Patenting Business methods and software solutions in India

Earlier this year, the Delhi High Court decided on a case on the patentability of software and business methods. This decision acts as a good reminder of some key differences between Indian and European patent laws, and of the necessities of patent applicants to have a well thought-out and prepared strategy for international protection of inventions through patents taking into account the specificities of different national patent systems. Finally, this decision may also be a warning shot of sorts for changes to come in the Indian Patent law.

The Case: OpenTV Inc v. The Controller of Patents and Designs

The Delhi High Court had to decide on a case related to a patent application filed by OpenTV Inc. which had been rejected by the CGPDTM (the Indian Patent Office). This patent application, which was filed through the Patent Cooperation Treaty (PCT, more on this later) had entered the national phase in India. The invention related to a “system and method to provide gift media” consisting of a “network architecture and method implemented to enable the exchange of interactive media”. In other words, it was a system and method to send and receive media as a gift through a platform.

The Patent Examiner issued a negative First Examination Report (FER; a preliminary examination report issued to give an opportunity to the applicant to modify or clarify the content of his application before a final decision is made), on the basis that the invention was nothing more than a business method, which is not patentable in India under Section 3(k) of the Indian Patent Act. It is important at this point to note that business methods are generally considered not patentable in most countries in the world.

Following this FER, OpenTV amended the patent claims and argued that the invention was not, in fact, a business method, but rather a technical invention which was patentable. The application was nevertheless rejected by the CGPDTM. OpenTV therefore appealed this decision and once again amended the patent claims in order to argue that any assertion that the invention was a business method were unfounded based on these new claims. The case reached the Delhi High Court, raising two important questions:

Whether the amendments to the patent claims made by OpenTV after the Patent Examiner’s decision and before this appeal was heard, were receivable; and

Whether the invention could indeed be considered a mere “business method” and therefore excluded from patentability.

On claims amendment

The Court stated that amendments to the patent claims were permissible at all time during the patent application procedure, including after the Examiner’s decision and before the appeal was heard by the High Court. However, in the present case, the claims as amended had the effect of expanding their reach and therefore broadening the extent of protection sought in the patent application. While amendments of claims is permissible, per Section 59 of the Indian Patents Act, these amendments must clarify or limit the extent of patent protection, not expand it[1].

Whether the claimed invention was a non-patentable “business method”

The most interesting – and most important – aspect of this decision however refers to the question of whether the invention claimed was patentable or not, regardless of which version of the claims were taken into account. In this case, the Court held that the invention was not patentable. To reach this conclusion, it highlighted the two main elements.

Firstly, under Indian patent law, the exclusion of business methods from patentability is absolute, in the sense that any invention which includes or involves some way of conducting business will be considered as excluded from patentability, even if other aspects of the claimed invention are indeed patentable. While software for example is considered non-patentable only when the claimed invention consists of a piece of software “per se” (meaning that the software is the invention and that an invention which only includes software or involves the use of software may be patented), the exclusion of business is a blanket rule in India. This is an important difference with patenting rules in Europe, where only business methods “per se” are excluded. Judge Singh who gave the decision himself outlined that “patentability of inventions based on methods of doing business and financial transactions, raised on the basis of decision from the (…) European Patent Office which analyse the technical effect of a business method invention would not be squarely applicable to India”.

Secondly, determining whether a claimed invention is a business method consists in ascertaining whether the claimed invention is primarily enabling the administration of a particular business and claiming monopoly over a manner of doing business on one hand, and whether the invention relates in fact to a computer program producing a technical effect or exhibiting technical advancement.

Here the Court held that the claimed invention was nothing more than a method for doing business (a method for giving gifts), even if it contained certain elements which were indeed technical (the method was based on software solutions and the related network architecture).

Call for reform?

Finally, the Court ended its decision with a Post Script, which is quite unusual, in which it recognises that the law it has to apply for questions related to new technical inventions or creations in the digital age are quite dated. Indeed, the Patents Act was passed in 1970, and the Copyright Act (relevant for any question related to the protection of software or software-related elements) in 1957. The Court therefore refers to the Parliamentary Standing Committee’s Report issued in 2021 in which the Committee stated that “there [is] a need to review the provisions of the legislation on the patenting of business methods, computer programs and algorithms” under the current Patent Act. In this sense, the Court closes its decision by stating that “A large number of inventions in emerging technologies including by SMEs, start-ups and educational institutions could be in the field of business methods or application of computing and digital technologies. There is a need to have a re-look at the exclusions in Section 3(k) of the Patents Act in view of the growing innovations in this space”.

Whether such a reform will actually take place remains to be seen, and should it happen, what the content of such a reform would is a mystery. Nevertheless, the Court’s comments are an indicator that IP rules related to inventions in the digital age, including future innovations in the field of Artificial Intelligence may be in the cusp of change in India.

[1] It can be useful to recall that an analogous rule exists for European Patents, as the European Patent Convention Article 123(2) (to which the Delhi High Court made a reference in its decision) states that an application “may not be amended in such a way that it contains subject-matter which extends beyond the content of the application as filed”.