Yahoo v. Controller, and Rediff: Business Methods are not patentable.

In one of its first major decisions involving patentability of business method patents (available here), the Intellectual Property Appellate Board (IPAB) has ruled (December 8, 2011) that pure business methods are not patentable in India.  This post provides an overview of the decision and its implications for the patent community:  (1) Business methods are not patentable in India; and (2) Any refusal of a patent under section 25(1) of the Act may be appealed to the IPAB as it relates to an order passed under section 15 of the Act, which in effect, may be appealed against under section 117-A of the Act.  Shamnad has discussed the issue of patentability of business methods here, and here.  Warning: Long post follows.    
As a further practice pointer, this case is also important because Yahoo overcame all other objections relating to novelty, and obviousness except the most important one, invention (section 3(k)).  Practitioners may want to cite this case to the Examiners while replying to examiners reports as appropriate. 
Quotable Quote:  Justice Prabha Sridevan and D.P.S. Parmar:  “…[W]e must place ourselves in 1998, to decide the patentability and what appears so easy and familiar today was new then. Even if we go back in time to 1998 the nature of invention is still a method of doing business. That does not change. There are huge innovations in the computers themselves, but the invention claimed is not for the machine but for the method. From whichever point of time we look at it, it still looks to be a business method.”
Overture Services Inc. filed a patent application titled “System and method for influencing a position on a search result listing generated by a computer network search engine”, and the title was later amended to “A method of operating a computer network search apparatus.”  This application claimed priority to a US application 09/322677 dated 28.05.1999. Yahoo acquired Overture sometime in 2003.
While undergoing examination at the Indian patent office, the examiner raised 17 objections against the application in the First Examination Report (FER).  These objections were made under section 3(k), and against novelty.  In it’s reply, Yahoo submitted new claims to include technical subject matter so as to overcome the 3(k) objection, and that the new claims were novel.  The Examiner again, in reply to the new claims, rejected claims as they fell under section 3(k).  The claims were further amended to remove apparatus claims.  (The first independent claim is reproduced at the end of this post.)  In responsive to the last amendment, the patent office informed Yahoo that the application had been found in order for grant, but it would be granted only after the disposal of pre-grant opposition, if any.  
On 20.04.2007, India Ltd. (“Rediff”), filed a pre-grant opposition against the application, under section 25(1).  The Controller informed Yahoo that the the invention did not pass the novelty and patentability test in late March 2009.  
Procedural issues:  The decision of the Controller was appealed before the IPAB.  The IPAB at that time passed an order holding that the Controller’s decision could not be treated as a refusal order under section  15 of the Act and therefore, the appeal was not maintainable. This IPAB decision was further appealed in a writ petition 4462 of 2010 before the Chennai High Court.  A division bench (DB) of the Chennai High Court held that the appeal was maintainable against the refusal of a patent under section 25(1) of the Act as it relates to an order passed under section 15 of the Act, which in effect, may be appealed against under section 117-A of the Act.  The DB also held that the Rediff was entitled to be heard and issued a direction to the IPAB to number the appeal and to decide the matter on merits after giving an opportunity to Rediff to be heard and consider its submissions made in the opposition.  
Before moving to the detailed reasoning adopted by the IPAB to reject the claims, section 3(k) of the Indian patents act is reproduced below:  
3. What are not inventions
The following are not inventions within the meaning of this Act, —
(k)              a mathematical or business method or a computer programme per se or algorithms;”
The IPAB referred to the Manual of Patent Procedures 2008 relating to business methods and considered the definition provided therein.  ““Business Methods” claimed in any form are not patentable subject matter. The term ‘Business Methods’ involves whole gamut of activities in a commercial or industrial enterprise relating to transaction of goods or services. With the development of Internet Technologies, business activities have grown tremendously through e-commerce and related B2B and B2C business. The claims are at times drafted not directly as business method but apparently with hitherto available technical features such as internet, networks, satellites, telecommunications, etc. The exclusions are carved out for all business methods and, therefore, if in substance the claims relate to business methods, even with the help of technology, they are not considered to be patentable.”  
Reasoning of the IPAB: The Board considered the law relating to business methods in advanced patent jurisdictions including United Kingdom (section 2 of the U.K. patents act); Article 52(2) of the European Patent Convention; and United States, 35 USC 101.  After considering the position in these jurisdictions, the IPAB concluded that in contrast to the foreign jurisdictions, in India, the law specifically excluded business methods with clear statutory language excluding business method patents.
Yahoo also raised the issue that Google Inc. had been granted several of “business method” patents.  However the IPAB held that the issue was the claims for the application under consideration and not the ones granted to any other party. The IPAB, however, agreed that there should be uniform practice adopted at the Indian patent offices.
The IPAB, therefore dismissed Yahoo Inc.’s appeal with costs.
First independent claim:

method of operating a computer network search apparatus for generating a result list (710) of items  representing a match with information entered by a user through an input device connected to the computer network (20), the search apparatus comprising a computer system (22, 24) operatively connected to the computer network and the method comprising:  
      storing a plurality of items (344) in a database (38, 40), each item comprising information to be communicated to a user and having associated with it at least one keyword (352), an information provided (302) and a bid amount (358);       receiving a keyword entered by a user though an input device (12);
      searching the stored items (344) and identifying items representing a match with the key word entered by the user;       ordering the identified items using the bid amounts (358) for the identified items, and generating a result list (710) including the ordered, identified items;       providing the result list (710) to the user;
      receiving a request from the user for information regarding an item selected from the result list (710);
      charging to an account of the information provider (302) associated with the selected item the bid amount (358) associated with the selected item; and providing information providers (302) with authenticated login access to permit an information provider to modify at least the bid amount (358) associated with the information provider’s listing (344); wherein the computer system (22, 24) sends an indication of the status of the information provider’s account to the information provider (302) in response to the occurrence of a predetermined condition.

Think Library-catalog books before the coming of computers
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16 thoughts on “Yahoo v. Controller, and Rediff: Business Methods are not patentable.”

  1. The IPAB is absolutely right. The business methods are specifically excluded. They cannot be patented in India. It is also interesting to note that the IPAB had taken the position as on the date of filing of the patent application, which is the right way of handling the case.

  2. True. The IPAB got it absolutely right. However, it is surprising that for all other issues re novelty and obviousness-the IPAB found in favour of Yahoo. Skewed result. One small factor brings down the entire application.

  3. Rajiv: what do you mean by “Think Library-catalog books …” The job that was done by a librarian and equate it to the claim?

  4. Just notice the comment—- “The IPAB, however, agreed that there should be uniform practice adopted at the Indian patent offices”!

    It appears that IPAB admits strongly that there in no uniform practice of the examination in the 4 patent offices in India. Quite funny!!! But Govt and the authorities don’t even bother to bring an uniform practice.

    I cite one case filed by D.P. Ahuja and examined in 2005. The initial claims of the patent application was a “business method”. Once the examiner objected strongly, the agent house changed the claims. They replaced the words “A Business method” with “A system for doing business”. The description to the accompanying drawings were not changed and it still remained as “business method”. The examiner, who was a qualified engineer, quoted from standard textbooks and literature the definitions of a “system”, “business method” and “business system” separately and showed that the claims were not patentable as per the Act. The supervising Controller, being a PhD in Chemistry, asked verbally the examiner not to adhere to his opinion and allow the claims as the agent house was strong! How funny!! The examiner didn’t hear to the controller. Again, the examiner was asked to discuss the issues, although the chemistry-background controller didn’t know the intricacies of device, system and a business method per se. This time the examiner was questioned by two controllers –one who is in the field of chemistry and the other having just a masters degree in physics. The examiner didn’t agree to their verbal opinions. Finally the case was vanished from the Patent Office, Kolkata and later on the case was re-constituted by the physics-background controller and was allocated to an easy-going examiner.

    Authorities don’t know how the patent office functions. This is the state of the art of the patent office and IPAB is now stating that there should be an “uniform practice”. Does IPAB know how “uniform practice” can be brought if some personal interests play pivotal roles at the time of granting or refusing cases? Can CGPDTM or any officer of IPO answer please?

  5. Uniform practice is always a problem and I think will remain. It can be because of many factors. Some of which come in my mind are:
    1. The genuine difference of opinion of different persons at the helm of affair (Examiner/Controller in the case of patent matters)
    2. The vested interests which poke their nose in the smooth functioning of the system in legal manner.
    3. Friendship (I am using mild word) of the person responsible for getting the work done (read here “ patent agent”) with the official/authority.

    These kinds of things go on and will go on. You see in litigation matters, we have different judgments of different High Courts on the same point. Even Supreme Court consisting of different Hon’ble Judges give the different judgment on the same/similar point. See PIKNIC (in trade mark matter) case of Supreme Court which was overruled within the period of few weeks by another judgment of Supreme Court itself comprising of different Hon’ble Judges.
    Besides I have seen the judgments which should not have been decided in the manner that they have been decided but because of some particular person appearing for particular party. This way face law becomes the case law.

  6. Reference by Yahoo to Google Inc’s patent portfolio is genuine. This judgment acts as a threat to the enforceability of many granted patents.

    Standard practices can not be adopted by the patent office until and unless there is a uniform training of patent examiners operating under one roof.

  7. @Ksithij
    having regard to Section 15, and the the comments by shakil ,do you still think that uniform training at nagpur is sufficient?
    i think, uniform training is just a great beginning of long journey !

  8. Dear Sir,
    I wish to draw attention to the fact that when the IPAB ruled that mere objections by the controller could not be taken as refusal, why did the applicant go to the high court. And what did the high court adjudicate upon. What has happened in this case that pursuant to the litigation the IPAB has been forced to take up the matter and give its verdict on patentability of the application , whereas the Controller should have been asked to decide pursuant to the decision of IPAB in the first case itself. A lost opportunity to force the Controller to give decision on what constitutes objection and what imply refusal.
    Another point is that it is only a matter a time when majority of inventive development will be more by the software rather than the hardware which is the contention of disputes under the patents act. The mind set of what constitutes invention is destined to go for a big change. For example with cloud computing coming there is only a virtual server and all novelty is going to be virtual. Prior to electricity the idea of light was through fire only. Same way our understanding of software tangled with hardware will come in for great scrutiny and redefinition. Section 3(k) may not be defendable in times to come.
    Patent Agent

  9. Anon@10:24PM: The job of a librarian and application of computers to that job does not make the job patentable. It was and remains a pure process. One simple case to illustrate the point.

    Shakil: There is a documented, public, quality policy issued by the Controller for all patent offices. We may take some time to reach a certain quality level. Decisions like these would ensure that the level is achieved sooner than later.

  10. Kshitij: This judgment is what it is. A good judgment. It has clarified what the patent law in our country has been since the latest amendments: Business Methods are not patentable.
    You cannot argue that “n” wrongly granted patents should be equated with one correct decision declining patentability. Two wrongs do not make one right.
    These wrongly granted patents may survived this judgment but still would have been vulnerable to challenge in Courts.
    Do read Shamnad’s post (linked) on patentability of business methods in India.

    Your point regarding training under one roof is well taken.

  11. @Rajiv – You have slightly misunderstood me. I am not arguing rights wrongs here. In fact, mere mention by the patent applicant of Google’s patent portfolio is bantering to say the least.

    All I am saying is that Google has been granted claims on purely business method patents, and the reference made by the patent applicant is “true”. I have the patent numbers with me, which ironically I got from one of the comments on SPICY IP blog only.

    Thanks for taking my point on training. Serious up-gradation of training levels of examiners is highly needed and so does “sensitivization” on various issues as cited by some of fellow readers. Why I am focusing on sensitivity is because in morning only my colleague stumbled upon 4 patents that were granted by IPO in record 3 months. Since morning we are investigating the reasons of such quick grant. The work is in progress, but, till now we have surely negated the factor of “efficiency” from one of the probable reasons.


  12. @Rajiv Kr. Choudhry, 10:48 PM,

    Perhaps you have not understood the contents of my earlier post. I tried to show you how a big chunk of the officers in IPO acts / decides cases. The following factors help them to act/decide:
    1. Nexus with the agents (sometimes ‘friendships’);
    2. No knowledge on the subject matter;
    3. Allotment of cases to an officer who is not capable of handling the contents of the case;
    4. Poor supervision of examination by the Assistant Controllers /Deputy Controllers; and
    5. Forceful reconstitution of many cases where personal interests play a pivotal role.

    These wrong actions are distinctly visible in Delhi Patent Office, Mumbai Patent Office and Kolkata Patent Office. No “public, quality policy issued by the Controller for all patent offices” can help to get rid of this poorly structured Government System.

    Government must change the “system” and punish the corrupt senior officials for their arbitrary actions. Accountability and uniformity of practices must be brought into.

  13. I know this article concerns the patent and not trade mark, yet I take this opportunity to refer the practice in TM Office, particularly in DELHI. There are some agents whose cases get accepted and advertised at the earliest and out of turn. Besides there are several marks which should not have been accepted but because of that particular agent. The names are known to the practicing lawyers of Delhi and one can find them out by scrolling the past journals. They have nexus with the officials.

  14. I know this article concerns the patent and not trade mark, yet I take this opportunity to refer the practice in TM Office, particularly in DELHI. There are some agents whose cases get accepted and advertised at the earliest and out of turn. Besides there are several marks which should not have been accepted but because of that particular agent. The names are known to the practicing lawyers of Delhi and one can find them out by scrolling the past journals. They have nexus with the officials.

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