In Comviva Technology v. Assistant Controller, the DHC was hearing an appeal against the rejection order of the Controller. The Controller held that the invention related to ‘business methods’ and ‘computer program per se’ u/s. 3(k)which was unpatentable. In this post, I argue that Comviva moves away from the DHC’s holding in OpenTV and adopts the approach of MHC in Priya Randolph while deciding the patentability of business methods. I also argue that the interpretation of 3(k) adopted by the Court in this case, prima facie, seems contrary to the legislative intent.
Background
The invention sought to enhance the security of electronic payment cards using various ways. One, it would save the electronic token in the card for a limited period, eliminating the chances of unauthorized transactions using invalid tokens. Two, such a token is only transmitted when the card is in close proximity to the mobile device, thereby reducing the chances of unauthorized transactions by stealing the token. Three, it used two-step verification before any transaction could be made.
According to Controller, when it comes to electronic payment, ‘security’ is the primary concern of the customer or user. The present invention, providing a secure electronic payment method, will help “establish a level of trust between a firm or organisation and their customers thereby leading to a growth of potential customer base.” Therefore, the Controller held, that the invention is related to commercial transaction which is essentially about carrying out business.
Further, it stated that the claims merely represent a set of executable instructions which do not show any technical enhancement or ‘go beyond’ the “normal” physical interactions between the software and hardware. Therefore, the invention was excluded for being a ‘computer program per se.’
Priya Randolph and OpenTV: Assessing Business Methods
In this post, I discussed Priya Randolph (MHC) and OpenTV (DHC), arguing that the two cases present contrasting approaches while deciding whether an invention was excluded under business methods or not.
On one hand, OpenTV adopted an ‘effects’ approach, arguing that the exclusion u/s. 3(k) is an absolute one. Therefore, as long as the invention addresses a business or administrative problem and provides a solution for the same”, it would be excluded u/s. 3(k). According to the Court, it is immaterial whether the manner of implementing the invention demonstrates “technical effect, implementation, technical advancement or technical contribution.”
On the other, Priya Randolph, relying on 2017 CRI guidelines, held that an invention will be excluded u/s. 3(k) if, in substance, it relates to a business method. As I wrote earlier, the MHC does not only focus on the end-result of the invention i.e. whether it solves a business problem. Rather, the Court also focused on the manner of implementation of the invention. If the invention is implemented in a technical manner i.e. providing a technical solution to a technical problem, it could be patentable. As a result, although an invention might facilitate business or financial transaction, it would still be patentable. In other words, unlike DHC, the bar is not absolute.
In the present case, however, the Court makes an interesting observation. In Para 13 & 14, it noted that Priya Randolph took a similar view as OpenTV. How? According to the Court, both cases held that “a claim would be construed as a ‘business method’ only if in substance it is for a business method.”
The Court misses an important nuance. Although both OpenTV and Priya Randolph hold that an invention must, in substance, relate to a business method, the stage at which the inquiry stops is different in both cases. In OpenTV, the inquiry will stop when the invention addresses a business or administrative problem and provides a solution for the same. In other words, the Court will only focus on the purpose or the effect of the invention. If it facilitates business activity or financial transactions, it is unpatentable.
In Priya Randolph, however, the Court goes beyond the purpose of the invention. Even if the purpose of the invention relates to business activity, the Court will look at the manner of implementation of the invention. If it is implemented in a technical manner to provide a ‘technical solution’ to the ‘technical problem’, the invention can be patented. Thus, the exclusion u/s. 3(k) is narrowed down.
Let me highlight this nuance by applying the ratio of both cases to the present problem.
In the instant case, the purpose of the invention is to enhance the security of electronic card payment. Relying on CRI guidelines 2017, the invention is related to carrying out a business activity or financial transaction/activity. As the Controller highlights, the invention seeks to build trust between the organisation and the customer, thereby increasing the customer base. In substance, it can be argued, that the invention relates to business method. Relying on OpenTV, the invention will be excluded u/s. 3(k).
However, if we use the approach of Priya Randolph, the result might be different. It can be argued that invention is implemented in a technical manner (deploying hardware and software) to solve a technical problem (preventing unauthorised transactions using electronic payment cards) by providing a technical solution (communicating electronic token to an electronic payment card). The Technical advancement is providing enhanced security for electronic payment cards by saving an electronic token.
Clearly, the two cases are not similar. Rather, one can reach a diametrically opposite conclusion in the same fact situation using the two cases.
What did the Court do in the present case?
The Court adopted the approach given by Priya Randolph. It noted, in Para 16, that the “invention improves security by ensuring that only authorised tokens, generated in close proximity and valid for a limited time, are accepted for transactions and unauthorized transactions with an invalid token is eliminated.” As a result, it observed that the invention addresses the security of the transaction, and the inventive step lies in the ‘technical process.’ (Para 17)
Clearly, the Court is looking at the manner of implementation of the invention rather than the effect, which is facilitating financial transactions in a secure manner. As a result, in my opinion, the Court moves away from the position in OpenTV and adopts a narrower interpretation of the exclusion u/s. 3(k).
Technical Advance and Business Methods
In OpenTV, the DHC made an important observation that business methods, unlike computer program, is not qualified with words per se. Therefore, it is important to ask whether importing the technical advancement test to business methods analysis is contrary to legislative intent. The legislative intent, by not qualifying business methods with the words per se, seems to exclude inventions relating to business methods from patentability, irrespective of technical advancement. The watering down of 3(k) exclusion by Priya Randolph and Comviva Technology may stem from an observation made in OpenTV. The Court, there, observed that a growing number of inventions in emerging technologies are in the field of business methods which are potentially excluded u/s. 3(k). As a result, it suggested a relook at 3(k) to not render it outdated. However, until the legislature steps in, the current approach of technical advancement seems to dilute 3(k) against legislative intent. For now, the interpretation of ‘business methods’ by MHC has found ground in the DHC too. It remains to be seen whether this dilution will continue or not.