You are on page 1of 12

COVER PAGE 1st GNLU ² Y.J.

TRIVEDI ANNUALE INTELLECTUAL PROPERTY RIGHT ESSAY COMPETITION TOPIC: IPR A KEY DRIVER OF BUSINESS STRATEGY IN I.T. INDUSTRY.

AUTHER: VAIBHAV SHUKLA ADDRESS: DURGA MANDIR CAMPUS, C.S.E.B. CHOWK, KORBA (EAST) Dist- KORBA State- CHHATTISGARH. PIN- 495677 (PERMANENT Adrs.) MOBILE: 09975608677, 9311998443

E MAIL ID: Vaibhav.shukla2488@gmail.com INSTITUTE: ILS LAW COLLEGE, PUNE (MAHARASHTRA). UNIVERSITY OF PUNE. ADRESS: ILS LAW COLLEGE, LAW COLLEGE ROAD, PUNE ² 411004

YEAR OF STUDY: 4th YEAR OF BSLLLB (5 YEAR LAW COURSE)

_________________________________________________________

There is an ongoing debate regarding use of Intellectual Property Rights to foster innovation in software industry. Apart from that there exist a tension between IP and standardization while standards aim to spur compatibility through a shared system. so what would be future of IT Industry depends on a perfect balance between proprietary rights and sharing of knowledge. The entire IT Industry is categorized on the basis of kind of products and services dealt with. comparison between these protections. the concept of Source code needs explanation as it is technical in nature. For easy comprehension of whole issue. Here it is important to take note of the fact that movement of Open Source Software (OSS) is being led by a community which has a grand success as 204 millions lines code base for Fedora 9 Linux. Human Capital management and Health care and life sciences. There is a long journey ahead for IP laws as challenges such as cloud computing are coming up. relevant provisions and need of combined effort from government as well as industry for curbing the evil of piracy. so that SMEs are benefitted and ultimately bring out growth to economy. Effective laws would lead India as Global IT hub along with other socio-economic benefits. With a special reference to companies like Infosys and Mindtree an attempt has been made to analyze IP creation aspect of business strategy of Indian IT companies. IPRs stimulates creation of innovation by exclusive rights in the market. Last but not the least journey of development of Indian Copyright and Patent laws with respect to computer software and program. . Today IT industry has its presence and very important role in segments like Enterprise resource planning.ABSTRACT This essay is an analysis of IPR as key driver of business strategy.

Vertical business applications. There is an ongoing debate regarding use of Intellectual Property Rights to foster innovation in software industry. For easy understanding Software working can be put into three levels- . Operational support.3 INTRODUCTION: Invention. Much of the software that is developed today is solely used for increasing efficiency. Security services. Real Estate and facility management. UNDERSTANDING OF SOFTWARE DEVELOPMENT PROCESS & SOURCE CODE: There are two kinds of software System software and Application Software. System Architecture. Financial applications. These activities generate substantial part of total revenue in India. And the issue of Open Source Software needs to be addressed at the same time. Testing. Wipro. offer Outsourced Software product development and Engineering services to companies building software products in the segments like Enterprise resource planning. Software defines quality and functionality of many product and services. Persisent and Tech Mahindra deals in development for above mentioned segments. Governance Risk and compliance. Maintenance and hosting. Apart from above Strong IP regime is essential to curb evil of Piracy and benefitting industry thereby. Customer relationship management. On the other hand companies like TCS. Human Capital management. Documentation. SOFTWARE AN IMPORTANT PLAYER IN INDIAN ECONOMY: Services that come under the domain of the information technology industry are as follows: Database design and development. Indian software companies like Mindtree corp. Proprietary and Open source are two types of software to be discussed. Health care and life sciences. functionality and quality of production and distribution process. Discoveries and Technologies widen scientific horizon but also pose new challenges for legal world. Infosys. Networking. Application Development. With emphasis on innovation and software patent there is a need to analyze IP rights in the industry and monopoly situation they provide.

Gopal Raju says ´Ones you have focus on IP it is important to make sure you protect it. Then Operating System executes instructions defined in the code to produce what is called Computing results. they only offer object code. Built in) for electronics e. Instructions 2. Source code is key focal point of any software program and is in centre of debate on software protection. Whereas Embedded software Companies deals in software written for special purpose (i.e.g.µ Infosys is seriously focusing on commercializing some of its IP and is simultaneously looking at India as nonlinear growth model. Computing results Computer Programmers write instructions i. you need to have a very clear IP strategy.1 Driven by need to protect its Intellectual property. The research arm of Infosys.1. Types of software companies: Software companies may be categorized into two main types which are Packaged software Companies and Embedded software Companies. it does not deter companies like Infosys to create IP. Television. a mobility platform. IP AS KEY DRIVER OF BUSINESS STRATEGY IN IT INDUSTRY: So what if Indian government does not award patents to software. Source code.e. Magic mirror and Shopping trip 360 are solutions that company is trying to productize. 1 http://www.ciol. To read Source code or to translate it into computer readable code Compiler is required. the company set about actively focusing on identifying all its Intellectual assets and protecting it through patents.g.com/Enterprise/EC-Featured-Articles/Feature/IP-creation-big-growth-strategy-forInfosys/28808109648/0/ . MConnect. Source code is program·s history and very valuable for people behind it. Internet browser. In fiscal 2008 Infosys generated over 102 invention disclosures and filled 10 patents in India and US. Most commercial software is sold without source code. SatLabs was recently awarded US patent for holography and mobile communication. Infosys Gradient a real time data integration tool. This readable code is called object code. Execution 3. First kind of companies offer software through Sale or lease or offers services on it e. Phones and Airplanes. To become a product based company rather than just a Service and Solution provider IP Protection strategy is important so that company has remedy in case of infringement by others and infringement of other·s IP is not committed by company itself to prevent undesirable litigation and penalties.

IP PROTECTION AND MONOPLOY IN I. But does this wisdom hold true in the Internet era? He states.5 IP PROTECTION OR STANDARDIZATION AS R&D MOTIVATOR AND SPECIAL MENTION TO EUROPEAN UNION: If there is no promise of monopoly would there be any incentive to innovate? Standardization is a major driver of competitiveness and is in general key factor for the development of IT industry.pdf 4 http://opensource. Open standards are important for SMEs (Small and Medium size Enterprises).htm .µ Patents are used to protect companies from new competitors and new ideas by protecting their old ways of doing business.T.iiita. A Standard help a product (ICT) or service to interact and communicate with one another (Interoperability). In software industry there 2 3 European commission White paper 2009 http://www.000 lines of code for building an operating system. Linus Torvalds released 10. Corporate affairs director.2 The official body is ISO (International Standardization Organization). The argument against software patenting is that it will kill innovation.in/janfeb05/brainwave_software. An example is well known MPEG standards for videos. Asia Pacific at Red Hat expresses his view on a blog4 as India has a tradition of firm belief in concept of shared knowledge.intertic. Standards are specifications on how particular parts of product and services will work. IPRs stimulates creation of innovation by exclusive rights in the market. IIM Ahmedabad on 12th feb 2005. it makes them a dangerous obstacle to all software development.In September 1991.com/law/09/12/ip-another-bubble-about-burst-view-another-civilization 5 http://mba. Anyone can use these standards to develop software. So IP Protection does motivate innovation but OSS is an cost effective way for the same. under General Public license.org/Policy%20Papers/Lewell. He is of opinion that ¶as software patents cover software ideas.´Intellectual Monopoly is not a cause of innovation but an unwelcomed consequence of it.ac. by leaving small firms or software developers liable for software patent infringement.5 Furthermore Boldrine and Levine state that. Now the code base of Fedora 9 Linux distribution is 204 million lines of code. There exist a tension between IP and standardization while standards aim to spur compatibility through a shared system. BUSINESS: Richard Stallman.3 Venkatesh Hariharan. It encouraged people to modify and share improvement with rest of the world. co-producer of GNU-Linux operating system delivered a talk at.

Aforesaid provision reads. but how can it foster a dynamic structure which market seeks for furtherance of innovation? FUTURE CHALLANGES SUCH AS CLOUD COMPUTING: The National Institute of Standards and Technology (NIST) and The Cloud Security Alliance have defined cloud computing as a model for on demand network access to a shared pool of computing resources over the internet. One of which could be bankruptcy filled by a cloud provider can have a major impact on users and providers service agreement may not qualify as Intellectual Property. 6 http://www. data servers. Just as business and consumers now pay for gas and electricity and other utilities. This behavior of Nokia is coming from the loss of market share to Apple.is potentially a risk of technological lock-in effect which results in certain technologies becoming standard.com/tags/security/ . cloud-enthusiast predict that the cloud would be sold on demand as a pure IT service. Nokia accuses Apple of patent infringement on Nokia developed 3G and Wireless LAN technology.6 SOFTWARE AND PATENT LAWS IN INDIA: In context of this Essay Sec 3 (k) of Patents act 1970 is worth mentioning here.iplawalert. It stated that Apple has infringed patents core technology that allows iphones to make calls and connect to the mobile internet. namely software applications. network and other services. ¶ a mathematical or business method or a computer program per se or algorithms is not patentable. A natural reaction of Nokia is then to use legal weapon. CASE STUDY: An interesting case similar to situation above is worth mentioning here is 2009 complaint of Nokia against Apple. A 2009 World Privacy Forum report concludes that cloud computing has significant implications for privacy of personal information as well as for confidentiality of business information. Nokia has patent right and therefore has law on their side.

The grant of patents yield high economic rewards apart from prestige attached. even though a substantial part of invention consists of computer program which used well-known formula for calculating time when rubber was cured and the mould could be opened. what is not patentable is only computer 7 8 US 584 (1963) 409 US 63 (1972) 9 Dimond v Diehr 450 US 175 (1981) 10 Patents act 1970. apart from that change in license as ¶compulsory licenses·. and algorithms were made non patentable. what are not invention and hence not patentable. which was therefore patentable. India had never allowed software patents as was the case in US earlier. However as USPTO was unwilling to grant patents and courts were also of similar view. case revolve around patent for a method for updating alarm limit. US has taken many years to develop the law on software patent. Through this amendment validity of patent was extended to 20 years and a new definition to ¶invention·10. Flook·s system was identical to previous except mathematical algorithm held no patentable. As per sec 3 (k) as contained in ordinance a computer program·s technical application to industry or a computer program in combination with hardware is patentable. give more recognition to patents vis-a vis copyright. According to Supreme Court in this case invention was nor merely mathematical algorithm. There are detailed guidelines by USPTO for patenting software and issues related thereto have repeatedly come before courts. a computer program per se. The response of USPTO (US Patent office) was uniform. It is interesting to note that global community of scientists including US. but a process for molding rubber. a business method. 12 Ibid sec 3 (k) .12 Patent ordinance 2004 and amendments in 2005: This ordinance sought to amend provision (sec 3 Patents act) which laid down.11 While amendment with respect to computer program was that. sec 84 post 2002 amendment. Courts were also of same opinion in ¶Parkerv flook·7. the programmers shifted the focus towards legal mechanism of trade secretes and copyright. In 1961 Supreme Court9 ordered the USPTO to grant a patent on invention. a mathematical method. In Gottschalk v Benson8 court ruled out that the discovery of a new formula is not patentable. whatever software is.7 Patent law prior to 2002: the whole concept of patent protection of software programs has flowed from US. it is not patentable subject matter. Amendment in 2002: This amendment has significant effects on Indian patent system. sec 2 (j) provides a new product or process involving an inventive step and capable of industrial application . as India had no well-drafted patent law specifically on computer software. 11 Ibid.

These amending acts amend sec 2(o) of copyright Act 1957 to change the definition of ¶literary work·. This proposed amendment tried to strike a balance between arguments for or against patent protection of computer program. capable of causing a computer to perform a particular task or to achieve a particular result. labour and judgement. making of copies and creation of competing program relying on copy of certain features will be an infringement. Chancery Division held. Also India·s leading IT companies and industry associations favored reasonable level of protection of computer software through Patent. compilation including computer database which may be expressed in words. COPYRIGHT AND SOFTWARE: Copyright is a form of IP protection granted under Indian law to a creator of original work of authorship. A computer program has been interpreted to mean ¶A set of instructions expressed in words codes.·15 In relation to software. It now includes computer program as well as computer database. 13 14 Ibid sec 2 (o) Ibid sec 30 15 Copyright Act 1957 sec 2 (ffc) . But bills deviated from ordinance and restored original position.13 The owner of copyright has the right to grant a license to another with respect to the copyright of his work.14 The Berne Convention for protection of Literary and Dramatic works in 1986 provide that Computer software (object code and source code) and compilation of data be protected under the Copyright Act. such as literary work including computer program. unless the copier has availed of right given by a copyright license. codes. The result is not only computer programs but database is also protected as copyright. And India has accordingly amended copyright law on 1994 and 1999. including a machine readable medium. Every member of WTO (including India) has to accept TRIPS. a scheme or in any other form.overall structure of computer system or program can be protected in its own right only if it is a result of sufficient skill. table. In a case of copyright infringement of source codes.program per se. schemes or in any other form including a machine readable medium. however Patent bill 2005 dropped the amendment proposed by this ordinance.

Since then the court has awarded damages in various cases including software piracy cases.org/piracyimpact2010/pr/pr_india_english. speeding up proceedings.16 Therefore it is clearly in the economic interest for India to focus on reducing software piracy in a systematic way. 16 Research from Business Software Alliance and leading Global Market research firm IDC available at http://portal. Popat 18 in this case the court awarded Microsoft Rs 19. Mayuri17 in this case the Court awarded Microsoft Rs 500.728 high-tech jobs $4. such as Microsoft corp v.000 in compensatory damages and Rs 500. billions in new economic activities and close to $512 million in new taxes till 2013. de-incentivizes local Product company·s innovation efforts. consumers and Industry to reject. prevent and attack piracy.6. Keshav S Dhakad chairman of India BSA committee said ´It is needless to say there must be a concentrated effort by Government.75 million plus 9% interest per year from the date of order till the date of payment. undermine government·s ability to collect legitimate taxes and fuels organized criminal activity linked with piracy. as well as Pnton Piller orders in software piracy cases.bsa.pdf 17 Case 1027/2005 18 Case 2005 (30) ptc 245 (Del) . According to a new study titled ¶Economic benefits of reducing Software piracy· reducing 65% software piracy rates in India by 10% points over four years would create over 65. giving special powers to existing specialist departments are some of suggestions. Slow pace of piracy reduction affects growth of IT industry in India. Training for Judges and enforcement machinery (police).9 ISSUE OF COUNTERFEITING AND IMPLICATION IN INDIA (Piracy): Recent study says reducing PC software piracy will generate billions in added economic activity in India.000 in punitive damages as well as costs other case is Microsoft corp v. In Indian judicial system much has still to be done to curb the problem of software piracy. Strong Intellectual Property regime has a great role to play here. In 2005 Delhi High Court also put an end to Indian court·s culture of refusing to award damages. with 76% of those benefits expected to remain in the local economy. The Delhi High Court in particular has granted in numerous cases exparte ad interim injunctions. APPROACH OF INDIAN JUDICIARY TOWARDS SOFTWARE PIRACY: (Microsoft cases and damages awarded): The Indian judiciary has become diligent in dealing with software piracy. Mr.

Patent protects creative functional invention whereas copyright protects creative nonfunctional authorship. modify and distribute it. Without seeking or getting patents Indian business especially those dealing in software will remain at the low end of value chain. without further restrictions. Why copyright protection does not seem to be adequate protection in case of software? The main reason for this is that copyright was designed to protect. They will be challenged more 19 http://www. COPYRIGHT OR PATENT PROTECTION: There have been several developments in IP regime in India. modify and improve software. The distribution terms of copyleft license agreement are such that redistributors are bound to redistribute modified software. on the same terms. GNU license was the first copyleft license. whereas computer program or computer based business methods are clearly functional works of technology. distribute. methodology. The license attached to Linux and other copyleft software seeks to prevent the software becoming proprietary. copyleft and open source movement go well.19 But the whole concept of copyleft came into notice only with the development of Linux computer operating system. Independent creation and reverse engineering can be prevented by patenting but not copyright protection. 21 Open source software and the Law by Priti Suri & associates page 176. hand in hand. which permits a person to use. Therefore copyright does exist in copyleft works and is acknowledged by the existence of and the terms of license. as already exist. 20 .20 The license asserts copyright over the software the license protects integrity and continued availability of software. with some exceptions nonfunctional matter. However an area which has attracted much hype is Patent protection with respect to computer programs and software. If restrictions are allowed there are fair chances of modified software becoming proprietary. and study how program works. change.21 Copyright does not protect ideas. Therefore copyright.gnu.org Important free programs such as the GNU C++ compiler exist only because of this.CONCEPT OF COPYLEFT: The concept of copyleft originated with Richard Stallman. copy. Infact copyleft works are subject to GNU GPL licenses. Copyleft implies free software. techniques and the likes which are often most important features of software program and business method. The source code is available to all users to run. processes.

alliance and collaborations.11 easily by low cost competitors in Asia. OSS community has generated tremendous support in India as it (OSS) clearly has socio-political benefits in country with population of more than 1 billion. Eastern Europe and elsewhere as they will lack negotiating strength because licensing and cross licensing of patents is an accepted way of striking deals. Open source would rather use legal weapon of copyright as an invitation to join the fun. rather than as a weapon against others. It also prevents hoarding of technology and ensures that anyone with interest wont be exclude from its development.22 CONCLUSION: Linus Torwald in an autobiographical work ¶Just for fun: the story of an accidental revolutionary· in chapter on intellectual property writes. a view point of Bombay chamber of commerce and industry. Implication of software and business method patent for Indian IT and other businesses . ¶The GPL (general public licensing) and open source model allows for the creation of best technology. 22 .

org/Policy%20Papers/Lewell.htm 5.wipo. http://portal.gnu. http://www.com/tags/security/ 6.intertic.int/wipo_magazine/en/ .com/law/09/12/ip-another-bubble-about-burst-view-another-civilization 4.bsa.in/janfeb05/brainwave_software. http://mba.BIBLIOGRAPHY BOOKS: 1.iplawalert. Links referred: 1. http://www.org 8. http://www.ac.pdf 7. http://www. 2.org/piracyimpact2010/pr/pr_india_english. Narayanan.com/Enterprise/EC-Featured-Articles/Feature/IP-creation-big-growth-strategy-forInfosys/28808109648/0/ 2.ciol. http://www. Open source software and the Law by Priti Suri & associates. http://opensource.pdf 3.iiita. Intellectual Property Law by P.