India: Software Patenting In India And USA

By Siddharth Dalmia, B.Tech
LL.B. 1st year (3-year LL.B. course)
Jindal Global Law School
O.P. Jindal Global University, Haryana, India
Mobile No. +919971799250
Email: dalmiasiddharth1994@gmail.com

The (Indian) Patents Act, 1970 ( hereinafter referred as "Patents Act" / "Act") as amended up to date defines the word 'invention' under section 2(i)(j) as a new product or process involving an inventive step and capable of industrial application. As per section 2(1)(ja) of the Act, "inventive step" means a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art.

Further, section 2(1)(ac) of the Act states that "capable of industrial application", in relation to an invention, means that the invention is capable of being made or used in industry.

Section 2 (1) (l) defines "new invention" in The Indian Patents Act, 1970 as follows:

"New invention" means any invention or technology which has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of patent application with complete specification, i.e. the subject matter has not fallen in public domain or that it does not form part of the state of the art;1

In this paper, we would be discussing the various case laws which have determined the conditions for patentability of software in Indian subcontinent and USA.

So, what is software patent? It is a patent on any performance of a computer realized by means of a computer program. India was the first country in the world to provide statutory protection to the software through the Copyright Act, but from then, the journey has been quite slow as in this era of internet, there is a need for more protection to the software, and we are still an old-school regarding the same. The effect of 'Make in India Campaign, hackathons, software innovations and the youth participation is severely mitigated as India is not able to provide protection, software deserves. About 60% of all make in India is happening through the software. IBM registered 8088 patents in a year, and 30% of which were filed in the name of Indian inventors. The need of the hour is dire and extreme to recognize the software not merely a literary work but as something which is invented on a routine basis.

The Patents (Amendment) Act, 2002 also introduced explicit exclusions from patentability under section 3 for Computer-Related Inventions (CRIs) as under:

  1. a mathematical or business method or a computer programme per se or algorithms;
  2. a literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever including cinematographic works and television productions;
  3. a mere scheme or rule or method of performing mental act or method of playing game;
  4. a presentation of information;
  5. the topography of integrated circuits.

The legislative intent to attach suffix "per se" to computer programme is evident by the following view expressed by the Joint Parliamentary Committee while introducing Patents (Amendments) Act, 2002:

"In the new proposed clause (k) the words ''per se" have been inserted. This change has been proposed because sometimes the computer programme may include certain other things, ancillary thereto or developed thereon. The intention here is not to reject them for grant of the patent if they are inventions. However, the computer programmes as such are not intended to be granted a patent. This amendment has been proposed to clarify the purpose."2

Supreme Court of India on inventive step:

IN Biswanath Prasad Radhey Shyam vs. Hindustan Metal Industries Ltd3, it was held as under:

The statutory provision "does not involve any inventive step", which is provided in 26(1) of the patent act and the word 'obvious' has become very significant under the patent law. Therefore, the 'obviousness' has to be very strictly and objectively judged. The one suggested by Salmond L. J. in Rado v. John Tye & Son Ltd.4 is apposite. It is: "Whether the alleged discovery lies so much out of the Track of what was known before as not naturally to suggest itself to a person thinking on the subject, it must not be the obvious or natural suggestion of what was previously known."

"Another test of whether a document is a publication which would negative existence of novelty or an "inventive step" is suggested, as under:"Had the document been placed in the hands of a competent craftsman (or engineer as distinguished from a mere artisan), endowed with the common general knowledge at the 'priority date', who was faced with the problem solved by the patentee but without knowledge of the patented invention, would he have said, "this gives me what I want?" (Encyclopaedia Britannica; ibid). To put it in another form: "Was it for practical purposes obvious to a skilled worker, in the field concerned, in the state of knowledge existing at the date of the patent to be found in the literature then available to him, that he would or should make the invention the subject of the claim concerned ?"5

In the case of F.Hoffman la Roche v Cipla6 it has been held as under:

"From the bare reading of the afore-quoted observations of Supreme Court, it is manifest that the Hon'ble Supreme Court has laid down the test for the purposes of ascertaining as to what constitutes an inventive step which is to be seen from the standpoint of technological advancement as well as obviousness to a person who is skilled in the art. It is to be emphasized that what is required to be seen is that the invention should not be obvious to the person skilled in art. These are exactly the wordings of New Patents Act, 2005 u/s Section 2(ja) as seen above. Therefore, the same cannot be read to mean that there has to exist other qualities in the said person like unimaginary nature of the person or any other kind of person having distinct qualities........ Normal and grammatical meaning of the said person who is skilled in art would presuppose that the said person would have the knowledge and the skill in the said field of art and will not be unknown to a particular field of art and it is from that angle one has to see that if the said document which is prior patent if placed in the hands of the said person skilled in art whether he will be able to work upon the same in the workshop and achieve the desired result leading to patent which is under challenge. If the answer comes in affirmative, then certainly the said invention under challenge is anticipated by the prior art or in other words, obvious to the person skilled in the art as a mere workshop result and otherwise, it is not. The said view propounded by Hon'ble Supreme Court in Biswanath Prasad (supra) holds the field till date and has been followed from time to time by this Court till recently without any variance..... Therefore, it is proper and legally warranted to apply the same very test for testing the patent; be it any kind of patent. It would be improper to import any further doctrinal approach by making the test modified or qualified what has been laid down by the Hon'ble Supreme Court in of Biswanath Prasad (supra)."

The test for obviousness is that it shall be judged strictly and objectively.7 In order to determine the inventive step, it is impertinent that the invention must be looked as a whole. Hence, it ought to be such that the inventive step is a feature which is not excluded subject in itself. If allowed, the patentee on the grounds of economic significance or technological advancement would be granted patents in all the cases. Therefore, this technical advance comparison should be done with the subject matter of invention and it should be found it is not related to any of the excluded subjects.

8Accordingly, CSIR came up with the following points needed to be objectively judged to ascertain whether, looking at the invention as a whole, the invention does have inventive step or not:

  1. Identify the "person skilled in the art", i.e competent craftsman or engineer as distinguished from a mere artisan;
  2. Identify the relevant common general knowledge of that person at the priority date;
  3. Identify the inventive concept of the claim in question or if that cannot readily be done, construe it;
  4. Identify what, if any, differences exist between the matter cited as forming part of the "state of the art" and the inventive concept of the claim or the claim as construed;
  5. Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of inventive ingenuity?9

But we are not a civil law country where we get into parliamentary debates and neither the judges are bound by them. It is on the discretion of the judges to interpret the statutes and and how they choose to do that. In a nutshell, USA, post 2014 recognizes the software patentability but India only recognizes software patentability only if it is somehow linked to some hardware or computer network.

Potential industrial applicability or the application are the inherent requirements for the grant of the patents. In short, invention must have some practical industrial application, which has been defined in section 2(1)(ac) of Indian Patents Act, 1970 as follows:

"capable of industrial application", in relation to an invention, means that the invention is capable of being made or used in an industry;

"The requirement of workability and usefulness are both connected to the requirement of industrial applicability. If an invention is not workable, it means that it is also not industrially applicable. The patent specification must disclose a practical application and industrial use for the claimed invention wherein a concrete benefit must be derivable directly from the description coupled with common general knowledge. Mere speculative use or vague and speculative indication of the possible objective will not suffice." 10,11

Indian case laws:

There have been several cases in India regarding the software patent cases, and the issues relating to the patents have been discussed in the same. Some of the most important case laws are as under:

Electronic Navigation Research Institute Vs. Controller General of Patents12:

This case was in relation with the patent application number 3624/DELNP/2005 for the invention titled "A CHAOS THEORETICAL EXPONENT VALUE CALCULATION SYSTEM" in which the application was denied by the patent office on the ground that the proposed system fell under the category of mathematical formulae even if it resulted in technical effects. The invention claimed a mathematical method to determine and evaluate the time signals.

Yahoo v Controller of Patents & Rediffcom India Limited13:

In this case, section 3(k) was discussed in great detail, and the patent application was rejected owing to a business model being embodied via technology. It was implied that the business model disguised as technological innovations would not meet the criteria for the patents being granted in India.

In the case of Yahoo, the patent claims included features of a software tool targeting search terms relevant to Yahoo's business. Accordingly, the IPAB concluded that the technical advance proposed by Yahoo was simply a method of doing business, even if it was a technically smarter way of doing business and, therefore, cannot be patented in accordance with provisions of Section 3(k) of the patents act.

Accenture global service GMBH vs. the assistant controller of Patents & Designs14:

This case relates to Indian patent application number 1398/DELNP/2003, which is now a granted patent as patent number 256171.This patent application was initially refused for patent registration by patent office under the provisions of Section 3(k) of the Indian patents act.

However, the patent applicant appealed before the IPAB, and as per the Controller's decision, it was held that the instant invention as claimed is not software per se but, a system is claimed which is having the improvement in web services and software. Accordingly, it was held that the invention since not falling into the category of section 3(K), viz software per se, corresponding objection was waived and the patent was granted.

Enercon India Limited v. Aloys Wobben, Germany15:

In this particular case, an invention was presented which had the automated steps for controlling the wind turbine which depended on the external conditions by the use of computer system. The board decided that it was not merely a computer software per se or a set of rules or procedure like algorithms and thus its patentability cannot be objected to.16 The patent application was granted.

Case Laws in USA:

First software patent was granted to Martin Goetz and British Petroleum Company in the US and the world. Diamond v. Diehr17 defined the case laws, and IT patents took a nebulous form where it was held the execution of the physical process by running a computer program did not preclude the patentability.

Cuno Engineering v. Automatic Devices18:

Flash of a genius test- A patent eligible device or process:

  • The new device, however useful must reveal the creativity and not just the calling.
  • The new invention cannot be the mere 'tinkering'.
  • It led to the birth of Inventive step/ Nonobviousness.

Gottschalk v. Benson 19:

This case determined that a mere algorithm to convert binary-coded decimal (BCD) into a pure binary number without any practical/ industrial application cannot be patented. The patent for this algorithm was not granted.

Machine or Transformation test: a patent can be granted if-

  • It is tied to some apparatus or machine.
  • Transform an article into a different thing or state.

Parker v. Flook 20:

Updating a numerical value (counter/ alarm limit) which is used in the chemical process of hydrocarbon conversion. A mathematical formula which was previously unknown needed to be used and solved. But updating counter value did not have the application to this process as such, and the mathematical formula could not be wholly preempted. The effective change was in a state of non- physical thing. Therefore, the patent was denied.

Diamond v. Diehr 21:

In this particular application, a method of operating a rubber molding press with the help of digital computer and software using an unknown mathematical equation, i.e., ln v=cz +x. The patent was not granted for the equation, but it was granted for the process as it affected the change in physical state of things.

KSR v. Teleflex 22:

TSM test: To be patent eligible, three criteria need to be considered.

  1. Teaching
  2. Suggestion
  3. Motivation

If in the known knowledge/ existing documents/ prior art the answer to the above three questions is a no, then the process/ invention is eligible to get patented.

Alice Corp. V. CLS bank 23:

It was a hedging software which could be used in financial trading systems and could reduce counterparty and settlement risk. It involved the use of third party or an escrow. The judges decided even though it would take an infinitesimal amount of time, this process could be carried out manually in the pre-internet era. Hence, the element of novelty was missing in the invention, and therefore it could not be patented.

Smartflash v. Apple 24:

The idea behind the alleged invention was such that data would be taken from the supplier to a carrier after determining the cost/ payment to provide access to the relevant content. This process was novel and could not have existed in the pre-internet era. As such, the patent was granted.

Supreme court of USA, hence determined a two-part test for determining if the patent could be granted:

  1. determine whether the claims at issue are directed to one of those patent-ineligible concepts (judicial exceptions), and
  2. search for the 'inventive concept'- i.e., "an element or combination of elements that is "sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.25

In the above case following JUDICIAL EXCEPTIONS were carved out:

  • laws of nature/natural principles,
  • natural phenomena; and / or
  • natural products.

DDR Holdings, LLC v. HOTELS.com 26:

The patent was filed to execute and assist financial-trading systems resulting in the reduction of settlement and counterparty risks.

  • They do not cite or ask for patenting any mathematical algorithm or idea. Neither do they recite any business practice or longstanding commercial practice.
  • The issue was of a novel process which would be used to interact with internet to get the desired result.

The implementation of the idea was beyond the "routine", "conventional" and "generic" and hence the patent was granted.

Ultramercial, Inc v. Hulu, LLC 27:

The patent was regarding the interactive advertisements which made the access to the premium content to be available. So, basically, the patents were using these advertisements as a form of currency. The effect for the same was intangible, and hence patent was not granted.

DDR Holdings, LLC v. HOTELS.com 28:

The uniform way to represent the website/ pages in a user-friendly format. For example, every website used to have the format of its own, but after the makemytrip.com paved its way in the market, everything became uniform and generalized. The new page was hybrid that merged the relevant content in a user-friendly manner.

The effects were tangible in nature as the content was build and made into a new format, and therefore the patent was granted.

Merits and demerits of software patents:

Merits Demerits
Patenting of software protect the idea and the same can be used only subject to the permission/license from the patentee. The software may be protected through other forms of statutory provisions like Copyrights as it may be considered as literary work, as and maintaining patent is a costly proposition.
Patent will protect the inventor against the copier as against copyright which would only protect the literary work and not the logic itself. The innovations which would depend on the previous work of concepts would be halted, and the development of the technology would be retarded and hindered.
New incentives ranging from royalty to licensing fee would be there. Short cycles of the software would render the patent useless by becoming outdated and/ or obsolete.
It will stimulate and incentivize the innovation making more people get into this regime. Long-term protection would drastically hinder the growth.
Bargaining capacities of the companies improved. 29It would lead to the rise in bad patents and burden on the resources of Patent offices.

Conclusion:

Only because the software is a code, doesn't mean it should not be patented as today's era is that of the internet which is again based on the code. To save the technological innovations and promote it, it is imperative that even the codes should be patented. Even though India was the first nation to provide statutory protection to the software, it has lagged behind in the area of software patenting, whereas the USA has realized its importance. Even though there are several demerits of the idea but the merits far outweigh the demerits. It has become the need of the hour to evolve our laws so that we may promote the technological advancements in the country.

Footnotes

1. Guidelines for Examination of Computer Related Inventions (CRIs). (2017). Office of the Controller General of Patents, Designs and Trade marks.

2. Guidelines for Examination of Computer Related Inventions (CRIs). (2017). Office of the Controller General of Patents, Designs and Trade marks.

3. Biswanath Prasad Radhey Shyam vs Hindustan Metal Industries Ltd (AIR 1982 SC 1444)

4. Salmond L.J. in Rado v. John Tye & Son Ltd., 4 (1967) RPC 297

5. Biswanath Prasad Radhey Shyam vs Hindustan Metal Industries Ltd (AIR 1982 SC 1444)

6. 7 F. Hoffmann-La Roche Ltd vs Cipla Ltd., Mumbai Central, ... on 7 September, 2012

7. Biswanath Prasad Radhey Shyam vs Hindustan Metal Industries Ltd (AIR 1982 SC 1444)

8. IPAB in Yahoo Inc. (Formerly Overture Service Inc.) v. Assistant Controller of Patents and Designs & Rediff.com India Limited (OA/22/2010/PT/CH dated 8th December, 2011)

9. Guidelines for Examination of Computer Related Inventions (CRIs). (2017). Office of the Controller General of Patents, Designs and Trade marks.

10. Guidelines for Examination of Computer Related Inventions (CRIs). (2017). Office of the Controller General of Patents, Designs and Trade marks.

11. Guidelines for Examination of Computer Related Inventions (CRIs). (2017). Office of the Controller General of Patents, Designs and Trade marks.

12. IPAB, OA/26/2009/PT/DEL, 5th July, 2013

13. IPAB, OA/22/2010/PT/CH, 8th December 2011

14. IPAB, OA/22/2009/PT/DEL, 28th December, 2012

15. Appellate Board DELHI BENCH 12 June 2013 ORA/08/2009/PT/CH

16. M.P. Nos. 8/2010 and 59/2010 in ORA NO. 20/2009/PT/CH

17. Diamond v. Diehr, 450 U.S. 175

18. Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84 (1941) 1

19. Gottschalk v. Benson, 409 U.S. 63

20. Parker v. Flook, 437 U.S. 584

21. Diamond v. Diehr, 450 U.S. 175

22. KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398

23. Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014)

24. Appeal from the United States District Court for the Eastern District of Texas in No. 6:13-cv-00447-JRG, Judge J. Rodney Gilstrap.

25. http://www.inkidee.com/

26. DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014)

27. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, No. 2010-1544

28. DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014)

29. Journal of Intellectual Property rights, Vol 20, July 2015, pp 210-222

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Advocates, 1st & 11th Floors, Mohan Dev Building 13, Tolstoy Marg New Delhi-110001 (India).

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