Jumping on the IP bandwagon is none other than one of the leading managment institutes of the country. IIM Calcutta (IIM-C) has now introduced "The Business of Intellectual Property" course for their Post Graduate Management students . Launched on 15th December 2009, the course hopes to cover the emergence of IP, a focus on the legal & regulatory systems, the transactional issues in IP and even a special focus on IPR protection in China.
The faculty at IIM-C, Dr. VK Unni who is at the helm of this programme has previously been a part of the faculty of my alma mater, and a huge influence on my choosing this field. So it seems like finally management students will discover their love for IP just as many of did! We here at SpicyIP hope that this course is a resounding success!
Dr. Reddy’s Laboratories has failed to successfully challenge Eli Lilly’s patent on olanzapine (a blockbuster drug) in the Court of Appeal. Click here for the judgment. Dr. Reddy’s Laboratories appealed from the judgment of Judge Floyd delivered in October 2008 which refused to revoke Eli Lilly’s patent on olanzapine. Olanzapine is an antipsychotic agent used to treat schizophrenia. The patent expires in 2010 but the legal protection will extend to 26 September 2011 owing to a supplementary protection certificate. Supplementary protection certificates are granted in the European Union to make good the long time needed to obtain regulatory approval. Image from here.
This is yet another setback with respect to its generic drug Zyprexa containing olanzapine. Dr. Reddy’s had fought and a lost a similar case in the United States along with other generic pharmaceutical companies Ivax and Teva. Lilly’s patent on olanzapine was upheld by the District Court and subsequently by the Federal Circuit. Dr. Reddy’s also failed to obtain an Abbreviated New Drug Application on the generic. Interestingly as reported here, Zyprexa has been linked to certain side-effects and Lilly has agreed to pay $1.2 billion to settle 28,500 lawsuits.
Prior Art: The Judge begins by noting the prior art with reference to a priority date of 25th April 1990. The first effective antipsychotic agent was chloropromazine. By 1990, other phenothiazine derivatives with the same pharmacological activity profile began to be used as antipsychotic agents. These first generation antipsychotics caused side effects like Parkisnsonism, motor restlessness, dystonia and dyskensia. Clozapine which was relicensed in 1989 did not cause these side effects but caused agranulocytotoxicity (fatal suppression of white blood cells).
The Patent: The Patent describes the prior art, including a mention of clozapine and British Patent 1,533, 235 (the Provisional specification of which has been relied on by Dr. Reddy’s Labs for attacking the novelty and obviousness of the present patent). The advantages of olanzapine over previous drugs were demonstrated with the help of real evaluations both in animals and in early clinical tests and experimental data. The judge notes that, the instant patent has reported early clinical tests, which is much more information than is normally disclosed in patents for new pharmaceutical compounds. Image from here.
Arguments of Dr. Reddy’s Labs
The Patent lacks novelty with respect to Lilly’s British Provisional Specification 1,533,235 published in November 1978 (patent granted with the same number).
Obviousness with respect to the above mentioned patent.
Obviousness with respect to review article published by Lilly scientist in 1980.
Patent 1,533,235: The patent relates to a class of compounds having useful central nervous system activity, useful as intermediates for the preparation of other compounds. These class of compounds is set out by a formula. The formula sets out a at least 10 to the power of 19 compounds. A further narrow class of compounds is identified consisting of 86,000 compounds. Olanzapine is one of the compounds in the narrower 86,000 group and does not bear specific mention.
JUDGMENT Novelty: Dr. Reddy’s Labs claims that the invention lacks novelty according to Article 54 of the European Patent Convention as it formed “part of the state of the art” having been “made available to the public by means of a written description”. The judge noted that this would amount to claiming that every chemical class disclosure discloses each and every member of the class even of the formula has merely been written down without any suggested utility and rejected the contention. With the help of various illustrations, the judge said that a generalized prior description does not specifically disclose a specific matter falling within it. The contention was rejected on the basis of a priori reasoning and inconsistency with EU Case law.
The court referred to EU Board of Appeal decision in Hoescht Enantiomers T 0296/87 wherein it was held that distinction is to be drawn between the “purely intellectual content of an item of information and the material disclosed in the sense of a specific teaching with regard to technical action.” Technical teaching and an individualized description is required to threaten novelty. The court did not find it necessary to look into what amounts to an “individualized description”, but noted that other factors like the specificity of the purpose were also relevant.
Drawing from Lord Hoffman’s judgment in Synthon’s Patent, [2006] RPC 10 (which notes that to constitute prior art, the subject matter if performed should result in infringement of the patent) the judge noted that performance of the general disclosure does not necessarily infringe the patent of a specific compound.
Obviousness: The judgment summarizes the EPO jurisprudence on obviousness: it is founded on the question, as to whether a patentee made a novel non-obvious technical advance and provided sufficient justification for it to be credible. In this context the judge notes that the identification of olanzapine was not an arbitrary selection. It is rightly noted that a particular compound out of a vast class is not obvious if one does not know how any individualized member of that class might behave. Obviousness over previous publication was also rejected.
Conclusion: The appeal was thus dismissed and the patent on olanzapine was upheld. The judgment most importantly has clarified the present law on determining obviousness with respect to selection patents.
The Law and Technology Committee of the Student Bar Association of the National Law School of India University has invited abstracts for proposed papers that are to be presented at its annual law & tech conference – Consilience - 2010.
Past editions of the conference have been based on themes ranging from 'Bio-technology and the law' to 'Free and Open Source Software' and have had speakers ranging from Dr. Montel Singh Ahluwalia (Deputy Chairman Planning Commission) to Rahul Mathan, a founding partner of Trilegal and one of India's foremost authorities on tech law.
The topic of discussion this year is 'Internet Intermediary Liability in India' – a topic which has been debated in great detail on this blog in the recent past.
The Committee has put out the following request for abstracts in order to choose papers that will eventually be presented at the conference:
The abstracts must be roughly 500 words and should clearly identify the issue they are dealing with, and the argument that they seek to put forward and should strictly conform to the guidelines below. The abstracts must be footnoted and the conference follows a very strict policy on plagiarism and runs all submissions through plagiarism detection software. The last date for submission of abstracts is January 18th and selected abstracts will be notified on January 25th and the authors are required to submit a final paper by March 15th.
For more information on the conference please visit the website – www. Consilience.in.
The NUJS law review has just come out with its special volume dedicated to the landmark Naz Foundation judgment that effectively decriminalised same sex activities in India. Pursuant to its tradition of being an open access journal, all the articles can be accessed freely here. I list out the articles and their authors below:
DECRIMINALISATION OF HOMOSEXUALITY AND THE CONSTITUION Professor Mahendra P. Singh
OUT OF THE COLONIAL CLOSET, BUT STILL THINKING 'INSIDE THE BOX': REGULATING 'PERVERSION' AND THE ROLE OF TOLERANCE IN DE-RADICALISING THE RIGHTS CLAIMS OF SEXUAL SUBALTERNS Ratna Kapur
NAVIGATING THE NOTEWORTHY AND NEBULOUS IN NAZ FOUNDATION Vikram Raghavan
READING SWARAJ INTO ARTICLE 15: A NEW DEAL FOR ALL MINORITIES Tarunabh Khaitan
SECTION 377 AND THE 'ORDER OF NATURE': NURTURING 'INDETERMINACY' IN THE LAW? Shamnad Basheer, Sroyon Mukherjee & Karthy Nair
THE PUBLIC AND CONSTITUTIONAL MORALITY CONUNDRUM: A CASE-NOTE ON THE NAZ FOUNDATION JUDGMENT Rohit Sharma
CRYSTALLISING QUEER POLITICS - THE NAZ FOUNDATION CASE AND ITS IMPLICATIONS FOR INDIA'S TRANSGENDER COMMUNITIES Siddharth Narrain
DIVIDED LAWS IN A UNIFIED NATION: TERRITORIAL APPLICATION OF HIGH COURT DECISIONS Jasmine Joseph
BREAKING SILENCES, CELEBRATING NEW SPACES: MAPPING ELITE RESPONSES TO THE 'INCLUSIVE' JUDGMENT Rukmini Sen
LOGIC AND COHERENCE IN NAZ FOUNDATION: THE ARGUMENTS OF NON-DISCRIMINATION, PRIVACY, AND DIGNITY Pritam Baruah
'RIGHT TO PRIVACY' IN NAZ FOUNDATION: A COUNTER-HETERONORMATIVE CRITIQUE Saptarshi Mandal
JUDICIAL INTERPRETATION OF ARTICLE 21 IN THE NAZ FOUNDATION CASE: PRIVACY - A MORAL RIGHT OR A CREATURE OF AN AMORAL CONSTITUTION? Bhargav K. Joshi & Neha Mary Koshy
Shamnad recently sent me this most interesting article by S. Murlidharan in the Hindu Business Line on the topic of taxing of royalties earned by authors of books that are of a literary, artistic or scientific nature. The article inspired me to have a quick look at one of the most fascinating and complex legislations – the Income Tax Act – a legislation which has sent shivers down me spine for more than one reason.
Murlidharan's article focuses exclusively on the topic of deductions covered under Chapter VIA of the Income Tax Act, 1961. This Chapter which is titled “Deductions to be made in computing total income” outlines the various deductions that may be made by an assessee while computing his total taxable income. For example if your net income is Rs. 5 lakhs out of which Rs. 3 lakhs has been earned from sources which qualify for deductions under Chapter VIA of the Income Tax Act then in that case your net taxable income would be Rs. 2 lakhs. Your tax liabilities will therefore be calculated on Rs. 2 lakhs instead of your net total income of Rs. 5 lakhs.
Chapter VIA has three interesting provisions pertaining to intellectual property:
(i)Section 80QQA – Deductions in respect of professional income of authors of text books in Indian languages; (ii)Section 80QQB – Deductions in respect of royalty income, etc., of authors of certain books other than text-books; (iii) Section 80 RRB – Deduction in respect of royalties on patents.
(i) Section 80QQA – Deductions in respect of professional income of authors of text books in Indian languages;
Under this provision of law “any income derived by [the author] in the exercise of his profession on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of any book, or of royalties or copyright fees (whether receivable in lump sum or otherwise) in respect of such book, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such income of an amount equal to twenty-five per cent thereof.”
Therefore if the total income is Rs. 100 lakhs the assesee may make an automatic deduction of Rs. 25 lakhs and calculate his tax liabilities only on Rs. 75 lakhs.
A sub-clause of the same provision requires either of the two conditions to be fulfilled for the deduction to be made: (i)that the book in question be in the nature of a dictionary, theasarus, encylopedia or any other book prescribed by an university for a degree or post-graduate degree. (ii)that the book is written in any language specified in the Eighth Schedule to the Constitution or any other language that the Government thinks necessary to promote. The Eighth Schedule to the Constitution of India lists the 22 languages, from all four corners of India, that may be treated as the official languages of different States. Click here to access the Constitution of India.
'Indian Language' – I'm a little intrigued as to what exactly constitutes an 'Indian Language'. Would 'English' qualify as an 'Indian Language' and therefore would authors of English text-books qualify for this exemption?
Article 348 of the Indian Constitution clearly states that all proceedings in the Supreme Court, the High Courts, all legislations introduced in Parliament and State Legislatures shall be in English (of course this provision is followed by another provision which states that the same may be done in Hindi or any other language so notified by the Government). Image from here. So I guess it would only be fair to conclude that English is an Indian language and that authors of English text-books would qualify for the deductions under this provision.
(ii)Section 80QQB – Deductions in respect of royalty income, etc., of authors of certain books other than text-books:
Under this provision of law any income derived by an author “in the exercise of his profession, on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of any book being a work of literary, artistic or scientific nature, or of royalty or copyright fees (whether receivable in lump sum or otherwise) in respect of such book” may be deducted in the manner prescribed under this clause.
As per this clause the assessee, if receiving through royalties or copyright fees, may claim a deduction of either Rs. 3 lakhs (if the payment is a lump-sum) or 15% of the value of all the books sold in the previous year (if the royalties are being received yearly), whichever is lesser.
An Explanation to the Section clearly excludes several works from the purview of this section namely: “books shall not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, text-books for schools, tracts and other publications of similar nature, by whatever name called;”
(iii)Section 80 RRB – Deduction in respect of royalties on patents:
Under this provision if in case a patentee's “gross total income of the previous year includes royalty, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, from such income, of an amount equal to the whole of such income or three lakh rupees, whichever is less”. Although the IT Act does not define a 'patentee' it is safe to assume the definition adopted by the Patents Act, 1970 which states that a 'patentee' means the person for the time being entered on the register as the grantee or proprietor of the patent. A patentee can therefore be different from the true and first inventor of the invention.
Although Chapter VIA does not define what a 'Royalty' is the same is defined in Section 9 of the IT Act, 1961 and it prima facie does not seem to distinguish between income received through an assingment deed and income received through a licensing agreement.
I reproduce only the relevant portion of the 'royalty' definition below:
Section 9: Explanation 2.For the purposes of this clause, royalty means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head Capital gains) for (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ; (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill ; [(iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB;] (v) the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films ; or (vi) the rendering of any services in connection with the activities referred to in sub-clauses (i) to [(iv), (iva) and] (v).
In conclusion I would say that while these deductions may not make a difference to the big players they may have the potential to act as incentives for the small and medium players be it authors or small enterprises. Even then Rs. 3 lakhs may be considered to be much to small a deduction. It would be interesting to see whether even artists and performers are able to lobby for similar provisions, especially artists performing the endangered arts.
For an interesting article on the topic of IP royalties and taxation please click here.
In the meanwhile we wish all our readers a Happy and Prosperous 2010. Party Hard, Party Safe! Don't drink and drive!
In the last post, Mr.Basheer has proposed a new way of dealing with the anomalies in practice when it comes to applying Section 21 of the Patents Act. The general opinion among patent practitioners is that the provision is used to unfairly get an applicant to “abandon” his application since there is no time limit on how long the patent office can sit on the application without responding to the applicant.
It appears that there is something else interesting as well; under Section 14 of the Act, if the examination report is adverse to the applicant, then before the disposal of the application, the applicant may make a representation for a hearing.
It must be noted that the representation must be made within the prescribed period, which is 12 months under Rule 24B. So typically these days most practitioners forward such a representation along with their response to the examiner's report.
Turns out that, not infrequently, the patent office gives a date of hearing which is after the prescribed 12 month period. Is this permissible is the question. Can there be a hearing under Section 14 after the prescribed period?
Some may say that Section 14 stipulates a time period for the applicant to make his representation, but does not give a timeline for the hearing by the patent office and so the patent office is justified in giving a date after the 12 month period.
My answer is, Section 14 need not set a timeline for the patent office because it is already provided for in Section 21.
A plain reading of Section 21 tells us that the 12 month period is to be observed strictly and the only instances where it may be extended are spelt out under sub-section 2 and 3. Sub-Section 2 provides that, at the end of the 12 month period if there is a pending appeal of the applicant filed before the High Court, then the 12 month period may be extended to a date that the High Court may determine.
Sub-section 3 of Section 21 and its proviso read thus:
If the time within which the appeal mentioned in sub-section (2) may be instituted has not expired, the Controller may extend the period as prescribed under sub-section (1),to such further period as he may determine:
Provided that if an appeal has been filed during the said further period, and the High Court has granted any extension of time for complying with the requirements of the Controller, then the requirements may be complied with within the time granted by the Court
Does this sub-section refer to an extension given by the Controller to file the appeal spoken of under sub-section (2) or, does it generally refer to an extension from the 12 month period in case the applicant has not been able to file his response to the report? Since the sub-section refers to the time period within which the appeal may be instituted, it means the former.
For instance, if the time period for filing an appeal referred to in sub-section (2) starts just before the end of the 12 month period, then the applicant would naturally need an extension of the 12 month period so that he may file such an appeal, without having to worry about a deemed abandonment of his patent application under Section 21. However, sub-section (3) does not state if this is to be only at the representation by the applicant or suo motu.
If this be the case, it could be said that unless there is an extension of the 12 month period under sub-sections 2 or 3 of Section 21, the hearing under Section 14 too must be held only within the 12 month period.
The bottom line is that Section 21 applies with equal rigour to the applicant and the patent office. So no act of the patent office should have the effect of derogating from the period prescribed in Section 21.
Pronunciation: \ə-ˈban-dən\ Function: transitive verb Meaning: to give up with the intent of never again claiming a right or interest in
So speaks an entry in the famous Webster's dictionary. Or for that matter, any other dictionary. Perhaps a genre of books that the Indian Patent Office (IPO) actively shies away from. How else might one explain the fact that patent applications that are passionately prosecuted by keen applicants end up being speciously branded as "abandoned" under the infamous Section 21?
Shwetashree did a guest post for us on this aspect, analysing an important order in Ferid Allani, where Justice Gita Mittal of the Delhi High Court came down heavily on the IPO for such a practice. While introducing Shwetashree's guest post, I had stated:
"Section 21 stipulates that after receiving objections via the first examination report (FER) from the patent office, an applicant has about a year (12 months) to put his/her application in order. So if X receives the FER on 1 Jan 2008, then X has time till 1 Jan 2009 to address the objections and put the application in order. If X does not do so, then section 21 enables the patent office to deem the patent application as "abandoned".
What the office typically did was that after they received responses from the patent applicant to the FER (lets say in Nov 2008), they would issue another set of objections (lets say on Dec 25, 2008) and ask the applicant to respond by Jan 1, 2009. A nearly impossible task for most applicants--given the short window. In fact, in some cases, including the one that Shwetashree took to court, the second examination report (SER?) reached the patent applicant well after Jan 1, 2009! Since there was no response, the patent office deemed this application as abandoned.
Little wonder then that Justice Mittal sharply castigated the patent office for such a specious practice. Needless to state, her order means that the patent office cannot now take the easy way out and "deem" applications to be abandoned (a term that signifies that the patent applicant has altogether lost interest in his/her patent application) BUT that it would have to necessarily give reasons for rejecting the patent application (if it does indeed decide to reject it)."
The Shell Order
In a later case involving the petrochemical major, Shell International, Justice Sistani ruled on similar lines and asked the Patent Office to hear the applicant before passing any adverse order. Unfortunately, my favourite Indian legal database, Indiakanoon, does not have a copy of this order, the particulars of which are:
Shell International Research vs UOI and Ors (WP (C) No 6721/2007): Order by Sistani J dated 19/09/2008.
More recently, Sai Deepak reviewed an IPAB order categorically holding that an order of abandonment under Section 21 is not appealable to the IPAB.
One might argue that the Indian Patent Office (IPO) is not fully to blame, as it is constrained by the wordings of the Patents Act and the rules. However, there is some wiggle room in Section 21 and the IPO ought to leverage this wiggle room to craft a sensible and fair solution.
A Proposal
Section 21 (and the pertinent rules thereto) suggests that the entire process of prosecution (starting with the issuance of a first examination report and ending with the applicant taking care of objections and putting the application in order for grant) must be completed within one year (12 months). It is important to note that section 21 and the time frame envisaged therein is not necessarily limited to the first examination report (and a response thereto), but to all possible communications that are to flow between the patent applicant and the office during the course of prosecution. In other words, not just the first examination report and its response, but also the second examination report, the third etc and responses thereto are to be included.
However, while maintaining the outer limit of 12 months, the IPO is to ensure that the patent applicant gets a reasonable time to respond to each one of its reports or office actions. Consider a scheme on the below lines:
The IPO issues an FER on Jan 1, 2010. It then gives four months to the applicant to respond i.e. by June 1, 2010. The IPO requires more clarifications and issues another report on August 1, 2010. It then gives the applicant another 2 months to respond i.e. by October 1, 2010. The IPO issues yet another report on November 1, 2010. And asks the applicant to respond by Jan 1, 2011. If the IPO remains dissatisfied with the response and is skeptical of the merits of the application, it ought to reject the application under section 15 (after offering the possibility of a hearing to the applicant, where necessary).
Is this scheme likely to work? Note that the entire process is completed within the maximum cap of 12 months as mandated by Section 21 and the rules (Rule 24B). The time lines may appear tight, but one could reduce the quantum of communications between the applicant and the IPO. Illustratively, one might mandate that the IPO take all its substantive objections at one shot in the first examination report (FER). It should use the second report (and other subsequent reports) only as a means of gaining further clarity on the applicants' response to the FER and not as a guise to issue fresh substantive objections.
One might also consider amending Rule 24 (B) that stipulates 12 months as the maximal upper limit to put an application in order. One could increase this time limit to 15 or 18 or even 24 months. After all, since Rule 24 (B) is a mere "rule" (that was framed by the government) and not a provision in the main text of the statute, the government could easily change this, without the waiting for Parliament to step in and amend the statute.
Before I sign off, let me wish all our readers a wonderful New Year. But before you bring in the New Year with your poison of choice, do mull on the above proposal and come back with your thoughts, this year...or the next.
ps: For those that wish to get a sense of the term "abandonment" without necessarily resorting to dictionaries, there are plenty of Hollywood flicks centred on this theme, including one to be released next year starring the dear departed, Brittany Murphy.
In its recently concluded Winter Session, the lower house of Parliament, the Lok Sabha, passed 'The Commercial Division of High Courts Bill', 2009. The Bill which is based on the recommendations of the 188th Report of the Law Commission of India aims at the adjudication of big ticket commercial disputes, Rs. 5 crores or above, within a timespan of one year. The Bill was consequently sent to the Rajya Sabha which has referred the Bill to the Select Committee on Personnel, Public Grievances, Law and Justice. The Select Committee will prepare a report on the Bill which will then be hopefully debated by the Rajya Sabha before the Bill gets passed into law. Image of a statue on the premises of the Madras High Court. Photo Credit to: G.V. Balasubramanian. The Law Commission Report can be accessed here. The proposed Bill can be accessed here.
The 188th Report of the Law Commission of India: The 188th Report prepared in the year 2003 appears to be fuelled by an outrage at a series of U.S. judgments which have characterized the state of the Indian judiciary as 'deplorable' and on the verge of 'collapse'. These U.S. judgments, basing their opinion on affidavits of lawyers and jurists familiar with the Indian legal system, have noted that since Indian Courts can take up to 15 years in adjudicating commercial disputes and that such a remedy was equivalent to no remedy. Proceeding on this assumption these U.S. Courts have assumed jurisdiction to adjudicate commercial disputes even though U.S. Courts would not otherwise have jurisdiction since no cause of action had arisen within the territory of the U.S.A.
The Law Commission while disagreeing with all these U.S. judgments has conceded that there is a pressing need to fast-track high value commercial disputes that have arisen in a post-liberalized and globalized Indian economy. The Law Commission therefore recommended the setting up of dedicated commercial benches within the High Court to adjudicate commercial high value law suits. The Bill introduced in Parliament by the Minister for Law and Justice is based primarily on the recommendations of the Law Commission Report. Image of Calcutta High Court. Photo credit: Avrajyoti Mitra.
The Commercial Division of High Courts Bill, 2009: The Bill proposes to fastrack these disputes by setting up dedicated Division Benches (i.e. two judges) in every High Court to hear 'commercial disputes' which are valued at Rs. 5 crores or higher.
The proposed definition of 'commercial disputes' covers even IP disputes as is obvious from the following definition in Section 2 of the Bill:
(a) “commercial dispute” means a dispute arising out of ordinary transactions of merchants, bankers and traders such as those relating to enforcement and interpretation of mercantile documents, export or import of merchandise, affreightment, carriage of goods, franchising, distribution and licensing agreements, maintenance and consultancy agreements, mercantile agency and mercantile usage, partnership, technology development in software, hardware, networks, internet, website and intellectual property such as trademark, copyright, patent, design, domain names and brands and such other commercial disputes which the Central Government may notify.
Typically the court assuming original jurisdiction in most commercial disputes are the District Courts. For examples the Patents Act, the Trademarks Act and the Copyirght Act all name the District Court as the court of first instance before which a suit for infringement can be filed. Normally law suits cannot be filed directly before a High Court. A High Court is usually confined to hearing appeals from District Court apart from being the only courts in a State to exercise writ jurisdiction. The only exception to this rule are the High Courts of Bombay, Madras, Calcutta, Delhi and Jammu & Kashmir. The first three were set up by the British in the 19th Century through the Indian High Courts Act, 1861. The Delhi High Court was created as recently as 1966 and is definitely the most dynamic of all these High Courts. These 5 High Courts have Original Jurisdiction i.e. lawsuits of a particular valuation can be filed directly in these High Courts provided that the High Court has the territorial jurisdiction to try these cases. Normally the territorial jurisdiction of these High Courts does not extend beyond the boundaries of the cities in which these Courts are based.
Most IP infringement suits are filed in these High Courts which have original jurisdiction as Indian District Courts are woefully underequipped to adjudicate complex high value commercial disputes. This is not to say that the High Courts, with original jurisdiction, are brimming with resources but there is no arguing that these Courts are definitely better off than the District Courts both in terms of resources and manpower.
By setting up dedicated Division Benches in all 21 High Courts across the country this Bill will bestow Original Jurisdiction on all High Courts making them the epicentre of all commercial litigation in indiviudal states. This makes a lot of sense because most businesses are based out of the capital cities of individual states and High Courts are usually situated in these capital cities. Image of Bombay High Court. Photo Credit: Nichalp.
The 'Unbelievable' Procedural Reforms: Apart from consolidating the forums of high value commercial disputes this Bill brings in absolutely unbelievable reform in the procedural laws of India. Currently the only time limit in the Code of Civil Procedure, 1908, is the 30 days time limit to file the written statement (this is the first pleading filed by the defendant in response to the lawsuit filed by the Plaintiff).
This amendment, which was introduced in 2002, signficantly fast-tracked the process because until this statutory time limit was introduced the normal practice for the Defendants was to delay filing a written statement for upto a year after the suit had been filed. With the 30 days time limit being enforced strictly by judges Defendants actually began to file written statements within the 30 days time limit.
The proposed Commercial Division Bill attempts to replicate this success by introducing time limits for every stage of a lawsuit. The Bill also proposes to consolidate the pleadings. Under the current law the only requirement at the stage of filing the suit is to submit a Plaint with some supporting documents. A plaint is limited to facts and involves no law. It basically lays out the cause of action and the relief that is requested from the Court. As per Section 9(2) of the proposed bill the Plaintiff will have to file the following pleadings and evidence along with the Plaint at the very initial stage of the lawsuit:
(a) the plaintiff shall file along with the plaint,— (i) the documents on which he sues or relies; (ii) as many copies of the plaint and documents referred to in this clause as to the number of defendants; (iii) an affidavit containing his statement in examination-in-chief; (iv) affidavits containing statements of other witness in examination- inchief; (v) brief issues that are likely to arise; (vi) list of interrogatories, if any; (vii) application for discovery and production of documents, if any, maintaining their relevancy; (viii) such other material as the plaintiff may consider necessary; (ix) full address, including e-mail, fax and telephone number of all the claimants and defendants to the extent known to the plaintiff;
The Defendant in turn has to reply within 30 days. Additional evidence may be filed at the time of trial. The cross examination of witnesses on their examination in chief affidavits will be outsourced to a Court Commissioner who may either be a retired judge or a lawyer of some standing. This is one recommendation which will go a long way in fast-tracking commercial disputes because cross examination is the most time consuming component of a trial.
Another significant change introduced by the Bill is the introduction of case management conference presided by one of the Judges of the Commercial Division, to fix schedules, dates along with time limits for oral arguments.
The truly revolutionary provision of the Bill however is Section 9(5) which requires the Commercial Division to pronounce a judgment within 30 days of arguments concluding and the matter being reserved for Orders. This is absolutely revolutionary because Indian judges, even judges of the High Court can take upto one year to pronounce Orders on an application for interim injunction in cases of patent infringement. Such a delay is simply outrageous. Having said that it can expected that there will be significant opposition from the judiciary to imposing this 30 day limit.
The above timelines have been drafted with a view to ensure that judgment is pronounced with a year of the law suit being filed.
Given the fact that most IP disputes do not even reach the stage of evidence in the one year period, this Bill is definitely good news.
If Moily the Law Minister can actually ensure that the Bill is passed by Parliament I see absolutely no difficulty as to why the Indian judiciary cannot meet this one year deadline from the time of filing the law suit.
There are however some reservations that I have in regards this Bill. I'll cover this in a follow on post in the coming days.
Previously, SpicyIP readers have come across a discussion surrounding the liability of Internet Service Providers in the light of the provisions of the Information Technology Amendment Act, 2008. Following the notification of said Act (here), a Guest Post (here) had been put by Aditya Gupta, final year student of National University of Law, Jodhpur, and a follow-up post by Professor Shamnad Basheer (here). All these posts sought to discuss the different dimensions of intermediary liability under the Information Technology (IT) Act. In response to these posts, SpicyIP now brings to its readers another Guest Post, penned by Kaushik Krishnan, a final year student of the National University of Juridical Sciences.
For this post, Kaushik has mainly taken into considerations Sections 79 and 81 of the IT Act and the safe harbour provisions regarding ISP liability.
Section 79
Section 79, which deals with intermediary liability, was amended by the IT (Amendment) Act, 2008.
Section 79 - Exemption from liability of intermediary in certain cases
(1) Notwithstanding anything contained in any law for the time being in force but subject to the provisions of sub-sections (2) and (3), an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him. (2) The provisions of sub-section (1) shall apply if-
(a) the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted; or
(b) the intermediary does not-
(i) initiate the transmission,
(ii) select the receiver of the transmission, and
(iii) select or modify the information contained in the transmission;
(c) the intermediary observes due diligence while discharging his duties under this Act and also observes such other guidelines as the Central Government may prescribe in this behalf.
(3) The provisions of sub-section (1) shall not apply if-
(a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise or otherwise in the commission of the unlawful act;
(b) upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner.
Explanation.-For the purposes of this section, the expression "third party information" means any information dealt with by an intermediary in his capacity as an intermediary.
I find it useful to break down the operative portions of this provision:
·notwithstanding any other law in force.
·an intermediary shall not be liable for any third party information hosted by him.
·if he:
oonly provides access
oand does not:
§initiate the transmission,
§select the receiver of the transmission, and
§select or modify the information contained in the transmission
oand exercised due diligence.
·But, he will be liable if he:
oaided or abetted in the commission of the unlawful act, or
ofailed to expeditiously remove or disable access to the material upon receiving knowledge or notice by the Government.
So broadly, despite what any other law may say, an intermediary will not be liable for any third party information he hosts as long as he could not have reasonably known about its existence, and was the uploading outside his sphere of control.
This interpretation seems reasonable enough. However, the problem is complicated because of another provision in the Act.
Section 81
Section 81 - Act to have overriding effect
The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
Provided that nothing contained in this Act shall restrict any person from exercising any right conferred under the Copyright Act, 1957 (14 of 1957) or the Patents Act, 1970."
This section therefore says that the provisions of the IT Act will override any conflicting provisions in other Acts. The 2008 Amendment added a proviso to section 81 that limits its application to the Copyright and Trademark Acts. It says that ``nothing contained in this Act shall restrict any person from exercising any right conferred under the Copyright Act, 1957 or the Patents Act, 1970''.
Copyright and Intermediary Liability
Clearly, the proviso to section 81 means that a copyright holder continues to exercise his rights despite what anything in the IT Act, which includes section 79, may say. That is, despite there being a provision that gives intermediaries immunity from legal action arising due to third party content, a copyright holder will still have the right to take action against an intermediary for copyright infringement.
Many commentors pointed out that even if the Copyright Act applied, intermediaries can still defend the uploads by showing that they had no knowledge that the content was infringing. That may be the case, but it is not clear, and is a matter of interpretation. Personally, I feel that the threshold in section 79 (due diligence) is much lower than the knowledge requirement under the Copyright Act. That is, Google may well be aware that there are copyright violations on the blogs it hosts. It may even specifically know that portions of a particular book in which copyright still exists are unlawfully reproduced on some of its blogs, because the book is new and popular. That may prove knowledge, but should Google be held liable for knowingly allowing the book's infringement?
But that is irrelevant. The point is regardless of whether there exists a defense in copyright law, intermediaries should still be given immunity from such cases. Section 81 prohibits us from reading that immunity into section 79.
Why Have a SafeHarbour Provision
To understand why the proviso in section 81 defeats the purpose of section 79, it would serve us well to consider why safe harbour provisions are needed.
Knowledge
Let's take the case of Blogger. Assume that I create a blog on Blogger and put up some content that is copyrighted. For Blogger to prevent any copyright infringement, it has to track every blog for any infringing content. Let's step back and see what that means. Technocrati reported that it was tracking 112,800,000 (112.8 million) blogs in 2008. That number is only likely to have gone up. To be (very) safe, let's assume that only 10% of those blogs are hosted by Blogger.
That means that Blogger would have to track 11 million blogs every second. Now, let's consider how many copyrighted works there are. I searched for a figure, and haven't been able to find one, but we can safely assume that every book published in the UK would be copyrighted. In 2005 alone, the UKpublished 206,000 new books. One country, in one year, published 200,000 copyrighted works. This does not include the billions of other works that are automatically granted copyright as soon as they are created each year. The total number of active copyrights (and infringements) in the world is probably way beyond any meaningful number. John Tehranian makes this point very well in his paper, Infringement Nation: Copyright Reform and the Law/Norm Gap.
Can Blogger, or any other content hoster, be reasonably asked to have knowledge of each violation of copyright?
Cost
Let's assume that there is some way for an intermediary to actually track every user and monitor each copyright violation. Such tracking would be considerably expensive, both in terms of money and resources. Is it right for the hoster of the content, who has nothing to do with its uploading, to pay the large sums needed to track all that content?
Dual Use
The idea of a dual use technology is that it can be used for both legitimiate and illegitimate purposes. This doctrine led to the idea that the uploading and hyperlinking of content that is copyrighted, by someone like Google, is not an infringement because of the highly transformative nature of the use (Perfect 10 v. Amazon).
The U.S. Ninth Circuit Court of Appeals held in that case, that Google made available to the public the new and highly beneficial function of "improving access to [pictorial] information on the Internet." This had the effect of recognizing that, "search engine technology provides an astoundingly valuable public benefit, which should not be jeopardized just because it might be used in a way that could affect somebody's sales."
Net Neutrality
The most important reason why intermediaries like Google and Blogger should have immunity from claims is because, even if it is possible, and cheap, do we want them to track all our content? Even more importantly, do we want these intermediaries to begin filtering our content on their own?
Imagine a world where your Internet Service Provider (BSNL or Airtel) checks if the content you are uploading infringes a copyright. Then, your content is verified by the e-mail provider or blog hosting service that you use. The filtering itself is a violation of privacy that no one would want. Doing so would take away any neutrality that intermediaries should provide to their users and content. There is no justifiable reason why an intermediary should make any prima facie discrimination based on the content that users transmit.
I can only think of very heinous crimes like hate speech or child pornography, that could possibly justify any tracking. Even in those cases, the answer is far from clear.
What Should a SafeHarbour Provision Do?
All the points above make clear why intermediaries need safe harbour provisions due to third party content. If we agree to the reasons above, we should agree to a clear provision that gives immunity against all types of liabilities, regardles of whether they arise from copyright or not. Most importantly, this immunity should be independent of any defense that the intermediary may or may not be able to take under the body of laws that govern the type of liability.
That is, copyright law may or may not give Google a defense against claims of infringement. Despite that, there needs to be clear immunity given to Google, not out of principles of copyright law, but because of its status as an intermediary.
Section 79 tries doing that, but is hampered by section 81. This needs to be corrected. Ideally, section 79 should incorporate something along the lines of the SafeHarbour provisions in the DMCA (see U.S.C. Sec. 512. Limitations on liability relating to material online). That is, section 79 should give intermediaries immunity against claims of copyright infringement. To balance the interests of copyright holders, this provision should make all intermediaries have a system by which copyright infringements can be reported and addressed (both Google and Blogger have this).
The Reason for the Problem
The confusion caused because of section 81 is because section 79 was only supposed to grant intermediaries immunity from criminal actions. While this is not clear in the Act, the Standing Committee Report on the Amendment Act indicates this. The Report clearly says that the Ministry's view was that the `proposed Section 79 did not absolve the network service providers from civil liabilities'.(Standing Committee Report, p. 17) This supports what Prof. Basheer said in his earlier post, that section 79 was a response to the Bazee fiasco. Its intended purpose seems only to have been to give intermediaries immunity from criminal cases. If that is the case, then Section 79 is hardly a safe harbour provision. This would also explain Section 81's proviso, since section 79 would never have give intermediaries immunity from copyright infringement in the first place.
Section 81's place should not be confused either. While there may be interpretations to suggest that its proviso does not invalidate section 79 (assuming that the latter provides any immunity), the Standing Committee's Report clearly says that the purpose of the proviso is to prevent any provisions of the IT Act from derogating provisions of either the Copyright or Patents Act. (Standing Committee Report, p. 103)
Conclusion
Given the legislative history behind the Amendment, I feel that section 79 does not give intermediaries immunity from claims of third party copyright infringement. In light of the Standing Committee Report, I doubt that section 79's scope is intended to extend beyond immunity from criminal liability.
That being the case, there is a clear need for the IT Act (or some other legislation) to give intermediaries immunity from any liability that may arise due to third party content. I hope that a subsequent amendment either cleans up section 79, or adds a new provision.
Does copyright subsist in a patent specification? The answer to this may seem obvious to most, but I did rather articulate on the obvious clearly than overlook something clearly obvious. In Catnic Components Ltd. & Anr. v. Hill and Smith Ltd. (1978), it was held by the UK High Court (Chancery Division) that copyright in a patent specification ceases to subsist upon publication of the patent application.
This UK judgment is well-known for its use of the “pith and marrow” doctrine, but its copyright angle is something I have been meaning to blog on for quite some time now.
The facts of the case are as follows:
Lintels are used to support bricks over apertures in a wall either during or after construction. These are horizontal members that are found over doors and entrances. The invention in this case is a steel lintel which is light and easy to handle as opposed to heavy ones used earlier. (picture from Catnic's official website)
The plaintiff, the assignee of the patent over steel lintels, claimed infringement of the patent by the defendant who not only manufactured lintels identical to the one claimed in the patent (where the posterior support members extend vertically) but also produced ones whose posterior support members were inclined at 6-8 degrees from the vertical.
The defendant had obtained drawings of these lintels from the plaintiff’s employee, so in addition to the claim of patent infringement, the plaintiff also claimed infringement of copyright in the drawings, some of which were similar, if not identical, to the ones disclosed in the patent specification. The plaintiff also pointed to identical dimensions in its drawings and that of the defendant to prove copyright infringement.
To the claim of patent infringement, the defendant contended that: 1. That the posterior member in the defendant’s product was integral with the base plate, whereas the independent claim of the plaintiff’s patent required the base plate to be joined to the posterior member; and
2. That the posterior member was inclined in the defendant’s product as opposed to the requirement of a vertical posterior member in the patent. The inclined member, according to the defendant, was a technical improvement over the plaintiff’s invention.
To this the Court held that the independent claim of the patent required the posterior member to be joined to the base plate, which would include an integral connection as well.
Also, since all essential features of the patent were found in the defendant’s product, the inclined posterior member may at best save the defendant from textual infringement, but not from substantial infringement. The inclined member, according to the Court, was an immaterial variation, poorly aimed at circumventing infringement.
As for copyright infringement, the Court first broached the criterion of defendant’s access to the plaintiff’s drawings. The witness for the defendant admitted that he had perused a copy of the plaintiff’s brochure which contained the drawings of the lintels sans any dimensions. It was also admitted by the witness that the defendant’s lintel design was inspired by the plaintiff’s idea.
On the basis of these admissions, the Court held that since there was no copyright in the idea, there was no infringement of the copyright in the drawings. Further, interestingly, on comparison of the designs of the lintels, the Court held the defendant’s work to be original since there was a discernible difference in the designs (if so, how was the patent infringement claim upheld? Read the judgment of the House of Lords on appeal).
To rule out copyright infringement altogether, the Court turned to the issue of subsistence of copyright in a patent specification. The issue was framed thus:
“The question is the effect, if any, of the publication of the patent drawings on the enforceability by the plaintiffs of their independent copyright in substantially identical drawings”
The sum total of the Court’s ruling on this issue is as follows: 1. By giving his consent to the publication of the patent application, the patent applicant dedicates his invention to the public, subject to the grant of a patent.
2. Since one of the essential requirements of patent grant is full and proper disclosure of the best method of working the invention, illustrated if necessary by drawings, upon expiry of the patent there comes into being an implicit right to the public to use the drawings of the patent in any manner. This is naturally so, since if there is no such licence, the patentee may enforce the patent after its expiry through the copyright in the drawings, thereby extending the life of the patent.
3. However, such implicit right does not extend to any drawing which does not form part of the patent, barring drawings which are substantially similar to the ones in the patent.
4. Such right to use the drawings exists even if the patentee voluntarily allows his patent to lapse.
5. Also, if the patent is held invalid, the patentee retains his copyright in the drawings.
The logic offered by the Court is that when an applicant elects to apply for a patent grant, he makes a conscious decision to relinquish his copyright in the drawings in return for a limited yet stronger right in the form of a patent.
The question that comes to one's mind is if the patentee loses copyright only with respect to drawings which relate to the subject-matter claimed or even those drawings which, though form part of the specification, may not necessarily relate to the specific invention being claimed?
This decision of the Chancery Division was challenged by both parties before the House of Lords. The plaintiffs appealed against rejection of the copyright claim, and the defendant against the patent claim. The House of Lords desisted from expressing a concluding view on subsistence of copyright in patent specification.
The decision of the Chancery Division was delivered prior to the UK Copyright, Designs and Patents Act 1988. Before the coming into force of this Act, the position of the law on copyright in patent specifications was as follows:
Patent specifications published before 1 August 1989-
Copyright in these belongs to the Crown but in normal circumstances no steps would be taken to enforce that copyright (notice of this was given in our Official Journal (Patents) on 25 June 1969). You would be allowed to copy these patent specifications freely but on the understanding that if the privilege is abused, for instance by copying for the purpose of selling them on, then the government may take action.
After the introduction of the 1988 Act, the position is as follows:
Patent specifications published on or after 1 August 1989-
After the Copyright Designs and Patents Act 1988 (CDPA) came into force, Copyright in patent specifications belonged to the applicant/proprietor (the Intellectual Property Office (IPO) though may copy and publish these as required by sections 16 and 24 of the Patents Act). The copying and issuing of copies to the public of patent specifications for the purposes of ‘disseminating information’ is also not an infringement of copyright. A notice of this general authorisation of such copying appeared in our Official Journal on 5 December 1990.
This means that you may freely copy UK patent specifications for the purpose of ‘disseminating the information contained in them’. If you were to copy the whole or a substantial part of the specification for any other purposes, such as marketing or sales, this could be an infringement of the copyright (unless the use fell within one of the exceptions to copyright).
If there are US or Indian decisions on similar lines or expressing a contra view, I request readers to share the details of the same with us.
Posts
