Interestingly, I met this certain someone (“X”) during my years in active IP practice. We had raided a small firm accused of software piracy and X was the defendant’s counsel. It was perhaps one of the last software piracy raids that I ever did–as it left a bad taste in my mouth and I figured that aggressive IP enforcement against small traders was often inequitable and really not my cup of tea. Part of the reason was also a heart to heart discussion I had with X during the course of that case. X strongly castigated me for representing a team that used highly extortionist tactics for getting their way against small defendants.
I met X again recently and we resurrected our old discussion on the inequity of IP raids. I asked him to write a piece on this for us, given his vast experience with these sort of cases. And here is what he has penned: very heartfelt, and yet very persuasive.
SOFTWARE RAIDS: COURT SPONSORED EXTORTION ?
Picture this.
You are working in your office one day, when all of a sudden, a group of people arrive unannounced brandishing a court order. The order allows them to walk into your office and conduct an audit of all your office computers to collect evidence of the use of unlicensed software in your office.
This group consists of a court-appointed commissioner, lawyers representing the plaintiff, and technical persons who will carry out the actual software audit.
Knowing that to disobey the order will amount to a contempt of court, you allow the group to carry out the audit.
The audit lasts several hours and continues well into the night. Needless to say, it is physically and emotionally draining on you as your work has come to a stand-still. Everyone around you knows there is some court proceeding going on. You have already lost face with your employees, and possibly even clients who have visited your office during the audit.
As you have several dozen computers purchased over a period of time, and the audit is conducted unannounced, you may not have the time to gather documentation and invoices demonstrating the purchase of licensed software.
While the court order allows you to back up your valuable client and business data, the plaintiff’s lawyers don’t allow you to do so, stating that documents/ data found on machines that contain any unlicensed software may not be backed up.
As everything is happening so fast and your whole world has been turned upside down, you do not have the time, presence of mind or legal representation to argue that (a) the court order does not make any such distinction; (b) such data may have been created on licensed software or (c) that such a backup of DATA does not infringe the copyright of the software company in its PROGRAMS.
All computers found with copies of what the plaintiff’s lawyers are calling unlicensed software are seized and sealed. You do not have the time, presence of mind or legal representation to argue that such copies may be backup copies allowed under the law, or that therefore several, or all of the seized machines are not liable to be seized, or that such copies are actually allowed under the software license.
The plaintiff’s lawyers conveniently do not inform you that the law allows back-up copies to be maintained or what constitutes a back-up copy permissible under law.
Even more importantly, your licensed servers are seized because they are found to contain back-up copies of software, allowed under the law, but deemed infringing by the plaintiff’s lawyers.
At the end of the audit, you are informed that your computers contain copies of unlicensed software to varying degrees. You are made to sign a report prepared by the commissioner, along with sheets that represent the software audit of each computer in your office.
Most of your computers and servers are seized and sealed. You are told that you cannot touch them till the court allows you to. You are not even allowed to separate the hard drives of those machines that contain the alleged unlicensed software, for the purpose of seizure, so as to enable you to continue using the rest of the machine, even though the court order clearly states that only storage media containing the unlicensed software is to be seized.
Again, you do not have the wherewithal to argue that the scope of the order has been exceeded.
The group leave your office in complete disarray, but not before the plaintiff’s lawyers tell you to meet them at their hotel later that night to discuss “settlement”, and vague references to press publicity.
You suddenly realise that you do not have access to any of your data and cannot service your clients.
You promptly rush over to the hotel in an attempt to save your business, reputation and sanity and make this go away at any cost.
The plaintiff’s lawyers play good-cop bad-cop. But they tell you that it is in the best interest of your business and reputation to settle immediately. There are threats about going to the press, about shutting your business down forever of you don’t play ball. They provide you with an exorbitant settlement figure that will effectively bankrupt you.
You beg and plead that you cannot afford the figure, that there are defences and mitigating circumstances, that maybe some software was installed in an unauthorised manner by employees and that you did not know, that you certainly do not need all that software for your business and therefore why must you be forced to purchase it; that you undertake that you will not use that software, and even if you do, in future, you will buy licenses, or that you will make use of open-source free alternatives (that last bit doesn’t go down too well).
You find yourself agreeing to all this even before you have seen the allegations made against you in the lawsuit. You agree to settle even before you know the merits of your case.
Your main concern is how to have your office up and running tomorrow, and save your reputation. You cannot be concerned about legal niceties! You cannot be concerned about defences available to you under the law.
You cannot be concerned about whether you in turn have a right to sue the plaintiff for wrongfully seizing your machines or overreaching the orders of the court.
You cannot be concerned with the fact that the court issuing the order to have you raided, did not have jurisdiction to do so in the first place, and that therefore the order itself is bad in law.
You don’t have the time to be concerned about all these nuances!
Even if these points are brought to your attention by your lawyer, you are keenly aware of the delays that are endemic to the legal system.
You are also keenly aware of the fact that the plaintiff will try and delay the hearing of the matter as much as possible to cripple your business to gain an forceful hand in the settlement negotiation.
The plaintiff also delays entering into a mutually agreeable settlement with you, knowing that you are in an extremely weak bargaining position (considering your office is virtually shut down), and that you won’t have any choice but to meet its exorbitant demands.
To top it off, the plaintiff’s PR agency puts out an article in the leading newspapers stating that your company was raided and found to be running on unlicensed software, thereby ruining your reputation beyond all measure.
Fighting on the merits would invite further unwanted media attention, not to mention a delay in the resumption of your business.
You are genuinely unable to meet the plaintiff’s monetary demands but execute a wholly one-sided settlement agreement anyway as you are left with no choice.
The suit papers arrive a few days later and you finally know what the lawsuit against you was all about.
More importantly, you realize that if the cards weren’t all stacked against you, you may have had a chance to successfully defend yourself.
It is too late, as you now have a court decree against you.
Does this not strike anyone as an extreme method of enforcement ? Does it not strike anyone that the courts are an unwitting tool in this extortion ?
Does it not strike anyone that even if the court had jurisdiction, certain safeguards must be incorporated in order to allow for the backup of data, and other methods so that the business of the defendant is not brought to a standstill.
Must not such orders safeguard against heavy-handed actions of the plaintiff during the execution of the commission, and provide for penalties against the plaintiff for overreaching the scope of such orders ?
Must the court not appoint independent technical experts to conduct such commissions ?
Must not the court provide the commissioner with some amount of discretion in the execution of the commission, for instance, to allow the use of computers after taking an undertaking from that the unlicensed software on such computers will not be used ?
After all, the purpose of executing a commission is to collect evidence, not stop a business. What purpose is served by not allowing a defendant to back up data, or be denied the use of an entire computer, when it is really only the hard disk that matters ?
Does this not strike anyone as an abuse of the law and court process with a view to committing extortion ? Does this not strike anyone as UNFAIR ?
作者 GHOST POSTER
Wow! How does this compare with, say, the raiding & sealing of a complete office if illegal drugs or ammunition was found in one of the rooms? Or in the house of one of the directors?
Is it just that Indian lawmakers have “copy-pasted” the procedures commonly followed for regular crimes to IT related crimes?
Also, do you know under what circumstances can the court issue a warrant for such an audit? If my office is running completely on open source products, am I still susceptible to such an audit? What can one do, prima-facie, to save oneself from a complete office audit if only one or two machines are capable of running/installing the copyrighted software? (For example, MS Office cannot be installed on Linux or Unix. So an audit for illegal MS Office installations cannot be conducted on Linux/Unix workstations).
Well this seems to be very similar to pre-trial discovery proceedings in the US or the saisie contrefacon proceedings in france or proceedings similar to those in the EU enforcement directive. I am glad that we have such proceeding in India too.
I wonder why one would think of this as an extreme method of enforcement. A business whether small or big enjoyed the free illegitimate use of the software which it probably purchased from a person selling it for Rs.100, and made thousands of rupees.
However I agree with the fact that courts must designate a technical expert. what is also important is that the court order should have exact details of how far the investigating team can probe and seize and seal. There has to be a way to challenge the proceedings if the defendant feels that the investigation has gone beyond the scope of the order.
Such proceedings are outlined in detail particularly in France and now extended to the EU. May we would like to see an article comparing the French procedure to the Indian one.
Dear Shamnad,
I have to agree that the argument made in this article, that a document created by a certain software, is not a copy of the software itself, is quite compelling. Under Section 14 of the Copyright Act, 1957, the right to reproduce or store in electronic form, issue copies, translate, adapt and sell/ rent, are the copyrights given to software, or a substantial part of the software. Section 16 mandates that no person shall be entitled to copyright otherwise than under and in accordance with the Act.
So therefore, can a document created using some software be considered an infringing copy of the software itself, as only certain copyrights are provided with respect to the software, which does not seem to include the right to create a document from said software ?
If defendants are not allowed to back up data or documents that may be created using unlicensed software, which may be according to a court order, several points arise for consideration: –
(a) That whether the document itself is to be considered a “copy” of the software or a “substantial part” of it.
(b) That even if the document itself is to be considered a copy of the software, which I think is a bit far-fetched, whether the defendants will at least be entitled to back-up the “content” of the document in some other format (even a hard copy for that matter).
(c) That should the defendant be considered the “author” of the literary, artistic or other work that is “computer generated” within the meaning of Section 2 (c) (vi), i.e., considered the person who “causes the work to be created”. In which case, wouldn’t the data or content of a document be, inter alia, copyright property of the defendant as the author, not the plaintiff ? Copyright would subsist in such a work as opposed to a situation under Section 13 (3).
(d) That if it is considered that a document is not an infringing copy of the software from which it was created, how to back up such a document without switching on the computer on which it is residing as this may breach the order of injunction. As any person with even a little knowledge about computers knows, it is a simple matter of connecting the hard drive of the computer in question, externally to another computer, and simply copying off the documents folder. Neither the operating system, nor the application requires to be either run or used in any other manner to achieve this process and the Defendant can fully comply with the injunction.
(e) That whether a court order couched in language that only allows back-up of documents created using licensed software is bad in law, as the document itself is not to be considered an infringing copy of software itself, also considering that the defendant may have to be considered the author and copyright owner of such document.
(f) That if nonetheless, a court order requires backups to be made only of documents created using licensed software, whether or not it is for the Plaintiff to demonstrate to the commissioner at the time of the commission that any document not allowed to be backed up, was actually created by unlicensed software [this may be impossible to do as each computer may contain several thousand documents which may or may not have been created on that machine – for example if a defendant stores a back-up of all his documents on a machine that if found to contain unlicensed software, how is it to be decided which documents are “bad documents” or “good documents”].
(g) That whether a document created using unlicensed software amounts to a “conversion” of the software. If so, the Plaintiff is entitled to take “proceedings” for the conversion thereof under Section 58. If it is argued by the Plaintiff that the “format” of the document is off-limits to a defendant, whether such “proceedings” will allow a Plaintiff to deny a defendant access to the “content” of the document itself is debatable. For example if a law firm is raided and found to contain unlicensed software, whether all documents found on computers which have unlicensed software, which may be client critical, will be blocked from access to the law firm that created them. Note that Section 58 also provides that the owner of copyright will not be entitled to any remedy in respect of conversion of infringing copies, if the opponent proves that he had reasonable grounds for believing that such copies do not involve infringement of the copyright in any work. Therefore a question also arises as to whether a conversion has to relate to an infringing copy of the software or even a document created from such software. [But see point (c) above.] The proviso may even apply to back-up copies of legally obtained software as per Section 52 (1) (aa) (ii).
I agree that a set of guidelines have to be in place when conducting raids of this nature since at the end of the day, if a defendant is not allowed access to the content of his documents, whether created using unlicensed software or not, and for even any length of time, it may lead to financial ruin, and that cannot be good thing even from the plaintiff’s point of view. I am given to understand that the Division Bench of the Delhi High Court has laid down some guidelines but have not had a chance to see them.
From a practical standpoint, it may simply not be possible to check each and every file on a computer to see what it was created on and by who, and may lead to a situation where everything must be seized, or left alone. If everything is seized, a potentially inequitable situation arises, hereas if all data is allowed to be backed up but an injunction operates, I cannot see a plaintiff suffering as a result. On account of the large number of documents present in any business, a person may not even realize that he has lost access to mission critical data, accounting data or some such thing which may even be required for some statutory compliance at short notice.
Lastly, and slightly off-topic, I wonder if it makes any sense to have copyright protection for software for “sixty years” from the end of the calendar year of publication (See Section 28A), when developers stop support for versions of software after five to ten years. It is very rare to find use of software released ten years ago. Perhaps a system of compulsory licensing could be evolved for companies that wish to use a particular version of software when a company ceases to provide support for such version. It would then be the headache of the user to figure out how to deploy and support the software, and the developer would continue to receive some income for the use of such software from compulsory license royalties.
Nikhil Krishnamurthy
Interesting article, but I feel the whole point has been missed. It is in reference to small traders/offices. While I agree the audit process described seems onerous and weighted towards the plaintiff, the solution is simple.Do not use unlicensed software. This is easy to enforce, more so if you have a small office and consists of very simple steps
1. Publish a clear policy detailing zero tolerance towards any employee found using unlicensed software on their work stations
2. Invest in a free or cheap software tool that audits your IT network for unlicensed software
3. Create 1 physical file containing Invoices for all computers and software purchased. Yes, it might take time to initially assemble such a file (if never done so in the past), but thereafter it is the easiest way to keep all documentation in 1 place
4. Use open source software as far as possible. Windows OS comes pre-loaded on all branded work stations. Use Openoffice, Adobe Raeder etc
The fact is that in India (and many other parts of the world), offices buy assembled or low cost computers and when they find out the cost of the accompanying application software (e.g. Office), take a knowing decision to use unlicensed software
I quite agree with Mr. Krishnamoorthy.
The case on apptment of Local Commissioner is Autodesk Inc. and Anr. v. A.V.T. Shankardass and Anr {2008 (37) PTC 581 (Del.)}]
There’s a copy of this order at
http://delhicourts.nic.in/Jul08/Autodesk%20Inc%20Vs.%20AVT%20Shankardass.pdf
http://www.ipghost.com
What I’d like all of you to consider is where actually do the copies of pirated software CDs come from?
I cannot for a moment believe that software companies have not been able to find a solution to stop software piracy in all the years that they have been suffering such alleged huge losses from software piracy. There have been so many advances and the equipment and wherewithal to protect your software from piracy are easily available. Yet through some ‘mysterious’ and most probably ‘supernatural’ means, pirated versions of software that are even yet to be released are to be found easily on the streets of India.
I cannot see how this can be possible without the active participation of the software companies themselves. The street vendors of crack and heroine and the promoters of gambling dens can learn a lot from the software companies.
I’ve seen somebody here saying that the best means of avoiding such harassment is simply to stop using unlicensed software. Clearly this person has had no experience in running an ITES / IT company. Can he explain to me how it is possible to compete with a concern that is using unlicensed software and therefore can quote so low figures for projects that you can’t even dream of if you are using licensed software!!
Thus, while it is easy to be sanctimonious and righteously preach to people that they should not be using unlicensed software, it is very difficult – even highly impossible – to do without unlicensed software and yet survive in the SME ITES / IT segment. By allowing such high handed and one-sided actions we are MURDERING the small entrepreneur and selling off our economy and consequently the nation itself into the hands of big business especially those from abroad. Such a course has from time immemorial shown itself to be disastrous (the best example is that of the East India Company).
If we must crackdown on software piracy it must be wholesale and not be single-case as it is right now. That is every user of pirated software must be booked and stopped from using such software. What happens today is the software companies fuel the habit of the SME units of using unlicensed software until they are sure that enough has been invested for the SME to be unable to function cold-turkey. And then in true crack-dealer fashion such extortion begins in earnest!!! When that happens, you cannot point to your competition and ask even them to be put out of business too because your competition is being fattened knowingly by the software company until they are ready for the altar of greed of the software companies!!
No, the answer is for the law to provide more equitable grounds for the SME entrepreneur to fight the software companies. At the very least, the software companies must be made accountable for the proper working of their product. They should be made to ensure after sales service and maintenance for at least 10 years and be made to provide backward compatibility in all versions till such time. We cannot allow the software companies rights without consequent duties to be fulfilled. Around 150 years ago we allowed a situation to develop where a merchant establishment had all authority without responsibility, and we became slaves as a consequence. We must never allow the same situation ever to develop again!!!
What I’d like all of you to consider is where actually do the copies of pirated software CDs come from?
I cannot for a moment believe that software companies have not been able to find a solution to stop software piracy in all the years that they have been suffering such alleged huge losses from software piracy. There have been so many advances and the equipment and wherewithal to protect your software from piracy are easily available. Yet through some ‘mysterious’ and most probably ‘supernatural’ means, pirated versions of software that are even yet to be released are to be found easily on the streets of India.
I cannot see how this can be possible without the active participation of the software companies themselves. The street vendors of crack and heroine and the promoters of gambling dens can learn a lot from the software companies.
I’ve seen somebody here saying that the best means of avoiding such harassment is simply to stop using unlicensed software. Clearly this person has had no experience in running an ITES / IT company. Can he explain to me how it is possible to compete with a concern that is using unlicensed software and therefore can quote so low figures for projects that you can’t even dream of if you are using licensed software!! Such firms make some profit only because they are using unlicensed software, while you – the conscientious buyer of licensed software – are left holding a worthless piece of documentation that gives you absolutely no rights on the software that you are supposed to have brought. Not even the right to redressal in case the software fails to perform what it is supposed to be performing. (READ the EULA and you will see so many clauses which show the software companies washing their hands off any responsibility for the performance of the software that they are purported to have created themselves and on the strength of the performance of which they are making such huge profits!!). When you buy licensed software, you don’t even have the right to demand after-sales-service of any kind!! There will be no help nor any effort to make sure that software is installed properly or even that your queries of how best to use the software are being answered or not. Can you imagine ANY segment where such an attitude is tolerated??
If we must crackdown on software piracy it must be wholesale and not be single-case as it is right now. That is every user of pirated software must be booked and stopped from using such software. What happens today is the software companies fuel the habit of the SME units of using unlicensed software until they are sure that enough has been invested for the SME to be unable to function cold-turkey. And then in true crack-dealer fashion such extortion begins in earnest!!! When that happens, you cannot point to your competition and ask even them to be put out of business too because your competition is being fattened knowingly by the software company until they are ready for the altar of greed of the software companies!!
Again it would be so easy to say that we – the end-user of software – must unite and stop the use of unlicensed software amongst ourselves, so that such crack-dealer tactics and strategies can be foiled. But when it comes to the survival of your business, it’s anybody’s guess how long such unity can last.
No, the answer is for the law to provide more equitable grounds for the SME entrepreneur to fight the software companies. At the very least, the software companies must be made accountable for the proper working of their product. They should be made to ensure after sales service and maintenance for at least 10 years and be made to provide backward compatibility in all versions till such time. We cannot allow the software companies rights without consequent duties to be fulfilled. Around 150 years ago we allowed a situation to develop where a merchant establishment had all authority without responsibility, and we became slaves as a consequence. We must never allow the same situation ever to develop again!!!