United States

The some of landmark decision of the most developed software industry were Diamond v. Diehr, In re Alappat, In re Lowry, State Street Bank &Trust Company v. Signature Financial Group, In re Wait, etc. At present the law in the US is “an abstract idea by itself never satisfies the requirement of the Patent Law. However an abstract idea when practically applied to produce a useful, concrete and tangible result satisfies it.”

The United States Patent and Trademark Office (UPSTO) has now one chapter on Patent Business Methods and for business methods and data analysis it’s granting Patents to software techniques if they are useful. Single click to order goods in an online transaction like famous Amazon.com.
1-click patent, An online system of accounting, In line rewards incentive system, On-line frequent buyer program, programs letting customers set their own price for hotel booking etc.

The figure shows the growth of patents in US.

Europe

Under the European Patent Convention (EPC) 1973 and particularly in its article which specifically states that ” discoveries, scientific theories and mathematical methods; aesthetic creations; schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers; (emphasis added) ,presentations of information will not be regarded as invention and excludes from patententability. The same law is followed by member countries of EPC where computer programs and business methods can not be patented. Well however practically its not so.

EPC formed an organization named European Patent Office which doesn’t work for under the European Commission. There is lack of consistent practice among EPO and the number of patent offices of the EPC’s member countries in granting patents and there’s been a good deal of uncertainty whether software patents are even enforceable. To harmonize the practice, a draft was proposed by European Commission on the subject in 2002 but the text was never agreed upon. Some feared that in Europe there is much more regime liberalism as compared to US which on the other hand others feared that they would lose the patent protection that they already have and enjoyed. Ultimately the proposal got defeated in European Parliament on July6, 2006 , which makes clear that the inconsistent practice that caused the commission to seek to clarify the law is still continuing.

UK

The effects of EPC are followed by United Kingdom Patent Law such that “programs for computers ” are not patentable to the extent that a patent application relates to a computer program as such. In Feb 2008 In re Astron Clinica Ltd. , it concerned six application that claimed to be ‘a method of doing’ and ‘device of doing it’ by running a suitably programmed computer on the device. Effectively, the program that carries out a method (related to Astron clinica case) . United Kingdom Intellectual Property Office (UKIPO) rejected these applications.

As per UK laws ‘An invention is considered as an invention if it provides contribution that is not excluded and which is also technical. A computer program which implements industrial process may well be considered as an invention but the program implements business process is not considered to be an invention’.

Japan

The country which is next to US and Europe is Japan in net exporter of intellectual rights.The standards for granting software patents were revised in 1993. The software patent law in Japan are much lenient. Software related invention are patentable. As per the patent law in Japan the nature of invention is defined as ‘ a creation of technical ideas utilizing a law of nature’. As per Japan guidelines claims can be patented if ‘utilization of nature law in information processing performed by software’ and ‘invention using hardware resources’.

Cause of lenient guidelines the software which can not be patented in Europe can be patented in Japan. So it is the second country which registers number of software patents after US.

Australia

Australia

In Australia , if the methods of doing business are pure or abstract then they are not considered to be patentable, but if the method is implemented using a computer, it avoid the exclusion business methods.

The Court referred to National Research Development Corporation v. Commissioner of Patents[13], as being the leading authority in Australia[14], where the High Court said “a process, to fall within the limits of patentability . . . , must be one that offers some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art . . . – that its value to the country is in the field of economic endeavor.”

India

As Indian patent law ‘a mathematical or business method or computer program par se(standing alone, in itself or by itself)’ or algorithms is not invention for purposes of the Patent Act. It was further modified ‘a computer program per se other than its technical application to industry or a combination with hardware’ can be patented.

The current examination guidelines of the Indian Patent Office on software sound similar to the traditional European approach which the European Parliament reconfirmed on 2003-09-24.

South Africa

In South Africa , the primary objective of a patent system should be to encourage and stimulate innovation. Some strict rules are followed to award of a patent. Firstly the invention must be new – that it must be substantially different from any prior art. Secondly, important, it must be inventive or non obvious – that is- with the same invention no any average practitioner in the field of technology would come up where the patent is awarded. Thirdly, the patent should be useful.
These are the regime to grant patents in South Africa and same is followed for the software.

Israel

In Israeli, patenting of software-related inventions depends on the term “process.” In the Rosenthal and United Technologies cases, courts interpreted the term as essentially dealing with a definite physical matter to change its appearance or condition. According to this line of reasoning, Israeli patent laws do not reflect on a computer program to be a process because it does not generate physical changes.

Malaysia

The existing Malaysia patent law does not have any specific provision for software related inventions. Section 13(1)(a) of the Malaysian Patent Act 1983 specifically excludes from patentable subject material “discoveries, scientific theories and mathematical methods” and paragraph (c) excludes “schemes, rules or methods for doing business, performing purely mental acts or playing games”. This is quite alike to the patent law in UK . Malaysia has adopted a modified system in its examination of patent applications that depend on whether the claims have been registered in other countries. In this manner, software based patents have been granted in Malaysia.

Conclusion

The developed countries are having very good amount of quality, quantity and value of the patents. Comparing the developing countries they still on progress there is improvement in their quantity but the factors like quality and value are still having a great difference with the low achievement in independent innovation and being the follower of powerful countries which no such self conducting policies. The government of the developing countries must strengthen the patent protection dynamics in favor of its civilians and add some more independent strategies.

http://wiki.ffii.org/SwpatinEn http://www.out-law.com Article Source: http://EzineArticles.com/?expert=Garima_Goswami

In their presentations, both John and Jonas described their funding criteria, which was fairly textbook for an angel investor and venture capitalist. John invests in early-stage, pre-revenue companies where his technical and business background can provide some value-add to management, and Jonas invests in later stage opportunities, for example a B, C or D round financing.

What I found unusual about John’s and Jonas’ funding criteria was that they both require an investment candidate to have intellectual property that is patented (or patentable) as a condition to funding. That is, if a company seeking capital does not have patentable IP, neither John, nor Jonas, will consider the company as an investment candidate.

Quite often, early stage investors prefer investing in companies with exciting intellectual property, or the existence of unique intellectual property forms an important part of an investor’s overall investment decision. However, this was the first time I had heard investors say definitively that they wouldn’t even consider funding a company if it did not have patentable intellectual property.

This made a bit more sense to me with respect to Jonas, whose venture capital fund invests in only med-tech, biotech and pharmaceutical deals–companies whose success and failure rides on their scientific inventions and ingenuity. But the criteria made less sense to me with respect to John, who proclaims to be industry agnostic and has invested in deals that range from toys to new media and software.

According to Amy Goldsmith, a patent attorney with Gottlieb, Rackman and Reisman, P.C., investors prefer companies with patented (or patentable) technology for two reasons. First, in order to obtain a patent from the United States Patent & Trademark Office (USPTO), the governing body that issues patents in the United States, the company has to prove that its idea or invention is useful, new and that the technology is not obvious from what has been done before. In essence, the invention is prescreened by the USPTO to have good chance of being economically viable and that it is something that hasn’t been seen in the marketplace before. Good news for investors.

The second reason investors prefer companies with patentable technology is that once a patent is issued, the company has the exclusive right to use that technology for a period of 20 years. That is, management can prevent any other person or entity from exploiting their technology for commercial gain, reducing or eliminating competition.

For an investor like Anson, who expects that only one in 10 of the companies he funds will ever produce a return on his investment, patentable technology is one of the principal ways he increases his odds for a successful exit. “Most of the companies I fund are two people in a kitchen or garage” claims Anson. The companies Anson invests in need every competitive advantage they can get to survive. A “keystone” or “fundamental” patent, business terms for very strong patented technology, keeps competitors out of the market.

As opposed to a company with an “execution” business model, where the company’s success hinges on management’s ability to execute their business strategy faster, bigger and cleaner than their competitors (and where, however, a competitor can easily jump into the market to compete), a company with a business model built around one or more pieces of patentable technology can stop everyone in its tracks that tries to duplicate its products or services.

Says Anson, “unlike an execution company, if a company with a business built around a keystone patent makes mistakes or even fails in the execution of its business plan, it can still survive.”

Interestingly enough, Amy Goldsmith notes that she rarely, if ever, sees funded early-stage companies that have patents at the time of funding. The patent office is so delayed with respect to its evaluation of patent applications (according to Goldsmith, it can take three to four years for a patent to be issued), that companies are frequently past the early stages of their development by the time a patent is issued.

John Anson is a bit more forgiving when it comes to requiring patentability searches or pending patents when he assesses a candidate for funding. Patent applications can be costly to prepare and often start-ups do not have the cash to pay for searches and applications. In this case, John relies on his extensive technological background to make his own determination as to whether the company’s technology has a reasonable chance of obtaining a patent. He researches the USPTOs database much in the same way that a patent attorney would. This information is available to the public for free at the USPTO’s website (www.USPTO.gov).

According to Dr. Wang in his presentation at the conference, the type of patent you obtain is also an important factor when investors assess whether they will make an investment in your company. The USPTO issues several kinds of patents, including design patents that protect the ornamental design of a functional item such as jewelry, furniture, beverage containers and computer icons; utility patents that protect the functionality of a given item; software patents; and biological patents.

However, according to Dr. Wang, investors have a certain amount of disdain for business method patents, which are a class of patents that disclose and claim new methods or processes for doing business.

Amy Goldsmith concurred with Dr. Wang’s assessment. It seems that the USPTO previously issued a significant number of business method patents and, as a result, patent owners had difficulty enforcing their rights under the patents. Further, according to Anson, because the description of the technology or method underlying the patent becomes public information within 18 months from filing, competitors can study a company’s business process and fairly easily design another process to go around the patented method. This actually puts the patent holder at a disadvantage as compared to never obtaining the business method patent at all.

The public’s easy access to your technology when you file and obtain a patent strikes a nerve with some entrepreneurs. I spoke with an entrepreneur recently who was holding off on filing any patent applications until he achieved some commercial momentum with his invention. He feared that once the details of his invention became public that a company in some far reaching province in Asia may try to steal his technology. Instead, he was going to rely on keeping his invention a trade secret for the time being.

Says Goldsmith, “depending on how easy your invention is to duplicate, there definitely is some truth that if your invention takes off, certain companies will copy it.” If you haven’t filed in Asia for a patent protection to prevent your invention from being copied, you will have little recourse.

According to Amy, the problem of enforcing patents in Asia is improving, but still isn’t great. “It will be another five to 10 years before we see a legal system that’s capable of enforcing patents, but it is getting better.”

My conversation with Amy Goldsmith was enlightening, and I learned a number of new things that would be important considerations for companies who want to protect their IP. These include:

• Budget. Make sure you have a budget in place to pay for searches and patent applications, which can start at $10,000.

• Timing. You only have one year from the use of an invention in commerce to file for your patent. If you’re thinking of filing, give yourself enough time to do searches and prepare the application.

• Scrutiny. According to Goldsmith, nearly 99% of patent applications will initially be rejected by the USPTO. The applicant (or his or her attorney or agent) must then appeal to the USPTO in order to demonstrate why the invention is patentable. This second step to the patent application process can be costly and is an expense that will be in addition to the $10,000 fee for services related to the application process.

• Expertise. Given the high percentage of patent applications that get bounced by the USPTO after the initial filing and the fact that you cannot make changes to an application (except to fix grammatical errors), even if you have a technical background, it’s in your best interest to retain patent counsel to prepare your patent application.

• Ownership. Patent applications can only be filed in the name of a person who invented the patent, not a company’s name. Therefore, if your employee has created an invention for your company, then you need to have invention assignment language in an employment contract or have at will employees (those without an employment contract) sign an assignment of inventions agreement.

• Monitoring. Because the US system for protecting patents is one of exclusion-no one else has the right to use the technology–it is the patent owner’s responsibility to make sure that others are not infringing on issued patent rights. It is prudent to put a system for monitoring your patented inventions in place and have a budget for enforcing your rights.
Interested in starting or funding a company that has a business model built around a piece of patented technology?

Got concerns about protecting your intellectual property?

Consider attending the seminar we are sponsoring on May 9, 2008, called “Patents & Trade Secrets: How to Protect Your Company’s IP”.

Amy Goldsmith will be our featured speaker. Details are included in this month’s newsletter.

Stephen Furnari is a business lawyer with Furnari Levine LLP. Steve helps business owners and entrepreneurs run their companies without the fear of losing everything they’ve worked hard to build in lawsuits and regulatory investigations. To learn how to save thousands in your business by avoiding costly legal mistakes, subscribe to our FREE mini e-course 7 DEADLY MISTAKES THAT COST ENTREPRENEURS THOUSANDS go to http://www.furnarilevine.com/legal_mistakes.html Article Source: http://EzineArticles.com/?expert=Stephen_Furnari