Indo Japan Desk October 2012


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A monthly Trade and Investment Bulletin of Corporate Professionals for Indo- Japan Business Community.

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Indo Japan Desk October 2012

  1. 1. Indo-Japan Trade & InvestmentBulletinOctober IssueJapan Desk, Corporate Professionals 2012
  2. 2. INDEXIndo-Japan Trade & Investment Highlights • India to Collaborate with Japan on RRE Trade • The Indian Government Optimistic about Japan Lifting Ban on Import of Shrimps from India • The Indo-Japanese Trade Might Get Doubled by 2014 • India and Japan to Collaborate on Study on LNG Pricing • The Pune Metro Project to be Funded by the Japanese Government • JICA Honour for DMRC • Lupin Limited Eyeing the Cancer Drugs in Japan • Tata Capital and Century Tokyo Collaborate to Provide Leasing Solutions • Japan’s Mitsui to Invest in Indian Healthcare Company Claris Lifesciences • Japan’s Honda Motor Company to Expand the Two Wheeler Production Capacity in India • India and Japan to Increase Co-operation Especially in Security • Bangalore to Witness an Upsurge of Hotels and Retail Outlets Especially for the Japanese • Honda Cars India to Have a Series of Launches in the Coming Year • Indo-Japanese Relationships not Limited to Trade/InvestmentKnowledge Center • Assignment & Licensing of Trademarks in India
  3. 3. Indo-Japan Trade & Investment HighlightsIndia to Collaborate with Japan on RRE Trade India is soon going to sign an agreement with the Japanese government which is expected to make the Indo-Japanese relationship even stronger. This agreement which is hoped to kick-start the development of Rare Earth Elements (RRE) in India will be signed in November.RREs are a set of 17 chemical elements which are typically dispersed throughout the earth butare not found readily as minerals. These are almost indispensable for producing products likeLCDs, aerospace components, microwaves, energy efficient light bulbs and medical equipment.India, having one of the richest RRE reserves in the World, could not utilize its potential of RREproduction to the fullest because in 2004, China started producing RRE at lower prices comparedto India. With China and Japan facing serious issues over the Senkaku/Diaoyu islands, China’sexports of RRE, especially to Japan have come down drastically affecting the Japanese hi-techmanufacturing industry.Supplementing India’s earlier decision to set up a REE extraction plant in Odisha, Indian RareEarths Limited and Toyota Tsusho from Japan have decided to set up a 12,000 tonne monaziteprocessing plant. Japan, the largest importer of rare earths has also decided to plough $1.3 billionin India to fund alternate sources for RRE.The Indian Government Optimistic about Japan Lifting its Ban onImport of Shrimps from IndiaThe Union Government is hopeful that Japan will lift its ban on importingshrimps from India which the country had imposed a couple of months agodue to presence of high levels of an anti-oxidant called ethoxyquin.However, officials of Export Inspection Council of India (EICI) and Marine Products ExportDevelopment Authority (MPEDA) have interacted with the health authorities and food safetycommission of Japan and have requested for taking back the decision. It was told by the officialsthat Japan has no Maximum Residue Limit prescribed for shrimps and hence the decision isbased on faulty grounds.
  4. 4. It is surprising that India which has been exporting shrimps to a lot of countries worldwide sincepast few decades faced such a problem now; especially when the country has used the samemethods for feeding and raising shrimps. It is hoped that this trade barrier will be overcome atthe earliest and will relieve almost 50,000 people in Odisha who are directly or indirectlyinvolved in this business.The Indo-Japanese Trade Might Get Doubled by 2014The bilateral trade between the countries might double to almost USD 25 billion by 2014. It hasbeen hoped that this will easily be achieved because there is huge scope of expansion in thecurrent state of the Indo-Japanese trade. Where India exports mainly mineral fuels and oils,pearls, precious and semi precious stones, iron, steel and fish to Japan; it imports from thecountry machinery appliances, medical and surgical equipments and articles made from iron andsteel.India and Japan to Collaborate on Study on LNG Pricing The Indian and Japanese Governments decided to start a joint study on Liquefied Natural Gas (LNG) pricing in the Asia Pacific market at the Sixth India-Japan Energy Dialogue between the Planning Commission of India and the Japanese Ministry of Economy, Trade and Industry. The countries are going to collaborate on both the production andthe exploration activities to ensure a stable and cheaper supply of LNG. Apart from this, thegovernments have also started a feasibility study of a project that aims to combine 2 powergeneration technologies from coal.The two countries also emphasized the importance of cooperation in the civil nuclear sector andin enhancing the safety there in. India and Japan hope to consistently improve their relationshipbased on similar collaborations. India will also be taking up the test run of Japanese projectswhich have been aimed at improving and utilizing efficiently the basic energy resources of thecountry like coal and water.The Pune Metro Project to be Funded by the Japanese GovernmentIndia has received Overseas Development Assistance from Japan for various metro projectsundertaken in the country including those in Delhi, Mumbai, Chennai and Kolkata. Now the
  5. 5. Pune metro project which was set in motion through a Government last month is likely to getfinancial support from the Japan International Co-operation Agency (JICA).The mass transit project which has been estimated to cost around Rs. 2600 Crores (approx. $500millions) will be collectively funded by the Central and the State Government, the PuneMunicipal Corporation and JICA. The construction of one of the few routes of the project istargeted to be completed in the next 3 years.JICA Honour for DMRC for Contribution to Indo-Japan Relations Delhi Metro Rail Corporation has been awarded the President’s Award by JICA for its contribution to the promotion of Indo-Japan ties. The award is also recognition of crucial role of Delhi metro in development of social, economic and human resource in India. Delhi Metro has been built with assistance of Japanese Government throughJICA and is often cited as the new age symbol of India-Japan partnership.Lupin Limited Eyeing the Cancer Drugs in JapanLupin which operates in Japan through two fully owned subsidiaries namely KyowaPharmaceutical Industry and I’rom Pharmaceuticals; is going to focus on oncology drugs inJapan. It has a group of around 7-8 cancer drugs in its product mix which have been licensed to itor have undergone collaborative development. The patents on these products worth $2 billion are going to expire in the next 3-5 years and this will allow Lupin to operate as a generic medicine player in Japan. Lupin which has a presence in both oral and injectable drugs will be expanding its manufacturing facilities in Japan. Apart from that it will be focusing on marketing and set up a cancer product packaging facility to target almost 400 cancer hospitals across Japan.This has come in the wake of Japan’s decision in April to incentivize entities to promote genericdrugs in the country. It is hoped that Lupin will be able to double its sales in Japan to over Rs.2600 Crores (approx. $500 million) in the next 5 years.
  6. 6. Tata Capital and Century Tokyo Collaborate to ProvideLeasing SolutionsTata Capital’s wholly owned subsidiary Tata CapitalFinancial Services and Japan’s Century Tokyo LeasingCorporation shall enter into a business relationship to provideleasing solutions.The leasing solutions will pertain to the lease of equipment which is a market with a hugepotential and an annual growth rate of 25-30 percent. The venture will provide a plethora ofequipment leasing facilities across various industries. Though no equity structure has beenproposed for the venture so far, the relationship is based on Tata Capital’s extensive network andCentury Tokyo’s expertise in the field of leasing.Japan’s Mitsui to Invest in Indian Healthcare Company Claris LifesciencesMitsui might invest up to Rs. 250 Crores (approx. $48 million) in Claris Lifesciences through astake sale of PE in the company or a Joint Venture between the two companies. ClarisLifesciences is based in Gujarat and produces sterile injectables for various medical segments.Present in 91 countries world over, Claris has investments form renowned institutions like SignetHealthcare (a PE firm focused on health care), Morgan Stanley Asia and Barclay’s Capitalamong others.Japan’s Honda Motor Company to Expand the Two Wheeler Production Capacity in India Honda Motorcycles and Scooters India, a unit of the main Japanese company is aiming to become the lathes two wheeler maker in India by the year 2020. The company plans to do this by adding 4-5 new factories so that the annual production capacity goes up to 10 million units.Honda India currently has 2 factories, one in Haryana and the other in Rajasthan. And there’sanother one which is being built in Karnataka. The planned factories are hoped to be set up inGujarat and Uttarakhand. Apart from this, the company also plans to set up a Technical Centre.The decision has been taken keeping in mind the expected growth rate of the two wheelerindustry at 14% annually.
  7. 7. India and Japan to Increase Co-operation Especially in SecurityDuring the Second India-Japan 2+2 Dialogue, the two countries discussed various issuesinvolving foreign policy and security; especially that concerning maritime, cyber space, outerspace, regional and international security. The dialogue revolved around the two countriesbriefing each other about their respective policies on security and defence developed accordingto their country’s security scenario.Bangalore to Witness an Upsurge of Hotels and Retail Outlets Especially for the JapaneseWith around 200 Japanese companies, almost 600 Japanese families and approximately 12,000Japanese visitors to the city, Bangalore surely needs facilities which make the Japanese feel athome.The Karnataka Government is in talks to establish a residential area especially for people fromJapan on about 1000 acres of land, complete with accommodation, hospitals, schools, pagodasand restaurants. Japan’s Nippon Infrastructure Company is establishing a 30-room business hotel exclusively for the Japanese expats. Similarly, Toyota enterprises, a subsidiary of the Toyota Motors Corporation has entered into a Joint Venture with the owners of ‘The Chancery’ to take over its 52 rooms and style them according to the Japanese tastes. The hotel will also house a Japanese restaurantand a spa.Bangalore will also soon be a home to a chain of Kenkos which are Japanese health outletsselling Japanese drugs, herbs accessories and skin and hair care products.Honda Cars India to Have a Series of Launches in the Coming YearHonda Cars India Ltd, a unit of Japan’s Motor Company is readying itself for a slew of launchesin the compact and premium segments. It will also be introducing the diesel variants of the carsfor which the parent company has independently developed the diesel engine.An entire new range of cars is being readied and hence no diesel variants will be introduced inthe models currently offered by Honda. In fact, the company is also considering the possibility ofbringing a utility vehicle specially suited for India. With plans to focus heavily on the export ofcars from India, the company is strategizing to improve its position as a car maker in the country.
  8. 8. Indo-Japanese Relationships not Limited to Trade/InvestmentAn exquisite Sai Baba Temple in Ajmer, Rajasthan, organized the marriage of Industrialist S. K.Lal’s daughter Nameeta with a Japanese groom Ukaako, son of Mitsuharo. With the marriageconducted in a traditional Hindu ceremony and with the bride and groom dressed up intraditional Indian attire, the wedding was attended by over 300 Japanese people who thoroughlyappreciated the Indian food and rituals.
  9. 9. Knowledge CenterIssue In Focus: Intellectual Property RightsASSIGNMENT & LICENSING OF TRADEMARKS IN INDIAJust as in the case of physical property such as land, every owner of a Brand or Trademark hasthe right to sell, license, and transfer its respective brand or trademark in accordance with legalprocedures. A Brand or Trademark owner can transfer his rights with respect to his trademarkeither by way of assignment or by licensing. In India, The Trade Marks Act, 1999 deals withassignment as well licensing of trademarks.To put it summarily, in case of an assignment of a trademark, there is a change in the ownershipof the registered brand and in case of licensing, the right in the trade mark continues to vest withthe original owner but only few restricted rights to use the brand/mark are given to the thirdparty.ASSIGNMENT OF A TRADEMARKAssignment of a trademark occurs when the ownership of such mark as such, is transferred fromone party to another whether along with or without the goodwill of the business. In case of aregistered Trademark, such assignment is required to be recorded in the Register of trade marks.A mark may be assigned or transferred to another entity in any of the following manners:
  10. 10. • Complete Assignment to another entity- The owner transfers all its rights with respect to a mark to another entity, including the transfer of the rights such as right to further transfer, to earn royalties, etc. (E.g. X, the proprietor of a brand, sells his mark completely through an agreement to Y. After this X does not retain any rights with respect to the brand)• Assignment to another entity but with respect to only some of the goods/ services- The transfer of ownership is restricted to specific products or services only. (E.g. P, the proprietor of a brand used for jams and jellies and dairy products. P assigns the rights in the brand with respect to only dairy products to Q and retains the rights in the brand with respect to jams and jellies.) This is called partial assignment.• Assignment with goodwill- Such assignment is where the rights and value of a trademark as associated with the product is also transferred to another entity. (E.g. P, the proprietor of a brand “Shudh” relating to dairy products, sells his brand to Q such that Q will be able to use the brand “Shudh” with respect to dairy products as well as any other products it manufactures.)• Assignment without goodwill- Such assignment also referred to as gross assignment, is where the owner of the brand restricts the right of the buyer and does not allow him to use such brand for the products being used by the original owner. Thus, the goodwill attached to such brand with respect to the product already being sold under such brand, is not transferred to the buyer. (E.g. P, the proprietor of a brand “Shudh” relating to dairy products, sells his brand to Q such that Q will not be able to use the mark “Shudh” with respect to dairy products but can use this brand for any other products being manufactured by it. In such case the goodwill which is associated with brand “Shudh” for dairy products is not transferred to Q and Q will be required to create distinct goodwill of brand “Shudh” for any other product or service like Restaurant wherein Q proposes to use this brand.). In many jurisdictions including United States, assignment of mark without goodwill is not allowed at all. India on the other hand allows assignment without goodwill.
  11. 11. Further, in case of registered Trademarks, the Trade Mark Act, 1999 also puts certain restrictionson the assignment of a registered trade mark wherein there exist possibilities of creatingconfusion in the mind of public/users. Such restrictions are:• Restriction on assignment that results in the creation of exclusive rights in more than one persons with respect to the same goods or services, or for same description of goods or services or such goods or services as associated with each other.• Restriction on assignment that results in different people using the trademark in different parts of the country simultaneously.TRADEMARK LICENSINGThe licensing of a mark is to allow others to use the mark without assigning the ownership andthe same may be done for all or some of the goods and services covered. The Trademarks Actdoes not mention the term ‘License’, the concept under the Act is mentioned as that of a‘Registered User’.Trademark licensing is advantageous to both the parties. While the licensor enjoys its rights tothe mark by getting the royalties for its use, the licensee is able to expand its market operationsby using the brand and developing its reputation.In case of Licensing, the licensor is open to license the rights over the trademark in manner itmay like. The Licensor can restrict the rights of the licensee in a trademark or brand with respectto the products or services wherein the licensee can use such brand, with respect to time forwhich it can use such mark, with respect to area within which it can use such mark etc.AGREEMENTS FOR TRANSMISSIONA trade mark is generally assigned by way of a properly executed Trademark AssignmentAgreement which pertains to the transfer of the mark from one person or entity who is the ownerto another. It is to be ensured when drafting such agreement that: the rights of the owner of the brand are not detrimentally affected due to the obligations contained. the requirement and decision regarding whether the assignment should be with or without the goodwill of the business is explicitly mentioned and negotiated
  12. 12.  the agreement should be drafted keeping in mind the purpose of the transaction in questionA mark is licensed by way of a License Agreement. As per the Trade Mark Act, 1999, contraryto the requirement in case of Assignment, the registration of license agreement with theTrademark Registrar of a mark is voluntary and not compulsory, but it is advisable. Further, likein an Assignment agreement, it is again very important that while drafting a License Agreement,the rights and duties of licensee are distinctively pre determined and defined. This is importantnot only to protect the rights of the Licensor in its own brand and to protect any misuse thereof,but also to secure licensee with his rights to use such brand.TO SUM UP…Assignment and Licensing of brands are considerable issues and proper strategizing may openvistas of opportunities for all, a licensor, a licensee, an assignor and an assignee. Both conceptsinvolve a degree of planning for the future of the parties involved and the brand in question. Thedevelopment of a brand, its propagation and its use, all lie in the hands of the proprietor of thebrand and trademark and assignment and licensing are effective methods to manage the same.
  13. 13. CONTACT US Pankaj Singla Japan Desk, Corporate Professionals DELHI (Head Office): D-28, South Extension Part - I, New Delhi – 110049 D: +91-11-40622293 T: +91-11-40622200 M: +91-99715-08320 F: +91-11-40622201 E: MUMBAI: 403-404, Churchgate Chambers, 5 New Marine Lines, Mumbai-400020 T : +91 22 22624671 F : +91 22 22655712 FARIDABAD (DELHI NCR): 565, Sector-7B, Faridabad, Haryana-121006 T : +91 129 4061130 F : +91 129 2241017 BEDFORD (UK) 2-4 Mill Street, Bedford MK40 3HD U.K. T : +44 (0) 2030063240 F : +44 (0) 2030063241DISCLAIMER: The entire contents of this document have been developed on the basis of relevant statutory provisions and as per theinformation available at the time of the preparation. Though the author has made utmost efforts to provide authentic information however, thematerial contained in this document does not constitute/substitute professional advice that may be required before acting on any matter. Thedocument has been produced only for the informational purposes; the author and the firm expressly disclaim all and any liability to any personwho has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any suchperson in reliance upon the contents of this document.