Murky waters: software innovations and business methods in India
The software industry has been one of the most promising sectors of the global economy. Many software companies come up with creative business models in their endeavour to grow. In recent years, it has been observed that software companies ardently seek intellectual property protection as part of their business strategies to build on their assets.
In India, software and computer programs are protected under the Indian Copyright Act 1957. Patent protection in India is governed by the Indian Patents Act 1970. Indian software companies such as Infosys, TCS, Wipro and many multinational companies have been proactive in filing patent applications for their innovations in India.
This is evident from the annual report of 2010–2011 published by the Indian Patent Office, which indicates that in the year 2010–2011, around 219 applications were filed in the field of bioinformatics and 9,594 applications in the field of computer science/electronics, which is an increase of 12.6 percent over the previous year. In the same year, 892 patents were granted in the field of computer science/electronics.
The grant of software patents is a debatable subject matter under the Indian patent regime. The Indian Patent Act, 1970 under Section 3(k) provides that “a mathematical or business method or a computer program per se or algorithm” is non-patentable, which raises the questions of what is actually patentable under the act.
It has been observed that Section 3(m), which provides that “a mere scheme or rule or method of performing a mental act” is non-patentable, is also cited for software innovations that do not involve hardware limitations.
It is interesting to explore the possibility or probability of obtaining patent protection for software innovations in India. The manual of patent office practice, published in 2011, specifies that the claims directed at computer program products are computer programs per se stored in a computer readable medium and as such, are not allowable. From the draft manual published by the Indian Patent Office in 2008, it is a common understanding that methods implemented by software that lack technical character and methods with a technical character but lacking hardware limitations in the specification are not patentable.
As per the guidelines of the draft manual, the method claim should clearly define the steps involved in carrying out the invention. It should have a technical character—in other words, it should solve a technical problem. The claim orienting towards a ‘process/method’ should contain a hardware or machine limitation. In view of these guidelines it would be safe to interpret that software in conjunction with a specific hardware or a device or apparatus, which results in a substantial technical effect, may be patentable.
The recent prosecution trend based on the Controller’s decisions throws light on a few interesting facts. In some of these decisions, a number of patent applications that were initially objected to under Section 3(k) for innovations involving software or algorithms, eventually obtained a grant. In a case decided in May 2012, the Controller had objected that the claims of the invention fell within the scope of Section 3(k), because it relates to a computer program. Therefore, the invention claimed in these claims was not patentable.
The argument presented in the case was that the invention claims a method for a process containing various steps being performed by the structural components for fetching an instruction from the memory for execution in a processor.
It was argued that the method claims do not claim the software to perform said steps and hence the subject matter of the method claims cannot be said to be a computer program per se. The case was granted in acceptance of this argument. In view of such decisions, it would be safe to say that the presence of substantial technical effect and hardware limitations in the claims may help overcome such objections.
Business methods
Section 3(k) also provides that business methods are non-patentable. Business method patents are scrutinised more than software innovations. This is reflected in the notable pre-grant opposition involving Yahoo Inc and Rediff.com. In this case, the IP Appellate Board (IPAB) held that business method patents are not an appropriate subject matter in India. The case involved a patent application, dated May 14, 2004, filed by Overture Services Inc of the US for a business method.
Yahoo acquired Overture in 2003. The application was examined and claims were objected to under Section 3(k), but the applicant successfully overcame the objections in the examination proceedings. The applicant was informed on June 9, 2006 that the application was found to be in order for grant, but only after disposal of any pre-grant opposition. On April 20, 2007 the application was published. Rediff filed a pre-grant opposition on October 27, 2007.
Meanwhile, Yahoo Inc informed the patent office that it had taken over the original applicant. Yahoo Inc was informed that the application did not pass the patentability test and was therefore rejected.
Yahoo Inc filed an appeal with the IPAB against the Controller’s decision, arguing, among other things, that many such patents had been granted to Google.
The IPAB in its decision dated December 8, 2011 dismissed the appeal, stating that “There are huge innovations in the computers themselves, but the invention claimed is not for the machine but for the method. From whichever point of time we look at it, it still looks to be a business method.”
As we look ahead to the future of software in India, it is evident that with the growing competition in the Indian market an apposite IP protection for the software technologies is a must.
Patents involving software innovations are difficult to interpret on most occasions, but in the present scenario when companies find different ways to obtain protection for their software, an indolent approach by others may prove to be adverse for their growth.
The progress for protecting IP in software in India has been slow. Nevertheless, careful strategy, adequate understanding of appropriate IP protection and proactively protecting one’s IP continue to be necessary factors to derive economic value from software innovations.
Shivendra Singh is a patent agent and associate with Krishna and Saurastri Associates. He can be contacted at: shivendra@krishnaandsaurastri.com
