Issue 15 April 2004
As one of the fastest growing economies in the world, India is a nation in transformation. Changes initiated little over a decade ago by a conscious shift in policy, are increasingly evident across numerous sectors including the law, wherein intellectual property and corporate governance are key areas of thrust. Some recent highlights are discussed below: The Trade Marks Act, 1999, finally came into force on September 15, 2003. It provides inter alia for registration of service marks, filing of multi-class applications, increasing the term of registration and renewal from 7 to 10 years as well as recognition of the concept of well-known marks. Thousands of service mark applications were filed immediately upon its notification. Further, in our last issue, we had remarked on the Trade Mark Registry’s quickened pace of functioning to clear the tremendous backlog of cases. With the new law in place, the tempo has picked up further.. This is clearly illustrated by the fact that there is now barely a three month gap between the filing and examination of an application vis-à-vis the one and a half to two year period previously taken by the Registry.
Turning to case law, the Delhi High Court recently deliberated upon the question whether ‘ribs/lines on the periphery of ophthalmic lenses are covered within the definition of trade mark or within the definition of design’ in Corning Incorporated, U.S.A. & Ors. vs. Raj Kumar Garg & Ors. The Court was of the view that a ‘design’ is merely a feature of shape, pattern, configuration, ornament or composition of lines or colours applied to an article to make it attractive to the consumer whereas a ‘trade mark’ is a device, label, name or any other mark (which may also be appealing to the customer) put on a product with the primary purpose of linking it to its manufacturer/producer. In the present instance, Corning demonstrated that the ribs in question were adopted by them specifically for distinguishing their lenses from the products of other manufacturers. They further established that by mutual agreement other manufacturers had agreed to use different number of ribs on their products to enable people in the trade to distinguish between the manufacturers thereof. Accordingly, it was held that prima facie the two ribs on the periphery were a ‘trade mark’. The Court also observed that the ribs were hardly noticeable on the lenses and thus, could not be judged to have artistic appeal required to qualify as a design. Further, mere registration of a mark as a design is not conclusive proof of it being a design and in any case, as per the Designs Act, 2000, a trade mark cannot be registered as a design. Thus, the defendants’ plea that the two ribs were not a trade mark but a design registration in their favour was not upheld and Corning was successful in injuncting the defendants from using the two ribs mark on their ophthalmic lenses.
On the patents front, the TRIPS deadline of January 1, 2005, for ushering in a complete product patent system is looming large on the horizon. The Indian Government has already indicated its seriousness towards compliance by proposing the 3rd Amendment to the Patent law. The Patents (Amendment) Bill 2003 was tabled in the Parliament in December 2003 but was subsequently referred to the Parliamentary Standing Committee for review and will have to be re-introduced in Parliament after general elections in April 2004. Apart from various procedural enhancements, this amendment intends to focus on:-
- Introduction of product patents in all fields of technology (as per TRIPS). Inventions in areas such as chemicals, food and pharmaceuticals hitherto entitled to process patents would therefore become eligible for product patent protection.
- Discontinuation of the facility relating to Exclusive Marketing Rights (‘EMRs‘) and a transitional provision for an automatic and priority examination process for black box applications linked to EMR applications.
- Replacing pre-grant opposition with post-grant opposition procedure. It is proposed that the opposition period will stretch for 1 year after the grant of the patent. A provision for unilateral representation against pending patent applications is also envisaged.
- Introduction of a provision for enabling grant of compulsory licenses for export of medicines to countries which have insufficient or no manufacturing capacity to meeting public health emergencies (in line with Doha Declaration).
- Enabling a claim for damages in an infringement action retrospectively from the date of publication and not from the date of acceptance of the patent application as is currently provided.
Pending the amendments, the EMR issue remains a pot boiler! Many petitions have been filed in the Courts challenging the constitutional validity of the EMR provisions. On the other hand, Novartis AG, the only foreign pharmaceutical company successful in obtaining an EMR, is enforcing its rights vigorously against the generics in India. There is active engagement in the High Courts of Chennai, Delhi and Mumbai and the matters are sub-judice. Being a forerunner in the field of patent litigation, the EMR issue will undoubtedly set the trend for the spate of inevitable product patent litigations in the post 2005 scenario.
Overhaul of the existing companies’ legislation continues to be debated strongly and the Companies (Amendment) Bill, 2003 highlighted in our last newsletter has been sent back by the Cabinet for redrafting since many of its provisions were opposed by corporates and industry chambers. In its place, a concept paper aiming to simplify the law is in the offing, which is likely to deal with regulation of private companies and consider limited liability partnerships as well.
The Government has permitted capitalization of lump sum fees and royalties payable for technical know-how and external commercial borrowings (‘ECBs’) received in convertible foreign currency, subject to compliance with prescribed conditions. Hitherto, equity shares could only be issued against inward remittance of convertible foreign exchange or import of plant and machinery.
The Foreign Direct Investment (FDI) policy has been further liberalized and up to 100% FDI is permitted in the following areas subject to relevant regulatory framework:-
- Printing scientific and technical magazines, periodicals and journals.
- Natural gas / LNG pipelines.
- Petroleum product marketing.
- Oil exploration in small and medium sized fields.
- Petroleum product pipelines.
The Banking sector too has witnessed a sea change. FDI limit in private sector banks has been raised from the existing 49% to 74%. Hitherto, foreign banks were allowed to operate through branch office(s) or by investment in a private bank. The liberalized policy permits operations through branch(es) or a wholly owned subsidiary or a subsidiary with foreign investment up to a maximum of 74%. However, it must be noted that a foreign bank may operate through only one of the three options provided. Existing branch(es) may be converted into a subsidiary.
Now that a number of new laws and regulations are in place, interesting times lie ahead in the field of intellectual property rights!
© Remfry & Sagar