Guest Post: Why are Business Method Patents being granted?

Aparajita Lath, a 3rd year student from NUJS, brings us this incisive guest post on Business Method Patents in India. Using examples, she points out that many business method patents are still being granted despite the express statutory exclusion of the same. After pointing out that many such applications are pending approval, she also discusses the policy considerations for denying the grant of such patents. This is her first submission in the SpicyIP Fellowship applicant series.

Business Method Patents – being granted in India

Recently in the case of Yahoo v controller of Patents[1], Yahoo sought to patent an invention titled “A method of operating a computer network search apparatus”.[2] This was a case relating to business methods. The court invalidated Yahoo’s claim and held that the claimed ‘invention’ “is nothing but doing the advertisement business electronically. Even the technical advance that is claimed over the existing art is only an improvement in the method of doing business and S.3(k) is clear that business method cannot be patented, the fact that there is an advance has not improved the case”.[3]
The express exclusion of business methods under S. 3(k) since 2002 and the decision in the Yahoo case, makes it amply clear that business methods cannot be granted patent protection in India. However, a study of the patents that have been granted by Patent Offices of India with regard to this subject matter show that many business methods are still being granted protection. 
Following are some examples –
Patent No. 252951 is a patent that was granted to Huawei Technologies for “a method devised to monitor and manage economic arrears in the field of post-paid telephonic services”.[4]The problem this invention sought to address was the unfavorable economic model of charging customers for calls made after the caller had actually made the call, thus the term ‘post-paid’.[5] The present ‘invention’ creates a method by which the credit worthiness of the subscriber is assessed before the call is made rather than a control after the end of the call, thus making the model economically viable.[6] Another similar patent, which assesses creditworthiness, was granted to Punjab National Bank (Patent No. 240258) for a method to compute the credit risk rating of a client by analyzing the business operations of the said individual.[7] The analysis includes scrutinizing the past transactions of the client in order to predict the individual’s future prospects in the industry in which he operates.[8]
Another interesting example of a business method patent that was granted was Afton Chemical Corporation’s patent (Patent No.240258)[9]. The patent was granted for “a method of enhancing fuel value of used or waste lubricating oil”.[10] Interestingly, the patent protected not only the method of enhancing fuel value but also protected a business method for distributing and using waste oils.[11]Though the patent over the method of increasing fuel value may still be legitimate, protection for the method of sale of this fuel is questionable. 
Many other business method patents have been granted by the Patent Office such as inc.’s patent for ‘A computerized system for automated dispute resolution through an Intranet website via the Internet or other communications linkage’[12] and Google’s patents for various methods which are related to collection of information for the purpose of advertising.[13]
All these patents are pure business method patents since they seek to achieve business efficiency and profitability, either administratively or by enhancing customer services, using well-known principles of commerce. Though many of them are executed by computer programs, these programs arguably have no technical application and produce no tangible or concrete result. Even if it is assumed that these programs do have some ‘technical effect’, the ‘inventions’ are prima facie business methods and regardless of the result of the software they should not be granted protection. 
Given that these methods fall under the ambit of Sec 3(k) there is no requirement of checking whether they are novel, non-obvious and involve an inventive step. Even if this enquiry is made, many business method patents, will fail to meet the basic requirements of patentability. In the patents mentioned above, checking the credibility of a subscriber or a client is common practice in the financial sector and is so intuitive in this field that no reasonable person would call this an ‘invention’. Also, given the first mover advantage and loyalty created by businesses, incentives for patents are not required for innovation. Also, as pointed out by the court in the Yahoo case, incentives are not required because the method itself ensures making more profits.[14]
In addition to all these arguments, granting monopoly power to businesses runs counter to existing laws in India like the Competition Act, 2002. Though this Act makes an exception to ‘reasonable’ monopolies created due to ownership of intellectual property right,[15] a patent to a business method in itself contradicts the very principles that the Competition Act is based on and hence may not be considered ‘reasonable’. Moreover, capturing markets and business opportunities with broadly worded patent claims, can result in eradication of small entrepreneurs and start-ups. This will naturally affect economic growth of the nation. Given the clear position of law and strong policy considerations against granting such patents, it is hoped that the Yahoo case will off-set the trend of granting business method patents and ensure stricter scrutiny of such applications (there are many pending applications that have been filed with regard to this subject matter)[16]
[1] Yahoo v Asst. Controller of Patents and Rediff, OA/22/2010/PT/CH (hereinafter Yahoo v Controller of Patents). 
[2]Id., ¶ 1. 
[3]Id., ¶ 48. 
[4] Patent No. 252951, Method for call control, Applicant: Huawei Technologies Co. Ltd., Date of Grant: 11/06/2012, Complete Specification ¶ 1. 
[5]Id., ¶ 1. 
[6]Id.¶ 3. 
[7] Patent No. 217341, A Method and Computing System for Evaluating Credit risk rating, Applicant: Punjab National Bank, Date of Grant: 26/03/2008, Complete Specification ¶ 7. 
[8]Id. ¶ 7. 
[9] Patent No. 240258, Fuel Composition Comprising Fuel and Lubrication Oil Composition, Applicant: Afton Chemical Corporation, Date of Grant: 30/04/2010. 
[10]Id., Complete Specification, ¶ 1. 
[12]Patent No. 221695, A computer system for analyzing data in connection with dispute, Applicant:, Date of Grant: 01/07/2008, Complete Specification ¶ 1. 
[13] See Patent No. 252220, Generating User Information for Use in Targeted Advertising, Applicant: Google, Date of Grant 2/5/2012; Patent No. 246483, Identifying and/or blocking ads such as document-specific competitive ads, Applicant: Google, Date of Grant 01/03/2011; Patent No. 246250 , Apparatus for determining prospective advertising hosts, Applicant: Google, Date of Grant 22/02/2011. 
[14] See Yahoo v Controller of Patents, supra note 1, ¶ 41 
[15] Sec 3(5), Competition Act, 2002. 
[16] See eg., Application No. 366/KOLNP/2012, Applicant – Wipro Limited, Title – Method And System for Workflow Management of a Business Process; Application No. 2797/CHE/2011, Applicant – Eaft Technologies India Pvt. Ltd., Title – Restaurant Order Management Networking System. 
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5 thoughts on “Guest Post: Why are Business Method Patents being granted?”

  1. We’ve received an anonymous comment via email:

    “I agree that the subject article is quite a good compilation of granted patents in the disputed area of business methods.

    According to my personal opinion this area is still quite grey and every case should be individually analyzed to judge whether it merely relates to a business method. In the subject article, the guest states “these programs have no technical application and produce no tangible or concrete result”, without providing any arguments in close reference to the technical field/application of the invention. Such an explicit statement may not be appropriate for one or more of these listed patents.

    Just wanted to share my view to have Section 3 (k) to be interpreted in a balanced way.”

  2. Thank you for your comment. I understand your concern, but i’d like to point out that I actually qualified my statement by providing the word- ‘arguably’ these programs have no technical application.

    However, regardless of this qualification, the point i was trying to make is that whether or not such programs (that execute business method patents) have technical application they should not be granted a patent. Because if such programs are granted patent protection you are invariably protecting subject matter that is expressly excluded. So a prima facie enquiry into what the computer program seeks to do, needs to be made at the outset. If is found that the progam executes a business method then whether or not it has technical application it should not be protected.

    Im sure there is merit in your argument, but i thought i should just clarify my stance.

    1. i want to do my project on business method patents ..plz suggest me some white papers on that..i m very thankful to you.. 🙂

  3. If any one has carefully observed, these patents are prosecuted by oldest firms in India.

    There is also a strong possibility of undue influence catered by these firms on the examiners.

  4. Mohammed Shahieeth

    Please correct the patent number of Punjab bank it retrieves me the result of for Punjab National Bank (Patent No. 240258)– as 1 2213/CHE/2006–240258–Fuel composition comprising fuel and lubricating oil composition 29/11/2006

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