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In November, 2020, Varsha wrote a detailed piece on the ongoing dispute between India and Pakistan on registration of GI over Basmati in the EU. Seemingly, after months of speculations (here and here) Nepal has finally joined the fight, opposing India’s application. This perhaps makes it the first IP disputes between the three South Asian countries.  While a more detailed post on this opposition will follow soon, I would like to quickly highlight a few interesting facts surrounding this event and Nepal’s connection with Basmati. 

As per Dr. Upreti here, Nepal is opposing India’s application on three major reasons- i) Basmati is grown and consumed traditionally in Nepal; 2) Nepal has worked extensively with national and international scientists, since 1965, to develop different varieties of rice using local basmati landraces; 3) Basmati has social and cultural ties with the Nepalese communities. However, whether the opposition will be accepted by the EU or not depends on the documentary evidence which Nepal would be required to submit before the authorities. 

While Pakistan has recently granted a GI status to Basmati, Nepal still protects its GIs under its trademarks law. The above report points out that Nepal does not have a GI regime in place in its national laws. Though the GI status is not a requisite for filing the opposition (as pointed out in Varsha’s post) they may play an important role in giving the opposition teeth against the application. 

Another interesting note on Nepal and its Basmati connection is that its import of the rice variety from India has consistently increased over the course of time, with at least one newspaper source even stating that Nepal imports all its Basmati(s) from India. As per this report, Nepal imported 2,874.00 tonnes of Basmati from India (2018-19; Apr-Nov) costing 2.67 Million dollars. Will this have a bearing on Nepal’s opposition? Readers better acquainted with the opposition process could let us know. 

In related news, the Pakistani opposition is receiving attention from the EU authorities. Recently it was reported that one of its rice exporters union (Rice Exporters Association of Pakistan) has submitted a reasoned statement after submitting the notice of opposition to India’s claim over Basmati, which was accepted by the EU. 

Furthermore, I wonder what changes these oppositions would bring in the political relations among the three neighbors. India and Pakistan share age-old strained relations and India’s equation with Nepal has been facing rough waters over the past few years, with reports of ties improving. Politics aside, it is surely interesting to note that LDCs and Developing nations are concerned about their IPRs and are taking steps to defend it internationally

With fresh opposition from Nepal and submission of reasoned statement and notice of opposition from the Pakistani contingent, the EU regulatory framework (Council Regulation 510/2006) under Article 7.5 suggests that now the interested parties would be engaged in consultation. These consultations will run for another six months wherein the parties would try to reach an agreement. In case no agreement is reached by the parties, then the committee will hear the matter according to Decision 1999/468/EC to decide the matter.   

Edit [Update: India has filed applications for registration of Basmati as a GI/ Certification Mark in 19 jurisdictions, with protection already granted in UK, South Africa, New Zealand and Kenya.]

Topical Highlight

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The Third to Tango: After Pakistan, Nepal Opposes India’s GI Application for Basmati

In this post, Praharsh discusses the implications of Nepal joining Pakistan’s opposition to India’s application for registration of GI over Basmati in the EU. He noted that this could be the first IP dispute between the three South Asian countries.  He highlighted three major reasons reported for Nepal’s opposition: 1) Basmati is grown and consumed traditionally in Nepal; 2) Nepal has worked extensively with national and international scientists, since 1965, to develop different varieties of rice using local basmati landraces; 3) Basmati has social and cultural ties with the Nepalese communities. Further, he mentioned that unlike Pakistan which recently granted a GI status to Basmati, Nepal still protects its GIs under its trademarks law. He noted that this is pertinent because even though GI status is not a requisite for filing the opposition, it may play an important role in giving the opposition teeth against the application. He noted that as per the EU regulatory framework (Council Regulation 510/2006) under Article 7.5, the interested parties would now be engaged in consultations running for six months wherein they would try to reach an agreement, failing which the committee will hear the matter according to Decision 1999/468/EC before deciding on it.

Thematic Highlight 

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Supreme Court Recognises Doctrine of Copyright Exhaustion in Softwares, And Its Subservience to EULAs

In this guest post, Vedangini Bisht and Shubham Chaudhary analyse a recent Supreme Court order in the case of Engineering Analysis Centre for Excellence Pvt. Ltd. v. CIT, which recognised the Doctrine of Copyright Exhaustion vis-a-vis Software. They note that this recognition would allow for the creation of secondary markets, and in effect, alternative distribution models, fostering greater access by creating an avenue where if a work is withdrawn by the right holder, it would continue to remain in circulation. They argue that the case provides overriding powers to End User License Agreements (“EULA”) to restrict the doctrine of copyright exhaustion since the Court laid down that even in situations where the software is purchased directly by an end-user from a foreign supplier or manufacturer, the payments for using foreign software would not amount to ‘royalty’ which is taxable in India since all the rights with respect to further sale of it would be restricted by the EULA. They also note that the Court clarified that conveying the title of software to distributors would not amount to first sale, which would render copyright exhaustion inapplicable to distributors. They argue that this is a correct reading of the law, and it grants software developers control over the price of their software in geographical markets.

Decisions from Indian Courts

• The Bombay High Court in NBU Bearings Pvt. Ltd. & Ors. v. Union of India held that the two independent remedies sought in the case under different statutes namely section 53of the Copyright Act, 1957 and IPR Rules framed under the Customs Act, 1962 could be construed harmoniously as independent of each other. Deciding in favour of the petitioners, the Court held that since the proceedings between the petitioners and respondents regarding ownership of the “TR” brand were still pending, the imported goods concerned, suspended from clearance would have to be released to the petitioners subject to their executing such bond with such surety or security and such conditions as may be specified in the bond in accordance with law. This would done as per a hearing by the Commissioner of Customs and/or by the duly authorised officer within one week from the date of receipt of this order and the officer would pass an appropriate order within one week thereafter. [March 12, 2021]
• The Bombay High Court in Cinefones v. Cinefones Systems & Anr., a case concerning a peculiar trade mark and copyright infringement and passing off action wherein the impugned mark was only one i.e., “CINEFONES”. This was held to be the plaintiff’s registered mark in whose artistic depiction it also held copyright. An ad-interim injunction was granted pending the hearing and final disposal of the suit, restraining the respondents from infringing the plaintiff’s trademark and copyright in the impugned mark in relation to its overhead projectors, lamp, antenna, receiver etc. or allied products and all other goods included in class 9. [March 12, 2021]
• The Bombay High Court in Franco-Indian Pharmaceuticals v. Vaibhav Vohra & Anr. granted an ad-interim order on being satisfied that there existed a strong prima facie case and balance of convenience in favour of the plaintiff, and that irreparable injury would be caused to the plaintiff if such relief would not be granted. The Court held that pending the hearing and final disposal of the suit, the respondents would be temporarily restrained from using the plaintiff’s trademarks “DEXORANGE”, “DEXORANGE PAEDIATRIC” and “DEXORANGE PLUS” in relation to their medicinal and pharmaceutical preparations. [March 10, 2021]
• The Delhi High Court in Natures Essence Pvt. Ltd. v. Protogreen Retail Solutions granted an interlocutory injunction in favour of the plaintiff restraining the defendants from infringing the plaintiff’s registered trade marks “NATURE’S INC.” and “NATURE’S ESSENCE”. [March 9, 2021]
• The Bombay High Court in Sharmilee Kapur & Anr. v. Mr. Kiran Bharekar dismissed the appeal holding that there was no reason to interfere with the impugned order. The Court found no merit in the appellant’s allegation that the respondent’s mark “TANMAN” is deceptively similar, almost identical to and merely a re-arrangement of the appellant’s mark “ATMANTAN BE TRANSFORMED.” [March 9, 2021]
• The Delhi High Court in Merck Sharp & Dohme Corp & Anr. v. Actis Generics Pvt. Ltd. granted an ex-parte injunction restraining the defendant from manufacturing, using, selling or dealing with either API or intermediates or any product, which infringes the plaintiff’s claimed subject matter Patent No.209816, including Sitagliptin or any of its pharmaceutically acceptable salts. [March 5, 2021]
• A Delhi District Court in Siemens Product Lifecycle v. Lucent Engineering Company granted a permanent injunction in favour of the plaintiffs, restraining the defendants from infringing the software programmes of the plaintiffs, including NX software, awarding the plaintiff compensatory damages of Rs.5,00,000/- and punitive damages of Rs.5,00,000/- respectively, along with costs of the suit (assessed at Rs.1,92,150/). The defendant was directed to pay the total amount of Rs,11,92,150/- to the plaintiffs within 4 weeks from the date of judgment, failing which plaintiffs were held to be entitled to interest @ 12 % per annum on the aforesaid amount from the date of the order till its realization. [March 3, 2021]
• The Bombay High Court directed the Centre to decide on the representations made by two multidrug-resistant tuberculosis (MDR-TB) survivors who filed PILs for directing the government to allow non-commercial production of Bedaquiline and Delamanid, which are two drugs essential for the treatment of MDR-TB.
• The Bombay High Court refused to grant pre-arrest bail to a man charged for selling substandard goods and violating trademark and copyright provisions. The Court held that infringement offences under Section 103 of the Trade Marks Act and Section 63 of the Copyright Act are non-bailable.

Other News

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  A Mumbai court directed the city police to register an FIR against actor Kangana Ranaut in relation to copyright infringement alleged by Ashish Kaul, the author of ‘Didda: The Warrior Queen of Kashmir’.

• 44,534 start-ups have been recognised by the Department for the Promotion of Industry and Internal Trade (DPIIT). These start-ups will be eligible for many incentives, including income tax benefits, an 80 percent rebate on patent filing fees and a 50 percent rebate on trademark filing fees.
• Sajid Sheikh and Gunjan Deshpande in a piece for The Wire Science highlighted the crucial role played by generic drugs in healthcare in India.
• An article for the Economic Times argued that the Indian government should buy out the IPRs in Covaxin from its developers Bharat Biotech and ICMR to walk the talk as per its demand, along with South Africa, that members of the World Trade Organisation waive all IPRs in relation to vaccines and medication for Covid-19.
• A German district court in Mannheim ruled in favour of LG Electronics in a mobile technology-related LTE standard essential patents infringement suit.
• As per the WHO Director-General, the WHO’s international program (COVAX) for getting coronavirus vaccines to the world delivered 20 million vaccine doses to 20 countries in its first week of distribution.

We’re pleased to inform you that Franklin Pierce Center for IP of the University of New Hampshire (UNH) School of Law is offering an Intellectual Property Summer Institute (IPSI) this summer in two sessions – May 24 to June 11, 2021 and June 14 to July 2, 2021. For further details, please see the announcement below:

University of New Hampshire Franklin Pierce School of Law

Attend UNH Franklin Pierce’s IP Summer Institute for Unparalleled Opportunities in Training and Networking

Ever since Indian law graduate Jaya Mitra realized she could access the cooperative educational opportunities at the University of New Hampshire Franklin Pierce School of Law whilst sitting in India, she has taken full advantage of those chances.

This summer, Jaya, an IP & Tech LL.M. candidate at Jindal Global Law School, will attend her second Intellectual Property Summer Institute (IPSI). Taught by distinguished UNH Law faculty, alumni, and IP professionals from all over the U.S., IPSI brings together (virtually, for now) IP professionals, professors, and law students – like Jaya – for intellectually stimulating lectures and vibrant discussions. Last year’s impressive roster of IP experts included attorneys from Microsoft, Disney, TikTok, 3M, and Spotify, among others, and the 2021 IPSI promises much of the same.

“Owing to the [MoU] between Symbiosis Law School, Pune (India), and UNH Franklin Pierce, I had attended a course organized by UNH in Silicon Valley in January 2020”, explains Jaya. “After such a positive, enriching experience, I jumped at the opportunity of learning from world-class faculty and industry experts of IP once again!”

In 2020, Jaya attended ‘Name, Image & Likeness: The Controversy of Identity in Sports Law’, taught by UNH Professor Mike McCann. McCann, who serves as director of the law school’s Sports & Entertainment Law Institute, will return again to IPSI 2021.

In addition to delivering expert takes on a broad range of topics, from patent licensing to cannabis, from video gaming to doing business in China to trademark searching, IPSI also offers an ideal setting for networking within the legal profession at the international scale.

“[IPSI] enabled me to be part of an IP course taught by the big shots of the IP world,” notes Jaya, who also enjoyed being a member of a classroom that connected her with legal professionals and students from across the world. The program, says Jaya, provides exposure to areas of law that might not have been fully explored in one’s home country, making it worthwhile for that reason, among so many others.

The 2021 Intellectual Property Summer Institute will be offered in two sessions – May 24 to June 11 and June 14 to July 2. The program is open to legal professionals, recent law school graduates, foreign law students entering the 4^th or 5^th year of their LL.B., current UNH Franklin Pierce School of Law graduate students, and the law school’s alumni.

“Attending IPSI would ensure broadening of one’s vision”, Jaya says of prospective attendees.

For more on the 2021 Intellectual Property Summer Institute, visit law.unh.edu/ipsi. Credit from the 1-2 credit IPSI courses can be applied to the law school’s LL.M. and Master’s programs in Intellectual Property. Contact admissions@law.unh.edu or WhatsApp +1-603-513-5300 for more information about these specialized degree programs.

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In Part I, in the light of jurisprudence, I had analysed whether copyright or design law would be the appropriate IP for jewellery protection. Additionally, I had also discussed if ‘adaptation’ or ‘reproduction’ would be the more suitable term for referring to the conversion of 2D drawings into 3D jewellery. In Part II, I look at other questions such as what would happen if a suit in respect of copying of jewellery is brought under copyright law and passing off, under design law and passing off, or under design law and Trademarks Act? I will also discuss the best mode presently available for protection of traditional designs in jewellery such as temple jewellery, meenakari, tarakasi etc.

Trademark Protection and Passing Off

The name and logo of a jewellery brand can be protected under trademark law. Interestingly, in A. Sirkar v. B. Sirkar Jahuree Pvt. Ltd., the grounds claimed by the plaintiff were copyright infringement and passing off. This action could probably be entertained by the court, as there does not seem to be any provision preventing dual protection. In their contentions, the plaintiff had also claimed some of the pieces of their jewellery were eligible for protection as shape of goods. Additionally, the defendant had claimed that the plaintiff can only protect his right in the shape of goods under Section 2(m) of the Trademark Act, 1999. This issue was neither discussed nor decided upon by the court. It is surprising how both the parties agreed that jewellery could be protected as shape marks, when the law says otherwise. It would be interesting to see if the court examines this issue in detail. If we examine Section 9(3) of the Trademarks Act, 1999 which deals with the absolute grounds for refusal of trademark protection, it provides that ‘a mark shall not be registered as a trade mark if it consists exclusively of ….(c) the shape which gives substantial value to the goods.’ After a bare perusal of the above section, it appears that jewellery would be excluded from shape mark protection.

Can a party approach the court for remedies under Designs Act, 2000, as well as passing off? As per Micolube India Ltd v. Rakesh Kumar, both can be pursued as separate causes of action. In the case, a three judge bench of the Delhi High Court observed– that design infringement is based on ‘uniqueness, newness and originality of the design’, and passing off is based on misrepresentation and damage to goodwill. In that case, there had been an attempt to combine them as a single cause of action and this was denied, leaving open the possibility of them being taken up separately within the same suit. (case discussed here)

In A. Sirkar, the plaintiff had alleged that the defendant had been selling identical jewellery, but the defendant had not claimed that the jewellery being sold by them was the plaintiff’s. Since the plaintiff was creating bespoke jewellery, a customer would probably expect that the plaintiff’s designs will only be sold at their shop and if it is being sold anywhere else, they might assume there to be some connection with the plaintiff. If the plaintiff can prove that the public was associating the defendant’s products with that of the plaintiff’s, they can successfully plead for passing off. Depending on the court’s determination regarding association, the misrepresentation criterion may or may not be fulfilled. And if misrepresentation cannot be proved, then the question concerning damage to the goodwill does not arise. (For more information on the general conflict between passing off and design protection, earlier posts can be found here, and earlier posts on trademark and design overlap can be found here)

Traditional Cultural Expressions and Geographical Indications

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Many regions in India are famous for their traditional jewellery designs that have been passed down from generation to generation. The traditional jewellery is linked to the cultural identity of the regions and is not a mere decorative item. Usually the specific communities that were engaged in creating the jewellery two centuries ago, are presently involved in continuing the craft. For example, Cuttack is famous for its silver filigree work, known as ‘Tarakasi’, where jewellery pieces of trellis-like appearance are made from thin hair-like silver wires. This craft is said to have been introduced during the Mughal period and the work is community and heredity based. Tarakasi is linked to the cultural identity of Odisha. It is worn by Odia brides, Odissi dancers and is also used for creating the backdrop for Durga idols during Durga Puja. Similarly, ‘Temple jewellery’ originated in the 9^th century and forms an important part of South India’s cultural heritage. Initially, it was created for royal families of the Chola and Pandya dynasty so that they could offer it in the temples and after that, royalty and temple dancers started wearing it. Later, the common public began using it. And under the patronage of Raja Man Singh Mewar, the creation of Meenakari jewellery flourished in the 16^th century and since then, Rajasthan has been renowned for it.

All the traditional jewellery discussed above, fall under the category of traditional cultural expressions (TCEs). WIPO has described TCEs as including ‘songs, dances, handicraft, designs, ceremonies, tales or many other artistic or cultural expressions’, which ‘form part of the identity and heritage of a traditional or indigenous community’ and ‘are passed down from generation to generation.’ Presently, India does not have a sui generis legislation for protecting TCEs and because of this, the creators are left to choose between certification trademark (CTM) or geographical indication (GI) protection or both. (Adyasha has examined the approaches considered by WIPO’s Intergovernmental Committee for the formulation of a sui generis legislation for TCEs.)

Copyright protection requires there be a single owner, ‘originality’, and for the determination of the duration of protection, a definite date of creation is required. All of these requirements make copyright impractical for protecting TCEs. With there being multiple creators of traditional jewellery, the customers will not assume that the products are coming from a single source (person/entity). In the absence of a label informing the customers the source of the products, the customers cannot differentiate between silver filigree coming from Bhubaneswar and Cuttack, making it difficult to prove misrepresentation and thus, eliminating the ground of passing off. (In her post, Sreyoshi has highlighted the difficulty with protecting TCEs (referring to hand block prints) under copyright and trademark law)

The names such as ‘Tarakasi’ and ‘Meenakari Jewellery’ could be protected as CTM. However, a precondition for CTM registration is that there should be a body for certifying the products. This would require that the creators of jewellery come together to form a governing body. This might be difficult in practice, as usually there is hardly any awareness regarding the laws among many of these communities. Section 9(b) of the Trademarks Act, 1999 prohibits the registration of trademarks that ‘consist exclusively of marks or indications which may serve in trade to designate the…geographical origin’ of the goods. Based on a literal interpretation of the section, it seems that indications such as ‘Silver filigree of Karimnagar’ would not be excluded from the ambit of CTM protection and only marks like ‘Karimnagar’ would be excluded. Additionally, CTM cannot protect the subject matter, as previously discussed above, jewellery may not be eligible for protection as shape marks.

GIs can be held collectively and protects the indications for unlimited duration. A GI registration empowers the registered proprietor (GI holder) and the authorised users to prevent any use of an indication along with products that have not been manufactured by the authorised users. This means that if a GI is granted for ‘Tarakasi’ from Cuttack, only the authorised users of Tarakasi can use the indication. Even if jewellers from Bhubaneshwar manufacture similar silver filigree products of higher quality, they cannot use the term ‘Tarakasi’ with their goods. Section 22 of Geographical Indications Act, 1999 enlists the acts that would constitute infringement of a registered GI. Like the governing body of ‘Darjeeling Tea’ has registered the name as a GI as well as CTM, the creators of the traditional jewellery could also opt for such simultaneous protection.

In the past, some GIs that have been registered for traditional jewellery designs in India – and have somehow done this without making mention of the connection between those designs and the place of origin! In 2006, ‘Silver Filigree of Karimnagar’ was registered as a GI in class 14 for jewellery, as well as, in other classes for non-jewellery decorative items like key chains, cutlery, mirrors, etc. Its journal copy indicates that jewellery has been produced in Karimnagar for generations and the method of production is also stated in detail. However the information provided in the journal copy fails to demonstrate how the quality, characteristics or reputation of the jewellery is linked to its geographical origin. Interestingly, the application also provides that, in India, ‘filigree is specialty of Cuttack in Orissa and Karimnagar in Andhra Pradesh’. Orissa should also consider registering a GI for its filigree jewellery and it appears that the issue of registration of Tarakasi (silver filigree jewellery) was brought before the Orissa legislative assembly in 2019. After searching the GI registry, it seems no action has been taken about it.

A GI was granted for ‘Thewa Art Work’ from Pratapgarh (Rajasthan) in 2014. According to the journal copy, Thewa art work does not itself refer to jewellery, rather it ‘becomes jewellery when applied on items used for jewellery’. The GI originated three to five hundred years ago. Here also, the journal copy does not refer to any characteristics that can be specifically attributed to the geographical origin of the product.

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In 2007, a GI was registered for ‘Temple Jewellery of Nagercoil’ and later, in 2016 a logo was registered in reference to the GI. The journal copy for the GI states that the origin of temple jewellery could be traced to the 17^th century in Nagercoil. Additionally, in the journal copy for the GI’s logo it has been specified that ‘majority of the producers are purchasing the raw materials from Chennai’ and the journal copy for the GI mentions that during the production, bees wax is mixed with the fine powder of a locally available stone. It has not been mentioned if the ‘stone’ contains any special properties or if it is only found in the area.

The relevance of discussing the source of raw materials for Silver Filigree of Karimnagar, Thewa Art Work and Temple Jewellery of Nagercoil, is to understand if the quality, characteristic or reputation of the jewellery can be attributed to the geographical region (terrior) or if the same jewellery can be produced anywhere in the world. Article 22 of TRIPS provides that geographical indications are ‘indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.’ (emphasis supplied) As there appears to be no link between the characteristics of the jewellery and their place of origin, it does raise questions regarding the basis on which the GIs have been granted. In case of jewellery, the raw materials such as gold, silver, stones are generally sourced from other places and this could create a problem when trying to register GIs. The lack of TCE protection has forced the creators of traditional jewellery to shoe horn their products into GI protection, which is clearly not meant for products that do not derive any characteristics from their geographical origin. It’s difficult to understand why the GI Registry went ahead with these registrations when the essence of ‘GI’ is missing from the products applied for registration. Another issue with GI protection is that it only protects the name of the products, while the knowledge and specialised techniques associated with it are excluded.

Though a sui generis framework for TCEs would be ideal, however in its absence, the options remaining for producers of TCEs are a piecemeal combination of copyright, design, certification marks, passing off and GIs. It is enough to confuse even lawyers, and also enough to make their purses happy. It is just the creators who have to bear the brunt of this deficiency in the law.

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Factual Background

The Bombay High Court recently granted interim anticipatory bail to actor and content creator Sherlyn Chopra, who was charged by the Mumbai Police’s cyber cell for uploading pornographic and obscene videos online. The Court directed the actor to cooperate with the investigation, report at the police station daily from March 15-17, and directed the police to report to it on the next date of hearing, which is March 23. In this post, I use this case to comment on the larger conversation regarding the use of copyright law as a remedy in cases where people’s private images/videos are shared online without their consent.

Chopra has been charged with offenses under Section 292 (sale of obscene material) of the Indian Penal Code as well as provisions of the Information Technology (IT) Act and Indecent Representation of Women Act upon a police complaint by Madhukar Keni, a retired Customs and Central Excise official.

During the bail hearing, the 37-year-old actor claimed that she was a victim of piracy and that the videos were uploaded without her consent. As per Section 75 of the IT Act, the statute applies to offences committed outside of India by any person if the act or conduct constituting the offence involves a computer located in India. According to Chopra’s lawyer, Advocate Charanjeet Chandrapal, the videos were meant for a subscription-based paid international portal and not free websites accessible in India. He also claimed that the alleged obscene content was created by a UK-based company of which Chopra is a director.

Does Chopra own Copyright in the allegedly Obscene content circulated?

The ruling in the case of Sex Style v. Abutbul by the Israeli Magistrate Court in Herzliya is a case in point on this issue. The case concerned a plaintiff who was a producer of pornographic content and who sued the defendant for copyright infringement. The Court held that even though the plaintiff’s content would have been protected by copyright, such protection would not be extended to it because of its immoral nature and contravention of Israel’s Penal Code. In some case, English Courts have also refused to enforce copyright in works that were ‘grossly immoral’ or those that were created in ‘disgraceful circumstances’.

As far as Indian law is concerned, as discussed previously on the blog in more detail (see here and here), a combined reading of Section 2(y) and Section 13 of the Copyright Act, 1957, demonstrates that for the subsistence of copyright in a work, the statute does not prescribe any requirements regarding its contents apart from originality. This makes the legislative intent regarding copyright protection of illegal works clear (as argued by Haber in the US context), particularly when contrasted with the Trade Marks Act, 1999 and the Patents Act, 1970 which contain provisions that expressly prohibit protection of marks or inventions as per criteria such as obscenity and morality.

However, the general principle of ‘no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act’, referred to by the Delhi High Court in the copyright case of Super Cassettes Industries Ltd. v. Hamar Television Network Pvt. Ltd., may apply to preclude a Court from enforcing all rights of an owner under copyright law when the underlying work is illegal or immoral.

As per Aniruddha Majumdar, the cases that are not patently illegal and lie elsewhere on a broad spectrum of illegality raise certain concerns regarding the denial of wholesale copyright protection to the works in question. The punishment for works that are obscene is already prescribed as per the Indian Penal Code, which constitutes a sufficient disincentive for the creation of these works. The test for obscenity in Indian Courts entails a subjective determination and so does the definition of what constitutes an offence under the Indecent Representation of Women Act. This Act prohibits as a bailable offence, indecent representation of women through advertisements or in publications, writings, paintings, figures or in any other manner. ‘Indecent’ refers to the depiction of the figure of a woman; her form or body or any part in a way which has the effect of being indecent, derogatory or denigrating to women, or is likely to deprave, corrupt or injure the public morality or morals. As per Section 4(a)(1), depictions in the interest of science, literature and art of a certain kind are exempted from the purview of this Act. Crucially, what is respectable is not judged from the point of view of the woman but from the standard of the ability to corrupt public morality. Given our culture and public morality, the object of attack has always been sexually suggestive representations of women, which reinforces the notion that only sexless women are deserving of respect. The law imposes a repressive puritanical culture in the name of doing away with the objectification of women, without accounting for the circumstances of the publication. If Chopra’s claims that she did not upload the content on a website accessible in India succeed, it is the uploader (responsible for circulating it in India) who would be liable for both copyright infringement as well violation of the Indecent Representation of Women Act.

Activists have noted that the harms arising out of non-consensual sharing of intimate images (NCII), particularly in regions where colonial laws prohibiting obscenity can criminalize victims of NCII for creating ‘immoral content’, are often considered to be self-inflicted. However, these moralistic notions of women-who-transgress-social-norms-deserve-no-legal-remedy should not translate into a complete denial of copyright protection to victims for the works in question.

If Chopra can successfully assert copyright ownership of the content created by the UK Company in which she is a Director, there would be an expectation of limited, geography-based circulation and control over publication, reproduction and communication to the public.

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Can Copyright Law Offer a Remedy?

This case raises important questions regarding authorship in NCII and whether copyright law can offer a remedy. When the NCII is a selfie, the assertion of authorship by the victim is typically easier since most jurisdictions would recognize the victim as the author of the image and the owner of the copyright subsisting in it. This may not be so straightforward when the NCII constitutes a recorded work where the creator may be different from the subject captured.

John Tehranian notes in this regard that the connection between fixation and authorship, and intention and joint authorship empowers copyright holders to shape and control the representation of the bodies of women and other minorities while suppressing counterhegemonic narratives that resist these marginalising and dominant representations. This reifies the male gaze as per the traditional lines of activity of the male author as against the passivity of the observed female muse/object. Similarly, Anthea Kraut demonstrates that assignment of copyright in choreography depends heavily on the dancer or choreographer’s position in the social hierarchy governed by race, gender and class. This reveals the racialised character of propertisation which treats some bodies as “fungible commodities” while according the status of creators or “possessive individuals” to others. Copyright’s authorship as well as the moral rights vested in it, privilege the rights of the ‘mastermind’ behind the camera as opposed to the person captured in front of it. This is also evident by the Ninth Circuit’s reasoning in the famous U.S.  case of Garcia v. Google, which involved a plaintiff who was portrayed in a film without her knowledge. She tried to prevent the film from being viewed publicly by claiming sole authorship over her individual performance in the work. The Court expressed sympathy for her but held that her claim was only meant to suppress speech and as such could not succeed when premised on copyright law instead of privacy, emotional distress or tort law. This judgment has been criticised for courts’ use of free speech rhetoric to arrive at arbitrary outcomes since almost every take-down action in copyright law is as speech suppressive as the remedy sought by Garcia.

Suggestions and Drawbacks

Given the liquid nature of information on the internet, and its capability of being communicated across vast distances, the harms to victims of NCII are exacerbated in our current technological environment. In these circumstances, the urgent priority of most victims is to ensure expeditious and permanent removal of their NCII from the internet, for which copyright has emerged as an unlikely but effective remedy. Unlike privacy law, which is still evolving, copyright law has been regionally and internationally harmonized over time.

There have been proposals to recognise victims of NCII as at least the joint authors of the content that features them, since the interest and value in this content often arises entirely out of the subject appearing in them instead of any other party’s contributions. Another proposal is to create a new exclusive right in intimate images, vesting in the subject who can prohibit the distribution, performance, display (including the private distribution, performance and display) of the content concerned. Yet another proposal is that copyright enforcement in such content must be conditional upon affirmative proof that its recording entailed the full consent of its subjects who were informed that this content would be widely distributed. Yin Harn Lee cautions that these proposals could lead to highly fragmented copyright ownership, making the transfer and exploitation of rights more complex and expensive. He suggests a remedy that would make a less fundamental change to authorship in copyright law, drawing on the terms of the settlement in the case of Chambers v. DCR, where the claimant successfully obtained injunctive relief against the defendant in the tort of misuse of private information. The claim was based on the defendant’s non-consensual distribution of the claimant’s private sexual images. This remedy, akin to the well-established remedy of delivery up ‘in aid of’ an injunction, gives the court the discretion in suitable cases, to direct the defendant to assign any copyright they may have in the images to the claimant, to enable the claimant to compel the removal of NCII from third-party websites.

The notice-and-takedown provisions under copyright law may help victims directly contact website owners hosting the content and compel its removal instead of approaching the police and other state authorities, who often engage in victim blaming, shaming and revictimization. For instance, Section 66E of the IT Act is a targeted provision that punishes privacy violations (though limited to the capture and publishing of ‘private areas’) and Section 67 and 67A penalise the publication and transmission of obscene material (moralistic concerns instead of prevention of cyber harassment animate this provision which also often curbs legitimate sexual expression). However, the nature of the criminal justice system in India which is particularly hostile to women, combined with deep seated social stigma that results in underreporting of sexual offences, may make some victims prefer copyright law over remedies under criminal law.

Conclusion

Finally, copyright law only provides an ad hoc solution to victims whose private images/videos have been shared online without their consent. This mischaracterizes the harm caused to them as a mere infringement of their intellectual property. For instance, the Judicial Magistrate in Tamluk, Medinipur in West Bengal in the case of State of West Bengal v. Animesh Boxi @ Ani Boxi (Case No. GR: 1587/17) likened non-consensual sharing of sexual images online to “virtual rape”. Vrinda Bhandari and Anja Kovacs lauded this judgment despite the term “virtual rape” suffering from definitional problems and being unsatisfactory. This is because the judgment endeavours to bridge the rift between online and offline gender-based violence, which currently limits our understanding of the harms arising out of online abuse against women.  It is unsettling that resorting to intellectual property law’s property-based reasoning may be the most effective method of safeguarding victims’ rights in real time absent a more comprehensive, unified set of measures and their victim friendly implementation on the ground.

Topical Highlight

Sherlyn Chopra Case- Non-Consensual Sharing of Intimate Images/Videos, Obscenity Laws and Copyright Remedies

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In this post, non-consensual sharing of intimate images or videos from a copyright perspective, in light of the recent case filed against Sherlyn Chopra for sharing obscene content online. She first analyses copyrightability of obscene content. She notes decisions from Israel and England that have used grounds of immorality to deny copyright protection to works. She contrasts this with Indian copyright law where such grounds are not provided to deny protection. However, she notes that courts might still deny protection stating the cause of action to be based on an illegal or immoral act. She argues that such denial should not take place and highlights the harms of the subjective determination of Indian obscenity laws for the victims. She then discusses whether authorship will be imparted to the subject of a non-consensual image or video and notes that copyright law has traditionally given a secondary status on the subject, conferring authorship only on the individual capturing the subject. She suggests various models through which the victims can use the notice-and-takedown provisions of copyright law to get such content removed. She, however, ends with a note of caution that copyright law offers ineffective remedies as it mischaracterises the harm caused to the victim.

Thematic Highlight

Protection of Jewellery: A Combination of Trademark, Design and Copyright Law? – Part II

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In this post, Varsha continues her analysis of intellectual property protection available to jewellery. She notes that there does not appear to be any bar in bringing a suit with multiple causes of action rooted in copyrights, trademarks, or designs. She also notes the decision in A. Sirkar v. B. Sirkar Jahuree Pvt. Ltd. where surprisingly neither of the parties claimed jewellery was ineligible for trademark protection, even though arguably it would be excluded from shape mark protection. She then discusses the protection available to traditional designs in jewellery. She notes the absence of a sui generis protection for traditional cultural expressions (TCEs) leaving creators to choose between certification trademark (CTM) or geographical indication (GI) protection or both. She points to the difficulty in obtaining CTM protection due to the hassle of creating a certifying authority and the possible exclusion of jewellery as shape marks. Finally, she discusses GI protection accorded to jewellery designs in the past and highlights that such protections have largely been granted without specifying the special geographical link for protection. Moreover, GIs only protect the name of the products, while the knowledge and specialised techniques associated with it are excluded. Hence, the creators are left with a piecemeal combination of several intellectual property rights in absence of a specific TCE protection.

Other Post

UNH Franklin Pierce’s IP Summer Institute 2021 (May 24 – June 11, June 14 – July 2)

We informed our readers about the Intellectual Property Summer Institute (IPSI) being offered by the Franklin Pierce Center for IP of the University of New Hampshire (UNH) School of Law. It will take place in two sessions – May 24 to June 11, 2021 and June 14 to July 2, 2021. Further details about the Institute can be found in the post here.

Decisions from Indian Courts

• The Delhi High Court in Jagmohan Ratra v. Ampa Cycles Pvt. Ltd., confirmed its earlier interim order granting a temporary injunction restraining the defendant from using any marks deceptively similar to the plaintiff’s ‘AMPA’ mark. [March 17, 2021]
• The Calcutta High Court in Vikas D Jain v. Dilip Kumar Jain, modified the interim injunction granted against the defendant by the single judge and held that the possession of the alleged infringing goods will stay with the defendant, and granted time to the defendant to file an affidavit-in-opposition. [March 17, 2021]
• The Delhi District Court (Patiala House) in Larsen & Toubro Limited v. Radheshyam Singh, granted a permanent injunction restraining the defendant from using any deceptively similar mark to the plaintiff’s registered Larsen & Toubro, L & T, LT, LT, LK and (i)GIC/GIC marks and awarded Rs 1 Lakh as damages. [March 17, 2021]
• The Delhi High Court in Brittania Industries Ltd. v. ITC Ltd., re-notified the matter for later hearing as part heard after noting the defendant’s submission that the infringement or passing off suit cannot be with respect to the Veda Digestive biscuits sold by the defendant in pillow packs. [March 16, 2021]

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• The Calcutta High Court in New Holland (Fiat) India Pvt. Ltd. v. The Controller of Patents and Designs, directed that the Registrar will not remove the appellants’ registered design till the pendency of the appeal. [March 16, 2021]
• The Delhi High Court in Asociacion De Productores De Pisco A.G. v. Union of India, listed the matter for June 1 for considering the Respondent’s proposal that they will not invoke the GI registration of ‘PISCO’ for the Appellant’s application for registration of ‘Chilean PISCO’. [March 15, 2021]
• The Calcutta High Court in Ganesh Grains Ltd. v. Shree Ganesh Besan Mill, granted an interim injunction restraining the defendant from using any marks deceptively similar to the plaintiff’s registered ‘Ganesh’ mark. [March 15, 2021]
• The Karnataka High Court in N Dinesh Kumar v. Shweta Khandelwal, set aside the order of the trial court holding against the defendant in a trademark infringement case and asked the court to hear the matter afresh and dispose it. [March 15, 2021]
• The Calcutta High Court in Shambhu Nath & Brothers v. Paras Nath Sharraf, granted an interim injunction restraining the defendant from using the plaintiff’s registered ‘tooFAN’ and ‘SNB’ marks. [March 15, 2021]
• The Bombay High Court in Sanjay Soya Pvt. Ltd. v. Narayani Trading Company, granted an interim injunction restraining the defendant from using any marks deceptively similar to the plaintiff’s trademark and their copyright in artistic works. [March 9, 2021]
• The Delhi High Court in Raaj Unocal Lubricants Ltd. v. Apple Energy Pvt. Ltd., restrained the defendant from using any mark deceptively similar to the plaintiff’s ‘UNOCAL’ mark and also restrained them from continuing a civil action in a Texas court, until next hearing. [March 8, 2021]

Other News from around the Country

• Author Ashish Kaul who had filed a copyright infringement case against actress Kangana Ranaut for her proposed film on Didda, has sent a notice to Khar Police Station for swift action to be taken.
• A Mumbai-based composer Joseph Mendoza has been accused of copying Singapore’s iconic national day song “Count On Me Singapore”.
• An Indian indigenous neurosurgery simulator developed jointly by AIIMS Delhi and IIT Delhi has been granted a US Patent through the ICMR Patent Cell.

News from around the World

• A piece in Bloomberg discusses the different stance taken by vaccine protectionists and vaccine free traders amidst the Covid-19 pandemic.
• The Quadrilateral group of nations- the USA, India, Japan, and Australia, has announced a partnership to supply up to one billion Covid-19 vaccine doses by the end of 2022.
• Canadian company, Biolyse, has sought license from Johnson & Johnson to manufacture their Covid-19 vaccine and has stated that it will take recourse to the compulsory licensing provisions if the license is not granted.

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• YouTube has started rolling out a new tool called ‘Checks’ that will assess possible copyright violations and ad suitability restrictions before a video is uploaded.
• Bangladesh intelligence agencies are suspected of getting content critical of the government from dissidents taken down by way of fake copyright infringement claims.
• China’s top intellectual property body has rejected and condemned applications to trademark the expression ‘crystal clear love’ used by a Chinese soldier who died in the India-China Galwan Valley clash.

Readers who have a paper in progress may be interested in this announcement – that the WBNUJS IP Chair is inviting papers for a book on the theme ‘Inclusive Wealth Generation through IP Commercialization’. The date for submission is 31st March, 2021. For more details, please see the announcement below:

Call for Chapters: Inclusive Wealth Generation through IP Commercialization

Editors

Dr. Pinaki Ghosh, MHRD IP Chair, WBNUJS
Dr. Shambhu Prasad Chakrabarty, Head and Research Fellow, CRSGPP, WBNUJS
Dr. Jayanta Ghosh, Research Fellow, CRSGPP, WBNUJS
Publisher: Thomson Reuters

Overview

This book features important commercial aspects of IPR. Intellectual property is an growing concern for development and competitiveness in developing economies. This competitiveness engages major commercial dimensions like IP valuation, IP management, IP consultation, inventor compensation, licensing agreements, patent abuse, enforcement, infringement, mediation etc. At the same time, innovation throw complex challenges towards respecting and protection the commercial aspects of IP. The pace of innovation has accelerated significantly in recent decades which prompts revisiting areas like IP management and policy framework. Marketing strategy of IP for economic development of an individual as well as the country requires a boost up so that it can address pivotal challenges. Effective technology transfer in the IP regime is dependent largely upon the progress made in the design and governance of national innovation system.

Themes

• Inclusive gain for exclusive contribution of IPR
• Micro economic theory and IPR
• Sovereign IP
• Indigenous Knowledge Commercialization: Journey from TK & TCE to GI
• Reward and rebate: Economics of IP promotion for social welfare

Audience

Academic research institutions involved in research of intellectual property. With the advancement of the technology the developing nations are facing the challenges of societal need and trying to catch-hold of the IP by laws and policy, hence this manuscript will be a pathfinder to unravel new laws and policies. It will also highlight the opportunities for the researchers to explore on the contemporary challenges on commercialization of IP.

Unique Angles

In this book, the authors:

• Gather lucid views of contemporary researchers and experts from different regions.
• Reflect the theme in this era of liberalization and globalization.
• Multidimensional aspects of IP to explore for research understanding.
• Best researchers and academician’s research works on the same platform.

Guidelines for Submission

The research linked with the emerging issues, which has two main prongs:

• Fundamental Research Prong: Determining the current definition and popular understanding of the term ‘Commercialization of Intellectual Property’ is inclusive and culturally sensitive. In other words, whether the definition of digital linked with the different emerging areas of research.

(Please note that the language used here has been deliberately kept as simple, engaging, and non-legal/technical as possible in the light of the large diversity of disciplinary backgrounds and age and experience groups. The final contributions will need to use more discipline specific terminology and neutral academic writing style).

• Practical Research Prong: Identifying ethical issues inherent in current and emerging innovations in the IP sector. You are welcome and invited to think about and address these two research prongs in creative ways and not necessarily follow the chain of thought followed in the broad areas mentioned above.

In order to keep things somewhat streamlined despite the emphasis on diversity of approaches and disciplines, you are encouraged to look at these research prongs to formulate, from the perspective of the broad points. As many of you have already have expertise in different focus points which is closely linked with the broad topic.

At the same time, requested to you would prefer to write more generally related to broader theme, namely, “Inclusive wealth generation through IP commercialization”, that is also perfectly fine.

We would like you to please pay special attention to the following points when compiling your contributions:

• You are welcome to submit just a full-blown article for the consideration by the editors. However, even in full blown articles, if the starting or central theme is linked to a real life example (e.g. a true case study or a real life news item), it would be very much appreciated as it will then link up nicely to the broad research approach adopted.
• Please do clearly outline (preferably in the introductory segment of your contribution), how your article links up to either the ‘Fundamental/Practical Research Prong’ described above, OR to the broader theme, namely “Inclusive wealth generation through IP commercialization”.
• If the topic on which you are writing does not relate to law, please also suggest the names of two referees (unknown to you personally) who are experts in the field/discipline to which your paper belongs. This is important for us to get the papers peer reviewed by appropriate people, and for you to be able to improve your writing (if the editors so recommend).
• Finally, as the aim of the book is to provide concrete guidance to policy makers at the highest level, we request you to make concrete recommendations, justifiable at least within the specific context of your research that can be given to policy/law makers who are involved with designing laws or policies associated with any of the broad themes.

Writing Style and Final Output

As mentioned, please use neutral academic writing style and avoid writing styles that are closer to journalistic approaches when preparing your contribution to the book. (Please note, however, that in your blog posts, the journalistic approach may be more effective in winning public interest and engagement. However, I do suggest providing links at appropriate places even in blog posts, as a means of citing to relevant literature).

Also, it is requested that all contributions to be considered for the book shall follow the following style and page limit:

• Articles: 15-25 typed pages or minimum 6000 words (single spacing) including all footnotes, 12 font size, times new roman (footnotes can be in font size 10 without spacing)
• Please use footnotes, not endnotes and use OSCOLA referencing style as the guide for footnoting.
• Abstract: Maximum 350 words with 5 keywords.

Deadline for Submission

• Submit full paper: 31st March, 2021
• Word Limit: Minimum 6000 words
• All submissions to be sent to iprchair@nujs.edu

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This post was co-authored by Anik Bhaduri and myself. Anik is a fourth year student at NALSAR University of Law.

A recent piece in the Economic Times argued that the Indian government should buy out the intellectual property rights to Covaxin, to bolster the commitment to its WTO proposal along with South Africa, to waive all IPRs on patents, copyright, industrial design and undisclosed information pertaining to vaccines for Covid 19 (covered previously on the blog here, here and here). The indigenously developed Covaxin has been created by Bharat Biotech and the Indian Council for Medical Research (ICMR). In Part I of this three-part post, we discuss the possibility of waiver of the patent and trade secret rights in Covaxin. In Part II, we explore the broader issue of IP ownership in outcomes of publicly funded research and in Part III, we analyse the opacity surrounding the clinical trial data generated during the Covaxin trial, which has not been publicly shared on grounds of IPR concerns.

Who Owns the IPR in Covaxin

As per Rule 233(i) of the General Financial Rules, 2017 (GFR), pertaining to the Funding of Sponsored Projects or Schemes, the Government Ministries or Departments sponsor projects or schemes undertaken by Universities and other similar Autonomous Organisations such as the ICMR etc., the results from which are expected to be in national interest. Normally, the totality of the expenditure on such projects, including the capital expenditure is borne by the relevant Ministry or Department. Crucially, this Rule also provides that in addition to the submission of technical and financial reports on completion of the project, “a stipulation should be made in such cases that the ownership in the physical and intellectual assets created or acquired out of such funds shall vest in the sponsor.” This does not seem to constitute binding law as it only suggests that such a stipulation is desirable and should be made while clause (ii) of the Rule provides that post completion, the sponsor/government ministry “should decide and communicate to the implementing agencies whether the assets should be returned, sold or retained by them.”

Mrinalini Kochupillai had noted that Rule 215(3)(i) of the GFRs 2005 (whose text is exactly the same as that of Rule 233(i), GFRs 2017) was in direct contradiction to the then applicable Department of Science and Technology’s (DST) (Ministry of Science and Technology), Guidelines for Technology Transfer and Intellectual Property, which encouraged institutions receiving grants from the DST to seek protection of IP resulting from the funded R&D projects. She argued that the patchwork of unclear policy statements makes the issue of ownership in publicly funded IP uncertain, and often liable to be trumped by contrary stipulations in funding agreements. We explore more on this broad issue in part 2 of our post.

The funding agreement between Bharat Biotech and ICMR is not available online and it is unclear whether the government retains the IP rights to Covaxin. Since the vaccine has been co-developed as part of a public-private partnership between the ICMR-National Institute of Virology (NIV) and Bharat Biotech, the government should have had some voice over the rights to IP in the vaccine.

The collaboration between Bharat Biotech and ICMR-NIV is reported to have begun in early May, 2020. It is unclear what role both Bharat Biotech and ICMR-NIV had in the collaboration as well as the amount of Indian taxpayer money used to fund the development of the vaccine. This is in stark contrast to developments in the United States, where for instance, large pharmaceutical companies have been criticized for benefitting out of US public funding as part of Operation Warp Speed and reaping gigantic profits via the development of their vaccines. There have been recent reports of Bharat Biotech collaborating with the US based pharmaceutical firm Ocugen Inc to co-develop Covaxin for the US market, which would make it seem that Bharat Biotech possesses the requisite rights over the IPR in the vaccine. This assumes greater significance as there is another vaccine being developed by Genova, Pune with the help of funding via a seed grant by the Department of Biotechnology. This vaccine uses novel mRNA technology, and if it succeeds in clinical trials, it would be a breakthrough and a first of its kind from the developing world. As a result, global demand for this vaccine may be significantly higher than that for Bharat Biotech’s vaccine which relies on conventional technology. Thus, the government’s retention of IPR in Covaxin and the novel mRNA vaccine in the pipeline, would enable it to be in a position to share them with the rest of the developing world in light of the spirit of its proposal at the WTO.

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Removing the patent barrier

The simplest way to ensure that patent rights do not hinder the free transfer of information on the drug would be for the government to ensure that all COVID projects funded by it will not claim IP rights in the first place by putting the outcomes of publicly funded research for Covid in the public domain, or to retain the patent rights purely as defensive patents, i.e., by not enforcing them. Another way of achieving a ‘waiver’ like status could be to operationalise Section 157A of the Indian Patents Act (following on from Art 73(b) TRIPS) (as covered previously on the blog here).

The waiver of intellectual property rights is in many ways superior to the alternative solution of compulsory licensing of drugs, which has been advocated by a number of countries that are opposed to the idea of a patent waiver. Firstly, compulsory licensing requires the payment of adequate compensation to the patent-holders, and the TRIPS does not clarify what counts as ‘adequate’ or how the quantum of such compensation is to be calculated which often leads to lengthy negotiations between the patent holder and the government. Secondly, manufacturers can only produce predefined quantities in compulsory license which hinders the objective of mass production of vaccines. Thirdly, large pharmaceutical corporations often retaliate against countries that impose compulsory licensing of drugs, leading to potential unemployment and a decline in investment. For instance, Abbott withdrew its products from Thailand after the imposition of a compulsory license. Developed countries, particularly the USA, have sometimes imposed trade sanctions on countries that have imposed compulsory licensing, outweighing the benefits derived from such licensing. A WTO waiver of obligations for all member states would preclude such targeting but it would be hypocritical if the countries that raised this demand do not waive similar IPRs on their vaccines, at least domestically.

One of the key arguments against the complete waiver of patent rights is that it reduces incentives to pharmaceutical companies to engage in research as they cannot recover the amounts, they had spent on developing the drug – in the case of Covaxin such an argument may be weakened since the research was at least partly funded by state agencies. Further, as this article in the Economist points out, if subsidies and tax breaks are accounted for, the American private pharmaceutical industry pays for only about one-third of the country’s biomedical research, while reaping a disproportionately large share of profits.

Since India has moved the demand for waiver of IPRs at the international arena under Article 73 of the TRIPS, it is reasonable to expect that the government will follow a similar policy in the domestic sphere by waiving the IPRs on Covaxin.

Lack of Proactive Disclosure of Know-how

While patent waivers are intuitive to consider in this scenario, the waiver of protection over technological know-how constituting commercially sensitive business information or trade secrets has not received adequate attention. Trade secrets in India are protected under contract law, or in the absence of a contract, under an equitable duty of confidence. As J. Prabha Sridevan has argued, the issue of access to vaccines and medical treatment amidst a pandemic is not just a concern to be negotiated among private parties at a price set by wealthy corporations. It should be perceived via a constitutional lens, as part of the right to health which constitutes a part of the inalienable right to life with dignity. This right overrides the state granted monopoly to a patented invention or contractually protected trade secret rights, making a strong case for a waiver of protection.

However, in practice this is complicated by the difficulty of enforcing such a waiver of trade secret protection since what exactly is sought to be shared may not be clear unless companies volunteer to make this information accessible. Manufacturing sites may be able to share some of this information but at the risk of jeaopardising their relationship with the company. Skilled personnel who can translate the technical know-how into actionable knowledge may also be required in addition to local manufacturing capacity. Thus, for the practical utility of such a waiver to be realised in real time, companies volunteering to opt in, into the sharing process would yield the most effective results. Many people are therefore cynical that a waiver of protection without proactive disclosure of ‘know-how’ would make little difference if pharmaceutical companies refuse to share their know-how which is essential to manufacture the vaccines.

Interestingly, it may be useful if the Drug Regulator shares data on clinical trials or any other confidential information available to it, once Article 39 of the TRIPS, which protects undisclosed information is waived off. Pertinently, Article 39(3) provides that when pharmaceutical products utilizing new chemical entities require the submission of undisclosed test or other data as part of gaining regulatory approvals, this data shall be protected against disclosure “except where necessary to protect the public.” We will explore the issue regarding disclosure of clinical trial data in more detail in part 3 of the post.

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We’re pleased to bring you a guest post by Lokesh Vyas on a recent Delhi High Court decision on arbitrability of IP disputes. Lokesh is a 5th year student at Institute of Law, Nirma University, Ahmedabad. He has written for us earlier on the absence of rights of film directors, here.

Hero Electric v. Lectro E-Mobility: Ambiguated Arbitrability of IP Disputes?

Lokesh Vyas

The arbitrability of IP disputes has often been a question of jurisprudential significance oscillating between the nature of a dispute as to the right in rem and right in personam. Inika Charles and Shamnad Basheer have also argued that the sub-ordinate right in personam arising from right in rem can be arbitrated. Recently, the Delhi High Court in the Hero Electric Vehicles Pvt. Ltd .v. Lectro E-Mobility Private Ltd, confronted the issue of arbitrability of a trademark infringement and passing off dispute between two family groups and resolved the case from a contractual angle without examining the IP angle emphasized by the plaintiffs. This case is part of a long-standing set of suits and disputes between the families (see here, here). For the purposes of the present post, only this current case will be looked at.

Facts

The dispute involves a Family Settlement Agreement (“FSA”) that divided the Manjul group into four family groups (F1, F2, F3, F4) and required the parties to resolve disputes out of or in connection with the FSA through arbitration. Hero Exports, (Plaintiff no. 2) which earlier belonged to all the members of Manjul Group was transferred to F1 through the FSA. Parallelly, a Trademark and Name Agreement (“TMNA”) was also executed which granted the exclusive rights to use the mark “Hero” and its variants, with respect to electronic vehicles, to F1 (as per the Plaintiff), including electric bikes. Similarly, it granted the rights of the mark “Hero” and its variants for other classes of goods to F2-F4. This included granting the rights of the mark to F4 for bicycles. (Do note the distinction between bikes and bicycles here)

The dispute arose when the defendants (F4) started using the marks ‘Hero’ on electric bicycles having a throttle. Of relevance, is a previous arbitral award in relation to the export of electric bicycles, wherein it was held that e-cycles without a throttle cannot be considered electric bikes. Hence, the plaintiff filed the suit claiming it to be an infringement and passing off of its registered trademark. Rather than directly responding to the infringement and passing off claim, the defendants seem to be indicating that the plaintiffs are making these claims because they have misinterpreted the FSA and TMNA, and thus claimed it ought to be adjudicated through arbitration as per the terms of the FSA and the TMNA.

(Note: The facts of the case are a little complicated, so I welcome corrections on facts/law, if any)

Court’s Reasoning vis a vis Arbitrability Issue

While holding the matter to be arbitrable, the Court highlighted that the present matter is not about the deceptive similarity of the marks or trademark infringement, but rather focuses on the ‘right to use the mark’ which arises from the FSA and the TMSA. The Court not only denied that the dispute, if settled in favor of the plaintiff, would operate in rem affecting the right of everyone from using the mark (para 47) but also denied the infraction of any provision of the Trade Marks Act Act or Rules per se. Thus, the Court held it to be an issue of contractual arrangements between the parties.

Current Position of Arbitrability of IP Disputes in India

The Supreme Court in Booz Allen v. SBI Home Finance opened the door for the arbitrability of IP disputes in India when it noted that “disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable”.

Per this understanding, IP disputes can be divided into two types, one which solely involves the right in rem (e.g. the infringement suits, the validity of IP rights, etc.) and cannot be arbitrated. The other involves a subordinate right in personam which arises from a right in rem (e.g. right to receive royalty, licensing right, etc). These are purely contractual in nature and can be resolved through arbitration. As per my understanding, all rights in personam arise from existing rights in rem.

In Eros v. Telemax, the Bombay High Court clarified this position by noting that “where there are matters of commercial disputes and parties have consciously decided to refer these disputes arising from that contract to a private forum, no question arises of those disputes being non-arbitrable”. Similarly, in Eurokids International, the Court held in favour of arbitrability of a matter involving the restriction on using IPs after the franchise agreement.

However, there are also cases that blur this understanding. Illustratively, in Impact Metals case, which pertained to the infringement of intellectual property and misappropriation of trade secrets, the Andhra Pradesh High Court held the matter to be arbitrable without assessing the nature of the remedies or rights involved in the matter. The Supreme Court in Ayyasamy v. A. Paramasivam & Ors. furthered this ambiguity by categorizing patent, trademark, and copyright disputes as inarbitrable disputes (though it was a part of obiter and doesn’t hold much authoritative value).

Recently, the Supreme Court in Vidya Drolia and Ors. v. Durga Trading Corporation brought some clarity on this issue by laying down a four-fold test of inarbitrablity of the subject matter. As per this test, a cause of action and/or subject-matter of the dispute is non-arbitrable when:

1. It relates to actions in rem, that do not pertain to subordinate rights in personam.
2. It affects third-party rights and has an erga omnes effect (i.e., it has implications on the public).
3. It relates to an inalienable sovereign and public interest functions of the State.
4. It is expressly or by necessary implication non-arbitrable as per mandatory statute(s).

Analysis of the Present Case

The present case took cognizance of these cases, however, in my opinion, it didn’t peruse them adequately. Firstly, the Court neither delved into the question of right in rem or in personam nor did it assess whether it’s an action in rem or in personam. The Court did not appreciate that the plaintiff, being a registered proprietor in class XII, has attempted to permanently restrain the defendant from using the mark ‘Hero’ for electric bikes. It was done by invoking the statutory rights under the Trademark Act and not because of the contract between them. The only way in which this would be arbitrable is if the right of F1 in the trademark, as assigned by the FSA and TMNA, was being questioned. However, that does not seem to be happening here.

Further, the Court overlooked that invoking a right in rem against a particular person doesn’t make it a right in personam claim which is subject to arbitration. Adjudication of dispute would automatically define the scope of the plaintiffs’ rights and the goods covered thereby, which can be claimed against other infringers as well in the future.

Secondly, the Court failed to notice that plaintiff’s claim of the exclusive right on the mark ‘Hero’ for electric bikes which includes (as per plaintiff) electric bicycles conflicts with the defendant’s claim of having rights over the electric bicycles. Thus, the issue of whether bikes include electric bicycles is a question on the scope and the validity of the registrations of trademarks which is a pure question of law that needs to be analyzed through examination of the Trade Marks Act, Trade Marks Rules, the extant registrations of the parties. Additionally, even if it is assumed that some part of the suit is contractual and therefore, is arbitrable, it doesn’t render the entire subject-matter as arbitrable because as per Sukanya Hoding’s ruling, a subject matter or cause of action in the suit cannot be bifurcated.

Thirdly, the Court failed to appraise erga omnes effects of the case i.e. the implications of the case on the public. By allowing the possibility of an owner of a trademark under class XII to not be able to protect his trademark from being copied by the owner of the mark under another class, the court is opening up the possibility of consumer confusion as well, since the primary purpose of the trademark as identifying the owner of the goodwill no longer be served.

Conclusion

By looking at the case solely from a contractual angle, the Court has overlooked that an agreement involving an arbitration clause can also have a right in rem issue which needs separate judicial scrutiny. A mere contractual relationship between two parties doesn’t convert the action into a right in personam.

Different countries have taken different stands regarding the arbitrability of IP disputes. For e.g. the USA (35 United States Code (U.S.C) § 294(d)) and Switzerland (Article 193.2, Swiss Federal Act on Private International Law, 1989.) allow the arbitration of patent infringement claims, while South Africa rejects the arbitrability of all IP disputes (Section 18(1) of the Patents Act 1978). France, Italy, Japan, and allow the parties to arbitrate the infringement of IPR but don’t let them arbitrate the validity of registrations. (Note: Refer to ICC’s Report on Intellectual Property Disputes and Arbitration to know more about the arbitrability of IP disputes in other countries.)

However, in India, the issue is uncertain. The Commercial Courts, Commercial Division, and Commercial Appellate Division of the High Court Acts, 2015 has further created confusion by providing for arbitration of commercial dispute [which includes IPR-Section 2(c)(xvii)] of specified value without specifically excluding the arbitration of IPR disputes from its purview under Section 10. In my opinion, leveraging this provision, we should clarify the ‘arbitrable’ aspects of IP disputes through an amendment in the Arbitration Act, as done by Hong Kong (Part 11A, Hong Kong Arbitration(Amendment) Ordinance, 2017.)

It would be great if readers who are more informed, chip in with their comments on this question as well.

Image from here

Recently, the Bombay High Court was faced with a controversial question of law while hearing an anticipatory bail application. The bail application was filed in response to a criminal report registered, inter alia, under Section 63 of the Copyright Act and Section 103 of the Trade Marks Act. The primary issue addressed by the court was whether these offences are bailable in nature or non-bailable. The court ruled on the side of the latter, holding these offences to be non-bailable. In this post, I shall analyse this order and situate it in the context of its implications for free speech in the country.

Background

The above mentioned provisions deal with the infringement of copyrights and trademarks respectively. Both of them prescribe a punishment of “not less than six months but which may extend to three years” in addition to the fine. The First Schedule of the Code of Criminal Procedure (‘CrPC’) provides for a three category classification of offences as bailable or non-bailable in accordance with the prescribed punishment. The second category in this classification states that offences “punishable with imprisonment for 3 years, and upwards but not more than 7 years” are non-bailable. The third category, on the other hand, states that offences “punishable with imprisonment for less than 3 years or with fine only” are bailable in nature. As the offences of copyright and trade marks have a maximum possible punishment of 3 years, it has led to a confusion as to which category they will fall under. (See earlier posts on the blog here and here for more detailed context) Accordingly, different high courts have reached contrasting conclusions on this. While Andhra HC and Delhi HC (here and here) have held these offences to be bailable due to the possibility of less than 3 years of punishment, they have been held to be non-bailable by Gauhati HC, Kerala HC (here and here), and Rajasthan HC, in light of the possibility of a 3 year punishment.

The Order

In the proceedings before the Bombay High Court, the State submitted that “this issue is no more res-integra” as different courts have held that offences punishable with up to 3 years of imprisonment are non-bailable in nature. The court sided with this interpretation, by relying upon a series of its earlier decisions dealing with the Prevention of Insults to National Honour Act, 1971, the Prevention of Corruption Act, and the M.R.T.P. Act, 1966, where the classification was decided based on the maximum possible punishment. It also referred to the recent Division Bench decision of the Rajasthan High Court in Nathu Ram v. State of Rajasthan, where on a reference it was held that offences for which imprisonment “may extend to three years” would fall in the second category, and thereby non-bailable and cognizable.

Missed Points

The above assessment of the Bombay High Court selectively considers only authorities supporting the final outcome arrived at by it, and ignoring the authorities that arrive at a contrary result. Two particularly relevant arguments raised in these orders that were not considered by the court are as follows.

First, the decision of the Supreme Court in Rajeev Chaudhary v. State (N.C.T.) of Delhi (‘Rajeev Chaudhary’) has not been addressed. The decision was rendered in the context of Section 167 of the CrPC and the court held that “imprisonment for a term of not less than ten years” will not include the offence of extortion that provides “imprisonment of either description for a term which may extend to ten years”. This has been distinguished by the Delhi HC by considering that the language of the classification of offences in the First Schedule is “materially different” to the term “not less than” used in Section 167. The Rajasthan HC similarly distinguished this decision considering it to be “in different context”. This, however, involves a discussion that does not consider the specific wording of the First Schedule. To reiterate, it uses the phrase “punishable with imprisonment for 3 years, and upwards but not more than 7 years.” (emphasis supplied) There is a deliberate use of the term ‘and’ in the classification. This possibly implies that the concerned offence must be punishable for 3 years and above, and not merely 3 years. A different interpretation would render the term ‘and’ redundant. If the view of the courts classifying these intellectual property offences in the second category were correct, then the term ‘and’ would have to be instead read as an ‘or’ which cannot be the case here. Accordingly, if the use of ‘and’ is considered deliberate, this makes the provisions in line with that in Rajeev Chaudhary since the effective interpretation of both provisions is the same. This interpretation should be favoured, as rightly pointed out by the Andhra HC, in light of the fact that criminal provisions are required to be interpreted strictly.

Second, the Supreme Court decision in Avinash Bhosale v. Union of India has not been discussed. This was rendered in relation to Section 135 (1)(ii) of the Customs Act, 1962. It prescribes for a punishment of “imprisonment which may extend to three years” (identical to the intellectual property offences being discussed in this post). The apex court had held this to be a bailable offence. As the language of both the copyright and the trademark offences is identical, this interpretation would squarely apply to them and they must be considered as bailable. A similar view was also taken by the Delhi HC.

In light of the non-consideration of the above Supreme Court judgments, it appears that the Bombay High Court order might be considered per incuriam and not a good law.

Impact on Free Speech

Holding copyright and trademark offences to be cognizable and non-bailable in nature has a significantly high impact on freedom of speech and expression in the country. Six particular issues need consideration in this regards.

Dissuading Creativity

First of all, as Bhavik rightly argues, the essence of copyright law is to spur creativity and facilitate access to works. With the threat of a police arrest and the absence of bail as a right, creators would indulge in self-censorship lest they might need to serve jail time for their actions. This is particularly true in the modern day hostile environment in the country where creators are regularly targeted for their content. Particularly, there has recently been an increase in what are known as SLAPP litigations (‘Strategic lawsuit against public participation’) where several cases have been filed against creators such as comedians.

Silencing Criticism

Secondly, this will also lead to suppression in criticism of unfair practices or government’s policies for fear of retaliation. This is because copyright law in the present day is being used as a means of censorship by both private players and the government. The excessive and unreasonable copyright infringement claims raised by WhiteHateJr to shut down all negative comments are an example of the former. The latter can be seen from recent reports hinting towards false invocation of copyright infringement by the Bangladesh government to take down content criticising the government’s functioning. This would, thus, further reduce the already narrowing boundaries of free speech in the country.

Hampering fair use

Thirdly, this would also dissuade carrying out activities which can be covered within the exceptions to the copyright law as provided in Section 52. This is because the determination of whether the concerned activity falls under the exception or not will happen only at a later stage of trial. Until such determination takes place, the threat of being booked under a cognizable, non-bailable offence and thereby the possibility of serving jail time looms large. For instance, consider an individual who runs a photocopying shop in Delhi where they photocopy entirety of books for the aid of students of a nearby university. If a copyright infringement suit is filed against them invoking Section 63, then there is a high probability that they will not be held guilty for the same in light of the D.U. Photocopy judgment. However, until the court rules so, the individual can be potentially arrested and put behind bars without any fault of theirs.

Trademark Bullying

Fourthly, even in context of trademarks, similar concerns persist. As the recent BigBasket-Daily Basket dispute indicates, big players regularly indulge in trademark bullying to drive smaller players out of the market or to make their business suffer. If such measures are resorted to, then legitimate trade mark owners also are exposed to the threats of being booked by a cognizable, non-bailable offence. A determination of whether there was indeed any infringement or not, or even whether the original mark itself is a generic mark and hence not protected, will only take place later during the trial. The situation is worsened by the absence of a consistent principle-based approach taken by Indian courts while dealing with issues such as likelihood of confusion. This further raises the possibility of harassment being suffered by legitimate trade mark owners.

Redundancy of Differentiated Culpability Model

Fifthly, it must be noted that both the legislations provide for differentiated punishment levels in that punishment of less than six months of imprisonment could also be imposed in adequate and special circumstances. The Copyright Act to this end, specifies that a precursor to this is that the “infringement has not been made for gain in the course of trade or business”. Hence, both the legislations envision that certain actions are at a lower level of culpability than others and should be treated liberally. This provision of lesser penalty, however, would become redundant if the offence is considered a cognizable, non-bailable one. This is because in such circumstances the process itself would be highly challenging and excruciating even if the final punishment awarded is minimal. This is because the alleged infringer would need to undergo unreasonable prison time at the whims of the police, thereby probably suffering more than what the punishment would have subjugated them to.

Impact on Vulnerable Groups

Finally, this has special implications for a country like India where the majority of the population is unaware of the functioning of intellectual property legislations. In such a scenario, if police is given unbridled power to arrest individuals without warrant and if bail for the same is made difficult, it could potentially be used as a weapon for harassment with no available remedy for the victims. The large extent of possible intellectual property violations in India and the lack of interpretive clarity on their defences just sets up a system where vulnerable groups can selectively be targeted. It could, thereby, become a mild version of sedition laws with even the private players with high social capital being able to unduly harass their critics.

Conclusion

The constant widening of the scope of criminal provisions concerning intellectual property rights poses significant challenges to the growth of both creativity and freedom of speech in the country. If this is coupled with making these offences as cognizable and non-bailable, it further entrenches the problems posed by this criminalisation. It raises additional questions about the shaky grounds on which criminalisation of intellectual property rights raises as possibly the harms sought to be reduced are countered by much higher harms that are caused by criminalisation in the first place. It is, thus, hoped that a shift towards decriminalisation of intellectual property offences takes place soon. Additionally, it is necessary that some certainty is provided in the interpretive exercise involving the classification of offences under the CrPC, particularly for those offences that do not strictly fall within the ambit of any of the prescribed categories.

Lorenzo’s Oil, a fantastic 1992 movie on a child with a rare disease and the lengths his parents go to find a treatment for him – based on a true story.

Through a series of directions issued in an order on 23rd March, Justice Prathiba M. Singh of the Delhi High Court may have finally pushed into action what the Central Government has been sitting on for years with regards to patients suffering from ‘rare diseases’. The current order related to a batch of petitions that involved 12 children with Duchenne Muscular Dystrophy (DMD), 2 children with Hunter Syndrome, and 1 adult with Hippel-Linau Syndrome, and the declared inability of the state to cover their treatment costs. The order sets out three major directives, along with several supporting directives. The major ones include: a) requiring the government to finalize the long pending National Health Policy for Rare Diseases, b) setting up of a ‘National Consortium for Research and Development on therapeutics for Rare Diseases’, and c) setting up for a ‘Rare Diseases Committee’ which would manage and utilise a ‘Rare Disease Fund’. These are all quite striking directives, especially given the lack of useful movement in the rare disease policy space for a number of years now. From a policy perspective – these are also managing to aim at both the unique innovation concerns as well as the access concerns that come with rare diseases. Additionally, an earlier order (Jan 12th) in this set of petitions also recognised that right to health not just in case of life/death cases, but also for providing better quality of life! 

Para 4: Considering the fact that `Right to Health and Healthcare‟ is a Fundamental Right which has been recognised by the Supreme Court to be a part of the `Right to life‟ under Article 21 of the Constitution, it is incumbent on society in general and authorities in particular to ensure that the life of such children is not compromised, even if there is a small window of improving their chances of survival or even providing a better quality of life 

Before we get further into the recent order, let’s put the overall issue in some context. 

Relevant Background: 

Rare diseases are those diseases which affect a tiny percentage of the population. In India, this number is unofficially pegged at around 1 in 2500 people. (“unofficially” because there is no official policy). Many of them tend to be genetic in nature, and diseases like DMD and Hunter Syndrome result in progressive damage and degeneration. There are an estimated 450 rare diseases found in India. And it frequently takes years before a patient is even diagnosed effectively – after which palliative care is frequently one of the only options. Treatments for rare diseases, when they exist, tend to be priced exorbitantly and are frequently much beyond the means for any patient in India, with costs sometimes going into crores! This also means that most affected do not live past their childhood. 

There are an estimated 70 million patients with rare diseases in India, though this number is also hard to pin due to the lack of good data collection in this regard. Despite the efforts of patient groups, there has been little concrete movement on the policy front with regard to how to handle rare diseases. Thomas had critiqued the inaction of the state in this post about 7 years ago and unfortunately the spirit of the critique still holds strong. Do also read that post for a bit more on why the pharmaceutical patent system is ill-equipped to incentivise making treatments for rare diseases. The short version is that when the market is so small, companies have no ‘incentive’ to invest into making treatments.

In 2017, a National Policy on Treatment for Rare Diseases was announced, following a 2016 Delhi High Court order that one be formulated. Even though the centre had declared in court that they had 100 crore for rare diseases – they later backtracked, saying that they were mistaken as they did not realise health was a state subject (!!), and that under the National Health Mission, they could not put together this type of a fund. After this incredible callousness, the policy was withdrawn in 2018, and a new draft policy finally re-appeared in January 2020. There has been no movement on the draft policy since then. 

The courts however have tried pushing the ball a bit so far. In 2014, Justice Manmohan at the Delhi High Court had asked the state to provide a child the treatment for Gaucher disease (another rare disease) that cost Rs 6-7 lakhs per month, free of cost. Specifically he stated that this was a core obligation of the state – read more here. However, what happens when even the state declares that they can’t afford to pay for treatment? This is the question that came before the court in the present set of cases. The children with Duchenne Muscular Dystrophy (DMD), and with Hunter syndrome are each looking at treatment costs of INR 6 crores per year (!), and INR 72 lakhs per year respectively!

Coming back to the current case: 

Sometime during the hearing, it was brought to the Court’s notice that Sarepta aside, there were other potential treatment avenues being pursued by ‘various organizations’. The court constituted a 9 member expert committee headed by Ms Renu Swarup of the Dept of Biotechnology, asking them to submit a report on (i) immediate treatment and therapy options for these and similarly situated patients, (ii) steps and timelines for indigenizing the development of therapies in India, (iii) whether accelerated approval processes can be taken for this, and (iv) immediate concrete proposals for crowdfunding the costs of treatment. The recommendations of this committee are set out in para 13 of the current order, and many of the directives seem to follow on from those recommendations. 

First off, the Court has ordered that the National Policy for Rare Diseases be finalized by March 31st, 2021. Given that the next date of hearing is April 19th, 2021, it can reasonably be expected that the centre will be questioned if they fail to do this yet again.

Accessibility and Prices

It’s interesting to note that an earlier order from the Court (dated 12th January) had asked the Health Ministry to follow up with Sarepta Therapeutics, the manufacturers of a treatment for DMD, who claimed they had a patient assistance programme (PAPs) but was apparently not responding to earlier requests for assistance. Going by this order, it seems like there was some sort of response, but it’s unclear what exactly it may have been. Did the Govt not follow up? Did they fail to get a deal? Either way, one hopes that the Court checks on this in future hearings, especially as pharmaceutical companies often showcase their PAPs as justification for higher prices, even if there is little evidence to show these PAPs are operationalised at all as we’ve written in the past. 

Nevertheless, in light of the State’s claimed inability to fund these exorbitant expenses, and the identification of other potential sources for treatment options, the Court had also asked that the Ministry of Health proceed with the proposed crowdfunding portal/mechanisms as mentioned in the 2020 draft policy. This too is to be finalised by 31st March, 2021. I’m a bit conflicted on the idea of the Government relying on crowdfunding to fund these types of expenses. The government also spends notoriously low amounts on public health – only about 1.3% of its GDP. And this hasn’t changed for at least 25 years, despite regular promises to double it (see chart in this post for more on that). I don’t know if it’s within the court’s purview to do anything more here – but from a policy perspective, this may give the government an ‘easy’ way out. Not to mention, the various other problems with this model. That being said – for at least the current batch of petitioners, this (crowdfunding) may be the only hope they have. 

Importantly though, the Court also focused on the government having an allocation for rare diseases and not spending it. After having an estimated budget of over 200 crores for the last 3 years (estimates later revised down to 42.5 crores), only 7.2 crores were actually spent. (*to remind readers – these petitions reached the court after the govt said they don’t have money to fund these treatments!! Couldn’t they have at least spent their allocated budget before saying they don’t have money??). The Court directed that the unspent budget be shifted into the new ‘Rare Disease Fund’ which would be managed and utilised by All India Institute of Medical Sciences (AIIMS) directly. The crowdfunding platform is also to be linked to this account. The Court also gave instructions that applications from patients for use of these funds are to be handled within 4 weeks. 

Broader Innovation related concerns

Given the usual bifurcation of ‘access’ from ‘innovation’, it was interesting to see that the Court tried to put in measures to address both sides of this issue. A ‘National Consortium for Research and Development on therapeutics for Rare Diseases’ was directed to be set up as a ‘nodal agency for supervising and monitoring the indigenization of treatments and therapies, manufacture of drugs, technology transfer, approvals, etc. for Rare Diseases’. The consortium is to consist of representatives from ‘DBT, ICMR, DST, CSIR, DCGI, and other related Ministries and Departments’, with the DBT and ICMR to take the lead. Personally, I would’ve been interested in seeing this effort merged into CSIR’s OSDD project – (see our posts on OSDD here) provided it receives the necessary attention, funding and support of course (since a lot of each of those will be needed regardless of which approach is taken). I assume here that more eyeballs, national and international, (through this type of an open approach) would be especially helpful given the complexity of these treatment possibilities, while also providing some hope to the millions of rare disease patients world over that the eventual treatment may be more reasonably priced as well. 

Ideally of course, this should have come from the government, and not through a judicial order. And down that line of thought is whether there is clarity on how the to-be-declared policy would interact with this consortium. Here for example, the court has directed that the to be declared policy is to incorporate these directives. Nevertheless, this move to put in place mechanisms that not only look at short term access concerns, but also look to develop local treatment mechanisms is certainly a holistic way of approaching the issue. And getting the DBT, ICMR, CSIR etc directly onto it seems to be a strong way of ensuring that indigenized research in rare disease treatments actually moves forward. 

Image from here

A recent post on blog already carries an analysis of the latest Supreme Court judgement in the case of  Engineering Analysis Centre of Excellence Private Limited v. The Commission of Income Tax and Anr. The judgment concerned the classification of payments under distribution agreements/end-user license agreements (EULA). The specific question was whether such payments amounted to “royalty” under Section 9(1)(vi) of the Indian Income Tax Act, 1961, thereby giving rise to income taxable in India for foreign residents.

After accounting for several provisions of the Copyright Act, 1957, the Court acknowledged the widely accepted notion that copyright in a work is distinct from a copy of the copyrighted work. The Court restated the general principle that “reproduction” and “use” are two different things; giving the right to “reproduce” may amount to transfer or license under Section 30 but not the right to “use”.  The Court concluded that what is purportedly called a “license” in the EULA is, in fact, a “sale of a physical object which contains an embedded computer programme” (paras 38, 57, 50, 52, 97).

This seems logical because, unlike Section 48 of the Patents Act, 1970, Section 14(a)-(b) of the Copyright Act 1957 does not concern itself with the exclusive right to “use” the work. Thus, granting someone the right to “use” a copyrighted work is not an exercise of copyright.

In my reading, the judgment leads to several interesting questions, ironies and puzzles. First, what purpose does the EULA then serve? From a 36,000-ft view-point, the typical EULAs considered in this judgment (extracted at para 44) grant the limited right to use the software and interdict (as opposed to permit) the end-users from making copies or reproductions of the software. The former is not an exercise of copyright. The latter is redundant because end-users making copies of the software (say for commercial distribution) could be sued for infringement under Section 14, read with Section 51 of the Copyright Act 1957. Simply put, do copyright owners in the software require a complicated EULA as far as rights are concerned? Would not a simple declaration declaring that this is not a license to copyright suffice? Of course, the EULAs may still be relevant for other commercial terms, warranties etc.

Second, presumably, a contractual restriction in the EULA preventing infringing activity may also give rise to a cause of action for breach-of-contract, independent from the statutory right of infringement. Perhaps this is valuable, perhaps not. Assuming this additional right is of some value, the source of this right could be relevant to appreciate. Given the Supreme Court’s decision that the transaction is a “sale” of goods, the EULA is an exercise of the right of the owner of the good (here, the object containing the software) to sell said goods, subject to conditions. But viewing this from a purely contractual/sale of goods lens raises a new question: is it possible for an owner in the “sale” transaction to impose conditions that derogate from such title transfer? A sale requires title transfer, which, in general terms, requires complete transfer of all incidents and benefits of ownership over what has been sold. There is no half-way in a title transfer. This would include destroying the product, taking-apart the goods, reverse engineering it or even making copies – they are all incidents of ownership. Of course, where the making of copies violates another law, such as the Copyright Act, 1957, the remedy lies there. However, the question I pose is this: is it logical to call something a “sale” where there are restrictions in the incidents and benefits of ownership? Or is it a case of lease or hiring? It is clearly implied from the judgment that the parties’ rights (qua the specific sold copy) would be governed under the Sale of Goods Act and/or Contract Act.

Third, the product may be covered by both patents and copyrights. Since “use” is expressly dealt with in Section 48 of the Patents Act, 1970, a EULA that purports to give permission to “use” the software product would then be a “license” under the Patents Act if not the Copyright Act. The question did not arise in this one case – but this implies that in future software cases, the tax authorities may start mapping patents with software products. This may seem hypothetical, but who knows what the future (or the unknown present) holds.

Fourth, and probably most importantly, most software today is being made available through online sales directly by the copyright owner– there is no object carrying the software being sold; it is not ‘canned’ in terms used by the Supreme Court in the past. What then? Even those are sold under EULAs carrying similar concepts – right to use the software in one or few machines, interdicting the users from making copies or use in other devices. By the very act of downloading, an end-user is creating a copy of the software on his/her machine. The ‘lawful copy’ in such cases is the copy of the software as downloaded under the EULA. This would be directly covered by Section 14(1)(b) of the Copyright Act, and the sale of the ‘copy’ through download would be an exercise of copyright. So, in my view, the conclusion would be different in such cases – I will not comment on the impact of this conclusion under the Income Tax Act, 1961.

In the above online model, suppose the copyright owner ‘sells’ the digital copy to a distributor, who sells it to an end-user? My answer does not change – it would still be an exercise of copyright under Section 14(1)(b) since the distributor is not giving away the copy in his possession as was the case in the physical sale model – but instead allowing the end-user to make his own copy on his hard-drive.

Image from here

Earlier this week, the General Court of the European Union (part of the Court of Justice for the European Union or the ECJ) ruled in favour of Lego in Case T-515/19. The Board of the appeal of the EU IPO had declared Legos community design registration number 1664368-0006 corresponding to the description “building blocks for a toy building set”. The Board of the appeal of the EU IPO had overturned a decision of the EU IPO in a cancellation proceeding initiated by a third party.

The contested design is represented below:

The fundamental issue before the General Court revolved around the recitals (10) and (11), and Article 8 (1)-(3) of the Council Regulation (EC) No. 6/2002 on Community Designs. Recital (10) restates the generally accepted principle that design registration should not be granted to features dictated solely by a technical function. Recital (11) presents an exception to this general rule in the context of mechanical fittings of modular products, which are acknowledged as “an important element of the innovative characteristics of modular products and present a major marketing asset”. This tension between recitals (10) and (11) seeps into Article 8 as well. Under Article 8(1), no design registration can subsist in features dictated solely by a technical function. Article 8(2) further states that no design registration can subsist in features that must necessarily be reproduced in their exact form and dimensions to permit the product to be mechanically connected to or placed in, around or against another product so that either product may perform its function. Article 8(3) overrides subclause (2) and holds that designs may nevertheless be granted in features allowing the multiple assembly or connection of mutually interchangeable products within a modular system.

On the face of it, subclauses (1) and (2) of Article 8 overlap. The General Court confirms such overlap when concluding that a feature may simultaneously fall within both subclauses – where the technical function of the product is to allow connection/disconnection/interconnection of the product (para 61). But the General Court immediately adds that there could nevertheless be features relating to connection/disconnection/interconnection covered under subclause (2) while not being the solely dictated technical function to attract subclause (1). While this may seem hypothetical, it appears to relate to situations where visual considerations have played some role – the features/shape/dimension is arbitrary and, therefore, not solely dictated by the technical function of connection/disconnection/interconnection (paras 62 – 68).

The General Court further confirmed that in cases where a particular feature falls under both subclauses (1) and (2), the benefit of subclause (3) may be granted. The General Court determined that the Board of Appeals of the EU IPO erred in law in this case by not assessing whether the conditions in (3) of Article 8 applied or not, even though this was asserted as a defence by the proprietor.

The General Court further concluded that the application of Article 8 (1) by the Board of Appeals was also erroneous. The General Court recollected from precedents that even if at least one feature is not solely dictated by the technical function of the product, Article 8 (1) will not apply. The Board of Appeals had identified 6 features of the design and concluded that they were all dictated solely by the technical function of the product, i.e., to allow assembly/disassembly with the rest of the bricks of the toy set. The 6 features as identified by the Board of Appeals were as follows: (i) row of studs on the upper face of the brick; (ii) row of smaller circles on the lower face of the brick; (iii) 2 rows of big circles on the lower face of the brick; (iv) the rectangular shape of the brick; (v) the thickness of the walls of the brick and, (vi) the cylindrical shape of the studs.

The error, however, was the failure to identify the “smooth surface of the upper face of the product”, which was also held to be a feature of appearance. Noting that this was a cancellation proceeding, the General Court held that the burden of proof rests on the challenger to demonstrate that all the features of appearance of the product are solely dictated by technical function; it was not for the proprietor to prove that the “smooth surface” feature was not exclusively dictated by function. Although the EU IPO had argued in its appeal response that even this feature does not save the contested design, the General Court held that the Impugned Order itself did not record how and why this “smooth surface” feature was dictated solely by function (paras 105, 109 – 112).

In short, the decision to cancel Lego’s design was annulled/set aside because the Impugned Order failed to answer a legal defence (the Article 8(3) argument of the proprietor) and did not contain reasons with respect to one feature of the contested design.

The test in India is worded differently compared to Article 8(1), and Indian law contains no separate provision such as Article 8(3) in the EU law. Under Section 2(d) of the Designs Act, 2000, the feature, inter alia, must “appeal to and judge solely by the eye”. It is worded conversely to the EU law. In its plain meaning, this may not make a difference in cases where the feature is dictated solely by function. But where a feature of appearance is dictated by a technical function as well as visual appearance, the implication of the plain language in the statute may result in different consequences. But caselaw, in both the UK and in India, has made this a difference without a distinction. Lord Reid sitting in the House of Lords in AMP Incorporated v. Utilux (1972) had observed that this identical phrase in UK 1949 legislation was “intended to exclude cases where a customer might choose an article of that shape not because of its appearance but because he thought that the shape made it more useful to him”. As was subsequently understood by the Privy Council in Interlego v. Tyco, (1988) approved of this and further clarified that a mere “coincidence of eye-appeal with functional efficiency” will not confer protection under designs law. In Interlego, when applying this statutory criterion, the Privy Council examined “if there are any features of that overall design which are not solely dictated by the function which the article in that shape has to perform later”. In said Interlego case, evidence was led at trial to show that the makers/designers made deliberate choices in the visual appearance of the lego brick during its designing phase (pages 248-249). It was accordingly concluded that the bricks were capable of design protection because it has features not dictated solely by function.

Having borrowed the wording from English law, it is evident that we intended to borrow the jurisprudence as well. In fact, the aforesaid judgments in AMP Incorporated and Interlego have been cited and relied on in Indian cases as well (e.g. Carlsberg Breweries v. Som Distilleries (2017). Thus, despite the difference in statutory language, given the historical connection with UK jurisprudence, the position of law is the same in India. What this implies for a Lego-like situation in India is simple – if there is evidence to show that at least one feature of the lego block is dictated by visual appearances (excluding or alongside a technical function), so long as the visual appeal is not a mere coincidence to functional efficiency, the statutory criteria of “judged solely by the eye” would stand fulfilled.

Note: I represent/have represented clients on related and unrelated issues. Views expressed here are personal.

Topical Highlight

Delhi HC Looks Into Access And Innovation Questions On Rare Diseases

Lorenzo’s Oil, a fantastic 1992 movie on a child with a rare disease and the lengths his parents go to find a treatment for him

In this post, Swaraj analyses an order issued by Justice Prathiba M. Singh of the Delhi High Court with regards to patients suffering from ‘rare diseases’. The order sets out three major directives: a) requiring the government to finalize the long pending National Health Policy for Rare Diseases, b) setting up of a ‘National Consortium for Research and Development on therapeutics for Rare Diseases’, and c) setting up for a ‘Rare Diseases Committee’ which would manage and utilise a ‘Rare Disease Fund’. He first provides a background to the issue highlighting the problems posed by rare diseases, exorbitant treatment costs, and government inaction. He then notes that the court had formed an expert committee to look at possible solutions to the rare diseases problem including immediate treatment options and crowdfunding costs, and directed that the National Policy for Rare Diseases be finalized by March 31st, 2021. He then highlights the lack of clarity on Sarepta Therapeutics’ non-operational patient assistance programme, crowdsourcing as the inefficient but possibly the only immediate solution for the impugned case, and government’s non-spending of its rare diseases budget. The court held this non-spent budget and crowdsourced funds to be shifted into the new ‘Rare Disease Fund’ which would be managed and utilised by AIIMS. Finally, he notes that the order interestingly also addresses ‘innovation’ concerns by setting up a ‘National Consortium for Research and Development on therapeutics for Rare Diseases’.

Thematic Highlights

Intellectual Property Rights in Covaxin – Part 1 (Waiver of IPRs)

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In Part I of this three-part post, Anupriya and Anik discuss the possibility of waiver of the patent and trade secret rights in Covaxin which has been created by Bharat Biotech and the ICMR. They first assess the ownership over Covaxin. They note the General Financial Rules, 2017, that stipulate that ownership of rights should ideally vest with the sponsor government. However, the funding agreement between Bharat Biotech and ICMR is not available online and it is unclear whether the government retains the IP rights to Covaxin. Reports of Bharat Biotech’s collaboration with a US firm to co-develop Covaxin for the US market, however, indicates it possessing the requisite IPR. They note that government’s retention of IPR ownership over vaccines funded by it would allow it to share them with the developing world. They then argue that waiver of IPR over all COVID projects funded by the government is a better solution than the other suggested alternative of compulsory licensing. They then analyse the difficulty in enforcing a disclosure of technological know-how covered by trade secret protections since what exactly is sought to be shared may not be clear unless companies volunteer to make this information accessible. They note the ineffectiveness of a waiver of patent protection unless proactive disclosure of ‘know-how’ takes place.

Copyright and Trademark Offences – Bailable or Not?: Bombay HC Also Weighs In

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In this post, I analyse the recent Bombay HC decision holding offences under Section 63 of the Copyright Act and Section 103 of the Trade Marks Act to be non-bailable. The court looked at various Bombay HC decisions and a Rajasthan HC Division Bench decision to hold these offences to be non-bailable as the maximum possible punishment is 3 years. I argue that this decision might be considered per incuriam and not good law as it does not consider the Supreme Court’s decisions in Rajeev Chaudhary v. State (N.C.T.) of Delhi and Avinash Bhosale v. Union of India which have been considered by other HCs to arrive at a conclusion contrary to that of the Bombay HC. I then analyse the impact of holding these offences as non-bailable on freedom of speech in the country. I particularly highlight six issues posed by the order in that it will dissuade creativity, silence criticism, hamper fair use, allow for trademark bullying, make the differentiated culpability model of these legislations redundant, and further subjugate vulnerable groups.

Other Posts

Lego Succeeds at EU Level for the Simplest of Reasons

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In this post, Adarsh analyses the recent decision of the General Court of the European Union in favour of Lego. The General Court analysed Articles 8 (1)-(3) of the Council Regulation (EC) No. 6/2002 on Community Designs. It noted the overlaps between subclauses (1) and (2) of Article 8 that prohibit design registration for features dictated solely by a technical function and those that are necessary for mechanical connection of the product, respectively. The General Court held that where a feature falls within both these subclauses, benefit of Article 8(3) maybe granted which holds that designs may nevertheless be granted in features allowing the multiple assembly or connection of mutually interchangeable products within a modular system. It overruled the Board of Appeal decision as that failed to assess Article 8(3) and did not identify the “smooth surface of the upper face of the product” having bearing on Article 8(1). Adarsh then analyses the dispute in context of Indian law and argues that so long as there is evidence to show that at least one feature of the lego block is dictated by visual appearances the Indian statutory criteria of “judged solely by the eye” would stand fulfilled.

Some Musings on Supreme Court’s Judgement on Taxation of Software

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In this post, Adarsh analyses the recent Supreme Court decision concerning the classification of payments under distribution agreements/end-user license agreements (EULA). He identifies four particularly interesting questions posed by the judgment. First, in light of the distinction between ‘reproduction’ and ‘use’ highlighted by the SC, what remains as the purpose of EULA, and whether it could simply be replaced by a declaration that that this is not a license to copyright. Second, another possible cause of action independent of the copyright infringement could be the breach-of-contract due to EULA. However, where restrictions are placed on the incidents and benefits of ownership, is it even logical to call the transaction a ‘sale’ of goods. Third, as the concerned product might also be covered by patents, would a EULA that purports to give permission to “use” the software product then be a “license” under the Patents Act if not the Copyright Act. Finally, the conclusion might be different where softwares are digitally sold where the ‘lawful copy’ is the copy of the software as downloaded under the EULA. This would be directly covered by Section 14(1)(b) of the Copyright Act.

Hero Electric v. Lectro E-Mobility: Ambiguated Arbitrability of IP Disputes?

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In this guest post, Lokesh analyses a recent Delhi High Court decision on arbitrability of IP disputes. He first summarises the complex fact situation including a Family Settlement Agreement (‘FSA’) and a Trademark and Name Agreement (‘TMNA’) allocating rights to use the mark ‘Hero’ among the four family groups of the Manjul group. Disputes arising out of or in connection with the FSA had to be adjudicated through arbitration. He then notes that the court not only denied that the dispute, if settled in favor of the plaintiff, would operate in rem but also denied the infraction of any provision of the Trade Marks Act, holding it to be merely a contractual issue. He then summarises the Indian jurisprudence on arbitrability of IP disputes and critiques the decision on three points. First, the court failed to assess whether the action and the rights involved were in rem or in personam. Since it was an infringement suit, it would have in rem implications by defining the scope of the plaintiffs’ rights. Second, the issue involved was a question on the scope and the validity of the registrations of trademarks which is a pure question of law. Finally, the Court failed to appraise the implications of the case on the public due to the confusion in identifying the mark’s owner.

Call for Chapters: Inclusive Wealth Generation through IP Commercialization

We informed our readers about a call for chapters by the WBNUJS IP Chair for a book on the theme ‘Inclusive Wealth Generation through IP Commercialization’. The date for submission is 31st March, 2021. Further details including the submission guidelines can be accessed from the post.

Decisions from Indian courts

• The IPAB in TVS Motor Company Ltd. v. The Controller of Patents & Designs, allowed the appeal, set aside the Respondent’s order rejecting a patent application filed by the Appellant, and directed the Respondent to grant the impugned patent. [March 25, 2021]
• The Bombay High Court in Dabur India Limited v. Shiv G. Shetti, granted an ex-parte ad-interim injunction in favour of the plaintiff and directed taking down or restricting access to specified URLs linking to video disparaging the plaintiff’s ‘REAL’ marks. [March 24, 2021]
• The Delhi High Court in Reddys Laboratories Limited v. Eros International Media Limited, dismissed the plaintiff’s temporary injunction plea seeking restraining the release of the defendant’s film ‘Haathi Mere Saathi’ over the use of an entity named ‘DRL’. [March 23, 2021]

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• The Madras High Court in Chinnamswami v. M/S. Balaji Consumer Products of India, noted that no effective progress had taken place in the case pending since 2002, and hence dismissed the same with liberty to the plaintiff to institute a fresh suit in case of violation of their marks. [March 22, 2021]
• The Delhi High Court in NL Blinds Pvt. Ltd. v. SSG Furnishing LLP, with consent of the parties, transferred the suit to the original jurisdiction of the court in accordance with Section 22(4) of Design Act and suspended the interim order pending final adjudication. [March 22, 2021]
• The Madras High Court in Handy Instant Foods v. Nature’s Care, noted that no effective progress had taken place in the case pending for 19 years, and hence dismissed the same with liberty to the plaintiff to institute a fresh suit in case of violation of their marks. [March 22, 2021]
• The Delhi High Court in Allied Blenders And Distillers Pvt. Ltd. v. Prakash Distillery And Chemical Co. Pvt. Ltd., reserved orders on the prayer for ad interim injunction, opposed by the defendant on the ground of want of jurisdiction. [March 22, 2021]
• The Madras High Court in Intel Corporation v. S. Ramanan, noted that no effective progress had taken place in the case pending since 2002, and hence dismissed the same with liberty to the plaintiff to institute a fresh suit in case of violation of their marks. [March 22, 2021]
• The Delhi District Court (Rohini) in M/S Solar Sales India v. Shanky Mittal, granted permanent injunction restraining the defendant from using any marks deceptively similar to the plaintiff’s registered ZONE mark, and also decreed Rs 1 lakh of damages in favour of the plaintiff. [March 22, 2021]
• The Calcutta High Court in Kaira District Cooperative Milk Producers Union Ltd. v. Maa Tara Trading Co., granted interim injunction restraining the defendant from using the plaintiff’s well-known mark Amul. [March 22, 2021]

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• The Bombay High Court in Hindustan Unilever Limited v. Greypixy Udyog, held that “that setting out two separate prayers, one for infringement and one for passing off is a singularly unwise practice”. [March 22, 2021]
• The Delhi District Court (Tis Hazari) in Retail Royalty Company v. Lemon Security and Services Management Pvt. Ltd., granted a permanent injunction restraining the defendants from using any mark deceptively similar to the plaintiff’s registered flying eagle mark. [March 20, 2021]
• The Delhi High Court in Novartis Ag v. Eris Lifesciences Limited, disposed of an application seeking injunction restraining the defendant from dealing in a pharmaceutical composition comprising combination of sacubitril + valsartan, in light of the defendant’s statement to abide by the interim injunction orders of the High Court for the State of Telangana and its affidavit submitted before the same. [March 19, 2021]
• The Delhi High Court in Audioplus v. Manoj Nagar, granted interim injunction restraining the defendant from using marks deceptively similar to the plaintiff’s registered STUDIOMASTER mark with the leeway to use the trade name/trademark STUDIO MAN, albeit, without any stylisation. [March 19, 2021]
• The Madras High Court in International Foodstuffs Co. LLC v. Iceberg Walnut Foods India Private Limited, granted a permanent injunction restraining the defendants from using its ICEBERG mark, and thereby from infringing the plaintiff’s registered LONDON DAIRY mark. [March 17, 2021]
• The IPAB in Tony Mon George v. Assistant Controller of Patents & Designs, allowed the appeal, set aside the Respondent’s order rejecting a patent application concerning a centrifugal separator for cleaning of gas filed by the Appellant, and directed the Respondent to grant the impugned patent. [March 15, 2021]

Other news

• The Copyright Office has introduced e-filing facility for registration/ renewal of a Copyright Society and a Performers’ Society w.e.f. March 19, 2021.
• In the latest edition of the International Intellectual Property (IP) Index released by the US Chamber of Commerce Global Innovation Policy Centre (GIPC), India has ranked 40 among 53 global economies.
• Over 250 members of European Parliament and national parliamentarians have urged the EU to support the India-South Africa proposal of temporary waiver of vaccine related patents.
• The short video company Kuaishou unveiled its music copyright settlement standards for short videos and live broadcast scenes on the platform as per which music copyright owner will receive payments based on the amount of usage of the concerned songs.

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• A federal jury in Texas has directed Apple to pay nearly $ 308.5 million as damages to Personalized Media Communications LLC, a licensing firm, in a patent infringement suit filed by the latter.
• A trademark infringement suit has been filed by Decathlon Sports India against NCR-based Pentathlon Sports.
• Taylor Swift and Evermore Park have dropped the respective copyright infringement suits filed by them against each other.
• Costco is challenging the punitive damages awarded to Tiffany’s in their ongoing trademark infringement suit over the sale of generic diamond engagement rings bearing Tiffany’s name.
• India and Japan have agreed to further strengthen cooperation in verification of patents.

Pic by Nick Youngson CC BY-SA 3.0, from here.

Last week we had a guest post by Lokesh Vyas that looked into the case of Hero Electrics v Lectro E-Mobility, wherein the order, holding the dispute to be arbitrable, was critiqued for inadequately clarifying the difference between IP disputes that can be arbitrated versus those that cannot. We’re pleased to bring our readers another guest post today that responds to Lokesh’s post. Today’s post, by Ajeeth Srinivas. K and Ishika Ray Chaudhuri, disagrees with the earlier critique, and argues that this order in fact furthers the position of arbitrability of IPR disputes in India. Ajeeth and Ishika are 4th year BBA, LLB and BA, LLB law students respectively at the School of Law, CHRIST (Deemed to be University), Bangalore. We welcome readers to comment with their own thoughts on the positions taken in either/both these posts.

Why the Case of Hero Electric vs. Lectro E-Mobility Actually Demystifies the Arbitrability of IP Disputes

Ajeeth Srinivas. K and Ishika Ray Chaudhuri. 

Recently, SpicyIP saw the publication of a post analysing the judgement of the Hon’ble Delhi High Court in the case of Hero Electric vs. Lectro E-Mobility. The post noted three instances of criticism against the judgement laid down in the case, which the authors unfortunately cannot agree with. The case at hand – in the opinion of the authors – is one which in fact furthers the position of the arbitrability of IPR disputes in India. The authors agree that the court could have been clearer in stating the specific principle it sought to support. Regardless, the authors hold that the case attempts to analyse the difference between arbitrable IPR disputes (which arise due to actions in personam) and general non-arbitrable IPR disputes. Vide this post, the authors seek to showcase this intention of the Court.

Clarification of Facts:

At first glance, the dispute in itself seems like an infringement of a trademark suit, as observed by the first paragraph of the judgement. However, vide the execution of the Family Settlement Agreement (FSA) and the Trademark and Name Agreement (TMNA), the family agreed to the fact that the use of the Mark “Hero” by each of the Family’s Groups would be limited to use in pre-existing businesses, and to the exclusion of other groups. It is essential here to note that the FSA and TMNA are amenable to arbitration, as evidenced from previous arbitral proceedings. Another factum of importance is the execution of a trademark license in 2010 by Hero Exports towards Hero Electric Vehicle Pvt. Ltd. This is thus merely a case seeking to restrain the defendants from using the Hero Mark by businesses run by F-4.

On that basis, our criticisms to the contentions made in the impugned post are as follows:

First Contention

The first contention in the published article criticises the fact that the Court does not delve into great depths when considering the issues concerning the infringement of IP, i.e., the supposed misuse of the Trademark by the Defendants. The authors fundamentally disagree with this criticism.

While this case is one that deals with claims relating to intellectual property, the case also deals with the capability of the Courts to refer parties to arbitration. The Court further expounds on Vidya Drolia v Durga Trading Corporation, which has laid down and specified the need for the presence of a “chalk and cheese situation” which prevents the parties to the contract from arbitrating the dispute. Therefore, the entirety of the cause of action in the dispute must be rendered non-arbitrable in order for the Court to be able to completely prevent arbitration.

Furthermore, the Court goes on to state in the instant case that its role in hearings under Section 8 and Section 11 of the Arbitration and Conciliation Act, 1996 is judicial in nature and not ministerial. As laid down under the Kompetenz-Kompetenz principle, the Arbitration Tribunal has the authority to decide on its own jurisdiction. Dissimilarly, a court of law can only prevent arbitration if the issue is not prima facie arbitrable. The jurisdiction of the Court, as per Indian law, extends merely to judging two aspects: firstly, whether a valid arbitration agreement exists (which does, here, as evidenced by the FSA and TMNA); and secondly, whether the subject-matter of the dispute is arbitrable (i.e., here, adjudicate the presence of a violation of a right purely in rem vide the IPR dispute in question). It is in this context that the Court also differentiates a non-arbitrable subject-matter and a non-arbitrable claim.

This is in line with the four-fold test laid down in Vidya Drolia. The tests only allow the Court to adjudicate to the extent of the specific tests mentioned therein, which are the qualifiers to adjudicate prima facie arbitrability (in paragraph 87 of that judgement). All other questions of arbitrability of the dispute must be left to the tribunal to adjudicate upon, without the intrusion of the Court, for if the Court indulged anything further, the same would be usurping the powers of the tribunal (in Paragraph 88 of that judgement).

This case, therefore, does not hinge on the arbitrability of the subject-matter – ie., say, an infringement on the trademark in question – but on the arbitrability of the claim, as is argued in the forthcoming section.

Second Contention and Third Contention

Now, the second contention of the impugned post suggests that the court failed to note the plaintiff’s ownership of the ‘Hero’ mark, while the third contention in the post suggests that the court failed to acknowledge the subsequent erga omnes implications raised in the suit at hand. It is in this context that the judgement’s analysis of the applicability of rights in rem and in personam must be examined.

A right in rem is a right erga omnes or applying to persons generally and the world at large. This is a protected right – that is, unlike a right in personam, a right in rem must be violated stricto sensu. A right in personam, on the other hand, is a personal right, arising usually out of special circumstances – like the presence of a pre-existing contract between the parties involved in a dispute – and does not exist generally otherwise. IPRs, for example, can often be confined to exist in rem and not in personam, as they are recognised in public interest as private in nature, to the exclusion of usage by the world in general.

The judgement at hand, in paragraph 76, reiterates a four-fold test laid down in the case of Vidya Drolia which can be utilized to determine the arbitrability of the subject matter in an arbitration agreement. The first part of the test specifically aims at clarifying that the cause of action must not relate to rights in rem, or rights in personam arising from rights in rem; these include, as stated in the judgement in paragraph 77, grants and issue of patents and registration of trademarks. The court goes on to state in paragraph 146 that the trademark in question in the suit already stood granted prior to the FSA and TMNA; the dispute here was in connection with which Family Group out of the four was assigned the rights to the same. The assignment in this case is contractual vide the execution of the FSA and the TMNA, and thus exists solely in personam. In fact, the rights in personam here, which may give rise to consequent rights in rem, (here, the ability to bring action against the misuse of the impugned trademark erga omnes against other third parties).

It is only due to the assignment of the Trademark to F-1 vide the FSA and the TMNA that any incidental rights in rem have arisen. The authors disagree with the third contention on the basis of paragraph 143 and 147 of the judgement, which when read together state categorically that the right asserted by the plaintiff’s petition does not emanate from the violation of Sections 28 and 29 of the Trade Marks Act, 1999, instead emanating from the FSA and the TMNA – and thus being asserted only against the F-4 Family Group and not erga omnes. The Hon’ble Mr. Justice C Hari Shankar also precisely notes in paragraph 143 that the plaintiffs’ petition only relies on the Act superficially in their prayer, having not argued for the same substantially otherwise. Therefore, this is primarily a contractual dispute, with one party to the contract demanding the restraint of use of a Trademark vested with them, and is not a dispute of deceptively similar marks, or general cases of infringement.

Any violation of the impugned provisions of the Act in question is thus incidental to the contractual dispute at hand – were there to be an infringement on the trademark, assuming one Family Group (according to the second contention of the impugned post, the plaintiffs) were to become repository to the rights of the same, this still would not lend the dispute at hand erga omnes effect.

Conclusion

The Indian perspective on the arbitrability of disputes when the subject matter arises from IPR is somewhat ambiguous, but has steadily trended towards the understanding that while rights in rem (as IPR are, as implied when reading the judgements of the High Courts of Gujarat and Delhi respectively in Gurukrupa Mech Tech and McDonalds India Pvt. Ltd. together) are not actionable in arbitration agreements, rights in personam are – even when the latter arises from the former (Booz-Allen & Hamilton Inc vs. Sbi Home Finance Ltd. & Ors).

Here, however, the rights in rem do not give rise to rights in personam, but rather the opposite, if at all. Therefore, given that the aforementioned Indian perspective specifically considers rights in personam arbitrable under Section 8 of the Arbitration and Conciliation Act, 1996, the case in question in fact clarifies and upholds the Indian perspective on the arbitrability of IPR, instead of mystifying it further as the impugned post claims. In the authors’ opinion, the case furthers the discussion of arbitrability of IPR disputes in India, by considering in detail the limitations the Courts have to deem such issues prima facie non-arbitrable. It clearly demarcates the right of an arbitral tribunal to rule on its own jurisdiction, only leaving tertiary cases to the Court.

This post was coauthored by Swaraj Paul Barooah and myself.

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In part I of this post, Anik and I argued that the government should waive the IPR in Covaxin in order to ensure that the vaccine can be rapidly accessed by the public. In Part II of this post, Swaraj and I analyse the broader issue of IP ownership in outcomes of publicly funded research. Part III explores opacity surrounding the clinical trial data generated during the Covaxin trial, which has not been publicly shared on grounds of IPR concerns.

Factual Background

As noted in Part 1, Covaxin has been co-developed as part of a public-private partnership between Bharat Biotech and the Indian Council for Medical Research (ICMR), with the details of the funding agreement between Bharat Biotech and ICMR not being available online. Bharat Biotech is now collaborating with the US based pharmaceutical firm Ocugen Inc to co-develop Covaxin for the US market, which would make it seem that Bharat Biotech possesses the requisite rights over the IPR in the vaccine. Meanwhile, another vaccine is being developed by Gennova Biopharmaceuticals, Pune with the help of funding via a seed grant by the Department of Biotechnology. This vaccine uses novel mRNA technology, and if it succeeds in clinical trials, it would be a breakthrough and a first of its kind from the developing world. That being said, it is unclear as to whether this is completely indigenous though, as the same press release that calls it indigenous, also says it was developed in collaboration with HDT Biotech Corporation, USA. Regardless, as an mRNA vaccine, global demand may be significantly higher than that for Bharat Biotech’s vaccine which relies on conventional technology. Thus, the government’s retention of IPR in Covaxin and the novel mRNA vaccine in the pipeline, would enable it to be in a position to share them with the rest of the developing world. It is to be seen if the Indian government, which is pushing for big change on the international stage, is willing to walk to the talk on the domestic stage by taking a stand on pushing to get the IP rights in exchange for its funding.

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Relevance and Evolution of a Regulatory Framework in India

The Covid-19 pandemic has compelled us to think more closely about the government’s ability to allow the public use of certain products/technologies in emergency situations, particularly if the funding for the development of these products/products involved the utilization of taxpayer’s money.

The Indian National Knowledge Commission noted as far back as 2007 that intellectual property infrastructure and assets must be utilised for public interest as well as for the overall benefit of society. In 2008, the Indian Government brought in the Protection and Utilisation of Public Funded Intellectual Property Bill, 2008 (PUPFIP bill). This Bill had many provisions directly taken from the US Bayh Dole Act, which was responsible for the creation of a uniform set of rules pertaining to government funded inventions in the US and the ownership of IP therein.

In contrast to the background and evidence justifying the legislation of a framework such as the Bayh Dole Act in the US, there is an abject lack of empirical data in India regarding the number of patents held by publicly funded institutes, the status of their licenses, commercialisation, utilisation etc.Perhaps, this compounds the difficulty in framing any overarching framework with an access-based ideology soundly guiding the process. As per official data, India’s expenditure on R&D activities constitutes only 0.7% of its GDP in contrast to many other countries such as the US (2.8%), China (2.1%), Korea (4.6%), Israel (4.5%), etc.  This also confirms observations that given the lower level of government funding, particularly to basic research in India, measures to bolster this funding may be imperative regardless of the adoption of any Bayh-Dole-esque framework. This is to underscore the significance of the government’s ability to incentivise research in priority areas, determine its scope and direction, and to make its outcomes available for public interest at affordable prices.

The PUPFIP Bill was criticised for restricting the public domain by prioritising private rights over public benefit, curtailing access to public funded research through a punitive instead of a facilitative framework, the lack of necessary contextualisation to India, diverting resources from pure basic research to more income promising applied research and patenting all inventions without considering whether this would help or hinder the larger goal of access to innovation. (discussed previously on the blog here, here and here).

Patchwork of Mutually Inconsistent Policies and Guidelines

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The PUPFIP Bill was never translated into law, but there has been a patchwork of rules, regulations and guidelines regarding IP in publicly funded research outcomes. Instead of leading to certitude and consistency, these scattered policies and guidelines have exacerbated the lack of clarity on this issue.

Without an overarching law in place, Indian Universities and research institutes frame their own policies regarding vesting of IP ownership in outcomes of publicly funded research (Rule 233, General Financial Rules, 2017). As per the National IPR Policy 2016, which is an aspirational and guiding document instead of a binding one, the focus of publicly funded research organisations should be on commercialisation of inventions, including by increasing collaboration between industry and academia. Crucially, the focus of the last Science Technology and Innovation Policy (2013) expressly listed modifications to IPR policy to provide for using rights for social and public good objectives when supported by public funds, and co-sharing of IPRs generated under public-private partnership. As per the National IPR Policy, 2016, researchers should be encouraged in public funded academic and R&D institutions via the linking of their IPR creation with research funding and career progression (pg. 8, 2.5). For these purposes, the policy recommends the creation of uniform guidelines for the division of royalties between organisations and individual researchers and innovators (2.6). The prospect of receiving royalties can constitute an important incentive for commercializing the invention by transferring research results to the public through the involvement of inventors in the process of technology transfer and licensing patented inventions to companies to bring them to the market. Critics caution that the policy’s overt focus on IP registration can cause further dilution of resources from pure research to applied research whose IP can be easily registered without any positive effects on the overall innovation environment and accessibility within it.

As per the Draft Model Guidelines for implementation of IPR policy for Academic Institutions (“Model Guidelines”) released by the Department for Promotion of Industry and Internal Trade (DPIIT) in 2019, it is recommended that Universities be the default owner of IP in products/research generated through university resources or in the course of university employment (covered on the blog here). In contrast, the National Innovation and Start-up Policy 2019 for Students and Faculty, provides for joint ownership by the inventors and the institute (4(a)(i), pg. 15). The reconciliation of these policies vis a vis each other is not clear. The Model Guidelines if/when finalised, would only be persuasive in nature. By virtue of being restricted to academic institutions, they do not have a bearing on the status of IP created by India’s biggest publicly funded organizations such as the ICMR, CSIR, ICAR etc. There is no update regarding the outcome of the Model Guidelines as of now.

The Model Guidelines, like the PUPFIP Bill do not provide the government with explicit ‘march-in rights’ over IP generated from public funding. March-in rights have been provided in the US Bayh Dole Act and entitle the government (funding agency), on its own initiative or at the request of a third party, to effectively ignore the exclusivity of a patent awarded under the Act and grant additional licenses to other “reasonable applicants”, once the agency determines, following an investigation, that one of four statutory criteria for exercising these rights has been met. One of these grounds includes the alleviation of health and safety needs, which are not reasonably satisfied by the contractor, assignee, or their licensees. This constitutes a ground, which if construed broadly, can be operationalized during the pandemic to provide for access to treatment, vaccines and medicines at affordable costs.

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A Welcome albeit Toothless Open Science Framework

The draft 5^th Science, Technology and Innovation Policy (“STIP”) marks a welcome shift of approach in the attempts regarding regulation of IP in the innovation ecosystem thus far (covered on the blog here). It emphasizes the need for Open Science initiatives by highlighting that it is imperative for publicly funded research to be made inclusive and accessible. The draft STIP proposes the creation of a dedicated Open Access portal “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.).” (1.2, pg. 12). It also recommends making available all data generated from publicly funded research as open data in ‘findable, accessible, interoperable and reusable (FAIR) terms’. This is extended to suggest that not just pre-prints, but also finalized versions of publications generated by the use of public funds be deposited in institutional repositories. (Executive Summary, pg. 2)

The draft STIP also emphasizes on enhancing R&D funding from state and central governments, as well as via hybrid public-private funding models. This policy too would only have persuasive value and has been criticized for paying mere lip-service to the laudable goals of innovation and access without providing any effective guidance on how these goals will be realized, especially given the assumptions on state-center coordination.

Conclusion

The Covid-19 pandemic reveals the lack of political will and institutional support thus far for controlling the outputs of publicly funded research in a clear and consistent manner that benefits the public, despite the government’s impressive stance at the WTO pushing for a waiver of TRIPS obligations. Alternative models of pharmaceutical innovation, publicly minded licensing and open-source techniques are now being considered, with an urgent emphasis on both encouraging innovation and equitable access. The US experience with the Bayh Dole (particularly march-in rights which have only been used once till date) has shown that promising safeguards may not necessarily be used successfully. However, even though the mere legislation of these provisions into law may be insufficient, their practical limitations should not be used to argue against the incorporation of similar provisions in other countries such as India where they may achieve desirable results if contextualised and supported politically. By not controlling the IP rights of the Biotech vaccine (and thus being able to share them openly, or at least licensing it out cheaply), India has already lost what could’ve been an easy way to provide relief to several poorer countries in the world. Furthermore, this would have and should have been an easy step in showing the world how the Covid treatment situation could have been done better, costing India an easy opportunity at gaining tremendous soft power across the world. Will India at least be able to take this step for the mRNA vaccine it is now supporting? Unfortunately, even these agreements (how much they’re funding, what the Indian government’s exact role is, etc) don’t seem to be publicly available so far. But let’s cross our fingers and see.

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Earlier this month, the Bombay High Court ruled that registration of copyright is not mandatory for obtaining relief in an infringement action. Seemingly a statement of the obvious, this decision by Justice GS Patel corrects a nine-year old blunder by a coordinate bench of the same court in Dhiraj Dewani v. Sonal Infosystems that had refused relief due to the absence of registration. As Rahul Bajaj explains here, the court in the said case had taken it upon itself to read into the legislative framework a requirement that did not actually exist. The present decision, Sanjay Soya v. Narayani Trading carefully deconstructs the flawed presumptions in its predecessor and declares it per incuriam. In this post, I will first discuss the judgment itself which rights the judicial position, and then I will re-examine the policy of automatic copyright protection in light of modern realities in the developing world.

The Dispute

The dispute at the centre of Sanjay Soya was fairly straightforward. Both parties sell soyabean oil. The plaintiff accused the defendant of copying its label which is a registered label mark as well as a piece of original artistic work enjoying copyright protection. The labels of both parties contained a yellow colour scheme, the image of a family, depiction of soyabeans and a teardrop oil device.

On the trademark question, the court promptly found the defendant’s label to be deceptively similar and likely to cause confusion. It also concluded that this was a case of passing off owing to dishonest adoption and an attempt to encash the plaintiff’s goodwill and reputation.

The defendant resisted the claim of copyright infringement through various arguments. It challenged the plaintiff’s ownership of the copyright in the label by arguing that only the artist and not a commercial entity like a company could own copyright under Section 17. This argument was easily shot down as the case fell squarely within the bracket of Section 17(c), with a former employee having designed the label for the plaintiff. It also unsuccessfully argued that trademark and copyright protection could not subsist concurrently over the label. While the defendant failed to show priority in its use of its label and could not prove the label art to be unoriginal either, it pleaded that in light of the Dhiraj Dewani precedent, relief for copyright infringement could not be claimed if the same was not registered.

Overruling Dhiraj Dewani:

Dhiraj Dewani was a case concerning infringement of taxation software with a plea for civil and criminal remedies brought under Sections 63, 63B and 64. In these provisions conviction is possible only if infringement is done knowingly. The Single Bench noted that penal provisions were required to be interpreted strictly. It took the view that an infringer cannot be expected to know about copyright existing over any work unless it is registered and published in the Official Gazette. Thus, it went ahead and read the optional registration provision in Section 45 as compulsory.

In Sanjay Soya, this judicial overstepping was declared per incuriam (para 28, 61). This is because the ruling in Dhiraj Dewani was made in ignorance of as many as 4 previous judgments of Bombay HC which had held copyright registration to be optional. The first of those, Burroughs Wellcome v. Uni-Sole, had even been cited before the Single Bench, but the final decision had neither followed it as it was bound to, nor had it given reasons to distinguish itself from it. Justice Patel explains that if the Single Bench disagreed with the previous decisions, the question had to be referred to a larger bench with explanation as to why reconsideration was needed. He then notes how the doctrine of stare decisis prevents a decision rendered in ignorance of decisions binding on it or of an applicable statute from being elevated to the status of precedent, as it happens to be per incuriam.

He then explains why the legal position taken in Dhiraj Dewani is wrong:

Firstly, Dhiraj Dewani incorrectly equates the trademark and the copyright regimes. While registration under the Trade Marks Act, 1999 is mandatory under Section 27 for conferment of special rights unavailable to an unregistered proprietor, there is no parallel mandate in the Copyright Act, which accords protection from the point of creation of the work. Section 45 allows that copyright in any work “may” be registered. It is also noted that a proposal to make registration mandatory in the Copyright Bill 1955 was dropped after the JPC Report cautioned that it would create an undue restriction in the exercise of rights.

Secondly, the very nature of copyright recognizes and rewards original expression. No forger wonders about the originality of her work after completing it, she is always aware of it. Copyright infringement is the presenting or using of another’s work as one’s own, and thereby illicitly availing the rights exclusive to the owner. This exclusivity cannot be subject to registration. The court notes that automatic protection is a fundamental principle of both the Berne Convention as well as the TRIPS Agreement.

Lastly, it rejects the idea that the special jurisdictional provision under Section 62 of the Copyright Act to sue a defendant in a court where the plaintiff is situated is available only to registered copyright owners.

With this excellently reasoned analysis, the court concluded that a case for copyright and trademark infringement, as well as for passing off is made out.

Copyright Registration and Policy Concerns

The present decision was confined to ascertaining the correct position of law, which as it stands, clearly makes copyright protection automatic. From a policy standpoint, the concern raised in Dhiraj Dewani regarding the difficulty in ascertaining copyright ownership without registration is not entirely unfounded. It is linked to the larger discourse regarding the feasibility of a formalities-based copyright system. In recent years, the primary argument advanced by most scholars favouring (some form of) a mandatory registration system has been the promise of legal certainty regarding copyright claims. For a policymaker, Sanjay Soya’s reasoning regarding forgers who always know that they are committing forgery does not account for the difficulties and heavy search costs incurred by legitimate potential users of work in ascertaining copyright claims so as to obtain necessary licenses.

Coupled with the relatively low threshold of originality, automatic protection allows works to be easily locked up outside the public domain. This problem is particularly amplified in case of orphaned works, where the lack of traceability of owners and fear of litigation impedes their use. In jurisdictions like India and UK where mechanisms are in place to allow users to license orphaned works, prospective users are burdened with unclear and onerous procedural requirements that may discourage downstream creativity. Scholars like Prof van Gompel suggest that registration and maintenance of digital copyright databases would go a long way in creating certainty regarding authorship, ownership, and term of protection; thereby helping mitigate licensing hurdles and encouraging the free flow of information.

While these advantages are no doubt promising, a formalities-based copyright system is to some extent antithetical to the philosophical notion of copyright which regards original expressions entitled to protection by virtue of their creation from the mind. To deny protection to such works without formalities would be to impose additional entry-level barriers on authors to enforce rights.

A further advantage that is often discussed is that the introduction of formalities is in the interest of the public, as greater barriers to protection would allow works to easily slip into the public domain, thereby enriching it. On the face of it, this is a promising argument. However, practically, in India and in other developing countries and LDCs where a vast majority of authors operate under social, financial, digital and informational limitations, mandatory registration would significantly impede them from protecting their rights. Many uninformed individuals and groups, including those who would otherwise be able to prevent the use of their traditional cultural expressions through copyright law, may become easy prey to misappropriation. Commercial content creators such as established filmmakers, musicians and publishers would be heavily advantaged over individual creators. Mandatory formalities would thus create benefits that would be skewed along the lines of the pre-existing hierarchy of privilege in society.

Prof Dev Gangjee suggests a mid-way approach to this. He contemplates a two-tier system where protection for an initial number of years may be automatic in order to allow authors to estimate the commercial potential of their work, subsequent to which, continued protection could be subject to registration. If not registered, the work may either fall into public domain or enjoy a narrower spectrum of rights with limited remedies. This offers a good compromise between the extremes, but the feasibility of its application to the Indian copyright regime requires detailed study and analysis. What is clear however is that while registration and maintenance of databases offers significant benefits, a wholly mandatory registration system is unsuitable for present Indian realities. A solution to the orphaned works problem will have to be obtained by simplifying procedures and issuing clear guidelines. It cannot be achieved by hindering copyright enforcement through measures that disproportionately affect the underprivileged.

In Part I of this post, Anik and I argued that the government should waive the IPR in Covaxin in order to ensure that the vaccine can be rapidly accessed by the public. In Part II of this post, Swaraj and I explored the broader issue of IP ownership in outcomes of publicly funded research. In Part III, I analyse the opacity surrounding the clinical trial data generated during the Covaxin trial, which has not been publicly shared on grounds of IPR concerns.

Factual Background

Covaxin was granted approval in ‘clinical trial mode’ without phase 3 efficacy data and was approved for regular emergency use authorization only on March 11, 2021, even though administration of the vaccines had begun on 16^th January, 2021.

The Union Health Ministry has outrightly denied RTI applications demanding data, evidence and other considerations based on which Bharat Biotech’s Covaxin and Serum Institute of India’s Covishield were granted formal clearances for emergency use authorisation. Responding to an RTI filed by independent journalist Saurav Das, the Ministry refused to make the documents public, noting that the request is beyond the ambit of the RTI as the ‘sought information is exempted under Section 8(1)(d) and (e) of the Right to Information Act, 2005.’ In reply to the demand of another activist, Saket Gokhale, who sought to obtain information taken into consideration for the approval of Covaxin, the Central Drugs Standard Control Organisation (CDSCO) again refused under Sections 8(1)(d) and (e) of the RTI Act, noting that ‘disclosure would harm the competitive position of Bharat Biotech.’

Section 8(1)(d) exempts the disclosure of information to citizens if it includes information shared in “commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information.” Similarly, Section 8(1)(e) grants an exemption from disclosure when the “information (is) available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information.”

Nature and extent of protection over CT data in India

Prior to the introduction of a new drug in the market in India, it must undergo clinical trials, and the data generated during these trials must be submitted to the Drug Controller’s Office as per Rule 122-DA of the Drugs and Cosmetics Act 1940 and Rules, 1945. Apart from pre-clinical studies where the drug is tested on living organisms such as mice, rabbits, monkeys etc. to determine its safety and tolerability, the trial itself involves three distinct phases. The first phase entails testing the drug’s safety and tolerability on human beings in small groups of 20-100 healthy volunteers. The second phase explores the effectiveness and short-term side effects of the drug on human beings in a larger group of up to 300 patients. Finally, the third phase involves administration of the drug at multiple treatment centers to determine the therapeutic benefits of the drug prior to granting marketing approval to it.

These phases generate a gigantic amount of data, submitted to the Office of the Drug Controller, which is relevant to evaluate the safety, quality, efficacy, risks and benefits of the drug along with its composition, including physical and chemical characteristics. Companies rely on the costs incurred for development of drugs to claim both patent protection and protection over CT data, which ignores that recovery of their costs can often be catered to more than sufficiently via patent protection.

CT data may also constitute trade secrets in India, which are protected under contract law, or in the absence of a contract, under an equitable duty of confidence under common law. There is nothing in the Drugs and Cosmetics Act, 1940 and Rules, 1945 to prohibit the data submitted to the Drug Controller from being made available to any third party.

Further, India is obliged to comply with Article 39(3) of the TRIPS agreement which requires protection of test data against “unfair commercial use” which can be overridden “where necessary to protect the public.”

Larger Public Interest Warranting Disclosure

Both Sections 8(1)(d) and 8(1)(e) of the RTI Act, cited to exempt the information from disclosure via RTIs, can be overridden due to larger public interest involved as per the text of these Sections itself. Not many concerns come to mind which would be as compellingly within the ambit of public health and interest as vaccination amidst a deadly pandemic in a densely populated country with abject inequalities in access to medical infrastructure as India. This is significant since the right to receive medical care has been recognised by the Supreme Court in Chameli Singh v. State of UP, as part of the fundamental right to life under Article 21 of the Indian Constitution.

Further, it has been argued that under Article 39(3) of the TRIPS, a state is free to make non-commercial use of CT data or fair commercial uses of such data, for instance, to avoid health or safety risks that access to data can ameliorate. Non-commercial and fair uses of CT data for the promotion of research and science in the public interest would be aligned with the research exemptions embodied in the domestic patent laws of many jurisdictions (Section 47, Patent Act in India). Finally, when non-competitors like public interest organisations, universities, hospitals (such as Saket Gokhale and Saurav Das) demand disclosure for reviewing and verification of the reliability and completeness of data, such data can be disclosed without violating the TRIPS.

Even with respect to protection for undisclosed information, there have been statements by the heads of the Dutch, French and UK regulatory authorities as well as the European Medicines Agency (EMA) to the effect that CT data should not be considered confidential commercial information. They argue that not sharing this data publicly undermines the philanthropy of trial participants, most of whom would have agreed to partake in the trial with the motivation to contribute to medical knowledge.

Further, independent researchers who want to conduct a meta-analysis of the data for safety and efficacy studies cannot be characterized as illegal free riders. Confidentiality over CT data impedes possible uses of raw clinical data by researchers for the development of predictive models for patient orientation towards appropriate treatments.

Another compelling reason to disclose CT data is that history has shown us that confidentiality in this data can lead to bias in reporting the outcomes of trials, while depriving researchers of the opportunity of verification of claims. For instance, independent researchers could only gain access to additional clinical study reports for Tamiflu via a freedom of information request to the EMA. These reports revealed that serious adverse events were not reported in published papers and the manufacturer’s claims were not consistent with CT data. Incomplete reporting also hinders doctors from being able to come up with the best treatment for patients.

Conclusion

Refusal to share the CT data of Covaxin reveals the extraordinarily opaque functioning of the CDSCO. The Clinical Trials Registry Database makes some information publicly available regarding sponsors, ethics committees, regulatory clearance status etc. but this is far from ideal. Data regarding serious adverse events associated with clinical trials and specific drugs, Good Clinical Practice inspections at trial sites and the number of inspections by the CDSCO and are not publicly available. This is unlike other jurisdictions, for instance, the US FDA website provides convenient public access to details of warning letters issued by their regulatory agencies with information regarding the specific violations and deficiencies found, dates of inspections and further action to be taken to remedy the situation. There will not be a time as urgent as the pandemic to push for this level of transparency in India as well to inspire the faith of the public in the healthcare system.

Image from here

Techno-friendly readers may have noticed that there is a sudden surge of interest in Non-Fungible Tokens (NFTs) across the internet and may have even purchased some for themselves. Some more luddite readers like myself may have still been grappling with this ‘blockchain thing’, and now find ourselves needing to know about NFTs as well! What exactly are they? Why the sudden interest in them? What implications do they have, especially on copyright law? Well, we’re pleased to bring our readers a set of posts which look into these questions. First we have an introductory post by Awani Kelkar, where the basics are set out in sort of a primer. Awani is a New York based lawyer with an interest in IP, TMT, and Art Law. After this, we will have a two part post by Adarsh that will carry on from Awani’s post and do a deep dive into some of the issues. (linked here and here)

Non-Fungible Tokens (NFT’s) and Copyright Law: A “Nifty” Dilemma

Awani Kelkar

On March 11, 2021, Mike Winkelmann a.k.a Beeple, a 40-year-old graphic designer made news by selling a digital collage, “Everydays: The First 5000 days” for slightly over $69 million. While this was not a record-breaking sales number, what sent ripples through the art world was what the buyer actually received at the close of this transaction- a digital file of the collage and Non-Fungible Tokens (NFT’s). Closer home, Prasad Bhatt, a Bangalore based illustrator known for his quirky caricatures, sold an NFT for his viral Leonardo Di Caprio GIF (titled “LDC Evolution”) for $3195.32.

In recent years, NFT’s are being linked to all types of creative works including music albums, tweets, photographs, and other digital media. Over the last 3 months, everyone from Grimes to to Kings of Leon to even the NBA has made use of this technology. It does not help that to know more about NFT’s, one must also have a basic understanding of complicated buzzwords such as blockchain and cryptocurrency. Today, let us try to understand NFT’s and their impact on a sphere inextricably interlinked with the entertainment world, copyright law.

What is an NFT?

An NFT is a unique digital asset (token) that is minted, recorded, and traded on blockchain technology and can be used to determine the authenticity and ownership of a particular asset or item (an artwork, a music album, a tweet, and possibly even tangible property).

Now, let us break this down and understand each concept individually.

1. Unique Nature– An NFT is unique because each token is coded in such a way that it contains distinctive data relating to the NFT’s creation, transaction history, and associated timestamps. Although the same asset can be associated with several NFT’s and those NFT’s might functionally be the same, they are still “non-fungible” i.e., unique and cannot be interchanged. In this respect, an NFT differs from real money or even cryptocurrency, all of which is homogenous and fungible.

2. Blockchain– This technology can be understood as an ever-growing permanent digital ledger which records transactions and sets of information relating to specific digital assets in a decentralized manner. Blockchain is seemingly immutable and secure because once data is entered, it cannot be altered or modified.

3. Ownership and Authenticity– An NFT can signify the authenticity and ownership of an asset because it is coded to contain exhaustive, publicly verifiable metadata and data about transaction history. Think of an NFT as the digital version of title papers that are recorded on a government register. It is important to note that the NFT itself cannot prove the genuineness of a creative work. It is possible that an NFT may get associated with a counterfeit or that the first ownership entry in blockchain is incorrect. Thus, we might still need to resort to traditional methods of authentication and appraisal of artwork.

4. Cryptocurrency- Decentralized digital currency that operates on blockchain technology and is designed to be secure. Currently, NFT’s are traded only in cryptocurrency (such as Ether), however, that may change soon.

Who can create an NFT for an artwork?

Under Section 14 of the Copyright Act of 1957, the copyright owner of a creative work owns a bundle of rights, including the right to make reproductions and adaptations. Upon purchase of an NFT that relates to a creative work, the buyer receives a copy of the underlying work (in JPEG, PDF, or MP4 format) and the NFT i.e., tokens get added to the buyer’s digital wallet. Since the sale of an NFT involves making a copy of the creative work and communicating it to the buyer, any unauthorized reproduction, distribution, or adaptation may amount to copyright infringement.

Unfortunately, there are increasing reports of artists finding their artworks on NFT trading websites. NFT marketplaces such as OpenSea are battling these concerns by including “Notice and Takedown” and “Repeat Infringer” policies in its Terms of Use.

What is the artist conveying when an NFT is sold?

It is important to understand the distinction between owning an NFT versus owning rights to the creative work associated with the NFT. After a sale, the buyer unequivocally owns the tokens that are placed in their digital wallet. However, ownership of the artwork itself is trickier. Although the seller is free to assign their copyright ownership in the creative work while selling an NFT, under Section 19, the digital contract covering the sale of NFT’s must expressly provide for such an assignment in signed writing. This is similar to how by default, an artist retains copyright ownership over a painting even if ownership of the tangible painting itself is conveyed to the buyer. Similarly, most NFT sales merely convey a license to use the digital copy of the creative work and the author or copyright holder retains their copyright.

What rights does the buyer of an NFT get?

As with all transactions, the rights of the buyer of an asset or item are decided by the governing sales contract. Thus, the governing digital contract underlying an NFT determines what rights a buyer has with respect to the digital copy of the creative work that they receive. While both parties are free to shape their contract as they deem fit, most NFT sales grant the buyer a non-exclusive license to use the digital copy of the creative work in a non-commercial manner.  When the latest Kings of Leon album was sold as an NFT, the Auction Terms stated that a buyer was granted a non-exclusive, non-transferable, royalty -free license to display album artwork and certain included merchandise in a personal and non-commercial manner. Alternatively, the NFT License Version 2.0 created by Dapper Labs for NFT sales relating to the wildly popular CryptoKitties, permits buyers to make commercial use provided that such use does not result in an earning above $100,000 in gross revenues each year. Most licenses do not grant the NFT buyer any rights to make modifications or derivative works.

As with any evolving industry and especially with one as technical as NFT’s, it is important for a buyer to analyze the digital contract and understand exactly what they are purchasing at the close of an NFT sale.

Can the public still experience the creative work?

Yes! NFT’s have ushered in a significant change to the art world by somewhat democratizing the actual experience related to a creative work. Thus, the $69 million sale of the Beeple collage does not restrict the general public from being able to view the artwork. We must remember that there is an artificial scarcity of only the NFT’s and not of the underlying creative work itself.

Although NFT’s are the newest craze, they is being widely compared to digital collectibles (Ex- Pokemon Cards or autographed items) which are valuable only if someone is willing to pay for them. Hence, the very creation of an NFT does not automatically give it value. NFT’s representing a Jeff Koons sculpture or a Banksy mural would presumably fetch a higher price than NFT’s associated with a lesser-known visual artist. But what it means for the future of copyright law is a question yet to be answered.

Image from here

(Editor’s note: If readers are unfamiliar with what Non-Fungible Tokens (NFTs) are and would like an explainer, you can refer to our earlier post by Awani Kelkar here. Adarsh’s posts go on to do a deep dive including into some of the questions raised there. You can also click here for Part 2 of Adarsh’s posts.)

Non-Fungible Tokens (NFT) Sales and Copyright Assignment: Part 1 (The Contract is the Key)

NFTs have been all the rage quite recently, and many would have come across the articles on some NFTs being been sold for huge money by way of auction (here, here). But what does this mean from a copyright law angle?

I want to restate a few fundamental principles of copyright law before I proceed any further:

1. An original work can be in any medium, including, for example, a digital piece of artwork or a new musical composition;
2. Barring some exceptions, by default, the author/creator of the work is the 1^st owner of the copyright in the work;
3. The copyright in the work is distinct from a copy of the copyrighted work; and
4. Even if a copy of the work can be accessed online publicly or even freely, does not imply waiver of the copyright over the work.

The lawyer’s understanding of NFTs

NFT is simply a digital mechanism to help authenticate ownership claims. Title/sale deeds for immovable properties is a good analogy. Typically, you acquire title over immovable property by way of a registered sale deed. That document (registered sale deed) records the owner. The sale deed/title deeds represent ownership over the property, which is why, for instance, a mortgage can be created by deposit of these title deeds with the bank. An NFT is similarly a digital token representing an ownership interest in an underlying asset, for instance, in a piece of digital art or music.

In the immovable property analogy, one has a registration authority that is tracking and authenticating this ownership. The authenticity of this NFT, in contrast, is due to its reliance on blockchain technology. Blockchain technology involves a ledger or database that is simultaneously present/shared across a P2P network. Again, a ‘tangible’ analogy could be a physically executed contract executed in multiple counterparts. All parties maintain the original versions of the contract. Any alleged tampering will not succeed unless all the counterparts with all the parties are simultaneously tampered with. That significantly reduces the chances of tampering. This is what blockchain achieves in the digital front. Since the ledger is distributed/maintained across multiple users (perhaps even thousands or millions) on a P2P network is almost impossible to falsify or illegally modify the records.

As the name implies, the tokens are non-fungible, i.e., unique. Money, for instance, is fungible – you can exchange an instrument for Rs 100 for two Rs. 50 instruments – the value is fixed; there is no one original or unique instrument. Instead, consider a Rs 100 instrument with Kapil Dev’s autograph on it (just my example) – this is unique and may have different values for different people. Of course, even this can be exchanged – I could trade this with, say, a Rs 100 instrument with Sachin Tendulkar’s autograph. For me, these values could be equivalent but maybe not for others. The point is that in the autograph example is that the item has unique properties.

There are several resources across the Internet on blockchain and NFTs, which provide an information overload on these concepts. As I understand, there are several NFT marketplaces for creators to use (here).

Are NFTs associated only with copyrighted works?

The answer is ‘no’. In principle, the underlying asset or item linked to the NFT need not be an original work on which copyright subsists; it could be a limited-edition collector’s item or anything else for that matter. Here is an example that Swaraj shared with me.

NGTs, digital works and copyright

These NFTs have come to the rescue of digital creators/artists because it overcomes the single most problematic issue in the digital realm. Digital works, once accessible, can be replicated/reproduce/copied and distributed at almost zero cost. The artist/creator may set up technological measures to prevent this, but this may create business issues for upcoming creators/artists, and circumvention and policing have always been an issue.

This problem is easily solved with NFTs the original work can be identified by associating it with an NFT. The other copies of the work floating around will not be related to the NFT. If I own the NFT for artwork, I can proclaim to hold the authentic/original of the art. I am sure people can relate to the real-world analogy to masterpieces.

Purchase of NFTs = copyright assignment or license?

Some claim that the purchaser of the NFT is simply a transfer of ownership in the NFT and nothing more; there is no copyright assignment or license. Here is one such resource, and here is another.

In my opinion, however, it depends! As I will explain below, I am unable to provide a definitive answer at present, but the current trend seems to be pointing to no copyright terms.

Before I share my view, please note my two reasonable assumptions:

1. There is copyright subsisting in the underlying work/digital asset.
2. The owner of the copyright has created the NFT

If these assumptions apply, in my view, the answer simply depends on the contract. After going through the websites of a few of the NFT marketplaces, it appears they all work similarly: the artist/creator ‘mints’ the work into an NFT, which is a reference to creating a unique file on the blockchain. This NFT will include a smart contract as well. When the sale occurs (say, after an auction), the NFT is sold under a contract with the consideration being paid from the buyer to the seller and the platform making a commission/service charge for this transaction.

Unfortunately, I could not locate a copy of the sale contracts in most of the big marketplaces unless I signed up and attempted to purchase something[1]. Dapper Labs, one of the first to employ NFTs, has put an open-source license that could be used for NFT sales: NFT License. If these terms as employed, the purchase of the NFT only gives you a limited license to do certain things with the underlying art. The album released by the Kings of Leon through NFT (here) was through YellowHeart. Their terms and conditions stipulate that the company owns the IP in the art, and only a limited license is given to the NFT purchaser. Similarly, Christie’s terms and conditions, which auctioned the now-famous “Everydays: the First 5000 days” for more than USD 69 million, specifies that all lots are sold without any copyright license or assignment.

I am uncertain whether all NFTs are being sold under similar terms. It is possible for the smart contract associated with the NFT to expressly and clearly stipulate that the transaction shall amount to an assignment of the copyright in the underlying work. Nothing in Indian law, for instance, precludes such an assignment agreement. If that is so, the transaction would be a copyright assignment in the underlying asset (e.g., the digital art/music etc.). Or depending on the actual terms, it could be a copyright license, or it could just be a sale of the copyrighted article without any license or assignment of the underlying copyright.

However, likely, this digital space is also being built on existing real-world commercial practice: what is auctioned is only the one original/authentic ‘copy’ without an assignment of, or a license to, the copyright itself. My best guess is that the contract would make this explicit, as seen in the examples above – it would be illogical not to have such a contractual term while valuing the NFTs to have such high values.

I observed an interesting point based on my visit to some of these NFT marketplaces. The creator/author is entitled to set up a recurring royalty term on future downstream sales by the purchasers. Readers may recollect the 2012 Amendments to the Indian Copyright Act, 1957, stipulating downstream royalty rights for lyricists/music composers. These NFTs gives the flexibility to implement this requirement with ease.

Immediately, one can recognise the value to content creators in the digital space, especially upcoming ones. Many hail this as revolutionary. But what if my two presumptions are incorrect? Are there other problems?….to be continued in Part-II.

[1] I would be keen to see this contract if someone has had a chance to try this out; I could not register myself from India with most of the popular global crypto-wallets and the crypto-wallet I did register from India was not being recognized by many of the NFT marketplaces.

Click here to view Part 2 of this post.