How To File Patents In India?

A patent is a form of intellectual property defined as “a government authority or licence conferring a right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention.” The purpose of a patent is to protect the intellectual property created by an inventor for a period of time so that the inventor has first rights over how he wishes to use his patent. A patent can be sold, leased, be used in exchange for royalties, equity, etc. A patent holder however, does not become the holder of the invention unless he has invented it first.

The then British Government of India, during the year 1856, tried to encourage and propagate new inventions termed as ‘exclusive privileges’ in the manufacturing sector. The first invention to be granted Intellectual Property Protection in India was by the Government of India under the petition special privileges to George Alfred DePenning for inventing the ‘Efficient Punkah (fan) Pulling Machine.’

The Indian Patents Act, 1970

Patentable Inventions

The list of inventions patentable are:

  • Process, manner, or method of manufacture or Art
  • Machine, apparatus or other articles
  • Product patent for medicines, food, drugs and chemicals
  • A substance should be produced by manufacturing
  • Computer software  used with hardware or with technical application to industry

Inventions Not Patentable (Sec 3)

The following is a list of inventions that cannot be patented:

  • Any invention obviously contradictory to established laws or that is superficial.
  • Any invention that could be used to exploit the population, contrary to morality, public order, or causes prejudice to life or health (of animals, plants, natural resources, humans,etc).
  • The discovery of a scientific principle, any substance occurring naturally (living or nonliving) or any abstract theory.
  • If no new product is formed nor a new reactant is formed using machines or apparatus. The discovery of a new property or new form of a substance.
  • Mere mixture of chemicals.
  • The duplication, rearrangement or arrangement of known devices.
  • A method of horticulture or agriculture.
  • Any surgical, medical, diagnostic, therapeutic, etc. process for the treatment of humans or animals (to render them free from disease).
  • Animals and plants in part or whole (other than microorganisms).
  • Algorithms, computer programmes, business or mathematical methods.
  • Musical, literary, artistic, dramatic, cinematographic (aesthetic productions or works), or television productions.
  • The mental strategy in playing a game, a mental act, rule, method or scheme.
  • Topography of integrated circuits
  • An invention that is traditional knowledge or which is a duplication or aggregate of known components properties.
  • Inventions related to atomic energy cannot be patentable under Sec 20 (1) of the Atomic Energy Act, 1962.

Application For Patents

The person applying for a patent should apply jointly with another person or alone and can be:

  • The first and true inventor of an invention.
  • An assignee can make an application on behalf of the first and true inventor of the invention.
  • The legal representative of a deceased applicant provided that before death, the applicant was entitled to make such an application.

Form Of Application

  • Every application made shall be for one patent only at the patent office in the prescribed form.
  • An international applicant applying for a patent in India under the Patent Cooperation Treaty must file a corresponding application before the Controller in India. No patent is valid for the entire world because patent law is territorial in nature. Filing an application in India enables a person to file for application at convention member countries which makes the application process easier when applying to multiple countries.

Amendments To The Patents Act And Rules

The Indian Patent Act was amended in 1999, 2002 and 2005. The need for patenting marks of patent agent examination, and chemicals and drugs under Trade Related Intellectual Property Rights (TRIPS) brought about the need for an amendment to the Patent Act.

The Indian Patent Rules were amended in 2003, 2005, 2006, 2012, 2013, 2014 and 2016. The rules were amended to include a fixed fee structure, patent agent exam qualification, appointment of the patent office as searching and examining authority, third category for applicants that are small entities.

The Indian Patents Office

The Office of the Controller General of Patents, Design and Trademarks (CGPDTM) administers the Indian Patent Office, which is an Office of the Government of India that is entitled with administering the laws of patents, trademarks and designs. It is important to note the distinction between patents, designs and trademarks.

Patent Duration

The duration of any patent filed in India is valid for a period of 20 years (irrespective of filing with complete or provisional specification) from the date of filing the application. If an applicant wishes to file an application under PCT, then the term of 20 years begins from the date of international patent filing. If an applicant wishes to file a patent in another country, then he must file the patent with the Patent Office of that respective country (through the conventional filing of an application or through the PCT route) since patents granted in India are valid only throughout the territory of India.

How To Get A Patent?

Get an Idea for a Patent

First get an idea of what has to be patented, and the same has to be presented on paper with a description, drawings and sketches (if necessary) explaining the work of the invention.

Patentability Search

Next, an individual must check the list of patentable inventions. The Patent Act (as mentioned above) entails what constitutes a patentable invention and what doesn’t. Only if an idea is patentable can an individual move forward to the next step. It also enables an individual to search for existing patents in case the idea or patent already exists.

Patent Application

If a patent is at the early stages of its development, then an inventor can file a provisional patent. This enables an inventor to secure a filing date (12 months of time to file complete specification) and it is also lower in cost to file a provisional patent as compared to the cost of filing a complete patent. If an inventor has complete specifications about the invention, then the individual can file for complete specification.

Publication of the Application

After an inventor has filed for complete specification, the application is published 18 months post first filing. If an inventor feels that they cannot wait for the period of 18 months from the date of filing the application, then s(he) can file for an early publication request along with the prescribed fees and the patent would take about a month to be published under an early publication request.

Request for Examination

The controller, upon receiving an RFE request from the applicant, hands over the patent to the patent examiner for examining criteria such as novelty, enabling, inventive step, patentable subject-matter and industrial application. All steps covered till now (from patent application till grant) is termed as patent prosecution. The patent examiner then submits a first examination report to the controller and the applicant which consists of documents of the claimed invention.

Response and Clearing of Objections

Based on the examination report, most patent applicants would receive objections. A patent agent can help create a response to the objections raised in the application. An inventor can communicate to the controller as to why his invention is patentable.

Grant of Patent

After all objects raised in the report are resolved and the patent is deemed to be in order of grant after meeting all criteria requirements, the patent is granted to the applicant as early as possible. The grant of a patent is published in the patent journal.

As we move towards becoming a Product Nation, it is important that companies and individuals own their IP. A Patent can become a competitive advantage in itself and is to be ignored at your own peril!

Patent shift: Hope for IT innovation, not litigation

One of the persistent threats to India’s software product ecosystem is from the constant push by MNCs for allowing software patents in India.

India’s nascent software product industry is growing rapidly and is on a trajectory where we can see global brands like Amazon, Google and Facebook emerge in the next 10 years.

One of the persistent threats to India’s software product ecosystem is from the constant push by MNCs for allowing software patents in India.

The MNCs (or more often, their well paid lawyers) cleverly couch this argument by saying that this will promote “innovation” and help the domestic software industry .

To which, we at the Indian Software Product Industry Round Table (iSPIRT), would like to respond by saying, “Thanks for your concern, but let us Indians worry about innovation within our own country”.

Over the last several years, we have seen many attempts by MNCs to (mis)interpret the Indian Patents Act in such a manner that software patents will be allowed in India.

We firmly believe that software patents are a recipe for litigation and not innovation. The history of patent litigation in the US serves as a cautionary tale for India. If you are a software developer in the United States, writing code and innovating is a risky proposition. The moment you are successful, patent trolls land up, claim that you are violating their patents and try to extract royalties from you.

Research conducted by James Bessen and Michael J Meurer, explained in their widely acclaimed book “Patent Failure How Judges, Bureaucrats, and Lawyers Put Innovators at Risk”, has shown that patents in the area of software have high rate of litigation. Due to the nature of software, the boundaries of patents granted in this field are often hazy and this leads to increased litigation.

The authors in a study published in 2012 estimate that direct costs of patent assertions by patent trolls total about $29 billion accrued in 2011. In 2011, a number of mobile app developers, most of them based in the US, got legal notices from a firm called Lodsys.

The notice claimed that in-app purchases used by these apps violated the patent held by the firm and threatened them with legal action if they did not enter into a license agreement with Lodsys.

Thankfully , Indian software developers and startups have not had to encounter such frivolous legal notices until now. Individual developers and star \tups can innovate freely in India, thanks to the foresight of our parliamentarians who exempted computer programmes per se from patentable subject matter. More patents has never meant more innovation.

This is a myth that patent lawyers love spreading, as patent litigation serves to expand their market opportunities.

However, the “Guidelines for Examination of Computer Related Inventions (CRIs)” (2015 guidelines) issued by the Patent Office on August 21, 2015 could have changed the scene in India as it was worded in a manner that permitted patents in the field of software.

Although the guidelines are only meant to ensure a uniform approach by the staff of the Indian Patent Office while examining patent applications and does not constitute rule-making, these would have led to a liberal examination process resulting in grant of more patents in the area of software.

This would have made innovation in the area of software akin to step ping on a mine field. We therefore welcome the order issued by the Controller General of Patents, Designs and Trademarks dated February 19, 2016 finalising the Guidelines for Examination of Computer Related Inventions (CRIs).

It is also important to call out the role of lawyers in this discussion. Warren Buffet, the ace investor, famously said, “Never ask your barber if you need a haircut.” In a similar vein, policy makers must disregard the self-serving clamour call from lawyers for more software patents in India. Most of these lawyers stand to benefit from increased patent filing and increased litigation.

Allowing software patents would have paved the way for digital colonisation of India, since the vast majority of software patents are owned by MNCs.

We therefore applaud the Indian Patent Office for revising the guidelines and promulgating a clear test for issuing patents. We believe that these guidelines are some of the clearest guidelines anywhere in the world and we believe this will help innovation, not litigation.

Software Patents FAQs for Indian Startups

A couple of months ago, you might have noticed press reports where iSPIRT took a strong stance against software patents in India. The global experience with software patents has been that it leads to increased patent litigation, and uncertainty for startups. Thanks to some enlightened policy making, India has been relatively free of the kind of software patent lawsuits that we see in the US, and we would like to keep it that way.

At the same time, we cannot wish away the fact that software patents are a reality in countries like the US, and every company needs to have a software patents strategy in place. We therefore set out to understand the most frequently asked questions (FAQs) and answer them. In talking to various stakeholders, we found that even veteran entrepreneurs would often confuse copyrights and software patents. We also found that there is very little awareness of what software patents actually are. Therefore, we curated a set of FAQs and answered them in very simple layman terms. Our goal is that even entrepreneurs who are beginning their startup journey should be able to get an understanding of this topic. Even if you are a veteran in the IT industry, these FAQs might help you avoid some common misconceptions.

We therefore invite all entrepreneurs to put this one their, “Must Read” lists. We also invite you to submit your questions and feedback to these FAQs. We view this document as a first step in understanding this topic, and look forward to your feedback to make this FAQ more useful to you.

Venkatesh Hariharan, Samuel Mani and Mishi Chowdhary
Software Patents Expert Team

Software Patents FAQs for Indian Startups

Executive Summary

As India’s product startup ecosystem grows and becomes global, the issue of software patents becomes increasingly important. Most startups work extremely hard to grow their marketshare, but do not realize the importance of a software patents strategy for protecting their interests. This document answers some of the most common questions that startups have around software patents. It outlines the importance of a software patents strategy, clarifies some of the common misconceptions around software patents, and proposes a software patents strategy for Indian startups to consider.

Note: This set of FAQs includes information about legal issues and legal developments. These are for informational purposes only. These are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. You should contact a lawyer for advice on specific legal issues. We don’t accept any responsibility or liability for the accuracy, content, completeness, legality, or reliability of the information contained in these materials.This document is intended for startup founders and executives. It aims to be a starting point for discussions around software patents, and not the last word on this subject.

1. Why do I need a software patents strategy?

Every IT company, and especially one that aims to go global, has to have a software patents strategy in place. This is one area where the old saying, “A stitch in time saves nine,” holds true. A proactive strategy can help many software startups improve their valuations and prevent a lot of grief. Some Venture Capitalists (VCs) tend to assign a higher valuation to startups that have software patents, though this depends from VC to VC.

Patents can also help startups from a defensive perspective. When a startup is flying under the radar, software patents might not be much of an issue. However, when a startup grows big, starts hitting the headlines, or goes global,[1] that is the time when the risk of patent litigation shoots up. Apart from being an expensive business, patent litigation can create a cloud of uncertainity over your business, and potentially scare away clients.[2] Startups that plan to take their products and services to markets like the US, that allow software patents, should be especially careful about software patents.

2. What is a patent?

A patent is a state granted monopoly to an inventor, in return for disclosure of the details of the invention. This monopoly is granted for a limited period of time. The classical test of whether something is an invention or not is novelty, usefulness, and non-obviousness. The word patent originates from the Latin word, patere, which means “to lay open” (i.e., to make available for public inspection).

3. India does not allow software patents. Therefore, why should I be worried?

Section 3 of the Indian Patent Act deals with things that are not considered to be inventions within the meaning of this Act. Section 3(k) of the act says that, “A mathematical or business method or a computer programme per se or algorithms are not patentable.” However, the definition of “per se “ has proven to be controversial. The recent guidelines from the Indian Patent Office on Computer Related Inventions would have the effect of making software a patentable subject matter, as long as it has technical effects. Many, including, iSPIRT have argued that this is against the will of the Indian Parliament, which had rejected a move to grant patents on technical effects of software.

Despite the controversy over how “software per se” should be defined, the number of patent applications that are being filed at the the Indian Patent Office is multiplying, and there is a sharp surge in the number of patents granted by the Indian Patent Office every year. A large number of these patent applications cover software in some form or the other. The legal validity of such patent grants is in question, but if these patent owners begin suing for infringment, it can cast a cloud of uncertainity over startups.

Startups that aim to go global will have to have a software patent strategy in place, when they enter markets like the US, where software patents are granted. This is because software patent litigation is an expensive business and a defensive mechanism needs to be in place. It would be advisable for such startups to hire a patent lawyer and check if they might be infringing on any software patents. If they are indeed infringing, they might have to either obtain a licence to use those patents or rewite their code, to ensure they are not infringing.

If your startup has an app (or builds apps for others), it has to be kept in mind that the jurisdiction of the app store is the US, since the major app stores are owned by companies based in the US[3].

Therefore, being proactive, and putting a software patent strategy in place, will help your organization in the long run.

4. If I cannot use patents to protect my software, how else can I protect it?

Software is algorithms for computers in human readable terms. Software can be protected through copyrights and trade secrets. Trade secrets offer certain advantages over software patents.

  1. Patent protection does not cover “abstract ideas” whereas trade secret protection can. Trade secret protection can cover almost any information (including code) which is secret and which provides an economic advantage over others.
  2. Patent protection is for a limited period of time (depending upon jurisdiction) but trade secret protection is available indefinitely.
  3. Patent protection is expensive and time consuming to obtain. In India, trade secret protection can be obtained simply by way of confidentiality and non-disclosure agreements. It is quicker and cheaper.

5. What is the harm if we also use patents, in addition to copyrights and trade secrets to protect software?

Protecting software with patents add another layer that complicates the lives of software developers. Under copyright law, if software developers write code that is similar to that of another, they can defend themselves on the grounds of independent invention because copyright protects the expression of an idea. However, the same defense is not possible under a software patent regime because a patent is a monopoly on the idea itself. Thus, even if software developers independently create a program, they may be liable for infringement, in countries that allow for software patenting.

Even end-users who use software for routine, everyday activities may be liable for infringement. For example, in the US, which has the most permissive software patenting regime, McDonalds and 400 other entities were served notices for violating DataCard’s patent on “Method for processing debit purchase transactions using a counter-top terminal system.” In another case, a company called Beneficial Innovations, sued the New York Times, You Tube and many other media organizations for allegedly violating its patent on “Method and system for playing games on a network.” Therefore the problem of software patents is not one that is confined to the software development industry alone and ends up increasing the cost of software for society as a whole.

6. What are the defensive strategies that I can adopt?

You could join a patent non-agression network like the Open Invention Network (OIN), which is the largest patent non-agression community with 1,700 members as on August 2015. Membership to OIN is free, and members have to agree that they will not sue other members of OIN around the Linux System, a list of 2,300 packages of core infrastructure technology in Linux and open source. Members also get a royalty free license to 1000 software patents owned by OIN, worth around $90 million. OIN was formed to protect Linux and Open Source users from patent litigation.

Startups that are not in the business of licensing patents to others should consider filing defensive patents. This can be an expensive business costing around $15,000 per patent (Rs 9.45 lakhs approximately).

Startups that have a unique idea, but do not want to go to the expense of filing a patent can consider submitting their ideas to www.defensivepublications.org that will review ideas and take care of patenting selected ideas. Defensive publications, which are endorsed by the US Patents and Trademarks Office (USPTO) as an Intellectual Property Rights management tool, are documents that provide descriptions and artwork of a product, device or method so that it enters the public domain and becomes prior art. This powerful preemptive disclosure prevents other parties from obtaining a patent on the product, device or method. It enables the original inventor to ensure that they have access to their invention by preventing others from later making patent claims on it. It also means that they do not have to shoulder the cost of patent applications.

7. What are the different forms of IP and can you offer a comparison between them?

Different forms of IP1Different-Forms of IP2Different Forms of IP3Different forms of IP4

 

8. How are patents granted? Do the norms vary from country to country?

The procedure for granting patents, the requirements placed on the patentee, and the extent of the exclusive rights vary widely between countries according to national laws and international agreements. Typically, however, a granted patent application must include one or more claims that define the invention. A patent may include many claims, each of which defines a specific property right. These claims must meet relevantpatentability requirements, such as noveltyusefulness, and non-obviousness. The exclusive right granted to a patentee in most countries is the right to prevent others, or at least to try to prevent others, from commercially making, using, selling, importing, or distributing a patented invention without permission.


9. If patents are granted by a sovereign state, does it mean that I have to file for the same patent in multiple geographies?

The procedure for granting patents, the requirements placed on the patentee, and the extent of the exclusive rights vary widely between countries according to national laws and international agreements. Typically, however, a granted patent application must include one or more claims that define the invention. A patent may include many claims, each of which defines a specific property right. These claims must meet relevantpatentability requirements, such as noveltyusefulness, and non-obviousness. The exclusive right granted to a patentee in most countries is the right to prevent others, or at least to try to prevent others, from commercially making, using, selling, importing, or distributing a patented invention without permission.

Under the World Trade Organization‘s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights, patents should be available in WTO member states for any invention, in all fields of technology,]and the term of protection available should be a minimum of twenty years. Nevertheless, there are variations on what is patentable subject matter from country to country. New Zealand, for instance, has taken a stance that software is not an invention and therefore, does not grant software patents.

10. What are patent trolls or Non Practicing Entities (NPEs)?

Patent trolls or Non Practicing Entities (NPEs) are organizations that exist solely for suing as a rent seeking or economic activity. Patent trolls usually strike when a startup is being acquired, is going public, or it announces the acquisition of large clients.

11. How difficult is it to file for a software patent, in jurisdictions that allow it?

Filing patents is a tedious process. Each step in the process of patent grant including filing, examination and closure is an expensive one. Companies with limited resources should in fact, give very careful consideration to a decision to file for patents. Many companies including huge market players file patents as a defensive measure rather than an offensive one. Therefore, it is important to focus on only high quality patents because only those provide a reliable and secure defensive cover. If a company has decided to invest huge sums of money in patenting activity, it would be prudent to have one good quality patent (for instance) rather than several patents of questionable merit and quality. What constitutes a good quality patent is dependent on the specific facts.

It is important to remember that patents are granted on a country by country basis and its prosecution is also on a country by country basis. Not all countries consider software a patentable subject matter. While patent applicants may file applications in various countries (which are signatories of the Patent Cooperation Treaty) with an advantage of the same priority date (i.e. the date on which the application was first filed in any country), a PCT application is helpful only to the extent of locking in on priority date. It does not however, ensure smooth patent grant procedures in all jurisdictions and the same is subject to local laws relating to patentable subject matter and examination rules. Several patent applications lose out in the examination stage in jurisdictions which have strict examination procedures and a tighter filtering mechanism for quality.

Given the above, there are obvious disadvantages to disclosure of technology a company may have spent a great deal of money and resources creating/developing. First of all, it makes otherwise confidential information public and makes the company more vulnerable to patent infringement suits. Secondly, it exposes the company’s business strategy or core technology asset to be accessed by entities in other jurisdictions who may have easy access to a patent in their country. There is no telling who may actually become privy to the company’s valuable technology assets and the company would not even be in the know if a potential competitor in a different country may use it to its advantage, especially in countries where software is not patentable. A lot of time, resources and money may therefore get wasted on waiting for a patent grant which may be well spent on actual innovation by the company.

Many high-tech companies, especially in the software product space, use trade secrets to protect their truly innovative and valuable assets (including business strategy forming the ‘secret sauce’ of their business, so to speak) because it is considered a much more effective mechanism to protect their IP without giving away or disclosing any part of their confidential information. Trade secret protection is much less complicated, much more economical and also quite effective in protecting a company’s IP assets compared to the complicated, tenuous and confounding patenting system. While there are specific trade secret laws in the US, in India we have to rely on implicit protections under the Contract Act.

[1]               See “How Life360 won its patent war,” at http://arstechnica.com/tech-policy/2015/03/how-life360-won-its-patent-war/

[2]                For an example see http://www.feld.com/archives/2012/08/a-software-entrepreneur-on-the-madness-of-software-patents-and-trolls.html

[3]               “More app developers sued over patent claims,” at http://www.theguardian.com/technology/2011/may/18/app-developers-sued-over-patent-claims

Open Source leaders discuss innovation, entrepreneurship and software patents.

Rohini Lakshané attended “Open Innovation, Entrepreneurship, and Our Digital Culture” in Bangalore on August 13, 2015. Major takeaways from the event are documented in this post.

Prof. Eben Moglen on FOSS and entrepreneurship

  • The culture of business in the 21st century needs open source software or free software because there is one Internet governed by one set of rules, protocols and APIs that make it possible for us to interact with each another. The Internet made everybody interdependent on everybody else. Startup culture needs free and open source software (FOSS) because startups are an insurgency, a guerrilla activity in business. The incumbents in a capitalistic world dislikes competition and detests that existing resources, such as FOSS, enable insurgents to circumvent some of the steep curve that they had to climb in order to become incumbents.
  • Hardware is developing in ways that make the idea of proprietary development of software obsolete. There is no large producer of proprietary software that isn’t also dependent on FOSS. Microsoft Cloud is based on deployments that do not use Windows but are based on FOSS. The era of Android as a semi-closed, semi-proprietary form of FOSS is over. Big and small companies around the world are exploiting the open source nature of Android.
  • Free software is a renewable resource not a commodity. Management is needed to avoid over-consumption or destruction of the FOSS ecosystem. Software is to the 21st century economic life what coal, steel, and rare earth metals were at the end of the previous century.
  • FOSS turned out to be about developing human brains. It turned out to be about using human intelligence in software better. Earlier universities, engineering colleges and research institutions were the greatest manufacturers and users of FOSS. Now businesses of all sizes are.
  • When Richard Stallman and Prof. Eben Moglen set out to make GPL free, they initiated a large public discussion process, the primary goal of which was to ensure that individual developers have as much right to talk and to be heard as loudly as the largest firms in the world. At the end of the negotiation process, 35 or 36 of the largest patent holders in the IT industry accepted the basic agreement to be a part of the commons. — Incumbents like people to pay for a seat at the table. Paying to have an opinion is a pretty serious part of the landscape of the patent system.

Prof. Eben Moglen on Digital India

  • Every e-governance project that the Indian government buys should use FOSS. The very nature of the way the citizens and governments interact can come to be mediated by software that people can read, understand, modify, and improve. An enormous ecosystem will come up — a kind of public–private partnership (PPP) in the improvement of governance and government services, which is far more useful than most other forms of PPP conceptualised in the developed world in the 20th century.
  • Everybody has a stake in the success of this policy. Several corporations are working against this policy as they once stated that they do not need FOSS.
  • The biggest market for both making and consuming software in the world is in India, because the science done here will dominate global software making, which in turn will define how the Internet works, which in turn will define society. One can’t develop the largest society on earth by reinventing the wheel. The government is going to understand that only the sharing of knowledge and the sharing of forms of inventing would enable the largest society in the world to develop itself freely and take its place in the forefront of digital humanity.
  • If every state government’s data centre across India is going to be turned into a cloud, one state might have VMWare, another might have AWS, and so on, it would be disastrous. To prevent this, all e-governance activities of every state government and federal agency in India could be conducted in one, big, homogeneous Indian cloud. This would enable utility computing across the country for all citizens, which would also make room for citizen computing to happen. When one moves towards architectures of omnipresent utility computing with large amounts of memory flatly available to everybody, one is going to be describing a national computing environment for a billion people. We can’t even begin to model it until we start accomplishing it.
  • Prof. Eben Moglen’s ambition is that there comes a time not very long from now when basic data science is taught in Indian secondary schools. The software is free and all the big data sets are public. A nation of a 100 million data scientists rules the world.

Keith Bergelt on the Open Invention Network

    • Over the past 10 years, Open Invention Network (OIN) has emerged as the largest patent non-aggression community in the history of technology. It has around 1,700 participants and is adding almost 2 participants every day. In the last quarter, OIN had approximately 200 licensees.
    • There is now a cultural transformation where companies are recognising that where OIN members collaborate, they shouldn’t use patents to stop or slow down progress. Where members compete, they choose to invent while utilising defensive patents publications. What we are doing is a patent collaboration and a technical collaboration that exists in major projects around the world.
    • OIN has been making a major effort since January 2015 to spend more time in India and China to be able to ensure that the technological might and expertise represented in the two countries can be a part of the global community, and that global projects can start here. “We can expect to leverage the expertise of the community to be able to drive innovation from here [India and China]. It’s not about IBM investing a billion dollars a year since 1999 and having some birthright to driving the open source initiatives around the world or about Google or Red Hat or anyone else. You have the ability to impact major changes and we want to be able to support you in the name of freedom of action as participants.”

Panel Discussion

Patent Wars and Innovation

  • In the past 5 to 7 years, patent wars in the handset segment of the information technology (IT) market have wasted tens of billions of dollars on litigation, and on raising the price of patent armaments. This patent litigation was purely an economic loss to the IT industry and it contributed nothing. If the patent system strangles invention, non-profit groups, non-commercial bodies, free software makers, and start-ups cannot invent freely.
  • Defensive patent publications, such as those made by IBM, lead to the gross underestimation of the inventive power and output of the company. People are struggling to find something to evaluate the productive output of an entity – startup, micro-industry or macro-industry. Patents are being used inappropriately and it’s part of the corruption of the patent system. Any venture capitalist (VC) who believes that either the innovative capacities or the potential success factors of a start-up are tied to its patents should know that there are only a minuscule number of cases where patents are the differentiator. The differentiators required in order to sustain business are how smart the people are, how quickly they innovate, and how quickly they are able to adapt to complex situations. We see a trend in the US of not equating patents with innovation. The core-developer and hacker communities are largely anti-patent.
  • However, the flip side is that if the FOSS communities do not patent defensively, i.e., acquire and publish patents for their inventions in order to prevent others from getting patents in one jurisdiction or another, patent trolls will eventually encroach on the communities’ inventive output. The only people making money out of this whole process are lawyers. It is slowing down the uptake of technology by creating fears and doubts in the system.
  • FOSS communities didn’t qualify everything produced in the 23 years of (Linus’) Linux, which would have let the service serve as stable prior art, preventing other people from filing patents. We can debate what is patentable subject matter in general or whether software should be patentable, but in the meantime if we can be proactive and file everything that we have in defensive publications and make it accessible to the patent and trademark offices here and around the world, we will have far fewer patents. We need to be activists in making sure that people can’t file patents that are representative of the creativity of a community.
  • The Chinese government has instituted a programme designed to produce defensive publications in order to capture all the inventiveness across their industries, to be able to ensure that the quality of what ultimately gets patented is at least as high.
  • The US has a massive repository called ip.com, which is with every patent examiner of the USPTO.
  • India does not grant software patents as per section 3(k) of the Indian Patents Act, but that doesn’t mean that no software patents are being granted. One of the empirical studies conducted by the Software Freedom Law Centre (SFLC) in India shows that 98.3% of the [telecom and computing technology] patents granted till 2013 went to multinational corporations. Almost none of the assignees are Indian.
  • In the context of the ongoing patent infringement law suits filed in the Delhi High Court by Ericsson [link]: The Delhi High Court has had a reputation of being very pro-intellectual property from the beginning.
  • Also, there is pressure from trade organisations. In August 2015, Ericsson along with ASSOCHAM invited the Director General of the Competition Commission of India to present a paper about why patents are good. It is essential to determine how the rules of conflict of interest apply here. This is exactly what the pharmaceutical industry would do. The only bodies who would object are Doctors Without Borders (MSF) or some local organisations who realise that high priced patented drugs is not what India needs and that we do not need to have the same IP policy as the US or Japan. We only need a different policy.
  • The Special 301 Report of the United States Trade Representative (USTR) is a big sham, and it suggests that India doesn’t have strict enforcement of IP law. India does, unlike China.
  • Accenture has been granted a software patent in India. The patent is about an expert present in a remote location transferring knowledge to somebody who is listening in another location. Universities offering MOOCs, BPOs, and many other services would fall under such a patent. SFLC spent four years trying to fight this patent. The first defence of Accenture’s battery of lawyers was that they won’t use the patent.
  • Patents of very low quality are being bought at very high prices. The tax system or the subsidy system for innovation regards all patents as equal. This is a pricing failure and that should be corrected by other forms of intervention. The pendulum has already begun to swing the other way. Alice Corp was the third consecutive and unanimous ruling by the US Supreme Court that abstract ideas are not patentable. Patent applications pertaining to business methods and algorithms are increasingly being rejected by the USPTO after the ruling.

Prof. Eben Moglen on Facebook:

Facebook is a badly designed technology because there is one Man in the Middle who keeps all the logs. The privacy problem with Facebook is not just about what people post. It’s about surveillance and data mining of web reading behaviour. It is a social danger that ought not to exist. I have said since 2010 is that we can’t forbid it; let’s replace it. It means bringing the web back as a writeable medium for people in an easy way. What I see as next-generation architecture could just as well be described as Tim Burners Lee’s previous generation architecture.

You have to be able to trust the Internet. If you can’t, you are going to be living in the shadow of govt surveillance, corporate surveillance, the fear of identity theft, and so on. We need to be able to explain to people what kind of software they can trust and what kind they can’t. Distributed social networking will happen; it’s not that difficult a problem.

An example of federated networking is Freedombox, a cheap hardware doing router jobs using free software in ways that encourage privacy. The pilot project for Freedombox has been deployed in little villages in Andhra Pradesh and Karnataka. These routers don’t deliver logs to a thug in a hoodie in Menlo Park.

By Rohini L, Reblogged from the The Centre for Internet and Society Blog.

Who owns the Copyrights on a product?

The Company where the engineers are employed for product development OR the Company employing them OR the product development team ?

This is an oft arising question in the software industry and of great relevance in fighting a corporate battle for claiming Copyright /IP and patent control of a product developed by the employees of a company. Logically speaking, the employees work under the overall product development framework of a company, and the development / coding structure is a joint effort of the whole team. The product overall functionality is defined by the Company and details multiple aspects :

  • The target market
  • The input and output parameters
  • The Call flow and the functionality within the product
  • The marketing pitch
  • And more….

But it’s the individual employee or the team effort that goes into the development and its their skill set deployed here. It’s a bit of a grey area and has been debated in court many a time. Its experienced in filing of patents globally and the right way ahead is to get a patent assignment deed signed by the patent filing individual / team for the same in favour of the Company in perpetuity and without any claims in the past, present and future on the same.

Extending the same logic to the product development team and the individuals threin, it would be best to structure the following plans in the employee contracts in an organization :

  • A Disclaimer from the employees clearly stating that all development work / concepts / and ideas executed in the due course of their employment with the organization are the rightful property of the Organisation and that the employee has no legal right over the same even after the termination of his contract with the Company.
  • A No- Compete/ Non Disclosure Agreement : in case of highly confidential and tasks involving a high degree of IP creation, its most important to get this agreement in place. A lot of knowledge is shared between employees in an organization in the due course of product ideation / development and this is valuable knowledge for competition. Employee ethics warrant a Non Disclosure of virgin knowledge developed within an organization with any outside and its good to strictly implement this in an organization.
  • Ethical Code of Conduct Agreement : Inclusions in this could be :
    1. Use of Company assets and information
    2. Non Disclosure
    3. Accountability and Zero tolerance

Implementing the above basics in an organization, add to the security layer in ensuring adequate protection and safeguards in any legal framework and action if needed at any time against violations in Copyright / IP ownership on products owned / developed by an organization.

Sold your company / Business ?? How to protect and handle the IPR transfer ??

As an entrepreneur launching a business in the IT and Software industry, one has his hand full with beating the competition and managing the overheads. The race is tough enough without employees stealing million dollar ideas and venture capitalists pulling the fast one during an acquisition. It is critical that start-up especially in the IT and Software Industry build a strong IP portfolio and take necessary precautions in order to safeguard their business interest. But why go into the trouble of registering your software code with the government or patenting your innovation when the uncertainty of future investment and business is looming over every start-up? The answer is simple. By registering the invention or source code, a start-up can not only protect their work, but also create potential for alternate sources of revenue by enforcing the rights vested in such a registered work.

Take for example the following factual scenario. A software and IT services start-up (Alpha Tech) develops a software platform titled PRIME. A combination of SaaS and PaaS, Alpha Tech invests extensively in hardware as well as software development and maintenance. While the software development process is duly recorded, no copyright registration is sought.

A second company (Beta Tech) seeks to acquire Alpha Tech. Negotiations ensue and it is agreed that all assets except for “Patents and other IPRs” shall be transferred to Beta Tech vide a Share Transfer Agreement. The IPRs and Patents are separately transferred to a third company which was incorporated by the shareholders of Alpha Tech and under the understanding of this “Business Transfer Agreement” with Betatech..

A year after the execution of the Share Transfer Agreement, it is found that Beta Tech is continuing the sale of PRIME through Alpha Tech which is now owned and controlled by Beta Tech.

Left with little choice, a copyright infringement suit is preferred by the former Shareholders/Directors of Alpha Tech with whom the Copyright in PRIME subsist. To assert the rights of the Copyright owner, it is essential to first establish that the underlying work was developed by the individual/company asserting the copyrights. In this particular case, it was also required to establish that the copyrights in the software program PRIME were assigned to the third company on or about the time Beta Tech took-over Alpha Tech. The lack of copyright registrations as well as ambiguity in the agreement as regards to the IPRs transferred to the third Company created several loopholes the impugned party to exploit.

In order to circumvent the loopholes, at the ex-parte stage itself, the petitioner, Alpha Tech filed an application for ad interim injunction to restrain the use of his software programs by Betatech as well as appointment of local commissioners to visit the defendants’ premises and raid them. On establishing a prima facie case as regards to the ownership over the software programme PRIME, the court granted the ex parte ad-interim injunction and local commissioners were appointed to capture the copyright violations by the Defendants.

While it is an uphill task to establish copyright infringement in cases such as the one under scrutiny, a clear chain of documents showing ownership/assignment of copyright in the software program in favour of the one asserting it coupled with suspected instances of infringement can be leveraged to get an ex-parte ad interim order. The order can be further enforced to protect the copyright owners of the software programs.

How do you handle customer requirements of “depositing” product source codes?

escrowIn todays exacting times, large corporations like to secure their business continuity on IT products and services sourced from smaller companies, by seeking access to the basic product source code. While the smaller IT companies spend man years developing cutting edge technology solutions, this sharing of the source code could kill their future and business.

The way out is an “Software Escrow Account” a win-win solution for both !!!

With due protection and security built into the storage / access and building adequate clauses on infringement and penalties at the customer end, this is a well established and acceptable process, helping  maximise the business potential for both.

The changing paradigms of the software and IT industry as well as increasing customer expectations have raised the stress on start up software and IT companies. On the one hand software start ups face threat of losing their valuable software to the infringers and on the other hand their clients demanding source code of the software for enabling better management of customizations are on the rise. Now here lies an underlying problem, the moment these software companies reveal their source code to their clients, the software would become vulnerable to infringement as there will be a high probability that a new product could easily be developed/ reverse engineered. On the flip side if they don’t reveal the source code, the client would not be satisfied and eventually these companies would lose their client base in an increasing competitive market.

Legally speaking, the standard approach in such situations would be to enter into Non disclosure agreements and non compete agreements which can only offer limited protection. These measures are merely paper measures which assert already existing rights of the software developer and actually fail to protect the copyright in the existing software product as the source code which when revealed by these software companies to the clients is hard to detect if it gets infringed.

The alternative therefore is to take affirmative measures which would prevent such an infringement. Escrow agreement and using the technology protection measures to give only limited access to the source code are win-win solutions for both client and the software developer whereby:

  • The client would have the desired access to the source code subject to terms of contract.
  • The Software developer has rights under the contract which would in-turn ensure that the client could not reverse engineer the product.

Successfully implementing these legal solutions can help software industry to maximize its potential and minimize the risks by using legal tools that have been tried and tested in finance and banking industry.

Guest Post contributed by Taron Mohan (Next Gen Solutions) and Aasish Somasi (Anand & Anand)

What is your company’s IP Score?

In the scramble to get to market, protecting the IP of your invention sometimes takes a backseat. This is a mistake and one that can have potentially damaging long-term effects. In this article we examine how developing a proactive IP Strategy can mitigate IP risk for a startup.

Startup Priorities

Most startups begin with a good idea and an identified solution that solves a key need in the marketplace. The idea may come to an individual as an epiphany or could be a group effort through a more thorough due diligence of the market place needs. Going from this idea to an actual startup usually involves several rounds of ideation and vetting.  It also results in  one or two champions of the idea ending up as the founders of the new company. Going from this stage to a functioning startup requires several intermediate steps:

  • (a) Assembling a core technical and business team that understands the problem that needs to be solved, and more importantly how the solution addresses the market,
  • (b) Completing a more thorough product due diligence of the market and competition and defining a viable business case for the product through validation from potential customers,
  • (c) Defining the first product prototype and a requirements specification that will help scope the efforts required for the same, and
  • (d) Preparing the necessary collateral to present to potential partners and investors to raise the initial round of investment.

Fig-1-Alternate-e1390009832438-300x265

Once an idea advances to the stage where a successful startup is formed, one or more of the above steps will be iterated in various forms. In many instances the company has to repeat the steps with changes in various parameters – the so called ‘pivot’ – in terms of product definition, core team, market addressed, or business value proposition. Even a successfully funded company will continue iterating on some of the basic four steps identified above as it executes towards delivering its product, or prepares for a subsequent round of funding. All of the above steps are critical and require resources and money. At each intermediate step the company is often required to prioritize one over the other to balance and maximize their opportunity for success.

In most startups one of the missing, but known, pieces in the early planning, the ‘Elephant in the room’, is an Intellectual Property (IP) Strategy. An IP Strategy addresses questions like: How defensible is the technology behind the product? What is the differentiable and novel aspect of the technology that we can support? What are the key patents that lie close to the product that we are designing, or the service that is being offered? Who are the established and smaller companies with IP and products in the given space? How should the company go about identifying and protecting the White Space? What are the key steps the company should take now that will maximize the long term value creation associated with the business plan of the company?  What actions need to take place towards filing new patents?

Why IP Lacks Priority in Most Technology Startups

With the exception of startups in pharmaceutical companies (especially new drug development), medical devices, and certain biosciences domains, most startups in the high technology space tend to ignore the urgency of developing an IP strategy during early stages of the company.

There are various reasons, some of them justified, behind this trend. From my experience in my own startups and the startups I have worked with, the reasons for not addressing patents early-on seem to converge on certain themes.

  • Too busy fighting fires – Founders feel that they are too busy doing ‘other’ things – getting the engineering prototype going, refining the business and marketing plan, raising money, and building their team.  Worrying about IP Strategy is the last thing to enter their minds.
  • Lack of bandwidth of key resources – Startups can’t afford their main architect, or the CTO to be distracted from doing his/her current job. Typically there is one person, or very few in the company who understand the complete technology solution. These folks are typically so overloaded with responsibilities and requests for their time and knowledge, that having another assignment – to lie out an IP Strategy – may just be the straw that breaks the camel’s back!
  • Too expensive – The costs associated with completing this work, and the time it will require from key employees, (keeping them away from their regular work) are too high.
  • We don’t care or we will be long gone –  One of the most surprising reasons for startups to delay their patents and IP strategy work are: they don’t care, their investors don’t care, their customers don’t care, and the reason that tops it all – we won’t be around by the time we need to worry about the patents!

IP Score for Startups

Given the potential for damage, it behooves startups to evaluate their IP risk. This allows startups to objectively decide whether or not investing in developing an IP strategy is worthwhile for them or not.

In seeking to quantify the urgency of having an IP Strategy and patents for a particular company, we need to identify a few parameters that have an impact on the IP of the company in the context of its landscape.  Here are a few parameters, in no particular order of importance, that influence the overall IP Score of a company.

1.    IP Relevance for the Technology Segment (5 = Very Aligned, 0 = Totally Misaligned (the technology segment may not require a well thought out IP Strategy)

IP Relevance index for the technology segment reflects the importance of patents and Intellectual Property for a given company’s product segment. For example, typically, any pharmaceutical company would by definition have a very high IP Relevance index since the whole company’s success is based on a unique drug or molecular structure that gives the company an unfair advantage vis-à-vis competition. Some metrics that could help us refine the IP Relevance index are following:

  • Business Valuation, Core Technology Correlation Index – to what extent is barrier-to-entry based on first mover’s advantage vs. technology differentiation?
  • To what extent can the technology implementation help differentiate the offering in the market place?
  • Mature Companies’ IP Position – what is the IP position of established large companies in the product space of the given company?
  • Competitive Startups’ IP Position – What is the IP position of other competing startups in this space?
  • Licensing/Partnership Strategy Index – Has the company laid out a cross-licensing and out-licensing plan for key technology pieces?
  • Considering some of all of the above factors we can come up with an IP Relevance Index for a company or a startup. We could define a number between 0-5. An IP Relevance index of 5 means that the relevance of having a mature IP Strategy is very critical for the product, and a score of 0 meaning that patents may not play a big role in the success of company’s product strategy.

2.    IP Maturity (5= Very Mature, 0 = No IP Maturity)

Yet another related parameter to quantify IP Score of a company or startup is IP Maturity. IP Maturity refers to the work the company has already done, and how effective is their current overall IP Strategy in maximizing the overall valuation of the company. Following are a few things that have high correlation with IP Maturity.

  • Filed Patents, Patent Applications, Provisionals and Trademarks – A higher number here means higher IP maturity.
  • Founders or Core Employees with patents under their belt in relevant technologies. This is yet another indication of how mature the overall thinking of the organization is and points towards a higher score for IP Maturity.
  • Steps towards some kind of IP Strategy – Companies that have well defined core architecture or product requirement documents, well documented peripheral idea and even a sketch of product or strategy roadmap would score high for IP Maturity as well.

3.    Ease of Implementation of an IP Strategy (5 = Very Easy, 0 = Very Difficult)

This attribute defines the ease with which a sound IP Strategy could be defined or implemented within a company. Again, a score of 5 would mean it would be very easy to implement an IP Strategy and a score of 0 would indicate an uphill battle when we attempt to implement an IP Strategy.

  • Experience and Maturity of Core Technical People – Overall technical understanding and experience of the core technical team with patents is generally a good indicator of how easily patents and IP Strategy could be implemented.
  • Management Drinking the IP Kool-Aid – By looking at past track records of the company management, and their IP track record, we can get a fair assessment of how much importance and urgency the management gives to patents and overall IP Strategy.
  • Resource Availability – The amount of cash available or allocated for patents and access to key technical resources that can help in creating the IP Strategy also is an important factor.
  • Published White papers or technical papers by founders or key employees in closely related or relevant areas, or even past publications in related or unrelated topics is again a good indication of ability to get access to the technical details of the products for implementing IP Strategy.
  • Documentation of code, innovation, and other technical details within the company are necessary aspects for implementing IP Strategy. More documentation of code and Whitepapers related to product make the job of IP landscaping, white space scoping, and patent drafting much easier.

And the IP score is…

We define the IP Score as the average of the above three metrics  – IP Relevance, IP Maturity, and Ease of Implementation of IP Strategy.

This is a number between 0 and 5.0. A High IP Score indicates a well thought of IP Strategy and indicates the company has taken steps towards building a defendable and distinguishing Patent Portfolio.

IP Score = Average(IP Relevance, IP Maturity, Ease of Implementation of IP Strategy)

IP Score vs. Maturity/Stage of the Company

In discussion with a seasoned entrepreneur friend of mine we came up with another interesting way to look at the IP Score of a company. If we view the IP Score of a company vis-à-vis the maturity or the stage of the company, it reveals interesting things. The maturity or the stage of the company is related to its overall progress towards product delivery, revenue growth, and financial position. Plotting IP Score vs. Company Maturity helps us identify the urgency of IP Strategy for a particular company.

An example of a company with high IP Score and high company maturity (top right quadrant) is Pfizer. Pfizer has strong patent portfolio of drugs like Lipitor and is a fairly mature and successful company in the Pharmaceutical domain.  Pfizer may still end up having overall high need for continued investment in IP Strategy (since the IP relevance of the technology domain is very high) but it is a fairly mature company in its own right.

The companies that lie in the bottom right quadrant (Low IP Score and High Company Maturity) have great strategic risk profile and are the strongest candidates for defining their IP Strategy at the earliest possible opportunity.

The companies with High IP Score and Low Company Maturity (top left quadrant) are the ones that have a solid IP Strategy from the get-go.

The companies in the bottom left quadrant (Low IP Score and Low Company Maturity) are the one’s that have time to create a solid IP Strategy to win in the marketplace.

Where does your company lie in this map?