Copyright

Software Copyright Raids: Striking an Optimal Balance


A. Introduction

In two previous posts, we discussed the issue of software raids from two different perspectives. One from the point of view of a raided party, to whom such raids are often inequitable, and the other from the point of a view of an IP enforcer, to whom speedy enforcement is absolutely essential for protecting their valuable IP rights.

In a previous post, I promised that we we would run a future post “synthesizing some of the more recent court orders …to ask if the orders draw an optimal balance between the need to protect IP owners against infringement, whilst at the same time safeguarding the interests of a raided party.”

I am still in the process of collecting these orders, but wanted to reflect on a very important Delhi High Court order that attempts to lay down some guidelines in this regard.

In Autodesk Inc. and Anr. v. A.V.T. Shankardass and Anr {2008 (37) PTC 581 (Del.)}, Autodesk appealed against the order of the Single Judge dismissing their prayer for the appointment of a Local Commissioner.

The single judge (if I’m not mistaken, it was Justice Ravinder Bhat) had refused to appoint a local commissioner on the ground that the only evidence before him of any alleged infringement by the defendant was the affidavit of an investigator hired by the Plaintiffs. The said investigator had not even visited the premises of the defendant, but had merely based his testimony of infringement on a telephone call with an executive from the defendant firm. The single judge therefore found no evidence of a “prima facie case” of software infringement and refused to appoint a commissioner.

The appellate court (Division bench at the Delhi High Court) overruled the single judge on this count, holding that the sworn affidavit of the investigator recording the nature of his conversation with the defendant firm was sufficient to constitute aprima facie case. And that it would be unrealistic to expect any further evidence at this stage. The court noted in pertinent part that:

“The private Investigator had sworn an affidavit on oath with regard to his conversation and information as received. In these circumstances, it could not be said that the appellant did not have a strongprima facie case. At the initial stage itself, it would be unrealistic to expect production of evidence of actual usage. The learned Single Judge failed to consider that in an action of infringement of software and piracy, the element of surprise was of critical importance and necessary. Issuance of notice would result in effacement of entire incriminating evidence.

Incidentally, the appellate court also strongly castigated the single judge for failing to follow its earlier rulings (that were also in the nature of appealsagainst the decisions of the said single judge). It noted:

“Even if a learned Single Judge has a firm belief or conviction and holds a view which is at variance with the view taken by the Division Bench, judicial discipline and propriety demand that the view of the Division Bench is adhered to rather than distinguishing it without there being any material difference or basis therefore.”

I find myself in agreement with this ruling of the appellate court, as “speed” and “surprise” are critical elements in any software piracy action and evidence of infringement is often difficult to come by.


B. The Delhi High Court Guidelines: Protecting the Copyright Owner

In the process of overruling the single judge, the Division Bench of the Delhi High Court also laid down some broad guidelines for the conduct of software raids. For a good review of this case, see this article by Divya Balasubramaniam of Lex Orbis.

Firstly, the court noted that it did not intend to lay down elaborate guidelines, since different fact situations would warrant different kind of “raid” orders.

Surprisingly, most of its alleged guidelines were not really in the nature of how software raids ought to be conducted, but more in the nature of propositions that supported the plaintiff’s case i.e. the fact that the element of “surprise” and the quick appointment of commissioners was absolutely critical in ensuring the protection of a plaintiff’s right in software piracy cases.

I’ve listed some of the points enunciated by the court in this regard:

“(i) The object of appointment of a Local Commissioner in software piracy matters is not, as much to collect evidence but to preserve and protect the infringing evidence. The pirated software or incriminating evidence can only be obtained from the premises of the opposite party
alone and in the absence of an ex parte appointment of a Local Commissioner there is likelihood that such evidence may be lost, removed or destroyed;

(ii) Request for ex parte appointment of a Local Commissioner in such matters is usual and in fact is intended to sub serve the ends of justice as it is imperative to have an element of surprise so that the actual position is not altered;

(iii) The test of reasonable and credible information regarding the existence of pirated software or incriminating evidence should not be subjected to strict proof or the requirement to demonstrate or produce part of the pirated software/incriminating evidence at the initial stage itself. It has to be tested on the touchstone of pragmatism and the natural and normal course of conduct and practice in trade.

(iv) It may not always be possible for a plaintiff to obtain any admission by employing decoy customers and gaining access to the defendants premises. Any such attempt also inheres in it the possibility of dis-appearance of the pirated software/incriminating evidence in case the decoy customers is exposed. Accordingly, visit by decoy customer or investigator is not to be insisted upon asa pre -condition. A report of private Investigator need not be dis-regarded or rejected simply because of his engagement by the plaintiff. The information provided by the private Investigator should The information provided by the private Investigator should receive objective evaluation.

(v) In cases where certain and definite information with regard to the existence of pirated software or incriminating evidence is not available or where the Court may nurture some element of doubt, it may consider asking the plaintiff to deposit cost in Court so that in case pirated software or incriminating evidence is not found then the defendant can be suitably compensated for the obtrusion in his work or privacy.”

C. The Delhi High Court Guidelines: Whither the Interests of the Defendant?

i) While I appreciate that the court made some attempt to spell out factors that ought to be taken into consideration whilst deciding an ex parte application for the appointment of a local commissioner in a software piracy case, it is pitiable that the court did not use this occasion to draw out “safeguards” to protect the interests of the raided party. As stated earlier, most of the courts propositions above cater to the interests of the Plaintiff copyright owner. Whither the defendants interests?

As an earlier ghost post argued, the danger of some of these broadly worded orders is that they go beyond the mere legitimate tracking down of infringement evidence and permit the disruption of the defendants business! It is therefore critical that we work out adequate safeguards to protect the interests of a raided party.

Had the court given more serious consideration to the defendant’s interests, it might have insisted on costs (last factor in the court ruling above) as not just optional, but compulsory. In other words, in every case software piracy case, an ex parte order appointing a commissioner to raid premises ought to come with the condition that the plaintiff deposit a sum of money in court to protect an innocent defendant who might be raided and put to losses.

ii) Interestingly, although the court discusses another potential safeguard in favour of the defendant, it ducks the issue and again leaves this to be decided on a case by case basis. It notes:

“We may also notice that the learned counsel for the respondent submitted that there is general exploitation by the multinational companies holding copyrights who make the cost of licences prohibitive. As a result of the appointment of Local Commissioner and consequential orders passed by the Courts, seizing the equipments and machines, including the software in question, the business of the respondent comes to stand still.

Counsel for the defendant, therefore, prayed that the computer system and the CPU’s which may be found or suspected to be involved in use of infringing software should not be seized or taken possession of and the ghost copies of the same including the software could be made for purposes of use as evidence in Court. Counsel for the plaintiff strongly objected to the same, raising objections to the feasibility of making ghost copies of hard discs and the possibility of manipulation therein and objections being raised of their admissibility. We are of the view that the above need not form part of the suggested guidelines and the directions to be given. These issues are best left to be assessed and appropriate orders passed in each individual case by the court.”

I personally think that we must work towards a system where the court commissioner can record evidence of infringement, without seizing the computers and other equipment.

Any techies on our reader list know how feasible it is to capture evidence of infringing software and data built on it, without actually seizing the machines? Can one create a copy of the infringing software and the data built on it (in exactly the same manner as it would have existed on the defendant’s computer) and can this copy then be used as evidence of infringement? I believe that such snapshots of the defendant’s computer and even the creation of a virtual machine that replicates what is contained in the defendant’s machine are possible with tools such as Norton Ghost.

If such a technical solution is a feasible one, it must be adopted–for it strikes an adequate balance between the need to preserve evidence and the defendant’s interest in carrying on his business. Consequently, any negotiated settlement between the parties is a fair one and not one that is skewed against a raided party, who is likely to agree to most terms drawn out by the plaintiff, given that his/her business has just been shut down.

iii) If the above technical solution is not immediately feasible, the defendant must be offered the right to back up his/her data. Such data must not only include data created on licensed software, but also data created using unlicensed software. After all, such “data” can hardly belong to the plaintiff copyright owner. If that were the case, then any copyrighted work (e.g. a book) that includes some infringing content (e.g. a few pages of the book) would automatically belong to the copyright owner of those few pages!

Having said this, it is important to appreciate that the copyright owner can certainly claim damages based on the “use” to which the infringing material has been put. In other words, if data has been created on unlicensed software, the copyright owner can insist on damages for the said “use” of the software to create that data. In a lengthy comment to an earlier ghost post, Nikhil Krishnamurthy very persuasively demonstrates the need for such backup’s and also discusses their legality.

It is quite disheartening that the appellate bench did not see the need to discuss the issue of “back ups” at all!

D. Conclusion

A recent post on original fake by Prashant Iyengar rightly articulates the concern that what was meant to be a civil remedy for copyright infringement may have morphed into almost police like powers in the hands of the commissioner. It is therefore critical that we work out adequate safeguards to protect the interests of a defendant.

Some of the safeguards could be as below:

i) That the copyright owner be asked to deposit costs in court, so as to cover any losses to a wrongfully accused defendant.

ii) That the copyright owner be asked to only capture evidence of infringement (through software such as Norton Ghost), without seizing the computers or other equipment.

iii) That if (ii) is not “technically” feasible at this stage, the defendant be permitted to back up all of her data, prior to her computers being seized.

I look forward to hearing from our readers on this issue and our attempt to formulate guidelines that might strike a somewhat healthy balance between the interests of a copyright owner and those of a raided party. Any other guidelines that you can think of?

Shamnad Basheer

Shamnad Basheer

Prof. (Dr.) Shamnad Basheer founded SpicyIP in 2005. He's also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof. Amartya Sen. Professional History: After graduating from the NLS, Bangalore Prof. Basheer joined Anand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Later, he was the Honorary Research Chair of IP Law at Nirma University and also a visiting professor of law at the National Law School (NLS), Bangalore. Prof. Basheer has published widely and his articles have won awards, including those instituted by ATRIP, the Stanford Technology Law Review and CREATe. He was consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also served on several government committees.

14 comments.

  1. AvatarPrashant

    Hey Shamnad,
    While guidelines may mitigate the harshness of the raid, my problem has more to do with the legality of such an order itself. Where is the provision in law which permits a civil court to set up its own investigative authority? Extending this logic, can the Supreme Court tomorrow install a rival to the Central Bureau of Investigation? Is this not an incursion into the sovereign domain of the executive?

    Reply
  2. AvatarAnonymous

    I am a 1st year student, bit confused. Is this type of order the same as the “ANTON PILLAR” injunction order?

    Reply
  3. AvatarAditya Gupta

    EXCESSES IN EXECUTION OF ANTON PILLER ORDERS: SAFEGUARDS ADOPTED BY UK COURTS

    Dear All

    As the subject of Anton Piller orders has been raised, I think it is appropriate that we discuss the UK jurisprudence regarding the same. The Courts in the UK were faced with a problem very similar to the one raised in the ghost blog. For instance one may peruse the cases of Universal Thermosensors Ltd. v. Hibben and Ors. ([1992] F.S.R. 361) and of Columbia Picture Industries and Ors. v. Robinson and Ors. ([1986] F.S.R. 367 per Scott J.). Both these cases deal with the issue of Anton Piller abuses where Anton Piller orders have been abused leading to great hardships to the defendant.

    In the Universal Thermosensors case, the Court’s order was abused to the extent that a woman alone in here house with her children was confronted by a man she did not know, claiming that he had a right to enter her house, and that she could not contact anyone except her lawyer (who at that time of the day was not available). The Court came up with 7 specific safeguards in order to check such abuses. The Court observed that:

    1. Anton Piller orders must be executed only on the working days in office hours when a solicitor is expected to be available.

    2. In general, Anton Piller orders should generally provide that, unless this is seriously impracticable, a detailed list of the items being removed must be prepared at the premises before they are removed and that the defendant should be given an opportunity to check this list at the time.

    3. The scope of Anton Piller orders must be limited in a manner to ensure that the plaintiff must not be allowed access to all the defendant’s documents/materials (especially if the defendant is a competitor company) and Court observed that certain means need to be devised to avoid certain situations.

    4. The Court further suggested that judges should ensure through suitable undertakings that the order is served and its execution supervised by a solicitor other than a member of the firm acting for the plaintiff and that such solicitor must have experience (and is familiar) with the working of Anton Piller orders. Further, the Court recommended that a report be prepared by the solicitor recounting the events of the execution and that such copy of the report be served on the defendants and be presented to the Court at an inter partes hearing within a short period of time.

    5. Anton Piller orders must not be executed at business premises save in the presence of a responsible officer or representative of the company or trader in the presence of a responsible officer or representative of the company or trader in question.

    6. The defendant must not be restrained from informing others about the existence of the order for an unreasonable period.

    7. If the order is to be executed at a private house, and it is at all likely that a woman may be in the house alone, the solicitor serving the order must be, or must be accompanied by, a woman.

    Similarly, in Columbia Pictures Industries case, the Court sought to make the following general comments regarding Anton Piller orders:

    1. Anton Piller order must be drawn so as to extend to the minimum extent necessary and to achieve the purpose for which they are granted i.e. to ensure preservation of evidence, which is likely to be destroyed or concealed.

    2. A detailed record of the material taken should always be required to be made by the solicitors executing the order.

    3. The plaintiff (and his solicitors) must be permitted to remove only those materials/documents from the defendant’s premises if they are clearly covered by the order. The Court particularly admonished the practice wherein material not covered by the order is removed after the defendant is procured and his consent is taken.

    4. The Court further recommended that the seized material must be returned to the defendants or else, if ends of justice demand, a neutral officer of the court must be charged with the custody of the material.

    5. Anton Piller orders further require that the plaintiffs must disclose all relevant facts and the affidavits in support of the applications must err on the side of excessive disclosure.

    In my opinion, these safeguards, if adopted by Indian Courts (and more importantly, if their breach is appropriately acted against), would provide solutions to most of the issues raised in the ghost blog and would appropriately safeguard the interests of the defendant.

    Regards

    Reply
  4. AvatarAditya Gupta

    GRANT OF ANTON PILLER ORDERS: NEED FOR CIRCUMSPECTION

    Dear All

    I wish to discuss not only the need to provide safeguards to defendants against the abuse of Anton Piller orders, but also the need to be circumspect in the grant of these orders. Once again, I shall draw an analogy with the UK experience, as in my opinion, the Indian experience is proving to be very similar to the UK one.

    It is pertinent to note that the Courts in the UK were initially reluctant in granting Anton Piller orders and agreed to do so only on the satisfaction of certain pre – conditions. (for instance, one may refer to the first case in Anton Piller jurisprudence viz. EMI Ltd. v. Pandit ([1975] 1 All E.R. 418) wherein the Court held that such orders must be granted only in ‘unusual cases’ with ‘exceptional circumstances’.)

    The landmark case relating to Anton Piller orders, (in fact the case from which the name itself originates), is that of Anton Piller KG v. Manufacturing Process Ltd. and Ors. ([1976] F.S.R 129) which laid down 3 specific criteria which need to be satisfied before the grant of Anton Piller Orders. The three criteria are:

    1. Plaintiff must establish an extremely strong prima facie case of infringement of his rights.

    2. The damage, potential or actual, must be very serious for the applicant (plaintiff)

    3. There must be clear evidence that the defendants have in their possession incriminating documents or things, and that there is real possibility that they may destroy such material before any application inter partes can be made.

    It is further to be noted that in the case of Lock International plc. v. Beswick ([1989] 1 W.L.R. 1268 per Hoffman J) , the Court observed that even in cases where the plaintiff has strong evidence that the defendant possesses certain confidential information, the Court must be circumspect and must ensure that there is proportionality between the perceived threat to the plaintiff’s rights and the remedy granted.

    Another interesting observation was made in the case of Booker McConnell plc and Anr. v. Plascow and Ors.([1985] R.P.C. 425 per Dillon LJ.) wherein the Court held that the plaintiff was required to show real possibility of destruction of evidence and that such “real possibility” was to be contrasted from extravagant or unreasonable fears of the plaintiff. This requirement is likely to raise the bar required to be satisfied by the plaintiff even further.

    In my opinion, the Indian Courts must adopt similar guidelines and the grant of Anton Piller orders must become an exception rather than the rule.

    Regards

    Reply
  5. AvatarAditya Gupta

    INSTANCES OF GRANT OF ANTON PILLER ORDERS IN INDIA

    The first software piracy case in India in which the Court granted an Anton Piller order was International Business Machines v. Kamal Dev (UNREPORTED) . In March, 1992, the International Business Machines Corporation (IBM) discovered that some of its computer programs were being pirated and pirated copies sold on the Indian market. The plaintiff applied for an Anton Piller order (application for the appointment of local commissioners was filed) in the Honourable Delhi High Court. On such application, the Court appointed such persons to visit the defendant’s premises and to

    1. Prepare an inventory of the computer programs whether on floppies or on hard disks, manuals, stationery articles, packaging materials and all electronic goods lying at the premises of the defendants bearing the trade mark IBM; and

    2. Run the programs contained on the defendants’ floppies or hard disks in order to see whether they contain any infringing program of the plaintiff including Storyboard Plus Version 2.00 or the trade mark IBM and, if so, to take the floppies and/or hard disks, related manuals, stationery articles, packaging materials and all electronic goods into custody. The local commissioners were empowered to seek expert help and police assistance, if so required.

    As is evident from the form of the above order, the local commissioners in this case were empowered to prepare an inventory of the computer programs as well as to seize the floppies, disks etc, thereby giving the order the flavour of an Anton Piller order.

    Two recent cases in which the Hon’ble High Court of Delhi has been inclined to grant ex parte Anton Piller orders are Autodesk Inc. and Anr. v. A.V.T. Shankardass and Anr. (Order of the Delhi High Court in Autodesk Inc. and Anr. v. A.V.T. Shankardass and Anr., FAO (OS) No. 116/2008 and CM No. 3558/2008 (dated 10.3.2008)) and Microsoft Corporation and Anr. v. Ashit Goswami and Anr. (Order of the Delhi High Court in Microsoft Corporation and Anr. v. Ashit Goswami and Anr., FAO (OS) No. 95/2008 and CM No. 2994/2008 (dated 10.3.2008)), wherein the Courts clearly held that in software piracy cases, the defendant can easily remove software in case of prior notice and, therefore, the ex parte appointment of an local commissioner without notice was essential for the preservation of evidence. The Court held that the element of surprise was necessary in cases involving Data processing as the incriminating evidence can be erased immediately. In light of these observations, the Court granted the prayer for an Anton Piller order, holding that it was empowered to appoint a Local Commissioner for the purposes of preservation of evidence (though it may not be empowered to appoint a Local Commissioner for facilitating or collecting evidence.)

    Reply
  6. AvatarDivs

    @ Prashant.. This is my opinion as to why the Hon’ble Court might have taken the stand it did…

    1. I think the Court in this case treats the Local Commner akin to a Court Officer who is appointed to undertake fns such as attaching somebody’s prop. etc. owing to such an analogous nature..if existent.. I guess the Court rendered guidelines..

    2. On sovereign domain of the executive being trespassed… India does not follow absolute seperation of powers.. but the organs are merely sufficiently diffrentiated… Hence Court framing guidelines..

    for that matter.. rarest of the rare doctrine for capital punishment also evolves thru case law and is not stated in “law” anywhere…

    Reply
  7. AvatarDivs

    Prashant…

    On discussion on this with a friend… we exploresd the CPC and Order XXVI R9 may be pertinent to appointment of the Local commissioner..

    Reply
  8. AvatarPrashant

    Hi Divya,
    I’ve discussed my reasons for why I think Order XXVI R9 does not apply to this case in my posting at originalfakes. Please do take a look at the section beginning with “Search and Seizure” – there are some other grounds on which such an order might be illegal that I have discussed there as well.

    About attachment of property (I’m assuming Order 38), firstly the pleadings in the Shankarlal case are under Order 26 – so the judge could not have validly granted an Order 38 relief. Even otherwise, attachment before judgment is to be granted only after issuing the defendant a show-cause notice and on satisfaction that the defendant is about to dispose of his property. The court can, instead of ordering attachment, require the defendant to deposit a security in court.

    In re your comment about separation of powers – I don’t think there’s an instance in the world of absolutely absolute separation of powers. That is not the stance from which I am attacking this order. The Supreme Court framing guidelines acts within it’s Constitutional authority under Article 142 of the Constitution – this privilege is not granted to courts lower down in the hierarchy. My point is that this order violates “the principle of sufficient differentiation” or “relative separation of powers” or whatever you may call it. When courts start setting up police machinery and raising an army, that surely violates the “basic structure” as much as when legislatures try to exclude judicial review.

    Reply
  9. AvatarAnonymous

    I read with interest the post on software copyright. I am just a law abiding citizen with great respect for the effort and work that goes into the making of software. I have a small organization of my own and probably belong to the ‘few’ who buy licensed software for use despite the exorbitant costs and despite being aware that the same pirated software (like Windows, Adobe Photoshop, CorelDraw) is available for just Rs 100/-.

    There are some practical issues we face especially with regard to Microsoft products. For one, a product like Windows 98 is no longer supported by them. Systems bought earlier have these as operating software. Most recent creative software that is used is not supported by outdated Windows editions. There are some systems, which come with pre- installed software. In the event of a system crash, the CDs for these are not available and the technician installs software that is available with them. Microsoft also does not offer any discounts for those who have licensed software and absolutely no benefits for those who wish to upgrade from the older versions.

    There is another issue of the version that you wish to purchase. Windows has this Home/Student version, Standard and Professional. A laptop usually comes with the home version that is pre-installed. Most of these systems are used by office executives, however when we as an organization wish to purchase the software, the home version is not offered. Most of us, do not require anything more than what the basic edition offers, and why should we be forced to purchase the professional edition?

    If the software companies price their products reasonably and offer upgrades at discounted rates, there are bound to be more people using licensed software.

    Also, buying licensed software has a major disadvantage. The unfortunate few figure in the database of the companies that harass you periodically for a software audit. Small organizations like us have neither the time nor technical personnel to give the details that they require. Honestly, those who purchase original software are a harassed lot.

    Reply
  10. AvatarAnonymous

    Anton Piller orders are also used for other purposes which have nothing to do with Intellectual Property or Copyrights. Use of Anton Piller involving blogs and alleged defamation is also on the rise. See Blogger resisting Anton Piller Search, also Existing and Emerging Privacy-based Limits In Litigation and Electronic Discovery. When the civil remedy of an Anton Piller order takes on retributive character, and SLAPPs against public criticisms become the hallmark, it would be a time for a rethink on the laws.

    Reply
  11. AvatarAnonymous

    Anton Piller orders are also apparently used for other purposes which do not relate to Intellectual Property or Copyrights etc. Use of Anton Piller involving blogs and alleged defamation is also on the rise. See Blogger resisting Anton Piller Search, also Existing and Emerging Privacy-based Limits In Litigation and Electronic Discovery. When the civil remedy of an Anton Piller order takes on retributive character, and SLAPPs against public criticisms become the hallmark, it would be a time for a rethink on the laws.

    Reply

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