I. Introduction
During the early days of computer industry, the software came integrated with hardware. The issue of intellectual property remained confined to hardware only. All this changed during the sixties when software was unbundled from hardware. This gave rise to independent software vendors (ISVs) and the production of standard and custom operating systems, as well as independent applications software’s. Rapid diffusion of low-cost desktop or personnel computer (PC) in late seventies and eighties opened up huge opportunities for ISVs. The software industry gradually increased in terms of overall trade, production and consumption. In 1990s, the widespread diffusion of the Internet created new channels for low-cost distribution and marketing of packaged software, reducing the barriers to entry into the packaged software industry. It also expanded the possibilities for rapid penetration of markets by packaged software products. This rapid increase in consumption of software and easy penetration of market through Internet resulted in increased software piracy, creating a big market in pirated software. According to estimates the global rate of piracy was 59.9% in the year 2010 that means out of the total software sold worldwide 59.9% was fake. Piracy causes huge losses of revenues to software companies every year.
This has made the issue of intellectual property protection for software all the more important. The software is a complex product, which has given rise to a totally different kind of industry in which the input and the output consist of intangibles. The ownership of intellectual property in software industry influences the returns to investments, and the market structure. How best to protect and regulate ownership of intellectual property? The issue of software patenting has thus attracted considerable attention and debate.