The Legal Challenges in Software Inventions: Insights into Section 3(k) of Indian Patents Act, 1970

The Legal Challenges in Software Inventions: Insights into Section 3(k) of Indian Patents Act, 1970The Delhi High Court, in Microsoft Technology Licensing, LLC vs Assistant Controller Of Patents And Designs [C.A.(COMM.IPD-PAT) 185/2022] appeal case examined the importance of Section 3(k) of the Patents Act, 1970, further establishing that 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. The Court, furthermore, observed that 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. This appeal was filed against the rejection of an Indian Patent application (3304/DEL/2005) titled “Reversible 2- Dimensional Pre- /Post-Filtering for Lapped Biorthogonal Transform”.

Factual Matrix and Submission of the Counsel

The Appellant/Applicant, MICROSOFT TECHNOLOGY LICENSING, LLC, filed an appeal against the order of the Controller dated May 23, 2019, for the refusal of the patent under Section 15 of the Act on the grounds that the Claims (1-15) of the patent application fall within the scope of Section 3(k) of the Act and are consequently not allowable under the Act. However, in this appealed case, the Respondent waived the objection to lack of inventive steps based on three prior art documents. The Appellant’s Counsel contended that the claims of the subject patent application address the technical problem of inefficiency in encoding blocks of 2D digital media data by introducing a novel and inventive application of a one-dimensional lapped overlap operator.

Further, the Counsel submitted that the approach specified in the subject patent application improves the encoding process by partitioning the 2D digital media data into macroblocks, applying a reversible 2D overlap operator offset from the borders of these blocks, and employing a reversible 2D block transform aligned with the borders of the macroblocks. The result of this operation yields a compressed bitstream that includes data processed by the reversible 2D overlap operator, ensuring high efficiency while maintaining quality in compression.

Thus, the Appellant contended that the technical advancement in the subject patent lies in the methodology of first inputting 2D digital media data using an input device and then compressing it into a streamlined bitstream using a lapped transform. Further, the Appellant highlighted that the subject patent application minimises redundancy, cancels out cross-terms within the data block structure, and is suitable and effective for lossless and lossy compression.

The Appellant’s Counsel also submitted that the Controller erroneously relied upon the Computer Related Invention (‘CRI’) Guidelines dated February 19, 2016, during the rejection of the subject patent application, which was already replaced by the CRI Guidelines of 2017. As per the CRI Guidelines published in 2016, there was a novel hardware requirement, which was required to be fulfilled by patentees if the invention was in the field of computer programmes, whereas the novel hardware requirement was removed in the 2017 Guidelines. The Counsel also urged that the decisions of the Court in Telefonaktiebolaget LM Ericsson (PUBL) vs. Intex Technologies (India) Ltd., Ferid Allani v. Union of India and Ors. have also not been appropriately implemented by the Patent Office while refusing the subject patent application.

The Counsel, while referring to the Court’s decision in the case Microsoft Technology Licensing, LLC vs. The Assistant Controller of Patents and Designs, submitted that the technical effect and contribution in the present patent can be clearly deciphered from the reading of the Claims and also the Complete Specification of the subject patent application. Additionally, while making submissions for patentability of computer programs, the Appellant also placed reliance on the decision dated February 23, 2006, of the European Technical Board of Appeals in Case- T 0424/03 referred to as the Clipboard formats/Microsoft as also the decisions of the UK Court of Appeal in Aerotel Ltd vs. Telco Holdings and HTC Europe Co. Ltd. v. Apple Inc.

On the contrary, the Respondent’s Counsel argued that the subject patent application is solely performed by employing a computer programme in C-language, as specified in the Complete Specification thereafter urging that the subject patent application is merely performed on software and thus, the objection of Section 3(k) of the Act is attracted. The Respondent also highlighted that if the technical contribution of the invention resides solely within the computer program per se, then the subject matter claimed in the subject patent application is not patentable; thus, the Claims of the subject patent application are objected to under Section 3(k) of the Act.

Analysis and Decision

In this case, the overall challenge tackled by the invention is in enhancing the encoding and decoding efficiency of image data using lapped transforms, addressing both technical and practical limitations in the state of the art. An analysis of the claims made by the Court shows that the subject invention enhances the functionality of the transform coding approach by detailing specific steps and methods that improve the efficiency and reversibility of the encoding and decoding processes. This is achieved through a series of operations, including reversible overlap operators and block transforms, which are crucial for reducing artifacts and improving the quality of compressed digital media. Thus, the Claims of the subject invention clearly articulate a specific approach to applying these techniques, thereby enhancing the traditional transform coding methods used in digital media compression.

Further, the Court observed that the Controller had erred in applying the novel hardware criteria by following guidelines that had already been replaced, i.e., the 2016 CRI Guidelines, as in the 2017 Guidelines, the novel hardware requirement was removed. Additionally, the Court cited Raytheon Company vs. Controller General of Patents and Designs, which determined the following points to be followed while examining Section 3(k) of the Act:

“20. Insofar as the novel hardware requirement is concerned, it is now well-settled that the requirement is not to be insisted upon in applications relating to inventions of computer programs. The manner in which such applications are to be examined and the interpretation of Section 3(k) is now settled by this Court in Ferid Allani (supra) and Microsoft (supra)…

  1. As can be seen from the above extracts, in the case of computer-related inventions, the patent office needs to examine if there is a technical contribution or what the technical effect generated by the invention as claimed. In the present case, it needs to be examined as to whether the system sought to be patented reduces the time period in scheduling job execution in the HPC system. The requirement for novel hardware is a higher standard that lacks any basis in law.
  2. The novel hardware standard existed in the 2016 CRI Guidelines, which were replaced by the 2017 CRI Guidelines. The patent office was in error by following the inapplicable 2016 Guidelines. Accordingly, the impugned order was not sustainable, but the appeal was allowed. The impugned order is set aside. The subject patent application of the Appellant shall now be examined afresh without insisting upon the novel hardware requirement….”

The Court then relied on the judicial precedent set by the Court in the case Lava International Ltd. vs. Telefonaktiebolaget LM Ericsson, which clarified that 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. Further, it was also held that patentability should be assessed based on its practical application in solving technical problems and the technical advancements it offers.

Thus, in the subject present application, the Court opined that the present patent application discloses a method and system that not only provides a real-world application for complex mathematical transformations, including lapped transforms and reversible overlap operators but also integrates these operations into a hardware component that performs digital media data compression. The Court adjudged that this integration significantly enhances the functionality of the hardware components of the subject patent application by enabling efficient and reversible compression, which directly contributes to improved system performance and efficiency and enhances the functionality of the general-purpose computers that implement the subject patent application.

The Court then held that the integration of the described methods and techniques as detailed in the subject present application are also implemented in a way that optimises the compression process for digital media data and also transforms the capabilities of general-purpose computing hardware into a specialised apparatus capable of efficient and effective data compression. Thus, the Court concluded that the subject patent application exhibits tangible benefits beyond ordinary computing functionality and is not barred by Section 3(k) of the Act.

Therefore, in view of the aforementioned analysis and reasoning in the refusal order, the Court found this case fit to be allowed and the subject patent application liable to be granted after considering the requirements of novelty and inventive step that have already been satisfied and on the basis of the subject patent application satisfying all the requirements for patentability.


In this case, the Court reiterated that the Controller should give proper reasoning for the refusal on the grounds of Section 3(k) of the Act. If the subject matter is implemented on the general-purpose computer but results in a further technical effect that improves the computer system’s functionality and effectiveness, the claimed invention cannot be rejected as non-patentable for being a ‘computer programme per se’. The Court urged that inventions having elements within a system or method that enhance the functionality of a system or hardware component and meet all the criteria for patentability can be considered patentable.

Thus, this case highlights that to avoid the Claims of the said patent falling within the scope of Section 3(k) of the Act, it is vital that along with improving the functionality of the system, the invention must also solve the technical problem and achieve an innovative technical advantage that is clearly defined and distinct from ordinary operations expected from the systems of the prior arts.

Authors: Manisha Singh and Tulika Banerjee

First Published by: Lexology here