SpicyIP | De-Coding Indian Intellectual Property Law
Founded in 2005 by Prof. Shamnad Basheer, an IP academic and consultant. SpicyIP is one of India's leading blogs/repositories on intellectual property (IP) and innovation law/policy. Through its independent reporting/analysis, SpicyIP is committed to fostering transparency within the Indian IP ecosystem.
Divij wrote a post on the draft e-commerce policy released by the Department for Promotion of Industry and Internal Trade. In his post, he focusses on the anti-counterfeiting measures to be adopted by e-commerce platforms and how they may adversely affect the freedom of small vendors and marketplaces. He then analyses the anti-piracy measures to be adopted and the suggestion to return to the notice and takedown approach for copyrighted content. He notes that this may lead to a disproportionate restriction in most cases.
Balu wrote a case analysis on a recent Delhi HC order dealing with an application filed for an interim injunction against the publication of certain allegedly disparaging advertisements by the defendant. The Court held that the impugned advertisement could be protected under Article 19(1)(a) as commercial speech. In his post, Balu notes that though the Court reaches the correct conclusion, its reasoning for the same is faulty since the Court could not justify the horizontal application of fundamental rights in a dispute between two private parties.
Pankhuri announced that the Franklin Pierce Center for Intellectual Property at the University of New Hampshire School of Law (UNH) and Royzz & Co. (erstwhile Solomon & Roy) have partnered to offer a scholarship for prospective international LL.M. students specialising in IP Law. The last date for submitting applications for the scholarship is May 15, 2019.
The Court granted an ex parte interim injunction restraining the Defendant from infringing and passing off the Plaintiff’s mark “PANCHVATI” by using a deceptively similar mark in respect of hotel and food services. In arriving at the decision, the Court observed that the Plaintiff was the registered proprietor of the mark and that the mark had attained immense reputation and goodwill due to its open and continuous use. It was further stated that it would be misrepresentation to the public if the Defendant was allowed to use the Plaintiff’s mark.
The dispute between the Parties arose on account of the Respondent’s use of certain textile print drawings belonging to the Petitioner in an exhibition. The Petitioner filed an FIR and the Respondent admitted his guilt on being questioned by the police. Moreover, the Petitioner also filed a case for restraining the Respondent from using its drawings and appointment of a Court Receiver for seizing the goods. Subsequently, the Parties amicably settled the matter but the Respondent violated the settlement terms and destroyed evidence against it. The Court noted that the custody of the seized goods was with the Court Receiver when the Respondent destroyed the evidence, thereby committing a contempt of Court. Accordingly, the Court imposed a fine of Rupees 15 lakhs and simple imprisonment for a period of 4 weeks.
The dispute between the Parties arose on account of the Appellant’s use of the mark “SWAGATH” being identical to the Respondent’s mark in respect of hotels and catering services. The Lower Court granted an interim injunction in favour of the Respondent, and restrained the Appellant from using the mark. On appeal, the Court noted that the Lower Court had failed to discuss the similarity or dissimilarity between the Parties’ marks, in addition to wrongly presuming that the Respondent’s word mark was registered. The Court further observed that the word “SWAGATH” was common to trade and non-distinctive, thereby preventing the Respondent from the exclusive use of the word, except as part of its device. On comparison of the Parties’ marks, the Court noted that the Appellant’s mark “SWAGATH” bore no resemblance to the Respondent’s device. Ultimately, the Court stated that the Appellant had made honest, open and concurrent use of the mark since 2008. In light of all these reasons, the Court set aside the order of the Lower Court and remanded the case to be decided by the trial court.
The dispute between the Parties arose on account of an advertisement campaign initiated by the Defendant where it was alleged to have made false, baseless and reckless statements against the Plaintiff’s product, “TATA SALT”. In the case initiated by the Plaintiff, the Court noted that the cause of action was separate, distinct and continuous in nature which would distinguish it from other actions filed by the Plaintiff, and hence the charge of forum shopping would not hold good against it. The Court observed in respect of the Defendant’s advertising material that it meant to denigrate white salt and especially cast aspersions on the Plaintiff’s product by making a reference to it. Accordingly, the Defendant was restrained from televising or publishing any commercials or any other advertisement which would result in the disparagement of the Plaintiff’s product.
We’re pleased to inform our readers that The Franklin Pierce Center for Intellectual Property at the University of New Hampshire School of Law (UNH) and Royzz & Co. (erstwhile Solomon & Roy) have partnered to offer a scholarship for prospective international LL.M. students specialising in IP Law. The deadline for submitting applications for the scholarship is May 15, 2019. For further details, please read the announcement below:
UNH Law-Franklin Pierce and Royzz & Co. Partner for IP Scholarship
The Franklin Pierce Center for Intellectual Property at the University of New Hampshire School of Law and Royzz & Co. (formerly Solomon & Roy) announce a new partnership to benefit international students interested in specializing in Intellectual Property (IP) Law. Royzz & Co. has sponsored a $5,000 International Student Scholarship that will be awarded to one international student admitted to UNH Law’s LL.M. in IP or Master’s in IP for the 2019-2020 academic year.
The University of New Hampshire School of Law offers a top-ranked U.S. legal education in global innovation. UNH Law is a top-ranked law school and ranked #5 for IP law, consistently making the top 10 since the rankings began nearly 30 years ago. LLM GUIDE recently named UNH Law to its 2019 Top 10 List for LL.M. Programs in Intellectual Property Law.
UNH Law’s 24 credit LL.M. program is ideal for domestic and foreign-trained attorneys and judges, and those with a legal education who are seeking specialized training on cutting-edge issues in intellectual property. The 30 credit Master’s program is designed for nonlawyers – engineers, scientists, inventors, business professors – seeking to understand legal issues in industry and policy who want to earn expert credentials in IP and innovation. Students have opportunities for practical training and gain invaluable hands-on experience through externships and legal clinics.
Under the guidance of the largest full-time faculty in the field of IP, students learn the fundamentals of obtaining, maintaining, and enforcing IP. Students also explore differences between domestic and international regulations and current issues shaping IP law and policy today. UNH Law’s Franklin Pierce Center for Intellectual Property offers one of the most comprehensive lists of innovative IP courses at any law school in the United States.
Graduates of UNH Law’s Franklin Pierce Center lead IP legal infrastructure around the world and are recognized for their signature approach to problem-solving and ability to hit the ground running. They are highly sought after in the marketplace and quickly rise to the top. UNH Law graduates comprise a global network of influential IP practitioners, working in more than 80 countries at major corporations, top law firms, and national IP offices around the world. This worldwide network of IP experts stands ready to help UNH Law students and graduates become the next generation of IP leaders.
UNH Law is now accepting applications for Fall 2019 from students who want to become a part of the school that sets the pace for legal education in the information age. To be considered for the International Student Scholarship sponsored by Royzz & Co., students should complete their application to the LL.M. or Master’s program in IP and then request an application for the International Student Scholarship. Scholarship applications are due by May 15, 2019.
Judgments of Indian courts are often criticised for their use of convoluted language, verbosity, and tendency to digress into avoidable terrains (for instances of courts employing barely decipherable language, see this). A recent order of the Delhi High Court (‘Order’), in the matter of Horlicks Limited and Anr. v. Heinz India Private Limited falls into the third category- crossing into the territory of fundamental rights in a private law dispute.
The Order was made in an application filed by Horlicks Limited for an interim injunction against the publication of certain allegedly disparaging advertisements by the Defendant. Ruling on the application, Justice Manmohan anchors his findings on the idea that commercial speech is a protected category of speech under Article 19 (1) (a) of the Constitution. Against this backdrop, the Hon’ble Judge goes on to examine the impugned advertisement, and finds it to be non-disparaging. While the end result itself may not to be faulted, the propriety of anchoring such a finding on a Part III provision of the Constitution is questionable. Despite the fact that the dispute was between two private entities, the Hon’ble Judge did not elaborate on how, if at all, a horizontal application of fundamental rights may be justified.
Horizontal Application of Fundamental Rights
It is well know that fundamental rights under Part III of the Constitution are typically available only against the state. Application of fundamental rights in matters other than those involving the state is referred to as the ‘horizontal application of fundamental rights’ and is done only under limited circumstances (for instance, in the case of Articles 15 (2), 17 and 23). Probably, the most commonly observed horizontal application of rights is when the courts deem a private entity to be ‘state’ (based on the control exerted by the state) under Article 12. Nevertheless, no such finding was made by Justice Manmohan in the present case.
Another dimension of horizontality is when a private defendant places reliance on fundamental rights to defend its impugned actions-often referred to as ‘indirect horizontality’ (for an excellent summary of horizontal application of rights in India, see this piece by Gautam Bhatia). Nevertheless, as Bhatia points out, there is no clarity yet about the circumstances in which indirect horizontality may be brought into play in India. In any case, it is highly doubtful whether there was any need to resort to indirect horizontality in the present matter as the Defendant’s actions could have been justified even without taking recourse to Article 19 (1) (a).
Reliance on Tata Press and Bennett Coleman
Being a pure private law dispute, it is not clear on what basis the Defendant claimed recourse to the free speech guarantee. In any case, the Court goes on to examine this claim and holds that advertisements, which is a facet of commercial speech under Article 19(1) (a), may be restricted only in accordance with a law enacted under Article 19(2). In its discussion of free speech, the Order relies on the decisions in Tata Press Limited v. MTNL and Bennett Coleman & Co. v. Union of India. While the decision in Tata Press is relied on to clarify that commercial speech is a class of free speech and that corporate bodies are entitled to it, Bennett Coleman is referred to for establishing that fundamental rights of shareholders as citizens are not lost when they associate to form a corporate entity.
It would appear that the reliance on both these judgments is misplaced. In so far as Tata Press is concerned, the said decision was based on a clear finding upfront that the defendant was a government owned entity, thus implying that it was ‘state’ and open to the scrutiny of Part III provisions. Moreover, the extent of protection accorded to commercial speech in Tata Press is lower than what seems to have been asserted in the Order. Although Tata Press does say in so many words that commercial speech forms part of the free speech guarantee, it is doubtful whether the judgment intended to bring all commercial speech within the ambit of free speech guarantee. This lack of clarity stems from the language employed in Tata Press:
“We are of the view that all commercial advertisements cannot be denied the protection of Article 19(1) (a) of the Constitution merely because they are issued by businessmen. The combined reading of Hamdard Dawakhana’s case and the Indian Express Newspaper’s case leads us to the conclusion that “commercial speech” cannot be denied the protection of Article 19(1) (a) of the Constitution merely because the same are issued by businessmen.”
The underlined portion from the extract indicates that Tata Press was in no way implying an unfettered protection to commercial speech. It is also interesting to note that Tata Press premised its conclusions on the ground that “public at large is benefitted by the information made available through the advertisement”. The present case on the other hand is one which involves alleged “misinformation”, as the Plaintiff claimed that the Defendant was making false and misleading statements in its advertisements. Thus, arguably, the present Order has erred in relying on Tata Press without first determining if the impugned ads were misleading or not (for an insightful discussion on the protection of commercial speech post Hamdard Dawakhana and Tata Press, see this).
The reliance on Benett Coleman too is misplaced as the judgment therein had sought to protect the rights of shareholders from state action. The following portion of the judgment clarifies this:
“The Bank Nationalisation case (supra) has established the view that the fundamental rights of shareholders as citizens are not lost when they associate to from a company. When their fundamental rights as shareholders are impaired by State action their rights as shareholders are protected.”
It is in no way implied that private and public law concepts exist in independent, watertight silos. In fact, there is growing convergence of the two areas and India has been long witness to constitutionalisation of its private law sphere (for an account of constitutionalisation of tort law, see this piece by Shyamkrishna Balganesh). Although the Order gets its final result right, as it goes on to make an enquiry on whether there was actual disparagement, it opens up the possibility of future decisions leaning (at least subconsciously) on the free speech guarantee to elevate the threshold required for disparagement. Although such elevation may not necessarily be a bad thing, any such change should be preceded by a cogent exposition of why constitutional norms should inform a disparagement dispute between two private parties.
It’s been a rough time for online intermediaries operating in India, lately. Jumping on the techlash bandwagon in the wake of multiple social media fiascos concerning online disinformation, data breaches, and mass propagation of hate speech and abuse, governments across the world are taking this as an opportunity to tighten regulation for online ‘intermediaries’ – platforms which host third party content, such as social media or online marketplaces. Similarly, the hornet’s nest of intermediary liability for copyright and trademark infringement has also been stirred.
The recently released draft e-commerce policy by the DPIIT apparently stems from laudable objectives of achieving ‘data sovereignty’ for India, and ensuring a fair market for consumers and domestic entrepreneurs. Unfortunately, when it comes to the proposed solutions for achieving these aims, the policy recommends solutions which would be stifling for online trade, freedom of information and access to knowledge. This is particularly apparent in its sections related to “e-commerce platforms” and their responsibilities for trademark or copyright infringement.
Doubling Down on Private Censorship
The first concern is the section on ‘anti-counterfeiting measures’ to be undertaken by e-commerce platforms. Many of these suggestions are well-balanced and promote transparency of e-commerce platforms towards their sellers as well as towards trademark owners who choose to register on such marketplaces. Some of these, such as the notice-and-notice requirement to forward complaints between a seller and a TM owner, appear to be taken from the Delhi High Court’s judgment on online marketplaces and their responsibilities, which we covered previously. However, there are some other concerning obligations proposed in the mix:
The policy proposes that, for a certain category of goods, including “high-value goods”, the marketplaces will be required to take the permission of the TM owners.
Further, the policy proposes that online marketplaces be made directly liable to refund customers and delist ‘counterfeit goods’ upon receiving complaints from individuals.
These incongruous requirements can potentially disrupt the freedom of smaller marketplaces or vendors, as they impose significant monitoring requirements on platforms, particularly in being liable for delisting and refunding counterfeit goods in the absence of a legal determination, which could dissuade business models which platform lesser known vendors. Moreover, this policy also fails to deal with the issue of second-hand product sales or ‘domestic exhaustion’, where the permission of TM owners may not be required when re-selling a validly purchased product.
The ‘anti-piracy’ proposals in the draft policy are even more disturbing:
Firstly, the policy proposes a return to the notice and takedown approach for copyrighted content, which is unfortunate, given that there is a severe need to transparency and accountability structures for platform behavior, before enforcing a restrictive requirement of this nature.
Secondly, and perhaps most dangerous, is the proposal to allow an ‘industry body’ to identify so-called ‘rogue websites’ which host pirated content, and forward such a list to intermediaries including ISPs, search engines and payment gateways, which will have a legal obligation to block access to such websites. Creating such opaque and private mechanisms to control online information, with no public representation or judicial oversight is unlikely to be beneficial to consumers or entrepreneurs, and is detrimental to the policy’s own aims.
We face an inflection point in policy-making, where we should be seriously considering the legal implications of affording major online platforms legal immunities for content that they host without taking into account the nuances in their business models and the level of control or complicity in enabling illegal speech. The outcome should be focused on the necessity to counter a set of identified harms, in a manner which is proportionate and balanced against the restrictions to intermediaries’ activities.
Such nuance, unfortunately, has gone completely over the heads of policy-makers in India, who have responded to concerns regarding illegal speech on platforms with disproportionate and dangerous proposals that threaten freedom of speech online. One example of this, which we blogged about last month, was the suggestion by the Ministry of IT to reduce the scope of intermediary liability by making them responsible for implementing clunky upload filters for all ‘illegal content’, which presumably would cover copyright or trademark infringement.
The e-commerce policy fails on similar counts – critical definitions are vague or absent and there is a complete lack of nuance or discussion about the rationale for many of its proposals, particularly in the case of trademark and copyright related concerns. I wonder if it is too much to hope for comprehensive and constructive policy making when it comes to an issue as important as the future of the internet and the Indian digital economy.
The Draft E-Commerce Policy is open to public comments until March 29, 2019. Please send in your comments to the draft at email@example.com.
In a guest post, Kartik Puttiah discussed the exclusions under Section 3(j) of the Patent Act in light of the Monsanto case. Specifically, he argues that excluding nucleotide acid sequences based on their use in plants is flawed since this does not constitute an evaluation of the subject matter, but rather its industrial application. He argues, further, that a balance between incentivising inventions in biotechnology and protecting farmers may be achieved by creating an exception for farmers under Section 47, while interpreting Section 3(j) in a manner that allows biotechnological inventions.
In another guest post, Alphonsa Jojan discussed the duties of Indian companies to share benefits under the Biological Diversity Act in light of Divya Pharmacy v Union of India. The author agrees with the verdict of the Uttarakhand High Court, which purposively interpreted the legislation to require benefit sharing on part of Indian companies with no foreign shareholding as well. She also discusses the implications of this judgment, which would require the creation of necessary frameworks and rules.
In a guest post, Swaroop Mamidipudi wrote on the scope of Section 31D of the Copyright Act in light of the recent litigation involving Spotify. He discussed the recent Office Memorandum released by the Department of Industrial Policy and Promotion, which brings internet broadcasting organisations within the ambit of the statutory licensing regime. He notes that the Government does not have the authority to release such a memo, and further, that internet broadcasters were not intended to be included in the regime by the legislature.
The dispute between the Parties arose on account of the Respondent’s unauthorized use of the Applicant’s patented fabric dyeing machine. On being aware of such use of its patented machine, the Applicant sent across a desist notice. The Respondent in its reply tried to distinguish the working of the two machines. The Additional District Judge ruled in favour of the Respondent, to which the Applicant filed an appeal. The Court granted an injunction in favour of the Applicant, thereby staying the impugned order of the Additional District Judge. It was initially stated by the Court that the Respondent had failed to discharge the burden to prove that the Applicant’s machine was not patentable and that the balance of convenience was in favour of the Applicant as it was entitled to enjoy the fruits of its time and money invested for a period of 20 years.
The Court granted a permanent injunction restraining the Defendants from infringing and passing off the Plaintiff’s mark “FLIPKART” by using an identical mark in respect of online e-commerce platforms or as a part of their domain names. The Court noted that the Defendants had no real prospect of defending the claims, and had failed to appear before the Court or file a written statement. The Court also ordered the internet and telecom service providers to block access to the Defendant’s websites.
The Court granted a permanent injunction restraining the Defendants from infringing and passing off the Plaintiff’s mark “SAMSUNG” by using an identical mark in respect of mobile phones, accessories and allied products. In arriving at the decision, the Court noted that the Defendant No. 8 had no real prospect of defending the claims, and had failed to appear before the Court. Moreover, the Court noted that though Defendant No. 21 had entered appearance, it had no prospect of defending the claims.
The Court granted a permanent injunction restraining the Defendant from broadcasting the Plaintiff’s copyrighted works through its cable services. In determining infringement, the Court acknowledged that the Plaintiff had valid and subsisting copyrights in its works which could subsequently not be broadcasted by the Defendant without a valid license. The Plaintiff was further granted damages of Rupees 10 lakhs, a sum arrived at by the Court through consideration of the fact that the Defendant had been deliberate and conscious in infringing the Plaintiff’s works.
The dispute between the Parties arose on account of the Defendant’s use of the mark “GODFATHER ELECTRA”, being deceptively similar to the Plaintiff’s mark “ELECTRA”. In light of the Defendant’s attempt to sell under the same brand in Delhi, the Plaintiff filed a suit and the Court granted it an interim injunction. The Court further granted a permanent injunction in favour of the Plaintiff on the ground that it was the registered proprietor of the mark “ELECTRA”, and the Defendant could not claim any right to use the same on account of prior use as its application was filed subsequent to the registration in the Plaintiff’s name. The Court also denied any delay on part of the Plaintiff in filing the suit as it had reasonably notified the Defendant to cease such use.
We’re pleased to bring to you a guest post by Swaroop Mamidipudi. Swaroop is an advocate practicing in copyright law at the Madras High Court. He has guest blogged for us in the past as well (see here and here).
Section 31D of the Copyright Act Does Not Cover Internet Broadcasting
The Spotify litigation (covered here) centres around the question that has been simmering around the Indian copyright scene for some time – does the statutory licensing regime under section 31D cover internet streaming services such as Spotify or Saavn?
While legal opinion seemed to be divided on the issue, the Central Government through the Department of Industrial Policy & Promotion released an ‘Office Memorandum’ (‘OM’) on September 5, 2016 regarding the inclusion of ‘Internet Broadcasting Organisations’ under the purview of statutory licensing as per s 31D of the Copyright Act, 1957 (‘the Act’).
The effect of this OM was that the owners of copyright would be bound by the rates of royalty as fixed by the Copyright Board for internet-based streaming rights of a particular work. Two issues arise out of the OM: Does the Central Government have the right to issue such an OM and is it binding? Is the OM legally sound?
Central Government’s power to issue the OM
The Act sets up two main bodies to administer it, namely the Copyright Office and the Copyright Board. Certain functions are given specifically to the Copyright Office, which is headed by the Registrar of Copyrights and his subordinates, and other powers, mostly adjudicatory or quasi-judicial in nature, are given to the Copyright Board.
The principal function of the Copyright Office is to maintain a Register of Copyrights of the names, addresses of authors and owners of the Copyright for the time being and other relevant particulars may be entered. As per s 9 of the Act, the Copyright Office is under the immediate control of the Registrar of Copyrights who in turn shall act under the superintendence and direction of the Central Government.
On the other hand, the Copyright Board, set up under s 11 of the Act, is an independent body, and is not under the direction or supervision of the Central Government. It has been held to be a quasi-judicial body by the Supreme Court in the Super Cassettes judgment and by the Madras High Court in the South Indian Music Companies Association judgment. In fact, the Madras High Court held that in the selection committee and process of selection of members to the Copyright Board, primacy must be given to the judiciary. This shows that as far as the powers and functions given to the Copyright Board are concerned, it is meant to act as a body outside the control and supervision of the Central Government. There is, in other words, a separation of powers between the Copyright Office and the Copyright Board.
S 31D of the Act dealing with statutory licensing is administered by the Copyright Board and must be, as a corollary, interpreted only by the Copyright Board and the judiciary. The Central Government has no role in either administering or interpreting it. The Central Government has no right to issue any clarification, memorandum, notification or any other such note that ‘interprets’ or ‘clarifies’ s 31D.
The Government’s power is, in fact, much narrower. Unlike s 119 of the Income Tax Act, 1961 or similar such provisions in the other taxing statutes, there is no express provision in the Copyright Act, 1957 which empowers the Central Government to issue instructions or orders or clarifications regarding any statutory provision. Although the Act states that Registrar of Copyrights shall act under the “superintendence and direction” of the Central Government, it is clear that such “superintendence and direction” does not envisage the power to issue clarificatory statements.
Now, let us look at the merits of the OM.
The HRD Minister, at the time of passing the bill introducing section 31D in the Parliament in his speech had stated that:
“The Copyright Board, as a matter of law, under the statute will actually decide on the quantum of money that will be required to be paid by the TV companies to the music companies who have bought over those rights. Therefore, there was some debate as to whether it should be limited only to radio, and TV should be kept out of it. But ultimately, we decided that TV should be included in it.”
From a plain reading of the speech of the HRD Minister, it is very evident that the only debate was if the provisions of s 31D should be limited only to radio or should include the TV broadcasters and it was never the intention of the Legislature to include internet broadcasters within the ambit of this section. Any attempt to do so will be against the spirit of the amendment.
Further, s 31D (3) clearly states that different rates may be set for “radio and TV” broadcasting. No other form of broadcasting is envisaged. Further, r 29 of the Copyright Rules, 2013 (‘Rules’) sets the procedure for the application for a statutory licence. R 29(3) states that “Separate notices shall be given… for radio broadcast or television broadcast…”. R 29(4), which deals with the details to be provided by the applicant states that the applicant must provide the “Name of the channel”, the “territorial coverage… by way of radio broadcast, television broadcast…”, and the “mode of communication to public, i.e radio, television or performance”. Even in r 30 relating to the maintenance of records, the rule states that separate records shall be maintained for “radio and television broadcasting”. R 31(6) of the Rules reiterates s 31D(3) when it states that the Board shall determine “royalties payable… for radio and television broadcast separately.” Lastly, r 31(7) makes a specific reference to the terms and conditions of the ‘Grant of Permission Agreement (GOPA)’ between the Ministry of Information and Broadcasting for operating the radio station.
All these provisions further show that the intent of the legislature in introducing s 31D was to regulate the licence rates for radio and television broadcasting only and not any dissemination of music through the internet.
The meaning of the terms ‘broadcasting organisation’, ‘broadcast’ and ‘communication to the public’
The OM attempts to include internet broadcasting within the ambit of s 31D(1) by reading the section with the definition of ‘communication to the public’ which is defined under Section 2(ff) of the Act. This approach is inherently erroneous.
S 31D(1) refers to a ‘broadcasting organisation’. This expression has not been defined under the Act. However, s 2(dd) introduced in 2012, defines “broadcast” as follows:
“broadcast” means communication to the public—
(i) by any means of wireless diffusion, whether in any one or more of the forms of signs, sounds or visual images; or
(ii) by wire,
and includes a re-broadcast;
The definition of ‘broadcast’ has two key ingredients: (a) there must be a communication to the public; and (b) this communication must be through wireless diffusion or by wire. A close reading of this provision shows that a broadcast is the act of actually transmitting the copyrighted work through wire or wireless diffusion, and not merely making it ready for such diffusion.
The term “communication to the public” is wider than “broadcast” since the definition of “broadcast” only includes two methods of communicating the work to the public. The phrase ‘communication to the public’ is defined as under:
‘(ff) “communication to the public” means making any work or performance available for being seen or heard or otherwise enjoyed by the public directly or by any means of display or diffusion other than by issuing physical copies of it, whether simultaneously or at places and times chosen individually, regardless of whether any member of the public actually sees, hears or otherwise enjoys the work or performance so made available.
Explanation.-For the purposes of this clause, communication through satellite or cable or any other means of simultaneous communication to more than one household or place of residence including residential rooms of any hotel or hostel shall be deemed to be communication to the public;’;”
The definition of “communication to the public” contains a phrase ‘whether simultaneously or at places and times chosen individually’. The question is – who makes this choice, the owner of the copyright or the member of the public? If the choice is that of the owner, then communication will exclude streaming. But if it implies the choice of the consumer, then it will include streaming.
The phrase immediately preceding this, being “making any work or performance available”, obviously refers to the owner of the copyright making it available. The phrase “whether simultaneously…” only qualifies this “making… available”. Further, every time a phrase refers to the “public”, the “public” is intentionally invoked by the definition. The person to whom no reference is made directly, is the person “making” the communication, i.e. the owner. Therefore, I submit that “chosen individually” intends to cover only the owner of the work and not the consumer. In other words, for an act to amount to communication to the public, the communication must be at times and places chosen by the owner.
This brings us to two questions:
Then where is internet streaming covered?
Then what is the meaning of “individually”?
To answer the first question, when the owner of a sound recording gives internet streaming services for music, he gives that person a licence to do two things: (a) to make a copy of that work on a server belonging to the streaming service; and (b) to allow the streaming service to “rent” it to the consumer.
These rights are covered under s 14(d)(i) and s 14(d)(ii). Communication of the work to the public is not invoked at all. For this reason also, the dissemination of music through an internet music streaming service provider is not a ‘communication to the public’, and is therefore not covered by the definition of ‘broadcast’ under s 2(ff). Such a reading is consistent with the entire scheme of the Act that deals with broadcasting, but only refers to radio and TV.
To answer the second question, “communication of the public” covers a broader spectrum than just broadcast. It includes theatrical distribution, public performance, narrowcasting – all these are cases where the owner chooses the times and places of communication. In fact, the Madras High Court in Thiagarajan Kumararaja v Capital Film Works, even found that dubbing and subtitling of films comes under the ambit of section 2(ff). This shows that the term “places and times chosen individually” will not become meaningless if internet streaming is excluded from its ambit.
To summarise, where the owner of the work chooses the times and places, it is “communication to the public”. Where the consumer chooses the times and places, it is not “communication to the public”. Therefore, persons running internet music streaming services are not ‘broadcasting organisations’ and will not be covered by section 31D. This would imply, obviously, that internet radio would be “communication to the public”. But the services provided by Spotify are not internet radio – the choice of what song to play and when is with the consumer. Therefore, it is not relevant to the present discussion.
What I attempt above is an internal reading of the Act and the Rules. Should statutory licensing include internet broadcasting? That is for policymakers to argue. The arguments above, I believe, are sound. But I would not be surprised if a judge leaned the other way on a reading of section 2(ff). Either way, Spotify’s action of invoking section 31D and playing the music without a licence is indefensible in law. That has already been covered on this blog before. Spotify, I think, is playing litigation strategy – try and get an interim order out of a judge and push Warner to a settlement.
We’re pleased to bring to you a guest post by Alphonsa Jojan. Alphonsa teaches at Tamil Nadu National Law University, Trichy. She has written a guest post for us earlier as well.
Developing Bio-Cultural Jurisprudence for Securing Rights of Indigenous Peoples and Local Communities – Divya Pharmacy v. UoI
On 21st December, 2018, the Uttarakhand High Court delivered its judgment (previously covered on the blog here) on a contentious issue under the Biological Diversity Act: whether Indian companies, which have no foreign participation in terms of shareholding or management, need to share benefits with local communities under the Biological Diversity Act (BD Act). This question has been flooding various forums, including the Uttarakhand High Court, Nagpur Bench of Bombay High Court and the Central Bench of National Green Tribunal. Interpreting the law in this context for the first time, Justice Sudhanshu Dhulia held that Indian companies will come under the regulatory purview of State Biodiversity Boards (SBBs) under Section 7 read with Section 23 of the BD Act, as SBBs have the power and duty to collect the fair and equitable benefit sharing fee as indicated in the 2014 Guidelines on Access and Benefit Sharing Regulations (2014 ABS Regulation) notified by the Ministry of Environment, Forest and Climate Change. This ruling by the High Court is based on a purposive interpretation of the BD Act relying on India’s international obligations towards indigenous peoples and local communities when resources they conserve and knowledge they hold are accessed and used. These obligations applicable to all actors were introduced through the Convention on Biological Diversity (CBD) and crystallised by the later developments such as the Nagoya Protocol to which India is a signatory.
The judgment was passed in a writ petition filed by Divya Pharmacy, a trust which uses various herbs collected from Uttarakhand for manufacturing ayurvedic medicine and nutraceutical products. The petition challenged the notice served by the Uttarakhand Biodiversity Board directing the trust to deposit a benefit sharing fee with the Board. The primary contention of the petitioner trust was that being a purely Indian company, the BD Act did not create any obligation on it to pay benefit sharing fee for using biological resources collected from India. In addition to this, the trust also argued that SBBs do not have powers to impose fair and equitable benefit sharing fee.
BD Act – A beneficial legislation for Indigenous Peoples and Local Communities (IPLC)
The Court rejected these arguments by anchoring its reasoning on the principles of conservation, sustainability and rights of indigenous peoples and local communities (IPLCs). Instead of following a literal reading of the provisions of the BD Act, the Court enquired into the purpose behind its enactment and considered BD Act as a beneficial legislation. It located the purpose in the Preamble of the BD Act, which links the Act to the Convention on Biological Diversity (CBD) and various other international treaties and commitments. The Court referred to these international commitments as movements encapsulating various struggles: such as the struggle of developing countries to conserve their biological resources from exploitation and extinction and the struggles of indigenous peoples to conserve their traditional knowledge and culture. Unlike many other takes on the BD Act, which focus on bio-piracy as well as trade and intellectual property rights, the reasoning of this judgment is based on the inter-play of the three objectives of the Act–conservation, sustainability, and fair and equitable benefit sharing for providing access (ABS).
The third objective of the Act, Fair and Equitable Benefit Sharing (FEBS), is given meaning by the Court by placing reliance on India’s international commitments to give rights to indigenous peoples and local communities. This becomes apparent as the Court cites Article 8(j) of CBD which encourages parties to the Convention to respect, maintain, apply the traditional knowledge, innovations and practices relevant for conservation and sustainable use; and encourage equitable sharing of the benefits arising from their use. The Nagoya Protocol on Access to Genetic Resources and Fair and Equitable Sharing of Benefits adopted under CBD, which elaborates on the ABS, is also relied on to reach the conclusion that indigenous peoples and local communities require protection not only from outside but also from within India. This interpretation of BD Act to impose benefit sharing obligation on Indian entities requires reading the BD Act beyond the black letters, taking into account the later international developments, including the Nagoya Protocol which entered into force in October 2014.
On this basis, the Court ruled that maintaining a distinction of a purely Indian commercial use and non-Indian commercial use is absurd, since for a meaningful recognition of indigenous peoples’ and local communities’ biodiversity stewardship, sharing of benefits arising from any commercial use of biological resources traditionally conserved by them is quintessential. In this context, it is apt to recall that one of the earliest examples of benefit-sharing of commercial utilisation of traditional knowledge and resources is by Indian entities- Kottakkal Arya Vaidya Sala and Tropical Botanical Garden and Research Institute- with the Kani tribes of Kerala.
In many ways, one can see the Court slowly developing an Indian jurisprudence on bio-cultural rights by establishing property rights for the communities over resources that have been traditionally conserved by them and/or have traditional knowledge over such resources. It is not surprising to read such an affirmation of bio-cultural rights from a Court which has in the recent past (Lalit Miglani v. State of Uttarakhand, Mohammed Salim v. Uttarakhand) upheld rights of nature, river etc., drawing inspiration from international jurisprudence.
A mammoth task for the NBA and the SBBs to develop guidelines to facilitate negotiations and deliver shared benefits to communities
While this judgment can have ramifications on similar issues that are pending before different forums, it is more importantly a wake-up call for the National Biodiversity Authority (NBA) and the State Biodiversity Boards (SBBs) to address the long standing criticism of their failure to make mechanisms for identifying benefit claimers and sharing benefits with them. At present, the users while filling the application form are required to provide details of benefit claimers. The NBA or the SBB does not share the responsibility of identifying the benefit claimers. No protocols for following the cardinal principles of the CBD and the Nagoya Protocol such as seeking prior informed consent of IPLCs before access, and facilitating negotiations with them for developing mutually agreed terms of benefit sharing are elaborated in detail in the Indian biodiversity laws or policies. This is despite the fact that the NBA under Section 21 of the BD Act is entrusted with the responsibility to facilitate the negotiations of the terms and conditions of the access and utilisation of the accessed biological resource or knowledge associated. The fact that applications under the BD Act are not publically accessible makes the process of access and benefit sharing opaque and immune to public scrutiny. Neither the Ministry of Environment nor the NBA speaks to these gaps in the 2014 ABS Regulation or in the recent Guidelines for processing ABS applications under Section 7. Similarly, there are no provisions for public hearings, like that in the Environmental Impact Assessment Notification, 2006, for voicing the concerns of the local communities with respect to access or benefit sharing terms. The 2014 ABS Regulation only provides that where benefit claimers are not identified, the funds will be used to support conservation, sustainable use of biological resources and to promote livelihoods of the local peoples from where the biological resources are accessed.
Unless explicit rules as well as demonstrable models and case studies for benefit sharing with communities are developed, there will be mounting attacks on the utility and effectiveness of the Act from all quarters, including from indigenous peoples and local communities. Thus, it is imperative that the authorities take initiatives to show that the institutions under the BD Act are capable of identifying benefit claimers, facilitating ABS negotiations and sharing the benefits with the local communities and indigenous peoples for their role in stewardship. These efforts will strengthen the case for the expanded reach of Biological Diversity Act.
We’re pleased to bring to you a guest post by Kartik Puttiah. Kartik is the co-founder of InvnTree IP Services. He has over thirteen years of experience in patent consulting. He specialises in patent drafting and prosecution, and routinely advises his clients on patent portfolio development. He also works with his clients in addressing patent risks. He obtained his B.E. degree in Industrial Engineering and Management and is also a registered patent and trademark agent.
Analyzing Subject Matter Excluded from Patenting in the Backdrop of Lawsuits Involving Monsanto
In a judgment passed by the Supreme Court of India on January 08, 2019, an order of the Division Bench of the Delhi High Court holding a key of Monsanto as invalid, was set aside. The patent is key to Monsanto’s Bollgard II Bt cotton business vertical. The Supreme Court set aside the Bench’s order primarily because the patent was held invalid in the absence of a trial, and it bought into the argument of Monsanto that it had not waived its rights for a trial in the matter of validity of its patent. Therefore, it is important to note that Supreme Court did not scrutinize the patent in question to declare the patent valid. The question of validity of the patent is likely to be dealt with in a trial court, and eventually in the Supreme Court, given the stakes, the eventual outcome of which will be extremely important to the biotechnology industry, and more specifically to the agro-biotech industry. The decision on the validity of the patent will have a major impact on what is considered to be patent eligible subject matter in the biotech industry. The decision may also hugely impact claim drafting and IP strategy that may be adopted to protect subject matter comparable to the one claimed in the patent.
The patent includes two sets of claims, 1-24 and 25-27. The first set of claims, 1-24, cover a method of producing a transgenic plant, whereas the second set covers a product, viz., a nucleic acid sequence. The independent method claim 1 includes the step of incorporating a Nucleic Acid Sequence (NAS) into the genome of a plant. The independent product claim 25 on the other hand claims the NAS itself. The method claim targets those companies which prepare donor seeds that have NAS, and such companies are few in number. The claims which are relatively of substantial commercial value are the product claims 25-27. The product claims target those companies who prepare hybrid seeds, which are derived from a process involving the donor seeds comprising the claimed NAS. Consequently, the hybrid seeds will include the NAS, and therefore map on to the product claim.
While the validity of the process claim may be questioned, the parties who are up against Monsanto are more interested in invalidating the product claims. I will discuss later on in the post about the far-reaching impact of the product claims in question. For now, the independent product claim 25 is reproduced below:
A nucleic acid sequence comprising a promoter operably linked to a first polynucleotide sequence encoding a plastid transit peptide, which is linked in frame to a second polynucleotide sequence encoding a Cry2Ab Bacillus thuringiensis 8-endotoxin protein, wherein expression of said nucleic acid sequence by a plant cell produces a fusion protein comprising an amino-terminal plastid transit peptide covalently linked to said 5-endotoxin protein, and wherein said fusion protein functions to localize said 5-endotoxin protein to a subcellular organelle or compartment.
The first part of the claim, appearing before the expression “wherein”, includes elements of the product (NAS), and the second part of the claim recites the consequence of its use.
The validity of the patent is challenged based on the provisions of § 3(j) of The Patents Act, 1970 (“Act”), which excludes patenting of plants and animals in whole or in part, as well as seeds, varieties, species, and essentially biological processes for production or propagation of plants and animals. However, said section allows patenting of microorganisms.
The argument used to challenge the validity is that NAS by itself is inert and inanimate, and its only use is when it is incorporated into a plant genome to form a seed or a plant, and seeds and plants are excluded subject matter. Although I agree with the assertions in relation to the nature and utility of NAS, I am not convinced that the Act, as it stands, allows for the patent to be rejected or invalidated based on such a contention. This is so because, as per this argument, it appears that it is not the subject matter of the claim but its industrial application (which is not necessarily the subject matter of the claim), which is scrutinized to check whether it falls within the scope of excluded subject matter. Such an approach is flawed and it is the subject matter and not the industrial application (when not considered part of the claim) of the subject matter that should be scrutinized to reject or invalidate a claim based on the provision of excluded subject matter.
I will suggest a few analogies to demonstrate the faults in the argument that a claimed subject matter should be classified as being within the scope of excluded subject matter if its only use or industrial application falls within the scope of excluded subject matter. In the first analogy, consider a tool that is developed for performing surgery. In this case, the tool by itself is inert and inanimate, and its only use is in a surgical process, which is excluded subject matter under § 3(i). Similarly, consider a pharmaceutical product that is developed to fight cancer. In this case again, the product by itself is inert and inanimate, and its only use is in a medical process (consumption of the drug as per a prescribed dosage), which is also excluded subject matter under § 3(i). Going by the argument based on “use”, both the surgical tool and the pharmaceutical product should be considered to fall within the scope of excluded subject matter. Therefore, if a patent is held invalid on the basis of “use”, there would be practically a blanket ban on patenting of pharmaceutical products, which is clearly not the legislative intent, given the amendments made to the Act in the past to comply with TRIPS.
Having made arguments in favour of upholding the validity of the patent, I now look at the ground level impact of upholding the validity of the patent. It is important to note that it is the NAS that is claimed, and not the seed. Assuming that the claimed NAS is patent eligible, consider the potential infringers. Primarily, the hybrid seed companies who produce and sell seeds that include the claimed NAS are potential infringers, and so are farmers who use such seeds. Therefore, at present, the farmers are at the mercy of the patent owner, who has gone against the hybrid seed sellers (companies) and not the users (farmers). While it is certain that no company will make the mistake of filing patent suit against farmers in India, given how politically sensitive such an action would be, there is nothing in the Act that stops the patent owner from proceeding against the farmers.
Given this, the question is whether there is legislative intent expressed in the Act to shield farmers from patent suits. In my view, one may infer that there is legislative intent to shield certain activities of farmers from infringement, since § 3(j) excludes from patenting, plants in whole or in part, seeds, varieties, species and essentially biological processes for production or propagation of plants, which are used or produced by farmers. Although § 3(j) indirectly expresses the legislative intent to shield farmers from patent suits, to the extent the legislature could envisage patent threats to farmers, the protection offered by the language used in § 3(j) is inadequate. This is best understood from the example of seeds, which, though not patentable, can still include patentable subject matter (NAS), as discussed, thereby making farmers vulnerable to patent suits. The vulnerability of farmers to patent suits may be understood from the experiences in foreign countries, and the legislature should make amendments to the Act at least now, instead of assuming that patent suits are unlikely to be filed against farmers in India.
Although the amendment to shield farmers could be made by altering the language of § 3(j), I believe that such an amendment could lead to more complications. Instead, the Act may be amended, say, by adding a clause to § 47, to exclude certain acts by farmers from being considered as patent infringement. The reason why I propose such an addition rather than amendment of § 3(j), is because, I believe that it would be in line with the legislative intent to encourage inventions of the nature claimed in the patent. Such an encouragement is possible only when hybrid seed companies, like the ones Monsanto is going after, are still within the ambit of patent infringement. An amendment to § 3(j) may exclude both the hybrid seed companies and the farmers from patent infringement, whereas it may be legislative intent to shield only farmers.
Another concern in holding the patent valid is the impact on the price of such seed. A valid patent means that the seed companies will have to pay a licencing fee to the patent owner, which will eventually be passed on to the farmers. However, while the Act by way of § 84(1)(b) has provision to impact pricing, invalidation of the patent is certainly not the answer to pricing concerns. The government is and continues to regulate trait value to be paid to patent owner, which I believe is the right approach to tackle pricing concerns.
In conclusion, I believe that the subject matter as claimed doesn’t fall within the scope of excluded subject matter, and hence the validity of the patent should be upheld. The seeds produced by seed companies, and therefore the seed companies, should be within the ambit of patent infringement. Further, The Patents Act, 1970 should be amended to introduce a clause to shield certain acts of farmers from patent infringement. Additionally, price control of certain farm inputs should be carried out by calibrating trait value, as is being done currently.
Divij broke the news about Spotify’s launch in India. In his post, he covers the legal battle between Spotify and Warner Chappel Music Ltd. before the Bombay HC. He also analyses the applicability of Section 31D of the Copyright Act to the facts of the case. He further questions Spotify’s decision to opt for statutory licensing in light of the principles laid down in IPRS v. Aditya Pandey decision.
Pankhuri notified us about a conference on “A 3-D Perspective on Indian Intellectual Property: Distinct, Diverse and Democratic?” organised by University of Pennsylvania Law School and IDIA . She even released a reminder about the event. The conference is to be held in Delhi on 5th March, 2019.
A reminder to our readers about the upcoming UPenn Law School & IDIA Conference on ‘A 3-D Perspective on Indian Intellectual Property: Distinct, Diverse and Democratic?’ which we had posted about earlier here. Those interested in attending the conference, please note that registration closes tomorrow, March 2.
The conference will be held on March 5 at the Indian Law Institute, New Delhi. The valedictory address will be delivered by Justice Ravindra Bhat (Delhi High Court). Also, the proceeds from conference will go towards IDIA, a project which empowers underprivileged children though legal education. For all other details of the conference, please see our updated post here and the final conference schedule & speakers’ list here.