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Patentability of Software or Computer Programs: To be or Not to be?

by Antoñina Puno Villa

I. INTRODUCTION

“The State shall protect and secure the exclusive rights of scientists, inventors, artists, and other gifted citizens to their intellectual property and creations, particularly when beneficial to the people, for such period as may be provided by law. “

Article XIV, Section 13, 1987 Constitution

In pursuance of this constitutional grant and policy, the Intellectual Property Code of the Philippines (IPC), Republic Act No. 8293 was enacted on July 22, 1996 and it took effect on January 1, 1998 covering several property rights. “The four main concerns of intellectual property law -patents, copyrights, trademarks and unfair competition, arising from infringement of any of the first three.”1

“The three legal rights are completely distinct and separate from one another and the protection afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the others.”2 This paper will focus on the two main property rights of patents and copyrights.

The objective of this paper is to present whether or not computer programs should be patentable in the Philippines? Currently, the law only protects computer programs under Part IV of the IPC or the Law on Copyright_ But is it enough?

In this line, this paper discusses the background of the IPC. The United States history of excluding computer programs from patents. The advantages and disadvantages of computer program’s patentability and protection under copyright, The parallel application and implication of the United States progression of including computer programs as a patentable process. It’s probability of being protected under patents in the Philippine setting. The comparison and analysis of patents and copyright will yield a conclusion and what would best serve the public in general. Various advances have transpired all over the world in the last ten years. Has the ten year effectivity of the copyright law proven adequate for computer programs to be protected? Or is it time for an amendment of the law to adapt to the fast paced needs of technology?

II. BACKGROUND

The Intellectual Property Code of the Philippines was based on the Intellectual Property Laws of the United States. The U.S. progression both in law and jurisprudence has geared towards the protection of computer softwares not only under copyright but under patents as well. But this has not always been the case.

Computer programs were viewed as mathematical algorithms, and not as processes or machines and any related inventions were considered non-statutory.3 The case of Diamond vs Diehr in 1981, broadened the coverage of computer softwares as being patentable if the invention was not merely a mathematical algorithm, but was a process as well.4 in this case a process for molding rubber became patentable even thouph the only “novel” feature of this invention was the timing process controlled by the computer.5 The U.S. Federal Circuit in 1998, in the case of State Street Bank & Trust vs Signature Financial Group, upheld the patentability of the “Hub and Spoke” software in running mutual funds investments, by explicitly stating that business methods can form patentable subject matter.6

In the Philippines, “A patent is a document, issued, upon application, by a government office, which describes an invention and creates a legal situation in which the patented invention can normally only be exploited (manufactured, used, sold, imported) with the authorization of the owner of the patent. (WIPO, 75). A patent is a statutory monopoly which protects against unlicensed use of the patented device or process even by one who discovers it properly through independent research.”7

§ 21 of the IPC states that patentable inventions include, “any technical solution of a problem in any field of human activity which is new, involves an inventive step and is industrially applicable shall be patentable. It may be, or may relate to, a product, or process, or an improvement of any of the foregoing.” The requirements of novelty, inventiveness and capability of industrial application must be met.

On the other hand, “Copyright has to do with the rights of intellectual creators, particularly those usually, though not exclusively, connected with mass communications. It is that system of legal protection an author enjoys of the form of expression of ideas.”8

Under the IPC there are several requirements that have to be met to make an invention patentable: the application, the publication, the payment of the fee and the necessity of acquiring a priority date. While copyright under § 172.1 is protected from the moment of creation, without having to perform any act to perfect it.

Under § 171.4 of the IPC, “a `computer’ is an electronic or similar device having information-processing capabilities, and a `computer program’ is a set of instructions expressed in words, codes, schemes, or in any other form, which is capable when incorporated in a medium that the computer can read, of causing the computer to perform or achieve a particular task or result.”

Computer programs are non-patentable inventions under the IPC because of the express statutory prohibition under § 22.2. They are categorized under schemes, rules and methods of performing mental acts, playing games or doing business.

III. ADVANTAGES

1. Patents confer an ironclad protection.

Under § 71(b) the rights conferred by patent shall be exclusive, “Where the subject matter of a patent is a process, to restrain, prevent or prohibit any unauthorized person or entity from using the process, and from manufacturing, dealing in, using, selling or offering for sale, or importing any product obtained directly or indirectly from such process.”

It is clear from the import of the law, that not only is the process protected but the product derived from such process as well. Furthermore, the extent of patent protection adheres to the Doctrine of Equivalents as embodied under § 75 which states that:

“75.1 The extent of protection conferred by the patent shall be determined by the claims, which are to be interpreted in the light of the description and drawings.

75.2 For the purposes of determining the extent of protection conferred by the patent, due account shall be taken of elements which are equivalent to the elements expressed in the claims, so that a claim shall be considered to cover not only all the elements as expressed therein, but also equivalents.”

The computer program, if patentable in the Philippines, would offer a broader protection because not only is the process itself patentable, the product derived therefrom but up the extent of it’s equivalent are covered. The Doctrine of Equivalents evolved in patent protection to frustrate malice and its creativeness.9 “There is equivalence if the accused device `performs substantially the same function in substantially the same way to obtain the same result.’ This is the function-means-and result test… It requires a showing that all three components of the equivalency test are met.”10 “The purpose of the doctrine of equivalents is to protect a patented invention from circumvention by minor changes or deviation.”11

2. Patent protection is exclusive.

Under § 71(b) the protection guaranteed to persons granted a patent is to the exclusion of all others. This prevents the exploitation of the computer program from being used and capitalized on until the 20 year period of protection under § 54 has lapsed. This is without prejudice to the publication prior to the grant of the patent. In which case, the applicant shall have all the rights of a patentee against any person who, without his authorization, exercised any of the rights conferred under § 71, as if a patent has been granted.12

“Software patenting protects against independent inventors, not just against copiers. This means that patents protect against independently developed programs that are based on the same concept.13

A person granted a patent may bring a civil action for infringement covered under § 76 as well as a criminal action for repetition of infringement under § 84. The penalty ranging from a fine of not less than one hundred thousand pesos (Php100,000) to a maximum of three hundred thousand pesos (Php 300,000), at the discretion of the court. The term of imprisonment shall be not less than 6 months but not more than 3 years.

3. It encourages invention and innovations.

The right to a patent belongs to the inventor, his heirs or assigns under § 28. In consonance, patent owners have the right to assign or transfer by succession the patent and to conclude licensing contracts for the same.14 “Patent documents stimulate development.”15

An owner of a patent is encouraged to enter into voluntary license contracts and in effect a transfer and dissemination of technology ensues.§ 85 of the IPC prevents the abuses of intellectual property rights brought about by the control of the subject matter under patent protection in order to maintain equality in trade and eliminate unfair competition.

The rights of a licensee under § 90 is to exploit the subject matter of the technology transfer arrangement during the whole term of the technology transfer arrangement. It means that he may use the computer program and introduce improvements on the idea to the extent of creating a new one.

4. Patents are worth the trouble.

The financial rewards in terms of royalties make the tedious process of patenting a product or process worthwhile. ” Patents provide software developers with a potential source of income. ”16 The patentee owner is rewarded in the form of payment of royalties by assignees and those he enters with voluntary licenses with. The rate of royalties are however determined by the Department of Legal Affairs in instances of involuntary licensing under § 100, subject to certain conditions and exclusive grounds under § 93. “Software patentability makes it worthwhile for investors to sink large resources into new or existing companies and for new entrants to devote resources to research and development.17

IV. DISADVANTAGES

1. Patents do not extend to behavior.

The protection given by patents are strong enough to exclude products made out even equivalent ones. But strong as it may sound, there are limits to the monopoly of patents because they do not extend to behavioral patterns. Some computer program’s value lie on generating certain results. Patents cannot prevent the use of other methods even though that is the principal source of it’s value.18

§ 72 enumerates the limits of patent protection which deals mainly with the tolerance of infringement in certain `private’ circumstances but only to the extent of being non-prejudicial to the economic interest of the owner of the patent. “Where the act is done privately and on a non­commercial scale or for a non-commercial purpose.”19

2. Patent protection does not protect independent inventors.

§ 72.3 allows third persons to perform acts which consist of making or using exclusively for the purpose of experiments that relate to the subject matter of the patented invention. But it does not extend to the protection that whatever the third person invents or improves based on that patented subject matter will be held by that third person exclusively. In reality, the inventor is allowed to experiment without the explicit authority from the owner but he is not allowed to benefit from whatever he comes up with. It is like a double edged sword allowing on one side to improve on a product or a process but at the same time limiting the end result.

3. Patent protection’s exclusivity hampers growth and development.

“The economic life of a software innovation is normally quite short. It is shorter than the 20-year term conferred by the patent law.”20 Compared to the U.S. and our Asian counterparts the technology that reaches the Philippines is quite late. The latest gadget is not so new when it reaches us. The exclusivity patent protection offers is quite stringent and limits innovation and development. By the time a problem on software or program creeps up, that innovation has been outmoded thereby limiting it’s possibility and growth. These computer softwares have limited shelf-life. Instead of benefiting from the developments of other people in the field, like in the “open source” or “free software,” the civil and criminal suits that could ensue are discouraging and a great barrier.

“The introduction of software patenting ma also increase secrecy of practical technical knowledge and hinder the sharing of knowledge.”21 When an applicant files for a patent, he is required to disclose information regarding the subject matter in a manner that is sufficiently clear and complete for it to be carried out by a person skilled in the art.22 Certain unscrupulous individuals withhold the publication of all it’s source codes to prevent other people from making use of the program.

“The price in return for the monopoly privilege granted by a patent is often supposed to be the disclosure of the invention, as a contribution to the public heritage of knowledge and know -how. My experience as a research scientist is that this does not work for software, quite the contrary, and for many reasons. The first such reason is that software patents, as already granted in the United States, or with doubtful legality by the European Patent Office (EPO), are most often trivial from a researcher point of view. Additionally they are often written in a gibberish quite impossible to understand in any reasonable amount of time by a sane professional. Therefore, to took for useful teaching in patent applications is a priori a very low yield activity in a scientific universe already overcrowded with useful information and results. I never met a software research scientist claiming to have used patent claims as a source of information. ”23

4. The process to Patentability is costly and tedious.

It is a tedious process to patent any subject matter covered by the law. Money and financial resources are needed to capitalize on the exclusivity of patent protection. There are instances that the capital are not returned. In cases of software that does not perform well, or are found later on to be ineffective and troublesome. The patent cost and complexity of the application makes patentability burdensome.

In the US setting, it was only quite recently that software were patentable subject matters. The process of requiring prior art is based on the disclosure of the claims and the application. The search process of the Patent office to determine prior art becomes difficult because the information is limited. “This trend results in insufficient published prior art, which makes it difficult to search for prior art and to examine patent applications properly.24 Just imagine this situation if applied in the Philippine setting where the published prior art is much more limited. The resources of the Patent Office will likewise encounter similar if not more gargantuan problems such as this. The end result in the US is that they grant patent to applications that have a broader scope than what the subject matter really is.25

V. COPYRIGHT PROS AND CONS

“Works are protected by the sole fact of their creation, irrespective of their mode or form of expression, as well as of their content, quality and purpose.”26 But that was not always the case. In a 1959 case of Santos vs Mc Coullough27 a suit could not prosper because the old law required artists to file a petition for their work to be protected. The suit was filed beyond the 30 day period allowed by law. It was the work of Mauro Malang Santos, more popularly known as ‘Malang’ that was infringed. He made a portrait commissioned by Ambassador Neri depicting Philippine Christmastime. The work was printed by Mc Coullough Printing Company in cards as ordered by the Ambassador. The printing company without authority reprinted these cards for other customers for a price. The great artist like Malang had to resort to the courts for his protection and it failed him. Fortunately, the law became more receptive with the enactment of PD 49.

1. Copyright attaches at the moment of creation.

Computer programs are protected under copyright under § 172 (n) of the IPC of the Philippines. The major advantage it brings is that it attaches at the moment of creation. It is therefore cheap and does not cost much to be protected under copyright. But at the same time the protection is limited. “Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others from the manufacture, sale or commercial use.”28

2. Subject matter of copyright.

In the same vein almost all software or computer programs are copyrighted. But at the same time, it cannot protect the ideas of the program itself. “Copyright protects only the specific form in which the idea or concept is expressed. Everybody can use the concept or idea itself .”29 In the case of Pearl & Dean vs Shoemart (2003), “Only the expression of the idea is protected by copyright, not the idea itself.”

3. Term of protection.

The term of protection of copyright is the lifetime of the author plus 50 years from his death.30 This period is quite long and even excessive in some aspects. As discussed earlier, software or computer programs have limited shelf life or economic viability. Limited as the protection maybe, an infringement thereof is enough protection to deter acts covered by the law. But at the same time it deters improvement and innovation on the subject matter.

The protection of copyright is sufficient to protect infringement of software or computer programs. Under § 216 of the IPC Remedies for Infringement includes: An injunction to restrain the use of the copyrighted work, the payment of damages, the seizure of the goods, the order of destruction of infringing materials, and the payment of exemplary and moral damages. While § 217 of the IPC provides for criminal penalties of infringement, including aiding or abetting. The penalties ranges from a minimum of one year (1) imprisonment to a maximum of nine (9) years. The fine from the amount of fifty thousand (Php 50,000) to one million five hundred thousand (Php 1,500,000).

In the case of NBI-Microsoft Corporation vs Hwang,31 the Court held that the gravamen of copyright infringement is not merely the unauthorized “manufacturing” of intellectual works but rather the unauthorized performance of any of the acts covered by Section 5 of PD 49. The rights vested exclusively on the copyright owner is enumerated under the law. Hence, any person who perform any acts under Section 5 without obtaining the copyright owner’s prior consent renders himself civilly and criminally liable for copyright infringement.

4. Incentives under copyright.

The term of protection in itself is an incentive under copyright. The protection carries with it economic and moral rights. The economic rights shall consist of the exclusive right to carry out, authorize or prevent the acts enumerated under § 177 which are as follows: reproduction of the work or a substantial portion of it; transformation of the work; sale or transfer of ownership; rental or copy of the work; public display; public performance and other communication of the work. The moral rights are embodied under § 193 which are the right to attribute the authorship of the work to him; to make alteration of the work prior to or before publication; to object to any distortion of the work which are derogatory and prejudicial to his honor and reputation and to restrain the use of his name to a work not of his own creation or a distortion thereof.

5. Copyright is suitable for protection.

Software and computer programs are suitably protected under copyright. It is relatively effortless to copyright a work at minimal costs and therefore convenient for new inventors and small and medium scale enterprises. In the US, many small and medium scale enterprises (SMEs) use copyright as their main protection.32

The main disadvantage of copyright protection is that it cannot protect the valuable behavior or concept of a program. The protection does not extend to the product derived from the subject matter. Therefore, anybody may use the work especially within the ambit of the law’s limitation. The concept of fair use under § 185 if included is not an infringement of copyright. Decompilation which is the reproduction of the code is allowed. The determining factors are the purpose and character of the use, nature of the copyrighted work, amount and substantiality used and the effect of the use in the market. The reproduction of the computer program is allowed under § 189, as the back-up copy for archival purposes if the original fails, is lost or destroyed.

VI. CONCLUSION

“The general origins of United States patent law are relatively clear. After a brief debate between James Madison and Thomas Jefferson concerning the general undesirability of monopolies, Jefferson relented in the case of incentives for certain types of inventive behavior. The United States Constitution was drafted to include an express congressional power “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. ” This provision not only authorized the creation of a federal patent law but, uniquely among the grants of congressional power, also expressly set out the objective and even some details concerning the means. An incentive in the form of a limited right to preclude competition could be offered to inventors to encourage the investment of their time and resources in inventive endeavors which would progress the useful arts. The hope was that this encouragement would result in the desired growth in the useful arts which, in turn, would result in overall economic growth and a general increase in prosperity. ”33

Upon analysis of the above quoted article, we can determine the reason as to why the great forefathers of the US enabled the creation of intellectual property rights. It is to encourage invention, innovation and foster creation. But at the same time the limitation of such a right likewise is for the benefit of the greater good. The limited monopoly given a patentable or copyrighted work is balanced with their eventually being owned by the public and thereby greatly benefiting everyone.

In balancing the two rights of patents and copyright in the Philippines, they are even in terms of advantages and disadvantages. The ten years that the Intellectual Property Law has been in effect has proven to be sufficient in terms of protection to software or computer programs under copyright protection. Jurisprudence has provided us with the strength and weakness of patents and copyright protection.

Under the case of Pearl & Dean Incorporated vs Shoemart, Incorporated it stated that: “The law attempts to strike an ideal balance between the two interests: The patent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new, useful and non-obvious advances in technology design, in return for the exclusive right to practice the invention for a number of years. The inventor may keep its fruits and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to the community, the patent is granted… but upon the expiration of that period, the knowlede of the invention inures to the people, who are thus enabled to practice it and profit by its use.” 34

In an article by Bernard Lang, he described some people who believe that software or computer program should be protected by patents as a religion in itself.35 He considers them to be “tautological” in their approach, in the sense that the protection given by patents is the only way to be protected against copying and reproduction. “Answering a written question by a French member of parliament regarding the position on the French government on the Common Position of the European Union Council on the patentability of software, the government wrote that “only patents will enable an inventor to fully protect his rights against competitors.” This tautological answer is very characteristic of the ideological - if not religious - approach of many actors regarding intellectual property and more specifically patents. As such, it is very enlightening as to the current debates.”36

There are several issues that arises and much more problem if software and/ or computer programs become patentable. But these intellectual properties guaranteed by the law is much like any other law. They seek to protect and regulate for the greater good. It is for the promotion of the general welfare of the people. It is an ideological concept that once granted a right, people would naturally offer restraint and decorum. In reality, we have found and again that this is not so. This is the very reason the legal system was created. In Utopia, a lawyer is missing and glaringly absent. Sadly, the world is not Utopia. No right is absolute, even if that right is a creation or an invention. Our great artist Malang found that out the hard way.

The great forefathers of the United States, Madison and Jeffreson, discerned this concept. Limited monopoly for the great work and in exchange the public domain will own these works, eventually. In weighing patents and copyright protection, I have analyzed that they are both beneficial and at the same time detrimental. They are not both perfect, but they offer solutions that the other does not. To strike a balance between them, some suggest, why not allow software or programs to be patentable and copyrightable? Rev. Fr. Aquino in his book stated, “There is nothing that prevents an object from being the subject of both patent and copyright.”37 But would it be for the greater good?

The 20 year period under patents is in itself a lifetime when it comes to software and programs. The discrepancy of the term of protection with patents having a shortened monopoly of 20 years compared to the lifetime plus 50 years of copyright offers a clear plus for an incentive package for inventors and innovators. But at the same time it deters advances and improvement on the software and program.

The subject matter of patents having the requirement of being new or not belonging to a prior art is the major concern and problem in the United States. The search process becomes difficult when the data available is limited. Patents are therefore granted even if they do not belong to that group. They are given a broader scope of applicability even if they do not deserve it. This would no less be applicable in the Philippine setting.

In sum, software patentability would present far greater problems than benefits. The ten year that the IPC has been in effect in the Philippines has proven sufficient to protect property rights of software and programs as decided in NBI, Microsoft vs Hwang (2005). The remedies of infringement coupled with unfair competition are enough deterrence.

Endnotes

  1. Pearl & Dean vs Shoemart , 409 SCRA 231, p. 242 (2003), citing Kho vs. CA, 379 SCRA 410. [↩]
  2. Ibid., p. 240. [↩]
  3. Tysver, Daniel. “History of Software Patents.” http://www.bitlaw.com/software-patent/history.html. Accessed October 23, 2008. [↩]
  4. Ibid. citing Diamond vs Diehr, 450 U. S. 175 (1981) [↩]
  5. Ibid. [↩]
  6. Ibid. citing State Street Bank & Trust vs Signature Finance Group, (1998) [↩]
  7. Aquino, Rev. Fr. Ranhilo Callangan, ” Intellectual Property Law, Comments and Annotations”, 3rd edition 2006, p. 192. [↩]
  8. Ibid., p. 14-15. [↩]
  9. Ibid. p. 236. [↩]
  10. Ibid. p. 237. [↩]
  11. Ibid. [↩]
  12. § 46, IPC. [↩]
  13. Koo, Dae-Hwan, “Information Technology and the Law: Computer Programs & Intellectual Property Law in the US, Europe, Japan, Korea”,2005, p. 269. [↩]
  14. § 71.2,IPC. [↩]
  15. Koo, ibid., p. 269. [↩]
  16. Ibid. p. 269. [↩]
  17. Ibid. [↩]
  18. Ibid. p. 270. [↩]
  19. § 72.2, IPC. [↩]
  20. Koo, ibid.p. 272. [↩]
  21. Ibid. p. 275. [↩]
  22. § 35.1, 1PC. [↩]
  23. Lang, Bernard, “Software Patentability: a computer research scientist’s view,” http://pauillac.inria.fr/~lang/ecrits/liste/recife-bresil/48.pdf. Accessed October 23, 2008. [↩]
  24. Koo, ibid, p. 276. [↩]
  25. Ibid., p. 277. [↩]
  26. § 2 P.D. 49, now § 172.2 IPC. [↩]
  27. Santos vs Mc Cullough, GR No.L19439, October 31, 1964, 12 SCRA 321. [↩]
  28. Supra, Pearl & Dean vs Shoemart, p. 245. [↩]
  29. Supra., Koo, p. 282. [↩]
  30. § 213.1, IPC. [↩]
  31. NBI-Microsoft Corporation vs Hwang, 460 SCRA 428, (2005) [↩]
  32. Supra,.Koo, p. 274. [↩]
  33. Chiapetta, Vincent, “Patentability of Computer Software instruction as an “Article of Manufacture” Software as such as the Right Stuff’, John Marshall Journal of Computer & Information Law, Volume 17, Issue 1, http://www.jmlss.edu/Jcil/17/vc.html, Accessed October 23, 2008. [↩]
  34. Supra., Pearl & Dean vs Shoeman, p. 244. [↩]
  35. Supra, Lang. [↩]
  36. Ibid. [↩]
  37. Supra, Aquino, p. 198. [↩]

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