Indian Patent Office issues Fresh Computer Related Inventions Guidelines in 2016

Indian Patent Office Guidelines, 19 February 2016, popularly known as the Computer Related Inventions (CRIs) Guidelines

The Indian Patent Office (IPO), through an order dated 19 February 2016, has recalled its earlier guidelines related to computer related inventions (CRIs) issued in August 2015 and published fresh guidelines changing the IPO’s earlier position on the patentability of CRIs in India.

 LEGAL CONTEXT

An invention is generally patentable in India if it satisfies the test of novelty, non-obviousness and utility in industrial application along with other procedural requirements. However, the first step in the examination of patent applications in India is to determine whether the subject-matter of the invention is patentable.

Section 3 of the Patents Act 1970 lists the subject matter which is excluded from patentability in India. The relevant sections regarding the patentability of Computer Related Inventions (CRIs) in India are sections 3(k), 3(l), 3(m) and 3(n).

According to sections 3(l), 3(m) and 3(n), “a literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever including cinematographic works and television productions”, “a mere scheme or rule or method of performing mental act or method of playing game” and “a presentation of information” respectively cannot be patented.

According to section 3(k), a mathematical or business method or a computer programme per se (by itself) or an algorithm is not patentable in India. The most contentious issue regarding section 3(k) is the meaning of “computer programmes per se”.

The Indian Patent Office (IPO) first issued the Guidelines for the Examination of Computer Related Inventions (CRIs) [CRI Guidelines] in August 2015 after issuing draft CRI Guidelines inviting public comments in June 2013. The objective of the CRI Guidelines was to lay down the procedure for the examination of patent applications related to CRIs so as to achieve uniformity and consistency in the examination of such applications by the IPOs across India. The attempt at harmonization of the practice related to the examination of patent applications might be attributed to the inconsistency in the practices adopted by the four IPOs in India with respect to applications involving CRIs; the Intellectual Property Appellate Board (IPAB) had noted this inconsistency in Yahoo v Controller, and Rediff (OA/22/2010/PT/CH).

The 2015 CRI Guidelines clearly stated that they did not constitute rule-making and that in case of any conflict between the Act and the Guidelines, the former would prevail. Subsequently, several policy think tanks along with academics and individuals in India submitted a joint letter to the Prime Minister of India to recall the 2015 Guidelines which were stated in the letter to be contrary to the Act insofar as they allowed software patents; according to section 3(k), software patents had been unconditionally proscribed under the Act.

In the light of the concerns expressed over the 2015 CRI Guidelines the IPO issued an order (Office Order No: CG/Office Order/2015/120) in December 2015 stating that the Guidelines were to be kept in abeyance until the contentious issues with respect to the Guidelines were resolved.

On 19 February 2016 the IPO issued fresh CRI Guidelines (effective immediately). The 2016 CRI Guidelines altered the earlier position on the patentability of CRIs in the 2015 CRI Guidelines.

FACTS

The CRI Guidelines stipulate that the examination procedure of patent applications relating to CRIs is the same as the test for other inventions i.e. the claimed invention must be novel, non-obvious and capable of industrial application. However, the Guidelines focus especially on determining whether the subject matter is patentable under section 3(k) where the claims in the patent application relate to CRIs.

According to the Guidelines, when determining patentability the focus must be on the underlying substance of the invention and not the form in which it is claimed. Secondly, the claims in the patent application must be taken as whole and where the substance of the claims taken as whole does not fall under section 3(k), the patent should not be denied.

  1. Mathematical Methods

The Guidelines state that purely abstract or intellectual methods are not patentable however the mere presence of a mathematical formula may not necessarily render it non-patentable. Examples of inventions excluded from patentability include acts of mental skill such as calculation of square root and claims which do not specify any practical application.

  1. Business Methods

Business methods are not patentable; if the subject matter of an invention is about “carrying out business/ trade/ financial activity/ transaction and/or a method of buying/selling goods through web (e.g. providing web service functionality)” the invention cannot be patented.

  1. Algorithms

Algorithms in all forms are non-patentable.

  1. Computer Programmes per se

The Guidelines note that the legislative intent behind suffixing “per se” to section 3(k) through amendment of the Act in 2002 was to exclude computer programmes “as such” from patentability.

The following view was expressed by the Joint Parliamentary Committee (JPC) while introducing the 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.”

Test to Determine Patentability of CRIs

The Guidelines lay down a 3-pronged test to examine CRI inventions:

  1. Proper construction of the claim and identification of the actual contribution
  2. Denial of the claim if the contribution lies solely in mathematical method, business method or algorithm
  3. In cases where the contribution relates to computer programmes, denial of the claim where it only involves a computer programme; examination of the application on the grounds of novelty, non-obviousness and industrial utility where the contribution lies in both computer programmes and hardware

            The Guidelines conclude with listing fifteen illustrative examples of claims which are not patentable including the claims made in Yahoo v Controller, and Rediff.

ANALYSIS

The 2016 CRI Guidelines depart from the earlier 2015 Guidelines inasmuch as the earlier Guidelines permitted patentability of certain computer programmes even where no “hardware component” was attached to the claims.

This is evident from the language of the 2015 Guidelines which stated that:

“The JPC report holds that the computer programmes as such are not intended to be granted patent. It uses the phrase “…certain other things, ancillary thereto or developed thereon…”
The term “ancillary” indicates something essential to give effect to the main subject. In respect of CRIs, the term “ancillary thereto” would mean the “things” which are essential to give effect to the computer programme. The clause “developed thereon” in the JPC report may be understood as any improvement or technical advancement achieved by such development. Therefore, if a computer programme is not claimed by “in itself” rather, it has been claimed in such manner so as to establish industrial applicability of the invention and fulfils all other criterion of patentability, the patent should not be denied.”

            The emphasis of the 2015 Guidelines on the “industrial applicability of the invention” was contrary to section 3(k) which clearly prohibited patents on “computer programmes per se”.

            The 2016 Guidelines sought to remedy this by requiring patent claims in the field of computer programmes to be made “in conjunction with a novel hardware”.

            A feature which has been dropped from the new Guidelines is the list of illustrative examples of claims which are patentable; the new Guidelines include fifteen exclusionary examples as opposed to two contained in the 2015 Guidelines.

PRACTICAL SIGNIFICANCE

            A significant number of start-up companies in India are online businesses. The 2016 Guidelines are a welcome development for computer activists and software developers in India who viewed the 2015 Guidelines permitting software patents as stymieing the growth of start-ups.

            The provision on the patentability of software programmes in section 1(2) (c) of the Patents Act 1977 in the United Kingdom is quite similar to section 3(k): section 1(2) (c) declares “program for a computer” to not be an invention; this condition holds true only where the application for a patent relates to that thing “as such”.

            The 2016 Guidelines have clarified the law on software patenting in India and brought it in line with the Act; only patent applications claiming software along with a novel hardware component would be eligible for grant of patent.

            Computer programmes are still copyrightable in India under section 2(o) of the Copyright Act 1957 which recognizes computer programmes as “literary works” and hence copyrightable. However, the level of protection extended by copyright covers only the specific lines of code in which the computer programme is written and the same programme may be written in a modified language by the users of the computer programme.

(Written by Devika Agarwal. Devika is a lawyer based in Chennai.)

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India-US Visa Dispute before the WTO

India’s complaint before the World Trade Organization (WTO) against the United States regarding its decision to raise the temporary visa fees has garnered attention from across the globe. In December last year, the US passed a bill (James Zadroga Act) that sought to double the fees for H-1B and L-1 non-immigrant work visas and also place limits on the issuance of such visas (Fees for H-1B visas was doubled to USD 4000 and that for L-1 visas was increased to USD 4500). Under the James Zadroga Act, entities which employ more than 50 people or 50 percent of their employees on non-immigrant visas in the US will be required to pay the increased visa fees. Under the new Act, even the period of applicability of the increased visa fees has been extended.

For a country that is known for sending a sizeable number of IT professionals to the US every year, this decision can have some far-reaching implications. In its complaint, India alleged that the measures taken by US to increase visa fees were inconsistent with the commitments made by US under the WTO; the measures would result in Indian IT professionals being treated in a less favourable manner than their American counterparts. The hike in the visa fees would in all likelihood deter IT firms in the US from hiring Indian professionals as they would have to pay a higher visa fee. This would result in preference being given to hiring people from US.

Although a country has the sovereign right to raise visa fees, the decision to increase visa fees for immigrants can be seen as a violation of the most favoured nation (MFN) principle and the national treatment principle under international law. The MFN principle states that a country cannot discriminate between two nations, and that it should accord the same treatment to one nation as it does to any other nation. According to the ‘national treatment’ principle, a country is required to treat the nationals of other countries in the same manner as it treats its own nationals. This principle is embodied under various international trade agreements such as Article 3 of the General Agreement on Tariffs and Trade (GATT), Article 17 of General Agreement on Trade in Services (GATS) and Article 3 of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. India has also alleged that the decision would also affect the rights of Indian firms which have been explicitly laid down under the Trade Related Investment Measures (TRIMs) Agreement.

According to the dispute resolution procedure of the WTO, the first step towards dispute settlement is a consultation between the two countries to amicably resolve the dispute within a period of 60 days. While most disputes get resolved at the stage of consultation, in the event that that does not work, the next step would be to constitute a panel to hear the dispute. This would lead to a full-fledged hearing of the case by WTO’s Dispute Settlement Body.

Since India filed the complaint on 3rd March, the consultation process between India and US is expected to conclude by the 1st week of May. If the two countries fail to come up with a mutually agreed solution by then, India may file a request for the establishment of a WTO panel to conduct subsequent proceedings.

(Written by Radhika Agarwal and Devika Agarwal. Radhika and Devika are lawyers based in Chennai.)