The patenting of software is one of the most hotly debated issues in the field of intellectual property, and probably the most high profile case in the field is that of Amazon’s ‘1-click’ patent.  The alleged innovation consisted of a way of allowing online shoppers to buy products with a single click.  Instead of entering payment details each time, the Amazon servers identify visitors using a cookie stored on their computer and retrieve the information automatically.  While Amazon secured patent protection for the technique in the United States back in 1999, its efforts to obtain protection internationally provide an interesting illustration of the differing approaches taken to patent protection of software inventions in different jurisdictions.

For example, while the Canadian, US and Australian patent regimes have so far been broadly in favour of crucial elements of Amazon’s patent claims, the European Patent Office appears to be taking a different stance.  A more detailed analysis of the fate of the patent is available here.

There are also differences in the treatment of applications for patent protection of software within Europe, between the European Patent Office and the UK Intellectual Property Office, with the latter being viewed by some as less lenient when it comes to computer implemented inventions.

One comment in the Guardian’s editorial on the subject resounds with this author:

Until the mid-1990s the computer industry – including Microsoft – was opposed to such licensing. This was mainly because the industry was so innovative without the protection of patents, which in any case involved often quite trivial advances in technology that were regarded as a standard part of an engineer’s work.

Every non-trivial piece of software involves a series of technical problems overcome through the innovative application of a developer’s expertise and experience.  Unquantifiable amounts of code are written, and an unfathomable number of problems overcome each day by software engineers worldwide, and the 1-click ‘innovation’ by Amazon is far from the most complex of these.  Much like that of a developer, a lawyer’s work involves using language to communicate complex information, and the analysis of rules and their application under specific circumstances.  If monopoly rights were granted over certain approaches to applying rules to sets of facts, to the structure of contract templates, or to more effective means of communicating information linguistically, I would be concerned that many legal professionals would grind to a halt.

While patents offer an important incentive to innovate, and a just reward to those who develop new technology benefitting society, I worry that if the bar to patent protection is set too low for software then smaller players in the field, who cannot afford to acquire patent portfolios or to pay for licensing agreements, may be forced out of the market altogether.

Fig No 5 from Apple's Patent Application

Apple has recently filed a patent for an infra red device, which can disable your iphone from taking pictures or recording footage during a concert. This is an interesting development for digital rights management. It may be another move by Apple to build up kudos with the music industry, as the industry’s cooperation is necessary to see the icloud beat Amazon and Google in the cloud media storage market.

However, concertgoers way find the automatic ‘shut down’ of their camera/ video camera on their handset a little intrusive. Taking photos or recording video in a concert may be more about sharing a social experience, for example, taking group photos, rather than ‘ripping off’ copyright material. Some argue, in fact, that low fidelity recordings accord with the US concept of fair use.  Others may wonder whether ‘watermarking’ the content may be sufficient to satisfy both sides of the bench.

That aside, positive uses have also been identified for the infrared patent.  Museums could potentially use infrared to transmit information to a device about an exhibit or link to relevant video content . It will be interesting to see how this particular use will differ from the increasingly popular QR barcode technology. The latter allows phone devices to scan a bar code and have information, such as a v-card,  delivered to a phone (interesting to note:  the patent on this innovation has been heavily disputed.

Where, however, the function of a product dictates how the design is formed then Intellectual Property law provides few solutions, bar patents, to protect the design. In general, Design law is clear that it does not protect the functional elements of registered designs.

So, take for example a design of a new light bulb. The shape may be registerable in that it may display novel features or contours, but it would not obtain protection for the bayonet or thread solution, as that part of the design would be dictated by the function of connecting to the electrical socket.

Trade marks and designs
Although trade marks are not commonly associated with product designs, they can in fact be registered for shapes. Take, for example, the coca cola bottle this is a registered trade mark, or the Chiquita banana box.

Yet, again, the same principle of excluding functional shapes from protection is found in trade mark law and a recent decision of the Court of Justice of the European Union (CJEU) on the fate of the Lego brick strengthens this view.

Lego have been in a long standing dispute regarding their application for the red coloured brick. This case found its way to the CJEU which concluded that such a trade mark was not registrable.

This was due to the brick shape being a sign which was deemed ‘exclusively’ of the ‘shape of goods… necessary to obtain a technical result’ – one of the absolute grounds for refusing a trade mark.

In terms of what is exclusively a functional shape, the Court would look at its ‘essential elements’.

It was considered the ‘essential element’ of the lego brick to be the row of studs on the top side of the brick. This part of the brick was designed to achieve the result of interlocking with other bricks and on this basis the mark was refused.

If the shape had other elements which were aesthetic, “decorative or imaginative” and which played an “important role in the shape”, then there may have been a chance for the lego brick to be registered. However, the distinctive red colour for the bricks was deemed not significant enough.

Limiting the role of trade marks
The rationale behind this somewhat restrictive stance for trade marks is to prevent trade mark owners from having a “monopoly over technical solutions or functional characteristics of a product” (see Philips judgment C-299/99, para 78).

Trade marks have a particularly wide scope of protection, as they extend their arm to prevent not only identical copying but also similar copying of a sign.

When applied to logos or words the impact is superficial. But when applied to shapes of products the impact could stifle competition within markets.

The registration of a red toy brick could hinder other toy manufacturers selling similar bricks to the market for better prices or providing better solutions to consumers. This would not be akin to promoting a “healthy and fair system of competition” – a prime consideration for the Court.

Trade marks as substitute patents
What also transpires in the reasoning of the Court is the desire to keep a clear demarcation line between patents and trade marks.

Patent rights last 20 years and are not renewable. Trade marks are renewable. To allow patented products to be trade marked without limitation could effectively undermine the credibility of the patent system.

In fact in identifying the ‘essential elements’ of the lego brick the previous Courts referred to the patents applied for by the owners.
There they found an overlap of the elements in both applications. The elements the owners sought to protect with patents were the same elements displayed in their trade mark application.

This finding was ‘practically irrefutable evidence’ of the functionality of the sign and of clear detriment to their trade mark application.

Product designs may be fine to trade mark, but beware of the limitations of this solution where the elements of shape are overly functional.

The End of Method Patents?

The US has been one of the few jurisdictions which allow methods or ways of doing things to be registered for patent protection. This type of patent might be narrowed significantly by a recent ruling by a US Appellate Court.  We will all be keeping a watch out for the final decision, given that many UK patents are filed with the intention of ultimately being granted as a US patent.

In the case the patent applicant appealed the decision of the USPTO, which had refused to grant a patent for the method of managing risk of sudden movements in energy costs.  The Appellate Court upheld the decision that the method was not patentable using a test given in a previous Supreme Court decision which held that in order to receive a patent a process must either be tied to a machine or result in a transformation.  This case is likely to be appealed to the Supreme Court. The business world will be waiting anxiously for a final decision which will impact the validity of future business method patents as well as ones which have been previously registered as they are now more vulnerable to attack.

Business method patents first became possible in 1998 when the same Appellate Court confirmed their patentability. In recent years there has been an explosion of business method patents being filed. In 1997 the US patent and trademark office only received 120 applications. This number has been rising steadily since then with a record breaking 1,300 filed last year. The most famous of this type of patent is the Amazon one click patent for ordering online.

To view the case click here.

Although they are probably not happy about the loss, the decision is unlikely to devastate the company. Luckily along with their patent they have built up a significant brand reputation. Consumers are more likely to recognize  the name and the distinctive yellow packaging than their ingredient sucralose. There is already a lot of competition in the artificial sweetner market. Although the various sweeteners taste different their branding is likely to influence the consumer as much as or even more than the taste of the product. Sweet and Lo and Equal, two of the major competitors of Splenda, use Aspartame which has been off patent since 1992 yet both remain successfull based on the power of their brand.

According to the Tate & Lyle company spokesperson, they are going to appeal the decision. It will be interesting to watch the progression of the case to the appellate level.

This news shows the importance of not merely relying on one type of IP protection alone.

Sucralose

Two interesting points arise from this – firstly how the question whether a trade mark is too descriptive can differ based on culture and language. While in the USA ‘Facebook’ is apparently a generic term for the kind of photo directory that many schools have published annually for years – see here. In the UK the word has no such meaning, so that the trade mark FACEBOOK is distinctive.

The other point of interest is the way in which people want to claim ownership of an idea – as if it is the idea which is responsible for the success that is achieved with it. Anyone who has been in business knows that it is how you implement an idea that determines whether it succeeds or not. But if you do think yours is a brilliant idea then the only way to protect it is to keep it to yourself, and only disclose it to someone else if you trust them, and have a good, properly drafted confidentiality agreement in place. The agreement does need to be tailored to the situation in hand if it is to have any value whatsoever.

One challenging aspect of advising small businesses is the vagueness of the law. It is difficult to give the clear, black and white answers business people need. One client recently asked me what letters we would be able to send out to enforce her design or trade mark rights if she registered them. She even wanted to know how much we would charge for such letters. She was unimpressed to hear about the threats legislation and that the price would largely depend on the facts. For a recent example of the threats provisions at work see here and for more details of the legislative provisions about designs see here, for trade marks, see s21 here and for Patents see here.

So, is it not worth registering rights given the uncertainties that exist and the potential costs of enforcement? I can only express my own opinion by explaining why Azrights has applied for a trade mark even though I know we would not be able to outspend a big corporation if it were minded to steal our brand. But that is to look at a worst case scenario. As the costs of infringement actions are so high for business – both in financial and resource terms – in practice, people are wary of infringing on other’s rights and try to get round them wherever possible. So, IP law does not generally involve squabbling in court over the existence or scope of rights. Rather than going to court to get a judge to tell them what they can and can’t do, the focus is on getting into the best position for reaching agreement on who should be allowed to do what.

In practice, if we did not register our rights it would be even more difficult to enforce them. Passing off actions are notoriously expensive to bring, and sustain. On the other hand a registered trade mark deters most people from infringing the rights. So, a registered right strengthens your position in achieving a negotiated solution. Disputes generally do not reach the courts and are settled, if both sides get the same advice about their respective prospects. It is only if both sides think they are going to win, or that anything can happen that settlement is less likely. As this is an important issue to many of our clients we will be coming back to these questions in future postings.