In a recent judgement, the Delhi High Court, while hearing an appeal against an order of the Controller of Patents and Designs, which refused a patent grant, distinguished between a technical method and a business method while examining the technical contributions/ effects of an invention. In the impugned order, the Controller refused a patent application titled “Methods and Devices for Authentication of an Electronic Payment Card using Electronic Token” on the grounds that the claimed invention falls under Section 3(k) of the Patents Act (“Act”), categorising it as a business method and a computer programme, per se.
Submissions
Counsel for the respondent, while reiterating the findings on the impugned order, submitted that the subject application refers to authentication of electronic payment cards, which helps to improve the security of financial transactions, thus assisting in the performance of such transactions. The invention disclosed in the subject application provides for a secure electronic payment method to the user. Hence, it was argued that the subject application is non-patentable by virtue of it falling under “business method”, under Section 3(k) of the Patents Act. Moreover, the said authentication process would be considered as a financial activity, which is non-patentable as per clause 4.5.2 of the Guidelines for Examination of Computer Related Inventions, 2016.
The Appellant, assailing the impugned order, submitted that the Controller (respondent) had failed to appreciate that even a computer-related invention, which demonstrates a “technical effect”, or a “technical contribution”, is patentable, even though it may be based on a computer programme. Moreover, the subject application relates to authentication of financial transaction and not financial transaction per se.
Analysis by Court
The court perused the arguments on two essential aspects upon which the patent has been refused under Section 3(k) of the Patents Act: (i) that it is in the nature of a business method and (ii) that it is a computer programme per se.
For the first ground of refusal, the Court looked at the Guidelines for Examination of Computer Related Inventions, 2017, issued by the Patent Office, where the term “business method” has been defined under clause 4.5.2. Upon a perusal of the same, the court held that the Claims shall be treated as “business method” only if they are essentially about carrying out business/ trade/ financial activity/ transaction. The use of words such as “business”, “sales”, “transaction”, “payment” by themselves are not relevant to conclude that the invention is a business method.
The Court further considered Opentv INC v. The Controller of Patents and Designs,which made the following observations:-
““73. Thus, the only question that the Court or the Patent Office, while dealing with patent applications involving a business method, needs to consider is whether the patent application addresses a business or administrative problem and provides a solution for the same. 74. In order to judge as to whether a particular patent application seeks to patent business methods or not, at the outset, the following aspects, ought to be considered – (i) whether the invention is primarily for enabling conduct or administration of a particular business, i.e., sale or purchase of goods or services; (ii) whether the purpose of the invention is for claiming exclusivity or monopoly over a manner of doing business; (iii) whether the invention relates to a method of sale or purchase of goods or services or is in fact a computer program producing a technical effect or exhibiting technical advancement. If it is the latter, it would be patentable but not if it is the former.”
The Court also considered Priya Randolf v. Deputy Controller of Patents and Designs, which held that “in e-commerce transactions, a claim would be construed as a “business method‟ only if in substance it is for a “business method””.
Applying the rationale of these cases to the present one, the Court concluded that the subject application is not addressing a business problem, but addressing the security of a transaction. It further held that the inventive step in the subject application does not lie in the business concept, but lies in the technical process as disclosed in the application. In fact, the authentication in the invention is done before the actual financial transaction begins. Therefore, the aforesaid subject application would not relate to a financial transaction and is not a business method.
Moving to analysing the second ground of refusal, that is, on account of the invention being a “computer programme per se”, the court held that the impugned order fails to take into account that the subject application, even if based on computer programme and communication, would be patentable as it has resulted in a technical advancement in contactless payments, where the contactless payments were vulnerable to unauthorised transactions when a transaction card got stolen or compromised. It recognised that existing solutions, like one-time passwords (OTPs) or dynamic security codes, are susceptible to problems such as mobile phone cloning, visibility of security codes, etc. The appellant, through the subject application, has tried to overcome such limitations by providing a technical solution to a technical problem, i.e., how to prevent unauthorised transactions using electronic payment cards. Therefore, the claimed invention was held as not being a “computer programme per se”, hence, not falling under the Section 3(k) list of exclusions.
The court, thus, set aside the impugned order and directed the Patent Office to proceed with granting the patent.
Comment & Conclusion
This case reaffirms the Bombay High Court’s position in Priya Randolph,that the invention should in substance be a business method to fall under Section 3(k) of the Act. Even if the purpose of the invention relates to a business activity, the Court is required to delve into the manner of implementation of the invention and peruse if its implementation results in a technical process instead of a business concept.
