Are Software Patents Finally Dead?

Prabir Purkayastha

5th March 2016


Last month, the Indian Patents Office released the revised Guidelines for Computer Related Invention (CRI Guidelines), which has finally aligned the Patents Office fully with the Indian Patents Act. This is the third time that software patents have been beaten back in India: the first with the Amendments to the Patents Act in 2005, the next, smuggling it in through the Patents Manual issued by the Patents Office, and this time, through the original CRI Guideline issued in August last year. Each time, these attempts have been beaten back.

After representations by various groups including the Free Software Movement of India, the August Guidelines were withdrawn and now the new Guidelines have been issued. Hopefully, this is the last time that we will have to fight the software patents battle in India, as the global opinion is now also shifting against software patents. Even the US, which started the whole mess by granting software patents, has now swung back, with the Supreme Court restricting patents involving software in a way that makes it almost impossible to claim patents for software alone.

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For those who may not be aware, the 2005 Amendments to the 1970 Act were in order to bring India's patents regime in line with TRIPS Agreement of WTO. The UPA government of Manmohan Singh required the Left's support in Lok Sabha to pass these amendments. It was the Left's pressure on the UPA that forced it to agree to key modifications that has made it possible for India to continue producing low cost medicines and bar software patents.

Why are battles over patents – whether in pharmaceuticals or software – important to the people? We need to understand the relationship between industry, the role of monopolies and its impact on the prices for us to understand the role of patents in our lives. Patents create monopolies and it is monopolies that then push up costs. A recent, particularly brutal example, was of a company, Turing Pharmaceuticals that pushed up the price by 75 times of Daraprim, a drug to treat rare but deadly toxoplasmosis, over which it had a monopoly, simply because it could. What would happen to us, if we had to buy our medicines at prices that are 10 to 100 times higher, as they are in the west?

The key reason why lifesaving drugs cost so much less in India than in the west, is because India has different provisions in its patents act. This makes it difficult for global pharma majors to build the kind of monopoly they enjoy in their home countries under their more “benevolent” patent laws. There they can patent small tweaks in a known chemical and get a new patent; or extend the life of the patents well-beyond its period of 22 years (minimum protection under TRIPS). The Section 3(d) of the Act, introduced under the pressure of the Left during UPA I, ensures that such small cosmetic changes do not lead to a patent in India, allowing for many more companies to produce these drugs. This is why India is regarded as the pharmacy for the global south. It is patents and the monopolies they create that lies at the root of high cost medicines in the west.

The battle over software patents is equally important today, as is for pharmaceuticals. Smart phones, computers, and devices such as washing machines, TV's, etc., all have electronic chips and software running on such chips. If software patents were allowed, dominant manufacturers could freeze out new entrants for violating their software patents.

It is estimated that the number of patents covering an average smart phone is 250,000, and further that 1 out of every 6 active patents in the US concerns a smartphone. If we accept software patents, any new entrant could be sued by the holders of these patents. They would add huge costs to the manufacturers, not only to fight such litigation, but to also pay license fees to patent holders, a cost which would then be passed on to the consumers. Such an increase in prices would hit the spread of mobile telephones, and would have deeply damage the spread of mobile internet in India.

In India, Ericsson has filed for a series of patents, essentially on software and compression algorithms that lie at the base of mobile telephony. None of these qualify for patents under 3(k). Using these filings, they are suing Lava, Micromax and other indigenous mobile phone manufacturers, seeking injunction on their sale of mobiles, penalties for infringement and royalty payments. If software patents become admissible -- by the Patents Office misinterpreting the Patents Act -- this would not only have put all Indian manufacturers at a disadvantage, it would also leave the Indian consumers at the mercy of global monopolies.

An Apple iPhone costs 4-6 times as much as a virtually identical phone with a different brand name. The difference is not due its additional features or its superior product, but the brand name of Apple. This is what monopoly prices can do, just due to better branding. Imagine if this was backed up by a legal monopoly. Apple has tried to create such a monopoly through filing law suits in various countries against Samsung and others. Given the Indian Patents Act, it did not try to file such suits in India. With a CRI Guidelines that sought to water down the Patents Act through (mis)interpretation and not law making, software patents would still have been granted by the Patents Office, with disastrous consequences.

In the run up to the TRIPS compliant Patents Act, a number of new sections were introduced. One of them was Section 3(k) that barred certain things from patenting, such as “a mathematical or business method or a computer program per se or algorithms.” These were incorporated in the Patents Act. Retrospectively, the tiny loophole of “per se” -- not barring computer programs but computer programs per se -- has given lawyers an opportunity to explain “per se” in such a way that it seeks to nullify the intent of the Act.

One such attempt in 2005, when the Act was sought to be amended by introducing additional qualifiers. To “per se” was added, “other than its technical application to industry or a combination with hardware” which pretty much meant any software. It was the quick response of the free software community then and other groups such as peoples science networks that campaigned on this issue, and the Left's taking it up with the UPA government that this addition to the Act was defeated.

Under the British, Indian Patents Act was very much in tune with British Law, with a “strong” patenting regime and a pro-monopoly bias. It was the high cost of life saving antibiotics, the new wonder drug of modern medicine, that forced independent India to review its patents law. The Ayyangar Committee set up for this purpose, came out with its path-breaking recommendations that India should allow only process patents, and not product patents in the field of medicines, food and agriculture. Medicines and food were essentials of life, and the interests of the people had to be valued more than the property rights of the inventors. This was incorporated in the Indian Patents Act in 1970. This simple step of protecting the process that creates the “chemical molecule” and not the molecule itself, was the basis in pharmaceuticals of the Indian generic industry. The foundations of the India generic industry were laid out by Indian public sector companies such as IDPL, and two CSIR laboratories – National Chemical Laboratory, Pune and the Central Drug Research Institute, Luknow, who pioneered new processes for the pharmaceutical components. Ranbaxy, CIPLA and a host of other generic manufacturers have grown out of this innovation ecosystem of process patents, backed up first class research capabilities within the CSIR system.

For those who are unaware of the significance of the Indian Patents Act, they have only to reflect on why India became the pharmacy of the global poor. When the AIDS epidemic was sweeping Africa, the anti-retrovirals cost about $10,000 a year, far beyond the capabilities of the patients in the global south. It was the availability of such medicine from India that cost less than a dollar a day – $350 for a year's medicine – that made it possible for millions of lives to be saved.

The TRIP Agreement and WTO damaged the Indian innovation system. It mandated that India had to switch to product patents and could not continue its process patent regime that had created the low-cost Indian drug industry. Though India succumbed to the pressures of the US and the global pharmaceutical monopolies and gave up on process patents, it created some flexibilities within TRIPS that could provide some relief to the generic industry and the global poor. It is these flexibilities that are now incorporated within the 2005 Amendments to the Patents Act, the most important of them being the 3(d) that prevents patents for small tweaks and ever-greening of existing ones on flimsy grounds.

The 3(k) section is to the software industry what the 3(d) is for the pharmaceutical industry. Just as the global pharma majors are fighting a battle within india's legal system against Section 3(d), dominant software players are trying to sabotage the provisions of 3(k). Credit to the various software groups, academics, some start-ups and others, who came together to take up this issue and its successful resolution by the Patents Office releasing the new CRI Guidelines. The current guidelines now are in tune with the Act.

However, the work for the software community and other public interest groups still remain. There are a large number of bad patents that have got in through clever drafting and pretending that they are not software patents. How to address this issue still remains. The Patents Office needs to do a suo moto review of such patents and throw them out. Only then can we declare software patents to be truly dead.