Tag Archives: litigation

All About Section 31 D of Copyright Act, 1957

The 2012 amendment in Copyright Act has introduced various provisions, one of them being section 31 D. This section is concerned with the broadcasting or performance of a literary or musical and sound recording, which has already been published.

Clause 1 of Section 31D states:

“Any broadcasting organization desirous of communicating to the public by way of a broadcast or by way of performance of a literary or musical work and sound recording which has already been published may do so subject to the provisions of this section”.

Broadcasting or performance of such work can be done by issuing a prior notice of the intention to broadcast the work and by paying royalty to the rights holder, as fixed by the Copyright Board. However, the term “Copyright Board” in the Act has been substituted with “Appellate Board” as per the Finance Act, 2017.

Due to widespread growth of internet all over the globe, ‘communication to public’ via internet is  much more prevalent and thus, on September 05, 2016, the Department of Industrial Policy and Promotion (DIPP) issued an Office Memorandum clarifying the scope of section 31 D of Copyright Act, 1957 by construing that  “any broadcasting organization desirous of communicating to the public” may not be restrictively interpreted to be covering only radio and television broadcasting, as definition of “broadcast” read with “communication to the public” appears to include all kinds of broadcasts including internet broadcasting.[1] Therefore, bringing ‘online broadcasting’ under the ambit of section 31 D of Copyright Act, 1957.

The practices as provided under section 31 D can be adequately taken care of by Copyright societies as provided in the statutes.  The functioning and working of the copyright societies in India has been well explained in the case of Entertainment Network (India) Ltd vs. Super Cassette Industries Ltd & Ors. In this case it was stated that the existence of the copyright society is for the benefit of the copyright holder. The Copyright society must help the copyright owner in a way that he/she is able to exploit his/her intellectual property rights in a structured manner. “The Copyright society grants license on behalf of the copyright owner, files for litigation on their behalf not only for the purpose of enforcement but also protection to enforcement of the copyright owner’s right. It not only pays royalty to the copyright owner but is authorized to dispense the amount collected by it amongst its members.” But the functioning of societies is under the scanner nowadays, as societies are alleged to have been using this law for getting personal gains, thus making the enforcement of this law redundant, leading to various contentious matters.

CHALLENGING SECTION 31 D AS ULTRA-VIRES

Since the introduction of section 31 D, it has been challenged by various entities alleging it to be ultra-vires the Constitution of India, especially Article 14, 19(1)(g) and 21 of the Constitution as well as the right to property under Article 300A.[2]   The functionality and mechanism of this particular section was disputed on ground that :

  1. a) There is no public interest in making film music available to the broadcasters at subsidized and preferential royalty rates rather than leaving them to negotiate commercial agreements with copyright owners and that the practical effect of Section 31D is to ensure commercial profitability of the broadcasters at the expense of the owners of the copyrighted works.
  2. b) The content of this provision cause inconsistency in the provisions of the Copyright Act, 1957 as it takes away the exclusivity from the exclusive rights granted to the owners of copyrighted works. Thus, leading to impediment of copyright owners to create original work and to commercially exploit them to his liking.
  3. c) Section 31D is violative of Article 19(1)(g), as it provides for the royalties to be fixed for radio broadcasting by the Board directly. Thus, such a power cannot be termed as a reasonable restriction.

The Madras High Court upheld the validity of Section 31 and 31D in the case of South Indian Music Companies v. Union of India  W.P No. 6604 of 2015 and observed that Section 31 and 31D provides for a mechanism to deal with public interest vis-a-vis the private interest. Thereby, taking care of public as well as interest of owners. Further, the guidelines as to determination of royalty and provision of providing the owners, a reasonable opportunity to be heard, thereby substantiating section 31D that was also introduced in compliance of Article 11(2)[3] and 13[4] of Berne Convention and Article 15(2)[5] of the Rome Convention (for sound recordings) and Article 9(1) of the TRIPS Agreement.[6]

Thus, the High Court, after analyzing various factors such as  principles governing the interpretation of statutes including the doctrine of purposive construction, reading down and contextual interpretation, did not find any reason to hold section 31 D of Copyright Act as unconstitutional.

These provisions under the amended Copyright Act has tried to balance the power of music labels by allowing the broadcasters that obtain the said licenses to have continuity of business by making copyrighted works available to the general public at large.  These provisions have dealt with the monopoly of the music labels by including the grant of a statutory non-voluntary license in the Act.

MECHANISM OF LICENSING UNDER SECTION 31 D

In another case of International Confederation of Societies of Authors and Composers (CISAC) v. Aditya Pandey & Ors. [7] The Hon’ble Supreme court of India, reaffirmed an interim order passed by the High Court of Delhi, which essentially discussed the following issues:-

  1. Whether the ‘Communication to the Public by way of Broadcasting of a Sound Recording’ also amounts to a ‘Communication to the Public of Literary and Musical Works embodied in the Sound Recording’ under the Copyright Act 1957?
  2. If the above is answered in affirmative, whether separate licenses in respect of such Literary and Musical Works should be obtained from the authors of copyrights in such works in addition to the license secured from the producer of the Sound Recording?

The court referred to the decision pronounced under Gramophone Co. Ltd. vs. Stephen Carwardine & Co.[8], which, recognized the concept of co-existing copyright. The learned Single Judge, at first had concluded that once a license is obtained from the owner or someone authorized to give it, in respect of a sound recording, for communicating it to the public, including by broadcasting, a separate authorization or license is not necessary from the copyright owner or author of the musical and/or literary work. However, this does not mean that the musical and/or literary work can be otherwise “performed” in the public, (as opposed to communication of a sound recording to the public) without authorization.[9]

With regard to the second issue, the Court relied on Indian Performing Right Society Ltd. v. Eastern Indian Motion Pictures Association and others[10], in which the Court had already pronounced that it was not necessary for a party to obtain a license from the authors of underlying works (e.g. lyricists and musicians) or from the assignees of such works (in this case, the sound recording company).

It is also pertinent to mention that the Supreme Court also noted that the assignment of the copyright in the work to make sound recording per se (i.e., which does not form part of any cinematograph film), shall not affect the right of the author of the underlying work to claim an equal share of royalties or/and consideration payable for utilization of such work in any form by the plaintiff/respondent.

WHOSE AUTHORITY IS IT TO GRANT LICENSE

The section once again came under the controversies, when the Deputy Registrar of Copyrights, granted an interim statutory license under Section 31D(1) of the Copyright Act, 1957 in favour of M/S Kuku & Koyal Internet Pvt. Ltd. The petitioners i.e. Saregama India Ltd and Super Casettes Industries Pvt Ltd, challenged this very order of the Deputy Registrar of Copyrights before the Delhi High Court through writ petition  [W.P.(C) 1155/2018 & W.P. (C) 1299/2018]  disputing the jurisdiction of this matter.   Petitioners argued that the power to grant license remains only with the Copyright Board . Thereby, the Hon’ble High Court of Delhi stayed the interim license and held that such directions had to be complied in accordance with law and thus, if the Registrar of Copyrights did not have the power to issue a statutory license, no such license could be granted.

CONSEQUENCES OF VIOLATING SECTION 31D

The violation of section 31D amounts to infringement of  copyright. The Calcutta High Court in the case of Saregama Ltd vs. The New Digital Media & Ors.[11] issued injunction against the defendant after analyzing the fact that the  agreement under section 31 D was enforceable and was not a dead agreement. Thus, non-payment of royalty by the defendants leads to violation of agreement as well as section 31D. It is pertinent to note that the Court did not grant any injunction with respect to those sound recording which was being used by the defendants without paying any royalty, as the concerned agreement has expired due to lapse of time, thus, such use of work was not considered as an injunction. However, the Court granted a monetary remedy to the owner of copyright because his work having exclusive right was being used by other party. The Court observed that provisions of section 31 D merely require royalties to be paid to the owner of the work as prescribed by the Copyright Board, the same is a statutory license.  As such, for breach of copyright, there can be no order of injunction only monetary claim as recognized by rules 29 – 31 of the Copyright Rules 2013.

The judiciary has tried to construe section 31 D of Copyright Act by balancing public interest and interest of the owners.

Author: Ms. Pratistha Sinha , Trademark Associate and Ms. Anuja Nair, Senior Associate – Media & Entertainment Litigation at Khurana & Khurana,  Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

References:

[1]http://www.manupatrafast.in/NewsletterArchives/listing/Induslaw/2016/ September-2016%20–%20Legal%20Developments.pdf

[2] Eskay Videos Pvt. Ltd. v. Union of India W.P. 92 of 2015; South Indian Music Companies v. Union of India  W.P No. 6604 of 2015

[3]Article 11 (2) Of Berne Convention: Authors of dramatic or dramatico-musical works shall enjoy, during the full term of their rights in the original works, the same rights with respect to translations thereof.

[4] Article 13 Of Berne Convention: Possible Limitation of the Right of Recording of Musical Works and Any Words Pertaining to 1. Compulsory licenses; 2. Transitory measures; 3. Seizure on importation of copies made without the author’s permission

[5]International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations Permitted Exceptions: 1. Specific Limitations; 2. Equivalents with copyright

[6] Article 9(1) of TRIPS Agreement:  Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom.

[7] CIVIL APPEAL NO. 9416 OF 2016

[8] (1934) 1 Ch. 450

[9]http://www.manupatrafast.in/NewsletterArchives/listing/Induslaw/2016/ September-2016%20–%20Legal%20Developments.pdf

[10] (1977) 2 SCC 820

[11] C.S. No.310 of 2015

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Patent Trolling

Introduction

A patent is an exclusive right that is granted to an inventor for a specified number of years to make, use, and sell an invention. Once the right s provided, no other person can use the invention without proper license from the patentee. This right is provided to protect such inventors legally from any harm. Later it is usually expected that the inventor will put it in the consumer market for use by licensing it to various other manufacturers.  But recently, many such inventors have been misusing such rights that are provided to them. Recently, many have been patenting items in the vaguest form that the legal system would allow, without the intention of using the patent in the future. Their aim is usually to get money by filing infringement suits against individuals or companies who are using products that is even remotely similar to their patented product. This practice is referred to as patent trolling. Thus, patent trolling can be defined as a practice of obtaining and using patents for licensing or litigation purposes rather than in production of one’s own goods or services; “its real business model is patent trolling.”

Analysis

These patent trollers are usually referred to as Non Performing Entities (NPE). These entities will not sell or produce their product but will rather just license money out of those who appear to have been infringing upon a patent that the NPE owns. Trolling had been becoming a very serious problem, where the small companies, enterprises and individuals had been facing most of the backlash due to the high number of cases being filed against them. Many companies settle as the risk of losing an infringement suit and paying millions of dollars is very risky, even if they don’t believe there is any sort of infringement. The act is more prevalent in USA than in Europe as Europe follows the policy ‘losers pay’ where the losing party has to bear the costs of both the sides. This deters people from filing false cases but this isn’t the case in USA. But in the recent case of TC Heartland LLC v. Kraft Foods Group Brands LLC the Supreme Court has given a very welcoming decision where the court said that patent case defendants could effectively be sued anywhere they do business. In the present case, the defendant weren’t allowed to shift the case to where its company was based but was not allowed by the lower courts, which were following a 1990 precedent from the U.S. Court of Appeals for the Federal Circuit. This decision brings a sigh of relief to many as many cases can now be moved away from ‘plaintiff-friendly’ districts to much more neutral districts where the defendants stand a chance of having a fairer outcome.

Strategies and Measures

The NPEs used a lot of different strategies to gain what they have been looking for. Some of the following measures are the most popular ones:

  1. They accumulate patents related to one area: The NPEs collect a number of patents related to one area which makes it nearly impossible and very expensive for the targeted company to come out of the infringement suit.
  2. They do not produce any product: The patent trollers never produce the product they have patented. This in turns makes it difficult to file a counter sue claim of infringement for the defendant. For example in a technological dispute.
  3. They sue a large number of defendants together: This strategy reduces their overall cost and given them the hope of a large payoff in the future.
  4. They claim a percent of the total revenue from the product:Even though their patent may cover a small aspect of the technology, the award granted can amount to millions for a successful product.

Thus, corporations have been asking for special laws or certain measures to be taken against such companies in order to avoid such suits and large amount of awards granted to them. Here are a few steps that companies can take against such troll patents:

  1. The Big Tent Coalition: The current laws allow even the users of a product, which is an infringement of a patent violation to be sued. The Bill will change that and later only legal action could be taken by the company or the individual who has created the product or service.
  2. How to prepare against such suits: One can always take certain precautionary measures to be safe against such frivolous suits. A company or an individual must always remember these thee simple steps before it opens its doors to others- be proactive, Insure, Ask an attorney.
  3. Giving proper Response: Response to a notice must always be made to the sender of the notice. Looking for ways to settle outside of courts could be a waste of time as the plaintiff already knows about such settlements.

Conclusion

Everyone is very much aware as to such troll patents but is still very far away from assessing them. The simple logic that everyone seems to follow is that everyone has a right to protect their patent even if they aren’t using them. It is simply seen as a way of doing business as it is a very common occurrence among big corporations. But the ones who are affected the most, the small companies and individuals need to be protected against such patent trollers as they face losses which takes years to overcome and even leaves them bankrupt. These NPEs target such companies who will very easily give into their demands looking at the vulnerable position that they are in and this is the reason that such vulnerable companies require protection.

 Author: Nishka Tyagi, Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

Growing Significance & Relevance of Shadow Counsels

Shadow Counsels (SC) are not a concept popularly exploited in India. However, their potential is yet to be discovered and realized in order for it to be part of our customary practice. The term ‘Shadow Counsel’ is used for any alternate or auxiliary lawyer appointed in case the original lawyer or the main counsel falters in any way. A Shadow Counsel monitors the case but doesn’t control it per se. The counsel is only to concern themselves with the ultimate outcome of the case and not to take active part in the day to day things. As the practice goes, the Shadow Counsel has all the liberty to attend the court proceedings but not to explicitly intervene. The primary job of the SC is determined based upon the stage at which they are called in and for the context of the matter that they are expected to address such as for a commercial dispute, commercial law issue of agreement vetting/drafting, IP portfolio monitoring/ due-diligence/ management/ strategy.

SCs are mostly engaged by corporations to facilitate legal workings of an entity. Some corporations even allow the SC to attend their Board Meetings so that they may foresee the legal repercussions of any decision taken by the Board. However, they are majorly engaged during trials so that they can rationalize the whole process. During an ongoing trial, it is quite frequent that the case deviates from its core issues and get muddled in the ancillary technicalities. The SC engaged with such a case has their primary concern attached with the bigger picture, or simply put, the outcome of the trial in its entirety. The SC is responsible for case assessment, strategy development and sometimes also for settlement evaluation. They can take care of preparing for any contingencies that may befall the main counsel and also remedy it, all to ensure that the trial’s outcome is favorable for their client without undue delays.

During the trial, a part of SCs’ responsibilities also extends to evaluate the main counsel’s work. They rectify any loopholes which may persist in paperwork or a line of argument, after the work of the main counsel is primarily finished. The SC exists as a contingency plan of the trial. They are responsible for vetting the work supplied by the main counsel and exercise their supervisory duties to remedy any lacuna. In most cases, a SC is hired to provide a fresh perspective to the case. They serve the purpose of a very necessary second opinion to either confirm the strategy chosen by the main counsel or to improve it. They add a touch of finesse to the phenomenon and make the process all the more efficient. Their job is to look at the case with a ‘bird’s-eye-view’ which gives them a holistic idea as to what the case needs and what it lacks. They are to foresee any issues which may arise in the trial and also to suggest and adopt preemptive measures to try and mitigate the damage or avoid it altogether.

The need for SC is rapidly being realized due to undeniably crucial role they can play. It is common that during a trial the outcome can sway at any given moment and therefore one can never be too careful. By engaging a Shadow Counsel, a much needed buffer can be added to the resources. More often than not, during a case, man-hours are wasted on the auxiliary things but with the help of an efficient Shadow Counsel  the case can be streamlined and the wastage of resources could be preemptively better utilized. Sometimes the Shadow Counsel is only employed to appropriately handle a particular part of the case and it is their job to ensure that it is concluded successfully and also that it neither interferes with any other aspect of the case nor does the case interfere with that particular task. There must be a particular proclivity to minimize the amount of financial resources engaged by the client. If they proceed to do their job competently then the client can save substantial amount of money since the resources are diverted towards necessary things and unwanted investments are minimized due to the streamlined, strategized approach. They minimize the risks of a major litigation process. Paying heed to their advice can redirect the course of the litigation in the favor of the client rather than going through the long and expensive process of prolonged litigation.

Apart from regular trial procedures, they are known to be engaged for the purposes of a criminal trial, insurance claims, multiple corporate representations, etc. In case of criminal trials, a shadow/standby counsel is appointed by the courts for any party who wish to proceed pro se, i.e. represent themselves without the assistance of a lawyer. The SC so appointed has to only assist the party and not steer the trial. In other cases if the defendant wishes to cooperate with the government or prosecution against the main defendants but cannot do so publically, the court allows the hiring of a shadow counsel who then steps in the interest of the particular defendant alone. This practice is actively undertaken during trials of drug cartels or major crime rings. In case of insurance claims, the Insured can hire a Shadow Counsel to supervise the records collected and made by the Insurer to ensure that the Insurer doesn’t exercise under bad faith, the contrary is also practiced. Furthermore, in cases where the main counsel is to represent the company as well as the employees against the allegations of a third party, a SC is engaged to prevent any conflict of interests which may arise between the interests of the company and that of the employee and they are to step in to either the employee or the company, should a conflict arise. Backup Counsels are also allowed for IPR procedures in the USA; they have the right to conduct business in the stead of the main counsel.

Apart from the known areas mentioned above, the services of SC can be utilized in various legal fields. They can greatly benefit corporations to rationalize their acts and decision making procedure with a view to cut back on any legal backlash. They can furnish efficient due diligence where agreements and legal documents are concerned. The entire functioning of businesses depends on the agreements drawn up by the legal teams of the companies, if these are weak then it leaves the entire entity vulnerable and potentially remedy-less. A Shadow Counsel can rectify any loopholes and provide the company with an iron-clad base to build their business transactions upon. Even with regard to filing and due diligence attached to Intellectual Property Rights, a proficient SC can be delegated the exclusive duty to handle the IP prosecution or litigation of a company to employ their predominant expertise which conclusively shortens the process of strengthening the IP portfolio of the company. The practice is cost-efficient and more importantly saves the company’s time and resources and guarantees the goal fulfillment for the company.

A Shadow Counsel can perform supervisory role or an ancillary function as per the needs of the client. Their valued addition as a legal resource enhances the efficiency of the main counsel and ensures that the objectives of the client are achieved in a cost-friendly and time-saving manner. Their involvement serves as an added benefit as opposed to risking the various loose ends in their absence. Thus, SC should swiftly become an indispensable part in the legal arena.

Author: Yashvi Padhya (Intern) and Tarun Khurana, at  Khurana&Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com.

Enzo Biochem Inc. v. Applera Corp. – A case pertaining to Doctrine of Equivalents

On August 02, 2017, the United States Court of Appealsfor the Federal Circuit ruled in favor of Applera Corp.and Tropix Inc.in the matter of Enzo Biochem Inc., Enzo Life Sciences Inc., Yale University v. Applera Corp., Tropix Inc. The Court affirmed that the district court accurately interpreted proper construction of claims in U.S. Patent No.5,449,767 (“the’767 patent”) and correctly analyzed Enzo’s doctrine of equivalents argument. In over thirteen years of litigation between the parties, the Court has considered this present infringement action on three separate occasions.

Background

Technology as disclosed in the ‘767 patent pertains to use of nucleotide probes to detect presence of a particular DNA or RNA sequence in a sample or to identify anotherwise unknown DNA sequence. According to the ’767 patent, many procedures employed in biomedical research and recombinant DNA technology rely on use of radioactive labels such as isotopes of hydrogen, phosphorus, carbon, oriodine. The ’767patent also notes serious limitations and drawbacks pertaining to use of radioactive materials that include, elaborate safety precautions, expensive use and purchase, and short shelf-life. As an alternative to use of radioactive labels, the’767 patent elaborates on a series of novel nucleotide derivatives that contain biotin, iminobiotin, lipoic acid,and other determinants attached covalently to pyrimidine or purine ring. Further, the ’767 patent asserts that the use of modified detection approach provides detection capacities equal to or greater than procedures which utilize radio isotopes, and also overcomes other limitations and drawbacks pertaining to use of radioactive labels.

The disputed languageof claim 1 involves following limitation:

“wherein A comprises at least three carbon atoms and represents atleast one component of a signaling moiety capable ofproducing a detectable signal . . . .”

Procedural History

In 2004, Enzo filed a suitag ainst Applera alleging infringement of six patentsincluding the ’767 patent. After multiple years of litigation in 2012, an appeal to the federal court regarding invalidity issues decided on summary judgment, Enzo I, 599 F.3d 1325 (Fed.Cir.2010). The jury found Applera infringed the claims at issue and awarded $48.6million in damages. In appeal, Applera argued that the district court erred in its claim construction because claims of the ’767 patent only cover indirect detection and alternatively, if the claims cover direct detection, they are invalid for lack of written description andlack of enablement. The Federal Court agreed with Applera and reversed the district court’s claim construction, Enzo II, 780 F.3d 1149, 1150 (Fed. Cir. 2015). The Court concluded that the inventors were claiming only indirect detection and thus, held that “the district court erred in construingthe disputed claims of the patent-in-suit to cover bothdirect and indirect detection”. The Court then remanded the case to the district court to determine whether accused product infringes under proper claim construction. The district court agreed with Applera and rejected doctrine of equivalents argument raised by Enzo. Hence, Enzo Appealed.

Opinion of the Court

Firstly, the Court discussed scope of Enzo II and concluded that the district court correctly interpreted Enzo II. According to the Court, the district court rightly referred to specification of the ’767 patent and opined that specification does not support inclusion of direct detection.

Secondly, the Court discussed doctrine of equivalents. According to Enzo, Applera infringes claims under doctrine of equivalents and the district court “misconstrued” its expert declaration and improperly drew inferences in favor of Applera, rather than Enzo. Further, Enzo asserted that scope of equivalents focused on a particular subset of direct detection.

According to the Court, the district court rightly explained that the patent “describes its method of indirect detection as a superior means of detection as compared to direct detection, with ‘detection capacities equal to or greater than products which utilize’ direct detection”. The Court explained that “the specification provides additional support that claim 1 covers only indirect detection”.

The Court relied on Dolly, Inc. v. Spalding & Evenflo Cos., 16 F.3d 394, 400 (Fed. Cir. 1994), according to which “the concept of equivalency cannot embrace a structure that is specifically excluded from the scope of the claims” and noted that the same principle applies in the present case. “Including direct detection as an equivalent of indirect detection would render meaningless the claim language on which decision in Enzo II was based”. Thus, direct detection cannot be an equivalent of indirect detection in relation to these patent claims.

Conclusion

The doctrine of equivalents is generally considered when a product or process does not literally infringe a patented invention but the product or process contains elements identical or equivalent to each claimed element of the patented invention. Further, an analysis of role played by each element in context of function, way, and result of the claimed element and the product or process is required. In the present case, the court excluded direct detection from the scope of claims by referring to specification of the patent application even when the claims expressly did not exclude direct detection. Thus, the present case is an instance of difficulties pertaining to analysis of doctrine of equivalents and indicates proving doctrine of equivalents as unfeasible.

Understanding ITC Litigation (Section 337 Cases)

Having seen regular and growing number of queries from Indian Companies on U.S. International Trade Commission (ITC) cases in the US (primarily companies having domestic market in the US), this is a brief attempt to give clarity on jurisdiction that ITC provides, types of cases handled, advantages/disadvantages of the ITC routes, among few other characteristics of the cases filed.

Introduction:

U.S. International Trade Commission (ITC) has, in the last few years, become a key destination for both Domestic and Foreign IP litigants for different types of Trade Disputes. ITC, in essence, is basically an independent, quasi- judicial Federal agency with broad investigative responsibilities on matters of trade. ITC is enabled to investigate effects of dumped and subsidized imports on domestic industries and conduct global safeguard investigations. The Commission is also involved in adjudicating cases involving imports that allegedly infringe intellectual property rights. The Commission also serves as a Federal resource where trade data and other trade policy-related information are gathered and analyzed for development of sound and informed U.S. trade policy. The Commission makes most of its information and analysis available to the public to promote understanding of international trade issues.

Basic functions of ITC can be viewed here. ITC therefore, not only focuses on IP issues, but handles and has jurisdiction over any action that is to be taken by an appropriately hurt entity on issues relating to import injury, handling Freedom of Information Act Requests (FIAR), customs, Antidumping and Countervailing Duties (AD/CVD), among other like matters. However, ITC is best known for its IP practice, wherein, Section 337 investigations conducted by the U.S. International Trade Commission often involve claims regarding intellectual property rights, including allegations of patent infringement and/or trademark infringement by imported goods, which may lead to unfair practices in import trade. Both utility and design patents, as well as registered and common law trademarks, may be asserted in these investigations. Other forms of unfair competition involving imported products, such as infringement of registered copyrights, mask works or boat hull designs, misappropriation of trade secrets or trade dress, passing off, and false advertising, may also be asserted. In addition, antitrust claims relating to imported goods may also be asserted.

337 Investigations:

A primary remedy available in Section 337 investigations is an exclusion order that directs Customs to stop infringing imports from entering the United States. In addition, the Commission may issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337. Expedited relief in the form of temporary exclusion orders and temporary cease and desist orders may also be available in certain exceptional circumstances. Section 337 investigations, which are conducted pursuant to 19 U.S.C. § 1337 and the Administrative Procedure Act, include trial proceedings before administrative law judges and review by the Commission.

Many of the highest profile, multi-forum IP disputes now include proceedings before the ITC. Since ITC cases go to trial faster than almost any forum in the world, they can be the first to be resolved in these multi-forum disputes and often spearhead resolution of the other cases. Most ITC disputes, as can be seen here, are Patent Infringement Suits filed by Patent holders who must prove that it has a domestic industry with respect to the patent in order to be entitled to relief, against foreign companies that are exporting/ attempting to export potentially patent infringing products to the US. Apart from patent infringement suits, other subject matters relating to, but not limited to, copyright infringement, mask work infringement, misappropriation of trade secrets, passing off, false advertising, and potentially even violations of the antitrust laws may also be asserted under Section 337. However, most of this instant article pertains to allegations being made in context of patent infringements.

Procedure:

As a procedure, following the key steps taken during the case till the same is disposed off:

1. Section 337 investigations are initiated by the Commission following the receipt of a properly filed complaint that complies with the Commission’s Rules.3A Commission notice announcing the institution of an investigation is published in the Federal Register whenever the Commission votes to institute a Section 337 investigation.

2. When an investigation is instituted, the Chief Administrative Law Judge at the Commission assigns an Administrative Law Judge to preside over the proceedings and to render an initial decision (referred to as an “Initial Determination”) as to whether Section 337 has been violated. The Commission also assigns an investigative attorney from the Commission’s Office of Unfair Import Investigations (“OUII”), who functions as an independent litigant representing the public interest in the investigation.

3. In the notice announcing initiation of an investigation, the Commission identifies entities that may participate in the investigation as parties, namely, the complainant(s) that allege a violation of Section 337, respondent(s) that are alleged to have violated Section 337, and the Investigative Attorney.

4. Section 337 investigations are conducted in accordance with procedural rules that are similar in many respects to the Federal Rules of Civil Procedure. These Commission procedural rules (found in 19 C.F.R. Part 210) are typically supplemented by a set of Ground Rules issued by the presiding Administrative Law Judge. The procedural rules and Administrative Law Judge’s Ground Rules provide important instructions and details regarding such matters as the taking of discovery and the handling of motions.

5. A formal evidentiary hearing on merits of a Section 337 case is conducted by the presiding Administrative Law Judge, giving parties the right of adequate notice, cross-examination, presentation of evidence, objection, motion, argument, and other rights essential to a fair hearing.

6. Following a hearing on the merits of the case, the Administrative Law Judge issues an Initial Determination (“ID”) that is certified to the Commission along with evidentiary record. Commission may review and adopt, modify, or reverse the ID or it may decide not to review the ID. If the Commission declines to review an ID, the ID becomes the final determination of the Commission.

7. In the event that the Commission determines that Section 337 has been violated, the Commission may issue an exclusion order barring the products at issue from entry into the United States, as well as a “cease and desist” order directing the violating parties to cease certain actions. The Commission’s exclusion orders are enforced by U.S. Customs and Border Protection. Commission orders become effective within 60 days of issuance unless disapproved by the President for policy reasons.

8. All appeals of Commission orders entered in Section 337 investigations are heard by the U.S. Court of Appeals for the Federal Circuit.

Owing to extremely pressing and short time durations between activities relating to cross-examination, presentation of evidence, objection, motion, arguments, litigating in the ITC enables an efficient resolution in a short period of time, and in a pressure-packed forum that can make or break the commercial success of the products at issue, wherein the entire case, starting from the complaint, to discovery, pretrial hearings, trial, post-trial briefs, to subsequent review by the Commission, typically happens within about 18 months.

Other pointers:

  1. Remedies: Unlike in federal district court litigation, ITC does not enable money damages as a remedy and the commission has authority to issue only two types of remedial orders: (1) limited or general exclusion orders and (2) cease and desist orders. Exclusion orders can include Limited Exclusion Order (LEO) that direct the U.S. Customs and Border Protection (CBP) to exclude all infringing articles imported by parties found by the commission to have violated Section 337, whereas a General Exclusion Order (GEO) directs CBP to exclude infringing goods from the United States, regardless of whether the persons importing those goods were parties to the investigation that led to the issuance of the GEO.
  1. Jurisdiction: ITC possesses authority to investigate whether certain allegedly imported and infringing articles should be allowed into US and to provide appropriate remedial relief, if necessary. In sum, the commission has in rem jurisdiction over imported goods rather than in personam jurisdiction over the parties who import those goods and the commission’s remedial orders can reach the products of parties over whom a district court may not have personal jurisdiction.
  1. Subject Matter Jurisdiction: ITC can only try cases wherein the complainant proves to the satisfaction of the ITC, that there has been importation into the United States, sale for importation, or sale within the United States after importation by the owner, importer, or consignee, of articles that infringe a U.S. patent. A second requirement is that a complainant must allege and establish the existence of a protectable domestic industry. For instance, in patent-based investigations, violation of Section 337 can be found “only if an industry in the United States, relating to the articles protected by the patent concerned, exists or is in the process of being established.”

 Exemplary Cases

1. In Dec, 2010, Motorola Mobility brought a patent infringement case at ITC against Microsoft concerning five of Motorola Mobility’s patents. Of the five, the claims were brought down to just one patent, namely U.S. Patent No. 6,069,896, which specifies a peer-to-peer wireless invention. The dispute was actually between Google and Microsoft, since Google bought Motorola Mobility about a year ago, largely to boost its patent holdings. Concerned patented technology uses Microsoft’s Xbox gaming consoles, wherein the Commissioners at the U.S. ITC refused an appeal by Motorola Mobility to examine findings of ITC Administrative Law Judge David P. Shaw that were determined in March, 2013. Shaw found that Microsoft did not infringe a single patent held by Motorola Mobility. Six Commissioners at the ITC agreed with the administrative law judge’s initial determination, including that “Motorola failed to establish indirect infringement on the merits.” They concluded that the investigation was now “terminated” in a notice, which can be accessed here.

2. In June 2013, ITC cleared video-streaming site Netflix of infringing four patents owned by digital entertainment company Rovi. In its preliminary order, administrative law judge, David Shaw, rejected Rovi’s infringement claims covering interactive television programme guides. One patent was found invalid. The complaint was filed in April 2010, targeting Netflix and consumer electronics companies Roku, LG Electronics, Mitsubishi and Vizio. Roku, which is the only one of those not to strike a licensing deal with Rovi, was cleared by the ITC on June 7 2013 of infringing one The asserted patents mainly cover the ability to customise the display of TV programmes, such as recommending shows based on customer preferences. Several claims within one patent – “Interactive computer system for providing television schedule information” – were found invalid on the grounds of anticipation and obviousness.

In sum, the speedy and specialized nature of ITC forum makes the commission an attractive proposition for getting relief, without factoring into issues such as equitable balance, counterclaims, inordinate costs (although ITC has short-term high costs), which are typical in federal district courts.

About the Author:Sheetal Tiwari, Trademark Attorney, at Khurana & Khurana, IP Attorneys and can be reached at sheetal@khuranaandkhurana.com

Let’s Google it !

David Elliot, from Arizona, owned 750 websites with domains like ‘googlegaycruises.com’ and ‘googledonaldtrump.com’ among many others.  His argument was that he needed to use the word ‘google’ because he was developing an internet based business that will promote charity, commerce, community, relationships, personal health etc. He further stated that he did not register the domain names in the hope of attracting internet users who are seeking to avail the company Google’s specific search engine service. In fact, the users who wanted to search for a topic, typed the word ‘google’ and came across Elliot’s websites. He had even spelt the word ‘google’ correctly in all the domain names, when he could have misspelt the same in order to create confusion among the users.

Google applied for its first trademark in 1997 and since then it has received a number of certificates covering its mark. On July 8, 1998, one of the co-founders of Google, Larry Page himself used the word ‘Google’ as a transitive verb when he wrote on a mailing list- ‘Have fun and keep googling!’

The District Court of Arizona ruled the case in favour of Google, forcing Elliot to hand over all the domain names to Google.

Elliot, now has sued Google, claiming that they should not be allowed to use the word ‘Google’ as its trademark anymore since ‘google’ means ‘search on the internet’, which made it a common transitive verb. His complaint states that the American Dialect Society declared it to be the ‘word of the decade’. He further claims that in 2010, Google itself had claimed that it would lose its trademark if the word ‘google’ was used synonymously for any search.

If consumers start using a trademark as a common word, then it becomes a generic term. A trademark or service mark that becomes generic in a particular country, is no longer entitled to protection since it is freely available to use.

There are many well known cases where certain brands could not hold on to their trademark. In Bayer Co., Inc. v. United Drug Co., 272 F. 505, ‘aspirin’ was held generic (in the United States) for acetylsalicylic acid pain reliever. But it was still protected in about 80 countries. Bayer also lost its case to protect its Trade Mark ‘Heroin’. Other brands like Kleenex and Xerox tried to save their marks, but in vain, since people commonly ask for a Kleenex instead of a tissue and for a xerox when they want to photocopy something. Band-aid did the same with bandages. In Haughton Elevator Co. v. Seeberger (Otis Elevator Co.), 85 U.S.P.Q. 80, ‘escalator’ was held as a generic term for ‘moving staircase’. In King-Seely Thermos Co. v. Aladdin Indus Inc., 321 F.2d 577, ‘thermos’ was held to be a generic word for vacuum-insulated bottles. In DuPont Cellophance Co. v. Waxed Prods. Co., 85 F.2d 75, ‘cellophane’ was held generic for transparent cellulose sheets. In Pilates, Inc. v. Current Concepts, Inc., 120 F. Supp. 2d 286, ‘pilates’ was held generic for a form of exercise.

Now, Google needs to prove that users associate the word ‘google’ with the company and not as a transitive verb in itself.

About the Author: Ms. Madhuri Iyer, Trade Mark Associate at Khurana & Khurana and can be reached at: Madhuri@khuranaandkhurana.com

Actavis and Novartis

ACTAVIS’ “EXPECTATION OF SUCCESS” AFFIRMED

ACTAVIS UK vs NOVARTIS AG

The High Court, Court of Appeal has recently upheld a decision on Appeal from the High Court, Patents Court, that the Novartis’s European Patent (UK) 0948320, a sustained release formulation of Fluvastatin (a Cholesterol lowering drug), is invalid on the ground of obviousness.

Earlier in the Patents Court

Actavis claimed for the revocation of Novartis patent on grounds of obviousness and insufficiency in the Patents Court. There was also a counterclaim by Novartis for infringement of its patent. Novartis conceded that the claims as granted could not be granted and applied for their amendment.   The claim and counterclaim before Justice Warren is reported at Actavis UK Ltd v Novartis AG [2009] EWHC 41 (Ch) (16 January 2009) . The teaching of the patent was compared to the pleaded prior art and common general knowledge and the judge found that the patent was obvious. The claim on insufficiency however failed.  The Actavis’ preparation would have infringed the defendant’s patent had it been valid but in view of the finding of obviousness the counterclaim failed.

Advances In A Case And Analysis

 

Solubility: high and very high

Fluvastatin was a well-known statin available in an immediate release formulation in 1996 (priority date of the patent is October 1996). A dosage regime of a 40 mg capsule to be taken twice a day was well known by that date plus there was extensive knowledge of sustained release formulations generally. The patent suggests that there is a need for a sustained release formulation of Fluvastatin and in creating such a formulation, there is a problem of its high water solubility and that any of the conventional methods would not work.

Judge Lloyd says “the problem presented in the Patent was illusory”.

Patent is seeking to deal with a problem of high water solubility of Fluvastatin. However, there would be problem only at very high and very low solubility. The solubility of the drug is high and not very high and therefore Fluvastatin is not so highly soluble that the skilled person would expect it to be impossible or difficult to make a sustained release form.

Common General Knowledge and an Expectation of success

Although there was lurking in the Patents Court about some arguments about other claims namely 2, 3, 10 too, however, the only claim which really matters is claim 1, which is permitted to be amended by Justice Warren.

Claim 1 is as follows:

“A sustained release pharmaceutical composition comprising a water soluble salt of Fluvastatin as active ingredient and being selected from the group consisting of matrix formulations, diffusion-controlled membrane coated formulations and combination’s thereof, wherein the sustained release formulation releases the active ingredient over more than 3 hours.”

Actavis advanced a case that a sustained release form of Fluvastatin would be expected not only to be a more convenient formulation for patient compliance (the common perception in October 1996 was that a reduction from 2 doses daily to a single dose would result in improved patient compliance) but would be likely to have significant medical advantages, namely improved therapeutic effect and fewer side effects and hence there was a strong motive to create a sustained release form and a strong expectation that all three types of benefits would be obtained, the two medical and the convenience. The Judge rejected the “medical advantage” but accepted the “more convenient” advantage point.

The fact that an immediate release formulation was already available which could be taken at a dose of up to 40 mg once a day and up to 80 mg per day in two doses, was a part of the common general knowledge of the skilled team. As a result, the skilled team would have an expectation of being able to develop an 80 mg sustained release formulation with some clinical efficacy. It would however be uncertain about clinical efficacy, and there would be no strong expectation that it would be achieved. It would be unable to predict with anything approaching certainty that any reduction in the risk of side-effects would be achieved. The team might get better efficacy or fewer side effects, but it would certainly get better compliance.

The problem and solution gave the same answer and the Judge affirmed the invalidity of the Novartis Patent on the ground of obviousness. The problem was to produce a sustained release of fluvastain. And the solution was provided by any of the standard methods for such formulations, which was obvious. The problem is not to look for better medical effect as discussed above and thus the decision of the Patents Court was rightly upheld.

There was some dispute between the parties about the effect in the case of the decision of the in Conor Medsystems Incorporated v Angiotec Pharmaceuticals Incorporated.

In Conor, The patent claim in question was a taxol coated stent for treating restenosis and prior art claimed a use of stent coated with one of the drugs of the class of drugs to which taxol belonged to. The House of Courts held the patent to be not obvious as it was not obvious for taxon to show the same therapeutic effect.

However, this should always be kept in mind that the obviousness is a question of fact and is a multifactorial question. “The question of obviousness must be considered on the facts of each case. The court must consider the weight to be attached to any particular factor in the light of all the relevant circumstances. These may include such matters as the motive to find a solution to the problem the patent addresses, the number and extent of the possible avenues of research, the effort involved in pursuing them and the expectation of success.” Generics v Lundbeck[2007] RPC 32.

In Pozzoli terms the only difference between the prior art and the claim is the idea of making a sustained release formulation and for that there was a technical motivation. [Pozzoli v BDMO [2007] FSR 37)].  The “Problem and Solution approach” gave the same answer. The problem was to produce a sustained release form of Fluvastatin, which would be solved by any of the standard methods for such formulations. The problem was not to look for better medical effects and the Judge affirmed the invalidity of the Novartis Patent on basis on the ground of obviousness. Since this was one of the first cases after Conor, it is to be seen further whether the Conor would make any change in interpreting the issue of obviousness or not.

Case No: A3/2009/0675

About the Author: Ms. Meenakshi Khurana, a Senior Patent Consultant in Institute of Intellectual Property Research & Development (IIPRD) and can be reached: meenakshi@iiprd.com.