A Report on India’s Top IP Developments of 2016

India witnessed a number of significant IP developments in 2016. As the year comes to an end, let’s take a look back at these developments that kept the Indian IP landscape action packed throughout out the year.

We have divided these developments into three categories: a) top 10 judgments/orders, b) top 10 policy related developments and c) other notable developments. The developments in the first two categories have been chosen owing to their jurisprudential impact (extremely well-reasoned on a point of law etc. for judgments) or their impact on the industry or the stir they created in terms of public perception (for judgments and policy related developments) or the significance of the change they brought about to the Indian IPR regime.

Top 10 IP Judgments/Orders

1. DU photocopy case – Undoubtedly, topping the list are the Delhi High Court judgments in the DU photocopy case, marking a landmark victory for students and access to education in India. The Single Judge on September 16 dismissed the suit filed by three publishers against DU and a photocopy shop holding that unauthorized making and distribution of course packs does not amount to copyright infringement as it falls within the ambit of Section 52(1)(i) of the Copyright Act that permits reproduction of works by teachers or students in the course of instruction. On appeal, the Division Bench interpreted Section 52(1)(i) as permitting photocopying of copyrighted works for preparation of course packs, irrespective of the quantity, as long as it for the purpose of educational instruction. Accordingly, it remanded the suit for a factual determination on the purpose of works photocopied in this case.

2. MySpace v. Super Cassettes – Very recently, a path breaking judgment passed by a Division Bench of the Delhi High Court in the MySpace-T-Series copyright dispute came as a huge relief for internet intermediaries in India. The Bench overturned the poorly reasoned judgment of the Single Judge holding that the immunity provided to intermediaries under Section 79 of the IT Act applies to secondary liability for copyright infringement as well despite the proviso to Section 81 of the same Act. It also clarified that an intermediary can be held liable for secondary infringement under Section 51(a)(ii) of the Copyright Act only if it had ‘actual knowledge’ that the third party’s act amounted to copyright infringement and not mere ‘general awareness’ of it. 

3. Bombay HC John Doe orders – A series of orders passed by the Bombay HC in the Udta Punjab, Great Grand Masti, Sultan and Dishoom (here and here) cases marked a progressive shift in the John Doe jurisprudence in India by laying down a strict framework for grant of John Doe orders that balances the interests of the copyright holders as well as that of the internet users and innocent third party providers. The court made it clear that only specific infringing links can be ordered to be blocked and not entire website, that such links must be verified by a technically competent person and listed out on affidavit, that a specific blocking message must be displayed by the ISPs and that third parties injured by John Doe order can approach the court for relief. It also significantly endorsed Basheer’s suggestion of a neutral ombudsman for blocking disputes.

4. Eros v. Telemax – The Bombay HC’s judgment in this case opened the doors in India for arbitration of IP disputes arising out of licensing and other commercial transactions dealing with IPRs. The court commendably clarified that such disputes are ‘in personam’ and not ‘in rem’ and thus perfectly arbitrable in absence of any law that suggests otherwise. 

5. IPRS v. Aditya Pandey – In a devastating blow to the rights of the lyricists and music composers, the Supreme Court in this case upheld the judgment of a Division Bench of the Delhi HC, holding that for communication of a sound recording to the public, one does not require to obtain permission from and pay royalty to the owners of the underlying literary and musical works i.e. the lyricist and the music composer in addition to the permission from the owner of the sound recording i.e. the producer. The court however clarified that with effect from June 26, 2012, the lyricists and composers would be entitled to equal share of royalties in respect of sound recordings that do not form part of a cinematographic film. 

6. Lee Pharma v. AstraZeneca – In a well-reasoned order, the Patent Office, at the beginning of the year, rejected the compulsory license application filed by Lee Pharma in respect of AstraZeneca’s patent in India over the anti-diabetic drug Saxagliptin. The Controller noted that none of three grounds for grant of CL under Section 84 of the Patents Act had been met as the applicant failed to quantify the requirement of this particular drug (as distinguished from that of all anti-diabetics or DPP-IV inhibitors) and also could not prove that Saxagliptin and all other DPP-IV inhibitors, also falling in same price range, were unreasonably priced.

7. Gilead v. Optimus Pharma & Ors. – The Patent Office approved Gilead’s patent application for its Hepatitis C drug Sofosbuvir and dismissed the various oppositions filed against its application. Unfortunately, this order, having a huge implication on access to this breakthrough drug, lacks clarity and proper reasoning. The opposition based on Section 3(d) of the Patents Act was rejected by (seemingly) drawing a flawed linkage between regulatory approval and enhanced efficacy. The order spoke of ‘comparative data’ without even specifying the known substance that was the subject of comparison and the data which was being referred to. I-MAK and DNP+ have challenged this order before the Delhi High Court. 

8. Ericcson v. CCI – The Delhi HC delivered a well-reasoned judgment refusing to set aside the CCI order directing investigation into Ericsson’s conduct of demanding excessive royalties etc. in respect of its SEPs that was prima facie found to constitute abuse of dominance. The court importantly clarified that CCI does not lack jurisdiction to deal with complaints on abuse of dominance in respect of patent rights as there is no irreconcilable conflict between the Patents Act and the Competition Act. It further noted that there is nothing in the law that prevents a party from challenging the validity of a patent or apply for a compulsory license under Patents Act and simultaneously instituting a CCI complaint against the patent holder alleging anti-competitive behavior.  

9. Prabhat Agri Biotech v. Registrar of Plant Varieties – In a very significant development, the Delhi HC struck down Section 24(5) of the Plant Varieties Act as unconstitutional. It held that this provision violates Article 14 of the Indian Constitution as it gives unbridled power to the Registrar, who is not required to be from a legal back ground or have legal expertise, to grant interim relief to a breeder against any abusive third party act during the period its registration application is pending. 

10. SIMCA v. UoI – The Madras High Court upheld the constitutionality of the Copyright Board challenged in this case. It rejected the argument that the legal framework on appointment of Board members fails to preserve the Board’s adjudicatory competence. However, it notably mandated appointment of at least one judicial member on the Board who meets the criteria set out in Rule 3(2)(ii) of the Copyright Rules, 2013. The court also upheld the constitutionality of the licensing scheme under Section 31 of the Copyright Act. It further held that the Board Chairman cannot be relegated to a mere member in the Search Cum Selection Committee, thus set aside the committee as violative of basic structure of the Constitution and directed reconstitution of the Board. Lastly, it refused to declare the 2014 rules relating to salaries and allowances etc. as unconstitutional. 

Top 10 IP Policy Related Developments

1. National IPR Policy – In a very significant development, the National IPR Policy was released by the Govt. on May 23.  The policy with the slogan ‘Creative India, Innovative India’ lays down seven objectives and enumerates the steps to be undertaken towards attainment of each of these objectives. Although the policy contains attractive vision and mission statements on having a balanced IPR system, fostering creativity and innovation, a notable acknowledgement of TRIPS compliance of India’s IPR laws and a few commendable proposals, it is flawed on many counts. The biggest flaw lies in its treatment of IP as an end in itself rather than a means to an end, namely creativity and innovation.

2. Patent (Amendment) Rules, 2016 – On the legislative front, the Patent (Amendment) Rules, 2016 were notified and came into force on May 16. These rules brought about a bunch of positive amendments to the Patent Rules, 2003, some of which include reduction of time for filing response to first examination report from 12 months to 6 months, introduction of expedited patent examination on request, treatment of start-ups as natural individual persons, refund of 90% of fees upon application withdrawal before first statement of objection and refund of excess fee paid.

3. Copyright and Semiconductors brought under DIPP – In an important move, the Government vide a notification dated March 17, transferred the administration of Copyright Act from the HRD Ministry and that of Semiconductor Integrated Circuits Layout-Design Act from the IT Ministry to DIPP (functioning under the Ministry of Commerce and Industry). This transfer seemed to be aimed at bringing all IP offices under the control of DIPP, which already had control over the Patent and Designs Office and Trade Marks and Geographical Indications Registry. While some welcomed this move of consolidation in light of the earlier power tussles between the Ministries, some criticized the shift of Copyright Office from HRD Ministry to DIPP. 

4. Mediation/Conciliation in trademark oppositions/rectifications – The Trademarks Registry, Delhi on February 19, in a welcome step towards reduction of pendency of matters, announced initiation of a project in collaboration with the Delhi State Legal Services Authority (DSLSA) for referring 500 pending opposition and rectification matters for mediation or conciliation upon consent of the parties. On March 31, it released a notice extending the project to all such pending matters and inviting interested parties to submit their consent in a prescribed consent form via e-mail. 

5. Mass abandonment of TM applications – On March 30, the Trademark Registry inexplicably deemed a large number of TM applications as abandoned, without issuing any notice to the affected parties. The order was made on the ground that the applicants did not reply to the examination reports issued in respect of these applications. This caused major concern among the applicants and many of them complained that their application was erroneously abandoned. Tata Steel and IP Attorneys Association filed a writ petition against this action before the Delhi High Court. The court, on April 5, stayed all abandonment orders issued by the Registry on or after March 20 and directed it to not issue any such orders without proper notice as required under the Trade Marks Act, till further orders.

6. DIPP brought internet broadcasts under section 31 – In a significant development, DIPP, on September 5,  issued an office memorandum interpreting the statutory licensing scheme under Section 31D of the Copyright Act to apply to internet broadcasting organisations as well and not only to radio stations and television broadcasting organisations. While this interpretation may be a welcome one as it could likely result in dissemination of more works on the internet, DIPP was not constitutionally competent to issue such a memorandum, as argued by Prof. Basheer. A letter requesting withdrawal of this memorandum has thus been sent by him to DIPP.

7. DIPP paper on SEP and FRAND – DIPP, on March 1, published a ‘Discussion Paper on Standard Essential Patents and Their Availability on FRAND terms’ and invited views/suggestions from the public, specifically on ‘Issues of Resolution’ stated in Section XI of the paper. The paper is aimed at sensitization on need and importance of regulating SEPs, facilitating their licensing on FRAND terms as well as development of a framework to define obligations of the SEP holders and the licensees. Interestingly, the paper faced plagiarism allegations, as a result of which a revised version of it was published by the DIPP. 

8. New CRI examination guidelines – The Patent Office recalled the much criticized 2015 guidelines on examination of computer related inventions (CRI) and issued a new set of guidelines on February 19 that are in line with the provisions of the Patents Act. These guidelines took the Indian position in this regard back to the one prevailing prior to the issue of the 2015 guidelines. They set out a clear procedure for determining the patentability of a CRI with examples and explicitly recognized that a CRI may fall under clauses (k), (l), (m) or (n) of Section 3 of the Act that provides a list of what are not inventions.

9. MoA’s draft notification on compulsory license of GM technology on FRAND terms – Adding to the list of unprecedented measures taken by the Govt. in its war against Monsanto, the Ministry of Agriculture on May 18 notified the ‘Licensing and Formats for GM Technology Agreements Guidelines, 2016’ that in effect created a compulsory licensing regime for GM crop technology patents. The Guidelines prohibited all patentees of GM technology from refusing to license their technology on FRAND terms to any eligible seed company that requests for it and at a royalty rate fixed by the Govt. They further created a presumption of license in case of patentee’s failure to respond to a seed company’s request within 30 days from its receipt. The guidelines were criticized for various reasons, including creation of substantive rights that falls outside the legal competence of MoA. Surprisingly, the guidelines were withdrawn on May 22 and republished in a draft form on May 24 for public comments.

10. Govt’s anti-CL private assurance – In a worrying development, the Govt., in February, was reported to have privately assured the US-India Business Council and other industry groups that it will not issue compulsory licenses for commercial purposes. This alleged assurance, if acted upon, would effectively nullify S.84 of the Patents Act that under which a license can be sought by any person as a legal entitlement on the grounds of insufficient availability, unaffordable pricing or non-working of the patent in India. However, the Govt., though after its silence for more than a month, issued a press release clarifying that no such assurance had been made by it. This clarification did not put to rest all apprehensions, resulting in NHRC issuing a press release on April 1 seeking further clarification from the Govt.

Fun amidst fury – GoAir v. Indigo

As we witnessed a number of high intensity matters unfold before us, Justice Gautam Patel, reminded us that it need not be all work and no fun. In an order that set a new benchmark for judicial humour in the country, Justice Patel’s excellent sense of wordplay resulted in an order that could serve as a guide for all upcoming judges on how to make reading judicial pronouncements interesting.

Other Notable IP Developments

1. Bom HC dismissed four contempt applications filed by CTR against Sergi holding that disobedience or breach of an injunction order must be clearly made out beyond any doubt. 

2. Del HC restrained IPRS from granting license in respect of works of Chithra Singh and late Jagjit Singh, finding it to be incompetent to do so under S. 33 of the Copyright Act.

3. Del HC rejected GlaxoSmithKline’s prayer for grant of exemplary and punitive damages as it failed to quantify the loss caused to it by defendant’s use of mark ‘GSK’.

4. Kar HC DB dismissed the appeal against Single Judge’s order holding that prima facie there was no illegality in the Cotton Seeds Price (Control) Order 2015.

5. Bom HC held that income accrued from the transfer of IPRs by a foreign entity is not taxable in India under the Income Tax Act.

6. Del HC Single Judge imposed strict conditions on sale of biosimilar version of Roche’s cancer drug Herceptin by Mylan and Biocon.

7. Bom HC DB held that infringement by defendant’s use of the mark in relation to its trade name rather than goods/services is covered only under S.29(5) and not S.29(4) of the Trade Marks Act, which applies only if the defendant is dealing with the goods or services in respect of which the Plaintiff’s mark is registered.

8. Bom HC held that Raymond Pharma’s use of ‘Raymond’ in its domain name prima facie does not amount to infringement of Raymond Limited’s trademark.

9. IPAB held that APEDA is entitled to GI tag for Basmati rice for areas stated in its application and accordingly directed the AR to grant registration and reconsider the matter afresh with respect to inclusion of areas claimed by MP Opponents. In a writ petition filed against this order, Madras HC directed APEDA not to interfere with Basmati production in MP in the interim.

10. IPAB rejected a patentee’s offer to surrender its patent during the pendency of the revocation proceedings in respect of that patent.

11. Del HC held that colour scheme of yellow and blue made trade dress of Britannia’s ‘Nutri Choice Digestive Zero biscuits’ deceptively similar to that of ITC’s Sunfeast Farmlite Digestive All Good’ and granted interim injunction in favour of ITC.

12. Del HC passed two orders restraining a food establishment and a club from infringing performers’ rights administered by Indian Singers’ Rights Association (ISRA).

13. Del HC granted an interim injunction restraining Lava from selling, importing and exporting any mobile phones using Ericsson’s patented technology.

14. Supreme Courtheld that it is mandatory for broadcasters broadcasting sporting events of national importance to provide ‘clean’ feeds to Prasar Bharati.

15. Del HC granted an interim injunction restraining Dish TV from selling its set top boxes and subscriptions to consumers in foreign territories in respect of which Gulf DTH, a UAE based company, had exclusive broadcasting rights for certain channels.

16. CBI court convicted ND Kasturi, former Deputy Registrar of Trade Marks for accepting illegal gratification.

17. CSIR admonished 38 affiliated laboratories for indiscriminate filing of patents applications.

18. introduced the Scheme for Facilitating Startups Intellectual Property Protection
    (SIPP) aimed at establishing a panel of IPR facilitators who would provide a range of IP related services to start ups on a pro-bono basis.

19. The Union Budget included announcement of four main IP-based tax developments.

20. appointed 458 new patent examiners, around 100 additional trademark examiners and 263 examiners on contractual basis.

21. A major scam in the assignment of copyright for about 166 Tamil movies was discovered.

22. Del HC DB held that Ritu Kumar’s drawings were protected neither under the Designs Act as they were not registered nor under the Copyright Act as they used had been reproduced on apparels more than 50 times by industrial process.

23. Del HC and Bom HC divergently interpreted SC’ judgment in IPRS v. Sanjay Dalia on territorial jurisdiction over copyright and trademark infringement disputes.

24. Del HC held that that all pending IPR matters are to be heard by Commercial Division of the High Court even if their valuation is less than 1 crore.

Conclusion

Although 2016 was largely a year of positive developments, it also saw some setbacks in the form of a flawed IP policy, emerging trend of jurisdictional overreach by the executive etc. We hope that 2017 witnesses the smoothening out many such rough edges and results in a more evolved IP regime in India.