A Layman's Narrative of Patents, TK and Biopiracy

As many of you may know, SpicyIP has been around for about 5 years now (since 2005). Since then, we've mainly conveyed the latest in Indian IP through the medium of "text". Often times, we've used "images" too.

However, we've fallen short on the video (and youtube) count. All that is set to change. We bring you our first video, albeit an amateurish and rather badly shot one (from my digital camera).

What amazed me was the fact that a layperson in Rishikesh (the gentleman worked in a small hotel) could articulate his views so well on patents, biopiracy and TK. He also refers to "trademarks" and the famous Chotiwala hotel in Rishikesh.

Here is the link to the video for those interested. Unfortunately, its in Hindi--but I hope to have subtitles soon.

And here is the brief description of the video.

"A layman's views on patents, biopiracy and traditional knowledge (from India). Quite astonishing that he had this range of knowledge, given that he wasn't a lawyer or scientist or a patent attorney or someone who had anything to do at all with TK! Just a member of the public (he worked in a hotel in Rishikesh) who had been exposed to patents and biopiracy thanks to the Indian media!

Off Topic: IDIA and Legal Reasoning Competition

For those of you blessed with the talent to craft clever questions on legal reasoning, there's a competition being run by the IDIA project.

IDIA (Increasing Diversity by Increasing Access to Legal Education) seeks to enhance access to legal education by training kids from underprivileged backgrounds for the law entrance examination (CLAT). The hope is that with intensive CLAT (and English) training, some of these children might make it to the premier law schools in India and have a shot at a decent legal education.

CLAT is a joint entrance examination run by 11 national law schools. It consists of different components such as i) English comprehension ii) Current affairs and GK iii) Mathematics iv) Logical Reasoning and v) Legal Reasoning.

While it is easy to source practice questions on most components above, good legal reasoning questions are hard to come by. And thus was born the IDIA competition to help source interesting questions from creative minds...questions that will form part of the training material being handed out to underprivileged students. Sample questions have been offered to give you a sense of what we're looking for...and one of the questions deals with the issue of patentability of medical methods.

The prize money is not all that great...but the intellectual challenge and the good karma might more than compensate....

SpicyIP Tidbit: CGPDTM releases a list of 'scientific advisors'

The Controller General of Patents has released a list of 'Scientific Advisors' who can advise Courts on the scientific and technical aspects of patent litigation. Courts have the power to appoint such advisors under Section 115 of the Patents Act, 1970.

The Controller General had published a notice inviting applications for these positions on 10 September, 2009. The notice and application for the same can be accessed over here and here. Applications were sought in four classes of advisors, with the minimum requirements being atleast 15 years of experience in their respective field of expertise:

1. Chemistry & Allied Sciences

2. Biotechnology & Microbiology

3. Mechanical & Allied Subjects

4. Electrical, Electronics and Related Subjects

The final list consists of 14 in the first category, 7 in the second category, 7 in the third category and 7 in the fourth category.

I was surprised to see that the list contains some registered 'Patent Agents'. Although there is no statutory bar against 'patent agents' being empanelled, one would think that there might be a conflict of interest for them to appear on such a list.

The publication of this list could not have come at a more appropriate time since I was informed earlier today that the Delhi High Court in a couple of patent infringement suits has ordered the appointment of 'scientific advisors' at the interim stage itself. I wish I could have updated you on the actual order but the Delhi High Court has stopped posting daily orders on its website. Given the important role that the scientific advisor will be playing in the future, the Patent Office could probably evolve a code of conduct for such advisors.

Issuing "Radio" Compulsory Licences in the Wake of a "Mirchi" Controversy

As expected, a writ petition has been filed challenging the legality of the appointment of the current chairman of the Copyright Board, Raghbir Singh. This came up before Justice Sikri of the Delhi High Court yesterday and notices have been issued.

We've been dealing with this controversial appointment in several earlier blog posts. In one of these posts, I had questioned his eligibility on the ground that he was 66 years old at the time of his appointment and therefore not suited to hold the office of Chairman of the Board. The Copyright act provides (interalia) that the chairman should be a person eligible to be appointed as a High Court judge.

Eligibility criteria for high court judges find mention in Article 217 of the Constitution of India, under which a judge must necessarily retire at the age of 62. I took this to mean that no person above the age of 62 could be appointed a High Court judge. And since Mr Singh was 66 at the time of his appointment, he was not eligible to be a High Court judge. And therefore not eligible to be appointed as Chairman of the Copyright Board as well. Well, it now turns out that I was wrong.

Courts have consistently held that the retirement age of a High Court judge as stipulated in the Constitution cannot necessarily be construed as an "eligibility" criterion. I quote extracts from a recent ruling (State of Uttaranchal vs Balwant Singh), where the Supreme court approved of the ruling by a division bench of a high court as below:


"The Division Bench of the High Court in the impugned judgment observed that the first clause of Article 165 insists that the Governor shall appoint a person as the Advocate General who is qualified to be appointed as a Judge of a High Court. The qualifications for the appointment of a Judge of a High Court are prescribed in the second clause of Article 217. It is true that the first clause of Article 217 says that a Judge of a High Court "shall hold office until he attains the age of 60 years" (at the relevant time the age of retirement of a Judge of the High Court was 60 years and now it is 62 years).

The Division Bench further held that the real question then was whether this provision is to be construed as one prescribing a qualification or as one prescribing the duration of the appointment of a Judge of a High Court. It was further held that as the provision does not occur in the second clause, it can only be construed as one prescribing the duration of the appointment of a Judge of a High Court. The Court further observed that the provisions about duration in the first clause of Article 217 cannot be made applicable to the Advocate General because the Constitution contains a specific provision about the duration of the appointment of the Advocate General in the third clause of Article 165 which says that the Advocate General shall hold office during the pleasure of the Governor.

This provision does not limit the duration of the appointment by reference to any particular age, as in the case of a Judge, it is not permissible to import into it the words "until he attains the age of sixty years". The specific provision in the Constitution must, therefore, be given effect to without any limitation. If a person is appointed as an Advocate General, say at the age of fifty-five years, there is no warrant for holding that he must cease to hold his office on his attaining sixty two years because it is so stated about a Judge of a High court in the first clause of Article 217. If that be a true position, as we hold it is, then the appointment is not bad because the person is past sixty two years, so long as he has the qualifications prescribed in the second clause of Article 217."

and later:

"In view of the clear enunciation of law in the aforesaid judgments, the controversy has been fully settled that the Advocate General for the State can be appointed after he/she attains the age of 62 years. Similarly, the Attorney General for India can be appointed after he/she attains the age of 65 years. In a number of other cases regarding the appointment of other authorities, the Courts have consistently taken the similar view."

and still later:

"The controversy raised by the petitioner in this case was decided 58 years ago in the judgment of Karkare (supra) which was approved by the Constitution Bench of the Supreme Court way back in 1962. Unfortunately, the same controversy has been repeatedly raised from time to time in various High Courts. When the controversy is no longer res-integra and the same controversy is raised repeatedly, then it not only wastes the precious time of the Court and prevent the Court from deciding other deserving cases, but also has the immense potentiality of demeaning a very important constitutional office and person who has been appointed to that office."

Even assuming Mr Singh's appointment is held illegal or irregular on some ground, this will not, by itself, vitiate the proceedings of the Copyright Board. As mentioned earlier, under the de facto doctrine and the doctrine of necessity, courts are likely to uphold the validity of the proceedings, notwithstanding any irregularity in the appointment of members adjudicating the dispute/proceedings.

As and when we lay on our hands on the text of this writ petition, we'll bring you more details. In the meantime, the grapevine has it that 81 licences have already been issued to about 4-5 radio stations (including Radio Mirchi) to cover different zones throughout India. These licences have been issued pursuant to the copyright board order stipulating that such licences be issued subject to a 2% royalty rate.

SpicyIP Tidbit: WSJ criticizes DCGI report on spurious drugs in India

The Wall Street Journal in its Sept 3rd edition carried an article by Dr. Roger Bate criticizing an exhaustive report on spurious drugs in India that was prepared jointly by the office of the Drug Controller Of India and the Indian Statistical Institute (ISI). This report which can be accessed over here was released late last year and was one of the most comprehensive reports on the prevalence of spurious drugs in India. (Please click here to access a well written summary of the report in the Mint). Dr. Bate belated criticism of the report questions the methodology adopted by the report in collecting samples for analysis.

The DCGI's report titled 'Report on Countrywide Survey for Spurious Drugs' was commissioned in light of sensational media reports which pegged the figure of counterfeit drugs in the market at 35%. In the 'Executive Summary' of the report the DCGI puts the figure of counterfeit drugs at a comforting 0.3%. The DCGI also strongly debunks the oft-repeated figure of 25% to 30% of counterfeits as unverified and often wrongly attributed to the World Health Organization (WHO) which itself has disclaimed making any such statement.

For the purposes of the survey, 24,125 drug samples, belonging to 9 therapeutic categories and spread over 61 popular brands were collected. Of all these sample only 11 were rejected by manufacturers, on a physical examination, as not being manufactured by them i.e. 0.046% of the entire batch. Of the 305 samples subjected to chemical analysis only 3 were found to be substandard with respect to content of the active ingredient mentioned on the label i.e. 0.101% of the entire study. An additional 2,671 samples which were subjected to testing on the orders of the Ministry of Health showed 100% conformity.

The report also carries out a comparison with a prior SEARO/WHO report which had pegged the level of counterfeits (on physical examination) in the Indian market at 3.1% against the DCGI's finding of only 0.046%. While the SEARO/WHO report states that atleast 0.3% of the samples subjected to a chemical analysis failed in meeting the standards specified in the labels, the DCGI report states that only 0.101 % failed to meet the standards specified in the labels when subjected to a chemical analysis.

In his article Dr. Bate summarizes the DCGI report as a 'well-conducted analysis of probably dubious data'. He states that 'It's reasonable to assume that the report generated untrustworthy findings because the samples were biased'. He bases these assumptions on an earlier study which he conducted along with noted Indian economist Dr. Bibek Debroy. That study had pegged the number of sub-standard drugs at 5% of all samples in Chennai and at 12% of all samples in Delhi. These numbers would appear highly inflated in light of the DCGI study.

While I will not comment on the statistical analysis, as I have no expertise in that area, I would like to point out that the DCGI should have stuck to the definitional framework laid down in the Drugs and Cosmetic Act, 1940 i.e. it should have classified the drugs as either “Adulterated drugs” (Section 17A) of the Drugs and Cosmetics Act, “Spurious Drugs” (Section 17B) or “Mis-branded” (Section 17). The term 'counterfeit' that the DCGI uses in its report is not found anywhere in the Drugs and Cosmetics Act, 1940.

Off-Topic: Research- What Does It Demand?

In the last post, I had penned a few rudimentary non-novel obvious thoughts on what it takes to nurture a culture of innovation based on Prof.Vijay Govindarajan’s (VG) work. In this post, I intend to delve deeper into one of VG’s recurring themes (“leitmotifs”) - absence of fear of failure. I had an interesting experience which I wish to draw from, to articulate better on this point. 

(Disclaimer: This post could be slightly off-topic, with an extended introduction (“bhoomika”, if I may) and probably an abrupt obvious conclusion, so for those who are looking for hardcore insta-opinions/analysis, this may not be to your liking.)

Sometime in 2007, I was at the Kharagpur railway station standing in a long queue waiting to book a ticket to home. The queue was not that long, but thanks to the laidback work ethic which is fiercely preserved and encouraged by the world’s largest commercial/utility employer, I was stuck for a good hour and a half, and was wondering at the sheer bankruptcy of colourful vocabulary in the Queen’s language when you so direly need it.

Just when I was about to put to test my native tongue’s range in this department (i.e. after having exhausted what I knew in the other languages I am fluent in), the gentleman standing in front of me turned around, and with what I mistook for a patronising smile, enquired if I was from the Southern part of India (he’s careful not to call me a “South Indian”).

As I answered in the affirmative, I noticed he was wearing a ‘70s style half-sleeve shirt in checks and a grey trouser, had an old huge rickety watch in his right arm, a sixth finger (the smoking stick of course) between the fingers of his left hand and wore a  pair of run-down “standard issue” Bata slippers. (The piling up of stereotypes should have alerted me to his background, but I guess my mind was still pre-occupied and in fact, was in awe of the stupendous verbal dexterity and reach of my native tongue). I managed to notice that he had sharp eyes.

He then asked me which department of the “insti” (IIT Kgp in the local lingo) was I from, to which I told him I was from the Law School. Once the usual questions were done with, I was informed that he was a Professor from the Computer Science Department of IIT Kgp and also, one of the founding members of the then newly-established Centre for Theoretical Studies (CTS) at IIT Kharagpur.

Upon asking further, he told me that he was an IITian himself, who did his Masters in the US (if my memory serves me right) and Ph.D from one of India’s renowned institutions. At the time of this discussion, I was briefly flirting with the idea of taking up studies in pure or applied mathematics after law. So I asked him the qualifications he looked for in the applicants to the CTS; I was told that interest in and aptitude for math was all that was needed, no references or glittering exaggerated CVs were required whatsoever.

The conversation then slowly veered to what led him to take up a career in research (and that too in an Indian Institution...), and from there on, to what did research demand from its aspirants.

The Professor’s insights rang of conviction borne out of experience; he said, contrary to the popular belief, research did not demand a 200+ IQ or a certification of genius from Mensa. He said the best of brains lacked patience, and were hence not cut out for research. Most aspirants, according to him, didn’t realize this until they stepped into research and more often than not, they were disillusioned and disenchanted within a year or so. The Professor confessed that he too was, at one point in his early days, on the verge of succumbing to disenchantment and motivational boredom.

However, as time passed by, he realized that research, more than dazzling brilliance, called for perseverance; failures were to be expected and one had to continue plodding one’s way through until the process grew on you. He also clarified that patience and perseverance were not to be confused with one another.

He felt that the reason the cream of the talent from the country’s elite institutions chose career paths other than research could be that they simply did not have the patience to slog through the years, more so when there was no dearth of easier opportunities to make it big within half a decade or less. 

Personally, I didn’t think he was making this point on moral grounds, he was analysing the issue from a very practical point of view. Also, I would think it is fairly banal to point out that his observation applies to all fields of study.

If his observations were right, which I think they were, no wonder an undergraduate degree becomes merely a stepping stone to a lucrative graduate program (read a management degree).  If a career in management is opted for out of love for the subject, then one really cannot judge the choice; after all, management too deserves a great talent pool. But funnily, barring one or two Raghuram Rajans, I am not sure how many aspirants of a management degree really look forward to a career in management research. 

If this be the case, I don’t think lack of resources or opportunities can be held as the primary reason(s) for paucity of researchers...it all comes down to our approach towards learning.

As long as contribution to a particular field of learning is not our idea of success, we can keep racking our brains and breaking our heads for all eternity as to why we lack in innovation, and yet we would still be barking up the wrong wall. (We had discussed on similar lines in an earlier post)

I probably sound “pontificatory”, that may be because I don’t know how else is this issue supposed to be addressed. As for relevance, I think when we discuss intellectual property and innovation, supposedly “abstract” issues such as these too need to be addressed because if we don’t do that, we are probably attempting to dig our teeth into the kernel of an apple without touching the skin...

Innovation- It's All In The Mind

There’s this series of videos of Harvard Business Publishing on YouTube I came across recently, a good number of which are dedicated to the theme of innovation. One of them, which I found to be of relevance to markets like India is a short interview of Prof.Vijay Govindarajan, Earl C. Daum Professor of International Business at Tuck School of Business (Dartmouth College). (To know more about Prof.VG, as he is popularly known, visit here and his blog)

In this video, VG is asked as to what must managers do to facilitate innovation in their organizations. To this, VG points out that “Change is less of a technical problem, but more of a mindset issue, an organizational issue”. To deal with this, he proposes injecting new blood into an organization; in fact, he feels that the new recruits must be from an area of technology different from the organization’s core technical expertise.

As to how should an organization deal with resistance to change, he recommends three steps-

1. People, according to him, respond to how they are measured and rewarded. So to a large extent, performance measurement criteria dictate talent’s attitude and approach to innovation.

2. As a corollary to the first step, he says innovation by definition means doing something different, which also means, that failure is to be expected and tolerated (but not necessarily encouraged...). Therefore, this needs to be factored in the performance measurement mechanism of the organization.

3. The third step is to inculcate the willingness to collaborate. To quote him, “creativity is an individual effort, whereas innovation is commercialization of creativity, which requires organizational effort”.

I think each and every one of VG’s observations applies to our (Indian) business models because they are perceived as “safe” business models (with increasingly notable exceptions, without doubt). This reality or perception needs to be changed because the openness and ability to accept and absorb failure is absolutely central to fostering and sustaining innovation (I shall deal with this point at a more operational level in the next post).

Ironically, there is no dearth of entrepreneurs in India and the popular opinion about India vis-a-vis China is that we are seen as having keener entrepreneurial spirits, and yet this does not seem to translate to greater emphasis on innovation. Is this because we lack resources, creative or capital, or the heart to withstand "innovational" setbacks, or more importantly, team work? This probably calls for some serious introspection.

When asked to name the top 3 innovations that come to his mind, VG names Tata Nano as one of them and says there are lessons for developed markets to learn from the Nano experience. He says that the first take-away is to realize that “emerging markets, like India and China, are fundamentally different from developed markets”.

Both India and China together account for 2.5 billion people and VG says “there’s 5000 years of pent up demand”. That said, he observes that India and China have “micro-customers”, which forces players from developed markets to devise “ultra low-cost business models”.  

In other words, he says, the very same products, which players from developed markets vend in their domestic markets, have to be “reinvented” for them to find acceptance in India and China. In the process, he says, there’s a good chance these reinvented low-cost products for emerging markets may disrupt the business models of the players in their home markets.

Simply put, a cheaper Ipod for India could play truant with Apple’s plans in the US. This probably explains (and I could be wrong here) why products are released in phases across markets so that, by the time a cheaper version (cost-wise) of a product X is introduced in India, the demand for X is more or less on the decline in the developed market; or probably, an advanced version has caught the fancy of the customers in the developed markets and X does not figure any more in their list of choices.

The Legal Angle

The “hard” legal inference that one could probably draw from the above hypothesis in the video, is that simultaneous/co-extensive IP (patent) protection for an advanced technology in developed and emerging markets serve different purposes- strictly speaking, protection makes commercial sense in the developed market, but serves a defensive purpose in the emerging market.

Stated otherwise, as regards IP protection, there’s an immediate need in the developed markets to ensure that competitors do not end up enjoying the fruits of one entity’s research and development efforts; however, as far as the emerging market is concerned, the idea or reason behind patent protection could be to ensure that, although the demand for the product may not be as high as it is in a developed market, low-cost manufacturers in the emerging market are excluded from commercializing the technology.

 This way, players from developed markets may stand a decent chance of selling their high-cost products at comparable costs even in developed markets. Of course, all this is based on the assumption that there is some demand in the emerging markets.

Even in the absence of demand, IP protection in emerging markets could always have a psychological effect- players from developed markets could continue to project their technological superiority by flaunting the number of patents they hold.

These are preliminary thoughts (not in any way novel)  and I hope to build on them soon. In the next few posts, we’l discuss “reverse innovation” and the similarities between legal and scientific research.

WSJ mixing up issues in Access to Drugs debate?

Recently our friends over at Afro-IP brought to light an article by Alec van Gelder in the WSJ on the problem of access to medicines in Africa. While the article is specific to the problems in Africa, its points about lack of infrastructure and diversion of money being major barriers to access are true across almost all developing countries. [Unfortunately the article is only fully available to subscribers.]

The article goes on to state that Big Pharma has been made a scapegoat of in these problems with activists constantly attacking their patent rights, and states that ‘this misguided battle against pharmaceutical companies’ patent rights will only make Africa’s health crisis worse’. Without getting into the specifics, in short, the article criticises activists - comparing them to scratched record players repeating the same thing about prices and patents being the main problem, while according to the author the main focus should be on the problem of lack of health infrastructure.

No doubt that the author raises certain very valid points in his article, however there are some crucial issues that seem to be mixed up to me. 

Firstly and most strikingly, is what he says about Compulsory Licensing. He rightly mentions that too much CL-ing will lead to discouragement to produce these medicines. However, in what seems to be a shot in the dark, he states that the reason CL haven't been used much is an increasing supply of medicines. While the TRIPS allows CLs, the main reason that they haven't been used often is political pressure against using them. Using a variety of what can be termed as backhanded moves, certain countries such as the US "push" developing countries not to use the Compulsory Licensing provisions of the TRIPS Agreement. Taking my own shot in the dark, I'd go as far as to say that they would be perhaps too common if there were complete political free-will in deciding on this matter. 

While I agree with him in that Pharmaceuticals are being made scapegoats in the whole process, I believe this is more because of the role they've been assigned in the system. They are profit making bodies, like any other corporations, who happen to make medicines. They are not charitable bodies out to save the world. In fact, on the face of it at least, certain companies are doing much more than is required by them to promote access to medicines. However, where I deviate from the article is that the author still insists that patents are the best hope for promoting access. He seems to see these issues as one. There is one issue of low access to medicines due to price barriers and another larger issue of the health sector being one in which the market does not determine the requirements of the people. For eg: another issue of access to no access to medicines due to the medicines for those diseases not being created at all. 

He doesn't give cognizance to the fact that the patent system essentially caters to a market that can afford the heavy investment and profits thereof from it. This is not limited to 1st line and 2nd line ARV treatments, (which receive the most publicity) but also to the several diseases which don't receive publicity and which affect the developing world, and especially those that aren't (usually) present in the developed world. 

I simply cannot see how one can press a normative argument for the current patent system using exceptions and 'charitable actions", and even compulsory licenses (which had essentially be introduced to ensure that there is at least some level of access), as a best case scenario for promoting accessible medicines. If the drug innovation system is such that it requires 'charity' by one party to the other, then it is certainly one which requires improvement.

Finally on the point of insufficient healthcare infrastructure, he is certainly right. The common example displaying the necessity of this is that of the DOTS formulation for TB treatment which works in the developed world but not in the developing world due to its rigourous infra-structural requirements over the prescription period of 6 months. Thus even the presence of a medicine for a disease that affects millions in the developing world is ineffective regardless of the price of  the medicine. Unfortunately however, he seems to see the problems in some sort of hierarchal structure, when it reality, the problem of drug innovation and access to medicines is very nuanced and multi-faceted. As such, these issues ought to be looked at holistically rather than one by one. 

Just off the top of my head, a hypothetical (and hence very unlikely) example of a holistic solution would be a vaccine for African sleeping sickness, funded by a prize system put together by several governments, (and hence free / cheap to the patients) that is spread like a virus through the air. While I readily admit this is far from any actual solution, my point is that the most effective solutions will be those that look to address all the problems, and not simply one over the other. Again, admittedly this is very difficult, but simply ignoring or undermining one portion of the problem certainly does nothing for it. 

Bappi Lahiri & Bad Faith Litigation

This post will cover the decision of the Court of Appeals for the Ninth Circuit against an attorney representing Bappi Lahiri, for a bad faith and frivolous copyright infringement claim.

Anthony Kornarens, a copyright lawyer based out of the United States, represented Bappi Lahiri, in a suit for copyright infringement and his conduct during the course of the suit formed the subject-matter of this case. The Court of Appeals upheld the decision of the district court, severely sanctioning the attorney and awarded the defendants $247,397.28 in attorneys' fees and $10,808.76 in costs.


FACTS:


Ownership of the song 'Thoda'
Lahiri composed a song titled 'Thoda' for the film 'Jyoti'. Since by agreement, Indian law was to govern the copyright in the song, the ultimate copyright in the underlying work (the song, in this case) vested with the film's producer, 'Pramod Films'. The owner of the work was thus Pramod Films and not Bappi Lahiri.


Our readers will be familiar with the decision in Indian Performing Right Society (“IPRS”) v. Indian Motion Pictures Association [A.I.R. 1977 S.C. 1443] which supports the above view, through its interpretation of the Act, which unfortunately, also forms part of Indian copyright law. (As a side-note, our readers might wish to read further on the issue of underlying works and ownership as contemplated by the proposed amendment to the Copyright Act here, here, and here).


The 'False Designation' Claim
In early 2002, Kornarens, on behalf of Bappi Lahiri filed a suit against “Dr. Dre” (the well-known hip-hop/rap artist and producer) his production company and the record label – Universal, Interscope Records and Aftermath Records for sampling bits of the song 'Thoda' (pardon the bilingual pun) without crediting Bappi Lahiri. Essentially, the suit was for a 'false designation' claim under the Lanham Act. It is important to note that no copyright infringement was actually claimed at this point in time.


The Copyright Infringement Claim
Three months after the above suit was instituted, the Supreme Court in another case, Dastar Corp. v. Twentieth Century Fox Film Corporation [537 U.S. 1099 (2003)] granted certiorari and ruled that the protection for 'false designation' under the Lanham Act extended only to 'producers of tangible goods and not authors of ideas, concepts or communications embodied in goods'. In view of the Indian copyright ownership system for underlying works, Bappi Lahiri's claim stood extinguished.

Three months post the certiorari decision, but before the final ruling, the two following acts were witnessed:

1. 1. Kornarens, on behalf of Lahiri registered a copyright in 'Thoda' with the United States Copyright Office.
2. 2. Three weeks after the final ruling in Dastar, Kornarens amended Lahiri's plaint to add a 'Thoda' copyright infringement claim.

Request for Summary Judgement by the Defendants
Since 'Pramod Films' had assigned the rights to 'Saregama', the latter filed a suit against the defendants for copyright infringement. However, Bappi Lahiri also asserted copyright over the same song and hence both were consolidated before the United States District Court for the Central District of California.

The defendants wanted the competing claims of copyright to be first decided by an Indian court, thus requesting a stay on the consolidated cases. Alternatively, they wanted a summary motion against Lahiri since he did not own copyright over the song 'Thoda', and his copyright infringement claim was thus baseless.

Mischaracterisation of Agreement by Attorney Kornarens
This is arguably where the 'bad faith' of the attorney first become evident. Kornarens submitted an agreement between Lahiri and Saregama claiming that it unequivocally resolved the copyright ownership dispute, thus dispensing with the need for consolidated cases in the district court. However, the agreement in fact, only stated that any damages recovered from the defendants from the copyright infringement suit, would be divided 30-70. The district court relied on this misrepresentation to deny the defendants summary motion against Lahiri, since the agreement purported to show a copyright ownership interest vesting in Lahiri, which in reality did not exist. Neither did the Court detail why the defendant's contention that Saregama owned the copyright under Indian law should be rejected.

Renewal of Summary Motion
The defendants, understandably aggrieved by the erroneous decision, renewed their summary motion against Lahiri. After a thorough analysis, the Court reversed its decision and held that Lahiri did not have a copyright interest over the song 'Thoda' under Indian law. The district court also found a bad faith element in Kornarens' pursuit of the copyright infringement claim and imposed sanctions amounting to more than $250,000 for multiplying the proceedings.

Attorney Kornarens appeal against the District Court ruling

Kornarens appealed the decision by raising the following contentions:

1. He relied on an Indian expert in copyright law to come to the conclusion that Lahiri had a copyright interest over the song.
2. Bappi Lahiri himself asserted that he owned the copyright over the song.
3. The District Court abused its discretion by sanctioning him unreasonably for damages amounting to $258,206.04 .

The Court of Appeals rejected his contentions on the following grounds:

1. Even a 'cursory investigation' of the applicable Indian law would make it amply clear that Lahiri had no copyright interest over the song.
2. The Indian legal position on this point is straightforward and the IPRS decision is in English, so there was no need to rely on expert advice from India of a questionable nature.
3. The court also found that the Indian position was similar to the U.S position in cases of work for hire, where the music composer for a film score surrenders the copyright in the song to the producer of the film.
4. Most importantly and regrettably however, Kornarens repeatedly misrepresented the decision in IPRS v. Indian Motion Pictures Association by presenting immaterial parts of a concurring opinion as the ratio of the case. He also misquoted another judgement by cunningly inserting the term 'film company' in a quote from the judgement, although the case dealt explicitly with non-film music.
5. Further, the history of the litigation, including his bad faith misrepresentation of the damages-sharing agreement as a copyright-ownership settlement agreement; his ploy of registering and amending the plaint post-Dastar; and also his attempt to have the judge hearing the case recuse himself so that a new judge unfamiliar with the history of the case would be appointed, proved that the Court did not abuse its discretion by sanctioning him.
6. On the issue of quantum of damages, the Court arrived at the figure after excluding expenses for the dismissed 'false designation' claim and only included costs incurred in defending against Lahiri's copyright infringement claim. Further, the Court employed an apportioned percentage method since it would be impossible to determine with mathematical precision the fees and costs generated only by Kornarens and not Saregama. The district court further excluded fees incurred because of court-requested supplemental information and adjusted billable hours of attorneys accordingly for redundant work.

CONCLUSION:

Thus, the Court of Appeals found a pattern of bad faith litigation on the part of Bappi Lahiri's attorney, Anthony Kornarens, resulting in multiple proceedings, which were excessive and unnecessary and motivated by unsubstantiated claims. There was ample evidence of recklessness on his part, and despite the fact that the Court's disciplinary power must be exercised with caution, this is a good example of when such power must be used. The ruling serves as a useful reminder that attorneys in their quest for recognition and a desire to succeed, occasionally transgress ethical boundaries. The message from the Ninth Circuit appears to be clear – constrain yourself or be prepared to dish out $250,000.

Open Source: Who and How Do I Hold Responsible/Liable?

Yesterday was an interesting day, interesting because the day threw up a lot of questions, the answers to which I am not sure of (which would mean I have something that resembles an answer), but the very questions have pointed me to another rich area of (potential?) research. I am pretty sure mine may not be the first head in which these questions have popped, yet that doesn’t stop me from relishing the questions or the fact that these questions managed to pop in my little head*.

These questions/issues that I refer to, popped yesterday as I was attending a seminar on “Software Patents and the Commons” arranged by the Software Freedom Law Center (SFLC) along with the Centre for Internet and Society (CIS) in New Delhi (I was pleasantly surprised to bump into the ever-cheerful Pranesh Prakash). During the course of the seminar, there were quite a few presentations, notably by Prof.Eben Moglen, Professor of law and legal history at Columbia University, Dr.Abhijit Sen, Member of the Planning Commission, and Venkatesh Hariharan, Corporate Affairs Director of (or at?) Red Hat. (Unfortunately, I didn’t have the pleasure of listening to Pranesh because I had to rush back to attend to something else)

The commonality in most of the presentations seemed to me that the Open Source way of doing things was presented as not just one of the alternatives, but the only “alternative”, in fact the only way of doing things. I really wouldn’t claim to be someone who is familiar with the literature on Open Source, therefore my questions/doubts are that of an uninformed but certainly not uninterested student of the jurisprudence of property and innovation, who wishes to set aside the literature for a moment and merely embark on understanding the implications of the Open Source model through questions and questions alone.

Since only questions are being relied upon to understand the model, it is imperative that one asks the right questions. But how do I know if they are right? I guess looking for internal consistency in the questions is one of way of staying on the right track.

Prof.Moglen in his talk spoke of property/power/ownership as a model which encourages creation of islands of exclusion which inhibit learning, whereas the Open Source model was spoken of as an “inclusive” model which encourages learning (these days a rather fashionable buzzword “inclusive”, isn’t it?). Prof.Abhijit Sen, an economist by training, however pointed out that the Open Model, in a way, is an anarchist model where there’s too much of free movement for every participant, ultimately leading to chaos, which he calls as the real tragedy of commons.

In other words, there may be a shared vision with respect to long-term goals regarding the methodology of innovation, but there may not be an agreement on the specifics of the immediate goals to be achieved (not necessarily “short-term goals”, because the word short-term somehow carries negative connotations of being short-sighted). Therefore, the concept of a collective/shared interest with regard to a specific task on hand is what Dr.Sen perceives to be as one of the primary and cardinal hurdles of the Open model.

To this however, Venkatesh Hariharan’s talk seemed to be an unintentional counter. He quoted a few numbers, such as the number of super computers in the world running on Open Source OS, to prove the reliability of products of Open innovation and the ability of unconnected individuals to work together on a project. This is ironic considering the fact that a few proponents of Open Source often scoff at empirical evidence from the “other camp”, and seek logical answers, but when it comes to proving their own “efficacy”, numbers/statistics seem to be their first resort...

Now, throughout these presentations, it was emphasised over and over again that “Ownership” looks at innovation as a secluded process which results in exclusion of a large section of the community. But ironically again, what was noticeable was the single-point approach to Open innovation itself in the sense that Open movement seems to define its identity through the prism of Ownership, as opposed to adopting a holistic approach. Not just that, it focuses or probably chooses to focus on certain aspects of “Ownership” to portray itself in a better light, in the process losing sight (deliberately?) of an entire gamut of issues/perspectives which “Ownership” has spawned and has devised remedies too.

And this is not because these issues do not arise in the case of the Open model; in fact, they very much do and yet the seminar gave one the impression that the Open model may not be equipped to address these issues, as yet (Dear Readers, please do not hesitate to fling or hurl any piece of gentlemanly literature which renders my observations “blanket” and proves me thoroughly and incontrovertibly wrong)

Now what exactly are these issues? Why are they “issues” in the first place? Ownership is probably creation of a controlled island of innovation; however ownership unfortunately does not have the luxury of focussing only on innovation. Along with the “rights/property”, come “duties/liabilities” (duties and liabilities although imputed with slightly different meanings, find themselves clubbed on the same face of the Hegelian matrix of interest, hence the interchangeable use). The duty to answer to a third party interest which is affected by the product of innovation comes with the right to property; such duties could broadly be categorised as “rules of liability”.

How does Ownership respond to such liability? How does it decide where the buck stops? How does a corporate identity help in addressing such issues? Although innovators are natural persons, Ownership/corporations ultimately hold the rights in the products of innovation and a corporation responds as a unitary entity to an allegation or a liability. It does not sit and rack its brains on apportioning the blame on to each innovator. More importantly, “Ownership” needs public acceptance, which requires it to address issues of liability in a fair manner. In a way, the interests behind “ownership” ensure that it continues to remain in the good books of the consuming public.

On the other hand, in an Open model, the user is encouraged to create and innovate further with the ostensible goal being greater learning, but then the “other” reason could be a hands-off approach to liability. Take for instance the unsuccessful defamation suits against Open innovation-based organizations like Wikipedia, which are thrown out on grounds that the content is “user-generated”.

Atleast in the case of Wikipedia, there are ways of ascertaining the culprit, but what about Open innovation in other fields? How do I know who is responsible for a particular cause of concern? After all, I should be in a position to bring him to justice. If self-regulation is propounded as the answer, I would be too naive to take that as an answer because if the exhortation is to not trust “Ownership” (which atleast makes itself accountable in some form), why should I believe open-innovation where the buck can stop at eternity if the chain of participation is long and snaky?

Furthermore, the sheer scale of (anonymous?) participation is precisely the reason that self-regulation is not an acceptable remedy for addressing “liabilities”. I am alive to the answer that:

 “Look, “Ownership” has been here since time immemorial! It has had the time to evolve, but Open model is young, you can’t really expect all the answers now! It is unfair!!”

Fine, but then "Ownership's" counter could be:

“Look, you are the one who keeps touting your numbers all the time to show how rapid and deep your penetration into the society is, although I don’t know how these numbers have been arrived at!! Be that as it may, your ostensible depth and reach make it absolutely imperative on your part to come up with convincing and realistic solutions/rules of liability before it gets out of hand! Peter Parker’s alter ego says “With Great Power Comes Great Responsibility!” I am asking you to follow Spiderman! It is totally fair!! After all, I speak for public interest and mind you, I am a tested and proven model for all your alarmist declarations! You don't trust me? I have empirical evidence to prove my point!!!”

I am sure I could be light years off the mark, so comments (particularly acerbic, caustic ones and their homologues) are welcome.

A closer look on rules of liability for the Open Model shall follow soon.

P.S: *(Which is why, somehow one can never consciously take credit for an idea is what I am increasingly beginning to think or believe, because most ideas seem to germinate subconsciously like a voice in your head talking to you in the third person. However, what one can probably take credit for is articulation of these ideas because articulation is a conscious act, rather process, impromptu if I may say so, with the mind being the doer and the witness (but does the mind initiate and do, or first do and improvise?) The final expression of this articulation in writing or in any tangible form or in the form of a product/process is shades more refined and is obviously more of an after-thought whose purpose is to rationalize the idea- LIBERALLY INSPIRED by “INCEPTION”)

Are communications with Indian 'Patent Agents' privileged under the Evidence Act, 1872?

'Client-Attorney' privilege is one of those sacrosant principles of the common law system which protects the communications between a client and his attorney from disclosure to a third party, regardless of whether the third party is a court of law. In the context of the common law system, 'client-attorney' privilege is a significant exception to the rule. The 'rule', as such, of the common law system, requires both parties to disclose all possible information to the court so as facilitate the quest for justice and the ultimate truth. Without complete information it is unlikely that a court of law will ever be in a position to deliver a verdict that does justice to both parties. The concept of 'client-attorney' privilege therefore is a limited exception to the full disclosure requirement since it was felt that a client could be best advised by his attorney only when he made full and frank disclosures to his attorney and the only way to ensure this was to 'privilege' the communications between the client and the attorney.

Apart from 'client-attorney' privilege, the only other communications that are privileged are 'spousal communications' i.e. communications during the course of a marriage under Section 122 of the Evidence Act, 1872. The ambit of privilege has been deliberately kept to a limited circle since expanding it beyond a limited class of people would curtail the right to a free and fair trial. Given the implications of increasing the ambit of privileged communications such a decision is best left to the legislation and not an activist judiciary.

The Indian Evidence Act, 1872 codifies the concept of 'client-attorney' privilege in Sections 126 and 129.

S. 126 imposes a duty on any 'barrister, attorney, pleader or vakil' from disclosing any professional communications that he may have made or received from a client in the course of his professional employment. The reason this provision does not use the term 'advocate' is the fact that it was drafted in 1872 and the Advocates Act was enacted in the year 1961.

S. 129 is the provision which 'privileges' all professional communications between a client and his legal advisor against disclosure in a court of law. For the sake of convenience I reproduce the provision below:

129. Confidential communication with Legal Advisers - No one shall be compelled to disclose to the Court any confidential communication which has taken place between him and his legal professional adviser, unless he offers himself as a witness in which case he may be compelled to disclose any such communication as may appear to the Court necessary to be known in order to explain any evidence which he has give, but not others.

This provision ensures that client-'legal advisers' communications cannot be summoned by a Court of Law in the course of discovery proceedings under Order 11 of the Code of Civil Procedure.

I. 'Client-Attorney' privilege in the context of the Indian 'Patent Agent'

The qualifying criteria for practice as an Indian Patent Agent is set out in Section 126 of the Patents Act. The minimum qualifying critieria is a degree in science, engineering or technology after which a candidate is required to pass the qualifying exams conducted by the Controller General of the Patent Office. On having passed the exams this candidate is said to have qualified as a 'Patent Agent' who, as per Section 127, is entitled to practice before the Controller. Therefore a person without a degree in law is perfectly qualified to become a patent agent in India. The question now is whether all confidential communications between the patent agent and her client are protected from disclosure during the course of discovery proceedings either before a court of law or the Controller himself, who under Section 77, has the power to order discovery of documents.

II. Does Section 126 of the Evidence Act, 1872 apply to disclosures by Patent Agents?

As explained above Section 126 places on 'barristers, attorneys, vakils, pleaders' a duty to not disclose any professional communications that he may have had with his client. Given the fact that the Evidence Act was enacted in 1872 and not amended subsequently, it is necessary to explain that 'barristers, attorneys, vakils and pleaders' are not no longer prevalent in India. While 'barrister' has the same meaning as that in England, the remaining three terms i.e. 'attorneys, vakils & pleaders' are defined in the Legal Practitioners Act, 1879 and they necessarily have to be understood in context of that legislation and not given an ordinary dictionary meaning. This entire class of legal practitioners were replaced by the sole term 'advocate' through the enactment of the Advocates Act, 1961.

The qualifiying criteria for an 'attorney' in those days was decided by the High Courts in which the attorneys sought to practice. Originally under the Indian High Courts Act, 1861 there were only three High Courts located at Madras, Calcutta and Bombay. While I'm not sure about this I've read somewhere that these High Court used to conduct special exams to qualify for the title of an 'attorney'.

Now although Section 126 does not mention 'advocate' the fact of the matter remains that Rule 17 of Chapter II, Part VI of the Bar Council of India Rules that were enacted under the Bar Council of India Act, prevent an advocate from breaching his obligations under Section 126 of the Evidence Act. Any breach of these obligations would render the 'advocate' liable for punishment and maybe even expulsion from the rolls of the bar council. Additionally it is most likely that Section 126 itself will be given a purposive interpretation to cover 'advocates' thereby rendering all such communications inadmissible in a court of law as evidence. Therefore even if an advocate were to unethically disclose such information it would not be possible to admit the same as evidence during the course of a trial.

Now lets come to the Indian 'Patent Agent'. In your opinion would a 'patent agent' be covered under the definition on Section 126 of the Indian Evidence Act? Is there a statutory code of ethics prohibiting a 'patent agent' from disclosing professional communications which maybe later used as evidence in a 'Court of Law' or before the 'Controller'? Of course such an act of unauthorized disclosure by a patent agent may result in a contractual violation but that in itself does not make the disclosure inadmissible in a Court of Law nor does it disqualify a patent agent from practicing or does it?

I would have loved to answer these questions over here but my concern is that, given the rather personal responses that I got to one of my previous posts on patent agents, the discussion may get hijacked by passion rather than reason. Instead I leave it our readers to provide the relevant answers in the comments section.
Given the small community of patent agents in India and the increasing migration between leading patent law firms, it is time that patentees asked these questions.

III. Does Section 129 of the Evidence Act, 1872 cover 'Indian Patent Agents'?

Section 129 of the Evidence Act, 1872 as reproduced above states that a witness shall not be compelled to disclose any confidential communications that he may have had with his 'Legal Professional Advisor'. The essential question over here is the ambit of the term 'legal professional advisor'. Given the difference in wording between Section 126 and 129 i.e. Section 126 specifies a class of legal practitioners, it is possible to argue that Section 129 by using the generic term 'legal professional advisor', envisages a much broader category.

The above understanding however will have to be tempered by the fact that under Section 29 of the Advocates Act, 1961 only advocates are entitled to practice law in India. For sake of convenience I reproduce the provision here:

29. Advocates to be the only recognised class of persons entitled to practice law.
Subject to the provisions of this Act and any rules made thereunder, there shall, as from the appointed day, be only one class of persons entitled to practise the profession of law, namely, advocates.
Advocates, as per the Advocates Act, 1961, need to be enrolled with Bar Council and the Bar Council requires all advocates to be law graduates i.e. hold a LLB degree, which can be acquired only after a three year course in a BCI recognized laa college.

The question therefore that requires to be answered in the context of patent agents is whether they would qualify as 'legal professional advisor', in light of the fact that only advocates can practice law in India?

If the answer to the above question is affirmative then in that case all communications between patent agents and their clients will be protected from disclosure during discovery proceedings. If the answer is negative then all communications between patent agents and their clients will be open to discovery proceedings under Order 11 of the CPC.

Conclusion: The World Intellectual Property Organization (WIPO) seems to have started work on a new international treaty to protect client-attorney privilege in the context of patent law. I'm not sure of the exact contours of the proposal but you can read up on the standing committee reports over here . I think the need of the hour is for patent agents to organize themselves and demand a statutory body to regulate themselves. An internet search reveals that there is an Patent Agents Association of India (PAAI). However given the fact that it does not seem to have statutory recognition it cannot regulate the profession itself.

Tintumon The SMS Hero and It's Trademark Issues

Commerce Professor: what is the most important source of finance for starting business?

Tintumon: “Father in law”.

Tintumon, is a character which was created and spread through text messages in mobile phones. This character is portrayed as a small boy who likes to ask embarrassing questions and has a very straightforward thinking. He is quick-witted, mostly inventive, and normally can’t stop himself from commenting on everyday issues.

M/s. M.C. Audios & Videos published a Trade Mark Caution Notice in a newspaper through their attorneys, Joachim & Janson, cautioning the general public that M/s. M.C. Audios & Videos is the legal and authorized owner of the 'Tintumon' trademark and is having the intellectual property rights over the name, logo, design, shape, and picture of “Tintumon”. It is also mentioned that, in order to accord statutory protection to the trademarks, M/s. M.C. Audios & Videos has filed Trademark applications in class-09, class-16, class-38 and 41 the Trade Marks Act, 1999 and that the same is under process of registration at Trademarks registry, Chennai.

Trademarks in India are classified in about 42 classes and these classes again are further sub-divided. The main objective of trademark classification is to group together the similar nature of goods and services.

However as far as trademark applications of M/s M.C. Audios & Videos are concern, it is not clear that being Audios-Videos enterprise why they have filed an trademark application for class-38 which is about Telecommunication.

Issues:
Two issues are very crucial here, firstly- whether M/s. M.C. Audios & Videos is entitled to get trademarks registration for a popularly known character like Tintumon?
Secondly- whether filing trademark applications gives the applicant a right to publish a Trade Mark Caution Notice or not?

The website tintumon.com developed by “Foradian” an Internet engineering company where people can read and share Tintumon’s Jocks. “Foradin” claims that, they made Tintumon, the first open source character in the world through the website. However the popularity of Tintumon increased to such an extend that books were published on Tinutmon jokes; even the mainstream media referred Tintumon in a Malayalam movie named Kalyanaraman (Year 2002). So it can be argued that Tintumon is a character, which is open and exercisable, by all persons and may therefore qualify as "Publici juris". The term “Publici Juris” is a term used to describe those things that belong to the entire community, and not to any private party. As far as the spirit of Indian Trade Marks Act 1999, no one can attempt to register a mark which can be classified as “Publici Juris”.

However section 9 of Trademark Act 1999 deals with absolute grounds for refusal of registration, where section 9 (2) 1 runs as: "A mark shall not be registered as a trademark if-it is of such nature as to deceive the public or cause confusion". In other words section 9 (2)1 seeks to prevent registration of marks, which are likely to deceive the public or cause confusion.

Previously it has already pointed out that Tintumon is a highly popular character, books even films also mentioned about it, now if M/s M.C. Audios & Videos starts to use Tintumon as their Trademarks then it will surely cause confusion among common people. Just because of Tintumon “trademark” common people may buy M/s Audios & Videos products with an impression that those Audios or Videos are related with Tintumon’s Jock, but the reality may be otherwise. So it can be said that there is a sure possibility of causing confusion among people, if 'Tintumon' is registered as trademark in the name of M/s Audios & Videos. So as per section 9(2)1 M/s Audios & Videos are not entitled to get trademarks registration for Tintumon.

The said “Trade Mark caution Notice” is claiming that M/s. M.C. Audios & Videos has filed Trade mark applications under the Trade Marks Act, 1999 and same is under process of registration at Trademarks Registry, Chennai. It has also notified that unauthorized use of the concerned Trade Mark/Trade name/ Tintu mon Logo or a deceptively/confusingly similar Trade Mark or imitation of the mark by any person, firm or company in respect of their goods or services through Print, Audio, Visual media and Electronic means would amount to passing off, falsification, false application of the aforesaid mark, name and/ or false trade description actionable under the Trademarks Act, 1999.

The most important point is whether an applicant who has not got a registration for a trademark yet, is entitled to publish such a caution notice? Section 27 (1) of 1999 Act, clearly mentions that:
“No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark.”

A threat also has given in last paragraph of the Notice, as: “Persons violating and disregarding the aforesaid cautionary caveat will do so at their own risk, cost, responsibility and detriment and will additionally expose themselves to appropriate civil and criminal proceedings, which our client is dearly and explicitly authorized in law to take without further notice".

Section 142 of the TM Act, 1999 provides a remedy against groundless threats of legal proceedings. A suit under S. 142 (1) will not lie if the registered proprietor of the trade mark (or a registered user) with due diligence commences and prosecutes an action for infringement against the person threatened. But here the concerned party is not yet a registered user of the trademark; so they are not entitled to put out such a caution notice and are liable to be sued for the same.

Therefore it maybe possible to file a law suit against M/s. M.C. Audios & Videos for groundless threats of legal proceeding.

SpicyIP Tidbit: NPPA proposes controlling the price of cancer drugs

Soon on the heels of the DIPP's discussion paper on compulsory licensing, the Business Standard has reported that the National Pharmaceutical Pricing Authority (NPPA) is planning to regulate 'prohibitively expensive oncology medication'. The BS reports that the NPPA is studying the Drug Price Control Order (DPCO) in order to figure out a way in which it can cover even cancer medication which until now has not been regulated by the DPCO. The NPPA's efforts appear to be fuelled by concern over the increasing cost of cancer drugs. Alternatively the BS also reports that the Department of Pharmaceuticals is also trying to figure out a mechanism for negotiating the prices of patented drugs.

The moot issue however is whether the DPCO and the NPPA are actually the best means to control drug prices. It is an open secret that the pharmaceutical industry, generic or otherwise, has mastered the art of evading the DPCO, by exploiting all the loopholes in that legislation. On 30th June, 2010 the NPPA released a 'Statement of Overcharging and Recovery thereof since the inception of NPPA'. As per this statement, of the Rs. 2190.48 crores (Approx. $500 Million USD) that was owed to the NPPA on the account of over-charging, it managed to recover only Rs. 199.84 crores i.e. less than one tenth of what was owed to it. On a summary perusal of the list it appears that the biggest defaulters on the list are Cipla and Okasa Pharma Pvt. Ltd. While I'm not sure, I think Okasa Pharma Pvt. Ltd. is a company owned by the family of Dr. Yusuf Hameid, the Chairman of Cipla. In fact I think Okasa Pharma is one of the holding companies of Cipla. Nevertheless both facts require more research before they can be confirmed. Cipla's annual report for the year 2009-2010, released on 13th July, 2010, adequately confirms that Cipla was served with demand notices of upto Rs. 1157.12 crores (inclusive of interest) under the Drug Price Control Order, 1995. (Cipla's profits for the year 2009-2010 after tax was Rs. 1081 crores) The Annual Report also states that “The Company has been legally advised that based on the directions given by the Supreme Court, there is no probability of the demand becoming payable by the Company. Hence, no provision is considered necessary in respect of the aforesaid amount. However, any unfavourable outcome in these proceedings could have an adverse impact on the Company.” The SC judgment referred to above is in the case of Secretary, Ministry Of Chemicals & Fertilizers Government Of India vs Cipla Ltd. & Ors. decided on the 1st of August, 2003. In its judgment the Supreme Court had set aside an Order of the Delhi High Court against Cipla. The SC had remanded the matter to the Delhi High Court and ordered the petitioners to pay atleast 50% of the amount charged pending disposal of the writs by the Delhi High Court. From the admissions in Cipla's annual report it would appear that the NPPA has failed miserably in recovering this amount.

It is obvious from the above that the NPPA has not been able to sucessfully implement the DPCO. The question therefore, before the Government of India, is whether price-controls are the best way to actually control prices. Instead how about abolishing taxes, customs and excise duty on pharmaceutical drugs? Why should the government seek its pound of flesh at the expense of the lives of its citizens? At one point of time import duties on life-saving drugs was as high as 30%!!!!

It goes without saying that the best way to control drug prices is to ensure cut-throat competition between drug companies. That still leaves the question of patented drugs where the innovators enjoy a statutory monopoly. How do we control the prices of those drugs? Compulsory licensing, maybe?

Guest Post: Requiem for a Dream?

Matthews George, our serial guest blogger from NUJS, has sent in this concise summary on an fantastic, albeit slightly dated Business World story on the state of research and development of new drugs in the Indian Pharmaceutical Industry.

REQUIEM FOR A DREAM?

by,

Mathews George

From the late 1990s right through mid-2000s, research on a series of drugs progressed successfully from preliminary experiments to phase I / phase II of clinical trials (tests on humans). But somewhere along the road, they lost their way. A string of drugs failed while others were abandoned. Today, the Indian pharma is at its crossroads. Disheartened by series of setbacks, the industry is on the course of revising its R&D strategy to that which hinges on steady returns.

The Businessworld article titled 'Death of a Dream' succinctly draws the grim picture in drug research, touching upon its causal factors. The article, however, is silent on the role of the extant legal and policy regime. An analysis from these perspectives would have been better appreciated by the legal fraternity and policy framers.

Course of change in R&D strategy

Back in 1997, heads turned when DRL licensed out a new drug to Danish pharma major Novo Nordisk in a multi-million dollar deal. Everybody expected the industry to repeat the same kind of success in drug discovery. By 2001, DRL had nine molecules in the pipeline, including two in late stages of clinical trials. DRL was termed as “the molecule millionaire” by a leading journal. In 2005, a landmark agreement between DRL, Citigroup Venture and ICICI Venture set up India’s first integrated drug development firm, Perlecan Pharma. However, all the research projects and ventures had to be called off after observing side-effects in later stages. The situation was not different in India’s half a dozen other premier pharmaceutical firms. Further, the Perlecan debacle hampered the prospects of other firms in entering into partnerships for funding their research activities.

The article rightly draws the course of change in R&D strategy of premier pharmaceutical companies - from high-risk, high-reward drug discovery to a strategy hinged on steady returns. For instance, last year, as the bitter after-effect of its 16-year-long futile effort to bring a new drug into the market, Dr. Reddy's Laboratories removed the words, ‘discovery led global pharmaceutical company’ from its grandiose vision statement. The removal sums up the crossroads at which Indian pharmaceutical sector stands today. In essence, the wild optimism which was present in mid-2000s no longer exists.

Fortunately, despite the setbacks, some pharmaceutical companies such as Glenmark, Piramal Healthcare and Lupin remain committed to new drug development. However, it is too early to draw a positive note unless they achieve substantial tangible results.

Reasons for failure in drug research

a) Early failures precluded the pharmaceutical companies from conducting further research on drug development. From a realistic perspective, the industry failed to appreciate the risks associated with new drug discovery. Failure is an inevitable component of the 8-12 year development process.
b) Lack of investment in R&D is another factor for the failure. For instance, Ranbaxy’s R&D budget fell from 9.2 per cent of sales in 2005 to 5.6 per cent in 2008. Firms are estimated to spend only 10-30 % of their R&D budget on new drug development. This further exacerbated research on new drug development.
c) Lack of focus and strategy in drug research
d) Dearth of experienced scientists in drug research.


Policy concerns

The Indian pharmaceutical sector has grown into a $20-billion global industry, flooding international markets with generic drugs and challenging big pharma’s patents. Discovery of a new drug could have placed Indian pharmaceutical industry in an altogether different league. For instance, the sales of US drug giant Pfizer’s top selling drug, Lipitor, is higher than the total sales of the world’s largest generic drug maker, Teva Pharmaceutical Industries. Unfortunately, as I mentioned earlier, the premier Indian pharmaceutical companies are in the course of revising their R&D strategy. Emulation of this strategy by the smaller companies will be the final straw. Thus the situation demands for an exigent policy revisit which will address the lacunae in the extant framework. It is imperative to address the following concerns in this policy revisit:

Does the current legal regime including the patent regime provide incentives for radical innovation? or
Is it lopsided in its approach of promoting only generic research? If yes, is this salubrious from a long term perspective?
Does the extant legal and policy framework maintain a salutary balance between addressing public health concerns and providing incentives for radical innovation?

Copyright Band-its and Public Interest: A Tainted Compulsory Licensing Decision?

Tis the season of compulsory licensing. First, we have a proactive DIPP exploring ways to create a more optimal compulsory licensing regime in India.

And now we have a quasi judicial body (the copyright board) deciding an actual compulsory licensing dispute..a decision that has been the subject of a crisp and succinct review in this guest post.

This copyright board decision pegging compulsory licensing (CL) rates for the broadcast of music at 2% of advertisement revenues earned by radio stations has created waves, literally and metaphorically. "Public interest", that magic word that has come to haunt many an IP owner in India, finds mention in several places in this decision.

The CL rates have been pegged "low" (when compared with the rather exorbitant rates that sound recording produces such as T series were demanding), owing to a "public interest" in the broadcast of content by radio stations.

Given the still inconclusive evidence on the nexus between copyright and the rate of creativity...and more importantly, the damning evidence that sound recording companies and collecting societies don't necessarily act in the interests of creative artists', a low rate is not really going to kill the sound recording industry...

However, public interest is a double edged sword. And if radio stations now leverage this concept to their benefit by availing of low CL rates to be dished out to content producers, one hopes that this very same concept will force them to deliver more content of a "public interest" variety as the years go by. The terms and conditions of the license granted to these radio stations clearly specify that they are to encourage and foster local "music" talent (as opposed to merely dishing out Bollywood item numbers). Therefore, the same "public interest" saber may be wielded in future to take them to task, should they fail on this count.

Legal Competence of the Copyright Board?

The question however remains: is this order by the Copyright Board good in law? As Prashant and I have been agitating from day one, any decision by this Board is tainted, as the very constitution of the board is legally flawed. Firstly, it is headed by someone who is not constitutionally competent to occupy the seat of a Chairman. As Prashant's RTI replies have demonstrated, Raghbir Singh, the current Chairman was 66 at the time of his appointment...which means that he was not eligible to appointed as a High Court judge at this mature age (no person above the age of 62 can be appointed as a High Court judge). The Copyright Act stipulates that only a person who is eligible to be appointed as a High Court judge could be elected as the Chairman of the Copyright Board.

Secondly, the Supreme Court had in a recent case (Union of India vs R Gandhi) held that a judicial body must have members that are reasonably independent of the executive. The Copyright board is staffed (in the majority) by law secretaries and the like--folks that, for the most part, act at the behest of the executive.

We detail out some of these objections to the constitutionality of the current copyright board in our submissions to a Parliamentary Standing Committee.

Wasted Resources?

However, where does all this leave us? We've come a good 9 years since the copyright board first began hearing this matter. We've had 18 counsels represent the interests of various parties in this case. And presumably none of these counsels did it for free (for the love of radio) but must have billed by the hour...or the minute as the case may be.

We've had the case yo-yo between the copyright board and the courts.. more times than one. We've had the Supreme Court admonish the Copyright board for arriving at a fanciful needle hour figure, sans any reasoned explanation of how they got there.

And now we finally have a decision by the board, rendered after countless hours of sittings, standings, examinations, cross examinations, arguments, counter arguments, rebuttals, sur-rebuttals and last but not the least, expert witness testimony...that must have cost the moon and various other parts of our wonderful galaxy.

It will be a great tragedy, if the entire process stands vitiated and has to be redone from scratch. Imagine the wasted time and resources ...surely all the money spent on this legal saga could have helped us establish a permanent copyright board..with a couple of branches perhaps, with latest state of art copyright libraries (dare I say digital ones at that), and some competent board members and staff.

And this brings us to the doctrine of necessity. Even if a court were to disband the current copyright board as one that is constitutionally flawed, the decisions of such a board are likely to be preserved under the doctrine of necessity. In other words, the court is not likely to hold the board decision and all of its findings as null and void (in a manner similar to the contractual concept of void ab initio).

However, such a board, once declared legally unfit, cannot sit in and decide future copyright disputes. It is pertinent to note that the government has now constituted a committee to recommend ways to better the composition (and working) of the copyright committee. Interestingly, all members of this committee are lawyers representing various clients in this compulsory licensing dispute, namely Neel Mason, Ameet Datta, Jagdeesh Sagar and Pratibha Singh.

Law vs Fact

What if the copyright board order is appealed (and there is every likelihood that it will be challenged this week itself).

Would the court then hold that no "deference" be given to any fact finding done by the Board? Those in the know of administrative law norms may be familiar with the age old and time tested law vs fact distinction...one that I am still unable to comprehend: aren't all legal propositions really "facts", albeit of a certain specific kind. The distinction becomes particularly problematic when we consider "mixed questions of law and fact", a nebulous category ingeniously invented by lawyers to open up any factual issue that wouldn't warrant interference otherwise.

Anyway, standard admin law norms suggest that courts are to defer to agency expertise when it comes to issues of "fact, and cannot reopen them unless there is a manifest error on the face of the record. However, in so far as issues of law are concerned, courts are free to review them de novo. Given the flawed constitution of the copyright board, woul d the court decide to not grant any deference to issues of "fact" that have been determined at the first instance by the Board? If such facts could be reopened by counsel, would it lead to a re-enactment of the entire saga once again before the courts?

I believe there is a recent case where a TRAI order had been appealed to a court in the first instance. Since this was the first appeal, the court appears to have held that it could review both questions of law and fact afresh. I'm hunting around for this decision and will bring you more on this once I find it. Alternatively, if any of our readers are in the know of this decision, please do let us know.

As to whether or not an appellate court hearing this particular compulsory licensing matter will adopt the above ruling and reopen all issues of fact (and perhaps even remand the case to a freshly instituted copyright board for specific factual determinations) remains to be seen.

Other Parties:

The board decision does not address another tricky legal issue. The only party that can effectively be bound by the current order is PPL. However, the order is worded in broad terms to cover all other music copyright owners. While one may argue that the same terms ought to bind T series as well (i.e 2% of ad revenue to be paid to them), one is not certain if similar terms would bind IPRS which collects on behalf of copyright owners over underlying musical works and lyrics. IPRS was and has never been party to the current proceedings (unlike T series which was a party but which worked out a private deal with one of the radio stations and whose matter was therefore divorced from the main proceeding). More importantly, it represents a different set of copyright interests (that of underlying copyright owners and artists) than sound recording copyright owners. Would the same 2% hold good here as well? Hopefully all these issues would be resolved in the days to come.

In any case, this saga is likely to drag on till 2011 and complete at least a decade of legal trials and tribulations. And is sure to go down in the annals of history as one legal rhapsody that entranced not just a band of lawyers, but the public at large (whether or not this merits categorisation as "public interest" strictu sensu).

ps: many thanks to Vivek Reddy, my co-blogger at LAOT, and an upcoming litigator from Hyderabad, for pointers on the TRAI decision and the standard of review.