Tag Archives: Intellectual Property

Cyber Theft of Intellectual Property

With the growth in the use of internet these days the cyber crimes are also growing. Cyber theft of Intellectual Property(IP) is one of them. Cyber theft of IP means stealing of copyrights, trade secrets, patents etc., using internet and computers.

Copyrights and trade secrets are the two forms of IP that is frequently stolen. For example, stealing of software, a unique recipe of a well-known dish, business strategies etc. Generally, the stolen material is sold to the rivals or others for further sale of the product. This may result in the huge loss to the company who originally created it.

Earlier, a lot of physical labour, time and money was spent to steal a trade secret or make a pirated version of anything. The original copies had to be physically stolen which used to take lot of time and money. But in the present scenario these works can be done easily sitting at one place without shedding too much time and money on it without leaving any proof of it.

One of the major cyber theft of IP faced by India is piracy. These days one can get pirated version of movies, software etc. The piracy results in a huge loss of revenue to the copyright holder. It is difficult to find the cyber thieves and punish them because everything they do is over internet, so they erase the data immediately and disappear within fraction of a second. The country has started taking strict measures to curb this offence. Telangana Intellectual Property Crime Unit (TIPCU) is one of the first unit that has been launched to deal with the IP crime.

Some of the ways through which one can protect IP from cyber theft are:

  • Frequently updating the list of IPs’ that need to be secured.
  • The company can increase the security to access its trade secrets.
  • It can reduce the number of people who can access their trade secrets.
  • Company needs to be up to date with software systems.
  • Constantly checking for some unusual cyber activities.
  • Constantly educate their employees about cyber security.
  • Constructing some threat mitigating programmes.
  • Installing up-to date anti-virus software.
  • Allowing employees to reach only some classified data.

Even after taking all these steps to protect IP’s there is no guarantee that they cannot be stolen because human dependence on the internet is growing constantly and people come up with new ways to do even a small thing so even in this case these cyber thieves may come up with new ways to crack all these security systems.

Author: M.Sai Krupa, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at anirudh@khuranaandkhurana.com.

References:

[1] http://law.jrank.org/pages/11992/Cyber-Crime-Intellectual-property-theft.html

[2]http://stlouis.cbslocal.com/2017/05/12/trending-topics-intellectual-property-at-risk-from-cyberthreats/

[3] http://www.iiprd.com/indias-first-ip-crime-unit-launched-telangana-state/

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Amendments in Patent Application Process in Singapore

The process of applying for patents in Singapore will become much easier and more efficient after Intellectual Property Office of Singapore (IPOS), in its continued efforts to ease patent application process, has introduced few changes in Patent forms 1 and 12B. According to a circular released on November 21, 2017 on IPOS website [1], these changes will be effective from 10 December 2017 [1] and will be available to Patent Applicants from that date. IPOS claims that after these changes the patent application process will be enhanced for general Applicants.

Amendments to ‘Patents form 1’ [2]

a. Patents forms 1 & 8 will be merged

This change will allow Applicants to enter details of inventors for which the patent has been applied in part 7 of the newly merged form i.e. merged ‘form 1’ & 8. There will be no need to file a separate form 8. It is a welcome move for the Applicants as they will not have to fill multiple forms. In addition to this, the Applicants will now be able to derive rights from the Inventor. Applicants can do this by filling in part 8 of the newly merged form. However, these amendments will not change the process of correcting the details of the inventors i.e. Patents Form 13 will not be applicable for such amendment or correction. Applicants will also be able to submit the details of the inventor separately by filling Patent Form 8 which will still be available for submissions.

b. A separate attachment for sequence listing

A new document will also be available for “sequence listing” for attachment at the time of filing of patent applications. A “sequence listing” is a list of biological sequences in the format prescribed by WIPO Standard ST.25 (Presentation of nucleotide and amino acid sequence listings) using controlled vocabulary (i.e. defined terms for certain features). This document will be available to patent applicants in case they do not want to include sequence listing as a part of description or claims. Also, the applicants will be able to paginate this document and will be able to indicate the page count of sequence listing document in a separate field.

In addition to this, if Applicants want to submit sequence listing as a separate reference document, not forming part of the description or claims, such document can be submitted using the mentioned “sequence listing” document type with a cover letter attached to indicate that it will serve as a reference document only.

c. A new feature of auto-population during divisional filings

Yet another efficient and productive move by the IPOS is the introduction of auto-population feature when a divisional application is being filed. This means that when an Applicant files a divisional application, relevant information from the parent application will be auto-populated for the convenience of the Applicants. Having said that, the Applicants will still be able to amend the auto-populated fields if they choose to do the same.

 Amendments to Patents ‘Form 12B’ [3]

Similar to the changes in Patents form 1, for the ease of Applicants, Patents Form 13 will also be merged with Patents Form 12B. Applicants don’t need to fill Form 13 in case they wish to make amendments to the specification when requesting for an examination review report using Patents Form 12B, and can do so by selecting the option “Written submissions and proposed amendments are filed” in Patents form B. With this selection, the Applicant will be required to submit both a clean and a marked up copy of the amendment of the specification.

Conclusion

Such amendments in the Patent Application process as mentioned above will be available from December 10, 2017. Further, these changes will ease the application process and will allow Applicants some flexibility in sequence listing, and amending details of inventors as well as amending the specification.

Author: Shilpi Saxena, Jr. Patent Associate at Khurana & Khurana Advocates and IP Attorneys can be reached at shilpi@iiprd.com.

 References:

[1] https://www.ipos.gov.sg/docs/default-source/resources-library/patents/circulars/(2017)-circular-no-8—enhancements-to-patent-application-process.pdf

[2] https://www.ipos.gov.sg/docs/default-source/resources-library/patents/patent-forms-and-fees/form-pf1—otc.pdf

[3] https://www.ipos.gov.sg/docs/default-source/resources-library/patents/patent-forms-and-fees/form-pf12b—otc477c1877c2d0635fa1cdff0000abd271.pdf

IP Rights Encompassing Comic Books

Comic book characters like Superman, Batman, Spiderman, Iron Man, Harry Potter etc. have become part of our daily lives ever since they were created via comic books and later incorporated through television shows, merchandise and more recently movies. From soft toys, video games to movies all such methods provide various avenues to the owners and creators of such characters to earn money and goodwill in this fiercely competitive market.

The artists behind such characters use their imagination, intellect and imagination and provide such characters with certain specific and unique attributes such as, costume, alter ego, superpowers, backstory etc. with which they are uniquely identified with when the consumers read about them or watch a TV show or a movie based on such characters. These unique attributes also give the idea of the artist an expression. It is due to these reasons that the creator/artist to protect such character to avoid infringement, copying, and misappropriation by third parties.

The production companies, advertisers, licensees and business houses, who invest a substantial amount of money to obtain rights of such characters for using such characters through various media like TV, movies, radio, merchandising, shall also have a genuine concern over infringement of their rights over such characters by any third party. It is due to these reasons that it becomes very important that such comic book characters are also included in the ambit of Intellectual Property Rights.

It is very important to understand that when do such comic book characters come under the ambit of copyright and trademark related legal protection and what happens to characters which are already in public domain but may be used subsequently in new copyrighted work.

Characters may be differentiated into two categories: graphic, and fictional. Where a graphic character can be depicted simply by a cartoon, or another form of graphic representation with its physical representation and characterization being visually obvious for the readers, a fictional character is a word portrait of which the physical appearance and characterization reside in the mind of the reader. Since images are more easily identifiable, retained in the memory of the readers and characterized than literary descriptions, it is are easier to afford them legal protection. David B. Feldman goes as far as to opine that fictional characters’ are the second-class citizens in the world of intellectual property.

Graphic characters

Copyright protection under the ambit of ‘artistic work’ can’t be afforded to such graphical characters since such characters and their personalities evolve from various episodes which the artist/creator creates, as it can’t be visually expressed and can only be perceived by the human mind. The copyright law though can protect such expressions of the character which can be graphically represented through drawings, colors, art, storyboard etc.

In the case of Hill vs. Whalen Mortell, 220 F 359 (S D NY, 1914), in which the court had held that the stage characters of Nutt and Giff were copies of plaintiff’s characters Mutt and Jeff since everybody viewing these characters was able to make the connection.

In another such case of protection to graphic characters, the case of Detective Comics vs. Bruns Publication, 111 F 2d 432 (2d Cir, 1940) comes to mind. In this case, the defendants had created a character called ‘Wonderman’ which had the same physical and emotional attributes as the Plaintiff’s popular comic character ‘Superman’. It was held by the court that the defendant’s had also copied the Plaintiff’s character’s pictorial and literary details. The court said that protection to characters can be given only if they have been portrayed in detail and they have been converted from an idea into a visual expression. In the present case, the idea of ‘superhuman powers’ can be used by anyone but the character must have different personality than an already existing one.

In another landmark judgment of Walt Disney vs. Air Pirates, 581 F.2d 751 (9th Cir, 1978), cert. denied, 439 U.S. 1132 (1979), the court had held that a two step test needed to be carried out to determine if copyright infringement has taken place. Firstly the visual similarities of the characters are analyzed and in the second step the personalities of the cartoon characters.

The second step is to be done through the ‘character delineation’ test which was developed in the case of Nichols vs. Universal Pictures, 45 F 2d 119 (2d Cir 1930), cert denied, 282 US, 902 (1931), this test is used to determine if the character in question is distinct and unique from other characters in such a way that it warrants copyright and trademark protection. It means that this is a penalty on authors and creators who do not put in effort or intellect on making their characters distinct from others.

In the Indian case of Malayala Manorama vs. V T Thomas, AIR 1989 Ker 49, the court had held that V T Thomas could continue drawing the characters of ‘Boban’ and ‘Molly’ despite leaving MalayalaManorama’s employment, since the characters had been created by Mr. Thomas before entering into employment with Manorama and the publishing house did not create or use their artistic imagination or intellect to create the aforementioned characters so their copyright will only be limited to the extent of the drawings made using the character, but the copyright over the character would remain with Mr. Thomas.

Fictional characters

While fictional characters are generally associated with copyright protection, increasing commercialization has meant that the intellectual property in these characters is no longer limited to the artistic works that created them, but has also extended to associated goods and services, which has benefited tremendously from the immense appeal and popularity of these fictional characters. This is known as character merchandising. The obvious consequence of the fact that the goodwill of these characters perform both, source-identifying as well as promotional functions meant that in most cases, they have been protected with trademarks.

Fictional characters have three significant components: name, physical or visual appearance, physical attributes, personality traits or characterization. In the case of Anderson vs. Stallone, 11 USP Q 2d 1161 (C.D. Calif. 1989), the court had held that the ‘Physical’ and ‘Emotional’ characterization of the character ‘Rocky’ were set in such detail that they were highly delineated, distinguishable and unique and imprinted in the mind of the viewers.

However in the case of Warner Brothers Pictures vs. Columbia Broadcasting Systems, 216 F 2d 945, 104 US P Q 103 (9th Cir. 1954), cert. denied, 348 US 971, 99 L Ed 756, 75 S. Ct. 532 (1955), the test of ‘story being told’ was applied. In this case, the court had held that the copyright protection would only be applied to the characters only if the story revolves around the particular character.

In another case of Silverman vs. Columbia Broadcasting Systems, the concept of ‘characters entering public domain and later acquiring new copyrighted work’ came into question. In this case it was held that the character will be entitled to protection once it enters the public domain unless new traits or characterizations have been added to it in subsequent works.

Conclusion

In conclusion I would like to say that it is clear from the various judgments discussed here that in case of graphic characters courts have had a lenient approach in granting protection because of their visual impact, as opposed to fictional characters where protection has been granted only if it is proved beyond doubt that they are distinct and distinguishable. Another aspect is that under Indian law ‘character’ has not been included in the definition of ‘artistic work’ and similarly under the definition of ‘literary work’ the work to be protected must be written down. It is hoped that the ambit of artistic and literary work is expanded to include characters as well.

References:

[1]https://www.americanbar.org/publications/landslide/2013-14/march_april/ip_and_comic_book_superhero.html

[2]https://spicyip.com/2016/04/giving-due-protection-to-fictional-characters-the-possibility-of-copymark.html

[3]https://theconversation.com/who-owns-superman-the-man-of-steel-fights-trademark-law-14625

About the Author: Aditya Vardhan, Trademark Associate, Khurana and Khurana Advocates and IP Attorneys, aditya@khuranaandkhurana.com

Initial Coin Offering (ICO) and its Intellectual Property (IP) Interface

With growing importance and widespread adoption of Cryptocurrencies such as Bitcoin, Litecoin, Ethereum, Ripple among many others, Initial Coin Offerings (ICO) have become very popular over the last few years. In brief, an ICO is an unregulated means by which funds are raised for a new cryptocurrency venture or even by a technology company that integrates its offerings/products with issuance and/or transactions of cryptocurrencies. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists (VCs) or banks, wherein in an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other Cryptocurrencies as mentioned above. More information on ICO’s can be seen herehere, and here.

Having been an active part of ICOs since 2016, and have drafted over 5 ICO offering documents, and 10 white papers, we have closely observed that there has been a strong and growing correlation between subscription levels for an ICO during the initial offering and the manner in which they depict/demonstrate their Intellectual Property (IP), especially their Patent portfolio. A clear mapping between ICO entity’s product commercialization, coin offering strategy, basis of product differentiation, and how they harness the blockchain technology with respect to their Patent/IP portfolio is a strong indicator of how they create entry barriers. Investors too are gaining maturity by doing thorough due-diligence on the IP that the ICO-entity holds before they invest in the ICO through comprehensive assessment of how broad the claims are, how the claimed subject matter integrates with the blockchain platform for issuance or transaction of newly issued currencies/coins, whether claim charts have been prepared, assignment/ownership issues if any, litigation/pre-litigation outcomes, validity challenges, competitive analysis, market landscape, white-space analysis, among other common IP due-diligence parameters.

Most ICO white papers therefore pay significant attention to how they present their Patent portfolio with respect to the manner in which each feature of their blockchain based implementation would be executed such as, for instance, how digital contracts would be managed, for an IoT architecture based entity: how blockchain would enable optimization of IoT device monitoring, and for an analytics company: how data analytics can be configured to associate with blockchain network tokens. Some white papers go further to even map their patent claims with the cryptocurrency interfacing mechanisms. Although most ICOs focus on their US Patent Portfolio, companies in other major startup communities such as in Israel, UK, Germany, and Singapore are also engaging strongly in how they uniquely position their offerings to gain competitive advantage through presentation of their IP. Most white papers intend explaining what their tokens are, how they are acquired, released/spent, along with their token generation events, and IP’s that interface with each of these steps can be integrated into the relevant portion of the white paper so as to demonstrate the extent of coverage and protection that the entity has done, which is also reflective of their IP strategy.

It is therefore, in sum, crucial to develop a robust IP strategy before launching an ICO to instill higher confidence in potential investors and create a differentiator in the market.

 

Author: Tarun Khurana, Partner and Patent Attorney at Khurana & Khurana (K&K) and IIPRD can be reached at Tarun@khuranaandkhurana.com

Emerging Trends in IP

Intellectual Property has seen numerous modifications. Different Intellectual Properties have come about to exist, which some would say is the impact of IP Maximalism and some would regard them as a matter of necessity of changing times, which reminds me of Victor Hugo, he spoke in a speech and I quote, “no power on earth can stop an idea whose time has come.” This is very well the era IP evolution. Where software is expressly ousted from patent protection, CRIs come to their rescue. New types of intellectual property rights are on the rise, for example, Data Exclusivity, Orphan Drug Exclusivity, Standard Essential Patents etc. India lags behind in several of these emerging trends, partly because of the lack of legislature in several issues and partly because of its mixed priorities. Legal framework needs to substantiate these issues more coherently, while maintaining India’s pro public-benefit approach towards IP.

Invention in softwares

While identifying what kind of protection is to be granted to an IP, one needs to identify on what is the “intellectual” in that property, is it an invention or a literary work?Software i.e. computer programme has found its mode of protection in the Indian Copyright Act, 1957. S2(ffc) defines computer programme as “a set of instructions expressed in words, codes, schemes or in any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result”. These are as such included in “literary work” defined in S.2 (o) of the Act, “literary work includes computer programmes, tables, and compilations including computer literary databases.”

On the other hand, the Indian Patents Act, 1970 expressly excludes computer programmes from the ambit of patentable subject- matter, visavis including it in Section 3 what are not inventions, S. 3 (k) a mathematical or business method or a computer programs  per se or algorithms; and S.3 (m) a mere scheme or rule or method of performing mental act or method of playing game; expressly excludes computer programs from patentable subject matter.[1]

However, the Patent Office prescribes guidelines to outline various regulations and explanations regarding patentability of computer related inventions (CRIs), last updated on 30 June, 2017.[2]

The legislative intent to attach the suffix per se to computer programme is evident by the following view expressed by Joint Parliamentary Committee while introducing Patents (Amendment) Act, 2002:

“In the new proposed clause (k) the words “per se” have been inserted. This change has been proposed because sometimes the computer programme may include certain other things, ancillary thereto or development thereon. The intention here in not to reject them for grant of patent if they are inventions. However, the computer programmes as such are not intended to be granted patent. This amendment has been proposed to clarify the purpose”.[3]

Example:

1. In re Accenture Global Service GMBH Vs. The Assistant Controller Of Patents & Designs[4], relates to Indian patent application number 1398/DELNP/2003, which is now a granted patent as patent number 256171, whose present legal status at the patent office database is, “Enforce with Due date of next renewal as 21/02/2017”. This patent application was initially refused for patent registration by patent office under the provisions of Section 3(k) of the Indian patents act.

However, the patent applicant appealed before the IPAB and as per the Controller’s decision, it was held that the instant invention as claimed is not software per se but, a system is claimed which is having the improvement in web services and software. Accordingly, it was held that the invention since not falling in the category of section 3(k), viz software per se, corresponding objection was waived and the patent was granted.

2. Nissan Motor filed a series of patent applications in 2017 with respect to the computer softwares inter alia a travel control device and method for vehicle[5] comprising: a target acquisition means for acquiring target information which includes the location of an avoidance target that exists near a vehicle, a vehicle information acquisition function for acquiring information which includes the location of a vehicle, and drive assist device[6] which is a driving assistance device for assisting driving when a host vehicle is changing lanes wherein the device is provided with; a position measurement means for measuring the position of the host vehicle; a detection means provided to the host vehicle the detection means detecting the conditions around the host vehicle; a database for recording map information.

The aforementioned claims of Nissan Motor are claims concerning Computer Related Inventions (CRIs) which mean to perform the function as mentioned above and hence are termed as means + functions defined in the Guidelines for Examination of Computer Related Inventions.[7]

In light of the guidelines published by the Indian patent office for examination of software patents / computer related inventions (CRIs), software patents can be applied in India by way of combination of hardware and software features, which are novel, inventive and possess industrial applications. It may be categorized as Hardware based inventions: apparatus/ system/ device, Method/process based, Computer program product/ computer readable medium. Unless the software is a computer program per se, it may be granted a patent in India, and hence Nissan stands a fair chance to be granted the aforementioned patents. However, in the case of any conflict between The Indian patents Act and the said Guidelines, the Act is to prevail and for such instances, it is essential to have rules with the effect of laws incorporating CRIs in patentable subject matter.

On the same lines European Patent Convention expressly excludes computer programs, per se, from the purview of patentable subject matter.

Whereas in USA, there is no specific exclusion of software or business methods from patentable subject matter.  The law states that the subject matter, to be patentable, must be a useful process, machine, manufacture or composition of matter. According to the US Supreme Court, the Congress intended the statutory patentable subject matter to include “anything under the sun made by man,” but the laws of nature, natural phenomena and abstract ideas are three specific areas which are not patentable.[8]

Emerging new IPs

SEPs and FRAND Licensing

A patent that protects technology essential to a standard is called a standard-essential patent.[9] A standard is a document that sets out requirements for a specific item, material, component, system or service, or describes in detail a particular method or procedure.[10] For example, a modern laptop computer implements around 251 interoperability standards.[11]

The concept of SEPs evolved in India when Ericson in 2011 objected to the importation of handsets by Kingtech Electronics (India), claiming that the handsets infringed several of their SEPs in AMR Codec (Adaptive Multi-Rate) technology. The Indian Patents Act, 1970 does not contain any special provision for SEPs. Although, the same have been recognized by the jurisprudence, SEP is defined as …for a technology that forms a part of a standard, the patent is regarded as an essential patent for such standard.An essential patent can be said to be a patent that corresponds to an industry standard. The same standard is mutually agreed by various service providers, equipment manufacturers etc to be mandatorily implemented for a particular technology (such standards are recognized and implemented by the concerned government authority as well). It is meant to ensure that complete compatibility is achieved. It is impossible to claim compatibility with a technology (as defined by the concerned standards) without actually infringing the specific patent (and hence the requirement to obtain a license).[12]

 Following cases in India,

  1. Ericsson and Micromax case,
  2. Ericsson and Intex case
  3. Ericsson and Best It World (India)
  4. Ericsson and Xiaomi Technology
  5. Ericsson and Lava International Private Limited
  6. Telefonaktiebolaget lm Ericsson (publ) v.Competition Commission of India and another,

have established clearly that the necessary steps to be taken by any company/ legal entity, intending to incorporate any technology in its product that is standardized by any SSO (Standard Setting Organisation). It has to,

1.Incorporate the patent which is essential to obtain that standard.

2. To enable themselves of the use of aforesaid patent, without infringing it, they require obtaining a license from the holder of the aforesaid patent.
However, such a situation can have an obvious monopolistic outcome in the hands of the patent holder, and to curb such a situation before-hand, the patent holder has its commitments as a member of the SSOs, these commitments are known as FRAND commitments. Whereas the question remains as to what are the clear boundaries of fair, reasonable and non-discriminatory license terms, is to be determined by the consensus reached by the parties, and if the parties are unable to reach such consensus, they may appoint a mediator for the purpose, and yet if the party seeking the license considers the license terms to be abusive of the dominant powers of the patentee, the CCI holds proper jurisdiction to inquire and investigate into the same.

Data Exclusivity

Data Exclusivity is a TRIPs Plus element that is much debated in India. It arises from the interpretation of the Article 39 of the TRIPs agreement, “Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use [13]wherein the big Pharmaceuticals and countries like USA interpret, “protection against unfair commercial use” to obviously mean, “protection of clinical data required to be submitted to a regulatory agency to prove safety and efficacy of a new drug, and prevention of generic drug manufacturers from relying on this data in their own applications.” USTR (United States Trade Representative) has been negotiating bilateral agreements enforcing the said interpretation of TRIPs, which is beyond the actual agreement and is thus referred to as a TRIPs Plus clause, with India. The Drugs and Cosmetics Act, 1940 provides for data exclusivity for a “new drug” under section122E for a total period of 4 years from the date of approval. There were considerations in November, 2016 that this period of four years to be increased to ten years.[14] Such exclusivity is itself a protection and does not depend upon the validity of the patent associated to the same drug, so even if the patent associated to the drug stands invalidated, the exclusivity stands unaffected and the drug remains out of the reach of the generic producers. There is no evidence that the four years of protection, already provided, was insufficient, and neither is there any protocol necessitating India to increase the said period. Such provision would delay market access of drugs at reasonable prices to the common people. Although, USA itself provides for 7 years of data exclusivity but the economic and developmental status of India, would suffer with such an amendment to the section.

Orphan Drug Exclusivity

An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition. India currently has no regulations for orphan drug manufacturing or selling. Treating rare or orphan diseases is important to India but very costly, which increases the patient burden. In India, 72,611,605 people are suffering from rare diseases, and 6,000–8,000 rare diseases can be found, including LeishmaniasisNorrie disease,ArthrogryposisCystic FibrosisWilson Disease, etc., many of which still do not have any cure and are mostly genetic in nature.[15]

Many countries have different definitions and regulations of orphan drugs,

USA under its The Orphan Drugs Act (ODA) is a federal law concerning rare diseases that affect fewer than 200,000 people or are of low prevalence, oraffects more than 200,000 in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will recovered from sales in the United States of such drug. Determinations under the preceding sentence with respect to any drug shall be made on the basis of the facts and circumstances as of the date the request for designation of the drug under this subsection is made.[16]

According to the Orphan Drug Regulation in Europe, an orphan disease is a disease or disorder that affects fewer than 5 in 10,000 citizens.[17]

In Australia, RareDiseases are defined as a condition, syndrome or disorder that affects 1 in 10,000 people or less (The Australian Therapeutic Goods Authority).[18]

The lack of regulation in India increases the burden on the patients but also negatively impacts the economic success of India’s pharmaceutical industry. Orphan drugs may help pharmaceutical companies reduce the impact of revenue loss by patent expiration of blockbuster drugs. Although there may still be challenges ahead for the industry, orphan drugs seem to offer the key to recovery and stability within the market. Governments of various countries have proactively implemented special incentives for the manufacturers of orphan drugs. For example, regulations include accelerated marketing procedures, marketing exclusivity, tax credit grants for research, reconsideration of applications for orphan designation, and technical assistance for elaboration of the application file.

Intellectual Property Rights came into existence with the primary objective of promoting the progress of science. Patents are the rights that grant exclusivity to the patent holders, where they can exclude others from exploiting their invention which they have spent their R&D upon. This creates a monopoly in the hand of the right holder; this monopoly was intended to serve as an incentive for creation.
What we can observe with the emerging trend of IP is that the protection is shifting its focus from promoting innovation in every field to reserving exclusivity. Pharmaceuticals have been trying to evergreen their patents on blockbuster drugs by merely changing the form of the drug, which when restricted by the Indian Courts by the mandate of S.3(d) of the Indian Patents Act, the validity of which section was found to be challenged in the Supreme Court. The Supreme Court held the section to be constitutionally valid, thereby striking down Bayer’s contentions[19], leading to many disappointed Pharmaceutical Companies. Data exclusivity is yet another tool aiming at the same monopolistic outcome, protecting the clinical data of any “new drug” for an absurd period of time. A “new drug” is not defined as a patented drug but simply a drug which has not been used in the country to any significant extent under the Drugs and the Cosmetics Act[20].

In re Ericsson v. CCI, it was alleged that Ericsson had added a covenant subjecting all disputes relating to matters under their FRAND license to the jurisdiction of Swedish Courts, thereby causing unnecessary costs for Indian mobile phone companies.[21] There are no specific guidelines as to what is fair, reasonable and non- discriminatory, due to which big fishes in the market construe the terms in their own brackets of convenience. Considering the economic condition of the Indian market, such licensing terms can lead to winding up of small and medium enterprises which is to be further evaluated by the Competition Commission of India.

This prevailing trend is untimely exclusivity masked in the disguise of evolution. However, exclusivity is an innate part of evolution, provided, used in the solution of overlooked issues such as orphan care drugs. Exclusivity is indeed very appealing for pharmaceutical companies to invest their R&D in the production of orphan drugs. It curbs their fear of negative commerce which appears to be an obvious result of producing any product with low commercial demand. With regulations such as a fixed exclusivity period over their drug and royalty standards, a profit margin can be achieved in addition to the recovery of production costs in the aforesaid duration.The shifting trend towards exclusivity can positively shape the Indian IP regime, if given the right direction.

About the Author: Namisha Jain, ILS law college, Intern  at Khurana and Khurana Advocates and IP Attorneys and can be reached at info@khuranaandkhurana.com

[1]  Indian Patents Act, 1970

[2] www.ipindia.nic.in/writeraddata/Portal/Images/pdf/Revised_Guidelines_

for_Examination_of_Computer-related_Inventions_CRI.pdf

[3] Report of the Joint Committee presented to the Rajya Sabha on 19th December, 2001 and laid on the table of Lok Sabha on 19th December 2001.

[4]  http://www.ipabindia.in/Pdfs/Order-283-2012-OA-22-2009-PT-DEL%20(Final).pdf

[5] Application No. 201747007327 A; www.Ipindia.nic.in/writeaddata/Portal/IPOJournal/1_471_1/Part-2.pdf

[6]  Application No. 201747015385;www. Ipindia.nic.in/writeaddata/Portal/IPOJournal/1_471_1/Part-2.pdf

[7] http://www.ipindia.nic.in/writeraddata/Portal/Images/pdf/Revised_Guidelines_for

_Examination_of_Computer-related_Inventions_CRI.pdf

[8] Bilski v. Kappos

[9]  http://ec.europa.eu/competition/publications/cpb/2014/008_en.pdf

[10]  http://www.cencenelec.eu/standards/DefEN/Pages/default.aspx

[11]  http://www.standardslaw.org/How_Many_Standards.pdf

[12]  In re Telefonaktiebolaget lm Ericsson (publ) v. Intex Technologies (India) Limited I.A. No. 6735/2014 in CS(OS) No.1045/ 2014

[13]  https://www.wto.org/english/docs_e/legal_e/27-trips.pdf

[14] https://www.ip-watch.org/2016/11/06/indian-generic-pharma-warns-government-caving-us-pressure-data-exclusivity/

[15] Adapted from the Rare Diseases List provided by the Foundation for Research on Rare Diseases and Disorders (accessed May 7, 2015)

 [16] https://www.fda.gov/forindustry/developingproductsforrarediseasesconditions

/howtoapplyfororphanproductdesignation/ucm364750.htm

[17] http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2000:018:0001:0005:en:PDF

[18] http://www.rarediseasedayaustralia.com.au/what-is-a-rare-disease/

[19]  Novartis AG v. Union of India CIVIL APPEAL Nos. 2706-2716 OF 2013 (ARISING OUT OF SLP(C) Nos. 20539-20549 OF 2009)

[20] Rule 122E of the Drugs and Cosmetics Act, 1945- Directorate General of Health Services. The Drugs and Cosmetics Act and Rules. D&C Rule’s 1945- 122E:2005. Delhi: D&C; 2005. p. 134.

[21]  Ericsson v. CCI W.P.(C) 464/2014 & CM Nos.911/2014 & 915/2014

Japanese Patent fund IP Bridge to raise $50m “Intellectual property and innovation” fund in Malaysia

On October 19, 2017 Japanese private equity fund “IP Bridge” disclosed its plan of launching a $50 million fund as a continuation of ASEAN push for “Intellectual property and innovation” and signed an agreement with Malaysian local, Leonie Hill Capital (LCH) [1]. The agreement aims at investing in “IP rich or to-be-rich”, national and regional enterprises in Malaysia and particularly targeting towards technology areas like Internet of Things (IoT), wearable, robotics etc. The agreement is a step towards accelerating the growth of startup companies in Southeast Asia.

This partnership between IP Bridge and LCH makes Malaysia the base of the first intellectual property innovation fund in Southeast Asia. As per the agreement, the two partners will focus their investments on technical companies that have substantial Intellectual Property or worthy enough to develop IP in future and are working in IoT sensors, Robotics, Agri-tech etc.

Further, the ManGo Factory program endorsed by the partnership provides support to venture companies for their overseas expansion. The partnership will “re-domicile more than 10 South East Asian and Japanese start-ups in Malaysia, providing them with facilities, access and market opportunities”. The partnership will provide wide support to the Start-up companies from commercialization, partnership/alliance and access methods to the world market and IP bridge can provide intellectual property utilization strategy and advice related to it. This collaboration of two companies will contribute the development of Malaysian technology companies.

The Prime Minister of Malaysia, Najib Razak, said that since Malaysia is geographically located in the center of ASIAN countries and has an appropriate ecosystem for the growth of start-up companies around the world; it is an appropriate place for start-up companies in Southeast Asia and Japan to procure funds more smoothly. At this, CEO of IP Bridge, Shigeharu Yoshii said “an appropriate ecosystem is required for start-up companies so that delicious rice will not grow without rich soil, clean water, adequate sunlight, insects, frogs, etc.” and its a great honor for them to function as part of Malaysia’s innovation ecosystem to support startup companies.

Najib Razak also added that the startups raised through this fund will generate employment in future and will also provide Malaysia with economic and social opportunities. The CEO of Malaysian Digital Economy Corporation (MDEC), Yasmin Mamoudo said that this Malaysia based innovation fund is a clear indication of growth of Malaysian digital economy. This agreement which launches fund for innovation will keep Malaysia in the conversation as a regional IP centre and further will boost up the relationship with an IP aggregation and monetization firm that is putting together a fairly good track record.

The fund raised by IP Bridge, is the biggest one among Asia’s largest and most active IP funds. For a non-practicing entity to move into the start-up investment space is certainly not a new tactic. This type of fund motivates the companies that are seeking to show a skeptical domestic constituency that IP monetization can be part of a sustainable business model.

On April 26, 2017 in a press release on Intellectual Property Office of Singapore (IPOS) online portal, it was published that IPOS announced a similar type of innovation fund named as “Makara Innovation Fund” [2]. The Makara Innovation Fund was supposed to invest one billion Singapore dollars in highly growing companies which encompass a strong IP and convincing business models. According to government officials in Singapore, the money in that fund will be used to bolster the country’s IP ecosystem and will target high-growth companies with strong IP and proven business models, leveraging Singapore as a base for their growth and expansion into world markets. This was announced by IPOS and Ministry of Law, along with updates to the IP Hub Master Plan.

Author: Shilpi Saxena, Jr. Patent Associate at Khurana & Khurana Advocates and IP Attorneys can be reached at shilpi@iiprd.com.

 References:

[1] IP Bridge concluded basic agreement with ASEAN-based PE fund under the support of the Malaysian government

[2]https://www.ipos.gov.sg/media-events/press-releases/ViewDetails/one-billion-dollar-innovation-fund-launched-in-singapore-to-drive-enterprise-growth-for-our-future-economy/

Intellectual Property of Singapore: Patents legislative amendments

In continuation of IPOS’s efforts to strengthen the patent regime and make Singapore’s Intellectual Property one of the best in the world also supporting inventive individual and businesses [1], Patents (Amendments) Act, 2017 and Patents (Amendment no.2 ) shall come into force on October 30, 2017 [2].

IPOS’ Patents legislative amendments

In IPOS’ efforts of delivering a well-equipped and a well-suited legal framework as well as a policy framework to individual patent applicants and corporate business houses, the Patents (Amendment) Act 2017 and the Patents (Amendment No.2) Rules 2017 will enter into force on 30 Oct 2017 [2]. The October version of the revised examination guidelines for Patent Applications at IPOS will also get published on the same date on the online website of IPOS (https://www.ipos.gov.sg/). Below are the key highlights of these amendments as released in the Patents Circular No.7/2017 [3] on IPOS website.

 Broadening of Grace Period

As effective from 30th October 2017, under the broadened grace period all the applicants will now be able to apply for patent protection for their invention notwithstanding that their invention has been disclosed prior to the filing of the patent application. In instances where the inventors have publicly disclosed their inventions prior to filing a patent application for the same, the broadened grace period will act as a safety cover for the entity in obtaining the Singapore patent rights. However, an important thing to note for the applicants is that not all jurisdictions have a provision for similarly broadened grace period, therefore, all the applicants are strongly encouraged to avoid or exercise prudence and caution before disclosing their inventions to third parties before applying for a patent.

Further as per the new provision, the applicants who require or ‘wish for’ their invention disclosure to be graced may inform the registrar when making:

  1. a request for search and examination;
  2. a request for examination;
  3. a response to written opinion; and
  4. a request for a review of an examination report or of a search and examination report.

The above requests must be accompanied by written evidence in the form of a statutory declaration or affidavit that complies with the requirements of the new Rule 8 of the Patents Rules.

 Changes to Supplementary Examination

As per the rules, supplementary examination route will become unavailable for patent applications filed on or after Jan 1, 2020 [3] i.e.

–  for Singapore national applications having a date of filing on or after Jan 1, 2020,

– for International applications entering national phase having a date of filing on or after 1 Jan 2020, and

– for Divisional applications having an initiation date on or after Jan 1, 2020.

However, patent applications filed before 1 January 2020 will continue to use the supplementary examination route. This means that with the unavailability of the supplementary examination route, all patent applications filed on or after 1 January 2020 will undergo full examination by IPOS examiners.  Given that, the entire process of examination is going to be carried out in Singapore, the quality and consistency of patents granted in Singapore is expected to improve. This will also align Singapore’s patent system with that of major jurisdictions, such as those of the US, Japan, and Europe, that perform a full examination of the patent applications that they receive. A period of 3 (three) years has been granted as grace period for the community to adjust as the change shall be effective from 30th October 2017 but shall come into operation from January 2020

Further,  as per the amendment,  the scope of supplementary examination has expanded by allowing an examiner to raise an objection relating to patentable subject matter to ensure consistency in the assessment of patentable subject matter across all the routes of examination.

Amendments to the Guidelines on Isolated Products from Nature

The Guidelines have been revised to clarify the distinction between inventions and discoveries as applicable to the issue of isolated products from nature. As per the new guidelines, a material or microorganism already existing in nature represents a discovery and therefore an isolated or purified material or microorganism from nature is not an invention. However, if a new use of the isolated or purified material or microorganism is found, then the new use can be claimed. The revised Guidelines will take effect on 30 October 2017.

The overall objective of this amendment is to facilitate innovation by allowing others to develop applications relating to the discovery and to monetize or earn rewards for translational research and development.

Author: Shilpi Saxena, Jr. Patent Associate at Khurana & Khurana Advocates and IP Attorneys can be reached at shilpi@iiprd.com.

Citing Sources

[1] https://www.ipos.gov.sg/about-ipos/singapore-ip-ranking

[2]https://www.ipos.gov.sg/media-events/happenings/ViewDetails/patents-and-designs-legislative-amendments-to-enter-into-force-on-30-oct-2017/

[3]https://www.ipos.gov.sg/docs/default-source/resources-library/patents/circulars/(2017)-circular-no-7—amendment-to-patents-act-and-rules-to-enter-into-force-on-30-october-2017.pdf

IPOS: Launch of Patents Formalities Manual

Recently, Singapore’s IP regime has seen a rapid growth and is gradually becoming Intellectual Property centre/hub in entire Asia.  To strengthen its Patent regime, few days back,  [3] the Intellectual Property Office of Singapore (IPOS),   on 24 Jul 2017 launched a ‘Patents Open Dossier” [1] to provide a single point of access for innovators enabling them to access published patent documents. The POD provides easy access to the applicant as well as the third party to keep track of patent applications, amongst other services.

Further, on 1 August 2017 IPOS [2] launched an online “Patents Formalities Manual” as part of their ongoing efforts to update their practices for helping inventors/innovators on their patent applications and improve on the turnaround time for the application process. This manual can be accessed by general public through the online portal of IPOS https://www.ipos.gov.sg/ [4]. This manual provides set of guidelines detailing the Registry’s practices, procedures and requirements for Patent applications and national phase entry for International applications, in Singapore. The “Patents Formalities Manual” is designed to provide the applicants with a better understanding of the procedures for applying a patent application under the Singapore patents act & rules as well as the procedure for applying as a national phase entry of the Patent Co-operation Treaty (PCT).

Out of many others, the “Patents Formalities Manual” is the most recent step taken by IPOS in enhancing the user experience for their applicants or other stakeholders by aiming to improving the filing accuracy in their patent applications with the IP office and address issues encountered during patent application process.

Patent applicants can refer to the manual on ‘https://www.ipos.gov.sg/resources/patent’ [5] for the most current practices. On this page, the applicants can access all the necessary & relevant documents which are related to filing for a patent in Singapore. The applicants may also refer to the manual to help in their filing process. Some of the documents are:

  • Forms & Fees For Filing In Singapore
  • PCT Forms & Fees
  • Guidelines and Useful Information
  • Circulars
  • Practice Directions

 

References:

[1]https://www.ipos.gov.sg/media-events/happenings/ViewDetails/launch-of-patents-open-dossier/

[2]https://www.ipos.gov.sg/media-events/happenings/ViewDetails/launch-of-patents-formalities-manual/

[3]https://www.ipos.gov.sg/docs/default-source/about-ipos-doc/full-report_update-to-ip-hub-master-plan_final.pdf?sfvrsn=2

[4]https://www.ipos.gov.sg/

[5] https://www.ipos.gov.sg/resources/patent

Author: ShilpiSaxena, Jr. Patent Associate at Khurana & Khurana Advocates and IP Attorneys can be reached at shilpi@iiprd.com.

INDIA’S PROTECTION TO SECRETS OF TRADE

  1. Introduction

The global econoamy is trending towards an era of protectionism as can be seen from policies such as “Make America Great Again” and “Make in India”, thereby increasing the significance on exports and the manufacturing sector. As a corollary effect, the importance of Intellectual Property (IP) protection also increases due to the need to extend such to exports for its proper commercialization. On April 28, 2017, the Office of the United States Trade Representative (USTR) released the 2017 “Special 301” Report[1] which reviews global developments on trade and intellectual property (IP). The USTR placed India on the Priority Watch List and one of the reasons for doing so was an outdated and insufficient trade secrets legal framework.[2] It is pertinent to note that the so called Special 301 Report has vested interests of corporate lobbying from the likes of PhRMA (Pharmaceutical Research and Manufacturers of America), Business Software Alliance (BSA) and Intellectual Property Owners Association (IPOA). This piece will attempt to analyse India’s approach to trade secrets protection and its adequacy in terms of business.

  1. What are Trade Secrets?

Trade secret is a formula, process, device or other business information that is kept confidential to maintain an advantage over the competitors. It is the information which includes formula, pattern, compilation, programme, device, method, technique, or process, that derives independent economic value from not being generally known or readily ascertainable.[3] Therefore, the ingredients of trade secrets are- (a) it is such information not generally known to the public which in turn confers economic or commercial benefit through the maintenance of confidentiality and exclusivity, and (b) it is subjected to reasonable efforts of secrecy since disclosure would result in undue enrichment of others. For example, Coca-Cola’s formula for its aerated drinks and KFC’s recipe for its delicious fried chicken are considered to be trade secrets which have been preserved for many decades.

  1. Interface with Intellectual Property?

Article 1(2) of the Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS Agreement”), states that intellectual property shall include protection of undisclosed information.[4] Article 39 of the TRIPS Agreement states that in the course of ensuring effective protection against unfair competition as provided in Article 10bis of the Paris Convention, with respect to information which is (a) a secret not generally known or readily accessible, (b) has commercial value by virtue of secrecy, and (c) has been subjected to reasonable steps for ensuring its secrecy, Member nations are to ensure that natural and legal persons have the possibility of preventing such information, within their control, from being disclosed to, acquired by, or used by others without their consent, in a manner contrary to honest commercial practice. It is submitted that the possibility referred to hereinbefore implies that trade secrets should be accorded protection within the legal system and not necessarily in the IP legislative framework of the said Member nation.

  1. India’s Policy Approach

The 1989 GATT (General Agreement on Tariffs and Trade) discussion paper[5] of India sets out that as per India, trade secrets cannot be considered to be intellectual property rights, because while the fundamental basis of intellectual property right rests in its disclosure, publication and registration, trade secrets are premised upon secrecy and confidentiality. It may be noted that disclosure and publication are necessary before according the protection of exclusivity when viewed from the IPR context since the prosecution stage involves challenges and objections which test the grant of said exclusivity. The paper further goes on to state that the observance and enforcement of secrecy and confidentiality should be governed by contractual obligations and the provisions of appropriate Civil Law but not by intellectual property law.

On May 12, 2016 India approved the National IPR Policy with seven objectives and elaborative steps to be undertaken by the identified ministries/departments. One of these objectives was to ensure an effective legal and legislative framework for the protection of IPRs. The steps outlined to be taken towards attaining this objective include, among other things, identification of important areas of study and research for future policy development, and one such area identified was the protection of trade secrets.[6] Hence it may be noted that India has taken a step towards considering the protection of trade secrets under the ambit of IPR protection.

Subsequently, the U.S.-India Trade Policy Forum held on October 20, 2016 in New Delhi included a meeting of the High-Level IP Working Group, a side-event on trade secrets, and several notable consensus outcomes related to promoting IP. India announced that it has taken important initiatives and steps, designed to enhance trade secrets protection in India, showing India’s strong commitment towards the importance of trade secrets protection. These initiatives and steps include the following:

  • A workshop was convened with government officials, academics, legal experts and representatives from U.S. and Indian industry that facilitated the exchange of information and best practices on trade secrets protection in both countries;
  • India noted that it protects trade secrets through a common law approach;
  • A toolkit would be prepared for industry, especially SMEs, to highlight applicable laws and policies that may enable them to protect their trade secrets in India;
  • A training module for judicial academies on trade secrets may also be considered;
  • A further study on various legal approaches to protection of trade secrets will also be undertaken by India.
  1. India’s Common Law Approach

The Delhi High Court in American Express Bank Ltd. v. Priya Puri,[7] defined trade secret as formulae, technical know-how or a method of business adopted by an employer which is unknown to others and such information has reasonable impact on organizational expansion and economic interests. Indian courts have approached trade secrets protection on the basis of principles of equity, action of breach of confidence and contractual obligations.

  • Equity

In John Richard Brady v. Chemical Process Equipments P. Ltd.,[8] it was held that independent of an underlying contract or in the absence of one, he who has received information in confidence is not allowed to take unfair advantage of it. This lays down that undue enrichment at the expense or detriment of another goes against the tenets of equity and fairness which need not be dependent on contractual obligations.

  • Breach of Confidence

In Zee Telefilms Ltd. v. Sundial Communications Pvt. Ltd.,[9] it was laid down that in an action of breach of confidence, the obligation of confidence is not limited to the original recipient but also extends to those persons who received the information with knowledge acquired at the time or subsequently that it was originally given in confidence. In Diljeet Titus v. Alfred Adevare & Ors, it was held that the Court must step in to restrain a breach of confidence independent of any right under law and that such an obligation need not be expressed but be implied and the breach of such confidence is independent of any other right. Therefore, it is submitted that the protection of trade secrets does not always necessarily stem from the owner of such secret having a right per se in respect of the same but from the implied obligation to maintain confidence by virtue of the nature of trade secrets in general.

  • Contractual Obligations

In Niranjan Shankar Golikari v. Century Spinning[10], it was held that negative covenants in employment agreements pertaining to non-disclosure of confidential information operative during the period of the contract of employment and even thereafter, are generally not regarded as restraint of trade and therefore do not fall under Section 27[11] of the Contract Act, 1872 as a former employee should not be allowed to take unfair advantage of the employer’s trade secrets which are vital for business. Post service restraint in maintaining confidentiality and also carrying on any other business for a limited period is permissible under the exception to Section 27 of the Contract Act, as was held in Homag India Pvt. Ltd. v. Mr. Ulfath Ali Khan.[12]

  1. Conclusion

It is submitted that as explained hereinabove, the common law trinity of equity, breach of confidence and contractual obligations for the protection of trade secrets is well suited to business requirements in India. India’s position should not be mistaken to connote that there is insufficient protection accorded to trade secrets and confidential information in the country. In fact, it must be clarified that Intellectual Property may not be the correct form of protection accorded to trade secrets. Trade Secrets rely on their nature of secrecy which precludes the quid pro quo disclosure required by the State before granting a statutory right of monopoly. Moreover, secrecy prevents the subject matter from being tested with regards to the scope of “has commercial value” and “has been subjected to reasonable steps of secrecy”. It is also pertinent to note that statutory enactment may not be sufficient to define the scope of what constitutes trade secret and protection thereof which could be more adequately handled on a case to case basis by the common law approach. It would be apposite to mention that legal proceedings and pleadings pertaining to trade secrets should be based on high modicum of confidentiality to protect the nature of the information as such.]

Author: Pratik Das, Legal Intern at Khurana and Khurana, Advocates and IP Attorneys and can be contacted at info@khuranaandkhurana.com

References :

[1] Available at https://ustr.gov/sites/default/files/301/2017%20Special%20301%20Report%20FINAL.PDF

[2] In the International IP Index, 2017 released by the U.S Chamber of Commerce, India was ranked 43 out of 45 countries in terms of the IP regime existing in the said countries; available at https://www.uschamber.com/event/2017-international-ip-index-the-roots-innovation

[3] Black’s Law Dictionary, Ed. 8, cited in Bombay Dyeing & Manufacturing Co. Ltd. v. Mehar Karan Singh, 2010 (112) BOM LR  3759.

[4] All categories of IP that are the subject of Part II, Sections 1 to 7 of the Agreement; Section 7 is titled as “Protection of undisclosed information”.

[5] MTN.GNG/NG11/W/37.

[6] Paragraph 3.8.4, National IPR Policy, 2016.

[7] (2006) HI LLJ 540 (Del).

[8] AIR 1987 Delhi 372.

[9] 2003 (27) PTC 457 (Bomb).

[10] AIR 1967 SC 1098.

[11] Agreement in restraint of trade is void.

[12] M.F.A. No. 1682/2010 C/W M.F.A. No. 1683/2010 (CPC) decided on 10.10.2012, Karnataka High Court.

Compulsory licensing

Compulsory licenses are sovereign state authorizations which enable a third party to make, use, or sell a patented product without the consent of the patent holder. Provisions pertaining to compulsory licensing are provided for under both the Indian Patent Act, 1970, as well as the international legal agreement between all the member nations of WTO – the TRIPS. In India, Chapter XVI of the Indian Patent Act, 1970 deals with compulsory licensing while the conditions which need to be fulfilled for the grant of a compulsory license are laid down under Sections 84 and 92 of the Act.

In accordance with Section 84(1) of the Indian Patent Act, 1970, after three years from the grant of a patent, any interested person may make an application for a compulsory license on the grounds that the patented invention:

(a) Does not satisfy the reasonable requirements of the public;

(b) Is not available to the public at a reasonably affordable price; and

(c) Is not worked in the territory of India.

In addition to the aforementioned grounds, according to Section 92 of the Act, compulsory licenses can also be issued suo motu by the Controller of Patents pursuant to a notification issued by the Central Government if there is either a “national emergency” or “extreme urgency” or in cases of “public non-commercial use”. The said section enables the Government of India to notify to the public of such extreme circumstances, whereupon, any person interested can apply for a compulsory license and the Controller in such case may grant to the applicant a license over the patent on such terms and conditions as he thinks fit.

The patentee, however, has the right to be heard in the compulsory licensing application process.

India’s first ever compulsory license was granted by the Patent Office on March 9, 2012, to Hyderabad-based Natco Pharma for the production of generic version of Bayer’s Nexavar, an anti-cancer agent used in the treatment of liver and kidney cancer. It was established in the Bayer vs Natco case that only 2% of the cancer patient population had an easy access to the drug and that the drug was being sold by Bayer at an exorbitant price of 2.8 lakh INR for a month’s treatment[1]. Further, on the ground that Nexavar was being imported within the territory of India, the Indian Patent Office issued a compulsory license to Natco Pharma, which assured that the tablets would be sold for Rs. 8,880/- per month. It was settled that 6% of the net sales of the drug would be paid to Bayer by Natco Pharma as royalty.

In the second case of Compulsory licensing in India, the Controller rejected BDR Pharmaceuticals’ application for compulsory license (made on March 4, 2013) for BMS cancer drug, SPRYCEL[2]. The Controller rejected the compulsory license application made by BDR for stating that BDR has failed to make prima facie case for the making of an order under section 87 of the Act. Controller in the said case observed that BDR Pharmaceuticals had not made any credible attempt to procure a voluntary license from the Patent holder and the applicant has also not acquired the ability to work the invention to the public advantage.

In the most recent case of compulsory licensing in India, Lee Pharma, a Hyderabad based Indian pharma company, filed an application for compulsory license (dated 29.06.2015) for the patent covering AstraZeneca’s diabetes management drug Saxagliptin. In order to make a prima facie case, Lee Pharma strived to show that their negotiations for a voluntary license with the patent owner were not rewarding as they did not receive any response from the Patent owner within a reasonable period. The grounds alleged by Lee Pharma were that:

  • the patentee has failed to meet the reasonable requirements of the public,
  • the patented invention is not available to the public at a reasonably affordable price, and
  • the patented invention is not worked in India.

However, all the three grounds of Lee Pharma were rejected by the Controller General and the Compulsory license application was refused[3]. The application was rejected on the basis that Lee Pharma failed to demonstrate what the reasonable requirement of the public was with respect to Saxagliptin and further failed to demonstrate the comparative requirement of the drug Saxagliptin vis-a-vis other drugs which are also DPP-4 inhibitors. Further, Controller General held that all the DPP-4 inhibitors were in the same price bracket and the allegation that Saxagliptin alone was being sold at an unaffordable price was unjustified. The Controller General also stated that Lee Pharma failed to show the exact number of patients being prescribed the patented drug and how many of them were unable to obtain it due to its non-availability and consequently it was difficult to hold whether manufacturing in India was necessary or not.

Considering the last two compulsory license cases in India, it is clear that the provisions of compulsory license cannot be misemployed to diminish the rights of the patent holders and that the basic jurisprudence governing the subject of compulsory license lies in balancing the conflicting interest of the patentee’s exclusive rights and making the invention available at an affordable price to third parties in case of need.

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

[1] http://thefirm.moneycontrol.com/story_page.php?autono=1132015

[2]https://iiprd.wordpress.com/2013/11/13/indian-patent-office-rejects-compulsory-licensing-application-bdr-pharmaceuticals-pvt-ltd-vs-bristol-myers-squibb/

[3] http://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/india-rejects-compulsory-license-application-of-lee-pharma-against-astrazenecas-saxagliptin/articleshow/50652935.cms