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Universities and Institutes are considered to be the most important foundation for growth of any country. It is the place where most of the basic research is carried out, giving way to inventions. As Intellectual Property Rights (IPR)act as a shield to such invention from being misused by third parties, and help in commercialization of these inventions, it is highly recommended that such inventions be protected under the IP domain in order to guard owner’s interests in order to infuse development in respective field of invention.

Often times, since students are the ones who carry out research that may lead to inventions, it is imperative for them to get these inventions protected in order to commercialize the mas well as thwart misuse of the same by third parties. Moreover, there are various reasons as to why Academic Institutes or Universities should consider filing a Patent Application for protection of inventions that have been carried out in their campus.

 IP Division in University

IP policy in universities is an important toolfor encouraging generation, protection, and commercialization of IP in universities and research institutes. The policy provides a structure and frameworkthat can be used to promote generation, protection and commercialization of IP in Research and Technology organizations. Typically, an IP policy mainly focuses on benefit sharing and ownership of IPRs, strategies for commercialization and management of privately sponsored research, collaborative research, conflict of interest as well as other issues.

 Existence of IP policies in institutes and universities is a strong indicator of their commitment in promoting generation, protection and commercial exploitation of IPRs.[1]

In 2001, due to growing importance of IP institutional policies, WIPO published a booklet entitled Guidelines for developing IP Policies in African Universities and Research Organizations. While the publication title suggests that the guidelines are aimed at African institutions, the content is universally applicable and, as a result, the guidelines have since been used in several developing countries. Recently, a second edition was compiled and is currently awaiting publication entitled Choices in Developing IP Policies in Universities and Research Organizations. It addresses ten issues that senior managers of universities and research organizations may wish to consider while developing institutional IP policies.

Some countries have prepared model IP policies that universities and research organizations may adapt, depending on their mission, research culture and agenda. For example, the Nigerian Office for Technology Appropriation (NOTAP) has prepared a model IP policy, which it has made available to universities and research institutions in Nigeria. This has resulted in speeding up the process of developing IP.

In other words, IP divisions in Universities and Institutions help spread the awareness of importance of IPR, especially for filing patent application for an invention. Such awareness and advantages of Patent protection gives an incentive to members of Universities for more inventions, leading to greater skills. Thus, University, in the end produces high quality manpower that the world is chasing for.

Licensing

Unlike industrial scientists and engineers who generally are hired to invent and assign rights in their inventions to their employer without any residual rights to additional compensation, university personnel are in a different position. The prime focus of universities is to educate and, in some instances, to conduct technical research.[2] However, in case of any invention during the conduct of technical research, Universities must not lose an opportunity to file a Patent application and take benefits from it thereon. This helps the universities in investing more on R&D and helping them in overall development.

 Academic-Industrial Linkages

There are many instances where Universities collaborate with industries for innovating in a specific domain, which gives a lot of exposure to its faculties and students and help them gain a position in these industries, leading to a lot of acknowledgement of the respective Universities. This, in turns, encourages the entire Academic ecosystem to do more research leading to useful invention, leading the country in becoming the hub of research and development.

One such occasion where innovation ecosystem was built was for Drug discovery, in which recently about 45 MoUs were exchanged between Pharmaceutical industries and central institutes such as IITs, IISCs, NIOERs, IISc-B, NIFT NITs, RGIPT, RGNIYD& SPAs. It is steps like these that have led India to enjoy the position of leadership in the world’s pharmaceutical market in Generic medicines.  Much of the credit also goes to policy initiative in terms of Patent Act, 1970 which allowed process patents, enabling in transforming India from medicine importing country to exporting country and Private and Public skill and entrepreneurship of Pharma Industry.[3]

Further, It is observed that India has been increasingly getting involved in research and development, so much so that, various Multinational Corporations across the world has shifted their R&D base in India. This is a significant reason as to why Indian Universities should file for Patent applications as all of the above facts give incentives for the Universities to innovate more useful products that helps grow the society as well as the economy.

Government Policies Supporting the Filing of Patent Applications

The Government of India amended the Patent Act by introducing the following policies that gives incentives to academic institutions to protect their inventions under Patent law.

  • The act has provided a concession to small entities and individual in fees for filing applications. Under the Act, an individual is supposed to pay Rs. 1600/- and Small entities shall pay 4000/-, however other Legal Entity are obligated to pay Rs. 8000/- .Thus, giving approximately 50% relaxation to an individual and small entities.
  • Scheme for facilitating Intellectual Property Protection (SIPP) running on pilot basis till 31st March 2020, facilitating 80 % rebates to start-ups for filing Patent applications. They can also avail the special facility of expedited examination of their patent applications.
  • The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India, has signed an Institutional agreement with Anna University to establish India’s second Technology and Innovation Support Center (TISC) at the Centre for Intellectual Property Rights (CIPR), Anna University, Chennai, under the World Intellectual Property Organization’s (WIPO) TISC program.[4]

Such reduction in filing fees for individuals, small entities and start-ups will help students to file patent application without any inconvenience. The objective of the aforesaid policies is to stimulate a dynamic, vibrant and balanced Intellectual Property Rights (IPRs) system in India to foster creativity and innovation, thereby promoting entrepreneurship and enhancing social, economic and cultural development

 Present Scenario

The data as presented below in Fig.1 and Fig.2 shows that the Indian universities have become more and more aware about the importance of IP over the last decade. The number of Patents filed by the various Indian Institutes of Technology for instance has increased from 91 in 2008-09 to 400 in 2016-17. IITs continue to top the rank list by filling the maximum number of applications in a year for the protection of their inventions within India, following which, Amity University and Indian Institute of Science score 2nd and 3rd rank. It is to be noted that Indian Institute of Science has shown remarkable growth in number of filing Patent applications in 2016-2017 as compared to the year 2008-2009. Further, Amity University recorded about more than 23% growth in the year 2012-2013. Moreover, CIPR has filed more than 185 Patents, 29 Trademarks, 39 Copyrights, 25 Industrial Design and has also assisted in filing 12 International Patent Applications.

                

                

The process of liberalization, privatization and globalization which started in 1991 has gained momentum in recent times. This, in addition to the fact that technology is increasingly penetrating in all aspects of Indian society, has resulted in greater awareness of IPR among all institutions of India. The foremost among them have been the universities and research institutes.

However, this positive trend of greater awareness of IPR and high growth in number of patents being filed by Indian Universities have been somewhat limited to just the top universities of India. If India is to become a knowledge-based developed economy and society in the coming decades, the trend of greater number of patent filings has to permeate to all the Universities of India and not just remain at the top. Innovation has to be in the forefront of this process. The universities need to implement all the above mentioned steps in order to gain recognition and acknowledgment in the field of research and development and innovation by protecting them through patent law. The need of the hour is to equip our Universities enough, so that large numbers of them are able to engage themselves in good quality and innovative research, resulting in socially relevant and commercially viable inventions. Along with this, the Universities also need to ensure they are able to realize the commercial benefits of their invention by using the IPR regime.

Thus only when the recent trend as seen in the top Indian universities is further developed and replicated in other universities, will India truly realizes its goal of becoming innovative and knowledge-based developed economy and society.

Author: Pratistha Sinha, Associate and Rishabh Nigam, Associate at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

References:

[1]http://www.wipo.int/edocs/pubdocs/en/intproperty/958/wipo_pub_958_3.pdf

[2]http://www.tms.org/pubs/journals/JOM/matters/matters-0301.html

[3]http://pib.nic.in/newsite/PrintRelease.aspx?relid=130224

[4]http://pib.nic.in/newsite/PrintRelease.aspx?relid=173318

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BRIEF INSIGHT INTO THE DISPUTE:

Introduction:

This case is a result of copyright infringement of a musical based on the story of Zorro.The character of Zorro originally was developed by Johnst McCulley which was further adapted in stories. All of the stories are part of public domain. Cabell (hereinafter “the plaintiff”) made a musical based on the story available in public domain and Zorro Productions (hereinafter “the defendant”) is the assignee of the character Zorro. The Plaintiff produced a musical titled “Z – The Musical of Zorro” and got its scripts and audio with the U.S. Copyright for original, novel elements of his work but not the elements in the public domain as of 1996.

The Plaintiff met the Defendant for the production of the Musical but the agreement did not materialise and the defendant gave a legal threat to the Plaintiff not to publish their work without a license from them. Later, the Defendant licensed the use of the character Zorro to Allende in 2005 and separate musical in 2008.

Facts:

  • The Plaintiff filed an infringement suit claiming that the novel and the musical was infringing its musical and seeking a declaration that the Plaintiffs’ musical is not infringing the copyright of the Defendant.
  • The Defendant cross-moved an application claiming that the Plaintiff was infringing its copyright.

ARGUMENTS BEFORE THE COURT:

The arguments advanced by the Plaintiff are –

  • The Defendant had access to the script of the musical of Plaintiff due to their exchanges with respect to a licensing agreement in 1966 which did not materialize.
  • The Plaintiff contended that there was substantial similarity between both the works.
  • The Plaintiff further contended that three characters from its script were sufficiently developed and therefore, it should be granted protection.
  • The Plaintiff’s musical was based on public domain and therefore, does not infringe the copyright of the Defendant

 The arguments advanced by the Defendant are –

  • The Defendant contended that the Plaintiff’s musical is infringing its copyright.
  • The Defendant further contended that Statute of Limitations will be applicable because when both the parties met for the licensing agreement, the Defendant had informed the Plaintiff that its musical is infringing the copyright of the Defendant.

DECISION OF THE COURT:

The court thus decided;

  1. That the Plaintiff’s musical does not infringe the Defendant’s copyright over the character of Zorro.
  2. That the Defendant’s musical and novel does not infringe the Plaintiff’s musical and does not have similar theme and setting.

CONCLUSION:

The Court analyzed the plaintiff’s claims. It was not disputed that the Defendant had access to Plaintiff’s script as a licensor holds a supervisory authority and there was an agreement between the Plaintiff and the Defendant which did not materialize so the Court cannot rule out a possibility of the Defendant having an access to the script. The Court followed the extrinsic test to conclude if there is a substantial similarity between the two works. The extrinsic test focuses on “articulable similarities between the plot, themes, dialogue, mood, setting, pace, characters, and sequence of events”. The Court determined that the plot of the novel was focused on the character Zorro’s childhood whereas the Plaintiff’s musical is based on Zorro when he is an adult. The Court found differences in the settings, theme, pace, mood and tone of the two works.  The Court concluded the claim of the Plaintiff by adjudicating that the claim of Plaintiff that three characters from the musical were sufficiently developed in the novel cannot stand as there is no substantial similarity between the two and the treatment given to them is also dissimilar.

Adjudicating on the claim of the Defendant that the Plaintiff is infringing its copyright, the Court concluded that a reasonable person will not find substantial similarity between the two musicals. The Court disagreed with the contention that Statute of Limitations will be applicable in the present dispute as the Defendant has the right to file an infringement claim whenever the Plaintiff produces its musical. The Court rested the dispute by applying the doctrine that a party abandons claims by not raising them in opposition to a summary judgment motion and held that the Defendant had abandoned its claims of copyright infringement by not raising it in opposition to a summary judgment motion and passed a declaratory judgment claim in favour of the Plaintiff in this regard.

Note: Several quotations from the judgement are included in this article. The complete judgment can be found here.

Author: Ankita Aseri, Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

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It is a general rule that once pronounced by a Court a judgment becomes functus officio and it cannot be altered or changed. However, an exception to this rule lies in the equity principle of ‘writ of error’. Writ of error is a writ filed where an error in delivering a judgment can be rectified on the grounds that human failing should not cause impediment to justice. This writ lays the basis for the modern-day ‘Review Petitions’ filed in the courts whereby the same court and same judge are allowed to review and alter their own judgments under extraordinary or unusual circumstances. This article analyses the power of the Controller under section 77(1) (f) and (g) of The Patents Act, 1970 to review his own decisions.

Scope of Section 77:

Chapter XV of the Patents Act 1970 refers to the powers of a Controller. Section 77 specifically bestows certain powers of the civil court on the Controller. It lays down the that the Controller shall have powers of a Civil Court while trying a suit under Code of Civil Procedure, 1908 in respect of the following matters:

1. summoning and enforcing the attendance of any person and examining him on oath;
2. requiring the discovery and production of any document;
3. receiving evidence on affidavits;
4. issuing commissions for examination of witnesses or evidences;
5. awarding costs;
6. reviewing his own decision on an application made within prescribed time and in the prescribed manner;
7. setting aside an order ex parte on application made within prescribed time and in the prescribed manner;
8. any other matter which may be prescribed.

Thus, section 77 confers upon the Controller certain essential powers of a civil court in order to enable him to deliver decisions in any proceedings before him under the Patents Act. This section is significant as it tends to state that any decision passed by the Controller in any proceeding before him shall be executed and enforced like a decree of Civil Court.

Section 77(1) (f) refers to the power of the Controller to review his own decision. The Civil Court has a similar power under Section 114 and Order 47 Rule 1 of the Code of Civil Procedure, 1908. A small parallel between the two provisions is drawn below:

Contents
Section 77(1)(f) of Patents Act
Section 114 of CPC
Initiation of review proceedings
On application of aggrieved party made in Form 24
On application of aggrieved party in prescribed format under Order 47
Limitation
Must be filed within one month from the date of communication of such decision to the applicant.[Rule 130 of Patent Rules 2003]
Must be filed within 30 days from the date of passing of such decree by the civil court.[Order 47]
Whom to apply
The Controller who passed the earlier decision
Application to be made to the very judge who passed the decree or made the order
Grounds for review

An application for review may be made on any of the following grounds-

(i) discovery of new and important matter or evidence; or
(ii)on account of some mistake/error apparent on the face of the record or;
(iii)for any other sufficient reason

An application for review of on order/decree may be made on any of the following grounds-

(i) Discovery of new and important matter or evidence; or
(ii) Mistake or error apparent on the face of the record; or
(iii) Any other sufficient reason

Appeal
No appeal shall lie from the Controller’s decision of review under section 77(1) (f).[Section 117 A]
No appeal shall lie from any order/decree passed in a Review Petition[Order 47 Rule 7(1)]

Therefore, from the above table it can be concluded that the powers of a Controller under Section 77(1) (f) of the Patents Act, 1970 are equivalent to the powers of a Civil Court under Section 114 of the Code of Civil Procedure, 1908. The mentioned provision thus gives wide powers to the Controller to review his own decision on the above mentioned grounds. If the order of the Controller concerns to any other person in addition to the applicant, the Controller shall immediately transmit a copy of application to the other person concerned.

Similarly, Section 77(1) (g) lays down the provision regarding setting aside of ex-parte orders passed by the Controller. The term ‘Ex Parte’ orders relate to those orders which are passed in the presence of just one party and without hearing the other. Clause (g) of the Section allows an applicant to make an application under Form 24 within one month from the date of communication of such order to the applicant or within such further period not exceeding one month as the Controller on request made (under Form-4) may allow. If the order of the Controller concerns to any other person in addition to the applicant, the Controller shall immediately transmit a copy of application to the other person concerned.

The order passed by the Controller in review is not appealable. Section 117A of the Act lays down the provisions for appeal from the decision/order of the examiner, controller or the state government to the Intellectual Property Appellate Board (IPAB). This is a mandatory provision laying down strict standards for appeal to IPAB. It clearly states that the appeal is allowable only in matters specifically mentioned under sub-section (2) of Section 117A.

The issue of appeal from a review application was discussed by the IPAB in the case of Andrews Ponnuraj Vairamani v. Controller of Patents, Chennai[1]in the year 2012. The IPAB while laying down the difference between these sections stated that Section 117 A is a special provision allowing appeals to the IPAB in certain specified circumstances whereas Section 77(1) (f) is a general provision laying down the grounds for allowing review of decisions made by the Controller. Review can be done only by the Controller and not the IPAB. This decision of the Controller is final and Section 117 A does not specify Section 77 as a ground for appeal to IPAB, thus leaving no scope for making cases appealable before IPAB under section 77 of the Patents Act, 1970 Further, it was held that- “Appeal is a creature of statute and is not an inherent right. Unless there is a specific provision for appeal, there can be no appeal. Where there is no provision to appeal against a review petition then appeal herein is not maintainable…” (Para 11&12).

Thus, it can be concluded that the Controller has wide powers under Section 77 which are equivalent to the power of a Civil Court under Code of Civil Procedure. Parties may seek review of the decision of the Controller where they feel that some grave error has occurred on the part of the Controller. However, the only drawback of this provision is that the review application is filed before the same Controller and therefore may, at times result in the party seeking for such reviews, prejudiced. However, this provision is a welcome move to ensure justice. Also, this decision of the Controller is final and no appeal can lie against an order passed upon a review application. This ensures that unnecessary hindrance due to repeated frivolous litigations/prosecutions is avoided.

References:

[1] Andrews Ponnuraj Vairamani v. Controller of Patents, Chennai; MANU/IC/0115/2012

[2] Section 77 of Patents Act, 1970

[3] Section 114 read with Order 47 of the Code of Civil Procedure, 1908

[4] Manual of Patent Practice and Procedure

[5]http://www.ipindia.nic.in/writereaddata/Portal/IPOGuidelinesManuals/1_28_1_manual-of-patent–practice_and-procedure.pdf

[6]http://www.ipindia.nic.in/writereaddata/Portal/IPORule/1_70_1_The-Patents-Rules-2003-Updated-till-23-June-2017.pdf

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There have been plethora of cases in India and abroad that discuss the menace caused due to monopolization of general English terms in course of business. The argument given by the proprietors is that to get a trademark over a name, it is important that the name is arbitrary and it does not describe the product that is being sold under it. While the importance of getting protection over one’s intellectual property is stressed upon, the bigger problem here lies with the concept of owning a name that everyone knows and uses in their day-to-day life. “Trademark Overreach or Trademark Abuse” refers to this practice of using and monopolizing general words as brand names. This article analyses the predicament of dominating general words for business purposes while highlighting upon the recent ‘COCKY’ controversy.

The COCKYGATE:

After Penelope Ward and Vi Keeland’s book ‘The Cocky Bastard’ became a major hit in 2015, number of romance novelists titling their books ‘Cocky’ was on the increase. The word is adored by these novelists for its implication to alpha-male heroes and for its under-playing potential. On 17th April 2018, the United State Patents and Trademark Office (USPTO) invited litigation when it granted a troublesome trademark on the general English word “COCKY”. Crux of the matter is that, self-published author Faleena Hopkins had filed for registration of trademark on the word “Cocky” in relation to a series of downloadable e-books in the field on romance, ‘Cocker Brothers of Atlanta’. The 19 book series is about Cocker brothers where each book features the word ‘Cocky’ in the title (books in the series can be viewed here Cocker Brothers Series). Adding fuel to the fire, Ms. Hopkins also wrote out to other authors to cease and desist from using the word in their book titles. Many authors like Jamila Jasper, Bianca Somberland have received notices from Ms. Hopkins stating that they should change the name of their books or else face legal actions. She also filed a complaint against these authors with Amazon as a consequence of which Amazon took down their books from sale. The matter came to light last week when many authors resorted to social media to write about the letters received from Ms. Hopkins with #COCKYGATE. The actions of Ms. Hopkins had led to an outcry in the romance writers’ community.

A petition to cancel the registration of ‘Cocky’ has been filed in the USPTO which has been signed by 17,000 people so far. The writers have claimed that romance novels usually involve alpha-male protagonists who are frequently described in the titles with this word. They also claimed that such generic terms cannot be trademarked. In her defense, Ms. Hopkins claims that ‘COCKY’ is an essential part of the titles of her books, hence, require protection. She said that she is received letters from the readers who lost their money thinking they bought her series. She stated that she is trying to protect the interests of such innocent buyers.

Analysis:

As stated earlier, general terms are not trademark-able. General terms refer to the terms or words that we use regularly in our day-to-day affairs or which are words of common tongue. General term is a term which ideally should not become the exclusive property of a single firm but at the same time it maybe a term which describes the source of a product or service provided under it; therefore, must not be appropriated by the rivals to use freely. Such terms cannot be trademarked unless they have attained a secondary meaning. A trademark claim may be overreaching if a mark similar to the registered mark comprised of a general term is separately registered and used in relation to a different class of goods. The court must not deny the defendants from using the general trademarked term unless it has acquired secondary distinctiveness.

Secondary Distinctiveness: An American Overview:

Federal Trademark Act, 1946 popularly known as the ‘Lanham Act’ governs the trademark law in the United States.  The act allows the owners of trademarks and service marks to register them on Principal Register. The refusal of registration is constrained to certain grounds enumerated in Section 2(a), (b), (c), (d) and (e) which includes grounds like mark being deceptively similar to another mark already registered, consists of immoral, deceptive or scandalous matter etc. This section is the American counterpart of Section 9 of the Indian Trademark Act, 1999, however, Section 2(f) of the Lanham Act provides an exception to refusal of registration on grounds of section 2(a), (b), (c), (d) and (e) (3), (e) (5). It states that “nothing herein shall prevent the registration of a mark used by the applicant that has become distinctive of the applicant’s goods in commerce”, thus, in US too, a general term can acquire protection only if the term has acquired a secondary meaning.

The Judicial outlook on this matter in United States is also in consonance with what the Act most states. Commonly descriptive terms or general terms used by the public or other businesses to describe a particular good cannot be trademarked unless it has acquired a distinctive meaning, in the sense that the public associates the term to a particular product of a particular company. Yet, there have been cases like the CITI Bank’s matter against AT&T over the term “THANK YOU”. The court sided with the defendants and stated that the term had achieved no secondary meaning, hence, CITI Bank cannot monopolize it.

Secondary Distinctiveness: Indian Perspective:

Section 9 of the Trademark Act, 1999 lays down the grounds for absolute refusal of registration of trademark and includes that a mark that is descriptive of the goods and services purported to be sold under it cannot be registered. It also bars registration of marks which have become customary in the current language or in bona fide and established practices of trade, however, the section gives an important exemption to the marks that have acquired distinctive character as a result of their use maybe registered. The exemption gives birth to the idea of ‘secondary distinctiveness’ which relates to the situation where certain terms acquiring a secondary meaning because of its use in the common parlance; such terms may be trademarked.

Examples of trademark overreach in India are many ranging from Ultratech’s claim over the term ‘Ultra’, or Reebok’s claim over the phrase ‘I am what I am’. In all these cases, the court ratio emphasized on the fact that a general term can be granted protection if and only if it is proven that the term has acquired distinctiveness and that public relate to the term by this secondary meaning rather than a definite meaning.

Conclusion:

In the present case also, the USPTO must take into consideration the genericness of the term ‘Cocky’ and the manner in which it is used by romance novelists in their titles. Generic terms should not be allowed to be trademarked unless there is proof of its acquired distinctiveness. The evidence of secondary distinctiveness must be made mandatory for those seeking to register generic terms as trademarks. Further while entertaining infringement suits involving such generic terms the Courts should be cautious to identify if the claim is bona fide; meaning, the generic term trademarked by the Plaintiff has attained a distinctive character and the public at large associates such term with the products of the Plaintiff.

Author: Aishwarya M. Pande, 5th Year, BA LLB (IPR Hons.), Institute of Law, Nirma University, Ahmedabad, Legal Intern at  Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

References:

[1] Trademark Registration no. 5447836 granted by USPTO

[2] http://tsdr.uspto.gov/#caseNumber=5447836&caseSearchType=US_APPLICATI

ON&caseType=DEFAULT&searchType=statusSearch

[3] Section 2, Federal Trademarks Act, 1946

[4] Section 9, Indian Trademarks Act, 1999

[5] https://timesofindia.indiatimes.com/life-style/books/features/romance-novelist-trademarks-word-cocky-stirs-up-controversy/articleshow/64108602.cms

[6] https://www.vox.com/culture/2018/5/15/17339578/cockygate-explained-romance-publishing-faleena-hopkins

[7] http://www.victoriastrauss.com/2018/05/09/trademark-shenanigans-weighing-in-on-cockygate/

[8]http://www.cbc.ca/radio/asithappens/as-it-happens-wednesday-edition-1.4665345/romance-writer-renames-book-after-author-trademarks-cocky-1.4665355

[9] James M. Treece and David Stephenson, ‘Another look at descriptive and generic terms in American Trademark Law.’,  66 Trademark Rep. pp 452,453

[10] Ultratech Cement Ltd. v. Dalmia Cement Bharat Ltd., (2015) 2 Mah LJ 354 (Bom)

[11] Reebok India Co. v. Gomzi Active, MANU/KA/0781/2006

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Exactly a year back, Calcutta High Court gave an elaborate judgement discussing the conditions for grant of design. The case holds relevance as it discusses element of Novelty and Prior Publication in detail. This post will try to comprehensively analyse the case.

FACTS

The design-in-dispute is a bottle cap under class 09-01 bearing Application No. 222799. The Private Respondent applied for cancellation under all the grounds mentioned in Section 19 of the Designs Act, 2000. The grounds are:

a. Design has been previously registered in India.
b. Design was published prior to the date of registration.
c. Design is not new or original.
d. Design is not registrable under the Act.
e. It is not a design as per Section 2(d) of the Act.

The Private Respondent claimed that the design features of the bottle-cap were not original or new. To adduce his statement, he relied on three evidences. Firstly, he provided the impugned registration nos. 195268, 195269, 200344 and 200682. All these ‘registered’ designs had bottle caps and closures with shape and configuration which was claimed by the Applicant. Secondly, he also produced a document titled ‘Ambrosia’ which was a magazine published in January 2009 and alleged it to be a prior art. Thirdly, he contended that the claimed design was a conventional design which has been in use for a long time.

LEGAL TIMELINE

1.  Publication of magazine ‘Ambrosia’ Vol. 16 No. 8 JANUARY 2009
2.  Applicant filed for registration of ‘claimed’ design MAY 2009
3.  Design published in Journal MARCH 2010
4.  Private Respondent filed for cancellation of ‘claimed’  design under Section 19 DECEMBER 2012
5.  Controller upheld the cancellation of design
6.  Calcutta High Court upheld Controller’s decision APRIL 2017

 ISSUE

Whether the Controller was correct in allowing for cancellation of the registration of the design under Section 19 of the Act?

FINDINGS

In the present case, J. Soumen Sen found out that the Private Respondent is an expert and thus has the required expertise to decide the matter. The Court held that the claimed design was published prior to registration and hence liable to be cancelled under Section 19 of the Act. The Court relied on Ambrosia magazine and held that since it was published in February 2009, the design cannot be granted protection. It was devoid of novelty and originality. The Court upheld the decision of the Controller and justified the cancellation of registration of design.

ANALYSIS

The present judgement revisits the element of Novelty and Prior Publication. Both the conditions are grounds for cancellation of registration of design under Section 19 of the Act. The design in the finished article has to be judged solely by the eye is no new fact. The reason why this exclusion was granted to the eye was that the purpose of granting design is to encourage and reward design of a good product. This helps in protecting the skill, creativity and labor of product designers.

What amounts to prior publication is a question of fact. It depends upon case to case. The test of prior publication is satisfied only when the previously registered design is out in public. The details of the design applied to the article should be such that it is can be judged by the eye. A person of ordinary intelligence and imperfect recollection must be able to see the design in his mind’s eye and not rely on imaginative faculties in constructing the design. The main ratio is that cancellation of design will be allowed if the claimed design is substantially similar to the of the prior publication design.

J Sen also cited various landmark cases like Parle Products Ltd.(2008) and Gopal Glass Works (2005) to elaborate on the concept of novelty and publication. Specifications, drawings of any demonstration done in connection with the registration of design does not constitute publication per se of the said design. This applies in registration of a design in foreign country as well. It means that specifications of the design disclosed while getting a registration will not amount to prior publication. Also, the judgement states that to constitute prior disclosure, the publication needs to firstly, be in tangible form of the design so applied to the article. The main factor that needs to be compared in prior publication is the visual effect and the appeal of the picture illustration.

The Court also cites Reckitt Benckiser IndiaLtd. v. Wyeth Ltd (2013) and few paragraphs from Russell-Clarke and Howe on Industrial Designs VIIIth edition quoting:

“In practical terms, there are two main ways in which a design can be published: by prior use of the design, by selling or displaying to the public articles to which the design has been applied; and by paper publications of one sort or another. It is not, in fact, necessary that publication should be on paper; an oral disclosure, provided it is non-confidential, will amount to publication.”

One of the notable mention is of Section 4(1) of the Registered Designs Act 1949 of UK. It is an exception wherein no prior art will be constituted if the proprietor of the registered design applies for registration with modifications and variations subject to conditions in respect of another article. In such case, his previous registration or the publication of his design as registered will not constitute prior publication. However, the term of protection will be limited only to the term of original design. This proves to be a great deal in UK as an Applicant who finds out that the claimed design has been previously registered with respect to a different article is allowed to buy the earlier design and then enjoy the advantage under the said section.

However, there lies a shortfall in the judgement. J. Sen has based on his findings based on the expertise of the Respondent (Refer Para. 39 of the judgement). This has further been aggravated by absence of any mention of the qualifications of the un-named Respondent. The Court should have compared the features of the design physically. Rather, it just relied on the Respondent’s submission as he was an expertise in the said field. Apart from this point, the judgement is a must-read for summarizing the element of publication and novelty in Design protection.

Author: Esha Himadri, Legal Intern, at  Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

References:

[1] Anuradha Doval v. The Controller of Patents and Designs [2017(71) PTC 288 (Cal)]

[2] Section 19, The Designs Act 2000

[3] Parle Products Private Limited v. Surya Food & Agro Limited [2009 (40) PTC 638 (Mad.) (DB)]

[4] Reckitt Benckiser India Ltd. V. Wyeth Ltd. [2013 (54) PTC 90 (Del) (FB)]

[5] Gopal Glass Works Limited v. Assistant Controller of Patents & Designs & Ors. [2006 (3) CHN 188]

[6] Russell-Clarke and Howe on Industrial Designs [VIIIth Edition]

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The cause of action for this case arose in 2003 on the assignment of the trademark ‘EENADU” by the defendant, NG Subbaraya Setty, in favor of the Petitioners, Canara Bank. This lead to two separate lawsuits: one by the borrower over cancellation of the assignment and another to recover the sum of money paid as royalty before the cancellation of the assignment deed with interests.

The case predominantly discusses whether the suit falls within the prohibition laid down under the principle of res judicata, also by sec 45 of the Trade Marks Act of 1999. The section specifies that any unregistered assignment cannot be presented as evidence in court of law. The assignment deed between the parties was never registered with the registry and thereby it cannot be accepted as a valid document under sec 45 of the TM Act. Furthermore, the party was of the opinion that the question of law was already decided by the courts by previously passed orders and therefore, the representation between the Supreme Court was barred by the doctrine of res judicata. However, the court in this matter held that if a question of law is wrongly decided by the other courts then that question being raised before the competent court between the same parties with the same cause of action is not barred by the doctrine of res judicata.

However, another important question in this case was whether the IP assignment was acceptable or not. The court held for this particular case that the assignment of IP was not valid. The reason for that was that the parties had not attached the IP as security or collateral at the time of entering into the loan agreement and the Court felt that subsequently an unrelated IP cannot be attached as collateral as a way to set off the claims of the banks. Furthermore, under Sec 6 and 8 of Banking Regulation Act a bank can only engage in certain types of business. And the selling of goods and obtaining royalty from the IP by way of a third party is not allowed as per Sec 6 and 8 of BR Act. Furthermore, the court clarified that a bank may sell the goods to set-off any claims it holds but it cannot do so by way of a third party and just obtain royalties from the goods which were never put as security or collateral before the bank. Therefore, in this particular case the assignment of IP was found invalid.

Now, ordinarily, the National IP Policy does allow for an IP to be attached as a security. However, the same is seen very skeptically by the banks since IP valuation can be tricky. Unless there is a system that makes registration mandatory, securitization will be very difficult in the Indian scenario. Any prior user who has not registered his trademark can challenge the claim of a registered IP owner as per current laws.[1] The banks would be left vulnerable in this case and the same can negate the whole purpose of allowing IP as security.

For example, in the much reported case of Vijay Mallya, his TM ‘Kingfisher’ was offered as collateral/security to the banks at the time of agreement and therefore did form part of security under sec 6 of BR Act. However, the auction of the TM was unsuccessful but it was a valid security nonetheless.

Therefore, it can be concluded that although IP as security is legally possible but it is a road less taken. The various aspects of the dynamic nature of the IP make it a very uncertain back-up for banks to realize their debts. However, if an appropriate method is introduced for valuation and registration then the banks may increasingly accept IP as collateral/security.

Author: Anirudha Bhatnagar, at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

References:

[1]//economictimes.indiatimes.com/articleshow/50194124.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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Smart Contracts, a concept that was proposed in 1994, with the intention to execute contractual obligations using computer codes has sprung into life after the introduction of blockchain technology in 2008. What blockchain did for smart contracts was to provide by linkage, a far less opaque, verifiable, impenetrable register to keep a record of all the transactions in the execution of the contract. It is important to understand that smart contracts are comprised of relatively simpler situations where on meeting of a certain predefined condition, the computer code triggers the fulfillment of the obligation. Standardized procedures can be made much faster and much more efficient by cutting out the middlemen. More complex parts of a contract like subjective terms cannot be handled solely by a smart contract.

Their role in IPR

Intellectual Property and their rights management comprise of a lot of transactions of a standard form which can be taken care if by the smart contracts and the underlying blockchain technology based on the nature of the Intellectual Property, and from there based on the respective use case. One way in which blockchain technology is looking to make strides in the IPR universe is through maintaining of IP registers   and assignment of rights and licenses to be regulated from the blockchain, as they can be directly entered into by the user and which reduce the time and effort to the absolute minimal.

Blockchain and smart contracts can come into play as repositories of information about Intellectual Properties which do not need a formal registration process for them to be recognized, especially copyright. In Indian Law, the copyright comes into existence as soon as the work is created and not when it is registered. This provides an incredibly difficult and cumbersome task to the authorities to find out when the said work came into existence, and there is always uncertainty about their proof of existence at a certain time. Presence of a blockchain, where some sort of print of the Intellectual Property can be stored in the blockchain, it would act as permanent record for the property and would allow the negotiating parties to have exact knowledge of the creatorship, nature and the time of the creation of the work resolving a lot of disputes at the very embryonic stage.  Also, a ledger with all the information about everyone in the supply chain from the creators to all the licensees would allow everyone in the supply chain to be aware of the genuineness of the product and hence protect the IP rights.

Given that smart contracts are competent to deal with standardized terms and conditions, they and the blockchain mechanism have the potential to become the ideal tools to handle processes like granting of licenses or authorization of access or any such agreement with relatively set terms. A simple example can be when some content over the internet, let’s say and article or a tutorial video can be accessed only after a certain payment that whole mechanism can be shifted over to blockchain to authorize the payment making the whole process much faster, and also leaving behind a trail. A feature of smart contracts is that they are self-executory in nature; the obligations are triggered automatically as soon as the requisite condition is fulfilled. This feature can be put to use in a license agreement which can ensure that all the necessary royalties are paid in accordance with the agreement and based on whatever calculations must be present in the contract code. In projects where a new technology is being developed, smart contracts can be used to automatically release funds when a certain point in the project is reached or a certain objective is accomplished.

Challenges and Potential

But all of these applications do come with their limitations as smart contracts have to be limited to standardized processes and can’t extended to the aspects where an interpretation or an assessment of the terms and conditions might be needed. The conditions and the milestones that have been spoken about in the above paragraph need to be very objective in nature for the mechanism to work. Anything that might not be a binary in nature will make it difficult for the smart contracts to be accepted as a medium of transaction.

There are already examples in the global community with Estonia using a platform called “BITNATION” for all its public notary services related to everything from birth certificates to contracts. Countries like Switzerland and Germany are investing heavily on blockchain based commercial registers while Canada has invested heavily in identity management systems based on blockchain. There is no dearth of application that Smart Contracts might find in IPR Management but that area is yet to be explored owing to the precarious legal position of cryptocurrencies and smart contracts in almost all legislations, and the general lack of understanding that lawmakers seem to have about technologies like these.

It would be remiss to say that Smart Contracts will provide solutions to all problems at once. They are still in a very nascent stage and will undergo a lot of development in the years to come. At the same time, with the digitization of all processes, it is safe to say that smart contracts will become an important business tool sooner rather than later and hence it is important that smart contacts be considered with all seriousness as they might become a part of everyday lives in the near future. It’ll also be seen that as the technology becomes more and more established, participants from the industry and the developers will have to work with each other so as to have systematic protocols for the blockchain. But as long as the law doesn’t address the uncertainties around it, blockchain and Smart Contracts will find it impossible to impregnate Intellectual Property and their rights management.

(For more details on smart contract, you can refer to here)

Author: Anirudha Bhatnagar, at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

References:

[1] http://www.wipo.int/wipo_magazine/en/2018/01/article_0005.html

[2]https://talkingtech.cliffordchance.com/en/ip/blockchain-and-its-application-in-the-field-of-ip.html

[3]http://www.fintechist.com/bitnation-uses-blockchain-based-public-notary-services-estonia-e-residency/

[4]https://medium.com/@foustry/blockchain-based-solutions-for-intellectual-property-management-2ba14b51d5f6

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Shadow Counsels (SC) are not a concept popularly exploited in India. However, their potential is yet to be discovered and realized in order for it to be part of our customary practice. The term ‘Shadow Counsel’ is used for any alternate or auxiliary lawyer appointed in case the original lawyer or the main counsel falters in any way. A Shadow Counsel monitors the case but doesn’t control it per se. The counsel is only to concern themselves with the ultimate outcome of the case and not to take active part in the day to day things. As the practice goes, the Shadow Counsel has all the liberty to attend the court proceedings but not to explicitly intervene. The primary job of the SC is determined based upon the stage at which they are called in and for the context of the matter that they are expected to address such as for a commercial dispute, commercial law issue of agreement vetting/drafting, IP portfolio monitoring/ due-diligence/ management/ strategy.

SCs are mostly engaged by corporations to facilitate legal workings of an entity. Some corporations even allow the SC to attend their Board Meetings so that they may foresee the legal repercussions of any decision taken by the Board. However, they are majorly engaged during trials so that they can rationalize the whole process. During an ongoing trial, it is quite frequent that the case deviates from its core issues and get muddled in the ancillary technicalities. The SC engaged with such a case has their primary concern attached with the bigger picture, or simply put, the outcome of the trial in its entirety. The SC is responsible for case assessment, strategy development and sometimes also for settlement evaluation. They can take care of preparing for any contingencies that may befall the main counsel and also remedy it, all to ensure that the trial’s outcome is favorable for their client without undue delays.

During the trial, a part of SCs’ responsibilities also extends to evaluate the main counsel’s work. They rectify any loopholes which may persist in paperwork or a line of argument, after the work of the main counsel is primarily finished. The SC exists as a contingency plan of the trial. They are responsible for vetting the work supplied by the main counsel and exercise their supervisory duties to remedy any lacuna. In most cases, a SC is hired to provide a fresh perspective to the case. They serve the purpose of a very necessary second opinion to either confirm the strategy chosen by the main counsel or to improve it. They add a touch of finesse to the phenomenon and make the process all the more efficient. Their job is to look at the case with a ‘bird’s-eye-view’ which gives them a holistic idea as to what the case needs and what it lacks. They are to foresee any issues which may arise in the trial and also to suggest and adopt preemptive measures to try and mitigate the damage or avoid it altogether.

The need for SC is rapidly being realized due to undeniably crucial role they can play. It is common that during a trial the outcome can sway at any given moment and therefore one can never be too careful. By engaging a Shadow Counsel, a much needed buffer can be added to the resources. More often than not, during a case, man-hours are wasted on the auxiliary things but with the help of an efficient Shadow Counsel  the case can be streamlined and the wastage of resources could be preemptively better utilized. Sometimes the Shadow Counsel is only employed to appropriately handle a particular part of the case and it is their job to ensure that it is concluded successfully and also that it neither interferes with any other aspect of the case nor does the case interfere with that particular task. There must be a particular proclivity to minimize the amount of financial resources engaged by the client. If they proceed to do their job competently then the client can save substantial amount of money since the resources are diverted towards necessary things and unwanted investments are minimized due to the streamlined, strategized approach. They minimize the risks of a major litigation process. Paying heed to their advice can redirect the course of the litigation in the favor of the client rather than going through the long and expensive process of prolonged litigation.

Apart from regular trial procedures, they are known to be engaged for the purposes of a criminal trial, insurance claims, multiple corporate representations, etc. In case of criminal trials, a shadow/standby counsel is appointed by the courts for any party who wish to proceed pro se, i.e. represent themselves without the assistance of a lawyer. The SC so appointed has to only assist the party and not steer the trial. In other cases if the defendant wishes to cooperate with the government or prosecution against the main defendants but cannot do so publically, the court allows the hiring of a shadow counsel who then steps in the interest of the particular defendant alone. This practice is actively undertaken during trials of drug cartels or major crime rings. In case of insurance claims, the Insured can hire a Shadow Counsel to supervise the records collected and made by the Insurer to ensure that the Insurer doesn’t exercise under bad faith, the contrary is also practiced. Furthermore, in cases where the main counsel is to represent the company as well as the employees against the allegations of a third party, a SC is engaged to prevent any conflict of interests which may arise between the interests of the company and that of the employee and they are to step in to either the employee or the company, should a conflict arise. Backup Counsels are also allowed for IPR procedures in the USA; they have the right to conduct business in the stead of the main counsel.

Apart from the known areas mentioned above, the services of SC can be utilized in various legal fields. They can greatly benefit corporations to rationalize their acts and decision making procedure with a view to cut back on any legal backlash. They can furnish efficient due diligence where agreements and legal documents are concerned. The entire functioning of businesses depends on the agreements drawn up by the legal teams of the companies, if these are weak then it leaves the entire entity vulnerable and potentially remedy-less. A Shadow Counsel can rectify any loopholes and provide the company with an iron-clad base to build their business transactions upon. Even with regard to filing and due diligence attached to Intellectual Property Rights, a proficient SC can be delegated the exclusive duty to handle the IP prosecution or litigation of a company to employ their predominant expertise which conclusively shortens the process of strengthening the IP portfolio of the company. The practice is cost-efficient and more importantly saves the company’s time and resources and guarantees the goal fulfillment for the company.

A Shadow Counsel can perform supervisory role or an ancillary function as per the needs of the client. Their valued addition as a legal resource enhances the efficiency of the main counsel and ensures that the objectives of the client are achieved in a cost-friendly and time-saving manner. Their involvement serves as an added benefit as opposed to risking the various loose ends in their absence. Thus, SC should swiftly become an indispensable part in the legal arena.

Author: Yashvi Padhya (Intern) and Tarun Khurana, at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

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Smart Contracts- First Impressions

Few words have caused as much bewilderment in the Indian setup as “blockchain” and “smart contracts” have. Much excitement has been generated by the coverage of cryptocurrencies in mainstream media, and the general aspiration towards digital transactions. But, the lack of understanding of the workings of the systems has stalled the growth rate of these entities. Currently, Ethereum is one of the most popular platforms that are specifically built for creating smart contracts, while bitcoin was only limited to currency usage.

Before we jump into the question of regulation of smart contracts in India, we need to first understand what smart contracts are and how exactly do they function. Smart contracts, just like standard contracts, contain a set of terms and conditions which are encoded, saved and replicated in the system, and by virtue of the blockchain, administered by the network of computers that run it. And smart contracts are garnering as much attention as they are owing to the benefits they bring in. The foremost of those are that they take out the middleman from the transaction and hence lowering the costs, and making a contractual agreement faster. Smart contracts are also much easier to form as they mostly contain standard contingency terms, which are if in case of an event, or fulfilling of a condition, an obligation must be performed, and are automatically performed in exact accordance with how the user formed the contract. As these contracts are self executing, there is no place for indistinct clauses like uncertain jurisdictions. This makes smart contracts perfect for multiple applications. They can act as a standard agreement between a user and a service provider, for example insurance. They can also act as in instrument for multi party agreements, and come into action whenever the requisite amount of signatures are obtained.

Smart Contracts- Global Regulations

How these smart contracts have been regulated and integrated into the market globally brings out some very interesting things. The US, generally the world leader in regulating new technologies has seen a lot of states rapidly tried to codify smart contracts into law. Arizona set the tone by passing laws to legally identify smart contracts and a few other states like Tennessee followed suit, aiding to the already existing Uniform Electronic Transactions Act, 1999. These laws, as has been passed in a haphazard manner, have come under heavy criticism from few of  the corners of the tech community, who believe that these laws only act as a patchwork and different states having different laws is just a facilitator for pandemonium, adding to the already existing confusion. It has also been said in the MIT Technology Review that smart contracts are meant just to facilitate some of the actions of the actual contract, while a contract remains a much more multi faceted instrument, including standards like reasonability which can’t be a part of a smart contract[1].

This is not to say that some participants have accepted blockchain and smart contracts with open arms. Depository Trust and Cleaning Corporation (DTCC), who run the clearing operations for a vast majority of Wall Street Operations declared their plans to handle trade of about 11 Billion USD worth of credit derivatives in blockchain through smart contracts [2]. Barclays Corporate Bank is already using blockchain to digitize transaction documents and use the technology for improving workflow management and moving an asset of value around. They also see the potential of cryptocurrencies being a part of the mainstream banking system in the next 15-20 years [3]. Japanese telecommunications conglomerate KDDI Corporation has joined the Enterprise Ethereum Alliance and are planning to test how blockchain-based smart contracts can be used for facilitating payments between companies.[4]

The Indian Scenario

The situation in India is no less complex. While blockchain as a technology has been accepted with aplomb, with SBI launching ‘BankChain’ for sharing of KYC data among banks using blockchain, and pharmaceutical sector using blockchain to maintain their records [5] amongst several other applications; the acceptance has been limited to maintaining records and information sharing. Cryptocurrencies haven’t had the same level of acceptance as it is neither a recognized currency nor it is illegal, which makes it  a roadblock for smart contracts. The smart contract has a huge potential in India, with regard to the  payments related to household activities and their monitoring like supplies, e-commerce, the something as fast paced as securities markets, where it could work in tandem with algorithms to make trading systems even more efficient, etc. Any relatively straightforward transaction can use smart contracts to make the whole process much faster, bringing down the costs substantially.

There is no clarity regarding how the smart contracts shall be codified in the Indian Law, if at all they are. The most common questions amongst the legal fraternity involve the status of cryptocurrencies being undefined in any law, and the questions of their taxations. It is a pertinent legal question whether cryptocurrencies can be treated as non monetary consideration for a contract, akin to Commodities Futures Trading Commission recognizing bitcoin as commodity and taxing it accordingly. The dispute resolution mechanism and important aspects like the conscionability of the terms, as covered in the 199th report of the Indian Law Commission [6] which are very essential to the Indian Contract Law remain unclear, and the potential of idea of the terms for award and damages be constituted in the smart contract itself might fail the test of conscionability. Further challenges are provided by the system of validation of the smart contract which is to be done through digital signatures. The Indian IT Act, 2000 puts a limitation on obtaining these digital signatures, and provides that they can only be obtained through a government designated certifying authority as per Section 35. This stands in complete variance with blockchain technology as it uses a hash-key for authorization as an individual identifier and authenticator. This disparity is also extended to the Indian Evidence Act, section 85B which states that an electronic agreement would be considered valid only if it has been authenticated with a digital signature. These two legal checkpoints not only corrupt the authentication process in blockchain through hash-key generation but also disallow any admissibility in the court as evidence.

In conclusion, it is undoubted that even though smart contracts aren’t completely self-sustaining systems, they have tremendous potential in reduction of costs and time worth billions, and making the whole process more secure as all the contracts will leave a clear audit trail. This saving shall benefit both the firms and the customers engaging with them. And concerns regarding regulations exist on multiple fronts. The introduction of smart contracts will pose fresh challenges for the legislature and it remains to be seen whether legislature is able to keep pace with the ever expanding paradigm of blockchain and smart contracts.

Author: Anirudhha Bhatnagar, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at swapnil@khuranaandkhurana.com.

References:

[1]https://www.technologyreview.com/s/610718/states-that-are-passing-laws-to-govern-smart-contracts-have-no-idea-what-theyre-doing/

[2]https://www.reuters.com/article/us-dtcc-blockchain-repos/dtcc-completes-blockchain-repo-test-idUSKBN1661L9

[3] https://www.siliconrepublic.com/enterprise/barclays-blockchain

[4] https://blog.jincor.com/the-japanese-evolution-of-smart-contracts-b9ff463493f5

[5]https://www.innoplexus.com/index.php/blog/five-use-cases-for-blockchain-in-pharma/

[6] 199th report of Law Commission of India on Unfair (Procedural & Substantive) Terms of Contract

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Sisvel UK Limited (“Sisvel”) arranged and finalized a Wi-Fi patent license agreement between Samsung Electronics Co. Ltd. (“Samsung”) and Hera Wireless S.A. (“Hera”), on June 7, 2018. Hera is the wholly owned subsidiary of Sisvel International S.A., the holding company of the Sisvel Group. The Sisvel Group has companies in major countries across the world such as the United States, Italy, China and Germany, among others.

Hera’s portfolio has over 100 patents across various jurisdictions such as the United States and Japan. The agreement covers a multi-year global license for the patents pertaining to the sale and distribution of Wi-Fi enabled products by Samsung. With this, Samsung has access to the essential patents owned by Hera, which are significant to the Institute of Electrical and Electronics Engineers 802.11 group of WIFI standards.

What are Patent Trolls?

Patent Trolls, or Patent Assertion Entities (“PAEs”) essentially acquire patents without the intent of actually manufacturing or developing products using those patents. In general, patent trolls are notorious for enforcing patent rights against infringers through rough legal practices such as undertaking frivolous litigation (or just the threat of it). They generally target smaller companies that cannot afford the expenses of an arduous litigation and hence would be quicker to settle. Even big companies can suffer harm in courts as was seen in the fight between Apple and VirnetX, a Patent Assertion Entity, over the Facetime and iMessage patents. In April 2018, a federal court in the United States ordered Apple to pay $502.6 million in damages to VirnetX.

Is Sisvel a Patent Troll?

The company is known for acquiring essential patents relating to telecommunication and wireless communication industries. One such example is its acquisition of 450 patents from Nokia, out of which 350 were essential for mobile telecommunication, specifically to 2nd, 3rd and 4th-generation communications standards, including GSM, UMTS / WCDMA and LTE. Sisvel has gained a notorious reputation in the past due to aggressive protection of its patents rights. In 2010, Sisvel called for the German police to raid a booth at the CeBIT and a heavy fine was imposed.

Nonetheless, Sisvel may not be considered a troll in its pejorative sense since it provides licenses for all the patents it owns on reasonable terms, that is, FRAND terms. FRAND is an acronym for fair, reasonable and non-discriminatory terms that an owner of Intellectual Property Rights should provide while granting a license. Sisvel acquires patents and then acts as the ultimate destination for companies to get licenses for all essential patents that they could require for their products. Forbes recognized this and declared Sisvel to be “the Patent troll we actually like”. In conclusion, Sisvel  just might be a company reclaiming the term ‘Patent Troll’ to get rid of its negative meaning and continue revolutionizing the patent licensing landscape.

Author: Aparajita Kaul, Intern at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

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