2/15/22, 9:23 AM Grooming the Law with Technology: Legal Protection of Software in India | India Corporate Law

India Corporate Law

Grooming the Law with Technology: Legal Protection

of Software in India
By Faraz Alam Sagar & Saniya Mirani on February 5, 2020

Introduction

As businesses strive to shift from paper to digital, there is an increasing penetration of software
products across industries. This is particularly true in India. The NASSCOM Report evinces that
the software products market was the fastest-growing segment amongst all IT services in India
in FY2019.[1] While the making of software requires a considerable amount of human, technical,
and financial resources; it can be copied within seconds, at infinitesimal cost. Thus, there is a
need to protect software with the strongest available intellectual property protections. In India,

https://corporate.cyrilamarchandblogs.com/2020/02/legal-protection-of-software-in-india/ 1/6
2/15/22, 9:23 AM Grooming the Law with Technology: Legal Protection of Software in India | India Corporate Law

the intellectual property regime provides a number of tools to protect such innovations. These
include, patents and copyright. Each of these tools have their own set of peculiarities and will
be discussed vis-à-vis protection of software, within the framework of cross-jurisdictional
analysis.

Copyright Law

A Copyright, being a natural right, is automatically granted as soon as it is fixed in a tangible

medium. This means that it must qualify as work, i.e., literary, artistic or dramatic work, as per
Section 2(y) of the Indian Copyright Act [“ICA”]. The statute defines literary work as including
“computer programme, tables and compilations including computer databases”. Accordingly, the
protection of software would squarely fall under the concept of literary work, thus making
software copyrightable. In the U.S.A. and the E.U. as well, softwares are protected as literary
works within their respective statutes.[2]

If a work is challenged in the court of law, it must stand the test of ‘originality’ as prescribed by
Section 13 of the ICA. However, originality is not defined under the statute, but it has been
interpreted by the Apex Court to mean that the author must put in a minimum level of
intellectual effort or creativity.[3] In a plethora of cases filed by Microsoft against software
pirates, the requisite of originality was never contentious. The requirement of originality was
fulfilled by merely showing that the programme originated from Microsoft itself and that
Microsoft possessed an original copyright certificate.[4] It must be noted that Courts are being
mindful of the significant damages that the growing menace of online software piracy is causing
to enterprises like Microsoft, Adobe, etc., and thus awarding punitive damages in addition to
heavy compensatory damages.

Copyright and Software Piracy

While the above-mentioned statutory requirement seems easy to fulfill, in reality, the ICA has
certain loopholes, which software pirates have taken advantage of. Since copyright law protects
only the literal expression and not the idea, certain non-literal elements of software – such as,
designing, structure, organisation, and user-interface, cannot be protected by copyright. The
courts have taken care of this statutory gap by considering non-literal similarity in case of
software infringement cases. Thus, they assess whether there is ‘substantial similarity’ in
programme structure and design features between the softwares.[5] This solution, however, is
not viable as the software developer will have to persistently go to court (as in the Microsoft
cases) to safeguard from piracy. By the time the judiciary acts on it, the author has already
suffered significant losses.

https://corporate.cyrilamarchandblogs.com/2020/02/legal-protection-of-software-in-india/ 2/6
2/15/22, 9:23 AM Grooming the Law with Technology: Legal Protection of Software in India | India Corporate Law

The above-mentioned approach taken by the Indian Courts to protect non-literal elements of
software finds an overwhelming acceptance in foreign jurisprudence. In the United States, the
Court in Computer Associates v. Altai has developed a three stage test called – ‘Abstraction-
Filtration-Comparison’ (AFC) test to check infringement.[6] Abstraction involves separating
elements of a software in the order of generality, for instance, object code, source code, and
then user interface. Filtration involves examination of each element of abstraction, to filter
copyrightable from non-copyrightable. Comparison involves checking the substantial similarity
between plaintiffs’ filtered copyrightable claims and defendant’s works. While the third step of
checking substantial similarity is common to India and United States, the first two steps, i.e.,
separating different elements within a software and filtrating the copyrightable from non-
copyrightable elements, can be used by Indian courts when a complex software’s infringement
case is presented before them. Therefore, it may be concluded that copyright regime in India
does not adequately protect the entire software architecture.

Moreover, the broad exceptions to infringement couched under Section 52(aa) and (ac) of ICA
allow the possibility of misuse in the name of research. Therefore, the statutory regime of
copyright must be amended to adapt to the needs of the growing IT industry.

Patent Law

Allowing software to be patented creates a constant tussle between multinational companies,

who spend millions on R&D for such softwares and open source activists, who want start-ups to
succeed and innovation to thrive across the market. Thus, there must be a focus on balancing
the interests of both these stakeholders.

In India, softwares are excluded from patentable subject matter. Section 3(k) prescribes that “a
mathematical or business method or a computer programme per se or algorithms” are not
eligible for patent. The guidance on this section was provided by the comment of the Joint
Parliamentary Committee Report, while introducing the provision, according to which, while a
computer programme as such will not be patentable, but if there are other things, “ancillary to”
or “developed thereon” the computer programme, then it may be patentable.

This guidance by the Parliament was interpreted by the patent office, in the Guidelines for
Examination of Computer Related Inventions (“CRI guidelines”) 2015, 2016, to mean that there
must be some “technical effect” or “combination with hardware”, for a computer programme to
qualify as ‘patentable’. Consequently, a plethora of patents have been granted to softwares,
where the applicants are able to demonstrate any technical effect. The patent office has
removed the criteria of technical effect from its latest CRI Guidelines 2017, perhaps in a bid to

https://corporate.cyrilamarchandblogs.com/2020/02/legal-protection-of-software-in-india/ 3/6
2/15/22, 9:23 AM Grooming the Law with Technology: Legal Protection of Software in India | India Corporate Law

approach the issue in a more diplomatic manner. Nonetheless, it is evident that patents have
still been granted based on the criteria of technical effect.

International Practice

The practice undertaken by the Indian Patent Office comes as no surprise, for the international
trends are similar and it seems that CRI Guidelines have taken inspiration from the international
trend. The European Patent Convention also bars computer programmes from its list of
patentable inventions; however, if the programme produces a “further technical effect” when
run, it is patentable. The jurisprudence on what constitutes a “further technical effect” is far
more sophisticated compared to the position in India. The Guidelines define further technical
effect as an effect, which goes beyond an ordinary physical interaction between the relevant
software and the hardware (computer). It presents concrete examples, for instance, when a
software has a further technical effect of being able to determine emissions by an X-ray
machine, or of improving the performance of a computer, it is considered patentable. Similar
examples were present in CRI guidelines 2015, but have now been done away with. CRI
Guidelines is a document referred to by thousands of applicants and patent examiners and the
lack of guidance may lead to unpredictable and inconsistent application of Section 3(k) in India.

In the United States, computer programmes are not explicitly excluded from patentable
products. The jurisprudence has been developed by judicial dicta. In 2014, the United States
Supreme Court in Alice v CLS Bank held that patents cannot be granted for ‘abstract ideas’ and
therefore, an ordinary computerisation of operations that could be undertaken manually, in
pre-internet era as well, are not patentable (“the Alice test”). However, the Alice test soon
became difficult as in latter cases, often the same subject-matter was identified to be both –
abstract and non-abstract.

More recently, the US Patent and Trademark Office (“USPTO”), in a bid to achieve uniformity as
to what constitutes an abstract idea, has released new rules to guide the examiners on
patentable subject-matter. It gives a two-step procedure to apply the Alice test. Step one is to
check if it’s an abstract idea. Abstract idea has be thoroughly defined. For instance, it states that
‘mental processes or concepts performed in human minds cannot be patented. Thus, a
computerised method for anonymous online shopping cannot be patented for it can be
performed by humans without a computer. Step two requires checking if the abstract idea has
been integrated into a practical application. If yes, then it is patentable; if no, then further
analysis is undertaken to check if it’s a routine, conventional activity.

The cross-jurisdictional trends reveal that with growing technological advances, it is necessary
to give more incentives to software developers to innovate by giving them patent protections.

https://corporate.cyrilamarchandblogs.com/2020/02/legal-protection-of-software-in-india/ 4/6
2/15/22, 9:23 AM Grooming the Law with Technology: Legal Protection of Software in India | India Corporate Law

Thus, to balance their incentivisation with concerns of open source activists, a comprehensive
set of guidelines must be published to guide the patent examiners on the scope of Section 3(k).
The legislature could also formulate distinct rules, personalised to the software development
industry, which not only uniformise the results, but also help in combatting the menace of
software piracy. An instance would be to prescribe a shorter time of protection (than the
prescribed 20-year protection) under the patent regime.

Conclusion

The Indian judiciary has been constantly trying to cope with the growing menace of software
piracy. The same effort is yet to be seen from the Parliament, to groom the existing law and
come up with an appropriate statutory regime that can cater to technological advances in
software. Since copyright only protects the written or literal element of software and patent only
protects the mechanical element of software, it may be argued that a regime should be
formulated for software that simultaneously protects both literal and mechanical elements.

[1]NASSCOM, The I-BPM Sector in India: Strategic Review 2019

[2] See, For U.S.A: Copyright Law of the United States, Title 17 –§102, Subject Matter of Copyright: 
In general; For EU: EU Directive 2009/24/EC on  the  legal  protection  of  computer  programs,
Article 1.

[3] Eastern Book Company v. DB Modak, (2008) 1 SCC 1.

[4] Microsoft Corporation vs Mr. Kiran, MIPR 2007 (3) 214; Microsoft Corporation vs Deepak Raval;
MIPR 2007 (1) 72; Microsoft Corporation and another Versus Mr. Shameer Ahmed J. and another
CS(OS) 300/2008; Adobe Systems, Inc. v. P. Bhoominathan 2009 (39) PTC 658 (Del).

[5] Maraekat Infotech Ltd v. Mr. Naylesh V. Kothari & Ors, 2016 SCC OnLine Bom 2369.

[6] Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992)

https://corporate.cyrilamarchandblogs.com/2020/02/legal-protection-of-software-in-india/ 5/6
2/15/22, 9:23 AM Grooming the Law with Technology: Legal Protection of Software in India | India Corporate Law

Copyright ©2022, Cyril Amarchand Mangaldas. All Rights Reserved.

https://corporate.cyrilamarchandblogs.com/2020/02/legal-protection-of-software-in-india/ 6/6