It ought not to be lost on our readers that this is one of those rare cases where a multinational company is challenging the IPR regime in India as being too IP maximalist and overprotectionist and not vice versa. I’ve reproduced the news item in full and our comments on this story follow at the end:
“The Indian arm of Samsung Electronics is involved in a first-of-its-kind legal battle in the country, related to linking patents and import laws. The bone of contention: dual-SIM phones that the company has been barred from importing into India because a Madurai-based inventor has a patent on such technology.
Interestingly, India has objected to similar attempts to link intellectual property (IP) and import regulations by the Netherlands that had seized drugs shipments from the country.
Samsung India Electronics Pvt. Ltd, the Indian arm of Korean electronics giant Samsung Electronics Co. Ltd, has moved a writ petition in the Delhi high court challenging action by the Indian customs department to prevent its imports of dual-SIM-card mobile phones because this allegedly infringes a local patent.
The case challenges India’s Customs Act 1962 and the Intellectual Property Rights (imported goods) Enforcement Rules.
Dual-SIM phones are those that can hold more than one SIM (subscriber identification module) or phone card. This means the same phone can have two numbers—much like multiple lines being connected to one instrument in the case of landline phones.
The company’s petition says its imports have been detained at several ports in the country by the customs department on the basis of a patent granted to S. Ram Kumar, a Madurai-based scientist.
Ram Kumar was granted a patent in 2008 by the Chennai patent office for a technology “apparently similar to that is being imported by Samsung and several other mobile phone importers in the country, and Samsung has been now informed by the customs department that its products have been detained as it infringes this patent”, said the petition, which has been reviewed by Mint.
A person involved with Samsung’s import activities confirmed that the company’s imports have been detained by the customs authority in Mumbai and Chennai. This person, who is not authorized to talk to the media on behalf of the company, declined comment on the value of these shipments.
“The company cannot comment on this now as the matter is sub judice,” said Samsung’s spokesperson Ruchika Batra.
Ram Kumar could not be reached for comment because he wasn’t available at the address and number mentioned in his patent application filed at the Chennai patent office.
A senior official at Mumbai customs said, “If the patentholder has registered the patent rights under the Intellectual Property (imported goods) Enforcement Rules, the officials at the ports will be forced to detain the product imported by anyone else, unless they produce a valid licence from the registered owner of the patent.”
Experts, however, say that since the Trade Related Intellectual Property Rights (TRIPS) rule doesn’t cover patents, the customs department cannot decide such actions on its own.
“TRIPS does not mandate any border protection measures in so far as patents are concerned. The Indian customs rules are, therefore, clearly TRIPS-plus. Since they empower customs authorities to seize goods upon the mere complaint of a patent owner and treat them as ‘prohibited goods’ without even hearing the importer, they are likely to be struck down as unconstitutional,” said Shamnad Basheer, a patent expert and an IP law professor—appointed by the ministry of human resource development—at the National University of Juridical Sciences, Kolkata.
“Much like the DCGI (Drug Controller General of India), customs authorities do not have the expertise to decide complex patent disputes, where issues on invalidity and non-infringement are often raised. Under the Indian Patents Act, only courts have the exclusive jurisdiction to decide issues of infringement. Given that India is considering challenging EU (European Union) customs regulations in the wake of seizures of Indian drug consignments, it will have to set its own house in order by taking immediate steps to roll back customs regulations that vest undue powers in the hands of its customs authorities,” Basheer added.
Samsung’s petition in the Delhi high court said: “Ram Kumar was demanding payment of royalties due to him through various representatives at each port, and was issuing no-objection certificates to those parties who paid him the royalty.”
A person familiar with the matter, who did not want to be identified, said Kumar was demanding Rs35 a phone as royalty. This couldn’t be independently verified by Mint.
Last year, customs authorities in the Netherlands had detained shipments of Indian drug companies such as Dr Reddy’s Laboratories Ltd, Cipla Ltd, Aurobindo Pharma Ltd and Indswift Laboratories Ltd. These were on the way to Latin America and were seized after the EU issued a note to its members asking them to detain goods under patent rights protection law.”
Anyone who has read the customs regulations (Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007) will appreciate that these regulations leave a lot to be desired. Firstly, it empowers a customs authority to determine the patent legality or otherwise of an import upon the mere representation of a patent owner, without even hearing the importer. It even goes to the extent of treating such goods as “prohibited” goods and consequently criminalising the import! It is very likely that a court will strike down these rules that violate principles of natural justice as unconstitutional.
Much like the DCGI issue, which we have blogged about in the context of the Bayer vs Cipla case, the issue is also one of institutional competence: Is the customs authority competent to decide a patent infringement case, which often involves complex issues of patent validity and claim scope?
In fact, in the case at hand, it would appear that the patent does not cover all “Dual SIM phones” (as Dual SIM technology itself has been around and is part of the prior art), but only those Dual SIM phones that also provide for more than one headphone/earphone jack, so that two people can be on two calls at the same time via the same handset. However, most of the goods seized by customs (consisting of both Samsung’s products and a number of other imports belonging to several Indian importers) appear to be generic Dual SIM phones with just one headphone/earphone jack. In other words, the patentee is attempting to claim rights over technology that is part of the prior art and clearly outside the scope of his patent.
It is pertinent to note that TRIPS expressly mandates member countries to only provide border control measures in the context of “counterfeit” and “pirated” goods, in relation to which issues of infringement are much easier to assess.
In other words, TRIPS (Art 51) makes it clear that there is no border control obligation with respect to patented goods: rather this is left to member countries, who may wish to institute measures in this regard.
Therefore, even if India wishes to institute border control measures for patented goods, it ought to do so in a manner that is likely to provide a fairer and more equitable result. Let the onus be on the party claiming patent infringement to secure an order in this regard from a court of law. After all, section 104 makes very clear that it is only a court of law that can make an assessment of patent infringement.
And if the court finds in favour of patent infringement, this order could be acted upon by the customs authorities i.e. they could seize any “imports” that violate patent rights. One will appreciate that as per the current regulations, goods that allegedly infringe IP rights can be seized by the customs authorities without even hearing the importer and the onus is then on the importer to move the court and have it released. The better and more equitable policy option would be to flip this the other way around. Let the onus be on the patent owner to agitate this issue before a court and if the court decides in her favour, the customs authorities could then seize infringing goods.
Lastly, on a strategic note, given that India is planning to take on EC customs regulations, it may help if the government seriously examines its own customs regulations and waters them down to reach a fairer and more equitable result. No doubt, the Samsung case where the imports were meant for India cannot be directly equated with the Netherlands “in transit” seizure of drugs meant for another country, and India’s chances of winning or losing the EU matter does not really depend on the fairness or otherwise of its own domestic regulations. However, in order to capture the moral high ground as well, the Indian government ought to re-examine what appears on the face of it to be an extremely overbroad and overbearing TRIPS plus customs regulation .
ps: Apparently, Ramkumar has also filed court cases (patent infringement actions) against parties that are locally manfuactuing Dual Sim phones in India. Once we confirm this news, we will bring you an update.