The Delhi High Court, on November 12, 2024, in the case of Comviva Tech Ltd vs The Assistant Controller of Patents & Designs [CA COMM IPD PAT 492/2022, 2024:DHC:8990], set aside the order of the Controller refusing Comviva’s patent application.

Comviva’s patent application number 201611000234, entitled “Methods and Devices for Authentication of an Electronic Payment Card using Electronic Token”, describes a method for securely authenticating electronic payment card transactions using an electronic token. The invention aims to enhance the security of contactless transactions by employing a two-step verification process across four key components: a mobile device, a server, an electronic contactless payment card, and a merchant’s device.  

The Controller had refused the subject application on the grounds of non-patentability under Section 3(k) of the Patents Act, which excludes from patentability a mathematical or business method or a computer programme me per se or algorithms.

The Controller interpreted the invention as automating commercial transactions, and thus categorized it as a ‘business method’. According to the Controller, the subject matter of the application was essentially concerned with ‘carrying out a business’ and the inventive step was rooted in the business/transactional concepts. The Controller referred to clause 4.5.2 of the Guidelines for the Examination of Computer-Related Inventions (CRI Guidelines) to assert that inventions that automate or perform financial transaction are categorised as business methods. In addition to classifying the invention as a business method, the Controller also held that the invention was based on a ‘computer programme per se’. The Controller reasoned that despite involving a server and a device, the claims essentially automated business methods without a specific hardware component, and the core of the invention lay in the software aspect of performing an electronic payment. The Controller also eluded that presence of “technical effect” is not the correct basis for assessing patentability under Section 3(k).

Comviva appealed the decision, arguing that it is a settled position that when an invention is based on a computer programme, it is patentable if it demonstrates a “technical effect” or a “technical contribution”. The Appellant emphasised that the objective of the invention was to improve the security of electronic payment transactions by preventing unauthorized transitions through the use of an electronic token for authentication. The Appellant further clarified that the claimed invention relates to authentication of financial transaction and not financial transaction itself.

In its judgment, the Delhi High Court examined the Controller’s decision and clarified that the term “business method” applies when the activity pertains to the transaction of goods or services. The mere presence of terms like “business’, “sales”, “transaction”, “payment” does not automatically render the invention a business method. However, if the subject matter of the application specifies an apparatus and/or a technical process for carrying out the invention, even partly, the claims must be assessed as a whole.

The Court also referenced the decisions in OpenTV Inc. vs The Controller of Patents and Designs and Priya Randolph and Anr. vs Deputy Controller of Patents and Designs, and took a view that both the cases held that in e-commerce transactions, a claim would be construed as a ‘business method’ only if in substance it is for a business method.

Given the aforesaid, the Court found that the Appellant’s application was wrongly classified as a ‘business method’. The Court emphasized that the invention provided a technical solution to a security issue by authenticating transactions before the actual financial exchange occurred, thus ensuring that the invention was not related to the transaction process itself but to the authentication process.

The Court further remarked that the Controller’s refusal was apparently just based on the presence of business-related terms such as ‘payment’, ‘transaction’, and ‘financial transaction’ in the claims and specification.

Further, the Court rejected the objection that the claimed invention was based on a computer programme per se, by stating that such an objection does not hold when the invention leads to a technical effect or provides a technical advancement. The Court pointed out that the claimed method resulted in a technical advancement in the field of contactless payments, specifically by providing enhanced security against unauthorized transactions. This was a significant technical solution to a technical problem over existing solutions like one-time password (OTP) or dynamic security code, which are vulnerable to various security threats, such as stolen transaction cards, mobile phone cloning, and visibility of security codes. Therefore, by preventing unauthorized access using electronic payment cards, the claimed invention addressed these vulnerabilities and provided a technical solution.

The Court set aside the Controller’s decision and directed the Patent Office to grant the patent.