A changing IP environment

India is a member of the World Trade Organisation (WTO) and a signatory to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). In the last few years India has modified its IP laws to ensure adequate protection for IP owners. Both the legislature and the judiciary are active in enacting and enforcing IP rights.

Patents

Pursuant to the TRIPs Agreement, India has amended its patent legislation on three occasions. The Patents Amendment Act 2005 and the Patent Rules 2005 have incorporated several changes to the patent legislation to fulfil India’s WTO obligations to allow, for example, product patents. Some of the key changes introduced by the act are outlined below.

Introduction of product patents

The act introduced product patents for inventions relating to food, drugs and chemicals by replacing the process patent regime which existed under the old Patents Act.

Restrictions on new use

The act provides that the mere discovery of a new form of a known substance that does not enhance the known efficacy of the substance cannot be patented. It must involve one or more inventive steps resulting in a new product or one new reactant to fit the criteria of patentability.

Software patenting

The act does not provide for the patenting of a computer program which is an algorithm per se, or mathematical methods or business methods.

Exclusive marketing rights

The act repealed the provisions concerning exclusive marketing rights and mailbox applications as a result of the introduction of the product patent regime. However, there are transitional provisions in this regard.

Pre-grant and post-grant opposition

The act provides for both pre-grant and post-grant oppositions. Furthermore, it specifies a time period for both – one year from the date of publication in the case of post-grant opposition and six months in the case of pre-grant opposition.

Compulsory licensing

Previously, compulsory licensing was confined to India. However, the act now provides for compulsory licensing for the export of pharmaceutical products to countries that do not have the requisite manufacturing facilities. For this, the recipient countries should also provide for compulsory licensing or should issue a notification to that effect.

Patent infringement

The new act provides that an applicant enjoys the same rights and privileges as a patent holder in the period between publication of the application and grant of the patent. However, infringement proceedings can be initiated only after the grant of a patent.

Request for examination

Under the act, when an application is published, a request for examination must be filed within 36 months of the date of priority of the application or of the date of filing of the application, whichever is earlier (as specified under the Patent Rules 2005). In the case of WTO or mailbox applications, the deadline to file the request for examination is 36 months from the date of application or date of priority, or 12 months from January 1 2005.

Publication of applications

Eighteen months after the date of application or the date of priority, whichever is earlier, all patent applications are published as per the provisions of the act and the rules. The act provides for expediting publication upon request.

Assignment

Under the old act, it was mandatory to register with the patents office all transactions concerning a patent (eg, assignments, mortgages, licences, shares in the patent, creation of any interest in patent) within six months of the date of execution of the document concerning the transaction. The new act requires only that such transactions be executed in writing, and sets out no registration requirements.

Approval for foreign filing

The act requires an Indian resident to obtain written permission from the controller of patents six weeks prior to filing a foreign patent application, unless a corresponding application is filed in India.

Implications

The new act clarified various ambiguities that existed under the earlier patent law and simplified some of the procedural requirements.

In cases of patent infringement, an infringement suit can be filed. A court may grant an injunction, award damages, direct an account of profits to be produced or order seizure, forfeiture or destruction of the infringing goods, materials and tools used to create the infringing goods.

Trademarks

India enacted the Trademarks Act 1999 and the Trademarks Rules 2002 (effective September 15 2003) to ensure adequate protection for domestic and international brand owners, in compliance with the TRIPs Agreement. Pursuant to the Trademarks Act, service marks can be registered. The act states that a trademark includes the shape of goods, their packaging and colour combinations. Further, the Trademarks Act gives protection to well-known trademarks and provides for the registration of convention applications, for which the priority deadline is six months. The term of a trademark has been increased to 10 years, renewable upon expiration.

As a measure to protect international proprietors, the Trademarks Act has defined a ‘well-known mark’ as a mark well known to a substantial segment of the public using such goods or receiving such services. Further, the Trademarks Act has increased the grounds on which trademark infringement can be claimed, such as likelihood of confusion, likelihood of dilution or disparagement of a registered trademark, comparative advertising and spoken use. The term ‘use’ has been expanded for the purpose of ascertaining infringement. If a trademark is not registered in India, a foreign trademark owner can initiate a passing-off action against the potential infringer.

The Trademarks Act provides statutory protection to well-known trademarks, which were protected under the common law.

The Trademarks Act defines a ‘well-known trademark’ as follows: “‘Well-known trademark’, in relation to any goods or services, means a mark which has become so well known to the substantial segment of the public which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first mentioned goods or services.” (Section 2(1) of the Trademarks Act.)

Furthermore, this definition should be read in conjunction with Sections 11(6) to 11(10) of the Trademarks Act, which specify the relevant factors to be considered by the registrar of trademarks when determining whether a particular mark is well known.

Relevant factors to be considered

While determining whether a trademark is well known, the registrar should consider any relevant facts, including the following:

•   the knowledge or recognition of the alleged well-known mark in the relevant section of the public, including knowledge obtained as a result of promotion of the trademark;

•   the duration, extent and geographical area of any use of that trademark;

•   the duration, extent and geographical area of any promotion of the trademark, including advertising or publicity and presentation at fairs or exhibition;

•   the duration and geographical area of any registration or any publication for registration of that trademark, to the extent that it reflects the use or recognition of the trademark; and

•   the record of successful enforcement and the extent to which any court or registrar has recognised the trademark as well known (Section 11(6) of the Trademarks Act).

These criteria are not exhaustive, but are indicative and illustrative guidelines to assist the registrar in determining cases. The decision will depend upon the facts and circumstances of each case.

Based on the foregoing, it will be the responsibility of a trademark owner to prove that the mark is well known. One way to prove this would be by demonstrating the degree of knowledge or recognition of the mark in the relevant section of the public using consumer surveys or opinion polls. In addition, awareness of a trademark in India can be proved by promotion of the mark through advertising in print and electronic media.

In a recent case in which a foreign trademark owner that had filed a trademark application initiated action against an Indian party whose trademark application was pending registration for the same mark, the Supreme Court observed that the mere fact that the foreign mark owner had not been using its trademark in India would be irrelevant if it were the first in the world market. In deciding the case, the court also observed that the intention of the foreign proprietor to use the trademark in India will be a decisive factor in such situations (Milmet Oftho Industries v Allergan Inc, MANU/SC/0512/2004).

In a suit alleging trademark infringement or passing off, a court may grant an injunction, award damages, direct an account of profits to be produced or issue an order requiring delivery of the infringing labels and marks for destruction or erasure. In addition, in respect of an infringement or passing-off action, a court can grant an ex parte injunction along with an interim order for discovery of documents, preservation of infringing goods or other evidence. Furthermore, the court can restrain the defendant from disposing of or dealing with assets in a manner that may adversely affect the plaintiff’s ability to recover damages or avail of any other pecuniary remedies that may be finally awarded to the plaintiff in the suit.

The Trademarks Act has implemented criminal remedies over and above the civil remedies that were previously available. It has also given more powers to the courts. As a result, applying false trademarks or trade descriptions and selling goods or providing services with such descriptions is an offence under the Trademarks Act. Any police officer (not below the rank of deputy superintendent of police or equivalent) can search and seize articles bearing infringing trademarks or labels without a warrant. Further, the Trademarks Act has increased the punishment for these offences to a term of not less than six months up to a maximum of three years. Moreover, offenders may be subject to a fine of between Rs50,000 (US$1,087) and Rs200,000 (US$4,348).

In India, if a trademark owner does not use a trademark in respect of the goods or services for which the mark has been registered, it may lose its rights over the trademark. This is even more significant since the introduction of service marks registration. The Trademarks Act provides for removal of a registered trademark for continuous non-use for a period of five years and one month in respect of the goods or services for which it was registered.

As a result of these new grounds for infringement, in a recent case the Delhi High Court prohibited Colgate Palmolive India Ltd from broadcasting an advertisement that disparaged a similar product sold by Dabur India Limited. The court held that an advertisement which was contrary to honest practices in industrial or commercial matters, and which also challenged the reputation of the registered trademark of the plaintiff, amounted to infringement of the plaintiff’s registered trademark under the provisions of the Trademarks Act. The court also held that even an indirect reference to another proprietor’s trademark in a disparaging advertisement would constitute infringement of that trademark.

Domain names

As a result of the Internet’s popularity, the Indian courts have dealt with a large number of domain name disputes in the last few years and the courts have consistently applied the law relating to passing off to domain name disputes.

In a recent case the Supreme Court of India held that domain names are subject to the legal norms applicable to other intellectual property. While restraining a subsequent proprietor from using another proprietor’s registered domain name, the Supreme Court considered various definitions under the Trademarks Act and held that a ‘domain name’ is a word or name that is capable of distinguishing the subject of trade or service made available to potential users of the Internet. Satyam Infoway Ltd, a leading IT services company and one of India’s largest internet service providers, has been the registered proprietor of several domain names, including ‘sify.net’, ‘sifymall.com’ and ‘sifyrealestate.com’, since June 1999. It claimed that the word ‘sify’ was a word invented by using elements of its corporate name. Another company, Sifynet, which started an internet marketing business using the domain names siffynet.net and siffynet.com in June 2001, was restrained from using these domain names (Satyam Infoway Ltd v Sifynet Solutions Pvt Ltd, 2004 53 SCL 26 (SC)).

Copyright

In India, copyright exists only in the form or expression of a work and not in the idea. The term of copyright is the lifetime of the author plus 60 years from the calendar year following the year of the author’s death.

India is a signatory to both the Berne Convention and the Universal Copyright Convention. Therefore, in the event of copyright infringement of a work that is not copyrighted in India, authors in member states of the aforesaid conventions will benefit from protection on a reciprocal basis in India.

A copyright holder is entitled to the remedies of injunction, damages and account of profits against an infringer. A sub-inspector of police who suspects the infringement or possible infringement of copyright can seize all copies of a work and the materials used to make infringing copies without a warrant, and produce them before a magistrate.

If a person knowingly and for gain or in the course of trade or business infringes or abets in the infringement of the copyright in any work or other right conferred by the copyright law, he is liable to be imprisoned for a term of between six months and three years, and to pay a fine of between Rs50,000 (US$1,037) and Rs200,000 (US$4,150). Where an offender uses an infringing copy of a computer program, he is liable to be punished with imprisonment of between seven days and three years and a fine of between Rs50,000 (US$1,037) and Rs200,000 (US$4,150). If the offender proves that the infringement was not for gain or in the course of trade or business, the court may not impose imprisonment but can order a fine of up to Rs50,000 (US$1,037).

If a person knowingly makes or possesses plates to make infringing copies, or publishes a sound recording or video film without the required particulars, he or she can be fined and imprisoned for up to two years.

Most multinational companies actively pursue these criminal options. As a result, software piracy in India has fallen from 90 per cent to 60 per cent, and music piracy has also been reduced.

Copyright comes into existence together with the work, and registration of a copyright is the only clear evidence of acceptance of a copyright.

Although the Indian courts do not usually award very high damages, the Delhi High Court recently awarded damages of about Rs2 million (US$46,500) to the Microsoft Corporation in a software piracy case, which is one of the highest damages awards in this type of case. In addition, the court permanently stopped the defendants from carrying out any infringement or passing-off activities of Microsoft products, copyrights or trademarks. The court also ordered the defendants to deliver up all pirate copies of Microsoft software, including the equipment used to copy the software and all other infringing materials in the defendant’s possession.

Furthermore, in awarding damages the court observed that it would be futile to direct the defendants to render accounts because they were carrying on this business surreptitiously. This is a new trend in the Indian judiciary, as opposed to the usual practice of issuing directions to render accounts, which are generally ineffective as the infringers do not maintain proper accounts. This case is a landmark in India’s software piracy case law, not just because of the very high damages awarded, but also because the court decided the case very quickly and based on evidence adduced by affidavits; this is unusual as litigation proceedings are generally lengthy in India.

Although India does not have specialised IP courts, Indian civil courts are pro-IP rights owners and have handed down landmark rulings in trademark and patent cases. Further, on September 15 2003 India set up the Intellectual Property Appellate in Chennai, which decides registration-related matters involving IP rights.