Inventions Addressing Transaction Security: Patentability Under the Indian Patents Act

The Delhi High Court analyzed the validity of a new invention aimed at securing financial transactions with a recent judgment. The case arose in the wake of the appeal against a decision of the Controller of Patents and Designs on the subject of whether or not a method of authenticating electronic payment cards should be granted a patent. The Controller refused on account of Section 3(k) of the Indian Patent Act, which states that business methods and computer programs are non-patentable.

Background
The invention was titled “Methods and Devices for Authentication of an Electronic Payment Card using Electronic Token”. A growing concern has been the security of electronic payments, so the invention provides a more secure method for the user to authenticate their payment card while conducting online payments.
However, the Controller of Patents said that it did not facilitate a solution to a technical problem and was, rather, considered a business method and a computer program per se, both of which are non-patentable in India. Section 3(k) of the Patents Act elaborates on the non-patentability of business methods and computer programs unless these methods offer a technical advancement.
The respondent’s argument was, again, in defense of the particular decision of the Controller, at the outset claiming that the invention was a business method. The respondent asserted that really the application was about authenticating electronic payment cards and securing financial transactions. Hence, the subject matter concerned activities that constitute financial transactions, expressly ruled out for patentability according to Section 3(k) of the Patents Act. The respondent also pointed to the Guidelines for Examination of Computer Related Inventions (2016), which state that financial activities, even if associated with technology, will not fulfill criteria for patent eligibility.
The respondent argued that authentication of financial transactions is more a business process and does not encroach into the parameters of technicality. Hence, there was no innovative technical input introduced by the invention and the act being largely financial in intent should therefore be again regarded as a business method.
The Defense of the Appellant
On the other hand, the appellant, disputing the findings of the Controller, argued that there were significant technical contributions to the idea beyond those of mere business methods. The appellant contended that one could patent an invention based on a computer program for the technical effect or technical advancement it would give rise to.
The invention did not merely pertain to business concepts or methods of doing business; it offered technical solutions to the problem of electronic payment. The appellant stated that the authentication method described in the invention was a critical element for securing financial transactions online before initiation, so as to counteract existing vulnerabilities in payment systems, e.g., risks from stolen or compromised payment cards.
Court Examination
The two major reasons for refusing a patent were considered by the Court: the assertion that it was a business method and the assertion that it was simply a computer program per se.
Business Method Argument
For the first prong, the Court invoked the 2017 Guidelines for the Examination of Computer Related Inventions, wherein a business method is outlined as an enterprise method involving the conduct or administration of business matters that may include sales, purchases, or transactions. However, the mere use of words like “business,” “sale,” or “payment” does not necessarily lead to classifying an invention as a business method.
The Court also cited cases such as Opentv Inc. v. The Controller of Patents and Designs and Priya Randolph v. Deputy Controller of Patents and Designs to illuminate the matter, where it was held that the concept of a business method would not arise unless the invention is in itself primarily directed to effectuate or manage a business or financial transaction.
In this instance, the Court found that the invention did not address a business problem; instead, it resolved a technical one-the security of financial transactions. As the Court concluded, the inventive step was not in the business concept itself but rather in the technical procedure to securely authorize a payment card prior to the execution of a financial transaction; consequently, the invention would not be categorized as a business method.
Computer Program Argument
The second point for refusal was that the invention was computer program-like. The Court decided that if an invention was based on a computer program but nonetheless supported a technical advance or solved a technical problem, it would be patentable.
In this instance, the Court decided that the invention helped enhance the security of contactless payments, which came under the threat of unauthorized transactions when payment cards were lost or stolen. Existing solutions such as one-time passwords (OTPs) or dynamic security codes occasionally were abused by vulnerabilities, such as in the case of phone cloning or visibility of those security codes. Therefore, the appellant’s invention brought forward technical solutions to those problems, which renders it patentable as it is based on a computer program.
It was thus concluded by the Court that the invention was not simply a computer program as such, and therefore, falls outside the ambit of Section 3(k) of the Patents Act.
Conclusion
The Delhi High Court’s decision to set aside the Controller’s order and to uphold the Patent Office’s decision to grant the patent is important for technology and innovation in India. The principle that inventions producing technical contributions or advancements would still patent computer programs or business methods has been reemphasized by this ruling. The focus, therefore, is not just on the nature of the invention itself, but also on the technical effects and innovations the invention induces.
The present case, too, stands in alignment with preceding judgments, including Priya Randolph v. Deputy Controller of Patents and Designs, where it was held that an invention must, in substance, be a business method to fall within Section 3(k). Hence, the Court has reiterated the fact that, although an invention has commercial applications, its technical contribution in combination with its mode of implementation will serve as the crucial consideration in determining whether the invention qualifies for patentability or not.
The ruling, hence, is a wake-up call that the Indian Patents Act can admit definitions of technology in the areas of electronic transaction and security. Any invention that would solve incomplete solutions to compelling problems like that of securing money transactions can be patentable, even when involving computer programs.