Category Archives: India

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

Delhi High Court sought Explanation through Counter Affidavit over Repudiation of Patent application for Xtandi

Xtandi, the wonder drug for prostate cancer, was developed at UCLA, Los Angeles, by the innovation of NIH and Department of Defense grants. The drug was later licensed to Medivation, a biopharma company, which in October 2009 struck a deal with Japanese Astellas Pharma to collaborate on developing and commercializing Xtandi. The two companies now work in partnership to market the drug in US while Astellas Pharma is entrusted with the commercialization of the drug even outside US. The rights to Xtandi were later taken over by Pfizer Inc as a part of Medivation acquisition in August 2016.

In the current scenario, Astellas Pharma, which sells Xtandi in India (a country where most of the people that require the drug make just over $4 per day), is condemned for making the drug available to the Indian metastatic castration-resistant prostate cancer patients at a whopping price of 335,000 rupees or about $5014.60 US Dollars for 112 capsules (a monthly supply), translating to roughly $180 or Rs. 11,000 per day. To this condemnation, the Japanese Pharma giant responded by saying that the cost has been fixed to recuperate the cost of innovation and is commensurate with patient benefit. The blockbuster drug currently nets nearly $3 billion in worldwide sales[1].

The patent application towards Xtandi, titled “DIARYHDANTOIN COMPOUNDS”, was duly filed by UCLA with Delhi Patent Office on December 13, 2007 (Application Number – 9668/DELNP/2007). The application was rejected by the Delhi Patent Office in November 2016. Hitherto, the varsity has been granted patent for this innovation in over 50 jurisdictions across the world since 2007. The rejection of the patent application in India came in the wake of a large array of pre-grant oppositions that were filed by a clutch of companies[2] like Fresenius Kabi on December 12, 2012, BDR pharma on July 24, 2013, Indian Pharmaceutical Alliance, and a few individuals -Mr.Umesh Shah and Ms. SheelaPawar on the following grounds of the Indian Patents Act:

  1. Section 25(1)(e) – Lack of Inventive Step
  2. Section 25(1)(f) – Not inventive (u/s 3(d) and u/s 3(e))
  3. Section 25(1)(g) – Lack of Clarity and sufficiency

The opponents had argued that the claimed compound is not patentable under Section 3(d) of the Patents Act, 1970 as amended by the Patents (Amendment) Act, 2005 as it is a new form of known substances. It was also held that the inventiondid not entail any material improvement in efficacy. Additionally, the Assistant Controller in the case held that the claimed invention did not entail an inventive step over US patent ‘981 and ‘257, inasmuch as it did not entail any non-obvious addition to the compounds envisaged by these documents[3].

For the reasons indicated supra made the Assistant Controller of Patents Designs, Mr. Umesh Chandra Pandey, rejected the invention under Section 25(1) in November 2016 (order by Patent Office). However, now the UCLA (the applicant), represented by senior advocate P Chidambaram, has contended that its application was rejected merely on the ground of opposition by some competitors. The writ petition filed by the UCLA also indicates that even the evidences submitted by UCLA in support of its claims were not considered by IPO and so it has been contested that the application be remanded for consideration of the same[4].

This ongoing attempt of UCLA to get Xtandi (Enzalutamide) patented in India witnessed a development on March 2 when Delhi High Court passed an order in the case of The Regents of the University of California v. Union of India (order), asking the Centre to render an explanation on rejection of patent application (on November 10, 2016).

About the author: Tanu Goyal, Patent Associate at IIPRD and can be reached at: tanu@khuranaandkhurana.com

[1]http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Patent-denied-price-of-prostate-cancer-drug-may-10112016014006

[2]http://www.pharmabiz.com/NewsDetails.aspx?aid=98990&sid=1

[3]http://www.mondaq.com/india/x/576168/Patent/IPO+Rejects+Patent+Application+For+Xtandi+Prostrate+Cancer+Drug

[4]http://www.dnaindia.com/health/report-hc-seeks-reason-for-denial-of-prostrate-cancer-drug-patent-2342983

Fighting with Counterfeit Menace: Montblanc Simplo GmbH vs. Gaurav Bhatia & ors. CS(OS) 2563/2013: Granting Injunctive Relief

Introduction:

It always has been a well known fact that the markets in India are targeted by large number of counterfeit products/goods. Popular brands like LV, GUCCI, Burberry, Armani, Hermes inter alia; are frequently pirated in local commercial markets. Among others, the most popular counterfeit products in market include hardware, software, clothing, watches, writing instruments.

At that backdrop, Indian system is striving hard to deal with the menace caused by the counterfeit products in the market which not only endangers country’s reputation and goodwill but also affect country’s financial market. Indian judiciary has timely made its presence felt by passing landmark judgments with various issues Indian market is facing. Recently, Hon’ble Delhi Court passed orders in one such case which dealt with counterfeit issue.

Facts of the case:

Delhi High Court in its recent judgment dated January 04, 2017 in the matter of Montblanc Simplo GmbH vs.  Gaurav Bhatia & ors. CS (OS) 2563/2013, The Court has restrained an electronic commerce web portal functioning under the Trade name “www.DIGAA.com”. The Defendant’s impugned website was alleged dealing with the manufacturing, selling and advertising of counterfeit Montblanc products which are registered under the Trademark of the Plaitiffs.

Background of the case:

Plaintiff:

A German company incorporated under the laws of the country having its registered office at Hamburg. The registered company named “Montblanc Simplo GmbH” has its work engaged in the manufacturing, distribution and sales of pens & other writing instruments under the registered Trade name MONTBLANC MEISTERSTUCK,. The plaintiff’s company Trademark also include “The Star Device” which is a white stylized six pointed star with circular edges and the “The three ring Device” comprised of three metallic bands located close to the middle of body of pen cap. The plaintiff’s company claims its product registered under proprietors name within India as well as other countries across the world.

In July 2013, the plaintiff through its office in India came to know that the said defendant was selling counterfeit products on a lesser rate from original product of plaintiff. The defendant represented his product as original product of Plaintiff Company. Hence, the present suit was filed.

Submission by the parties:

Plaintiff’s Submission:

  • Plaintiff claimed that his company is losing reputation and trust of his clients because of defendant’s counterfeited products. Plaintiff claimed to be suffering loss and demanded damage worth INR 2,005,000.
  • Plaintiff stated the price of original MEISTERSTUCK CLASSIQUE is INR 30,000 whereas the defendants were selling similar counterfeit product for INR 6,860.
  • Plaintiff in his submission stated that they purchased writing instrument, namely, the MEISTERSTUCK CLASSIQUE from the website defendant was using to sell the products, which were being sold at a discounted price and falsely represented as a product of the plaintiff upon examination that the product was a counterfeit.
  • It was submitted by the plaintiff that the defendant’s product is of inferior quality; also the refill used in Defendants instrument was different than that of original product. Defendant’s instrument has a different color combination than that of plaintiff. Also, the tip of the refill of defendant’s writing instrument has a plastic ball which is different than that of plaintiff’s original product. The serial numbers on the product were also fabricated by the defendant.

The defendants after filing their Written Statement stopped appearing in court and the suit was preceded Ex-parte.

Observation by the Hon’ble court:

  • Court observed some of the consumers complaints filed against the defendant including one customer who purchased counterfeited product from defendant and suffered subsequently lodged a complaint before the cyber cell of Chandigarh Police under section 420 & 406 of Indian Penal Code and section 66A of Information Technology Act.
  • Plaintiff’s brand name MONTBLANC is a well-known mark having goodwill and reputation in its market. It is also proved that public identified plaintiff’s product from its trade dress which includes “The Star Device” and “The Three Ring Device”.
  • Plaintiff also proved on record its notice published in India, and related information from the defendant’s web portal displaying counterfeit products of the plaintiff’s Trademark, They also attached the invoice alongside of the purchased products and photographs of counterfeit products and their warranty card.
  • The court observed that the plaintiff had proved that the defendant was counterfeiting its goods and thereby, infringing its Trademark.

Held:

The Hon’ble Court, in view of the above case granted relief of permanent injunction against the Defendants as sought by the plaintiff  and also passed a restraining order against them to restrain them from Passing-off their counterfeit products as that of plaintiff’s. However, the claim for damages was rejected by the court on the ground that Plaintiffs have not produced sufficient evidence to show the extent of actual damage suffered by the company. Hence, the judgment was in the favor of the plaintiff. Pertinently, it is important to note that in order to claim damages proper and sufficient evidence must accompany to get monetary relief against damages suffered.

About the author: Mayank Srivastav, an intern at Khurana & Khurana, Advocates and IP Attorneys

Export under section 107A of Indian Patent Act, 1970

In the case of Bayer Corporation versus Union of India & ors (W.P.(C) 1971/2014) and Bayer Intellectual Property Gmbh & Anr versus Alembic Pharmaceuticals ltd (CS(COMM) No.1592/2016), High Court of Delhi in the consolidated decision dated March 08, 2017, adjudicated on the issue whether Section 107A of the Patents Act, 1970 permits export from India of a patented invention, even if solely for uses reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product.

Though it’s been almost five years after first compulsory license (in India) was granted to Natco in 2012 against Bayer’s Patent IN215758 covering Nexavar (Sorafenib ), Bayer and Natco are fighting it hard in 2017 as well. One of the terms of Compuslory License was “solely for the purposes of making, using, offering to sell and selling the drug covered by the patent for the purpose of treating HCC and RCC in humans within the territory of India”.

Subsequently, Natco was permitted to export the drug SORAFENIB TOSYLATE not exceeding 15 gm for development / clinical studies and trials. Natco again applied for permission to export 1 Kg. of Active Pharmaceutical Ingredient (API) SORAFENIB to China for the purposes of conducting development / clinical studies and trials, to which Bayer objected.

To better understand the issue at the heart of this decision, it’s important to understand section 48 of the Indian Patent Act, 1970 which gives rights of Patentee and section 107A of the Indian Patent Act, 1970 which lists out activities which shall not be considered to be infringement of Patent.
Both the sections have been reproduced below for convenience.

Section 48:

Subject to the other provisions contained in this Act and the conditions specified in section 47, a patent granted under this Act shall confer upon the patentee—

(a) where the subject matter of the patent is a product, the exclusive right to prevent third parties, who do not have his consent, from the act of making, using, offering for sale, selling or importing for those purposes that product in India;

(b) where the subject matter of the patent is a process, the exclusive right to prevent third parties, who do not have his consent, from the act of using that process, and from the act of using, offering for sale, selling or importing for those purposes the product obtained directly by that process in India.

Section 107A:

For the purposes of this Act,— any act of making, constructing, using, selling or importing a patented invention solely for uses reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product; (b) importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product, shall not be considered as a infringement of patent rights.

Natco pleaded that export of the Patented invention for the use reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product is squarely covered under section 107A. It also submitted that its intentions were not for commercial purpose. Natco also submitted that grant of Compulsory License does not take away the rights to export the Patented invention for the purposes of section 107A.

Bayer alleged that 107A of Indian Patent Act does not allow exporting of drug even for the purposes of reasonably related to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product. Bayer tried to draw attention to the fact that language of section 107A does not use the word ‘export’ but uses the word ‘import’. Bayer alleged that absence of the word ‘export’ clearly indicates the purpose of the law was not to allow the export of the patented invention and the words ‘in a country other than India’ should be interpreted only to allow export of the information generated by experiments in India. Patented invention as such cannot be exported from India to generate information to be submitted in other countries. The word selling should be interpreted to mean selling in India and not outside. Bayer alleged that if law intended to allow export, language would have expressly included that as it has included import. In summary, Bayer requested the court to interpret the word sell to mean selling without exporting, i.e. selling in India. Bayer importantly also alleged that exporting under 107A of Patented invention for which compulsory license was granted would result in the abuse of law.

On 5th November, 2014, Natco was permitted export of SORAFENIB for carrying on activities for obtaining regulatory approvals within the meaning of Section 107A of the Act. Bayer preferred appeal against the said order and which was disposed of by expediting the hearing of the writ petition and by prohibiting export till the decision of the writ petition. The hearing of the writ petition commenced on 7th September, 2015 and concluded on 8th July, 2016, when orders were reserved.

Natco had also brought attention to the fact that China requires clinical trials to be conducted in China and do not recognize clinical trials conducted in India. This makes it mandatory for Natco to seek export under section 107A so that it can launch the product in China immediately after term of patent is over.

CS(COMM) No.1592/2016 was filed by Bayer to injunct Alembic from making, selling, distributing, advertising, exporting, offering for sale and in any manner directly or indirectly dealing in Rivaroxaban‘ and any product that infringes Bayer‘s patent IN 211300. Alembic was manufacturing and exporting RIVAROXABAN to the European Union and had made multiple Drug Master File submissions to the United States Food and Drug Administration in the United States of America for the drug RIVAROXABAN. Alembic alleged that exports being effected by Alembic were within the meaning of Section 107A only.

For both cases, court held after referring different dictionaries that selling cannot be interpreted to mean to exclude exporting. Also court found that Patent Act does not require court to do so. Court also brought attention to the fact that even absence of the word ‘export’ in section 48 does not prevent Patentee from restricting third parties from exporting patented invention. Court explained that it’s not the exporting of information is allowed but it’s the Patented invention. The words ‘in a country other than India’ are for the law in force (of country where information is required).
Court also went on to hold that even when compulsory license is granted, Natco as a non-patentee cannot be deprived of making, constructing and selling by way of export a patented invention for purposes specified in Section 107A.

Court gave the liberty Bayer to, if makes out a case of the exports effected or to be effected being for purposes other than specified in Section 107A, take appropriate proceedings therefor.

About the Author: Swapnil Patil, Patent Associate at Khurana & Khurana, Advocates and IP Attorneys and can be reached at: swapnil@khuranaandkhurana.com.

India’s time to delve into IP laws

Shireen Shukla, legal intern at Kkurana & Khurana, probes the recent International IP Index report, released by U.S. Chamber of Commerce, where India stood at 43rd position, out of 45 countries.

On 8th February, 2017 U.S. Chamber of Commerce released its 5th annual International IP Index, “The Roots of Innovation,” rating 45 world economies on patents, trademarks, copyright, trade secrets, enforcement, and international treaties with the aim to provide both, an IP report card for the world and a guidebook for policymakers seeking to bolster economic growth and innovation.

It is an undeniable fact that protection of intellectual property serves dual role in the economic growth of a country. Where on one hand it promotes innovation by providing legal protection of inventions, on the other it may retard catch-up and learning by restricting the diffusion of innovations. Therefore a sounder IPR protection in a country encourages technology development and technology transfer from developed to least developed countries. Countries that would demonstrate a commitment to IP laws will only reap rewards.

Often we have seen that major companies and brands invest their money or open their outlets in another country only after seeing the soundness of their IP laws. This proves the role of IP laws and enforceability on the GDP of a country.

GIPC is leading a worldwide effort to champion intellectual property rights as vital to creating jobs, saving lives, advancing global economic growth, and generating breakthrough solutions to global challenges  (Reddy, 2017). The Index ranked the IP systems of 45 countries. Where on one hand United States was ranked number 1, India and Pakistan were ranked 43 and 44 respectively.

Image Source: U.S. Chamber International IP Index: http://www.theglobalipcenter.com/ipindex2017-chart/#

 

Some major facts from the IP Index:

  • A pack of global IP leaders emerged among the 2017 Index rankings, with the U.S., UK, Japan, and EU economies, ranked more closely together than ever.
  • Canada signed the Comprehensive Economic and Trade Agreement (CETA), which raised the bar for life sciences IP protection.
  • Russia introduced new forced localization measures.
  • Japan’s score increased by 10% due to ratification of TPP and accession to the Index treaties.
  • South Korea passed amendments to the Patent Law.
  • Uncertainty around software patentability, Section 3(d) of the Patent Law, and High Court copyright decisions in India continue to present challenges.
  • Indonesia’s Patent Law included a heightened efficacy requirement and outlawed second use claims.
  • South Africa introduced new local procurement policies.
  • UAE created a specialized IPR Court.
  • Indian government issued the National Intellectual Property Rights Policy in 2016.

India announced the much-awaited National IPR Policy in May 2016. This act proved to be a positive attitude to foster the IP laws in India. The Policy is a boon for the IP industry as it provides constructive ways and methods to improve IP administration. The policy has enumerated the importance to educate Indian businesses about IP rights.

The Policy makers realizing the real issue in hand, addressed a number of important gaps in India’s national IP environment, which included the need for stronger enforcement of existing IP rights through the building of new state-level IP cells and investing more resources in existing enforcement agencies; reducing processing times for patent and trademark applications; as well as the need for introducing a legislative framework for the protection of trade secrets

Major developments and landmark judgments in Intellectual property laws since 2015:

  • The Delhi high court on 7 October 2015, barred Mumbai-based Glenmark Pharmaceuticals Ltd from selling, distributing, marketing or exporting its anti-diabetes drugs Zita and Zita-Met,as they tentatively infringed the patent of US-based pharmaceuticals company Merck Sharp and Dohme Corp.
  • In March, 2016, the Delhi High court in the case of Ericcson v. CCI for the first time ever, considered at how IP law interfaced with competition law. It allowed Competition Commission of India (CCI) to continue its investigation into anti-competitive practices by Ericsson regarding use of its SEP’s by other companies such as Micromax and Intex.
  • National IPR Policy in 2016, released last year is entirely compliant with the WTO’s agreement on TRIPS.
  • Examination time for trademarks has been reduced from 13 months to 8 months in the 2016 policy.
  • Bombay HC passed a series of judgments cases (Phantm Films pvt, Ltd. v. CBFC & Anr; Eros International Media Ltd. & Another v. Bharat Sanchar Nigam Ltd.) laid down a strict agenda for the grant of John Doe orders leading to path breaking shift in the John Doe jurisprudence in India. The above-mentioned judgments are focused on balancing the interests of not just copyright holders but also the Internet users and innocent third party providers.
  • The judgment by Bombay HC in Eros v. Telemax, is a pioneer that unwrapped the scope of arbitration of IP disputes arising out of licensing and other commercial transactions.
  • In December 2016, the Delhi High Court in the case of Agri Biotech v. Registrar of Plant Varieties declared section 24(5) of the Plant Varieties Act unconstitutional. The court giving a momentous judgment stated that the section violates Article 14 as it gives unchecked powers to the Registrar. The registrar is not required to be from a legal background in order to grant interim relief to a breeder against any abusive third party act during the period its registration application is pending.This lead to arbitrary use of powers by the registrar.

Beside the above-mentioned developments and progressions, PM Narendra Modi’s “Make in India” initiative also aims to promoting foreign direct investment and implementing intellectual property rights. In these initiatives, the government has decided to improve the intellectual property rights for the benefit of innovators and creators by modernizing infrastructure, and using state of the art technology.

One of the most recent and effective change brought in the trademark rules was on 6th march 2017, where the number of trademark forms have been reduced from 74 to 8 with an aim of simplifying the process of trade mark applications. The new rules promote e-filling of the trademark applications. The fee for online filing of the application is 10 per cent lower than that of the physical filing.

Steps India can take to strengthen its IPR laws:

  • India should implement speedy examination and registration procedures.
  • It should take effective steps to achieve the target of one month (as stated in IPR policy 2016).
  • The number of patent examiners and trademark offices should be increased to improve efficiency and disposal speed.
  • Section 3(d) of India’s Patent Act 1970, relating to restrictions on patenting incremental changes should be amended. Norms relating ever greening should also be revised.
  • A new and revised IPR laws and policies should be implemented so as to make it compatible with IPR laws of WIPO, TRIPS and other major dominant countries like US & UK

Every fiscal year, enormous time and money is being invested on R&D to improve the existing status of the Intellectual property laws in India, to bring it at par with the IP laws of US. We hope by following the above guidelines and following the National IPR Policy, India’s position improves in the next International IP Index 2017.

References :

  1. Prashant Reddy, The Press Release Journalism Around the GIPC IP Index, February 13, 2017, < https://spicyip.com/2017/02/the-press-release-journalism-around-the-gipc-ip-index.html&gt; Last accessed: 28th February 2017
  2. Merck Sharp And Dohme Corporation. v. Glenmark Pharmaceutical, FAO (OS) 190/2013, C.M. APPL. 5755/2013, 466/2014 & 467/2014, (Delhi High Court) (20.03.2015)
  3. Telefonaktiebolaget LM Ericsson v. Competition Commission of India, W.P.(C) 464/2014 & CM Nos.911/2014 & 915/2014, (Delhi High Court) (30.03.2016)
  4. Phantom Films Pvt. Ltd. v. The Central Board of Film Certification, W.P.(L) 1529 /2016, (Bombay High Court) (13.06.2016)
  5. Eros International Media Limited v. Bharat Sanchar Nigam Limited, C.S. No.620 /2016 & O.A.Nos.763 to 765/2016 (Madras High Court) (25.10.2016)
  6. Eros International Media Limited v. Telemax Links India Pvt. Ltd., Suit no. 331 /2013, (Bombay High Court) ((12.04.2016)
  7. Prabhat Agri Biotech Ltd. v. Registrar of Plant Varities, W.P.(C) 250/2009, (Delhi High Court) (02.12.2016)

 

BLACKBERRY SUES NOKIA FOR PATENT INFRINGEMENT: AN OVERVIEW

The once powerful mobile phone companies BlackBerry and Nokia are in the headlines again, not for their new technological developments but because of their legal battle.

The Valentine’s Day card for Nokia was in the form of complaint entailing 11 items that Blackberry did not like about it. The complaint listed out the 11 patents of Blackberry infringed by Nokia. The company has not commanded an injunctive relief, i.e. asking Nokia to stop using the patents; instead it has asked for compensation for the unauthorized usage of the said patents. Let’s have a brief overview of the case.

Blackberry:

Headquartered in Waterloo, Ontario, Canada, Blackberry Limited, formerly known as Research In Motion (RIM), was founded by two engineering students, Mike Lazaridis and Douglas Fregin in 1984. It is a multi-national wireless telecommunications software and mobile hardware company, currently chaired by John S. Chen. It had taken over the smart phone market with its flagship QWERTY keypad range of mobile phones. Blackberry uses its own operating system, and had recently entered the Android arena of smart phones. It had ruled the gadget market with its classy, easy and appealing technology and applications for over two decades until its plunge with the launch of Apple iPhone and other Android phones. It had also developed key innovations that underlie 3G and 4G mobile communication technologies, such as Long-Term Evolution (LTE), including LTE Advanced and Universal Terrestrial Radio Access Network (UTRAN) technologies, and Universal Mobile Telecommunication Systems (UMTS). Blackberry’s contribution to innovation, including investment in research and development has exceeded a total of $ 5.5 billion, and has protected the technical innovations by seeking patents from the US office.

Nokia:

In a paper mill in 1865, Nokia was created by Fredrik Idestam and Leo Mechelin in South-west Finland. It is a multinational communications and information technology company, considered to be one of the most important Fortune 500 organizations. Nokia launched Mobira Cityman in 1987, the world’s first handheld phone. The most famous Nokia’s first GSM handset, Nokia 1101, was a swift hit in the market when it was launched in 1992. The partnership of Nokia with Microsoft It is presently chaired by Rajeev Suri. With the ingression of new companies, Nokia has tumbled down.

Connecting the dots:

Rockstar Consortium Inc. (also Rockstar Bidco) was formed in 2012 to settle and negotiate patent licensing acquired from the bankrupt multinational telecommunications and data networking equipment manufacturer Nortel. It comprises of five members: Apple Inc. Blackberry, Ericsson, Microsoft and Sony.

Rockstar Consortium bought Nortel’s IP in 2011 for $ 4.5 Billion, and created a special-purpose-patent-assertion company to use them. The IP consisted of over 6000 patents covering 4G wireless innovations and a range of technologies. Nokia had also made an attempt to buy Nortel’s IP in 2009, but was unable to obtain them due to the latter’s bankruptcy proceedings. In 2012, Rockstar Consortium was also listed, by the Business Insider, as the 3rd most fearsome (out of 8) “patent trolls” in the industry.

Rockstar initiated a lawsuit against 8 companies in 2013, including Google, Smasung, and other Android phone makers. When the IP was purchased by it, Google anticipated this scenario. The complaint encompassed 6 patents, all from the same patent family. The case was settled on confidential terms.

untitled

Blackberry sues Nokia: Case name:

Blackberry Limited   [Plaintiff]

Vs.

Nokia Corporation, Nokia Solutions and Networks Oy, Nokia Solutions and Network Holdings USA Inc., and Nokia Solutions and Networks US LLC                 [Defendants]

Case number and Court:

17- 155, United States District Court for the District of Delware (Wilmington). This Court has personal jurisdiction over each of the defendants under the Delware Long-Arm Statue, 10 Del. Code § 3014, and the U.S. Constitution. The Court has jurisdiction over this controversy under 28 U.S.C. §§ 1331 and 1338(a). The action for patent infringement has arisen under the patent laws of the United States, 35 U.S.C. § 1 et seq., including but not limited to 35 U.S.C. § 271.

Allegations:

Blackberry has filed this complaint against Nokia due to the latter’s unauthorized usage of the former’s contributions to innovation technologies. Blackberry holds the following 11 patents, known as “Asserted Patents” (enforcement of patent by the owner who believes that his patent has been infringed) which are the subject matter of the case:

  1. ‘418 Patent: United States Patent No. 6,996,418 is entitled “Apparatus and Method for PFDM Data Communications” and was issued on February 6, 2006.
  2. ‘246 Patent: United States Patent No. 8,254,246 is entitled “Scattered Pilot Pattern and Channel Estimation Method for MIMO-OFDM Systems and was issued on August 28, 2012.
  3. ‘090 Patent: United States Patent No. 8,494,090 is entitled “Detecting the Number of Transmit Antennas in a Base Station” and was issued on July 23, 2013.
  4. ‘305 Patent: United States Patent No. 7,529,305 is entitled “Combination of Space-Time Coding and Spatial Multiplexing, and the Use of Orthogonal Transformation in Space-Time Coding” and was issued on May 5, 2009.
  5. ‘433 Patent: United States Patent No. 8,861,433 is entitled “Method for Accessing a Service Unavailable through and Network Cell” and was issued on October 14, 2014.
  6. ‘697 Patent: United States Patent No. 9,426,697 is entitled “Method for Accessing a Service Unavailable through and Network Cell” and was issued on August 23, 2016.
  7. ‘772 Patent: United States Patent No. 9,253,772 is entitled “System and Method for Multi-Carrier Network Operation” and was issued on February 2, 2016.
  8. ‘192 Patent: United States Patent No. 8,897,192 is entitled “System and Method for Discontinuous Reception Control Start Time” and was issued on November 25, 2014.
  9. ‘202 Patent: United States Patent No. 9,125,202 is entitled “Multi-Beam Cellular Communication System” and was issued on September 1, 2015.
  10. ‘683 Patent: United States Patent No. 8,243,683 is entitled “Method and Apparatus for State/Mode Transitioning” and was issued on August 14, 2012.
  11. ‘829 Patent: United States Patent No. 8, 644,829 is entitled “Method and Apparatus for Signaling Release Cause Indication in a UMTS Network” and was issued on February 4, 2014.

Blackberry is the owner of all rights, title and interest in the aforementioned patents, with the full and exclusive right to bring suit to enforce them, including the right to recover for past infringement. Blackberry and RIM have publicly declared to the European Telecommunications Standards Institute (ETSI), an industry organization that promulgates wireless telecommunication standards specified by 3GPP (3rd Generation Partnership Project), that the Asserted Patents may be or may become essential to LTE Standards and/or UMTS/UTRAN Standards [practising wireless telecommunication standards], and the declaration is in public domain, accessible on a search engine provided and maintained by ETSI (https://ipr.etsi.org/).

Nokia has taken action intending to cause others to directly infringe the patents, including by selling or offering for sale the Infringing Products to third parties in the United States while expressly promoting these products’ capability to practice the LTE Standards, knowing that using these products to practice the LTE Standards would constitute direct infringement of the ’418 patent.

Infringing Products:

The 3GPP specifications that enumerate LTE and UMTS/UTRAN Standards are and have been implemented in Nokia’s products like Nokia’s Flexi line of products, alone or in combination with Nokia software such as the Nokia Liquid Radio Software Suite (collectively, the “Infringing Products”).  The Infringing Products include, without limitation, the following products, alone or in combination:  Nokia’s Flexi Multiradio and Multiradio 10 base stations, the Flexi Zone (small cell) Micro and Pico base stations, Femtocell base stations, Flexi Network Server, the Flexi Radio Antenna System, Nokia radio network controllers, and Nokia Liquid Radio Software Suite.

Knowledge:

Blackberry alleges that Nokia had knowledge of the existence of the applications for or the family members of the Asserted Patents as it had used the same in various patent prosecutions of its own.

  • The family members of the ‘246 patent were cited in an international search report and were also cited by Nokia and by an examiner during prosecution of a number of patent applications assigned to Nokia. Hence, it had notice of this patent before the filing of this action.
  • The publication of parent application of the ‘090 patent was cited in an international search report, and was also cited by Nokia during prosecution of a number of patent applications assigned to it. Hence, it had notice of this patent before the filing of this action.
  • The publication of parent application of the ‘772 patent was cited by examiners during prosecution of a number of patent applications assigned to it. Hence, it had notice of this patent long before the filing of this action.
  • The publication of parent application of the ‘192 patent was cited by the examiner during prosecution of at least one patent application that was assigned to Alcatel-Lucent, which was acquired by Nokia. Hence, Nokia had notice of this patent long before the filing of this action.
  • The publication of the priority application of the ‘202 patent was cited by examiners during prosecution of a number of applications that were assigned to Alcatel entities, which were acquired by Nokia. Hence, it had notice of this patent long before the filing of this action.
  • Long before the filing of this action, Nokia knew or should have known from the prosecution of its own patent applications and those of Alcatel-Lucent that the asserted ’246, ’090, ’772, ’192, and ’202 patents covered LTE features used by their Infringing Products.
  • The publication of the application that resulted in the issuance of the ‘683 patent was cited by the examiner during prosecution of a Nokia patent application. Hence, Nokia had notice of this patent long before the filing of this action.
  • The publication of the application that resulted in the issuance of the ‘829 patent was cited by Nokia during prosecution of a Nokia patent application. Hence, Nokia had notice of this patent long before the filing of this action.
  • Long before the filing of this action, Nokia knew or should have known from the prosecution of its own patent applications that the asserted ‘683 and ‘829 patents covered UMTS/UTRAN features used by their Infringing Products.
  • By April 10, 2012, RIM had acquired the ’418, ’246, and ’305 patents and had caused to be recorded at the USPTO the assignments of ownership of these patents to RIM. Currently, the assignment of these patents to Blackberry has been recorded in the USPTO. Nokia has knowledge of the same through its due diligence of Nortel U.S. patents.

Infringement Claims:

Nokia knowingly and intentionally encourages and aids at least its end-users to directly infringe the asserted patents. Nokia has been, and currently is, an active inducer of infringement of these patents under 35 U.S.C. § 271(b) and a contributory infringer under 35 U.S.C. § 271(c). It has been willfully blind to the existence of the patents. Nokia’s infringement has been, and continues to be, willful and deliberate, and has caused substantial damage to BlackBerry. Nokia developed, commercialized, demonstrated, and/or tested the Infringing Products despite its evaluation and knowledge of the Nortel patent portfolio, including the application that led to the issuance of some patents, and its knowledge of family members of a few of the 11 patents from prosecution of its own patent applications. In spite of Nokia’s knowledge of the patents, Nokia has continued making, using, offering for sale/lease, and/or selling or leasing in the United States, and/or importing into the United States, the Infringing Products that are compliant with the LTE Standards, without a license from BlackBerry.  Nokia’s egregious infringement behavior warrants an award of enhanced damages.

Prayer for relief:

Blackberry prays that the Court:

  • Render judgment declaring that Nokia directly infringed, induced others to infringe, and/or contributed to the infringement of the asserted patents.
  • Award BlackBerry damages adequate to compensate it for Nokia’s infringement of the asserted patents.
  • Award an ongoing royalty for Nokia’s ongoing infringement of the asserted patents.
  • Render judgment declaring Nokia’s infringement of the asserted patents willful and deliberate, and award BlackBerry enhanced damages pursuant to 35 U.S.C. § 284.
  • Award BlackBerry pre-judgment and post-judgment interest to the full extent allowed under the law, as well as BlackBerry’s costs and disbursements.
  • Enter an order finding that this is an exceptional case and awarding Blackberry its reasonable attorneys’ fees pursuant to 35 U.S.C. § 285.
  • Award any other relief as the Court deems fit.

Conclusion:

Both the companies are having a downfall in their sales. Blackberry has stopped making smart phones, and Nokia has had a huge decrease in sales of its one-of-a-kind Lumia phones, manufactured in collaboration with Microsoft. Blackberry has started licensing its software and brand assets to others so that its name in the market continues. Also, it pledged to license these patents as they form essential elements for mobile telecommunication standard.  As is evident from the prayer of the complaint, no injunction has been claimed for. Instead, Blackberry has claimed damages and royalty for the unauthorized use of its patents. This is a smart move by the smart phone maker to commercialize on its leftover assets. Nokia has not responded to this complaint as of now, and is looking into the matter, as per a news article. Nokia’s counter is acutely awaited.

About the Author :

Ms. Aditi Tiwari, intern at Khurana and Khurana, Advocates and IP Attorneys. Views expressed in this article are solely of the intern and do not reflect the views of either of any of the employees or employers.Queries regarding this may be directed to swapnils@khuranaandkhurana.com