Source: https://vakilpro.com/software-patentability-in-india/
Timestamp: 2019-04-22 06:06:20+00:00

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India is a hub of Information Technology, with an unprecedented boost in the development of innovative technologies. With breakthrough technological inventions and development of software in past years, it became paramount to protect the innovation and safeguard the interest of inventors. Fortunately, patent laws in India help in protecting one’s invention and software are no different. The Indian Patent Office has laid out Computer Related Invention Guidelines to streamline the process of obtaining a software patent in India.
A Patent an exclusive right granted to a person who has invented some new and useful article. an improvement of existing article or a new process of making some article. Patent laws in India ensure that no other person can make, use, distribute or sell any commodity which uses this product or process by granting patent rights to the inventor.
The Indian Patents Acts 1970 governs all aspects of the patent in India, including what can and cannot be patented, guidelines for obtaining a patent, procedure for obtaining a patent, tenure of a registered patent, etc. Section 3(k) of the Indian Patents Act, 1970 reads that ‘mathematical or business method or a computer programme per se or algorithms’ do not fall under the category of items that can be patented in India. Therefore, the Patent Office has been rejecting the majority of patent applications for software patent in India, even though they are high on innovation.
Software has traditionally been protected under copyright law since code fits quite easily into the description of a literary work. Thus, Software is protected as works of literature under the Berne Convention, and any software written is automatically covered by copyright. This allows the creator to prevent another entity from copying the program and there is generally no need to register code in order for it to be copyrighted. While Software Patenting has recently emerged (if only in the US, Japan and Europe) where, Patents give their owners the right to prevent others from using a claimed invention, even if it was independently developed and there was no copying involved.
Further, it should be noted that patents cover the underlying methodologies embodied in a given piece of software. On the other copyright prevents the direct copying of software, but do not prevent other authors from writing their own embodiments of the underlying methodologies.
The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), particularly Article 27, are subject to debate on the international legal framework for the patentability of software, and on whether software and computer-implemented inventions should be considered as a field of technology.
However, there have been no dispute settlement procedures regarding software patents. Its relevance for patentability in the computer-implemented business methods, and software information technology remains uncertain, since the TRIPs agreement is subject to interpretation.
Within European Union member states, the EPO and other national patent offices have issued many patents for inventions involving software since the European Patent Convention (EPC) came into force in the late 1970s. Article 52 EPC excludes “programs for computers” from patentability (Art. 52(2)) to the extent that a patent application relates to a computer program “as such” (Art. 52(3)).
This has been interpreted to mean that any invention which makes a non-obvious “technical contribution” or solves a “technical problem” in a non-obvious way is patentable even if a computer program is used in the invention. Computer-implemented inventions which only solve a business problem using a computer, rather than a technical problem, are considered unpatentable as lacking an inventive step. Nevertheless, the fact that an invention is useful in business does not mean it is not patentable if it also solves a technical problem.
The Patent Cooperation Treaty (PCT) is an international patent law treaty, which provides a unified procedure for filing patent applications to protect inventions. A patent application filed under the PCT is called an international application or PCT application. Under the PCT, the international search and the preliminary examination are conducted by International Searching Authorities (ISA) and International Preliminary Examining Authority (IPEA).
The issues involved in conferring patent rights to software are, however, a lot more complex than taking out copyrights on them. Specifically, there are two challenges that one encounters when dealing with software patents. The first is about the instrument of patent itself and whether the manner of protection it confers is suited to the software industry. The second is the nature of software, and whether it should be subject to patenting.
However, issues involved in conferring patent rights to software are a lot more complex than taking out copyrights on them. Specifically, there are two challenges that one encounters when dealing with software patents. The first is about the instrument of patent itself and whether the manner of protection it confers is suited to the software industry. The second is the nature of software and whether it should be subject to patenting.
The Indian Patent Office (IPO) recently modified the Computer-Related Inventions Guide lines in June 2017 by removing the requirement of ‘novel hardware’ to get a software patented in India. The amended guidelines have deleted one of the three steps from the test for patentability which stipulated that patents for software could only be claimed in conjunction with novel hardware. However, the requirement of some hardware remains the same to obtain a software patent in India.
The claim is denied if the contribution lies only in mathematical method, business method or algorithm.
Check if the patent is claimed in conjunction with a novel hardware if the contribution lies in the field of the computer programme.
Under the new CRI guidelines, the IPO has taken a more favourable approach towards patentability of CRIs as compared to the past. The revised guidelines are useful to patent applicants and practitioners alike. When it comes to getting a patent in India, computer-related inventions can be really tricky. It is important to clearly describe the invention in such a manner that it is easily comprehensible to laypersons.
1. Method to compress or process data, video, image or audio.
3. A method of improving a machine or memory operation.
4. A Method of improving physical, chemical, biological or electric properties of an object.
5. A Graphical User Interface controlling system.
6. A Mobile Unit positioning method.
1. An abstract idea, computer programme or code.
With the latest amendment, the IPO shall gear up to receive numerous applications from many companies and start ups that have their base in software. Experts also speculate an acute decrease in the number of patent litigation that has been stalling the progress of Indian software fraternity.
Technology related patents (which are not in relation to hardware) are usually categorized as software patents or business method patents. For example, a system or process developed by a taxi company which allows any customer to choose a taxi which is closest to his location could qualify as a business method.
The Indian Patent Act,1970 governs all aspects of the patent in India, including what can and cannot be patented, guidelines for obtaining a patent, procedure for obtaining a patent, tenure of a registered patent, etc. Section 3(k) of the Indian Patents Act, 1970 reads that mathematical or business method or a computer programme per se or algorithms’ do not fall under the category of items that can be patented in India. Therefore, the Patent Office has been rejecting the majority of patent applications for software patent in India, even though they are high on innovation.
1. Industrial Applicability: – “capable of industrial application”, in relation to an invention, means that the invention is capable of being made or used in an industry.
2. Inventive Step:-“inventive step” 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.
3. Novelty:-“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.
4. Patentability exclusion for software or computer program:-Mathematical business method computer programme per se or algorithms.
Patentability exclusion for software or computer program specifically elucidates subject matter which is novel or new product or process, having an inventive step and capable of industrial application qualify for patent if it falls under Section 3(k) of the Indian Patents Act, 1970. Nevertheless, not all computers related invention falls under Section 3(k) or that computer-related inventions which are outside the scope of Section 3(k) are patentable in India. For instance, if the main essence or contribution or function of the proposed invention lies solely in the computer program, the invention is not patentable as per Section 3(k) of the Patents Act, 1970. Conversely, if the main essence or contribution or function of the proposed invention lies the computer program as well as hardware, the invention will not fall under Section 3(k) and shall be judged on other criteria of patentability.
In Accenture Global Service GMBH v. Assistant Controller of Patents & Design where applicant sought for a patent on a method to generate a data mapping document. The objection against the method’s technical effect being unidentifiable, the applicant submitted that the present claims recite “technical solution to a technical problem of the need for a data document design system and design tools that addresses one of the most important technical challenges faced by database systems is data migration.” After analyzing the inventions on merits, the Patent Office observed that the invention is not software per se, it is rather a system having web-services and software and thus, is not falling in the category of section 3(k) and patent was granted in May 2013.
In 2009, Facebook sought a patent on a method “for generating dynamic relationship-based content, personalized for members of the web-based social network”. The objections against the grant were ‘the method being nothing but an algorithm implemented through software thus falling under Section 3(k) and being non- patentable.’ The applicant contended that section 3(k) was not applicable in this case because the invention “implements a technical process and has a technical effect” and further went on to explain the intricacy of the method. These amendments to the claims satisfied the Patent Office’s objections and thus it granted the patent in February 2017.
Another patent was granted to Facebook on 25thApril 2017 “for a method of providing access to user profile data maintained by Facebook to third-party application”. Facebook submitted that “the present invention included hardware limitation and provided technical improvements and benefits like checking privacy setting associated with the user profile and based on the privacy setting the access is provided to the third-party application and the third-party application personalizes the user content data.” The Patent Office concluded that this doesn’t fall under the purview of Section 3(k), and duly granted it a patent.
In Feb 2005, Google sought for a patent on an invention titled, ‘phrase identification in an information retrieval system’. One of the claims disclosed it to be a basic mathematical algorithm with the logical steps thus falling under section 3(k) of the Patents Act, 1970 and therefore not being patentable. However, Google reasoned that its invention is not an algorithm or a computer program per se, “but provides a technical solution to a technical problem of how to automatically identify phrases in a document collection”. It claimed that the technical solution i.e. the end product which is an index, stored in a memory consisting of related valid phrases, is inventive. On hearing the above submissions, the Patent Office concluded that it is “a technical advancement over the prior art” and thus granted it the patent in May 2017.
In 2009, Apple applied for a patent on a ‘method for browsing data items with respect to a display screen associated with a computing device and an electronic device’. The objections against the invention were that it was merely a software program and thus falling within the scope of computer programs per se i.e., under the provision of section 3(k) of the Act. Apple submitted that the method “although the steps of the method can be performed by means of software, the method constitutes a practical application of this computer software to produce a useful result bringing an improved technical effect while presenting advantages and overcoming drawbacks of hitherto known techniques.” Accepting this submission, the Kolkata Patent Office granted the patent.
Mathematical or business method or a computer programme per se or algorithms.
Literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever including cinematographic works and television productions.
Mere scheme or rule or method of performing mental act or method of playing game.
Presentation of information.opography of integrated circuits.
In Europe, the European Patent Convention (EPC) (Art. 52(c) and state that a computer program claimed such us excluded from patentability. But an appeal by before the board of appeals for the european patent office provided useful guidance. The Board stated that a narrow reading of the relevant articles meant that not all computer programs should be excluded from patentability to comply with Art. 27 of the TRIPS Agreement which deals with the patentable subject matter. The Board concluded that a computer programs as such referred only to those that were non-technical in character. It also acknowledged that “it does not make a difference whether a computer program is claimed by itself or as a record on a carrier. In other words, as long as a computer program is technical, the medium in which it is recorded is irrelevant and is, in fact, patentable. Given the current widespread online commercial distribution of software, this is an especially important finding.
In the United States, patent protection for software-related inventions is limited to those on recordable media, not to computer programs themselves. This protection falls short when it comes to the online distribution of software. Unfortunately, the Supreme Court’s decision in Alice Corp v. CLS Bank and some subsequent cases have failed to provide clear boundaries for the patent eligibility of software-related inventions.
With respect to computer software, in Patents (Amendment) Act, 2002, the scope of non-patentable subject matter in the Act was amended to include the following: “a mathematical method or a business method or a computer programme per se or algorithms”.
However, the recent amendment changes (Ordinance, 2004), which amends the Patents Act, 1970, has been promulgated after receiving assent from the President of India and has came into effect from 1st Jan., 2005. Apart from change in pharmaceuticals and agro chemicals, one of the seminal amendments this Ordinance seeks to bring is to permit the patenting of embedded software.
Hence, the amendment means that while a mathematical or a business method or an algorithm cannot be patented, a computer programme which has a technical application in any industry or which can be incorporated in hardware can be patented. Since any commercial software has some industry application and all applications can be construed as technical applications, obviously it opens all software patenting.
Therefore, it is important that the software sought to be protected is not merely a new version or an improvement over an existing code.
Further, in accordance with the specific requirements of the Ordinance with regard to patentability of software, the software should necessarily have a technical application to the industry or be intrinsic to or “embedded” in hardware. This is to prevent against any future litigation or claims of infringements being raised, which is a distinct probability even after a patent has been granted.
India for its part seems to have adopted the more conservative approach of the European patenting norms for software. But the Ordinance definitely has its use and relevance in today’s India, particularly for our growing domestic semi- conductor industry. This, along with judicial tempering might definitely ensure a judicious use of patent protection while allowing the industry to grow through innovations and inventions, thereby, mitigating the risks of trivial patents chocking the life out of real innovations and inventions. This is the reason a patent should always be treated as a “double edged sword”, to be wielded with caution and sensitivity. Now whether, in reality this will be implemented on a rigid basis or will become broad in scope through application (as in the U.S.), and, more importantly, whether the Ordinance would, in fact, result in increased innovation and inventions in the software industry, remains to be seen.
Cloud Computing Patents within this background of development and innovation, Companies and individuals are seeking patent protection for cloud computing inventions. These inventions can present unique challenges to patent drafters who seek to obtain adequate coverage and protection for these inventions. Some of these challenges will be discussed herein, but first a fundamental understanding of these kinds of patents is required.
Cloud computing is the delivery of computing services, servers, storage, databases, networking, software, analytics and more over the Internet (“the cloud”). Companies offering these computing services are called “Cloud Providers” and typically charge for cloud computing services based on usage, similar to how you are billed for water or electricity at home.
Cloud service providers usually build several data centres around the world, and then use these facilities to provide services to customers from different countries. The globalization benefits of cloud computing, together with other benefits such as virtualization and scalability, enabled fast growth and adaption of the cloud computing technology by various organizations.Since, there are no all encompassing international or global patents (a US filed patent application is only valid in the USA and an EU patent in Europe), PAE and NPE cannot just file their claims in one country, but need to file in several countries where the servers are located or at least enforce their obtained judgments in those countries. Also,the forum shopping is a frequently used term in this context: i.e. litigants file their law suits in the Court thought most likely to provide a favourable judgment.
Switzerland is a key jurisdiction for enforcement, since it is a party to many international IP treaties (e.g. Patent Cooperation Treaty, European Patent Convention, Patent Law Treaty, etc.).Recognition of foreign arbitral awards does usually not trigger any particular issues in Switzerland, which is widely recognized as an arbitration friendly forum. The Swiss Federal Supreme Court adopts a very narrow interpretation of public policy and refrains from re-examining the merits of foreign arbitral awards. But also the Swiss Federal Patent Court which has exclusive jurisdiction over patent infringement and invalidity actions is known for its expedite procedures. Another benefit is that the parties can agree on conducting the proceedings in English.
Eventually, the soon to be implemented unitary patent concept with a single Court (the Unified Patent Court) and uniform protection which means that revocation as well as infringement proceedings are to be decided for the unitary patent as a whole rather than for each country individually, will also likely to lead to increased patent litigation in Europe.
cloud computing IP risks have had little public airing so far is probably that, while implicitly acknowledged, they have yet to be thoroughly expressed and articulated. For example, in UK financial services, now one of the most heavily regulated sectors, cloud computing is treated as outsourcing and in its cloud guidance, the FCA (Financial Conduct Authority, the UK regulator states that regulated firms should“identify and manage any risks introduced by their [cloud] arrangements. Accordingly firms should carry out a risk assessment to identify relevant risks and identify steps to mitigate them, document this assessment, identify current industry good practice … assess the overall operational risks, monitor concentration risk and consider what action it would take if the provider failed.
IP risks are not called out expressly but this is clear guidance that firms must identify, assess and plan for all relevant risks including service availability failure, which could of course crystallise due to IP risks.
NPEs are arming for offensive patent action in the cloud, stocking up their armouries and probing for weakness and opportunity. Cloud software patent risks have emerged on to the business agenda and are likely to become increasingly prominent for CSPs , cloud users and regulators alike.
As the public cloud services market continues to mature and grow the concentration of computing resources into cloud data centres is increasingly attracting the attention of NPEs as a target for patent litigation. At a time when data security and privacy risks are front of mind for cloud service providers (CSPs) and their users, the intellectual property (IP) risks to cloud service availability posed by NPE patent claims are rising up the business agenda.
PEs (Non-Practising Entities) are businesses that assert patents through litigation to achieve revenues from alleged infringers without practising or commercialising the technology covered by the patents they hold. NPEs are uniquely well placed to monetise their patents at each stage of the litigation cycle. They have access to capital and all necessary forensic and legal resources; and an NPE doesn’t practise its patents, so is immune to a counterclaim that a defendant might otherwise be able to bring against a competitor, or a cross-licence that the defendant could otherwise offer.
NPEs’ activities may attract attention as arbitraging the patent system, but that is to miss the point: the defendant in a patent claim brought by an NPE generally has an unattractive real-world choice between the cost and distraction of litigation and the cost of settlement which, whilst low in relation to likely litigation costs, is high relative to the perceived merits of the claim. Whilst recent US cases have made it more difficult to patent and enforce computer-implemented inventions, cloud-based software patent litigation is increasing: NPEs appear to have doubled down over the last five years, acquiring more cloud patents for their armoury as well as filing more patent cases.
From the NPE’s standpoint this makes sense. Claiming that software in the CSP’s PaaS (Platform as a Service) or IaaS (Infrastructure as a Service) infringes the NPE’s patents can be an efficient way to threaten alternative objectives: the CSP risks an injunction stopping it from using the software that embodies the patented technology; and the CSP’s customers using that software also face disruption as they may be liable both for their own workloads and for their CSP’s infringing code that they use.
Software contracts, like many other transactions, are governed by the common law principles as embodied in the Indian Contract Act. Contracts can be in the nature of sale or assignment/licence. If the computer software is considered as a ‘good’, the Sale of Goods Act, 1930 will have relevance in the formation and execution of the sale contract. Section 2 (7) of the Sale of Goods Act defines ‘good’ as ‘every kind of movable property other than actionable claims and money, and includes stock and shares, growing crops, grass….’ This definition of ‘goods’ includes all types of movable properties, whether tangible or intangible.
Labelling computer software as ‘goods’ would make them liable under different tax laws, viz. central excise duty, customs duty on imports, and royalty paid by the assessee for using the trademark of another person. Once the software transactions are labelled as sale of goods or services, other laws related to goods will also be operative, viz., the Consumer Protection Act, 1986, the conditions and warranties, as contained in the Sale of Goods Act (Sections 11-17).
The legality and enforceability of these agreements have not been tested by the Indian courts so far. No software licence has been invalidated so far on the grounds of not being in writing or signed.Where the transaction is in the nature of sale, the parties may determine the terms and conditions of the contract, which will be enforceable, provided it is not against public policy. If the contract is merely for use or a service contract, the Consumer Protection Act will be applicable and the software vendor/developer may be held liable if the product or service is found to be defective/deficient, as the case may be. But it is also notable that click-wrap agreements may involve more than one jurisdiction, which may give rise to conflict of laws issues. Question may also arise regarding the extra-territorial application of the Indian law. Similarly, anti-trust issues may arise, which may be subject to competition law. The legality of shrink- wrap or click-wrap agreements, having restrictions on the development, use, services, may be called in question under the Competition Act, 2002. Whether Internet contracts would be covered by the Information Technology Act, which has very limited application in IP issues, has yet to be seen. So far as the contract law is concerned, the validity of the shrink-wrap/click-wrap agreements cannot be questioned as long as there is a sufficient offer, an acceptance of the offer, as well as a bargained-for exchange or consideration But a licence agreement, in spite of the fact it fulfills all the requirements of a valid contract, may not be enforceable if its stipulations conflict with the law governing it or it is an unconscionable or unreasonable bargain. In computer software, generally it is the tendency of software producers to do away.
Another difference regarding the procedure of challenging award. According to the provisions of Indian arbitration law the right to challenge an award is a statutory right and thus cannot be waived or taken away by an agreement between the parties. So, parties cannot exclude by agreement any right of appeal or other recourse that the law may provide.
For analysing, issues regarding arbitrability of IP disputes in India there were considered several judgments. In Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (“Booz Allen”), the Supreme Court of India determined arbitrability under Indian law. It observed that disputes involving rights in rem (i.e. disputes concerning rights exercisable against the world at large) are not arbitrable, while disputes concerning rights in personam (i.e. rights exercisable against specific persons) are arbitrable. In Eros International Media Limited v. Telemax Links India Pvt. Ltd., the Bombay High Court considered the arbitrability of disputes involving Intellectual Property rights. The decision of Court was as Eros’ action concerned “a specific particularized relief against a particular defined party”, which would not give it any rights against the world at large, the Court found that Eros’ action was not in rem but in personam. On this basis, the Court concluded that the dispute between the Parties was arbitrable.
India only in cases where issues related to IPR is incidental, however, the actual dispute is over the subject which is contractual in nature involving right in personam, may be a subject of arbitration. Notwithstanding, the law of arbitration of India is based UNCITRAL Model Law there were noticed difference in the procedure of challenging arbitration award.
The recognition and enforcement of patent rights in India is principally governed by the Patents Act, 1970 and the rules issued under the Act. The Act has been amended several times and was substantially amended by the Patents (Amendment) Act, 2005 in order to bring the Indian patent regime into line with the Agreement on Trade-Related Aspects of Intellectual Property Rights ,1994 (TRIPs).
Customs enforcement of intellectual property rights (including patents) is governed by the Intellectual Property Rights (Imported Goods) Enforcement Rules,2007. Right holders can notify the customs authorities of the goods allegedly infringing their patent rights. On the basis of such information, customs authorities can detain and seize the goods in accordance with the applicable procedure.
The law made by the Indian Parliament or the state legislatures is considered binding law, and is the primary source in the case of conflict between sources.
INTERNATIONAL TREATIES. Provisions of international treaties or conventions cannot be applied directly by Courts. Domestic legislation giving effect to these conventions must be passed by the Indian Parliament or the state legislatures. However, in certain exceptional circumstances, where there is no statutory guidance, courts lean towards the direct application of international conventions.
Under the Patents Act 1970, the District Court is the court of first instance for patent infringement actions. If the defendant seeks to challenge the validity of the patent during an infringement action, the action must be transferred to the High Court. However, the High Courts of Delhi, Bombay, Calcutta and Madras exercise original jurisdiction for patent infringement actions that are within their pecuniary jurisdiction, as prescribed under the relevant rules. This means that an infringement action can be brought directly before these High Courts provided that the applicable pecuniary thresholds are satisfied.
There are currently no specialised Courts to hear and decide patent infringement actions, although this has been widely debated.
The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 is currently being considered by the Indian Parliament and is expected to be passed in the near future. If this Bill is enacted into a law, a separate division will be established in High Courts to deal with commercial matters (including intellectual property disputes), and special procedures will be followed for these matters.
More generally, patent enforcement actions are subject to the regular rules on litigation before Civil Courts. Civil Courts have exclusive jurisdiction to hear and decide issues concerning patent infringement. However, the Patent Office and the Intellectual Property Appellate Board (a specialised statutory body established to deal with intellectual property issues) have jurisdiction to decide on issues of patent invalidity.
A software patent holder can start civil proceedings when seeking to enforce its rights. An injunction against the continuance of the threats.Damages for losses suffered, if any.
Criminal proceedings for patent infringement cannot be instituted under the Patents Act,1970.
Effective border enforcement mechanisms are available in India. The government issued the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 under the Indian Customs Act,1962 with a view to strengthen the statutory and executive guidelines, thereby assisting patent holders in enforcing their rights at the borders of the Indian territory.
India has a unique system for the enforcement of patent rights at the borders. When the Intellectual Property (Imported Goods) Enforcement Rules,2007 were initially implemented, the customs authorities were quite active in detaining goods on the basis of registered patent rights. However, one of the cases of detention resulted in prolonged litigation in numerous forums where the detention was challenged and, ultimately, the goods were released. Based on this experience, the Delhi High Court, in Ericsson v Union of India (2012(52) PTC494(Del)), directed the customs authorities to exercise caution and restraint while enforcing patent rights at the borders. While customs authorities have the power to detain goods at the border in straightforward or simple patent infringement cases, they have been directed to act merely as “implementation authorities” in complex patent infringement cases (that is, they must only implement orders passed by the Court).
In February, 2011, the Government issued Circular relating to the implementation of the 2007 Rules. Under this Circular, an online, centralised bond management system has been created as part of the existing Automated Recordation and Targeting System. Through this system, a right holder can provide a one-time bond along with security at the time of registration, to which all ports will have access. In the case of interdiction of allegedly infringing goods, if the amount of the centralised bond and the security are not sufficient to cover the value of the goods seized, the right holder will be required to execute a supplementary bond and provide security for the corresponding amount within three days of the interdiction.

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