IPRs Figure Prominently in ‘Trade Policy Review’ of WTO

[*Long Post]

I shall deal with the recently released ‘Trade Policy Review’ (“Review”) of WTO which deals with IPRs in a great detail. In fact, the ‘level of detail’ in this Review is something which should make us aware that the “world is watching us closely”! Though the Review doesn’t criticize India’s extant IPR legal system as such (especially in the context of US position), it voices certain concerns and draws attention to certain lacunae and/or inefficiencies in the system. It is, in fact, quite interesting to note the significance attached to IPR in this Review (considering the volume occupied by IPR in the Review). Any negative note like the above mentioned one in an international document like the Review is definitely a matter of ‘national’ shame. If the GoI is sincere about ‘Make in India’, it cannot afford to generate a negative impression on this front. It is imperative for the top echelons of the GoI to take note of this Review and more importantly, take effective steps to address the same in a time bound manner. The lacunae and inefficiencies of the Indian regulatory system, which is highlighted in this Review, is a (national) public secret. It is, in fact, a different matter altogether to become an (international) public secret…(Sigh)!!

At the outset, I would like to note that this post is not a summary of the Review. My intention is to reproduce some of the crucial and pertinent observations in this Review. A very brief summary of the Review is available here. I will, however, request all of you to go through this Review as it provides a succinct factual account of all the major IP developments since the last Review.

The Review begins with a note on the importance of IPRs and slippage of India’s position in Global Innovation Index, 2014 – “India has an important economic interest in protecting the intellectual property rights (IPRs) of its creators and inventors, particularly in the creative and knowledge-based industries. It is an active stakeholder in the international intellectual property community, and party to key WIPO treaties. Since the last Review, India has in its 2012 telecommunications policy favoured “Indian” IPRs in line with other policies favouring local manufacture. India’s National Manufacturing Policy, while defining the functions of the Technology Acquisition and Development Fund, has stated that the Fund will have the option to approach the Government for issue of a Compulsory Licence for the technology which is not being provided by the patent-holder at reasonable rates or is not working in India to meet the domestic demand in a satisfactory manner. It is stated that such compulsory licences will be issued only within the provisions of the TRIPS. In the Global Innovation Index 2014, India slipped ten positions to rank 76th in the world.” It is evident that the Review ‘impliedly’ connects innovation with IPRs. It is a ‘debatable’ connection as ‘innovation culture’ is determined by a myriad factors. Therefore, this observation may be taken with a pinch of salt. 

The Review notes the submission of draft National IPR Policy. The Review also takes note of the evolving jurisprudence on Section 3(d), SC judgment in Novartis and ‘compulsory licensing’. The Review notes that pharmaceuticals, organic chemistry and computer technology attracted the highest number of patent applications in the period 1999-2013.

The Review highlights the grim state of affairs on IPR regulatory infrastructure. It says,: “A special effort was made between 2006-08 to speed up the granting of patents and reduce the backlog. This was subsequently followed by the implementation of a Plan Scheme for “Modernization & Strengthening” of IP Offices (2007-11). Under the scheme, new posts of patent examiners/controllers have been created. Procedures were also streamlined and at present the functioning of the IP Office is completely e-enabled. However, due to high attrition rates and the time-lag involved in recruitment, the situation of applications pending did not really improve. The scheme has been continued in the Twelfth Plan (2012-17). Additionally the strengthening of the functioning of the IP Offices will be continued through further modernization.” New Delhi is listening, I hope..

On a critical note regarding the Guidelines for Examination of Patent Applications, the Review makes the following observations: “In October 2014 Guidelines for Examination of Patent Applications in the Field of Pharmaceuticals were issued. These guidelines were issued after wide consultation on a draft issued in August 2014 with stakeholders both online and otherwise. Several comments made were accepted. For example, the disclosure of the international non-proprietary names of medicines in patent applications is not mandatory as was initially proposed. Guidance on the interpretation of Section 3(d) merely quotes large excerpts from the Supreme Court judgment referred to above and the IPAB decision of 2013 and provides no further guidance.”  As Section 3(d) has become the ‘villain’ for pharmaceutical companies in most of the patent disputes, this ambiguity is appalling and has to be rectified at the earliest. The Review voices this (genuine) concern which has to be rectified at the earliest.

Trademarks

On well-known trademarks, the Review rightly observes the subjectivity involved in determination of ‘well-known marks’: “India protects well-known trademarks in its law and courts have upheld internationally-well-known marks. Since 2011, India’s Trademarks Registry has been publishing a list of well-known marks and prohibited trademarks, including a specific list of International Non-Proprietary Names as established by the WHO. The draft Manual for Trademark Practice and Procedure states that: sub-sections (6) to (10) of section 11 deal with matters concerning protection of well-known trademarks. Sub-section (6) lays down factors which the Registrar should take into account in determining whether the trademark is well-known. The onus is on the proprietor to establish by evidence that the mark is well-known. On the other hand, sub section (9) mandates that the Registrar shall not require as a condition for determining that a trademark is well-known for any of the following factors: (i) that the trademark has been used in India; (ii) that the trademark has been registered; (iii) that the application for registration of the trademark has been filed in India; (iv) that the trademark is well-known, or has been registered, or in respect of which an application for registration has been filed in any jurisdiction other than India; or (v) that the trademark is well-known to the public at large in India.

Sub-section (10) obliges the Registrar to protect a well-known mark against identical or similar trademark and to take into account “the bad faith of either the applicant or the opponent in respect of the rights relating to the trademark”. Section 2(2) clarifies that any reference: (a) to “trademark” shall include reference to “collective mark” or “certification trade mark”; (b) to the use of a mark shall be construed as a reference to the use of printed or other visual representation of the mark; (c) to the use of a mark in relation to goods shall be construed as a reference to the use of the mark upon, or in any physical or in any other relation whatsoever, to such goods; (d) to the use of a mark in relation to services shall be construed as a reference to the use of the mark as or as part of any statement about the availability, provision or performance of such services; (e) to the Registrar shall be construed as including a reference to any officer when discharging the functions of the Registrar in pursuance of sub-section (2) of Section 3; (f) to the Trademarks Registry shall be construed as including a reference to any office of the Trademarks Registry.

On occasion, courts are said to have interpreted the language narrowly to exclude use of well-known trademarks as trade names and industry has called for an amendment to make it clear that well-known trademarks are not allowed to be used as trade names, as this may dilute the trademark. However, while recognizing well-known marks, the Courts may have to take into account other considerations to reach a decision. The requirement that each individual case should be judged on its own facts is also stipulated in the WIPO joint recommendation on the well-known marks in Article 2 (1) (c) of the resolution. There have been many such cases where the Trademarks Registry or the courts have decided that the protection would apply to any other product. Cases in point are the Judgments on Sony, Bajaj Electrical Limited, Enfield Bullet, and Whirlpool Corporation in respect of protection of product and trade names.”

Industrial designs

The Review takes note of the lack of legal clarity in-between copyright in 3D forms of artistic works and protection under Designs Act.

Copyright

On copyright, the Review takes note of the economic context. For the benefit of readers, I feel it is imperative to reproduce the text on economic significance of copyright: “India is the world’s largest producer of films and the total contribution of the Indian film and television industry to India’s GDP is estimated at 0.5% or Rs 500 billion (or approximately US$8 billion). This industry, in which copyright protection plays an important role, is projected to grow at a compound growth rate of 17% per annum up to 2017. The English and foreign films segment represents only around 6% of total revenues from films in India, but this is set to grow due to increasing use of dubbing of foreign films into Indian languages. The Government is also trying to attract foreign film production to India. India is already being increasingly used for visual effects and animation by the foreign film industry, especially Hollywood.

Similarly, the Indian music industry is reported to have had revenues of around US$150 million in 2013, of which over 50% was obtained through digital sales. Over 80% of music relates to film music in India; in some cases, over 10% of a producer’s revenues could come from music. Digital sales and licensing revenues are expected to rise in the near future.”

Trade secrets and test data protection

The Review takes note of the ‘unprotected’ territory of trade secrets and test data protection. – “There is no specific legislation regulating the protection of trade secrets and hence no enforcement measures/penalties for violations of trade secrets, other than under contract law and common law of passing off, breach of confidence etc. It is not clear precisely how India protects against disclosure of trade secrets by third parties not party to any formal or informal contracts or confidence. However, Indian Courts have upheld trade secret protection on the basis of principles of equity and at times upon a common law action of breach of confidence as well as breach of contractual obligation. The remedies available to the owner of trade secrets are injunctions preventing the licensee from disclosing the trade secret, orders to return all confidential and proprietary information and compensation for any losses suffered due to disclosure of trade secrets.”

The aforesaid concern is, definitely, worth brainstorming. United States has Uniform Trade Secrets Act which is meant to protect trade secrets of US companies operating in various states. We neednt have a legislation just because United States has one. On the other hand, if a legislation like the Uniform Trade Secrets Act does benefit Indian economy, we should explore that option. Note that the Coca Cola formula is still a trade secret. And the significance of Coca-Cola to the US economy cannot be underestimated.

Test Data

The Review observes as follows: “There is no specific legislation protecting test data submitted for obtaining regulatory approval of pharmaceuticals. The Drugs and Cosmetics Act of 1940 regulates the manufacture and marketing approvals for drugs and traditional medicines, while the Insecticides Act of 1968 addresses the manufacture and marketing approvals for agricultural chemicals (such as insecticides, fungicides and weedicides). However, there is no statute in place in India at this time for the protection of pharmaceutical, agrochemical and traditional medicine-related data against disclosure and reliance by third parties. Such test data is said to be protected under the Official Secrets Act. However, it is not clear how India implements the second obligation under Article 39.3 of the TRIPS Agreement, which is in addition to the obligation to provide protection against disclosure, namely, protection of such data against unfair commercial use.”

Without getting into the merits of the aforesaid observation, it is a fact that the aforesaid territory is largely unchartered. The policy is not clear in this front. If the policy is to keep it unprotected, so be it. However, indecision on the policy front is not forthcoming.

Enforcement

Appreciating the role played by private players, the Review offers quite a few positive observations on IP enforcement – “In addition to the Government’s efforts to enforce IPR, industries in India have become more proactive. For example, the Ministry of Human Resource and Development recently issued an official notification designating the Federation of Indian Chambers of Commerce and Industry (FICCI) to Chair the Subcommittee under the Copyright Enforcement Advisory Council (CEAC) responsible for coordinating relevant stakeholders to address the menace of piracy. Similarly, as reported in the last Review, the Ministry of Information and Broadcasting had set up a Committee on Piracy, and IPR-holders have created associations and IPR committees to generate awareness on issues relating to counterfeit, fake, and spurious products. The music and film industry, through the Film Federation of India, Motion Picture Association, and Indian Music Industry Association, cooperates and collaborates with the police in the design and implementation of anti-piracy programmes. To support the efforts of the industry, the state Governments of Andhra Pradesh, Kerala, Maharashtra, and Tamil Nadu, where the film and music industry is prominent, have introduced legislation which stipulates that video piracy is an offence. The aim is that with enhanced coordination of the industry, enforcement will continue to improve.” I must, however, note that the efforts of some of the above-mentioned State Governments (including the enactment of legislations) have been highly contentious. Some are criticised to be over-reaching. Therefore, this observation may be taken with a pinch of salt.