Rajya Sabha to vote on radical judicial reforms for high value IP disputes

The Rajya Sabha is scheduled to debate and vote on the “Commercial Division of High Courts Bill, 2009” on the 29th of August, 2011, after it concludes voting on the Copyright Amendment Bill, 2010. The Commercial Division of High Courts Bill, 2009 seeks to transfer to the High Courts all high-valued commercial disputes valued at Rs. 5 crores (US $ 1.2 million approx). The ‘radical reform’ that this Bill seeks to bring about is with regard to procedure. The Bill has been drafted in a manner which will ensure that all such disputes are concluded within a span of a year of filing. I’ve done a more detailed note explaining the Bill over here.

The Lok Sabha had passed the Bill in December, 2009 without so much as referring it to a Standing Committee. This Bill was one of the 5 Bills that the Lok Sabha had passed in that particular session without any debate due to a ruckus over the creation of Telangana. Thankfully when the Bill was introduced into the Rajya Sabha the Chairperson of that House referred it to a Select Committee consisting of only Rajya Sabha members. The Select Committee deliberated extensively on the Bill and consulted several experts on the matter and tabled its report last year before Parliament. One of the main amendments recommended by the Committee was to reduce the threshold value from Rs. 5 crores to Rs. 1 crore (US $ 200,000). Although the Committee in principal agreed to the Bill with several amendments, the Bill was opposed by at least 2 MPs on the Committee. The main reason for their opposition was the perceived inequality at reforming the system for only high-value litigation without bothering to overhaul the entire system. The Select Committee Report itself can be found on the excellent website of PRS over here. Although the Communist parties and some other parties are opposed to the Bill, it is likely that this Bill will sail through Rajya Sabha since the BJP does not have any fundamental opposition to the Bill. Since the Lok Sabha has already approved the Bill, it will become law once the Rajya Sabha passes it.

This Bill will significantly affect the manner in which IP litigation is conducted in India since the definition of ‘commercial disputes’ includes patent, trademark and copyright litigation. Given that valuation of IP disputes is anyway left up to the Plaintiff, it is possible that most IP lawyers will value their IP suits at Rs. 1 crore so as to avail of the fast-track mechanism before the new Commercial Benches.

Having said that I must also mention that given the rigorous schedule set down by the Bill there will be tremendous pressure on the IP firms to meet deadlines for trials and it may be prudent for such firms to start recruiting more lawyers to cope with the inevitable pressure. Although I was earlier of the opinion that it was possible to finish trials and arguments, in an IP dispute, within a span of 1 year, I now have serious reservations as to whether patent litigation can proceed at such a pace without seriously compromising the rights of at least one party. have a look at the Bajaj-TVS patent dispute its been more than 3 years and the trial is yet to begin mainly because of questions of law. Unfortunately none of the IP associations seems to have brought the peculiarities of IP litigation to the notice of the Select Committee.