-----Original Message-----
>From Dagny Taggart

>Not only should e-gold worry about e-gold but also
>about DigiGold!
>This is taken from the GoldMoney.com web site, I guess
>this could be considered their official statement ...[snip]...

Perhaps this article below will help you put a perspective on the
whole issue. Patents at the best of times rest on shaky ground, and in
the computer and software industries....



Should Patents be Granted for Computer Software or Ways of Doing

The Government's Conclusions


1.  In the autumn the Patent Office published a consultation leaflet
inviting views on how far computer software and ways of doing business
should be protectable by patents (a copy of the leaflet is at Annex
This is the report on the consultation exercise, and on the
conclusions the
Government has reached.

2.  The consultation attracted a lot of interest. The Patent Office
received around 11,000 hits. Patent Office officials gave 15
to business organisations, universities, and so on. They made many
telephone calls to senior figures in organisations likely to be
affected by
the proposals, to explain the issues and ascertain views. An internet
newsgroup was established, and received around 280 external
Interviews and reports featured in national newspapers and radio

3.  In addition there were 285 responses to the invitation to submit
They comprised 241 individuals, and 44 organisations (companies, trade
professional bodies, and so on). Respondents, apart from those who
requested anonymity, are listed at Annex B, with details of how to
view the
responses. The Government is particularly pleased by the range of
represented. As well as responses from intellectual property (IP)
practitioners, and businesses and individuals heavily involved in
responses came from, among others, Small and Medium Enterprises
financial sector bodies, academics, and consumers. Those in product
service sectors, both, and neither were all well represented.

4.  Respondents put many different points and arguments. It is
to record all of them fully in a document this size, but they are
summarised at Annex C.

5.  The Government is very grateful to all respondents, and to all
who contributed to the consultation in other ways. It has a stronger
for reaching conclusions as a result. The rest of this document sets
these conclusions.

The Role of Patents

6.  Patents are a long-established means of encouraging innovation. A
patent confers on its holder a legal monopoly, for a limited period,
commercial exploitation of the patented invention. In return for the
monopoly the inventor must disclose his invention so that others may
utilise his knowledge.

7.  Patents evolved in manufacturing industry, to provide an incentive
innovate which would otherwise be weakened by the risk that inventions
which are expensive to develop would prove to be capable of being
copied by
rivals, who would not have borne the development costs. The prospect
of a
temporary monopoly restores the incentive to make investment and take
in inventing and developing new technical products and solutions, for
ultimate benefit of consumers.

8.  But patents also entail disadvantages. They impose a regulatory
on innovators who incur the costs of patenting, searching, avoiding
infringement, enforcement and management time spent on patent
considerations. This can be particularly serious for SMEs. In
addition, it
does not follow that because there are circumstances where patents
encourage innovation (and enhance consumer choice), they will
do so in all areas.

9.  This means it is important to limit the patent system to those
where the benefits will outweigh the disadvantages. It is the reason
to date, patents have been confined to technological inventions.
such as ways of playing games, scientific theories and artistic works
not been patentable. Nor have ways of doing business, or computer
as such that does not give rise to a 'technical effect'.

10.  It is these last two categories with which the rest of this
is concerned.


11.  There was no consensus among respondents on how far software
ought to
be patentable. Positions ranging from calls for a drastic reduction in
is patentable through to ending the rule that "software as such" is
patentable all found a measure of support. On two points, however,
was a significant measure of agreement: few respondents went as far as
suggest that software should be patentable even where there is no
effect, and none disputed the point - made by organisations in
particular -
that the current legal position is uncertain, and that this
uncertainty is

12.  Many respondents emphasised the advantages of 'Open Source'
and characterised patents as a threat. Some of these expressly called
fewer, or no, software patents. Others focused on the harm they felt
software patents would do, implying that their chief concern was a
extension of patentability. Many of the respondents who held these
were individuals, often working in software development within SMEs or
one-man bands, or in spare time.

13.  Responses from organisations were far more likely to note the
advantages of software patents, insisting that the availability of
at present is stimulating innovation. Frequently these responses made
proposals for amendments to the law which they presented in terms of
rationalising and clarifying the existing position.

14.  The diversity of views received is no doubt partly due to the
diversity of the software industry. In the provision of relatively
small-scale home and office software, barriers to entry are low and
are numerous SMEs, one-man bands and part-timers. At the other end of
scale are much larger software projects which require substantial
investment of capital, and are necessarily the province of quite large
firms, the biggest of which have annual Research and Development (R&D)
budgets running into hundreds of millions of pounds.

15.  The Government is sympathetic to many of the points made by those
concerned about the impact of patents. There is a vast amount of
software development taking place without patent protection at present
(though, like all software, it is protected by copyright against
copying). Much of it is being carried out by individuals and SMEs. To
extend patentability so that these developers have to divert time and
effort into making sure they are not infringing patents, and seeking
enforcing them, would impose a major burden. The necessary case for
believing that a significant extension of patentability would increase
innovation in this field simply has not been made. In fact, as many
respondents suggested, it could have the opposite effect.

16.  The Government does not, however, accept the view - asserted by
respondents - that Open Source software is threatened by the existing
extent of patentability. This seems to fly in the face of the facts,
notably that during the last decade Open Source software has

17.  Of course, the case for the current level of patentability must
that it is supporting innovation, and not merely that Open Source is
thriving alongside it. The activities of companies involved in
software projects - many of whom supported partentability - certainly
a closer resemblance to those areas of technological innovation where
patents have traditionally been available. In this part of the market
are fewer participants, and they tend to be powerful firms. Barriers
entry are higher. Patents are more likely to stimulate innovation
of the scale of the R&D, and may spur competition because they offer
would-be entrants one way of gaining a foothold.

18.  While there is not a direct fit between the requirement that
must involve technological innovation to be patentable, and larger
activity of this sort, it is true that much of this effort is directed
inventions which will meet the requirement. Moreover the investment is
predicated upon the availability of patents. It is an area of high
investment and rapid innovation, in which patents appear to be playing
their intended part. The Government does not want to change the rules
in a
way which participants would regard as substantially weakening their
incentive to innovate.

19.  The Government's conclusion is thus to reaffirm the principle
patents are for technological innovations. Software should not be
patentable where there is no technological innovation, and
innovations should not cease to be patentable merely because the
lies in software.

20.  However, the Government agrees with those respondents who said
that at
present the law is not clear enough, and that this is damaging.
Clarification is needed. This raises complex and technical questions,
the central difficulty can be expressed simply: how to define the
determining when software is, and is not, part of a technological
innovation, so that what is patentable will be clear in specific cases
future. The Government intends to take this matter up with its
partners in
the European Union and the European Patent Convention as a matter of

Ways of Doing Business

21.  There was a good deal more agreement among respondents about
methods. Virtually all opposed patents for business methods where no
computer is involved. The great majority also opposed patents for
computer-implemented business methods if there is no technological

22.  Business methods are of course as old as business itself. The
traditional arguments against patenting them are that innovations in
of doing business are not like new drugs or pesticides which require
costly R&D. The advantages of stealing a march on competitors, albeit
temporarily, are incentive enough to seek to develop them. Moreover
nature of business methods can lead to very wide patents - a patent
for a
particular sales method can affect all the sectors in which that sales
method might be useful.

23.  Most respondents did not feel that new technologies, above all
internet, have changed this argument. A minority of the organisations
disagreed. They felt that, as new technology has created new
some of which may involve considerable R&D cost to realise, then
should be available for computer-implemented business methods. But
thought that innovation is a feature of competition in business
(whether computer-implemented or not), as companies strive for
advantage. They argued that copying of business methods can spur new
intended to (re)gain advantage. Patents - ie monopolies - could reduce
innovation and consumer choice.

24.  There is no sign, at least to date, of a want of innovation in
computer-implemented business methods, and nor was there in the US
business methods became patentable in 1998. Intense innovation has
characterised this field. The Government's conclusion is that those
favour some form of patentability for business methods have not
the necessary evidence that it would be likely to increase innovation.
Unless and until that evidence is available, ways of doing business
remain unpatentable.

March 2001
Last updated 12 March 2001


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