Edinburgh Napier University

  Advances in information technology have enabled the design and development of innovations in business methods. This is particularly felt with IT enabled innovations such as Sun Microsystems' stateless shopping Cart for the web which is a Web shopping cart system that does not require any data files to be maintained on either the client or the server.Firms attempt to leverage these innovations to gain competitive advantages through cost reduction and other quality improvements, which may also pass some benefits on to consumers. However, such competitive advantages are increasingly difficult to sustain because business method innovations are often easy to copy or imitate. Quick and cheap imitation of innovative products and processes may reduce the incentives for firms to invest further in innovation. Thus, patent protection for business method inventions became a live issue with different on outcomes as between the US and Europe. At present, in the US business method patents are legally recognised since the State Street Bank decision, 149 F. 3d 1368 (US Court of Appeals for the Federal Circuit 1998). However, the European Patent Office (EPO) still is noncommittal although some business method-related inventions have been granted de factoprotection by EPO suchas Hitachi Ltd’s automatic trading method and apparatus (EP 567 291), the Western Union Company’s method and system for performing money transfer transactions (EP 848 361) etc.. John Stuart Mill (1909) said "the superiority of one country over another, in a branch of production, often arises only from having begun it sooner".1 So it seems that the uncertainty of EPO's attitude to business method patents may result in a serious negative impact in European industry and economy. This thesis sets out to examine what precisely are the attitudes of the US and European institutions to business method patents and to explain what is the present law and how it has arisen. The author thereafter carries out an evaluation of the rationed economic and social effects of allowing / disallowing Business Method Patents and to address the question of whether Europe should adopt patent protections for business method–related inventions.
To address these questions, the research focuses on the following questions: (1) under the current legal framework provided by EPC what business method–related inventions can be granted European patent? (2 )whether business method –related inventions are worth protecting by the patents in Europe. To answer the latter question, the thesis not only analyses the predictable economic and social effects of allowing or alternatively disallowing business method protections generally, but we also discuss “patent quality” which is used by US patent economists to analyse whether business method inventions have a sufficient value to justify the granting of exclusive patent rights in return for disclosure of the inventions’ specifications to the public. In analysing the predictable and likely economic and social effects of allowing or alternatively disallowing business method protections, the US position in patenting business method –related inventions needs to be considered, therefore the thesis also evaluates the US patent legal framework for business method patents and contrasts it with the European position. Through analysis of the relevant provisions and decisions, the research has concluded that under the current legal framework business method apparatus inventions are patentable in Europe if they can meet the patentability requirements of the European Patent Convention (EPC). To the effect that if a business method process invention is achieved by a technical means, solves a technical problem, or achieves a technical effect, it is often patentable in Europe provided it meets the EPC patentability requirements. However, turning to the evaluation of the economic effects of business method patents, economic analysis cannot find strong evidence to support increasing the current protections for business method patents. At the same time, the economic analysis also cannot find strong evidence to oppose present protections for business method patents. But when the US position is considered, infringement risk would favour it for it appears on balance that there may be some reason to think that Europe should adopt stronger protections for business method patents. Furthermore, the value of disclosing patented business method–related inventions’ specifications seems also to show that accepting business method patents is an appropriate choice for Europe.
1 Mill, J. S.,1909. Principles of Political Economy.7thed. London: Longmans Green. p. 78