BUSINESS METHOD PATENTS IN EUROPE AND THEIR STRATEGIC USE—EVIDENCE FROM FRANKING DEVICE MANUFACTURERS

Abstract

There has been a wide-spread misconception based on the imprecise wording of Art. 52 of the European Patent Convention that the protection of business methods by patents is prohibited in Europe. This article investigates the legal framework set by patent laws with respect to the patentability of business methods, contrasting the situation in lege in Europe and the situation in the US. It is shown that in praxi business methods have never been excluded from patentability in Europe. In the empirical part of the article, 1901 European patent applications relating to business methods are identified and major patent indicators are computed. Further, a case study from the franking device industry which is characterized by strong competition for intellectual property rights is conducted. It contains evidence for the strategic use of business method patents leading to opposition rates against granted patents of 44%.

Keywords:

• Business method patents
• Patent opposition
• EPO
• Franking device manufacturers

Acknowledgements

Financial support from the Deutsche Forschungsgemeinschaft DFG within its Sonderforschungsbereich 386 and also from the German Academic Exchange Service DAAD is gratefully acknowledged. Earlier versions of this article have been presented at the Economic Seminar Series (European Patent Office, Munich, 26 October 2004), the fifth EPIP conference on ‘European Policy on Patents and Intellectual Property: What direction should it go?’ (Copenhagen, 2005) and the second GEABA symposium (Freiburg, 2005). I wish to thank Dominique Guellec and Leo Gianotti for their kind support.

Notes

¹Compare Art. 52 of the EPC.

²For a full treatment of this subject see Beresford (2000).

³A good example is Priceline's US patent Nr. 5,794,207 protecting a ‘Method and apparatus […] designed to facilitate buyer-driven conditional purchase offers’ which protects an Internet-based version of the reverse-auction mechanism, where the buyer specifies the product he wants to purchase and the seller offering the lowest price wins the right to deliver the product.

⁴In 1998, in the famous State Street Bank and Trust Co. vs. Signature Financial Group-decision involving US patent No. 5,193,056, the United States court of Appeals for the Federal Circuit ruled that business method patents are patentable subject matter (Conley, 2003, pp. 21–23). See also http://www.law.emory.edu/fedcircuit/july98/96-1327.wpd.html

⁵The EPO only recently advocated the introduction of a new class G06Q (which will contain applications related to business methods) in the 8th revision of the IPC forthcoming 2006 (Gianotti, 2005).

⁶USPTO patents are available online at http://www.uspto.gov/patft/index.html, latest visit on September 2004.

⁷If patent protection for a given invention is sought in more than one jurisdiction, the different patents are called equivalent patents. The underlying equivalent definition of the Espace database is that for two documents to be described as equivalents, all their priorities must be the same.

⁸This database contains extensive bibliographic and procedural information on patent applications published by the EPO between 1978 and 2003.

⁹Cumulating the number of granted patents overestimates the actual size of the patent portfolio since patents might lapse due to the non-payment of renewal fees and since patents can be revoked in opposition proceedings.

¹⁰Societé Secap is a small manufacturer for franking devices with a negligible market share and no own patenting activities.