Best Way To Protect Your Software: Patent & Licensing

As intellectual property rights have become a crucial asset for business in the information era, software companies want to protect their creations through patents. However, not all new software is eligible for a patent, and sometimes, one might need to consider licensing.  

The software industry has been growing at an exponential pace in India due to its large reservoir of talent and human resources. India attracts some of the biggest software and hardware corporations worldwide. It also serves as a significant outsourcing station for such companies. The emerging domestic software industry within the country has made it essential for businesses to safeguard their Intellectual Property rights (IPR). These laws allow individuals and companies to protect intangible assets, such as technology and content. Software patent allow businesses to safeguard software, programs, or even special machines used to run those programs. 

What is Software?

Software is a set of guidelines or commands a computing system follows to complete a stated task or operation. Since the lines of code that make up software are intangible, they cannot be treated or classified as traditional goods. However, whenever an individual or company sells any such software, buyers receive a license to use the software. Additionally, they also get some guidelines specifying the dos and don’ts for the licensee.

Software markets are vulnerable to unstated economic loss due to counterfeit, copying, and piracy. They also face the serious threat of becoming irrelevant or obsolete if competitors introduce a more efficient product in the future. Therefore, companies need to protect their software under the guidelines of the IPR mechanism. It will safeguard the economic interest of the owner and give a push to innovation as well.

For How Long are Software Patents Valid?

Patent protection lasts for a specified period, and software patents remain valid for 20 years from filing. The patents for software come under the category of technology. The methods of software coding are critical and unique. Therefore, it becomes essential to safeguard such codes and software through patents. 

Patents are the perfect solution to protect the functional aspect of the software. However, to apply for a patent, the program must be a technical invention. As per Section 3(k) of the Patent Act, 2002, all computer programs cannot be patented because they are lines of code. To apply for and receive a patent, the code or software must meet the following criteria:

  1. The software must not be the business method, mathematical method, or algorithm
  2. The computer program must be patentable
  3. The hardware is the core part of the invention in addition to the software program.

Are Software Patents Allowed in India?

Software is not patentable in India by itself, but individuals and businesses can patent it if the software aligns with an invention capable of industrial use and inventiveness.

The Patent (Amendments) Act, 2002 states that a computer program has words attached to it and can not qualify as a patent. Hence, these cannot be patented in India by themselves, but if they work in tandem with something unique and inventive, they can receive such rights. As a result, software becomes patentable when it is a part of the computer-related invention

Rules of Software Patent Registration

The Patent (Amendment) Act, 2002 governs the procedure for patent registration. The Act came into effect on 20 May 2003. The following elements are not a part of the Patent (Amendment) Act, 2002:

  1. Integrated circuits topography
  2. Simple scheme or rule for performing mental act or a method of playing a computer game
  3. Any work related to drama, art, music, or an aesthetic creation including television productions and cinematography work

License Agreement

A license agreement serves as access granted to any third party by the rightful owner of a computer program or software. The owner provides genuine buyers with such a license to allow them access to their software. These agreements entail features of retention, allowing the owner substantial rights of use related to the software. As a result, these allow the true owners to have substantial control over their software and the buyers also get to utilise the code or machine for their gains. 

Software transactions occur through a sale and by providing buyers with the required licenses, which favour the licensor. Such sales feature all the normal warranties, including liability regulations, taxation, and compliance. However, the ownership of IPR in software lies with the licensor. The licensee may use such software fairly without any issues or legal repercussions. However, encrypting the file or misuse of proprietary licenses can lead to infringement of competition law and other IPR laws.

If you are looking to Patent Your Software or license it out for others, Vakilsearch can help you. We have years of experience handling intellectual property rights: matters and can provide you with the necessary support and guidance. 

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