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Overview

This blog covers the role that patents play in access to pharmaceuticals -HIV/AIDS in Thailand along with steps taken by government to overcome from current status of HIV/AIDS drugs. The measures which may help to improve access to HIV/AIDS drugs in the country through patent system.

HIV/AIDS Epidemic in Thailand

AIDS epidemic in Thailand, is because of its tarnished sex industry. There are approximately 500,000 HIV-positive people in Thailand out of a total population of 64.6 million. Thailand enjoys a “mid-tier” drug pricing status, which means Thai government pays less for HIV drugs in comparison to European or U.S. consumers.

                                     

Thailand has patent law since 1979, however, for pharmaceuticals, this law provided for process patents only. Huge backlogs of pharmaceutical patent applications are pending in Thailand due to variety of reasons. The delays are creating pressure on countries to expand their patent protection terms in order to access affordable medicines. In Thailand, it takes five to eight years for a patent to be examined. After submitting patent application the agency makes formal notification to public. Patent protection begins from the filing date and extends for up to 20 years. Many multinational drug companies often send legal notices to generic companies and hospitals which are producing / buying similar drug and warn them of the consequences they have to bear if the patent is granted.

Currently, it takes 5 to 15 years post introduction of original product for a generic version to come in the market which results in higher prices of patented drugs; which deprives the access to general public

Measures taken by Government

Governments, NGO’s & activists have been fighting hard with the issues which affect access to life-saving medicines, and are trying to find solutions to these problems. Government is trying to create balance between encouraging innovation in the pharmaceutical sector through intellectual property protection and making life-saving drugs more widely available. They realize encouraging innovation in the pharmaceutical sector through patent system must be balanced with the urgent need to make life-saving medicines more widely available. Thailand hopes to be one of the first countries to end AIDS by 2030.

Government is constantly undertaking programs for public awareness regarding HIV-AIDS.

  • HIV testing and counselling (HTC) and prevention programs are organized in Thailand
  • HIV education and approach to safe sex education
  • Preventing mother-to-child transmission

Author: Ms. Deepika Sharma, Sr. Patent Associate at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at  deepika@iiprd.com.

References:

[1] https://www.avert.org/professionals/hiv-around-world/asia-pacific/thailand

[2]http://www.ip-watch.org/2018/05/18/patent-backlogs-fuel-efforts-extend-pharma-patent-terms-thailand-brazil-aids-activists-say/

[3] http://www.aei.org/publication/thailand-and-the-drug-patent-wars/

[4]https://www.avert.org/professionals/hiv-around-world/asia-pacific/thailand

[5]http://www.wipo.int/export/sites/www/about-ip/en/studies/pdf/iipi_hiv.pdf

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School of Planning and Architecture, Delhi organized a half day workshop on 11th December 2018 to acquaint faculty and students with interesting domain of Intellectual Property Rights. The workshop aimed at introducing the participants with purpose and processes involved with protection of various forms intellectual properties while also exposing them to challenges that loom in the domain.

Among other distinguished speakers, Ms. Prigya Arora, Patent Associate, Khurana and Khurana Advocates and IP Attorneys, discussed various modes of intellectual property protection including copyrights, trademarks, patents and designs. She also explained the participants about legal provisions and process for protecting various intellectual properties in the discourse.

The workshop also witnessed other speakers who peddled their views on topics like the importance of  Intellectual Property Rights for educational institutions while explaining other concepts and challenges through certain case studies. In current era when there are vital inter-linkages and interdependence between various disciplines, such an initiative becomes all the more important.

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Introduction

Advent of Reliance Jio has completely transformed the dynamics of telecom sector in India. Almost free outgoing calls and extremely cheap data services has forced revolutionary changes in the pricing of telecom services as well as the structure of the telecom operators. Vodafone Idea merger and Airtel-Tata DOCOMO merger are remarkable examples of this shift. For consumers, there has been a huge relief in terms of the cost of availing telecom services. In order to compete with Reliance Jio’s extraordinarily cost-efficient plans, other telecom operators had to cut their tariff plans too. However, reductions in the prices have seemed to affect average revenue per user (ARPU) of these telecom operators.

Minimum Recharge Tariff Plan

To combat this, telecom operators have repeatedly tried strategies which often run contrary to the interests of the consumers at large. Latest in the list is ‘minimum recharge tariff’ plan.Through this plan, the telecom companies have introduced a host of sub-Rs 100 prepaid packs such as Rs 35, Rs 65 and Rs 95, with a 28-day validity period. This means that users who do not recharge their plans would see outgoing calls blocked in 30 days and incoming ones in 45 days.

There are a major chunk of dual-SIM smartphones consumers who use a secondary connection (usually a service other than Reliance Jio) exclusively for incoming calls. The latest plans will force such consumers to recharge their secondary SIM a minimum amount every month only for receiving incoming calls. Then there are 2G users, who for several reasons cannot afford to have a 4G smartphone. A large number of such users have a mobile connection only for receiving incoming calls. These telecom operators, through this scheme, aim to remove such users and shift them to a monthly plan with minimum recharge which would, in turn, boost ARPU of these telecom operators.

No more Life-Time validity

The scheme is a complete departure from ‘lifetime free validity’ model that had been in place all these years. Lifetime free validity scheme had several positive impact on the growth of telecom sector as it led to steep rise in the number of subscribers and brought telecom services to the low-income section of the population particularly residing in semi-urban and rural areas. The scheme was advantageous for the consumers unable to afford monthly rental services. The new tariff scheme would roll back the benefits and low-income subscribers will be the most affected by it.

Role of Telecom Regulatory Authority of India (TRAI)

Telecom Regulatory Authority of India (hereinafter ‘TRAI’) was created by TRAI Act 1997 to regulate telecom services especially the services provided by private operators. One of its central objectives is to ensure consumer protection. In doing so, TRAI has taken several measures in the past to facilitate quality services at affordable rates.

In the present case as well, TRAI has been receiving a large number of complaints from customers.[1]However, it has been stated by TRAI that it will not interfere in the actual tariff structures, as telecom operators are responsible for the same.[2] Further, the tariff plans do not violate TRAI Regulations on tariff which prescribes for a minimum of six-months as tariff protection period.[3]

No Prior Approval Needed

Initially, TRAI had directed standard tariff packages for cellular mobile services. The service providers were also required to seek prior approval of the authority before launching new tariff plans and/or making changes in the existing plans. However, due to high degree of competition in the telecom sector and decline in the tariff, the authority shifted to de-regulation of the tariffs.

Hence, in the current setup, service providers enjoy full flexibility to provide tariff plans according to their policies and the requirement of seeking prior approval has been waived off. Huge concerns were raised when telecom operators had doubled the data charges a few years ago but no actions were taken as regulation of service charge is predominately the responsibility of the service provider and TRAI’s mandate does not cover it.

The aim of providing telecom operators the liberty to fix tariff plans on will was done with a view that increased competition between the market players would lead to reduction of rates of telecom services to the consumers. With the new tariff plans in place, shifting back to regulation of tariffs is a notion that TRAI should worth considering. After all, protection of the interest of the consumer is the central mandate of TRAI.

Further, TRAI enjoy the power to “issue such directions to service providers as it may consider necessary for proper functioning by service providers”.[4] In the present case, TRAI should ideally step in and use this power to bar the telecom operators from continuing their plan or ask the operators to bring necessary changes to the current plan.

Consumer Redressal Mechanism

According to Telecom Consumers Complaint Redressal Mechanism Regulations 2012,[5] an aggrieved consumer is ought to get his complaint resolved through this procedure:

  1. Visit the operator’s site and find the proper complaint procedure. Telecom operators provide ‘Manual of Practice’ which contains the procedure for resolving grievances.
  2. Call all India customer care number and register your complaint. You must obtain a complaint or docket number. After registering your complaint, your operator would ask you to wait for its resolution. According to TRAI regulations, the operators must resolve the complaint quickly.
  3. If operator has failed to resolve the complaint, you can register the complaint to Nodal Officer. List of such Nodal Officers are provided on the website of the operator. The Nodal Officer is obligated to resolve your complaint within ten days.
  4. If you are still not satisfied, you may move to Appellate Authority in your circle, the contact details of which are also mentioned in the company website.[6] This is usually the last body to resolve your complaint. However, one can register the complaint through National Consumer Helpline or move to the local consumer court.

The above mentioned steps must be followed else your complaint in the consumer court will not be entertained.

Antitrust Claims

In the recent Supreme Court judgment in Competition Commission of India v Bharti Airtel Ltd.,[7] the position of TRAI and CCI with respect to antitrust claims that require interpretation of TRAI Act 1997 has been cleared. The Apex Court has ruled that CCI cannot proceed with investigations of alleged antitrust breaches by telecom operators if the case involves interpretation of TRAI Act. Since, TRAI is better placed to interpret TRAI Act, investigations by CCI in such cases could only proceed after jurisdictional facts are determined by TRAI.

Notably, the above mentioned case concerned the alleged cartelisation of Bharti Airtel, Vodafone Idea and Cellular Operators Association of India (COAI) when these operators had refused the consumers to avail mobile portability service.

Cartel

The definition of cartel has been provided under Section 2(c) of the Act which reads as follows: ‘cartel includes an association of producers, sellers, distributors, traders or service providers who , by agreement themselves, limit, control or attempt to control the production, distribution, sale or price of or, trade in goods or provision of services.’

                

In the present case, as seen above, the tariff plans launched by both Vodafone, Idea and Bharti Airtel are almost identical in nature. This would not leave much option for the customers except for subscribing to the plans. Further, all the telecom operators rolled out the tariff plans at around the same time. Hence, this is a clear case of cartelisation in reference to the minimum recharge tariff plans as the service providers are clearly attempting to control the price of the tariff plans.

As laid down in the Competition Commission of India v Bharti Airtel Ltd judgment, TRAI is likely to have significant role to play if such claims are launched.

Abuse of Dominant Position

Vodafone + Idea  and Bharti Airtel( after merger with Tata DOCOMO) currently stand as the top operators telecom market in India both on the basis of revenue and consumer base.[8] Further, if we consider the relevant market of ‘2G and 3G cell phone services’, Vodafone Idea (or Bharti Airtel) could easily qualify as holding a ‘dominant position’ in geographical market of India within the meaning of Competition Act 2002.[9]

According to Section 4(2)(a)(ii), imposing ‘unfair’ price in purchase or sale of goods or service would amount to an ‘abuse of dominant position’. In the present case, these telecom operators are abusing their dominant position in the 2G and 3G cell phone market by forcing the customers to subscribe to the unfair tariff plans.

Conclusion

It is certain that low-income consumers will be affected the most by these new tariff plans. The plans could have long lasting adverse impact on the prosperity of the telecom sector in India. TRAI’s mission is “to create and nurture conditions for growth of telecommunications in the country in a manner and at a pace which will enable India to play a leading role in emerging global information society”. In the past one decade, TRAI has been quite successful in doing justice to its mission.

While the Smartphone boom in India has been remarkable, still more than 75% of the cell phone users rely on feature phones that work on a 2G or 3G platform.[10] This plan will hit them the most and it is highly likely that portion of those users would be wiped out from the network due to unaffordability of the new tariff plans. This is in the long run is definitely going to affect India at large as on one hand Centre is hoisting the Digital India and E-Governance on the other hand these telecom providers are excluding a major population from this bracket of basic amenity of communication. Such acts of the Telecom Operators like Bharti Airtel, Idea and Vodafone  is highly reproachable.

Stance of TRAI in this matter has been soft so far but the situation demands the regulatory body to take necessary strong steps against the operators. As discussed above, the antitrust claims could be relevant, more so in light of ongoing cases against the telecom operators.

Author: Mr. Shubham Borkar, Senior Associate – Litigation and Business Development  and Parimal Kashyap – Intern, at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at shubham@khuranaandkhurana.com or at www.linkedin.com/in/shubhamborkar.

[1]https://economictimes.indiatimes.com/industry/telecom/telecom-news/trai-frowns-at-telcos-threatening-to-snap-services-despite-sufficient-pre-paid-balance/articleshow/66848480.cms

[2]ibid.

[3]https://trai.gov.in/sites/default/files/protectingconsumerinterests.pdf

[4]TRAI Act 1997, s 12(4).

[5]https://www.trai.gov.in/sites/default/files/TCCRR0012012.pdf

[6] https://www.airtel.in/digital-tv/dth-contact-us/customer-care/dth-customers/.

[7]https://www.livelaw.in/cci-has-to-wait-for-trai-findings-before-acting-on-jios-complaint-of-cartelization-by-other-telecos-sc-read-judgment/

[8]https://telecomtalk.info/reliance-jio-top-operator-2021/184455/.

[9]Competition Act 2002, ss 4 & 19(1).

[10]https://dazeinfo.com/2018/05/07/smartphone-users-in-india-2018-2022-growth/.

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The Grand Indian wedding season is on and Delhi’s Chandni Chowk is again one stop solution for the would-be brides to buy cheaper version of their favourite bridal Lehnga’s. This year they have enough options to choose from that includes Sabyasachi designed Priyanka Chopra and Deepika’s Padukone’s wedding collection or Manish Malhotra designed bridal wear for Isha Ambani. One news report suggests Anuskha Sharma and Sonam Kapoor’s bridal lehenga’s were the market callings last year. In Delhi’s Gaffar Market and Linking Road, Mumbai these designs varied the range of Rs,12,000 to 1 lakh[1].  Delhi are not two exceptions but a stroll in Brigade Road, Bangalore and Vardaman Market in Kolkata presents us the same picture. The most coveted brands such as ‘Moncler’, ‘Gucci’ , ‘Armani’ ‘Louis Vuitton’, ‘Versace’, ‘Hermes’ ‘Heron Preston’, ‘Kenzo’ and many more might be a big deal for some but the street markets across the country are thriving on first and second copies of these names. The penetration of internet has made accessible the “duplicate goods” to consumers from every section of the society. These practices certainly questions the Indian IP enforcement mechanisms but also casts doubt over the competency of present IP laws in fashion industry as a whole.  The practices of design piracy and knock off is not merely middle class chase for luxury lifestyle but the practice is prevalent among the designers themselves and thus discourages the fashion industry for ‘original works’.

@dietsabya, an Instagram handle inspired by New York based @diet_prada, social media fashion watchdog has been incessantly working to make the public aware about the blatant plagiarism by the designers themselves, sometime from young college students and sometimes foreign designers. As per Diet investigations renowned fashion designer Anita Dhongre copied designs from the students of JD institute.

               

Present Scenario

Indian IP laws, specifically The Copyright Act,1957 and The Designs Act, 2000 gives two kinds of protection in the designer clothes . First is the  protection for the drawings on any garment that may not necessarily include the shape/design of the garment itself . @dietsabya highlights this kind of copying by famous designer Nashish Soni onto Alexader Wangny’s slogan.  The second category includes the design/shape of the garment itself, attributing to its unique fabric and tailoring. Designers are aggressively pushing to protect their design rights of this category. Rohit Bal in 2017 became the first designer in India to get copyright over his entire collection and the spree was followed by number of other designers thereafter.

Kal Raustiala and Christopher Jon Springman in her paper “The Piracy Paradox : Innovation and Intellectual Property in Fashion Design “ describes this problem as  “Copying enables designs and styles to move quickly from early adopters to the masses. And since no one cool wants to keep wearing something after everybody else is wearing it, the copying of designs helps fuel the incessant demand for something new.“[2]

               

“Jeans represent democracy in fashion” – Giorgio Armani

India is world’s largest and noisiest democracy. Indian textiles and apparels have always been one of the most sought after globally. Currently, the Indian textile industry is pegged at around US$ 120 billion, and is expected to reach US$ 230 billion by 2020.[3] It contributes approximately 2 percent to the country’s GDP and 14 per cent to overall Index of Industrial Production (IIP). The industry has also attracted FDI worth US$ 2.55 billion during April 2000 to June 2017. Just like Indian democracy the fashion industry in India is too diverse. Some have classified the sector as per their purchasing power and social reach namely- “Premier fashion”; “luxury segment”; “Affordable luxury” and “Mains stream brands”.[4]

It is thus more relevant today that such a huge sector is not trapped in complex web of laws functioning across domains . Currently it is majorly regulated by Intellectual Property laws – Copyright Act 1957, The Trademarks Act, 1999, Designs Act 2000, and Geographical Indications of Goods (Registration and Protection) Act, 1999, however none of the them is sufficient to deal with the sector in entirety.

Copyright or Design ?

Before the next collection for designers is launched, one question that disturbs the designers the most is how to prevent others from copying their original work which has been produced after rigorous intellectual labour. Whether to seek copyright protection of their original work or get the design registered to ensure its full scale commercial exploitation. This designer’s dilemma came to the courtroom in Ritika Private Limited v. Biba Apparels Private Limited.[5] In this case, the plaintiff, a boutique apparel designer brand, brought a suit against the defendants who have been a leading name in ethnic wear, for an injunction to prevent reproduction,printing, publishing, selling or offering the prints or garments for which the plaintiff claimed to be the first owner. The legal issue raised in this case was that once the copyrighted works of the plaintiff are applied for the making of any dress, and production of that dress exceeds 50 in number, whether the plaintiff losses ownership of her copyright works . The court made a distinction between designs eligible for copyright protection under the Copyright Act, 1957 and the Designs Act,2000. It held that copyright protects the original expression of the “artistic work” and offers limited protection to the commercial exploitation of the same, whereas the Designs Act is the chief tool to protect industrial application of the design, however the design need not to be always original. The court decided the dispute in favour of the defendants and the suit thus dismissed,relying on the bar under Section 15(2) of the Copyright Act, 1957.  It was also held that had the facts been different from the ‘application of the designs’ to ‘direct lifting of the design’ the answer would have also differed. Here the ‘direct lifting’ would mean copy pasting the copyright work from its original form.  Ultimately the web of IP laws proved to be counterproductive for Ritika Private Limited.

The need is being recognised globally to sync the laws relating to fashion industry and develop exclusive programs to make fashion lawyers more aware about their duties and responsibilities and bring consumer sensitization about their choices . The infamous Rana Plaza incident which killed over 1,100 garment workers in Bangladesh highlights the poor labour enforcement by the global fashion leaders such as ZARA and H&M. Thus there is a need for everyone to be aware about legal issues facing the fashion industry ranging from merchandising, distribution and franchising agreements to intellectual property and labour laws.

Multiple law schools have designed their curriculum focusing to cater the needs of fashion industry these include Fordham Law School, world’s first Fashion Law Institute working with the support of the Council of Fashion Designers of America and Diane von Furstenberg offering JDand LL.M programs to the students. The course includes specialty in Fashion Law and Finance and Fashion Ethics, Sustainability and Development. In India such focused opportunities are quite limited. No full time graduation program is available but IIFD, Chandigarh offers limited opportunities on Fashion Retail Law in India  and Diploma in Fashion & Law. Some short term courses are also available to students by leaders in global fashion industry these include coveted program by Milano Fashion institute offering exposure to brand protection ; fashion negotiations and specific agreements for the industry ;supply chain issues ; issues related to counterfeiting & fashion forgery.

One thing is clear the ad-hoc approach would serve no purpose and comprehensive and focused approach needs to be followed that cater all the interest of fashion industry in the country.

We at Khurana and Khurana are standing closely with the Fashion Industry, we have a dedicated team looking after Fashion Law issues.

Author: Mr. Shubham Borkar, Senior Associate – Litigation and Business Development  and Gursimran Narula – Intern, at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at shubham@khuranaandkhurana.com. or at www.linkedin.com/in/shubhamborkar.

References:

[1]https://www.ibef.org/archives/detail/b3ZlcnZpZXcmMzc3NDEmMTEy

[2]http://www.nishithdesai.com/information/areas-of-service/industry/fashion.html

[3]Ritika Private Limited v. Biba Apparels Private Limited

[4]https://papers.ssrn.com/sol3/papers.cfm?abstract_id=878401

[5]https://timesofindia.indiatimes.com/city/delhi/anushka-sharmas-wedding-lehenga-takes-over-delhis-bridal-market/articleshow/65783313.cms

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Introduction

Cross-border counterfeiting and infringement of goods can have severe long-term consequences for an economy. In order to protect the IP rights of the holders as well as to secure the economy from such breaches, the government formulated Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. These rules are aimed to prevent counterfeiting and infringing good from entering into the market. In order to benefit from the rules, right holder has to fulfill certain procedural obligations. The whole procedure is known as recording of IP Rights with the Customs. This process can now be done online through Indian Customs IPR Recordation Portal (https://ipr.icegate.gov.in).

What are ‘goods infringing intellectual property rights’?

According to Rule 2(a) of the IP Rules, “any goods which are made, reproduced, put into circulation or otherwise used in breach of the intellectual property laws in India or outside India and without the consent of the right holder or a person duly authorized to do so by the right holder” fall under the ambit of ‘goods infringing intellectual property rights’. The definition is thus, wide enough to encapsulate all the goods that the respective IP Statutes deem infringing the rights of IP right holders.

Indian Customs IPR Recordation Portal

The portal was created for easy facilitation of recordation of IP rights with the Customs. The portal provides for recordation of the major IP rights i.e. trademark, designs, copyright and geographical indicator.

Procedure for recordation of IP rights with the Customs

  1. The right-holder must file application for recordation of a trademark, patent, design, copyright or geographical indication and submit the following documents electronically on http://www.ipr.icegate.gov.in/.
  2. The first step of filing an application will involve creating a unique id and a password on the website and thereafter, submit the relevant documents and fill the online forms. The information submitted will be saved and can be edited later. However, any post-recordal edits will be subjected to approval of the Custom authorities.
  3. Where the applicant is seeking to record multiple IP rights, separate forms must be filled for each IP right.Similarly, where the applicant holds multiple registrations (for example: four registrations for one trademark, each in a single class) for single IP right, a separate application for each registration has to be filed. Likewise, if one multi-class registration is owned in three classes, one application shall cover all the three classes.
  4. Thereafter, a unique temporary registration number will be generated.
  5. The physical copies of the documents which were uploaded along with a print out of the application form filed online are required to be filed at the Customs Office of the Right holder’s choice which has an IPR cell along with a demand draft towards payment of the official fee of INR 2000.
  6. Thereafter, the concerned IPR Cell of the relevant Customs Office will scrutinize the documents, register the notice of the Right holder and thereafter issue a Unique Permanent Registration Number (UPRN). This process could take upto 30 days.
  7. Once the UPRN is generated, the design, trademark, copyright, or geographical indication is formally recorded with the Customs authorities and this information is made simultaneously made available at all ports.

Documents to be Submitted with the Application Form

Following documents are to be submitted along with the application form:

  1. Proof of ownership of the IP right and a scanned copy of the registration certificate of such IP right.
  2. Serial number of the demand draft of INR 2000/-. The demand draft must be issued by any nationalized or scheduled bank in India and made out in favour of the Commissioner of Customs of the opted location.
  3. Scanned copy of power of attorney in favour of counsel / advocate / agent who is filing the Application.
  4. A statement of exclusivity outlining the scope of the IP right sought to be recorded.
  5. Digital images of genuine goods (for trademarks and designs)
  6. Statement of grounds of suspension of infringing goods
  7. Digital images of infringing goods (if applicable/available).
  8. Differentiating features of genuine and infringing goods (not mandatory but advisable for trademarks and designs).
  9. The IEC code of the rights holder and/or other authorized importers (not mandatory but advisable).
  10. Customs Tariff headings of the applicable goods (if available).
  11. In case of geographical indications, description of the geographical indications, geographical area of production and map.
  12. The General Bond or Centralised Bond

Application of Bonds in the Setup

The procedure provides for the application of three kinds of bonds: General Bonds, Centralised Bonds and Indemnity Bonds.

During the registration, the right holder may opt to submit a General Bond in form of an undertaking that s/he will submit the specific consignment-wise security bonds at the time of interdiction of infringing goods. The forms for General Bond and a Consignment Specific bond are available here. When required, the right holder is required to execute the Consignmentspecific Bond of an amount equivalent to 110% of the value of the goods detained by the Customs, along with security, in the form of a bank guarantee or fixed deposit, equivalent to 25% of the bond value at the port of interdiction within 3 days of interdiction of the consignment.

Alternatively, the right holder can file a Centralised Bond for a value that is sufficient in their judgment, to correspond to value of suspected allegedly infringing goods all over India. This security amount will then be used against future interdiction of goods that infringe the IP right holder. The format of the Centralised Bond is available here.Right hold has to furnish a security for an amount equivalent to 25% of the value of the Centralised Bond with the relevant Customs authority. Once the above requirement is fulfilled, the relevant Customs Office will create an on-line centralised bond account and security account. The system will generate a unique Bond Registration Number (BRN) and the same will e-mailed to the Right holder or his/her authorised representative.  All future correspondence relating to bond management shall be with reference to this BRN only. There will be a single BRN for an Right holder which may cover more than one Unique Permanent Registration Number (UPRN).

Through the centralised bond, the IP right holder is at the liberty to ‘top-up’ the bond at any time without worrying about producing a consignment-specific bond in a short period when infringing goods are interdicted. In case, the amount of the Centralised Bond and the security is not enough to cover the value of the goods interdicted, then the right holder is required to furnish a supplementary bond within three days of interdiction.

Further, an indemnity bond is also required to be furnished by the right holder. This is done to protect the Custom authorities against any liability and expenses that may be incurred as a result of detention of the goods. A format for the indemnity bond is provided here.

After furnishing these bonds and completing other procedural requirements, the recordation process is completed. The recordations remain effective for a period of five years or expiry of the IP, whichever is earlier

Detaining of Goods by the Custom Authorities and Remedies to the Right Holder

After detaining goods, Customs gives notice of invite to both the importer as well as the rights holder to join the proceedings. Failure to join the proceedings within the given time period shall result in release of the goods to the importer. At this point, the right holder is required to furnish bonds as discussed above. After the completion of this procedure, the right holder (or its authorised representative) is provided with the photographs or serial numbers of the products or samples of the products for scrutiny and testing to ascertain whether the products are infringing or not. The right holder can request for the name, address, serial number, import documents and other relevant information to aid in his/her determination as to whether the goods are infringing.The inspection must be finished within ten working days from the date of notice. Thereafter, a follow-up action is taken. If no action is taken within that period, the goods are released. This limitation is further restricted to three working days (may be extended to seven) in case of perishable goods. If the relevant Customs officials conclude that the goods are infringing the IP right holder’s rights and no other legal proceeding is pending then, the infringing goods will be destroyed or disposed outside the normal channels of commerce after obtaining a “no objection” or concurrence of the Right holder. All the cost of detention, demurrage and destruction is to be borne by the right holder. Goods of non-commercial nature contained in personal baggage or meant for personal use of the importer are not subject to the above Rules.

Powers of the Commissioner

A Commissioner can on his/her own motion suspect the clearance of the imported goods if there is prima facie evidence or s/he has reasonable grounds to believe that the goods infringe IP rights even where the said rights are not recorded under the IPR Rules. Given that situation, the rights holder is required to comply with the requirements of recordal within 5 days, else the suspension shall be cancelled.

Conclusion

The setup has become quite convenient for the IP holders after the launch of the portal. With proper recordation, Custom authorities are at a better position to tackle cross-border counterfeiting and infringement of IP rights. However, efficiency of the setup depends to a great extent on the right holder.

Author: Yashvi Padhya, 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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Introduction

On the 4th December, 2018, The Ministry of Commerce and Industry released the draft (rules amendment) for Patents Act 1970. These rules are mainly amended with respect to international applications, patent opposition and a few form related extensions. The Central Government proposes to make these amendments in exercise of the powers conferred by section 159 of the Patents Act, 1970. Given below are the extracts of actual sections of Patents Act and the respective changes made to them are highlighted or in bold.

Amendments to Rules

Sr. No.
Before

After

Amendment  I :

In the principal rules, after sub-rule (2) of rule 18, the following proviso shall be inserted. The words in bold represent the added explanation.

Rule 18 OF INDIAN PATENTS ACT 1970:

18. Appropriate office in relation to international applications. —

(1) …

(2) …

(3) An international application shall be filed at and processed by the appropriate office, referred to in sub-rule (1), in accordance with the provisions of this Chapter, the Treaty and the regulation under the Treaty.

(3) An international application shall be filed at and processed by the appropriate office, referred to in sub-rule (1), in accordance with the provisions of this Chapter, the Treaty and the regulation under the Treaty.

“Provided that, in respect of international application, a patent agent shall file, leave, make or give all documents including scanned copies that are required to be submitted in original, only by electronic transmission duly authenticated;”

“Provided further that the original documents, if required to be submitted in original, shall be submitted within a period of fifteen days; failing which such documents shall be deemed not to have been filed”.

Amendment II

In the principal rules , in sub-rule (1) of rule 24 C, clause (b) shall be substituted, as follows:- The words in bold represent the added sub points.

Rule 24 C OF INDIAN PATENTS ACT 1970:

(1) An applicant may file a request for expedited examination in Form 18A along with the fee as specified in the first schedule only by electronic transmission duly authenticated within the period prescribed in rule 24B on any of the following grounds, namely:-

(a) that India has been indicated as the competent International Searching Authority or elected as an International Preliminary Examining Authority in the corresponding international application; or
(b) that the applicant is a startup.

(c) that the applicant is a small entity as defined in rule 2(fa) of the principal rules; or

(d) that in case of natural persons only, the applicant or at least one of the applicants is a female; or

(e) that the applicant is a government undertaking in accordance with clause (h) of sub-section (1) of section 2 of the Act in case of an Indian applicant, or is a similar entity in case of a foreign applicant.

Explanation:- The term ‘substantially financed’ in sub-clause (iv) of clause (h) of sub-section (1) of section 2 of the Act shall have the same meaning as in the Explanation to sub-section (1) of section 14 of the Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971, or

(f) that the applicant is eligible under an arrangement for processing an international application pursuant to an agreement between Indian Patent Office with another participating patent office.

Explanation: The patentability of patent applications filed under clause (f) above will be in accordance with the relevant provisions of the Act.”

Amendment III

In the principal rules, in sub-rule (4) of rule 24-C, the following proviso shall be inserted

Rule 24 C OF INDIAN PATENTS ACT 1970:

(4) Where the request for expedited examination does not comply with the requirements of this rule, such a request shall be processed in accordance with the provisions contained in rule 24B, with an intimation to the applicant, and shall be deemed to have been filed on the date on which the request for expedited examination was filed.

Provided that if such requirements are met before issuance of FER, the application shall be processed for expedited examination in accordance with the provisions of rule 24-C.

Amendment IV

In rule 55 of the principal rules after sub-rule (2), the following sub-rule shall be inserted, namely

Rule 55 OF INDIAN PATENTS ACT 1970:

55. Opposition to the patent.

(1) …

(1A) …

(2) The Controller shall consider such representation only when a request for examination of the application has been filed.

“(2A) The Controller shall, by order, constitute a bench comprising two members, who shall proceed to dispose of the application and the representation jointly:

Provided that if the members of the bench differ in opinion on any issue, the Controller shall nominate a third member to the bench and subsequently the majority decision will be treated as final.”

(3) On consideration of the representation if the BENCH is of the opinion that application for patent shall be refused or the complete specification requires amendment, he shall give a notice to the applicant to that effect.

(4) …

(5) On consideration of the statement and evidence filed by the applicant, the representation including the statement and evidence filed by the opponent, submissions made by the parties, and after hearing the parties, if so requested, the BENCH may either reject the representation or require the complete specification and other documents to be amended to his satisfaction before the patent is granted or refuse to grant a patent on the application, by passing a speaking order to simultaneously decide on the application and the representation ordinarily within one month from the completion of above proceedings.

Amendments to Schedules

Amendment I

The point 48 and 49 have been added sections 48A and 49A

THE FIRST SCHEDULE

Amendment II

In Form 18A, for para 3, the following shall be substituted, namely:-
Form number 18, sub point 3 will be replaced as shown below in highlight.

FORM 18A

Amendment III

In the Note portion of Form 18A, the following shall be added, namely:

“Form 28 is to be mandatorily submitted if applicant avails expedited examination under any of the clauses (b) to (f) of sub-rule (1) of rule 24C”

Form number 28, sub point 2 will be added points iii, iv, & v as shown below in highlight.

FORM 28

Conclusion

Hence all these amendments have been proposed by the Department of Industrial Policy and Promotion. These rules may be called the Patents (Amendment) Rules, 2018. These draft rules have been published in the official Gazette and notice is hereby given that the said draft rules will be taken into consideration after the expiry of a period of thirty days from the date on which copies of the Gazette of India, in which this notification is published, are made available to the public. Hence in order to submit and objections or suggestions, if any, may be addressed to Shri Sushil K Satpute, Director, DIPP, Ministry of Commerce and Industry, Government of India, Udyog Bhawan, New Delhi-110011 or by e-mail at sushil.satpute@nic.in. The objections and suggestions, which may be received from any person with respect to the said draft rules before the expiry of the period so specified, will be considered by the Central Government.

Author: Yashvi Padhya, 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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An Introduction to Artificial Intelligence

In recent times, Artificial Intelligence (AI) has become the talk of the hour. People are concerned with respect to the impact of AI on various fields. In the simplest of words, AI can be defined as “the capability of a machine to imitate intelligent human behaviour“[1] or “the theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.”[2] So, the basic aspiration behind the development of AI is to emulate the human capabilities of senses (by acquiring images, recording sound or speech etc), comprehend this sensation(by processing the data acquired through sensory devices), and then act upon it.

Although, the phenomenon seems to a recent one, AI is not a new phenomenon. Its foundations were developed for over 70 years by the works of prominent scientists like Alan Turing, Marvin Minsky, and John McCarthy.[3] The history of AI is full of periods of enthusiasm and heavy investments towards the development of AI, followed by periods of disappointment and low investments, a phenomena has been called as ‘AI Winters’. But, it seems that this cycle of ‘AI winters’ is over, once and for all due to various factors. The factors being exponential growth in computation power as expected by Moore’s law[4], huge decrease in cost of storage of data, cloud computing, and explosion of digital data dubbed as ‘Big Data‘. These factors combined by development of Machine Learning(ML) i.e., the ability of a machine to learn without being explicitly programmed, and deep learning i.e., the technique that implements ML using algorithms that resemble neurons structure in a human brain, have put the development of AI in hyper speed. In Machine Learning process, the algorithm is fed with training data and by analysing this data the algorithm generated newer knowledge, quite like a child who is taught the basics of how to sketch and shade and then eventually he comes up with a masterpiece.

AI and The Legal Sector

With the potential benefits and capabilities of AI, it is not surprising that some leading law firms are adopting AI systems, as they want to automate tasks like data entry, data management and repetitive time consuming tasks. AI systems combined with Machine Learning ability could analyse thousands of pages of complex legal documentation and find relevant documents once it is shown a sample relevant document like a judicial precedent. These systems would be very effective in conducting due diligence, reviewing contracts and risk assessment.

  • Predicting Legal Outcomes

AI systems have started to be used to predict the legal outcomes a case i.e., likelihood to win the case. A Deloitte Insight report predicts “radical changes” and “profound reforms in legal sector due to AI systems, that would automate around one lakh tasks performed in legal sector by 2036. While some are concerned about threat to their jobs, some expect that if used correctly AI systems could help legal firms to have small specialised workforce review what the AI tools have provided and then can focus more on better advisory work for client.

Another legal service provider called ‘Legalist Inc.’ using proprietary algorithms estimates the likelihood of success of a case, the likely duration of disposal of the case, the likely expected return on success, and suggests whether to settle or move forward with the litigation.

  • Conducting Legal Research

For instance, ‘Ross‘ an AI powered by IBM Watson is capable of conducting legal research, case brief analysis, instant summarization of cases, track any legal development with respect to user’s legal issue, capable of answering substantive legal questions like what are the patent requirements in U.S.

  • Finding Gaps

With respect of insolvency specifically, ‘LawPath’ helps businesses to find legal gaps by completing online questionnaire, which could be very helpful during the insolvency proceedings. So, in future the development of industry specific databases could help in checking the health of businesses specifically for solvency.

The KEY Point

The key point to note is that the emergence of AI is not to be seen as an isolated event. Other surrounding technologies would work in consonance with it. AI works heavily on data that could be fed into it, so a foundation of clean, relevant and structured data is necessary. For this a flexible culture open to changes and risks would be necessary, along with talented professionals that could understand the AI system.

So, the first barriers law firms are going to face are creation of clean and reliable data.Fortunately, technological innovations that help in collection of such data and support its management are improving day by day. [5]

Why is AI a Better Option?

Companies these days are collecting large amount of data that allows them to cater to the needs of their clients better, tailor their products, develop marketing strategies in such a way that both their profits and customer satisfaction increases.Defined technically as “the information assets characterized by such a high volume, velocity and variety to require specific technology and analytical methods for its transformation into value”.[6] In simplest of words, Big Data describes large volume of data which is both structured and unstructured, that due to its massive size cannot be processed using traditional databases and software techniques. This is where AI would play its important role. AI would be able to analyse this Big Data efficiently and quickly.

Role of AI in Insolvency Resolution

To understand this, we would first have to understand , how the process of Insolvency resolution takes place . A corporate insolvency resolution process (CIRP) can be initiated by filing an application before the NCLT once a corporate debtor makes a default of Rupees 1 lakh or more.[7] This application can be filed by a financial creditor, an operational creditor or the corporate debtor itself. The Code allows a maximum 270 days for resolution.

After such application is admitted, a moratorium order is passed which prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor or any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property.[8] The moratorium order also prohibits transferring of assets by the corporate debtor[9] and remains in effect till the completion of the CIRP or earlier if NCLT approves a resolution plan or passes an order for liquidation of the corporate debtor.[10]

Appointment of Resolution Professional

NCLT appoints an interim resolution professional (IRP) who continues to manage the resolution process till the appointment of a resolution professional (RP). Once the committee of creditors is formed, a majority vote of 66% or more of the voting share of the financial creditors appoints the IRP as the resolution professional or substitutes IRP with another resolution professional.

Committee of Creditors

Once all the claims against the corporate debtor are collated, the interim resolution professional constitutes a committee of creditors. This committee comprises of all financial creditors of the corporate debtor. Every financial creditor in the committee of creditors (COC) is endowed with certain voting rights which are determined on the basis of financial debt owed to them. When there are no financial creditors or when all financial creditors are related parties of the corporate debtor, COC is comprised of the 18 largest operational creditors by value.

Role of the Resolution Professional

Resolution Professional is central to the CIRP and has a wide variety of tasks to perform. Due diligence becomes a crucial practice in the resolution process as unlike usual transactions, resolution applicant is denied from benefit of representations and warranties from the promoters. Such applicant, to a large extent, depends on Resolution Professional to provide all relevant information.

Further, since the whole process is strictly timed bounded, there is limited time frame to finish the due diligence process. Although Resolution Professional is responsible for protecting and preserving the value of the property of the corporate debtor, COC has a vital role to play through its voting rights. Resolution Professional is also responsible for providing the liquidation value to every member of the COC and is required to maintain the confidentiality of such value. A liquidation value is the estimated possible value of the assets of the corporate debtor if the corporate debtor were to be liquidated on the insolvency commencement date. Along with liquidation value, fair value of the assets is also determined. ‘Fair value’ has been defined as the “estimated realisable value of the assets of the corporate debtor, if they were to be exchanged on the insolvency commencement date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had acted knowledgeably, prudently and without compulsion”. Resolution Professional is likewise required to provide fair value to the COC after the receipt of the resolution plans.

How AI is going to help in this?

Due to advent of Big Data Insolvency professionals would have access to more data than ever before.This would allow the advisor to identify strategies, factors, and issues that will impact on business performance.More digitised data means the professional won’t have to spend days physically searching for relevant documents. Using data analytics AI systems to analyse this big chunk of data would help the professional to reach quicker conclusions confidently about what are the drivers of performance in a specific business (Key performance indicators)and what needs to be changed in the business. These systems could conduct file scans of key storage repositories and email servers to discover documents. AI algorithm would help the insolvency practitioners to discover compliances and non-compliances easily. For instance, what forms have to be complied with and when they are due.

Real Time Data Access

Such information and the Key performance indicators of a business which get updated from time to time can then be shared with the creditors on their smartphones, which can help them take better decision regarding insolvency. Such real time data access can ensure that interests of creditors is maintained and leads to creditor empowerment, as they will be able to take better decisions.

Industry specific database

Due to creation of industry specific databases with regards to insolvency eventually AI would be able to come up with correlations with regards to performance measures and risk of insolvency, which could be used to provide advance warning signs to businesses before their business goes into the red.The ability of such AI systems to conduct file discovery scans of key storage repositories and email servers would help them identify anomalies and make it easier to point out who is liable. Example of Big Data for insolvency profession could be analysing actions of Directors using Director Identification Numbers to find fraud, misrepresentation, or negligent behaviour. This all would help increase the opportunity for successful rescue or restructure.

AI Complimenting Professionals

Researchers believe that due to AI people rather than relying upon works of professional could come up with their own problem solving strategies.[11] They believe such professionals should become either highly specialized or collaborate with AI service providers to take large amount of work that could be automated while keeping their margins less for  individual cases.

Researchers predict that such advent of technology may have two fold impact on the legal profession.[12]

  1. By replacement of traditional technologies and tools the work efficiency of professionals would increase while costs would decrease.
  2. Some traditional professionals might be replaced by such advanced technologies.They predict emergence of ‘para-professionals’ i.e., those who equipped with such technology would be able to perform tasks that previously required expert professionals, that too at much lower cost.

The Silver Lining

Despite this threat, the key thing to remember is that embracing these technologies is not an option but necessity both for the sake of legal professionals, IPs, and clients. Appropriate and timely implementation of Artificial intelligence will not replace lawyers, but rather act as an augmentation tool to improve legal service industry.

If you have any queries relation to this, feel free to revert back to me at www.linkedin.com/in/shubhamborkar.

Author: Mr. Shubham Borkar, Senior Associate – Litigation and Business Development  and Nitish Daniel, P.H.D Candidate NLU Delhi, Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at shubham@khuranaandkhurana.com.

References:

[1]Artificial Intelligence, Merriam-Webster.com. Merriam-Webster, n.d. Web. 23 Oct. 2018

[2]Artificial Intelligence, Oxford Dictionary (3rd edn, 2010).

[3]Bruce G. Buchanan, ‘ A (Very) Brief History of Artificial Intelligence’,  AI Magazine Volume 26 Number Number 4 (2006).

[4]Moore’s law was a prediction made by American engineer Gordon Moore in 1965 which states that the number of transistors per silicon chip doubles every year. Hence, resulting in exponential growth in computational power.

[5] Technoligical Innovations that would work in consonance with AI

Aerial inspection via Drone technology could help topographic survey of large land assets from the air.

Cloud storage is form of computer data storage where digital data instead of being stored in local hard drive(memory) of the user’s computer is saved on remote data servers of cloud storage service providers. Same data could be stored in multiple servers of such service provider and these servers could be present in multiple locations across the globe. So, if one server goes down the data is still safe in other servers.

Cloud storage ensures that key company documentation on insolvency cases is easily accessible and stored at low cost without fearing the chance of it getting destroyed or lost. As data generated by company could be huge, instead of needing separate infrastructure on business premises, they could take the service of cloud service providers. This could ensure data is not destroyed or tampered with when company gets into financial trouble.Availability of such data would facilitate its processing by AI.

Blockchain is often defined in complex terms as distributed, decentralized, public ledger. Use of Blockchain technology can ensure that such data isn’t manipulated or tampered within simple word this means is that Blockchain is chain of blocks that contain information. Each block has data, ‘Hash’, and the Hash of previous block.

A Hash can be assumed to be fingerprint of a block, which is unique for a block just like a fingerprint. Changing any information in the block changes the Hash. Each time a new information/data is added in the Blockchain it adds new block, such a new block would contain the Hash of the previous block. So, tampering with a block will invalidate all the subsequent blocks, as the hash of tampered block would change and will not match with the subsequent blocks.

Further, Block chain has a security functionality called ‘proof of work’, which is a mechanism that slows down the creation of new blocks.Another security mechanism of Blockchain is being distributed. What’s special about blockchain is that instead of a centralised authority validating the transaction, transactions are validated by Person to Person(P2P) networks which is open to all. When someone joins this P2P network they get the full copy of blockchain. If someone tries to change data in a Blockchain, it is verified with each node(the participants in P2P network). Only if it checks out in the nodes it is added to the Blockchain.

To successfully tamper with data in Blockchain you will need to tamper with all the blocks in the chain, redo the proofing for each block, and take control of more than 50% of P2P network. This is considered almost impossible to do. Use of such technology can ensure that data is not manipulated and all creditors are on the same page.

[6] De Mauro et al., “A Formal definition of Big Data based on its essential Features”. Library Review 65 122–135 (2016).(Available at doi:10.1108/LR-06-2015-0061).

[7]Insolvency and Bankruptcy Code 2016, s 4(1).

[8]Insolvency and Bankruptcy Code 2016, ss 14(1)(a), 14(1)(c).

[9]Insolvency and Bankruptcy Code 2016, s 14(1)(b)

[10]Insolvency and Bankruptcy Code 2016, s 14(4).

[11] R Susskind and D Susskind, “The Future of the Professions: How Technology Will Transform the Work of Human Experts”, Oxford University Press, 2016.

[12] R Susskind and D Susskind, “The Future of the Professions: How Technology Will Transform the Work of Human Experts”, Oxford University Press, 2016.

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Introduction

Recently in the last week of November 2018, the Finnish telecommunication giant Nokia announced inking a patent licensing agreement with Oppo. Oppo is a Chinese consumer electronics and mobile communication company which is popular for its smartphones. Oppo has been focusing  on producing the youth-based smartphones . Having been launched in 2004, Oppo has been riding high on the statistics recently, and became the leading smartphone manufacturer in China in 2016. [1] On the other hand, Nokia is a Finnish Company founded in 1865 headquartered in Espoo.  Nokia has had its operations in a lot of countries of the world and recently in 2014, the company stopped its manufacturing operations. However, as a result of the vast and diverse quantum of patents that it holds and the licensing that it has done to major communication providers of the world, it still gains significantly by way of royalty.

Way Till Now: Nokia’s Licensing Agreement With Other Companies

So far, Nokia has had patent licensing agreements with a lot of companies. With the current patent licensing deal, Oppo now sits alongside other manufacturers like Xiaomi, Samsung, and Huawei that have been using a significant part of Nokia’s Intellectual Property since the past few years. Nokia presently exists as a leading patent owner [2] of several communication standards such as 2G, 3G and even 4G.  The company has over a 100 licenses, most of the same being in the mobile phone market and includes a big chunk of major companies like Apple, Huawei, LG Electronics, Samsung and now Oppo.  Any company that wants to produce a device that work upto those standards shall have to take a license of Nokia’s patents.

The Deal With Oppo

With the present deal, Oppo now joins other companies like Apple, Xiaomi and Huawei who use the license by Nokia to produce their products. This usage is done in return of a payment called Royalty. This deal shall surely bring greater royalty to Nokia. The other relevant details pertaining to the deal are kept confidential. However, this deal does not mean that Oppo shall produce smartphones for Nokia as the agreement regarding the same is existing with HMD Global. The licensing has further strengthened Nokia’s global licensing program. [3]

Conclusion

One after the other, with companies coming and using the patents of Nokia, the company is eventually strengthening its global licensing program. Nokia has a very strong position in the global patent pool and the same is the reason why one after the other the telecommunication giants are buying its patents. Nokia has its Patent Licensing agreements signed with Apple, Samsung and LG Electronics already. It subsequently signed agreements with Huawei and Oppo in December 2017 and December 2018 respectively. It has already licensed its other products to companies like Microsoft and a lot of its licenses have already been extended beyond their initially set timelines. Nokia had spent huge sums on its Research and Development in the past two decades and the company now seeks to engage in a more aggressive policy [4] to license its patents to maximize returns from its investment. The significant number of companies coming and using Nokia’s Patents and the continuous royalty that it earns speaks volumes about the company’s strong position in the Global Patents pool.

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

References:

[1] https://www.oppo.com/in/about-us/

[2]https://www.teleanalysis.com/news/international/nokia-oppo-sign-patent-license-agreement-29266

[3]https://www.gizchina.com/2018/11/26/oppo-and-nokia-signed-a-multi-year-patent-licensing-deal/

[4]https://nokiamob.net/2018/11/26/nokia-signs-patent-licensing-deal-with-chinas-oppo/

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Introduction

After a patents row that escalated between Nokia and Apple in December last year and was settled in May. Nokia sues Apple for the infringement of several patents claiming that Apple has been using Nokia technologies without the proper licenses. Nokia says that the two companies have been able to reach an agreement over several patents in 2011. But Apple allegedly rejected subsequent negotiations with Nokia to license other patented inventions used in numerous Apple’s products.  The lawsuits includes dispute over a broad range of technologies such as display, antenna, video coding Antenna, software chipsets and user interface.

Nokia Corporation is a multinational company and a global leader in innovation, leading in telecommunications, information technology, and consumer electronics industry. Headquartered in Espoo, Finland Nokia reported annual revenues of around €23 billion in 2017. It is a public limited company listed on the New York Stock Exchange and Helsinki Stock Exchange.

Apple Inc. is an US multinational Technology Company headquartered in Cupertino, California with annual revenue of $265 billion in 2018, which designs, develops, and sells consumer electronics, computer software, and online services. Apple was incorporated in 1977 and is the world largest company in Information Technology by revenue.

 Dispute

Nokia says it’s a very old infringement as Apple have allegedly been using several of Nokia’s mobile patents since the 3Gs, turning it into a bitter public fight.

The lawsuit started late last year. Nokia first blamed Apple of infringing some of Nokia’s patents as well as patents from the two companies it owned, NSN and Alcatel Lucent.

This time Apple is filing an antitrust lawsuit, against PAE’s (Patent Assertion Entities) acting on Nokia’s behalf. Apple argues that Nokia already has a reasonable agreement for these patents through FRAND. But Nokia is transferring these patents to PAEs in order to get more revenue through its intellectual property from Apple and other Smartphone makers.

Patent Assertion Entities is any entity/businesses that acquire patents from third parties and get revenue by asserting them against infringement. They do not actually produce or invent any goods or services for public consumption, their sole purpose is to profit by identify infringers and sue them.

FRAND (Fair, Reasonable and Non-Discriminatory) is a voluntary licensing commitment taken from the owner of an intellectual property (usually a patent) that may become essential to practice a technical standard. This means that companies can take advantage of these patents and without paying outrageous licensing fees as they are essential to most products.

In response to this lawsuit, Nokia is striking back by suing Apple directly.

This week Nokia technology announced that it had sued Apple over 32 new Smartphone tech patents in the United States and Europe.

In a company statement Nokia adds that Apple did start by paying for the other patents by 2011, still the other 32 patents in the lawsuit have been refused for extension. It has not been able to reach an agreement to pay for those additional ones mentioned in the lawsuit with the tech giant.

Conclusion

Nokia and Apple have announced to settle their patent disputes and have agreed to have a multiyear patent license deal.  Nokia will receive upfront cash payment from this quarter itself and additional licensing revenue for the duration of the agreement.

Apple has settled a patent dispute with Nokia and agreed to buy more of its network products and services.

This means that Nokia will now get bigger royalties from using its mobile phone patents, as it’s tapping more into its patent portfolios. Nokia will also supply mobile network infrastructure products of Apple. In turn Apple will resume sales of Nokia digital health products and retail it online stores and look at further collaboration in this venture. Withings (Nokia) Digital Health products making a comeback to Apple retail and online Stores. Nokia has recently been focusing on developing on digital health as one of their new business ventures, since its doom as a world’s largest phone maker.

Withings is a French consumer Electronics Company headquartered in Issy-les-Moulineaux, France, distributing products worldwide. It was purchased by Finnish company Nokia on 26 April 2016. The deal closed on 31 May, with Withings having been absorbed into Nokia’s new Digital Health unit led by the former Withings CEO; the division became known as Nokia Health. In May 2018, Withings became an independent company again.

Author: Ms. Tanuja Prasad, Associate at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@khuranaandkhurana.com.

References:

[1]https://gadgets.ndtv.com/mobiles/news/apple-nokia-patent-dispute-settled-licence-agreement-business-collaboration-1697124

[2]https://nokiapoweruser.com/nokia-inks-patent-licensing-business-collaboration-agreement-applenokia-inks-patent-licensing-and-business-collaboration-agreement-with-apple-settles-all-litigations/

[3]https://www.digit.in/general/nokia-and-apple-settle-patent-dispute-agree-to-a-new-business-collaboration-35264.html

[4]https://www.apple.com/newsroom/2017/05/nokia-and-apple-sign-agreement-settle-all-litigation/

[5]https://www.theverge.com/2017/5/23/15679612/apple-nokia-settle-patent-dispute-withings

[6] https://en.wikipedia.org/wiki/Patent_troll

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Introduction

Nokia began in 1865 as a single paper mill operation. Since then, the Finnish company has seen sector-by-sector success and the same speaks volumes about its global rise as well. Post Nokia’s acquisition of Alcatel- Lucent, its position has emboldened even more.[1]  Till now, Nokia has  done business in about 130 countries and operated as a telecommunications, information technology and consumer electronics company.  Whereas, Huawei was founded in 1987 as a Chinese company and operates in domains of Telecom Neworks, IT and cloud services. [2] Presently, Huawei is the biggest maker of telecoms equipment by revenue and world’s third largest maker of smartphones.

About Patent Licensing

Licensing is a contractual agreement where licensor’s patents, service mark and trademark and know how may be sold or made available to licensee for consideration. Recently, both the companies have been in news for the Patent Licensing agreement that took place between the two giants. Previously, Xiaomi too had signed a similar deal with Nokia. Even the simple technology that we use everyday can actually cost the companies a lot in Research and Development.  An innovation that is seemingly simple today might not have been the same when it might have been invented for the very first time.  Agreements like these are done so that the companies can avoid legal disputes and the original company responsible for the invention gets a slice of the share from anyone who uses it.[3]

What Flows After The Nokia-Huawei Deal

Nokia now has licensing deals with a lot of handset makers including Apple, LG, Samsung Electronics and Xiaomi. Nokia existed as a huge cellphone maker a decade ago, but eventually it withdrew from the handset market in 2014; however, the company still remains a major licensor for wireless technology. Nokia had created a valuable patent portfolio in the three decades in the mobile industry where it existed as a leader. In its patent portfolio some innovations that exist are the technology that improve mobile signals within the phone, help in preserving battery life and other features like voice recognition.[4]

Conclusion

After the Finnish company entering into an agreement with the huge Chinese giant, it now has patent licensing agreements with most of the big companies in this sector. Nokia’s shares have dipped with time but inspite of that and even after pulling out of the manufacturing sector, the royalty that Nokia receives from being the first innovator, from companies like Xiaomi, helps it to survive effectively. In the present case, the details about the purported deal have not been made public but the amount that Nokia shall receive from Huawei in the form of royalty further strengthens its position for the wide range of innovations that it made in the capacity of a first mover.

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

References:

[1] https://www.nokia.com/about-us/who-we-are/our-history

[2] https://www.huawei.com/en/about-huawei

[3]https://www.xda-developers.com/huawei-patent-license-agreement-nokia/https://www.xda-developers.com/huawei-patent-license-agreement-nokia/

[4] https://www.ft.com/content/1291d6c0-e62c-11e7-97e2-916d4fbac0da

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