FICCI Online

Certificate Course
on Intellectual
Property (IPPro)

IPRs IN SOFTWARE

MODULE 7
The module facilitates to provide core study material regarding growing IT and IP
relations. Researched, developed and compiled by the IPR experts, the course
module provides current scenario of IPRs in software, role of IPR in development
of software technology and industry, Computer Related Inventions (CRI) and
software patents.

Chapter Title Page No.

1 IPR IN DEVELOPMENT OF SOFTWARE 2-7
TECHNOLOGY AND INDUSTRY
2 CRI AND SOFTWARE PATENTS 8-17

IPRs IN SOFTWARE 1.3 1

CHAPTER 1: IPR IN DEVELOPMENT OF
SOFTWARE TECHNOLOGY AND
INDUSTRY
Intellectual property rights provides for the foundation of the software industry. The law offers
different methods for protecting rights of ownership based on their type. There are essentially
four types of intellectual property rights relevant to software: patents, copyrights, trade secrets
and trademarks. Each affords a different type of legal protection. Patents, copyrights and trade
secrets help protect the technology itself. Trademarks protect the names or symbols used to
distinguish a product in the marketplace.

Patents

A patent is a twenty year exclusive domination on the right to make, use and sell a qualifying
invention. This legal monopoly is measured a reward for the time and effort expended in creating
the invention. In return, the invention must be described in detail to the Patent Office, which
publishes the information, thus increasing the amount of technological knowledge available to
the public.

For obtaining a U.S. patent, an inventor needs to apply to the United States Patent and
Trademark Office (USPTO) and prove that the invention is new, useful, and “nonobvious.”
Software patents are extremely powerful economic tools. Patents can be acquired for ideas,
systems, methods, algorithms and functions personified in a software product: editing functions,
user-interface features, compiling techniques, operating system techniques, program algorithms,
menu arrangements, display presentations or arrangements and program language translation
methods.

Patent rights are elite; anyone making, using or selling the patented invention without the patent
owner’s authorization is guilty of infringement. Forfeits are stiff and include triple damages.
Once a patent for an invention is granted, subsequent “independent” development of the
invention by another inventor is still considered infringement.

IPRs IN SOFTWARE 1.3 2

Copyrights

Copyright protection covers the particular form in which an idea is expressed. In the case of
software, copyright law would protect the source code and object code, as well as certain unique
original elements of the user interface.

As with patents, the exclusive rights afforded under copyright law are envisioned to reward the
creative and inventive efforts of the “author” of the copyrighted work. The exclusive right to
control duplication protects the owner of copyrighted software against the competition that
would result from precise copying of the program’s code. Copyright law also safeguards against
indirect copying, such as unauthorized transformation of the code into a different program design
language.

Copyright protection arises automatically upon the creation of an original work of authorship.
The duration of a copyright is the author’s life plus fifty years. In the case of software created by
an employee in the course of his or her employment, the resulting “work made for hire” would
be protected by copyright law for seventy-five years from publication.

In contrast with patents, independent development of a copyrighted work is a defense to an

allegation of copyright infringement. Imagine, how unlikely it would be for the same thousands
of lines of code to be created independently by one not affianced in unauthorized copying.
Unlike patents, copyright law affords no protection to the ideas underlying the program.

Trade Secrets

A trade secret is any formula, pattern, compound, device, process, tool or mechanism that is not
generally known or discoverable by others, is maintained in secrecy by its owner and gives its
owner a competitive gain because it is kept secret. The classic example of a trade secret is the
formula to Coca-Cola.

A trade secret can tentatively last forever for as long as its owner uses reasonable efforts to keep
it secret and someone else doesn’t independently create or “discover” it. Many features of
software, such as code and the ideas and concepts imitated in it, can be protected as trade secrets.
This protection lasts as long as the protected element retains its trade secret status. Unlike

IPRs IN SOFTWARE 1.3 3

patents, trade secret defense will not extend to elements of software that are readily ascertainable
by lawful means, such as reverse engineering or sovereign development.

Trade secrets are not subject to being “infringed,” as with patents and copyrights, but are subject
to theft. Their legal status as a protectable intellectual property right will be endorsed if the
owner can prove the trade secret was not generally known and rational steps were taken to
preserve its secrecy.

Maximizing the economic value of a software asset critically depends on understanding the
nature of the intellectual property rights involved and how best to use the available forms of legal
protection to protect those rights.

IPRs IN SOFTWARE 1.3 4

 1
Ownership and Value of Intellectual Property to Indian Software Developers

It was in the past that Indian companies created IP as a part of a customized software
development contract with a foreign client. It was a one-off engagement to meet the particular
needs of the client. This had two implications for the Indian software supplier. Firstly, the
software that the Indian company created was the possessions of the client for whom it was
1
http://iipi.org/wp-content/uploads/2012/10/India-Software-Study-2004.pdf

IPRs IN SOFTWARE 1.3 5

created and who paid for it. It did not belong to the Indian vendor and in principal could not be
used again without consideration being given to the original client. Therefore the software
services, even if valuable to the client, were not of much future business use to the Indian
company. Second, the customized software was unique to the business application for which it
was created and therefore did not have much if any value in other business applications. It did
not have value for other clients and therefore it was not of much future business value to the
Indian software supplier.

Intellectual Property Protection for Software Innovation in software products can be

protected as intellectual property, usually either through the use of copyrights or patents. Both
patents and copyrights are tools that are intended to protect a firm’s or individual’s innovation
from misuse by others, although they are quite different tools for doing so. Copyrights, generally,
protect the countenance of an idea; copyright protection extends to a specific work, but cannot be
applied to the ideas contained in such work. The application of copyright protection for software
products was firmly established internationally via the World Trade Organization’s (WTO)
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Under Article 10
of the TRIPs agreement, WTO members are required to treat computer programs, whether in
object or in source code, as literary works as defined in the Berne Convention. Copyright
protection thus extends routinely to software code once the code has been written and recorded
in a medium. A copyright holder may use his or her right to prevent others from using, making,
selling or distributing unauthorized copies of the work.

Unlike in the context of copyright, the TRIPs agreement does not explicitly discuss patent
protection for software. The TRIPs agreement does, however, contemplate protection for
software under its general discussion of patentable subject matter in Article 27. Article 27 makes
patent protection available to any inventions in all fields of technology, provided they meet the
minimum threshold requirements of novelty, utility and non-obviousness. Like copyright, a
patent holder may use his or her right to prevent others from using, making, selling or
distributing unauthorized copies of the invention protected. The protection offered by patents
tends to be broader than that of copyright, as copyright protection extends only to a specific
expression whereas patent protection extends to the underlying functionality of an invention.

IPRs IN SOFTWARE 1.3 6

Because patents can offer broader protection than copyrights, they are seen as more valuable if
they can be acquired. However, patent protection tends to be more expensive to obtain than
copyright protection, because patents require a formal application process in every country
where protection is desired. This application process often involves not only application fees, but
attorney and translation fees as well. In practice, the extent to which software may be patented
varies by country, depending upon the formal requirements and limitations placed on the
patenting of software by individual countries. The 1981 Supreme Court decision in Diehr is
widely regarded as the seminal case on the patentability of software in the United States. In
Diehr, the Supreme Court reaffirmed the long-held idea that a mathematical formula or
algorithm, in the abstract, is not patentable subject matter. The Supreme Court went on to hold in
Diehr, however, that when a formula or algorithm is employed in a claimed invention, one must
view the invention as a whole to determine patentability and not summarily dismiss the invention
as non-patentable simply because a formula or algorithm (i.e., software) was used. In other
words, an invention that includes software may be protected via the patent laws, provided the
invention, as a whole, meets the criteria of patentability.

Protection of Intellectual Property in India (In context of Softwares)

The protection of intellectual property was of little interest to Indian software companies in the
past. In part this lack of interest is explained by the small “new knowledge” content of Indian
software services; there was not much intellectual property to protect. Indian companies did not
own the customized intellectual property they might have created since their work product fell
under work for hire standards or ownership was explicitly transferred to the hiring company. But
even if Indian companies created software services that had new knowledge value, they did not
seriously take steps to protect it. The main intellectual property protection available for software
in India is copyright protection. India’s copyright law conforms to the requirements set out by
the TRIPs agreement and thus software is protected as a literary work in India (for a broader
discussion of copyright protection in India, see below). Over the last ten years, India has
implemented a number of legislative measures to bring it into compliance with TRIPs
requirements.

IPRs IN SOFTWARE 1.3 7

CHAPTER 2: CRI AND SOFTWARE
PATENTS
 Guidelines for Computer related Inventions (CRI)2 :

 CRI guidelines in India were issued in 2015, after painstaking consultations with
stakeholders, with the objective of bringing more clarity, uniformity and certainty in
patent examination procedures followed by the four patent offices. These guidelines
included positive examples about patentability of software-related inventions under
Section 3k, of Indian Patent act.
 Several stakeholders contend that these guidelines were logically well-structured and
eliminated several ambiguities related to software patents. Upon protests from certain IT
groups, the rather logically-structured guidelines were kept in abeyance and revised
guidelines to examine CRIs were issued on February 19, 2016.
 The revised guidelines make patentability of software possible only if the inventor also
invents a new hardware. Since the revised guidelines were issued, claims of at least 29
CRI applications have been rejected by the patent office under Section 3(k), i.e., on
grounds of containing subject matter that is not eligible for patenting. Microsoft alone
had to face the 3(k) related issues in 11 of its inventions.
 The guidelines discuss various provisions relating to the patentability of computer related
inventions. In case of any conflict between these guidelines and the provisions of the
Patents Act, 1970 or the Rules made there under, the said provisions of the Act and Rules
will prevail over these guidelines. The guidelines are subject to revision from time to
time based on interpretations by Courts of law, statutory amendments and valuable inputs
from the stakeholders.

2
http://ipindia.nic.in/writereaddata/Portal/IPOGuidelinesManuals/1_86_1_Revised__Guidelines_for_Examination_o
f_Computer-related_Inventions_CRI__.pdf

IPRs IN SOFTWARE 1.3 8

  Legal Provisions relating to CRIs

The Patents (Amendment) Act 2002 3(No. 38 of 2002) came into effect on 20th May, 2003. It
amended the definition of invention under section 2(1)(j) as “Invention” means a new product or
process involving an inventive step and capable of industrial application; and as per section
2(1)(ja)2 "inventive step" means a feature of an invention that involves technical advance as
compared to the existing knowledge or having economic significance or both and that makes the
invention not obvious to a person skilled in the art. Further, section 2(1)(ac) states that “"capable
of industrial application", in relation to an invention, means that the invention is capable of being
made or used in an industry;”. The Patents (Amendment) Act, 20024 also introduced explicit
exclusions from patentability under section 3 for Computer Related Inventions (CRIs) as under:
(k) a mathematical or business method or a computer program per se or algorithms; a literary,
dramatic, musical or artistic work or any other aesthetic creation whatsoever including
cinematographic works and television productions; (m) a mere scheme or rule or method of
performing mental act or method of playing game; (n) a presentation of information.

 Examination Procedure

The examination procedure of patent applications relating to CRIs is the same as that for other
inventions to the extent of consideration of novelty, inventive step, industrial applicability and
sufficiency of disclosure etc. The determination that the subject matter relates to one of the
excluded categories requires greater skill on the part of the examiner and these guidelines focus
more on this aspect.

 Novelty is the foremost requirement to determine the patentability of any invention. No

invention can be held patentable if the subject matter as described and claimed was
disclosed before the date of filing or before the date of priority, as the case may be. The
purpose of novelty in respect of CRIs is no different from any other field of invention.
The definition of “new invention” in The Indian Patents Act, 1970 is as follows: "New
invention" means any invention or technology which has not been anticipated by
publication in any document or used in the country or elsewhere in the world before the

3
http://www.gnaipr.com/Acts/Indian%20Patent%20Act%20Amendment%202002.pdf
4
https://indiankanoon.org/doc/1449261/

IPRs IN SOFTWARE 1.3 9

 date of filing of patent application with complete specification, i.e. the subject matter has
not fallen in public domain or that it does not form part of the state of the art; The novelty
criterion is judged under various provisions of the Patents Act and Rules.
 Inventive step is decided in accordance with the provisions of section 2(1)(ja) of the
Indian Patents Act, 1970. The determination of inventive step with regard to CRIs is
carried out in like manner as in other categories of inventions. As per 2(1)(ja), "inventive
step" means a feature of an invention that involves technical advancement as compared to
the existing knowledge or having economic significance or both and that makes the
invention not obvious to a person skilled in the art. When the patentee clarifies that there
is an inventive step which is a methodological advancement as compared to the existing
knowledge or that it has economic connotation that would not give him the right to a
patent as such. ‘’The inventive step’ must be a feature which is not an excluded subject
itself. Otherwise, the patentee by citing economic significance or technical advance in
relation to any of the excluded subjects can insist upon grant of patent thereto. Therefore,
this technical advance comparison should be done with the subject matter of invention
and it should be found it is not related to any of the excluded subjects.
Indian Supreme court on inventive step5: In Biswanath Prasad Radhey Shyam
vs Hindustan Metal Industries Ltd it was held that “The expression" does not involve any
inventive step" used in Section 26(1) (a) of the Act and its equivalent word "obvious",
have acquired special significance in the terminology of Patent Law. The 'obviousness'
has to be strictly and objectively judged. For this determination several forms of the
question have been suggested. The one suggested by Salmond L. J. in Rado v. John Tye
& Son Ltd. is apposite. It is: "Whether the alleged discovery lies so much out of the track
of what was known before as not naturally to suggest itself to a person thinking on the
subject, it must not be the obvious or natural suggestion of what was previously known."
High Court of Delhi on Inventive Step: In the F.Hoffman la Roche v Cipla case
the Hon’ble Delhi High Court had observed that the obviousness test is what is laid down
in Biswanath Prasad Radhey Shyam vs Hindustan Metal Industries Ltd (AIR 1982 SC
1444) which states that “Such observations made in the foreign judgments are not the
guiding factors in the true sense of the term as to what qualities that person skilled in the

5
https://indiankanoon.org/doc/1905157/?type=print

IPRs IN SOFTWARE 1.3 10

 art should possess. The reading of the said qualities would mean qualifying the said
statement and the test laid down by the Supreme Court.” Hon’ble High Court further
added, “From the bare reading of the afore quoted observations of Supreme Court, it is
manifest that the Hon'ble Supreme Court has laid down the test for the purposes of
ascertaining as to what constitutes an inventive step which is to be seen from the
standpoint of technological advancement as well as obviousness to a person who is
skilled in the art.” It is to be emphasized that what is required to be seen is that the
invention should not be obvious to the person skilled in art. These are exactly the
wordings of the New Patents Act, 2005 u/s Section 2(ja) as seen above. The said view
propounded by Hon'ble Supreme Court in Biswanath Prasad (supra) holds the field till
date and has been followed from time to time by this Court till recently without any
variance.

 Industrial Applicability: In patent law, industrial applicability or industrial application is

a patentability requirement according to which a patent can only be granted for an
invention which is capable of industrial application, i.e. for an invention which can be
made or used in some kind of industry. It has been defined in section 2(1)(ac) of Indian
Patents Act, 1970 as follows:

"capable of industrial application", in relation to an invention, means that the invention is

capable of being made or used in an industry;

Industry herein is to be understood broadly having any useful and practical activity while
excluding intellectual or aesthetic activity. Claims relating to “Method of playing games”
and “computer programming languages” are not considered to be industrially applicable.
A method for effecting introductions with a view to making friends is not industrially
applicable even though it could be carried out by a commercial enterprise. The
requirement of workability and usefulness are both connected to the requirement of
industrial applicability. If an invention is not workable, it means that it is also not
industrially applicable. The patent specification must disclose a practical application and
industrial use for the claimed invention wherein a concrete benefit must be derivable

IPRs IN SOFTWARE 1.3 11

 directly from the description coupled with common general knowledge. Mere speculative
use and indication of possible objective will not suffice. The determination of industrial
applicability in case of CRIs is very crucial since applications relating to CRIs may
contain only nonconcrete theories, lacking in industrial application.

 Sufficiency of Disclosure:

Grant of patents is agreement to disclosure. It is for the disclosure of invention by the applicant
that the patent rights are granted to him for a limited period of time, if all criteria of patentability
are fulfilled. The Patents Act, 1970 requires the applicant to specify ‘what’ the invention is and
‘how’ to perform it. The invention shall be described fully and particularly to satisfy the ‘what’
requirement and further the best method of performing the invention known to the applicant to
satisfy the ‘how’ requirement. The complete specification should therefore disclose the invention
completely to meet the requirement of the Patents Act and should also enable a person skilled in
the art to work the invention without any assistance of the patentee or any further
experimentation. The description must be unambiguous, clear, correct and accurate. It must not
contain any statements which may mislead the person skilled in the art to which the specification
is addressed. While the requirements of sufficiency of disclosure is considered generally in all
fields of invention; in cases of patent applications concerning computer related inventions
(CRIs), these requirements are considered as fulfilled if the specification addresses the
following:

 Fully and particularly:

1. If the patent application relates to apparatus/system/device i.e. hardware based
inventions, each and every feature of the invention shall be described with suitable
illustrative drawings. If these claims are worded in such a way that they merely and only
comprise of a memory which stores instructions to execute the previously claimed
method and a processor to execute these instructions, then this set of claims claiming a
system/device /apparatus may be deemed as conventional and may not fulfil the
eligibility criteria of patentability. If, however, the invention relates to ‘method’, the
necessary sequence of steps should clearly be described so as to distinguish the invention
from the prior art with the help of the flowcharts and other information required to

IPRs IN SOFTWARE 1.3 12

 perform the invention together with their modes/means of implementation.
2. The working relationship of different components together with connectivity shall be
described.
3. The desired result/output or the outcome of the invention as envisaged in the
specification and of any intermediate applicable components/steps shall be clearly
described.

 Best Method of operation:

The best mode of operation and/or use of the invention shall be described with suitable
illustrations. The specification should not limit the description of the invention only to its
functionality rather it should specifically and clearly describe the implementation of the
invention.

 Claims:

1. The claims should clearly define the scope of the invention and should take care of unity of
invention requirements as defined under section 10(5) of the Patents Act, 1970.

2. The claim(s) of a complete specification should be clear and succinct and should be fairly
based on the matter disclosed in the specification.

3. The claims in the field of Computer related inventions need to be construed to ascertain the
substance of the claim without wholly relying on the forms and types of the claims.

 Form and substance:

The sub-section 3(k) excludes mathematical methods or business methods or computer program
per se or algorithms from patentability.

While the judgment of mathematical methods or business methods is comparatively easier, it is

the computer program per se or algorithms related inventions that require careful consideration
of the examiner. Computer programs are often claimed in the form of algorithms as method
claims or system claims with some ‘means’ indicating the functions of flow charts or process
steps. The algorithm related claims are even wider than the computer programs claimed by them

IPRs IN SOFTWARE 1.3 13

as a single algorithm can be implemented through different programs in different computer
languages. If, in material, claims in any form such as method/process, apparatus/system/device,
computer program product/ computer readable medium belong to the said excluded categories,
they is not patentable. Even when the issue is related to hardware/software relation the
expression of the functionality as a ‘method’, is judged on its substance. In patentability cases,
the emphasis should be on the fundamental substance of the invention, not the particular form in
which it is claimed. The Patents Act clearly excludes computer programs per se and the
exclusion should not be allowed to be avoided merely by obscuring the substance of the claim by
wording

 Means plus Function:

The claims concerning CRIs are often expressed in means for performing some function such as
means for converting digital to analog signal etc. These types of claims are termed as means plus
function format. The ‘means’ mentioned in the claims shall clearly be defined with the help of
physical constructional features and their reference numerals to enhance the intelligibility of the
claims. The claims in means plus function form shall not be allowed if the structural features of
those means are not disclosed in the specification. Further, if the specification supports
employment of the invention solely by the computer program then in that case means plus
function claims shall be rejected as these means are nothing but computer program per se.

Where no structural features of those means are disclosed in the specification and specification
supports implementation of the invention solely by the software then in that case means in the
“means plus function” claims are nothing but software.

 Determination of excluded subject matter relating to CRIs:

Since patents are granted to inventions, whether products or processes, in all fields of
technology, it is important to ascertain from the nature of the claimed CRI whether it is of a
technical nature involving technical advancement as compared to the existing knowledge or
having economic significance or both and is not subject to exclusion under Section 3 of the
Patents Act. The sub-section 3(k) excludes mathematical methods or business methods or
computer program per se or algorithms from patentability.

IPRs IN SOFTWARE 1.3 14

 Computer programs are often claimed in the form of algorithms as method claims or
system claims with some ‘means’ indicating the functions of flow charts or process steps. It is
well-established that, while establishing patentability, the focus should be on the underlying
substance of the invention and not on the particular form in which it is claimed. If the claims in
any form such as method/process, apparatus/system/device, computer program product/
computer readable medium fall under the said excluded categories, they would not be patentable.
However, if in substance, the claims, taken as whole, do not fall in any of the excluded
categories, the patent should not be denied.

 Tests/Indicators to determine Patentability of CRIs:

Examiners may rely on the following three stage test in examining CRI applications:
(1) Properly construing the claim and identify the actual contribution;
(2) If the contribution lies only in mathematical method, business method or algorithm,
deny the claim; and
(3) Check whether it is claimed in conjunction with a novel hardware, if the contribution
lies in the field of computer program, and proceed to other steps to determine
patentability with respect to the invention. The computer program in itself is never
patentable. If the contribution lies solely in the computer program, deny the claim. If the
contribution lies in both the computer program as well as hardware, proceed to other
steps of patentability.

In the new proposed clause (k) the words ''per se" have been inserted. This change has
been proposed because sometimes the computer program may include certain other things,
ancillary thereto or developed thereon. The intention here is not to reject them for grant of
patent if they are inventions. However, the computer programs as such are not intended to
be granted patent. This amendment has been proposed to clarify the purpose.

The Joint Plant Committee (JPC) states “the computer program may include certain other
things”, which may qualify them as inventions and hence be awarded patents. Computer
program cannot certainly “include” hardware. Therefore, the three stage test prescribed
previously went against the legislative intent while dealing with CRI.

IPRs IN SOFTWARE 1.3 15

On the other hand, the debate is, what can a computer program “include” that is “ancillary
thereto or developed thereon”, which make it an invention. In our view, computer program can
include “technical movements”, again articulated as computer program, which nudge CRI from
being categorized as “computer program per se”.
The new guidelines do not deal with what “other things” the computer program can include that
is “ancillary thereto or developed thereon”, which makes it an invention. The guidelines offer
stuffiest scope to the examiners to exercise discretion while examining CRI, and to the applicants
to argue their case based on the Act, legislative intent and case law, without knocking the doors
of the Intellectual Property Appellate Board (IPAB).

 Software Patents And CRI (Case laws):

Yahoo’s Patent Application Denied Due to Section 3(k)6

Yahoo filed a patent application in 2007 for a method that scheduled the appearance
of users’ online presence in an Instant Messaging (IM) application. Recently, it was
turned down on grounds of containing subject matter that is ineligible for patenting.

Ericsson v. Lava7 – Delhi HC passes interim injunction for Lava to stop

manufacture and sale

India’s smartphone patent war rages on and its latest

development is Ericsson’s provisional victory over Lava. The
Delhi High Court passed an interim order in the ongoing case of
Telefonktiebolaget LM Ericsson v. Lava International Ltd.
which, operative from the 21st of June 2016, is an injunction
order that prevents Lava from importing, exporting,
manufacturing, and selling any mobile phones that use
Ericsson’s patents and technology.

Section 3(k) With regard to Section 3(k), the Court dismissed Lava’s arguments of the patents
being nothing but algorithms and hence not patentable.

6
https://spicyip.com/tag/3k
7
https://indiankanoon.org/doc/181502352/

IPRs IN SOFTWARE 1.3 16

Disclaimer: The study material mentioned in the module is for academics purpose to provide
information and understanding; it should not be interpreted as a legal advice or opinion.

IPRs IN SOFTWARE 1.3 17