(C) Prior Art Effect

250 As noted, patents are granted only to inventions that are novel, involve an inventive step and are useful or industrially applicable. To determine if the requirements of novelty and inventive step are met, the claimed invention is compared with the existing state of the art. The existing state of the art is sometimes referred to as the ‘prior art.’ Prior art in electronic form, which exists in cyberspace only (‘cyber art’), raises questions as to its availability as ‘prior art’ and, thus, whether it can be applied against an invention for which a patent is sought in determining novelty or inventive step. The questions include whether that kind of information has become ‘prior art’ even if it was disclosed on the Internet for only a limited period.

251 Although similar questions have been addressed with respect to prior art published on paper, publication on the Internet may have different implications. Authenticity, veracity and integrity are the critical issues for prior art in cyberspace, since cyber art is considered to be more vulnerable to alteration and modification. The determination of the timing of the disclosure and the accessibility of the cyber art to the public, given the network’s capacity for instantaneous dissemination on the international scale, are other concerns. Furthermore, national laws may extend the concept of the prior art to include prior uses. Under such national laws, the concept of ‘use’ may be revisited in a computer environment. In addition, the above‑mentioned questions are applicable in the context of a grace period for public disclosure of an invention before filing a patent application.³⁷⁵ WIPO conducted a survey of its Member States concerning, among other issues, disclosure of information on the Internet, focusing on current national approaches and the need for harmonization at an international level, and the summary of its results is available online.³⁷⁶

(D) Enforcement of Rights

252 As in other fields of intellectual property, jurisdictional questions and enforcement of rights are also relevant to patent protection. The Internet raises complex issues in this regard, as patent protection is provided on a country-by-country basis, and the patent law of each country has application only within its borders, in accordance with the traditional principles of territoriality. For example, where patented software is sold and delivered over the Internet internationally, any infringement action would require a consideration of the jurisdictional and choice of law issues. Private international law issues in the field of patents are discussed in Chapter IV below. Moreover, the first practical issue may be that of detection, since the unauthorized importation of such software by means of the Internet, unlike the importation of tangible goods, cannot be detected and stopped by customs authorities.

253 One of the questions particular to patent protection may be the case where a patented product invention consists of elements that are physically located in different territories. Or, for example, in the case of process patents for a method to process and transfer certain data using computerized networks (for example, the Internet), distinct elements in the claimed process could be performed in different territories. If an alleged infringer operates a system containing all of the claimed elements within the territory in which the invention is protected, there would be a straightforward claim for infringement. However, the questions of infringement and jurisdiction would be more difficult where a patented invention involves activities in several countries by several individuals. In particular, Article 28 of the TRIPS Agreement requires that a patent confer on its owner the right to prevent others from ‘using’ the patented product or process. What constitutes ‘using’ a patented product or process is increasingly complicated in the case of Internet-related e-commerce patents.

254 This question may be examined in the context of the abovementioned case, State Street Bank & Trust v. Signature Financial Group³⁷⁷, where the Court of Appeals held that the patent involved patentable subject matter. The patent Claim 1 in that case provides as follows:

“A data processing system for managing a financial services configuration of a portfolio established as a partnership, each partner being one of a plurality of funds, comprising:

- computer processor means for processing data;

- storage means for storing data on a storage medium;

(i) means for initializing the storage medium;

(ii) second means for processing data regarding assets in the portfolio and each of the funds from a previous day and data regarding increases or decreases in each of the funds, assets and for allocating the percentage share that each fund holds in the portfolio;

(iii) means for processing data regarding daily incremental income, expenses, and net realized gain or loss for the portfolio and for allocating such data among each fund;

(iv) means for processing data regarding daily net unrealized gain or loss for the portfolio and for allocating such data among each fund; and

(v) means for processing data regarding aggregate year-end income, expenses, and capital gain or loss for the portfolio and each of the funds.”

Each of the recited “means” in Claim 1 of the patent corresponds to a physical structure that could be located at sites remote from the other “means.” Indeed, the various “means” could be located in different countries. Given this situation, it may not be clear in which jurisdiction the accused infringer is actually “using” the patented invention. Although such questions remain largely hypothetical for the moment, real cases can be anticipated to follow. Thus, increasing consideration must be given to these questions in future to ensure that rightsholders and tribunals are well prepared.