PIRATE BAY: A SINKING SHIP FOR HOLLYWOOD? (PART II)

I would like to thank Question IPR for his/her comments on Part I of the post series and am reproducing the his/her first comment below for a better understanding of the law of secondary liability for copyright infringement in the U.S.

Question IPR stated that, “Indirect infringement liability (Secondary liability for Copyright infringement) in the United States can be divided into three major headings as of today:

· Contributory Infringement

· Vicarious Infringement

· Inducement standard [I disagree with him/her. It is pertinent to note that the Sony standard of substantial non-infringing use was a standard created to determine contributory liability for secondary copyright infringement as opposed to vicarious liability for such infringement. Moreover, the Grokster ‘inducement’ standard was created to address the loophole in the law of contributory infringement, which failed to nab models like Grokster and Morpheus. Thus, the Grokster ‘inducement’ standard is an alternate to the Sony standard for determining liability for contributory liability for secondary copyright infringement, and is not a third independent standard for determining secondary infringement.]

A. Contributory –

One who knowingly induces, causes, or materially contributes to the infringing conduct of others is liable for contributory infringement. The defendant must:

1. know or have a reason to know of another's directly infringing activity; and

2. actively participate in it by inducing, materially contributing to, or furthering it

B. Vicarious -

Vicarious Infringement may be found whenever the defendant has:

1.the right and ability to control or supervise the direct infringer

2. a direct financial interest in the infringement

C. Inducement -

The standard laid down in the Grokster case is called “inducement infringement”

“ one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties”.

In applying the Inducement Test, the court looked at:

· Evidence of intent

· Unlawful purpose

· Active steps

Court found Grokster to be guilty because it:

· endeavored to be Napster replacement;

· made no attempt to develop filters to diminish infringing activity; and

· by selling ads, profited from high-volume use.”

I would suggest that readers read this part of the post after reading Question IPR’s comments, as they add to the content of Part I of this post series. Moving on, now we examine the application of the Grokster standard to TPB.

Application of The Grokster Standard: Liability of TPB

So, if the TPB case was to come up in the U.S., would the application of the Grokster standard make TPB liable?

It is pertinent to note that the charge against Grokster was that Grokster and Streamcast knowingly and intentionally distributed their software to enable users to reproduce and distribute the copyrighted works in violation of the Copyright Act. The technology in Grokster worked as follows:

A user who downloaded and installed the Grokster software possessed the Fast Track protocol which enabled him to send requests for files directly to the computers of others using compatible software.

On the FastTrack network opened by the Grokster software, the user’s request went to a computer given an indexing capacity by the software and designated a supernode, or to some other computer with comparable power and capacity to collect temporary indexes of the files available on the computers of users connected to it. The supernode (or indexing computer) searches its own index and may communicate the search request to other supernodes. If the file is found, the supernode discloses its location to the computer requesting it, and the requesting user can download the file directly from the computer located.

The copied file is placed in a designated sharing folder on the requesting user's computer, where it is available for other users to download in turn, along with any other file in that folder.

Thus, the ‘search engine/indexing capability’ was located within the Grokster setup itself, the user could make available, access and download files solely using the Grokster set up.

In the present case the software used is BitTorrent’s application, after converting the concerned audio/video files into torrent files, the content of the files are uploaded and accessible on the BitTorrent trackers and indexes, TPB being one example. Thus, one can access, download and upload torrent files only through torrent application downloaded from BitTorrent’s website.

However, as stated above, torrent links are not available on BitTorrent’s website. For torrent links, indexes and trackers similar to TPB have to be used. In fact, torrent links also show up on a Google search. Once the user clicks on this link he is directed towards another user’s computer which stores the said content, which can then be downloaded by the first user. TPB argues that post displaying the torrent links and directing the user to the content, it is out of the picture. The infringing material is on someone else’s computer and is downloaded only after the user gets in contact with that other network.

So interestingly, as there was a change in technology post Napster, we see a change in technology post Grokster also. In Grokster the set up facilitated the entire process of searching, making available, accessing and downloading infringing files. However, in our case if one were to sue BitTorrent for contributory copyright infringement, they would argue that like Sony, their only point of contact with the consumer is when the software is downloaded. Therefore, they cannot be made use for subsequent use of the software/application to make available, access and download infringing material.

Since the material is actually stored on the user’s computer, and the search engines, which arguably act as a point of contact, simply argue that they acting provide mere search results and cannot be held liable for content of third party, which is available outside the website. The issue is where does the liability lie?

The Grokster standards being: (1) the defendant promoted the infringement-enabling virtues of its device; (2) the defendant failed to filter out infringing uses; and (3) defendant’s business plan depended on a high volume of infringement.

The first problem is that the device, i.e., the BitTorrent software isn’t owned or operated by TPB. In any case, TPB has not actively promoted its infringement-enabling virtues. It is pertinent to note that that in Grokster, Justice Souter stated that, “We adopt it here, holding that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

In the instant case there was is no such evidence of clear expression or any other affirmative step being taken by TPB to foster infringement. Though in Grokster the Supreme Court was mindful of the survey submitted by MGM which displayed that the probable scope of infringement was staggering and was influenced by it, it was more affected by the attitude of the operators in marketing Grokster as the next Napster, post the Napster litigation.

However, let us assume for the sake of argument that a survey can prove that BitTorrent technology was predominantly used to have access to copyright infringing work and TPB marketed itself as by stating that “half of the world’s torrents are found using its trackers.” Could this be presumed to fall within the first Grokster criteria? Could intention be found in the fact that overwhelming percentage of results on TPB’s search were links to infringing material?

Then comes the next issue, can TPB filter content available on it’s website?

As is evident from Google’s operations, search engines can use filters. The efficacy of such filters is another concern. For instance, Google filters pornography to some extent through it’s safe search option] In fact, torrentfreak reports that Google has started filtering links to torrent files. TPB’s claims that it can filter the content available and displayed, but it won’t do so. [See the TPB ’about page’]

Third, is their business plan based on a high volume of infringement? Since, the site is supported by advertising revenue - the answer to this would be yes.

It is submitted that apart from the intention criteria, both the other criteria could be satisfactorily proven. Though two factors support a finding of infringement, the Supreme Court greatly stressed on the requirement of culpable intent, which as defined by the Court isn’t really present in our case. Consequently, will TPB get away scot-free?

This brings us to our next contention, can one argue that the way the entire system is worked - broken in to parts, one place to access and download the software, the infringing files being made available elsewhere, and indexing of such files occurring on a separate search engine, is all of this to do away with any possibility of locating intention at any on level, and thus, an attempt to find a way out of the Grokster standard?

Application of The Grokster Standard: Perfect 10, the Ninth Cicruit and Liability of TPB

There are a series of Perfect 10 cases which deal with the application of the Grokster standard. the case most relevant for our purposes is Perfect 10, Inc. v. Google & Anr., 487 F.3d 701 (2007).

In this case, on appeal the Ninth Circuit Court applied the Grokster standard. More importantly, the issue addressed in the case is of direct relevance to us. One of the claims against Google was for contributorily infringing copyright as its search results linked to third-party websites that displayed infringing full-size versions of Perfect 10’s images, i.e., Google’s search results linked to infringing content outside website. As is evident the claim is similar to the claim in the present case.

The most interesting and bizarre part of the judgment is the interpretation given by the Ninth Circuit to the Grokster standard. The reasoning is reproduced below as there is no possible way of otherwise explaining it:

Before that, for a brief background, the Ninth Circuit accepted the existence of direct infringement by third party users using the Google search engine as a medium. Second, it accepted the general definition of contributory infringement as enunciated in Grokster, and then went on to talk about the different liability standards which can fall within this definition.

“….Within the general rule that “[o]ne infringes contributorily by intentionally inducing or encouraging direct infringement,” the [U.S. Supreme] Court has defined two categories of contributory liability: (1) Liability under our jurisprudence may be predicated on actively encouraging (or inducing) infringement through specific acts (as the Court's opinion develops) or (2) on distributing a product distributees use to infringe copyrights, if the product is not capable of ‘substantial’ or ‘commercially significant’ noninfringing uses. ….We must next consider whether Google could be held liable under the first category of contributory liability identified by the Supreme Court, that is, the liability that may be imposed for intentionally encouraging infringement through specific acts.

Grokster tells us that contribution to infringement must be intentional for liability to arise. However, Grokster also directs us to analyze contributory liability in light of “rules of fault-based liability derived from the common law,” and common law principles establish that intent may be imputed. [For instance], Tort law ordinarily imputes to an actor the intention to cause the natural and probable consequences of his conduct.” (“If the actor knows that the consequences are certain, or substantially certain, to result from his act, and still goes ahead, he is treated by the law as if he had in fact desired to produce the result.”).

Google's activities do not meet the “inducement” test explained in Grokster because Google has not promoted the use of its search engine specifically to infringe copyrights. However, the Supreme Court in Grokster did not suggest that a court must find inducement in order to impose contributory liability under common law principles.

Our tests for contributory liability [the Napster test] are consistent with the rule set forth in Grokster. We have adopted the general rule: “one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a ‘contributory’ infringer,” In Napster, we considered claims that the operator of an electronic file sharing system was contributorily liable for assisting individual users to swap copyrighted music files stored on their home computers with other users of the system. We stated that “if a computer system operator learns of specific infringing material available on his system and fails to purge such material from the system, the operator knows of and contributes to direct infringement.” Because Napster knew of the availability of infringing music files, assisted users in accessing such files, and failed to block access to such files, we concluded that Napster materially contributed to infringement.

Although neither Napster nor Netcom expressly required a finding of intent, those cases are consistent with Grokster because both decisions ruled that a service provider's knowing failure to prevent infringing actions could be the basis for imposing contributory liability. Under such circumstances, intent for infringement may be imputed. In addition, Napster and Netcom are consistent with the longstanding requirement that an actor's contribution to infringement must be material to warrant the imposition of contributory liability. Accordingly, we hold that a computer system operator can be held contributorily liable if it “has actual knowledge that specific infringing material is available using its system,” and can “take simple measures to prevent further damage” to copyrighted works, yet continues to provide access to infringing works.

Here, the district court held that even assuming Google had actual knowledge of infringing material available on its system, Google did not materially contribute to infringing conduct because it did not undertake any substantial promotional or advertising efforts to encourage visits to infringing websites, nor provide a significant revenue stream to the infringing websites. This analysis is erroneous. There is no dispute that Google substantially assists websites to distribute their infringing copies to a worldwide market and assists a worldwide audience of users to access infringing materials. We cannot discount the effect of such a service on copyright owners, even though Google's assistance is available to all websites, not just infringing ones. Applying our test, Google could be held contributorily liable if it had knowledge that infringing perfect 10 images were available using its search engine, could take simple measures to prevent further damage to perfect 10's copyrighted works, and failed to take such steps.”

As stated earlier the dictum of the Ninth Circuit is interesting and bizarre on two very important points. It is pertinent to note that in Grokster the Apex Court held as follows:

“We adopt it here, holding that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.…. mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise.”

Thus, one, Grokster held that the intention of the party to facilitate infringement had to be found in clear expression or other affirmative steps, failure to filter or making money out of contributory infringement in themselves were not sufficient to make a party guilty, in the absence of other purposeful, culpable expression and conduct. The Ninth Circuit decision goes clearly against this and states that intent, even in cases like the Google search engine, when not clear or culpable can be imputed on the satisfaction of the Napster test.

This brings us to our second point, that the Apex Court discarded the Napster test as a bad test and this can be found clearly expressed in the excerpt found above, where the court stated that mere knowledge of actual infringing uses would not be enough to subject the distributor to liability. The Ninth Circuit said, well, such a distributor can be found liable if he has actual knowledge and can take simple measures to take off the infringing material but fails to do so.

Thus, whether the Ninth Circuit decision is in keeping with the Grokster standard is questionable. However, it is important to note that applying this test to the Google search engine, they held that in all probability Google would be liable for providing links to third party websites which hosted illegal or infringing matter if Google had actual knowledge that the material was infringing, could have taken simple measures to take off the material, but failed to do so.

Applying this dicta to the case at hand, from the legal notices TPB (available on their website) received it is clear that it had actual knowledge of availability of links that lead to infringing material on their website. Second, whether they could filter it using simple measures requires factual inquiry, but it should be noted that on their website, ‘about us’ page they clearly show or reflect an anti-content filtering stance. Third, if there are such measures and TPB failed to take stock, then under the Ninth Circuit standard they could be held liable for contributory infringement.

More importantly, in the beginning of this rather long post, I had stated that under Swedish law intent needs to be proved to impute liability for contributory infringement. It is submitted that the Ninth Circuit decision, through it’s test, does impute intent to facilitate infringement on the distributor in general or Google search engine in specific. Thus, if such reasoning is applied in Sweden, then there is a possibility the TPB might not win the case, so heavily touted to be balanced in their favour.

To make matters more interesting, on 24 February, 2009, after the commencement of the TPB trial, the Swedish Parliament passed a Copyright Bill, which makes it easier to investigate suspected cases of illegal file sharing.

Will TPB be liable under Indian law? Post to follow!

Delhi HC: Guiding the way in copyright infringement cases

We have time and again, reported on various instances of copyright infringement. However, for only the second time, at least to this blogger's mind, the Delhi High Court has gone ahead and taken the softer approach towards a possible infringers in view of how this may affect the academic performance of students!

In Syndicate of the Press of the University of Cambridge v. BD Bhandari (CS (OS) 1274/2004 of the Delhi High Court) pronounced in mid- January this year, the Court was faced with the allegations of copyright infringement of grammar exercises from the publication 'Advance English Grammar by Martin Hewings' by popular publishers MBD. The Defendants, MBD, known to most students (including this very grateful blogger) as a study guide for several subjects, in this particular case had used Martin Hewing's publication as a part of their English guide to help students better attempt grammar exercises in examinations. The defendant's through their written statement refuted the claim of copyright infringement by pointing out the following differences:

- The introduction to each exercise in the book was different.
- The illustrations available in each exercise of the Plaintiff's work were absent in the MBD Publication.
- The answers in the Defendant's publication were placed immediately after the question posed and there was only once answer available unlike the Plaintiff's work.
- Therefore, the Defendants claimed that being a guide book they had to publish answers to questions posed, which happened to be from the Plaintiff's publication.

However, as the Court also noted, the striking point in the case arises in terms of the pricing of the Defendant's books. The Defendant publication cost Rs. 600, over 6 times that of the Plaintiff!!

Strangely enough, the Judge in this present case (Justice Rajiv Sahai Endlaw of the Delhi High Court), despite admitting that ordinarily he would have been inclined to decree the suit in favour of the Plaintiffs, in this case was reluctant to do so keeping in mind the "effect it would have on students" since an injunction in this case "would have had the effect of severely affecting the very existence of such guide books, kunjies and dukkies"!

The Learned Judge then goes on to expound a rationale for not decreeing such behaviour as infringing for the following reasons:

- The Court, retracing the same route it had taken in Oxford v. Narendra Publishing (that our readers will remember we posted about here) stated that requirement to prove originality in a work had undergone a “paradigm shift” from the sweat of the brow doctrine to the modicum of creativity standard after EBC v. DB Modak. Opining that the Plaintiff’s grammar exercises were only “sentences, sometimes with blanks”, the Court held the same does not possess the requisite standard of originality to constitute a copyright.

- Also looking into Section 52 (1) (h), the Court stated that the reproduction of literary work as part of questions to be answered in an examination or in answers to such question shall not constitute infringement of copyright. In the Hon’ble Judges opinion, this would mean that once the Plaintiff’s work was prescribed by a University this would automatically mean that they would fall within the ambit of Section 52 (1) (h) and therefore in the public domain.

- They examined the questions of fair dealing and transformative use and answered in a fashion similar to Oxford. The Court stated that while the questions and answers in the Grammar section were from the Plaintiff’s material, the purpose behind the use of the same and the form in which they were presented was different.

- The purpose behind the publication of the books, the market and the readers that the two publications targeted were completely different. While the Plaintiff’s publication was a textbook and prescribed in the schools/universities to enable students would master the said text, the Defendant's publications were used to study for examinations at a short notice and used by students "who are not the top students in each class/ course or students with high intellect."

- The text in the two publications were found to be different by the Court since the defendants in their book, have appended Punjabi translations/meanings of different words as well as a summary in Hindi. Furthermore, the numbering of the chapters and the exercises, a different introduction to each of the chapters contained therein was also different from that of the Plaintiff. This, according to the judge, allows the reader on a bare perusal of the books to believe that the defendant’s publication is entirely different than that of the plaintiff since the theoretical portion was moderately revised, and the appendices and additional exercises were omitted.

Spicy Comments

First, as a question to our readers- The Court states that books ordinarily entitled to a copyright are stripped of that right the moment they are prescribed as the syllabus by a University under S. 52 (1) (h). Is this automatic assumption since the books are prescribed as syllabus, they are now part of the examination and therefore hold no copyright? Comments on the same will be much appreciated.

In the opinion of this blogger, while it is commendable that the judgment does fully understand the possible implications of banning Guides that help several students, (as stated above) the judgment also poses some questions. The Court states the addition of Punjabi and Hindi translations along with the deletion of illustrations and rearrangement of the answer key, all on bare perusal make the two publications seem different. With this observation, the blogger disagrees.

However, on the whole the judgment toes the line with Oxford v Narendra Publishing and does take into account the several students who will be studying for their examinations. We here at SpicyIP wish all of them (especially those sitting for their Board Examinations) all the very best!

Bayer vs UOI and Cipla: A "Spurious" Tale

Following earlier posts on the Bayer vs Union of India (UOI)/Cipla writ proceedings before the Delhi High Court, let me bring to your attention another fallacious argument advanced by Bayer where they attempt to label all generic drugs as "spurious" drugs.

Bayer’s writ petition states that Cipla’s generic version of Sorafanib, purported to be sold under the brand name “Soranib” would amount to a “spurious drug” under Section 17B of The Drugs and Cosmetics Act, 1940. This section provides as below:

“17B Spurious drugs – For the purposes of this Chapter, a drug shall be deemed to be spurious, -

(a) if it is manufactured under a name which belongs to another drug; or

(b) if it is an imitation of, or is a substitute for, another drug or resembles another drug in a manner likely to deceive or bears upon it or upon its label or container the name of another drug unless it is plainly and conspicuously marked so as to reveal its true character and its lack of identity with such other drug; or

(c) if the label or container bears the name of an individual or company purporting to be the manufacturer of the drug, which individual or company is fictitious or does not exist; or

(d) if it has been substituted wholly or in part by another drug or substance; or

(e) if it purports to be the product of a manufacturer of whom it is not truly a product.”

If Bayer’s contention is accepted, then every generic drug would ipso facto amount to a “spurious drug”, by virtue of the mere fact that they are substitutes of originator drugs! Such an interpretation is highly “ludicrous” and completely antithetical to the very purpose and spirit of the Drugs Act.

No doubt, the drug which Cipla intends to sell under the brand name “Soranib” would amount to a “substitute” for Bayer's drug, sold under the brand name, “Nexavar”. However, the fact that the brand names are so distinct is enough to ensure that there is no confusion in the mind of a consumer purchasing these drugs.

Therefore under section 17B, Cipla’s drug, Soranib is likely to be "plainly and conspicuously marked” so as to reveal its true character and its lack of identity with the petitioners drug, “Nexavar”. It cannot therefore be labeled as a “spurious” drug, by any stretch of imagination.

Bayer vs UOI and Cipla: Patent Apathy by the Government?

In our last post, we bemoaned the fact that the government was not taking the Bayer writ seriously enough. This apathy caused Dilip Shah, Secretary General of the Indian Pharmaceutical Alliance (IPA) to write a letter to the government, as below:

(A similarly worded letter was addressed to Mr Ashok Kumar, Secretary, Department of Pharmaceuticals as well).


To:
Mr Naresh Dayal
Secretary
Department of Health
Ministry of Health & Family Welfare
Nirman Bhawan, Room No. 149
New Delhi 110 011

Dear Mr Dayal,

Re: Delhi High Court Order dated 7 November 2008: In WP(C) No. 7833 of 2008: Bayer vs Union of India & Anr

We invite your attention to our letters of 15 January and 5 February 2009 on the above noted subject.

The said case was heard on 18, 19 and 25 February 2009. The Petitioner’s (Bayer) Counsel (Mr Shanti Bhushan) argued the case for three days. However, when the time came for the Union of India to respond on 25 February 2009, the assigned Senior Counsel was absent. It was after the regular hours of business. The Standing Counsel could have at least asked for hearing to continue on the next day when the Senior Counsel could have been called to respond, but instead the Standing Counsel concluded his arguments in less than five minutes.

It is indeed sad that on a matter of serious policy issues, the UoI (Respondent # 1) and the Drugs Controller General of India (Respondent # 2) have not even argued their case before the Delhi High Court, inspite of letters requesting your personal intervention.

With kind regards,

Yours sincerely,

D G Shah
Secretary General

Bayer vs Cipla: Attempting "Patent Linkage" In India

The writ petition filed by Bayer against the Union of India (UOI) and Cipla came up for hearing on the 17th, 18th and then the 25th of February. For those not familiar with this story, please see our previous post.

In essence, Bayer filed a writ against the UOI, praying that the DCGI (Drug Controller General of India) be restrained from granting any drug approval to Cipla's generic version of their patented drug, Sorefanib (sold as "Nexavar"). The key ground for praying so was that any such approval would violate the patent rights of Bayer and it was incumbent on the DCGI to help Bayer with enforcing its patent rights.

For most of the three days, (17th, 18th and 25th), Justice Bhat heard Bayer's counsel, Shantibhushan. On the 25th, the judge also heard Arun Jaitley (counsel for Cipla), Anand Grover (Counsel for Cancer Patients Aid Association) and Sandeep Sethi (Counsel for the Indian Pharmaceutical Alliance, which sought impleadment in the present proceedings).

Unfortunately, the government counsel did not bother to show up for a long time. This nonchalance on the part of the government in a matter of such serious import for patent law and public health is deeply troubling.

Shantibhushan, counsel for Bayer (and counsel who represented Novartis as well in the Novartis vs UOI case) focussed his key arguments around section 2 of the Drugs and Cosmetics Act. This section reads as below:

“Application of other laws not barred. —The provisions of this Act shall be in addition to and not in derogation of, the Dangerous Drugs Act, 1930 2 of 1930,and any other law for the time being in force.”

Shantibhushan argued that this section must be taken to mean that the DCGI cannot grant drug approval for any drug that is likely to violate an existing patent right.

This argument is highly misleading on two grounds:

i) The grant of drug regulatory approval by the DCGI cannot, by itself amount to a patent infringement

ii) The existence of patent infringement cannot be assumed merely because the patentee states so, but has to be clearly established before a court of law in accordance with the infringement provisions mentioned under the Patents Act, 1970. Such an assessment is beyond the statutory powers of the DCGI, which is institutionally incapable of dealing with complex issues of patent scope, validity and infringement.

Therefore, the mere grant of a drug regulatory approval, would not, ipso facto, entail a contravention of the Patents Act or any other law. Consequently, there is no violation of section 2 of the DCA. To elaborate further:

Section 48 of the Patents Act, 1970 spells out the various exclusive rights of a patentee and includes the acts of “making, using, offering for sale, selling or importing” the patented product or process as the case may be.

A mere grant of a drug regulatory approval by the DCGI to Cipla on the basis that its drug is safe and effective does not amount to an act of “making, using, offering for sale, selling or importing” the petitioners’ patented product.

Secondly, section 107A of the Patents Act, 1970 clearly exempts from patent infringement any of acts of making, using or even selling a patented invention, in so far as such acts are necessary to obtain information for the filing of a drug regulatory application before the DCGI. It is highly illogical to argue that when all acts leading upto the stage of drug approval are exempt from patent infringement, the very act of approval itself amounts to an infringement.

Section 107A (a) of the Patents Act, commonly referred to as the “Bolar” provision reads as below:

107A. Certain acts not to be considered as infringement.— For the purposes of this Act,–
(a) any act of making, constructing, using or selling a patented invention solely for uses reasonably relating to the development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use or sale of any product;

As evident, this section permits any drug manufacturer to experiment with any patented drug with a view to generating data that could then be submitted to a drug control authority. The aim of this section is to ensure that generic drugs are introduced into the market as soon as the patent expires or is invalidated, so that consumers may benefit from this early entry of affordably priced drugs.

If Bayer's argument were accepted, it would hit at the very essence of the above Bolar provision that is aimed at speeding up generic entry into the market and the availability of low cost drugs to the consumer.

Secondly, Bayer's arguments are premised on the notion that the patent is a valid one and that it is infringed. It is pertinent to note that Cipla had stated in its pleadings that it intends to challenge the validity of the Bayer's patent.

More importantly, neither is the DCGI authorized by the DCA to make such an assessment nor does it possess the institutional competence to make such an assessment. From section 104, it is only a court of law that can make such an assessment in an infringement suit filed under the Patents Act, 1970.

Further, section 19 of the Indian Patents Act, 1970 provides limited powers to the Controller in the context of a new patent application that potentially infringes an existing patent. It is pertinent to note that in such cases, the Controller may at best only direct that a reference to the earlier patent (that has been potentially infringed) be inserted in the new applicant’s complete specification, so that it serves as “notice” to the public. It does not authorize the controller to deny the grant of the patent itself to the applicant.

It is therefore preposterous to suggest that absent a specific statutory provision authorising it to do so, an institutionally incompetent authority such as the DCGI assess the possibility of patent infringement and deny drug regulatory approval on this ground.

Section 19 is reproduced below:

19. Powers of Controller in case of potential infringement

(1) If, in consequence of the investigation required 2[under this Act] it appears to the Controller that an invention in respect of which an application for a patent has been made cannot be performed without substantial risk of infringement of a claim of any other patent, he may direct that a reference to that other patent shall be inserted in the applicant's complete specification by way of notice to the public, unless within such time as may be prescribed—

(a) the applicant shows to the satisfaction of the Controller that there are reasonable grounds for contesting the validity of the said claim of the other patent; or
(b) the complete specification is amended to the satisfaction of the Controller.

(2) Where, after a reference to another patent has been inserted in a complete specification in pursuance of a direction under sub-section (1)—

(a) that other patent is revoked or otherwise ceases to be in force; or
(b) the specification of that other patent is amended by the deletion of the relevant claim; or
(c) it is found, in proceedings before the court of the Controller, that the relevant claim of that other patent is invalid or is not infringed by any working of the applicant's invention.
the Controller may, on the application of the applicant, delete the reference to that other patent.

It is pertinent to note that countries that follow a system of patent linkage have a specific statutory or other legal provision enabling such linkage. The Indian Parliament has shied away from introducing such a mechanism in India. In fact, even developed countries such as the EU have, for several policy reasons, avoided creating a patent linkage mechanism.

Europe's competition authority (DG Competition) which began a pharmaceutical sector enquiry last year stated in its preliminary report at page 113-114 that:

“Patent linkage refers to the practice of linking the granting of MA (market authorization), the pricing and reimbursement status or any regulatory approval for a generic medicinal product, to the status of a patent (application) for the originator reference product. Under EU law, it is not allowed to link marketing authorisation to the patent status of the originator reference product…. Since the status of a patent (application) is not included in the grounds set out in the Regulation and in the Directive, it cannot be used as an argument for refusing, suspending or revoking MA.”

Conclusion

In short, the mere grant of drug regulatory approval amounts to a patent infringement is misleading and wrong in law, since:

i) The DCGI’s act of approving a drug as safe and effective cannot, ipso facto, amount to a patent infringement.

ii) Even otherwise, the existence of patent infringement cannot be assumed merely because the patentee states so, but has to be clearly established before a court of law in accordance with the infringement provisions mentioned under the Patents Act, 1970. Such an assessment is beyond the statutory powers of the DCGI, which is institutionally incapable of dealing with complex issues of patent scope, validity and infringement.

iii) Absence an express statutory provision, the DCGI cannot assess patent issues. Such assesment would be outside its statutory authority and would, to that extent, be unconstitutional.

Guest Post on Software Patenting in India

We bring you a guest post on software patents from Essenese Obhan, a leading patent attorney from New Delhi.

Essenese is the founding partner of an IP boutique, Obhan & Associates. Prior to founding Obhan & Associates in 2007, he worked for a number of years with Anand and Anand, India's leading IP firm.

While Essenese himself is an expert on patents relating to the mechanical, industrial, software, and telecom sectors, the Obhan team includes associates that specialize in chemical, biotech, electronic, electrical, and nano technological inventions. The firm has a first of its kind proprietary automated application preparation system that streamlines and simplifies the application filing process. The firm also has a customized docket management system that efficiently tracks due dates.

Most importantly, the firm has a proprietary Indian patent and design database containing bibliographic data from 1980 till date that allows them to do freedom to operate searches in India in record time.

Essenese is listed as a patent specialist in Chambers 2009 and Legal 500. He is also the Member of the Committee on Software Patenting at FICPI and the Treasurer of the FICPI Indian Group.

He has personally drafted over 500 patents and prosecuted thousands. He regularly conducts training programs for companies and has formulated IP policies and strategies for numerous organizations.

On a personal note, when I look back and attempt to list what may qualify as "good" deeds in my life, convincing a very bright engineering student in a Pune bar ["elbow room'] to become a patent attorney would rate very highly on that list. That bright engineer was Essenese. He's come very far since then and would easily rank today as one of India's top patent attorney in the under 35 category.

Readers tracking software patents on this blog will appreciate that my take on section 3(k), the Indian provision governing software patents is quite different from the manner in which Essenese proposes to construe this. Though both of us agree that the term "technical" ought not to be the determinative filter that separates the non patentable software inventions from patentable ones.

With this guest post, I hope we can generate more debate on this theme.

PATENTING OF SOFTWARE INVENTIONS IN INDIA
By Essenese Obhan, Obhan and Associates

Although Indian patent jurisprudence has significantly evolved over the last few years in most areas of technology, the patenting of software inventions unfortunately remains a segment that has not witnessed any significant developments, either by way of judicial precedent or practice at the Indian patent office. While ambiguity on this subject exists in most jurisdictions across the world, the patent office in India is yet to define clear guidelines on the patentability of software inventions. In the absence of an official position set forth either by the Indian patent office or Indian courts, what emerges is the fundamental question: Are software inventions patentable in India?

The answer to this question may be found by analyzing the history surrounding the section of the Indian Patent Act that addresses software inventions - Section 3(k), which was first introduced in Indian patent law by the Patent (Amendment) Act, 2002. Section 3(k) prohibits the grant of patents for: “a mathematical or business method or a computer programe per se or algorithms”. Debates on the subject of patentability of software inventions often revolve around the phrase “per se” that is used in conjunction with software inventions in the Indian Patent Act .

The Patent (Amendment) Act, 2002 was first introduced as the Patents (Second Amendment) Bill, 1999, in Parliament (‘bill’). The bill was subsequently referred to a Joint Committee by both houses of the parliament for their comments and suggestions. Section 3(k) as present in the bill did not include the phrase “per se” for computer programes and prohibited the grant of patents for: “a mathematical or business method or a computer programe or algorithms”. This phrase “per se” was introduced in the bill on the recommendations that were received from the Joint Committee to whom the bill was referred.

The Joint Committee in its report stated that their deliberations were motivated by an abiding concern to balance and calibrate intellectual property protection with national and public interest. The Joint Committee, prior to recommending any changes to the bill invited views and consulted individuals, organizations and institutions interested in the subject matter of the bill in its attempt to offer a considered view on the subject matter of the bill.

With respect to the patenting of software inventions, the Joint Committee recommended the insertion of the phrase “per se” in Section 3(k) of the bill and clarified that the phrase was being inserted to address the patentability of inventions relating to computer programes that may include certain other things ‘ancillary thereto’ or ‘developed thereon’. The Joint Committee further clarified that the intention of the bill was not to reject such inventions from grant of patents but only distinguish such inventions from the underlying computer programes as such.

It is, therefore, clear that the legislature never intended to prohibit software inventions but only the underlying computer programes or algorithms. The computer programe as such has always been the subject matter of copyright protection and it appears that it was this distinction that was sought to be clarified by the Joint Committee whilst recommending the insertion of the phrase “per se” in Section 3(k). However, using the computer programe as a building tool for developing software products (‘developed thereon’), or identifying a better method or process (‘ancillary thereto’) for doing a task on a computer that is expressed by way of a computer programe, are clearly patentable subject matter as long as they satisfy the other requirements of an invention.

The phrase “per se” is, unfortunately, often interpreted in a manner which is in clear contradiction to the legislative intent. While some believe Section 3(k) to imply that generally all software inventions are not patentable, others believe the section to imply that mere computer programes are not patentable but that as long as the computer programe includes something more or something “technical” the computer programe may be patentable. A significant cause for the differing views on the subject is often on account of the different understanding of the terms that are used in discussions on software patenting. Some terms that need to be well defined and understood before any meaningful discussion can take place on the subject are software, computer programe, technical and algorithm.

Referring again to Section 3(k), what is prohibited from patent protection are “computer programes per se or algorithms”. While an algorithm may be said to be a series of steps or instructions for an electronic or computing device, the computer programe may be considered as an expression of the algorithm. However, the term algorithm is often misunderstood as a “method for a computer” resulting in method claims directed to computer related inventions being considered as excluded subject matter in India. Such interpretations of algorithm coupled with the inconsistent interpretations of the phrase “per se” have unfortunately mired the fate of software inventions in India.

It would seem illogical to have on the one hand the legislative intent of granting patents for software inventions, while on the other hand refusing method claims for software inventions. As a person in the software art would well recognize that at the heart of software inventions is a method and that a software invention may be expressed by multiple computer programes, each having an associated algorithm. The algorithms and its expression by way of the computer programe are effectively expressions of the software invention and ought to be considered as underlying layers on which software products are built and are not the invention themselves.

As an example, the invention in Symbian modifies the form and functioning of Digital Link Libraries (DLL) by suggesting that the DLL be formed of two parts; a fixed part and an extension part. The invention is said to avoid difficulties and unreliability associated with conventional DLL’s. Assuming, that this invention were sent to two different software development vendors for building a software product, both software vendors would likely implement the invention using a different algorithm which would be expressed by different computer programes. Both such computer programes and their associated algorithms are merely expressions of the same invention and are not the invention itself and accordingly, the Joint Committee rightly distinguished a software invention from the underlying computer programe or algorithm.

It may therefore be unnecessary to try and distinguish, as has been the practice, between a computer programe that is ‘technical’ or has a ‘technical effect’ from a computer programe that does not. A computer programe when implemented or worked on a computer is undoubtedly technical in nature and it would be difficult if not impossible to contend otherwise. As reported in SpicyIP, Mr. NN Prasad representing the Department of Industrial Policy and Promotion at a recent stakeholders meeting for discussions on the draft patent manual specifically instructed that the term ‘technical’ ought to be deleted from all manuals and guidelines, and that it might be in India’s best interest not to blindly follow the complicated and often inconsistent path that has been followed on the subject in foreign jurisdictions.

In fact, the UK Court of Appeal in the joint decision of Aerotel and Macrossan while confirming that the four stage approach for determining patentable subject matter ought to be applied in software inventions, also stated that the fourth stage would normally be unnecessary. The four stages referred to by the Court are:

1. Properly construe the claim;
2. Identify the actual contribution;
3. Ask whether it falls solely within the excluded subject matter;
4. Check whether the contribution is actually technical in nature.

A similar view was also expressed in Symbian where the Court held that the steps 3 and 4 may in fact be conflated and that the determination of excluded subject matter as required by step 3 inherently required the technical assessment of the contribution as required by step 4. It thus appears that both the UK and Europe may in fact eventually move away from a “technical” assessment of the software invention as an independent factor in determining patentability.

This may after all be the correct approach for India to adopt in connection with software inventions and a “technical” assessment of a software invention as an independent test for determining the patentability of a software invention should be avoided. So long as the invention itself, and not its expressions, is not a mathematical method or a business method that have been specifically excluded from patent protection in India; and so long as the invention itself satisfies the requirements of novelty and inventive step, such software inventions should constitute patentable subject matter.

It should therefore be immaterial whether the patent application for the software invention has method claims or system claims. The focus of patentability assessment ought to be on properly construing the claim and identifying the actual contribution, as set out in steps 1 and 2 above, and not on whether the general subject matter appears to be technical or recites a technical device as a limitation. An assessment of the invention or the actual contribution along these lines inherently includes an assessment of the technical effect or character of the software invention contribution. A software invention not including a technical contribution would undoubtedly fall within the ambit of the business method exclusion. A software invention may of course be partly of a technical nature and partly of a non technical nature and it is thus imperative that due care be exercised while drafting the specification to ensure that the claims bring out the technical contribution of the invention.

As the Indian Patent Act does not specifically exclude software inventions, and as the Joint Committee specifically acknowledges that inventions that are ancillary to or are developed using computer programes are patentable, software inventions are patentable subject matter in India. Accordingly, patentability assessments would be well served to focus more on identifying the actual invention or contribution of the software invention and then determining if the contribution falls within the exclusions set forth in the Indian Patent Act, rather than determining the technical effect or character of the software invention, which is undoubtedly inherently technical in nature.

Jurisdiction in cases of Design infringement

Justice Shivakumar of the Madras High Court recently passed an order in Urooj Ahmed v. Maya Appliances, A. No. 5533/2008 in CS No. 949/2008; and the order is path-breaking. It is path-breaking not because of an excellent interpretation of the law, but because of the discovery of novel uses of the English language.

The Court was faced with a pure question of law. Can a suit for infringement of design be filed in the Court within whose jurisdiction the plaintiff resides?

Generally (in accordance with the Code of Civil Procedure), a suit is maintainable in the Court within whose jurisdiction the defendant resides. This general scheme is changed by the Copyright Act, 1957 through Section 62. Under Section 62(2), a suit for infringement of copyright is maintainable in the Court within whose jurisdiction the plaintiff resides. There is no such provision in the Designs Act, 2000; and on a plain reading, it ought to be clear that a suit must be filed in accordance with the general principles in the Code of Civil Procedure (i.e. in the Court in whose jurisdiction the defendant resides).

A straightforward interpretation must suggest that a “copyright” is not the same as a “design”; and a suit for infringement of copyright is distinct from a suit for infringement of design. The learned Judge, however, managed to hold otherwise. He noted that Section 62 of the Copyright Act says:

62.Jurisdiction of court over matters arising under this Chapter:- (1) Every suit or other civil proceeding arising under this Chapter in respect of the infringement of copyright in any work or the infringement of any other right conferred by this Act shall be instituted in the district court having jurisdiction.

(2) For the purpose of sub-section (1), a "district court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908(5 of 1908), or any other law for the time being in force include a district court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceedings, the person instituting the suit or other proceeding or, where there are more than one such persons, any of them actually and voluntarily resides or carries on business or personally works for gain.

Now, it might well have been possible to stop the enquiry here itself. As mentioned earlier, there is no corresponding provision in the Designs Act, 2000; and it is clear that the legislative intent was not to extend the same provision to infringement of design. But, the Court relied on Section 11 of the Designs Act. This is what Section 11 says:

11. Copyright in design on registration. (1). When a design is registered, the registered proprietor of the design shall subject to the provisions of this Act, have copyright in the design during ten years from the date of registration.

Again on a plain reading; this provision simply means that the registered owner of a design also has the copyright in a design. The English language is not capable of stretching this to lead to the construction that infringement of design is the same thing as infringement of copyright. Nonetheless, the Judge held that the suit for infringement of design must be held to be the same as a suit for infringement of copyright in the design. Therefore, the provisions of Section 62 of the Copyright Act would apply to a case of infringement of design as well. Accordingly, the Court concluded that a suit for infringement of a design can be filed in the Court in whose jurisdiction the plaintiff resides.

The following is a representation of the reasoning involved:

Premise 1: A suit cannot be filed in the Court in whose jurisdiction the plaintiff resides.

Premise 2: It is an exception to premise 1 that in cases of copyright infringement, a suit can be filed in the Court in whose jurisdiction the plaintiff resides.

Premise 3: The registered proprietor of a design has copyright in the design.

Conclusion: It is an exception to premise 1 that in cases of design infringement, a suit can be filed in the Court in whose jurisdiction the plaintiff resides.

The conclusion does not follow from the premises. What the reasoning also assumes is the existence of another premise – ‘the fact that the registered proprietor of a design has copyright in the design means that the design is a copyright’. This assumption is entirely unwarranted. The fact that copyright can exist in a design does not mean that the design is the copyright or that the copyright is the design. Infringement of one is not and cannot be the same thing as infringement of the other. A reference to the definitional provisions of the Designs Act, 2000 itself would have made this abundantly clear. Section 2(c) of the Act defines a copyright as “…the exclusive right to apply a design to any article in any class in which the design is registered…” Further, a design is defined in Section 2(d) to exclude artistic works as defined under the Copyright Act.

Thus, a copyright is not a design; in the context of the Act, it is a right to apply a design to an article. Section 11 of the Designs Act must mean, therefore, that the registered proprietor of a design also has the exclusive right to apply the design to an article. It might mean that once a design is registered, the owner of the design ipso facto becomes the owner of the copyright in the design. However, it certainly cannot be interpreted as extinguishing the distinction between a design and a copyright. It cannot possibly mean that the provisions in the Copyright Act, 1957 shall be relevant for the purposes of determining the jurisdiction of Courts in cases of infringement of design. Obviously, in 2000, Parliament was well aware of the position of law in relation to jurisdiction in the Civil Procedure Code as well as in the Copyright Act. If Parliament intended to allow filing of suits in the plaintiff’s place of residence, it would have said so in the Designs Act specifically. Justice Shivakumar seems to have overlooked this fact; and in doing so, has opened up the door for grave confusion between distinct forms of intellectual property protection.

It must be hoped that reason is re-introduced into the law in this sphere. A suit for infringement of designs must be tested as per the provisions of the Designs Act – Section 11 of the Designs Act cannot be taken to mean that the provisions of the Copyright Act become applicable in their totality in such cases. In particular, the correct position of law seems to be that a suit for infringement of design must be filed in the Court of the defendant’s jurisdiction and not the Court of the plaintiff’s jurisdiction. Accordingly, it appears that Justice Shivakumar’s order ought to be overruled / reversed on appeal.

(1. It is noteworthy that the position is not crystal clear under the Copyright Act either – see this post. 2. This Australian High Court judgment provides an interesting perspective on the overlap between copyrights and designs generally. 3. Another example of Indian Courts grappling with the interaction between design and copyright is discussed in this post.)