CLC/AM/R/05

The Central Law College

INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN

INTELLECTUAL PROPERTY LAW

UNIT-I

PROPERTY:

Definition of Property:

The word 'property' is derived from the Latin term 'properietate' and the French
equivalent 'proprius' which means a thing owned.

The concept of property and ownership are very closely related to each other. There can
be no property without ownership and ownership without property. There are two Kinds
of Property namely, Corporeal and Incorporeal Property. The concept of property
occupies an important place human life because it is impossible to live without property.

Morris Ginsberg defines property thus:

“Property may be described as the set of rights and obligations which define the
relations between individuals or groups in respect of their control over material
things (or persons treated as things).”

According to Kigsley Davis, property “consists of the rights and duties of one person or
group (the owner) as against all other persons and groups with respect to some scarce
good. It is thus exclusive, for it sets off what is mine from what is thine; but it is also
social, being rooted in custom and protected by law”.

SALMOND says that the law of property is the law of proprietary rights ‘right in rem’,
the law of proprietary rights ‘in personam’ is distinguished from it as the law of
obligations.

According to this usage, a freehold or leasehold estate in land, or patent or copyright is

included in property but debt or shares or benefit arising out of a contract is not property.

According to Salmond, property has been termed in a variety of senses:

1.Legal Rights- It includes all those rights which a person is entitled by a way of law. All
those material objects which a person owns as per the law are his legal rights. These are
the rights which he can exercise over others. It includes a person’s personal as well as
proprietary rights.

2.Proprietary Rights- It does not include personal rights, It only include proprietary rights.
It means that land, chattels, shares or debts are his property but his right to life and
reputation are not included in his property.

3.CorporealProperty- It only includes those property which real or which can be seen i.e.
land, chattels, etc. It does not include shares or debts as property.
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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN
KINDS OF PROPERTY -

Property is essentially of two kinds Corporeal Property and Incorporeal Property.

Corporeal Property can be further divided into Movable and Immovable Property and real
and personal property. Incorporeal property is of two kinds-in re propria and rights in re
aliena or encumbrances.

Characteristics of Property:

Understood in terms of rights, the following are the characteristics of property rights:

(i) Property can be transferred by its owner by way of sale, exchange or gift.

(ii) The things in which an individual may hold property rights may be both tangible and
intangible. Examples of the latter are copyrights of books or goodwill of a business.

(iii) Property rights do not necessarily imply actual use and enjoyment of the relevant
things by the owner. Law makes a distinction between ownership and possession. The
many kinds of property right may be summarized as possession, use, alteration, using up,
usufruct, income and disposition.

Stages in the Development of the Property System:

The development of the property system has been a subject of speculation for a long time.
Different writers have indicated the stages differently. We may consider some of these
views.

Vinogradoff appears to distinguish four principal phases:

 First, the formation of property in tribal and communal surroundings.

 Second, the application to landed property of the notion of tenure.
 Third, the growth of individual appropriation.
 Fourth, the restrictions which are being imposed upon such appropriation by
collectivist tendencies in modern times.

Hobhouse speaks of three phases in the growth of property system.

 During the first phase, there is little social differentiation, little inequality.
Economic resources are owned in common, or are strictly controlled by the
community.
 During the second phase, wealth increases, great inequalities appear and
individual or collective ownership escapes from community control.
 During the third phase, a conscious attempt is made to diminish inequality and to
restore community control.

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN
This scheme of Hobhouse has some resemblances to the Marxist distinction into three
stages: that of primitive classless society, followed by class differentiation and the growth
of inequality, and the final stage of a classless society at a higher level.

TANGIBLE ASSETS:-

Assets with a physical existence that can be touched and felt are tangible assets. They
are used primarily in the operation of the business to produce products or services. Since
tangible assets are often purchased, they are much more easily valued than intangible
assets.

Tangible assets can be accounted for as either long-term or current assets depending
on their estimated life. These types of assets include buildings, automobiles, physical
inventory, furniture and machines. They depreciate in value over time.

INTANGIBLE ASSETS:-

Intangible assets do not have a physical character. Yet, they are essential to the
continued operation of a business. These types of assets can have either a definite or
indefinite life depending on the type of asset. Examples of intangible assets include
goodwill, intellectual property (patents, copyrights and trademarks), brand names,
customer relationships, contracts and non-compete agreements. Intangible assets have the
ability to appreciate in value.

S.NO TANGIBLE PROERTY INTANGIBLE PROPERTY

1 They have a physical existence They don’t have a physical

existence

2 Tangible assets are depreciated Intangible assets are amortized

3 Are generally much easier to liquidate due to Are not that easy to liquidate and
their physical presence sell in the market.

4 The cost can be easily determined or The cost is much harder to

evaluated determine for Intangible assets

5 Examples: vehicle, plant & machinery, all Examples: Software, logo,

movable and immovable property etc.., patent, Copyright, Trademark,
Design etc..,

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN
THE CONCEPT OF INTELLECTUAL PROPERTY:-

Intellectual property, very broadly, means the legal property which results from
intellectual activity in the industrial, scientific and artistic fields. Countries have laws to
protect intellectual property for two main reasons. One is to give statutory expression to
the moral and economic rights of creators in their creations and such rights of the public
in access to those creations. The second is to promote, as a deliberate act of government
policy, creativity and the dissemination and application of its results and to encourage fair
trading which would contribute to economic and social development.

Generally speaking, IP law aims at safeguarding creators and other producers of

intellectual goods and services by granting them certain time- limited rights to control the
use made of those productions. These rights do not apply to the physical object in which
the creation may be embodied but instead to the intellectual creation as such. IP is
traditionally divided into two branches: “industrial property and copyright”.

Intellectual property rights are a bundle of exclusive rights over creations of the mind,
both artistic and commercial. The former is covered by copyright laws, which protect
creative works such as books, movies, music, paintings, photographs, and software and
gives the copyright holder exclusive right to control reproduction or adaptation of such
works for a certain period of time.

The second category is collectively known as "industrial properties", as they are typically
created and used for industrial or commercial purposes. A patent may be granted for a
new, useful, and non-obvious invention, and gives the patent holder a right to prevent
others from practicing the invention without a license from the inventor for a certain
period of time. A trademark is a distinctive sign which is used to prevent confusion
among products in the marketplace.

An industrial design right protects the form of appearance, style or design of an industrial
object from infringement. A trade secret is an item of non-public information concerning
the commercial practices or proprietary knowledge of a business. Public disclosure of
trade secrets may sometimes be illegal.

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN

IMPORTANT TYPES OF INTELECTUAL PROPERTY:

Patents

A patent is a set of exclusive rights that a sovereign state grants an inventor or their
assignee in exchange for public disclosure of their inventions. Patents are issued for
certain lengths of time that depend on national laws. To receive a patent, an inventor
needs to file a claim that meets the minimum requirements of patentability. These
requirements often include novelty (originality) and non-obviousness. Once a patent is
granted, it prevents others from using, selling, manufacturing or distributing the
invention without express permission.

Copyright:-

A copyright grants the right to copy a work of intellectual property. It also assigns
credit for the IP. Though copyrights were originally conceived as a way for the
government to restrict printing, they have since become a means of protecting authors
rights to profit from their creative endeavors. In addition to written works, copyrights
can be assigned to other forms of IP including songs, films, and works of art. Copyrights
are issued for a finite amount of time, usually between 50 and 100 years from the time of
the death.

Design :-

Industrial Design protection is provided for a shape, configuration, surface pattern,

colour, or line (or a combination of these), which, when applied to a functional article,
produces or increases aesthetics, and improves the visual appearance of the design, be it a
two-dimensional or a three-dimensional article. As per Indian Law, under the Design Act
of 2000, Industrial Design protection is a type of intellectual property right that gives the
exclusive right to make, sell, and use articles that embody the protected design, to
selected people only. Protection rights are provided for a period of 10 years. They can
then be renewed once for an additional period of 5 years. Design protection provides
geographical rights, like Patents and Trademarks do. To obtain Design Protection in
India, the same has to be registered in India. The pre-requisites for a design to qualify for
protection are as follows:

 It should be novel and original

 It should be applicable to a functional article
 It should be visible on a finished article
 It should be non-obvious
 There should be no prior publication or disclosure of the design.

Trademark

A trademark is a distinctive sign or the symbol used by a business organization,

individual or other established legal the entity that is used to differentiate that
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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN
entity’s products and services from others. Trademarks are typically a word, phrase,
design or symbol. Trademarks therefore serve as a badge of origin for a brand in order to
communicate that origin to consumers.

Trade Secret

A trade secret is a design, formula, process or other pieces of intellectual property

that are not known to the general public, which provides an economic advantage over
competitors. Businesses can take steps to protect their trade secrets including requiring
employees to sign nondisclosure agreements or contracts with non-compete clauses.

PROTECTION AGAINST UNFAIR COMPETITION :-

It is generally seen that IPR and competition law have conflicting objectives. The
reason behind this is that IPRs, by ascertaining limits within which competitors may
exercise the exclusive legal rights (monopolies) over their invention, this seems to be
against static market access and level playing fields in competition rules, specifically
restricting the horizontal and vertical limits, or on the abuse of monopoly position.

The word ‘competition’ is used in different sense by IPR and Competition law:-

The connotation of ‘competition’ in both IPR and competition law are different. The
main objective of permitting license in IPR is to encourage competition among the
prospective innovators and concurrently restrict the competition in several ways and after
a specified period, the rights go to the public domain ending the competition. The primary
objective of competition law is to stop the abusive practices in the market, stipulate and
encourage competition in the market and make sure that customers get the proper product
at an affordable price with improved quality.

Unfair Competition:-

As a general rule, any act or practice carried out in the course of industrial or
commercial activities contrary to honest practices constitutes an act of unfair competition;
the decisive criterion being “contrary to honest practices”. In Belgium and Luxembourg
honest practices are sometimes referred to as “honest trade practices”, in Switzerland and
Spain as “the principle of good faith” and in Italy as “professional correctness”.

It is not easy to find a clear-cut and worldwide definition of what constitutes an act
contrary to honest practices. Standards of ‘honesty’ and ‘fairness’ may differ from
country to country to reflect the economic, sociological and moral concepts of a given
society. Therefore, the notion of ‘honesty’ has to be interpreted by the judicial bodies of
the country concerned. Conceptions of honest practices established by international trade
should also be taken into consideration, especially in cases of competition between
organisations in different countries.

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN
A wide interpretation can be given to ‘an act or practice contrary to honest practices’.
For example, an omission to act can also be considered an act of unfair competition. The
WIPO Model Provisions on Protection Against Unfair Competition defines the “failure to
correct or supplement information concerning a product test published in a consumer
magazine, thereby giving a wrong impression of the quality of the product offered on the
market, or failure to give sufficient information concerning the correct operation of a
product or concerning possible side-effects of a product,” as an act of unfair competition.

WIPO also states that failure to comply with honest practices should arise “in the
course of industrial or commercial activities”. This can be broadly understood as being
activities of organisations providing goods or services – particularly the selling or buying
of such products or services – and activities of professionals such as medical doctors or
legal experts.

Protection against unfair competition is an ever-evolving notion that has to adapt to

the evolution of trade, and the development of new principles and obligations for
participants in the business market. Originally designed to protect the ‘honest
businessman’, the scope of protection against unfair competition has now been enlarged
to include protection of the customer. Nowadays laws against unfair competition aim to
ensure fair competition in the interests of all concerned.

Behavior classified as unfair competition

To prevent unfair practice certain actions are limited by law. Article 10 bis of the Paris
Convention classifies unfair business practices into three broad categories:

Acts causing confusion

An act or practice, in the course of industrial or commercial activities, that causes, or

is likely to cause, confusion with respect to another’s enterprise or its activities, in
particular, the products or services offered by such an enterprise constitutes an act of
unfair competition.

Even the likelihood of confusion having a detrimental effect comparable to actual

confusion constitutes an act of unfair competition and this widely enlarges the scope of
protection. For instance, a trademark, whether registered or not, or a product’s appearance
may lead to confusion. Appearance of a product includes packaging, shape or other non-
functional characteristic features of the product.

Acts that are misleading

A misleading act can create a false impression of a competitor’s product or services

leading to the consumer, acting on false information, suffering financial damage.
Misleading acts can take the form of a statement giving incorrect indications or
allegations about an enterprise or its products or services. For example, misleading
statements concerning the manufacturing process of a product may relate to a product’s
safety and create a false impression.

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
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Acts damaging goodwill or reputation

Reducing the distinctive character, appearance, value or the reputation attached to a

product could damage another’s goodwill or reputation. For instance, any act that dilutes
the effect of a trademark is considered unfair as it could destroy the originality and
distinctive character of a trademark. Other acts that could be classified as causing unfair
competition include discrediting another’s enterprise or its activities, industrial or
commercial espionage, and acting unfairly with respect to confidential information such
as breach of contract or breach of confidence.

Under the Paris Convention, Member States are obliged to provide protection against
unfair competition. This obligation is reinforced by Article 2 of the Trade-Related
Aspects of Intellectual Property Rights (TRIPS) that obliges members of the WTO to
comply with the Paris Convention.

TRIPS regarding IPR policy and Competition Law :-

There are generally two approaches that have been adopted to prevent IPR abuse:
compulsory licensing (an involuntary contract between a willing buyer and an unwilling
seller imposed and enforced by the state) and parallel imports (goods brought into a
country without the authorization of the patent, trademark or copyright holders after those
goods were placed legitimately into the market elsewhere).

Preventive Measures

Two methods have been used to prevent the abuse in IPRs:-

 Compulsory licensing (a contract which is involuntary between a willing buyer

and an unwilling seller is enforced by the government.)
 Parallel imports (goods brought into another country once they have been placed
in the market elsewhere without the permission of a patent or copyright holder.)

Under Article 31 of the TRIPS Agreement provides for the grant of compulsory licenses,
under the following situation:-

 In the interest of public health

 In case of national emergency
 Anti-competitive practices
 Secondly, there are many inferences regarding the interlink between competition
policy and IPR that requires to be taken into account. Authorities regulating
competition policy should consider each case relating to IPRs with reason
approach. However abuse of dominance laws could be applied to IPRs and
suitable remedies taken, this will reduce high potential cost regarding reducing
incentives to innovate.

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN

Some of the exclusive rights that a copyright affords an author include the right to
display the work publicly, transmit or display the work by radio or video, to produce and
sell copies of the work and create derivative works for the original.

UNIT – II

COPYRIGHT:

Copyright is a bundle of rights. Every right can be exploiting by individually or wholly.

Owner of copyright may exploit himself or through license for economical benefits.
Copyright holder can claim the lump sum payment as royalty.

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN
Subject matter of copyright:-
Copyright subsist on the original work of author transfer from idea to expression. Such
work consists of following names:-
(a) Original literary, dramatic, musical and artistic work.
(b) Cinematograph film
(c) Sound recording

Above the work are considered as subject matter of copyright. In no case does copyright
protection for an original work of authorship extend to any idea, procedure, process,
system, method of operation, concept, principle, or discovery, regardless of the form in
which it is described, explained, illustrated or embodied in such work.

Copyright does not subsist in :-

(a) Cinematograph film: substantial part of film is an infringement of copyright in any
other work.
(b) Sound recording: any work made with respect to literary, dramatic, musical work,
copyright infringed in other work.

Cinematograph film or sound recording shall not affect the separate copyright in any
work of substantial part of film made.

Copyright as bundle of right and statutory right under copyright (section-14):-

Copyright :-
(a) Author has exclusive right over his work.
(b) Such right may exercise with respect to the Copyright Act,1957 (rights are mentioned
following points):-
(a) Literary, Dramatic or Musical work(not include computer
programme)
(1) Reproduce the work in any material form and storing in any
medium by electronic means.
(2) Issue copy to the public. The copies which are not in circulation
already.
(3) To perform the work to public and communication to public.
(4) To make cinematograph or sound recording from the work.
(5) To translate the work.
(6) To adaptation of the work.
(7) Any work with relevant to adaptation and translation of above all
or any one.
(b) Computer programme:-

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN
(1) Reproduce the work in any material form and storing in any
medium by electronic means.
(2) Issue copy to the public. The copies which are not in circulation
already.
(3) To perform the work to public and communication to public.
(4) To make cinematograph or sound recording from the work.
(5) To translate the work.
(6) To adaptation of the work.
(7) Any work with relevant to adaptation and translation of above all
or any one.
(8) To sell or give for commercial rental or offer for sale or
commercial rental any copy of the computer programme. The
commercial rental does not include, programme is not essential
object of rental.
(c) Artistic work :-
(1) Reproduce the work in any material form and storing in any
medium by electronic means.
(a) Depiction in three- dimensions to two-dimension work.
(b) Depiction in two- dimensions to three-dimension work.
(2) Issue copy to the public. The copies which are not in circulation
already.
(3) To perform the work to public and communication to public.
(4) To make cinematograph or sound recording from the work.
(5) To adaptation of the work.
(6) Any work with relevant to adaptation and translation of above all
or any one.
(d) Cinematograph film:-
(1) To make a copy of film and including following particulars:-
(a) A photograph of any image forming part thereof
(b) Storing of it in any medium by electronic or other means.
(2) To sell or give on commercial rental or offer for sale or for such
rental, any copy of the film,
(3) To sell or give hire or offer for sale or hire of whether such copy
has been sold or given on hire on earlier occasions.
(4) Communicate the film to public.
(e) Sound Recording :-
(1) To make any other sound recording embodying it storing of it
any medium by electronic or other means.
(2) To sell or give on commercial rental or offer for sale or for such
rental, any copy of the film and Communicate the film to public.

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
PREPARED BY Mr. G.BASKARAN
Author and Owner ship of copyright :-
Author is the person who has created copyright. Ownership flows from authorship.
Authorship and ownership are two sides of same came. Author has the moral right over
the copyright and moral rights. Owner can holds the peculiar rights and economic rights.
Author may be the owner of work. At the same time, ownership may hold by other
person.

As per the copyright legislation, author is the first owner of copyright. Ownership has defined
as bundle of rights. Each right may separate from whole right. Below mentioned table clearly
defined the nature of work and name of the person who has done it :-

S.NO NATURE OF WORK NAME OF OWNER

1 Literary or dramatic work Author

2 Musical Composer

3 Artistic Artist

4 Photograph The person who takes

photographs

5 Cinematograph or sound recording Producer

6 Computer generator work Person who crates it

Work done in the course of employment :-

Any author is appointed for employment with regard to Newspaper, Magazine as
similar periodical. There is no agreement between the proprietor of above company and
employee. Author can claim as the first owner. Otherwise, employer or proprietor
treated as first owner of all works done by author. V.T.Thomas and others-Vs- Malaala
manorama co LTd. Artist had made the carton in the course of employment. But, he
claim that, it was made before joining the work. Actually, It is done in the course of
employment. The court held that, employer considered is owner of artistic work.
Ex : Teacher written a book. Teacher was appointed for teach not for write a book.
Author is teacher.

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
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In absence of agreement to contrary, question papers were set by question setter. He is
real owner of his work.

Contract of service or apprenticeship :

Any employee has engaged to creation of certain intellectual property for valuable
consideration. In the course of employment, he created some intellectual property with
the absence of agreement to contrary between the employer and employee of ownership
of creation. Employer will be treated as first owner. Above situation may applicable to
the photographer, engraver, cinematography or any government work or any public
undertaking.

The person who has deliver his address or speech at public place. He is owner of his
delivered speech. Unless, the person appointed by someone or on behalf of other person.
Other person will be treated as first owner under copyright.

Vicco Laboratories –vs- Art Commercia Advertising Pvt. LTd (2001) 7 S.C.C.81.
The petitioner had employed the respondent no1to 4 as their advertising agents
through the petitioner sister concern M/S Modern Advertising Agency” and make a
sponsor in doordarshan serial for popularize. The serial name is “Yeh jo hai zindagi” and
containing the 52 episoides. But, petitioner company sponsored for 22 episodes only. So,
Doordarhsan telecast the serial title with advertisement for above said 22 episodes.
Petitioner claim that, whole episodes made by their money. Supreme court held that, few
conditions :
 As the agent of petitioner
 In the course of their employment with the petitioner.
 Valuable considerations paid by them.

Above said conditions not fulfilled by petitioner. So, petitioner can’t claim the whole
right over the serial and producer real owner of serial. Petitioner considered as sponsor of
serial.

MORAL RIGHTS
This special right works after the assignment either wholly or partially of the copyright :-
 Author can claim authorship of his work.
 Author can claim the damages or restrain with respect to distortion, mutilation,
modification, or other act in relation to the said work affect the honor or
reputation of author.
Author shall not have right to claim damage or restrain in respect of adaptation of
computer programme.

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
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Terms of copyright :-

SECTIONS NATURE OF COPYRIGHT Calendar year-first

published

22 Literary, Dramatic, Musical, Artistic work (Joint Life of Author + 60

author : who died at last) years

23 Anonymous and pseudonymous work (other than 60 years

photograph)

23(3)(1) (c) Anonymous and pseudonymous work (joint Authour life

author : who disclose or identify last) time +60 years

26 Cinematographic film 60 years

27 Sound recording 60 years

28 Government work 60 years

28 A Public undertaking 60 years

29 International organization 60 years

37(2) Broadcast reproduction right 25 years

38(2) Performers right 50 years

Assignment of copyright :-

Section 18 of copyright Act :

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
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Copyright is the bundle of right. It can be divided into the different parts and transfer as
right. Owner of copyright has right to assign the existing work or prospective future work.
Usually, future work shall take effect from the date of existence.

Assignment will not work until it specified by mode of exploitation or medium.

The person who is the author of literary or musical work added their work in the
cinematography film. Author has right to receive the equal share on royalty. Any contract
opposed with restriction, Legal heirs and copyright society can communicate with the
public.

The assignee of a copyright is entitled to rights vested with copyright. Assignee can claim
right which rights assigned by assignor. Once, assignor assigned his right to assignee.
Assignee can enforce such right against the assignor. “Assignee” includes the person
who is receive the rights from the assignor. Assignment is future prospective means, legal
representative also treated as assignee.

Mode of assignment (section 19 of Copyright Act,1957) :-

The term of assignment means, the giving authority by the owner of property or a right to
make use of property or exercise the right. An equitable assignment is created by implied
or expressed.

Conditions for Assignment :-

 Assignment shall be writing and signed by assignor.

 Assignment details : duration, territory applicable, what right assigned.
 A copyright assigned to copyright society. Even though, It is assigned again with
someone. Author of work is a member shall be treated as void.
 Any work has been added with cinematograph film. Author of such work can
claim the equal share of royalties and consideration.

Below mentioned assignment terms applicable to the assignment agreement take place
after copyright Amendment Act-1994

 Specify the royalty or lump sum consideration for assignment of copyright.

 Assignment shall be subject to revision, extension and termination. But, it can be
take place with mutual consent of assignor and assignee.
 Assignee is not ready to exercise his right within one year of assignment. Such
assignment considered as lapsed. Even, It can be decided by specific terms of
contract.
 Assignment does not contain duration and territorial clause in agreement. It
assumed as 5 years with extendable within the territorial of India.

Disputes with respect to assignment of copyright:-

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INTELLECTUAL PROPERTY LAW (FA10C) LECTURE NOTES
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 Appellate board is authority to decide the case with regard to the assignment
of copyright. An assignee not exercises his assignment. Assignor may
approach Appellate Board for holding necessary inquiry.
 Any aggrieved party may give complaint with regard to recovery of any
royalty or any other issues. Appellate board may conduct an inquiry and pass
necessary order. This authority shall pass the final order within period of 6
months from the date of complaint made.
 Appellate Board does not pass any order on revocation. Unless, Terms of
Assignment are affects the assignor and assignor as the author.
 Any litigation is pending before Appellate Board with regard to the revocation
of assignment. Decision shall be made to implementation of term of
assignment and pay the consideration for assignment.
 Revocation assignment order shall not make within the period of 5 years from
the date of assignment made.

Transmission of copyright in manuscript by testamentary disposition :-

Owner of copyright may bequest his work to legal heirs. Such work not published
before the death of testator. Testator is the owner of his work. Unless, any will or codicil
made by testator. Owner of copyright can transfer his right through the manuscript of a
literary, dramatic, or musical work or artistic work

Right of author to relinquish copyright :-

The author may relinquish his right by expressing in written form to registrar or
by public notice. The relinquishment will not affects the rights already subsist in favour
others.

The registrar of copyright shall publish the notice given by author of copyright within
14 days of notice. It shall be done with prescribed forms. After the publication, the work
will remain not less than 3 years in public domain.

License under the copyright

License may be exclusive or inclusive. Exclusive license shall be given by author
of work. Copyright owner license his right to exclusion of all other persons including the
owner.

The owner of copyright may grant any interest by license. It shall be done in medium
of writing or through his authorized agent. License can transfer for existing work or
future work. But, future work will get effect only with comes in to existence and legal
representative also receive benefit of license in future work(section :30).

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TYPES OF LICENSES UNDER THE COPYRIGHT ACT, 1957 AS AMENDED IN
2012

Chapter IV of the Copyright Act discusses licensing of copyrighted works. This chapter
discusses seven different types of licenses issued by the Copyright Board:

a) Compulsory licenses for works withheld from the public:

According to this provision, any person may approach the copyright board, for
issuance of a compulsory license to publish a work that is withheld from the public by the
copyright owner. However, before approaching the Copyright Board, the complainant
should have approached the copyright owner first for a license to republish or perform the
work and the copyright owner should have unreasonably rejected the request of the
complainant.

b) Compulsory licenses for unpublished works of unknown authors:

In case of unpublished works of unknown or dead authors, any person may apply to
the Copyright Board for a license to publish or communicate to the public such works or
translations thereof. However, before making such an application, the applicant is
required by law, to publish his proposal to do so in a national newspaper.

c) Compulsory licenses for the benefit of the disabled:

Any person or non-profit organization working for the benefit of the disabled may
apply to the Copyright Board for a compulsory license to publish any work in a format
suitable for their accessibility.

d) Statutory licenses for Cover Version:

Section 31C of the Copyright Act provides for the grant of statutory licenses for
making cover versions of any sound recordings. This section specifically requires the
Copyright Board to fix the minimum amount of royalty to be paid for the creation of such
a version.

e) Statutory licenses for Broadcasting literary, musical works and sound recordings:
This license is issued by the Copyright Board in favour of any broadcasting
organization desirous of broadcasting to the public any literary, musical work or sound
recording which is already published by the copyright holder. Although the Copyright
Board is authorized to determine the royalties payable under this license, the Board is yet
to convene and determine these royalties.

f) License to produce and publish translations:

This license issued by the Copyright Board permits the applicant, after the applicant
pays a determined royalty to produce and publish a translation of literary or dramatic
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work, after seven years of publication of said work. It is pertinent to note here, that this
licensing is not applicable to cinematographic films and sound recordings.

g) License to reproduce and publish works for limited purposes:

The Copyright Board may issue licenses to publish a work in India if the editions
of such literary, scientific or artistic works are not made available in India. The Copyright
Board, in case of such applications, may issue the license after determining the royalty to
be paid to the copyright holder.

INFRINGEMENT

In dealing with copyright, we should bear in the mind that copyright does not protect
novelty but only originality. Copyright protects only the expression and not the idea.
Therefore, if it is the only method of expressing the work, it cannot be protected.

The key factors required for initiating any infringement case are:

 Prove ownership of Copyright

 Infringer has copied (Substantially Similar)

In the case of Super Cassette Industries Vs Nodules Co. Ltd ., the defendant played
cassette in Hotel amounts to copyright infringement. This was clearly held to be act of
infringement of author’s right over copyright. Copying can, therefore, be proved by
inference. It can be inferred that the defendant has in fact copied the plaintiff’s work from
the fact that the defendant had access to the plaintiff’s work and from the similarities
between his work and that of the plaintiff’s. The rationale behind this is that given the
sufficient opportunity that the defendant had to copy the plaintiff’s work in addition to the
striking similarity between the two works, the evidence in hand is indicative of copyright
infringement.

In the case of Roma Mitra Vs State of Bihar, the Plaintiff, a student gave the work to
the guide. The guide published the work as her own. The published article was
substantially similar and therefore, amounted to copyright infringement.

REMEDIES

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CIVIL REMEDIES : The most importance civil remedy is the grant of interlocutory
injunction since most actions start with an application for some interlocutory relief and in
most cases the matter never goes beyond the interlocutory stage. The other civil remedies
include damages - actual and conversion; attorney’s fees, rendition of accounts of profits
and delivery up. 8.1.1

INTERLOCUTORY INJUCTIONS

The principles on which interlocutory injunctions should be granted were discussed in

detail in the English case of American Cyanamid v Ethicon Ltd31. [1975] AC 368
(HL(E)]. After this case, it was believed that the classic requirements for the grant of
interim injunction are:  Prima facie case  Balance of Convenience; and  Irreparable
injury

PECUNIARY REMEDIES

Under the Copyright laws of some countries like the United Kingdom, it is essential for
the plaintiff to elect between damages and an account of profits

Under Sections 55 and 58 of the Indian Copyright Act, 1957, the plaintiff can seek the
following three remedies, namely

 account of profits

 compensatory damages and

 conversion damages which are assessed on the basis of value of the article converted.

ANTON PILLOR ORDER

The Anton Piller Order derives its name from a Court of Appeal decision in Anton Piller
AG vs Manufacturing Processes. An Anton Piller Order has the following elements:
 An injunction restraining the defendant from dealing in the infringing goods or
destroying, them;

 An order that the plaintiffs solicitors be permitted to enter the premises of the
defendants, search the same and take goods in their safe custody; and

 An order that defendant be directed to disclose the names and addresses of suppliers and
customers and also to file an affidavit will a specified time giving this information.

MAREVA INJUNCTION

Mareva Injunction is an order which temporarily freezes assets of a defendant thus

preventing the defendant from frustrating the judgment by disposal of such assets.

NORWICH PHARMACAL ORDERS These orders are made to ascertain information

from third parties to enable the plaintiff or the defendant to produce evidence before the
courts of law.
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CRIMINAL REMEDIES

Criminal remedy includes imprisonment of the infringer and the infringing copies seized.
Besides one can get ANTON PILLER order from court, which means that court grants an
ex-parte order if it feels that the case is balanced in favour of copyright holder. The owner
can claim damages from the infringer. The author can get an order for search of
defendant’s premises, if there is clear evidence to show the presence of infringing copies
in the premises of infringer. The infringer is be liable for imprisonment ranging 6 months
to 3 years and/or fine of Rs.50,000/- to Rs. 2 lakhs. For the first time, the punishment
would be for a period of 6 months to 3 years and/or Rs.25,000 to 2 lakhs and for the
second Time it would be for 1 to3 years and/or Rs.50,000 to 2 lakhs. And for
infringement on computer Program, the punishment may vary from 7 days up to 3 years
and/or Rs.50,000 – 2 lakhs.

ADMINISTRATIVE REMEDIES

An application can be made by the owner of copyright in any work or by his duly
authorized agent, to the Registrar of Copyrights to ban the import of infringing copies
into India and the delivery of infringing copies of copyrighted article which were earlier
confiscated from infringer to the owner of the copyright.

UNIT-III

PATENT:

The Patents Act 1970, along with the Patents Rules 1972, came into force on 20th
April 1972, replacing the Indian Patents and Designs Act 1911. The Patents Act was
largely based on the recommendations of the Ayyangar Committee Report headed by
Justice N. Rajagopala Ayyangar. One of the recommendations was the allowance of only

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process patents with regard to inventions relating to drugs, medicines, food and
chemicals.

Later, India became signatory to many international arrangements with an

objective of strengthening its patent law and coming in league with the modern world.
One of the significant steps towards achieving this objective was becoming the member
of the Trade Related Intellectual Property Rights (TRIPS) system.

Significantly, India also became signatory of the Paris Convention and the Patent
Cooperation Treaty on 7th December 1998 and thereafter signed the Budapest Treaty on
17th December 2001.

History:

Being a signatory to TRIPS, India was under a contractual obligation to amend its
Patents Act to comply with its provisions. India had to meet the first set of requirements
on 1st January 1995 to give a pipeline protection till the country starts granting product
patent.

On 26th March, 1999, Patents (Amendment) Act, 1999 came into force
retrospective effect from 1st January, 1995. The main amendments are as follows:

Section 5(2) was introduced which provides for filing of applications for patent in
the field of drugs, medicines and agro-chemicals. These applications were kept pending
in the mailbox or black box. This mailbox was to be opened on 1st January 2005.

Provision of Exclusive Marketing Rights (EMR) was brought in by way of Chapter

IV A. Thus, pipeline protection was provided for pharmaceutical and agro-chemical
manufacturers whose applications for product were lying in black box.

Section 39 was omitted from the Act, thereby enabling the Indian residents to file
the applications for in an outside India simultaneously.

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Chapter II (A) was inserted in the Indian Patent Rules dealing with International
Applications under PCT.

Current Position:

The present Indian position in respect of patent law is governed by the provisions
of the Patents Act, 1970 as amended by the Patents (Amendment) Act, 2005 (hereinafter
referred to as the Act) and Patents Acts Rules, 2006 (hereinafter referred to as the Rules)

The Head Patent Office is located at Kolkata and its branch offices are located at
Delhi, Mumbai and Chennai. Patent system in India is administered by the Controller
General of Patents, Designs, Trademarks and Geographical Indications. Each office has
its own territorial jurisdiction for receiving patent applications and is empowered to deal
with all sections of Patent Act.

The jurisdiction for filing the patent application depends upon:

 Indian applicant(s): determined according to place of residence, place of business

of the applicant or where the invention actually originated.
 Foreign applicant(s): determined by the address for service in India.

Inventions:-

The Act provides for the definition of the invention, which is now compliant with
the provisions of TRIPS. The criteria for patentability of an invention are novelty,
inventive step and industrial applicability.

Section 2(1)(j) of the Patent Act, 2005, defines the "invention" as a new product or
as process involving an inventive step and capable of industrial application.

Under the Act "New invention" is defined under section 2(1)(l) of the Patents Act

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"New invention" means any invention or technology which has not been
anticipated by publication in any document or used in the country or elsewhere in the
world before the date of filing of patent application with complete specification, i.e., the
subject matter has not fallen in public domain or that it does not form part of the state of
the art.

Thus, according to this definition of new invention, Act talks of absolute novelty,
i.e. the invention should have neither been used anywhere in the world nor published in
any part of the world. However, the later sections of the act for the purpose of
anticipation and opposition proceedings deal with the relative novelty i.e. not used in
India and not published in any part of the world. Further, entire Act refers to the word
invention and not new invention. Therefore, for all purposes relative novelty is the
criterion.

Exceptions To The Novelty Rule:

There are a few exceptions where the rule of novelty is not applicable. These cases
are as follows:

 Subject matter published without the consent of the inventor.

 The invention was published in consequence of the display in an exhibition
notified by the Government or reading the paper before a Learned Society. Grace
period of 12 months is given in such cases to file the patent application.
 Previous communication to Government of India.
 Public working for reasonable trials.

"Inventive Step" is defined under Section 2 (1) (ja) of the "Act". Prior to the
Amendment of 2005, inventive step meant a feature that makes the invention not
obvious to a person skilled in the art. The new Act of 2005 defined inventive step more
precisely.

"Inventive step means a feature of an invention that involves technical advance as

compare to the existing knowledge or having economic significance or both and that
makes the invention not obvious to a person skilled in the art."

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Thus, in addition to the non-obviousness criterion two other conditions were added
i.e. it should also involve technical advancement as compared to the existing knowledge
or having economic significance, or both, in addition to being non-obvious.

The terms “technical advance” and “economic significance” have not been defined
clearly and are unambiguous. It cannot be left to presumption “economic significance” is
synonymous to the phrase “capable of industrial application” in section 2 (1)(ac) or in
footnote 5 to Article 27. The meaning of the phrase “technical advance” cannot be
presumed either, in absence of a specific definition or reference.

The Patents Act 1970 had a very limited scope of protection wherein the essential
elements of invention were new, useful and manner of manufacture. Even though
manufacture was not defined in the old Act, the Patent Office established the practice of
interpreting manufacture as process resulting in a tangible product. The landmark
decision of Calcutta High Court on the process of production of Bursitis virus containing
vaccine (Dimminaco AG vs Controller of Patents, 2002) changed the practice and now
the definition of invention is interpreted keeping in mind the term ‘industrial application’
as under section 2(1)(j).

The Act defines ‘capable of industrial application’ in relation to an invention as

capable of being made or used in an industry.

An invention is capable of industrial application if it satisfies the three conditions

cumulatively:

 can be made;
 can be used in at least one field of activity;
 can be reproduced with the same characteristics as many as necessary.

Inventions not applicable :-

Section 3 of the Act, deals with non patentable inventions.

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(a) Inventions which are frivolous or contrary to well established natural laws.

For example: inventions relating to perpetual motion alleged to be giving output

without any input is not patentable as it is contrary to natural law. Merely making in one
piece, articles, previously made in two or more pieces is frivolous. Mere usefulness is
not sufficient (Indian Vacuum Brake co. Ltd vs. Laurd (AUR 1962 CAK 152).

(b) Inventions whose primary or intended use or commercial exploitation could be contrary
to public order or morality (such as something against accepted norms of a culture in a
society), or which causes serious prejudice to human, animal or plant life or health or to
the environment.

For example terminator technology which involves inserting a gene sequence in a

seed to stop germination or growing recombinant plants leading to disappearance of
butterflies.

(c) The mere discovery of a scientific principle or the formulation of an abstract theory or
discovery of any living thing or non-living substances occurring in nature. However
isolation of living thing or non-living substances is patentable as it involves human
technical intervention.
(d) Mere discovery of a new form of a known substance which does not result in the
enhancement of the known efficacy of that substance, or mere discovery of any new
property, or new use of a known substance, or mere use of known process, machine, or
apparatus unless such known process results in a new product or employs at least one
new reactant.

Explanation to Section 3 (d): "Salts, esters, ethers, polymorphs, metabolites, pure

form, particle size, isomers, mixtures of isomers, complexes, combinations, and other
derivatives of known substance shall be considered to be the same substance, unless they
differ significantly in properties with regard to efficacy.

It may be seen from section 3(d) that new use of a known substance is not
permissible. It means that claims for second medical use are not allowed in India.

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Further, derivatives of known substances are considered to be the same substance unless
they "differ significantly in properties with regard to efficacy".

The term "efficacy" under section 3 (d) has been held vague, as it does not indicate
the kind of efficacy required under the provision. It is also ambiguous because it is
unclear whether the phrase "enhancement of known efficacy" is the same as the phrase
"technical advance" under section 2 (1), (ja).

However, the explanation provided to section 3 (d) does not rule out the grant of
patent to derivatives, complexes, combinations, isomers and so on, if enhancement of its
efficacy as a consequence of its properties can be shown.

(e) Substances obtained by mere admixture such as physical admixture are not patentable
under the Act.

However, compositions consisting of combination preparations comprising of two

or more known active ingredients are patentable if "synergism" or super additive effect is
shown clearly, for example pharmaceutical compositions or any other chemical
compositions

(f) The mere arrangement or re-arrangement or duplication of known devices each

functioning independently of one another in a known way.
(g) Abolished
(h) Methods of agriculture or horticulture.

For example a method of producing a new form of a known plant even if it

involved a modification of the conditions under which natural phenomena would pursue
their inevitable course is not patentable. (N.V. Philips Gloeiammpenfabrieken’s
Application 71 RFC 192).

(i) Processes for medical, surgical, curative, prophylactic, diagnostic, therapeutic, or other
treatment of human beings or animals or plants that would render them free of disease
or to increase their economic value.

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In United Kingdom, a method for treating an old animal with an enzyme two hours
prior to butchering was allowed to be patented as the treatment increased the economic
value of the animal by making the meat soft (Swift Application RPC 37, 1962). Such a
process would not be patentable under the Indian Patent system.

The words ‘diagnostic & therapeutic’ has to be read as diagnosis of diseases in

human beings and animals. Accordingly, method of screening antibodies for a specific
activity is permissible.

(j) Plants and animals in whole or any part thereof other than microorganisms but including
seeds, varieties and species and essentially biological processes for production or
propagation of plants and animals. For example clones and new variety of plants are not
patentable. But process/method of preparing genetically modified organisms is
patentable subject matter.
(k) Computer program per se, a mathematical method or a business method or algorithms.
(l) Literary, dramatic, musical or artistic work or any other aesthetic creations including
cinematographic works and television productions are not patentable as they are
covered under the copyrights, design and entertainment laws.
(m) Scheme/rule/method of performing a mental act or method of playing a game.
(n) Presentation of information.

Unfortunately neither the Act nor the Rules defines a mathematical method, or a
business method or a computer program per se or algorithm. Under such circumstances,
one has to rely on the practices built up under Articles 52(1), 52(2) and 52(3) of the
EPC, where similar provisions corresponding to the Indian Act under section 3(k), 3(m),
and 3(n) exists.

A program producing technical effect or program having technical character is

permissible in EPO as it is not program per se. Accordingly, software related inventions
may be patentable if accompanied by a novel and non-obvious technical effect which
adds to the art of technology.

(o) Topography of integrated circuits.

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(p) An invention falling within the scope of traditional knowledge such as the use of herbal
medicines.

Inventions relating to atomic energy are not patentable under section 4. Such
applications are referred to the Department of Atomic Energy. The decision of the
Department of Atomic Energy is final and no appeal lies to the decisions of the
Department of Atomic Energy (section : 4).

With the amendments effected patents are now granted for inventions relating to
both product and process. The invention must relate to a machine, article or substance
capable of industrial application, or the process of manufacture of an article. A patent
may also be obtained for an improvement of an article or of a process of manufacture.
Further, with regard to medicine or drug patent is now granted for the product and
process of manufacturing the substance.

Registration of Assignment:

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Registration of assignment etc. is compulsory under the Act, though no time limit
has been specified for registration of assignment. However, the registration dates back to
the date of execution of the instrument. Unless licensee or assignee is entered in the
register of patents they cannot file a suit for infringement.

The license Agreement has to be registered under section 69 of the Patents Act at
the appropriate Patent Office by filing prescribed form with the prescribed fee. After it is
registered, the licensee name is entered in the Register of Patents.

Commercial Working Of Patents:

Section 146(2) provides every patentee and licensee to furnish to the Controller
periodical statement of the extent to which the patented invention has been worked on
commercial basis in India. Such statements should be furnished in the manner prescribed
under Rule 131.

Therefore, filing a statement regarding the working of patented invention on a

commercial scale in India is a mandatory requirement. Failure or refusal by the patentee
or licensee calls for penalty provisions. Further, submission of false information is
punishable by imprisonment up to six months or fine or both. Most important is that
failure to work the invention in India is attracted under section 84(c) for the grant of
compulsory license.

Importation of the patented article/product does not amount to working of the

Patent in India. Any working of the patent for the production of the patented article or
the use of the patent process in the production of any articles for sale to the public would
appear to amount to working on a commercial scale. The working on a commercial scale
is that the demand for the particular article in India is met at a reasonable price.

If the patentee has granted license to company ‘A’ in Japan to manufacture the
patented product in Japan and export and sell them to India, it does not amount to
working the patented product in India. Company ‘A’ is therefore not required to submit
information on prescribed form. Accordingly, the patentee has to submit the information.

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If the patentee provides technical assistance for manufacturing the patented product
in India to an Indian based affiliate duly licensed to manufacture the patented product in
India, the Indian based affiliate can file Form 27.

If the patentee submits the form 27 without mentioning that a license has been
issued to the Indian based affiliate, then the patentee is attracted by penalty provisions
under section 122(2) of The Patents Act, as the information furnished in Form 27 is
knowingly false. The co-owners can submit form either jointly or separately.

Thus either the patentee or the licensee may submit information of commercial
working of the patent. If there is no licensee in India, the patentee will be punished if he
fails to submit the information or furnishes false information. In case there is a licensee
in India and he is authorized by the patentee to furnish the information to the patent
office and if he fails to furnish such information or submits false information, he is liable
to be punished under section 122(2).

All or part of the information submitted in a statement of working may be

published by the Controller. A statement of working would remain confidential till such
time and if at all it is published by the Controller.

Patent Holder:-

A Patent holder invents a procedure or product whose exclusive Rights and Obligations
of Patentee are given to the Patent holder as an inspiring force for investment in creative
or inventive exercises and for the spread of such exercises in public at large for learning.
However, these exclusive Rights and Obligations of Patentee are not unending and can
revocation of such rights can be done in certain exceptional circumstances where is need
to balance the interest of the Patent holders and with others.

There are a number of limitations and exceptions to these Rights and Obligations of
Patentee which are as follows:

 Research or experimental utilization;

 usage on outdoor vessels;

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 receiving administrative authorization from various professionals;
 reduction of Patent rights and similar imports;
 Compulsory relating and acquisition or use of inventions by the Governments.

Even if there are limitations or exceptions, yet term to hold a Patent remains unaltered.
Thus, a Patent is a set of exclusive Rights and Obligations that is granted by a state to an
inventor of the invention or his/her assignee for a fixed time period in exchange for the
disclosure of the invention of the inventor. It refers to a grant of some advantage,
property, or expert made by the government or the sovereign of the country to as a
minimum of one person. The way or procedure according to which it is done is known as
Patent. An invention of the inventor is the creation of intelligence applied to labor and
capital and for the production of something useful and new. Such creation or invention
turns into the restrictive property of the inventor on the grant of Patent.

Benefits conferred upon the Patentee of a Patent:-

In India, the Patent law identifies the exclusive Rights and Obligations of Patentee to gain
certain commercial advantages out of the invention invented by him/her. Such Rights and
Obligations of Patentee are provided to boost the inventor to invest in the new innovative
offices, and should also realize that the developments done by them will be ensured and
protected by the law and hence no other person has the capacity to make a duplicate of
their inventions or creations.

Such protection is provided for a certain time period (for the most part, 20 years) amongst
which the inventor will have certain selective Rights and Obligations of Patentee as per
the Patent Act, 1970. When a patent comes in all reality, certain exploitative Rights and
Obligations of Patentee are presented as an incentive for the revelation of the creation or
invention of the Patentee to people at large.

These controlling Rights and Obligations of Patentee are, generally, for a time period
of 20 years and are also assignable, thus enabling the Patentee of the Patent to get a
license for the invention and maximize the profit associated with such an invention.

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As per Article 284 of the TRIPS (Trade-Related Aspects of Intellectual Property
Rights), Agreement provides the following Rights and Obligations of Patentee:

A registered Patent should confer the following exclusive Rights on its owner:

where the Patent’s subject matter is a product, to prevent any third parties, which is also
not having the consent of the owner, from the following acts of using, making, offering
for selling, sale, or importing for these purposes such product of the owner;

where the Patent’s subject matter is a process, to prevent any third parties, which is also
not having the consent of the owner, from the following acts of using, making, offering
for selling, sale, or importing for these purposes at least the product that is obtained
directly by such a process.

The owner of the Patent should also have the right to transfer by succession or assign the
Patent and to conclude the licensing contracts.

Rights of Patentee as per the Patent Act, 1970:-

A grant of Patent in India gives the Patentee the exclusive model to utilize or make the
patented invention or utilize the patented procedure related to the invention. Certain
Rights and Obligations of Patentee are enshrined under the Patent Act, 1970. The various
kinds of Rights of Patentee are as follows:

Where the grant of Patent is done for a product, the exclusive right to prevent any third
party, who is no having his/her consent, from any act of offering, using, making for sale,
importing or exporting for such products in the territory of India;

Where the subject matter associated with the Patent is a process, the exclusive right to
prevent any third party, who is no having his/her consent, from any act of offering, using,
making for sale, importing or exporting for such products that are directly obtained from
the process in the territory of India;

Moreover, the product produced by the Patentee should not be such that it cannot be
patented in India as per Section 48 of the Patent Act, 1970.

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The elaborated Rights of Patentee in India are as follows:

Rights of Patentee

Right to exploit the Patent

When the new invention is a product, the Patentee has the exclusive rights to use, make,
import, or sell for these purposes related to an invention in India. On the other hand, when
the invention of the inventor is a procedure or process of manufacturing of any article or
substance, the right to exploit means the exclusive right exercise or use the procedure or
method in the territory of India.

Right to Grant License

The Patentee of a Patent is given the right to grant license or transfer rights or enter into
some arrangement for some consideration. The assignment or license to be valid and
legitimate it is required to be in writing and should be registered with the Controller of
Patent. Unless a document of assignment of a Patent is not registered, it is not admitted as
evidence of title of the Patent, and such a rule is applicable to the assignee, not the
assignor. (As per Section 69(5) of the Patent Act, 1970)

Right to Surrender

By giving notice in the prescribed manner, the Patentee of a Patent has the right to
surrender a Patent at any time and at his/her own discretion. The advertisement for such
an offer of surrender is required to be done in the Journal. The publication is done to give
an opportunity to the people to oppose the offer of surrender of the Patentee. This is done
when the Patentee apprehends his/her non-performance of the Patent in the future and
upon which he/she decides to surrender the Patent.

Right to sue for Infringement

The Patentee has the right to sue for Infringement of Patent in District Court has the
jurisdiction to try the suit.

Right to Use and Enjoy Patent

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The Patentee of the Patent has the exclusive right to exercise, make, utilize, convey or
offer or the patented substance or article in India or to practice or utilize or the process or
techniques associated with the invention. Such rights can be exercised either by the
Patentee himself/herself or by his/her licensees or agents.

Obligations of Patentee as per the Patent Act, 1970:-

Once a Patent is granted to a Patentee, there are certain Rights and Obligations of
Patentee. The Obligations of Patentee are as follows:

Obligations of Patentee

Duty to Disclose

Sec 8 of the Patent Act, 1970[1], accomplishes the obligation to disclose of the Patentee.
Section 8(1) of the Patent Act, 1970, tells that the Patentee has an obligation to disclose
all required data related to the remote uses of comparative or same invention documented
by him/her or through him/her or through someone by him/her at the time of applying or
within 6 months of applying.

The Patentee of a Patent is required to record an announcement of all the listed

particulars viewing the applications and, in addition to the above, an endeavor to disclose
all the points of interest of any subsequent applications that might be documented at the
future stages.

Section 8(2) of the Patent Act, 1970, puts an obligation on the Patentee to provide all
the data required by the Controller of Patent with regards to the relating of any remote
applications at whatever point demand is made by the Controller of Patents within a time
period of 6 months of such a demand by the Controller of Patent. The first part of the
obligation of Patentee begins when a man records an application of Patent. On the other
hand, the second part begins after a demand is made by the Controller of Patents under
the Patents Act, 1970.

Duty to Request for Examination

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Not like other Intellectual Property Rights, the Registration process of Registration of
Patent does not accommodate any kind of programmed examination of the grant of Patent
application. In the procedure above mentioned, as indicated by Section 11(B) of the
Patents Act, 1970, the obligation is thrown on the Patentee himself/herself to ask for the
Controller of Patents to look at the growth or development connected for Patent.

Duty to Respond to Objections

The Controller of Patent before accepting the examination request passes it to the
analyst who looks at the growth and gives a report to the Controller of Patent known as
the First Examination Report (FER). On certain cases there may be some protests which
will be brought up in the First Examination Report, it is the right of Patentee to reply to
such opposition complaints and consent to the corresponding within a time period of a
year of the issuance of the First Examination Report (FER) falling which the application
of the Patentee will be considered to be surrendered by the Controller of Patent.

Duty to clear all Objections

It is the obligation of the owner of the Patent to respond to the raised objections as
well as to clear and remove each one of the raised objections and, in addition, certain
oppositions raised against his/her invention. In the event that the Controller of Patent has
not fulfilled he/she, it may also require a meeting also. Furthermore, it is the obligation of
the owner of Patent to go for a consultation and clear all the objections and, in addition,
oppositions, if are raised any, against the invention of the inventor.

Duty to Pay Statutory Fees

The Patentee has an obligation to pay all the statutory expenses required to get a grant
of a Patent in the process of Registration without failure generally, his/her application for
the grant of Patent won’t be managed. Sec 142 of the Patent Act, 1970, accomplishes the
provisions recognized with payment of charges and, in addition, the consequences for
non-payment of such prescribed fees.

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After this process is imitated to and the Patentee of Patent clears every one of the
restrictions and protests raised against his/her invention, if the Controller of Patent is
fulfilled, he/she will grant a Patent to the invention and publishes it in the Journal, or
generally, the Controller rejects such a Patent.

Compulsory License:

Sections 84 to 94 of the Patents Act relate to compulsory licensing of patented

products. A person may apply for a compulsory license three years after the grant of a
patent on the following grounds:

• the reasonable requirements of the public have not been satisfied, or

• patented invention is not available at a reasonable affordable price or
• the patented invention is not worked in India.

Compulsory license may also be granted on notification by Central Government on

exceptional circumstances related to public interest namely national emergency, extreme
urgency example scarcity of petroleum products, earthquake etc, and public non-
commercial use

The Controller will notify and grant licenses without any consideration as in other
cases in respect of patents on such terms and conditions that the article is available to the
public at lowest price.

The Compulsory license provisions is aimed at curbing the practice of meeting the
demand for patented articles solely by importation from abroad thereby discouraging

 transfer of technology,
 development in existing trade & industry,
 non-establishment of new trade & industry,
 refusal to grant licenses to work the patent locally,
 imposing unreasonable terms on licenses thereby discouraging voluntary licensing and
imposing restrictive conditions on the use,
 sale or lease of the patented articles thereby prolonging the patent monopoly rights
even after the patent has expired.
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 Revocation of the patent for non-working has been adopted in almost all countries.

In considering the application for the grant of compulsory license, the Controller
shall take into account the nature of the invention; the time which has elapsed since the
sealing of the patent; the measures already taken by the patentee or any licensee to make
full use of the invention; the ability of the applicant to work the invention to the public
advantage; capacity of the applicant to undertake the risk in providing the capital and
working the invention; whether the applicant has made efforts to obtain a license from a
patentee on reasonable terms and conditions and such efforts have not been successful
within a reasonable period (6 months) as the Controller may deem fit.

Where the Controller is satisfied that a prima facie case has been made, the
Controller will direct the applicant to serve copies of the application on patentee and any
other person appearing in the Register of Patents and upon hearing the parties may give
his decision. An appeal lies to the appellate board. The Controller can terminate the
compulsory license when circumstances that gave rise to the grant no longer exist.

Further, in determining royalty Controller shall keep in mind the nature of the
invention; the expenditure incurred in making and developing the invention; expenditure
in obtaining patent and its maintenance; patented invention is worked and the licensee
gets reasonable profit; patented article is available to public at reasonably affordable
price; license granted is non-exclusive; the right of the licensee is non assignable; that
the license is for a balance period of the term of the patent or shorter term;

Surrender of Patents

Section 63 of the Patents Act, 1970 allows a patentee to surrender a patent. The
patentee can offer to surrender his patent by giving notice to the Controller.1 The offer to
surrender the patent should be published by the Controller, and every person interested in
the patent must also be notified of the same.

After the publication, any interested person can oppose the surrender, by giving notice
to the Controller which should be notified by the Controller to the patentee. If the
patentee or the opponent wants to be heard, the Controller, on being satisfied that the

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patent may be surrendered and after the hearing, may accept the offer and revoke the
patent by order.

The notice of opposition must be given to the Controller within a period of 3 months
from the date of publication of the notice to surrender the patent. If the patentee’s offer to
surrender the patent is accepted by the Controller, he may:

 direct the patentee to return the patent; and

 on receiving the patent revoke it by order; and
 publish the revocation of the patent.

Revocation of Patents

Section 64 of the Patents Act, 1970 deals with the ‘Revocation of patents’. A patent that
has been granted to an invention can be revoked by the Appellate Board in the following
ways:

 on a petition filed by any interested person; or

 on a petition filed by the Central Government; or
 on a counter-claim in a suit for infringement of the patent by the High Court.


Grounds for Revocation of Patents

A patent may be revoked on any of the following grounds:

 where an invention as claimed in a valid claim of earlier priority date which is included in
the complete specification of another patent;
 where the patent application was filed by a person who is not entitled under the
provisions of the Act and was granted a patent on such application;
 where the patent was wrongfully obtained and the rights of the petitioner or any person
under/through whom he claims, were contravened;
 when the subject of a claim of the complete specification is not an invention within the
meaning of the Act;

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 where the invention that is being claimed is not new having regard to what was publicly
known or used in India before the priority date of the claim and also having regard to
what was published in any of the documents, whether in India or elsewhere;
 where the invention that is claimed is obvious and lacks any inventive step, having
regard to what was publicly known, used or published in India, before the priority date;
 where the invention is not useful;
 where the invention and the method by which it is to be performed is not sufficiently
and fairly described by the complete specification. In other words, the description of the
method or the instructions for the working of the invention as specified in the complete
specification are insufficient to enable a person of average skill and knowledge of the art
to which the invention relates, to operate or work the invention or where the best
method of performing the invention which is known to the applicant is not disclosed;
 where the scope of any claim is not defined properly or based on the matter which his
not disclosed in the specification;
 where a false suggestion or representation was made to obtain the patent;
 where the subject of any claim of the complete specification is not patentable under the
Act;
 the invention that is being claimed was secretly used in India before the priority date of
the claim;
 where the information required under Section 8 has not been disclosed by the applicant
of the patent to the Controller or the information that has been furnished is false to his
knowledge;
 where any direction of secrecy passed under Section 35 has been contravened by the
applicant or made an application in contravention of Section 39 for the grant of a patent
outside India;
 where the permission to amend the complete specification under Section 57 or 58 was
obtained by fraud;
 the complete specification does not disclose or mentions the wrong source or
geographical origin of biological material used for the invention;
 the invention was anticipated having regard to the knowledge which was available
within any local or indigenous community within India or elsewhere.

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 However, where the invention claimed is not new, obvious or lacks any inventive step,
having regard to what was publicly known or used in India or published in India or
elsewhere, before the priority date of the claim:
 a personal document, secret trial or secret use shall not be taken into account;

Where the patent is for a process or for a product that is made by a process which is
claimed, the importation of the product which is made abroad by that process into India
will constitute knowledge or use in India of the invention, on the date of importation.
Except where the product has been imported for the purpose of reasonable trial or
experiment only.

Categories of Grounds for Revocation

Broadly there are three categories of grounds for revocation of a patent, viz.,

 grounds relating to the rights of the patentee and his conduct

 grounds relating to the invention and its quality
 grounds relating to the description of the invention

The grounds relating to the rights of the patentee and his conduct includes the following:

patentee is not entitled to the patent because the applicant for the patent was not entitled
to apply;

 The patent was obtained wrongfully as against the person entitled;

 the patent was obtained by false suggestion or representation;
 failure to disclose information regarding foreign applications;
 non-compliance with directions for secrecy;
 the amendment of the complete specification was obtained by fraud.

The grounds relating to the invention and its quality include the following:

 where the subject of a claim is not an invention;

 the subject of a claim is not a patentable invention;

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 the invention claimed was secretly used before the priority date;
 the invention claimed is already a subject of a prior grant;
 the invention claimed lacks novelty, having regard to prior knowledge or use;
 the invention is obvious or lacks an inventive step, having regard to prior knowledge or
use;
 where the invention is not useful;
 the invention claimed was anticipated having regard to the knowledge, oral or otherwise
within any local or indigenous community in India or elsewhere.

The grounds relating to the description of the invention includes the following:

 the invention is not described sufficiently and the best method for performing it is not
disclosed;
 the claims are not defined clearly.

Furthermore, on a petition of the Central Government, the High Court may revoke a
patent if it is satisfied that the patentee has failed to comply with the request of the
Central Government, without any reasonable cause to make, use or exercise the invention
which has been granted a patent for the Government’s purpose, within the meaning of
Section 99 of the Act.8 The petition for revocation of a patent should be notified to all
persons mentioned in the register who are proprietors of that patent or have a share or
interest in the patent.9

Revocation at Instance of the Government:-

Section 65 of the Patents Act, 1970 deals with cases relating to atomic energy wherein,
a patent is revoked or the complete specifications are amended on directions from the
Government. Where after the grant of a patent, the Central Government is satisfied that a
patent is for an invention relating to atomic energy for which no patent can be granted,
the Government can direct the Controller to revoke the patent.

Therefore, if a patent has been granted to an invention in the field of atomic energy,
the Central Government can direct the Controller to revoke the patent. Upon receiving the
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direction from the Central Government the Controller notifies the patentee and every
person who has an interest in the patent and gives them an opportunity of being heard,
after which the Controller revokes the patent.

If the Controller feels that the patent can be sustained by amending something, instead
of revoking the patent he can also allow the patentee to amend the complete specification
in a manner which he considers necessary. Therefore, the Controller can exercise his
discretion in this regard.

The Government can also revoke a patent in the public interest.10 Where a patent or
the manner in which it is exercised is mischievous to the State or prejudicial to the public,
the Central Government after giving an opportunity to the patentee to be heard can make
a declaration to that effect in the Official Gazette following which the patent shall be
considered revoked.

The revoking of a patent in the larger interest of the public is a fast track proceeding. It
does not involve the Controller being directed by the Central Government, nor does it
involve invoking any grounds of revocation. Thus, it is the most expeditious way by
which a patent can be revoked, and once the declaration is made in the official gazette,
the patent stands revoked.

compulsory license:-

A compulsory licence is a licence or authorisation issued by the government to an

applicant for making, using and selling a patented product or employing a patented
process without the consent of the patentee. Chapter XVI of the Indian Patents Act 1970
and the Agreement on Trade-Related Aspects of Intellectual Property Rights discuss
compulsory licensing.

Who can apply for a compulsory licence:-

According to Section 84 of the Patents Act, any person interested (regardless of whether
they hold a licence for the patent or any other patent) may make an application to the

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controller for grant of a compulsory licence on expiry of three years from the date of the
grant of the patent, when any of the following conditions are fulfilled:

 Reasonable requirements of the public with respect to the patented invention have not
been satisfied;
 the patented invention is not available to the public at a reasonably affordable price; or
 The patented invention is not used in India.

An interested party may file the application for a compulsory license online or on paper
via Form 17, along with a prescribed fee, with the Indian patent office. Form 17 should be
accompanied with a statement setting out the nature of the applicant’s interest, together
with the facts and particulars on which the application is based.

Procedure for processing compulsory license application:-

On filing the application for grant of a compulsory licence along with the relevant
facts and evidence, the controller will analyze the prima facie case made by the applicant
against the patentee. After considering such factors as the nature of the invention, the
applicant’s ability to work the invention and whether the applicant has made efforts to
obtain a licence from the patentee on reasonable terms and, if such efforts have not been
successful within a reasonable period (ie, six months from the date of application), the
controller will decide whether to grant or reject the compulsory licence.

In case the controller is not satisfied with the applicant’s request, a notice will be issued
to the applicant regarding rejection of the grant of a compulsory licence. In this scenario,
the applicant may request a hearing with the controller, within one month from the date of
such notice of rejection. The controller will thereafter decide the fate of the application
based on the hearing discussion held with the applicant.

Terms and conditions of a compulsory licence:-

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Once the controller decides to grant the compulsory licence, they will set out the
necessary terms and conditions of the compulsory licence. The controller also decides on
the royalties or remuneration payable to the patentee based on:

 the patentee’s investment in the invention;

 the workability of the patentee’s invention by the applicant;
 the selling price of the patented articles (at affordable prices); and
 the term of the licence.

The controller will also clarify the provisions applicable for exporting and importing the
patented article, non-exclusivity and non-assignability of the licence, among other things.

The government may, if it is necessary to do so in the public interest, direct the

controller at any time to authorise any licensee in respect of a patent to import the
patented article or an article or substance made by a patented process from abroad. Such
authorisation is subject to conditions, including details of royalties and other
remuneration, the quantum of import, sale price of the imported article and import period,
among other things.

Opposition to the grant of a compulsory licence:-

When the controller is satisfied, on consideration of an application under Section 84,

that a prima facie case has been made out for the making of an order, the applicant will be
directed to serve copies of the application to the patentee and any other person appearing
from the register (eg, a licensee mentioned in the register). The application made by the
applicant is thereafter published in the Official Journal.

The patentee or any other person desiring to oppose the application for the grant of a
compulsory licence may, within the prescribed time (two months from the date of
publishing the application in the Official Journal), file a notice of opposition via Form 14,
along with the prescribed fee. The opposition statement should contain statements
pertaining to the grounds on which the grant of the compulsory licence is opposed. When
such a notice is served, the controller will notify the applicant and give both the applicant
and opponent an opportunity to be heard before deciding the case.

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Licensing of related patents:-

Where the licensee is unable to work the licensed invention without the use of another
related patented invention, the licensee may apply for a grant of licence for such a related
patented invention. Such an order to grant the licence for the other related invention will
be made if the controller is satisfied that:

the applicant is able and willing to grant or procure a grant for the patentee and its
licensee (if they so desire) of a licence in respect of the other invention; and the invention
has made a substantial contribution to the establishment or development of commercial or
industrial activities in India.

Compulsory licence for exporting patented products:-

A compulsory licence for exporting goods usually relates to exporting pharmaceutical

products, particularly in certain exceptional circumstances. A compulsory licence is
available for the manufacture and export of patented pharmaceutical products to any
country with insufficient or no manufacturing capacity in the pharmaceutical sector for
the concerned product, to address public health problems. Such export is allowed,
provided that the compulsory licence has been granted by such country or such country
has, by notification or otherwise, allowed the import of the patented pharmaceutical
products from India. The pharmaceutical products may be any patented product or
product manufactured through a patented process of the pharmaceutical sector needed to
address public health problems and should be inclusive of ingredients necessary for their
manufacture and diagnostic kits required for their use.

On receiving an application in the prescribed manner, the controller will grant a

compulsory licence solely for manufacture and export of the concerned pharmaceutical
product to such country under the terms and conditions as may be specified and
published.

Termination of compulsory licence:-

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On an application (via Form 21) along with evidence, made by the patentee or any
other person deriving title or interest in the patent, the compulsory licence granted under
Section 84 may be terminated by the controller when the circumstances considered for
grant of the compulsory licence cease to exist. The applicant is thereafter required to
serve a copy of the application and evidence to the holder of the compulsory licence and
to inform the controller of the date on which the service was made effective.

The holder of the compulsory licence may file his or her objection along with evidence
to the application for termination, within one month from the date of the controller’s
receipt of the application (and evidence). A copy of the objection and evidence is also
required to be served to the applicant by the licence holder.

Thereafter, the controller will appoint a hearing for analysing the facts and issuing a
verdict. If the controller decides to terminate the compulsory licence, an order setting out
terms and conditions (if any) of such termination will be served to both the parties.

Important Cases:-

Bayer v Natco

India’s first ever compulsory licence was granted by the Patent Office on 9 March
2012 to Hyderabad-based Natco Pharma for the production of a generic version of
Bayer’s Nexavar, an anti-cancer agent used in the treatment of liver and kidney cancer. It
was established in Bayer v Natco that only 2% of the cancer patient population had easy
access to the drug and that the drug was being sold by Bayer at the exorbitant price of
Rs280,000 for a month’s treatment. Further, on the grounds that Nexavar was being
imported within India, the Patent Office issued a compulsory licence to Natco Pharma,
which assured that the tablets would be sold for Rs8,880 per month. It was settled that 6%
of the net selling price of the drug would be paid to Bayer by Natco Pharma as royalties.

BDR Pharmaceuticals International Pvt Ltd v Bristol-Myers Squibb Co

In BDR Pharmaceuticals the controller rejected BDR’s application for a compulsory

licence (4 March 2013) for the Bristol-Myers Squibb cancer drug SPRYCEL. The

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controller rejected the compulsory licence application made by BDR by stating that BDR
had failed to make a prima facie case for the grant of the compulsory licence. The
controller observed that BDR had made no credible attempt to procure a licence from the
patent holder and the applicant had also not acquired the ability to work the invention to
public advantage. Thus, the request for grant of the compulsory licence was refused.

Lee Pharma v AstraZeneca AB

In the most recent case of compulsory licensing in India, Lee Pharma, a Hyderabad-
based Indian pharma company, filed an application for a compulsory licence (29 June
2015) for the patent covering AstraZeneca’s diabetes management drug Saxagliptin. In
order to make a prima facie case, Lee Pharma declared that request for a licence with the
patent owner was not responded to within a reasonable period. The grounds alleged by
Lee Pharma were that:

 the patentee failed to meet the reasonable requirements of the public;

 the patented invention is unavailable to the public at a reasonably affordable price; and
 the patented invention is not used in India.

However, all three grounds as well as the compulsory application were rejected. The
application was rejected on the basis that Lee Pharma failed to demonstrate the
reasonable requirement of the public and further failed to demonstrate the comparative
requirement of Saxagliptin in relation to other drugs in the market. Further, the controller
held that all the related drugs available in the market were in the same price range and the
allegation that Saxagliptin alone was being sold at an unaffordable price was not justified.
The controller also stated that Lee Pharma failed to demonstrate the exact number of
patients that were unable to obtain the drug due to its non-availability.

Infringement and relief under Patent :-

The Patents Act, 1970 empowers the patentee to file a suit in case there is an
infringement of his exclusive patent rights. In order to file a suit, the limitation period as
specified under the Limitation Act is 3 years within the infringement of the patent rights.
The burden of proof usually lies on the plaintiff to prove that there was patent

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infringement by the defendant but in certain cases, it is at the discretion of the court to
decide the burden of proof. In India, both districts and the high courts have the power to
hear cases related to patent infringement. However, in case there is a counterclaim for
revocation of the patent filed by the defendant, then only the High Court has the right to
hear the case. The patentee can file the case in the place of his residence or the place
where he carries out his business or where the cause of action arises. Section 68 of the
Indian Patents Act contains the rights of the patentees. It list down the following activities
as the infringement of the patentee’s rights:

 Using
 Making
 Importing
 Offering for sale
 Selling the patented process

If the defendant is involved in any of the above-mentioned acts, then he will be

considered liable for infringement of the rights of the patentee. Section 108(1) of the
patents act, 1970 provides for relief to the plaintiff in case his patent rights have been
violated. The remedies available to the patentee are:

Temporary/Interlocutory Injunction:-

A temporary injunction is invoked by the court at the initial stages of the suit filed by
the plaintiff. This is passed in order to prevent the defendant from getting further gains by
using other patented products. In order to invoke a temporary injunction, it is important
for the patentee to prove that the patent is valid and has been infringed by the defendant.
Also, the subsequent infringement in his patent rights has caused irreparable loss to him.

Permanent injunction:-

A permanent injunction is invoked when the case is finally decided by the court. The
interim injunction is transferred to a permanent injunction if the defendant is found guilty
of patent infringement rights. But if the defendant is absolved from the liability, then the
interim injunction stands dissolved and is not converted into a permanent injunction.

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Damages:-

In case the defendant is proven guilty, the plaintiff is either awarded damages or an
account of profits by the defendant. Damages may not be provided to the plaintiff in case
the defendant pleads ignorance and proves that he had no reasonable grounds to believe
that the said patent existed at the time of infringement.

Defenses available in the suit

There are various defenses provided in a patent infringement suit which absolves the
defendant of his liability:

 When a defendant denies infringement by proving his lack of intention.

 In case of estoppels or res judicata.
 When a plaintiff is not entitled to sue for infringement.
 When the defendant has the express/implied license to use the patented product.
 When there is a revocation of patents for reasons of it being illegal.
 In the case of pharmaceutical drugs/medicines, the government can retain the exclusive
right to manufacture patented products in public welfare.
 in case the alleged infringement is obvious and not novel.
 What does not amount to infringement

Section 107A in the Patents Act incorporates bolar provision and provision for parallel
imports:

Bolar provision: It gives rights to the manufacturers of pharmaceutical products to

conduct research on various patented products so that the products can be brought into the
market for the welfare of the general public. But this research can only come into effect
after the expiry of the patented product.

Parallel import provisions: This gives the right to import the product to the person
authorized by the patentee. This importation will not be considered as an infringement of
the patent rights of the patentee. This meant any person who is in possession of the
license can import the patented products without seeking permission from the patentee
and this will not be considered as an infringement.
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Landmark Judgments

Bajaj Auto Limited V. TVS Motor Company Limited JT 2009 (12) SC 103

This case was instituted in the year 2007 by Bajaj Auto Limited against T.V.S. Motor
Company Ltd. in the Madras High Court. In this case, the court held that the cases related
to copyright infringement including the cases of patent infringement took many years to
get disposed of. The court ordered the other courts for speedy disposal of the cases related
to copyright infringement. The parties often get caught in getting an order for a temporary
injunction. The court suggested that the proceedings related to such cases be carried on a
day to day basis and decision be announced within 4 months of the initiation of the
proceedings.

Novartis v. Union of India (2013) 6 SCC 1

In this case, a company Novartis filed an application before the court to grant the
patent to one of its drugs ‘Gleevec’ which they claimed was invented by them. In this
case, the court drew a distinction between invention and the discovery of an already
existing drug. Also, the court also formulated a new test for granting patents to
pharmaceutical products known as enhanced therapeutic efficacy. The court introduced
this test besides the other traditional tests mentioned under Article 3 of the patents act to
ensure that these patented products are made available to the general public on nominal
prices in times of need.

Hoffmann-La Roche Ltd vs Cipla Ltd., Mumbai Central

This case was one of the first cases of patent infringement in India after independence.
In this case, the plaintiff pleaded that an interim injunction order is passed against the
defendant’s selling of a generic form of the drug. The court rejected the case saying that
the sale of the patented product was for public interest and also a case of a counterclaim
for the revocation of the patent was ongoing in another court.

Dr Snehlata C. Gupte v. Union of India & Ors (W.P. (C) No 3516 and 3517 of 2007)
Delhi HC)

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The court, in this case, cleared the ambiguities related to the date as to when the patent
could be considered to be granted. Some contended that the patent is granted as soon as
the decision for its non-rejection comes. The due process of law is the bedrock of legal
provisions in the country. But the court held that the issue of a certificate in case of
granting patents is a mere formality and the application for the grant of a patent would be
considered to be accepted once the controller passes the order.

Loss or destruction of patents(section-154):-

 Patent shall be lost or destroyed.

 Controller has to satisfy with genuine.
 Applicant shall pay prescribed fee and get the duplicate copy of patent certificate.

Other important cases laws:

1. Bajaj Auto Limited Vs. TVS Motor Company Limited JT 2009 (12) SC 103:-

Speedy disposal of Intellectual property rights cases

This case involved the controversy regarding the unauthorized application of the
patent of the DTSi technology. The case became very vital regarding not only the
financial stakes of the parties but also regarding the application of the doctrine of pith
and marrow also termed as Doctrine of Equivalents.

This case was filed before the Madras High Court in 2007. The plaintiffs (Bajaj
Auto Ltd), along with the state of Maharashtra alleged the defendants (T.V.S. Motor
Company Ltd.) of infringement of the patents of the plaintiffs, which apprehended the
invention of the technology of advanced internal combustion engine. The case
engaged the questions of patent infringement by the defendant and the damages for
the same. Furthermore, the case threw light upon the argument regarding justification
of the risks issued by the defendant of the same case.

The plaintiffs sought remedy of permanent injunction for obstructing the

defendants from using the technology or invention prescribed in the patents of the
plaintiffs; and for obstructing them from marketing, selling offering for sale or
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exporting 2/3 wheelers (including the proposed 125cc TVS FLAME motorcycle) that
consisted of the disputed internal combustion engine or product that infringed the
patent. Damages for infringement of the patent were also claimed by the Plaintiffs.

The Supreme Court of India by this landmark judgement directed all the courts in
India for speedy trial and disposal of intellectual property related cases. In this two-
year-old dispute involving two companies, which had been locked in a patent dispute
over the use of a twin-spark plug engine technology, the Supreme Court observed that
suits relating to the matters of patents, trademarks and copyrights are pending for
years and years and litigation is mainly fought between the parties about the
temporary injunction. The Supreme Court directed that hearing in the intellectual
property matters should proceed on day to day basis and the final judgment should be
given normally within four months from the date of the filing of the suit. The
Supreme Court further directed to all the courts and tribunals in the country to
punctually and faithfully carry out the aforesaid orders.

2. Novartis v. Union of India (2013) 6 SCC 1 :-

Rejection of a patent for a Drug which was not ‘inventive’ or had an superior
‘efficacy’-

Novartis filled an application to patent one of its drugs called ‘Gleevec’ by

covering it under the word invention mentioned in Section 3 of the Patents Act,1970.
The Supreme Court rejected their application after a 7 year long battle by giving the
following reasons: Firstly there was no invention of a new drug, as a mere discovery
of an existing drug would not amount to invention. Secondly Supreme Court upheld
the view that under Indian Patent Act for grant of pharmaceutical patents apart from
proving the traditional tests of novelty, inventive step and application, there is a new
test of enhanced therapeutic efficacy for claims that cover incremental changes to
existing drugs which also Novartis’s drug did not qualify. This became a landmark
judgment because the court looked beyond the technicalities and into the fact that the
attempt of such companies to ‘evergreen’ their patents and making them inaccessible
at nominal rates.

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3. F. Hoffmann-La Roche Ltd vs Cipla Ltd., Mumbai Central,:-

First Patent Litigation in India post India’s 2005 Product Patent Regime which
included public interest and pricing issues.

Over the years India has seen many patent disputes between Foreign Multinational
Pharmaceutical companies and Indian generic drug companies. But the suit between
Roche and Cipla has surely set the standards when it comes to a patent infringement
suit.

In this case, two plaintiffs, namely, F. Hoffmann-La Roche Ltd. and OSI
Pharmaceuticals Inc., filed the suit for permanent injunction restraining infringement
of patent, rendition of accounts, damages and delivery against Cipla Ltd. Mumbai.
Indian Generic manufacturer Cipla won this landmark case in the Delhi High Court.
The case is the first Patent Litigation in India post India’s 2005 Product Patent
Regime which included public interest and pricing issues in addition to India’s
Section 3d that prevents evergreening. The case was followed by Pharma Giants
worldwide.

Roche sued Cipla in 2008 before Delhi High Court claiming that Cipla’s generic
product Erlocip violates former’s Indian ‘774 patent claiming “Erlotinib
Hydrocloride”. The trial Judge rejected Roche’s appeal to grant interim injunction
restraining Cipla from selling generic version of Tarceva on the grounds of public
interest and the fact that there was an ongoing patent revocation proceedings against
‘774 patent. Cipla’s generic version costs about 1/3rd of Roche’s patented drug.
Roche’s subsequent appeal to Division Bench also failed when not only did the bench
uphold the findings of Trial Judge but also imposed costs on Roche for suppression of
material patent information about Roche’s later filed application in India
(IN/PCT/2002/00507/DEL). This was the Patent Application which was actually on
Polymorph Form B of Erlotinib Hydrocloride but was rejected in 2008 following the
opposition filed by Cipla primarily on Section 3d. Cipla argued that Tarceva
corresponds to Polymorphic Form B (which is not a product of ‘774 patent but a ‘507
rejected application) and that it is Form B which is more stable and suitable for solid

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oral dosage form than the compound disclosed in ‘774 patent comprising a mixture of
Forms A and B. Roche’s subsequent appeal before the Supreme Court (SC)
challenging the order passed by the division bench got dismissed due to the ongoing
trial at the Delhi High Court.

4. Dr Snehlata C. Gupte v. Union of India & Ors (W.P. (C) No 3516 and 3517 of
2007) Delhi HC) :-

What Shall Be The Actual Date Of Grant Of A Patent?

This case was instrumental in determining when a patent can said to be granted
under the Patent Act 1970 (the Act). This lack of clarity led to a scrutiny of the
relevant provisions the Act and also the existing process with a time gap between the
grant and the issuance of the patent certificate. The Delhi High Court, while holding
that the date of grant of a patent is the date on which the Controller passes an order to
that effect on the file, noted that the language, “a patent shall be granted as
expeditiously as possible” (u/s 43) does point out that a patent has to be granted once
it is found that either the application is not refused in a pre-grant opposition or
otherwise is not found in contravention of any provision of the Act.

At the core of the legal challenge was the existing process, which resulted in a time
gap between the grant of a patent and the issue of the patent certificate. The court held
that the date of the grant of a patent is the date on which the controller passes an order
to that effect on the file i.e. on the day in which the Controller makes a decision to
grant a patent. The issue of a certificate at a later date is then nothing more than a
mere formality.

The court also came down strongly against the practice of filing serial pre-grant
oppositions. through aliases, a practice now fairly common in most pharmaceutical
patent cases.

Therefore, the decision taken by the Controller on the file is the determining event
for ascertaining the date of grant of patent and the acts of sealing of the patent and
entering the same in the Register are ministerial acts evidencing the grant of patent.
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5. Bayer Corporation vs Union Of India :-

India’s First Compulsory License

On March 9, 2012, the Indian Patent Office granted its first Compulsory License to
Natco Pharma Ltd. for producing generic version of Bayer Corporations’s patented
medicine Nexavar (Sorafenib Tosylate), which is used in the treatment of Liver and
Kidney cancer. While the multinational giant was selling the drug at INR 2.80 lakh
for a month’s course, Natco promised to make available the same at a price of about 3
% (INR 8800) of what was charged by Bayer. Natco was directed to pay 6 percent of
the net sales of the drug as royalty to Bayer. Among other important terms and
condition of the non assignable, non exclusive license were directions to Natco to
manufacture the patented drug only at their own manufacturing facility, selling the
drug only within the Indian Territory and supplying the patented drug to at least 600
needy and deserving patients per year free of cost.

Aggrieved by the Controller’s decision, Bayer immediately moved to the

Intellectual Property Appellate Board (IPAB) for stay on the orderalleging that the
grant of compulsory license was illegal and unsustainable. The Board rejected Bayer’s
appeal holding that if stay was granted, it would definitely jeopardize the interest of
the public who need the drug at the later stage of the disease. It further held that the
right of access to affordable medicine was as much a matter of right to dignity of the
patients and to grant stay at this juncture would really affect them.

Bayer then filed an appeal challenging the compulsory license granted to Natco by the
Controller-General. The Board stated that the invention must be available to the
public at a reasonably affordable price and if not, compulsory license can be issued
and observed that the Sub-sections (a), (b) and (c) of Section 84(1) are separated by
the disjunctive ‘or’ and therefore, even if one conditions satisfied, the Controller will
be well within his rights to order compulsory license.

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The Board further noted that The R&D costs and the prices of other drugs do not
assist in deciding what the public can afford reasonably. It stated that the reasonably
affordable price necessarily has to be fixed from the view point of the public and the
word ‘afford’ itself indicates whether the public can afford to buy the drug.

It also stated that even if it takes the appellant’s own number (i.e. the number of
affected patients) it finds that the supply made by it cannot be said to be adequate and
the price definitely is the factor that will determine whether the public will reach out
for a particular invention.

The Board held that the Controller was right in holding that the sales of the drug by
the appellant at the price of about 280,000/- wasalone relevant for the determination
of public requirement and he was also right in considering the purchasing capacity of
the public and the evidence available to conclude that the invention was not
reasonably affordable to the public.

On the percentage of royalty that was to be paid by the Respondent to the Appellant
(6% that was fixed by the Controller), IPAB increased it by 1 percent but did not
change any other terms and conditions of the licence.

The IPAB dismissed the appeal and confirmed the grant of Compulsory license
stating that it has dealt with each of the issue in detail in view of the significance of
the order of compulsory licence made in India for the first time

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UNIT-IV

INDUSTRIALDESIGN:

Introduction of design:-

Registered design is a shape, configuration, pattern or ornament or composition of

lines or colour or combination thereof applied to any article whether two dimensional or
three dimensional protected under the Designs Act, 2000. Design registration is similar
to copyright registration, patent or trademark registration and a type of intellectual
property registration – which protects creations of the mind. In this article, we review the
basics of registered design in India.

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Section :2(d) “design” means only the features of shape, configuration, pattern,
ornament or composition of lines or colours applied to any article whether in two
dimensional or three dimensional or in both forms, by any industrial process or means,
whether manual, mechanical or chemical, separate or combined, which in the finished
article appeal to and are judged solely by the eye; but does not include any mode or
principle of construction or anything which is in substance a mere mechanical device,
and does not include any trade mark as defined in clause (v) of sub-section (1) of section
2 of the Trade and Merchandise Marks Act, 1958 (43 of 1958) or property mark as
defined in section 479 of the Indian Penal Code (45 of 1860) or any artistic work as
defined in clause (c) of section 2 of the Copyright Act, 1957 (14 of 1957);

Registered Design:-

As per the Designs Act, 2000, a ‘Design’ means only the features of shape,
configuration, pattern or ornament or composition of lines or colour or combination
thereof applied to any article whether two dimensional or three dimensional or in both
forms, by any industrial process or means, whether manual, mechanical or chemical,
separate or combined, which in the finished article appeal to and are judged solely by the
eye, but does not include any mode or principle or construction or anything which is in
substance a mere mechanical device, and does not include any trade mark or copyright.
A design registered in India under the Designs Act, 2000 is referred to as a registered
design.

Designs that can be Registered:-

For a design to be registered under the Designs Act, it must satisfy the following
six conditions:

 The design should be new or original, not previously published or used in any country
before the date of application for registration.
 The design should relate to features of shape, configuration, pattern or ornamentation
applied or applicable to an article. Thus, designs of industrial plans, layouts and
installations are not registrable under the Act.

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 The design should be applied or applicable to any article by any industrial process.
Normally, designs of artistic nature like painting, sculptures and the like which are not
produced in bulk by any industrial process are excluded from registration under the Act.
 The features of the design in the finished article should appeal to and are judged solely by
the eye. This implies that the design must appear and should be visible on the finished
article, for which it is meant. Thus, any design in the inside arrangement of a box, money
purse or almirah may not be considered for showing such articles in the open state, as
those articles are generally put in the market in the closed state.
 Any mode or principle of construction or operation or any thing which is in substance a
mere mechanical device, would not be registrable design.
 The design should not include any Trademark or Copyright.
 Examples of Registered Designs
 A wide variety of items can be registered under the Designs Act in India. Items ranging
from cutlery to dress can be registered as a design in India provided its original and not
be a mere mechanical contraption.

Items that Cannot be Registered as a Design :-

The following items cannot be registered as a design:

 Books, jackets, calendars, certificates, forms-and other documents, dressmaking

patterns, greeting cards, leaflets, maps and plan cards, postcards, stamps, medals.
 Labels, tokens, cards, cartoons. any principle or mode of construction of an article.
 Mere mechanical contrivance.
 Buildings and structures.
 Parts of articles not manufactured and sold separately.
 Variations commonly used in the trade.
 Mere workshop alterations of components of an assembly.
 Mere change in size of article.
 Flags, emblems or signs of any country.
 Layout designs of integrated circuits.
 Benefits of Design Registration

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All documents pertaining to a registered design are maintained by the Patent Office
to put competitors on notice about registration of a design. A registered design provides
the creator, exclusive rights over use of the design for a period of ten years, that can be
further extended for a period of five years. In case of infringement or piracy of a
registered design, the owner of the registered design can seek legal remedy under the
Designs Act. Anyone found contravening to the copyright in a design, is liable for every
offence to pay a sum not exceeding Rs. 25,000/- to the registered proprietor subject to a
maximum of Rs. 50,000/- recoverable as contract debt in respect of any one design.
Thus, registering a design provides legal remedy against infringement.

Novelty and originality under Design:-

Those who wish to purchase an article for use are often influenced in their choice not
only by practical utility and efficiency but also by its appearance. Some look for artistic
merit. Some are attracted by a design which is strange or bizarre. Many simply choose the
article which catches their eye. Whatever the reason may be, one article with a particular
design may sell better than one without it. It would, therefore be profitable to use a design
which will attract customers.

A design is novel when it is not disclosed anywhere before the date of filing for
ordinary applications. The date of reference for reciprocity applications is the priority
date of the application for registration. A design may be novel if it can be differentiated
from pre-existing designs or a combination of designs. A design should not be published
or used anywhere before the date of filing or priority date.

A design in order to be registrable must be both new and original not previously
published in India or elsewhere. Natural objects applied as designs may be novel or
original. For example the representation of a tree or a building on a spoon may be
considered new or original. Here the novelty consists in the application of a drawing or
design taken from a material source to an article. The words new or original involve the
idea of novelty either in the pattern, shape, or ornament itself or in the way in which an
old pattern shape or ornament is to be applied to some special subject matter. A paper
weight in the shape of an animal may be new and original. In order to be registerable the

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design should be substantially different from the pre-existing designs applied to the class
of article. What amounts to a substantial difference must depend on the particular facts
of each case.”Original” means originating from the author of the design, section 2(g).

The novelty or Originality of a particular part of the article may be sufficient to

impart the character of novelty and originality to the whole. A combination of known
designs may be considered novel if the appearance of the combination as a whole is
new.A combination of two or more old features may be registrable if the combination is
not obvious bit is new and original.

Color may form an element in a design, but color or coloring as such dies not
constitute design, unless the change of colour creates a new pattern or ornament.
Composition of lines or colours can constitute or design under the new definition.

In deciding the question of novelty or originality evidence of experts in the trade is

admissible. The introduction of ordinary trade variants into an old design cannot make it
new or original.

Originality:

Section 2(g) of the Act defines originality of design which is originating from the
author of the design. An industrial design can be considered to be original even if they
are known previously but are new in their application. A pre-existing design that is new
in its form can be considered as an original work of the author. For example, a flower
vase in the shape of the Eiffel Tower can be registered for serving different purposes
even though the shape of the Eiffel Tower is well known

Case law: Reckitt Benkiser India Ltd v. Wyeth Ltd

A registered design can be cancelled under Section 19 of the Act if such registered
design had been published in India or in any other country prior to its date of
registration. The legal interpretation as to what amounts to prior publication under the
act was interpreted in the judgment recently delivered by the Delhi High Court in the
above case.

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Disclosure of Design:-

Section 16 of the Act mentions certain circumstances where disclosure of a design

cannot be rendered as a publication to alter the status of the novelty of that design.
Disclosure of a design cannot be considered as a publication of design in cases where the
proprietor of the design imparts his design to a person in good faith, and that person
discloses the design by using or publishing it in breach of good faith. Acknowledgment
of first and confidential order for registration of articles incorporating a novel or original
textile design cannot be considered as a publication of disclosure of the design.

Exhibition of the design prior to registration:-

Section 21 of the Act mentions circumstances where an exhibition of a design

cannot prevent it from getting registration. The exhibition of a design or an article
embodying the novel design without the prior consent of the proprietor shall not prohibit
the registration of such design if the design is displayed in an industrial exhibition or
exhibition to which the provisions of Section 21 of the Designs Act, 2000 have been
extended. The publication of the description of the design during the period of exhibition
or subsequently shall not create hindrance to the registration of the design.

However, there are certain requirements to be fulfilled to register the design

posterior to the exhibition. A prior notice has to be furnished to the controller in the
prescribed manner by the exhibitor exhibiting the design or article embodying the design
or by the publisher publishing a description of the design. An application of registration
of the design has to be filed within six months of the date of the exhibition of the design
or publication of the description of the design.

In order to find out whether a design is novel or not, the examiner conducts a
novelty search, article-wise or class-wise, by meticulously going through various
databases and compares the design in consideration with the published designs to find
out distinguishable features. If the design in consideration is not novel, then the previous
publications are cited in the search report and sent to the controller.

Case Laws
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The concept of novelty and originality has been clarified in the case of Bharat
Glass Tube Ltd. v. Gopal Glass Works Ltd where it was held that a design which has
been invented for the very first time by the author and has never been reproduced,
registered or published anywhere in India or outside India could be considered to be
novel or original.

In the case of M/s BrightoAutoIndustries Vs Shri Raj Chawla, it was held that
“originality” under this Act means an original creation of the author. A design can be
considered a novel if it can be distinguished from the existing design. In other words, the
design should not be substantially similar to any other known designs. It is not necessary
that the entire design has to be new. Even if any of its significant parts are novel, it will
be considered to be fulfilling the criterion of novelty. The eye is considered to be the
ultimate judge to conclude the novelty of a design.

The court held in the case of Hello Mineral Water Pvt Ltd Vs Thermoking
California Pure held that in order to comply with the requirement of novelty, a mere
new novel shape or form is not enough. There has to be some element or combination of
elements different from anything found in any prior structure.

Publication of design ;-

The term “publication” has not been defined in the Act. The controller in the case
of Venus Industries Vs MagppieExpots held that any design would be considered to be
published if it has been made available to any person in India who is free to use or
disclose it.

Assignment will specifically deal as to what constitutes infringement of copyright

in design while keeping in mind the provisions as laid down in the Designs Act, 2000.
Also, the remedies shall also be discussed in this assignment available as against the
person who has infringed the right of the proprietor of the design along with citing
different landmark case laws to support and analyze the purpose of this assignment.

Infringement of Copyright in a Design:-

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In order to understand the infringement of copyright in a design, we need to know
what constitutes a design to be qualified as statutorily registered design under the
Designs Act, 2000 (hereinafter referred to as the “Act”). To that extent, section 4 of the
Act lays down the following three criteria which are to be considered while a person or
proprietor intends to get their work registered:

It has to be new or original. For further clarification, the landmark case of

Gammeter vs Controller of Patents explained that the design does not necessarily have
to be created newly, but can also be used in a unique way on an old design as long as the
usage of the new design on an existing product has not been already discovered earlier
otherwise.

It does not exist in the public domain or has been published in any tangible form
within India or outside India as the case may be. This can be explained by citing the case
of Steelbird Hi-tech India Ltd vs SPS Gambhir in which the Court clearly explained
that the design needs to be new or original which is a product of the intellectual outcome
of a person and has never been in existence before such person has expressed such
design in a tangible form.

It is significantly distinguishable from other designs or a combination of designs

already existing in the public domain.

Should not have any scandalous or obscene matter present in its content.

A design which is registered as per Chapter II of the Act, section 11 of the Act
gives an advantage to the registered user to not only protect their work under the Act
itself but also can acquire copyright protection for a period of ten years from the same
day the work was registered under the Act. On the registration of a design under the Act
the proprietor of the design acquires the following rights:

The exclusive right to apply the design to any article in any class in which the
design is registered;

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the exclusive right to publish or expose, or cause to be published or exposed, any
article in any class of goods in which the design is registered to which such design is
applied; and

the exclusive right to import for the purposes of sale any article belonging to the
class in which the design is registered and having applied to it that design.

For explaining further as to what constitutes as an act of “Piracy of Design”,

section 22 (1) of the Act lays down the following checks that will help determine
whether the Design created or developed is pirated or not:

The design which is proposed to be registered or used otherwise for the purpose of
sale should not have “fraudulent or obvious limitation” as to that with a registered
design, until and unless written permission has been acquired from the registered owner
of the registered design. This was clarified in the case of Veerplast Houseware vs
Bonjour International in which the Court considered this particular check to be
confirmed from the point of view of the “customer with average knowledge and
imperfect recollection”.

“Substantial differences” should be there between the design which is proposed to

be registered and the design which has been already registered. This was discussed in a
landmark case of Britannia Industries Ltd vs Sara Lee Bakery wherein, the
infringement of the design was judged by matching the old design with the newly
registered design and in the instance of substantial similarities. It was an important case
since the designs of both the parties were to be considered from the perspective of a
child which was found out by the Court to having substantial differences as against the
contentions which were made by the plaintiff.

Contravention of any of the following checks mentioned above shall be discussed

in the next chapter of this article which provides remedy as against the wrongdoer or the
person who has infringed upon the rights of the person who has already registered their
design as under the Act.

Remedies against Infringement of Copyright in a Design:-

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In pursuant to the previous chapter, we have established as to what constitutes an
infringement of copyright in design and the different case laws which had further helped
in developing the understanding of the concept. In this chapter, the different remedial
mechanisms shall be explained below with reference to the relevant provisions:

Section 22(2) of the Act- Subsection 2 of section 22 provides that if any person has
been found in contravention of section 22(1) of the Act which has been discussed in the
previous chapters, the person who has infringed the rights of the registered proprietor of
the design shall be liable to pay not more than INR 25,000 which will be recoverable
towards contract debt. The registered proprietor also has the right to file a suit for
injunction, not lower than that of the Court of a District Judge, as against the person
wherein, if injunction is passed against the person, he/ she shall be liable to pay such
damages awarded by the Court other than stopping the wrongdoer to use the infringed
design.

Section 55 of the Copyright Act, 1957 provides for civil remedies that can be
availed by the registered proprietor wherein, if any person who is intentionally infringing
such work as covered in the Copyright Act, 1957 are entitled to seek remedy in the form
of either claiming damages, accounts or by filing a suit for injunction against the person
who has infringed the right of the registered proprietor.

The registered proprietor is also entitled to receive such profit which was gained by
the wrongdoer during the time of using the infringed design of the registered proprietor.

The registered proprietor may also seek an interlocutory injunction as under Order
39, Rules 1 and 2 of The Code of Civil Procedure, 1908 wherein, the registered
proprietor has to establish a prima facie case showing “balance of convenience” in its
favour. This can be further explained by citing the case of Novartis AG vs Mehar
Pharma wherein, the Court held that an “interlocutory injunction will not be granted
where damages will provide an adequate remedy should the claim succeed”.

As under Administrative Remedies, the registered proprietor of the design can file
an application under section 53 of the Copyright Act, 1957 before the Registrar of
Copyright for stopping the import of products which are subjected to infringement of
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his/ her right under the Copyright Act, 1957 wherein, after necessary examination, may
confiscate such products which are likely to infringe the rights of the registered
proprietor.

Section 63 of the Copyright Act, 1957 provides for criminal remedies that can be
availed by the registered proprietor wherein, if any person who is intentionally infringing
or abets such infringement of such work as covered in the Copyright Act, 1957 or
otherwise (meaning work connected to designs as under the Act), such person shall be
punished by way of imprisonment for a minimum of 6 (six) months which may extend
up to 3 (three) years along with fines amounting to a minimum of INR 50,000 which
may extend to INR 2,00,000.

Section 63A of the Copyright Act, 1957 provides for punishment on second and
subsequent crime wherein criminal remedies can be availed by the registered proprietor.
Such punishment shall consist of imprisoning the wrongdoer for a minimum 1 (one) year
which may extend up to 3 (three) years along with fines amounting to a minimum of
INR 1,00,000 which may extend to INR 2,00,000.

Civil remedies against piracy defenses:-

Industrialization and innovation have been revolving upon the theory of value for
money. The consumer always tries to gain value of the product from its utility whereas
the producer aims at harvesting profits from the investment to develop the product. Given
the plethora of options available, preference would always be given for the product with
original innovation, novelty and distinctiveness. To reflect globalization, registration of a
novel designs is now a common practise amongst every enterprise as they try to keep
their product ahead & superior to others. Racing to protect one's own design, these
enterprises face a crucial threat of design infringement for their registered design.

The proprietor of the registered design has the exclusive rights to sell, make, license or
to use articles embodying such design. In Design Act, 2000, Section 22 actively deals
with the piracy of the registered design in India. According to the law, the Piracy of
design is considered for any person:

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The monetary gain and protection are both hampered once the design is infringed by
another party. To keep a check, the Indian government recently announced its National
IPR policy, which compliant with the World Trade Organisation's agreement on Trade
Related aspects of IPRs (TRIPS) and moreover the policy also has been keen upon
increasing awareness for generation and effective enforcement of IPR, besides
encouragement of IP commercialization through various incentives. The IPR policy
mainly highlights the issue of infringement in Patents, design and Trademark and the
steps being taken by the authority to stop the practice of infringement or piracy in Indian
jurisdiction respectively.

Design is defined as "drawing or the deception of an original plan for a novel pattern,
model, shape, configuration, that is chiefly decorative or ornamental."

For the purpose of sale, make or license use any of the design as registered under the
Design Act, 2000 without the written consent or license of the registered proprietor;

applies to the design or any fraudulent or obvious imitation tries for the purpose of sale,
of any article in any class of article in which the design has been registered without the
consent of the registered proprietor.

Publication:-

Publish or expose or cause to be published or exposed for sale that article, knowing
that the design or any fraudulent or obvious imitation there has been applied to any article
in any class of article where the design is registered.

Taking into consideration the above stated section it would not be lawful to apply for
a registered design, or a fraudulent or obvious imitation of such, to an article or to import,
publish or expose an article to which such a design has been applied in the same class of
articles in which the design is registered, without the consent from the registered owner.
In response to this the said section also highlights provisions for one who acts in
contraventions of this section which includes filing suit to recover a nominal sum from
the infringer as a contract debt or seeking damages and an injunction against misuse of
the design.
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In the Piracy of registered design, every resemblance doesn't seem to be the action of
infringement or imitation. An obvious imitation is, one where immediately strikes another
design as being so similar to the original registered design, to be almost impossible to
differentiate. The most common method to identify infringement as stated in (Veeplast v
Bonjour, 2011): the two products need not be placed side by side, but rather examined
from the point of view of a customer with average knowledge and imperfect recollection.
The main consideration is whether the broad features of shape, configuration and pattern
are similar to one another.

Further as per s. 19 of the Design Act, 2000 which provides a provision to a registered
proprietor for cancellation of registration of design on the various grounds such as
novelty etc. All grounds available to a person seeking cancellation may be adopted as a
defence in infringement proceedings. In Steelbird v Gambhir (2014) the Delhi High
Court upheld the defendants' plea that the design was neither novel nor original and thus
it is not eligible for protection under the design law. The court vacated the injunction.

UNIT-5

Confidential information

Introduction:-

Information refers to know-how transmitted “orally, by letter or by demonstration”.

The maintenance of secrecy is pertinent for securing to owner of an invention the
uninterrupted proprietorship of marketable know-how so that it remains at least a form
of property and it can be enforced by law.

Confidential information can be defined as information that can be legally

protected and provides a business advantage to the owner of that information by virtue of
the fact that it is kept secret. The two underlying requirements are that the information

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must have value by virtue of being kept secret and it must be capable of being legally
protected. The word confidential information and trade secrets are synonymous. It can
also be defined as that type of information which is privileged information, classified
information, or specific information of a type for which there is a clear and compelling
need to withhold from disclosure. It was remarked in the case of Stephen John Coogan v
News Group Newspapers Limited and Glenn Michael Mulcaire that while confidential
information might not be “property” as a matter of law, it is often treated as part of
intellectual property.

People ought to keep secrets if they have. From the nineteenth century, the courts
have developed this simple moral percept into the form of legal liability which is of
considerable breadth. This development has run counter to the traditional reluctance of
judges to adopt broad proposition as ground rules for the imposition of liability, and they
have added to face some of the difficulties inherent in their unusual course. The passing
of Human Rights Act 1998 and recognition of states obligation to confer a right of
privacy, has caused the breach of confidence action to spin off a satellite that is
establishing its own orbit. On a different front, the flexibility of breach of confidence has
allowed many issued to which it is germane to be dealt with in the civil courts.

Confidential Information As Property:-

The willingness of the courts to hold indirect recipients responsible shows that the
obligation to respect confidence is not purely personal to the initial giver of the
undertaking; which raises a question “Whether is it than in any meaningful sense
property?” Clearly, those who deal in technical know how often treat it as such. Lord
Upjohn, the then judge of Court of Appeal never the less denied that confidential
information was “property in any normal sense but equity wills restraint its transmission
to another if in breach of some confidential relationship”. This predominant view has
been used by judges to support consequential conclusions in a variety of situations. It
suggests the wisdom of shaping the obligation by reference to the requirement of
conscientious behavior rather than by disposing of issue simply by attaching a property
label.

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First, the property right characteristically gives the owner the power not only to
license but also to transfer ownership and engage in other transaction with respect to the
subject matter. For established type of intellectual property such as patent, trademark,
copyright etc. these basic powers are defined in the governing statutes. In case of
assignment of know-how, the assignor by itself remains the only person entitled to sue
an outsider for misuse of it, which makes a crucial aspect of property lacking.

Secondly, if confidential information is per se classified as equitable property,

when it is misused the profits ought to be recoverable not just by the personal remedies
of account or damages but by the remedy of a constructive trust in any traceable asset
constituting a property. Thirdly, the central significance given to the undertaking to
respect the confidence makes liability turn to an initial personal obligation. This means
that information otherwise obtained will not be protected just because it is in some sense
private and so respect for freedom of information and expression is maintained. It means
that if the person with technical know-how assigns it or licenses it exclusively to two
different people in an inconsistent manner the recipients are each left to their rights
against the provider of the know-how subject to any remedy which may independently
arise in law or equity directly against the other. Instead of the rule that the as between
owners of equitable interests the first in time prevails, the courts are compelled to reach a
resolution of a three-cornered dispute taking into account all of the particular
circumstances.

Patent, Copyright, And Confidential Information:-

Due to the far-reaching range of subject matter, it becomes imperative to compare

the protection of confidential information with that provided by patents and copyright. In
the realm of technical ideas, confidence cannot play any long term role unless the
information can be put to commercial use without at the same time becoming public.
The mechanical device will always reveal in working to experts once it is marketed and
importantly reverse engineering by a purchaser is not a breach of confidence, but a
process of manufacture may not be similarly detectable. In the latter case, an inventor
may secure a patent that gives him monopoly protection against independent divisor of
the same invention but for a limited period. Accordingly, it is for him to decide to keep
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his invention secret through obligation as an alternative and not an additional form of
protection which stands good only against those who receive the information directly. A
person who chooses to keep an idea confidential during his own exploitation of it runs
the serious risk of someone else discovering and patenting it.

In particular, the need to protect trade secrets is not just an aspect of contractual
obligation but even infractions by direct and indirect recipients in non-contractual
relationships have not infrequently been neglected even in legal systems which have the
usual panoply of specific intellectual property rights. Responding to this interest of
creators and investors the TRIPS agreement contains a broad provision requiring that
persons who have secret information lawfully in their control be able to prevent its
unauthorized disclosure, acquisition or use in a manner contrary to honest commercial
practices.

In principal copyright is capable of helping to resist invasion of privacy but the

intrusion must take the form of making at least one copy or of doing any other act
specified as constituting infringement. Coupled with this there must be copying of
manner of expression and not merely use of information contained in the copyright act.
The proceedings, moreover, must be brought by those with the title to copyright. Breach
of confidence protection resembles copyright in that the information which the defendant
seeks to deploy must derive from that which the plaintiff seeks to protect. But
confidence protection is not generally tied to a particular way of using the material. It is
concerned with the information in substance and not in form, and only the person to
whom the obligation of confidence is owed are be entitled to sue. Thus if a secret society
has rules written for it by persons who do nothing to dispose of their copyright and a
member with the intent to expose the society to the public discloses it; he may have
committed breach of confidential obligation towards the society. But there will be
infringement of copyright in the rules only if he substantially reproduces their content.

The scope of the modern law began to be settled around 1850 with Prince Albert
v. Strange and Morrison v. Moat. In both, the cases injunction were granted against
indirect receipt of confidential information and the jurisdiction was set to arise by virtue
of property, agreement, confidence, trust, and bailment. But it was uncertain then and is
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now in what circumstances direct and indirect receipts of information would have
liability imposed on them. More recently contract has seized to be treated as the
universal touchstone of liability, though its role in determining what obligations of
confidence may exist is still crucial.

Starting with Saltman v. Campbell the Court recognized a wider equitable

jurisdiction and said “not so much on property or on contract but on good faith” and this
approach is now reasonably well ingrained among the judiciary. But if the true measure
is this simple moral yardstick the courts have been imprecise in the matter on how it is
calibrated.

This has excited jurists in favor of working out the implications of good faith more
exactly in accordance with the percept of restitution in favor of a new tort of a breach of
confidence, in favor of equitable property as the true basis of protection. In this account,
the following points must be isolated at which these differences begin to matter. They
concern in particular:

 The liability of those who in some sense act innocently.

 The circumstances in which the damage may be awarded for breach.
 The possibility of awarding damages for injury to feelings as distinct from economic
loss.
 The effects of dealing that treat the information as property.
 The liability of indirect recipient.
 Requirement of Liability

Following are the requirement that constitutes an actionable breach of confidence.

“First, the information itself must have the necessary quality of confidence about it.
Secondly, that information must have been imparted in circumstances importing an
obligation of confidence. Thirdly, there must be an unauthorized use of that information
to the detriment of the party communicating it.”

Subject Matter Capable Of Protection:-

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The breach of confidence action lies in respect of technical, commercial, personal
and other information without distinction by subject. It has been accepted that
scandalous or immoral material may be disqualified from protection just as it is not
accorded copyright. An idea for something yet to be elaborated may attract legal
protection as confidential information where there is nothing that generates copyright. It
is enough that the content of the idea is clearly identifiable, original, of potential
commercial attractiveness and capable of being realized in reality. It is perfectly possible
to have a confidential document; be it formula or something of a kind which is the result
of work done by the maker on material which may be available for the use of anybody.
But what makes it confidential is the fact that the maker of the document has used his
brain and thus produced a result which can only be reached who goes through the same
process.

If the information has been made freely and entirely public, either before it was
given to the defendant in confidence or else in the interval between the time and trial of
the action then nothing protectable remains. If not all the relevant information has been
made public, the rest, if it can be adequately satisfied, remains capable of protection. If
the information has been given to some of those interested and not to others there may
remain some relative secrecy. Whether the court will grant any form of relief in such
cases seems to depend on the circumstances as a whole. In this context the “springboard”
metaphor has been in trend, according to which a person who has obtained information
in confidence is not a allowed to use it as a springboard for activities detrimental to the
person who made the confidential communication and it remains springboard even when
all the features have been published or can be ascertained by actual inspection by any
member of the public. This is not an invariable rule which takes no account of
subsequent development and other circumstances; therefore the springboard does not last
forever.

It is well settled that there can be no confidence which can be relied on to restraint
a disclosure of iniquity and in this context, iniquity covers criminal, tortious and other
legally wrongful conduct if it is serious and is likely to occur in future. Some courts
consider that where the information concerns misdeeds of a serious nature which are of

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importance to the country they should intervene to preserve confidential obligation. One
way of expressing this inclination is by holding that public interest is nothing other than
the consideration of the extent of the obligation to respect confidence itself.

There is now a broader approach which treats iniquity as merely one instance of
just cause for allowing for confidence to be broken in the public interest by limited
publication, to an appropriate person to take action on matters of public safety and
administration of justice. In every case whether the basis in iniquity or some other
ground the court has to balance the competing interest taking account of the
proportionality of the restraint upon freedom of expression.

Confidential Obligation:-

A prima facie case of liability is established when; one person supplies information
to another on the condition that he will keep it secret. Equally the obligation to do so
may arise where the first person employs or requests another to acquire information and
hold it in confidence for him. But the whole case rests on the requirement of good faith.
Whether the recipient or the acquirer is bound only if he accepts that the information is
to be treated confidentially is to be tested objectively. If the circumstances are such that
any reasonable man standing in the shoes of recipient of the information would have
realized that upon reasonable grounds the information was given to him in confidence,
this should suffice to impose upon him the equitable obligation of confidence.

Once the obligation is assumed it may be breached by conduct that is neither ill-
motivated nor deliberate. Also, the relationship between two persons may be such that
equity imposes a duty upon one to act in the interest of others rather than him. The moral
impulse from which the fiduciary duty emerges is very similar to that which requires
confidence to be respected and often there is an overlap between the principles. But the
difference is that fiduciary responsibility may be a source of duty to preserve confidence.
An employee who removes confidential report from his employer’s desk will break the
confidence that already exists. An outsider who did the same thing would commit
trespass, but he would probably not be in breach of confidence. The fiduciary duty may
be in a wider scope than a simple obligation to observe confidence. For example, a

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recipient may be expected to continue using the information for his beneficiary’s
advantage only, even if it has become public. Equally, he may be obliged to hold the
profits for breach of trust for his beneficiary. Equities intervention is to prevent the
fiduciary from taking a personal advantage from the possible conflict of interest and
duty.

Where the relationship between the supplier and recipient of the information is that
of employer and employee a distinct policy has been pursued by the judges. They have
struck a balance between the desire to accord every worker the freedom to dispose of his
labor where and when he pleases and the wish to give protection to valuable pieces of
information that a particular employer may possess over his competitor and which an
employee might give to competitor or which he might use him in competition.

While he remains in employment he must observe his duty of fidelity. Once he

leaves his employment the balance rests largely in favor of employee who is entitled to
make use of all the skill and knowledge that any employee of his kind would have
acquired. He is obliged to respect two specific interest of his employer i.e. in secret
processes and goodwill. The above position is applicable only in the presence of an
express covenant.

A person in India can be contractually bound not to disclose any information that is
revealed to him in confidence. The courts have upheld a restrictive clause imbibed in a
technology transfer agreement, which imposed negative covenants on licensee not to
disclose or use the information received under the agreement for any purpose other than
that agreed in the said agreement. The courts have invoked a wider equitable jurisdiction
and awarded injunction even in the absence of a written contract.

In VFS Global Services Private v Suprit Roy, the defendant was employed under
a contract wherein his services could be brought to an end by either party with one
month’s notice or salary. Though later additional terms were added, restraining the
defendant from interacting with a competing company during employment and two years
after. The appellant employer filed a suit seeking damages and for enforcing the negative
covenant. D.Y. Chandrachud J. held that a clause prohibiting an employee from

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disclosing commercial or trade secrets is not in restraint of trade; however, it was
observed that the relief sought was considered to be extremely vague and not simply
non-disclosure of confidential information. Eventually, the defendant had claimed that
the information in question was not a secret, but he agreed to maintain confidentiality
subject to the information not being in the public domain.

The High Court had to rule on claims of confidentiality in Bombay Dyeing and
Manufacturing v Mehar Karan Singh, where the defendant was alleged to have
disclosed confidential information to a competitor whilst in the employment of the
plaintiff and apprehension was expressed that confidential information gathered was
divulged. It was observed that information that is within the public domain cannot relate
to confidentiality. Any person in employment for some period would know certain facts
which would come to his knowledge without any special efforts. The mere use of words
such as strategy and crucial policies would not give it a character of secrecy, as these
could be anticipated by any individual with foresight.

In Desiccant Rotors International v Bappaditya Sarkar, an employee entered

into an agreement, accepting that he was dealing with certain confidential material such
as trade secrets technology, know-how, methods, and processes. Upon resignation, he
entered into a non-compete agreement for a term of two years and agreed to deliver
official property. Within three months, the delinquent employee joined a direct
competitor of the plaintiff. In the injunctive proceedings instituted for violation of the
terms of the agreements, including the confidentiality and non-compete, the Delhi High
Court reiterated the principles embodied in the Indian Contract Act, which holds that any
agreement in restraint of trade is void, and recognized an individual’s fundamental right
to earn a living by practicing any trade or profession of his or her choice conferred by
the Article 19 of the Constitution of India.

Without giving any consideration to the plaintiff’s arguments that the restrictive
covenants were principally intended to protect its confidential and proprietary
information, the High Court ruled that in a clash between employers wishing to protect
themselves from competition and the right of employees seeking employment wherever
they choose, employees’ interests and rights must prevail. Notwithstanding, to safeguard
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the interests of the plaintiff, the Court restrained the employee from approaching the
employer’s suppliers and customers for soliciting business.

The recent Delhi High Court decision in Diljeeth Titus case[xxiii] also further
vouches for the fact that confidential information of the employer can be protected post-
employment period. In Escorts case[xxiv], the Delhi High Court restrained from
manufacturing, selling or offering for sale of the Pick-N-Carry Mobile Cranes that are
substantial imitation or reproduction of the industrial drawings of the Plaintiffs or from
using in any other manner whatsoever, the technical know-how. In Burlington case[xxv]
the Delhi High Court again restrained carrying on any business including mail Order
business by utilizing the list of clientele/customers included in the database of the
petitioner.

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Undertakings by the employee that he will not upon leaving the employment to
disclose or use trade secrets are enforceable only if reasonably necessary to protect the
employer. Otherwise, it is undue restraint to trade and is void. Such covenant by
employees is scrupulously tested so that they must be no wider in scope then is
reasonably necessary to give employer protection of the relevant interest.

The deliberate or reckless recipient would be in many circumstances be liable

under the general law of tort for inducing or procuring breach of contract, unjustifiably
interfering with business relations or conspiracy; if not his bad faith would justify
equity’s intervention. Other recipients who at most have only been negligent are not
themselves usually regarded as acting in bad faith. However, obligations of confidence
are apparently imposed on direct recipient under an objective test and it is justified to say
that it is too much to expect from the plaintiff to establish fraud always. The same
approach can be equally applied to indirect recipient. But if the non-negligent recipient is
to be held liable it can only be done when the confidential information has been
dignified with the status of property or else the court’s intervention is to secure the

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information against the breach of the obligation of good faith originally assumed by the
first recipient.

The need to show that the information must have been imparted in the
circumstances importing an obligation of confidence does not confine action to cases
where there was prior undertaking to keep the information secret. It is enough that the
person acquiring the knowledge ought to have known that he ought not to disclose it.

Unauthorized Use:-

The acts that constitute infringement of a patent or copyright are in different ways,
limited by précised criteria. In the case of patents by confining infringement to certain
kinds of industrial use and commercial information within the scope of claims defining
the monopoly. In the case of copyright by the requirement of reproduction or
performance, copying of manner in which the ideas are expressed and the taking of a
substantial part of the work. The notion of breach of confidence, by comparison, is
loosely defined. It may consist of any disclosure or use which contravenes the limited
purpose of the revelation. If the question is one of misuse it does not matter that the user
will not disclose the information to further recipient. The information used must come
from that disclosed in confidence and not form some other source.

The liability of the defendant may turn upon his state of mind both at the time
when he receives the information and when he uses or discloses it. When it comes to
breaching it appears not to matter that the defendant acts out of some misguided or well-
meaning motive, that he does not appreciate the confidentiality of the document form
which he takes information or that he has forgotten the source of information and thinks
that he has thought of it himself.

The range of information that may be the subject of confidence makes the question
of whether the plaintiff must show that he has or will suffer detriment by the breach of
confidence has been a difficult issue. The motive for protecting the technical and
commercial information is normally to protect its economic value for the plaintiff. The
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motive for protecting personal information may prevent distress or embarrassment. It is
tempting to say that liability ought to follow simply upon the breaking of confidence
without looking also for detriment[xxvii]. But it must be remembered that a very wide
range of subject matter is involved, likewise, there is some public interest in the freedom
to use information. Restriction of that freedom accordingly requires sufficient reasons.

In this connection it can be said that most economic torts are actionable only upon
proof of damage and the tort of defamation is confined to statements which tend to lower
the plaintiff in the eyes of right thinking members of the public which is an objective
standard approach[xxviii]

Remedies Available:-

In India, only civil or equitable remedies are available for an action of breach of
confidence. The remedies available include the award of an injunction “preventing the
third party from disclosing the trade secrets,” the return of all “confidential and
proprietary information,” and compensation or damages “for any losses suffered due to
disclosure of trade secrets The court may also order the party at fault too “deliver-up”
such material . Criminal prosecution can be launched, only against a person who, in
pursuance of any of the powers conferred under Information Technology Act, 2000 has
secured access to any information and discloses it without the consent of the person
concerned. A maximum punishment of 2 years and a fine which may extend to Rs. 1,
00,000 has been prescribed

Injunctions may be interlocutory, ad interim or permanent. The information may

remain confidential only for a limited period in which case the injunction will not extend
beyond that period. Moreover, “since the information alleged to be confidential may be
of value to the plaintiff only for a specified period, interim injunction will ordinarily be
granted only for a specified period depending upon the circumstances and the nature of
the confidential information The rules that the courts use to determine, whether to award
an interim or permanent injunction were summarized as follows in the Gujarat Bottling
Co. Ltd. case:

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Te grant of an interlocutory injunction during the pendency of legal proceedings is
a matter requiring the exercise of discretion of the Court. While exercising the
discretion the Court applies the following tests –

 whether the plaintiff has a prima facie case,

 whether the balance of convenience is in favor of the plaintiff, and
 whether the plaintiff would suffer an irreparable injury if his prayer for interlocutory
injunction is disallowed.

The decision whether or not to grant an interlocutory injunction has to be taken at a

time when the existence of the legal right assailed by the plaintiff and its alleged
violation are both contested and uncertain and remain uncertain till they are established
at the trial on evidence. Relief by way of interlocutory injunction is granted to mitigate
the risk of injustice to the plaintiff during the period before that uncertainty could be
resolved.

The object of the interlocutory injunction is to protect the plaintiff against injury by
violation of his right for which he could not be adequately compensated in damages
recoverable in the action if the uncertainty were resolved in his favor at the trial. The
need for such protection has, however, to be weighed against the corresponding need of
the defendant to be protected against injury resulting from his having been prevented
from exercising his own legal rights for which he could not be adequately compensated.
The Court must weigh one need against another and determine where the “balance of
convenience” lies.

The determination of damages is based on the “market value of the confidential

information based on a notional sale between a willing seller and a willing purchaser

OBLIGATIONS

A. DURING EMPLOYMENT

In addition to any contractual obligation, all employees, regardless of rank, owe a duty
of good faith and loyalty to their employers. Unless enlarged by express terms in the
employment contract, this duty requires respect for the employer’s trade secrets and
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confidentiality of customer lists. Employees, because of this duty of fidelity, may not use
their general skills to the detriment of their employer while they are employed. This
general obligation does not prevent employees from planning, on their own time and
using their own resources, to go into business for themselves.

AFTER TERMINATION OF EMPLOYMENT

Employees may use general skills and knowledge anywhere following the termination of
employment. They may not use or divulge their employer’s trade secrets or confidential
information. The two types of knowledge are difficult to separate. As noted in Faccenda
Chicken,

The obligation does not extend [after termination], however, to cover all information
which is given to or acquired by the employee while in his employment, and in particular
may not cover information which is only ‘confidential’ in the sense that an unauthorized
disclosure of such information to a third party while the employment subsisted would be a
clear breach of the duty of good faith. Assuming that the information would be
considered a trade secret or “highly confidential”, there are three basis upon which
employers generally seek protection.

Firstly, trade secrets and confidential information are protected by the equitable principles
applicable to breaches of confidence. Namely,

[Protection of trade secrets] depends on thebroad principle of equity that he who has
received information in confidence shall not take unfair advantage of it. He must not
make use of it to the prejudice of him who gave it without obtaining his consent.

In actions of breach of confidence, the Courts will assess whether the information in
question was,

 confidential,
 disclosed so that the recipient knew it was confidential, and
 used by the recipient without permission to the
 Detriment of the party who disclosed the confidence.

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Secondly, in employment cases, trade secrets and confidential information are protected
by express or implied contractual obligations.

Thirdly, in situations involving high-ranking employees and company officers, there are
fiduciary obligations, which protect an employer’s trade secrets or confidential
information.

Often, in actions over trade secrets or confidential information, parties base their claims
on a combination of all three of these basis. However, it is the second and third categories
which have the most bearing upon employment cases. For the purpose of this paper we
will look at each of these in turn.

Contract of Employment

Express Terms

Where there are express terms of an employment contract governing disclosure and
use of trade secrets and confidential information, the Courts will enforce such clauses
provided they are not in restraint of trade.

Implied Terms

In the absence of express terms, the Courts will imply terms into the contract of
employment in order to restrict employees, regardless of rank, from using trade secrets
and “highly confidential” information after the termination of their employment.

Monarch Messenger Services Ltd. Houlding provides a good example of the

application of this general duty of fidelity where the employee is not bound by terms of a
written contract of employment. In that case, the defendant had been employed as a driver
for the plaintiff’s messenger service. After three years of employment, he went into
business for himself and attracted two of the plaintiff’s major customers. At the time that
he was hired, he had not been asked to sign a contract restraining him from going into
business for himself. In the course of his employment, he played a part in obtaining two
major clients and became responsible for servicing their courier needs. There was no
evidence that he had carried away any original or copied price lists. In the absence of
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written contractual obligations, the Court relied on the common law duties of employees
as follows:

The duty of the employee to look after and preserve the employer’s property extends to
the employer’s physical property and also to his intangible property such as his trade
secrets, lists of customers and secret processes. The obligation exists while the employee
is employed and continues after the employment has terminated.

The Court found:

It is also clear that the information entitled to protection for the benefit of the ex-
employer need not be contained in a document or other tangible or physical form. It may
include information committed to memory by the ex-employee

The Court concluded that:

If the information in question can fairly be regarded as a separate part of the

employee’s stock of knowledge which a man of ordinary honesty and intelligence would
recognize, to be the property of his old employer and not his own…, then the Court, if it
thinks there is a danger of the information being used or disclosed by the ex-employee to
the detriment of the old employer, will do what it can to prevent that result. ..

An employee can be in breach of his duty of good faith, if he makes copies or

memorizes a list of his employer’s clients for use after the termination of employment.
The important factor is that the Courts continue to imply the duty with respect to trade
secrets and truly confidential information after the termination of the employment
relationship.

Fiduciary Obligations:-

In addition to the general duty of fidelity, high ranking employees, officers, and
directors (apart from statutory obligations) owe their employer fiduciary duties that forbid
them from deriving personal benefit from business opportunities which arise through their
employment. Like other employees, they may not disclose or use trade secrets and highly
confidential information belonging to their former employer. In addition, they may be
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prevented from using or disclosing less confidential information – that a low ranking
employee could otherwise take advantage of – if doing so would put them in breach of
their fiduciary duties.

As fiduciaries, senior employees may not directly solicit clients of their former
employers, unless this solicitation is part of a general solicitation, which is permissible.
This restriction has particular relevance to “confidential” information concerning
customer lists which Faccenda Chicken would not prevent a “mere employee” from
using. In the words of the Court in Alberts v. Mountjoy:

Thus we have a principle with a principle to the effect that the ex-employee [fiduciary]
is not entitled to make “an unfair use” of information acquired in the course of his
employment, nor may he use confidential information so acquired to advance his own
business at the expense of that of his former employer. (emphasis added)

Courts apply Alberts v. Mountjoy in situations where the ex- employee is of sufficient
rank and where the nature of the business makes the employer particularly vulnerable. For
example, this occurs where a large portion of business flows from repeat business or
policy renewals and where there is an emphasis on the personal relationship between the
client and the employees who service them. In such cases, it is not necessary for the ex-
employee to have physically removed documents containing the sensitive information,
which is a factor that Courts will examine in cases dealing with “regular employees”.

Fiduciary obligations apply to directors, officers and “top employees” with respect to all
degrees of confidential information. They may also apply to less senior employees in a
particular position of trust. It is, of course, a question of fact whether an employee will be
considered a “top employee” with fiduciary duties.

In Ontario, Alberts v. Mountjoy was distinguished in, an R.W. Hamilton Ltd. v. Aeroquip
Corp. et al. The Court found that, although the defendant employees had been “managers”
in a business of selling hydraulic hose, they were not fiduciaries since they did not guide
the affairs of their employer. Consequently, they were free to establish a competing
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business in the same geographical area. The decision contains an interesting observation
by Mr. Justice Smith, underlining the difference between “top management” and “mere
employees”.

In my view the approach of the Courts has struck a balance between the need for
compelling persons who occupy such high positions in the business or corporate world
that the law should prevent the few who could easily succumb to the temptation of
serving two masters from so doing, and freedom of trade. They should be made to
conform to a high standard of ethical behaviour even if by doing so the Courts may
appear to be encroaching upon the requirements of freedom of trade. Not all managerial
positions should lead to the imposition of the very high duty of a trustee lest the law
commit a high proportion of employees in this province to slavery.

Employers are protected from the faithless actions of top management by the law of
trusts and, failing that, in respect of lower level employees by certain elementary rules of
decency that will prevent theft of confidential information and of customer lists. Beyond
this the law dare not go, preferring that the business community rely on contractual
arrangements.

In Coin-A-Matic (Pacific) Ltd. v. Saibil et al , the defendant employee had been the
Western Region Vice President in the plaintiff’s coin-operated machine business. After
leaving the plaintiff’s employ the defendant did not take any documents but did retain
copies of leases and other contracts. He then set up a competing business and solicited a
number of his ex-employer’s clients. There had been no breach of his duty of fidelity as
neither customer information nor standard form contracts, which the defendant used were
confidential according to the tests in Faccenda Chicken. Then, following White Oaks
Welding Supplies v. Tap , the Court held, that while there had been a solicitation of the
ex-employer’s clients, this solicitation was part of a permissible general solicitation. In
the result there had been no breach of the defendant’s fiduciary obligation.

The preceding cases show that there is a limit to how far the fiduciary principle can be
stretched. Employers will resort to fiduciary duties to prevent a former employee from
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using information acquired during employment – information that would not be
considered a trade secret in the strictest sense. However, if the information is a trade
secret or “highly confidential”, it will be protected by the general obligations owed by all
employees.

CONSIDERATIONS

THE ONUS OF PROOF

An employer seeking to protect information has the onus of proving its secret or
confidential nature. As indicated previously an employer’s ability to protect a trade secret
or confidential information will depend on the circumstances of the particular case.

In employment related cases, the Courts consider whether the:

 employer possesses a trade secret,

 employee knew it was a secret,
 employee acquired knowledge of the secret during his employment, and,
 employee has, after the termination of employment, made improper use of the
knowledge.

Looking at each of these four elements will provide the factual backdrop against which
one can measure the extent of the obligations of employers and employees in this area.

Important criteria ;-

a) Possession of a Trade Secret

i) Existence of a Secret

Assuming there is no doubt over the “ownership” of the information in question,

Courts will consider a number of factors when deciding whether information is
confidential or a trade secret. These include the:

• extent to which the information is known outside the business;

• extent to which it is known by employees and others involved in the business;

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• extent of measures taken to guard the secrecy of the information;
• value of the information to both the holder of the secret, and to his competitors;
• amount of effort or money expended in developing the information;
• ease or difficulty with which the information can be properly acquired or duplicated by
others; and
• whether the holder of the secret and the taker treat the information as secret.

Probably the most important of these considerations concerns the employer’s ability to
satisfy the Court that it took positive steps to maintain the secrecy of the information in
question.

For example, in Robin Nodwell Mfg. Ltd. v. Foremost Developments Ltd. and
Nodwell , the defendant, Nodwell, assisted the plaintiff in the development of a four-track
vehicle, which he later perfected while working for another employer, Foremost
Developments Ltd. Since there was no written contract of employment, the plaintiff
sought an injunction on the grounds that Nodwell had breached an implied term of his
employment contract not to disclose trade secrets. The Court found that the vehicle was
not a trade secret because it was not developed in secrecy.

By that I do not mean to say that he was running out and telling his competitors from
the housetops but he was not running a very tight security proposition and this he
continued while in the employ of the plaintiff…[It] is significant that no documentary
warnings were went out to anyone as to any change in policy and I am satisfied on the
evidence that during the course of the development, there were, notwithstanding
restrictions, a large number of people who would come into the shop an see the [vehicle]
in various stages of development.

This case makes it clear that the employer has a responsibility to take active steps to
guard what it views as its trade secrets or confidential information.

ii) Maintenance of Secrecy

The very nature of trade secrets and confidential information makes it difficult for an
employer to satisfy the onus in litigation. Secrets will lose their special status once they

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have been revealed, a point well illustrated by R.L. Crain Limited v. Ashton and Ashton
Press Manufacturing Company Limited. In that case, the defendant, Ashton, was a former
machine shop foreman of the plaintiff, Crain. Crain alleged that Ashton had become
familiar with trade secrets and confidential information and used them to produce his own
machine.

Unlike in Nodwell, the Court was prepared to accept that the information had, for a while,
been a trade secret. However, it held that the information had ceased being confidential
by the time Ashton had left the plaintiff’s employ. The Court refused to protect the
information by granting an injunction to prevent Ashton from making and selling his own
machines.

b) Employee Awareness

Where an employer has actively guarded its confidential information or trade secrets by
restricting access to the sensitive work areas and warning employees of the confidential
nature of the information, it should be able to prove that its former employees were aware
of the confidential nature of particular information.

c) Acquired During Employment

The employer must also prove that the employee learned the secret during his
employment – a question, which touches on the skills and knowledge of the employee at
the time his employment commences. It is in essence, a restatement of the first criterion
concerning the employer’s possession of a trade secret. This will be a problem in cases
where the employee developed a trade secret before or after joining the employer. The
case, Dyform Engineering Ltd. et al v. IttupHollowcore International Ltd. et al
illustrates this point well.

In Dyform, the defendant, Putti worked for the plaintiff as plant superintendent. Before
joining the plaintiff he had developed a concrete extruding machine for which he had
obtained a patent. Putti later assigned the patent to the plaintiff. After leaving the

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plaintiff’s employ, Putti developed an improvement to the machine. It was argued that he
had an obligation, as a former employee, not to reveal the trade secret to his former
employer’s competitors. In dismissing the argument, the Court noted,

As to trade secrets disclosed…, there is no evidence the…technology was acquired by

Putti during the term of his employment. It would appear in the evidence he had
formulated the concept of the…technology [after the termination of his employment]. To
do so he no doubt knew of certain secrets that were exploited by him and resulted in a
subsequent patent application. But there is no evidence that those secrets were acquired
by him whilst employed by the plaintiff…

d) Unauthorized Use

Assuming that the employer can satisfy the first three criteria, it still has to prove
unauthorized use. It is not enough to prove only the possibility of misuse, even where the
ex-employee has physically taken or copied secret or confidential documents,
surreptitiously or otherwise.

Montour Ltee v. Jolicoeur , concerned an employee whom the Court found had
taken or copied commercial cooking recipes and used them with his new employer. The
employee was a junior employee with no managerial responsibilities. There was no term
of the employment contract restraining the employee from going to work for a competitor
and no term on the non-disclosure of trade secrets or confidential information.
Nevertheless, both the employee and his new employer were found jointly and severally
liable in damages for the plaintiff’s losses. The Court simply could not believe that the
defendants could have developed so many products without using the plaintiff’s recipes.

In Monarch Messenger Services Ltd. Houlding , the plaintiff proved that its former
employee had solicited customers for a new employer. The Court found that the
confidential information related to

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• identity of customers, the identity of key personnel employed by customers, pricing
practices and
• a general knowledge of the former employer’s business practices.

Difference between :Trade Secrets, Confidential Information, and Know-how:-

The world is growing increasingly more accessible every day. Ideas can be shared with
millions in an instant via the internet and more information is being published than ever
before. In this increasingly complicated, competitive, and connected world, some
information is best protected by keeping it secret rather than by traditional intellectual
property rights.

Trademarks, copyrights, and patents are common intellectual property topics. On the
other hand, trade secrets, know-how, and confidential information are a lot less popular,
even though they can each play an important role in a business’s prosperity. So, what are
trade secrets, know-how, and confidential information, and how are they different?

Confidential Information

Some of the world’s most successful companies realized long ago that there is
immense value in keeping certain intellectual assets confidential, and that by protecting
their confidentiality, they could maintain a competitive advantage on the market.

Ideas, information, and processes that cannot be patented, reverse engineered, or the
subject of copyright can be protected by keeping them confidential. So, one way to define
confidential information is any information that a business does not want its competitors
or the general public to know or have access to, such as customer lists, sales statistics,
financial data, legal documents, new product proposals, marketing plans, and business
contacts.

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Furthermore, confidential information is often information embodied in methods and
strategies used to manufacture products or provide services, such as formulas, recipes,
and processes that may or may not meet the requirements for statutory protection. Trades
secrets and know-how are both subsets of confidential information.

Trade Secrets:-

A simple definition of a trade secret is any formula, process, design, pattern, or

commercial method that is not known or readily ascertainable by the general public and is
subject to efforts to keep it secret. Examples of famous trade secrets include:

 Google’s search engine algorithm

 The recipes for Coca-Cola and Pepsi
 The formula for the lubricant WD-40

Common types of trade secrets include:

 Formulas, recipes, and processes

 Devices, software, and products
 Plans, designs, and patterns
 Customer and supplier lists
 Marketing and sales techniques and forecasts
 Advertising strategies
 Unannounced business relationships and opportunities
 Personal information, such as the identities of key employees and their compensation
 Trade secrets are legally protected from misappropriation. In general, a trade secret is
misappropriated when a person:
 Acquires the trade secret through means that he or she knew or should have known was
improper.
 Discloses or uses the trade secret without permission when he or she knew or should
have known that the trade secret was acquired through improper means.
 The owner of a trade secret can, amongst other things, sue a defendant to recover for
economic losses caused by the misappropriation. This is usually measured by the

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owner’s lost profits or the defendant’s unjust enrichment. Furthermore, in some cases,
punitive damages may also be awarded.

In general, in order for a trade secret to be protected, it must meet the following
requirements:

 Be commercially valuable
 Not be known or readily ascertainable
 Create or embody a competitive edge
 Be subject to efforts to keep it secret

Trade secret protection lasts indefinitely, or until the trade secret is published or
otherwise becomes generally known. Furthermore, there is no formal application or
registration process required for a trade secret, but the owner must take reasonable steps
to keep it secret.

Know-how

Manufacturing of a product or performance of a service which is not readily available

to the general public, that gives the acquirer a competitive advantage, and for which there
is no precise or accurate description.

Know-how typically relates to the ability to:

 Make the right business decisions

 Manage people
 Lead and motivate
 Research
 Design
 Utilize and maintain machines, technologies, and data

The relationship between know-how and trade secrets is often misunderstood. First of
all, while know-how refers to factual knowledge that is not generally known to the public
and which may be difficult for others to imitate, that knowledge may not necessarily be
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secret. Trade secrets, as the name implies, need to be kept secret. Secondly, trade secrets
usually include know-how.

Trade Secrets, Know-how, and Confidential Information Important:-

There are many advantages to keeping important technical information and knowledge
secret from your competitors, but for the most part, it comes down to profit. By choosing
not to disclose important information that gives it a competitive advantage, a company
may be able to maintain monopolistic power in the market and/or build their market
without competition.

In many cases, whether the subject matter can be patented or copyrighted makes no
difference. This is because patents and copyrights only provide a limited monopoly.
Sometimes, it may be in the best interest of those who have an idea that can be patented
or information that can be copyrighted to keep it a secret rather than disclose it to the
world only to receive a limited monopoly.

Take Coca-Cola as an example, one of the leaders in the beverage industry. Coca-Cola
has successfully sold its products to millions of people all over the world while having
never disclosed the Coca-Cola recipe to the public. To this day, the Coca-Cola recipe is
still a mystery and no one knows exactly what ingredients and at what quantities are
required to produce a bottle of Coca-Cola. This means that it is practically impossible for
the company’s competitors to imitate the product.

What’s more, Coca-Cola has chosen not to patent its process. This is because, in order
to be granted a patent for the process, the company would have to disclose the process
and recipe by which Coca-Cola is made. Instead, the company has chosen to protect its
competitive advantage by treating the recipe as a trade secret, which can theoretically be
kept secret forever.

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UNIT-6

Trade and Merchandise Marks

Historical functional origins:-

The rationale of modern era trademark protection has its origins in two medieval
historical functions as practised by the craft guilds in the then more personal or
proximate interactive relationship between the manufacturer-proprietor-consumer
triumvirate , namely:

Signa mercatorum:

This was a proprietary or mercantile mark which was usually but optionally affixed
to the owner’s merchandise. In his 1927 seminary paper, Frank Isaac Schetcher aptly
captured the purpose of this mark as “either for the benefit of illiterate clerks or in order
that in the case of shipwreck or piracy (or some other agency) the goods might be
identified and reclaimed by the owner.” As such, this mark was intended to identify the

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proprietary owner of the goods in commercial channels of trade, and had nothing to do
with identifying the source of production of those goods to which it had been affixed.

Hallmarks:

This was a regulatory production mark which was peremptorily affixed to the
goods by either statutory imperative, administrative order, municipal or guild regulation.
Its purpose was to ensure quality craftsmanship by enabling the guild warden to identify
the source of defective or inferior goods and discipline the manufacturer for their
ineptitude or errant conduct, or in the event of goods being smuggled into a protected
monopolistic area, to discover and confiscate the infringing goods. This type of mark
then served to identify the source of production or manufacture of the goods bearing the
mark.

Transfamatory ramifications

The visionary Frank I Schechter espoused and postulated the evolutionary trend of
trademark functions in line with commercial practices as follows:

“Discarding then the idea that a trademark or trade name informs the consumer as
to the actual source or origin of goods, what does it indicate and with what result? It
indicates, not that the article in question comes from a definite or particular source, the
characteristics of which or the personalities connected with which are specifically known
to the consumer, but merely that the goods in connection with which it is used emanate
from the same possibly-anonymus source or have reached the consumer through the
same channels as certain other goods that have already given the consumer satisfication,
and that bore the same trademark.”

From this postulation we distil four major modern era information agency
functions of trademarks as hereunder summarized.

Badge of origin or source:-

This remains one of the primary functions of trademarks, albeit from an impersonal
as opposed to old day personal interactive relationship between the consuming public
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and the manufacturer or proprietary owner of the trademark. For, given the
transformation of manufacturing processes from labour-intensive to high technology and
distributorship from direct channels to diversified and indirect channels, this has made it
virtually impossible for the modern day consuming public to, with any degree of
certainty, link the ultimate goods to physically identifiable sources or origins.

Product differentiation:-

This function signifies the identification and differentiation or distinction of goods

or services of one undertaking from those of other undertakings. Whereas traditionally
this function was somewhat obscured and subsumed in the source or origin function, the
transformation trade practices elevated it to visibility and recognition at parity with the
origin or source function. For, in seeking to distinguish between competing products, the
consumer no longer relies on personal acquaintance with the manufacturer, but now
relies more on the combination of distribution channels and the distinctiveness or their
familiarity with the trademark affixed to the products, whose previous satisfication has
become ingrained in their sub-conscious mind.

Registrable Trademark:-

On the spectrum of registrability, invented/fanciful words rate first. Words that

have no meaning and are a random combination of two or more words/letters are
invented words. Almost on an equal footing are arbitrary trademarks. Trademarks that
are common names, but are in no way related to the goods or services they represent.

Grounds of Refusal:

Section 9 called Absolute Grounds and Section 11, called Relative Grounds, of the
Trademarks Act, 1999 provides certain grounds on which a trademark could be refused
registration.

Absolute Grounds:-

Section 9 (1) lays down

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“The trade marks which are devoid of any distinctive character, that is to say, not
capable of distinguishing the goods or services of one person from those of another
person:

which consist exclusively of marks or indications which may serve in trade to

designate the kind, quality, quantity, intended purpose, values, geographical origin or the
time of production of the goods or rendering of the service or other characteristics of the
goods or services;

which consist exclusively of marks or indications which have become customary in

the current language or in the bona fide and established practices of the trade.

Two exceptions to this rule are the marks which have “acquired distinctiveness”
and “well-known trademarks (information on which is mentioned below).

Section 9(2) lays down,

“A mark shall not be registered as a trade mark if —-

 it is of such nature as to deceive the public or cause confusion:

 it contains or comprises of any matter likely to hurt the religious susceptibilities of
any class or section of the citizens of India;
 it comprises or contains scandalous or obscene matter;
 its use is prohibited under the Emblems and Names (Prevention of Improper Use)
Act, 1950.

Examples

First Instance : where a person applied for mark like “PATA” for footwear which is
deceptively similar to BATA

Section 9(3) lays down,

 “A mark shall not be registered as a trade mark if it consists exclusively of –

 the shape of goods which results from the nature of the goods themselves;
 the shape of goods which is necessary to obtain a technical result;

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 the shape which gives substantial value to the goods”

It is pertinent to note that shape of goods per se is registrable. However such shape
cannot be the very nature of the goods or the shape becomes mandatory to attain a
technical result or gives some value to it.

These are the absolute grounds on which a mark may be refused registration.

Relative Grounds:

Section 11 lays down that a trade mark shall not be registered if,because of

 its identity with an earlier trade mark and similarity of goods services covered by
the trade mark; (or)
 its similarity to an earlier trade mark and the identity or similarity of the goods or
services covered by the trade mark.
 There exists a likelihood of confusion on the part of the public, which includes the
likelihood of association with the earlier trade mark

This provision deals with refusal of registration due to prior existing

similar/identical trademarks. So where the mark is similar/identical to a prior existing
mark in relation to similar/identical goods/services and due to which there is a possibility
of the public to get confused/deceived as to origin of the goods/services, the said mark
shall be refused registration.

One exception for this is Section 12 which deals with “honest, concurrent usage,”
i.e where both the marks have been honestly and concurrently being used by the
respective trademark holders, then registration may not be refused.

Section 11(2) lays down “A trade mark which –

 is identical with or similar to an earlier trade mark

 is to be registered for goods or services which are not similar to those for which
the earlier trade mark is registered in the name of a different proprietor.”

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This provision deals with marks which are deceptively similar/identical to an
earlier mark but is used/applied with respect to goods/services totally different from
those of the earlier mark. In such a case, the subsequent mark will be refused registration
only where the earlier mark is well-known and the subsequent mark would be
detrimental to the interest of the earlier mark.

Section 11(3) of the Act lays down “A trade mark shall not be registered if, or to
the extend that, its use in India is liable to be prevented —

 by virtue of any law in particular the law of passing off protecting an unregistered
trade mark used in the course of trade (or)
 by virtue of law of copyright.”

Procedure for registration of Trade:-

STEP :1

All Trade Marks must be searched to determine their availability before they are
used... If a word, design or symbol is not to be featured in an advertising programme or
on a label, it should be searched even if you plan to use it for a short time. If you do so,
the cost of the search can save your investment on advertising and other promotional
material and also it will avoid an injunction or an award of damages in a suit. Before
making an application for registration, the applicant can apply for search to know
whether his Trademark resembled any other mark already on record.

STEP :2

After searching is made, according to the report the applicant can decide whether
to apply for the mark or not. Once he decides to apply, he has to fill up basic details
based on which the attorney or agent will prepare documents for registration. Once the
application is filed with the Trade Marks Registry, they will accept the application and
subsequently the number will be allotted to the applicant. You can start using TM.

STEP :3

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The scrutinization of the application will be done at this stage. If the Registrar has
any objections to the acceptance of the application, he will communicate his objections
to the applicant or attorney.

STEP :4

If the applicant or attorney requests for personal hearing of the case, the Registrar
can fix a date for hearing.

STEP :5

The Registrar may after hearing the Attorney, consider the submissions made by
the attorney pass such orders he may deem fit.

STEP :6

Under Section 20 of the act, when an application for registration of Trade Mark has
been accepted, whether absolutely or subject to conditions, the Registrar shall pass an
order for advertising in the prescribed manner in the Trade Marks Journal in order to
give third parties an opportunity for the opposition.

The applicant has to pay the prescribed fee and may be required to supply the printing
block for the Trademark satisfactory to the Registrar and furnish such other information
as may be necessary relating to series of Trade Mark differing from one another in
respect of the particulars. If there is no opposition filed for the mark applied, it will be
through for registration. The registration certificate will be issued at this stage, which is
the final stage. You can start using

 Trademark Distinctiveness
 Trademark distinctiveness refers to the features of a registered design that
identify products or services as originating from a specific company.
 Distinctive trademarks are:
 Different from other marks used to describe similar goods and services.

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 Ones which include a visual description of the type of goods or service.
 Recognized as identifying the source of the goods or service.
 Spectrum of Distinctiveness
 Generic Marks: Use a common word for a product or service.

Descriptive Marks: Describe, per the United States Patent and Trademark Office, an
"ingredient, quality, characteristic, function, feature, purpose, or use of the specified
goods or services."

Suggestive Marks: Need imagination, thought, or perception to arrive at an

understanding of what the mark represents.

Arbitrary Marks: Have no relation to the goods or services the mark represents.

Fanciful Marks: Consist of a coined phrase or invented name.

Why is Trademark Distinctiveness Important?

The more distinctive a trademark design is, the easier it is to register that
trademark. The higher up in the distinctiveness spectrum a trademark is, the more
protection that it receives under U.S. law. Having a trademark high in the spectrum can
help a company avoid the effort and cost involved in fighting patent infringement issues.

Even when the trademark is a common word, it can still be distinctive for a
particular good or service. Even though "Apple" is a common English word, it was
successfully trademarked for computers and related products. It was also trademarked
(by another company) for a record label. The computer company and the record label
later made an agreement that the computer company would not market music software
under the name "Apple" or when using the "Apple" logo. Interestingly, MacOS comes
with a System Sound named "sosume." Recently, the Apple computer company started
an electronic music store, which prompted a trademark lawsuit from the Apple Music
company.

Trademark Infringement and Remedies:-

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A trademark is a symbol in the form of a word. It is a device or a label which is
applied to articles of commerce with a view to stipulate the customers that the particular
article is a good manufactured or otherwise dealt in by a particular person as
distinguished from similar goods manufactured or dealt by other persons. A trademark
identifies the product of its origin and guarantees of its unchanged quality. A trademark
advertises the product and distinguishes it from others. A trademark is a word, phrase,
symbol or design, or combination of words, phrases, symbols or designs is used in the
course of trade which identifies and distinguishes the source of the goods or services of
one enterprise from those of others. A trademark is different from a copyright or a patent
or geographical indication. A copyright protects an original artistic or literary work; a
patent protects an invention whereas a geographical indication is used to identify goods
having special characteristics originating from a definite territory.

Almost all jurisdictions including India employ a classification system in which

goods and services have been grouped into classes for registration. Most countries
follow the same classification system, namely the International Classification of Goods
and Services, which consists of 34 classes of goods and 8 classes of services. (The
WIPO recently revised the Nice Classification, adding three service classes (43, 44, and
45) and restructuring Class 42, retaining certain services. This provision has not yet been
implemented in India).For example, printed matter, newspaper and periodicals are
classified in Class 16 while services in the field of publication comes under Class 41.The
registration of a trademark confers on the registered proprietor of the trademark the
exclusive right to use the trademark in relation to the goods or services in respect of
which the trademark is registered. While registration of a trademark is not compulsory it
offers better legal protection for action for infringement. Any person can apply for
registration of a trademark to the Trademark Registry under whose jurisdiction the
principal place of the business of the applicant in India falls. In case of a company about
to be formed, anyone may apply in his name for subsequent assignment of the
registration in the company's favor.Before making an application for registration it is
prudent to make an inspection of the already registered trademarks to ensure that
registration may not be denied in view of resemblance of the proposed mark to an
existing one or prohibited one. An application for trademark may be made on Form TM-
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1 with prescribed fee of Rs. 2500/- at one of the five office of the Trade Marks Registry
located at Mumbai, Delhi, Kolkata, Chennai and Ahmedabad depending on the place
where the applicant resides or has his principle place of business. The application is
examined to ascertain whether it is distinctive and does not conflict with existing
registered or pending trademarks and examination report issued. If it is found be
acceptable then it is advertised in the Trade Marks Journal to allow others to oppose the
registration. If there is no opposition or if the opposition is decided in favor of the
applicant then the mark is registered and a certificate of registration is issued. If the
applicant's response does not overcome all objections, the Registrar will issue a final
refusal. The applicant may then appeal to the Intellectual Property Appellate Board, an
administrative tribunal. A common ground for refusal is likelihood of confusion between
the applicant's mark with registered mark or pending prior mark. Marks, which are
merely descriptive in relation to the applicant's goods or services, or a feature of the
goods or services, may also be refused registration. Marks consisting of geographic
terms or surnames may also be refused. Marks may be refused for other reasons as well.
The term of a trademark registration is for a period of ten years. The renewal is possible
for further period of 10 years each. Unlike patents, copyrights or industrial design
trademark rights can last indefinitely if the owner continues to use the mark. However, if
a registered trademark is not renewed, it is liable to be removed from the register.

Anyone who claims rights in a mark can use the TM (trademark) or SM (service
mark) designation with the mark to alert the public of the claim. It is not necessary to
have a registration, or even a pending application, to use these designations. The claim
may or may not be valid. The registration symbol, (R), may only be used when the mark
is registered.

India’s obligations under the TRIPS Agreement for protection of trademarks, inter
alia, include protection to distinguishing marks, recognition of service marks, indefinite
periodical renewal of registration, abolition of compulsory licensing of trademarks, etc.
India, being a common law country, follows not only the codified law, but also common
law principles, and as such provides for infringement as well as passing off actions

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against violation of trademarks. Section 135 of the Trade Marks Act recognizes both
infringement as well as passing off actions. Trademark Infringement And Remedies

Trademark infringement is a violation of the exclusive rights attaching to a

registered trademark without the authorization of the trademark owner or any licensees
(provided that such authorization was within the scope of the license). Infringement may
occur when the infringer (i.e. the person doing the infringing act), uses a trademark
which is identical or confusingly similar to a registered trademark owned by another
person, in relation to products or services which are identical or similar to the products
or services which the registration covers. The owner of such registered trademark may
commence legal proceedings against the infringer.

A trademark which is not registered cannot be infringed as such, and the trademark
owner cannot bring infringement proceedings. Instead, the owner can commence
proceedings under the common law for passing off or misrepresentation, or under
legislation which prohibits unfair business practices. In some jurisdictions, infringement
of trade dress may also be actionable. To establish infringement with regard to a
registered trademark, it is necessary only to establish that the infringing mark is identical
or deceptively similar to the registered mark and no further proof is required.

Trademark infringement is an infringement of exclusive rights attaching to a

trademark without the authorization of the trademark owner or any licensee. Trademark
infringement typically occurs when a person uses a trademark which may be either a
symbol or a design, with resembles to the products owned by the other party. The
trademark owner may begin an officially permitted proceeding against a party, which
infringes its registration. There are two types of remedies are available to the owner of a
trademark for unauthorized use of its imitation by a third party. These remedies are an
action for passing off in the case of an unregistered trademark and an action for
infringement in case of a registered trademark. An infringement action and an action for
passing off are quite different from each other, an infringement action is a statutory
remedy and an action for passing off is a common law remedy.

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In case of infringement / passing off trademark, a criminal complaint can also be
filed. It may be noted that under the Provisions of the Trade Marks Act, 1999, the
offences under the Act are Cognizable, meaning there by that police can register an FIR
(First Information Report) and prosecute the offenders directly.

Civil remedies in Trademark:

 Injunction/ stay against the use of the trademark

 Damages can be claimed
 Accounts and handing over of profits
 Appointment of local commissioner by the court for custody/ sealing of infringing
material / accounts
 Application under order 39 rule 1 & 2 of the CPC for grant of temporary / ad
interim ex-parte injunction

The Courts can grant injunction and direct the custom authorities to withhold the
infringing material / its shipment or prevent its disposal in any other manner, to protect
the interest of the owners of intellectual property rights. This legal proposition can be
enforced with / without involving the concerned authorities as a party in the suit.

The relief which a court may usually grant in a suit for infringement or passing off
includes permanent and interim injunction, damages or account of profits, delivery of the
infringing goods for destruction and cost of the legal proceedings.

The order of interim injunction may be passed ex parte or after notice. The Interim
relief's in the suit may also include order for:

(a) Appointment of a local commissioner, which is akin to an “Anton Pillar Order”,

for search, seizure and preservation of infringing goods, account books and preparation
of inventory, etc.

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(b) Restraining the infringer from disposing of or dealing with the assets in a
manner which may adversely affect plaintiff’s ability to recover damages, costs or other
pecuniary remedies which may be finally awarded to the plaintiff.

Passing off under trademark – An Appraisal

Passing off is a common law tort, which can be used to enforce unregistered
trademark rights. The law of passing off prevents one person from misrepresenting his
goods or services as that of another.

The concept of passing off has undergone changes in the course of time. At first it
was restricted to the representation of one person's goods as those of another. Later it
was extended to business and services. Subsequently it was further extended to
professions and non-trading activities. Today it is applied to many forms of unfair
trading and unfair competition where the activities of one person cause damage or injury
to the goodwill associated with the activities of another person or group of persons.

The basic question in this tort turns upon whether the defendants' conduct is such
as to tend to mislead the public to believe that the defendants' business is the plaintiff's
or to cause confusion between the business activities of the two.

The tort of passing off is sufficiently wide to give relief to charities engaged in
trading type activities.

In British Diabetic Association V Diabetic Society , both the parties were

charitable societies. Their names were deceptively similar. The words 'Association' and
'Society' were too close since they were similar in derivation and meaning and were not
wholly dissimilar in form. Permanent injunction granted.

Elements Of Passing Off:

The three fundamental elements of passing off are Reputation, Misrepresentation

and Damage to goodwill. These three elements are also known as the CLASSICAL
TRINITY, as restated by the House of Lords in the case of Reckitt & Colman Ltd V
Borden Inc. It was stated in this case that in a suit for passing off the plaintiff must
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establish firstly, goodwill or reputation attached to his goods or services. Secondly he
must prove a misrepresentation by the defendant to the public i.e. leading or likely to
lead the public to believe that the goods and services offered by him are that of the
plaintiff's. Lastly he must demonstrate that he has suffered a loss due to the belief that
the defendant's goods and services are those of the plaintiff's.

Modern Elements of Passing off - In the case Erven Warnink Vs. Townend 3 ,
Lord Diplock gave the essential modern characteristics of a passing off action. They are
as follows:

 Misrepresentation
 Made by a person in the course of trade
 To prospective customers of his or ultimate consumers of goods or services
supplied by him.
 Which is calculated to injure the business or goodwill of another trader.
 Which causes actual damage to a business or goodwill of the trader by whom the
action is brought.

The above concept of passing off can be explained with the help of few case laws:

Honda Motors Co. Ltd V Charanjit Singh & Others:

Facts: Plaintiff was using trademark "HONDA" in respect of automobiles and

power equipments. Defendants started using the mark "HONDA" for its pressure
cookers. Plaintiff bought an action against the defendants for passing of the business of
the plaintiff.

Held: It was held that the use of the mark "Honda" by the defendants couldn't be
said to be an honest adoption. Its usage by the defendant is likely to cause confusion in
the minds of the public. The application of the plaintiff was allowed.

Why passing off is necessary:

The Trademark is providing protection to registered goods and services, but the
passing off action is providing a protection to unregistered goods and services. The most

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important point is that the remedy is same in both the cases but the Trademark is
available to only the registered goods and services and passing off is available to
unregistered goods and services. To more knowledge of this context we can summaries
the case of Durga Dutt vs. Navaratna Pharmaceutical[2]; in this case the Supreme Court
is set out the distinction between infringement and passing off. The action for
infringement is a statutory remedy conferred on the registered owner of a registered
Trade mark and has an exclusive right to the use of the trade mark in relation to those
goods. And the passing off is available to the unregistered goods and services.

The second most important point is that the use by the defendant of the trade mark
of the plaintiff is not essential in an action for passing off, but in the case of an action for
infringement this will not applicable.

The third important distinction between these two is that if the essential features of
the trade mark of the plaintiff have been adopted by the defendant, the fact that the get
up, packing and other writing or marks on the goods or on the packets in which he offers
his goods for sale marked differences or indicate clearly a trade origin different from that
of the registered owner of the mark would be immaterial; but in case of passing off the
defendant may escape liability if he can show that the added matter is sufficiently to
distinguish his goods from those of the plaintiff.

In the cases of infringement the burden is always lies to the plaintiff. In the case of
S.M. Dyechem Ltd. v. Cadbury (India) Ltd. In this case an infringement action is fail
where plaintiff cannot prove registration or that its registration extends to the goods or to
all the goods in question or because the registration is invalid and yet the plaintiff may
show that by imitating the mark otherwise, the defendant has done what is calculated to
pass off his goods as those plaintiff.

What the plaintiff must establish in a passing off action?

It is essential for success in a passing off action based on the use of a mark or get
up that the plaintiff should show that the disputed mark or get up has become by user
distinctive of the plaintiff’s goods so that the use in relation to any goods of the kind

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dealt in by the plaintiff of that mark or get up will be understood by the trade and the
public as indicating the plaintiff’s goods.

When the passing off arise:

The passing off action is arise when there is misrepresentation, when it is harm the
existence plaintiff’s goodwill, when it is made by a trader in the course of trade, which is
injure the business of another trader and which cause actual damage to the business or
goodwill of the trader by the whom action is brought.

But these requirements were reduced to three in Reckitt & Colman Products Ltd.
V. Borden Inc. now there are three essential requirements for the passing off action:

The Claimant’s Goodwill: Although damage is the gist of an action for passing
off, but the plaintiff must show that there is a reasonable reason of his being injured by
the defendant’s action, even if the conduct of the defendant might be calculated to
deceive the public. A private individual cannot institute a suit for passing off even if the
defendant practices deception upon the public, unless it is proved that the defendant’s
action is likely to cause damage to the individual.

Misrepresentation: Misrepresentation in the simplest form of passing off. If A says

falsely these goods I am selling are B’s goods. It is a clear case of passing off. In simple
way we can say that misrepresentation should lead. Or be likely to lead confusion on the
part of consumers. In case ofKhemraj v. Garg, in this case the defendants had copied the
get up, layout, design and colour scheme, etc. and the name “manavpanchang,mani ram
panchang” and “shri vallabh Mani Ram panchang” of the plaintiff’s panchang.The court
held that it is similar to the plaintiff’s product and Interim injunction was granted.

In the case of Rupa & Co. Ltd v. Dawn Mills Co. Ltd. In this case the defendant
manufacture an underwear which named dawn as similar to the plaintiff’s manufactured
underwear don, which is creating confusion in the minds of people because the layout,
get up and colour combination is same to the plaintiff’s product.

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Damage: Damages are available in a passing off action. And remedy is available
in both cases whether the infringement suit or passing off action in both the cases
remedy is given.

How the passing off action arises?

The case of Akash Arora vs. Yahoo Inc, in this case the court held that the
yahooindia is creating a confusion in the mind of the people. And the defendant
yahooindia is same as the plaintiff’s yahoo. But as a student of law I am not go with the
case decision because my views regarding to the case is that his site may be better than
his competitors. And second important thing is that those who access the Internet they
are capable to distinguish which site is yahoo. in and which one is yahooindia.So the
question of confusion is not create when the people are able to distinguish between the
sites then there will be no question of passing off arise.

The second case In Reckitt & Colman of India Ltd. vs. M.P. Ramachandran &
Anr,Hon’ble Calcutta High Court (Barin Ghosh, J.) laid down five principles for
granting an injunction in case of comparative advertising:

i. A tradesman is entitled to declare his goods to be best in the world even though
the declaration is untrue;

ii. He can also say that his goods are better than his competitors, even though such
statement is untrue;

iii. For the purpose of saying that his goods are the best in the world or his goods
are better than his competitors he can even compare the advantages of his goods over the
goods of others;

iv. He however, cannot, while saying that his goods are better than his competitors,
say that his competitor’s goods are bad. If he says so, he really slanders the goods of his
competitors and their goods, which is not permissible.

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v. If there is no defamation to the goods or to the manufacturer of such goods no
action lies, but if there is such defamation an action lies and if an action lies for recovery
of damages for defamation, then the court is also competent to grant an order of
injunction restraining repetition of such defamation.

The Hon’ble court also observed in this case that “One can boast about
technological superiority of his product and while doing so can also compare the
advantages of his product with those which are available in the market. He can also say
that the technology of the products available in the market has become old or obsolete.
He can further add that the new technology available to him is far more superior to the
known technology, but he cannot say that the known technology is bad and harmful or
that the product made with the known technology is bad and harmful. What he can claim
is only that his product and his technology is superior. While comparing the technology
and the products manufactured on the basis thereof, he can say that by reason of the new
superior technology available to him, his product is much superior to others. He cannot,
however while so comparing say that the available technology and the products made in
accordance therewith are bad and harmful.”

Reverse passing off:-

Another variety, somewhat rarer is so-called 'reverse passing off'. This occurs
where the defendant markets the plaintiff's product as being the defendant's product (see
John Roberts Powers School v Tessensohn [1995] FSR 947). It will be recalled that
orthodox passing off entails the defendant representing that his product is the plaintiff's
product. In many cases, reverse passing off can be explained under the ordinary rules:
for example where a defendant may represent that he or she made goods which were in
fact made by the plaintiff so as to pass off his own business as a branch of the plaintiff's.

Assignment and Transmission of Trademark

Assignment and Transmission of Trademark is a process in which ownership of the

trademark is passed from one person to another with full or partial rights depending on
the terms and conditions of the owner of the trademark. Registered and Unregistered

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Trademarks are assigned and transmitted from one person to another with or without the
goodwill of the business concerned.

Difference between the Assignment and Transmission of the Trademark

Generally, the term Assignment and Transmission are used interchangeably but Sec 2
of the Trademark Act clearly distinguishes between the Assignment and Transmission. In
case of an assignment of a trademark, there is a change in the ownership of the registered
brand and in case of Transmission, the right in the trademark continues to vest with the
original owner but only a few restricted rights to use the brand/mark are given to the third
party.

For example, X is the owner of the trademark “œ” and decided to assign his trademark
to Y. It means that X will no longer have the ownership of the trademark and after proper
assignment Y will be registered owner of the trademark and will have all the rights to it.
Whereas if X decided to do the Transmission of a Trademark it will mean that X is still
the original owner of the trademark but he has just given restricted rights and liabilities to
Y to use the trademark.

Types of Assignment and Transmission of Trademark

Complete Assignment and Transmission

It means the transfer of all rights including rights to further transfer, rights to royalties,
etc from one individual to another. For example, A proprietor ‘X’ sells his all rights of
the Trademark to Y another proprietor according to which Y have all the exclusive rights
of the Trademark and he can use the trademark in any way as he deems fit, if he wants he
can further transfer it, he can receive royalties for the usage of Trademark or set some
guidelines for the usage of the trademark as they deem fit and there will be no need to
take the approval of ‘X’.

Partial Assignment

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It means the transfer of ownership specified or restricted to certain services or products.
For example: ‘X’ a proprietor have a Trademark which deals with men’s lifestyle
products which include clothing to shoes assign and transfer his trademark to Z on a
condition that they can use their trademark only in dealing with shoes and nothing else,
the only X has the right to use the trademark on all the products. This kind of transfer is
known as a partial transfer.

Assignment with goodwill

It means to transfer and assignment of the trademark with all the rights and values
associated with the trademark from one person to another. For example, X assign and
transfer his trademark to Z with all the rights and values. By doing this Z has the full right
to use the trademark for all men’s lifestyle products or for any other products that they
manufacture in future.

The assignment without goodwill

It means the transfer of trademark by the owner in such a way it can be used for any
other purpose except the original one.

For example: X proprietor with a trademark deals with men’s lifestyle products, assigns
and transfers his trademark to Z on a condition that Z can use his trademark for any
product that he wants except for men’s lifestyle products.

Conditions for assignment and transmission as given in section 42

Section 42 of the Trademark Act describes Conditions for Assignment and

Transmission of a Trademark otherwise than in connection with the goodwill of a
business. It states that assignment and transmission of the trademark otherwise than in
connection with goodwill will not take effect until and unless assignee apply to the
registrar concerning the directions for the advisement of the assignment and advertises it
in such form and manner and within such period as the Registrar may direct but not later

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than 6 months of which the assignment is made or after an extended period of 3 months if
registrar allows for it.

But it will not be considered as an assignment of trademark otherwise than in

connection with the goodwill of the business if the trademark is assigned for some goods
and services along with the goodwill of the business concerned for those goods and
services.

And the assignment is done for those goods which are exported and those services
which are used outside India with the assignment of goodwill

Restrictions on Assignment of Trademark

Trademark act also makes certain restrictions on the Assignment and Transmission of
the Trademark where there is a possibility of creation of confusion among users or public.

 Restriction on assignment or transmission where multiple exclusive rights would be

created.
 Restriction on assignment or Transmission where exclusive rights would be created in
different parts of India.

Process of Assignment and Transmission of Trademark (Section 45)

Application to the Registrar of Trademark in Form TM-P

(with the original copy of duly certified documents)

Registrar will dispose of his decision within 3 months

o Inform the applicant about the assignment or

o Call to furnish proof if he has some doubts.

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If approved, the registrar will make an entry in the Register with details,

 the name and address of the assignee;

 the date of the assignment
 where the assignment is in respect of any rights in the trademark, a description of the
right assignment.
 the basis under which the assignment is made; and
 the date on which the entry is made in the register.

If there is any dispute going on between the parties regarding the validity of an
assignment or transmission, the registrar may refuse to register the assignment or
transmission until the right of the parties has been determined.

Assignment and Transmission of Registered Trademark (Section 38)

Section 38 of the Trademark Act describes the Transmission of Registered Trademark

according to which “Notwithstanding anything in any other law to the contrary a
registered trademark shall, subject to the provisions of this Chapter, be assignable and
transmissible, whether with or without the goodwill of the business concerned and in
respect either of all the goods or services in respect of which the trademark is registered
or of some only of those goods or services”

Assignment and Transmission of Unregistered Trademark(Section 39)

Section 39 of the Trademark Act describes the Transmission of Unregistered

Trademark according to which “An unregistered trademark may be assigned or
transmitted with or without the goodwill of the business concerned.”

Benefits of Assignment and Transmission of Trademark

Expansion of business

By assignment and transmission of the trademark from the owner to the assignee,
the owner expands his business by using the same trademark in more than one place

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simultaneously. By giving the partial authority of the owner also has the power to give a
trademark assignment to more than one person.

Benefits of the already established brand

Assignment and transmission of trademark help the assignee to use the already
established trademark in the market to create their base. It also helps the assignee to save
money and resources by not spending on marketing to create a brand.

Legal Proof

Assignment and Transmission of trademark also act as a legal proof in case disputes of
any kind arise regarding the usage of Trademark because all the legal rights and liabilities
were already mentioned in a form of a legal deed.

Monetary benefits

By Assignment and Transmission of Trademark, the owner of the trademark enjoys

monetary benefits received by assignment and Transmission along with the increase in
the value of the brand by operating with the same Trademark in more than one place.

Important Cases:-

Structural waterproofing and ORS v. Amit Gupta ORS [93 (2001) DLT 496]

It is stated that when disputes arise between parties for assignment and transmission of
Trademark then the registrar can refuse to register the assignment and transmission until
and unless the decision is taken by the competent court. In this case, the plaintiff claimed
the ownership of the trademark only based on Memorandum of understanding created
between them. The court in this case declined his request for an injunction on the
defendant. It is also stated in the decision that the trademark cannot be claimed unsuitable
merely because there is a change in the name of the registered proprietor.

Cinni foundation v. Raj Kumar Shah and sons[ 2009(41)PTC320(Del)]

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It was found that the trademark CINNI was used by the owner. The deed of assignment
has been created and duly signed between the parties and after a certain time, it is found
that the trademark is not a registered trademark and so the defendant tries to claim the
trademark in which court decided that according to the law, assignee acquire no title
without registration of the assignment deed.

UNIT-7:

GLOBAL TREND

Origin of WTO:-

The Uruguay round of GATT (1986-93) gave birth to World Trade Organization.
The members of GATT singed on an agreement of Uruguay round in April 1994 in
Morocco for establishing a new organization named WTO.

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It was officially constituted on January 1, 1995 which took the place of GATT as
an effective formal, organization. GATT was an informal organization which regulated
world trade since 1948.

Contrary to the temporary nature of GATT, WTO is a permanent organization

which has been established on the basis of an international treaty approved by
participating countries. It achieved the international status like IMF and IBRD, but it is
not an agency of the United Nations Organization (UNO).

Structure:

The WTO has nearly 153 members accounting for over 97% of world trade.
Around 30 others are negotiating membership. Decisions are made by the entire
membership. This is typically by consensus.

A majority vote is also possible but it has never been used in the WTO and was
extremely rare under the WTO’s predecessor, GATT. The WTO’s agreements have been
ratified in all members’ parliaments.

The WTO’s top level decision-making body is the Ministerial Conferences which
meets at least once in every two years. Below this is the General Council (normally
ambassadors and heads of delegation in Geneva, but sometimes officials sent from
members’ capitals) which meets several times a year in the Geneva headquarters. The
General Council also meets as the Trade Policy Review Body and the Disputes
Settlement Body.

At the next level, the Goods Council, Services Council and Intellectual Property
(TRIPs) Council report to the General Council. Numerous specialized committees,
working groups and working parties deal with the individual agreements and other areas
such as, the environment, development, membership applications and regional trade
agreements.

Secretariat:

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The WTO secretariat, based in Geneva, has around 600 staff and is headed by a
Director-General. Its annual budget is roughly 160 million Swiss Francs. It does not
have branch offices outside Geneva. Since decisions are taken by the members
themselves, the secretariat does not have the decision making the role that other
international bureaucracies are given.

The secretariat s main duties to supply technical support for the various councils
and committees and the ministerial conferences, to provide technical assistance for
developing countries, to analyze world trade and to explain WTO affairs to the public
and media. The secretariat also provides some forms of legal assistance in the dispute
settlement process and advises governments wishing to become members of the WTO.

Objectives:

The important objectives of WTO are:

 To improve the standard of living of people in the member countries.

 To ensure full employment and broad increase in effective demand.
 To enlarge production and trade of goods.
 To increase the trade of services.
 To ensure optimum utilization of world resources.
 To protect the environment.
 To accept the concept of sustainable development.

Functions:

The main functions of WTO are discussed below:

 To implement rules and provisions related to trade policy review mechanism.

 To provide a platform to member countries to decide future strategies related to
trade and tariff.
 To provide facilities for implementation, administration and operation of
multilateral and bilateral agreements of the world trade.
 To administer the rules and processes related to dispute settlement.
 To ensure the optimum use of world resources.
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 To assist international organizations such as, IMF and IBRD for establishing
coherence in Universal Economic Policy determination.

WTO Agreements:

The WTO’s rule and the agreements are the result of negotiations between the
members. The current sets were the outcome to the 1986-93 Uruguay Round
negotiations which included a major revision of the original General Agreement on
Tariffs and Trade (GATI).

GATT is now the WTO’s principal rule-book for trade in goods. The Uruguay
Round also created new rules for dealing with trade in services, relevant aspects of
intellectual property, dispute settlement and trade policy reviews.

The complete set runs to some 30,000 pages consisting of about 30 agreements and
separate commitments (called schedules) made by individual members in specific areas
such as, lower customs duty rates and services market-opening.

Through these agreements, WTO members operate a non-discriminatory trading

system that spells out their rights and their obligations. Each country receives guarantees
that its exports will be treated fairly and consistently in other countries’ markets. Each
country promises to do the same for imports into its own market. The system also gives
developing countries some flexibility in implementing their commitments.

(a) Goods:

It all began with trade in goods. From 1947 to 1994, GATT was the forum for
negotiating lower customs duty rates and other trade barriers; the text of the General
Agreement spelt out important, rules, particularly non-discriminations since 1995, the
updated GATT has become the WTO s umbrella agreement for trade in goods.

It has annexes dealing with specific sectors such as, agriculture and textiles and
with specific issues such as, state trading, product standards, subsidies and action taken
against dumping.

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(b) Services:

Banks, insurance firms, telecommunication companies, tour operators, hotel chains

and transport companies looking to do business abroad can now enjoy the same
principles of free and fair that originally only applied to trade in goods.

These principles appear in the new General Agreement on Trade in Services

(GATS). WTO members have also made individual commitments under GATS stating
which of their services sectors, they are willing to open for foreign competition and how
open those markets are.

(c) Intellectual Property:

The WTO’s intellectual property agreement amounts to rules for trade and
investment in ideas and creativity. The rules state how copyrights, patents, trademarks,
geographical names used to identify products, industrial designs, integrated circuit layout
designs and undisclosed information such as trade secrets “intellectual property” should
be protected when trade is involved.

(d) Dispute Settlement:

The WTO’s procedure for resolving trade quarrels under the Dispute Settlement
Understanding is vital for enforcing the rules and therefore, for ensuring that trade flows
smoothly.

Countries bring disputes to the WTO if they think their rights under the agreements
are being infringed. Judgments by specially appointed independent experts are based on
interpretations of the agreements and individual countries’ commitments.

The system encourages countries to settle their differences through consultation.

Failing that, they can follow a carefully mapped out, stage-by-stage procedure that
includes the possibility of the ruling by a panel of experts and the chance to appeal the
ruling on legal grounds.

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Confidence in the system is bourne out by the number of cases brought to the
WTO, around 300 cases in eight years compared to the 300 disputes dealt with during
the entire life of GATT (1947-94).

(e) Policy Review:

The Trade Policy Review Mechanism’s purpose is to improve transparency, to create

a greater understanding of the policies that countries are adopting and to assess their
impact. Many members also see the reviews as constructive feedback on their policies.

All WTO members must undergo periodic scrutiny, each review containing reports by
the country concerned and the WTO Secretariat.

Functions of the WTO

The WTO’s functions can be broadly divided into the following categories:

Trade Negotiations

The WTO facilitates trade negotiations among countries by providing a framework

to structure the agreements, as well as providing dispute resolution mechanisms. It
creates an international legal framework that ensures the smooth exchange of goods and
services among the member countries.

Implementation and Monitoring

Once the agreements are negotiated, the job of the WTO is to ensure that the
signatory countries adhere to their commitments in practice. It also produces research
based on the impact of the agreements on the economies of the countries involved.

Dispute Settlement

The WTO also acts as a dispute settlement body when there is a trade conflict
between its member states. The members of the WTO can file complaints against other
member states if they feel the trade and economic policies of a country are divergent
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from their commitments under one of the agreements of the WTO. Following the
complaint, there are formal hearings like a court until a settlement is reached.

Building Trade Capacity:-

The WTO runs special programs to support developing countries by helping them
build the capacity to participate in free trade with more developed countries. It also gives
concessions under certain agreements to low-development countries to ease them into
free trade with other countries.

Outreach:-

Finally, the WTO carries out lobbying and outreach across the world as a part of its
larger objectives to promote free trade. They try to persuade governments to reduce
barriers to trade to free, fair, and open markets around the world.

TRIPs:-

In the current times, various intellectual inventions and creativities have a huge
importance in this world. While these creativities and ideas become popular and
successful, their promotion and protection become very important for the inventor. The
protection importantly needed for the trade secrets and layout-designs of the integrated
circuits. Moreover, the trademarks and the other intellectual property rights have to be
protected in order to guarantee genuineness to the clients of the inventor. In the global
trade arena, the extent of products and ventures comprising licensed innovation has
expanded drastically, and if the protected innovation security offered by nations is
insufficient, then there is a huge threat of contorting the International trade security.

Nonetheless, in developing nations, even though frameworks existed for the security of
licensed innovation, there were numerous nations where the standard of security was
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insufficient, for instance, the degree of security was restricted or the time for which the
work could be protected was bindingly short, or requirement of licensed innovation rights
couldn’t be destined to be adequately viable. Indeed, even among developing countries,
there were a few nations with frameworks that gave a lot of protection to the new and
successful innovations.

Trips: brief background and overview

Beginning of TRIPS agreement

The IP system is a tool for public policy and it generally aims to promote economic,
social and cultural progress by encouraging creative work and technological innovation.
In particular, copyright protection and related rights aim mainly at promoting and
rewarding creative work. This offers writers and designers a chance to create a profit
through their jobs. Other than as an invitation to writers, copyright effectively creates an
economic base for cultural and consumer sectors until the privileges of publishers and
manufacturers have been approved or delegated.

Hence, for improving global trade security, there is an expanding acknowledgement

of the need to build up a structure to guarantee suitable protection to recent innovations.
In the licensed innovation field, as of now, there existed various treaties for the global
security of the new and genuine innovations, for example, the Paris Convention identified
with modern property rights including licenses and trademarks, and the Berne Convention
concerning copyright. In any case, with more accentuation being put on the Trade-related
areas of Secured innovations, it was viewed as a dire undertaking to achieve global treaty
with regards to GATT, with however many countries as could be expected under the
circumstances taking part, concerning guidelines of insurance of protected innovation
related with Trade. At present, discussions on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) have become one of the major innovative areas for discussion in
the Uruguay Round of GATT, which began in 1986. Along with other agreements to be
concluded in the Uruguay Round, the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPs Agreement) was finally concluded at a ministerial

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meeting in Marrakech, Morocco, in April 1994, and entered into force as part of the WTO
Agreement on 1 January 1995.

Organization and process of the TRIPS agreement:-

The World Trade Organization (WTO) is the legal and administrative framework for
the management and growth at the multilateral level of international ties between its 157
members. It aims at creating equal and secure foreign trading arrangements in order to
promote exchange & investment and increase worldwide living standards. It is the
successor of the former GATT 1947, which was a multilateral agreement. The year’s
trade deal was concluded. Under GATT auspices, further trade liberalization was
followed up by “trade rounds” with the aim of further cuts in tariffs and enhanced rules.

The Uruguay Round was the 8th round and most detailed phase of trade negotiations.
The talks started in 1986 and concluded in 1994. A further significant decrease of
customs duties worldwide, the liberalization of textiles and agriculture trading and the
adoption of improved laws, was the main outcome of the Uruguay Round. The trading
system has also been expanded to new areas of unprecedented commercial relations,
including trade in services and intellectual property. The growing economic value and the
rising share of these two fields of foreign trade are expressed in this. Moreover, the
results included developing a strengthened and integrated dispute settlement system
applicable to agreements covered by the World Trade Organization ( WTO).

The TRIPs Agreement covers the protection of intellectual property in trade-related

regions to a considerable degree and is seen as a wide-ranging new framework for the
protection of intellectual property standards. Furthermore, the TRIPs Agreement has the
additional value of being the first legal deal covering all aspects of intellectual property
with a variety of concrete clauses. The issues of the defence of intellectual property rights
were first addressed at GATT at the Tokyo Round in 1978 as an international trade
concern. The Tokyo Round discussed and coordinated policy on international rules to
strengthen strategies against counterfeit goods. The World Intellectual Property
Organization (WIPO), a specialist body of the United Nations, also addressed the
intercontinental security of an intellectual property. Nonetheless, in the sense of WIPO, a

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variety of issues have been found, including the reality that treaties are impossible to
execute, and the WIPO General Assembly may only propose corrective measures;
furthermore, the ratification of treaties is focused on the concept of an agreement by all
Members, and whether or not the Member States accede to the Treaty is solely left to
them.

Consequently, the United States, which wished to strengthen international intellectual

property protection, presented the problems of developing countries, their IP protection
systems and their management as problems of trade, and, in an attempt to resolve these
issues, urged “Trade-related aspects of intellectual property, including trade in counterfeit
goods” (TRIPS) to be treated as a bargaining item. Thus, at the GATT ministerial meeting
held in Punta Del Este, Uruguay, in September 1986, it was decided to open negotiations
on the GSP. The discussion continued and, in January 1987, a decision was made to set
up negotiation proposals and bargaining committees in 15 areas. When it was explained
why, despite the heated debate between developed and developing countries, all the
countries participating in the discussion agreed on the ADPIC negotiations, the Uruguay
Round Agreement was adopted in the form of a single, overall undertaking. Although the
TRIPS agreement itself, which resulted from the TRIPS negotiations, was disadvantaged
to the developing countries, there were other negotiating areas, such as agriculture and
textiles, that brought about results that benefited developing countries.

Compulsory licensing

The provisions of the Paris Convention relating to the protection of patents included
the right to a priority scheme, the patents’ freedom in different countries, the appointment
of the inventor to the patent, the patentability of inventions in cases of restrictions on the
sale, mandatory authorizations for the non-workable time in cases of fee payment, the
restitution of patents or cases of non-committal. However, there are no substantive
provisions relating to patent protection in the Paris Convention, including the patentable
subject-matter, effects of patent rights and duration of patent protection. It was also
problematic because compulsory license provisions were unclear in cases of failure to
work. Accordingly, the terms of the TRIPS agreement provide for patentable subject-
matter, the consequences of patent rights, the duration of patent protection and other
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specific provisions relating to patent protection. Detailed and express provisions
concerning compulsory licences are also available.

Conditions for compulsory licensing under TRIPS:-

 The TRIPS Agreement lays down specific and comprehensive rules relating to mandatory
licences, for which the right holder has not been approved, for certain purposes so as to
ensure they are provided in certain cases by clarifying the conditions in which these can
be issued. The following are the relevant provisions:
 Such usage shall be considered in accordance with its merits.
 This usage can only be allowed if the proposed user has made attempts, in the light of
fair business conditions before such usage, to obtain permission from the right holder
and has failed to do so within a reasonable period of time.
 This shall be restricted to the reason for which the application has been approved and
only for non-profit public use or to remediate a practice found to be anticompetitive
following the judicial or administrative process with respect to semiconductor
technology.
 This use is non-exclusive. This use is not assignable except for the part of the
organization or goodwill that profits from that use. Every such use shall primarily be
approved by the Member approving such use for the supply of the internal market.
Subject to reasonable security of the legitimate interests of the individuals so allowed,
the authorisation for such use shall be liable for termination if and where the
circumstances leading to it cease to occur and are unlikely to recur.
 In each case, in accordance with the economic value of the authorisation, the right
holder shall receive sufficient remuneration.

Members shall not apply the above terms where such use is permitted to remedy a
practice established as anti-competitive following a judiciary or administrative process.
Where such use shall be allowed in the absence of an infringement of another patent, the
following further conditions shall apply:

 substantial technological progress made with regard to the invention claimed in the
second patent, with a major economic significance as regards the invention in the first
patent,
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 an owner of the first Valid patent and
 the usage permitted for the first patent, except with the assignment of the second
patent, shall not be assignable.

Effects of Trips on Trade mark, Patent and copyright law in India:-

The areas of intellectual property that it covers are: copyright and related rights (i.e.
the rights of performers, producers of sound recordings and broadcasting organizations);
trademarks including service marks; geographical indications including appellations of
origin; industrial designs; patents including the protection of new varieties of plants; the
layout-designs of integrated circuits; and undisclosed information including trade secrets
and test data.

The three main features of the Agreement are:

Standards.

In respect of each of the main areas of intellectual property covered by the TRIPS
Agreement, the Agreement sets out the minimum standards of protection to be provided
by each Member. Each of the main elements of protection is defined, namely the subject-
matter to be protected, the rights to be conferred and permissible exceptions to those
rights, and the minimum duration of protection. The Agreement sets these standards by
requiring, first, that the substantive obligations of the main conventions of the WIPO, the
Paris Convention for the Protection of Industrial Property (Paris Convention) and the
Berne Convention for the Protection of Literary and Artistic Works (Berne Convention)
in their most recent versions, must be complied with. With the exception of the provisions
of the Berne Convention on moral rights, all the main substantive provisions of these
conventions are incorporated by reference and thus become obligations under the TRIPS
Agreement between TRIPS Member countries. The relevant provisions are to be found in
Articles 2.1 and 9.1 of the TRIPS Agreement, which relate, respectively, to the Paris
Convention and to the Berne Convention. Secondly, the TRIPS Agreement adds a
substantial number of additional obligations on matters where the pre-existing
conventions are silent or were seen as being inadequate. The TRIPS Agreement is thus
sometimes referred to as a Berne and Paris-plus agreement.
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Enforcement. The second main set of provisions deals with domestic procedures and
remedies for the enforcement of intellectual property rights. The Agreement lays down
certain general principles applicable to all IPR enforcement procedures. In addition, it
contains provisions on civil and administrative procedures and remedies, provisional
measures, special requirements related to border measures and criminal procedures,
which specify, in a certain amount of detail, the procedures and remedies that must be
available so that right holders can effectively enforce their rights.

Dispute settlement.

The Agreement makes disputes between WTO Members about the respect of the
TRIPS obligations subject to the WTO's dispute settlement procedures. In addition the
Agreement provides for certain basic principles, such as national and most-favoured-
nation treatment, and some general rules to ensure that procedural difficulties in acquiring
or maintaining IPRs do not nullify the substantive benefits that should flow from the
Agreement. The obligations under the Agreement will apply equally to all Member
countries, but developing countries will have a longer period to phase them in. Special
transition arrangements operate in the situation where a developing country does not
presently provide product patent protection in the area of pharmaceuticals.

The TRIPS Agreement is a minimum standards agreement, which allows Members

to provide more extensive protection of intellectual property if they so wish. Members are
left free to determine the appropriate method of implementing the provisions of the
Agreement within their own legal system and practice.

Certain general provisions :-

As in the main pre-existing intellectual property conventions, the basic obligation on

each Member country is to accord the treatment in regard to the protection of intellectual
property provided for under the Agreement to the persons of other Members. Article 1.3
defines who these persons are. These persons are referred to as “nationals” but include
persons, natural or legal, who have a close attachment to other Members without
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necessarily being nationals. The criteria for determining which persons must thus benefit
from the treatment provided for under the Agreement are those laid down for this purpose
in the main pre-existing intellectual property conventions of WIPO, applied of course
with respect to all WTO Members whether or not they are party to those conventions.
These conventions are the Paris Convention, the Berne Convention, International
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations (Rome Convention), and the Treaty on Intellectual Property in Respect of
Integrated Circuits (IPIC Treaty).

Articles 3, 4 and 5 include the fundamental rules on national and most-favoured-nation

treatment of foreign nationals, which are common to all categories of intellectual property
covered by the Agreement. These obligations cover not only the substantive standards of
protection but also matters affecting the availability, acquisition, scope, maintenance and
enforcement of intellectual property rights as well as those matters affecting the use of
intellectual property rights specifically addressed in the Agreement. While the national
treatment clause forbids discrimination between a Member's own nationals and the
nationals of other Members, the most-favoured-nation treatment clause forbids
discrimination between the nationals of other Members. In respect of the national
treatment obligation, the exceptions allowed under the pre-existing intellectual property
conventions of WIPO are also allowed under TRIPS. Where these exceptions allow
material reciprocity, a consequential exception to MFN treatment is also permitted (e.g.
comparison of terms for copyright protection in excess of the minimum term required by
the TRIPS Agreement as provided under Article 7(8) of the Berne Convention as
incorporated into the TRIPS Agreement). Certain other limited exceptions to the MFN
obligation are also provided for.

The general goals of the TRIPS Agreement are contained in the Preamble of the
Agreement, which reproduces the basic Uruguay Round negotiating objectives
established in the TRIPS area by the 1986 Punta del Este Declaration and the 1988/89
Mid-Term Review. These objectives include the reduction of distortions and impediments
to international trade, promotion of effective and adequate protection of intellectual
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property rights, and ensuring that measures and procedures to enforce intellectual
property rights do not themselves become barriers to legitimate trade. These objectives
should be read in conjunction with Article 7, entitled “Objectives”, according to which
the protection and enforcement of intellectual property rights should contribute to the
promotion of technological innovation and to the transfer and dissemination of
technology, to the mutual advantage of producers and users of technological knowledge
and in a manner conducive to social and economic welfare, and to a balance of rights and
obligations. Article 8, entitled “Principles”, recognizes the rights of Members to adopt
measures for public health and other public interest reasons and to prevent the abuse of
intellectual property rights, provided that such measures are consistent with the provisions
of the TRIPS Agreement.

Substantive standards of protection

Copyright

During the Uruguay Round negotiations, it was recognized that the Berne Convention
already, for the most part, provided adequate basic standards of copyright protection.
Thus it was agreed that the point of departure should be the existing level of protection
under the latest Act, the Paris Act of 1971, of that Convention. The point of departure is
expressed in Article 9.1 under which Members are obliged to comply with the substantive
provisions of the Paris Act of 1971 of the Berne Convention, i.e. Articles 1 through 21 of
the Berne Convention (1971) and the Appendix thereto. However, Members do not have
rights or obligations under the TRIPS Agreement in respect of the rights conferred under
Article 6bis of that Convention, i.e. the moral rights (the right to claim authorship and to
object to any derogatory action in relation to a work, which would be prejudicial to the
author's honour or reputation), or of the rights derived therefrom. The provisions of the
Berne Convention referred to deal with questions such as subject-matter to be protected,
minimum term of protection, and rights to be conferred and permissible limitations to
those rights. The Appendix allows developing countries, under certain conditions, to
make some limitations to the right of translation and the right of reproduction.

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In addition to requiring compliance with the basic standards of the Berne Convention,
the TRIPS Agreement clarifies and adds certain specific points.

Article 9.2 confirms that copyright protection shall extend to expressions and not to
ideas, procedures, methods of operation or mathematical concepts as such.

Article 10.1 provides that computer programs, whether in source or object code, shall
be protected as literary works under the Berne Convention (1971). This provision
confirms that computer programs must be protected under copyright and that those
provisions of the Berne Convention that apply to literary works shall be applied also to
them. It confirms further, that the form in which a program is, whether in source or object
code, does not affect the protection. The obligation to protect computer programs as
literary works means e.g. that only those limitations that are applicable to literary works
may be applied to computer programs. It also confirms that the general term of protection
of 50 years applies to computer programs. Possible shorter terms applicable to
photographic works and works of applied art may not be applied.

Article 10.2 clarifies that databases and other compilations of data or other material
shall be protected as such under copyright even where the databases include data that as
such are not protected under copyright. Databases are eligible for copyright protection
provided that they by reason of the selection or arrangement of their contents constitute
intellectual creations. The provision also confirms that databases have to be protected
regardless of which form they are in, whether machine readable or other form.
Furthermore, the provision clarifies that such protection shall not extend to the data or
material itself, and that it shall be without prejudice to any copyright subsisting in the data
or material itself.

Article 11 provides that authors shall have in respect of at least computer programs
and, in certain circumstances, of cinematographic works the right to authorize or to
prohibit the commercial rental to the public of originals or copies of their copyright
works. With respect to cinematographic works, the exclusive rental right is subject to the
so-called impairment test: a Member is excerpted from the obligation unless such rental
has led to widespread copying of such works which is materially impairing the exclusive

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right of reproduction conferred in that Member on authors and their successors in title. In
respect of computer programs, the obligation does not apply to rentals where the program
itself is not the essential object of the rental.

According to the general rule contained in Article 7(1) of the Berne Convention as
incorporated into the TRIPS Agreement, the term of protection shall be the life of the
author and 50 years after his death. Paragraphs 2 through 4 of that Article specifically
allow shorter terms in certain cases. These provisions are supplemented by Article 12 of
the TRIPS Agreement, which provides that whenever the term of protection of a work,
other than a photographic work or a work of applied art, is calculated on a basis other
than the life of a natural person, such term shall be no less than 50 years from the end of
the calendar year of authorized publication, or, failing such authorized publication within
50 years from the making of the work, 50 years from the end of the calendar year of
making.

Article 13 requires Members to confine limitations or exceptions to exclusive rights to

certain special cases which do not conflict with a normal exploitation of the work and do
not unreasonably prejudice the legitimate interests of the right holder. This is a horizontal
provision that applies to all limitations and exceptions permitted under the provisions of
the Berne Convention and the Appendix thereto as incorporated into the TRIPS
Agreement. The application of these limitations is permitted also under the TRIPS
Agreement, but the provision makes it clear that they must be applied in a manner that
does not prejudice the legitimate interests of the right holder.

Related rights:-

The provisions on protection of performers, producers of phonograms and

broadcasting organizations are included in Article 14. According to Article 14.1,
performers shall have the possibility of preventing the unauthorized fixation of their
performance on a phonogram (e.g. the recording of a live musical performance). The
fixation right covers only aural, not audiovisual fixations. Performers must also be in
position to prevent the reproduction of such fixations. They shall also have the possibility

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of preventing the unauthorized broadcasting by wireless means and the communication to
the public of their live performance.

In accordance with Article 14.2, Members have to grant producers of phonograms an

exclusive reproduction right. In addition to this, they have to grant, in accordance with
Article 14.4, an exclusive rental right at least to producers of phonograms. The provisions
on rental rights apply also to any other right holders in phonograms as determined in
national law. This right has the same scope as the rental right in respect of computer
programs. Therefore it is not subject to the impairment test as in respect of
cinematographic works. However, it is limited by a so-called grand-fathering clause,
according to which a Member, which on 15 April 1994, i.e. the date of the signature of
the Marrakesh Agreement, had in force a system of equitable remuneration of right
holders in respect of the rental of phonograms, may maintain such system provided that
the commercial rental of phonograms is not giving rise to the material impairment of the
exclusive rights of reproduction of right holders.

Broadcasting organizations shall have, in accordance with Article 14.3, the right to
prohibit the unauthorized fixation, the reproduction of fixations, and the rebroadcasting
by wireless means of broadcasts, as well as the communication to the public of their
television broadcasts. However, it is not necessary to grant such rights to broadcasting
organizations, if owners of copyright in the subject-matter of broadcasts are provided
with the possibility of preventing these acts, subject to the provisions of the Berne
Convention.

The term of protection is at least 50 years for performers and producers of

phonograms, and 20 years for broadcasting organizations (Article 14.5).

Article 14.6 provides that any Member may, in relation to the protection of
performers, producers of phonograms and broadcasting organizations, provide for
conditions, limitations, exceptions and reservations to the extent permitted by the Rome
Convention.

Trademarks:-

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The basic rule contained in Article 15 is that any sign, or any combination of signs,
capable of distinguishing the goods and services of one undertaking from those of other
undertakings, must be eligible for registration as a trademark, provided that it is visually
perceptible. Such signs, in particular words including personal names, letters, numerals,
figurative elements and combinations of colours as well as any combination of such signs,
must be eligible for registration as trademarks.

Where signs are not inherently capable of distinguishing the relevant goods or
services, Member countries are allowed to require, as an additional condition for
eligibility for registration as a trademark, that distinctiveness has been acquired through
use. Members are free to determine whether to allow the registration of signs that are not
visually perceptible (e.g. sound or smell marks).

Members may make registrability depend on use. However, actual use of a trademark
shall not be permitted as a condition for filing an application for registration, and at least
three years must have passed after that filing date before failure to realize an intent to use
is allowed as the ground for refusing the application (Article 14.3).

The Agreement requires service marks to be protected in the same way as marks
distinguishing goods (see e.g. Articles 15.1, 16.2 and 62.3).

The owner of a registered trademark must be granted the exclusive right to prevent all
third parties not having the owner's consent from using in the course of trade identical or
similar signs for goods or services which are identical or similar to those in respect of
which the trademark is registered where such use would result in a likelihood of
confusion. In case of the use of an identical sign for identical goods or services, a
likelihood of confusion must be presumed (Article 16.1).

The TRIPS Agreement contains certain provisions on well-known marks, which

supplement the protection required by Article 6bis of the Paris Convention, as
incorporated by reference into the TRIPS Agreement, which obliges Members to refuse
or to cancel the registration, and to prohibit the use of a mark conflicting with a mark
which is well known. First, the provisions of that Article must be applied also to services.
Second, it is required that knowledge in the relevant sector of the public acquired not only
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as a result of the use of the mark but also by other means, including as a result of its
promotion, be taken into account. Furthermore, the protection of registered well-known
marks must extend to goods or services which are not similar to those in respect of which
the trademark has been registered, provided that its use would indicate a connection
between those goods or services and the owner of the registered trademark, and the
interests of the owner are likely to be damaged by such use (Articles 16.2 and 3).

Members may provide limited exceptions to the rights conferred by a trademark, such
as fair use of descriptive terms, provided that such exceptions take account of the
legitimate interests of the owner of the trademark and of third parties (Article 17).

Initial registration, and each renewal of registration, of a trademark shall be for a term
of no less than seven years. The registration of a trademark shall be renewable
indefinitely (Article 18).

Cancellation of a mark on the grounds of non-use cannot take place before three years
of uninterrupted non-use has elapsed unless valid reasons based on the existence of
obstacles to such use are shown by the trademark owner. Circumstances arising
independently of the will of the owner of the trademark, such as import restrictions or
other government restrictions, shall be recognized as valid reasons of non-use. Use of a
trademark by another person, when subject to the control of its owner, must be recognized
as use of the trademark for the purpose of maintaining the registration (Article 19).

It is further required that use of the trademark in the course of trade shall not be
unjustifiably encumbered by special requirements, such as use with another trademark,
use in a special form, or use in a manner detrimental to its capability to distinguish the
goods or services (Article 20).

Geographical indications:-

Geographical indications are defined, for the purposes of the Agreement, as indications
which identify a good as originating in the territory of a Member, or a region or locality in
that territory, where a given quality, reputation or other characteristic of the good is
essentially attributable to its geographical origin (Article 22.1). Thus, this definition
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specifies that the quality, reputation or other characteristics of a good can each be a
sufficient basis for eligibility as a geographical indication, where they are essentially
attributable to the geographical origin of the good.

In respect of all geographical indications, interested parties must have legal means to
prevent use of indications which mislead the public as to the geographical origin of the
good, and use which constitutes an act of unfair competition within the meaning of
Article 10bis of the Paris Convention (Article 22.2).

The registration of a trademark which uses a geographical indication in a way that

misleads the public as to the true place of origin must be refused or invalidated ex officio
if the legislation so permits or at the request of an interested party (Article 22.3).

Article 23 provides that interested parties must have the legal means to prevent the use
of a geographical indication identifying wines for wines not originating in the place
indicated by the geographical indication. This applies even where the public is not being
misled, there is no unfair competition and the true origin of the good is indicated or the
geographical indication is accompanied be expressions such as “kind”, “type”, “style”,
“imitation” or the like. Similar protection must be given to geographical indications
identifying spirits when used on spirits. Protection against registration of a trademark
must be provided accordingly.

Article 24 contains a number of exceptions to the protection of geographical

indications. These exceptions are of particular relevance in respect of the additional
protection for geographical indications for wines and spirits. For example, Members are
not obliged to bring a geographical indication under protection, where it has become a
generic term for describing the product in question (paragraph 6). Measures to implement
these provisions shall not prejudice prior trademark rights that have been acquired in
good faith (paragraph 5). Under certain circumstances, continued use of a geographical
indication for wines or spirits may be allowed on a scale and nature as before (paragraph
4). Members availing themselves of the use of these exceptions must be willing to enter
into negotiations about their continued application to individual geographical indications
(paragraph 1). The exceptions cannot be used to diminish the protection of geographical

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indications that existed prior to the entry into force of the TRIPS Agreement (paragraph
3). The TRIPS Council shall keep under review the application of the provisions on the
protection of geographical indications (paragraph 2).

Industrial designs

Article 25.1 of the TRIPS Agreement obliges Members to provide for the protection of
independently created industrial designs that are new or original. Members may provide
that designs are not new or original if they do not significantly differ from known designs
or combinations of known design features. Members may provide that such protection
shall not extend to designs dictated essentially by technical or functional considerations.

Article 25.2 contains a special provision aimed at taking into account the short life
cycle and sheer number of new designs in the textile sector: requirements for securing
protection of such designs, in particular in regard to any cost, examination or publication,
must not unreasonably impair the opportunity to seek and obtain such protection.
Members are free to meet this obligation through industrial design law or through
copyright law.

Article 26.1 requires Members to grant the owner of a protected industrial design the
right to prevent third parties not having the owner's consent from making, selling or
importing articles bearing or embodying a design which is a copy, or substantially a copy,
of the protected design, when such acts are undertaken for commercial purposes.

Article 26.2 allows Members to provide limited exceptions to the protection of

industrial designs, provided that such exceptions do not unreasonably conflict with the
normal exploitation of protected industrial designs and do not unreasonably prejudice the
legitimate interests of the owner of the protected design, taking account of the legitimate
interests of third parties.

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The duration of protection available shall amount to at least 10 years (Article 26.3).
The wording “amount to” allows the term to be divided into, for example, two periods of
five years.

The TRIPS Agreement requires Member countries to make patents available for any
inventions, whether products or processes, in all fields of technology without
discrimination, subject to the normal tests of novelty, inventiveness and industrial
applicability. It is also required that patents be available and patent rights enjoyable
without discrimination as to the place of invention and whether products are imported or
locally produced (Article 27.1).

There are three permissible exceptions to the basic rule on patentability. One is for
inventions contrary to ordre public or morality; this explicitly includes inventions
dangerous to human, animal or plant life or health or seriously prejudicial to the
environment. The use of this exception is subject to the condition that the commercial
exploitation of the invention must also be prevented and this prevention must be
necessary for the protection of ordre public or morality (Article 27.2).

The second exception is that Members may exclude from patentability diagnostic,
therapeutic and surgical methods for the treatment of humans or animals (Article 27.3(a)).

The third is that Members may exclude plants and animals other than micro-
organisms and essentially biological processes for the production of plants or animals
other than non-biological and microbiological processes. However, any country excluding
plant varieties from patent protection must provide an effective sui generis system of
protection. Moreover, the whole provision is subject to review four years after entry into
force of the Agreement (Article 27.3(b)).

The exclusive rights that must be conferred by a product patent are the ones of
making, using, offering for sale, selling, and importing for these purposes. Process patent
protection must give rights not only over use of the process but also over products
obtained directly by the process. Patent owners shall also have the right to assign, or
transfer by succession, the patent and to conclude licensing contracts (Article 28).

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Members may provide limited exceptions to the exclusive rights conferred by a patent,
provided that such exceptions do not unreasonably conflict with a normal exploitation of
the patent and do not unreasonably prejudice the legitimate interests of the patent owner,
taking account of the legitimate interests of third parties (Article 30).

The term of protection available shall not end before the expiration of a period of 20
years counted from the filing date (Article 33).

Members shall require that an applicant for a patent shall disclose the invention in a
manner sufficiently clear and complete for the invention to be carried out by a person
skilled in the art and may require the applicant to indicate the best mode for carrying out
the invention known to the inventor at the filing date or, where priority is claimed, at the
priority date of the application (Article 29.1).

If the subject-matter of a patent is a process for obtaining a product, the judicial

authorities shall have the authority to order the defendant to prove that the process to
obtain an identical product is different from the patented process, where certain
conditions indicating a likelihood that the protected process was used are met (Article
34).

Compulsory licensing and government use without the authorization of the right
holder are allowed, but are made subject to conditions aimed at protecting the legitimate
interests of the right holder. The conditions are mainly contained in Article 31. These
include the obligation, as a general rule, to grant such licences only if an unsuccessful
attempt has been made to acquire a voluntary licence on reasonable terms and conditions
within a reasonable period of time; the requirement to pay adequate remuneration in the
circumstances of each case, taking into account the economic value of the licence; and a
requirement that decisions be subject to judicial or other independent review by a distinct
higher authority. Certain of these conditions are relaxed where compulsory licences are
employed to remedy practices that have been established as anticompetitive by a legal
process. These conditions should be read together with the related provisions of Article
27.1, which require that patent rights shall be enjoyable without discrimination as to the
field of technology, and whether products are imported or locally produced.

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Layout-designs of integrated circuits

Article 35 of the TRIPS Agreement requires Member countries to protect the layout-
designs of integrated circuits in accordance with the provisions of the IPIC Treaty (the
Treaty on Intellectual Property in Respect of Integrated Circuits), negotiated under the
auspices of WIPO in 1989. These provisions deal with, inter alia, the definitions of
“integrated circuit” and “layout-design (topography)”, requirements for protection,
exclusive rights, and limitations, as well as exploitation, registration and disclosure. An
“integrated circuit” means a product, in its final form or an intermediate form, in which
the elements, at least one of which is an active element, and some or all of the
interconnections are integrally formed in and/or on a piece of material and which is
intended to perform an electronic function. A “layout-design (topography)” is defined as
the three-dimensional disposition, however expressed, of the elements, at least one of
which is an active element, and of some or all of the interconnections of an integrated
circuit, or such a three-dimensional disposition prepared for an integrated circuit intended
for manufacture. The obligation to protect layout-designs applies to such layout-designs
that are original in the sense that they are the result of their creators' own intellectual
effort and are not commonplace among creators of layout-designs and manufacturers of
integrated circuits at the time of their creation. The exclusive rights include the right of
reproduction and the right of importation, sale and other distribution for commercial
purposes. Certain limitations to these rights are provided for.

In addition to requiring Member countries to protect the layout-designs of integrated

circuits in accordance with the provisions of the IPIC Treaty, the TRIPS Agreement
clarifies and/or builds on four points. These points relate to the term of protection (ten
years instead of eight, Article 38), the applicability of the protection to articles containing
infringing integrated circuits (last sub clause of Article 36) and the treatment of innocent
infringers (Article 37.1). The conditions in Article 31 of the TRIPS Agreement apply
mutatis mutandis to compulsory or non-voluntary licensing of a layout-design or to its use
by or for the government without the authorization of the right holder, instead of the
provisions of the IPIC Treaty on compulsory licensing (Article 37.2).

Protection of undisclosed information

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The TRIPS Agreement requires undisclosed information -- trade secrets or know-how
-- to benefit from protection. According to Article 39.2, the protection must apply to
information that is secret, that has commercial value because it is secret and that has been
subject to reasonable steps to keep it secret. The Agreement does not require undisclosed
information to be treated as a form of property, but it does require that a person lawfully
in control of such information must have the possibility of preventing it from being
disclosed to, acquired by, or used by others without his or her consent in a manner
contrary to honest commercial practices. “Manner contrary to honest commercial
practices” includes breach of contract, breach of confidence and inducement to breach, as
well as the acquisition of undisclosed information by third parties who knew, or were
grossly negligent in failing to know, that such practices were involved in the acquisition.

The Agreement also contains provisions on undisclosed test data and other data whose
submission is required by governments as a condition of approving the marketing of
pharmaceutical or agricultural chemical products which use new chemical entities. In
such a situation the Member government concerned must protect the data against unfair
commercial use. In addition, Members must protect such data against disclosure, except
where necessary to protect the public, or unless steps are taken to ensure that the data are
protected against unfair commercial use.

Control of anti-competitive practices in contractual licences

Article 40 of the TRIPS Agreement recognizes that some licensing practices or

conditions pertaining to intellectual property rights which restrain competition may have
adverse effects on trade and may impede the transfer and dissemination of technology
(paragraph 1). Member countries may adopt, consistently with the other provisions of the
Agreement, appropriate measures to prevent or control practices in the licensing of
intellectual property rights which are abusive and anti-competitive (paragraph 2). The
Agreement provides for a mechanism whereby a country seeking to take action against
such practices involving the companies of another Member country can enter into
consultations with that other Member and exchange publicly available non-confidential

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information of relevance to the matter in question and of other information available to
that Member, subject to domestic law and to the conclusion of mutually satisfactory
agreements concerning the safeguarding of its confidentiality by the requesting Member
(paragraph 3). Similarly, a country whose companies are subject to such action in another
Member can enter into consultations with that Member (paragraph 4).

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