Removal from Trademarks Register Due to Non-Use

Is using and/or commercializing a registered Trade Mark really necessary in India or is simply sitting over it and renewing the same periodically enough to maintain the mark and gain from the protection it accords. Poorva Khandekar, an intern at Khurana & Khurana and 4’th year law student from KIIT Law School, Bhubaneswar explores the nuances of use of a registered mark in view of Section 47 of the Indian Trademarks Act, 1999.

We presently live in an era where time is money and therefore loss of time is equal to loss of money. I begin this piece of writing with this mundane phrase as it might turn out to be of specific interest to persons (artificial and natural) who lose money on unnecessary trademark litigations which could have been avoided, to a certain extent.

Section 47 of the Trademarks Act of 1999 puts forth two interesting scenarios regarding removal of a registered trademark from the trademark register. Under 47(1)(a), if it is proved that the trademark was not registered with a bona fide interest and was not put into use three months prior to the date of application then the trademark may be removed from the register.

Clause 2 of the same section discusses about removal of trademark in case it is left unused for a period of at least five years. This period is calculated from the date of registration upto three months before the filing of application for removal.

The problem area that we have identified today is significant but avoidable. While filing the form TM-1 (the details about the trademark), the status of use of the trademark is to be mentioned. Many of the trademarks are registered as “proposed to be used” as allowed by section 46 of the Act. This information is available to everybody and is generally relied upon by people. As mentioned above, if the mark is not put to use within five years then it can be removed from the register.

Looking through a few recent (or, fairly recent) cases on these points will help us get a clearer picture of the scenario. To begin with, it is essential to understand the meaning awarded to the word “use” in section 47. In a case of Hardie Trading Ltd. v. Addisons Paint & Chemicals Ltd.[1], the Supreme Court laid down that the word ‘use’ may encompass actions other than actual sale of goods or services. The intention to abandon the trademark has to be established by the party who approaches the court for removal of the mark from register. In some other cases[2] the Apex Court has observed that the mere presence of a mark in the register does not by itself prove its use at all. Also, the court has categorized promotional activity in India as a pre-cursor of the market reputation without having effected sales of the products in this country. These endorsements were given the status of validity for proving the knowledge of reputation to the other party and the dishonest intention thereof.

In a Delhi High Court judgment of Pfizer Products Inc. vs Rajesh Chopra[3], the plaintiffs filed a suit for infringement and passing off action on the defendants. In the instant case the propriety rights of a drug sold under the name of “Geodon” were challenged. The plaintiff registered the same in India on 18th July, 1996. The defendant, on the other hand, claimed proprietorship of ‘Geodon’ and use of the mark since 1st of June, 2003. One of the major contentions of the defendants was that the plaintiffs have failed to show use of the trademark since the registration and hence the mark is liable to be struck off from the register so as to leave a room for the defendant to market his product under the trademark. The balance of convenience favoured the plaintiff as it is a global player, selling the drugs by this name in more than 40 countries. Though, sale of those drugs in India could not be established, the importance of copying the trademark of such a global product in the field of medicine was established. Hence the trademark was not removed from the register.

In Vishnudas Trading as Vishnadas Kishendas Vs. Vazir Sultan Tobacco Co. Limited[4], the Supreme court laid down that “a trader or manufacturer who is trading in or manufacturing only one or some of the articles or goods under a trade mark and has no bona fide intention to trade in or manufacture the other articles or goods falling under that class but has obtained registration of its trade mark under that class which covers several other articles or goods, held, registration liable to be rectified by confining it to the specific articles or goods which are actually intended to be traded in or manufactured.” In the instant case, the application was filed to limit the use of trademark “Charminar” to the manufactured class of cigarettes. The registration was obtained in zarda and quiwam too, in which the applicant wished to use the trademark. The court applied the provisions of non-use and ordered rectification in the register.

In another case decided on 6^th January 2012[5], a trademark of a company “Kellogg Company” possessing global recognition was directed to be removed by IPAB for non-use for 22 years. The appellants claimed that their products were basically chewing gum, bubble gum and dairy products which were not likely to cause confusion in the minds of consumer for the products of breakfast global giant “Kellogg”.

After scrutiny of these cases, we have a few suggestions to make. If you are a trademark owner, then the time to change the status of your trademark from “proposed to be used” to used shall depend on these few factor:

• You have started popularizing your products/services, though the manufacturing has not yet started.
• You have started proceeds relating to establish a market, like- hiring an authorized agent for marketing, etc.

For the purpose of initiating this change in the register, Form TM-16 has to be submitted along with a fee of Rs. 500 to the Trademark Registry. If you wish to initiate this change in someone else’s trademark then resort to Form-26 which has to be submitted with a fee of Rs.3000.

Thus, filing of this change (by Form-16) may result in enabling information to other parties who wish to take you to the court of law for “non-use” of the registered trademark even though it is already being used. Hence, saving your time and the time of court which spent on litigations pertaining to non-use.

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[1] AIR 2003 SC 3377

[2] Corn Products Refining Co. v. Shangrila Food Products Ltd and Consolidated Foods Corporation vs Brandon And Company Private Ltd. [AIR 1965 Bom 35]

[3] 2007 (35) PTC 59 Del

[4] 1997 4 SCC 201

[5] M/s Pops Foods Products (P) Ltd. v. M/s Kellogg Co.

The Copyright Amendment Bill, 2011: Proposed Impact on the Film Industry in India

With the recent developments in the Copyright Act and with the Rajya Sabha very recently passing the proposed amendments in the Copyright Act, 1957, we thought of aggregating the major issues with the current version of the Act and the proposed changes in the Act, and how such changes might impact the overall rights of the stakeholders, particularly the ones in the Music and Media Industry. Here is what Rupkatha Basu, an Intern at Khurana & Khurana and 3’rd year student at KIIT School of Law, Bhubaneswar has to say:

When the legendary lyricist Javed Akhtar raised a furor demanding Amit Mehra and Apoorva Lakhia to seek permission from him before opting to remake the cult Bollywood movie Zanjeer, the question arose, is his demand lawful or even justified? The argument that Akhtar raised based on the moral rights of the creator may hold good in his case, but the right to integrity as u/s 57 of The Copyright Act,1957 definitely perishes once the work is made a part of a cinematograph film. There is increasing demand in the film industry to give more rights to the performers, the composers, the lyricists and most importantly the directors. This is because at present, producers of films are keeping all rights with themselves. As a result the lyricists and singers are not getting royalty in case their works are used for commercial purposes.

In the wake of such a scenario comes, The Copyright Amendment Bill, 2011. It was first introduced in the Rajya Sabha in November, 2010 but later on was recommended to the Parliamentary Standing Committee. The PSC has put forth certain recommendations and the final result is the Amendment Bill, 2011.

The Present Law

Section 2(d) of the Copyright Act, 1957 states that in relation to a cinematograph film or sound recording, it is the producer who is the sole author of the work. Reading section 17 along with this, it becomes clear that the producer is the first owner of the copyrighted work. It leaves no doubt that it is he who solely has all the rights and thus only he can assign or transfer it. The lyricist, composer, artists, script-writer, even the director are appointed by him and thus he also holds the copyright being the employer since the work has been created during the course of the employment. The Director, though being the brain behind the film, does not hold any right whatsoever on the movie other than the moral rights. He is not a performer within the meaning of section 2(qq) and thus cannot claim rights u/s 38 of the Act. In fact, as per section 38(4), once a performer has consented to the incorporation of his performance in a cinematograph film, all rights u/s 38 are denied to him.

Presently, the lyricist or the composer of the song receives no royalty once the song has been incorporated in a cinematograph film. This is the position subsequent to the decision of the Hon’ble Supreme Court in its landmark judgment Indian Performing Rights Society Ltd. v. Eastern India Motion Pictures Association[1] (IPRS Case). In the afore-mentioned matter the Copyright Board initially decided that composers and lyricists retained copyright in their musical works incorporated as sound tracks in cinematograph films and thus can collect fees, royalties and charges with respect to those films. On appeal, the High Court set aside the decision of the Board. Finally, the Supreme Court held that interpreting section 17(b) and (c) in terms of section 13(4) would mean that the rights of the music composer and lyricist are defeated by virtue of the producer becoming the first owner of the copyright. If the author of a lyric or musical work authorizes a film producer to make a cinematographic film on his composition, he cannot later claim copyright infringement.

The Road Ahead: The Copyright Amendment Bill, 2011

The Amendment aims to bring the Indian law in conformity with the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.

The 2010 Bill is aimed to give authorship not only to producers like UTV Motion Pictures but also to directors like Imtiaz Ali and Sujoy Ghosh who actually make the movies. It was proposed to amend sub-clause (v) of section 2(d) to acknowledge both the producer and the principal director as the “authors” of a cinematograph film. But this has been deleted from the 2011 version of the Bill on the recommendation of the Parliamentary Standing Committee.

It is further proposed to insert a “Proviso” to section 18 prohibiting lyricists and composers from assigning away their right to receive royalties other than to the legal heirs or to a copyright society for the collection and distribution. Sub section 9* is also to be added to section 19 providing that no assignment of copyright in any work to make a cinematograph film or sound recording shall affect the right of the author of the work to claim equal royalties with the producer in case of utilization of the work in any form other than as part of cinematograph film or sound recording. This is definitely going to benefit lyricists, composers, scriptwriters when their work is being used outside the movie viz., in commercials. Such modifications were suggested to bring about greater clarity in matters related to royalty.

The Bill proposes to insert section 38A and 38B replacing section 38(3) and (4). These aim to give exclusive rights to the performers and introduce moral rights for them as well. It says that once the performer has consented to the incorporation of his performance in a cinematograph film, he cannot object to the enjoyment of the performer’s rights by the producer.[2] But the “proviso” to it reads that the performer will still be entitled to royalties in case of making of the performance for commercial use. In both UK and US, royalties accruing by utilization of a copyrighted work in a cinematograph film are the legitimate right of the lyricist or the composer.

Section 38B has been proposed in consonance with the existing section 57 which gives moral rights to the author. If the Bill is passed by the Parliament and receives the assent of the President, even the performers can claim moral rights. Injunction or damages can be claimed for mutilating any performance. Thus, when films like Agneepath are remade, the performers of the earlier film can claim damages if their performance is deteriorated by the subsequent performance. Thus, Amitabh Bachchan can definitely have a case if he finds that the remake is by anyway degrading his performance.

Conclusion

The Bill has received widespread support from the International Confederation of Authors and Composers[3]. The restriction on the assignment of the right to royalty may be argued to be in violation of freedom of contract granted as an extension to the freedom of trade guaranteed by Article 19(1)(g) of the Indian Constitution but in reality it is just a reasonable restriction as other welfare legislations like the Minimum Wages Ac, 1948.

The amendment providing joint authorship to the director was required since the film is essentially a director’s brainchild. Moreover, there is no other way provided in the Bill to protect the interests of the Director.

The Bill is no doubt a necessary change required to undo the injustice caused by the IPRS case and to implement the observation made by Justice Krishna Iyer where he had categorically asked the legislature way back in the ‘70s to do something to help the authors and music composers who are left in the cold

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[1] 1977 SCR(3) 206

[2] Section 38A(2) to be inserted by the Copyright Amendment Bill, 2011

[3] Kirti Dahiya, Cinematographic Lyricists Right to Royalty: Myth or Reality? Journal of Intellectual Property Rights, Vol.6, July, 2011 available at http://nopr.niscair.res.in/bitstream/123456789/12448/1/IJPR%2016%284%29%20335-340.pdf  visited on 14.05.2012

Question of claim amendments by patentee in India

We would discuss hereinbelow the various scenarios when the patentee can seek amendment of the specification and claims of his patent. Further this Article would examine as to when and when not the patent amendment should be allowed during pendency of patent infringement suit. The Author, at the end, presents a hypothetical case to raise questions unanswered by Indian courts at the moment.

The statutory provisions containing amendment of patent applications/patents are contained in sections 57 to 59. Section 57 explains that an Application for Amendment can be filed to the Patent Office any time after grant of the patent, subject to the condition that the Controller would not pass any order of refusal or acceptance during the pendency of a patent infringement suit or patent revocation proceedings. Further Section 58 points out that the High Court or Appellate Board instead of revoking a patent in a revocation proceeding may allow the patentee to amend the specification or claims in case the patent is held to be invalid. All these amendments must be by way disclaimer, correction or explanation and without going beyond the scope of the unamended specification (Section 59).

So the two scenarios seem to be clear:

1. One is when the Patentee can file Application of Amendment at any time after the grant of the patent.
2. Second is when patentee can amend his specification or claims after Application for revocation is filed against him and his patent (first independent claim) is held to be invalid.

We would now discuss the third scenario that is the amendment by the patentee during the pendency of a patent infringement suit. In one case before the Delhi High Court in 2009, the patentee (plaintiff) filed an application for amendment (under section 58) of claim 1 during pendency of patent infringement suit. (AGC Flat Glass Europe SA Vs Anand Mahajan and Ors) The patentee added words “a sensitizing material, typically tin” in claim 1 on a mirror without copper layer in its coating.

The question was whether this amendment was allowable or not. The defendant contented that this amendment changes the scope of the original invention. On this, the court referred to UK decisions and divided such amendments into two categories: “the first one is a situation where the patentee has been apprised of prior art by an opponent and amendment is undertaken to overcome the prior art; the second is a situation where the patentee himself has been aware of the prior art but has never taken steps to amend the patent on his own. UK Courts have held the second situation as being inexcusable, where the patentee must not be allowed to amend his patent”. The second category did not apply to this case. The amendment was held to be allowable in this case.

The Court pointed that the amendment was within the scope of the invention as the description clearly mentioned the presence of a sensitizing process as one of the three stages in manufacture of mirrors and patentee’s amendment is by way of explanation.

Till now it becomes clear that the Court may allow the patentee to amend his specification or claim during the pendency of infringement proceedings, of course subject to the conditions of Section 59.  However, there are no existing decisions upon certain other facts which I would like to bring here by way of a hypothetical case. Suppose, a patent has been granted to an Applicant in 2008 in India whose equivalent United States patent was granted in 2009. The Indian patent’s first independent claim says,

1. A composition comprising “A” and “B” in weight percentages of “x to y” %  and “p to q” %.

Consider “A” and “B” as two broad classes of compounds. The dependent claims claim the specific compounds in narrowed concentration ranges.

The first independent in US has been narrowed down by the Applicant to the specific compounds contained in those classes following the rejections of novelty by USPTO in light of the closest prior art Z. The US equivalent’s first claim is:

1. A composition comprising “A₁” and “B₁” in weight percentages of “x₁ to y₁” % and “p₁ to q₁” %.

Now suppose a competitor company launched a product in India containing the specific compounds A₁ and B_1. The patentee (patentee) filed a suit for infringement of its patent. The competitor company (defendant) files a counter statement invalidating the patent’s first independent claim in light of the prior art Z. The Patentee then files an application of amendment amending its claim 1 by bringing the claim limitations of dependent claims into claim 1 to overcome the prior art cited.

Now the question is, should patentee be allowed to do this claim amendment at this stage? From our understanding of the precedents, we believe that the patentee should not be allowed to make such claim amendment. Delhi High Court in the previous discussed case clearly referred to UK decisions on claim amendment issues which point that the second is a situation where the patentee himself has been aware of the prior art but has never taken steps to amend the patent on his own. UK Courts have held the second situation as being inexcusable, where the patentee must not be allowed to amend his patent.

In this hypothetical case that we are discussing, it is clear that the patentee had clear knowledge of the prior art Z since the US patent was granted but he did not take any steps to amend the Indian Patent after that. Further, isn’t the patentee under continued obligation under section 8 to keep the Controller updated of the office actions in other countries till the grant of the patent which the patentee failed to do so in this case. The Indian Patent was granted after the US patent grant. I believe the patentee should feel the brunt now for not amending the claim earlier and in this case, the patent should not only be revoked on grounds of anticipation, but also wrongful obtainment of patent Section 64 (1)(c). Further, if such claim amendment is allowed, the patentee, as a precedent, would always get a free hand to amend his claims anytime during the patent life, and to draft the first claim unreasonably broad, knowing fully well of the invalidation actions that can be put on in front of him post the grant of the patent.

About the Author: Meenakshi Khurana, Patent Specialist at Khurana & Khurana, Advocates and IP Attorneys.

Viacom vs. YouTube

Technology seems to have found its place in the courtrooms also, these days. Viacom, an American global mass media company, sued YouTube, a video-sharing site owned by Google on the basis that YouTube had indulged in rampant intentional copyright infringement of videos which were originally owned by Viacom. This suit was for a mind boggling $1 billion.

YouTube, being popular among the masses, gets 800 million users a month and roughly 60 hours of new videos are uploaded to the site every minute. Viacom filed a complaint against YouTube on March 13, 2007, alleging that the later had uploaded the copyrighted material owned by Viacom. Over 150,000 clips of Viacom were viewed more than 1.5 billion times on YouTube including popular shows like South Park, without the permission of Viacom. The allegation included that YouTube did this to earn more revenue through their advertisements and traffic incurred on their website.  The English Premier League, The Rodgers and Hammerstein Organization and the Scottish Premier League later on, were merged in the suit as the other complainants.

In July 2008, during the pre-trial phase, a U.S. District Court for the Southern District of New York ruling came in favour of Viacom, stating that details of all the users of YouTube had to be tracked by them. There was an uproar over this ruling that the users were now exposed and their privacy was infringed upon. However, Judge Louis Stanton was of the opinion that YouTube is not a ‘video tape service provider’ as provided in the Video Privacy Protection Act 1988 so the data of the users is not protected under this Act. However, later, Google agreed to hand over the data of the users to Viacom and the other complainants, but only after making it anonymous. Although, the setback was that the data of the employees of both the parties, were handed over, without any anonymity.

Viacom argued that both YouTube and its owner Google knew about the infringement but they did not do anything about it. Google and YouTube retaliated back saying that they were entitled to ‘safe harbour’ protection under Digital Millenium Copyright Act (DMCA) since they had insufficient notice of the alleged offences. This defense will not be available to someone who derived a financial benefit from copyrighted material if he had the right and ability to control it.

Under the Act, Web hosting companies are not required to keep a track on every file downloaded by their users.  The DMCA is flawed since it does not cover YouTube. YouTube claimed that they did not know about the infringement and that they do not keep a check on the videos uploaded. This is a completely flawed argument since YouTube removes videos which are reported as spam, if they have pornographic content or if the original owner restricted permission for the public at large.

On June 23^rd 2010, Judge Stanton decided that , “When YouTube was given notices, it removed the material. It is thus protected from liability” under a provision in the Digital Millenium Copyright Act (DMCA). He further stated that while there was an occasion in 2007 when Viacom sent YouTube a single takedown notice for 100,000 videos and the later took them down by the next day.

While YouTube clearly emerged victorious in this case, this decision followed established judicial precedents that online services like YouTube are protected when they work cooperatively with copyright holders to help them manage their rights online.

Viacom has said that it plans to appeal against this decision.  Maybe then the DMCA will be interpreted in a more liberal manner. You can be sure, that all the online service providers would be watching this case, whenever the appeal happens.

 

About the Author: Ms. Madhuri Iyer, Trade Mark Attorney at Khurana & Khurana and can be reached at: Madhuri@khuranaandkhurana.com

Gucci vs. Guess

Copying has become quite common in today’s times, and especially when a lower priced product or a small company imitates an expensive brand. However, a trademark infringement fight between two top most fashion brands is not something that we usually see.

Back in 2009, Gucci sued Guess for trademark infringement over the stylized initial “G”. The proceedings of the case started before the US district court in Manhattan on Thursday (5’th April 2012) after 3 years and is expected to remain in federal court for weeks. This lawsuit is the biggest fashion fight of its kind since Christian Louboutin sued Yves Saint Laurent over his trademarked red soles. “Gucci” is a registered trademark since 1969 and the brand was first used in 1953.  Guess has been accused of specifically ripping off four designs: Gucci’s green and red stripe; the interlocking “G” pattern; the square “G” and the brand name’s delicate script font.  Gucci has been in apparel business for more than 40 years and extremely popular and one of the most luxurious brands all over the world. Here in this case, the plaintiff does not need to prove the well-known stature of the trademark and any kind of dilution of the trademark Gucci will affect its brand value.

Since Gucci is such an established name, it is fair to assume that people are likely to get confused over the logo “G”. When a prudent person looks at a product from both the two brands with their respective logo on it, it’s difficult to differentiate between the two. The most important argument and allegation in this case is that Guess has blatantly copied the shoe design from Gucci and here in this case Guess could be in trouble.  There is a likelihood of confusion and dilution of the trade mark Gucci and it can be assumed that Guess has designed or copied the logo and design of Gucci to confuse the consumers.

However, the CEO of Guess Inc.  claims that Gucci has taken too long to file a law suit. The counsel for Guess claimed that Gucci cannot claim infringement because the company “sat on its rights” for at least seven years before deciding to sue.

According to Bloomberg Business week reports, Gucci has claimed $124 million in damages for $221 million worth of Guess product infringements.

It’s a battle of two heavyweight designer luxury companies and it’s interesting to know that now companies are ready to spend millions of Dollar in litigation to protect their Trade Marks. It will be interesting to read the final outcome of the case and what the Hon’ble US court decides in this matter. Meanwhile, one can check the design of both the shoes and decide how much similarity is there.

 

 

 

 

 

 

Image Source: www.telegraph.uk

About the Author: Mr. Kumar Janmejay, Trade Mark Attorney at Khurana & Khurana and can be reached at: Kumar@khuranaandkhurana.com

 

Setback for Force India

It seems like all is not well in the kingdom of the King of Good Times. Vijay Mallya, who is already facing a host of financial difficulties, with his airlines accumulating losses and statutory authorities putting pressure on the management to pay up the liabilities,has received yet another jolt. His F-1 team Force India lost an IP case against Aerolab SRL, a former designer of Force India cars.

Force India had entered into an aerodynamic development contract with Aerolab SRL in 2008.  The contract was however terminated by Aerolab, following a payment default by Force India in 2009. Aerolab, then started working withTeam Lotus (now Caterham F1).  Force India accused Team Lotus, Aerolab and Lotus Chief Technical Officer Michael Gascoyne (ex Force India Technical Director) of illegally copying Force India Formula One Team’s design from secure files held at Aerolab.  Force India claimed that the Lotus T127 had featured a large number of parts copied from Force India’s design.

Therefore, Force India’s claim for breach of confidence and infringement of Copyright did succeed and they were awarded compensation. Fair enough?

Well, here’s the catch:

All the F-1 teams are bound by the “Concorde Agreement” requiring each team to design almost its entire car apart from the engine, gearbox and tyres. It provides for each team to own the intellectual property rights to its car, and it prohibits the misuse by any team of another team’s confidential information.

Force India alleged that when it parted ways with Aerolab, the latter held substantial amount of confidential information and a number of CAD files that contained access to the designs of Force India’s parts.

Aerolab then joined hands with Caterham F1 and allegedly misused Force India’s design to build a wind tunnel model for them.

Following the publication of Team Lotus wind tunnel model pictures in October 2009, Force India Formula One Team lodged a complaint with the Criminal Court in Italy and subsequently commenced civil proceedings before the Chancery Division of England and Wales High Court, citing concerns in respect of illegal copying of Force India Formula One Team design intellectual property.

Force India contended that the confidentiality obligations in clause 5 of the Development Contract, and in particular clause 5(b), continued after termination, to which Aerolab objected.

It is well-known to all those involved in F1, including everyone connected with the case, that misuse of confidential information attracts severe penalties from the FIA.

The case was heard at length at the High Court during January 2012 with Mr Justice Arnold finding Team Lotus (now known as Caterham F1) and Aerolab liable for copyright infringement and using confidential information respectively and that some parts created using Force India’s confidential information were used on the Team Lotus race cars in the early part of the 2010 season.

Honourable Mr. Justice Arnold ruled that Aerolab had misused certain confidential information as a means of taking a “short-cut” to produce a wind-tunnel model that could begin to be used for testing as soon as possible. However, the court also opined that Force India had come “nowhere near” establishing systematic copying of files and that the misuse mainly consisted of opportunistic copying of CAD files by CAD draftsmen in order to take a short cut.

The court did not find the Chief Technical Officer of Team Lotus, Mr. Gascoyne jointly liable for inducing Aerolab to act in breach of Development Contract.There was no direct evidence of any kind to support the claim that Mr Gascoyne made an agreement that Force India’s CAD files would be used as the starting point for the design of the Lotus model.

The court awarded Force India €25,000 compensation for the accidental usage of a small amount of 2009 data. Since, Aerolab had sued Force India for non-payment of dues for which Force India was ordered to pay a sum of €846,230 to Aerolab, the sum of €25,000 would be set off against this amount.

Another noteworthy aspect of this case is the court’s opinion on “trade secret”. The case referred to was Cross J in Printers & Finishers Ltd v Holloway, (1965) 1 WLR 1, (1965) RPC 239 where it had to be considered whether an ex-employee should be restrained by injunction from making use of his recollection of the contents of certain written printing instructions which had been made available to him when he was working in his former employers’ flock printing factory. In was held:

-“In this connection one must bear in mind that not all information which is given to a servant in confidence and which it would be a breach of his duty for him to disclose to another person during his employment is a trade secret which he can be prevented from using for his own advantage after the employment is over, even though he has entered into no express covenant with regard to the matter in hand. For example, the printing instructions were handed to Holloway to be used by him during his employment exclusively for the plaintiffs’ benefit. It would have been a breach of duty on his part to divulge any of the contents to a stranger while he was employed, but many of these instructions are not really “trade secrets” at all. Holloway was not, indeed, entitled to take a copy of the instructions away with him; but in so far as the instructions cannot be called “trade secrets” and he carried them in his head, he is entitled to use them for his own benefit or the benefit of any future employer.”

Force India has decided to appeal against the decision of High Court calling the settlement “totally unrepresentative”, considering the current value of a F1 car somewhere around £15 million.

The UK High Court judgement, in respect of the illegal copying, will now be referred for the consideration of Formula One’s governing body, the FIA, whilst the Italian criminal case against Mike Gascoyne, and others remain pending.

 

About the Author: Mr. Anirudh Sarin, Trade Mark Intern at Khurana & Khurana and can be reached at: Anirudh@khuranaandkhurana.com

First Compulsory License Grant in India to Natco

The Controller General of India passed an order of compulsory license (CL) against Bayer’s patent on drug Nexavar on March 09, 2012, which is India’s first compulsory license and is resulting from India’s first CL application filed by Natco last year which was reported and discussed by us here. The complete CL order is available at the Indian Patent Office website here.

The grant permits Nacto to manufacture and market a generic version of Nexavar for Rs. 8800 for 120 tablets per month treatment (against Rs 284,428 per month by Bayer) in return for paying 6% royalty on sales to Bayer. The order also makes it obligatory for Natco to supply the drug free of cost to at least 600 needy patients per year.

The CL was granted in accordance with the grounds described under section 84 of the Indian Patent Act.

Section 84(1) of the Indian Patent’s Act allows any interested person to make an application to the Controller for grant of compulsory license after the expiry of three years from the date of grant of patent on any of the following grounds:

a. that the reasonable requirements of public with respect to the patented invention have not been satisfied

b. that the patented invention is not available to the public at reasonably affordable price,

c. that the patented invention is not worked in India.

The Controller gave his reasoning and conclusion separately on each of the above three grounds and found that all the grounds are satisfied in granting the CL against Bayer. His brief reasonings are as below:

1.      Reasonable Requirements of public are satisfied [84 (1) (a)]

Controller found that the drug is available to only 2% of the eligible patients and thus reasonable requirements of the public are not satisfied. He noted: “…there is requirement of at least 8842 patients. Even after the lapse of three years, the Patentee has imported and made available only an insignificant proportion of the reasonable requirement of the patented product in india.”  He did not take into consideration the sales of the generic version of the same drug in India by Cipla at lesser prices which was one of the reasons given by Bayer for lesser sales of the patented drug by Bayer in India. The Controller has also taken into consideration the Form 27 (Working of invention statement) filed by Bayer in 2009 and 2010 which show only an insignificant quantum of sales (only Rs. 2 crore for 2009) for the eligible patients.

2.      Non-availability at reasonably affordable price [84 (1) (b)]

Controller concluded that sales by Bayer at a price of about Rs. 2,80,000/- (for a month) constitutes a fraction of the requirement of the public and the only reason for not buying by them is due to no reasonable affordability.  He concludes, “Hence, I conclude beyond that the patented invention was not available to public at a reasonably affordably price…Consequently a compulsory license be issued to the Applicant…”

3.      Non-working in India [84 (1) (c)]

Controller after reading together the international agreements on intellectual property including TRIPS, Paris convention and the Indian Patent statutes including 83, 90, 84(6), came to the conclusion that the “worked in the territory of India” means “manufactured to a reasonable extent in India”. And Bayer failed to manufacture the drug in India even after four years from the patent grant date and further failed to grant voluntary licence for manufacturing in India and thus CL is to be issued to the Applicant.

 What can be the possible implications of the grant? :

• Encouraging  for generic industry: More CLs to follow

Just the other day, even before CL decision came out, one of the top five Indian pharma companies (name undisclosed) discussed with us regarding their interest in filing six CL applications against six patented drugs separately owned by three different big players of the world.

This decision definitely could encourage more generic companies resorting to this route. As we have seen in majority of the generic – innovator patent battles in India, the pricing and public health issues always arise which seems to always go in favour of generic drugs over the patented ones. Further majority of the patented drugs are imported into India and in accordance with this decision, not complying with the “working in the territory of India” condition  which would further the chances of more CL application filings.

• Bayer’s possible appeal to the court

It is strongly speculated that Bayer would appeal the Controller’s decision and try best to protect its IP rights.

• MNCs may consider Differential Pricing structure

This decision may make the MNCs to consider the differential pricing structure for selling drugs for different sections/classes of the public in India. Even the Controller himself in his order brought this point as to why Bayer did not consider differential pricing.

• Very positive for patients in India

This decision definitely would be having positive impacts on the patients suffering from kidney and liver cancers in India, who were not able to afford the such a high cost treatment.

• Other countries may get motivated

This decision may motivate other low and medium income countries to adopt the same provision in their Patent Laws.

• Precedent for the following cases

This is the first decision on Compulsory Licence Application in India and would act as precedent for all possible future cases.

About the Author: The Author of this article is Meenakshi Khurana, Patent Specialist at Khurana & Khurana, IP Attorneys and reachable at meenakshi@khuranaandkhurana.com

MORGARDSHAMMAR AB Vs. MORGARDSHAMMAR India Pvt. Ltd.

Recently, the Honourable High Court of Delhi has restrained Modi Group’s MORGARDSHAMMAR India, a rolling mill equipment manufacturer, from using the MORGARDSHAMMAR trademark. The Court has granted Plaintiff MORGARDSHAMMAR AB a decree of permanent injunction against use of its trademarks or trade name by the defendants MORGARDSHAMMAR India.

Justice A.K. Pathak issued a restraining order restraining India’s joint venture firm with Sweden’s MORGARDSHAMMAR AB from using the trademark on the ground that its Swedish partner’s share in the Indian firm has plunged below 40 percent to 8 percent, thereby impeding the Indian firm of the right to exploit the trademark as per the trademark license agreement amid the two companies.

Plaintiff MORGARDSHAMMAR AB is a registered company in Sweden and is engaged in the business of manufacturing, designing, fabricating and delivering revamps of all sorts of rolling mills including guide system, equipment and spare parts of the rolling mills.

Plaintiff has widespread business worldwide and has proprietary rights in the trade name ‘MORGARDSHAMMAR’ and trademark ‘MORGARDSHAMMAR (Label)”. Owing to plaintiff’s prevalent business worldwide they had applied for and obtained registration in India in respect of trademark “MH MORGARDSHAMMAR” bearing Registration no. 393277 in Class 7 with respect to rolling mills machinery, parts thereof and fittings.

Whilst Defendant MORGARDSHAMMAR India is a joint venture company of Plaintiff MORGARDSHAMMAR AB and Modi Group and was incorporated in 1983 for the purpose of designing, planning, fabricating, constructing, manufacturing, sub-contracting, providing, supplying, installing, commissioning, working, operating, purchase import, exporting, selling and dealing in all kinds of rolling mills including guide systems equipments, spare parts for rolling mills and accessories thereof, acting as consulting engineers, supplier of process knowhow and technology in hot and cold rolling of ferrous and nonferrous metals

In September 1984 Plaintiff, vide a non-exclusive Trade Mark License Agreement permitted the defendant to use its trademarks/trade name i.e. ‘MORGARDSHAMMAR’ on the terms and conditions stipulated in the said agreement. As per the Clause 15(a) of aforesaid agreement, the right of permissive user of the aforesaid trademark will come to an end if the shareholding pattern of the Plaintiff falls below 25 percent.

In November 2009, defendant MORGARDSHAMMAR India in connivance and collusion with the majority shareholders allotted 750,000 equity shares of the defendant to the Mr. U.K. Modi of Modi Group, thereby altering the whole shareholding pattern of the Modi Group ensuing in abridged percentage of shareholding of MORGARDSHAMMAR AB in MORGARDSHAMMAR India from 40 percent to 8 percent. Since the equity shareholding pattern of MORGARDSHAMMAR AB in MORGARDSHAMMAR India has fallen below 25 percent.

Afterwards in December 2009, Plaintiff through their Advocates conducted a search of the records of Registrar of Companies in respect of the Defendant and astonishingly came to know that Defendant without the knowledge of the Plaintiff had allotted its 750,000 equity shares to Mr. U.K. Modi of Modi Group consequently reducing the shareholding of the Plaintiff from 40% to 8%. Therefore, defendant is liable to cease and desist from using the trademark and trade name.

Plaintiff subsequently issued a notice of cessation of the agreement with the Defendant thus prohibiting the Defendant from using the trademarks/ trade name as per Trade Mark License Agreement whereby Defendant was called upon to stop using the trade marks/ trade name within 21 days of the receipt of the notice.

Defendant’s witness Mr. Brajeshwar Dayal Garg submitted that the shareholding of the Plaintiff has been abridged to less than 25% is not disputed and allotment of 750,000 equity shares of Plaintiff to Mr. U.K. Modi of Modi Group is also not disputed, but it is put forth that the decision to allocate 750,000 equity shares to Mr. U.K. Modi of Modi Group was taken in the Annual General Meeting dated 27^th September 2007. And notwithstanding serving notice of the Annual General Meeting to all the shareholders, Plaintiff chose not to attend the meeting. Subsequently, 750,000 equity shares were allotted to the Defendant in the meeting of the Board of Directors held on 25^th January 2008. Accordingly Form 2 was filed before the Registrar of Companies in relation to the Board of Director’s meeting.

Although, once the licence has been terminated by the plaintiff, defendant has no right to persist the use of the trademark and trade name and such use is tantamount to infringement under Section 29 of the Trade Mark Act. Furthermore, defendant can’t even exploit the trademark as its trade name or name of its business concern.

Consequently, the plaintiff MORGARDSHAMMAR AB is entitled for a decree of permanent injunction against use of its trademarks or trade name by the defendant MORGARDSHAMMAR India since as per the Trade Mark Licensing Agreement clause 15(a) was violated according to which the right of the permissive user of the trademark will come to an end if the shareholding pattern of the Plaintiff in the defendant’s company MORGARDSHAMMAR India falls below 25 percent.

The complete judgment is available here.

About the Author: Mr. Hemant Thadani, Trade Mark Associate at Khurana & Khurana and can be reached at: Info@khuranaandkhurana.com

EULA-Look before You Leap!

Ever wondered what is the never ending excruciating agreement that pops up just before you are all set to make an e-mail account, install an application or download software? Apparently, all of us click the “I agree” option without paying much heed to what the agreement says. But, this seemingly impenetrable legal jargon is much more than just a worthless set of pages. End User Licensing Agreement or EULA as it is called is a legal contract between you and the software publisher that spells out the terms and conditions for using the software. It defines the relationship between the provider of software and the end user. Usually, the EULA delineates the amount of computers a user can use the software on,restricts the way a user can use software, such as prohibiting the redistribution of the software or reverse-engineering it andany legal rights that are given up by agreeing to the EULA. Accepting the terms of EULA might even expose a userto third-party monitoring, i.e. allowing other users to access parts of your computer.While the original purpose of EULA was to protect software developers and distributors from having their products unlawfully distributed, that goal has now unfortunately, fizzled out.

Research shows that the average time spent on the EULA by people is 6-8 seconds. Obviously, people don’t understand its implications and just blindly scroll down to save themselves from monotony. You might agree to the EULA’s terms by:

• clicking an “I accept” button during the installation process
• opening the shrink wrap software packaging
• breaking the seal on the software CD
• mailing a registration card to the software publisher
• installing the application
• using the application

You can refuse to accept the terms and conditions of the EULA, but then you can’t legally use the software! Many big names like Facebook, Microsoft, Adobe, Apple to name a few, have some preposterous terms and conditions. Facebook for instance, amended its Terms of Service in 2009 to claim broad rights to users’ content, such as photos and videos. Adobe tried to do the same with Photoshop Express in 2008. An extract from Facebook’s EULA reads, “You grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook.” Another one from AT& T reads, “You agree that, by entering into this Agreement, you and AT&T are each waiving the right to a trial by jury or to participate in a class action.”

In general the following points should be noted about EULA:

• ELUA is legally binding.
• EULA restricts how you can use the software.
• EULA may force you to agree to certain conditions when using the software.
• EULA can limit your ability to sue for damages.
• ELUA might impose terms and conditions that affect your online security and privacy.
• The software you purchase or download might be bundled with third-party software, i.e. EULA covering primary software might ask you install third-partysoftware bundled with it.

EULA is always drafted in a manner to afford maximum protection to the interests of the Licensor (or Software Developer). The following points are clearly set out in the agreement:

• Product Specifications
• Type of License – In case of multiple versions, specific version-wise licenses must be given
• Duration of License – the exact time of commencement and termination
• Grounds of termination – on what grounds can the Licensor terminate the license
• Specifications of the Limited Warranty to be provided by the Licensor
• Legal Jurisdiction

A sample EULA can be viewed here.Following are the most important four parts of an EULA:

• Licensing: The usersare only being “licensed” to use the software and do not have any intellectual rights over the software installed.
• Warranties: Contains a Disclaimer of Warranty.
• Laws: What laws control or apply to the license agreement that the user agree to.
• Liability: Limitation of Liability section that states the extent to which the licensor can be held financially responsible for any mishaps that might incur as a result of the use of the software.

In M.A. Mortenson Co. v. Timberline Software Corp. the plaintiff was a construction company, who used software from Timberline to prepare a bid only to discoverlater that the software led them to underbid by more than a million dollars.It was held that in case EULA seeks to reduce the liability of a company, even to the extent of the software itself being faulty, the company would not be responsible. The court affirmed an order of summary judgment, clearing Timberline of any damages.

Another important aspect to be understood is that download of software gives the user only a “license”to use that software and does not confer ownership, i.e., a software is never sold but the user merelypurchases the license to use it according to the terms and conditions attached with it. The software publisher retains all rights, including copyrights, to the software and accompanying media. The EULA document outlines the terms of the software license, enunciating all rights and restrictions relating to the ownership, use, distribution, and warranty of the software product. In Timothy S. Vernor v. Autodesk, Inc. Vernor was not allowed to sell some old copies of AutoCAD on eBay brought from an architect’s office. The US Court of Appeals for the Ninth Circuit held that the US “first sale” protections didn’t apply to Vernor, because he had not bought the software from a legitimate “owner”,since the architecture firm had only “licensed” the software, and that license could allow a software company to prevent resale, lending, etc. of the software.

Your way out:

• Read EULA before you install the software.
• Consider the software publisher.
• Beware of firewall prompts when installing software.
• Beware of “free” software, especially peer-to-peer (P2P) file sharing software.
• Scrutinize and evaluate any EULA that requires you to allow monitoring of your online activity.

Conclusion:

Awareness and only awareness is the right way to be protected from this trap and the ambush that lies within. Even though the law surrounding EULA continues to evolve, the need of the hour is that the users of software contemplate what impact EULA might have on the security of their computer and personal information and make an informed decision. However irksome it might seem but skimming through the provisions of EULA might not after all be such a bad idea!

About the Author: Mr. Anirudh Sarin, Trade Mark Intern at Khurana & Khurana and can be reached at: Anirudh@khuranaandkhurana.com

Opposition against Monsanto’s European Patent on a virus resistant Melon Plant variety

Dr. Vandana Shiva, an Indian Environmental Activist has lent her support to “No Patent on Seeds”, a European coalition, in opposing the European Patent EP1962578 granted to Monsanto in May 2011. The Patent claims a melon variety having resistance to Curcurbit Yellow Stunting Disorder Virus (CYSDV) with virus resistance traits taken from melon varieties found in India.

The opponents seek complete revocation of the Patent and contend that the Monsanto invention uses conventional breeding methods of crossing and selection to create the new resistant varieties and further contend that this is “bio-piracy” and not invention. The Indian variety has long been registered in international seed banks (PI 313970). The Patent, if granted, could block access to breeding material which inherits genetic conditions that confer resistance.

Article 53(b) of the European Patent Convention (EPC) excludes patents on plant varieties and on essentially biological processes for the breeding of plants. The opponents allege that claim 1 falls under the exemption of Art 53(b) which excludes patents on breeding that are based on crossing and selection.

The opponents also cites the precedent set by EPO on interpretation of the Article 53(b): the two 2010 decisions G2/07 and G1/08 on Broccoli and Tomato varieties respectively, wherein it was decided that the biological processes for “breeding plants are only patentable under the EPC if they comprise steps which materially alter the breeding procedure such that the resulting plants are not obtained by simple recombination of the parent genomes”, in other words it was decided that the conventional breeding could not be patented.

The opponents further argue that the invention is not patentable under under Art 53(a) of the EPC, as being contrary to morality and public order. Dr. Vandana Shiva from Navdanya accuses the patent to violate the Biological Diversity Act and the Plant Variety Protection and Farmers Rights Act. Navdanya is a network of 500,000 seed keepers and organic farmers in India.

The Biological Diversity Act, 2002 was enacted pursuant to Convention on Biological Diversity (CBD) to which India is a signatory.

According to  Section 6 of the Biological Diversity Act, 2002 it is mandatory to seek permission from the National Biodiversity Authority (NBA) for applying for a patent in or out of India over an invention based on biological resources obtained from India. The Section 6(1) says,

6.(1) No person shall apply for any intellectual property right, by whatever name called, in or outside India for any invention based on any research or information on a biological resource obtained from India without obtaining the previous approval of the National Biodiversity Authority before making such application.
Provided that if a person applies for a patent, permission of the National Biodiversity Authority may be obtained after the acceptance of the patent but before the sealing of the patent by the patent authority concerned

Monsanto clearly did not seek approval from the NBA in using Indian melon varieties in developing the alleged new melon variety, and thus could be proven to be a case of bio-piracy under this Act. The opponents further stresses that the duty to implement such measures is already part of the CBD itself (Art. 15.7). Therefore they allege the patent to be against the public order.

The opponents further seek patent revocation on grounds of lack of inventiveness under Article 56 of the EPC and lack of sufficient disclosure and clarity under Article 83. They allege the patent does not describe successfully how to breed a new melon which is resistant to CYSDV.

The “No Patents on Seeds” coalition is supported globally by over 300 NGOs and farmers’ organisations, and has collected about 100000 signatures against patents on plants and animals. The coalition urges the institutions of the EU for revision of European Patent Law to exclude breeding material, plants and animals and food derived thereof from patentability.

The opponents rightly fear the blockage of the access to breeding material which inherits genetic conditions that confer resistance if the patent is not revoked. The breeders’ and farmers’ communities of India and the world eagerly wait for the decision of the EPO.

About the Author: Ms. Meenakshi Khurana, Patent Specialist at Khurana & Khurana and can be reached at: meenakshi@khuranaandkhurana.com