US Supreme Court to decide on Patent–Eligibility of ‘Computer-Implemented Inventions’

Section 101 of US Patent Act (“35 U.S.C. § 101”) provides that one may obtain patent for invention or discovery of any new and useful subject-matter (process, machine, manufacture etc.) or for any new and useful improvement thereof. In a pending case before it, United States Supreme Court (“Supreme Court) has to decide whether claims related to ‘computer-implemented inventions’ are patent-eligible subject matter within the meaning of 35 U.S.C. § 101.

Invoking the writ jurisdiction (writ of certiorari) of the Supreme Court under 28 U.S. Code § 1254(1), Alice Corporation Pty. Ltd. (“Petitioner”) has filed a petition against the decision given in an en banc hearing. The disputed invention in the present case relates to a ‘computerised system for creating and exchanging financial instruments such as derivates’ (“INVENTCO system”). One aspect of INVENTCO system can be described as follows:

“.....specific computer system and computerized process for the execution of a previously agreed-upon exchange, known as “settlement”

To understand it more clearly, prior to the execution of an agreement to exchange financial instruments or assets, there is a stage where parties merely agree to execute the exchange. There may be situations where one of the parties, at the time of actual execution or settlement of the agreement, performs its obligation(s) but other party does not. So as to address this situation of risk, the disputed invention provides for a specifically programmed computer. Following are the features of this computerised system:

“Invention” under Patents Act, 1970 : An Overview and Analysis

(Important note: Though this post is fairly long, it thoroughly discusses the concept of “invention” under Patents Act, 1970. Starting from the basic understanding of the concept, the post culminates its discussion on the landmark decision of the Supreme Court of India in Novartis AG v. Union of India)

Invention: A historical background prior to the enactment of Patents Act, 1970

In 1947, when India was released from rule of British Government, the country was still dominated with a patent regime favourable to multinationals abroad. Though much has changed since then, Indian patent jurisprudence is still witnessing ups and downs. To the core of the patent law lies an ‘invention’ which, according to Black’s Law Dictionary, means an act or operation of finding out something new. Defining this ‘something new’ has, even in 21^st century, remains the most problematic issue under Indian patent law.

(Image Source: 123RF.com)

The old patent regime, which was governed by Indian Patents and Designs Act, 1911 (“Old Act”), defined an invention as ‘any manner of new manufacture and includes an improvement and an alleged invention’.[1] According to the Old Act, term ‘manufacture’ included ‘any art, process or manner of producing, preparing or making an article, and also any article prepared or produced by manufacture’.[2] That is, in order to qualify as an invention under the Old Act, there should have been an existence of a new art, process or manner of producing.......any article prepared or produced by manufacture.

By not defining what is ‘new’, the definition had provided space for the existence of ambiguity. Could minor changes be considered as ‘new’, and hence, sufficient for patent protection? A similar problem still exists under the Patents Act, 1970 (“1970 Act”) while defining 'inventive step'. While the definition of invention under the Old Act did not provide that the patented invention should be useful, the Supreme Court of India (“Supreme Court”), in Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries, stated that courts have generally held that an invention must be useful.[3]Under the 1970 Act, it was provided that an invention should be useful (originally enacted definition).