Ex-Parte Patent Office proceedings in the matter of patent application number 131,733 filed by Mr. Eli Tamir (decision of the Israeli Patent Registrar, September 21, 2006)

This is one of the most important decisions of the current Israeli Patent Registrar, Dr. Meir Noam. The decision provides that, under Israeli law, business methods fall outside the scope of patentable subject matter. The decision also clarifies in which circumstances computer related inventions are patentable.

The invention for which patent was sought related to a method of promoting the sales of goods and/or services. Following an initial rejection by the examiner, who contended that business methods were not patentable, the applicant amended the application. The amended application related to a computerized system which was "useful in the promotion of sales of goods and/or services". Still, the examiner was not impressed by the semantic amendments and insisted that the heart of the invention was a business method, which was not patentable.

The Patent Registrar analyzes the historic changes in the Patent Act and then refers to the legal status surrounding the patentability of business methods around the world. The Registrar refers to the fact that UK law and European law (the European Patent Convention) both explicitly exclude business methods from the scope of patentable subject matter. The Registrar acknowledges that in the US, business methods have been recognized as patentable as patentable subject matter, following the famous case of State Street Bank & Trust Co. v. Signature Financial Group, Inc. However, the Registrar is of the opinion that the US law in this regard is an exception, which should not be adopted in Israel.

 When analyzing the text of the Israeli Patent Act, the Registrar comes to the conclusion that business methods fail to meet the requirement that the invention should originate from a technological field, since business methods belong to the social sciences. In support of this conclusion, the Registrar refers to the fact that one who applies to become a patent agent in Israel must possess an academic degree in one of a few technological fields indicated in the Act. Thus, an invention which does not originate from these technological fields cannot be patentable.

Finally, the Registrar goes on to examine the patentability of computer related inventions. First, the Registrar cites the old District Court Rosental case, in which the court denied patentability for computer related inventions. Then, he refers to the later District Court decision in the matter of United Technologies Corporation, in which the court decided that an invention which comprises of a computer program, that is an integral part of a physical system, can fall with the scope of patentable subject matter. The Registrar is of the opinion that, in this case, when the novelty and the "pith and marrow" of the invention lies in the business method part of the invention, and not in the computerized part of the invention (which serves for the sole purpose of transforming the invention to a more "physical" one), the invention is not patentable. Comparing this opinion to US case law, the Registrar practically accepts the Diamond v. Diehr paradigm which requires a dominant physical element, but not the broader State Street doctrine, which provides broad protection for computer related inventions that produce a useful result. The Registrar also specifically explains that in Israel, e-commerce business methods which rely solely on software code, do not comply with the requirement to become patentable subject matter.