Backtracking slightly, a business method patent can loosely be defined as a patent aimed at performing a commercial purpose by means of digital networks. Business method patents critics have been very critical of these patents claiming that these patent don’t cover physical inventions/innovations, but rather deal with more abstract concepts and mathematical algorithms.
The global position on business method patents is a little dicey. While certain countries such as USA, Japan, Australia, Singapore, etc seem to favour it (last month the US Supreme Court said it would review the Bilski position as to whether business method patents should be allowed or not), other countries such as India, China and most of Europe tend not to allow such patents.
Looking at the case in hand, Chinese patent law doesn’t prohibit business method patents. In fact, Part II, Chapter 9 of the SIPO’s Guidelines for Patent Examination expressly provides for computer software related inventions that possess “technicality”. However, as mentioned, the Chinese Patent Office has been seen to take an extremely cautious approach to granting these patents, and as such, very few business method patents have been granted so far in China. Two of the few that have been granted have been to Citibank. The patent for the ‘Electronic Monetary System’ was granted in December 2002 (and was subsequently lapsed) and the currently revoked patent for ‘Computer system for data management and method for operating said system’ was granted in January 2003.
As per this site, the hearing, which was held in April, 2009, proceeded without Citibank being represented at the hearing and no reasons were published for the decision. Though the decision is not surprising, the reasoning of the decision needs to be published so as to maintain a standard of transparency in proceedings. That Citibank chose not to appear may indicate that it has decided to abandon the patent. However, that aside, this development is important due to the fact that it shows a growing awareness of IP rights and the framework surrounding it, as well as the legal tools available by the society. It also lays down the path for future actions along the same lines.
This case and the decision are also in line with the view, as Spicy IP has opined earlier, that is required by our own patent system. A plain reading of section 3(k) of the Indian Patents Act prohibits ‘business methods’ from patentability, as well as excludes ‘computer programs’ per se and algorithms from patentability. However, as pointed out by Mr. Shamnad Basheer earlier, (in the post as well as the comments section) this has not stopped several bad patents from slipping through the fingers of the Patent Office.
While some say that it is the carelessness of Patent Agents which is leading to these bad patents, the fact remains that even with the most careful of Agents, there is still a chance that some bad patents will slip through. Therefore, there is also a responsibility on Indian civil society , NGOs and other groups/institutions to take a lead from this Chinese example, to pool in resources and keep an eye out for such bad patents so as to ensure the continued improvement and development of our patent system.