Introduction:
With the advent of the FinTech revolution, technology and innovation have taken centre stage throughout the globe. Every business alike, ranging from multi-national companies to start-ups to MSMEs, strives to adopt new-age technologies like Cloud Computing, Artificial Intelligence, Blockchain technology, etc., to gain a competitive edge and cement a first-mover advantage. In such rapidly developing markets, there is an increasing need to protect the intellectual property (‘IP’) vested in intangible embodiments like programmes, computer algorithms, and software that facilitate companies’ competitive edge.
Since computer programmes and software are generally expressed through source and object codes, it is similar to a literary work, thereby attracting the dimensions of the Copyright Act of 1957. At the onset, the Copyright Act under Section 2(o) defines “literary works” to include computer programmes, tables, and compilations like computer databases. Moreover, Section 2(ffc) defines a “computer programme” as a set of instructions expressed in words, codes, etc., capable of causing a computer to perform or achieve a particular result. In this regard, from a purposive interpretation of S.2(o) and (ffc), we observe that a copyright protects the coder’s expression, consequently protecting the innovation, creativity, and operations of the code executed in the computer. Another vital dimension of computer programs is the contemporary discourse of the colloquial term “Software Patent.” In the advancing global software market, which is estimated to be worth $400-500$ billion, there grew a greater need to protect software. Recently, Airbnb’s software patent application (#US20140278591A1) that automatically determined booking availability for user-sourced accommodations was granted, giving the company a substantial competitive edge in the hospitality sector, and recuperating its financial position post the pandemic. In this manner, the US patent law on software patenting is quite progressive and has laid down numerous tests like the TSM test[1], flash of a genius test[2], etc., to determine patentability. In contrast, there is a lingering impediment in the Indian IP regime vis-à-vis software patenting, i.e., the interpretative contradiction between the governing statutes and rules.
Decoding the Software Patent Regime of India:
Over time, India’s statutes and rules governing software patents have observed a ping-pong effect. The crux of the legislative lacunae exists in the interpretation of Section 2(1)(I) read with Section 3(k) of the Indian Patents Act. In this regard, S.2(1)(I) defines a “new invention” to be an invention or technology which has not been published or anticipated anywhere in the world before the date of filing of a patent application with complete specification. On the other hand, S.3(k) states that “a mathematical or business method or a computer program per se or algorithms” are not inventions and therefore not patentable. From a birds-eye view, we can infer that any novel technology invented by a computer programme per se cannot be deemed to be a new invention as per S.2(1)(I) and therefore not patentable U/s.3(k). However, when we examine the essence of the phrase “per se” through case laws and established guidelines, we can decode the scope of software patents. Firstly, at the international frontier, the Agreement of Trade-Related Aspects of Intellectual Property Rights vide Article 27 upholds patentability of inventions in all fields of technology, provided that the usual criteria of novelty, inventive step and industrial applicability are met and sufficiently disclosed. Secondly, the term “per se” is similar to the “as such” caveat demonstrated by Article 52 of the European Patent Convention (‘EPC’). In this line of jurisprudence, the case of HTC v. Apple clarifies the persisting dichotomy by appealing to the question of “technical contribution.” The case brought about an understanding that there is no clear rule to determine whether or not a computer programme is excluded from patenting. Furthermore, it was held that a programme is likely to be patentable if it “makes a computer a better computer in the sense of running more efficiently and effectively as a computer.”
In the Indian context, the same line of reasoning was adopted and broadened by the Delhi High Court in Ferid Allani v. Union of India, wherein it was held that if the invention demonstrates a “technical effect‟ or a “technical contribution,‟ it is patentable even though it may be based on a computer programme.” Moreover, it was also asserted that the term “per se” resembles the legal position of the phrase “as such” given in the EPC. This interpretation of “per se” was also backed by the Revised Computer Related Inventions (CRI’s) Guidelines of 2017, which considered that the effect that a computer programme produces is crucial in determining patentability. Additionally, the case is pivotal in not just addressing software patents but also CRI’s as it would be retrograde to not grant patents to such innovations in the modern-day digital era. In Telefonktiebolaget LM Ericsson v. Lava International Ltd., the court affirmed that Section 3(k) does not apply when algorithms or computer programmes are used in a patent employing modern technology to do specific computations to improve or produce technology for practical realization or bring about a technical effect. Lastly, in Aloys Wobben v. Enercon (India) Limited, it was cemented that when a computer programme performs a technical process or solves a technical problem by giving a technical effect, it cannot be termed as a “computer programme per se” and does not attract Section 3(k). Therefore, we can establish that as long as a computer programme brings about a technical effect or complimentarily solves a technical problem and does not exist ‘by itself,’ it may be patented.
Decoding the Argument of Software Patent over Copyright
Copyright, in essence, protects only the literal expression of an idea, i.e., protects the source and object code of a software. Furthermore, Section 14(b) of the Copyright Act provides certain exclusive rights to the original copyright
holder regarding distribution, sale, store, etc. However, copyright infringement and software piracy are rampant in this digital era. Moreover, with such advanced technology and easement of statutes, it is even possible to reproduce the entire programme code. Hence, there is a void relating to the modified expression of a similar idea. Additionally, copyright protection does not protect the process, procedure, or technical discovery of a computer programme which is pivotal to any company in accruing competitive leverage. In this regard, a software patent gains significance as it protects both the idea and the functional aspect, facilitates new incentives from royalty to licensing fee, improves bargaining capacities, and provides greater legal protection against infringement.
The fundamental argument for software patents over copyright lies in the interpretation of Section 52 of the Copyright Act, which provides for copyright infringement exceptions. Section 52 establishes a general principle that a computer program’s reverse engineering and fair use would not amount to copyright infringement. Furthermore, it provides vast scope for third parties to modify the copyrighted work, and by such simple modification, a third party will be able to claim a different expression and copyright on the work. In the realm of copyrights, originality is a sine qua non to avail legal recourse; therefore, when a computer programme is reverse engineered, the essence of originality is lost. In this regard, exempting a reverse-engineered programme with slight modifications changing the ‘expression’ of the same rendered output contravenes the tenets of copyright blatantly. The leading case of Sega Enterprises v. Accolade Inc. is often brought up in this discourse of ‘fair use’ as the law in India regarding the permissibility of reverse engineering vis-à-vis copyrighted computer programmes is similar to the precedent established in the Sega case. The court set guidelines for reverse-engineering and reiterated that de-compilation or disassembly of a computer programme is a fair use when there is a mere indirect exploit of functional codes, a legitimate reason for disassembly, and if de-compilation fosters creativity in the marketplace. In Eastern Book Company v. D.B. Modak, the Supreme Court moved from the age-old “sweat of the brow” doctrine to the test of “modicum of creativity,” and held that a copyright holder would be eligible to claim infringement on the grounds of substantial copying and absence of the “flavour of a minimum requirement of creativity.” Lastly, unlike the European Union or the US, the legislative intent behind India’s copyright regime is based on public policy and strives to ensure a balance between public access of works and the individual interest of the copyright holder. Consequently, setting contractual clauses through end-user license agreements (EULA’s) that prohibit reverse engineering of source codes is analogized to creating an absolute monopoly over an idea without acquiring a patent. Such clauses circumvent and encroach the ‘expression’ aspect of copyright, which thereby contravenes the legislative intent and Section 23 of the Indian Contract Act, 1872. Therefore, whilst copyright protection assists a nascent marketplace in promoting creativity and the emergence of new inventions, it can prove detrimental to a highly competitive business ecosystem, wherein huge expenses are incurred in the research and development of cutting-edge technologies. In such an advanced marketplace, a software patent would be invaluable in protecting original work.
Conclusion
From the aforementioned discussion, it is important to note that the dimension of copyright and patent are prevalent in the Indian IP regime to protect computer programmes. Another nascent dimension that emerges is trade secret protection. However, there is no legislative backing for trade secrets, and tort and contract law principles currently govern it. While it can prove beneficial in the commercial context by protecting the idea, structure, or design specification of a computer programme, several limitations exist like vulnerability to reverse engineering, a compulsion of a legal and contractual relationship, and heavy reliance on uberrima fides. Nonetheless, a fusion of EULA’s and trade secret protection accompanied with legislative backing can be a viable alternative to software patenting in the distant future. In the contemporary context, the Indian software patent regime is required to be more robust and establish a footprint within the IP regime. Presently, the standard of patentability is set relatively high due to apprehensions of patent trolls; however, if the Indian courts adopt the Abstraction-Filtration-Comparison test as established in Computer Associates v. Altai Inc., it can elucidate the significance of functional codes and prevent trolls. Moreover, the standard of a person having ordinary skill in the art (PHOSITA) needs to be raised to a similar level to the USA and accept the explanation of the devised models and flowcharts to be sufficient disclosure. Lastly, history has time and time again illustrated that patent protects every business alike, which can tremendously boost the FinTech economy of India in this start-up age. The same can also be inferred in the case of Microsoft contravening i4i’s patent covering custom XML in MS Office or Blackberry violating NTP’s patent over wireless-push E-mail and paying over $617 million as settlement. Hence, to assure greater protection of the creator’s work and safeguard the objectives of intellectual property rights, it is critical to unify and harmonize the now fragmented, fallacious, and ambiguous laws.
[1] In KSR International v. Teleflex Inc. (550 U.S. 398 (2007)), the TSM test was considered and it was held that a claimed invention is “obvious” and cannot be granted a patent when there is a Teaching, Suggestion, or Motivation to combine prior art teachings.
[2] In Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84 (1941) 1, the doctrine of “flash of genius” was formulated and asserted that an invention must indicate the flash of creative genius, not merely a skill of the calling. Patents were granted only if an inventor revealed the flash of genius behind the invention.
Samrudh Kopparam
AUTHOR
Samrudh Kopparam is a 2nd year law student pursuing B.A., LL.B (Hons.) from Jindal Global Law School. His area of interest includes Intellectual Property Rights, Technology Law, and Corporate governance. Apart from his academic interests, he enjoys writing, swimming, and playing table tennis. He looks forward to connecting and collaborating with IP enthusiasts at https://www.linkedin.com/in/samrudh-kopparam/.
