India acceded to the to Madrid Protocol in July, at a time when its IT industry is blooming. Lucy Rana of S.S. Rana & Co reports
The economic reforms of 1991 kindled the growth of Indian industries and the nation witnessed significant changes such as the eradication of import restrictions, the genesis of foreign competition, privatisation of public sector industries, and a fostering of the the production of fast moving consumer goods (FMCG). Indian industry accounts for 28 percent of the country’s GDP and employs approximately 14 percent of the total workforce. In view of the immense growth, Indian industries can be perceived as a key factor in escalating the Indian economy to a developed status.
Indian industries are constantly witnessing technological advancements, as well as strong competition internationally as a consequence of which most of the industries and firms in high-end niche areas are proactively seeking intellectual property-based growth strategies. Most of Indian industries are relying on intellectual property rights as effective tools for growth and advancement. In recent times, the filing of patents and trademarks by Indian industries has significantly increased, representing an increased attention by Indian inventors and creators towards new ideas and concepts. The recent accession of India to the Madrid Protocol is also expected to lead to impetus growth and re-alignment of business strategies by Indian companies in order to beneficially adapt them to the changing regime.
IT industry and IP
The formulation of laws and policies governing IP has a huge impact on the various sectors of the economy, including information technology.
The Indian IT industry has been one of the key driving forces that has been inching-up India’s economic growth. The IT industry in the past few decades has gradually evolved as a major contributor to India’s GDP and has played a vital role in driving growth of the economy in terms of employment, exports, revenue generation and standard of living. Reportedly, the domestic IT market grew 16.7 percent between the fiscal years of 2009-2010 and 2011-2012.
As there has been widespread innovation in the field of IT, IP-focused growth strategies are being widely adopted and retaining intellectual capital is becoming, day-by-day, a critical issue. In comparison to other nations, the use of IP as an effective tool for protection has been relatively low. However, numbers show that in recent times, there has been a steady growth in the number of patents filed by IT companies. Numerically, Infosys, which is one of the largest IT services companies in India, topped the list of Indian IT companies filing patents. According to the data compiled by equity research firm Barclays (from January to September 2012), Infosys filed 159 patents, followed by TCS and Wipro, which filed 43 and 4 patents respectively at the US Patent and Trademark Office. Thus, there has been an upsurge in IT firms creating and protecting IP, and a large number of IT-based multinational corporations are also exploiting the IP creating potential of the Indian IT industry.
It has been observed that foreign-owned firms operating in India seek IP protection more frequently than IT companies of Indian origin. However, in the last few years the nation has witnessed an escalation in the rate of patenting activity in India and the search for IP protection by more and more IT firms. Meanwhile, in order to encourage emerging ventures and offer support for innovations, the government of India has recently announced a scheme that aims to provide financial support to developing technology companies in filing international patents.
Software patenting in India
Software per se is not patentable, however, specific software products that have a useful practical application are patentable. The Indian Patents Act of 1970 does not protect mere ideas. Moreover, the act also provides certain items that although can be categorised as inventions are not patentable. Thus, the legislative intent behind drafting the act was to eliminate spurious claims aimed at creating unfounded monopolies and encourage innovation that benefits the public.
Protection under the Copyright Act
Software/computer programmes are entitled to protection under the Copyright Act of 1957 as computer programmes/code fall under the definition of “literary work” in the Copyright Act. Apart from being prone to copyright infringement, computer programme are also susceptible to the vices of modern technology facilities, which include not only piracy but also plagiarism of the entire programming code.
The road ahead
With the increase in international competition and recent upsurge in innovations by Indian IT companies, it is expected that in the near future the Indian IT industry will create new and valuable IP and accord adequate protection to them through relevant IP tools. The government initiative to encourage innovations by conferring financial support to Indian IT companies in filing international patents is praiseworthy.