Sunday, September 03, 2006

Business Method Patents [India]

Can business methods be patented?

Business method patents, granted for particular business models unique to a particular organization, have been the subject of mounting interest and controversy among business leaders in the digital media, internet and e-commerce sector.

As business method patents were not specifically addressed, there remains a controversy over the relationship between the requirements under Article 27 of TRIPs for patentability "for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application" and the necessity of granting software and business method patents.

Business method patents were initially regarded as unpatentable. Then, in 1998, the court in the case of State Street v Signature Financial held that a business process patent could be granted on the same basis as any other invention. The requirement imposed by the USPTO on such grants from 2001, which said that business method inventions must apply, involve, use or advance the "technological arts," was removed by a majority decision of the board in Ex Parte Lundgren in October 2005 on the basis that no such requirement existed in law.

However, the Indian position following the January 1 2005 amendment to the Patent Act remains that computer programs, however sophisticated, are not patentable. Patentability depends on whether the software has a necessary technical application to the industry or whether it is intrinsic to or "embedded" in hardware. This runs parallel to the position of software patenting in Europe where the focus is not on software or computer programs as such, but on whether the software or computer programs are "sufficiently technical in nature", or, in other words, it should have a "technical application to industry" or should be a combination with hardware.

The rigidity of the Indian position is mainly supported with the argument that it is to curb the risk of trivial patents choking the life out of real innovations and inventions. But as a growing economy with a vibrant emerging software industry, India could benefit from a more relaxed position. As a result, the legal position on the patentability of such claims requires rethinking.

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