Ownership and Copyright of Software in India

The advent of the computer system brought about a new landscape of innovation in the world of technology and has been almost single-handedly transforming the technology and network space. Any computer is run by two operative platforms – software and hardware. From a layman’s point of view, we can understand hardware as the tangible component and software as the intangible component. Any intellectual property which is granted to either of these components is also different from one another.

Often, such hardware components can have protection under the patent laws of the country considering it pertains mainly to the physical devices, which may include computer systems or computer components such as disk drives, memory chips, bus architectures, and monitors. Accessories for computers, such as a keyboard with improved construction, are also suitable for patenting.

However, most of the laws regarding Intellectual Property (IP) Rights or, for emphasis, the IP Rights ownership of software are still clouded with several intricacies. Any form of intellectual property rights seeks to reward innovation, novel and creative ideas for the exclusivity and change it brings to the creator’s innovation.

Copyright Protection of Software

As per the Indian Copyright Act, 1957, Section 2 (O), you can protect your work of software coding and programming from reproducing, copying, translating, or adapting in order to save from copyright infringement software. It is considered as an intellectual property and is protected in India.

• Software is protected under copyright laws, with the person who writes the software’s source code, or the author being vested with the ownership of copyright over the software.
• Copyright does not protect the idea or the facts alone, but it protects the way or in the manner it is expressed and put across in a tangible form. Therefore, only the final tangible medium of expression that can be reproduced is granted copyright protection.
• Historically, computers and computer programs were not granted any such copyright protection because, until a time, computer programs were viewed as intangible objects. The copyright laws were further extended to include machine-readable software codes with the same copyright status as ‘literary works.’
• The Copyright Act of 1957 includes computer programs, tables and compilations, including computer databases, as a part of the definition of ‘literary work’.
• Section 13 of the Act provides for the categories of work in which the copyright subsists, which includes original literary work.
• As per the Indian Copyright Act of 1957, computer software that does not lead to a technical effect is granted protection under copyright law. For granting copyright protection, computer software is required to be original and sufficient effort and skill must also be put into it to signify its originality.

 

Copyright, Your Employees & Contractors

As discussed above, unlike other IP rights such as patents, trademarks, etc. copyright does not require a formal registration to own the IP right over the work. Although, formal registration of the copyright has its advantages in the case of proving IP rights in the courts in cases of disputes, infringements, etc.

In a software development company or any other company, there are two sets of workers or individuals who help in building software or aid in providing the services.

• Those who have been hired to perform the tasks and are on the payroll for their daily performance at work.
• Contractors or freelancers who are hired to provide a particular or specialized service and, at the completion of such service, are eligible for a certain fee from the company and, thereby, their contract with the company comes to an end.
• The company enters into an agreement with both of these sets of individuals, wherein a clause relating to the IP assignment clears the air as to who owns the IP right when performing services for the company.

 

Typically, employers would enjoy the right of ownership of any IP right created by their employees. A separate IP assignment contract may be entered into with the employee. However, the usual practice has been to include the assignment rights under the employment agreement.

Note: Software or any such material created by employees is considered work made for hire. Thus, ownership lies with the employers upon creation. The IP assignment clause under the contract is very carefully drafted to ensure that no IP remains with the employee for any creation.

For a software development company, if an employee writes the code of software, even despite being the author, the copyright for such work would remain with the employer or the company.

It would be interesting to understand a scenario wherein an individual has created a software code in their capacity during the official working hours of the company they are employed with. In such a scenario, a company or the employer may have a claim over the software if it falls within the scope of their employment, i.e., if it is related to the industry or scope of services the company performs.

A company may also choose to involve freelancers or vendor contractors to perform services for them or even to develop software for the company. In such a case, it is always better to safeguard the IP rights of the company by entering into a work-for-hire agreement with such freelancers, with the freelancers transferring any such right of ownership over the work, created specifically for the company to vest with the company itself.

It is upon the company to be aware of the same and ensure such a contract is entered upon with the freelancers. In the United States, for example, there are no mandates that any of the work created by the freelancer would result in a work for hire unless a contract specifically mentions the same. Therefore, it becomes essential for any company engaging any freelancers, vendors, or contractors to enter into a separate contract wherein the ownership of the IP rights is transferred to the company.

When to have the conversation about copyright with your development team?

In the interest of both parties, it would be the best practice to discuss at the very initial stage regarding whom the copyright should vest with. Ideally, an in-house software development team consists of individuals who are their employees; thereby they ought to have an IP assignment clause under their employment agreement. However, if they have not agreed upon such a clause, the employer should ensure an IP assignment agreement is entered upon with the development team.

• Such assignment and ownership of copyright will come into effect upon completion of the development of the software. It is also noteworthy, that such an agreement should explicitly state that it was a ‘work-made-for-hire’.
• If any developer would like to have any right to use the software at a later stage or in different projects, the developer must negotiate a license to the software in the same way any third-party would.
• Therefore, every well-written software development contract will contain a clause designating the code a work-made-for-hire, assigning the code to the client on completion, or granting the client a license to use the code on completion.

 

Infringement of Copyright & Legal Remedies

Section 51 of Copyright Act, 1957 defines infringement of copyright and states that a person infringes copyright of another if they unauthorizedly commit any act which only the copyright folder has exclusive rights to do.

Civil remedies to copyright infringements are provided in chapter XII of Copyright Act, 1957 granting injunction and damages for copyright infringement and criminal liability provisions are provided in chapter XII of Copyright Act, 1957 wherein abetment of infringement is defined under Section 63 of the Copyright Acts, 1957 and is also unlawful and punishable with imprisonment of up to three years and a fine up to INR 2 Lakhs.

• As per Section 63(B) of the Copyright Act, 1957, a person who knowingly uses the infringing copies of computer software commits a criminal offence punishable with imprisonment for not for not less than seven days, extendable up to three years and a fine not less than INR 50,000, which may extend to INR 2 Lakhs.
• Section 62 of the Copyright Act, 1957 entitles a Plaintiff to file for a suit for injunction against infringements within District Court of the jurisdiction where Plaintiff resides or carries on business or works for gain.
• Indian Courts, in recent times, have accepted petitions against unknown Defendants or persons identifiable through their IP Addresses in Internet law related litigation.

 

Popularly known as John Doe order in the US Courts, India had adopted the principal of accepting petitions against unknown persons in defamation cases or Intellectual property infringements, including cases relating to software piracy. This is a positive legal enforcement strategy adopted by Indian Courts to resolve internet related litigation where defendants cannot be identified at the stage of filing of the position.

Examples of Software Copyright Infringement

• Downloading software or programmes from the internet is a typical example of infringement. Third parties upload the software on the internet for free or at very few charges.
• Another example of copyright violation is end-user piracy. The end-users utilizing the unlicensed software on their systems are violators.
• On occasions, the computer dealers pre-install software on the systems even before the sale. Also, some dealers use one synchronization license copy of the software for many systems. This is also a form of copyright infringement.
• The sale of illegal duplicate copies of software is the most common violation of copyright.

 

The following activities do not constitute infringement of software copyright:

• Making backup copies by the owner of software/program as a safety measure against loss or damage.
• Creating software copies for personal use only.
• To study the information and future scope of the software (intimating owner).
• To test the feasibility and functionality of the software.

 

Conclusion

Although it is not mandatory, copyrighting your work right away can not only help gain a lot of benefits but avoid numerous potential conflicts and issues in the future too. Besides, while you aim to always keep up with technology, you must make sure to always keep up with the laws associated with such technologies.



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