Combating threats of copyright infringement of software

Anirudh Rao 5^th Year LL.B, University Law College, Bangalore

Introduction: Over the past several years, advances in computer software have brought us time-saving business programs, educational software that teaches basic and sophisticated subjects, graphics programs that have revolutionized the design industry, Internet applications that help connect us with other computer users, and an increasingly complex variety of computer games to entertain us. As the software industry grows, everyone stands to benefit for it enables us to perform tasks with a greater degree of efficiency and accuracy. Compared to literature, music and movies, computer software is a relatively new form of intellectual property. Nevertheless, software is protected under the very same laws.

The copyright infringement of software or software piracy refers to practices which involve the unauthorized copying of computer software. Pirated software hurts everyone—from software developers to retail store owners, and ultimately to all software users. Furthermore, the illegal duplication and distribution of software has a significant impact on the economy.

Dimensions of the problem: Copyright Infringement is extremely common in countries like United States, Mexico, China, Indonesia, Russia, Brazil, Zimbabwe and several other parts of the world[1]. Most countries have copyright laws which apply to software, but the problem seems to lie in its enforcement and differences in legislation for e.g. Software authors suggest that copyright infringement negatively affects the economy by decreasing the profits that allow for further development and growth within the software industry[2].

The U.S. is the country most affected, as they provide about 80% of the world’s software[3]. Software counterfeiting is claimed to be a large problem by some, resulting in a revenue loss of US $11-12 billion, China and Vietnam are the biggest offenders[4]. Furthermore, The Fourth Annual BSA and IDC Global Software Piracy Study revealed that 35% of the software installed in 2006 on personal computers (PCs) worldwide was obtained illegally, amounting to nearly $40 billion in global losses due to software[5]. The rate of copyright infringement of software in the Asia-Pacific region has been estimated at 53% for 2004[6]

Types of copyright infringement of software: It might be surprising to know that one might be unintentionally pirating software thus leading him into a piracy trap. Therefore it is important to educate oneself about the types of copyright infringement of software.

1. Softlifting: Softlifting occurs when a person purchases a single licensed copy of a software program and loads it on several machines, in violation of the terms of the license agreement e.g. “sharing” software with friends and co-workers and installing software on home/laptop computers[7].

2. Counterfeiting: When unauthorized copies of software are duplicated and sold as “legitimate copies” produced or authorized by the legal publisher (typically the counterfeiter will use trademarks to make the product look like legitimate software[8]).

3. Internet Piracy: Internet piracy is the uploading of commercial software (i.e., software that is not freeware or public domain) on to the Internet for anyone to copy or copying commercial software from any of these services[9].

4. CD-R Piracy: CD-R piracy is the illegal copying of software using CD-R recording technology. This form of piracy occurs when a person obtains a copy of a software program and makes a copy or copies and re-distributes them to friends or for re-sale. President Bush in 2005 signed the Family Entertainment and Copyright Act making CD-R Piracy a federal felony[10].

5. Internet Piracy: Internet piracy is the uploading of commercial software (i.e., software that is not freeware or public domain) on to the Internet for anyone to copy or copying commercial software from any of these services. On June 27, 2005, the US Supreme Court issued its ruling in MGM v. Grokster, ruling that the providers of software that designed to enable “file-sharing” of copyrighted works may be held liable for the copyright infringement that takes place using that software[11].

6. Unrestricted client access: Unrestricted client access piracy occurs when a copy of a software program is copied onto an organization’s servers and the organization’s network “clients” are allowed to freely access the software in violation of the terms of the license agreement[12].

7. Hard-disk loading: The US Supreme Court in Mai systems corp. v. Peak computer, Inc[13]. described Hard-disk loading as one that occurs when an individual or company sells computers preloaded with illegal copies of software. Often this is done by the vendor as an incentive to buy certain hardware.

8. OEM Piracy: Some software, known as OEM (original equipment manufacturer) software, is only legally sold with specified hardware. When these programs are copied and sold separately from the hardware, this is a violation of the distribution contract between the vendor and the software publisher[14].

9. Commercial Use of Noncommercial Software: Using educational or other commercial-use-restricted software in violation of the software license is a form of software piracy. Software companies will often market special non-commercial software aimed at a particular audience. For e.g. many software companies sell educational versions of their software to public schools, universities and other educational institutions. However, it should be noted that in the US, the first-sale doctrine Softman v. Adobe[15] and Novell, Inc. v. CPU Distrib., Inc.[16] ruled that software sales are purchases, not licenses, and resale, including unbundling, is lawful regardless of a contractual prohibition. The reasoning in Softman v. Adobe suggests that resale of student licensed versions, provided they are accurately described as such, is also not infringing.

10. Manufacturing Plant Sale of Overruns and ‘Scraps’: Software publishers routinely authorize CD manufacturing plants to produce copies of their software onto CD-ROM so that they can distribute these CD-ROMs to their authorized vendors for resale to the public[17].

Several international treaties and conventions spell out protections that are afforded to software against infringement. The TRIPS provides for extensive protection of software. The WIPO Copyright Treaty of 1996, which is a special agreement to the Berne Convention,[18] requires compliance with Berne. This treaty makes it explicit that computer programs are protected as literary works under The Berne Convention. The Berne members constitute a union that is open to all countries of the world, provided that certain minimum protective requirements are satisfied. And the Universal Copyright Convention (UCC) mandates all UCC member countries to provide protection against software piracy to the extent that the member country’s copyright laws protect software.

The TRIPS standpoint: The TRIPS is the first international Treaty to explicitly include computer programs within the illustrative list of copyrighted works[19]. The TRIPS sets forth three different forms of protection for software: copyright, patent and trade secret regime. TRIPS includes a specific provision in Article 10 that expressly requires member states to protect software, whether in source or object code, as literary works under the Berne Convention. However, the member countries have a right to provide more extensive protection of intellectual property rights within their national legal systems.

Article 27.1 recognizes patent protection for software related invention for the member states so long as the invention satisfies the other requirements[20] for patentability which are country specific. Therefore, software may be granted patent protection in a particular country if it fulfils the specific conditions set forth under the laws of that country.

Article 39 of TRIPS provides an alternative to copyright protection. It talks about protection for undisclosed information and offers a trade secret regime for software protection[21]. Trade secret regime is applicable for the protection of trade secrets which may include software. Certain software may contain lot of valuable and confidential information about a company which forms its trade secret. Civil and criminal actions are provided for in most legislation against the unauthorized disclosure or use of confidential information. In this case, there is no exclusive right, but an indirect type of protection based on a factual characteristic of the information (its secret nature) and its business value[22]. Unlike patents, trade secrets are protected as long as the information is kept secret[23].

Thus, TRIPS does not preclude additional forms of protection for computer programs and a member can offer patent, copyright and trade secret protection for computer programs[24]. Keeping in mind the higher standards of creativity required by patent law the software developer can choose any form of protection which is most desirable to him. As the source code is comprehensible only by a trained programmer and not by normal persons, the proprietors generally protect the source code under the trade secret regime and the object code is protected as a copyright[25].

Berne Convention: The Berne Convention does not explicitly mention computer programs in its illustrative list of copyright works. However, as per TRIPS, member states should recognize computer programs (software) as literary works.

Article 2 (7) of the Berne Convention makes the protection of works of applied art dependant on domestic legislation i.e. the extent to which protection may be granted and the conditions under which such works will be protected is dependant on the statute of the particular country where the work originated. Works enumerated in Article 2 of the Berne Convention are mere illustrations of the kinds of works to which copyright might extend. These illustrations are not exhaustive. Therefore, works such as computer programs that exhibit utilitarian characteristics and also contain expressive elements can be brought under the ambit of work of applied art[26].

However, Article 7 (4) of the Berne Convention exempts, inter alia, the works of applied art from the general term of protection and sets up a minimum term of only 25 years from the making of the work. As article 2 (7) makes the protection of works of applied art dependant on domestic legislations, the term of protection may be applicable accordingly with respect to different countries.

WIPO Copyright Treaty: In 1996, two copyright treaties were negotiated under the auspices of WIPO. These treaties are: WIPO Copyright Treaty (“WCT”) and the WIPO Performances and Phonograms Treaty (“WPPT”). The WCT of 1996 is a special agreement to the Berne Convention and requires compliance with Berne Convention. This treaty makes explicit that computer programs are protected as literary works under Berne Convention. It also states that compilations of data for which the selection or arrangement of the contents are sufficiently original are protected as compilations. Software makers are granted a right to control rentals of computer programs[27].

Position in India: In India, computer software does not form the subject matter of patents as the requirement of the patent law is that the process must result in something “tangible” and “vendible.”[28] Though not many in India demand software protection, it is a much needed protection considering the growth of the Information Technology industry in the country. India has adopted most of the particulars of the international instruments discussed above and has incorporated its own law on software protection based on the essentials of these instruments[29]. The major statutes that cover software protection in India are the Copyrights Act, 1957 and the Patents Act, 1970.

There are very few cases pertaining to protection of software in India, most of them with the Microsoft Corporation as the aggrieved party. The availability of injunctive relief and criminal remedies are particularly vital to the software industry. Software developers often rely on civil ex-parte injunctive procedures to identify infringers[30]. However, civil procedures in many developing nations are time-consuming, cost-prohibitive, and largely ineffective against professional criminals. Therefore, software developers are often forced to rely on criminal prosecutions by public authorities to deter rampant piracy of their products[31]. In a landmark judgment[32], the Delhi High Court awarded punitive and exemplary damages against the wrongdoers who were involved in piracy activities by hard-disk loading. With the growing concept of software technology parks and the importance of software in every business, more and more companies want protection under the legal regime to obviate software piracy.

Consequences: Copyright infringement of software directly affects the profitability of the software industry. Money being lost to pirates means fewer resources to publishers to devote to research and development of new products, undermining the very essence of Intellectual Property Rights. Aside from the legal consequences of using pirated software, organizations forfeit some practical benefits as well like:

• Increase the chances that the software will not function correctly or will fail completely;
• Forfeit access to customer support, upgrades, technical documentation, training, and bug fixes;
• Have no warranty, which means that it is highly vulnerable;
• Increase in the risk of exposure to a debilitating virus that can destroy valuable data;
• The software might actually be an outdated version, a beta (test) version, or a nonfunctioning copy;
• Subjection to significant fines for copyright infringement; and
• Risk of potential negative publicity and public and private embarrassment.

Conclusion: The hazards of software infringement remain large, particularly for those software producers who export their programs. However, combating this threat requires combined efforts of policy-makers, software developers and publishers, businesses, journalists, domestic and international bodies, an active group of non- governmental organizations as well as and concerned individuals. As long as software infringement exists, there will be fewer jobs, less research and development and increased costs in the IT sector.

The following suggestions are recommended:

1. Review and amend existing IPR related legislation to ensure better enforcement in the country.
2. Provide adequate human resources, specialized in IPR and copyright It related issues, such as e –security to ensure adequate enforcement.
3. Encourage universities and research centers to conduct research on computer software infringement in India to identify appropriate preventative actions and remedies.
4. Enhance the support to the awareness campaigns about IPR and copyright organizations. Specific awareness seminars must target software developers, and mainly exporters to educate them about these laws and resources and how to utilize them to protect their intellectual property interests domestically and abroad.
5. Build the capacity of Indian judges to become capable of handling computer software infringement cases.
6. Coordinate with international organizations to learn from other developing countries’ experiences in combating computer software infringement.

Respecting intellectual property rights laws benefits everyone. From strengthening economies, creating job opportunities, protecting honest workers from losing their jobs to criminals, stimulating technological progress to giving customers the genuine software experience they deserve while protecting them from becoming victims.