Delhi High Court Sets Aside IPO’s Refusal of Patent Application Based on Section 3(k) of the Patents Act

On 12 November 2024, in Comviva Technologies v Assistant Controller of Patents & Designs, the Delhi High Court set aside the Indian Patent Office

On 12 November 2024, the Delhi High Court set aside the Indian Patent Office (IPO)’s refusal of a patent application based on Section 3(k) of the Patents Act, which relates to a computer program and business method (2024:DHC:8990). The IPO had initially refused the application, which was titled “Methods and Devices for Authentication of an Electronic Payment Card using Electronic Token”, on the grounds that the invention pertained to commercial transactions and offered a secure method for electronic payments, which is a business tool to foster trust between organisations and their customers. According to the IPO, the claims were essentially a set of executable instructions that neither demonstrated technical advancement nor exceeded the conventional interactions between software and hardware. As a result, the invention was excluded on the grounds of being a “computer program per se”. Moreover, the application’s description and claims failed to disclose any technical interaction between the features; the mere presence of technical effect or contribution was insufficient to meet the requirements imposed by Section 3(k) of the Patents Act, which makes “a mathematical or business method or a computer programme per se or algorithms” non-patentable subject matter.

In an appeal filed before the Delhi High Court, Comviva argued that the invention disclosed a two-step security verification technique and was thus related to the authentication of financial transactions and not a transaction itself. Further, since the application disclosed a technical problem and solution, the invention did not relate to a computer program per se. The court referred to the 2017 Guidelines for Examination of Computer-Related Inventions, which prescribe that an objection related to a business method would be applicable where the activity disclosed in the application pertains to a transaction of goods or services. The court emphasised that the presence of terms such as ‘business’, ‘sales’, ‘transaction’ and ‘payment’ is not enough to conclude that an invention relates to a business method.

Reference was also made to Open TV v The Controller of Patents and Designs, which had discussed the following three-step test for deciding if an application related to a business method (2023:DHC:3305). It considered whether:

The court analysed the invention and subject matter of the claims in view of this three-step test. It concluded that the invention improves security by eliminating invalid tokens and ensures that only authorised tokens are accepted for conducting transactions. Therefore, the invention did not relate to a business method or financial transaction but rather addressed a technical problem, preventing unauthorised transactions using electronic payment cards. The court also noted that the invention resulted in a technical advancement in contactless payments. After reviewing existing judicial precedents on the issue, the court found that the invention’s subject matter did not relate to a computer program per se.

Accordingly, it set aside the refusal order and granted the patent, subject to any other objections that may be raised by the IPO in accordance with the Patents Act.