INTELLECTUAL PROPERTY RIGHTS-II:

Abstract Strategy in Patent vis a vis Bilski v. Kappos 561 U.S. 593
(2010)

SUBMITTED BY: SUBMITTED TO:

MIHIR SINGH DR. CHANDRIKA
1120202174 ASSISTANT PROFESSOR OF
LAW
BBA LLB
HIMACHAL PRADESH
8th SEMESTER
NATIONAL LAW
UNIVERSITY, SHIMLA.
 DECLARATION

I hereby declare that the assignment entitled “Abstract Strategy in Patent vis a vis Bilski v.
Kappos 561 U.S. 593 (2010)” submitted by me to Himachal Pradesh National Law
University, Shimla is a record of Bonafede project work carried out by me, Mihir Singh,
under the guidance of Dr. Chandrika. I further declare that the work reported in this project
has not been submitted and will not be submitted, either in part or in full, for the award of any
other degree or diploma in this institute or any other institute or university.

Mihir Singh

Date: 06-05-2024
INTRODUCTION

Patent law is a crucial aspect of intellectual property rights that aims to promote innovation
by granting inventors exclusive rights to their inventions for a limited period 1. In India, the
Patents Act, 1970, governs the patenting process and sets the criteria for what constitutes a
patentable invention. However, not all inventions are eligible for patents. Among the
exclusions are abstract strategies, which encompass non-technical, intellectual, or conceptual
ideas such as business methods, mathematical formulas, and mental processes. The exclusion
of abstract strategies from patentability is grounded in the principle that patents should only
be granted for inventions that provide a tangible technical contribution or solve a technical
problem.

The concept of abstract strategy in patent law is significant because it delineates the boundary
between patentable and non-patentable inventions, ensuring that the patent system
incentivizes genuine technological advancements rather than monopolizing abstract ideas.
This paper aims to explore how abstract strategies are treated under Indian patent law,
focusing on the relevant legal provisions, judicial interpretations, and practical implications
for inventors and the broader innovation ecosystem.

The Indian Patents Act, 1970, specifically addresses the issue of abstract strategies in Section
3, which lists non-patentable inventions. Section 3(k) 2 explicitly excludes "a mathematical or
business method or a computer programme per se or algorithms" from patentability (Patents
Act, 1970). This provision has been subject to various interpretations by the Indian courts and
the Intellectual Property Appellate Board (IPAB), which have sought to clarify the
circumstances under which inventions involving abstract strategies can be considered
patentable if they demonstrate a technical effect or contribution.

The Indian Patent Office has also issued guidelines for examining computer-related
inventions (CRIs), providing criteria for assessing whether an invention involving an abstract
strategy meets the requirements for patentability. These guidelines emphasize the need for a
claimed invention to demonstrate a specific and substantial technical contribution beyond the
abstract idea itself.3

1
https://wysebridge.com/what-is-the-difference-between-patent-enforceability-and-
patent-validity
2
Patents Act, 1970.
3
Indian Patent Office Guidelines for Examination of Computer Related Inventions (CRIs), 2017. Retrieved
from Indian Patent Office.
This assignment will delve into the legal framework governing abstract strategies in Indian
patent law, analyse key judicial decisions and examination guidelines, and discuss the
challenges and controversies surrounding the patentability of abstract ideas. By
understanding the treatment of abstract strategies under Indian patent law, we can better
appreciate the balance between encouraging innovation and preventing the monopolization of
abstract concepts.

ABSTRACT STRATEGY & ITS IMPLICATIONS

Abstract strategies in the context of patent law refer to non-technical ideas or concepts that do
not result in any practical application or technical advancement. These include business
methods, mathematical formulas, and purely mental processes. The exclusion of such
strategies from patentability is intended to ensure that patents are granted only for inventions
that provide tangible, technical contributions rather than for mere abstract ideas or theoretical
concepts.

Types of Abstract Strategies

1. Business Methods: Strategies or methods related to conducting business, such as

marketing techniques, financial strategies, and organizational methods. For example,
a method for managing a business process without any technical implementation
would be considered an abstract strategy and not patentable.

2. Mathematical Algorithms: Pure mathematical formulas or calculations that do not

provide a technical solution to a problem. For instance, a new algorithm for
performing arithmetic operations more efficiently, without any specific application to
a technical field, would be excluded from patentability.

3. Mental Processes: Methods or procedures that can be performed entirely in the

human mind, such as abstract rules for playing a game or methods of organizing
human activity. An example would be a method for teaching a subject without any
associated technical apparatus.

Legal Framework
The Indian Patents Act, 1970, explicitly addresses the exclusion of abstract strategies from
patentability under Section 3. Specifically, Section 3(k) states that "a mathematical or
business method or a computer programme per se or algorithms" are not patentable (Patents
Act, 1970)4. This provision is designed to prevent the monopolization of abstract ideas that
do not contribute to the technological arts.

Implications of Abstract Strategy Exclusion

1. Encouragement of Genuine Innovation: By excluding abstract strategies from

patentability, the law ensures that patents are granted only for inventions that offer
practical and technical advancements. This encourages inventors to focus on
developing genuine technological innovations.
2. Prevention of Patent Thickets: Allowing patents on abstract strategies could lead to
a proliferation of patents on basic ideas, creating a "patent thicket" that could hinder
innovation by making it difficult for new inventors to navigate existing patents.
3. Clarity and Predictability: Clear guidelines on the exclusion of abstract strategies
help provide predictability for inventors and businesses, enabling them to understand
what types of inventions are likely to be patentable.
4. Alignment with International Standards: The exclusion of abstract strategies aligns
Indian patent law with international standards, such as those in the United States and
Europe, which also exclude abstract ideas from patentability. This harmonization
facilitates global patenting strategies for inventors.

BILSKI v/s KAPPOS 561 U.S. 593 (2010)5

Introduction
It is a landmark case that has far-reaching implications for patent law, the United States
Supreme Court recently issued a significant ruling on the test for patent eligibility under
Section 101 of the Patent Act. Section 101 of the U.S. Patent Act is a fundamental provision
that defines the scope of patent eligibility6. It establishes the categories of inventions that are
considered patentable subject matter.
4
http://iprstudio.com/fer-reply-resolving-objections-under-section-3k-of-patents-act-1970/
5
2010 SCC OnLine US SC 89
6
https://brainiac.co.in/patent-and-trademark-registration-related-blogs.php
The petitioners in the case sought a patent for their method of hedging against energy market
price fluctuations. The patent examiner rejected their application, deeming it an abstract idea
that lacked implementation on a specific apparatus. This decision was subsequently affirmed
by the Federal Circuit7. However, the Supreme Court’s verdict brings forth a new perspective
on the matter.

Background
The case was initiated when the petitioners submitted a patent application for their innovative
method, which relied on a simple mathematical concept and well-known statistical
techniques. The patent examiner rejected their application, however, on the grounds that it
concerned an abstract concept and lacked a specific implementation apparatus. Using the
machine-or-transformation test, the Federal Circuit subsequently upheld this ruling.
According to this criterion, a process may be patentable if it is linked to a specific machine or
transforms an item into something else.

The Dissenting Opinions

Within the Federal Circuit, there were dissenting opinions. One judge argued that the method
failed because it constituted a business method. Another judge contended that the invention
was an abstract idea and, therefore, unpatentable. A third dissenter suggested remanding the
case to determine patentability under other provisions. These diverging viewpoints highlight
the complexity and contentiousness of the issue.

Supreme Court Verdict

The Supreme Court, in a majority decision authored by Justice Kennedy, held that the
machine-or-transformation test was not the sole test for patent eligibility under Section 101 of
the Patent Act. While the Court acknowledged the importance of the test, it emphasized that
Section 101 defines patent eligibility with exceptions for laws of nature, physical phenomena,
and abstract ideas. Moreover, the Court pointed out that the Federal Circuit’s adoption of the
machine-or-transformation test as the exclusive criterion for defining a “process” was
unnecessary and potentially restrictive.
The Court emphasized that the test’s exclusivity could create uncertainty for patentability in
emerging technologies, including computer software. It clarified that the definition of
“process” in Section 100(b) did not exclude business methods, and federal law explicitly
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contemplated the patentability of certain business method patents. The Court emphasized that
the requirements of novelty, non- obviousness, and full description acted as safeguards
against unjustified patents.8
However, the Court also acknowledged that the petitioners’ process might not meet the
requirements of Section 101 as it claimed an abstract idea. The Court’s precedent supported
the limitation that abstract ideas should not be patentable.

Concurring Opinions
Justice Stevens concurred with the majority but expressed concerns about the breadth of the
majority’s reasoning. While agreeing that the machine-or-transformation test was not the sole
test for patentability, he believed that the method in question was not a “process” because it
merely described a general method of conducting business. He argued that business methods
should not be patentable based on historical norms, legislative intent, and the adverse impact
on innovation and competition.
Justice Breyer’s concurrence highlighted key points of agreement among the Justices. He
emphasized that while the machine-or-transformation test was useful and important, it had
never been the sole test for patentability. Furthermore, he clarified that the presence of a
useful, concrete, and tangible result did not automatically make an invention patentable.

Implications
The Bilski v. Kappos decision clarified the patent eligibility criteria for business methods,
providing more flexibility in evaluating their patentability. The Court rejected the notion that
the machine-or-transformation test was the exclusive standard, acknowledging that other
factors, such as novelty and non-obviousness, should also be considered.
This ruling had both supporters and detractors within the patent community. Supporters
appreciated the increased flexibility for patent applications, particularly for business method
inventions that did not strictly meet the machine-or-transformation test. Detractors expressed
concerns about a potential flood of process claims, including services like legal counseling
and arbitration, and desired more definitive guidelines on appropriate business method
patents.

Scenario in India

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Section 3(k) of the Indian Patent Act states that “a mathematical or business method or a
computer program per se or algorithms” are not inventions and, therefore, not patentable.
This provision explicitly excludes mathematical algorithms from patentability, emphasizing
the legislative intent to prevent the monopolization of abstract mathematical concepts.
However, the interpretation and application of Section 3(k) have been the subject of debate
and controversy. There have been instances where applicants sought to patent algorithms
integrated into specific applications or processes, arguing that the inventive step lies in the
practical implementation rather than the algorithm itself. In the landmark case of Ferid
Allani v. Union of India (2004), the Indian Supreme Court clarified that mathematical
methods, algorithms, and computer programs as such are non-patentable. The Court
emphasized that the exclusion extends to the “essence” of a mathematical algorithm, even if
it is claimed as part of a broader invention or application.
It is worth noting that the exclusion of mathematical algorithms does not preclude/prevent
patent protection for inventions that utilize mathematical algorithms as a part of a larger
inventive concept. If an invention incorporates a technical solution or demonstrates a tangible
application beyond the algorithm itself, it may still be eligible for patent protection.
In recent years, there have been ongoing discussions and debates regarding the scope of
patentability for computer-related inventions, including software and algorithms. The Indian
Patent Office and the judiciary have been striving to strike a balance between encouraging
innovation and preventing the undue monopolization of abstract ideas.

TECHNICAL EFFECT REQUIREMENT

The "technical effect" requirement is a critical criterion for determining the patentability of
inventions involving abstract strategies under Indian patent law. This requirement ensures
that patents are granted only for inventions that provide tangible technological benefits and
not for mere abstract ideas or theoretical concepts. The technical effect must demonstrate a
specific and substantial technical contribution to the field of technology, offering a practical
application or solving a technical problem.

Key Elements of Technical Effect

To satisfy the technical effect requirement, an invention must meet the following criteria:
1. Specific Technical Contribution:
  The invention must offer a concrete technical solution to a technical problem. This
contribution should go beyond the mere implementation of an abstract idea on a
computer or other hardware.
 Example: An algorithm that significantly improves the efficiency of data processing
in a computer system by reducing computational overhead.
2. Substantial Technical Advancement:
 The invention should represent a significant advancement over existing technologies.
This could involve improvements in speed, efficiency, reliability, or other technical
attributes.
 Example: A software application that enhances the security of data transmission in a
novel and non-obvious way.
3. Practical Application:
 The invention must have a practical application in a specific field of technology 9. It
should demonstrate utility and effectiveness in solving real-world technical problems.
 Example: A method for optimizing resource allocation in cloud computing
environments, resulting in reduced energy consumption and improved performance.

CHALLENGES

1. Defining Technical Effect

One of the primary challenges in patent law is defining what constitutes a "technical effect."
The term itself is broad and can be subject to varied interpretations. The lack of a precise
definition leads to inconsistencies in the examination process and judicial decisions.
 Interpretative Variability: Different patent examiners and courts may interpret the
technical effect requirement differently, leading to inconsistent outcomes for similar
inventions.
2. Balancing Innovation and Monopolization
Abstract strategies, such as algorithms and business methods, often lie at the intersection of
innovation and monopolization. Granting patents for these strategies can potentially stifle
competition and innovation by allowing patent holders to monopolize fundamental ideas.

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  Patent Thickets: Allowing patents on abstract strategies could lead to a dense web of
patents on basic ideas, known as "patent thickets," which can hinder further
innovation and make it difficult for new entrants to navigate existing patents.
3. Assessing Novelty and Inventive Step
Abstract strategies often involve complex and highly specialized knowledge, making it
challenging to assess their novelty and inventive step. Determining whether an abstract
strategy genuinely advances the state of the art or is merely a trivial improvement can be
difficult.
 Complexity of Examination: The technical complexity of inventions involving
abstract strategies can pose significant challenges for patent examiners in assessing
their patentability.
4. Economic and Ethical Considerations
The patentability of abstract strategies raises important economic and ethical considerations.
On one hand, patents can incentivize investment in research and development. On the other
hand, they can lead to monopolistic practices that harm consumers and the broader economy.
 Access and Fair Use: Granting patents on abstract strategies could limit access to
essential technologies and raise issues of fair use, particularly in fields like software
development and financial services.

CONCLUSION
Abstract strategy in patent law represents a crucial area where the principles of intellectual
property rights intersect with the need to promote genuine technological innovation. The
Indian Patents Act, 1970, through provisions like Section 3(k), clearly delineates the
boundary between patentable inventions and non-patentable abstract ideas. This exclusion
aims to ensure that patents are granted only for inventions that provide tangible, technical
contributions, thereby fostering an environment conducive to real technological
advancements.
The technical effect requirement is central to this framework, requiring that inventions
involving abstract strategies must demonstrate a specific, substantial technical contribution.
This helps to ensure that patents are reserved for innovations that solve technical problems or
advance technological fields in meaningful ways. Judicial interpretations and guidelines from
the Indian Patent Office have further clarified this requirement, emphasizing the need for a
practical application or technical advancement.
However, the challenges and controversies surrounding the patentability of abstract strategies
cannot be overlooked. Defining what constitutes a technical effect remains complex and
subject to varied interpretations, leading to inconsistencies in patent examinations and
judicial decisions. Balancing the encouragement of innovation with the prevention of
monopolization of abstract ideas is a delicate task that continues to evolve.
Moreover, the patenting of software, algorithms, and other abstract strategies raises
significant economic and ethical considerations. While patents can incentivize investment in
research and development, they can also restrict access to essential technologies and stifle
open-source innovation. The global harmonization of patent laws regarding abstract strategies
remains a contentious issue, complicating the international patenting landscape for inventors.
In conclusion, while the legal framework in India provides a robust mechanism to exclude
abstract strategies from patentability, ongoing dialogue and refinement are necessary to
address the associated challenges and controversies. The balance between encouraging
genuine technological innovation and preventing the monopolization of fundamental ideas is
critical for fostering a dynamic and competitive technological landscape.