Software Patenting: A Huge Blow To Indian History

THE latest Patent ordinance has already raised strong protests from the people for favouring global pharmaceutical MNCs. What has gone relatively unnoticed is its attack on the software industry, where computer programmes (read software) can now be patented. The new ordinance has supposedly been brought in to make the Indian Patent Act TRIPS compliant. The Old Act (modified in 2002) has exactly the language given in TRIPS on this count, so it was fully TRIPS compliant. Therefore, the attempt to sneak in software patenting under the guise of meeting the TRIPS deadline is completely mala fide. Even worse, this major step has been taken bypassing the parliament and without any debate in the country.

Kapil Sibal, the minister for science and technology is reported to have said that patenting of software is due to the demand of the Indian software industry whom it will help. We understand from government sources that Nasscom is supposed to have supported this measure. Considering that India is known to have very few software products, a highly protective Intellectual Property regime in software, which includes even patent protection, can only harm the Indian industry. For this reason, no developed country except the US has provided for patent protection in software. In view of this, the only conclusion is that the government of India has given in to the pressure of the US government and US companies, with Nasscom acting at their behest.

The Indian Patent Act, as modified in 2002 had made non patentable the following:

“a mathematical method or a business method or a computer prgramme per se or algorithms”.

The recent amendment states instead:

“a computer programme per se other than its technical application to
industry or a combination with hardware; a mathematical method or a business method or algorithms;”


If we go beyond the legalese, the amendment means that while a mathematical or a business method or an algorithm cannot be patented, a computer programme which has a technical application in any industry or which can be incorporated in hardware can be patented. Since any commercial software has some industry application and all applications can be construed as technical applications, obviously it opens all software to patenting. That the government would even contemplate bringing an entire industry under patenting without any semblance of a debate or without it being placed in the parliament must rank as an act of betrayal of the Indian people. By government’s own admission, the only issue on which there was a time constraint was to bring in the product patent regime and make it TRIPS compliant by end 2004.

There was no such pressure on the software patenting where we were already fully TRIPS compliant. So why was this added to the Patents Ordinance? Under whose pressure? Or was Steve Ballmer’s (president of Microsoft) presence in India in this period merely a co-incidence? Is it also a co-incidence that Microsoft and Nasscom co-hosted some programmes together?

Why is patenting a problem for the software industry? After patenting was allowed in the US, smaller developers and independent software companies have been under severe attack. Large companies have the ability to buy up patents, keep on filing patents and can tie up smaller companies in costly law suits for years. Therefore, moving from a copyright regime to a software patenting one, simply makes the cost of developing new software many times higher. Copyright is virtually automatic, there are no costs associated with copyrights; patents have to be filed and filing imposes fairly high costs. If they have to be filed in a number of countries, the costs multiply.

As India has very little of software products, its industry supplying “bodies” (body shopping) to develop software for global giants, such a regime would push up the costs of the users of software as a whole and also make it almost impossible for Indian companies in the future to break into the global software market with its own products. Indian software industry would be much better served by taking the Free/Open Source route. This would not only make the costs to the user much smaller, but also make it possible to generate innovative products without being shut out by debilitating patent battles.

Why is software patenting so dangerous? Software patents do not patent programmes; if they did only that, it would be a minor irritant. What they do is to patent the idea on which the software is developed. And if ideas can be patented, then a range of applications can be claimed to have infringed some idea or the other. Unlike copyright, which only protects the code as written, patents protect the idea underpinning the code. Thus, copyright protection protects what we write; others can copy the idea but not the actual code. Thus we can copy Shakespeare’s plots (which is also what Shakespeare did) but not his language.


Patent protection is much broader. It carves out an entire area within which others can stray at their peril. Quite often, neither the patent holder nor the others know the extent of the area which it covers. This is what leads to litigation and can be used by large companies to drive out competition. Richard Stallman, the co-developer of the GNU-Linux operating system and proponent of Free Software says, “Software patents are patents which cover software ideas, ideas which you would use in developing software. That is what makes them a dangerous obstacle to all software development.” It is then possible for companies such IBM, (who held 9,000 patents in 1990 and probably hold many times that number today) that any product violates an idea contained in any of these patents. As neither the patent office nor the judicial system understands the concepts and ideas on which software is built, they then tie-up smaller companies for years. Even if a completely novel idea is used by a company, IBM (or Microsoft) could say that the package as a whole violates some other patents that it holds and therefore the smaller company should cross-license its idea with IBM in lieu of IBM allowing them to use these patents. Both tactics have used by companies against its rivals, with the large and well-heeled companies wielding an obvious advantage.

One of the classic patent cases was the data compression technique used in reducing the size of data files. The LZW compression algorithm was granted a patent in 1984, well after a number of companies had introduced into their products. They had either to re-engineer their product or pay high license fees. Even today, all software using the GIF format has to pay royalties. Public Encryption key software could not be used again for similar reasons. US-based holds a patent on ‘one-click shopping’; any company that wants to use a similar idea can be sued. From zipping of files to implementing an automatic recalculation function in spread sheets, all have come under attack for violating an idea contained in some patent One can go on to a long list of such patents and patent cases, all of which hinge on the US law allowing software patenting. It obviously creates enormous hurdles for software developers. There is no way a developer can even figure out what has been patented and only finds it out after some company takes him to court. As long as the software is not successful, nobody bothers. But if it succeeds in the market place, it would be sure to face challenges from major software companies.


For those who are suggesting that patent protection helps innovators, a look at India’s own development of its software industry would be of help. India started its software industry only after IBM was driven out of the country. Before that, there was no software industry worth the name, with software and hardware being imported from IBM. Once IBM left, Indian computer companies developed computers using the Unix operating system, which was in the public domain. This led to developing a large number of skilled software professionals with Unix experience and were also writing high-level applications for making the entire computer system work. With companies such as HP and Sun challenging IBM, Unix became the de facto operating system platform for such companies. The demand in the Silicon Valley for Unix programming skills stemmed from this turn of events. This led to Indians establishing a major market presence there, with companies such as Wipro opening Unix support teams. If either of the two conditions did not exist, Unix being available in the public domain and IBM having been kicked out, the Indian software industry may have well followed the path of the Indian hardware industry.


In Europe, there is a huge opposition to software patenting, with small business organisations, leading scientists, economists opposing this measure. The European Parliament has been forced to defer software patenting several times. The European Commission put forward a proposal in February 2002 for a Directive on the Patentability of Computer-implemented inventions, also referred to as the Software Patents Directive. The directive aims to clarify what is patentable and what is not at a European level, given the many different national laws on patenting.  In this Directive, only software, which is embedded in hardware, is sought to be opened for patent protection.

It should be noted that the directive does not aim to make it possible to patent pure computer programmes: it would only apply to computer software integrated into an appliance. This makes it much more restrictive than the amended Indian Patent Act, which opens out any technical application of a programme to industry or its realisation in hardware for patenting. Even with this restriction, the critics of the EU directive have pointed out that a patent on software is in effect a patent on an idea, while traditionally patents have been restricted to concrete physical inventions only. By making this amendment, it is possible to implement algorithms in hardware and then claim patent protection for this. Once an idea can be patented if it is burnt in to hardware, the argument for extending it to a software implementation gains ground. In fact, the first breach in the US for making software patentable came through this route.

Most small business organisations in EU have opposed the directive, as in their view this would favour large companies over small, innovative ones. The software community, particularly the EU Open Linux community, have said that it would have massive ramifications for developments such as open source software. A number of countries have opposed the directive, the latest being Poland. At present, even this limited patenting of software in EU is under hold. That India, which has a much greater stake in software should put in its statuettes something so retrogressive does not speak well of this government. That it should do so without even a semblance of debate is doubly unfortunate. We hope that good sense will prevail and it will take out software patenting clause from the Act that it puts before the parliament.