Monthly Archives: December 2016

The Mickey Mouse Debate

Mickey Mouse has always been synonymous with Disney, and has served as their ultimate mascot.Disney Corporation has always been protective of its creations and has ensured that their copyrights and their beloved mascot, Mickey Mouse, never fall into the public domain.  Every time the first Mickey Mouse copyright is set to expire, Disney springs into action to extend the copyright term.

The debate of copyright term duration is a long standing one. Initially, US copyright law provided for a copyright term which lasted for a period of fourteen years from the date of publication. This term could be renewed for an additional fourteen years if the author was still alive at the expiry of the first term. In 1831, the Copyright Act was amended and the term was extended from fourteen years to 28 years, which could be renewed for an additional 14 years.

In 1976 the copyright act went through major changes when the first Mickey Mouse copyright was set to expire. The amendment extended the term of copyright for works copyrighted before 1978 to life of the author plus fifty years after the author’s demise and 75 years for works of Corporate.

With only 5 years left on Mickey Mouse’s copyright term in 1998, Congress again changed the duration with the Copyright Term Extension Act, 1998 (CTEA) providing retroactive extension of the copyright term.It extended the term of protection to life of the author plus 70 years, and for works of corporate authorship to 120 years after creation or 95 years after publication, whichever endpoint is earlier. According to the Act works made in 1923 or afterward will not enter the public domain till 2019 or afterward, depending on the date of production. Disney’s Mickey Mouse is set to expire on 2023 and the debate on extension is set to begin again.

The Debate

So why is there so much debate about how long creative work can be protected by copyright? Copyright provides duality of purpose which is fundamentally at odds with each other. One purpose of copyright is to educate the public culturally by disseminating cultural knowledge. The other purpose is to foster creativity by allowing authors to reap benefits from works for a limited period thus encouraging them to create more works. It is in this battle that the debate for duration of copyright finds place.

The longest debate on duration of term with respect to copyright laws is in the US. Both proponents and opponents of extension have put put forth several arguments in favour of their stand, and this debate is set to resume soon, with the effect of the CTEA expiring at the end of 2018 and the first Mickey Mouse copyright entering the public domain in 2023.

Proponents of extension have maintained that the purpose of copyright is to promote creativity and art by allowing monopoly to the creators, thus giving them an incentive to create more. According to them, by giving exclusive rights to the creator for a limited time, both the author and the public benefit. The purpose of granting exclusive rights to authors isn’t so that they recoup their initial investment, but to let them earn substantial amounts so that they can create more works. In order to achieve this, copyright term must be for a considerable period.

Proponents of extension also argue that if works fall into the public domain they will go unused. If owners know that a particular copyright is going to lapse into the public domain, they would be unwilling to utilize it further, or create derivative works, and the public could lose out.

Another argument put forth by proponents of extension is that due to increase in life expectancy and longevity of business, copyright term must also be extended.Also, with better technology, the lifespan of a created work has become virtually infinite. This means that works can be exploited longer. Therefore, proponents of extension argue that unless copyright term is extended it to match the longevity of owners, and the longevity of the work itself, it no longer becomes an incentive for authors to create more work.

Copyright is as an extension of the creator’s persona. If it gets distorted or tarnished due to lack of protection, creators are discouraged from creating more works, potentially damaging their reputation. This also means that creators will be unwilling to disseminate quality copies of work if they are soon to fall in the public domain and risk being tarnished. This would mean that the public would lose out on culturally rich works.

Opponents of extension argue that authors have always known that their works would fall into the public domain, but this has never deterred them from creating new works. Further, extension of copyright stifles creativity as another person cannot build upon the works of the owner if it has not entered the public domain. Getting permission and licenses deters new creators from building on already existing works. This means the public would miss out on better works.

Opponents also argue that the increase in life expectancy argument is invalid as copyrights are protected for the lifetime of the author. Hence, if the life expectancy has increased it means that the copyright term will automatically increase as well.

When it comes to business entities owning copyrights, longevity of the creator is irrelevant. The opponents of extension have argued that copyrights are borrowed rights from the sovereign. Copyright is not an inherent, but a statutory, right given by the sovereign. However, irrespective of copyright being a statutory right, it needs to foster creativity. When business concerns know that copyright term is limited to a shorter duration, they are discouraged from investing further or creating derivative works. For example, when concerns like Disney know that their copyright over Mickey Mouse is set to expire soon, they would stop creating further derivative works, such as theme parks, products, animated works etc,.

In 2003, a study proved that the last two major copyright changes before CTEA, the Copyright Act of 1976 and the 1988 Berne Convention, had significant effects on copyright registrations.Yet another study, conducted in 2006, proved that countries that extended the terms of copyright from the author’s life plus fifty years to the author’s life plus seventy years anytime between 1991 and 2002, saw a significant increase in movie production.This clearly shows that copyright extension is in the best interest of creativity.

The Indian Scenario

The media and entertainment industry in India is still in its nascent stage. Copyright protection under the Indian Copyright Act is for a period of 60 years from death of the author. In 2008 Yash Raj and FICCI approached the HRD Ministry to extend the copyright term to 95 years like in the CTEA.The ministry welcomed film producers’ recommendations in extension of copyright term for the Copyright Amendment Act, 2010. While Parliament may not have agreed to extending the term of a copyright to 95 years like in the US, they did amend the law dealing with copyright term of films. The amendment has allowed joint authorship of the producer and the principal director for a film. Thanks to the amendment, a principal director will have a copyright protected for 70 years, as opposed to the producer who has only 60 years. This has effectively increased the term of protection for movies from 60 years to 70 years. The momentum for increasing copyright term is just starting and India will soon get to see similar debates as faced by CTEA in the US.

About the Author : Nadine Kolliyil, an intern at Khurana & Khurana, Advocates and IP Attorneys looks into the debate surrounding copyright extension in the US, and Bollywood’s attempt to extend copyright term.

References:

Merk’s patent valid but Teva’s Nasonex generic non-infringing

In Merck Sharp & Dohme Corp.  (hereinafter referred to be as “Merck”) v. Teva Pharms. United States, Inc. (hereinafter referred to be as “Teva”) decided on November 16, 2016, Teva’s application of Abbreviated New Drug Application (hereinafter referred to as “ANDA”) no. 205149 had triggered Merck to file infringement suit against Teva in respect of US patent number 6127353 (hereinafter referred to be as “353” patent) which is currently listed against NDA number of New Drug Application (hereinafter referred to as “NDA”) number 020762. The‘353 patent is set out to expire in April 03, 2018 with Pediatric Exclusivity. NDA 020762 was approved for ‘NASONEX’ having MOMETASONE FUROATE (hereinafter referred to as “MMF”) as active ingredient in the dosage form EQ 0.05MG BASE/SPRAY. Merck further stated in its complaint that Teva’s ANDA application contained certification (PARA IV) that US patent no. 6127353 is invalid and unenforceable and will not be infringed by Teva producing its generic, the complaint also stated that Teva refused to allow Merck access to its ANDA application or samples.

Anhydrous Mometasone Furoate (“MFA”) was earlier patented by Merck in the early 1980s. MFA and MFM are the polymorphs. On July 3, 2014, plaintiff i.e. Merck brought this action alleging infringement. Merck filed an amended complaint on August 17, 2015, which Teva answered on August 31, 2015. Independent claims 1 and 6 and dependent claims 9-12 of the ‘353 patent titled ‘Mometasone furoate monohydrate, process for making same and pharmaceutical compositions’ were asserted by Merck.

Independent claim 1 and claim 6 have been reproduced below for the reference:

Claim 1:

9.alpha.,21-dichloro-16α-methyl-1,4-pregnadiene-11β,17α-diol-3,20-dione-17-(2′-furoate) monohydrate.

Claim 6:

A pharmaceutical composition comprising mometasone furoate monohydrate in a carrier consisting essentially of water.

Teva’s ANDA contains MFA as the active ingredient and has shelf life of 2 years. Merck did not allege the inclusion of MFM in the pre-formulation active ingredient of Teva’s formulation.

Teva had challenged the ‘353 patent on the grounds of double patenting with U.S. Patent 6,180,781 (hereinafter referred to be as ‘781’) and lack of subject matter description. Court rejected both the arguments and found the Patent to be valid. To ascertain whether Teva’s ANDA product contains any MFM during shelf life, Teva presented six different batches of its product to Merck. Merck’s expert, Dr. Victor Young (“Dr. Young”), testified in favor of Merck by placing a high premium on his ability to visually distinguish between MFM and MFA using a microscope. Teva’s expert, Dr. Leonard Chyall (Dr. Chyall), however, contended that protocol required visual observation to be paired with a more accurate method of measurement. Court observed that “Dr. Chyall has offered up a reasonable criticism of such findings. At bar, Dr. Chyall’s testimony is more credible and consistent”. Finally the court ordered in favor of Merck for the issues of validity but declared Teva’s product to be non-infringing the ‘353 patent. In the form 10K submitted with Securities and Exchange Commission on February 26, 2016, Merck apprehended decline the sale of Nasonex after the entry of generics. Here is their take ‘For example, a court has ruled that a proposed generic form of Nasonex does not infringe the Company’s U.S. patent for Nasonex. If the generic form of Nasonex receives marketing approval in the United States, the Company will experience a loss of Nasonex sales.’

About the Author :  Ms. Rashmi, intern at Khurana and Khurana, Advocates and IP Attorneys. For any queries, please write to swapnil@khuranaandkhurana.com.

Simplified account of Design Registration in India

This article is intended with covering the basic FAQs about Design registration in India. For the sake of better focusing, format of questions and answers has been adopted.

Industrial Designs are protected by different laws in different countries, i.e. some countries choose to go for Patent Registration and some go for specialized systems. Unlike USA which has chosen to protect the designs through Patents, India has chosen a sui generis system. In India, Design registration is covered under The Designs Act, 2000.

In India, functionality is protected under Patents and not Industrial Designs which are meant to protect external ornamental or aesthetic appearance such as patterns, colour, lines, shape or surface of the article.

  1. What is Design under the Design Act, 2000?

Section 2 (d) deals with this.

Design means only the features of shape, configuration, pattern or ornament or composition of lines or colour or combination thereof applied to any article whether two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye, but does not include any mode or principle or construction or anything which is in substance a mere mechanical device, and does not include any trade mark, as define in clause (v) of sub-section of Section 2 of the Trade and Merchandise Marks Act, 1958, property mark or artistic works as defined under Section 2(c) of the Copyright Act, 1957.

  1. What is Article under Design Act, 2000?

Section 2 (a) deals with this.

Article means any article of manufacture and any substance, artificial, or partly artificial and partly natural and includes any part of an article capable of being made and sold separately”

  1. What are the benefits of Design Registration?

Registered Proprietor has the exclusive right to apply a registered design to the article in the class in which Design is registered. Rights obtained by Design Registration can be licensed and/or assigned. In case of infringement, damages can be claimed by the registered Proprietor.

  1. Who may apply for Design Registration?

Any person claiming to be the proprietor of any new or original design may apply for registration. A proprietor may be from India or from a Convention Country.

A proprietor may be:

  1. an author of design,
  2. a person who has acquired the design,
  3. a person for whom the design has been developed by the author, or
  4. a person on whom the design has devolved.

The application for registration of design can be filed by the applicant himself or through a professional person (i.e. patent agent, legal practitioner). However, for the applicants not residing in India, address of an agent residing in India can be used as address for service.

  1. Where to apply for Design Registration?

Applications can be filed in either the Design Office in Kolkata or the branch offices of the Patent office in Delhi, Mumbai or Chennai. For e-filing, FAQs available at https://ipindiaonline.gov.in/eDesign1/faqs/index.html can be referred.

  1. Is it necessary to have prototype article before applying for Design Registration?

No, it’s not mandatory to have prototype. However, Design must be capable of being applied to article by an Industrial Process.

  1. What is the correct time to apply for Design Registration?

Application for Design Registration must be filed before making the design available to the Public as not novel Design cannot be given registration. It is also to be noted that Design Registration is granted to whoever files the application first.

 

  1. What are the types of Applications?
  2. Ordinary application: An ordinary application does not claim priority.
  3. Reciprocity application: In case priority of foreign application is to be claimed, it has to be done within six months of filing foreign application. Such applications being filed in India are termed as reciprocal applications. This period of six months is not extendable.
  4. What is considered to be Date of Registration in Designs?

In case of ordinary applications, the date of making the application for registration is the date of registration of the Design.

In case of reciprocal applications, the date of filing the application in the convention country is the date of registration of the Design.

  1. Is there any period of pre-grant opposition for Design registration in India?

No

  1. What is time allowed for putting application in condition of grant?

In a Substantive examination, objections may be raised based on whether criteria of something being called as design as set out by definition is met or not, is Design new/original or not, is Design prejudicial to public order or morality, and is Design prejudicial to the security of India. The period allowed for removal of objections can not exceed six months from the date of filing of the application. However,   said   period   of   six   months   can   be extended  for  a  further  period  not  exceeding  three months  provided  a  request  in  Form-18  is  filed  before the expiry of initial six months. On consideration  of  response  of  the  applicant, if  the Controller  is of  opinion  that  the requirements  of Act and Rules have   not   been   met, the   fact is communicated to the applicant clearly mentioning that the application is liable to be refused for reasons to be detailed and fixing a date for hearing. If the applicant fails to appear for the hearing without any request for adjournment, the application is refused. If written submissions are filed, while the opportunity to  be  heard  is  not  availed  by  the  applicant,  no  further opportunity  to be  heard is  provided  and  the matter   is   decided   based on   the  written submissions. If the applicant complies with all the requirements laid down  under  the  Act  and  Rules,  communicated  in  the form  of  statement  of  objections,  the  application  shall be registered forthwith.

  1. How to know whether any registration already exists?

Two different forms have to be used in two different situations.

When the registration number is known:

Request can be made by any person in form 6 along with the fees and mentioning registration number of the design for which information is required.

When the registration number is not known:

Request can be made by any person in form 7 along with information in his possession. Based on such information, controller causes search to be made in class indicated therein as much as possible. Where Form 7 is accompanied by a representation or specimen of the design, such representation or specimen is to be furnished in duplicate.

  1. What are the criteria for Design Registration?

A design should:

Be new or original registration

Not been disclosed to the public anywhere by publication in tangible from or by use or in any other way prior to the filling date, or where applicable, the priority date of the application for registration.

Be significantly distinguishable from known designs or combination of known designs.

Not comprise or contain scandalous or obscene matter.

Not be a mere mechanical contrivance.

Be applied to an article and should appeal to the eye.

Not be contrary to public order or morality.

Not be prejudicial to the security of India

  1. What is the term of Protection if Design is registered?

The copyright in a registered design may be extended by a period of five years, from the  expiration  of original period of ten years. An  application  for  extension  of  copyright  shall  be filed before  the  expiry  of  the  original  period  of  ten years. A registration of design ceases to be effective on non-payment of extension fee. However, lapsed designs may be restored provided application for restoration in Form-4 with prescribed fees is filed within one year from the date of lapse stating the ground for such non-payment of extension fee with sufficient reasons. If the application for restoration is allowed the proprietor is required to pay the prescribed extension fee and requisite additional fee and finally the lapsed registration is restored.

  1. Is it possible to renew the term of the Design Registration?

No, there is no provision for renewing the term of the Design registration once a period of 15 years is over.

  1. Is Cancellation of registered Design Possible?

The registration of a design may be cancelled at any time after the registration of design.

Petition for cancellation has to be made in form 8

Following grounds can be used for the same:

    That the design has been previously registered in India or

    That it has been published in India or elsewhere prior to date of registration or

    The design is not new or original or

    Design is not registrable or

    It is not a design under Clause (d) of Section 2.

  1. Can the Refusal of Design Registration be appealed?

Yes, the jurisdiction lies with High Court.

  1. Are the abandoned applications published? Can same applicant apply for registration of same Design again?

Abandoned applications are not published by the Design Office. Another application can be made for the same design if Applicant has himself not made the Design available to the public.

  1. What are the remedies available in case of piracy of Registered Design?

In case of piracy of registered Design, a suit for injunction and/or recovery of damages may be instituted against the accused in any court not below the court of District Judge.

Section 22 of the Design Act 2000 provides the legal proceedings to be followed in case of Piracy of Registered Design.

One of the below remedies can be sought against the accused:

  • Paying to the registered proprietor of the design a sum not exceeding twenty-five thousand rupees recoverable as a contract debt provided that the total sum recoverable  in  respect  of  any one design shall not exceed fifty thousand rupees; and
  • Recovery of damages for any such contravention, and an injunction against the repetition thereof, to pay such damages as may be awarded and to be restrained by injunction accordingly

References:

http://www.ipindia.nic.in/faq-designs.htm

http://www.ipindia.nic.in/writereaddata/images/pdf/ten-steps-to-design-application.pdf

http://www.ipindia.nic.in/writereaddata/Portal/IPOGuidelinesManuals/1_30_1_manual-designs-practice-and-procedure.pdf

Simplified account of Copyright Registration in India

This article is intended with covering the basic FAQs about Copyright registration in India. For the sake of better focusing, format of questions and answers has been adopted.

  1. What is Copyright?

Copyright is a right given by the law to creators of literary, dramatic, musical and artistic works and producers of cinematograph films and sound recordings. It is important to note that Copyright does not protect the ideas but protects the expression of the ideas.

  1. What kind of works can be protected by Copyright?

The Copyright Act, 1957 protects original literary, dramatic, musical and artistic works and cinematograph films and sound recordings from unauthorized uses.

  1. What kind of works cannot be protected by Copyright?

Ideas, procedures, methods of operation or mathematical concepts as such, titles, or names, short word combinations, slogans, short phrases, methods, plots or factual information are not protected by Copyright.

  1. Who can file for Copyright registration?

Any individual who is an author or rights owner or assignee or legal heir can file application for copyright of a work.

  1. Where can applications for Copyright be filed?

Applications can be filed both online and through Physical mode. Physical applications have to be directed to:

Copyright Division.

Department Of Industrial Policy & Promotion,

Ministry of Commerce and Industry;

G-30 Super Market August Kranti Bhawan

Bhikaji Kama Palace

New Delhi- 110066

For e-filing, instructions available at http://copyright.gov.in/UserRegistration/frmLoginPage.aspx may be referred.

  1. Can both the unpublished and published works be protected by Copyright?

Yes

  1. Is quality of work important for Copyright registration?

It is the originality of the work that is mandatory for the registration and not the quality of the work.

  1. What is the procedure for Copyright Registration in India?

After application has been filed and diary number has been allocated, applicant has to wait for a mandatory period of 30 days to check if any objection is filed in the Copyright office against applicant’s claim that particular work is created by him. If such objection is filed it may take another one month time to decide as to whether the work could be registered by the Registrar of Copyrights after giving an opportunity of hearing the matter from both the parties. If no objection is filed then application goes for scrutiny from the examiners. If any discrepancy is found the applicant is given 30 days time to remove the same. Therefore, it may take 2 to 3 months time for registration of any work in the normal course.

copyright_blog

Source: http://copyright.gov.in/ 

  1. What kind works of website can be protected through Copyright?

A web-site contains several works such as literary works, artistic works (photographs etc.), sound recordings, video clips, cinematograph films and broadcastings and computer software too. Separate applications have to be filed for registration of all these works.

  1. Whether computer Software or Computer Programme can be registered?

Yes. Computer Software or programme can be registered as a ‘literary work’. As per Section 2 (o) of the Copyright Act, 1957 “literary work” includes computer programmes, tables and compilations, including computer databases. ‘Source Code’ has also to be supplied along with the application for registration of copyright for software products.

  1. What kinds of right are granted to Copyright owner?

Copyright owner has two types of rights related to his work:

Economic Rights: Economic rights include for example right of reproduction, right of performance, right of broadcasting and right of communication which are derived from right of performance, rights of translation and adaptation.

Moral Rights: These are the rights that allow owner to maintain his image. These rights allow author to claim authorship of the work and to restrain or claim damages in respect of any distortion, mutilation, modification or other act in relation to the said work which is done even after the expiration of the term of copyright if such distortion, mutilation, modification or other act would be prejudicial to his honour or reputation. It’s important to note that moral rights remain with original creator even after whole or in part assignment of the work.

  1. What is the term of Protection granted by Copyright?

Term of the protection depends on the type of work. Generally, it’s until the expiration of the 50th year after the author’s death. In case of anonymous work, it’s until 50th year after the work has been lawfully made available to the public. In case of pseudonymous work, it’s until 50th year after the work has been lawfully made available to the public, but if author leaves no doubt about the identity or reveals the identity of his or her work, the general rule applies. In case of Audiovisual (cinematographic) works, it’s 50 years after the making available of the work to the public (“release”) or if such event did not take place, then from the creation of the work. In case of applied art and photographic works, it’s 25 years from the creation of the work.

  1. Is India member of the international treaties related to Copyright?

Except, WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), India is a member of most of the important international conventions governing the area of copyright law, including the Berne Convention of 1886, the Universal Copyright Convention of 1951, the Rome Convention of 1961 and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

  1. Which sections of the Act define what is and what is not infringement of Copyright?

Section 51 of the Act deals with the provisions related to infringement of the Copyright. Section 52 of the Act provides a detailed list of acts that do not constitute infringement. Owner of the copyright can seek criminal and civil remedies against accused infringer.

Reference:

copyright.gov.in/frmfaq.aspx

Simplified account of Trademark Registration in India

We had written an article giving a simplified account of Patenting procedures in India to enable readers who are new to the Patents. Similar attempt is being made here to provide answers to the Trademark FAQs so as to enable readers who are new to the Trademark.

  1. What is trademark? What is mark? What are some examples?

Answer: Trademark can be defined  as “trade mark” means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours;..”.

“Mark” includes a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours or any combination thereof.

Below are some examples of trademarks:

  1. Word: IBM, Google
  2. Fanciful designation: Kodak
  3. Names: Disney
  4. Slogan: Hum hain na! (ICICI bank limited)
  5. Device: pepsi_2007
  6. Number: the 4711 cologne

7.Picture:   lacoste-logo-880x660 Lacoste logo

Registering your trademark helps you secure exclusivity over your mark, helps you get geographical coverage throughout country/region of registration, gives you a complete defence that you are not infringing rights of other person, helps you create brand value.

  1. What does trademark-logo1 and  registeredtm-svg  signify, when can we use them?

Answer:  trademark-logo1 is used to indicate that the trademark is unregistered but this mark is used for promote goods. trademark-logo1 can be used even for trademarks for which registration is not applied to claim use over it.

 registeredtm-svg is used to represent a registered trademark/ service mark that provides the applicant complete ownership and legal rights over the trademark/ service mark.

  1. Who can apply for trademark? Where should trademark application be filed?

Answer:  An application can be made for registration of trademark actually used or proposed to be used by any person claiming to be proprietor of the trademark. In India, for facilitation of the registration of the trademarks, Trademark registry operates from five locations i.e. Delhi, Mumbai, Ahmadabad, Kolkata, and Chennai.  In case of Indian applicants, jurisdiction is decided based on the principal place of business of applicant and in case of foreign applicants, jurisdiction is based on where applicant’s agent or attorney is situated.

More info about jurisdiction and locations of Trademark registry can be obtained from by visiting http://ipindia.nic.in/tmr_new/location_jurisdiction.htm .

For e-filing, manual available at https://ipindiaonline.gov.in/trademarkefiling/UsefullDownloads/User_Manual_etrademarkfiling.pdf may be referred.

  1. What are the general stages of trademark registration?

trademark-flowchart

  1. An optional initial trademark search (identical search or similarity search) may be conducted on the government
  2. Once there is a go ahead for trademark filing, an application for Trademark will be made through relevant forms provided by the trademark office/ Registrar of
  3. In the next step, the trademark office will issue an examination report and formality check report to communicate objections or to request clarifications with the There is no need to file request for examination i.e. examination of trademark is automatic. In this examination report, mark is examined basically on three grounds i.e. distinctiveness, descriptiveness and similarity to the prior marks. To qualify for registration, mark should be distinctive, non-descriptive, and there should not be any similar prior marks.
  4. A reply has to be made to the trademark office in lieu of the reports that may be accepted or may be followed by a The applicant or agent if appointed is required to respond to the examiner’s objection(s) within a period of one month from the date of receipt of Examination Report. Failure to respond to examination report within this specified period can lead to abandonment of application.
  5. If the trademark office is satisfied that the trademark request complies with all the necessary provisions under the act, the mark is advertised before
  6. Once the mark is advertised in trademark journal, it is open for a period of 4 months for third parties to
  7. If no opposition is received during the specified period, the Trademark is deemed to be
  8. Once registered, there is no post-grant opposition.

 

  1. Is the registration of trademark compulsory?

Answer: No. Registration of a trademark is not compulsory. However, the registration is the prima facie evidence of the proprietorship of the trademark under registration. However,  it is to be noted that no suit can be instituted for infringement of unregistered trademarks. For unregistered marks, action can be brought against any person for passing off goods or services as the goods of another person or as services provided by another person. The latter is said to be common law right.

  1. Can a registered trademark be amended at later date?

Answer: Yes, the filed mark is allowed to be amended as per the provision of Section 22 of the Trademarks Act, which allows the amendment of the mark provided it does not amount to a substantial change in the character of the mark as such. It is practice of the Registrar of Trade Marks that if the mark applied as a label mark, any superficial or insignificant character or feature of the said mark, is allowed to be amended, if a request filed in the prescribed format along with 16 copies of the amended label mark.

  1. What is collective Trademark?

The collective mark is owned by an association of persons not being a partnership. It belongs to a group and its use therefore is reserved for members of the group. The primary function of a collective mark is to indicate a trade connection with the association or organization who is the proprietor of the mark. Section 63 of Trademarks Act, 1999 and Rule 128 of the Trademarks Rules, 2002 deal with this.

  1. What is Certification mark?

The purpose of a certification trade mark is to show that the goods or services in respect of which the mark is used have been certified by some competent person in respect of certain characteristics such as Origin, mode of manufacture, quality etc. Section 74 of Trademarks Act, 1999 and Rule 135 of the Trademarks Rules, 2002 deal with this.

  1. What are the modes of filing trademark internationally? Can a foreign applicant claim the priority based on earlier application?

Answer: International registration of trademark is facilitated through Madrid Protocol which allows trademark application in one country/region to take priority from trademark application filed in other country/region. This priority has to be claimed within six months. India is member of the Madrid Protocol with effect from July 08, 2013.

  1. Once registered for what period of time, a trademark is effective? Can a trademark registration be renewed?

Answer: The registration of a trademark is valid for a period of 10 years. It can be renewed every 10 years, perpetually. In India, renewal request is to be filed in form TM-12 within six months before the expiry of the last registration of trademark. If renewal fee is not paid till the expiration of last registration, surcharge has to be paid along with prescribed fee accompanied to form TM-10. If renewal fee along with surcharge is not paid till the expiry of six months after expiration of last registration, trademark is liable to be removed. Once removed, restoration of trademark can be requested in form TM-13 along with prescribed fees and applicable renewal fees. TM-13 can be filed from six months of expiration of last registration till the expiry of 1 year from the expiration of last registration.

  1. Is the trade mark liable for removal on the ground of non-use?

Answer: Yes, a registered trademark can be removed on the basis of non use. Except as excused in clause 3 of section 47 of trademarks act, 1999, a trade mark may be removed on the ground of non-use if:

  1. that the trade mark was registered without any bona fide intention and was not used till a date three months before the date of the application for removal; or
  2. trademark was not used for a continuous period of five year from the date of registration of trademark and application was made after three months from the expiry of five years.

  1. Is the sound or smell registrable as trademark? How are these marks specified?

Answer: Yes, sounds or smells are registrable as a mark. However, they should be capable of being reproduced graphically and should be distinctive. Sound can be represented as musical notations along with the sound recording Smell can be represented as chemical formula along with the sample.

  1. Is a three-dimensional mark registrable?

      Answer: Yes, a three-dimensional mark is registrable.

  1. What is classification of goods adopted in India?

Answer: International Classification of goods and services (Nice Classification) is adopted in India.

  1. What are the grounds for refusal of registration of trademark?

Answer:  Section 9 of the trade marks act, 1999 provides absolute grounds and section 11 provides relative grounds for refusal of registration of India. Trademark laws mandates trademark to be distinctive and non-descriptive in order to get registered. Rationale behind this provision is that non-distinctive or descriptive marks can’t be granted monopoly being generic to the trade and are open for public use without any exclusive rights over the same. Some of the examples of non-distinctive or descriptive marks are give below:

  1. Dalal street for financial services
  2. Best restaurant for food services
  3. Strong furniture for furniture
  4. High tech for technology related goods/services

  1. Can a registered user restrain third party from using identical or similar mark if third party is continuous and prior user of the mark?

Answer: A registered user can’t restrain third party from using identical or similar mark if third party has been continuously using the mark in relation to the same goods or services for which mark of registered user is registered provided third party has been using the mark from a date prior to date of use of registered mark or date of registration, whichever is earlier.

 

  1. Before applying for registration, where can search be done to check if identical or similar marks already exist?

Answer:  In case you wish to carry out your own search (identical as well as similarity), following are the recommended steps for the same:

At the first step, you may check your mark’s availability on a free government portal using the following steps:

  1. Go to the government search portal : https://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx
  2. Select the relevant class of search from a list of 45 different business classes listed here: http://ipindiaonline.gov.in/tmrpublicsearch/classfication_goods_service.htm

For  Wordmark:

  1. Search using the “Contain” in the drop-down instead of “Start With” to have a broader
  2. Please note that Trademark Registry will also object if the name is similar Thus, for better results, search similar sounding words as well. Example: A keyword like Kryzal can have following terms that are similar sounding: Crizal, Cryzal, Creezal, Crisal, Crysal, Creesal, Krizal, Kreezal, Krisal, Kreesal, Krysal.
  3. Also note that the website often encounters downtime error, and sometimes shows “no record found” while that is And thus a minimum of 2 time confirmation is recommended if such a scenario occurs.
  4. Please note that the normal update in the portal is done on an average period of one Thus recent filings will not reflect in the search.
  5. If you find any result similar to your mark and the same/ similar class or same similar business description, the name is recommended to be changed to avoid any objection/opposition during the trademark registration

For Logo:

  1. For a logo, Vienna code classification search is to be carried The relevant Vienna code class can be searched on this interface: http://www.wipo.int/classifications/nivilo/vienna/index.htm#  by clicking on the search button (top left) and then enter the keyword (top right), followed by browse through the category to identify relevant Vienna Classification.
  2. Once the relevant Vienna code is found out, please enter the same in the Search interface using dropdown to select Search Type as “Vienna Code” instead of “Wordmark”
  3. Enter the Relevant Vienna Code in the following format: 1.1.1 will become 010101 while 1.2.12 will become 010212.
  4. Enter the relevant class and Relevancy criteria will be similar to the wordmark

Foreign Filing Permission: Indian Patent System Perspective

Different countries having regard to National Security Considerations and with the intent of having a check on the defence and atomic energy related inventions, have different restrictions in place. While some countries make it mandatory to file Patent Applications in their country before applying in any other country, some countries require only prior permission before applying in other countries.  Here is the link for a quick overview of the requirements of different countries.

While filing Patent application outside India for the invention conceived by Indian resident, it is not compulsory to first file Patent Application in India. However, it’s important to note that if Patent Application is not to be first filed in India, written permission is to be sought in form 25 from the Indian Patent Office. It’s also important that mandate of seeking permission for foreign filing remains there even after filing Indian application for six weeks.

Attention of the readers is also sought to the language of the governing section (reproduced below) of the Patent Act, 1970 which uses the word ‘resident’ and not the citizen. Therefore if the invention has been conceived by citizen/national of any country while he was residing in India, section 39 has to be complied with before applying for foreign Patent Applications.

Official fee for form 25 is as follows:

Natural person(s) and/ or Startup:

E-filing- 1600

Physical filing: 1750

Small entity, alone or with natural person(s) and/ or Startup:

E-filing- 4000

Physical filing: 4400

Others, alone or with natural person(s) and/ or Startup and/ or small entity                        

E-filing- 8000

Physical filing: 8800

 

Regarding timeline, Indian Patent Office has to dispose of such request within 21 days of receipt of such request. However, this timeline changes for the inventions related to defence or atomic energy, where the period of twenty-one days starts from the date of receipt of consent from the Central Government.

Related sections and rules have been reproduced below. Sections dealing punishments in case of failure to comply with relevant sections have also been reproduced.

Section 39. Residents not to apply for patents outside India without prior permission.—
(1) No person resident in India shall, except under the authority of a written permit sought in the manner prescribed and granted by or on behalf of the Controller, make or cause to be made any application outside India for the grant of a patent for an invention unless— (a) an application for a patent for the same invention has been made in India, not less than six weeks before the application outside India; and (b) either no direction has been given under sub-section (1) of section 35 in relation to the application in India, or all such directions have been revoked.

(2) The Controller shall dispose of every such application within such period as may be prescribed: Provided that if the invention is relevant for defence purpose or atomic energy, the Controller shall not grant permit without the prior consent of the Central Government.

(3) This section shall not apply in relation to an invention for which an application for protection has first been filed in a country outside India by a person resident outside India.

Rule 71: Permission for making patent application outside India under section 39.—

(1) The request for permission for making patent application outside India shall be made in Form 25.

(2) The Controller shall dispose of the request made under sub-rule (1) within a period of twenty-one days from the date of filing of such request:
Provided that in case of inventions relating to defence or atomic energy, the period of twenty-one days shall be counted from the date of receipt of consent from the Central Government.

Below given sections deals with the penalties for not complying with section 39:

Section 40:

Liability for contravention of section 35 or section 39.—Without prejudice to the provisions contained in Chapter XX, if in respect of an application for a patent any person contravenes any direction as to secrecy given by the Controller under section 35 or makes or causes to be made an application for grant of a patent outside India in contravention of section 39 the application for patent under this Act shall be deemed to have been abandoned and the patent granted, if any, shall be liable to be revoked under section 64.

Section 118: Contravention of secrecy provisions relating to certain inventions.—If any person fails to comply with any direction given under section 35 or makes or causes to be made an application for the grant of a patent in contravention of section 39 he shall be punishable with imprisonment for a’ term which may extend to two years, or with fine, or with both.

PATENT INFRINGMENT SUIT BY DOLBY AGAINST OPPO AND VIVO

Anjana Mohan, an intern at Khurana & Khurana, Advocates and IP Attorneys deals with the updates in the Patent Litigation between Dolby International and two Smartphone companies Oppo and Vivo over the patented technology by Dolby.

Dolby filed suits vide Suit no CS(COMM) 1425/2016 and CS(COMM) 1426/2016 against various parties including the two major Chinese companies Oppo and Vivo, and their number of affiliated local entity, at the Delhi High Court alleging patent infringement of its technology and for illegally selling phones with Dolby technology  without paying appropriate royalties for use of its patented technologies.

The defendants had filed applications, without prejudice to their rights and contentions, state that to enable them to continue manufacturing and selling goods with the technology in which the plaintiffs claim patent, that they are ready and willing to deposit in this court the royalty as computed and stated in the plaint. The applicants/defendants offer to deposit royalty in this court at the rate of Rs.32/- per unit manufactured /sold/imported. However the counsel for the Plaintiff contended that they have specified the standard royalty charged by them from all licensees and which is graded as per the volume of manufacturing/sales/imports. It was also contended on behalf of Plaintiff that the royalty at the highest rate would work out to about Rs.38/- per unit and that the defendants should be directed to pay royalty at the said rate directly to the plaintiffs in US Dollars, as is being paid under interim orders in a large number of other suits, a compilation whereof is handed over in the court. It was also contended that the defendants should pay also the arrears of the royalty due with effect from the date the defendants started manufacture/sale/import of the goods with the subject technology.

As per the order on the 27th of October 2016, the court ordered that the defendants should furnish the particulars regarding the manufacture, importation and sale of the products on the 5th of the succeeding month. Moreover, the defendants are required to pay on the 8th of the succeeding month the royalty at the rate of Rs.34/- and in return, would allow the continuance of the importation/sale/manufacture of the goods. The directors of the said companies have agreed to be bound by the undertaking of the court.

Further, after much deliberations/arguments/contentions pertaining to the rate of royalty to be paid interim, the Plaintiffs and Defendants has represented to the Hon’ble Court that the parties have worked out an interim arrangement during the pendency of the suit. They have in Court handed over a draft of the interim arrangement which had been perused and found acceptable by the Court. The said terms envisaged the appointment of a Mediator. The counsels state that this Court may appoint any retired Judge of this Court as Mediator and they would pay lump-sum remuneration of Rs.5,00,000/- for mediation, to be shared equally between the plaintiffs and the defendants. Chief Justice A.P. Shah (Retd.) has agreed to mediate as per the recent order dated 14th December 2016.

In the light of the above it would be interesting to note the final verdict in the matter and thus is much awaited.

References:

Hetero’s Subsidiaries not infringing Roxane’s patent on PhosLo

In Roxane Laboratories, Inc. (hereinafter referred to be as “Roxane”) v. Camber Pharmaceuticals Inc., et al. (hereinafter referred to as “Camber”) decided by United States Court of Appeals for the Federal Circuit on November 17, 2016, Roxane had appealed against decision of district court in an infringement suit against Camber and Invagen Pharmaceuticals Inc (collectively referred to as “appellees”), both of which are subsidiaries of Hetero Drugs Ltd. (hereinafter referred to as “Hetero”). The infringement suit was in respect of US patent number 8563032 (hereinafter referred to be as “032” patent). This appeal was from  the  United  States  District  Court  for  the  District  of  New  Jersey  in  No.  2:14-cv-04042-SRC-CLW, Judge Stanley R. Chesler. In March, 2014 appellant i.e. Roxane had filed suit for infringement against the appellees in the district of Ohio. The case was later (in June 2014) transferred to state of New jersey on the basis of convenience of  the parties  and  witnesses  as  a  whole  and  the  balance  of public and private interests.

Appellees manufacture and  sell  calcium  acetate  products  in  elongated  size  00  (“size  00el”)  capsules which are same in diameter and but have a greater length and  a larger fill volume. Calcium acetate is used to treat patients suffering from end-stage kidney failure who have abnormally high serum phosphorous levels. When taken orally, calcium acetate binds to phosphorous in foods and prevents its absorption through the gastrointestinal tract.

Roxane filed a patent on 6 Dec, 2006, the ’032 patent, for a capsule formulation of calcium acetate granules. The ‘032 patent titled ‘Formulation and manufacturing process for calcium acetate capsules’ was asserted by Roxane. This patent has only one independent claim.

In July 2015, the district  court  in  New  Jersey  issued an order construing the claim limitation “size 00 or less.” In favor of appelles. The district court held that the ’032 patent does not clearly state that size 00 also includes family of size 00 including 00el.

Appellant not only challenged construction of claims by court of New Jersey but also challenged transfer of case from state of Ohio to the state of New Jersey.

Independent claim 1 has been reproduced below for the reference:

Claim 1:

A calcium acetate capsule formulation comprising flowable granules comprised of a pharmaceutically acceptable amount of calcium acetate along with other pharmaceutically acceptable adjuvants, wherein said granules are filled into and contained within a pharmaceutically acceptable capsule such that 667 mg of said calcium acetate on an anhydrous basis are present in said capsule that is size 00 or less.

Decision of the Federal Circuit on the transfer of case:

Federal circuit observed that district court had not abused the discretion while transferring the case from Ohio to New Jersey. Federal Circuit observed that district court has wide discretions on transferring the jurisdiction and in the current case, the transfer was well within the powers of the district court.

 Decision of the Federal Circuit on the construction of claim:

Roxane argued that the court made a mistake in interpreting claims as excluding size 00el capsules. According to Roxane, “size 00” refers to either non-elongated or elongated size 00. Roxane maintains that capsule “size” only designates capsule diameter, not length or volume. Hetero responded that court correctly construed “size 00” as designating a capsule of one specific size i.e., one specific diameter, length, and fill volume not a family of capsules and that the limitation “size 00 or less” thus excludes the larger elongated size 00 capsules from the scope of the claims and further the written description, examples and the prosecution history supports the fact that “size 00” refers to standard, non-elongated size 00 capsules as they clearly mention size 00 capsule containing 667 mg of calcium acetate, thus having particular fill capacity. Federal Circuit concluded that 032’ patent and its prosecution history clearly indicates that size 00 refers to standard, non-elongated capsules and Hetero manufacturing and selling calcium acetate size 00el capsules does not infringe Roxane’s patent for capsule formulation of calcium acetate granules.

Federal circuit thus not only rejected the Appellant’s arguments on the transfer of case but also affirmed the construction of the claims by the district court.

About the Author : Ms. Rashmi Goswami, intern at Khurana and Khurana, Advocates and IP Attorneys. In case of any queries, feel free to reach on swapnil@khuranaandkhurana.com.

BRAND VALUATION – APPROACHES AND METHODS

Sakshi Sharma, an intern at Khurana & Khurana, Advocates and IP Attorneys looks into the concept of Brand Valuation, its history, evolution and different approaches and methods thereto.

Introduction:

Brands today are not restricted to marketing or profits made by a company, but are a part of our everyday life. In the light of emergence of concepts of consumer awareness and the new world economy, brands have a quintessential role to play. The term brand, infers to names, terms, signs, symbols and logos that identify goods, services and companies; Brand Value is not just a financial number. As put forth by Ajimon Francis, Indian head and CEO for global brand consultancy Brand Finance, “It (Brand Value) is a measure of several factors like loyalty of customers, the ability of a brand to keep offering newer products and technology, and the connect with consumers, who give it a premium.”

Brands have three primary functions – navigation, reassurance and engagement. To explain this further – Navigation is when the brands help customers to select from the bewildering array of alternatives while Reassurance ensures that they communicate the intrinsic quality of the product or service and assure consumers at the point of purchase while Engagement communicates a distinctive imagery and associations that encourage identification of the brand by customers.It is an obvious assumption that the value that brands carry and the process of their valuation is important.

Brand Valuation and Brand Equity:

Brand Valuation can be defined as the process used to calculate the value of a brand or the amount of money another party is willing to pay for it or the financial value of the brand.

The concept of Brand Value, although similarly constructed to that of Brand Equity, is distinct. To put it simply, while brand equity deals with a consumer based perspective, brand value is more of a company based perspective. As early as 1991, Srivastava and Shocker identified brand equity as a multidimensional construct composed of brand strength and brand value. This indicates that brand equity is a concept a lot broader than brand value.

In order to further this discussion of the distinction between the two, let us consider an example. This specific case concerns the $1.7 billion purchase of Snapple by Quaker Oats in 1994. Quaker Oats’ primary distribution strength was confined to supermarkets and drugstores whereas smaller convenience stores and gas stations constituted more than half of Snapple’s sales. But despite the purchase, Quaker Oats was unable to increase supermarket and drugstore sales enough to compensate for lost convenience and gas station sales and was forced to sell Snapple for $ 300 million just three years later. As seen in this case, Snapple’s Brand Value decreased enormously over the three years that Quaker Oats owned it, but this had nothing to do with it brand equity, which could have been constant or increased owing to the additional exposure in supermarkets and drug stores. What can be concluded from this example is that neither a brand’s purchase price nor a dramatic change in its selling price provides information about the magnitude or movement of a brand’s equity. This also means that while a company may have the highest brand value, it is not necessary that it also has high brand equity. For example, Apple’s Brand Value ID ranked #1 is worth $185 billion whereas its equity is #11 and Coca Cola has the highest Brand Equity.

Evaluating Brands:

Before evaluating brands, two essential questions need to be answered i.e. what is being valued, the trademarks, the brand or the branded business and secondly, the purpose for such valuation. This brings us to the answering what the utility of undertaking brand valuation is. The process of brand valuation is of primal importance not only for the brand and the respective owning company to improve upon the same but also for the purposes to increase the market value and ascertain accuracy in instances of mergers and acquisitions. In other words, brand valuation would comprise of technical valuation which can be utilized for balance sheet reporting, tax planning, litigation, securitization, licensing, mergers and acquisitions and investor relations purposes and commercial valuation which is operational for the purpose of brand architecture, portfolio management, market strategy, budget allocation and brand scorecards. Thus, the application of brand valuation would be for strategic brand management and financial transactions.

Prior Approach:

Earlier research with respect to Brand Valuation was limited to two areas: Marketing measurement of brand equity and financial treatment of brands. The former was used by Keller and included subsequent studies by Lassar et al on the measure of brand strength, by Park and Srinivasan on the evaluation of the equity of brand extension, Kamakura and Russell on single source scanner panel data to estimate brand equity and Aaker and Montameni and Shahrokhi on the issue of valuing brand equity across local and global markets. The financial treatment of brands has traditionally stemmed from the recognition of brands on the balance sheet (Barwise et.al., 1989, Oldroyd, 1994, 1998), which presents problems to the accounting profession due to the uncertainty of dealing with the future nature of the benefits associated with brands, and hence the reliability of the information presented. Tollington (1989) has debated the distinction between goodwill and intangible brand assets. Further studies investigated the impact on the stock price of customer perceptions of perceived quality, a component of brand equity (Aaker and Jacobson, 1994), and on the linkage between shareholder value and the financial value of a company’s brands (Kerin and Sethuraman, 1998).

Current Trend/Practices in Brand Evaluation:

However, Brand Valuation is no longer limited to these two areas anymore. International Organization for Standardization (ISO) came up with ISO 10668 – Monetary Brand Valuation in 2010, which laid down principles which should be adopted when valuing any brand and is popularly followed by most firms indulging in valuation of brands like Interbrand, Finance World and Brand Equity Ten. ISO 10668 is a ‘meta standard’ which succinctly specifies the principles to be followed and the types of work to be conducted in any brand valuation. It is a summary of existing best practice and intentionally avoids detailed methodological work steps and requirements. As per ISO 10668, each brand is subjected to an analysis on three levels – Legal analysis, Behavioral analysis and Financial Analysis. Keeping in mind that the nature and concept of value is difficult to grasp on account of being subjective in nature, these three methods of analysis objectify the valuing of brands.

Legal Analysis is the method that draws a distinction between the trademarks, the brands and the intangible assets involved and defines them as separate entities. After the brand valuer has clearly determined the intangible assets and Intellectual Property rights included in the definition of the ‘brand’ in concern, (s)he is required to assess the legal protection afforded to the brand by identifying each of the legal rights that protect it, the legal owner of each relevant legal right and the legal parameters influencing negatively or positively the value of the brand. Extensive Risk analysis and due diligence is required in the legal analysis and the analysis must be segmented by type of IPR, territory and business category. In other words, the valuer needs to observe and assess the legal protection afforded to the brand by identifying each of the legal rights that protect the brand, the legal owner of each of those legal rights and the legal parameters positively or negatively influencing the value of the brand.

Behavioral analysis involves understanding and forming an opinion on likely stakeholder behavior specific to geography, product and customer segments where the brand is operational. For perusal using this method, it is necessary to understand the market size and trends, contribution of the brand to the purchase decision, attitude of all stakeholder groups to the brand and all economic benefits conferred on the branded business by the brand. Here, the brand valuer must also look into why a possible stakeholder would prefer the brand in comparison to that of the competitors’ and the concept of brand strength which is comprised of future sales volumes, revenues and risks.

Financial Analysis is the most frequently used brand valuation method and uses four approaches – Cost, Market, Economic and Formulary approach. Often, a fifth approach is also considered. Special situation approach recognizes that in some instances brand valuation can be related to particular circumstances that are not necessarily consistent with external or internal valuations. Each case has to be evaluated on individual merit, based on how much value the strategic buyer can extract from the market as a result of this purchase, and how much of this value the seller will be able to obtain from this strategic buyer.

COST BASED APPROACH:

Cost Based approach is the approach more often used by Aaker and Keller and is primarily concerned with the cost in creating or replacing the brand. The cost approach can be further divided into the following methods:

  1. Accumulated Cost or Historical cost method:

It aggregates all the historical marketing costs as the value (Keller 1998).In other words, the method involves historical cost of creating the brand as the actual brand value. It is often used at the initial stages of brand creation when specific market application and benefits cannot yet be identified. However, the shortfalls of this method are that there exists difficulties as to what would classify as marketing costs and subsequent amortization of marketing cost as percentage of sales over the brand’s expected life.In addition to that, it is sometimes difficult to recapture all the historical development costs and this method does not consider long term investments that do not involve cash outlay such as quality controls, specific expertise and involvement of personnel, opportunity costs of launching the upgraded products without any price premium over competitors’ prices. The cost of creating the brand might actually have little to do with its present value.Most alternatives suggested suffer from the same shortcomings but there is one as proposed by Reilly and Schweihs which may be effective. They propose to adjust the actual cost of launching the brand by inflation every year where this inflation adjusted launch cost would be the brand’s value.

  1. Replacement Cost Method:

The Replacement Cost Method values the brand considering the expenditures and investments necessary to replace the brand with a new one that has an equivalent utility to the company. Aaker (1991) proposes that the cost of launching a new brand is divided by its probability of success. Although this method is easy in terms of calculation, it neglects the success of an established brand. The first brand in the market has a natural advantage over the other brands as they avoid clutter and with each new attempt, the probability of success diminishes.

  1. Use of Conversion Model:

Using the method here, one estimates the amount of awareness that needs to be generated in order to achieve the current level of sales. This approach would be based on conversion models, i.e., taking the level of awareness that induces trial that further induces regular repurchase (Aaker, 1991). The output so generated can be used for two purposes: to determine the cost of acquiring new customers and would be the replacement cost of brand equity. The major flaw in this system is that the differential in the purchase patterns of a generic and a branded product is needed and the conversion ratio between awareness and purchase is higher for an unbranded generic than the branded product and this indicates that awareness is not a key driver of sales.

  1. Customer Preference Model:

Aaker (1991) proposed that the value of the brand can be calculated by observing the increase in awareness and comparing it to the corresponding increase in the market share. But he had identified the problem with this being how much of the increased market share is attributable to the brand’s awareness increase and how much to other factors. A further issue is that one would not expect a linear function between awareness and market share.

 In alternative, another method is the Recreation method which is similar to the replacement method but involves costs involved in creating the brand again, rather than simply the costs of replacement. Another distinction that exists between the two is that the value computed through the replacement cost method excludes obsolescent intangible assets.Another method is the residual value method states that the value of the brand is the discounted residual value obtained subtracting the cumulative brand costs from cumulative revenues attributable to the brand.

MARKET BASED APPROACH:

 Market based approach basically deals with the amount at which a brand is sold and is related to highest value that a “willing buyer & seller” are prepared to pay for an asset. This approach is most commonly used when one wishes to sell the brand and consists of methods herein stated:

  1. Comparable Approach or the Brand Sale Comparison Method

This method involves valuation of the brand by looking at recent transactions involving similar brands in the same industry and referring to comparable multiples.In other words, this method takes the premium (or some other measure) that has been paid for similar brands and applies this to brands that the company owns. The advantage of this approach is that it looks at a third party perspective that is, what the third party is willing to pay and is easy to calculate but the flaw in this method is that the data for comparable brands is rare and the price paid for a similar brand includes the synergies and the specific objectives of the buyer and it may not be applicable to the value of the brand at issue.

  1. Brand Equity based on Equity Evaluation method

Simon and Sullivan (1993) believe that brand equity can be divided into two parts:

  • The “demand-enhancing” component, which includes advertising and results in price premium profits,
  • The cost advantage component, which is obtained due to the brand during new product introductions and through economies of scale in distribution.

Hence, they basically estimated the value of brand equity using the financial market value and the advantage of this approach is that it is based on empirical evidence but shortfalls of this approach is that it assumes a very strong state of efficient market hypothesis and that all information is included in the share price.

  1. Residual Method

Keller has proposed the valuation of the brand by means of residual value which would be when the market capitalization is subtracted from the net asset value. It would be the value of the “intangibles” one of which is the brand.

Another alternative approach that is suggested is that of usage of real options as proposed by Damodaran (1996). The variables that need to be calculated are: risk free interest rate, implied volatility (variance) of the underlying asset, the current exercise price, the value of the underlying asset and the time of expiration of the option. This method is useful in calculating the potential value of line extensions but the inherent assumptions in this approach make any practical application difficult.

Income Based Approach:

Income Based or Economic Use approach is the valuation of future net earnings directly attributable to the brand to determine the value of the brand in its current use (Keller, 1998; Reilly and Schweihs, 1999; Cravens and Guilding, 1999). This method is extremely effective as it shows the future potential of a brand that the owner currently enjoys and the value is useful when compared to the open market valuation as the owner can determine the benefit foregone by pursuing the current course of action.

The methods used under the approach are as follows:

  1. Royalty Relief Method:

The Royalty Relief method is the most popular in practice. It is premised on the royalty that a company would have to pay for the use of the trademark if they had to license it (Aaker 1991).

The methodology that needs to be followed here is that the valuer must firstly determine the underlining base for the calculation (percentage of turnover, net sales or another base, or number of units), determine the appropriate royalty rate and determine a growth rate, expected life and discount rate for the brand. Valuers usually rely on databases that publish international royalty rates for the specific industry and the product. This investigation results in a variety and range of appropriate royalty rates and the final royalty rate is decided after looking at the qualitative aspects around the brand, like strength of the brand team and management. This method has an edge of being industry specific and accepted by tax authorities but this method loses out as there are really few brands that are truly comparable and usually the royalty rate encompasses more than just the brand.

  1. Differential of Price to sale ratios method:

The Differential of Price to Sale ratios Method calculates brand value as the difference between the estimated price to sales ratio for a branded company and the price to sales ratio for an unbranded company and multiplies it by the sales of the branded company. Why this method can be used is because information is readily available and it is easy to conceptualize but the drawback is that the comparable firms are a limited few and there exists no distinction between the brand and other intangible assets such as good customer relationships.

  1. Price Premium Method

The premise of the price premium approach is that a branded product should sell for a premium over a generic product (Aaker, 1991). The Price Premium Method calculates the brand value by multiplying the price differential of the branded product with respect to a generic product by the total volume of branded sales. It assumes that the brand generates an additional benefit for consumers, for which they are willing to pay a little extra.The fault in this method is that where a branded product does not command a price premium, the benefit arises on the cost and market share dimensions.

  1. Brand Equity based on discounted cash flow:

The problem faced by this method is the same as when trying to determine the cash flows(profit) attributable to the brand. From a pure finance perspective it is better to use Free Cash Flows as this is not affected by accounting anomalies; cash flow is ultimately the key variable in determining the value of any asset (Reilly and Schweihs, 1999). Furthermore Discounted Cash Flow do not adequately consider assets that do not produce cash flows currently (an option pricing approach will need to be followed) (Damodaran, 1996). The advantage of this model is that it takes increased working capital and fixed asset investments into account.

  1. Brand Equity based on differences in return on investment, return on assets and economic value added.

These models are based on the premise that branded products deliver superior returns, therefore if we value the “excess” returns into the future we would derive a value for the brand (Aaker, 1991). This method is easy to apply and the information is readily available, but there is no separation between brand and other intangible assets and does not adjust, by their volatility, the earnings of the two companies compared, including discount rate.

Other methods also include conjoint analysis, income split method, brand value based on future earnings, competitive equilibrium analysis model, etc. The very fact that there are so many methods worth discussing under the income or economic approach show how accurate and sought after this approach is.

 FORMULARY APPROACH:

 The Formulary approaches are those that are extensively used commercially by consulting other organizations. This approach is similar to the income or economic use approach differing in the magnitude of commercial usage and employing multiple criteria to determine the value of the brand. Within formulary approaches are the following approaches:

  1. Interbrand Approach

Interbrand is a brand consultancy firm, specializing in areas such as brand strategy, brand analytics, brand valuation, etc. It determines the earning from the brand and capitalizes them by making suitable adjustments. (Keller, 1998) The firm bases its brand valuation on financial analysis, role of the brand and brand strength.

The firm attempts at determination of brand earnings by means of using a brand index which is based on 7 factors namely –leadership, internationalization/geography, stability, market, trend, support and protection in the descending order of weightage. This approach is popular and widely appreciated because of its ability to take all aspects of branding into account. The difficulty in this approach is that it is difficult to determine the appropriate discount rate because parts of the risks usually included in the discount rate factored into the Brand Index score. In addition to that, even the capital charge is difficult to ascertain. Aaker reveals that “…the Interbrand system does not consider the potential of the brand to support extensions into other product classes. Brand support may be ineffective; spending money on advertising does not necessarily indicate effective brand building. Trademark protection, although necessary, does not of itself create brand value.”

  1. Finance World Method

The Financial World magazine method utilizes the “brand index”, comprising the same seven factors and weightings. The premium profit attributable to the brand is calculated differently.  This premium is determined by estimating the operating profit attributable to a brand, and then deducting the earnings of a comparable unbranded product from this. This latter value could be determined, for example, by assuming that a generic version of the product would generate a 5% net return on capital employed (Keller, 1998). The resulting premium profit is adjusted for taxes, and multiplied by the brand strength multiplier.

  1. Brand Equity Ten

As stated by Aaker, the Brand Equity Ten Method measures brand equity through 5 dimensions – loyalty, perceived quality or leadership measures, other customer oriented association or differentiation measure like brand personality, awareness measures and market behavior measures like market share, market price and distribution coverage. Brand Equity ten, thus, looks at the customer loyalty dimension of brand equity and the measures to create a measurement instrument.

  1. Brand Finance Ltd.

Brand Finance Ltd. is a UK based consulting organization which undertakes brand valuation by means of identifying the position of the brand in the competitive marketplace, the total business earnings from the brand, the added value of total earnings attributed specifically to the brand and beta risk factor associated with the earnings. On the value so obtained, it discounts the brand added value after tax at a rate that reflects the brand risk profile.

CONCLUSION:

Having looked at the above mentioned methods and approaches, it is clear that brands and the process of valuing them is essential for marketing purposes and profits for the firm that owns them and that the developed literature in this arena is indicative of interest taken by various stakeholders and academicians. However, despite the variety of methods available and their respective comprehensibility, the prominent problem that emerges time and again is the lack of uniformity in the methods adopted and the results so achieved as there exists large amounts of variations in the valuation amount obtained. This can be clearly understood upon considering the case of Kingfisher Airlines and their valuation as when the brand was evaluated by Grant Thornton LLP in 2011, the amount was Rs. 4,100 Crores but when SBI, after obtaining the brand as collateral had evaluated the brand after acquiring it as a collateral against the loan of over Rs 9,000 Crores, the brand was valued at a mere Rs. 160 Crores.This case is indicative not only of the lack of uniformity in valuation but factors like time, market reputation or adverse circumstances like the company declaring bankruptcy being variable and affecting the process of brand valuation. Depending on the method adopted for brand valuation, these factors may or may not affect the value. It is true that this process of evaluating concerns only the firm owning the brand or the one acquiring it, the existence of a supervising authority would evade the variation and subsequent disputes that arise in addition to preventing companies from alleging inflated cost of the brand. ISO 10668 has provided a uniform standard for brand valuation but the lack of administrative or controlling authority to not only decide disputes but scrutinize and approve of the brand valuation done by the firm would go miles to reduce the problem of ambiguity attached to the resultant amount. Hence, though there has been a lot of progress in the field of brand valuation, there is still scope for more. After all, what is a product, if the consumers don’t relate and recognize it; Brands are here to stay and certainly are assets worth encashing in.