CASE COMMENT ON YAHOO v. CONTROLLER OF PATENTS AND REDIFF.

COM

DR. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY

LUCKNOW
2015-2016

FINAL DRAFT: CASE COMMENT ON YAHOO v. CONTROLLER OFPATENTS AND

REDIFF.COM
SEMINAR PAPER: CHILD LAW

SUBMITTED TO:
MS. SHAKUNTLA
ASSISSTANT PROFESSOR
DEPARTMENT OF LAW
DR. RMLNLU, LUCKNOW
SUBMITTED BY:
AKANKSHA
ROLL NO. 16
SEMESTER VII, B.A.LL.B.(HONS.)

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CASE COMMENT ON YAHOO v. CONTROLLER OF PATENTS AND REDIFF.COM

CONTENTS
OBJECTIVE.............................................................................................................. 3
RESEARCH METHODOLOGY.................................................................................... 3
INTRODUCTION...................................................................................................... 3
TITLE...................................................................................................................... 5
BENCH STRENGTH................................................................................................. 5
LEGISLATIVE PROVISIONS APPLIED........................................................................5
PRIOR HISTORY...................................................................................................... 5
FACTS..................................................................................................................... 6
ISSUE..................................................................................................................... 6
DECISION LAID DOWN........................................................................................... 7
CONCLUSION......................................................................................................... 9
BIBLIOGRAPHY..................................................................................................... 11

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OBJECTIVE
The Indian patent system, especially provisions relating to oppositions as made
available by the Indian Patents Act 2005 (the Act) has been heralded as one that strikes a fine
balance between the monopoly granted to an inventor on one side, and public interest on the
other side. However, a mere reading of the statute does not communicate its practical impact.
Here, we will look at its implications in terms of a case in practice.
The Indian patent system, especially provisions relating to oppositions as made
available by the Indian Patents Act 2005 (the Act) has been heralded as one that strikes a fine
balance between the monopoly granted to an inventor on one side, and public interest on the
other side. However, a mere reading of the statute does not communicate its practical impact.
Here, we will look at its implications in terms of a case in practice.

RESEARCH METHODOLOGY
The research methodology adopted in this project is doctrinal legal research. Primary
sources are referred for data collection, such as, legislations, cases or judgments given by
Supreme Court. This project involves non-empirical study.
Various secondary sources had also been used. They include newspaper articles,
opinions of experts and e-resources.

INTRODUCTION
To give a brief background of the case, a national phase Indian patent application for
an invention entitled "System and method for influencing a position on a search result listing
generated by a computer network search engine" was filed on November 26 2011 by
Overture Services based on an international PCT application, which in turn, claimed priority
from a US application dated May 28 1999. A First Examination Report (FER) was issued on
December 30 2004, setting a non-extendible deadline expiring on December 30 2005 for
placing the application in order for grant. Among others, the said FER objected to the claims
as falling within section 3(k) of the Act. After a couple of attempts, the application was
placed in order for grant on June 9 2006, subject to disposal of pre-grant opposition (if any).
A pre-grant opposition under section 25(1) was filed on October 22 2007 by Rediff.com. In

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the Interim, the application was assigned to Yahoo. After hearing both the parties, the
Controller of patents and designs proceeded to refuse the application on March 29 2009.
Aggrieved by the Controller's refusal order, Yahoo proceeded to file an appeal with
the Intellectual Property Appellate Board (IPAB). During the initial phase, the maintainability
of the appeal was hotly contested and IPAB rejected the appeal on the ground that no appeal
would stand up against the order under section 25(1), as section 25(1) is not mentioned in
section 117 of the Act. It may be noted that section 117 prescribes the nature of orders by IPO
that can be appealed.
Aggrieved by IPAB's decision, Yahoo filed a writ petition with the Chennai High
Court. Remanding the case back to IPAB, the Court stated that "an appeal would lie against
the refusal of the patent under section 25(1), since the same is relatable to an order passed
under section 15 of the Act which in effect is one appealable under section 117A of the Act".
While enumerating the logic, the Chennai High Court observed that "therefore a decision
made under section 25(1) of the Act read along with Rule 55 will have to be read into and to
be relatable to section 15 of the Act. So, in as much as the decision made under section 25(1)
read with Rule 55 of the Patent Rules, 2003 is in the nature of an adjudication, such an order
which is relatable to section 15 is appealable by treating the same as one under the said
section".
In addition, the Chennai High Court observed that in the appeal procedure, Rediff.com
(respondent number four) had a right to be heard. In this regard, the Court indicated that "it is
a well settled principle of law that an appeal is a continuation of the proceedings. If an appeal
is an continuation then the parties to the original proceedings will have to take their litigation
to the Appellate Forum. Rediff.com has accrued right in pursuant to the order of the
Controller dated 27.03.2009. In as much as the order of the Controller is based upon the
opposition of Rediff.com, in our considered view it is proper and necessary party to the
appeal".1

1 http://www.managingip.com/Article/3243286/India-A-practical-view-on-patent-oppositions.html

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TITLE
Petitioner:
Yahoo! Inc (Formerly 'Overture Service Inc.')
701, First Avenue, Sunnyvale
California 94089, United States of America
v.
Respondent:
1.Intellectual Property Appellate Board
2.Union of India
3.Assistant Controller of Patents and Designs Patents Office
4.Rediff.com India Limited
Date: 29.07.2010

BENCH STRENGTH
Devision bench decision of the honourable Mr. Justice F.M.Ibrahim Kalifulla and the
honourable Mr. Justice M.M.Sundresh of High Court, Madras.

LEGISLATIVE PROVISIONS APPLIED

1. Section 3 (k) of the Indian Patents Act, 1970: Section 3 The following are not
inventions within the meaning of this Act, (k) a mathematical or business method or
a computer program per se or algorithms;.
2. Article 226 of Constitution of India: Power of High Courts to issue certain writs.

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PRIOR HISTORY
Petition filed Under Article 226 of the Constitution of India praying to issue a Writ of
Certiorarified Mandamus, calling for the records of the first respondent dated 23.10.2009 in
the case bearing S.R.No.236/2009/PT/IPAB and quash the same and directing the first
respondent herein to take the case bearing S.R.No.236/2007/PT/IPAB on record and dispose
of the same in accordance with law.

FACTS
An application was filed by M/s.Overture Services Inc., a Delaware Corporation
having its place of business in U.S.A. The invention which was originally titled as "System
and method for influencing a position on a search result list generated by a computer network
search engine" was later amended to "A method of operating a computer network search
apparatus". The International Application was filed on 26.03.2000. The said U.S. Application
was granted as U.S.Patent No.6269361 on 31.07.2001. Thereafter, the said M/s.Overture
Services Inc., got merged with the petitioner namely, M/s.Yahoo! Inc. 2.2.As per Section 11A of the Patents Act, 1970, the application was published on 20.04.2004 in Patents Journal
No.16 of 2007. In pursuant to the same, M/s.Rediff.com India Limited of Mumbai filed a Pregrant Opposition by way of representation under Section 25(1) of the Patents Act on
22.10.2007. The Controller accepted the representation and refused to grant patent by holding
that the invention of the applicant does not pass the novelty and patentability test.
Challenging the said order, an appeal was preferred by the petitioner before the IPAB namely,
the Intellectual Property Appellate Board, Chennai.
The said appeal was refused to be entertained by IPAB on the ground that in as much
as no appeal would lie against an order under Section 25(1) of the Patents Act, 1970 as
provided under Section 117-A of the Act the same cannot be entertained. Challenging the said
order of refusal to entertain the appeal filed by IPAB, the petitioner has filed the present writ
petition seeking to set aside the same with a consequential relief to number the appeal and
hear the same on merits and in accordance with law.

ISSUE
Whether business methods are patentable or not?

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An invention 'Buck' which can be used to refine searches on the internet was
denied patent because of section 3 (k) of Patent Act which states that business methods are
not patentable. The specifications given in the application described its economic significance
in e-commerce and therefore it was considered as a business method. Secondly, Rediff had
used above said method but Controller held that use of invention on internet amounts to
public knowledge & prior use. Thus, the case was dismissed.

DECISION LAID DOWN

The IPAB in this case deliberated as to the patentability of a Business Method in
India. The IPAB held that the patent application filed by Overture Services Inc. (which was
later taken over by Yahoo Inc.) was not patentable under the provisions of Section 3 (k) of the
Indian Patents Act, 1970 which states as under:
Section 3 The following are not inventions within the meaning of this Act, (k) a
mathematical or business method or a computer program per se or algorithms;.
The invention relates to A method of operating a computer network search
apparatus. Rediff.com India Ltd. filed a pre-grant opposition and the Patent Office found
that the patent did not pass the novelty and patentability test. This order was appealed against
by Yahoo and the matter was heard by the IPAB.
Rediff argued that the alleged invention was merely a computer program which
performs a business method causing a search listing with given key words provided by a user
based on the amount of money deposited.
The IPAB considered the question as to whether the Invention is patentable or not.
The IPAB considered Section 3(k). The IPAB observed that in contrast to the law prevalent in
the US, in India the law specifically excludes business method patents and there is no
administrative acceptance therefore.
The IPAB relied on a passage in Mathew Fish in Patent Law: Interpretation and
Scope of Protection which stated For inventing business methods no incentive is required
because better business methods are necessary ingredients of the art of doing business and
further the need for making more money is inexorable. Secondly the exclusion of competition
may really be counter-productive to the technological prosperity of the society.

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The IPAB held that since the invention falls under the purview of Section 3 (k) it is
not patentable and therefore the patent applied for was rejected.
In its arguments, Yahoo contended that several patents have been granted for business
methods to Google and also cited the case of Dimminaco AG v. Controller of Patents (IPLR
2002 July 255). The IPAB observed that there should be a uniform practice, when similar
inventions come up for grant of patent before the Indian Patent Office. The IPAB further
maintained that if the actual position is that the Patent Office had been adopting different
standards for different applicants, it is not a desirable state of affairs. The IPAB stated that if
other patents suffer from the same vice of S.3 (k) then as and when the question arises, it will
be dealt with. The IPAB stated that the patentability bar cannot be ignored merely because it
is alleged that in other cases erroneous decisions have been issued.
Court was of the opinion that Rediff.com will have to be heard in the appeal filed by
the petitioner. Further if the appeal is allowed without hearing Rediff.com then the very
purpose of the enactment of Section 24(1) of the Act which provides for Pre-grant Opposition
itself would become redundant. Therefore, we hold that Rediff.com has got a legal right to be
heard in the appeal filed by the petitioner.
Thus, the writ petition was allowed by setting aside the order of IPAB and
consequentially a direction is issued to IPAB to number the appeal and decide the same on
merits and in accordance with law, within a period of three months, from the date of receipt
of a copy of this order, after affording an opportunity to Rediff.com and by considering its
opposition.

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CONCLUSION
In one of its first major decisions involving patentability of business method
patents (available here), the Intellectual Property Appellate Board (IPAB) has ruled
(December 8, 2011) that pure business methods are not patentable in India. This post
provides an overview of the decision and its implications for the patent community: (1)
Business methods are not patentable in India; and (2) Any refusal of a patent under section
25(1) of the Act may be appealed to the IPAB as it relates to an order passed under section 15
of the Act, which in effect, may be appealed against under section 117-A of the Act.
Shamnad has discussed the issue of patentability of business methods here, and here.
Warning: Long post follows.
As a further practice pointer, this case is also important because Yahoo overcame all
other objections relating to novelty, and obviousness except the most important one,
invention (section 3(k)). Practitioners may want to cite this case to the Examiners while
replying to examiners reports as appropriate.
Overture Services Inc. filed a patent application titled System and method for
influencing a position on a search result listing generated by a computer network search
engine, and the title was later amended to A method of operating a computer network
search apparatus. This application claimed priority to a US application 09/322677 dated
28.05.1999. Yahoo acquired Overture sometime in 2003.
While undergoing examination at the Indian patent office, the examiner raised 17 objections
against the application in the First Examination Report (FER). These objections were made
under section 3(k), and against novelty. In its reply, Yahoo submitted new claims to
include technical subject matter so as to overcome the 3(k) objection, and that the new claims
were novel. The Examiner again, in reply to the new claims, rejected claims as they fell
under section 3(k). The claims were further amended to remove apparatus claims. (The
first independent claim is reproduced at the end of this post.) In responsive to the last

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amendment, the patent office informed Yahoo that the application had been found in order for
grant, but it would be granted only after the disposal of pre-grant opposition, if any.
On 20.04.2007, Rediff.com India Ltd. (Rediff), filed a pre-grant opposition against the
application, under section 25(1). The Controller informed Yahoo that the the invention did
not pass the novelty and patentability test in late March 2009.
The decision of the Controller was appealed before the IPAB. The IPAB at that time
passed an order holding that the Controllers decision could not be treated as a refusal order
under section 15 of the Act and therefore, the appeal was not maintainable. This IPAB
decision was further appealed in a writ petition 4462 of 2010 before the Chennai High Court.
A division bench (DB) of the Chennai High Court held that the appeal was maintainable
against the refusal of a patent under section 25(1) of the Act as it relates to an order passed
under section 15 of the Act, which in effect, may be appealed against under section 117-A of
the Act. The DB also held that the Rediff was entitled to be heard and issued a direction to
the IPAB to number the appeal and to decide the matter on merits after giving an opportunity
to Rediff to be heard and consider its submissions made in the opposition.
The IPAB referred to the Manual of Patent Procedures 2008 relating to business
methods and considered the definition provided therein. Business Methods claimed in
any form are not patentable subject matter. The term Business Methods involves whole
gamut of activities in a commercial or industrial enterprise relating to transaction of goods or
services. With the development of Internet Technologies, business activities have grown
tremendously through e-commerce and related B2B and B2C business. The claims are at
times drafted not directly as business method but apparently with hitherto available technical
features such as internet, networks, satellites, telecommunications, etc. The exclusions are
carved out for all business methods and, therefore, if in substance the claims relate to
business methods, even with the help of technology, they are not considered to be
patentable.
The Board considered the law relating to business methods in advanced patent
jurisdictions including United Kingdom (section 2 of the U.K. patents act); Article 52(2) of
the European Patent Convention; and United States, 35 USC 101. After considering the
position in these jurisdictions, the IPAB concluded that in contrast to the foreign jurisdictions,
in India, the law specifically excluded business methods with clear statutory language
excluding business method patents.
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Yahoo also raised the issue that Google Inc. had been granted several of business method
patents. However the IPAB held that the issue was the claims for the application under
consideration and not the ones granted to any other party. The IPAB, however, agreed that
there should be uniform practice adopted at the Indian patent offices.
The IPAB, therefore dismissed Yahoo Inc.s appeal with costs.

BIBLIOGRAPHY
1. http://www.managingip.com/Article/3243286/India-A-practical-view-on-patentoppositions.html
2. http://www.manupatrafast.in/NewsletterArchives%5Clisting%5CRK%20Dewan
%5C2012/Newsletter%20October%202012.pdf
http://www.ipabindia.in/Pdfs/Order-222-11-OA-22-10-PT-CH.pdf
http://mowingthelaw.blogspot.com/2012/02/recent-important-ipr-judgements.html
http://indiankanoon.org/doc/626315/
http://spicyip.com/2012/01/yahoo-v-controller-and-rediff-business.html
7. Indian Patents Act, 1970.
3.
4.
5.
6.

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