Patentability of Business Methods in India – Insights from Recent Case Laws

Rahul Chaudhry & Partners | View firm profile

In the ever-evolving landscape of intellectual property rights, the patentability of inventions in the realm of business methods remains a complex and multifaceted challenge, particularly in jurisdictions like India.The nuances of patent law, coupled with the rapid advancements in technology and commerce, necessitate a constant re-evaluation of legal frameworks. Recent case laws in India shed light on the intricate interplay between business methods and patentability, offering valuable insights into the interpretation and application of existing laws.

Understanding the Legal Landscape

The Indian Patents Act of 1970, under Section 3(k), explicitly excludes mathematical or business methods, computer programs per se, or algorithms from patent protection. Additionally, the Manual of Patent Office Practice and Procedure (MPPP) provides guidelines regarding the interpretation of business methods, emphasizing that claims solely directed towards business methods are not considered patentable subject matter. The MPPP outlines that while terms like enterprise or commerce do not necessarily imply a business method, if the subject matter primarily involves business/trade/financial activities or online buying/selling, it falls under the category of business methods and is deemed non-patentable.

Insights from Case Laws

Historically, the case of YAHOO Vs. THE CONTROLLER OF PATENTS decided by the Intellectual Property Appellate Board (IPAB) in 2011, set a precedent reaffirming the exclusion of business methods from patent protection in India. The invention in question aimed at influencing the position of a search result listing generated by a computer network search engine. This invention intended to allow website promoters to control their placement in search result listings, ensuring their listings are prominent in searches relevant to their content. The IPAB noted that the invention appeared to be a method of doing business, even if it is a technically smarter way of doing business. Thereby asserting that the purported invention was merely an improvement in the method of doing business, falling within the ambit of Section 3(k).

More recently, two High Courts have addressed the conundrum regarding the patentability of inventions related to business methods. The Delhi High Court’s (DHC) decision in OPENTV INC Vs. THE CONTROLLER OF PATENTS (C.A.(COMM.IPD-PAT)-14/2021 decided on 11.05.2023) upheld the refusal of a patent application for a system and method to provide gift media. The subject patent application recited a network architecture which enabled gifting of media items amongst users.

The DHC ruled that the invention, although claiming technical features, essentially amounted to a method of doing business, falling under the exclusion of patentability outlined in Section 3(k). Despite arguments about technical advancements enabling two-way communication in media distribution, the DHC emphasized that the core purpose of the invention was facilitating media gifting, which it deemed to be a business method. The judgment further prompted a call for a review of patent legislation concerning business methods, computer programs, and algorithms, noting the increasing innovation in these areas, particularly among SMEs, start-ups, and educational institutions. The DHC urged a reconsideration of the exclusions outlined in Section 3(k) to accommodate evolving technological landscapes.

In another instance, the Madras High Court’s (MHC) ruling in PRIYA RANDOLPH Vs. DEPUTY CONTROLLER ((T)CMA(PT)/109/2023 decided on 20.12.2023) provided a nuanced perspective on business method patentability in India. In the present case, the MHC was hearing an appeal against refusal of grant of a patent for an invention related to the completion of transactions in e-commerce, from the purchase of a product to its delivery via an e-commerce platform, a logistic company, and a delivery executive. In its ruling, the MHC overturned the refusal order by the Deputy Controller of Patents, holding that the mere involvement of a business method in an invention does not automatically render it unpatentable under Section 3(k). The MHC emphasized that the nature and essence of the invention should be assessed, particularly focusing on its technical contribution. The MHC observed that the claims were directed at concealing the physical address of the purchaser of goods in e-commerce transactions using software, hardware, and firmware. While acknowledging that conducting e-commerce in this manner could be part of a business method, the MHC held that the monopoly claim was not in respect of a business method but rather in respect of an invention deploying hardware, software, and firmware for data privacy and protection purposes. Therefore, the conclusion that the claimed invention related to a business method was deemed untenable.

Reconciling IPAB and Court Perspectives

The recent activity in Indian judicial fora suggests a shift towards a merit-based assessment of business method patents. While IPAB historically upheld strict exclusion, recent court decisions reflect a more nuanced understanding. Courts are critically assessing the actual spectrum of the invention in the business realm, focusing on technical contributions rather than solely categorizing innovations as business methods.

Way Forward

The cases discussed offer valuable insights into the challenges and opportunities associated with patenting business methods in India. While the absolute exclusion under Section 3(k) presents hurdles, the acknowledgment of technical contributions in inventions pertaining to business verticals opens the doors for potential patent protection for innovations fostered by business-oriented enterprises and companies.

Such Applicants can take respite in the direction in which the jurisprudence pertaining to business related inventions is headed, which involves a merit-driven assessment and adjudication of grant of patent to technical contributions in business processes. Accordingly, the business-oriented enterprises can strategize and identify potential innovations along these pivotal points and aim to build a niche but strong patent portfolio in Indian jurisdiction.

Authors: Siddharth Sharma & Narayan Sharma

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