Innovators in IT can rejoice . Even as software per se would continue to be outside the purview of patenting, embedded software as well as software/hardware combinations would qualify for patents, if they fulfil specified novelty conditions.

That is, certain applications of software that have hardware elements can be patented. The clarification is among a host of changes the UPA government has made in the patent amendment bill, originally drafted by the previous NDA government.

Another major amendment in the re-drafted bill relates to protection of biological resources from unfair patenting.

Disclosure of the origin of materials like plants, animals and micro-organisms would now be a mandatory pre-requisite for patents of inventions using such material or associated knowledge.

In the patent application, the disclosure has to be made upfront. Absence of the disclosure can be held as reason for opposition to or rejection or revocation of a patent, it has been freshly clarified.

India is the first country to make such disclosure mandatory, officials said. The aim is to avoid usurpation of traditional knowledge and unfair patenting by use of such usurped knowledge.

Simply put, the amendment on software patent means that software with certain technical applications can now be patented, if reinforced with hardware inputs.

Currently, under the Patents Act 1970 - which was amended twice earlier - mathematical or business method or a computer programme per se or algorithms are not patentable.

To illustrate the present clarification with an example, examiners of a patent application for a software that makes your washing machine wash, rinse and dry clothes would be inclined to pass the claim, whereas any effort to patent the "fuzzy logic" solution independently would not pass muster.

The clarification is a godsend for the Indian software industry, which is seeking opportunities in embedded software and mobile computing aggressively. The world market for embedded software solutions was estimated at $21 billion in 2003 - expected to grow at a CAGR of 16%.

Telecommunications, computing and data communication applications account for 34% of the world's embedded software market. Consumer electronics account for 20%, industrial automation 19%, automotives 10% and office automation 8%.

The new mandatory disclosure of origin of biological resources is in keeping with India's position in the WTO that the anti-biopiracy provisions in the Convention on Biological Diversity (CBD) should reflect in national patent laws.

Countries like the US and Japan are opposed to the idea of mandatory disclosure. They argue that CBD compliance should be found outside the TRIPS and patent laws.

The bill has sought to harmonise the patent act with the biodiversity act and the mandate of the proposed biodiversity authority.