20. Mr. 'A' steals computer source code used for Mr. 'B's computer. Is Mr.'A' liable?

1. Facts of the Case

Mr. ‘A’ gains unauthorized access to a computer system belonging to Mr. ‘B’ and steals the source code used in Mr. B’s software. This source code is the core intellectual property of Mr. B’s software application, possibly used for commercial or operational purposes.

Source code theft is not just a breach of confidentiality, but also a violation of intellectual property rights, as the code represents significant effort, time, innovation, and investment. Mr. A may use this stolen code for personal profit, to develop a competing product, or to cause financial harm to Mr. B.

The question arises: Is Mr. A legally liable under the Information Technology Act, 2000 for stealing source code?

2. Issues in the Case

1. Does unauthorized access to and copying of source code qualify as a cyber offence?

Does digital theft of code equate to traditional theft of physical property under Indian law?

2. What is the legal protection available to source code as digital property under the IT Act, 2000?

3. Is stealing source code considered data theft, intellectual property theft, or both?

Which legal provisions can be invoked—only the IT Act, or also Copyright and IPC laws?

4. What are the punishments for such cyber offences in India?

What penalties can be imposed for unauthorized access and digital data theft?

3. Legal Principles Covered Under the IT Act, 2000 and Other Laws

Section 43 – Penalty for Damage to Computer, Computer System, or Network

This section covers unauthorized access or downloading of data from a system. Mr. A’s act of accessing Mr. B’s computer and extracting the source code without consent is a clear violation of this section.

It covers:

Unauthorized access
Copying, downloading or extracting data
Causing disruption or theft of information

Section 66 – Computer-Related Offences

If the acts in Section 43 are done dishonestly or fraudulently, it escalates to a criminal offence under Section 66.

Penalty: Imprisonment up to 3 years or fine up to ₹5 lakhs or both.

Section 66B – Dishonestly Receiving Stolen Computer Resource or Communication Device

If the stolen source code is used by another party who knows it’s stolen, that person can be punished under this section.

Penalty: Imprisonment up to 3 years and fine up to ₹1 lakh.

Other Legal Support

Copyright Act, 1957

Source code is protected under literary works in the Copyright Act. If the code is original and registered, Mr. B can also proceed under copyright infringement.

Penalty for infringement:

Injunction
Damages or account of profits
Criminal prosecution with imprisonment up to 3 years

Indian Penal Code (IPC)

Section 378 & 379 – Theft
Digital theft, though intangible, is increasingly recognized under broader interpretations of property theft.
Section 405 & 406 – Criminal Breach of Trust
Section 420 – Cheating and dishonestly inducing delivery of property

4. Possible Judgement

If Mr. A is Proven Guilty

The court may:

Convict Mr. A under Sections 43 and 66 of the IT Act for unauthorized access and data theft.
Penalize him under Copyright Act for intellectual property theft.
Apply Section 420 IPC for fraudulent intent and dishonest gain.
Impose imprisonment of up to 3 years and fine based on damages caused.

The court may also:

Order Mr. A to destroy all copies of the stolen code
Award compensation or damages to Mr. B for business loss
Direct injunction preventing further use or distribution of the code

If Evidence is Weak or Unauthorized Access Not Proven