We’re pleased to announce that the Confederation of Indian Industry (CII) in partnership with Texas A&M University School of Law (TAMU), will be conducting an online certificate course spread over four weekends in September 2020, starting 5th-6th September. The course is priced at INR 15,000 + GST. We’re happy to note that SpicyIP readers are eligible for a discounted price of INR 10,000 + GST. Readers can contact Mr. Jyoti Kumar (details mentioned below) and mention SpicyIP, to avail the discounted price. One of our SpicyIP members will also be a faculty member on this program. For more details, please see below:

The Confederation of Indian Industry in partnership with Texas A&M University School of Law is organizing an ‘Executive Education Program on Health, Pharmaceuticals and Intellectual Property Rights’. Over four weekends in September 2020 (Saturdays & Sundays, 3 hrs per day, 1800 to 2100 hrs), the program will bring together academic and industry leaders to discuss issues around patent law and policy, pharmaceuticals policy, regulatory issues, the use of technology, the global trade regime, and other barriers to health care and medication. This will be an opportunity for industry leaders to explore various promising opportunities in an academic setting, and to look beyond​ COVID-19 to the future course of health care, access, and innovation in developing country pharmaceutical industries.

The executive program would be delivered by renowned global faculty.

Topics to be covered are:

1. The Trade regime, policies, statutes and role of the WTO
2. COVID-19 & Changes to Global Trade
3. Global Alliances\
4. FDA & Related Issues
5. Cross Border Challenges and Opportunities in the Global Health Market
6. IP Strategy Fundamentals
7. What kind of patent & IP strategy should an Indian company adopt when entering the US market
8. What are the forms of regulatory exclusivities? Whether it is good for third world countries to have regulatory exclusivities. Issues with the trade regime and regulatory exclusivities.
9. Oppositions and Injunctions: Indian Patent Jurisprudence
10. Public Private Partnership
11. IP & Competition Issues affecting India
12. Advocacy strategies from innovation and generic perspective
13. Bayh- Dole Act and its role in the US comparison with India
14. USTR & its Role. Historic; going forward; options for developing countries
15. Contracts and collaborations with foreign, Indian companies and universities
16. Different issues in agreements with foreign companies, entitles and more
17. Technology transfer, pharmaceutical protection & access issues from India
18. Access vs Innovation (AAM collaboration and foreign generics)

For more details, please visit https://law.tamu.edu/executive-education-program.

Participants will receive a certificate jointly issued by CII and Texas A&M University School of Law.

The link for registration is https://bit.ly/3hmE7Y5.

Mr. Jyoti Kumar, Director & Head – IPR, CII (jkumar@cii.in, 9866313270) is the coordinator for this initiative. Please feel free to contact him for any clarifications or to avail the discount for our readers.

[This post has been co-authored with Praharsh Gour. His previous posts can be found here.]

(Someone somewhere had already made this meme! Found here)

India’s tryst with interim injunctions in high tech patent disputes is a long, problematic one, as covered several times in this blog.  Despite all the issues pointed out, and despite courts stating that it should be used judiciously, it probably surprises few observers to see it being used too frequently. Over the course of this two part post, we will first try to provide an overview of the interim injunction minefield, as it were, including several of the points put forward by various authors on this blog over the years, and then look towards some possible remedies for this. 

Numbers and More

A study by Prof Ramakrishna Thammaiah looking at patent cases between 2000 to 2016 in High courts across the country, notes that in about 60% of the cases (36/59) where an application for an interim injunction has been filed, the courts have granted it. Praharsh and Rishabh Joshi (a former intern with SpicyIP) manually went through the PTC Journals for 2016-19 and found that of the 13 patent cases heard in the High Courts in this period, interim injunctions were granted in 5.

And what happens to those interim injunctions? Prashant and Aparajita, who combed through 143 patent suits, instituted between 2005 – 2015 at the High Courts at Bombay, Delhi, Madras, Calcutta and Gujarat, noted that only 5 judgments were delivered in this period – underscoring the massive delays that happen (despite, as they point out, Justice Katju’s order that trials in all IP cases should conclude within 4 months!). Research compiled by the SpicyIP team that had worked on the i3 series (“interrogating interim injunctions”) points towards several ‘interim’ injunctions which have lasted more than a couple of years! Vifor v. D Mohan was the standout example here, wherein the injunction lasted for more than four years!. We are in the process of updating this data and at a later point, we’ll try to bring out more of  the egregious examples, as well as problematic patterns over the years.   

Various posts on SpicyIP have looked into these problematic interim injunctions in the past (indicatively, by Namratha here, by Shamnad here and by Saahil here). Shamnad had also strongly argued for doing away with this interim phase altogether in complex matters, in an earlier blog post here, as well as in this paper jointly authored with Jay Sanklecha and Prakruthi Gowda.

In the context of broader patent policy vis-a-vis development, there may even be more to this debate. The 2017-18 Annual Report of the CGPDTM (“Patent Office” – which for some reason has yet to publish the Annual Reports for 2018-19, and 2019-20) shows that:

i) of the 13,045 patents granted that year, only 1937 were granted to Indians/Indian entities.

ii) of the 56,764 patents in force currently, only 8830 belong to Indians. 

(Tangential note: The Annual Report on Page 31 also notes that only 12,246 patents are shown as being worked in India, out of the 56,764 patents. Those interested in interim injunctions in this context may be interested in this new paper by Sandeep Rathod. It is outside the scope of the current posts though). 

In other words, the development and technology transfer promise of the TRIPS Agreement is still far from being realised, with so few Indian patent holders even 15 years after India’s become a TRIPS compliant country. In this light, interim injunctions which unfairly prevent or delay indigenous activity (patented or not) are also worth noting as possible contributors to this failure. This is of course a topic that requires more investigation and detailed nuancing – perhaps a question we can look into in the future. Nonetheless, the question is one worth considering.

Issues with Issuing Interims 

Meme template from here

While there has been some consensus (at least on paper) that interim injunctions are to be granted only in exceptional circumstances, things are less clear when it comes to translating that into reality. Nonetheless, there are usually three criteria that the court must look into while considering these grants: (i) prima facie case, (ii) irreparable injury, (iii) balance of convenience. In matters of pharmaceutical patents, courts have opted for an additional criterion i.e. (iv) assessment of the impact of the proposed injunction on public interest. As pointed out by Shamnad in the above link, and Maitreyee here, there is inconsistency in interpreting the scope and matter of these heads. Applications for interim injunctions are (to be) decided within a very short span of time and are occasionally ex parte i.e. without the presence of the defendant. With respect to ‘public interest’, the principle of audi alteram partem is unfortunately a difficult one to implement in this framework where private rights have public interest fallouts. This leaves it up to the court to watch out for the irreparable harm that may be happening to the larger public interest, including those whose lives (or deaths) may be depending on the medicines in question. It is therefore vital that court-imposed changes to the status quo during the interim period, be imposed only in very carefully considered circumstances. As Adarsh’s argument here shows, even understanding ‘public interest’ is more than a black and white matter, with possibilities for ‘public interest’ aligning with the patentee’s position in some situations, and in other situations – possibilities for multi-faceted application of ‘public interest’ aligning with defendant’s position, beyond just the mere ‘price-differential’ factor.

There is also the need to watch out for clever litigation tactics that are sometimes employed. As discussed by Sandeep Rathod (here) and Prof. Yogesh Pai (here), the recent past has seen a hike in the number of pharma patent cases where the case is instituted against an individual as the first defendant, rather than the supposed infringing generic company. Pointing towards data put forward in Sandeep’s paper, both authors say that while these individuals usually do have some nexus with the entity, the intention seems to be more to create an impression of the defendant being a ‘fly by night’ party or a party with not much to lose.

While there is much that can be said on all of these 4 factors, for now we’ll just highlight one issue regarding developing the prima facie case. Due to the ‘presumption against validity of a patent’ rule  (under Section 13(4) and upheld by the Supreme Court here), courts are not expected to automatically assume patent validity in all cases. For instance, in cases where strong oppositions are in process, a court would be at liberty to require the plaintiff to defend the patent afresh. In other cases of course, where there are little to no questions about the patents validity, the court is free to assume that it is valid. (See more on this in the Basheer, Sanklecha, Gowda paper linked above. They additionally note that our courts are vulnerable to the lack of expertise to understand the technical jargon of the pharmaceutical patent claims, which is a problem particularly in ex-parte hearings – more on that later below.) 

However, this needs to be seen in consonance with  the seemingly high error rates by the IPO, as pointed out by Prof. Feroz Ali and Roshan John here. The study underlying their article is this 2018 AccessIBSA study suggesting the error rate is as high as 72% for pharmaceutical patents! Along similar lines, Prof. Bhaven Sampat had conducted an empirical study that indicated that the “high standard” for judging the eligibility of an invention for a patent under the Indian Patent Act, in section 3(d) isn’t actually put into practice by the Patent Office. Of course, the statistic alone is not reason to automatically tilt the balance against patentees – but it does give good reasons for courts to be a little more careful before assuming validity. The unfortunate fact is that there is no easy method, barring either drastically fixing the challenges faced by the Patent Office, or just outright challenging the majority of patent applications, to correct for this potentially huge error.

Ex-parte Injunctions

Ex-parte interim injunctions, especially in complex/high tech patent cases, are almost always even more problematic. Indicatively, Shan had highlighted the SC judgment in Ramrameshwari Devi v. Nirmala Devi that laid down circumstances in which ex-partes could be granted. The SC in that case noted, “experience reveals that ex-parte interim injunction orders in some cases can create havoc and getting them vacated or modified in our existing judicial system is a nightmare.” Further, patent specific posts on how problematic ex-parte injunctions can be, include this one by Prashant, and this one by Shamnad. Nonetheless, courts have used the (supposedly) exceptional power to issue ex-parte interim injunctions much more frequently than one would expect in patent disputes.

Order 39 Rule 3A of the CPC prescribes that the court shall ‘make an endeavour’ to dispose of the ex-parte application within 30 days from the date on which it is granted. However, pharma patent disputes are comprised of extremely complex scientific and technical issues which are difficult to resolve in such a short time span, opening the door to errors. The difficulty in successfully establishing all four criteria without looking into substantive questions of law and facts also frequently results in what is essentially a mini-trial. This is despite the Supreme Court in Colgate Palmolive v. Hindustan Lever Ltd. expressly stating “..the court should not attempt to resolve difficult issues of fact or law on an application for interlocutory relief.” (Readers can also refer to Prashant’s post here, for more on this). 

In short – determining the prima facie case of infringement of a patent (which might not have been eligible for the protection in the first place) by authorities (who might not be equipped with the technical prowess to address the issue at hand) coupled with the limited time accorded to adjudicate upon the application for ex parte injunction, essentially leaves a wide margin of error. On one hand, this may lead to courts extending this interim process, sometimes to a painful extent. On the other hand, courts may hastily grant what turns out to be an unfair / inequitable injunction, which also may have damaged the business and reputation of the defendant. And of course, in pharmaceutical cases, such injunctions additionally can deprive the public the ability to access medicines that are often exponentially cheaper and sometimes of a lifesaving nature.

In the second part of this post, we shall examine some possible safeguards against these seemingly erroneous interim orders.

Image from here

We’re pleased to bring to you a guest post by Anshuman Sahoo, arguing that legal recognition of fluid trademarks (which are popularly being used in the context of the ongoing Covid-19 pandemic) is a step in the wrong direction considering the economic rationale behind trademark law. Anshuman is a second-year LL.M. student at Rajiv Gandhi School of Intellectual Property Law, IIT Kharagpur. This post is a follow on to a guest post published on the blog last month, which discussed the application of Indian trademark law to fluid trademarks.

Fluid Trademarks: A Prologue to Trademark Law Going Awry?

Anshuman Sahoo

This is a reply to a recent post on fluid trademarks on the blog. Maybe a reply won’t be the best word; it’s more of an addendum. While Devangini brilliantly expounded the emergence of fluid trademarks and its registration, there’s a substantial implication thereof that she left undiscussed, probably due to the word limit constraint. While the growing popularity of fluid trademarks is indeed a development to look forward to, it raises significant concerns as to the future trajectory of trademark law. As Devangini rightly points out in the title of the post, trademark law has started protecting the alter ego of a brand; and this may be an opportune time to ask the fundamental question of what  trademark law is doing protecting brands when it was originally intended to protect consumer’s interests by indicating the source. The answer points towards a worrisome trend of trademark expansionism, brand fetishism, and the abuse of the economic rationale behind trademark law.

A little background: Why trademark at all?

Before treading the unknown, it’s helpful to take stock of the known. Every economist knows monopoly is bad; it raises the price, reduces customer choice, slows down qualitative improvements, and above all, often leads to deadweight losses. Why do we allow a proprietor to enjoy the monopoly conferred by trademark law, then? The answer is, in the case of trademarks, or other forms of IP generally, the legal monopoly allowed is very carefully calculated to match the benefits that are expected to be reaped out of that monopoly.

What’s the calculation behind trademarks? There are many, but the dominant narrative is that of  search cost optimisation. Left to herself, a consumer will spend a certain amount of time, energy, and even money in the course of making a choice between various goods – that cost is called the search cost. The full price of a good is not only the actual price but also the search cost added thereto. That is,

Full price = Actual price + Search cost

Therefore, the key purpose of the trademark law is to minimise customer’s search costs by associating a non-transient image with the sources of products/services.

Where do fluid trademarks cross the line?

When I handover ten rupees to a shopkeeper, he lets me take a pen. Shall I be willing to give him fifteen rupees for the same pen? NO. Will he give me two pens for the same ten rupees? NO. The ‘ten rupees’ is the cost, and the ‘pen’ is the benefit; and there’s a certain cost-benefit balance here that can’t be violated without making one of us worse off. Same is the case with trademarks: the trademark monopoly is the cost, and the search cost reduction is the benefit, and this delicate balance between the parties (the brands and the consumers) must be carefully guarded!

Fluid trademarks disturb this balance and shift the cost-benefit equation in favour of the brands. Brands are better protected; brands are better equipped to induce ‘irrational’ loyalty from the consumers; brands are now able to distort the free and competitive market force in their favour. But what do the consumers get in return? Practically nothing. To the contrary, they incur further costs since fluid trademarks may sometimes add to their confusion and hence increase the search cost. Also, as Devangini rightly pointed out in her post, sometimes it may lead to honest cases being penalised as infringements.

A prologue to a trend?

The concern regarding fluid trademarks is real. However, the elephant in the room is the trend: fluid trademark isn’t a single instance, it’s rather one out of many attempts to synonymize brands with trademarks. Ilanah Fhima provides a rigorous review of how trademark law is meeting the brand’s needs here, although her stand is more positive than normative.

This abovementioned concern regarding fluid trademarks superimposes itself on the concern surrounding trademark expansionism. The consequences of these varying manifestations of trademark expansionism are mercifully similar. While the IP-maximalist governments are seamlessly pushing to raise the minimum IP standards, the neoliberal economists have done their part by discarding the access-incentive model of IP protection. The access-incentive model is now being heavily replaced by the ‘internalising the externalities’ model for preventing free-riding. And the chief players of the game, the brands, are continuously coming up with ways to exploit the loopholes in the existing legislation to stretch the contours of intellectual property beyond comprehension. In such a world, it’s the consumer’s interests that are at stake, and the free and competitive market that’s being threatened.

Protecting the balance of the trade-off: A sacred duty

Lawyers are often confined to the legal world – carefully examining the legal implications that might arise from the application of the black letter of the law. But, sometimes, black letter law obstructs a clear-eyed assessment of reality. That’s the time when lawyers have a duty to step beyond their comfort zones and take a trans-disciplinary outlook to critically examine the real-world contexts within which law operates.

Image from here

We’re pleased to bring to you a guest post by Aniruddha Majumdar, analysing whether illegal works should receive copyright protection in India – a question raised by Justice Gautam Patel in his wonderfully thought provoking post on the blog a few years ago, and also engaged with in an insightful response post by Prof. Joshua D. Sarnoff.

Aniruddha is an Associate at Talwar, Thakore & Associates in Mumbai. He graduated from NLS, Bangalore in 2019 and was Chief Editor of the Indian Journal of Law and Technology in 2017-18. The views expressed in the post are personal.

Should Illegal Works Receive Copyright Protection?

Aniruddha Majumdar

In what was a rare blog post by a sitting judge, Justice GS Patel had raised a significant question in relation to the intellectual property regime in India namely, is copyright content-agnostic? In other words, can a work be denied copyright protection if it is illegal? Written in 2017, Justice Patel refrained from offering a conclusive opinion on this matter. Nevertheless, the question has become even more pertinent perhaps, in light of the ongoing debate regarding content regulation of online streaming platforms. If a certain series or movie is found to be obscene, blasphemous, or otherwise illegal, does copyright continue to subsist in it as per the current law? If yes, should courts grant protection to such works at par with other works?

Reading section 2(y) and section 13 of the Copyright Act, 1957 together, in order for copyright to subsist in a work, the statute does not lay down any requirements as to its contents except its originality. This is in stark contrast with the Trade Marks Act, 1999 and the Patents Act, 1970 which expressly prohibit protection of marks or inventions based on criteria such as obscenity and morality.

Should copyright be denied in its entirety?

Given that the copyrightability of a work does not expressly get affected based on its legality, the question then is – should a court of law enforce all the rights of an author under copyright laws even if the work is illegal? The principle ‘no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act’ is a strong argument against the above proposition, and has been alluded to by the Delhi High Court in the context of copyright laws in Super Cassettes Industries Ltd. v. Hamar Television Network Pvt. Ltd. At first glance, one would agree. For instance, if the owner of a movie depicting child pornography sues a third party for a copyright infringement, few would insist that he be awarded damages by a court for his cause of action. A similar conclusion could follow in case of an article which is purely defamatory. But what about cases such as a political work which is declared to be hate speech? While the author’s style of writing may have been passionate, perhaps they did not intend to include elements of hate speech in the work. There is a broad spectrum of illegality, one end of which would include works which are patently, knowingly, or substantially illegal. However, for cases lying elsewhere on the spectrum, which are less cut and dried, there are a few concerns which surround the wholesale denial of copyright protection, which are as follows:

1. It would result in a double disincentive on authors who do not intentionally produce an illegal work. There are several works which are in the grey area, and an author cannot be expected to know whether a given work necessarily amounts to an offence. As a result, authors may become over-cautious and steer clear of producing works, which a court may have found to be protected or innocent speech. This fear would be rooted in the possibility of a lack of copyright protection and would result in a chilling effect on free speech. The adverse effects of this chilling effect have been dealt with by the Supreme Court here and here.

2. The Indian Penal Code (‘IPC’), enacted in 1860, defines, and prescribes the punishment for, works which are obscene, constitute hate speech, etc. I argue that as per the legislature, the punishment is a sufficient disincentive for authors of such works. This is evident given that no amendments have been made either in the IPC, the Copyright Act or any other law currently in force (for a considerable amount of time now) to include an express provision which denies copyright protection in an illegal work. The legislative intent, therefore, is amply clear and a complete denial of copyright protection for illegal works is not envisaged (the presence of content-based requirements in the Trade Marks Act and the Patents Act and its absence in the Copyright Act also supports this proposition – as argued by Haber in the US context).

3. If there is no protection provided to an illegal work, say an online series, a third party may simply edit out the content which has been banned (if possible), and release the work as its own. In fact, certain parties may even begin to track works which have the potential to be banned, and then race towards becoming the first one to modify it such that the illegality is cured. If copyright is denied in its entirety, there would be nothing to prevent such misappropriation and unjust enrichment. The first owner would be left without recourse not only in terms of suing for infringement, but also for claiming his/her moral rights (if the first owner is also the author). Surely, this is an unjust consequence especially if the author or owner had no intention or knowledge of producing a work which was illegal. Furthermore, this would also seriously inhibit the author’s ability to modify the work in case he/she wants to cure the illegality.

Is partial post facto denial the key?

Clearly, a wholesale import of the principle would cause a lot more problems than it would solve. Nonetheless, the issues raised above can be effectively addressed.. As far as the chilling effect on free speech is concerned, this can be addressed to an extent by a post facto denial of copyright protection. Once an order is passed by the competent authority, and a finding in relation to the illegal nature of the work is final, courts may proceed with denying copyright protection (as far as agreements for licensing or assignment for an illegal work are concerned, I assume that they would be void since they pertain to an unlawful object, and hence, will not be enforced by courts). This would ensure that authors do not have to self-censor their works in anticipation of a breach of some statute or the other. Only if the work is found to violate some provision will the author be denied protection.

However, in order to avoid the double disincentive mentioned above, even the post facto denial of protection must not be total. The author must retain rights such as moral rights, the right to modify the work, as well as the right to seek injunctions. If, for instance, the author of a book containing hate speech sues a third party for pirated copies, the court may refuse to award damages to the author. Nevertheless, it should not, in my opinion, refuse the right to seek injunction against any infringing copies. An injunction cannot be said to be a ‘gain’ from the author’s perspective. It is simply a prevention of further harm, especially since the work may have already been banned from circulation, and the author may be facing proceedings under the relevant statute. A denial of injunction would lead to the absurd conclusion that another party may, by simply deleting or modifying the parts of the work which violate a law, claim ownership over it and enjoy all the rights of an owner under the copyright law. This would, in fact, amount to unjust enrichment of that party at the cost of the first owner of the work. (In this post, I do not propose a differential standard for works which are patently, knowingly or substantially illegal. Arguments both against and in favour of such a proposal would require addressing multiple nuances which merit a separate post in themselves. For now, I have restricted my arguments to non-obvious cases.)

In essence, while adjudicating over a suit for infringement of copyright in an illegal work, the court should, in exercising its discretion, refuse to grant any damages. On the other hand, the right of injunction should be enforced so that authors of substantially similar works are not benefited unjustly. While copyright would subsist, enforcement would be partially denied (this was suggested in Glyn v. Weston Feature Film Co. Ltd.). This, I believe, answers Justice Patel’s question, even if partially.

Topical Highlight

T-Series’ Copyright Infringement Claim against Roposo: Intermediary Liability, Safe Harbour and Fair Dealing

Image from here

In this post, I analysed T-Series’ copyright infringement claim against Roposo. I first flagged two relevant features of the application- a music library and an option to ‘collaborate’. I explore whether Roposo can be considered an intermediary and argue that such holding is possible only for the ‘collaborate’ option, leading to personal liability for the music library. Subsequently, for the ‘collaborate’ option for which it acts as an intermediary, I argue that it can claim safe harbour protection. Additionally, I analyse whether a fair dealing exception is available to Roposo, concluding that it is possibly available only for the ‘collaborate’ feature and not for the music library. In conclusion I note that Roposo might ink a licensing deal with T-Series, similar to Sharechat. Finally, I touch upon the adverse impact of onerous licensing requirements on the user generated content potential in India and how it might engender the same remuneration disparities that TikTok was plagued with.

Thematic Highlight

Should Illegal Works Receive Copyright Protection?

Image from here

In this guest post, Aniruddha analyses whether illegal works should receive protection. He notes that prima facie requirements concerning the content of a work (apart from originality) are not imposed by the Copyright Act in contrast with prohibitions based on obscenity and morality under patent and trademark law. While he sees strength in the statement that courts should enforce claims based on immoral or illegal acts, he believes the same is confined only to certain bright lined scenarios. However, in light of largely vague prohibitions such as those based on hate speech, he raises three concerns against complete prohibition of copyright. First, it will act as double disincentive due to chilling effect on free speech. Second, the absence of expression denial of copyright protection is a proof of legislative intent to this end. Third, it will allow third parties to modify the illegal parts and misappropriate the remaining work in their name. He, thus, suggests only a limited post-facto denial should be used with the author retaining rights such as moral rights, the right to modify the work, as well as the right to seek injunctions.

Other posts

Interim Injunctions: What’s the Damage? – A Summary

(Someone somewhere already made this meme! Found here)

In this post, Swaraj and Praharsh summarise India’s tryst with interim injunctions in patent disputes. In the post they highlight the anomaly between courts granting interim injunction at a higher percentage, normatively and the delayed judgments by the courts in patent disputes, as observed, which essentially results in a scenario where ‘interim’ injunctions have lasted for years. They mention that despite a consensus on the four factor test to assess an application for interim injunction, there are inconsistencies as to what shall fall under these heads, which coupled with other highlighted problems arguably make a case for extremely cautious approach towards assessing these applications. They note that assumption of patent validity should not be strict when there is considerable opposing evidence, especially since the IPO has high error rates. In the final part they highlight the conundrum associated with ex partes wherein on one hand there is a risk of courts extending such ex parte interim injunctions to abnormally long durations and on the other hand, the risk of granting an unfair / inequitable injunction.

Fluid Trademarks: A Prologue to Trademark Law Going Awry?

Image from here

In this guest post, Anshuman discusses a worrisome trend of trademark expansionism with specific focus on fluid marks. Anshuman first highlights how full price of a product comprises of actual price and the search cost borne by consumers. A key purpose of trademark law, then, is to minimise this search cost. Accordingly, in a cost-benefit set up, trademark monopoly can be seen as the cost and the search cost reduction as the benefit, creating a delicate balance. Anshuman highlights how this balance is affected by fluid marks that shift it in favour of the brands without much benefit, or even a loss due to greater confusion, to the consumers. Finally, Anshuman adds a caveat that fluid marks are merely one example of a general trend towards trademark expansionism with brands being synonymised with trademarks.

NLUJ’s Centre for IP Studies Essay Competition [Submit by September 27]

 

Recently, we informed our readers that the Centre for Intellectual Property Studies, NLU Jodhpur is organising an essay writing competition for law students from Indian universities on the theme ‘Copyright Societies and Performers’ Rights Societies in India’. The deadline for registration is September 20, 2020 and that for submission of essays is September 27, 2020. Further information on the submission guidelines is mentioned in the post.

CII & TAMU Executive Education Program on Health, Pharmaceuticals and IPR [Over 4 Weekends in Sept]

We also informed our readers that the Confederation of Indian Industry (CII) in partnership with Texas A&M University School of Law (TAMU), will be conducting an online certificate course on health, pharma and IP spread over four weekends in September 2020, starting 5th-6th September. We’re happy to note that SpicyIP readers are eligible for a discounted price for the course. More details regarding the course are mentioned in the post.

Decisions from Indian Courts

• Delhi High Court in Jindal Industries Pvt. Ltd. v. Panther Pipes Pvt. Ltd., passed an interim order restraining the defendants from using the ‘JINDAL POWER’ mark or any other marks deceptively similar to the plaintiff’s registered ‘JINDAL’ mark. [September 2, 2020]
• Delhi High Court in FMC Corporation & Anr. v. Modern Insecticides Limited, granted ex-parte ad-interim injunction in favour of the plaintiff in suit filed by it for infringement of its patent rights in Insecticide Chlorantraniliprole. [September 2, 2020]

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  Delhi High Court in Sporta Technologies Pvt Ltd v. Dream11 Team, granted an interim relief in favour of the plaintiff restricting the defendant from using plaintiff’s registered ‘Dream11’ mark or any other deceptively similar mark, asked the domain registrar to suspend defendant’s ‘Dream11team’ domain name, and asked the defendant to remove infringing content. [September 2, 2020]

• A Hyderabad civil court imposed an interim stay on the release of the Netflix series ‘Bad Boy Billionaires-India’ based on a petition by B Ramalinga Raju, accused in the Satyam fraud, considering sub judice proceedings and the loss to plaintiff’s reputation. [September 1, 2020]
• Delhi High Court in Delhi Public School Society v. Manish Tripathi, absolved the defendant of liability in a trademark infringement claim by designing a mask with the plaintiff’s logo since such act was based on a misrepresentation by a third party. [September 1, 2020]
• Delhi High Court in Flipkart Internet Pvt. Ltd. v. State of NCT Delhi & Anr, heard a petition from Flipkart to quash an FIR registered under Section 63 of the Copyright Act, 1957 and Sections 103/104 of the Trade Marks Act, 1999, owing to sale of allegedly fake products on its online marketplace. The Court allowed the State to review its position and listed the matter on a later date. [September 1, 2020]
• Madhya Pradesh High Court in Mold-Tek Packaging Ltd. v. S.D. Containers, held that under Section 22(4) of the Designs Act, despite the use of the term ‘High Court’, a commercial dispute will be transferred to a Commercial Court in a state where the High Court has no ordinary original civil jurisdiction. It also reaffirmed that an application for cancellation of registration of design would lie to the Controller exclusively, with High Court only having appellate jurisdiction. [September 1, 2020]
• Bangalore District Court in Nandhini Deluxe v. Nandhini Mushroom Family Restaurant, granted a permanent injunction restraining the defendant from using its ‘NANDHINI MUSHROOM FAMILY RESTAURANT’ mark for infringing and passing off the plaintiff’s registered ‘NANDHINI’ and ‘NANDHINI DELUXE’ marks. [August 31, 2020]
• Delhi High Court passed an order in Super Cassettes Industries Ltd. v. Relevant E Solutions Ltd. & Ors., wherein it noted Roposo’s affidavit stating that it has addressed most of the concerns raised by T-Series in its copyright infringement claim. The Court, however, refused to grant ad-interim injunction of a sweeping nature as demanded by T-Series without hearing the parties. [August 31, 2020]
• Bangalore District Court in Mysore Saree Udyog LLP v. Chickpet Saree Udyog, granted a permanent injunction restraining the defendant from using its ‘CHICKPET SAREE UDYOG’ mark for infringing and passing off the plaintiff’s registered ‘MYSORE SAREE UDYOG’ mark. [August 31, 2020]

• Image from here

  Delhi High Court in Gujarat Cooperative Milk Marketing Federation Ltd. v. Amul Franchise.in, grant an ex-parte ad-interim injunction against the defendants running websites with similar domain names as ‘AMUL’ and duping individuals through the same. Moreover, it ordered the domain registrar to suspend/ delete the impugned domain names, and restrained them from selling those domain names containing the expression ‘AMUL’. [August 28, 2020]

Other News from around the Country

• The Geographical Indications of Goods (Registration and Protection) (Amendment) Rules, 2020 have come into force on August 26, 2020.
• The Ministry of Consumer Affairs, Food and Public Distribution, has released a draft of the Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020, dealing, inter alia, with comparative advertising and puffery.
• The Trademarks Registry through a public notice informed that it has decided to conduct Show-Cause Hearings through Video Conferencing provided that the applicant or authorised agent give consent for the same before September 5, 2020.

• Image from here

  T-Series has served a legal notice for copyright infringement against social networking application, Triller, for using its copyrighted music content.

• A post in Financial Express examined the practice of not crediting the lyricists for their songs on online streaming platforms and its impact on the lyricists.
• Sikkim’s famous Dalle Khursani, one of the world’s spiciest chillies, has received a GI tag.
• As per 2020 edition of the “Global Innovation Index” (GII) report, India has ranked 48^th out of 131 economies. Bangalore has emerged as the top science and technology (S&T) cluster in the country by applying for 3200 scientific patents to the International Patent Cooperation Treaty, thereby moving up five ranks to secure 60th spot among the top 100 S&T cluster rankings compiled by WIPO.
• Manipur is expecting to receive a GI tag for its Tamenglong orange (Citrus reticulata).
• PixaHive has created a database of images available under a public domain license.
• A CUSAT faculty has received a patent for an in-vessel composting technology that can easily be installed in backyards to process biodegradable waste to compost in a short time.
• Biocon Biologics India Ltd. along with its partner Mylan N.V. launched the cheapest insulin glargine injection in the US market, after an earlier favourable ruling in a patent challenge made by Sanofi.

News from around the World

• A Vietnamese technology firm, VNG, has sued TikTok for copyright infringement by using their songs without adequate licenses.

  Image from here

• In a major update, Google Images now provides a “Licensable” badge making it easier for consumers to understand which image is available for free use and for the rights holders to clearly specify licensing terms for the pictures.
• A patent infringement suit has been filed by Coretek Services against HCL America for its software product HCL Sametime, a collaboration application.
• Songwriter Eddy Grant who wrote the song ‘Electric Avenue’ has sued US President Donald Trump for copyright infringement by using this song in a Twitter video to support his re-election campaign.
• A copyright infringement case has been filed by music producer Terrance Hayes against Kendrick Lamar for violation of his rights in the song ‘Loyalty’.
• In light of the pandemic, fast food giant KFC has dropped its famous ‘Finger Lickin’ Good’ slogan stating that it ‘doesn’t quite fit in the current environment’, but will return when the ‘time is right’.

With the development of innovative methods of brand-image building, there has been a proliferation of non-conventional trademarks. After colour, sound, scent marks and the like, proprietors are now seeking to trademark ‘layouts’ of stores and service outlets. These marks are different from architectural trademarks, the first of which in India were registered for the Taj Mahal Palace Hotel (discussed in detail here) and the BSE Building, both situated in Mumbai. While these protect the image of the buildings’ exteriors as device marks for commercial use, layout marks are intended to protect the sophisticated layouts of stores, including the interior and consisting of a distinct arrangement of features, colour patterns, furniture.

Mary Cohr’s ‘Store Front’

Mary Cohr’s ‘Salon Area’

Among these is Mary Cohr, seeking protection for the layouts of its ‘store front’ as well as ‘salon area’ (Application No 4073262 and 4134918 respectively). Another applicant has filed for a 3D trademark over the layout of a Vedic restaurant (4100482). Recently, Godrej & Boyce’s U & Us Home Studio has successfully overcome a lack of distinctiveness objection and been granted a device mark for its ‘Discussion Area Zone’ (4169443). They have also applied to trademark their ‘Material Library Zone’ (4169441) and ‘Color Visualizer Zone’ (4169442). This post discusses some of the challenges presented by layout trademarks, focusing on the Discussion Area Zone in particular.

Store layouts or ‘business get-ups’ have enjoyed protection in the US since the case of Two Pesos v. Taco Cabana, where the US Supreme Court held that the Mexican theme-based get up of the Taco Cabana chain of restaurants, enjoyed trade dress protection under Section 43(a)(1) of the Lanham Act. Subsequently, trade dress protection has been granted to the layout and décor of a wine retail store, fast-food restaurant chains, and several retail-store layouts. Later decisions added the requirement to prove secondary meaning, for retail layouts to obtain trade dress protection. In 2013, after an initial rejection, the German Trademark Office referred Apple’s application for a 3D trademark over their store layout to the CJEU. The CJEU examined the layout’s pictorial representation and the elaborate word-description and held that the store adequately distinguished Apple’s services from those of others’, paving way for layout trademark protection in the EU.

Layout Trademarks in India

Vedic Restaurant Layout

While there is no reference to layouts in the Trade marks Act, 1999, the inclusive definition of ‘mark’ under Section 2(m) has allowed for recognition of non-conventional marks. The Discussion Area Zone is registered as a device mark, rather than trade dress or 3D trademark as in other jurisdictions. The Vedic restaurant application (mentioned above) sought a 3D trademark, but was asked to change to a device mark. However, store layouts may be more appropriate as 3D trademarks, considering they are applied in a 3-dimensional form on business spaces, while device marks usually cover designs in 2D form.

While trade dress protection is another alternative, it may not be suitable for all layouts. In Colgate Palmolive v. Anchor Health, the Delhi High Court held trade dress to be the ‘overall impression that customer gets as to the source and origin of the goods from visual impression of colour combination, shape of the container, packaging.’ Trade dress protection in India is provided over broad thematic features. Since layout marks are applied over designs of stores and consist of arrangements of otherwise commonplace elements, specificity is desirable so as to avoid overbroad protection.    

The Discussion Area Zone’s layout consists of a touch table, a TV, three chairs and a designed shelf to enable the customers to plan themes digitally. The mark initially faced a Section 9(1)(a) ‘lack of distinctiveness’ objection, but a detailed reply describing the uniqueness and popularity of the said mark has overcome the same.

Source-Indication function

The primary question regarding layout marks is whether they actually indicate the source of the product. In the Apple Store case, the German Trademark Office had originally observed that the design of a store may enable consumers to recognise the quality and price range of the goods, but not their source, necessitating use of other trademarks. Apple had countered this by stating that most 3D trademarks are applied on the product itself making them inseparable from it. This can be seen in cases like Toblerone and Zippo lighter, neither of which are used without labels. In fact, several non-conventional trademarks like colour and motion marks are used together with word marks. It follows that the layouts (3D trademark) for service-providing outlets being integrated into the service itself, cannot be rejected on grounds of requiring labels.

Source-identification is particularly important in the Discussion Area Zone’s case, as the trademark does not protect the layout of the outlet as visible from outside, but a section within the showroom. The consumer would not have access to the Discussion Area Zone until they actually enter the outlet. In re NV Organon, an orange-flavour mark was rejected, as the US TTAB pointed out that consumers don’t come in contact with flavor marks until they have consumed it, defeating source-indication function. Presently, while the consumers’ contact with the layout occurs before purchase decision is made, it still doesn’t serve the purposes of identifying and distinguishing the service outlet from those of competitors. The one possible case where it may do so is when the Discussion Area Zone stands as an independently-visible outlet within a mall or a combined brands showroom. But this has not been discussed in the application. Notably, Mary Cohr’s ‘store front’ mark has been granted, whereas the ‘salon area’, which like the Discussion Area Zone remains situated ­inside the showroom, faces a Section 9(1)(a) objection. This is a concern that requires particular attention.

Graphical Representation

Unlike conventional trademarks, store layouts consist of multiple elements in a unique arrangement. As the exact sizes in which the mark will be applied cannot be ascertained, it is likely to take on various appearances, running the risk of protection over all conceivable manifestations of the layout. However, layout marks would meet the Ralf Sieckmann standards for non-conventional trademarks, i.e., ‘clear, precise, self-contained, easily accessible, intelligible, durable and objective’ (adopted in India’s Draft Manual of Trade Marks 2015) if their pictorial representations are sufficiently descriptive of their proportions. Rule 29(4) of the Trade Mark Rules, 2002 requires that the graphical representation of shape trademark applications be in the form of drawings showing all features of the mark, accompanied with an accurate description of its constituent features. The registrar is also authorized to call for different perspectives. Interestingly, this would be applicable on 3D Marks, but not necessarily on device marks. Regardless, the recent layout mark applications have included actual photographs, making them sufficiently perceptible.

Photograph of ‘Discussion Area Zone’

Layout Sketch of ‘Discussion Area Zone’

Functionality

The functionality doctrine in trademark law prohibits the registration of marks which consist of technical features that add value to the product itself. Embodied in Section 9(3) of the Trade Marks Act, this doctrine is a safeguard against the anticompetitive effects of granting monopolies over functions. Functionality often creates roadblocks for taste or scent marks since they are likely to be used to make products more palatable (read Anupriya’s analysis of scent marks here). Flavour marks in particular face a harsher challenge to overcome as flavours are only added to consumables and the value of something which is intended to be eaten or drunk is inevitably influenced by flavour-addition.

In context of layout marks, functionality presents a veritable challenge as the articles combined together to obtain the unique arrangement be might those that are necessary to obtain specific technical functions – e.g., the use of showcases, cash counters, seating arrangements, etc. The Discussion Area Zone illustrates this. According to the product description, it consists of the following elements:

1. A touch table for customer interaction, theme selection and room planning.
2. An inward curving panel with TV fitted on one side of the walls for design presentation and viewing of 3D renderings of rooms.
3. Three chairs with curved back for customers to sit.
4. Miniature stand with three levels of leaf-shaped shelves carrying miniatures depicting various furniture categories.

Arguably, the only elements in this design that do not serve a functional purpose are the leaf-shaped shelves, and the curvature of the chairs and wall. While a combination of elements which include functional and non-functional elements can still be distinctive, it is necessary to prove that the manner in which the features are combined amounts to more than simply the ‘sum of its parts’ (see Voss of Norway v. OHIM). Unlike the Apple Store description, it is not prima facie clear how this layout made of only 4 elements is non-functional as a whole. Though a Section 9(3) objection was not raised during the examination, in general, the Trademark office must undertake a careful consideration of the question of functionality.

To conclude, it can be said that while the Discussion Area Zone trademark has not dealt in depth with some of these issues, the unique nature of layout marks doesn’t present any obstacles that cannot be overcome by use of safeguards already present in the Indian trademark regime.

[This post was co-authored with Praharsh Gour. This is part II of our two-part post on interim injunctions. You can view Part I here.]

In our previous post, we summarized some of the many issues with interim injunctions in high-tech patent matters. We also pointed to an earlier suggestion of doing away with the interim phase altogether. We highlighted that aside from the possible pro-patentee bias in the grant, there is also the issue of public interest perhaps not being sufficiently being accounted for. And finally, we also pointed out that in the pharma sector in particular, there is good reason to believe that a high number of patents are erroneously granted in the first place, further exacerbating problems caused by unfair and long-lasting interim injunctions.

As explained by the Delhi High Court in Shenzen OnePlus Technology Co. Ltd. v. Micromax Informatics Ltd., “…A delicate balance has to be struck between the right of the plaintiff and the right of the defendant at the stage of granting an ad-interim injunction. Only if a Court were to find that so grave and so irreparable is the injury that even a day’s delay cannot be brooked, and so strong is the prima facie case made out, only then would a Court be justified in granting an ad-interim injunction…” Thomas covered the case and the subsequent appeal here and here.

The Delhi High Court recently reiterated in Natco Pharma v. Bayer Healthcare (2019) that for an interim injunction to be granted, discussion of the necessary factors i.e. prima facie case, balance of convenience and irreparable hardship (and public interest when necessary) must be present. The order also went on to reject the notion that interim injunctions are to be granted as a matter of routine. Pankhuri and Bhavik have discussed this order by the Division Bench here. 

However, as several other cases have shown, it would still be quite a large assumption to think that all is now well. For instance, just this year, the Delhi High Court granted an interim injunction in Novartis Ag v. Sun Pharma Industries (2020), where, despite holding that the three factors had been established, the court still had not recorded its reasons for reaching this conclusion, nor did it mention the public interest factor. Namratha has analysed this court order here. 

Currently, measures taken by defendants usually include applying for the vacation of interim injunctions or post-grant opposition or counterclaims for invalidity of the suit patent. While oppositions or counterclaims will take time, getting an order for vacation of interim injunction, (especially ex-parte interim injunction), under Order 39 Rule 4 of the Civil Procedure Code, is  “a herculean task”, as noted in an obiter by the Delhi High Court in Microsoft v. Dhiren Gopal (pdf), covered by Saahil here. (Side note: In the 2014 Enercon decision, the Supreme Court clarified that multiple remedies could not be pursued simultaneously at different fora. Aparajita and Shamnad had discussed this in detail here, and here and here respectively.)

When it comes to ex-parte interim injunctions, if the injunction continues for more than 30 days (without reason), defendants can appeal to have the injunction vacated/modified, as held by the Supreme Court in A. Venkatasubbiah Naidu v. S. Chellappan and Ors. The Court also went on to say, “In appropriate cases the appellate court, […] may suggest suitable action against the erring judicial officer, including recommendation to take steps for making adverse entry in his ACRs”. (Note: there are possibly different interpretations on course of action in these situations, as held in Shri Westarly Dkhar And Ors v. Shri Sehekaya Lyngdoh). 

Bonds and Damages: A Quantum of Solace? 

In situations where the courts decide they must go ahead with an injunction, there are two (seemingly underutilised)  measures available, which can be resorted to as a counter-balance to the limitations discussed in the previous post- of time, high error rate, lack of expertise to rely on, etc. Having such safeguards in place isn’t essentially questioning the capability of the courts in any manner but rather is arising out of the nature of interim injunctions. As said interim injunctions are supposed to be equitable in nature, it is expected that the power to issue interim injunctions comes with a larger responsibility that no untoward loss occurs to any of the parties. 

i) Deposit of a security bond with the court 

As described above, there are situations where an interim injunction not only restrains the defendant from doing business for a long period of time, but also deprives the public of more affordable, and critical medicines. A security bond obligating the plaintiff to deposit an amount upfront for the potential loss to the business of the defendant, and, as we would suggest, potential damages to public interest, not only provides some remedy to the defendant in case of wrongful interim injunction, but also keeps the plaintiff in check, to approach the court with demands of interim injunctions in only apt situations. If the security bond has a ‘damages in case of harm to public interest’ component, this could be directed to a patient group or some relevant NGO. 

The above alternative of asking for a security may or may not fit in non pharma/medicine situations/sectors and it would be open for the court to decide on this. Order 39 Rule 2(2) of the CPC prescribes the discretionary power of courts to put in place terms on the grant on an injunction, including keeping accounts, giving security, or any other manner the court thinks fit. The Supreme Court in Raunaq International Ltd. v. I.V.F Construction Ltd. has discussed this requirement:

“The party at whose instance interim orders are obtained has to be made accountable for the consequences of the interim order. … the petitioner asking for interim orders, in appropriate cases should be asked to provide security for any increase in cost as a result of such delay, … in consequence of an interim order. Otherwise public detriment may outweigh public benefit in granting such interim orders. Stay order or injunction order, if issued, must be moulded to provide for restitution”. 

In fact, we can see this approach in other jurisdictions too, presumably because the TRIPS Agreement in Article 50 (3), mandates that judicial authorities are given the power to order the applicant (patentee) to provide a “security or equivalent assurance sufficient to protect the defendant and to prevent abuse.”  

Practices in China and USA, ranked no 1 and 2 in terms of patent applications filed as well as granted, are also worth looking at. In both these countries, it appears to be mandatory for applicants to deposit a security bond with the court, for potential damages occurring to the defendant due to a wrongful injunction order. In the US, the defendant must prove that the damage accrued from the injunction to avail the security bond (see Buddy Systems Inc. v. Excer- Genie, Inc.). Whereas, Chinese laws prescribe strict liability, which means that the defendant will be eligible for the monetary compensation out of the bond if the final decision of the court is in its favor (see this piece by Hui Zhang et. al for a summary on China’s law on interim injunction). Huang Chih Sung has discussed patentee’s liability in China, USA and Taiwan in depth, in cases of wrongful interim injunctions in his paper available here.

Though Indian courts have occasionally availed this method (or an undertaking to the same effect), it seems to be a rare occurrence. Given the frequency of loosely granted patents, as well as grant of interim injunctions – it may be a step in the right direction to require a security deposit to ensure that flimsy interims aren’t requested, as well as to provide more confidence with which injunctions, when necessary, can be granted. 

ii) Compensatory Remedy

The Delhi High Court in Himalaya International Ltd. v. Himalaya Drug Company (2017), elaborated the remedy under Section 95 of the CPC, which provides for compensation to the defendant where a temporary injunction has been granted on insufficient grounds. The court however cautioned that the defendant is to institute a counter suit for recovery of damage only after final determination of the previous suit, for it to have a prima facie case. The court further clarified that this remedy will not affect the remedy to institute a fresh counter suit. In the (presumably few) scenarios where there is a provable case of malicious prosecution, Section 35 A of the CPC read with Section 95 also gives power to the court to ask for damages. While the Indian Supreme Court has interpreted the remedy under Section 95 to be limited to INR 50000, the Single Judge bench of Delhi High Court in the Himalaya International decision clarified that “ Though, I entertain doubts whether a suit for recovery of damages on account of obtaining wrongful injunction would qualify as a commercial dispute but if it is so ….following the parity of reasoning as in deletion of Section 35A(2), in commercial suits, the maximum compensation which the Court can award for obtaining injunction on insufficient grounds, cannot be Rs.50,000/- as provided in Section 95(1) of the CPC.”  

Courts in other jurisdictions have utilized similar provisions too. Prof Thomas Cotter, in his blog posts here and here, has discussed the remedies available in case of erroneous injunctions in certain other jurisdictions. Most notable in his examples is the €3.65 million in damages from a French court in  Laboratoires Negma SAS v. Biogaran SAS due to a preliminary injunction of a patent that later found to be invalid, together with abuse of proceedings claim. Similarly,  Scandinavian courts for instance have explored compensating defendants for losses accruing out of wrongful interim injunctions. And as discussed by H.C. Sung  in his paper, mentioned above, US courts have indicated that if the defendant is able to establish the plaintiff’s mala fide intentions to institute the suit, then the plaintiff’s liability shall not be limited only to the amount filed as the security bond, but can extend over and above it.  

Conclusion

As long as interim injunctions continue to flow, this discussion of what safeguards to take against erroneous injunctions will continue to be relevant.  The larger question though is whether courts believe they should take precautions against the giving of erroneous injunctions. The number of times that courts have advised caution suggests that they at least believe other courts may be treading this zone. 

Requiring security bonds or undertakings from plaintiffs seems like a viable “middle path” which resolves the question of whether an injunction is erroneous or not simply by imposing it as a condition for which one party can ask another party to suspend activities without final resolution. It ensures that serious plaintiffs are taken seriously, and that defendants have a realistic way of compensation should it turn out to be necessary. Since the language of Rule 2(2) makes it a discretionary power, it can also be suggested that courts should be open to the alternative of issuing interim injunctions in situations where the plaintiff voluntarily submits an undertaking, assuring to compensate the wrongful consequential damage to the defendant. 

To sum up, our takeaways bring us to roughly the following suggestions for courts to consider: 

1. Bypass the interim phase altogether. If this is not feasible: 
2. Turn down the request for interim injunction in lieu of the defendant maintaining books of accounts (this assumes the plaintiff has shown everything except irreparable loss).
3. If the plaintiff has satisfied the irreparable loss criteria as well, then grant an injunction on the condition that a security deposit is granted (one that takes into account potential harms to public interest as well).
4. If there are genuine economic reasons for the plaintiff to be unable to furnish the security deposit, then require an undertaking to pay.

We’re pleased to inform you that the Centre for Intellectual Property Rights, National University of Advanced Legal Studies, Kochi is organizing the an essay competition for law students on the theme ‘Innovate for a Green Future: Role of IP Rights in Encouraging Innovation and Creativity’. The deadline for submission of essays is October 4, 2020. For further details, please read the announcement below.

6th CIPR National Essay Writing Competition

The Centre for Intellectual Property Rights, National University of Advanced Legal Studies is organizing the 6th CIPR National Level Essay Competition. The Centre seeks essays on the theme ‘Innovate for a Green Future: Role of IP Rights in Encouraging Innovation and Creativity’.

Eligibility

The competition is open to LL.B. and LL.M. students studying in any of the recognized law schools/ colleges/ departments of the universities.

Submission Guidelines
• Submissions are to be made in electronic form only and are to be sent to cipr@nuals.ac.in.
• The essay should be in English, not exceeding 3000 words (excluding footnotes).
• Only one essay per participant will be permitted. Multiple submissions will lead to immediate disqualification.
• The essay should be accompanied by an abstract not exceeding 300 words.
• Co-authorship is permitted to a maximum of two authors per submission.
• The cover page should include name, address, e-mail ID, contact number and the name of the College/University along with address and class of the participant. In case of co-authorship, the covering letter should include details of both the authors.
• No part of the submission should have been published earlier nor should it be under consideration for publication or a contest elsewhere.
• Any form of plagiarism will result in immediate disqualification.
• The essay should not contain names or any other marks which reveal the identity of the author.
• Duly filled Declaration Form (available here) must accompany the essay.
• In all matters related to the Essay Competition, the decision of the Panel and CIPR shall be final and conclusive.

Formatting Guidelines

• All submissions must follow the Bluebook system of citation 20th edition.
• The Submissions are to be made in Times New Roman, Font Size: 12, Line spacing: 1.5, Footnote size: 10.
• Submissions may be made in .doc/.docx/.odt formats only.

Deadline

The last date for the submission of the essay is 11:59 pm, 4th October, 2020.

Prizes

First Prize: Rs. 10,000/-

Second Prize: Rs. 5,000/-

Third Prize: Rs. 3,000/-

Image from here

This time, I want to discuss recent judgement from the Federal Court of Canada – Yves Choueifaty v. Attorney General of Canada, 2020 FC 837 – available here. I found it interesting because it concerned the patentability of computer-related inventions (CRI) and addressed a situation where the Court found the Patent Office Manual to be erroneous.

The case concerned the invention that claimed a computer-implemented method concerning investment portfolios. An in-depth assessment of the claims or the technology at hand is not necessary for the present purposes, though the judgement carries a reasonably good summary of the invention involved. The patent application was rejected as claiming something that is not an ‘invention’, i.e. not patentable subject matter. The Federal Court disagreed with the test applied and directed the Patent Office to consider afresh the amended claims filed by the patent applicant.

The Canada Patent Office followed the approach listed in its Manual of Patent Office Practice in deciding that the invention claimed was not patentable subject matter. The Manual prescribed a “problem-solution” approach under which patent claims are construed to determine only the “essential elements” and in turn, only those features of a claim that are necessary to achieve the disclosed solution to an identified problem were deemed to be “essential elements” (para 13). In the facts of the case, it was held that a “computer” was not one of the essential elements and instead, the essential elements were directed to a scheme or rules involving mere calculations, which were not patentable subject matter (paras 16-18).

On appeal, the Federal Court concluded that the above approach of the Patent Office prescribed in the Manual was erroneous. In particular, the Court explicitly held that the principles of claim construction were identical, whether the matter was being decided by a Court or by the Patent Office (para 35). Although the Canadian Patent Office argued that it was merely construing the claims in a “purposive manner”, the Federal Court concluded that the Patent Office did not fully appreciate what is meant by this. In Particular, the Federal Court believed that the Patent Office had not appreciated the teachings of the Canadian Supreme Court in two precedents (Free World Trust case, 2000 SCC 66; and Whirlpool case, 2000 SCC 67).

The Federal Court expressly differentiated between the “substance of the invention” approach and the “purposive” construction approach (para 37). The “purposive” construction approach as per the Canadian Supreme Court mandate did require the claim be construed based on its “essential” features. Determining whether a claim element is essential for non-essential, however, requires an assessment of the following two questions (para 38):

1. Would it be obvious to a skilled reader that varying a particular element would not effect the way the invention works? If modifying or substituting the element changes the way the invention works, then that element is essential.
2. Is it the intention of the inventor, considering the express language of the claim, or inferred from it, that the element was intended to be essential? If so, then it is an essential element.

In other words, both the inventor’s intention and the perspective of the PSITA were relevant. The Court concluded that the so-called “problem-solution” approach in the Canadian Patent Office manual did not correctly address both questions. On facts, the Court did not issue a finding on the specific claims before it and instead, directed the Patent Office to reconsider the matter afresh.

At a substantive level, I find three significant takeaways:

1. the standards/principles of claim construction would be the same across the life-cycle of the pattern/patent application, and irrespective of the forum involved;
2. Claim construction in Canada necessarily involves focusing only on the “essential” elements, this being determined based on the two questions noted above;
3. If the “essential” elements of a given claim are not patentable subject matter, the claim will not be allowed.

On the semantics front, it is prevalent to state that purposive construction of claims involves looking at the substance of the claim and yet, the Court differentiated “purposive” construction of claims from the concept of looking at the “substance” of the claims.

Relevance to India

On the face of it, I do not think that the judgement has much relevance to India from a substantive point of view, on patentable subject matter. Section 3 (k) applies in India, and I believe different tests apply under the statutory provision, though I do not intend to go into this here.

However, what I wanted to highlight is the statement that claim construction principles cannot vary between the Patent Office and courts. The US is famous for this dichotomy, where the USPTO applies what is called the “broadest reasonable interpretation” or BRI standard for claims (see here), but that is not what courts apply when deciding invalidity/infringement. I have never found the reasoning given for this dichotomy in the US to be logical, though my ultimate conclusion is that it is a practice that has evolved and matured in that territory. But I do not think that such a dichotomy applies in the Indian context. Granted, the Patents Act, 1970 is silent on the specific issue but the overall scheme and historical context suggest that the legislator wanted a reasonable level of certainty as far as patent exclusivity was concerned. In that context, to have different claim construction standards at the Patent Office level and before courts would contradict the need for certainty.

The Canadian Federal Court’s interference with the Canadian Patent Office Manual is also noteworthy. Of course, there is no dispute that the Patent Office manuals are not binding on courts, and ultimately, the Patent Office manual is subject to the statute (and its interpretation by courts). After reading this judgement, I revisited the revised CRI guidelines issued by the Indian Patent Office (available here). I note the following:

“4.4.3 Claims:

…

3. The claims in the field of Computer related inventions need to be construed to ascertain the substance of the claim without wholly relying on the forms and types of the claims.

 4.4.4 Form and substance:

 The sub-section 3(k) excludes a mathematical or business method or a computer programme per se or algorithms from patentability. While the judgment of mathematical methods or business methods is comparatively easier, it is the computer programme per se or algorithms related inventions that require careful consideration of the examiner… If, in substance, claims in any form such as method/process, apparatus/system/device, computer program product/ computer readable medium belong to the said excluded categories, they would not be patentable.

 Even when the issue is related to hardware/software relation, the expression of the functionality as a “method“ is to be judged on its substance. It is well-established that, in patentability cases, the focus should be on the underlying substance of the invention, not the particular form in which it is claimed. The Patents Act clearly excludes computer programmes per se and the exclusion should not be allowed to be avoided merely by camouflaging the substance of the claim by its wording.

 4.5.2 Claims directed as “Business Method”: …

However, mere presence of the words such as “enterprise”, “business”, “business rules”, “supply-chain”, “order”, “sales”, “transactions”, “commerce”, “payment” etc. in the claims may not lead to conclusion of an invention being just a “Business Method”, but if the subject matter is essentially about carrying out business/ trade/ financial activity/ transaction and/or a method of buying/selling goods through web (e.g. providing web service functionality), the same should be treated as business method and shall not be patentable.”

(emphasis supplied in bold and underline)

In the face of it, the Indian Patent Office time and again suggests that one must look at the “substance” of the claim, without once clarifying how one is determined as “substance” of the claim. There is also language to suggest that one must assess what the claim is “essentially” about, though it is not entirely clear whether, by this, the Patent Office is directing Examiners to differentiate between “essential” and “non-essential” features.

In contrast, to the best of my knowledge (and I am open to any correction), the only precedent I am aware on claim construction is the Division Bench judgement of the Delhi High Court in Roche v. Cipla. I have my own disagreements with that judgement, though that is not up for discussion here. Roche stands for the proposition that one must undertake a “purposive” construction of the claims (though frankly, I believe the judgement is somewhat incomplete as far as what this means and, in fact, self-contradictory at a certain point – again, I digress).

Is the term “purposive” construction the same as looking at the “essential” features of the claim? Or is it about the “substance” of the claim? The Canadian Federal Court says purposive construction is about deciphering the “essential” features of the claim but different from looking at the “substance” of the claims. I do not believe that the claim construction principle of splitting between essential and non-essential elements, applies in India. Even in the UK, where this concept of differentiating between ‘essential’ and non-essential features originated, the principles have evolved. Everyone seems to talk about “purposive” construction, but the more I read, the more I believe that the specific tests that apply under this concept vary across courts (and across time). In all of this, has the vague and esoteric test mentioned by the Indian Patent Office, to look at the “substance” of the claim, logical or valid? I look forward to receiving some thoughts and comments.

Image from here

Lizzo, like many other pop stars, has been embroiled in multiple copyright disputes. Recently, she won a case she filed against songwriters Justin Raisen, Jeremiah Raisen, and Justin “Yves” Rothman. They had claimed that the superhit song ‘Truth Hurts’ was derived from ‘Healthy’, which they wrote with Lizzo, making them co-owners of ‘Truth Hurts’ too.

Judge Dolly M. Gee of United States District Court in Los Angeles ruled in favour of Lizzo, noting that, “as a matter of law, a joint author of one copyrightable work does not automatically gain ownership of a derivative work in which the joint author had no hand in creating.” Interestingly, the songwriters had made contradictory claims in their filings. In one filing, they had contended that ‘Healthy’ and ‘Truth Hurts’ were distinct entities, with one being derivative of the other. In another filing, they had alleged that the two songs were “part of an ongoing creative process that culminated in a single final product.”

I use this case to analyse the complexity of joint authorship claims in the music industry as well as the barriers to creation of follow-on works in the Indian context.

Legal Landscape

In India, all joint authors are also co-owners of the work created and have no exclusive rights to use such work without the permission of the other co-authors.

The Supreme Court in Malabar Fisheries Co. v. CIT, Kerala and the Allahabad High Court in Rajendra Kumar Sharma v. Brijendra Kumar Sharma, ruled that post dissolution of or resignation from a partnership, the partners are not entitled to use the co-created works without the permission of other partners. Similarly, the Allahabad High Court in the case of Nav Sahitya Prakash and Ors. v. Anand Kumar and Ors., went on to cite Halsbury’s Laws of England (3rd Edition, Vol, III, para 738) as follows:

“One joint author cannot reproduce the work himself, or grant licence to others to reproduce it, without the consent of other author or authors, but may by himself take proceedings for infringement against third party.”

This case was also quoted with approval by the Bombay High Court in Angnath Arts Pvt. Ltd. vs Century Communications Ltd., which held that a joint author “cannot exploit the copyright singly or individually. The exploitation of the copyright must be jointly made by the petitioner and respondents as they are the joint owner.”

As per Section 2(z) of the Indian Copyright Act, “work of joint authorship” refers to work “produced by the collaboration of two or more authors in which the contribution of one author is not distinct from the contribution of the other author or authors.” Indian courts have not defined the scope of this collaboration but the statute as per the explanation to Section 13(2) requires that in the case of joint authorship of a work, the conditions conferring copyright should be satisfied by all the authors of the work. However, in India, there is no requirement of a formal agreement for joint authorship and a legal relationship may arise solely on the basis of contributions of various actors. For the purpose of joint authorship, the contributions must be indistinguishable and a result of close and active intellectual collaboration with respect to the final product and not the nature of the work done as per the landmark case of Najma Heptullah v. Orient Longman Ltd.

Joint ownership under the statute has been interpreted to mean that one owner cannot exercise any right in the property owned without the consent of the other owners. Therefore, though Indian law does not extend ownership in the derivative to a joint author of an initial work who had no contribution in creating the derivative, the creation of derivatives would still require the permission of all joint authors of the initial work.

Having an agreement in place at the time of composition clarifies issues of ownership and rights allocation. In the film industry, there are clear stakeholders and rights are owned usually by the producer and eventually the label, pursuant to assignment agreements. Claims are likely to be interpreted in favour of the person who owns all the rights, i.e. typically, the producer or label which becomes the first owner of the sound recording as well as its underlying music and lyrics. A producer usually provides minimal creative inputs and merely finances the production of the song or film, soliciting advertisements, marketing and promoting the final product. All economic rights are commonly licensed to the producer to allow him to realise the profits of his investment. This centrifugal role of the producer has been upheld in the case of Indian Performing Rights Society v. Eastern India Motion Picture Association and more recently in M/s. Indian Record Manufacturing Company Limited v. AGI Music Sdn Bhd and Ors. (covered on the blog here). The composers and lyricists retain moral rights and the right to receive performance royalties, if registered with a copyright society (as per 2012 amendments to Section 18 of the Indian Copyright Act).

In contrast to this, in the independent music category, which pertains to music largely produced independently from commercial record labels or their subsidiaries, creators are becoming increasingly inclined to demarcate rights on paper, for instance splitting credit and royalties with a producer based on his contribution to the work.  Sandhya Surendran, a leading Indian advocate in the music, technology and internet sectors, notes that this has not been the trend so far because such agreements have been perceived to be cumbersome. However, with growing awareness of creator rights and royalties, indie artists are realising the importance of agreeing to certain things on paper, to ensure that there is no trouble at a later stage. Therefore, the concept of joint ownership is only going to increase in relevance in the context of independent music to ensure that artists and creators receive entitlements commensurate with their contributions.

Conclusion

If an agreement is in place at the time of the initial composition, then determining ownership in the derivative works would also be easier. However, given the improvisational and collaborative nature of songwriting, the creative and often indivisible effort of multiple persons such as lyricists, composers, songwriters etc., and the money and power wielded by the producer, negotiating these agreements may not always be easy or possible.

On the other hand, requiring the permission of all creators of an initial work to create derivative works, as required by Indian law (unlike U.S. law as enunciated in the ‘Truth Hurts’ dispute) can also harm downstream creators. The current copyright system and its notions of authorship assign a premium to ‘originality’ to the extent that ‘original’ authors, as designated by the system, become the owners of not just their works but also gatekeepers of works that borrow from their works for various reasons, including to re-contextualise initial works and challenge cultural hierarchies. Requiring permission from all joint authors before an existing work can be borrowed from and built upon, expands the copyright monopolies of the creators of the initial works and chills the creative endeavours of those (including, any but not all of the joint authors of the initial work) who want to engage dialogically with the work in question. Expansive economic rights that impede the creation of follow-on works, justified as incentives for creation of ‘original’ works need to be reconsidered since many artists consider their works to be a ‘conversation’ and achieve a sense of fulfillment and belonging by community engagement with their works. They consider dissemination of their work without hope of financial remuneration, as “simply the way that art gets made.” The Copyright (Amendment) Act, 2012 extended fair dealing for the purposes of ‘criticism’ and ‘review’ to ‘all works’ as per S.52(1)(a) of the Copyright Act, 1957, resultantly, covering even cinematographic films and sound recordings. Prior to the Amendment, this right was restricted to only literary, dramatic, musical or artistic works. As technologies for content creation have proliferated, consumers have become users of content for not just passive consumption but also follow on creation. Lawrence Liang had argued at the time of the 2012 Amendments that the statutory provision exempting ‘criticism and review’ drafted in the context of print media can be inadequate in exempting fair use of audio-visual works. This is because creative communities routinely re-contextualise existing videos and sounds, appropriating large amounts of these works with a view to disrupting existing meanings and creating new ones. Thus, fair dealing for the purpose of ‘criticism’ must import ideas from musical practices that conceptually favour a wider understanding of permissible appropriation than the narrower terrains signified by ‘criticism and review’. Otherwise, our ability to critically and creatively engage with our contemporary world (made known to us often through audio-visual media) is impeded, ultimately restricting our freedom of speech and expression.

This also underscores the need for more probing interdisciplinary scholarship that emphasizes the gap between the creative and economic realities involved in the creation of works in the music industry and the technicalities of copyright doctrine, with an aim to bridge this gap.

We’re pleased to inform you that DPIIT IPR Chair, NLU Delhi is organising an online roundtable on ‘The Global Implications of Unwired Planet v. Huawei: Lessons for India’s Evolving SEP Jurisprudence’ at 3 p.m. tomorrow (September 11, 2020). For further details, please read the announcement below:

Online Roundtable on ‘The Global Implications of Unwired Planet v. Huawei: Lessons for India’s Evolving SEP Jurisprudence’

September 11, 2020

Organiser: DPIIT IPR Chair, NLU Delhi

Online Roundtable: The Global Implications of Unwired Planet v. Huawei: Lessons for India’s Evolving SEP Jurisprudence

The roundtable aims to discuss the recent decision of United Kingdom’s Supreme Court in Unwired Planet v. Huawei. It will be organised by DPIIT IPR Chair at National Law University, Delhi. It will start at 3:00 pm IST on September 11, 2020 and will be for a duration of 90 minutes (including floor discussion /Q&A).

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

1. Mr. Adarsh Ramanujan (Independent counsel, Law Chambers of Adarsh Ramanujan)
2. Mr. Ashutosh Kumar (Associate Partner, Singh and Singh)
3. Mr. Dirk Weiler (Head of Standards Policy, NOKIA)
4. J Sai Deepak (Arguing Counsel, Supreme Court of India)
5. Nishant Sharma (Lead Counsel, IP and Litigation, Dobly Laboratries (TBC)
6. Rajiv Kumar Chaudhary (Partner, Halder & Associates)
7. Vishwas Devaiah (Professor of Law, Jindal Global Law School)

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

Location: Online

Access Details: Please log-in on Zoom application with the following credentials

Webinar ID: 933 4496 3503

Passcode: 766353

Link: https://zoom.us/j/93344963503?pwd=ZkJYMEd4bnRSZVAwWnZncEkxNzJMQT09

Registration Fees: No fee

Contact: ipr.chair@nludelhi.ac.in

Official link: https://nludelhi.ac.in/up-event1.aspx?id=35097

Please click here and here to view our posts on the UK Court of Appeals’ decisions in this case.

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We’re pleased to bring to you a guest post by Tanvi Sehgal, discussing the impact of the Covid-19 induced shift from theatrical release of films to OTT release on the producers’ share of earnings and proposing an amendment to the cinema hall exception to the provision on mandatory royalty sharing under the Copyright Act in light of this shift. Tanvi is a guest faculty at the Faculty of Law, Delhi University, where she recently submitted her PhD thesis titled ‘Revisiting Copyright Law in View of Contemporary Developments’.

When Covid-19 Shuttered Cinema Halls!: Should Producers Share Royalties from OTT Release of Films?

Tanvi Sehgal

Ever since the lockdown in late March, cinema halls have been eerily empty. With places of public entertainment only gradually reopening, there is little or no hope that cinema halls will see the hustle bustle they were earlier accustomed to, anytime soon. Since no one could have predicted this unusual turn of events, there were (like there would usually be) movies in the pipeline awaiting their release. Realizing that the pandemic is here to stay, producers of such films who had their finances at stake, decided to release them on streaming services such as Netflix, Amazon Prime Video, Hotstar etc. to name a few. 

The Change in the Primary Medium for Release of Cinematograph Films: Outlining the Issue

Amongst the many films that have been released on the web so far, some big releases starring stalwarts like Irfan Khan in ‘Angrezi Medium’ (which was his last ever!) and Amitabh Bachchan in Gulabo Sitabo, are a few notable ones. If not for this pandemic, these movies would have been block buster releases, creating a stir in cinema halls. But unfortunately, nothing of this sort happened and the producers were compelled to directly release the films (or re-release as in case of Angrezi Medium after its theatrical release was cut short) on streaming services such as Hotstar and Amazon Prime Video. Clearly, the cinema hall owners lost a big share of their yearly profits, but what is unknown is how much the producers lost by not being able to showcase their multi-starrers in a cinema hall.

In contrast with blockbuster theatrical releases, web series or films that are destined to be released on streaming services often have a small star cast with small set ups which makes the same cost efficient. This is quite unlikely for a regular, blockbuster Indian cinematograph film that has elaborate sets and a distinguished star cast to begin with and which under normal practice, is looking forward to a grand theatrical release. Consequently, the cost of producing such films is typically much higher (often, if not always) than the web series made solely for release on online platforms. Profits that producers earn in such cases is often directly related to how well the movies perform in the hall and for how long. In other words, box office earnings account for a significant portion of a producer’s earnings from a film. Having done well at the cinema halls, the producers get a second chance to recover their investments when the rights for the same cinematograph film are granted for television/digital premieres. Here again, the popularity of the film at the theatre allows them to bid high stakes for it. So, when producers of such blockbuster films are compelled to directly release such films on streaming services, they stand to lose parts of their profit that they would have otherwise earned by releasing it first in a cinema hall. A glimpse of the losses incurred by them can be viewed here. The streaming services are also aware that the producers presently have no better option than to release their films online, so they might not negotiate much with the latter.  Keeping in mind the flagrant spread of the pandemic and the predictions with regard to its subsistence, it seems like the producers will have to bear with these losses for long. 

Loss of Profits to Producers and 2012 Amendment to the Copyright Act

While the unrest caused due to do the pandemic is beyond anyone’s control, what makes the position of producers detrimental in this context, is a provision in the Copyright Act, 1957 (hereinafter, ‘the Act’) that was amended 8 years ago to pay royalties to authors of underlying works even after assignment of the same. The 2012 amendment of the Act, in order to safeguard the rights of lyricists and music composers whose works have been included in cinematograph films granted them under Section 18, an unassignable right to royalty to be shared on equal basis with their assignee (who in most cases is the producer of such cinematograph films) whenever their work is utilized. The only exception to such royalty sharing being when the cinematograph film is communicated to public in a cinema hall. This means that when a cinematograph film is being utilized to be shown in a cinema hall the producer of the film (mostly the assignee) need not share royalties with the authors of underlying works whose works have been included in such a film. The communication of a cinematograph film to public in a cinema hall and the earnings made by way of royalties thereof, are thus considered to be sole profit of the producer. Barring this particular instance, once the rights have been assigned by a lyricist or a music composer to the producer of a film, the former retains the right to receive royalties on equal basis, as and when their work is utilized by the assignee. What is noteworthy is the fact that the present situation (of having an embargo on cinema hall releases) makes the only exception to Section 18 also inapplicable, thereby causing a setback to producers!

If Application of the Exception was Less Stringent!

The provision under Section 18 when inserted was primarily included to allow authors of underlying works to have a constant source of income and to enable them to vindicate their rights as and when their work was utilized. With this, the struggle of the authors seems to finally have come to an end, on paper (the practical difficulties notwithstanding) and the provision has been a fair one.  From the language of the proviso to section 18, it may be presumed that producers (being assignees of such works) were given an exclusive share to profits from their earnings from the cinema hall – it typically being the first medium of communication of cinematograph films, and any subsequent earnings by way of utilization of the work via other modes/mediums were required to be shared with the authors. In this way, the interests of both producers (as assignees of underlying works) and authors (of such works who are creators of the work and deserve to be rewarded as and when their work was utilized) were balanced.

That said, considering the unprecedented situation that one is facing due to the Covid-19 pandemic, the fairness of such a provision has become dubious. With no chance of release of cinematograph films in cinema halls and the blockbusters being released directly on online streaming services, the producers are compelled to share royalties with authors of underlying works even when their first medium of communication to public of the film is via the web itself. Consequently, producers are deprived of exclusive earnings at any instance, in spite of them being the assignee of the rights in the works so incorporated, investing huge sums of money in the production of the film, and having already paid a lump-sum consideration to authors for the same. It may be argued that producers are financially in a better situation (than the authors) to bear the losses imposed by the pandemic. Even then, one cannot overlook the fact that what is contested is only exclusive benefits (for the producer as an assignee) for usage via the first medium of communication (which even the legislature in its wisdom provided for in the case of cinema halls) and that for any subsequent utilization the royalty sharing arrangement remains the same as ordained by the law.

Therefore, keeping in view the challenges imposed by the pandemic and also the recent trend of releasing movies online, I submit that instead of specifically applying the exception (of not paying royalties to authors of underlying works) to cinema hall releases only (as the first medium of communication), the exception should be made applicable to the first medium of communication of a cinematograph film be it a cinema hall or the web. Once the medium for first release has been chosen, and exclusive royalties by way of the same has been recouped, the assignees may continue to share royalties with the authors of underlying works for any subsequent utilization of their work. That is to say, if producers directly decide to release their films on the web (not having released it in the hall first) they would not have to share the royalties with authors of underlying works for its usage via this first medium, but a subsequent utilization, by way of, say, a television premiere of the same film would require them to abide by the royalty sharing arrangement under Section 18. Considering the longer duration for which films stay on the web in comparison to cinema halls and to prevent inequities in cases where the first and any subsequent medium of communication remains the same (i.e. for instance, in cases where the film is solely released on the web and there is no separate, identifiable subsequent medium of communication such as a television premiere or otherwise), the balance of interests as intended by the legislature can be maintained by fixing an outer time-limit during which, the royalties would be exclusive for the producer. Beyond this time frame, the royalty sharing may continue as ordained by law.

Such a change to the provision would be a sound one for all times to come, as releasing films on streaming services might become a regular practice (considering their popularity as a mode of communication and the ease to watch an uninterrupted show) even after the pandemic ends.

We’re pleased to bring to you a guest post by Yash More and Hitoishi Sarkar, discussing the Indian courts’ interpretation of what constitutes ‘use’ while adjudicating upon disputes concerning prior use of trademarks in light of the recent UK decision in MERCK KGaA v. MERCK Sharp. Yash and Hitoishi are 2nd year students at Gujarat National Law University, Gandhinagar.

Introduction

In May this year, the UK High Court of Justice in MERCK KGaA v. MERCK Sharp, while ruling on an alleged trademark infringement claim, considered what constitutes ‘use’ in the course of business under the trademark law. For those familiar with the nuances of trademark law, the definition of ‘use’ holds much relevance for Indian courts while adjudicating upon disputes concerning the prior use of trademarks under Section 34 of the Trademarks Act, 1999.

Earlier in March, the Delhi High Court in Peps Industries Pvt. Ltd. v. Kurlon Ltd. was called upon to adjudicate a similar question of law wherein it held ‘sales’ to be an essential criterion to claim the defence of ‘prior use’ under Section 34. (The aforementioned decision has been appealed before a Division Bench of the same court which refused to delve into the merits of the matter and directed the parties to arrive at an amicable settlement.) However, in MERCK KGaA, the UK High Court remarked that there could be ‘use’ in the course of trade without any actual sales which runs contrary to the approach taken by the Delhi High Court in Peps Industries.

The decision in MERCK KGaA has several takeaways for India, especially when examined from the touchstone of Section 34. In this post, we seek to analyse the vastly inconsistent interpretation of this provision in the Indian jurisprudence while juxtaposing them with several decisions from English courts.

Background

Merck Global, a German pharmaceutical company, entered into a co-existence agreement with its subsidiary, Merck US, that it can only use the Merck brand in the US and Canada, whereas Merck Global would use it elsewhere. In 2016, Merck Global initiated infringement proceedings against Merck US in the UK for trademark infringement based on their use of the trademark on various US websites, social media posts and email addresses that Merck Global claimed were targeting the UK market. The most interesting point discussed by the court was whether the activities of Merck US constituted ‘use’ in the UK in the course of trade.  The reason this was in dispute was that Merck US never actually sold any wares in the UK using the Merck brand. Merck Global argued that the advertisements issued by Merck US would establish in the mind of the average consumer a link between the sign constituting the company or trade name and the products.

What constitutes ‘First Use’?

In India, Section 34 of the Trademarks Act, 1999 states that the proprietor of a registered trademark cannot interfere with the use of any identical or similar mark if the person has been using the mark from an earlier date. In this context, the Supreme Court in S. Syed Mohideen v. P. Sulochana Bai had laid down that the rights of the prior user are recognised as superior to that of the registered user, and therefore, a registered proprietor cannot disturb or interfere with the rights of the prior user.

While trademark litigation in India often realms around the question of prior use of trademark, the jurisprudence on what constitutes ‘use’ under Section 34 is limited. Indian courts, for long, have struggled to delineate the meaning of ‘use’ pursuant to Section 34. This makes the decision in MERCK KGaA significantly important and interesting in the Indian IP domain. The issue remains largely unsettled with much back and forth from various high courts across the country.

The Delhi High Court in Revlon Inc. v. Sarita Manufacturing Co., held that the dissemination of knowledge of a trademark in respect of a product through advertisement in the media amounts to use of the trademark whether or not the advertisement is coupled with the actual existence of the product in the market. Similarly, in J.N. Nichols Limited v. Rose & Thistle and Anr., the Calcutta High Court explained that the use of a trademark does not postulate actual sale of the goods bearing such a mark. The ‘use’ can be in any form or way and does not necessarily mean and imply actual physical sale and even mere advertisement without having even the existence of the goods can be said to be a use of the trademark. This reasoning was also upheld later in Kabushiki Kaisha Toshiba v. Toshiba Appliances Co.

On the contrary, a single judge bench of the Bombay High Court in Kamat Hotels (India) Limited v. Royal Orchid Hotels Limited and Ors., opined that concept of continuous use emphasises that a right vests in a person when he puts his goods with the mark in the market and that mere adoption of a mark is not sufficient. Interestingly, the Bombay High Court in Kamat Hotels relied on the Supreme Court’s ruling in Hardie Trading Ltd. and Ors. v. Addisons Paint and Chemicals Ltd., where the apex court had in fact held that the term ‘use’ may be other than physical use and it should not be merely limited to physical use on the goods or to sale of goods bearing the trademark. Likewise, this market availability test has been relied upon by the Supreme Court in several decisions such as N.R. Dongre and Ors. v. Whirlpool Corpn. and Milmet Oftho Industries and Ors. v. Allergan Inc.

The Division Bench of the Delhi High Court in Pioneer Nuts and Bolts Pvt. Ltd. v. M/s. Goodwill Enterprises, most authoritatively ruled on this issue. In this case, while expounding on the concept of ‘use’ under Section 34, it dismissed the contention of the defendants that merely issuing advertisements bearing the impugned trademark would confer upon it preferential rights. It explained that reliance on Hardie Trading is misleading because that case concerned rectification of the trademarks register under Section 46 of the Trademarks Act and the question of a prior continuous user under Section 34 was not an issue for adjudication before the court. Similarly, the bench negatived the verdict in Kabushiki Kaisha Toshiba reasoning that the advertisements in Toshiba were coupled with the fact of maintenance of service centres in India for the products imported into India. It was not as if the trademark was not used in relation to the goods. In Peps Industries, the Delhi High Court upheld its earlier reasoning in Pioneer Nuts.

How have UK Courts defined ‘First Use’ ?

Indian courts have always relied upon the trademark law in UK as a source of guide to adjudicate upon important questions of law. In Harold Radford & Co. Ld’s Appl, it was held that the mere issuance of an advertisement would not constitute a use of the mark. It was observed that otherwise the proprietor of a trademark might, without having any goods to offer, advertise its marks at periodical intervals and thereby prevent any attack being made upon the mark. It was emphasised that use of a mark in advertising media must be concurrent with the placing of the goods in the market if it is to be regarded as a trademark. Interestingly, in REVUE Trade Mark the court refused to endorse such an interpretation of the law and opined that “that it is not necessary that the goods must exist concurrently with the advertisements.” Thus, the recent decision in MERCK KGaA implicitly affirms the position of law laid down in REVUE Trade Mark by ruling that that there could be ‘use’ in the course of trade without any actual sales.

Conclusion

In MERCK KGaA, the essential finding was that there could be ‘use’ in the course of trade without any actual sales. Juxtaposing the legal pronouncements in Hardie Trading and J.N. Nichols, the authors believe that the position of law is similar in India. The argument that a business has not launched its products under the trademarks and thus is not entitled to disturb the honest and bonafide use of a prior adopted trademark stands unsustainable as use of a trademark does not necessarily mean and imply actual physical sale.

However, the contrary approach upheld in Pioneer Nuts & Bolts and Peps Industries, which not only necessitated the physical use of mark but also logically rebutted the cases which held otherwise, makes it a daunting task for the courts to determine the legality of this issue authoritatively. It is extremely crucial for the courts to clear the muddy waters and settle the flip-flop in this regard as the Bombay High Court in Kamat Hotels had ruled that that “a right vest in a person when he puts his goods with the mark in the market” while interpreting Section 34 of the Trademark Act. However, it had reiterated the ruling in Hardie Trading where the Supreme Court had refused to endorse such an interpretation of the law.

Topical Highlight

When Covid-19 Shuttered Cinema Halls!: Should Producers Share Royalties from OTT Release of Films?

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In a guest post, Tanvi Sehgal weighs in on the impact of the COVID-19 induced shift from theatrical release of films to OTT release on the producers’ share of earnings. She explains how the pandemic shutting down movie theatres for such a long duration has forced producers to release their movies on OTT platforms such as Netflix, Amazon Prime and Hotstar. According to her, movies intended for a theatrical release tend to involve significantly larger investments than those meant for OTT platforms or television as the former brings in huge profits. She elaborates how the 2012 amendment has made equal sharing of royalties between producers and the authors of underlying works mandatory except in case of cinema hall showings of the film. In these unprecedented times, this provision is harming the producers as they are not making enough profits and are being compelled to share royalties. Tanvi suggests tackling this by amending the law to exempt royalty sharing for the first medium of release, whichever it may be. To prevent inequities in cases where the first and any subsequent medium remains the same, the legislature may fix an outer time-limit during which the royalties would be exclusive for the producer.

Thematic Highlight

Interim Injunctions: What’s The Damage? – Part II

This post is a follow-on to Swaraj and Praharsh’s previous post, where they summarized some of the issues with interim injunctions in high-tech patent matters. They discussed a number of cases to emphasize that the granting of an interim injunction necessarily requires a discussion of the factors i.e. prima facie case, balance of convenience and irreparable hardship (and public interest when necessary), and that the same must not be granted as a matter of routine.  When courts must provide interim injunctions, they suggest two safety measures to counter-balance the limitations of interim injunctions. Firstly, a security bond obligating the plaintiff to deposit an amount upfront for the potential loss to the defendant’s business, and, potential damages to public interest, may be maintained to provide remedy to the defendant in case of wrongful interim injunction. It would also deter the plaintiff from approaching the court with demands of interim injunctions except in apt situations. Secondly, on institution of a counter suit for recovery of damage by the defendant after final determination of the previous suit, the party may be awarded compensation where a temporary injunction has been granted on insufficient grounds. They conclude by revisiting practices in other jurisdictions and suggesting four possible measures that could support these two discussed safeguards.

Other Posts

Store Layouts: The New Trademark on the Block

Photograph of ‘Discussion Area Zone’

In this post, I analysed store layout trademarks. I begin by explaining what these trademarks protect and how they are treated by different trademark regimes including the US, EU and finally India. Using U & Us Home Studio’s ‘Discussion Area Zone’ as an example of a layout situated inside a showroom, I point out how consumers would not have access to such a zone until they actually enter the outlet, emphasizing that  layout trademarks need to perform the basic source-indication function. I then explain how these marks would meet the graphical representation requirement if pictorial representations depicting accurate proportions are submitted during filing. Lastly, I discuss functionality doctrine as a challenge to layout trademarks, as the articles combined together to obtain the unique arrangement might be those that are necessary to obtain specific technical functions. While a combination of functional and non-functional elements can still be distinctive, it is necessary to prove that the manner in which the features are combined amounts to more than simply the ‘sum of its parts.’ I conclude that the unique nature of layout trademarks doesn’t present any obstacles that cannot be overcome by use of safeguards present in Indian trademark law.

NUALS’ 6th CIPR National Essay Writing Competition [Submit by Oct 4]

We informed our readers that the Centre for Intellectual Property Rights, National University of Advanced Legal Studies, Kochi is organizing the 6th edition of their National Essay Writing Competition for law students on the theme ‘Innovate for a Green Future: Role of IP Rights in Encouraging Innovation and Creativity’. The deadline for submission of essays is October 4, 2020.

Yves Choueifaty v. Attorney General of Canada: An Interesting Development from Canada on Claim Construction and Patent Office Manuals

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Adarsh analysed the Federal Court of Canada’s judgment in Yves Choueifaty v. Attorney General of Canada, concerning the patentability of computer-related inventions (CRI). He explains how the Court concluded that the Canadian Patent Office’s “purposive manner” of construing the claims as prescribed in the Manual was erroneous, explicitly holding that the principles of claim construction were identical, whether the matter was being decided by a Court or by the Patent Office. The Federal Court expressly differentiated between the “substance of the invention” approach and the “purposive” construction approach. It held that the latter required the claim be construed based on its “essential” features for which both the inventor’s intention and the perspective of the PSITA were relevant. Adarsh emphasizes that claim construction principles cannot vary between the Patent Office and courts, although practice in the US allows for this. He goes through the Indian Patent Office’s CRI guidelines and Roche v. Cipla and questions whether “purposive” construction as expressed by the court is the same as looking at the “essential” features of the claim? He concludes that the claim construction principle of splitting between essential and non-essential elements, does not apply in India, instead the specific tests that apply under this concept vary across courts.

Lizzo’s Copyright Victory in Truth Hurts: Joint Authorship and Follow-on Works in the Music Industry in India

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Anupriya discussed Lizzo’s victory against three songwriters who had claimed that her super-hit song ‘Truth Hurts’ was derived from ‘Healthy’, which they wrote with Lizzo, making them co-owners of ‘Truth Hurts’ too. Analysing Section 2(z) of the Copyright Act, Anupriya explains that in India, while ownership does not extend to the derivative of a jointly authored work when the co-author had no contribution in creating the derivative, the very creation of derivatives would still require the permission of all joint authors. In the film industry, the assignment of rights to the producer and eventually the label could mean that copyright claims are likely to be interpreted in their favour. In contrast, creators of independent music are becoming increasingly inclined to demarcate their rights on paper. She then argues that requiring permission from all joint authors before an existing work can be built upon, impedes creative engagement as many artists consider their works to be a ‘conversation’ and achieve a sense of fulfillment and belonging through community engagement in these works. Finally, she suggests that statutory fair dealing for the purpose of ‘criticism’ must import ideas from musical practices that conceptually favour a wider understanding of permissible appropriation than the narrower terrains signified by ‘criticism and review’.

Online Roundtable on ‘The Global Implications Unwired Planet v. Huawei: Lessons for India’s Evolving SEP Jurisprudence’ [September 11]

We also informed our readers about the online roundtable conducted by DPIIT IPR Chair, NLU Delhi on 11th September on the global implications of the UK Supreme Court’s decision in Unwired Planet v. Huawei and the Lessons for India’s evolving SEP jurisprudence that was conducted on.  Our earlier posts on UK Court of Appeals’ decisions in this case can be viewed here and here.

Much Ado about ‘Use’: UK Decision Rekindles Debate under Indian Trade Mark Law

In a guest post, Yash More and Hitoishi Sarkar discussed the Indian courts’ interpretation of what constitutes ‘use’ while adjudicating upon disputes concerning prior use of trademarks in light of the recent UK HC decision in MERCK KGaA v. MERCK Sharp. They explain that the UK HC held that to constitute ‘prior use’, actual sales in the market are not required. It rejected the argument that a business that has not launched its products under the trademarks is not entitled to disturb a registered trademark. They contrast this with Delhi HC’s recent decision in Peps Industries v. Kurlon, which held ‘sales’ to be an essential criterion to claim the defence of ‘prior use’ under Section 34 of Trade Marks Act. They discuss several judgments delivered by the Delhi, Calcutta and Bombay HCs on the interpretation of ‘prior use’, as well as the Supreme Court’s decision in Hardie Trading and Ors. v. Addisons Paint and Chemicals. They suggest that the jurisprudence is fairly consistent in not requiring proof of sales to confirm prior use, with the only exception of Delhi HC which has created confusion in this regard.

Other Developments

Decisions from Indian Courts

• Delhi High Court, in Mittal Electronics v. Sujata Home Appliances, applied the Supreme Court’s ratio in Nandhini Deluxe v. Karnataka Co-operative Milk Producers Federation and modified its ad-interim injunction noting that even though plaintiff is the prior user of the mark ‘SUJATA’, for the goods mixer, grinders, blenders, however, for the goods water filters, water purifiers and RO System, the licensor and director of defendant No.1 is the prior registered owner of the mark ‘SUJATA’. [September 9, 2020]
• Delhi High Court, in Inter Ikea Systems Bv v. Viki Furniture, awarded a temporary injunction restraining the defendant from infringing the copyright of the plaintiff as also passing off their goods as that of the plaintiff through their website www.vikifurniture.com and products listings in www.flipkart.com and other e-commerce portals. [September 9, 2020]
• Delhi High Court, in Designarch Consultants v. Jumeirah Beach Resort LLC, a case concerning infringement of BURJ AL ARAB by plaintiff’s BURJNOIDA trademark, directed the till the defendant to give atleast seven days’ prior notice to the plaintiff before initiating any proceedings including legal proceedings in any court claiming infringement and/or for passing off the defendant’s mark, logo or the shape by the plaintiff. Defendant was also restrained from extending any threat to the plaintiff. [September 10, 2020]

Other News from around the Country

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  T-Series has issued copyright infringement notices to many social video platforms including Bolo Indya, Mitron, MX Player’s Takatak, Triller and Josh for using its copyrighted songs and videos on their platforms, asking each of them to pay around Rs 3.5 crore in damages. Nikhil’s post on T-Series’ recently filed suit against short-video app Roposo can be viewed here.

• The Department of Science and Technology’s latest Science & Technology Indicators (STI 2019-20) have revealed that 76% of patents filed in India in the last 13 years were by foreign companies.
• A piece in IPRMENTLAW discussed the DPIIT’s recent call for a stakeholders consultation meeting to discuss the various aspects pertaining to registration of multiple copyright societies as opposed to single copyright society in a single class of work.
• Music Composers Association of India has confirmed issuing an opinion in favour of composer Pranav Ajayrao Malpe, whose’ song Aayenge Hum Vapas, the anthem of the upcoming season of IPL 2020, has been accused by rapper Krishna Kaul to be a copyright violation and plagiarism of the latter’s song Dekh Kaun Aaya Vapas. Kaul has responded by stating that MCAI has no legal authority under Copyright Act.
• The Tea Board of India has warned of legal action against those gardens in the Darjeeling hills which process and sell tea leaves from outside and label them as the GI-tagged Darjeeling Tea.
• A piece in The Better India discusses cases of traditional Indian healthcare remedies and attempts to patent them.

News from around the World

• State Attorney Generals in the USA have urged the federal government to exercise its march-in rights under the Bayh-Dole Act (similar to compulsory licensing in India) against Gilead to ensure that Americans can access sufficient supplies of Remdesivir during this pandemic and at affordable prices.

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• A court in Texas, USA has ruled that Apple must pay more than $500 million in damages and interest for 4G patent infringements held by intellectual property company PanOptis.
• The US International Trade Commission has launched a Section 337 investigation into whether certain Apple’s mobile devices and laptop computers infringed patents held by Japan’s Maxell Holdings.
• UKIPO has denied registration to trade mark featuring the words ‘THE ROYAL BUTLER’, sought by Prince Charles’ former butler on grounds of possibility of confusion as to Royal patronage.
• The Advocate General of the European Court has submitted an opinion in case C‑637/19 BY v. CX that electronic transmission by a party to proceedings of copyrighted material as evidence to a court does not constitute a “communication to the public” or a “distribution to the public” in accordance with Article 3(1) and Article 4(1) of Directive 2001/29/EC.
• Members of Europe’s creative industry have criticised the European Commission’s consultation on new Article 17 of the Copyright Directive for departing from the original objective of providing a high level of protection for rights holders and creators and to create a level playing field in the online Digital Single Market.

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• Nine people in Shanghai were sentenced up to six years in prison on Wednesday for infringing on the copyright of Danish toy maker LEGO. The toys the group designed, produced and sold were under the brand name LEPIN, whose packaging, design and color were all similar to that used by LEGO.
• Japan’s Sharp Corp said that it has won a patent infringement lawsuit relating to mobile communications technology against Daimler in Germany.
• Myanmar’s Ministry of Commerce has urged business owners to register trademarks in accordance with the new Trademark Law to streamline the process of shifting from first-to-use to first-to-file system.

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In an interesting scenario that perhaps adds to the mounting pile of evidence of ex-parte interim injunctions being problematic, the Delhi High Court on 9th September, 2020, modified an ex-parte interim injunction order after finding that the plaintiff concealed material facts during the hearing. The initial order had estopped the defendants, Sujata Electronics (defendant no. 1), its manufactures (defendants no. 2 & 4), and its dealers (defendant no. 3) from manufacturing, importing, selling any products under the mark ‘SUJATA’. And the recent order modified the injunction, permitting the defendants to continue to sell and manufacture 3 specific products i.e. “water filters, water purifiers and RO systems” bearing the mark ‘SUJATA’ while keeping the terms of injunction intact against the use of the trademark on any other products. The court also directed for returning the goods seized by the local commissioners, back to the defendants.

The court passed the initial ex-parte interim injunction, seemingly under the impression that the plaintiff (Mittal Electronics) held exclusive proprietary rights over the mark under different classes. However, the defendant later appraised the court that plaintiff has concealed the fact that defendant no.1 too owned the mark ‘SUJATA’, under class 11 (Apparatus for lighting, heating, steam generating, cooking, refrigerating, drying ventilating, water supply and sanitary purposes) for use over water filters, water purifiers and RO systems!

In this post I shall highlight some of the key findings of the court, specifically focusing on the clean hands doctrine and question of confusion in minds of public.

Background

The plaintiff claims to have adopted the trademark ‘SUJATA’ in 1991 from its predecessor, who had originally adopted the mark in 1980. The plaintiff says it is in the business of manufacturing and selling a variety of electrical goods and home appliances and have trademark registrations under classes 7, 8, 9, 11, 35 (Note: The application under class 11 (for lighting, refrigerating, drying, water supply and sanitary purposes including water filters, water purifiers and RO systems) was made in 2014).  As per their submissions, the plaintiff came to know about the defendant’s use of an identical mark when one of its technicians was called to repair a geyser bearing the mark ‘SUJATA’ and realised that it wasn’t the one manufactured by the plaintiff. Consequently, the plaintiff instituted a suit on 06/02/20, seeking permanent injunction against the defendant from manufacturing, purchasing or selling home appliances and other accessories under the mark ‘SUJATA’ or ‘Star SUJATA’ and also filed an application for interim injunction. The plaintiff also asked the court to declare its marks as “well known” and for delivery up, rendition of accounts, damages etc.

The court, through order dated 7th February, 2020 (pdf), had held that the plaintiff made a prima facie case and if no ex-parte ad-interim injunction is granted, it would suffer irreparable loss. The court also held that balance of convenience lies in favour of the plaintiff and against the defendants. Fulfillment of the above three factors is the condition precedent for a court to pass a valid interim injunction. While the order elaborates the prima facie case, the reasons for ‘balance of convenience’ and ‘fear of irreparable injury’ seem to be missing. Premises of the defendants were then inspected and goods bearing the impugned mark were seized. The defendants promptly filed an interim application, seeking variation in the interim injunction order granted by the court, permitting the defendants to manufacture and trade in water filters, water purifiers and RO systems bearing the mark ‘SUJATA’.

Suppression of the Material Facts by the Plaintiff

The defendant alleged that the plaintiff has suppressed a few material facts to get an ex-parte injunction in its favor. The defendant appraised the courts that:-

• A director of defendant no. 1 (Mr. Rajesh Bansal) owns a similar mark ‘SUJATA’ under class 11, bearing no. 2337951, since 2012. The proprietor’s name in the application is “Rajesh Bansal Trading as Luxmi Enterprise” and the location of the proprietor is Bhatinda, Punjab (Status report pdf).
• The Plaintiff didn’t file any opposition to the above registration.
• Rajesh Bansal, the director of defendant no. 1, in 2014 opposed the plaintiff’s later application, for registration of the mark ‘SUJATA’ under class 11, in 2014. However, the opposition was ultimately abandoned (pdf) and mark was granted in favor of plaintiff.

(Side note: Interestingly, the defendant’s application for registration of the mark ‘star SUJATA’ under class 11, was rejected on ground of similarity of the marks with plaintiff’s prior registered trademarks.)

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The plaintiff responded saying that despite due diligence there was no way it could have established that both Rajesh Bansals (The one who opposed its application /holds proprietary rights over the mark ‘SUJATA’ under class 11 and the director of defendant no. 1) are the same.

The court rejected this, holding that the master data of the defendant no. 1 (pdf) which is available on the Registrar of Companies’ website clearly shows that Mr. Rajesh Bansal is one of the directors of the defendant no. 1. The court acknowledged that the addresses of Mr. Bansal in both the documents are different, but ultimately held that “the fact that Rajesh Bansal was one of the directors of defendant no. 1 was sufficient for the plaintiff to have carried out further investigation…particularly in view of the fact that due to earlier objections before the Trade Mark Registry, plaintiff was aware that one Rajesh Bansal through has a registration of mark ‘SUJATA’ in his favour.”

The court also noted that the plaint was filed on a complaint of a geyser and yet sought injunctions over products like water purifiers, RO systems despite the fact that it has neither made/ sold any of the three products nor have made any specific claims in the plaint about such products! This also makes one wonder as to why this was not noted in the initial order, prior to granting an ex-parte injunction over these!

Court’s Analysis of the Clean Hands Doctrine

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It is notable that power to issue interim injunctions is a discretionary but equitable power, and equity expects the claimant to appease the court with all known material information so that courts may decide on the issue after a fair assessment of the situation. On this point, the court in Eveready v. Sanjay Chadha held that the court would be justified in withdrawing an interim relief if the party in question withheld material information.

In the present case, the court relied on Kishore Samrite v. State of Uttar Pradesh & Ors. to assess the “doctrine of clean hands”  reminding  litigants of their obligations while approaching the court stating “the people, who approach the court for relief on an ex parte statement, are under a contract with the court that they would state the whole case fully and fairly to the court and where the litigant has broken such faith, the discretion of the court cannot be exercised in favour of such a litigant.”  The court then relied on Charanjit Thukral & Ors. v. Deepak Thukral & Ors. to recall that “Where plaintiff does not act bona fidely and does not put every material facts before the Court, the Court is within its inherent power to refuse to grant him injunction, even though there might be facts upon which injunction might be granted.”

On Question of Confusion

The court discussed at length whether modifying the injunction would result in confusion in the minds of the public, relying on FDC Limited, Larsen and Toubro Ltd., S. Syeed Mohideen and other cases. The court ruled that there is nothing in the plaint claiming that any customer was deceived into buying the defendant’s products as that of the plaintiff. The only bone of contention was with regard to geysers, on which the defendant is not seeking modification. The court held that the products of the parties are different, regardless of the same class of registration and also took note of the fact that regardless of the registration by the plaintiff under class 11, it hasn’t produced any evidence towards its use of the mark and neither had done anything to rectify the defendant’s mark, prior to institution of the suit. The court relied on  Vishnudas Trading As Vishnudas and M/S. Nandhini Deluxe and held that “the proprietor of a trade mark cannot enjoy monopoly over the entire class of goods and, particularly, when he is not using the said trademark in respect of certain goods falling under the same class.”

Conclusion

Though the court’s modification of the interim injunction is appropriate, it is perplexing to think that despite virtually reprimanding the plaintiff for approaching the court with unclean hands, the court didn’t take any measures against it. After all, the plaintiff wasn’t manufacturing any water purifiers or RO systems and thus will not be affected by modification in the interim injunction. It was the defendants who were barred from manufacturing and selling their products for approximately 6 months. One recalls the Supreme Court’s order in the Ramrameshwari Devi v. Nirmala Devi (covered here by Shan), where it had expressly held that “If an injunction has been granted on the basis of false pleadings or forged documents (which is very often the case in India) courts must impose costs on the litigants”!

Further, there is another question that the court does not seem to have addressed: As mentioned above, the plaintiff had asked that its mark be declared a well-known mark, a legal term that carries certain connotations. Though the court did not discuss this, it seems to have accepted this in para 8 of the ex-parte injunction, where it says in passing, “…now achieved the status of well known mark”. The present order does not clarify how this came to be, nor whether it still stands in light of new material facts.

Let’s wait and see how the rest of this case plays out!

P.S: I would like to thank Swaraj for his valuable inputs on this piece!

We’re pleased to inform you that the NUALS Intellectual Property Law Review is inviting contributions to the third volume of the journal. The deadline for submissions is December 15, 2020. For further details, please read the call for papers below:

Call for Papers: NUALS Intellectual Property Review (Vol. 3)

The NUALS Intellectual Property Law Review (ISSN 2582-4244) is a peer-reviewed, double blind and open access journal, operating under the aegis of the Centre for Intellectual Property Rights (CIPR), NUALS. The Journal, being an exposition of contemporary developments in intellectual property law, encourages authors to explore the latest developments in the field, while also giving readers an insight into overlooked areas of the law. The Advisory Board of the Journal includes Prof. T Ramakrishna, Prof. (Dr.) V. C Vivekanandan, Prof. (Dr.) G B Reddy, Prof. (Dr.) Bismi Gopalakrishnan, Dr. Arul George Scaria, Adv. Swapna Sundar, Adv. Manoj Pillai, Adv. Elizabeth Puthren and Adv. Raghul Sudheesh.

We invite contributions for the Third Volume of the Journal from academicians, practitioners of the legal profession, researchers, post-graduates and under-graduate students of law. Contributions may be in the form of articles, essays, notes, commentaries and reviews. Submissions will be put through an exhaustive review process and published on the official website of the Journal (lawreview.ciprnuals.in), University (nuals.ac.in), as well as CIPR (ciprnuals.in).

Categories of Submissions:

• Articles: 5000- 7000 words
• Essays: 3000-5000 words
• Notes, Comments and Reviews: 1000- 3000 words

Word count is exclusive of footnotes. Longer submissions will be considered at the discretion of the editorial board.

Guidelines for Submission

1. All submissions are to be made in the electronic form, and must be sent to ciprlawreview@nuals.ac.in. Submissions must be received on or before 15^th December, 2020.
2. All submissions must include an abstract not exceeding 300 words.
3. Submissions must be accompanied by a brief note including the following information:
   • Name
   • Postal Address
   • Name of Institution
   • Course of Study (if applicable)
   • Academic Year
4. In submission of work, the author undertakes that the work is original and has not been submitted, accepted or published elsewhere.
5. All submissions will be subject to a plagiarism check at the first stage of evaluation. If work is found to be unoriginal or plagiarised (including self-plagiarism), it will be rejected at the first instance. The Journal also reserves the right to revoke the acceptance upon a finding of plagiarism at any stage of the submission or editing process.
6. Co-authorship is allowed for a maximum of two authors.
7. Authors will be intimated of receipt of submission within one week from date of submission.

Formatting Guidelines

1. The submission must be made in .doc/.docx/.odt format only. PDFs of submissions will not be accepted.
2. The body of the manuscript must be according to the following specifications:
   • Times New Roman font
   • Font size 12
   • Line spacing 1.5
3. Submissions must follow the Bluebook (20^th edition) style of citation. Footnotes must be in Times New Roman, font size 10 with single line spacing.

On acceptance of submission, authors will be issued a certificate of publication.

Contact

For any queries or clarifications, reach out to us at:
Dr. Athira P S (Editor-in-Chief)  ciprlawreview@nuals.ac.in
Mr. Suhan S (Editor-in-Chief, Student Board of Editors) +91-99475 33721

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

In a recent landmark ruling, the U.K. Supreme Court (here) dismissed the appeals filed by implementers of technical standards, i.e. Huawei, ZTE, against standard essential patent (SEP) holders, i.e. Unwired and Conversant.  This is a well-known dispute and has previously been covered by this blog here, here, and briefly touched upon here.

In this Part I, I will focus on summarising the ruling, reserving my critique/comments to Part II.

Issues

 The Supreme Court was asked to answer the following questions:

1. Jurisdiction of English courts to grant an injunction concerning UK SEPs with the proviso that it would automatically stand vacated upon entering of a FRAND global license, and the jurisdiction to settle terms of such FRAND global license;
2. Whether the English courts were forum non conveniens;
3. The meaning of the “non-discrimination” obligation in FRAND;
4. The nature of the FRAND license that an SEP holder must offer before initiating infringement suits, in accordance with the ECJ’s judgement in Huawei v. ZTE;
5. The circumstances when a Court can award damages in place of an injunction. 

Policy considerations/factors underpinning the judgement

On reading the judgement as a whole, the U.K. Supreme Court was cognizant of the following policy considerations/factors (paras 4, 10, 15, 36):

1. potentials of abuse by a SEP holder (the so-called ‘hold-up’ situation);
2. denial by implementers of the SEP holders’ legitimate rights;
3. the industry practice is to negotiate worldwide licenses because it is not rational to seek licenses, country by country;
4. the prohibitive cost of litigating the validity and essentiality of SEPs, territory by territory.

Finding on issue 1

1. It is relevant, among others, to consider industry practice in deciding what amounts to a FRAND license (para 9).
2. There is a lack of ex-ante clarity to both SEP holders and implementers since it is not feasible to test the validity and essentiality/infringement of the patents involved in a standard, for each country. Therefore, it is industry practice to take a worldwide license to SEPs because it “purchases certainty” (para 60).

3. The possibility of an injunction is a necessary component of the balance required because it provides the implementers with a “strong incentive” to accept FRAND licenses. The counterbalance is that the SEP holder is limited from seeking an injunction, being bound by an irrevocable FRAND undertaking (para 61).

4. The ETSI IP policy, clause 6 of which memorialises the undertaking to offer FRAND licenses on SEPs, is intended to have an international effect (para 62).

5. A national Court settling/directing FRAND global licenses does create risks of forum shopping, conflicting judgements and applications for anti-suit injunctions. However, that is simply the inevitable consequence of the policies adopted by standard setting organisations (SSOs) in, adopting a FRAND undertaking with international effect, but not prescribing an international tribunal or forum to determine the terms of such FRAND licenses (para 90).

6. The relevant stakeholders are welcome to devise methods to have this resolved through other means, such as by providing for an international tribunal or forum or by identifying respected national IP courts or tribunals as a chosen forum (para 90).

7. While English courts certainly do not have the jurisdiction to rule on the validity or infringement of a foreign patent (para 63), English courts certainly do have jurisdiction to rule upon whether a U.K. SEP is valid and/or infringed (para 90). Similarly, both parties have invited the U.K. Court to rule upon and enforce contracts which the SEP holders have entered into (i.e. the ETSI IP policy) (para 90).

8. A conspectus of foreign jurisprudence on the subject of jurisdiction shows that (para 84):

• U.S. courts were willing to consider FRAND obligations on a global basis, grant an injunction of a national SEP in the implement refuses a license on FRAND terms, and determine the FRAND terms on a worldwide basis;
• U.S. courts also typically consider examples of real-life commercial negotiation when fixing FRAND terms, though the determination of a FRAND license by one national Court does not preclude an implementer from challenging foreign patents on invalidity and/or essentiality;
• German courts also recognise worldwide FRAND licenses and consider that an implementer’s counter-offer our national license confined only to Germany might not be FRAND. Thus, German courts are willing in principle to grant an injunction on a national SEP if the implementer refuses a license on FRAND terms;
• German courts typically consider industry practice when determining the terms of a FRAND license;
• The position is uncertain in China. Chinese courts have neither rejected the possibility of a worldwide license, nor have they expressly declined jurisdiction to determine a worldwide license.

9. Implementers are also sufficiently safeguarded because the implementer can insist on the following as part of the FRAND license (para 64):

• reserve the right to challenge the validity and/or essentially of the patents/sample thereof in the relevant national/foreign Court;
• require that the license provide a mechanism to alter the royalty rates as a result; and
• require that the license provide a mechanism to recover sums paid as royalties to that extent.

10. There is no legal basis for treating non-practising entities or patent assertion entities holding SEPs any differently from other SEP holders because in either case, they are bound by the FRAND undertaking (para 89). In any event, this is not a question concerning jurisdiction.

Finding on issue 2 

11. This argument was considered moot because the principle of forum non conveniens can only be raised if there is another forum having jurisdiction to determine the dispute (para 96). On facts, however, it was found that Chinese courts do not, at present, have jurisdiction to determine the terms of a global FRAND license, at least in the absence of agreements by all parties that they should do so (para 97).

Finding on issue 3 

12. The “non-discriminatory” requirement is not equal to an MFN clause (para 106). The ETSI specifically considered, but subsequently rejected, an MFN condition (para 116-119).

13. The FRAND undertaking imposes a “single unitary obligation” and thus, “non-discriminatory” aspect of the undertaking provides focus to what may be fair and reasonable. As far as royalty rates, this implies that it must be a “fair market price” that is “generally available” for any market participant, and reflect the “true value” of the SEPs to which the licence relates and without adjustment depending on the individual characteristics of a particular market participant (paras 112-114). The role of the non-discrimination limb is to ensure that the fair and reasonable royalty “is one which does not depend on any idiosyncratic characteristics of the licensee” (para 122).

14. Differential pricing occurs even in a voluntary license and can also be pro-competitive. It is difficult to interpret the ETSI IP policy so strictly to impose an obligation of identical royalties in all cases (paras 123-124). If such differential pricing is anti-competitive, there is a separate authority/forum to address that issue (para 124).

15. In the facts of the case, the alleged benchmark agreement with Samsung was practically a “fire sale” licensing deal. If the same is applied across all implementers, it removes the incentive amongst implementers to take advantage of such a market opportunity. Similarly, it eliminates the ability of SEP portfolio owners to use such opportunities to raise funds without permanently devaluing the portfolio (para 126).

P.S: There is some doubt on what to Court meant as far as equality in royalties amongst various implementers. The overall tenor of the judgment suggests differential licensing rates would not ipso facto mean a violation of FRAND terms. On the other hand, there is one specific sentence where the Court stated: “…Put another way, there is to be a single royalty price list available to all” (para 114). In my reading, perhaps the sentence requires correction since the Court really wanted to say the opposite. Nevertheless, this is likely to be a bone of contention.

Finding on issue 4 

16. While the ECJ in Huawei v. ZTE requires “notice or prior consultation” by the SEP holder before initiating infringement suit, the exact nature and content of such notice/consultation were left open by the ECJ and depended on the circumstances of each case (paras 151-152. 157).

17. On facts, Unwired has complied with Huawei v. ZTE because Unwired was willing to license on whatever terms the Court determined were FRAND. In contrast, Huawei was only prepared to take a license with the scope specified by itself; Huawei never made an unqualified commitment to enter into a FRAND license (paras 144-158).

Finding on issue 5

18. The Court took note of the concern expressed in the eBay case (U.S. Supreme Court) that non-practising entities may use the threat of injunction as a means of charging exorbitant fees and better leverage in negotiations. However, while this may be relevant in other cases, it was not relevant for SEPs where there was a FRAND undertaking (para 164).

An award of damages is unlikely to be an adequate substitute in SEPs for the simple reason that it would be impractical for the SEP holder to bring proceedings in every country where the patent has been infringed (para 166). This would actually incentivise implementers to infringe rather than take FRAND licenses (para 167).

Please click here to view Part II of this post. 

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

In Part I, I had summarised the U.K. Supreme Court’s ruling in the Unwired case. In this Part II, I share my critique of the judgement. While I have several comments, I have restricted myself to the principal ones for the present platform.

Must a FRAND license always be global?

At 1^st glance, the U.K. Supreme Court’s judgment suggests that a FRAND license must always be global. It is permissible, however, to have national carve-outs by which implementers can seek a reduction in, and/or refund of, royalties on a country-by-country basis upon a finding of non-infringement/non-essentially or invalidity.

Although the judgement carries a lengthy discussion on this issue, in my reading, the justification for the Court’s conclusion boils down to the following two points:

1. As an industry practice, parties tend to execute FRAND global licenses because both parties believe that it is practically not feasible to test the essentiality and/or validity of the SEPs, country-by-country;
2. The ETSI IP policy, which is was the legal basis for imposing the FRAND undertaking in this case, has an international effect.

The 2^nd of the two reasons above-noted contradicts with the rest of the judgment. The Court accepts that the ETSI IP policy is a contract governed by French law and must be interpreted and applied as a contract. Clause 6 of the ETSI IP policy does not use the word “worldwide” or, in fact, any other term prescribed or suggesting any territorial scope for the license to be offered by the SEP. On the contrary, clause 9 of the ETS I IPR policy, which concerns a license to software that is essential to the standard, expressly states that the license is “worldwide”. No doubt, the ETSI IP policy is international in its perspective, but to necessarily conclude that the FRAND undertaking in clause 6 must necessarily always result in a “global” license is a far-fetched interpretation of what is admittedly a contract.

Moreover, when it comes to the exact meaning and scope of the “non-discriminatory” aspect of the FRAND undertaking, the Court says that the language in the ETSI IP policy is not specific enough to impute a “hard-edged” or a rigid independent/stand-alone obligation. And yet, where the ETSI IP policy appears to have consciously remained obscure about the territorial scope of implementing the FRAND undertaking through a license, the Court had no difficulty in imputing a global coverage.

As for the 1^st reasoning, it is certainly logical to consider industry practice, but the question is whether this alone can justify the imposition of a global license by a national Court?

The problem, I believe, is more conceptual – because the issue was pegged as a matter of “jurisdiction”, whereas it is not. A suit filed before a national Court claiming infringement of a patent of that country, is definitely within the “jurisdiction” of the Court. A defendant is entitled to defend against an injunction in such a case by invoking the contractual FRAND undertaking. In principle, nothing bars the jurisdiction of the Court to adjudicate this defence either. If the defendant is subject to the jurisdiction of the Court (for whatever reason), the Court has the “jurisdiction” to pass any prohibitory or mandatory orders against the defendant.

If ultimately, the Court finds infringement and validity in favour of the patent holder, the Court will have to decide on relief. Ignoring relief concerning past conduct for the present moment, prospectively, the Court would have to ordinarily issue an injunction. However, the Court retains the discretion to deny an injunction and effectively grant a license. The Court also has to power to determine the terms of such a Court-ordered license. The circumstances in which a court can deny a permanent injunction is prescribed/limited by case law, though one need not enter this discussion at present. In the case of a SEP, the main difference is that the Court-ordered license must also be a FRAND license.

Once it is appreciated that the question is more of propriety or suitability of the Court’s formulation of the relief (injunction or FRAND global license), the traditional principles of the Court’s power to grant relief, kick-in. Since the Court is exercising its inherent power and discretion in formulating relief, the Court wields tremendous power to consider all relevant/logical and equitable factors. In this case, impracticality of negotiating and/or litigating on a country-by-country basis, the industry practice of executing global licenses for SEPs, seem to have tilted in favour of the Court granting/settling a FRAND global license (rather than a local U.K. license). Of course, to be clear, it is not as if the Court ordered the implementers to execute a license because a court cannot issue such a direction (this is equally true under the Indian Specific Relief Act, 1963). The Court did the next best thing – an injunction will operate if the party chooses not to execute the license as settled by the Court.

It bears recollection that there was a finding by the Court that the ECJ’s framework, as laid down in Huawei v. ZTE to prevent abuse of dominance by SEP holders, was fulfilled in this case. The defendant was found to be an unwilling licensee and as having rejected a FRAND license.

The difficulty is that there is enough language in the U.K. Supreme Court judgement for one to argue that a “FRAND” license, by definition, must be global. I believe it would be too far-fetched to consider it as a precedent for such a proposition; there simply isn’t enough legal reasoning for the same.

The Huawei v. ZTE prior notice obligation

I don’t intend to provide any comprehensive views on the U.K. Supreme Court’s interpretation of the ECJ judgement here. However, there is one critical point that I wish to highlight, which is intricately connected to my previous point. What would happen if the SEP holder attempted to fulfil the Huawei v. ZTE framework by offering a FRAND global license and the implementer counter-offered licenses on the same terms, to be decided on a country-by-country basis only? With the implementer then be an unwilling licensee? The ECJ judgement in Huawei v. ZTE does not really answer this, but it may be possible to read the U.K. Supreme Court’s judgement to this effect. I expected a lot more discussion and future case law on this point.

The non-discrimination obligation and equality in royalty rates

Honestly, I found this to be one of the most confusing parts of the judgement, though, possibly that the blame is to be shared equally with the parties. I clarify the outset that I believe the Court permitted differential pricing amongst licenses/implementers, though, as indicated in Part-I, there is at least one sentence that can be used to argue to the contrary.

My opinion is that the judgement is intellectually dishonest on this issue at some level. Yes, the FRAND obligation is a “single unitary undertaking” simply because a party cannot choose to be fair or reasonable but discriminatory. And no doubt, these are cognate terms, and therefore, each aspect of the undertaking gives flavour to the others. For instance, if a particular term is considered “discriminatory” (whatever be the meaning of this term), I doubt anybody will argue that it is nevertheless “fair” or “reasonable”.

That said, I think the obscurity in the language used by the Court could have, and should have, been avoided. The overall general question was whether a SEP holder is bound to offer the identical royalty rates to each implementer. It is inherent in the concept of “non-discrimination” that unequal parties can be treated differently. Whether we pick simple logic or constitutional law or even international law, it has always been an accepted proposition that one cannot treat apples and oranges the same way. Therefore, in the abstract, in principle, FRAND does not necessarily mean identical royalty rates, across-the-board. Instead, differential royalty rates could be justified by objective business justifications. Unfortunately, this also means a case-by-case examination.

Implications for India

At a minimum, this judgement can be used to support the following critical propositions before an Indian court:

• It is possible and even legitimate for equitable relief such as injunctions to be granted in favour of SEP holders, under the right circumstances;
• Courts have a wide amplitude in settling the terms of a FRAND license if the Court was so inclined to do so in lieu of an injunction;
• Among others, Courts could consider a FRAND global license in lieu of an injunction.

In the Indian context, one is also more concerned with interim injunctions. Even if that be the case, interim injunctions are also an equitable remedy, and it would not be illogical to transpose some of the observations of the U.K. Supreme Court, to the context of interim injunctions as well.

In contrast, I don’t believe this judgement necessarily affects the interpretation or application of Section 4 of the Competition Act, 2002. That said, I can certainly see how this judgement can be used favourably by SEPs to suggest that differential royalty rates, in and of itself, do not necessarily amount to illegal price discrimination under Section 4 of the Competition Act, 2002. It would seem anomalous to suggest that the contractual FRAND undertakings are not subsumed within Section 4 of the Competition Act, 2002.

Closing thoughts

While I do have my qualms with the way the judgment is worded/written, I will also acknowledge that the Court was confronted with issues that do not conform to any perfect solution. Under the circumstances, and in the facts of the case, I think the Court took the most optimal approach to decide the matters before it.

Nevertheless, with this judgment, which is likely to have significant persuasive value across the globe, one is seriously risking multi-country litigation, forum shopping, conflicting judgement, and anti-suit injunctions, one a global-scale. The advice from the Court in para 90 of the judgement is the way to go if one is looking at a more long-term and stable solution – it is high time that SSOs amend their respective IPR policies and start having a choice of forum clause.

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Latest in the Ibrutinib patent saga is IPAB’s order maintaining the interim stay over the revocation of the anti-cancer drug patent. This comes at an interesting time, as a recent report by I-MAK suggests that US-based Biopharma Company AbbVie might be attempting to build a patent wall around Imbruvica (Ibrutinib’s market brand), having secured 88 patents out of 165 applications filed. Imbruvica currently generates a whopping $4.5 billion a year for AbbVie.

In India, Pharmacyclics LLC (owned by AbbVie) had been granted the patent in 2014 (IN 262968), against which Laurus Labs had filed a post-grant opposition under Section 25(2) of the Patents Act, 1970 the next year. The hearing was scheduled in November 2017, but was adjourned and rescheduled to 25^th September 2019, before being ultimately held on 22^nd November. Consequently, the patent was revoked on grounds of lack of inventive step in March 2020.

Pharmacyclics approached the IPAB and obtained an interim stay (the issues with this order have been discussed here). Laurus Labs filed a writ petition in the Delhi High Court (‘DHC’) arguing that the stay was a ‘non-speaking’ order and was told that it could seek a vacation of the interim order in IPAB. Subsequently, the current order was passed by IPAB Chairperson Justice Manmohan Singh and Dr. Onkar Nath Singh, the technical member for PVPAT, since the technical member for patent was yet to join (see para 9). This is despite the fact that when the IDMA had petitioned Delhi High Court over the long standing absence of a technical member for patents, it was observed that Shri B.P. Singh has been appointed as the technical member for patents by an order dated 21^st July 2020 and would be joining shortly.

Three-factor test and Public Interest

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Earlier this month Praharsh and Swaraj had raised concerns regarding courts’ lack of discussion of the three-pronged test while granting injunctions and interim orders. This order in the Ibrutinib case begins by emphasizing the necessity to make out those factors: a prima facie case, balance of convenience and irreparable injury. It goes on to devote a long discussion to whether a prima facie case exists and concludes in the affirmative. However, balance of convenience and irreparable injury are barely touched upon. For the latter, IPAB has reasoned that the interim order must continue for the parallel continuation of the infringement suits against Laurus Labs and third parties (such as this one).

Public interest – which becomes relevant because Ibrutinib is an anti-cancer drug – has not been discussed at all. A previous post on this blog explains the vast pricing differences between Pharmacyclics’ Imbruvica and Ibrutinib’s generic versions. In Roche v. Cipla, despite the fact that Roche had a valid patent, the price differential between the patented drug and the generic ones had been taken into consideration on account of restriction of public’s access to affordable medicine (Namratha has discussed this here). Given that the patent in question is a revoked one and there is no question of presumption of validity, it is surprising that such an important consideration did not even merit a discussion.

Why had the Revocation been Stayed?

Days before the hearing scheduled on 25^th September 2019, the Opponent had filed additional documents, prompting Pharmacyclics to approach DHC against their admittance. Pharmacyclics also decided to file rebuttal evidence of its own. The court, in an order dated 6^th November 2019, stressed upon the importance of following the timelines laid down in the Act and the Patent Rules 2003 and directed all of the evidence to be sent to the Opposition Board. However, the Joint Controller did not send the evidence. Moreover, two members of the Board remained absent from the hearing. The patent was then revoked after placing great emphasis on Laurus’ additional evidence and disregarding the Opposition Board’s report which favoured Pharmacyclics. The stay order of 12^th June was passed in light of these facts.

Clarification on Rules for filing Additional Evidence

In the current order, the IPAB considered at length the Rules 60 and 62 of the Patent Rules 2003, which deal with the filing of further evidence and the hearing, respectively. Rule 60 holds that further evidence can only be filed with the Controller’s permission and is only possible before the hearing has been fixed under Rule 62. Relying on the DHC order of 6^th November, IPAB observed that once the Opposition Board is constituted, no evidence ought to be permitted. However, in case any new evidence comes to light, one last opportunity to file the same may be availed under Rule 60 – but this has to be done prior to fixing of the hearing. After that, Rule 60 cannot be invoked and no further evidence can be filed. The permission under Rule 62(4) to ‘rely on any publication’ refers only to publicly available documents and is to be exercised with five days’ notice.

It was heavily emphasized that Rule 60 is an exception and cannot be invoked as a rule. The DHC Order had explained that the purpose behind the strictness in setting timelines was the enormous sanctity placed on the two-stage decision-making process in a post-grant opposition. This is because by this time, the patent application has already undergone rigorous examination along with possible pre-grant oppositions. This clarification on the purpose and operation of Rules 60 and 62(4) would be quite helpful. Just about a month back, the IPAB had stayed another revocation in case of Novartis’s Ceritinib drug owing to the Controller’s oversight regarding acceptance of additional evidence post the fixing of hearing (I have covered the order here).

Further buttressing the importance of following timelines under the Act, the DHC had clarified that filing additional evidence is not permissible even if hearing is adjourned. As explained before, the hearing had originally been scheduled to be held in November 2017. After a two-year long adjournment period, the additional evidence consisting of seven documents including expert affidavit of Mr. B.M. Chaudhary was filed on 10^th and 19^th September, shortly before the then upcoming hearing date of 25^th September. IPAB agreed with DHC’s holding that Rule 60 contemplates the first notice of hearing only. The rationale behind this is that if filing of evidence is permitted due to adjournment, parties may unduly delay hearings in order to dig up more evidence. However, considering that Pharmacyclics had had an opportunity to rebut the additional evidence filed, DHC had ordered that all filed documents be sent to the Opposition Board.

Importance of Opposition Board

Despite the DHC direction, the Joint Controller did not forward the newly filed evidence to the Opposition Board. The reason given was shortage of time.  He stated that forwarding the evidence to Members of Opposition Board was not necessary. Moreover, he insisted that presence of all members of the Board at the time of final hearing is not mandatory either. Interestingly, regardless of the Board not being sent the evidence, each of their reports rules in favour of Pharmacyclics. The Joint Controller though, in the revocation order, has relied strongly on the Opponent’s additional evidence.

Notably, the DHC’s order had stated that Board members have to be present during hearing because they would not have had the opportunity to look at the documents submitted under Rule 62(4). This raises the question – if the members’ presence is important to peruse publications that are notified late, how can they be kept in the dark about a complete set of evidences which the Joint Controller himself goes to rely strongly on?

IPAB didn’t buy this either. It noted that failure to forward the evidence was against the DHC’s order. Moreover, no reason had been given to explain the absence of the Board members during the hearing. Rule 62(5) mandates that the Joint Controller shall take into consideration recommendations of Opposition Board while deciding the opposition. IPAB relied on the Supreme Court’s decision in Cipla v. Union of India which held that the ‘Opposition Board has got considerable relevance’ and the Board’s report is ‘crucial in the decision making process while passing order by the Controller under Section 25(4)’.

Concluding thoughts

Despite such detailed clarifications, certain things about this order strike as strange. At one point, as per Para 19, the counsel for Pharmacyclics oddly argues that since the issue of novelty was decided in their favour, the issue of obviousness ought to have been decided in their favour too, ‘as per settled law’. Right after that, it is stated that the counsel for Pharmacyclics tried to make submissions as to whether the patent was obvious or not, but IPAB refused to look into it claiming that doing so would effectively amount to deciding the merits. While it is understood that a decision would be made on the stay alone, the order doesn’t explain why it is necessary to restrict arguments to the procedural lapses. Wouldn’t completely ignoring the actual substantive ground behind the revocation amount to an incomplete analysis of the prima facie case requirement? Isn’t the presence of a technical member (patents) on the IPAB panel supposed to help take such matters forward? Readers with better legal understanding of this are requested to share their insights.

In Para 44, IPAB then goes on to observe that Ibrutinib has been granted patents in 87 countries and not been invalidated anywhere. It is strange that this is deemed relevant despite the fact that patent laws across these 87 countries are different from that in India, while on the other hand the IPAB refuses to consider substantive merit of the patent per Indian law, while staying the revocation. Would, for instance, the rejection in another country be seen as reason to reject it in India as well? One would think not.

In any case, we look forward to seeing how the rest of this case unfolds!

Topical Highlight

A Tale of Two Sujatas: Delhi HC Reflects on Suppression of Material Facts and Clean Hands Doctrine

Praharsh discussed Delhi HC’s recent order modifying an ex-parte interim injunction after finding that the plaintiff concealed material facts during the hearing. The Plaintiff, who used the registered mark ‘SUJATA’ under classes 7, 8, 9, 11, and 35 had obtained the injunction by concealing the fact that a director of the Defendant owned a similar mark ‘SUJATA’ under class 11 since 2012. The director had also opposed the Plaintiff’s later application for registration of the SUJATA mark under class 11. This prompted the court to invoke the Clean Hands doctrine. On infringement, the court held that there is no claim that any customer was deceived into buying the defendant’s products as that of the Plaintiff. Thus, relying on the Nandhini Deluxe case, it modified the injunction, allowing defendants to use the mark ‘SUJATA’ specifically for ‘water filters, water purifiers and RO systems’ while keeping the terms of injunction intact for other products. Praharsh concludes by highlighting that the court refrained from imposing any costs despite the plaintiff’s concealment of material facts. He also points out that the court failed to elaborate the statement in the ex-parte order that accorded the status of a well-known mark to the Plaintiff’s mark, and the present position in light of revealed facts.

Thematic Highlight

U.K. Supreme Court’s Landmark Ruling on SEPs: An Imperfect Solution, But Is There a Perfect One?

In Part 1, Adarsh summarises the UK Supreme Court’s ruling in the five issues raised in Unwired Planet v. Huawei. The first issue was on the jurisdiction of English courts to grant an injunction concerning UK SEPs with the proviso that it would automatically stand vacated upon entering of a FRAND global license, and the jurisdiction to settle terms of such FRAND global license saw a very detailed discussion. Among other points, it was held that while English courts do not have the jurisdiction to rule on the validity or infringement of a foreign patent, they do have jurisdiction to rule upon whether a UK SEP is valid and/or infringed. The question of whether English courts were forum non conveniens was found to be irrelevant as Chinese courts did not have jurisdiction to try the case in the first place. Further, the meaning of the “non-discrimination” obligation in FRAND was held to not equal an MFN clause. It imposes a “single unitary obligation” and thus provides focus to what may be fair and reasonable. It was also held that Unwired Planet has complied with ECJ’s judgement in Huawei v. ZTE because it was willing to license on whatever terms the Court determined were FRAND. The court then took note of the concern that non-practising entities may use the threat of injunction as a means of charging exorbitant fees and better leverage in negotiations, but noted that it was not relevant for SEPs where there was a FRAND undertaking.

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In Part II, Adarsh critiqued the judgment. On the conclusion that a FRAND license must always be global, he argues that reliance on the ETSI IP policy’s international effect contradicts the judgment. Among other things, he points out that the territorial scope of the policy appears to have been consciously kept obscure like the ‘non-discriminatory’ aspect of the FRAND undertaking. Yet, the Court imputed a global coverage to the former but refrained from interfering with the latter. He then suggests that the judgment might possibly be read to mean that if the SEP holder attempted to fulfil the Huawei v. ZTE framework by offering a FRAND global license and the implementer counter-offered licenses on the same terms, to be decided on a country-by-country basis only, the implementer would be an unwilling licensee. With regard to equality in royalty rates, he argues that it is inherent in the concept of ‘non-discrimination’ that unequal parties can be treated differently. Thus, differential royalty rates could be justified on a case-by-case examination. He concludes that in the Indian context, this judgement can be used to support equitable relief such as injunctions to be granted in favour of SEP holders before a court. Courts have wide amplitude in settling the terms of a FRAND license if so inclined to do so in lieu of an injunction. Moreover, courts could consider a FRAND global license in lieu of an injunction.

Other Posts

Call for Papers: NUALS Intellectual Property Review (Vol. 3) [Submit by Dec 15]

We informed our readers that the NUALS Intellectual Property Law Review is inviting contributions for the third volume of the journal. The deadline for submissions is December 15, 2020. Details regarding submission can be found in the post.

Ibrutinib Patent Revocation: IPAB Says the Stay is Here to Stay

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In this post, I discuss the IPAB’s order maintaining the stay over the revocation of the Ibrutinib patent. I point out how this interim order devotes a long discussion to whether a prima facie case exists and concludes in the affirmative. However, balance of convenience and irreparable injury and public interest are given little importance. I walk through the history of the revocation and subsequently discuss the current order, where the IPAB has clarified that Rule 60 of Patent Rules 2003 holds that additional evidence during post-grant opposition can only be filed with the Controller’s permission and only before the hearing has been fixed under Rule 62. The IPAB has further underscored the significance of Opposition Board by relying on the Supreme Court’s decision in Cipla v. Union of India which held that the ‘Opposition Board has got considerable relevance’ and the Board’s report is ‘crucial in the decision making process while passing order by the Controller under Section 25(4)’. Finally, I highlight certain oddities with the order, including how the IPAB gives consideration to the fact that Ibrutinib has been granted patents in 87 countries and not been invalidated anywhere, despite the fact that patent laws across these 87 countries are different from that in India – while on the other hand the IPAB refuses to consider substantive merit of the patent per Indian law, while staying the revocation.

Other Developments

Decisions from Indian Courts

• Bangalore District Court in Cothas Coffee Co v. Avighna Coffee Pvt. Ltd permanently restrained the defendant from infringing and passing off the plaintiff’s registered trademarks ‘COTHAS COFFEE’ and ‘COTHAS’ [September 11, 2020].
• Delhi High Court in Anil Rathi v. Shri Sharma Steeltech passed an ex-parte injunction restraining the defendants from dealing in a variety of goods under the registered trademark ‘RATHI’ or from adopting any other mark or label which is identical or deceptively similar to trade mark [September 15, 2020].
• Delhi High Court in Dassault Systemes & Ors v. Advanced Engineering Solutions issued summons to the defendants in a case of infringement of copyright in the plaintiff’s software programmes CATIA, SOLIDWORDS AND SIMULIA [September 15, 2020].
• Delhi High Court in Capital Foods v. Radiant Indus Chem. Pvt. Ltd granted an ad-interim injunction restraining the defendant from reproduction, adoption and imitation of the original works of the plaintiff in respect of the trade dress, get up and packaging of the plaintiff’s product [September 16, 2020].
• Delhi High Court in Indoco Remedies Ltd vs Bristol Myers Squibb Holdings refused to allow the plaintiff to manufacture and sell its APIXABID, a generic product of the formulation of APIXABAN, during the COVID-19 pandemic or to allow the sale of 58,000 strips of APIXABID already manufactured as the same would be an infringement of the defendant’s patent on APIXABAN [September 18, 2020].

Other News from around the Country

• The Supreme Court has extended Justice Manmohan Singh’s tenure as IPAB Chairman for 3 months. Praharsh has discussed the issues with IPAB appointments here.
• A team of faculty members and one alumnus from Aligarh Muslim University have been granted a patent over their invention which makes use of nanotechnology for increasing the durability of cement.
• Indian company Magfast Co. won a 15 year long battle against PepsiCo to use the trademark ‘Mountain Dew’.
• Hyderabad-based Saptagir Laboratories has signed an exclusive agreement with Jubilant Generics to manufacture intermediates and Active Pharmaceutical Ingredient for the drug ‘Remdesivir’ used in COVID-19 treatment.
• The European Commission has sought public comments on India’s plea to register the name ‘Basmati’ under geographical indication (GI), the application for which was filed in 2018.
• IPAB has allowed Pfizer’s appeal and granted it a patent for JAK inhibitor drug Tofacitinib and its salts.

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  Telangana High Court has ordered a complete stay on the release of footballer Akhilesh Paul’s biopic ‘Jhund’, in India and abroad as well as on OTT platforms, owing to a copyright infringement claim.

• Indian short-video platform Chingari, has announced a licensing deal with music label T-Series that will allow Chingari’s users and creators in India, West Asia and SAARC nations to access music owned by T-Series.
• Reddy’s Laboratories announced that it has settled patent litigation with US-based Bristol Myers Squibb’s subsidiary Celgene over Revlimid capsules, with Celgene providing them license to sell volume-limited amounts of the capsules in the US after March 2022.

News from around the World

• Businesswoman Katrina Parrott has sued Apple for copyright infringement of her ‘iDiversicons’, which consists of her copyrighted system of letting users choose from five skin tones of color for human skin emojis in keypads.
• European Court of Justice allowed Barcelona footballer Lionel Messi to trademark his surname as a sportswear brand, dismissing an appeal from Spanish cycling company Massi.

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  EUIPO rejected pseudonymous artist Banksy’s application to use his famous ‘Flower Thrower’ as a trademark stating that Banksy had not used his trademark and the application was filed in bad faith.

• A district court in the US cleared singer Nicki Minaj of copyright infringement charges against Tracy Chapman for her song ‘Sorry’ which was allegedly sampled from the latter’s ‘Baby Can I Hold You’.
• The US Court of Appeals for the Ninth Circuit affirmed a decision holding that the musical, ‘Jersey Boys’ did not infringe copyright in an autobiography of Four Seasons’ band member Tommy DeVito.
• Australia is considering new laws which will make Facebook and Google pay for news items.
• Mitsubishi Electric has won a trademark infringement lawsuit against factory-automation product counterfeiters in China’s Guangzhou Intellectual Property Court.

For regular updates on IP news and opinions related to COVID-19, please visit our COVID-19 & IP Updates page (also accessible from the Resources section on our website).