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You Could Be Sued For Your Ideas...

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DQI Bureau
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Thought of a software that can have an innovative use, an idea that
has taken you by the storm? Very good. You want to put it into action

immediately? Excellent. And, you want to patent this concept? Yes? No?

OK, OK, I get you. It's just an idea and you would like to see it take

form and you would like to show it to the world and you would like to

sell it and make money and....






Right? Wrong. For all you know, someone else could actually steal your
idea, patent it and sue you-the originator of the idea-for using it.

As happened in the case of an Israeli computer manufacturer. Because

they were busy making money manufacturing computer systems, they forgot

to patent it. And, today, they are reduced to selling diskettes because

a smart major name in the industry sued them for making their own machines.

Because the latter had the patent.






Not patenting is no smart way of doing business. As cut-throat competition
increases in the global village to market products, ideas and concepts,

another fierce race is on in the field of patenting ideas, concepts

as well as innovations and inventions, says Sanford T Colb, an Israeli

lawyer practicing in the US and a patent guru. In the US, he says, anything

that is new, useful and non-obvious, can be patented-be it a product,

a concept or an idea, technological or non-technological.






Ironically, even as several other countries are trying to grapple with
the ambiguities of the software industry, India is unable to pass even

a Patents Bill due to political compulsions!






National Association of Software and Service Companies (NASSCOM) is
stressing on the need for the Indian software companies to wake up to

this fact of business. With the Indian software companies doing so much

export business in the US-60% of the IT revenue comes from software

exports and 59% of this is from the US-it is pitiable to note that none

of the Indian companies think it worth the while to take the patents

issue seriously. Surprisingly, even companies that have offices in the

US and would ideally be aware of the potential risks of not filing for

patents neglect this very essential part of business.






Contrast this with the fact that as of 1993, IBM had 13,144 patents
in the US. In the same year, it is said to have applied for 1,087 patents

and in 1994, 1,298 patents. Other majors such as Hitachi, Dell, HP,

DEC, Intel etc, too, are as serious about patenting their products as

about making them.






One may well wonder why patenting becomes important for Indian companies
when their major revenue is from maintenance and service projects. "We

are looking at a paradigm shift to product development while retaining

the thrust on software projects and services," explains Dewang

Mehta, Executive Director, NASSCOM. Also, patents can be obtained for

any innovative process (or method), manner of manufacture, machine (or

apparatus) or composition.






How to apply


An Indian company wishing to get a patent protection in the US would
have to file an application with the PTO. For the purpose of obtaining

an early filing date, the inventor may file a Preliminary Patent Application

(PPA). However, to obtain a patent, the inventor must file a formal

patent application (within one year of the PPA date if one is filed)

that follows technical conventions and contains words and drawings to

clearly teach how to make and use the basic invention; explain why the

invention is different from all previous and similar developments; and

precisely describe what aspects of the invention deserve the patent

(the patent claims).






The PTO, on receiving the patent application, examines it to see if
it satisfies all technical requirements, whether it qualifies for a

patent and the scope of the patent. This process could take anywhere

between one and three years. Once the application is approved for patent,

the applicant pays a patent issue fee of $625 (independent inventors,

non-profit corporations and for-profit corporations with fewer than

500 employees) or $1,250 (for-profit corporations with more than 500

employees). To keep a patent in effect, three additional fees must be

paid over the life of the patent, totaling $3,000 for a small inventor

and double the amount for large corporations.






Apart from the natural expiry date of a patent, it may also be declared
invalid if it is shown that the patent application was insufficient,

that the applicant committed fraud or that the inventor engaged in illegal

conduct when using the patent.






Once a patent is granted, the owner may enforce it by bringing a patent
infringement action against anyone who uses the invention without the

patent owner's permission. Once the patent is upheld, the court can

prevent the infringer from any further use or sale of the patented invention

and award damages to the patent owner. Or, it can work out an out-of-court-settlement

by which the infringer pays the patent owner a royalty.






The limitations


A software patent is issued not on the software itself but on inventions
that use innovative software to produce a useful result. The patent

application should describe the software in relation to computer hardware

and related devices, and limit the software to specific uses. As of

mid-1995, more than 20,000 of these patents had been issued.






There are still several loopholes in getting a patent. For one, the
software-based invention may be considered obvious over the prior art

(version, release etc). Also, mathematical algorithms are not considered

by many countries for patent. In such cases, however, companies can

seek protection under the umbrella of trade secret or copyright laws.






Copyright protection is extended to the expression of ideas-as against
protection for ideas and concepts-giving the owner of a creative work

the right to keep others from using the work without the owner's permission.

Providing a copyright notice or registering the work with the US Copyright

Office is not necessary to obtain basic protection. Placing a copyright

notice on the work (circled 'c') is enough to prevent the work from

being copied. However, registering with the US Copyright Office within

three months of publishing the work or before the infringing begins

would prove beneficial when suing the offending party in case of infringement.

Copyright can also prove commercially beneficial through licensing agreements.






Trade secret law affords the owner of commercial information that provides
a competitive edge the right to keep others from using such information

if the information was improperly disclosed to or acquired by a competitor

while the owner of the information took sufficient precaution to prevent

the information from leaking.








Not patenting would cost the Indian software industry heavily as MNCs
are increasingly becoming conscious of the patent-awareness levels of

the companies they offload the projects to. Many are wary of entering

the country because of the weak IPR laws in the country, says Pravin

Anand, an advocate specializing in patent issues. On the flip side,

Indian companies could find an MNC in their backyard with lawsuits.




































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Who

owns the software?







Undertaking software projects and developing customized software
as per client requirements can throw up problems as to, say, who

owns the finished product? The developer or the customer? Just paying

for the project will not make the customer the owner of the software.

Therefore, it is in best interests of both the customer and the

developer that the two parties should start off their relationship

with a clear-cut agreement of terms and conditions addressing the

issues of deliverables and ownership. The two can opt for single

ownership or joint ownership. If the ownership right has been transferred

to the customer, the developer should ensure that he is not transferring

the ownership of his background technology as well to the customer.






A written agreement that takes care of every nuance of the project
would be able to take care of disputes and problems that may arise

during the course of commissioning of the project. This will take

care of ensuring that the customer does not have nightmares about

not seeing the product or not seeing quality product. Documenting

specifications will also clear up misunderstandings that can lead

to customer dissatisfaction, and thereby, non-payment or litigation.

Testing of software is also essential to ensure satisfaction to

both parties.






Development contracts should also provide for resolving issues,
since court litigations could prove expensive. Mediation and arbitration

are two most commonly sought after ways of working out a solution.





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Site references

for patent-related issues:




http://www.nolo.com


http://www.uspto.gov


http://leweb.loc.gov/copyright


http://www.findlaw.com


http://www.patent.womplex.ibm.com



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S MEERA


in New Delhi





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