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:
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.
Claim 1 (main request)An automatic auction method executed in a server computer comprising the steps of:
a) transmitting information on a product to be auctioned to a plurality of client computers via a network, each client computer belonging to a bidder;
b) receiving a plurality of auction ordering information pieces, each including a desired price and a maximum price in competitive state, for purchase of said product, from the plurality of client computers via the network;
c) storing the received auction ordering information pieces in the server computer for respective bidders;
d) setting an auction price;
e) determining whether there is any bidder who proposes a desired price equal to or higher than the auction price using the auction ordering information pieces stored in the server computer;
f) if there is no bidder in the step e), lowering the auction price, and repeating the step e);
g) if there is more than one bidder at step e), judging whether there is more than one bidder for whom the auction price is less than or equal to the desired price such that a competitive state occurs using the auction ordering information pieces stored in the server computer;
h) if the competitive state occurs, increasing the auction price by a predetermined value;
i) excluding the bidder who proposes acceptable a price lower than the increased auction price and specifying the other bidder or bidders using the auction ordering information;
j) judging whether the competitive state occurs among the bidder or bidders specified in the step i);
k) repeating the steps h), i) and j) and determining the remaining bidder as a successful bidder when there is no competitive state at step j); and
l) if no competitive state occurs in the step g), determining the remaining bidder as a successful bidder.
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.
You can read the whole decision here: T 0258/03 (Auction method/HITACHI) of 21.4.2004