We’re pleased to bring to your notice two PhD scholarship opportunities for the Australian Research Council funded project on ‘Food security and the governance of local knowledge in India and Indonesia’ at the University of Newcastle (UON), Australia. The deadline for applications is November 30, 2019. For further details, please see the announcement below:

PhD Scholarship for Project on ‘Food Security and the Governance of Local Knowledge in India and Indonesia’ at the University of Newcastle (UON), Australia 

The aim of this Australian Research Council funded project is to examine the way small farmers identify, conserve and exchange plant material and incorporate it into cultivated crops through plant selection and breeding and to identify the ways regulatory structures in India and Indonesia help or hinder this process.

795 million people are undernourished, and they mostly rely on small farmers for food. To protect these farmers from the twin challenges of multinational agribusiness and climate change, this interdisciplinary project aims to:

• examine the ways small farmers identify, conserve and exchange useful plant material and incorporate it into cultivated crops through plant selection and breeding under conditions of climate change;
• identify the ways regulatory structures in India and Indonesia help or hinder this process; and
• identify opportunities for the application of such local knowledge and its regulatory framework in Australia.

The project will result in proposed changes to intellectual property law and other laws to encourage agricultural innovation and enhance farmers’ welfare in the face of increased climate variability in India and Indonesia. Lessons from the experiences in these countries will help farmers, governments, NGOs and businesses to develop supportive policies and identify plant varieties for challenging conditions. The project will also build collaborative international networks of researchers.

PhD Scholarship Details

Funding:

• $27,596 per annum (2019 rate) indexed annually.
• The living allowance scholarship is for 3.5 years and the tuition fee scholarship is for four years.
• $1,500 relocation allowance and Overseas Student Health Cover at single rate, for an international candidate.

Supervisor: Professor Christoph Antons

Available to: Domestic and international students

Eligibility Criteria

• Minimum eligibility criteria for a Doctoral Degree in Law at UON
• Proficiency in relevant national and/or regional languages of India and/or Indonesia

Application Procedure

Interested applicants should send an email expressing their interest along with scanned copies of their academic transcripts, CV, a brief statement of their research interests and a proposal that specifically links them to the research project.

Please send the email expressing interest to christoph.antons@newcastle.edu.au by 5 pm on 30 November 2019.

Applications close on 30 November 2019.

As per a notice dated November 6, 2019, the Bombay High Court had directed that all urgent mentioning for ex-parte ad-interim applications in IP matters will be held in the chambers of the judge, from November 7, 2019. As per the notice, the matters allowed to be circulated after the in chamber hearing, will be placed on the ‘production list’, which will be heart at 11:00 am on the assigned date. This procedure had been adopted on the directions of Mr. Justice SJ Kathawala, who at the time held the IP portfolio in the Bombay High Court’s roster or ‘sitting list’. The notice was valid until November 11, 2019, when there was a change in the sitting list and the IP matters were reallocated to Mr. Justice Gupte.

For those unfamiliar with the Bombay High Court’s procedural terminology, this notice meant that in cases where a petitioner is seeking ‘urgent’ ex-parte ad-interim relief in any matter classified as an IP matter, they will make a ‘mentioning’ in the chambers of the judge (and not in open court), at 10:30 am. If the party convinces the judge of the urgency of the matter, the application for ad-interim relief will be taken up for hearing at 11:00 am. However, that the matter is taken up for hearing will not be made known to the public or to the defendants. Matters taken up for production are as a rule published prior to the hearing, in order to allow the defendants to be present and to state their case before an adverse order is passed against them.

The reasons for such a direction are not listed on the notice itself. As per a Mumbai Mirror report, the notice is meant to serve the purpose of ‘maintaining secrecy’ and ostensibly to discourage the defendants to oppose a petition made against them. As per the report, providing notice to defendants prior to seeking relief against them ‘frustrates the purpose of applications’ and enables defendants to dispose of infringing material prior to any adverse order being passed.

The explicit endorsement of ex parte hearings and relief by the Bombay High Court stands contrary to accepted principles of civil procedure, as well as guidelines on ex parte injunctions which have been issued by the Supreme Court as well as other High Courts. As noted in the Mirror article, this is particularly glaring in contrast to the position adopted by the Delhi High Court which in May, 2019, came down on the practice of ‘defendant masking’ adopted by plaintiffs, where plaintiffs were filing cases without naming the primary defendant as the first defendant, in order to prevent defendants from taking note and making an appearance for stating their case.

We have time and again highlighted on this blog the problematic nature of ex parte ad interim injunctions, particularly in complex IP disputes, and given that injunctions once obtained can be difficult to vacate, often taking years for the same. Under the Code of Civil Procedure, ex parte hearings proceedings are an exception only in cases where a validly served summons to the defendant is not complied with. In fact, non-service of summons is a ground for the vacation of an ex parte ad-interim order passed against a defendant under O. IX R. 13. According to the Supreme Court, ex parte injunctions should only be granted in exceptional cases, taking into consideration factors including:

‘(a) whether irreparable or serious mischief will ensue to the plaintiff.

(b) whether the refusal of ex parte injunction would involve greater injustice than the grant of it would involve;

(c) the court will also consider the time at which the plaintiff first had notice of the act complained so that the making of improper order against a party in his absence is prevented;

(d) the court will consider whether the plaintiff had acquiesced for sometime and in such circumstances it will not grant ex parte injunction;

(e) the court would expect a party applying for ex parte injunction to show utmost good faith in making the application;

(f) even if granted, the ex parte injunction would be for a limited period of time.

(g) General principles like prima facie case, balance of convenience and irreparable loss would also be considered by the court.’

The procedure adopted (which thankfully now stands revoked) by the Bombay High Court seems to presume the validity of the plaintiff’s case without hearing the other side. If, as reports suggest, the procedure was adopted to prevent destruction of evidence by unscrupulous defendants, there exist separate and appropriate civil and criminal remedies for preventing the same, which do not amount to an adverse presumption against the defendant’s prior to a hearing and are not contrary to the defendant’s right to a hearing and the public interest in open court proceedings.

We’re pleased to inform you that The Third World Network (TWN), Tata Institute of Social Sciences (TISS) Mumbai and Jan Swasthya Abhiyan are organising a workshop on Access to Medicines, TRIPS and Patents in the Developing World from December 17-21, 2019, at TISS Mumbai. The deadline for applications is November 25, 2019. For further details, please see the announcement below:

Workshop on Access to Medicines, TRIPS and Patents in the Developing World

Jan Swasthya Abhiyan, Third World Network (TWN) and Tata Institute of Social Sciences (TISS) Mumbai are together organising a five-day workshop on Access to Medicines, TRIPS and Patents in the Developing World from December 17-21, 2019, at TISS Mumbai.

This workshop is expected to deepen the understanding of the intricate linkage between access to medicines and the barriers presented by intellectual property legal and policy framework. It will also help in increasing the knowledge on use of INVITE FOR WORKSHOP ON ACCESS TO MEDICINES TRIPS AND PATENTS_2019 provided by international trade agreements such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), to improve access to medicines at a domestic level. The workshop also aims to equip the participants to make law and policy interventions. Scholarships for the travel and accommodation are available for the selected candidates.

You’re requested to share information regarding the workshop with any participant from your organisation or any other organisations/institutions who might be interested in the workshop (preferably younger activists). The interested candidates can send their applications (form available here) to campaign4access2medicinesindia@gmail.com by 25th November, 2019.

Further details of the workshop can be found here.

Image from here

This is a case on trade secret / confidential information. The Indian jurisprudence on trade secret law is still at a nascent stage. While discussing this case, I am limiting the scope to the issue of protection of trade secret / confidential information only.

Facts

This is a commercial appeal filed under Section 13 (1A) of the Commercial Courts Act read with relevant provisions of CPC. The Appellant had earlier unsuccessfully pleaded for an interim injunction at the Court of Additional City Civil and Sessions Judge (which is the Court of First Instance).

Image from here

The Appellant is a tech-company. It developed a pioneering technology on the process of extrusion (which can be used in the manufacture of ‘Horlicks’). It claimed that the relevant information pertaining to this technology is made available on a ‘need to know’ basis. Its contentions are two-pronged (paragraph 3):

1. The Appellant’s test results and data bases are protected under Section 2(o) of the Copyright Act, 1957. The Respondent infringed the Appellant’s copyright.
2. The Appellant entered into a Master Services Agreement for technology transfer. This entailed transfer of Confidential Information. The Appellant alleged that the patent applications filed by the first and second Respondents described ‘experiments conducted at the plaintiff’s premises’ and ‘the appellant was shocked to find that the impugned patented application incorporates the appellant’s intellectual property and confidential information’. Therefore, the filing of patent application amounted to infringement of appellant’s rights in ‘its proprietary information and intellectual property’ (para 5).

The Appellant sought permanent injunction to restrain the Respondents and sister concerns from ‘infringing the rights of the appellant in its intellectual property or confidential information in any manner including by asserting, enforcing any rights in the International Patent Application No……’ (para 6).

The Respondent refuted the claims citing various grounds; some of which are beyond the scope of this post. One of the main contentions was that the Respondent was the lawful owner of IPR vide the Master Services Agreement. Also, the Appellant should have exhausted the alternate remedy of filing pre-grant opposition under Section 25 of the Indian Patents Act, 1970 before filing the instant commercial suit (para 8).

The Trial Judge had earlier agreed with the contentions of the Respondent by inter alia holding that the Appellant does not enjoy proprietary rights over the concerned Confidential Information (vide the Master Services Agreement).

Key Issue

The Appellant claimed that its test results and databases are protected under Section 2(o) of the Copyright Act, 1957. The basic allegation is that the patent application filed by some of the Respondents contained ‘appellant’s intellectual property and confidential information. The appellant has quoted what is stated in the patent application and the key claims made in the patent application…( ) Thus the case of the Appellant is that the acts of 1^st to 3^rd Respondents of using, storing and reproducing the test results of the Appellant amounts to infringement of its copyright. Secondly, the confidential information that is proprietary to the plaintiff is reproduced in the impugned patent application’ (para 22).

Judgment

The Court noted that the Appellant had not produced before the Trial Court the original work (proprietary test databases and test results) in respect of which copyright is claimed. Only a redacted version of alleged original work was produced. This attracted adverse inference (para 23).

As on confidential information, the Court was not prima facie convinced as to whether the respective information fell under the clause of confidential information. The Court held that the ‘Appellant was required to clearly identify the information relied upon by it and establish that, prima facie, the said information is of a confidential nature’ (para 30).

The Court also took note of the delay on the part of the Appellant in filing the suit (when a discretionary equitable remedy is claimed). The High Court also noted that the scope of interference of an Appellate Court ‘against an order refusing to grant discretionary and equitable relief of temporary injunction is limited’ (para 32).

Analysis

I do not think that the Copyright Law will help the Appellant. Copyright Law protects expression and not the information / contents. As far as protection of database is concerned, the Copyright Law protects arrangement, presentation, selection etc of the database.

The EU Directive on Databases (96/9) offers copyright and sui generis protection for databases. While Copyright Law protects selection or arrangement of contents which constitutes author’s own intellectual creation, sui generis right protects the contents of the database (Arts 3 and 7). India doesn’t offer a sui generis protection for databases (unlike the European Union). Indian Copyright Law can only be invoked as far as expression is concerned (and definitely not with regard to the contents of the database). This doesn’t help the case of the Appellant.

On protection of confidential information, the Appellant may have a case. It is an issue involving law and facts. Confidential information, otherwise known as trade secret, is an area of law which is not explored much in India. Art 39 of the TRIPS, the relevant article, provides as follows:

‘1…

2. Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices so long as such information: (a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) has commercial value because it is secret; and (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

3…’

(Principles of Unfair Competition Law should be read along with trade secrets (Art 39.1 of TRIPS). India, unfortunately, doesn’t have a robust legal framework on ‘Unfair Competition’ (which is not Competition Law / Antitrust Law). We, however, do have principles of tort law and equity which deal with unfair competition. But this area of law has not received the deserved attention.)

Trade secrets is a mixed bag. It has its pros and cons. As to appreciate the finer aspects associated with trade secrets Law, consider the following: In case of patents, the patentee enjoys exclusivity. That is not the case with trade secrets. Secrecy and exclusivity associated with trade secrets law are factual aspects (and not necessarily legally warranted). The protection offered by trade secrets law is available only against wrongful appropriation. Since facts play a major role in adjudication, cases involving trade secrets may end up as ‘hard cases’.

Broadly speaking, trade secrets can be protected in two ways (other than Common Law principles): statutory trade secret protection and contractual trade secret protection. Statutory trade secret protection may generally be retrospective in nature i.e addressing a violation which has already happened. On the other hand, contractual trade secret protection is generally prospective in nature i.e to preclude violation. Considering that India doesn’t have a robust statutory framework for protection of trade secrets, the importance of contractual trade secret protection cannot be overemphasized.

Any case involving trade secrets, like the instant one, generally involves three issues:

1. Is the information a trade secret?
2. Has the information been misappropriated?
3. What are the remedies?

The instant Karnataka High Court judgment doesn’t deliberate upon the above-mentioned three aspects. Plausibly, they were not raised before the Court. It may be the case that the Appellant relied too much on Copyright Law (which is conceptually incongruent and therefore, unhelpful).

I shall later discuss the above-mentioned three aspects from a comparative law perspective (US and EU). These jurisdictions are far more advanced on trade secrets law. As principles of equity, they can be brought to the attention of the Court for better appreciation of trade secrets law.

Adarsh had previously written two posts on the various misunderstandings surrounding the Plant Varieties Act (“PPV Act“). He had focussed on the Public Notice 01/2019 (“Notice“) published in May 2019, and had pointed out that the Notice was ultra vires. In his third post, he points out that the Notice states that only single cross hybrids could be registered. In his post, he explains how the PPV Act and UPOV allow for registration of registration of multi-parent hybrids too.

Divij wrote a post on a notice released by the Bombay High Court which directed all urgent mentioning for ex parte ad interim applications in IP matters were to be held in the chambers of the judge, from November 7, 2019. In his post, Divij focuses on the problems posed by ex parte ad interim injunctions and explains that this should only be exercised in exceptional cases. This procedure currently stands revoked.

Pankhuri announced about two PhD scholarship opportunities for the Australian Research Council funded project on ‘Food security and the governance of local knowledge in India and Indonesia’ at the University of Newcastle (UON), Australia. The deadline for applications is November 30, 2019.

Pankhuri further announced that Third World Network (TWN), Tata Institute of Social Sciences (TISS) Mumbai and Jan Swasthya Abhiyan are organising a workshop on Access to Medicines, TRIPS and Patents in the Developing World from December 17-21, 2019, at TISS Mumbai. The deadline for applications is November 25, 2019.

Other Developments

Indian

Judgments

Nike Innovate CV v. Sahibjeet Singh Sachdeva and Others – Delhi District Court [November 4, 2019]

The Court granted a decree of permanent injunction restraining the Defendant No. 3 from infringing and passing off the Plaintiff’s marks “NIKE” and “SWOOSH” in respect of footwear, athletic shoes and other allied goods. With respect to Defendant Nos. 1 and 2, the Court observed that the Plaintiff had failed to prove its case of infringement as there was no record or expert opinion submitted by the Plaintiff to that extent. In the case of Defendant No. 3 in whose premises the Local Commissioner had conducted a raid, the Court found infringement of the Plaintiff’s aforementioned marks. The Plaintiff had already compromised with Defendant Nos. 4 to 8 impleaded in the case before the hearing and no order was passed concerning them.

Ultratech Cement Limited and Another v. New Century Cement Company and Others – Bombay High Court [November 6, 2019]

The Court granted a decree of permanent injunction restraining the Defendant from infringing and passing off the Plaintiff’s mark “ULTRATECH” by using marks containing the word “ULTRA” in respect of cement. The Defendants represented that they would not use the mark in the future, and that they would apply for the cancellation/ removal of their registered marks, namely “ULTRA PREMIUM PLUS”, “ULTRA PREMIUM” and “ULTRA PREMIUM CEMENT BEMISAL MAJBUTI”.

Kitply Industries Limited v. S. Manikanandan and Others – Calcutta High Court [November 6, 2019]

The Court granted an ex parte interim injunction restraining the Respondents from infringing and passing off the Petitioner’s mark “KITPLY” by using various marks containing “KIT” in respect of furniture. The Court noted that the Petitioner had prima facie substantiated its case, and the Respondents were also infringing the Petitioner’s copyrights and its tagline.

Ultratech Cement Limited and Another v. Chunar Churk Cement Limited and Others – Bombay High Court [November 6, 2019]

The Court granted a temporary injunction restraining the Defendants from using any mark identical to or deceptively similar to the Plaintiffs’ marks “ULTRATECH”, “BIRLA”, “ULTRA” or “THE ENGINEERS CHOICE” during the pendency of the hearing and final disposal of the suit.

Burberry Limited v. Aditya Varma – Delhi District Court [November 7, 2019]

The dispute between the Parties arose on account of the Defendant’s alleged infringement of the Plaintiff’s mark “BURBERRY” by adopting an identical mark in respect of apparels. There was seizure of the alleged counterfeit goods from Defendant’s shop, however the Plaintiff failed to prove that the goods were counterfeit. Accordingly, the Court gave the Defendant a benefit of the doubt and dismissed the Plaintiff’s case.

Louis Vuitton Malletier v. Aditya Varma – Delhi District Court [November 7, 2019]

The dispute between the Parties arose on account of the Defendant’s alleged infringement of the Plaintiff’s mark “LOUIS VUITTON” by adopting an identical mark in respect of apparels. Though the Plaintiff claimed the goods seized by the Local Commissioner to be counterfeit in nature, it was unable to prove the same. Accordingly, the Court gave the Defendant a benefit of the doubt and dismissed the Plaintiff’s case.

Pan Seed Private Limited v. M/s. Kishan Green Field Agritech and Others – Calcutta High Court [November 8, 2019]

The Court granted a decree of interim injunction restraining the Respondents from infringing and passing off the Plaintiff’s mark “PAN” by using a deceptively similar mark “DOUBLE PAAN”, and from infringing the Plaintiff’s copyright in its label containing the mark “PAN” along with a betel leaf by using a similar label. The Court noted that the Petitioner was the registered proprietor of the mark “PAN” and a copyright holder in respect of its label. Therefore, the Court noted that the Respondent’s adoption of a deceptively similar mark and a similar label led to infringement, and the Petitioner had substantiated its case for the grant of an interim injunction.

Super Cassettes Industries Private Limited v. Samara TV – Delhi District Court [November 8, 2019]

The Court granted an ex parte permanent injunction restraining the Defendant from broadcasting Plaintiff’s copyrighted works through its cable services. In determining infringement, the Court acknowledged that the Plaintiff had valid and subsisting copyrights in its works which could subsequently not be broadcasted by the Defendant without a valid licence. The Court observed that the Defendant had committed continuous infringement by ignoring communications from the Plaintiff and failing to pay licence fees. The Plaintiff was further granted damages of Rupees 5 lakhs, considering the substantial loss and damage caused by the Defendant on account of its continuous infringement.

News

• The Delhi High Court has sought Trade Marks Registrar’s affidavit on streamlining processing of trademark applications and increasing its efficiency.
• Aditya Birla Group files copyright infringement suit against MP Birla Group
• Lawsuit filed against Shweta Tiwari-Starrer ‘Mere Dad Ki Dulhan’
• India decides not to join mega RCEP trade deal as key concern
• Tea Board open to holding talks with ITC to sort out trademark issue
• Alleged plagiarism by makers of Bala, two directors move courts.
• Karur hotelier restrained from using ‘Star Briyani’ trademark for restaurants
• Ministry complains to Delhi Police on selling of non-price edition of Economic Survey, case filed
• Madras high court restrains Dindigul Star Biriyani from using trademark
• Innovation in India and Bangalore figures in the World IP Report, 2019
• Natco in legal fight with FMC to produce CTPR based insecticide in India
• Delhi HC refuses To summon Bihar’s CM Nitish Kumar as a plaintiff’s witness in a copyright infringement suit against him.
• Two varieties of Darjeeling tea i.e., green and white tea, have been registered under Geographical Indications of Goods (Registration and Protection) Act 1999, with effect from October 2019,

International

• Google Bid to End Oracle Copyright Suit to Be Heard by US Supreme Court

• China-EU agreement on geographical indications a milestone: commerce ministry

[This post has been co-authored with Bhavik Shukla, a 5th year student at NLIU, Bhopal]

In a very welcome and significant development, on July 11 this year, a Division Bench of the Delhi High Court set aside two interim injunction orders granted by a Single Judge against Natco, for having been passed without the Court forming an opinion on the three elements of the well-settled test for interim injunctions i.e. prima facie case, balance of convenience and irreparable harm.

The Court noted that an order in an interim injunction application must necessarily indicate that the court has considered these three elements in arriving at the conclusion as to the grant or non-grant of the injunction. It further emphasised that in case of patent infringement suits, particularly those involving pharma patents, the court must also consider the additional elements that have been discussed in various cases. It accordingly directed the Single Judge to decide both the interim injunction applications afresh, without being affected by the order in Sterlite Technologies case (discussed below) which had been blindly relied upon to grant the injunctions straight away.

Sterlite Technologies Order: Blanket Approach of Interim Injunctions in Patent Infringement Suits

On 31st May this year, a Single Judge of the Delhi High Court (Justice Endlaw) had granted an interim injunction in favour of Sterlite Technologies Ltd., wherein the Defendant, ZTT India Pvt. Ltd. was restrained from infringing its patents. What is remarkably striking about the order is that the injunction was granted by the Court despite it admitting that it was impossible to form even a prima facie opinion on the question of infringement at that stage since the Defendant was not in appearance to counter the Plaintiff’s submission. The Court stated that such experimentation with interim injunctions in patent infringement suits is “the need of the hour”, reasoning that since a patent’s term is limited and determination of a patent infringement suit usually takes long, non-grant of these injunctions unfairly affect a patentee’s profits till the determination of the suit.

The Court elaborated that in the absence of an interim injunction, the loss borne by the patentee during the period of determination is significant because the alleged infringer/defendant is able to sell the patented product at a much lower price as compared to the patentee, given that it did not have to incur the cost of innovation.

As for the defendant, the Court stated that they could undertake two defences in an infringement suit, one of denial of infringement and the other of the invalidity of the patent. Taking note of both these defences, the Court observed that no harm would be caused to the defendant on successfully proving either of these defences as they would be entitled to sell their product. However, the Court’s conclusion that the defendant will suffer “no harm” appears flawed, since regardless of the defence sought by the defendant, they would be restrained from selling the drug till the final decision of the suit, leading to their loss of profits.

The Court further stated that one the other hand, if the defendant fails to prove either defence, an interim injunction would fully compensate the plaintiff. It reasoned that in absence of an interim injunction in such cases the plaintiff would be “entitled only to profits earned by the defendant and which do not reflect the profits which the plaintiff would have earned if there had been no infringement”, given that the defendant would be able to sell the drug at a much lower price, translating into far lesser profits. In arriving at this conclusion, the Court made the assumption that if the injunction was granted, the plaintiff would have necessarily sold the same/ similar number of units as the defendant would have in absence of an injunction. Is this assumption correct? Isn’t it possible that in some cases the defendant can sell more number of units than what the plaintiff would have alone sold and thereby make even higher profits, given that more number of patients can afford to buy the drug at a lower price?

Having made the above observations, the Court opined that in patent infringement suits, interim injunctions would balance the rights of both the parties and enable the patentees/plaintiffs to reap full benefits of their patented inventions. Such arrangement, in Court’s opinion, would also ensure the purity of the court processes because it would discourage defendants to falsely contest infringement suits only to take advantage of delays in court processes. It stated that the defendants who violate the interim injunction despite knowing that they are infringing would run an additional risk of penal consequences.

Single Judge’s Interim Injunction Orders in Natco Cases: Blind Reliance upon Sterlite Technologies

Subsequently, on 5^th July, two patent infringement suits came up for hearing before Justice Endlaw, the same judge who passed the order in Sterlite Technologies case detailed above. The suits were filed by Bayer Healthcare (‘Bayer’) and Bristol Myers Squibb (‘BMS’) against Natco, seeking a permanent as well as an interim injunction restraining Natco from dealing with any product involving their patented drugs, Regorafenib and Apixaban respectively. While dealing with the interim injunction applications, without making any independent assessment, the Single Judge straightaway asked Natco as to why an interim injunction must not be granted in terms of the Sterlite Technologies order. When Natco argued the invalidity of the patent, it rejected the argument stating that the invalidity would be a ground for defeating the suit but not for rejecting an interim injunction order in terms of the Sterlite Technologies order. Accordingly, it granted an interim injunction in favour of the patentee in both the cases stating that the interim orders would be reversed in case Natco could defend the alleged infringement.

Division Bench’s Orders in Natco Cases: Rejection of Blanket Approach Adopted in Sterlite Technologies

Natco appealed against both the orders of the Single Judge, claiming that the grant of interim injunctions in favour of Bayer and BMS (collectively ‘Respondents’) was contrary to the settled law in respect of interim injunctions, as it failed to satisfy the three-pronged test: (i) a prima facie case, (ii) balance of convenience in favour of the plaintiff, and (iii) the sufferance of irreparable hardship to the plaintiff if the injunction is not granted.

Dealing with both the appeals, the Division Bench (comprising Justice S. Muralidhar and Justice Talwant Singh) first noted that the impugned orders were not ex parte as was the case in Sterlite Technologies, probably suggesting that same standards could not have been relied upon without deliberation in the instant cases. Moreover, the Division Bench while deciding the appeal against BMS observed close similarities between both the impugned orders of the Single Judge passed against Natco, to the extent of verbatim reproduction of several paragraphs. Further, referring to various Supreme Court decisions, the Division Bench stated that it is settled law that for an interim injunction to be granted, three important elements i.e. prima facie case, balance of convenience and irreparable hardship must be present, but there was no formation on an opinion on any of these elements in the Single Judge’s orders. While it agreed that an opinion on each of these elements is not required to be expressly stated in the order, but a reading of the order should indicate that the Court has impliedly formed an opinion on each of these aspects. The Single Judge’s orders however, it noted, did not even impliedly mention any of these elements and even the order in Sterlite Technologies that was relied upon did not reflect the view of the Court on any of these elements. On the contrary, it observed, that the order recorded that it was not possible to form a prima facie opinion on the question of infringement at the stage.

Having noted this, the Division Bench stated that it would be undesirable to adopt a blanket approach of granting interim injunctions in patent infringement suits as a matter of routine at the first hearing, as suggested by the Single Judge. Moreover, it observed that while examining infringement suits involving pharmaceutical patents, not only the three general parameters of prima facie case, balance of convenience and irreparable hardship need to be taken into account but also other parameters which have been considered important by courts in various decisions including Merck v. Glenmark and Cipla v. Roche. The Court further mentioned that the interim orders passed by the Single Judge lacked clarity and failed to indicate the scope of permissible activities that could be undertaken by the Appellants.

In view of the above discussed observations, the Division Bench set aside both the interim orders of the Single Judge, and directed him to hear the two interim injunction applications afresh on merits. In the interim, it clarified that the status quo before the passing of the Single Judge’s orders shall be maintained.

Nipping in the Bud of the Disturbing Trend of Invariable Grant of Interim Injunctions in Patent Infringement Suits

The Division Bench’s decisions are laudable and set an extremely important precedent for dealing with applications for grant of interim injunctions. They nip in the bud the dangerous trend of invariable grant of interim injunctions in patent infringement suits, set by the Sterlite Technologies order. The future interim injunction orders, including those in patent infringement cases, will necessarily have to indicate that the three-pronged test for grant of interim injunctions has been satisfied. And in patent suits, particularly pharma patent suits, also indicate that the additional parameters peculiar to them (such as public interest) have been taken into account.

Time to Dispense with Interim Injunctions in Complex Patent Infringement Suits?

It is perplexing that while courts in the past have endorsed the approach of even dispensing with interim injunctions altogether in patent infringement suits and moving directly to expedited trials (an approach that Prof. Basheer strongly argued in favour of), Justice Endlaw thought it fit to grant them as a matter of rule in such suits. Although it is indeed true that the life of a patent is limited and the determination of patent infringement suits takes several years, the courts cannot look at protecting the interests of the patentee alone. They must not lose sight of the fact that interim injunctions not only adversely affect the interests of the alleged infringer but also those of the consumers who’re denied access to cheaper products, especially in the case of pharmaceutical patent suits where patients are prevented from accessing cheaper drugs including life-saving ones. In order to balance the interests of both the parties, interim injunctions, thus, must not be granted under any circumstances without taking into account the well-settled parameters for grant of an interim injunction.

We’re pleased to bring to you an insightful guest post by Abhilasha Nautiyal. Abhilasha is an attorney at Ira Law, a firm that she co-founded with other colleagues. Prior to this, she was a partner at an IP law firm. Abhilasha graduated from the Army Institute of Law and then pursued a master’s in law from Harvard Law School. Her detailed bio can be found here.

Abhilasha has co-authored a guest post for us in the past as well.

Transborder Prosecution History Estoppel in Patent Litigation?

Abhilasha Nautiyal

What is the impact of differences in claim language between Indian and corresponding foreign patents on the infringement and validity analysis of the Indian patent? Does the prosecution history of a foreign patent impact this analysis? These questions were answered by a Single Judge of the Delhi High Court in its decision in Communication Components Antenna Inc. v. Ace Technologies Corp and Ors. (Communication Components) (dated July 12, 2019), which decided an application for interlocutory injunction. This decision was appealed to a Division Bench by the defendants and the Division Bench has passed an interim order, without actually staying the Single Judge’s order. More on this later.

What is interesting in the Single Judge’s decision is the treatment of prosecution history of a corresponding foreign patent which resulted in a claim amendment. To put it in context, in this case, claims of a corresponding US patent were amended by the patentee during prosecution. Based on this fact, an argument was made by the defendants before the Single Judge that this difference in claim language rendered the Indian claim obvious and thus a credible challenge to patent validity was raised. The judgment, however, does not mention if the prosecution history of the US patent disclosed the reason for the amendment to the concerned claim.

While rejecting this argument of the defendants, the court laid down a new principle for claim construction – a difference in claim language between a corresponding foreign claim and the Indian claim will have a bearing on the Indian claim only if the difference is ‘substantial’ and not merely ‘clarificatory’. While prosecution history estoppel is understood to apply to a patentee’s conduct with respect to the prosecution of that patent in the concerned jurisdiction, the court in Communication Components appears to apply this principle to difference in claim language and other matters of prosecution history of a corresponding foreign patent. This test appears to extend the principle of ‘prosecution history estoppel’ beyond borders.

To quote the decision, “While patent applicants ought to be held bound by the broad statements made during prosecution of their patents in various jurisdictions, there is bound to be differences in the wording of claims which may happen…while determining infringement in India, the variation in the language of the claims in different jurisdictions cannot be examined in a minute fashion…The language of the claims in corresponding foreign patents can be looked at to ensure that broadly the invention is the same and no substantive claims have been either deleted or withdrawn. International patents relating to the same patent can also be referred to in order to establish ‘evergreening’ of an invention.”

Whether the concerned statement during the prosecution of a corresponding foreign patent or difference in claim language is substantial or clarificatory will be a factual enquiry in each case and may involve questions of foreign law. This could be challenging to determine at the interim stage at least in some cases.

While the rationale of developing this test of substantiality per the decision is a variation in patent law and practices across the world and patent examiners’ subjective assessment of patentability, it could be viewed as being contrary to the Novartis decision of the Supreme Court (Novartis AG v. Union of India and Ors., (2013) 6 SCC 1) on patent validity. In Novartis, the Supreme Court based its finding of obviousness of the Gleevec patent application on, inter alia, statements made by the patentee during the prosecution of a foreign patent (which was the basic patent for imatinib and did not correspond to the Indian application which covered a specific salt form, imatinib mesylate). The Court in Novartis did not draw any difference between substantial and clarificatory statements.

Communication Components appears to try and reconcile Novartis by stating, “International patents relating to the same patent can also be referred to in order to establish ‘evergreening’ of an invention.” Therefore, is the test of substantiality as formulated in Communication Components applicable to validity analysis other than evergreening? This appears to be an anomalous dichotomy.

The Delhi High Court Division Bench decision in F. Hoffmann-La Roche Ltd. v. Cipla Ltd. (225 (2015) DLT 391, Roche) is also relied upon in Communication Components for the proposition that ‘statements made after the grant of a patent would not be relevant in interpreting grant of a patent’:

“It is also now a settled position in law that, statements made after the grant of a patent would not be relevant in interpreting grant of a patent. The Ld. Division Bench in Roche v. Cipla (Supra), relying on the judgment of the US Court in Pfizer v. Ranbaxy 457 F.3d 1284 held as under:

…In the decision reported as 457 F.3d 1284 (United States) Pfizer v. Ranbaxy the Court held that the statements made during prosecution of foreign applications are irrelevant as they are in response to unique patentability requirements overseas. The Court also held that the statement made in later unrelated applications cannot be used to interpret claims of prior patent.” (emphasis supplied)

The language in Communication Components suggests that the court in Roche upheld the proposition that statements made during prosecution of foreign applications are irrelevant. This cuts against the substantiality principle formulated in Communication Components. However, while the court in Roche did reproduce a section of Pfizer v. Ranbaxy which contained the rejection of reliance on statements made during prosecution of foreign applications, the finding in Roche is limited to statements made in unrelated and subsequent applications.

In the appeal against the Single Judge’s decision in Communication Components, a Division Bench has passed an interim order which records their disagreement on certain aspects with the Single Judge and has varied some directions passed in the order. Pertinently, the Division Bench’s disagreement does not cover the test of substantiality developed by the Single Judge. Interestingly, the Division Bench has passed a direction with respect to the validity of the suit patent that both the Division Bench’s interim order and the Single Judge’s order, being prima facie in nature, will not weigh with or be a persuasive factor for a decision in any proceeding.

 Image from here

Earlier this year, Justice Rajiv Sahai Endlaw made a concluding remark on the “non-essential verbosity” of a plaintiff in a civil dispute [Nikita Gupta v. Alok Gupta (May 21, 2019)]. He observed that the plaint filed therein was a classic textbook case of how not to draft a plaint, which he felt should have been taught in law schools.

Justice Endlaw has raised similar concerns in the past even in IP cases. In Vifor (International) v. Suven Life Sciences Ltd., decided in March this year, he had remarked that the effort to expedite, endeavoured by the Commercial Courts Act, must be not only by the courts, but also by other stakeholders such as litigants and counsel. He stressed the need for counsel to pay attention to making concise pleadings, avoiding unnecessary pleas and filing relevant documents as evidence. He denounced the habit of counsel not paying attention to their client’s claim or defence in the beginning, then filing a plethora of applications to make up for the lacunae and seeking extension of time to file reply, despite knowing that it is not permitted. He observed that in such situations no time should be wasted or else the Commercial Courts Act would remain a piece of legislation only on paper.

In September, yet again, he made similar observations in a copyright infringement case, Zee Entertainment Enterprise Ltd. v. Saregama India Ltd. In that case, the plaintiff’s request to file additional documents post framing of issues was rightly rejected by him as he felt that entertaining a request to exercise discretion in allowing such requests would defeat the purpose of the legislative mandate under the Commercial Courts Act, and that litigants and lawyers must wake up to the change required to be brought about in the conduct of commercial suits.

In the latest case of GSK Consumer Healthcare S.A v. EG Pharmaceuticals & Ors., involving trademark infringement and passing off, where the suit parties were manufacturers of pharmaceuticals, Justice Endlaw once again gave some lessons on legal drafting and the requirements under the Commercial Courts Act, this time to the defendant therein.  I have summarised these below:

1. Mechanical denial of averments in a plaint by repeating the phrase “wrong and denied” and putting a plaintiff to proof without verifying the same is unacceptable in an era of information explosion where all details of the parties are available in the public domain. He found it incredulous that the parties of the case being two renowned pharmaceutical companies and competitors in the trade, would not keep track of each other’s affairs and performances.
2. The progressive changes brought forth by the Commercial Courts Act through the establishment of Commercial Courts and the Commercial Appellate Division have timelines for parties to abide by and these changes offered no scope for litigants and advocates to indulge in the game of litigation. According to Justice Endlaw, such progressive changes are defeated by the practice of lawyers perfunctorily denying every averment in the opposite party’s pleadings including those which are easily verifiable.
3. Dealing with the drafting of verification in pleadings, he referred to the amendment to Order 8 of the CPC dealing with verifications as applicable to commercial suits where verifications are to be done with reference to each allegation in the pleading and the denial of the allegations of the other, supported by reasons for doing so. He noted that lawyers continue to make verifications in complete ignorance of this amendment and that this would leave the court with no option but to reject such pleadings under the Commercial Court Act or requisition the presence of the officials of the parties who are in the know of things and quiz him or her in the court.
4. Pleadings relating to intellectual property rights are found to be signed, verified and supported by an affidavit of counsel who are not aware of the facts pleaded, which he pointed out, is a wrong practice. Unless signed by the parties to the suit, he stated that no credence could be given to such pleadings.

One cannot agree more with Justice Endlaw’s observations in the above-discussed cases. It is indeed a nightmare to deal with verbose pleadings that run into several pages, be it before a court or a tribunal, where counsel must separate the proverbial grain from the chaff while drafting a reply.  Crisp drafting is an essential skill for lawyers. It is not very often that one comes across plaints or written statements drafted in a razor-sharp manner. Though many law schools today have courses on legal drafting, this is a craft that most of us learn through experience and through one’s mentors in the legal profession, if one is fortunate to have such mentors.

So how does the rest of the world curb verbosity in pleadings? A clue may lie in the practice by courts in many developed countries which impose restrictions on page limit, word limit, font size and line spacing. Such restrictions exist in varying forms in courts in Singapore, Canada, New Zealand, European Union and the United States.  Currently, the Commercial Courts Act or the Rules thereunder have no such restrictions. If such a change were to be brought in, it would compel lawyers to practice the art of brevity.

Image from here

[This post has been co-authored with Pankhuri Agarwal]

Earlier this month, the Supreme Court in Rojer Mathew v. South Indian Bank Ltd. & Ors., struck down the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 (‘Rules’) framed under Section 184 of the Finance Act, 2017 (‘Act’) on the grounds that they impinge on judicial independence and are contrary to the guidelines laid down in cases like RK Jain and Madras Bar Association.

As our readers may recall from the extensive discussions on the blog in 2017 (see here, here and here), Part XIV of the Act merges a number of tribunals, including the Copyright Board with the Intellectual Property Appellate Board (IPAB). The Act also gives the Central Government the power to make rules pertaining to eligibility, appointment, and service conditions of tribunal members. Pursuant to such powers, the Central Government went on to frame the Rules, which gave the Government overly broad powers as regards the appointment and service conditions of tribunal members. These Rules have now been struck down by the Supreme Court and the Government has been directed to frame a fresh set of Rules.

In the interim, the appointment to the tribunals and the terms and conditions of appointment shall be in terms of the respective statutes that applied before the enactment of the Act. As to the validity of the Part XIV of the Act, which was challenged for having been passed as a Money Bill despite it containing non-finance/taxation related provisions, the question has now been referred to a larger bench.

Highlights of the Judgment

The Judgment, as has been summarized here, addresses primarily three core legal issues: (i) whether Part XIV of the Act could have been validly enacted as a Money Bill; (ii) whether it suffered from the vice of excessive delegation; and (iii) whether the Rules are valid. An interesting aspect of the judgment is that although there is a unanimous opinion signed by all 5 judges on the bench, there is a separate part-concurring, part-dissenting opinions by Justice Deepak Gupta and Justice DY Chandrachud (here onwards, the ‘unanimous’ opinion will be referred to as the ‘majority’ opinion).

On the Money Bill issue, the majority opinion observes that it is uncertain as to what falls within the scope of a Money Bill as defined under Article 110. Given this uncertainty, they felt it prudent to refer the question to a larger bench. Such reference was also prompted by the lack of clarity in the Aadhaar judgment, in which the Aadhaar Act was found to be a Money Bill without first delineating the scope of Article 110. Chandrachud J. though clearly held that Part XIV can in no way qualify to be a Money Bill, given its predominant objective of overriding the existing legislations governing tribunals. It is useful to recall that, typically, Money Bills are only concerned with taxation/fiscal issues, with minimal leeway provided to incidental non-fiscal issues. Despite such a finding, Chandrachud J. agrees with the decision to refer the issue of what constitutes a Money Bill to a larger bench.

A rather interesting aspect of the separate opinion delivered by Chandrachud J. on the question of whether Part XIV of the Act is a Money Bill is that in some parts of his opinion, he uses the word ‘we’ which gives the impression that he is writing on behalf of the majority (for instance, see paragraphs 76 and 77 of his opinion). This is particularly interesting given that all 5 judges have signed the CJI’s majority opinion which merely refers the question to a larger bench. This quirk re-appears in the portion which deals with question of appointments made during the pendency of the proceedings (discussed below).

As to the second question of excessive delegation, the majority found that there was none. This was based on the fact that these matters were not “undelegatable” per se and in any case, the “policy” for the executive as regards appointment and service conditions were already laid down by the Supreme Court through its decisions in cases like RK Jain, L Chandra Kumar, R Gandhi, Madras Bar Association, and Gujarat Urja Vikas. Gupta J. disagrees with the majority and holds that if the executive felt bound by the “policy” laid down in these decisions, there would not have been any breach of such policies in framing the Rules in the first place. Chandrachud J. too holds that there was excessive delegation.

Gupta J.’s opinion provides a good segue way into the question of validity of the Rules. All three opinions hold that they are invalid and strike them down in their entirety. Multiple reasons were found for such lack of validity: dominance of the executive in the selection and removal process of the tribunal judges, varying ages of superannuation for judges of different tribunals, lack of adequate legal expertise for technical members, among other things. Put in other words, yet again, the Government was found to have made the same transgressions it has been making all these years in tribunal selections, appointments and service conditions.

Parent Legislations to Govern Re-organised Tribunals

After striking down the Rules, the majority opinion directs the Government to reformulate them in accordance with the ratio in cases like R Gandhi, Madras Bar Asssociation, L Chandra Kumar and Gujarat Urja Vikas. Such reformulation essentially is to ensure that a number of rudimentary principles laid down by the Court in relation to appointment, conditions of service, tenure etc. are adhered to. These principles in turn are broadly meant to ensure that judicial independence is not taken away under the garb of ensuring technical expertise.

In the interim, i.e., till such time the Government frames new rules, the majority directs that the appointments to the tribunals re-organised by the Act and the terms and conditions of appointment should be governed by their parent legislations which were overridden by the Act. However, if any additional benefits concerning salaries and emoluments have been granted under the Act, they would not be withdrawn and will apply to new members as well.

Implications for IPAB and Copyright Board

What is the effect of the interim direction on the IPAB? Does this mean that the Copyright Board which was merged into IPAB by way of the Act would now spring back into life?

While the judgment refers the question on the validity of Part XIV of the Act to a larger bench, it does not stay the merger of tribunals brought into effect by it. It only strikes down the Rules framed under the Act which relate to qualifications, appointment and terms of service of tribunal members. Therefore, it appears that the merger of Copyright Board into IPAB continues and IPAB would continue to handle copyright matters in addition to patent, trademark, GI and plant variety matters.

However, the appointments to IPAB and the terms and conditions of appointment would now again be governed by the Trade Marks Act, as they did before the enactment of the Act, till a fresh set of Rules are framed in accordance with the majority judgment and the interim direction is consequently modified by the Court. The additional benefits relating to salaries and emoluments granted under the Act (if any), would not be withdrawn though and will apply to newly appointment members as well.

It’s unclear though as to what would be the required qualifications for the Technical Member (Copyright), since they are not prescribed in either the Trade Marks Act or the Copyright Act. The Copyright Rules prescribe qualifications for members of the Copyright Board, which stands abolished by the Act. But given the lacuna created by the striking down of the Rules, would the qualifications prescribed in the Copyright Rules govern the appointment of Technical Member (Copyright) at IPAB in the interim? This issue, for instance, does not arise in case of Technical Member (Patents) as the qualifications for that are prescribed in the Patents Act (Section 116(2)).

What Happens to the Appointments Already Made and Those in Process?

Another piece in the puzzle is whether the appointments made during the pendency of the proceedings will continue to be valid. The majority opinion does not appear to address this. Nevertheless, Chandrachud J. in his conclusion (para 103) holds that the appointments made in accordance with the interim orders passed by the Court, shall not be affected by the Rules being declared unconstitutional. Interestingly, here also, Chandrachud J. appears to speak on behalf of the majority (“we direct that those appointments shall not be affected by the declaration of unconstitutionality”) while writing his separate opinion.

This is however not very relevant to IPAB as the only appointment that appears to have been made to it during the pendency of the proceedings was that of Justice Manmohan Singh as the Chairman, who retired in September this year. The rest of the vacancies, i.e. for the posts of Vice Chairman and Technical Members (Patent, Trade Marks & Copyright) (see here, here and here), which were advertised after the Rules came into force, have anyway not been filled up till now.

However, the judgment does not provide any clarity on what happens to the appointments which are underway – are the vacancies for those posts required to be re-advertised and filled up in accordance with the earlier procedure that governed these appointments?

Any End in Sight?

Given their effect on judicial independence, the direction to reframe the Rules is indeed welcome. Nevertheless, it is doubtful whether mere reformulation in itself would lead to any palpable changes in the way IPAB is run. As Prashant had pointed out recently, for most part of its 16 years’ existence, IPAB has been dysfunctional. In fact, a recent response received from the DPIIT to a representation made by Dr. Gopakumar Nair as regards appointment to IPAB offers very little hope. In its response to the representation – made to enquire the undue delay in appointment of IPAB members – DIPP has informed of the steps that have been taken to fill up the positions to IPAB. While the appointment of the Chairperson has been held up at Supreme Court’s end for several months now, the vacancy for the Vice-Chairman was re-advertised only last month and the appointment of Technical Members is pending with the Competent Authority that’s considering the recommendations of the Search-cum-Selection Committee.

Given the lack of urgency shown in appointments, it is worrisome that no timeframe has been set for the Government to actually reformulate the rules. And given the Government’s patchy history of time and again coming up with questionable rules to govern the tribunals, the denouement is far from sight.

Government of India approved the proposal for Bilateral Patent Prosecution Highway (PPH) Programme between Indian Patent Office under Controller General of Patents, Design and Trade Marktis (CGPDTM), Government of India and Patent Offices of other interested countries/regions. The maiden initiative is with Japanese Patent Office (JPO). It will be run on a pilot basis for a period of three years.

What is a Patent Prosecution Highway Programme?

The word “prosecution” is not to be understood as in Criminal Law. Broadly speaking, patent prosecution is the process of drafting, filing and negotiating with the respective patent office so as to obtain patent protection. [Read this for more information.]

Patent Prosecution Highway refers to bilateral arrangement between patent offices that aims to achieve: a) promote work-sharing and b) enable accelerated processing of patent applications (as patent offices can make use of the inputs of the other patent office as well). [Patent Prosecution Highway is not a novel concept. In fact, there is a PCT-led Patent Prosecution Highway Pilot (India is not a party to it).]

For explanation provided by JPO, please visit here. From what I gather from my sources in JPO, Japanese companies were quite keen and pressing the JPO for early conclusion of negotiations. This development is viewed positively back in Japan.

Official Notification

I am reproducing the essential part of the official notification:

“Under this pilot programme, Indian Patent Office may receive patent applications in certain specified technical fields only, like electrical, electronics, computer science, information technology, physics, civil, mechanical, textiles, automobiles and metallurgy. Japan Patent Office may receive applications in all fields of technology. Patent Prosecution Highway will lead to benefits like reduction in disposal time and pendency of patent applications, consistency in quality of granted patents and an opportunity for Indian inventors including MSMEs and Start-ups of India to get accelerated examination of their patent applications in Japan.

In the year 2014-15, around 6000 patents were granted and about 15,000 patent applications were disposed, this figure has increased to more than 15,000 grants and about 51,000 disposal of patent applications in the year 2018-19 and is likely to reach about 25,000 grants and 60,000 disposals this year. The examination time of a patent application in the year 2014-15 which was around 72 months has already been reduced to less than 36 months at present and the same is targeted to further reduce to 12-16 months by March 2021. In case of expedited examination, the swiftest grant of a patent has been in 67 days from request for examination.

Japanese inventors seeking patent protection in India will now be able to take the benefits of expedited examination in India under the pilot programme on PPH. Faster grant of patents in India will result in more inbound investments by companies and also introduction of newer technologies thereby giving fillip to make in India and increasing employment opportunities. It will also help Indian Startups in patenting in Japan.”

Comments

This is a welcome initiative, given that the Japanese Patent Office is highly regarded for its quality of functioning. It can be agreed that not all is well with performance of IPO (and Indian Patent regulatory framework). Quite often, in various meetings and conferences in Europe, I have come across various (valid and justifiable) concerns regarding the Indian system.

Just to place things in perspective, I would like to recall an experience I had not so long ago. I had the opportunity to attend a hearing at the Board of Appeal of European Patent Office. The parties had earlier filed the written submissions. The Oral hearing commenced at the stipulated time and it went on for almost 45 minutes. Specific questions were asked. The lawyers were expected to give brief answers. Once the oral arguments concluded, there was a recess for half an hour. When the Board convened again, the final order was dictated. In less than two hours, the proceedings were completed.

Where do we stand? How ‘comparable’ is our system? How can we address the systemic weaknesses? These are critical questions which we should ask ourselves. Prof Amartya Sen, in ‘The Idea of Justice’, talks about two essentials of a virtuous institution: institutional virtuosity and individual virtuosity. In this regard, I sign off on a positive note with regard to this initiative of GoI.

I discussed a trade secret case law recently. I wrote that I would discuss some of the fundamental aspects from a comparative law perspective. As a prelude, I can only discuss the broad contours of trade secret protection in a blog post. I am limiting the discussion of this post to fundamentals of trade secret protection and US position. I shall discuss the EU position in a later post. If specific questions are asked, I shall try to answer them.

What is a Trade Secret?

A trade secret can be any kind of information (and not limited to technology). Therefore, in a broad sense, all commercial enterprises own trade secrets. In the IP world, licenses are generally a combination of patent and know-how licenses. For instance, a pharmaceutical patent may protect a particular chemical ingredient. But the medicine’s galenic formulation (the principles of preparing and compounding medicines in order to optimize their absorption) may be protected by a trade secret.

There are significant differences between patents and trade secrets. I shall discuss some of them. While a patent demands disclosure to the patent office, a trade secret does not. While a patent extends a 20 year exclusivity period, the term of trade secret protection is unlimited. Given the legal protection attached to a patent, a patent is easy to license when compared to a trade secret. Unlike patents, trade secret protection always carries the risks of parallel inventions and reverse engineering. That means, the protection offered by trade secret is conditional in nature as it entails inherent risks. Considering all these aspects of trade secrets, it is harder to prove infringements when compared to patents. For instance, infringement of patent calls for examination of patent claims. A trade secret may not have something akin to claims. In the light of this understanding, let us examine trade secrets.

Statutory trade secret protection generally protects trade secrets against misappropriation (i.e acquisition by improper means or from someone who had improperly acquired).  But a pressing issue is: how can a trade secret be protected when it is the subject matter in a court proceeding? Is there a possibility for in-camera proceeding? If adjudication can jeopardise trade secret protection, the so-called protection may turn out to be redundant in practice. Can trade secret, therefore, be treated as a ‘property’ so as to extend some solid degree of protection? Indian law is silent on these aspects. Right to property is no longer a fundamental right in India. On the other hand, it is a legal right. [Note that, even if there is lawful disclosure of trade secret, the protection lapses (unlike patents). Trade secret Law doesn’t protect the information per se. On the other hand, it protects information from unauthorized access only.]

In US, both federal (The Defend Trade Secrets Act) and state laws deal with trade secrets. The state laws are harmonized to a great extent by Uniform Trade Secrets Act (a piece of legislation proposed by Uniform Law Commission). [For the Act, please click here.]

Having set the background, this post briefly discusses the following from US perspective:

1. When is a particular piece of information treated as a trade secret?
2. When can it be said to be misappropriated?
3. What are the remedies?

Whether a Particular Piece of Information is a Trade Secret?

US courts follow a six-factor test (Sections 757 and 758 of the Restatement of Torts (1939) followed by US Courts):

• The extent to which the information is known outside the claimant’s business
• The extent to which it is known by employees and others involved in the business
• The extent of measures taken by the claimant to guard the secrecy of the information
• The value of the information to the business and its competitors
• The amount of effort or money expended by the business in developing the information
• The ease or difficulty with which the information could be properly acquired or duplicated by others

Misappropriation (Section 1(2) of UTSA)

[Note that it is a broad definition which includes even indirect acquisition of trade secret.]

“Misappropriation” means: (i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(ii) disclosure or use of a trade secret of another without express or implied consent by a person who

(A) used improper means to acquire knowledge of the trade secret; or

(B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was (I) derived from or through a person who had utilized improper means to acquire it; (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or

(C) before a material change of his [or her] position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake

Legal Remedies

US  → injunctive relief + damages including exemplary damages damages (factors-in actual loss and unjust enrichment)

Exemplary damages are awarded in case of willful and malicious misappropriation.

H/T: I would like to thank Michael Lin for pointing out the federal law on trade secrets.

We’re pleased to inform you that The Inter-University Centre for IPR Studies (IUCIPRS), Cochin University of Science and Technology (CUSAT) has instituted a Minor Research Project with the objective of encouraging young teachers from Kerala and the rest of India, to undertake research in the area of intellectual property rights. For further details, please see the announcement below:

IUCIPRS Minor Research Project in the Area of IPR for Teachers

The Inter-University Centre for IPR Studies (IUCIPRS), Cochin University of Science and Technology (CUSAT), instituted the Minor Research Project with the objective of encouraging young teachers from across Kerala and the rest of India, to undertake research in the area of Intellectual Property Rights. Every year five (5) project awards are earmarked. One minor research project is kept open to teachers from Central & State Universities/ Government/Aided Colleges across India, provided sufficient number of eligible applications are not received from within Kerala. The scholarship shall be known as IUCIPRS Minor Research Project.

Eligibility

The applicant shall be a full time teacher teaching in any University/ Government/Aided College in Kerala or any other part of India.

The applicant shall have been a teacher for a minimum of three years.

Duration of Project

A maximum of twelve months from the date of release of the research grant from IUCIPRS

Project Funding

A funding of a minimum of Rs. 5,00,000 shall be available for one Minor Research Project for a year. It may be increased from time to time depending on the availability of funds. The maximum amount that may be released for one Minor Research Project, however, shall not exceed Rs. 10,00,000.

Details of Application and Research Proposal

The application shall be in the prescribed form along with the detailed research proposal. The research proposal shall include the area of research in IPR chosen, research problem, research questions, methodology, duration of the project, possible outcome, social utility of the research, the details of the expenditure, name of the Principal Investigator and others involved in the project etc.

Procedure for Selection 

A committee consisting of three experts nominated by the Vice-Chancellor along with the Director of IUCIPRS shall scrutinize the application along with the research proposal and may recommend for the release of grant. The selection for Minor Research Project is based on the quality of the research proposal.

Notification for the Project

The notification for the Project shall be posted on the website of IUCIPRS in the beginning of the upcoming financial year. The deadline for applications shall be two months after the publication of the notification.

Terms and Conditions of Award of Project

The Project shall be awarded in the name of the Head of the Institution where the applicant is working and the teacher shall execute a bond with IUCIPRS before the release of the grant.

50% of the total research grant shall be released by IUCIPRS after the execution of the bond by the teacher concerned. The cheque shall be in the name of the Head of the Institution. The Institution shall maintain a separate account.

The awardee shall make a presentation and submit an interim report at the end of six months on the progress made and the final report of the research at the end of the Project.

25% of the grant shall be sanctioned after the submission of the interim report. However, it shall be released after the proof of communication regarding the submission of the article for publication is provided.

The awardee shall submit an audited Utilization Certificate (UC) along with the statement of expenditure auditing the account by a Chartered Accountant on completion of the project. The balance 25% of the grant shall be released only upon the receipt of the audited UC and submission of proof of acceptance of the publication.

The awardee shall publish the research report acknowledging the receipt of the funding from IUCIPRS.

The above norms may be suitably amended by way of deletion/addition by the Executive Committee of IUCIPRS.

CISAC is the International Confederation of Societies of Authors and Composers. Its stated objective is to ‘protect the rights and promote the interests of creators across all regions of the world and artistic fields; music, audiovisual, drama, literature and visual arts’. It aims to ‘foster a legislative environment that supports the cultural and creative industries, thereby contributing to both cultural diversity and economic growth worldwide’. [For more details, please click here.] According to Wikipedia, it is the world’s largest international network of authors’ societies.

It released its report recently. Its report on India (pages 50 and 51) is interesting. It states that the collections in India have gone up in the last two years. It talks about IPRS (which is re-admitted to CISAC membership in 2018). The report notes that the growing collections is largely driven by audio and video streaming (which is due to growing mobile usage). It notes that ‘the mobile phone is the content gateway device for consumers in India’.

I am reproducing some of the parts of the Report (with respect to India):

“The legal environment for creators in India has been improving. In 2012, the Copyright Act, 1957 was amended by the Indian legislature, granting unique and unprecedented rights to lyricists and music composers allowing them to claim an ‘equal share of royalty’ for the utilization of musical compositions and lyrics in ‘any form’.

This right is inalienable and in the past year has significantly benefitted songwriters in India. IPRS, the sole authors society in India, is now empowered to solely act as a CMO on behalf of authors. IPRS administers the performing right and the mechanical right in India.

Music publishing has largely been controlled by the recorded music business in India with master rights and publishing rights licensing generally being held and conducted by a single entity. IPRS has emerged as an exception to this general rule in India, with most Indian and international music publishing business joining IPRS.

IPRS was re-registered by the Indian Government in late 2017 and was able to enforce the [Indian] Copyright Act, 1957. [For SpicyIP post, click here.] It was re-admitted to CISAC in December 2018, having restructured its constitution, among other changes, to its policies.

Legal and policy challenges

The Indian music sector continues to face challenges arising from legislative change proposals relating to a potential inclusion of music streaming under rules that support the existing statutory licensing provision. This would complicate the licensing terrain in India particularly where music streaming has assumed critical proportions from a revenue perspective. The Indian government is currently deliberating on industry feedback on the proposed changes. This is further complicated by a continuing reluctance of various platforms, particularly private FM Radio, to pay publishing royalties. IPRS has instituted litigations against various users including telecom service provider Vodafone in the past year.”

Comments

The Report is an interesting read. It gives one side of the spectrum. The influence of EU Copyright Directive (2019/790) is evident from the Report. A detailed review of the Directive is beyond the scope of this post. However, it can be stated that the Directive goes a long way in ensuring that the creators are acknowledged, compensated and protected for their work. There are some justifiable criticisms of this Directive as well. Whatever be the arguments for and against the Directive, it is definitely a piece of legislation worth an in-depth analysis for designing a more equitable copyright law framework.

At this juncture, it is important to appreciate the fundamental distinctions between ‘authors’ rights’ in civil and common law systems. In a civil law system (continental tradition), authors’ rights are recognized as human rights. It recognizes the personal relationship between the creator and the creation. Accordingly, it places a strong emphasis on moral rights (which cannot be transferred). It even tries to protect commercial interests of creators. On the contrary, in Anglo-American system (common law system), copyright is regarded as a legal instrument for promotion of creation of works and making them available to the society. It is influenced by Utilitarian theory than by Natural Law theory as in the case of civil law system. Accordingly, moral rights are narrower. The real intellectual creators may not enjoy authorship or original ownership of copyright. Also, statutory protection of commercial interests is either non-existent or at a bare minimum. [For more, please click here.]

Jurisprudentially speaking, India, by and large, follows common law system (India does provide for moral rights). The EU Directive is a classic exposition of civil law system. I am not arguing for or against either system. There are valid justifications and criticisms regarding both the systems. While deliberating for a better copyright system, it augurs well to start at the fundamentals.

Please feel free to write to me or Pankhuri if there is any interesting development / policy initiative with regard to authors’ rights.

Topical Highlight

Recently, the Delhi HC set aside two interim injunction orders passed against Natco. In a post co-authored by Pankhuri Agarwal and Bhavik Shukla, these orders were identified as a welcome restoration of the three-pronged test for the grant of interim injunctions in India. The earlier orders of Justice Endlaw had done away with the three-pronged test in light of the interests of the patentee. However, the authors note that the three-pronged test must be retained to ensure that a balance is maintained between the interests of the patentee and the defendant.

Thematic Highlight

In an insightful post, Latha Nair helpfully lays out a string of comments made by Justice Rajiv Sahai Endlaw in his judgments on legal drafting and practice. These comments primarily call out needless verbosity in plaints, unverified objections in replies, uninformed verification of pleadings by counsel and the practice of requesting modifications and rectification of pleadings due to the counsel’s own shortcomings. Latha Nair notes that these are problems must be dealt with by the Commercial Courts Act, with a possible solution that may be adopted from other jurisdictions being restrictions on word count, pages, line spacing or font size.

Other Posts

In her guest post, Abhilasha Nautiyal discusses the relevance of trans-border prosecution history estoppel in the context of patent litigation. She noted that a recent decision of the Delhi HC in Communication Components Antenna Inc v Ace Technologies Corp, laid down a new principle for claim construction –  that a difference in claim language between a corresponding foreign claim and the Indian claim will have a bearing on the Indian claim only if the difference is ‘substantial’ and not merely ‘clarificatory’. She notes that the decision of the Delhi HC may be contrary to earlier decisions of the Supreme Court and other High Courts.

In their post, Balu Nair and Pankhuri Agarwal write on the Supreme Court’s decision in Rojer Mathew v South Indian Bank Ltd. This case has struck down the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 (‘Rules’) framed under Section 184 of the Finance Act, 2017 on the grounds that they impinge on judicial independence. Specifically, in the context of the IPAB, this means that appointments to the tribunal will once again be governed by the Trade Marks Act, although the merger of the Copyright Board into the IPAB seems to be left intact. The Trade Marks Act is woefully inadequate in its exposition of the rules related to the appointment of members to the IPAB, which leaves much uncertainty in the interim.

The Government of India recently approved the Patent Prosecution Program between India and Japan. In his post, Mathews George notes that this is the first time India has entered into such an agreement, which will work on a pilot basis for a period of three years. This agreement hopes to promote work-sharing and enable accelerated processing of patent applications. Mathews notes that this agreement may also result in an improvement of the functioning of the IPO, as they may now adopt practices followed by Japan’s patent office, which is known for its quality of functioning.

Mathews George wrote a post on the trade secret issues that arose in the Karnataka HC’s decision Steer Engineering Pvt Ltd v Glaxosmithkline Consumer. The subject matter of the dispute was a process of extrusion for the manufacture of Horlicks, which was only shared on a ‘need-to-know’ basis. Both the plaintiff’s claims, based on Section 2(o) of the Copyright Act 1957 and common law protection of confidential information, failed. Mathews notes that India is yet to develop robust jurisprudence on the protection of confidential improvement, and points to the need for contracts to effect such protection.

In a helpful conceptual post, Mathews discusses the fundamentals of trade secret law along with comparative perspectives from American jurisprudence. He points out some of the differences between patent protection and trade secret protection, and then discusses the problems associated with enforcing trade secrets in court. He then discusses the statutory framework of trade secret protection in the United States of America.

Pankhuri brought to our notice the details of an initiative of the Inter-University Centre for IPR Studies (IUCIPRS), Cochin University of Science and Technology (CUSAT), which has instituted a Minor Research Project with the objective of encouraging young teachers from Kerala and the rest of India, to undertake research in the area of intellectual property rights.

Mathews wrote a post highlighting the review of India in CISAC’s Global Collections Report 2019. He notes that the report highlights an increase in collections in India and puts it down to increased mobile usage. He concludes by discussing the global influence of the EU Copyright Directive and the unique dilemma it poses in India, which must now adapt to using concepts from both common law and civil law systems.

Other Developments

Indian

Judgments

Hindustan Unilever Limited v. Sambhu Das – Calcutta High Court [November 13, 2019]

The Court granted a decree of ex parte interim injunction restraining the Respondent from infringing and passing off the Petitioner’s registered trademark “ACTIVE WHEEL” by using a deceptively similar mark “ACTIVE SANGITA” in respect of detergent powder. The Court noted that the mark used by the Respondent were prima facie infringing of the Petitioner’s mark. Moreover, the Court observed that the artistic work of the Respondent was a colourable and deceptive imitation of the Petitioner’s artistic work.

Hindustan Unilever Limited v. Viver Lifecare Private Limited – Calcutta High Court [November 13, 2019]

The Court granted a decree of interim injunction restraining the Defendant from using the mark “AZADI DETERGENT POWDER” on packets in which the Petitioner’s “ACTIVE WHEEL” was being sold. The Court noted that the Respondent’s packets were a colourable and deceptive imitation of the Petitioner’s artistic work, resulting in its copyright infringement.

Super Cassettes Industries Private Limited v. M/s. SVM News; Super Cassettes Industries Private Limited v. K.K. Media Solutions Private Limited – Delhi District Court [November 16, 2019]

The Court granted an ex parte permanent injunction restraining the Defendants from broadcasting Plaintiff’s copyrighted works through its cable services. In determining infringement, the Court acknowledged that the Plaintiff had valid and subsisting copyrights in its works which could subsequently not be broadcasted by the Defendant without a valid licence. The Court observed that the Defendants had caused substantial loss and damage to the Plaintiff on account of its continuous copyright infringement. Accordingly, the Plaintiff was granted punitive damages of Rupees 5 lakhs.

News

• Filmmaker Nandi Chinni Kumar has sent legal notices to makers of upcoming Hindi movie ‘Jhund’ and actor Amitabh Bachchan, who is playing the lead role in the film, for copyright infringement.
• The Indian Patent Office dismissed two pre-grant oppositions filed by Indian Pharmaceutical Alliance and Pankaj Kumar Singh against Immunogen Inc.’s Indian Patent Application no. 885/CHENP/2008.
• A new policy formulated by the DRDO recently states that no licence fee or royalty will be applicable to the use of Indian patents held by the research agency.
• Illegal cancer drugs from Bangladesh flood Indian market.
• A divisional application of Merck for a process for producing tiacumicins B granted.
• A ‘Make in India’ innovation for Neuropathic pain medication.
• Delhi High Court seeks response from the Registrar of Trade Marks to explain the uploading of backdated o-3 notices on its website.
• All IPAB hearings of this year cancelled.
• Gujarat-based Root’s Decor files for patent for virtual reality-based system.
• The Supreme Court has rejected Anchor Health & Beauty Care’s appeal seeking restoration of its criminal complaint against Colgate.
• Dabur to sue Marico’s Parachute oil for their print advertisement.
• Ogilvy-Vivo put ‘plagiarism’ spat to rest, reach an ‘amicable agreement’ outside court.
• Researcher gets patent for genetic disorder screening.
• In supersession of earlier Manual of Patent Office Practice and Procedure published on 22nd day of March, 2011, a new Manual of Patent Office Practice and Procedure is published with immediate effect.

International

• ATN supports orders by the Federal Court of Canada to block piracy sites.
• IP High Court admitted $1.3 million damage compensation as equivalent to the license fee.
• Turkish Patent and Trademark Office has published a new trademark examination guideline.
• U.S. photographer takes on Pinterest for committing and encouraging copyright infringement.

On October 16, 2019 the Advocate General (AG) of the European Court of Justice rendered an opinion in Sky Plc & Ors v. Sky Kick UK Ltd. & Anr. (“the Sky case”) in a reference by Justice Arnold of the England and Wales High Court (Chancery Division). The AG’s opinion caught my attention because the opinion as well as the facts of the case resonated the 1996 order of the Indian Supreme Court in Vishnu Das Trading v. Vazir Sultan Tobacco Ltd., famously known to IP lawyers as “the Charminar case”. While AG’s opinions are only advisory in nature, statistics indicate that courts largely follow the same in arriving at a final judgement.

Let’s examine what makes these two cases similar.

Sky v. Sky Kick

The brief facts of the Sky case are that Sky PLC (“Sky”), who owned several SKY trademarks in the EU in various classes including 9 and 38, sued Sky Kick UK Ltd (“Sky Kick”), a cloud migration information technology service start-up, for trademark infringement. While Sky has used the mark SKY in connection with a range of goods and services and, in particular, goods and services relating to its core business areas of television broadcasting, telephony and broadband provision, it did not offer any email migration or cloud backup goods or services. Nor was there any evidence that it planned to do so in the immediate future. Sky Kick, therefore, denied infringement and, in counter claim, sought invalidity of Sky’s marks as these lacked clarity and precision and were made in bad faith. All the five questions by the referring court to the AG centred around the role and function of ‘specification of goods or services’.

For the purposes of the discussion here, I am limiting myself to the first two questions referred to the AG for opinion, which I summarise  as follows:

1. Can a trademark be declared wholly or partially invalid because the terms in the specification of goods and services lack sufficient clarity and precision?
2. If yes, is the term “computer software” sufficiently clear to enable determination of the extent of protection conferred by the trademark in question?

The AG answered the first question in the negative because any lack of clarity and precision in the specification of goods could always be remedied before or after registration of the mark.

As regards the second question, the AG agreed with the referring court that the registration of a trademark for “computer software” was unjustified and contrary to the public interest because it conferred on the proprietor a monopoly of immense breadth which cannot be justified by any legitimate commercial interest of the proprietor. In support of his opinion, the AG quoted from the 1995 case, Mercury v. Mercury, where Justice Laddie made the following observations regarding the specification “computer software”:

‘the defendant argues that ………… the plaintiff’s registration creates a monopoly in the mark ….. when used on an enormous and enormously diffuse range of products, including products in which the plaintiff can have no legitimate interest. ……. The registration of a mark for “computer software” would cover ………..not just the plaintiff’s type of products but games software, accounting software, software for designing genealogical tables, software used in the medical diagnostic field, software used for controlling the computers in satellites and the software used in the computers running the London Underground system. …. In the end he accepted that some of these were so far removed from what his client marketed …………..in my view there is a strong argument that a registration of a mark simply for “computer software” will normally be too wide… …….. In my view it is thoroughly undesirable that a trader who is interested in one limited  area of computer software should, by registration, obtain a statutory monopoly of indefinite duration  covering all types of software, including those which are far removed from his own area of trading interest.’

Charminar v. Charminar

Charminar is a 15^th century monument and mosque in the city of Hyderabad. Briefly, the facts are that the respondent Vazir Sultan & Co (“VSC”) manufactured cigarettes under the mark CHARMINAR and owned a registration for the same for “manufactured tobacco” in class 34. The appellant, Vishnu Das Trading (“VDT”), subsequently commenced manufacturing ‘quiwam and zarda’ (chewing tobacco products) under the device mark CHARMINAR. The respective marks used different images of Charminar. However, VSC objected to the trademark application of VDT. VDT in turn filed for rectification of VSC’s mark on ground of non-use in respect of chewing tobacco, which was allowed by the Registrar of Trademarks. VSC’s appeal before the Single Judge of the High Court of Madras was allowed on the ground that the sub-classification of “manufactured tobacco” applied by the Registrar of Trademarks was not permitted. VDT appealed before the Division Bench of the Court which upheld the Single Judge’s order holding that there could be no separate registration for cigarettes in class 34 as it spoke only of “manufactured tobacco” and hence VSC’s mark could not be removed on ground of non-use in respect of chewing tobacco, even if these had never been manufactured or intended to be manufactured by VSC. This led to the final appeal before the Supreme Court by VDT.

The Supreme Court allowed VDT’s appeal. Noting that the object of the Trade Marks Act was “to enlarge the field of registrability”, the Court held as follows:

In our view, if a trader or manufacturer actually trades in or manufactures only one or some of the articles coming under a broad classification and such trader or manufacturer has no bonafide intention to trade in or manufacture other goods or articles which also fall under the said broad classification, such trader or manufacturer should not be permitted to enjoy monopoly in respect of all the articles which may come under such broad classification and by that process preclude the other traders or manufacturers to get registration of separate and distinct goods which may also be grouped under the broad classification.

The Supreme Court also made a cautionary note that the order only dealt with the issue of validity of the order of rectification and not on issues of infringement or passing off, thereby leaving the legal recourse of a passing-off action to the registered proprietor.

The administration of the World Wide Web’s ‘.org’ domain registry has been handed over from a non-profit organisation to a private equity organisation, sparking concerns and backlash about the privatization of internet commons and possibly increased censorship owing to the change in the non-profit status of the domain name registrar.

Domain name registrars are responsible for the allocation of domain names (the naming system of the world wide web) and also set the policies for acceptable uses of Top Level Domains (TLD’s), which includes the ‘.org’ domain name, which has traditionally been used for websites by non-profit organisations, and had been managed by a non-profit corporation under the Internet Society, the Public Interest Registry. On November 13, the PIR sold the right to the domain registry, including the right to pricing of ‘.org’ domains, to a private equity firm Ethos Capital, reportedly for a sum upwards of 1 Billion USD.

The move has sparked concerns from various organisations, who have seen this as a precursor to increased domain name registration prices, particularly in light of ICANN (the organisation responsible for administering the DNS system and its policies as a whole) making changes to the .org Registry Agreement. In June, 2019, the new .org agreement lifted price caps and allowed unilateral price increases for .org domain registrations and made changes to the level of mandatory scrutiny and processes for rights protection mechanisms.

The sale is also significant in the context of increasing pressure from rightsholders for domain name registrars to be more actively involved in trademark (and increasingly, copyright) disputes. A concern I have raised in this blog in the past is whether and to what extent organisations dealing with the internet’s infrastructural backbone should be involved in settling private and often ultra-legal disputes concerning intellectual property rights management. The trend is quite apparent – rights holders as well as national courts (including in India) are increasingly petitioning domain name registrars to suspend or remove domain names which are found to be infringing upon intellectual property law. These mechanisms have also found their way into the operational process of the Domain Name System administration, such as through expedited processes for suspension of trademark-infringing domain names including the Trademark Clearinghouse. While the .org domain name system has reportedly been more ‘hands-off’ under the management and policies of the non-profit PIR, this may be set to change under its new management. More fundamentally, this decision serves to highlight yet again the opacity of decision-making processes at the highest levels of the management of the DNS by ICANN, which has been the subject of repeated criticism in this regard.

We’re pleased to bring to you a guest post by Mathangi K. Mathangi is a second year law student at Gujarat National Law University, Gandhinagar.

Design Rights: Originality to Remain the Sole Criterion ? – India and the EU

Mathangi K

The origin of the term “industrial design” can be traced back to the 20^th century German architect Peter Behres, who has been hailed to be the first industrial designer in the world. The concept of “industrial design” as an intellectual property witnessed a fast and a steady diffusion into the various legal systems across the world, with the US setting the milestone by being the first to adopt the concept of “industrial rights” in its IPR regime. The percolation then became more gradual with countries all over the world incorporating the rights into their respective systems.

India as well as the EU were among the first few regimes to adopt the concept of design rights in their legal systems. The main reason behind it can be attributed to the fact India as well as the main EU economies such as France, England, Germany etc. had major industrial economies and acted as the industrial centres in the world. Thus, it seemed imperative for the countries to have a well-regulated system in order to offer protection to their industrial designs.

The Indian Regime

In India, the design rights are governed by the Designs Act, 2000. The Designs Act, 2000 is said to be a landmark legislation in the design arena since it comprehensively lays down the design regulations in India. The Act not only lays down the guidelines from the Indian perspective but also stands at par with the TRIPS guidelines and standards.

The Act clearly lays down the pre-requisites for an object to qualify as a design –

• It should be novel and original.
• It should be applicable to a functional article.
• It should be visible on a finished article.
• There should be no prior publication or disclosure of the design.

The bare provisions have been purported with a number of cases that have laid down the importance of “novelty or originality” in the object to qualify as a design. In the case of M/S Crocs Inc. USA v. Liberty Shoes Ltd. & Ors., the Delhi High Court in 2018 had laid down that the “originality” shall remain the sole essential criteria in the determination of design rights. The court in this case also laid down that design right cannot be granted merely on the object being functional in nature if it fails to ‘appeal to the eye.’

This term “appeal to the human eye” has been well established in the common law regime. The court in the UK case of Amp. v. Utilux in 1971, laid down the test for appeal to eye that has been followed by the courts in India until today.

• The appeal must be clearly visible to the human eye.
• There shall lie no necessity to create an artistic or aesthetic creation as long as the object in consideration is “original” in nature.

This establishes the schematic line of Indian ruling that requires originality to be the main criterion for the protection of design rights. These rulings in turn portray the need for objectivity in offering protection which has remained as important factor in the Indian IPR regime.

The EU Regime

The EU IP witnesses a combined play of both the EU as well as the national laws of the respective countries. Both these laws have a well-developed set of laws regarding design rights. The design rights in the EU is governed by the Directive 2001/29/EC that lays down the essential conditions for an object to be offered design protection.

It is a well-established principle through the EU precedents that there shall be two cumulative elements to fall under the ambit of “works” – the object must exhibit originality and must be a creative expression in any form or manner. For originality to be demonstrated, it is required and sufficient that the object reflects the free and creative choices of the author. And as regards to its expression, it is required by the Directive 2001/29 that the object in question is identifiable with sufficient precision and objectivity. The object must not provide any scope for subjectivity, which acts as a detriment to the legal certainty involved.

In EU, there have been multiple instances when the domestic laws and the EU laws have been contradictory to each other. For example, in the most recent case of Cofemel – Sociedade de Vestuário SA, v. G-Star Raw CV, there appeared to be a contradiction between the domestic laws of Poland  which required the creation of “aesthetic effect” in order to offer design protection and the EU laws that solely based its rights on “originality and its expression”. The CJEU in its ruling held that originality and its expression shall remain the sole criterion since the protection of industrial rights must involve no element of subjectivity and must completely be objective in nature.

Comparative Analysis

Certain key similarities as well as differences can be found in the EU and Indian IP regime. While in the EU, both the EU Directives as well as the national laws of the respective countries which may at times, be in contradiction to each other, are taken into account, in India the design rights are solely governed by the Designs Act, 2000. “Originality” has remained the sole important criterion in both the geographical territories. The terms “creative expression” in the EU regime and “appeal to the eye” in the Indian scenario can be seen to be synonymous terms where both require the creative expression but do not require or mandate the creation of an artistic or an aesthetic effect.

Though both the regimes have attempted at making the laws completely objective in nature, with no element of subjectivity involved, they stand at different levels in the success of the same. While in the EU, the element of objectivity has been given utmost importance, “appeal to the human eye”, though bases its findings on “originality”, still provides a scope for subjectivity to be involved since it, to an extent, lies on the human judgement.

It is also essential to note that while the EU law has undergone a multitude of changes and evolution due to the co-existence of various jurisdictions and regulations, on the other hand, in India, the design laws have not undergone such radical and multitude of changes due to the existence of a single well laid down guideline which is the Designs Act, 2000. The cases in India can be seen to be guiding the entire regulations in a particular direction without many deviations from the main course unlike the EU, that witnesses’ deviations from the main law, which often seem to be in direct contradiction to the main law as well.

Thus, while both the Indian and EU law on Design rights aim to achieve a similar outcome, the levels in which each of them are at achieving this goal, stands different. Both the regimes seek to eliminate subjectivity involved as a whole. Today, the EU stands at a better position today with stronger precedents in the attainment of this goal. India has come miles forwards but still trails behind the EU in achieving the same. It is imperative for Indian courts to set stronger precedents that requires nothing but originality for an object to be offered design protection.

Image from here

In this post, I intend to share my views on the draft “Guidelines on Access to Biological Resources and Associated Knowledge and Equitable Sharing of Benefits Regulations, 2019” (draft ABS Regulations, 2019). As many may be aware, the previous version of the same guidelines was issued in 2014, viz., ABS Regulations, 2014. The draft ABS Regulations, 2019, is intended to replace the earlier version and was put up for comments earlier this year. The topic is a little dated, but I recently had the occasion to work on these draft guidelines and felt the need to share some thoughts on the same. In any event, the draft is not final yet and so…better late than never!

The regulations are proposed, inter alia, under Section 21(4) of the Biological Diversity Act, 2002 (“BDA”), which empowers the national biodiversity authority to frame “Guidelines”, by way of regulations, for the purposes of determination of equitable benefit sharing. Section 64 of the BDA grants power to the National Biodiversity Authority to make “Regulations”. This power is to be distinguished from the power of the Central Government/State Government to make “Rules” under Section 62/63.

The short summary is that the regulations deal with how benefit sharing obligations are to be determined and imposed by the authority. For simplicity-sake, the benefit sharing methods in the draft ABS Regulations, 2019, is transcribed into the following table:

There are many points to discuss on the draft and several points have been raised for discussion in the various comments provided to the draft (which I have on file based on an RTI request), as well. I do not intend to provide a line by line commentary and will limit myself to only a few.

Binding the State Biodiversity Board

Draft Regulation 2 suggests that the State Biodiversity Board (SBB) are bound to follow the regulations for benefit sharing when exercising powers conferred under Sections 23 (b) and 24.

The draft is being issued after the judgment of the High Court of Uttarakhand in Divya Pharmacy vs Union Of India And Others dated 21.12.2018 (covered here and here), which holds that SBBs can impose benefit sharing obligations. To the best of my knowledge, this judgment has not been stayed on appeal (if at all it was appealed). So, understandably, the draft ABS Regulations 2019 operate on this basis. (Note: My personal view is that the judgment requires reconsideration, but this requires a lengthy explanation and perhaps I will explore this in a later post).

I think this is a welcome move. It removes arbitrariness in the functioning of the SBBs as far as benefit sharing imposition is concerned. The NBA had also issued guidelines to SBBs for processing of applications filed with the SBB (here). There is, of course, the question whether the NBA can frame the guidelines for the SBB. Section 21(4) makes it clear that guidelines thereunder are for the purposes of Section 21 only, which is limited to benefit sharing determination by the NBA. Section 18(1), which also repeats Section 21(4) in substance, makes it clear that the guidelines for benefit sharing are only with respect to Sections 3, 4 and 6; it does not mention Section 7, which provision concerns the SBBs. On the other hand, Section 64 and Section 18(3)(c), however suggest that the NBA may frame regulations or perform other functions for the “purposes of the Act”. This is a sweeping power and could be argued to cover directions to SBBs on how to determine benefit sharing.

This is certainly a debatable question, and, in my view, I do not think the legislature intended the NBA to be directing the SBBs in anyway, let alone direct the SBBs to follow certain guidelines to determine benefit sharing. Section 48 states the NBA is bound by directions of the Central Government and Section 49 states that the SBB is bound by the directions of the State Government; nothing in the BDA deals with the NBA’s power to issue directions to SBBs. Section 63 empowers the respective State Government to notify rules relating to how the SBBs to perform the functions under Section 24 and 23. In fact, Section 50(1) deals with the procedure for settlement of disputes between the NBA and SBBs, which only shows to me that the legislature expected situations where the NBA and the SBBs may have different, if not conflicting views, on issues/subjects. For the NBA to have the power to direct SBBs on benefit sharing arrangements, does not fit in this scheme.

Granted that this is a tricky problem to have – a common guidance across NBA and the SBBs is practically a welcome move (given past instances that practitioners have seen from SBBs), and yet, the BDA itself does not bend to this practical need. As I wrote this post, I realized that the fundamental problem arises from the assumption that SBBs are indeed empowered to independently impose benefit sharing obligations under Section 24 and 7. If this assumption goes, so does this tricky problem. Anyway, I hope to write on this assumption at a later point in time.

Creation of a New Obligation

Under draft Regulation 8, any Indian researcher/scientist (presumably, this is a reference to residential status) is obligated to provide prior intimation to the NBA in a new Form B if such person intends to deposit a novel microbial strain discovered in India, with a repository outside India.  It is difficult to source the statutory provision corresponding to this obligation. Since we are limited to an Indian here, Section 3 does not apply and since one is dealing with ‘research’, despite being an Indian, Section 7 does not apply.  Under Section 4, if the microbial strain is established to be “result of research” falling within the scope of Section 4, a prior approval from NBA is anyway mandatory since that would be a transfer to a person (repository) outside India; if not, there is no statutory obligation at all.  In the former case, there is anyway mechanism setup for approval and the draft Regulation 8 is an unnecessary additional obligation without statutory backing.  In the latter case, there is anyway no statutory backing for the draft Regulation 8 and prima facie, appears ultra vires.

More of my comments in Part-II. Stay tuned!

Image from here

Continuing further on my comments on the new Draft ABS Guidelines, 2019.

Definition of Conventional Breeding

Under draft Regulation 12(d), accessing biological resources for “conventional breeding or traditional practices in use in any agriculture, horticulture, poultry, dairy farming, animal husbandry or bee keeping”, is exempt from approval.  This exemption can perhaps be traced to the exclusion of the said activities in Section 2(f) of the BDA. However, the regulations now add a qualifier that such activities are exempt only if they are done “in India”. This territorial restriction is absent in Section 2(f) of the BDA. Please note that this territorial restriction is present in Regulation 17(d) of the currently active ABS, 2014 as well.

Further, for the first time, an explanatory note has been added to define the phrase “conventional breeding and traditional practices”, which reads as follows: –

Explanatory Note:  The conventional breeding and traditional practices for the purposes of these regulations shall be developing more genetic variability or improvement of animal and plant species by facilitating meiotic combination of genes expressing themselves in the subsequent generations that are practiced in agriculture, aquaculture, horticulture, sericulture, poultry, dairy farming, animal husbandry or bee keeping and animal husbandry etc. by the growers/ cultivators/ farmers/ individuals based  on their traditional knowledge passed on to them from their previous generations. However, when practiced for scaling up with a commercial intent will not be considered as conventional breeding and traditional practices” (Emphasis Supplied)   

The first difficulty I see with this proposed definition is that even from the farmer’s perspective, the language limits it to only situations where their activity is “based on their traditional knowledge passed on to them from their previous generations”. Is it the intent that farmers should not move along with developments in technology and science, and always limits themselves to “traditional knowledge”? Is it the intent that farmers who thus move practice something in addition to “traditional knowledge” are not intended to be exempt? It would be absurd to suggest so, but that is the effect of the definition.

The second difficulty arises from the last sentence in the above definition, which states that “scaling up with a commercial intent” would not be covered within the scope of the term “conventional breeding”.  As per dictionary meaning (Cambridge), the term ‘scaling up’ refers to ‘increasing something in size, amount or production’ and one meaning of the term ‘commercial’ is ‘intended to make money’.  Accordingly, the draft suggests that if the same activity is done in higher volumes towards the intent of making money, it is not ‘conventional breeding’. The direct implication is that activities of seed companies are not covered by ‘conventional breeding’; neither would farmers who intend to sell or exchange seeds. The problem here is that the language in Section 2(f) of the BDA is agnostic to who is practicing “conventional breeding” or in what volume. And the fact that “conventional breeding” was carved out from the scope of “commercialization” in Section 2(f) itself suggests that the legislature did not consider commercial intent as being a factor to be considered. So long as the activity is “conventional breeding” it is exempt as per Section 2(f). Therefore, for the draft regulations to create a new limitation prima facie appears to be outside of the BDA.

The question that remains is whether this was anyway the legislative intent. This is undoubtedly a vexed question. The background, including the Convention on Biodiversity pursuant to which the BDA was enacted, and the context, including the positive definition of ‘commercial utilization’ in Section 2(f) of the BDA, suggests to me that the legislative intent was to regulate access of resources for non-agricultural purposes. Conventional Breeding has been practiced for several hundred years (even thousands as some suggest) to improve genetic variability, and whether small scale or large scale, whether with commercial intent or otherwise, it contributes to the preserving and/or increasing diversity. If the avowed intent of the BDA is to preserve and increase biodiversity, it makes little sense to place such artificial limitations on the scope of “conventional breeding”.

The issue is not just limited to ‘conventional breeding’ and this is the third difficulty. The proposed explanatory note attempts to define both ‘conventional breeding’ and “traditional practices”. Section 2(f), inter alia, exempts “traditional practices” in agriculture, horticulture, poultry, dairy farming, animal husbandry or bee keeping. The references to “developing more genetic variability or improvement” and to “facilitating meiotic combination of genes” in the proposed definition are clearly geared towards defining “breeding” (and consequently, “conventional breeding”). “Traditional practices” need not necessarily be about breeding or improving genetic variability.  This leaves persons involved in poultry, dairy farming, animal husbandry or bee keeping (many of whom are obviously doing it on large scale and with commercial intent), high and dry.

The issue of exemption to “conventional breeding and traditional practices” has been a troublesome issue since the inception. And mind, this goes back for more than a decade. From that perspective, whichever camp one belongs to, the attempt to define the term is a welcome move. But I don’t think the NBA has got the definition right. However, if the NBA proceeds with the same definition in the final version, would the industry bell the cat?

Exemption under Section 40

The draft regulation 12(g) lists the few items as being exempt under Section 40 of the BDA. These items are couched as “normally trade as commodities”. Ex facie, this is not permissible because the power under Section 40 is conferred only on the Central Government and not the NBA.

Limiting the Exemption for Value Added Products

The draft regulation 12 (f) reiterates the exemption created for value added products arising from Section 2 (c) read with Section 2 (p) of the BDA. Accessing value added products as defined in Section 2 (p) for any purpose, or transferring the same, or transferring the research relating to the same or, seeking intellectual property based on research / information of the same does not require any approval.

A value-added product is defined under BDA in Section 2 (p) as “products containing portions or extracts of plants and animals in unrecognizable and physically inseparable form”.

The draft regulations, however, add a new explanatory note stating that when such value-added products are themselves used as raw materials for the manufacturing of another product, the exemption will not apply. This explanatory note attached to draft regulation 12 (f) is unwarranted and ultra vires.  This is because the exemption to access of value-added products is agnostic to the purpose of such access under the BDA.

NBA to Act as Check Point for Nagoya Protocol

Under draft regulation 13, in the event a person seeking IPR in India has obtained biological resource from a member country of Nagoya Protocol, a new obligation has been placed to seek a No Objection Certificate from the NBA.  This is to be issued, inter alia, upon producing the proof of source of origin of the biological resource.  A similar obligation is placed even for access from non-member countries, though, the documentation requirement is different.

While such a mechanism may be required, for the NBA to confer itself this power, is unwarranted because the BDA did not intend for the NBA to perform this function. The Nagoya Protocol did not even exist at that that time. The entire purpose of the BDA is for the conservation of Indian biological resources/associated knowledge and is not a regulatory mechanism to verify the legitimacy of access of biological resource from other countries. No doubt, the Central Government may need an authority to perform this function, but the NBA cannot confer this power onto itself.

Hopefully, my two posts contained some food for thought for those interested in this area – a subject that is starved of rigorous commentary or jurisprudence.

In a press release by the Ministry of Commerce and Industry, it was clarified that any order of the Intellectual Property Appellate Board (IPAB) and any decision of intellectual property offices (such as the Controller General of Patents, Designs and Trademarks) can be challenged before High Courts by way of a writ petition under Article 226 of the Constitution and before the Supreme Court by way of Special Leave Petition under Article 136 of the Constitution.

This press release is merely an iteration of the existing position on this issue, which was earlier considered to be governed by the dictum of the Supreme Court in L Chandra Kumar v. Union of India. In this judgment, the Supreme Court noted that while the legislatures can take away the jurisdiction of any court, they cannot seek to replace the High Court and Supreme Court jurisdictions, under Article 226 and Article 32/ 136 respectively.

The press release also notes that no amendments are under consideration to alter this position of law.

Image from here.