IP Protection for Digital Replicas of Industrial Equipment: Ownership, Access and Contractual Control
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Introduction : In an industrial setting, a digital twin rarely consists of a single component. It may be embodied in CAD files, executable code, models, software algorithms, technical documentation, process instructions, sensor logs and historical operating data.
This layered structure creates potential ambiguities over ownership at the time of procurement. The manufacturer may own the physical equipment and certain pre-existing engineering specifications relating to it. The manufacturer may also rely on technology supplied by another company for the software framework underpinning the twin. Separate parties may contribute software libraries or simulation engines, while the manufacturer may generate operational information that becomes central to the twin’s commercial value.
Legal Provisions: The IP Building Blocks of a Digital Twin
Copyright in Software and Models
For many of the components of a digital twin, the initial and most appropriate forms of protection can be granted by the Copyright Act, 1957. Section 2(o) of the Copyright Act expressly includes computer programmes and computer databases within ‘literary work’. Section 13 provides for copyright to subsist in original literary, dramatic, musical and artistic works, while Section 14 defines the exclusive rights included in copyright.
Copyright protection is concerned with expression rather than the ideas and functional concepts underlying them. In R G Anand v Deluxe Films, the Supreme Court distinguished between unprotected ideas and protected expression. [3] A party cannot claim copyright merely because it was the first to develop a particular digital model. The key question is whether protected expression has been copied.
Databases and Industrial Data
Digital twins rely upon data but ownership and copyright are different. Raw sensor readings and other factual machine-generated data are not, as facts or data per se, protected by copyright merely because they have commercial value.
They could be protected where there is an original arrangement or a sufficiently original compilation of data, and copyright would only apply to the data compilation not the data itself. In Burlington Home Shopping Pvt Ltd v Rajnish Chibber, the Delhi High Court held, at the interim stage, that an original compilation of customer addresses constituted a literary work and restrained the defendant from using the plaintiff’s database. The Judge determined that protection rested on the qualifying database and confidential information.
Indian law does not presently provide a standalone sui generis database right, Digital-twin agreements should, therefore, distinguish between raw machine-generated data, original database compilations, derived analytics and technically sensitive information.
Engineering drawings and technical documentation
An engineering drawing may attract copyright independently of the software used to create or digitize it. Section 2 (c)(i) of the Copyright Act includes drawings, diagrams, maps, charts and plans within the definition of ‘artistic work’.
In John Richard Brady v Chemical Process Equipment's Pvt Ltd, the Delhi High Court considered copyright in technical drawings together with confidential technical information and know-how disclosed under conditions of confidence, and granted interim protection against their alleged misuse.
Section 15 of the Copyright Act creates an important interface between copyright and design protection. Under Section 15(2), where a design is capable of registration under the Designs Act, 2000 but is not registered, copyright in the design ceases once the relevant article has been reproduced more than fifty times by an industrial process. The copyright position of engineering drawings should therefore be considered alongside the Designs Act in projects involving industrial reproduction.
Patents and computer-implemented technology
A Digital-twin could also involve patentable technical subject-matter, and while section 3(k) of the Patents Act, 1970 has traditionally prevented computer programmes "per se" from being patented, not every software-related invention is debarred from protection.
The relevant examination framework is provided by the Office of the Controller General of Patents, Designs and Trade Marks’ Guidelines for Examination of Computer Related Inventions (CRIs) - 2025, read together with the Patents Act and Rules. Patentability should hence be considered independently from copyright. A digital twin may bolster a patented process without necessarily falling foul of copyright and contract protecting the software component primarily.
Confidential engineering information and know-how
Although India lacks its own dedicated trade-secret statute, confidential technical information is protected by way of contractual arrangements, equity and related relief. Section 16 of the Copyright Act expressly preserves the right and jurisdiction to restrain a breach of trust or confidence.
Legal Analysis: Ownership Depends on the Component
A manufacturer doesn’t automatically own everything in its digital twin
A digital-twin project often contains different categories of rights. Some, such as the manufacturer’s pre-existing design drawings, specifications, machine data and other background IP, may exist before the contract. The supplier may own its software libraries, simulation engines, models and reusable tools, while third-party components may remain subject to separate License terms. Project-specific IP may be owned by either party or allocated through the contract.
The starting point of Sec 17 of the Copyright Act provides that the author is the initial owner of the work, save as the following exceptions in the section. The employment exception in Sec 17(c) relates to works prepared in the course of employment on a contract of service, and should not be readily applied to an independent technology supplier just because it was compensated to provide certain deliverables.
This distinction was taken into consideration in Yennes Infotech (P) Ltd v The Managing Director in which the Madras High Court made a distinction between a contract of service and a contract for service and refused to automatically apply Section 17(c) to a customized software arrangement. Ownership of custom developed software and models in the context of a digital twin project should be clearly laid out rather than assuming based solely on who bore the development costs.
Infringement can occur even where the final model looks different
A supplier may still infringe copyright even if the final digital model does not visually resemble the earlier version. Infringement may arise from reproduction of protected software code, drawings, documentation or database expression. Breach of confidence may also arise where technical information supplied for a limited purpose is used for an unauthorised purpose.
This distinction between ownership and permitted use matters in both directions: a supplier may retain ownership of its reusable modelling platform while remaining prohibited from using the customer’s confidential engineering information for another client, while a manufacturer may receive rights to use supplier software without acquiring ownership of the supplier’s reusable platform.
Licensing and Access After the Supplier Relationship Ends
The biggest practical danger for a poorly drafted digital-twin contract arises on termination. This is because a manufacturer will own the hardware and operational data but still be reliant on proprietary supplier software to interpret or visualize that data. If this license expires at the end of the services agreement, even full ownership of the underlying data is of little practical benefit, if the customer has no continuing access.
Sections 30 and 30A of the Copyright Act provide for written Licenses and apply the requirements of Section 19 to such Licenses with necessary adaptations. A digital-twin contract ought therefore to identify the precise scope of the access and/or software rights required after termination, as opposed to general rights to “use the software”.
This also needs to be considered if the consequences of a long term disruption of the supplier's software would have significant operational risk. The contract should define the circumstances in which the code may be released and the purposes for which the released code may be used. Escrow does not, by itself, transfer ownership.
The English litigation in Topalsson GmbH v Rolls-Royce Motor Cars Ltd provides a useful comparative example. Rolls-Royce engaged Topalsson under a Services Agreement to design, build, implement and maintain digital visualisation software, and disputes subsequently arose over performance and termination. The Court of Appeal decided the appeal in 2024. The decisions are not binding in India, but they illustrate the importance of addressing software rights, deliverables and termination consequences expressly.
Practical Implications: Contracting for Digital-Twin Projects
1. Define the asset taxonomy prior to development
The contract should, preferably through a schedule, identify Customer Background IP, Supplier Background IP, Third-Party IP, Customer Data, Machine-Generated Data, Derived Data and Analytics, Project-Specific Models, Bespoke Software, Drawings and Documentation, and Improvements. A single definition of ‘Project IP’ is rarely sufficient because these categories may be subject to different ownership, licensing, confidentiality and use restrictions.
2. Segregate ownership from License rights
For a supplier-owned platform, the customer should be granted a License broad enough to operate and maintain the twin for its manufacturing activities. If the customer already owns the project-related materials, the License granted to the supplier should be limited to what is necessary to perform the agreed services.
3. Spell out Data Rights clearly
The contract should distinguish customer-supplied data, machine-generated data, derived datasets and analytics, and specify the parties’ respective rights to access, use, export, retain and delete that information. It should also state whether the supplier may use the data for benchmarking, product development or model training.
4. Safeguard confidential engineering information
Drawings, machine parameters, maintenance histories, process specifications and failure data should be identified as confidential where appropriate. The agreement should regulate storage, access, copying, disclosure, retention and permitted use by employees and subcontractors.
5. Define the exit mechanism prior to entering into a project
Termination provisions should define what is to be delivered by the supplier, the form and timing of delivery, including current versions of the relevant models, project configurations, documentation and the customer’s data, together with reasonable transition assistance, while preserving the supplier’s underlying intellectual-property rights in its background technology.
Contract Clauses for Digital-Twin Projects
A robust digital-twin agreement should contain, at minimum:
IP ownership clause: identifies and allocates background IP, project-specific material, improvements and third-party components.
License clause: specifies the scope, duration, territory and permitted uses of supplier-owned software.
Data rights clause: separates customer data, machine-generated data, derived data and analytics and states permitted supplier uses.
Confidentiality clause: protects engineering drawings, specifications, source code, model parameters, operational data and know-how.
Third-party software clause: identifies proprietary and open-source components and the applicable License restrictions.
Security and subcontracting clause: imposes equivalent IP, confidentiality and data-protection obligations on subcontractors and establishes appropriate access controls and incident-reporting requirements.
Exit and transition clause: requires return or transfer of agreed data, models, documentation and project materials and provides reasonable transition assistance.
Source-code escrow clause: where justified by operational dependence, defines release events and limits use of released code to the agreed purpose.
Post-termination clause: specifies which Licenses survive termination, what information must be deleted or returned, and what limited rights remain necessary for legal, audit or operational purposes.
Relevant Case Laws
John Richard Brady v Chemical Process Equipment's Pvt Ltd
The Delhi High Court considered copyright in engineering drawings alongside confidential technical information and know-how supplied under conditions of confidence. The decision demonstrates that industrial drawings and confidential engineering information may give rise to distinct but overlapping claims.
Burlington Home Shopping Pvt Ltd v Rajnish Chibber
The Delhi High Court restrained unauthorised exploitation of a customer database developed through compilation. The case is useful in understanding protection of qualifying database compilations and confidential information.
Eastern Book Company v D.B. Modak
The Supreme Court rejected a purely labour-based approach to originality and required sufficient skill and judgment. The principle is relevant to original databases and other digital-twin compilations.
R G Anand v Delux Films
The Supreme Court’s idea-expression distinction remains relevant where parties create similar technical models but dispute whether protected expression has actually been copied.
Yennes Infotech (P) Ltd v The Managing Director
The Madras High Court distinguished a contract of service from a contract for service in determining ownership of customised software. The case is particularly relevant when allocating rights in supplier-developed digital-twin software.
Topalsson GmbH v Rolls-Royce Motor Cars Ltd
The English courts considered a dispute arising from termination of a digital-visualisation software project. Although not binding in India, the litigation provides a useful comparative lesson in addressing software rights, deliverables and termination in advance.
Conclusion
A manufacturing digital twin should not be treated as a single item of intellectual property. It is better understood as a bundle of software, engineering drawings, databases, models, documentation and sensitive technical information, each of which may attract different forms of legal protection.
The greatest commercial risk often arises when the supplier relationship ends. A manufacturer may own its equipment and operational data while remaining dependent on supplier-owned software. Conversely, a supplier should not be expected to transfer its reusable platform merely because it was used for a customer-specific project.
The practical solution is contractual precision. Digital-twin agreements should identify background IP, project outputs, data, models, software and confidential information separately; distinguish ownership from licensing; define permitted uses; and establish a workable exit mechanism. In manufacturing, continued access to the digital twin after termination can be as important as ownership itself. These issues should therefore be settled when the project is negotiated, rather than after the technology has become indispensable to the physical system it represents.
Author: Ayush Garg in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.
Endnotes
World Intellectual Property Organization, “IP Protection of Digital Twins”, explaining that digital twins may involve copyright, patents, trade secrets, databases, input data, software and simulation/models.
Copyright Act 1957, ss 2(o), 13–14.
R G Anand v Delux Films (1978) 4 SCC 118.
Burlington Home Shopping Pvt Ltd v Rajnish Chibber 1995 PTC (15) 278 (Del).
Copyright Act 1957, s 2(c)(i).
John Richard Brady v Chemical Process Equipments Pvt Ltd AIR 1987 Del 372.
Copyright Act 1957, s 15(2).
Office of the Controller General of Patents, Designs and Trade Marks, Guidelines for Examination of Computer Related Inventions (CRIs) - 2025 (2025).
Copyright Act 1957, s 16.
Yennes Infotech (P) Ltd v The Managing Director AIR 2021 Mad 281.
Copyright Act 1957, ss 19, 30 and 30A.
Topalsson GmbH v Rolls-Royce Motor Cars Ltd [2023] EWHC 1765 (TCC); [2024] EWCA Civ 1330.
John Richard Brady (n 6).
Burlington Home Shopping (n 4).
Eastern Book Co v D B Modak (2008) 1 SCC 1.
R G Anand (n 3).
Yennes Infotech (n 10).
Topalsson (n 12).
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