The late 20th century has marked itself to be a significant contributor to the field of intellectual property as well as software development. The swift advancement in the latter paved way for theft, duplication and other crimes pertaining to the former warranting the burgeoning of shielding this kind of intellectual property (“IP”).
Safeguarding the software means protecting the computer programme. At the onset, computer programmes were perceived parallel to codes, i.e., the source code and the object code, which are the literal expression of a computer programme. Therefore, copyright was the harbinger of protecting this form of IP.
With technology marching beyond the confines of human imaginations, for the first time software was embedded in a hardware which produced a technical functionality. A ‘data processing system including a plurality of magnetic tape units’ was designed and employed for sorting large quantities of data. Being regarded as an ‘invention’, the United States Patent and Trademark Office (“USPTO”) granted patent to the software in as early as 1965, and a neoteric concept known as ‘software patent’ was born.
In software patenting, instead of protecting the literal expression of the computer program, the objective is to safeguard the idea, i.e., the non-literal expression, underlying a computer programme which has a commercial value in the eyes of law. In other words, patent protection is conferred on the operational methods or functional aspects of a programme.
In this post, I shall discuss about the evolvement and prevailing laws and practices in USA and India pertaining to software patenting.
WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO)
Acknowledging that the copyright protection does not encompass protection of the conception behind software, which can render technical functions, WIPO duly recognizes the need for software patenting. In addition to the existence of three fundamental pre-requisites for patenting any invention, it has proposed two more criteria for determining whether software qualifies for grant of patent –
- Patentable subject matter; and
- The subject matter meeting minimum substantive standards.
AMERICAN STANCE ON SOFTWARE PATENTING
A pioneer in granting software patenting, the American jurisprudence has undergone a paradigm shift within half a century from adopting a liberal approach to gradually moving to a rigid one. In the absence of specific statutes or regulations governing this discipline, the American jurisprudence and practices have mushroomed through judicial precedents.
35 U.S. Code § 101 specifies four categories of inventions, or any improvement thereto, that may be granted a patent – process, machine, manufacture and composition of matter. Over the course of years, the Hon’ble United States Supreme Court (“US SC”) determined certain exceptions, also known as judicially recognized exceptions, that could not be granted a patent per se - abstract ideas, laws of nature and natural phenomena. It observed that bestowing exclusive rights over these tools that are fundamental to any invention would hinder innovation. Nonetheless, any invention found by the application of any or all of these fundamentals may be eligible for patenting.
The US SC described software as a set of instructions, an idea without physical existence and is often referred to as ‘software / computer programme per se’. For the purpose of patenting such software, the Hon’ble Court has stressed on the physical embodiment of such programmes. The Court of Appeals for the Federal Circuit, in the Intellectual Ventures I LLC v. Symantec Corp., vividly noted that ideas per se are not patentable, thereby making a computer programme, a precursor to technology rather than being technology itself, unpatentable. It must however be noted that tangibility as an attribute gained significance only not to prima facie reject the application received for software patenting.
Gradual Development of Software Patenting Law
In 1981, with the US SC holding in Diamond v. Diehr (“Diehr”) that a patent claim shall not be denied merely because it is based on a mathematical formulae, the Court of Appeals for the Federal Circuit went a step further in Street Bank & Trust Company v. Signature Financial Group holding that whether the subject matter of application qualifies for patent shall be determined on the grounds of novelty and non-obviousness, instead of categorizing the subject matter. The latter observation, which expanded the horizon for software patenting, was subsequently restricted in scope by the Federal Circuit in re Alappat wherein it observed that if the algorithms limit a general-purpose computer to a specific purpose performing functions pursuant to the software, then they are patentable.
Following this and other court decisions, the USPTO issued new guidelines for examination of computer-related inventions in early 1996. These clarify that software, which demonstrably controls or configures some computer hardware, is patentable regardless of whether it includes mathematical algorithms.
The practices developing in favor of securing the exclusive rights of inventors of the software witnessed a steep U-turn with the decision of the US SC in the historical judgment of Alice v. CLS Bank (2014) (“Alice”).The Hon’ble Court, laying due emphasis on ‘technical advantage’, applied two tests, initially proposed in Mayo Collaborative Services v. Prometheus Labs, to evaluate the patent-eligibility of software – firstly, whether the software patenting claims hinge on an ‘abstract idea’, and if so, whether its elements transform those claims into patentable invention, and secondly, whether such a claim has an ‘inventive concept’. However, what constitutes abstract idea and inventive concept opened doors to subjective interpretations of examiners, thereby adversely impacting the software patenting law. The significance of ‘inventive step’ was especially stressed in Intellectual Ventures v. Capital One wherein the Hon’ble Court observed that that application of abstract idea in a generic computer cannot be considered sufficient for patenting. In one of the recent cases, the patent claim for vehicle charging station, by Chargepoint Inc., despite falling along the lines of Diehr, was denied the claim on the Alice’s rule of abstract idea.
EVOLUTION OF SOFTWARE PATENTING LAW IN INDIA
In India, software was initially confined to copyright. Keeping abreast of the latest developments in this technological sphere, Indian legal system evolved and is making conscious attempts towards maintaining pace with the international practices in the software patenting law.
Ex facie, software patenting means granting exclusive rights for the application of software. Legally speaking, no statute has precisely defined software patenting. Nonetheless, through the guidelines and judicial precedents, certain stipulations have been discerned for the grant of the same.
Patent is granted for inventions. According to the Patent Act, 1970 (“the 1970 Act”), patent is granted for a new product or process that involves an inventive step and is capable of industrial application. That is to say, the invention must be a product or process that is new, non-obvious and showcases technical advancement and/or have economic significance, and is capable of being used in an industry.
“Per se” concept
Section 3 of the 1970 Act enlists what is not an invention and hence, not eligible to be patented under the statute. Prior to the 2002 amendment, clause (k) of Section 3 of the 1970 Act included ‘computer programme’. The consequence was that a computer programme was outrightly excluded from being treated as an invention and hence, the same could not be patented. The premise for such inclusion in the list of exclusion was that computer programme was deemed to be merely describing an abstract idea and not an invention exhibiting any technical advancement (or inventive step), which is one of the pre-requisites for securing a patent. Patent is conferred only for inventions and not for idea. Further, for the sake of argument, granting exclusive rights for an idea, here in the form of computer programme, rather than for its application meant hindering innovation rather than promoting it.
The technological revolution however enabled the application of computer programme in hardware embracing technical effects which went beyond normal interactions, often referred to as computer related inventions. It nationally instigated deliberations whether to grant patent for software or computer programmes. Observing the changing practices in the concerned domain in foreign jurisdictions, the legislature attempted to strike a balance between the patentable and non-patentable computer programme by proposing the addition of words “per se” to computer programme in the Patent (Second) Amendment Bill, 1999. The intent behind this recommendation was to clarify that a computer programme as such shall not be granted a patent, but shall not be rejected either if it includes certain other things, ancillary to or developed thereon, which falls within the confines of invention. Enforcing the same in the Patent Amendment Act, 2002 (“the Amendment Act)”, the effect was the exclusion of standalone computer programmes, thereby paving the way for computer related inventions for the grant of patent.
Computer Related Inventions Guidelines
Being an unregulated arena and acknowledging the escalating claims for software patenting, the Office of the Controller General of Patents, Designs and Trademarks (“the Office”) issued the Guidelines for Examination of Computer Related Inventions (CRI). The first set of Guidelines, issued in 2015 and laying due emphasis on the ‘per se’ concept, explained that if a computer programme influences the functionality or performance of the hardware beyond normal interaction and involves technical advancement, such a computer programme should not be denied patent. In other words, a computer programme must be an integral part of hardware, in addition to fulfilling other pre-conditions, to be eligible for securing a patent.
The terms ‘hardware’ and ‘software’ have been rendered dictionary meaning. Hardware is the physical / tangible element of a computer whereas software is the intangible element, i.e., computer programme, used for operating a computer. Though there subsisted ambiguity as to the strict definition of technical effect and technical advancement, the 2015 Guidelines entailed six determinants of technical advancement.
Subsequently, the Indian Patent Office (“IPO”) released new Guidelines in 2016. Obliterating the determinants of technical advancement, the new Guidelines instead provided that the computer programme must be novel, involve technical advancement and capable of industrial usage and it must be embedded in a ‘novel hardware’ for the grant of patent. The ‘novelty of the hardware’ did not sit well with the stakeholders and called for heavy criticism. It was contended that the parent legislation only obliterated the patenting of standalone computer programmes and made no reference to computer programmes being used in a novel hardware for patentability. Thus, it nullified the preclusion that was limited to computer programmes per se by the Amendment Act.
Revising this defect in the 2016 Guidelines, the Office adopted a liberal approach in 2017 and issued Revised Guidelines of 2017 wherein it deleted the requirement of ‘novel’ hardware. Hence, for a computer programme not to be right away excluded from the consideration, the precondition has been confined to the creation of technical effect upon interaction of the computer programme with the system.
The validity of ‘novel’ hardware requirement was also a subject matter of contention in the case of Accenture Global Service Gmbh v. Assistant Controller of Patents and Designs (2012) wherein the Intellectual Property Appellate Board observed that the disputed requirement was no where mentioned in the Patent Act, Manual of Patent Office Practice and Procedure or any guidelines by the Indian Courts in such matters, and hence could not be considered as a pre-requisite for granting a software patent.
Another observation to be noted is that though the Revised Guidelines of 2017 does away with the criteria of technical effect, the Indian Patent Office and Courts are still considering it as the one of the core factors for granting the same in light of the ‘per se’ amendment. For example, in the application for software patenting made by Apple Inc. in 2009, the absence of technical effect was one of the objections raised in the First Examination Report, but was subsequently granted (in 2017) after the Kolkata Patent Office found that in fact, it was not a computer programme per se and produced technical effect. In one of the most recent decisions given by Delhi High Court (2019), it observed that if a programme for which software patent is claimed exhibits technical effect, it shall not fall within the ambit of Section 3(k) and hence shall be patentable.
Overcoming the subsisting inconsistencies in software patenting, there have been a few companies that have obtained software patent, for example – Facebook for generating dynamic relationship-based content personalized for members of the web-based social network and Apple for browsing data items with respect to a display screen associated with a computing device and an electronic device.
COMPARISON OF PREVAILING CIRCUMSTANCES IN THE TWO COUNTRIES
Policy-wise, the US legal fraternity perceives that the Alice rule has brought software patenting at the brink of its death, often referring it as a ‘broken patent system’. In stark contrast to the prevailing practice in the US, the liberal approach adopted by Indian sub-continent indicates growth in this niche area of law. Though the Indian legal system may have been dilatory, there subsists more clarity in the software patenting jurisprudence in India than the US.
Nonetheless, despite the broken system in USA, the attorneys and practitioners have been striving to overcome the impediments laid down in Alice. According to one of the articles recently published by IPWatchdog, approximately 62% of the US-utility patents issued in 2019 were software-related, about 22% more than that in 2018. Unfortunately, there is no concrete statistics to analyze the status of software patenting in India.
However, as per the 2017 report of the Office, only 46,000 patent applications were filed in the said financial year in India as against 650,000 in the US in 2017. Further, despite post-Alice regime witnessing a sharp decline in software patenting, the 2017 data discloses that approximately half of the US-utility patents issued were software-related. In other words, the USPTO grants more software-related patent claims than the total patent applications received in India. Ironically, the lamenting situation prevails in a country that has been regarded as the fastest growing tech hub in the world. Lack of awareness and expensive and time-consuming patenting process have been reckoned as the primary reasons behind the miserable circumstance.
Post more than half a century since the grant of first patent to software, there subsists widespread ambiguity in the concept and is still at a nascent stage. While there are countries like China that have relaxed guidelines for software patenting, there are others like Thailand and New Zealand excluding them altogether. Those arguing in favor of patenting believe that granting exclusive rights shall encourage people to apply their knowledge and experience to invent new technology and techniques, whereas those arguing against believe that it would restrict the growth since technology and techniques are in fact a sequential development and patenting a programme may serve as an impediment in their further development.
Keeping the ongoing debate aside, the success of economies is sailing on, inter alia, technological advancements and computer-related innovations. Baker McKenzie, in one of its recent articles, has acknowledged the unparalleled potential of India to become the next Silicon Valley of the world. It serves as a good drive for us to make conscious efforts in creating a conducive environment for computer-related inventions, among others, and protect the rights of the inventors to foster growth.