Microsoft Technology Licensing LLC v Assistant Controller of Patents and Designs (2024)

Summary

The appeal sought “to set aside the impugned order dated 23rd May, 2019 passed by the Respondent- Assistant Controller of Patents and Designs” (para 3), which “refused the application for grant of a patent titled ‘Reversible 2- Dimensional Pre” ... “/Post-Filtering for Lapped Biorthogonal Transform’ bearing Application No. 3304/DEL/2005” (para 3). “By the impugned order, the ld. Controller has refused the application for grant of the subject patent on the ground that the Claims of the said patent fall within the scope of Section 3(k) of the Act” while it “has waived the objection on lack of inventive step” (para 4). The Patent Office’s stand was that “the invention that the subject patent application discloses is merely performed on software and thus, the objection of Section 3(k) of the Act would still be attracted.” (para 13)

The Court held that “Compression of images and video files using different techniques has a clear technical effect and a contribution made to the state of art” (para 29) and that “The ld. Controller has clearly erred in applying the novel hardware criteria by following guidelines which were already replaced i.e., 2016 CRI” (“Computer Related Invention”) “Guidelines.” (para 31) It found that the integration of the claimed methods into “a digital media processor” “transforms the capabilities of general-purpose computing hardware into a specialised apparatus capable of efficient and effective data compression, which it otherwise was not expected to be capable of.” (para 35) “Accordingly, it is evident that the subject patent application exhibits tangible benefits beyond ordinary computing functionality and is not barred by Section 3(k) of the Act.” (para 36) “The impugned order is accordingly set aside; the Appeal is allowed and the Office of the Controller General of Patents is directed to grant the subject patent application.” (para 37)

What the court decided

1. Compression as a technical effect. “Compression techniques are evolving in nature and make” ... “enormous contribution in terms of resource utilisation. These methods not only reduce the amount of data that needs to be stored and transmitted but also enhance the efficiency of these processes. Compression of images and video files using different techniques has a clear technical effect and a contribution made to the state of art.” (para 29)
2. The novel hardware criteria. “The ld. Controller has clearly erred in applying the novel hardware criteria by following guidelines which were already replaced i.e., 2016 CRI” (“Computer Related Invention”) “Guidelines. The admitted position is that in the 2017 Guidelines, the novel hardware requirement is removed. This has been discussed in detail in the decision of the Coordinate Bench of this Court in Microsoft (supra) and by this Court in Raytheon Company v Controller General of Patents and Designs” (See Microsoft Technology Licensing v Assistant Controller of Patents and Designs (Delhi, 15 May 2023).) (para 31)
3. The approach in Lava. Of Telefonaktiebolaget LM Ericsson v Lava International (2024) the Court said that “the Court has importantly clarified that inventions which integrate such elements within a system or method that enhances the functionality of a system or hardware component, and meet all the criteria for patentability, can indeed be considered patentable. This understanding emphasises the necessity of demonstrating a tangible technical effect or advancement through the implementation of these algorithms or computer programs within a practical application or device to qualify for patent protection.” (para 32)
4. The test under section 3(k). “In light of the above discussion, it is clearly established that in case of an invention involving computer programmes, to circumvent the limitations imposed by Section (k) of the Act, a patentee must demonstrate that the overall method and system disclosed in the patent application, upon implementation in a general-purpose computer, must contribute directly to a specific and credible technical effect or enhancement beyond mere general computing processes. Therefore, the inventive contribution of a patent should not only improve the functionality of the system but also achieve an innovative technical advantage that is clearly defined and distinct from ordinary operations expected of such systems.” (para 33)
5. Integration with the hardware. “From the claim construction analysis carried out, it is clear that the subject patent application discloses a method and system that not only provides a real world application for complex mathematical transformations, including lapped transforms and reversible overlap operators, but also integrates these operations into a hardware setup” ... “that performs digital media data compression. This integration significantly enhances the functionality of the hardware components of the subject patent application by enabling efficient and reversible compression, which directly contributes to improved system performance and efficiency.” (para 34)
6. Further technical effect. “Clearly, in the understanding of the Court, this optimization is not merely a theoretical improvement but is applied in practical hardware configurations, contributing a clear technical effect of enhanced data compression capabilities and reduced storage requirements during processing.” “This transformation also meets the criteria of further technical effect as stated to be a requirement in Lava (supra), wherein an invention that incorporates computer programmes or algorithms in such a way that it significantly enhances the hardware’s functionality is considered patentable, as long as it meets the criteria for patentability.” (para 35)
7. Not barred, and grant. “Accordingly, it is evident that the subject patent application exhibits tangible benefits beyond ordinary computing functionality and is not barred by Section 3(k) of the Act. Further, considering the requirement of novelty and inventive step have already been satisfied, the subject patent application satisfies all the requirements for patentability. Therefore, the patent is liable to be granted.” (para 36) “The impugned order is accordingly set aside; the Appeal is allowed and the Office of the Controller General of Patents is directed to grant the subject patent application.” (paras 36–37)

Subsequent treatment

• Explained — In BlackBerry v Assistant Controller of Patents and Designs (2024) the Delhi High Court, citing this judgment as 2024:DHC:3547, recorded that “the refusal of an application for grant of patent was overturned as the said invention transformed the capabilities of a general purpose computer, to make it suitable for effective data compression, which it otherwise was not capable of.” (para 47)
• Distinguished — In Kroll Information Assurance v Controller General of Patents, Designs and Trademarks (2025) the Delhi High Court, citing this judgment as 2024 SCC OnLine Del 3239, read it as holding “that for a software invention to overcome the bar under Section 3(k) of the Act, it has to have a technical transformation that significantly enhances the hardware functionality” (para 25), and held that “the appellant’s reliance on the judgments in Lava (supra) and Microsoft (supra) is misplaced.” (para 33)