Patent is a set of exclusive rights granted by the state to an inventor or his/her assignee for a limited period of time in exchange for the public disclosure of an invention. The term patent usually refers to an exclusive right granted to anyone who invents any new, useful, and non-obvious process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof, and claims that right in a formal patent application. A patent provides the right to exclude others from making, using, selling, offering for sale, or importing the patented invention for the term of the patent, which is usually 20 years from the filing date.
Software Patent in Conventional Countries:
However, there is no international convention that grants patent to computer programs. But the English law does have some exceptions in certain cases where a computer program can be patented along with the computer. Under the Paris convention, 1883, that covers protection of industrial property, the member countries can specify the ‘protectable’ subject matter’ for patents on their discretion. According to the World Intellectual Property Organization (WIPO) 1978, a computer program must offer new and inventive technical solutions for it to claim patent protection.
If a computer software is merely an algorithm it should not be protected under patents. The term of algorithm is not defined in the patent act. If the invention is technical in nature it will entitled to get protection under patents. The mathematical algorithms which per se are not regarded as patentable subject matter universally, they are merely considered as abstract ideas or mental steps. The World Intellectual Property Organization (WIPO) 1978 provided that for granting patent protection for computer software it must fulfill the criteria of new and inventive technical solutions. These guidelines stated that a computer program, whether claimed as an apparatus or as a process, was unpatentable. Under these guidelines, an invention relating to a programmed computer could be patentable only if the computer were combined with other, non obvious elements to produce a physical result. The P.T.O. viewed computer programs and inventions containing or relating to computer programs as unpatentable mental steps, and not patentable processes or machines.
In the 1972 case of Gottschalk v. Benson, the Supreme Court struggled with whether an algorithm to convert binary-coded decimal numbers into true binary numbers was considered patentable. The Court felt that a patent on this concept would pre-empt the entire mathematical algorithm. Since mathematics could be considered an abstract idea, and abstract ideas are not patentable, the Supreme Court held that the algorithm in question is not patentable.
In the 1980s, the Supreme Court forced the P.T.O. to change its position. The 1981 case of Diamond v. Diehr provided the first instance in which the U.S. Supreme Court ordered the P.T.O. to grant a patent on an invention even though computer software was utilized. In that case, the invention related to a method for determining how rubber should be heated in order to be best "cured." The invention utilized a computer to calculate and control the heating times for the rubber. However, the invention (as defined by the claims) included not only the computer program, but also included steps relating to heating rubber, and removing the rubber from the heat. The Supreme Court stated that in this case, the invention was not merely a mathematical algorithm, but was a process for molding rubber, and hence was patentable.
In the early 1990s, the Federal Circuit (the highest court for patent matters other than the Supreme Court) tried to clarify when a software related invention is patentable. The court stated that the invention as a whole should be examined. If the invention is only a mathematical algorithm, such as a computer program designed to convert binary-coded decimal numbers into binary numbers then the invention is unpatentable. However, if the invention utilizes the computer to manipulate numbers that represent concrete, real world values (such as a program that interprets electrocardiograph signals to predict arrhythmia or a program that analyzes seismic measurements), then the invention is a process relating to those real world concepts and is patentable.
In 1998, the Federal Circuit issued its State Street Bank & Trust v. Signature Financial Group decision, which further clarified the patentability of computer software in the United States. In this case, Signature Financial had obtained a patent on a "Hub and Spoke" method of running mutual funds. In this method, several mutual funds (or "spokes") pool their investment assets into a single investment portfolio (the "hub"). Software then determines the value of each fund based upon a percentage ownership of each of the assets in the hub portfolio. This information is tracked on a daily basis, and is used to track fund share pricing and tax accountability. State Street Bank asked the court to declare this invention to be unpatentable as a mere mathematical algorithm or as a business method. The Federal Circuit rejected the arguments of State Street Bank, and instead upheld the patent by explicitly stating that business methods can form patentable subject matter. The court emphasized that software or other processes that yield a useful, concrete and tangible result should be considered patentable.
Software Patent in India:
Patent protection is still a debatable issue in some cases, such as in the case of computer programs. India, like the European Union, does not allow patents for inventions related to software. Patent laws in India are based on British law. Computer programs are not considered a patentable invention under section 1(2) of the U.K. Patents Act of 1977 also. However, section 2(o) of the Copyright Act 1957 does provide protection for computer programs and computer data. This is because this section recognizes computer programs and computer data under creative works category that is entitled to copyright protection.
Best legal minds in India have had to work hard to understand what exactly "computer program per se" means. They have cited U.S. case law, U.K. case law, E.U. precedents, and sought to arrive at an understanding of how per se should be understood. For that, we can look at the 2004 Patent Ordinance that Parliament rejected in 2005. In that ordinance, sections 3(k) and (ka) read as follows: (3) The following are not inventions within the meaning of this Act: (k) a computer program per se other than its technical application to industry or a combination with hardware; (ka) a mathematical method or a business method or algorithms. Thus, it is clear that the interpretation is wrong that "computer program per se" excludes "a computer program that has technical application to industry" and "a computer program in combination with hardware". By rejecting the 2004 Ordinance wording, Parliament has clearly shown that "technical application to industry" and "combination with hardware" do not make a computer program patentable subject matter.