Viability Of Software Patents: A Global Perspective

                                                                Nischay Nehra & Avinash Maurya S

Abstract

Innovation is the key to development in every industry and the speed of innovation in the software industry is astonishing. However, such innovation requires a legal framework which is equally progressive, so as to assimilate and usurp to new innovations or developments, specifically speaking the intellectual property law. One thing that has grabbed the attention of the international community is “software patent”. “Software patent” has not only acquired attention in “academic literature” but also in the courts, from the governments and the software industry itself. There is higher ambivalence in practice of granting of “software patents” globally.

The question which devours the major portion of the debate on “software patent” is whether software could be a patentable subject matter. Other questions being what should be the qualifications in order to be patentable, whether a patent is encouragement or a blockage to innovation and development of the industry as a whole, whether the existing patent law regime needs reforms etc.

Through this paper, the authors would deliberate upon, how courts in the United States and Europe, over the time, have developed the jurisdiction of “software patent” including the international framework correlated with “software patent” and India’s failed attempt to develop the “software patent” regime from its existing nascent state. The authors would also highlight how “software patents” are divergent from other kinds of patents and what others issues are associated with “software patents”. This paper is an attempt to understand the global status quo of law relating to “software patents” and global practice of granting the same.

Introduction

There has been always a bright side and a dark side to the patent system. The sides are inseparable, just as the two sides of human personality are inseparable. The legal system of patents has this one simple goal: allow the bright side to shine on innovation, and keep the dark side on check.[1]

Today, human interaction with software has become indispensable. A computer software makes a device functional and life convenient. Indeed, the software industry has mushroomed into a globalized and one of the fastest growing industry. As per NASSCOM[2], presently, the Indian software industry exports were valued at $126 billion and domestic at $ 41 billion.[3]Undoubtedly an Industry of such magnitude calls for a stable, protective and progressive intellectual property (IP) legal framework. However, IP protection of software has always been a topic of debate, both at National as well as International level.[4]

The said debate enumerates from the vagueness of appropriate choice between software copyright protection and patent protection. The argument in favoir of the patent is that copyright protects the expression of the work and not the idea embedded inside the expression. Copyright protects the code of a software while it does not stop the utilization of the idea behind the software. Contrarily, the patent of software protects the key idea and fundamental features of the software. Also, copyright & patent can be complementary in a few regards. Similar to copyright, trade secrets do not secure against innovations and ideas underlying the software that are effectively ascertainable by people in general through free revelation or figuring out. While, Patent, on the other side, shields the “idea” behind the software or the” functionality” of the software. A “software patent” prevents the contenders from delivering the similar product, benefits, or idea irrespective of whether the questioned software has seen the light of the day by way of copying, independent development or reverse-engineering.

“Software patent”, as a term, does not have a universally accepted or approved definition, which remains one of the issues with “software patents”. However, Lemley and Allison have suggested a definition as “an invention that is completely embodied in software, even if the claims of the patent refer to a system or article of manufacture.”[5]

However, there are also arguments against the “software patents” that software is not a subject matter which is patentable. Questions include whether a software is a mere algorithm, mathematical formula, or abstract ideas, ineligible to be patented or it has a technical effect, making it entitled to patent protection[6]; or how can a software fulfil the other requirements necessary so as to be patentable i.e.,

  1. industrial application or usefulness;
  2. novel;
  3. inventive step; and
  4. details of invention must meet certain substantive standards in the patent application.[7]

It is also argued that the very nature of the industry i.e., the pace of software industry development makes it ineligible to the protection.[8] One line of arguments also contends that software patent can prove to be a hurdle in the path of innovation.[9]

While some jurisdictions take software under the umbrella of patent protection, others do not, primarily developing countries, and, also, no uniformity or consistency can be observed among the countries granting patent protection to software.  This paper throws the light on the software patent regime under international framework, Europe, the United States, and India, answering the question whether patent protection is inevitable to the growth of the software industry, the absence of which would impede the development of this emerging industry. The paper also deliberates upon the judicial development correlated with “software patent”.

International Framework

The international framework neither provides for a yardstick on which patentability of software can be judged upon nor provide a concrete answer to the debate on “software patent”. The “Paris Convention for the Protection of Industrial Property” of 1883, the oldest and still in force convention, does not highlight any requirements that could be considered a qualifying test for a software to be eligible for patent protection and leaves entirely on the laws of the adopting member states to decide upon the subject matters that could be afforded patent protection.[10]Also, the Patent Corporation Treaty does not provide an explicit answer whether or not software is patentable, but it does talk about the examination of an international application for a computer programme invention by the office in charge.[11] The office in-charge may or may not consider the examination of such application.

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“The Agreement on Trade-Related Intellectual Property Rights (TRIPS)” tries to wipe away the dirt accumulated on the underneath hidden answer regarding the patentability of software. Article 27 of TRIPS comes to the rescue of “software patents” in the international debate on “software patent”. It provides, “patents shall be available for any inventions, whether products or processes, in all fields of technology, provided they are new, involve an inventive step and are capable of industrial application.”[12] Hence, the TRIPS agreement extends the protection of patent to all fields of technology, provided they qualify the requirements stated in the article. The TRIPS agreement also provides for the exclusions of patentable subject matter[13] and computer software is not one among the defined exclusions. Unlike, copyright protection for computer software[14], TRIPS agreement does not provide explicit patent protection to software. However, the obligation of contracting member states, as provided under the TRIPS agreement, to take all technological inventions, having the potential of industrial application, under the garb of patent protection, may challenge the steps taken against “software patent”.

But the inability of international agreements to provide for an explicit provision for “software patent” makes uniformity in rules apropos of patent protection a hard-pressed task. The TRIPS agreement, through article 27, accords patent protection only to “inventions”. However, the definition of “invention” does not find its place in the TRIPS agreement, putting the definition of “invention” and exclusions concerned under the discretion of member states.[15] The present status quo allows countries to ascertain the extent of patent protection to be accorded to computer programs.[16]

European Framework- European Patent Convention

Around the 1960s, Europe began with harmonizing of patent laws, following which “the Patent Cooperation Treaty” was signed. The UK Patent Act of 1949 provided patent protection to software as the definition of invention meant “any manner of new manufacture….”[17]. Similarly, Germany also had a liberal approach towards “software patent.”[18]However, on 5th October 1973, after rounds of negotiations, 16 countries signed “the European Patent Convention (EPC)” which took the force of law in 1977.[19]Consequently, both, the United Kingdom and Germany, changed their law in conformity with the EPC.

Article 52 provides patent protection to every invention capable of industrial application.[20] However, Article 52(2) also explicitly excludes “programmes for computers”. Although, article 52(2) has to be read with article 52(3), which provides, “Paragraph 2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such.” However, EPC does not define invention.

The case of Viacom Systems Application[21]was the first judicial decision on the issue of patentability of software. Granting patent, the Technical Board of Appeal (TBA) decided that when a technical process is performed through a computer programme and a claimed has been made upon the same process and not over the programme, it cannot be denied the patent protection because the technical contribution, as defined, is something which concerns the state of art. The similar principle of technical effect of software on the invention became a decisive factor for the grant of patent protection to computer programmes.[22] Later, in case of IBM- Computer program product[23]&IBM- Computer Program II,[24] it was decided that if a technical effect has been produced by execution of a programme on a computer, then a claim to such computer programme product cannot be denied patent protection., although the mentioned technical effect must be in addition than mere interaction between the computer and the programme. Further, it was also decided that a solution to the technical problem is enough to provide technical character to an invention.[25] According to case laws, execution or controlling of a technical process does not exclude patent protection, irrespective of its implementation either by software or by hardware. Involvement of a computer programme cannot be a ground to refute patent protection.[26]

Having a technical character is the key to patent protection. The mere obvious physical effect of software shall not be considered as a technical character of a programme, an additional effect i.e., working of an electrical filter or a machine including internal functioning[27]etc., grants a computer programme with technical character. Conclusively, it can be said that an invention with technical character, whether implemented by computer programme or not, can be provided protection of patent protection under EPC.

The United States- An Active Role By Judiciary

Under the laws of U.S, section 101 of title 35 deals with various aspect of patent law it provides that “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter or any new and useful improvement thereof may obtain a patent therefore, subject to the conditions and requirements of this title.”

A bare perusal of Section 101 describes the eligibility criteria for the patentable subject matter. This wider definition has allowed the United States to provide patent in wider areas of technology without any limitation provided that the claimed invention must fulfil the criterion of patentability. Judicial interpretation has also shaped the computer software patent law as to what can be considered as patentable subject matter. 

The fundamental characteristic of the software is different from any other subject matter which has earned patent previously. The main difficulty arises from the fact that software is “not a monolithic work”.[28]  Prior to 1968, court used to adopt narrower view with regard to patentability of software. However in 1968, USPTO adopted new guidelines for examining the criteria of software patent. Under these guidelines, software could be considered as a part of a patentable process only if the entire combination produced a “physical result”. The first software patent was granted by the US on April 23 1968, on an application filed on April 9 1965, which led to the development of the commercial software industry. However, the abovementioned guidelines failed to sustain for long against the Supreme Court rulings. The Supreme Court first addressed the questionability of software patents in 1972, in Gottschalk v. Benson.[29]The court decried that this is an attempt to a patent the algorithm itself. The court held that an algorithm is not patentable. A mathematical formula is like a law of nature, the patent law cannot allow anyone to wholly pre empt a mathematical or law of nature. In Parker v. Flook,[30]the US Supreme Court ruled that the software was similar to mathematics and law of nature, both of which are excluded from being patented and, therefore, was per se non patentable.

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However, Stigma created by Benson and Flook that software was not be patentable, was removed in 1981 in the dictum of Diamond v. Diehr.[31]It clearly opened the doors for software patent by adopting the view that anything under the sun that is made by men or women is a subject matter of patent”. The court held that the computerized process could be patented even if the invention had used a mathematical algorithm

 A new standard of patentability of computer programmes was established by Diehr[32], following which various tests were evolved by the US courts in different cases to check patentability of a subject matter to earn a patent. In ReAlappet,[33]the federal circuit court held that certain type of mathematical subject matter represents nothing more than an “abstract idea”   unless it has some “practical application”. The Court gave a new test to determine the patentability on the basis of practical application i.e., any software would be considered eligible if it produced “useful, concrete and tangible result”.

A drastic change came in 2008, when in Re Bilski[34]the Circuit Court while rejecting all tests developed by previous decisions held that the decisive criterion of patentability was to be found in the classic “machine-or-transformation test”. The Supreme Court, while affirming Bilski v Kappos,[35]held that the “machine-or-transformation test” is a very convenient way to determine patentability, but not an exclusive or exhaustive test, and hence, all software need not meet the “machine-or-transformation test” to be a patentable subject matter[36] and left it upon lower court’s discretion[37]. The court also suggested an additional way to test eligibility if the claimed software participated in the “basic computer operation of a computer”. The test was applied affirmatively in Alice Corp. Pty. Ltd. v. CLS Bank International[38] i.e., for the “patentability of an abstract idea there must be an additional inventive concept having additional features beyond the concept”[39]. However, after the Bilski[40] decision eligible patent subject became a pure matter of litigation due to a broad interpretation of section 101.

Indian Scenario

The software industry in India is one of the fastest growing sectors with an average growth of 50% in the last decade. India is one of the leading sourcing destinations across the world, “accounting for approximately 55 percent market share of the US$ 185-190 billion global services sourcing business in 2017-18”[41].

The Indian Patents Act 1970 governs all aspects of patent law in Indian. In India, the status quo is that software will not be considered patentable if it does not have any technical application. Section 3(k) of the Act, as amended in 2002, explicitly excludes computer programmes from patentability as “a mathematical or business method or a computer or algorithm is non-patentable”.

The amendment of 2002 in the Indian Patents Act 1970, through section 3(k), made software patents per se a subject matter of non-patentability but not in totality. Use of the word “per se” implies that the legislative intent was to allow the patent to those inventions which are more than “software”.   However, the Patents (Amendment) Ordinance of 2004 brought a glimmer of “hope by expending the ambit section 3(k)[42], which allowed the patentability of software which was either in combination with hardware or had technical application. However, due to rejection by the Parliament of the ordinance in 2005, the change was short lived and the industry could not substantially make use of this opportunity to their benefit. The rejection by the Parliament pulled back the status quo of software patents to its earlier pedestal.

In 2005, Indian patent office issued the Draft manual of patent for practice and procedure, providing the guidelines for granting of patent to the computer programme related inventions. The guidelines stated that “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 method claim should clearly define the steps involved in carrying out the invention. It should have a technical effect.”[43]  The conviction of the guidelines was to allow patent protection only to such inventions which had technical effect and hardware limitation. Tragically, these guidelines failed to be implemented uniformly among various patent offices across India because of the non-binding character of guidelines. Again an attempt was made by the government in 2008, a draft manual containing the guidelines was issued which was more elaborated on points but was similar in content. It also failed to remove ambiguities.

Until 2015, in the absence of any directions, there were inconsistencies among the four patent offices (Delhi, Kolkata, Mumbai, Chennai) across India, in granting of patents to software. In order to wipe out such inconsistencies, guidelines were issued by controller of patents in 2015, known as Computer-Related Invention Guidelines (CRI Guidelines). Under the 2015 guidelines, a patent could be issued to software if it fulfils certain conditions. However, the guidelines of 2015 were recalled because they were proved to be violating of section 3(k)[44]. Finally, in 2016, new CRI guidelines were issued, altering the prior position on granting of a software patent. A new criterion called ‘novel hardware requirement’ was introduced. Under the 2016 guidelines, the inventor must show that “invention included a computer program in conjunction with a novel hardware”. The 2016 CRI guidelines cleared the air of legal ambiguities in relation to software patenting in India. Subsequently, in 2017, the Controller General of Patents, Designs & Trade Marks issued revised guidelines which focus on substance over form instead of “novel hardware requirement”. The 2017 guidelines negated the need for “novel hardware requirement” introducing the ease in granting of patent protection to computer software.

Conclusion

Today economies are developing at a very fast pace and so does their respective software industry. New inventions or developments, playing a crucial role, are remodelling the software industry every day. Also, with the active participation of various stakeholders in matters of intellectual properties i.e., courts, governments, society etc.  The value and scope of patent protection is swelling and likely to be changed over time. A lot of ink & judicial efforts have already been put in while defining the scope of patent protection in matters apropos of computer software.

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A bird-eye view of global patent policies and legal framework weighs the balance towards a stronger patent regime. The TRIPS agreement may act as a shield against any blanket ban on software patent advocating for software patents.[45] The EPC does not shut the doors on software for patent protection. Similarly, the United States also has a much clear stance on “software patent” and the CLS Bank International v Alice Corp. Pty. Ltd[46] is a widely celebrated judgment among the advocates of “software patents” globally. However, there are concerns around the world against software patents including software being an algorithm which should be given copyright protection; patent protection is not a fit with the rapidity of developments in the industry and many more.

However, the need of the hour calls for reform in the area of “software patent”, failure to do so might impede the pace of evolution of the software industry. Patent regulators play a vital role in stronger software patent regime and India’s Controller General of Patents, Designs & Trade Marks needs to have a more active role when compared with its counterparts i.e. the United States’ USPTO and European EPO. Further, there is a need to clear the thin, line when an invention surpasses per se stage and turns into a full-fledged patent invention. Although the debate regarding patentability of software has been turning in favour of the advocates of software patent, the huge chunk of this development of favour of software patent is owed to the active and progressive role played by the judiciary around the world, still the jurisprudence of software patent needs more clarity and there is a need for stronger and dynamic role of executive, legislature and judiciary for spreading the horizons of software patent.


[1] Gregory A. Stobbs, Software Patents (2nd ed. Aspen Publishers 2007). 

[2] The National Association of Software and Services Companies (NASSCOM) is the trade association of Indian IT Industry.

[3] Arun Thukral, Outlook 2019: IT Swings Between Big Opportunities, Small Challenges, The Economic Times (Jan. 2, 2019), https://economictimes.indiatimes.com/markets/stocks/news/outlook-2019-it-swings-between-big-opportunities-small-challenges/articleshow/67346582.cms.

[4] Tomoko Miyamoto, Patenting Software, World Intellectual Property Organization, (November 19, 2019) https://www.wipo.int/sme/en/documents/software_patents_fulltext.html. 

[5] John R. Allison & Mark A Lemley, Who’s Patenting What? An Empirical Exploration of Patent Prosecution,

53 Vanderbilt L. Rev. 2099, 2110 (2000).

[6] S.k. Verma, Raman Mittal, Legal Dimensions of Cyber space, (2nd ed. Indian Law Institute, 2004).

[7] supra note at 3.

[8] Gordon Irlam & Ross Williams, Software Patents: An Industry at Risk, (November 19, 2019), https://tech-insider.org/free-software/research/acrobat/9401.pdf.

[9] Ravindra Chingale & Srikirishna Deva Rao, Software Patent in India: A comparative Judicial and Empirical Overview, 20 J.I.P.R. 210, 212 (2015).

[10] The Paris Convention for the Protection of Industrial Property art. 1 (1883).

[11] Regulations under the Patent Cooperation Treaty Rule 39.1 & Rule 67.1.

[12] Agreement on Trade-Related Aspects of Intellectual Property Rights art. 27.1 (1994); Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994).

[13] Agreement on Trade-Related Aspects of Intellectual Property Rights art. 27.2 & 27.3 (1994); Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994).

[14] Agreement on Trade-Related Aspects of Intellectual Property Rights art. 10.1 (1994); Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994).

[15] U.N.C.T.A.D., I.C.T.S.D. Resource Book on Trips and Development, 357 (2nded.,Cambridge University Press 2005).

[16] supra note at 6.

[17] The Patents Act 1949,§ 101.

[18] L. Ford, Alchemy and Patentability: Technology, ‘Useful Arts,’ and the Chimerical Mind-Machine, 42 Cal. L. Rev. 49, 100 (2005).

[19] European Patent Office, The History of the E.P.O., (November 19, 2019), https://www.epo.org/about-us/timeline.htm.

[20] European Patent Convention art. 52(1).

[21] Viacom International Inc. v. YouTube Inc. (1987) O.J.E.P.O. 14.

[22] Koch and Sterzel, (1988) O.J.E.P.O. 19.

[23] I.B.M.- Computer program product,T 1173/97.

[24] I.B.M.- Computer Program II,T 935/97.

[25] I.B.M.-Computer Related Invention,T 115/85.

[26] European Patent office, Patents for software? European Law and Pratice (November 19, 2019), https://www.epo.org/news-issues/issues/software.html.

[27] (1990) E.P.O.R. 91.

[28] Andre’s Guadamuz Gonzalez, The software patent debate, 1 Journal of Intellectual Property Law & Practice 196, (2006).

[29] Gottschalk v. Benson 409 U.S. 63(1972).

[30] Parker v. flook 437U.S. 584(1978).

[31] Diamond v. Diehr 450 U.S. 175 (1981).

[32] id.

[33] In Re. Alappet 33 F.3d 1526 (Fed. Cir. 1994).

[34] In Re Bilski 545 F.3d 943, 88 U.S.P.Q.2d 1385.

[35] Bilski v Kappos 130 S. Ct. 3218 (U.S. 2010).

[36] The Supreme Court stated, “It may not make sense to require courts to conine themselves to asking the questions posed by the machine-or-transformation test. Section 101’s terms suggest that new technologies may call for new inquiries.” id. at 606.

[37] The Supreme Court directed to the Federal Circuit for the expressly determining patent eligibility in that case—and for the implied purpose of providing  flexible rules for providing guidance to the public, but the Court did not “take a position on where that balance ought to be struck.”

[38] Alice Corp. Pty. Ltd. v. CLS Bank International 573 U.S. 208, 134 S. Ct. 2347 (2014).

[39] Joseph S. III Bird, A Virtual Analog Rule for Software Patent Eligibility, 8 Landslide 47, (2015), https://www.uspto.gov/sites/default/files/documents/2015ig_f_bird_9nov2015.pdf.

[40] supra note at 35

[41] Indian Brand Equity Foundation, IT & ITeS Industry in India (Dec., 2018), https://www.ibef.org/industry/information-technology-india.aspx.

[42] The amended Section 3 (k) read as “Section 3 (k): a computer programme per se other than its technical application to industry or a combination with hardware”.

[43] Ritushka Negi, Business Method and Software Patent Trends in India (November 19, 2019) https://www.remfry.com/wp-content/uploads/2017/12/2009-Business-Method-and-Software-Patents.pdf.

[44] Yahoo v. Controllerand Rediff,OA/22/2010/PT/CH, 8 Dec.2011.

[45] id.

[46] CLS Bank International v. Alice Corp. Pty. Ltd 768 F. Supp. 2d. 221 (D.D.C. 2011).