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LETTER FROM INDIA AND CHINA

INTELLECTUAL PROPERTY
CORPORATE LAW

Issue 21

October 2007


AT A GLANCE

Section I - INDIA
A Necessary Change: Amendments to The Trade Marks Act, 1999.
Border Control: The IP Rights((Imported Goods) Enforcement Rules, 2007.
E-filings: Digital Make-Over of the Indian Trademark and Patent Office.
The Novartis Case: Further Developments.
'Role': another well-known mark.
'Pony': The Needle case.
'Carrefour': The Retail Giant .
Six months on: The Protection of Plant Varieties and Farmers' Rights Act, 2001.
 
Section II - CHINA
WIPO Seminar: China and India talk about their IP systems
A First: US Patent Ruling in favour of a Chinese Enterprise
New Legislation: The Anti-Monopoly Law



Ladies and gentlemen, we're celebrating! The firm turned 180 this year. And if that isn't reason enough to pop the bubbly, this month marks the first anniversary of the opening of our Beijing office.

So far, Remfry's 'Letter from India' has only charted developments on the Indian IP horizon. However, with our presence in China, henceforth, this newsletter shall also carry updates provided by our office in Beijing on local developments. Ergo, the change of name of our newsletter to 'Remfry's Letter from India and China'. Of course, our endeavour to make each issue more interesting than the previous remains constant. Hope you concur as you turn the pages!

Section I - INDIA

A NECESSARY CHANGE: AMENDMENTS TO THE TRADE MARKS ACT, 1999.


In our April issue we had reported the Indian government's approval for accession to the Madrid Protocol and introduction of a Bill to make the necessary amendments to the Trade Marks Act 1999.

On August 23, 2007, a Bill to amend the current trade mark statute was tabled in the Lower House of Parliament. Chiefly, it seeks to incorporate a new chapter containing the necessary provisions re international registration of trade marks under the Madrid system. The proposed Chapter IVA provides, inter alia, the government designating a specific office of the Trade Marks Registry to deal with international applications, a ten year term of registration and renewal, requirements re international applications originating from India and applications wherein India has been designated as a Contracting Party, examination, advertisement and opposition of an international application and ceasure of an international registration if the basic registration becomes invalid prior to expiry of 5 years of an international registration.

Significantly, in an effort to speed up disposal of matters and bring trade mark jurisprudence in line with international business needs and practices, the Bill also seeks to introduce the following changes:

Reduction of the time period within which an opposition can be filed from four months to three months;
Simplification of the law relating to transfer of ownership of trade marks by assignment or transmission. It proposes to scrap provisions prescribing additional requirements re recordal of transfers involving creation of multiple rights in India and separation of markets as well as transfers unaccompanied by the goodwill of the business. It also proposes a time line within which applications pertaining to transfer of ownership would have to be disposed of; and
Omission of special provisions for textile goods currently in place.

 


BORDER CONTROL: THE IP RIGHTS (IMPORTED GOODS) ENFORCEMENT RULES, 2007

One of the most significant concerns of intellectual property right holders, particularly in developing markets, is that of counterfeiting. To tackle this issue more effectively, the Indian Government has by a notification dated May 8, 2007, brought into effect The Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007.

The salient features of the Rules are:

A right holder may give notice to Customs requesting suspension of clearance of infringing goods, containing the following details:

Proof of the existence and ownership of a valid IP right by the right holder,
A statement of the grounds for the notice of suspension of release;
In the case of a specific consignment of allegedly infringing goods, details of the consignment and a statement of the grounds for the notice including prima facie evidence of infringement;
Detailed description of the goods with Customs Tariff Heading in respect of which an IP right applies, together with a sample, model or photograph of the genuine product; and
Name of customs airport/customs port/ land customs station to be covered.

The registration of the notice is, however, subject to the right holder executing a bond with Customs undertaking to protect the importer, consignee and the owner of the goods and the competent authorities against all liabilities and to bear the costs towards destruction, demurrage and detention charges incurred till the time of destruction or disposal.
If the notice is registered by Customs, all Custom offices covered by the notice shall be informed of the details of the notice and the minimum validity period of the registration would be one year (unless a shorter period is requested by the right holder). Although not specifically provided for in the Rules, we suspect that the registration period would be extendible on request.
After the grant of the registration and examination of the notice by Customs, the import of the allegedly infringing goods into India shall be deemed as prohibited within the meaning of the Customs law.

 

Where Customs, based on the notice given, have reason to believe that the imported goods are suspect, they shall suspend clearance. Significantly, Customs may also, on their own initiative, suspend clearance of goods, in respect of which they have prima facie evidence or reasonable grounds to suspect infringement.
Goods can be detained for a total period of 20 days (in phases of 10 days each). However, in the case of perishable goods the period of suspension of release shall be 3 working days which may be extended by another 4 days, subject to the satisfaction of Customs that such extension shall not affect the goods.
If Customs have reason to believe that the impugned goods are infringing goods and liable to confiscation under the Customs Act, they may seize the same. However, the right holder and the importer shall be allowed to examine the seized goods and may be provided representative samples for examination, testing and analysis to assist in determining whether the goods are pirated, counterfeit or otherwise infringe an IP right.
Where, upon determination by Customs that the detained or seized goods detained have infringed IP rights and that no legal proceedings are pending in relation to such determination, Customs shall destroy the goods or dispose of them after obtaining 'no objection' from, or concurrence of, the right holder.
Re-exportation of goods infringing IP rights shall not be allowed in an unaltered state.
Customs, may on their own, or at the right holder's request, retain samples of goods infringing IP rights prior to their destruction or disposal and provide the same to the right holder or importer if such samples are needed as evidence in pending or future litigations.
Goods of a non-commercial nature contained in personal baggage or sent in small consignments intended for personal use of the importer are not subject to the above Rules.

Thus, all trade mark, patent, copyright, design and geographical indication right holders can now register their IP rights with Customs for interception of counterfeits at the point of entry. In a departure from the past, the Rules grant Customs adjudication powers, allowing them not only to confiscate but also destroy goods and should, therefore, act as a significant deterrent to the import of counterfeit products.


E-FILINGS: DIGITAL MAKE-OVER OF THE INDIAN TRADEMARK AND PATENT OFFICE

A big leap was taken in the process of modernization of the Indian Trademark and Patent Offices by the launch on July 20, 2007, of electronic filing facilities for trade mark and patent applications in India. The expectation is that the Indian Trademark and Patent offices would gradually switch over to a completely paperless office, in a phased manner, within the next three years.

As regards the exact process for filing a trade mark or patent electronically, user friendly manuals can be accessed online (temporarily at www.patentoffice.nic in as the proposed website www.ipindiaonline.gov.in is still under construction), wherein various screen shots are illustrated along with the procedures that one must follow while filing such an application. In the coming months, the Trade Mark and the Patent Offices are also expected to provide on-line tutorials to guide customers at every step, namely, e-filing, electronic processing, examination, correspondence, publication, opposition, hearing, registration, renewal and assignment.

There are certain pre-requisites for filing an e-application. A user must register with the Trade Mark or Patent Office and obtain a User ID. Further, he/she must also acquire Digital Signatures. As regards payment of fees, e-filing systems are designed to support Electronic Fund Transfer (EFT) using the State Bank of India (SBI) as the Payment Gateway.

Incidentally, subsequent to the launch of the e-filing facility it has also become possible to view the status of trade mark applications and to run a search in respect of trade mark applications online. However, it is still early days yet and we believe it will be some time before these new procedures catch on in a big way..


THE NOVARTIS CASE: FURTHER DEVELOPMENTS

With our involvement in the GLIVEC matter, we have, from time to time, been updating readers on the progress in the case. At the time our last issue went to print, Novartis's writ petitions filed before the Madras High Court, raising the following issues, were pending.

Whether Section 3(d) of the Patents Act, 1970 as amended by the Patents Amendment Act, 2005 was in compliance of Article 27 of TRIPS;
Whether Section 3(d) was arbitrary and vague and thereby offended the fundamental right guaranteed under Article 14 of the Constitution relating to equality before law and consequently should be struck down; and
Whether a declaratory relief from the Court can be availed to the effect that the amended Section 3(d) was not in compliance of Article 27 of TRIPS?

The High Court, after a very detailed consideration of all the contentions, and referring to a large number of decisions, dismissed the writ petitions vide judgment of August 6, 2007.

With regard to (a), the Court held that the issue may be agitated before the Dispute Settlement Body ('DSB') under WTO/TRIPS which had been constituted to settle disputes between member countries and their citizens/legal entities in implementing TRIPS. Further, India being a welfare state, its first obligation under the Constitution was to provide good healthcare to its citizens and it had every right to bring in any legislation while discharging obligations under TRIPS to suit the needs and welfare of citizens. Even assuming, without conceding, that the petitioner had the right to enforce the terms of TRIPS, yet, he must go only before the DSB. Accordingly, the Court held that it had no jurisdiction to decide the validity of the amended Section in relation to Article 27 of TRIPS.

With regard to point (b), the Court held that the petitioner was not a "common man" but had expertise and understanding with regard to the terms 'efficacy' and 'enhanced efficacy'. The petitioner was definitely aware of the 'therapeutic effect' of the drug and the difference between the therapeutic effect of the prior patented drug and the drug in respect of which a patent had been applied for. Therefore, it was a simple exercise for the patent applicant to prove the therapeutic effect/efficacy of the known substance and the enhancement in the known efficacy achieved through the new drug.

Further, the Statutory Authority (the Patent Office) had been granted discretion in the determination of enhanced efficacy. And if there were an error, it could always be corrected by higher forums provided for in the Act itself and thereafter, by the Courts. It held further that a provision of law could not be struck down on the ground that the Authority exercising the power under that provision was likely to misuse it, unless it was shown that the said provision itself ex-facie was violative of Article 14 of the Constitution of India - which was not the case in the present instance.

In deciding whether to grant a patent or not on such new discovery, the Explanation to Section 3(d) created a deeming fiction that all derivatives of a known substance would be deemed to be the same substance unless they differed significantly in properties with regard to efficacy. Therefore, in sum and substance, what the amended Section with the Explanation prescribed was a test to decide whether the discovery was an invention or not.

It was held that Article 14 could be invoked only when it was shown that in the exercise of a discretionary power there was a possibility of a real and substantial discrimination and such exercise interfered with the fundamental right guaranteed by the Constitution. A wrong decision arrived at by the Patent Controller based on wrong application of the amended Section could not be a ground to strike down the said amended Section which was otherwise in order.

As regards issuing a declaration as enunciated in point (c), the Court held that there was no bar on Indian Courts to give a declaration that the amended Section was in violation of an International Treaty. However no declaration would be given where it would serve no useful purpose to the petitioner. The amended Section did not take away in toto the right of the petitioner to carry on trade.

 


There have also been some noteworthy decisions vis-à-vis trade marks in the recent past. A brief summary of judgments passed in a few matters handled by us follows.


'ROLEX': ANOTHER WELL-KNOWN MARK

In Rolex S.A. Vs. Rolex Wear Corporation and Others, the High Court of Delhi granted an ad-interim injunction in favour of the Plaintiff, a world renowned watch manufacturing company, restraining the Defendants from using the trade mark ROLEX in relation to 'ready made garments'. The Court based its order on the premise that the Plaintiff, i.e., Rolex S.A. being the registered proprietor of the renowned trade marks ROLEX and ROLEX OYSTER had a right to protect its trade mark ROLEX from dilution and was, therefore, entitled to grant of ad-interim injunction. It is pertinent to note that the Court upheld the necessity of protecting well-known brands such as 'ROLEX' in spite of Defendant's claim of use of their mark since the year 1970.

'PONY': THE NEEDLE CASE

In Needle Industries (India) Ltd. v. Super Thread Industries & Ors., Super Thread Industries (ST) adopted on December 12, 1987, the mark 'PONY' in respect of goods falling under class 23 and filed an application for registration of the same eight months later on August 8, 1988. Needle Industries (India) Ltd. (NI) had been using the same mark - 'PONY' and 'PONY with Device' since 1971 in respect of goods falling under class 26 and filed an opposition against ST's mark. However, the learned Registrar held that ST's mark was distinctive of their goods and dismissed the opposition. Being aggrieved with the said order of the Registrar, NI preferred an appeal before the Intellectual Property Appellate Board ('IPAB').

It was contended before the IPAB that goods falling under Class 23 and 26 were allied and cognate goods and the trade channels for both were the same. NI further stated that 'PONY' was a well known mark associated with the company. The IPAB concurred and held that NI's mark had acquired wide reputation and goodwill in the market and the use of the said mark, albeit for different goods, by ST, would mislead the public into thinking that ST's goods emanate from NI, which in turn would deface NI's goodwill. Moreover, ST had not given any valid explanation for adoption of the mark and use for a mere 8 months prior to filing an application could not be taken as concurrent use. Thus, adoption of the trade mark by ST was not bona fide and ST had adopted the impugned mark only to gain unlawful profit and to enrich itself at the cost of NI.


'CARREFOUR': THE RETAIL GIANT

Established in 1960, Carrefour is presently the largest retailer in Europe and the second largest in the world with a network of 7,000 stores in about 30 countries and a sales turnover of Euro 94 billion. In the instant case, Carrefour v. Mr. V. Subburaman & Ors., on becoming aware of the misuse of the mark "CARREFOUR" and "C" logo by the Defendants in respect of furniture, Carrefour served a cease and desist notice upon them. Upon receipt of the said notice, the Defendants stopped using the "C" logo, however, they continued in their use of the mark "CARREFOUR". Accordingly, Carrefour filed a suit claiming infringement and passing off alongwith an application for interim injunction.

After appreciating the material on record it was held by the Court that:

Carrefour had established that it adopted the trade name "CARREFOUR" way back in 1960 and started a chain of retail outlets in France that spread out to European, Asian & Middle East Countries
That it had worldwide registrations (about 2500 in number) for the said trade mark for a variety of products including furniture
That it had obtained registration in India way back in 1995 in respect of Classes 16, 25, 29, 30, 32 and 33 (though not for furniture)
That it had a huge turnover and had incurred heavy expenditure on publicity.
That it had already set foot in India as was evident from the evidence adduced.
Since the Defendants had given up use of the 'C' logo immediately after receipt of Plaintiff's cease and desist notice (despite claiming to use the mark and logo since the year 2000), they had given up their claim over a part of the trade mark. Accordingly, the Defendants would have to explain as to how they could sustain their claim in respect of the other part of the trade mark.
Carrefour had established a prima facie case. The balance of convenience was also in favour of Carrefour in view of the fact that the public was likely to be deceived into thinking that the products offered by the Defendants had a connection to Carrefour. Thus, the Court allowed the application for grant of interim injunction.



SIX MONTHS ON: THE PROTECTION OF PLANT VARIETIES AND FARMERS' RIGHTS ACT, 2001

India's initiative to protect plant varieties, the rights of farmers and plant breeders and to encourage the development of new varieties of plants by enacting 'The Protection of Plant Varieties and Farmers' Rights Act, 2001' has shown promising results. Within three months of the opening up of the plant variety register, the Protection of Plant Varieties and Farmers' Rights Authority has received 150 applications for the registration of new crop varieties. Interestingly, most of them are for hybrids or the parent lines meant for hybrids. For the information of interested applicants, the Authority has published the descriptors for identifying new varieties and the locations where the varieties offered for registration would be tested to verify their characteristics. In addition, it has started publishing a monthly 'Plant Variety Journal of India' for notifying registered varieties and putting out other relevant information. The Authority is currently working towards expanding the list of crops registrable under the Act and is expected to notify the details shortly.

Section II - CHINA

Remfry & Sagar is proud to be the first Indian law firm to have set up a Representative Office in China, which opened on October 30, 2006. Current estimates indicate that the bilateral trade between India and China is growing exponentially and is expected to touch US$ 50 billion per annum by 2010. We, therefore, believe that there could not have been a more opportune time to set up a physical presence on the Chinese mainland and that we could contribute, in some measure, towards realizing the shared vision of the two countries.

SEMINAR ON 'NATIONAL STRATEGIES AND POLICIES FOR INNOVATION'

The first development we cover under this Section is quite apt. At a WIPO Seminar held on July 2, 2007, Mr. Liu Jian, Division Director, International Cooperation Department, State Intellectual Property Office of the Peoples' Republic of China (SIPO), spoke at length on his government's intellectually property policy. Also present was Mr. T. C. James, Director of the Intellectual Property Division, Ministry of Commerce and Industry, India, who commented on India's IP environment. Both officials outlined how the national intellectual property (IP) system could be integrated into national innovation strategies and policies in order to help develop a country's resources, infrastructure and capacity for economic development. While expressing differences in their approaches, both speakers agreed that the IP system was an important, if not indispensable, factor for economic development.

Mr. Liu presented the national innovation strategies detailed in China's Outline of National Medium- and Long-Term Science and Technology Development (2006-2020). The main goal, he said, was to upgrade the country's industrial structure in order to make China an innovation-driven economy by 2020. To this end, Mr. Liu emphasised the importance for China of building its capacity for indigenous innovation.

Despite the patenting boom in China, with over 210,000 applications for patents for inventions filed with SIPO in 2006, a large majority of these continue to be filed by foreign applicants, particularly in the field of hi-tech and core technologies. Mr. Liu quoted the words of Chinese Premier Wen Jiabao on this central concern: "The core technology cannot be bought. Only by strong capacity of science and technological innovation and by obtaining our own IP rights, can we promote the international competitiveness of the country and win respect and dignity in the international society".

Mr. Liu highlighted three key elements of indigenous innovation which needed to be developed:

generating original innovation in the domain of basic research;
integrating existing technology in order to create competitive new products or business lines; and
assimilating, digesting and improving imported technologies in order to create new IP rights based on those technologies.

China's IP policies for promoting innovation aimed, therefore, at the following: first, to support Chinese enterprises in building their R&D capacities in order to develop and patent core technologies; second, to assimilate existing technologies while introducing advanced technologies from abroad; and third, to improve the protection of IP rights as a means of encouraging investment in - and the rewards from - innovation.

The national strategy also laid down measures to improve the national innovation system, including:

support to small and medium-sized enterprises,
business-university-academia collaboration,
commercialisation of R&D results from research institutes and universities, and
promotion of intermediary services, such as information services, IP agencies, investment services and incubators.

One of the challenges, Mr. Liu noted, was to increase IP awareness in order to establish a culture of innovation and a social environment conducive both to the respect of others' IP rights and the protection of one's own. He also emphasised the necessity of effective enforcement of IP rights protection, which, he held, was the most essential part of the IP system.

Mr. James began his presentation by asking whether a strong IP rights regime was a choice or a necessity. He described the Indian IP strategy as four pronged:

to meet existing international obligations;
to protect the rights of IP holders while safeguarding the public interest;
to modernise the IP rights administration; and
to modernise the IP rights administration; and
to improve awareness about IP.

Mr. James summarised the different IP laws enacted in India, emphasising that the Indian legislation aimed to strike a balance between the interests of IP right holders and those of the public. In addition to establishing an up-to-date legal framework, the Indian government had embarked on a US$34 million project to modernise the administration of IP rights in the country. This included the construction of four state-of-the-art IP office buildings equipped with the latest IT facilities, a four-fold increase in the number of examiners, and the establishment of an Intellectual Property Training Institute for in-house training. The modernised administration, Mr. James said, had successfully eliminated a backlog of over 44,000 patent applications in the past three years, and it was now possible to obtain a patent in eight months, compared with previous delays of six to eight years. In the past five years, the filing of patent applications had increased three-fold and patent grants five-fold.

Mr. James expressed conviction that confidence in the IP system was a powerful economic stimulator. An effective and efficient patent system, he believed, encouraged innovative activities and promoted transfer of technology. To achieve this, however, IP rights had to be approached not as a self-contained and distinct domain, but rather as a policy instrument to be deployed in the context of wide ranging socio-economic, technological and political objectives. "The protection of IP rights", concluded Mr. James in answer to his own question, "is not a choice, but a necessity".


Another interesting decision, this one on well-known marks.

A FIRST: US PATENT RULING IN FAVOUR OF A CHINESE ENTERPRISE

On July 10, 2007, A US District Court ruled that GFCI products made by China General Protecht Group Inc. (Protecht) and sold in the United States did not infringe Leviton Manufacturing Company's (Leviton) US Patent No. 6246558.

Protecht, an export oriented enterprise, developed six series of products through independent innovation, of which GFCI (a safety device) was the main product. All these products were exported to various countries including the United States, where the market was particularly large for the GFCI product - it enjoyed sales of USD 3 billion per year. Prior to Protecht's entry in the US market, four American enterprises including Leviton had monopolized the market for over 20 years. When Protecht's products broke the technical monopoly of the American enterprises, by April 2004, Leviton filed a total of five infringement actions (including four patents) against Protecht's four most important customers in different district courts. Significantly, Leviton had applied for more than 70 patents for its GFCI product and over the last 20 years, was involved in litigation with 38 foreign enterprises for their alleged infringement of its patents - ultimately, all of these foreign enterprises exited the US market.

Leviton's strategy was three pronged. Five successive lawsuits in different courts resulted in high legal costs for Protecht. Second, under US law, if a person holding an important position in an infringer's company, intends to and directly participates in committing infringement and uses the company to evade liability for personal infringement, the company's limited liability may be pierced. This was Leviton's tactic to exert pressure on Protecht's American dealers and cut off the company's marketing channels. Third, it tried to delay the time limit for adjudication.

In response, Protecht decided to carry on the lawsuit at any cost. When Protecht's products had first entered the US market, they had been appraised as being non-infringing goods upon similar products and the company firmly believed that it had not committed any infringing act. In fact, it never abandoned its independent innovation and obtained over 45 Chinese and American patents in various categories. Further, Protecht requested transfer of all proceedings to the New Mexico District Court, for which it received approval.

In time, Protecht's perseverance bore fruit and in May 2006, it became the first Chinese enterprise to obtain a "Markman Order" from an American court. A "Markman Order" is a judicial ruling made by a US judge in a patent infringement case through interpreting patent rights and confirming the scope of protection. In a Markman procedure, the party that loses the suit is not allowed to appeal to a higher court on this judicial order independent of a judgment of infringement, and the prevailing party will usually make a summary judgment motion requesting that the judges decide the case without requiring a trial. On making a summary judgment motion to the court hearing the No. 6246558 case, the Court concluded that Protecht's products did not contain parts and other factors pertaining to the No. 6246558 patent right.

This litigation victory is reportedly the first time an American court has ruled in a Chinese enterprise's favour in an IP litigation case where a Chinese enterprise was sued by an American enterprise for infringement. In fact, the political significance of the case exceeds its commercial value and of course, the outcome will provide a fillip to Chinese enterprises in overseas markets. However, it also serves as a warning for Chinese businesses to pay more attention to protecting their IP rights in foreign countries and acquaint themselves with local laws.


NEW LEGISLATION: THE ANTI-MONOPOLY LAW


On August 30, 2007, China finally joined around 80 countries (including India) which have an anti-monopoly (anti-trust) legislation. The drafting of the law commenced in 1994 and it will come into effect on August 1, 2008. The law has met with mixed reactions from various quarters with the biggest concern being the checks on mergers of foreign and Chinese enterprises to ascertain whether they affect "national security". However, the Government has been quick to allay the fears of the international community and has assured that these provisions follow international practice and would not adversely affect foreign investors.

Other salient features of the law are as follows:

Formation of the Anti-Monopoly Commission. The Commission has been given the power to conduct on-the-spot inspections, question the undertakings under investigation and other relevant parties, request submission of relevant documents such as agreements, accounting books, seize and detain relevant evidence, as well as inquire into the bank accounts of the undertaking concerned.
The following will be regarded as a monopoly: (i) when an undertaking reaches a monopolistic agreement, (ii) when an undertaking abuses a dominant market position, and (iii) when undertakings form an undertaking cartel. These terms have been defined below.
Monopoly agreements prohibited under the Law include (i) restricting the output or sales of products, (ii) restricting the purchasing of new technology, new equipment or restricting the development of new technology or new products and (iii) jointly boycotting transactions.
The law also identifies specifically the agreements between undertakings and their trading counterparties which are prohibited, including: (i) fixing the price of re-sale to third parties and (ii) restricting the minimum price the products will be sold to third parties.
In assessing whether an undertaking has a "dominant market position"six factors are to be examined including: (i) the market share, (ii) the ability of that undertaking to control the market or to purchase raw materials, (iii) the monetary assets and technology of the undertaking, (iv) the reliance other undertakings have on that undertaking and (vi) other relevant factors. The dominant market position will also be determined by the total market share of the undertaking/s according to the following formula: (i) if one undertaking has more than 1/2 of the total market share in the relevant market, (ii) if two undertaking jointly have more than 2/3 of the total market share, and (iii) if three undertakings jointly have more than 3/4 of the total market share..
The following prohibitions are imposed on undertakings having a dominant market position (i) selling products below cost price without any justification, (ii) selling products at unfairly high prices or buying products at unfairly low prices, (iii) refusing to trade/deal with other parties without any justification, (iv) forcing other parties to deals with them or restrict such parties from dealing with other parties, (v) imposing unreasonable trading conditions, (vi) applying discriminatory terms to similarly situated parties without any justification, and (vii) other like conduct that abuses a dominant market position.
"Undertaking cartels" are defined as: (i) mergers of undertakings, (ii) an undertaking obtaining a controlling stake in another undertaking by acquisition of shares and/or or assets of that undertaking, and (iii) an undertaking controlling another undertaking or exerting control over the decision making ability of another undertaking through a contract. All undertakings intending to form undertaking cartels must seek prior approval from the Commission, or they will be prohibited from forming such a cartel.
Chapter 5 of the law aids enterprises against local protectionism as it specifically prohibits administrative agencies and public organisations from abusing their powers to block commodities from outside of their areas by employing such tactics as fixing discriminatory prices, imposing technical requirements or inspection standards, creating special licensing procedures, as well as other unfair protectionist methods. The law also stipulates that "government departments should not take advantage of their power to curb competition".
It may be noted that the Chinese Government in December last year released a list of strategic sectors in which state monopolies would continue to be permitted. They include military-related manufacturing, power production and grids, petroleum, gas and petrochemicals, telecom manufacturing, coal, and civil aviation.


Au revoir!

© Remfry & Sagar
April 2007


"Letter from India" is intended to provide our clients and associates with information of general nature on legal issues and recent developments in the areas of intellectual property, foreign investment and corporate laws. It should not be relied upon as legal advice or opinion.