This is one of the landmark decisions when it comes to the patentability of software. The EPO Board of Appeal established that patent claims, including method claims, are patent-eligible if they use technical means. In other words, a “computer-implemented method” is patent-eligible already due to the presence of the word “computer”. 

On the merits, however, the European Patent Office refused to grant a software patent for an automatic auction method. Here are the practical takeaways from the decision T 0258/03 (Auction method/HITACHI) of 21.4.2004 of Technical Board of Appeal 3.5.01:

Key takeaways

Headnote I: “A method involving technical means is an invention within the meaning of Article 52(1) EPC (as distinguished from decision T 931/95-Controlling pension benefits system/PBS PARTNERSHIP)(see points 4.1 to 4.4 of the reasons).”

Headnote II: “Method steps consisting of modifications to a business scheme and aimed at circumventing a technical problem rather than solving it by technical means cannot contribute to the technical character of the subject-matter claimed (see point 5.7 of the reasons).”

The invention

This European patent application relates to an automatic auction method executed in a server computer. The auction starts with data exchange between the clients and the server to collect bids from the participants. Each bid comprises a “desired price” and a “maximum price in competitive state”. After this initial phase the auction is automatic and does not require that the bidders follow the auction on-line. An auction price is set and successively lowered (which is typical for so-called Dutch auctions) until it reaches the level of the highest bid or bids as determined by the “desired price”. In case of several identical bids the price is increased until only the bidder having offered the highest “maximum price” is left. He is declared successful.

Fig. 2 of EP 0 828 223
Fig. 2 of EP 0 828 223
  • Claim 1 (main request)

Is it patentable?

First of all, the Board made it clear that system or apparatus claims that constitute a physical entity of product are always technical and thus patent-eligible:

For these reasons the Board holds that, contrary to the examining division’s assessment, the apparatus of claim 3 is an invention within the meaning of Article 52(1) EPC since it comprises clearly technical features such as a “server computer”, “client computers” and a “network”.

This conclusion is in conformity with decision T 931/95, where it is stated in headnote III that: “An apparatus constituting a physical entity or concrete product, suitable for performing or supporting an economic activity is an invention within the meaning of Article 52(1) EPC.”

Moreover, the Board established that also method claims pass the patent-eligibility hurdle already if they recite a technical means:

The reasoning above (point 3.5) is independent of the category of the claim. Thus, in the present case, also the method of claim 1 is not excluded from patentability under Article 52(2) EPC.

[…] It is therefore concluded that, in general, a method involving technical means is an invention within the meaning of Article 52(1) EPC.

Turning to inventive step, however, the Board did not attribute any technical character to the part of the claimed method that concerned the auction method. This part of the claim could thus not establish an inventive step according to the Comvik approach:

In the Board’s view, however, this solution does not contribute to a technical character and cannot therefore be taken into account for assessing inventive step since it concerns the rules of the auction, ie it is not a technical solution to the delay problem described (and solved by technical means) in documents D2 and D6, but a solution entirely based on modifications to the auction method. Method steps consisting of modifications to a business scheme and aimed at circumventing a technical problem rather than solving it by technical means cannot contribute to the technical character of the subject-matter claimed.

Notably, the Board also carefully assessed whether some of the auction steps were perhaps designed to be particularly suitable for being computer-executed. In this case, such steps would have contributed to inventive step. However, in the end the Board did held that the particular auction step, even if it was considered technical, was obvious:

Nevertheless, if a step of a method has been designed in such a way as to be particularly suitable for being performed on a computer, it has arguably a technical character. Suggesting such a step might require technical considerations (cf T 769/92, headnote I), namely of the working principles of a computer. This view was also expressed in T 52/85 (not published in the OJ EPO), where a method for displaying a list of expressions semantically related to another linguistic expression was found non-technical exactly because no such technical considerations were necessary: the method was “nothing else but what a human being searching for semantically related words would do” (see point 5.8 of the decision).

The invention under examination may contain such a feature which does not correspond to what a human being would do if performing the auction without computer support. This is the step of raising the auction price successively in order to determine the highest maximum price offered by bidders having proposed the same desired price (step (h). An auctioneer would presumably do this simply by looking at the bids. Still, the Board is convinced that this way of ranking the bids is a routine programming measure well within the reach of the skilled person. Thus, this feature, even if possibly constituting a technical solution to a problem, would have been obvious to the person skilled in the art of data processing.

Therefore, the Board ultimately decided that the patent application does not provide any technical contribution that could be the basis for an inventive step.

More information

You can read the whole decision here: T 0258/03 (Auction method/HITACHI) of 21.4.2004

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