[This guest post is authored by Pragya Singh and Lakshita Handa. Pragya is a Senior Resident Fellow at the Vidhi Centre for Legal Policy, New Delhi and Lakshita is a Research Fellow at the Vidhi Centre for Legal Policy, New Delhi. They work in the area of Legal Design and Regulation. Views expressed here are those of the authors’.]
Drafting laws and policies is a rigorous process that involves multiple stages of deliberation, negotiation, and consultation between relevant stakeholders on the minutiae of the subject matter at hand. Before the intent of the executive and legislature is crystallized into a policy or passed as a law, it undergoes extensive rounds of review and changes hands between drafters, relevant stakeholders, subject matter experts, and various departments of the Government. In this post, we set out to explore what happens when the court segues into this process and the implications that ensue when courts attempt to shape policy. For the purpose of this analysis, we focus on the Delhi High Court’s recent decision in OpenTV Inc vs. The Controller of Patents and Designs and Anr (‘OpenTV vs. CPD’), wherein the court expressed the need to review the grant of patents on ‘business methods’ in light of technological developments.
Factors of Policy and Law Design
The deliberative process employed in the drafting of laws and policies varies in accordance with the nature of such laws or policies. For instance, the formulation of an economic policy may rely on the collection of empirical evidence over a period of time to analyze the trends presented by such data. Similarly, a law that is likely to have a transboundary impact may require an analysis of the prevalent international legal regimes on the subject-matter for harmonizing the law with internationally recognized best practices and tailoring it in accordance with domestic concerns.
It is therefore safe to conclude that policy-making and the eventual passing of laws is a long process that requires a considerable volume of information drawn from expert analysis, stakeholder consultation as well as inter/intra-departmental considerations at the Government level. It must be deliberate in its intent, mechanism, and implementation to make an actual impact on good governance. It must also present thorough justifications for advocating change in the status quo of the legal framework governing the subject.
The Delhi High Court on May 11, in OpenTV vs. CPD, examined an appeal filed from the order of the Patent Registry which deliberated on Section 3 (k) of the Patents Act,1970 (‘Act’) barring the grant of a patent to ‘business methods’ (read more about it here and here). While examining the matter, the court upheld the Registry’s order and dismissed the petition since Section 3(k) of the Act expressly prohibits the grant of a patent on business methods. However, despite dismissing the matter based on the extant legal framework and merits of the case, the court proceeded to list cases in other jurisdictions (United Kingdom and Europe) where the ban on business method patents is not absolute. It also noted through a ‘Post Script’ that a large number of inventions in emerging technologies, including by small and medium enterprises, startups, and educational institutes, were in the field of business methods or applications of computing and digital technologies. The Court, therefore, emphasized on the need to re-look at the exclusions in Section 3(k) of the Act and directed the Registry to send a copy of the order to the Department for Promotion of Industry and Internal Trade (‘DPIIT’), to consider effecting such change in the legal framework of patent regulation.
A Nudge Towards What?
It must be noted that before sending the order to DPIIT for necessary consideration, the court did not call upon DPIIT as a party to understand why business method patents have not been allowed under the Act. Notably, in cases, where the court has nudged the executive towards policy-making, such as the Visakha Case and the recent Pathan order, the State and its specific department have been made a party to the proceedings with the objective of better understanding the matter at length and completing the process of deliberation before suggesting such changes in the law. In this case only the Controller General of Patents, Designs & Trademarks (‘CGPDTM’) is a party to the case by virtue of the appeal procedure and the order has been merely sent to the DPIIT for reference. It is also important to note that the office of the CGPDTM is in-charge of implementing the relevant law, whereas the DPIIT is empowered to regulate the entire field by drafting laws and policies (such as the National IPR Policy, 2016, Industrial Policy, 2017 and E-Commerce Rules, 2020), and although they both form part of the ‘Government’, they function as entirely distinct units.
In the order, the court conclusively refers to the 161st Parliamentary Standing Committee Report titled ‘Review of the Intellectual Property Rights Regime in India’ (read the full report here) as a basis for beckoning the State to change the concerned law. The issue with referencing the Report is that the concept of business methods has been mentioned only in reference to a general suggestion on artificial intelligence-related intellectual property claims. Further, as mentioned earlier, the court touches upon the practices in other jurisdictions like the EU and the UK, but averts from delving deeper into the analysis by comparing the framework in these countries with the conditions prevalent in India.
The court thus does not examine the issue at length or refer to any relevant study with statistical evidence to justify the suggested change in policy and law regulating patents. The importance of such an examination is warranted by the nature of the subject matter i.e., the protection of patents. The debate around the regulation of business methods is composed of multiple moving parts and varies from jurisdiction to jurisdiction. Patent protections are granted to inventions with technical novelty. However, processes that enhance commercial transactions such as claims of business method patents have been traditionally barred from the purview of patent protection as they have more to do with business strategies and economic analysis of the relevant market than an inventive technical creation (read more here and here). The court in its order also notes that granting business method patents may run the risk of monopolizing a manner of doing business. Such a patent grant may be anti-competitive and opposed to promoting new technological innovations and could further lead to the stymieing of a specific market.
Re-looking at the exclusions under Section 3(k) of the Act might be instrumental in bringing the Act abreast with technological innovations in the digital space however significantly altering the status quo of the law through an appeal order arising out of Section 117A, which is a procedural matter, begets further analysis.
Implications of the ‘Post Script’
Typically, the court forays into policy formulation through a writ or public interest litigation and it has long since been established that the judiciary can make law through precedents and expanding the body of common law. The use of obiter dicta to comment on the status of a law is a common practice of the judiciary as well.
However, inherent characteristics of a court process may limit the impact of policy-related ruminations of the judiciary. First, adjudication by its very nature limits the scope of a policy exercise as it arises through the lis between litigants asking for a based remedy on the facts of their case. Though the court may comment on the area of law being litigated in such cases, the order must be narrowly worded to avoid scattered and expansive rulings. Unless the constitutionality or vires of a provision is contested by a party to the suit, the court is required to interpret the law within the limits of the law in its extant state. Second, courts unlike legislators have limited capacity to generate information in a case on the basis of which they pronounce their final judgements. The Government may, while making a policy or passing a law, gather an amplitude of information through committee meetings and reports, stakeholder analysis, and expert testimony. Third, despite having the jurisdiction to lay down policy or direct making of laws, the court does not have the capability to build infrastructure for monitoring and operationalizing the implementation of the pronounced policy (read more here).
In this case, the court has used the heading ‘Post-Script’ to delineate this distinction, from the ratio decidendi. Directing the DPIIT to consider the matter through the obiter dicta poses the question of whether this practice of the court inspires confidence or creates further confusion on the subject. The court must also be careful to not impinge upon the jurisdiction of the legislature in matters of policy since such a practice leads to shaky constitutional grounds for beckoning the State to change the law, without the bearings to effectuate an overhaul of the law.
A relevant paragraph from Kevin T. McGuire’s analysis of judicial process and policy making in ‘Conditions for Effective Policy-Making’ sheds light on the balance that the court must maintain in pronouncing policy:
“Courts must lay the legal groundwork for change by institutionalizing a series of precedents upon which to build their policies. Once those policies are established, there must be a reasonable amount of acceptance by both the public and elected officials. To the extent that there is resistance to judicial policy, government officials must be willing to offer rewards or punishments to bring about implementation. In short, because courts lack the ability to put their rulings into effect, they must depend upon the goodwill of others to act on their behalf. The greater care courts take in establishing the legitimacy of their rulings, the more likely they are to be supported by those who can create the conditions necessary for implementers to carry out the courts’ will.”
The court acting in an appellate capacity and requesting the State to revise a provision of law in light of the generally evolving nature of inventions without substantial deliberation on the matter invites further reflection. Any endeavor to address a specialized subject matter from a focused policy deliberation perspective should be executed diligently, either by courts or legislators. A perfunctory attempt in this regard can be more detrimental than beneficial. Therefore, while the role of the judiciary as an influencer of law and policy cannot be denied, any substantial change to law and policy must be necessarily grounded in independent research and rigorous analysis to produce such projections that eventually coalesce into meaningful changes in the system.