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As expected, the judgment of the Division Bench (DB) of the Delhi High Court in the Monsanto v. Nuziveedu litigation was admitted by the Supreme Court last week and the case is now slated for a hearing in July sometime. The bench of two judges hearing the matter refused to grant a stay on the operation of the DB’s judgment. While I don’t (yet) have access to the pleadings, I’m told that Monsanto’s legal team is now disputing the extent to which they waived their right to trial and are claiming that the High Court erred in assuming that they had waived their right to trial even on the issue of patent validity.

As I mentioned earlier, it seemed rather exceptional for Monsanto to waive its right to a trial in such a complicated case. The fact that they are contesting the judgment on this issue of waiver of trial clearly indicates some confusion before the Division Bench. Since Indian courts do not maintain verbatim transcripts or video recordings of the proceedings, Monsanto is going to be drawn into a ‘he-said, she said’ situation and judges tend to believe other judges. It is highly unlikely that the SC will set aside the decision on these grounds.

So how then is the appeal going to proceed before the Supreme Court?

Ideally an appeal of this nature should be confined to the appellate court examining whether there has been any abuse of discretion by the lower courts i.e. correcting errors made by the lower court if any. However, in high-profile cases like this, the Supreme Court very often ends up hearing the entire case de novo i.e. from scratch. This is what happened in the Glivec case – the Supreme Court’s judgment bears little semblance to the IPAB’s judgment.

If the court is going to hear the appeal de novo it will have a chance to finally lay down the law on some basic principles of patent law. The success of the court in this endeavour depends largely on its ability to cut through the clutter and zero into the core legal issues.

Claim construction – what is the subject matter of Claim 25 and is it hit by Section 3(j)?

The first and foremost issue, in my opinion, is the manner in which the patent claims are to be interpreted by the court. The patent claims are the most crucial aspect of any patent litigation because these claims identify the nature and scope of the invention being protected.

There are several techniques to interpret claims and the basic debate on claim interpretation is quite similar to the debate on statutory interpretation. Judges have a choice of sticking to a literal interpretation of the words contained in the claim or going for a purposive interpretation by looking at the history of the patent prosecution etc. etc. I suspect Indian judges will tilt towards the latter but whatever the conclusion the Supreme Court comes to it is important for the Court to lay down the substantive law on the issue. Common law depends on case by case evolution and this case can be an important milestone in how the Patent Office understands claim construction.

Other issues for the court to consider are whether claim interpretation is purely a question of law or fact and whether the parties are expected to lead evidence on the issue and whether a trial court should be conducting a separate claim construction hearing.

Based on the claim construction principles laid down by the Supreme Court, it will be interesting to see how it interprets Claim 25 of the disputed patent. The claim is as follow:

A nucleic acid sequence comprising a promoter operably linked to a first polynucleotide sequence encoding a plastid transit peptide, which is linked in frame to a second polynucleotide sequence encoding a Cry2Ab Bacillus thuringiensis 8-endotoxin protein, wherein expression of said nucleic acid sequence by a plant cell produces a fusion protein comprising an amino-terminal plastid transit peptide covalently linked to said 5- endotoxin protein, and wherein said fusion protein functions to localize said 5-endotoxin protein to a subcellular organelle or compartment.

In my opinion, the Division Bench of the High Court does a very poor job of interpreting this claim because it gives three different interpretations to the same patent claim.

At one point it states the invention is not a product or a process but for an “event”. In the court’s words, “in the opinion of the court…. what was granted was not a patent over the product, or even the method, but of identification of the “event” i.e. the place in the genetic sequence of the DNA where the CryAB2 protein, in the plant cell.”

At a later stage, the court states that “it is held that the subject matter, the concerned nucleotide sequence over which Monsanto has patent rights and the process is unpatentable by reason of Section 3(j) of the Patents Act”. Here the court appears to reach this conclusion on the grounds that Monsanto’s patent is for an “essentially biological process” which is specifically prohibited by Section 3(j).

Then while discussing the issue of overlaps between the Patents Act and the Plant Variety Protection & Farmers Right Act (PVPFRA) the court states that “a transgenic variety can be a “new variety” and, therefore registrable under Section 15(1) …..Therefore, there is not merit in Monsanto’s argument that its products cannot ipso facto be registered and secure protection under the PV Act”.  So here, the Court characterises Monsanto’s invention as a plant variety which again is unpatentable under Section 3(j).

So, is Monsanto’s patent, for an “event”, “an essentially biological process” or a “plant variety”? The court appears to be saying that the invention is all three – that in my opinion is a category error and highlights the importance of claim construction because only when the nature of invention is correctly identified can the court go ahead and determine whether the said invention falls foul of the criteria in Section 3 of the Patents Act before assessing the patent on other factors such as inventiveness etc.

Each set of interpretations offered by the Division Bench has different implications. If the claim is interpreted to mean an “essentially biological process” (read Eashan Ghosh’s excellent post over here for the High Court’s understanding of “essentially biological”) or “microbiological process” (read my post here) or a “plant variety” then Monsanto will have a tough time swinging the case in its favour because it will be hit by Section 3(j).

If the invention is identified as selected genes of a micro-organism and the placement of said genes at a particular location in a plant genome then I don’t see Section 3(j) tripping the patent. The analysis then will have to shift to the question of whether the said invention was novel and inventive. To determine that question, the Supreme Court will have to remand the matter to the trial court to determine the evidence.

The challenge thus for the Supreme Court is to ensure that it does not err on the issue of claim construction.

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One of the central planks of Nuziveedu’s defense in its ongoing litigation against Monsanto, that we’ve blogged about over here and here, is its claim that Monsanto’s invention is nothing but a “transgenic plant” with increased insect resistance and that the same could be protected as a “plant variety” under the Plant Variety Protection & Farmers Rights Act, 2001 (PVPFRA). As discussed earlier, this characterization of Monsanto’s claim may not be accurate but it seems to have been accepted by the Division Bench (although as explained in my previous post, the court is confused regarding the nature of Monsanto’s invention).

If Monsanto’s patent is interpreted as claiming a plant or plant variety it would mean that the patent would have to be struck down for violating the statutory prohibition against patenting plants and plant varieties under Section 3(j) of the Act. Although “plants” and “plant varieties” are not patentable under the law, it is possible for private parties to claim monopolies over “plant varieties” under the PVPFRA, which is a sui generis legislation. It is important to understand that only plant varieties and not plants can be protected as monopolies under the PVPFRA. So, for example, seed companies can’t simply claim a monopoly over all mango trees under the PVPFRA but they can claim a monopoly over certain varieties of mango trees that have been developed by a breeder (for example alphonsos) provided it meets certain requirements under the PVPFRA. Similarly, in the case of cotton, while seed companies can not claim a monopoly over the cotton plant per se, they can certainly claim protection over individual varieties of the cotton plant of which there are several.

The reason that India enacted this legislation is two-fold. First, there was a domestic demand for such a legislation from Indian seed companies who wanted to protect their new plant varieties – unlike other Indian industries, domestic seed companies in India are very innovative given the country’s long history of agriculture, we definitely have the skills to breed new varieties and it is Indian breeders who best understand Indian soil and climatic conditions. Second, TRIPS required India to provide some form of IP protection for plants under its domestic law, even if it wasn’t under patent law. The option of a separate law for plant varieties, rather than forcing it under patent law was because the Europeans have always had a separate IP system for plant varieties modelled on the UPOV treaty. (as have the Americans but this is of lesser significance since plants are patentable subject matter in the US). UPOV provides for a wide experimental use exception and allows farmers to reuse seeds – both of these features would not be allowed under the EU’s patent law treaties at the time.

The Indian government opted for replicating the European model and using UPOV as the base for its new legislation. That may not have been the best decision because the advent of biotechnology in the 80s had led to significant litigation in the EU on the bright lines between their patent law and their sui generis PVP legislation. This is because biotechnology opens the door to genetic manipulation and patent offices around the world started granting patents for biological material, usually in the form of micro-organisms.

Today, we are facing the same issues in India as the EU did in the nineties and have not learnt the right lessons from the EU which has taken steps to mitigate the effects of a possible overlap between the PVP and patent legislation. (I have a forthcoming article on the Indian overlap issue in the JWIP, although I am not sure when exactly it will be published). Further, in India we already had a Seeds Act, 1966 which regulated the quality of seeds and while I haven’t studied the issue in detail I suspect the PVPFRA overlaps with the Seeds Act to a limited extent.
But enough of history.

Returning to the issue at hand, it is necessary to understand that the definition of plant varieties would necessarily require Monsanto to be claiming a particular variety. Monsanto’s patent, as I discussed in the earlier post, appears to be claiming genes of a micro-organism placed in “any plant”. So, was the High Court correct in simply telling Monsanto to get its invention registered under the PVPFRA? I don’t think so, for two reasons.

First, if the entire claim of Monsanto’s patent was directed towards a micro-organism then it is patently clear that its invention cannot be protected under the PVPFRA especially since the legislation specifically excludes “micro-organism” from the definition of “variety”. Moreover, it is necessary to understand that Monsanto’s Claim 25 is not directed at merely at a specific variety of a cotton plant but it applies across the board to all plants (whether the claim is overbroad is a different issue). So, the debate once again goes back to the interpretation of claim 25.

The second simpler argument raised by Nuziveedu is that of “benefit-sharing”. Nuziveedu has been arguing (and the High Court has accepted the argument) that at most Monsanto can register its invention as a variety under the PVPFRA after which it can invoke the “benefit sharing” clause under the law to claim royalties from any other seed company which uses the Bt. Trait that Nuziveedu claims is the essence of Monsanto’s invention.

The “benefit sharing” provision is unique to the Indian legislation and is not present in UPOV. It is defined as follows:

“benefit sharing, in relation to a variety, means such proportion of the benefit accruing to a breeder of such variety or such proportion of the benefit accruing to the breeder from an agent or a licensee of such variety, as the case may be, for which a claimant shall be entitled as determined by the Authority under section 26”

The logic of mandating “benefit sharing” under Indian law was to protect small farmers/breeders who have bred new varieties that may have then been used by seed companies or universities as the basis for their own varieties. After all, plant varieties are always bred from existing plant varieties. Like several other “feel good” provisions in the PVPFRA, the benefit sharing provision is utterly unworkable because how ever do you determine ownership of genetic material that has never been registered and how exactly are you going to determine benefit sharing as per the proportion of genetic material used? You can have a case where there are 10 genes that are useless but 1 gene that can be gamechanger – how ever is a governmental authority going to determine the manner in which royalty can be shared in such cases? As far as I am aware, since the legislation was enacted, there has been only one case which perhaps qualified for benefit-sharing and that is the case of the HMT rice variety. Our former blogger, Mrinalini had written about the case over here and more recently the Wire reported on it over here. Even in that case the farmer never got any “benefit”.

In the facts of the present case, if Monsanto’s invention is construed as being over a micro-organism, there is simply no case of benefit sharing because the benefit sharing provisions extend only to plant genetic material and not genetic material belonging to micro-organisms. So, the entire issue circles back once again to claim construction and identifying the soul of Monsanto’s patent.

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We are pleased to bring you a guest post by our Fellowship applicant Prarthana Patnaik. She is a 4th year student at National Law University, Odisha. This is her first submission for the Fellowship.

Can Embedding Tweets Constitute Copyright Infringement?

Prarthana Patnaik

On 15^th February, 2018, a New York District Court ruled that embedding tweets may amount to copyright infringement. This decision (Goldman v. Breitbart) has generated widespread criticism for it has far-reaching implications on acts of in-line linking done on the Web, which is a fairly common practice today.

In-line links enable content from a source website to be visible as part of a linking website’s main body, i.e., instead of taking the user to another web page like a normal link, an in-line link creates a connection between the linking website and the source website and the user has access to the source website’s media without ever exiting the linking website. Copyright owners often criticize acts of in-line linking since netizens and other competitors often take advantage of this technology to display and pass off copyrighted content as their own.

In the twitter verse, tweets may be embedded by using in-line links. This makes tweeted content appear on web pages other than Twitter. Notably, this differs from retweeting – which occurs when a user re-posts or shares his own Tweets or another person’s Tweets with his followers.

Brief Background

Coming back to the case at hand, the events underlying it date back to 2016, when the plaintiff, Justin Goldman uploaded his photo of a famous sports figure, Tom Brady, on his Snapchat story – which went viral and landed on several online platforms, including Twitter. The tweet containing the photo was later embedded by news outlets and blogs in their articles. Subsequently, Goldman sued the news companies for infringing his exclusive right to display his copyrighted work. Before the Court, the defendants’ primary argument was that under the ‘Server Test’, they could not be held liable.

Applicability of the Server Test

The Server Test was first introduced in the 2007 ruling of Perfect 10 v. Amazon.com. According to this test, in order to constitute an infringement of the exclusive right of ‘display’ of electronic information, such information needs to be stored on the accused’s server. Hence, creating in-line links cannot amount to ‘displaying’ the information. Over the years, this test has been adopted in several cases (see Flava Works v. Gunther, Pearson Education v. Ishayev etc.) giving it the stature of a well-established precedent.

Despite this, the Goldman Court did not apply this test. The Learned Judge’s reservations against this test can be divided into two broad categories.

Firstly, she delved into the plain meaning of the right to display under the American Copyright Act, which states that “to “display” a work means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process…” .Traditionally thus, the definition of ‘display’ requires ‘copy’ of original content to be in a tangible medium of expression. Applying this definition, the defendants in Goldman, employed the server test to argue that there had been no ‘display’ of the photograph because the defendants had not ‘copied’ it, i.e., it was not stored on their servers. Instead, they had merely facilitated users’ access to the photograph by linking it.

The Court, however, differed from this and concluded that ‘display’ is possible by a ‘process’, other than by making a ‘copy’. It stated that the defendants took an ‘active step to transmit the photo by ‘including the code’ i.e., embedding. It opined that since these steps constituted a ‘process’ they could be construed as ‘displaying the photo’. The Court further held that the act of ‘displaying’ did not necessarily entail storing the content.

Secondly, she relied on the 2014 case of American Broadcasting Cos. v. Aereo. Aereo’s broadcasting service permitted users to watch TV programs on the Internet at the same time it was broadcast on air. Aereo argued that since users chose the program, Aereo did not choose and ‘transmit’ the program and hence, Aereo could not be held liable. This was refuted by the Court stating that such a distinction did not matter to broadcasters or users. In Goldman, the Court relied on this case to state that copyright infringement must not hinge on “technical distinctions invisible to the user” i.e., since the image was ultimately displayed on other web pages, the mere technical distinction of whether or not they were stored on other webpages’ servers need not be considered.

Debunking the Court’s Opinions

Direct Infringement Liability

To begin with, it is important to note that the Goldman Court solely focused on direct infringement liability of the defendants. Even so, the criteria laid down in Perfect 10 for proving such liability was (a) ownership of allegedly infringing content, (b) violation of at least one exclusive right of copyright holder. In Goldman, the defendants clearly did not ‘own’ the content. This brought the crux of the discussion down to whether or not there had been a violation of the exclusive right of display. With regard to that, more analysis is required. The Court’s decision hinged on the meaning of the term ‘process’. The Court brought the act of embedding under the meaning of the word ‘process’ by describing it as a series of ‘active steps’ – none of which are mentioned in the statute.

The Court’s second observation and its reliance on Aereo, was logically inconsistent since the underlying facts and technology differ in both cases. In Aereo, the ‘technical distinction’ was regarding whether Aereo or the user ultimately chose and ‘transmitted’ the programme. Such a distinction was then considered irrelevant in determining whether or not there had been a violation of the exclusive rights. In Goldman, the technical distinction of whether or not the image was stored in the defendants’ servers was crucial since such a distinction helps us to construe whether or not images were ‘displayed’.

Contributory Liability

Apart from the above, a case of contributory infringement also cannot be made out against the defendants. In order to establish contributory infringement, the widely accepted test is that the accused must be proved to have “knowledge of infringing activity” and should be “inducing, causing or materially contributing to infringing conduct of another”. In Goldman, the news outlets were completely unaware that embedding tweets would potentially result in copyright infringement since it is a fairly ubiquitous activity, done by many in the cyberspace. Secondly, the news companies cannot be said to have contributed to any sort of ‘infringing conduct’. A simple look at Twitter’s Terms of Service highlights the fact that content which is posted on Twitter may be made “available to other companies, organizations or individuals for the syndication, broadcast, distribution, promotion or publication of such Content on other media and services”. By embedding the tweet which contained the photograph, the news companies were well within their their re-posting rights under Twitter’s Terms of Use.

Incorrect application of the Server Test

Lastly, the Court’s understanding of the Server test was flawed. This test was introduced to ensure that hosts of copyrighted content, and not people who merely link it, are held liable. The amici curiae of the defendants argued that the Server test was an application of a simple principle i.e., “a person is free to tell another where they may view a third party’s display of a copyrighted work, without being held liable for infringement if that display turns out to be unlawful”. By placing liability on linkers and by not applying the test, the Court arbitrarily held the linkers responsible for another party’s infringing conduct.

The Underlying Debate

This is not the first instance where the practice of embedding tweets and other types of in-line linking has generated controversy. Aside from the harms posed to copyrighted content of owners, such practices may also adversely affects commercial interests and viewership rates of website companies. The case, however, does raise pertinent questions. Depending on the determination given to the meaning of ‘display’ in future cases, the validity of the Server Test will also come into question. In the Indian context, there have been no allegations of link liability in the context of copyright law. It will be interesting to see how Indian Courts deal with such cases and whether they will apply the Server Test when such cases do arise.

We are pleased to bring to you a guest post by our Fellowship applicant, Poornima Ramesh. Poornima is a 2nd year student at School of Law, Sastra University. This is her first submission for the Fellowship.

Is The Discussion on Patent Laws For Outer Space Inventions Really All That Relevant?

Poornima Ramesh

There is an interesting debate grappling the international community of IP lawyers – patents for inventions made and used in space. We are all aware that patent rights are territorial in nature and can only be enforced in the jurisdiction of registration of the patent. Now the current conundrum is two-fold – how does one get a patent for an invention made in space? The second is even more challenging than the first and questions the remedy available for patent infringements in outer space.

The Growing Importance of the Space Industry

These questions need answers in the light of growing importance of the space industry. If we have made extraordinary strides in space activities, it is primarily because of commercialization. Where companies are competing to make technology that will advance space exploration, patenting them is the next logical step. Currently, there is much enthusiasm surrounding this industry, as it is viewed to be a rewarding investment despite the high risk involved. Space companies have ambitious projects to develop technology for asteroid mining, which, if made possible, would pave way for space colonization. Apart from this, space tourism is also gaining much momentum. All these point out to the promising future that holds for space technology. Hence, there is a need for patent laws to promote space exploration and address investor concerns.

International Treaties on Space Law

On the international frontier, there are five treaties and conventions dealing with space explorations. India is a signatory to one and has ratified the other four. Even these international laws have failed to envisage the need for patent protection in outer space. But their words are interpreted to resolve the existing issue. According to the Registration Convention of 1975, states are obliged to register the object launched into outer space. Here, the spaceship is seen as the extension of the state launching the same. This convention is construed to mean that any invention in the outer space will be treated as belonging to that country in whose name the spacecraft is registered. This was spelled more clearly in the inter-governmental agreement signed in 1998 for the establishment of International Space Station. Hence, if in an Indian spacecraft an invention is made, then the patent will be granted by the Indian government and it will be protected by Indian patent laws even if the inventor is a foreign national. The answer makes sense and is quite direct. This clears the air of confusion for a moment.

Patent Infringement in Outer Space

But what about the patents already existing on Earth? Commercial enterprises register their patents only in those countries that they seek to establish themselves. It is possible to make that country which has granted the patent liable if it had violated the same in the space, for the Registration Convention considers the space vehicle to belong to the state of registration. The company could initiate proceedings in that country as their patent holds validity in that jurisdiction. But the hypothesis drawn is this – what if countries that don’t protect the specific patent violate them in the space? What remedy can such a patent holder avail? It is indeed very far-fetched. I would like to counter these seemingly crucial problems with a couple of questions. Isn’t the likelihood of the same happening on Earth equally possible? Does this need to be elevated to an issue that requires specific space legislation? Because the problem is about patent violations by countries where the patent has not been registered by the company. This is a trouble that lies more in line with the nature of patent registration. It is a costly affair for a business entity to register its creation in all the 195 countries of the world. Patent laws need to be restructured to protect businesses and this initiative has to begin at the international level. But to provide protection to an invention at a global level will abridge the moral rights of other inventors. In any case, it is highly impossible as well. This is the real issue that needs deliberation and I feel the current debate on the need for intellectual property law on space activities is a disguise of this.

But those in support of this debate add a further twist to the problem by stating that the term ‘launching state’ under the 1975 Convention could be exploited by businesses by either choosing it to be the country that launches the space object or the country from which the space object is launched. Remember, we talked about the commercialization of space sector? The critics say that private firms could pick a country of their choice to launch their spaceship, dubbing it as ‘flags of convenience’. This could help them avoid liability as the patent infringement would have occurred in that country of registration of the space object which hasn’t granted right to the patent, even if the company belongs to a country that recognizes the patent. Consequently, it is said, this could reduce investor confidence and lessen funding for companies. The entire premise of the argument rests on speculation. It is good to see that we are speculating an area even before we are visited with visible problems.  But are we speculating too much? Are we blowing out of proportion the possible ramifications of the absence of space laws? On the lack of reliable facts to substantiate, these arguments end up being nothing more than conjectures. Furthermore, let us not forget that this is a costly venture involving high cost of operations, thus making this all a billionaire’s club space project. Even assuming these concerns are valid, how is it at all possible to come to know of these infringements occurring in space?

To curb the exploitation of the ambiguous provision under the Convention, it is suggested that a single international jurisdiction be instituted for filing patents and address infringements, concerning space technology. What this means is an international recognition for patents developed by space technology companies, because the violation of these patents is apparently more serious than patent infringements occurring across any other technological sector! The motive behind the voices of those advocating single jurisdiction is clear – they are intensely betting on the growth of the space industry and want to protect it at any cost. But this is far from feasible and calls upon the need to study this area before we bring any treaty or legislation in haste.

India’s Stand

Currently, there are no codified laws in India governing outer space activities. Nor does the present law on patents address the issue at hand. Experts are stressing on the need for India to frame a legislation for outer space exploration, considering the strides it has made in recent years, leaving even the international community astonished with its technical prowess. However, the patent discussion is absent.

Presently, the only country in the world that has a legislation governing patents for invention in outer space is the US. But even the 35 U.S. Code §105  has its loopholes and is not fool-proof. As of now, there isn’t a single instance to back this discussion on the need for patent laws for infringements in outer space. Perhaps, we are moving towards these developments. Yet how sensible does it sound to govern outer space inventions under territorial laws when companies like SpaceX are aspiring to colonize Mars before another world war strikes.

We don’t know how the future is going to turn out. It will be a futile effort to formulate laws in a time where everything is uncertain. In the current context, we can only prepare ourselves to be ready for the future.

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We’re happy to bring you another guest post by our Fellowship applicant Prarthana Patnaik. Prarthana is a 4th year student at National Law University, Odisha. This is her second submission for the Fellowship.

A Case for Creating ‘Identity Rights’ for Digital Identities in India

Prarthana Patnaik

In the era of the Aadhar, demonetization, blockchain and other technological advancements, ‘digital identities’ are gaining increasing prominence. The World Bank defines ‘digital identities’ as “a set of electronically captured and stored attributes and credentials that can uniquely identify a person”. Currently, in India, the conception of digital identities centres around Aadhar, the 12-digit unique ID number issued to Indian residents. Conceptually, digital identities are wider in scope and can include social media accounts, mail accounts, IP addresses, bank accounts etc. While these identities help enhance connectivity and visibility, they also raise an alarm on privacy concerns, identity frauds and various other cyber crimes. Increasing instances of such crimes highlight the need to look into various legal measures to protect digital identities.

The protection of such identities finds some expression in Indian jurisprudence. On 24^th August, 2017, in the now landmark case of K.S. Puttaswamy (retd.) v. Union of India, a nine Judge Bench of the Supreme Court, while mulling over the right to privacy, highlighted several related rights arising from the same. These included rights such as: one’s “right to control information that is available about them on the world wide web”, the right to protect one’s own reputation, and one’s “personal conception of the ‘self’”. The Court observed that such identity rights also emanate from ‘informational privacy’ i.e., the right to exercise control over one’s personal data which entails the right to control one’s “existence on the Internet”.

To me, this poses a question: Is it possible to use IP law to protect such identities? The idea of protecting identities as intellectual property may seem far-fetched to most and perhaps, even ludicrous. After all, IP law protects creations of the human mind, and identities can certainly not be classified as a ‘creation’.

The Link between Personality Rights & Digital Identities

Perhaps the only part of IP law that allows for a connection between the two is  “personality rights”.

Personality rights have been defined as the right of famous individuals, whose identities have acquired a sort of brand value.  This right allows them to “control when, where and how their identity is used”. As has been stated by the Delhi High Court in ICC Development (International) v. Arvee Enterprises, such identities or ‘personas’ cannot be monopolized by persons other than the individual i.e., the right vests in an individual and he alone is entitled to profit from it.

Upon noting that personality rights have received IP protection, one can consider the possibility of extending the same to digital identities of individuals.

To begin with, personality rights are known to have sprung from the ‘right to publicity’ – which in turn, stems from the ‘right to privacy’. The ‘right to publicity’ is often used interchangeably with personality rights. It was first discussed (but not explicitly mentioned) in R. Rajagopal v. State of Tamil Nadu, wherein it was stated that a person’s name and identity could not be used without his consent. After elaboration in further cases (D.M. Entertainment v. Baby Gift House, Shivaji Rao Gaikwad v. Varsha Productions, etc.), the right now accords all natural persons the right to prevent the unauthorized use of indicators of their identities (name, personality, trait, signature, voice etc.).The same can be applied to digital identities: on creation of such identities, individuals submit themselves to the scrutiny of the public, similar to celebrities in movies and public events. In fact, one may conclude that people’s digital identities are exposed to a larger and more global audience.

A pertinent argument that could follow is that digital identities are not ‘properties owned’ by individuals and are therefore not entitled to receive IP protection. While identities or indicia of identities have been held to be “property” of individuals, the ownership issue admittedly raises complex issues in case of digital identities: Several arguments have been advanced, to show that governments and companies have the right of ownership over our digital identities. This issue can also be settled by drawing parallels to personality rights. The same question arises in both instances: Who owns the rights in question? Do celebrities own their personas or the agencies/companies who represent these celebrities?

Are Digital Identities ‘Property Owned’ by Individuals?

The right in the “identities” (or property, as shown above) is viewed as a fully alienable right, which may be assigned or transferred to others. It has been argued by scholars that this right must be interpreted as a partially alienable right. An interesting article deals with this issue and the author creates a distinction between “publicity-holders” (person who owns property interests in commercial uses of an identity) and “identity-holders” (the individual whose identity or indicia is the one that must be appropriated to show a violation of his publicity rights). However, even then, rights of the “identity holders” hold precedence. As the author of the aforementioned article argues, instead of viewing publicity right as a fully alienable property right, limits on alienability should be introduced within the property framework, and such rights must be viewed as rooted solely in the identity-holder.   A similar view was taken by the Delhi High Court when it held that personality rights can “inhere only in an individual or in any indicia of an individual’s personality like his name, personality trait, signature, voice, etc.,”. It further held that “An individual may acquire the right of publicity by virtue of his association with an event, sport, movie, etc. However, that right does not inhere in the event in question, that made the individual famous, nor in the corporation that has brought about the organization of the event.” From the above interpretation, one may argue that the right to control one’s identity solely vests in the individual.

Another related concern with regard to the protection of “identities” under IP is that personality rights/publicity rights cannot apply to digital identities. This is because only infringement of celebrities’ rights result in commercial losses to companies and hence, IP protection should only be accorded to them, instead of ordinary people and their digital identities. However, when we view identities as properties of individuals, it is reasonable to assume that a person’s identity can assume pecuniary value in certain cases and can be exploited for commercial benefits. This can be highlighted by instances where infringement of digital identities have caused huge losses to companies and other individuals alike. Examples include the attack by the WannaCry ransomware on hospital databases and banking institutions, the reports of Aadhar-related frauds where customers’ Aadhar details were used to siphon money, and other similar reports of identity theft and fraud.

‘Identity Rights’ in India: The Way Forward

Since both identity rights and personality rights are privacy-oriented, ‘identity rights’ can be used as an umbrella term to include the latter  along with protection of digital identities inter alia. It has been argued that there is a need to create a distinct legal status for personality rights. On the contrary, it has also been argued that such rights do not deserve protection under IP law. However, the need for these rights cannot be disputed in an era where commercial appropriation of identities is rampant. Also, the amorphous nature of identities and the issue of multiple identities will not be effectively covered if such rights are outlined and made inflexible.

The introduction of identity rights under IP law is particularly important in today’s India. Our data security laws and cyber laws are not evolved enough to account for most cyber-attacks and hence, most cyber-attacks do not fall under the scanner of the law and victims of such cases are rendered incapable of availing justice. If such rights are recognized under IP law, affected individuals will be able to seek civil damages and permanent or temporary injunctions, which are more effective than criminal remedies in such cases. The same two-step test of validity (enforceable right in identity) and identifiability (the concerned person must be identifiable) which has been employed in cases of infringement of right to publicity can be employed in cases of infringement of digital identities too. In an increasingly digitized world, people’s identities and their personal data gain more commercial value and hence, there is a need to accord all sorts of protection available under the law.

Image from here

We’ve had quite an eventful fortnight at the blog:

Thematic Highlight

This fortnight’s thematic highlight was a guest post by our fellowship applicant, Prarthana Patnaik. Taking apart a recent US District Court judgment that held the “embedding” of tweets as copyright infringement, Prarthana discusses the implications of the decision. In doing so, she critically analyses the Court’s understanding and application of the “Server Test” – which is the landmark judicial test employed in deciding issues of copyright infringement of electronic information.

Topical Highlight

Prashant brought us this fortnight’s topical highlights, with his posts on the recent developments in the Monsanto – Naziveedu dispute:

• Prashant first reported that the appeal arising from the Division Bench order, was admitted by the SC last week, and has been slated for a hearing in July. He notes that as things stand at present, the Delhi HC Division Bench judgment has not been stayed by the SC and Monsanto is disputing the DB’s assumption that they had waived their right to trial. Against this background, Prashant observes that the SC will have the opportunity to discuss several issues central to patent law, in July. These primarily include hitherto unexplored aspects of patent claim construction.
• Prashant then attempted to analyse the true nature of Monsanto’s invention, ahead of the SC hearing. He traces the development of the PPVFR legislation in India, and draws our attention to the present conflict in the Monsanto litigation: whether the Monsanto invention is protectable as a patent or as a “plant variety” under the PPVFR Act. He observes that this question, along with all aspects that it entails, boils down to the issue of claim construction.

Other Posts

Kick starting the fortnight, was a guest post by our fellowship applicant Kashish Makkar. In his post, Kashish argues that the John Doe jurisprudence in India was adopted in flagrant disregard for the rule of law. As such, he observes that an alternative statutory remedy exists under the Code of Civil Procedure, 1908 – particularly ‘representative suits’ as stipulated under Order 1, Rule 8 of the Code. Finally, Kashish argues that ‘John Doe’ orders can potentially be held ultra vires the Code on the grounds that they are not sustainable u/s 151 of the Code.

Next, Pankhuri wrote about India’s inclusion on the ‘Priority Watch List’ of the USTR’s annual ‘Special 301 Report on IPRs’. Noting the USTR’s concerns regarding India’s IP practices, Pankhuri observes that the report surprisingly does not expressly take issue with India’s local patent disclosure requirements. These disclosure requirements, stipulated under Form 27 of the Act, have been the centre of much debate and discussion off late – with the Indian government receiving suggestions and comments to modify Form 27 from various stakeholders – including the US government. Pankhuri concludes by drawing our attention to articles by Vidya Krishnan and Latha Jishnu that discuss suggested modifications to Form 27 procedures within the larger context of US pressure to modify Indian patent laws.

Prashant reported on the recent dispute faced by Baba Ramdev’s Patanjali with regard to its revenue sharing obligations under the Biological Diversity Act. After tracing the development of the Biodiversity legislation both internationally and nationally, Prashant throws light on the Act’s provisions. Under the act, companies are required to first obtain permission of the state biodiversity boards for accessing the resources, and then share royalties with the boards, for any “commercial utilization” of the resources. Prashant observes that despite these provisions, the biodiversity act differentiates between “indian companies” and “foreign ones” – absolving the former of several obligations under the Act. Thus, to prove the former, would be Patanjali’s ideal approach to the issue.

Finally, we had a guest post by another fellowship applicant, Poornima Ramesh. Poornima discusses a rather interesting aspect of patent law: patents for inventions made and used in outer space. She takes us through the current international legal regime governing space law – particularly inventions made in space. Against this backdrop, she attempts to unravel answers to two primary dilemmas: ownership and related issues concerning patents for inventions made in space, and possible remedies for patent infringements in outer space.

Events & Announcements

Pankhuri announced that the EIPIN (European IP Institutes Network Innovation Society is inviting applications for Marie Skłodowska-Curie Individual Fellowship. The deadline for submitting research proposals is September 12, 2018.

Other Developments

Indian

Judgments

Somashekar P. Patil v. DVG Patil  – Karnataka High Court [May 8, 2018]

The dispute concerned Respondent’s use of the trademark “PATIL FRAGRANCES” in committing infringement and passing off of the Appellant’s trademark “PATIL AND PATIL PARIMALA WORKS” for the sale of incense sticks. The Court concurred with the order passed by the Trial Court in vacating the temporary injunction granted to the Appellant, thereby allowing the Respondent to use its trademark on the ground of a bona fide use of the word “PATIL”, as he hailed from the Appellant’s family and also on the basis that the products and brands of both the parties were different.

M/S Hindustan Media Ltd. v. Mr. Faisal Masood & Ors. – Delhi High Court [May 4, 2018]

The court granted an ex-parte permanent injunction restraining the defendant from using the domain name ‘hindustantimes.in’, the trademark ‘Hindustan Times’ and the logo depicting the words ‘Hindustan Times’. The court opines that the defendants had no real prospect of defending their claim as they did not enter an appearance, file a written statement or deny the documents of the plaintiff. Plaintiff is the owner of the registered trademark Hindustan Times and HT and the prior user of the mark and the domain name. Hence, the suit was decreed in favour of the plaintiff and against the defendant.

Sandisk LLC & Anr. v. Devaram Choudhary & Anr.- Delhi High Court [May 7, 2018]

The court granted an ex-parte permanent injunction restraining the defendants from infringing the plaintiff’s trade mark ‘SANDISK’, trade dress, copyright and passing off its goods as that of the plaintiff. The defendants did not make any attempt to defend their claim. Defendants did not file any written statement despite entering an appearance and did not deny the plaintiff’s documents. The court was of the view that the defendants were trying to unfairly benefit from the reputation and goodwill of the plaintiffs by selling counterfeit products using plaintiff’s trademark and its product packaging.

Shuddhananda Yoga Samaj v. Rajeswari Book Shop & Anr.- Madurai Bench of the Madras High Court [April 24, 2018]

The court dismissed the appeal praying for a permanent injunction restraining the defendants from publishing the literary works of author Yogi Shuddhananda Bharathi without the permission of the plaintiff society, the legatee of the copyright in all literary works of the author under a will dated 14.10.1981.The dispute with respect to  defendant no. 2concerned the alleged infringement of copyright in one of the literary works of the author, a book titled ‘Maha Kavi Dhante’. The defendant no. 2 claimed that the book with the same title had been published by another publisher way back in 1940 and the book clearly mentioned that the author had assigned the copyright in the book to that publisher. In view of these facts, the court noted that the author himself did not have copyright in the book at the time of the execution of the will as he had already assigned it to a publisher at that time and thus, could not have bequeathed the copyright in the book to the plaintiff society.

News

• UTV Software Communications obtains John Doe orders from Delhi High Court against several piracy websites
• Odisa HC issues notices on GI tag for Banglar Rosogolla
• No change in cotton seed price: Agriculture ministry
• Indian Patent Office revokes patent granted to JCB
• Javed Akhtar and Lata Mangeshar Join Hands to Fight Remixes
• HC refuses to entertain plea against release of Kaala on June 7
• Coolpad accuses Xiaomi of patent infringement: Report
• Eye hospital nets patent for innovative drug delivery
• Javed Akhtar: Composers and lyricists will finally get their due
• Designer Rahul Mishra accuses brands of plagiarism
• No plagiarism but life rights debate haunts October
• Suresh Prabhu launches Intellectual Property mascot – IP Nani
• Barclays seeks patents around e-currency tech
• Amendments to Commercial Courts Act Notified
• Subramania Bharati Copyright Conundrum
• ITAT says Google India should pay tax on advertisement revenue sent to parent 

International

• Dr Dre loses trademark battle with a gynaecologist called Dr Drai
• Romance novelist trademarks word ‘cocky’, stirs up controversy
• HBO wins copyright infringement case over graffiti artist relying on de minimus copyright exception
• US: Tech Giants Offer Startups Free Patents in Bid to Foil Lawsuits
• Trade-processing Tech Provider Gets Blockchain Patent to Make Proxy Voting Easier
• Apple versus Samsung patent trial comes down to the meaning of a three-word phrase
• China set to increase patent protection by five years, according to reports
• Hasbro trademarks Play-doh’s scent: sweet, slightly musky
• US Congress mulls extending copyright yet again – to 144 years

We’re pleased to announce that the National Law University, Delhi is looking to engage three full-time Research Fellows (Law) for the Centre for Innovation, Intellectual Property and Competition (CIIPC), at its campus in Dwarka, New Delhi. The deadline for sending applications is June 3, 2018. For further details, please read the call for applications below.

Call for Applications – Research Fellows (Law)

Position: National Law University, Delhi (‘University’) is seeking to engage, on a
contractual basis, three full-time RESEARCH FELLOWS (LAW) for the CENTRE FOR
INNOVATION, INTELLECTUAL PROPERTY AND COMPETITION (CIIPC), at its campus in Dwarka, New Delhi.

About the Centre: CIIPC was established in the year 2015 with the objective of contributing to
academic and policy oriented dialogues in the areas of innovation, IP, and competition. The
Centre is currently engaged in various research projects and more details of the projects can be accessed at www.ciipc.org. The Centre has also hosted many events as part of its diverse dissemination activities and many events are also scheduled for the year 2018. Please see our www.ciipc.org.

Responsibilities of the Research Fellow: The research fellow will assist the Centre in
conducting high-quality research primarily as part of one of the three projects mentioned below –

1. Regulation of Digital Markets in the Context of Big Data, AI, and IoT
2. Open Access Textbook on Intellectual Property Law
3. Open Access Textbook on Competition Law

As part of the assigned research project, the Research Fellow is expected to engage in diverse research activities including field work, data collection, data analysis, report drafting, etc. Research fellows are also expected to supervise the work of the student researchers/ interns associated with the centre and/or assist principal investigators in conducting research.  Research fellows are also expected to assist in conducting the overall activities of the centre in terms of events and institutional building activities of the centre.

Qualifications: Candidates holding graduate (LL.B.) or post-graduate degree in
law (LL.M.), with demonstrable interest in interdisciplinary research, are encouraged to apply. Candidates must show demonstrable research interest in the relevant areas of at least one of the projects mentioned above. Candidates with experience in both competition law and intellectual property law may be given preference.

Compensation: Salary will be commensurate with qualifications and experience and will be in
the range of Rs. 40,000 – Rs. 60,000 per month.

Application Process: Interested candidates should submit their applications by email to careers@ciipc.org with a cc to ciipc@nludelhi.ac.in. The email should have the following
documents, along with an appropriate covering letter:

• CV
• Writing sample (published/ unpublished)
• Contact details of two referees·
• a statement of purpose (SoP), explaining your interest in working with CIIPC (Max. 800 words). The SoP should clearly indicate the preferred project (if your profile is suitable for more than one project, please indicate the preferred projects in the order of preference) and how your educational/ work experiences can add value for that project.

The subject of the e-mail should be “CIIPC- Application for
Research Fellow (Law)”. The covering letter must mention (Attn: Co-Directors, CIIPC).

The University reserves the right to conduct interviews to fill this position. The University will
be unable to cover the costs for attending the interview. But the University is open about exploring the possibilities of a video interview.

Deadline: Applications must be submitted no later than 3rd June, 2018.

NOTE 1: National Law University, Delhi is an equal opportunity workplace.
NOTE 2: Graduates from NLU, Delhi and other research fellows working at NLU, Delhi, are
also requested to apply only as per the above mentioned procedure.

We bring you a guest post from Mr. R.K. Trivedi, Director (Technical) of National Seed Association of India (NSAI). This post is in response to Prashant’s post on whether Monsanto’s invention can be protected as a plant variety and seek benefit-sharing from Nuziveedu, which was published on the blog last week.

As readers may be aware, Monsanto is locked in what is possibly the biggest patent/technology battle against various seed companies for some years now. The main seed companies at the forefront of this dispute include Nuziveedu, Prabhat Agri Biotech and Pravardhan Seeds etc. All of these seed companies are part of NSAI.

The disputes between Monsanto and NSAI companies also involve issues of plant variety protection, Essential Commodities act, Contract Act, Specific Relief Act, Arbitration Act etc. For our previous posts on various aspects of this controversy and litigation etc., please click here.

National Seed Association of India (NSAI) on Delhi High Court’s Judgment in the Monsanto-Nuziveedu Dispute

R.K. Trivedi

Mr. Prashant Reddy’s post does not give a correct interpretation of the Delhi High Court’s recent decision in the Monsanto-Nuziveedu dispute. If we want to correctly interpret the Delhi High Court’s decision, we have to first understand the provisions of Indian Patents Act, PPV& FR Act and TRIPS Agreement of WTO.

Indian Patents Act, Section 3(j) excludes from patentability “plants and animals in whole or any part thereof other than microorganisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals”, in pursuance of Article 27(3)(b) of the TRIPS Agreement.

PPV&FR Act covers transgenic variety as a “new variety”, which is, therefore, eligible for registration under Section 15(1) provided it satisfies the conditions of ―novelty, distinctiveness, uniformity and stability. A breeder under Section 16(1) includes the breeder of such transgenic variety. Under Section 24, varieties, other than essentially derived varieties can be given registration. The facility of benefit sharing then is conferred upon all interested to seek the advantages, upon fee determined in this regard. What is crucial in this enactment is benefit sharing under Section 26. If someone’s variety with a unique trait (like the Bt. Trait) is used to create a new variety, benefit sharing can be claimed from the creator of the new variety under Section 26 of the PPV&FR Act read with Rules 41 to 44 of the PPV&FR Rules. The registration of a plant variety or a transgenic variety under Section 28 of the PPVFR Act confers certain exclusive rights enshrined therein on the breeder. Section 30 of the PPVFR Act provides for “Researcher’s rights” allowing use of any registered variety for developing new varieties. Under section 39, the farmers have the right to save, sow, re-sow, exchange, share and sell the farm saved seeds of any protected variety including a transgenic variety.

The Delhi High Court has critically gone through the above provisions of Indian Patents Act and PPV&FR Act and observed that India has a well-balanced legal framework that protects the rights of plant breeders, farmers and biotech companies.The Court held that Monsanto cannot have patent on transgenic seeds per se. They can have a patent on gene or gene sequences that have been synthesized in the laboratory and under Patents Act they have the right to prevent anyone else from producing such transgenic seeds in a laboratory and selling the same. However, once they sell transgenic seeds to Indian seed companies for use as initial varieties for creating new varieties, they cannot claim patent rights on subsequent seeds produced by farmers and breeders using essentially biological processes. For that, it must rely on the provisions of benefit sharing under the PPV&FR Act.

Further, I would like to correct this notion that our PVP legislation is a copy of UPOV model. The Indian PPV&FR Act is a unique enactment and is not modeled on UPOV as claimed in Mr. Prashant Reddy’s post. Indian Government categorically states to TRIPS that we shall not copy the UPOV model but will adopt a sui generis system having a separate law to fulfill our national requirement by providing farmer’s rights and rewarding farmers for their efforts to conserve crop biodiversity. Some of the differences between the UPOV Convention and the PPVFR Act are as follows-

(i) In PPV&FR Act, the definition of ‘variety’ includes transgenic variety also, whereas, ‘variety’ definition of UPOV does not cover transgenic variety.

(ii) In PPV&FR Act researcher’s right is very comprehensive whereas in UPOV, the researcher’s right is restrictive.

(iii) In PPV&FR Act, there is a provision for Farmer’s Right, Right of Communities, Benefit Sharing, Gene funds etc. However, such provisions do not exist in UPOV.

As can be seen from the above in UPOV, the transgenic plant varieties are not even covered in the definition of the variety.  Similarly, the benefit sharing provision is not there in UPOV as per the requirements set out by advanced countries which may not be favorable for recognition and reward of the conservation or breeding activities carried out by the farmers or breeders of the third world. UPOV does not provide farmers’ rights and also does not provide for compensation to farmers on failure of the registered variety to give expected performance under given conditions. Therefore, the Indian PPV&FR Act is a balanced Act and a complete code, protecting the interest of all the stakeholders. One of the unique features of the PPVFR Act is that, it prevents creation of monopoly in agriculture sector. This clarifies that the Govt. of India had consciously chosen not to join UPOV and develop a sui generis legislation in the form of PPV&FR Act to suit Indian national interest.

In view of the above, it is pertinent to note that the Delhi High Court order only captures the legislative intent of the Govt. and the provisions of the Indian Law.  The Indian law is balanced and provides incentives for the innovation in the form of trait development to companies like Monsanto and also encourages the breeders to incorporate the new innovations and develop new plant varieties by giving access under the researchers’ rights.  The farmers are given protection to save, use all plant varieties including transgenic plant varieties.

In my opinion, Monsanto should be happy as the trait value fixation would now be carried out by a statutory body, PPV&FR Authority whose actions need to be transparent and accountable through judicial review.  It is impossible to get a judicial review for actions under the Essential Commodities Act since they have a protection under the public interest.

In view of the above, I am surprised why Monsanto is not welcoming the fair decision of the Hon’ble High Court of Delhi, which will help all other biotech trait developers as well.  It is heartening that the breeders of small and medium seed companies along with the breeders of public sector and large seed companies are brought on the same footing by the Court order. This will encourage not only innovation but also competition by bringing more players which will ultimately benefit the farmers.  Thus, the judgment takes care of the interest of all stakeholders and thereby benefits the farmers.

Image from here

Last week, we had brought to you a guest post by NSAI on the ongoing Monsanto-Nuziveedu patent dispute. We now bring to you another guest post on this dispute by Mr. Bhagirath Choudhary, the founder director of the South Asia Biotechnology Centre (SABC), New Delhi and Dr. Usharani KS, who practices at Prometheus Patent Services, Hyderabad. This post is in response to NSAI’s post, which in turn was in response to Prashant’s post on whether Monsanto’s invention can be protected as a plant variety and seek benefit-sharing from Nuziveedu.

NSAI’s Lopsided Take on Patenting of Biotech Innovation in Agriculture 

Bhagirath Choudhary & Usharani KS

The post by NSAI on a patent dispute between two private parties, Nuziveedu vs. Monsanto, defies the logic and reasoning of patenting biotech innovations under the Indian Patents (Amendment) Act 2005 and the protection of seeds and plant varieties under the Protection of Plant Varieties and Farmers’ Rights Act 2001. NSAI’s sloppy post also favors the views and position of one party and openly flouts the rights of other members who may not prescribe such lopsided position, which is contrary to the spirit of innovation and intellectual property rights (IPRs) in agriculture sector. In summary, the NSAI’s position on the impugned patent is self-contradictory, disregards 420+ similar biotech patents filed/granted to scientists from both public and private sector institutions and raises emotional and nationalist perspective by twisting and churning of different laws to benefit one party against imminent national loss. In the following paras, we put together our brains over what is the subject matter of Monsanto’s patent, provisions under PPVFRA 2001 & IPA 2005 and the dispute, in this case:

Monsanto’s patent has two claim sets that are directed towards nucleic acid or gene sequences (Claims 25-27) and methods for producing transgenic plants (Claims 1-24). Both the claims viz. the man-made nucleic acid or gene sequences and the man-made processes (not an essential biological process) of transferring the man-made gene sequences (a novel product) into the genome of a plant, emanate from human ingenuity.

Claims 25 to 27 have the preamble “nucleic acid sequence” defining a biotechnological product and the body of the independent claim 25 “a promoter operably linked to a first polynucleotide sequence encoding a plastid transit peptide, which is linked in frame to a second polynucleotide sequence encoding a Cry2Ab Bacillus thuringiensis 8-endotoxin protein, wherein expression of said nucleic acid sequence by a plant cell produces a fusion protein comprising an amino-terminal plastid transit peptide covalently linked to said 5-endotoxin protein, and wherein said fusion protein functions to localize said 5-endotoxin protein to a subcellular organelle or compartment” clearly establishes that the biotechnological product is man-made where the Cry2Ab gene from a microorganism conferring the insecticidal trait is engineered to be expressed in a suitable system. Thus the man-made nucleic acid or gene sequences do not exist in nature, cannot be considered a part of plant, and are novel biotech products.

Claims 1 to 24 have the preamble “method for producing a transgenic plant” categorizing them as process claims with a primary purpose of producing transgenic plants. The body of the claim “incorporating into its genome a nucleic acid sequence comprising a plant functional promoter sequence operably linked to a first polynucleotide sequence encoding a plastid transit peptide, which is linked in frame to a second polynucleotide sequence encoding a Cry2Ab Bacillus thuringiensis 5-endotoxin protein, wherein said plastid transit peptide functions to localize said 5-endotoxin protein to a subcellular organelle or compartment” discloses the method of incorporating the above identified biotechnological products into a plant genome under lab conditions. The transformants were then selected and regenerated to obtain stable transgenic seeds and transgenic plants with the insecticidal Bt trait. Thus, this process of integrating novel gene sequences into plant genome with substantial human intervention is not an “Essential Biological Process”.

Monsanto transformed Coker variety of cotton seed with the man-made gene sequences claimed in the impugned patent thereby conferring Bt trait to the Coker variety. The novel gene sequences were then transferred from the Coker variety through conventional breeding by the intended party (sub-licensees in this case) into their desired cotton variety fit for Indian agro-climatic conditions. Here both novel products and processes are protected as a patent by the inventor (Monsanto in this case) under the IPA 2005, and the resultant desired cotton variety with novel gene sequences is protected by the owner of variety (sub-licensee Nuziveedu in this case) under the PPVFRA 2001. Both PPVFRA 2001 and IPA 2005 clearly demarcate what is patentable under IPA 2005 and what can be protected under PPVFRA 2001, and any other interpretation is erroneous and misleading.

Evidently, the disputed patent does not have claims directed towards the transgenic plants or transgenic seeds i.e. Coker variety of cotton seeds containing novel gene sequences that were obtained from the methods for producing such transgenic seeds, which is merely a carrier of novel nucleic acid or gene sequences (claims 1 to 24). Since, the novel gene sequences are non-specific to an organism/species/kingdom, the same gene sequences can be moved into any other plant species, microbes or other suitable organisms and are certainly not a part of the plant. This is also why Monsanto and other inventors of similar novel gene sequences (so far around 420+ patent applications for such novel gene sequences and/or processes have been either filed/granted by IPA 2005) can’t protect their inventions under the PPVFRA 2001.

The PPV&FR Act 2001 protects a specific plant variety or a specific hybrid and its parents which fulfils the magic criteria of DUS – Distinctness, Uniformity & Stability. Any variety that conforms to DUS criterion with or without novel gene sequences, can be protected under the PPVFRA. In comparison, patents are granted to novel biotech innovations that essentially conform to the magic criteria of Novelty, Inventive Step and Industrial Application. Therefore, neither IPA 2005 requires a variety or a seed or a crop for the patent claims other than indicating its industrial application nor the PPVFRA requires novel gene sequences for protecting a plant variety or hybrid and its parents. Thus both IPA 2005 and PPVFRA 2001 are complementary and shall co-exist to foster biotech innovations on one hand, and improved plant varieties on the other hand for the benefits of innovators, breeders and farmers.

Regarding the provisions for claim of exclusive rights under section 28 of the PPVFRA, the breeder of the protected variety or a hybrid and its parent enjoys the protection under PPVFRA to produce, to license, to sell, to market, to distribute, to import and to export the protected variety. If gene patents are revoked as in Monsanto’s case, the patent holder of novel gene sequences could enjoy all these benefits only when they move such patent in the form of seeds, and shall be denied benefits of production of pure protein through any other form such as microbes and other methods, which are not protected under PPVFRA. Therefore, denying patent on novel gene sequences will limit the industrial application of such biotech innovations to seeds only, and inhibits their other industrial applications. Similarly, the PPVFRA doesn’t have any provision for claim of benefit sharing of patented gene sequences under section 26, and is limited to access, extent, nature and use of genetic resource in developing new variety or essentially derived variety (EDV). Therefore, any argument by NSAI on claims of registration under section 15, claims for benefits sharing under section 26 and claims for exclusive rights under section 28 on patented gene sequences under PPVFRA is misleading, farce and deceptive.

In a nutshell, following key points raised by NSAI are self-contradictory and are a smear campaign to confuse and convolute the issue on the disputed patent including:

• “The Court held that Monsanto cannot have patent on transgenic seeds per se” – The disputed patent does not claim transgenic plants or seeds.
• “However, once they sell transgenic seeds to Indian seed companies for use as initial varieties for creating new varieties, they cannot claim patent rights on subsequent seeds produced by farmers and breeders using essentially biological processes. For that, it must rely on the provisions of benefit sharing under the PPV&FR Act” – Here the patent right claims are upon the patented gene incorporated into seeds and not on the seeds per se. Hence PPVFR Act and benefit sharing with reference to this patent are irrelevant as described above.

The points that we as a concerned society need to deliberate are:

1. How come a biotechnological gene product got invalidated under section 3(j) of IPA 2005?
2. Once a patented gene is backcrossed into a seed or a plant variety, does the patent rights of the gene cease to exist and can the unauthorized use of a patented gene after its introgression into plants constitute infringement?

Finally, it is a very welcome relief to see that NSAI has conceded that “They (Monsanto) can have a patent on gene or gene sequences that have been synthesized in the laboratory and under patents act, they have the right to prevent anyone else from producing such transgenic seeds in a laboratory and selling the same”.

Image from here

We are pleased to bring to you a guest post by Adarsh Ramanujan. Adarsh is an advocate primarily assisting clients as a litigation attorney. He has recently started his own counsel practice with offices in Delhi and Chennai after having spent considerable time with Lakshmikumaran & Sridharan at their New Delhi and Geneva offices. He obtained his B.Sc. LL.B. (Hons.) degree (Gold Medalist) from National Law University, Jodhpur  and LL.M. degree from University of California, Berkeley. He is a qualified Patent Agent in India. A major portion of his time is spent, practicing in the areas of IP & Technology Laws as well as in International Trade Law. He was however branched out into doing commercial litigation and arbitration work. His expertise also extends to regulatory laws such as environmental laws, biodiversity laws and cyber laws. Adarsh is currently teaching a seminar course on commercial arbitration in NLU, Delhi and has previously taught patent law in NLU, Jodhpur and at the CEIPI Institute (University of Strasbourg). He has authored or co-authored close to 30 publications on diverse topics, including on IP, WTO, constitutional law and international tax. He has guest blogged for us in the past as well (see here).

Understanding the Public Interest Element of the Injunction Analysis in Patent Infringement Cases

Adarsh Ramanujan

I happened to be sitting in on a proceeding before the Delhi High Court yesterday where a case of patent infringement was being argued and the case appeared to concern a patent in the healthcare sector (not a medicament though). As was expected, the parties and the Court reached the point where the traditional three-factor (or four-factor) test for granting interim injunction was being deliberated upon and again, as one would expect, the point of public interest became a prominent issue.

It was clear that almost everyone, as a matter of principle, agrees that public interest is a factor in determining whether interim injunctions are to be awarded or denied. The question, however, relates to the contours of this element. In particular, whether the fact that the accused infringer’s product was being sold at a price significantly lower than the price at which the patentee was apparently making available the said patented technology through its own products.

I felt that, perhaps, on many occasions, the perspective behind this “public interest” element is lost in translation:

1. The question to be assessed is whether the grant of an interim injunction would go against public interest. The burden on the patentee when it comes to this element, so to speak, is in the negative – that public interest would not be dis-served by the grant of an injunction.

2. When seeking an interim injunction on the basis of Section 48 of the Patents Act, 1970, Section 83 is not relevant because Section 83 only applies to compulsory license proceedings. This is a finding of our own Division Bench of the Delhi High Court in Novartis v. Cipla (2017). This means that to merely refer to the public interest embodied in Section 83 as a matter of general principle to argue denial of injunction may not be a strong argument.

3. In cases relating to the healthcare segment, the public interest element is not a one-way street, as is most often assumed. While there is public interest in enabling access to generic versions at lower prices, there is also a public interest element involved in enforcing patents and encouraging innovation.

a. Our own Delhi High Court in Merck v. Glenmark, citing Bayer v. Cipla, recognized the public interest element flowing in favour of grant of an injunction. The Delhi High Court emphasized the need to balance both these interests.

b. The US courts also consider the need to balance both the above interests in assessing the “public interest” leg of the analysis. I would refer to Pfizer v. Teva, 429 F.3d 1364 (Fed.Cri. 2005) and Sanofi v. Apotex, 488 F.Supp.2d 317 (S.D.N.Y. 2006).

c. The fact that enforcing validly granted patent monopolies is itself in public interest is also acknowledged in the UK. I would refer to Chiron v. Organon, [1995] F.S.R. 325.

d. If balancing these two competing interests in a given case suggests that both interests are at equipoise or slightly in favour of the patentee, the “public interest” prong of the analysis favours the patentee. If, however, the interest in favour of the making available generic version at a lower price outweighs the competing interest, this prong of the analysis favours the accused infringer.

4. In the context of balancing the above two interests, the US courts seem to take the position price differential alone is not a tipping point – the mere fact of the accused infringer selling at a lower price than the patentee is alone not enough to outweigh the interest in enforcing a valid patent. I would refer to the observations of the Federal Circuit in Pfizer v. Teva (noted above), which relies on an earlier judgment in Payless Shoesource, Inc. v. Reebok Int’l Ltd., 998 F.2d 985, 991 (Fed.Cir.1993). In fact, it appears that the arguments referring to the scheme of the US laws that enable faster entry of lower priced generics (the ANDA regime) are routinely rejected as being a sufficient basis on its own to conclude that grant of an injunction dis-serves public interest.

Note: This is to be contrasted with a fact situation where the patentee is not making the patented product, at all. Here is the balancing act will stand skewed in favour of the accused infringer because the patentee has not made the patented invention available to the market. Here, I refer to the US Supreme Court judgment in EBay v. MercExchange, 547 U.S. 388 (2006). See also, for instance, Bayer v. Ajanta, Delhi High Court (2017).

5. On the other hand, where the accused infringing product appears to grant an advantage, the assessment may tip in favour of the accused infringer. A very good example I know of is the case of Conceptus, Inc. v. Hologic, Inc., 2012 WL 44064 (N.D California, 2012), which involved a medical device. On facts, Court noted that the accused infringing device and the patentee’s products were not always interchangeable and the accused infringing device had some advantages. For this reason, the Court concluded that public interest would undoubtedly be harmed by an injunction.

6. Similarly, large scale market disruption, customer inconvenience and cost also seem to be a tipping point in favour of the accused infringer on the public interest element angle. Johnson & Johnson Vision Care, Inc., v. CIBA Vision Corp., 712 F.Supp.2d 1285 (M.D. Florida, 2010) is a good example. This involved eye care lenses and the evidence before the Court was that the accused device was being used by more than 5.5 million users and these patients would be being abruptly told that the contact lens for which they have been fitted and with which they are satisfied, is no longer available; choosing a new lens will at minimum require refitting and the new lens may not prove as efficacious. Moreover, patients may have to be refitted more than once until an appropriate lens is found. An undefined number will not be able to be refitted appropriately at all.

7. UK courts tend to have a much more fluid approach to this issue and there are fewer judgments that tend to analyse this specific issue in lengthy detail (quite ironic). Nevertheless, the conclusions are no different. For instance, in Actavis Group PTC EHF v. ICOS Corp, [2017] EWHC 2880 (Pat), the High Court of Justice noted the two competing interests (lower cost generics versus need to encourage innovation by enforcing patents) and stated that it won’t base its decision on the same, suggesting that the Court did not find the balance to be tipped in favour of the accused infringer. Similar findings are seen in Novartis AG v. Hospira UK Ltd, [2014] 1 W.L.R. 1264.

8. In Chrion v. Organon (noted earlier), the Patents Court stated simpliciter that all the factors contended by the accused infringer with reference to public interest being harmed by an injunction is addressed within the Patents Act, 1977 in the UK through compulsory license proceeding or through government authorized use. The Court rejected the stereotypical arguments of the accused infringer and concluded, simpliciter, that what the accused infringer wanted was a compulsory license without going to the proper authority and showing the necessary ingredients. To me, given the overlap in the legislative scheme of the Indian Patents Act, 1970 with the UK law, this decision is of vital importance.

9. In contrast, in Edwards Lifesciences LLC v. Boston Scientific Scimed Inc., 2017 WL 01339063, the High Court of Justice, noted that public interest is a separate ground that may militate against the grant of an injunction in a given case. This was a case involving an infringing heart valve and evidence was presented that in at least one hospital, close to 60-70% of the procedures involved use of the infringing valve since this infringing valve provided best results for a certain category of patients. The Court concluded that there existed a patient group for whom the accused device provided the best or only option and thus, an injunction would harm public interest. For various other reasons though, while the Court granted the injunction the operation of the injunction was stayed pending appeal.

My Conclusions

1. Defendants would be better-off focusing on items over and above price differentials when arguing why an interim injunction would dis-serve public interest

2. Complete non-working by patentee is a factor.

3. Focusing on market penetration of their product and the practical difficulties for patients and health care providers seems a better bet for defendants.

4. Focusing on the advantages of the accused infringing device over the patentee’s product, supported with some evidence, would also be a batter bet for defendants.

(This post is authored by and published on behalf of Mathews P. George)

In M/s Hilton Roulunds Ltd v. Commissioner of Income Tax (2018), the Delhi High Court held that the expenditure incurred by the assessee for acquiring trademark was revenue expenditure and not capital expenditure. Accordingly, the expenditure is deductible under Section 37(1) of the Income Tax Act, 1961.

As per the first licensing agreement, the appellant had to pay running royalty at the rate of 1.8% of the net selling price from the date of commercial production of respective goods. The licence could be terminated by 12 months’ notice or by 30 days’ notice in case of breach of the terms of the agreement. The Agreement was for a period of 10 years. As per the second licensing agreement, which has overridden the first licensing agreement, a one-time royalty of Rs. 1 crore was payable towards the trademark licence. As per the terms, the Appellant enjoyed the exclusive right to use the mark for an indefinite time period.

The Assessing Officer, holding the expenditure to be of enduring nature, concluded that the expenditure was capital expenditure. The Commissioner of Income Tax (Appeals), reversed the finding of the Assessing Officer. The Department went in appeal and the ITAT concurred with the finding of AO.

The Delhi High Court reversed the ITAT’s finding and observed as follows: “When the benefit of the use of the mark has inured to the licensor i.e. HRL, the amount, that has been paid to HRL was a consideration for permission to use the mark, and not for acquiring ownership rights in the mark. The mark “HILTON” did not belong to the appellant. It also did not belong to either of its current promoters i.e. RF or IFU. It belonged to HRL which was one of the joint venture partners when the appellant was initially formed. The use of the mark “HILTON” thus, merely facilitated the appellant’s business in India. The question of law is answered in the negative, in favour of the Assessee and against the Revenue. It is directed that the payment of Rs. 1 crore be treated as revenue expenditure.”

Analysis                  

[For distinction between capital expenditure and revenue expenditure, please click here. Please note that I do not intend to test the instant fact situation against all the factors distinguishing capital and revenue expenditure. On the other hand, I intend to test the given fact situation against some of the prominent factors only.]

Conceptually speaking, I am not convinced with the tenability of reasoning of HC. Ownership over an asset confers one with “a bundle of rights”. Licence, on the other hand, gives the licensee the right to exercise a particular right or set of rights agreed upon by the licensor. In determining whether the corresponding expenditure is capital or revenue in nature, the substance rather than the form of the expenditure must be examined. In the instant case, the expenditure is one-time in nature which is a characteristic associated with capital expenditure. As to draw an analogy, instead of buying a building for running my business, if I obtain lease / licence, the pertinent determining question should be whether that right (of indefinite time period for one-time payment) inter alia forms part of permanent platform on which the intended business is to be run? If yes, it should be capital expenditure.

Having the right to use a certain trademark for an indefinite time period improves the earning capability of the assessee (as the assessee can invest in brand building etc). On the other hand, if the licence period is pre-determined, the royalty payments at definite time intervals are necessary to ensure the ‘maintenance’ of earning capacity (by continuing to use the trademark). While the former is a characteristic associated with capital expenditure, the latter is a characteristic associated with revenue expenditure. In the instant case, the assessee can confidently invest in long term brand building as the licence period is indefinite and further, the royalty is one-time royalty payment. A permanent platform is built and further, the right to use that particular trademark is no longer a contingent right. It is a permanent right and therefore, no expenditure is required vis-à-vis ‘maintaining’ the right to use that trademark. Therefore, for the aforesaid reasons, I am inclined to perceive it as more a case of capital expenditure rather than revenue expenditure.

Finally, applying the canons of interpretation associated with taxation, an interpretation favouring tax avoidance is to be avoided. If the reasoning and conclusion of this judgment is accepted as tenable, then it paves the way for similar tax structuring schemes which may, arguably, contradict the intention of the legislature. Therefore, arguably, this judgment contradicts the mischief rule of interpretation as well.

Image from here

We’re happy to bring you another guest post by our Fellowship applicant Prarthana Patnaik. Prarthana is a 4th year student at National Law University, Odisha. This is her third submission for the Fellowship. The previous submissions can be viewed here and here.

Google Images’ ‘View Image’ Button and Copyright Infringement

Prarthana Patnaik

Google’s Image Search service allows users to view thumbnail images (low-resolution reproduction of images available on other websites) in response to the specific search query entered by the users. It uses a “spider” software which ‘crawls’ the web and creates an index of thumbnails which are then displayed through an index-searching software. The ‘View Image’ button that was part of the Image Search service until recently, allowed the users to directly access and download the full-resolution version of the thumbnail, bypassing the hosting website. This feature of its service attracted a lot of controversy since it facilitated users to steal copyrighted images and also reduced viewership and traffic of the hosting websites.

In the wake of this, Google recently decided to remove the ‘View Image’ button. While this has been perceived as a victory for copyright holders (photographers, publishers etc.), netizens, who say that this was one of the most useful feature of the Image Search service offered by Google, are complaining against it. So, why did Google remove the ‘View Image’ button? Did it apprehend accusations of copyright infringement for providing this feature?

In the past, the Image Search services offered by Google and other visual search engines have been the subject of litigation in USA. In Kelly v. Arriba Soft Corp (‘Kelly’), in 2003, the US Court of Appeals for the Ninth Circuit examined whether Arriba, an internet search engine, infringed copyright in Kelly’s photographs by ‘crawling’ the web looking for images, creating thumbnails of those images (including Kelly’s photographs) and then displaying them in response to search queries. On clicking a thumbnail, users were directed to the original hosting website where they could view and download the full-sized image. On applying the four-factor fair use test, the Court held that Arriba’s use of Kelly’s images as thumbnails constituted fair use. It noted that although the use was commercial, it was highly ‘transformative’ in nature as the photographer’s use of his images was for aesthetic and artistic purposes whereas Arriba’s use of those images was for a functional purpose of creating a catalogue and improving access to artistic works. With respect to market harm, it observed that Arriba’s thumbnails did not harm the market/value for Kelly’s full-sized images because thumbnails, which lose their clarity when enlarged due to their low resolution, did not act as a substitute for full-sized images.

In Perfect 10 v. Amazon (Perfect 10), in 2007, the same Court examined whether Google’s creation and display of thumbnails of Perfect 10’s erotic images and linking to third-party sites where infringing full-size version of these images were displayed amounted to direct and secondary/contributory copyright infringement, respectively and if it did, whether it fell within the ambit of fair use. Applying the ‘Server Test’, the Court noted that since Google’s computers stored thumbnails of Perfect 10’s images and communicated their copies to the users, Perfect 10 had succeeded in prima facie proving that Google’s thumbnails directly infringed its display right. However, applying the same test in respect of full-sized images, it held that since the images were neither stored on Google’s servers nor were their copies (but only HTML addresses of them) communicated to the users’ computers, Google neither ‘displayed’ nor ‘distributed’ the images to its users but only directed them to websites which stored the images.

The Court then went on to apply the fair use doctrine to assess whether Perfect 10’s use of thumbnails constituted fair use and upon a similar four-factor analysis as in Kelly, concluded that it did.

In examining Google’s secondary liability for linking to infringing full-size images displayed on third-party websites, the Court first found that there had been direct infringement by these parties since they had made unauthorized use of Perfect 10’s images. It then examined Google’s contributory liability (i.e. whether Google, with knowledge of infringement, intentionally induced or encouraged direct infringement) and vicarious liability (i.e. whether Google ‘controlled’ the infringing party and derived “direct financial benefit” from the direct infringement). Although the Court remanded the claim of contributory infringement to the District Court, it concluded that Google could not be held vicariously liable because Perfect 10 had not proven Google’s right to stop or limit direct infringement.

Google Image Search’s ‘View Image’ Function: Copyright Infringement or Fair Use?

The decisions discussed above make it clear that Google’s creation and display of thumbnails does not constitute copyright infringement in the US since it falls under the fair use exception. However, its liability for making full-size, high resolution versions of copyrighted images directly available for viewing and downloading, through its ‘View Image’ feature is not clear.

Before we delve into the issue of whether the ‘View Image’ feature could constitute infringement or not, it is necessary to note a few differences between its functions and the functions of the image search service provided by Arriba (later renamed Ditto) in Kelly and Google in Perfect 10. In the latter cases, clicking on a thumbnail enabled users to access and download full-size images only by visiting the hosting website. However, the ‘View Image’ function acted as a direct link between the thumbnails to the full-size image stored on the hosting website’s server, allowing users to thereby bypass the hosting website. In effect, when one clicked on the ‘View Image’ button, one was not led to Google or the hosting website, but directly to the image stored in the hosting website’s server, which was enabled by the HTML instructions provided by Google.

A. United States

Direct infringement

If we apply the test of direct infringement as applied in the Perfect 10 case to the ‘View Image’ feature, we arrive at the same conclusion that there is no infringement, since it is clear that by providing access to the full-size image, Google neither ‘displayed’ (as it did not store a copy of the image in its servers) nor ‘distributed’ (as it did not ‘actually communicate’ the images to user’s servers but merely gave the address of the image to user’s browser and the user’s browser interacted with the web browser which stores the copyrighted image) the images hosted by others. However, it has to be noted that the applicability of the Server Test in respect of display rights has been recently questioned by the New York District Court in Goldman v. Breibart on the basis of the meaning of ‘display’ under the US Copyright Act. In this case, the court concluded that ‘display’ did not necessarily require a ‘copy’ of the image to be stored in a tangible medium of expression and it can be covered by any ‘device or process’ alone.

Secondary Infringement

In applying the tests of secondary infringement to the Google ‘View Image’ feature, we see that Google assisted websites to enable users to access their images (infringing or otherwise) with its ‘View Image’ function. In cases where the plaintiff can prove that Google had knowledge of infringing images on its search engine and that it could take simple measures to prevent damage to plaintiff’s copyrighted works and failed to take such steps, a claim of contributory infringement would lie. Also (though this was discussed in the context of vicarious liability and then held as a claim of contributory liability), Google’s practical ability to police such infringing conduct needs to be looked into. In Perfect 10, the Court held that Google lacks such ability since it did not have image recognition technology. However, such is not the case today, as can be seen by Google’s reverse image search technology. Similarly, on applying the test of vicarious liability, such liability will only arise when Google’s agreement with the third party website is such that it has the legal right or ability to prevent it from committing acts of infringement and that it derives “direct financial benefits” from such use of images by third parties. Hence, secondary liability of Google will differ from case to case.

Fair use

Assuming that linking to full-size images prima facie amounts to copyright infringement, in my opinion, it does not fall under the fair use exception In examining the first factor, Google’s use of the full-size images would not be construed as transformative since the full size images were mere reproductions of the original images and completely superseded the original work. Also, the purpose of accessibility to images was fulfilled by the thumbnails alone and there was no need to make full sized images available for viewing and downloading to fulfil such purpose. Hence, since the ‘View Image’ button does not “add something new, with a further purpose or different character”, the first factor would weigh against Google. The second factor would weigh slightly in favour of the copyright owner as the original images are creative, yet published works. The third factor would also weigh in favour of the owner since, when one looks into the purpose of copying, one finds there is no reasonable relation between the quantity of the material used and the purpose behind doing so i.e., the purpose of furthering accessibility was already served by thumbnails. The fourth factor would also weigh against Google since the full-size images would harm the market for the owner’s images, by directly substituting them. Also, the ‘View Image’ function allowed the user to bypass the hosting website and the same led to decreased traffic and viewership in the owner’s website (such harm is clear from Google’s settlement with Getty Images). On viewing the factors as a whole, Google’s ‘View Image’ function would not fall under the fair use exception, in my opinion.

B. India

The images (both the thumbnails and the full-sized images) would be considered as “artistic works” under Section 2 (c) of the Indian Copyright Act, 1957. Section 51 deals with infringement and the Google’s function could either fall under Section 51(a)(i) (direct infringement) and/or Section 51(a)(ii) (secondary infringement).

Direct infringement

As per Section 51(a)(i), direct infringement occurs when, one does any act, which the copyright owner has the exclusive right to do. The exclusive rights of an owner of an artistic work are listed under Section 14(c) and out of them, the rights that could be alleged to have been infringed by Google are “right to reproduce the work in any material form”, “right to issue copies of the work to the public” and the “right to communicate the work to the public”. Google’s View Image function cannot be said to violate the reproduction right since the images are not stored by Google in any medium by electronic means i.e., it is not stored in Google’s servers and remains in the hosting website’s server. It cannot be said to infringe the right to issue copies to the public since Google does not issue ‘copies’ of the images but merely provides a link to the images. It may infringe the communication right, however. Section 2(ff) of the Act states that “communication to the public” means “making any work available for being seen or heard or otherwise enjoyed by the public directly or by any means of display or diffusion other than by issuing copies of such work regardless of whether any member of the public actually sees, hears or otherwise enjoys the work so made available.” This right has mostly been invoked in the context of broadcast of cinematographic works and not in respect of artistic works yet. Also, focus has been laid on the meaning of ‘diffusion’, instead of that of ‘display’. If ‘display’ is taken to be similar as ‘display’ in the US copyright law and includes making of ‘copies’ which are “fixed in a tangible medium of expression” only, then Google’s ‘View Image’ feature would not amount to infringement of the owner’s communication right. However, if ‘display’ is interpreted to include electronic modes of communication, then it could constitute infringement.

Secondary infringement

According to Section 51(a)(ii), when one permits for profit any place to be used for communication of copyrighted work to the public, with the knowledge/reasonable belief that such communication constitutes infringement, one commits secondary infringement. Further, it has been held by the Delhi High Court in the MySpace case that in order to be liable, the intermediary must have “actual knowledge” of “specific infringing material”. Therefore, in each case it would have to be seen whether Google had actual knowledge of the availability of specific infringing material through service and whether it reaped any profit from it depending on its agreement with third parties. If all of this could be proven, a claim of secondary infringement could lie against Google for its Image Search service including the ‘View Image’ feature.

Fair use

Assuming that there is a prima facie case of infringement in India, one would then have to examine whether Google’s ‘View Image’ function can fall under the Indian version of the fair use doctrine as codified under Section 52 of the Copyright Act, 1957. The structure of the Indian provision differs from its American counterpart. Unlike Section 107 of the US Copyright Act that merely lays down the four-factor test, Section 52 lists out an exhaustive list of acts that do not constitute copyright infringement. Since Google’s Image Search service does not fall within the ambit of any of the acts excluded under Section 52, Google’s use of full-sized version (‘View Image’ feature) as well as thumbnails of copyrighted images could constitute copyright infringement in India if it amounts to ‘display’ of those images.

Images from here and here

We’re glad to bring to you another guest post by our Fellowship applicant, Rishabh Mohnot. Rishabh is a 3rd year student at National University of Juridical Sciences (NUJS), Kolkata. This is his second submission for the Fellowship. The first submission can be viewed here. Rishabh had also written a post for us last year during his internship.

Utility or Futility: When Should a Patent Be Revoked on the Ground of Inutility?

Rishabh Mohnot

Under the Patents Act, 1970, Section 64(1) provides a number of grounds for revocation of a patent. One of these grounds is the non-usefulness or inutility of the patented invention. The relevant part of the section reads as: “Subject to the provisions contained in this Act, a patent… may be revoked…on any of the following grounds that is to say-…(g) that the invention, so far as claimed in any claim of the complete specification, is not useful.” In this post, I dwell upon the question that how should the utility of a patented invention be determined while considering a petition for revocation of the patent.

The question requires a discussion on two broad themes – first, the date on which the utility of a patent must be examined and second, the understanding of the concept and threshold of ‘usefulness’.

Date on Which the Utility of a Patent Must be Examined

Traditionally, courts in India have held that the determination of utility of a patent application must be made as on the date of application. If a patent is to be revoked, so must be done on grounds that existed prior to the application date. To illustrate, a petition to revoke a patent for lack of novelty cannot be made by adducing proof of art that came into existence after the date of application. The general rule that has developed, therefore, is that any event that has occurred subsequent to the grant of the patent does not affect its validity.

This is perhaps the simplest solution to our question. As a rule, any event that has occurred subsequent to the date of application cannot be considered when determining the validity of the patent. This would include, ostensibly, even those events that result from failures of the patented device itself. However, this rule is not a direct answer to our question, and would constitute an unjustified expansion of this rule of temporality.

In the context of utility, this rule of temporality has generally been applied to prohibit developments in the particular field of technology from affecting the utility of the granted patent. To illustrate, this would mean that the invention of CDs would not invalidate the patent for floppy disks, even if they effectively replaced them. This, however, is distinct from the hypothetical created by our question, where the floppy disk would be replaced not because of other developments, but due to inutility of its own accord (perhaps due to systemic glitches that only reveal themselves after protracted usage). A development that directly relates to the performance of the device for which a patent was granted is distinct, therefore, from developments that occur independently of the granted patent, over which the patentee has no control.

The statutory provision for revocation on grounds of utility, unlike certain other grounds [for example, Section 64(a) and (b)], does not hinge on a temporal aspect. Since it is not specifically prohibited, it is possible to argue that the utility of a patent may be assessed even after the date on which the application was made.

Further, a post application date assessment is not entirely alien to the field of intellectual property rights. Under trademark law, trademarks lose their validity on account of ‘genericide’. Genericide occurs when a trademark is deemed to lose distinctiveness due to its usage in society. To elucidate, consider the case of ‘Xerox’, which began as a trademark for a manufacturer of photocopy machines, but subsequently became synonymous with the term ‘photocopy’, thereby losing its distinctiveness.

From a moral perspective, considering post application events for revocation, especially those directly emanating from the patented device itself, is not unfair since the patentee is directly responsible for the same.

Threshold of Usefulness

One more important aspect needs to be considered – when does a patent become useless? And what is the threshold under which utility is determined?

In Farbwerke Hoescht AG v. Unichem Laboratories, the Bombay HC held that the quantum of utility required is minimal. It interpreted the provision as ‘a choice for the public’. The commercial utility or viability of a patent remains irrelevant. To illustrate, this would mean that a floppy disk does not fail the test of utility in the present day, despite it being practically useless to the consumer today.

However, in my opinion, if a patent becomes practically useless on account of its own failures, its validity may be saved by highlighting the technical advancement made by the patent. For instance, consider a patent, which, in its specifications asserts rights over the recipe of a chemical solution that effectively dissolved basic substances due to the reaction between two compounds that was previously impossible to engineer.  This solution is marketed as a cleaner of tough stains. In my opinion, even if this solution subsequently fails to clean tough stains of its own accord, then its utility may be preserved by the ‘technical advancement’ that it has brought about by enabling a reaction between two chemical compounds. Such an interpretation would be consistent with the dicta of the Bombay HC, if ‘public’ were interpreted to include not just consumers, but also producers and people of skill in the art that may use this technical advance to make further breakthroughs.  It is important to note that the stain-cleaning ability of the solution, in this example, has been excluded from the specification of the patent, effectively making such a benefit of patent ancillary rather than the main thrust of the patent.

Therefore, it is possible to argue that the technical advancement claimed by a patent is sufficient to render the patent useful. It may be time, now, to shift focus from an idea of utility that flows from the way the patent is marketed, to the underlying aspects of technological advancement and evolution that they claim.

In the context of our question, this means that the consideration of revocation of patents on grounds of utility must not only take into account the practical or marketed use of patents, but also the scientific or technical advancement that they represent in their respective fields of technology.

Image from here

We are pleased to bring to you another guest post by our Fellowship applicant, Kashish Makkar. Kashish is a 2nd year student at NLSIU, Bangalore. This is his second submission for the Fellowship. The first submission can be viewed here.

The Delhi University Photocopy Case: Is Law Just Politics?

Kashish Makkar

Critical Legal Studies (CLS), a jurisprudential movement that started in the late 1970s advocated that law and politics cannot be separated. They were convinced that law is a game which was heavily loaded to favour the powerful and wealthy. However, in the DU Photocopy case, the outcome was directly opposite of what the CLS scholars would have suggested. The Single Bench of the Delhi HC (Justice Endlaw), in September 2016, delivered the verdict in a David-Goliath fashion by ruling in favour of the Delhi University and its photocopier and by extension ‘access to education’, and against the top five academic publishers of the world and by extension ‘copyright’ (the Division Bench’s judgment is discussed later). The court quite categorically laid down that the creation of course packs containing photocopies of relevant portions of copyrighted works, by a university, through a photocopier or otherwise, and their distribution to its students does not amount to copyright infringement. In its opinion, such reproduction is in the course of instruction, which, as per Section 52(1)(i) of the Copyright Act, 1957, does not constitute copyright infringement

This was an unprecedented verdict in the field of copyright law. In this blog post, I will discuss how this verdict was a result of the court’s populist outlook that led it to look at the dispute as a binary of two outcomes, one, where ‘access to education’ would prevail and, the other, where copyright would. I will argue as to how these two were not the necessary outcomes, i.e., the copyright regime in India would have remained far more efficient and access to education would have still been upheld had the court not caused the fatal omission of limiting the issue of infringement to that of a question of law and not of fact.

The Background

Before delving into the analysis of this omission made by the court, it is imperative to understand the context that led the court to approach towards the suit in a binary fashion. For this, we must appreciate the circumstances in which the suit was actually heard. Apart from the DU and the photocopier, who were the named defendants, two associations of students and academics, namely ASEAK and SPEAK, were also impleaded as defendants. These associations brought to the court the public trial that this suit was already facing on account of the massive outcry that academicians, authors, and students all over the world had generated against the suit. More than 300 academicians had rallied against the lawsuit and written open letters to the publishers to withdraw the lawsuit. These influential people of the academia had successfully projected the lawsuit as a battle between ‘access to education’ and ‘copyright’. Therefore, the court had to balance the convenience between the parties in an environment where, one, the crucial opinion-makers of the public were also defendants in the suit, and two, the public had already held against the plaintiffs.

Hence, the lines for the outcomes of the suit were already drawn in a fashion where either you would support the principle of ‘access to education’, or you would be against it.

The Fatal Omission

Contrary to the expectations of a justice system that upholds efficiency in accordance with rule of law, the Delhi HC gave in to the populist pressures. The same was evident from the inception of the lawsuit as the delineation of the issue before the court reflected that the result cannot be anything but one of the two outcomes in the binary that the public had identified.

Although Justice Endlaw correctly identified that the question in the suit is whether the making of course-packs amounts to copyright infringement,an omission was made in the manner in which the same was framed. Justice Endlaw while identifying the issue noted that the question of infringement in this case was a question of law and not of fact(Para 22, 2016 SCC Online Del 5128). He observed that if the actions of the University fell under S. 52(1)(i)(i), the claim of infringement is bound to fail and if not, the activity is due for an injunction. It is this observation which makes the outcome of the suit binary and makes the entire judgment problematic.

The problem lies in that such a formulation constructs Section 52(1)(i)(i) as a blanket provision which either has a total application or no application at all. Such a blanket construction is troublesome on account of the fact that so long as reproduction of a copyrighted work is for the purpose covered under the provision, it can never infringe the copyright of the author. Essentially, whether you copy an entire book in the course of instruction or just 20% of it, you’re not infringing the copyright in it.

This could never have been the intention of the legislature. The legislature could not have intended to give permission to 100% copying even during the course of instruction as that would defeat the scheme of the Copyright Act itself. For instance, by allowing the interpretation as is provided by the court, it makes Section 32A (licencing & reprography) of the Copyright Act to be redundant. And, as per general rules of interpretation of statutes, a sound interpretation of statute cannot ever make a provision of the statute redundant.

Similarly, the above interpretation is also against Justice Endlaw’s own reasoning. Throughout the course of the judgment, it was reiterated that the course-packs were not competing with the market of the publishers as the students would have never bought the publisher’s books to read just the sections of the books which are relevant for their syllabus. Hence, it was reasoned that there is no harm to the commercial interests of the publishers. However, in construing the issue as a question of law and not fact, the court didn’t end up placing a limit on the publication allowed. As a result, it’s own reasoning of course-packs not competing with publications falls flat as this omission actually allows a full-fledged reproduction of copyrighted works too.

It is pertinent at this point to examine how the situation would have been different had the question not been constructed in this fashion.

Infringement as a Question of Fact: A Way More Efficient Paradigm

Had the construction of the issue not been in the above form and court would have examined the issue as a question of fact too the outcome would have been substantially better. The same would be due to two reasons:

One, the court would have examined the structure of course-packs, i.e., what percentages of copyrighted material have been copied. This would have allowed the court to examine whether the copying has been actually done for the course of instruction and would have thus prevented the decision from acting as a precedent to any case where entire copyrighted material would have been copied under the guise of §52(1)(i)(i) exception.

And two, this would have led the court to examine the issue from the licensing perspective, which was in fact the prayer of the plaintiffs. Since the court would have examined the extent to which the reproduction was done, it would have necessarily observed that till a certain threshold the reproduction amounts to be within the course of instruction and beyond that the only way out is to be via licencing, since by no means must the publishers bear all the costs for access to education.

Therefore, the other paradigm is more efficient for all the stakeholders.

The Way Forward

Certainly, the deficiency in the delineation of the issue was identified by the two-judge bench of the Delhi HC where the decision of Justice Endlaw was appealed. (Para 80, 2016 SCC Online Del 6229). Therefore, this allows any finding that will come out in this regard be limited to the set of facts raised in the suit (i.e. course-packs which will have an upper limit of copying from copyrighted works). Unlike, the single-bench judgment that allows the interpretation to be blanket, since, it held that it is a question of law and not limited to the facts of the case.

However, soon enough the suit was withdrawn by the publishers. Therefore, the law stands undefined in respect of the permissible limit of reproduction of a copyrighted work in the course of instruction. However, one thing that remains defined is that politics and populism have come to define the law of the land so much so that the outcomes of the suits get reduced to the binary that the public perceives it to be, irrespective of what may be efficient and be in accordance with the rule of law.   

Image from here

Thematic Highlight

This fortnight’s thematic highlights were brought by Adarsh Ramanujan and our fellowship applicant, Kashish Makkar, respectively:

Adarsh Ramanujan wrote an interesting guest post, throwing some much needed light on the element of “public interest” during the grant of injunctions in patent proceedings. He deconstructs the “public interest element” – taking us through the way various aspects of it are understood by both Indian and foreign courts. He concludes by suggesting ways in which parties should approach the “public interest” factor during patent injunction deliberations.

In his second submission forthe fellowship, Kashish attempts to unveil an interesting backdrop to the DU photocopy dispute. Observing that the judgment has political undertones, he argues that the Delhi High Court in its judgment should have approached the question of infringement and fair use as a question of fact, instead of as a question of law. He observes that the Court’s interpretation and application of the latter defeated what he believes to be the legislative intent behind fair use provisions.

Topical Highlight

This fortnight’s topical highlights brought us back to the Monsanto – Naziveedu dispute:

First, we had a guest post by Mr. R.K. Trivedi, Director (Technical) of National Seed Association of India (NSAI). His post was in response to Prashant’s earlier post on whether Monsanto’s invention can be protected as a plant variety and seek benefit-sharing from Nuziveedu. Disagreeing with Prashant, Mr. Trivedi observes that The Delhi High Court has critically gone through the provisions of Indian Patents Act and PPV&FR Act to hold that India has a well-balanced legal framework that protects the rights of plant breeders, farmers and biotech companies. He then argues that India’s PVP legislation is not a copy of the UPOV model, but is instead, a novel, well-balanced legislation that protects the interests of all stakeholders. He concludes by observing that the decision is fair and bound to encourage innovation and competition in the market.

Following this, we had another guest post by Mr. Bhagirath Choudhary, the founder director of the South Asia Biotechnology Centre (SABC), New Delhi and Dr. Usharani KS, who practices at Prometheus Patent Services, Hyderabad. Their co-authored post was in response to, and in strong disagreement with Mr. Trivedi’s post. Notably, Dr. Usharani and Mr. Choudhary argue that Mr. Trivedi’s post is self-contradictory on key grounds and urge that the discussion be taken towards the more important aspects of the issue: i.e. invalidation of a biotech patent u/s 3(j) of the Patents Act; and scope and limits of patent rights upon the backcrossing of a patented gene into a seed or a plant variety.

Other Posts

Mathews covered the recent case of M/s Hilton Roulunds Ltd v. Commissioner of Income Tax (2018), where the Delhi High Court held that the expenditure incurred by the assessee for acquiring trademark was revenue expenditure, instead of capital expenditure. Mathews disagrees with the Court’s ruling – arguing that the nature of expenditure in the present case is a one-time expenditure, which is characteristic of capital expenditure. He further substantiates this argument by observing that in the instant case, the assessee can use the trademark for an indefinite period, which improves earning capability and is indicative of capital expenditure.

Next, our fellowship applicant, Prarthana Patnaik brought us her third submission for the fellowship. Prarthana discusses the copyright infringement claims surrounding Google’s ‘View Image’ extension – the tool by which Google allows for pictures to be directly available for viewing and downloading. She explores the same in the context of fair use, direct and secondary infringement liability. Subsequently, she analyses Google’s potential liability by studying the treatment of the abovementioned tests within American and Indian jurisdictions.

This was followed by a post by another one of our fellowship applicants, Rishabh Mohnot. In his post which doubles as his second submission for the fellowship, Rishabh deals with the revocation of a patent on the ground of in utility. He explores the contours of application of this ground by dividing his analysis into two broad categories: date of determination of utility; and concept and threshold of usefulness.

Events & Announcements

Pankhuri announced that the National Law University, Delhi was looking to engage three full-time Research Fellows (Law) for the Centre for Innovation, Intellectual Property and Competition (CIIPC), at its campus in Dwarka, New Delhi. The deadline for sending applications was June 3, 2018.

Other Developments

Indian

Judgments

M/S Maya Appliances Pvt. Ltd. v. Preethi Kitchen Appliances Pvt. Ltd. & Anr. – Madras High Court [April 28, 2018]

The court allowed an appeal against the single judge’s order granting an ad-interim injunction restraining the appellant from infringing the respondent no. 1’s copyright in the registered design of its tripod-shaped base unit for its ‘Preethi Zodiac’ series of mixer-grinders and passing off its mixer-grinders as that of respondent no. 1., by selling any mixer grinders with features identical or similar to respondent No. 1’s design. The appellant – the registered proprietors of its own tripod-shaped base unit design for its ‘Vidiem V Star’ series of mixer-grinders – submitted that its design is different from respondent 1’s design. The court observed that whether two designs are substantially similar or not is to be determined by applying the visual appeal test. Applying the test to the facts of this case, it noted that in the present case, since the plaintiff had not claimed monopoly over the tripod shape and thus, if the tripod is ignored, there was no similarity between the designs at all. It further pointed out the various dissimilarities between the two designs and thereby concluded that there was no substantial similarity which could be considered as fraudulent or obvious imitation.

Sandisk LLC & Anr v. Transton – Delhi High Court [May 10, 2018]

The court granted a permanent injunction restraining the defendant from infringing plaintiff’s registered trademark ‘SanDisk’ and the Red Flame Logo and passing off its goods as that of the plaintiff by selling counterfeit goods bearing the plaintiffs’ ‘SanDisk’ trademark and product packaging. The plaintiff contended that their statutory rights have been interfered with and that it had lost business, trust of consumers and its image among other members of trade. The court observed that “due to extensive use, the plaintiffs’ mark SANDISK, and Red Frame logo have acquired reputation and goodwill globally as well as in India“. It noted that the defendant was using the plaintiff’s registered trademark and product packaging to sell counterfeit products in order to unfairly benefit from the reputation and goodwill of the plaintiff and to pass off the plaintiff’s services as their own, and that this was likely to cause  incalculable losses and injury to the plaintiff as well as harm to the public. Consequently, the court decreed in favour of the plaintiff and held that it was entitled to compensation of Rs. 33,16,320/-. It, however, refused to grant punitive damages, keeping in view of the judgments in HRCN Cable Network case (2017) and the HUL case (2014).

M/S Raj Traders v. Commissioner Of Customs — Custom, Excise & Service Tax Tribunal [May 14, 2018]
Certain goods imported by the applicant were found to be non-compliant with Indian Bureau of Standard requirements. The Tribunal observed that the customs officials may be able to determine violations of copyright and trademark at the border itself, patent, GI and design infringement prove to be tricky to determine in the absence of judicial pronouncements to that effect, hence the officials must proceed with caution. Further, when all formalities associated with the registration of IPR may be undertaken by the Customs department, protection will be accorded at all the ports as specified in the notice, doing away with the need for multiple notices.

Saregama India Limited v. Eros Digital FZ LLC and Anr. — Calcutta High Court [May 16, 2018]
Application filed for removal of party in a suit against copyright infringement, wherein the applicant claimed that he was merely an agent of foreign principals and hence not liable for any copyright violation committed by them. The Court found that at a preliminary stage of the trial, one is not concerned with the merits of the dispute, and the averments in the plaint are deemed to be true. Therefore, rejecting the application, the Court directed the applicant to file their written statement in response to the plaint.

Cello Plast v. La Opala R. G. Ltd. & Ors. — Calcutta High Court [May 18, 2018]
The order dealt with an appeal against a lower court order rejecting an application for ad interim relief in a suit for passing off of identical or nearly identical depiction of trees or flowers or plants or the like on the opalware plates. The court, observing that the etchings on the glassware looked similar, but the order of the lower court was not passed completely without reasons or appeared to be bad to the meanest mind in the sense that it is outlandish, and hence refrained from interfering with the same, leaving behind the issues to be determined while hearing the interlocutory application.

La Opala R.G. Ltd v. Cello Plast & Ors.  — Calcutta High Court [May 16, 2018]

The Court, in a suit for passing off of petitioner’s trade dress for opal glass tableware, found that the trade dress of defendant’s products were deceptively similar to that of petitioner’s product trade’. The Court also rejected the argument that since glassware is sold in cartons, deceptive similarity does not arise if the carton displays the trade name of the defendant, observing that glassware can be sold without the carton as well and that in any case sale in cartons is not a defence to infringement. Since the petitioner was able to show, prima facie, that there was a case of infringement, the Court granted the interim order sought.

M/S H.T Media Ltd & Anr. v. Susheel Kumar & Ors. — Delhi High Court [May 22, 2018]
The Court observed that the adoption and using of counterfeit domain name or registered trademark, trade dress or deceptively similar domain name, unequivocally amounts to the infringement and passing off of the plaintiff’s IPR. Hence, the Court awarded a decree of permanent injunction. The Court also observed that plaintiffs have suffered loss of goodwill and reputation, and hence are entitled to punitive damages as well. Based on the malafide conduct of the defendants and their non-appearance before the Court, the plaintiffs were awarded punitive damages of Rs.10 Lac as well as costs of the litigation.

Christian Louboutin SAS v. Abubaker & Ors. — Delhi High Court [May 25, 2018]
The Court dismissed the suit for TM infringement and passing off of the plaintiff’s RED SOLE mark, relying on legislative intention behind SS.2(m) and 9(1)(a-b) of the TM Act, 1999 held that a TM can only be represented through a Combination of colours, not a single colour. Further, it was also held that the law laid down in the Deere Casewas wrong as it did not take into account the language of S.2(m), relying on the ratio in N. Bhargavan Pillai (Dead) & Anr. v. State of Kerala, (2004) 13 SCC 217. The Court distinguished this case from the previous Christian Louboutin Case (Del HC, 2017) by relying on Padma Sundara Rao (Dead) & Ors. v. State of Tamil Nadu & Ors. (2002) 3 SCC 533 wherein it was held that ratio of judgment is fact-dependent and even difference of a single fact can make difference in the ratios of the two cases, coupled with the aforesaid point. Court also rejected the argument that red sole is a device TM and thus a device is capable of being a mark and therefore a TM, once again relying on the above mentioned legislative intention. To be a ‘device’ for the device to be a TM, such a device must have standalone independent existence in itself so as to have an identity of its own even without being part of the product. S.10 is also not applicable to this case because it also uses the terms combination of colour. Lastly, S.30(2)(a) precludes a claim for infringement, stating that when a characteristic of a TM is functional to the product in question, another trader cannot be restrained from using the same, especially when the defendant is using the trade name VERONICA to distinguish his products from the plaintiffs’. There is no confusion or deception between the two, nor is there a case for passing off given the above points of law.

Elektrobit Automotive GmbH v. DDIT — ITAT, Delhi [May 22, 2018]
The ITAT held that in order to qualify as royalty payment, a transfer of all or any rights (including the granting of any licence) in respect of copyright has to be shown, and distinction has to be made between the acquisition of a “copyright” and a “copyrighted article”. In the present case, there was no transfer of copyright by the assessee and it was a case of mere transfer of a copyrighted article, as the licensee was prohibited from copying, decompiling, de-assembling, or reverse engineering the software without the written consent of the licensor, who retained the incorporeal copyright. The right to use the copyright of a software is different from the right to use a the software itself, and payment for the latter does not amount to royalty, and hence would be business income (not taxable in India). As a result the appeal was partly allowed in favour of the appellant.

News

• Rustom writer files complaint against Shahid Kapoor’s Batti Gul Meter Chalu
• RGV stole my story yet again: Jaya Kumar
• Madras HC upholds TRAI tariff order, regulation for broadcasting sector
• RMPL Applies For Registration as Copyright Society
• Private publishers must pay Rs 63,000 per subject a year to Balbharati
• Delhi High Court grants John Doe order for the film ‘Deadpool 2’
• Hindustan Unilever fights for rights over Kwality Walls
• India pitches for WTO talks on checking theft of traditional knowledge
• India seeks to generate more support at WTO on linking TRIPS to bio-piracy
• Ice cream company guilty of copyright infringement
• Haier advertisement case: Delhi High Court interim order favours Voltas
• Christian Dior settles plagiarism dispute with Indian design studio People Tree

International

• USA: EFF Fights for Public Access To Patent Disputes
• Japan Patent Office extends grace period to 12 months
• Photographers Shutter at Plan to Boost Copyright Fees
• Michael Jackson’s estate sues ABC for copyright infringement
• New York: Judge Denies Author Attempt to Trademark ‘Cocky’

We are pleased to bring to you a two-part guest post by Adarsh Ramanujan. Adarsh is an advocate primarily assisting clients as a litigation attorney. He has recently started his own counsel practice with offices in Delhi and Chennai after having spent considerable time with Lakshmikumaran & Sridharan at their New Delhi and Geneva offices. He obtained his B.Sc. LL.B. (Hons.) degree (Gold Medalist) from National Law University, Jodhpur  and LL.M. degree from University of California, Berkeley. He is a qualified Patent Agent in India. A major portion of his time is spent, practicing in the areas of IP & Technology Laws as well as in International Trade Law. He was however branched out into doing commercial litigation and arbitration work. His expertise also extends to regulatory laws such as environmental laws, biodiversity laws and cyber laws. Adarsh is currently teaching a seminar course on commercial arbitration in NLU, Delhi and has previously taught patent law in NLU, Jodhpur and at the CEIPI Institute (University of Strasbourg). He has authored or co-authored close to 30 publications on diverse topics, including on IP, WTO, constitutional law and international tax. He has guest blogged for us in the past as well (see here and here).

In this two-part post, Adarsh analyses a recent order passed by the Bengaluru bench of the Income Tax Appellate Tribunal (ITAT), directing Google India to pay taxes on the payments made by it to Google Ireland between 2007-08 and 2015-16, towards marketing and distribution rights of Adwords programme for India. The Tribunal held that Google India was not a mere re-seller of advertising space to Indian advertisers but a licensee of Google Ireland’s IP and thus the payments made by it to Google Ireland were in the nature of  ‘royalty’, for which it was under the obligation to deduct tax at source as per the Income Tax Act. In October last year, a similar order was passed by ITAT for the assessment years 2007-08 to 2012-13, which is currently in appeal before the Karnataka High Court. Prof. Basheer had expressed disagreement with the Tribunal’s conclusion in this order as, in his opinion, Google India’s use of Google Ireland’s IP was only incidental and its main purpose was to resell ad space to the Indian customers. A piece published in the Outlook had quoted his views on the order as follows:

“Basheer says the closer analogy is not a McDonalds franchisee, which would have made the case for royalties and consequent taxation a stronger one. “It’s better to think of Google as a real-­estate developer who uses third party agents to attract more people,” he says. “Google AdWords is more like digital real est­ate. It is digital real estate. Google India is using Google’s trademark (brand name) and other intellectual property only incidentally. Their main purpose is to actively go out and solicit customers who can buy the keyword space.”

Adarsh offers similar critiques of the recent ITAT order in this post. Here goes Part I of the post:

The ITAT Bengaluru Order in the Google Adwords Royalty Tax Case – Part I

Adarsh Ramanujan

On May 11, 2018, the Income Tax Appellate Tribunal (ITAT) in Bengaluru dismissed a batch of appeals and cross-appeals filed by Google India Pvt. Ltd., Google Ireland Limited and the Revenue Department. A copy of the order is available here.  The appeals arose from the decision of the Commissioner of Income Tax (Appeal) (CIT(A)) pertaining to the assessments years 2007-2008 to 2015-2016.

The order is, of course, quite lengthy and deals with several different issues under the Income Tax Act relating to the Google AdWords Program and the payments made by Google India Pvt. Ltd. (Google India) to Google Ireland Ltd. (Google Ireland). At its heart, the dispute involved a contract under which Google India purchased advertisement space from Google Ireland for a price, for further resale to advertisers in India – something akin to distribution rights. Among others, the CIT(A) had ruled that the payment made for such purchase amounted to “royalty” under Section 9(1)(vi) of the Income Tax Act.

Explanation 2 to Section 9(1)(vi) of the Income Tax Act has a rather lengthy definition of “royalty”. The critical portion of this definition is extracted below:

Explanation 2.—For the purposes of this clause, “royalty” means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head “Capital gains”) for—

• the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property.
• the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property;
• the use of any patent, invention, model, design, secret formula or process or trade mark or similar property

…

The CIT(A) had concluded that the payment made by Google India to Google Ireland was for distribution rights and that in the circumstances of the case, this was covered under the category of “similar property” in the Explanation 2 to Section 9(1)(vi).

Given that I am on a platform for sharing and discussing IP and related issues, I have tried my best to avoid highly tax-centric issues. In these parts (Part-I and Part-II), I will only deal with two issues examined by the ITAT in its order:

– the nature / status of the payments made by Google India to Google Ireland – whether the payment is to be treated as ‘royalty’ as opposed to just business income in the hands of Google Ireland, and

– who is the beneficial owner of the sum paid / payable by Google India.

I will not deal with the issues arising under the Transfer Pricing regime – that requires its own space.

Setting the Legal Context

On the first issue, it is relevant to note that Google Ireland did not have a permanent establishment in India and if the payment by Google India was solely treated as business income for Google Ireland, it is not chargeable to tax in India. If, however, the payment is ‘royalty’ under Section 9 of the Income Tax Act, the income is taxable in India. There would be a consequential and concomitant obligation to deduct TDS on Google India, depending on the finding on this issue.

On the second issue, if Google Ireland is not the “beneficial owner”, the beneficial rate of 10% under the Indo-Ireland DTAA would not be available. This requirement of being the “beneficial owner” to take advantage of the Indo-Ireland DTAA, arises from the text of the DTAA itself.

Critical Facts / Evidence Recorded

Google India and Google Ireland had entered into two separate contracts, which are at the heart of this decision:

1. The Distribution / Reseller contract (Paras 85-91):

a. Here, Google India was hired as the distributor / reseller of Google Adword program to advertisers.

b. The language of the contract states that Google Ireland is “providing advertisement space through the distribution program” for distribution by Google India and Google India, agrees to “market and distribute AdWords Program to Advertisers in the designated Territory”.

c. The “AdWords Program” was defined to mean the advertising program currently offered by Google under the name “AdWords.”

d. Google India is made responsible for any services to the advertisers, including signup, after-sales service and responding to queries.

e. No party was stated to acquire any intellectual property rights through this agreement, except for the limited purposes as may be required to implement the agreement.

2. Service Agreement (Paras 82-84):

a. Here, Google Ireland hired Google India for certain IT-enabled services, which were to be performed using the software / technology of Google Ireland. This agreement indicated that the ownership of IP right over such software, including confidential information, as well as over any derivative works, shall rest with Google Ireland.

b. There was oral testimony on record to state that the IT services offered by Google India primarily involved approving and administering advertisements to conform to Google editorial guidelines and responding to customer queries and other typical back office functions (Paras 93-94). Part of this included an assessment of whether a proposed ad violates any trademark. Use was made of an internal tool where trademark violations in an ad text are detected and if any such violation is detected, the ad is rejected. This internal tool is not available to the advertisers directly (Para 95).

3. The legal owner of the AdWords Program was Google Inc. USA and through two intermediate companies (Google Ireland Holdings, Google Netherlands Holdings BV), it was licensed to Google Ireland. Google Ireland, of course, licenses the same to Google India. During the course of the proceedings before the lower tax authorities as well as the ITAT, a request was made to produce all agreements at all four levels. However, only the agreements at the last two levels, i.e. Google Netherlands Holdings BV-to-Google Ireland and Google Ireland-to-Google India, were produced [Para 164].

Critical Findings of Fact from Evidence

4. On a wholesome reading of the Distribution / Reseller contract, the ITAT concluded that the Distribution / Reseller contract is not merely an agreement to provide / resell advertisement space but it is an agreement for facilitating the display and publication of an advertisement to targeted customers (Para 107).

5. Under the Service Agreement, the only IT enabled services rendered by Google India to Google Ireland related to the AdWords Program and nothing more.

6. Based on this inference, the ITAT concluded (Paras 108, 116):

“108. We have also examined the obligations cast upon [sic] [Google India] under the agreements and found the obligation cast upon [sic] [Google India] under the Google Adword distribution agreement can only be discharged with the help of the ITES division. Therefore, the Google Adword distributor agreement and the service agreement are to be read together as they are interconnected with the navel cord and without resorting to the service agreement the terms and conditions under the Google AdWord Distribution Agreement cannot be complied with. Therefore, in order to understand the function of Google Adword program, we have to read both the agreements together.

…

116…But in the instant case, [sic] [Google India] has not purchased the advertisement space for putting its advertisement online from [sic] [Google Ireland]. The assessee has been duly appointed a distributor under the Google Adword Distribution Agreement to distribute and sell the advertisement space obtained from [sic] [Google Ireland] under the Distribution Agreement. Under the distribution agreement, [sic] [Google India] was under obligation to provide pre-sale and after sale services with the help of ITES division. While providing after sales services / technical services, the assessee had access to the intellectual property rights and tools and informatives, derivative works owned by [sic] [Google Ireland]. In the instant case, assessee is not a simpliciter buyer of AdWord Space for putting the advertisement either for himself or for others…”

(Emphasis supplied in bold)

7. The findings of fact noted in paras 108 and 116 of the ITAT order, above, are repeated across several other portions of the order.

Please click here to view Part II of this post.

In Part I of this two-part guest post on the Google Adwords royalty tax case, Adarsh had explained the critical facts/evidence recorded in the case along with the critical findings of fact made by ITAT from such evidence. In Part II of the post below, he discusses the Tribunal’s findings on the legal issues and critically analyses them.

The ITAT Bengaluru Order in the Google AdWords Royalty Tax Case – Part II

Adarsh Ramanujan

Application of the Law to the Facts of the Case

1. The above findings of fact made the decision of the ITAT, quite simple. The ITAT found that the fee being paid by Google India to Google Ireland was not a fee for access to advertisement space simpliciter, but also for access to patent, technical know-how, IPRs, trade mark, the process, derivative works, brand features, etc., of Google Ireland [Para 135]. Thus, the payment made by Google India to Google Ireland under the Distributor / Reseller Contract was held to be royalty as per Section 9(1)(vi) of the Income Tax Act. 

2. It bears to mention two important arguments raised by Google India to repel the above conclusion. First, Google India argued that payments made by residents to non-residents without a permanent establishment in India are subject to an equalization tax @ 6%, under the Finance Act, 2016. Thus, Parliamentary intent is to tax payments similar to the ones in the present case as business profit only. However, the ITAT rejected this argument by holding that the “equilization levy is to charged only on consideration for specified services and not others where there is use of IPR, copyright and other intangibles” and therefore, “the introduction of equilisation levy would not convert the nature of payment made by [sic] [Google India] to [sic] [Google Ireland].” [Para 139]

3. Second, it was contended that the use of trademarks by Google India was only incidental and thus, the payments cannot be termed as royalty, placing reliance on Director of Income Tax Vs. Sheraton International Inc., (2009) 178 Taxmann 84 Delhi and Formula One World Championship Ltd., Vs. CIT, (2016) 76 Taxmann 6 (Del). Both cases were distinguished on facts as those relating to advertisement services where use of trademark was considered incidental. In contrast, in this case, the ITAT observed that the use of the IPRs, technical know-how, trade mark, derivative works and other intangibles of Google Ireland was not incidental since the obligations under the Distributor / Reseller Contract cannot be fulfilled without the same [Paras 142, 145].

4. On the question of whether Google Ireland is the “beneficial owner”:

a. The ITAT notes that there are four layers of license agreements and no access was given to agreements beyond the layer of Google Netherlands Holdings BV-Google Ireland. Even this agreement, it was factually found by the ITAT, contained a clause for license fee payable by Google Ireland to the upstream company, though the quantum was not clear [Para 164].

b. The ITAT held that without all the agreements and details in place, it was not possible to predict the manner in which the revenue received by Google Ireland was being distributed to the upstream companies. On the other hand, the burden of proof was on the assessee to clarify based on evidence that Google Ireland was indeed the beneficial owner since it retained a substantial portion of the payment received from Google India [Paras 158, 165].

c. The finding also appears to be that a mere TRC or a Tax Residency Certificate, while acting as proof of residency of a company, will not amount to proof of beneficial ownership [Para 171].

d. Given the lack of evidence on this issue, the matter was remanded to the Assessing Officer solely on this issue [Para 172].

Short Critical Appraisal

Limiting myself to the issue of royalties, I have several critiques to offer:

1. First, for such a lengthy order, it is not at all clear under which specific part of Explanation 2 to Section 9(1)(vi) of the Income Tax Act, the payments were brought under. Right or wrong, at least the CIT(A) had identified distribution rights to be “similar property” and there also appear to be findings that the AdWords program is itself is a computer programme and thus, payments effectuated for transfer or use of the same would be “royalty”. This is not the finding of the ITAT. Instead, with a broad stroke, the ITAT simply declares that the transaction and the payment was for use of “patent, technical know-how, IPRs, trade mark, the process, derivative works, brand features, etc.”.

2. Second, even assuming all the findings of facts are correct, the fact remains that the composite transaction involved more than just a license to various forms of IP from Google Ireland. The findings do not negate the supply of advertising space for downstream advertisers brought on board by Google India. By its own order, ITAT has found that the payments by Google India to Google Ireland were towards: (i) obtaining advertising space; (ii) facilitating the display and publication of an advertisement to targeted customers; (iii) access to IP involved in the execution of these functions. There is no finding that items (i) and (ii) fell within the scope of Section 9(1)(iv). That being the case, in my view, the ITAT could not have assumed, without further analysis, the entire payment as being “royalty”.

3. Third, continuing from the second point above, again assuming ITAT’s findings on the interpretation of the Re-seller / Distributor Contract to be correct, the real question that remains unanswered in the ITAT order is whether payments for obtaining “advertising space” and “facilitating the display and publishing of an advertisement to targeted customers” would amount to “royalty”. In my respectful submission, the answer is a resounding ‘no’.

a. From an advertiser’s point of view, the AdWords program is simply a service offered by Google (ignoring the legal entities involved in the picture for the moment). For instance, the AdWords program allows the advertiser to get links of their products or services displayed during the course of displaying search results on Google’s search engine.

b. Ultimately, the advertiser gets no access to copyrighted material or any other IP.

c. Google Ireland can take any business approach to make this service available.

d. Google Ireland has chosen to follow a model whereby Google India is engaged to market this service and sign up advertisers for this service. Once an advertiser agrees to use the service, Google India takes the responsibility of signing them up, assist them in availing these services and provide any after-sales services, if required.

e. Google India signs an agreement with the advertisers, where the advertiser takes full responsibility of the website links (URLs) to be displayed and identification of the keywords, which when used in the search engine, should display these URLs. Google India gets paid on a per-click basis.

f. Presumably, and it seems logical, the search result page is not in the control of Google India and from Google India’s perspective, it is in Google Ireland’s control. In the re-seller / distributor contract, Google Ireland commits itself to providing the advertisement space on the search result page.

g. I did not see the payment clause of the Re-seller / Distributor Contract extracted in the order. However, it appears that Google India retains part of the fee paid by the advertiser and sends the rest of it to Google Ireland.

h. From the advertiser’s perspective, it is paying a certain fee to Google India for putting up their URLs on the search result page in certain cases (revenue model may be per-click). Google India retains a sort of a fee for services rendered as a distributor of another service offered by Google Ireland. Ultimately, the “advertisement space”, meaning the search results page where the URLs will be displayed, is being provided by Google Ireland and thus, Google India pays Google Ireland for providing that space.

i. Obviously, on a digital platform, this display of the URLs on the search result page involves the use of software / computer programmes. That is merely the mode of execution of the advertisement service. In the scheme of things, the primary service being rendered is providing an advertiser with space on search page results and use of any software or other means to render this service, is merely incidental.

4. Fourth, for the Service Contract, some payment was received by Google India from Google Ireland, though the ITAT order does not get into the finer details of the same. It was also undisputed that the Contracts were executed on different dates. If these were to be accounted for, prima facie, it is not as if the transactions were a sham/ surreptitiously split. If there is some mala fide involved, the story would be something like this – the parties were aware that the performance of the Distributor / Resellers Contract required use of IP and thus, payments could be taxed as “royalty”; to avoid this, the parties created a separate transaction as a Service Contract to give access to the required IP. I’m not sure if the facts narrated would lead someone to that conclusion, at least from an evidentiary stand-point. There is also no finding to the effect that there was an intentional attempt to circumvent the law.

5. Fifth, even assuming it was factually correct that the ITES services rendered by Google India were themselves limited to the AdWords Program, it is possible and logically consistent to split said ITES services from supplying online advertisement space. Imagine a contract between an OEM and a distributor for distribution of a tangible product and a separate contract awarded to the distributor for installation and after-sale services. The distribution contract may not necessarily involve IP, but installation and after-sales services may require access to confidential information / know-how / other IP. This does not convert the distributorship into an IP license agreement. It appears that this is exactly what the ITAT appears to have done. It is true that online and digital platforms may require new ways of thinking and approach on several fronts, but I am not entirely sure whether what was done in this case was appropriate. Another perspective to consider is that the two components of the transaction could have been contracted with two different entities as well – therefore, to tie them together without any finding that the transactions are a sham simply because both components were with the same entity, seems unjustified.

6. Time and again, the ITAT quotes precedents to state the contractual terms must be read to fully understand the nature of the transaction and yet, with respect, to me it appears perverse for the ITAT to have focused on only one aspect of the transaction to characterize the composite transaction (and this is assuming the two contracts were to be read together as a composite transaction).

It’s been a while since we updated you on the patent working PIL matter  at the Delhi High Court. On 23^rd April, 2018, the Delhi High Court disposed of the matter, directing the Government to complete all steps towards effecting necessary amendments in the patent working provisions, strictly within the timelines proposed by it. It has also asked the Government to place a report before it upon completion of this exercise.

As our readers may recall, the Court, in an order passed on 15th March, had directed the Government to file an affidavit stating a reasonable timeline within which it would complete the then ongoing consultation with the stakeholders on the patent working issues, examine the comments it receives and effectuate the necessary amendments under the Patents Act/Rules. Pursuant to this order, the Government had filed an affidavit (dated 20^th April) proposing the timelines to be as follows:

In the judgment (dated April 23), the court has accepted these timelines and directed the Government to complete the remaining steps in accordance with them.

Here’re the relevant paragraphs of the judgment:

“We accept the timelines suggested by the respondent no.1 who shall remain bound by the same. Every effort shall be made to ensure that there is no deviation and the matter is treated in right earnest and given the seriousness which it deserves to be accorded to it.

The respondents shall place a report before this court upon completion of the aforesaid noticed exercise.

In view of the above, this writ petition and application which sought the strict implementation of the law need not detain this court any further and are hereby disposed of.”

One now hopes that the Government will come up with a more optimal working disclosure format and implement it more rigorously in the years to come. The Government has already completed the process of stakeholder consultation in this regard. A total of 73 stakeholders, from India as well as abroad, had submitted their comments to the Patent Office in late March. Selected stakeholders were then invited by the Patent Office for a consultation meeting which was held in New Delhi on 6^th April. Representations were made by 43 stakeholders (both Indian and foreign) at the meeting, which included 19 law firms, 7 industry associations, 6 companies, 3 non-profit organisations, 3 academicians, 1 R&D organisation, 1 in-house lawyers’ group, 1 patent agent, 1 patent attorney and 1 government body (The US Patent and Trademark Office).

Among law firms, almost all top IP law firms (Anand & Anand, Remfry & Sagar, K&S Partners etc.) presented their views. From the industry, 2 pharma companies (Mylan and Natco) and 4 other companies, namely, Samsung, Huawei, HUL and Erricson made representations. Apart from these individual companies, feedback was also given by 7 industry associations such as BSA, CII, FICCI, JIPI, JIPG, OPPI and ASSOCHAM. Indian academics who participated included Prof. Basheer (represented by his counsel, Mr. Sai Vinod), Dr. Raj Dave from GNLU and Prof. Yogesh Pai from NLU Delhi. From non-profit organizations, we had the Lawyers Collective, MSF (Doctors without Borders) and the Center for Internet and Society (CIS). A gist of the major issues raised and the suggestions made during the meeting, as provided by the Government in the affidavit submitted to the court, can be viewed here.

The Government is now in the process of examining the stakeholders’ feedback and preparing a draft of necessary amendments to the Patents Rules/Form 27. As per the proposed timelines, the draft amendment will be notified in the gazette for stakeholders’ comments by July this year.

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We’re pleased to bring to you a guest post by Arth Nagpal. Arth is a 2nd year student at National Law School, Bangalore. This is his first submission for the Fellowship.

SpicyIP Fellowship 2018-19: Developments in Liability of ISPs for Copyright Infringement

Arth Nagpal

This piece intends to draw a comparison between liability of ISPs for copyright infringement in the United States and India. The former has in place a system of ISP liability through the mechanism of graduated responses, as has been restated in the recent judgment of BMG v. Cox Communications. However, in India, a different approach is followed. John Doe orders are issued against websites, which frequently victimize innocent websites hosting content. The liability for copyright infringement is laid down, or rather, its enforcement is done in such a manner that the true infringers might be in a position to escape liability. Hence, this post tries to analyze the standard of responsibility and the mechanism of apprehending copyright infringers followed in the United States, and also attempts to examine the provisions of the Indian Copyright Act, 1957 and the IT Act, 2000 to gain a clearer understanding of the law in place and the need for transformation therein.

Legal Developments in US

Recently, a US-based Internet Service Provider Grande Communications was sued by the Recording Industry Association of America for various copyright infringements perpetrated by its customer base, constituted by more than 160,000 customers. It has been reported that Grande is merely one of the many service providers that are guilty of providing internet services to customers who choose to illegally download data which ranges from music, video files, books and so on. Although U.S. Magistrate Judge Andrew Austin acknowledged the fact that the “availability of copyrighted music lures customers”, as well as Grande’s actions to alert its customers regarding infringing copyrights, he denied the motion to dismiss the contributory infringement claim against Grande.

This suit takes its cue after the recent appeal decided by a United States Circuit Court in the case of BMG v. Cox Communications, wherein the respondent, an ISP, appealed the lower court’s judgment on being found guilty of contributory infringement by not taking sufficient measures to curb copyright infringement by its customer base. In fact, the appellant, a management company that owns copyrights in musical compositions, contended that the service provider sheltered repeat infringers by reactivating their accounts after terminating them, to give an appearance of compliance. The judgment delivered on February 1, 2018 raised the standard for contributory infringement of copyright. Rather than a negligence or ‘should have known’ standard, a ‘willful blindness’ standard has been prescribed, or rather, reinforced. Willful blindness is defined as a situation in which a person possesses enough knowledge to be ignorant or unaware of direct proof of critical facts. In effect, the person will be considered to have actual knowledge of those facts. This differs from actual knowledge, wherein it can be conclusively assumed that a person ‘must have known’ a particular thing. However, in copyright law, willful blindness is equated with actual knowledge, since it is only a notch below actual knowledge when it comes to the mental state of the accused. In case the service provider believes or has reason to believe that its customers are infringing on copyrights, it must take suitable measures to stop such illegal activity. If it fails to do so, it is guilty of contributory infringement, and cannot take shelter under the guise of unawareness.

Legal Consequences of Copyright Infringement

In the present BitTorrent era, copyright infringements aren’t surprising. In fact, they’re quite common in most spheres of cyber awareness. There have been judgments in the past, the most significant one having been decided in 2017 in a Finnish Court, wherein the founders of Pirate Bay were held guilty of copyright infringement and fined $477,000. Another instance of a similar judicial action was seen in the Australian Federal Court in 2017, effectively banning 42 torrent sites. India, on the other hand, has been lax in comparison in this regard. The last update on piracy-related crackdowns was probably in last September of the arrest of the administrator of a Tamil torrent site. However, these relate to site-owners being penalized and not the ISPs that facilitate piracy of copyrighted material by consumers.

The Madras High Court, under a suit for copyright infringement filed by Prakash Jha Films, directed several ISPs to disable user access to websites that allowed users to view copyrighted material, particularly two movies that had released recently. The Order of the Court has been adequately covered here. The concern is still whether there exists any concrete legal basis for ISPs to be held liable for infringements made by constituents of their customer bases. This Order came across as excessive due to its blanket ban on entire websites, not merely the URLs that had been identified as hosting copyrighted data. The lack of an appropriate standard indicates the need for looking towards contemporary practices of other nations. Moreover, a perusal of the provisions of the Indian Copyright Act, 1957 must be made.

ISP Safeguards versus John Doe Orders

The standard applied in BMG v. Cox is that of ‘willful blindness’ towards infringements happening under the ISP’s nose. This essentially translates to contributory infringement, since the ISP does not take action against its users. This ensures a system in which an ISP is compelled to establish a system to tackle repeated infringements by users without requiring the Court to impose a restriction on numerous websites, some even upon mere speculation of availability of copyrighted material. In countries such as the United States, this is known as a graduated response system, or three-strikes. A governmental agency, as in the United Kingdom, or otherwise, as in the United States, prescribes a code for ISPs to follow in order to limit infringements. A common practice with respect to protecting copyrights in India is the John Doe Order, which essentially safeguards copyrighted material against an anonymous infringer. This approach is centered on data-specific prohibition, rather than a broader, more pervasive measure against copyright infringement in general.

The problem with John Doe Orders, or Ashok Kumar Orders as they are known in India, is a greater probability of innocent websites getting caught in the mire, due to the uncertainty of infringing parties. This has been properly elaborated upon by Kian Ganz in his article on LiveMint. This is at variance with the mechanism in the United States of establishing a mechanism to hold the ISP and its customer base liable, rather than innocent websites. A study undertaken by Copenhagen Economics on Indian Online Intermediaries perfectly portrays the problem with the present liability regime targeting intermediaries. Intermediaries do not have direct control per se over the information being exchanged or hosted via their platforms. Hence, John Doe Orders, especially in light of the more stringent prohibition they impose now, are greatly unjust to such websites that are unaware of the material that they are facilitating the exchange of.

The Indian Copyright Act, 1957

The Indian Copyright Act provides penal punishments for infringement of copyright under Chapter XIII. Sections 63 and 63A correspond to infringement of copyrights by first-time offenders and repeat offenders respectively. However, these relate to infringements made by individuals and not the liability of the ISP itself. As per Section 52(1)(b), ISPs are exempt from liability since they are merely intermediaries “storing work in the technical process of electronic transmission or communication to the public.” Intermediaries, covered under Section 52(1)(c), are provided similar immunity, except in situations wherein they are “aware or have reasonable grounds for believing that such storage is of an infringing copy”. The application of this is grave, since the awareness of an intermediary with respect to infringing material cannot be conclusively proved. It is considerably difficult to be informed about copyrights and whether one is infringing them or not. The idea of blocking websites to curb infringement has been equated to ‘whacking moles’ in Australia, in the sense that it would be inconsequential due to the rapid movement of website owners in reproducing the same data elsewhere. Moreover, such a measure needs to be monitored carefully to provide for a system of ‘checks and balances’.

Since ISPs are users’ gateways to the World Wide Web, it is only logical to break the chain at the initial level. Upon confirmation (from copyright holders or knowledge gained by the ISP upon monitoring unusual activity of a user) of infringements made by a customer, action must be taken by the ISP itself, by disabling access for a certain number of days, rather than deactivating websites without any notice whatsoever. This necessitates a change in Indian copyright law to limit ISP immunity under Section 52(1)(b) of the Act for a more efficacious curtailment of copyright infringement.

ISP Liability: Need of the Hour

With the advent of streaming services in India such as Netflix and Amazon Prime, copyrights that need to be procured have increased, implying a greater scope for infringements. Hence, piracy should be taken seriously. A ‘willful blindness’ test for holding ISPs responsible for contributory infringement of copyright should be introduced to inculcate legal and scrupulous practices in the ISPs and the users. As of now, there does not exist any scope for ISP liability, thanks to Section 52(1)(b). In fact, Section 79 of the IT Act, 2000 strengthens this immunity and even blurs the distinction between an ISP and an intermediary such as Google, Yahoo! etc. A willful blindness standard would enable the accountability of ISPs for their inaction towards infringing customers. Instead of holding websites accountable for their potential storage of copyrighted data, the ISPs and in turn the consumers must be brought to book.

A reform of the Copyright Act is required to address copyright infringement at the basic level of commission, and modify the provisions that hold websites vicariously liable on the basis of mere apprehension of storage of copyrighted material. The European Commission has already set in motion a plan to reform its copyright framework. PRS for Music are petitioning to overhaul its copyright law to enable better protection of the rights of music creators. India should undergo a similar redefinition to ensure holding the actual perpetrators of the crime responsible and realigning the penal consequences that need be effected.

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Last week, we had brought to you a guest post by NSAI on the ongoing Monsanto-Nuziveedu patent dispute. We now bring to you another guest post on this dispute by Mr. Bhagirath Choudhary, the founder director of the South Asia Biotechnology Centre (SABC), New Delhi and Dr. Usharani KS, who practices at Prometheus Patent Services, Hyderabad. This post is in response to NSAI’s post, which in turn was in response to Prashant’s post on whether Monsanto’s invention can be protected as a plant variety and seek benefit-sharing from Nuziveedu.

NSAI’s Lopsided Take on Patenting of Biotech Innovation in Agriculture 

Bhagirath Choudhary & Usharani KS

The post by NSAI on a patent dispute between two private parties, Nuziveedu vs. Monsanto, defies the logic and reasoning of patenting biotech innovations under the Indian Patents (Amendment) Act 2005 and the protection of seeds and plant varieties under the Protection of Plant Varieties and Farmers’ Rights Act 2001. NSAI’s sloppy post also favors the views and position of one party and openly flouts the rights of other members who may not prescribe such lopsided position, which is contrary to the spirit of innovation and intellectual property rights (IPRs) in agriculture sector. In summary, the NSAI’s position on the impugned patent is self-contradictory, disregards 420+ similar biotech patents filed/granted to scientists from both public and private sector institutions and raises emotional and nationalist perspective by twisting and churning of different laws to benefit one party against imminent national loss. In the following paras, we put together our brains over what is the subject matter of Monsanto’s patent, provisions under PPVFRA 2001 & IPA 2005 and the dispute, in this case:

Monsanto’s patent has two claim sets that are directed towards nucleic acid or gene sequences (Claims 25-27) and methods for producing transgenic plants (Claims 1-24). Both the claims viz. the man-made nucleic acid or gene sequences and the man-made processes (not an essential biological process) of transferring the man-made gene sequences (a novel product) into the genome of a plant, emanate from human ingenuity.

Claims 25 to 27 have the preamble “nucleic acid sequence” defining a biotechnological product and the body of the independent claim 25 “a promoter operably linked to a first polynucleotide sequence encoding a plastid transit peptide, which is linked in frame to a second polynucleotide sequence encoding a Cry2Ab Bacillus thuringiensis 8-endotoxin protein, wherein expression of said nucleic acid sequence by a plant cell produces a fusion protein comprising an amino-terminal plastid transit peptide covalently linked to said 5-endotoxin protein, and wherein said fusion protein functions to localize said 5-endotoxin protein to a subcellular organelle or compartment” clearly establishes that the biotechnological product is man-made where the Cry2Ab gene from a microorganism conferring the insecticidal trait is engineered to be expressed in a suitable system. Thus the man-made nucleic acid or gene sequences do not exist in nature, cannot be considered a part of plant, and are novel biotech products.

Claims 1 to 24 have the preamble “method for producing a transgenic plant” categorizing them as process claims with a primary purpose of producing transgenic plants. The body of the claim “incorporating into its genome a nucleic acid sequence comprising a plant functional promoter sequence operably linked to a first polynucleotide sequence encoding a plastid transit peptide, which is linked in frame to a second polynucleotide sequence encoding a Cry2Ab Bacillus thuringiensis 5-endotoxin protein, wherein said plastid transit peptide functions to localize said 5-endotoxin protein to a subcellular organelle or compartment” discloses the method of incorporating the above identified biotechnological products into a plant genome under lab conditions. The transformants were then selected and regenerated to obtain stable transgenic seeds and transgenic plants with the insecticidal Bt trait. Thus, this process of integrating novel gene sequences into plant genome with substantial human intervention is not an “Essential Biological Process”.

Monsanto transformed Coker variety of cotton seed with the man-made gene sequences claimed in the impugned patent thereby conferring Bt trait to the Coker variety. The novel gene sequences were then transferred from the Coker variety through conventional breeding by the intended party (sub-licensees in this case) into their desired cotton variety fit for Indian agro-climatic conditions. Here both novel products and processes are protected as a patent by the inventor (Monsanto in this case) under the IPA 2005, and the resultant desired cotton variety with novel gene sequences is protected by the owner of variety (sub-licensee Nuziveedu in this case) under the PPVFRA 2001. Both PPVFRA 2001 and IPA 2005 clearly demarcate what is patentable under IPA 2005 and what can be protected under PPVFRA 2001, and any other interpretation is erroneous and misleading.

Evidently, the disputed patent does not have claims directed towards the transgenic plants or transgenic seeds i.e. Coker variety of cotton seeds containing novel gene sequences that were obtained from the methods for producing such transgenic seeds, which is merely a carrier of novel nucleic acid or gene sequences (claims 1 to 24). Since, the novel gene sequences are non-specific to an organism/species/kingdom, the same gene sequences can be moved into any other plant species, microbes or other suitable organisms and are certainly not a part of the plant. This is also why Monsanto and other inventors of similar novel gene sequences (so far around 420+ patent applications for such novel gene sequences and/or processes have been either filed/granted by IPA 2005) can’t protect their inventions under the PPVFRA 2001.

The PPV&FR Act 2001 protects a specific plant variety or a specific hybrid and its parents which fulfils the magic criteria of DUS – Distinctness, Uniformity & Stability. Any variety that conforms to DUS criterion with or without novel gene sequences, can be protected under the PPVFRA. In comparison, patents are granted to novel biotech innovations that essentially conform to the magic criteria of Novelty, Inventive Step and Industrial Application. Therefore, neither IPA 2005 requires a variety or a seed or a crop for the patent claims other than indicating its industrial application nor the PPVFRA requires novel gene sequences for protecting a plant variety or hybrid and its parents. Thus both IPA 2005 and PPVFRA 2001 are complementary and shall co-exist to foster biotech innovations on one hand, and improved plant varieties on the other hand for the benefits of innovators, breeders and farmers.

Regarding the provisions for claim of exclusive rights under section 28 of the PPVFRA, the breeder of the protected variety or a hybrid and its parent enjoys the protection under PPVFRA to produce, to license, to sell, to market, to distribute, to import and to export the protected variety. If gene patents are revoked as in Monsanto’s case, the patent holder of novel gene sequences could enjoy all these benefits only when they move such patent in the form of seeds, and shall be denied benefits of production of pure protein through any other form such as microbes and other methods, which are not protected under PPVFRA. Therefore, denying patent on novel gene sequences will limit the industrial application of such biotech innovations to seeds only, and inhibits their other industrial applications. Similarly, the PPVFRA doesn’t have any provision for claim of benefit sharing of patented gene sequences under section 26, and is limited to access, extent, nature and use of genetic resource in developing new variety or essentially derived variety (EDV). Therefore, any argument by NSAI on claims of registration under section 15, claims for benefits sharing under section 26 and claims for exclusive rights under section 28 on patented gene sequences under PPVFRA is misleading, farce and deceptive.

In a nutshell, following key points raised by NSAI are self-contradictory and are a smear campaign to confuse and convolute the issue on the disputed patent including:

• “The Court held that Monsanto cannot have patent on transgenic seeds per se” – The disputed patent does not claim transgenic plants or seeds.
• “However, once they sell transgenic seeds to Indian seed companies for use as initial varieties for creating new varieties, they cannot claim patent rights on subsequent seeds produced by farmers and breeders using essentially biological processes. For that, it must rely on the provisions of benefit sharing under the PPV&FR Act” – Here the patent right claims are upon the patented gene incorporated into seeds and not on the seeds per se. Hence PPVFR Act and benefit sharing with reference to this patent are irrelevant as described above.

The points that we as a concerned society need to deliberate are:

1. How come a biotechnological gene product got invalidated under section 3(j) of IPA 2005?
2. Once a patented gene is backcrossed into a seed or a plant variety, does the patent rights of the gene cease to exist and can the unauthorized use of a patented gene after its introgression into plants constitute infringement?

Finally, it is a very welcome relief to see that NSAI has conceded that “They (Monsanto) can have a patent on gene or gene sequences that have been synthesized in the laboratory and under patents act, they have the right to prevent anyone else from producing such transgenic seeds in a laboratory and selling the same”.

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