Tag Archives: IP

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

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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.

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

SUMMARY JUDGMENT IN INTELLECTUAL PROPERTY DISPUTES UNDER ORDER XIII-A OF CIVIL PROCEDURE CODE

  1. Applicability of order XIII-A of CPC to Intellectual Property Dispute

With the objective of streamlining and expediting the disposal of disputes in litigation, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as the “Act”) came into effect on October 23, 2015.  The Act provides for the setting up of specially designated Commercial Courts at District level and Commercial Division of High Courts with ordinary original civil jurisdiction to adjudicate on commercial disputes of a certain specified value. “Commercial dispute” includes disputes arising out of intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semi-conductor integrated circuits.[1] “Specified Value” has been defined[2] to mean the value of the subject-matter of the suit, determined in accordance to Section 12 of the Act, which shall not be less than one crore rupees or such higher value to be notified by the Central Government. The value of subject matter in an intellectual property right dispute would be determined by the market value of the said IP right, as estimated by the plaintiff[3].

  1. Amendment of the Code of Civil Procedure

The said Act has amended the Code of Civil Procedure, 1908 (hereinafter to be referred to as “CPC”) to incorporate stricter timelines and procedures. These amended provisions of the CPC are applicable[4] only in respect of commercial disputes of specified value (one crore rupees). One such salient feature of the Act is the inclusion of Order XIII-A in CPC which provides for the mechanism of Summary Judgment in respect of a claim without recording oral evidence. In light of two recent decisions of the Delhi High Court, this article aims to  analyse the said mechanism in respect of intellectual property disputes.

  1. Context of the mechanism under Order XIII-A

Order XIII-A delineates the procedure by which the Court shall, on application of a party, decide a claim without the recording of oral evidence. Previously, suits which had more or less a clear outcome based on merits would still have to go through the entire procedure enumerated under the CPC before the case could be disposed.

The technicalities led to inordinate delays for the parties concerned and the entire docket system was overburdened. To counter this event, the amendment envisages a process for a summary judgment which is on similar lines to summary suits provided in the CPC with the primary difference that application for summary judgment can be in respect of any relief in a commercial dispute while summary suits relate to such relief relating to liquidated demand or fixed sum of debt.

Application to be in respect of a claim or part thereof

Under order XIII-A, the “claim” in an application for summary judgment shall include (a) part of a claim, (b) a particular question on which the whole or part of the claim depends, and (c) counter-claim.[5] For example, in Trade Mark infringement suit, the question of prior user/first use may be a question on which the claim for damages depends either in whole or in part, and such question may be determined in an application for summary judgment.

When and on what considerations:

Under mechanism as provided under Order XIII-A, the application for summary judgment can be made by either party after the service of summons to the defendant and before the framing of issues.[6] Upon consideration and satisfaction of the Court, a summary judgment may be given that (a) the plaintiff/defendant has no real prospect of succeeding on the claim/defence, as the case may be; and (b) there is no other compelling reason as to why the claim should not be disposed of before the recording of oral evidence.[7]

The rationale being that the Court, after hearing both parties to an application for summary judgment, is of the view that there are no material propositions of fact or law on which further evidence needs to be led since the respective rights of the parties are well-established as per the merits of the dispute.

  1. Bright v. MJ Bizcraft

In the case of Bright Enterprises Private Ltd. v. MJ Bizcraft LLP[8], decided by a Division Bench of the Delhi High Court in appeal, a suit was originally instituted before a Single Judge to claim a permanent injunction, restraining trademark infringement and dilution of goodwill by the defendant. The Plaintiffs used ‘PRIVE’ in the hotel business while the Defendants used ‘PRIVEE’ in relation to a nightclub in the hotel Shangri-La Eros. The Single Judge, without issuing summons to the defendant, dismissed the said suit by suomoto invoking Order XIII-A and stating that a plaintiff’s suit with “no real chance of success” ought to be dismissed at whichever stage the Court finds it so. Subsequently, this was appealed by the plaintiffs.

  • No dismissal without issue of summons

On an appeal by the Plaintiffs on the dismissal of their case, the Division Bench held that the principle of audi alteram partem is embedded in the CPC and hence issue of summons is not optional at the instance of the Court when a particular suit has been duly instituted. It was further held that at the stage of admission of the suit, it is only to be seen whether the suit has been duly instituted. It observed that the case of a plaintiff may be weak but that is not a ground for dismissing a suit without granting the plaintiff an opportunity of proving and establishing his case.

  • Window for application and no suomoto invocation

The Division Bench further held that Order XIII-A cannot be suomoto invoked by the Single Judge on inquisition and that summary judgment may only be delivered upon appropriate application being made by either of the parties.[9] Moreover, it was stressed upon by the Court that the window for preferring an application for summary judgment is only after issuance of summons to the defendant and before the framing of issues, and since such proceedings are of an exceptional nature it was the prerogative of Courts to be scrupulous while observing the requirements of Order XIII-A.

  1. Ahuja Radios

In Ahuja Radios v. A. Karim[10], an application for summary judgment was made on the basis of admissions on part of the defendant. The plaintiff was a leading manufacturer and seller of audio equipment under the registered AHUJA mark since 1940. A suit was filed against the defendant for selling counterfeit products under its mark.

The court restrained the defendant from selling audio equipment using the mark AHUJA or other deceptively similar mark and ordered a local commissioner to inspect his premises. The inspection resulted in seizure of a number of products bearing the AHUJA mark, which the defendant admitted were not original. Subsequently in pleadings, the defendant made claims contrary to his initial admitted statements and claimed that such counterfeit products were placed in his premises by the plaintiff immediately before the inspection.

The Court noted that the defendant had no real prospect of resisting the decree of permanent injunction and that the defendant also had little prospect of succeeding in its defence that he was not dealing in the counterfeit products, thereby indicating that there was no compelling reason for the Court to not dispose of the claim for permanent injunction before the recording of oral evidence.

The court passed a decree for permanent injunction in summary disposal of the suit under Order XIII-A on the basis of the admissions of fact by the defendant. Therefore, it is pertinent to note that admission on fact is a relevant criterion for admitting an application for summary judgment.

Conclusion

It is pertinent to note that sometimes disputes in relation to intellectual property rights are pertaining to infringers who do not enter appearance in the proceedings to the suit. Instead of requiring the plaintiff to lead evidence ex-parte, summary judgment under Order XIII-A of the CPC is an efficacious mechanism of disposal of disputes in such cases. The Courts are already passing punitive damages in trademark infringement cases where the offence of infringement is gross and clearly made out and hence, it is submitted that Order XIII-A would find an appropriate application in such disputes.

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

References :

[1] Section 2(1)(c)(xvii) of the Act.

[2] Section 2(1)(i).

[3] Section 12(1)(d).

[4] Section 16(1) and 16(2).

[5] Order XIIIA, R. 1(2).

[6]Ibid, R. 2.

[7]Ibid, R. 3.

[8]2017(69)PTC596(Del).

[9] Order XIII-A Rule 4.

[10] IA No. 5202/2017 in CS(COMM) 35/2017 delivered on May 1, 2017.

Exclusions in Patentable Subject Matter in Malaysia

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

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

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

Section 13(1)(a)

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

Section 13(1)(b)

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

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

Solutions

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

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

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

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

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

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

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

REFERENCES

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

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

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

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

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

MyIPO allocates Fund for students

A fund of RM 500,000 has been allocated by the Intellectual Property Corporation of Malaysia (MyIPO) for school and university students in the country to register their Intellectual Properties (IP), said Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hamzah Zainudin.[1]

The ministry had been strongly encouraging the students to be creative and to patent their products before being commercialized. “The cost to register intellectual properties is very high, which is RM 1,500 and that is why we are allocating a special fund. We will assess all applications to register the intellectual properties via a new application.” he told[2] reporters after the closing ceremony of ‘IP Funtastic’ programme at SMK Sungai Bayor near Selama on April 29, 2017.

‘IP Funtastic’, the two day programme which was organized by MyIPO, aimed at creating imaginative and tech-savvy capitalists and saw a total of 30 students from various schools of the country participate in it. Students as well as teachers were exposed to application design technologies and websites via coding to develop their own IPs during the course of the programme. The same were then uploaded to ‘IP for Youngsters’, a portal and mobile application that gathers creative works by students in the country.

REFERENCES

[1] BERNAMA. “MyIPO Allocates RM500,000 For Students To Register Intellectual Properties”. bernama.com. http://www.bernama.com/bernama/v8/ge/newsgeneral.php?id=1351874 (accessed 22nd May 2017).

[2] BERNAMA. “MyIPO Allocates RM500,000 For Students To Register Intellectual Properties”. bernama.com. http://www.bernama.com/bernama/v8/ge/newsgeneral.php?id=1351874 (accessed 22nd May 2017).

IPOS launches S$1 billion Innovation Fund and upgrades Intellectual Property Masterplan!

Reportedly[1], the Intellectual Property Office of Singapore (IPOS) has announced that Singapore is launching a S$1 billion (US$717 million approx.) innovation fund to help companies with strong intellectual property strategies to grow and expand overseas.

The Makara Innovation Fund, a partnership between IPOS and local private equity firm Makara Capital, will invest S$30 to S$150 million on each of 10-15 “IP-rich and high-growth potential” companies from all over the world, including Singapore. These companies will then tap on Singapore’s IP ecosystem to help them deepen their value creation, compete effectively and expand into the global markets.  MIF will help anchor the nation as a destination for ideas to be translated into assets and revenue by employing a ‘from Singapore and through Singapore’ approach.[2]

The IPOS has also updated a 2013 IP Hub Master Plan aimed at building up Singapore’s competencies in managing and exploiting intellectual property (IP).

The Committee on the Future Economy’s (CFE) Report had identified IP as a key driver of economic growth; and in response, IPOS and the Ministry of Law have upgraded the masterplan to support the CFE’s recommendation, to strengthen Singapore’s innovation ecosystem and shape competencies to help enterprises innovate and scale up.

For starters, a master’s programme in IP Innovation and Management, offered by the Singapore University of Social Sciences, will take in its first batch in July 2017.[3] IPOS’ IP Academy will also work more closely with institutes of higher learning to roll out IP electives to undergraduates, and ramp up training for working adults too. The number of skilled IP experts will be doubled to 1,000 over the next five years to support the growing demand for innovation expertise, and create good, well-paying jobs. Company-level engagements will be stepped up to help local innovators and businesses identify and understand their IP, and use it for growth and expansion.

Taken together, the initiatives under the updated masterplan is estimated to inject at least $1.5 billion value-add into Singapore’s economy, with further benefits as it catalyses more innovation-driven enterprises, in the next five years.[4]

IPOS also plans to step up engagement with companies to help them identify and understand their IP and use it for growth.

For example, IPOS signed a memorandum of understanding with the Singapore Business Federation (SBF) to reach out to the body’s 24,200 member firms to raise IP awareness and competencies. The deepened engagement between both organisations will help SBF’s 25,000 member companies build IP awareness and competencies, as well as gain direct access to IPOS’ suite of IP services, such as training, executive education and complimentary IP clinics.[5]

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

REFERENCES

[1] Yahaya, Yasmine. “Intellectual property masterplan upgraded to drive innovation”. straitstimes.com. http://www.straitstimes.com/business/economy/intellectual-property-masterplan-upgraded-to-drive-innovation. (accessed 18th May, 2017).

[2] Huang, Claire. “   IPOS, Makara Capital launch S$1b fund to drive innovation”. Businesstimes.com.sg. http://www.businesstimes.com.sg/government-economy/ipos-makara-capital-launch-s1b-fund-to-drive-innovation  (accessed 18th May, 2017).

[3] Yahaya, Yasmine. “Intellectual property masterplan upgraded to drive innovation”. straitstimes.com. http://www.straitstimes.com/business/economy/intellectual-property-masterplan-upgraded-to-drive-innovation. (accessed 18th May, 2017).

[4] Yahaya, Yasmine. “Intellectual property masterplan upgraded to drive innovation”. straitstimes.com. http://www.straitstimes.com/business/economy/intellectual-property-masterplan-upgraded-to-drive-innovation. (accessed 18th May, 2017).

[5] “One-billion dollar innovation fund launched in Singapore to drive enterprise growth for our future economy”https://www.ipos.gov.sg/MediaEvents/Readnews/tabid/873/articleid/381/category

/Press%20Releases/parentId/80/year/2017/Default.aspx.