Section 3(K): An Amendment To Stifle Or Encourage Creativity?

October 6, 2015by S.L.Soujanya0

Software patentability and the rules associated with it suffer from the lack of uniformity and subsequent ambiguity across the globe. The USA, Singapore and Australia to name a few have encouraged software patentability by granting liberal patents, Europe in general has been opposing on the ground that they are based on established mathematical formulas and do not call for any patentability as they do not involve the crucial inventive step as a patentability criteria.

Earlier there was no software patenting procedure in India. There were no specific guidelines which spoke of software patentability. The computer programs are not patentable per se; however a claim to a manner of manufacture, which results in a tangible product, which requires the application of an algorithm or a particular computer program, may be patentable.

Software protection had always faced an ambiguity of whether being in the protective umbrella of copyrights or the patents. India had first granted a copyright protection to the software programs by giving it a statutory recognition in the year 1984. The amendments were rudimentary in concepts of software hence after setting up a working group in the early years of the 90’s the Copyright amendment act received the presidential assent in 1994. This act read the literary works to include tablets, computer programs and compilations including data bases.

The Indian patents act 1970 speaks of inventions not-patentable. Section 3(k) was first introduced in Indian patent law by the Patent (Amendment) Act, 2002 and through Patent (Amendment) Ordinance, 2004 prohibiting the grant of patents for: “a mathematical or business method or a computer program per se or algorithms”. The phrase per se has been the root cause of all the ambiguity and subsequently the problems arising out of it precisely because it has never been defined in the Indian statute.

A patent office guideline issued on August 21, 2015 the Controller General of Patents, Designs and Trade Marks issued a new set of guidelines for issuance of computer-related inventions, which allows the companies to show innovation in just software rather than in both software and hardware as was previously required. This is believed to ease off the ambiguity generated by section 3(k) and subsequent guidelines issued in the year 2008 due to which several patents have been rejected.

Like any other amendment this set of new guidelines has its hits and misses. The software giants, experts and litigants are having a dual opinion regarding the effectiveness of these guidelines.

The preliminary argument that goes against these guidelines is that software applications are considered to be an applied mathematical form and already is protected under copyrights. The experts argue that software emanates from mathematical calculations and formulae involved hence can only be subjected to copyrights.

The argument also goes about saying that an applied form of logic cannot have a carved boundary thus cannot be patentable. The most quoted example is that of an e commerce model where there are innumerable patents regarding the various systems implemented which are based on software. It becomes very difficult for a developer to decide as to where an innovation line can be drawn. Hence if a logic, formula and mathematics cannot be patented then so cannot be software. There are also practical implications of this because it is very difficult for a software developer to figure out what part of logic has been patented.

The second argument that is put forward is that a sudden amendment of allowing software patentability would lead to a mad rush and competition to patent the existing software thus killing innovation and the patentability scope for ever. Petty litigations like law suits over one click buying, software giants fighting over square icons is being witnessed in the systems where software patentability has been signaled. The same would bestow on India and the companies may end up giving away their time for litigations over innovations. This kind of backdoor permission to software patents would seriously affect the growth and innovation amongst the youth.

On the contrary the MNC lobby is very much in favour of software patenting. The MNC’S have filed nearly 95% of the Indian patents so far. Hence with relation to software too they exhibit an upper hand. They preliminarily argue that software thus not just involve formulae or calculations but also involves loads of technicalities which very much satisfy the patentability criteria.

The guidelines, issued on August 21, allow companies to show innovation in just software, rather than in both software and hardware as was previously required. This comes as a huge advantage to the BPO industry as most of the IPR protection for software in particular the business method is filed by them. TCS, NASSCOM, WIPRO are some of the companies who file the maximum software patents globally as per their annual reports.

Another advantage is that the need to amend the claim language in some cases will be taken care by the new guidelines thus creating a lesser need for hearing. It is also believed that this would also help the examiners to judge in a better way about software patentability as to whom to be awarded and vice versa. The new guidelines would expand the software inventions and also give a system support to innovations thus nurturing the software industry by helping the indigenous as well as the software companies worldwide.

Indian software industry mainly consists of five main components, viz. Software Products, IT services, Engineering and R&D services, ITES/BPO (IT-enabled services/Business Process Outsourcing) and Hardware. The growth exhibited by the industry has been around 12% to 15%. IT is useful in all the sectors and thus forms the backbone of the economy of a country. Two thirds of the revenue of the Indian software Industry is generated from its exports.
On the whole there is seen a pro patent shift by the software giants with an ambiguity on the language of article 3(k) still persisting. More clarity is sought out for the same. At the same time it is highly important to know the patentability boundaries in order to make the most of this amendment in software thus inducing a lot more confidence in terms of innovation and curbing the chances of litigation.

S.L.Soujanya

S.L.Soujanya

Ms. S.L. Soujanya is a registered Patent agent with an academic background in Pharmaceutical sciences. She holds a Bachelor’s degree in Pharmacy from the Osmania University, Hyderabad and holds a Post Graduate Diploma in Intellectual Property Rights Law from NLSIU, Bangalore.

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