IP Insights: Patent strategies for SaaS inventions (2023)

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Hello everyone. Today, we would like to take a closer look at patent strategies for a very important technology - “software as a service”. Nikolaus, what is “software as a service”, and why is it so important?
“Software as a service“ relates to software that is centrally hosted, for example in a cloud environment, and is then licensed to the customer on a subscription basis.
A typical example is Office software that can be accessed via the cloud. But there are also more complex products on the market such industrial automation software, where operation of a whole factory can be remotely controlled from the cloud.
Let’s look at the example of the manufacturing plant more closely. The plant may have a variety of 5G controlled robots or smart programmable logic controllers (PLCs). While the plant with all the robots and the PLCs may be located within Germany, the software may not, and may be located outside Germany, or maybe even outside the European Union.
If you are in the business of developing such a cloud-based software, you may face the question of how to best protect your software.
In this field of cloud-run software, you typically look at claims that are either method claims for a data-processing method, system claims for the data-processing system, or individual claims directed to data-processing devices, or the computer program.
Thinking from the perspective of enforcement: method claims may actually be more valuable than product claims. The reason is that - in contrast to the hardware, which is “transferrable” across borders - the effect of a method claim usually occurs where the site is actually located. And this may be in Germany where your patent is in force.
But before we go into more details of enforcement, I think, we should first discuss how a claim should be drafted so we can take the hurdle of patentability, and at the same time ensure that the scope of the claim has also a practical impact for enforcement.
Right, Nikolaus, let’s look at patentability first. As regards patentability, the most important decision in this field remains the decision G 1/19 of the Enlarged Board of Appeal of the EPO. In this decision it was found - building upon earlier case law - that in order for a claim to take the patentability hurdle, the claim must produce a sufficient technical effect.
In the field we are discussing, the industrially controlled robots, such a technical effect may, for example, reside in input or output operations, where you have a real interaction with physical reality.
Precisely, and interestingly, this case law is already included in the current version of the Examination Guidelines of the European Patent Office, thus a patent claim directed at a “Software as a service”-invention should include such a link to physical reality, for example via using the generated data for controlling the industrial automation robot in the factory.
And even more: This link does not only help to overcome the patentability hurdle, it also helps on the enforcement side later. German case law typically looks at economic aspects when judging whether a method claim, that is partially reproduced abroad, is infringed in Germany.
We have seen such a case for an eye testing method that could be performed from home via the Internet. In this case, essential steps were executed abroad, but the final eyeglass prescription was sent back to the customer in Germany, and infringement was confirmed for Germany.
A corresponding logic may also apply where a configuration of an industrial robot is optimized abroad, and the final configuration is then sent to the factory that is located in Germany. So, the software provider abroad might still be liable for patent infringement in Germany.
For example, German case law has accepted that an operator running a software that gathers data within Germany, sends the data abroad to produce a certain result may infringe the patent in Germany, if the commercial use of the result occurs within Germany.
Right. And there is a further concept we should consider when discussing how to best enforce claims in the area of software as a service: This relates to the derived product protection as codified in Art. 64 (2) of the European Patent Convention. German cases have recognized that this derived product protection may also be applicable to data. In a particular case, for data generated by a method for encoding video.
Consequently, a strong argument can be made that if the cloud-based software produces data that are fed back to the robot, the derived product protection applies.
In this context, it will also be interesting to see how the UPC will decide on this issue. In any event, the derived product protection is also codified in Art. 25 c) UPCA, so that the UPC might follow this approach.