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Protecting Our Software Exports

India'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, touching 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.

©2011 Inohelp Consulting Solutions (P) Ltd.

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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.

Image from here

Kshitij Malhotra
Inohelp Consulting Solutions (P) Ltd.
(www.inohelp.com)
310, Sector 18B, Dwarka
New Delhi – 110075
India

©2011 Inohelp Consulting Solutions (P) Ltd.

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Fixed Line: +91-11-43614903

Hand Phone: +91-9711006619
Email: kshitij.malhotra@inohelp.com

Inohelp is an integrated Intellectual Property (IP) service firm providing high end patent drafting, filing, and
research and analytics solutions. At Inohelp, we help innovators, product developers, patent practitioners
and businesses in transforming their innovation into patents. Some of the projects we undertake include:
PATENT DRAFTING, PATENT FILING, PRIOR ART SEARCH, PATENT LANDSCAPE STUDIES,
FREEDOM TO OPERATE STUDIES, PATENT VALIDITY ANALYSIS AND PATENT PROOF READING.

©2011 Inohelp Consulting Solutions (P) Ltd.