India: Blockchain Services – Whether Patentable

Before discussing the status of patenting of blockchain services in India, let us first have a look at what blockchain services are - Blockchain services first came in existence with bitcoin, first decentralized digital currency released in 2009, which used it as a ledger for transactions related to the cryptocurrency or electronic cash. Blockchain is nothing but digital ledger of records which can be efficiently utilised for storing and maintaining any data relating to different fields of work. Each record is termed 'block' and is linked with cryptography i.e. encrypted in certain codes which are difficult to decode, thus ensuring data security. Also, addition of each record involves validation of cryptograph by the system, every time it is done. Since the system involves updating the records in all the systems running that software, it is practically impossible to corrupt or modify such system, without being noticed. Being decentralized in nature, such systems can easily be assessed and verified but cannot be modified. Therefore, services offered by such program are considered transparent, secure and incorruptible.

Blockchain services, although started with bitcoin, very soon caught the attention of other leading industries for storing and processing their data and making it available to the people. Not just hi-tech giants like IBM, Intel, Amazon and Walmart, but also Startups and MSMEs are seen adopting this technology in innovative ways by using them in applications that have the potential to simplify everyday tasks and activities1.

Owing to the popularity of this technique and Government's initiatives, India is also witnessing a similar trend of higher incidence of Start-up applications based on blockchain services. Government of Andhra Pradesh also approved its potential by dedicating a part of the FinTech Valley Vizag plan to the development and use of Blockchain in Banking and Finance related IT services and also for exploring Smart-contracts2.

Important sectors where it has been put to use or has potential to be used are Banking, Government Sector, Smart-Contracts, Land Registration, and also voting in Election/Polls (because of its anti-tampering capabilities)3. 2017 has proved to be a fundamental year, in application of blockchain technology in various e-services.

A plethora of successful and potential applications can be carried out using innovations in blockchain technology, few of which are mentioned below:

  • OpenBazaar uses blockchain to create a platform for peer-to-peer ecommerce to transact without paying transaction fees.
  • Governance – Blockchain technology can bring full transparency and accessibility to election results or any other kind of polls.
  • Boardroom - Blockchain application can enable efficient organizational decision-making
  • Supply chain auditing - Transparency in supply chain claims can be made with blockchain-based time-stamping of a date and location that corresponds to a product number. Example, UK-based Provenance offers such a facility to its users.
  • Google Docs - Where two or more users can simultaneously view, edit and validate a document, rather than sharing it back and forth on mail for the same purpose.

Currently, finance offers the highest potential for use for the Blockchain technology. Being highly secure, financial organizations are increasingly employing such systems. Financial institutions (FI) normally employ another institute or a third party to monitor their transactions; blockchain technology effectively cuts out such third-parties from FIs' transactions, thus, saving their resources and time. These organizations invest a lot to innovate blockchain services as per their system. Greater efforts are being put to patent their systems, such that they could secure their place in the market and their competitors could be kept at bay. Apparently, if such systems could be patented, it may bring competition among its various users, thus flourishing the service to the full extent.

Having discussed of blockchain services, its applications and innovations, lets now take a look at some sections of the Patents Act, 1970, related to the patentability of such systems in India. Section 2(1)(j) of this Act defines 'invention' as - 'Invention means a new product or process involving an inventive step and capable of industrial application'; where 'inventive step' as per section 2(1)(ja) means 'a feature of an invention that involves technical advancement 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) states that 'capable of industrial application', in relation to an invention, means that 'the invention is capable of being made or used in an industry'. Further, Section 3 of the Act, cover things which are not considered invention. "Blockchain services" which are primarily based on algorithms involving mathematical theory and/or computer programs may get considered as not an invention within the meaning of Patents Act as per Section 3(k). Also, according to the 'Guidelines for Examination of Computer Related Inventions (CRIs)', in addition to the tests of Novelty, Inventive Step, and Industrial Applicability, the applicants in case of CRIs also need to establish that the claims are not directed towards "a mathematical method", "business method", "algorithm" or "computer programme per se".4

For Blockchain technology, the exclusion of "computer pragramme per" is inter alia a major worry for the applicants. The said Guidelines particularly state exclusions such as:

  1. Claims directed at computer programmes/ set of instructions/ Routines and/or Sub-routines.
  2. Claims directed at "computer programme products" / "Storage Medium having instructions" / "Database" / "Computer Memory with instruction" stored in a computer readable medium.

    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 patent if they are inventions. However, the computer programmes as such are not intended to be granted patent. This amendment has been proposed to clarify the purpose."5

In view of the above provisions, it would not be out of place to say that the blockchain technology comprising primary features as explained above does not form a patentable subject matter under the Indian laws, unless the applicant is able to show technical advancement along with the hardware interaction in the claimed invention.

Footnotes

1. The rising ties between IP and blockchain. Available at: https://www.intepat.com/blog/intellectual-property/blockchain-ip-patent/

2. ibid

3. ibid

4. Pages 15-17 of Guidelines for Examination of Computer Related Inventions issued by Office of CGPDTM in 2017

5. Report of the Joint Committee presented to the Rajya Sabha on 19th December, 2001 and laid on the table of Lok Sabha on 19th December 2001

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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