SPR4: Safe Communications Patent Makes Software Development Risky

In search of illusory incentives

The major theoretical argument used by the supporters of software patents is that of incentivization. This utilitarian school of thought argues that incentives will improve production and innovation in the industry. Following this, software patent supporters argue that the denial of software patents will have a negative impact on the market. In this fourth edition of our Software Patents Review (SPR4), we will delve into the veracity of such arguments, by examining application no. 202247048192 which was granted on 07/03/2024 (Patent Number:522012) to INTERNATIONAL BUSINESS MACHINES CORPORATION (US Corporation). This was an application for a patent on Secure Key Exchange in a computing environment.

Fig. 1- From the Complete specification

As we can see the invention relates to a method of ensuring safe communication between computer networks. It involves creation of safety keys using a set of mathematical procedures and rules to encrypt and decrypt data (cryptographic algorithm). Eventually, such keys are exchanged between networks to ensure safe communication. The algorithm to create and read such keys is the soul of the so-called invention. The Patents Act, 1970 which governs the patent regime in India has clearly laid down in section 3(k) that a mathematical or business method or a computer programme per se or algorithms are not patentable inventions. It is well known that patent applicants try to circumvent Section 3(k) by presenting their application as an invention with a technical impact that is achieved through the underlying algorithm. Nevertheless, the legislative history and records clearly indicate that Indian law doesn’t favor extending protection even if there is a technical effect.  

In 2005 while rejecting the proposal of adding the term “technical effect” to Section 3(k), parliamentarian N.N Krishnadas opined that such an extension would be antithetical to the spirit of the common people and the general interest of our country, especially in the fields of pharmacy and software. Section 3 of the Indian Patents Act specifies what are not inventions under the Indian Patents Act. Following these debates, the Indian parliament rejected the proposed amendment to Section 3(k) which read as follows:

“(k) a computer programme per se other than its technical application to industry or a combination with hardware;

(ka) a mathematical method or a business method or algorithms”

Instead, the old language for Section 3(k) was reinstated and it now reads as follows:

(k) a mathematical or business method or a computer programme per se or algorithms;

This makes it abundantly clear that “technical application to industry” or “a combination with hardware,” does not make software a patentable subject matter. However, applicants for software patents draft their application in a way that obscures its clear nature as an algorithm or mathematical function. In this instance too, the invention is presented as a technical combination, with nodes and hubs. In reality, all these components are not part of the invention, but rather the environment in which the algorithm is employed. So, the statutory test should entirely be focused on the algorithm that enables this safe key communication. 

It is important to note that there is a marked distinction between the role played by the legislature and executive in granting patents. It is a well recognised principle in administrative law that law-making powers rest with the legislative body, which is the Indian Parliament. The executive’s role is implementing the law. Here through the Patents Act,1970 the Indian Parliament has taken a policy decision regarding the patentability of software. But as we see in this application, the executive wing (IPO) is making further policy choices in the legislation. This is against the fundamental principles of administrative law. If IPO is left to make such policy decisions we will have no assurance about the basic tenets of patent law being protected. On the other hand, such policy decisions deviating from the legislative intent will also open the floodgates for litigation. 

The analysis of the procedural history of this application, and others like the patent on online voting, seems to suggest that the IPO’s patent examination process needs a major overhaul, especially when it comes to interpreting the will of the Indian Parliament with respect to Section 3(k). Flooded with applications we can either have an infinite wait or approvals without proper application of mind. In this application, the examination report rightly pointed out that the claims were not novel and lacked an inventive step. The response was that this has solved a technical problem of how to establish a secure communication channel between an initiator node and a responder node. This argument of presenting a solution to a problem as the criterion for patentability comes from the incentive theory that we discussed. It indirectly claims that if patents are given to such inventions, it will incentivize companies to invest more in such problem-solving inventions. 

Even though this sounds like a valid argument, it is seriously ignorant of the real theoretical basis of the utilitarian approach to IP. If we go back to the etymology of the word patent, it can be traced back to the old French term “patente” which means open. It also has a Latin root with the word “patere” which means to "lie open.” The etymological analysis reveals how important the idea of openness is within the patent framework. The patent framework aims at regulating openness and sets the maximum term of exclusion to 20 years. Every application should be approached keeping in mind the pre-eminence of openness. The real objective of IP protection is to achieve the golden balance between stimuli for creativity and access to those creations. In the case of the present application, the balance has been lost. The very nature of the invention is crucial in determining the balance. The invention at hand relates to a security feature that is very much quintessential for the growing online web. If such an important technology is granted a 20-year patent monopoly (that too to a foreign MNC) would mean that Indian software companies will not be able to develop similar mechanisms. They have to wait for 20 years to develop models like this. 

As we know 20 years is a long time in the tech world and by that time this mechanism might have lost its relevance. The only option left for them would be to get it licensed from IBM. This will be impossible for many of the grassroots level software startups in India. Indian developers building on this mechanism would also enable the availability of affordable versions at large. By granting the patent, both development and access are compromised. Access is important beyond its theoretical significance. If such a safety key mechanism is open for innovation it will help in developing more sophisticated and effective safety key mechanisms, and will also enable the development of field/industry-specific innovations in safety key. But Indian examiners miss this point while dealing with the mirage of technical effect. The argument of incentive is always countered by a stronger argument of innovation and access in the case of such algorithms.

A more disturbing fact is that, in the first information report the examiners found that the invention comes under section 3(k) and thereby goes out of the scope of patents. But the action they took is quite surprising.

Fig. 2 – from the reply to objections filed by the applicant

They advised the applicant to remove the words that give the impression of it being an algorithm. Applicants using the tactic is more or less understandable. But the examiners advising it are beyond comprehension. Why would they focus on the wording rather than the actual nature of the invention? A pro-patent approach in software might be guided by the belief that it will incentivize further inventions. This emotion was in the scene from the beginning itself. However, as we saw in the case of this application, patents not only prevent copying, but will severely hinder innovation, and that too for a period of 20 years. To put the final nail in the coffin, I would like to draw your attention to the survey conducted by Stanford University on Indian software patents. This study has shown that the availability of patent protection only has only a minimal impact on the software industry. It was also observed that the absence of patents made no impact on the nature of innovations in the industry. So, the argument in this case that such technical problems will only be solved when there is an incentive for patent protection is baseless. 

Athul Mohan is a LLB (Hons) student at NLSIU.

IBM Secure Key Exchange Patent