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.
We are pleased to inform you that IIPRD along with Khurana & Khurana, Advocates and IP Attorneys (K&K) is offering a crash course for preparation for the Patent Agent Examination (PAE) 2018, which is tentatively scheduled to be held on 28th October, 2018. For further details of the course, please read the post below.
Crash Course For Cracking Patent Agent Examination (PAE) 2018: By Senior Practicing Professionals Of IIPRD, And Khurana & Khurana, Advocates And IP Attorneys (K&K)
IIPRD along with Khurana & Khurana, Advocates and IP Attorneys (K&K) is conducting a professional training programme in Patent Law Practices and Procedures for candidates appearing for the Patent Agent Examination (PAE) 2018 that is planned to be conducted by the Ministry of Commerce and Industry (Govt. of India) through Patent Offices in October 2018, for obtaining the necessary qualification to practice as a Patent Agent under the Patent Acts and Rules 1970.
On demand of practitioners and stakeholders in the Indian IP Industry, IIPRD and Khurana & Khurana are delighted to announce an impactful and practical case studies based crash course for cracking the Patent Agent Examination 2018.
Key Highlights of the Course
• The proposed PAE crash course is a 2 months programme (September-October 2018), with face to face physical classes being held on each Saturday from 10 AM – 12 PM. The sessions would be taken by thorough and practicing professionals of K&K who have, on an average, over 12 years of relevant experience in Patent Prosecution and Litigation.
• The course would be held physically and simultaneously across 5 Offices of IIPRD/Khurana & Khurana (or other venues as mentioned below), specifically in Delhi, Bangalore, Hyderabad, Pune, and Mumbai.
• Each session of the course (coverage of which is given below) would be video-recorded and in case a participant is not able to attend a particular class, the recorded video can be shared through a secured account created for the participant and accessible only to the participant. Each video session is and would remain the Copyright of IIPRD and hence would not be open for any kind of distribution or use other than the mentioned purpose.
• The fee for the complete PAE crash course is INR 15000 + GST per participant, payable latest by 30th August 2018. Fees for the course can be paid through bank transfer or through a cheque/DD that can be issued in favor of IIPRD.
• IIPRD and K&K are also happy to offer scholarship to a few students based on an online examination that would be held on 1’st August 2018, wherein the complete fees for the course shall be waived off for the selected students. Anyone can apply for the scholarship through the scholarship link given below by giving their respective details, and would be contacted on 20th of July 2018 to confirm their participation for the above-mentioned examination through email, which email would also give complete instructions on how the examination would be conducted. The examination would basically involve 2 sections, one for checking technical skills/competence of the participating professionals, and the other one for evaluating their written English skills, based on which final results would be announced on 10th August 2018. Any candidate who does not qualify for the scholarship can of course apply for the course as a general participant/candidate by payment of the course fee.
Session-Wise Breakup of the Course
01 September 2018: Section 1 – Section 21 of the Indian Patent Act, 1970 (and corresponding Rules and Forms) with specific focus on Definitions, Criteria of Patentability, Non Patentable Subject Matters, Types of Applications, and Powers of Controllers.
08 September 2018: Section 25 – Section 66 of the Indian Patent Act, 1970 with specific focus on the Oppositions, Anticipation, Provisions of Secrecy, Revocations, Patent of Addition, and Restoration of Patents.
15 September 2018: Section 67 – Section 115 of the Indian Patent Act, 1970 with specific focus on Patent Assignments, Compulsory Licensing, Power of Central Government, and Infringement Proceedings
22 September 2018: Section 116 – Section 162 of the Indian Patent Act, 1970 with specific focus on Convention/PCT Applications, Functions of Appellate Board and other Provisions. Amendment Rules 2016 with emphasis on important revisions to examination and Hearing procedures; provisions for start-ups and fees.
29 September 2018: Comprehensive Claims and Specifications Drafting training with emphasis on identification of inventive concept from the disclosure and drafting of claims. Common mistakes to be avoided during drafting. Do’s and don’ts for drafting different parts of the specification viz. title, abstract, examples, etc. with applicable rules.
06 October 2018: Hands-on exercises for Claims and Specifications Drafting with emphasis on standard practices for drafting patent applications pertaining to engineering domain and life sciences domain. Specific tips in view of common objections raised in FER (approach of Indian patent office towards the patent application drafting practices). Amendment of Application and Specifications. Drafting of Patents of Addition and Divisional Application.
13 October 2018: Training by practicing Attorneys and Agents: Important case laws and implication thereof on interpretation of various Sections of the Patents Act, 1970. Advising clients with respect to patenting of inventions of different domains, implications of assignment and various types of licensing, infringement related issues, filing of patent application in India and PCT with detailed procedures and many other aspects with dedicated Q&A session.
14 October 2018: Mock Exam 1
20 October 2018: Mock Exam 2
27 October 2018: Tips for Viva and General Discussion
New Delhi K-16, Jangpura Extension
Mumbai FA27, Lake City Center, Kapurbavdi Circle, Thane (W)
Pune Office No. 203 + 204, 2nd Floor, Citymall, University Road, Ganesh Khind, Shivaji Nagar
Nativa was granted Russia’s First Compulsory License
In moves that should have significant global impact on public health, an Arbitration Court in Moscow, Russia, granted Russia’s first Compulsory License for Lenalidomide (trade name Revlemid). In a similar development this month, the German Federal Supreme Court upheld a preliminary Compulsory License granted by a lower court for the HIV drug Isentress.
The Russian License
Unlike in India, the Russian judiciary has the exclusive authority to issue compulsory licenses. The CL is an outcome of the suit filed in 2017 by Celgene against Russian pharma manufacturer Nativa, which was producing generic version of the anti-cancer drug Revlemid. The court instead allowed Nativa’s counterclaim for the issue of a compulsory license. The patent on Revlemid, held by US pharmaceutical company Celgene, will now be produced by Russian Manufacturer Nativa under the terms of the license granted by the Court.
Nativa had asked for the CL because it produced a dependent patent, i.e. a patent which could not be worked without the use of a prior patent. As per Russian law, a compulsory licence could be granted, where it is proven that the dependent invention is an important technical achievement and has significant economic advantages over the invention of the first patent. The court accepted both these points, and found that there was significant public interest in the grant of the CL, and consequently admitted the application for compulsory licensing. Interestingly, the terms of the license require Nativa to pay a whopping 30% of the revenue as royalty to the patent holder. In comparison, the compulsory license granted in India for Nexavar, required Natco to pay 6% in royalty.
The German License
In 2017, a Federal Patent Court heard a challenge against Merck by Japanese pharmaceutical Shinogi, against Merck’s manufacture of its HIV drug, Raltegravir (trade name Isentress). According to the press release by the German Supreme Court, the CL was upheld on grounds of public interest and the threat to public health posed by an injunction. The press release reads:
“The Federal Court also shares the assessment of the Federal Patent Court that a public interest in the granting of a compulsory license is credible. It is true that not every HIV or AIDS patient is required to be treated with raltegravir at any time. There are, however, patient groups that needed raltegravir to maintain the safety and quality of treatment. These include, in particular, infants, children under 12, pregnant women, people who need prophylactic treatment because of the risk of infection, and patients who are already treated with Isentress and who are threatened with significant side effects and interactions when switching to another drug.”
The lower court decision of the German Federal Court was well covered in a guest post on this blog here.
The global use of compulsory licensing is encouraging particularly for developing countries which regularly face public health crises due to unavailability of medicines, in which patent rights have a large role to play. Even as the developed world, particularly the USA, pressurises developing countries like India against utilizing legitimate TRIPS flexibilities like compulsory licensing, the use of such provisions by other developed nations like Russia and Germany should lend greater credence to the legitimacy of its use and hopefully incentivise more nations to utilise such flexibilities in favour of public health.
Procter & Gamble (P&G) had also successfully sought the court’s intervention so as to permanently stop Jamia from using or registering ‘Ora-B’ or any other similar brand in any manner. The court further said that the defendants should withdraw any trademark application for the mark ‘ORA-B’ and undertake that they shall not make any application for any trademark or copyright registration for any other mark, which is deceptively similar to the plaintiffs’ well-known mark ‘Oral-B’.
This Madras High Court judgment sets out certain significant pointers with respect to defensive registration (in the context of Trade Marks Act, 1958) and well-known marks (in the context of Trade Marks Act, 1999). My endeavour is to highlight these aspects of the judgment.
This writ petition was filed by the petitioner praying to quash the order dated 04.01.2013 passed by the 2nd respondent viz., Intellectual Property Appellate Board. The IPAB had earlier allowed the appeal filed by the 1st respondent herein in OA/19/2009/TM/CH and thereby had quashed the order passed by the 3rd respondent viz., the Deputy Registrar of Trademarks in MAS 25781 dated 26.06.2009.
The petitioner-company is engaged in the business of manufacturing and marketing incense (agarbathi) sticks and dhoop sticks for more than half a century. They adopted the trademark ‘CYCLE’ ever since their inception in 1954. The petitioner registered “CYCLE BRAND” mark under Registration No.163539 in Class 3 for Perfumes, oodubathy, dhoop and hair oil and the house mark device of ‘Cycle’ in all the 34 trademark Classifications.
Whether the 1st respondent’s application for registration of trademark (viz, a composite label comprising of the words “CYCLE” on the top, device of cycle in the middle and words “GRASS BROOM” at the bottom) under Class 21 (in respect of brooms and other articles for cleaning purpose) liable to be refused in the light of the fact that the petitioner has registered the “CYCLE BRAND” in all the 34 trademark Classifications?
Whether “CYCLE BRAND” trademark is a ‘well known mark”?
The Court based its reasoning on the following principles:
Common words are not entitled to protection under Trade Marks Act. (Citing Registrar of Trade Marks Vs. Ashok Chandra Rakhit, AIR 1955 SC 558 & Bhole Baba Milk Food Industries Ltd Vs. Parul Food Specialities Pvt Ltd, CDJ 2011 DHC 1174)
Non-user of the trademark should not be allowed to enjoy monopoly; otherwise, he will indulge in mischief of trafficking in Trademark and prevent all bone fide users of such common word. (Trading Vs. Vazir Sultan Tobacco co.Ltd, 1997(4) SCC 201)
The petitioner company obtained registration for their mark under Trade and Merchandise Marks Act, 1958. Section 47 of the said Act provided for defensive registration of trademarks. The conditions laid down under Section 47 of the said Act for defensive registration were: i) the trade mark should consist of any invented word; ii) the trade mark should have become so well-known as respect any goods in relation to which it is registered and has been used, use in relation to other goods will indicate a connection in the course of trade between those goods and a person entitled to use the trade mark in relation to the first mentioned goods. The petitioner failed to prove that “CYCLE BRAND” satisfies both the conditions. Neither the word “Cycle” or “Brand” is invented word and therefore, did not qualify for defensive registration. Further, citing Supreme Court judgment in Skyline Education Institute Vs. S.L.Vaswani & another, the Court held that “unless the word is an invented word coined by a person out of his own effort and thought process, he cannot prevent and exclude others from from using the generic and common word by holding it within his folds by not putting it to use for a long time from the date of registration of the said trademark.”
Therefore, petitioner’s registration of the trademark “CYCLE BRAND” under Class 21 will not be a bar for registration of the 1st respondent’s trademark/composite label.
The next question that falls for consideration is whether the petitioner has established that his mark is a well known mark. The defensive registration was done away with under the Trade Marks Act, 1999 and the concept of a “well-known trade mark” as defined under Section 2(1)(zg) was introduced and Section 11 was amended in conformity with Section 47 of the Trade & Merchandise Act, 1958. In the Trade Marks Act, 1999, Section 11(6),(7),(8) & (9) explain the nature of a well-known trade mark and how to determine the same.
A reading of Section 11(6) makes it clear that while considering whether the mark is a well-known trade mark, the relevant factors to be take into consideration are i) knowledge or recognition of the Trade Mark in relevant sections of the public as a result of promotion of the mark, ii) duration, extent and geographical area of use and promotion through publicity and iii) record of successful enforcement of the rights in the Trade Mark, in particular the extent to which the mark has been recognized as well-known by any Court or Registrar. In the instant case, no evidence was adduced by the petitioner to show that the petitioner’s mark is a well known mark within the meaning of Section 2(1)(zg) and Section 11(6),(7) & (8) of the Act.
Citing these aspects, the writ petition was dismissed.
This judgment puts across two vital legal messages: i) law does not favour one who just ‘sits’ (or squats) on his/her trademark; and ii) as for proving that a mark is a “well-known mark”, it is essential to adduce evidence. The burden of proof is upon the party claiming so. If the party does not adduce evidence, the claim gets negated.
The judgment refers to the claims made by the petitioner with respect to the Orders issued by IPAB and Deputy Registrar (Paragraphs 24 & 25). The judgment perceived it as a case of misinterpretation. It is unfortunate that an Order leaves even a scintilla of scope for misinterpretation as in the instant case. Our system is miles away from quality judgment writing / Order writing and it is definitely a serious systemic defect. Readers may be aware that the SC had earlier set aside a Himachal Pradesh High Court judgment owing to poor English. Now, contrast it with the early judgments of our SC and HC especially those judgments belonging to pre-independence era.
For the benefit of readers, I am copy-pasting Paragraphs 24 and 25 mentioned above:
“24.Further, it was argued by the learned counsel for the petitioner that both the respondents 2 & 3 have held that the petitioner’s mark is a well-known mark. But, this submission of the learned counsel for the petitioner deserves no merits. From a careful perusal of the order passed by the 3rd respondent, it is seen that the 3rd respondent has not given any speaking order on any issue for determining the mark as a well-known mark under Section 11(10) of the Act. The order of the 3rd respondent merely recorded the arguments of the petitioner and respondent and without any discussion goes on to hold that the impugned mark is deceptively similar to the opponent’s mark CYCLE BRAND as it is not only the mark of opponent’s, but, also the house mark of the opponent. Absolutely, We do not find any finding by the 3rd respondent to the effect that the petitioner’s mark is a well-known mark as claimed by the petitioner. Similarly, even the finding of the 3rd respondent that the mark is deceptively similar to the petitioner’s trademark CYCLE BRAND and that it is the petitioner’s house mark, is not based on any evaluation of evidence or analytical finding, but a mere repetition of the petitioner’s arguments.
25.Similarly, We find that the 2nd respondent-IPAB in para 9 of its order has only elaborated the submission made by the learned counsel for the petitioner herein/respondent therein and as a passing reference, it stated that the trademark of the petitioner herein is a well known mark and it is not the determination of the 2nd respondent-IPAB and it is only the submission of the learned counsel. For better appreciation, it would be appropriate to extract the relevant portion in the order of the 2nd respondent-IPAB at para 9 as hereunder “9.The Counsel for the respondent on the other hand argued that the appellant have deliberately copied their mark with minor cosmetic changes. The respondent trade mark is a well known mark. They have been using CYCLE BRAND since 1954. ……” No doubt, in the conclusion portion, at para 11, the 2nd respondent-IPAB has stated that there is no disputing that CYCLE BRAND for agarbathis (incense stick) is an established brand over many decades. But, it is not an invented or unique device. Again, only as a passing reference, the 2nd respondent-IPAB has stated that the mark of the petitioner is an established brand, but no determination was made to arrive at such a conclusion by the 2nd respondent. Therefore, the submission made by the learned counsel for the petitioner that the 2nd respondent-Board has rendered a finding that it is a well-known mark, cannot be accepted. The 2nd respondent has not given any finding based on document or evidence that the petitioner’s mark is a well-known mark. There is a mere passing reference in the order of the 2nd respondent-IPAB. It is not the same as a ‘well known mark’ defined in Section 2(1)(zg) and there is no determination of the mark as being well known, following the parameters laid down in Section 11(6) to (9) of the Trade Marks Act.”
In an interesting judgment
delivered earlier this month, the Delhi High Court adopted a highly tenuous (and bizarre) line of reasoning in arriving at the conclusion that the plaintiff was not entitled to passing off relief at the interim stage.
But first, the facts. Plaintiff No. 1, one Rohit Singh, a software developer who works for plaintiff no. 2, Vyooh Low Level Computing LLP, claimed that he developed a proprietary software product called Split View. The distinctive attribute of this piece of software is that it enables a user to simultaneously work on multiple windows on a computer screen.
According to the plaintiffs, they learnt in December, 2015 that the defendant, Apple Computers, had developed a piece of software, forming part of MAC OS X E1 Capitan (version 10.11) and iOS 9. This software enabled the screened to be split into two halves in order to enable consumers to work on multiple applications simultaneously and was called Split View. Given that this software was hailed as the most significant improvement in the software updates for Mac OSX and iOS 9, it soon became the first search result on Google for ‘Split View’. This gave rise to the mistaken belief in the public mind, the plaintiff argued, that the plaintiff’s software was an imitation of the defendant’s software, resulting in the plaintiff filing a suit for passing off.
Resisting the plaintiff’s prayer for the grant of interim relief, the defendant argued that it had been using the phrase ‘Split View’ to refer to the multi-windowing functionality in its products since 1993 and had introduced this feature with the same name in its Mac and iOS operating systems in a phased manner. Further, the defendant contended that ‘Split View’ was a descriptive phrase widely used by many third parties for which there were 1839 patents predating the Plaintiff’s development of its software product. Finally, the defendant argued that the plaintiff had not established that it had earned any goodwill and reputation for the Split View software and that the same had been swamped by the defendant.
While the plaintiff was able to obtain an ex parte interim order interdicting the use of the trademark ‘Split View’ in any of the defendant’s products, this relief was vacated by the Division Bench and the matter was remanded to a single judge for adjudicating upon the prayer for the grant of interim relief. The judgment under discussion was delivered against this backdrop.
While conducting a passing off analysis, the Court noted that the plaintiff had neither averred, nor established, that the defendant was seeking to arrogate to itself the goodwill and reputation earned by the plaintiff which is the sine qua non to succeed in a passing off action. To buttress its conclusion, the Court made the following, two parts bizarre, one part worrying, observation:
“E. In fact, during the hearing, the thought did cross my mind that the effect if any of the association, even if made between the plaintiffs and the defendant, at least at this stage appears to be to the benefit rather than to the detriments of the plaintiffs; if at all anyone familiar with the trade mark of the plaintiffs forms an opinion that the defendant, in its product has incorporated the software under the mark „SplitView‟ of the plaintiffs, in my mind it prima facie appears that the reputation and / or goodwill of the plaintiffs would go up, rather than down.”
While some may argue that the finding excerpted above was only in the form of obiter dicta and does not merit a detailed examination, I would submit that this observation is deeply problematic for 3 key reasons.
First, and most important, the judge’s observation, if taken to its logical conclusion, would give a tech giant like Apple a carte blanche to pass off the products and services of others as their own. Given that Apple would always have the upper hand vis-à-vis a plaintiff insofar as goodwill and reputation of its products is concerned, the logic underpinning the judge’s conclusion essentially forecloses the possibility of a finding of passing off ever being returned against them.
Second, and relatedly, given that it is a well settled principle that, at the interim relief stage, the Court should not make observations that would prejudicially affect the case of a party on merits and should only make a prima facie assessment, this finding is a cause for concern. Put simply, if the judge has already formed a view that the plaintiff has nothing to lose by Apple using its trademark, one wonders how any plaintiff would be able to disabuse a judge of this notion at trial.
Finally, it bears noting that the Court made this observation in the context of addressing the plaintiff’s argument that this was a case of ‘reverse confusion’. The Court records the plaintiff’s argument at para 10(x) in the following words:
“(x) this is a case on reverse confusion where the senior user suffers injury not because junior user seeks to profit from the goodwill associated with the senior user‟s mark but because public comes to assume that the senior user‟s products are really the junior user‟s or that the senior user is somehow connected to the junior user…” [italicized a portion of the argument for emphasis].
Simply put, the plaintiff’s argument was not that its goodwill has gone down by virtue of an association being made in the public mind between its software and that of the defendant; it simply is that the creation of such association, ipso facto, results in the causation of an injury. This being so, I would respectfully submit that it was wholly inapposite for the Court to assess this argument from the vantage point of erosion of goodwill and reputation.
The matter will now be listed on the 27th of August for the preparation of the trial schedule. One only hopes that, when the Court issues its final ruling, it does so with an open mind, uninfluenced by this deeply problematic observation.
We are pleased to inform our readers that the Sports Law and Policy Centre (SLPC), Bangalore is organising the second edition of the SLPC Symposium on August 17-18, 2018 at the India International Centre, New Delhi. Apart from sports law issues, some of the issues which will be discussed in the Symposium include refreshing sports broadcasting regulation in India, whether celebrities should be held liable for the products they endorse etc. For further details of the event, please read the post below:
The Sports Law & Policy Symposium 2018
India International Centre, New Delhi
August 17 – 18, 2018
The Sports Law & Policy Centre, Bengaluru, (www.sportslaw.in), powered by LawNK and the GoSports Foundation, is organising the second edition of the Sports Law & Policy Symposium in New Delhi, India over the course of two days, August 17 and 18, 2018 at the India International Centre, New Delhi. The objectives of the Symposium are to bring together the sports law and regulation fraternity in India, initiate dialogue on the role of sports lawyers in India, and catalyse collaboration on issues of common interest.
The Symposium will showcase and deliberate on key recent developments in sports law and related issues affecting the sporting ecosystem in India, and will feature presentations, seminars and interactive sessions involving leading legal practitioners, administrators, regulators and industry experts across the sporting spectrum, from India and overseas.
The first edition of the Symposium was held on July 15, 2017 at Bengaluru, and brought together over 20 eminent speakers and an audience of over 120 participants. The Symposium was structured around a keynote address, facilitated discussions and presentations on varied topics such as Sports Governance, SportsCommerce, Sports Regulation and Sports Careers. We also released the SLPC publication on the Ten Reforms Indian Sports Administration Needs.
In the context of the increasing professionalisation and commercialisation of Indian sport, the 2018 edition of the Symposium will focus on the following broad themes:
– Sports Broadcasting Regulation in India
– Sports Governance
– Structuring Leagues and Organising Sporting Events in India
– The Emerging Jurisprudence of Athletes’ Human Rights in India
This year it is expected that the Symposium will host about 300 participants, 10 international speakers, and 20 Indian speakers.
To register for the SLPC Symposium, please fill out the form available at this link goo.gl/buL8Xi.
For further information please feel free to write to us at email@example.com.
About the SLPC
The SLPC is an independent think-tank focused on interdisciplinary research, scholarship, education and institutional support for public and private enterprises in areas relating to legal, policy and ethical issues affecting amateur and professional sports in India. The Symposium is SLPC’s annual flagship conference, and represents SLPC’s continuing commitment to thought leadership in India by bringing together leading sports law practitioners, sports policy experts, in-house counsel, researchers, academicians, sports administrators, NGOs and students in India to exchange and share their experiences and learnings on various aspects of the law and policy relating to sports in India.
We are pleased to bring to you an insightful guest post by Dr. Balakrishna Pisupati on the interpretational and other issues in respect of India’s Biological Diversity Act and Rules.
Dr. Pisupati is an internationally renowned conservation and development specialist with close to three decades of experience working at national, regional and international levels, holding positions such as Vice-Chancellor, TransDisciplinary University (TDU, India), Chief of Biodiversity, Land Law and Governance programmes at United Nations Environment Programme (UNEP, Kenya), Senior Policy Fellow at Fridtjof Nansen Institute (FNI, Norway), Chairman, National Biodiversity Authority-Government of India (NBA, India), Coordinator, Biodiplomacy Programme at United Nations University (UNU-IAS, Japan), Head, Regional Biodiversity Programme for Asia at the World Conservation Union (IUCN, Sri Lanka), Head, Biodiversity and Biotechnology programme at the M S Swaminathan Research Foundation (MSSRF, India). He has advised more than 30 countries on conservation and development policy and served as advisor to international bodies such as China Council for International Cooperation on Environment and Development, China, the Global Environment Facility (GEF), World Bank, United Nations Development Programme (UNDP) and others. Currently, he is the Chairperson of FLEDGE based in India. He can be reached at firstname.lastname@example.org.
Protecting India’s Biodiversity: Are we all Criminals?
India has a unique law that is not known to a majority of us. Unfortunately, a technically strict and mindless interpretation of it results in several of us being labelled as “violators”. Worse still, this law makes most violations a cognizable and non-bailable offence. It is the Biological Diversity Act (2002) and associated Rules (2004) that I am talking about.
A couple of weeks ago, the conservation community woke up to a paper in the journal Science, where more than 170 scientists lamented how a supposedly progressive international regime, the Convention on Biological Diversity or CBD in short, has become the ‘the cure that is killing’ biodiversity conservation.
This analytical piece comes in on the eve of 25 years of adoption of the Convention; even as countries have met in Montreal last week to discuss ways and means of saving the world’s natural wealth and sharing the resources. The key problem with the CBD, as per the authors, is the provisions related to access to genetic resources and benefit sharing.
India as a front-runner
It is a well known fact that India was one of the leading voices at the CBD negotiations during the early 1990s and facilitated its adoption during the 1992 United Nations Conference on Environment and Development – popularly called the Rio Earth Summit. This Conference also gave birth to the United Nations Framework Convention on Climate Change (UNFCCC) and the United Nations Convention to Combat Desertification (UNCCD).
The Indian government decided in 1993 that India should walk the talk in effectively implementing the CBD at the national level and agreed to develop a national legal framework to realise the objectives of CBD, namely conservation, sustainable use and sharing of benefits of such use equitably. And thus was sparked the trigger for the Biological Diversity Act.
Lengthy discussions, difficult negotiations with civil society and careful assessment of India’s priorities to secure its biological resources and associated knowledge in the 1990s resulted in the legislation being passed in the Parliament a full decade latter in 2002.
To some extent, India started the exercise with no previous experience of dealing with one specific issue – how to safeguard and secure its sovereign wealth– the biological resources and associated knowledge – from being misappropriated using the framework of access and benefit sharing (ABS).
Needless to say, articulating norms around ABS proved a significant challenge, owing to the absence of any significant international precedent. Compared to this, norms around conservation and sustainable use (which form the other two objectives of the Act and the CBD) was relatively easier to frame.
The ABS provisions, for the large part, require non-Indians (defined in very broad terms to include even an Indian company with a single non-Indian shareholder) to seek prior permission before commercialisation of any biological resource and share a percentage of their profits with the National Biodiversity Fund to be used for conservation and related actions. For purely Indian entities however, they only have to “intimate” State Biodiversity Boards of such actions.
The Act has several excellent provisions that were considered futuristic at the time of drafting. Unfortunately some of them have now become redundant and/or troublesome for those who wish to comply. The key problem with some of the provisions clearly indicate the intent to restrict use than facilitate use. In short, the Act had a single intent – ensure India’s resources are not used by anyone for commercial purpose without prior permission or intimation. The intent can be argued as good and needed but all the trouble started in the way certain provisions of the Act are being interpreted now by the administrative ministry, the Ministry of Environment, Forests and Climate Change and the implementing agency, the NBA.
When the trouble started!
Thanks to lack of coordination and collaboration during the formative years of implementation of the Act in India, several States in India drafted State-level Rules that are in many ways not in alignment with the national legislation. For example, though the Act calls for Indians to intimate the State Biodiversity Boards when commercialisation of biological resources happen, several State Rules are drafted in a manner that require Indians need ‘permission’. This in itself is a major legal and implementation challenge.
Real trouble started in 2012 when a newly established Biodiversity Management Committee (BMC) from Madhya Pradesh – a statutory body, as per the Act, created to implement the Act at local self-government level, filed a case seeking benefits from a coal mining company arguing that coal is a product of biological resources and mining of coal is nothing but commercialisation of biological resources and the profits be shared with it as per the Act. After long discussion and expert consultation, the NBA clarified before the court that coal cannot be considered a biological resource per se and therefore there is no issue of benefit sharing.
This led to a sudden deluge of interpretations as to what is a biological resource, what is commercial utilization, what aspects of the resources and associated knowledge are covered under the Act, how to interpret the exemptions and the related and more importantly what is meant by ‘prior’ permission before commercialisation by both Indians and non-Indians.
In the absence of clarity and multiple-interpretations, often not supported by legal certainty, the Act became a nightmare for a number of stakeholders, including researchers and those wanting to prospect the resources legally. Thus, the Act that was supposed to help India reap benefits using its bio-wealth has become a nightmare for those who wish to comply, those who implement it and those who will be interpreting the provisions in case of violations namely the judiciary.
The following are some of the current interpretations that are being suggested by the implementing agency regarding provisions of the Act. Mind you, many of these are not documented anywhere but are those being verbally discussed and used in a case-by-case basis by the NBA. This makes the predictability of the interpretation a challenge.
For example, any act of commercialization of biological resource should have prior permission from the NBA if a non-Indian, non-resident Indian or an Indian entity with non-Indian participation is involved. If not, the act will be treated as cognizable, non-bailable offence. In other words, majority of Indian companies and entities using biological resources already are considered ‘non-Indian’. These include thousands of companies and research entities ranging from those manufacturing herbal products to biotechnology companies.
The definition of commercialisation is so broad that even someone ‘commercialising’ an extract or fragrance has to get the ‘prior’ permission.
Interpreted this way, almost all the food, beverage and related items one sees on the grocery store shelf will come under the purview of the Act and even a road side vendor who is trading biological resources or extracting juice and other such activities need to share a certain percentage of profit with the State or National Biodiversity Fund.
During one case of interpretation of ‘extract’ a few years ago, the arguments between the NBA and the Ministry of Environment and Forests has been whether selling soya bean oil attract the ABS provisions or not. One interpretation was since extracting of oil is a ‘traditional practice’ and since such practices are exempted from the Act (Section 2 of the Act), there is no ABS provision that need to be invoked. Another interpretation, that to an extent prevailed with no logic though was, that current methods of ‘extraction’ are not traditional and hence ABS mechanism should prevail and the oil extraction industry should share a percentage of profits
Also, there is no distinction that NBA makes regarding commercial and non-commercial use of biological resources as of now. The arguments used by the NBA and its expert committee has largely been that the distinction is difficult to the made and hence non-commercial research is something that cannot be distinguished unless a formal application is made to the NBA or SBB for review and decision making. This has put a large number of non-commercial activities related to use of biological resources under stress.
Interestingly, another provision, that does not make much sense now is the Article 5 on collaborative research and how it is being interpreted under the Act. As per the Act and associated Notification, collaborative research is exempted – only and only if – it is approved by central government. In other words, all the collaborative research projects being implemented by research institutions, Universities, academia, NGOs and others involving biological resources and associated knowledge are in a way violating the Act and a criminal case may be bought against them anytime.
Some of the suggested interpretations of the Act make it sound more alarming. Take the case of an entrepreneur who has been in the business of commercial use of resources but not being aware of the need of prior permission. The applicant puts in application to the Authority for seeking permission to undertake commercialisation of resources now.
The first action by the Authority is not to entertain his application but send him a show-cause notice as to why a criminal action cannot be taken against him for his actions in the past, since prior permission is required under the Act. Not only the applicant now is denied an opportunity to correct the wrong (compounding of offence) but his entire enterprise is put on hold indefinitely threatening criminal action. Unfortunately, decisions related to such actions are not even being informed to the applicants months after receipt of such applications. This is clear violation of the Act in itself.
Recently, one of the SBSs undertook a search and seize operation in another State citing the resources collected from its State has been held by an entrepreneur and went to arrest him. This is in clear violation of Indian criminal procedural code.
On top of these, though the time to dispose applications for permissions and ABS are specified to be 60-90 days from the date of application as per the Act, it taken an average of time anywhere from 1-3 years.
I can cite a dozen more such interpretations and actions, including an objection by a staff of the Authority for non-Indians to participate in Indian workshops and seminars citing that the participants may misuse the knowledge gained from the participation. Simply put, bizarre!
Where to from here?
Given the above problems, a vast majority of Indians, companies and enterprises using biological resources, ranging from those making pickles to major biotechnology companies are violators of the Act as per the confusing interpretations suggested by NBA. Since there is no provision for compounding of offense or even an opportunity for someone to plead ignorance, research and development as well as commercialisation of biodiversity has almost come to a standstill for those who wish to comply has come to a stop.
Given the above, it is critically important for the Government, including the Law Ministry to address both the interpretation issues as well as correct the wrongs in the Act. In the absence of corrective action, India will significantly lose from its biological resources since no one would like to use the resource with such uncertainty and predictability of interpretation resulting in set-back to research and development using biological resources.
The following could serve as a beginning to corrective action:
First, initiate immediate steps to amend the Act since many provisions of the Act are unclear, does not resonate with what the country wants now and does not support ABS principles.
Second, ensure a notification will be made to compound past actions. Even the Income Tax Laws have such provisions. In the absence of any awareness about the Act since its enactment, it is incorrect to penalise those who approach the NBA with an application to comply now on. In fact, this option has already been provided to the Authority in 2013 but no action been taken.
Third, ensure the Authority is mandated to provide interpretation of the Act with clarity. Multiple interpretations from the Authority, its members, the expert committee and SBBs are only complicating the implementation and compliance. Clear indicators to monitor action by the NBA and SBBs has to be set. This has to be legally correct than based on emotions.
Fourth, ensure all the SBBs interpret the Act and its provisions uniformly. In the absence of this, as it is now, it is a challenge for those who wish to comply and easy for those who wish to violate. This means the State Rules have to be re-drafted urgently.
Fifth, raise the awareness levels of the judiciary, at all levels including the National Green Tribunal, about the Act, its intent, current obligations of India under the international legal regime (the Nagoya Protocol) and the provisions of Vienna Convention, and
Lastly, ensure NBA share all the information about decision making publicly, since very little information on how, why and when decisions are made by the expert committees and the Authority are available on the website, though there is a legal obligation for NBA to do to, both under the Citizen’s Charter and Right to Information Act.
I am not sure about you, but I want to be on the right side of law, if only I know which side.
Dr. Balakrishna Pisupati is currently the Chairperson, FLEDGE and former Chairman, National Biodiversity Authority.
The second guest post by Prof. (Dr.) N.S. Gopalakrishnan forms the thematic highlight of this week. In continuation to his first post, Prof. Gopalakrishnan states that there has been no report of an individual registering a new variety under the Protection of Plant Varieties and Farmers’ Right Act, 2001 till date. He then proceeds to describe how certain provisions and rules under the Act create confusion with regard to notification of crops and time limit for registration of extant and farmers’ varieties, which benefits seed companies at the expense of farmers. He concludes that there is an urgent need to challenge these rules and notifications to ensure that justice is meted to the farming community.
Prashant reported a Delhi High Court judgment whereby the Court upheld the constitutionality of Rules 56(3), 56(4), 56(5), 56(6), 57(5), and Rule 61(5) of the Copyright Rules, 2013, which gives the government the right to regulate tariff policies. Prashant argues that, under Section 33A of the Copyright Act, 1957, only powers to prescribe rules regarding mode or the timeline of publication have been delegated to the government and hence, the challenged provisions go beyond the scope of Section 33A. He concludes that the task of regulating tariff policies must be not hindered by bureaucratic inefficiency and must be left to the copyright board, an independent judicial body.
Next, Divij covered India’s first post-trial judgment in a Standard Essential Patent suit, delivered by the Delhi High Court. In its judgment, the Court decided the ‘essentiality’ of Philips’ patent positively, and held that the defendants (local manufacturers), by manufacturing standard-compliant DVD players, were infringing this patent. After examining the parties’ arguments and the Court’s reasoning, he concludes that Court’s lack of analysis on important areas like assessing essentiality, forgoing a claim construction, disregarding exhaustion principles and assessing FRAND terms would most likely be challenged via appeal.
Prof. Basheer brought this really interesting news about how a hit Chinese black comedy movie was reportedly inspired by the Supreme Court’s decision in Novartis AG v. Union of India. The movie provides an insight into the life of a cancer patient who started smuggling cheap anti-cancer drugs from India. Prof. Basheer then provides a relook at the 2013 decision of the Supreme Court, wherein it had invoked Section 3(d) and rejected Novartis’ attempt to patent its anti-cancer drug Glivec, since it had not demonstrated any significantly enhanced efficacy over earlier substances. By deciding so, the Court had effectively put an end to evergreening (the practice of making minor developments to existing patented drugs and then claiming secondary patents over those modified drugs).
Next, I wrote a post on a recent Himachal Pradesh High Court judgment which examined the validity of a patent granted way back in 2004. The plaintiff’s patented product had numerous similarities to the traditional kilta (an all-purpose bamboo basket used in Himachal Pradesh for hauling any kinds of goods). Invoking Section 3(p) of the Patents Act, amongst other Sections of the Act, the Court revoked the patent for being based on “traditional knowledge”. I then proceed to analyze the history of the patent grant and expose the lackadaisical attitude adopted by the Patent Office in granting this patent. I conclude my post stating that there is a pressing need for the Courts to define and lay down the parameters of “traditional knowledge” to avoid unnecessary litigation in the future.
The Court ordered the continuation of the interim injunction restraining the Defendant from infringing the Plaintiff’s ‘WILKINSON SWORD’ trademark for razor blades by using the mark ‘ZORRIK TALVAR’ for the same product, Drawing analogies to the case of Allied Blenders & Distillers Pvt. Ltd. v. Shree Nath Heritage Liquor Pvt. Ltd., the Court found the balance of convenience in favour of the Plaintiff after explaining at length that using a word sharing the same semantic field for a similar product would amount to infringement and passing off due to the way brand recollection operates in associative memory of consumers, even though the trade dresses were dissimilar.
The Court granted a decree of permanent injunction restraining the Defendant from using the mark ‘VICTOR 80’ or any mark deceptively similar to the Plaintiff’s ‘VICTOR’ mark for crop protection products, holding that the Plaintiff cannot be dis-entitled on the ground of delay in filing the suit because the Defendant had only been squatting on the ‘VICTOR 80’ mark and even a registered trademark, if not used, cannot qualify as a trademark. Further, the Court held that the Plaintiff cannot be estopped by virtue of a past representation by it before the Registry that the two products in question were actually different because that representation was erroneous and contrary to the Trade Marks Act and there can be no estoppel that goes against the statute.
The Court upheld the Trial Court’s ad-interim injunction on the defendant’s ‘Men’s Fair and Lovely’ ad which was prima facie disparaging the plaintiff’s ‘Fair and Handsome’ product on prime time telecast. The Court observed that the plaintiff’s modus operandi of initiating a disparagement (tort) suit before a Civil Judge as per the CPC for the denigrating comparative advertisement and then seeking leave to present a plaint for infringement of its trademark before the District Court to satisfy Section 134 of the Trade Marks Act, for wrongly using its distinct product as comparison in that advertisement, was procedurally valid. But it has not yet gone into the merits of the case.
The Court dismissed a plea against Apple for naming its multiscreen software as ‘SPLITVIEW’, which was also the name of the plaintiff’s yet unregistered trademark for similar software. The Court ruled that under Section 27 of the Trade Marks Act, no protection can be granted for unregistered trademarks unless passing off is proved, which was prima facie not apparent. Further, the Court saw no prima facie case for interim relief for injury due to wrongful association, opining that any such association would likely be beneficial to the plaintiff’s reputation.
The court granted an ex-parte permanent injunction restraining the Defendants from infringing and diluting the Plaintiff’s trademark ‘Xerox’ and from passing off their goods and services as that of the Plaintiff by carrying on their business under the deceptively similar style and phonetically identical name ‘Zerox’. The Defendants were also directed to transfer the domain http://zeroxindia.com/ to the Plaintiff.
The Court stayed the present proceedings involving trademark infringement and passing off until final disposal by the IPAB of the applications filed before it by both parties to cancel each other’s trademarks, as both were holding trademark ‘HERITAGE’ registered under the Class 30 for selling rice. It further held that as per Section 124(5) of the Trade Marks Act, 1999, the stay would not preclude the Court from making an interlocutory order to consider interim relief for the plaintiff.
The Court set aside an Additional District Judge’s decree, holding that the defendant had passed off his bidies as those of the plaintiff by illegally using wrappers/labels that were deceptively similar to those trademarked by the plaintiff. Though the plaintiff had stopped business in 1986 and the defendant had stopped using the disputed labels since 1978, the Court awarded damages for the past infringement and also restrained the defendant from using these labels again if the plaintiff should renew the registration of his trademarks.
The Court held that the Plaintiff’s patented ‘Device for Manually Hauling of Agricultural Produce’ was not in fact an invention as it did not constitute any inventive step over the traditional knowledge with respect to manufacturing the device known as ‘Kilta’ and simply using plastic as as raw material had not led to any proven enhancements, thereby negating the Plaintiff’s claim for infringement of patent. The Court went ahead and decreed the counter-claim of the Defendants, cancelling the above patent granted to the plaintiffs.
Earlier (quite a few years ago!), Prashant had reported a 2008 order of the Himachal Pradesh High Court, wherein the Court had examined the validity of the Patent No. 195917, a patent granted to the plaintiffs for a “device used for manually hauling agricultural produce”, on the basis of its alleged similarities to a traditional handicraft called “kilta” (an-all-purpose bamboo basket used to carry any type of load, supported by a rope and tied to the forehead). In this case, the plaintiffs had averred that the respondent had infringed their patent rights by manufacturing the patented device and by selling it to the Himachal Pradesh Government and they had filed for a permanent injunction against this, which was subsequently denied by the Court.
This case serves as a typical example of pendency of litigation in Indian Courts since the matter, which was initiated by a suit filed in 2005, has been pending for 13 whole years. It only recently came into light on 29th June 2018, when a single judge bench of the Himachal Pradesh High Court revoked the aforementioned patent grant. Though the parties’ arguments and the Court’s deliberations in its latest decision mostly remain similar to the ones in its earlier order, I will briefly recap it for the benefit of our readers.
Arguments of the Parties
The plaintiffs claim that the inventor of the patented product, Dhanpat Seth, based his invention on the kilta but improved upon the same by inventing longer baskets made up of synthetic polymeric material and by attaching removable harnessing which enabled farmers to tie the basket to the waist instead of the forehead. In effect, they claimed that this produced better orthopedic results since the traditional kilta used to cause severe back pain to farmers.
The defendants, on the other hand, contested the suit by stating that the patent had been incorrectly granted. They mainly argue that the patented product is not an “invention” under Section 2(1)(j) of the Patents Act, 1970 since it lacks novelty and an “inventive step” i.e., it is merely an application and a “workshop improvement” upon the kilta, which was well-known long before the prior date of the patent application.
The Court’s Decision
The Court based its decision on several provisions of the Patents Act, 1970, few of which I have discussed below:
Section 2(1)(ja): Clearly, the plaintiff’s product merely amounted to a “plastic kilta”, as has rightly been pointed out by the Court. The Court applied the test of “inventive step” defined under Section 2(1)(ja) i.e., whether the product undertakes “technical advance, as compared to existing knowledge” and/or whether it has “economic significance”, that makes the invention not obvious to a “person skilled in art”. It was decided that the defendants had successfully proven their case by showing that changes in size or that of raw material could not contribute to a “technical advance” or have “economic significance”. Since their product did not have any significant inventive features and bore striking resemblance to the kilta, it was decided that the patented product would appear obvious to a “person skilled in art”.
Section 3(d): The Court held that the product attracts Section 3(d) since mere replacement of raw material (bamboo replaced by plastic) amounted to merely a “new discovery of a known substance” i.e., the traditional kilta and that there was no “enhancement of the known efficacy” since the orthopaedic superiority of the product was not aptly testified by any surgeon.
Section 3(p): Stating that the kilta had been used in the “countryside of Himachal Pradesh since times immemorial”, the Court stated that the same amounted to “traditional knowledge” under Section 3(p) and that the product was a “mere aggregation or duplication of traditionally known components”.
How exactly did the Patent Office grant Patent 195917?
The plaintiffs had applied for the patent grant on 24th June 2002, a day after which Section 3(p) was inserted into the Patents Act vide the Patents (Amendment) Act, 2002. A perusal of the First Examination Report, dated 19 June 2003, for Patent 195917 reveals that the Examiner of Patents and Designs clearly did not apply his mind while examining the patent application of the plaintiffs. In the Report, it is merely stated that the product was not an invention under Section 2(1)(j) and that it lacked an “inventive step” .They cited the introduction of lightweight nylon baskets for tea-pluckers in Sri Lanka as prior art. Surprisingly, they did not consider the local example of the kilta as prior art or give consideration to the fact that the patent grant may be barred under Section 3(p). Later, in 2004, the application for the patent was accepted and the Examiner’s reasons for doing so were not specified. It is, hence, quite baffling and mysterious that the Patent Office granted a patent to the plaintiff’s product, despite existing prior art and when it was so clearly based on the traditional kilta.
Takeaways from this Case: Traditional Knowledge still remains undefined in India
The main problem in assessing patent applications based on traditional knowledge stems from the fact that “traditional knowledge” remains undefined. As has been noted earlier, the Himachal Pradesh High Court proceeds to assume that the kilta comes under the ambit of “traditional knowledge” in Section 3(p) on the vague assumption that it has been around since “time immemorial”. It does not lay down any test or parameters by which a certain invention can be said to be based on “traditional knowledge” or termed as an “aggregation or duplication of traditionally known components”.
The question, therefore, still persists; how is the Patent Office to define “traditional knowledge” and conclude that a patented product stands barred under Section 3(p)? Judicial interpretation on the same is required for efficient examination of future patent applications based on Indian traditional knowledge and prevention of needless and lengthy litigation.
Almost a year after it was reserved by the Delhi High Court, the first post-trial judgement by an Indian Court in a Standard Essential Patent-related suit was issued on July 12, 2018. In Koninklijke Philips Electronics N.V. vs. Rajesh Bansal And Ors., Ms. Justice Mukta Gupta delivered a positive finding of the ‘essentiality’ of Philips’ patent, and held that the defendants, local manufacturers, in manufacturing standard-compliant DVD players were infringing this patent.
Plaintiff, in 1995, registered Patent No. 184753 in India (the suit patent), which relates to a “Decoding Device for converting a Modulated Signal to a series of M-Bit Information Words”. Defendants are Indian manufacturers who imported DVD player components and assembled them in India. Plaintiff claimed that the defendant’s DVD players employ ‘decoders’ especially meant for decoding contents stored on optical storage media in accordance with the methods described in IN-184753, thus infringing the suit patent. The DVD standards in question are the DVD Video Standard and the DVD ROM Standard created by the DVD Forum, and subsequently adopted by the ISO and ECMA.
The Court describes the functioning of the patent (even though no claim construction is done in the judgement) as follows – “The invention concerns ‘channel modulation’ which involves a coding step that is performed directly before the storage of the data. This coding ensures that the data to be stored on the disk has a particularly suitable structure for storage. The decoding of 16-bit code words to 8-bit information words is performed by “looking ahead” to the next code words.”
Arguments and Court’s Analysis
The Court framed eight issues to be decided in the suit:
“(i) Whether the plaintiff No.1 is the proprietor of Indian Patent registered under No. 184753?
(ii) Whether the plaintiffs are owners of a valid patent?”
These two issues were decided at the outset in favour of the plaintiffs. The defendants during argument had challenged the validity of the suit patent, contending that it is an algorithm and not an invention, and therefore is not patentable. However, as this was not pleaded by the defendant’s in their written statement, the argument was not considered.
The Court next considered issue (vi),
“Whether the impugned suit patent (#184753) is an essential patent in respect of DVD technology and whether the essentiality as claimed is valid under the Indian Law?”
The Plaintiff argued that the suit patent was an essential patent required to comply with the DVD Standard. The Plaintiff sought to rely upon ‘essentiality certificates’ granted to its corresponding US and European Patents, to prove that the patent was, in fact, essential. The Court did not examine the validity of these ‘essentiality certificates’, holding that the Plaintiff had discharged their burden of proof by producing evidence of ‘essentiality’, despite Defendant’s objections over the credit-worthiness of the reports. In reasoning based almost entirely on the ‘essentiality certificates’ of the US and EP Patents, and without independent analysis, the Court held that the suit patent is an essential patent for the fulfillment of the DVD Standard.
“(iii) Whether the defendants have infringed the plaintiffs’ Indian Patent No. 184753?”
The Court found that the defendant infringed the suit patent on two counts – because the suit patents were SEPs, the logical corollary of the defendant manufacturing a standard compliant device without a license for the SEP indicated infringement. In the alternative, the plaintiff argued that infringement was independently proven in its evidence. The defendant argued that the plaintiff had failed to prove infringement. Importantly, the defendant also argued that the plaintiff was unable to prove that taking into account the prevalent technical practices and the state of the art in usage, making, selling, leasing of the DVD player without infringing the plaintiff’s patent is not possible. Unfortunately, this was not accounted for by the High Court. The Court considered the evidence provided by the Plaintiff’s witness, holding that the plaintiff was able to prove (through EFM (eight to fourteen modulation)+ demodulation technique) that the suit patent was in fact infringed. While the court discusses the precedent on the construction of a claim, no such construction is done, and no comparison of the patent claims with the allegedly infringing product is made. It is unclear whether the EFM technique is in fact disclosed in the suit patent, therefore the suitability of this analysis is circumspect. However, this analysis seems to be sufficient for the court to hold that there is factual infringement as well as infringement based on the compliance of a standard without taking the required licenses from the SEP.
The defendant’s next leg of argument rested on the principle of exhaustion of rights, which holds that the patent right over a product cannot be enforced against that specific product once it has been sold by the manufacturer or licensee. The defendant argued that it purchased the relevant allegedly infringing device from third-party manufacturers who were duly licensed by the plaintiff. The Court dismissed this argument routinely, stating that the defendant had not managed to prove that the sellers from whom they had purchased were properly licensed by the plaintiffs. However, this does not address the full scope of the exhaustion argument, in terms of the protections it grants innocent downstream purchasers.
“(iv) Whether the defendants had knowledge of the plaintiffs’ patents in respect of DVDs and the plaintiffs’ licensing programs?”
The Court held that the defendants, in applying for a license from the plaintiff, must have had knowledge of the plaintiffs patent, and therefore held this issue against the defendants.
“(v) Whether the plaintiffs along with various other members of the DVD forum are misusing its position with a view to create a monopoly and earn exorbitant profits by creating patent pools?”
The defendant next argued that the issue of licensing of a standard essential patent was a competition law issue and could not be decided by a civil court as per the Competition Act, 2002. The Court, rightly, rejected this argument, one which has already been settled by Telefonaktiebolaget LM Ericsson (PUBL) vs. Competition Commission of India and Ors. In which the Court held that the CCI and the civil court operate in different spheres and offer different remedies, and the civil court cannot go into issues of anti-competitive behavior
“(vii) Whether the defendant No.2 is liable to pay any license fee to the plaintiffs and if so at what rate?
(viii) Whether the plaintiffs are entitled to a decree of damages or any other relief?”
The plaintiffs argue that the value of royalty must be based on the entirety of the patent pool, which is the basis on which its licensing occurs. Defendants stated that this would amount to a breach of Fair, Reasonable and Non-Discriminatory licensing terms, which are usually followed in cases of SEP. However, there was no analysis in the judgement on what the scope of FRAND is, particularly in how the court should determine what is FRAND in a situation where it sets royalty rates. The Court relied on the US Federal Court’s decision in Commonwealth Scientific and Industrial Research Organization vs. CISCO Systems, Inc. to conclude that the royalty rates may be based on informal negotiations, and in the absence of a countervailing methodology by the defendants, allowed the royalty rate to be fixed at USD 3.175 from the date of institution of the suits till 27th May, 2010 and from 28th May, 2010 at USD 1.90 till 12th February, 2015.
Finally, the Court reproduced at length the law on punitive damages, as established in Hindustan Unilever, and expounded on the importance of not being arbitrary in the award of damages, then immediately proceeded to award an arbitrary Rs. 5 Lakh in punitive damages without taking into account any of the principles reproduced by it.
The Delhi High Court’s decision is certainly an important landmark in SEP litigation in India. However, the lack of analysis by the Court on crucial areas like assessing essentiality, forgoing a claim construction, disregarding exhaustion principles and assessing FRAND terms means that it is more likely to have a notorious legacy, and possibly subject to challenge in appeal on any of the above grounds.