THE NEW PATENTS LAW

With the signing of GATT and ratification of WTO, The (Indian) Patents Act, 1970 has been amended by Patents (Amendment) Ordinance 1994. This Ordinance came into effect on January 1, 1995.

The aforesaid Ordinance has only carried out the basic minimum amendments necessary under Article 70(8) of the TRIPS provisions of GATT. India has opted to avail of the ten year transition period permissible under Article 65 of GATT to completely overhaul The Patents Act, 1970.

With effect from January 1, 1995, it is now possible to file applications for pharmaceutical compounds per se provided they are not otherwise unpatentable. These applications (commonly referred to as Black Box filings) will be kept in abeyance and will not be examined till December 31, 2004 unless they are followed, in the interim period, by applications for exclusive marketing rights on the prescribed form. Exclusive marketing rights will be granted to the applicants on the basis of such applications provided the following conditions (which are based on Article 70(9) of GATT / TRIPS AGREEMENT) are satisfied:

However, where an invention has been made in India, the first three conditions mentioned above will not apply. Instead, a patent should have been granted on a corresponding Indian application containing process claims filed after January 1, 1995 and before the Black Box filing.

Exclusive marketing rights will be granted for a period of five years or till the date of the grant of the patent or till the date of rejection of the application whichever is earlier.

In case, a Black Box filing is not based on a corresponding application filed in a member country of GATT after January 1, 1995, the pipe line protection envisaged by Article 70(9) of GATT will not be available. Such application will be taken up for examination only after January 1, 2005 for grant of patent but without the benefit of any exclusive marketing rights in the interim period.

The Indian Government has now declared all the members of GATT as "convention" countries. Therefore, an Indian application can now claim priority from a basic application filed in any member country of GATT after January 3, 1995. In addition, India will continue to enjoy the existing reciprocal arrangements it has with Australia, Canada, Eire, New Zealand and the United Kingdom for the purposes of claiming priority.

Separate forms, official fee and other procedural requirements for Black Box filings have been notified in the Gazette of India dated December 31, 1994 which has now become available to public. After considering objections, if any, received from public, the Indian Government will in due course finalise these procedural requirements. In the interim period it is possible to effect Black Box filings under Article 70(8) of GATT with or without the benefit of Article 70(9) on the basis of existing procedural requirements and official fee. Many such applications have already been filed in our country.

Another important amendment which has been effected to The Patents Act, 1970 is with respect to inventions made in India. Hitherto where an invention was made by any person resident in India (irrespective of his nationality), no application could be filed or caused to be filed by him outside India until six weeks had elapsed after Indian filing. In an unexpected move this provision has been done away with. Therefore, it is now possible for an applicant to file an application for patent outside India without first filing an application in India even if the invention was made in India by an Indian resident.

TRADE MARKS

In our last issue we had informed you of the salient features of a Bill pending before the Indian Parliament to replace the existing Trade and Merchandise Marks Act, 1958. Unfortunately, the Bill has not yet been passed and according to current indications the new Act is not likely to come into force until March 1995.

Meanwhile, it would be comforting for the international community to know that reputation of trade marks of overseas companies is being recognised in India and there have been significant judicial precedents on the question of transborder or spill over of international reputation.

In April of 1992, we had informed you of a landmark judgment delivered by the Delhi High Court in Apple Computer Inc. Vs. Apple Leasing Industries. In this case, the Court recognised the international nature of reputation and held that a plaintiff is entitled to restrain misuse of its trade mark even in a jurisdiction where it may not carry on any business at all since reputation travels across frontiers by means of media publicity, movies, television and international travel/communication.

In November 1993 the Delhi High Court restrained two local companies by separate orders of interim injunction from using BENZ and MERCEDES respectively. The restraint order in respect of BENZ involved a company in India engaged in sale of undergarments under the trade mark VIP-BENZ in combination with a three-pointed human figure in a ring - characteristic of the three pointed star device of Daimler Benz AG - with the legend "Germans would be proud of it". While upholding the plaintiff's claim for interim injunction, the High Court made the following observations:

"I think it will be a great perversion of the law relating to Trade Marks and Designs, if a mark of the order of the "Mercedes Benz", its symbol, a three pointed star, is humbled by indiscriminate colourable imitation by all or anyone; whether they are persons, who make undergarments like the defendant, or any one else. Such a mark is not up for grabs - not available to any person to apply upon anything or goods. That name which is well known in India and world wide, with respect to cars, as is its symbol a three pointed star."

Yet another interesting observation in this case:

"In my view, the Trade Mark law is not intended to protect a person who deliberately sets out to take the benefit of somebody else's reputation with reference to goods, especially so when the reputation extends world wide. By no stretch of imagination can it be said that use for any length of time of the name "Benz" should not be objected to."

The operation of order of interim injunction was stayed in an appeal preferred by the defendant. The plaintiff filed a special leave petition before the Supreme Court of India challenging the legality of the appellate court's Order and the Supreme Court set aside the stay granted by the appellate court thereby reactivating the order of interim injunction granted by the single judge.

The other restraint order related to use of trade mark MERCEDES upon casseroles.

The principles enunciated in the above decisions were followed in another judgment by the Delhi High Court in October 1994 in the "WHIRLPOOL" case. This was a passing-off action instituted by Whirlpool Corporation against an Indian company, seeking grant of an ad-interim injunction preventing the defendant from passing-off its goods as those of the plaintiff's by use of trade mark "WHIRLPOOL". One of the questions before the Court was whether the plaintiff - who was not selling in India - could claim the benefit of transborder reputation in trade mark "WHIRLPOOL" so as to maintain a passing-off action in India or should its goodwill and reputation be confined to territories in which it has proved actual use of the trade mark in the market. The documents filed in the proceedings proved that some limited sales had been made to US Embassy and US AID in India and that the "WHIRLPOOL" products had been advertised in magazines having international circulation including in India. The Court held that plaintiff could bank upon transborder reputation of its washing machines for the purpose of maintaining passing-off action in India.

In March 1979 the Government of India had imposed a ban on the registration of trade marks in respect of certain drugs, viz, Analgin, Asprin (Acetyl Salicyclic acid), Chlorpromazine, Ferrous Sulphate, Pipereazine and its salts such as adipate, citrate and phosphate and new single ingredient drug first introduced in India. This ban did not, however, apply to drugs meant solely for exports. Pursuant to this notification, the applicants in the pharmaceutical industry were required to file an affidavit stating that the concerned trade mark was not used or proposed to be used in respect of any of the afore-mentioned drugs for domestic sales. As a result of a number of representations, the Government revoked the earlier notification on March 9, 1994. Consequently, it would no longer be necessary to file a drug affidavit thereby simplifying the procedure for registration of trade marks in respect of new single ingredient drugs.

FOREIGN INVESTMENT AND TRANSFER OF TECHNOLOGY

In our previous issue we had discussed the new liberalised industrial policy which was announced on July 24, 1991 and the possibilities for a foreign investor of setting up business in India. Although there has been no fundamental change in the policy, we would like to share with you our experience under the new régime.

It was hoped that the process of liberalisation, once commenced, would gradually percolate to the lowest levels of bureaucracy. Unfortunately, this has not yet occurred. Even after grant of the basic approval by the Foreign Investment Promotion Board or the Reserve Bank of India (normally within six to eight weeks of filing of the application), there are several procedural impediments to be crossed before a project can get on stream. By way of example, the joint venture company (JVC) in India has to obtain, initially, an "approval in principle" from the Reserve Bank of India before receipt of foreign equity from the overseas company and once the money is received from abroad, the JVC is required to make an application to the Reserve Bank of India for "final permission" for allotment of shares to the overseas company. This two tier approach and consequent delay of up to six weeks could be dispensed with.

In the last three years several licensing arrangements and foreign investment proposals have been approved - many of them envisaging majority participation by foreign investors in JVCs and in some cases even 100% - although lately the Government has started asking the question:

"Won't you like to have some Indian shareholding in your project - even if something like 20%?"

However, an interesting trend that is emerging is the apparent reluctance of Indian companies - especially large industrial houses - to accede to a minority position even though the Government permits majority foreign participation. Consequently, one does run off and on into a 50:50 joint venture - though from a purely legal perspective such an arrangement is fraught with certain risks and curious complications. All this is perhaps an indication of the fact that Indian businessmen have come of age.

However whether the ratio of shareholding of overseas companies to Indian partners is 49:51, 50:50 or 51:49, the important thing is to find the right Indian partner and we see from our day-to-day experience that there is a genuine dearth of good Indian partners - especially if the project is small and the overseas company is looking out for medium sized business partners.

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