Geo focus on India
Abstract ideas
Raj S Davé, G Deepak Sriniwas,
Manisha Singh, Myungjin Ro and
Neil Davey review new guidelines
on software patenting in India, while
comparing US and EU legislation
H
ow has the outlook on patent
eligibility of software-related
invention changed in India?
While patenting software
innovation in the US has been
negatively impacted by the Supreme Court
of the US’ ruling in Alice Corporation Pvt Ltd
v CLS Bank Intl (“Alice”), will India take the
middle ground on software patenting, as in
Europe, in light of the 2017 Computer Related
Invention (CRI) Guidelines? We evaluate the
trends in software patenting in India post the
2015 and 2016 CRI Guidelines, and provide
insight on the future trends in software
patenting in India.
We also compare patent eligibility
standards for software-related invention in
India and the US post-Alice.
Introduction
One of the most important developments
in technology this century has been the
emergence of software as a new field of
innovation. The Indian Patent Office refers
to software-related invention as CRI, which
involves the use of a computer, network,
or other programming platform where the
implementation of features is in part or
wholly found through the means of software.
Particularly, the increasing development
of software as an entirely new platform
of innovation has led to the question of
46 Intellectual Property Magazine
“Unfortunately, it isn’t
a perfect system;
there are times
when vagueness
or overzealous limits
on patent eligibility
may stifle the
growth of a field.”
eligibility in the sphere of patents. As an entire
industry has grown around the development,
implementation, and distribution of software,
protecting this valuable new form of
intellectual property has become paramount
to the health of continued innovation.
Patents aid this process for innovators to
protect intellectual property and encourage
the competition to create new and better
developments in a field. Conversely, patents
also provide boundaries on what can and
cannot be patented, to prevent anything
beyond limited monopolies for innovators
December 2017/January 2018
while allowing them to benefit from their
work. Striking a balance between allowing
for the ownership of ideas, and creating
boundaries on what extent these limits
exist falls upon the various patent offices
and agencies of the nations of the world.
Unfortunately, it isn’t a perfect system; there
are times when vagueness or overzealous
limits on patent eligibility may stifle the growth
of a field. In an industry as fluid and immutable
as software development, making a clear set
of guidelines on software patent eligibility is
the key to allowing protection of software-
related invention though the legal system.
Thus, determining the extent of these
boundaries based on legal standards for
patent eligibility, novelty and inventive step
for software patents presents significant
challenges. In India, the patenting of software
on its own has been and continues to be
ineligible subject matter under the recently
released version of CRI Guidelines on 30 June
2017 (the “2017 Guidelines”), as per Section
3(k) of the India Patent Act of 1970. US law
does not specifically prohibit software patents;
the only exemptions to subject matter eligibility
are: laws of nature, natural phenomena, and
abstract ideas. The June 2014 decision by
SCOTUS in Alice states that abstract ideas
are not eligible for patenting, even when
implemented on a computer. However, the
impact of Alice on software patenting has
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been drastic. Alice has become infamous in
legal circles as being vague; there are few
guidelines on what is or is not “abstract”.
Indeed, there is little question that SCOTUS’
Alice decision has changed the landscape of
software patents. This has in turn led to a sharp
decrease in the granting of software-related
patents within the US. Thus, understanding
how the 2017 guidelines in India and Alice
in the US are being implemented can offer
guidelines to industry and patent practitioners
on how software patents should be handled in
these two countries.
India’s 2017 CRI guidelines
versus the previous guidelines
In India, there have been three versions of the
guidelines for examining computer-related
inventions. The first version was released by
the Indian Patent Office (“IPO”) in August
2015 (the “2015 Guidelines”). However,
just four months after releasing the 2015
Guidelines, the IPO put the same in abeyance in
December 2015 and released a revised version
in February 2016 (the “2016 Guidelines”). The
2016 Guidelines widened the scope of non-
patentability of “algorithms” and increased
the bar on patenting CRI by prescribing the
following three-step test:
• Properly construe the claim and identify the
actual contribution.
• If the contribution lies only in mathematical
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method, business method or algorithm,
deny the claim.
• If the contribution lies in the field of
computer programs, check whether it is
claimed in conjunction with novel hardware
and proceed to other steps to determine
patentability with respect to the invention.
The computer program in itself is never
patentable. If the contribution lies solely in
the computer program, deny the claim. If
the contribution lies in both the computer
program as well as hardware, proceed to
other steps of patentability.
While the three-step test could have been
beneficial for the patent examiners, the
inclusion of the phrase “novel hardware”
in the third step, without accompanying
clarification of this phrase, created serious
challenges for the implementation of the test.
In particular, the test seemed to contradict the
decision of the Intellectual Property Appellate
Board in Accenture Global Service GmbH v
Asst Controller of Patents and Designs.
An analysis of the controller’s decisions for
grant of software-related patents during the
period of September 2015 to November 2015
(grants governed by the 2015 Guidelines) and
September 2016 to November 2016 (grants
governed by the 2016 Guidelines) indicates
that when the 2015 Guidelines were in force,
the rate of grant was 94% and the rate of
rejection was 6%. However, when the 2016
Guidelines were in force, the IPO seemed to
have taken a rigid stance on the need of “novel
hardware”, thereby resulting in a decline in
the grant rate. In particular, the grant rate was
83% and the rate of rejection was 17% post
the 2016 Guidelines.
Fortunately, the 2016 Guidelines were in
effect for only close to 15 months (between
February 2016 and June 2017) as the IPO
issued a latest version of CRI-Guidelines on 30
June 2017 ie, the 2017 Guidelines. One of the
substantial changes in the 2017 Guidelines is
the deletion of the three-step test.
While the three-step test is deleted in
the 2017 Guidelines, additional language is
added to other sections to reinforce the patent
intelligibility of pure software innovation. Also,
the 2017 Guidelines require the examiner to
look at the invention as a whole and hold
the invention as non-patentable, if any claim
in any form falls under the categories of
exclusion under Section 3(k). Thus, as the
intent of the IPO appears to be to reduce the
emphasis on “novel hardware” (as contained
in the three-step test of the 2016 Guidelines),
the 2017 Guidelines now offer an opportunity
for computer-related inventions to be critically
examined without the requirement for
including a “novel hardware” in the claim. The
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Geo focus on India
other improvement in the 2017 Guidelines
relates to deletion of all portions of the 2016
Guidelines that negated inventions involving a
general purpose computer, more particularly,
claims reciting a processor and a memory.
Yet another change in the 2017 Guidelines
pertains to “mathematical methods”. While
the 2016 Guidelines were substantially
silent on “mathematical methods”, the
2017 Guidelines contain a directive that
“the exclusions may not apply to inventions
that include mathematical formulae and
resulting in systems for encoding, reducing
noise in communications/electrical/electronic
systems or encrypting/decrypting electronic
communications.” In light of such a clear
directive, one expects that inventions directed
to these technical domains would not be
subjected to rejections under grounds of
patent ineligible subject matter.
While the 2017 Guidelines have limited
examples as compared to the 2016 Guidelines,
it is good to note that the examples do not
pertain to cases that were merely decided by
the Controller and, therefore, not subjected to
a legal challenge in court.
In the domain of business methods,
the contents of 2016 Guidelines and the
2017 Guidelines are substantially similar.
The examples are in-line with the opinion of
the Appellate Board in Yahoo v Controller
of Patents & Rediffcom India Ltd; there is no
substantial change in the position of the IPO.
One cause of concern pertains to the
treatment of the term “algorithm” in the
2017 Guidelines. Despite the fact that there
are several Indian judicial precedents, such
as the Enercon India Ltd v Aloys Wobben,
Ericsson v Intex, and Ericsson v Lava, dealing
with the term “algorithm”, neither the 2016
Guidelines nor the 2017 Guidelines seems to
have adopted the consistent findings of the
tribunals from these cases.
While it is clear from the 2017 Guidelines
that the IPO has to now critically examine an
application and that a rejection cannot be
based merely on the account of non-existence
of “novel hardware”, it will be interesting to
watch how the IPO will interpret the statement
“if in substance, the claim, taken as whole,
does not fall in any of the excluded categories,
the patent should not be denied” as contained
in the 2017 Guideline.
Comparisons with the US
There are many similarities and differences
between the problems for software patenting
in India under the CRI Guidelines and that in
the US under the Alice decision. The ineligibility
of patenting “abstract ideas implemented
on a generic computer” has caused the US
Patent and Trademark Office (USPTO) to issue
Intellectual Property Magazine 47
 Geo focus on India
countless 101 rejections on numerous patents
for computer-related inventions since Alice.
In Alice, SCOTUS articulated a two-step
process for assessing patent-eligible subject
matter in the context of computer-related
inventions. Initially, determine whether the
patent claim at issue is directed to an abstract
idea. If so, consider whether the claim elements
individually or in combination “transform” the
claim into a patent-eligible invention. For the
second step, SCOTUS in Alice explained that
“the mere recitation of a generic computer
cannot transform a patent-ineligible abstract
idea into a patent-eligible invention.”
Further, according to the court, claiming well-
understood, routine, and conventional features
specified at a high level of generality does not
suffice for an “inventive concept”. But the
court provided little guidance beyond those
somewhat extreme examples. In addition, the
court did not “labour to delimit the precise
contours of the ‘abstract ideas’ category”.
Absent clear guidance from SCOTUS, lower
courts have at times had difficulty determining
what constitutes an abstract idea and what
amounts to an inventive concept.
Following the outcry against the 2015
CRI Guidelines, the Office of India’s Controller
General of Patents, Designs, and Trademarks
drew a very clear line in the sand in the 2016
CRI guidelines. The three-step process in the
2016 CRI Guidelines, while stringent, provided
transparency for eligibility of software patents,
thereby clearing up the confusion from 2015.
However, with the omission of the three-step
process in the 2017 CRI Guidelines, the intent
of the IPO is not quite clear. It removes specificity
from the guidelines, while maintaining certain
basic exemptions with numerous references to
Section 3(k).
Like Alice, the 2017 Guidelines are lacking
in clarity. While Alice fails to articulate a clear
definition for what is or is not “abstract”, the
2017 Guidelines also do not clearly define to
what extent an innovation must encompass
more than purely computer program to be
considered outside the scope of the Section
3(k) exemption. Without the explicit inclusion
of the phrase “novel hardware” in the 2017
Guidelines, it would be now up to Indian
patent examiners to decide whether a claim
directed to a software-related invention falls
within the realm of patent ineligible subject
matter.
Alice marked a clear departure for software
patenting from the ruling under Bilksi v Kappos.
Alice held patents to be invalid because the
claims were drawn to an abstract idea, and
implementing those claims on a computer
was not enough to transform that idea into
patentable subject matter. However, what is
an “abstract idea” is an issue that examiners
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at the USPTO and US courts struggle with to
this day. In the case of the 2017 Guidelines,
which do not include the three-step test, the
intent of the IPO is not quite as clear as in the
2016 Guidelines. The underlying message by
removing the three-step test is still unclear. Like
Alice, it is likely that Indian examiners will have
to look to future court rulings to define what
is needed to patent a software innovation
despite the Section 3(k) exemption.
“Given the poor
health of software
patenting in India,
it would be another
lost opportunity for
Indian information
technology companies
if the ambiguities in
the 2017 Guidelines
are construed against
software-related
invention.”
Based on the current climate of software
patenting, it seems improbable that the 2017
Guidelines may spell a further drought of
computer program patents in India, despite
the similarities between Alice and the 2017
Guidelines. While the similarity to Alice in its
ambiguity is unfortunate, without the three-
step test, the onus of determining eligibility
rests purely on the examiner who is guided
by the judicial precedents available on the
subject. Examiners are likely to consider the
removal of the three-step test as a sign to
decrease Section 3(k) rejections. As the current
Indian judicial precedents are in line with the
European position on patent eligibility of
software-related invention, it is unlikely that
Indian examiners will adopt the conservative
approach of the USPTO post-Alice, and
thereby take an even stricter approach to any
claim directed to a software-related invention.
Given the poor health of software patenting
in India, it would be another lost opportunity
for Indian information technology companies
if the ambiguities in the 2017 Guidelines are
construed against software-related invention
as is currently done by the USPTO post-Alice.
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Summary
In India, as in the US, the most serious challenge
with the newly revised CRI Guidelines of 2017
arises from ambiguity in the 2017 Guidelines.
Software patents in the US have declined in the
face of unclear definitions for “abstract idea”
and “generic computer”. While removal of the
three-step test has also reduced the emphasis
on “novel hardware” in India, there is still a
need to remove the ambiguity surrounding
the term “algorithm” in the 2017 Guidelines.
The cases and patents issued post-2017
Guidelines will likely have a defining impact in
providing examples of patent eligible subject
matter for software-related patents in India.
One can only hope that the 2017 Guidelines
would be a significant improvement for patent
eligibility of software-related invention in India,
and furthermore let’s hope that India does
not adopt the post-Alice standards from the
US. If instead India was to adopt the current
European standard for determining patent
eligibility of software-related invention, then
maybe for once India can proudly state to the
world that it is more patent friendly than the
US, at least towards software patenting.
Authors
Raj S Davé (top left)
is the president and
founder of Davé Law
Group, Virginia, US.
G Deepak Sriniwas
(top right) and
Manisha Singh
(middle left) are
partners at Lex Orbis,
New Delhi, India.
Myungjin Ro (middle right) is a 2017
graduate from Georgia Institute of
Technology. Neil Davey (bottom left) is an
undergraduate at Harvard College and is
admitted to Harvard Law School.
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