Richard Stallman is one of the founders of the Free Software Movement and lead
developer of the GNU Operating System. (1)

JP: Can you first of all explain the "Free Software Movement'.

RMS: The basic idea of the Free Software Movement is that the user of software
deserves certain freedoms. There are four essential freedoms, which we label
freedoms 0 through 3.
Freedom 0 is the freedom to run the software as you wish. Freedom 1 is the
freedom to study and change the source code as you wish. Freedom 2 is the
freedom to copy and distribute the software as you wish. And freedom 3 is the
freedom to create and distribute modified versions as you wish. With these four
freedoms, users have full control of their own computers, and can use their
computers to cooperate in a community. Freedoms 0 and 2 directly benefit all
users, since all users can exercise them. Freedoms 1 and 3, only programmers
can directly exercise, but everyone benefits from them, because everyone can
adopt (or not) the changes that programmers make. Thus, free software develops
under the control of its users.
Non-free software, by contrast, keeps users divided and helpless. It is distributed
in a social scheme designed to divide and subjugate. The developers of non-free
software have power over their users, and they use this power to the detriment
of users in various ways. It is common for non-free software to contain malicious
features, features that exist not because the users want them, but because the
developers want to force them on the users. The aim of the free software
movement is to escape from non-free software.

JP: What was your history with the free software movement?

RMS: I launched the movement in 1983 with a deliberate decision to develop a
complete world of free software. The idea is not just to produce a scattering of
free programs that were nice to use. Rather, the idea is to systematically build
free software so that one can escape completely from non-free software. Nonfree
software is basically antisocial, it subjugates it users, and it should not exist.
So what I wanted was to create a community in which it does not exist. A
community where we would escape from non-free software into freedom.
The first collection of programs you need in order to escape non-free software is
an operating system. With an operating system, you can do a lot of things with
your computer. Without an operating system, even if you have a lot of
applications, you cannot do anything -- you cannot run them without an
operating system. In 1983 all operating systems were proprietary. That meant
that the first step you had to take in using a computer was to give up your
freedom: they required users to sign a contract, a promise not to share, just to
get an executable version that you couldn't look at or understand. In order to use
your computer you had to sign something saying you would betray your
community.
Thus, I needed to create a free operating system. It happened that operating
system development was my field, so I was technically suited for the task. It was
also the first job that had to be done.
The operating system we created was compatible with Unix, and was called GNU.
GNU stands for "GNU is Not Unix", and the most important thing about GNU is
that it is not Unix. Unix is a non-free operating system, and you are not allowed
to make a free version of Unix. We developed a free system that is like Unix, but
not Unix. We wrote all the parts of it from scratch.
In 1983, there were hundreds of components to the Unix operating system. We
began the long process of replacing them one by one. Some of the components
took a few days, others took a year or several.
By 1992, we had all of the essential components except one: the kernel. The
kernel is one of the major essential components of the system. In GNU, we began
developing a kernel in 1990. I chose the initial design based on a belief that it
would be a quick design to implement. My choice backfired and it took much
longer than I'd hoped. In 1992, the Linux kernel was liberated. It had been
released in 1991, but on a non-free license. In 1992 the developer changed the
license for the kernel, making it free. That meant we had a free operating
system, which I call "GNU/Linux' or "GNU plus Linux'.
However, when this combination was made, the users got confused, and began to
call the whole thing "Linux'. That is not very nice.
First of all, it isn't nice because there are thousands of people involved in the GNU
project who deserve a share of the credit. We started the project, and did the
biggest part of the work, so we deserve to get equal mention. (Some people
believe that the kernel alone is more important than the rest of the operating
system. This belief appears to result from an attempt to construct a justification
for the "Linux" misnomer.)
But there is more at stake than just credit: the GNU Project was a campaign for
freedom, and Linux was not. The developer of Linux had other motives, motives
that were more personal. That does not diminish the value of his contribution. His
motives were not bad. He developed the system in order to amuse himself and
learn. Amusing oneself is good -- programming is great fun. Wanting to learn is
also good. But Linux was not designed with the goal of liberating cyberspace, and
the motives for Linux would not have given us the whole GNU/Linux system.
Today tens of millions of users are using an operating system that was developed
so they could have freedom -- but they don't know this, because they think the
system is Linux and that it was developed by a student "just for fun'.

JP: So the GNU+Linux system is not an accident.

RMS: You cannot rely on accidents to defend freedom. Accidents can sometimes
help, but you need people who are aware and determined to do this. Because it
was not designed specifically for freedom, it is no coincidence that the first license
to Linux was non-free. In fact I don't know why he changed it.

JP: Does the difference between the GNU project and Linux relate to the
difference between "free software' and "open source'?

RMS: As GNU+Linux came to be used by thousands, and then hundreds of
thousands, and then millions, they started to talk to each other: Look at how
powerful, reliable, convenient, cheap, and fun this system is. Most people talking
about it, though, never mentioned that it was about freedom. They never thought
about it that way. And so our work spread to more people than our ideas did.
Linus Torvalds, the developer of Linux, never agreed with our ideas. He was not a
proponent of the ethical aspects of our ideas or a critic of the antisocial nature of
non-free software. He just claimed that our software was technically superior to
particular competitors.
That claim happened to be true: in the 1990s, someone did a controlled
experiment to measure the reliability of software, feeding random input
sequences into different programs (Unix systems and GNU systems), and found
GNU to be the most reliable. He repeated the tests years later, and GNU was still
the most reliable.
The ideas of Torvalds led by 1996 to a division in the community on goals. One
group was for freedom, the other for powerful and reliable software. There were
regular public arguments. In 1998 the other camp chose the term "open source'
to describe their position. "Open source' is not a movement, in my view. It is,
perhaps, a collection of ideas, or a campaign.

JP: Since we will be talking about this more, perhaps now is a good time to define
"movement'.

RMS: I don't have a definition ready, I'll have to think of one. Let us define it as a
collection of people working to promote an ideal. Or maybe, an ideal, together
with an activity to promote it.

JP: So, "open source' is missing the ideal part?

RMS: They recommend a development methodology and claim that the model will
produce superior software. If so, to us, it's a bonus. Freedom often allows one to
achieve convenience. I appreciate having more powerful software, and if freedom
helps that, good. But for us in the free software movement that is secondary.

JP: And in fact one should be willing to sacrifice some power and convenience of
the software for freedom.

RMS: Absolutely.

Infogain sees opportunity in revival of captives

NEW DELHI: Product engineering and IT services firm Infogain is eyeing reviving struggling captive centres in the country as the next big opportunity. The $40-million firm plans to take over some of these centres while others would be revived in partnership with the companies. It is currently in talks with a $60-million US-based software company for resuscitating its captive unit in south.
A recent Forrester report said that over 60% of captive centres in India are struggling due to spiralling costs, attrition and lack of integration. In the last two years, about 300 such captive centres have been set up in India by North American and European companies.
“We are looking at companies with revenues in the range $50-500 million and captive centre targets of 100-150 people, with 40-50 people working currently. We are in discussions with software companies and hope to finalise a partnership within a month,” said Infogain India president & CEO Eddie Chandhok.
Once it takes over operations at a captive centre, Infogain would convert it into an offshore development centre, bring some of the client’s employees, hire new people and have co-branding at the centre. It would render its services, including product engineering and implementation while the client would provide its domain expertise for product development. The client would pay Infogain a lower fee, in return for letting it operate its captive centre.
In other cases, where the company wants to maintain control over its captive unit, Infogain would recruit new people and provide its services. “It is also likely that a small complement of people would be based in the company’s own captive centre while a larger set of people would be based in Infogain’s own facility,” said Mr Chandhok.
“We expect this business to contribute about 30-40% to our revenue in the next two years,” said Infogain Corporation president & CEO Kapil Nanda, adding that another area of interest for the firm is entering into value-added reseller (VAR) relationship where it would take its clients’ products to market.
“We have VAR relations in the US where we sell software for some of our clients. We are having some discussions on that front with firms in India. We have introduced Oracle to a few customers on an informal basis. Once these deals fructify, we would like to have a VAR relationship with the company,” said Mr Nanda.

Google to set up new facility in Hyderabad

NEW DELHI: Internet search engine Google on Friday said it will set up a new facility in Hyderabad to support its growing business and team expansion across its operations in India.The company also signed an MoU with the Andhra Pradesh government to buy land in Hyderabad, a company statement said here, adding this marks Google's continued investment in India, it said."India is an exciting market. Google products and services have received a very encouraging response and our offices have grown significantly," Google India Director Online Sales and Operations Roy Gilbert said.Commenting on the development, Andhra Pradesh Chief Minister Y S Rajashekara Reddy said: "We are focused on creating an environment for more companies to partner with us. Such investments help in accelerating the country's economic growth besides providing gainful employment."

Indian software companies boost hiring, see profits surge as outsourcing grows

100,000.That's the number of new jobs that India's top five software companies plan to add this fiscal year, riding a boom in outsourcing that's fattened profits. That's on top of a record 76,500 new employees who joined these companies last year.
The figures underscore how rapidly U.S. and other Western companies are shifting work to low-cost India, where outsourcing is no longer limited to call centers or back office work such as billing and salary records.Companies like Tata Consultancy Services Ltd. and Infosys Technologies Ltd. now have thousands of engineers developing software to improve corporate productivity and manage information technology infrastructure.

And despite concerns that rising salaries, a possible slowdown in the U.S. economy and the rupee's strength against the dollar would hurt business, the latest earnings figures -- released over the past two weeks -- show that profits are surging.Net profit for the top five outsourcing companies -- Tata Consultancy, Infosys, Wipro Ltd., Satyam Computer Services Ltd. and HCL Technologies Ltd., ranked in that order -- grew to a collective US$3 billion (euro2.2 billion) for the fiscal year through March, up 47 percent.Sales, meanwhile, jumped 41 percent to a combined US$13.6 billion (euro10 billion).And the top four software companies won 713 new clients last year. A figure from HCL Technologies was not available."We are seeing robust growth," Infosys Chief Executive Nandan Nilekani told reporters when his company reported a 70 percent year-on-year surge in profits during the January-March quarter.Nilekani's confidence appears rooted in the strong economic rationale of the outsourcing business: Western companies will keep shifting jobs overseas so long as they can get the same work done for less money elsewhere.Indian companies have set up centers in other low-cost countries like Vietnam and Romania so to stay competitive despite rising salaries at home. As a result, they are hiring more people in these countries.Nearly 10 percent of Tata Consultancy's employees are now foreign nationals. For Infosys, the number is close to 3 percent.The outsourcing portfolio has also expanded over the years to increasingly include high-value services, thus enabling Indian companies to charge higher fees and partially offset the impact of a weaker dollar and increased wage costs.Tata Consultancy, India's leader in the field, had sales of more than US$250 million last year managing IT infrastructure of its client companies, said Ashwin Mehta, analyst at Mumbai-based brokerage Ambit Capital.HCL Technologies said its focus on remote infrastructure management services -- which may include everything from help in installing new software to monitoring network security -- helped in winning several large multiyear deals last year."The deal sizes are getting bigger," said Mehta.Tata Consultancy won 12 outsourcing orders worth more than US$50 million each last year, while Wipro Ltd. won 10 such deals. Both companies said they are aiming to win similar contracts this year."We believe that we have the right ingredients to keep winning," Wipro Chairman Azim Premji said after the company announced its latest earnings.To keep the momentum going, Indian software companies are also looking to win more customers outside the United States, traditionally the largest client country.They have acquired businesses in Europe to increase visibility there, set up centers in Latin America and are also winning orders from Australia and New Zealand.Diversifying helps hedge against a possible slowdown or a potential political backlash in the United States.Besides Indian companies, IBM Corp., Accenture and EDS Corp. are also expanding their off-shore centers in India, hiring tens of thousands of new employees.The boom in outsourcing underlines the increasing globalization of labor, which has helped corporate profits -- in both rich and poor countries -- rise faster than labor costs, said D. Subbarao, a member of the India's prime minister's advisory council.According to a recent International Monetary Fund report, the share of labor in total economic output of rich countries fell over the past two decades because of technological progress and outsourcing, with Europe accounting for the biggest drop of about 10 percentage points. But pay in emerging countries such as China and India has seen robust growth, the report said.Subbarao fears there could be a backlash from U.S. labor groups, which could cause Washington turn more protectionist in the run-up to next year's presidential elections.In 2004, a Democrat campaign against outsourcing saw several states reverse plans to transfer some of their back-office work to places like India. The impact on India's outsourcing companies was limited though."These are temporary blips on the long road to globalization," Subbarao said.

Software Patents and Software Industry in India

Background

While there has been a lot of discussion on the impact that the latest amendment to the Indian Patent Act will have on public health and the pharmaceutical sector in India, there has been a disturbing silence about the impact that the amendment has on the software industry.

After the patents (second amendment) in 2002, the scope of non patentable subject matter in the Act was amended to include the following: “a mathematical method or a business method or a computer programme per se or algorithms”.

The important phrase that was added was ‘per se’, and with the amendment we effectively included Software patents into Indian Law. The latest amendment seeks to expand the scope of software patents, and states “a computer programme per se other than its technical application to industry or a combination with hardware; a mathematical method or a business method or algorithms”.

This briefing note will not address the technical and legal implication of this amendment but instead pose the larger question of why we should be concerned about software patents, and the impact that it will have on the software industry in India.

Conceptual difference between Copyright and Patent

The first thing to note is that software is already protected under Copyright law, so what then is the motivation and the implication of a move from copyright protection to patent protection?

Software has traditionally been protected under copyright law since code fits quite easily into the description of a literary work. Software Patenting has recently emerged (if only in the US, Japan and Europe) as an alternative that software companies are increasingly employing to, in order to protect their products.

The issues involved in conferring patent rights to software are, however, a lot more complex than taking out copyrights on them. Specifically, there are two challenges that one encounters when dealing with software patents. The first is about the instrument of patent itself and whether the manner of protection it confers is suited to the software industry. The second is the nature of software, and whether it should be subject to patenting.


a) Different Subject Matters
Copyright protection extends to all original literary works (among them, computer programs), dramatic, musical and artistic works, including films. Under copyright, protection is given only to the particular expression of an idea that was adopted and not the idea itself. (For instance, a program to add numbers written in two different computer languages would count as two different expressions of one idea) Effectively, independent rendering of a copyrighted work by a third party would not infringe the copyright.

Generally patents are conferred on any ‘new’ and ‘useful’ art, process, method or manner of manufacture, machines, appliances or other articles or substances produced by manufacture. Worldwide, the attitude towards patentability of software has been skeptical. The Indian Patent Act, as modified in 2002 had made non-patentable the following:
“…a mathematical method or a business method or a computer programme per se or algorithms”.

However, the recent amendment ordnance states instead:
“…a computer programme per se other than its technical application to industry or a combination with hardware;
a mathematical method or a business method or algorithms.”

b) Who may claim the right to a patent/copyright?
Generally, the author of a literary, artistic, musical or dramatic work automatically becomes the owner of its copyright.
Software developers are perfectly protected without patents. Everyone who writes a computer program automatically owns the copyright in it. It's copyright law that made Microsoft, Oracle, SAP and the entire software industry so very big. It's the same legal concept that also protects books, music, movies, paintings, even architecture.
Many of the world's richest people owe their wealth to copyright law. Some examples are: Bill Gates, Paul Allen and Steve Ballmer (Microsoft); Larry Ellison (Oracle); Hasso Plattner and the other founders of SAP; Paul McCartney (Beatles); JK Rowling (Harry Potter).

The patent, on the other hand is granted to the first to apply for it, regardless of who the first to invent it was. Patents cost a lot of money. They cost even more paying the lawyers to write the application than they cost to actually apply. It takes typically some years for the application to get considered, even though patent offices do an extremely sloppy job of considering.

c) Rights conferred
Copyright law gives the owner the exclusive right to reproduce the material, issue copies, perform, adapt and translate the work. However, these rights are tempered by the rights of fair use which are available to the public. Under “fair use”, certain uses of copyright material would not be infringing, such as use for academic purposes, news reporting etc. Further, independent recreation of a copyrighted work would not constitute infringement. Thus if the same piece of code were independently developed by two different companies, neither would have a claim against the other.

A patent confers on the owner an absoulte monopoly which is the the right to prevent others from marking, using, offering for sale without his/her consent. In general, patent protection is a far stronger method of protection than copyright because the protection extends to the level of the idea embodied by a software and injuncts ancillary uses of an invention as well. It would weaken copyright in software that is the base of all European software development, because independent creations protected by copyright would be attackable by patents
Many patent applications cover very small and specific algorithms or techniques that are used in a wide variety of programs. Frequently the "inventions" mentioned in a patent application have been independently formulated and are already in use by other programmers when the application is filed.

d) Duration of protection
The TRIPS agreement mandates a period of at least 20 years for a product patent and 15 years in the case of a process patent.
For Copyright, the agreement prescribes a minimum period of the lifetime of the author plus seventy years.

Nature of Software and Indian Software Industry


Software is complex: The complexity of computer programs makes it difficult to be understood by any one person. This capacity for complexity allows for the creation of highly sophisticated products but also means that they are dependent on a vast range of technologies.
Software is free from the constraints of the real world that ensure a product does not become too complex. Major software may comprise up to 10 million lines of code - potentially thousands of inventions, any of which might be patented
For example, Apple was sued because its HyperCard program allegedly violates patent number 4,736,308, which covers a specific technique that, in simplified terms, entails scrolling through a database displaying selected parts of each line of text. Separately, the scrolling and display functions are ubiquitous fixtures of computer programming, but combining them without a license from the holder of patent 4,736,308 is now apparently illegal.
In its complexity, software is different from other engineering and mechanical inventions for which patent protection was devised. The latter are often characterized by large "building block" inventions that can revolutionize a given mechanical process. Software, especially a complex program, seldom includes substantial leaps in technology, but rather consists of adept combinations of many ideas. Whether a software program is a good one does not generally depend as much on the newness of a specific technique, but instead depends on the unique combination of known algorithms and methods. Patents should not protect such methods of innovation.

Software Technology evolves rapidly: Software technology is evolving much faster than other industries, even with its own hardware industry. Against this light, a patent that lasts upto 17 years is extremely alarming. Microprocessors double in speed every 2 years.
Research in software is galloping ahead of developments. In most industries, researching new ideas often costs more money than bringing them to the market. The software industry is, on the other hand, loaded with ideas.
The idea behind most software patents can be coded in just 20 lines of code, but any program incorporating that idea - along with many others - will be a thousand times larger. It is the writing of a program that takes all the time, not coming up with ideas.
What this means is that on an average of every two years, a product will have to be replaced in the market. The idea underlying it will remain the same although the particular means and variants of its applications may have changed radically.
Coming out with a full-featured product, every two years is costly especially in relation to the inexpensive idea that backs it. There’s more novelty in the development and application of the same idea to new technology than with coming up with the original raw idea.
The objective of granting patent rights should be to foster the growth and evolution of the industry. Granting a patent at this stage would be akin to unreasonably prolonging the life of a product.
It is generally found that those who are investing time creating and lodging patents are vastly outpacing those who are investing effort bringing such ideas to market. By the time an immature technology develops to the point where it can be incorporated into products, it has a dozen or more patents on it that render it commercially intractable.

Software doesn't wear out: In other industries, research continues up to a point where further research costs too much to be feasible. At this stage, the industry's output merely consists of replacing parts that have worn out.
However, in the software sector, a computer program that is fully debugged will perform its function forever without requiring maintenance or modification. “What this means is that unlike socks that wear out, and breakfast cereal that is eaten, a particular software product can be sold to a particular customer at most once. If it is to be sold to that customer again, it must be enhanced with new features and functionality.” This inevitably means that even if the industry were to approach maturity, any software company that does not produce new and innovative products will simply run out of customers! Thus, the industry will remain innovative whether or not software patents exist.

Software has different economics: Most other major industries have medium to high research and development costs and very high production costs. Most often, the production costs dwarf the other two areas (because of the physicality that they involve) so that these costs can be added on to the cost of the final product without any relatively major difference in the price.
Software is unique in this aspect because
-The research costs very little because “ideas are as abundant as air”
-The development of an idea into a marketable product costs far more than the research.
-The production costs are minimal, often just a little more than the price of the medium, which is typically a floppy or a CDROM.
Patents affect the ‘development’ stage of the process of ‘manufacture’ of software. Thus the threat exists that the price of software could be singularly determined by the number of patented innovations that it incorporates.

Patent and Innovation in Software Industry

As argued before the process of software development by its very nature is ‘incremental’ i.e. developing of new software majorly consists of building upon existing ideas and rearranging the processes devised by others, and hence has an inbuilt need for using existing algorithms and mathematical formulae. Patent protection over software or over a set of algorithms within patented software would inevitably create a thicket of patents which the subsequent software developer might need to obtain clearance from before he can begin to work on it. The costs involved in obtaining these clearances and those involved in case one finds oneself having infringed a patent are usually very high, as in the case of biomedical patents. This would act as a disincentive for an aspiring software developer and would adversely affect the growth of the Indian software industry. Introduction of two bills- ‘Genomic Research and Diagnostic Accessibility Bill, 2002’ and ‘Genomic Science and Technology Innovation Act of 2002’ though still pending before the US Congress show the real concerns involved for a ‘patent and innovation policy’ within genomics. Similar concerns are exist in the software and innovation policy and need to be addressed adequately by the each national legislature.
Further there are substantial costs involved in verifying which patents one must obtain clearance for as skimming through the huge patent databases has become a very costly exercise. Unfortunately, conducting a patent search is a slow, deliberative process that, when harnessed to software development, could stop innovation in its tracks. And because patent applications are confidential, there is simply no way for computer programmers to ensure that what they write will not violate some patent that is yet to be issued making survival a very important issue for smaller player in the market.
Various large companies in US have obtained exemptions from going through patent searches for standard work due to huge costs. In such a scenario in a small player software industry like India, it would be unwise to allow ‘software patents’ as they may have negative impact upon the innovation within the industry.
By its nature software industry is ‘innovation driven’ i.e. the only way a software company can compete and improve its sales or grip over market is by making better and more useful features available. This innovation which is the driving force behind the Indian software industry is bound to get affected if a patent protection is provided to software patents. If a company can easily sustain itself on its ‘invention’ (by obtaining patents upon its software) and need not remain innovation driven, which would mean that a patent monopoly would inversely impact innovation and competition in software industry. It would further give rise to monopolistic tendencies and a practice of quoting arbitrary price for the grant of ‘voluntary license’. This lesson can be learnt by looking west where the idea of Public Key Encryption was patented in the US. The patent expired in 1997 and until then, it largely blocked the use of Public Key Encryption in the US. Similar instances can be found w.r.t. ‘data compression software’ and ‘single click software’ patented by Amazon.com. A number of programs that people started to develop got crushed. They were never really available because the patent holders threatened them. This led to a lot of unrest in the software community which culminated into the public outrage against software patents. Similar pressures have prevailed in European community where software patents found public opposition too immense to mount for a long time.
A look at India's own development of its software industry would be of immense help as India started its software industry only after IBM was driven out of country. Before that, there was no software industry worth the name, with software and hardware being imported from IBM. Once IBM left, Indian computer companies developed computers using the UNIX operating system, which was in the public domain. This led to the presence of a large number of skilled software professionals with experience of UNIX were also writing high-level applications for making the entire computer system work.

Political economy of Software Patents

While understanding the issue of software patents, it’s important to look at its political economy and the implications involved for India. If one were to study the trends of software patenting in US and Europe one would witness that the IBM owns a majority of patents along with other giant software companies and has been topping the list of maximum patents granted in US in the private sector. This fact must be seen in the light of the opposition faced from small business organisations, leading scientists and economists in Europe and the unprecedented delay in passing the Software Patent Directive of 2002 by the European parliament. It should be noted that the directive does not aim to make it possible to patent pure computer programs: it would only apply to computer software integrated into an appliance. This makes it much more restrictive than the amended Indian Patent Act, which opens out any technical application of a programme to industry or its realisation in hardware for patenting. Even with this restriction, the critics of the EU directive have pointed out that a patent on software is in effect a patent on an idea, while traditionally patents have been restricted to concrete physical inventions only. By making this amendment, it is possible to implement algorithms in hardware and then claim patent protection for this. Once an idea can be patented if it is burnt in to hardware, the argument for extending it to a software implementation gains ground. In fact, the first breach in the US for making software patentable came through this route. If one were to study the trends in the scope of patentable subject matter granted in software patents by US courts, one would observe that from Diamond v. Diehr onwards court has been granting patents on much more abstract components, which has slowly transformed into patenting the central idea underlying the software. This trend indicates the easy malleability of legal terminology which has brought US courts’ stand on software patents to a full circle from Gottschalk v. Benson where the court found a patent upon software as a patent upon the underlying algorithms which is nothing more than a mathematical formula, unpatentable by its very definition.
The concerns regarding the weaker relative position of these small players is much more relevant in India. Among the primary reasons for large corporations like IBM lobbying for software patents is due to their stronger hold over the software market and ownership of the largest number of patents in this market. Large corporations use their patents, apart from making royalty upon them, to getting access benefit to the patents of other companies. This would close the option of cross-licensing for a majority of Indian companies which have no patents upon software. License though may be obtained are usually available at exorbitantly high prices which would most likely be unaffordable for Indian companies which operate on a small scale and have restricted budget options. The multinational corporations would use software patents as a defensive strategy for preventing smaller Indian companies from gaining any grounds in the market, which would eventually drive them out of business hence destroying the existing Indian software industry.
Software industry has a very characteristic nature which makes it extremely vulnerable to being easily monopolized. Among these characteristics are Network effects (the fact that a program becomes more useful if more people use it), interoperability and compatibility problems, the low cost of massive reproduction of software, the difficulty of inspecting software distributed without the source code, the learning curve and the rapid evolution of the market. Taking the instance of Microsoft Windows (the most popular operating system in use in India today) which enjoys a perpetual monopoly over the operating system market in India, many a larger institutions find Windows extremely costly and desperately needed an alternative to it in order to do business profitably. The recent success of Linux operating systems is demonstrative of this, but this must be understood in the light that India follows a copyright regime for software which allows many of the above mentioned characteristics of compatibility and interoperability to be resolved which would be totally impossible in a software patent regime. This then means that software patents have a potential to hamper the growth of open software movement in India which has begun to play central role in Indian Government’s ‘e-governance’ initiative. Hence it’s extremely urgent to ensure that patents in software do not cause any harm to the fine balance that copyright has achieved.
While understanding a political economy argument of software patents the adverse impact of monopolization upon public interest which has been held to be of utmost importance by the apex court in India, even above one’s legitimate commercial interests.

Procedural Issues

There are a certain procedural issues involved which are of determinative nature as to the allowance of a software patent regime in India. India doesn’t have a well laid out or even a well practiced software patent practice to guide Indian patent office. In the absence of any such policy, examining software patent application becomes a very daunting task, coupled with which the complicated and highly technical nature of software, Indian patent office is quite incapable to evaluate complicated and technically trivial claims which software patent often present. Imposing a software patent regime in such a scenario would impact the quality of such patents which might then prove counter-productive in the development of Indian software industry.
To be able to tackle this situation more personnel and experts would have to be employed in the patent office that can then ensure maintenance of a certain quality standards while granting software patents. But this in turn may not produce increased innovation in the software industry for the human capital which would be invested into processing the claims and preventing and tackling with the patent infringements rather than being invested in developing new software and hence benefit the software industry and economy of the country in general.
The difficulty in reaching a policy to grant software patents and the impacts of granting these patents in the absence of policy are indeed far reaching. In the absence of a policy which classifies patents on algorithms, techniques etc. it would take an awfully long time for the patent office to process a claim, searching the ‘prior art’ which makes the system inefficient and unworkable. Long delays in processing patent applications and subsequent challenge procedure often makes filing for a patent an unwise option for small companies and individual software developer, which form the backbone of Indian software industry. For instance, IBM was granted a patent on the same data-compression algorithm that Unisys supposedly owned. Such an error which could prove lethal for a developing company which has planned its budget meticulously and in consequence of this error would be greatly disincentivized to develop new software. The Patent Office was probably not aware of granting two patents for the same algorithm because the descriptions in the patents themselves are quite different even though the formulas are mathematically equivalent. Even when patents are known in advance, software publishers have generally not licensed the algorithms or techniques; instead, they try to rewrite their programs to avoid using the particular procedure that the patent describes. Sometimes this isn't possible, in which case companies have often chosen to avoid implementing new features altogether. It seems clear from the evidence of the last few years that software patents are actually preventing the adoption of new technology, rather than encouraging it.

thanks to..

LAWRENCE LIANG

The Indian software industry appears to provide a startling confirmation of the benefits of multinational investment in
a fledgling industrial sector. The main question explored in this paper is how and why this happened. We find that
multinational firms had an important catalysing effect on the industry’s evolution, even though foreign firms
established by expatriate Indians probably exerted more competitive pressure. We do not accept a popular view,
which ascribes this benign influence to the development of human capital. We argue it was tight labour markets due
to foreign competition, which induced domestic firms to both acquire unique organisational capabilities and to improve
the value-adding strategies of multinational firms.

details.....http://www.eastwestcenter.org/stored/pdfs/ECONwp051.pdf

Software companies of India

The Software Industry comprises of businesses related to the production and maintenance of computer software. The roots of the industry lies in the IT phenomenon. Services regarding software such as training, consulting and maintenance are a part of this ever-growing industry. The IT industry is witnessing a rapid growth and offers lucrative job opportunities making IT a premium career option for the youth. Infact it is one of the fastest growing sector of Indian industry. India is emerging as a Global IT superpower. The success can be attributed to factor advantage of high quality of software human resources. The Software Industry has succeeded in converting this comparative advantage to increasing exports. More and more companies are receiving the ISO 9000 certification and the day is not far when India will have the highest number of ISO 9000 companies in the world. Indian Software Industry is estimated to be worth USD 1.2 billion. Unfortunately the growth has been limited to a few cities around Bangalore, Mumbai, Delhi and Noida. One problem that software companies in India are facing is that of outflow of IT professionals. This can be looked into by ensuring the conditions for investment and growth in the industry are safeguarded by political stability. Wipro, HCL, Tata Consultancy Services, Satyam computer Services, CMC, IBM etc are some of the major Software companies in India.