Introduction to Software
Patents
A definition of software patent is hard and
one may not find the definition on any patent office website. Software embodied
in a physical computer readable medium and aiding an innovative process or
machine is considered patentable. In order to obtain a software patent, the
patent application has to subtly claim the software as employing or performing
certain function or process and as embodied in a computer readable medium.
Software patents have a very recent history
as the first software patent granted was in 1981, in the legal case of Diamond
v. Diehr. The claimed invention is a heat treatment of rubber, wherein software
code is employed to compute the optimum time duration for the treatment. In
another case of State Street Bank & Trust v. Signature Financial Group, a
software business method was granted a patent in the year 1998, redefining
software patentability. Software patentability has been a topic of debate world
over. The first question an inventor, who wishes to patent his invention, asks
is "Is software patentable". The short answer is that the US patent
office does grant software patents, and there has been a surge in software
patenting in the US.
A classification of software patents is
virtually nonexistent, although a majority of recent patents are software
patents based on the above criteria and about 1400 patents are purely on
computational software. Major companies like IBM, AT&T, Siemens, HP and
Microsoft boast of an extensive software patent portfolio. IBM possesses 31,995
US patents, HP possesses 21,000 patents worldwide as on 2003, Microsoft
possesses 5000 US patents and Siemens possesses more than 10,000 issued and
pending US patents. Microsoft and Siemens have a cross-licensing agreement to
enable increased access to each others patent portfolios. In the USPTO database
there are about 25123 claimed software patents and about 284978 granted patents
that disclose the use of software in their inventions.
Software patents will surge a rise in
software innovation and also enhance the quality of software protection.
Cross-licensing agreements support even higher level of innovation and
interaction in the software industry. Software patents not only protect marketing
rights for a company but also their intellectual property, thereby providing a
driving and inspiring force for the programmers.
Don't even get started anyone on the
advantages of software products in day to day life. Software products range
from operating systems, encryption software, web development, virtual reality,
gaming software to customized software solutions for sectors like medical,
banking, aviation, military, etc; software has been the savior for many
industries. Without software, humans may not have envisioned such advancement
in technology and consequently the quality of life.
Business method and software patent trends in India
India is well known for its software industry, which has
growth exponentially in a short space of time. According to estimates of the
National Association of Software and Services Companies (NASSCOM) – the main
trade body and chamber of commerce of India’s IT and business process
outsourcing industries – the domestic software industry generates annual
revenues of around US$60 billion, the bulk of which is exported. Further, many
top multinational companies either do business in India or have research
centres there, thus promoting knowledge exchange and bringing in valuable
foreign know-how.
India has a balanced political outlook and an independent
judiciary, and in the last decade or so has done well in harmonizing its patent
law with that of other major jurisdictions. However, software protection is
weak and the need to provide stronger protection for software inventions has
been the subject of debate both domestically and around the world.
Background
Prior to May 20 2003, the Indian Patents Act 1970 defined
an “invention” as any new and useful article, process, method or manner of
manufacture; machine, apparatus or other article; or substance produced by manufacture;
including any new and useful improvement thereto. While there was no specific
provision excluding the patentability of software per se
or business methods from
the interpretation of this definition, it could be clearly ascertained that only
methods for the manufacture of a vendible or tangible product were patentable.
Therefore, methods implemented by software inventions and software per se
and business
methods were not
patentable.
Some protection was provided under the Copyright Act
1957, which included computer programs and computer databases within the
definition of “literary works”.
With the arrival of multinational companies following
liberalisation in 1991, India’s IT industry expanded and fast became a crucial
plank of the national economy. A wide range of computer and business method
inventions – including automation methods, testing methodologies and
web-enabled applications – assumed critical importance to the burgeoning
industry, giving rise to support for software patents within this group. The
issue of whether to grant patents to software-related inventions was reignited
as stakeholders, especially multinational companies, considered the protection
available under the Copyright Act to be inadequate. Stronger protection was
both expected and required.
Consequently, in 2002 the Patents Act was amended,
redefining an “invention” as “a new product or process involving an inventive
step and capable of industrial application”, in line with Article 27 of the
TRIPs Agreement. More importantly, a new Section 3(k) was introduced, providing
that mathematical and business methods, computer programs per se
and
algorithms were not considered patentable inventions. Disappointingly, however,
inventors could derive little benefit from these provisions in practice in the
absence of any guidelines.
In a welcome move, the government thus took further steps
to extend broader protection to software inventions: the Patents (Amendment)
Ordinance 2004 was promulgated in December 2004 and Section 3(k) was amended to
exclude from patentability “a computer programme per se other than
its technical application to industry or a combination with hardware”. However,
while this amendment admittedly expanded the scope of patentability of software
inventions, it could not be substantially exploited. The Patents (Amendment)
Act 2005 repealed the ordinance and restored the earlier position.
Practice
Pursuant to Section 3(k) of the Patents Act, mathematical
and business methods, Computer programs per se and algorithms are not
patentable. Accordingly, business methods have been categorically excluded from
patentability. The Patent Office considers a particular method to be a business
method if it involves a monetary transaction or mere marketing or sale purchase
methodology.
The interpretation of “computer programme per se” has been a
contentious issue and has been viewed in different ways. The wording
undoubtedly implies that the legislature’s intention was that mere computer
programs should not be patentable, but that software inventions – in other
words, inventions implemented by software which are more than mere computer
programs – could be patented.
The Indian Patent Office released a Draft Manual of
Patent Practice and Procedure in 2005 providing guidelines on the types of
claim allowed in respect of software-related inventions. As per the guidelines,
claims to computer programs per se, computer-readable media with programs
recorded thereon, methods implemented by software that lack technical effect
and methods with a technical effect but lacking hardware support in the
specification are not patentable. The guidelines state that in respect of a
method, “the method claim should clearly define the steps involved in carrying
out the invention. It should have a technical effect. In other words, it should
solve a technical problem…The claim orienting towards a ‘process/method’ should
contain a hardware or machine limitation.”
In India, for administrative convenience, four patent
offices are located in metropolitan cities. However, the offices are
inconsistent in their practice with regard to software inventions, mainly due to
the lack of clear guidelines. While the Indian Patent Office largely relies on
the practice of the European and UK patent offices, there have been instances
where inventions claiming software methods with a technical effect that have
been allowed by the European or UK patent office have nonetheless been rejected
by Indian Patent Office officials on the following grounds:
• The term “technical effect” is not defined in the
Indian Patents Act.
• The Draft Manual is not binding on the examiners, as it
is only in draft form.
• There are no Indian precedents in respect of software
inventions.
One step further
There have been no real developments since the release of
the Draft Manual in 2005. The government issued another version of the manual
in 2008. The guidelines on software inventions are more elaborate, but similar
in content.
In response to pressure from different sectors, the
government invited comments from interested parties, including legal practitioners
and industry, and organized stakeholder meetings across the country to develop
a consensual approach. These meetings generated intense debate, with the open
source industry opposing the guidelines set out in the manual and arguing that
the manual tries to introduce software patent protection. This narrow interpretation
has been vehemently contested by others, who contend that the guidelines cannot
be a determining factor for interpreting the law, but are used only to describe
practice and procedure.
The hardware limitation for processes or methods having a
technical effect was also contested. It was contended that these may be novel
independent of hardware features which may be known, and that the protection is
intended for novel or non obvious processes and methods themselves, without
reference to the physical medium through which they are implemented. Moreover,
if a hardware limitation was required, it could allow many users to avoid
infringement of a patent simply by choosing alternative hardware.
Opinions were also voiced in favour of the allowance of
claims relating to computer-readable media storing novel inventive programs. Supporters
argued that since damages are determined based on the number of copies of the
product sold, method claims do not provide adequate protection because they
base damages on the number of times the software manufacturer runs the infringing
software for test purposes.
The intense debate on software-related inventions
compelled the government to provide assurance that it will convene a meeting
with the software industry to discuss related issues. However, so far no developments
have taken place in this regard.
The Draft Manual, when finalized, will not have the force
and effect of law, but will act as a guideline for the Patent Office. In fact,
the preface of the Draft Manual states that: “The manual does not constitute
rule making and hence does not have the force and effect of law. Statements made
in the manual are not in themselves an authority in any action by an officer of
the Patent Office. While the manual may be regarded as a hand book, it does not
impose any particular line of action and may not be quoted to that end.”
Conclusion
While stronger protection is needed for software
inventions in India, the patentability of such inventions remains ambiguous.
There is an urgent need to make the patent system transparent on an equitable
basis and to provide technology specific training to Patent Office officials,
in order to cultivate a broad and positive outlook. It is hoped that the
government will accelerate its efforts to achieve a consensus within the
software industry – and further, that the patent regime will be reshaped for
the benefit of the software industry as a whole.
INDIAN PATENT OFFICE
Section 3 of the Indian Patent
Act, 1970 covers topics that are not patentable. Section 3(k) states as
unpatentable “a mathematical or business method or computer program
per se or algorithms.” The sub-section (k) was added to Section 3 of the
Indian Patent Act, 1970 by the Patents Amendment Act, 2002.This sub-section for
the first time in India’s patent history made patentable at least certain
aspects or variations of computer program related inventions.
In 2005, the President of India
moved an Ordinance to include computer software that was embedded in hardware
like computer, mobile, televisions etc. and having industrial application under
the definition of patentable inventions by amending Section 3(k) of the Indian
Patent Act, 1970. The Ordinance split the Section 3(k) into two sub-sections
(k) and (ka). The excluded subject matters as originally contained in Section
3(k) were provided in the new sub-section (ka). The subsection (ka) now
included as topics not patentable ‘a mathematical method or a business
method or algorithms’. The amended Section 3(k) read as follows:
“a computer program per se
other than its technical application to industry or a combination with hardware”.
The points of interest in the
above proposed amendment were the addition of the “technical application”
criteria and “combination with hardware”. The intention was to make clear that
if an invention directed at computer software had technical application to
industry or coupled to hardware – then it was patentable. This seems analogous
to the EPO’s “further technical contribution” criteria.
However, stiff opposition to the above
amendments caused the Indian Parliament to reject the Ordinance and not enact
the same.
As a result, the law as it
stands now has been reverted to the original position of excluding computer
programs per se from patentability. The “per se” catch again introduced
ambiguity to the law and as a result a number of applications relating to
software inventions are filed in India every year by not claiming computer programs
“per se” but attaching a hardware component to meet the statutory requirements.
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