DRAWBACKS IN PATENT, COPYRIGHT TRADEMARK SYSTEMS

1. 17/10/2017 Murali 1
Inadequacies of Indian Industrial
Property Rights Regime.
Department of Law
SAVITRIBAI PHULE
PUNE UNIVERSITY
GOLDEN JUBILEE CELEBRATIONS
25TH TO 27TH
MARCH 2017
R. Muralidharan
Advocate, Patent Agent ,Law Lecturer, Mediator

2. Manu Associates,
143/4, 8th Main,14th Cross,
Royal fort Apartments
Malleswaram.
Bangalore. 560003.
Mobile:-0-94482 47549
mailto:
muralimanu@gmail.com/
advrmuralidharan@gmail.com
R. Muralidharan
Advocate, Patent Agent
Law Lecturer, Mediator
10/17/2017Murali
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Inadequacies of Indian
Industrial Property Rights
Regime

3. Indian IPR policy
• 12th May 2016, Department of Industrial Policy &
Promotion, Ministry of Commerce & Industry,
Government of India published the National
Intellectual Property Rights Policy 2016.
• Approved by the Cabinet on 13th May 2016.
• Think-Tank - headed by Justice Prabha Sridevan, a
former judge (Madras High Court) and former
chairperson of the Intellectual Property Appellate
Board (IPAB).
• Other members of the Think Tank are :- Prathiba Singh
[Senior Advocate]; Punita Bhargava[ Advocate,
Inventure IP] ; Unnat Pandit, [Cadila Pharmaceuticals];
Rajeev Srinivasan, [Director, Asian School of Business];
and Narendra Sabharwal, [Retired DDG, WIPO].
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4. Indian IPR policy : Issues
• The Think Tank did not include a possible representation for foreign
applicants who file the maximum number of patent applications in
India. Most of the Applicants (above 80%) are of Foreign origin.
• Some of them, particularly those belonging to the U.S. have
complaints and they occasionally become subjudice before
International forums and sovereign institutions regulating global
trade policies.
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5. New Organizational Structure for IPR Regime Administration
• As of now, IPR Administration in India comes under the
ambit of different Ministries of the Union of India.
• It is necessary to have a full-fledged Department of
Industrial Property, headed by some of the IPR Cadre
Officers, which will exercise overall control of administering
IPR Regime in India.
• The proposed department of Industrial Property can draw
people from the legal profession and include/consist of
people from the other IPR departments who are currently
administering the regime.
• Ensuring that this Independent organizational structure is
headed by a Joint Secretary or a Secretary is absolutely
necessary to minimize conflicts that will be inherent in any
multidepartment control.
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6. Do we need New Additional Legislations in IPR?
• In India we do not have some types of IPR which other
countries have found to be useful and hence, are today, a
part of their IPR System.
1. Law of utility model.
2. Pharma focused new generation of IPR.
a) Data Exclusivity
b) Orphan Drug/Generic/Pediatric/Exclusivities.
3. Traditional Knowledge Protection
4. Protection of Computer Software
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7. Law of utility model.
• They are different from patent in that they do not insist on ‘Inventive
Steps’.
• Like Patent, they insist on Novelty, Utility, and Statutory Subject matter. The
applicants should themselves do a bonafide search on novelty and make a
declaration. They have a reduced span of protection. These are not
available for process but only for products. Normally, for products having a
design element, Applicant applies for both Patent and Utility Model
Protection.
• The grant occurs within 6 to 9 months of the application as there is no
preceding examination. The Applicant opts for Patent Protection if there is
a favorable Examination Report on Inventive step in their patent
application. This protection is particularly best suited to grass root rural
inventors who may have satisfied the requirement of Novelty, Utility, and
Statutory Subject matter but not inventive steps.
• It is gratifying to note that the Think Tank has recommended the
enactment of Utility Model protection.
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8. Pharma focused new generation of IPR
• We have the words of Madam Indira Gandhi,
at WHO, that the inventions relating to
human and animal health must be freely
available to all, unfettered by commercial
monopoly. Current Indian Patent Law
implements the letter and spirit of Mrs.
Gandhi’s wishes. However, in the interests of
the Indian Pharma Industry, it is time that we
consider whether we should have the
following new generation IPR as part of our
IPR system:
a) Data Exclusivity
b) Orphan Drug/Generic/Pediatric/
Exclusivities.
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9. Data Exclusivity:
• Introduction of a new drug or a new combination of earlier approved drugs
requires Marketing Approval from Drug Controllers around the world.
• Often, the cost of obtaining regulatory approval is between 5 to 10 times the
cost of generating new molecules. In the course of obtaining regulatory
approval the companies spend a lot of money on research relating to the
method, conduct of clinical trials, analysis of data, etc.
• In the U.S.A., the results are protected under Hutch-Waxman Act and Europe
also provides for similar protection. If Indian Companies are going to develop
new molecules as opposed to the present generic drug business, the enactment
of data protection laws in India may be absolutely necessary.
• In this connection Satwant Reddy Committee recommended enactment of laws
in India for the protection of Data Exclusivity under patent laws. However, the
above committee had recommended a much-watered down version in
comparison with global peers.
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10. Orphan Drug/Generic/Pediatric/Exclusivities
• U.S. Laws provide 5 years protection for the Orphan Drugs i.e. for
drugs meant for rare diseases having fewer patients and Generic
Exclusivity of 120 days for those who introduce a new cheaper
generic drug in place of patented medicine to substitute the more
expensive Patented Drug, Pediatric Exclusivity, etc.
• If Indian Pharmaceutical Industry is to grow in a vibrant way and if
India aspires to become a supplier of research developed drugs, to
the world, the Think Tank should necessarily consider whether these
types of rights are desirable in the present Indian context.
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11. Traditional
Knowledge
Protection
• Of late, it has become
fashionable amongst
nationalistic intelligentia
to demand that there must
be some kind of legal
protection for Traditional
Knowledge in India.
However, this demand
overlooks the fundamental
truth that any Traditional
Knowledge is part of public
domain, incapable of
appropriation by anyone.
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12. Traditional Knowledge Protection
• It is like the fishes located in high seas beyond territorial and exclusive
economic zones of a country, which can be fished by anyone in the world.
This, jurisprudentially, falls under the Latin Maxim “res omnium
communis”.
• Making Traditional Knowledge capable of appropriation by the social
groups; that are responsible for the generation and preservation of the
Traditional Knowledge overlooks the second obstacle namely, none of
these individual or social groups have made a serious demand for the
protection of these rights.
• Conferring these rights on the social groups and leaving the enforcement
either to government agencies or NGOs, will only result in another form of
IPR bureaucracy with no tangible benefit to the so called social groups who
are the possessors (not owners) of the Traditional Knowledge.
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13. Traditional Knowledge Protection
• A modern welfare state runs on the economic principle that in a free
market there must be perfect competition. Every IPR grants
commercial monopoly which actually distorts the competition. Thus,
every IPR is statutorily sanctioned exception justified by strong
economic and ethical reasons.
• For an applicant to be entitled for a patent or plant variety monopoly,
he must create something which was not originally there. After the
period of monopoly, the technology in the patent enlarges into public
domain adding thereby to the knowledge of the people. Over a
period, this can become a part of Traditional Knowledge. Hence, there
is no economic, social, or even ethical justification for grant of any
monopoly over Traditional Knowledge.
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14. Traditional Knowledge Protection
• Furthermore, even though the Indian Patent Act, 1970 prohibits the
patentability of any Traditional Knowledge per se, but any improvement to
Traditional Knowledge that meets the requirements of Novelty, Utility,
Non-obviousness, and Statutory Subject Matter is patentable.
• Similarly, in India and many parts of the world, if a person rediscovers
specific implementation solutions for lost Traditional Knowledge, there is
no reason why he should be denied patent protection.
• There should not be any legislation for protecting Traditional Knowledge
when the social groups that possesses the Traditional Knowledge are
unable and unwilling to undergo the expensive process of IPR registration
and its enforcement.
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15. Protection of Computer Software
Computer software in India is primarily
protected under the umbrella of
Copyright Laws as “literary work”. It is
well known that Copyright Law protects
only “Method of Expression (form)” and
not the “idea” (content) or its
“commercial expression”. Thus, it is
inappropriate to protect software under
copyright laws.
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16. Protection of Computer Software
• Even though the Indian Patent Act, 1970 prohibits the
patentability of software perse, the Patent Manual
published by the Indian Patent Office does not totally rule
out the patentability of the improved technical effect
brought about by the employment of new software.
• The test of improved technical effect manifested in any
product or process is different from the operation of the
computer or the software. However, the monopoly
provided under patent is much stronger in comparison
with the protection under copyright law.
• The IT industry today is getting used to the concept of a
non-exclusive, irrevocable, perpetual license on non-
discriminatory terms. Software Patents will complicate the
situation.
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17. Protection of Computer Software
• In addition to patent and software protection, the IT industry extensively
uses “non-compete” and “non-poaching” obligations. An average
employment contract in the IT industry contains a restrictive covenant on
employees that will continue to operate even after the termination of
contract of employment. This prima facie attracts the operation of Section
27 of the Indian Contract Act, 1872 which stipulates that agreement in
restraint of trade shall be void.
• Hence, it is necessary for the Think Tank to consider “sui generis” method
of protecting computer software; if necessary, by merging the best aspects
of both Patent Law and Copyright Law which will clarify the most
fundamental contractual principle that a restrictive covenant in restraint of
trade can be valid, if it is reasonable and for protecting the valuable
commercial information which is protected under statute, or unprotected
yet may be protected under the contract
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18. Reforms to Patent law in General
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19. Review of Section 3 of the Indian
Patent Act, 1970
The present Indian Patent Law Regime
draws its inspiration, substantially, from
the Justice Rajagopala Ayyangar
Committee Report. The Committee, in the
1960s, recommended a very strict,
Patentee unfriendly Patent Regime
considering the then prevailing socio-
economic conditions which can be
summed up as following:

20. Between 1958 – 1970
• India was a predominantly agricultural
country, where 85% of the population was
dependent on agriculture. There was no
Indian Industry. The State was the driver
and mover of Indian Economy, Private
Industry was never allowed to grow
because of “Licence and Quota Raj”. India
was closed to foreign capital and adopted
excessively protectionist measures in favor
of state commercial monopoly in business
matters resulting in a lot of inefficiency and
waste. Importantly, there was no such thing
as a Service Industry.
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21. 1970 – Present day
• Today 58% of Indians are involved in agriculture, contributing to just 18% of
its GDP.
• India today is the supplier of good quality cheap Generic Drugs to the
world. Notwithstanding the occasional ban of reputed Indian
manufacturers, the State of Andhra Pradesh boasts of the maximum
number of U.S. FDA approved manufacturing facilities anywhere, outside
the U.S., (even when the whole of Europe is considered as a single unit.)
India, today, is the generic drug capital of the world.
• India constitutes 5% of Global Territory, has roughly 20% of global
population and 20% of share in the global digital traffic. Indian IT and
Business Process Outsourcing (BPOS) companies have set the bench mark
in the Global Software Industry.
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22. 1970 – Present day
• India today has many Universities. Many of these Universities are committed to
achieving excellence and are producing more engineers and scientists than the
Indian industry can reasonably absorb. Hence, from being the exporter of low-value
indentured labour between 1780 and 1850, today we have become an exporter of
high value Human Resources to many parts of the developed world.
• Many Indian Companies are becoming Multinational Companies. Reliance, TATA,
Infosys and WIPRO, Dr. Reddy, Ranbaxy, and Sun pharma have become Global
brands. Even small and medium scale entrepreneurs have established commercial
facilities in many South-Asian and African countries. There is a substantial outgo of
Indian Capital for the establishment of Indian controlled businesses in different
parts of the world. Even though we welcome foreign capital, the facts speak for
themselves: there is a substantial outgo of Indian capital for owning business
located abroad. Hence, the view that India is a poor, developing, capital importing
country warranting a strict patenting regime deserves reconsideration
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24. Reconsider:
• Section 3 of the Indian Patent Act, 1970, contains 17 categories of
Non-Patentable Subject Matter. Some of these exclusions were
deleted but more exclusions were added.
• The rationale behind Section 3 of the Indian Patent Act, 1970 namely
that these categories of inventions are absolutely essential for
facilitating the Socio-economic development of India overlooks this
fundamental point.
• If these categories of invention are more significant for socio-
economic development in India, then these categories should have
even more significant protection than the rest!!
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26. Section 3
• Section 3 in its present form goes against our important WTO TRIPS
obligation viz. we will protect all innovations without discrimination.
• This is not to say that Section 3 should be repealed. Many exclusions
contained in Section 3 are the result of Judicial Decisions in the U.S. also,
even though they do not have similar statutory provisions.
• In fact, if these foreign patent specifications are sufficiently Indianised
by incorporating additional data and explanation, many of the so called
non-patentable exclusions of Section 3 can be successfully overcome by
a smart Patent attorney in India
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28. Reforms to Section 39 of Patent Act, 1970:
• The published statistics of the Indian Patent Office revealed that 85% of
applicants for patents in India are of foreign origin. Of the remaining 15%
applicants, though the applicant may be Indian as a legal entity, there may
be substantial foreign control..
• If the outsourced research to India results in an improvement, which by
contract it would vest in the person who sponsored the research.
Sometimes the foreign applicant will mention the Indian personnel who
generated the invention in India. (Since the applicant is foreign,they may
not have complied with local filing requirement of Indian Law)
• When the foreign applicant applies for Indian Patent through PCT Route,
the Patent Office can refuse patent for non-compliance of local filing
requirement, as one of the inventor is Indian and the invention originated
in India.
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29. Reforms to Section 39 of Patent Act, 1970:
• In India, the consideration that prevails in U.S.A. does
not apply.
• The provision applies cruelly on Indian innovators who
are named as co-inventors or applicants in a foreign
patent when the foreign collaborator with better IPR
culture take immediate steps for IPR registration in
their respective territories, which may also have
similar Local Filing Requirement.
• It is known that foreign entities altogether leave out
the name of Indian Resident inventor from the
declaration of Inventorship. Thus, this provision
operates unjustly on Indian Innovators.

30. The operation of Section 2(h) and Section 47
• Reconciling the Apparent conflict between the operation of Section 2(h)
(Government Undertaking) and Section 47 (Government use of
Patents) of the Indian Patent Act, 1970:
• Every Patent is a proprietary Right in rem which is granted by the state
after careful examination and scrutiny. Hence the patent should bind a
state as much as any other commercial entity operating in its territory.
• Under the Defense of Empire Rules, when a state requisitions private
property occupies and uses it (even for war and military purposes),( when
the property is handed back to the owner), the state is obliged under
common law, to pay compensation to the land owner. If patent is a
proprietary Right in rem, then there is no reason to apply a different
yardstick for allowing Government use of patents.
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32. The operation of Section 2(h) and Section 47
• Union of India and many state governments own and control companies
that are listed in the stock market, where lots of non-stateactors own
substantial shares. These organisations essentially carry out commercial
functions.
• These two sections will enable a government controlled entity or even
NGOs that receive substantial funding from Government to get away with
blatant acts of infringement. In Hughes Aircraft vs. NASA, a direct state
functionary executing sovereign acts agreed to pay compensation/damages
to the patentee after the court ruled the existence of patent infringement.
• Section 47 makes it clear that the government can use its patent, only for
its “own purpose”. It is common knowledge that “own purpose” cannot
include “commercial purpose”.
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33. The operation of Section 2(h) and Section 47
• If we have to follow the U.S. model, it is fair and reasonable that the
state pays reasonable royalty (comparable to those given in
Compulsory Licensing cases) as and when a state or its
instrumentality uses a Patented Technology. Definitely, listed
commercial entities owned or controlled by the state cannot be
allowed to get away with patent infringement and claim that it is
government use of patent.
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34. Expropriation without compensation biological inventions
• Form – 1 (Application for Patent) imposes obligations on the use of
any biological material endemic to India, without the applicant
obtaining the permission from the Indian National Biodiversity
Authority(NBA). While granting such permission (which is an exercise
of sovereign power), the NBA can declare itself as a joint owner of the
IPR. This is, partial expropriation without compensation.
• This violates India`s obligation under Paris Convention and the
Convention on Protection of Biodiversity. This unfairly discriminates
against foreigners who may become victims of this provision, even
when the used Biological Material was from other parts of the world,
if the material is considered as endemic to India in the opinion of
NBA.
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36. Question of an Arbitrator pronouncing validity of a patent?
• An International transfer of technology agreement involves Indian
and Foreign Patents. The parties exercise their choice of law and
often have dispute settlement by Arbitration.
• Under the Indian Arbitration Act ,the arbitrator may not have the
required power to pronounce on the validity of a patent. This is
because a patent is a right in rem and an arbitrator appointed to
adjudicate the contractual rights of the parties may not have the legal
competence to go into the question of validity of patent.
• Until the patent is revoked or at least the operation of patent is
stayed, the arbitrator has to proceed on the footing that the patent is
valid.
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38. Question of an Arbitrator pronouncing validity of a patent?
• In case, the licensing agreement is terminated and the dispute
involves pronouncing on the validity of the Patent, can an arbitrator
sitting in an Indian forum decide on the validity of an Indian Patent?
• Under section 294 of US Patent Act, the arbitrator has been
specifically empowered to go into the question on validity of Patent.
In such situations, his decision will be binding in between the parties.
• Patent is a right in rem and only public authorities like IPO, IPAB and
High Courts can revoke the Patent. No arbitrator can pronounce on
the validity of an Indian Patent. Hence, it might be necessary to make
an amendment to Indian Patent Act clothing the arbitrator with
power to pronounce on validity of the Patent
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39. A Silver lining to a dark cloud.
• When the compulsory licensing provisions were first
incorporated in the Indian Patent Act 1970, they
attracted a lot of criticism from the United States of
America and research driven pharma multinational
corporations.
• In fact, all countries in the world have compulsory
licensing provisions built in to their patent regimes.
• United States where the IPR laws do not specifically
empower the state to grant compulsory licenses the
courts have many a time directed the parties to
negotiate a compulsory licence to prevent Antitrust
abuse. India steadfastly maintained its support to the
Compulsory licensing provisions while reasonably
safeguarding the interest of the patentees at the
same time.
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40. Compulsory licensing
• In fact, the present Indian regime on patent law incorporates new types of
Compulsory licenses in addition to the ones prevailing under the 1970 Act.
Sec 91 of the Patent Acts provided that related patents will also be
available for Compulsory licensing.
• Sec 92 further provides for Compulsory licensing by notification by the
Central government. Under the earlier Patent regime (1970) all
pharmaceutical and food process patents automatically came under the
ambit of licences of rights.
• Under the present Indian patent regime, this provision of licences of rights
has suffered a silent repeal. However, when the Central Government issues
notification under Sec 92 of the Indian Patent Act, then it will automatically
amount to a “Licences of right” to be decided by Central government and
as evidenced in the notification.
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41. Compulsory licensing
• Furthermore, under the traditional patent jurisprudence Compulsory
licensing is only to ensure that the Patented product is available in the
local market at a reasonable cost. Normally, Compulsory licences are
not meant for meeting an export demand. However, Sec 92 A of the
Patent Act provides for Compulsory licensing even for catering to a
foreign market. Thus, India is in the global forefront to ensure that
Compulsory licensing provisions are essential for preventing Patent
abuse.
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42. Bayer v. Natco (decided on
March 04, 2013)
• In Bayer v. Natco (decided on March 04,
2013)the Indian Patent Office granted
Compulsory licensing in favour of Nacto on the
ground that the “Nexavar” patented medicine
is not available in the Indian market both in
terms of quantity and cost.
• However the Patent Office and the IPAB
ensured that there will be royalty rate of 6% of
the sales turn over as opposed to the 2 to 4%
recommend royalty as provided under UN
procurement norms..

43. BDR Pharmaceuticals v. Bristol Myers
• In BDR Pharmaceuticals v. Bristol Myers (decided on October 30,
2013)The Indian Patent Office held that the applicant for Compulsory
licensing has not taken reasonable and diligent steps for procuring a
voluntary license on mutually negotiated terms. Thus in all fairness it
must be said to the credit of the Patent Office that they have been
implementing the Compulsory licensing provisions fairly and justly
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44. Another area of concern
• Supreme Court of India had upheld the decision of IPAB in the case of Glivic
(Beta Crystalline form of Imatinibe Myselate).
• In this case the applicant was able to demonstrate that administration of
the drug in the above form increases the bioavailability of the drug by
another 30%, thereby facilitating ease of administration and better
absorption of the product.
• However, the IPAB came to the conclusion that the word “efficacy”
contemplated in Sec 3(d) explanation could only mean” therapeutic
efficacy”. The learned chairman of the IPAB (who subsequently became the
Chairman of the IPR think Tank) while deciding the meaning of the word
‘efficacy’ instead of adopting the ‘golden rule of statutory interpretation’
chose to apply the ‘mischief rule of statutory interpretation’.
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46. NOVARTIS AG VERSUS UNION OF INDIA & OTHERS ( 2009)
• In other words, the IPAB concluded that Sec 3(d)and its explanation were
essentially for preventing the questionable practice of evergreening of
patents by aggressively patenting even incremental innovations.
• One should be conscious of the fact that the expression ‘therapeutic
efficacy’ is much more stricter than the expression ‘efficacy’. For e.g. if a
product covered by the patent can be produced in a more environmentally
friendly manner or at greatly reduced cost, from the point of view of the
common man there is an improvement in efficacy. However, this will not
constitute therapeutic efficacy as envisaged but the IPAB and subsequently
upheld by the Supreme Court.
• However, considering that this litigation is just first of the many litigations
which will occur in the future, one hopes that the Supreme Court will apply
the golden rule in statutory interpretation and make the expression more
just from the point of view of drug inventors.
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47. INTERRELATION BETWEEN
COPYRIGHT AND DESIGN
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48. Section 15 of Copyright Act
• First, Section 15 of Copyright Act stipulates that where a copyright is
registered, when under law, it ought to have been protected under Design
Act, the Copyright protection would cease in respect of the article, when it
is replicated more than 50 times by an individual process.
• IP Attorneys all over the world do not put all their eggs in one basket. They
may seek concurrent registration under Trademark, Patent, Copyright,
Design, Semiconductor Integrated Circuits Layout-Design Acts etc. in
respect of one product.
• Copyright infringement cannot be availed to injunct products embodying
visual features. BUT there is no reason to extinguish copyright/design
protection. The Applicant must be given a choice of election. This
provision should not promote unjust enrichment.
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49. Piracy of registered design
• In case of a design infringement, Compensation that
can be granted is Rs. 25000/- per an act of
infringement subject to a maximum of Rs. 50000/-.
This ceiling is unreasonably low. Damages should
depend on quantum of infringement and illegal profits
made from infringing acts. But, this should be a good
reason for the Courts to award interim relief, as
compensation ceiling fixed by law makes the loss,
irreparable within the meaning of ‘relative hardship
doctrine’.
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50. Section 5(4) of Design Act 2000
• As per Section 5(4) of Design Act 2000, an appeal arising from the order of
the Controller refusing an application for design, or an appeal arising from
challenges to the validity of Registered Design lies with the High Court.
• Controller General of Patents, Designs and Trade Marks is the primary
authority vested with the power of registration of Patents, Trademark,
Designs and Geographical Indications.
• However, an appeal from the decision of the Controllers in matters of
Patents, Trademark and Geographical Indications lies with the IPAB. Though
the new IP policy propagates Administration and Management - to
modernize and strengthen service oriented IPR administration, no effort is
seen in the policy to consider IPAB as a comprehensive authority to decide
appeals from Controller General
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51. This presentation is primary meant for
instructional use. Not for Publication. The
ownership of the TM & copyrighted material
(especially cartoons) appearing in the
presentation is acknowledged. Thanks to the
Cartoonists/Photographers, a dull
presentation receives an interesting touch.
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52. Thank you.
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