Indian Patent Office Releases Guidelines for Examination of Computer Related Inventions

By an order dated August 21, 2015, the Controller General of Patents, Designs and Trademarks released the latest guidelines for examination of patent applications dealing with computer related inventions. The guidelines are available here. This post is merely an update on this development. I hope to undertake an analysis of the Guidelines soon.

Paragraph 3 of the Guidelines contains definitions of algorithm, computer, computer network, computer programme, computer system, data, firmware, function, hardware, "per se", software and a few more similar and relevant terms. Para 4.5 of the Guidelines deals with determination of excluded subject-matter in patent applications, with specific sub-heads separately dealing with determination of various categories of subject-matter excluded under Section 3(k) of the Patents Act, 1970. Extracted below are some of the relevant portions:

4.5 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 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 programme per se or algorithms from patentability. Computer programmes 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, in patentability cases, the focus should be on the underlying substance of the invention, not the particular form in which it is claimed. What is important is to judge the substance of claims taking whole of the claim together. 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 category, the patent should not be denied. 

4.5.4 Claims directed at Computer Programme per se: 
The computer programme per se is excluded from patentability under section 3 (k) apart from mathematical or business method and algorithm. Claims which are directed towards computer programs per se are excluded from patentability, like (i) Claims directed at computer programmes/ set of instructions/ Routines and/or Sub-routines written in a specific language (ii) Claims directed at “computer programme products” / “Storage Medium having instructions” / “Database” / “Computer Memory with instruction” i.e. computer programmes per se stored in a computer readable medium The legislative intent to attach suffix per se to computer programme is evident by the following view expressed by the Joint Parliamentary Committee while introducing Patents (Amendments) Act, 2002:

“In the new proposed clause (k) the words ''per se" have been inserted. This change has been proposed because sometimes the computer programme 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 programmes as such are not intended to be granted patent. This amendment has been proposed to clarify the purpose.” 

The JPC report holds that the computer programmes as such are not intended to be granted patent. It uses the phrase “ … certain other things, ancillary thereto or developed thereon…..”. The term “ancillary” indicates something essential to give effect to the main subject. In respect of CRIs, the term “ancillary thereto” would mean the “things” which are essential to give effect to the computer programme. The clause “developed thereon” in the JPC report may be understood as any improvement or technical advancement achieved by such development. Therefore, if a computer programme is not claimed by “in itself” rather, it has been claimed in such manner so as to establish industrial applicability of the invention and fulfills all other criterion of patentability, the patent should not be denied. In such a scenario, the claims in question shall have to be considered taking in to account whole of the claims. 

Supreme Court's Interpretation of Special Jurisdiction Provisions in IPRS v. Sanjay Dalia

On July 1, 2015, the Supreme Court pronounced its verdict in the much awaited case of IPRS v. Sanjay Dalia where the issue was the interpretation of the special jurisdiction provisions, namely Section 62 of the Copyright Act, 1957 and 134 of the Trademarks Act, 1999. The Court held that if the cause of action incidentally arises at a place where the principal office of the plaintiff is located, the plaintiff cannot rely upon Sections 62/134 to institute a suit at a place where its branch office is located.

Reproduced below are the provisions in question:

62. Jurisdiction of court over matters arising under this Chapter. --          

(1) Every suit or other civil proceeding arising under this Chapter in respect of the infringement of copyright in any work or the infringement of any other right conferred by this Act shall be instituted in the district court having jurisdiction. 

(2) For the purpose of sub-section (1), a "district court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or any other law for the time being in force, include a district court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or other proceeding or, where there are more than one such persons, any of them actually and voluntarily resides or carries on business or personally works for gain.” 

134. Suit for infringement, etc., to be instituted before District Court. -- 

(1) No suit-- (a) for the infringement of a registered trade mark; or (b) relating to any right in a registered trade mark; or (c) for passing off arising out of the use by the defendant of any trade mark which is identical with or deceptively similar to the plaintiff's trade mark, whether registered or unregistered, shall be instituted in any court inferior to a District Court having jurisdiction to try the suit. 

(2) For the purpose of clauses (a) and (b) of sub-section (1), a "District Court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908) or any other law for the time being in force, include a District Court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or proceeding, or, where there are more than one such persons any of them, actually and voluntarily resides or carries on business or personally works for gain. 

It is clear from both provisions, which are identical in all material respects, that they provide additional jurisdictional remedies over and above the conventional options available to a plaintiff under Section 20 of the Code of Civil Procedure, 1908. The central issue before the Court was the interpretation of the phrase “carries on business” used in both provisions, which has a bearing on the following scenarios:

1.       Can a place where the branch office of the plaintiff is located, in the absence of a cause of action which has arisen in such place, be treated as a place where the plaintiff corporation “carries on business”?

2.       In a situation where a cause of action has arisen at the place where the branch office is located, is the plaintiff barred from instituting a suit at a place where he has his registered/principal office because no cause of action has arisen there? In other words, does the Plaintiff not have the option of choosing between the principal/registered place of business, and the branch office where the cause of action has arisen in whole or in part?

In order to address these scenarios, it is imperative to understand the construal of the Explanation to Section 20 of the CPC since it spells out the meaning of “carries on business”. Reproduced below is Section 20 with the Explanation:

20. Other suits to be instituted where defendants reside or cause of action arises.- Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction—

(a) The defendant, or each of the defendants where there are more than one, at the time of the commencement of the Suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises.

Explanation: A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.

The phrase “carries on business” in the Explanation has been interpreted in two other decisions of the Supreme Court, namely Patel Roadways v. Prasad Trading and New Moga Transport v. United India Assurance. In Para 10 of New Moga Transport, the Court held thus:

“10. On a plain reading of the Explanation to Section 20 CPC it is clear that the Explanation consists of two parts: (i) before the word “or” appearing between the words “office in India” and the words “in respect of”, and (ii) the other thereafter. The Explanation applies to a defendant which is a corporation, which term would include even a company. The first part of the Explanation applies only to such corporation which has its sole or principal office at a particular place. In that event, the court within whose jurisdiction the sole or principal office of the company is situate will also have jurisdiction inasmuch as even if the defendant may not actually be carrying on business at that place, it will be deemed to carry on business at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a principal office at one place and has also a subordinate office at another place. The expression “at such place” appearing in the Explanation and the word “or” which is disjunctive clearly suggest that if the case falls within the latter part of the Explanation it is not the court within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone has the jurisdiction “in respect of any cause of action arising at any place where it has also a subordinate office”.”

In light of this ratio and after having extensively reviewed the object of Sections 62/134, the Supreme Court in IPRS rightly observed that these special jurisdiction provisions are exceptions to Section 20 of the CPC only in so far as they permit the plaintiff to sue at a place of his residence or where he works for gain or carries on business. In other words, the provisions are not to be construed as granting cartes blanches to the plaintiff since there are limitations/riders which apply to the plaintiff’s ability to sue even under Sections 62/134. This sentiment finds express endorsement in Para 16 of the decision.

In reading in limitations into the provisions, the Court relied upon the spirit of convenience of parties which is embodied in the Explanation to Section 20. According to the Court, keeping with the spirit of the Explanation, unless a cause of action arises at a place where the branch office of the plaintiff is located, it cannot be deemed as a place where the plaintiff “carries on business” for the purposes of Sections 62/134. In the absence of such a qualification, plaintiff corporations with branch offices in far flung places could harass defendants by suing them at such places despite the cause of action not having arisen there. Simply put, the convenience of defendants has not been entirely done away with by Sections 62/134 since balance is struck by using cause of action as the parameter to determine jurisdiction in so far as the branch office of the plaintiff is concerned.

Viewed from another angle, the underlying rationale is that a branch office has not been accorded the same status under law as a principal place of business for the purposes of jurisdiction. Consequently, a branch office needs to be supplemented by a cause of action for it to be deemed in law as a place where the plaintiff "carries on business". In fact, under Sections 62/134, the place where the branch office is located is the only appropriate place for the plaintiff to sue when the cause of action has accrued there. This approach strikes a balance between the convenience of the plaintiff and the defendant since the assumption is that the branch office makes it convenient for the plaintiff to sue, and the accrual of the cause of action in that place means the defendant’s goods are being sold there and therefore it is not inconvenient for him to defend himself.

Based on this logic, following are the practical jurisdictional consequences:

1.       If the principal place of business of the plaintiff is at X, and the cause of action has arisen at Y where there is no branch of office, Plaintiff may sue at X based on Sections 62/134, and at Y based on Section 20(c) of the CPC.

2.       If the principal place of business of the plaintiff is at X, and the cause of action has arisen at Y where there is a branch office, Plaintiff may sue only at Y, not X, if the suit relates to the said cause of action.

3.       If the principal place of business of the plaintiff is at X, and the cause of action has arisen at Y, and branch office is at Z, then plaintiff may rely on Sections 62/134 to sue at X and Section 20(c) of the CPC to sue at Y, but cannot sue at Z under any circumstances invoking Sections 62/134 or Section 20.

There is another scenario which is possible. The plaintiff could have its principal place of business at X and a single defendant may give rise to two causes of action simultaneously at Y (where there is a branch office), and Z (where there is no branch office). In so far as Y is concerned, the plaintiff cannot sue at X or Z, going by the ratio of the IPRS. Further, with respect to the cause of action at Z, the plaintiff may sue either at X based on Sections 62/134 or Z based on Section 20(c). However, both causes of action, namely with respect to Y and Z, cannot be combined in a composite suit since the ratio of the Supreme Court’s decision in Dhodha House would come in the way.

Comments and clarifications are welcome.