Software Protection

Software solutions have become established in all areas of technology. Software is being used not only for end products but also and specifically in the automation of internal processes, such as in production technology and sales organization. Practice shows that such software solutions can often provide a decisive advantage over competitors by, for example, producing products more quickly and cheaply or by saving on labor cost. It is therefore even more important to protect the software that is being used as well as to be aware of the most up-to-date legal developments in this area.

Current political discussions

In the U.S., a liberal approach has been taken with regard to patent protection of software since the 90’s (especially since the U.S. Supreme Court’s 1998 “State Street Bank” decision). In Germany and the EU on the other hand, the approach is more restrictive in the granting of “software patents”, for which the proper legal term is “patents for computer-implemented inventions”. The discussion on software patents began back in the 90’s and reached a peak in 2005 in the debate on a proposed EU Commission Directive on the introduction of “software patents”. This software patent directive was rejected by the European Parliament in July 2005.

The discussion, however, has continued until today. The debate heated up again recently based on an application by several parties to the (former) federal government of Germany. The members of the CDU/CSU, SPD, FDP and Bündnis 90/Die Grünen parties, who were in the Bundestag at that time, requested, among other things, that the federal government should guarantee that “the economic exploitation rights regarding software shall remain protected under copyright law and shall not be undermined by third-party software patents” (Bundestag document 17/13086 of April 16, page 3).

It is often argued that copyright law is available for the protection of software and therefore no patent protection is required. But can you (and above all, should you) rely on copyright protection? Or to put it the other way around: Is copyright protection even able to guarantee sufficient protection for software? What other intellectual property rights are available in addition to copyright? What are the advantages and disadvantages of these property rights? These are questions that are no longer relevant for software developers alone.

Copyright protection is not enough

The starting point of the current discussion is just right. In principle, “computer programs” are protected by copyright law (Sections 69a - 69g German Copyright Act), whereas patent protection strictly excludes “programs for data processing systems” in accordance with Section 1(3) Patent Act (for Germany) and Article 52(3) EPC (for Europe). The copyright protection arises automatically with the creation of the work, i. e. the programming of the software. An application or registration is not necessary. It is therefore free of charge. In addition, the copyright protection in Germany and most other countries expires 70 years after the death of the author (programmer) while in patent law the protection expires 20 years after the filing of the patent application. Despite these advantages a company should not, however, rely on copyright protection. The main reason is that copyright protection can be very easily circumvented. Copyright, for example, offers no protection against reverse engineering. In accordance with Section 69e Copyright Act, no infringement has occurred if the reproduction of the code is necessary to obtain the information required to achieve the interoperability of an independently created computer program with other programs.

In principle, it is therefore possible to acquire a protected piece of software, decompile it and analyze it. The information gained in this way can then lead to the programming of an own software in a slightly altered version, but with the same functions, without the copyright holder of the genuine software being able to take any action against it.

In addition, proof of ownership is often difficult and expensive because the copyright is held by the author (programmer) of the software.

You must therefore be able to prove the entire link with the rights owner. These problems do not arise in case of patents because legal ownership is presumed by entry in the patent register (Section 30(3) sentence 2 German Patent Act). This apparently formal aspect is often worth real money because it can make the difference between winning or losing the case.

In addition, copyright law also differs from patent law in the handling of parallel inventions. In case of independent parallel developments, a company cannot take action against the parallel developer based on copyright law, whereas patent law protection would be available.

However, the scope of copyright protection is even more critical. Copyright law protects the particular form of the source code in accordance with Section 69a Copyright Act. If a programmer, for example, programs in the C++ programming language but a competitor uses another programming language, the original programmer usually cannot take any action.

Additional patent protection is recommended

In summary, it can be stated that companies are well advised to protect their software (at least also) by means of other intellectual property rights. Inter alia, patent law could be an option.

But how is this statement compatible with the above assertion that programs for data processing systems are strictly excluded from patent protection? Both statements are correct. Section 1(3) Patent Act excludes programs for data processing systems from the scope of inventions that can be patented. According to Section 1(4) Patent Act, however, this applies only to data processing programs “as such”. If the inventions have a specific technical subject, which goes beyond a simple data processing program “as such”, they may be patentable.

According to case law this requirement of “technical character” is met if a computer program for which a patent application has been filed includes features which serve as a solution for a concrete technical problem by technical means (decision by the Federal Court of Justice of April 22, 2010, Case Xa ZB 20/08 – dynamic documentation generation), or to put it more simply: A computer program is specifically technical (and can therefore be patented) if it solves a technical problem in a technical way.

Features, tasks, and effects that are assessed as technical in accordance with case law, are for example effects in the traditional technical areas such as mechanical engineering and electrical engineering, chemistry, etc., but also effects such as the saving of storage space, the increasing of the performance of computers, processors etc., the saving of energy or the improvement of system components.

“Trick” –
Technical formulation of patent claims

When registering software patents in Germany and Europe, therefore, a “trick” is often used. The patent claims are often formulated as “technical”, even mechanical, in order to pass the hurdle of “technical character”. For example, the saving of data in various different storage locations (temporary storage, program data memory, etc.) or in various components (chips, RAM, etc.)
is highlighted, in order to make it possible to obtain a patent. In many cases the consciously technical formulation of the patent claims and the associated abstraction leads to the fact that these patents, however, often also include embodiments for which the underlying software was never intended. This applies above all to older patents, which are sometimes undergoing a renaissance as a result of technological development. The owners of these patents often try to take advantage of this fact and enforce these (“misused”) patents against infringers.

Most recent developments in the USA

This development was also recognized in the U.S. Accordingly, the law amending the US Patent Act (Leahy-Smith America Invents Act - AIA), signed into law by President Obama in September 2011, contains new trial proceedings conducted at the U.S. Patent Office (USPTO) to review the patentability of one or more claims of covered business method patents (§ 18 AIA). This procedure has been available since September 16, 2012. Up to now, 48 such petitions have been filed (status as of September 3, 2013). A number that could increase quickly in the future because the first decisions have now been issued. Software manufacturer SAP achieved the revocation of U.S. patent 6.553.350 by Versata which protects a procedure for price calculation (decision of June 11, 2013, Case CBM2012-00001). As the primary grounds for its decision, the U.S. Patent Office stated that the patent claims were too abstract. The patent protected a calculation method whose individual steps could also be performed on paper so the computer was not required to implement it.

Some observers consider the decision by the USPTO to be a general renunciation of the granting of software patents in the U.S. We will have to wait and see whether the decision will really have such extensive consequences. On a positive note, companies that consider themselves exposed to a (potential) infringement of a U.S. patent now have the opportunity to have this patent reviewed in office proceedings, without incurring the enormous costs involved in U.S. court proceedings.

Conclusion

Copyright provides free protection for software but is not designed especially for the protection of software, meaning that there are serious gaps in protection. In order to close these gaps a company should also protect software by means of patents which is possible not only in the U.S. but also in Germany and Europe by applying a few tricks.