We’re pleased to bring to you a guest post by Abhijay Srekanth, discussing a Chinese decision on copyrightability of a musical water fountain show and analysing whether the courts’ approach therein is compatible with Indian copyright law. Abhijay is a 4th law student at Jindal Global Law School, Sonipat.

Copyrighting Musical Fountains: An Analysis of China’s Approach to Dynamic Artworks

Abhijay Srekanth

A musical water fountain with colourful lighting (image from here)

The strict rules of copyright law have been criticised for not being able to account for emerging and dynamic forms of art. Public art displays, in particular, have had a tenuous relationship with copyright protection, the latter having failed on numerous occasions to recognise an artwork as protectable. The decision of the Chinese courts in Beijing Zhongke Shuijing Technology Co., Ltd. v. Lakeside Management Office of Hangzhou West Lake Scenic Area and Ors. is a breath of fresh air in the way it allows for a fountain-show to be considered as a copyrightable artwork. This post will briefly go over the court’s decision and analyse whether such an approach is compatible with Indian copyright law.

The Chinese Position

Beijing Zhongke Shuijing Technology Co. claimed to own a copyright over a fountain show it arranged to the music “Beauty Overthrowing States and Cities” and “Streets Where Wind Lives” at the International Horticultural Exposition Music Fountain. It alleged that Beijing Zhongke Hengye Zhongzi Technology Co. had plagiarised its arrangement and played it at the West Lake Musical Fountain (Hangzhou), thereby violating its copyright. The question that, therefore, emerged was whether a fountain-show was copyrightable.

The appellate court, inter alia, ruled that a musical fountain show would be copyrightable as a ‘fine-artwork’. Under Article 2 of the Implementing Regulation of Copyright Law of the Republic of China (hereinafter, ‘Implementing Regulation’), a ‘work’ is defined as “original intellectual creations in the literary, artistic and scientific domain, insofar as they are capable of being reproduced in a certain tangible form”. A work can be copyrighted if it meets four factors: (i) it is an expression, (ii) it is original, (iii) it is fixed (though this requirement may not apply strictly to all works), and (iv) that it can be replicated in some tangible form. On an evaluation of the water-fountain, the Court noted that the particular patterns of spray accompanying music and light were unique enough to be considered an original expression. In dealing with replication, the Court examined the infrastructure that enabled the fountain and held that the mechanical infrastructure and accompanying software when utilised by the fountain designer would produce the same show, thereby replicating the fountain at every instance resulting in its general protectability as a ‘work’.

When tasked with identifying the nature of a fountain-show work, the Court on applying ‘common sense’ deemed it fit to exclude the show from the ambit of a dramatic work or a performance. It then noted that the work was dynamic and could be considered a cinematographic or a similar work related to filming. This theory was immediately disregarded as a cinematograph requires ‘filming on a medium’ and the continuous spraying of water by a fountain hardly fits this criterion. The next question that arose was whether the complex computer code that helped enable the timing and synchronisation of water with music and light would give rise to a computer-code copyright. This too was abandoned as only the code and not its function (the resulting spraying of water in time with music and light) would be protectable, and the code was not argued to have been infringed.

The Court then finally examined whether the fountain show as a composite aesthetic experience would constitute an artistic work. Article 4(7) of the Implementation Regulation defines an artistic work as “means two- or three-dimensional works of the plastic arts created in lines, colours or other media which impart aesthetic effect, such as paintings, works of calligraphy and sculptures”. The spray was not random and was in-fact carefully designed to best complement the accompanying light and sound with height and ferocity of spray varying with the music’s volume and pitch. The show in its entirety contributed to a sense of aesthetic fulfillment in a similar way that conventional art does.

The Implementation Regulation’s recognition of dynamic art pieces as art was an all together different issue. In dealing with what is effectively an interpretative exercise, the Court adopted a model appreciation of the evolution of art. The illustrations, like those in its Indian counterpart, are largely static works. However, the Court held that in the absence of a strict exclusion of dynamic works or a duration requirement, expanding the scope of artistic works to include a dynamic artwork was not forbidden. It noted that the purpose of copyright law is to encourage the development of artistic, literary, and scientific works in order to culturally and spiritually enrich the public. The advent of technology has led to the development of novel mediums which in turn lead to the creation of artworks with unimaginable compositions, forms, colours, and styles. A literal interpretation based on the examples in Article 4 would not only result in artists being disincentivised from moving beyond anachronistic conceptions of art but run contrary to the very purpose of copyright.

Artistic Works under India’s Copyright Act

Section 2(a)(ii) of India’s Copyright Act, 1957 broadly defines an artwork as a painting, drawing, sculpture, photograph, engraving, work of architecture or any work of artistic craftsmanship. The open-ended definition of artwork allows for the legal regime to extend copyright protection to new forms of expression, contingent on such a work meeting the originality requirement. Its applicability to dynamic art forms like a fountain show is, however, uncertain. On an application of the ejusdem generis rule, artistic works defined under section 2(a)(ii) are mostly static works, though varying in composition and dimensions. The chassis of a fountain if original enough could possibly be protected as an artistic work. The problem that arises in conceptualising a show as an ‘artistic work’ is that as a dynamic work subject to environmental conditions, a fountain-show may not necessarily meet the ‘fixation requirement’.

Fixation Requirement and Art Works

The fixation requirement for a work to be present in a fixed medium is a mechanism through which the Copyright Act seeks to ensure a work is an expression and not just an idea. The Indian Act provides for an inclusive list of artworks that warrant a copyright but fails to specify a ‘fixation requirement’ within the text of the law, as opposed to the explicit fixation requirement within section 2(h) for dramatic works. That being said, the Copyright Manual for Artistic Works issued by the Department of Industrial Policy and Promotion defines an artistic work as “any work which is an original creation of an author or an owner fixed in a tangible form, is capable of being entered into the Register of Copyrights, irrespective of the fact that whether such work possess any artistic quality or not.” (emphasis supplied).

Not all jurisdictions approach the fixation requirement as flexibly as China. An example is the approach taken to applying the fixation requirement to artworks by the Seventh Circuit Court of the United States’ in its decision in Chapman Kelly v. Chicago Park District. The Court was tasked with examining the copyrightability of a massive flower arrangement. The Court noted that the flowers that made up the sculpture were transient, i.e., their colour and shape would change in time, leading to the entirety of the work itself becoming transient. Such a work would therefore not be tangibly fixed and could not be copyrighted. On an application of Kelly, one could argue that components of the fountain-show such as the music were definitely fixated in as much as the fountain show continued to function. However, the varying light streams and dynamic spray patterns of water would not be likely to be considered fixated as to warrant copyright protection.

Concluding Remarks

The Chinese judgement does wonders in its appreciation for newly emerging forms of art and the way in which it attempts to accommodate the same within the existing legal regime. Interestingly enough, Article 4(7)’s definition of an artwork does not possess a provision that would anticipate ‘other artworks’ as section 2(a)(ii) of India’s Copyright Act. The Indian Act would therefore have no issue accommodating a fountain-show or any similarly dynamic artwork except for a ‘fixation’ requirement in the Copyright manual. Criticisms of the fixation requirement aside for a moment, the purpose of the requirement is to separate idea from expression. The replicability requirement under the Chinese Act in many ways meets the same purpose- the operations team is able to recreate the same show each time, ensuring that any protection is for a singular dynamic work and not the concept of a fountain show. In the absence of a strict statutory fixation requirement, copyright authorities should adopt an expansionary approach with the caveat that works meet the original-expression requirement.

We’re pleased to inform you that the National Law School of India University (NLSIU), Bangalore has announced two PhD scholarships on public health and the law, supported by the Thakur Foundation. For details, please see the announcement below.

NLSIU announces the Thakur Foundation PhD Scholarships in Public Health & the Law

Logo of NLSIU, Bangalore

National Law School of India University is delighted to announce a new doctoral scholarship programme, the Thakur Foundation Scholarships in Public Health & the Law. The programme is supported by the Thakur Foundation, an organisation investing in capacity building for an empowered society through participative, socially-just governance.

In 2020-21, the COVID pandemic has generated acute awareness of the systematic underinvestment in the public health sector in India. The success of public health interventions rests on multiple factors including socio-economic considerations, training and capacity of public health cadre, access to reliable information, and the regulatory ecosystem of drugs and medical professionals. By supporting doctoral research in this area, NLSIU seeks to strengthen our understanding of the role of law and public institutions in delivering health services. Through this research we hope to address issues which lie at the interface of law and public health while developing research capacities of early career researchers. The scholarship will be offered to two students for the entire duration of their doctoral studies over a period of three years.

We invite candidates interested in topics of public health and the law to apply for this Scholarship through the 2021 NLSIU PhD application process. Application deadlines for 2021 will be announced shortly.

Eligible candidates may choose their research topic and design a proposal. Possible research directions include:

• Public Health and the Regulation of Speech – the issue of misleading information in the advertisement of health-related products and increasing misinformation on public health issues, raising the question of how and to what extent, the state can regulate speech impacting public health in India under Article 19 of the Constitution.
• Judicial review of regulatory decisions in the public health context – examining the extent of judicial review of Government’s decision to prohibit drugs that may lack therapeutic justification or which may be dangerous. Recent cases raise a crucial question of the extent to which the judiciary can review decisions by specialist regulators. What should be the theoretical framework for judicial review in such cases?
• The Right to Medicine & Judicial Activism in the context of Rare Diseases & Experimental Medicine – examining recent High Court decisions interpreting the ‘right to health’ to direct the government to provide access to medicine, including medicine with insufficient clinical trial data. Research would query the extent to which citizens can claim the right to access experimental medicine lacking adequate clinical data, and whether judges can override specialist regulators in such cases.
• Public Health and Federalism in India – examining public health decision-making from the perspective of constitutional theory. Can there be a single unifying theory on the issue of public health and federalism? If yes, what will be the contours of such a theory?
• Regulation of the medical professions – empirical research on the two regulatory mechanisms governing the medical profession: through consumer and criminal courts, and through self-regulation bodies like the erstwhile Medical Council of India. Questions arise on the efficiencies of these two different regulatory mechanisms and the ‘quality of regulation’.
• The ‘Right to Health’, discrimination and insurance policies – the extent to which insurance companies can discriminate against potential customers on the basis of their genetic disorders or other pre-existing medical conditions, especially government owned insurance companies.
• Epidemics and the law – the need to update the antique Epidemics Act, 1897, keeping in mind issues ranging from questions of liberty to federalism to equitable access to medicines and vaccines.
• Regulation of Indian medicine – the extent to which practitioners of traditional Indian medicine can practice modern medicine, with variation in state laws and recent decisions by the Central Council for Indian Medicine (CCIM), allowing practitioners of Indian medicine, recognized under the Indian Medicine Central Council Act, 1970 to perform 58 surgical procedures.

Supreme Court of India

After being heavily criticized for taking matters into its own hands by transferring matters related to the Covid-19 crisis from High Courts, the Supreme Court had its first hearing in the suo motu case on 30th April. A three-judge bench consisting of Justices DY Chandrachud, L Nageswara Rao and Ravindra Bhat looked into a wide variety of issues such as Oxygen & Covid drugs shortage, (the lack of) equitable pricing of vaccines, protection of health workers, possibility of invoking compulsory licenses and clampdown on free speech on social media platforms, resolving to issue interim orders for the time being. While the order revealing the definitive directions that shall be binding is yet to be released, during the hearing, the apex court has raised some extremely pertinent questions on India’s current vaccine and drug policies.

Equitable Pricing of Vaccines

The central government is set to procure 50% of the vaccines, while the remaining 50% would be procured by the state governments. This is a little strange considering both sets of procurements will ultimately be administered to the public (barring union territories and exports). Recently it was announced that Covishield, i.e., the AstraZeneca vaccine manufactured by Serum Institute, would be sold to state governments at INR 400, while it is currently priced at INR 150 for the central government. After severe backlash, Serum Institute slashed the state government price to INR 300. It later announced that the INR 150 price was for the initial 100 million doses only, and the price will soon increase for central government procurement as well – the Health Minister, however, contradicted this, creating massive confusion. Similarly, Bharat Biotech’s Covaxin, which is publicly funded and developed in India, is being sold at INR 150 to the central government while states will be charged INR 600 (See here for details on vaccine prices). This differential pricing contributes to the already confounding mystery that is Covaxin’s IP ownership (see here and here).

The Supreme Court thus asked the question all of India has been asking: why this difference? It questioned why the Central government wasn’t procuring all of the vaccines and distributing it equitably among states, similar to the National Vaccine Policy, considering it was in the best position to do so. The bench drew attention to Rules 19 and 20 of the Drugs Price Control Order. These rules empower the government to monitor prices and set ceiling prices for drugs in extraordinary circumstances in public interest. It was also pointed out that AstraZeneca shots have been priced at much lower prices in other countries. Notably, Serum Institute has sold vaccines to Covax Facility at a per dose price of INR 225 and to Bangladesh at INR 300 while the UK-manufactured AstraZeneca is being sold in UK at INR 225, EU at INR 160,  US at INR 300 (approximate prices, converted from USD).

However, the bench refrained from issuing any specific directions in this regard and merely asked the central government to look into the matter.

Covid Medication and Compulsory Licensing

An important development was the bench’s reference to the Doha Declaration on TRIPS and Sections 92 and 100 of the Patents Act, 1970, asking the government to consider compulsory licensing for Covid drugs with sunset clauses. It recommended that these steps be considered in order to ramp up manufacturing as its affidavit showed 10 PSUs that have the requisite capacity. In fact, the Patents Act contains a number of provisions relating to CLs, as explained by Swaraj and Varsha here, and the pressure to invoke these is mounting day by day. Delhi HC had recommended grant of CL recently. Earlier, the Maharashtra government too had written to the centre, asking it to invoke a CL on remdesivir for generic manufacture.

Packets of Remdesivir (image from here)

Once treated as a remote, exceptional provision, CLs have come alive in the international consciousness since the beginning of the pandemic. Several countries have made arrangements for CLs on Covid medication (see Swaraj and Varsha’s post). After years of chastising countries for such measures including India’s Nexavar CL in 2013, the US and other developed countries are now supporting CLs and other TRIPS flexibilities as appropriate and adequate measures to tackle the Covid crisis (as opposed to the divisive TRIPS waiver proposal). Despite criticizing Hungary earlier for its manner of granting a CL on remdesivir, the US in its Annual Special 301 Report, in a welcome change, recognises CLs as a tool to handle the ongoing crisis. In March, a Canadian company sought a CL to manufacture Johnson & Johnson’s single-dose vaccine. If granted, it will become the first CL granted on a Covid vaccine. Amidst these international developments and domestic pressure, it remains to be seen whether the government decides to take the leap, be it for drugs or vaccines.

The Supreme Court also touched upon issues relating to Covid drug procurement through importation. Like Pankhuri discussed here, the apex court too, pointed towards Section 107A, highlighting that since Bangladesh, being an LDC, was not obliged to protect product patents, importing remdesivir from generic manufacturers operating there could be considered. The discussion however did not throw any light on the possible problems that may be associated with this option that Pankhuri had underscored.

Despite this much needed questioning of drug and vaccine manufacturing, the court unfortunately did not dig deep into the issue at the heart of the manufacturing hurdles – Covaxin’s IP ownership status. While Covaxin’s manufacturing has now been expanded to multiple facilities to a total of 700 million doses per year and the government has permitted Haffkine Institute to manufacture it as well, it is unclear why IP rights on the same have not been lifted so as to properly breach the demand-supply chasm. Given vaccination has now been increased to the 18-45 year age group, it is only a matter of time before supply runs out.

Clampdown on Free Speech on Social Media Platforms

As the devastating consequences of the second wave unfold all over India, citizens have taken to social media including platforms like Twitter, Instagram and Facebook to seek help procuring oxygen, beds, remdesivir and plasma for their family members as well as helping each other by passing around information regarding supply. Citizens as well as political leaders severely denounced the government, with calls for the Prime Minister’s resignation gaining traction too. As a result, the government ordered Twitter to take down several tweets that criticized the government’s handling of the public health crisis. Facebook too happened to block a hashtag temporarily, subsequently restoring it after backlash. In Amethi, UP, a man was arrested for creating fear among people through spread of misinformation for asking for oxygen cylinders online.

During the hearing, the Supreme Court specifically addressed this issue and stated that the use of social media by citizens to voice their grievances during a crisis can in no way be termed misinformation. It threatened to treat any clampdown on free exchange of information as contempt of court.

Concluding thoughts

Without a proper application followed by the hearing and grant of compulsory license; or an announcement by the government revealing the status of IP in Covaxin, there is no conclusive progress. The Supreme Court has mostly touched upon some of the important issues, without delving deep or issuing even interim orders (so far). The next hearing is scheduled on 10th May. Meanwhile, the state high courts continue to address local problems such as regulation of election rallies and oxygen supply to hospitals. While this SC hearing would undoubtedly increase the pressure on the central government, concrete steps remain to be taken so as to bring out actual results in the form of increased manufacture and supply of vaccines and drugs.

Once the interim order is out, we will be updating our readers on the Supreme Court’s directions. In the next few days, we will also be coming out with suggestions on the overall situation and what can be done going forward from here.

Topical Highlight

Supreme Court Weighs in on the Crisis: Vaccine Price Equity, Compulsory Licensing and Free Speech Online

In this post, Adyasha analyses the recent proceedings in the suo motu case taken up by the Supreme Court regarding matters concerning the Covid-19 pandemic. She first discusses the concerns regarding the pricing of vaccines and notes that the court asked the right questions from the Central Government as to the differential pricing for the Centre and other entities, deviation from the National Vaccine Policy, and powers under the Drugs Price Control Order. No specific directions were, however, given in this regard. The court also asked the government to consider compulsory licensing mechanisms which are being debated globally, and have received a comparatively favourable stance from its traditional opposers such as the US. The court also raised the possibility of drug procurement from other countries but did not touch upon possible accompanying issues. Adyasha, however, notes that the court failed to raise the key issue of Covaxin’s IP status which impairs production expansion. She then notes the court’s protection of the use of social media by citizens to voice their grievances. She concludes by noting that no conclusive progress has been made so far by the case as issues have been touched only on the surface.

Thematic Highlight

Copyrighting Musical Fountains: An Analysis of China’s Approach to Dynamic Artworks

Image from here

In this guest post, Abhijay a Chinese decision on copyrightability of a musical water fountain show and analyses whether the courts’ approach therein is compatible with Indian copyright law. He first summarises the decision highlighting the court’s novel interpretation to consider the show as an artistic work. He then compares it with the Indian position and notes that it might be difficult for such a show to be considered artistic work in India as it might not meet the fixation requirement which while is specified in the Copyright Manual (though not found in the Copyright Act). He then notes that the Chinese position on fixation is much more flexible as against the US position where it would be difficult to gain protection for a similar show. He concludes by noting that in the absence of a fixation requirement specified in the Act, a liberal approach should be taken towards artistic works as long as the works meet the original-expression requirement.

Other Posts

NLSIU Announces Thakur Foundation PhD Scholarships in Public Health & the Law

We informed our readers that the National Law School of India University (NLSIU), Bangalore has announced two PhD scholarships on public health and the law, supported by the Thakur Foundation. The scholarship will be offered to two students for the entire duration of their doctoral studies over a period of three years. Further details including the possible research directions and the application process are mentioned in the post.

A Guide on Fair Use Cases in India

Image from here

In this post, Pankhuri brought out the initial instalment of a compilation of all the fair use decisions pronounced by India’s high courts and the Supreme Court under the Copyright Act, 1957 till date. The compilation lists the relevant legal provisions, case details and the main points of court’s reasoning in respect of each type of use. This instalment compiles the decisions relating to education and research. Within this category, the cases have been arranged according to the broad type of use, such as course packs, guide books, question papers etc. The compilation will be updated periodically and the entire compilation should hopefully be released soon.

Decisions from Indian Courts

• Image from here

  The Delhi High Court in Tata Sons Private Limited v. Dinesh Kumar, granted an ex-parte interim injunction restraining the defendant from using any marks deceptively similar to the plaintiff’s well-known registered mark ‘TATA’. [April 28, 2021]

• The Delhi High Court in Sun Pharmaceutical Industries Ltd. v. Nukind Healthcare P. Ltd., granted an ex-parte interim injunction restraining the defendant dealing in medicinal preparations/health supplements under their ‘NUVITAL’ mark or any mark deceptively similar to the plaintiff’s registered ‘REVITAL’ mark. [April 28, 2021]

Other News from around the Country

• MSD, the Indian unit of US-based drug maker Merck has entered into voluntary licensing agreements with five Indian drugmakers for molnupiravir, an experimental drug that is currently tested to treat Covid-19 infections.
• Jan Swasthya Abhiyan, a Mumbai based network of organisations and individuals, has filed an application in the ongoing suo motu case concerning Covid-19 before the Supreme Court seeking, inter alia, directions to invoke powers under Sections 100 and 92 of the Patent Act for government use or compulsory licensing of the drugs Remdesivir, Favipiravir and Tocilizumab.

• Image from here

  A piece in Scroll discusses the opacity behind the ownership of IP rights over Covaxin.

• A piece in News18 argues that relaxation of patent rights in Covaxin might also be in the interest of Bharat Biotech.
• Producer Anurag Augustus has approached the Kerala High Court for the cancellation of screenwriter Jinu Vargheese Abraham’s copyright in the script of the movie Kaduva, claiming that the script was written under a contract of personal service.
• Actor Sakshi Malik settled her dispute with the producer of the Telugu Film, V, whom she had sued for illicit use of her picture in the movie for referring to a “female escort or a commercial sex worker”.

News from around the World

• Brazil’s senate has approved a bill to suspend patent protection for Covid-19 vaccines, tests and medications amidst the Covid-19 pandemic. The bill has now been sent to the lower house of the Congress for its consideration.
• Australian mining magnate Clive Palmer has been ordered to pay A$1.5 million in damages to Universal Music for illegally using the latter’s copyright over Twisted Sister’s 1984 hit song “We’re Not Gonna Take It” in political advertising.
• A piece in LiveMint argues that WTO patent waivers would not be of much help in tackling the pandemic.

We’re pleased to inform you that the DPIIT IPR Chair at NLU Delhi is organising an online panel discussion on ‘IP and the Pandemic’ on May 5, 2021. For details, please see the announcement below:

NLU Delhi’s Online Panel Discussion on ‘IP and the Pandemic’

May 5, 2021 | 7:30 PM IST

The pandemic has raised several crucial issues concerning the role of Intellectual Property (IP) in the context of innovation and access to Covid-19 vaccines and pharmaceuticals. India and the world are in need of constructive solutions at this critical stage. The ‘IP and the Pandemic’ webinar aims to bring you the latest and the most cutting-edge issues through a panel discussion among eminent experts.

Organiser

DPIIT IPR Chair, National Law University Delhi

Panel Discussion

The panel discussion aims to discuss the following issues:

a) What is the IP & technological landscape of Covid-19 vaccines and drugs?

b) What is the situation on access to Covid-19 technologies in India?

c) Is IP a barrier in scaling up production when technology licenses are available?

d) With India indicating amending the TRIPS waiver proposal, what will it look like?

e) What are India’s policy options to achieve vaccine equity if prices remain a concern & scaling up remains a challenge?

Inaugural Remarks

Prof. (Dr.) Srikrishna Deva Rao, Vice Chancellor, NLU
Delhi

Panelists

We have invited the following panelists from the industry who will provide their own perspectives:

Jayashree Watal (Honorary Professor, NLU Delhi)

K. M. Gopakumar (Senior Legal Advisor, TWN)

Murali Neelakantan (Principal Lawyer at Amicus)

Prashant Reddy T. (Independent Lawyer)

Moderator: Dr. Yogesh Pai (Assistant Professor, NLU Delhi)

Eligibility

Everybody (faculties, students, practitioners, researchers etc.)

Date & Time

07:30 pm IST on May 05, 2021

Location

Live on Youtube

Access Link

https://www.youtube.com/watch?v=EosNBQvnuVk

Registration 

No prior registration is required. Participation is free.

Contact

ipr.chair@nludelhi.ac.in

Representative image of Covid vaccine (from here)

A couple of days ago, I wrote about the Supreme Court’s first hearing in the suo motu Covid-19 case that took place on 30th April, discussing the questions raised by the bench. The interim order resulting from this hearing is now out.

The order discusses the implementation of the Disaster Management Act, medical infrastructure, oxygen supply, vaccines, compulsory licensing, and supply of essential drugs. The court has examined the existing government policy on these issues and then asked questions and/or made its recommendations. At the outset, the order clarifies that its objective is merely to facilitate a dialogue between relevant stakeholders and governments, so as to ensure that the policy approach is grounded in the constitutional human rights framework. Thus, it does not constitute binding instructions on what is the executive’s domain. It does however give the Central government much to ‘consider’ before the next hearing. This post will go over points not covered in my earlier post.

Vaccine Procurement Split between Centre and States

The Central Government clarified that two vaccination drives, constituting 50% of vaccines each, were to take place, wherein it would procure vaccines and provide for free of cost inoculation of identified groups including frontline workers, healthcare workers, and vulnerable persons aged 45 years and above; while the state governments along with private hospitals would negotiate and purchase vaccines to carry out a separate drive for people belonging to the 18-44 year age group.

The court expressed its reservations regarding this, pointing out that even the 18-44 age group will include persons suffering from vulnerabilities. Moreover, leaving each state to directly negotiate logistical arrangements with the manufacturers would lead to chaos and uncertainty (para 34-36). The court also sought clarifications on a few questions:

• Addressing the problem of registration of those individuals between 18-44 years who do not have access to digital resources
• Whether walk-in vaccination facilities for those above 45 would continue free of cost
• Outreach of vaccination facilities to rural areas and underprivileged sections of society
• Possibility of Central government procuring 100% of vaccines and equitably distributing among states
• Vaccination plan showing current and projected availability of stocks; timeline for achieving immunization

Constitutionality of Splitting the Procurement Process

As explained in my previous post, it has been revealed that both Covaxin and Covishield manufacturers will be charging a higher price from state governments than what they’ve been receiving from the Central government. Upon being questioned on this, the Central government explained that the idea behind allowing direct price negotiations between state governments and private manufacturers was to create a competitive market where private vaccine production is incentivized, resulting in ‘market driven affordable prices.’

The court rightly pointed out that this will be seriously detrimental to the end users of the vaccine, i.e., the 18-44 age group, as their ability to get vaccinated would depend on their state government’s financial wherewithal and policy decisions, leading to disparities across the nation. This group consists of several persons from marginalized communities, who would be disadvantaged as against those above 45 years who may receive free vaccination. Despite not rendering a conclusive determination, the court cautioned that such discriminatory treatment of similarly circumstanced classes of citizens would not only fall foul of Article 14, but is also prima facie inconsistent with right to health under Article 21. The court also asked the government to submit any studies relied on to adopt the market-incentive based approach for vaccine procurement and if such a study was relevant during a pandemic.

Aside from the constitutional tensions flagged by the court, this direct negotiations based competitive-market approach for vaccine procurement, which also allows negotiations between private hospitals and manufacturers, is eerily reminiscent of the flurry of bilateral deals between (mostly) developed countries and vaccine manufacturers that took place in late 2020. The ability of countries to enter into such bilateral deals was(is) determined by their financial strength, leaving millions of people in poorer countries, empty-handed. The great irony is that this kind of competitive market approach to Covid vaccination, which is a public health good due to the pandemic, is exactly what India is opposing through its TRIPS Waiver proposal before the WTO. Knowing that the quantity of vaccines is bottle necked, and the need is urgent, how could a policy of this sort be followed within the country, potentially pitting state governments against each other?

The court then went on to seek the following information:

• The complete details of any funding, infrastructural or other aid provided to Bharat Biotech and Serum Institute in the past,
• whether any of these aids were factored in to allow benefits on the procurement prices to the central government, and
• if so, why the same benefits were being denied to state governments.
• Lastly, full extent of direct and indirect grant/aid provided for research, development and manufacture of all existing vaccines and future vaccines that it proposes to authorize.

The court falls short of asking for the IP ownership details on Covaxin, or the relevant terms of Serum Institute’s agreement with the central government. However, if the demanded information is brought into public domain, it would help understand the extent of public funding in these vaccines, and thereby assess the legitimacy of the vaccine prices.

A chart showing rising Covid cases in India in 2020-2021 (image from here)

Compulsory Licensing

As discussed during the hearing, the order goes on to advise the government to consider compulsory licensing of drugs and vaccines, and other drugs as an option. It recounts the legal framework of CLs for patents in India, and went through the TRIPS regime, focusing on the Doha Declaration and the objectives and principles outlined in Articles 7 and 8 of TRIPS which permit the use of flexibilities to protect public health (paras 42-46, 55).

Supply of Essential Drugs

The Central government insisted that Remdesivir was the only drug useful for treating those infected with Covid. While Tociluzumab had more effective substitutes available in India, Favipiravir’s use on Covid patients was not sufficiently peer reviewed (paras 48-49).Regarding Remdesivir, in addition to the existing licensing agreements between the patentee Gilead and 7 Indian companies, the government is looking at the possibility of importing the same (para 47(x)). The court thus recommended that:

• Central government must provide to it the actual rates of production and demand of all essential drugs, and its plans for of rationing and equitable distribution
• Imposing ceiling prices for sale of these drugs per the Drugs Price Control Order
• Consider importing Remdesivir and other drugs, ramping up domestic production or issuing of CLs under Patents Act, 1970
• Consider setting up a special team to identify and prosecute black market sale of oxygen and essential drugs

Hospital Admission Policy

Recognising that gaining admission into hospitals was one of the greatest challenges faced by Covid patients, the court noted a few important policy revisions to be considered by the government:

• With testing facilities overwhelmed, results taking long and the new virus strain not being detected in RT-PCR, test results shouldn’t be compulsory for hospital admission
• No denial of admission due to absence of IP proof or residence in the same city
• No denial of admission due to arbitrary factors like not arriving on 108 ambulances
• Central government to formulate hospitalization policy based on need of patients

Clampdown on Information

The strictest directions issued were with regard to attack on free speech in social media among citizens sharing their grievances relating to the pandemic, which would be treated as contempt of court. The court emphasized the importance of free flow of information in society to prevent public tragedies such as the Maharashtra drought of 1973. It also stated that the sharing of information would help embed the pandemic in collective public memory and aid future generations (pg 54).

Conclusion

Despite being issued at an interim stage, the order asks several pertinent questions regarding government policy which, if addressed immediately, would help prevent further deterioration of the national crisis. The vaccine procurement and price policy in particular can have extremely harsh consequences for citizens in terms of unaffordable prices and state-to-state disparity. It is necessary that it be amended at the earliest. However, while the court does urge the government to ban ‘super spreader events’ and gatherings, it does not inquire into the issue of election rallies, Kumbh mela, and such processions which contributed to the skyrocketing surge of the second wave (para 68). It appears that the court is more concerned with the policy to be adopted from here on, but a stricter direction regarding public gatherings would have been helpful.

In an interesting development, Natco has approached the Controller of Patents for a Compulsory Licence under Section 92 of the Patents Act, for the drug Baricitinib. The 12 page application is available here. Baricitinib is generally used to treat diseases like rheumatoid arthritis and has been “reportedly approved” (as per the application) for such use in EU and India in 2017 and 2018 respectively. The application goes on to quote studies that indicate the Baricitinib in combination with Remdesivir is more effective for patients with Covid 19, as compared to Remdesivir alone, with possibly less side effects as well (see Para 20-23). The application then points to the US FDA’s recent grant of Emergency Use Authorization for Baricitinib in combination with Remdesivir as of 19.11.2020, and that the dosage tends to be 1 tablet a day for up to 14 days.

Natco was responsible for the first and only successful Compulsory License applicantion in India thus far, when they received one for Bayer’s Nexavar. The patent for Barcitinib is owned by Incyte Holdings Corporation, with a license to Eli Lilly, who markets it under name Olumiant. It is unclear whether Eli Lilly is the exclusive licensee or not.

This time however, Natco is not going the Section 84 route, but rather is taking the Section 92 route. This may be quite a strategic move, as rather than fighting it out with the patent owner/licensee, the S.92 route requires the Government to accept / reject the application based on the straightforward criteria of whether the patent in force is necessary in a circumstance of national emergency, extreme urgency or a case of public non-commercial use, including in public health crises such as epidemics. Needless to say, there is clearly an on-going emergency.

Natco relies on Form 27 data to show that Olumiant is not manufactured in India, that less than 9000 tablets were imported in 2019 and 2020, and that the average cost per tablet is approximately INR 3230. (A quick google search though, indicates that market prices may be cheaper than this – see here for instance, INR 21,000 for 28 tablets, which comes to about INR 750 per tablet) The current number of Covid-19 patients undergoing treatment, they point out, is around 34 lakhs and increasing, and that at best, Eli Lilly’s supply would meet the needs of only approximately 600 patients. And finally, they also point out that Baricitinib was mentioned by the Delhi High Court in the on-going Covid case, as one of the drugs which CLs should be discussed / considered for.

In terms of other formalities, Natco seems all set. They’ve stated that they’ve applied for and received emergency use authorisation from the DCGI on 29.04.2021, who has also recognised an unmet medical need. And that they’ve submitted bioequivalence studies that show bioequivalence to Olumiant. Natco also states that they’d applied for a voluntary license with the patent holder, but only received a response from its licensee, Eli Lilly, which supposedly asked for confidential information. For current purposes, Natco says they are willing to make the tablets available at prices between INR 15 per tablet, to INR 30 per tablet depending on the dosage, though they state that they will inform the Controller later as to the quantity that they can make available. This price also seems to include the 7% royalty on net profits that they’ve listed in their requested terms and conditions, and is significantly cheaper than both Natco’s stated figures of Eli Lilly’s product being INR 3000 per tablet, or the online link I mentioned above of INR 750 per tablet. Interestingly – these terms and conditions also state that preference is to be given to patients in economically weaker sections, government welfare schemes and in remoter areas of the country. Meanwhile, Natco has also filed an intervention application before the on-going Supreme Court suo moto writ petition.

As discussed on the blog in great detail, the Indian government has been asking for an IP Waiver at the WTO, with reports of a modified version of the waiver being placed for discussion soon. Both the Delhi High Court and the Supreme Court have pretty much told the Indian government that this is the time to consider compulsory licences. Prima facie – this seems like a solid case for a CL. Now it remains to be seen whether the executive will walk its talk.
(Important to keep in mind though – that while the waiver and CL may help in this case – the question of know-how, manufacturing capacity, trade secrets, etc still remain unanswered when it comes to vaccines. We’ll try to carry a more detailed post on those issues, soon).

A 20 ml vial of tocilizumab, marketed by Cipla (image from here)

This evening, the Delhi High Court passed an interim order issuing important directions on the shortage of the drug Tocilizumab in Delhi hospitals. The case arose from a petition by the brother of a Covid-19 patient, who had been prescribed a tocilizumab injection (Actemra 400g) by the doctor, but could not be administered the same due to the unavailability of the drug. Owing to the rapidly deteriorating condition of the patient, the petitioner had approached the court with the urgent plea. The petition, which was against the GNCTD, the Drug Controller of Delhi, Drugs Controller General of India and the Union of India through the Secretary, Department of Pharmaceuticals, also impleaded the manufacturer of tocilizumab – Roche Products (India) Pvt. Ltd.  While the GNCTD and the Central government assured the court that they would make efforts to provide the drug to the patient, the court passed certain important directions relating to the availability of the drug.

In dealing with the issue of the shortage of tocilizumab, the court considered at length the observations of the Supreme Court in the interim order released on 2nd May (discussed here and here), as well as that of the Division Bench of the Delhi High court in its 20th April order. It noted that the Apex court had asked the Central government to combat the shortage of drugs such as remdesivir and tocilizumab by considering the granting of compulsory licenses for Covid-19 drugs under the existing patent law framework. It had also recommended controlling the prices of these drugs by invoking Rules 19 and 20 of Drugs Price Control Order. Similarly, the Division Bench of Delhi High Court had ordered the Central government to reach out to the patent holders to immediately ramp up manufacturing at ‘war footing’, to encourage voluntary licenses, and if the same did not materialize, to consider the CL options available under the Patents Act, 1970.

Presently, the court concluded that there was a case of extreme shortage of tocilizumab, countrywide. Despite allocation of tocilizumab to states and UTs, which included 500 vials to Delhi, the same failed to meet the soaring demand (paras 12, 13). Noting, from the SC order, that the drug was not being manufactured in India and that adequate quantities were not available for purchase by even those who were willing to buy it, the court issued the following directions to the Central government, seeking information on (Para 14):

• The remaining stock of tocilizumab available for distribution in Delhi
• Details of entities to whom approvals have been granted for manufacturing, marketing, importing or selling of tocilizumab in India.
• The stock of tocilizumab so far consumed from the 500 vials allocated to Delhi, as well as if any remained.

From Roche, the court sought the following information, reproduced directly:

1. Whether immediate quantities of the drug Tocilizumab can be obtained from any of  the manufacturing units engaged in manufacture of the said drug,  and made available in India,  for the purpose of  administration  to Covid-19 patients in India?
2. The quantities of the drug Tocilizumab to be made available in India either through itself or through its licensee(s) in India on a monthly basis  for the next four months.
3. What is the total quantity of this drug – Tocilizumab, that has been imported/sold in India, since March 2020 – either by the company itself or through its licensee(s) or approved importer(s) in India.

Patent Working Information and Availability of Tocilizumab

It is clear from the discussions of all the courts concerned that there is a dire shortage of tocilizumab in India, owing to the absence of local manufacturing and low import quantities. It has been reported that a Hyderabad-based drugmaker Hetero Labs has sought permission from the CDSCO to manufacture tocilizumab in India – though the arrangement between Roche and Hetero for this purpose is not clear. At the moment, only Cipla Limited imports and markets tocilizumab in India and the same is not meeting the overwhelming needs of the 2nd wave of Covid-19 (para 48(i) of SC interim order). This information only came to light because it was specifically provided to the Supreme Court in the suo motu writ petition. However, details regarding quantum of invention manufactured/imported, licensees and sub-licensees, and information regarding public requirement being reasonably met was previously required as part of Form 27 disclosure. The same was however excluded by a recent amendment which Pankhuri critiques here. As she argues, these disclosure requirements support and facilitate the CL regime. In their absence, we are witnessing at present, a patented drug that is likely fit for a CL grant, except no application for it has been filed so far. This case forms an illustrative example for consideration as to whether the public and potential generic manufacturers should have to wait till a patentee/licensee is directed by a court – as Roche has been – to find out these important details regarding the working of a patent. In this case, the waiting seems to have had significant public health costs.

The Central government in its statement to the Supreme Court (para 48(ii) of SC interim order) had insisted that there were equal or better performing substitutes of tocilizumab that were domestically produced and available (an attempt to shirk off responsibility from making the drug available?). The reason tocilizumab was going out of stocks is because of the public perception that it is an imported drug. The Supreme Court had nevertheless asked the government to provide for the drug through import, licensed manufacturing or CL, and look into its pricing. With Delhi high court specifically lending support to this recommendation, it remains to be seen what course the Central government takes with regard to tocilizumab, or its Indian-manufactured substitutes.

(All this aside – readers may also want to check outthis article, which questions why many of these drugs are being prescribed in the first place).

Late last night, the new US Trade Representative Katherine Tai, announced that the Biden-Harris administration is now supporting the waiver of IP protections for Covid-19 Vaccines. The short statement is available here and I reproduce it in full below:

United States Trade Representative Katherine Tai today released a statement announcing the Biden-Harris Administration’s support for waiving intellectual property protections for COVID-19 vaccines.

“This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures.  The Administration believes strongly in intellectual property protections, but in service of ending this pandemic, supports the waiver of those protections for COVID-19 vaccines. We will actively participate in text-based negotiations at the World Trade Organization (WTO) needed to make that happen. Those negotiations will take time given the consensus-based nature of the institution and the complexity of the issues involved.

“The Administration’s aim is to get as many safe and effective vaccines to as many people as fast as possible.  As our vaccine supply for the American people is secured, the Administration will continue to ramp up its efforts – working with the private sector and all possible partners – to expand vaccine manufacturing and distribution.  It will also work to increase the raw materials needed to produce those vaccines.”

This is a remarkable turnaround from the US’ earlier position, as Praharsh has described in some of his earlier posts. This announcement also comes about a week after USTR held meetings with Pfizer and AstraZeneca on this issue. WTO members are currently in a 2 day meeting session discussing the TRIPS IP Waiver proposal by India and South Africa, after earlier efforts at reaching a consensus failed.

However, for now, one thing to be noted is that the statement above does not refer directly to the proposed TRIPS Waiver (See earlier posts here and here for a breakdown of the waiver). In fact, as readers will remember, the proposed TRIPS waiver is much wider than vaccines, so it is to be seen whether the US position is now only supporting IP waiver of the vaccines, or whether it is supporting the TRIPS IP Waiver proposal put forth by India and South Africa. If it is only of the vaccines – then a much larger issue of tech transfer, know-how, tacit knowledge, manufacturing capacity etc will still be a huge barrier to any meaningful progress on the vaccine front – unless the IP holders voluntarily share this knowledge. Forced technology transfer is another possibility but one that may not yield much result but will certainly be aggressively pushed back against. If on the other hand, the US is actually supporting India and South Africa’s IP Waiver proposal, then there may be more progress on production of covid treatment drugs and related necessary equipment, etc, even as the vaccines take time to slowly roll out.

Meanwhile, in what may be the result of some behind the scenes negotiations, India and South Africa have said that they will be modifying their initial proposal and will be submitting the revised version soon, perhaps with a sunset clause more explicitly mentioned. We will be putting out a more analytical post on these issues once there is some clarity on what the ‘text-based negotiations’ are that US is referring to. Meanwhile, I encourage readers to check out the very interesting panel discussion hosted by Yogesh Pai, NLU Delhi last night, that discussed several of these issues, just a few hours before this announcement (panel details here, video here,)

A vial of Covishield vaccine beside a syringe (image from here)

Recently, a Nanded-based pharmaceutical company, Cutis Biotech (‘Cutis’), had filed a passing off suit against Serum Institute of India (‘SII’) for the use of the mark ‘Covishield’. SII has been using the mark for the vaccines manufactured by it while Cutis has been using it for its products such as sanitisers and disinfectants. We had earlier informed our readers about the initial suit filed by Cutis in the Nanded District Court. The suit was subsequently filed in a Pune commercial court which ruled in favour of SII. The commercial court held that Cutis did not have sufficient goodwill and there was absence of any deception by SII’s use, and pointed out the important public interest in the vaccines. Aggrieved by this order, Cutis filed an appeal before the Bombay High Court which was rejected by the court. In this post, I shall analyse the Bombay High Court order in context of its analysis of passing off.

Passing Off

Both the parties in the case had applied for registration of the Covishield marks. However, since neither of them had obtained registration, the dispute was in the nature of a passing off claim. It allows a prior user to seek an injunction if its goodwill has been misappropriated. The classic trinity of the elements to be satisfied for a successful passing off claim are “reputation of goods, possibility of deception and likelihood of damages to the plaintiff” as laid down by the Supreme Court in cases such as Laxmikant V. Patel v. Chetanbhat Shah. I shall deal with each of these factors in order after addressing the court’s discussion on prior user.

Prior User

Cutis had filed its trademark application on April 29, 2020, for medicinal products while SII’s application was filed on June 6, 2020 for vaccines. Cutis claimed to have coined the term ‘Covishield’ for its pharma products on April 25, 2020, and to have received products such as sanitizers bearing the mark by May 30, 2020, and thereby making it the prior user of the mark. The court, however, found the evidence on this point to be insufficient. As recorded in the order, the evidence included , inter alia, an invoice bearing an entry of ‘Covishield’ without particulars, some post-September 2020 invoices prepared by Cutis itself with some having no names, a certificate of provisional registration, and documents regarding the change of premises and a tax audit. The order does not explicitly specify how documents other than invoices indicated use of the ‘Covishield’ mark. At the same time, it does not provide any specific reason while holding that it did not find “adequate details to establish a prima facie case”.

The court instead held that SII was a prior user. While coming to this holding it referred to inter-office communication at SII regarding purchasing of packaging material regarding ‘Covishield’ dating March 2020 and an endorsement of a printing house. It considered this issue with the broader context of SII’s statements regarding its large scale investment in Covid-19 vaccines which were public knowledge in March-April 2020. Notably, the use by the prior user has to be consistent and not intermittent. The court found SII’s use to be continuous by referring to the various permissions sought by it under different laws and the clinical trials conducted by it. It, however, does not refer to the timelines of the conduct of these trials.

The court seems to have adopted a seemingly contradictory stance in addressing the evidence of both parties. While looking at Cutis’ evidence it states it to be insufficient without providing any reasoning despite the existence of an invoice dating May 2020. Admittedly, it could be argued that this single invoice is not sufficient to show consistent use on part of Cutis, but the court does not explicitly note down this concern. On the other hand, for SII the court seems to have been fine with largely a one-time set of events involving a communication to print packaging material with the ‘Covishield’ mark in March 2020. There is no indication of any further use of the mark until the registration application in June 2020. The public knowledge of SII manufacturing a vaccine cannot itself be considered a ‘use’ of the ‘Covishield’ mark itself. As a hypothetical, what would the situation be if the ‘Covishield’ mark referred to for packaging would have been used by SII for say a chain of sanitizers, and a different term coined for the vaccine? The use of a mark requires it to be associated with a given product which was not shown until the vaccine was officially termed as ‘Covishield’. It is, thus, unclear as to which of the parties should have been considered a prior user based on the consistency of use demonstrated in the evidence as the order is unclear on the same.

Reputation of Goods

For the sake of argument, if it is assumed that Cutis could be considered the prior user, the three factors for a passing off claim are to be satisfied. The first factor is that of the reputation of the plaintiff’s goods. On this count, Cutis “claimed that from 30 May 2020 to 31 December 2020, its turnover was of Rs.16 lakh and it spent Rs.1.2 lakh towards advertisements.” The court noted that while turnover in specific is not always a clinching factor to establish goodwill, the turnover of nearly 2 lakh a month for products such as sanitisers and disinfectants which have been in high demand was significantly low to establish goodwill. This holding has to be seen in the context of the fact that SII is one of world’s largest manufacturers and has a much greater reputation. Even for the Covishield vaccine in specific, by the time of writing of the order, the vaccine sales amounted to nearly Rs 375 crores. It is, thus, difficult to hold that Cutis sufficiently proved existence of its goodwill with respect to its products bearing the ‘Covishield’ mark.

Possibility of Deception and Likelihood of Damages

The factors to be considered to determine the possibility of deception have been laid down in Cadila Healthcare Limited v. Cadila Pharmaceuticals Limited. They include nature of the marks and their resembleness, nature of goods and their character and performance, and the class of purchasers and mode of purchasing. While the two word marks are identical in that they use the term ‘Covishield’, the court rightly held that there is no likelihood of confusion between the products of the two parties. The court emphasised on the drastically different trade channels in that the vaccines can be accessed by citizens only at places designated by the government. Its nature is also vastly different in that it is administered using an injection as against sanitisers and disinfectants sold by Cutis. More importantly, the primary buyers of the vaccines are the government who are directly dealing with the vaccine manufacturers so there remains no possibility of confusing it with plaintiff’s products.

In terms of injury caused, Cutis argued that due to SII’s use of the ‘Covishield’ mark, its suppliers have stopped supplies impairing its growth and damaging its business. It, however, adduced only a single communication as evidence where a trade partner refused supply on 7 December 2020 for an order dated 15 August 2020. The court rightly held this to be insufficient evidence of the harm caused to Cutis since it was a single email exchange with a long gap of nearly four months, raising doubts about its authenticity. In light of any other evidence, it cannot be stated that any damages will be suffered by Cutis and hence a passing off claim was rightly held to be non-maintainable.

Balance of Convenience and Irreparable Injury

Even if it is assumed that a prima facie case of passing off does indeed exist, for a temporary injunction claim to succeed the plaintiff must also satisfy the two factors of irreparable injury and balance of convenience. In the instant case, as noted above, there is no sufficient evidence to indicate any irreparable injury being caused to Cutis if the injunction is not granted. Similarly, on the count of balance of convenience, greater injury would have been caused to SII if the injunction had been granted in light of its large scale investments as well as revenue as compared to any injury caused to Cutis due to denial of the injunction given its comparatively minuscule revenue and investment. Another factor that the court considered while assessing balance of convenience was the impact of an injunction from using the ‘Covishield’ mark on the “Vaccine administration programme of the State.” This is essential given that there will be large scale confusion amongst the masses if the vaccine is not termed ‘Covishield’ anymore and thereby disrupting an already inefficient vaccination programme in India. In such a scenario, the court right considered the wider public interest (a factor considered in several interim injunction applications such as here) in concluding the balance of convenience in SII’s favour.

Conclusion

Despite the possible lack of clarity in the court’s determination of prior user, the court rightly decided to deny an injunction in favour of Cutis. It, however, failed to raise a more fundamental question that Mathews had raised in his earlier piece here that of the protectability of the ‘Covishield’ mark in the first place. As he had argued, there is a reasonable case that can be made out to claim that it is a descriptive mark. In such a scenario, the primary burden on Cutis ought to have been to highlight that it had attained secondary meaning entitling it to protection. This would have been difficult to establish in light of the relatively small revenues of Cutis. On the other hand, SII has a strong case in claiming that its use of ‘Covishield’ has acquired secondary meaning as it is so known in the entire country as well as outside. This discussion would have, thus, led to a position where Cutis’ plea would have been rejected on the ground of absence of trademark protection without going into a discussion of whether passing off has been proved or not.

Wrapped Reichstag building in Berlin, Germany (image from here)

We’re pleased to bring you a guest post by Priya Garg, Ghanavi Umesh and Rishika Agarwal, analysing the meaning of the term ‘permanently situate’ as used in sections 52(1)(t) and (u) of the Copyright Act which provide for freedom of panorama.

Priya is an Assistant Lecturer at Jindal Global Law School, Sonipat. She holds a Bachelor of Civil Law (BCL) degree from the University of Oxford and B.A. LL.B, (Hons.) degree from NUJS, Kolkata. Ghanavi is a 2nd year student at National Law University, Delhi and Rishika is a 4th year student at Jindal Global Law School, Sonipat.

Freedom of Panorama: Meaning of the Term ‘Permanently Situate’ under the Copyright Act

Priya Garg, Ghanavi Umesh & Rishika Aggarwal

Introduction

In respect of a copyrighted work, its copyright owner possesses a bundle of exclusive rights. Freedom of panorama (hereinafter ‘FOP’) is an exception carved out under copyright law to the owner’s exclusive rights. FOP doctrine permits one to create certain derivative works such as photographs, drawings, paintings, etc. from a copyrighted work which has been ‘permanently’ located in a public place without his consent. However, the ambit of this doctrine varies across jurisdictions.[i] In India, sections 52(1)(s), (t) and (u) of the Copyright Act, 1957 (hereinafter, the Act) incorporate this doctrine. Section 52(1)(s) permits the making or publishing of a painting, drawing, engraving or photograph of a work of architecture or the display of a work of architecture. Under section 52(1)(t) read with section 2(c)(iii) of the Act, a person can create/publish a painting, drawing, engraving or photograph of a sculpture or other works of artistic craftsmanship provided such work is ‘permanently’ situated in a public place or any premises accessible to the public. Further, under section 52(1)(u), a cinematograph film can be made to include an artistic work ‘permanently’ situated in a public place or any premises accessible to the public.

This post analyses the potential meaning of the term ‘permanently situate’ as used under sections 52(1)(t) and (u) of the Act.

Analysis of Different Aspects of the Term ‘Permanently Situate’

The Indian judiciary got the opportunity to interpret this term only once, in The Daily Calendar Supplying v. The United Concern, as discussed in an earlier post on this blog. In this case, the plaintiff got an oil painting designed by an artist, obtained copyright over it and thereafter got multiple copies of it printed for sale. The plaintiff alleged that the defendant had begun selling copies of a slightly modified version of his painting, leading to the loss of sales revenue for him. One of the counter arguments of the defendant was that since the plaintiff had installed the ‘copies’ of his painting in many temples in the south, the painting could be said to be an artistic work permanently installed in public place, making or publishing of which is thus permitted under section 52(1)(t). However, the Madras High Court clarified that mere installation of multiple ‘copies’ of a work in a public place did not amount to installation of the original work in a public place if the author retains the original work in his private custody.

Although there is limited jurisprudence on this matter in India, the term ‘permanently situated/located’ has been interpreted by the German courts in a few cases.

Minimum duration for which work needs to be placed in public

In Wrapped Reichstag case ([2004] E.C.C. 25.), the issue arose before the German Federal Court of Justice regarding determination of the minimum duration for which a work needs to remain in public space for it to be considered as ‘permanently’ located there.

This very issue, which though arose in this case in a different context, nevertheless is pertinent in deciding what constitutes the ‘permanent placement’ of an artistic work if it is ephemeral in nature (such as sand work or ice sculpture).

In this case, as a project organised by two artists, the Berlin Reichstag building was wrapped in a certain fabric for two weeks. A photographic image of this installation was used by a photo agency to make postcards which were sold to people. Regarding this commercial exploitation of the image of their work, the artists filed a case of copyright infringement. The question arose if the usage of the image on postcards would fall under the FOP exception. It would be so if the artistic work could be first said to have been ‘permanently located’ in a public place.

Regarding this, the court stated that there is no minimum fixed duration for which a work needs to remain in a public place for it to be considered ‘permanently’ placed. Instead, it required that the work is kept in a public place during its ‘natural’ life for it to be considered as being ‘permanently located’. The court, however, cautioned that this itself would not be not conclusive of the issue, because the author’s intention ‘at the time’ of placing his work in public remains decisive. And therefore, where the author intends to place his work in public for a period shorter than its ‘natural’ life, even though he wishes to destroy it upon its severance, the work would be considered as having been only ‘temporarily’ installed. Further, the court clarified that the author’s subjective intention remains irrelevant because his intention as objectively perceived by a viewer or passerby matters in deciding if the work has been ‘permanently’ placed in public.[ii] On this basis, the court decided that in the case, the defendant cannot use the defence of freedom of panaroma because the wrapping of the Reichstag was in the manner of an exhibition and exhibitions’ display should be seen in terms of weeks and months, but not in years. Hence, even if the display was for the short duration of two weeks, the work is still an exhibition the author of which deserves copyright protection.

Since, neither the statute nor the courts in India have stated their stance on this aspect of the issue, the position adopted in Germany may hold persuasive value and may be incorporated in the Indian legal context though with slight modifications if necessary. This is because firstly, unlike Germany, India is a common law country and in common law jurisdictions, a fair use clause is given broader interpretation. Secondly, in India, the Delhi High Court, in the landmark DU Photocopy verdict, has clarified that section 52 is not an exception to copyright but a right in itself and therefore the rule of narrow interpretation may not apply in relation to this provision.

Application of the term vis-a-vis non-stationary works

Another significant aspect of this issue is whether non-stationary items can be said to be ‘permanently’ located under sections 52(t) and (u) of the Act.

This aspect was dealt with by the German Supreme Court in AIDA Kussmund case in 2017. In this case, the plaintiff company painted an image of kissing lips on its cruise ships. It sued the defendant when the latter depicted the former’s image on his website. The defendant relied upon the FOP exception. The plaintiff counter-argued that the cruise ship, being a non-stationary object, was not ‘permanently’ located in a public place.

The court rejected this contention. It held that the ship was ‘permanently’ located in a public place despite it being a non-stationary work. It reasoned that a work to be ‘permanently’ located in a public place, it suffices if the work remains in some public place or the other for a ‘longer’ period of its lifetime even if it halts in private places for shorter intervals.

The judgment, therefore, expanded the scope of the FOP doctrine and thereby widened the definition of public places. Thus, it is likely for the Indian courts to embrace this kind of interpretation if a similar issue comes up before them.

This implies that non-stationary artistic works such as moving carts of street vendors, modes of public transportation, tableau, rides in amusement parks including toy train rides, etc. which may commonly be understood to be excluded from the scope of FOP doctrine ‘may’ now be included within its ambit in India.

However, there are certain ambiguities that this verdict has given birth to.

First, it remains unclear as to whether the principle propounded shall apply to only non-stationary works or to both stationary and non-stationary works. This is because, if it applies to stationary works as well, then even artistic works displayed in temporary public exhibitions or another public place (for instance outside a showroom) would be subject to the FOP exception provided such works are displayed in one public place or the other for a ‘longer’ period of their entire life. If that be the interpretation of the verdict, then to this extent, the position laid down in Wrapped Reichstag regarding the work displayed in temporary exhibitions may stand overruled.

Similarly, if this verdict can be interpreted to apply to the work which is stationary and has been permanently affixed to a place, then it can be interpreted to have stated, by laying down that for a work to be ‘permanently’ located in public place it only needs to remain in such place for ‘longer’ period of time calculated as a fraction of its lifetime, that where an artistic work is permanently affixed to a place it may not be enough for merely the work to be ‘permanently’ installed in a place which remains open to the public for a short period (such as Pragati Maidan and Mughal Garden in New Delhi which remain open to the public only for short durations in the entire year) to fall under the exception. It will be additionally required that the place in which the work has been installed also remains open to the public for a ‘longer’ period of time. This is because during the time the place is not open to the public, it cannot be called public space. Hence, the work of art located permanently in such place cannot be termed as being located in ‘public space’ for a ‘longer’ period of its own life. For example, if the life of a statue permanently affixed in Delhi’s Mughal Garden was 60 years and if it was to become open for public view for only a fortnight every year, then for a ‘longer’ part of its life, the work would remain out of public view.

This can be, however, only one way of interpreting the verdict. I believe that this might only be an unintended consequence of the court’s verdict in AIDA Kussmund case. Hence, the Indian courts should guard themselves against the possibility of this kind of interpretation if in the future similar issue arises before them.

Second, uncertainty remains regarding the quantitative threshold of the term ‘longer’ for an object to be considered as ‘permanently’ located in a public place, i.e. whether it is enough if the work remains in some public place for slightly more than 50% of its natural life or the threshold is higher.

Conclusion

The jurisprudence on the meaning of the term ‘permanently situated/located’ under the FOP doctrine is in its nascent stage of development in several jurisdictions including India. German courts have offered some insights which Indian courts may draw from when the case for interpretation arises; however, this import of interpretation must be done cautiously, for there is difference in the legal systems as well as the social, cultural and economic circumstances of the two countries.

[i]See e.g. S. 32.2, The Copyright Act, 1985 (Canada); S. 65-68, The Copyright Act, 1968 (Australia); S. 62, The Copyright, Designs and Patents Act 1988 (United Kingdom); S. 59, German Copyright Act (UrhG), 1965; Art. L122-5, Intellectual Property Code, 1992 (France); Pokémon Go is Just the Beginning of an Absurd Copyright Struggle in AR, Games Industry, available at http://www.gamesindustry.biz/articles/2016-10-20-pok-mon-go-is-just-the-beginning-of-an-absurd-copyright-struggle-in-ar; Teresa Nobre, Freedom of Panorama in Portugal, available at https://www.communia-association.org/wp-content/uploads/2016/06/BCS_Communia_FoP_study.pdf.

[ii]See LiebedeineStadt(High Regional Court of Cologne, 2012).

We’re pleased to bring to you a guest post by Abhinav Hansaraman, analysing the interim order recently issued by the Delhi High Court in a trademark infringement and passing off dispute between online payment apps PhonePe and Bharatpe. Abhinav is a 5th year student at the National Law University, Delhi.

Pay/‘Pe’ Charcha – Delhi High Court’s Decision in PhonePe v. BharatPe Trademark Dispute

Abhinav Hansaraman

BharatPe and PhonePe trademarks side-by-side (image from here)

On 15th April, a single judge bench of the Delhi High Court decided an interim application in a suit between PhonePe and BharatPe concerning whether use of the suffix ‘Pe’ in ‘BharatPe’ mark amounted to infringement of the registered mark ‘PhonePe’ and passing off. The Court held that there was no infringement and laid down the standards for such determination.

Facts of the case

Both parties are online payment service providers. While the defendant (EZY Services/BharatPe) has a merchant exclusive business, plaintiff (PhonePe) works with both merchants and consumers. The plaintiff and the defendant use the marks ‘PhonePe’ and ‘BharatPe’ respectively.  The plaintiff had alleged that the defendant’s mark and the use of the word ‘BharatPe’ infringed its registered trademark and amounted to passing off by the defendant of their services as that of the plaintiff.  Consequently, the plaintiff sought permanent injunction against such usage.  These proceedings relate to an interim application seeking interim injunction under Order XXXIX Rules 1 and 2 of the Civil Procedure Code.

Interestingly, when EZY Services had sought to register the word mark ‘BharatPe’ under Class 9, the Registry had objected to it for being non-distinctive and the application was consequently abandoned.

Court’s analysis

In determining whether or not the defendants should be injuncted from using the ‘BharatPe’ mark, the Court considered the issue of similarity between the two marks. In this respect, the comparison of the marks as a whole, and comparison of ‘dominant’ portions of the mark were particularly considered by the Court, as explained below:

First, on the question of whether trademarks must be compared as a whole, the Court noted that the plaintiff had not separately registered parts of the ‘PhonePe’ mark. Section 17(1) of the Trade Marks Act, 1999 (‘Act’) “specifically confers” the exclusive rights to use of the whole trademark and section 17(2) clarifies that the registration of such a composite trademark would not confer exclusive rights over any part of the registered trademark where the part was not subject of a separate application or where the part contained any word or term which was common to the trade or was non-distinctive.  The Court referred to Kaviraj Pandit Durga Dutt Sharma where the Supreme Court had held that trademarks were to be compared as a whole.  This is often called the ‘anti-dissection’ rule.  The Court referred to a catena of decisions approving this ‘anti-dissection’ principle, such as Ashok Chandra Rakhit and Stiefel Laboratories.  The Court held that ‘PhonePe’ and ‘BharatPe’ were composite marks and that the plaintiff could not claim exclusivity over the suffix ‘Pe’, as it connoted pay and was descriptive of the plaintiff’s payment services.  The Court held that merely misspelling pay as ‘Pe’ would not entitle exclusivity.  As comparison, the Court explained that much like the plaintiff could not claim exclusivity over the suffix ‘Pay’, it could not claim exclusivity over such a misspelling.

Second, the Court analysed the law on the ‘dominant mark’ test.  The Court referred to a judgment of a Division Bench of the Delhi High Court in South India Beverages. In South India Beverages, the Court had explained the ‘dominant mark’ test.  The Court held that while a mark is to be considered as a whole, importance or ‘dominance’ could be accorded to parts of a mark in the case of composite marks and where a particular element enjoys prominence with respect to other elements, it would be a ‘dominant mark’.  The Court had ruled that while the general rule under Section 17 of the Trade Marks Act was that marks must be considered as a whole, Courts were required to keep in mind the relative dominance of parts of a mark.  The test was whether any part of the plaintiff’s mark was dominant or was an essential feature, and if so, whether such dominant part was infringed by the defendant.  On facts, the Court ruled that there may be substance to the claim that ‘Pe’ constituted a dominant part or essential feature of the marks, especially as it was written with a capital ‘P’.

Third, on the question of confusing or deceptive similarity of the defendant’s mark, the Court observed that while exclusivity could not be claimed in parts of a registered mark, imitations of the dominant or essential features of such registered marks could constitute infringement. It also clarified that descriptive or generic marks (or parts thereof) are not exclusive and misspelling of descriptive words would not grant exclusivity.  The Court referred to the Delhi High Court’s judgment in Marico and Section 9 of the Act and held that trademark protection could not be claimed over descriptive marks, until such descriptive marks acquire distinctiveness or secondary meaning. Accordingly, the Court opined that if the plaintiff could establish that the ‘Pe’ suffix had acquired distinctiveness and a secondary meaning, it could make a case for infringement.  The Court held that the marks were entirely different as the words ‘Phone’ and ‘Bharat’ were phonetically dissimilar, the triangular device used in the defendant’s mark was unique, and not used by the plaintiff.  The Court also rejected claims of similarity on grounds that both marks were in similar font and in purple colour.  The Court held that such factors were insufficient to constitute a case for deceptive or confusing similarity.  Interestingly, the Court ruled that the nature of services provided by the parties were different, as the plaintiff was an online payment portal while the defendants provided a single QR code basis which customers could work with consumer facing UPI based apps, including the plaintiff’s app.  The Court found that such customers who deal with the apps could be expected to know the difference.  Thus, the Court denied the grant of injunction.

Comments

Large swathes of the Court’s reasoning are correct and well founded –  the Court’s analysis of the principles underlying the comparison of trademarks as a whole, the status accorded to dominant marks, and  the (lack of) protection of descriptive marks are in line with established precedent. The above being said, two aspects of the Court’s decision are, in my view,  cause for concern.

First, the finding of the Court that the capitalization of a part of a mark could possibly constitute dominance is unfounded. Companies’ decision to use capitalized or uncapitalized letters in their trademarks is based on stylistic or design preferences.  While the Court’s observation that the use of capital letters bestows dominance is only indicative and not determinative, this imposes a cost on companies for excluding capital letters from their trademarks.   Often, companies decide to use uncapitalized letters for stylistic and design preferences and should not be confused with the importance of such parts of a trademark.  Although the Court’s ruling on the interaction between the dominant effect of a part of a trademark and the anti-dissection rule is sound, my concern relates only to the undue-importance of capitalization of parts of a trademark.  Irrespective of capitalization, if a part of a mark achieves such dominance or secondary meaning, it must be accorded a higher level of protection.  The Court’s reasoning that capitalization itself  accords dominance deserves re-examination.  Further, and perhaps more importantly, this reasoning diverges from the reasoning that Indian Courts have adopted to identify ‘dominant marks’.  Indian Courts have used the dominant mark rule to protect parts of a trademark only when such portions were adopted arbitrarily (Amar Singh Chawal Wala), were part of a family of marks (Amar Singh Chawal Wala), or where the parts were a unique combination having no recognized meaning (South India Beverages).  Therefore, when the Court has noticed that ‘Pe’ is a deliberate misspelling of a descriptive term, it is surprising that the Court proposes that capitalization could have overriding importance. While the Court ruled that the plaintiff could not claim exclusivity over ‘Pe’, this logic could swing Courts in other suits involving dominant marks where deliberate misspellings and descriptive words are not used.

Second, the Court’s reasoning on the users of the two services being able to differentiate between the two marks does not hold water.  The Supreme Court, in Amritdhara Pharmacy held that marks must be compared with reference to an “unwary purchaser of average intelligence and imperfect recollection”. Even when the Delhi High Court discussed the anti-dissection rule in South India Beverages, the analysis was with reference to an “ordinary prospective buyer”.  Further, the Court had also held that the mere fact that some ‘sophisticated consumers’ were immune from confusion is not a complete defence to infringement claims. This rule was particularly important where the purchase decisions were not a result of “conscious and sustained deliberation”. Therefore, even if the Court were correct that some sophisticated consumers of the services of both parties would be aware of the differences between the parties, that is not sufficient to rule that there was no similarity.

PhonePe and BharatPe are competing services on the UPI framework and the decision by consumers to choose one over the other is not necessarily out of such deliberation.  Further, the ordinary prospective user of these two products are not just employees of large grocery chains or banks who could be expected to know the difference, but thousands of tiny kiranas, paan shops, and vegetable sellers.  Moreover, merely because large banks and sections of sophisticated consumers would be immune to confusion is not sufficient to support the Court’s ruling, as South India Beverages held that the immunity of some sophisticated consumers is not sufficient to rule that there was no deceptive similarity.

Topical Highlights

Pic of package cover for olumiant baricitinib

Natco Files Compulsory Licence Application for Covid Drug Baricitinib?

Swaraj wrote about Natco’s application for a compulsory license to manufacture the drug Baricitinib. He reports that the application points to studies showing that Baricitinib in combination with Remdesivir is more effective for patients with Covid 19, as compared to Remdesivir alone, with possibly less side effects as well. The drug is currently not manufactured in India, and less than 9000 tablets were imported in 2019 and 2020, with the average cost per tablet approximating to INR 3230. Natco, which is responsible for the only successful CL grant in India for Nexavar, has strategically applied for the license this time under Section 92, which requires the Government to accept / reject the application based on the straightforward criteria of whether the patent in force is necessary in a circumstance of national emergency, extreme urgency or a case of public non-commercial use, including in public health crises such as epidemics. With the Delhi HC and the Supreme Court advising the government to consider compulsory licenses, as well as Indian government’s TRIPS Waiver proposal at the WTO, Swaraj concludes that the time is quite opportune for Natco’s application.

In Major Turnaround, US Announces Support for IP Waiver of Covid Vaccines

USTR logo

Swaraj reported that the US administration has changed its stance in the WTO and is now supporting the waiver of IP protections for Covid-19 Vaccines. Noting this remarkable change in position, he cautions that the statement by USTR Katherine Tai, announcing this support does not directly refer to the India-South Africa proposal which is in fact much wider than a vaccine waiver, extending to Covid-19 drugs, equipment and therapeutics as well. He argues that if it is only of the vaccines – then a much larger issue of tech transfer, know-how, tacit knowledge, manufacturing capacity etc will still pose a huge barrier to any meaningful progress on the vaccine front – unless the IP holders voluntarily share this knowledge. He also reports that India and South Africa have said that they will be modifying their initial proposal and will be submitting the revised version soon, which might have a sunset clause more explicitly mentioned.

SC Issues Interim Order in Suo Motu COVID-19 Case: Raises Questions on Vaccine Procurement Process, Compulsory Licensing and More

Representative image of Covid vaccine (from here)

I discussed the Supreme Court’s interim order and the directions issues in the suo motu Covid-19 case that took place on 30th April. I go over the SC’s criticism of the policy of splitting vaccine procurement between Centre and States due to the chaos and uncertainty that may be created if each state is left to directly negotiate logistical arrangements with the manufacturers. The court also takes issue with the idea of allowing direct price negotiations between state governments and private manufacturers to create a competitive market for incentivizing private vaccine production, as that will lead to competition between states and hardships for the public. This differential policy is also likely to fail the reasonable classification test under Article 14 and defeat the right to health under Article 21 of the Constitution. I argue that this competitive-market approach is reminiscent of the free-market Covid-19 medication approach which India is opposing through its TRIPS waiver proposal at WTO. I then highlight the court’s recommendation to government to consider compulsory licensing, and its directions regarding price-capping for supply of essential drugs and developing a need-based, equitable hospital admission policy. Lastly, I also underscore the SC’s commitment to free speech and information exchange online during this public health emergency.

Thematic Highlight

Covishield vaccine illustration

Bombay HC Rejects Injunction Plea in Passing Off Action against Serum Institute of India for the ‘Covishield’ Mark

Nikhil analysed the recent passing off suit by the Nanded-based pharmaceutical company, Cutis Biotech, against Serum Institute of India for the use of the mark ‘Covishield’ which was dismissed by the Bombay HC. In assessing the first determinant for passing off, i.e., prior use, he argues that the court seems to have adopted a contradictory stance in addressing the evidence of both parties where, as opposed to consistent use, a largely a one-time set of events involving a communication to print packaging material with the ‘Covishield’ mark in March 2020 holds SII the prior user. As regards reputation, SII being one of world’s largest manufacturers works in its favour to establish a much greater reputation than Cutis. The court then holds against a possibility of deception too, emphasizing the separate primary buyer group (government and citizens) and drastically different trade channels in that the vaccines can be accessed by citizens only at places designated by the government as opposed to sanitizers and disinfectants sold by Cutis. It then finds insufficient evidence of injury as well. The court then opines that regardless of the existence of a prima facie case, the balance of convenience and irreparable injury lies in favour of SII as there will be large scale confusion amongst the masses if the vaccine is not termed ‘Covishield’ anymore and thereby disrupting an already inefficient vaccination programme in India. Thus considering wider public interest, it denies the injunction.

Other Posts

Delhi HC Issues Order on Tocilizumab Shortage, Seeks Patent Working Information from Roche

A 20 ml vial of tocilizumab, marketed by Cipla (image from here)

In another post, I discussed the Delhi High Court’s interim order issuing important directions on the shortage of the drug Tocilizumab in Delhi hospitals, wherein the patent owner Roche too had been impleaded. The court considered at length the observations of the Supreme Court in the interim order, as well as that of the Division Bench of the Delhi High court in its 20th April order and concluded that there was a case of extreme shortage of tocilizumab. It went on to issue directions to the Central government to submit information regarding the availability and distribution of the drug. From Roche, it sought information relating to import and manufacture of the drug in India. I argue that this information, which has only come to light owing to the court’s demand of the same from the government and Roche, would have been much easily available through the old version of Form 27. However, the amended version excludes these disclosures, making it difficult for potential licensees to assess their chances. Lastly, I highlight how the Central government has insisted that tocilizumab is not a necessary Covid drug and how this stance could come in the way of making it available to public in the face of rising demand for the same.

Freedom of Panorama: Analysing the Term ‘Permanently Situate’ under the Copyright Act

Wrapped Reichstag photo

In a guest post, Priya Garg, Ghanavi Umesh and Rishika Agarwal analysed the potential meaning of the term ‘permanently situate’ in context of the freedom of panorama, as used under sections 52(1)(t) and (u) of the Copyright Act. They highlight that in Daily Calendar Supplying v. United Concern the Madras High Court clarified that mere installation of multiple ‘copies’ of a work in a public place did not amount to installation of the original work in a public place if the author retains the original work in his private custody. They discuss the Wrapped Reichstag case from Germany, where the natural life of a work was emphasized, as well as the author’s intention at the time of placing his work in public, holding that there is no minimum fixed duration for which a work needs to remain in a public place for it to be considered ‘permanently’. They consider this to be of persuasive value in India owing to its civil law origin and author-oriented approach which differs from India’s. Another German decision holds that for a work to be ‘permanently’ located in a public place, it needn’t be stationary and suffices if the work remains in some public place or the other for a ‘longer’ period of its lifetime, expanding the scope of the doctrine. The authors then highlight two great uncertainties that remain: firstly, whether the principle propounded shall apply to only non-stationary works or to both stationary and non-stationary works; and secondly, the quantitative time threshold for an object to be considered as ‘permanently’ located in a public place.

Pay/‘Pe’ Charcha: Delhi High Court’s Decision in PhonePe v. BharatPe Trademark Dispute

Bharatpe and PhonePe logos

In another guest post, Abhinav Hansaraman dissects the recent rejection of PhonePe’s infringement suit against BharatPe, both of them being online payment service providers, with   BharatPe being a merchant exclusive business, and PhonePe catering to both merchants and consumers. He discusses how the court decided that owing to  Section 17(1) of the Trade Marks Act, 1999 (‘Act’) as well as the descriptive nature of ‘Pay’, PhonePe could not claim exclusivity over such a misspelling, ‘Pe’. It then held that ‘Pe’ constituted a dominant part or essential feature of the marks, especially as it was written with a capital ‘P’. Finally, it ruled that there was no likelihood of confusion between the two because the nature of services provided by the parties was different, and customers who deal with the apps could be expected to know the difference. He however critiques two aspects of the judgment: Firstly, that the capitalization of a part of a mark could possibly constitute dominance as companies’ decision to use capitalized or uncapitalized letters in their trademarks is based on stylistic or design preferences.  This ruling imposes a cost on companies for excluding capital letters from their trademarks. Secondly, he disagrees with the Court’s reasoning on the users of the two services being able to differentiate between the two marks. Even if this were to be true, he argues, that is not sufficient to rule that there was no similarity.

Event Poster

NLU Delhi’s Online Panel Discussion on ‘IP and the Pandemic’ [May 5]

We informed our readers that the DPIIT IPR Chair at NLU Delhi organised an online panel discussion on ‘IP and the Pandemic’ on May 5, 2021. For details, please see the announcement. The video recording of the same is available here.

Decisions from Indian Courts

• The Supreme Court in In Re: Distribution Of Essential Supplies And Services During Pandemic issued multiple interim directions on the implementation of the Disaster Management Act, medical infrastructure, oxygen supply, vaccines, compulsory licensing, and supply of essential drugs.
• Delhi High Court in Dharmendra Kumar Aggarwal v. Govt. of NCT of Delhi, issued directions on the shortage of the drug Tocilizumab in Delhi hospitals and sought information on its availability from the Central Government and patent owner Roche.

Other News from around the Country

• Supreme Court photo

  The USTR announced its support for a narrow waiver on TRIPS obligations applying on Covid-19 Vaccines [see Swaraj’s take on this, here].

• The Supreme Court set up a National Task Force to streamline oxygen allocation across the country.
• Natco Pharma has started distributing generic versions of anti-arthritis drug Baricitinib, now used with Remdesivir to Covid-19 patients. It has also applied for a compulsory license for the same under Section 92 of the Patent Act [See Swaraj’s report on this, here].
• WhiteHat Jr withdrew its defamation suit against Pradeep Poonia before the Delhi High Court.
• Hyderabad-based Hetero Labs has sought CDSCO approval to make tocilizumab, a key drug for Covid treatment in India.
• An article in The Hindu revealed that ICMR shares IP ownership over Covaxin and receives royalties from its sale.
• Pfizer CEO stated that they seek an expedited approval pathway to market their vaccines in India.
• An ORF article considers compulsory licenses under Patent and Competition Law in India to bring about Vaccine Equity.

News from around the World

• The United States placed India and eight other countries on the Priority Watch List for IP protection and enforcement in its Annual Special 301 Report.
• Like US, New Zealand has expressed support for a narrow TRIPS waiver on Covid-19 vaccines.
• A UK court upheld Meghan Markle’s final copyright claim against Associated Newspapers, the publisher of the Mail on Sunday and MailOnline, over its publication of a letter to her father, Thomas Markle.

Image from here

May 2021 has been an interesting month so far for compulsory licenses. First the Supreme Court inquired about the Government’s position on issuing CLs for COVID-19 related drugs and vaccines, then Natco filed an application requesting a compulsory license for Baricitinib. This is followed by Delhi HC’s interim order, where it too hinted that the Central government could explore the alternative of compulsory licensing. Even on the international front, one of the major opponents of the compulsory license mechanism- the USA, has recognized the right of other Members to issue compulsory license in its notorious Special 301 Report (See page 34). However, amidst all this, the Central government in an affidavit filed before the Supreme Court in the above matter, seemed skeptical in making a call on compulsory license. Notably, the government in the affidavit maintained that :-

“44….The main constraint is in availability of raw materials and essential inputs. Therefore, any additional permissions and licenses may not result in increased production immediately. It is difficult to predict the trend of the pandemic and therefore difficult to forecast the demand for Remdesivir with a reasonable degree of certainty. However, such permissions will build capacities to effectively handle any future crises.

45. It is presumptuous to assume that the patent holder will not agree to more voluntary licenses for such manufacturers who have a new drug manufacturing permission from the DCGI. However, if such a manufacturer applies for a compulsory license under section 92, the same may be suitably considered by the DoC.”

In explaining how it plans to ensure that accessibility to medicines improve, the government stated that-

47. …… When there is a surge in cases and in demand of patented medicines/drugs/vaccines from all over the world the solution needs to be found out essentially at an executive level engaging at diplomatic levels. Any exercise of statutory powers either under the patents act 1970 read with TRIPS agreement and Doha declaration or in any other way can only prove to be counter-productive at this stage, the central government is very actively engaging itself with global organisations at a diplomatic level to find out a solution in the best possible interest of India. It is earnestly urged that any discussion or a mention of exercise of statutory powers either for essential drugs or vaccines having patent issues would have serious, severe and unintended adverse consequences in the countries efforts being made on global platform using all its resources, good-will and good-offices though diplomatic and other channels. 

Regardless of whether one agrees with the government’s position, the larger question of why the divergence between international appearances and domestic reality is one that continues to loom. Readers may recall that India is one of the original Members that has argued IPRs as an encumbrance in accessing essential medicines and proposed for waiving key provisions of the TRIPS agreement. One of the main reasons for the proposal is the  pressure built by developed Members against using TRIPS flexibilities like compulsory license. Seemingly, the positions of the parties now appear to have been switched. Where the US is supporting the right to issue compulsory licenses and India is instead relying on voluntary cooperation of the IP holders (see para. 45 above). Perhaps this is an outcome of the verbal assurance by India to USIBC against using compulsory license for pharmaceutical products? However, with the US itself supporting use of this flexibility it seems perplexing what is holding the nation back from resorting to compulsory licenses. 

As a side note, in relation to the previous post which mentioned that Natco had filed a Compulsory Licence application – Eli Lilly has now signed voluntary licences with Sun, Cipla, and Lupin, perhaps giving the government a way out of granting the CL application. 

While the temptation of letting voluntary negotiations is understandable and there are fair share of arguments for (see here and here) and against (see here and here)  viability of compulsory license to ramp up production of COVID-19 treatment, the larger question is why is the government not being consistent on its position and taking a clear call on what it thinks is the best way forward for quick access to Covid drugs and vaccines? 

USTR logo

Lost in the shadow of the US’s historic change of position on Waiver of IP rights in Covid-19 vaccines, the USTR’s latest Annual Special 301 Report has its own share of surprises to offer. The Report, as is known, is a much criticized annual exercise in ‘calling out’ countries for adopting IP policies that the US does not approve of – regardless of the fact that they’re made by sovereign nations to suit their own local realities. India, which enjoys the distinction of being featured in the ‘Priority Watch List’ for the 29th year in a row, shares the glory with 8 other countries this time. The report follows the usual pattern of criticizing various TRIPS compliant aspects of India’s IP laws which make it harder for American companies to sustain monopolies in India. While a detailed examination of the country report will be undertaken in a different post, this one looks into the more general issue of US’s relaxed stance on compulsory licensing, the strong criticism of which has characterized nearly every previous Special 301 Report in recent years.

Respecting Compulsory Licensing

The Covid-19 pandemic has made possible the unimaginable – in its section on ‘IP and Health’, the Report considers the worldwide state of emergency brought about by the pandemic and goes on to state that the US respects the grant of compulsory licenses (‘CLs’) to meet its challenges. While such commitments had been made in previous reports too, like the 2016 Report (discussed here), the hollowness of that was revealed in its country reports where Ecuador and Indonesia had been questioned on the lack of clarity in their CL laws. India, of course, had earned a much detailed critique of its various CL provisions, and for its policy level consideration of CLs as a tool for enhancing use of green technologies. This time, quite surprisingly, the commitment to respect CLs is not qualified by any subsequent riders. Neither India, nor any other country has been called out for issuing CLs or amending its CL laws, despite the fact that there have been amendments by several countries to provide for CLs in their patent law.

In fact, going a step further, the Report states that:

‘the United States respects the right of its trading partners to exercise the full range of existing flexibilities in the TRIPS Agreement and the Doha Declaration on the TRIPS Agreement and Public Health in order to scale up the production and distribution necessary to overcome the challenges of the ongoing COVID-19 pandemic.’ (emphasis added)

Like the support for the waiver, this recognition of TRIPS flexibilities for national emergency, public non-commercial use, for import of pharmaceutical products and the like, could have come as a result of the escalating international pressure in light of the rapidly deteriorating humanitarian crisis in India, Brazil and the rest of the Global South.

The US and TRIPS Flexibilities

Those familiar with TRIPS history would know that US has a notorious record of using FTA Agreements to enforce TRIPS-plus protection. It has consistently opposed WTO members’ exercise of TRIPS flexibilities by threatening unilateral trade sanctions even in the face of crippling public health crises. During the height of the AIDS epidemic, South Africa’s enactment of legislation to exercise these flexibilities was met with sanctions, with the US continuing to mount pressure till an estimated 20% of all South Africans were infected and the US government was forced to change policy. Similarly, Brazil had used the threat of compulsory licensing to negotiate with Roche for a more affordable price on its anti-retroviral AIDS drugs. US responded with a WTO dispute against it, though it was ultimately dropped. The global outcry against this maximalist approach was among the things that helped bring about a reaffirmed international commitment to public health through the Doha Declaration. Despite that, India’s sole compulsory license on Bayer’s anti-cancer drug Nexavar received severe backlash from the US, and earned it a consistent place on the Priority Watch List. This recent article shows that the use, or even mere consideration of a TRIPS flexibility, almost automatically earns countries a spot in the next Special 301 Report (Page 5-6). This is despite the fact that the US itself has granted several CLs, some of which, as Prof. Basheer showed, are not termed so.

Faced with a ravaging pandemic, many developed countries have resorted to the same flexibilities that developing ones had for long been castigated for adopting. In 2020, several countries enacted laws to provide for a CL regime that might be needed to deal with Covid-19 challenges. Israel even granted a CL, on AbbVie’s Kaletra. Subsequently, US government bodies were seen following the usual routine of criticizing grants of CLs or plans of doing so. In January, the US Embassy in Netherlands released a statement expressing concern over Netherlands’ consideration of expanding its CL policy. A CL issued by Hungary on Gilead’s Covid treatment drug remdesivir was criticized by US Chamber of Commerce and Pharma associations in the US in their Special 301 submission.

That the US has chosen to relax its general policy on CLs (even though it took a literal pandemic) is therefore a much welcome change. While this may appear unsurprising and only natural as it aligns with the US support for the IP waiver, it is worth noting that this change may have consequences which are more immediate and wider in ambit than what a waiver might achieve.

What this Support for CLs Means

As Swaraj has noted, the USTR support for IP waiver is limited to vaccines and does not extend to Covid-19 drugs and equipments as originally proposed by India and South Africa. The same qualification is thankfully not present in the Special 301 Report’s CL position. This might be of assurance to countries that may have refrained from granting CLs on Covid-19 treatment drugs due to fear of US retaliation. So far, most Covid-related CL applications have been filed for Covid drugs which enjoy clear patent protection, e.g., remdesivir, baricitinib, etc.

In India, both the Supreme Court and the Delhi high court have asked the government to consider CLs as an option to meet the drug shortage for remdesivir and tocilizumab among others. A recent Section 92 application by Natco seeks a CL on baricitinib under the national emergency provision. While the government has indicated that it is not inclined to grant a CL and the assurance given by the government to USIBC against pharmaceutical CLs may have something to do with it, the revised US position on CLs could be weighed against these past considerations. Similarly, Canada recently saw its first CL application for the manufacture and export of the Johnson & Johnson’s single-dose vaccine by a small drug manufacturer Biolyse Pharma. Such CL applications, if granted, have the potential to save thousands of lives. Regardless of whether the TRIPS waiver succeeds, more countries can freely consider this solution.

Are CLs sufficient?

While this policy change definitely holds persuasive value, it must be understood that CLs alone are not enough in the time of a pandemic. As Anupriya explains, there are several limitations to CLs, including the cap on predefined quantities, cumbersome procedures, and threat of retaliation from pharma companies. Additionally, CLs have been designed with a country-level, product-specific approach that target the incapability of one patented invention to meet the public’s needs. They are not designed to handle a pandemic where the world is faced with multiple strains of Covid-19, limited availability of vaccines across countries, and an acute shortage of drugs leading to overwhelming of healthcare systems.

All said, it must also be stated that support for CLs at a stage no less than the peak of a global pandemic, is too little, too late (the 2020 Report, which released at the start of the pandemic, provided no such concessions). Compulsory licensing cannot be seen as a tool so rare and exceptional that it takes 3 million deaths across the developing and the developed world to justify its use. The pandemic has given the whole world a bitter taste of the suffering that poorer countries have been going through repeatedly. The US needs to keep respecting the rights of countries to use TRIPS flexibilities regardless of whether their public health emergencies are affecting the US.

Image from here

As news broke out on May 3, 20201 regarding the Indian Council of Medical Research (ICMR) earning royalties out of every dose of Covaxin sold, many were quick to chide the government for embarrassing itself by profiting off vaccines sold in its own country while seeking a waiver of 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) at the WTO. In this post, I focus on the differential pricing of vaccines and analyse the revelations made in the affidavit filed by the Central Government in the case titled, ‘In Re: Distribution of Essential Supplies and Services During Pandemic’ yesterday. I discuss the contents of the affidavit and argue that they reveal the Central government’s prioritization of vaccine profiteering and scoring political points, instead of any well thought out strategy to deal with a pandemic that has already escalated into a humanitarian catastrophe.

In my previous posts (here, here and here), I had argued that the government should assert IP ownership in Covaxin and waive all IP protection over it, in addition to making its knowhow available to other manufacturers in India and the rest of the developing world for faster dissemination and use of the vaccine among larger populations across the world.

The affidavit mentioned that support for one private industry and three public sector manufacturing facilities, was “under consideration”, to make them ready with enhanced capacities to support augmented vaccine production over the next 6-8 months (Central Govt. affidavit, para 35). However, though the affidavit talked about possibly upscaling Covaxin production, it contained nothing regarding waiver of IPRs in Covaxin.

Image from here

Funding

Pertinently, the affidavit noted that money was given for the production of Covaxin and Covishield, in the form of advance payment [not support or investment] of Rs. 1732.50 crores to Serum Institute of India (SII) for 11 crore doses of Covishield vaccine for the months of May, June and July and similarly, an advance payment of Rs. 787.50 crores was released to Bharat Biotech India Ltd (BBIL) for 05 crore Covaxin doses for the months of May, June and July (Central Govt. affidavit, para 32).

The Public Private Partnership between ICMR and BBIL stipulates a 5% royalty clause in favour of ICMR on net sale as well as clauses on prioritising in-country supplies (Central Govt. affidavit, para 33).

There was no government aid or assistance provided for any research and development costs of either Covaxin or Covishield (para 33). It is pertinent to note that Serum Institute had no research costs as it undertook no financial risk by conducting any protracted R&D. As Murali Neelkanthan has pointed out, SII was only a contract manufacturer that had received an advanced payment for the vaccines that it would be manufacturing. Similarly, the affidavit provides no figures regarding the ‘investment’ costs of BBIL, which should not be confused with working capital costs. Since IP protection is meant to enable ‘reasonable’ recoupment of your investment in innovation, it is worth interrogating these questions in the context of the pricing, particularly the differential pricing, of these vaccines.

Image from here

The Exclusionary Effect of Relying on Private Negotiations

The affidavit cites ‘financial risk’ borne by vaccine manufacturers to justify private negotiations on price of the vaccines instead of utilising statutory provisions [Central Govt. affidavit, para 22 (vi)].

This is bizarre since it has been widely recognised now, even in the most capitalist countries such as the US, that pharmaceutical companies and their market-oriented incentives will not achieve the vaccination goals required to contain the pandemic. As this article titled, ‘Why Joe Biden Punched Big Pharma’ highlights, in developing countries particularly, pharmaceutical companies would impose high prices, leading to vaccine scarcity, ensuring only the elite can access these vaccines, because this is still more profitable than lowering the prices for everyone.

Factories can upscale production only if the relevant IP barriers and know-how of vaccine manufacture do not act as impediments. It is appalling that we have to make this argument despite the Indian government (through ICMR) sharing IP ownership in the indigenously developed Covaxin. With only two vaccine candidates administered right now, produced by BBIL and SII, a severe shortage of vaccines, and no resort to price control measures, private negotiations will most likely fail in making access to vaccines inclusive and equitable. The Central Government’s affidavit itself admits that there is a ceiling price for drugs like paracetamol, as per the Drug Price Control (Order) 2013, even though there is no scarcity of paracetamol in the country, which has hundreds of manufacturers. However, the same affidavit doesn’t see the need for regulating vaccine prices, which it argues are best left to private negotiations, despite the acute shortage of these vaccines which constitute the only known way out of a pandemic that has caused 2,20,000 deaths in the country (even as per grossly underreported official records).

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Distribution Politics

According to the new vaccine policy, 50% of total manufactured vaccines were to be supplied to the Central Government which would vaccinate the most vulnerable group of the population (45+), and the remaining quantity would then be distributed amongst all States on a prorata basis. Out of the 50% allotted to the State, 50% will go to the State [calculated on pro-rata basis based upon the population of age group of 18-44 years] and the balance 50% will go to the private sector based upon the contracts between private sector and vaccine manufacturers. [Central Govt. affidavit, para 22 (vii)]. The Centre will procure both the vaccines at Rs 150 per dose from vaccine manufacturers while Covishield is being supplied to the States at Rs. 300 per dose, and Covaxin at Rs. 400 per dose. The significant difference in prices of the vaccines for the Central Government and the States are said to be a result of the Centre being a bulk purchaser, and hence being in a position to get a better price for the vaccines [Central Govt. affidavit, para 22 (v)]. It is worth asking that if the Centre has the power by virtue of its large orders or otherwise, to bargain for a better price, why is it not purchasing vaccines for the entire country? Since all the money being spent is taxpayers’ money at the end of the day, why are costs of vaccines and coverage of population not being minimised and maximised respectively via a prudent national immunization program?

The burden of ‘free’ vaccination has been passed onto states but not without the self-congratulation of acknowledging the Central Government’s “persuasion” which caused BBIL and SII to declare uniform prices for all State Governments [Central Govt. affidavit, para 22 (v)].

As per an analysis by IndiaSpend, India’s 8 most socioeconomically backward states would have to spend around 30% of their health budgets for the procurement of COVID-19 vaccines for their populations. These 8 states except Odisha have already reported a revenue deficit in their revised budget estimates for 2020-21, as per a PRS Legislative Research brief. The costs of vaccination will further swell up due to the addition of supply chain, training, transportation and follow-up process costs, which would compel states to shift their spending away from tuberculosis, malaria, maternal and child health and other focus areas. These 8 states are among the 20 states that have announced free vaccination. However, these promises are meaningless without any effective timelines and procurement plans in place. While states are struggling to make ends meet, and being financially pressured, the Central government, as of May, 2021 as per its own data, has spent only 8.5% of the INR 35,000 crore that it had allocated in the 2021-22 budget for vaccination, anticipating coverage of 37% of the population. At the rate of 150 per dose, the Central government has the capability to buy 2.1 billion doses, whereas India’s 18 plus population of 940 million requires only 1.88 billion doses. As per IndiaSpend, only 80% of the remaining funds (INR 32,000 crore) will be needed to procure two vaccine doses for vaccinating the entire adult population.

Currently, SII and BBIL are selling doses of Covishield and Covaxin to private hospitals at INR 600 per dose and at INR 1,200 per dose respectively. Thus, these companies are financially incentivised to divert greater stocks to private hospitals, at prices that will exclude a large part of the Indian population and worsen vaccine scarcity at a time when the Central government, despite having the money, has abdicated its responsibility of procurement for a large part of the population. With ICMR, funded by the Ministry of Health & Family Welfare, earning royalties for the Centre out of financially distressed states having to pay INR 400 per dose of Covaxin, this appears to be a case of obscene vaccine profiteering and politics at the cost of citizens’ lives.

Many thanks to Akshat Agrawal for his insightful inputs for this post.

USTR logo

The Office of the United States Trade Representative (‘USTR’) recently released its Annual Special 301 Report on Intellectual Property Protection (‘Report’). To borrow Swaraj’s description of an earlier Report, the Special 301 Report “is a unilateral measure taken by the USTR which essentially ranks countries according to how much the US appreciates their IP regimes, and this is used as a kind of [political] ‘shaming’ mechanism to coerce countries into ‘strengthening’ their IP regimes to match the TRIPS-plus standards that the US tries to promote.” As always, India has found its place in the ‘Priority Watch List’ indicating that the US does not agree with the IP law regime of the country at several points. Adyasha has analysed the softened stance towards compulsory licensing in the Report. In this post, I shall analyse India-specific copyright and enforcement related issues discussed in the Report.

Copyright

The Report largely repeats its observations concerning copyright law in India from last year’s report. It commences with noting the high prevalence of piracy, particularly online piracy, in India. It is followed by a generic statement reading “Court cases and government memoranda also raise concerns that a broad range of published works will not be afforded meaningful copyright protection.” There is no indication what these cases and memoranda are that gives them such an impression and what issues that they deal with.

The Report then discusses the state of statutory licensing in the country in context of the draft Amendment Rules published by the DPIIT that sought to explicitly permit statutory licensing of internet broadcasts. It further goes on to criticize the draft amendments stating them to be antithetical to the interests of rights holders and questions the strength of protection of rights and the functioning of the music licensing market. These concerns, however, totally overlook the fact that the rules have already been notified a month and a half ago and none of these allegedly problematic aspects have seen the light of the day.

While the Report also raises valid copyright problems existing in India such as unauthorized file sharing and reprints, signal thefts, and circumvention of technological protection measures, the list also interestingly includes “commercial-scale photocopying”. This, however, is despite the thorough analysis in the DU Photocopy judgment highlighting inaccessibility of education in India and the necessary role played by such large scale photocopier to redress the same without hampering the market for the original product and within the confines of exceptions laid down in the Copyright Act.

Although not specifically mentioned in the country report for India, the general observations in the Report also emphasise the prevalence of unauthorized camcording as a key piracy issue and that India fails to “effectively criminalize unauthorized camcording in theaters”. While this might be considered to be in line with the commitments under Article 61 of TRIPS, it fails to take into account two facts. First, India’s criminalization of copyright infringements is already significantly broader than TRIPS requirements (see here) and thereby encompasses camcording, and second, there remains a general need to rethink criminalization as a solution to copyright piracy and assess its effectiveness.

As a parting aside, it is interesting to note that the Report mentions that the US is monitoring India’s next steps which includes “DPIIT’s December 2020 solicitation of public comments on amending the Copyright Act” (emphasis supplied). This is despite the fact that the consultations were carried out in a closed door manner with only industry stakeholders without any clear public involvement, thereby shutting off the biggest stakeholder as I argued earlier.

IP Enforcement

On the aspect of enforcement of intellectual property rights, the broad point made by the Report is that “While India’s enforcement of IP in the online sphere has gradually improved, a lack of concrete benefits for innovators and creators persists, which continues to undermine their efforts.” It further notes that the “overall IP enforcement” system in India currently “remains inadequate”. The Report rightly highlights some of the lingering problems in India from the perspective of enforcement such as lack of familiarity with techniques of investigation and absence of coordinated action by relevant authorities. It further highlights the absence of dedicated crime enforcement units in most states and recommends the creation of a “national-level enforcement task force for IP crimes.” The idea of the national task force seems to be in line with a similar approach undertaken in the US where an IP Task Force has been set up under the Department of Justice. The Mission Statement for the same reads as follows:

“The IP Task Force supports the Department’s efforts to aggressively investigate and prosecute a wide range of IP crimes, with a particular focus on:  (1) public health and safety; (2) theft of trade secrets and economic espionage; and (3) large-scale commercial counterfeiting and piracy.  The Department places a special emphasis on the investigation and prosecution of IP crimes that are committed or facilitated by cyber-enabled means or perpetrated by organized criminal networks.  The IP Task Force also supports state and local law enforcement’s efforts to address criminal intellectual property enforcement by providing grants and training.”

The point raised regarding enhancement of enforcement mechanisms related to intellectual property is considerably important for India. India is both a large contributor to the market for counterfeit goods as well as a large victim of the same as discussed on the blog here and here. The present enforcement system works in a piecemeal fashion without much coordination between different agencies. Dedicated IP enforcement units in each state combined with a central coordination agency could significantly help in tackling counterfeit goods being sold at national scale. This, however, should not take place without due regard to the current intellectual property regulatory framework in India which has an overemphasis on criminalization. Unless intellectual property offences are restrictively drawn, the creation of a dedicated task force would largely lead to greater probability of innocent parties being arrested despite possibly being protected by exceptions such as fair dealing. Similarly, we must be wary of the narrative linking intellectual property enforcement as a solution to tackling spurious drugs as the same has been largely used by big pharma to protect their commercial interests against generic manufacturers (see here, here, and here).

Conclusion

As far as the issues on copyright, piracy, and enforcement are concerned, the Report does not offer anything substantially new compared to the previous Special 301 Reports. While the earlier idea of threatening unilateral trade sanctions that the reports used to carry has slightly faded with the WTO coming into picture, the US still has the option to issue a formal WTO dispute based on the findings in the Report. This mechanism, however, is rarely used, largely for countries categorized as “priority foreign country”. Despite this, the Report still carries the weight of acting as a pressuring tool to stimulate changes in the intellectual property regimes of concerned countries. It particularly affects bilateral relations between two countries as can be seen from the private assurance given by the Indian government to the US-India Business Council in 2016 of not invoking compulsory licensing for commercial purposes following criticism in earlier Special 301 Reports. Similarly, last year the USTR removed India from the list of ‘developing countries’, thereby taking away the preferential treatment with respect to countervailing duties (CVDs). However, as noted earlier, on the front of copyright and enforcement issues similar concerns have been raised in the past only with limited success in actual change domestically. Admittedly, a lot of suggestions that push for greater commercialization and lesser accessibility for the public at large should not be weighed heavily in India. Genuine concerns such as those surrounding heightened prevalence of piracy and counterfeiting, and ineffective enforcement should, however, be given adequate attention in times to come, so long as a balanced and contextual approach is taken towards these issues and not one that runs at the whims of IP maximalists.

We’re pleased to bring to you a guest post by our former blogger Rajiv Choudhry, discussing the recent Delhi High Court order granting an anti-anti-suit injunction in favour of InterDigital in a SEP patent infringement dispute with Xiaomi. Rajiv is a practicing advocate based in New Delhi. He specialises in IP law, with a focus on high – technology and patent law and advises/represents clients on SEP/FRAND and other issues related or unrelated to those discussed in the post. He’s also a founder member of the Fair Standards Alliance, a not-for-profit body that advocates fairness in patent licensing. The views expressed in the post are personal. Rajiv’s previous posts on the blog can be viewed here, here, here, here, here, here and here.

India’s First Anti-Anti Suit Injunction (A2SI) Order: A Missed Opportunity

Rajiv Choudhry

Delhi High Court

On 3rd May, the Delhi High Court (DHC) in InterDigital Corp & Ors. v. Xiaomi Corp & Ors. issued its first and presumably first global anti-anti-suit injunction or A2SI (this terminology was first introduced by Florian Mueller on his blog fosspatents.com here). The judgment confirms its earlier order dated 9th October, 2020 in favour of InterDigital. See our blog post on the previous order here.

In its judgment, the court has directed Xiaomi to indemnify InterDigital against any penalty, if issued by the Wuhan court. Readers would remember that the Wuhan court had issued a penalty of RMB 1 million (~ $150,000) per day against InterDigital in its anti-suit injunction (“ASI”) of September 2020 if InterDigital proceeded with its injunction / damages suit against Xiaomi in before the DHC.

This is a long post and is divided into two parts for convenience. The first part deals with the decision issued by the Wuhan Court and includes a comparison of the prayers (as stated by the DHC) made in the Wuhan suit and in the patent infringement suit at the DHC.

The second part of the post covers a critique of the decision of the DHC and various factors that have been overlooked by the Court in issuing the first A2SI. These factors include InterDigital’s history in Chinese courts, and before Chinese anti-trust authorities.

A translation of the Wuhan court judgment may be read from here (source: patentlyo.com).

The substantive part of the Wuhan court reasoning is extracted below. This shows that InterDigital is avoiding dealing with Chinese courts and has used the Delhi High Court as forum of choice to get the desired results.

x—-x—-x

Since 2015, the applicants, as manufacturers of wireless communication terminal equipment and implementers of standard-related patents (including SEPs), have started the license negotiations with the respondents on the licensing of patents related to wireless communication standards. In May 2017, the respondents issued an oral offer to the applicants for FRAND licensing negotiations. On June 15, 2019, the respondents issued a written offer to the applicants concerning patented technologies covering 3G, 4G, 5G and 802.11, HEVC standards, and disclosed its license fee standard for their patented technologies related to standards. The applicants responded positively, and requested the respondents to provide the calculation method of the license fee rate and comparable rates for reference, but the respondents did not make any response. In view of this fact, the applicants issued a counteroffer to the respondents on July 30, 2019 for the aforementioned licensing negotiations. The counteroffer was rejected by the respondents.

In February 2020, the respondents initiated the standard-related patents licensing negotiation offer to the applicants again and sent the offer quotation to the applicants. Upon review, the applicants considered that there was no material change between the offer and the license fee rate proposed by the respondents in June 2019.

For this reason, for a long period of time, the two sides achieved no substantial progress in the negotiations, and the negotiations bogged down. On June 9, 2020, in order to resolve the deadlock in standard-related patents negotiations, the applicants filed a lawsuit with this court, requesting and accepting that this court, in accordance with FRAND rules, determine the global rate or range of rate involved in SEPs license fee negotiations between the parties.

However, the actions of the respondents after this court had accepted the case showed that the respondents did not respect the court’s trial procedure, which hindered the proceedings of the case and caused huge damage to the overseas market of the applicants and their affiliates.

On June 9, 2020, after accepting the case, this court served the respondents with the copy of the complaint, evidentiary materials, court summons and other judicial documents. On July 28 of the same year, the applicants informed the respondents that they had applied to this court to decide the dispute between the two parties on the license fee rate, and entered the proceedings.  The next day, the respondents, on account of Xiaomi and their affiliates’ infringement on their patents with No.262910, No.295912, No.298719, No.313036, No.320182 registered and held in India,, applied to the District Court of Delhi, India for a temporary injunction and a permanent injunction against the applicants Xiaomi and their affiliates’ producing and selling REDMI NOTE8, REDMIK20 and other wireless communication terminal products (mobile phone products), to restrict Xiaomi and its affiliates from producing and selling the aforesaid infringing products.

After the applicants learned that the respondents had applied for a temporary injunction and a permanent injunction against the applicants in the District Court of India, on August 4, 2020, the applicants requested this court to issue an anti-suit injunction to prevent the respondents from interfering and obstructing the trial of this case through the injunctive measures launched against the applicants Xiaomi and their affiliates.

On August 11 of the same year, this court sent copies of the complaint, evidence and court summons and other documents to the respondents via e-mail. After these emails were successfully sent, the two respondents refused to reply to this court. On September 2, the same year, this court again sent copies of the indictment, evidence, litigation formalities, court summons and other judicial documents to the two respondents by express mail. According to the tracking information of the express delivery, the lawsuit documents of the case had arrived in the United States on September 14 of the same year, and the delivery was successfully completed on September 19 of the same year. But the respondents still did not sign the receipt and reply to this court. On September 23, the same year, after the applicants completed the required procedures for the application for this anti-suit injunction, this court accepted its application for an anti-suit injunction and initiated the review procedure for an anti-suit injunction. The above indicates: First, after the applicants notified the respondents that this court could accept this kind of case, the respondents got the information that this court had accepted the case. However, the respondents did not respect and cooperate with this court in initiating the proceedings of this case, but initiated the temporary injunction and permanent injunction proceedings in the District Court of India in order to exclude this court from jurisdiction of this case and neutralize this case, causing interference and obstruction to the hearing procedure of this case.

x—-x—-x

Analysis of the Delhi High Court Judgment

The judgement is 107 pages long and the real analysis is in last 35 odd pages, the remainder being facts of the case, Indian case law, or foreign case law pertaining to on anti-suit injunctions.

In issuing its overly broad (my view) order, the court seems to be guided on the fact that InterDigital had not been served any notice of the Wuhan proceedings (even though notice was given by email on 11.08.2020, and thereafter on 02.09.2020).  The court records in para 94.3:

“….Even as regards the main complaint and the documents filed by the defendants, in that regard, the Wuhan Court records, candidly, that service of the complainant and the documents were still in process, but that it was nevertheless proceeding to issue the anti-suit injunction “directly”, “in a sense of behavior preservation”. Whether the Wuhan Court was justified in doing so, or not, is not for me to comment on, in the present proceedings. Suffice it to state that, in the circumstances, the contention that the order of the Wuhan Court was passed after due notice to the plaintiffs is obviously unacceptable.”

If one reads the Wuhan court judgment, it is clear that service was made to InterDigital by both the court as well as Xiaomi. One doubt that emerges here is that the procedure to obtain an ex parte hearing / status quo order is somewhat similar to the process adopted by the Wuhan court. Like the Wuhan court, we too have a similar procedure where a party is heard and an ex-parte order / status quo order depending the test as laid down under Order 39. Hence, if the Wuhan Court has termed its order as a ‘behavior preservation order’, I see no issues: after all we too issue notice to the opposite party under Order 39 Rule 4 after the ex-parte order is issued.

The court then compares the suit in New Delhi to the proceeding in Wuhan.

In para 96, the Court considers InterDigital’s ETSI commitment to grant licenses of its SEP portfolio.  The para goes on to identify several of Xiaomi’s handsets that supposedly infringe InterDigital’s patents, and also that Xiaomi has been unwilling to take a license to the FRAND terms.

Prayer in the New Delhi suit

Para 6 provides, “…as such, in the suit, the plaintiffs have not sought an absolute injunction, against the defendants, from using the SEPs held by the plaintiffs, but have sought for an injunction in the event the defendants are not willing to obtain licences, from the plaintiffs, for use of the said SEPs, at FRAND royalty rates.”

This can be stated as InterDigital wants the court to determine FRAND royalty rates, and indeed para 7 provides, “Determination of the FRAND rate at which the defendants could obtain licences, from the plaintiffs for using their SEPs is, therefore, unquestionably an inalienable part of the present litigation.”

Para 97 provides the details of the Wuhan Complaint:

“The prayer clause, in the Wuhan complaint of the defendants, requested the Wuhan Court “to determine the global royalty rates or the range for the licensing of all standard essential patents (“SEPs”) and patent applications in (the plaintiffs) 3G, 4G patent portfolios that (the plaintiffs) hold or have the right to license in accordance with FRAND principal”.”

The same para goes on to state:

“The complaint thereafter refers to a Confidentiality Agreement executed between the plaintiffs and the defendants in December 2016, for a potential patent cooperation project, whereafter it is asserted that substantive licensing negotiations, for the patents held and managed by the plaintiffs, commenced. Details of the negotiations follow, resulting in the defendants alleging that “the royalty rates for the relevant wireless communication SEPs offered by InterDigital (were) obviously too high, which violate(d) FRAND licensing obligations”. Exception has also been taken, into the complaint, to the refusal, by the plaintiffs, to disclose the basis on which they had worked out the royalty rates.”

We’re pleased to bring to you a two-part guest post by our former blogger Rajiv Choudhry, discussing the recent Delhi High Court order granting an anti-anti-suit injunction in favour of InterDigital. Rajiv is a practicing advocate based in New Delhi. He specialises in IP law, with a focus on high – technology and patent law and advises/represents clients on SEP/FRAND and other issues related or unrelated to those discussed in the post. He’s also a founder member of the Fair Standards Alliance, a not-for-profit body that advocates fairness in patent licensing. The views expressed in the post are personal. Rajiv’s previous posts on the blog can be viewed here, here, here, here, here, here and here.

India’s First Anti-Anti Suit Injunction (A2SI) Order: A Missed Opportunity (Part II)

Rajiv Choudhry

Delhi High Court

In Part I of this post, I’d covered the decision issued by the Wuhan Court and includes a comparison of the prayers (as stated by the DHC) made in the Wuhan suit and in the patent infringement suit at the DHC.

This post continues from the previous post on the issue and covers a critique of the decision of the DHC and various factors that have been overlooked by the court in issuing the first A2SI.  These factors include InterDigital’s history in Chinese courts, and before Chinese anti-trust authorities.

Para 98 provides the conclusion: “Holistically viewed, I do not think that the Wuhan Court was justified either in holding that the plaintiffs had sought to interfere with the complaint filed by the defendants in the Wuhan Court, by filing the present suit, or that they intended to exclude the jurisdiction of the Wuhan Court thereby.”

This reasoning provides a higher pedestal to the patentee, and the alleged infringer is left to bear the brunt of the order.  How can InterDigital be entitled to a FRAND royalty before determining: validity, essentiality and / infringement of each of its patents?  Isn’t a court entitled to hold specific views about the lis it is approached to adjudicate upon?  It is reasonable for the Wuhan court to view the Indian filing as an impediment in the final determination of global FRAND rates.

The matter in India is one for determination of damages.  Here it must not be forgotten that in patent matters: damages come at the end of a trial, where the Plaintiff has shown that it has a right, that right has been infringed, and that claimed damages will make it whole – i.e. are in proportion to the Plaintiff’s losses.  Even assuming that InterDigital’s patents are: (1) Valid, (2) Essential, and (3) Infringed, all that InterDigital is entitled to is a FRAND royalty (see para 7).  The question whether the demand is FRAND is itself a question that, as para 7 provides, is up for deciding.  Despite recording this fact (last sentence) in para 98, the order does not factor the same into consideration.

Once a different court is seized of the same matter (determination of FRAND royalty / global royalty), the Delhi Court should have gone slow as itself observes the Supreme Court’s order in Modi Entertainment Network v. W.S.G. Cricket Pte Ltd. (para 23, page 24) and the seven principles it laid down for issuance of an anti-suit injunction.

In particular, the present order loses site of the fact that global royalty rate determination is up in Wuhan (para 97) and that a confidentiality agreement is already in place between InterDigital and Xiaomi in 2016 (para 97).  The court also loses site of the fact that the Wuhan matter is for a global royalty rate determination, which includes India.  Hence it is India that is a forum-non conveniens, not China.

Sufficient to state that once the Wuhan court sets a global rate, there would no requirement for any court leave alone the Delhi Court to determine validity, infringement, essentiality, etc.

However, reasoning in para 99 loses site of this fact and presumes that the Indian court will set out to do all that at least for the patents in suit, no matter that it has to reach the same result that the Wuhan court is tasked with.

Hence the court wrongly concludes that the Wuhan Court order of 23.09.2020,  “…falls into error falls into error in opining that the plaintiffs had, by initiating the present proceedings before this Court, sought to exclude the jurisdiction of the Wuhan Court.  Rather, the Wuhan Court has, by its order, sought to exclude the jurisdiction of this Court to adjudicate on the lis brought before it by the plaintiff which this Court, and no other, is empowered to adjudicate,…”  The order also concludes that there is no overlap / minor overlap between the two matters, which does not prevent it from adjudicating the same.

The Court in issuing its order also provides that if the Wuhan court enforces its ASI order, and directs InterDigital to deposit penalties for prosecuting its Indian suit, then Xiaomi must compensate it by depositing a corresponding amount with the Court in India. This amount could be secured by InterDigital thereafter.

This is an entirely wrong conclusion and the order makes no reference to the advanced negotiations held into by the parties.   The Delhi High Court order makes selective reference to the Wuhan court order and does not refer to the substantive facts / reasoning therein.

If one reads the Chinese court order, it is clear that InterDigital is forum shopping and using one court to issue orders to avoid those from a different jurisdiction.

Some aspects that should have been considered by court (or should have been brought to the attention of the court but were not:

A. InterDigital in Chinese Courts

The DHC does not keep in view the conduct of the parties:  In 2013, InterDigital did not participate in antitrust proceedings brought in by Huawei in China for the fear that its executives would be arrested.  Shenzhen-based Huawei claimed InterDigital charged it a royalty rate far above what it obtained from Apple Inc and Samsung Electronics Co Ltd.  See post on reuters on this issue and InterDigital’s own SEC filing.

This proceeding was a result of the suit that InterDigital had brought against Huawei and others in the U.S. International Trade Commission for infringing its SEPs on 26.07.2011.  And very predictably on 05.12.2011, Huawei filed a suit against InterDigital in Shenzhen Intermediate Court in China.  This suit alleged that InterDigital held a dominant market position in China and the United States in the market for the licensing of essential patents owned by InterDigital and had abused its market power by engaging in unlawful practices, including differentiated pricing, tying, refusal to deal, etc.

On 04.02.2013, the Shenzhen Court held that InterDigital had violated China’s Anti-Monopoly Law by (1) seeking royalties from Huawei that the court believed were excessive, (2) tying the licensing of essential patents to non-essential patents, and (3) requesting as part of its licensing proposals that Huawei provide a grant-back of certain patents to InterDigital. The court ordered InterDigital to cease the alleged excessive pricing and bundling of non-essential patents with essential patents and pay Huawei approximately USD3.2 million in damages.

InterDigital appealed to the Guangdong High Court, which affirmed the Shenzhen Intermediate Court’s decision in its entirety.  The High Court found the two acts of InterDigital to constitute an abuse of its market dominance. See coverage here and here.

B. InterDigital’s history with Chinese anti-trust agencies

In May 2014, InterDigital settled anti-monopoly charges with the Chinese National Development and Reform Commission (“NDRC”).  As a condition for terminating the investigation, InterDigital made the following commitments regarding the licensing of its patent portfolio for wireless mobile standards to Chinese manufacturers of cellular terminal units, as follows:

1. Offer a global license for its standard essential patents only;
2. InterDigital will not require that a Chinese manufacturer agrees to a royalty-free, reciprocal cross-license of the Chinese manufacturer’s similarly categorized standard-essential wireless patents;
3. Binding arbitration before commencing exclusionary action or injunctive relief: InterDigital will offer Chinese manufacturer (with whom it is not able to agree global royalty rates for its SEPs) the option to enter into expedited binding arbitration under fair and reasonable terms to resolve the royalty rate and other terms of a worldwide license under InterDigital’s wireless standard-essential patents.

C. Standard declarations and patents in China

The Wuhan court was adjudicating upon a global rate: This required it to see all possible SEP declarations made by InterDigital.  I did a small declaration search.  Per this search done on ETSI (ipr.etsi.org), InterDigital has made 74 declarations with China specific patents vs. 32 declarations having India specific patents.  Each of these declarations have additional patents and the number is in the hundreds. It is clear that InterDigital itself considers China to be a more important market than India, and which is why more filing in China as compared to India.

One additional information that might be seen is that the declarations with India specific patents are recent: specifically 2014 onwards.  This means that the affinity that InterDigital has towards filing patents in India is recent as compared to China.

Hence the court should have allowed for a determination of global royalty rate first and gone slow.  It would be check mate for InterDigital if the Wuhan court issues a global license for its wireless SEPs.  Adjudicating the validity, essentiality, and infringement of the same here in Delhi would then be a futile exercise.

D. Practical reasons why Chinese courts should evaluate the FRAND royalty

In the end I must add practical reasons why a Chinese court should determine the royalty rate, and not Indian courts. This is because the Chinese courts control the complete semiconductor ecosystem that builds all parts that go into the mobile phone: from the display to the touch pad, to the baseband processor, to the memory, to the antenna, everything is manufactured in China. Of course, there are some components that are made in India but they are at the lower end of the supply chain.

Hence, the Chinese courts have complete information as far as rate determination goes. This is important because InterDigital (and other SEP owners) does not license baseband processor providers: for good reason. They will get less royalty.

In the image below (front and back end semiconductor of a mobile phone), the only component that relates to SEP in the cellular context is the baseband processor. Other components are device specific and have no relation to the baseband processor. In other words, there is no issue before the Indian court whether the royalty demanded is FRAND. The issue before the Indian court is complicated by the presence of the confidentiality club.

Image from here. Similar charts may be seen here.

This is not how our public policy works…. hopefully! Image from here

On 11th May, it was reported that Kerala High Court has sought a response from the Central government on a PIL seeking direction to the government to invoke the compulsory license (CL) provisions for the COVID-19 vaccines. In the PIL, the Petitioner (Adv. Gopakumar GV) argues that in the present crisis resorting to CL will assist the nation to ramp up the quantity of vaccine output and thus overcome its scarcity. As reported before, the government is already facing a Gatling gun of questions on its stance pertaining to CLs and opinions seem to be divided on the effectiveness of the mechanism in assuring access to vaccines and other treatments in the pandemic. 

However, a CL could be granted under sections 84 and 92 of the Patents Act only when the invention is patented in the first place. Therefore, the million-dollar question (quite literally) remains:-

Are there any patents on the vaccines yet?

To simply answer this question- No, there is no patent granted on the COVID-19 vaccines yet (as explained by Prashant in this session and also stated in the petition). But alas things are not quite simple. It has been reported that despite having no patent on any of COVID-19 vaccines, many vaccines are still protected owing to patents on their underlying technology. For instance- internationally:-

• Pfizer-BioNTech’s BNT 162 Vaccine uses patented lipid nanoparticle (NP) technology to deliver mRNA to cells.
• The underlying technology behind Moderna’s mRNA vaccine too is patent protected and its specific Betacoronavirus mRNA vaccine enjoys patent protection as well.
• AstraZeneca’s COVID-19 vaccine- ChAdOx1 nCoV-19 or AZD1222 is based on “novel adenoviral vectors derived from a chimpanzee adenovirus” which also enjoys patent protection. (see here and here).

Things are not different in India too where the tech behind Astrazeneca vaccine (Covishield) is protected under Patent no. 318021 see (pdf) (for- adenovirus vector comprising capsid derived from chimpanzee adenovirus AdY25)  and Patent no. 263933 see (pdf) (for- immunogenic composition or vaccine with simian adenovirus vector). The owner of this tech is ISIS Innovation Limited- Oxford University’s technology and research commercialization company, which has now been renamed to Oxford Union Innovation. Apart from these 2 registered patents, there are at least 2 applications pending under the name of Oxford University Innovation Limited for (Application no. 201817047327; filed on 14.12.18) (pdf)  and (Application no. 202147007710; filed on 24.02.21) (pdf). With regard to IP on Covaxin- after a thorough public search on ipindia.com, I could not find any applications by ICMR or Bharat Biotech on the vaccine yet. (The last application that I could find by Bharat Biotech concerns the Zika virus vaccine – see pdf here) However, it has been reported that Bharat Biotech and ICMR have been sharing the IP behind the vaccine and have agreed to divide the royalties generated – see also Anupriya’s recent post. 

Therefore, despite not being protected by patents themselves, the vaccines still enjoy some sort of exclusivity from the patent protection accorded to the technology behind it. This brings me to my next question- 

Can compulsory licenses help ramp up vaccine production?

CLs are suggested as means to ramp up outputs. Assuming that the government is satisfied that owing to the present pandemic it is necessary to grant CLs on the patents relating to the technology underlying the vaccines, it could issue a notification under Section 92(1) for CL and then the interested parties may apply before the Controller for such a license. Issuing CLs to the interested parties on these patents would help remove the existing patent barriers to the manufacture of more vaccines in the country. Further, even if the Government cannot grant CLs for the Covid-19 vaccines yet as there are currently no “patents in force” on them, it can invoke Section 100 of the Act to authorize any person to manufacture these vaccines for the purposes of the Government if patent applications have been filed for them. It is unclear though if any application has been filed for these vaccines yet. The Government can, however, authorize the use of the technology behind the vaccines in respect of which patent applications have been filed. For using the flexibility under Section 100, there is no need for a patent to be registered. Rather, the Central government can use it anytime after an application for a patent has been filed with the Patent Office. Prashant had earlier highlighted this alternative among other provisions of the Patents Act to ensure that a stockpile of essential medicines and medical devices are available for prompt disposal in the pandemic. 

In practice though, it seems slightly improbable that CLs or government use of the invention alone will do the trick to increase the output of COVID-19 vaccines for the reasons discussed below.

Non-patent IP barriers: Undisclosed information

As Chris Garrison has succinctly explained here, there is an ‘IP Stack’ which causes hindrance to accessibility. This stack contains three types of protection:- 

1) Patents; 

2) Data Exclusivity (i.e. exclusivity over clinical and preclinical trials data filed before the drug regulating authority);

3) Trade secrets. 

Via CL, the generic manufacturers can only overcome the patent barrier and use the information disclosed by the patentee to the Patent Office in exchange for the patent monopoly. There are other substantial bits of information that remain undisclosed and to which the generic manufacturer will remain oblivious despite getting a CL for the invention. But then many of us may ask, isn’t the entire purpose of granting a 20-year patent monopoly to bring to the public domain all the information that may be necessary for others to effectively manufacture the invention once the patent monopoly ends and thereby benefit the public? Under TRIPS, countries are bound to require the patentee to disclose only the sufficient (which may not be the best way) to carry out the invention. Therefore, while countries like India (see section 10(4)(b) of Patents Act) and the US require best mode disclosure (Section 112 US Patents Act,  see page 412), Europe requires only sufficient disclosure. Even where the patentee is required to disclose the best way, the disclosure may still be lacking (see pages 3-5; also see here, here ) some information required to carry out the invention in an effective and commercially viable way (for instance, because it is required to disclose the best way known on the date of filing only and so it can keep secret the information on a better way that they may find over time). Considering that disclosure is the cornerstone of the patent bargain, it is upsetting to see how little has been done to ensure that the disclosure is meaningful. 

Description: Disclosed and undisclosed information. Each bar represents the total information required to carry out the invention in an effective and commercially viable way at some point during the lifetime of the patent. The white and grey fractions notionally represent the portions of the information that have had to be disclosed (made public) by the patent owner and those which have not (kept secret). See Source

Without falling prey to the western straw man arguments that the scientists in India do not understand science or produce substandard medicines etc, it is true that reverse engineering a biologic using just the disclosure made before the Patent Office does not necessarily yield a biosimilar. For example in the past, the Brazilian Patent Office sought to translate important patents of developed countries into Portuguese, as a way to encourage industry to circumvent the obligation to pay royalty and imitate these inventions. However, without access to other undisclosed information, this experiment proved to be a recipe for disaster as the products manufactured out of this exercise were something else altogether. 

While CLs can be a fruitful alternative for reverse engineering molecule based drugs (like paracetamol, which apparently has a ceiling price unlike COVID-19 vaccines) or for accessing disclosures made before the Patent Office, it will fall short to ensure that complicated biologics like Covishield or Covaxin can successfully be reverse engineered to biosimilars in no time, unless there is also an eco-system in which such inventions can be worked, including skilled personnel, appropriate equipment, the required know-how, etc. As Prashant has pointed out here, it is necessary that focus shifts from IP to undisclosed information and tech transfer especially in the context of COVID-19 vaccines. This brings me to my third question- 

How can the undisclosed information be accessed?

As explained by Anupriya, clinical trial data is relevant to evaluate the safety, quality, efficacy, risks and benefits of the drug along with its composition, including physical and chemical characteristics. TRIPS under Article 39.3 prescribes for protection of clinical trial data which can be disclosed when it is ‘necessary to protect the public’. However, Prof. Basheer in his paper has pointed out that there are no express provisions within any Indian laws that prevent disclosure of the test data results to any third party. An elaborate discussion on this is done by Amit Singh and Pramita Dasgupta here.  

Leaving the patent disclosure and clinical trials data aside, the third piece of the puzzle is to access trade secrets. Trade secrets refer to information that can range from technical designs and specifications to instruction manuals, process controls etc. While India doesn’t have a specific law for trade secrets, they can be protected (paywalled) under the Indian Contracts Act and Common Law Principle of Equity. Unlike the above two sets of information, trade secrets are not disclosed before any authority. Therefore, to access trade secrets, voluntary cooperation with its holder is required. In such a situation, if measures like CL or disclosure of clinical trials are resorted to, then there is a probability that the holder of a trade secret might end up protecting the information in a much more aggressive manner. Owing to the above reason, CLs may not be sufficient to ensure access to vaccines. In the same vein, organizations like IDMA and OPPI have suggested that waiving patents alone won’t be sufficient for improving the output of vaccines.

The government has recently come out (sorta) on its rationale for the nonuse of flexibilities under the Patents Act. In the affidavit filed before the Supreme Court, the government preferred to get into voluntary negotiations with the drug manufacturers instead of resorting to any TRIPS compliant flexibility under the Patent Act. While it is understandable that undisclosed information behind Covishield might require cooperation on part of Astrazeneca, it is startling to see the Centre’s opacity over Covaxin esp now when it is out in the open now that the government is one of the IP owners of Covaxin. Anupriya in her three-part post (here, here, and here) wrote on this issue and suggested that the government must make it available to the public. Similar requests of tech transfer have been made by various Chief Ministers recently (see here and here).

Seemingly the government has paid heed to these requests and has announced its plans to ramp up production of Covaxin by roping in 3 PSUs (Haffkine Biopharmaceutical Corporation Ltd, Mumbai, Indian Immunologicals Ltd, Hyderabad and Biologicals Limited (BIBCOL), Bulandshahr) under  “Mission Covid Suraksha”. It has further been reported that Bharat Biotech will share the Covaxin “formula” with the interested manufacturers, which comes after ICMR said something similar a few days back. An official announcement is yet to be made in this regard. The bigger issue is all of this planning could have and should have happened one year ago, not only after a deadly 2nd wave. India is supposed to be one of the most capable vaccine manufacturers and arranging sufficient quantities shouldn’t have been an issue with a bit of foresight and planning. Sure, India did bet on Novavax (see here, here (paywalled)). However, it should have realized that betting all the monies on one horse in a pandemic might only take the jockey this far. 

Thanks to Pankhuri and Swaraj for their valuable inputs!