Intellectual Property Management Industry Alerts

Protection of Business Methods and IP

There’s a famous saying that ‘successful people are not different but they do things which are way different from the ordinary’. Doesn’t that sound that such people chalk out totally novel ways of doing the same things differently? Hence, this poses a question in Intellectual Property law that whether such ‘different ways of doing same things’ can be protected or not?

What are Business Methods?

Any business in order to cater to the day to day demands of the customers as well as to survive the cut throat competitions in the market, have to keep evolving and developing its strategies. Such strategies which are created out of intellectual deliberations and mental manipulations are called as Business methods. The Business methods are indispensable in the working of any business.

In recent years, another similar issue has arisen: namely the question of the patentability of business methods. Traditionally, business methods have been either in the public domain or protected under trade secret law. Today, however, information technology offers possibilities for new business models, using information technology as a tool for processing and transmitting various data, such as technical, commercial and financial data. Due to the high economic stakes associated with such new business methods and the expansion of ecommerce in our society, the debate on the feasibility of patenting business methods has continued at various areas1.

How are Business Methods protected in India?

Generally, whenever any Business method is protected under IP law, it is called Business Method Patent or ‘BMP’. Business Patents are those patents which are given to business methods or business systems or like. A business method may be defined as “a method of operating any aspect of an economic enterprise”. Business method patents are part of a larger family of patents known as utility patents, which protect inventions, chemical formulas, processes, and other discoveries. A business method is classified as a process, because it is not a physical object like a mechanical invention or chemical composition2.

It is interesting to note that there is no concrete statute to protect Business Methods in India. All we can do as of now is to study how different other statutes indirectly afford protection to the same.

1. Copyright Act

The very basic protection that our Copyright Act affords is the protection of the expression of any idea. Hence, if the business method which is in a written form can be protected as under a literary work. However, if any person does the modification to the same, there’s no stopping to it.

2. Patents Act

The Patents Act of India is not favorable. The section 3 of the Act clearly states that business methods are not patentable! Also such was upheld in the landmark case of Yahoo vs Controller, and Rediff .

3. Trade Secrets and Indian Contract Act

There is no special legislation in India to protect trade secrets and confidentia information but Indian courts have upheld the protection of trade secrets on the basis of principles of equity. Such Trade secrets are mainly protected through the law of contract. Section 27 of the said Act restricts a person from disclosing any information, which can be come across at the time of employment. However, only civil remedies are said to exist and no criminal remedies.
In the case of Burlington Home Shopping Pvt Ltd, Rajnish Chibber3,the Delhi High Court held that ‘’copyright and trade secret law protect different elements of compiled business data, with copyright protecting the expression in these compilations and  trade

Secret law protecting the underlying data. In fact, copyright and trade secret protection for compilations of business data frequently converge. Copyright protection for business directories often extends to the underlying data, and trade secret protection may extend to particular expressive arrangements of data”.

Advantages & Disadvantages of BMP

ï‚· Advantages

Granting of protection to business method can be a blessing to small business/companies especially to the start-ups. The very reason being that such protection can boost their confidence and give a stand against giant/rival companies. They would be able to attract market power and get enough time to analyze and interpret how to tackle competition. Moreover, BMP can be regarded as incentive for innovation hence, are very beneficial for the innovators, market and the target consumers/customers.

ï‚· Disadvantages

To begin with disadvantages, it is essential to note the circumstances of any economy. For example- a developed country or a capitalist economy would be happy to grant a BMP due to the very reason of its competitive nature. Such economy would like to maintain dominance of that business which innovates in order to return every possible benefit associated to it. Whereas, in a developing economy, not everything is the same. It is true that small businesses and startups are the most vulnerable but,granting of BMP’s would in fact lead to more mediocrity in the developing economy. This means that, a startup firm may not try to develop more as soon BMP is granted. Also, if BMP’s are granted so much, many businesses would not be able to adopt such methods and modify according to the needs of the market. Hence, it would lead to an unhealthy economy with scanty growth!

Advisory

It is advised that in highly debatable matters especially that of granting of protection to the business methods, no extreme steps should be taken. Hence, a ‘middle-path’ is desired. It is suggested that granting of patents to business methods should be given but, only for a very smaller period eg-3 to 4 years. Such provision would ensure protection to the innovator and also, the short patent period would let other innovators to modify or chance upon newer and better innovation.

This publication is provided for general information and does not constitute  any legal opinion.This publication is protected by copyright. © 2022 Astrea Legal Associates LLP