As you are aware of, Covishield, the vaccine candidate of Serum Institute of India was approved by Drug Controller General of India for restricted emergency use. Pertinently, a passing off suit was filed by a Nanded-based pharmaceutical company, Cutis Biotech, which claimed to be the lawful and the prior user of the tradename “Covishield” against Serum Institute of India. The trademark applications, which were filed by the Cutis Biotech and the Serum Institute of India, are pending before the Registry [ Live Law report].

Legal Position

According to Section 2(zb) of Trademarks Act, 1999, “trade mark” means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours. The strength of a mark is directly proportional to its ‘distinctiveness’ i.e. its  inherent ability to distinguish itself from other marks and identify the source.

Broadly speaking, marks can be classified into generic marks (e.g. “Xerox”), descriptive marks (e.g. “Fair and Lovely”), arbitrary marks (e.g. “Apple” Computers) and invented marks (e.g. “Zerodha”) in the ascending order of their strengths. Since generic marks cannot distinguish any longer, they cannot be registered as trademarks. Descriptive marks are those which immediately convey the ingredients or qualities or characteristics of the goods. Illustratively, “Fair and Lovely” mark for the cream will immediately convey that it is a cosmetic product. On the other hand, Arbitrary marks and invented marks are those which cannot logically explain the ingredients of qualities or characteristics of the goods. For example, “Apple” or “Zerodha” will not immediately convey the inherent characteristics or qualities of the concerned products.

My view

I checked the website of Cutis Biotech. From what I gather, the company is marketing a series of covid-preventive products such as surface decontaminant, fruit and vegetable wash and antiseptic under the trade name “Covishield”. As the name indicates, these products “shield” one from “covid”. Therefore, I will place “Covishield” under the category of descriptive marks. Descriptive marks are eligible for protection provided they lose their primary meaning and acquire secondary meaning; the primary meaning being the actual meaning of the mark and the secondary meaning being the source-identifying function. Illustratively, Cutis Biotech can obtain protection for “Covishield” if (i) the mark loses its primary meaning of shielding one from corona; and (ii) enables the consumer to identify the source of the product as Cutis Biotech. This is a question of fact. [See SpicyIP post on Bombay High Court judgment (2015) on descriptive mark and passing off]

As I see it, it may be an arduous task to prove that “Covishield” has acquired a secondary meaning. This means that Curtis Biotech may have a heavier burden of proof to prove its case. Further, the Serum Institute may face a similar legal burden in terms of obtaining and defending trademark protection for “Covishield” (if at all the mark reaches that stage).

Topical Highlight

Sci-Hub and Libgen Up against Academic Publishers: A Death Knell for Access to Research? – Part I

In this three-part post, Nikhil dissects the ongoing copyright litigation in the Delhi High Court by three big publishing houses, namely Elsevier, Wiley and ACM against the shadow libraries Libgen and Sci-Hub, alongwith the interpretive issues before the court. In Part I, he explains the background of the dispute and analyses the dynamic injunction plea sought by the plaintiffs. He argues that a thorough examination should be carried out before categorising the defendant websites as ‘rogue’. He notes pertinently that a sample size of hundred or so articles might not be sufficient to establish infringement to an extent where the total scope of works runs over 84 million each. He argues that the common practice by some courts to not be particularly careful in structuring the dynamic injunction orders and giving broad-worded reliefs can misused by the plaintiffs, thereby unreasonably constraining free speech. In this light, he concludes that caution must be exercised in structuring a dynamic injunction relief if it is granted.

Sci-Hub and Libgen Up against Academic Publishers: A Death Knell for Access to Research? – Part II

In Part II, Nikhil analyses the applicability of a fair dealing exception to the case and argues that a strong case can be made that the use of copyrighted works by the defendants amounts to a fair dealing of the copyrighted works for purpose of research under Section 52(1)(a) of the Copyright Act. He analyses the functioning of Libgen and Scihub as per the US four-factor test incorporated by the Delhi High Court in India TV Independent News Service Pvt. Ltd. v. Yashraj Films Pvt. Ltd. to interpret fair dealing. He argues that in the instant case, the purpose of use of the copyrighted works by the defendants is to ensure adequate access to paywalled articles to facilitate research. He then argues that if the court concludes that defendants’ use indeed amounts to ‘fair dealing’ based on the four-factor test, the next question would be to see if it falls within the scope of sub-section (a)(i). He notes that in light of precedent, the provision could be interpreted to include use of works that facilitates research. Finally, he concludes that accepting the defendants’ fair dealing arguments would not set a dangerous precedent as is feared since the assessment will be particular to the case at hand, which is peculiar because of the defendants’ non-profit nature and lack of impact on the owner’s market.

Sci-Hub and Libgen Up against Academic Publishers: A Death Knell for Access to Research? – Part III

Finally, in Part III, Nikhil analyses the applicability of the educational use exception provided under Section 52(1)(i) of the Act (which was found applicable in the DU photocopy case) to this case. He argues that if the court decides against the defendants in this case, that will mean that the applicability of this exception will become minimal. He also analyses whether the three-pronged test for grant of an interim injunction has been satisfied in this case. He notes that the plaintiffs have approached the courts after almost a decade of the existence of defendant websites, and thus, their probability of securing the interim injunction should be minimal. Therefore, the court should be wary of granting any relief until the trial is completed and the facts and law have been thoroughly examined. Finally, he hopes that the court factors in the different considerations of a developing nation like India as against the developed nations where the defendant websites have presently been blocked, because this litigation can have a massive impact on the research potential of the country.

Thematic Highlight

Copyright and the Sci-Hub/Libgen Case: A Constitutional Query

In this post, Saral Minocha writes about the ongoing copyright litigation in the Delhi High Court by three big publishing houses, namely Elsevier, Wiley and ACM against the shadow libraries Libgen and Sci-Hub. He argues that an interpretation of our copyright law which allows the plaintiffs to prevail in this ongoing litigation restricts the right to free speech as granted in Article 19(1)(a), and does not have basis in any ground in Article 19(2). Saral notes that unlike in the US, the argument that speech infringing copyright is unprotected is not an attractive argument with respect to the Indian Constitution since Indian Courts are not left free to determine grounds on which the right granted under Article 19(1)(a) can be restricted. Further, he demonstrates how copyright law that prohibits access to educational materials is not covered by any of the restrictions under Article 19(2). He notes that copyright law has to be subject to Article 19(1)(a) not just because of Article 13 (which provides that laws infringing fundamental rights are void to the extent of infringement), but also because of Article 245 (which provides for power of Parliament to legislate). Finally, he concludes that these discrepancies can be resolved if copyright law is amended to make educational materials available at a reasonable cost or if a clarification is made in the exceptions to infringement so that copyright does not inhibit research. Otherwise, he notes that the Constitution could be amended to include “copyright” as a ground in Article 19(2).

Other Posts

A Look Back at India’s Top IP Developments of 2020

Unfortunately, many traditions worldwide had to be broken the past year, but at SpicyIP we gladly continued our annual tradition of recounting all the significant developments that impacted the Indian IP landscape in 2020. This year, we divided these developments into four categories: a) Top 10 IP Judgments/Orders (Topicality/Impact); b) Top 10 IP Judgments/Orders (Jurisprudence/Legal Lucidity); c) Top 10 IP Legislative and Policy Related Developments; and d) Top 10 Other IP Developments. We also included a list of other notable IP developments of 2020 here and we informed viewers of a list of the most read posts on the blog in 2020 here.

‘Jhund’ Injunction Order: Copyright and Personality Rights in Real Life Stories

In this post, Shivam Kaushik analyses the Telangana High Court’s order granting an interim injunction restraining the release of the film ‘Jhund’ in October this year. This restraining order was passed due to potential copyright and personality right infringement. He criticises the reasoning of the High Court because as per precedent [R.G. Anand v. Deluxe Films (1978)], which the High Court cites itself but does not follow or distinguish—similarity in plot, depiction, life and the life and story of protagonist is insufficient to constitute infringement. He pertinently points out that without access to the plaintiff’s script, it was impossible that the film’s story could be a substantial and material copy of it. He analyses the jurisprudence around the right of publicity in India, as per which only that which is not on the public record cannot be revealed. He argues that the life story of Defendant No. 1 received heavy publicity when it was showcased in an episode of popular TV show ‘Satyamev Jayate’ and it became a part of public record, eroding the element of privacy and the publicity rights in it. Therefore, he concludes that the reasoning of the High Court in holding that copyright can exist in life stories is unconvincing and unreasonably expands the scope of copyright and personality rights.

Tenability of Passing Off Action against “COVISHIELD” of Serum Institute of India

In this post, Mathews examines a passing off suit filed by a Nanded-based pharmaceutical company, Cutis Biotech, claiming to be the lawful and the prior user of the tradename “Covishield” against Serum Institute of India. He argues that Cutis Biotech’s use of the tradename “Covishield” for products such as surface decontaminant, fruit and vegetable wash and antiseptic is descriptive since these products “shield” one from “covid”. Thus, he notes that Cutis Biotech can obtain protection for “Covishield” if (i) the mark loses its primary meaning of shielding one from corona; and (ii) enables the consumer to identify the source of the product as Cutis Biotech, which is a question of fact. He concludes that it will be arduous to prove that “Covishield” has acquired a secondary meaning. Similarly, the Serum Institute would also have to satisfy a higher burden of proof for obtaining and defending trademark protection for “Covishield” (if at all the mark reaches that stage).

The Legality of the Appointment of the 5 Technical Members to the IPAB

In this post, Prashant briefly describes the advertisements, The Tribunal Rules, 2020, Selection Committee recommendations of 5 shortlisted candidates and the Appointments Committee Cabinet approval of the same, pursuant to which the appointments of 5 Technical Members to the IPAB were made. He argues that these appointments are illegal for two reasons. Firstly, under the Tribunal Rules, 2020, practising lawyers can be appointed to the IPAB as Technical Members only if they have 25 years of experience in copyright or trademarks, depending on the role for which they are being appointed. He notes that it is quite obvious from reading the bios of the Technical Members on the website of the IPAB that most of them (not all) do not appear to have the 25 years of experience required under the 2020 rules. Secondly, presuming that the appointments were made under the law that existed prior to the 2017 rules, the entire process of advertisement, selection and appointment should have been completed prior to the notification of the new Tribunal Rules, 2020 on 12th February, 2020 because the moment the Tribunal Rules, 2020 came into effect in February, the legal framework under which the advertisement in 2018 were issued ceased to exist. He notes that since this was not done, the appointments are illegal. He concludes that the correct course of action would have been to re-advertise the posts after the new tribunal rules came into effect on 12th February, 2020.

Decisions from Indian Courts

• The IPAB in a major decision in Music Broadcast Ltd. v. Tips Industries Ltd. & Ors., the first statutory licensing case before the IPAB on radio royalties, set the radio royalties for sound recording and underlying works. [December 31, 2020]
• The Income Tax Appellate Tribunal- Mumbai partly allowed the assessee’s plea in M/s.NGC Network Asia LLC Dy. Director of Income Tax, holding that the distribution right granted by the assessee to NGC India was only a commercial right/broadcast reproduction right and not copyright. Consequently, consideration received by the assessee for the same cannot be treated as royalty or fees under Article 12 of India-USA DTAA. [December 30, 2020]
• The Delhi High Court in Havells India Ltd. v. Mohit Talwar & Ors., noted that the local commissioner had found a voluminous quantity of packaging material infringing the plaintiff’s trademark Havells at the defendant’s premises. Thus, the Court in order or ensure the integrity of inventory directed that until the execution of the local commission is complete, the premises shall remain under the control and supervision of the local commissioner, who will decide the schedule for execution of the commission. [December 30, 2020]
• A local court at Ahmedabad refused to stay ISKCON temple’s neighbour, JP Infrastructure from using the trademark ISCON since the services of the temple and the realty firm are completely different.
• The Court of an Additional Sessions Judge at Mirzapur, UP ordered a stay on the use of a company’s trademark by a former employee in his firm’s advertisement material.
• The Bombay High Court passed an order mandating pubs, clubs, bars, resorts and similar establishments across the country to get a music license from PPL India (Phonographic Performance Limited) in order to play music on Christmas and New Year’s Eve.
• The Delhi High Court issued summons in the copyright infringement suit filed by Elsevier alleging infringement of copyright in medical journals, articles, etc.

Other News from around the Country

• In an ambitious effort to make scientific knowledge available to all, the government proposed an ambitious open data policy to make information generated by all publicly funded research, including its results, freely accessible to everyone.
• The Draft 5th National Science, Technology, and Innovation Policy was released by the Ministry of Science and Technology.
• Delhi-based Mankind Pharma & Gujarat’s Intas Pharmaceuticals were found selling a Type 2 diabetes drug without seeking approval regarding its price from National Pharmaceutical Pricing Authority.
• An article in the Financial Express examines the legal issues arising from works created by artificial intelligence.
• An article in The Print argues that the case in Delhi High Court against Sci-Hub and LibGen, which give students and researchers access to papers for free, is against public interest.
• Facebook signed a global licensing deal with Indian music label, Tips Music.
• RSS general secretary Bhaiyyaji Joshi noted that knowledge is meant for dissemination among masses, and thus, “we do not agree with the concept of patent.”

News from around the World

• The Wuhan Intermediate People’s Court, China rejected an application filed by InterDigital to reconsider the anti-suit injunction granted in favour of Xiaomi.
• A federal judge in Florida ruled in favour of security research firm Corellium, rejecting Apple’s claims that the firm had infringed its copyright in software by helping researchers find bugs and security loopholes in Apple’s products.
• The Higher People’s Court in Shanghai, China upheld a six-year prison sentence and a 90 million yuan ($14 million) fine imposed on a Chinese entrepreneur for making unlicensed copies of Lego toy blocks valued at 300 million yuan ($46 million).
• An English teacher and author from the US filed a lawsuit against Netflix and the creators of the show “Outer Banks” alleging copyright infringement.

Recently, Nikhil covered InterDigital’s ongoing SEP (Standard Essential Patents) infringement dispute with Xiaomi, wherein a Confidentiality Club was proposed for sharing confidential documents to assess whether the licensing terms being offered by InterDigital were on FRAND (fair, reasonable and non-discriminatory) basis. The Delhi High Court in its recent order in the case rejected the plaintiff’s proposal to restrict access to certain confidential information from the defendant’s representatives, and to make it subject only to external eyes. In this post, I discuss the relevance of this decision to commercial civil suits beyond SEP litigation.

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Applicability of the Decision Beyond SEP Litigation

Nikhil notes in his post that the question of “application of this decision beyond SEP disputes might be slightly limited given that the harms through disclosure of confidential information in areas such as trade secrets might be substantially high to push for exclusion of interested parties who might unduly gain from such confidential information.”

However, in my reading of the judgment, the Court does not balance the harm caused to the plaintiff vs. the right of the defendant to access the information, on an equal footing. The Court does not deny that disclosure of information pertaining to comparable licensing agreements can cause “irreversible harm” to the plaintiff, as alleged. It in fact, acknowledges InterDigital’s business considerations as legitimate but notes that—”The business interests of InterDigital, howsoever legitimate, cannot prevail over the paramount consideration of grant of fair opportunity, and natural justice, to Xiaomi, to meet the case set up by InterDigital.” (para 53) The Court does not even consider it pertinent to really go into interrogating the degree of potential harm that may be caused or its permanence/irreversibility. The decision instead, pivots on recognising that “litigation cannot be a one-way street” and crucially notes that it is the plaintiff who has brought the defendant to Court—”InterDigital has invited Xiaomi into the arena, and not vice versa.” (para 29).

Further, the crux of the entire discussion on SEP litigation is that the defendant’s access to information in comparable license agreements is a relevant consideration for defending his suit and making an argument regarding the royalty rates being FRAND compliant or not. FRAND terms must be non-discriminatory by definition, which is why comparing rates with other license agreements becomes relevant. The Court notes:

“Whether, in extending a particular royalty rate to a licensee, for exploitation of its SEP, the plaintiff has discriminated, favourably or otherwise, qua that particular licensee, becomes, therefore, a relevant consideration, in assessing whether the rate extended to the licensee is, or is not, FRAND…….The damage that would ensue, to the fundamental principles of natural justice, fair play and due process, were the defendant to be excluded access from such allegedly “comparable” license agreements, is serious and irreparable. Any procedural arrangement, which is fraught with the possibility of such damage has, in my view, to be unequivocally jettisoned.” (para 28)

Therefore, in my opinion the applicability of this holding extends beyond SEP litigation to all cases involving trade secrets i.e., commercially valuable confidential information. This has a bearing on the defendant’s right to access information that is relevant to defend his case, regardless of that information being confidential in nature.

Trade secrets in India are protected only under contract law, or in the absence of a contract, under an equitable duty of confidence. This case makes it clear that the defendant cannot be excluded from accessing contractually protected confidential information, if such information is relevant for her to defend the suit. This is because concerns of fair play, equal opportunity and natural justice trump any interest that the plaintiff may have in keeping this information secret. The relevance of access to confidential information for the defendant is easy and intuitive to prove in SEP litigation. However, that in my opinion, would not render this decision inapplicable beyond SEP litigation, in other civil suits (including IP suits generally) where such relevance can similarly be proved.

In fact, the decision also relies on the Delhi high Court case of Transformative Learning Solutions Pvt Ltd. v. Pawajot Kaur Baweja, pertaining to the allegation of infringement of the plaintiff’s copyright in a customer’s list. The plaintiffs in this case had sought an injunction, against the defendants, from disclosing their confidential information and trade secrets, among other things.

The Delhi High Court in the present case quotes from paras 23 and 24 of Transformative Learning Solutions to note that:

“to ask the defendants to contest the suit without knowing the customers list in which copyright is claimed and without knowing what they are sought to be restrained from doing, would not only be unfair to the defendants but also would be contrary to procedure prescribed by law. The Advocates of defendants and experts, even if any possible in such scenario, cannot be expected to make pleadings, to meet the case of plaintiffs. The non-disclosure to the defendant sought by the plaintiffs, in my opinion deprives the defendant of opportunity of being heard and the right to defend the suit.”

The Court notes that as per Section 129 of the Civil Procedure Code, all High Courts are entitled to make rules to regulate their own procedure in the exercise of their original civil jurisdiction. The non obstante clause at the beginning of Section 129 indicates that Original Side Rules, framed by the High Court in exercise of the power conferred by Section 129 would prevail over anything to the contrary, that may be found in the CPC.

Rule 17 in Chapter VII of the Delhi High Court (Original Side) Rules, 2018, deviates from the regime of complete transparency, envisaged by Section 153B of the CPC. It permits parties to a commercial suit, who want to rely on confidential information, to request the Court to constitute a Confidentiality Club, “so as to allow limited access to such documents/information.” The question that arose in this case was whether such “limited access” could be so limited as to deny access to the opposite party, as well as its employees and officials, and limit access only to its nominated “ex-house” counsel and experts. The Court answered it based on the defendant’s right to access this information, where it is relevant to defend her suit. Therefore, the judgment should not be construed to be limited to just SEP litigation, and is a useful precedent to argue in favour of the defendant’s right to know in civil suits across the board where confidentiality clubs may be created.

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In this post on the recent Delhi High Court order in Interdigital v. Xiaomi, I highlight how the common practice of courts granting confidentiality in commercial litigation without much reasoning does not augur well for transparency, judicial accountability and the citizens’ right to be informed of Court processes and reasoning as part of the fundamental right to freedom of speech and expression under Article 19(1)(a) of the Constitution of India.

The Public’s Right to Know

The Delhi High Court’s order deals with InterDigital’s proposal of a Confidentiality Club for sharing confidential documents to assess whether the licensing terms being offered by InterDigital to Xiaomi were on FRAND (fair, reasonable and non-discriminatory) basis. The Delhi High Court rejected this proposal to restrict access to certain confidential information from the defendant’s representatives, and to make it subject external eyes only.

The judgement clarifies that it is only concerned with the issue of whether such a tiered Confidentiality Club arrangement can be imposed upon Xiaomi against its wishes. It answers this question in the negative but notes that the decision does not have a bearing on similar arrangements in case both parties agree to them as a result of some reciprocal understanding amongst themselves.

Therefore, though the judgment decries the denial of fair opportunity, to the defendants, to meet the case set up by the plaintiffs, it still does not offer pushback against confidentiality that affects the public’s right to know. However, as noted in a Report titled, ‘Open Courts in the Digital Age’ by the Vidhi Centre for Legal Policy, the answer to what constitutes confidential information is not always self-evident, especially when parties have not contracted or agreed amongst themselves on this question.

In the case of Ericsson v. Mercury Electronics, even claim charts were treated as confidential upon a request by the patentee without much reasoning by the Court to treat them so. The commercial reason for Ericsson’s request for confidentiality was most likely based on the impact of such disclosure on its other litigation—it was suing multiple companies for patent infringement as well as being investigated by the Competition Commission of India (CCI). Similarly, in the case of Ericsson v. Lava, Ericsson argued for confidentiality of its patent licensing agreements containing sensitive commercial information, which was again granted by the Court without much reasoning. Here too, Ericsson probably did not want to disclose its licensing rates as it was accused of abuse of its dominant position as a SEP owner.

Notably, this grant of confidentiality without reasoning, as long as both parties consent to it, ignores the public interest involved in accessing information regarding these disputes. As the Vidhi Report notes, “The logical extension of the courts agreeing to protect the confidentiality of these pleadings is that even the trials and arguments would have to take place behind closed doors.”  This impediment on dissemination of information regarding trials and arguments also hinders the assessment of judicial accountability.

This can potentially lead to a slippery slope wherein more litigants are motivated to seek and be granted confidentiality in commercial litigation. In the United States, despite both parties agreeing to confidentiality, it was noted pertinently that, “many litigants would like to keep confidential the salary they make, the injuries they suffered, or the price they agreed to pay under a contract.” However, the details must be disclosed to the public if they are “….vital to claims made in litigation.” (Baxter International Incorporated v. Abbott Laboratories, 297 F.3d 544) There, the Court insisted on document-by-document reasons and legal arguments in support of the propriety of secrecy instead of accepting the request for confidentiality on account of the license agreement being confidential by its very terms.

Constitutionalising the Concern

In the Indian context, as I briefly note in part 1, Section 153B of the Civil Procedure Code (CPC) notes that any Civil Court should be considered open to the public as a general rule in all civil cases, subject to the judge’s discretion in certain cases. However, Section 129 of the CPC provides that all High Courts are entitled to make rules to regulate their own procedure in the exercise of their original civil jurisdiction. The non obstante clause at the beginning of Section 129 indicates that Original Side Rules, framed by the High Court in exercise of the power conferred by Section 129 would prevail, irrespective of anything to the contrary in the CPC. However, open courts have now become an issue of constitutional concern with the Supreme Court’s pronouncement in the case of Swapnil Tripathi v. Supreme Court of India. According to this judgment, ‘open courts’ should be considered as an extension of Article 19(1)(a) of the Constitution of India, since they are instrumental to materialise the citizens’ right to be informed of the workings of different institutions of the state, subject to certain restrictions such as the fundamental right to privacy, etc. Thus, in addition to consent of both parties (as required by the case at hand), Courts should ideally also insist on convincing reasons to grant requests for confidentiality of information before excluding these documents, and resultantly, the arguments relying upon them, from public scrutiny.

Once perceived via a constitutional lens, we would perhaps require a narrowly tailored test for determining confidentiality of information where the public is precluded from exercising their fundamental right to access the court proceedings and documents relied upon by the parties.

Recently, in Anuradha Bhasin vs Union of India (2020) 3 SCC 637, the Supreme Court noted that as per the proportionality standard, any restriction on fundamental rights of individuals must be pursuant to and necessary for a legitimate aim and must constitute only the least restrictive measure in the absence of any alternative to achieve that aim. The Court observed that Article 19 mandates the right to information as an important facet of the right to freedom of speech and expression in a democracy sworn to transparency and accountability. (para 23.1) The richer articulation of the right to information of the public in Anuradha Bhasin arguably heightens the quality of justification required for its restriction. That said, any test would also have to delicately balance competing legitimate interests of private parties in this information. Applying this test may not be as straightforward as it was in Anuradha Bhasin where only the state was interested in concealing the information concerned.

Conclusion

Finally, judges need to be more proactive and alert to the public interest in these seemingly ‘private’ disputes. This is because, as Rajiv notes here, these disputes entail more than just the rights of the private parties involved since a patent monopoly, as an exception to a competitive market, must necessarily be justified by efficiency concerns rooted in public interest. Similarly, Justice (Retd.) Prabha Sridevan has noted pertinently in the case of IP disputes that judges must adopt a more proactive and inquisitorial role in adjudicating these disputes, which often involve big names and corporations. She observes that remaining alert to the Constitution is crucial since public interest is not just an also ran but the justification in which the reward of the IP holder is rooted, and hence it precedes such reward.

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The Sci-Hub/Libgen case continues to generate interest from researchers across the country. We’re pleased to bring you another guest post on this issue, this time one that showcases the results of a ‘mini survey’ on users of Sci-Hub, as well as highlights the lack of empirical evidence in these debates. This post is co-authored by Anshuman Sahoo and Aditi Shirpurkar. Anshuman is a 2nd year LL.M. student at Rajiv Gandhi School of Intellectual Property Law, IIT Kharagpur. He regularly writes at anshumansahoo.com. He’d also written a guest post titled ‘Fluid Trademarks: A Prologue to Trademark Law Going Awry?‘ for us last year. Aditi is an engineer-turned-lawyer currently pursuing LL.M. at the same law school.

Readers can find our previous posts on and around the Sci-Hub/Libgen case here.

The Sci-Hub Case: Why It is Time to Stop Favouring the Doctrinal Approach to Law over an Empirical One

Anshuman Sahoo & Aditi Shirpurkar

We, humans, love stories; so much so that we built our whole social, cultural, and economic structures around fictional stories. The story of democracy, the story of justice, the story of nation-states, and the list keeps growing. We can’t touch ‘democracy’, we can’t see ‘justice’, yet we chose to believe in them – and our shared and collective belief in those stories is what gives them their power. If Yuval Noah Harari is to be believed, it is this ability to believe in abstract non-real stories that sets humans apart from other animals.

However, albeit all their awesomeness and life-changing roles, stories are stories, after all. They are essential in shaping our collective actions as a society, but their role is instrumental only and must never be the absolute goals. As a society, we chose to believe in certain stories because they make our lives easier – because they’re means to a desirable end – not because they’re an end in themselves.

However, the distinction between stories as instruments of collective cooperation and stories as an end in themselves often gets blurred. Priorities get interchanged, and policymakers end up acting like marionettes; lawmakers come up with legislations that promote rent seeking by the elite few at the cost of social welfare, and economists try hard to justify such policies. Intellectual Property laws are a case in point, and the Sci-Hub case exposes only the tip of the iceberg.

This article is an attempt at relooking the stories our legal doctrines have been telling us. In this article, we discuss the data collected from a mini-survey conducted by us involving researchers and students from some of the ‘elite’ institutes in India, including IISc Bangalore, IIT Kharagpur, IIT Guwahati, IIT Bombay, NLU Delhi, NLSIU Bangalore etc. The survey was snowballed in between 22 December 2020 to 2 January 2021, and was able to garner 212 responses in this short span of time. While such a small number cannot be claimed to be representational of the population under study, this is at least worth examining further, given the interesting findings. The survey questionnaire focused only on Sci-Hub dependence of the respondents, and didn’t include other means of unauthorized/illegal access such as Libgen, #icanhazpdf (Twitter), or other shadow libraries. Given sufficient time and resources, a more holistic study with a representative sample will definitely be more insightful.

Having survey respondents from the ‘elite’ institutes was a significant aspect for us since it implied at least two things. First, it meant that we covered a population that is, at least in theory, a primary beneficiary of copyright law, as elite institutes carry on much of the significant research and publishing work in the country – and copyright law has the primary goal of encouraging such creative endeavours. Second, having respondents from elite institutes meant that we are crossing past the ‘unequal distribution’ problem of copyright by focusing largely on a population that is expected to have the best infrastructure and resources in the country. (For those interested, results of the survey are available here)

Data Tells a Different Story

Elite Institutes

Out of the total 212 responses, 154 responses (72.64%) were obtained from respondents who have studied or are studying in Institutes having NIRF ranking above 10, which implies that the respondents belong to highly esteemed and infrastructurally developed institutes.

Age group and stage of education of Respondents

115 respondents (54.2% of the total) belong to the age group of 25-35 years and 88 respondents (41.5%) belong to the 18-25 age group. The age group points towards a population with maturity in terms of studies and research. 91 respondents (42.9%) have either completed their Master’s degree or are pursuing a Master’s degree, while 87 respondents are research scholars or have been research scholars. This percentage indicates that most of the respondents have some research experience since their educational level requires basic to advance research skills.

Number of publications

Majority of the respondents (73.6%) have less than 2 published research papers, this implies that a majority of the respondents have limited experience in the publication of research papers or are at a nascent stage of research. However, about 20% of respondents have a considerable number of publications (about 2-5 publications), which indicated experienced researchers.

Accessing resources through Sci-Hub

A total of 140 (66%) respondents highly depend on Sci-hub (respondents who have rated their dependence as somewhere between 8-10, on a scale of 0 to 10) for accessing paid resources. Although 51.9% of respondents access authorised subscriptions for research papers, the percentage of the respondents dependent on Sci-Hub imply that some of the resources are not even accessible through authorised subscriptions. The percentage of respondents dependent on

Sci-hub for direct access is also considerable at 48.1%, which indicates that a substantial portion of the respondents directly depends for access to resources on Sci-Hub. Quite interestingly, this 48.1% share springs alone from Sci-Hub, even when other illegal sources like Libgen and shadow libraries aren’t considered. The combined share of such illegal open access platforms is expected to be even higher.

Dependence on Sci-Hub during Covid-19 lockdown period

During the Covid-19 lockdown period, many students had limited access or negligible access to their institute’s resources. The increase in respondents’ dependence on Sci-hub for accessing resources indicates the need to depend on open resources/libraries like Sci-Hub.

164 respondents (77.3%) indicated that they highly depend on Sci-Hub for accessing paywalled resources during the Covid-19 lockdown, a 10% increase over the pre-pandemic scenario. The absolute reliance (ie, rating of 10) on Sci-Hub has also risen during the lockdown period, implying that students have relied more on Sci-Hub during this period. Also, the percentage of respondents using Sci-hub to directly access a resource has seen a considerable rise of 22.7 per cent, indicating the difficulty in accessing authorised resources.

Sci-Hub as the only available platform with access to certain literature

62.2% of the respondents most frequently used Sci-Hub only when they didn’t have access through their institutions. This points towards the fact that Indian institutes do not have sufficient subscriptions of the paid/legal means of accessing research literature.

Only a quarter of the respondents (25.4 %), have frequently borrowed credentials from a friend from other institutes to access resources. This indicates that students are most likely to prefer open resources/libraries like Sci-hub for accessing resources when authorised resources are not accessible, rather than depending on other friends to share his/her credentials for accessing the necessary resources. This is also indicative that some resources are either difficult to access

through authorised subscriptions, or the ease of access through Sci-Hub in such cases is much higher. A better explanation, however, could be that the even the participants’ friends’ universities did not have the required subscription to start with. This points towards the fact that the lack of paid subscriptions is an issue that concerns almost all the Indian universities.

Of Stories and Doctrines

The legal battle that we are witnessing between ‘illegal sci-hub‘ and ‘legal copyright holders‘ is indeed a battle between two versions of the same story – the story of society’s creative welfare. On one side, we have a bunch of well-crafted legal fictions about how creative works are to be promoted all the while ensuring public access to the created works. While the legal fictions used in telling this side of the story have diverse origins, most of them can be traced back either to Locke or to the American economists, lawyers and CEOs in the 1980s and 90s. There are two prominent features of this side of the story. First, they have wide acceptance amongst the lawyers, judges, academicians, policymakers etc. Second, they are not backed by any sort of empirical evidence.

The other side of the story has a relatively recent emergence. It has little backing from any legal doctrine or fiction, except for utilitarianism. This side of the story, however, is highly empirical and is supported by the numbers. It looks at the doctrines critically and trusts numbers and data above all others. The origin of this side of the story can be traced back to handful of academicians and scholars in recent decades who tried to take a scientific approach to law and policy. (See for e.g. here, here, here and here).

The contrast between the two sides of the story becomes clearly visible in countries like India where the copyright law is largely imported rather than indigenously developed. In such imported legal systems, the battle between the doctrines and the ground realities turn fierce. As the above data analysis suggests, the ground realities in Indian universities are far from what is envisaged by the law. Students from even the best of the institutes are heavily reliant on unauthorised (supposedly illegal) sources to access educational materials – and this should be taken to be only the tip of the iceberg, since the study doesn’t even go into the problems faced by other stakeholders such as independent researchers, not-so-rich institutes, researchers with disabilities etc. In such cases, it is pertinent to ask whether the creativity incentivisation goal of the copyright law and policy is being adequately balanced with the public access goal of copyright.

The mismatch between legal doctrines (in Indian copyright law) and ground realities in India spring from multiple factors. First, the importation of legal doctrines from the US and EU countries has often not been considerate of the domestic needs. Second, the Indian legal education divorces legal studies from policy studies. In ignoring the crucial and complimentary link between lawyers and policymakers, it discourages domestic policy innovations. Third, the mismatch seems to be a universal issue when it comes to doctrinal legal systems. Inside doctrinal legal systems, rent-seeking becomes the norm. Often, sophisticated power elites capture the democratic procedures in policy making, and use them to tilt the doctrines in their favour. And once a doctrine/law is persuaded successfully, the trend perpetuates.

Which Story to Believe?

Legal doctrines give law its stability and predictability, which are significant must-haves of any legal system. However, it is equally important to critically assess the arguments that legal doctrines put forward. When arguing without any empirical backing, doctrines tend to hide behind the cloaks of vague policy terms like ‘equality’ and ‘efficiency’ even when the only thing they’re doing is imposing welfare costs on the society. And it is easy to believe them because they appeal to ideologies. Ideologies make us blind to the reality, doctrines serve the status quo; we know this from history.

In such a scenario, more and more data on ground realities seem to be the only solution. We, as a society, need more legal scholars willing to collect and compile data on ground realities. While certain policy think tanks and NGOs seem to be doing the job, their efforts are far from sufficing a population of 1.3 billion. In addition to scholars, we need lawyers and judges to culminate a culture of empirical analysis in the courtrooms. With sufficient ground data in our arsenal, we can positively shape and bargain policies not only in the domestic but also the supranational legal systems.

Authors’ note: We would like to acknowledge Swaraj Barooah for his inputs on this piece.

[This post has been co-authored with Praharsh Gour]

On 2/01/2021, the Ministry of Science and Technology rolled out the draft version of the proposed Science, Technology and Innovation Policy. The process to have a new policy, subsequent to the 2013 one, was in the works since May 2020 (see here for our coverage of the same). And after a claimed 4 track process of consultations and “nearly 300 rounds of consultations with more than 40,000 stakeholders well distributed in terms of region, age, gender, education, economic status, etc” the present draft version of the policy is brought out for public consultation. The substantive portion of the policy is spread out in eleven chapters and for the purpose of this post we shall discuss the first chapter titled “Open Science”. It is to be noted – the Ministry of Science and Technology is concerned only with STEM type sciences, while research in social sciences seems to fall under the ambit of the Indian Council of Social Science Research, under the Ministry of Education. Therefore on the face of it, research in social sciences are not covered by this policy and it would thus be very pertinent to see whether the Ministry of Education will be joining this endeavour or not. As per the Press Release, the draft is open for comments till Jan 25, 2020 on email: india-stip[at]gov[dot]in 

Is Access now granted (read Open)? 

The draft policy places a lot of importance on Open Science and the need for publicly funded research to be inclusive and accessible. In pertinent part it states: 

“Open Science fosters more equitable participation in science through diverse steps like increasing access to research outputs, more transparency and accountability in research, inclusiveness, better resource utilisation through minimal restrictions on reuse of research outputs and infrastructure, and ensuring constant exchange of knowledge between producers and users of knowledge. It is important to make publicly-funded research output and resources available to all to foster learning and innovation. STIP aspires to build an ecosystem where research data, infrastructure, resources and knowledge are accessible to all.” (emphasis provided)

Open Access Portal: The policy proposes to establish an open access, interoperable portal called the Indian Science and Technology Archive of Research (INDSTA). The portal shall be dedicated “to provide access, specifically, to the outputs of all publicly-funded research (including manuscripts, research data, supplementary information, research protocols, review articles, conference proceedings, monographs, book chapters, etc.).” Notably, INDSTA is to also support text and data mining, querying and visualisations. 

Open Data: Importantly, the draft policy also proposes to make available all the data used in and generated from publicly funded research to the scientific community and public at large. The Policy suggests that all the data shall be available in Findable, Accessible, Interoperable and Reusable (FAIR) terms. These guiding principles provide both machines and humans better ability to engage with the vast amounts of data that is being generated in scientific eco-systems. (More on FAIR principles can be read here.) 

It also states that wherever applicable, on the basis of grounds of privacy, national security and IPRs, data will be made available to the public, subject to anonymisation or redaction. Or if the same is not possible then, it will still be made available to “bonafide and authorized researchers”. While it is understandable that not all data can (or should) be made available, this does require clarity on what qualifies a researcher as a ‘bonafide’ researcher, what type of data is eligible for being kept away from the reach of the general public, etc. 

Post-Print Repositories: The policy calls for an important Open Access mandate on manuscripts coming from public funds. It states,

“Full text of final accepted author versions of manuscripts (postprints and optionally preprints) along with supplementary materials, which are the result of public funding or performed in publicly funded institutions, or were performed using infrastructure built with the support of public funds will be deposited, immediately upon acceptance, to an institutional repository or central repository”.

The draft doesn’t elaborate on this but this type of a requirement would also have the double benefit of pushing all public funded manuscripts away from publishing in ‘closed’ journals, which traditionally don’t allow post-prints (i.e., post peer review) to be shared in accessible manners. This institutional push away from ‘closed’ journal publishing is a huge step in itself – as such mandates may be the only way of getting around the high pressure academic publishing environment that often pushes (ie., forces) academics to publish in closed journals, based on impact factor and reputation, etc. And regarding the central repository – unlike Mendeley, SSRN etc, there is no question of a giant publisher acquiring this central repository since it would be a government repository. 

One Nation, One Subscription

The most notable feature of the policy is the call for one centrally negotiated subscription which will enable access to “all individuals in India”. While this would have huge repercussions, the draft policy currently doesn’t elaborate on much. The whole provision is reproduced below: 

“The Government of India will negotiate with journal publishers for a “one nation, one subscription” policy whereby, in return for one centrally negotiated payment, all individuals in India will have access to journal articles. This will replace individual institutional journal subscriptions.”

It is laudable that such a radical proposal is being considered in a way that makes clear that the research communities’ concerns regarding access and excessive subscription fees have been heard. While this, if successfully implemented, would be a game changer for researchers in the country, a lot depends on how large the theory-practice gap is when this provision is sought to be converted from paper to practice. As noted in an earlier post – there is a strong need to question why so many people need to depend on shadow libraries in the first place – and this policy proposal goes right to the heart of that question – but in its current limited form, leaves many other questions open. 

Firstly – would journal publishers be open to such a proposal? While it would certainly make their job easier to just negotiate with one bulk governmental consumer, would it make business sense (read: profit maximisation) for them to provide access to ‘all individuals in India’ at one price? On the other hand however, is the fact that access to top scientific journals is an inelastic demand – i.e., at the end of the day, institutes need access to this if they want their researchers to be internationally relevant. And at this unprecedented scale of India-wide subscription level – will this end up with the Government just paying whatever ridiculous price the journals put forth? (relevant – see here and here). Another question is who will decide which journals are worth subscribing to, now? This is especially relevant since it also says this will replace individual institutional journals. (This would be presumably be more problematic in social sciences, where various other considerations could come into the picture but perhaps a less troubled, even if still a tedious issue within STEM sciences). Given market dynamics – if an individual / private institute wants/needs to subscribe to a journal outside of the government selected ones – is there a chance that these (non-subscribed) journals will now become even higher priced, since the only ones who go after them, will presumably have a higher demand for them? 

Regardless, much of the direction of this policy marks significant progress by the Indian government towards a culture of greater / open access. It also shows an understanding that public funded research is meant for the public (see here and here), as well as a desire to reach into the vast catalyzation potential that such access would provide. It now remains to see whether the next step of converting this to the implementation stage is one which is feasible or not. 

The Consultation Process

The consultation/ public participation in the background of the policy merits appreciation independent of the policy document. The policy discloses that close to 300 rounds of negotiation has occurred for its formation, since May 2020 till date. The participative model behind the policy is based on four interdependent tracks. 

• Track I is concerned with creating a repository of public voices to guide the drafting process.
• Track II is consulting 21 expert-driven thematic collectives for feeding evidence based recommendations in the drafting process.
• Track III comprises of engaging with ministries through nominated nodal officers 
• Track IV (a bit ambiguous)  engagement of apex-level multi stakeholder at national and global levels.

The independent organization Science Policy Forum (SPF) led the Track I initiatives and devised six instruments for fulfilling the commitments therein (more about these instruments can be found here).

(Pic from the SPF website linked above)

That being said – regardless of how good a process SPF has steered – questions raised in an earlier post about SPF as a host of the process, remain. 

Additional notes

The Open Science portion of the document also touches upon other important aspects, even if only briefly. It looks at infrastructural needs of the community by calling for libraries at public funded universities to be accessible to the public without undue hassle. It further endeavors to make ‘learning spaces’ universally accessible, “especially for people with special needs” and also seeks to enable the right of attribution, preservation and translations (especially in regional languages) of the publicly funded educational resources. The policy further highlights the need to improve awareness and accessibility of the Indian journals internationally, as well as the issue of predatory journals in India. To that extent, the limited text in the draft policy does seem to reflect a well rounded understanding of the problems of access in India. However, the devil is often in the details, and only when those details are available, will we know if the solutions also reflect an understanding of these problems. As mentioned above, the draft policy is laudable for its initiative to rattle the cage, however it is yet to be seen if the proposed ‘maverick-esque’ solutions have the needed teeth to take the proposed bite. 

Image from here

There has been a recent development in the context of the Biological Diversity Act, 2002 (‘BDA’), which I thought was interesting to share and discuss on the blog.

Back in 2018, the Central Government issued the direction to the National Biodiversity Authority (‘NBA’) purportedly under Section 48 of the BDA. According to this office memorandum (followed by another) a kind of immunity deal was provided for persons who had committed any acts without the required approval from the authorities under the BDA. Such persons were permitted to file and obtain an ex post facto approval for past conduct/acts, and these applications were to be processed under the applicable rules and regulations, without any fear of criminal prosecution. Readers may recollect that under the BDA, not taking the required approvals for the regulated activities was considered a criminal offence.

Apparently, this move was a success, given the significant number of applications that were moved under this office memorandum. This post concerns a development arising in the context of the processing of such applications. From what I have been learning from clients, in cases where the application has been moved under the office memorandum for past acts of accession for the purpose of research, the NBA has been issuing letters and draft agreements requiring the applicant to deposit a lump sum amount as “benefit sharing”. Intuitively, one may feel that such a mandate seems appropriate. However, the difficulty is that mandating a lump-sum payment as ‘benefit sharing’ for research purposes where the research has not yet led to any commercialised products, seems ultra vires.

Under Section 21 of the BDA, the NBA is authorised to impose “benefit sharing” obligations on the applicant. Under Section 21(4) of the BDA, the NBA is authorised to frame “guidelines” in the form of “regulations” for the purposes of such “benefit sharing” obligations. In 2014, the NBA did publish such guidelines entitled “The Guidelines on Access to Biological Resources and Associated Knowledge and Benefits Sharing Regulations, 2014”. At present, it is this 2014 Guidelines that apply. Although there was a draft to revamp the same, it is yet to be finalised (see the discussion on this here and here).

Regulation 2, 3, 4 of the 2014 Guidelines do not apply to access for research purposes. Regulation 6 and 7 concern the situation where results of the research are being transferred and thus, apply downstream. Regulations 9-10 concern benefit sharing in situations where IPR is commercialised. Regulation 12 concerns benefit-sharing where the applicant transfers the accessed resource or knowledge, to a 3^rd party for further research and commercialisation. Regulation 13 concerns non-commercial research or research for emergency purposes outside India by Indian researchers/government institutions.

Primarily, this leaves Regulation 1, which concerns access to biological resources or traditional knowledge for research or bio-survey and bio-utilisation for research. Under Regulation 1 (2), the NBA is required to enter into a benefit-sharing agreement even in such cases. The proviso to Regulation 1 (2) explicitly confers upon the NBA the discretion to mandate an “upfront payment” from the applicant but only in case of biological resources having “high economic value”. A general discretion has been conferred under Regulation 14 under which benefit sharing is to be done in monetary and/or non-monetary modes as agreed between the applicant and the NBA. Annexure 1 contains various “options” for benefit sharing purposes.

It is evident that Regulation 1 is lex specialis when it comes to access for research purposes. In the scheme of the legislation/regulation, it is further evident that monetary options for benefit sharing are expressly imposed under Regulations 3 to 12, only in cases where the transaction involves commercialisation. In circumstances where the approval is only for research and the applicant has not yet reached the stage of commercialisation, there are no monetary benefits for anybody and thus, the sharing of such non—existent monetary benefits does not arise. The proviso to Regulation 1 is the exception that proves the rule, conferring on the NBA the discretion to impose upfront monetary payment only in exceptional cases for research (for biological resources having “high economic value”). Under Regulation 14(2) there is a mandate for the NBA to consider various factors in determining “benefit sharing” including the stage of research and development, and the timelines and milestones involved. The Regulation accounts for the possibility that the research may not really result in a commercially viable product. Therefore, for the NBA to be insisting on upfront monetary deposits, as if it were a tax that one must mandate pay-up in any and every case seems completely arbitrary. In any event, the agreement entered between the applicant and the NBA mandates the applicant to come back to the NBA in the event the research results in commercialisation. Therefore, there is enough safeguard, at least as a matter of law.

The issue does not end here because the way this upfront payment has been determined also appears arbitrary. From what I have been told by clients, the NBA imposes an ad-hoc ₹ 3000 per accession, as a rule of thumb. The 2014 Guidelines do not carry any such rule of thumb. However, it appears from the website of the NBA that it had issued a set of “operational guidelines” for various State Biodiversity Boards and annex-03 of this guidelines contains a table for “amount of upfront payment for access to biological resources for bio survey and bio utilisation leading to commercial utilisation”. This table comprises a fixed amount and among others, Rs 3000 if the biological resource accesses from a cultivated source/institution/market. The provenance of this table is itself questionable; the applicability of this set of guidelines meant for State Biodiversity Boards to applications filed with the NBA is a second error; and finally, this document itself indicates that it does not apply to situations of access for research purposes.

It is also my understanding that in all of these cases, the NBA is issuing communications to the applicants to accept the terms and conditions without any demur or protest and threatening to criminally prosecute the applicants if they do not do so. This entire approach seems whimsical and arbitrary on the face of it. Where the office memorandum has been issued, and applications have been sought for ex post facto approvals, threatening criminal prosecution is directly contradictory and unreasonable. This is especially when applicants are only attempting to negotiate the terms and conditions of the benefit-sharing arrangement in accordance with the law. Under Section 21(1) of the BDA and Rule 20(5) of the Biological Diversity Rules, 2004, the quantum of benefits “shall be mutually agreed” between the applicant and the authority. This requirement is further reiterated in Regulation 14(1) of the 2014 guidelines as also from Article 15(7) of the United Nations Convention on Biological Diversity, 1992, pursuant to which the BDA was enacted. In other words, while the final terms and conditions can be imposed by the NBA, it is expected that there is a process to it, and for the applicant and the authority to bona fide discuss the possible terms and conditions. There is a decision-making process involving consensus building intended in the scheme of the statute and not just a unilateral imposition by some of a licensing authority.

On the whole, the recent actions of the NBA in insisting on upfront payment even for research, imposing an arbitrary upfront monetary quantum as benefit-sharing payment, and the entirely unilateral decision-making, appears to be unreasonable and bad in law.

Pic from here

In a great start to the Sci-Hub litigation (Elsevier, Wiley, and ACS vs Sci-Hub, LibGen – for background context, see the bottom of this post), Justice Midha at the Delhi High Court repeatedly pointed out that the issues in this case involved ‘a matter of public importance’, while saying he would not want to pass any orders in the law suit without hearing the various parties that wanted to get their views heard in the case, for the interim application as well as the suit. The publishers had asked for a blocking order to be passed today, against the ‘rogue websites’ citing the self-proclaimed ‘pirate’ nature of these websites, and that certain other jurisdictions had also passed these orders. For clarity – these jurisdictions are Austria, Belgium, Denmark, France, Germany, Italy, Portugal, Russia, Spain and Sweden. Regardless of those jurisdiction’s fair dealing exception, a central question in this case will no doubt be to determine whether this falls within India’s very explicit and arguably expansive research exception, along the lines of Nikhil’s earlier arguments (here onwards)– so it seems a positive step that those reasons were not taken as sufficient to throw in a quick blocking injunction.

The Delhi Science Forum, and the Knowledge Commons, represented through Rohit Sharma, had filed an intervention application, and a group of various scientists, represented through Jawahar Raja had filed an impleadment application. The court therefore declined the plea for blocking the said websites today and ordered for the pleadings to be completed within the next 6 weeks, listing the matter for hearing after six weeks. The proceedings today otherwise mostly contained procedural and formal compliance issues, for which Sci-Hub received an extension of 2 weeks to fulfil, as well as the liberty to move an application for exemption from formal compliances, due to the peculiar nature of this case and Alexandra Elbakyan of Sci-Hub currently being in Russia. Senior counsel Gopal Sankaranarayan appeared on behalf of Sci-Hub, and senior counsel Amit Sibal appeared on behalf of the publishers.

As far as the interim direction of Sci-Hub not uploading any new articles on its platform is concerned, the same was extended until the next date of hearing. However, the plaintiffs’ plea to extend the same direction on Libgen as well, was rejected. The same was rejected on the ground that Libgen had not yet been served by the Plaintiffs effectively, as per the service report. Therefore, in the status quo, no interim direction is applicable against Libgen.

Those interested can also check LiveLaw’s short tweet thread on the proceedings here. Our previous posts on this case can be seen here.

(Background context, as reproduced from Nikhil’s earlier post: Recently, three major academic publishers Elsevier, Wiley, and American Chemical Society filed a copyright infringement suit in the Delhi High Court against two groups of websites going by the names ‘Sci-Hub’ and ‘Libgen’ which provide free access to millions of research papers/books. The plaintiffs have sought a permanent injunction against these websites and a dynamic injunction order so that the mirror links of these websites can be blocked as and when the plaintiffs notify. Additionally, the plaintiffs have sought an interim injunction against the defendants.)

Image from here

We’re pleased to bring to you a guest post by Prerna Sengupta and Riddhi Bang, critiquing the inverse ratio rule of copyright infringement and its application by Indian courts, in light of the US Supreme Court’s ruling in the ‘Stairway to Heaven’ copyright dispute last year. Prerna and Riddhi are 2nd year students at the NALSAR University of Law, Hyderabad.

Our previous posts relating to the ‘Stairway to Heaven’ case can be viewed here, here and here.

The Inverse Ratio Rule: On Its Stairway to Heaven?

Prerna Sengupta & Riddhi Bang

Introduction

The evolution of copyright law in consonance with the music industry has failed to maintain peace with the technological advancements. An example of this is the redundancy of the inverse ratio rule in today’s era of streaming. The inverse ratio rule states that in a copyright infringement case, where a high degree of access of the allegedly infringed work is shown, a lower degree of similarity is required to establish infringement. This rule was overturned in the ‘Stairway to Heaven’ case in October last year.

Composed by the band Led Zeppelin, the song ‘Stairway to Heaven’ is often considered as the most popular rock song of all time. Randy Wolfe, a member of the rock band ‘Spirit’ stated that this song showed a striking similarity to his band’s 1968 instrumental ‘Taurus’ but never sued. In 2014, Michael Skidmore filed a suit against Led Zeppelin for copyright infringement on behalf of Wolfe’s estate.

This six-year long legal battle came to an end last year with the US Supreme Court declining to hear the case thus upholding the judgement given earlier by an 11-judge panel of the Ninth Circuit Court of Appeals in favour of Led Zeppelin. This post explores the concept of inverse ratio rule and its efficacy in today’s technologically forward world. Furthermore, the authors attempt to critique the use of this rule by Indian courts against the threshold set by the Court in the ‘Stairway to Heaven‘ copyright infringement case.

Brief background

The inverse ratio rule was established in 1977 by the Ninth Circuit (San Francisco based US Court of Appeals). However, this rule has been considered to be problematic because ‘more’ access to someone’s work doesn’t necessarily mean that such work has been copied. Therefore, this rule can lead to erroneous findings because the jury is led to believe that a certain degree of access automatically establishes copying. The general fallibility of this rule led to a horde (pg. 27) of contradictory decisions over time and was overruled by the Court of Appeals in the case of Skidmore v. Led Zeppelin in March last year.

At the outset, an infringement analysis entails that the plaintiff demonstrate both (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. To establish the second requirement, the Ninth Circuit necessitates the plaintiff to show copying (shown by circumstantial evidence of access to the copyrighted work) and unlawful appropriation (the similarities between the two works must be ‘substantial’ and they must involve protected elements of the plaintiff’s work).

The inverse ratio rule has been used (pg. 28) both in the context of copying and unlawful appropriation, muddying the waters as to what part of the infringement analysis the rule applies. This checkered application of the rule over the years has led to various inconsistencies in Ninth Circuit decisions proving copyright infringement.

Understanding the lacunae of the rule

The inverse ratio rule cannot be a measure to establish the degree of copying but a mere tool to show that there was indeed an act of copying. Once it is proved that there was in fact copying, then the access stands inconsequential as the question now shifts to infringement analysis. In a case where a song enjoys great popularity and wide dissemination, but the defendant has not heard it, the court is likely to find, nonetheless, that the defendant had access to it thereby deceptively proving that the work was copied.

Even in the Led Zeppelin case, the court was of the opinion that the inverse ratio rule ‘is not part of the copyright statute, defies logic, and creates uncertainty for the courts and the parties’. The judgement cited Sid & Marty Krofft Television Prods., Inc. v. McDonald’s Corp where it was admitted that the standard in this rule is impossible to quantify and Arc Music Corp. v. Lee where the court was of the opinion that the idea of this rule is a “superficially attractive apophthegm which upon examination confuses more than it clarifies“.

Present day implications

The inverse ratio rule places a heavy reliance on ‘access’; which was formerly justified because of its value as reasonable circumstantial evidence but now has been attenuated owing to accelerating digital and technological interconnections and is today proven by merely large-scale circulation of work. All forms of creative work can be made available quickly and easily by means of the internet and therefore there are no geographical barriers preventing access.

Today, with the popularity of YouTube, Spotify, Netflix and such, ‘access’ can be demonstrated by simply showing that the work in question was available on demand. This way thus, the rule dilutes the standard of similarity with a result that people whose work is more accessible are unjustly better-off. This holds especially true for a creative art form like music which is more readily available than ever. Today, a person could create a new and original piece of music from their home and it can be made available online to thousands of people across the world almost instantly. The wide dissemination as a basis for finding access undercuts the legal rationale of the inverse ratio rule and establishes a minimal barrier for plaintiffs.

Consequently, the proof of access or inverse ratio rule is an antiquated element which clearly does not have any utility in determining copyright infringement in the age of the internet.

Indian context

The inverse ratio rule has not been established directly in India before. However, courts have used the proof of access test to determine copyright infringement. The Delhi High Court in the case of Twentieth Century Fox Film v. Zee Telefilms Ltd. & Ors. stated that in the absence of direct evidence, secondary evidence could be established by proving similarities in the imputed and original works along with proving that the defendant had access to the plaintiff’s work. Additionally, in the case of Mansoob Haider v. Yashraj Telefilms Pvt. Ltd., the court stated that access is material in determining copyright infringement.

Most recently, the Bombay High Court last year in a case concerning Netflix’s horror drama ‘Betaal’ used this test. The plaintiff alleged that the drama was copied from his literary work titled ‘Vetaal‘. The court held that it did not constitute a copyright infringement and one of the reasons accorded for the same was that the story of ‘Vetalam’ was a well known story in Hindu mythology. This reasoning seems to be particularly erroneous because the mere fact that everyone knows or has ‘access’ to a popular story in Hindu mythology does not prevent one from creatively producing a new piece of work inspired from the original myth. Access does not supply the lack of similarity and therefore, a rule such as the inverse ratio rule only creates more problems than it solves.

Conclusion

In today’s time where everyone has access to a great deal of content available online on demand, the bar then, for proving copyright infringement would be set extremely low when the inverse ratio rule is used thereby preventing anyone from creating anything inspired from any sort of content available on the internet simply because they were able to access it.

The inverse ratio rule which was formerly used by defendants to defend themselves and protect independently created music instead became a tool for plaintiffs to establish copying by simply showing that the defendant could access the plaintiff’s work. By overruling the inverse ratio rule, the US Supreme Court in Skidmore v. Led Zeppelin sought to level the playing field for both plaintiffs and defendants.

[This post has been co-authored with Varsha Jhavar.]

Image from here

Recently, the Screenwriters Rights Association of India (SRAI) filed a revised application before the Registrar of Copyrights to be recognised as a copyright society under Section 33 of the Copyright Act, 1957. SRAI aims to negotiate, collect and distribute royalties on behalf of screenwriters in works authored by them. It had previously applied for registration in 2017 as well, but the application disappeared for unknown reasons (see the discussion here). On 27 November 2020, the Copyright Office issued a public notice (which includes the application for those who want to see it) inviting comments from industry stakeholders as well as members of the public regarding the registration within 30 days. On a bare perusal, the present revised application seems to have an additional annexure regarding the last audited balance sheet and income and expenditure account/bank balance. In this post, we discuss the rights available to screenwriters under the Copyright Act, 1957, and analyse SRAI’s application to understand how it proposes to uphold their rights.

Why Royalties have to be paid to Screenwriters?

The law relating to film royalties in India underwent a sea change in 2012. Prior to the Copyright (Amendment) Act 2012, underlying works incorporated in cinematograph films and sound recordings were considered to be created as part of a ‘contract of service’ under Section 17, which transferred the copyright therein to the producer or ‘employer’ (see IPRS v. East India Motion Pictures, 1977). This effectively denied the authors of underlying works any profits in their work beyond the initial assignment fee, even if the song went on to earn huge profits in the market. While an ‘agreement to the contrary’ was statutorily possible, the cartel-like power dynamics among producers in the film industry meant that individual authors had inconsequential bargaining power.

The 2012 Amendment, in a bid to remedy this injustice, created provisions for a ‘right to receive royalties’. While the producer remains the owner of the copyright, Section 18 now mandates that the royalties earned through the utilization of the literary works in non-cinema hall uses be shared equally between the authors and copyright owners as a matter of right (discussed here). This right cannot be waived through contract, nor is it affected if the copyright changes hands through assignment [Section 19(9)].

In context of works created by screenwriters, this right means that no matter who comes to own the copyright over a script or story, if the same is utilized for any purpose other than cinema hall shows, the authors have a legal right to be paid royalties. So, for instance, if a film script has been licensed for the purpose of creating a web-series, then the author is entitled to royalties for this utilization.

The 2012 Amendment also brought about certain reforms in the law relating to copyright societies. According to Section 34(3) of the Copyright Act, 1957, copyright societies are responsible for licensing works created by its members, collecting royalties for the same, and for distribution of these royalties to the members and/or producers. They primarily work to protect the interests of their members and increase their bargaining power before potential licensees. SRAI’s application for registration covers work created by screenwriters such as the story, script, screenplay, and dialogues of films. It excludes lyrics, as those are the domain of Indian Performing Rights Society. Notably, while SRAI may be applying for registration as a copyright society, it is not the only association which undertakes measures to protect the interests of screenwriters in India – more on that later below.

SRAI’s Purpose

Screenwriters are statutorily entitled to an equal share of royalties when their work is exploited by ‘reproduction in any material form including any digital form’, i.e., when the movie appears on satellite TV or OTT, or by ‘public performance’, or by ‘translation’ or ‘adaptation’ of such work (literary as well as dramatic works, i.e., the script as well the movie) (see MoA, page 28, para 1 of the application).However, over the years, screenwriters in India have talked about being bullied into one-sided contracts or deals which do not pay them their due as writers of scripts that go on to receive huge profits as well as critical acclaim. While the 2012 Amendment makes equal royalties a legal compulsion, it appears that writers are yet to begin receiving it.

Famous screenwriters such as Anjum Rajabali, Javed Akhtar, Kamlesh Pandey and Saket Chaudhary among others, who have previously spoken about such issues, came together in 2016 to form SRAI. The society has been incorporated as a not-for-profit company, limited by guarantee. [SRAI’s Articles of Association (AoA) and Memorandums of Association (MoA) seem to have been inspired from the AoA and MoA of Collective Management Organisations abroad.]While SRAI’s functions can be expected to be in line with what Section 34(3) prescribes, it has enlisted its specific purposes in the MoA, which ranges from registration of members’ works to entering into contracts with third parties on their behalf in respect of the use of their works. The society plans to publish a tariff scheme which will provide the rates for issuance of licenses and/or assignments for the members’ works to third parties. A tariff scheme generally specifies the different royalty rates for various uses. The society will also have the power to initiate and maintain litigation for recovery of royalties in case of default. It seeks to ensure protection and enforcement of members’ IP outside India and one of the ways it plans on doing so is by establishing relations with foreign associations that share similar objects or ones that are formed for the promotion of welfare of its members. It also aims to create awareness among its members regarding the availability of rights and remedies to them under various laws and regulations. As per the MoA, the society aims to act as a ‘vital link’ between the fraternity and facilitate settlement of disputes. It also intends to assist its members requiring basic survival support by means of formation of grants, donations and trusts. Hopefully, SRAI will work towards creation of an emergency fund that would help its members in situations such as the present pandemic.

SRAI offers its membership to authors, producers and the adult legal heirs or nominees of the former two categories of persons. It has three-tiered membership structure decided on the basis of work experience of each individual member – a) Life membership, for the highly experienced script writers and producers in both TV and films; b) Regular membership, for the comparatively less experienced ones; and c) Associate membership, for those in an early stage of their career and for the legal heirs of previous members (specific experience requirements are available in the AoA from page 40 onwards).

Issues with SRAI’s Application

There are some things about SRAI’s application that are worth noting.In Form VIII under Rule 44 of Copyright Rules, 2013 (page 4 of the application), SRAI has mentioned that it proposes to carry on the business of licensing/assigning in respect of ‘literary and dramatic works’, while in the MoA, it is stated that the main object of SRAI is ‘to promote, protect and enforce the general professional interests of all Authors, Creators and Owners of any Literary Work’ (emphasis added). The application refers to only Literary works at certain places, while it mentions both – literary and dramatic at others.This distinction is particularly important because the right of royalty available to authors of literary works is not available to those of dramatic works (2012 Amendment applies only to literary and musical works). Since film scripts may classify as either literary or dramatic work depending upon whether they are intended for direct screenplay, different rules of assignment will come into play while negotiating licenses for the works respectively. It would be helpful if SRAI would clarify its scope of operation.

Page 34 of the Application states that 7 people wish to be formed into a company, however Annexure 2 (see page 11) provides that ‘the Applicant’ consists of 8 people. Page 1 states that the SRAI has applied for registration as a copyright society, thus it can be inferred that the company is the applicant. The inconsistency in the number of people involved in formation of the company and the number of applicants should be sorted out at the earliest as it might lead to problems later.

Screenwriters Association vis-a-vis SRAI

Screenwriters Association – not to be confused with SRAI – is a trade union of screenwriters and lyricists that came into existence in the early 1950s, under the name of ‘Film Writers Association’. In 2016, it changed its name to ‘Screenwriters Association’ (SWA). It is registered under the Trade Union Act, 1926 (and therefore not eligible to register as a copyright society). SWA is an independent organization that SRAI has not claimed any legal association with. However, it is worth noting that there appear to be certain commonalities in their objectives and possible overlaps between the spheres of activity of SWA and SRAI.

SWA’s membership is available in three categories – regular/life, fellow, and associate members.  According to its website, SWA allows the registration of members’ scripts and lyrics and charges a certain fee for the same. SRAI too provides for registration of its members’ work, but it is unclear whether they intend to register these works with the Registrar, with the SWA or with themselves independently.

As a trade union, SWA has engaged in a lot of activities to uphold the rights of its members. The SWA has formulated Minimum Basic Contracts (Film, TV, Lyrics, Digital) (see FAQ 5) and has also been working towards fair remuneration which it is trying to get producers to accept. It has also introduced a standard release form in order to prevent victimisation of writers.

During the COVID-19 pandemic, the SWA went ahead and offered its members all kinds of assistance, including assistance for food relief. Presumably SRAI will also aim to form a general social fund for members in need and additionally, an emergency fund for situations such as a Pandemic or financial crises. While it is good to have multiple organizations working for the welfare of screenwriters, this degree of overlap could confuse the members of these organisations as to whom they must approach for the resolution of their issues.

In 2017, as an unregistered society, SRAI could have started the issuance of licenses on behalf of its members as their ‘authorised agent’ under Section 30. However, this would have presented twin problems – first, Section 30 states that license for a work can be granted by an ‘owner’ or his ‘duly authorised agent’, but since screenwriters are generally authors and rarely owners, this may exclude majority of them from the operation of the society and second, under Section 55, infringement action can only be initiated by the owner or his exclusive licensee, not by the agent, thus excluding infringement actions from the purview of the SRAI. Thus, a registered copyright society seems the most practical way, in helping screenwriters get their due (H/t to Shriya Gopalakrishnan for pointing this out).

It is no secret that authors of underlying works such as screenwriters have historically faced challenges in securing the fair value due to them. Other copyright societies such as IPRS and ISRA have been proactive in their efforts to assert the rights of their members before producers as well as in court. SRAI’s application, if accepted this time, would greatly benefit the screenwriters by institutionalising the system for royalty collection and promoting their interests. It is worth noting that SRAI has invited stakeholders such as the Producers Guild, the Indian Film & TV Producers Council, the Motion Picture Association, broadcasters, OTT platforms, and others to communicate each others’ concerns and resolve any issues regarding screenwriters’ rights. While the chances of success of this society’s efforts might be curtailed by the lack of sanctions under Section 33 of the Act, 1957, such a move is a progressive step to establish healthy discourse among the various stakeholders in the film industry that would ensure that fewer conflicts arise.

Topical Highlight

Issues in Sci-Hub Case ‘A Matter of Public Importance’

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In this post, Swaraj highlighted some issues that came up during the hearing of the recent litigation, involving Elsevier, Wiley, and ACS suing Sci-Hub and LibGen for copyright infringement. He observed that it was a positive step for Justice Midha of the Delhi High Court to repeatedly point out that case was ‘a matter of public importance’, and he would not want to pass any orders without hearing the various parties that wanted to get their views heard in the case. Swaraj noted that in another positive step, the blocking of these websites in other jurisdictions was not considered sufficient to throw in a quick blocking injunction without factoring in India’s expansive research exception. He also noted that the Delhi Science Forum, and the Knowledge Commons filed an intervention application, and a group of various scientists filed an impleadment application. The court ordered for the pleadings to be completed within the next 6 weeks, listing the matter for hearing after six weeks.

Draft Science, Technology and Innovation Policy Proposes Major Changes to India’s Open Access Culture

In this post, Swaraj and Praharsh examine the Open Science chapter of the Ministry of Science and Technology’s draft version of the proposed Science, Technology and Innovation Policy, which has been brought out for public consultation, and is open for comments till Jan 25, 2021. They happily note that the draft policy places a lot of importance on Open Science and the need for publicly funded research to be inclusive and accessible. They also observe that the most notable feature of the policy is the call for one centrally negotiated subscription which will enable access to “all individuals in India”. They conclude that the policy marks significant progress towards a culture of open access based on an understanding that public funded research is meant for the public (see here and here), as well as a desire to reach into the vast catalyzation potential that such access would provide.

Thematic Highlight

Interdigital v. Xiaomi: Relevance for Defendant’s Rights beyond SEP Litigation

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In this post, Anupriya discusses the relevance of a recent order by the Delhi High Court in a case concerning InterDigital’s ongoing SEP (Standard Essential Patents) infringement dispute with Xiaomi. She disagrees with a previous post by Nikhil on this issue, and argues instead, that the order should not be construed to be limited to SEP litigation. She notes that the case makes it clear that the defendant cannot be excluded from accessing contractually protected confidential information, if such information is relevant for her to defend the suit. This is because concerns of fair play, equal opportunity and natural justice trump any interest that the plaintiff may have in keeping this information secret. The relevance of access to confidential information for the defendant is easy and intuitive to prove in SEP litigation. However, that would not render this decision inapplicable beyond SEP litigation, in other civil suits (including IP suits generally) where such relevance can similarly be proved. She concludes that the case is a useful precedent to argue in favour of the defendant’s right to know in civil suits across the board where confidentiality clubs may be created.

Interdigital v. Xiaomi: Confidential Information and Open Courts

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In another post on the recent Delhi High Court order in Interdigital v. Xiaomi, Anupriya highlights how the common practice of courts granting confidentiality in commercial litigation without much reasoning does not augur well for transparency, judicial accountability and the citizens’ right to be informed of Court processes and reasoning as part of their fundamental right to freedom of speech and expression under Article 19(1)(a) of the Constitution of India. She also argues that once perceived via a constitutional lens, we would perhaps require a narrowly tailored test for determining confidentiality of information where the public is precluded from exercising their fundamental right to access the court proceedings and documents relied upon by the parties.

Other Posts

Take Two!: Screenwriters Rights Association of India Applies for Registration as Copyright Society… Again

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In this post, Varsha and Adyasha analyse the revised application filed by the Screenwriters Rights Association of India (SRAI) to be recognised as a copyright society under Section 33 of the Copyright Act, 1957. They first summarise the right to royalties as available to screenwriters post the 2012 amendments to the Act. They then look at the purpose and the objectives of SRAI by looking at its MoA, noting elements such as registration of members’ works, entering agreements with third parties on members’ behalf, publishing tariff scheme, and enforcing IP both within and outside India. Then they look at the issues with the application and point out the inconsistency in the number of people involved in formation of the company and the number of applicants, and the mentioning of ‘dramatic’ works in the application despite the MoA only referring to ‘literary’ works. Finally, they note the presence of Screenwriters Association (SWA), a trade union of screenwriters and lyricists, and its efforts to secure the interests of screenwriters. Finally, they note the problems SRAI, in 2017 as an unregistered society, would have faced had it started the issuance of licenses on behalf of its members as their ‘authorised agent’, and conclude by hoping that acceptance of SRAI’s application will be a positive for the screenwriters’ rights.

The Inverse Ratio Rule: On Its Stairway to Heaven?

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In this guest post, Prerna Sengupta and Riddhi Bang, critique the inverse ratio rule of copyright infringement and its application by Indian courts, in light of the US Supreme Court’s ruling in the ‘Stairway to Heaven’ copyright dispute last year. They note that the rule has been considered to be problematic because ‘more’ access to someone’s work doesn’t necessarily mean that such work has been copied. Therefore, this rule can lead to erroneous findings because the jury is led to believe that a certain degree of access automatically establishes copying. They also argue that the checkered application of the rule for proving copyright infringement leads to worrying inconsistencies, particularly in today’s age of wide dissemination where access is quite easy to prove. They argue that the rule also leaves people whose work is more accessible as unjustly better-off within the infringement analysis. They also critique the Bombay High Court’s application of this test last year in a case concerning Netflix’s horror drama ‘Betaal’. They conclude that the rule was formerly used by defendants to defend themselves and protect independently created music but today it has become a tool for plaintiffs to establish copying by simply showing that the defendant could access the plaintiff’s work.

National Biodiversity Authority Imposing Upfront Monetary Payment as Benefit Sharing for Research

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In this post, Adarsh Ramanujan argues that the recent actions of the National Biodiversity Authority, in insisting on upfront payment even for research, imposing an arbitrary upfront monetary quantum as benefit-sharing payment, and the entirely unilateral decision-making, appears to be unreasonable and bad in law. He points out that while the final terms and conditions can be imposed by the NBA, it is expected that there is a process to it, and for the applicant and the authority to bona fide discuss the possible terms and conditions. He derives his argument from the Sections of the Biological Diversity Act, 2002 and Rules under the Biological Diversity Rules, 2004 to conclude that decision-making process envisaged under the scheme of the statute and Rules framed thereunder, involve consensus building which has been subverted by the recent unilateral imposition of upfront lumpsum payments.

The Sci-Hub Case: Why It is Time to Stop Favouring the Doctrinal Approach to Law over an Empirical One

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In this guest post, Anshuman Sahoo and Aditi Shirpurkar examine the Sci-Hub/Libgen case which showcases the data they collected from a ‘mini survey’ on users of Sci-Hub to examine Sci-Hub dependence among researchers and students from some of the ‘elite’ institutes in India, including IISc Bangalore, IIT Kharagpur, IIT Guwahati, IIT Bombay, NLU Delhi, NLSIU Bangalore etc. The study reveals that students from even the best of the institutes are heavily reliant on unauthorised (supposedly illegal) sources to access educational materials – and this should be taken to be only the tip of the iceberg, since the study doesn’t even go into the problems faced by other stakeholders such as independent researchers, not-so-rich institutes, researchers with disabilities etc. The authors highlight the lack of empirical evidence in the debates animating this litigation, arguing for fact-based IP instead of faith-based IP.

Decisions from Indian Courts

• The Delhi High Court in Blue Heaven Cosmetics Pvt. Ltd. v. BHCosmetics LLC, granted an ex-parte ad-interim injunction restraining the defendant from using any mark deceptively similar to the plaintiff’s registered ‘BH’ and ‘BLUE HEAVEN’ marks. [January 8, 2021]
• The Delhi High Court in Elsevier Ltd. and ors. v. Alexandra Elbakyan and ors., re-issued notice to Libgen and ordered Sci-Hub not to upload any of the plaintiffs’ material till next hearing based on their undertaking. The court noted the case to be a ‘matter of public importance’. Multiple intervention applications have also been filed in the case. [January 6, 2021]
• The Delhi High Court in Roland Corporation v. Sandeep Jain, granted an injunction in favour of the plaintiff confining the use of the defendant’s marks as per a statement given by the defendants, in a trademark infringement suit filed by the plaintiff for their registered ‘BOSS’ marks. [January 6, 2021]

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• The Delhi High Court in Reddys Laboratories Ltd v. Ridgecure Pharma, granted an ad-interim injunction restraining the defendant from using the plaintiff’s registered ‘OMEZ’ mark for medicinal and pharmaceutical preparations. [January 6, 2021]
• The Punjab & Haryana High Court in Cremo Netureal Milk LLP v. Cremo S.A., dismissed an appeal challenging the order of the Commercial Court, Faridabad, granting an ad-interim injunction in favour of the Respondent restraining the Appellants from using any mark deceptively similar to the ‘Cremo’ mark. [January 5, 2021]
• The Delhi High Court in Indian Performing Right Society v. Entertainment Network (India) Ltd., held that for public performance of sound recordings, a license from PPL is required, and for musical works, that from IPRS is required, and for events making use of both forms of work, both the licenses are required. [January 4, 2021]
• The Delhi High Court in Shrivats Rathi v. Anil Rathi, dismissed an appeal against the order of a single judge restraining the appellants from using any mark deceptively similar to the ‘RATHI’ mark. [January 4, 2021]
• The IPAB in The University of British Columbia v. Controller of Patents, allowed the appeal against the decision of the Assistant Controller of Patents & Designs rejecting a patent application concerning monoclonal antibodies to the 14-3-3 ƞ protein isoform. [December 31, 2020]
• The IPAB in Degapudi Janardhana Reddy v. Controller of Patents and Designs, allowed the appeal against the decision of the Assistant Controller of Patents & Designs and reminded the case back to the controller to decide it on merit based on amended set of claims. [December 31, 2020]
• The IPAB in Anaghaya Million Pharma LLP v. Nippon Soda Co. Ltd., dismissed a revocation petition on the ground of lack of locus standi of the petitioner. [December 29, 2020]
• The IPAB in Tony Mon George v. Assistant Controller of Patents and Designs, allowed the appeal against the decision of the Assistant Controller of Patents & Designs rejecting a patent application based on Compound 6- 1140 of D4. [December 29, 2020]
• The IPAB in Evonik ROHM Gmbh v. Assistant Controller of Patents and Designs, allowed the appeal against the decision of the Assistant Controller of Patents & Designs and reminded the case back to the controller to decide it on merit based on amended set of claims. [December 29, 2020]
• The IPAB in UCB Pharma Gmbh v. Controller General of Patents, Designs, & Trademarks, allowed the appeal against the decision of the Assistant Controller of Patents & Designs rejecting a patent application for the way to control degradation of fesoterodine even in stress conditions using certain stabilisers. [December 29, 2020]

Other News from around the Country

• The Twitter account of Sci-Hub has been permanently suspended citing violation of the Counterfeiting Policy. The site’s owner, Alexandra Elbakyan believes this might be directly related to the ongoing copyright suit in India.

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• The national convenor of the RSS-affiliate Swadeshi Jagran Manch, Ashwani Mahajan, has written to the central government urging them to ensure access to research in light of the ongoing Sci-Hub copyright infringement suit.
• A piece in The Week highlights various academics speaking out against academic publishers seeking injunction against Sci-Hub and Libgen.
• Several people including celebrities have fallen for a recent phishing scam on Instagram with a message claiming that one of the users’ posts has been flagged for copyright violation and they could appeal the same using a link which seeks the account passwords.
• Painter Sobha Singh’ s daughter accused the Punjab government of unauthorised use of her late father’s registered copyrighted artwork, a picture of Guru Teg Bahadur, in the government’s official calendar. A day after this the government issued an apology and dropped the painting from celebrations of 400th birth anniversary of the guru.
• A group of farmers in Theni have applied for a GI tag for ‘panneer’ grapes grown in Cumbum.
• The Tribal Cooperative Marketing Development Federation of India under the ministry of tribal affairs has identified 54 products that could potentially obtain a GI tag and shall assist the makers and suppliers of these products in applying for the same.
• A Vidarbha scientist, Dr. Sameer Kulkarni, received patent for his technique to preserve the efficacy of bottle gourds for six months.
• AIMIM chief Asaduddin Owaisi advised the central government to invoke Section 92 of the Patents and issue compulsory licenses to generic manufacturers for ensuring adequate delivery of vaccines.

News from around the World

• Russia has granted a compulsory license to Pharmasyntez to produce Remdesvir for a period of one year.
• Rapper Nicki Minaj settled the pending copyright dispute with Tracy Chapman for allegedly leaking an unreleased song on the radio containing a sample of Tracy’s song, by paying $450,000.
• Cydia has sued Apple for illegally monopolising software distribution on iOS through App Store.
• HanesBrands received a judgment in its favour on a trademark infringement suit from the Nanjing Intermediate People’s Court in China.

On 31st December 2020, an IPAB bench consisting of the Chairman Manmohan Singh J. and two technical members Surya Senthil and SP Chockalingam, delivered a grand statutory license order for radio broadcasts under Section 31D of the Copyright Act. We had previously blogged about the Public Notice issued by IPAB seeking suggestions from stakeholders for the fixation of these rates. The notice came in the wake of the expiry of the erstwhile Copyright Board’s compulsory license order (CB order) under Section 31(1)(b) which had set the rate for radio royalties at 2% of the Net Advertisement Revenues. In this detailed order, IPAB not only adopted new rates for radio royalties but it also completely revamped the existing royalty model. It also went ahead and fixed royalty rates for underlying works in addition to the sound recordings that radio broadcasters had sought licenses for. [Long post ahead]

[Please also see my next post, on the Delhi High Court order which came out immediately after this order – holding that royalties are not payable to authors of underlying works when a sound recording is broadcasted!]

No Cross-examination of Witnesses

Before diving into the order itself – it is pertinent to mention: In a Bloomberg Quint article (paywall), Prashant points out that the parties involved in the matter appear to havesurprisingly waived their right to cross-examine each others’ witnesses. This is rather baffling, considering the parties’ arguments involve multiple conflicting reports and statements whose veracity could only have been ascertained through a detailed cross-examination of expert testimony. Naturally, IPAB ends up not relying on any of the reports presented for its decision. As Prashant explains, this omission of cross-examination might be owing to the mandatory 2 month limit within which IPAB is forced to render its decision. The fact that this hushed decision has not seen the unpacking of the many economic and factual claims relied on, casts a long shadow over it.

IPRS’s intervention application and the Royalty for Underlying Works

Prior to fixing the royalty rate, IPAB admitted an intervention application from IPRS which sought to argue that separate royalty rates needed to be fixed for literary and musical works incorporated in sound recordings. However, Section 31D empowers broadcasting organizations to seek a statutory license, and tasks IPAB with fixing the rates for such a license. As the radio broadcasters only sought statutory licenses for sound recordings, did IPAB have the authority to admit a third party and fix royalty rates for underlying works? While the order repeatedly reminds us that it is conducting a non-adversarial ‘consultative process’ and not functioning as a civil court, neither the Copyright Act nor the Copyright Rules 2013 instruct IPAB to observe this distinction. It may be argued that IPAB decided to fix underlying works’ royalties in exercise of its ‘suo motu powers’, recognizing IPRS as an ‘interested person’ under Rule 31(1), 31(2) and 31(3) of Copyright Rules 2013 – but the order itself offers no such explanation. Besides, IPAB is a court of law and not a regulatory body. As such, if it does not have the authority to allow a third party into the hearing, the decision could fail to withstand appellate scrutiny.

Having heard IPRS, IPAB noted the Supreme Court’s 1977 decision in IPRS v. Eastern India Motion Pictures,which had held that works created for incorporation a film come within Section 17(b) and (c), and the copyright in those underlying works divests from the original author and vests in the producer. It scrutinized the 2012 Amendments to Sections 17, 18 and 19 that exempted underlying works incorporated in cinematograph films from automatic assignment and further created an inalienable right to ‘receive an equal share of royalties’ for the authors of these underlying works. It then read these sections together with Section 31D, as they are creations of the same amendment, holding that the exception carved out for underlying works meant that the right to royalties over these works was now a ‘shared right’ between the author and whoever owned the copyright.

However, what Sections 18 and 19 create is a distinct contractual right that arises upon assignment of copyright. Section 31D on the other hand deals with statutory royalties, not necessarily connected with assignment. To rely on Sections 18 and 19 in order to interpret statutory licenses creates unnecessary confusion, particularly when the term ‘share’ has not been used in Section 31D. This is because Section 18 is rather unclear on who is to pay the authors their share, i.e., whether multiple separate-but-equal royalties are to be paid by the licensee, or a single royalty is to be split in equal parts (thereby greatly reducing the final amount received by authors). With IPAB conflating the two concepts and pronouncing a ‘shared right’, it may become easy for future licensees to argue that Section 18 intends a single royalty to be equally divided – thereby greatly harming the economic interests of the authors themselves.

Adopting a Methodology

To decide upon a methodology, IPAB considered the following models proposed –

1. Needle per hour (NPH) model, which calculates royalty at a fixed amount per hour on the basis of actual usage.
2. Net Advertisement Revenue (NAR) model which fixes royalty as a percentage of the ad revenues of the radio business
3. Gross Revenue model, which calculates royalty as a percentage of all revenues of the radio business, thereby incorporating the growing non-ad revenues
4. A Hybrid Model involving both NPH and NAR

Radio Broadcasters’ Arguments

The Radio broadcasters favoured the NAR model, which is what the CB Order had finalised, setting royalties at a heavily criticised 2% NAR (pro-rata basis) to support the declining radio companies that lacked capacity to afford high royalties. Building upon that, the radio broadcasters argued that an increasing number of listeners are shifting to mobile apps and other digital platforms for music. Radio business performs public functions despite being burdened by several kinds of licensing fees to the government in addition to music royalty, as it continues to operate on a free-to-air, non-subscription based model and thus caters to the masses. It runs social awareness programs and broadcasts news, and has helped disseminate information during COVID-19. NPH model’s fixed rates which are not sensitive to the broadcasters’ losses and would thus be onerous for them. Ad revenues on the other hand are accurate indicators of the broadcasters’ income. Further, the global standard of royalty lies between 1-5% on NAR. They sought royalty at a rate of 0.75% to 2% of NAR.

Music Companies’ and PPL’s Arguments

The respondents vehemently opposed the argument that radio business is facing losses. They cited reports such as the FICCI-EY Report 2020, FICCI-KPMG Report 2019 among others, to argue that the radio industry grown significantly in size with investment in new radio stations across the country with non-ad revenues rising to about 20% of total revenues, and has far exceeded the music industry’s growth. They asserted that the input cost of making music has risen exponentially and radio industry reaps ‘the fruits of finished labour’. Moreover, radio companies are owned by conglomerates which engage in multi-platform barter deals with advertisers and thus present manipulated accounts of their radio ad revenues.

 They also highlighted that radio companies are in fact paying royalty rates as high as 6-7% of NAR to Non-PPL members on whom the CB Order did not apply. They opposed the invocation of public interest arguing that music is not public good and radios in fact earn maximum business by repeatedly playing popular Bollywood music instead of promoting different kinds of ghazals, folk, Indi-pop music, and regional content. Largely favouring the NPH model which accommodates time-slot and city-wise differentials, some respondents were amenable to a gross revenue model too.

IPAB’s Decision

Having heard all these arguments, IPAB decided that the NPH Model was the most suitable option as it accommodates the varying levels of listenership in different cities, and during different times of the day, making it compatible with Rule 31(7). It rejected the NAR model as the method of calculating ad revenues varies between broadcasters and this creates difficulty in computation. Other than completely ignoring the burgeoning non-ad revenues of broadcasters, it also subjects the copyright owner to the broadcaster’s business practices which should not have a bearing on royalty determination.

This shift to a pay-per-use model is a much welcome development, as it was patently unfair to allow broadcasters to keep paying on the basis of their returns, which could remain low because of poor business decisions on their part.

Rate Fixation

The CB order of 2010 had based its decision primarily on the woes of the radio broadcasters who had relied on their low growth rate and social awareness initiatives to put forth a compelling case that brought down the prevailing 20% NAR/INR 2400 NPH rate charged by PPL to a meagre 2% NAR. IPAB however opined that statutory licensing is not intended to protect public interest in copyrighted works like compulsory licensing does. It is intended to ensure hassle-free licensing at a rate that closely resembles the free market rate and ensures adequate returns to copyright owners. It thus requires the balancing of interests of both the licensor and licensee.

Financial Health of the Industries

The parties presented multiple expert reports making contradictory claims regarding each others’ financial state. The Copyright Board in 2010 had examined multiple reports from FICCI, Ernst & Young, as well as expert witness testimony. These reports had been dissected and their claims weighed upon through examination of several expert witnesses from both sides, helping the Copyright Board arrive at its decision. IPAB on the other hand did not engage in such a detailed inquiry, as explained before. Instead it observed that conclusions couldn’t be drawn but credible doubts had been cast over the radio companies’ claim of declining revenues and loss of listenership (para 108). Ultimately, IPAB disregarded the plea that radio was burdened with several fees and permits already and lacked the capacity to pay high royalties. It observed that the applicants willingly chose to pursue this business and could not rely on other expenditures to deny the fair value due to copyright owners (para 99).

This assessment ties in well with the previous finding that statutory licensing intends to accommodate interests of both parties. While the other content broadcasted by radio may be of social importance, the burden of incentivizing the radio business cannot be shifted on the shoulders of the music industry which puts together immense creative and financial efforts in creating music.

Setting a Benchmark for Prevailing Rates

An important question to consider was what should be taken as ‘prevailing standards of royalties’ directed by Rule 31(7)(d). A number of broadcasters insisted upon the 2% of NAR rate set by CB Order 2010 since it was in force till its expiry in September 2020, seeking an equivalent rate adapted to the NPH model. The respondents suggested instead the rates charged by non-PPL members in voluntary licenses as they represented a truer picture of existing market prices. IPAB rejected the 2% NAR equivalent as it was 10 years old and far too low even by market standards prevailing in 2010 (Copyright Board had fixed a higher rate of INR 660 NPH as far back as in 2002!). Royalty rates followed in foreign countries were also rightly rejected as they did not reflect the realities of the Indian market. Instead, IPAB looked to the license fees paid by All India Radio (AIR) as a benchmark to arrive at its final matrix.

Ultimately cities were divided into 5 tiers and separate rates were set. Time-slots too were divided into prime time, other time and lean time. A similar scheme was adopted to fix royalties for underlying works.

Other Considerations

IPAB rejected respondents’ request for higher royalty rates for popular songs which were repeatedly played as they claimed this to have a saturation effect on the masses, observing that it could not be determined whether it was the popularity of the song that led to repeat broadcast or was it the repeated broadcast that made the song popular. Another plea similarly shot down was that of setting higher rates for playing of complete songs in place of shortened, ‘radio edits’ claiming that that discourage music purchase. Similarly, the request for fixing higher rates for new songs was rejected too as IPAB observed that  it could not be decisively said that age of a song is correlated to its popularity.

Despite the fact that this order has been passed for the period between 01/10/2020 to 30/09/2021, IPAB remained conscious to not let business returns during the COVID pandemic influence the rates as it deemed the same to be temporary and not indicative of the long term situation. Lastly, IPAB also allowed regional players with lower listenership to negotiate voluntary licenses and arrive at prices suitable to their business.  Although the order has not explicitly clarified whether it is an order in rem, the fact that allows space for voluntary licensing indicates that those not party to this application may be free to negotiate independent licenses.

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A shocking order delivered by the Delhi HC on 4th January in IPRS v. ENIL and PPL v. CRI Events, only days after the landmark radio royalty statutory license order, has held that underlying works incorporated in sound recordings are not utilized and do not incur royalty when the sound recording is used! The order goes on to interpret the 2012 Amendment in a manner that almost completely extinguishes the rights of authors of underlying works.

Underlying Works and Royalty Rights

Section 17(b) and (c) of the Copyright Act, 1957, which borrow from the ‘Work-For-Hire’ doctrine in US copyright law, provide for automatic assignment of copyright in works created under a ‘contract for service’ to the person who pays for their creation, i.e., the producer. A problematic Supreme Court judgment in 1977 pronounced that underlying works incorporated in song tracks or films come under these provisions, thus preventing their authors from staking claim in their own creations that went on to earn crores in the market. Following decades of struggle (Prof. Basheer discusses this here), an Amendment in 2012 gave statutory recognition to authors’ right to receive royalty from underlying works.

The Delhi High Court Decision

The first suit concerned a number of agreements dating back to 2001 between IPRS and ENIL (owner of Radio Mirchi FM) under which the latter had been licensed music to be broadcasted in 7 cities. ENIL then broadcasted the said music in 3 additional cities, against which IPRS brought an infringement claim seeking permanent injunction and damages. The second suit was filed by IPRS and PPL in 2009 against an event management company which played music without obtaining licenses from the plaintiffs in events organized in its banquet hall.

The arguments advanced by the IPRS and PPL were straightforward: That music had been played without authorization, amounting to infringement, and thus, damages were owed. They claimed that playing of songs utilized the sound recordings, as well as the underlying musical and literary works, and thus separate licenses were to be taken for all categories of works. The defendants countered that broadcast of sound recordings only affects the copyright therein, because when the underlying works are incorporated in the sound recording, they integrate into the latter with only a single resultant work: the sound recording.

The question before the court was thus twofold:

1. Does communication of sound recordings amount to communication of underlying works as well?
2. Has there been any change in the position of law in this regard due to the 2012 Amendment?

Both were answered in negative.

Court’s Analysis

The defendants drew strength from the 1977 decision in IPRS v. Eastern India Motion Pictures (referred above) to argue that when underlying works are used to make a sound recording, they merge into it and the only surviving copyright is that of the author of the sound recording (the producer). They also rely on the 2011 decision in IPRS v. Aditya Pandey, which had been criticised for misinterpreting rights in underlying works even as they stood before the 2012 Amendment, to argue that a musical or literary work in itself, without the other elements of the sound recording, is not commercially viable! Surely they could not have forgotten that different set of lyrics (literary work) and music (musical work) can be combined to put together a completely different product, or even sold independently? Accepting this flawed argument, the court goes on to state (para 22):

‘It is the owner of the sound recording who transforms the literary work which otherwise is a mere collection of words into a sound, capable of phonetic pleasure and who gives the composition of music a sound of various musical instruments’.

In an interview to SpicyIP back in 2010, Achille Forler had rightly questioned: How can ownership of a work be attributed to the one who has the idea (to create) and not to its creator?

The defendant had also argued that copyrighted works are mutually exclusive as understood from Section 2(y) and the exploitation of copyright in one class of work cannot amount to exploitation of any other work (page 17) – an argument that challenges the very concepts of derivative work and infringement. If works are necessarily mutually exclusive, then a work which, in a small portion consists of a substantial part of another copyrighted work cannot be infringing as the latter must have lost its independent existence upon incorporation?

Accepting this argument (!!!), the court held that utilization of a song recording does not constitute the utilization of underlying works and thus, no authorisation is required from the authors of the underlying works, nor is any royalty owed to them.

This is a complicated issue. The authorisation requirement and royalty do not necessarily go hand in hand. The 2012 Amendment added a proviso to Section 17, declaring that literary, musical, dramatic or artistic work incorporated in a cinematograph work is exempt from the provisions of 17(b) and (c). This means that the automatic assignment does not take place and independent copyright subsists in these underlying works alongside the fresh copyright in the film. Thus, in case of film songs, multiple copyrights subsist simultaneously and the underlying works do not get assigned unless specifically done through contract. So theoretically, if any film song recordings contain underlying works that have not been assigned to the producer or anyone else; a broadcaster would require the author/copyright owner’s authorisation to communicate the same.

Amendments to Sections 18 and 19 further entrench this position. The provisos 3 and 4 to Section 18(1) hold that the right to receive an ‘equal share of royalties’ for non-cinema uses in case of underlying works in films, and all uses for those in non-film sound recordings, cannot be assigned or waived. Sections 19(9) and (10) further declare that even if the works themselves are assigned away, the inalienable right to receive royalty shall remain with the author. Therefore, in case the authors have assigned away the copyright in their works, they would still be entitled to a share in royalty under Section 18.

The court then goes on to hold that sound recordings are works of joint authorship under Section 2(z).   This is questionable on multiple grounds. Firstly, joint authorship occurs when a work is created through the close and active intellectual collaboration of parties such that their individual contributions are indistinguishable (Najma Heptullah v. Orient Longman Ltd.). The lyrics and music embodied in a song are arguably far too distinguishable and separately attributable to meet this standard. Secondly, even if it is to be treated as a jointly authored work, courts have repeatedly held that a single joint author cannot individually exploit a work without the consent of the other authors, as Anupriya explains here. Following this interpretation, communication of sound recordings would require authorisation from and compensation to the authors of underlying works as well. This is wholly incompatible with the argument that authors lose all rights in the underlying works.

The Effect of 2012 Amendment

It is necessary to note that both of these infringement suits predate the 2012 Amendment, and thus their treatment hinges on the question of whether 2012 Amendment has a retrospective effect. In case there is no retrospective effect, these suits may be bound by the pre-2012 legal position, as dictated by the Supreme Court’s interim order in this matter.

IPRS argued that 2012 Amendment has retrospective effect, and the additions to the law are merely clarificatory. This is a bit difficult to accept, because while the proviso to Section 17 can be argued to be a clarifying provision, the right to receive royalty clearly carves out an exception that was previously non-existent. Moreover, the IPAB in its recent statutory license order relies on the use of the word ‘shall’ in Sections 17, 18 and 19 to accord the amendments a future effect.

The court though, took a completely different view, and this is the most problematic part of the judgment. It held that the 2012 Amendment has no effect on the legal position, because even if applied, it does not entitle the owners of copyright in literary and musical works to claim infringement when their work is communicated as part of sound recordings they have authorized! Instead, the right is available when their work is being communicated otherwise than by way of sound recording (see para 29-32) – presumably referring to communication through public performance.  This interpretation goes against the literal words of the statute which preserve the author’s copyright unless specifically assigned, and for any utilization (refer Sections 18 and 19). [One might also wonder, if the contributions in a sound recording are indistinguishable by virtue of being jointly authored, and lack independent commercial viability, how can a lyricist or musician exploit the work otherwise than by way of sound recording?].

Concluding thoughts

This absurd interpretation leaves authors to claim shares only from non-sound recording uses of their work, which would mean live performances at events. Surely this could not have been the intention of the legislature, which amended the Copyright Act specifically to bring economic justice to the authors of works incorporated in films – a fact which is clear from a bare perusal of the Statement of Objects and Reasons to the Copyright (Amendment) Bill 2010 and the Parliamentary Standing Committee Report (PDF). If the authors have no claim on the royalties accrued from the use of sound recordings which gathers the lion’s share of the profit through radio, TV and online broadcast, ringtones, as well as physical sale of CDs and cassettes, their situation is hardly any better than it was 44 years ago.

Aside from being fraught with self-contradictions, this judgment does blatant injustice to the authors who already suffer from limited legal protections and lack collective bargaining power to secure their rights. It also completely fails to consider legislative intent behind the 2012 Amendment and renders an interpretation that effectively obliterates its effect. These authors, who had secured a victory of sorts through the radio broadcast statutory license earlier, will likely face trouble once again as this decision empowers the producer-oriented entertainment industry to deprive authors of their rewards. Fortunately, an appeal against this has been admitted by a division bench of the Delhi high court. One can only hope that this decision is overruled, and as soon as possible.

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Images from here and here

The Delhi High Court passed an order last month in the matter of H Lundbeck A/S v. Hetro Drugs Ltd., whereby it ruled that “export of the products from India would amount to use of the product in India” under Section 107 of the Patents Act. While according this meaning to the term ‘export’, the court however, did not elucidate on the reasoning for its interpretation. The present post will discuss why the present ruling is inconsistent with the nature of the Act and the ramifications of such interpretations.  

Background

The subject matter in this case was an antidepressant with patent titled “Pharmaceutical Composition Comprising Phenyl Piperazine Derivatives as Serotonin Reuptake Inhibitors” (IN 227963) and was granted protection on 27/01/2009. The drug’s international nonproprietary name (INN) is Vortioxetine. The Petitioner (H Lundbeck A/S) alleged that the Respondent (Hetero Drugs Ltd.) imported the API Vortioxetine thrice in 2016 and subsequently exported substantial quantities of Vortioxetine Hydrobromide to other countries (notably Canada and a few other Latin American countries). It further alleged that Defendant no. 2 (presumably a local contracted manufacturer? Strangely nowhere in the order is the identity of this party revealed!) sought environmental clearance to expand the Respondents’ manufacturing capacity of Vortioxetine Hydrobromide. The Respondents refuted the allegations and claimed that they aren’t using the product in India, rather are exporting it for the purposes of research and development.

The court rejected the defense of the Respondents, holding that the Respondents did not provide any evidence to prove that the substantial portion of the Respondents’ export was utilised in research and development. (Side note: The trend of courts not substantiating on how plaintiffs have fulfilled the three-factor test required for an interim injunction continues in this case). Now, moving on to the questions around ‘export’.

Precedents on Interpretations

The court in the present case did not clarify the rationale behind establishing why export of a good shall be considered as “usage in India”. In common parlance, the term ‘export’ is associated with selling, or transporting for the purposes of selling, of a product from one country to another country. Therefore to regard it as a “use” of the product within the selling country stands in contradiction with the “extraterritorial” nature of the word itself. Let’s look at what precedents have said on how to interpret words used commonly through the legislation:  The Delhi High Court in Bayer v. Union of India decision, relied on Polestar Electronic (Pvt.) Ltd. v Additional Commissioner, Sales Tax and Anr., Central Bank of India v State of Kerala and Ors. and  Central Bank of India v Ravindra & Ors.  to reflect the “two clear strands of reasoning … while interpreting the meaning and purport of general words. One, that plain and natural meaning should be preferred ordinarily, and two, that the context and purpose of the provision should always be kept in mind.” Though, the court in this case held export to mean “selling”, it justified its stance after comparing the use and intended meaning accorded to the common term “export” under different provisions of the Act. In the present case, no such explanation was given by the court for ruling that “export” shall fall within the meaning of “use in India”, which is in contradiction of the general understanding of the word “export” in the first place.

 Extermination of ‘No Extraterritorial Application’ of Patentee’s Rights?

Further problems accrue if one is to read ‘use’ into ‘export’ under 107 of the Act,  since this would also increase the ambit of rights accorded to a patentee under Section 48 of the Act, multifariously. By using such an interpretation, a patentee can later claim it has a right to prohibit another party’s export (now aka ‘use in India’) of the allegedly infringing goods. 

In a situation where a party is exporting products after manufacturing them in India, and the patentee wants a remedy for an infringement within the territory of India, their case will depend on whether Ss 107 and 107A of the Act apply or not. In case the respondent fails to establish the application of the above provisions, then in such a situation the patentee can claim infringement of its rights on the basis of the manufacture of the infringing goods. 

The Delhi High Court in Merck Sharp & Dohme Corp v. Sanjeev Gupta faced the similar situation, wherein the respondent was manufacturing the goods in India and then subsequently exporting the entire quantity. The Respondent argued that giving rights against export of the good would amount to extraterritorial application of the Patents Act. The court rejected this reasoning and focused on “the place of manufacturing” instead. The court held that “the manufacture of the product has, admittedly, occurred within the territory of India, and the question of extraterritorial application does not arise in this case.” 

Similarly, there was no reason for the court in the present case to interpret ‘export’ as ‘use in India’, when a straightforward reading of the law, as well as judicial precedent, shows that the right being infringed is the right accorded against the manufacturing of the infringing goods within  the territory of India. 

Therefore, the court in the present case could have avoided getting into the murky situation of interpreting “export” as something which it shouldn’t be and risking extraterritorial application of the patentee’s rights in the longer run. A simple reading of Section 48 (conferring rights on the patentee) and Sections 47 and 107 (defences against the above rights) supports the reasoning in the Sanjeev Gupta case. 

Hypothetical Ramification no. 1: Complications During Transit and Subsequent Seizures ? 

It is pertinent to note that an unclear stance on the term “export from India” can have far more  ramifications too. For instance, without a clear explanation of what “export from India” could mean, one may interpret it to include transit of goods from Country X, through India to Country Y. This may inadvertently grant patentees the right to sue over goods in transit through India as well. Such an interpretation is also not far fetched as the Customs Act and the Foreign Trade (Development and Regulation) Act both provide for a simplistic definition of the term “export” i.e. taking goods out of India. However,  such an interpretation, among other things, would hamper India’s international stance taken up in the EU-Certain generic medicines in transit case. In this case goods from India which were destined to other countries were seized by the customs authorities of the Netherlands. The Dutch authorities alleged that since goods were in transit within the EU territory, the authorities have power to seize them if they are violative of the EU’s patent laws. India vehemently opposed this stance and maintained that “the mere fact that medicines are in transit through EU territory, and that there is a patent title applicable to such medicines in the EU territory, does not in itself constitute enough grounds for customs authorities in any Member State to suspect that the medicines at stake infringe patent rights.” (see here for a detailed summary of the understanding agreed between India and EU, and here for our coverage about the intransit seizures, on the blog.) 

 Hypothetical Ramification no. 2: Potential for Denigrating the Working Requirements

Another question which may arise out of interpreting export within “used in India ”, is its potential ramification on the already diluted working requirement of the patent, in the Act . As a quick recap, Section 83 (especially clause (a) and (g)) of the Act along with Form 27 form the “working norm” of patents in India. However, the local working requirement of a patent has been trimmed down substantially by the recent amendment of the Form 27 (covered here by Adarsh and by Pankhuri here). Subsequent to these amendments, the patentee is required to “inform the value accrued to it in India” but doesn’t need to disclose the per-unit price of the invention. Furthermore, the patentee is no longer required  to prove whether a public requirement has been met at a reasonable price, or not. In light of the above, the present interpretation of export as “used in India” runs at a risk of diluting this requirement even further. If export of a particular product is read as “used in India” then, the value accrued by exporting the goods can be (perhaps mischievously) interpreted to show the value accruing in India. 

Therefore, such an interpretation may enable the manufacturer to claim that it is fulfilling the working requirement without actually making it available for the public in India! To understand how dangerous the implications can be, let’s consider a hypothetical situation a vaccine for COVID-19 – assuming no other vaccines were being made available in India – i.e., the situation just a month ago. Applying the above argument, the patentee can still “fulfill” the working requirement under the Indian patent law, just by exporting the vaccines abroad (either after manufacturing it in India or possibly and completely illogically, even in transit via India, as argued above) and subsequently showing the value accrued to it. Furthermore, consequent to the said amendment, the patentee can avoid fulfillment of public requirement essentially meaning it can export the entire quantity abroad effectively, so long as it can show that value has been accrued to it by such export. While the above scenario is highly unlikely owing to the media attention and the gravity of the situation, the same cannot be said for other drugs manufactured in India. 

Incidentally – in July 2020, in Bayer v. Titan Industries, too, the court rejected the Respondent’s plea regarding application of the research exemption under Section 107A and held use by Respondent by exporting a product from India, to mean “use in India ”. I haven’t examined that case in detail – however – prima facie it seems that  the above case too suffers from the same issue as discussed above.

Regardless, for the reasons stated above, this interpretation by the court may inadvertently end up disrupting the fine balance between exclusive rights and public interest which the patent law seeks to achieve. Such an interpretation accords more rights to a patentee, gives sufficient leeway to avoid necessary obligations as discussed and stands against the need of interpreting words closely to their ordinary meaning,  as suggested by judicial precedents.  

P.S : I would like to thank Swaraj for his comments on the post. 

Topical Highlight

Delhi HC Order Cripples Authors’ Royalty Rights in Underlying Works

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I critiqued the Delhi High Court’s order in IPRS v. ENIL, which held that underlying works incorporated in sound recordings are not utilized and do not incur royalty when the sound recording is used. I briefly review how the 2012 Amendment was brought in to recognise authors of underlying works’ inalienable right to royalty. In this order, the court has accepted the argument that it is the producer of a sound recording who owns copyright over it as the underlying works are not independently commercially viable. It further holds that utilization of a sound recording does not amount to utilization of the underlying works and neither authorization nor royalty is owed to the latter’s authors. I explain how this goes against the literal words of the statute post-amendment. I further point out that the observation that sound recordings are works of joint authorship contradicts the other observations of the order. Lastly, I argue that the court’s ruling that 2012 amendment has no legal effect on broadcast of sound recordings as authors only have royalty rights over non-sound recording uses completely ignores the legislative intent and defeats the purpose behind the amendment, thus causing serious economic losses to authors.

Thematic Highlight

Delhi High Court Interprets ‘Export’ as ‘Use’ in India; Grants Interim Injunction to Lundbeck

Praharsh analysed order in the case of Lundbeck A/S v. Hetro Drugs Ltd. wherein the Delhi High Court ruled that ‘export’ of products from India would amount to ‘use’ of the product in India under Section 107 of the Patents Act. Praharsh explains that equating ‘export’ to ‘selling’ contradicts established precedent on statutory interpretation which requires words to be accorded their plain and natural meaning and to be construed by keeping in mind the context and purpose of the provision. He then discusses how this understanding of ‘use’, risks allowing patentees to claim remedies against export of patented products, thereby permitting an extraterritorial application of the law. Further, it creates room for the argument that products in transit through India are used as well, which runs counter to India’s stance in the EU-Certain generic medicines in transit case where India firmly argued that products transiting through EU territory could not be said to be violating EU patent rights. Finally, he then draws attention to the Form 27 amendment in Patent working disclosure norms. Reading exports as “use in India” runs the grave risk of enabling the manufacturer to claim that it is fulfilling the working requirement without actually making it available for the public in India.

Other Posts

IPAB’s First Statutory License Order Overhauls Radio Royalty System

I discussed the IPAB’s Statutory License order fixing royalty rates for radio broadcasts of sound recordings. Other than the lack of witness cross-examination in the proceedings, I also criticize IPAB’s admittance of IPRS’s intervention petition for fixing of royalties in underlying literary and musical works. Specifically, the interpretation of a ‘shared right’ of royalty is confusing and risks harming the very authors who are the intended royalty recipients. I explain how IPAB has adopted the needle-per-hour model for fixing rates to accommodate differences in city-wise listenership and timeslot traffic. Further, the rates have been driven more by considerations of fair market value and balancing of interests of both radio companies and copyright owners as opposed to the public interest considerations that had led to the fixing of a low rate on the basis of radio industry’s poor financial health. Moreover, IPAB also chose to refuse pleas to fix higher rates for new songs, for playing of complete tracks and for repeated playing of popular songs on grounds that there was no evidence that these caused harm. Lastly, IPAB allows space for negotiation of voluntary licenses if parties so will.

Patent Drafting Positions at Remfry & Sagar, Bengaluru & Gurgaon

We informed our readers that Remfry & Sagar, one of India’s leading IP law firms, is looking to recruit two candidates for patent drafting for its Bengaluru and Gurgaon offices. Further details are available in our announcement post.

Other Developments

Decisions from Indian Courts

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  IPAB in Hewlett Packard v. The Registrar of Trademarks & Anr ordered that the trademark ‘OBELISK’ bearing registered No. 3227569 in class 9 be removed from the Register forthwith on the grounds that it is wrongly registered by Respondent No.2 and is covered under the provisions of Section 47 and Section 57 of the Trade Marks Act, 1999 [December 30, 2020].

• IPAB in Wisig Networks Pvt Ltd v. Controller Of Patents And Designs allowed the appeal against the decision of the Assistant Controller of Patents & Designs on grounds that it was devoid of any reasoning and remanded the application back to it to be decided on merits [January 8, 2021].
• IPAB in Asthristis Relied Plus Ltd v. Controller Of Patents And Designs allowed the appeal against the decision of the Assistant Controller of Patents & Designs rejecting a patent application and directed the respondents to grant patent to the appellant on the amended set of claims [January 11, 2021].
• Delhi High Court in Bharat Biotech International v. Optival Health Solutions Pvt. framed the issues in a dispute concerning ‘TCV,’ ‘TCV/TYPBAR- TC’ and related trademarks and listed it for hearing [January 11, 2021].
• Gujarat High Court in M/s Vipul v. Akshar Sweets And Namkeen, in a case of trademark infringement, directed the trial Court to decide the application of the appellants for grant of interim injunction as expeditiously as possible, preferably within a period of three months [January 11, 2021].
• Delhi High Court in Aktiebolaget Volvo & Ors v. Vaishali Travels & Anr passed an ex-parte interim injunction against the Defendants, restraining them from using the Plaintiff’s trademark ‘VOLVO’ and/or any deceptively or confusingly mark in relation to online booking of bus tickets, live tracking of buses, telephonic booking of bus tickets or in relation to any other goods or services, in any manner, including the impugned domain name, www.vaishalivolvo.com, meta- tags associated with the impugned domain name, as a part of the email id vaishalivolvo35@gmail.com [January 11, 2021].
• Delhi High Court in Gs1 India v. Global Barcodes Sl & Ors granted a permanent injunction and damages in favour of the Plaintiff restraining the Defendants and their associates from using, selling, offering for sale, issuing or allocating 13-digit barcode numbers starting with ‘890’ or any deceptively similar marks leading to confusion as to origin or association or mistaken impression as to certification regarding compliance with GS1 standards (GS1 General Specification), amounting to infringement of Plaintiff’s registered trademark [January 12, 2021].
• Delhi High Court in Quikr India Private Limited v. Nike Innovate C.V & Anr. noted procedural inadequacies in the granting of an ex-parte injunction in a matter relating to the infringement of trademark through counterfeit goods sold under trademarks NIKE, SWOOSH DEVICE, NIKE PRO, NIKE+, NIKE AIR JORDAN, JORDAN, JUMP MAN (DEVICE) and directed that the application under Order 39 Rules 1 and 2 CPC be restored to the file of the trial court and be decided afresh [January 13, 2021].
• A Delhi District Court in Burberry Limited v. Dinesh granted a decree of permanent injunction to the plaintiffs, restraining the defendants from selling, offering for sale, marketing, advertising, distributing or dealing in/under the impugned trademark ‘BURBERRY EQUESTRIAN KNIGHT LOGO, CHECK’ or deceptively similar trademark to the plaintiff’s trademark ‘BURBERRY’, along with compensatory damages in sum of Rs. 1 lakh lumpsum on account of unfair economic and commercial advantage which the defendants tried to gain at the expenses of the plaintiff’s reputation as well as costs towards litigation expenses in the sum of Rs. 33,000/- in favour of the plaintiff  [January 18, 2021].

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• A Delhi District Court in Levi Strauss & Co v. Dinesh, granted a permanent injunction to the Plaintiffs restraining the defendants from selling, offering for sale, marketing, advertising, distributing or dealing in/under the impugned trademark ‘LEVI’s’ with/without the ‘Two Horse Logo’ and/or House mark ‘LEVI’s’, along with compensatory damages in sum of Rs. 1 lakh lumpsum on account of unfair economic and commercial advantage which the defendants tried to gain at the expenses of the plaintiff’s reputation as well as costs towards litigation expenses in the sum of Rs. 33,000/- in favour of the plaintiff [January 18, 2021].
• Delhi High Court in Blue Heaven Cosmetics v. Bhcosmetics Llc, granted the plaintiff’s request and amended its previous order dated January 8, 2021 wherein it was stated that ‘BH’ is a registered trademark of the plaintiff whereas in fact the trademark is pending registration [January 18, 2021].
• Delhi High Court in V Guard Industries Ltd v. Sukan Raj Jain & Anr granted an interim injunction against the Defendants restraining them from manufacturing, selling, offering for sale, advertising, directly or indirectly dealing in machines, electronic, electrical, parts and fittings or any other products under the impugned mark ‘N-GUARD’/ domain name ‘www.nguard.in’, any other trade mark/trade name/trade dress/domain name/designs as may amount to infringement of the plaintiff ‘s registered and well-known trade mark ‘V-GUARD’ [January 18, 2021].
• IPAB in Dotcom Retail Ltd. v. The Registrar of Trademarks directed that the entry of registered Trade mark No. 2015388 for the mark ‘beautybay’ (device) in Class 35 in the name of Respondent No.1 be deleted from the Register under the provisions of Section 47(1)(a) and (b) and Section 57 of the Trade Marks Act, 1999 [January 19, 2021].
• IPAB in Krishna Chetty & Sons v. Deepali Co. Pvt. Ltd. acknowledged an allegation of bad faith registration and stayed the trademark Application Nos. 2936330 in class 42, 3743497 in class 14, 3743498 in class 35, 3743500 in class 42, 3743504 in class 42, 3743505 in class 14, 3743506 in class 35 and 3743507 in class 36 [January 19, 2021].

Other News from around the Country

• Ashish Kaul, the author of ‘Didda: The Warrior Queen of Kashmir’, has accused the Kangana Ranaut’s film ‘Manikarnika Returns: The Legend Of Didda’ based on the Kashmiri Queen Didda’s life, of copyright infringement.
• Serum Institute of India has filed its response to a lawsuit by pharma manufacturer Curtis-Biotech over the brand name ‘Covishield’, saying both companies operate in different product categories and there is no scope for confusion over the trademark.
• The Bombay High Court allowed the German personal care brand Sebamed to continue comparative advertisements naming FMCG major Hindustan Unilever Ltd soap brands Dove, Pears and Lux as long as it is backed by right scientific data. However, it must remove HUL’s detergent brand Rin reference from campaigns which compare the pH level of soap brands Pears and Dove to that of Rin.

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  The Delhi High Court refused to stay the release of the film ‘The White Tiger’ in a last minute petition as it was scheduled to release on the online streaming platform, Netflix on the very next day on January 22.

• Zanjeer copyright case is set to be probed by Crime Branch of Mumbai Police.
• Com Olho, a leading cloud-based machine learning platform, becomes India’s first company to receive patent for advertising fraud detection.
• A Geographical Indication tag has been sought for Gucchi, also known as Morel, one of the world’s most expensive mushrooms growing in Kashmir’s Doda district, valued at over INR 20,000 for every kilogram.
• Maha Movie TV channel’s CEO Sanjay Verma has been arrested by Mumbai Police in an alleged copyright violation case as well as TRP rigging accusations.
• Gujarat police has arrested four persons in Surat for selling whole wheat flour using Reliance’s Jio trademark.

News from around the World

• Bitcoin developer Craig Wright is reportedly suing Bitcoin.org and Bitcoincore.org for copyright infringements of the Bitcoin Whitepaper.

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• Google has signed a deal with Alliance de la Presse d’Information Generale, a group of French publishers, paving the way for digital copyright payments for online news content and negotiation of individual licensing deals with publishers.
• Pfizer Inc and associate companies have sued Aurobindo Pharmaceuticals Ltd in a US court for patent infringement of its arthritis drug Xeljanz.
• Germany’s Federal Court of Justice has affirmed the personality and image rights of two celebrity plaintiffs whose images were used without consent.
• NBA star Michael Jordan has faced defeat in a Shanghai Court decision in a trademark dispute against Chinese sportswear manufacturer Qiaodan Sports Company who brought a lawsuit against him for consistent unauthorised use of the trademark “Qiaodan”, which is the Chinese translation of the word “Jordan” without any authorisation.
• US Supreme Court rejected a bid by Merck & Co.’s Idenix to revive a case against Gilead Sciences Inc. in a dispute over a patent for a hepatitis C treatment.

This blog carried a piece on the Delhi High Court’s recent judgment in IPRS v. Entertainment Network (India) Ltd. last week. As pointed out there, the judgement distinguishes between cases where underlying works (lyrics/musical composition) are used in the context of the broadcast of sound recordings versus other situations (e.g. live performances). In the latter case, the Court held that an injunction could be sought by authors/composers (or by the Copyright Society representing their interests) but not in the former case. The judgment has been appealed, and the Division Bench has issued notice in the matter, with the interim direction that the judgment from the Single Judge will not be treated as a precedent in other proceedings (DB order is available here).

This is my two cents on the judgement.

Contradictory legal plea?

Adyasha has already pointed out that the two suits considered in the case, viz., CS (OS) 666/2006 and CS (OS) 1996/2009, involved causes of action pre-dating the 2012 Amendments. The first suit was by IPRS alone and the second suit was jointly by IPRS and PPL.

According to the Court (para 16), IPRS and PPL had jointly pleaded the following in the subsequent suit: “Ultimately, the producer of the sound recording…… will own all rights in the sound recordings as well as the underlying works i.e., lyrics and musical compositions…” The Court believed that this admission in the subsequent suit practically negated the cause of action claimed in the earlier suit, which was that separate license was needed from the lyricist/composer, apart from the owner.

Ultimately, this seems to be one of the factors (and not the dispositive one) considered by the Court. Even though this could not have been sufficient to dismiss the claim because admissions of law cannot bind parties, it does create the impression that even IPRS was not entirely clear with its legal stand. Taking self-contradictory legal positions would affect the credibility of the case, even if it’s not fatal.

No licensee estoppel

The Court also rejected the IPRS’ contention that the Defendant was estopped from challenging the need for a license because they had previously taken a license from IPRS. The Court rejected this licensee estoppel contention because there can be no estoppel against the law (para 28); if by the law, no separate license was needed from IPRS, prior conduct to the contrary did not matter.

Procedural correctness?

The suits were disposed off finally (without trial), but under what provision? In its inception, the order records that it concerned two (2) suits and four (4) different I.A.s in one of them. The four I.A.s were under Section 10 of the CPC, Order 6/Rule 17 of the CPC, Section 151 of the CPC, and Order 11/Rule 12 of the CPC. None of these provisions concerns summary disposal of the suit without a trial. The judgment purportedly does this summary disposal under Section 151 (para 20). Section 151 may seem wide enough, but it cannot be invoked for this purpose because that would amount to circumventing other provisions of the CPC. Where other provisions of the CPC prescribes specific procedures/thresholds for summary disposal, viz. Order 8/Rule 10, Order 12/Rule 6, Order 13-A in case of commercial suits etc., the legislative intent is that the suit cannot be disposed off without trial in other situations. Thus, the disposal of the suits by this judgment seems questionable.

P.S: The suit is categorised as CS(OS) and not CS (COMM), and so, Order 13-A under the Commercial Courts Act could not even be invoked. But the Court acknowledges that these cases were transferred to the Commerical Division of the HC as per the Delhi High Court Notification dated 28.04.2016, under the 1^st proviso to Section 7 of the Commercial Courts Act. In which case, the case would have been categorised as CS (COMM), and the procedure under the Commercial Courts Act would have applied. So, the whole thing seems odd, but perhaps, I am missing something.

Value of Interim Orders?

This judgment brings to light a question that has intrigued me for some time. At para 26, the Court operates as if that findings of law in the prior interim order of the Supreme Court in ICSAC v. Aditya Pandey, are practically final because it was not contingent on the Defendant or Plaintiff proving anything on trial. The Court even records that despite repeated queries, IPRS could not answer what would be established in evidence/trial that would require a different interpretation than was previously taken in the Supreme Court’s interim order.

While the Supreme Court has held that there must be consistency in interim orders in similar fact situations as a matter of judicial discipline and fairness, it is equally well-settled that interim orders are not precedents and do not operate as res judicata. But what the Court did here is slightly different – it decided a case finally based on a prior interim order. How far is this legally appropriate?

We have seen several interim orders, especially in IP cases, containing detailed/comprehensive analyses and conclusions of law. In theory, even on pure questions of law, a judge could take a different view at the final stage in the very same case. But what if every argument has been considered and answered in the interim order? What if no new legal reference/material is cited at the final stage? Even then, a judge is not bound to follow the findings in the interim order. But there is no legal principle preventing a Court from adopting an interim order’s reasoning in a final judgment, as long as the Court has not taken a close-minded approach to the case and has afforded a reasonable opportunity to the parties to defend their respective cases. It directly relates to one of the principles of natural justice – justice must only be done, but should (manifestly and undoubtedly) be seen to be done.

So, there is an element of procedural correctness/fairness to the issue – even if the Court were to adopt the reasoning from an interim order, it cannot do so at its whims and fancies, because that would affect a party’s ability to defend its case. For instance, where there is no application of an application for summary disposal (or even the possibility of one), forcing the party to demonstrate the need for a trial, affects due process in my opinion.

Interpretation of the 2012 Amendment to the Copyright Act

I have made this point earlier: on the face of it, the 2012 amendments to Sections 18-19 of the Copyright Act grant an in personam statutory right to authors of underlying works to claim royalties/equal share of royalties from the assignee. It is a cause of action for money, and it is a cause of action against the assignee. It does not create a cause of action against others, such as a radio broadcaster who has already taken the assignee’s license.

If the 2012 Amendment were to be enforced by IPRS (assuming standing, cause of action etc.) against radio broadcasters who have taken a license from PPL, the appropriate mechanism would have been for them to make a money claim against PPL, seeking an equal share in the royalty received by PPL from the radio broadcasters. Attempting to enjoin the radio broadcasters under the amended Sections 18/19 of the Copyright Act, in my opinion, is not correct.

That said, I agree with Adyasha that some of the observations in the judgment on the effect of the 2012 Amendments are erroneous. Consider the following statement (para 31):

“… It cannot mean that utilisation of the work as embodied in the sound recording also entitles the owner of the copyright in such work to demand an equal share of royalties and consideration payable for the sound recording.”

With due respect to the Court, this is ex facie erroneous when the statute’s plain text is considered.

IPRS and film producers – another missed opportunity?

One other point bothered me. When relying on the 2012 Amendments, IPRS appears to have emphasised on Section 19(10) alone as per the judgment. Section 19(10) is limited to situations of underlying works within a sound recording that does not form part of a cinematograph film. Yet, there is a finding of fact that the Plaintiff(s)’ claim in both suits concerned sound recordings forming part of the cinematograph film (para 31). If this finding of fact by the Court were correct, even assuming the 2012 Amendments are applicable retrospectively, I am not clear why Section 19(10) even applies; if at all, Section 19(9) and the 2^nd proviso to Section 18(1) would apply.

Pointing to Section 19(9) and the 2^nd proviso to Section 18 (1) may have raised another set of issues – the relationship with film producers. Readers may recollect the prior ruling of the Supreme Court in IPRS  1977, which is considered/interpreted/applied in subsequent caselaw as suggesting an automatic assignment of all rights in the underlying works in favour of the film producer even after the 1994 Amendment to the Copyright Act (my critique on this issue can be read here and here). In theory, the Court would then have to consider the following issues:

• For a cause of action arising post-1994, but pre-2012, amendment, could IPRS even initiate this infringement litigation?
• Does the proviso to Section 17 inserted in 2012 have retrospective effect?
• In particular, is the proviso to Section 17 inserted in 2012, a reflection of the approach suggested by Justice Krishna Iyer in para 21 of IPRS 1977 (“…The film producer has the sole right to exercise what is his entitlement under s. 14(1)(c) qua film, but he cannot trench on the composer’s copyright which he does only if the ‘music’ is performed or produced or reproduced separately, in violation of s. 14(1)(a). For instance, a film may be caused to be exhibited as a film but the pieces of music cannot be picked out of the sound track and played in the cinema or other theatre. To do that is the privilege of the composer and that right of his is not crowned in the film copyright except where there is special provision such as in s. 17, proviso (c). So, beyond exhibiting the film as a cinema show, if the producer plays the songs separately to attract an audience or for other reason, he infringes the composer’s copyright. Anywhere, in a restaurant or aeroplane or radio station or cinema theatre, if a music is played, there comes into play the copyright of the composer or the Performing Arts Society….”)?
• Assuming the 2012 Amendments to Sections 18-19 applied, who is the ‘assignee’ for the purposes of the 2^nd proviso to Section 18(1) r/w Section 19(9)?

Now that the judgment is under appeal, the correct approach to a complete judgment in this matter will require the Division Bench to answer these questions. It was a missed opportunity at the Single Judge stage; I couldn’t fully appreciate (and I don’t want to speculate) why these issues were not considered at the Single Judge stage given the express finding of fact in para 31 of the judgment.

Retrospective at the 2012 Amendment to the Copyright Act

This is an issue acknowledged by the Court as arising in the case (para 17 (b)) but was not answered as pointed out by Adyasha in the previous post. Hopefully, the Division Bench will have the occasion to answer this issue.

We’re pleased to announce that NLU Jodhpur’s Journal of Intellectual Property Studies (JIPS) is inviting original, unpublished manuscripts for publication in the Summer 2021 Issue (Volume IV, Issue II) of the Journal. The last date for submissions is March 21, 2021. For further details, please read the journal’s call for papers below:

Call for Papers: NLU Jodhpur’s Journal of Intellectual Property Studies [Vol. IV, Issue II]

The Board of Editors of the Journal of Intellectual Property Studies [JIPS], published under the aegis of National Law University, Jodhpur is pleased to invite original, unpublished manuscripts for publication in the Summer 2021 issue of the Journal (Volume IV, Issue II) in the form of articles and notes. The manuscripts must pertain to the field of intellectual property law or to related fields such as media and technology law. The deadline for submission for manuscripts is 21st March 2021.

Volume IV Issue I was recently released and can be found with our previous issues here. The Journal subjects all articles to a review process by our student editors prior to publication. We also benefit from the guidance of our illustrious board of advisors who help the journal attain its objectives. The Journal stands by the ideals of open access to scholarly works and it will be published online on an open-access platform for everyone to read and cite freely.

About the organisation/institution

National Law University, Jodhpur (NLU Jodhpur) is one of India’s leading law schools situated in the vibrant and colourful city of Jodhpur, Rajasthan. NLU Jodhpur has constantly been ranked as one of the top law schools in India. Since its establishment in 1999, NLU Jodhpur has endeavoured to produce exceptional lawyers and legal scholars aimed at pushing and challenging the existing boundaries of knowledge.

About the journal

The Journal of Intellectual Property Studies is a bi-annual, student-run academic journal published by National Law University, Jodhpur. The Journal was established in 2016 and primarily deals with contemporary developments in the field of intellectual property and related laws.

There are very few journals in India discussing at length topical issues in the field of intellectual property rights and hence, the journal’s objective is to fill this void by becoming a platform where ideas can be exchanged and in turn hopes to enhance discourse on intellectual property rights between policymakers, practitioners and scholars. To achieve this, the journal solicits articles from a diverse pool of authors comprising of scholars, practitioners and students.

The Board of Editors of the Journal of Intellectual Property Studies [JIPS], is pleased to invite original, unpublished manuscripts for publication in the winter 2020 Issue of the Journal (Volume IV, Issue II) in the form of notes and articles.

Theme/topics

The manuscripts must pertain to the field of intellectual property law or  related fields such as media and technology law.

How to submit

Manuscripts may be submitted via email at jips@nlujodhpur.ac.in. The submission guidelines are available here.

Important dates and deadlines

The deadline for submission for manuscripts is 21st March, 2021.

Contact info

For further details regarding JIPS, contribution guidelines, and our editorial policy, please visit our website.

Topical Highlight

The Delhi High Court Judgement in the IPRS Case (2021)

In this post, Adarsh Ramanujan analyses the Delhi High Court’s recent judgment in IPRS v. Entertainment Network (India) Ltd. The judgment has been appealed, and the Division Bench has issued notice in the matter, with the interim direction that the judgment from the Single Judge will not be treated as a precedent in other proceedings. Adarsh points to the Court’s finding that IPRS took self-contradictory legal positions in the two suits considered in the case. He also notes that the disposal of the suits summarily under Section 151 of the Civil Procedure Code (CPC) was questionable since invoking the section for this purpose amounts to circumventing other provisions of the CPC. He also examines the issue of the Court basing its final decision in this case upon a prior interim order despite interim orders not serving as precedents for final decisions. He notes that adopting the reasoning of an interim order, in a case where there was no application for summary disposal, and forcing the other party to demonstrate the need for a trial, affects due process. Further, he provides a list of pertinent questions left unanswered by the Single Judge decision under appeal, including the interpretation of the proviso to section 17 as well as the possibility of its retrospective application. He concludes with the hope that the Division Bench will answer these questions.

Other Posts

Call for Papers: NLU Jodhpur’s Journal of Intellectual Property Studies Vol. 4, Issue 2 [Submit by March 21]

We recently informed our readers regarding a call for papers by NLU Jodhpur’s Journal of Intellectual Property Studies. Original, unpublished manuscripts have been invited for publication in the Summer 2021 Issue (Volume IV, Issue II) of the Journal. Manuscripts may be submitted via email at jips@nlujodhpur.ac.in. The submission guidelines are available here.

Decisions from Indian Courts

• A commercial court in Pune in the case of refused to pass an interim injunction in favour of Cutis Biotech restraining the Serum Institute of India from using the trademark “COVISHIELD” for its vaccine for the Coronavirus pandemic. [January 30, 2021]
• The Delhi High Court in Centrient Pharmaceuticals v. Dalas Biotech Ltd., refused to direct the defendant to answer the interrogatories detailed by the plaintiffs, noting that a roving and fishing inquiry cannot be allowed through the process of interrogatories. The case concerned a permanent injunction sought by the plaintiff restraining the defendant from violating and infringing the plaintiff’s in its patent for the “Process for preparing Amoxicillin Trihydrate”. [January 27, 2021]
• The Delhi High Court in Dassault Systemes Solidworks v. Spartan Engineering Industries Pvt. Ltd., granted an ad interim ex parte injunction restraining the defendant from infringing the plaintiff’s copyright in the SOLIDWORKS software [January 28, 2021]
• The Delhi High Court in R. Industries Pvt. Ltd. v. Mohan Meakin Ltd., held that the plaintiff could not be said satisfy the essential ingredient of a prima facie case by demonstrating that it was the prior user of the impugned mark or that defendant’s use of the mark would cause it irreparable injury. Hence, the Court vacated the ex parte ad-interim injunction granted against the defendant and dismissed the plaintiff’s application for grant of ad-interim injunction. [January 29, 2021]
• The Delhi High Court in John Hart Jr. & Anr. v. Mukul Deora & Ors., refused to grant an injunction against the release of the film, ‘The White Tiger’ on Netflix based on the plaintiff’s allegations regarding copyright infringement less than 24 hours prior to the release of the film. The Court held that an injunction was not necessary since the plaintiff’s could be monetarily compensated later if they succeeded in the case, and directed the defendants to keep detailed accounts of the earnings made from the film so that, at any later stage, were the plaintiffs to succeed, award of damages or monetary compensation could be facilitated. [January 21, 2021]
• The Income Tax Appellate Tribunal (Mumbai) in Trimble Solutions v. Deputy Commissioner of Income Tax partly allowed the appellants’ plea, holding that the payments received by the assessee towards distribution of sub-releases and main releases were for a right to provide a copyrighted article i.e. software updates, which was akin to the amounts received for distribution of the specialized off-the-shelf software products, and not for any right to use the copyright embedded in the said copyrighted article (i.e. software products). Thus, the Court held that the same could not be construed as “royalty” income, and would be the “business income” of the assessee. [January 18, 2021]
• The Delhi High Court in Glaxo Group Ltd. v. Zuche Pharmaceuticals Pvt. Ltd., granted an ex-parte ad interim injunction upon being satisfied by the plaintiff’s prima facie case, and restrained the defendants from selling pharmaceutical or cosmetic products containing the ingredients Betamethasone Valerate and Neomycin, packaged in a manner that is similar to the plaintiff’s packaging and infringes the plaintiff’s mark BETNOVATE. [January 22, 2021]
• The Delhi High Court in Zenith Dance Institute Pvt. Ltd. v. Zenith Dancing & Music, granted an ex-parte ad interim injunction upon being satisfied by the plaintiff’s prima facie case, and restrained the defendants from infringing the plaintiff’s mark ZENITH by using it in conjunction with their goods and services. [January 22, 2021]
  

Other News from around the Country

• The Designs (Amendment) Rules, 2021, came into force on January 25, 2021.
• The Crime Intelligence Unit carried out raids on the offices of Mahamovies channel in Delhi in connection with a copyright and cheating case filed by late producer Prakash Mehra’s son regarding the channel airing Mehra’s hits despite having no right to do so.
• In an article for The Wire, Shambhavi Sinha argued that compulsory licencing can be a powerful public health tool to work around concerns over insufficient supply of important pharmaceutical products.
• The Gujarat Police arrested four persons in Surat for selling whole wheat flour while infringing the Jio trademark, post a complaint by Reliance Jio.
• In an article for The Indian Express, Pranav Mukul examines the broader implications of Google and Facebook’s skirmish in Australia regarding sharing of royalties with news publishers, upon India and the regulation of news media and digital platforms in our country.

News from around the World

• In an article for The Print, Nayanima Basu highlighted that US and Europe still oppose India and South Africa’s WTO proposal to waive IPR restrictions concerning Covid-19 vaccines, and the TRIPS Council has set up another meeting to discuss the same on February 4, 2021.
• Continental AG sued Nokia before a U.S. court for determination of a fair payment for using Nokia Oyj patented technology in the case of Continental Automotive Systems Inc. v. Nokia Corp., 2021-66, Delaware Chancery Court (Wilmington).
• A New York judge denied Microsoft a fresh trial when Microsoft endeavoured to overturn a 2020 judgement holding it liable for infringing a database interface patent.
• The divorced Welsh and British designers David and Elizabeth Emanuel are engaged in a legal battle regarding reproduction of sketches of Princess Diana’s legendary gown. David filed a lawsuit alleging copyright infringement against Elizabeth for creating “eight drawings which constitute a reproduction of the design drawings” that the erstwhile couple had jointly created.
• Shares in Apple Inc.’s supplier Luxshare Precision Industry fell by around 9.5% due to concerns regarding patent infringement investigation filed by U.S.-based Amphenol Corp.

Image from here

The Committee of Experts on Non-Personal Data (NPD) Governance Framework headed by Kris Gopalakrishnan, constituted by the Ministry of Electronics and Information Technology had released its first Report in July, 2020. I had written about the Report for SpicyIP here. In December last year, a revised Report (“the Report/Revised Report” hereinafter) was released by the Committee with the goal of unlocking economic benefit from non-personal data, creating a data sharing framework, establishing community-based rights over NPD and addressing potential harms to privacy due to misuse of data (3.5, Revised Report). The Committee was constituted for the stated purpose of making suggestions to the Central Government on regulation of non-personal data (1.1, Revised Report). The Kris Gopalakrishnan Committee (“the Committee” hereinafter) received more than 1500 representations and submissions from industry bodies, civil society, independent experts and companies, based on which it released its Revised Report. The deadline for public submissions on the Revised Report was 27 January 2021.

The revised NPD framework retains the heavy-handed regulatory architecture of its initial version, albeit with a few clarifications. In Part I of this two-part post, I discuss concerns regarding possible copyright and trade secret protection over the data mandated to be shared, which the Report either overlooks or misunderstands. I also analyse the shortcomings of a community rights framework in the context of data. In Part II, I criticise the Committee’s justifications for overriding possible IP protection over NPD. I conclude by exploring alternatives to the Committee’s approach and discuss how competition law could be utilised for furthering the goals of the Committee.

Data Sharing For High Value Datasets

The revised report defines data sharing in terms of controlled access to non-personal data for certain purposes. However, these purposes are quite vague.

Firstly, ‘sovereign purpose’ is recognised as a legitimate ground to gain access to a combination of personal and non-personal data, but the validity of a request will not be scrutinised by the NPD Authority, which is a specialised regulatory body meant to enforce the NPD framework. (8.1[vi], Revised Report). The perils of this strengthening the already potent surveillance architecture of the State without accountability have been noted here. (pages 10-11)

Secondly, the Report authorises the creation of High Value Datasets (HVDs) for ‘public good’, which is once again very vaguely defined, and includes research, innovation, policy development, devising public programmes, infrastructures etc. Any organisation registered in India can request for access to data in HVDs (8.2[v], Revised Report). Using a vague public purpose as a proxy for gaining access to HVDs and then utilising the data therein for purely commercial purposes is not safeguarded against as there are no end-use restrictions upon the entity who gains access to data for a supposedly public purpose. Notwithstanding the feasibility of such restrictions, it is predictable for organisations to not just incidentally use the data shared with them for profit-seeking, but also to make requests that meet the ‘granularity’ or ‘specificity’ criteria (left undefined in the Report) solely for profit-seeking purposes under the garb of artificially contrived public good purposes.

Data sharing between two or more for-profit private entities has been done away with under the new report (8.3, Revised Report). The Revised Report groups NPD into three distinct categories based on granularity: (a) raw data, (b) aggregate data, and (c) inferred data. Sharing raw data and aggregate data is mandated while inferred data has been recognised as proprietary, and hence, exempt from the data sharing obligation.

Copyright Protection

The Report recognises that as per Section 2(o) of the Copyright Act, 1957, original compilations of data in databases are protected as literary works. This means that the manner in which the data has been selected and arranged is protected if there has been a minimum degree of creativity involved. Sui generis database protection is not recognised in India inasmuch as our Courts do not protect the mere investment of labour into collecting, aggregating and storing data (discussed on the blog here). In an attempt to get around this, the Report notes that complete raw datasets may not be collected and data sharing is mandated only for designated HVDs where the fields for data to be shared are pre-set and relatively straightforward. The Committee concludes that such extraction as per pre-determined fields would not violate database copyright (9.3[iv], Revised Report). This is an incorrect and convenient conclusion to arrive at. A subset within a dataset is not necessarily raw data. A subset in itself could also be a result of original compilation of data but the Report does not acknowledge this possibility. Data businesses that collect a wide range of data make decisions regarding its use as well as the kinds of data to be collected, and the many subsets within subsets in which it is to be sorted. These compilations as well as the underlying data therein confer competitive advantages to these businesses, protected by copyright and trade secrets.

Trade Secrets and Data Sharing Obligations

The Report notes that when data sharing would entail access to private companies’ trade secrets or other proprietary information regarding their employees/internal processes and productivity data, the same would be exempt from data sharing requirements. (8.6[i], Revised Report). Thus, the revised version insists that it does not compel businesses to share proprietary data. Many assumptions in the revised framework misunderstand the nature of data and the IP protection that it may be subject to.

Trade secrets in India are protected under contract law, or in the absence of a contract, under an equitable duty of confidence. For instance, data collected by manufacturers of a particular IoT device excluding unanonymized personally identifiable data, aggregated and compiled in automated logs and similar records can arguably be considered as trade secret. This data may be confidential or secret if it is not open to independent discovery by others, and is obtained from private goods, assets and processes. Further, it is well recognised that a trade secret may be constituted by a combination of elements, each of which by itself may be in the public domain, but where the combination, which is kept secret, grants a competitive advantage.

The Report does not seem to recognise this, and mandates that such aggregate data be shared with data trustees who will create an HVD for public access out of it. Notably, a data trustee could be any government organization or non-profit private organization, i.e., a Section 8 company/Society/Trust, which would be responsible for the creation, maintenance and data-sharing of HVDs in India. It would be overly naïve to take a simplistic view of NGOs and Trusts, which can often be riddled with transparency, accountability and misrepresentation issues, and may operate to further the interests of certain private sector entities. Private companies can set up a Section 8 company for non-apparent uses under the garb of public purpose and ultimately gain access to data that they would not have been able to acquire otherwise for their commercial purposes.

A data trustee is obligated to establish grievance redressal mechanisms and owes a duty of care to the community whose data is collected. However, this is not a straightforward process since a community rights framework based on land rights, forest rights etc. is not necessarily applicable to people who form part of a data community. These communities are not organically created and people are not even likely to know if they belong to a particular ‘data’ community.

Further, the framework also runs the risk of promoting regulatory arbitrage. It provides that mixed datasets, which constitute the majority of datasets in a data economy, that typically have inextricably linked personal and non-personal data, will be governed by the Personal Data Protection Bill instead of the NPD framework. The threshold of inextricable linkage is a subjective one and may require only showing that separation of personal and non-personal data is technically or economically unfeasible for the firm in question. It allows firms to store data in a fashion that can exempt them from being regulated under the NPD framework. Data businesses are thus, disincentivised to anonymise data if they want to prevent losing their competitive advantage by mandatorily sharing their data with data trustees.

In part II, I discuss the shortcomings in the Revised Report’s justifications for overriding IP protection and other rights over NPD. I also briefly explore alternatives to the Report’s heavy-handed regulatory architecture by turning to possible solutions within competition law.