Analysis of Microsoft Technology Licensing, LLC Vs Assistant Controller of Patents and Designs

Section 3(k) of the Patents Act, 1970, has arguably been one of the most controversial provisions on the non-patentability of the subject matter in the Indian Patents law. It is also one of the most recurring objections during the examination of Computer-Related Inventions (CRIs) at the Indian Patent Office (IPO). Accordingly, there have been several attempts to bring clarification, particularly to the interpretation of “algorithm” and “computer program per se” of Section 3(k). However, it still is misinterpreted, leading to erroneous objections to office actions. For example, the applicants still receive objections for lack of novel hardware in software-based inventions, despite the IPO-issued CRI guidelines directing to the contrary.

Even the Courts have tried to bring clarity to this section through their orders, the most recent being Microsoft Technology Licensing, LLC v. The Assistant Controller of Patents and Designs. In this case, Microsoft filed an application (1373/DEL/2003) on November 7th, 2003 for the invention “Methods and Systems for authentication of a user for sub-locations of a network location.” After examination, the IPO refused the application on the grounds of non-patentability under Section 3(k). Microsoft thereafter filed an appeal before the Hon’ble High Court of Delhi, challenging the Controller’s order.

Synopsis of Controller’s Order

The Controller stated that the alleged invention provides a technique for authentication involving the use of two different cookies for authenticated access to the client computer accessing a sublocation in a network location, which is a set of instructions in the form of an algorithm performed by the general computing device. It has been implemented on a conventional computing device and software environment. The Controller, therefore, held that claims 1-28 are an implementation of computer-executable instructions/algorithms on a general-purpose computing device, leading to the refusal of the application.

Appellant’s arguments before the High Court

Microsoft argued that Section 3(k) has been misinterpreted in the impugned order. The inclusion of the term “per se” in Section 3(k) indicates that the intent of the legislature is not to refuse the grant of patents to computer programs altogether. The intent was to refuse patent protection only to the computer programs as such.

They further argued that the technical contribution/effect of the present application lies in the improved security of the existing computer and computer networks. Therefore, the contribution of the claimed invention does not lie solely in the excluded subject matter but rather in the combination of the software with the hardware components.

IPO’s arguments before the High Court

The IPO argued that the claimed invention is merely an “algorithm” which, is a set of rules that must be followed to solve a problem. The set of instructions is being implemented on a computer program per se, and the subject invention is therefore non-patentable.

Court’s observation on the evolution of Section 3(k)

Before diving into the details of the present invention, the Court found it reasonable, to revisit the historical background leading to the evolution of Section 3(k), to appreciate the legislative intent behind this provision.

Observation on the legislative intent of Section 3(k)

The Court noted that it was only in 1999 that the term “computer programs” was inserted into Section 3, through the Patents (Second Amendment) Bill, 1999. At that time, there was no mention of the term “per se” in this provision. In 2001, the Joint Parliamentary Committee report recommended the insertion of the word “per se” in conjunction with “computer program” in Section 3(k), explaining that this change has been proposed as the computer programme may include certain other things, ancillary thereto or developed thereon. Therefore, the intention here is not to reject them for grant of a patent if they are inventions, but to refuse the patent to the computer programmes as such. The Patents (Second Amendment) Bill, 1999 eventually came into force as The Patents (Amendment) Act, 2002, having the Section 3(k) with the phrase “computer programme per se.

Thereafter, the Rajya Sabha’s Department Related Parliamentary Standing Committee on Commerce highlighted the need for a clear definition of “per se” under Section 3(k). In their report, the Committee acknowledged that a framework needs to be developed for patenting of algorithms by associating their use with a tangible result. The Committee therefore recommended that the approach of linking the mathematical methods or algorithms to a tangible technical device or a practical application should be adopted in India as well, for facilitating their patents, as already being done in the EU and the US.

Based on this historical background, the Court observed that the legislative discussions emphasize the need for adopting a clear definition of the term “per se” to ensure accurate and consistent application of the law. It is evident that this term was added to clarify that “computer programs as such” are non-patentable. The amendment intended to allow the 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. This amendment also brings the Indian patent jurisprudence in line with international practices.

More importantly, the Court acknowledged that although the legislative intent has always been clear, the term “per se” has led to inconsistent and imbalanced application of the law.

Referral to CRI guidelines

The Court noted that the first CRI guidelines issued in 2013 clearly defined two terms, technical effect and technical advancement, which are used to assess the patent eligibility of a claimed invention in relation to Section 3(k). Thereafter, 2017 CRI guidelines eliminated 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 a method claims qua a new computer program in combination with the hardware being claimed. The Court noted that the focus in the 2017 CRI guidelines appears to be on substance over forms and claims.

Referral to Ferid Allani vs Union of India

The Court also discussed the judgement in Ferid Allani vs Union of India, where the Court held that the addition of the term “per se” in Section 3(k) was meant to clarify that genuine inventions based on computer programs should not be refused patent. The Court highlighted the need to delve into the aspect of ‘technical effect’ and ‘technical advancement’, for determining the patentability of CRIs.

Referral to Manual of Patent Practise and Procedure (MPPP)

The Court then referred to the MPPP issued in 2019 and noted that the 2017 CRI guidelines and 2019 Manual clarify that “computer programs as such” are non-patentable, but inventions that involve a technical contribution or effect, beyond the program itself, may be patentable.

Interpretation of Section 3(k)

The Court acknowledged that despite the legislative intent and interpretation of the courts (and earlier IPAB) on this issue, the IPO often places significant reliance on the necessity of novel hardware as the determining factor. In the present case as well, the non-patentability objection alludes to the same objection. The Court thus reinforced the view that patent applications should be considered in the context of established judicial precedents, Section 3 (k) of the Act, extant guidelines related to CRIs, and other materials that indicate the legislative framework.

The Court particularly stated that if a computer-based invention provides a technical effect or contribution, it may still be patentable. The technical effect or contribution can be demonstrated by showing that the invention solves a technical problem, enhances a technical process, or has some other technical benefit. The mere fact that an invention involves a mathematical or computer-based method does not automatically exclude it from being patentable.

Court’s directions to the IPO on CRIs

The Court remarked that examiners must analyse the substance of the invention to determine whether an invention falls within the excluded categories, instead of focusing solely on the form of the claims. The Court acknowledged that while the concept of technical effect and contribution is crucial in determining the patent eligibility of CRIs, there is currently a lack of clarity in this area.

The Court accordingly suggested providing examples or illustrations of patentable and non-patentable computer programs in the CRI guidelines and instructed the IPO to provide indicators to the examiners by citing an exhaustive list of worked examples, relating to patent eligibility.

The Court emphasized that creating signposts would serve as reliable guidance for the examiners and would result in consistency in the examination, leading to a more predictable and transparent patent system. It would also ensure alignment with practices adopted in several jurisdictions, such as EPO and USPTO. The Court, therefore, instructed the IPO/CGPDTM to also frame signposts, keeping in mind the Indian legal framework.

Court’s findings and decision in the subject appeal

The Court opined that the Controller has entirely missed the point and his approach is misguided. The mere conclusion that claims 1-28 are implemented on a computer and are computer-executable instructions/algorithms performed on a general-purpose computing device is not the correct approach for rejecting a patent application. The fact that the claimed invention involves a set of algorithms executed in a pre-defined sequential manner on a conventional computing device does not necessarily imply that it lacks a technical effect or contribution. If the subject matter is implemented on a general-purpose computer, but results in a technical effect that improves the computer system’s functionality and effectiveness, the claimed invention cannot be rejected on nonpatentability as a “computer program per se”. Even a mathematical method or computer program can be used in a technical process carried out by technical means, such as a computer comprising hardware or a suitably configured general-purpose computer. The interpretation of “per se” under Section 3(k) of the Act has been entirely overlooked by the Controller.

The Court also acknowledged the technical contribution of the invention, as using two different cookies for providing authenticated access to the client computer accessing a sub-location(s) within a network location, which simplifies user interaction with content received from feeds. The present invention, therefore, enhances the security of accessing sub-locations of network locations and streamlines the user experience.

The Court, therefore, held that Controller’s rejection stems from a misinterpretation of Section 3(k) of the Act, and an oversight of the technical effect and contribution of the claimed invention, resulting in an erroneous determination that the subject patent constitutes “computer program per se”.

The Court accordingly set aside the impugned order and held that the subject patent does not fall within the excluded categories and identified the next step to be assessing the novelty and inventive step (non-obviousness) of the claimed invention. However, since the impugned order did not have any discussion on other requirements, the Court did not comment on these grounds and remanded the matter back to the Controller for re-examining the application only for novelty and inventive step.

Moreover, the Court in general guided the IPO to adopt a more comprehensive approach when assessing CRIs, considering technical effects and contributions provided by the invention rather than solely focusing on the implementation of algorithms and computer-executable instructions. An invention should not be deemed a computer program per se merely because it involves algorithms and computer-executable instructions. Rather, it should be assessed based on its technical advancements and practical application in solving real-world problems.

This judgement by the Hon’ble High Court of Delhi is a welcoming take on Section 3(k) of the IPO. While the CRI guidelines, the MPPP, and the past Court judgements have been quite clear in terms of the interpretation of this section, there still have been many inconsistencies in the practice opted by the IPO while examining applications relating to CRIs. This order by the Court has comprehensively considered the legislative intent of the provision, steps taken by the IPO in clarifying this provision, and the global stand on the patentability of CRIs, to clarify the interpretation of Section 3(k), further paving the clear path for the IPO to provide a more predictable and uniform outcome of the CRI applications to the Applicants.