Is India Geared Up for Business Method Patent?
By Apoorva Yadav
Today technology is changing expeditiously. New technical inventions are taking place in huge number. These new inventions open new field of subject-matter for protection under Intellectual Property Law. Intellectual Property law gives an umbrella protection to new inventors. Patent provide protection for those line of process, products which are novel and are capable of proving that it involves an inventive step. USPTO grants maximum patents in a year. The paper written here advocates the invalidity of Business Method patent in Indian scenario. Business method today is capable of IP protection in countries like USA, Australia, Japan and New Zealand. India is against granting of protection to Business Method.
Definition: Business Method Patent
Business Patents are those patents which are given to business methods or business systems or like. A business method may be defined as "a method of operating any aspect of an economic enterprise". Business method patents are part of a larger family of patents known as utility patents, which protect inventions, chemical formulas, processes, and other discoveries. A business method is classified as a process, because it is not a physical object like a mechanical invention or chemical composition.
Background To Business Method Patents
Business Method Patents were not considered as a subject matter for protection under Patent Law. Earlier Business Method was considered as an abstract idea and was thus not falling under the purview of Patents. But by a decision by a Federal Court even Business Method have been granted patent protection. Section 101 of US Patent Act defines Inventions which are capable of Patent protection.
A combine reading of Sections 101, 102, 103 and 112 will lead to following construction:
• Any process, machine or composition of matter may be patented if;
• It is new (Novelty Section 102), Non-obvious (Section 103) and is capable of adequate description and invention (Section 112).
Protection Under TRIPS
TRIPS also provide subject matter for patent protection. Article 27 paragraph 1 of the agreement on Trade-Related Aspects of Intellectual Rights (TRIPS) provides that "patents shall be available 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..."
Further, Article 27 paragraph 2 of the TRIPS agreement permits Members to "exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect order public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law."
Cases In Which Business Method Was Upheld
Concept of Business method patent is now a decade old. State Street case is an important decision in this regard. Further developments have taken place after this judgment.
Business Method was considered as an exception to Patent protection until 1998. The first case of this kind was filed in the year 1908. In Hotel Security case the question was whether business methods can be said to be patentable. Here the case rejected the argument of it being capable of protection and created a per se exception to business methods. It was until year 1998 that this position was accepted.
1. State Street Bank v. Signature Financial Group, Inc.
In the present case the District Court had rejected application for Business Method Patent on the said process of “hub and space”. But Later the Federal Circuit confirmed that there is no rule which prohibits the patentability of "business methods." The Court stated “The judicially-created business method exception to patentability is . . . an unwarranted encumbrance to the definition of statutory subject matter in section 101 that should be discarded as error-prone, redundant, and obsolete.” It merits retirement from the glossary of section 101. Patentability does not turn on whether the claimed method does "business" instead of something else, but on whether the method, viewed as a whole, meets the requirements of patentability as set forth in Sections 102, 103, and 112 of the Patent Act.
Federal Court further clarified that it was never intended that business methods should be kept out of the subject matter. Rather in earlier few cases claim was rejected due to incapability of those methods to be taken as inventions. Thus, State Street confirmed that business methods can be patented if they meet the statutory requirements of utility, novelty and non-obviousness.
2. Amazon.com Inc. v. Barnsandnoble.com
In this case one-click patent to Amazon.com was criticized by few writers on the ground of it being “unplanned mutation”. Here an injunction was granted to Barnes & Noble for not using the said feature. This case clearly reflects drawbacks that can arise in case a business patent is protected in countries which are still developing their technologies. Later part of my paper deals with disadvantage that granting a business method patent can have.
Amendments Brought After State Street Case
Now that the situation is clear with respect to business method patents in US laws, it can be said that business method are capable of granting patent protection. But in order that no ambiguity remains the USPTO publicly announced that in terms of granting protection sufficient prior art search should be undertaken.
1. Class 705
A new classification (Class 705) was introduced for the filing of business method patents under the more generic utility patent applications: "Data processing: financial, business practice, management or cost/price determination.” Specifically, Class 705 includes sub-categories for industries such as health care, insurance, electronic shopping, inventory management, accounting, and finance.
2. Amendment In Title 35
Section 100 Title 35, United States Code, was amended to provide for improvements in the quality of patents on certain inventions. Thus, ‘Business Method Patent Improvement Act of 2000’’was passed. The term business method patent has been defined under the Act. What is surprising is the fact that under the definition any “technique used in Athletics” can also be qualified as a Business Method Patent.
For providing better uniformity in the system Interim Guidelines were published for Examination of Patent Applications for Patent Subject Matter Eligibility on October 26, 2005
Lacunas Prevalent In Method Adopted At USPTO
It has been observed that the method of granting patent in USPTO is without a substantial base. Patents at USPTO are granted not on a quality basis, rather on quantity basis. The following are serious lacunas which should be given a serious thought:-
1. In USPTO examiners are not properly trained to search prior art. Prior art search is scattered and hence proper care is required while doing a prior art search. But since the examiners are not provided with enough resources quality somewhere lacks while granting a Patent
2. Further it has been observed that in USPTO examiners get bonuses on allowing a patent rather than rejecting it. Hence the result can be seen more the acceptance by examiners, more the bonus. The process should change and bonus should be given only while rejecting a patent.
3. Once a patent is granted USPTO doesn’t conduct a review or quality control.
4. Mostly claims use ambiguous language which leads to more confusion in mind of patent examiner. Thus affecting the quality of specific invention.
Disadvantage O Granting a Business Method Patent
1. Once a patent is granted for an invention it is capable of securing the rights of patentee for a period of 20 years. Thus it can be well understood that if patent is granted for a business method then it would obstruct new technological research for the next 20 years to come.
2. Granting a patent on business method would create a monopolistic situation which would hinder growth. It would mean an unhealthy competition.
Advantage Of Granting A Business Method Patent:
1. Copyright protection is insufficient to protect Business method. All Research and Development that is done requires that something more that Copyright protection should be given in order to reward Business ideas.
2. Start-ups should be encouraged. New companies would benefit with a concept of such kind. Initially patent protection to such starting groups would definitely benefit them in order to have a strong stand in front of powerful companies. Business method patents create the artificial scarcity needed to preserve market power and restore the incentive to innovate.
Solution For A Business Method Protection
1. The paper here accepts granting of business patents but not at the cost of technological or economical growth. Thus in order to benefit both inventor and other co-inventors in line it would be better to grant patent protection only for a limited period of 3 years for Business method Patents. Thus law should help in sustaining a collaborative effort.
2. Change in the Patent System at USPTO is also required. The one sentence rule should be eliminated so as to faciltitate clearer language. Thus, it would help patent examiners and also leave less scope for manuplation by patent lawyers. Also person applying should disclose his computer code to the patent examiner.
3. Salary of Patent examiners should be increased. Also USPTO should give bonuses on rejecting a patent application rather than on accepting it as earlier mentioned in paper.
Should Patent Be Granted On Business Method In India
India is a developing economy. We are still unable to cope up with many threats like poverty, unemployment and population. In global market India is considered as a growing economy. Our youths are taking India to greater heights. All this reflect that we require a technological and economical boom. It needs to be mentioned that countries which have granted business method patents are developed countries. Conformance with TRIPS is particularly slow in developing countries, notably Argentina, Brazil, India and Egypt. Further I believe that granting a business method patent in India would impede technological growth in our country. Hence I am of opinion that business method patent should not be granted in India.
With boom in intellect ideas in corporate world it is required that these should be protected and respected. But fortification of these ideas by means of patent might not be profitable at this stage in developing countries. Grant of business method patent in US saw mixed reactions from experts of law. Moot problem was the modus operandi for granting of business method patent at USPTO. US have also drafted an Act called Business Method Patent Improvement Act of 2000 with respect to protection of business methods ironically athletic techniques are also within the purview of Business methods.
Patent over a particular invention protects it for a period of twenty years. Thus a patentee acquires an exclusive right over it (subject to Patent Act) and thus has right to prevent infringement of it during the said period. Thus in case of protection to business method the patentee would be in a position to stop the claimant of patent for a period of 20 years. Thus it would imply that business related methods/ideas would be retarded for such a long period. It can be thus concluded that Business method may be granted but it should be granted for a lesser duration of time and preference should be given to new companies. Thus Indian Patent system may move a step ahead for grant of Business method patent in future but not at present. It would be beneficial that there is no amendment in Section 2(k) of Indian Patent Act, 1970 for the next five years.
Apoorva Yadav is a Final Year Student at the National Law Institute University, [NLIU] in Bhopal (M.P)