High Court Emphasizes The Need To Re-Evaluate The Exclusions Under Section 3(K) Of The Patents Act

INTRODUCTION

On May 11th, 2023, the Hon’ble High Court of Delhi (hereinafter referred to as the “Hon’ble Court”) in its decision OpenTV Inc vs. The Controller of Patents and Designs & Anr[1]., dismissing OpenTV Inc’s (hereinafter referred to as the “Appellant”) petition challenging the decision of Controller of Patents (hereinafter referred to as the “Respondent”), held that “there is a need to have a re-look at the exclusions in Section 3(k) of the Patents Act, in view of the growing innovations”.

BACKGROUND

The Appellant, a US-based company offering interactive and enhanced television solutions, filed an appeal against the Respondent’s decision, dated May 31st, 2021, refusing the Appellant’s patent application titled “System and method to provide gift media”, bearing application no. 2564/DELNP/2012 filed on May 23rd, 2012, under Section 15 of the Patents Act, 1970 (hereinafter referred to as the “Act”). The patent application deals with network architecture and a method implemented on the same to enable the exchange of interactive media content distribution of any type of digital or tangible media. The application has been rejected by the Respondent under Section 3(k) of the Act, according to which “a mathematical or business method or a computer programme per se or algorithms” is non-patentable, along with Section 59(1) of the Act which states that claim amendments must fall within the scope of the claims on record before the amendment and must be supported in substance by the specification.

APPELLANT’S CONTENTIONS

The Appellant submitted that their invention was not merely a computer program but a technical solution to a technical problem. They argued that the claimed method and system provided a novel and inventive way of transmitting interactive television applications, involving a complex interplay of hardware and software components. They further contended that the invention was not excluded under Section 3(k) of the Act as it had technical application and demonstrated a technical effect.

With respect to the objection under Section 59 of the Act, the Appellant relying on AGC Flat Glass Europe SA v. Anand Mahajan and Ors.,[2] submitted that “so long as the scope of the claim is not enlarged and it is within the overall claims which are already filed, the dependent claims ought to be considered.” They further added that dependent claims may be added at any stage of the prosecution of the patent, as held in a 2020 IPAB decision, titled The University of British Columbia v. Controller of Patents.[3]Furthermore, it was submitted that no assessment had been made by the Respondent as to how the Appellant had expanded the scope of present independent claims.

RESPONDENT’S CONTENTIONS

On the other hand, the Respondent justifying the rejection argued that the claimed invention was primarily a computer program and did not exhibit any technical advancement or effect beyond the realm of software. The Respondent further submitted that the purpose of exclusion under Section 3(k) was to prevent the monopolization of computer programs and to encourage software development as copyrightable subject matter.

COURT’S OBSERVATIONS

The following three issues were considered by the single bench of the Hon’ble Court headed by Hon’ble Justice Pratibha M. Singh:

I. Whether amendment of claims in a patent specification can be permitted at the appellate stage, at the instance of the Applicant?

The Hon’ble Court, relying on Nippon A&L v. Controller of Patents[4] and Societe Des Produits Nestle Sa v. Controller of Patents and Designs[5], stated that claim amendments are allowed at the appellate stage as long as they fall within the scope of the original claims as per Section 59 of the Act. However, in the present case, the proposed amendments were found to broaden the scope of the original claims and thus were considered impermissible.

II. Whether the subject invention is non-patentable in view of Section 3(k) of the Patent Act, 1970?

The Hon’ble Court examined the patent application's specification and determined that its primary purpose is to enable the distribution of media content, whether in tangible or intangible form, to recipients. The Hon’ble Court concluded that this process, regardless of its categorization as a method or system, essentially constitutes a business method focused on giving media as a gift. Therefore, the Hon’ble Court deemed the invention ineligible for patent protection under Section 3(k) of the Act, which excludes business methods from patentability.

The Hon’ble Court further noted that “In order to judge as to whether a particular patent application seeks to patent business methods or not, at the outset, the following aspects, ought to be considered - (i) whether the invention is primarily for enabling conduct or administration of a particular business i.e., sale or purchase of goods or services; (ii) whether the purpose of the invention is for claiming exclusivity or monopoly over a manner of doing business; (iii) whether the invention relates to a method of sale or purchase of goods or services or is in fact a computer program producing a technical effect or exhibiting technical advancement. If it is the latter, it would be patentable but not if it is the former”.

III. Whether the subject invention satisfies the other tests of novelty, inventive step and industrial application and is entitled to patent?

The Hon’ble Court did not address this issue as the patent was rejected on grounds of patentability under Section 3(k) of the Act, itself.

Referring to the 161st Report of the “Review of the Intellectual Property Rights Regime in India” presented by the Parliamentary Standing Committee, the Hon’ble Court observed that, “A large number of inventions in emerging technologies including by SMEs, start-ups and educational institutions could be in the field of business methods or application of computing and digital technologies. There is a need to have a re-look at the exclusions in Section 3(k) of the Patents Act, 1970, in view of the growing innovations in this space. As the Parliamentary Committee Report referred to above recommends, the need to consider the march of technology in the digital space, is an urgent one, so that patent law is not outpaced and patenting itself does not become irrelevant in the years to come.”

The Hon’ble Court further noted that "The modification of this provision would, in the context of the said report clearly be one in legislative domain. In terms of the statute as it stands, business method inventions are not patentable,” and directed the Registry to send a copy of the order to the Secretary, DPIIT, Ministry of Commerce and Industry for necessary consideration.

CONCLUSION

With significant implications for both the software industry and patent law in India, this decision elucidates the scope of patentability of software-based inventions and highlights the importance of innovations demonstrating a technical contribution in order to be eligible for a patent grant under Section 3(k) of the Act.

The rapid progress in the field of digital technology, computing, and their applications has revolutionized the way businesses function, leading to the development of several innovative methods and processes. Therefore, there is a need to establish a balance between patent protection and public interest in order to encourage and facilitate innovation along with the continued relevance and effectiveness of the patent system.

[1] C.A.(COMM.IPD-PAT) 14/2021-DEL HC [2] (2009) ILR 4 Delhi 256 [3] OA/24/2020/PT/CHN [4] 2022 SCC OnLine Del 1909 [5] 2023/DHC/000774