Kshitij MalhotraIndia’s technology exports have grown considerably over the years. Software exports constitute a lion’s share of these exports. According to recent NASSCOM reports, the software product exports have grown by 14.4 percent in the current fiscal year, touchi
ng about USD 7.3 billion (INR 330 billion). Further, the reports predict the market to grow exponentially, driven by an increasing number of start-up software product businesses as well as a rapid growth of existing businesses.
The growth in software exports have forced software companies to focus on legally protecting their technologies/products in the countries of export. This holds true especially for utility software products developed exclusively to be retailed in foreign markets. One way of legally protecting technologies/ products may involve securing the intellectual property by means of patents, more often than not complimented by copyrights. Trademark protection may also be considered, to protect consumer interests in lieu of counterfeit branding. However, considering the encompassing and strong nature of patent protection, the focus of the companies should be more on protecting their technologies/products by means of patents than protecting their products through any other instruments.
For applying patents abroad, the Indian patent laws provide 2 main routes. It should be noted that both the routes require utmost caution from the companies as missing any procedural formality or a deadline can be detrimental to the patent obtaining efforts. The starting point of the patent obtaining procedure is, of course, to prepare a patent application, which includes a detailed description of the technology/ product, and most importantly one or more claims defining the scope of the protection needed. It is strictly advisable to prepare the patent application in a format accepted by, and in accordance with, best practices of the patent offices of the countries where the technology/product is being intended to be exported. This is because the standards of an acceptable patent application in US and Europe differs significantly from the standards acceptable in India. Accordingly, it makes a lot of sense to hire a patent attorney/agent who has a global exposure in drafting and handling patent applications filed in these jurisdictions. Luckily, India has been a hot destination for patent outsourcing for some time now. Therefore, finding talented patent attorneys having global exposure is not a difficult proposition for software companies.
Once a patent application is prepared, the next step is to elect the route through which the patent application is to be filed in foreign countries. The first route is to file the patent application in India, and follow the patent application with a Patent Cooperation Treaty (PCT) application or with corresponding applications (Paris convention applications) in the desired foreign countries, within 12 months from date of filing the patent application in India. Now, the filing of the PCT application has advantages and disadvantages vis-a-vi filing convention applications directly in foreign countries. The most important advantage is that the filing of a PCT application provides a company an extended time for selecting the countries to enter. This allows the companies to seriously deliberate upon countries to apply for patents. Such deliberation is an absolute must as the cost of obtaining a patent in foreign countries is very expensive, and the process is lengthy and saturating. One of the biggest disadvantages of filing the PCT application is, of course, the expenditure incurred to file the PCT application. For example, filing the PCT application, and transmitting it to WIPO, the administrative authority of the PCT application, costs (official charges) around INR 12,000 for companies.
The second route, which is much more advisable for software and business method product/technologies, involves filing patent applications directly in countries of export, without filing a patent application in India. The advisability of this route is attributed to statutory laws, which exclude patenting of few classes of products/technologies, in India. These classes include “typical” software products and business method products. Accordingly, it does not make sense for a company to invest time and money in filing and obtaining a patent in India for software/business method products.
However, direct filing in foreign countries, without filing in India, requires a patent applicant to obtain a Foreign Filing License (FFL) from the patent office. It should be noted that the penalty of filing for patents in foreign countries in contravention to the FFL levies a penalty, which can even be of criminal nature! Such FFL can be obtained by applying for the license in prescribed form to the patent office. Usually, the patent office is quick to respond to such license requests, and gives the FFL in 6 weeks from making the FFL application.
The Indian software industry is at a point of inflexion. The industry is transiting from essentially a service based industry to a development based industry. However, software companies should be careful with legally protecting their software products, especially in export markets, such as US and Europe, which have strong patenting culture. The Indian patent laws provide various routes for the software companies to apply for patents in foreign countries. However, the companies should be careful with respect to meeting procedural formalities at the patent office as any failure to meet the formalities can be detrimental to efforts of patenting abroad.
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