The idea that computer programs cannot be patented is now correctly understood, by most, to be fiction. There is still considerable confusion, however, due in part to the noises from the open source software lobby groups when the draft EU 'Directive On The Patentability Of Computer-Implemented Inventions' was being debated by the European Parliament.
The fact is that the anti-software patent groups shot themselves in their collective foot with their efforts. The Directive would have imposed additional limitations on the patentability of software. Its rejection by the European Parliament in July 2005 allowed the European Patent Office (EPO), which grants the overwhelming majority of patent rights in Europe, to continue doing what it had been for years - granting patents for software inventions that provide a 'technical contribution'.
The EPO's position has continued to become increasing liberal. Every few months, the EPO issues a decision that increases the scope of patentable software inventions. Had the Directive been put into law, this would not have been possible. By way of contrast, on the other side of the Atlantic, the US courts have started imposing additional restrictions on the patentability of software.
The fact is that software patents have the potential to cripple any business that uses software. There is extra potential for harm when the business writes its own software, whether for internal use only or for distribution externally, regardless of whether it is free or for a fee.
A patent gives the holder the ability to take anyone, using the patented invention in the course of business, to the metaphorical cleaners. Courts are not shy to award injunctions, forbidding further use of infringing software and imposing damages to compensate the patent holder financially for past use of the software by the infringer. An approach by a patent holder to a business using software that infringes the patent can be enough to shrink that business's ambitions; a successful infringement court case can force a business into liquidation.
Before reading the rest of this paragraph, please bear in mind that it is impossible to state fairly the power of patents without alarming a percentage of any audience. If your business makes, uses, sells, distributes without charge, offers for sale or free distribution, keeps (in memory or on disk) or imports software that uses the invention defined in the claims of a patent in a relevant country, and you don't have a licence for it, then your business is an infringer. It is irrelevant whether you independently created the software, copied it or bought it from someone else. It isn't even relevant that you didn't know about the patent - infringement is absolute and independent of any knowledge. Ignorance is no defence!
But software that just sits on my desktop or server and doesn't control any external hardware can't include any patented invention, right? Wrong; US patents exist and can be valid for all kinds of software, including mobile and desktop applications. European and UK patents exist and are presumed valid for all manner of software.
For instance, EP 0 852 363 was granted to software which generates photographic mosaics. The software places many small photographs at locations dependent on their average colour such that the resultant image, when viewed from a distance, approximates an image initially fed into the software.
You will probably have seen the results in the windows of shops on your local high street. The software does nothing more technical than generate a picture from plural input pictures, yet a patent having effect in the UK was granted.
Such is not new. EP 0 266 049 was granted in 1994 on an application filed in 1988 and covers the JPEG image compression format which, fundamentally, is just a data processing algorithm.
The UK courts uphold software patents just like any other. In Menashe Business Mercantile Ltd. & Another v William Hill Organization Ltd., the Court of Appeal found William Hill liable for infringement of a UK patent for an interactive online gaming invention. This case is interesting also because the server hosting the system was located in the Caribbean. The judge considered this to be less relevant than the fact that the system was operated by users located in the UK.
I only use open source software, perhaps under the terms of the GPL, so I am safe? This is true to an extent. You are fairly safe from other signatories of the GPL and members of the Open Invention Network (if you agree to their terms), but you are not safe from others. Microsoft, the holder of one of the world's largest patent portfolios, recently proclaimed that the Linux operating system and associated software infringes on 235 of their patents. Microsoft hasn't yet sued any open source users, but they have entered, controversially, into a cross-licence deal with Novell.
Copyright is great - it is free because it subsists automatically without registration, and provides protection against copying. Copyright does have some big limitations, the main ones being that it doesn't protect the underlying ideas or techniques and that it doesn't protect against independent creation. Put the other way around, you can infringe third party patents even without knowledge of their software, let alone copying of it.
So, what can I do?
As with most business issues, it all comes down to risk. If you are in the fortunate majority, you got this far without being sued. This might continue, so doing nothing may be a feasible option, but there are better options. You can take steps to minimise the chances of infringing, or at least minimise the chances of being noticed to be infringing. This might impede your business, but the reduced chance of being sued for patent infringement might be worth it.
You can better your hand by applying for patents for the inventions that your business generates. As an owner of patents and/or patent applications, you have options for cross-licensing those who approach you under their patent rights. Logically, a patent right holder might be less likely, everything else being equal, to approach a company which has its own patent rights. Having patent rights might, therefore, stop you being approached at all.
Applying for, and maintaining, patent rights is not cheap. The costs depend on the nature of the invention and the countries where protection is sought, but in any case are at least a few thousand pounds. Patents expenses may not be justified solely by the existence of a defensive patent portfolio - you may want to be open minded about making your patent rights work for you.
If you patent an invention that your competitors subsequently use, you have the upper hand. You have the option to license them for a fee, thereby making them subsidise your sales. If you want them out of the market covered by your patent, get a court to injunct them. That is what patents are there for - to reward, and thus encourage, innovation. However, being innovative is not enough - you need to apply for patents covering your innovations.
If your business is such that taking out patents is not an option, you may still need to be wary of others' patent rights. Whether or not you apply for patents, you should consider instructing a patent attorney to set up a watch for potentially relevant third party patent rights.
Paul Derry is an attorney specialising in electronics and software patents at Venner Shipley LLP