Tag Archives: Intellectual Property

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 The USTR placed India on the Priority Watch List and one of the reasons for doing so was an outdated and insufficient trade secrets legal framework.[2] It is pertinent to note that the so called Special 301 Report has vested interests of corporate lobbying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.

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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

GST IMPLICATION ON INTELLECTUAL PROPERTY

GST IMPLICATION ON INTELLECTUAL PROPERTY

  1. Once upon a time . . .

Before the Goods and Services Tax (GST) regime,the Union government exclusively used to levy tax on transactions relating to Intellectual Property (IP) rightsif such were classified as services[1] (under Service Tax, Chapter V, Finance Act, 1994), while the State governments used to levy tax on IP rights if the transaction involving such were classified as sale/deemed[2] sale of goods[3] (under State Sales Tax/State Value Added Tax or Central Sales Tax which was collected and retained by the originating State). The aforesaid indirect tax system required interpretation on the classification of the transaction.This often led to double taxation when the same transaction was subjected to both sales tax and service tax due to the industry being cautious so as to avoid penalties of avoiding tax.

 

  1. Growing Stronger Together

With the advent of GST, the need to classify transactions involving IP as either relating to rendering of service or sale/deemed sale of goods was absolved. This is due to GST being concurrent[4] in naturewith the Centre and the States simultaneously and seperately levying it on a common base or transaction irrespective of its classification. It is pertinent to note that GST would be applicable on supply of goods or services[5] as against the previous concept of tax on the manufacture of goods or on sale of goods or on provision of services.

The GST to be levied for intra-state supply of goods and services by the Centre would be called Central GST (CGST) and that to be levied by the States [including Union territories with legislature] would be called State GST (SGST). On inter-state supply of goods and services, Integrated GST (IGST) is to be collected by the Centre.[6] IGST would also be applicable on imports.[7] GST is a destination based consumption tax, that is, the tax is received by the state in which the goods or services are consumed and not by the state in which such goods are manufactured.

 

  1. Rates in relation to Intellectual Property

Section 9 of the CGST, 2017 [corresponding section 9 of SGST] states that the CGST (or SGST as the case may be) shall be levied on the transaction value[8] or the price actually paid or payable for the said supply of goods and/or services and at such rate to be notified on the recommendations of the GST Council. Subsequently, the rates have been notified as follows[9]:

Under Sl. No. 17, Heading 9973-

  • Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right in respect of goods other than Information Technology software at the rate of 12% (6% CGST and 6% SGST).
  • Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right in respect of Information Technology software at the rate of 18% (9% CGST and 9% SGST).

“Information Technology software” means[10] any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment.

  • Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration at the same rate of central tax as on supply of like goods involving transfer of title in goods.
  • Any transfer of right in goods or of undivided share in goods without the transfer of title thereof at the same rate of central tax as on supply of like goods involving transfer of title in goods.
  1. Brief Analysis

It is pertinent to note that under the GST regime, permanent transfer/sale of a particular intellectual property right would be considered as supply of service and a 12% tax (6% CGST and 6% SGST) would be levied on the transaction price provided such IPR is not in respect of software. Temporary transfer or permission to use or enjoy (license or assignment) any IPR would also be taxable at the same rate provided it is not relating to IT software.

Earlier, permanent transfer was not considered as declared service and hence not exigible under service tax. It is also to be noted that earlier the exclusivity test (whether transfer/assignment/license is exclusive to the transferee) as laid down in the BSNL judgment[11] was the standard for determining whether the transfer would amount tosale (and hence, subject to sales tax) or license (and hence, subject to service tax). Under the GST it is immaterial for the purpose of taxation whether the said transfer is exclusive or for that matter temporary since it will be subjected to the same concurrent tax.

It is also pertinent to note that sale or licensing of intellectual property pertaining to software would be charged 18% tax (9% CGST and 9% SGST). Even though GST has done away with the need to classify transactions in respect of goods and services, the Centre has in a way reversed the TCS judgment[12] which had held that transactions relating to shrink wrapped software (software bound with product) was to be considered as transfer of the right to use such software goods (and hence deemed sale of goods[13]) while the same is to be treated as service due to the notification.[14]

It may also be noted that the Constitution (One Hundred and First Amendment) Act, 2016 [by which the GST was introduced in the constitutional framework] did not amend Article 366(29A)(d) which specifies that the transfer of the right to use any goods is to be deemed as a sale of those goods. However with the aforesaid notification[15], the Centre while notifying the taxation rate, has in a way classified the transfer of the right to use any goods to be treated as service.

  1. Reverse Charge on Copyright

GST is to be levied on the person supplying the goods and/or services. However, Section 9(3) of the CGST Act, 2017 states that the Centre may specify certain categories of supply of goods andservices on which the tax is to be paid on reverse charge basis by the recipient of the supply. Therefore, as per notification[16], the tax on the supply of services by an author, music composer, photographer, artist, etc. by way of transfer or permitting the use or enjoyment of a copyright relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer etc., shall be borne by the said publisher, music company or producer.

  1. “Registered Brand Name” in the context of GST

It is to be noted that the supply of certain goods, such as chena or paneer, natural honey, wheat, rice and other cereals, pulses, flour of cereals and pulses, other than those packed in unit container and bearing a registered brand name, is exempted from CGST[17]. Supply of such goods, when put up in unit container and bearing a registered brand name attracts 2.5% CGST rate[18].

Subsequently, doubts were being raised as to the meaning of “registered brand name”. On July 5, 2017, the Finance Ministry issued a press release[19] clarifying the same. The statement noted that “registered brand name” has been defined in the notifications[20] and the same would mean brand name or trade name which is registered under the Trade Marks Act, 1999. In this regard, registered trade mark means a trade mark which is actually on the register and remaining in force[21].

Thus, unless the brand name or trade name is actually on the Register of Trade Marks and is in force under the Trade Marks Act, 1999, GST rate of 5% (2.5% CGST and 2.5% SGST) will not be applicable on the supply of such goods.[22] It is pertinent to note that this may lead up to a situation wherein a particular company selling, say, cereals in unit containers bearing a brand name but such brand name is not on the Trade Mark Register and hence not in force, would be exempted from GST. Such situation would also extend to new players in the cereals (or other exempted goods) industry who have applied for trademarks and whose marks have not been registered. The relevant question posited by this clarification is that whether smaller players would now be discouraged from filing for trademark registration due to availing tax exemption which in turn would reduce their costs? This might go against the objective of the National IPR Policy 2016, which encourages commercialization of IP at the grass-root level. Still considering the importance of Intellectual Property, such manufacturers need to understand the gravity of the matter that non registering of Trade Mark is not favourable to them considering the market for their products which is ultimately identified by their brand name and hence they cannot afford to not protect their brand name only to save some minor percent of GST. Thus, importance/benefits of Trade Mark Registration when compared to the applicable GST for products under Trade Mark which is not on register, it is indeed crystal clear that manufacturers should protect their IP which in all circumstances should be of paramount interest which help reap profits by leaps and bounds.

  1. Conclusion

With the introduction of GST at nascent stage, it is still to be seen as to how the implementation is carried forward. At the very least, the GST has brought about a positive change by doing away with the need to classify transactions as either relating to goods or services since all transactions would now be concurrently levied tax by both the Centre and the States (provided transaction is intra-state supply; inter-state to be levied exclusively by Centre). The GST has also subsumed numerous central, state and municipal taxes and by doing so, will ensure that indirect tax rates and structures are common across the country thereby increasing certainty and ease of doing business.

About the Author: Pratik Das, Legal Intern at Khurana and Khurana, Advocates and IP Attorneys and can be reached at abhijeet@khuranaandkhurana.com

References :

[1] Intellectual Property Service meant the temporary transfer or permission to use or enjoy any intellectual property right.

[2] Article 366 (29A) (d) of the Constitution specifies that the transfer of the right to use any goods to be deemed as a sale of those goods.

[3] Supreme Court in Tata Consultancy Services v. State of Andhra Pradesh,  (2005) 1 SCC 308 held that the term “goods” under Article 366 (12) of the Constitution includes intangible/incorporeal property which is capable of abstraction, consumption and use, and which can be transmitted, transferred, delivered, stored, possessed, etc.

[4]Article 246A, Constitution (One Hundred and First Amendment) Act, 2016.

[5]Articles 366(12A), 286(1A), 286(1B), 286(2), Constitution (One Hundred and First Amendment) Act, 2016.

[6]Article 269A, Constitution (One Hundred and First Amendment) Act, 2016.

[7]Ibid.

[8]Section 15, CGST, 2017.

[9] Notification No. 11/2017-Central Tax (Rate), dated 28th June, 2017 [which notify the rates for supply of services under CGST Act].

[10]Ibid at Explanation (v).

[11]Bharat Sanchar Nigam Ltd. v. Union of India, (2006) 3 SCC 1.

[12]Supra at 3.

[13]Supra at 2.

[14]Supra at 9.

[15]Ibid.

[16]Notification No. 13/2017-Central Tax (Rate), dated 28th June, 2017 [which notify the categories of services on which tax will be payable under reverse charge mechanism under CGST Act].

[17] Notification No. 2/2017-Central Tax (Rate), dated 28th June, 2017 [which exempts intra-state supply of the specified goods from CGST].

[18] Notification No. 1/2017-Central Tax (Rate), dated 28th June, 2017 [which notifies the CGST rates of intra-state supply of goods].

[19]Available at http://pib.nic.in/newsite/PrintRelease.aspx?relid=167146.

[20]Supra at 17, 18.

[21]Section 2(w), Trademarks Act, 1999.

[22]Supra at 19.

THE EXCLUSIVITY OF BRAND TAGLINES

Brand taglines are catch phrases which serve to draw a connection for consumers with the business’ products and services, and the concerned brand in general. A particular sequence of words repetitively used in the promotion of a brand or business in relation to its products and services often finds a place in the associative memory of the public. For example, when coming across the catch phrase “Finger lookin’ good”, one is instantly reminded of KFC’s sumptuous range of food products.Similarly, the tagline “Just Do It” is commonly associated with the brand NIKE and the phrase, “There are some things money can’t buy. For everything else, there’s MasterCard” connotes a connection with Mastercard.

Taglines are primarily used for advertising as they are memorable, differentiate the brand and impart certain emotions regarding the brand. The said exclusive association also flows from the mere mention of the brand, for example when one refers to Mc’donalds, the phrase “I’m Lovin’ It” automatically comes to mind, thereby indicating that some sort of intangible ownership of the particular phrase exists. This short note will attempt to elucidate upon whether and if so, what type of intellectual property protection is accorded to taglines or trade slogans with specific reference to the Indian context.

Scope of Brand Taglines as Trademarks

Section 2(m) of the Trademarks Act, 1999 defines “mark” as including a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours or any combination thereof. It is seen that the legislation provides for a tagline or combination of words to be included within the ambit of the definition of mark.

Trademark is defined under the Act as a mark capable of being represented graphically and of being able to distinguish the goods or services of one person from those of others in the course of trade.[1] Therefore, it is seen that a brand tagline is capable of being reduced to two-dimensional representation on paper. It is submitted that the distinctiveness criterion has a close nexus with Section 9(1) of the Trademarks Act under absolute grounds for refusal of registration.

In order for a brand tagline to qualify as a trademark, it must be distinctive,by acquiring secondary meaning and goodwill,and must not be descriptive of thefeatures of the products and services in respect of which it is used. The brand tagline by itself also must not indicate anything which has become customary in the established trade practices of that particular business.

Distinctiveness of the Generic

The Karnataka High Court in Reebok India Company v. Gomzi Active[2] has held that the person claiming the benefit of distinctive usage has to establish that over a period of time the concerned trade slogan has developed a secondary meaning and goodwill.[3] The Court accepted Reebok’s (Defendant) contention that the phrase “I AM WHAT I AM” is generic in nature and has not any acquired distinctive character in relation to the goods produced by Gomzi Active.[4]It was further held that both parties were operating under different and distinct trade names and by the mere use of the common phrase and expression “I AM WHAT I AM” it cannot be said that a customer with reasonable prudence would be misled to purchase the products manufactured by Reebok mistaking them for the products manufactured by Gomzi Active.[5] It is submitted that extensive advertisement through various modes and subsequent inherent association by consumers of the brand tagline with brand’s products and services would satisfy the test of distinctiveness even if concerned tagline is a common and generic phrase.

Descriptiveness and Commercial Features

The Hon’ble Supreme Court in a petition for special leave to appeal[6] upheld a Division Bench decision of the Delhi High Court in Procter & Gamble Manufacturing (Tianjin) Co. Ltd. &Ors. v. Anchor Health & Beauty Care Pvt. Ltd.[7], wherein the issue of distinctiveness and descriptiveness of brand taglines was discussed and elaborated.[8]The Court held that

  • The expression “ALLROUND PROTECTION” in Anchor’s advertisements and on its product is covered within the meaning of Section 2(m) & (zb) of the Act.

  • There is a difference between specific descriptiveness and generic descriptiveness.Forexample,a particular tagline may be descriptive of such features that are unique to the brand’s products but not generic features of the said products. (It is pertinent to note that Anchor was the first in the industry to use “ALLROUND PROTECTION”)

It is submitted that the Court in a way has interpreted a brand’s tagline or its“communicated commercial essence”tobe considered as a unique feature of its products and services, while deciding that is not a descriptive tagline.

Expressions of Customary Trade Practice

In Stokely Van Camp Inc v. Heinz India Pvt Ltd.[9], the Delhi High Court Division bench held that the trade slogan “Rehydrate Replenish Refuel” used in respect of Gatorade, even though a registered slogan mark, cannot be granted protection since in the energy drink market it has become customary and in fact necessary to describe products as such. Therefore, the Court held the defendant’s use of the expression “Rehydrates fluids, Replenishes vital salts, Recharges glucose” will fall within the ambit of Section 30 (2)(a) of the Trademarks Act, wherein a registered trademark is not infringed when the alleged infringing mark/expression is used to indicate features and characteristics of the products in respect of which it is used.

Therefore, it is seen that brand taglines have been recognised as trademarks in India provided they have acquired distinctiveness through goodwill and secondary meaning. It is also seen that trade slogans can be used to describe particular unique commercial features of the brand’s products and services.

Scope of Brand Taglines as Copyrights

Copyright subsists in original literary, dramatic, musical and artistic works, cinematographic films and sound recordings.[10]The Delhi High Court in Pepsi Co. Inc. and Anrv. Hindustan Coca Cola and Ors.,held that advertising slogans are not to be accorded protection under the Copyright Act and they may be protected under the law of passing off.[11] The Court also opined that although the task of devising advertising slogans often requires a high level of skill and judgment but they will usually not qualify as original literary works.Law of passing off is not limited to names but is wide enough to encompass other descriptive materials including slogans, as part of goodwill built by extensive advertisement.[12]

Further, in Godfrey Phillips India Ltd. v DharampalSatyapal Ltd. & Another[13], the Delhi High Court followed the ratio of Pepsi Co and held that the advertising slogan “ShauqBadiCheezHain” is a mere combination of common words and hence cannot be granted protection as a literary or artistic work under the Copyright Act since they are as such not an outcome of great skill, and at best can be given protection under the law of passing off provided the requisite case is made out for passing off.

It is submitted that the reason as to why advertising slogans or brand taglines are usually not granted copyright protection is due to the generic use of words in such taglines. Brand taglines are often arrived at after much deliberation and exercise of intellectual activity and hence it may be argued to come under the ambit of originality and creativity in order to be treated as literary or artistic works.

Conclusion

In conclusion, it is submitted that a particular brand tagline may be accorded protection as a trademark if it satisfies the distinctiveness and non-descriptiveness criteria. In case of Tagline comprising of common words or generic phrase, it is through extensive use, advertising and campaigning that a tagline or slogan acquires secondary meaning to the extent consumers and the general public start associating it exclusively with the concerned brand or business. Therefore, proper documentation and detailed records regarding the use and advertising of brand taglines are essential for the purpose of preventing the dilution of goodwill created with the public.

It is also to be noted that brand taglines are usually not granted copyright protection due to the use of generic common-place words and the Courts are reluctant in considering them to be original literary or artistic works.

About the Author: Pratik Das, Legal Intern at Khurana and Khurana, Advocates and IP Attorneys and can be reached at abhijeet@khuranaandkhurana.com.

References:

[1] Section 2(zb), Trademarks Act, 1999

[2] 2007 (34) PTC 164 (Karn)

[3]Ibid at paragraph 11

[4]Ibid at paragraph 12

[5]Ibid at paragraph 16

[6]C. Nos. 15928-15929/2014

[7]2014 (59) PTC 421 (Del)

[8]Ibid at paragraph 10

[9]MIPR 2010 (3) 273 at paragraph 9

[10] Section 13(1)(a), Copyright Act, 1957

[11] 94(2001)DLT 30 at paragraph 70

[12]Ibid at paragraph 68

[13] 2012 (51) PTC 251 (Del) at paragraph 14

Singapore: The upcoming Intellectual Property centre of Asia

Today, the growth of global economy has become impossible without considering Intellectual Property.

 

In Asia, Singapore is witnessing a huge growth of its Intellectual Property segment and is slowly becoming the focus of Intellectual Property in Asia. Singapore is ranked fourth in the world and top in Asia for having the best IP protection in the World Economic Forum’s Global Competitiveness Report 2016-2017. Adding on to this, the government of Singapore has also come up with an IP Hub Master Plan [1] to develop the country as a worldwide IP hub. The Singapore government has taken few more steps such as launching an IP financial scheme and coming up with a Center of Excellence for IP valuation [2] to accelerate the growth of IP sector in the country.

 

Several data analytics experts have conducted various studies for visualizing the impact of the steps taken by the Government of Singapore. Few results from the case studies will provide an intellectual and a clear picture of how Singapore is progressing towards maintaining its top position as far as Asian IP sector is concerned. The results will also show that which entities (for example. Firms, local companies, global companies) are the major contributors in this progress.

 

Major contributors in Singapore IP

 

  • Almost 50% of patents filed in Singapore are invented in United States.
  • Almost 13% of the filed Patents in Singapore are invented in Japan [3].
  • Almost 95% of total patents filed in Singapore are filed by companies which are not originated in Singapore.

Thus more than 60% of filed patents in Singapore are invented in United States and Japan combined. The statistics in itself shows that global companies are very much interested in getting their IP protected in Singapore. This is possible mainly due to the steps taken by Singapore Government [1][2]. In addition to these steps the Government also provides monetary help for Research & Development and for filing patents to Singapore originated companies [4].Most patented technology areas in Singapore? [6]

Singapore: Granted Patents & Registered Trademarks

Data Analytics companies analyzed the trend of patents published at the patent office of Singapore to find out the number of applications granted. The analysis was done using the patent kind codes to consider various stages of patent applications. It was concluded that:

  • From the year 1999, the average number of granted patents by local and global entities at the Singapore patent office per year is more than 5,000. The rate of growth has been consistent over the past decades [5].
  • More than 21000 Trademark Applications have been filed in 2014, out of which around 19000 applications have been registered. [7]

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

References:

[1] Lee, Shaun. “IP Hub Master Plan: To Develop Singapore as a Global IP Hub in Asia.” Singapore International Arbitration Blog. N.p., 03 Apr. 2013. Web.

[2] “IP Financing Scheme Launched.” Spruson & Ferguson. N.p., 10 Aug. 2014. Web.

[3] GreyB. “The Race of Singapore to Become The Next IP Hub of Asia.” GreyB. GreyB, 10 Apr. 2017. Web.

[4] “Funding and Assistance.” Funding and Assistance. IPOS, 21 Sept. 2016. Web.

[5] “PTMT Products and Services Brochure.” Patent Statistics, PTMT Brochure. N.p., n.d. Web.

[6] SOURCE-WIPO STATISTICS DATABASE; LAST UPDATED 05/2017

[7] https://www.ipos.gov.sg/AboutIP/IPResources/Statistics.aspx

 

 

Semiconductor Integrated Circuit Layout Design (SICLD)…… Unused Potential IP

When we indulge in conversations related to Intellectual Property, what typically comes to our mind are Patents or Trade Marks or Copyrights or maybe Geographical Indication (GI). Other Intellectual Property Protection Acts such as Industrial Designs and Semiconductor Integrated Circuits Layout Design Act (“SICLD” hereinafter) rarely attract our attention, hardly discussed and to utter surprise of all, being zero practiced so far.

Integrated circuits (ICs) form an integral part of every electronics device. To generate a desired output from a given input, electric signal has to pass through hundreds or even thousands of electrical/electronic components. A lay out is created to arrange these components in smallest possible area meeting the circuit requirement to gain some specific electrical output. With introduction of technologies such as very large scale integration (VLSI), and ultra large scale integration (ULSI), these circuits are getting further miniaturized day by day. To reduce power consumption and to enhance processing speed, new layouts designs are rolled out frequently, thanks to continuous research in the field.

An integrated circuit is an arrangement/pattern of transistors and other circuit elements on a semiconductor chip in accordance with a circuit that provides a logical electrical output. SICLD was introduced to protect layout of said unique arrangements of electrical components. Under this act “Layout-Design”, which essentially is the mask layout or floor planning of the integrated circuits, can be registered and protected.Information such as a procedure, process, system, program,and method of operation among others are exempted from protection.

India heavily depends on semiconductors imports to meet industry needs. Until last decade, 80-90% of semiconductors were imported from countries such as China, Japan, Korea among others. With initiatives like “Make in India”, “Digital India” and other efforts by newly formed government, promotion of local semiconductor manufacturing is logical. If statistics are to be believed, it is quite interesting to note that semiconductor import has come down to 65-70% during fiscal year 2014-15. According to Mr. Ashok Chandak, chairman of Indian electronics and semiconductor association (IESA), import may further come down to 50% during current fiscal year itself.

Prime Minister’s recent business tours, to countries such as China, Korea, Japan among others that are world’s leading semiconductor producers has attracted investment worth billions to India. With increase in number of companies that are willing to invest and setup their manufacturing units in India, semiconductor industry is going to see “Acche Din”.

Despite ever increasing research in electronics and semiconductors industry, it is hard to swallow the truth that there is little or zero awareness of SICLD. The fact is that the Indian SICLD Registry is still looking for first applicant to file an application. It is indeed depressing to see that the official gazette published by SICLD registry says “No Application Received” month after month, ever since it was first introduced.

With revival of semiconductor manufacturing in India, it is high time the SICLD registry also gets revived and makes way for “Acche Din” for itself. The registry with support of renowned law houses, can ensure something fabulous to attract layout design applications. Creating awareness through conferences, workshops, seminars and webinars can simply do wonders. Layout designs hold some unused and unturned potential.Who knows it may turn out to be best bet among all the intellectual properties during years to come.

About the Author: Lalit Suryavansi, Patent Associate at Khurana & Khurana, Advocates and IP Attorneys and can be reached at: lalit@khuranaandkhurana.com