SPR5: A Business Method Masquerading as an Invention

In the world of technology and innovation, the debate surrounding software patents has been a contentious and long-standing issue. While patents have traditionally been granted for physical inventions and processes, the application of patenting to business methods and software has raised significant concerns among industry experts, developers, and legal scholars. This article delves into normative and empirical aspects of a patent granted to a software product.

The patent application number 202121032157 was granted a patent on 27/04/2023. This patent deals with receiving data from diverse machines, identifying the data definitions present in the file, comparing it with the centralized database or the master data, transforming the data to ensure it fits into the master database, linking the transformed data file with the master data in real-time using Artificial Intelligence (AI) and Machine Learning (ML) techniques, and thereby creating a transformed data file and remotely accessing the output file for data analytics.

Figure 1: Patent Summary

Figure 2: Patent Application 

The patent has been granted to a software that is classifying the data, received through a sensor, and pigeonholing it into the master data categories. Apart from the fact that it is the sensor that is sending data, there is no application of the data. Section 3(k) of the Patent Act of 1970 denies patents for “mathematics, business methods, software per se, or algorithms,” as they are not considered innovations. The application says that the transformed file is used for real-time data analytics. 

In replying to the notice given by the examiner the applicant says that the invention is more than a sequence of computational steps and the claimed invention provides a technical solution. However, it fails to reason out the same. The applicant cites Delhi High Court’s decision in the case of Telefonaktiebolaget LM Ericsson V. Intex Technologies (India) Limited which said that any invention that has a technical contribution is patentable.

However, this patent must be reviewed with Section 3(m) of the patent act which states that “a mere scheme or rule or method of performing a mental act is not patentable.” Here the mental method is nothing but the matching of the input data and slotting it into the master database. Take the examples cited by the applicant. The master data is shown in Figure 1. Here the input of the plurality of data definitions must be fit into the master definitions. This can be done mentally very easily and the mere act of encoding a mental model or a business method in software does not make the resulting method patentable.

Figure 3: The system transforms the plurality of data definitions into the master definitions using a set of data transformation techniques

While the patent is legally untenable, normatively speaking granting a patent to software would be disastrous for the growth of innovation. For instance, the patent given to this applicant would bar any derivative use of this data transformation technique. This means that any other person arriving at the same output independently using deductive logic would be a potential patent violator as “independent invention” is not a valid defence in patent law. 

Now that this patent has been granted, this logic, or the process of arriving at the output, cannot be used without the prior permission of the creator. This will have a chilling effect on innovation and growth of the software industry. Software patents have the potential to stifle innovation and create complex patent thickets, where multiple patents cover overlapping functionalities. This scenario creates a barrier to entry for new innovators and startups, as navigating a maze of patents becomes a costly and time-consuming affair. It also makes no sense to grant a patent for twenty years for software whose shelf life is not beyond 5 years due to the rapid technological evolution. Software cannot be treated in the same class as that of a product for the purpose of patents. Unlike software whose utility is limited to 2-5 years, for any invention in products like Air conditioners or Washing machines, their usage would start only after 2-5 years after they are invented to peak in 8-12 years and its market would decline after 15-18 years. Hence it makes sense for granting a patent for 20 years for such products, but not software.

The observation in the case of Telefonaktiebolaget LM Ericsson V. Intex Technologies (India) Limited that any invention that has a technical contribution is patentable is problematic. In the recent case of OpenTV Inc. v The Controller of Patents and Designs and Anr, the Delhi High Court held that inventions that have a technical effect or solve a technical problem can be excluded from the scope of Section 3(k). The courts have failed to understand that any software can be shown to have a technical effect or make a technical contribution. The intent of the legislature was not to allow a broad category of software to get patents. However, increasingly many software and business methods have been granted patents in recent times. 

Considering the various challenges outlined, it is apparent that granting patents for software does not foster technological advancement and innovation as intended. The abstract nature of software code, coupled with its rapid pace of evolution, creates problematic situations like overlapping patent claims that obstruct progress. 



Rather than relying on patents, the priority should shift to alternative means of safeguarding software innovations that avoid such pitfalls. Protection like copyright provides sufficient legal support for software creators while still allowing the free inter-mixing of ideas, collaborative efforts, and iterative improvements that are crucial drivers of progress in this space. It is important to cultivate an environment that is helpful to innovation, cooperation, and sharing of knowledge across the software industry. We will have to look at alternate Intellectual Property regimes to ensure there is some protection for software. The new approach must not just help innovation to thrive, but also help the welfare of the society as a whole.