US Department of Justice conducts review of IPXI

A press release issued by IPXI, Intellectual Property Exchange International, Inc., the world's first financial exchange for licensing and trading intellectual property rights, brought to our attention, the eight month long review of IPXI conducted by the Antitrust Division of the United States Department of Justice.  After the completion of the review, the DoJ has, according to the press release, issued its BRL (Business Review Letter) which apparently is in favour of the IPXI Licensing Model. 

IPXI, is an exchange that has been founded by the leading innovation corporations of the world in collaboration with prestigious universities of the world. The founding members of IPXI include corporations such as Hewlett-Packard Company, J.P. Morgan Chase & Co., Sony Corporation of America and Philips Intellectual Property & Standards, a division of Philips Electronics among others. 

It appears to be the unanimous opinion of the concerned officials at IPXI that the BRL amounts to a endorsement by the DoJ and which in turn will help in fostering confidence in the minds of IPXI members and prospective market participants. 

The BRL, notes that the IPXI Licensing Model is an efficient model which has the potential to benefit IP owners and users alike by providing lower transaction costs as well as by enabling a more efficient match up of licensees and licensors. The DoJ also noted with approval the IPXI system of pooled URL's, through which patents with more than one owner can be offered together. This system will help reducing the expense and time involved to acquire and disseminate such patents to the potential licensees and consequently help in the reduction of the stacked royalties, clear the blocked positions  and integrate technologies resulting in better practice and innvoation in the industry. The BRL of the DoJ, also notes that in addition to these benefits, the IPXI Licensing Model could "generate efficiencies for the IP marketplace and encourage innovation through increased licensing efficiency, sublicense transferability, and greater transparency." Moreover, the aspect of price transparency along with lower transaction costs will help IP users to make better development and financial decisions  leading to further reduction of costs.

The President and Chief Executive Officer of IPXI, Gerard Pannekoek, has announced, in the press release, that the official launch of the marketing period for the first offerings of IPXI which would kickstart the trading on the Exchange floors would happen soon.

Public health activists lose challenge against Gilead before the Competition Commission of India

The Competition Commission of India (CCI), in an order dated March 5, 2013 has dismissed, at the threshold stage, a complaint filed by a public health (HIV) activist against Gilead Inc. alleging that the company was engaged in anti-competitive activities with respect to licensing of its technologies relating to anti-HIV drugs. The activist was represented by Advocates Ms. Savita Singh, Ms. Veena Johari and Ms. Kajal Bhardwaj. The order can be accessed over here. 

Complaints before the CCI usually go through a two-stage process. The complaint is first scrutinized by the CCI and if a prima facie case is made out the complaint is referred to the Director General for investigation and notice is then issued to the opposite side. After completion of the D-G’s investigation, both parties present oral arguments before the CCI which then disposes the case on merits. In the present case, the CCI did not even find it necessary to refer the case to the DG or issue notice to Gilead and has instead directly rejected the case. 

The three main agreements that were the subject of the proceedings, are as follows: 

“a. Voluntary non-exclusive agreements entered into by the OP [Gilead] directly with Indian Pharmaceutical companies since 2006 for production and distribution of TDF and FTC medicines and their combinations. 

b. Licence agreement of the OP with MPP which allowed MPP to have sub-licences with Indian pharmaceutical companies. 

c. The sub-license tripartite agreement among the OP, MPP and the Indian pharmaceutical companies. (all three agreements collectively referred to as ‘license agreements’)” (para 9 of the order) 

The first agreement was the famous licence which Gilead had issued to 11 Indian pharmaceutical companies for the manufacture of Tenofovir (TDF) on the assumption that it was going to get a patent for the drug in India. That never happened since the patent office rejected Gilead’s patent application and from what I understand an appeal is pending before the IPAB. 

The second agreement was the licence between Gilead and the Medicine Patent Pool (MPP), a new venture backed by UNITAID, which aims at pooling together of resources for a more efficient program to tackle HIV/AIDs. Swaraj had blogged about it over here. 

The third agreement was the licence between MPP and Indian pharmaceutical companies, which Swaraj had blogged about over here. 

The activist raised several objections against all three licensing agreements which can be read in para 10 of the order. The gist of the challenge was that the licensing agreements would allegedly restrict the supply of AIDs drugs which would make the drugs expensive in India. According to the activists, such agreements were thus in violation of Section 3(1) of the Competition Act which prohibits any persons from entering into production agreements which cause an “appreciable adverse” effect on competition in India. It was also alleged that Section 3(4) would be violated. This provision forbids certain agreements in the “productions chains in different markets” if such agreement causes a likely “appreciable adverse” effect on competition in India. 

After hearing the public health activists, the CCI, in an unusual step, convened a meeting with the National AIDS Control Organization (NACO) and the National Institute of Pharmaceutical Research (NIPER). 

After being briefed on the state of HIV treatment in India, the CCI rejected the arguments made by the activist community mainly on the rather reasonable ground that the Indian market had diverse competition amongst generic pharmaceutical companies. In pertinent part it points out that there were over 21 different generic drug manufacturers in just the HIV/ARV space and that combined they produced atleast 150 different brands. 

Most importantly, the CCI pointed out that Gilead’s drugs constituted only a small portion of the market since several generic manufacturers in India were manufacturing the drugs in question without taking any licences from Gilead. Even for the companies taking licences the CCI pointed out that such licences contributed to a technology transfer which would help the companies in question. 

I have not seen the complaint filed by the activists but going by the CCI’s order, I’m having a difficult time understanding why exactly they even filed this case.

Bombay HC restrains the release of any trailers/teasers of Zanjeer

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The Bombay High Court (see here for order) has restrained the release of any trailers or teasers of the remake Zanjeer/ Thoofan (the Telugu version of the film), until the final judgment on this matter is pronounced. 

The remade ‘Zanjeer’ has run into hot water, not only is it involved in a copyright dispute (see here) but also involved in a controversy regarding non-payment of dues for the film’s remake rights. Sumeet and Puneeth Mehra (Amit Mehra’s brothers) had sold remake-rights for this film to Amit Mehra (the producer of the remake) who has allegedly been defaulting on payments. The contract between the two parties was terminated and on 26th July 2012, Sumeet Mehra obtained an interim order restraining the release of the movie. Arbitration between the parties resulted in the Arbitral Tribunal upholding the termination of contract by Sumeet and Puneeth Mehra. After arbitration, Amit Mehra filed an arbitration petition before the Bombay High Court which has been heard and concluded and the judgment is awaited. 

The present interim injunction was granted as the Court felt it appropriate to restrain Amit Mehra from releasing trailers or teasers (in Hindi and Telugu) till this judgment is pronounced. Since trailers and teasers form part of the movie which is the subject matter of the petition, this injunction was considered necessary in order not to prejudice the rights of Sumeet and Puneeth Mehra.

SpicyIP Tidbit: Viacom restrained from using 'Nautanki' trademark

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A local Court in Gurgaon granted an ex-parte interim injunction against Viacom 18 Pvt Ltd., restraining them from using the trademark ‘Nautanki’ and the accompanying logo last week, as reported here. 

The Great Indian Nautanki Company Private Limited (GINC), which runs the hugely popular entertainment project 'Kingdom Of Dreams' in Gurgaon had filed a lawsuit against Viacom for infringing their trademark ‘Nautanki’. Viacom produces a successful comedy show ‘Nautanki - The Comedy Theatre’ which is aired on Colors channel on Indian television. This is very bad news for Viacom as the show has high TRP ratings, which in all likelihood will desperately try to get the injunction vacated as soon as possible. This is an interesting infringement case to watch out for because of a high degree of similarity in the services i.e. comedy performances and the impression created on relevant audience. We'll keep you posted regarding the developments!

Recent decision on Protection of Plant Varieties Act - Maharashtra Hybrid Seeds v. UOI and Ors

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The case (here) in the following post is the first of its kind and an interesting one. It deals with matters related to the Protection of Plant Varieties and Farmers Rights Act, 2001. 

Preliminary observation 

Before going into the facts of the case,

the court pointed to a major lapse on the part of the Government in relation to its inaction in implementing various provisions of the Protection of Plant Varieties and Farmers Rights Act, 2001 (‘the Act’). The Act under Chapter VIII envisages setting up of an Appellate Tribunal. This chapter also provides for the IPAB to act as a transitional tribunal till a specialized tribunal is established. Though these provisions have been in force for six and a half years, the government has been negligent as it has not yet operationalized them! The consequence is that disputes under this Act are piled on to regular courts which are not only over-loaded and short of judges but also lack technical knowledge required to resolve such disputes. Therefore, the court urges the Government to take immediate steps in implementing these provisions. 

Facts 

The petitioner filed an application for registration of a novel variety of cotton that it had developed. The said application was published in the Plant Variety Journal. The respondent filed an opposition to the application, however, the opposition over-shot the stipulated period of 3 months. The Registrar accepted the delayed opposition thereby condoning the delay. 

Issues 

The main question before the court was whether the Registrar had the power to condone a delay in matters regarding filing of opposition. In order to address this question the court primarily relied on Rules 32 and 33 of the Protection of Plant Varieties and Farmers Rights Rules, 2003 (‘Rules’) and Section 21(2) of the Act. 

Briefly, Rule 32 mandates compliance with time schedules provided for in the Act in relation to advertisements, oppositions, etc. Rule 33(6) allows the Registrar to condone a delay with regard to submission of evidence. And Section 21(2) states that any person may file an opposition within 3 months of date of advertisement. 

It was contended that the power under Rule 33(6) to condone delay should be extended to Rule 32. The court highlighted that Rule 33 deals with condonation of delay in relation to submission of evidence. On the other hand, Rule 32 explicitly deals with filing of oppositions and states that the time period provided for in the Act is absolute and therefore cannot be extended. The court, therefore, holds that the power under Rule 33 is with regard to a specific matter and hence cannot be imported into Rule 32 which deals with other matters. 

Having established this, the court then assesses whether the time period of three months under Section 21(2) is incapable of extension in view of Rule 32. In this regard, it was held that since the Act does not provide for a sanction in case of non-compliance with the said period, the Registrar can extend the time-limit. This is supported by the fact that time-limitations are procedural matters and given that the statute deals with rights of farmers, procedural irregularities should not hinder realization of rights conferred by the Act. Moreover, since the Act is a beneficial legislation it should be interpreted liberally in order to achieve the objectives for which it was made. Also, the court observed that a rule takes colour from the substantive provisions of the Act and therefore cannot be read to limit the application of the Act. 

Parallels were drawn with Section 21 (2) of the Trade Marks Act, 1999 which expressly prohibits filing of oppositions after the prescribed time period. Since this negative connotation is missing from the present Act, the court says this furthers the legislative intent of condoning a delay. 

It was also accepted that since the applications were published and not personally notified to the opposite party, there could be circumstances where the interested party missed the advertisement and in appropriate cases, the Registrar should be allowed to condone delay. 

Therefore, it was held that Rule 32 should be read as directory and not mandatory. In this regard, the court also held that the Central Govt. has the power to make such a rule and this rule is not liable to be struck down.

Ericsson sues Micromax over SEPs in 100-crore Patent Suit: Delhi High Court awards Interim Deposit

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In a move that is surely going to open a hornet’s nest soon in the future, Ericsson, the Swedish giant in mobile network infrastructure manufacturing, has recently filed a patent infringement suit against Micromax, one of India’s largest domestic mobile handset manufacturers (producing approximately 5.5% of the 200 million mobile handsets sold annually in India). The suit, filed at the Delhi High Court, involves a huge claim of Rs. 100 crores made by Ericsson by way of damages, which makes it perhaps the foremost in rank in terms of damages sought in a patent suit in the Indian IT and Telecommunications sector.

According to Ericsson, this legal action on its part was inevitable after more than three years’ negotiation with Micromax refused to yield a solution in the form of a license agreement on certain standard-essential patents (SEP) relating to wireless technology standards such as GSM, EDGE and 3G. The Micromax handsets and tablets using the disputed technology include models from its popular series like Ninja, Canvas 2 and Funbook Talk.

The dispute in itself is of considerable significance because of the subject-matter under consideration and the fact that it marks Ericsson’s entry into the Indian patent litigation scenario through the latest in a series of SEP litigations filed by it across the world against other players like Samsung and Acer. However, what makes it even more noteworthy is that the Delhi High Court, in the form of an interim order by Justice Manmohan, has issued an order to Micromax to deposit a certain amount of money, apparently in a bid to protect Ericsson’s monetary interests while the negotiations are continuing. The deposit prescribed consists of category-specific royalties, such as 1.25% of the sale price for phones/devices capable of GSM, 1.75% of sale price for phones/devices capable of GPRS + GSM, 2% of sale price for phones/devices capable of EDGE + GPRS + GSM and for WCDMA/HSPA [UMTS] phones/devices, calling tablets and finally, USD 2.50 for Dongles and data cards.

At a first glance, the royalties prescribed appear to be considerably high in amount. More than using any determining yardstick of its own by way of evaluating FRAND terms, the court seems to have given such an order solely based on Ericsson’s claims. The court has also permitted officials from Ericsson to work with customs officers in the inspection of Micromax's consignments to check for devices infringing Ericsson’s patents. The deposit is to be made by Micromax if it wishes to keep importing and selling its products and avoid getting them impounded by the customs department as its current consignment has been after Ericsson had alleged patent violation.  

Micromax has been quick to reject all the allegations by Ericsson and made the counter-allegation of non-compliance by the latter of its previous global commitments on providing its SEP to handset makers under fair, reasonable and non-discriminatory (FRAND) terms. Claims have also been made that Ericsson, following its exit from the handset market after termination of its JV with Sony, was seeking to extort unrealistic amount of licensing fees, as is evident from its ongoing battles with not only Micromax, but also other players like Samsung.  

In case the court decides in Ericsson’s favour, the impact of the decision is likely to undermine the low-cost business strategy of several domestic handset and tablet companies, as well as open a floodgate of litigation in the Indian telecommunications sector in the days to come. This possibility gains further currency by reports of Ericsson evaluating feasibility of similar legal action against a few other local low-cost handset manufacturers like Lava, Spice, Karbonn and Intex Technologies.

Interestingly enough, the US Department of Justice and the USPTO have in the beginning of this year issued a joined statement on SEPs, encouraging voluntary technology licensing on FRAND terms and discouraging injunctions or exclusionary orders that block infringing products from the market. One can argue that the impounding of Micromax’s consignment on the basis of Ericsson’s allegation in the present case amounts to exactly an injunction that the US government spoke out against. The dangers of a trend of granting ex-parte injunction in patent infringement suits have especially been highlighted time and again in this blog (see here and here). Even the high amount of deposit that Micromax needs to pay to continue its business is likely to attract considerable criticism, given the context.

There have been several SEP battles all across the globe till date, including those between Apple and Samsung or between HTC and Nokia, but the present dispute differs from them in the matter that one of the parties is not technically the owner of technology, which makes it difficult for that party to countersue Ericsson.

The Spicy IP team hopes to keep the readers informed as various facets of this drama unravels before the Delhi High Court in the days to come.

Full Bench Delhi HC (Design Act)- Reckitt Benkiser India Ltd. v. Wyeth Ltd.

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A reference (order available here) was made to a Full Bench of the Delhi High Court to consider as to what amounts to ‘prior publication’ under the Design Act, 2000. 

Previously, mere publication of a design by a foreign patent office was held not to constitute prior publication (Dabour Ltd. v Amit Jain (Del HC) and Gopal Glass Works v Asst. Contoller of Patents and Designs (Cal HC)). However, this ratio was questioned as it seemed to have overlooked the implications of Section 44 (reciprocal arrangements with convention countries) of the Act. 

In order to address these issues, the Full Bench of the Del HC delineated four major issues - 

Issue 1- Whether a design registered abroad can be a ground for cancellation of a design registered in India under Section 19(1)(a) of the Act? Implication of Section 44 on Section 19(1)(a)? 

In this regard, the court referred to Section 51A of the erstwhile Design Act, 1911 which is similar to Section 19 of the present Act. It was noted that with regard to the drafting of Section 19(1)(a), the Parliament has used the same language as was used under Section 51A(1) of the 1911 Act i.e. registration of the design in India. However, the Parliament made a conscious departure with regard to clause (b) of Section 19. Prior publication as a ground for cancellation was no more limited to prior publication in India but expanded to include prior publication in any other country. This, the court said, shows that registration of a design abroad cannot be a ground included under Section 19(1)(a) since the Parliament consciously did not include ‘or any other country’ in clause (a). 

Therefore, the court found that under Section 19(1)(a) only a design which is registered in India can cause the cancellation of another deign subsequently registered in India. 

The court also held that such an interpretation would not allow Section 44(1) to widen the sweep of Section 19(1)(a). This was because once a foreign registered design is registered in India (within the statutory requirement of six months), it becomes a design previously registered in India. 

Therefore, this registration can be a ground for cancellation of a design (whose application is made after the date of priority of foreign registration) subsequently registered in India. 

Issue 2- Failure to apply for registration in India within six months of making of an application abroad. 

The court cautioned that this benefit - of a foreign registered design seeking cancellation of an Indian registered design under Section 19(1)(a), will only be available if the application for registration in India is made within six months of the date of application made in the convention country abroad. If this criterion is not fulfilled, the applicant loses his entitlement to priority. In such cases, the consequence would be that registration of a similar design in India in the six months period (or till the foreign owner makes an application in India) would get priority over the foreign registered design. But this does not prevent the foreign owner to initiate infringement action under Section 22 of the Act on the ground of prior publication (19(1)(b) read with 4(b)). 

Issue 3 & 4 – i) Meaning of prior publication under Section 19(1)(b) read with Section 4(b) of the Act. ii) Whether documents existing in the record of the Registrar of Designs in a convention country abroad result in prior publication. 

The court considered Section 4(b) of the Act which bars registration of a design which is disclosed to the public in India or abroad through publication ‘in a tangible form or by use or in any other way’. Therefore, it is not mere publication but publication by use, or in a tangible form or in any other way. The meaning of the term ‘any other way’ is guided by ‘tangible form’ or ‘use’. So, a design on paper would qualify as publication only if the visual impact of the design is similar to when we see the design in a tangible form or in use. After quoting the Single Judge and Supreme Court in the case of Gopal Glass Works extensively, the court observed that the Supreme Court and the Single Judge had rightly held that documents downloaded from the UK Patent Office website did not amount to prior publication as they did not add that amount of clarity required to fulfill the ‘tangible form or by use or any other form’ requirement. 

The court held that what amounts to publication is a question of fact to be decided on a case to case basis. Therefore, mere existence of a design in the record of a Registrar of Design in a convention country does not in all cases amount to publication. The test of prior publication would be satisfied only if the registered design is made public and is presented with such clarity that the design’s application to a specific article can be visually judged. 

Conclusion 

With regard to the facts of the present case, the court observes that the Division Bench has approved the decision of the Single Judge on the existence of prior publication as the spatula in question was found in actual use prior to registration in India. However, this is only a prima facie determination for the disposal of an interim injunction. The court directed both parties to appear before the Single Judge on the 17th of April, 2013, for further proceedings.

Guest Post: U.S. Supreme Court hears arguments in reverse payments case

The U.S. Supreme Court recently heard arguments on the legality of reverse payment settlements in the pharmaceutical sector, where a patent holder would pay a generic pharmaceutical manufacturer to delay or withdraw any challenges to patent validity. Given the increasing number of reverse payment settlements, the final holding of the U.S. Supreme Court is going to have a significant impact on competition in the pharmaceutical industry. 

We have for our readers a guest post on this topic and the hearing before the Supreme Court, by Mr. George Yu, an experienced patent litigation lawyer at Schiff Hardin LLP. Mr. Yu’s practice focuses on patent infringement litigation and intellectual property counseling. Mr. Yu’s strong background in biochemistry and molecular biology enhance his experience in handling patent litigations involving complex pharmaceutical, biotechnology, and medical technology products. Prior to joining Schiff Hardin, Mr. Yu was Assistant General Counsel, Litigation for Affymetrix, Inc., the first company to commercialize DNA microarrays.

Federal Trade Commission v. Actavis, Inc:  A Quick Look into Reverse Payments

by 

George Yu

The name of the game in the pharmaceutical industry is exclusivity.  According to Drugs.com, sales in the US for a blockbuster drug like Lipitor® can go from nearly $2 billion a quarter to less than $200M a quarter less than a year after the introduction of a generic version of the drug.  (See www.drugs.com.)  On March 25, 2013, the U.S. Supreme Court heard argument in Fair Trade Commission v. Actavis (12-416) regarding one of the strategies used by drug companies to extend their exclusivity, the so-called “reverse payment settlement.” 

The party wishing to practice a patent in the typical patent licensing scenario provides a payment or other consideration to the patentee in exchange for a promise by the patentee not to sue for infringement.  In the pharmaceutical industry, the branded pharmaceutical company that owns a patent covering a drug sometimes will pay a generic drug company that has filed an Abbreviated New Drug Application under the Hatch-Waxman Amendments to delay the entry of a competing product and withdraw challenges to the validity of the patent.  These reverse payment or “pay-for-delay” settlements have become more common in recent years and have been challenged by the Fair Trade Commission (FTC), pharmaceutical wholesalers, and pharmacies as anticompetitive.  The FTC estimated in 2010 that reverse payment settlements in the pharmaceutical industry cost U.S. consumers $3.5 billion annually.  The FTC published another report at the beginning of this year indicating an increase in reverse payment settlements.

Actavis and the “scope of the patent” test

As discussed in the opinion of the Eleventh Circuit Court of Appeals, the reverse payment settlement in Actavis relates to a patent set to expire in 2020 covering a formulation of AndroGel®, a topical gel that treats the symptoms of low testosterone in men.  Sales of AndroGel® generated revenue in excess of $1.8 billion between 2000 and 2007.  Two drug companies filed ANDAs to market generic versions of AndroGel®, leading to patent litigation between the marketer of AndroGel® and the generic competitors.  The generic drug companies estimated that the generic version would sell at 25% of the price of AndroGel® and decrease sales of AndroGel® by 90%.

In 2006, after the lifting of the 30-month stay when the litigation was still ongoing, the parties reached a settlement under which the defendants agreed not market a generic version of AndroGel® until August 31, 2015.  During the nine years of AndroGel® exclusivity, the generic drug companies would receive a total of $29-40 million per year.  As required by statute, the parties reported their settlement to the FTC.

The FTC then filed suit against the settling parties alleging that the reverse payment settlements were unlawful agreements not to compete.  The FTC asserted that the patentee was not likely to prevail in the infringement actions because of the persuasive arguments regarding the invalidity and noninfringement of the asserted patent.  The FTC argued that because the AndroGel® patent “was unlikely to prevent generic entry,” the reverse payments extended an unauthorized monopoly.

The district court dismissed the FTC’s complaint based on Eleventh Circuit precedent because the FTC did not allege that the settlement imposed a greater exclusion than that provided by the patent itself.  The FTC appealed, challenging the “scope of the patent” test for anticompetitive behavior.  The Eleventh Circuit affirmed, and the FTC petitioned the Supreme Court for review.  The briefs, including a number of amicus curiae briefs, can be found here, including a brief from one of the co-sponsors of the Hatch-Waxman amendments, Rep. Henry Waxman.

K-Dur and the “quick look” test

Shortly after the Eleventh Circuit’s decision in Actavis, the Third Circuit considered a similar appeal and reached a different result based on a different legal test.  The In re K-Dur Antitrust Litigation appeal related to the settlement of patent litigations involving patents covering a controlled-release microencapsulated potassium chloride formulation.  One settlement required the generic drug company to delay entry of its product of four years for a payment of $60 million.  But the settlement also included a cross-license to certain patents owned by the generic drug company.

Despite the branded and generic drug companies’ argument that the payment related to the licensing of patents not involved in the litigation, the Third Circuit found that there was a reverse payment.  After reviewing the precedent from other circuits, the K-Dur panel rejected the scope of the patent test because reverse payments “permit the sharing of monopoly rents between would-be competitors without any assurance that the underlying patent is valid.”  Instead, the Third Circuit held that courts should apply a “quick look rule of reason” analysis, which shifts the burden to defendants to provide evidence that per se illegal behavior had an economic justification.  Under those circumstances, defendants in quick look situations have only rarely been able to provide the justification necessary to avoid antitrust liability.

The K-Dur defendants also petitioned for review by the Supreme Court, which has yet to rule on their petition.

The Oral Argument in actavis

Deputy Solicitor General, Malcolm Stewart, argued on behalf of the Government, while Jeffrey Weinberger argued on behalf of the respondent pharmaceutical companies.  Justice Samuel Alito recused himself from the proceedings.  Thus, a 4-4 decision, which would uphold the Eleventh Circuit’s ruling that the settlements are lawful, is possible.

Shortly after Mr. Stewart began his argument in support of the quick look test, Justice Scalia challenged him to identify “a case in which the patentee acting within the scope of the patent has nonetheless been held liable under the antitrust laws.”  Justice Kennedy indicated his concern that the quick look test makes no attempt to distinguish between weak patents and strong patents because settlements involving either would be presumptively unlawful.  Justice Breyer, on the other hand, asked why the Government would not be satisfied with an acknowledgement that reverse payment settlements sometimes have anticompetitive effects and should be subject to the standard rule of reason analysis without a presumption for or against legality.  Mr. Stewart responded that such an approach would bring in the “kitchen sink”—i.e., unnecessarily complicate the analysis.

For respondents, Mr. Weinberger responded to the question posed by Justice Scalia by stating that there had in fact been no decision where the court “has ever found a restraint outside the scope of the patent to be unlawful.”  However, Justice Sotomayor challenged Mr. Weinberger to suggest another licensing situation where a patentee and a licensee appear to be sharing the monopoly profits.  Failing to provide a clear example in response to Justice Sotomayor, Mr. Weinberger argued instead that judges would have a hard time determining whether a given agreement was anticompetitive under the rule of reason.

The questions posed at the argument suggest that Justice Scalia favors affirmance, while four justices (Kennedy, Breyer, Sotomayor, and Kagan) favor applying the rule of reason analysis or require at least some additional analysis of the anticompetitive effects beyond either the “scope of the patent” and “quick look” tests.  A decision is expected in the early summer.

This post represents solely the views of the author and does not represent the views of Schiff Hardin LLP or any clients of Schiff Hardin LLP.

Patent Office publishes final version of Guidelines for Examination of Biotechnology Applications for Patents

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The Patent Office has published the final version of the “Guidelines for Examination of Biotechnology Applications for Patents”, accessible over here, dated March 25, 2013. The draft version of these guidelines was published initially in December, 2012 and made available for public comment on the Patent Office website. The public comments received by the Patent Office, most of which were negative, were published on the patent office website and I’m told that the Patent Office did organize a meeting with the important stake-holders. 

It is most important to note that in the final version of the guidelines, the Patent Office has itself conceded that it has no rule-making authority and that these guidelines do not have the force of law. The pertinent statement on page 1 reads as follows “However, these guidelines do not constitute rule making. In case of any conflict between these guidelines and the provisions of the Patents Act, 1970 and the Patents Rules, 2003, the said provisions of Act and Rules will prevail over these guidelines. The guidelines are subject to revision from time to time based on interpretations by a Court of Law, statutory amendments and valuable inputs from the stakeholders.” This is a vital point, which we had pointed out in our first post on the issue in December. The Controller General should clarify in adequate detail to his staff that any objection to a biotech patent will have to be based on the Patent Act and judicial precedents. If the Patent Office rejects a biotech patent application citing these guidelines as the controlling authority, the IPAB will most certainly reverse such an order since the guidelines do not have the force of the law. Controllers may thus cite only the reasoning contained in the guidelines provided that such reasoning itself is based on the Patent Act or judicial precedents.

Joint Committees related to Trademark Matters

A public notice issued 5 days ago by the Office of The Controller General Patents, Designs& Trade Marks has brought forth quite a wonderful initiative. It provides for the establishment of joint committees consisting of members from Trademark stakeholders and some officers of the Trademark Registry. (henceforth TMR) This initiative has been suggested as a mechanism to find constructive solutions for the various problems that arise with respect to trademark matters as well as to ensure better coordination between the TMR and the trademark stakeholders. 

Six joint committees have been mentioned in the notice. These are the Committee about matters related to the Front Office or E-Relations, the Committee about matters related to Show Caused or Contested Matters' Hearings, the Committee about matters related to Examination of TM Applications, the Committee about matters related to Advertisements, the Committee about matters related to Post Registration Changes in Trademarks & Renewals and the Committee about matters related to Servers and Technical Improvement.  All these committees consist of four members two of whom are from the Government department and two from various law firms. The names and details of the Committee members including their designations, mobile numbers and email addresses can be found on pages 3 and 4 of the public notice.

The terms and conditions of the Joint Committees are listed in the public notice itself. The initial terms are that the TMR officials in these committees are expected to brief the other members about the present setup which includes the administration as well as the automated system under the TMR. The functions of the Committee is limited to proposing constructive solutions within the existing system including the Trademarks Act and Rules. Other terms and conditions relate to the procedural aspects which state that the meetings of the Committees are to happen at least once a month. Such meetings will be convened by the senior most member of the Committee as per the convenience of the other members of the Committee. Volunteers and other individuals can attend meeting if prior information is given to the members of the Committee. This brings in an  element of accountability while being a learning opportunity for many interested parties.  

Representations and suggestions by other individuals or organisations relevant to the subject handled by the Committee can be circulated among the members of the Committee and will be discussed in the meetings. Generally the Committee will not look into individual grievances even if they are brought to the notice of the Committee. However, if the grievance is of a particular type which requires immediate attention of the Committee, then in such an instance, it can be deliberated upon by the Committee. At every meeting it is imperative that two members of the Committee must be present and that of the two members, one must be from the TMR and the other a representative of the trademark stakeholders. The public notice also states that the signed minutes of every meeting must be sent to the Office of The Controller General Patents, Designs& Trade Marks with the proposed suggestions of the Committee. 

This appears to be a good initiative that hopefully will brighten the trademark scene in India. Having a Committee for the deliberation and discussion of the various difficulties that the stakeholders and the Government face and reaching a constructive solution for the same is undoubtedly, a step forward.

SpicyIP Weekly Review (March- Week 4)

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This week has been quite exciting and action packed with SpicyIP covering various recent legal developments – cases, Copyright Rules, 2013 and other important legal issues. 

Copyright Rules, 2013 

The week started off with news regarding notification of the Copyright Rules, 2013 (Anubha’s post here). The new rules (available here) are pursuant to the recent Copyright Amendment Act, 2012. Prashant in his post (here) highlighted certain changes that the new rules have made with regard to the composition of the Copyright Board. One welcome change that was pointed out was with regard to Rule 3(2) sub-rule (d) which now allows advocates with ten years experience in copyright law to be appointed as members of the Copyright Board. However, Prashant exposed an inherent flaw in the Rules in that they allow bureaucrats and ILS officers to be appointed to the Board. Such a provision could render this rule susceptible to a constitutional challenge. 

Important decisions over the past week 

Sai through his succinct post drew our notice to the IPAB’s decision in the Natco/Bayer compulsory license case. This was a landmark decision that upheld the compulsory license granted to Nacto for Bayer’s patented kidney cancer drug- Nexavar. The decision first dealt with certain technical issues raised by Bayer and then went on to address the substantive issues. The IPAB also stressed on the overwhelming public interest dimension in compulsory license issues and in this regard perused the Ayyangar Report and provisions from TRIPS, the Paris Convention and the Doha Declaration on Access to Medicines. 

This post was followed by another recent and far-reaching decision by the US Supreme Court on parallel imports of copyrighted works. Shamnad covered this decision (here). This case was between John Wiley a famous US book publisher and Kirstaeng a Thai student studying in the US. The question in this case was whether Kirstaeng’s import into the US of certain books sold in Thailand violated Wiley’s exclusive right to distribution and Section 602’s import prohibition. The Supreme Court based its decision on the principle of international exhaustion and dismissed Wiley’s claim of unauthorized importation. Shamnad highlights various implications this judgment will have on India. 

I posted on the recent ‘AUML-IMUL’ trademark controversy. The proprietors of the registered trademark AMUL opposed registration of the mark IMUL. The registrar rejected the opposition and held IMUL’s mark to be honest and not deceptively similar. On appeal, however, the IPAB set aside the registrar’s order as it found ‘IMUL’ to be phonetically similar to ‘AMUL’ and therefore held that IMUL was deceptively similar and likely to cause confusion among the public. 

Other important legal developments 

Prashant updated our readers about certain interesting details that may have implications on the Pratibha Syntex lawsuit brought by the State of California. The Californian Attorney General has allegedly misled the court by stating that Pratibha (defendant) “has not asserted any valid defence as to its use of pirated Microsoft programs.” This statement seems to be false because Pratibha Syntex has actually been trying to put up a fight and as pointed out, on Sep. 25, 2012 Pratibha Syntex filed an Order 7 Rule 11 application seeking dismissal of the lawsuit. These and other interesting findings pointed out in post leave us to question the conduct of the Californian A-G. 

This insightful post was followed by Prashant’s tidbit on the release of a new novel by Dr. Kalyan Kankanala a leading Indian IP lawyer. The book is titled ‘Road Humps and Sidewalks’ and is about a national epidemic, a cure, a doctor, a blind lawyer, a patent and a pharmaceutical company. This combination certainly makes for a promising and exciting read. 

Thereafter, Madhulika blogged about the recent comments and concerns raised by Roy Waldron (Chief IP Counsel for Pfizer) over India’s ‘protectionist’ IP regime. Pfizer questioned India’s patentablity standards, accused India of abusing the compulsory license system and threatened to remove trade benefits and GSP prevelidges. Madhulika has comprehensively dealt with these concerns in her post. 

SpicyIP then brought in a clarification with regard to our post on the Fox 'Knock-Out’ copyright dispute where due to Mid-Day’s reportage we were given to believe that the Fox had won the case and was awarded damages. But later it was brought to our notice that the matter was actually settled amicably by the two parties and there was no question of damages being award. 

Gopika brought to our notice that producers of the popular TV show ‘Mad Men’ are involved a dispute regarding the unauthorized use of Ms. Gita May’s image in the main title sequence of the show. The complaint lists eight causes of action which include the misappropriation of right of publicity for commercial purposes, invasion of common law rights of privacy; and violation of the unfair competition law, false advertising law, quasi contract and the principle of unjust enrichment among others. 

SpicyIP was then informed of the inevitable – leading music labels – T Series, Venus Records and a certain Bharat Anand have challenged the constitutional validity of sections 17,18, 19, 30 and 33 of the amended Copyright Act. Shamnad’s posts here and here highlight the issues raised by these parties. 

This was followed by Gopika’s post on the statistics of patent grants in India. The data tabulates patent applications filed in medicines from 2009 to January 2013. The post analysis these statistics on the basis of time-period of grant, state-wise grant, pending patent applications, patent applications filed by Indians through PCT and other such parameters. 

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SpicyIP comment of the week 

This is a new section we're introducing which will highlight some of the best comments we've received over the week - 

1. To Gopika’s post on the ‘Mad Men’ controversy - SAV said “Similarly in the Indian case of Titan Industries Limited v Ramkumar Jewellers ([CS(OS) 2662 of 2011]), the plaintiff had asked celebrity couple Amitabh Bachchan and Jaya Bachchan to endorse and advertise its range of diamond jewellery which was sold under the brand name Tanishq. The couple had assigned all the rights in their personality to the plaintiff for use in the advertisements in all media, including print and video. The plaintiff had invested huge sums of money in the promotional campaign. The defendant, a jeweler dealing in identical goods to those of the plaintiff, was found to have put up a hoarding identical to the plaintiff’s, including the same photograph of the celebrity couple displayed on the plaintiff’s hoarding. Since the defendant had neither sought permission from the couple to use their photograph, nor been authorized to do so by the plaintiff, the court held it liable not only for infringement of the plaintiff’s copyright in the advertisement, but also for misappropriation of the couple’s personality rights. The court thereby recognizing the couple’s rights in their personalities.”

International Developments 

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Register of Copyrights Calls for a Complete Rewrite of Copyright Law (reported by Plagiarism Today)- Maria Pallante, the Register of Copyrights at the U.S. Copyright Office, has recently called for a complete rewrite of U.S. copyright law. According to Pallante, “The law is showing the strain of its age,” and requires the attention of Congress. As plagiarism today points out, Pallante’s proposals are centered around – what copyright holders should control in the digital age, performance rights of sound recordings, reduction of copyright term, an opt out provision for libraries and archives and other miscellaneous issues. 

German Parliament Votes To Protect News Snippets From Republishing- The German Upper House has finally passed an amendment to the German copyright law which will now provide auxiliary protection to extracts from press articles. This change shall prevent internet platforms from using publishers’ content without licensing (and payment) except for “single words” or “minimal extracts.” 

More about the Kirtsaeng v. John Wiley & Sons US Supreme Court case on parallel imports - http://www.ip-watch.org/2013/03/19/us-supreme-court-applies-first-sale-doctrine-worldwide/; http://www.ip-watch.org/weblog/wp-content/uploads/2013/03/Kirtsaeng-pdf.pdf 

Nation-states enter contentious patent-buying business (Reuters)- Patent competition in the United States is usually a fierce arena for private companies, but now the South Korean, French, Japanese and Chinese governments are entering the business too. They have set-up patent-acquisition companies, with the goal of helping domestic technology firms and possibly making some money in the process. 

Copyright Constitutionality Challenges

In an earlier post, we'd reported a constitutionality challenge that had been filed against the recent copyright amendments. Well, it turns out that the constitutionality challenge was filed by 3 different parties. 

1. T series and Venus filed two separate petitions challenging the constitutionality of the statutory licensing scheme under the amended Section 31(1)(b) and 31(D). They had initially filed the writ in the Supreme Court under Article 32, but were asked by the court to file instead in the High Court under Article 226. 

This was apparently filed yesterday, but returned by the Delhi High Court Registry for fixing technical errors in the petition. This petition claims that Sections 31(1)(b) and 31 (D) contravene Articles 14, 19(1)(g), 21 and 300A of the Constitution of India.

2. A certain Bharat Anand filed a separate writ petition in the Delhi High Court yesterday challenging the constitutionality of Sections 17, 18, 19 and 30 of the copyright act dealing with the mandatory sharing of royalties with music composers and lyricists. 

Jagdish Sagar is the lawyer on record representing Bharat Anand.This was also returned by the Delhi High Court registry for fixing technical errors in the petition. (we are given to believe that the petitioner is a film producer).

All these writ petitions are now likely to now be taken on record only after the court reopens on April 1st.

Statistics of patent grants in India

Recently, Dr. S. Jagathrakshakan, Minister of State for Commerce & Industry filed a written reply which contained statistics of applicants filed for patents and the patents that were actually granted in India. This was released by the Press Information Bureau and was brought to our knowledge by a friend and well wisher of SpicyIP , Mr. Shiwprasad Wanve.

The PIB release tabulates the patent applications filed in medicines by Indian legal entities including companies, Research and Development Institutions & Academic Institutions from 2009 to January 2013. A varying trend can be observed with the total number of applications filed dipping in 2010- 2011 to 365 from a 581 in 2009- 2010. It increased in 2011- 2012 to 814  but fell to a 649 in 2012- 2013. However, in all the years Mumbai has had the highest number of patent applications filed with Delhi in second place in 2009-2011 and Chennai from 2011-2013. Kolkata has consistently had the least number of patent applications filed.

When we contrast this with the number of patents actually granted, a decreasing trend can be observed from 75 in 2009- 2010 to 41 in 2012-2013. However, when a state-wise analysis is done, it is seen that there is not much of a difference between the number of patents granted in Mumbai and Delhi. In fact, in 2010-2011, the number of patent applications filed in Mumbai was 152 while the number from Delhi was 121. The number of patents granted in Mumbai was 24 while the number granted in Delhi was 40. However, even in the years from 2011-2013, when the number of patents filed in Delhi was less than both Chennai and Mumbai, it is seen that the difference in the number of patents granted in Mumbai and Delhi was marginal. On the other hand, the number of patents granted in Chennai where there were 214 applications in 2011-2012 was only 1. No patents have been granted in Kolkata 2011 onwards.

The PIB release also deals with the issue of pending patent applications. Sec. 11B of the Patents Act, 1970 which deals with request for examination of patent applications. Sec 11B stipulates that requests for examination must be made in the prescribed manner within the prescribed period. The pendency of patent applications is dependent on the pendency of requests for examination of the patent applications. As on 31 January 2013 there are 370 pending requests for examination in Delhi, 290 in Mumbai, 247 in Chennai and 48 in Kolkata.

The Minister of State has sought to justify the delay in grant of patents. He clarifies that there are several stages to the granting of patents which includes the publication of the initial application, filing a request for examination of the application, the actual examination of the application and the disposal of any opposition that may arise at such stage. This quasi-judicial process coupled with the increase in filing of patent applications in India and the shortage of patent examiners are according to the Minister of State, the reason for the delay. While these are valid reasons raised by the Minister of State, it appears that there do exists solutions for the same. The shortage in patent examiners and other resources compared to an increasing  number of filed patent applications can be remedied if more resources were sanctioned to the Patent Office by the Government. A cost- benefit analysis would support this solution considering the amount of revenue that is generated by patents.

The PIB release also look at the patent application filed by Indians through PCT as well in India. As far as the PCT is concerned,  the most number of applications were filed in 2010- 2011 when 871 application were filed followed by 2011- 2012 when 773 applications were filed. The least was in 2012-2013 when only 646 applications were filed. In India, on the contrary, the highest percentage of patent applications filed by Indians was in 2012- 2013 when 21.75% was filed by Indian Residents. The least was in 2009- 2010 when 20.54% was filed by Indian residents.

These statistics are extremely helpful to those studying or who are generally interested in the Indian patent scene to understand the trajectory in which it is moving.

Breaking News: India's Copyright Amendments Challenged

As expected, India's revolutionary copyright amendments seeking to foster social justice by providing mandatory royalty payments to music composers and lyricists has been challenged as unconstitutional. (For those interested, a text of the amendment is available here).

A writ petition was first filed before the Supreme Court of India sometime last week by leading music labels, T Series and Venus Records, challenging interalia sections 17,18, 19, 30 and 33 of the amended Act. A bench comprising Justice Aftab Alam and Justice Ranjana Desai declined to hear the matter, asking that the writ be filed before the High Court. 

We are given to believe that a fresh writ petition was filed today before the Delhi High Court and is expected to come up tomorrow. My guess is that the amendments have been challenged as violative of Article 14 (vague, arbitrary etc) and violative of the right to trade/contract etc (Article 19). We'll keep you posted.

Copyright Rules, 2013 designed to fail the Copyright Board

While the Copyright Office has made a few amendments, to the draft version of the Copyright Rules, 2012 governing the Copyright Board, the amendments in the final notified version fail to go far enough. (Our previous post can be accessed over here)                                          

Let’s start with the good news first. 

Good-news: The Copyright Office has inserted a new sub-rule (d) to Rule 3(2) allowing for advocates with ten years of experience in copyright law to be appointed as members of the Copyright Board. 

Bad-news: The Copyright Office has retained the self-serving provisions which allow serving bureaucrats and Indian Legal Service (ILS) officers to be appointed to the Board directly by the Central Government without the requirement to consult with the Chairperson, who himself can be appointed only after consultation with the Chief Justice of India. 

This is bad news for two reasons: 

(i) The Government is going to use this opportunity to pack the Board with its members thereby seriously affecting the independence of the tribunal. The Supreme Court has time and again held that appointments to judicial tribunals should always be in consultation with the judiciary to prevent too much control by the Executive; 

(ii) The provisions allowing for the appointment of serving bureaucrats and ILS officers are also susceptible to a constitutional challenge after the Supreme Court’s decision in the NCLT case. In that case, the Supreme Court was categorical in its assertion that serving bureaucrats could in no circumstance be appointed as members of judicial tribunals. The Court did make a half-baked exception for officers of the Indian Legal Service (ILS), allowing them to be appointed in the post of a technical member but in this case the Copyright Board does not have any special posts for technical members and ILS officers therefore cannot qualify to be appointed to this post. 

It is tragic that the Copyright Office decided to draft the rules in a manner which will invite a constitutional challenge. Without the Copyright Board, the recent Copyright Amendment Act, 2012 is rendered a toothless law. What makes this even worse is the fact that the Copyright Office is aware of all these challenges because of the PIL filed by SIMCA against the Copyright Board. As things stand today, that PIL before the Madras High Court is rendered infructuous because the initial provision under challenge were amended but that of course does not preclude the possibility of a fresh challenge by the music labels. 

Personally, I hope the music labels challenge the Rules and get a stay on the functioning of the Copyright Board until there is no possibility of bureaucrats being appointed to the tribunal.

Copy of the Copyright Rules, 2013

Thanks to PRS Legislative Research, a clean copy of the latest Copyright Rules, 2013 as appeared on the Official Gazzette is available here. As we noted earlier, the notification of the rules came out on March 14, 2013. The rules were enacted pursuant to the Copyright (Amendment) Act, 2012 notified on June 21, 2012.

'Mad Men' controversy

The hugely popular and critically acclaimed TV series 'Mad Men' has faced a setback after its production company Lionsgate has been sued by Gita Hall May, a top 1950's model. The lawsuit has been filed by Ms. May in the Superior Court of the State of California for the county of Los Angeles. 

The main title sequence of the Mad Men series depicts the shadow of a businessman falling through Madison Avenue. The background uses advertisements, office buildings and other designs to set the series in the 1950- 1960's. One of the advertisements contain an image of a red haired woman, who, through her looks and by herself is clearly identifiable with this time frame. This red haired woman was Gita Hall May and that particular image was a photograph taken by noted fashion photogapher Richard Avedon, to be used in a hairspray advertisement for Revlon. 

Ms. May has submitted before the Los Angeles Court in her complaint that she consented to the use of her likeness and the Avedon photograph only for the Revlon campaign then. To quote directly from the complaint, " At no time did she agree to allow, forty years later, her image to be cropped from the photo, in secret, and inserted as a key element in the title sequence of a cable television series, without her consent and for commercial purposes ." 

Ms. May's complaint is simple. She contends that she has a right to her likeness and that Lionsgate should not be allowed to exploit it without her consent, in an unauthorised manner while paying her no compensation whatsoever. It is extremely interesting to note that even this main title sequence of the Mad Men series has been acclaimed independently of the series as can be evidenced from the series's 2008 Emmy Award win for Outstanding Main Title Design. The complaint asserts that Ms. May's image in the main title sequence was integral to the success of the series and that Lionsgate has generated over one billion dollars through the exploitation of the series and its episodes. The complaint states that Ms. May's image in the main title sequence not only added commercial and economic value to the series but was also partly responsible for the value, success, goodwill, profits and reputation of Lionsgate and the other unidentified Defendants.

Therefore, Ms. May has approached the Los Angeles Court seeking remedy for the unauthorised use of her image and likeness by Lionsgate. The complaint lists eight causes of action which include the misappropriation of right of publicity for commercial purposes, invasion of common law rights of privacy; and violation of the unfair competition law, false advertising law, quasi contract and the principle of unjust enrichment among others. The complaint asks for several remedies including general, special, consequential, statutory and punitive damages; restitution; injunctive relief. ( The complete list can be found on pg: 13 of the complaint)

The decision of the Los Angeles Court on this matter is not yet out. In the meantime, readers can refer to this blog post for the image of Gita Hall May in the Revlon hairspray ad.

A clarification on the Fox-‘Knockout’ copyright dispute

In this post, we would like to clarify one of our earlier posts that we had published on Monday regarding the Fox-‘Knockout’ copyright dispute. In the earlier post we had reported, on the basis of a NDTV/Mid-Day report that Fox had won a copyright infringement claim against the Indian producers of the movie ‘Knockout’ for allegedly infringing Fox’s copyright in the script for the movie ‘Phone-Booth’. The report had also mentioned that Fox was awarded Rs. 1.25 crore in damages. 

Subsequent to our post, we received some comments informing us that the issue was actually settled amicably between both parties. 

Thanks to some outside help, we managed to get our hands on the orders passed in the lawsuit and it appears that the initial news report in the Mid-Day was a piece of misinformation. 

From the information that we have gleaned from these orders, Fox had sued the producers of ‘Knock-Out’ in October, 2010 before the Bombay High Court just days before the movie was released. At the time the Single Judge had apparently granted Fox an interim injunction. This interim injunction was vacated by the Division Bench of the Bombay High Court on the undertaking that the Indian producers would deposit a sum of Rs. 1.5 crore with the Bombay High Court pending disposal of the suit. The next order is dated February 22, 2013 which records that Fox had moved to have the suit decreed in its favour, including the Rs. 1.5 crore. The Court issued noticed to the Defendants. 

On the next day, March 5, 2013 the order of the Bombay High Court records that the suit was being disposed in terms of the ‘Minutes of the Order’ submitted to the Court by both parties. From what I have been told by advocates in the Bombay High Court, this usually means that the matter has been settled amicably by both parties and the ‘Minutes of the Order’ would contain the terms of the settlement. While the ‘minutes’ are not available, it is quite clear that there has been no finding of copyright infringement by the Bombay High Court and the Rs. 1.25 crore have not been awarded as damages but as a part of the settlement. 

I don’t know why Mid-Day is putting a spin on this story by portraying the amicable settlement as a judgment of the court. 

On the merits of the case, I think it was a bad settlement. American movie studios have been trying to enforce such claims for the last decade and they almost never win because there is no copyright over the basic idea and most Hindi movies have a radically different portrayal of the same idea, which means that they do not infringe the copyright in the original script. We had earlier blogged about an earlier lawsuit where the Delhi High Court rejected a similar claim by Fox against Zee, available over here.