IP Issues in India: EU-India Free Trade Agreement

KanikaSatyan, Student of Law, Symbiosis Law School, Pune

ABSTRACT

India adopted the Liberalization Privatization and Globalization Policy in the year 1991 as part of the Economic Reform Policy. The adoption of these policies changed the entire economic scenario in the country paving way for more foreign investments, export etc. In furtherance of the same efforts, India entered into multiple free trade agreements, agreements of economic cooperation and bilateral trade agreements with several countries. India has been in talks with the European Union to enter into such a free trade agreement since 7 years now; however no positive consensus has been reached yet. Intellectual property protection and enforcement is, among the many key regimes which has been discussed immensely but no conclusion has been arrived at.

India has rejected many of the recommendations made by EU as they are said to exceed India’s TRIPS obligations with respect to data exclusivity on pharmaceuticals and drugs. Their demands in relation to geographical indicators are also in the nature of creating monopoly.There are also provisions on transfer of technology and parallel imports thatclearlyfavour the EU. There is a need for negotiations, to set out clearly the terms and conditions of such an agreement. This paper would thus, in brief,look through the lens on the pros and cons of adoption of such an agreement and also comment on the feasibility and practicability of it.

INTRODUCTION

India is rightfully termed as one of the emerging economic super powers in the country. Though its trade regimes has expanded manifold after the Economic Reform Policy of 1991, its regulatory environment is still rigid as compared to other countries. India is ranked 134thamong 189 countries in the rank of ease of doing business ((World Bank’s Ease of Doing Business Index , June 2013)). This itself indicates the restrictive nature of India’s trade policies. This restrictive regime, in the recent times has hampered India’s trade with many countries including the European Union.

The European Union has always been an important trade partner for India. EU investment stock in India grew substantially reaching €41.8 billion in 2012. The value of EU-India trade grew from €28.6 billion in 2003 to €72.7 billion in 2013 ((Countries and Regions, European Commission ,Trade Policies ,available at http://ec.europa.eu/trade/policy/countries-and-regions/countries/india/ last accessed on July 15, 2015)). The Bilateral Trade and Investment Agreement (BTIA) also commonly known as Free Trade Agreement between the European Union and India was initiated to develop the trade relations between the countries and carry out trade with fewer barriers.This also meant increase in the competitiveness of Indian products in the European Union.

The parameters for an ambitious FTA were set out in the report of the EU-India High Level Trade Group in October 2006 and the discussions started in 2007. However, even after around 20 rounds of discussion, there has been no definitive conclusion that has been arrived at.Among all the chapters that have been discussed at length and breadth and that have been negotiated since the past years, the IP chapter has been the most controversial one. The reason being: Entering into a FTA agreement would mean stricter and a strong intellectual property regime. Some of the demands made by EU are not in harmony with the Indian IP laws and could lead to an IPR regime that goes beyond what is mandated under TRIPS ((Patralekha Chatterjee , Leaked India Chapter of India – EU FTA shows TRIPS Plus Pitfalls for India  – Experts say ,Intellectual Property Watch , 12/03/2013 available at http://www.ip-watch.org/2013/03/12/leaked-ip-chapter-of-india-eu-fta-shows-trips-plus-pitfalls-for-india-expert-says/last accessed on July 15, 2015)). Therefore, on one hand, entering into an agreement may bring in economic and trade benefits and on the other it may totally overturn the Indian IP regime.A balance to this needs be figured out.

The specific Intellectual Property Issues have been discussed in detail below:

THE DEBATE ON PHARMACEUTICAL DRUGS

One of key reasons behind the infamous tug of war for power between developed and developing countries, in the recent times, has been regarding patent protection for medicines invented by the inventor companies. This drug pricing issue has lead to a lot of dispute in global world. India is popularly known as the ‘pharmacy of the developing world’. It, upholding its moral obligation to provide cheap access to medicines to its huge and majorly below the poverty line population, is the biggest producer and exporter of cheap generic medicines. India’s Patent Law regime under Section 3[d] ((After the 2005 Amendment))grants protection to a generic company to make low cost copy cat versions of drug of the original drugs which is originally invented in developed nations like US, EU etc. This provision was widely criticized for hampering the growth of new innovations, especially in the field of pharmaceuticals. In addition to this, in the year 2013 the Apex Court in India delivered the judgment in the case of Novartis v. Union of India ((Civil Appeal No. 2706-2716 of 2013))which in specific allowed Indian generic companies to make low cost copies of ‘Gleevec’ produced by Novartis and denied the latter’s application for patent extension.This decision was also criticized worldwide as now the generic companies could produce the same drug at one tenth the cost of the original drug while the innovator companies lost the market of the same in many countries.

While this debate was still afresh, the EU in it’s FTA proposal, not only demanded data exclusivity for pharmaceutical inventions but also demanded that its companies have the power to demand the freezing of bank accounts & seizure of properties of generic companies on the mere allegation of patent infringement & to drag third parties like treatment providers Sinto litigation ((Attack on Affordable medicines continues in EU-India Trade Negotiations, April 11,2013 available at http://infojustice.org/archives/29287 last accessed on July 16, 2015)). This raised controversy as this demand not only was in contrast with the ratio laid down by the Supreme Court in the Novartis case but also fundamentally meant that adopting this would lead to curtailment of the independence and the discretionary powers of the Indian judiciary ((Ibid)). Many of these are against the provisions of TRIPS.

However, grey area lies as the EU has now officially stated that they do not want data exclusivity .Yet they continue to pressurize India for the same. The ambiguity regarding this has not been sorted out yet and thus it is essential to discuss the effects of such anenforcement also. Further, there is concern that even if this demand has withdrawn, such withdrawal may not ensure that supply of cheap medicines in India and beyond is not affected. The FTA will more than likely sanction European investors to challenge Indian regulation at internationalarbitration tribunals -with a track record of favouring the investor-by claiming that their IPRs have been affected ((SumanModwel and Surendra Singh, The EU-FTA Negotiations :Leading to an agreement or disagreement?, Observer Research Foundation Occasional Paper 32 , February 2012)).

India is therefore at a crossroad where on one hand it has cheap and regular access to essential medicines and on the other hand a prospective trading future with the European Union. This crucial decision would decide the fate of the EU India Free Trade Agreement.

DATA EXCLUSIVITY – THE CORRESPONDING AMBIGUITY

Data exclusivity (DE) or exclusivity of registration data is the period of non-reliance and non-disclosure that is provided to new chemical entities, pharmaceutical compositions, and agrochemical registration data or test data. Data exclusivity provides the originator with rights to preclude third parties from relying on the data to obtain marketing approval for a specific period of time ((Jaya Bhatnagar and Vidisha Garg , India : Data Exclusivity,  21 May 2009 , available at www.mondaq.com last accessed on July 16, 2015)). This has also been advocated in WTO’s agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) under Article 39[3] ((Article 39(3) of TRIPS states that “Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.”)). If this is enforced this will prevent the generic pharmaceutical companies to refer the data for a period of up to 10 years. The only solution would be for the generic manufacturer to repeat the drug trials that the originator has done. This could prove to be really expensive.

In Europe, data and market exclusivity is already allowed on medicinal products.Though India is a signatory to TRIPS, it does not have any express laws on data exclusivity. Therefore, it is uncertain as to what would be the effects of such an agreement on the Indian Patent Act, 1970. This makes it even more unclear as to whether this indicates that EU may want a legislative change to incorporate these changes.

NATIONAL EFFECTS

In addition, these provisions have contravening effects both on a national and on an international scale. In India, The Constitution of the country is held to be supreme. Right to health has been read into Article 21 of the constitution which envisages the right to life. Furthermore underArticle 47 ((Article 47 of the Constitution “Duty of the State to raise the level of nutrition and the standard of living and to improve  public health”.))of the Constitution, the State has the responsibility to provide public health and the non-availability of cheaper medicines in the country due to patented medicines would hinder such a process.

In the case of Mohd Ahmed v. Union of India ((W.P(C) 7279/2013)), the above said has also been upheld .The Court in this case held that “Every person has a fundamental right to quality health care — that is affordable, accessible and compassionate ((Paragraph 59 of the Judgment)). By virtue of Article 21 of the Constitution, the State is under a legal obligation to ensure access to life saving drugs to patients. A reasonable and equitable access to life saving medicines is critical to promoting and protecting the right to health. This means that Government must at the bare minimum ensure that individuals have access to essential medicines. Availability of a very expensive drug virtually makes it inaccessible ((Paragraph 68 of the Judgment)). In the opinion of this Court, no government can wriggle out of its core obligation of ensuring the right of access to health facilities for vulnerable and marginalized section of society ((Paragraph 69 of the Judgment)).”

In this case, though the Court did not expressly deal with the topic of IP in cases of drugs , it however invoked the constitutional right to health in a case where the driver of inaccessibility is the regime of intellectual property and  laid the foundations of a jurisprudence that has been gaining ground in many countries: the constitutionalisation of IP law ((Indian Constitutional Law and Philosophy , Delhi High Court rules on Article 21 and access to medicines ,April 17,2014 , available at https://indconlawphil.wordpress.com/2014/04/17/delhi-high-court-rules-on-article-21-and-access-to-medicine/ last accessed on July 16, 2015)). The Court thus made it clear that the Constitution is relevant and emphasized on balancing of rights of the creator and the public. Thus, in all essence, on a national level, adoption of the EU claims for data exclusivity or other methods of ensuring monopoly in the production of pharmaceutical drugs, may fundamentally reverse the IP laws, undermine the Constitution and may deny justice to the people of India.

INTERNATIONAL EFFECTS–GOING BEYOND TRIPS OBLIGATION?

On an international level, the effects of the same would be catastrophic.The negotiators from both sides have not found means to balance the patent rights which the EU demands in respect to the right to access essential medicines which is also well founded under the International Law by the World Health Organisation. This move is favouring corporate interests of pharmaceutical giants at a risk to the health of not only the people in India, but also other developing countries which import cheap medicines from India.WTO upholding the importance of public health hasin the Doha round given primacy to public health over private intellectual property ((Ellen F.M ‘T Hoen , TRIPS Pharmaceutical Patents and Access to Essential Medicines : Seattle, Doha and Beyond, 23/06/2003 available at https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CCwQFjAC&url=http%3A%2F%2Fwww.who.int%2Fintellectualproperty%2Ftopics%2Fip%2FtHoen.pdf&ei=8ThLVKH3OYmF8gXlvYKQBg&usg=AFQjCNE54Ln4iwPZVDhg8ajNdSOHLafApA&bvm=bv.77880786,d.dGc&cad=rja last accessed on July 16, 2015)). Hence such data exclusivity or extended patent protection may be in contravention to the discussion of the Doha rounds.

Apart from the same, the most significant point that needs to be analyzed is whether adopting the provisions of the FTA would mean going beyond India’s TRIPS obligations. The TRIPS Agreements allows that if the medicine is chemically the same, then there is no need to prove again that the generic version is safe and effective because it works the same way and so the applicant can rely on the tests carried out by the originator company ((Sanya Reid Smith , TRIPS Plus Bilateral agreements- A threat to Public Health,available at www.twinside.org last accessed on July 16, 2015)). However, by the way of these bilateral agreements the developed countries like EU are compelling the developing countries like India to assume even more stringent IP obligations than those required in TRIPS ((Ibid))and thus indirectly enforcing the TRIPS Plus agreements. The TRIPS Plus effectively means that any intellectual property agreement negotiated subsequently to TRIPS among and /or involving the WTO members can only create higher standards .The TRIPS Plus concept covers both those activities aimed at increasing the level of protection given to right holders beyond that is given in the TRIPS and those measures aimed at reducing the effectiveness or scope of limitations on rights and exceptions ((Sisule F Musungu and Graham Dutfield , Multilateral agreements and TRIPS Plus World :The WIPO ,TRIPS Issues Paper 3 , available at http://www.iprsonline.org/ictsd/docs/WIPO_Musungu_Dutfield.pdf last accessed on July 16, 2015)).

Article 2.1 of the EU-India draft FTA indicates that ‘this chapter shall complement and further specify the rights and obligations between the Parties beyond those under the TRIPS Agreement and other international treaties in the field of intellectual property to which they are parties’. Hence, the intention to exceed the TRIPS standards is explicit. This approach ignores that India, notwithstanding its recent economic performance and the expansion of its research and development capabilities, is the home to one of the largest populations of poor people in the world ((About 30%of India’s population is before the poverty line)). Such strong IP protection, atleast in a country like India could only result in impracticability on the part of the majority of the population to access medicines.

The   ‘Objectives’ of the IPRs chapter inthe proposed FTA overlook the differences in the levels of development of India and theEU and this is the principal reason why the negotiations have been going on since the past 7 years ((Carlos M Correa, Negotiation of Free Trade Agreement European Union India : Will India accept the TRIPS plus protection? ,University of Buenos Aires , June 2009)). Thus, adopting the demands of EU may create ripples all over the world, creating a disharmony in Indian as well as international laws.

India is not the only country which is pressurized for a stricter IP regime, in anticipation of a good trade relation with developing countries like USA and EU. Even the Mercosur  (Argentina , Brazil , Paraguay and Uruguay) and many of the other countries have been under pressure because of  the consistent demands of the developing countries for the same , in return for a free trade agreement with them. This can now be said to be a world wide phenomena where the more and more countries are forced to comply to TRIPS Plus where in fact they are signatories to TRIPS.

With respect to the EU India FTA there is a lot of ambiguity as to what exactly are the demands of the EU. Clarity and certainty to the same,needs to be figured out before accepting the proposal for free trade.

THE IP ENFORCEMENT MEASURES

The IPR Chapter under the FTA is not only limited to protection of IP rights but also focuses on its enforcement. Several measures are undertaken by them for the same .One of EU’s demandsin this area is to introduce the mandatory use of court injunctions, or court orders. This would mean that when a patent or trademark dispute emerges between a generic and a patent-holding company, the generic manufacturer would have to halt production even before a case for infringement has been heard in court. The courts would therefore not be allowed to balance the constitutionally-enshrinedright to health and the access to medicines against the economic harm and compensation due to the rights holder if the case is proved ((Medecins Sans Frontieres , The Truth Behind the Spin :How the Europe –India Free Trade Agreement will harm access to medicines ,November 4,2010 available at http://www.doctorswithoutborders.org/news-stories/briefing-document/truth-behind-spin-how-europe-india-free-trade-agreement-will-harm last accessed on July 16, 2015)). The European Union is also said to enforce IP by adopting various border measures that stop the flow of generic medicines. There have been cases of stoppage of medicines in the European ports on the assumption that there was a patent infringement .The European Customs Regulation Council is now said to impose these regulations on India ((Ibid)).

All these demands need to carefully analyzed and negotiated by India, before signing the agreement.

CORRESPONDING INVESTMENT PROVISIONS

Apart from these there are some corresponding Investment provisions that need to be analyzed as these could disrupt the IP provisions and have several effects on IP holders and their rights.

The FTA states about an Investor to State Arbitration Mechanism.Some of the investment provisions outlined in the FTA would allow a multinational drug company to directly sue the Indian government if a company feels their IP rights are being infringed upon by governmentaction. This could happen if, for example, the government decided to regulate drug prices or override a drug patent in order to allow generic manufacturers to produce more affordable versionsof a medicine deemed important for public health. Despite this being allowed under international law through TRIPS, the company could claim the government’s action negatively impacts their ‘investment’ in the country. The investment rules proposed in the FTA would allow for companies tosue the government through secret dispute settlement panels, outside of the national court system,  which is currently unprecedented in the country ((Access Campaign, How an FTA between the EU and India could threaten access to affordable medicines, available at http://www.msfaccess.org/content/how-fta-between-eu-and-india-could-threaten-access-affordable-medicines last accessed on July 16, 2015)).

Moreover, the expansive definition provided to ‘investment’ has a very wide ambit which may prove to be problematic in the future. Investment is defined as “intellectual property rights, goodwill, technicalprocesses and know-how as conferred by law”. The central consequence of this is that it would grant foreign IP owners the investment protectionsset out in the investment chapter in addition to the extensive protections set forth in the IP chapter. This broadens the range of government actions that could be challenged as expropriation bycompanies or their respective governments to include actions that foreign companies claim affect their intellectual property ((The Intellectual Property and Investment Chapters of EU – India FTA :Implications for health, Briefing Note May 2011)).

DEMANDS REGARDING GEOGRAPHICAL INDICATION

Geographical Indication is another aspect in the IP chapter that has been negotiated but no consensus has been reached. Geographical Indications of Goods are defined as that aspect of industrial property whichrefers to the geographical indication referring to a country or to a place situated therein as being the country or place of origin of that product. Typically, such a name conveys an assurance of quality and distinctiveness which is essentially attributable to the fact of its origin in that defined geographical locality, region or country ((Geographical Indications Registry , available at http://ipindia.nic.in/girindia/ last accessed on July 16, 2015)).

The EU is very determined on the recognition and protection of its 130 geographical indications (GIs). The situation on GIs is of growing concern. Despite commitments to take action, India is reluctant to enter into any additional political commitment on GIs.The EU expects that effective registration should take place before entry into force of the agreement. Without such result on GIs, the Commission considers it is not in a position to conclude negotiations. If deemed necessary, conditionality clauses will apply, i.e. the EU will make certain trade concessions conditional on GI protection upon entry into force.

The EU is demanding not only general protection of geographical indication under Article 22 but is also enforcing Article 23 of the TRIPS which provides a higher level of protection for GIs for wines and spirits (such as Champagne and Scotch Whisky).India will be expected to confirm readiness to apply administrative facilitation to the 130 applications, to notify extension of TRIPS Art 23 level of protection to any non-wine/spirit product category and to confirm readiness to work on political deliverables on GIs within the FTA ((India – EU: Where is Europe’s Trade Agenda headed? ,27/02/2012 , available on www.euroactiv.com last accessed on July 16, 2015)).

Focusing on a more important aspect, it has been pointed out by many that the demand for protection of geographical indicators that has been made by EU is basically a method of establishing monopoly especially in areas where it has more intellectual property ((Shramana Ganguly,Amul calls for a relook at EU India Free Trade Agreement , The Economic Times ,March 27,2013 ,available at http://articles.economictimes.indiatimes.com/2013-03-27/news/38041233_1_dairy-farmers-eu-india-free-trade-agreement-dairy-products last accessed on July 15, 2015)). In specific, Amul has claimed that EU has the highest number of geographical indicators(GIs) for which it is seeking ‘extra protection’ beyond the rules of the World Trade Organisation (WTO). But EU is neither willing for any GI protection to India’s Lassi or Paneer, nor is it refusing to stop the bio-piracy of India’s traditional knowledge like Ayurveda and resources like Neem.

The imminent threat to the local Indian products has also been stressed upon in the negotiations and this has been under scanner regarding the reduced import duties for EU dairy products in terms of the FTA. EU also doesn’t allow import of Indian dairy products, citing its strict sanitary and phyto-sanitary standards, which are nothing but a non-tariff barrier ((Ibid)). On the other handEU provides very high subsidy to dairy producers.This can lead to dumping of such subsidised product at lower rate if market access is granted to them. This will result in raising India’s imports from the EU, while EU does not allow import of Indian dairy products.This pattern has been observed with regard to the EU-South Korea FTA and EU-Singapore FTA ((Grover Law , EU India FTA draws flak over Geographical Indication Issue , April- May 2013Edition)).

Besides this, another apprehension is with respect to the fact that the EU has a host of GIs for its various dairy products like Feta, Mozzarella, Emmentaler etc. and it is trying to extend protection of these GIs to countries outside the EU by requiring the country with which it is negotiating an FTA to protect its registered GIs.In entire EU, one can find Indian products like ‘paneer’ and ‘lassi’ being manufactured or marketed by local people. These are ethnic Indian products and India can actually claim similar GI protection ((Ibid)).

Thus when it comes to GI, the stance taken by EU has been somewhat hypocritical.Focusing only on the protection of its GIs, it is treating India’s GIs to be subservient to its own. This aspect needs to be negotiated suitably so as to ensure that the interests of both the nations are taken care of and one’s interest does not dominate the others.

TRANSFER OF TECHNOLOGY

In the matter of transfer of technology the provisions have not been designed in a fair and reasonable manner. Article 3.1 of the draft EU-India FTA limits itself to the Parties’ ‘exchange of views and information on their domestic and international policies affecting transfer of technology’ and to the creation of an ‘enabling environment for technology transfer in the host countries, including issues such as the relevant legal framework and development of human capital’.

Provisions like these are in the nature of putting burden only on India for creating the appropriateconditions for the transfer of technology to occur, without any substantial obligationon the EU ((Carlos M Correa ,Negotiation of Free Trade Agreement European Union India : Will India accept the TRIPS plus protection? ,University of Buenos Aires , June 2009)). Again, these put forward only the EU’s interests at a pedestal, while the entire burden is put on India. As seen, most of the provisions of this FTA are in favour of EU and apart from trade with less barriers it getting several other benefits.These require immense discussion, so as to find out a way to implement them in a balanced manner.

PARALLEL IMPORTS

There is also a contrast in the provisions in the FTA regarding Parallel imports and provisions for the same under the TRIPS. While article 4 of the EU-India draft FTA seems to confirm the Parties’ right to provide forparallel imports (under the principle known as ‘exhaustion of rights’),the final proviso(‘subject to the provision of the TRIPS Agreement’) raises some concerns, since article 6of the Agreement exempts exhaustion, as contemplated under national laws, from anychallenge under the WTO dispute settlement mechanism. The referred to final provisoseems to subordinate each Party’s right to establish its ‘own regime for exhaustion’ tounspecified provisions of the Agreement, in contradiction with the broad exemptionconferred under article 6 of the Agreement, subject only to the provisions of Articles 3 and 4 thereof ((Ibid)).

OTHER ASPECTS

Apart from these aspects that are very important to strike the deal between EU and India there are many other factors that may lead to certain other small discrepancies. For eg: India is not a signatory to many of the international conventions on IPR. Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (Rome Convention), nor the more recent WIPO Copyrights Treaty and the WIPO Performances and Phonograms Treaty. Thus in future there may arise problems due to these discrepancies in ratification. There is certain disagreement also on the term of copyright between the EU and India. EU has suggested counting of the statutory 50 year term of copyright from a different date. This may create certain disruptions in the trade between them in future. Several other differences like the above said exist. There is need for negotiators on both sides to carefully analyse and they go forward with the FTA.

CONCLUSION

This Free Trade Agreement with European Union is going to open up several boundaries and barriers that earlier acted as a trade disruption between the countries. The benefits that India will receive economically cannot be stressed upon further. However, at the present scenario, more than the benefits India needs to focus upon negotiating with the EU for provisions that would lead to mutual benefit of both the trade partners.This is because many of the provisions, in specific relating to transfer of technology and parallel imports are clearly seen to be supporting EU’s IP needs. The same is the case with Geographical Indication .Last but not the least, a unanimous decision is to be taken on the question of access of cheap medicines .This has been controversial not only for this agreement but also worldwide. Leaving everything apart , most importantly it is necessary to see that a deal is made between both the countries soon. It has already taken 7 years .It is time to strike a deal.

Significance of Remedies Available In Intellectual Property Rights

Author: Abhinav Gaur, Research Associate

Ubi Jus Ibi Remedium, this latin phrase expedites upon the fundamental of theory of every judicial system, which means where there is a right, there is a remedy. The existence of judiciary as a watchdog for every democratic set up can hardly be argued, as it the existence of judiciary and the punishment implicating laws that deter any wrong in society. The foremost function of judiciary is to provide for legal remedies for trespasses against personal and property rights of person.

The grant of any right’s effectiveness totally depends upon how expeditiously the remedy for such right’s infringement is availed to a person. Intellectual Property Rights is no exception to this fact, as statute in this regard provides only a modicum of direction as regards the nature of remedies and the procedure for safeguarding them, leaving a large extent of role within the province of judges.

Intellectual property is inchoate property when manifested in a legally recognizable way. Property right was, till the deletion of Article 19(1)(f) of the Constitution of India, a fundamental right for citizens, but now under Article 300-A it is separately notified as a Constitutional right ensuring that no person can be deprived of his property save by the authority of law ((Justice R. K. Abichandani, Role of Judiciary in the Effective Protection of Intellectual Property Right, available at http://gujarathighcourt.nic.in/Articles/roleofjudicary.htm (last viewed on 30th May 2013).)).

The most intimidating feature of an intellectual property is that it differs from the other forms of property because of uncertainties regarding its value and manner of use. It is not something that can be kept safe in lockers or be hidden from others. Having the right of intellectual property registered is no guarantee of its safety from being stolen. The registration is nothing more, in effect, that the recognition of the right of ownership. This property, which is a product of the intellect is, therefore, very difficult to protect. Commercial piracy is a big business and there is hardly any country in the world where pirated articles are not being sold ((Justice (Dr.) A.S. Anand, Intellectual Property- Indian Experience (1997) 6 SCC J. 1)).

Protection of Intellectual Property

The phenomenal growth in various fields of technology, industry, commerce and trade during the last two decades is due mainly to the encouraged extensive research and development output resulting from the creative of scientists, technologists and artists all over the world. With dynamics of business set ups, advertisement techniques, business development techniques and grit of human efforts have led from making use of superfast data processing techniques assisted by advanced computer generated creative works. The continuous efforts of human to advance with advancing age in every field like science, technology, commerce, communication and what not; is resulting into intellectual property which is sole creation of human intrigue.

Thus, when so much of research and intellect for over years is invested in invention of an intellectual property, it deserves to be protected. It is so highly prized by all civilized nations that it is thought worthy of protection by national laws and international conventions ((Gramophone Company v. Birender Bahadur Pandey, AIR 1984 SC 667)).

Remedies against exploitation of Intellectual Property

The intellectual property is protected by the sanctions of law and a right to secure one’s intellectual property is a statutory right ((Vikas Vashishth, Law & Practice of Intellectual Property in India, Bharat law house, New Delhi, (3rd ed.), 23.)). It is well known principle of law that where there is a right there is a remedy which is derived from the maxim ubi jus ibi remedium. India has four statutes protecting the infringement of intellectual property of a person, namely, (a) The Trade Marks Act, 1999, (b) The Copyright Act, 1957, (c) The Patents Act, 1970 and (d) The Designs Act 2000. Not limited to remedies available in those statutes, an aggrieved person may have recourse to the provisions in Section 479 to 489 Indian Penal Code, 1860 and Section 38 of the Specific Relief Act, 1963.

Generally, it is the civil remedy which is sought in most of the cases. An aggrieved person can file a suit in competent court seeking relief of injunction, damages, accounts and delivery of infringing goods or article. The relief of injunction is the most asked for as of its very nature to prima facie stop further breach and loss to the aggrieved. The right to seek injunction is a very effective right and courts have discretionary power in matters pertaining to it, ofcourse subject to certain conditions.

Remedies under the Trademarks Act

When dispute arises or any breach is done in respect to, the infringement of a registered trade mark; or any right registered under trade mark; or for passing off arising out of the use by the defendant of any trade mark (registered/unregistered), shall not be instituted in any court inferior to a district court having jurisdiction to try such case ((Trade Marks act 1999, s 134 (1).)). It is well settled, that a court shall not readily presume the existence of jurisdiction of a court which was not conferred by the statute ((Dhoda House and Patel Field Marshal Industries v S. K. Maingi and PM Diesel Ltd. 2006 (32) PTC 1 (SC).)).

The Court has discretion to grant injunction and at the option of plaintiff court may also award damages, together without or without any order for the delivery-up of the infringing labels and marks for destruction or erasure ((Trade Marks act 1999, s 135)). The purpose of grant of injunction is not to penalize the defendant but to protect the interest of the plaintiff to the extent it is justified ((N. R. Dongre v. Whirlpool Corporation (1996) 5 SCC 714)).

In the case of passing-off it is usual, rather essential, to seek an injunction, temporary or ad interim. The plaintiff must prove, a prime facie case, availability of balance of convenience in his favor and his suffering an irreparable injury in the absence of grant of injunction ((Laxmikant V. Patel v. Chetan bhai Shah (2002) 3 SCC 65)). The court under section 54 of Specific Relief Act has discretion to grant perpetual injunction.

Remedies under copyright act

The Act extends protection to the work by conferring certain exclusive rights on the author. The act provides for civil remedies ((Copyright Act 1957, s. 55))by the way of seeking injunction/damages or otherwise as may be conferred, on infringement of a right under the Act in respect of any work. This remedy is given to an ‘owner’ ((Copyright Act 1957, s. 17))and not to a ‘prospective owner’. Injunction is an equitable remedy, by way of judicial discretion, depending upon case to case ((R. M. Subbiah v. N. Sankaran Nair, AIR 1979 Mad 56)). If the plaintiff succeeds at the trial in establishing infringement of copyright, he will normally be entitled to a permanent injunction to restrain future infringements ((K. P. M. Sundhram v. M/S RP Mandir, AIR 1983 Del 461; Hawkins Cookers Ltd v. Magicook Appliances Co., 2002 (25) PTC 713 (Del); Himalaya Drug Co. v. Sumit, 2006 (32) PTC 112 (Del); Diamond Comic Pvt. Ltd. v Raja Pocket Books, 2005 (31) PTC 378 (Del).)).

The Act also provides for compensatory civil remedies against infringement of copyright, by awarding damages. The purpose of award of damage is restoration to plaintiff as if no damage had been done or as his position was before infringement. The court ((Microsoft Corporation v. K. Mayuri, 2007 (35) PTC 415))has observed that in cases of blatant infringement, an award of damage may be passed under following three heads:

(a) Compensatory or Actual Damages;
(b) Damages to Reputation;
(c) Punitive Damages.

Remedies under Patents Act 1970

Where any person threatens any other person by any means, with proceedings for infringement of a patent ((Patents Act 1970, s. 106)), any person aggrieved thereby may bring a suit against him praying for following reliefs:

(a) A declaration that the threats are unjustifiable;
(b) An injunction against continuance of threats; and
(c) Such damages, if any.

However, a mere notification of existing of a patent does not constitute a threat of proceeding ((Upendra Nath Dass and Sons v. T. C. Martin, AIR 1962 Cal 69)). Injunctions ((Patents Act, s. 111.)), at the plaintiff’s behest may also be granted against defendant on the discretion of the court. Court may also order seizing, destroying or forfeiting such material proved to be infringing ((Patents Act, s. 108.)).

Remedies under the Designs Act

The Designs Act provide for two remedies, alternate to each other ((Designs Act, s. 22(2).)), which are as follows:-

(a) If any person acts in contravention of Section 22, he shall be liable to pay the registered proprietor of the design a sum not exceeding Rs. 25,000 for every contravention recoverable as a contract debt, provided that total sum recoverable in respect of any one design shall not exceed Rs. 50,000.

(b) The proprietor may bring a suit for recovery for damages for any such contravention, and for an injunction against a repetition thereof, and shall be entitled to recover such damages as awarded by the court on succeeding.

Rights and Obligation of Patentee: A Negative Right

Author: Abhinav Gaur, Research Associate

What is a patent?
A patent is an exclusive right ((N. R. Subramanium, Patent Law, Wadhwa and Company, New Delhi [2nd ed. 2007]))granted to a person who has invented a new and useful article or an improvement of an existing article, or a new process of making an article ((P. Narayanan, Patent Law, Eastern Law House, Kolkata [4th ed. 2006] 1)). Patent is a monopoly ((Raj Prakash v. Mangat Ram Chaudhary, (1978) AIR Del 1))right ((A. Bhargava, Guide To Patents Act With Patent Rules, Taxmann Allied Services, New Delhi, [2003]))in respect of an invention ((Halsbury’s Laws of England [4th ed., Vol. 35, para 303])). The object of granting a patent is to encourage and develop new technology and industry ((P. Narayanan, Intellectual Property Law, Eastern Law House, Kolkata, (3rd ed. 2001) 11)). Thus, precisely, Patent is an instrument to guarantee protection of rights of patent holder to use the invention to his advantage.

The word patent is nowhere defined in the Act, although section 2(1)(m) states ‘Patent’ means a patent granted under this Act’, but generally, A patent is a state sanctioned time barred right to the inventor, in return of inventor disclosing the details of the invention to the public.

Who is a patentee?

Patentee is a person for the time being entered in Register of Patents as the grantee or proprietor of patent ((S. 2 (1) (p), The Patents Act, 1970. (39 OF 1970).)). Patentee is the one to whom a patent has been granted. The term is usually applied to one who has obtained letters patent for a new innovation ((Black’s Law Dictionary (2nd ed.) http://thelawdictionary.org/patentee/ [Last viewed on May 23, 2013])).

Grant of a patent

Patent once granted ((Section 43 The Patents Act, 1970 [39 OF 1970]))does not prima facie validate a patent. Guarantee of patent should not be confused with issuance of a patent ((Bishwanath Prasad Radhey Shyam v. H M Industries, AIR 1982 SC 1444; Hindustan Lever Ltd. v. Godrej Soaps Ltd, AIR 1996 Cal HC 367; Standipack P Ltd v. Oswal Trading Co, AIR 2000 Del 23; Gandhimathi Appliances v. L G Varadaraju, (2001) CLA-BL Supp 250 (Mad HC DB); Novartis AG v. Mehar Pharma, 2005(30) PTC 160 [Bom])). The examination and investigation carried out by the Controller of Patents and any further report or proceedings must not at all be deemed to warrant the validity of a patent, and Government or any other officer related to it shall not be liable for any action taken on grounds of the investigation ((S. 13(4) The Patents Act, 1970 [39 OF 1970].)). Controller, taking notice of a failure to abide by his specification, may refuse the grant of patent ((S. 15 The Patents Act, 1970 [39 OF 1970])).

The following paragraph elucidates upon the effect of grant of a patent on a patentee:

The effect of the grant of a patent is quid pro quo. Quid id the knowledge disclosed to the public and quo is the monopoly granted for the term of the patent ((Raj Prakash v. Mangat Ram Chaudhary, AIR 1978 Del 1. See Firoz Ali Khaidar, The Laws Of Patents: With Special Focus On Pharmaceuticals In India, Lexis Nexis, Buttersworth Wadwa, Nagpur, (2009) 250.)).

Consequences of Grant of Patents

There lies an exclusive right upon patentee’s agent or assignee conferred by a patent, for a limited period to the exclusion of all others. With the right to prevent others from making, using or marketing such invention during the period of protection, lies a monopoly right over the invention for a limited period to make or use the invention or to make it.

Rights and Obligations of Patentee

Patentee has been enshrined with following rights:-

(a) Where the patent is for a product, the exclusive right to prevent third parties, who do not have his consent, from act of making, using, offering for sale, selling or importing for those purposes that product in India;

(b) Where the subject matter of patent is a process, the exclusive right to prevent third parties, who do not have his consent, from act of using, offering for sale, selling or importing for those purposes the product directly obtained from that process, in India ((F Hoffmann-la Roche Ltd v. Cipla Limited, 2008 (37) PTC 71 (Del).)).
Nevertheless, that product should not be such that no patent can be granted for that product in India ((S. 48 The Patents Act, 1970 [39 OF 1970])).

More explicitly, if the rights to patentee are to be elaborated, the rights can be formulized as under:

Right to exploit the patent

In the case, when invention is a product, it is the exclusive rights of patentee to make, use, sell or import for these purposes, the invention in India. Whereas, in the case where such is for a method or process of manufacturing an article or substance, it confers exclusive right to use or exercise the method or process in India.

Right to grant license

The patentee has the discretion to transfer rights or grant licenses or enter into some other arrangement for a consideration. A license or an assignment to must be in writing and registered with the Controller of Patents, for it to be legitimate and valid. The document assigning a patent is not admitted as evidence of title of any person to a patent, unless registered ((S. 69(5) The Patents Act, 1970 [39 OF 1970])) and this is applicable to assignee not the assignor ((National Research Dev. v. Silicon Ceramics, AIR 1998 Del 52)).

Right to surrender

The patentee upon his own discretion has the right to surrender the patent at any time by giving notice in the prescribed manner to the Controller. The Controller, before accepting the offer of surrender shall have to advertise the same so as to give an opportunity to the interested parties to oppose the offer of surrender. This is usually done when the patentee apprehends his non-performance of the patent in future and upon which he decides to surrender the patent.

Right to sue for infringement

The patentee has a right to institute proceedings for infringement of the patent in a District Court having jurisdiction to try the suit.

What are Patentee’s rights subjected to?

Rights of patentees as discussed above are subjected to few restrictions, which are as follows:-

Government use of patent

A patented invention may be used or even acquired by the Government, for its use only; it is be understood that Government may also restrict or prohibit the use of patent under certain circumstances. In case of a patent in respect of any medicine or drug, it may be imported by the Government for its own use or for distribution in any dispensary, hospital or other medical institution maintained by or on behalf of the Government. This a government can do without consent of patentee or even without payment of royalties. The Government may also sell the article manufactured by patented process on royalties or may also acquire a patent on paying a suitable compensation.

Compulsory Licenses

If patent is not worked satisfactorily to meet the reasonable requirements of the public, at a reasonable price. The Controller may grant compulsory licenses to any applicant to work the patent. A compulsory license is a provision under the Indian Patent Act which allows the government to mandate a generic drug maker to produce inexpensive medicine in public interest even as a patent on the product is valid. Compulsory licenses may also be obtained in respect of related patents where one patent cannot be worked without using the related patent.

Revocation of Patents

A patent may be revoked in cases where there has been no work or unsatisfactory result to the demand of public in respect of patented invention.

Invention for defense purposes

Such patents may be subject to certain secrecy provisions, i.e. publication of same may be restricted or prohibited by directions of controller. Upon continuance of such order or prohibition of publication or communication of patented invention, applicant is debarred for using it and Central Government might use it on payment of royalties to applicant.

Restored Patents

Once lapsed, a patent may be restored, provided that few limitations are imposed on the right of the patentee. When infringement was done during the period between date of lapse and date of advertisement of the application for restoration, then the patentee has no right to seek action for infringement.

OBLIGATIONS OF A PATENTEE

Wisely said, that where there is right, there is a duty. The possession of patent does not only bestow certain monopoly rights upon the patentee but also certain duties, such as:-

1. To encourage and secure working of invention to fullest extent without undue delay.
2. Not to use monopoly to unfairly prejudice interest of public.
3. Failure to discharge duties reasonably, would lead to revocation of patent.
4. To furnish periodical statements to Controller, as to extend to which invention has been worked.
5. Failure to provide statement to Controller is a punishable offence.

A patent is a monopoly right conferred by the Patent Office on an inventor, with his right to exploit his invention for a limited period of time. During this period, the inventor is entitled to exclude anyone else from commercially exploiting his invention. Once a patent is granted to the patentee, certain rights and obligations arises with respect of holding, using, exploiting, and working of a patent on a patentee. The author believes it to be a negative right, because enjoyment of a patent by a patentee is subject to various restrictions and obligations, breach of which may result into heavy penalties as subscribed by the law.

Parallel reexamination can serve as a trap for a plaintiff-patentee

This Legal Update is Contributed By: Aakarsh Kamra

In an Appeal from the United States District Court for the Central District of California in Case No. 04-CV-8604, the appellate panel agreed that statements made in an ongoing, pending reeexamination were relevant to the claim construction.

In this case, however, the Federal Circuit held that the reexamination statements were not direct enough to constitute prosecution disclaimer. The appellate court’s approach here looked particularly to the words used by to the patentee in the reexamination to identify any actual limitations or disclaimers and refused to read-between-the-lines to find implied disclaimers. In this sense, the decision supports the long-held prosecution strategy of keeping the prosecution history file thin.

The Federal Circuit then offered its own broader construction of the term and remanded the case for reconsideration.

Background

The United States District Court for the Central District of California granted summary judgment of noninfringement to the defendants (Mako Products, Inc.; Air Sea Land Productions, Inc.; CineVideoTech, Inc.; Spectrum Effects, Inc.; Blue Sky Aerials, Inc.; Jordan Klein’s, Sr.; Jordan Klein’s, Jr.; and Oppenheimer Cine Rental, LLC) on the patent owned by David Grober and Voice International, Inc. (“Appellants”). Several defendants cross-appeal the district court’s denial of attorney’s fees. For the reasons recited below, this court affirms-in-part, vacates-in-part, and remands to the district court.

In 2006, David Grober won an academy award for the best technical achievement of the year for his “perfect horizon” camera stabilization head. The camera head is designed to compensate for motion during land, air, and sea operations of a camera. Grober’s patent No. 6,611,662 covers the camera head and is the subject of this appeal.

This case is like many that involve parallel legal proceedings. Grober filed an infringement action in 2004, Mako then filed an inter partes reexamination request – asking the USPTO to take a fresh look at the patent. The district court stayed the litigation until 2006. At that time, the court became antsy and reopened the case. After claim construction, the district court ruled that the accused products did not infringe the asserted claims and dismissed. Later, during the course of the appeal, the USPTO finally decided the reexamination by confirming the patentability of the asserted claims.

The court finds no error in the district court’s personal jurisdiction determinations. Appellants did not show that the Kleins or Oppenheimer performed any  relevant activities to establish general or specific personal jurisdiction. This court concludes that the district court properly declined personal jurisdiction over the Kleins and Oppenheimer.

The court vacates the district court’s claim construction and vacates the grant of summary judgment for non-infringement. This court remands for further proceedings. Finally, this court affirms the district court’s personal jurisdiction determination.

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Intellectual Property: The Dominant Force In Future Commercial Transactions Comprising Mergers and Acquisitions

Authors : Puneet Yadav & Prashant R Dahat

There is a well-established statutory, administrative and judicial framework to safeguard intellectual property rights in India, whether they relate to patents, trademarks, copyright or industrial designs. Well-known international trademarks have been protected in India even when they were not registered in India. The Indian Trademarks Law has been extended through court decisions to service marks in addition to trade marks for goods. Computer software companies have successfully curtailed piracy through court orders. Computer databases have been protected. The courts, under the doctrine of breach of confidentiality, accorded an extensive protection of trade secrets. Right to privacy, which is not protected even in some developed countries, has been recognized in India.

There has been a noticeable pick-up in cross-border mergers and acquisitions in recent months that could signal the beginning of a sustained rise in international takeovers. In last year alone, there were six major Mergers and Acquisitions transactions in which a company in one country acquired the assets and operations of a company in a different country. Continue reading “Intellectual Property: The Dominant Force In Future Commercial Transactions Comprising Mergers and Acquisitions”