The Impact of Institutional Design on the Development of Patent Law Patentability of Computer Programs and Business Methods in Europe and the United States of America as a Topical Example

While there has been a long and vivid debate about the necessity and desirability of the formation of a pan-European patent system with a centralized patent court, this debate has so far generally focused on Europe alone. However, it seems worthwhile to contribute to this debate by taking a look outside of Europe. In the United States of America, the centralized court for patent appeals, i.e. the Court of Appeals for the Federal Circuit (CAFC), was established almost three decades ago. The foundation and the work of the CAFC have led to an intense and ongoing debate in the U.S. about advantages and drawbacks of a centralized patent court which has generated extensive scholarly work on this topic. Several studies have shown the impact a change in institutional design may have on the development of patent law. This article seeks to introduce the findings of U.S. literature into the European debate and to draw conclusions from these findings with regard to the advantages and disadvantages of the establishment of a centralized patent system in Europe and its institutional design. In fact, the basic assumption underlying this attempt is that institutional design, and namely the degree of centralization of a patent court system, influence the quality of patent case law produced by such system. The development of patent law in the field of software and business methods in the U.S. and in Europe seems especially well suited to serve as a topical example. The development in this field of patent law in the U.S. since the formation of the CAFC in 1982 will clearly show the advantages and drawbacks of a centralized system of patent enforcement. At the same time, a comparison to the development of these issues in European patent law will show that the fundamentally different institutional framework has played an important role for the somewhat different development of this field of patent law in Europe. Indeed, it has led to a (sometimes unsystematic and not always linear) development of a system of »checks and balances« in case law, i.e. of wavering split decisions by the EPO Boards of Appeal and national courts in different jurisdictions which eventually has made this area of patent law fairly uniform among the Member States even without one centralized entity in charge of patent protection and enforcement. The main difference, however, is that in this development towards reasonably uniform standards, extreme solutions could never sustain and govern the issue of patentability of computer programs throughout Europe. Therefore, the problem of belated correction of doubtful and 'frozen' case law, framing the standards of patentability throughout Europe for a considerable time, does not really exist in the present European system. Finally, the results of the comparative assessment are put into the overarching context of the question which lesson Europe can learn from the creation, institutional design and performance of the CAFC regarding the necessity and appropriate institutional design of a future centralized European patent litigation system.