability of Computer Programs" published by the European Commission on October 19,

2000, the Software & Information Industry Association submits the following comments on

behalf of its members.

       The Software & Information Industry Association (SIIA) is the principal trade

association of the software and information industry and represents over 1,000 small and large

high-tech companies in over 30 countries throughout the world that develop and market software

and electronic content for business, education, consumers, the Internet, and entertainment. SIIA

members represent a wide range of business interests—they create and develop new and valuable

software and software-related inventions, use software and software-related technologies in their

regular business operations, and license or purchase software and software-related technologies

from third parties. More often than not, the software and software-related inventions are

technologies deemed patentable under U.S. law.

       In addition, SIIA also represents numerous information companies that produce and offer

a variety of database products and services. Many of these databases are valuable search tools

that the examiners at the U.S. Patent and Trademark Office (USPTO) are using to determine

whether a particular invention meets the statutory criteria of novelty and nonobviousness to

qualify for patent protection. Consequently, SIIA and our members are extremely interested in

the issues presented by the Commission's study on the "The Economic Impact of Patentability of

Computer Programs," and in particular to issues relating to: (1) whether "patent protection in

Europe should be available for computer program applications outside the areas which are

currently considered to be "technical" by the jurisprudence of the European Patent Office and

Member State courts," and (2) if so, how the European Patent Office should address issues

relating to the identification of prior art to ensure that only valid, enforceable patents are issued.

Issues Relating to Broadening the Availability of Computer Program Patent Applications

       Patent systems -- when operating properly -- foster and encourage innovation. This is the

case in all fields of technology and for all inventions, including software and software-related

inventions, such as business methods. The key, of course, is to make certain that the patent

system is operating properly, such that the likelihood of patents granted on non-novel or

nonobvious inventions is kept to a minimum. Thus, in the view of SIIA, the issue is not whether

patents should be granted on computer programs, but rather how to ensure that the patent system

is operating in a way that fosters the issuance of valid and enforceable patents relating to

computer program inventions. In this way, the shared goal of encouraging innovation and

promoting e-commerce will be achieved.

       Differing standards in the United States and Europe foster patent-forum shopping and

inhibit innovation and commerce. This is especially true in the case of software and software-

related inventions, which more often than not are exploited without regard for international

borders. For instance, a business method invention that is protected by a patent in the United

States may be used on the Internet. If this invention were not capable of protection in Europe,

the patent holder may seek to restrain European nationals from engaging in transactions using

this business method or not license European businesses to use the business method.

       For various reasons, in the United States, many creators of computer programs do not

seek patent protection for their computer program creations. What is significant, however, is not

whether these inventors seek to protect these creations through patent law, but rather that they

have the choice whether to do so or not. In the United States, creators of software have the

nonexclusive option of seeking protection through Federal copyright law or patent law or

through state trade secret and misappropriation laws. Because software innovators have all these

options, they are able to make a decision that is best suited for their business model and the

nature of the software or software-related invention.

       Recent history has shown us that the availability of patent protection for software and

software-related inventions is especially important in the e-commerce environment. More and

more ".com's" and other small businesses are starting new and innovative business ventures. As

investors attempt to determine which of these businesses are "players" and which are

"pretenders," they are demanding that these new businesses have an intellectual property

portfolio. Without this portfolio, these businesses are susceptible to competitors and others who

might attempt to misappropriate the innovation.

       An essential part of this portfolio is patent protection. If it is not possible for a business

to patent its software and software-related inventions it will be less likely to attract investors and

venture capitalists (VCs) will invest. Instead these investors and VCs will invest in those

businesses that are able to protect against theft of intellectual property on which their business

model is based. Therefore, separate and apart from the issue of whether patents encourage the

inventors themselves, the availability of patent protection provides investors with the necessary

security for them to invest in these inventors, thereby spurring e-commerce and in turn fostering


       Finally, with our involvement in efforts to promote open-source software, we note that

our position is quite consistent with this initiative. As noted above, those who create software

have the option of not seeking protection for their software creations. Moreover, many

companies may chose to patent an invention only to ensure that they may continue to make it

freely available to others without fear that someone may later claim patent or some other form of

intellectual property protection on that program. In addition, we concur with the Commission's

conclusions that "a developer [of open source software] could …want to obtain patents on

specific applications."

       In sum, SIIA believes that the potential for obtaining patent protection of software and

software-related inventions promotes e-commerce and fosters innovation. The key is to ensure

that these patents are not unduly broad so as to impede e-commerce or innovation. Thus, in our

view, issues identified in the report relating to the issuance of patents on software and software-

related inventions can and should be addressed at the administrative level (i.e., how to ensure the

issuance of valid and enforceable patents on software and software-related technologies), not the

policy level (i.e., whether to issues patents on software and software-related inventions at all).

Issues Relating to the Identification of Prior Art during the Patent Examination Process

       The adage about not "reinventing the wheel" has special significance and applicability to

issues of identification of prior art in the software-related technologies. If patent examiners do

not have the necessary patent and nonpatent prior art to search when determining the

patentability of software-related inventions, the European Patent Office (EPO) (as well as the

USPTO and all other patent offices) runs the very real risk of issuing patents whose validity is

highly suspect. In effect, if the EPO fails to provide its examiners with sufficient prior art

databases from which to search, inevitably the EPO will be sanctioning the modern day

equivalent of reinventing the wheel by issuing patents on products and processes that are not

truly novel or nonobvious.

       It goes without saying that the quality of the patents issued by the EPO are only as good

as the quality and quantity of the prior art that patent examiners have access to and are able to

search. If the EPO does not have an adequate collection of software-related prior art from which

to search, the patent examination process will become more akin to a patent registration system

and the value of the patented inventions in these technologies will decrease accordingly.

Lowered values of patented software-related inventions will make it more difficult for patentees

to license their patented inventions and reduce the amount of compensation they are able to

receive for the licensed technology.

       Inadequate prior art collections for examiners to search will also lead to increased

instances of patents being held invalid by the courts. Over time this would result in a general

loss of confidence in the patent system and in particular in patents issued in the arts for which

patents are most likely to be held invalid. It will also unduly shift the burden of finding the

preponderance of prior art from the EPO to defendants, who discover themselves in litigation

against potentially dubious patent infringement claims.

       We recognize that there are examples where defendants involved in patent infringement

litigation conduct extensive prior art invalidity searches that entail the expenditure of large sums

of money and excessive amounts of resources. We also recognize the impracticality of the EPO,

as it considers a particular patent application, of undertaking a boundless approach to prior art

searches similar to what might be undertaken by such a defendant. Nevertheless, we do believe

that the EPO should make ample patent and nonpatent prior art in the software-related arts

accessible to its examiners to ensure a reliable "first line of defense" that provides the patent

community and the public with reasonable assurances that the EPO is issuing valid patents. Such

an undertaking by the EPO, as well as any other appropriate authority, is practical, cost-effective,

and an integral step towards an effective patent system in which all stakeholders have


       It has been our experience that many who practice in the software and software-related

technologies praise the USPTO for investing substantial amounts of time and energy into

addressing prior art issues relating to software patents, even as more can and should be done. It

is noted, nonetheless, that additional progress still needs to be made in the examination process

to ensure that the USPTO provides a better "first line of defense." Specifically, we note concerns

voiced by some in the software industry that the USPTO has insufficient collections of nonpatent

prior art in the software and software-related technologies and that this shortcoming has led to

the issuance of some patents of questionable validity.

       SIIA has observed that in mature technologies with crowded arts, patents tend to be

somewhat narrow. One threatened with infringement of a narrow patent may change its product

to avoid infringement or drop a potential new product altogether. Emerging Internet businesses

threatened with infringement of a business method patent may not have those options because its

business requires it to practice the business method. Therefore, it is most important that the EPO

have the best prior art to do a good job examining these patents on emerging technologies

business methods -- because of the limited prior art in these areas, the importance of having an

adequate knowledge of the state of the prior art in these areas is magnified.

       Therefore, based on the experience of the software industry and the unique nature of the

software industry, and assuming that the Commission decides to strengthen the availability of

patents for computer programs (as discussed in the previous section), we strongly urge the

Commission and other relevant authorities to take the necessary steps to improve its nonpatent

prior art collections relating to software and software-related inventions.

         In this regard, SIIA has worked with the USPTO and other relevant agencies and

organizations to ensure that patent examiners had at their disposal the necessary nonpatent prior

art information to search when making patentability determinations relating to software-related


         In addition to issues relating to the availability of nonpatent prior art, it is also important

to note that the quality of issued patents is also highly dependent upon the skill, education, and

experience of the patent examiners whose job it is to formulate and conduct appropriate prior art

searches. If the Commission undertakes the next steps to strengthen the availability of patents

for computer program applications, then it is essential that the EPO continue to hire competent

and experienced patent examiners in the computer science technologies. Equally as important is

that the EPO compensate these examiners sufficiently to discourage them from leaving the EPO

once they have acquired the necessary tools to be productive members of the patent examining


         Before taking any action, the EPO should ensure that they have a sufficient number of

experienced examiners to handle the influx of patent applications in the software-related arts and

should devote sufficient amount of time to training these examiners on effective prior art search

techniques and on recent advances and technological developments. This is especially important

in an art that is comprised mostly of nonpatent prior art references, such the computer software



         In sum, SIIA believes that concerns identified in the consultation paper relating to the

issuance of patents that are not novel nor obvious should be addressed at the administrative level

through the practical and cost-effective steps identified in our comments above. To reiterate, it is

not necessary to make fundamental changes at the policy level that would preclude patents from

issuing on software and software-related inventions, such as business methods. Accordingly,

these concerns should not prevent the Commission from recommending the strengthening of the

availability of software and software-related patents provided the EPO has taken steps related to

identification of prior art in the software-related arts and to improve examiner training and the

number and accessibility of software databases. SIIA stands ready to work with the Commission

and other relevant authorities as these issues are studied further.

         In closing, we commend the EPO for making the effort to examine these very important

issues related to the patentability of software and software-related inventions and look forward to

working with the Commission on any initiatives it may take up to address these issues.

Mark Bohannon
General Counsel and Vice President of Government Affairs

Keith Kupferschmid
Intellectual Property Counsel

Software & Information Industry Association (SIIA)


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