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Importance of IPR to sustain the Commercial Software Model India Habitat Centre, New Delhi December 05, 2003 Presented by: Rakesh Bakshi Director – Law & Corporate Affairs Microsoft Corporation (India) Private Limited
Agenda • Commercial Software Model • What is this model? • Its advantages • Intellectual Property Rights • Nature of IPR • Kinds of IPR • IP rights in software • Conclusion • Importance of IPR for commercial software • Other factors commercial software needs to succeed • Level Playing field • Increasing the size of the domestic IT market • Moving from renting IQ to developing IP
Commercial Software Model - 1 • Generate revenue by Licensing IP in the form of Software Programs • Mass Market approach • Sell many units of the same program • Recover up-front costs from revenues • Reinvest portion of revenues in Research and Development to fuel innovation and growth
Commercial Software Model - 2 • Other companies compete for the same business • Success depends on understanding customer needs better than competition…. ....and responding faster to those needs!
Commercial Software Model - 3 • Strong incentives to innovate and stand behind the products: • Release stable, tested products • Fix bugs and security holes • Support partners, developers and customers who use the software product • Integrate new features and services that add value for customers • Comply with industry and government standards • Interoperate with other products and the products of the competitors
Strengths of Commercial Software Model - 1 • Remarkable economic growth • Between 1990 and 1998, annual market growth in the packaged software - over 15% in the USA • Generated USD 7.2 billion in US federal and state corporate taxes in 1997 - expected to grow to USD 25 billion by 2005 • Innovation • Dramatic gains in performance and functionality even as the price of these products has remained stable or even fallen • In 1998, the US software and computer services industries invested about USD 14.3 billion in R & D - exceeding level of R & D spending by the US motor vehicles, pharmaceuticals and aerospace industries
Strengths of Commercial Software Model - 2 • Local IT Industry growth • Opportunities for hardware manufacturers, software developers, service providers and channel companies • Indian software and services market has grown to over $12b
Strengths of Commercial Software Model - 3 • Drivers of Interoperability through industry wide standardization - Thousands of off-the-shelf products communicate and exchange data • Cost Effectiveness – • Low TCO including post-purchase costs of customizing the system, maintaining and servicing and training costs • Highly productive and quicker return on investment
Intellectual Property Rights - 1 • Rights protecting commercially valuable products of the human intellect • Property created by exercise of intellectual faculty, a result of a person’s intellectual activity
Intellectual Property Rights - 2 • Industrial Designs • Patents • Trade Marks • Geographical Indications • Semiconductor Topographies • Copyrights /Performing Artists and Broadcasters rights • Trade Secrets/undisclosed information – Coke formula
Intellectual Property Rights - 3 • Copyright Act, 1957 protects computer programmes, tables and compilations including computer databases as “Literary works” • Protects expression of ideas • Registration not mandatory • Term of protection – Life of the author plus sixty years
Intellectual Property Rights - 4 • Confers exclusive rights on the owner of copyright, inter alia, to • reproduce the work in any material form • issue copies of the work to the public • communicate the work to the public • Violation of exclusive rights constitutes copyright infringement - both a civil and a criminal proceeding may be maintained
Conclusion – 1 Generates Revenue • Licensing of IP - primary source of revenue - Value of software entirely based upon intangibles • License reserves commercial exploitation of copyrights exclusively to the software producer • Licenses generate revenue to recover upfront costs of R & D and re-investment for future innovation
Conclusion – 2 Protect software products from unauthorized copying • Software Industry is labour intensive but reproduction is low cost activity making it a target of illegal appropriation/piracy • Digital format allows faster ad infinitum reproduction without loss of quality • Technologies to breach security are matching up with those to aid security
What does it mean to us? • Strong IPR regime is essential for the survival, growth and success of the Commercial Software Industry • Commercial software industry has vested interests in: • Level playing field • Growing the domestic IT market • Moving from renting IQ to developing IP