The legal scenario regarding the patentability of software-related inventions has changed dramatically over the last few decades. In today's era, the protection of technology and technological developments cannot be guaranteed by looking backwards. Country's economic development and innovation depends largely upon the digital environment as it has become one of the promising areas of producing wealth and generating economy.

Economists consider patent protection as a trade-off between the need to encourage innovation and the necessary evil of allowing temporary monopoly to the innovator who invests his labor and time in the invention. Although the patentability of software is unsettled till date, no one can deny the relevance of software in today's world. There are some who argue that software is so fundamental that our society should not allow anyone to own it to the exclusion of others. Some are satisfied in treating software as copyrightable literature, affording protection only to its expressive, but not its functional aspects. Some argue strongly that the patent system which has existed since late eighteenth century is outdated and cannot handle this new technology and that some are different, sui generis, form of protection should be created for software technology. Others argue that the current patent system is working fine and that it will adapt to this new technology, just as it has done many times before.

In many countries, the patentability of software remains uncertain and often involves manipulation of the patent claims. Patenting inventions pertaining to novel industrial processes, installations, or equipment that incorporate computer technology has never been seriously questioned. But if the novelty resides solely in the computer programs, difficulties can be expected unless the claims are couched in proper terms. If the invention is pure software then the task of preparing a set of acceptable claims, while still providing the full measure of protection for the invention, becomes formidable, if not impossible. Yet some of the greatest inventions of our times reside in the field of computer software.

As the overwhelming development, majority of countries have established patent systems, there is universal recognition that a system is needed to support and foster innovations in industry. When innovations are quickly emulated, the incentives for R&D are substantially diminished. Particularly benefited by patents are industries where large capital is required, such as the biotechnology. However, also benefited are fields' innovations are easy to reverse engineer or replicate, and trade secret protection is difficult. Consequently, software industries have real need of such protection.

What the World is doing

Most of the jurisprudence relating to software patents has originated from U.S., which is considered as the cradle of software patents. Beginning with the landmark decision of US Supreme Court in Diamond v. Diehr,1 in which the Court ordered the Patent office to grant a patent for an invention even though it involved the utilization of computer software, the US Supreme Court has traveled a long distance with regard to software patents.

Considering the position in the European Union, it is evident that software is patentable in EU, provided they make a technical effect. Though the European Parliament rejected the Computer Implemented Inventions Directive in July 2005, the position with regard to software patenting remains more or less the same in EU member states.2

U.S. Court recognition to software patents created a substantial divide in international patent law. Without regard to pragmatic considerations, U.S. courts so far have seen no reason under law to constrain the recognition of software patents. By contrast, Europe and Japan have both attempted to limit the negative social welfare implications of expanding patent recognition by legislatively prohibiting non-computer-implemented business method patents and imposing limitations on the patentability of software. The broad recognition of the patentability of all types of business methods by U.S. courts, including the recognition of non-technical or non-computer-implemented business methods, is the source of significant social welfare losses in the U.S., Europe and Japan's attempts to draw a line between high and low quality business method and software innovations better balance the need to stimulate innovation while preventing unnecessary anti-competitive or overly broad patent recognition. Furthermore, the lack of consistency and harmony among members of the Trilateral Patent System due to the U.S. recognition of business methods increase the costs of engaging in international business. After reviewing the current state of business method and patent system internationally, we conclude that the requirement of an inventive step found in Europe is superior to the U.S. approach. Although commentators have criticized the European approach for being opaque, the approach does a superior job of distinguishing between innovative and non-innovative-computer-implemented inventions. The U.S. approach does not promote efficiently and is extremely costly from social-welfare perspective. For these reasons, Europe and Japan are unlikely to follow U.S. lead in the treatment of business method and software patents.

While the European and Japanese approaches are not optimal, they come much closer to achieving optimality than does the U.S. approach. Therefore, it follows that the best possibility for international harmonization of business method and software patent law rests on reforming the U.S. Patent system in order to bring it into alignment with European Patent law. The U.S. adoption of an inventive step requirement for computer-implemented business method and software innovations and the creation of sui generis protection for non-computer-implemented business method would promote international harmonization while significantly increasing the efficiency of U.S. business method and software patent law. Less dramatic changes would also add to the efficiency of U.S. Patent law in this area. Strict enforcement of enablement and best mode disclosure requirements would reduce ambiguity and limit opportunistic behavior. Finally, creating a post grant third party opposition process would add an important error correcting mechanism that has proven effective in Europe and Japan. The reforms would significantly enhance the efficiency of U.S. business method and software patent law while achieving a higher level of international patent law harmonization.3

Indian Position

India is well known for its software industry which has grown incredibly in a short span of time. Today in the era of globalization, many top Multi-National Companies either do business in India or have research centers for promoting knowledge exchange and bringing in valuable foreign knowledge. Though India has done well in harmonizing patent law but software patent protection is weak and hence, there is a need for strong patent protection. But the drawbacks software patents should be considered carefully. Software Patents do not encourage innovation; rather they lock up key innovations and encourage large corporation monopoly. The Indian Government should seriously think about what its position on software patents should be. India could maintain the status quo; or could allow patents with strong safeguards against frivolous patent claims, and possibly with a greatly shortened life span.

Still, an invention shall not become unpatentable in India merely because it was implemented with software. Like the EU countries, in India also the gaining of patent protection for software depends more on the drafting skills of the Patent Engineer. If the claims are drafted in such a way as to reflect that the invention is not software per se, it shall qualify for patent protection.

In 2008, the Patent Office published a new 'Draft Manual of Patent Practice and Procedure' in which certain method claims for software inventions were allowed to be patented. This Draft, however was withdrawn from circulation, with Shri N.N. Prasad (then Joint Secretary of DIPP, the department administering the Patent Office) noting that the parts of the Manual on sections 3(d) and 3(k) had created a lot controversy, and were ultra vires the scope of the Manual, which in anyway could not override the Patent Act. The Draft Manual relied heavily on the interpretation of U.K. courts in regard to the patentability of software.

In India we still need to wait for the new guidelines by the patent office in regard to Software inventions as the earlier guidelines were opposed by software industries and the legislators. The present Patent Act by using the term 'Computer per se' has open way for software patent to some extent. The law still has to develop in this regard. India should catch up with the world in matters relating to software patents to avoid any back log as it suffered in many other cases. We can only wait and hope for a dramatic turn in this particular field.


1 450 U.S. 175 (1981), Diamond v. Diehr

2 Eloise Gratton, Should Patent Protection be Considered for Computer Software-Related Inventions;

3 Duncan M. Davidson, The Future Of Software Protection: Common Law & Uncommon Software;

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