Panel Discussion on R & D and Intellectual Property Rights in ICT Industry in India
December 23, 2004, New Delhi

Opening Remarks by Shri R.Gopalan, Joint Secretary, Ministry of Commerce & Industry

Opening remarks for panel discussion on "R&D and Intellectual Property Rights in ICT industry in India" organized by FICCI on 23rd December 2004

It gives me great pleasure to be here amongst such a distinguished gathering to deliberate on issues relating to IPRs in ICT industry in India. A lot of seminal developments are taking place in the area of ICT - this in turn is throwing up several new issues for consideration of IPR experts. I will very briefly dwell upon some of these in the context of the existing Patent and Copyright regimes.

Patent Issues

As you all know, two multilateral treaties deal with the protection of inventions through patents - namely the Paris Convention and the TRIPS Agreement of the WTO. The Patent system provides a framework for protection of innovation and technological development through a delicate balance between providing for an exclusive right to the patent owner to prevent others from commercially exploiting the patented invention for a limited period and a corresponding duty to disclose the information concerning the patented invention to the public.

The patent system has played a vital role in promoting the development of the underlying technical infrastructure for the internet and e-commerce that takes place across its networks.

Several new issues are associated with digital media and e-commerce in the context of patent protection. One such issue relates to Business Method Patents. Recently, patents have been granted to certain inventions concerning financial services, electronic sales and advertising methods and business methods. For instance, there has been a significant decision in the USA that has found a business model for managing an investment portfolio to be a patentable subject matter (in State Street Bank & Trust Vs Signature Financial Group ). A second example is in Europe. The Boards of Appeal of the European Patent Office has decided in one case that a computer system involving a number of independent management tasks, including financial and inventory management and a system operation method was patentable as such. There is a distinct possibility that the number of these e-commerce-type patents may increase significantly in times to come. As yet, there is no full clarity on how to treat such issues. Some critics consider that such patents concerning business practices reflect familiar ways of doing business that are not new or novel and the only aspect that is different is that they occur in cyberspace.

The stakes involved in these issues are quite high. One illustrative example is a law suit filed in 1999 by Amazon.com against its rival Barnesandnoble.com on its patent concerning 'one click' technology. This patented technology enables online customer to make repeated purchases from the website of Amazon.com without having to repeatedly fill out credit card and billing address information. Amazon.com alleged that one click checkout system of its rival known as "Express Lane", infringed its patent. The case was, however, finally settled out of court between the two parties.

Another important issue relates to patentability of software. Article 27.1 of TRIPS Agreement does not allow the exclusion of software in general from patentability. There is an ongoing discussion on where to draw the line between copyright and patent law protection for computer programmes. Generally, countries in Europe as well as South Africa explicitly exclude computer programmes as such from protection under their patent laws, while Australia, Canada, Chile, Israel, Japan, Republic of Korea and US do not exclude such protections. In the Indian context, the 2nd Amendment to the Patent Act amended Section 3(k) of the Act to disallow patent on computer programme per se.

Enforcement Issues

Several complex issues arise concerning enforcement of patent rights in relation to the Internet. Patent protection is provided on a country-by-country basis. The patent law works on the principle of
territoriality. However, where patented software is sold and delivered over the internet internationally, any infringement action would require a consideration of the jurisdictional and choice of law issues. One practical issue concerns that of detection. Unauthorized importation of patented software by means of the Internet, unlike the importation of tangible goods, cannot be detected and stopped by customs authorities.

A second issue relates to Article 28 of the TRIPS Agreement which requires that a patent conferred on its owner the right to prevent others from 'using' the patented product or process. What constitutes 'using' a patented product or process is increasingly complicated in the case of Internet-related e-commerce patents.

Copy Right Issues

The digital technology has a significant impact on copyright issues. The digital technology enables transmission and use of copyright protected "literary and artistic works" such as writings, musical works and audio-visual works. The digital technology enables the transmission and use of all these protected materials in digital form over interactive networks. There is demand to apply new legal rules in such a way as to ensure that digital technology does not undermine the basic tenets of copyright and related rights. On the network one can make unlimited number of copies within seconds without any degradation in quality. In fact, Internet has been
described by some as "the world's biggest copy machine". These copies can be transmitted to locations around the world in a matter of minutes. This can potentially disrupt traditional markets for sale of copies of programmes, art, books and movies. The case of the Internet based file swapping services such as Napster is too well known to be recounted here.

There are several other complex issues which are being debated and considered by experts at different fora. India also has a vital stake in these deliberations as we are a major power in the field of IT software and related services. India is also now in the forefront of the R&D outsourcing by the Fortune 500 companies. An enabling patent environment in India would help to give a further fillip to R&D activities in India.

I would like to congratulate FICCI for organizing a very topical panel discussion. I am sure this would throw up several valuable insights on the subject. I wish the participants and organizers all success.

Thank you.