The Draft Manual of the Patent Office & Software Patents


The Business Standard recently carried a story on software patents or to be more specific the response by some companies to the question of software patents as deal with by the Patent Office’s Draft Manual on Patent Practice and Procedure which was released earlier this year for comments and suggestions. (The comments received from various stake holders has been posted by the Patent Office on its website and can be accessed here)

Legality of the Draft Manual released by the Patent Office: Before going on to the question of software patents a quick observation in regards the Draft Manual of the Patent Office. The BS story, surprisingly, has quoted Justice Krishna Iyer, an iconic, retired, Supreme Court Justice as saying that “neither the controller nor the central government has authority or sanction of law to publish a manual of the kind put on the website”. He proceeds to junk the Draft manual as “irrelevant”. This is quite an intriguing statement from one of the most celebrated judges in Indian history because it is nobody’s case that the Draft Manual has the authority of law. The Manual was always meant to be only an indicator of the practices of the Patent Office and does not have any binding effect on any of the examiners from the Patent Office. In this regard the Patent Controller himself has clearly stated in the preface to the Draft Manual that the Manual does not have the authority of law – “The Manual does not constitute rule making and hence do not have the force and effect of law. Statements made in the Manual are not in themselves an authority for any action by an officer of the Patent Office. While the Manual may be regarded as a handbook, it does not impose any particular line of action and may not be quoted to that end. The U.K. Intellectual Property Office follows the very same practice.

Software Patents in India: The response of the Red Hat to the section in the Draft Manual of the Patent Office regarding patentability of computer programme was as follows: We find that the draft manual seeks to introduce software patents, and we believe this is not in consonance with the current legal situation which states that “a mathematical or business method and or a computer program per se or algorithms are not patentable.

Red Hat’s observation is bang on the point – contrary to common perception that software patents are not patentable in India, the Patent Office has in fact being granting software patents for quite some time now. Readers may remember one of Shamnad’s posts on how the patent office has already granted some bad patents to the Centre for Good Governance and McKinsey for software/business methods developed by them.

The question that then arises is how exactly is the Patent Office granting patents for software programmes if the law expressly forbids such patents?

Section 3(k) of the Patent Act excludes from patentable subject matter “a mathematical or business method and or a computer program per se or algorithms”. The proposal in 2005 had been to amend this section to read as “a computer programme per se other than its technical application to industry or a combination with hardware; a mathematical method or a business method or algorithms.” Fortunately however this amendment was not included in the Patent Amendment Bill, 2005, due to opposition from the Open Source community and the Left and it was presumed that Section 3(k) would not allow for the grant of software patents.

However, contrary to common perception, the current wording of Section 3(k) does not impose a blanket ban on all software patents. In this regards the Draft Manual of the Indian Patent Office draws a distinction between ‘software per se’ and ‘software having its technical application in the industry’. As per this distinction a computer programme controlling a technical process can be patented as a part of the hardware. Therefore the Indian Patent Office requires the patentee to draft the patent application for a software programme in relation to particular hardware since an abstract stand alone computer programme is definitely not patentable. The Patent Office illustrates this proposition with the following example: a method for processing seismic data, comprising the steps of collecting the time varying seismic detector output signals for a plurality of seismic sensors placed in a cable.” Here the signals are collected from a definite recited structure and hence allowable.

This approach of the Patent Office is not all that surprising and is in line with the practices followed by the Patent Offices of the E.U. and the U.K. Both the EPO and the UKIPO are barred, by their national laws, from granting patents to computer programmes per se but both have been granting software patents under the technical effects approach. While the U.S generally does follow a liberal policy when it comes to software patenting it may adopt a more conservative approach if the Supreme Court invalidates business method patents in the Bilski case.

While it maybe difficult to find fault with the Draft Manual’s interpretation of Section 3(k) it’s a whole new ball game when it comes to a question of whether or not this is a prudent approach from a policy perspective. For an excellent policy analysis of this situation please click here for the views of an Open Source Evangelist. Also for a general overview on the opposition to software patents please click here for an excellent note by Lawrence Liang of the Alternative Law Forum (ALF).

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP).

5 comments.

  1. AvatarJ. Sai Deepak

    Dear Prashant,
    Extremely relevant post dude! About a month back, i went through Justice Krishna Iyer’s comments (http://ipindia.nic.in/ipr/patent/manual.htm) on the manual and was planning to post on it. Appropriately, the post found a better author:)To echo what you said, i too found the “issue” of the manual not having the force of law a non-issue. Atleast as far as i know nowhere have Courts cited the manual as an interpretative guide and for perfectly justified (and may be obvious) reasons. The manual is just what it claims to be- a manual. It does not fall under any rung of delegated legislation. A case from the US CAFC has beautifully explained this point when the status of the MPEP was in question. If i remember it right the case was Atmel Inc v. Information Storage Devices (ISD) . Interestingly, the primary issue in this case was the interpretation of s.112 of the US patent act and compliance with rules laid down in the Code of Federal Regulations (CFR), the equivalent of the Patent Rules if i may call it so. One of the parties sought to take the support of the MPEP in interpreting the section and the Court ruled that MPEP did not have the force of law. To give the issue a rounded perspective, this decision may be read along with the GSK & Triantafylos Tafas v. UPSTO and Chevron Inc v. NRDC. The last judgment introduced the “chevron deference” which we in India know as “administrative prerogative”. The court in the GSK case ruled that even the rules under the Patents Act could not claim the chevron deference.
    In the Indian context, administrative prerogative as far as my limited knowledge goes, has been extended to institutions such as SEBI and RBI for very valid reasons- they are regulators and the court has conceded to them being better placed to give shape to legislative intent in addition to possessing the requisite expertise in the subject.
    If the Indian patent office too has to be bestowed with such prerogative, then it must be treated as a regulator which, coincidentally, was the subject matter of my correspondence with Mr.Basheer sometime back. He directed me to Shubha Ghosh’s article on applying regulatory jurisprudence to the patent office and as always the article answered a lot of doubts. In my opinion, of all the branches of law, since the law of patents (may not be applicable to other forms of IPR) has a discernible and prominent tilt towards technology which requires a separate skill set,it is best suited for importation of regulatory principles. The case for a regulatory model is further strengthened since the nexus between competition law and patents is so close. Even if a complete makeover is deemed unnecessary, a synergistic model with a blend of both regulatory and quid pro quo models may help resolve quite a few issues and may even clarify our understanding of intellectual property.
    I know that i suffer from acute verbal diarrhoea, i sincerely hope i made some sense. Once again, i must say that i am pleasantly surprised to find a post with Justice Vaidyanathapuram Ramaiyer Krishna Iyer’s take on Patent law.

    Best Wishes,
    J.Sai Deepak.

    Reply
  2. AvatarPrashant Reddy

    Dear Sai,

    Thank you for updating us on the American position. I however do not understand the analogies to the RBI and the SEBI. The limits of administrative prerogatives bestowed upon statutory authorities depend not on the judiciary but the Parliament and the extent that they decide to do so. In this regards the Patent Act, s. 159 provides the Central Government with the power to make wide ranging rules to interpret the patent act subject to the condition that these rules are ratified by Parliament. By the central government the Act obviously means the relevant Ministry – which basically means the patent controller. So if the Controller really wanted to demonstrate his expertise he is free to approach the Parliament and get his draft rules ratified.

    Cheers,
    Prashant

    Reply
  3. AvatarJ. Sai Deepak

    Dear Prashant,
    You are absolutely right; the judiciary cannot read something into the Act which the legislature never intended in the first place. I blame myself for not explaining the import of my earlier statement properly. The power to make rules under the Patents Act, as you rightly pointed out is given to the controller under s.159 which is similar to s.2(b)(2) of 35USC and these rules, similar to other forms of delegated legislation have to be tabled before the Parliament for ratification. s.159 speaks of power to make rules for manner of making of application, time period of filing, fees etc. which power is not in the same league as the policy-making authority of RBI. To put it in the words of the GSK judgment in the US, there is no “substantive rule-making authority” vested in the Patent Office. Also, as you rightly pointed out, the Patent Office is not an autonomous body, unlike RBI, and the rules governing the IPO are made by the Central Government, specifically Ministry of Trade and Commerce. The controller’s expertise may be used for the same, but irrespective of the rules being framed through the controller or by the controller, these rules are merely procedural in nature. The powers of the controller and the establishment of the patent office under chapters 14 and 15 respectively bear witness to this. Of course, one might say that since the appointees and their appointments in the RBI too are not fully free from interference of the executive, the RBI is not fully autonomous.This is true of most bodies; but the point which i was trying to convey was that atleast theoretically speaking RBI can decide its policies as a monetary market regulator (and thus far the practice has been to accord SEBI the same status by virtue of it being the capital market regulator), this is not so with the patent office because it is not a regulator. I must thank you for patiently responding to my comment and helping me clarify myself.

    Wishes,
    J.Sai Deepak.

    Reply
  4. AvatarJ. Sai Deepak

    Dear Prashant,
    i was just wondering about s.159(1). It says the central government is vested with the power to make rules “for carrying out the purposes of this Act”. You do have a point because the Act could have said but doesnt say that the govt. has power to make rules “for carrying out the purposes of this Act in accordance with the provisions of this Act”. This means that the former version gives more latitude as opposed to the hypothetical latter, but can such amplitude be extrapolated to say that the power to make rules includes power to formulate substantive rules?In any case, even if the provision doesnt mention “in accordance with the provisions of this Act”, is it not implicit? The counter to this could be that s.159(2) opens with the statement, “without prejudice to the generality of the foregoing power”, which proves your point.

    Also, with regard to the regulatory model which i was referring to earlier, would it be right to say that provisions which speak of compulsory licensing make it easier to import regulatory jurisprudence since such provisions acknowledge the influence of unjustified monopoly of a patent on the competition?I am just thinking aloud to see how this section can be interpreted, Kindly let me know what you think. I hope i am not stretching the discussion to irrational limits.

    Best Wishes,
    J.Sai Deepak.

    Reply
  5. AvatarPrashant Reddy

    Dear Sai,

    You’re right in bringing up the point of substantive rule-making. In India delegated legislation is usually permissible to only procedural areas and not extend to substantive areas of law since policy making cannot be delegated to the patent office. However the distinction between procedural and substantive can get quite blurry and courts are more than willing to allow specialized statutory authorities to come up with their own interpretations. For e.g. in the Novartis case the Madras High Court refused to strike down Section 3(d) on the grounds that it amounted to excessive delegation. This meant that the patent controller has a wide ranging power to decide how to interpret ‘efficacy’ in Section 3(d).
    Coming to Section 159 I would think the relevant provision is S. 159(xvi) which is a very wide provision. I think it is possible to sneak in even substantive rule making under this provision because these rules have to be ratified by Parliament and it is unlikely that any court will strike down a piece of delegated legislation which has been ratified by the Parliament itself.
    As for the RBI/SEBI analogy – their autonomy comes into question within the policy limits laid down by Parliament. For e.g. the RBI can’t decide FDI caps – the Ministry prescribes the maximum FDI cap and the RBI merely gets to manipulate it within those limits. To that extent even the Patent Office has the same power. Technically both these entities are supposed to act at an Arms Length from the Central Government when it comes to quasi-judicial functions.
    Anyway I have a nagging suspicion that I’ve gone off on a tangent here so I’ll zip it for now! 🙂

    Cheers
    Prashant

    Reply

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