Category Archives: India

Google AdWords Giving a Good Wallop to Trademark Law

Introduction

In this era of globalization, we use Internet on a regular basis in our daily lives. People are continuously trying to gain more profits and for this they sometimes adopt illegal practices for promotion of their goods and services. These practices include unauthorized use of a registered name or mark owned by their competitor. This misuse leads to infringement of rights of legitimate owner of the name or mark. A specific kind of software is generally used by search engines, called spider or crawler to gather information of web pages available on the Internet. In order to attract customers towards their websites, owners are continuously making use of “Google AdWords”, “Meta-Tags”, “Hyper- Linking”, “Deep- Linking”, etc.

The present article outlines relation between “Use of Google AdWords” and “Trademark Infringement”. Basically, Google AdWords are keywords to search for a particular category of goods and/or services required by a person. When a person types a particular keyword on a search engine, the search engine matches the keyword entered by the person with the Google AdWords of various web-pages, and accordingly displays the most prominent results. By using the competitors name and/or mark with various permutations and combinations, search engine results are effortlessly manipulated to lure the visitors to one’s website. Google AdWords are used to set the web links in a prioritized manner based on the queries of user. They act as a code for providing information about the web page, which helps in diverting Internet traffic to their websites, causing considerable commercial loss to the legitimate registered owner.

 

What is a Google Ad-Word?

Google AdWord is a successful and client capturing advertisement option that is also a misleading source with respect to the Trade Mark rights of a trademark owner. Google AdWords are basically keywords that are used by an advertiser of certain goods and services to advertise their products, wherein when a specified keyword is searched for, the search engine shows the advertisements/websites of various advertisers. Hence, in this way, Google AdWords are used to divert Internet traffic towards a particular advertisement/website. The keywords used, generally denote someone’s area of business. It is an intelligent system that highlights ads/website depending on the keyword search. Its use is very simple and Google is paid by the website owner for each and every click on their website. AdWords is a paid referencing service started by Google for business promotion.

 

Misuse of Google AdWords leads to Trade Mark Infringement

This is a very important question as to how the use of Google AdWords may lead to Trade Mark infringement. If a person selects any word to be used as an AdWord, which is either similar or identical to a third party’s trademark, does the person infringe the rights of the trademark owner?  It was held in the very famous Consim- Google AdWords controversy[1] that if these AdWords are used by the person which is similar or identical to the third party’s trademark, then this amount to diluting/tarnishing the goodwill or reputation of the third party as this creates confusion in the mind of the customers of the person whose trademark is allegedly infringed. Therefore, this should not be allowed and becomes a case of trademark infringement.

Let us understand this with the help of an illustration: Suppose ‘A’ is the registered trademark owner of certain brand. Now ‘B’ is using AdWords which is in competition to the business owned by ‘A’, and uses Trade Mark of A as one of the paid keywords in the Google Adwords. ‘B’ is therefore diverting the internet traffic towards his own advertisement by using Trade Mark of A such that when users search for A, advertisement of B would also be shown, thereby causing damage to the goodwill/reputation owned by ‘A’, which is not allowed under Trade Marks Law. Hence, selection of Google AdWords becomes very relevant in the eyes of Trademark Law.

A case, Matrix Cellular (International) Services Limited v TSIM Communication Services Private Limitedand IP Attorneys, which represents the plaintiff in the Delhi High Court, wherein the Plaintiff, Matrix Cellular (International) Services Limited, is the proprietor/ owner of the trademark MATRIX since 1995 in respect of ‘International roaming Sim cards’. The defendant is accused of dishonestly using plaintiff’s trade mark i.e. MATRIX as Google AdWords to divert the users to their website by creating a confusion in their minds. The Court recognized that the defendant has engaged in dishonestly using Plaintiff’s trademark to gain profits and the same has resulted in infringement of Plaintiff’s trademark, as a result of which the Court was pleased to grant an interim injunction in the favor of the Plaintiff.

 

Exemplary Landmark Cases

  1. Consim Info Pvt. Ltd. vs. Google India Pvt. Ltd. & Ors. [2]

In this case, Appellant was a private limited company that provided online matrimonial services. In the course of its business, it had adopted several trademarks including Bharat Matrimony, Tamil Matrimony, Telugu Matrimony, Assamese Matrimony, etc. It had registered several domain names with these word marks. The respondents, Google India and its parent company were in the business of offering an advertisement program called AdWords. It generates ‘Sponsored Links’ on the right-hand side of any organic search results produced by Google, closely corresponding to the term searched for.

Google allows the Key Word to appear as a part of the advertisement as well. Therefore, the more the term is searched for, more the chances that it is a heavily demanded Key Word. The competitors would thus bid for the Key Words of other players in their business to catch the attention of user and thereby divert the business meant for such other players. The appellant filed a suit for permanent injunction restraining Google from infringing their trademarks by using them in the AdWords Program and Key Word suggestion Tool. It also restricted Google from passing off their services using the appellant’s trademarks and their closely resembling variants. The issue in question was whether such use of appellant’s trademark by Google’s Ad program amounted to trademark infringement.

Madras High Court thus concluded that the appellant had made a prima facie case and the balance of convenience lied in its favor and thus eventually granted an injunction.

  1. Rescuecom Corp. v. Google Inc. [3]

This is a very interesting case where the main question before the court was whether the use of trademark as keywords amount to Trademark infringement. The US Court of Appeal held that the use of trademark as keywords can be equated to the use of trademark as Meta –Tags. Therefore, Google was held liable for using the trademarked words in its Keyword Suggestion Tool. [4]

Conclusion

Thus, summarizing, use of Trademarks as a Google AdWords can be allowed if it comes under fair use, otherwise the same is restricted. Google is everywhere and it is estimated that approximately 80-85% of the world’s population uses it. If a person wants to mislead someone from the actual website of the proprietor to the impugned one it is the best platform available. Thus, customers are lured and are often misguided by the person violating by increasing the traffic and demand towards his/their website. The use of such Google AdWords is entirely dependent upon the facts and circumstances of case. Google AdWords being special keywords are embedded in web-pages and are often used by search engines in deciding the relevant websites to show in a search result. Therefore, the unfair and illegal use of the Google AdWords with respect to the Trade Marks leads to the Trademark infringement and irreparable damage to the legitimate owner. Choice of keywords becomes very important in this regard otherwise it would lead to infringement of other person’s rights. The concept of Google AdWords in relation to Intellectual Property should be understood and their misuse should be prevented.

About the Author: Ms. Yogita Agrawal, Legal Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at abhijeet@khuranaandkhurana.com

 

References

  1. Consim Info Pvt. Ltd. vs. Google India Pvt. Ltd. & Ors. 2013 54 PTC 578 (Mad).
  2. 2013 54 PTC 578 (Mad).
  3. 562 F.3d 123 (2nd Cir. 2009).
  4. Mattel Inc. and Others vs. Jayant Agarwalla and Others 2008 (38) PTC 416; Samsung Electronics Company Limited & Anr. vs. Kapil Wadhwa & Ors. C.S. (OS) No.1155/2011.

Headline: Dealing with John Doe Orders in India

Standfirst: In an effort to reduce piracy, the media and film industries are increasingly seeking John Doe orders against internet service providers, illegal unlicensed distributors and cable operators, say Amruta Mahuli, Abhijeet Deshmukh and Abhishek Pandurangi of Khurana and Khurana.

Pullquote:

“The injunctions on blocking of entire websites ought not be granted ‘unless it is demonstrated that the entirety of the website contains, and contains only, illicit material’.”

 

With one of the largest multimedia industries and consumer bases in the world, India’s media law jurisprudence has always attracted interest. Accordingly, in 2003 Indian finally entered the “John Doe orders era”, or the “Ashok Kumar orders era” as it is referred to in the Indian Judiciary context.

In 2003 the Delhi High Court in the case of Taj Television & Anr v Rajan Mandal & Orsfor the first time passed an exparte interim order allowing the plaintiff to search and seize equipment and devices of unknown defendants, thus starting the jurisprudence of passing orders against John Does/Ashok Kumars. While the Taj Television judgment was considered sketchy when it came to the implementation and formulation of directions for execution, the Indian courts have, in the past decade, evolved to deal with IP infringement instances.

Legislative background

The John Doe orders jurisprudence in India is still considered in its developing phase wherein the Indian judiciary and legal system are making a conscious effort to improve and evolve their laws with technology. John Doe orders in India are governed by Order 39,rules 1 and 2 of the Civil Procedure Code, 1908 (CPC), read with section 151 of the CPC and the provisions of the Specific Relief Act,1963 related to permanent injunctions.

Therefore, as prerequisites to procure John Doe orders, plaintiffs need to prove the prima facie case, with the balance of convenience and potential damage, while establishment of proprietary rights of the owner is mandatory. The Indian courts often rely upon the following John Doe order factors in the 2003 case Bloomsbury Publishing Group v News Group Newspapers:

“First, the claimant needs to demonstrate that he has a good arguable case against the defendant. The stronger the order, no doubt the stronger that case should be. Second, the order has to be in terms which clearly state what the defendant must and must not do. Third, it must be possible to identify the defendant against whom the order is sought. Fourth, it will only be effective against a person who, when made aware of the terms of the order, will understand that it applies to him.”

Having said that, there are certain intricacies involved, such as execution of orders in the light of technical limitations, and jurisdiction issuesaround the name of John Does identified merely on the basis of a numerical IP address, which may not actually fall within the court’s jurisdiction.

Implementing John Doe orders

In an effort to reduce piracy and its menace, the booming media and film industries have welcomed this change with a warm embrace, seeking John Doe orders for numerous movies against internet service providers (ISPs), illegal unlicensed distributors and cable operators.

On the other hand, some Court dictums have also attracted criticism for their overreaching effect. Such was the case in Star India v Sujit Jha and Ors, where the Delhi High Court passed a pre-emptive order to block 73 websites in their entirety meeting out the prayer by the plaintiff under the guise that: “It is extremely easy for the website to provide access to the blocked content through another URL since a mere change of a character in the URL string will result in a completely new URL.

“Consequently, it is extremely easy for a website to circumvent and thus nullify any order that directs blocking of specific URLs since such websites can very easily provide access to the same content by merely changing one character in the URL string. Thus, unless access to the entire website of the named and unnamed defendants is blocked, there is no alternate and efficient remedy that is open to the plaintiff.”

On appeal, the Divisional Bench of the Delhi High Court narrowed the scope of the order by restricting the blocking of certain URL links rather than the entire websites, but a bit too late—only after conclusion of the relevant sports series.

On another front, the Bombay High Court set out the protocol for the execution of John Doe orders against ISPs in the case Balaji Motion Pictures & Anr v Bharat Sanchar Nigam & Ors. The plaintiffs in this case were directed to serve a public notice stating the crux of the case and order passed by the court to the defendants, thus providing “sufficient service” to the defendants allowing them a period of four days to apply against the grant of injunction.

Denying excessive and unreasonable requests by the plaintiffs against John Doe defendants in the Dishoom case, Justice Patel strongly dissented with the plaintiff’s plea for blocking of access to 134 URL links that mostly were web addresses for entire websites, thus engraving a strong precedent that the injunctions on blocking of entire websites ought not be granted “unless it is demonstrated that the entirety of the website contains, and contains only, illicit material”.

On the other hand, the concerns raised by Justice Singh in Star India regarding setting up of illicit links on a differently named website or on the same website under a hidden or misleading HTML link or tag do not appear far from the truth as well.

The plaintiff in most cases procures the said order with the hope of prohibiting piracy of its films through various portals such as popular streaming websites, while on the other hand, the ISPs complain of web policing; finding the right balance and setting out strong precedents is therefore what the Indian judiciary is currently focused on.

Judicial guidelines

In 2016, the Bombay High Court in the case Eros International and Anr v BSNL & Others extended the requisite guidelines, not just for the executing authorities but also for the jury and the plaintiff, to deal with unidentified defendants, especially ISPs and anonymous bloggers who violate the piracy laws.

The court has instructed copyright holders to verify and authenticate the allegedly illicit links prior to requesting their blocking, while advocates and general counsels are mandated to verify these links again. Last, enforcing Order 39,rule 1 of the CPC, the plaintiff is mandated to submit all the material before the High Court as an affidavit on oath.

The court also issued guidelines to be followed by the courts while issuing a John Doe order: they are advised to review the list and verify its authenticity or delegate a neutral third party to do so. The ISPs are instructed to display a message on the blocked webpage that includes the particulars of the case and reason for blocking, the address of the copyright holder and a statement that any aggrieved person, including the viewers, may approach the court with atleast 48 hours’ notice to the advocates of the plaintiff.

This judgment also narrowed the validity of the block to 21 days, after which the plaintiff would be required to approach the court and obtain an order for extension of the ban.

Policing guidelines

With more and more John Doe orders being sought by media houses, the reality of how badly the media industry is affected by such piracy is evident, but courts are pressing towards the balance against arbitrary and unreasonable relief. Plaintiffs may reasonably limit their request for the relief sought, and the legislative and executive authorities may take a step further and establish regulatory commissions to police selected websites that are suspected of some infringement rather than completely shutting them down.

In the case of Reliance Big Entertainment v Jyoti Cable Network & Ors, the court asked the police to assist the film production companies to curb piracy without any norms or guidelines, thus granting excess discretion for the enforcing authorities which may stand to Constitutional scrutiny.

While such judicial activity spells trouble for illicit web users and websites promoting piracy, there is a new market for online entertainment platforms and streaming services where one can stream videos at a nominal cost or in some cases no cost at all. Unlike sites where there is a risk of pirated videos being uploaded, these services stream only pre-recorded or live videos and have obtained requisite licences from distributors, thereby stifling piracy.

The substantial urban population in India, who once habitually streamed and downloaded videos, books and songs online from illicit sources, are now opting for the safe sources, which guarantee good quality. Indian society and courts are trying to travel away from piracy, and although the destination seems far away, quite a distance has been covered.

Authored by:

Amruta Mahuli is an Attorney-at-law at Khurana and Khurana. She can be contacted at: [mumbai@khuranaandkhurana.com]

Abhijeet Deshmukh is an Attorney-at-law at Khurana and Khurana. He can be contacted at: [abhijeet@khuranaandkhurana.com]

Abhishek Pandurangi is a partner at Khurana and Khurana. He can be contacted at: [ abhishekp@khuranaandkhurana.com]

IIPRD among top 100 Intellectual Property Blogs- FEEDSPOT

IIPRD, with great pleasure, is happy to announce that it has been ranked as one of the top 100 Intellectual Property Blogs writer from thousands of top Intellectual Property Blog writers on IP, Patents, Trademarks and Copyrights by Feedspot.

IIPRD strives to ensure delivering and providing insights to the IP industry continuously and extensively to help their clients, International Law Firms as well as stakeholders to keep them updated/aware about the updates, analysis and insights to the recent happenings in the IP domain across various jurisdictions.

IIPRD is a premier Intellectual Property Consulting and Commercialization/Licensing Firm with a diversified business practice providing services in the domain of Commercialization, Valuation, Licensing, Transfer of Technology and Due-Diligence of Intellectual Property Assets along with providing complete IP and Patent Analytics and Litigation Support Services to International Corporates.

Being ranked among the Top 100 Intellectual Property Blog writers, we would like to extend our gratitude to all our readers, netizens as well as IP stakeholders, helping us to evolve day by day and continue to create benchmarks in the industry.

IIPRD look forward to continue with our sincere efforts in contributing knowledge and excellence to stakeholders across the industry.

NPDC Supplementary Details

Patents are a major area of business proficiency nowadays and recently in India too, it has become as important as marketing, finance, corporate governance, and manufacturing economics. India’s growing R&D operations have taken a beating due to lack of in-house professionals to file patents applications. Even then, the numbers clearly indicate that there is a great deal of patenting activity going on among companies across India. Patent Specification, besides being the most important document in the entire patent registration procedure, is also considered to be one of the most complex Techno-Legal documents. Drafting of Patent Specification is a device of great importance and thus should not be left to a layman to design it. It is extremely important to use carefully selected language to describe an invention to satisfy requirements both in legal terms as well as in technical terms. Selection of the right words may prove tricky when the draft-person is an amateur. Unclear and indefinite languages used in the specification are always likely to draw competitors, or any person concerned to invalidate or oppose the patent or the patent application. And not only is the language significant, satisfying the requirements of patentability is equally vital.

And here is exactly where the National Patent Drafting Competition (NPDC) plays a crucial role in bringing greater awareness and respect for Patents in a coveted and competitive way. NPDC through its nationwide reach will aim to promote development of Patent Drafting as a Skill Set, encouraging more and more technical people to take up Patent Drafting as a Professional Competency and also identifying and honoring Top Patent Drafters in the Country. This initiative of NPDC comes with an earnest effort by IIPRD, its associates, leading sister Law Firm, Khurana & Khurana IP and Attorneys (K&K) and Sughrue Mion. Other partners serving us in this endeavour are TIFAC, PAAI, Spicy IP, IBLJ and Lex Witness.

NPDC commences on 1st of August 2017, when IIPRD and K&K will put forth on their respective websites (www.iiprd.com and www.khuranaandkhurana.com) three invention disclosures, one each in three different domains (Electronics/ Hi-Tech, Mechanical and Chemistry/Pharmaceuticals). The NPDC will be active till 20th August  2017, within which timeframe, Eligible Participants would need to write Complete Patent Specifications (along with Drawings, if applicable) which complies with the Indian Patent Act. Please note that one participant can file only one Patent Specification which will be one domain of his choice.

Complete details of the modus-operandi of the Competition can also be seen here.

Any Practitioner having a Technical/Science Background is eligible to participate in the Competition. So for instance, the Participant could be a student, a practicing Attorney, an in-house counsel, a scientist, a faculty, or any other stakeholder having a technical qualification.

In order to enable serious participants to submit their specification, a small Participation Fees of INR 1000 (USD 50) is to be submitted by each participant, which can either be paid by means of Bank Transfer or though a DD or a Cheque in favor of “IIPRD”. The Draft should reach IIPRD’s Office by 20th August 2017.

 Drafted Patent Application can be sent to Competition@iiprd.com or can be sent in Hard Copy to IIPRD’s, Greater Noida Office. In either way, drafted patent applications should be received by IIPRD on or before 20th August 2017.

Evaluation of the Drafts would be done collectively by representatives from each International Law Firm and Khurana & Khurana, IP Attorneys, coordinated by IIPRD. Their collective decision on selection of the Winners will stand final and shall not be open to change in any manner. The Winners will be decided based on a combination of numerous factors (such as flow of the Specification, Scope covered through embodiments, Claim drafting strategy and Accurary of technical coverage).

On 1st September 2017, two winners for each technology domain would be announced on the websites of IIPRD and K&K.On around 28th September 2017 (to be confirmed soon), during the 3-Days International Pharmaceutical Patent Conference being organized by IIPRD at Hotel Hilton (Andheri East) Mumbai, prize distribution of the winners would take place form 1700 hrs to 1800 hrs, wherein the first winner for technology domain would be given a price of Rupees One Lakh Only (INR 100000) or USD 2000, and the second winner for each technology domain would be given a prize of Rupees Fifty Thousand Only (INR 50000) or USD 1000.

For any of your query/question, please feel free to write to competition@iiprd.com, and/or call 0120-4296878/2342010 and speak with Mr. R. Srinivas.

Exclusions in Patentable Subject Matter in Malaysia

Malaysia’s Patent Act similar to other countries jurisdictions excludes certain subject matter from protection under patent. Such subject matter is defined under section 13(1) of Malaysia’s Patent Act.

The Malaysian patent law uncovers some of the non-patentable subject matter relevant to the life sciences industry in Malaysia. This non-patentable subject matter in Malaysia affects the life sciences industry. Some of the related examples are: discoveries and scientific theories; plant or animal varieties or essentially biological processes for the production of plants or animals; methods of treatment of human or animal body by surgery or therapy, and diagnostic methods practiced on the human or animal body. [1]

The Malaysian IP office (MyIPO) for its Interpretation and application of sections 13(1)(a) and 13(1)(b)  is highly influenced by European Patent Convention (EPC) 2000 and European guidelines for the lawful protection of biotechnological inventions.

Section 13(1)(a)

It relates in general to discoveries. Although, Malaysian patent law does not provide protection for discovery of new species, but it is possible to protect the composition/methodology of an extract obtained from new species, if it fulfills the patentability requirements.[2]

Section 13(1)(b)

It states that flora or fauna varieties or essentially biological processes for their production, other than man-made living microorganisms as well as microbiological processes and products of such processes, cannot be patented. To provide protection for new plant species, likely to Europe, Malaysia has also followed a “sui generis system”. Thus, since October 2008, the “Protection of New Plant Varieties Act 2004” is in force. [2] [3]

Practical observation on MyIPO’s interpretation and application under section 13(1)(b) in lieu with animal varieties shows that it is highly influenced by European Patent Convention 2000 and the directive 98/44/EC. [2]

Solutions

EPC 2000 provisions were followed by MyIPO to interpret and apply the provisions of section 13(1)(d) for treatment and diagnosis methods which would be beneficial for the pharmaceutical and medical. The section 13(1)(d)’s subject matter interpretation for exemption under protection has been expanded in Chapter IV, point 3.5 of MyIPO’s Guidelines for Patent Examination (October 2011).

Under section 13(1)(d), it’s been stated that all non-therapeutic treatment methods are patentable whereas surgical or therapy based treatment methods are exempted from protection. It covers all the cosmetic methods and methods which are practiced on human or animal body. Cosmetic methods includes straightening/waving of hair or any other cosmetic application on human body for the cosmetic purpose. [4]

Additionally, technical methods of measuring/recording human characteristics which have an industrial application can also be protected under MyIPO. MyIPO doesn’t allow the biological characters to be patentable. For example, artificial manufacturing of prosthetic limbs, different diagnostic scanning approaches are allowed to be protected under law. Furthermore, diagnosis approaches which involve alive organism for analyzing information that produces intermediate results and does not directs a treatment decision also patentable. [4] [5]

Similar to EPO, MyIPO believes the theory that curing any disease is same as its treatment by therapy, based upon this theory MyIPO excludes the prophylactic methods from the patentable subject matter. [3] [4]

Rooted from European Patent Convention provisions, MyIPO does not exempt apparatuses used in treatment or diagnosis from a patentable subject matter which implies that surgical, therapeutical or diagnostic equipments can be claimed. Through this insight, substances/compositions used for treating a disease if claimed are patentable. [2] [4]

Inspite of the fact that generally “treatment methods” claims are not patentable in Malaysia, still it’s possible to acquire protection over such methods through Malaysian IPO. Malaysian IPO permits to pursue patent over few types of purpose-limited products. These purpose limited products uses medical usage of claims. [4]

About the Author :Shilpi Saxena, Jr. Patent Associate at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at abhijeet@khuranaandkhurana.com

REFERENCES

[1] Ramachandran, Sumah. “PATENT PROTECTION IN MALAYSIA – A BASIC GUIDE.” PATENT PROTECTION IN MALAYSIA (n.d.): n. pag. http://www.bioeconomycorporation.my. BIOTECHCORP, 23 Dec. 2011.

[2] Office, European Patent. “The European Patent Convention.” Article 53 – Exceptions to Patentability – The European Patent Convention, Convention on the Grant of European Patents – (European Patent Convention), Part II – Substantive Patent Law, Chapter I – Patentability. Espacenet, n.d.

[3] “Malaysia.” Malaysia: Protection of New Plant Varieties Act 2004 (Act 634). WIPO, n.d. Web.

[4] Rights, Journal Of Intellectual Property, and Asif E. “Exclusion of Diagnostic, Therapeutic and Surgical Methods from Patentability.” Exclusion of Diagnostic, Therapeutic and Surgical Methods from Patentability 18.May 2013 (2013): 242-50. Journal of Intellectual Property Rights, 8 Apr. 2013.

[5] RAMACHANDRAN, Suman. “PATENT REGISTRATION PROCEDURE IN MALAYSIA.” BIOTECHCORP, 10 July 2009. Web.

Biological Diversity Act, 2002 and Patenting of Biological Inventions in India – Part I (Section – 6)

The Biological Diversity Act of 2002 (BDA) is a piece of Indian legislation which came into being in response to compliance with the Convention on Biological Diversity (CBD), to which India is a ratified member. In fact, India has taken the lead among developing and developed nations both in introducing a substantive legislation in conformance with the objectives of the CBD.

The objective of the BDA is broadly to conserve India’s biological diversity, ensure sustainable use of its biological resources, and ensure equitable sharing of benefits arising out of use of its biological resources. Though the BDA came into being in 2002, it was only in 2004 when the Rules were notified, hence, for all practical purposes, the effective implementation date of the BDA is 2004.

The BDA, in general, quite broadly covers access and use of biological resources occurring in India or knowledge associated thereto for various purposes, be it for research or commercial activity, by Indian citizens or non-citizens alike, in India or abroad.

Recognizing the importance of IPR, the BDA makes special mention of the application of the provisions of the BDA to IPR in Section 61. A careful reading of Section 6 reveals the truly wide mandate of the BDA with regard to IPR. Firstly, it is to be noted that Section 6 is not limited to Indian citizens or Indian residents (as defined in the Income Tax Act, 1961). The term “no person” used in Section 6, sub-clause 1 can be broadly interpreted to include any natural or legal person irrespective of nationality. Secondly, the application of the law is extra-territorial in that it is applicable upon IPR laws of other foreign countries also. Thirdly, it is interesting to note that the scope of the said section is not merely limited to biological material “occurring” in India. In fact, the term used is “obtained” from India, which is suggestive in its broadest implication that even exotic material would be within the ambit as long as it is obtained from India.

The language of Section 6 of the BDA leaves open a lot of questions, many of which have no definitive answers due to lack of any judicial precedents established by the judiciary of India. For instance, Section 6 states that permission of the NBA is required when IPR is applied for research or information based on a biological resource obtained from India. There is lack of clarity as to how the NBA will construe the scope of “obtained”? As the objective of the NBA is to safeguard Indian biodiversity, will “obtaining” be limited to only those biological resources which are literally sourced from within India? What about Indian biological material sourced in India but subsequently exported, and obtained elsewhere (outside of India)? Alternatively, does the term “obtained” necessarily mean that the biological resource shall also be found to be “occurring” in India? Does “occurring” mean only indigenous biological resources which are sufficiently distinct compared to their foreign counterparts? Or will it include biological resource of foreign origin which is also found in India regardless of any distinctive trait? How does one determine any time frame after which a biological resource can be considered to be “occurring” in India?

In another instance, Section 6 clearly states that no application for IPR rights is to be filed in any foreign country without prior NBA approval. The first proviso provides that in the event an application is filed, NBA permission may be obtained after the acceptance of the patent but before patent grant by the patent authority concerned. An obvious question here is whether the foreign patent office is legally bound to keep the patent grant in abeyance until NBA approval is provided?

In yet another instance, as per Section 6, the term “no person” is used. While it is clear that the term includes any Indian citizen, or a resident of India (as defined in the Income Tax Act, 1961), does it cover a foreign national operating outside India? A casual reading of the statute would suggest so, however, it puts an unnecessary burden on such a particular group to comply with Indian laws, which they may be contravening without their knowledge! This would make the jurisdictional reach of Act worldwide, whereas Section 1(2) clearly states that the Act extends to the whole of India and not elsewhere!

The definition of “biological resource” can be found in Section 2(c)2 of the BDA. It may be appreciated that the definition is quite broad, while specifically excluding value added products3 and human genetic material. It is quite clear from the definition in Section 2(c) that the legislation is principally directed towards patenting of biological inventions, which puts an additional burden, largely regulatory in nature, on the Applicant to comply with.

The gravity of non-compliance with Section 6 of the BDA can be appreciated from Sections 55(1)4, 575 and Section 586 of the Act. Briefly, under Section 55(1) and 57, the punishment for contravention of Section 6 is imprisonment for a term of up to 5 years, or a fine of up to INR 10,00,000 or more, or both. Under Section 58, such offences are cognizable and non-bailable. This is of particular significance in that the police, upon a complaint, can arrest the person concerned without prior Judge order, and bail is not a matter of right, but at the discretion of the Judge!

Under current Indian Patent Office (IPO) practice, it is observed that for patent applications, which disclose any biological material, in the First Examination Report (FER), it is almost routine to come across an objection requiring clarification as to furnishing of NBA approval in the case of use of any biological resource obtained from India. As mentioned previously, as per Section 6 of the NBA, grant of the patent would be kept in abeyance until proof of NBA approval is provided.  It should be pointed out that for patenting purposes, the application of provisions of the NBA as per the IPO is not limited merely to claimed biological resource. Instead, it encompasses use of any such resource or knowledge thereof in any part of the application. For instance, use of any biological resource for validation purposes of a claimed product would fall within the ambit of NBA!

In the case of national phase or convention applications deriving priority from a foreign country, typically a declaration may be provided stating that no biological resource obtained from India has been used in the invention. Understandably, it may be difficult for an Indian applicant to do so.

Interestingly, it is to be noted while the IPO does not require evidence of compliance with any other law of the land prior to grant of patents, it particularly requires compliance with the BDA! This “cooperation” between the IPO and the NBA is admirable in that it represents a cooperation between two different ministries, namely, The Ministry of Environment and Forests under which the NBA is a statutory autonomous body, and The Ministry of Commerce and Industry (Department of Industrial Policy & Promotion, under which the Office of the Controller General of Patents, Designs & Trademark functions.

In conclusion, under current IPO practice regime, any Applicant using any biological resource (as defined under Section 2(c) of the BDA) is suggested that he seek NBA clearance at the earliest instance in order to ensure a timely and smooth prosecution progress.

In the next part of this article, provisions of the BDA with respect to access of biological resources by Indian citizens or non-citizens, and sharing of research results generated from such biological resources will be elucidated and discussed.

About the Author: Amitavo Mitra, Sr. Patent Associate at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at amitavo@khuranaandkhurana.com.

1Section 6 of BDA: (1)“ No person shall apply for any intellectual property right, by whatever name called, in or outside India for any invention based on any research or information on a biological resource obtained from India without obtaining the previous approval of the National Biodiversity Authority before making such application

Provided that if a person applies for a patent, permission of the National Biodiversity Authority may be obtained after the acceptance of the patent but before the seating of tile patent by the patent authority concerned

Provided further that the National Biodiversity Authority shall dispose of the application for permission made to it within a period of ninety days from the date of receipt thereof”.

(2) “The National Biodiversity Authority may, while granting the approval under this section, impose benefit sharing fee or royalty or both or impose conditions including the sharing of financial benefits arising out of the commercial utilization of such rights”.

(3) “The provisions of this section shall not apply to any person making an application for any right under any law relating to protection of plant varieties enacted by Parliament”.

(4) “Where any right is granted under law referred to in sub-section (3), the concerned authority granting such right shall endorse a copy of such document granting the right to the National Biodiversity Authority”.

2Section 2(c) of BDA: “biological resources” means plants, animals and micro-organisms or parts thereof, their genetic material and by-products (excluding value added products) with actual or potential use or value, but does not include human genetic material.

3Section 2(p) of BDA: “value added products” means products which may contain portions or extracts of plants and animals in unrecognizable and physically inseparable form.

4Section 55(1) of BDA: “Whoever contravenes or to or abets the contravention of the provisions of section 3 or section 4 or section 6 shall be punishable with imprisonment for a term which may extend to five years, or with fine which may extend to ten lakh rupees and where the damage caused exceeds tend lakh rupees such fine may commensurate with the damage caused, or with both”.

5Section 57 of BDA: (1) “Where an offence or contravention under this Act has been committed by a company, every person who at the time the offence or contravention was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence or contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence or contravention was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence or contravention”.

(2) “Notwithstanding anything contained in sub-section (1), where an offence or contravention under this Act has been committed by a company and it is proved that the offence or contravention has been committed with the consent or connivance of, or is attributable to, any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the offence or contravention and shall be liable to be proceeded against and punished accordingly.

 

6Section 58 of BDA: “The offences under this Act shall be cognizable and non-bailable”.

Liability of online market portals vis-à-vis trademark infringement in the cyberspace

With the emergence of globalization and sharp advancement of technologies, our society and its knowledge making has also changed steadily. The scope and range of knowledge has expanded and is only a click away, due to the expansion of digital connectivity. However with every pro come the cons. Infringements of copyrighted works are considered as big threats hampering the growth of the Internet, e-commerce and digital economy. The amendment to the Information Technology act 2000, in the year 2009 did gave a fillip to IPR issues in cyber law, however one of the major issue that is still untouched is the issue of secondary liability for trademark infringement on 3rd parties involved in some manner in the sale, advertising, shipment or other activities relating to the goods/services in cyberspace.

Before dealing with the Indian Scenario, it would indeed be pertinent to deal with the international perspective of labiality of operators of online market portals vis-à-vis trademark infringement in cyberspace.

Before proceeding further it is significant to know the concept of secondary liability. The concept of secondary liability is a common principle of law of torts, which arises when a party materially contributes to, enables, induces, or is otherwise responsible for directly or contributory-infringing acts carried out by another party. It is wellspring of unfair competition law. There are two kinds of secondary liability:

  1. Vicarious liability: It is a stricter liability amongst the two as the law of tortimposes responsibility upon one person for the failure of another, with whom the person has a special relationship, to exercise such care, as a reasonably prudent person would use under similar circumstance.[1]
  2. Contributory liability: It is a tortious liability for soliciting and aiding and abetting, the infringement, i.e. if a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, then the manufacturer is liable for contributory liability[2].

While the concept of Vicarious Liability comes into picture when:

  • The third party has the right and ability to control the actions of the direct infringer; and
  • The third party derives a direct financial benefit from the infringement.

The notion of Contributory liability comes when:

  • The defendant knows of the infringement; and
  • The defendant materially contributes to the infringement.[3]

One of the earliest cases, which dealt with this principle, was the case of Kalem Co. v. Harper Brothers[4], while the landmark case that dealt with Secondary Liability in Trademarks was Inwood Laboratories v. Ives Laboratories[5]

While in India we still haven’t got the opportunity to give a verdict on the issue, but the judgments of Court of Justice of the European Union[6] and US Federal Court[7] comes as a guiding force on the subject.

L’Oréal v. eBay International AG[8]

Facts:

  • The proceedings was between L’Oréal SA and its subsidiaries Lancôme parfums et beauté & Cie SNC, Laboratoire Garnier & Cie, on one hand, while eBay Inc. and subsidiaries on the other regarding the sale of L’Oréal products on the online marketplace operated by eBay without L’Oréal’s consent.
  • L’Oréal was a manufacturer and supplier of perfumes, cosmetics and hair-care products, which operate a closed selective distribution network, in which authorised distributors are restrained from supplying products to other distributors. On the other hand eBay operates an electronic marketplace, which provides platform to sellers to set up online shops on eBay sites. Thereafter eBay facilitate prospective buyers to bid for items offered by sellers.
  • On 22 May 2007, L’Oréal communicated its apprehensions to eBay about the widespread incidence selling of counterfeit goods on the site. And soon a trademark infringement case was filed against eBay.
  • The Court of Justice of emphasized and considered whether the display of the sign (which is identical to the registered mark), in the sponsored link, constitute “use” of L’oreal’s trademarks ‘in the course of trade’. Or whether eBay could claim immunity from secondary liability under provisions of the EU E-commerce Directive.

Judgment:

  • The role of online marketplace operator cannot be assessed under Directive 89/104 or Regulation No 40/94, but must be examined under rule and laws set out under Directive 2000/31 (Section 4 of Chapter II)(‘liability of intermediary service providers’) along with Articles 12 to 15 of that directive.
  • In order for an Internet service provider to fall within the scope of Article 14 of Directive 2000/31, it is essential that the provider be an intermediary provider within the meaning intended by the legislature in the context of Section 4 of Chapter II of that directive.
  • It was held by the Court of Justice that eBay has not used the registered trademark ‘L’oreal’s’ in its own commercial communications, but has simply displayed the sign or selected keywords corresponding to L’Oréal trade marks on Google search engine in order to offer sale to prospective buyers. In that context the operator of the online marketplace was just acting as an advertiser. However the court held that the proprietor of a trade mark is entitled to prevent an online marketplace operator from advertising his trademark as the goods offered on sale through advertisement does not enable reasonably well-informed and reasonably observant internet users, and makes it difficult for prospective buyers to ascertain whether the goods concerned originate from the proprietor of the trade mark or from an undertaking economically linked to that proprietor or, on the contrary, originate from a third party.
  • The court while assessing what construes ‘active role’ under Article 14 under Directive 2000/31 stated that “the operator plays such a role when it provides assistance which entails, in particular, optimizing the presentation of the offers for sale in question or promoting them.” Therefore the court held that the defendant did not play any active role in the same regard, however the court stated that if the operator of the internet market was aware of facts and circumstances that there unlawful offer of sale were being executed at his portal and still did not take any step to prevent the same then he is exempted to take any exemption from the liability.
  • Due to the s reasons stated above the court granted injunction in favor of L’Oréal.

Tiffany (NJ) Inc. v. eBay, Inc.[9]

Facts:

  • In 2002 eBay had implemented a “fraud engine,” which is principally dedicated to ferreting out illegal listings, including counterfeit listings. The fraud engine incorporated Tiffany-specific filters too. A page named, “About Me” was also maintained by Tiffany and not eBay. The headline of the page was “BUYER BEWARE,” & the page began: “Most of the purported TIFFANY & CO. silver jewelry and packaging available on eBay is counterfeit.”
  • In 2004 Tiffany & Co sent a number of notices to eBay stating to remove counterfeit products of the brand and by 2005 Tiffany & Co. filed injunction suit in the district court in order to shut down the legitimate secondary market dealing in Tiffany goods.

Judgment:

  • The District court rejected the allegations of Tiffany that eBay had directly infringement its trademark. Rather the court said that eBay’s was protected by the doctrine of nominative fair use[10]. As a result, an appeal came before the circuit judge.
  • The bench relied on the two-prong test while awarding its judgment:
  1. Whether the plaintiff’s mark is entitled to protection, and
  2. Whether the defendant’s use of the mark is likely to cause consumers confusion as to the origin or sponsorship of the defendant’s goods.

The court discussed the case under 4 heads:

  1. Direct Trademark Infringement
  2. Contributory Trademark Infringement
  3. Trademark Dilution
  4. False Advertising
  • Direct Trademark Infringement: The bench observed “defendant may lawfully use a plaintiff’s trademark where doing so is necessary to describe the plaintiff’s product and does not imply a false affiliation or endorsement by the plaintiff of the defendant.” The court also observed that eBay promptly removed all listings that Tiffany challenged as counterfeit and took affirmative steps to identify and remove illegitimate Tiffany goods. As a result the court observed that eBay’s use of Tiffany’s mark in the described manner did not constitute direct trademark infringement.
  • Contributory Trademark Infringement: The court rejected to apply Inwood test[11] as it observed that eBay clearly possessed generalized knowledge as to counterfeiting on its website which makes it insufficient to impose any penalty on the issue. The court also observed that it was the duty of the plaintiff to establish the ‘knowledge’ of contributory infringement. The court agreed with the decision of the district court that eBay was not willfully blind[12] to the counterfeit sales of Tiffany.
  • Trademark Dilution[13]: The court rejected Tiffany’s dilution by blurring claim on the ground that “eBay never used the TIFFANY Marks in an effort to create an association with its own product, but instead, used the marks directly to advertise and identify the availability of authentic Tiffany merchandise on the eBay website.”
  • False Advertising: The court of appeal rejected the argument that eBay advertised the sale of Tiffany goods on its website, and because many of those goods were in fact counterfeit, eBay should be liable for false advertising and that the advertisements at issue were not literally false because authentic Tiffany merchandise were also sold on eBay’s website, even if counterfeit Tiffany products are sold there, too.
  • In conclusion the court approved with the district court’s judgment that eBay’s use of Tiffany’s mark on its website and in sponsored links was lawful and that eBay as an operator of online market was not liable for any trademark infringement.

 

Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc[14]

Facts:

  • Vuitton filed trademark and copyright infringement against the defendant, Akanoc on the context that the defendant sold counterfeit replica LV goods. The plaintiff had earlier too given several notices to the defendant him to remove the infringing products.
  • The suit was assessed under 4 heads:
  1. Contributory trademark infringement,
  2. Vicarious trademark infringement,
  3. Contributory copyright infringement, and
  4. Vicarious copyright infringement.

Judgment:

  • The court while relying on the case of Applied Info. Sciences Corp. v. eBay, Inc.[15] held that in order to establish direct infringement of a trademark, a plaintiff must show:
  1. Ownership of a valid trademark, and
  2. A likelihood of confusion resulting from a defendant’s alleged infringing use.

The court while discussing the case held that third parties have infringed Plaintiff’s copyrights and trademarks.

  • While deciding the issue of Contributory Trademark Infringement the court replied their judgement on the test of Inwood Lab[16]. The court found that the defendant had actual or constructive knowledge knowledge of trademark infringement of the rightful proprietor Louis The court observed that the defendant had the ability to terminate websites by unplugging an entire server or disable individual IP addresses and thereby remove websites using their servers. As a result the court observed that the defendants knew third parties were infringing Plaintiffs trademarks and remained wilfully blind despite his ability to terminate its services to those third parties.
  • While deciding the issue of vicarious liability it was important that the direct and second infringer shared some relation[17] amongst each other. The Defendant Chen stated in his declaration that he have never known any operators of websites as he does not directly deal with infringing website operators.
  • As a result the jury granted injunction in favour of plaintiff and awarded $10,500,000 for contributory trademark infringement/counterfeiting against each of the defendants making it a total of $31,500,000 as damages.

Conclusion

While deciding the liability of trademark infringement 3rd parties on the virtual market it is significant and vital to know the Inwood Lab test. If someone directly “monitors and control” the instrumentality of infringement, then such person would be held liable for such trademark infringement. While discussing landmark cases of different countries it is pertinent to note that different courts held totally an unlike and distinctive opinion while the dealing with the same issue or subject in hand.

Where while examining the Tiffany case on one hand, the court emphasized on the importance and significance of actual and constructive knowledge of an breach, on the part of the secondary infringer in order to establish a contributory trademark liability on the part of operators online marketplaces, there on the other hand, the judgment of CJEU in L’Oréal v. eBay International AG, the court gave stricter ruling while assessing the liability of the online market operators. The court in the case of L’Oréal held that the proprietor of a trademark registered in a Member State had the right to prevent offers for sale or advertising even online of good associated with his registered trademark.

The court in the case of Tiffany (NJ) Inc. V. eBay the court have stressed the ‘control‘ element an operator posses on the part of the secondary infringer and held that the defendant did not have any direct control on the infringing goods, hence was liable to be set free without and damages. The Court in the case of L’Oréal giving a firmer judgment said eBay’s advertisements created an evident association between the registered trademarked goods and online market site, which eventually created an adverse effect on the registered trademark. The court also held the advertisements eBay had not only contravened the interests of fair trading but had also violated consumer protection rules laid down by Directive 2000/31 Article 6.

The jury in Louis Vuitton Malletier case gave a much firmer, securer and accurate judgment stating that the defendant not only provided its services to the infringing party but also had a direct control and monitoring of the instrumentality used by a third party to infringe. The court siad in order the prove an infringement case against an online market operator it was imperative to show that contributory infringer was assisted with actual or constructive knowledge of trademark infringement. While passing a deterrent judgment, the court awarded statutory damages of $31,500,000 in favour of the plaintiff for contributory trademark infringement.

Convenient for international courts, they have appropriate legislations and directives that would help them deal with the subject. The Indian courts have yet to address the issue critically and bridge this important gap of liability of 3rd part in a trademark infringement in the cyberspace. Fortunately the international courts have critically analyzed the subject and have set an enlightening, fitting and instructive path for Indian courts.

Indian jurisprudence on “liability of online market portals vis-à-vis trademark infringement in the cyberspace” will be dealt by me in my next blog.

About the Author:

Ms. Shireen Shukla, a legal intern at Khurana & Khurana, Advocates and IP Attorneys articulates her finding on the International jurisprudence on the labiality of operators of online market portals vis-à-vis trademark infringement in cyberspace.

[1] The Free Dictionary: http://legal-dictionary.thefreedictionary.com/vicarious+liability

[2] Justice O’Connor, Justice Burger, Justice Brennan, Justice Blackmun, Justice Powell, Justice Stevens & Justice Marshal in Re: Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 102 S. Ct. 2182, 72 L. Ed. 2d 606 (1982)

[3] Michael J. McCue: Lewis Roca Rothgerber Christie: Secondary Liability for Trademark and Copyright Infringement; last visited as on 5th April, 2017 <https://www.lrrc.com/secondary-liability-for-trademark-and-copyright-infringement-02-05-2012&gt;

[4] 222 U.S. 55 (1911)

[5] 456 U.S. 844 (1982)

[6] L’Oréal v. eBay International AG

[7] Tiffany (NJ) Inc. v. eBay Inc. 600 F.3d 93 (2d Cir. 2010)

[8] C-324/09

[9] 600 F.3d 93 (2d Cir. 2010)

[10] “it allows the defendant to use a plaintiff’s trademark to identify the plaintiff’s goods so long as there is no likelihood of confusion about the source of the defendant’s product or the mark-holder’s sponsorship or affiliation.”

[11] i.e. if a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, then the manufacturer is liable for contributory liability

[12] Where a person suspects that users of its service are infringing a protected mark (suspects wrongdoing), and that he shields himself by deliberately failing to investigate by giving a blind view to the issue.

[13] The Federal laws of US allows the owner of a “famous mark” to enjoin a person from using “a mark or trade name in commerce that is likely to cause dilution by blurring or dilution.

[14] 658 F.3d 936 (9th Cir. 2011)

[15] 511 F.3d 966, 972 (9th Cir. 2007).

[16] The plaintiff must establish that the defendant:

  1. Intentionally induced the primary infringer to infringe, or
  2. Continued to supply an infringing product to an infringer with knowledge that the infringer is mislabeling the particular product supplied

[17] That the defendant and the infringer have an apparent or actual partnership, have authority to bind one another in transactions with third parties or exercise joint ownership or control over the infringing product.

Can non-compliance of mandatory provisions under the patents act, 1970 land you behind the bars?

Technically YES.

The Patents Act, 1970 (hereinafter referred to as the “Act”) is a piece of legislation, penalties under which are largely civil in nature, such as fines, award of monetary damages, injunction, loss of patentee rights including compulsory licensing, abandonment of application or revocation of a patent.

However, violation of certain provisions, such as Section 39 attracts liabilities as set forth in Section 40, and Section 118 of the Act.

In 2002, the foreign filing license (FFL) requirement was introduced in the Act. This requirement required that any inventor / applicant who is a resident of India should file or cause to be filed a patent application for his/her own invention first in India; and only after a period of six weeks after the date of filing of the patent application, a filing could be done in a country outside India. Such a requirement clearly indicates that any Applicant (including inventor) who is a resident of India and desirous to file a patent application firstly outside India is required to U/S 39 to seek a Foreign Filing License (FFL) prior to filing the patent application in any foreign jurisdiction. The principal intent behind FFL is to allow the Indian Patent Office (IPO) to track applications which may be of national importance and/or of sensitive nature, such as atomic energy, defense or national security. It is to be noted that there is no provision under the Act to seek a FFL retrospectively, which makes adherence to the provisions of Section 39 and related Sections that much more critical and important.

Under 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”.

It is also important to note that, the scope of Section 39 with respect to “Residents” is not limited to citizens of India or people (citizens of India or elsewhere) living in India. The term “resident” in law is construed to be broader than the term “citizen.” The term “resident” is not defined anywhere in the Patents Act of 1970. The lack of a definition for the term “resident” in the Act necessitates that this interpretation be made from the definition of “resident” as given in the Income Tax Act, 1961. According to the Indian Income Tax Act, an individual is termed as a ‘Resident of India’ if he stays for the prescribed period during a fiscal year i.e. 1st April to 31st March, either for: 182 days or more; or Has been in India in the aggregate for 365 days or more in the previous 4 years. Thus, the scope of who is a resident, while not defined in the Act, can be found in Section 6 of the Income Tax Act, 19611.

Violation of directions under Section 39 attracts civil liabilities under Section 402 of the Act.  Briefly, under the said Section, contravention of Section 39 would result in the application deemed to have been abandoned, and if granted, shall be liable to be revoked under Section 64, sub-clause (n). The language of the provision clearly suggests that non-compliance of Section 39 would severely prejudice the interests of a patent applicant or patentee. A plain reading of the statute suggests that there is no option provided to the applicant to remedy the deficiency, and there are no judicial precedents established by the higher judiciary which may allow any such relief to the Applicant.

More importantly, violations of directions under Section 39 also attract criminal liabilities under Section 1183 of the Act, in which the term of imprisonment may extend to 2 years or a monetary fine imposed on the inventor, in addition to abandonment of the patent application or revocation of the patent even if it is already granted.

It is to be noted that judicial proceedings under Section 118 are to be initiated by the Controller. However, since the Controller has no powers to pass any order of imprisonment, the matter is to be sent to the Courts for formal proceedings.

The language of the said Section, particularly in reference to the word “shall” suggests that judicial proceedings are to be mandatorily initiated and that the Controller has no discretion in the matter. It is up to the Judge’s discretion to pass an order of fine, imprisonment or both. While there is no prior case of prosecution under Section 118, it is important for an Applicant to assume strict compliance in order to avoid unnecessary judicial proceedings.

Therefore, it is in the interests of the Applicant to not only be aware of the provisions of Section 39, 40, and 118, but also take timely action to be in compliance. The said Sections assume more relevance in the present context as many foreign companies have R&D centers in India, research findings of which are filed as patent applications first outside India.  Another common scenario is Indian citizens carrying out research abroad which can lead to generation of patents, or conversely, foreign citizens in India carrying out research. In any of the instances, it is likely that the foreign patent attorney may not be aware of the particular provisions as discussed herein and may inadvertently not only prejudice patentee rights, but also expose the applicant to court proceedings.

Thus, it is always recommended that, in the case of doubt over the residency status of an inventor, it is always safer to first file a patent application in India or to obtain written permission from the Controller of Patents for the grant of foreign filing license and thereby, safeguard the inventor from criminal consequences of Section 118 of The Indian Patents Act of 1970.

ABOUT THE AUTHOR:

Dr. Amitavo Mitra is a Patent Agent and Sr. Patent Associate at Khurana and Khurana, Advocates and IP Attorneys. Views expressed in this article are solely of the author and do not reflect the views of either of any of the employees or employers.

Queries regarding this may be directed to amitavo@khuranaandkhurana.com or swapnils@khuranaandkhurana.com

1Section 6 of Income Tax Act, 1961: (1) An individual is said to be resident in India in any previous year, if he- (a) is in India in that year for a period or periods amounting in all to one hundred and eighty- two days or more; or (b) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty- five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation.- In the case of an individual,- (a) being a citizen of India, who leaves India in any previous year 4 as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958 ), or] for the purposes of employment outside India, the provisions of subclause (c) shall apply in relation to that year as if for the words” sixty days”, occurring therein, the words” one hundred and eighty two days” had been substituted; (b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub- clause (c) shall apply in relation to that year as if for the words” sixty days”, occurring therein, the words 5 one hundred and eighty- two days”] had been substituted.]

(2) A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

(3) A company is said to be resident in India in any previous year, if- (i) it is an Indian company; or (ii) during that year, the control and management of its affairs is situated wholly in India.

(4) Every other person is said to be resident in India in any previous year in every case, except where during that year the control and management of his affairs is situated wholly outside India.

(5) If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income.

(6) A person is said to be” not ordinarily resident” in India in any previous year if such person is- (a) an individual who has not been resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more; or (b) Hindu undivided family whose manager has not been resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more.

2 Section 40 of Patents Act, 1970: “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”.

3 Section 118 of the Patents Act, 1970: “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”.

Early publication of patent application under the Indian patent law system

Publication of a patent application is one of the prime stages in the process of getting a patent. The publication date of the patent application is considered of a specific significance because the applicants’ advantages as well as rights start from the publication date. Even though the applicant cannot seek any infringement proceedings till the patent is granted.

Generally, the patent application is published in the Official Patent Office Journal automatically after 18 months from the date of filing of the application or the priority claimed date, whichever is earlier. It is to be noted that only complete applications are published, whereas the provisional applications, unless filed as a complete after provisional (CAP) application (i.e., complete application before the expiry if 12 month form the filing date of the provisional application), are neither published nor examined by the Patent Office. The provisional application will be deemed abandoned at the expiry of the 12 month period if a CAP application is not filed.

The provision for early publication is given under Section 11A(2) of the Indian Patents Act, 1970, which states that “The applicant may, in the prescribed manner, request the Controller to publish his application at any time before the expiry of the period prescribed under sub‑section (1)1 and subject to the provisions of sub‑section (3)2, the Controller shall publish such application as soon as possible”.

Thus, a request for early publication can be made by filing a Form 9 along with a payment of fees of INR 2500 (if applicant is a natural person/startup) or INR 6250 (if applicant is a small entity) or INR 12500 (if applicant is other than natural person/startup or small entity). Under rule 24A, and upon the request for early publication, the application will normally be published within 1 month from the date of such request.

It is important to note that the provision to file the request for early publication for any patent application is available ONLY to the Applicant of the patent application, whereas any other person, apart from the Applicant of the patent application, cannot file such request for any reason whatsoever.

Advantages of early publication:

Reducing prosecution time. Examination of a patent application takes place only after publication of the patent application (subject to the queue position of the application pending examination and filing of request for examination by way of Form 18). Provided that if an Applicant files a complete application in the first instance along with Form 18 and Form 9, the Applicant stands to advance prosecution time by approximately 17 months. In another example, if the Applicant files a CAP along with Form 18 and Form 9 at the 12 month deadline, the Applicant stands to advance prosecution time by approximately 5 months.
Start time of patentee rights. A patentee can institute a suit or other proceeding for infringement against the infringing party only after grant of the patent, however, the rights start accruing only after the publication date. Therefore, in the instance of early publication, the applicant gets “extra” time for which damages may be claimed from potential infringers.
Prior art: A patent application does not become prior art until it is published, i.e. it becomes a prior art only after 18 months from the date of filing of the application or the priority claimed date, whichever is earlier. An applicant interested in securing his patent rights at the earliest can take advantage of detracting his competitors by making his invention/application public at the earliest instance.
Discouraging competitors: Early publication allows the applicant to advertise to potential competitors that a particular subject matter is already a subject of the patenting process. This may serve to detract the competitor from coming up with a similar product or process. However, with India following first-to-file system, the utility of this advantage has diminished and of limited value.
Disadvantages of early publication:

Fees: Though the fees for filing a request for early publication (as stated above) is not significant, however, for many individual or small entities, the amount may not be trivial and represents a cost over and above the regular fees.
Withdrawal of application: Under normal procedure, the applicant has upto the 15th month from priority date to withdraw the application. However, with early publication, depending upon when the request is made, the Applicant’s choice to withdraw may be greatly curtailed.
Pay-to-play: The early publication feature allows those with financial wherewithal to leapfrog the examination queue in part by eliminating or substantially decreasing the latency time while the application is not published. This may be unfair to applicants who otherwise cannot avail of this opportunity.
Risk of pre-grant opposition: A pre-grant opposition can be filed by any person upon publication of the application and at any time before grant of the patent if the prescribed examination fee has been paid. Thereby, early publication certainly gives more time for the opponents for pre-grant opposition.
Overall, it can be appreciated that based on the strategy of the Applicant and his interest, the provision of early publication can be exercised at the Applicants discretion to maximize the value of the patent.

It should be noted that given the long pendency of applications currently awaiting examination at the Indian Patent Office, early publication just might be a relatively non-expensive method (for those who can afford it) to expedite the prosecution process.

1Section 11A(1): Save as otherwise provided, no application for patent shall ordinarily be open to the public for such period as may be prescribed.

2Section 11A(3): Every application for a patent shall, on the expiry of the period specified under sub‑section (1), be published, except in cases where the application-(a) in which secrecy direction is imposed under section 35; or (b) has been abandoned under sub‑section (1) of section 9; or (c) has been withdrawn three months prior to the period specified under sub‑section (1).

ABOUT THE AUTHOR:

Mr. Amitavo Mitra, Patent Agent and Sr. Patent Associate at Khurana and Khurana, Advocates and IP Attorneys. Views expressed in this article are solely of the author and do not reflect the views of either of any of the employees or employers.

Queries regarding this may be directed to amitavo@khuranaandkhurana.com or swapnils@khuranaandkhurana.com

Injunction against Cipla COPD Drug ‘INDAFLO’ Upheld: Delhi High Court

Reportedly, on an appeal filed by Cipla pertaining to COPD drug INDAFLO, the Delhi High court division bench maintained the interim injunction imposed by single judge against Cipla.  As per the order, Cipla has now been restrained from, inter alia, using, manufacturing, importing, selling any pharmaceutical products etc. containing ‘INDACATEROL‘ or ‘INDACATEROL Maleate‘, alone or in combination with any other compound or Active Pharmaceutical Ingredient (API) leading to the infringement of Novartis patent over INDACATEROL.

Background:

INDACATEROL is a bronchodilator and used in the treatment of the patients suffering from Chronic Obstructive Pulmonary Disease (COPD). The drug has been protected and patented by Novartis under Patent no. 222346 and Novartis markets the drug in India through Lupin under the trade name “ONBREZ”. However, Cipla had launched a generic version of the drug with the trade name ‘UNIBREZ’ to which Novartis filed a trademark infringement suit and Cipla agreed to change the trade name to ‘INDAFLO’. Further, Novartis moved to Delhi High Court to seek permanent injunction against manufacturing and selling of INDAFLO and thereby stopping Cipla to infringe its patent over this drug. Hon’ble Single Judge Justice Manmohan Singh passed order for interim injunction against Cipla, until the decision on the application for compulsory license to manufacture and sell INDAFLO is decided by the respective authority.

Being aggrieved by the order of the Learned Single Judge, Cipla filed an appeal challenging the interim injunction.

Arguments and Observations:

Cipla contended and relied on Section 48 (Rights of the Patentees) of the Patent Act 1970, referring to the wordings as mentioned in Section 48 “subject to other provisions in the Act” to be viewed in the light of Section 83 (dealing with General Principles applicable to working of patented inventions) of this Act.

Taking Sections 48 and 83 of the Patents Act, Cipla argued that since Novartis does not manufacture the drug in India and therefore Novartis does not comply with the principles under Section 83. The court rejected this argument stating that Section 83 has no relevance as far as Rights of Patentees as mentioned under Section 48 is concerned.

As per the bench of two judges, Section 83 begins with the words ‘without prejudice to the other provisions contained in this Act’ meaning that Section 83 is without prejudice to any sections in this Act which includes Section 48 as well and further it has been stated that Section 83 belongs to the different chapter of the Act and therefore this does not have an effect on the rights awarded to the patentee under Section 48 of this Act.

Cipla has further argued that since Novartis does not practice the patent in India as it imports the drug in limited quantities and market through Lupin, Cipla should not be restricted to manufacture and sell its generic version. Taking the 2002 case Telemecanique in light, the bench of the two judges rejected the Cipla’s claim, stating that the working of the patent need not compulsorily imply to only manufacture in India, however, the patent can be exercised by even importing the products. However, the court at this stage concluded that on the basis of data submitted by Novartis, sufficient quantities are imported in India since other drugs for treating COPD are also available in the market and also INDACATEROL does not fall in the category of Life Saving Drug.

Cipla further argued on the grounds of “public interest” that Novartis is not importing the sufficient quantity of the drug and also the drug marketed by Novartis is approx. 5 times as expensive as compared to Cipla’s generic version. Cipla argued that pubic interest would not be served in case the injunction is allowed to remain and contended that while granting an injunction “public interest” has to be considered as one of the four aspects (in addition to prima facie case, balance of convenience and irreparable harm and injury).  To which, the court rejected this plea stating that “public interest” is only one of the four factors to be considered while granting an injunction. Further, the bench brought it to the notice that Cipla in this case till now has not even proved that the grant of injunction against Cipla would really harm the public interest. Whereas, Novartis has duly established the validity of the patent and the revocation of the interim injunction in this case, would cause irreparable injury to Novartis under their rights as Patentees as mentioned under section 48 of Indian Patent Act.

Judgment:

Therefore, the bench maintained the interim injunction passed by Hon’ble Judge Manmohan Singh judgment and refused to interfere with the impugned judgment proving to be a disappointment for Cipla in the respiratory drugs market.

About the Author: Ankur Gupta, Lead Operations-Hyderabad, IIPRD and can be reached at: ankurg@iiprd.com