Business Method Patents: An Oxymoron?
Aparajita Lath & Shivam Bhardwaj*
Volume 6 Issue 1 (2013)
The practice of granting patents to business methods is antithetical to the core concepts of intellectual property rights. Patent protection is afforded to novel creations which have industrial and technical application. A business method can be understood as an effective method of conducting commercial transactions. These methods are a result of business instinct and creativity. An external ‘patent’ incentive is not required to motivate the creation of such methods. Competition and first mover advantage are mechanisms that have ensured that novel business methods are created continuously. Moreover, such methods are purely transactional in nature, lacking in physical instantiation and hence not patent eligible. Despite the apparent clarity on the treatment of such subject matter, software, a gift of the Information Age, has confused our understanding of business methods. This confusion is evident in the leading US cases – State Street Bank Co. v. Signature Financial Group Inc. and In Re Bilski, where the court grappled over whether a business method executed through software could amount to a patentable ‘invention’. Even the Agreement on Trade-Related Aspects of Intellectual Property Rights (‘TRIPS’) does not address this ambiguity. In contrast, the Indian law, under § 3(k) of the Indian Patent Act, 1970, clearly excludes granting of patents to business methods. Despite this express exclusion, along with the Competition Act, 2002 and the Yahoo v. Controller of Patents decision, our empirical study shows that the Indian Patent Office still grants patent protection to business methods! The paper seeks to address these issues in detail and suggests that judicial decisions and legislative provisions be reconsidered so that the disparity between law and practice in India can be addressed in an expeditious manner.