Author Archives: IIPRD

Growing Significance & Relevance of Shadow Counsels

Shadow Counsels (SC) are not a concept popularly exploited in India. However, their potential is yet to be discovered and realized in order for it to be part of our customary practice. The term ‘Shadow Counsel’ is used for any alternate or auxiliary lawyer appointed in case the original lawyer or the main counsel falters in any way. A Shadow Counsel monitors the case but doesn’t control it per se. The counsel is only to concern themselves with the ultimate outcome of the case and not to take active part in the day to day things. As the practice goes, the Shadow Counsel has all the liberty to attend the court proceedings but not to explicitly intervene. The primary job of the SC is determined based upon the stage at which they are called in and for the context of the matter that they are expected to address such as for a commercial dispute, commercial law issue of agreement vetting/drafting, IP portfolio monitoring/ due-diligence/ management/ strategy.

SCs are mostly engaged by corporations to facilitate legal workings of an entity. Some corporations even allow the SC to attend their Board Meetings so that they may foresee the legal repercussions of any decision taken by the Board. However, they are majorly engaged during trials so that they can rationalize the whole process. During an ongoing trial, it is quite frequent that the case deviates from its core issues and get muddled in the ancillary technicalities. The SC engaged with such a case has their primary concern attached with the bigger picture, or simply put, the outcome of the trial in its entirety. The SC is responsible for case assessment, strategy development and sometimes also for settlement evaluation. They can take care of preparing for any contingencies that may befall the main counsel and also remedy it, all to ensure that the trial’s outcome is favorable for their client without undue delays.

During the trial, a part of SCs’ responsibilities also extends to evaluate the main counsel’s work. They rectify any loopholes which may persist in paperwork or a line of argument, after the work of the main counsel is primarily finished. The SC exists as a contingency plan of the trial. They are responsible for vetting the work supplied by the main counsel and exercise their supervisory duties to remedy any lacuna. In most cases, a SC is hired to provide a fresh perspective to the case. They serve the purpose of a very necessary second opinion to either confirm the strategy chosen by the main counsel or to improve it. They add a touch of finesse to the phenomenon and make the process all the more efficient. Their job is to look at the case with a ‘bird’s-eye-view’ which gives them a holistic idea as to what the case needs and what it lacks. They are to foresee any issues which may arise in the trial and also to suggest and adopt preemptive measures to try and mitigate the damage or avoid it altogether.

The need for SC is rapidly being realized due to undeniably crucial role they can play. It is common that during a trial the outcome can sway at any given moment and therefore one can never be too careful. By engaging a Shadow Counsel, a much needed buffer can be added to the resources. More often than not, during a case, man-hours are wasted on the auxiliary things but with the help of an efficient Shadow Counsel  the case can be streamlined and the wastage of resources could be preemptively better utilized. Sometimes the Shadow Counsel is only employed to appropriately handle a particular part of the case and it is their job to ensure that it is concluded successfully and also that it neither interferes with any other aspect of the case nor does the case interfere with that particular task. There must be a particular proclivity to minimize the amount of financial resources engaged by the client. If they proceed to do their job competently then the client can save substantial amount of money since the resources are diverted towards necessary things and unwanted investments are minimized due to the streamlined, strategized approach. They minimize the risks of a major litigation process. Paying heed to their advice can redirect the course of the litigation in the favor of the client rather than going through the long and expensive process of prolonged litigation.

Apart from regular trial procedures, they are known to be engaged for the purposes of a criminal trial, insurance claims, multiple corporate representations, etc. In case of criminal trials, a shadow/standby counsel is appointed by the courts for any party who wish to proceed pro se, i.e. represent themselves without the assistance of a lawyer. The SC so appointed has to only assist the party and not steer the trial. In other cases if the defendant wishes to cooperate with the government or prosecution against the main defendants but cannot do so publically, the court allows the hiring of a shadow counsel who then steps in the interest of the particular defendant alone. This practice is actively undertaken during trials of drug cartels or major crime rings. In case of insurance claims, the Insured can hire a Shadow Counsel to supervise the records collected and made by the Insurer to ensure that the Insurer doesn’t exercise under bad faith, the contrary is also practiced. Furthermore, in cases where the main counsel is to represent the company as well as the employees against the allegations of a third party, a SC is engaged to prevent any conflict of interests which may arise between the interests of the company and that of the employee and they are to step in to either the employee or the company, should a conflict arise. Backup Counsels are also allowed for IPR procedures in the USA; they have the right to conduct business in the stead of the main counsel.

Apart from the known areas mentioned above, the services of SC can be utilized in various legal fields. They can greatly benefit corporations to rationalize their acts and decision making procedure with a view to cut back on any legal backlash. They can furnish efficient due diligence where agreements and legal documents are concerned. The entire functioning of businesses depends on the agreements drawn up by the legal teams of the companies, if these are weak then it leaves the entire entity vulnerable and potentially remedy-less. A Shadow Counsel can rectify any loopholes and provide the company with an iron-clad base to build their business transactions upon. Even with regard to filing and due diligence attached to Intellectual Property Rights, a proficient SC can be delegated the exclusive duty to handle the IP prosecution or litigation of a company to employ their predominant expertise which conclusively shortens the process of strengthening the IP portfolio of the company. The practice is cost-efficient and more importantly saves the company’s time and resources and guarantees the goal fulfillment for the company.

A Shadow Counsel can perform supervisory role or an ancillary function as per the needs of the client. Their valued addition as a legal resource enhances the efficiency of the main counsel and ensures that the objectives of the client are achieved in a cost-friendly and time-saving manner. Their involvement serves as an added benefit as opposed to risking the various loose ends in their absence. Thus, SC should swiftly become an indispensable part in the legal arena.

Author: Yashvi Padhya (Intern) and Tarun Khurana, at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

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Smart Contract In The Indian Crucible

Smart Contracts- First Impressions

Few words have caused as much bewilderment in the Indian setup as “blockchain” and “smart contracts” have. Much excitement has been generated by the coverage of cryptocurrencies in mainstream media, and the general aspiration towards digital transactions. But, the lack of understanding of the workings of the systems has stalled the growth rate of these entities. Currently, Ethereum is one of the most popular platforms that are specifically built for creating smart contracts, while bitcoin was only limited to currency usage.

Before we jump into the question of regulation of smart contracts in India, we need to first understand what smart contracts are and how exactly do they function. Smart contracts, just like standard contracts, contain a set of terms and conditions which are encoded, saved and replicated in the system, and by virtue of the blockchain, administered by the network of computers that run it. And smart contracts are garnering as much attention as they are owing to the benefits they bring in. The foremost of those are that they take out the middleman from the transaction and hence lowering the costs, and making a contractual agreement faster. Smart contracts are also much easier to form as they mostly contain standard contingency terms, which are if in case of an event, or fulfilling of a condition, an obligation must be performed, and are automatically performed in exact accordance with how the user formed the contract. As these contracts are self executing, there is no place for indistinct clauses like uncertain jurisdictions. This makes smart contracts perfect for multiple applications. They can act as a standard agreement between a user and a service provider, for example insurance. They can also act as in instrument for multi party agreements, and come into action whenever the requisite amount of signatures are obtained.

Smart Contracts- Global Regulations

How these smart contracts have been regulated and integrated into the market globally brings out some very interesting things. The US, generally the world leader in regulating new technologies has seen a lot of states rapidly tried to codify smart contracts into law. Arizona set the tone by passing laws to legally identify smart contracts and a few other states like Tennessee followed suit, aiding to the already existing Uniform Electronic Transactions Act, 1999. These laws, as has been passed in a haphazard manner, have come under heavy criticism from few of  the corners of the tech community, who believe that these laws only act as a patchwork and different states having different laws is just a facilitator for pandemonium, adding to the already existing confusion. It has also been said in the MIT Technology Review that smart contracts are meant just to facilitate some of the actions of the actual contract, while a contract remains a much more multi faceted instrument, including standards like reasonability which can’t be a part of a smart contract[1].

This is not to say that some participants have accepted blockchain and smart contracts with open arms. Depository Trust and Cleaning Corporation (DTCC), who run the clearing operations for a vast majority of Wall Street Operations declared their plans to handle trade of about 11 Billion USD worth of credit derivatives in blockchain through smart contracts [2]. Barclays Corporate Bank is already using blockchain to digitize transaction documents and use the technology for improving workflow management and moving an asset of value around. They also see the potential of cryptocurrencies being a part of the mainstream banking system in the next 15-20 years [3]. Japanese telecommunications conglomerate KDDI Corporation has joined the Enterprise Ethereum Alliance and are planning to test how blockchain-based smart contracts can be used for facilitating payments between companies.[4]

The Indian Scenario

The situation in India is no less complex. While blockchain as a technology has been accepted with aplomb, with SBI launching ‘BankChain’ for sharing of KYC data among banks using blockchain, and pharmaceutical sector using blockchain to maintain their records [5] amongst several other applications; the acceptance has been limited to maintaining records and information sharing. Cryptocurrencies haven’t had the same level of acceptance as it is neither a recognized currency nor it is illegal, which makes it  a roadblock for smart contracts. The smart contract has a huge potential in India, with regard to the  payments related to household activities and their monitoring like supplies, e-commerce, the something as fast paced as securities markets, where it could work in tandem with algorithms to make trading systems even more efficient, etc. Any relatively straightforward transaction can use smart contracts to make the whole process much faster, bringing down the costs substantially.

There is no clarity regarding how the smart contracts shall be codified in the Indian Law, if at all they are. The most common questions amongst the legal fraternity involve the status of cryptocurrencies being undefined in any law, and the questions of their taxations. It is a pertinent legal question whether cryptocurrencies can be treated as non monetary consideration for a contract, akin to Commodities Futures Trading Commission recognizing bitcoin as commodity and taxing it accordingly. The dispute resolution mechanism and important aspects like the conscionability of the terms, as covered in the 199th report of the Indian Law Commission [6] which are very essential to the Indian Contract Law remain unclear, and the potential of idea of the terms for award and damages be constituted in the smart contract itself might fail the test of conscionability. Further challenges are provided by the system of validation of the smart contract which is to be done through digital signatures. The Indian IT Act, 2000 puts a limitation on obtaining these digital signatures, and provides that they can only be obtained through a government designated certifying authority as per Section 35. This stands in complete variance with blockchain technology as it uses a hash-key for authorization as an individual identifier and authenticator. This disparity is also extended to the Indian Evidence Act, section 85B which states that an electronic agreement would be considered valid only if it has been authenticated with a digital signature. These two legal checkpoints not only corrupt the authentication process in blockchain through hash-key generation but also disallow any admissibility in the court as evidence.

In conclusion, it is undoubted that even though smart contracts aren’t completely self-sustaining systems, they have tremendous potential in reduction of costs and time worth billions, and making the whole process more secure as all the contracts will leave a clear audit trail. This saving shall benefit both the firms and the customers engaging with them. And concerns regarding regulations exist on multiple fronts. The introduction of smart contracts will pose fresh challenges for the legislature and it remains to be seen whether legislature is able to keep pace with the ever expanding paradigm of blockchain and smart contracts.

Author: Anirudhha Bhatnagar, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at swapnil@khuranaandkhurana.com.

References:

[1]https://www.technologyreview.com/s/610718/states-that-are-passing-laws-to-govern-smart-contracts-have-no-idea-what-theyre-doing/

[2]https://www.reuters.com/article/us-dtcc-blockchain-repos/dtcc-completes-blockchain-repo-test-idUSKBN1661L9

[3] https://www.siliconrepublic.com/enterprise/barclays-blockchain

[4] https://blog.jincor.com/the-japanese-evolution-of-smart-contracts-b9ff463493f5

[5]https://www.innoplexus.com/index.php/blog/five-use-cases-for-blockchain-in-pharma/

[6] 199th report of Law Commission of India on Unfair (Procedural & Substantive) Terms of Contract

Samsung Acquires Hera Wi-Fi Patents Through (Patent Troll?) Sisvel

Sisvel UK Limited (“Sisvel”) arranged and finalized a Wi-Fi patent license agreement between Samsung Electronics Co. Ltd. (“Samsung”) and Hera Wireless S.A. (“Hera”), on June 7, 2018. Hera is the wholly owned subsidiary of Sisvel International S.A., the holding company of the Sisvel Group. The Sisvel Group has companies in major countries across the world such as the United States, Italy, China and Germany, among others.

Hera’s portfolio has over 100 patents across various jurisdictions such as the United States and Japan. The agreement covers a multi-year global license for the patents pertaining to the sale and distribution of Wi-Fi enabled products by Samsung. With this, Samsung has access to the essential patents owned by Hera, which are significant to the Institute of Electrical and Electronics Engineers 802.11 group of WIFI standards.

What are Patent Trolls?

Patent Trolls, or Patent Assertion Entities (“PAEs”) essentially acquire patents without the intent of actually manufacturing or developing products using those patents. In general, patent trolls are notorious for enforcing patent rights against infringers through rough legal practices such as undertaking frivolous litigation (or just the threat of it). They generally target smaller companies that cannot afford the expenses of an arduous litigation and hence would be quicker to settle. Even big companies can suffer harm in courts as was seen in the fight between Apple and VirnetX, a Patent Assertion Entity, over the Facetime and iMessage patents. In April 2018, a federal court in the United States ordered Apple to pay $502.6 million in damages to VirnetX.

Is Sisvel a Patent Troll?

The company is known for acquiring essential patents relating to telecommunication and wireless communication industries. One such example is its acquisition of 450 patents from Nokia, out of which 350 were essential for mobile telecommunication, specifically to 2nd, 3rd and 4th-generation communications standards, including GSM, UMTS / WCDMA and LTE. Sisvel has gained a notorious reputation in the past due to aggressive protection of its patents rights. In 2010, Sisvel called for the German police to raid a booth at the CeBIT and a heavy fine was imposed.

Nonetheless, Sisvel may not be considered a troll in its pejorative sense since it provides licenses for all the patents it owns on reasonable terms, that is, FRAND terms. FRAND is an acronym for fair, reasonable and non-discriminatory terms that an owner of Intellectual Property Rights should provide while granting a license. Sisvel acquires patents and then acts as the ultimate destination for companies to get licenses for all essential patents that they could require for their products. Forbes recognized this and declared Sisvel to be “the Patent troll we actually like”. In conclusion, Sisvel  just might be a company reclaiming the term ‘Patent Troll’ to get rid of its negative meaning and continue revolutionizing the patent licensing landscape.

Author: Aparajita Kaul, Intern at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

Case Summary Of “Coca Cola Company V Glacier Water Industries Ltd.”

This article summarises the judgment of High Court of New Delhi dated 28thFebruary 2018 in the case “Coca Cola Company v Glacier Water Industries Ltd..

Brief Insight Into The Dispute:

Introduction:

This case pertains to the infringement, passing off and unfair competition of registered trademark ‘KINLEY’. Coca Cola Company (hereinafter “the plaintiff) is the registered proprietor of the mark ‘KINLEY’in class 32, which is primarily used by the plaintiff in relation to drinking water. Glacier Water Industries Ltd. (hereinafter “the defendant) were using the mark ‘KINLEY’ for water purification systems using reverse osmosis. The Defendant falsely claimed to have launched their water system in collaboration with the plaintiff no.1’s Indian subsidiary, The Coca Cola India Pvt. Ltd., but no such collaboration exists. The Defendant openly advertised its product using the mark ‘KINLEY’. The Defendant also applied for registration of the mark KINLEY bearing Application No. 2329491 in Class 11 for the specifications”water purifier, water supply and sanitary purpose” claiming use since 1st April, 2011. The Court vide order dated 29.04.2013granted an ad interim injunction in favour of the Plaintiff which restricted the Defendant from using the mark till further orders.

The application is decided ex parte by Justice Manmohan.

Facts:

  1. The Defendant was openly advertising its product, and that the mark KINLEY was displayed prominently on its products.
  2. The Defendant created websites like http://www.glacierswater.com, http://www.kinley.in and http://www.kinleyro.com using the registered mark of the Plaintiff.
  3. The reliefs sought under the prayer clause of the application are;
    a. A decree of permanent injunction restraining the defendant from doing any acts or deeds amounting to or likely to –
    (i) infringement;
    (ii) passing off;
    (iii) unfair competition;
    b. A mandatory injunction to direct the Defendant to transfer the domain name to the Plaintiff.
    c. Costs of the proceedings.
    d. And for such other and further reliefs as the court may deem fit.

Arguments Before The Court:

The arguments advanced by the Plaintiff are –

  • It is contended that the Defendant is advertising its products by displaying the registered mark ‘KINLEY’ on their promotional materials.
  • The Defendant has falsely claimed to have launched their water system in collaboration with the plaintiff no.1’s Indian subsidiary, The Coca Cola India Pvt. Ltd., whereas, in fact, no such collaboration exists.
  • The Defendant has applied for registration of the mark KINLEY for the specifications “water purifier, water supply and sanitary purpose” claiming use since 1st April, 2011
  • The Plaintiff has proved that their sales amounted to Rs.4,229 crores (approx.) and advertising expenses amounted to Rs.839 crores.
  • It is further contended that the Defendant have created websites http://www.glacierswater.com, http://www.kinley.in and http://www.kinleyro.com using the registered mark of the Plaintiff.
  • Also, the Court vide order dated 29.04.2013 granted an ad interim injunction in favour of the Plaintiff which restricted the Defendant from using the mark till further orders.

Decision Of The Court:

The court thus decided;

  1. The plaintiff’s mark ‘KINLEY’ hasacquired reputation and goodwill in the marks in India as well as globally.
  2. The defendants have dishonestly used the ‘KINLEY’ trademark of the Plaintiff in relation to water purification system.
  3. The trademark ‘KINLEY’ used by the defendant, amounts toinfringement and passing off of the plaintiff’s trademark.

Conclusion:

The Courtheld that due to extensive use over substantial period of time, the plaintiff’s mark ‘KINLEY’ have acquired reputation and goodwill in India as well as globally. The Court further observed that as the Defendant have not appeared before the Court, the evidence submitted by the Plaintiff is accepted as true and correct. The Court relied on the case of Ramesh Chand Ardawatiya Vs. Anil Panjwani, AIR 2003 SC 2508 which held that –

A prima facie proof of the relevant facts constituting the cause of action would suffice and the court would grant the plaintiff such relief as to which he may in law be found entitled.

The Court disposed off the case by holding that the trademark KINLEY used by the defendant, amounts to infringement and passing off of the plaintiff’s trademark and the Defendant will compensate the Plaintiff by paying costs.

Note: Several quotations from the judgement are included in this article. The complete judgment can be found here.

Author: Ankita Aseri, Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

Developments In China’s Intellectual Property Law

This article offers an overview of the state of intellectual property protection in China. In the past decade, the People’s Republic of China (PRC or China) has significantly upgraded its intellectual property rights protection regime. In order to provide a background for evaluating intellectual property in modern China, this article deals with the history of intellectual property protection in China and examines the significant new intellectual property laws enacted by China in the recent years.

I. History of Intellectual Property Rights In China

A. ANCIENT CHINA

From the beginning, the control of symbols and creative works was viewed as a state communal right, not put in place to protect individual ownership but in order for the state to assert control over works, particularly its own. China’s first copyright regulation was announced in A.D. 835. It prohibited the unauthorized reproduction of works related to natural events based on the understanding that the Emperor was the only link between them and the people.The first official substantive Intellectual property laws were enacted in the early 20th century. Following this, China enacted its first copyright law in 1910, its first patent law in 1912 and its first trademark law in 1923.[1] But these provided little protection for foreigners and were never well enforced.

B. MAOISM

Maoism, known in China as Mao Zedong Thought, is a political theory derived from the teachings of the Chinese political leader Mao Zedong, whose followers are known as Maoists. It developed from the 1950s until his death in 1976 it was widely applied as the guiding political and military ideology.

With the rise of Maoism, the intellectual property regime then in place was altered under a regime of brutal Cultural Revolution and information control. The system previously in place could no longer exist.[2]The effects of this specific era in China’s cultural, political and legal history have continued to linger on the implementation of its intellectual property regime today.

C. POST MAO CHINA

After Mao’s death China was no longer practicing the isolationist policy it had adhered to under Mao and was instead focused on bringing China back as a major international political player. In1979 China signed the Agreement on Trade Relations between the United States of America and the PRC, allowing for protection of American copyright, patent and trademarks in China[3]. The 1980’s saw China become party to the World Intellectual Property Organization, the Berne Convention, the Paris Convention and the Patent Cooperation Treaty.

However Chinese people did not have legislation relating to intellectual property customs enforcement until fifteen years ago.[4] Furthermore, the legal system is vulnerable to political interference.  Corruption is also intensified by the relatively low salaries of judges and court officials, which makes bribery an enticing option. Lack of legal education becomes an even larger problem.  Furthermore, the case reporting system in the PRC is barely sufficient, making legal precedent almost useless since cases and decisions are not well documented or accessible. Moreover with low damages, the lack of ability to effectively enforce judgments, allegations of protectionism by the courts; a lack of ability to patent certain subject matter, a lack of transparency on legal matters and other factors made China a less desirable jurisdiction.

II. Developments in the Intellectual Property Laws

A. PATENT SYSTEM

In 2015, there were substantial changes to China’s patent laws that expanded the scope of permitted subject matter eligible for patent protection. The State Intellectual Property Office of the People’s Republic of China (“SIPO”) received the most applications in 2015 (1,101,864 filings) and became the first office to receive more than a million applications in a single year[5]. Approximately 1.3 million applications were filed at the SIPO in 2016, more than that received at the US, Japan, Korea, and European patent office combined.  It is worth noticing that around 96% of total applications from China are filed in China and only 4% of the total is filed abroad.  Of the 10 largest PCT filers, China’s ZTE, Huawei Technologies, and BOE Technology now collectively file more than the US and Republic of Korea’s Qualcomm, Hewlett-Packard, Intel, LG Electronics, and Samsung Electronics.  Overall filings of PCT applications increased 44% by Chinese applicants in 2016 and they are now the third largest filers behind Japan and the US.  As a further comparison, China was only behind Japan, the second largest filer, by roughly 2,000 filings[6].

B. China’s judicial System for intellectual property protection.

China has also worked hard to improve its court system.  Since 2014, three specialized IP courts in Beijing, Shanghai, and Guangzhou hear all first instance IP matters in these regions.  These courts include judges with IP training and background to facilitate the proceedings.  Based on the successful establishment of these courts, China’s government has continued to expand the specialized courts and opened IP tribunals in Wuhan, Nanjing, Suzhou, and Chengdu in early 2017. In 2015, Beijing IP court handled 3394 administrative review cases (i.e. judicial review over administrative decision, e.g, rejection of applications). The people’s courts exercise judicial power independently according to law, are subordinate only to the law itself, and are not subject to interference by any administrative organ, public organization or individual.

The other challenging issue was the lack of transparency with respect to legal proceedings. Chinese courts did not routinely publish decisions of the court. At most, appellate level courts would issue end-of-year summaries of a limited number of cases that were considered particularly relevant by a specific court. Since 2014, all judicial opinions are to be published on the China Judgments Online (CJO) with few exceptions. This increased transparency is not only important as China legal system becomes more transparent to all observers but the attorneys that practice in China are now able to provide a much more accurate assessment to a client on the strengths and weaknesses of the client’s case.

Chinese Courts also started giving favourable IP owner results. Of the more than 1,600 cases analysed, IP owners won more than 80% of the time and permanent injunctions were issued by the Chinese courts in more than 90% of the cases. Also there is no biasness towards Chinese companies as against foreign companies; In fact foreign companies enjoyed a slightly higher success rate for both proving infringement and obtaining an injunction compared to their Chinese counterparts. Moreover, the average damage awards for both trademark and copyright infringement have also risen, not just for patent infringement.  One possible explanation for this shift is the strong push by President Xi Jinping’s to improve the perception of China as a country that is tough on intellectual property infringement.

III. CONCLUSION

China is not only becoming a critical country to file for patent protection, it is increasingly becoming a viable venue for all intellectual property enforcement.  More and more companies are looking to China as a stand-alone enforcement jurisdiction, as a -effective “second front” to open in conjunction with US or European litigation, and a country where supply chain integrity can be protected via its IP laws and not just contractual means.

Author: Yesha Parikh, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at swapnil@khuranaandkhurana.com.

References: 

[1] The Second Coming of Intellectual Property Rights in China, Peter Yu

[2] blog.jipel.law.nyu.edu

[3]The Middle Kingdom and the Intellectual Property World 

[4]Kluwer Law International, China Intellectual Property Law Guide

[5] Latest Developments of Chinese Patent Law System

[6]http://www.ipwatchdog.com/2018/05/07/rapid-changes-chinese-legal-system-attractive-venue-ip-litigation/id=96099/

The Need For A Better Data Visibility- GDPR

On the 26th April, 2016 with the announcement of General Data Protection Regulation or GDPR the European Union shook the entire globe with such stringent privacy policies in an internet revolution world. The main aim with which GDPR was thought of was to empower the users to control their Personal Identifiable Information in terms of regulating to whom it shall be made available to, deleting it, editing it. Most importantly GDPR’s motive was to allow the customers to have an informed choice as to when their data is taken and for what purpose is it being used subsequently.

Though the legal jurisdiction of GDPR spreads only across the entire EU but due to the indispensible and worldwide reach of internet it has impacted all the states and almost every sector which is somehow associated with internet. GDPR being a new legislation, firms/ individuals tend to incur a lot of difficulties in terms of the compliances to be fulfilled. A detailed analysis of GDPR and what regulations have been introduced by way of this regulation can be found here.

GDPR though might seem quiet complex but by following the below mentioned checklist one can prepare their organisation for the GDPR compliances.

CHECKLIST

STEP I: Segregation

  • The first step is to determine the nature of the organisation that is whether the organisation is a Data controller or a Data processor. Data controllers are the ones who decide upon the purpose of the data and Data processors are the ones who directly are in the act of processing of the data.

STEP II: Data Information

  • Every company should have a complete list of all the personal information that is held by them, the source of information, and what is done with the data, meaning thereby, a complete record of the processing activities have to be maintained [Article 30].
  • This information related to the whereabouts of the personal data should be clearly mentioned in the privacy policy such that the reader gets to know what is being done with his data.
  • The privacy policy should contain a valid reason for data processing and the same should be lawful [Article 6].

STEP III: Accountability and Management

  • A data protection officer is appointed. The appointment of a DPO is required only in three circumstances, first where the processing is being carried out by a public authority except a judicial body; secondly, when the nature itself of the business involves processing activities and; thirdly, when such data is being processed in an extremely large quantity [Article 37]
  • It is the duty of the organisation to make sure that the members of the organisation are aware of the various practices and laws related to GDPR, this can be done by providing training to the staff [Article 25].
  • When processing is to be carried out on behalf of the processor then only the processor providing sufficient guarantees to match the technical requirements of the organisation could be chosen. Furthermore the customer has to give an informed consent as to use of that sub processor [Article 28].
  • For organisations not established within the territory of EU, but dealing in data of EU citizens a representative has to be appointed in any of the EU states and that person should handle all the data processing difficulties [Article 27].
  • Breach of personal data has to be communicated within 72 hours to the local authority as well as the data subjects, that is, the person whose data has been breached [Article 33 and 34].

Consent- was it ever ‘INFORMED’

Consent, which is the most debated topic, has always been questioned as to whether the consent is informed or not. Earlier the organisation used to have complex consent terms which were difficult for the customers to understand and comprehend, or used to have simple cookie pop-up displaying “by entering this website you agree to all the conditions” was this really consent?

The organisations used to trick the customers into giving consent. The new legislation that came into effect on May 2018 however has made it essential for the organisations to have simplified privacy terms, also simple pop up would not be enough the website has to display all the details which are being processed or controlled by it so that the viewer can have a informed choice.

In this era where privacy is supreme GDPR has tried to keep up with it by amending the exiting consent terms which existed as a dotted line contract.

  • Websites which intend to collect any sort of personal information should have a visible privacy policy link and only when the user check into the box shall that be considered accepted. This means that the practice of pre-ticked boxes is a crime now. [Article 7]
  • Simple, clear and understandable language should be used to draft the privacy policy any sort of ambiguity shall render the agreement void. [Article 7.2]
  • The new legislation realised the privacy loss when the data which was once consented to was stuck and could not be withdrawn. Now along with the consent process the data controller has to mention the process by which consent can be withdrawn. [Article 7.3]
  • Consent for children below 16 years will be taken by their legal guardians only. [Article 8]
  • Any change in the privacy policy now requires the data controller to inform all the consented data subjects in simple language as to what changes have taken place. [Article 7]

How Has India Been Impacted By GDPR

Companies all across the world are assessing the impact on their economy. Undoubtedly high fines are one of the driving forces which are compelling industries to look into it. India is having a major structural transition with peculiar change in the information technology sector which is again expected to grow. Major markets for the Indian ITs are the US, UK and Europe. To a large extend the growth of this sector will depend upon how well India has decided to respond to these regulatory changes in order to retain the status of dependable processing destination.

The changing guidelines mean Indian companies will now have to assess and redesign their data-intensive business processes such as data acquisition, processing and data management, in compliance with the guidelines. This transition however is not easy as:

  • Huge Fresh Capital Investment: The quantum of investment needed to gear up for the changes is huge. This investment is not only in terms of money but also the time investment required to comprehend, change, train is huge.
  • India’s weak data protection laws: The already existing weak data protection laws, which led the Supreme Court to deliver S.Puttaswamy v. Union of India judgement makes India less competitive than other outsourcing units in this sector. The recommendation of the Srikrishna Committee have also come up, the question next is whether these recommendations meet the requirement of EU’s regulation or they need to be further amended.
  • Cross Border restrictions: With the introduction of GDPR the extent of business has been reduced in terms of data of the EU citizens, Indian companies have to now adopt the necessary safeguard in order to continue as a master player in this sector.

These challenges however should not hinder if India views GDPR as a business opportunity and not as a compliance burden as this would have a twofold effect, not only will it allow India to stand out in the technology sector but will also strengthen India’s own privacy landscape.

Author: Shrivali Kajaria , Intern at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

Copyrighting Patents

The nature of Intellectual Property Rights is such that, like any other law, it has loopholes as well as overlaps. These overlaps arise due to the fact that IPR protects ideas by their expressions and expression can be in more ways than what can be imagined by one person. There are subject matters which are eligible for the protection of more than one kind of IP. The prime example is the overlap between design and copyrights which has been statutorily dealt with under the Copyrights Act.

However, the recent debate has been with regard to Copyrights and Patents. Now, both of these are as far apart as two IP protection sects can be. Copyright protects literary, dramatic, artistic, cinematographic, musical works whereas Patent grants rights to functional inventions which are novel, useful and non-obvious. However, these rights find a commonality in the patent applications. It is pertinent to disclose the information relating to the working of the invention in the patent application by way of specifications. These specifications also include certain drawings and sketches of working models of the invention. There has been a long standing question whether these applications, which consist of the originally authored specifications and drawings, are eligible to be granted a copyright. Or alternately, can the specifications in the patent application be infringing upon copyrights owned by other authors/scholars.

Countries have taken different stands in the matter. Germany, for instance, excludes patent documents from the copyright protection from the time they are published.[1] However it is necessary for a person to cite the source when using it in a scholarly or academic work. Switzerland as well exclusively exempts the patent documents from being copyrighted.[2] On the other hand the position in UK differs depending on when the patent was filed. All the applications filed prior to 1989 were protected by the Crown Copyright. However, after they enforced their 1988 Copyright Act all the applications prior to 1989 remained with the government  unless they had a copyright notice on them, and the copyright for all the applications filed after that date lies with the applicant and no use can be made unless with express license except for the purpose of ‘dissemination of information’.[3] USA holds a different position for copyrighting patent applications. It has been stated that all the information posted on the website of the USPTO is considered to be in the public domain but the government holds international copyright over it. However, the applicants are allowed to specify their copyright on the patent drawings or other materials.[4]

There have been very few cases which discuss the copyright ability of patent applications. The US case that accepted that copyright subsists in a patent application was In Re Yardley.[5] In more recent cases, it has been questioned whether patent applications can be challenged in court as infringing a copyright. In American Institute of Physics and John Wiley & Sons, Inc. v. Schwegman, Lundberg & Woessner P.A. [6], the University alleged that the firm infringed their copyright by attaching a scholarly article in their patent application. The firm on the other hand took the defense of ‘Fair Use’ and stated that the articles were taken from the USPTO website itself. In two other cases, American Institute of Physics and Blackwell Publishing, Ltd. v. Winstead PC[7]  and John Wiley & Sons, Ltd. and American Institute of Physics v. McDonnell Boehnen Hulbert & Berghoff LLP [8]—and again, after intervention by the PTO—the plaintiffs similarly amended their complaints to disclaim any allegation of infringement based on submission of copies of copyrighted articles to the PTO, or on retention of file copies of the works submitted to the PTO.[9] The defendants in all these cases stated that disclosure of prior art was necessary in order to secure a patent for their invention and thereby should be included under the exclusion of ‘Fair Use’. The court accepted this and said that as long as it proves to be of evidentiary value and is a requisite for disclosure for the government the use can be deemed to be fair.

Contrarily, the UK courts do not follow the same rationale. In Catnic Components Ltd. & Anr. v. Hill and Smith Ltd. the court held that the copyright in a patent ceases to exist once it is published. The court was of the opinion that the main underlying principle behind granting a patent is full disclosure. The idea is to bring the invention into public domain so as to boost innovation. Copyright on the other hand restricts the rights of other people by giving exclusive rights to the owner of the copyright. It is a conflict between the most basic objectives of the two rights. Furthermore, scholars have pointed out that granting copyright could in effect hamper the innovations further. The term of a patent is a maximum of twenty years but in case of copyrights the term is much longer and continues to be in effect 60 or 70 years after the death of the owner, depending on the domestic laws of the country. This creates a problem as to the fact that even after the invention is out in the public domain there would still be rights which will be otherwise attached and thereby will beat the purpose of being in public domain. These questions have not yet arisen in front of the Indian courts and the law is also silent on it, nothing has been stated explicitly. But the position of other countries gives us a fair idea as to how allowing copyright in patent applications or not can lead to different scenarios and raise different questions.

Author:  Yashvi Padhya, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at swapnil@khuranaandkhurana.com.

References:

[1] https://www.dpma.de/english/patents/faq/index.html#a22

[2] https://www.admin.ch/opc/en/classified-compilation/19920251/index.html#a5

[3]http://webarchive.nationalarchives.gov.uk/20140603113132/http://www.ipo.gov.uk/types

/copy/c-other/c-other-faq/c-other-faq-type/c-other-faq-type-patspec.htm

[4] https://www.uspto.gov/terms-use-uspto-websites

[5] 493 F.2d 1389 (CCPA 1974)

[6] D. Minn. Civ. No. 12-528

[7] N.D. Tex. No. 3:12-CV-1230

[8] N.D. Ill. No. 12 C 1446

[9]http://www.mondaq.com/unitedstates/x/283736/Copyright/Can+a+Patent+Application+

Violate+the+Copyright+Laws

Steering Towards Success, The Bishop’s Way

IP (Patent) Licensing and Commercialization Case Study: Bishop Steering

Intellectual Property can be understood as creations of the mind such as inventions, expressions in the form of literary, artistic or other works of expression, symbols, names and images, etc. used in commerce. It can further be divided into Industrial Property or Copyright.[1] Patent as a part of Industrial Property, is an exclusive right granted for an invention – a product or process that provides a new way of doing something, or that offers a new technical solution to a problem[2].

According to 7 USCS § 178a, the term “commercialization” means “the stage in the development or advancement of a technology at which point private enterprise is willing to invest in a full-scale production facility[3]. Even though the definition is derived from US Agriculture Laws, the still be applied constructively and harmoniously with the intellectual property laws under question.

The most common means to attain commercialisation of an asset after sale is either by an assignment or a license. An analogy between a real property and an intellectual property can be drawn for both licensing and agreement. An assignment is “An assignment is a transfer or setting over of property, or of some right or interest therein, from one person to another denoting not only the act of transfer, but also the instrument by which it is effected[4].” This implies that there will be a complete transfer of ownership which may not be favourable. License, on the other hand, is defined under Black’s Law dictionary as “A permission, usually revocable, to commit some act that would otherwise be unlawful[5].” Licence of an Intellectual property can be compared with lease of a real property as ownership rights can be retained while granting the other remaining rights. A license provides the owner a better control over the asset as compares to an assignment.

Intellectual property is useful only when it is suitably exploited in the form of commercialisation by means of licensing. In order to elaborate the impact of licencing of an intellectual property asset, a patent in particular, it is worth mentioning the seminal case of Bishop Steering.

Dr Arthur E. Bishop having both the engineering ingenuity to design breakthrough automotive systems as well as the requisite leadership skills to attract and inspire highly-specialised designers and engineers started what eventually became Bishop Steering Technology Pty Ltd. (Bishop) way back in 1957[6]. He adapted technology originally developed for power-steering systems for World War II aircraft for use in automobiles[7]. And in 2011 became a subsidiary of the German company GMH Stahlverarbeitung GmbH and continued operating under the name Bishop Steering Technology Pty Ltd[8].

One of the earliest patents that had been granted to Bishop Steering was in 1958 for perfection over rack – and – pinion power steering technology. Since then it had been an uphill trajectory as over the years Bishop Steering has filed for more than 500 patents, out of which more than 100 have been successfully registered[9].This generated at its peak almost around 7 million USD by means of royalties, out of which more than 90% are from oversees licensees.

But instead of venturing into materialise it into manufactured product and realising its sale thereafter, the company followed the strategy to go for licensing its patents and other intellectual property assets to other car and car component manufacturing companies, mostly small and medium enterprises and investing the revenue generated in further R&D purposes. The company has a dedicated protection policy regarding its intellectual property and defends it vigorously and prosecutes any infringer[10].

Its strategy to generate revenue and bring its products and related developments to market is actually quite simple, to first create an IP following its licensing[11]. This strategy proved to be favourable after Bishop steering secured its first license from a major Japanese automobile manufacturing firm[12]. Throughout the company’s history, it has strategically used licensing to grow its business, taking full advantage of such business partnerships and adapting contracts to suit the prevailing business environment. From starting with exclusive licenses to licensees, with time, is has positioned itself in the market in such a fashion that it was then able to negotiate for non – exclusive licenses and enter into joint ventures, thereby increasing its sources of income.At one point in time, almost a quarter of motor vehicles produced every year incorporated Bishop technology[13].

Bishop Steering Technology Inc. (Indianapolis/USA) along with Bishop Steering Technology GmbH (Cologne/Germany) were acquired by GMH Stahlverarbeitung GmbH, a subsidiary of Georgsmarienhütte Holding GmbH on 15 January 2011 and till this day belong to the Steering Systems business unit of the internationally-oriented GMH Gruppe. The success story of this company still stands strong today as it inspires numerous enterprises to consider and follow a similar business strategy of creation, protection and licensing of patents and other intellectual property with the aid, advice and counselling of expert patent attorneys.

Author: Madhur Tulsiani , Intern at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

References:

[1]http://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pdf

[2] (ibid).

[3]https://www.gpo.gov/fdsys/pkg/USCODE-2011-title7/pdf/USCODE-2011-title7-chap8A-subchapII-sec178a.pdf

[4]http://www.republicsg.info/Dictionaries/2004_Black%27s-Law-Dictionary-Edition-8.pdf

[5] (ibid).

[6]https://www.bishopsteering.com.au/de-en/about-us/history/

[7]http://www.wipo.int/ipadvantage/en/details.jsp?id=4739

[8] (ibid).

[9](ibid).

[10]http://www.wipo.int/edocs/mdocs/sme/en/wipo_reg_ip_guz_02/wipo_reg_ip_guz_02_8_b-related1.pdf

[11]http://www.wipo.int/ipadvantage/en/articles/article_0112.html

[12]http://www.wipo.int/ipadvantage/en/articles/article_0112.html

[13] (ibid).

Exclusive Webinar On Intellectual Property Issues And Portfolio Management

In today’s competitive global market, Intellectual Property (IP) plays a key role in a company’s expansion and success. As India aligns its policies to make itself more growth-friendly, it is essential to recognize innovation as a key aspect for accelerating economic development. Intellectual Property Rights (IPR) can aid a start-up entrepreneur in gaining key advantage and exclusivity over the other competitors. A company’s IP portfolio is an extremely valuable asset to attract investors and protect the business.

Recognising the increasing importance of IPR for budding entrepreneurs, Khurana&Khurana, along with IIPRD, bring to you a unique opportunity to learn from the absolute best in the field in a special Webinar on June 30, 2018 from 3:00 PM to 4:00 PM IST. It shall be conducted by Mr. Parvez Kudrolli, an esteemed Senior Associate and registered Patent Agent at Khurana & Khurana and IIPRD. He will holistically deal with the creation, management, protection and enforcement of IP Portfolios. His expertise in patents, consultancy, business development and Software related IPR ensure that every budding enterpriser will gain comprehensive awareness on contemporary IP issues. The attendees will also get the unique opportunity to clear any doubts they may have, post the Webinar.

Interested individuals can register here.

Business Method Patents: Non-Patentable Only In Books?

The legal situation of granting business method patent depends from place to place. The reason being that Trade-Related Aspects of Intellectual Property (TRIPS) did not expressly address the said patent issue. Thus, countries grant (or do not grant) looking upon its local conditions and national policies. That said, India is one of the country that does not believe in granting business method patent and has declared so statutorily in Section 3(k) of the Patent Act, 1970 and Entry 08.03.05.10 of the Patent Manual.

It has always maintained the stance of non-patentability of business method. Unlike USA, it never changed its position. It was only after the infamous case of State Street Bank & Trust Co. v. Signature Financial Group that US allowed business methods to be granted patent protection under the US Patent Law. The United States Court of Appeals for the Federal Circuit stated that since the Patent Act 1952 business method patents must fall under the ambit of patentability. The Federal Court over-ruled the lower court and held that practical utility and essential characteristics are the two factors needed to be seen for determining patentable subject matter.

On the other hand, European Commission sides with India and states that business and invention should not be mixed together otherwise it will hamper development, innovation and creativity. It is a fact that a business has limited number of methods of doing a business. Granting monopoly will restrict small players to rise and increase the licensing cost exorbitantly.

In India, Patent Office considers a particular method to be a business method if it involves a monetary transaction or mere marketing or sale purchase methodology. Section 3(k) expressly bars business method patents as innovations. The landmark case of Yahoo v. Controller and Rediff was a prominent case where J. Prabha Sridevan discussed Business Method Patents. She held:

We must place ourselves in 1998, to decide the patentability and what appears so easy and familiar today was new then. Even if we go back in time to 1998 the nature of invention is still a method of doing business. That does not change. There are huge innovations in the computers themselves, but the invention claimed is not for the machine but for the method. From whichever point of time we look at it, it still looks to be a business method.”

A patent application having claims directed to a software program/algorithm having a bunch of computer instructions cannot be claimed as an invention. The exclusions are carved out for all business methods and, therefore, if in substance the claims relate to business methods, even with the help of technology, they are not considered to be patentable.

As per recent decisions by the Controller of Patent, the trend is only in black letters and is not being followed to the T. In an interesting turn of facts and reasoning, three applications of business method patent were granted by the Controller Office. This post will dissect the three applications so granted.

I. In the matter of Patent Application No. 830/CHENP/2009 filed on 12/02/2009

The Applicant Facebook had filed for patent of a method for generating personalized data for viewing of user of a social network. Soon a series of objections were filed opposing the patent by virtue of Section 3(k) of the Act. It was claimed that the method is purely functional in nature and the whole patent falls under the ambit of business method patents. The Applicant then amended their claim 1 to 6 by including so called ‘hardware limitations’ in their method steps. The observations of the decision while accepting the amended claims randomly record that the “present subject matter implements a technical process and has a technical effect.” The absence of a proper definition of what constitutes a technical effect has what resulted into the grant of patent. The decision does not proceed to explain what were the actual technical effects that the Facebook had in its method patent.

II. In the matter of Patent Application No. 6799/CHENP/2009 filed on 18/11/2009

The Applicant Facebook had filed for patent of a method of providing access to user profile data maintained by a social network website to a third-party application server; a method of sharing user profile data between a social network website and a third-party application server and a system for sharing user profile data between a social network website and a third-party application server. The major opposition that the application faced was that it was nothing, but mere algorithms implemented through software and thus cannot be allowed u/s 3(k) of Patents Act, 1970. The Applicant in response submitted that the present invention included hardware limitation and provided technical improvements and benefits like checking privacy setting associated with the user profile and based on the privacy setting the access is provided to the third-party application and the third-party application personalizes the user content data. The Controller Ms. Subhra Banerjee relying on the written submission by the Applicant proceeded to grant patent to Facebook. The same problem arose here; the decision did not specify what was the technical effect or for that matter hardware limitation. It has been time and now held that hardware limitation should be the one that essentially captures the subject matter of the patent. However, in the present application, there was no such essential link between the method and the hardware.

III. In the matter of Patent Application No.461/KOLNP/2009 filed on 03/02/2009

The Applicant Apple had filed patent for a method for browsing data items with respect to a display screen associated with a computing device and electronic device. The purpose of the alleged invention was to browse media content with multiple browsers whose operations are synced. The Applicant pleaded that the ‘claimed method’ should not be read as computer programme as it only permits the computer program’s functionality. Deputy Controller of Patents and Design Ms. Nirmalaya Sinha accepted the claims of the Applicant. The whole decision is ambiguous as the application clearly reeks of being a business method. However, the basis of grant was given on technical aspects and practical utility which are of no concern to business method patents.

The grant of patent in all the above three applications show a sorry state of affairs and undue advantages of absence of definitions of terms like ‘technical effect’, ‘novel hardware’ and ‘practical utility’. It is for the time to come, when these decisions will be challenged and hopefully logic will prevail.

Author: Esha Himadri, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at swapnil@khuranaandkhurana.com.

References:

[1]https://www.financialexpress.com/india-news/google-gets-big-boost-in-india-awarded-patent-for-system-to-spot-good-and-bad-phrases/666474/

[2] Bandyopadhyay TK, Alyappan A (2014) Business Method Patents and IT Industry: An Analysis, Intel Property Rights, 2:112.

[3]https://www.firstpost.com/tech/news-analysis/software-patents-prohibited-under-indian-law-but-granted-in-spirit-3702725.html

[4] Yahoo v. Controller and Rediff, 2012 (49) PTC 502 (IPAB)

[5] State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1368