Trademark Row over “Khadi”

As per recent news in The Times of India the  Indian government is bracing itself for a trademark battle against German Company’s “Khadi Naturprodukte” over the handspun fabric that was made a centre piece of India’s freedom struggle by Mahatma Gandhi.   The government has made objections to the use of Khadi as a trademark for selling a range of Indian-origin products, including shampoos, soaps and oils in the European markets and which can be purchased online too.

            Traditionally Khadi is known as handspun and hand woven cloth.  During the period of freedom struggle Mahatma Gandhi started Swadeshi Movement. Khadi was spun from indigenous cotton for making clothes, which were known as khaddar or khadi. Khadi not only gave clothes to the poor masses but also gave them self reliance and ideology for life. Britishers suffered heavy losses when Indians started using Khadi instead of imported expensive clothes and thus khadi made significant contribution in Indian freedom struggle. Undoubtedly Khadi is traditionally Indian and is more than just cloth.

            The Government’s attempt to promote Khadi is facing some trademark hurdles as this brand is registered abroad, in countries such as Germany, Spain and Hungary. It looks similar to the case of Haldi, Basmati rice and Neem where traditional Indian intellectual properties have been registered in the west. Khadi is the latest instance of infringement of intellectual property rights.

The German firm says on its website that “Khadi” is a unique brand for the European market and only exclusively available with us.” Products listed on its website include shampoos, soaps and oils which overlap with what KVIC sells under a similar brand, but the current list doesn’t include fabric.

There is pending application for granting status of ‘geographical indication’ or GI on Khadi to India. This refers to products that are specific to a particular place, such as Darjeeling tea. A few months ago, the Intellectual Property Rights (IPR) Attorneys Association sought a GI tag for Khadi products on behalf of all Indian producers. The application is still pending and if the attempt succeeds, all trademarks granted to khadi for the fabric would get cancelled.

 The department of industrial policy and promotion (DIPP) has suggested KVIC to get international trademark under the Madrid Protocol. A trademark would be a proof of authenticity and will also provide legal protection. Shri BH Anil Kumar, joint secretary in the MSME ministry said “There will be more value added consumables so that khadi does not remain a synonym for a fabric, but connotes a lifestyle”.

“We will put all our force and strength to try and ensure that this trademark is cancelled,” a DIPP official said.

            In order to prevent further infringement of IP in Indian traditional herbs and agricultural produce or in other words to prevent “bio-piracy”, the government of India has formed a Traditional Knowledge Digital Library (TKDL) in order to provide information on traditional knowledge existing in the country.

Finally it seems that Khadi may get its dues, if the KVIC efforts are successful. “Khadi” is not just a “Trademark” but it is an icon of National pride, a symbol of economic independence and a means of employment to thousands people especially in villages where livelihood depends on “Khadi”. Hence it needs to be protected at against IP Infringements.

About the Author: Ms. Pallavi Sharma, Trademark Attorney at Khurana and Khurana, Advocates and IP Attorneys and can be reached at : pallavi@khuranaandkhurana.com

High Court grants interim injunction against online retailer from using L’oreal Trademark

Recently, Delhi High Court passed an interim injunction against an online retailer restraining them from using the name of L’oreal to sell or supply any goods on any website or in any other manner having regard to the L’oreal’s plea alleging counterfeit products having its trademark were being sold/ traded by the online retailer Brandworld through the shopping website Shopclues.com.

L’oreal has filed suit for permanent injunction restraining defendants, on account of infringement, passing off and rendition of accounts against the defendants. Plaintiffs Loreal established in France claimed that they are using the mark “L’oreal” since 1910. It has also been submitted by the counsel for the Plaintiffs that the mark “L’oreal” is registered in major countries of the world and thus has built up a globally valuable trade mark. Hence the plaintiff claimed that they have acquired immense goodwill and reputation by using the said trade mark.

As a matter of fact, Plaintiff observed that certain counterfeit products are being sold by the defendants through online selling under their trademark. Plaintiffs submitted that the alleged goods were purchased and sent for verification and it was revealed that they are counterfeit ones. Thus Plaintiffs prayed for exparte ad interim injunction against the defendants.

Justice G. S. Sistani after perusing the plaint and hearing the Plaintiffs counsel granted ex parte ad interim injunction against defendants restraining ‘defendants, their  directors, principal officers, partners, agents, representatives, distributors, assigns, stockists from using,  manufacturing, marketing, purveying, supplying, selling, soliciting,  exporting, displaying, advertising on the online market place through the  website http://www.ShopClues.com, or any other mode with respect to the impugned  trade mark L’OREAL and L’OREAL formative trade mark’ till next date. Summons issued to the defendants through all possible modes.

The Hon’ble High court also stated that on perusing the facts, the balance of convenience is in favor of Plaintiffs and it is the fit case wherein if the interim injunction is not granted then Plaintiffs will suffer from irreparable loss.

Thus it will be interesting to note the Court’s final verdict in this case in view of the incredible growth of online selling where the sellers are listed by the online website provider to sell their goods to the buyers at discounted prices, which is a growing concern for the manufacturers which making it mandatory for them to be more vigilant on the list of sellers dealing with their goods in order to avoid distortion of prices and preventing dealing of counterfeit products under their mark.

About the Author: Mr. Abhijeet Deshmukh, Trademark Attorney at Khurana and Khurana,  Advocates and IP Attorneys  and can be reached at: Abhijeet@khuranaandkhurana.com

Cipla Files Representation with Govt. Seeking Revocation of Novartis’ Patents

It has been recently reported in Economic times that Cipla has filed representation with the government (Department of Industrial Policy & Promotion) seeking revocation of five patents of Novartis on indacaterol, a respiratory drug for the treatment of chronic obstructive pulmonary disease (COPD) and marketed as Onbrez by Novartis. The central government, under section 66 of the Indian Patent Act, has the power to revoke patent in public interest, after giving patentee an opportunity to be heard.

According to section 66,

“Where the Central Government is of opinion that a patent or the mode in which it is exercised is mischievous to the State or generally prejudicial to the public, it may, after giving the patentee an opportunity to be heard, make a declaration to that effect in the Official Gazette and thereupon the patent shall be deemed to be revoked.”

Cipla has launched its generic version of indacaterol and alleged that Novartis held patents on indacaterol since 2008-09 without manufacturing in India and importing only in negligible amounts, as a result of which there is an urgent and unmet need to provide this drug to patients at affordable prices. According to Cipla, it has potential to manufacture adequate quantities of the drug to make available in the country.  Cipla’s launched generic version of indaceterol is reported to be 1/5th of the price of Novartis’ Onbrez.

This is the first time that an Indian generic company has asked the government to revoke patents on the ground of public interest under section 66. Otherwise, the revocation has always been sought on grounds under section 64 (for example obviousness, anticipation, insufficient disclosure, violation of section 8, 3d etc.), whether an Indian company has filed a revocation petition or a counter claim in an infringement suit. However, public health and drug price play significant role in deciding a patent’s fate in India especially in context of Compulsory Licensing of patent as it happened in Natco’s case. Even in Roche v. Cipla, public health and pricing issues were considered by the India courts, although the decision at the High Court was based on merits of the case and not in public interest.

It is highly expected that Novartis will take a legal course to challenge Cipla’s launch. Novartis has been very active to protect patents for its one of the blockbuster anti-diabetic drugs vildaglipton in India. Novartis has sought, just a few months ago, quia timet interim injunctions against several Indian generic companies including Glenmark generics, Bajaj healthcare, Cadila healthcare, Alembic pharmaceuticals against alleged patent infringement of vildaglipton even before they actually launched their generic versions and after they obtained marketing approvals from DCGI.

Thus Novartis will most likely file patent infringement suits seeking interim/permanent injunctions restraining Cipla from manufacturing and selling generic version of indacaterol in India.

On another note, Cipla could also have applied to obtain a compulsory license to manufacture and sell indacaterol before launching the drug. All three grounds of granting compulsory license under section 84(1) viz. reasonable requirements of public not being met, drug non-affordability and non-working of patent in India could have been proved by Cipla. According to Cipla, Novartis declared import of meagre 53,844 units for the year 2013 which do not satisfy even 4500 patients annually where there are more than 1.5 crore patients in need of the drug. Cipla also urged the government to consider COPD as an epidemic worthy of being qualified as a “public health crisis” as it claims 50 lakh lives annually in India, which is more than the toll from HIV-AIDS, malaria, cancer and tuberculosis.

Till now, we are not aware of any case in India wherein the government has revoked the patent in public interest under section 66. The outcome of government opinion to revoke said patents is thus eagerly awaited. This would act as precedent for all similar future cases. And if the government decides to revoke the patent under this section, the ongoing conflict between multinational innovator companies and Indian generic companies is going to intensify. Innovator companies criticize that India has weak patent laws not in compliance with international standards, whereas Indian government takes a stand that its patent laws are in compliance with TRIPs standards and are designed to meet the objectives of drug availability, affordability and accessibility.

 About the Author: Meenakshi Khurana, Partner at Khurana & Khurana, Advocates and IP Attorneys and can be reached at: meenakshi@khuranaandkhurana.com

PATENTS IN THE FIELD OF OUTER SPACE

An Indian space craft successfully entered Mars’ orbit, marking it as the first interplanetary mission for the country making India in the processof being the first Asian nation to reach the Red Planet— and the first nation in the world to successfully reach Mars on its first attempt.This post is devoted to raise awareness about the patent laws related to outer space.

Introduction

As we all know patentsare granted by state or national governments to inventors.Patents are territorial and are only enforced within the jurisdiction of the granting government. For example, holder of a U.S. patent may only be able to enforce the patent against someone who is using, making, sellingor importing the patented invention within the United States. Hence, the owner of the invention must file a separate patent application in countries of his interest, i.e where he wishes to obtain exclusive rights to his invention.

Above limitation in implementing rights granted by patents raises a pertinent question while discussing patents in space domain  -whose territory is space?

Laws pertaining to outer space

In this context it will be worthwhile to examine laws concerning outer space.

Space law can be described as an area of the laws governing activities in outer space that are applicable to national and international law. International lawyers have been unable to agree on a uniform definition of the term “outer space”, although most lawyers agree that outer space generally begins at the lowest altitude above sea level at which objects can orbit the Earth, approximately 100 km (60 mi).

Outer Space Treaty

The Outer Space Treaty, formally known as the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Moon and Other Celestial Bodies. It is a treaty that forms the basis of international space law. The treaty was opened for signature in the USA, the UK, and the Soviet Union on 27 January 1967, and entered into force on 10 October 1967. 102 countries are parties to the treaty, as of May 2013, while another 27 have signed the treaty but have not completed ratification.

Responsibility for Activities in Space

Article VI of the Outer Space Treaty deals with international responsibility, stating that “the activities of non-governmental entities in outer space, including the Moon and other celestial bodies, shall require authorization and continuing supervision by the appropriate State Party to the Treaty” and that States Parties shall bear international responsibility for national space activities whether carried out by governmental or non-governmental entities.

Sovereignty in Outer Space

On 20 December 1961, the United Nation passed a resolution 1721 as follows;

(a) International law, including the charter of the United Nations, applies to outer space and celestial bodies,

(b) outer space and celestial bodies are free for exploration and use by all States in conformity with international law and are not subject to national appropriation.

Article II of the Outer space Treaty states “outer space, including the Moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means”. Hence outer space is not subject to sovereignty of any state. It is regarded as a “Res Communis”, that is it is a public domain or public property.No one nation may claim ownership of outer space or any celestial body. So, outer space is not owned or controlled by anyone and it is available for anyone to use for any purpose. This does not mean that States that areexploring and using outer space cannot exercise any degree of authority.

As far as an object launched into outer space is concerned, in accordance with Article VIII of the Outer Space Treaty, the State on whose registry such an object is carried shall retain jurisdiction and control over that object, and over any personnel thereof.

Importance of IPR in Space Regime

Space technology has been for a long time one of the most advanced technical areas, and outer space activities are, in fact, the fruit of intellectual creations, it is only in recent years that intellectual property in the field of space activitiesis raised.

The reason is that:

  • Space activities are increasingly now shifting from being state owned to private and commercial activities
  • An increasing number of space activities are operated under international cooperation schemes, which depend on a simple, uniform and reliable international legal framework

Intellectual property protection is critical to fostering innovation in space research and exploration. Without protection, inventors would not reap the full benefits of their inventions and would in turn focus less on research and development.

Case Study: International Space Station (ISS)

The International Space Station (ISS) is a space station, or a habitable artificial satellite, in low Earth orbit. It is a modular structure whose first component was launched in 1998.

As the International Space Station nears completion, the issue of Space-related Intellectual Property Rights (SIPRs) is becoming increasingly important. The partners in this adventure, the USA, Russia, Japan, Canada and the Member States of European Space Agency (ESA), are working together to establish a legal framework to define the rights and obligations of each of the partner states, as well as their jurisdiction and control over their ISS elements.

Experiments to be carried out on the ISS cover human physiology, biology, biotechnology, medicine, biology, science and technology. The pharmaceutical sector in particular has been identified as an area that will benefit from experiments carried out on the ISS.

These factors raise the question of which laws apply to such experiments? For instance, if a scientist/astronaut invents a medical treatment while on board the ISS, which patent law can be used to protect it? Also, can the use of patented inventions be protected in outer space?

The complexity of the legal regime concerning IPRs for the ISS lies in the fact that the ISS consists of different modules provided by different partners. Different IP laws from different ISS Partners can coexist; as each partner registers their flight elements and retains jurisdiction, control and ownership over them.

In order to protect the exclusive rights of inventors, intergovernmental agreement on the ISS was signed on 29 September 1988 by the United States of America, Japan, Canada and ten other member states.

Article 21 of the International Space Station Intergovernmental Agreement (IGA) recognises the jurisdiction of each partner’s courts and allows for national laws to be applied in the modules belonging to the partners. This means that the different IP laws of each partner have to coexist, that is in the event an invention occurs on the Space Station, ownershipof invention will be determined by the ownership and registry of the Station’s element in which the invention has taken place.

For instance, if an invention is realised in a USA space element the USA Patent Act will be applicable as the invention is deemed to have occurred on US territory or for example, an invention made on a Japanese Element will be deemed to have occurred in Japan.

An invention created by an enterprise astronaut on ISS will be patented in the nation that has jurisdiction over the module where the invention took place, not the nation of the inventor.

105 of 35 U.S.C. (Inventions in Outer Space)

The USA is the only country that has enacted an explicit provision related to inventions in outer space.

The USA Patent Act (re. 35 U.S.C.§ 105(2003)) states that any invention made, used or sold in outer space on board a spacecraft that is under the jurisdiction or control of the USA is considered to be made, used or sold on US territory, except where an international agreement has been concluded that states otherwise.

Apart from the USA, however, only Germany modified its patent law prior to the signing of an Intergovernmental Agreement (IGA) on the ISS, to ensure that its patent law can be applied to inventions created on board an ESA registered module.

Apart from these two countries, the national patent laws of no other country contain provisions that would make national patent law applicable on board a spacecraft.

Space Legislation in India

India, like most other countries, has no provisions related to space legislation.

India is a party to all international space treaties, which form the main body of international space law. India has also played a significant role to adopt legal principles by the U.N. General Assembly Resolutions, which provide for the application of international law and promotion of international cooperation and understanding in space activities.

Thus it is for the Parliament of India to take the starting step in the direction of enacting a law for India for the purpose of the effective regulation of various aspects of India’s space policy. Because of recent national and global developments, active involvement of the private sector in country’s space programme, commercialisation of space activities and the agreements made nationally and globally with various agencies, governments, international and intergovernmental organisations, there is a huge need of space laws in India.

The second most important reason for a space law in India is that having successfully demonstrated their implicational capabilitiesnow the Indian space activities have become vastly diversified and have come to stay. Hence to facilitate inter-departmental coordination it is important to make legal norm related to space inventions.

Thirdly, there is a need to clarify applicable legal norms and rules relating to both public laws and private law aspects of space activities, as demonstrated by the experience of developed countries like USA and Germany.

Fourthly commercialisation of the space products is establishing and a vast space activities and space market where India plans to and has already begun to sell its space products.

Therefore, there is need for India to enact a National Space Legislation as soon as possible.

Conclusion

Space provides sufficient opportunities for many joint venture programmes for various innovative applications towards the cause of human kind. A harmonized system of IPR regime for the outer space is needed. The harmonized system should take into account the interests of developing countries and promote moral and ethical usage of Outer Space for the benefit of the entire humanity.

About the Author: Ms Harsha Rohatgi, Patent Associate, Khurana & Khurana, Advocates and IP Attorneys and can be reached at: harsha@khuranaandkhurana.com

Practice of Patent Asserting Entities: Boon or Bane: Global Innovations

Introduction

Patent troll relates to a person or company that enforces its patents against one or more alleged infringers in an opportunistic and unduly aggressive manner, often with no intention to manufacture or market the patented invention. Various terms such as patent trolls, patent monetization companies, or patent assertion entities are used for such entities; however, irrespective of term used, it solely talks about companies that conduct very little research to create new ideas and produces no products. Instead, they hold patents in which they were not involved at any level: ranging from designing, manufacturing or process associated with that patent. Their main aim is to sue similar patent holder firms or to extract license payments under the threat of lawsuits or actual litigation to enforce their demands.

A more polite and neutral name used for them is “Non-Practicing Entities” (NPE’s). Non-practicing entities include legitimate institutions such as start-ups, technology transfer agencies, universities, research organizations inter alia.

Modus Operandi of patent trolls

Patent trolls usually gather together large portfolios of patents, which they purchase from companies that are going out of business, from firms that have developed technology that they don’t intend to pursue on a particular technology, or from individuals who are lacking funds to develop their inventions or ideas. Further, the trolls look for successful products that use the technology covered by their patents and demand a licensing fee. Because patent suits are expensive to defend, the target company is most often willing to settle out of court.

Trolls accumulate patents related to a target company. By purchasing many patents focused on one area, they are able to bring up so many occasions of possible infringement which further makes it harder and more expensive for the target company to defend the suit. They also sue multiple defendants so that the legal cost per defendant is reduced but makes for a large overall potential payback.

On the other hand, as a matter of practice, lawyers are paid on a contingency basis – they are only paid if they win the case. That reduces the cost further of the  trolls. On the other hand cost for the accused infringer is sky-high and if they try to fight the case, there is no quick way to end the litigation and achieve success in the litigation.

The patent trolls may also claim a share in total revenue from the product although patents may cover only a small aspect of the technology. The award can amount to millions for a successful product.

From various sources, it is believed that 97 percent of infringement suits in U.S. are settled before trial rather than risk judgement irrespective of the merits of the case and also the cost of patent litigation (bringing or defending a patent lawsuit is expensive, with legal costs and lawyers’ fees reaching into the millions of dollars) works to patent trolls advantage, too. Further adding to the list of advantages for trolls, if a defendant company loses a suit, it may be liable for treble damages in a case of wilful infringement.

The result is a situation where the accused infringer faces so much of a burden of fighting the court case that it becomes appealing to pay some lesser amount to make the litigation go away.

Patent Trolling in India

The practice of patent trolling was prevalent and practiced in India in the Information Technology and Communications sector till 2005 prior to passage and enactment of the Patents (Amendment) Act, 2005 after which there was steep decline in trolling activities.  The reason for this decline is nothing but the inclusion in the 2005 Act of a list of non-patentable subject matter which includes Software domain which is considered to be most significant domain involved in patent trolling among others, imposition of stringent deadlines for pre-grant opposition, introduction of post-grant opposition, as well as the introduction of a variety of other provisions such as compulsory licensing.

Pertinently patent law in India do not aims to prohibit the existence of patent trolls but threatens its existence.  For instance, Indian patent law makes it mandatory that a (granted) patent be worked or used in India. However otherwise, if a patent is not used in the territory of India within a period of 3 years from the grant of patent, compulsory licensing might be invoked.  Also, the Indian Patents Act makes it mandatory to file statement of working of a patent at the end of each financial year. And if the patent holders fail to file such a statement, he may be liable for a fine and/or imprisonment.  Hence in India, patent trolling does not pose any major threat to any entity seeking opportunity to enter the Indian market in view of the amendments to the laws which fairly controls the patent troll activity in India.

Conclusion:

While patent trolls are a major threat in many countries they are not a viable option to operate in India In view of provisions incorporated in Indian Patent Laws vide Patents (Amendment) Act, 2005.  It can be observed that while the other countries are plagued with patent troll activities, the Indian system strived fairly to control the problem of patent trolls.  May be US and other developed countries need to take a leaf out of Indian Patent Laws to curb the menace of patent trolls instead of criticising IPR regime.

About the Author: Mr Sitanshu Singh, Patent Associate, Khurana & Khurana, Advocates and IP Attorneys and can be reached at: sitanshu@khuranaandkhurana.com

Emcure’s Notice of Motion succeeds against Corona Remedies: Bombay High Court

In the recent decision of Bombay High Court in the case of Emcure Pharmaceuticals v Corona Remedies, the Hon’ble court decided on the issue of deceptive similarity, acquiescence and balance of Convenience in favor of Emcure Pharmaceuticals.

Facts of the case:

The plaintiff’s trademarks ‘OROFER’ and ‘OROFER XT’ are registered as word marks since 1996 with the trade mark registry in class 5 in relation to medicinal and pharmaceuticals preparations for iron  deficiency, anaemia, methylcobalmin deficiency, folic acid deficiency, zinc deficiency and so forth.

On, 10 January 2006 the plaintiff became aware of the advertisement of the defendant’s trade mark ‘COROFER’ in the Trade mark Journal 1371. However on 17th December 2007, Plaintiff sent Cease and Desist notice to the Defendant through their attorneys. Thereafter the Defendant’s registration was opposed by the plaintiff on 20th December 2007 claiming inter alia prior and original adopter of the mark ‘OROFER’ in class 5 and due to prolonged and extensive use, the mark exclusively connotes to the plaintiff only and would cause confusion and deception among potentials if used by any other entity.

The plaintiff also sent second Cease and Desist notice to defendants on 26th June 2009. Moreover on dt. 7th September 2013 filed infringement suit against the defendants. The Plaintiff also filed the notice of motion for interim relief injuncting the defendants from using the impugned trademark in any manner thereof.

Issues Involved:

  1. Whether the defendant’s mark is deceptively similar to the Plaintiff’s mark?

  1. Whether the fact that other marks exists with the word “FER” is determinative, in that the use of this word or abbreviation by the Defendant cannot be said to constitute an infringement of the Plaintiff ’s marks?

  1. Whether it constitutes a valid defense if it be shown that Plaintiff is not the first user of the impugned mark?

  1. Whether Plaintiff’s claim stands defeated if the alleged delay is proved? And if the knowledge of the Plaintiff regarding the Defendant’s use is shown, hasnot the Plaintiff acquiesced in the Defendant’s use of its rival marks? Whether S. 33 is limited to a later registered trade mark?

Issue 1:

The court held that the true test is to juxtapose the two marks and then analyze the likely effect on the mind of a person of average intelligence and imperfect recollection. In the present case the entire mark of the plaintiff is incorporated in the defendant’s mark which makes it deceptively similar to the plaintiff’s mark. Thus there is no difference between the plaintiff’s mark and the defendant’s mark except for the addition of the preceding letter ‘C’.  The court also relied on the case of Boots Company PLC v. Registrar of Trade Marks & Anr. Wherin it was held CROFEN to be deceptively similar to BRUFEN. Thus the court held that the Defendant’s mark is confusingly and deceptively similar to the Plaintiff’s mark.

Issue 2:

The court held that the fact is inconsequential that there exists other mark with the term FER in them. Moreover in view of the fact that the defendant itself has sought for the registration of the mark with the term FER, defendants cannot claim lack of distinctiveness.

Issue 3:

The defendants claim that the markl ‘OROFER’ is already used by one Advent Laboratories Patna who is prior user since 1983 and the mark is registered on 24th September 1985. The plaintiff however denied the contention and claimed that the mark was filed on proposed to be used basis and there is no evidence of its actual use. Moreover Section 28(3) and Section 12 provides for co existence of the marks on the register where both the proprietors do not have exclusive rights over each other, however as against third party each of them has full rights against the third party. The court held that in the present case the defendant is the third party and not the concurrent user.

Issue 4:

The court held that mere delay in filing the suit in no way defeat the rights of the registered proprietor and which is not firmly settled by various case laws. (Relied Medley Pharmaceuticals Ltd. v Twilight Mecantiles Ltd. & Anr) Moreover it is also settled principle that in law question of acquiescence arises where the proprietor being aware of the rights and the infringement of the mark but fail to sue without a positive act of encouragement. And this is not the defence available to the infringer.

The court held in reference to acquiescence that “Acquiescence is a species of estoppel, a rule in equity and a rule of evidence.  Essential  to the acquiescence  doctrine  is  that  it  is  accompanied  by  an encouragement  or an inducement:  he who possesses a legal  right must have encouraged the alleged violator of that right in acting to the latter’s detriment, confident in the knowledge that the former is not asserting his rights against the violator. Acquiescence is not mere negligence or oversight. There must be the abandonment of the right to exclusivity”.

The court on the question of delay, acquiescence and honesty of adoption, relied on Cadila Pharmaceuticals Ltd. v Sami Khatib and Hindustan Pencils and Schering Corporation and held that even if it is assumed that the defendant’s adoption was honest, the defendant had the means to discover the plaintiff’s mark and particularly in view of the fact of plaintiff’ opposition to the defendant’s mark, the continued use of the mark by the defendant was at its peril. Moreover the onus of proving the honest and concurrent user lies with the defendant and the defendant fails to prove the same. However the defendant also fails to produce the sales figure. Hence question of acquiescence did not arise. (Relied on Win Medicare v. Somacare Laboratories Ltd)

The defendant further claimed that the S. 33 also applies to the unregistered mark whereas the court rejected the argument and held that the “S. 33 operates in a well defined and circumscribed set of circumstances. It cannot possible oust every other plea of acquiescence”.

About the Author: Mr. Abhijeet Deshmukh, Trade Mark Attorney, Khurana & Khurana, Advocates and IP Attorneys and can be reached at: Abhijeet@khuranaandkhurana.com

Criminalizing online sharing of Academic Article by a Columbian Student

Background

Diego Gomez is a student perusing post graduation in Conservation and Wildlife Management in Costa Rica. Like students of developing countries, he also used to face lack of availability of literature in the libraries and other sources of reading. To face this scarcity of academic databases, Diego, used the power of internet. It enabled him to read relevant research, share documents, and communicate with others in his field. In recent times, though large amount of database is available on internet yet to find something credible and scholarly, one has to pay a premium price and this served as a barrier for Gomez. So he, along with his fellow students started sharing articles which they find relevant amongst themselves on internet. On being asked about giving due acknowledgement to author, this is what Gomez has to say:

“The important thing is to make a correct citation, attributing researchers’ work by indicating their name and year of publication and, of course, not claiming the work of another researcher, but to recognize it and value it. Therefore, what we usually do is to reference the findings and make them available to those who need them.”

One such paper research paper was shared by Gomez on Scribd. The paper was a taxonomy document that could be used by conservationists like him to identify animals and study ways of preserving them and their ecosystems. It is noticeable that Columbia is world’s second most biodiverse country and access to such prominent piece of work could have served the scientific fraternity in conservation of flora and fauna of the nation.  Yet two years later, Gomez received a legal notice from the author of the impugned article intimating him about initiating criminal investigation against him in this regard. The notice was silent as to the reason and criminal charges for which Gomes was accused. Later on, he discovered that the author of the impugned article filed a lawsuit over the “violation of [his] economic and related rights.” This is what Gomes has to say on it:

“Three years ago, through a Facebook group in which I participated along with many others interested in the amphibian and reptile studies, I came across a master’s thesis that was crucial to identify some amphibians I found… At that time, however, I thought it was something could be of interested [sic] for other groups, so I shared it on the web. 

Although I was not the only one (the document was in several sites already), for sharing knowledge—recognising the authorship—now the author advances a criminal case against me.”

Another relevant fact to the case was, later on, Scribd made the impugned article accessible for an amount of $5 which was initially freely accessible. Thus, it can be inferred that money was never a motive of Diego behind uploading impugned article.

Diego now faces up to 8 years in jail and a monetary fine – for making available such scientifically important document which could have easily served the purpose of conserving biodiversity in the second most biodiverse country of the world.

Fair Use Doctrine

In general, Fair Use is a safety filter incorporated with a view to maintain a balance between rights to have access to information of public at large without hampering right to property of the copyright holder. This doctrine was firstly recognized by Britisher’s as a concept of “test copyright”[1] . It was incorporated into the Copyright Act of 1976[2]. In US, copyright was originated with a view to elevate the “importance of scholarly access”. It was invented to “assist learning” but instant case is an example how this system failed to serve the purpose.[3] In the words of renowned academician, De Vos,

 “Fair use, a doctrine of U.S. law situated within copyright, is an influence within the institutional and political arrangements, the infrastructure that points to “the presence and operations of standards and classifications, which lean heavily on all writing practices”

Not in all cases, acknowledging the source of copyrighted information amounts to “taking permission” from copyright holder. This is because there is no straight jacket framework to stipulate what exactly amounts to be permitted under doctrine of Fair Use. Although, it has been argued in lengths in several point of time, but still it depends on particular facts and circumstances of the case. Some of the examples of activities that are taken under the doctrine by US courts are:

“quotation of excerpts in a review or criticism for purposes of illustration or comment; quotation of short passages in a scholarly or technical work, for illustration or clarification of the author’s observations; use in a parody of some of the content of the work parodied; summary of an address or article, with brief quotations, in a news report; reproduction by a library of a portion of a work to replace part of a damaged copy; reproduction by a teacher or student of a small part of a work to illustrate a lesson; reproduction of a work in legislative or judicial proceedings or reports; incidental and fortuitous reproduction, in a newsreel or broadcast, of a work located in the scene of an event being reported.”[4]

Limitations and Exceptions for the use of Copyright protected work

Under US Copyright laws, this right is subject to certain limitations found in sections 107 through 118 of the copyright law[5]. Section 107 contains a list of the various purposes for which the reproduction of a particular work may be considered fair, such as criticism, comment, news reporting, teaching, scholarship, and most importantly research. Diego can claim the doctrine of Fair Use if he can prove that he had borrowed the content for research purpose. In one of his statement Diego inter-alia said, he wasn’t making a personal profit from sharing the impugned article—he simply intended for other scientists like him to be able to access and cite this scientific research. Section 107 also sets out four factors to be considered in determining whether or not a particular use is fair.

  1. The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes
  2. The nature of the copyrighted work
  3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole
  4. The effect of the use upon the potential market for, or value of, the copyrighted work

The nature and purpose of use was clearly to share data amongst fellow learners and it was never intended to make any profit. The fact that Diego didn’t have any monetary agreement with Scribd further strengthens his argument.

Under Columbian Copyright Laws, the Fair use doctrine is very limited. Instead, it has a list of exception and limitations to the rights of authors. These exceptions are not compatible new era digital situations and needs to be urgently amended. Further under Columbian Criminal Law, the necessary ingredients to held one criminally liable for such copyright infringement are: mens rea and antijurídica. Mens rea is the intention or knowledge of wrongdoing that constitutes part of a crime. Certainly, in the instant case, this ingredient does not find any place as Diego never intended to harm the author. For that matter, the author also not known to him and thus it is almost impossible to possess malice for some unknown person. Secondly antijurídica: which means whether there was actual harm against the economic rights of the author. As mentioned earlier, the impugned article was available free of cost on internet. It was Scribd, who later on started charging money for it. Moreover, the act of Diego added economic value to the impugned article. It is evident from the fact that Scribd made the impugned article paid only after it has been shared by Diego which may be due to increase in viewership of it. Thus, it can be inferred that Diego directly or indirectly, only added value to the article and in no way degraded or diminished its value.

In a landmark ruling, the Supreme Court of Colombia, the highest criminal judicial tribunal and Court of Cassation, ruled that, in order to establish criminal copyright infringement, it is necessary to ask whether the allegedly criminal conduct is profit-making, whether it causes effective injury and whether the intention is to cause harm on the right holder. Judicial interpretation on copyright issues is scarce and uncertain in Colombia. In this context, the Supreme Court’s Cassation ruling 29,188 (released on 30 April 2008) has set guidelines for “the development of national jurisprudence on the nature, scope and meaning of the criminal protection of copyright. [6]

Berne three-step test

As discussed earlier, the doctrine of fair use puts limitations on the exclusive rights of the copyright holders. It set forward certain exceptions and limitations which serves as an exception to Copyright infringement subjected to facts and circumstances of the case. There has been a long discussion on whether the copyright holders have unlimited exclusive rights to their work. On the contrary, a strong set of limitations and exceptions is deemed necessary to safeguard fundamental rights and freedoms of users, to regulate competition and industry practice, to promote the dissemination of information, and to alleviate the symptoms of market failure.[7]  In a nutshell, the test “sets limits to limitations on exclusive rights” [8]and allows limitations

  1. “in certain special cases”

It requires that a limitation or exception in national legislation should be clearly defined and should be “narrow in its scope and reach” in a quantitative as well as a qualitative sense. That does not mean, however, that every situation to which the limitation could apply needs to be explicitly identified, provided that the scope of the limitation is known and particularized.[9]In the instant case these limitation may extend to throwing the impugned article in public domain of learners. It may be taken as a precedent for other scholarly works which are far away from the reach of learners from ‘not so developed’ nation. In this way such highly informative work may explicitly be coined under the head of “special cases” of Berne’s convention.

  1. “that do not conflict with the normal exploitation of the work”

It inter-alia means that the said limitation or exception in the national legislation is way higher than the normal level of exploitation of work and if such extent of exploitation is permitted will deprive the rightful copyright holder of significant or tangible commercial gains.[10]It depends on what status does a country give to its research and development. No doubt, individual’s exclusive copyrights are subjected to protection but not at the cost of nation’s development. In a way, an individual is a part of the state and hence the state’s development must be kept at higher pedestal when it comes to research and development.

  1. “that do not unreasonably prejudice the legitimate interests of the author / right-holder”.

The terminologies in this step require high interpretation as they have not been explicitly defined elsewhere. It contains an important proportionality test in the way that the harm to the right-holders has to be reasonably related to the users’ benefits. In other words, the prejudice has to be proportionate.[11]It takes immense effort to make a scholarly work worth informative and the individual interest cannot be ignored wholly. The possible way out can be that the state fix a moderate price of such works which will serve both the state and the copyright holder.

Conclusion

Instant case epitomizes the darker side of the restrictions placed by the old and non-compatible laws on the exclusive economic rights of the authors. In my opinion there is no justice in such laws if they criminalize sharing of such scholarly research works. Gomez shared the impugned article with a view to foster the protection of biodiversity of his country but helping others with similar ambitions to access the scholarly work. Learners of this kind are vast in number who unintentionally falls in to the complex cobwebs of prohibitive restraints of copyright. Penalizing and criminalizing healthy content sharing will lead to formation of large army of like-minded people aggrieved from such bogus legal system. It is an imminent step to ensure that learners are not made criminals for promoting scientific progress and exercising their creative expression.

It is a well accepted fact that it is highly difficult for students of developing countries to attain such informative scholarly work and hence, such sharing, in my opinion should not be termed as offense as long as the copyright holder retains its moral rights. However, it won’t be totally non-expectable to hope for a law that does not criminalizes such sharing of scholarly works done without malice or intention to draw personal benefits, especially when that work is actually being used for the development and application of scientific progress, which the prime objective of the copyright laws.

[1] Great Britain’s Statute of Anne of 1709

[2] 17 U.S.C. § 107

[3] Logie, John. (2006).”Copyright in increasingly digital academic contexts: What it takes” (WIDE paper #7) retrieved on 28 August 2014 from http://www.wide.msu.edu/widepapers .

[4] Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law, 1961, retrieved on 28 August 2014 from http://www.copyright.gov/reports/annual/archive/ar-1961.pdf

[5] title 17, U. S. Code

[6] “Colombian ruling on copyright: Without profit  there is no criminal offence “ by carobotero · Bogotá (Colombia) · May 15th, 2008 last retrieved on 28 August 2014 from

 http://archive.icommons.org/articles/colombian-ruling-on-copyright-without-profit-there-is-no-criminal-offence

[7] Guibault, L. (2002), Copyright Limitations and Contracts – An Analysis of the Contractual Overridability of Limitations on Copyright, Kluwer Law International, The Hague

[8] Senftleben, M. (2004), Copyright, Limitations and the Three-Step Test – An Analysis of the Three-Step Test in International and EC Copyright Law, Kluwer Law International, The Hague

[9] WTO Copyright Panel decision (2000), case WT/DS160, United States – Section 110 (5) of the US Copyright Act, Page 32.

[10] WTO Copyright Panel decision (2000), case WT/DS160, United States – Section 110 (5) of the US Copyright Act, Page 44.

[11] WTO Copyright Panel decision (2000), case WT/DS160, United States – Section 110 (5) of the US Copyright Act, Page 57.

About the Author: Mr. Ananya Pratap Singh, an Intern at Khurana and Khurana, Advocates and IP Attorneys.

Monkey Selfie-Legal Aspects

 

Background

Picture1

David J. Slater is a British wild life photographer from Gloucestershire who ventured to an Indonesian jungle in 2011 to take photos of extremely rare crested black macaque monkeys. As he narrated the story to the telegraph, he told “They were quite mischievous, jumping all over my equipment and it looked like they were already posing for the camera when one hit the button.”A curious female grabbed his camera and snapped hundreds of shots. The best one out of the image was a selfie by a female macaque grinning toothily into the camera. Mr. Slater eventually retrieved it.

The images made headlines around the world, and were used on a number of websites, newspapers, magazines and television shows. Some of these pictures were posted on Wikimedia Commons[1], where images and videos are offered to the public for free. It was nominated for the best public domain photo on Wikimedia Commons.

In early 2012, Mr Slater officially asked Wikimedia to take down the image. It was removed, but was later added again by another user and has remained on Wikimedia Commons. Mr. Slater contends that he owns the copyright over the said photographs. He further states that he has suffered considerable expense to get these photographs as he traveled into the deep forests of Indonesia and spent three days following the animals with his camera equipment and even hired the guide who led him deep into the wilds, where the inquisitive monkey could grab his camera and start snapping.

He has also argued that he would hold the copyright to any images taken by an assistant. In effect, the smiling simian was his assistant that day in the jungle, he reasoned.

On the images’ discussion page one of the editors who uploaded the photos wrote that “This image was shot by a monkey who picked up a camera that a photographer had dropped” and was therefore not eligible for copyright.

Wikimedia argues that no one owns the photo — not itself, not Mr. Slater and not even the shutter-happy monkey and the image falls into the public domain. Mr. Tomasz Kozlowski, who is responsible for uploading the image to Wikimedia, told the Telegraph: “There has been some confusion over who owns the copyright. As Wikimedia is based in the US, we are guided by their law, which says that works that originate from a non-human source can’t claim copyright. The work did not originate from Mr Slater as by his own admission he did not take the picture, the monkey did. However monkeys can’t and don’t own copyrights.”

“he who takes the selfie owns the selfie”

This legal pseudo-doctrine encompasses two legal terms “authorship” and “taking/capturing”. Technically, there are three parties in this entire episode: a UK wildlife photographer, a US website and an Indonesian macaque. Thus, we have to look in to the Copyright laws on each of these countries to analyze the legal position of the impugned Copyright.

  • Author

Under US Copyright Law, the term ‘authorship’ implies that, for a work to be copyrightable, it must owe its origin to a human being.[2] Materials produced solely by nature, by plants, or by animals are not copyrightable.[3]

Under the UK’s Copyright, Designs and Patents Act, 1988, the copyright in an artistic work such as a photograph is owned by the person who creates it.[4] And, under English law, “person” means human or corporate entity, but does not include animals.

Under Indonesian Copyright laws, the person deemed to be the Author.[5]

Mr. Slater can file a suit for Copyright infringement at of the countries where the photograph has been used without authorization. But none of the countries among UK, US and Indonesia have given recognition to the work created by animal. And it is an undisputed fact that Mr. Slater himself accepted that monkey clicked the picture. Hence, the claim of Wikimedia, that the impugned photograph falls within the ambit of Public domain, is more apt and suitable. It is worth noticing that Indonesia and Britain are the members of Berne and TRIPs conventions and hence, if the suit is filed in UK (as it is most likely) then the impugned photographs will be treated in the same manner as under UK copyright law.

  • Effect of Ownership of Camera

As the general rule of all Copyright law, it is formulated to protect the creators of artistic works and not the owners. The Copyright protection is given for incorporeal property and camera, being a movable property, is a corporeal property. Under US Copyright laws, mere ownership of a book, manuscript, painting, or any other copy or phonorecord does not give the possessor the copyright. The law provides that transfer of ownership of any material object that embodies a protected work does not of itself convey any rights in the copyright.[6]

Under an earlier copyright law – the UK Copyright Act 1956 – the author of a photograph was defined as the person who at the time the photograph was taken “owned the material on which it was taken but under Copyright, Designs and Patents Act, 1988, author, in relation to a work, means the person who creates it[7] and the author of a work is the first owner of any copyright in it[8].In the instant case Mr. Slater is neither the author and hence he cannot be termed as owner of copyright under UK copyright laws.

Under Indonesian Copyright law, the strict interpretation of Article 7 read with Article 9 of the Indonesian Copyright Act leads to the conclusion that Indonesian government is the rightful owner of the impugned copyright. Article 7 of the Indonesian copyright law inter-alia says that if a work is ‘designed’ by one person and ‘worked out’ by another, then the one who designed the work gets the copyright. Going by the words of Mr. Slater, it was he who has setup the camera and it was the Macaque who clicked the photographs. In another words, the macaque has done the designing part while Mr. Slater just left his camera.

Further Article 9 inter-alia says if any legal entity claims right in a work without mentioning its author then such legal entity is deemed to be its author unless the contrary is proved. The impugned photographs are shot at Indonesian National Park. Thus, if Indonesian government, being a legal entity, claims the copyright under Article 9, then it would be just and proper under Indonesian Copyright laws unless the contrary is proved.

Image taken by an assistant

In the instant case, Mr.Slater also contended that the Macaque should be considered as the ‘assistant’ of him as Mr.Slater took all the pain behind setting up the perfect conditions for the selfie while the macaque only clicked the shutter. This claim of Mr.Slater would have been successful under the Copyright laws of UK and USA, if there would have existed any written employer-employee agreement or “work made for hire” agreement between them. If one go by the general laws of Agency, then employee is a person and thus an animal cannot hold an agency. A person can be owner of an animal like a bull in a bullock cart but the bull can’t be termed as an Agent.

  • Test of Agency

The best explanation for Cost-Benefit Internalization theory is based on the moral andeconomic principle that a person must bear the foreseeable consequences ofher voluntary actions. Thus, the principal must bear the consequences ofhiring an agent to the extent it is foreseeable that harm might result from theagent’s unauthorized acts.[9] A person may include artificial or natural person but in no way it will include animals. Although, sometimes, the owner of an animal may be held responsible for the act of his animal but won’t amount to agency.

Under UK Copyright laws, if an artistic work is made by an employee in the course of his employment, his employer is the first owner of any copyright in the work subject to any agreement to the contrary.[10] No agreement can be signed with or by an animal. Thus, an animal cannot be termed as an employee under sec. 11 of Copyright, Designs and Patents Act 1988 and thus Macaque cannot hold the copyright.

  • “Work made for hire” Agreement

Section 101 of the Copyright Act (title 17 of the U.S. Code) defines a “work made for hire”. A work made for hire[11] is either

  • a work created by an employee as part of his/her regular duties. A person is an employee if the hiring party has the right to control the manner and means by which the work is created; or
  • a specially commissioned work for certain categories of works and only if there is a written agreement between the employer and employee stating that the work is made for hire.

Thus, under US Copyright law also, an employee is a person. Therefore, a macaque cannot hold a work made for hire agreement under US copyright laws making the claim of Mr.Slater invalid.

Joint work

One possible way out for successfully claiming the copyright under laws of UK, USA and Indonesia might be that it is a joint work. According to the US Copyright Laws[12], the copyright of the work is initially held by the author of the work.The authors of a joint work are co-owners of copyright in the work. Further, Section 101 provides that:

“[a] ‘joint work’ is a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole”.

Therefore, in the present case, the court could find that the monkey selfies were works of joint authorship between the macaque and Mr.Slater. This would then allow Mr. Slater to exercise economic rights over the works of joint authorship between human and non-human authors.[13]

  • Liability of Wikimedia

As per, Digital Millennium Copyright Act enacted in 1998 stated that the Internet Service Provider (ISP) cannot be held liable for transmission of copyright infringing content except when such ISP remove such content after a proper notice regarding copyright violation has been received from the copyright owner. It is important to note that this notice unlike other notices must: be in writing, be signed by the copyright owner or the owner’s agent, identify the copyrighted work claimed to be infringed (or list of infringements from the same site) and identify the material that is infringing the work.

Under the UK Copyright law,[14] “work of joint authorship” means a work produced by the collaboration of two or more authors in which the contribution of each author is not distinct from that of the other author or authors. In the instant case, both the macaque and Mr.Slater have contributed for the said photograph. The setting up of camera and other instruments weighs as equal importance as clicking the shutter by Macaque. Hence, under UK copyright law, the said photograph can be termed as a work of Joint authorship.

Under Indonesian Copyright Laws[15], author include joint authors who have either inspired in creation of work based on several parameters such as intellectual ability, imagination, dexterity, skill or expertise. In the instant case, the dexterity of Mr. Slater cannot be questioned as he is a professional wildlife photographer but the things are not same for Macaque. There is grey area of discussion that whether a macaque possesses intellectual ability, imagination, skill or expertise. Not only that, we all know that macaque may possess skills such as climbing trees but can it be termed as Intellectual ability under Intellectual property laws. Thus, Indonesian law requires interpretation in this area of law.

Conclusion

Though various legal aspects of the case have been brought out and discussed above with reference to laws of respective countries, US copyright regulators have recently interpreted chapter 300 of US Copyright office and issued clarification on the subject matter without specifically mentioning the impugned image that has direct bearing on the case. The clarification in substance means that the subject selfie is not subject to copyright under US Copyright laws. The clarification states that in a classic case of Burrow-Giles Lithograohic Co. vs. Sarony[16], it has been stated that the copyright laws only protects “fruits of intellectual labour” that “are founded in the creative powers of the mind”. Because the copyright law is limited to “original intellectual conceptions of the author”, the office will refuse to register a claim if it determines that a human being did not create the work.[17]In the instantcase,work was neither founded nor originated by either of Mr, Slater or Macaque. It may be termed as natural occurrence or better to say an accident. Thus, according to US copyright office, neither Mr.Slater nor macaque used any intellectual labour or creative power in this accidental episode, and therefore neither has claims to the copyright.

References

[1]Wikimedia Commons (or simply Commons) is an online repository of free-use images, sound, and other media files. It is a project of the Wikimedia Foundation.

[2]Copyright Compendium no.503.03(a)

[3]Copyright Compendium no. 202.02(b)

[4] Section 9, Chapter 48, Copyright, Designs and Patents Act 1988

[5] Article 5 of Law of the Republic of Indonesia

[6]U.S. Copyright Office · Library of Congress Copyright Basics circular 1 reviewed: 05⁄2012

[7] Section 9, Chapter 48, Copyright, Designs and Patents Act 1988

[8] Section 11 of Copyright, Designs and Patents Act 1988

[9] “A Theory of Agency Law” by Paula J. Dalley, Professor of Law, Oklahoma City University. University of Pittsburg Law Review,        [Vol. 72:495]

[10] Section 11(2) of Copyright, Designs and Patents Act 1988

[11] United States Copyright Office, Library of Congress available at http://www.copyright.gov/eco/help-author.html

[12]Copyright Act 17 U.S.C. no. 201(a).

[13] “British Photographer, Indonesian Macaque, American Website: Copyright Ownership Dispute Over Monkey Selfies” by Vnzomo in “Strathmore University’s Centre for Intellectual Property and Information Technology Law” available at https://cipitlawstrath.wordpress.com/2014/08/08/

[14] Section 10 of of Copyright, Designs and Patents Act 1988.

[15] Article 1(2) LAW OF THE REPUBLIC OF INDONESIA

[16] 111 U.S. 53, 58 (1884).

[17] Page 8, Compendium : 300, “Copyrightable Authorship: What cane registered”available at http://copyright.gov/comp3/chap300/ch300-copyrightable-authorship.pdf.

About the Author: Mr. Ananya Pratap Singh, an intern at Khurana and Khurana, Advocates and IP Attorneys.

Bose Vs Beats- The Headphone War

There has been great buzz in patent world with the reported news on 25 Jul 2014 of suits filed by Bose Corps against Beats Electronics in US International Trade Commission (ITC) to block US imports of noise cancelling headphones made by Beats Electronics and a mirror suit in Federal District Court in Delaware, USA over the alleged patent infringement of its noise-cancelling technology used in Beats headphones. The patent infringement suit is being viewed by different entities in different perspectives. Is it just a fight by Bose Corporation to protect its IP rights? Or is it a proverbial  David versus Goliath fight– wherein a fifty year old giant Bose Corporation is using its financial might to subdue an eight year old start up company? The timing of this is also raising many eyebrows as this patent infringement suit is being linked to the news about acquisition of Beats Electronics by Apple in May 2014.

Bose and Beats are two of the leading players in the headphone industry and this suit can simply be about Bose Corporation’s desire and right to protect its intellectual property rights. The suit essentially is about noise reduction technology used for noise reduction methods in headphones. Bose contends that Beats Adaptive Noise Cancellation (ANC) technology being used in their headphones Beats Studio ® and Studio ® Wireless Headphones infringes on the Automatic Noise Reduction (ANR) technology which is protected by their following five patents:

  1. US 6717537
  2. US 8073150
  3. US 8073151
  4. US 8054992
  5. US 8345088

Bose in these suits have also informed about their huge investment over an extended period of time in research and development. Bose has further contended that for the last 50 years they have been investing extensively in research, development, engineering, and design of proprietary technologies and their implementations can be seen in their line of products such as noise cancelling headphones. Bose has further sought to be compensated for losses suffered and profit lost because of Beats using their patented technology.

High end Headphone market in 2013 has been valued at $ 1 billion with Beats reported having 60 % of this market share. Bose law suit therefore could be genuine desire to protect its market share especially in US and European markets.

In another perspective, this could be viewed as a fight between Bose and Apple where Bose by targeting Beats Electronics is actually targeting Apple. But this can be actually counter productive since Beats Electronic now with Apple’s financial backing can engage in a long drawn legal battle and take this fight to a legal and logical conclusion. Apple as reported in various news items has just acquired Beats Electronics for $ 3 billion and Apple can be expected to fight hard to protect its interests.

Bose Corporation’s first suit filed with International Trade Commission against Beats Electronics is to stop Beat Electronics from importing its headphones with noise cancelling technology to the United States from China. This action has been taken to prevent Beat Electronics from taking over the market and also to reduce the competition from Beat. Bose Corporation’s second suit against Beat Electronics is to stop them from infringing on their patented technologies.

Further, Bose is not leaving any stone unturned and is taking legal actions against Chinese companies also to make them stop from infringing on the patents held by Bose Corporation. One of the Bose representatives has said in a statement “We are committed to protecting our investment and our customers and defending the patent we own”.

As Apple is already involved in a number of big patent battles especially with Samsung and is one of the top companies with most Patent infringement cases in USA, it will be interesting to see how Apple / Beats are going to react to this and how they are going to defend themselves against this law suit. We have to wait for the decision from the court to see if Beat will be able to defend themselves or if they will prefer the case to get the law suits settled outside the court as was done recently between Apple and Samsung.

Ultimately only legal merits will be considered for outcome of this suit but it will be interesting and fruitful to watch how these big companies defend themselves as the precedent set with these suits could help in formulating future business strategies not only for business entities involved in these law suits but also other business houses.

About the Author: Mr Paras Khurana, Patent Associate at Khurana & Khurana and can be reached at: paras@khuranaandkhurana.com

Vacation of injunction upon invalidation of patent by USPTO ePlus. v. Lawson Software

In a recent judgment, The U.S. Court of Appeals for the Federal Circuit on July 25, 2014, vacated the U.S. District Court’s decision on injunction and contempt orders against Lawson Software and instructed the lower court to dismiss the patent litigation case brought by ePlus, Inc. This decision mainly pertains totwo main issues. Firstly, whether an injunction can continue after the USPTO has cancelled the only claim on which the injunction was based. Secondly, whether the civil contempt remedies based on violation of an injunction are appropriate when the injunction itself has been overturned on direct appeal. The decision can be found here.

 Background of the case:

 ePlus, Inc.,an IT assets selling and financing company, and assignee of U.S. Patent Nos. 6,023,683 (”683 patent hereinafter) and 6,505,172 (”172 patent hereinafter), sued Lawson Software, Inc. (“Lawson”) for infringementin the year 2009 in a district court. The district court found two of the asserted system claims and three of the asserted method claims not invalid, and a jury found that Lawson infringed those claims. The defendant then appealed in Court of Appeals for the Federal Circuit (CAFC) where it was decided that the two asserted system claims (claim 1 of the ′172 patent and claim 3 of the ′683 patent) were invalid, and that two of the three asserted method claims (claims 28 and 29 of the ′683 patent) were not infringed.

It further affirmed infringement of method claim 26. So CAFC remanded the district court to consider what changes are required to the terms of the injunction, consistent with the opinion. On remand, in addition to reconsidering the injunction, the district court also instituted contempt proceedings for the reason that Lawson had redesigned its software against which the injunction order was passed. The district court held Lawson in contempt for violating the injunction, finding that the redesigned products were no more than colorably different.The court ordered Lawson to pay a compensatory fine of $18,167,950 and coercive daily fines of $62,362 until it could show compliance with the injunction.Thus being aggrieved by such order, Lawson appealed the district court’s modified injunction and contempt order in CAFC.In the meantime during proceeding of validity of the said patent claim, USPTO held Claim 26 as invalid during reexamination procedure. Armed with UPSTO decision the defendant Lawson Inc. further appealed in CAFC against the decision given by district court on injunction and contempt of court.

 Decisions given by CAFC

Issue 1

Whether the district court’s modified injunction against Lawson must be set aside now that the USPTO has cancelled the patent claim on which it is based.

 It is well established principle of law that an injunction must be set aside when the legal basis for it has ceased to exist.Citing case of Mendenhall v. Barber–Greene Co. the court recognized that upholding injunctions would be “anomalous in the extreme in connection with patents this court has just held invalid.” Under these authorities, there is no longer any legal basis to enjoin Lawson’s conduct based on rights that claim 26 of the ′683 patent previously conferred as those rights have ceased to exist. Since USPTO found claim 26 invalid, claim 26 no longer confered any rights that support an injunction against infringement. Hence cancellation of claim 26 by the USPTO required vacation of the injunction.

 Issue 2

Whether the civil contempt remedies based on the violation of an injunction are appropriate when the injunction has been overturned on direct appeal?

 It was held that the case is not distinguishable on the ground that the injunction has been set aside as the result of the USPTO proceeding rather than a court judgment. Citing the case of Fresenius USA, Inc. v. Baxter International, Inc. whereit was held that a non-final money judgment of damages for infringement must be set aside where the judgment rested on a patent claim that the USPTO later cancelled. It was held that the cancellation of a patent requires that non-final judgments be set aside because the “cancelled claims are void ab initio,” Similarly, relying on these underlined principle the civil contempt sanctions in this case must be set aside.

 There would not have been any need to decide about the survival of the civil contempt sanctions in case the injunction had been final at the time the district court imposed civil contempt sanctions. Pertinently, the injunction here was not final even though claim 26 had been held infringed. The court unanimously held in Fresenius that even if the court has rejected an invalidity defense to infringement, an “intervening decision invalidating the patents unquestionably applies” as long as “the judgment in [the present] litigation is not final.” In Fresenius, the federal court had previously reviewed the district court’s rulings on infringement and invalidity and remanded the case to the district court to determine the scope of damages and injunctive relief. When reviewing the judgment reached by the district court on remand, the federal court held that the original district court judgment, while “final for purposes of appeal was not sufficiently final to preclude application of the intervening judgment” that led to the cancellation of the patent. It was concluded that the compensatory award for the violation of the injunction must be set aside in light of the cancellation of claim 26. Finally the CAFC remanded the lower court with instruction to dismiss.

 Conclusion:

Thus it can be concluded that the decision is based on the  valid principles of law that when the main subject matter i.e. Claim 26 is itself void ab initio then the order of injunction and the civil contempt to protect such claim cannot exist or say continue to exist and needed to be set aside. Thus the validity of any patent claims per se plays utmost importance in order to determine the rights and liabilities of the parties to the dispute.

About the Author: Mr Sitanshu singh, Patent Associate at Khurana & Khurana and can be reached at:  sitanshu@khuranaandkhurana.com

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