Delhi HC rules in favour of Havells India - finds Asian Electronic's patent to be anticipated and lacking in an inventive step

The Delhi High Court in a crisp, well reasoned, 13 page Order dated 19th April, 2010, has dismissed an interim injunction application in a patent infringement suit filed by Asian Electronics Ltd. v. Havells India Ltd. The patent at suit is unfortunately not available on the IPIRS system. Both Asian Electronics and Havells India are big players in the Indian electronic markets. While Asian Electronics was led by Mr. Gaurav Barathi, who is also counsel for NATCO in its patent dispute with Roche, Havells India Ltd. was represented by Ms. Neha Kapoor. The presiding Judge was Mr. Justice Ravinder Bhat, one of the leading IP judges of the Delhi High Court, as is once again demonstrated through this Order.

(a) Details of the Patent
Patent Application No.: No.544/BOM/1999
Patent No: 193488
Date of Grant: 27.02.2007
Inventor: Suresh Hiralal Shah (Chairman of Asian Electronics Ltd.)
Patentee: Asian Electronics Ltd.
Abstract: “Conversion Kit to change the fluorescent lighting units inductive operation to electronic operation”.
Number of other countries where such a patent has been granted: 26

(b) Brief description of the claimed invention
The invention aims at converting fluorescent lighting units, such as tube-lights, from working on an inductive operation mechanism to an electronic operation mechanism without the need for any re-wiring. According to the Plaintiff company, its inventors discovered that fluorescent lighting units operating on an inductive operation mechanism were 'energy inefficient' as they used to flicker while starting and also discharge invisible gas.

The conversion kit invented by the Plaintiffs is claimed by the suit patent in the following manner:

Claim No.10
Conversion kit to change the fluorescent lighting units – from inductive operation to electronic operation as claim in claim 1 comprising alternatively as a modification.

“a. straight fluorescent lamp having at least two contact pins at its each end
b. first and second adaptors mountable on the ends of said lamp, each said adaptor having a pair of internal contacts for mating with said lamp contact pins and also having a pair or external contact pins for mating with contacts in the lighting fixture;
c. connection lines provided in a line channel for electrically connecting the said first adaptor to the said second adaptor; and
d. an electronic ballast.”

The Plaintiff company claims that when it bought and dismantled the Defendant company's product, it discovered that almost all the essential features of its patented invention had been literally copied by the Defendant i.e. (i) The Conversion kit (ii) Adaptors on either side of fluorescent lamp (iii) Wiring assembly & (iv) Ballast.

(c) The Defendant's arguments
The Defendant's put forth four main defenses:

(i) That their product was different from that of the Plaintiff's – this is of no relevance since an infringement analysis proceeds on a comparison of the claims vis-a-vis the product.

(ii) That prior art such as U.S. Patent No. 4246629 contained all embodiments claimed by the suit patent, thereby rendering the suit patent not only obvious but also anticipated. As per Section 107 of the Patents Act, a defendant can claim all the grounds of revocation, laid out in Section 64, as a defence to a claim of infringement.

(iii) That the trivial differences between the prior art and the invention claimed in the suit patent are nothing but mere workshop improvements which are essentially a re-arrangement of known parts and that such workshop improvements could not be construed to be an 'inventive step' that is worth a patent monopoly.

(iv) That the patentee had not filed any evidence to suggest that it was even working its invention in sufficient quantities thereby ensuring that the balance of convenience was in the favour of the Defendants.

(d) Justice Bhat's Order: Justice Bhat starts of his excellent analysis of the case by noting that the Plaintiffs are not claiming an invention in any of the individual components of the conversion kit. Instead he rightly notes that the invention was claimed for a conversion kit which comprised of several individual components such as the adaptors, the ballast etc.

In the backdrop of this observation he then reviews certain basic concepts of the Indian Patent Act such as the definitions of 'invention', 'inventive step', 'new invention' & 'patent' as also the scope of Section 3 which defines what is not patentable subject matter. In particular he stresses of Section 3(f) which states that the mere arrangement or re-arrangement or duplication of known devices each functioning independently of one another in a known way is not patentable subject matter. The Judge also makes reference to the bar of Section 3(d) which states that a mere use of a known process, machine or apparatus unless such known process results in a new product will not be considered to a patentable invention.

The judgment then carries out a very concise review of English case law on the grant of patents for combination and the “law of collocations”, both of which state the same concepts that are found in Section 3(d) and Section 3(f) i.e. no patent can be granted for the mere re-arrangement of known components unless such re-arrangement leads to a radically different result i.e. not obvious to a person skilled in the art. In light of the statutory provisions, as also the weight of common law, the Judge made a prima facie finding of not only obviousness but also one of non-patentability on the basis of Section 3(d) and Section 3(f).

The Court also found the suit patent to be anticipated by the prior U.S. Patent cited by the Defendant since that one document described the entire invention that was being claimed by the suit patent.

Although the above findings were more than enough to dispose the interim injunction application the Court went ahead to state that by not filing any documents to show the working of the suit patent, the Plaintiff had failed to even demonstrate that the patent was being worked in the Country. On this count the Court found even the balance of convenience in favour of the Defendant company and dismissed the application for interim injunction. A note of warning therefore to all future patentees would be to file statements of working along with interim injunction applications, failing which, it is likely that the Delhi High Court would not find the balance of convenience in the favour of the patentee.

Hat-tip - Sumathi

ACTA: A New Culture of Damages...

The Anti-Counterfeiting Trade Agreement (ACTA) has been discussed at length on SpicyIP, notably by Swaraj and Amlan. In particular, recent posts by Amlan on the official text of ACTA make for very matured reading.

ACTA has obviously generated a lot of interest, with its politico-economic implications forming the focal point of quite a few debates/discussions. In a few forthcoming posts, I would like to make sense of the provisions sought to be advanced by ACTA primarily from a legal standpoint.

This first post takes a look at the provisions for damages in ACTA.

Article 2.2 of Section 1 (Civil Enforcement) of Chapter II of ACTA deals with damages, which is preceded by an Article on injunctive reliefs, probably indicating the indispensability of injunctive relief as the primary tool of enforcement of IPR. This, in a way, helps one understand the role and place of damages in the “big picture” of enforcement.

As appears to be the case with most of the ACTA provisions, the provision on damages too indicates a divergence in the views of parties to ACTA negotiations on the scope of ACTA, and its applicability to forms of IPR other than copyrights and related rights, and trademarks.

Sub-article 1(a) requires (“shall”) parties to ACTA to vest judicial authorities with the power to order an infringer, who infringes either knowingly or has reasonable grounds to know,

1. to pay the right holder adequate damages to compensate for the injury sustained by the right holder or

2. the profits of the infringer attributable to the infringement (basically account of profits) which may be treated as the amount of damages the right holder is entitled to.

The EU seems to have proposed actual injury to the right holder to calculate “adequate damages”. As for account of profits, apparently a few parties have sought to exclude it from computation of adequate damages; the need for such a clause is not clear because damages based on injury to the right holder is usually not connected to or contingent on account of profits of the infringer, then why mention it specifically? 

It has been pointed out that this provision is similar to Article 45.1 of TRIPS for the most part but for the presence of accounts of profits as an alternative to damages.

Sub-article 1(b) sets out the possible metrics for calculation of damages, which could be any legitimate measure of value submitted by the right holder. Such metrics include:

1. lost profits

2. value of the infringed good measured by market price

3. retail price or

4. account of profits

What is interesting is that TRIPS does not specify any such metric, leave alone mandate one. However, ACTA uses the word “shall” in saying that Courts will have to consider any such measure of value submitted by the right-holder.

Sub-article 2 is an alternative to sub-article 1 which a right-holder may opt for. It deals with infringement of works, phonograms and performances protected by copyrights and related rights, and trademarks. The US seems to have asked for a mandatory provision of statutory damages in such instances, besides presumption for determining the amount of damages sufficient to compensate the right-holder for infringement. The EU, New Zealand and Canada seem to take a relatively flexible position on the above.

Sub-article 3 is similar to Article 45.2 of TRIPS which provides for recovery of profits or payment of statutory damages in cases of innocent infringement.

Sub-article 5 again mandates payment of courts fees, legal costs and attorney expenses, which is a default rule to be given a go by only in exceptional circumstances. The alternative phraseology is where the payment of legal costs and attorney fees shall be provided for in appropriate cases. (This is again provided for in Article 45.2 of TRIPS)

All in all, micromanagement of award of damages characterizes these provisions. It is clear that these are designed to serve the interests of the right-holder predominantly, however is there a way of striking a balance between public and private interests by modulating the use of injunctive relief and damages? The answer to this question is different for different nations.

This document on ACTA cites the decision of the US Supreme Court in eBay Inc v. Merc Exchange wherein the US Supreme Court has discussed the effect of grant of interim reliefs on public interest. The Court has observed that an interim relief is effectively used as a bargaining tool when the terms of a license are negotiated with the infringer and that the threat of an interim relief could help a right-holder in unduly gaining an upper hand in the negotiations.

Further, the US Supreme Court asks Courts to wake up to the possibility of interim reliefs granted to broadly-worded patents acting as stumbling blocks to advancement of public interest. Therefore, the Court has advocated grant of damages over interim injunctive relief, where appropriate.

In one’s opinion, there’s another way of looking at this. On one hand, while it is true that enforcement standards advanced by and through ACTA may not be in the best interests of all countries which are at various stages of development, it is also true that unless and until enforcement is given its due, the State is merely doling out paper tigers in the form of IP rights which at the end of the day add nothing to the balance sheet of a right-holder but costs.

Probably in regimes where the rate of disposal of disputes by Courts is higher in general, and also IP awareness levels are perceptibly higher, it makes sense for the Court to question the wisdom behind grant of interim reliefs and consider grant of damages as a viable alternative, so as to protect public interest from private mischief. More importantly, where IP awareness levels are so high that players have become adept at playing around with the system, it makes sense for the Courts to get “activisty”.

 But in fledgling IP regimes where market players in general have scant regard for rights which are alien to them, injunctive relief is an indispensable tool. This is because the order of a Court has a certain impact value on the streets which the right-holder can flag and flog before the infringer. Despite this, if Courts in such regimes show a marked reluctance even in granting interim injunctions, and force-fit arguments on merits of the case within a self-styled prism of public interest, it does raise valid questions in the mind of the right-holder which one may summarise as follows-

“Why grant me a right in the first place and systematically rob me of every tool of enforcing it? I am granted a right, but there seems to be a disconnect between the arm of the State which grants it and the arm which enforces it. Also, my right has inbuilt limitations, why limit the right further through extra-statutory means? 

I am given the right on the premise that its proper exercise would contribute to furthering public good and my hands are tied when I try to enforce it, in the name of public interest. To add to that, I, as the right-holder, am always in the dock and my cause is politically incorrect for eternity. Am I being granted a right to further public good through my efforts or am I being saddled with a liability for a limited term and a placard which reads “take a shot at me, it’s the right thing to do and it’s free and profitable”!”

What one is trying to convey is that ACTA probably does represent an overkill in terms of enforcement even for developed IP regimes, naturally the adoption of these standards by developing IP regimes is beyond question. But the larger question is about the rate and quality of enforcement in developing IP regimes. This calls for a serious stock-taking exercise- How many cases do we have where a right-holder has been granted interim relief? How long does it take, on an average, for a right-holder to obtain an interim injunction? Has the analysis in such cases been strictly prima facie? Have extraneous considerations played an overt or covert role in such cases in denying grant of interim relief? How many IP cases have been finally disposed off and how many of them in favour of a right-holder? How many examples do we have where a right-holder has been awarded damages, 5? 6?

It is not one’s case that if a dispute is ruled against a right-holder, it hasn’t been dealt with fairly. But it should not be the case either that the number of instances where a right-holder’s claim is upheld are far and few in between. How does all this affect innovation, particularly in countries like India?

Innovation does need human capital, which India is reasonably well-placed to provide. But it also needs a business model where innovation is given its due, which means the will to invest significant resources consistently, the ability to extract optimum benefits out of such investments and the resilience to withstand shocks. This is possible only if the entity has the required experience to handle innovation and the attendant risks.

Entities which recognise the value of innovation naturally are bound to have concerns which other less-innovative environments may not completely relate to or share. However if such ID (innovation deficient) regimes wish to attract entities from IP (innovation proficient) regimes, the latter’s concerns need to be addressed to the extent possible and without sacrificing public interest.

I am sure a few immediate reactions could be that there are no statistics to prove the sub-textual proposition. I do not have statistics nor do I wish to quote them here even if I had, instead we could approach the issue in a different way- For those who believe that IP rights are important primers of innovation, there’s no excuse for not streamlining all aspects of the system. And for those who believe that IP rights have become important primers of innovation no thanks to collective and organized clamour, let the system play itself out and prove you right, but until then it deserves a fair chance.

New blogger - Amlan Mohanty - joins us at SpicyIP

The SpicyIP Team is proud to welcome Amlan Mohanty as the newest member to our blogging team.

Amlan is a second year student of the B.A.LLB (Hons.) program at the National Law School of India University, Bangalore and has already written some fantastic guest posts for us. His main focus will be on the law of copyright and I can assure you that he will churning out a rather 'spicy' analysis of the Copyright Amendment Bill, 2010 in the coming days.

I request all our readers to please join me in welcoming Amlan and wishing him all the best for a long-innings at SpicyIP.

The Story of the Laawaris Song, as Told by the Calcutta HC

Three orders in the Laawaris/Housefull song matter passed separately on 29 and 30 April 2010 in three different suits are now available online here, here and here. Knitting the three orders helps put together the story of the song, and how each of the parties has claimed to own title to the copyright, which is what I attempt to do below. For our previous posts in this, read here and here.

The parties in the suits, who have played the role of petitioner and defendant variously, include:

• Puneet Mehra (qua son of, and representative of the heirs of Prakash Mehra) Prakash Mehra was the director, producer and lyricist of the song Apni toh jaise taise.
• Anandji Virji Shah, one-half of the music composer duo Kalyanji-Anandji, who composed the song
• Saregama India Ltd., a music label
• Super Cassettes Industries Ltd.(SCIL), a music label
• Nadiadwala Grandson Entertainment (NGE) Pvt Ltd., a film production house

The agreements in the story --

• 1981: between film production house Prakash Mehra Productions and Saregama relating to, among other things, the rights of the soundtrack in the film Laawaris (1981).
• 2010: Signed on 11 February 2010 between Saregama, SCIL and NGE.

I shall not go into the chain of events that led to suit. Suffice it to say that Saregama, SCIL and NGE appear to have received notices from Puneet Mehra and Anandji in re the use of the song in Housefull's soundtrack (2010). Saregama then obtained an interim injunction from the Calcutta High Court under section 60 of the Copyright Act (remedy in case of groundless threat of legal proceedings) against Puneet Mehra and Anandji restraining the latter from claiming any rights in the song. This injunction was vacated on 29 April, when Mehra and Anandji filed their suits claiming title to the song.

Justice Nadira Patherya, who heard all three matters, repeated her observations in two orders, i.e., the one vacating the injunction in favour of Saregama against Mehra/Anandji, and the other granting an injunction in favour of Mehra against NGE and others in re the use of the song. in both cases, the judge zoomed in on the 1981 agreement, and the rights that flowed from it, as being "the only document that needs to be construed at this stage". She interpreted it as follows:

Producer Mehra transferred and assigned absolutely to Saregama

1. the copyright to make records of all contracts works and
2. the copyright, performing right and "all other rights" in the contract works embodied in its film.

The key phrase is "all other rights". According to the court, this did not include exploitation of the song, as claimed by Saregama.

In 1981, Saregama acquired a right in the soundtrack, and, therefore, was assigned rights with respect to such soundtrack as embodied in the producer's films. Whatever royalty was paid, therefore, was for such physical and non-physical rights in the soundtrack.

According to the agreement, Mehra was to make the sound track available exclusively to Saregama. Both parties were to ensure the security of such sound track. To assume that such right extended to allow exploitation of the sound track in another film would be contrary to the terms of agreement.

On the other hand, the 2010 agreement is 3-party agreement which is in the nature of a license. According to the court, if the 2010 license had been limited to re-recording the song, there would have been no problem. However, because the 2010 agreement allowed the exploitation of the song in "Housefull", it fell outside the scope of the 1981 agreement. Therefore, an injunction was granted in favour of Prakash Mehra's heirs against the respondents from exploiting the song till 30 June 2010.

Meanwhile, there was the third claim of rights from the music composer(s) of the song. Refusing to grant an interim injunction, the court noted that they could have no exclusive rights, as the music was composed on commission for valuable consideration from Prakash Mehra. Critically, they failed to show any independent musical notation or score to show that the composition was independent of the film. The court also pointed out that if the composers had indeed been owners of the musical score, some royalty would have been claimed or paid. There was no proof or any such royalty, nailing the coffin on their claims further. This was the story we covered in our original post here. Anandji, in blue, on the right. Image from here.

The latest, of course, is reports that the brains behind NGA, Sajid Nadiadwala, may well decide to sue Saregama for defamation now that the use of the song has been stayed, which we posted on here. Nadiadwala's image from here. I know we've all had an overdose of this story in the past one week, so shall keep mum for a bit!

It is of course entirely appropriate that SpicyIP's regular guest poster Nikhil Krishnamurthy should have written on this issue just a short while ago. The author-centric changes in the Copyright Bill, if regularised. will hugely change the way claims to ownership and royalty play out, especially in the films industry in India. Read the posts on this here and here.

Guest Post: Waxing Lyrical on Royalties - Update

We are pleased to bring to our readers another interesting guest post by Mr. Nikhil Krishnamurthy, Senior Partner of Krishnamurthy & Co. Previous posts on the same topic can be found here and here.

WAXING LYRICAL ON ROYALTIES - UPDATE

As a follow-up to my post here analysing various proposed amendments seeking to introduce author-centric provisions into the Copyright Act 1957, I am providing below the actual text of the said provisions as contained in the Copyright (Amendment) Bill, 2010.

The analysis contained in my earlier post does not change materially.

Second Proviso to Proposed Section 17 (g)

“(g) in case of cinematograph film produced before the commencement of the Copyright (Amendment) Act, 2010, the principal director shall enjoy the copyright for a period of ten years after the expiry of the duration of copyright in the cinematograph film subject to the principal director entering into a written agreement with the owner of the copyright in the film during the subsistence of copyright:

Provided that an agreement referred to in this clause shall not be necessary in case where the owner and principal director are the same person;

Provided further that in case of any work incorporated in a cinematograph work nothing contained in clauses (b) and (c) shall affect the right of the author in the work referred to in clause (a) of sub-section (1) of section 13;”

Second Proviso proposed to Section 18 (3)

“(3) In this section, the expression "assignee" as respects the assignment of the copyright in any future work includes the legal representatives of the assignee, if the assignee dies before the work comes into existence.

Provided further that no such assignment shall be applied to any medium or mode of exploitation of the work which did not exist or was not in commercial use at the time when the assignment was made, unless the assignment specifically referred to such medium or mode of exploitation of the work.

Provided also that the author of the literary or musical work included in a cinematograph film or sound recording shall not assign the right to receive royalties from the utilisation of such work in any form other than as part of the cinematograph film or sound recording except to the legal heirs or to a copyright society for collection and distribution and any agreement to the contrary shall be void.”


Proposed Section 19 (8) and (9)

“(8) The assignment of copyright in any work contrary to that of the terms and conditions of the rights already assigned to a copyright society in which the author of the work is a member shall be void.

(9) No assignment of the copyright in any work to make a cinematograph film or sound recording shall affect the right of the author of the work to claim royalties or any other consideration payable in case of utilisation of the work in any form other than as part of the cinematograph film or sound recording.”

As one will see, Section 19 (9) in fact contemplates the assignment of copyright by the author, to another, for the purpose of making cinematograph films and sound recordings, and this therefore does not address the grievance of the author-composers.

Keeping in mind some of the stated objectives of the Bill (“namely, 3 (viii) to give independent rights to authors of literary and musical works in cinematograph films, (ix) clarify that the authors would have rights to receive royalties and the benefits enjoyed through the copyright societies, (x) ensure that the authors of the works, in particular, author of the songs included in the cinematograph films or sound recordings, receive royalty for the commercial exploitation of such works”), the provisions ought to have properly clarified the issue of first ownership of copyright in music and lyrics composed for films and sound recordings, and generally prohibited, in such cases, assignments for lump-sums and maybe those that are for the entire term of copyright.

In my view, it is the issue of first ownership rather than a prohibition on assignment that is most critical since if a producer of a film or recording can validly claim first ownership of copyright in a work incorporated in a film or sound recording, then the question of assignment or prohibition thereof will not even arise as an author cannot assign what he does not himself own.

Interestingly, as I anticipated, I am given to understand that the agreements between Producers and author-composers has already started seeing focused changes in terms of specifying first ownership of copyright. I provide below some of the relevant clauses that have been brought to my attention in this regard.


"RIGHTS AND ASSIGNMENT:

The Lyricist hereby agree that the Lyrics shall constitute a work specially ordered by the Producer, and accordingly the Lyricist expressly acknowledges and agrees that the Producer shall be considered the first author (???) and owner of the Lyrics for all purposes and the owner of all Lyrics Rights, without condition, restriction or limitation of any kind, and free and clear of any and all claims for royalty or other compensation, except as specifically set forth herein. Accordingly, and without limitation of the foregoing, the Producer shall be entitled to copyright the Lyrics in its own name, and, as proprietor of such copyright, to renew said copyright in its own name. The Lyricist irrevocably and unconditionally waive all rights in respect of the Lyrics to which he is now or in the future be entitled to under the Copyright Act, 1957 (“Act”).

In the event the Lyricist still retain any of the Lyrics Rights and/or any other rights under any law, the Lyricist hereby irrevocably and exclusively grant, convey and assign to the Producer all Lyrics Rights and any part thereof in perpetuity and the Producer shall have the exclusive right to adapt, change, revise, remix, delete from, add to and/or rearrange material or any part thereof submitted by the Lyricist hereunder, and to combine the same with other material to any extent, abridge, broadcast, record, communicate, exploit and / or use the Music in any manner, including the right to assign, license, convey or grant the rights in the Lyrics and Songs to any third parties. The Lyricist hereby specifically waives his "moral rights" of authors as the said term is commonly understood throughout the world and waives his rights pursuant to Section 19(4) of the Act. The Lyricist hereby agrees and undertakes that he has no right, title and/or interest in the Songs.

The Lyricist agrees to execute the necessary documents to enable the Producer to protect or perfect the Rights granted under this Agreement at the request and expense of the Producer.”


In a related matter involving a song from the film Laawaris which has been reused in Housefull, Sajid Nadiadwala, the affected producer who has been ordered to remove the song from his film by the Kolkata High Court, had a very interesting and refreshing response, even though he is on the losing end. He reportedly states “As for Punit and Amit Mehra [the sons of Prakash Mehra, director and lyricist for Laawaris], I’m actually grateful to them for opening up a very large issue, much bigger than the song in my film. Who is the copyright owner of a song? So far, we presumed it was the music company. But now it seems that isn’t the case. I think copyright laws need to be revised.”

I would go so far as to say he deserves a big round of applause [and a quick settlement with the owners of copyright so that he can proceed unhindered with the theatrical distribution of his film].

Breaking News: Roche Loses Valcyte Case

In a momentous decision likely to impact the course of Indian patent jurisprudence, the Indian patent office held against Roche in a post grant opposition challenging the validity of its patent covering Valcyte (Valgancyclovir Hydrochloride).

Specifically, Roche's patent which covered the "L-Valinate Ester of Gancyclovir" and all acceptable salts, was opposed under section 25 (2) by the following parties:

i) Cipla (represented by Majumdar and Company and Ramesh Kumar of RK Legal)
ii) Bakul Pharma (represented by Majumdar and Company)
iii) Matrix Labs (represented by Feroz Ali)
iv) Indian Network for People Living with HIV/AIDS (INP+ (represented by Anand Grover)
v) Tamilnadu Networking People with HIV/AIDS (TNNP+ (represented by Anand Grover)
vi) Ranbaxy (represented by Lakshmikumaran of Lakshmikumaran and Sridharan)

Compared to the IPAB's "Gleevec" decision which meandered into flights of fancy, this decision appears more grounded and logically coherent (well, at least relatively).

Inventive Step:

The Controller, SP Subramaniyan, appears to have struck down the patent mainly on grounds of lack of inventive step. The reasoning ran thus:

i) Roche's patent claimed the L Valinate ester of "Gancyclvoir".

ii) Gancyclovir was already present in the market and was being administered intravenously for anti viral purposes (mainly HIV infections). Owing to problems with intravenous administration, a person skilled in the art would have been motivated to look out for an oral dosage form with increased bio-availability.

iii) Acyclovir, a molecule similar in structure and function (anti viral properties) to Gancyclovir was already in the market. In order to make Acyclovir more bio-available, it had been "esterized" and converted to a pro-drug. Specifically, certain select amino acids were used to result in the L-valinate ester of Acyclovir called Valacyclovir. Valacyclovir was then combined with hydrochloric acid to result in Valacyclvoir Hydrochloride (sold as Valtrex, an anti Herpes drug by GSK).

iv) Based on the above, the person skilled in the art would have been motivated to follow a similar route with Gancyclvoir--and this would have resulted in the L-valinate ester of Gancyclovir (namely Valgancyclovir) and later, a combination with hydrochloric acid to result in Valgancyclovir Hydrochloride (sold as Valcyte by Roche).

To this extent, the Indian patent office appears to have endorsed an "obvious to try" test. Compared to the IPAB's shaky ruling on inventive step in the Novartis "Gleevec" case, this ruling by the IPO appears sound, succinct and logically coherent.

Section 3(d):

Unfortunately, the ruling on section 3.d is not as clear as the one on inventive step. The Controller appears to suggest that an increase in bio-availability does not necessarily lead to more efficacy (defined as per the Madras High Court decision as "therapeutic efficacy"). And that Roche's claim of an increase in bio-availability does not necessarily equate to an increase in "efficacy". The Controller does not however indicate as to what quantum of increased bio-availability would suffice to constitute an increase in "efficacy" as well.

Locus Standi and "Person Interested"

What I liked most about the decision is the fact that the IPO has finally opened up the meaning of "person interested" in section 25 (2). It placed emphasis on the term "includes" in the definition of "person interested" and held that a person interested could include a patient group that was interested in opposing bad patents that resulted in increased drug prices.

This will certainly engender more oppositions from civil society and patient groups and is a welcome development. As a previous post noted, the number of patent oppositions are very small. It will also help the case of the Rajashtan Drug Control official that I alluded to in the earlier post.

Conclusion:

The IPO's decision in the Valcyte case deals yet another blow to MNC pharma patents in India. Barring Pegasus, most other pharma patent decisions appear to be going against MNC's.

The first high profile MNC case was Novartis' Gleevec, where the patent was refused by the IPO and the IPAB (an appeal is now pending before the Supreme Court). The second was Roches' Tarceva (Erlotinib), where the court refused to restrain Cipla from selling a generic version (the trial is still on and it remains to be seen whether this patent will also end up being invalidated). And the third case is that of Roche's Valcyte where the IPO has now struck down the patent. This means that Cipla can safely sell its Valcept version, unless the IPO's ruling is reversed by the IPAB or the courts.

With all these decisions, India appears to be sending out a strong signal that it will not tolerate frivolous pharmaceutical patents. Rather, only the most meritorious pharmaceutical inventions will make it past the patentability filter.

SpicyIP Tidbits: Centre refuses MontBlanc permission to use Gandhi image

In what promises to end the Montblanc-Gandhi dispute once and for all, we have news that the Centre has refused permission to MontBlanc to use the image of Mahatma Gandhi on their pens.

According to news reports, the Solicitor General told the Supreme Court that the Centre had rejected MontBlanc's two applications seeking such permission on grounds that national emblems could not be used for commercial purposes.

As a result, the Court has decided to dispose of the case after MontBlanc's counsel gave an undertaking that the remaining pens and advertisements would be withdrawn. The decision was on a PIL filed by one Harsh Vardhan Surna who drew the Court's attention to the Emblems and Names (Prevention of Improper Use) Act, 1950, according to which "the name or pictorial representation of Mahatma Gandhi" cannot be used for any commercial purposes.

Read reports from TOI, the Hindu, DNA and Economic Times/IANS here.

Readers may recall the last post we had run on the issue pertained to a petition before the Kerala High Court, where the luxury pens company had given an oral undertaking that it would not sell any pens with the image of Gandhiji, till such time as its application for permission was decided by the Central Government. Now that the permission has been denied, I see no issue of further controversy. Our earlier reports on this are here and here.

SpicyIP Tidbits: Housefull producer to sue music label for defamation?

According to two reports from Subhash K Jha which appear separately in the Bangalore Mirror and the Times of India, the producer of Housefull, which film's soundtrack included a controversial reworked version of a 30-year old song, intends to sue the music label that claimed to have sold him the rights to the song for defamation.

(SpicyIP's regular "guest" poster and copyright expert Nikhil Krishnamurty brought the news to our attention -- I've been a tad late in putting this up.)

A brief background --

• Our post last week reported that the Calcutta High Court had refused to grant an injunction in favour of Anandji, the music director of the original song, on the use of the reworked version in the newer film.
• However, the following day, i.e., Friday, the Calcutta High Court heard and granted a temporary injunction to the heirs of Prakash Mehra, the producer and lyricist of the original song, in a related suit. SpicyIP's regular commentator and friend, Frequently Anon was quick to highlight news items which reported on this development which you can read here.
• Another commentator who claims to be a legal counsel involved in the matter has provided her take on the facts and the arguments in the case here.

Therefore, the injunction on the use of the song "Apni toh jaise taise" has gone through. Meanwhile, the film producer of the newer film Sajid Nadiawala, the producer of the newer film Housefull (2010), has added an interesting twist to the case -- he has threatened to sue Saregama for defemation for having sold him unclean rights to a song. The reports add an interesting comment on how Saregama appears to be operating --

"According to the industry sources, Nadiadwala paid Rs 15 lakhs to Saregama for the rights. Says Nadiadwala, “I can’t disclose the amount. But it’s almost five times the money required to record a new song. But we liked the song and we wanted it to be part of Housefull. In any case, it’s easy to buy copyrights for songs from Saregama. They have a rate-card and all a producer has to do is consult that card and get any song he wants. In fact, we got Kaanta lagaa (originally sung by Lata Mangeshkar) from Saregama for my film Mujhse Shaadi Karogi and there was no problem at all.”

Nadiawala also refers to a 20-page tripartite agreement between himself, Saregama and T-Series (the music label that marketed the soundtrack for the new film, Housefull), which would be very interesting to read, and will shed more light on how the various parties claim to have rights to the song. We're grateful for any tip-offs on that!

SpicyIP Tidbits: Cipla serves legal notice on GWU; demands a written apology for events in relation to the GWU-CII Summit

The Business Standard and the Economic Times have both reported that Cipla, one of India's biggest pharmaceutical companies, has served a legal notice on the George Washington University (GWU) for allegedly allowing the GWU-CII summit to be used by Gilead to make representations, that were aimed at influencing sub-judice patent litigation pertaining to Tenofovir, the patent application of which was rejected by the Patent Office following a sucessfull opposition by Cipla. The appeal against the decision of the Patent Office is pending before the Intellectual Property Appellate Board and not the Delhi High Court as reported by the BS.

Cipla's allegations against GWU is that the University allowed itself to be used by "some multinational pharmaceutical companies to try and enhance and publicise their own products and influence India's judicial process." Cipla's main grouse seems to be the alleged fact that Gilead was allowed to make a presentation on its case for Tenofovir despite the fact that litigation is pending before a judicial forum. Cipla has allegedly demanded a written apology from GWU saying it does not endorse Gilead's views on the matter and in case GWU refuses to issue such an apology, Cipla has threatened to move Court to seek relief. It is not clear from either of the new-reports as to the nature of the legal wrong that has provoked this legal notice against GWU. While there may be moral or ethical issues involved in this controversy I find it difficult to pin-point any legal issues.

Cipla's letter adds to the list of controversies surrounding the GWU-CII Summit.

We have blogged about the same over here.

Guest Post: An Appeal by Indian Civil Society to the U.S. President

Indian civil society organizations have sent an open letter to President Obama, informing him of the USPTO's and U.S. Embassy's attempts in influencing the course of the debate on Indian patent law. This letter follows another letter sent by these civil society organizations to the Minister of Commerce, objecting to the GWU-CII seminars and which we have blogged about here.

Avni Chari, a student of NALSAR, who has previously blogged for us, has sent us this concise summary on the contents of this second letter.

AN APPEAL TO THE U.S. PRESIDENT
Avni S. Chari

In a letter dated 13 April, 2010, a conflation of Indian public interest, health, and patients groups appealed to the U.S. President to immediately cease all activity disrupting the state of Patent protection in India. The Indian Legislature, despite all legitimate reservations, has earnestly attempted to conform with TRIPS standards by amending the patent law to further extend the ambit of protection to pharmaceutical products. The demands laid out by TRIPS were carefully pursued keeping in mind that higher patent standards will reduce welfare, especially in developing countries. However, these attempts by the Indian Government have seemingly fallen short of satisfying U.S. expectations. Their disapproval has increasingly been manifested through aggressive lobbying and pressure politics in the country.

The recent letter to President Obama sharply elicits the gravity of the situation. The various signatory groups (NWGPL, AIDAN, JSA, DSF and Centad to name a few) begin the letter by expressing their solemn support for, “the principle of universal healthcare for all persons.” They underscore the fact that the price of medicines is a key factor in influencing the right to health, and lower patent criteria for medicines would threaten this right by precipitously heightening price.

The signatories sharply direct attention to the fact that the Indian generic pharmaceuticals market has been sustaining the lives of millions within and outside the country. Approximately 50% of the essential medicines that UNICEF distributes in developing countries come from India and 75-80% of all medicines distributed by the International Dispensary Association (IDA) are the consequence of this generic competition. India’s ability to continue supplying safe, effective and affordable generics to its own citizens and to most of the developing and least developed world depends on the continued and balanced use of TRIPS flexibilities, which is now being threatened by U.S. agencies.

Another cause for concern is the choice of Pfizer, a multinational pharmaceutical company, as an advocacy partner by the USPTO. The multinational is infamous in Asia and is known to have delayed generic entry of medicines in the Philippines. The company is further embroiled in serious bribery allegations in the Philippines and scandals of unethical drug promotion in the U.S. In response to upheaval by public interest groups, the USPTO has officially regretted associating with Pfizer. However such redress is insufficient and it is obliged to send individual regret letters to all the invitees and participants of the event.

The unethical lobbying practices of the USPTO-Pfizer duo in India have been an affront to the nation’s sovereignty. In this regard, the signatories of the letter seek the following:

(i) An apology from US Embassy in India and First Secretary for Intellectual Property for associating with Pfizer as against the official Policy or practices of the USPTO.
(ii) A formal investigation into the links between the USPTO in India and Pfizer.
(iii) Necessary action against the officials concerned for misinforming the Indian media and the general public about its own Patent laws and public health safe guards.

The letter asks that, “The U.S. immediately cease their activities in India in promoting ever increasing intellectual property protection and TRIPS-plus measures and in lobbying against the use of TRIPS-flexibilities by the Indian Parliament.”

The U.S. lobbying last year outraged Indian sentiments and spurred pockets of sporadic commotion from every corner concerned with IPR, pharmaceuticals or simply public interest in general. This letter has been the first instance of a concerted effort expressing firm and clear admonition against the unethical lobbying of the U.S.

Guest Post: Exhaustion and Copyright Law - A look at the Copyright Amendment Bill, 2010

One of our regular commentators - Ms. Sneha Jain - a student of ILS, Pune has sent us this excellent guest post on the implications of the Copyright Amendment Bill, 2010 for parallel imports of copyrighted works. She has further nuanced her post by linking the discussion to the proposed definition of 'commercial rentals' in the pending Bill. For those of you interested in the concept of parallel imports, this post is a must read.

Exhaustion and Copyright Law

by Sneha Jain

While the disability-related and the film industry-related amendments of the Copyright (Amendment) Bill, 2010 (the ‘Bill’) continue to be the hot topics of conversation amongst the IP circles see here, another amendment, which is by no means lesser in significance, has been overshadowed in the limelight.

Simply worded, yet powerful in its impact, the amendment to Sec. 2(m) which defines an “infringing copy” and corresponding amendments to Sec. 14(d)(ii) and 14(e)(ii) will bring a symmetry in the application of the principle of international exhaustion across the three genres of IP – Trademark, Patent and Copyright.

Exhaustion and Parallel Imports

Exhaustion acts as a limitation on the distribution right by excluding control over the copies which have already been put into circulation. The Principle of Exhaustion or the First Sale Doctrine means that once a copy of the copyrighted work is sold, the exclusive right of the owner to sell or distribute a copy of the work is exhausted by the first sale of such copy.

There are three forms of exhaustion –
1)Domestic – where the owner exhausts his right only if the copies are sold for the first time domestically;
2)Regional – where the rights are exhausted only if the first sale occurs within his own country or any country within a region; and
3)International – where rights are exhausted irrespective of the place where the copies are first put for sale.
In the first two situations, the owner retains the right to restrict import of copies made abroad into the domestic market or the region respectively. However, in case of international exhaustion, the owner loses this right on the first sale.

The practical effect of this principle is the practice of parallel imports whereby an unauthorised third party imports cheaper but legitimate copies from Country A into Country B to sell them in parallel with the same yet more expensive legitimate copies which are either domestically manufactured or imported with the consent of the copyright owner.

Exhaustion under Trade Mark and Patent Law

Sec. 30 (3) of the Trade Marks Act, 1999 recognises the principle of national as well as international exhaustion. Sec. 30(4) clarifies that 30(3) does not apply where the proprietor has “legitimate reasons” to “oppose further dealings in the goods in particular if the goods are changed or impaired after they have been put on the market.”

In the context of the Patents Act, 1970, even though Sec. 107A(b) has been ambiguously worded and has been the subject of numerous debates, it expressly recognises only the principle of international exhaustion. Nevertheless, strong arguments exist in favour of recognition of national exhaustion as well.1

Exhaustion under Copyright Law

Justice Bhat in Warner Bros. v. V.G. Santosh, CS(OS) 1682/2009 explicitly recognised that, in the context of copyright law, while the principle of international exhaustion may apply to literary, musical, dramatic or artistic works; it does not apply to cinematographic film [and to sound recordings as well]. This case involved the import from US into India of legally purchased DVDs of films produced by Warner Bros. which were not yet released for public viewing in India. He based his decision on the difference between the wordings of Sec. 14(1)(d) [and (e)] and 14(1)(a)/(b)/(c). While under the former, the copyright owner continues to exercise his right to sell or give on hire a particular copy “regardless of whether such copy has been sold or given on hire on earlier occasions”; under the latter, he ceases to exercise these rights over copies which are “already in circulation.”

This essentially means that the buyer of a cinematographic film or a sound recording cannot sell or give on hire, his copy of the film or recording without the previous permission of the copyright owner. However, the buyer of a literary, musical, dramatic or artistic work does not require any such permission. Justice Bhat also favoured this interpretation on the ground that since owners of copyright in films/recordings can exercise their right to distribute the work through licences which can be limited geographically, accepting international exhaustion would permit a licensee, who acquires a copy, to exploit the copies beyond his contractually imposed geographical limit and thus nullify the object of geographically limited licences.

Proposed Amendments

The Bill proposes to add a proviso to the definition of an “infringing copy” under Sec. 2(m) -
“Provided that a copy of a work published in any country outside India with the permission of the author of the work and imported from that country into India shall not be deemed to be an infringing copy.”

Correspondingly, the words “regardless of whether such copy has been sold or given on hire on earlier occasions” in Sec. 14(1)(d)(ii) and 14(1)(e)(ii) are proposed to be deleted. Also, the word “hire” in the above sections has been replaced by “commercial rental” which definition is proposed to be added by Sec. 2(fa) -
2(fa) “commercial rental” does not include the rental, lease or lending of a lawfully acquired copy of a computer programme, sound recording, visual recording or cinematographic film for non-profit purposes by a non-profit library or non-profit educational institution.

Impact of the Proposed Amendments

By the amendment to Sec. 14, the distinction in the wordings of Sec. 14(1)(d)/(e) and 14(1)(a)/(b)/(c) which formed the basis of Justice Bhat’s reasoning in Warner Bros., will become non-existent. Copyright law will henceforth recognise the principle of international exhaustion uniformly without making any distinctions between the various works. Further, the exclusion of ‘copies of works lawfully published abroad and imported into India’ from the definition of “infringing copy” also reinforces the applicability of the international exhaustion principle.

However, at the same time, an exception is provided to the applicability of international exhaustion by the definition of “commercial rentals”. This definition is rather exclusionary than explanatory. The exclusionary part appears to have been influenced by Sec. 109(b)(1)(A) of the US Copyright Code which was added by the Record Rental Amendment Act, 1984. Sec. 109(b)(1)(A) is an exception to the first sale doctrine whereby a buyer of a copy of a sound recording/computer programme is prohibited from renting it to the public for commercial advantages. This was added to counter the practice of consumers renting new albums, making copies and avoid buying the album. The Indian law does not explain what is included within “commercial rental” but explicitly excludes rentals for non-profit purposes by certain establishments from its purview.

Further, “commercial rental” under the Indian law applies not only to sound recordings and computer programmes but also to cinematographic films. This falls squarely within the condition to the exception under Art. 11 of the TRIPS whereby Members are obligated to enable owners of cinematographic films to prohibit or authorise sale or commercial rental of originals or copies only if such rental has led to widespread copying which materially impairs the reproduction right of the owner.

Concluding Remarks

The recognition of international copyright exhaustion is a welcome change. It brings uniformity in the intellectual property regime of the country. At the same time, carving an exception to this principle by defining commercial rentals ensures protection of the reproduction rights of the owner.

While the Indian law is on the path of consistency and stability, the legal regime which influenced our law – the US, also appears to be headed for some uniformity. The US Supreme Court has granted a certiorari see here and here against Omega v. Costco Wholesale Corp., 541 F. 3d 982 (9th Cir. 2008). It has agreed to review the issue of “whether the principle of international exhaustion applies to copyrighted works that are manufactured abroad.” The review is expected not only to discuss the copyright angle but also shed some light on the applicability of exhaustion to other areas of intellectual property. This will directly affect an ongoing litigation on the issue of international patent exhaustion before the Federal Circuit in FujiFilm Corp. v. Benum, Fed. Cir.App. No. 2009-1487 see here . The decision on the certiorari is expected in the October 2010 Term of the Court.

Of south India, Handicrafts and changing types -- GI trends

If anyone's glanced through the latest GI Journal, No. 33, available here, you will have seen that the number of applications for GIs in India has crossed the 200 mark. Of these, at least 120 have been granted already, according to this note that's up on the IPO site.

Since the IPO hasn't put up an Annual Report in a very long time, and I was curious about some trends I noticed in the GI applications/registrations, I thought I'd do some number-crunching myself. I used the data from the list of registered GIs (numbering 120), and not the applications (which are presently 206), and did some very simple arithmetic, and found the following.

A. Southern Indian states more GI registrations than rest of India

The first, most interesting, trend I noticed was the state of origin of the various registrations -- a simple majority of these come from the four states in southern India, i.e., Karnataka, Tamil Nadu, Andhra Pradesh and Kerala - in that order. They have about 58 per cent of the GI registrations (or 70 registrations) to their credit. The rest put together have 50 registrations.

These four southern Indian states are the only ones to have reached double figures, with Karnataka head and shoulders above them all, at 27 registrations! A similar bias exists among the applications, although I didn't attempt a numerical analysis there. My own theory for this is "proximity" - the GI registry is in Chennai, and attracts more applications from the 'neighbourhood'. There are other likely explanations, but may be politically incorrect. In any case, some one is really marketing GIs in this part of the country. Does anyone have a deeper explanation to offer?

In total GIs have been granted to applicants in 18 Indian states, as well as to Peru - the sole international representative in the Registry of granted GIs in India. There are several parts of India that are yet unrepresented on the Register, such as the North-east (except for a couple of registrations for Nagaland and Assam).


B. Maximum number of GIs for "Handicrafts"

A second trend is the type of goods that are being registered - I have not attempted a class-wise split, but the data in the registered list suggests that GIs for "Handicrafts" have been granted the most - about two-thirds of the total number of GIs. The remaining are split between "Agricultural", "Manufactured" and "Food stuff".

The GI Registry also appears to be denominating types of goods afresh -- what appears as "Alcoholic Beverages" in the list of applications shows up as "Manufactured" in the list of registered GIs; similarly an application for a "Textile" converts to a registration for a "Handicraft".

Do readers have any insight into why this is happening? Are these typologies being raised and changed during prosecution? Or are we to assume it's the whimsy of the Registry and that they bear no relevance to the registration itself? As an aside, I note that "Food Stuff" remains "Food Stuff", distinct from "Agricultural" and "Manufactured". Pity we couldn't see the Jamnagar applications play out, otherwise that may have morphed into something interesting too?

This typology also throws up another issue -- I note that details about the type of goods being registered is not of much use, because one particular type covers a whole range of items. For example, the "Manufactured" descriptor includes alcoholic beverages like Feni and Peruvian Pisco, the Coimbatore Wet Grinder, Mysore sandal (oil and soap) and East India (EI) Leather.

C. Occasional dips, but registration on the rise?

There doesn't seem to be any fixed pattern on the number of registrations being granted every year -- if you were to look at the chart, the numbers are erratically rising and falling. 2006-07 to 2008-09 had an accelerated trend, but then dropped drastically in 2009-10.

Logically, GIs for handicrafts form a chunk of the registrations every year, perhaps also because of re-classification of textiles as handicrafts. GIs for Manufactured goods, such as they are, have been just about kept alive over the years. And only two GIs for food stuffs have been registered so far, in 2008-09 and 2009-10.

We've reported on trends in GI registrations previously -- see this post criticising misreporting in mainstream media about GI numbers in India.

But during most of our reporting on GIs, whether it is by way of discussing trends or analysis of registrations, a question repeatedly rears its head -- do we have any post-registration evidence of the value of a GI registration? How have these registrations helped communities convert their rights into a viable tool for protection and profit?

There is some discussion on the challenges of the application process, which is interesting to study because it often involves bringing economically or socially backward communities in India into direct engagement with intellectual property. However, there is not enough data on what happens after registration. The last I recall having read about was a study from Himachal Pradesh on the plight of Kullu weavers after they got a GI. If anyone has similar information on other GIs, please do share.

Article 300A of the Constitution: A constitutional right to 'data exclusivity'?

A. Introduction: Over the last few weeks there have been an increasing number of media reports on the Free Trade Agreement (FTA) that is being negotiated by the governments of the European Union and India. While there are several hurdles that are yet to be cleared before the signing of this Treaty that is expected to bring huge trade benefits to both countries, the focus in the recent past seems to be on the IP-related provisions that are allegedly going to affect the thriving generic pharmaceutical industry in India. In particular, generic industry lobbies like the Indian Drug Manufacturer Association, Non-Governmental Organizations like MSF are pressing the government to be wary against any attempt to include data-exclusivity provisions in the FTA, as the same, in their opinion, is not mandated by TRIPs.

A data exclusivity provision would prohibit generic pharmaceutical companies from depending on the clinical data submitted by innovator pharmaceutical companies to receive marketing approval for their product. The Drugs and Cosmetics Rules, 1945 currently allows for generic pharmaceutical companies to depend on clinical trial data submitted by innovator companies instead of requiring generic pharmaceutical companies to execute their own clinical trials. If generic pharmaceutical companies were required to carry out their own clinical trials, the cost of their product would likely increase, since clinical trials are usually an expensive affair. The only data required to be submitted by generic pharmaceutical companies is a bio-equivalence report, establishing that the generic drugs demonstrates biological activity i.e. similar to the original innovator drug. Therefore when the law mandates the innovator pharmaceutical company to submit expensive clinical data which will then be used by other generic pharmaceutical companies, for their marketing approvals, it is in a sense acquiring the 'clinical trial data' (property) of the innovator company for a 'public purpose'.

Before I continue I would like to clarify that the aim of this post is not to examine whether data exclusivity/protection is required by TRIPs. Instead this post aims to examine a hypothetical scenario wherein an innovator company challenges certain provisions of the Drugs and Cosmetics Act & Rules, on the basis of Article 300A of the Constitution of India, in order to protect the clinical trial data submitted by them to the regulator. I am sure that many of our readers will dis-agree with most of what I have to say – I only request that any such criticism remains constructive and in good humour.

B. A brief history of property rights in Independent India: The history of property rights in India is way too complicated for me to provide for a detailed account herein. I'll instead just aim for a very brief summary of the same.

When independent India first adopted its Constitution, the Right to Property, as enshrined in Article 19(1)(f), was a fundamental right and therefore placed at a high pedestal. Article 19(1)(f) had to be read along with Article 31 of the Constitution in order to prevent the Government from depriving a person of his property without the “authority of the law” and further that such law should provide “for compensation for the property taken possession of or acquired and either fixes the amount of compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and give”.

Both Article 19(1)(f) and Article 31 proved to be a substantial headache to the Indian Government, as these provisions made it very difficult for the Government to proceed with its socialist agenda of land reforms and nationalization schemes, as the Government simply could not afford to pay reasonable compensation for the lands and corporations acquired by it. Initially the Congress Party which was in power at the Centre aimed at maintaining the legality of its action by introducing new provisions such as Article 31A,B & C along with Schedule IX to the Constitution to protect, from judicial review, all those legislations which offended the fundamental rights enshrined in Part III of the Constitution. At last count there were at least 285 legislations, most of them land reform legislations, locked up under the safety of Schedule IX.

In 1977, the grand coalition of the Janata Party, had just wiped out the Congress Party, in the elections held after the lifting of the internal emergency imposed by then Prime Minister Indira Gandhi in the year 1975. A year later in 1978, the Janata Party passed the 44th Amendment to the Constitution of India. As a part of these Amendments both Article 19(1)(f) & Article 31 were deleted from the Constitution. Article 31 however was only party deleted in the sense that Article 31(1) which provided that “no person shall be deprived of his property, save by the authority of the law” was transferred out of the fundamental rights chapter and shifted to Chapter IV of Part XII, in the form of Article 300A.

Article 300A now reads as follows: Article 300A. Persons not to be deprived of property save by authority of law.- No person shall be deprived of his property save by authority of law.
The constitution of India can be accessed here.
This amendment had two immediate implications:
(i) The Right to Property would now be a Constitutional Right and not a Fundamental Right. A legislation violating the constitutional right to property could now be challenged only in High Courts and not directly in the Supreme Court.
(ii)Due to the deletion of Article 31 the Government was no longer under an obligation to compensate persons whose land had been acquired as per a law passed by Parliament.

As of now, it is, beyond the scope of my research and understanding as to whether Proposition (ii) i.e. deprivation of property without compensation is still legally tenable especially in light of the Supreme Court's ruling, in the Maneka Gandhi case, which held that each and every provision of the Constitution had to be interpreted in a just, fair and reasonable manner. Therefore any law depriving a person of his property shall have to do so in a reasonable manner. It could be argued that the only reasonable manner to deprive a person of his property would be to offer him, reasonable compensation for the same. This discussion however is not completely relevant for the purpose of this post. The only relevant point is the fact that under the Constitution no person can be deprived of their property without the authority of law.

The two relevant concepts that now require to be examined are (i) 'property' & (ii) 'authority by law'.

C. 'Property' as understood in Article 300A: The obvious first question is as to whether or not 'intellectual property' such as 'clinical trial data' would fall within the definition of 'property' as understood in Article 300A. There seems to be enough authority to support the proposition that 'property' as understood in Article 300A is wider than just 'immovable property'. One such authority in the context of 'intellectual property rights' is the judgment of the Supreme Court in the case of Entertainment Network India Ltd. (ENIL) v. Super Cassette Industries Ltd. (SCIL). In pertinent part the Court held the following:

The ownership of any copyright like ownership of any other property must be considered having regard to the principles contained in Article 19(1)(g) read with Article 300A of the Constitution, besides, the human rights on property.

The judgment goes on further to say that:

But the right of property is no longer a fundamental right. It will be subject to reasonable restrictions. In terms of Article 300A of the Constitution, it may be subject to the conditions laid down therein, namely, it may be wholly or in part acquired in public interest and on payment of reasonable compensation.

The fact that the Supreme Court recognizes 'copyright' to fall within Article 300A is indicative that even 'clinical trial data', collected after extensive experimenting, should in all likelihood fall within the definition of 'property' as understood in Article 300A.

D. 'Authority by law' as understood in Article 300A: The term 'law' as defined in Article 300A is understood to mean only a legislation or a statutory rule or order. The term 'law' as understood by Article 300A will not include executive fiats. The source of the 'law' depriving a person of his property has to be necessarily traced, through a statute, to the legislature. The question therefore is whether the relevant provisions of the Drugs and Cosmetics Rules, 1945 qualify as 'law' for the purpose of Article 300A or whether the same would be struck down as having no basis in the Act:

(i) The relevant provisions of the Drugs & Cosmetics Rules, 1945: I've always been slightly intrigued by the weak regulatory architecture of the Drugs and Cosmetics Act, 1940 since it has left the bulk of the regulation, especially essential policies pertaining to clinical trials etc., to the vagaries of delegated legislation i.e. the Drugs & Cosmetics Rules, 1945. The relevant provisions on the nature of data that is needed to be submitted for regulatory approval is laid out in the following Rules and Schedules:

(a) Rule 122 E – Definition of 'new drug': Any drug which has not been used within the territory of India for any significant extent under the conditions prescribed by the Act shall be deemed to be a 'new drug' for a period of 4 years after its approval by the relevant authority, which is now the DCGI/CDSCO.

(b) Schedule Y, Appendix 1 to the D & C Rules, 1945 (approval for new drugs) – These provisions prescribe the data that is to be submitted to the DCGI along with the application to manufacture a 'new drug'. The clinical data that is required is as follows:
(i)Phase 1 & Phase 2 – Clinical Trial studies;
(ii) Phase III – Confirmatory Clinical Trial studies, which involves large scale testing on human beings (These studies would include mandatory Phase III trials on at least 100 Indian patients in India);
These requirements however are significantly diluted by the first proviso to Rule 122(B)(3) and Rule 122(A)(2), which states that local clinical trials need not be conducted if in case the Licensing Authority so decides to waive the requirement in light of tests carried out in foreign countries.

(c) Schedule Y, Appendix 1A (Approval for generic drugs) – These provisions prescribe the data that is to be submitted to the DCGI along with the application to manufacture a 'new drug' already approved for manufacture in India. Not surprisingly these provisions do not require the submission of any 'clinical studies' – the only requirement is that the application be accompanied by bio-equivalence studies along with sub-acute animal toxicity studies for intravenous infusions and injectables. Bio-equivalence studies are a relatively inexpensive affair and are aimed at establishing that the biological efficacy and safety of the generic drug in relation to the innovator drug. These studies save generic manufacturers the cost of executing expensive clinical trials and are in fact the primary reason for the low cost of generic drugs.

The long and short of this provision is that the approving authority of the Central Government, in effect depends, on clinical trial data submitted by the innovator company for the first approval of its new drug product. In a sense the Government 'acquires' the data for a 'public purpose' in a manner which directly affects the business of the innovator company.

Most importantly however this dependence on the innovator's data is not mandated by the Act but instead by the Rules, which are delegated legislation.

(ii) Do 'the relevant provisions' of the D & C Rules, 1945, fall within the definition of 'law' as understood in Article 300A?

There is enough authority to support the proposition that Statutory Rules & Orders would fall within the definition of 'law' as understood in the context of Article 300A. For example an Order made under the procedure laid down by the Land Acquisition Act would qualify as 'law' for the purpose of Article 300A since it has been promulgated under the procedure prescribed by the Act. The 'relevant provisions' of the D & C Rules, 1945, that have been discussed above, may not qualify as 'law' since such delegated legislation, in my opinon, is beyond the scope of the Act.

As discussed by a Seven Judge Bench of the Supreme Court in the In Re Delhi Laws case, delegated legislation is permissible, to the extent that it does not allow for the delegation of an essential legislative function i.e. a question of policy cannot be delegated. The decision to 'acquire' valuable property, i.e. expensive clinical data, for a public purpose is an essential function which can be carried out only through an Act of the legislature. At the time when the United States of America decided to curtail the data exclusivity period of innovators drugs from perpetuity to 5 years it had to do so through a legislative action which was known as the Hatch-Waxman Act and not through FDA regulations.

Moreover each and every rule that is formulated in the guise of delegated legislation has to find its source in the Parent Statute. In the present case I have, either rightly or wrongly, not be been able to locate the source of these 'relevant provisions' in the Drugs and Cosmetics Act. While it is true that the Act provides the Central Government with a mandate to regulate the manufacture of drugs, it does not provide the Government with the power to deprive a person of his property.

It would therefore be difficult for the Government to defend these provisions on the basis of Article 300A of the Constitution.

Having said that, I would also like to clarify that the rights under Article 300A are always capable of being restricted by Parliament. It would thus be completely legal for Parliament to pass an amendment expressly allowing for generic companies to depend on the clinical data submitted by the innovator company, provided the innovator is reasonably compensated for sharing the same.

Conclusion: While I'm aware that this post may come across as a mindless academic fantasy, I am half convinced that if the 'relevant provisions' of the Drugs and Cosmetics Rule, 1945 were to be challenged, before a Court of Law, they would be struck down therefore allowing innovator companies to have de facto data exclusivity in perpetuity, until Parliament states otherwise through a legislation.

US Special 301 Report and a Not So Special Indian Response

Tis that time of the year again! The US once again revels in its rather arrogant and high handed Special 301 mantle by condemning IP regimes that don't quite look like their own. Pay homage to this years' 301 report which reads thus for India:

India

India will remain on the Priority Watch List in 2010. India continues to make gradual progress on efforts to improve its legislative, administrative, and enforcement infrastructure for IPR. India has made incremental improvements on enforcement, and its IP offices continued to pursue promising modernization efforts. Among other steps, the United States is encouraged by the Indian government’s consideration of possible trademark law amendments that would facilitate India’s accession to the Madrid Protocol.

The United States encourages the continuation of efforts to reduce patent application backlogs and streamline patent opposition proceedings. Some industries report improved engagement and commitment from enforcement officials on key enforcement challenges such as optical disc and book piracy. However, concerns remain over India’s inadequate legal framework and ineffective enforcement. Piracy and counterfeiting, including the counterfeiting of medicines, remains widespread and India’s enforcement regime remains ineffective at addressing this problem. Amendments are needed to bring India’s copyright law in line with international standards, including by implementing the provisions of the WIPO Internet Treaties. Additionally, a law designed to address the unauthorized manufacture and distribution of optical discs remains in draft form and should be enacted in the near term.

The United States continues to urge India to improve its IPR regime by providing stronger protection for patents. One concern in this regard is a provision in India’s Patent Law that prohibits patents on certain chemical forms absent a showing of increased efficacy. While the full import of this provision remains unclear, it appears to limit the patentability of potentially beneficial innovations, such as temperature-stable forms of a drug or new means of drug delivery. The United States also encourages India to provide protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products. The United States encourages India to improve its criminal enforcement regime by providing for expeditious judicial disposition of IPR infringement cases as well as deterrent sentences, and to change the perception that IPR offenses are low priority crimes. The United States urges India to strengthen its IPR regime and will continue to work with India on these issues in the coming year."

SpicyIP Competition: India's Reply?

The language this year is of course far more tempered ("we encourage you to remove section 3(d), so that faltu patents by Pfizer can be registered and Indian consumers milked to the hilt...blah blah blah..") than the denunciatory language of the past.

But frankly speaking, should India even bother responding to this US industry sponsored factually baseless report? After all, India has been ranked number one in a more objective and data driven report by Consumers International.

In case India wishes to reply, what should her reply look like? We welcome thoughts from our readers on this count. In fact, SpicyIP will offer an award to the best entry on this count. Do email this entry to us (sroyonmukherjee [at] gmail.com) or post this in the comments section to this post.

In the meantime, here is a quick draft response for your consideration:

"Dear USA,

India encourages you to mind your own business. We respect your sovereignty to frame IP laws according to your national priorities and suggest that you show us the same courtesy. If your grouse is that we haven't complied with TRIPS, please feel free to take us to the WTO dispute panel. Our guess is that panel members familiar with the English language will ultimately inform you that section 3(d) is perfectly compatible with TRIPS. And that Article 39.3 does not mandate pharmaceutical data exclusivity, as you suggest!

More importantly, at that point, we might even think of hauling you up before the very same body for rampant violations, including your refusal to grant TRIPS mandated copyright protection to our record companies, despite a WTO ruling (Irish music case) against you.

Yours sincerely,

India."


ps: we thank Rajiv Kumar Choudhry for bringing this year's report immediately to our attention.