Thought leadership from our experts

What next? - mapping trends in intellectual property law in India

These are exciting times for intellectual property law in India. Over the last couple of years, intellectual property law in India has seen unprecedented activity on several fronts – substantive law, procedural law, interaction with other laws, systemic changes at the governmental level and a realignment of IP policy. These trends suggest a move towards broader protection, broader remedies and simpler procedure for conducting IP lawsuits. However, a new 'booby trap' that has emerged is Competition law which is being applied to whittle down intellectual property rights.

This article maps the trends in the development of intellectual property law and policy in India in the recent past and makes predictions (where appropriate) of the likely repercussions of these trends.

I. IP law is interacting with other laws

A. Interplay of Intellectual Property law with Competition Law

The apparent conflict between intellectual property law and competition (antitrust) law and attempts by other jurisdictions to reconcile these two branches of law are well documented. In the last year, this issue has gained prominence in India and this has revealed not only a conflict between the two branches of law but also a tug of war between the Courts and the Competition Commission of India.

There are two separate trends which have emerged:

a. Tug of war between the Court and the Competition Commission of India: Competition authorities in India are entertaining matters even though parallel proceedings are pending before a higher judicial authority such as a High Court.

For instance, the Competition Commission of India ordered an investigation into an alleged abuse of dominant position by a patentee on the basis of information which stated that the patentee was demanding unfair, discriminatory and exorbitant royalty from willing licencees . The Competition Commission entertained this dispute even though lawsuits for patent infringement against these entities were already pending before the Delhi High Court. Though the Commission took note of the pendency of the lawsuits, it held that the pendency of lawsuit did not divest the Commission of its jurisdiction to investigate anti-competitive practices.

Similarly, in a dispute involving infringement of design and copyright , the Commission entertained a matter in which the informant claimed that the litigation that had been filed before the Delhi High Court was a "sham" and that such litigation amounted to an abuse of dominant position.

In writ petitions against all these orders, the Delhi High Court has taken a serious view of the interference by the Commission and has passed stay orders to the extent that after the investigation, the investigating authority will not file its final report and the Commission will not pass a final order.

Some reports in the press have also suggested that the Commission may look into settlements reached by pharmaceutical companies through Court – ordered mediations. This again will be an unreasonable attack on the mediation process which is conducted under orders and supervision of a Court.

b. Whittling down of intellectual property rights by applying competition law: In a recent case relating to auto spare parts , the Competition Commission held that if an enterprise is found to be dominant and indulges in practices that amount to denial of market access to customers in the relevant market, it is no defence to suggest that such exclusionary conduct is within the scope of intellectual property rights. The Commission seems to have taken the view that intellectual property law is completely overridden by competition law and has failed to take a 'middle path' akin to the one taken by nearly every jurisdiction in the world. Several appeals are expected to

be filed against this order of the Commissioner shortly.

Prediction for the future: These trends indicate that parties which have traditionally been at the receiving end of injunction orders from the Courts will now run to the Competition Commission to neutralize Court orders and to defeat IP rights. This will only exacerbate the emerging conflict between the Court and the Commission. The High Court will possibly have the final say since it not only adjudicates the intellectual property lawsuits but can also decide writ petitions against orders passed by the Commission.

B. Interaction between intellectual property law and internet law

Online counterfeiting and piracy over the internet has thrown up some tricky issues regarding balancing two competing interests - (i) effective protection of IP rights and (ii) protecting free speech. Film producers in India have been able to curb online piracy to an extent by obtaining orders against internet service providers directing them to restrict access to website which host infringing content. Though these orders have been heavily criticized by free speech activists as being excessive, the Court seems to be taking the view that curbing online piracy requires such harsh measures.

Sale of counterfeits over online portals is another area of serious concern which is troubling right holders. While Courts are willing to pass orders against such counterfeiters, the difficulty in locating the physical goods has proved to be a major stumbling block. The problem has only become more complex by the immunity enjoyed by intermediaries under India's internet law, the Information Technology Act, 2000. This issue requires some creative solutions - we believe that this can be achieved by a collaboration of the client, an online investigator, a physical investigator and a creative lawyer!

II. IP now involves 'big returns'

Intellectual property disputes in India are moving towards mega-compensation and mega-damages. A recent study revealed that the Delhi High Court has granted nearly over Rs. 8,00,00,000 as damages in nearly 177 cases with the average damages in cases where damages were granted being approximately half a million rupees. Apart from damages, rights holders are increasingly recovering huge sums of compensation through settlements in intellectual property lawsuits. For instance, recently a defendant settled a lawsuit with a copyright holder entailing payment of the sum of Rs. 45 crores as license fee for a period of five years .

Intellectual property is also receiving a higher valuation by brand owners. For instance in a recent case, during settlement negotiations for sale of a brand, the brand owner valued his brand over a billion rupees.

Prediction for the future: These damages, compensation and valuation figures suggest that IP valuation in India is maturing slowly but surely. As IP plays an increasingly important role in making a business unique, both business owners and Courts are recognizing the true value of IP and the loss caused to right holders by IP infringement. We believe that these figures will only go up in the coming years. We also expect that this trend will also extend to patent law where the damages, compensation and valuation are likely to be even higher.

I. Patentees are being granted ex – parte injunctions

Patentees who have approached the Court before the Defendants' launch of the infringing product have obtained ex–parte injunctions or undertakings from Defendants thereby nipping the infringing activity in the bud. The soundness of this approach has been bolstered by several decisions of the Delhi High Court which have held that such "quia timet actions" are not premature and thus can be entertained by Courts. Courts seem to favour the view that the balance of equities lies with the patentee at least till the time the infringer has launched in the market. This view taken has neutralized the effect of earlier orders wherein patentees were denied interim injunction in patent infringement lawsuits.

Prediction for the future: The balance of equities in patent litigation can change quickly post a launch, especially in pharmaceutical patent litigation where more often than not generics flood the market with the infringing product immediately upon launch. Patentees will thus actively monitor "triggers" that give rise to a credible apprehension that a competitor is likely to launch the infringing product in the market and file lawsuits sooner rather than later in order to capitalize on this trend.

II. Courts are coming down hard on contemnors – "Entire premises sealed"

In a case decided just last week , the Delhi High Court came down hard on Defendants who had defied the orders of the Court. When the Court appointed Local Commissioner reached the Defendants' premises to execute a raid, the Defendants refused to allow the inspection by the Local Commission and his team. Taking cognizance of the contemptuous acts of the Defendants, the Court immediately summoned the contemnors to the Court.

The Court observed that the conduct was deplorable and in a 'first of its kind' order, directed the Local Commissioner to seal the Defendants' entire premises – this meant closing of an entire office with over 400 employees who were summarily removed from the premises and the premises locked from outside under the seal of the Court.

This order is unique since in typical contempt situations, the Court usually orders the sealing of either the computer systems or simply a second technical inspection of the computer systems followed by the sealing of only those systems that contain the pirated software programs. The Court's bold approach forced the Defendants to immediately appear before the Court and the matter was settled within two weeks of its institution.

Prediction for the future: In our practice before the Courts, in the past we have come across cases where the Defendants openly violate orders of Courts and several years pass before contempt petitions are decided and the contemnors are put to task. Orders such as the one passed in the above case have the potential of restoring respect for the law and faith in our legal system.

III. Scope of rights associated with IP is broadening

Courts in India are looking beyond the narrow contours of trademark, copyright and patent law and are recognizing different forms of intellectual property in common law even in cases where such rights are not expressly granted by statute.

For instance, in a case involving misuse of images of two of India's top actors , the Delhi High Court recognized the publicity right of a celebrity in a detailed decision that carefully defined the contours of the right.

In another important development, the Delhi High Court bolstered a right holder's attempts to prevent circumvention of technology and noted that such circumvention has penal consequences. In this case, the Delhi High Court granted an injunction restraining the use of jailbreak software on Sony's Playstation consoles .

In two very interesting cases regarding rights over proprietary information such as score alerts generated live during a match, the Delhi High Court has been grappling with the issue of whether Indian law should recognize the "hot news doctrine". A two-Judge bench of the Delhi High Court took the view that Indian law does not recognize this doctrine. In an appeal against this order, the Supreme Court passed an interim order directing the parties shall maintain status quo as it existed before the order of the two – Judge bench and required the Defendants to deposit a million rupees per match.

IV. Procedure for obtaining well – known trademark status is now clearer

Courts in India are now frequently adjudicating on the well – known status of a trademark. In the year 2011, the Registrar of Trademarks released a list of list of well – known trademarks enlisting trademarks that had been declared "well – known" by a Court . Trademark owners can now forward favourable court orders recognizing the well – known nature of their trademarks to the Registrar requesting for its addition in the list.

For instance, recently the marks MICROSOFT and NESTLE have been added to this list based on recent orders passed by the Delhi High Court recognizing these marks as well known. Once the mark is entered into this list, the Registrar may object to future third party applications misusing these marks irrespective of the goods and services.

Another interesting decision by the Delhi High Court in this area was the Ford decision wherein the Court went to the extent of saying that the mark was not only well – known but was "extremely well known".

Prediction for the future: Right holders will now strive hard and lead evidence in lawsuits in the hope that the Court declares their mark as well – known. A 'well – known' status will help them in future opposition proceedings, litigation as well as proceedings before the Registrar of Companies regarding misuse of their mark as a corporate name.

V. The Patent Office and the Trademark Office are undergoing systemic changes

In a recent writ petition challenging the significant delays by the patent office in issuing the first examination report to a patentee, the Delhi High Court took a very serious view of the matter and asked the Government to file a detailed affidavit explaning the cause for the delay. When the Patent Office cited the lack of infrastructure, the Court made an attempt to find a long term solution by bringing about systemic changes and is even looking into the possibility of providing a patent term adjustment to patentees in India. This case is still pending and is one to watch out for.

In the recent past, the Patent Office and the Trademark Office has started engaging in a consultative process asking for comments from stakeholders before framing policies and guidelines. For instance, recently the Patent Office issued draft guidelines for examination of patents in the field of pharmaceuticals. After receiving several comments by stakeholders and an oral hearing, the Patent Office decided to revise the guidelines and circulated a revised draft for further comments by stakeholders. Such a consultative process has significantly improved transparency in the framing of IP policies and guidelines.

VI. Procedure for conducting cross-examination of foreign witnesses through video – conferencing has become simple

Over the last decade the Delhi High Court has been trying to streamline the procedure for conducting fast – track trials in intellectual property matters. One major step in this direction had been the appointment of retired Judges as Court Commissioners who could record evidence. This has significantly increased the pace at which trial is conducted since these Court Commissioners do not have the same workload as the Registrars of the Court do.

Another very important step in this direction has been the Court's willingness to allow recordal of cross – examination of foreign witnesses over video-conferencing. The streamlining of the procedure for video – conferencing took place in three stages across three lawsuits. In Stage 1, the Court required a representative of the Indian High Commission to be present during the video – conferencing so as to ensure that the witness was not being fed the answers from someone . In Stage 2, realising the difficulties in coordinating with the Indian High Commission, the Court relaxed the requirement and said that simply a notary public may be present. However, this presented its own logistical issues of finding a time convenient to several people including government officials across time zones. Finally, in Stage 3, the Court recognized that with advancement in technology it is possible to capture on the camera the entire room in which the witness may be sitting for making his statement via video conferencing and thus parties can easily verify if the witness is answering on his own. The Court accordingly directed that even a notary public need not be present .

Prediction for the future: These developments will make the recordal of evidence through video - conferencing very simple and would thus be the preferred option for foreign litigants. The Court is actively working towards making the procedure streamlined and efficient so as to ensure that litigants are not unduly inconvenienced. These efforts are likely to have two effects: (i) it reduces the cost and (ii) increases the pace of litigation in India.

Another general trend is worth a mention here: In the recent past, Courts had started taking an anti – IP view and a short – sighted view of what is in the public interest had started to dominate. This trend is slowly reversing and Courts and the Government are beginning to realign their thinking on what is best for India in the long term.