Ameet Datta tells the story of a real life IP raid and explains why civil procedures are more enticing than criminal ones in the battle against pirates

It is the worst kept secret in Delhi. In the dense and bustling electronics market of Nehru Place, New Delhi, thrives a brisk trade in pirated software. Among the run-down buildings, thousands of CDs loaded with unlicensed software surreptitiously change hands for cash every day.

Individuals engaged in this trade take orders and call up associates who roam the marketplace with discs carrying illegal software. Transactions are swift and if one returns to the location of a past transaction the same day, chances are the seller has moved “shop” and simply melted away.

The marketplace is wary of intellectual property (IP) raids and is strongly organized into a traders association (as are other organized marketplaces). While efforts have been made at the association level to distance the marketplace from the piracy trade, little has changed with the exception of driving such trade underground, making it a more covert activity.

Nehru Place (as is the case with other areas in the grip of piracy) has been the subject of multiple raids with varying degrees of success.

The lessons, as elsewhere in life, are learned from raids which failed.

Launching a case

The plaintiff, Arun Bansal, developed a type of software called Leo which helped deliver astrological predictions. He subsequently discovered through reports that unlicensed copies of his software were being sold at various locations in Nehru Place market. Bansal’s enquiries revealed the specific locations where the software was available for sale.

After securing a copy of the infringing computer programme from the market, Bansal checked the software. It was indeed unlicensed.

He quickly launched a civil lawsuit (Mr Arun Bansal & Anr v Alok and Ors) before Delhi High Court, alleging copyright infringement and seeking damages. He also sought an interim injunction and an Anton Piller order.

Granted under the provisions of orders 26 and 39 of the Code of Civil Procedure, 1908 (CPC), an Anton Piller order permits the appointment by the court of an advocate as a local commissioner (essentially a representative of the court) who is given the responsibility to visit the defendant’s premises, seize infringing goods and record any infringing activity.

Assessing the facts of the case, the court granted an ex-parte ad-interim injunction, restraining the use, by the defendants, of the Leo software. It also appointed a local commissioner to visit the location at Nehru Place to seize and collect evidence relating to the sale of the infringing software.

Planning the raid

The raid team comprised three lawyers representing the plaintiff, the court-appointed commissioner and two investigators tasked with making the “trap purchase”. The trap purchase was warranted due to the way in which infringing goods are dealt with at locations such as Nehru Place.

The modus operandi essentially involves taking orders for specific software and obtaining the CDs from couriers who roam the marketplace with bags. Since no premises actually stock the infringing software, it is often difficult to pinpoint the location of the goods.

Any raid entails a “pre-raid check” where one purchase is made and an additional order placed for multiple copies. The order provides the basis of a trap purchase and also confirms first-hand, and at the last possible moment, that the goods will be available.

Prior to proceeding to the location, the investigators briefed the local commissioner on the details of the target premises and location, approach paths, exits, and expectations of resistance. The team was also briefed on the software in question.

Executing the raid

With the team maintaining a safe distance, the investigator tasked with making the trap purchase was dispatched to the location. The second investigator followed close behind, maintaining a “line of sight”, with the raid team and the first investigator. The pre-arranged signal involved the investigator scratching his head.

Once the disc containing the software arrived at the location and the investigator gave the signal, the team rushed into the premises and confronted the defendants with the local commissioner identifying himself and handing over a certified copy of the order passed by the high court.

Unprepared for resistance

Seized with absolute terror after being approached by five strangers claiming the defendants were the subject of a high court raid, the defendants immediately started apologizing to the local commissioner.

The commissioner began preparing his on-the-spot-proceedings report after seizing the infringing CD. This report details the circumstances of any seizure and also records, in the presence of the defendants, a superdari nama or seizure memo, detailing the goods seized. The report is normally initialled by the defendants and forms part of the commissioner’s report to the court.

Soon enough, members of the local traders association arrived at the premises and started protesting against the raid. Some individuals among the gathered crowd started using abusive language and incited the other onlookers to assault the raid team.

In the ensuing skirmish, the defendants and their associates snatched the seized CD and the commissioner’s report and ran. Several members of the raid team were assaulted during the fracas and were lucky to escape without any serious injuries.

Lessons learned

What went wrong? According to a debriefing exercise following the raid, a number of problems were identified.

The primary shortcoming was a lack of adequate intelligence on local conditions prevailing in the market. To exacerbate matters, detailed information regarding the antecedents of the defendants was also missing. In fact, the investigation never progressed beyond the business location used by the defendants in this matter.

The lack of police protection and cover during the execution of the raid was also cited a dangerous oversight.

The recent assault by local traders on members of the Delhi Police Crime Branch at another location favoured by pirates, a case which disappointingly emerged after Leo software raid, suggests that sufficient police back-up is necessary for both investigator and public protection.

Since the court order allowed the plaintiff to seek police assistance, prior warning could have allowed the team to seek police presence during the raid.

Furthermore, reducing the commissioner’s delay in wrapping up the raid with the report could have prevented a crowd from assembling and soon after, indulging in a backlash.

A petition for criminal contempt was subsequently filed against named and unnamed persons. One person who was traced, tendered an unconditional apology after being sent to police custody. The police traced none of the remaining persons despite their best efforts. It was later discovered that the pirates had decamped from their premises in Delhi, which was rented, and were untraceable.

Since that period, there have been several instances where local commissions have been obstructed. The courts have been swift in their retribution, sending to jail and fining the persons responsible hundreds of thousands of rupees in compensation in relation to cases filed by GE (GE Motors India Pvt Ltd v Mukesh Kumar) and Microsoft.

Today, almost all local commissions, if handled properly and in coordination with local law enforcement agencies, are executed smoothly without any serious obstruction.

Choice of routes

Rights owners keen to counter piracy in India can choose either the criminal complaint/case route, or the civil suit route.

Taking into account the development of jurisprudence around civil enforcement cases today, the contrast between a criminal law enforcement campaign and a civil law enforcement campaign is stark in its progress and result.

At first glance, the criminal law route appears quick and fittingly retributive, while the civil route appears disappointingly low-key and frustratingly slow. Upon closer examination, despite initial successes, the criminal route emerges as a cumbersome process in which rights owners have little control over the end result, whereas the civil route, even with its limitations, emerges as the better option.

The focus of anti–piracy campaigns in India has largely been reactive in seeking to address instances of piracy that come to the notice of a rights owner or its representatives in India.

Anti-piracy campaigns, with a few exceptions, have never specifically sought to strengthen brands in India or even to boost business. On the contrary, most of them continue to be a financial burden for rights owners with little effort being made to pass the financial onus onto violators.

Examples of successful, self-sustaining anti-piracy campaigns in India have been demonstrated by software companies such as Microsoft, Autodesk, Adobe, Tata Consultancy Services, all of which are members of the Business Software Alliance.

Software companies, like other rights owners, have also pursued the criminal law route with a degree of initial success and significant disappointment thereafter.

Criminal campaigns

In the mid to late 1990s, various Indian and multinational software companies instituted criminal complaints against parties in India. These parties were either indulging in “hard disk loading” (loading unlicensed software onto assembled computers) or dealing in infringing copyrighted material by reproducing the software on discs and selling them at rock-bottom rates.

Without a trace: Increasing sophistication in organized crime networks makes it difficult to prosecute infringers.
Without a trace: Increasing sophistication in organized crime networks makes it difficult to prosecute infringers.

Instances of software piracy were common (as is the case presently) and at that time, a heavy-handed approach was considered necessary. For copyright infringement in India, police are permitted to make arrests without a court warrant. In addition, the element of facing “public shame” after an arrest was perceived as a further incentive to proceed with this remedy.

Before long, dozens, and finally hundreds of cases, were lodged with various city police departments around the country, which carried out raids and arrests. Once the accused had been arrested, bail was usually granted within three to five days. This effectively put the case to rest until the police filed charge sheets against the accused and trials began in each matter. The severe time lapse between arrests and the commencement of trials was between three to five years.

During this period, rights owners also found that they had no control or say in the prosecution proceedings as criminal cases were prosecuted solely by the state against the accused.

Carelessness and lack of exit options

The cases instituted by the police were also adversely affected by sloppy evidence gathering and preservation. In one reported instance, a police officer punched a hole through a floppy disc containing backed up software evidence to tag the disc to the case file.

Adding to this, state prosecutors were often unfamiliar with, and in some cases not inclined to brush up on, proving IP rights. Criminal courts faced with large case backlogs often regarded IP cases as “luxury litigation”, and were often dismissive of efforts by rights owners to prove any infringement.

Faced with the prospect of the endless and often unpredictable criminal process, rights owners attempted to settle the matters, but were soon faced with another obstacle. Copyright infringement, and now even trademark infringement, being criminal offences, the cases could not be compounded by a settlement between the parties.

In such cases, the only option was to approach the relevant high court under section 482 of the Code of Criminal Procedure, 1973, seeking to quash the first information report filed by the police (at the request of the rights owner). Every such case was left to chance and depended on a bench’s good humour rather than certainty.

Rights owners’ lack of confidence in the system consequently prompted the search for alternative models of enforcement.

A more promising path?

In the late 1980s a music company, Gramophone Company of India, sought and was granted an Anton Piller order in a civil suit filed against Super Cassettes Industries.

The Anton Piller order soon became an integral part of the rights assertion campaign of every party. A local commissioner would report back to the court, following a raid, leaving the seized goods under a court seal, with the defendants to be produced at a later date. With the infringing goods under court custody, parties (and the defendants) would likely sue for a settlement. The court would normally allow the suit to be decreed on the basis of the settlement arrived at between the parties, under the provisions of order 23, rule 3, of the CPC.

The civil process essentially allows parties to escape the heavy-handed approach that characterizes the criminal law route and still retain the ability to seize infringing goods. More importantly, parties are given the opportunity to quickly exit the litigation process upon arriving at a mutual settlement.

A test of patience: Both criminal and civil cases can take years to reach the trial stage.
A test of patience: Both criminal and civil cases can take years to reach the trial stage.

Nevertheless, the civil process is not void of problems.

The very basis of litigation in India serves to create complications for rights owners. If in a given situation seizures are not allowed, defendants often choose to fight a prolonged battle, rather than pursuing an out-of-court settlement, defeating the intentions of the rights owners.

Suits moved to trial in varying time frames, but almost never before a three or four year period, and even then, interruptions by defendants or even by the plaintiffs (due to delays in securing original documents, especially by foreign companies) added little to the prospect of quick closure to the litigation. These delayed lawsuits also exposed valuable IP rights to questions of validity, and thus rights owners were often wary of entering such litigation.

Streamlining the civil process

In the recent case of Autodesk Inc and Anr v Mr AVT Shankerdass and Anr, a division bench of Delhi High Court framed guidelines for the appointment of local commissioners in software matters.

The court held that requests for the appointment of local commissioners were normal in such matters and that these appointments were targeted more towards the preservation and protection of infringing evidence, than the collection of it. This is due to the fact that the absence of such an appointment could result in evidence being lost, removed or destroyed.

In addition, the court maintained that credible information regarding the existence of pirated software or incriminating evidence should not be subjected to strict proof.

The court also held that courts should not insist on visits by decoy customers and investigators as a precondition to granting such orders. The report of a private investigator need not be disregarded or rejected simply because of his engagement by the plaintiff, but should receive objective evaluation, according to the court.

To protect the rights of defendants, it was also stated that in the absence of certain and definite information, a court could order plaintiffs to deposit costs to protect defendants if they were being harassed.

The court clearly refused to consider the defendants’ plea requesting for hard disks containing allegedly infringing software not to be seized. The defendants argued that copies of the software (rather than the entire hard disk) could be made to provide evidence in the given proceedings so that the defendants’ business would not come to a standstill.

The court left such considerations to the trial courts in each individual case.

This is one of the many instances of how civil courts in India have ensured that the civil process remains a viable route for rights owners. As seen above, even with the laws in place, much depends on how anti-piracy operations are conceived, planned and executed.

Ameet Datta is a partner at Luthra & Luthra Law Offices where he specializes in intellectual property, media and entertainment law.