The main legal point established in the judgment is that a claimed invention primarily involving conducting business or organizing commercial transactions, rather than providing a technical solution to a technical problem, falls within the ambit of Section 3(k) of the Patents Act as a 'business method' and is non-patentable.

JUDGMENT

Sanjeev Narula, J. (Oral)--Oneempower Pte Ltd. (Appellant), a loyalty marketing and commerce technology company, challenges the rejection of their patent application No. 10508/DELHNP/2013 for the invention titled "A Transaction Reward System". The crux of the present dispute lies in the characterisation of Appellant's invention as a business method and a computer programme per se by the Assistant Controller of Patents and Designs [hereinafter, "Controller"], vide order dated 24th November, 2022 [hereinafter, "impugned order"]. In this comprehensive exposition, while deciding the appeal under Section 117A of the Patents Act, 1970, we embark on an examination of the Appellant's arguments pertaining to the `technical effect' of the claimed invention as well as a scrutiny of the Controller's reasoning for rejecting it under Section 3(k) of the Patents Act.

THE SUBJECT INVENTION

2. Let us first delve into the essence of the invention, peering beneath the surface to unravel the claims made by the Appellant in the subject invention.

3. The subject invention is a Transaction Reward System [hereinafter interchangeably, "TRS" or "subject invention"] which enables the user to select a portion of available reward in order to offset the cost of purchase, against a selected reward remotely, and without interference of the retailer and without influencing operation of the retailer processor. It is intended to eliminate the need to modify the retail payment terminal for applying available rewards, as the purchaser would be in direct contact with the financial institution facilitating the transaction, through a mobile/communication device. The reward points are applied at the financial institution's end, thereby reducing the complexity and cost of the entire process.

4. The constituent elements of the TRS are depicted and explained hereunder:

[IMG]

Figure 1

4.1. The TRS (point 30) consists of a reward and transaction processor system (point 32), which stores the information regarding reward entitlement associated with a particular purchaser (point 16). It is this reward and transaction processor system that applies a portion of purchaser's available reward in order to offset the cost of purchase. Information related to reward redemption is received by the reward interface (point 34) via a first communication from the purchaser. TRS relays reward redemption information to the reward and transaction processor system. Transaction interface (point 36) receives information concerning a purchase from the retail processor (points 38 and 40), which is conveyed via a second communication from the retail processor. The transaction interface thereafter communicates the information indicative of user's purchase, to the reward and transaction processor system.

5. The method of executing a transaction on the TRS is as follows:

[IMG]

Figure 2

5.1. The reward redemption information pertaining to selection of a part of an available award is first received by the reward interface from the purchaser. This information is then communicated to the reward and transaction processor system. Thereafter, the transaction interface gathers information concerning a purchase from the retail processor associated with a given retailer. This information is also communicated to the reward and transaction processor system. Finally, the TRS offsets the selected available reward with the cost of the purchase, in accordance with the reward redemption information.

CONTENTIONS OF THE PARTIES

On behalf of the Appellant

6. Mr. Ayush Sharma, counsel for Appellant, raises the following grounds of challenge:

6.1. The Controller has erred in classifying the subject invention as a business method, devoid of a technical effect. As compared to the conventional system, subject invention is more cost-effective and economical as it does not require retail payment terminals to be modified to cater to the loyalty marketing system and it eliminates the interference of retailers. TRS discloses