In an appeal decision, the Delhi High Court recently overturned the rejection of two patent applications filed by Ab Initio Technology LLC, concerning data processing methods. These applications, Nos. 6500/DELNP/2011 and 6501/DELNP/2011, were refused by the Assistant Controller of Patents and Designs on the grounds of non-patentability under Section 3(k) of the Patents Act, 1970, as they were deemed to be computer programs per se, and for failing to meet the criteria for divisional applications under Section 16(1).
Ab Initio Technology LLC argued on appeal that the inventions in question were not mere software programs but involved advanced data processing techniques with clear technical effects. It argued that technical effect specifically subsisted in the claims related to methods for improving the speed of functional dependency analysis and optimizing computational resources. Ab Initio submitted that the technical effects produced by its inventions brought them outside the scope of Section 3(k).
The Patent Office, however, maintained that the claimed inventions were purely algorithmic and lacked the necessary technical character required to bring them outside the scope of Section 3(k). The office argued that the inventions merely involved software instructions executed on general-purpose computers without any substantive technical innovation, and fell squarely within the scope of the exclusion under Section 3(k).
In its ruling, the court analyzed the legislative intent behind Section 3(k) and relevant judicial precedents. It noted that the exclusion of computer programs per se from patentability does not extend to inventions that demonstrate a technical effect or solve a technical problem. The court recognized that modern inventions often integrate software with hardware to achieve significant technical advancements and that such contributions should not be excluded from patent protection.
The court determined that the inventions claimed by Ab Initio Technology LLC demonstrated a clear technical effect by enhancing the efficiency and speed of data processing operations. Consequently, the court held that the rejection of the patent applications under Section 3(k) was invalid. Furthermore, the court determined the divisional applications to be valid under Section 16(1), as they were based on distinct inventive concepts disclosed in the original parent application.
As a result, the court set aside the orders rejecting the patent applications and remanded the matter back to the Controller of Patents for an examination of the inventions for satisfaction of the inventive step requirement. The court instructed that this reassessment should consider the technical advancements claimed by the appellant in its submissions.
Section 3(k) and Technical effect
Relevant paragraphs from the case relating to the technical effect required under Section 3(k) read as follows:
“23. Since the discussion focuses on the scope, width, and ambit of Section 3(k) of the Act, it would be instructive to give a brief overview of the legislative evolution, the opinion of commentators, and Courts.
LEGISLATIVE HISTORY OF SECTION 3(K)
24. The legislative aspect has been usefully elaborated in a decision by a Coordinate Bench of this Court in Microsoft Technology (supra). No purpose would be served in reinventing the wheel and repeating the same. However, for purposes of ease of reference, the significant milestones in the evolution of Section 3(k) of the Act are summarized as under:
(I) Constitution of the Committee under Justice Bakshi Tek Chand in 1948 for review of patent laws in India – Recommendations were submitted in April 1950, basis which the Bill No.59 of 1953 was presented in Parliament. This introduced provisions prohibiting certain categories of inventions from patentability. However, since the Government did not press for this Bill, it lapsed.
(ii) Constitution of the Committee under Justice N. Rajagopala Ayyangar, Retd. Judge of the Supreme Court of India, in April 1957 to review patent laws in India. The report [‘Ayyangar Committee Report] was submitted in September 1959 emphasizing inter alia on “what inventions should be not patentable”.
(iii) Bill No. 62 of 1965 introduced in Parliament based on the Ayyangar Committee Report added Section 3 under Chapter II titled “Inventions Not Patentable”, however, did not include any mention of computer program or algorithm. This Bill eventually lapsed.
(iv) Bill No. 120 of 1967 was introduced in Parliament reproducing provisions of Section 3 from the 1965 Bill, and enacted finally as the Patents Act, 1970. There was no mention of computer program or algorithm under Section 3.
(v) The Agreement on Trade Related Aspects of Intellectual Property Rights [‘TRIPS Agreement’] entered into force on 01st January 1995 by member nations of the World Trade Organization [‘WTO’] for minimum standards for regulation of different forms of intellectual property by national governments. Article 27 provided exclusions to patentability.
(vi) Patents (2nd Amendment) Bill No.49 of 1999 introduced in Parliament with a new entry relating to computer programs inserted as Section 3(k) that read as follows: ‘a mathematical or business method or a computer program or algorithm’. It did not mention the term ‘per se’.
(vii) Joint Parliamentary Committee constituted to consider this Bill of 1999, tabled a report on 19th December, 2001 and recommended insertion of the word ‘per se’ along with ‘computer program’. In an attempt to clarify this insertion, the JPC stated inter alia that ‘the intention here is not to reject them for grant of patent if they are inventions. However, computer programs as such are not intended to be granted patent’.
(viii) The 1999 Bill was finally passed in 2002 and came into force as the Patents (Amendment) Act, 2002 containing Section 3(k) which read as under – ‘a mathematical or business method or computer program per se or algorithms’.
(ix) Patents (Amendment) Ordinance, 2004 was promulgated with effect from 01st January 2005 with a further clarificatory amendment in Section 3(k) separating computer programs from mathematical methods/business methods/algorithms and excluding from the exception of computer programs ‘a technical application to industry or a combination in hardware’. This Ordinance was not ratified by Parliament.
(x) Post the Ordinance, some other Parliamentary developments occurred and deliberations in that regard are summarized usefully in this paragraph from Microsoft Technology (supra):
“27. Although the changes introduced by the Patents (Amendment) Ordinance, 2004 were not ratified by the Parliament, however, the Parliament passed Statement of Objects and Reasons to the Patents (Amendment) Act, 2005 [“2005 Statement of Objects and Reasons”], which endorsed the “technical contribution” approach for patentability of computer-related inventions [“CRIs”]. The 2005 Statement of Objects and Reasons states one of the objects as:
“(iii) to modify and clarify the provisions relating to patenting of software-related inventions when they have technical application to industry or in combination with hardware;”
28. The Rajya Sabha’s Department Related Parliamentary Standing Committee on Commerce highlighted the need for a clear definition to “per se” under Section 3(k). Later, they also emphasized upon revisiting the Patents Act, 1970 and Copyright Act, 1957 to facilitate twelve (12) inventorship, authorship and ownership by Artificial Intelligence [“AI”]. Relevant portions of the “One Hundred and Sixty First Report on Review of the Intellectual Property Rights Regime in India”, is reproduced hereinbelow:
“ARTIFICIAL INTELLIGENCE AND IPR
…
8.6 The Committee was informed that a framework needs to be developed for patenting of algorithms by associating their use to a tangible result. For example, under the AI guidelines of European Patent Office, abstract mathematical methods cannot be patented. However, it is patented if the mathematical method involves the use of technical means or a device such as computers. Also, linking the mathematical applications and algorithms to practical application makes them a process which could be patented as being practiced in US.
8.7 The Committee recommends the Department that the approach in linking the mathematical methods or algorithms to a tangible technical device or a practical application should be adopted in India for facilitating their patents as being done in E.U. and U.S. Hence, the conversion of mathematical methods and algorithms to a process in this way would make it easier to protect them as patents.”
25. After noting the legislative history, this Court in Microsoft Technology (supra) opined as under:
“29. The aforenoted legislative history of the provision, Statement of Objects and Reasons to the Patents (Amendment) Act, 2005, the Report of Joint Parliamentary Committee on Patents (Second Amendment) Bill, 1999, the parliamentary debates, et al. point towards the shift in relation to grant of patent protection for CRIs. The legislative discussions also emphasize the need for adopting a clear definition to the term “per se” to ensure accurate and consistent application of the law. The said term was added to make it clear that “computer programs as such” are non-patentable. The intent of the amendment was to allow grant of patents to CRIs that involve a novel hardware component or provide a technical contribution to the prior art(s) beyond the program itself. In other words, if a computer program is used in conjunction with a hardware or results in a technical effect/ solves a technical problem, it may be eligible for patent protection. This amendment brings Indian patent jurisprudence in line with international practices.” (emphasis added)
26. The Court further noted the guidelines issued by the Patent Office for the examination of Computer Related Inventions [‘CRIs’] and observed as under:
“Guidelines issued by the Patent Office for examination of CRIs 31. In 2013, the Office of Controller General of Patents, Designs, and Trade Marks [“CGPDTM”] introduced its first guidelines for examining patent applications of CRIs. Two terms were defined: technical effect and technical advancement. These terms are used to assess patent eligibility of a claimed invention in relation to Section 3(k) of the Act. The said guidelines provided seventeen (17) illustrations of CRIs and interpret all of them to be nonpatentable. The necessity of a novel hardware and other features of the said guidelines led to its revision in 2015, wherein a constructive approach towards patentability of CRIs, were introduced. Eleven (11) illustrations were provided, of which, nine (09) were considered patentable and two (02) nonpatentable. Shortly after being released, the same were suspended and subsequently, 2016 CRI guidelines were introduced. These guidelines reflected a return to the 2013 CRI guidelines with a more rigid interpretation of Section 3(k) and were criticized for their lack of clarity and consistency in the examination of CRIs, leading to ambiguity in the industry and also for broadening the exclusions under Section 3(k) of the Act. In response to these concerns, 2017 CRI guidelines were issued which aimed to provide greater clarity and consistency in the examination process of CRIs. Indeed, the said guidelines had a positive tenor and are more progressive regarding patentability and examination procedure of patent applications of CRIs under Section 3(k) of the Act. The revised 2017 CRI guidelines have done away with the three-step test laid down in the 2016 CRI guidelines and the requirement of novel hardware in conjunction with a computer program (software) when method claims qua a new computer program in combination with the hardware are being claimed. The focus in the 2017 CRI guidelines appears to be on substance over forms and claims.” (emphasis added)
27. In Fend Allani (supra), these guidelines were also discussed. The Court held that in consonance with the inclusion of the term ‘per se’, inventions based on computer programs should not be refused patent and the Court has to assess the aspect of ‘technical effect’ and ‘technical advancement’ for determining patentability of CRIs.
28. Clause 3.15 of the CRI Guidelines, 2013 provided examples of technical effect; the same is being reproduced herein for ease of reference:
“3.15 Technical Effect:
It is defined for the purpose of these guidelines as a solution to a technical problem, which the invention taken as a whole, tends to overcome. A few general examples of technical effect are as follows:
-
- Higher speed
- Reduced hard-disk access time
- More economical use of memory
- More efficient database search strategy
- More effective data compression techniques
- Improved user interface
- Better control of robotic arm
- Improved reception/transmission of a radio signal.”
29. Later, the definitions of ‘technical effect’ in Clause 3.15 and ‘technical advancement’ in Clause 3.16 were replaced by more generic phraseology in the 2016 CRI Guidelines per Clauses 4.4.4 and 4.4.5. This was further amended in 2017 CRI Guidelines where it was categorically stated in Clause 4.4.4 that “in patentability cases, the focus should be on the underlying substance of the invention, not the particular form in which it is claimed”.
30. In this context, reference may also be made to a Commentary on Patent Law wherein a useful analysis of Section 3(k) is provided. The opinion seems to lean towards a restrictive interpretation of Clause 3(k), rather than an expansive one so as to not prevent concepts which have specific application in fields of technology being excluded from patentability. The author states that “most innovations being carried out in India by small entrepreneurs, start-ups or the bigger IT solution companies are in the area of business methods, computer programs, and algorithms. Not protecting them results and not recognizing the strength of such innovations”. Further, if the algorithms which are step-wise description are converted into a code resulting in a technical application, the algorithm transforms and becomes a technical advancement, and, therefore, patentable as they are producing a technical effect.
31. Relevant decisions which have traversed the nuances of Section 3(k) of the Act are as under:
(i) *Fend Allani v. Union of India and Ors.* – the matter concerned rejection of a patent application for “METHOD AND DEVICE FOR ACCESSING INFORMATION SOURCES AND SERVICES ON THE WEB”. The rejection of the patent application was first set aside by a Single Judge of this Court and by a direction in February 2008, the Patent Officer was directed to give reasons for the rejection. In November 2008, Patent Office again rejected the patent application and gave reasons under Section 3(k). The order of Patent Office was appealed and in para 10 of the said decision, it was observed by this Court as under:
“10. Moreover, Section 3(k) has a long legislative history and various judicial decisions have also interpreted this provision. The bar on patenting is in respect of ‘computer programs per se….’ and not all inventions based on computer programs. In today’s digital world, when most inventions are based on computer programs, it would be retrograde to argue that all such inventions would not be patentable. Innovation in the field of artificial intelligence, blockchain technologies, and other digital products would be based on computer programs, however, the same would not become nonpatentable inventions – simply for that reason. It is rare to see a product which is not based on a computer program. Whether they are cars and other automobiles, microwave ovens, washing machines, refrigerators, they all have some sort of computer programs in-built in them. Thus, the effect that such programs produce including in digital and electronic products is crucial in determining the test of patentability.”
The Court then remanded the matter for re-examination by the Patent Office in light of the Guidelines issued for CRIs.
(ii) *Lava International Ltd. v. Telefonaktiebolaget LM Ericsson* – in assessing one of the contentions of Lava for revocation of the patent under Section 3(k), a Single Judge of this Court opined as under:
“69. After analysing the CRI Guidelines and the aforementioned judgments, I am of the view that the inventions that are solely directed towards algorithms, mathematical methods, business methods or are computer programmes per se, would not satisfy the test of patentability and would consequently, not be inventions. However, an invention that merely incorporates algorithms, sets of instructions, mathematical or business methods within a method or system, and satisfies all the criteria for patentability, is not inherently non-patentable. Therefore, what has to be seen is that if the algorithms are directed at enhancing the functionality of a system or a hardware component, the effect or the functionality derived by the system or the hardware component is a patentable subject matter. However, the algorithm itself is not a patentable subject matter. To illustrate, we may consider the example of a smart thermostat algorithm that dynamically adjusts the heating or cooling of a room in a building based on real-time weather data, occupancy patterns, and energy prices. This algorithm, by itself, is a series of computational steps and may not be patentable. However, the implementation of this algorithm within a device, even if the said device is a general-purpose computer, in such a way that it transforms the computer’s capabilities and leads to tangible benefits like reduced energy consumption, cost savings, and improved comfort levels for occupants can be considered as a patentable subject matter.”
(iii) *Microsoft Technology Licensing, LLC v. Asstt. Controller of Patents & Designs* – in assessing an appeal against the rejection of a patent application for “METHODS AND SYSTEMS FOR AUTHENTICATION OF A USER FOR SUB-LOCATIONS OF A NETWORK LOCATION”, a Single Judge of this Court held as under:
“40. The subject patent provides a technique for authenticating a user for accessing one or more sub-locations of a network location, involving the use of two different cookies. One cookie is used for authentication at the network location, and another at the sub-location. The claimed invention’s technical effect/ contribution is to prevent unauthorized access to sub-locations within the network location by using two different cookies and effectively foiling the attempts of a malicious user to gain access to network sub-locations by illegally obtaining cookies from another user. The technical effect is the improved security of the authentication process for accessing sub-locations of a network location. Prior to this invention, using only one cookie to authenticate a user for both the network location and sub-locations posed a security risk, as malicious users could steal cookies from others and gain unauthorized access. By using two different cookies/ two-tier authentication – one for the network location and another for the sub-location – the subject patent provides a more secure authentication process that is not vulnerable to cookie theft. The technical contribution of this invention is the technique of using two different cookies for providing authenticated access to a client computer accessing a sub-location(s) within a network location, which simplifies user interaction with content received from feeds. Overall, the subject patent enhances the security of accessing sub-locations of network locations and streamlines the user experience.”
(iv) In a recent decision by a Single Judge of this Court in *Microsoft Technology Licensing, LLC v. Assistant Controller of Patents and Designs*, the aspect of Section 3(k) of the Act was considered again in context of an appeal against refusal of grant of a patent application titled “REVERSIBLE 2-DIMENSIONAL PRE-/POST-FILTERING FOR LAPPED BIORTHOGONAL TRANSFORM”. After citing Lava International Limited (supra) with approval, the Court in Microsoft Technology (supra) (2024) held as under:
“33. In light of the above discussion, it is clearly established that in case of an invention involving computer programmes, to circumvent the limitations imposed by Section (k) of the Act, a patentee must demonstrate that the overall method and system disclosed in the patent application, upon implementation in a general-purpose computer, must contribute directly to a specific and credible technical effect or enhancement beyond mere general computing processes. Therefore, the inventive contribution of a patent should not only improve the functionality of the system but also achieve an innovative technical advantage that is clearly defined and distinct from ordinary operations expected of such systems.”
32. Counsel for appellant relied on extracts from Guidelines for Examination of the European Patent Office. Para 3.6 of the said Guidelines provided for computer programs being excluded from patentability under Article 52(2)(c) and 52(3) if claimed “as such”, excluding those where there was a ‘technical character’. Attention in particular was drawn to para 3.6.4 which related to database management systems and information retrieval. The said Guidelines stated inter alia as under:
“3.6.4 Database management systems and information retrieval Database management systems are technical systems implemented on computers to perform the technical tasks of storing and retrieving data using various data structures for efficient management of data. A method performed in a database management system is thus a method which uses technical means and is therefore not excluded from patentability under Art. 52(2) and Art. 52(3).”
33. Reliance was also placed on a decision of the Technical Board of Appeal of the European Patent Office dated 17th October 2019 in *Microsoft Technology Licensing LLC in Case No. T 0697/17 – 3.5.07*. The appeal was from a decision of the Examination Division refusing the subject European Patent Application. The objection was taken for lack of inventive step on the basis of general-purpose computer features. The Appeal Board opined as under:
“5.3.1 It is clear from the very language of claim 1 that the method steps are performed by components of a relational database system, namely a parser, a query optimiser and a query execution engine.
A database management system uses data structures, software components and processing techniques for storing, controlling and processing data, and for providing an interface to let the user create, read, update and delete data. The internal data structures, such as an index and a query tree, and components, e.g. a parser, a query optimiser and a query execution engine, are used purposively for storing data to a computer storage medium and retrieving data from the medium. As explained above, the established case law considers these to be technical effects (G 3/08, reasons 10.8.5; T 1569/05 of 26 June 2008, reasons 3.6). The data structures used for providing access to data and for optimising and processing queries are functional data structures since they purposively control the operation of the database management system and of the computer system to perform those technical tasks. While a database system is used to store non-technical information and database design usually involves information-modelling aspects which do not contribute to solving a technical problem, the implementation of a database management system involves technical considerations. Therefore, a database management system is not a computer program as such but rather a technical system (see also decision T 1924/17, reasons 9, 13 and 14).”
34. Further reliance was placed on a decision of the Technical Board of Appeal of the European Patent Office dated 09th May 2018 in the appeal filed by *SAP SE in Case No. T 2330/13 – 3.5.07*. Appeal was against refusal of a European Patent Application for claims on the basis that they only provided a solution of the mathematical problem of checking rules and was not inventive. In the decision, the Board opined as under:
“5.7.10 Regarding the present case, the Board recognises that performing the method in parallel usually results in more efficient evaluation of the selection conditions. The “desired number of bit sub-matrices” can be tuned, within the constraints of a particular data set, so that the desired degree of parallelism is achieved. Unlike the case of T 1784/06 (supra), both the present claims and the originally filed description (see page 14, lines 10 to 12) describe parallel processing. The Board therefore considers that, as in decision T 1321/11 (supra), the features supporting parallel processing contribute to the technical character of the claim. In the present case, a more concrete parallel hardware architecture does not have to be claimed, since it is credible that efficiency gains can be achieved for different technical means used to perform the sub-tasks in parallel.”
35. In light of the above decisions, submissions of the appellant regarding the patent application require closer scrutiny. As stated in the 2017 CRI Guidelines, it is not the form but the underlying substance which has to be considered for the purposes of analyzing Section 3(k) of the Act. Section 3(k), as noted above, excludes a computer program per se or algorithm from patentability. The test which must be applied for determining whether the claim is of a computer program per se/algorithm or otherwise is based on determining whether the said program/algorithm has a technical effect. Some examples of technical effect were given in the 2013 CRI Guidelines (supra) which included higher speed, reduced hard-disks access time, more economical use of memory, more efficient database search strategy, more effective data compression techniques, improved user interface, etc. Even though these examples were not included in the 2016 CRI Guidelines, they gave a useful indication of what, practically, would come within the radar for determining ‘technical effect’.
36. Axiomatically, any method or process through an algorithm/computer software is meant to solve a problem. The problem may be relatable to a human user who needs computer software to achieve a more efficient conclusion, or it may be relatable to processing systems that apply the methods and achieve faster computation. This distinction understandably can be quite blurred and, therefore, no distinct definition or detailing can be provided which encompasses all possible cases. However, the trend of the Courts, as evident from the decisions cited above in paragraph 31, is to give a restrictive interpretation to the exclusion in Section 3(k) of the Act and adopt a more benevolent interpretation of what would amount to a ‘technical effect’. This approach aligns itself with the fast progress of technology, which always evolves incrementally by solving technical/processual problems to achieve greater efficiency and better user interface.
37.To put it simply, any hardware [which is essentially semiconductor chips and associated circuitry] has to necessarily work in tandem with a functional code [which is in a programmable language, converted ultimately into machine language i.e. binary system (bits), understood by the hardware]. Any processing input is given through a code/program which the hardware processes, providing an output. If Section 3(k) of the Act is interpreted to mean that anything which is designed merely as an input [code/software] is not patentable, it would be stating the obvious i.e. input and output elements are in distinct silos from pure hardware i.e. semiconductor chips and circuitry. However, this is not how the Courts have interpreted the inclusion of ‘per se’ in this provision.
38. ‘Technical effect’ is the bridge or the connect between an input and the processor. If an ingenious input system/method is able to allow the processor to give a more efficient and faster output and computation, the effect, in this Court’s opinion, would be ‘technical’. A ‘technical effect’ cannot be just about nuts and bolts, or hardware tweaks and transformations. If an innovative input [in the form of a program] allows the hardware to process the output faster, then it would amount to a ‘technical effect’. In other words, a well-designed innovative input in the form of a process, system, or method that enhances the computational ability of the processor would undoubtedly result in a ‘technical effect’ and which goes beyond the usual ‘user interface’. This already finds resonance in *Lava International (supra)* and the 2023 *Microsoft Technology (supra).”
Citation: Ab Initio Technology LLC v. Assistant Controller of Patents & Designs, C.A. (COMM.IPD-PAT) Nos. 26/2021 & 447/2022 (H.C. Delhi July 30, 2024). Available at : https://indiankanoon.org/doc/17692126/
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