Module: Intellectual Property

Content

Introduction
IP Audit
Patent
Trademark
Copyright
Design
Trade Secret
IP Indemnity
Transfer of Technology

Unit 1 Introduction

The term ‘property’ is subject to diverse interpretation. ‘Property’ in the legal sense is essentially
a bundle of rights following from the concept of ownership and possession. Conceptually
‘property’ always has a material existence. The value of property depends on the knowledge of
use associated with it. For example, a slab of iron as property can be seen at different levels. At
one level, it has the value as a metal; where the technique of cutting and shaping of iron has been
developed and it is also treasured as various useful tools, like spear, sword, plough, axe, knife
etc. So, its value increases manifold, because of its utility in various industries.
Thus, the element of ‘knowledge of use’ complicates the conception of property. A matter
becomes a ‘resource’ only when there is an idea and technology to use the matter in such a
manner that it can satisfy the human need. It becomes a ‘resource’ in two senses, a material
resource and an intellectual or technological resource. There is an intellectual capability to direct
its use. When these resources come together with respect to a substance it becomes ‘property’. It
is not only giving the satisfaction that a useful tool is prepared, but also the bundle of rights can
be claimed.
Some of the bundles of rights vested in ‘property’ are possession, ownership, enjoyment, control,
power of transfer etc. The right to property is a right to the aggregate of use of things; these
rights may relate to the tangible things or intangible creative inputs.
The rights over ‘intangible creative inputs’ is called ‘intellectual property’ which is created by
the intellect of the human mind. Intellectual property encompasses the protection offered by the
legal regimes of various types like trademark, patent, copyright, design, and trade secret/

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confidential information. Intellectual property insists on some amount of novelty/originality to
gain protection, the degree of newness, be it novelty or originality, differs from one system to
another. The intellectual property system is duration specific with some exceptions.

Owners have the right to stop others from using their inventions, designs or creations; they also
have the right to negotiate the payment for using them. The degree of protection and enforcement
of these rights varied extensively around the world; intellectual property became very important
in trade but these differences became a source of strain in international economic relations.
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an
international legal agreement between all the member nations of the World Trade Organization
(WTO), came into force on January 1, 1995.
The agreement covers five broad issues:
 How basic principles of the trading system and other international intellectual property
agreements should be applied;
 How to give adequate protection to intellectual property rights;
 How countries should enforce those rights adequately in their own territories;
 How to settle disputes on intellectual property between members of the WTO;
 Special transitional arrangements during the period when the new system is being
introduced.

Definition of IP: The TRIPS Agreement states that, for the purposes of the Agreement, the term
“intellectual property” refers to all categories of intellectual property that are the subject of
namely, copyright, trademarks, geographical indications, industrial designs, patents, layout-
designs (topographies) of integrated circuits, and undisclosed information (Article 1.2 of TRIPs).

The World Intellectual Property Organization (WIPO) is one of the 17 specialized agencies of
the United Nations. WIPO was created in 1967 “to encourage creative activity, to promote the
protection of intellectual property throughout the world.” WIPO currently has 185 member
states. With TRIPS virtually all international treaties and conventions dealing with IPRs were
administered by WIPO, a United Nations agency with headquarters in Geneva, Switzerland.

The TRIPS Agreement builds on the existing multilateral systems for the protection of the
various intellectual property rights covered by it, and many substantive provisions of the main
international instruments for the protection of intellectual property are included in the
Agreement. These provisions are included by reference, however, and not reproduced as such in
the TRIPS Agreement. The instruments explicitly referred to in the Agreement are the Paris
Convention for the Protection of Industrial Property (Patent, Trademark, Design, Appellation of
Origin and Unfair Competition), notably the Stockholm Act of this Convention of 14 July 1967
(the "Paris Convention (1967)"), the Berne Convention for the Protection of Literary and Artistic

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Works, the International Convention for the Protection of Performers, Producers of Phonograms
and Broadcasting Organizations adopted at Rome on 26 October 1961 (the "Rome Convention")
and the Treaty on Intellectual Property in Respect of Integrated Circuits adopted at Washington
on 26 May 1989 (the "IPIC Treaty" or "Washington Treaty").

IP Audit

Identifying all IP Assets - The first step to conducting an IP audit is to identify any and all
intellectual property rights owned by the company. Any patent, registered trademark or copyright
registration should be considered as part of the audit. Pending patent applications, pending
trademark applications, and trade secrets may also be considered. Licensed IP rights can also be
included in an IP audit. Other less commonly encountered forms of IP that should be included in
an IP audit include: trade dress, mask works (which is a special type of copyright),
contracts/licensing agreements, domain names, and hyperlinks.
Assessing the Rights Associated With Each Piece of IP. Once every piece of IP is identified, the
next step is to determine what rights are associated with each piece of IP. By determining what
rights the company has for each piece of IP, a value can be placed on the IP right. For instance,
the company may own a patent for one of its products, but if the company has an exclusive
licensing agreement in place that licenses the right to use the product to a third party, then the
company does not have the right to use the patented invention, even though the company still
owns the patent. The patent still has value for the company, but the right to use is tied up in a
licensing agreement until the time when the licensing agreement terminates.
Secure Rights for Gaps in IP Protection and Addressing Deficiencies. After assessing what IP the
company has and what rights the company has in their IP, the company needs to evaluate if there
are any gaps or holes in their IP protection and take steps to secure the appropriate forms of IP to
fill those gaps. Additionally, if the following have not already been done then ownership should
be established for each piece of IP, recordation of transfers should be verified, and security
interests in the IP should be perfected.
There are many situations that arise in business where an IP audit is prudent. A few examples of
when an IP audit should be conducted by a business include:
As a general rule, IP audits should be conducted at least once a year at the same time each year
during the normal course of business.
IP audits are useful in any situation where due diligence is necessary or after a major business
event. For instance, an IP audit is a good idea whenever there is a merger, acquisition, or
significant purchase of stock,

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IP audits are important whenever there is a transfer of intellectual property by way of a transfer,
assignment or sale.
IP audits should also be conducted prior to entering into new or renewed licensing agreements.
When there is a significant change in the law, it may be smart to conduct an IP audit to re-
evaluate the company’s IP assets in view of the changes in the law.
The value of IP can be difficult to pin down if you do not have any experience with IP valuation.
Companies should hire specialists to conduct IP value determinations. There are three main
approaches to IP valuations, and which is most appropriate for your company’s situation depends
on the IP you own, the purpose of the valuation, and the amount of available data about the IP
assets that are being evaluated. The three approaches include:

The Income Approach - The most common IP valuation approach is the income based approach,
which looks at how much money the IP generates and can generate in the future for the company
based on the remaining life of the IP. This valuation approach takes into consideration any
income generated by the IP at present, and extrapolates into the future the possible income that
can be generated from the IP.
The Market Approach - When there are similar IP rights being bought and sold or licensed in the
market, it is possible to conduct a valuation of your company’s IP rights based on comparable
transactions for IP that are taking place in the marketplace.
The Cost Approach - The cost approach assigns a value to the IP asset based on how much it
would cost to reproduce or obtain the asset. This approach looks at all the costs that go into
securing the IP and assigns this amount as the value of the IP asset.
Many common mistakes that companies make when it comes to IP audits can be incredibly
costly in the long run. That is why it is best to avoid potential pitfalls in your company’s IP audit.
Some examples include:
One of the biggest mistakes that companies make concerning IP audits is not getting an audit in
the first place. Without an IP audit, your company has no idea or record of all of the IP assets
you have and has no way to value those assets. It is impossible to make an accurate valuation of
the company without an inventory of the IP assets you have.
Mistaken about what IP Assets are owned – Businesses sometime think that they own IP rights
that they actually do not own. An IP audit helps identify what assets the company owns, which
assets it does not own, and provides solutions on how to rectify this situation.
Businesses that have an incomplete understanding of what their IP rights entail might mistakenly
assume that they have more rights than they truly do. For instance, registering a domain name is
not the same as trademarking the word used in the domain name. Just because a company
registers a domain name does not mean that the company has the right to use it, especially if
someone else owns a trademark on the name used in the domain name.

Example: An imaginary pen making company mane is Friend’s Company, FRIEND’s is the
trademark of the company. It makes two models of pen, ink pen named GOLDY and roller pen
JOURNEY, which has three different coloured ink in it. The process to make the pen is unique
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and patent protected. The marketing strategy of the company is also unique, a dedicated team is
implementing that strategy and they are under strict confidentiality agreement. The company has
physical assets which are movable and immovable assets and also the IP assets.

The first step in the Audit process is to identify the readily identifiable IP. Assets falling into this
category will include registered trademarks, copyrights, designs or patents owned by the
business, any licenses to third parties and any licenses from third parties, including cross-
licenses. Also included in this category are things such as in-house work manuals, databases,
recipes, franchise agreements, publications and product/process know-how. Once identified the
IP’s are then scrutinized to determine who owns them, whether they have not lapsed (remain
registered) and enforceable and whether they are being effectively used. The Individual
components are also given an importance rating – by looking at factors such as whether or not
they are embodied to core technologies, the life expectancy of the underlying IP in the said
technology and the potential or actual exclusivity of the technology.

The second step is to itemize what might be termed external or market influences. These will
include the company brand, product brands, company and product get-up, goodwill, product
certification, export certifications, regulatory approvals, distribution and raw material networks,
client lists, and marketing and advertising programs.

In trying to estimate the value of any of these items, a good question to ask is how much will it
cost to replace the item if it were lost, what is the expected income, e.g. in the next five years,
that can be generated by the underlying IP assets and how is it being used. Several IP valuation
methods can be used to establish the value of an underlying IP asset.

The above example illustrates how an IP audit can facilitate the identification of importance, in
terms of contribution to company’s competitiveness and bottom line, different IP assets it own or
use. In the example, the most valuable assets are clearly to the Product brands and to a Patent.
Having made this assessment the Company Management may then take informed decisions
measures to be taken in the event that a Company’s IP is infringed. In addition the management
would be in a position to formulate an IP strategy with the objective on ensuring that the
company’s IP assets are used effectively and appropriately. Understanding which of the
company’s IP assets are most important enables their full value to be realized and protected.
To conclude, an IP Audit makes sound business sense. Not only can an Audit identify company
strengths and weaknesses, it is also an extremely useful tool that can be used to bring together all
of the different departments within an organization. All departments have an interest in some
shape or form as to how a product is made, what goes into the product, how it is packaged,
marketed and the price at which it is placed on the shop shelf

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Unit 2 Patent Law

2.1 Introduction

From the historical background of patent system, it is clear that it originated purely for industrial
innovation. One has to come out with the tangible, concrete, manifestation of the ideas in the
form of some invention to get the patent monopoly. It is not an absolute right, but only a limited
monopoly right for a period of 20 years. Patent right is not an automatic right, but statutorily
conferred. One has to satisfy the minimum criteria, and also has to go through the procedure of
the registration, like the application, examination, opposition, and grant. Patent rights constitute a
bundle of rights granted by the state to the applicant of patent for the invention. It provides an
incentive to the inventor/investor to invest in research and development. It gives the assurance
that inventor/investor is going to get the rights for limited period of time. In the absence of this
valid patent system, there would be no incentive; and there is a potential risk that it might be
copied and used by those who did not invest in developing the technology.

A patent grants exclusive rights upon an invention for a particular duration to an inventor in
return for the full disclosure made by the patentee of his invention.The purpose of the patent
system is to promote the advancement of science and technology for public benefit. It reaches
this goal by giving exclusive rights to inventors. By donating exclusive rights, the patent system
provides the stimuli to invent, invest, design and disseminate, which encourages the creation of
inventions and their utilization for public benefit.

India had passed its first patent law in 1856. The first patent law was passed in response to the
recommendations of a committee mandated to revise and update the laws to serve the changing
needs of society. Thereafter, there were several changes and adjustments of the patent law, which
eventually led to the Patent Act of 1970, which came into force on 20 April 1972. The Patents
Act of 1970 was amended three times after India became a member of the WTO. As a member
of the WTO, India had to adhere to a series of agreements, including the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS). The agreement provided basic
standards for IP in all member countries. A basic principle is the principle of non-discrimination,
according to which inventions must not be discriminated against on the basis of the scientific and
technological field to which they belong. Since India discriminated against drugs, chemicals and
certain other inventions by granting only process patents, it had to amend its patent law. A
transitional period of ten years from 1995 has been granted to do so.

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In response, India amended the Patent Act three times in 1999, 2002 and 2005. During the
transition period, India was required to grant exclusive marketing rights to drugs, implemented
by the United States. The 2005 amendment removes discriminatory treatment by granting patents
on products and processes to drugs, chemicals, food related inventions. A mailbox has been
made available during the transition period for applicants wishing to acquire product patents for
medicines, etc., after 2005.

2.2 Non-Patentable Subject Matter

An invention is assessed by the government using patentability criteria. The five patentability
requirements are as follows:

(1) The invention must relate to a patentable subject;

(2) The invention must be new;
(3) The invention must involve an inventive step;
(4) The invention must have an industrial application; and
(5) The invention must be described in detail in a specification and must be activated.

The patentable subject matter requirement is the first and the basic filter to evaluate the
patentability of an invention. The government defines the list of eligible and non-eligible subject
matters for patenting. A list of ineligible subject matters is enumerated by law, also known as
non-patentable inventions. The interpretation for non-patentable subject matter is from the case
laws in the United States; in India and Europe there are statutory list of exclusions and some
judicial interpretation also exists. The United States has only three exclusions: abstract ideas,
physical phenomena, and the laws of nature. In contrast, India and Europe have a long list of
exclusions. Inventions that are not patentable in India are:

1. An invention which is frivolous or which claims anything obviously contrary to well

established natural laws is not patentable in India.1 For example, a perpetual motion
machine supposed to produce output without any contribution would not be patentable
because it would be contrary to the well-established principles of natural law.

2. An invention the primary or intended use or commercial exploitation of which would be

contrary to public order or morality or which causes serious prejudice to human, animal
or plant life or health or to the environment is not patentable in India. 2 For example, a
machine for creating a violent environment would not be patentable because it would be
detrimental to public order.

1
Section 3 (a) of the Indian Patent Act as amended in 2005
2
Section 3(b) of the Indian Patent Actas amended in 2005

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 3. The mere discovery of a scientific principle or the formulation of an abstract theory or
discovery of any living thing or non-living substance occurring in nature would not be
patentable.3 The relativity theory of Einstein, for example, is not patentable.

4. The mere discovery of a new form of a known substance which does not result in the
enhancement of the known efficacy of that substance or the mere discovery of any new
property or new use for a known substance or of the mere use of a known process,
machine or apparatus unless such known process results in a new product or employs at
least one new reactant is not patentable. 4 For the purpose of the provision, salts, esters,
ethers, polymorphs, metabolites, pure forms, particles, isomers, isomeric mixtures,
complexes, combinations and other derivatives of known substances are considered as
identical, in properties with regard to efficiency. For example, if a substance X is known
to treat muscle fatigue, a chloride form of X, XCl, will not be patentable, because it is a
new salt form of a known substance.
.
5. A substance obtained by a mere admixture resulting only in the aggregation of the
properties of the components thereof or a process for producing such substance is not
patentable. In the absence of any synergistic combination a mere physical admixture will
not be entitled for a patent.5 For example, a mixture of sugar with pieces of coconut in
order to make a coconut sweetener is not patented because it is a mere accompaniment

6. The mere arrangement or re-arrangement or duplication of known devices each

functioning independently of one another in a known way is not patentable. 6 For
example, a wristwatch to which a compass is attached is not patentable, because both
devices function independently of each other.

7. A method of agriculture or horticulture is not patentable in India. 7 For example, a method

to grow plants on the roof is not patentable.

8. Any process for the medicinal, surgical, curative, prophylactic, diagnostic, therapeutic or
other treatment of human beings or any process for a similar treatment of animals to
render them free of disease or to increase their economic value or that of their products is
not patentable.8 For example, a method for performing acupuncture for treating muscle
pain is not patentable. Moreover, a method to perform an operation to remove cancer
tissue is not patentable.

3
Section 3(c) of the Indian Patent Act as amended in 2005
4
Section 3(d) of the Indian Patent Act as amended in 2005
5
Section 3(e) of the Indian Patent Act as amended in 2005
6
Section 3(f) of the Indian Patent Act as amended in 2005
7
Section 3(h) of the Indian Patent Act as amended in 2005
8
Section 3(i) of the Indian Patent Act as amended in 2005

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 9. Plants and animals in whole or any part thereof including seeds, varieties and species and
essentially biological processes for production or propagation of plants and animals are
not patentable.9 For example, a genetically modified mouse that is an animal, a rose plant
that is a plant, a process of selection and proposing a coffee plant that is essentially a
biological process, is not patentable, whereas a genetically transformed bacterium that is
a micro-organism, patentable.

10. A mathematical or business method or algorithm or a computer programme per se is not

patentable.10 For example, a method for purchasing, selling and distributing furniture is
not patentable. Moreover, because it is a business method, a computer program for
displaying screen protectors is not patentable because it is a computer program in itself.

11. A literary, dramatic, musical or artistic work or any other aesthetic creation including
cinematographic works and television productions are not patentable. 11 For example,
books, plays, etc. are not patentable.

12. A mere scheme or rule or method of performing mental act or method of playing a game
is not patentable.12 For example, a way to play chess is not patentable. Furthermore,
presentation of information in any format is not patentable in India.13 For example, a
patent will not be granted on a PowerPoint presentation.

13. Topographies of integrated circuits are not patentable in India. They are protected by
different legislation.

14. An invention which, in effect, is traditional knowledge or which is an aggregation or

duplication of known properties of traditionally known component or components is not
patentable.14 For example, the use of ginger for stomach problems is not patentable.

15. Inventions relating to atomic energy are not patentable.15

As in India, Europe has a long list of non-patentable inventions. In summary, patentable

substance has two dots, competent substances and exclusions. An invention that is patentable
must be included in the list of eligible substances and outside the list of exclusions or non-
patentable inventions.

9
Section 3(j) of the Indian Patent Act as amended in 2005
10
Section 3(k) of the Indian Patent Act as amended in 2005
11
Section 3(l) of the Indian Patent Act as amended in 2005
12
Section 3(m) of the Indian Patent Act as amended in 2005
13
Section 3(n) of the Indian Patent Act as amended in 2005
14
Section 3(p) of the Indian Patent Act as amended in 2005
15
Section 4 of the Indian Patent Act as amended in 2005

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2.3 Novelty

Novelty requirement verifies whether an invention is new in the light of what already exists
(state of the art) and thus a patent grant. The novelty of an invention is evaluated on the basis of
any description (state of the art) with respect to the invention and that is in the public domain
before the application is filed by the patent application of the present invention. One can imagine
the evaluation of the novelty by considering a conventional weighing balance whereby the
present invention is placed on one of the plates and the references of the prior art will be placed
on the other plate. The plate on which the present invention is placed should weigh more for the
invention to pass the news filter.

The Indian Patent Act defines 'new invention' as any invention or technology that is not expected
by publication in a document or used in the country or anywhere else in the world prior to the
filing date of a full specification patent application. The state of the art that anticipates an
invention and negates the novelty of an invention can be categorized as follows:

1) Anticipation by publication;
2) Anticipation through public knowledge and public use;
3) Anticipation by public display; and
4) Anticipation by sale.
Any of the foregoing categories of prior art to negate novelty or to anticipate an invention should
disclose every feature of the claimed invention. Further, in order to determine the novelty of an
invention, a single prior art is contemplated. The disclosure in this single prior art should negate
novelty or anticipate the invention.16

i. Anticipation by publication

For a publication to become prior art for an invention, the publication must meet the following
conditions:
a) The publication must disclose every feature of the claimed invention, and
b) i. The publication should be an Indian patent application published prior to filing the
complete description of the invention;17 or
ii. The publication should be an Indian patent application filed prior to the filing of the
complete description of the invention and published after the complete description of the
invention has been filed;18 or
iii. The publication may be any type of publication anywhere in the world prior to the
date of the patent application relating to the invention;19
16
Manual of patent practice and procedure, 2008, section 3.3.4
17
Section 13(1)(a) of the Indian Patent Act as amended in 2005
18
Section 13(1)(b) of the Indian Patent Act as amended in 2005
19
Section 13(2) of the Indian Patent Act as amended in 2005

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In other words, an invention will be new if there is no patent application for the same invention
submitted prior to the filing date in India and if there is no publication relating to the same
invention anywhere in the world prior to the application date filing patent application in
connection with invention. However, there are some exceptions to this rule.

Exceptions to Anticipation by prior publication:

It is not assumed that the prior publication negates the novelty or anticipates an invention if the
publication is under one of the following conditions:
1. The applicant / patent holder demonstrates that the published case was unjustly obtained
by the person who published it by the applicant and by the patent holder; and the
applicant / patent holder has filed a patent application as soon as reasonably practical
after learning of the publication.20
2. A complete specification was submitted by a person, and later the invention was
published or used in violation of the rights of the true and first inventor or of a person
who has obtained the rights from him.21
3. The invention is communicated to the Government or to any person authorized by the
Government to investigate the invention or its merits.22
4. If the invention is read on a paper by the real and first inventor to a learned society or
published with the consent of the inventor in a transaction of such a society and if the
patent application related to the invention is published within twelve months.23

ii. Anticipation by public knowledge and public use

When an invention is in the public domain in the form of public knowledge before filing a patent
application for the invention, the novelty of the invention is lost. In this case, the knowledge
should be easily accessible to the public. Furthermore, if the invention is publicly used prior to
the filing of the patent application for the invention, such public use will mean that the invention
is considered to be novelty-neutral. The invention is used as public only when used in India.
However, if the use of the invention was in secrecy, that use will not be considered as public use.

iii. Anticipation by public display

Public display of an invention prior to the filing date of the patent application will anticipate the
invention. However, if an invention is shown by the inventor in an exhibition published by the
central government in the Official Gazette, such public display or use of the invention in
presenting or disclosing details of the invention as a consequence of the exhibition will not

20
Section 29(2)(a) and 29(2)(b) of the Indian Patent Act as amended in 2005
21
Section 29(3) of the Indian Patent Act as amended in 2005
22
Section 20 of the Indian Patent Act as amended in 2005
23
Section 31(d) of the Indian Patent Act as amended in 2005

11
anticipate the invention, provided that: a patent application is filed within twelve (12) months
from the date of such a public display.

iv. Anticipation by sale

If an invention is offered for sale in India by the applicant prior to the date of the patent
application or if it is operated commercially, then it will not be considered as new. However, if
the invention was on reasonable trial, it will not be obviated, provided the application is made
within twelve months of the date of the first trial.
The novelty requirement is roughly similar to India in Europe and a bit wider in the United
States. The US law provides for a grace period for publishing and selling, which is narrow or
does not exist in India and Europe. In addition, US law follows the first to invent system and
provides provisions on meddling of a previous inventor to ignore the novelty of an invention.

2.4 Inventive Step/Non-Obviousness

Inventive step, or non-obviousness, is an extension of novelty and analyzes whether an invention

deserves patentability from the viewpoint of the skilled artisan in view of the combined prior art.
An invention is intended to have an inventive or non-obvious nature, if not obvious to person
having skill in the art. In India, an invention is meant to be inventive when the invention is:
1. technically advanced or of economic significance in the light of the prior art; and
2. was not obvious to the skilled artisan (person skilled in the art).
The patent law of India does not define the terms "technical advance" and "economic
significance". The person skilled in the art is considered to be an ordinary practitioner who is
aware of what was generally known in the art at the relevant time. 24 If such a person feels that the
invention is obvious, the invention would not fulfill the inventive step criteria.
To evaluate the inventive step, all the information in the prior art references may be combined
provided they are all in the same art. Some of the questions that are considered when
determining the inventive step are:
 What was the problem to which the patented development referred?
 How long had this problem existed?
 How significant was the problem?
 How far was the problem known and how many were looking for a solution?25
The Indian Patent Office is pursuing a problem-solution approach. The first step is to identify the
problem solved by the invention and determine whether the solution proposed by the invention is
obvious in view of existing solutions. Secondary indications such as commercial success, long-

24
Manual of patent practice and procedure, 2008, section 3.51.2
25
Manual of patent practice and procedure, 2008, section 3.14.1

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felt but unresolved needs and other secondary factors are also contemplated in the assessment of
inventive step.
In the most important case of inventive step in India, Bishwanath Prasad Radhey Shyam v. M/s
Hindustan Metal Industries,26 the Supreme Court of India explained that to be patentable, an
improvement of something known or a combination of different things is already known, it
should be more than just a mere workshop improvement and must independently fulfil the test of
the invention or inventive step.
The court further stated that the improvement or combination to be patentable must produce a
new result or article, or a better or cheaper article than what already existed. According to the
court, an invention would have an inventive step if the combinations of old known integers could
be combined to produce a new process or an improved result through their cooperation.

2.5 Industrial Application

 The act defines "industrially applicable" to an invention that can be manufactured or used
in an industry

 An invention can be applied industrially if it cumulatively fulfills the three conditions

 can be produced;
 can be used in at least one field of activity;
 can be reproduced with the same characteristics as necessary

2.6 Drafting of a Patent Specification

Introduction

In order for an applicant to obtain patent rights, the Applicant should disclose his invention to the
Patent Office. The specification must accompany the patent application and, on the basis of the
information contained in the description and the claims contained therein, the Patent Office will
determine whether the invention is patentable.

Patent Specification

A patent specification is a document by which an inventor discloses the details of his invention
to the Patent Office and the public. The patent is a techno-legal document that must be filed with
the patent office together with a patent application. The patent is a technical document because it
contains the technical aspects of the invention. Moreover, it is also a legal document because it
26
AIR 1982 SC 1444

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describes the legal limits of protection pursued by the inventor. The language used in a patent
has an amalgamation of technical and legal terminology.
There are two types of patent specifications viz,

1) Provisional specification; and

2) Complete specification

 Provisional specification

A provisional specification is a document that generally, but not exhaustively, discloses an

inventive concept. The provisional specification is submitted primarily to secure a ‘priority date’
when the inventor needs more time to work out and perfect the details of his invention.
Therefore, the provisional description rarely discloses all relevant details of the invention in a
sufficiently clear and complete manner. Although full information is not required, it is
recommended that the provisional specification must provide as much information as the
inventor/applicant has about the invention at the time of submission, as the provisional
specification will be used at a later stage to determine whether the complete specification claims
the invention which is part of the provisional specification.Drawings relating to the invention
may also be submitted with the provisional specification, and such drawings are considered part
of the specification.27

 Complete Specification

A complete specification is a document that describes all the particulars of an invention in a

sufficiently clear and comprehensive manner, as opposed to revealing a broad inventive concept
in the provisional description, so as to allow a person who has ordinary skill in the art to practice
the invention. The complete specification is also different from that of the provisional
specifications because it must end with a claim or set of claims. As a fundamental aspect of
specification creation, it should be understood that each claim in the complete specification
defines an invention. Therefore, each claim has a respective priority date.28 A priority date is the
date on which an application for the patent was filed for the first time in a Convention country.
In such a case, if within 12 months, applications are filed in other Convention countries, the
novelty of the patent is not killed by the prior patent application. Thus when an application is
filed in another Convention country, the 12 month period to determine novelty of each claim is
calculated with respect to the priority date of each claim.

The complete specification can be filed in two ways:

1. Subsequent filing; or
2. Direct filing
27
Section 10(2) of the Indian Patent Act as amended in 2005
28
Section 9 of the Indian Patent Act as amended in 2005

14
In subsequent filing, the full specification will be submitted after submission of the relevant
provisional specification and further priority is claimed from the relevant provisional
specification. This subsequent submission of the complete specification should be made within
twelve months of the “priority date” or the filing date of the provisional specification. 29 Further,
when the description in the complete specification refers to the drawings filed with the
corresponding provisional specification, these drawings may be incorporated by reference
without the drawings having to be submitted again with the complete specification.30

In addition, the subject-matter claimed in the complete specification should be sufficiently

supported in the provisional specification to take precedence over the corresponding provisional
specification.31 For example, consider the following scenario:

Filing format

The provisional or complete specification and associated drawings must be prepared on A4 size
paper of about 29,7 x 21 cm with a margin of at least 4 cm on the upper and left part and 3 cm on
the lower and the right part thereof. 32 The drawings should be delivered as a different set of
papers and not appear in the specification itself.33

Parts of the complete specification

The complete specification should be formulated in Form 2 and submitted to the Indian Patent
Office. The complete specification must be created in the following format:

1) Title;
2) Preamble of the invention;
3) Technical field;
4) Background of the invention;
5) Objects of the invention;
6) Statement of the invention;
7) Brief description of the drawings;
8) Detailed description of the invention;
9) Claims; and
10) Abstract.

Title

29
Section 9 of the Indian Patent Act as amended in 2005
30
Rule 13(4) of the Indian Patent Rules 2003
31
Section 11(2) of the Indian Patent Act as amended in 2005
32
Rule 9(1)of the Indian Patent Rules 2003
33
Rule 15(2) of the Indian Patent Rules 2003

15
The full description should begin with the title of the invention. The title should fairly grasp
certain features of the invention. It should not exceed fifteen (15) words. 34
Furthermore, the inventor's name, the word "patent", words in other languages, the abbreviation
"etc." and fancy words may not be used in the title. 35 However, words like improved or
improvements can be used in the title.

Preamble of the invention

The preamble of the invention should indicate that “the following description particularly
describes the invention and the manner in which it is to be practiced.” The preamble, along with
the title of the invention, should indicate the name, address and nationality of the applicant on the
first page of Form 2.

Technical Field

The section “Technical Field” in the description will indicate to which scope the invention
belongs and in particular specifies the subject matter of the invention. For example, the technical
field may indicate “The invention relates generally to dispensing machines, and more
particularly to a machine dispensing coffee.”

Background of the Invention

The aim of this section is to distinguish the present invention from that already practiced in the
industry. The above object is achieved by briefly discussing the teachings of the prior art and the
disadvantages or disadvantages of such teachings, if any. This section provides the conditions to
describe the present invention clearly and in detail at a later date.
For example, when the invention relates to a coffee dispenser incorporating a crusher as a new
and inventive concept for grinding the coffee seeds, the disadvantages or disadvantages of the
existing coffee dispenser (assuming that the concept of grinding the coffee has seeds in the
coffee output machine itself is not present in the existing coffee dispensing machine) can be
discussed briefly.

Objects of the invention

The aim of this section is to bring about the need for the invention. This section aims to achieve
the objects, advantages or solutions achieved by the application of the present invention. It may
contain statements such as “The main object of this invention is ... Another object of the
invention is ......; Yet another object of the invention is ...” and so on.

34
Rule 13 (7)(a) of the Indian Patent rules 2003
35
Manual of Patent Practice and Procedure, third edition, 2008, section 5.6.1 (a), page 104

16
Statement of the Invention

This section is usually designed to introduce omnibus claims. This section should list the
independent claims in plain language. The section may include statements such as,
“Accordingly, the invention provides an apparatus that includes ......”

Brief description of the drawings

This section refers to all illustrations in the "Drawing" part of the specification. In this section, a
brief discussion will be given regarding the embodiments illustrated by each of the figures.

Detailed description of the invention

The aim of this section is to provide sufficient details of the invention. The preparation and use
of the invention and the objects, advantages or solutions achieved by the use of the invention (as
discussed in the section "Objects of the Invention" of the specification) should be explained in
detail.36 Furthermore, the details of the invention should be explained with reference to the
drawings. The details provided in this section are considered to be sufficient if one of ordinary
skill in the art is able to practice the invention without undue experimentation. This section may
also include examples to facilitate a better understanding of the invention. Further, this section
should provide or disclose the best mode of carrying out the invention which is known to the
Applicant.37
Claims

Claims are the sum and substance of the patent. The patent rights are granted to the claimed
subject matter. The subject matter which is in the description but not claimed is considered
unclaimed and therefore made available to the public.

Each claim is a distinct invention and therefore all claims will not be invalidated if any claim is
invalid.

A claim is a sentence and should therefore begin with a capital letter and end with a period. The
‘Claims’ section of the specification should begin after the “Detailed Description of the
Invention” section on a separate page. The preamble of the claim section should read: “I claim,”
“We claim," or “What is claimed” and should match the claim lists.

36
Section 10 (4)a of the Indian Patent Act as amended in 2005
37
Section 10(4)b of the Indian Patent Act as amended in 2005

17
Almost always, the first independent claim is broadly worded to cover the important aspects of
the invention. Further details of the invention may be covered in dependent claims which have a
close coverage. To vary the scope of protection different claims can be made
A claim must be divided into three parts, namely introductory sentence, body and a link
connecting the introductory sentence and the body.

Some flow chart next will describe the examination of patent application to assess novelty and
inventive step:

Determination of Claimed Invention

Determination of the closest prior art

Identification of the differences between the

claimed invention and the closest prior art

Identical Different

The claimed Considering whether or not the claimed

invention invention would have been obvious to the
skilled person
Lacks Novelty

Obvious Non-obvious

The claimed invention The claimed invention

lacks inventive step involves an inventive step

18
 Flow Chart to Assess the Novelty and Inventive Step of an Invention

2.7 Patent Procedure

For understanding the Indian Patent Laws properly, one need to have an in-depth understanding
of the ‘Patent Procedure’. And hence whenever one is referring to ‘Patent Procedure’ it means
and includes the rules related to the process of patent filing and applications regarding patent
prosecution in a particular jurisdiction.
According to the Indian Patent regime, the ‘Patent Procedure’ can be divided into following six
stages:
 Filing
 Request for Examination
 Examination
 Publication
 Opposition- Pre Grant and Post Grant
 Registration and Renewal fee payment

Filing

Patent application filling is considered to be the first step for patent grant and the first question
that need to be answered is that, ‘who is considered to be eligible to file a patent application?’
The answer to this question can be found in the Patents act which states that a patent application
can be filed either by a person who claim to be the true and first inventor or the application can
be filed by the investor of the true and first inventor. 38 Not only this, the patent application can
also be filed by the legal representative of any deceased person who was entitled to file such an
application immediately before the death of the true and first inventor. 39 Another essential point
to be kept in mind is which office to approach for the patent application. The person with the
patent application has to approach the Patent Office which has four branches across India i.e.
Delhi, Mumbai, Kolkata and Chennai. These offices have their jurisdictional limitations means a
patent application originating from any particular region of India can approach only a specific
branch office which has jurisdiction over that area. For example, a patent application from
Kerala can only be filed in Chennai office and not in Delhi or any other office.
Three types of filing is there
 National Application

38
Section 6 (1) (a) & (b), The Patent Act, 1970 as amended in 2005.
39
Section 6 (1) (c), The Patent Act, 1970 (as amended)

19
  Convention Application (administered by Paris Convention among Paris Convention
Union countries) - An application for patent filed in the Patent Office, claiming a priority
date based on the same application filed in one or more of the convention countries, is
called a convention application. In order to get convention status, an applicant should file
the application in the Indian Patent Office within 12 months from the date of first filing
of a similar application in the convention country. Any interested party needs to file each
and every country separately. Convention Application administered by WIPO under the
provisions of Paris Convention among Paris Convention Union countries, 177 countries
are Parties of it.
 PCT Application– Patent Cooperation Treaty (PCT) was concluded at Washington on
June 19, 1970. As the name itself suggests this treaty was concluded with the central
objective of providing international cooperation between various nations in the wake of
making international patent filings convenient for the applicants. Before the PCT came
into existence the only system of international patent filings available was under the Paris
Convention. Under PCT application any interested party can apply various countries at a
time. For convention application there is no option for choosing various countries under
one application. The PCT came as an alternative route of international patent filing with
its own set of rules and regulations. Presently there are 152 contracting parties to PCT.
The Patent Cooperation Treaty (PCT) provides a patent filing system wherein the patent
office of applicant’s country (or alternatively International Bureau) becomes the
Receiving Office (RO) where the PCT application can be filed. While filing the
application the applicant can designate countries where he wishes to apply for patent
protection. Generally, all the countries are designated by default at the time of filing and
later at the time of national phase entry of the PCT application the applicant can choose
which countries to enter. The PCT application procedure consists of two phases i.e. the
international phase where once the PCT application is filed an International Search
Report is generated by the International Searching Authority and the national phase
where national applications are filed corresponding to the international PCT application.
There are multiple advantages of filing a PCT application as against filing convention
applications under the Paris Convention. Some of these advantages are – (i) The
application is filed at the RO and countries can be designated where patent protection is
desired. The requirement of physically filing the application in different countries is done
away with; (ii) An international search report is generated by an International Search
Authority, which gives the applicant a fair idea about the patentability of the invention;
(iii) The applicant gets 30 or 31 months to apply for the patent in individual countries as
opposed to 12 months in case of Convention filing under the Paris Convention.

PCT Application procedure may be summarized with the help of the following flow diagram:

20
 Time Line Process Process Time Line
(in months) (in months)

National/Regional 0
PCT Application
0 .. ………. Application …………

Filing og
……… 12
application with
PCT

16 …………………….. International Search ……………………... 16

Report

18 ……………………. International ………………………18

Publication

International
National Phase entry in
………… some countries Preliminary 22
…………..
20
Examination

International
Preliminary Report ………. 28
on Patentability

Entry into National

Phase for Other
…………..30/31
Countries

Note- The time period has to be counted from the date of priority or filing of Application
whichever is earlier

Request for Examination (RFE)

RFE is the second mandatory stage after the application filing at Indian Patent Office. It is a
request to the patent office, which need to be filed within 48 months of the priority date, for the
examination of the patent. If not filed within the stipulated time, the patent application is
considered to be withdrawn and hence it is advisable to file the RFE as soon as possible because
after the filing of RFE only, the Patent office will queue the application for the process of
examination.

21
Publication

Publication of the patent application is the third stage under which the application needs to be
published upon expiry of 18 months of the priority date. In case some secrecy direction has been
issued for the application, then the publication should happen either after the cessation of the said
direction or after expiry of 18 months whichever is later. If the application is intended for the
PCT filing but is currently at national phase, the publication needs to happen immediately after
filing. In case the application is not published after the said stipulated period of 18 months, the
application would be deemed to be published and will have the same effect so.

There are two reasons which makes the publication really important, they are:

Firstly, the publication date of the application commences the Patent holder’s right so that in case
after the patent grant if the right holder sues for infringement and succeed, the damages will be
calculated from the date of publication only.

Secondly, the publication will open the door for the pre-grant opposition by the third parties.
There is also available with the application an option of early publication of application where if
the applicant doesn’t want to wait for the completion of 18 months, he/she could apply for early
publication in which case the application would be published within one month of filing for said
request. It needs to be noted here that since the publication date has such significance, the
applicant has to think smartly regarding whether to go for the early publication or not. On one
hand the early publication will open the doors for pre-grant opposition and on the other hand it
will ensure the early commencement of the right of applicant.

Examination
The examination of the patent application will be done only after RFE. After receiving the
examination application, the Controller of Patent refers the same to the examiner within one
month from the date of publication or request for examination, which ever is earlier. 40 The
examiner on receiving the application will review the application and make a report in respect of
the following:

 whether the form of application and specification are in accordance with the
requirements of the Patent Act and the Rules; and
 whether the invention that forms part of the patent application satisfies the
patentability requirements such as subject matter, industrial applicability, novelty,
inventive step and specification.41

40
Section 12(1), The Patents Act, 1970 (as amended)

22
After the examination, the First Examination Report (FER) will be sent to the applicant, or if not,
then to his authorized agent only. The FER will not be sent to any third party (Interested person)
if the said third party is the applicant for the examination, but only an intimation of such
examination will be delivered.

Putting application in order for grant

After the issuance of the First Examination Report, the applicant has 6 months from the date of
the FER to comply with the requirements. However, it is advisable to respond as early as
possible. By responding early, there will be an opportunity to the Patent Office to issue another
examination report. Please note that issuance of subsequent examination reports by the Patent
Office and responding to the same by the applicant can occur within 12 months from the date of
the FER. This scenario is known as putting the application for grant. The patent application will
be deemed to be withdrawn in case all the requirements mentioned in the report are not met
within 12 months. It needs to be considered here that the applicant should file a response to the
examination report as soon as possible and meet all the requirements effectively of subsequent
examination reports. From the practical viewpoint, in case there is an adverse decision on the
application, the applicant should request for the hearing before the controller as this will ensure
that the patent is not rejected without hearing.

Opposition- Pre Grant and Post Grant

 Pre Grant-Representation

After the publication of the application, the patent is open for the opposition which can be done
by anybody. The representation for the pre-grant opposition need to be made before the grant of
the patent and according to the Patent Rules the patent can not be granted before the passing of 6
months from the date of publication for application. Hence at least 6 months is available for
making the pre-grant opposition and it is advisable to make it as soon as possible. Various
grounds for pre-grant opposition could be:

 Patentability of the invention including Novelty, inventive step and industrial application,
 Non-disclosure or wrongful mentioning of the source and geographical origin of
biological material used in the invention,
 Anticipation of invention by knowledge, oral or otherwise available within any local or
indigenous community in India or elsewhere,
 Wrongful obtaining,
 Prior publication,

41
Dr. Kalyan C. Kankanala, Arun Narasani and Vinita Radhakrishnan, Indian Patent Law and Practice, pg. 70, OUP Publications,
ISBN: 0-19-806774-7 978-0-19-806774-0

23
  Prior claiming,
 Prior public knowledge and use in India,
 Insufficiency of description,
 Failure to disclose the information regarding corresponding foreign application or
furnishing false information,
 Failure to file convention application within twelve months from the date of first
application made in the convention country,

 Post Grant opposition

A post-grant opposition could be made only by an Interested Person that too within a period of 1
year from the date of grant. According to the Patent Act, ‘Interested Person’ is ‘a person engaged
in, or in promoting research in the field of the invention’. 42 The Interested person needs to have
the bonafide interest in the invention and he has to prove that he is the person interested in the
invention. For example: suppose ‘A’ gets a patent on accelerator paddle with a motion sensor,
then any mechanical engineer engaged in any car manufacturing company could be considered to
be interested person.

Post grant opposition procedure may be summarized with the help of the following flow
diagram:

42
Section 2 (t) of Indian Patent Act, 1970.

24
 Post Grant
Publication

Notice of Opposition within 12 months of publication. By Interested Person

(opponent)-Grounds under Section 25(2)

Writt en Statement and Evidence

Patent Holder is Controller constitutes

Notified Opposition Board

Patent Holder can contest -Reply

statement and evidence within 2 Refers the Opposition to the
months from date of receipt of Opposition Board
notice from controller

Opponent can file evidence in response Report within three months from
to the Patent Holder evidence within one reference- every ground of opposition
month from receipt of such evidence – with joint recommendation

.
Hearing Notice sent by
the Controller

Hearing (If parties want)

Revoke the Reject

Requires
Patent Opposition
amendment in
Patent

Registration and Renewal fee payment

After the publication of the patent application if all the objection raised in the examination report
are met and there is no pre-grant opposition, the application will then proceed toward the final
registration and grant of patent. If there is pre-grant opposition pending, then the patent will be
granted after the dismissal of the same.
Coming to the payment of renewal fee, the fee needs to be paid for 20 years for the maintenance
of the Patent. And there could be two possible situations with respect to the first renewal
payment;
 If the Patent is granted within 2 years from date of filing, then the renewal fee needs to be
paid before expiry of those 2 years,
 If the Patent is granted after 2 years from date of filing, the renewal fees need to be paid
within 3 months from the date of recordation of patent.


25
2.8 Patent Infringement

A Patent is an exclusive right granted to an inventor for the invention claimed and under Indian
Laws the patent could be grated either to the Product or the Process or both. 43 This gives the

43
Section 48, The Patents Act, 1970
Section 48 reads as follows:
“Subject to the other provisions contained in this Act and the conditions specified in section 47, a patent granted under this Act
shall confer upon the patentee -
(a) where the subject matter of the patent is a product, the exclusive right to prevent third parties, who do not have his consent,
from the act of making, using, offering for sale, selling or importing for those purposes that product in India;
(b) where the subject matter of the patent is a process, the exclusive right to prevent third parties, who do not have his consent,
from the act of using that process, and from the act of using, offering for sale, selling or importing for those purposes the product
obtained directly by that process in India”.

26
Product Patent holder a right to exclude others from manufacturing, making, selling, offering for
sale, etc. of protected product in the country or importing into the country where the product is
protected.44 Similarly, it gives a Process Patent holder a right to exclude others from using the
process for making any product, also it grants the patent holder to exclude others from
manufacturing, selling, making, offering for sale, importing of products made using the process
which is patented.45 This exclusive right commences from the date of the publication of
application and could be exercised till the expiry of term of the said patent, but the exclusive
right could be exercised only after the grant of the patent.

A patent is considered to be infringed when any person exercises the exclusive right of the Patent
holder without his permission within the country of patent grant and within the term of
protection. An infringement could be assessed by ascertaining following things:

 Whether the person alleged of infringement exercised the rights of the patent holder
with respect to the patented invention?
 Whether the rights have been exercised without authorization of the patent holder?
 Whether the actions of the alleged infringer are within the country or territory of patent
grant? and
 Whether the patent has not expired or lapsed?

A Patent would be considered to be infringed if the answers to all the above question are
positive. The most contentious question among above is the first one because a person would be
considered to infringe the patent if his product or process falls within the boundaries of the
protected invention. Also, in any patent protection, claims are considered to be the one limiting
and defining the scope of the protection and hence a product or process will be considered to
infringe any patent if that product or process falls within the limits of those claims. Hence,
understanding the meaning and scope of patent claims (“claim construction”) is important for
determining infringement.

‘Claim Construction’ is the term used to describe the process of construing the claims of a patent
to give them meaning, which is then compared to an allegedly infringing device or method to
determine infringement or to prior art to determine validity. 46 The scope of the claim will be
decided by the state of art, specifications, prosecution history, dictionaries and so on. Also, the
Preamble of the claim may some times act as a limitation of the scope of the claim.
Based on its nature, infringement may be classified into two types:
A. Direct Infringement; and
44
Section 48(a), The Patents Act, 1970.
45
Section 48(b), The Patents Act, 1970.
46
Mariappan Vs.A.R. Safiullah, MANU/TN/0828/2008 at Para 36 citing Raj Prakash v. Mangat Ram Choudhary and Ors.,
MANU/DE/0152/1977.

27
 B. Indirect Infringement.

Direct Infringement
Direct infringement is again classified into two types:
 Literal Infringement; and
 Equivalence Infringement.

Literal Infringement

An infringement would be termed as Literal Infringement when all the elements of any claim
could be found in the alleged product or process. To determine the literal infringement, one
needs to compare the elements of claim to those of the alleged product or process one by one.

Equivalence Infringement

If a product or any process literally does not infringe any claims of a patent, the determination of
equivalence infringement is carried out. If there is a difference between the elements of any
process or product from those of the claim elements by equivalence, then there exists
Infringement by equivalence. There are various tests to assess the equivalence of an element to
that of the claim element. In India, if the product in substance is equivalent to the claim, then that
product or process is infringing. The presence of any insubstantial changes and non-essential
elements are not sufficient for alienation of an infringing product or process from infringement.
If in a product or process the core of the claimed invention has been copied, then there exists
substantial equivalence.

Indirect Infringement

If a person encourages, induces or instigates another person to infringe a product or process it is

said to be indirect infringement. Indirect infringement hence, would not exist without direct
infringement. In cases of such infringement, the person encouraging or inducing does not
infringe the patent directly but does so by inducing another person. It becomes clear that,
intention is an important factor to determine the existence of indirect infringement. Such
infringement may exist if the encouragement or inducement is done through sales,
advertisements and so on.

Contributory infringement is one of the kinds of indirect infringement. A person will be liable if
under contributory infringement, he knowingly facilitated infringement by way of sales of any
material component of the product patented. In such cases, the material component should not be
staple or generally available in the market and also has non-infringing uses.

28
2.9 Defenses

A person can save himself from liability of infringement by using the defenses to infringement.
In such situations, even if the product or process is infringing the person will not be liable for
infringement because he falls under the scope of one of the defenses. Some of the important
defenses are:

a. Experiment, Research or Education;

b. Bolar Exemption;
c. Government use;
d. Patent Exhaustion;
e. Patent Misuse; and
f. Inequitable Conduct.

Experiment, Research or Education

If patented inventions has been used for experiments or research it is a valid defense to patent
infringement. The provision under the Indian law relating to such experimentation or research
has expansive language usage that can be interpreted to having a very broad scope. 47 The use of a
patented invention for educational purposes in addition to research, is also a valid defense in
India.

Bolar Exemption;

Any patented drug can be used for conducting studies, trials and experiments without liability of
infringement to receive authorization from drug approval authorities. 48 Because of its enactment
in USA after the decision in Roche v. Bolar49such a defense is called the Bolar Exemption. The

47
Section 47(3), The Patents Act, 1970.
Section 47(3) reads as follows: The grant of patent under this Act shall be subject to the condition that
“… (3)any machine, apparatus or other article in respect of which the patent is granted or any article made by the use of the
process in respect of which the patent is granted, may be made or used, and any process in respect of which the patent is granted
may be used, by any person, for the purpose merely of experiment or research including the imparting of instructions to pupils;
…”
48
Section 107A(a), The Patents Act, 1970.
Section 107A(a) reads as follows: For the purposes of this Act, -“(a) any act of making, constructing, using, selling or importing
a patented invention solely for uses reasonably relating to the development and submission of information required under any law
for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or
import of any product; …”
49
Roche Products, Inc. v. Bolar Pharmaceutical Co. Inc., 733 F.2d 858 (C.A.Fed.,1984).

29
provision in India has been worded in very broad language and includes government approvals
for any invention and not only drug related ones.

Government use

If the importation, manufacturing or usage of a patented invention is done by the government or

on behalf of the government it constitutes a valid defense. 50 If the activities are only merely
related to purposes of government’s own use such a defense is available. Initially, the courts
expounded the scope of the defense for government use only to government officers and
departments. However, in a recent decision of the Delhi High Court it as stated that the
government use exemption will also extend to the contractors of the government as well.

The Garware Wall Ropes Case

In Garware Wall Ropes Ltd v Al Chopra and Konkan Railway Corporation Ltd. (2009 (111)
Bom LR 479),51 the appellant filed for a temporary injunction as well as rendition of accounts
against the respondents for infringing his patent. The respondents pleaded immunity under
Section 100, by stating that Section 100 of the Patents Act grants complete protection for using
the patents for the work of railways, which is a department of the central Government and such
contracts are signed on behalf of the president of India.
The respondents also contested the infringement action by stating that the patens had been in use
for at least two decades and there was delay and laches on the part of the appellant. The court
ruled that patented locking systems were inventions within the meaning of Section 2(1) (j) of the
Patents Act involving inventive steps and the appellant was the true and first inventor. The court
also said that the suit was filed in civil court, which took time to give its decision. Moreover,
there was no delay or laches as infringement still continued.
The ambit and scope of Section 100 was headed by the court, after which it held that: “Under
Sections 99 and 100 even a third person, can be allowed to use the patent for the purposes of
Government or Government undertakings provided an agreement or license is given by the
patentee to such third person and upon payment of royalty.”
Section 47 also identifies instances where the government may import or manufacture any
patented product or patented process merely for its own use. To the inventor, a patent system
confers certain definite advantages. A search of Section 47 and 48 clarifies that provisions of
Section 47 curtail the rights of the patentee under Section 48, but such curtailment is not in
entirety, even in respect of Government.
The court recognized that Section 48 creates certain rights in favour of the patentee, which
cannot be taken away in the manner that was being done. At this stage, the court referred to

50
Section 47(1), The Patents Act, 1970.
Section 47(1) reads as follows: The grant of patent under this Act shall be subject to the condition that
“(1) any machine, apparatus or other article in respect of which the patent is granted or any article made by using a process in
respect of which the patent is granted, may be imported or made by or on behalf of the Government for the purpose merely of its
own use; …”
51
Garware Wall Ropes Ltd v Al Chopra and Konkan Railway Corporation Ltd (2009 (111) Bom LR 479).

30
Section 156, which says that a patent shall have same effect as against Government, as it has
against any person. Under Section 47, the government may practice the invention “merely of its
own use”, as against this, if the government uses them or any person authorized by the
government under Section 100, it has to be through an agreement or license by the patentee.
Section 47 of the Patents Act also outlines other instances where patented inventions may be
used, such as for imparting educational instructions and the distribution of patented medicines in
government dispensary or hospitals on account of public service.

The Chemtura Case

In Chemtura Corporation v. Union of India and Ors 52., wherein the suit was filed before the
Hon’ble High Court of Delhi relating to use by or on behalf of the Government for the purpose
merely of its own use. The patent holder in the case, Chemtura, filed a patent infringement suit
against Union of India and others with respect to an invention concerning side bearing pad
assembly and sought a temporary injunction during the pendency of the suit. The infringement
action was filed against Government of India and a consortium that supplied the product falling
within the scope of the Chemtura’s patent under a railway contract. The consortium got the
contract through a public tender for supply of products based on drawings provided by the
Ministry of Railways.
While making a decision on the grant of temporary injunction, the Delhi High Court observed
that the consortium would not be liable for patent infringement because the manufacture and
supply of the patented invention by the consortium would amount to government use under
Section 47 of the Patents Act. Relevant portion of Section 47 of the Patents Act reads as follows:
“The grant of a patent under this act shall be subject to the condition that
(1) any machine, apparatus or other article in respect of which the patent is granted or any article
made by using a process in respect of which the patent is granted, may be imported or made by
or on behalf of the Government for the purpose merely of its own use;
(2.) any process in respect of which the patent is granted may be used by or on behalf of the
Government for the purpose merely of its own use … “
According to the section, any manufacture, Import or use by or on behalf of the government for
its own purposes would not amount to patent infringement. This is referred to as “Government
Use” exemption. As the consortium supplied the patented products to the Ministry of Railways
after manufacturing the products based on the drawings provided by the Ministry, the Court
stated that the manufacture was made on behalf of the Government for its own use. The Court
disagreed with the Bombay High Court decision in Garware Wall Ropes case, which held that
the ‘Government Use’ exemption under Section 47 would be limited to use for the purposes of
the Government by any department of the Government and use by servants and agents of the
Government in performance of their duties/in discharge of their duties assigned to them

52
Chemtura Corporation vs Union Of India & Ors., CS(OS) No. 930 of 2009.

31
irrespective of who is benefited by such use. It stated that manufacture or use by any person on
behalf of the government would be covered under the exemption.
The interpretation of the Court with respect to the scope of ‘Government Use’ exemption under
Section 47 is well founded and appropriate. As pointed out by the Court, a literal reading of the
section indicates that manufacture or use of a patented invention both “by and on behalf” of the
Government is exempt from patent infringement. Therefore, restriction of the exemption to use
by the Government department or its officers as done by the Bombay High Court would not be in
consonance with the language of the section.
The court in the case rightly stated that the consortium would not be liable because the products
were supplied based on requirements of the Ministry. In the case, the Ministry decided what
product it wants and asked the manufacturer to make the product in accordance with its specific
requirements. As the manufacturer was not given any autonomy with respect to the product,
manufacturer was acting on behalf of the Government under its directions. Therefore, the
manufacturer fell within the scope of the exemption. If the manufacturer was given the autonomy
to make the product and the Ministry had only given broad requirements, its manufacture of a
patented product would not fall within the scope of the exemption. In order to determine whether
manufacture of a patented product is covered under the ‘Government Use’ exemption’, the extent
of control of the Government on the design or elements of the product to be supplied to it is an
important factor to be considered.

Patent Exhaustion

On the sale of the product by the patent holder all the exclusive rights related to the product are
exhausted. If it is a process patent, exhaustion applies on the sale of the product that has been
made by that process. It is termed in USA, as the first sale doctrine.

Such exhaustions can be either national or international or even regional. If it is the case of a
national exhaustion, then the rights of the patent holder is lost in that country, if the product is
sold in that country. Where the rights of the patent older have been exhausted within a country
by the sale of the product in any country, it is International exhaustion. If the patented product is
sold in any country that is within the region, the rights of the holder are exhausted under regional
exhaustion. Regional exhaustion is a system followed by the European Union.
The process of International exhaustion is followed by India. The rights of the patent older in
India according to the Patents Act in India, is exhausted by the product sale in another country
authorized under the law of that country. If a product has been purchased by a person in a
country authorized to sell the product in that country and ten imports that same to India, it will

32
not be patent infringement. 53 Such an exception is said to be termed as Parallel Imports
exemption as it allows parallel imports without liability of a product.

Patent Misuse

If a product patent is used by the patent holder beyond the scope of the rights granted it is termed
as patent misuse. It includes activities that are anti-competitive, extension of patent rights
generally beyond that has been granted under the patent and inequitable conduct. Any action that
constitutes abuse of dominance, restraint of competition or so on, by the patent older is patent
misuse.54 Moreover, any such activity that lads to expanding of patent rights to non-patented
inventions by the patent holder trough exercising patent rights will also amount to patent misuse.
A patent misuse can also be done by inequitable conduct that as ben explained next. The patent
older misusing patent is an equitable defense under patent infringement and has been well
recognized by the courts of US.

Inequitable Conduct

If a patent holder defrauds the patent office or provides misleading or false information to the
office he is liable for inequitable conduct. Such a conduct exists in situations such as disclosure
of false information that relates to invention, inventorship, foreign applications and so on.
Inequitable conduct can be assessed taking into consideration the intention of the patent holder
and the materiality of information which has been withheld or disclosed wrongfully. A ground
for patent revocation in India is inequitable conduct.55

2.10 Remedies

Remedies for patent infringement are inclusive of:

a. Injunction
b. Damages;
c. Account of profits;56 and
53
Section 107A(b), The Patents Act, 1970.
Section 107A(b) reads as follows:
For the purposes of this Act, -“…(b) importation of patented products by any person from a person who is duly authorized under
the law to produce and sell or distribute the product, shall not be considered as an infringement of patent rights”.
54
Some common comments on Contributory and Induced Patent Infringement; Implications for software developers, 81 JPTOS
777
55
Section 66, The Patents Act, 1970.
56
Section 108(1), The Patents Act, 1970.
Section 108(1) reads as follows:
“The reliefs which a court may grant in any suit for infringement include an injunction (subject to such terms, if any, as the court
thinks fit) and, at the option of the plaintiff, either damages or an account of profits.”

33
 d. Costs.

Injunction
Injunction is granted by a court ordering a party to act or refrain from acting in a certain manner
and it is an equitable remedy too. Injunction can be either permanent or temporary. During the
pendency of the suit generally, a temporary injunction is granted while a permanent injunction is
granted after determining the infringement made by the court.

Temporary injunction is generally granted by a court after reviewing the following factors:

a. Whether the applicant for the injunction has a prima facie case?
b. Whether the applicant will suffer an irreparable loss if the injunction is not granted?
c. Whether the balance of convenience is in favor of the applicant?57

Damages
Damages are the money paid to the patent holder so that the loss sustained by him is made good
due to the infringement. The loss in term of money caused due to the infringing action of the
infringer is termed as damages. When infringement is proved, a patent holder can get actual
damages suffered by him. Courts can also grant punitive damages in case of infringement done
willfully to deter infringers.

Account of profits
The profits made by an infringer that are based on the infringing action are termed as account of
profits. The patent older can get profits made by the infringer in addition to the damages, after
the infringement case has been succeeding. Generally, courts grant the higher among the
damages and the account of profits and not a cumulative of both the remedies.

Costs
The patent older can also apply for costs incurred in the suit of infringement after succeeding.
The court can grant lawyer fee, court fee and so on as costs.

2.11 Transfer of Patent

Once a patent for an invention is granted, it is important to consider (1) if the patentee/proprietor
of the patent is going to manufacture, market, sell and/or distribute the invention, (2) whether the
patentee/proprietor of the patent is going to sell all rights in his/her invention to someone else for
a sum of money, or (3) if the patentee/proprietor of the patent will license someone else to
produce and bring the patented product to market under specified terms by the Patentee that must
57
National Research Development Corporation of India Vs. The Delhi Cloth & General Mills Co. Ltd. and Ors.,
MANU/DE/0304/1979. at Para 7.

34
be met for the licensee. This article discusses how one may effect, use or monetize the patented
invention.
A patent is considered as a transferrable property that can be transferred from the original
patentee to any other person by assignment or by operation of law. A patent can be licensed or
assigned only by the owner of the patent. In case of co-owners or joint-owners, a co-owner can
assign or license the patent only upon consent of the other owner(s)
Requirements for creation of any interest in a patent
• Section 68 of the Indian Patents Act 1970 provides for the mortgage of, license or
creation of any interest in the patent.
• "Assignments, etc., not to be valid unless in writing and duly executed. An assignment of
a patent or of a share in a patent, a mortgage, license or the creation of any other
interest in a patent shall not be valid unless the same were in writing and the agreement
between the parties concerned is reduced to the form of a document embodying all the
terms and conditions governing their rights and obligations and duly executed"
Requirements
• The assignment, mortgage or license should be reduced to writing in a document
embodying all the terms and conditions governing the rights and obligations between the
parties;
• An application for registration of such document should be filed in the prescribed manner
in Form-16 within the time prescribed under section 68. The document when registered
will have effect from the date of execution.

Forms/Nature of Transfer of Patent Rights

Grant of a Patent confers to a patentee the right to prevent others from making, using, exercising
or selling the invention without his permission. The following are the ways in which a patentee
can deal with the patent:
• Assignment
• Licenses
• Transmission of patent by operation of law
An assignment is the transfer of all the proprietary rights by the patentee to the assignee while
the license is the right granted to work the invention by withholding the proprietary rights with
the patentee. An assignee can in turn reassign his rights to third parties while the licensee cannot

35
change the title or cannot reassign his rights to the third person. An assignee is assigned with all
the rights that the patent owner can enjoy while the licensee cannot enjoy such rights. Also an
assignee has the right to sue the infringer while the licensee is not empowered with the rights to
sue any party for the infringement of the patent in his name. Having known the difference
between assignment and license from the aforesaid, the patentee can decide the best possible way
of commercializing his/her invention

2.11.1 Assignment
The term 'assignment' is not defined in the Indian Patents Act. Assignment is an act by which the
patentee assigns whole or part of his patent rights to the assignee who acquires the right to
prevent others from making, using, exercising or vending the invention. There are three kinds of
assignments
• Legal Assignment
• Equitable Assignment
• Mortgage
Legal Assignment
An assignment (or an agreement to assign) of an existing patent is a legal assignment, where the
assignee may enter his name as the patent owner. A patent which is created by deed can only be
assigned by a deed. A legal assignee entitled as the proprietor of the patent acquires all rights
thereof.
Equitable Assignments
Any agreement including a letter in which the patentee agrees to give a certain defined share of
the patent to another person is an equitable assignment of the patent. However an assignee in
such a case cannot have his name entered in the register as the proprietor of patent. But the
assignee may have notice of his interest in the patent entered in the register.
Mortgages
A mortgage is an agreement in which the patent rights are wholly or partly transferred to
assignee in return for a sum of money. Once the assignor repays the sum to the assignee, the
patent rights are restored to assignor/patentee. The person in whose favor a mortgage is made is
not entitled to have his name entered in the register as the proprietor, but he can get his name
entered in the register as mortgagee.

2.11.2 Licenses
The Patents Act allows a patentee to grant a License by the way of agreement under section 70 of
the Act. A patentee by the way of granting a license may permit a licensee to make, use, or
exercise the invention. A license granted is not valid unless it is in writing. The license is

36
contract signed by the licensor and the licensee in writing and the terms agreed upon by them
including the payment of royalties at a rate mentioned for all articles made under the patent.
Licenses are of the following types,
• Voluntary License
• Statutory License(such as compulsory License)
• Exclusive/Limited License
• Express/Implied License
Voluntary licenses
It is the license given to any other person to make, use and sell the patented article as agreed
upon the terms of license in writing. Since it is a voluntary license, the Controller and the Central
government do not have any role to play. The terms and conditions of such agreement are
mutually agreed upon by the licensor and licensee. In case of any disagreement, the licensor can
cancel the licensing agreement.
Statutory licenses
Statutory licenses are granted by central government by empowering a third party to make/use
the patented article without the consent of the patent holder in view of public interest. Classic
example of such statutory licenses is compulsory licenses. Compulsory licenses are generally
defined as "authorizations permitting a third party to make, use, or sell a patented invention
without the patent owner's consent3.
Compulsory Licenses (CLs)
Though CLs works against the interest of the patent holder, it is granted under certain provided
conditions under the Patents Act. Under section 84 of the Indian Patents Act 1970, any person
can make an application for grant of a compulsory license for a patent after three years, from the
date of grant of that patent, on any of the following grounds: (a) The reasonable requirements of
the public with respect to the patented invention have not been satisfied; (b) The patented
invention is not available to the public at a reasonably affordable price. (c) The patented
invention has not worked in the territory of India.
Under Section 92 A of the Act, CLs can also be granted for exporting pharmaceutical product(s)
to any country incapable of manufacturing pharmaceutical products for the benefit of the people
in that country, further when working of the patent required another related patent under Section
88 of the Act or on notification by the Central Government, the controller can grant a license to
an interested person. The Central or State Government can use the invention or its process for its
own purpose either with or without royalty.
Exclusive Licenses and Limited Licenses

37
Depending upon the degree and extent of rights conferred on the licensee, a license may be
Exclusive or Limited License. An exclusive license excludes all other persons including the
patentee from the right to use the invention. Any one or more rights of the patented invention can
be conferred from the bundle of rights owned by the patentee. The rights may be divided and
assigned, restrained entirely or in part. In a limited license, the limitation may arise as to persons,
time, place, manufacture, use or sale.
Express and Implied Licenses
An express license is one in which the permission to use the patent is given in express terms.
Such a license is not valid unless it is in writing in a document embodying the terms and
conditions. In case of implied license though the permission is not given in express terms, it is
implied from the circumstances. For example: where a person buys a patented article, either
within jurisdiction or abroad either directly from the patentee or his licensees, there is an implied
license in any way and to resell it.

2.11.3 Transmission of Patent by Operation of law

When a patentee dies, his interest in the patent passes to his legal representative; in case of
dissolution or winding up of a company or bankruptcy transmission of patent by operation of law
occurs
How can the Patent be Cancelled / Revoked?
Either the Intellectual Property Appellate Board (IPAB) by way of a revocation application filed
under Section 64 of the Patent Act or the High Court by way of a counter-claim in a suit for
infringement of the patent may pass orders for revocation of a patent. In a patent infringement
action, the defendant can raise the grounds for cancellation as defences and at the same time file
a counterclaim for revocation. The grounds on which the patent can be revoked include wrongful
procurement of invention, false suggestion or representation in obtaining patent, failure to
disclose corresponding foreign applications, prior secret use, prior grant, lack of novelty, or
obviousness. The Controller of Patents also has the power to revoke the patent if, despite the
grant of a compulsory license, the reasonable requirements of the public with respect to the
patented invention remain unsatisfied or if the patented invention is not available to the public at
a reasonable price.
Can the Patent be surrendered?
A patentee may surrender his patent under Section 63 at any time by giving notice to the
Controller in the prescribed manner.

2.12 Special Provisions for Government, Security and Defense

38
Certain inventions can have extreme importance for national security purposes. Thus, if a patent
is given to them in the same manner as the other inventions, it may be that national security can
get compromised. Thus, in such cases, a patent is restricted by certain conditions in order to
ensure that the defense structure remains robust. These conditions are given in chapter VII and
chapter XVII of the Patents Act 1970.

Chapter VII allows the Controller and the Government to issue secrecy directions in case of an
invention which has relevance for national security and defense. Secrecy Directions are a kind of
a gag order on the application and the disclosure made therein. The application is prevented from
being published. Without publication, a patent cannot be granted, though the application may
proceed up to the stage of the grant.

This does not mean that the invention will never see the light of the day. It can be commercially
utilized; however, it can only be so at the behest of the Government. Chapter XVII governs how
and under what conditions the Government can utilize the invention and what are the rights of
the inventor in such a situation. Section 3758 says that while secrecy directions in respect of an
invention are in force, the application can proceed up to the stage of grant of patent, however, the
Controller is not allowed to grant or reject the application. The application will not be disclosed
at any stage during this period and no appeal will lie from any order that the Controller gives.
Where a complete specification has been filed in pursuance of grant of the invention, and the
secrecy directions are in force, then the Government can use the invention for its own purposes
as described under section 100, 101, and 103 of the Act. If the Government feels that because of
the secrecy directions, the inventor has suffered hardships, it can pay any amount as solatium to
the inventor that it feels reasonable. While the secrecy directions are in force, the applicant need
not pay any renewable fees.

The Government under Chapter XVII includes Government Undertakings. This is not so
however, in section 47, under which the Government can appropriate a patent for its own use.
Section 47 is applicable on all patents, not just those which have a relevance for national security
and defence; it is a condition to which every grant of a patent is subject. Thus, even if secrecy
58
Section 37. Consequences of secrecy directions.—
(1) So long as any directions under section 35 are in force in respect of an application— (a) the Controller shall not pass an order
refusing to grant the same; and (b) notwithstanding anything contained in this Act, no appeal shall lie from any order of the
Controller passed in respect thereof: Provided that the application may, subject to the directions, proceed up to the stage of grant
of the patent, but the application and the specification found to be in order for grant of the patent shall not be published, and no
patent shall be granted in pursuance of that application.
(2) Where a complete specification filed in pursuance of an application for a patent for an invention in respect of which directions
have been given under section 35 is found to be in order for grant of the patent during the continuance in force of the directions,
then— (a) if, during the continuance in force of the directions, any use of the invention is made by or on behalf of, or to the order
of the Government, the provisions of sections 100,101 and 103 shall apply in relation to that use as if the patent had been granted
for the invention; and (b) if it appears to the Central Government that the applicant for the patent has suffered hardship by reason
of the continuance in force of the directions, the Central Government may make to him such payment (if any) by way of solatium
as appears to the Central Government to be reasonable having regard to the novelty and utility of the invention and the purpose
for which it is designed, and to any other relevant circumstances.
(3) Where a patent is granted in pursuance of an application in respect of which directions have been given under section 35, no
renewal fee shall be payable in respect of any period during which those directions were in force.

39
directions are revoked, and a patent is granted, an invention can at any time, be appropriated by
the government for its own use only. Thus, under section 47, the Government cannot
commercialize a patent. However, there is no provision for equitable remuneration under this
section, thus if a patent is appropriated under this section, an inventor has no remedy unlike in
the case of chapter XVII where an inventor is entitled to equitable remuneration and can
approach the High Court to get it in case it is denied or there is a dispute related to the amount of
remuneration, with one exception.59

The provisions in the Patents Act 1970, relevant for inventions related for defence and security
purposes are explained below:

Section 2(1)(h)60 of the Patents Act 1970 defines a government undertaking as an industrial
undertaking which is either by run by a governmental department, or by a statutory corporation
owned or controlled by the government, or by a company in which either the central government
or the state government or both together hold at least 51% of the paid up share capital, or by the
subsidiary of such a company, or by an institution which is financed by the government. Any
such entity, as explained above, can use an invention which is under secrecy directions.

Section 3561 of the Patents Act 1970 explains when secrecy directions should be issued. It states
that there are two situations where they can be issued:

1. The Controller recognizes that the invention falls in a class notified to him by the
government for which disclosure has to be restricted. In such a case, the Controller will
issue secrecy directions and then notify the government that such an application has been
made for an invention which falls on the list of notified inventions. Thereafter, the

59
Section 103(6).
60
Section 2(1)(h) "Government undertaking" means any industrial undertaking carried on—
(i) by a department of the Government, or
(ii) by a corporation established by a Central, Provincial or State Act, which is owned or controlled by the Government, or
(iii) by a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or
(iv) by an institution wholly or substantially financed by the Government.
61
Section 35. Secrecy directions relating to inventions relevant for defence purposes.—
(1) Where, in respect of an application made before or after the commencement of this Act for a patent, it appears to the
Controller that the invention is one of a class notified to him by the Central Government as relevant for defence purposes, or,
where otherwise the invention appears to him to be so relevant, he may give directions for prohibiting or restricting the
publication of information with respect to the invention or the communication of such information.
(2) Where the Controller gives any such directions as are referred to in subsection (1), he shall give notice of the application and
of the directions to the Central Government, and the Central Government shall, upon receipt of such notice, consider whether the
publication of the invention would be prejudicial to the defence of India, and if upon such consideration, it appears to it that the
publication of the invention would not so prejudice, give notice to the Controller to that effect, who shall thereupon revoke the
directions and notify the applicant accordingly.
(3) Without prejudice to the provisions contained in sub-section (1), where the Central Government is of opinion that an
invention in respect of which the Controller has not given any directions under sub-section (1), is relevant for defence purposes, it
may at any directions under sub-section (1), is relevant for defence purposes, it may at any time before grant of patent notify the
Controller to that effect, and thereupon the provisions of that sub-section shall apply as if the invention where one of the class
notified by the Central Government, and accordingly the Controller shall give notice to the Central Government of the directions
issued by him.

40
 government considers the invention and notifies the controller about how to proceed, i.e.
to continue applying the secrecy directions or revoke them.
2. The government recognizes that an application has been made for an invention which if
disclosed will have prejudicial effect on national security. It notifies the Controller who
thereafter issues secrecy directions and then proceeds as mentioned above.

Apart from the secrecy directions there is another section in the Act which empowers the
Government to prevent disclosure of inventions that it considers relevant for security interests of
the country.

Section 157A62 allows the Central Government to prevent disclosure of any information relating
to any patentable invention, or an application for a patent, which it considers a threat to the
security of India. Furthermore, it can revoke a patent in respect of such invention by issuing a
notification in the official gazette.
This section gives a non-exhaustive definition of any action necessary for security of India. This
includes actions relating to:
 Fissionable materials (such as enriched uranium), and their sources;
 Sale/Purchase of arms, ammunition, weapons, or materials related to establishment and
functioning of a military installation;
 War time measures or diplomatic measures necessary during emergencies in international
relations.

Once secrecy directions are issued, it does not mean that the inventor cannot challenge them.
Section 3663 gives the applicant the right to ask for a review of the secrecy directions even before
the six month period after which the secrecy directions have to be mandatorily reviewed. The
Controller however, has the discretion to allow or reject this request. If the Controller feels that

62
Section 157A. Protection of security of India.— Notwithstanding anything contained in this Act, the Central Government shall
—
(a) not disclose any information relating to any patentable invention or any application relating to the grant of patent under this
Act, which it considers prejudicial to the interest of security of India;
(b) take any action including the revocation of any patent which it considers necessary in the interest of the security of India by
issue of a notification in the Official Gazette to that effect.
Explanation.—For the purposes of this section, the expression "security of India" includes any action necessary for the
security of India which—
relates to fissionable materials or the materials from which they are derived; or
relates to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on
directly or indirectly for the purpose of supplying a military establishment; or is taken in time of war or other emergency in
international relations.
63
Section 36. Secrecy directions to be periodically reviewed.—
(1) The question whether an invention in respect of which directions have been given under section 35 continues to be relevant
for defence purposes shall be reconsidered by the Central Government at intervals of six months or on a request made by the
applicant which is found to be reasonable by the Controller and if, on such reconsideration it appears to the Central Government
that the publication of the invention would no longer be prejudicial to the defence of India or in case of an application filed by a
foreign applicant it is found that the invention is published outside India it shall forthwith give notice to the Controller to revoke
the direction and the Controllers shall thereupon revoke the directions previously given by him.
(2) The result of every re-consideration under sub-section (1), shall be communicated to the applicant within such time and in
such manner as may be prescribed.

41
there are reasonable grounds for a review, he/she can allow it. In a review, the Government
considers whether the disclosure of the invention still has prejudicial consequences for national
security, and if it doesn’t, then it notifies the Controller to revoke secrecy directions. Any
decision by the Controller under this section has to be communicated to the applicant within 15
days of the receipt of the request, according to Rule 72(1) of the Patent Rules. 64 Thus, the
disposal of the review request would be so as to allow the inventor to know the fate of his/her
invention without undue delay.

If the secrecy directions are revoked, Section 3865 allows the Controller can extend the time for
completing the formalities of application that had been left incomplete due to the secrecy
directions, even if the time for completion of those formalities had expired according to the
provisions of the Act. This time period however, will not exceed the duration for which the
secrecy directions were in force, according to Rule 72(2)66 of the Patent Rules. Therefore, the
applicant’s interest is not prejudiced because of the imposition of secrecy directions.

A complementary provision to this provision is section 11B(4)67 of the Patents Act 1970. It gives
an exception to the rule that an application will be treated as withdrawn if a request for
examination is not made in the prescribed time period. In case an application has been subject to
a secrecy direction, then a request of examination can be made in the prescribed period after the
revocation of the secrecy directions. Thus an application under secrecy directions will remain
suspended for as long as the directions persist. It is not treated as abandoned or lapsed. Once the
secrecy directions are revoked, there is a certain time period within which all the formalities
must be completed, in order to ensure that a patent is granted. These are given in the rules to the
Patents Act, 1970. Rule 24B68 states that the prescribed time period under this section is forty-
eight months from the date of priority or from the date of filing of the application, or within six
months from the date of revocation of the secrecy direction, whichever is later.
64
Section 71. Permission for making patent application outside India under section 39.—
(1) The request for permission for making patent application outside India shall be made in Form 25.
65
Section 38. Revocation of secrecy directions and extension of time.—When any direction given under section 35 is revoked by
the Controller, then, notwithstanding any provision of this Act specifying the time within which any step should be taken or any
act done in connection with an application for the patent, the Controller may, subject to such conditions, if any, as he thinks fit to
impose, extend the time for doing anything required or authorised to be done by or under this Act in connection with the
application whether or not that time has previously expired.
66
Section 71. Permission for making patent application outside India under section 39.—
(2) The Controller shall dispose of the request made under sub-rule (1) within a period of twenty-one days from the date of filing
of such request: Provided that in case of inventions relating to defence or atomic energy, the period of twenty-one days shall be
counted from the date of receipt of consent from the Central Government.
67
Section 11B. Request for examination.—
(4) In case the applicant or any other interested person does not make a request for examination of the application for a patent
within the period as specified under subsection (1) or sub-section (3), the application shall be treated as withdrawn by the
applicant: Provided that—
(i) the applicant may, at any time after filing the application but before the grant of a patent, withdraw the application by making
a request in the prescribed manner; and
(ii) in a case where secrecy direction has been issued under section 35, the request for examination may be made within the
prescribed period from the date of revocation of the secrecy direction.
68
Rule 24B. Examination of application.—(1)(iii)The request for examination under sub-section (4) of section 11B shall be made
within forty-eight months from the date of priority or from the date of filing of the application, or within six months from the date
of revocation of the secrecy direction, whichever is later.

42
Another issue before the Government when such inventions are in question is to prevent them
from reaching into the hands of other countries, whether allies or not. Otherwise the imposition
of secrecy directions would become irrelevant. Thus section 3969 was incorporated into the Act
which allows the Government to control the application of a patent over an invention (with
regard to which secrecy directions have been passed) abroad by an Indian resident. An
application abroad is allowed only after a written permission has been granted by, or on behalf of
the Controller (as prescribed under Form 25).

An exception to this rule is allowed only if an application abroad is made after six weeks have
passed since the application as the Indian office was made, and no secrecy directions were
passed by the Controller, or any secrecy directions passed have been revoked. Thus, only after
the government has determined that the invention is not such that publishing it would
compromise the security and defense of the country would the applicant be allowed to file an
application in other countries.

In cases of inventions which relate to security of India (including those related to atomic energy)
the Controller cannot give a written permission unless the Government consents to allow an
application abroad. However, in cases where an application had already been filed abroad before
an application was filed in India, this rule does not apply. No written permission for any
subsequent application abroad needs to be filed.
Where a request for a written permission has been filed, the Controller has to decide it within 21
days of the receipt, according to Rule 71 of the Patent Rules. In cases of application relating to
an invention relevant for the defense of India, the period of 21 days is counted from the time the
Central Government is notified of the request.

If the secrecy directions or the rule under section 39 are not complied with, there are several
consequences that follow. They are described under section 40.70 It says that contravention of the
secrecy directions or section 39 would result in treatment of the application made in India shall
as abandoned. If the patent had been granted, then the patent is liable to be revoked under section
69
Section 39. Residents not to apply for patents outside India without prior permission.—
(1) No person resident in India shall, except under the authority of a written permit sought in the manner prescribed and granted
by or on behalf of the Controller, make or cause to be made any application outside India for the grant of a patent for an invention
unless— (a) an application for a patent for the same invention has been made in India, not less than six weeks before the
application outside India; and (b) either no direction has been given under sub-section (1) of section 35 in relation to the
application in India, or all such directions have been revoked.
(2) The Controller shall dispose of every such application within such period as may be prescribed: Provided that if the invention
is relevant for defence purpose or atomic energy, the Controller shall not grant permit without the prior consent of the Central
Government.
(3) This section shall not apply in relation to an invention for which an application for protection has first been filed in a country
outside India by a person resident outside India.
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Section 40. Liability for contravention of section 35 or section 39.—Without prejudice to the provisions contained in Chapter
XX, if in respect of an application for a patent any person contravenes any direction as to secrecy given by the Controller under
section 35 or makes or causes to be made an application for grant of a patent outside India in contravention of section 39 the
application for patent under this Act shall be deemed to have been abandoned and the patent granted, if any, shall be liable to be
revoked under section 64.

43
64(n) which states that a patent can be revoked by the Appellate Board on a petition by any
interested party or the Central Government if either the secrecy directions or section 39 have
been contravened by the applicant. Furthermore, under section 118, such action is punishable by
imprisonment up to two years or fine or both.

An important feature of secrecy directions is that they are not, and cannot be subject to judicial
scrutiny, i.e., a challenge to them cannot be made in Court. This is because under section 41,71 the
Controller’s and the Government's orders regarding the invention are final. No challenge to them
in any court and on any ground is allowed. The Act bars such action, and therefore it is only the
Government that will decide whether secrecy directions should be revoked.

Section 4272 is not directly relevant for the inventor as such. It saves the Controller from any
liability arising out of his disclosure of the patent application and any specifications related to it
to the Government for the purposes of deciding whether secrecy directions should be made or
revoked, or any action under section 39 is required. Thus, the applicant cannot sue the Controller
for using his discretion in relation to the invention.

As mentioned earlier, under section 37, the Government is allowed to use the invention under the
conditions prescribed in chapter XVII. This chapter consists of sections 99-103. The conditions
prescribed in these sections and the rights of the applicant in case the invention is acquired for
government’s use are given below.

Under section 99,73 the use of an invention for the purposes of the government is defined as
manufacture, vending (including for non-commercial purposes), use, or exercise of the invention
for the purposes of Central or State Government or a Government Undertaking. That is the
Central or State Government, or a Government Undertaking can manufacture and use or sell the
invention.

71
Section 41. Finality of orders of Controller and Central Government.—All orders of the Controller giving directions as to
secrecy as well as all orders of the Central Government under this Chapter shall be final and shall not be called in question in any
court on any ground whatsoever.
72
Section 42. Savings respecting disclosure to Government.—Nothing in this Act shall be held to prevent the disclosure by the
Controller of information concerning an application for a patent or a specification filed in pursuance thereof to the Central
Government for the purpose of the application or specification being examined for considering whether an order under this
Chapter should be made or whether an order so made should be revoked.
73
Section 99. Meaning of use of invention for purposes of Government.—
(1) For the purposes of this Chapter, an invention is said to be used for the purposes of Government if it is made, used, exercised
or vended for the purposes of the Central Government, a State Government or a Government undertaking.
(2) [Omitted by the Patents (Amendment) Act, 2002]
(3) Nothing contained in this Chapter shall apply in respect of any such importation, making or using of any machine, apparatus
or other article or of any such using of any process or of any such importation, using or distribution of any medicine or drug, as
may be made by virtue of one or more of the conditions specified in section 47.

44
Section 10074 lays down the manner in which an invention can be appropriated for its own use by
the Central Government and the rights of the patentee in such cases. It states that the Central
Government, or a third party authorized by it, can use the invention for the purposes of the
Government, and in such cases the royalty payable to the applicant/patentee is governed by the
following rules:
1. In case of an invention which has been recorded, tried, and/or tested by or on behalf of
the Government before the priority date of the relevant claims in the complete
specification, and the disclosure was not by the patentee/applicant/assignor 75 of the
invention, no royalty or any other remuneration is payable.
2. In case of an invention whose use is made after the grant of the patent, or as a result of
disclosure by the patentee/applicant/assignor of the invention, the royalty/any
remuneration shall be decided according to the terms agreed between the patentee (this
includes his/her exclusive licensee, and/or the assignor of the invention, from whom the
applicant or the patentee derives the title) and the Central Government or an authorized
third party. These terms may be decided before or after the use of the invention. If there
is no agreement, then the royalty/remuneration will be decided by the High Court on a
reference made under section 103.
74
Section 100. Power of Central Government to use inventions for purposes of Government.—
(1) Notwithstanding anything contained in this Act, at any time after an application for a patent has been filed at the patent office
or a patent has been granted, the Central Government and any person authorised in writing by it, may use the invention for the
purposes of Government in accordance with the provisions of this Chapter.
(2) Where an invention has, before the priority date of the relevant claim of the complete specification, been duly recorded in a
document, or tested or tried, by or on behalf of the Government or a Government undertaking, otherwise than in consequence of
the communication of the invention directly or indirectly by the patentee or by a person from whom he derives title, any use of
the invention by the Central Government or any person authorised in writing by it for the purposes of Government may be made
free of any royalty or other remuneration to the patentee.
(3) If and so far as the invention has not been so recorded or tried or tested as aforesaid, any use of the invention made by the
Central Government or any person authorised by it under sub-section (1), at any time after grant of the patent or in consequence
of any such communication as aforesaid, shall be made upon terms as may be agreed upon either before or after the use, between
the Central Government or any person authorised under sub-section (1) and the patentee, or, as may in default of agreement be
determined by the High Court on a reference under section 103: Provided that in case of any such use of any patent, the patentee
shall be paid not more than adequate remuneration in the circumstances of each case, taking into account the economic value of
the use of the patent.
(4) The authorisation by the Central Government in respect of an invention may be given under this section, either before or after
the patent is granted and either before or after the acts in respect of which such authorisation is given or done, and may be given
to any person whether or not he is authorised directly or indirectly by the applicant or the patentee to make, use, exercise or vend
the invention or import the machine, apparatus or other article or medicine or drug covered by such patent.
(5) Where an invention has been used by or with the authority of the Central Government for the purposes of Government under
this section, then, except in case of national emergency or other circumstances of extreme urgency or for noncommercial use, the
Government shall notify the patentee as soon as practicable of the fact and furnish him with such information as to the extent of
the use of the invention as he may, from time to time, reasonably require; and where the invention has been used for the purposes
of a Government undertaking, the Central Government may call for such information as may be necessary for this purpose from
such undertaking.
(6) The right to make, use, exercise and vend an invention for the purposes of Government under sub-section (1) shall include the
right to sell on noncommercial basis, the goods have been made in exercise of that right, and a purchaser of goods so sold, and a
person claiming through him, shall have the power to deal with the goods as if the Central Government or the person authorised
under sub-section (1) were the patentee of the invention.
(7) Where in respect of a patent which has been the subject of an authorisation under this section, there is an exclusive licensee as
is referred to in sub-section (3) of section 101, or where such patent has been assigned to the patentee in consideration of
royalties or other benefits determined by reference to the use of the invention (including payments by way of minimum royalty),
the notice directed to be given under sub-section (5) shall also be given to such exclusive licensee or assignor, as the case may be,
and the reference to the patentee in sub-section (3) shall be deemed to include a reference to such assignor or exclusive licensee.
75

45
 3. When deciding the adequate remuneration in the circumstances of each case, the
economic value of the invention will be the primary factor.
The Central Government is empowered to authorize a third party to use an invention before or
after the third party has used the invention for the purposes of the Government, and without
regard to whether the patent has been granted or not. The authorization is in no way affected by
the absence of an agreement between the applicant/patentee and the third party with regard to the
use of the invention.

The patentee/applicant (this includes his/her exclusive licensee, and/or the assignor of the
invention, from whom the applicant or the patentee derives the title) is entitled to be notified of
such use by the Government or an authorized third party, within a reasonable amount of time,
and he/she is also entitled to information regarding the extent of the use of the invention
periodically, as required by him/her. If the use is for the purposes of a Government undertaking,
then the Central Government is entitled to ask for any information about the use of the invention
that it feels is required for this purpose.

The doctrine of first sale applies in case of the invention sold by the Government/authorized
third party as if the invention was sold by the patentee/applicant. Thus, even if the Government
has not yet negotiated terms of use with the applicant, and it is manufacturing and selling the
invention, the applicant’s rights will get exhausted as soon as the sale is made. Thereafter, he/she
cannot challenge anything that the buyer does with invention.

A concern that an applicant/patentee may have is the damage to the novelty of the invention by
the use of the invention by the Government. This is remedied by section 64(3)76 which states that
any challenge to the novelty of the invention by reason of its prior use for the following
purposes:
1. For the purposes of reasonable trial and experiment.

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Section 64. Revocation of patents.—
(1) Subject to the provisions contained in this Act, a patent, whether granted before or after the commencement of this Act, may,
be revoked on a petition of any person interested or of the Central Government by the Appellate Board or on a counter-claim in a
suit for infringement of the patent by the High Court on any of the following grounds , that is to say—
(n) that the applicant contravened any direction for secrecy passed under section 35 or made or caused to be made an application
for the grant of a patent outside India in contravention of section 39
(3) For the purpose of clause (1) of sub-section (1), no account shall be taken of any use of the invention—
(a) for the purpose of reasonable trial or experiment only; or
(b) by the Government or by any person authorised by the Government or by a Government undertaking, in consequence of the
applicant for the patent or any person from whom he derives title having communicated or disclosed the invention directly or
indirectly to the Government or person authorised as aforesaid or to the Government undertaking; or
(c) by any other person, in consequence of the applicant for the patent or any person from whom he derives title having
communicated or disclosed the invention, and without the consent or acquiescence of the applicant or of any person from whom
he derives title.
(4) Without prejudice to the provisions contained in sub-section (1), a patent may be revoked by the High Court on the petition of
the Central Government, if the High Court is satisfied that the patentee has without reasonable cause failed to comply with the
request of the Central Government to make, use or exercise the patented invention for the purposes of Government within the
meaning of section 99 upon reasonable terms.

46
 2. By the Government, Government Undertaking, or a third party on behalf of them, where
the applicant or assignor of the patent has disclosed the invention to the above mentioned
parties directly or indirectly.
3. By a third party as result of the assignor of the invention having disclosed the invention
to them without the consent or acquiescence of the applicant.

It is not a valid ground. The novelty of the invention shall subsist without any damage.

Section 10177 gives the rights of the third parties who have been authorized by the Government to
use the invention on its behalf. It says that any license/assignment between the patentee/applicant
and any person apart from the Central Government, the terms of which relate to restricting or
regulating the use of an invention for the purposes of the Government, or for payments to be
made in case of such use, will have no effect as regards any use of the invention made by the
Central Government, authorized third party, or the patentee/applicant where the use is for the
purposes of the Government.

Where the patentee has obtained the patent (or the right of apply for it) in lieu of
royalties/remuneration to be decided by the use of the invention, then if the patentee uses the
invention on behalf of the Central Government, then any royalty/remuneration payable by the
Government to the patentee shall be divided between the patentee and the assignee according to
77
Section 101. Rights of third parties in respect of use of invention for purposes of Government.—
(1) In relation to any use of a patented invention, or an invention in respect of which an application for a patent is pending, made
for the purposes of Government—
(a) by the Central Government or any person authorised by the Central Government under section 100; or
(b) by the patentee or applicant for the patent to the order made by the Central Government,
the provisions of any licence, assignment or agreement granted or made, between the patentee or applicant for the patent (or any
person who derives title for him or from whom he derives title) and any person other then the Central Government shall be of no
effect so far as those provisions—
(i) restrict or regulate the use for the purposes of Government of the invention, or of any model document or information relating
thereto, or
(ii) provide for the making of payments in respect of any use of the invention or of the model, document or information relating
thereto for the purposes of Government , and the reproduction or publication of any model or document in connection with the
said use for the purposes of Government shall not be deemed to be an infringement of any copyright subsisting in the model or
document.
(2) Where the patent, or the right to apply for or obtain the has been assigned to the patentee in consideration of royalties or other
benefits determined by reference to the use of the invention then, in relation to any use of the invention made for the purposes of
Government by the patentee to the order of the Central Government, sub-section (3) of section 100 shall have effect as if that use
were made by virtue of an authority given under that section; and use of the invention for the purposes of Government by virtue
of sub-section (3) of that section shall have effect as if the reference to the patentee included a reference to the assignor of the
patent, and any sum payable by virtue of that sub-section shall be divided between the patentee and the assignor in such
proportion as may be agreed upon between them or as may in default of agreement be determined by the High Court on a
reference under section 103.
(3) Where by virtue of sub-section (3) of section 100, payments are required to be made by the Central Government or persons
authorised under sub-section (1) of that section in respect of the use of an invention for the purposes of Government and where in
respect of such patent there is an exclusive licensee authorised under his licence to use the invention for the purposes of
Government, such sum shall be shared by the patentee and such licensee in such proportions, if any, as may be agreed upon
between them or as may in default of agreement be determined by the High Court on a reference under section 103 to be just,
having regard to any expenditure incurred by the licensee—
(a) in developing the said invention; or
(b) in making payments to the patentees other than royalties or other benefits determined by reference to the use of the invention
in consideration of the licence.

47
the terms of an agreement. In case such terms are absent, then if a reference is made to it under
section 103, High Court will decide the division of royalty.

Similarly, if there is an exclusive licensee, authorized to use the invention for the purposes of the
Government, then the royalty/remuneration paid by the Government shall be divided between
them according to the terms of the license, and in absence of such terms, by High Court.
However, in this case, when the High Court is considering the division of royalty, it will consider
the costs incurred by the licensee in developing the invention, payments to the patentee , or
benefits deriving out of references to the use of the invention.

Section 10278 empowers the Central Government to acquire a patent for public purposes, by
notifying such acquisition in the official gazette. The official gazette is a kind of a newsletter of
the Government of India, through which it notifies all the laws that have been passed by the
President and other decisions taken by it. Once an acquisition is notified in the gazette, all the
rights in the invention will then stand transferred to the Government. The
applicant/patentee/registered interested parties must be notified of such acquisition. They are
entitled to compensation in case of such acquisition. The amount of compensation can be
decided according to an agreement between the Government and the above mentioned parties, or
the High Court. If the High Court is deciding the compensation, it will consider the following
factors:
1. Costs of developing the invention.
2. Term of the patent left.
3. The manner in which it has already been worked.
4. Any other relevant consideration that the High Court feels appropriate.

78
Section 102. Acquisition of inventions and patents by the Central Government.—
(1) The Central Government may, if satisfied that it is necessary that an invention which is the subject of an application for a
patent or a patent should be acquired from the applicant or the patentee for a public purpose, publish a notification to that effect
in the Official Gazette, and thereupon the invention or patent and all rights in respect of the invention or patent shall, by force of
this section, stand transferred to and be vested in the Central Government.
(2) Notice of the acquisition shall be given to the applicant, and, where a patent has been granted, to the patentee and other
persons, if any, appearing in the register as having an interest in the patent.
(3) The Central Government shall pay to the applicant, or, as the case may be, the patentee and other persons appearing on the
register as having an interest in the patent such compensation as may be agreed upon between the Central Government and the
applicant, or the patentee and other persons; or, as may, in default of agreement, be determined by the High Court on a reference
under section 103 to be just having regard to the expenditure incurred in connection with the invention and, in the case of a
patent, the term thereof, the period during which and the manner in which it has already been worked (including the profits made
during such period by the patentee or by his licensee whether exclusive or otherwise) and other relevant factors.

48
Section 10379, as has already been mentioned above, provides for reference to High Court in case
of a dispute related to terms of payment for use of invention. In such a petition, if the Central
Government is a party, it may raise a counter-claim challenging the validity of the patent, and/or
petition for its revocation under section 64. Even if the patentee is not a party to the proceedings,
the validity of the patent is open to challenge by the Central Government.

Apart from the usual challenges to the validity, i.e. to the novelty, non-obviousness, utility, and
patentability, section 64 also provides other grounds for a challenge namely, Section 64(4)
allows the High Court to revoke a patent on petition by the Central Government, if the High
Court is satisfied that the patentee has not complied with the Central Government’s directions
under section 99 to manufacture/use/exercise the patent for its own purposes without reasonable
cause.

In such proceedings, it may happen that a recording, test or trial of an invention by or on behalf
of the Government would need to be proven. However, the disclosure of any such document
regarding the invention may prejudice the security of India. In such cases, the Central
Government can restrict the disclosure of such a document to the opposing counsel or a mutually
agreed upon independent expert.

The High Court, when deciding a dispute relating to the terms of use of an invention, can
consider any compensation received in lieu of such use, either directly, or indirectly from the
79
Section 103. Reference to High Court of disputes as to use for purposes of Government.—
(1) Any dispute as to the exercise by the Central Government or a person authorised by it of the powers conferred by section 100,
or as to terms for the use of an invention for the purposes of Government thereunder or as to the right of any person to receive
any part of a payment made in pursuance of sub-section (3) of that section or as to the amount of compensation payable for the
acquisition of an invention or a patent under section 102, may be referred to the High Court by either party to the dispute in such
manner as may be prescribed by the rules of the High Court.
(2) In any proceedings under this section to which the Central Government is a party, the Central Government may,—
(a) if the patentee is a party to the proceedings, petition by way of counter-claim for revocation of the patent on any ground upon
which a patent may be revoked under section 64; and
(b) whether a patentee is or is not a party to the proceedings, put in issue the validity of the patent without petitioning for its
revocation.
(3) If in such proceedings as aforesaid any question arises whether an invention has been recorded, tested or tried as is mentioned
in section 100, and the disclosure of any document regarding the invention, or of any evidence of the test or trial thereof, would,
in the opinion of the Central Government, be prejudicial to the public interest, the disclosure may be made confidentially to the
advocate of the other party or to an independent expert mutually agreed upon.
(4) In determining under this section any dispute between the Central Government and any person as to terms for the use of an
invention for the purposes of Government, the High Court shall have regard to any benefit or compensation which that person or
any person from whom he derives title, may have received, or may be entitled to receive, directly or indirectly in respect of the
use of the invention in question for the purposes of Government.
(5) In any proceedings under this section, the High Court may at any time order the whole proceedings or any question or issue of
fact arising therein to be referred to an official referee, commissioner or an arbitrator on such terms as the High Court may direct,
and references to the High Court in the foregoing provisions of this section shall be construed accordingly.
(6) Where the invention claimed in a patent was made by a person who at the time it was made was in the service of the Central
Government or of a State Government or was an employee of a Government undertaking and the subject-matter of the invention
is certified by the relevant Government or the principal officer of the Government undertaking to be connected with the work
done in the course of the normal duties of the Government servant or employee of the Government undertaking, then,
notwithstanding anything contained in this section, any dispute of the nature referred to in sub-section (1) relating to the
invention shall be disposed of by the Central Government conformably to the provisions of this section so far as may be
applicable, but before doing so the Central Government shall give an opportunity to the patentee and such other parties as it
considers have an interest in the matter to be heard.

49
government, as a relevant factor. It can also, at any time during the proceedings, can refer the
whole proceeding or any specific question(s) to an official referee, commissioner, or arbitrator,
on any terms. In such cases, any order passed by any of the above shall have effect as if the High
Court has passed them.

If the applicant/patentee was in service of the Government (Central, State, or PSU) when the
invention was made, and the invention was connected with work done in the normal course of
the employee’s duties, then no reference to the High Court is allowed. Any dispute will be
resolved by the Central Government, with reference to the terms of section 103, as far as
reasonably possible. In such cases, the applicant/patentee/interested parties are entitled to an
opportunity of being heard.

Another important provision of the Patents Act 1970 is section 4780 which as mentioned above,
provide a blanket power to the Government to appropriate a patent for its own use. However, this
does not mean that the patentee is prohibited from marketing his invention. The patentee will
simply be competing with the Government. This section merely states that every patent that is
granted is subject to certain conditions, which are as follows:

1. Use of an invention (which includes machine, apparatus, or process, either of making the
article for which patent is granted, or an independent process) by the Government, only
for its own purposes. This use includes import, and manufacture by the Government, or
by any third party on behalf of the Government.
2. Use of an invention (which includes machine, apparatus, or process, either of making the
article for which patent is granted, or an independent process) by anyone for the purposes
of teaching and research.
3. In case of a medicine/drug which has been patented, the Government can import the
medicine either for its own use or distribute it through its hospitals, dispensary, or any
other medical institutions, established by the Government, or notified by the official
gazette.

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Section 47. Grant of patents to be subject to certain conditions.—The grant of a patent under this Act shall be subject to the
condition that—
(1) any machine, apparatus or other article in respect of which the patent is granted or any article made by using a process in
respect of which the patent is granted, may be imported or made by or on behalf of the Government for the purpose merely of its
own use;
(2) any process in respect of which the patent is granted may be used by or on behalf of the Government for the purpose merely
of its own use;
(3) any machine, apparatus or other article in respect of which the patent is granted or any article made by the use of the process
in respect of which the patent is granted, may be made or used, and any process in respect of which the patent is granted may be
used, by any person, for the purpose merely of experiment or research including the imparting of instructions to pupils; and
(4) in the case of a patent in respect of any medicine or drug, the medicine or drug may be imported by the Government for the
purpose merely of its own use or for distribution in any dispensary, hospital or other medical institution maintained by or on
behalf of the Government or any other dispensary, hospital or other medical institution which the Central Government may,
having regard to the public service that such dispensary, hospital or medical institution renders, specify in this behalf by
notification in the Official Gazette.

50
Some other relevant sections are as follows:

The rights of co-owners of a patent as defined in section 50.81 Unless there is an

agreement between co inventors which specifies otherwise, or there are directions passed by the
Controller under section 51 (Directions in case of a dispute between co-owners):
1. All co-owners are entitled to an equal share in the patent.
2. All co-owners are entitled to all the exclusive rights of a patentee for their own benefit,
without accounting to anybody else.
3. A license or assignment cannot be granted unless all co-owners agree to such license or
assignment.

In such cases, the doctrine of first sale applies as if the seller of the patented invention was the
sole patentee. Thus it does not matter if the co-owners of the patent are not jointly selling their
invention. For the buyer, it will be as if the invention has been sold by both or all of them.

In case of death of a co-owner while the patent is in force, the rules applying to devolution of
movable property will also apply to the patent, and the rights and obligations of any
trustees/legal representatives/heirs shall be decided accordingly. Thus, in the same way as
physical property is inherited by the successor, a patent will also stand transferred.

Inventions related to atomic energy are not eligible for a patent (barred by section 20 of the
Atomic Energy Act). If by chance, any such patent has been granted over an invention which
may be related to atomic energy, section 6582 says that where the Central Government realizes
81
Section 50. Rights of co-owners of patents
(1) Where a patent is granted to two or more persons, each of those persons shall, unless an agreement to the contrary is in force,
be entitled to an equal undivided share in the patent.
(2) Subject to the provisions contained in this section and in section 51, where two or more persons are registered as grantee or
proprietor of a patent, then, unless an agreement to the contrary is in force, each of those persons shall be entitled, by himself or
his agents, to rights conferred by section 48 for his own benefit without accounting to the other person or persons.
(3) Subject to the provisions contained in this section and in section 51 and to any agreement for the time being in force, where
two or more persons are registered as grantee or proprietor of a patent, then, a licence under the patent shall not be granted and
share in the patent shall not be assigned by one of such persons except with the consent of the other person or persons.
(4) Where a patented article is sold by one of two or more persons registered as grantee or proprietor of a patent, the purchaser
and any person claiming through him shall be entitled to deal with the article in the same manner as if the article had been sold by
a sole patentee.
(5) Subject to the provisions contained in this section, the rules of law applicable to the ownership and devolution of movable
property generally shall apply in relation to patents; and nothing contained in sub-section (1) or subsection (2) shall affect the
mutual rights or obligations of trustees or of the legal representatives of a deceased person or their rights or obligations as such.
(6) Nothing in this section shall affect the rights of the assignees of a partial interest in a patent created before the commencement
of this Act.
82
Section 65. Revocation of patent or amendment of complete specification on directions from Government in cases relating to
atomic energy. –
(1) Where at any time after grant of a patent, the Central Government is satisfied that a patent is for an invention relating to
atomic energy for which no patent can be granted under sub-section (1) of section 20 of the Atomic Energy Act, 1962 (33 of
1962), it may direct the Controller to revoke the patent, and thereupon the Controller, after giving notice, to the patentee and
every other person whose name has been entered in the register as having an interest in the patent, and after giving them an
opportunity of being heard, may revoke the patent.
(2) In any proceedings under sub-section (1), the Controller may allow the patentee to amend the complete specification in such
manner as he considers necessary instead of revoking the patent.

51
that such a patent has been granted for an invention related to atomic energy (for which patent is
barred under section 20 of the Atomic Energy Act) it can direct the Controller to revoke the
patent. When he receives such directions, the Controller has to notify the patentee and any other
person who is registered as having an interest in the patent. They are entitled to a reasonable
opportunity of being heard before the patent is revoked furthermore; the Controller can allow
amendments in the complete specification which he feels would suffice instead of revoking the
patent.

When licensing the right to manufacture, use, and sell the patent, there are certain conditions
which cannot be put in the licensing contract. These are mainly to prevent the patentee from
abusing the monopoly granted by the patent. They are given in Section 14083 voids certain
restrictive conditions that may be put into a contract to the detriment of licensee, lessee, or
purchaser. The conditions are:
1. Requiring to acquire the any article other than the patented article (or article made by the
patented process) exclusively from the licensor, leaser, or vendor.
2. Restricting the right to acquire or use any article other than the patented article (or article
made by the patented process) from any other person.
3. Prohibiting or restricting them from using any other process other than the patented
process.
4. Providing exclusive grant back, coercive package licensing, or preventing challenges to
validity of the patent.

83
Section 140. Avoidance of certain restrictive conditions.—
(1) It shall not be lawful to insert—
(i) in any contract for or in relation to the sale or lease of a patented article or an article made by a patented process; or
(ii) in licence to manufacture or use a patented article; or
(iii) in a licence to work any process protected by a patent, a condition the effect of which may be—
to require the purchaser, lessee, or licensee to acquire from the vendor, lessor, or licensor or his nominees, or to prohibit from
acquiring or to restrict in any manner or to any extent his right to acquire from any person or to prohibit him from acquiring
except from the vendor, lessor, or licensor or his nominees any article other than the patented article or an article other than that
made by the patented process; or
to prohibit the purchaser, lessee or licensee from using or to restrict in any manner or to any extent the right of the purchaser,
lessee or licensee, to use an article other than the patented article or an article other than that made by the patented process, which
is not supplied by the vendor, lessor or licensor or his nominee; or
to prohibit the purchaser, lessee or licensee from using or to restrict in any manner or to any extent the right of the purchaser,
lessee or licensee to use any process other than the patented process,
to provide exclusive grant back, prevention to challenges to validity of Patent & Coercive package licensing,
and any such condition shall be void.
(2) A condition of the nature referred to in clause (a) or clause (b) or clause (c) of sub-section (1) shall not cease to be a condition
falling within that sub-section merely by reason of the fact that the agreement containing it has been entered into separately,
whether before or after the contract relating to the sale, lease or licence of the patented article or process.
(3) In proceedings against any person for the infringement of a patent, it shall be a defence to prove that at the time of the
infringement there was in force a contract relating to the patent and containing a condition declared unlawful by this section:
Provided that this sub-section shall not apply if the plaintiff is not a party to the contract and proves to the satisfaction of the court
that the restrictive condition was inserted in the contract without his knowledge and consent, express or implied.
(4) Nothing in this section shall—
(a) affect a condition in a contract by which a person is prohibited from selling goods other than those of a particular person;
(b) validate a contract which, but for this section, would be invalid;
(c) affect a condition in a contract for the lease of, or licence to use a patented article, by which the lessor or licensor reserves to
himself or his nominee the right to supply such new parts of the patented article as may be required or to put or keep it in repair.
(5) [Omitted by the Patents (Amendment) Act, 2002].

52
It does not matter that such conditions are present in other agreements made before or after the
licensing, lease, or sale agreement. They will be void. Furthermore, insertion of such a condition
into a contract is a valid ground of defense in case of an infringement suit. However, if the
plaintiff can prove that he/she is not a party to the contract, and insertion of such a condition was
without his (express or implied) knowledge and consent. Conditions of a contract which prohibit
a party from selling goods other than those of a particular person, or allow the lessor/licensor to
reserve the right to supply new parts of the patented product for its maintenance are not
restrictive conditions. Any contract, which is otherwise invalid, will not be declared valid
because of it complies with this section, i.e. does not contain any restrictive conditions. There are
further rights that the Act allows a licensee/lessee/purchaser to have in respect of  patent
agreement. Section 14184 allows a licensee, lessee, or purchaser to determine i.e. to end their
respective agreements with a three months notice to the licensor, lessor, or vendor in respect of
an article in which all or the relevant subsisting patents have ceased to exist. This is allowed only
if there is nothing contrary in their respective agreements i.e. under the agreement, there is not
already a condition which prohibits the licensee/lessee/purchaser from terminating the contract
once the patent term ends. However, if there are any other determination options exercisable
under the contract, they shall remain open and viable options.

Cases
In Chemtura Corp v Union of India85, use of patent by Ministry of Railways was held to be
valid as use under section 47 Even though the use was by a supplier, since the use was on
behalf of the Railways, the plaintiff was barred from seeking an injunction, as long as the use
was only for the purposes of the Government
In Garware Wall Ropes Limited v. A.I. Chopra 86 the Court had occasion to interpret Section 47
of the Act. The words ‘merely of its own use’ occurring in Section 47 of the Act was held to
mean that use for the purposes of the Government by any department of the Government and
use by servants and agents of the Government in performance of their duties/in discharge of
their duties assigned to them irrespective of who is benefited by such use. It was held that this
would not include use by any other person like contractor or railways since the meaning is
strictly restricted to the direct use by any department of the Government or its servants. Under
section 99 and 100 however, the terms ‘for the purposes of Government’, were held to include
not only Central and State Government, but also Government Undertakings.

84
141. Determination of certain contracts.—
(1) Any contract for the sale or lease of a patented article or for licence to manufacture, use or work a patented article or process,
or relating to any such sale, lease or licence, may at any time after the patent or all the patents by which the article or process was
protected at the time of the making of the contract has or have ceased to be in force, and notwithstanding anything to the contrary
in the contract or in any other contract, be determined by the purchaser, lessee, or licensee, as the case may be, of the patent on
giving three months notice in writing to the other party.
(2) The provisions of this section shall be without prejudice to any right of determining a contract exercisable apart from this
section.
85
CS(OS) No. 930 of 2009
86
2009 (111) BomLR 479, 2010 (42) PTC 731 (Bom)

53
In Puneet Kaushik v UOI87 it was decided that, Section 39 will also apply to PCT applications.
The filing date will be the date on which permission under section 39 is granted.

Unit 3 Trademark

3.1 Introduction
Imagine anyone enters to a shop and every possible products covered with white paper, there is
no name on each product and they are looking like exactly same. It will be difficult position for
the purchaser to fix their mind to have any product. So, Trademark (TM) refers to any symbol,
sign, uniquely identify or differentiate between the products or services of any enterprise, and in
pursuance thereof, protect the mark.
The Mark served to identify the source of the goods to prospective purchasers who could then
make their selections based upon the reputation which they acquired through the consistent
performance. TM used to fight against unfair competition of the market. The interest of the
public in not being deceived has been called the basic purpose of the TM.
To justify TM, it can be sum up which are:
1. Identification
2. Source
3. Advertising
4. Quality

3.2 Justification of TM
Objective of the TM is capability of consumers to identify the particular product with negligible
search cost, hence protection of TM is in interest of customers as well as owners, as goodwill of
the product is maintained as a reward of the investment made, also ensures that the customers
from being deceived by the imitation of the marks which probably operating in the market with
lower quality of products. The dilution of the TM or free benefits by resting on the reputed TM
by the competitors is prevented by protecting a TM.
TM performs two important aspects.
i) encourage the production of quality products and

87
W.P. (C) No. 1631 of 2013

54
 ii) by identifying the source of goods and services, marks help consumers to identify their
expected quality to meet the individual consumer’s expectations.
The quality of the product, experienced by the customer, is called “felt quality” which makes the
consumer reach the same product again, so as to experience the exact quality, such experience is
called, “expected experience”. TM aims at maintaining the quality of the product which retains
the patron for the loyal customers. Reliability motivates producers to maintain adequate quality
standard and purchaser to stick with the goods and services. In the economic parlance, the
infringer free ride on the reliable mark and reputation by deceiving customers as to source and
quality. Such free rider reaps where he has not sown. There is no incentive to bonafide TM
holders.
TM becomes the best method of marketing as it’s a shortcut to persuade the customers to buy the
product by informing and educating them through merchandising. The information about quality,
nature or origin of the product as disseminated to people through the TM serves the purpose of
advertising the same. The consumers can be persuaded to purchase the product by informational
or persuasional advertisement. The advertisement may be informational or persuasive, although
persuasive advertisements as well as comparative advertisement create a lasting impression in
the mind of the consumers. Thus the market environment which is created by using the TM goes
in favour of the TM owner and as well as consumers.

3.3 Definition
Trademark is defined as a mark capable of being represented graphically and which is capable of
distinguishing the goods or services of one person from those of others and may include shape of
goods, their packaging and combination of colours [Section 2 (zb) of Trademark Act 1999].
A Mark includes:
Heading, Label, Ticket, Name, Device, Brand, Signature, Letter, Word, Numeral, Combination
of colors Shape of goods, packaging, & any combination thereof. (Section 2(m) Trademark Act
1999)

 An invented word or any arbitrary dictionary word or words, not being directly
descriptive of the character or quality of the goods/service. Ex. Nokia for mobile phone,
Canon for camera, Apple for electronics, Mango for cloth line, Cadbury for chocolate etc.

 Letters or numerals or any combination thereof; Ex. GM, IBM, LG, 501 soap bar etc.

 Devices, including fancy devices or symbols; Ex. MacDonald's double arches, Apple
computers’ half bitten apple etc.

 Monograms; Ex. GE

 Combination of colors or even a single color in combination with a word or device; Ex.
Cyan Color of Tiffany &Co. packaging, Louboutin's iconic red-soled shoes.
55
  Shape of goods or their packaging; Ex. Coca Cola bottle shape.

 Marks constituting a 3-dimensional sign; Ex. 3-dimensional shape of a rooster applied to

the roof of a vehicle.

 Sound marks when represented in conventional notation or described in words by being

graphically; Ex. Twentieth Century Fox – Drums + Trumpets +Strings, MGM
Entertainment – Roaring Lion,

 Any name (including personal or surname of the applicant or predecessor in business or

the signature of the person), which is not unusual for trade to adopt as a mark; Ex.
Goenka jewelry, Tata etc.

3.3.1 Spectrum/Degree of Distinctiveness

The essential function of any trade mark is to guarantee the identity of the origin of the marked
goods or services to the consumer. In order to fulfill that function of a trade mark must be able to
distinguish it from other marks or signs. Distinctiveness impacts on everything from the
registrability of a mark, to its scope of protection, its enforceability and its continuing validity
once registered. A trademark cannot risk being confused with another.
The principles laid in Abercrombie and Fitch Co. v. Hunting World, Inc [537, F.2d 4, 189
U.S.P.Q. 759,769 (2d Cir. 1976) by Honb’l Judge Friendly, referring to distinctiveness of mark,
prior to the acquiring of the status of being a Trademark. This principle has been followed not
only by American Courts, but also by European countries and India. The test of Spectrum of
Distinctiveness (degree of distinctiveness) or the Abercrombie test, Honb’l court classified the
marks into:
1. Inherently distinctive mark: This can further be understood as following
 Fanciful
 Arbitrary
 Suggestive marks.
2. Non-inherently distinctive: The court identified following as under this head
 Descriptive
 Geographical
 Personal Name; and
3. Marks with no distinctiveness: Court inferred this includes all the Generic Marks.
The clear limits or demarcation hasn’t been very alluring, there have always been Courts
interpreting the line of demarcation. The above mentioned terms by the court hav been
explained henceforth:

Arbitrary, fanciful and Suggestive marks

56
These marks are also few times referred as “technical marks.” Degree of distinctiveness is strong
in case of these marks. Public already identifies these symbols or indicators as indication of the
source of goods or services they as such represent. The technical trademarks are awarded with
trademark connotation “ab initio” itself. The reasons for granting of such TM are three-folds,
mentioned below:
(i) The term is in such a nature that the public would inevitably perceive it to be a TM.
(ii) The appropriation of non-descriptive term for use as a trademark doesn’t disable the
Competitors from describing their goods or services.
(iii) The potential competitors need certainty with respect to the TM status of the term.

Fanciful marks are usually some catchy words with no specific meaning as such and not at all
describing the goods or services. The following words fall under the category of Fanciful marks:
KODAK for Photographic supplies
CUTICURA for toilet soap
CUTEX for cuticle-removing liquid
ARGYROL for antiseptic
KOTEX sanitary pads
ODOL mouthwash
POLAROID for optical devices, cameras

Arbitrary marks are consisting of words having dictionary meaning, but not related with the
product or services. The following words can be brought under the category of arbitrary marks:
APPLE computer
BLACK &WHITE Scotch whiskey
ICE CREAM chewing gum
CAMEL cigarettes
SHELL gasoline
MANGO cloth line or hotels
Suggestive marks are consisting of words which are giving certain message for the products, so
there is a hidden suggestion about the product, but not actually describing the product.
The following marks come under suggestive marks category
HEAD & SHOULDER Shampoo
CLEAN & CLEAR Face wash
SNIKKERS Chocolates

Descriptive Marks
A descriptive mark is describing the goods or service in actual sense.

57
CAFÉ COFFEE DAY Coffee shop
PIZZA HUT Pizza outlet
BURGER KING Fast food chain, where burger is also available
There is a fine-line difference between the descriptive mark and the suggestive mark. Suggestive
mark conveys imagination, thought or perception which is required to reach a conclusion on the
nature of goods or services. So, it is not actually ‘descriptive’. On the other hand, descriptive
marks convey the ingredients, qualities or characteristics of the goods or services on which it is
used. Each and every entity needs certain scope of description to describe their goods and
services, so, intended purpose, functions or use is very much needed for every entity in the
market. If one entity is creating a monopoly by TM, which is a descriptive mark, it creates a
limitation in the market and restricts other entities from describing their product. Hence, it is not
desirable and thus a descriptive mark is the weakest mark for TM registration.
Generic Marks
Generic mark can be of two types. (i) One is the general word in the common parlance, eg. if any
football association or cricket association wants to monopoly the ‘WORLD CUP’ as a TM, that
will not be acceptable, as ‘world cup’ is a generic term and a word in the common parlance,
which is used by any possible sports for their respective world cup. (ii) Over use of any word can
replace the goods by that TM. Fallacy in this kind of situation is the TM, which was originally a
strong TM (arbitrary, fanciful or suggestive), but due to extensive marketing in relation to a
product it may become generic with time. Ex. The word ‘photocopy’ is replaced by the word
‘XEROX’ whereas ‘XEROX’ is the fanciful TM and now they are struggling to ratin it as a
fanciful TM. Other examples are CELLOPHANE, NYLON, ESCALATOR, ASPIRIN etc.

3.4 Grounds of Refusal of Registration

According to the Trade Marks Act 1999 there are 2 types of grounds for refusal for registration
of Trade Marks, which are:
i. Absolute Grounds for Refusal of Registration
ii. Relative Grounds for Refusal of Registration

3.4.1 Absolute Grounds of Refusal

The absolute grounds for refusal of registration are:
a) The marks which lack the distinctive character (degree of distinctivity is discussed in 4.3)
that is those marks which are not capable of differentiating between goods and services of
one entity from those of another shall not be registered.88
b) The marks that consist exclusively of marks or indications which may serve in trade to
designate the kind, quality, quantity, intended purpose, value, geographical origin or the
88
S.9(1)(a) of Trade Marks Act, 1999

58
 time of production of the goods or services shall not be registered. 89 Examples of those
that indicate the Kind, quality, quantity are: TREAT for desert sauces, FRUIT LOOP for
cereals, LASTING PERFORMANCE for perfumes, and FUR for clothes. Examples for
Intended purpose: PERFECT BROW for cosmetics and FOODSAVER for vacuum
packing machine. Examples of geographical names: EUROLAMB for meat was refused
registration. However, SIMLA for cigarettes was refused.
c) The mark which have become customary in the current language and establish practices
of the trade, shall, not be registered.90

Acquired Distinctiveness / Secondary meaning

However, if the marks which have no distinctive character and descriptive in nature can be
registered if they have acquired distinctiveness. There has to be an investigation of customer
perception. As for the extent of customer recognition, there should not be any confusion between
the descriptive mark and other entities. The evidence supporting the conversion of the non-
distinctive to distinctive marks are duration of use, volume of marketed goods, volume of service
provided, use of an advertising slogan, use in combination with other trademarks, advertising
expenditure, trade and consumer surveys. All or some of them would prove that the TM has
acquired distinctiveness. Overall, evidence would show that the brand has acquired a “secondary
meaning.”91
Proof of secondary importance is not necessary to provide legal protection for all types of trade
marks. Fanciful, arbitrary and suggestive marks are inherently distinctive, thus they do not need
the secondary meaning/acquired distinctiveness. Only descriptive mark requires secondary
meaning/acquired distinctiveness for registration.
d) That mark shall not be registered if it deceiving for the public or can cause confusion. 92
For example: KITKAT and FITFAT, KURKURE and MURMURE etc.
In Amritdhara Pharmacy v. SatyaDeo Gupta93 respondents filed an application for registration of
"Laxmandhara" for their biological medicines. Amritdhara Pharmacy disagreed and the registrar
considered it misleading and allowed registration for the sale of the product under the name only
in Uttar Pradesh. The Supreme Court noted that there is no confusion, as the words amrith and
dhara mean nectar or river, while laxman and dhara mean laxman of Ramayana or river
respectively. The Supreme Court ruled that the point was to be approached from the point of
view of a man of average intelligence and imperfect memory. “Dhara” alone is not crucial. The
overall similarity of the compound word is to be regarded as the client of middle intelligence,
and the incomplete memory would go more by phonetic and structural similarity. The court

89
S.9(1) (b) of Trade Marks Act, 1999
90
S.9(1) (c) of Trade Marks Act, 1999
91
S.9(1) proviso of Trade Marks Act, 1999
92
S.9(2) of Trade Marks Act, 1999
93
AIR 1963 SC 449

59
restored the registrar's instructions. The registration for the purpose of sale with Uttar Pradesh
was allowed because of the “honest concurrent” user.
In Hoffman La Roche and Co., Ltd, against Geoffrey Manners and Co. Pvt Ltd. 94, the appellant
registered “PROTOVIT” and the complainants “DROPOVIT”. The request for correction was
rejected because it is not deceptively similar and not descriptive. The Supreme Court cites Lord
Denning in Parker Knoll v. Knoll International Ltd., “Fooling one thing and causing confusion is
another.” If you deceive a man, you tell him a lie. "You make him a misrepresentation and let
him believe it. You cannot do it knowingly or intentionally, but you do it anyway, and that's how
you're fooling yourself, causing confusion without giving it a false representation, you can tell it
the truth, the whole Truth and nothing but telling the truth, but still you can cause confusion in
your mind, not by any mistake, but because it does not have the knowledge or the ability to
distinguish it from the other parts of the truth that is known to it, or because he cannot even
bother. “The court said it was necessary to use both the visual and phonetic tests. The word
DROPOVIT was not understood as a descriptive word, but as an invented word. The court found
that the letters “D” and “P” in DROPOVIT and the corresponding letters “P” and “T” in
PROTOVIT ca not be blurred in the pronunciation and the words are so dissimilar that there is
no reasonable likelihood of confusion the words either from the visual or phonetic point of view.
e) If the mark contains or includes something that is likely to violate the religious sensitivity
of a class or part of the Indian citizens, it will not be registered. 95 Hallelujah:96 [praising
the Lord, praising God] refused that clothing influenced the generally accepted customs
of the time, Ramayana rejected for agarbatti.
f) If the trademark contains or contains scandalous or obscene material, it may not be
registered.97 Example: FUCT TM applied for clothing, but rejected for TM by US Courts.
g) If the use of the mark is forbidden under the Law on Emblems and Names (Prevention of
Inappropriate Use) of 1950, it may not be registered.98 Example: Ashok Chakra cannot be
applied for TM.
h) If the mark consists exclusively of the shape of the goods, which results from the nature
of the goods themselves, they may not be registered.99 Example: apple design for
packaging apples, round shape for the tennis ball.
i) If the mark consists exclusively of the shape of the goods necessary to obtain the
technical results.100 If the shape mark is dictated by the function without that shape the
technical result cannot be achieved, those shape marks cannot be registered. Example:
LEGO BRICKS for Toys, KITKAT finger shaped chocolate are refused.

94
AIR 1970 SC 2067
95
S.9(2) of Trade Marks Act, 1999
96
1976 RPC 605
97
S.9(2) of Trade Marks Act, 1999
98
S.9(2) of Trade Marks Act, 1999
99
S.9(3) of Trade Marks Act, 1999
100
S.9(3) of Trade Marks Act, 1999

60
 j) The shape which giver substantial value to the goods is not registered. 101 At the
Koninckijke Phillips Electronics NV v. Remington Consumer Products Ltd, 102 Phillips,
who had marketed her three-blade rotatory electric shaver (phillishave), was charted the
shape and configuration of the razor head registered on the basis of use. Remington
began manufacturing and selling its razor DT 55, a three-head razor whose blade heads
were arranged in an equilateral triangle similar to that of Phillips. Phillips sued
Remington for violating his trademark and Remington counterclaimed the validity of TM
against Philips. The High Court found that the mark was devoid of any distinctive
character and consisted solely of a sign intended to indicate the purpose of the goods and
a form necessary to obtain a technical result. The appellate court referred the case to the
European Court of Justice after the stay. The European Court of Justice has commented
on the four issues raised by the Court of Appeal. The Court stated that a sign which is
exclusively in the form of a product cannot be proved if it is established that the essential
functional characteristics of that shape are attributable only to the technical result.
Furthermore, the ground for refusal or inadmissibility imposed by that provision cannot
be overcome by establishing other forms which would allow the same technical result to
be achieved. So the Philips’ application for TM got rejected.

3.4.2 Relative grounds of refusal

A trademark shall not be registered under the following circumstances:
Where there is a likelihood of confusion, including the likelihood of association with the earlier
mark, as the mark is identical to the earlier mark and similarity of the goods or services; or
similar to the earlier mark and identical or similar goods or services. 103 For example: TOFFEE
TREAT and ROBERTS TOFFEE TREAT. In determining the similarity of the marks, the oral,
visual and conceptual similarity must be taken into account. In addition, the distinctive and
dominant components are examined. The similarity varies with the circumstances. Words with a
common suffix or prefix could look similar if the remaining parts are similar and give relative
importance to other parts. EX: TURBOGAZ and TURBOTORCH are similar; MOLIVAR and
BOLIVAR for cigarettes, TREVICOL and FEVICOL, VIMCO and SIMCO, ESQUIRE and
EWQUARE. Similarity can occur due to syllabification. Eg. BALI and BARLEI. Similarity may
be due to the translation, such as REDFORT and LAL QILA. Similarity may be due to a TM that
contains the entirety of the others. Ex: FROLLICK and ROLLICK for ice cream,
CONSOLETTE and CONSOLE for gramophones. Expressions can have common words like
RUSTOM INDIA and RUSTON, STARDUST and STARMIST. If the older mark is strongly
distinctive, the subsequent mark could be similar without significant change. For example: The
word VAPORUB on the products of Vicks Chemical Company was so distinctive that the use of

101
S.9(3) of Trade Marks Act, 1999
102
ECJ, June 18, 2002, Lawtel
103
S.11 (1) & (2) of Trade Marks Act, 1999

61
VAPOR RUB together with KARSOTE from Decardova was still considered similar and led to
confusion among consumers.104
To determine the likelihood of confusion, the standard of “Consumers with average intelligence
and incomplete memory” is used.105 The “first impression” that the consumer might have should
be taken into account.
Summary of the principles:106

a. Main idea or salient features considered.

b. TM that are remembered by the general impression or by a significant detail and not by a
photographic memory of the whole.
c. The general similarity is the touchstone.
d. Brands must be viewed from the point of view of the first impression of a person of
average intelligence and imperfect memory.
e. The overall structure, phonetic similarity, and similarity of the idea are important, and
both the visual and the phonetic test must be used.
f. Brands must be compared as a whole, microscopic examination is inadmissible.

Some more points are needed to note for Relative Grounds of refusal.
 In case of likelihood of confusion with the unregistered TM which is protected under
common law of passing off, the TM shall not be registered.107
 If any label or packaging registered or not but declared as an artistic work under
copyright, shall not be protected as TM.108
 If the consent is taken from the earlier TM holder, the later mark can be registered as a
TM.109

Well-known marks 
Well known marks are marks generally acknowledged to be marks which have a high degree of
recognition and reputation in the areas of trade of the proprietors of such marks, and in many
cases beyond the areas of trade of the proprietors of such marks. Well-known marks are critical
business assets which can be used and traded just like any other assets. As such, these critical
business assets deserve the fullest and widest possible protection in order that mark owners may
fully exploit the value of such well-known marks.
This need for specific protection for well-known marks is recognised in various international
obligations which set out the principles for the protection of well-known marks, with individual
countries setting out the extent of which such rights are to be protected.
104
De Cardovavs Vicks Chemical Co 1951 68 RPC 103
105
Amritdhara Pharmacy v. SatyaDeo Gupta AIR 1963 SC 449
106
Kaviraj Pandit Durga Dutt Sharma vs Navaratna Pharmaceutical 1965 AIR 980, 1965 SCR (1) 737
107
S.11 (3)(a) of Trade Marks Act, 1999
108
S.11 (3)(b) of Trade Marks Act, 1999
109
S.11 (4) of Trade Marks Act, 1999

62
Whether a mark is well-known is a factual question. The factors to be considered in determining
whether a mark is well-known generally fall within the following scope:110
 the degree of knowledge or recognition of the mark in the relevant sector of the public;
 the duration, extent and geographical area of any use of the mark;
 the duration, extent and geographical area of any promotion of the mark;
 the duration, extent and geographical area of any registrations to the effect they reflect
use or recognition of the mark;
 the record of successful enforcement of rights in the mark; and
 the value associated with the mark.
Protection for well-known marks is not confined to use of similar marks used for goods or
services identical or similar to those of the owner of the well-known mark, but also to use in
relation to goods or services which are not identical or similar to those of the owner of the well-
known mark if such use would indicate a connection exists between such goods or services and
the owner of the well-known mark. While many countries recognise unregistered well-known
marks, it is however advisable to seek registration of well-known marks, taking into account that
there may be extended forms of protection for registered well-known marks in India.
So, that the goods and services for which the other mark is used or is seeking protection are not
identical with or similar to the goods for which the well-known mark acquired its reputation, that
the use of the other mark would indicate a connection between these goods and the owner of the
well-known mark, and that his interests are likely to be damaged by such use.111

This rule reflects the so-called “dilution doctrine.” This doctrine prevents the weakening or
diminishing of a mark's ability to clearly and unambiguously distinguish one origin of goods or
services from another and protects the distinctive character of a mark.112
Dilution has two dimensions:
i. Blurring: This is the classic or traditional dilution effect. The unique and distinctive
meaning of a TM for identifying and distinguishing a source can be watered down and
mitigated. There is no confusion about source, sponsorship, affiliation or affiliation.113
ii. Tarnishment: Here is the effect of the junior TM to soiled, worsened or diluted the
distinctive quality and reputation of the older TM. The junior mark is used on a product
or in a context that degrades the reputation of the mark established by the senior user or is
completely incompatible with the image projected by the senior mark.114
Before the commencement of 1999 Trademark Act any TM used in good faith, nothing in this
Act shall prejudice the validity of registration of that TM or right to use that TM on the ground
that such TM is identical with or similar to a well know TM.115
110
S.11 (6) of Trade Marks Act, 1999
111
S.11 (7) – (10) of Trade Marks Act, 1999
112
The doctrine of dilution as a separate basis for protection of trademarks originated in Britain and Germany and was introduced
into the United States through the writings and Congressional testimony of Frank Schechter.
113
See Tiffany and Co. v. Boston Club Inc., 231 F. Supp. 836; Sally Gee Inc v. Myra Hogan Inc., 699 F. 2d 621; Mead Data Cent
Inc. v. Toyota Motor Sales Inc, 875 F. 2d 1026
114
See Bean Inc v. Drake Publishers Inc., 811 F. 2d 26; Coca Cola Co v. Gemini Rising Inc., 346 F. Supp 1183
115
S.11 (11) of Trade Marks Act, 1999

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3.5 Registration of Trademark
General principles in application
The Trade & Merchandise Mark Act of 1958 was revised and replaced by the Trade Mark Act
1999. The process began when a sweeping review of the 1958 Law was made in the light of new
developments in trade and commercial practices, increasing globalization of trade and industry.
Procedure on receipt of application
The application must be completed at the Office of the Trademark Office, where the principal
place of business of the applicant is in India. After registration of a trade mark is completed, it
will be submitted for examination.
The review of the trademark application includes the verification of compliance with the
1. Submission requirements that follow the procedure prescribed by the trade procedure
trademark law and trademark rules;
2. Material requirements for the registrability of the mark.
The examiner (including a senior examiner) performing the examination will submit a
consolidated “examination report” listing any objections to the acceptance of the application for
registration; or, where appropriate, submit a proposal for acceptance of the request, with or
without restriction, condition or restriction on the use of the mark. A computer-generated “search
report” listing conflicting trademarks is attached to the search report. The examiner will list any
existing deficiencies in the application and raise any applicable objections to accepting the
application for registration of the trademark. The applicant (including the applicant's
representative) must respond to the examiner’s objections within a period of one month from
receipt of the audit report. The response to the search report, together with proof of use of the
trademark in India and other documents attached to the response, will be duly considered. If the
objections cannot be waived, the applicant will be given the opportunity to be heard. The
application is thereafter accepted with or without limitation, condition or limitation of the use of
the trademark; or as it will be, it will be rejected for registration. The decision to accept or reject
the application will be communicated to the applicant. The accepted application will at that time
be published in the Trade Mark Journal.
Acceptance & Advertisement
If an application has been filed prior to acceptance and there is no objection, it is a mandatory
legal requirement that the application be accepted by the registrar or an authorized officer in the
file before the trademark may be registered. Section 20 of the Trademarks Act, 1999 states that,
if an application for registration of a trade mark has been accepted in absolute terms or subject to
conditions or restrictions, the Registrar shall accept as soon as possible after acceptance the
request accepted as being common with the conditions or restrictions, if any, subject to the
presumption of being advertised in the prescribed manner: The reservation to Section 20 allows
the registrar to file an application for registration of a trade mark which is to be advertised prior

64
to acceptance a trade mark. The examination of an application of TM is based on Section 9 and
Section 11 of the Trademark Act, 1999.
After the advertisement, if there is no contradiction, the mark can generally go on to registration.
Therefore, the pre-adoption rule as required by law itself should be invoked under “exceptional
circumstances”. If the examiner finds sound evidence of bonafide commercial adoption and use
of the mark, the examiner or hearing officer may “accept” the request and designate the mark as
“accepted”. In appropriate cases or when an application is made on Form TM-58, a cross-
application may be issued to the registered holder or to the earlier applicant. This will allow him
to oppose the registration if he so wishes.
Section 19 allows the Registrar to withdraw the acceptance of an application by mistake or under
circumstances where the trademark should not be registered or registered under conditions or
restrictions.

FILING OF APPLICATION
WITH/WITHOUT PRIORITY

EXAMINATION REPORT

1 MONTH
FILING OF REPORT

ACCEPTED HEARING

6 MO NTHS

PUBLICATION REFUSED/AB
IN THE ANDONES
JOURNAL

4 MONTHS

WAIT FOR REPLY OF

OPPOSITION NOTICE/HEARI
NG
2MONTHS

OPPOSITION
DISALLOWED

REGISTRATION OF TRDEMARK

Pictorial Diagram of Registration of Trademark

65
Opposition
A notice of opposition to the registration of a trade mark must be made within three months of
the date of publication or re-notification of the application in the trade mark journal or within
that additional period of not more than one month, the request made to him on Form TM-44 may
allow [(See Rule 47 (6)].
Section 91 of the Trade Marks Act provides for an appeal against a Registrar's decision before
the Intellectual Property Appellate Board (IPAB). In some cases, parties may also invoke the
jurisdiction of high courts. (Rule 40 of the Trade Mark Rules, 2002).

Section 50 (1) (d) authorizes the Registrar to cancel the registration of a Registered User, ex
officio or at the request of a person, on the ground that a provision in the Quality of Goods /
Services Agreement is not enforced or not complied with become. Section 47 provides two
alternative reasons for removing the mark for non-use. A correction or change equivalent to that
in Section 58 (1) with respect to the registered mark shall be considered in relation to the
registered users referred to in paragraph 2.
(a) Any mistake made in relation to the name, address or description of the registered proprietor
of a trade mark or other mark relating to the trade mark; (b) any change of name, address or
description of the person registered as owner; (c) cancellation of the registration of a trade mark;
(d) deletion of goods or classes of goods or services for which the mark is registered. Rule 91
prescribes the procedure for this purpose.
Paragraph 59 (1) expressly prohibits any addition or modification in any way that substantially
affects the identity of the registered trade mark. Paragraph 25 (4) provides that the removed trade
mark is to be registered and renewed up to one year after the last entry in the register. In this case
the application form TM-13 must be submitted together with the prescribed fees plus the annual
fees. Otherwise, in accordance with paragraph 3 of section 25, the registered holder may extend
the registration for a period of 10 years. Upon request in the prescribed form (TM-10) and
payment of the prescribed fee and supplement within six months from the expiration of the last
registration.
Three types of filing for TM like Patent system
 National Application
 Convention Application (administered by Paris Convention among Paris Convention
Union countries) - An application for patent filed in the Patent Office, claiming a priority
date based on the same application filed in one or more of the convention countries, is
called a convention application. Any interested party needs to file each and every country
separately. In order to get convention status, an applicant should file the application in the
Indian Patent Office within 6 months from the date of first filing of a similar application
in the convention country. Convention Application administered by WIPO under the

66
 provisions Paris Convention among Paris Convention Union countries, 177 countries are
Parties of it.
 Madrid System Application - Protecting your brand/TM outside India implies acquiring
TM rights in each of the export markets where anyone wish to commercialize their
products or services. TM rights are territorial in nature and are only valid within the
territory of a country (national trade mark) or a group of countries having established a
regional trade mark system (e.g., the European Union). In principle, to acquire TM rights
abroad anyone need to file separate trade mark applications at the TM offices of the
countries where anyone wish to have their brand/TM protected. Once anyone gets their
rights in those countries, there is need to follow separate procedures at those same offices
to manage TM rights (renew, license, or assign them). Under Madrid system application,
any interested party can apply various countries at a time. For convention application
there is no option for choosing various countries under one application. However, being a
national of India or a person domiciled in India can take advantage of an alternative,
more attractive, cost-effective and user-friendly route to acquire and manage the TM
rights abroad by making use of the Madrid Protocol, an international treaty that India
joined in 2013

Pictorial Diagram of Madrid system

(http://www.wipo.int/madrid/en/how_madrid_works.html)

67
3.5.2 Registration of Certification Marks

Section 2(1)(e) defines certification trade mark which means “a mark capable of distinguishing
the goods or services in connection with which it is used in the course of trade which is certified
by the proprietor of the mark in respect of origin, material, mode of manufacture of goods or
performance of services, quality, accuracy or other characteristics from goods or services not so
certified and registrable as such under Chapter IX in respect of those goods or services in the
name as proprietor of the certification trade mark, of that person”. 
Sections 69 to 78 of the Act relate to the registration of the certification mark in the line similar
to the registration of ordinary TM.
Section 70 of the Law clarifies that the holder of a Certification Mark may not itself trade in
certified goods or trade in the provision of services of the certified type. In addition, the
certifying authority, which may be an individual or a company or a group of persons, should
have the power to certify the goods in terms of origin, material, method of manufacture or
service provision, quality, accuracy or other characteristics

3.5.3 Registration of Collective Marks

“Collective Trademark” means a trademark that distinguishes the goods or services of members
of a partnership (other than a partnership as defined by the Indian Partnership Act of 1932) that
distinguishes the trademark owner from those of other persons. Section 2 (1) (g) In order to be
eligible for registration, the collective mark must be graphically representable and capable of
meeting other requirements that apply to the registration of marks in general, the points to be
respected by the examiner in such cases, are: -
a. The collective mark belongs to an association of persons who do not constitute a
partnership.
b. The collective marks belong to a group and their use is reserved for the members of the
group.
c. The association may not use the collective mark itself, but it ensures compliance with
certain quality standards by its members who can use the collective mark.
d. The principal function of a collective mark is to indicate a trade relationship with the
association or organization that owns the mark
Sections 61 to 68 of the Act contain special provisions for the registration of collective marks in
the line similar to the registration of ordinary TM, but it includes -
(a) Name and purpose of the association
(b) The persons entitled to use the mark and the type of check which the claimant would exercise
over the use
(c) The requirement of membership in the association
(d) Conditions of use of the mark

68
(e) Sanctions against abuse
(f) Procedures for handling complaints against the use of collective trademarks

Collective trademarks differ from certification marks. The main difference is that collective
trademarks may be used by particular members of the organization which owns them, while
certification marks may be used by anybody who complies with the standards defined by the
owner of the particular certification mark.

3.6 Rights Conferred by Trademark

The main idea to keep in mind when dealing with trademarks is that the Court interprets whether
consumers are confused about the origin of goods and services. The protection of the trademark
is based on the principle of protecting the reputation and goodwill of the owner of the trademark
that the owner of the trademark obtains through constant and exclusive use. The law seeks to
protect a person’s established trademark from being infringed by another by not allowing others
to use the trademark. In addition to use, rights in a trademark may be obtained by registration, by
consent or by license or by assignment. The right of ownership acquired in a trademark is based
on the association of the trademark with the goods or services.
Section 28 of the Trade Marks Act 1999 deals with the rights conferred by the registration.
Under this section, when registering a trade mark, the trade mark owner receives the exclusive
right to trade mark the trade mark in relation to goods and services.
The rights under Section 28 of the Act are subject to various restrictions such as

 the rights can be challenged on the ground that the registration is not valid,116

 the exclusive right to use the trademark is subject to conditions and limitations to which
the registration is subject,117

 the exclusive right conferred by registration will not operate against persons who are
registered proprietors of identical or similar marks,118

 the registered user cannot interfere with or restrain prior user of the same or similar trade
mark provided the mark must have been used from a date prior to the use of the
registered trade mark, or its date of registration, whichever is earlier, the prior use
claimed must be by the proprietor by himself or his predecessor in title and the claimed
use must be continuous,119

116
Section 28(1) of the Trade Marks Act, 1999
117
Section 28(2) of the Trade Marks Act, 1999
118
Section 28(3) of the Trade Marks Act, 1999
119
Section 34 of the Trade Marks Act, 1999

69
  the registered user cannot interfere with or restrain honest concurrent use of the same or
similar trademark,120 and

 the registered proprietor cannot interfere with any bonafide use by a person of his own
name or that of his place of business, or the use of any bonafide description of the
character or the quality of his goods.121

3.7 Transfer of Trademarks

Assignment & Licensing Of Trademarks in India

• Just as in the case of physical property such as land, every owner of a Brand or
Trademark has the right to sell, license, transfer, etc. its respective brand or trademark in
accordance with legal procedures. A brand or Trademark owner can transfer his rights
with respect to his trademark either by way of assignment or by licensing. In India, The
Trade Marks Act, 1999 deals with assignment as well licensing of trademarks.
• In case of an assignment of a trademark, there is a change in the ownership of the
registered brand and in case of licensing, the right in the trade mark continues to vest
with the original owner but only few restricted rights to use the brand/mark are given to
the third party.

3.7.1 Assignment of a Trademark

Assignment of a trademark occurs when the ownership of such mark as such, is transferred from
one party to another whether along with or without the goodwill of the business. In case of a
registered Trademark, such assignment is required to be recorded in the Register of trade marks.
A mark may be assigned or transferred to another entity in any of the following manners:
• Complete Assignment to another entity- The owner transfers all its rights with respect
to a mark to another entity, including the transfer of the rights such as right to further
transfer, to earn royalties, etc. (E.g. X, the proprietor of a brand, sells his mark
completely through an agreement to Y. After this X does not retain any rights with
respect to the brand)
• Assignment to another entity but with respect to only some of the goods/
services- The transfer of ownership is restricted to specific products or services only.
(E.g. P, the proprietor of a brand used for jams and jellies and dairy products. P assigns
the rights in the brand with respect to only dairy products to Q and retains the rights in
the brand with respect to jams and jellies.) This is called partial assignment.
• Assignment with goodwill- Such assignment is where the rights and value of a
trademark as associated with the product is also transferred to another entity.(E.g. P, the
120
Section 12 of the Trade Marks Act, 1999
121
Section 35 of the Trade Marks Act, 1999

70
 proprietor of a brand "Shudh" relating to dairy products, sells his brand to Q such that Q
will be able to use the brand "Shudh" with respect to dairy products as well as any other
products it manufactures.)
• Assignment without goodwill- Such assignment also referred to as gross assignment, is
where the owner of the brand restricts the right of the buyer and does not allow him to
use such brand for the products being used by the original owner. Thus, the goodwill
attached to such brand with respect to the product already being sold under such brand, is
not transferred to the buyer. (E.g. P, the proprietor of a brand "Shudh" relating to dairy
products, sells his brand to Q such that Q will not be able to use the mark "Shudh" with
respect to dairy products but can use this brand for any other products being
manufactured by it. In such case the goodwill which is associated with brand "Shudh" for
dairy products is not transferred to Q and Q will be required to create distinct goodwill of
brand "Shudh" for any other product or service like Restaurant wherein Q proposes to use
this brand.). In many jurisdictions like United States, assignment of mark without
goodwill is not allowed at all. India on the other hand allows assignment without
goodwill.
Further, in case of registered Trademarks, the Trade Mark Act 1999 also puts certain restrictions
on the assignment of a registered trade mark wherein there exist possibilities of creating
confusion in the mind of public/users. Such restrictions are:
• Restriction on assignment that results in the creation of exclusive rights in more than one
person with respect to the same goods or services, or for same description of goods or
services or such goods or services as associated with each other.
• Restriction on assignment that results in different people using the trademark in different
parts of the country simultaneously.

3.7.2 Trademark Licensing

The licensing of a mark is to allow others to use the mark without assigning the ownership and
the same may be done for all or some of the goods and services covered.   The Trademarks Act
does not mention the term 'License', the concept under the Act is mentioned as that of a
'Registered User'.
Trademark licensing is advantageous to both the parties. While the licensor enjoys its rights to
the mark by getting the royalties for its use, the licensee is able to expand its market operations
by using the brand and developing its reputation.
In case of Licensing, the licensor is open to license the rights over the trademark in manner it
may like. The Licensor can restrict the rights of the licensee in a trademark or brand with respect
to the products or services wherein the licensee can use such brand, with respect to time for
which it can use such mark, with respect to area within which it can use such mark etc.

71
3.7.3 Agreements for Transmission
A trade mark is generally assigned by way of a properly executed Trademark Assignment
Agreement which pertains to the transfer of the mark from one person or entity who is the owner
to another. It is to be ensured when drafting such agreement that:
 The rights of the owner of the brand are not detrimentally affected due to the
obligations contained.
 The requirement and decision regarding whether the assignment should be with or
without the goodwill of the business is explicitly mentioned and negotiated.
 The agreement should be drafted keeping in mind the purpose of the transaction
in question
A mark is licensed by way of a License Agreement. As per the Trade Mark Act, 1999, contrary
to the requirement in case of Assignment, the registration of license agreement with the
Trademark Registrar of a mark is voluntary and not compulsory, but it is advisable. Further, like
in an Assignment agreement, it is again very important that while drafting a License Agreement,
the rights and duties of licensee are distinctively pre determined and defined. This is important
not only to protect the rights of the Licensor in its own brand and to protect any misuse thereof,
but also to secure licensee with his rights to use such brand.
Assignment and Licensing of brands are considerable issues and proper strategizing may open
vistas of opportunities for all, a licensor, a licensee, an assignor and an assignee. Both concepts
involve a degree of planning for the future of the parties involved and the brand in question. The
development of a brand, its propagation and its use, all lie in the hands of the proprietor of the
brand and trademark and assignment and licensing are effective methods to manage the same.
Role Of Goodwill In Transfer Of Trademark
A trademark is a property of the owner and owner has a right under the Trade Marks Act, 1999
to transfer the property to other person against any consideration. Although the classical theory
regarding the goodwill and trademark says that, the two are inseparable but the contemporary
law evolved to an extent that now a trademark is treated separately from goodwill and hence a
trademark can be transferred with goodwill as well as without goodwill.

3.7.4 Law Regarding Assignment of Trademark

Assignment is the legal term for transfer of ownership which simply means any act of parties by
which interest or rights associated with property of any kind can be transferred from one party to
another party. Trade mark can be assignable or transmissible by three Modes
• By legal operation;
• Inheritance; and

72
 • Giving authority to other party.
The assignee will become the subsequent proprietor of the trademark assigned whether in part or
in full based on the conditions agreed between the parties. As per The Indian Trade Marks Act,
1999, a trademark can be assignable with or without of goodwill of the business either in respect
of all the goods or services or part thereof. Indian law according to Sec. 37 of the Act recognize
the right of proprietor in trademark & in Sec. 38, 39 of the Act by which registered or
unregistered trademark can be assignable and transmissible with or without goodwill subject to
restrictions laid down in Sec. 40 of Trade Marks Act, 1999. On the other hand, U.S. legislation
under Sec. 10 of Trademark act (Lanhman Act) 1946, recognize only assignment of trademark
with goodwill and assignment without goodwill is termed as assignment in gross and invalid,
therefore assignee acquire no rights in such transfer.
What is goodwill?
Goodwill is also an intangible asset which cannot be easily defined. In the words of Lord
Macnaghten, in case of Commissioner of Inland Revenue v Muller & co's Margarine Ltd 2 can be
described as "it is a thing very easy to describe, very difficult to define. It is the benefit and
advantage of the good name, reputation and connection of a business. It is the attractive force
which brings in customers. It is the one thing which distinguishes an old established business
from a new business at its first start. The goodwill of a business must emanate from a particular
centre or source. However widely extended or diffused its influence may be, goodwill is worth
nothing unless it has power of attraction sufficient to bring customers home to the source from
which it emanates."
Goodwill of a trademark is local in character and divisible like in case of business of a brand
situated in different countries. In every country business holds a separate goodwill related to the
particular brand although some part of that goodwill is dependent upon the overall working of
the business around the world. Business of a brand may be closed in a particular country but
closing of that business would not affect the overall goodwill of the business. While the element
of goodwill may be based primarily on earnings, such factors as the prestige and renown of the
business, the ownership of a trade or brand name, and a record of successful operation over a
prolonged period in a particular locality, also may furnish support for the inclusion of intangible
value. This shows that goodwill is inclusive of brand value and based on number of other factors.
While trademark get its value from goodwill associated with products or services.
Trademark & Goodwill: Separable Or Inseparable
In case of assignment with goodwill, assigner transfer absolute rights i.e. all the rights and values
associated with trademark which give absolute authority to transferee to control, to sell or to
improvise or change the quality or structure or completely stop the services of such products. It
is basically that transferor is replaced by transferee in terms of authority, control & rights & after
assignment transferor is completely barred from using such trademark associated with any

73
products & services in kind. Whereas trademark assigned without goodwill means the right to
use trademark associated with the specific products or services of transferor is transferred to the
transferee & rest of the goodwill lies with transferor. Accordingly, transferee can use such
trademark for specific products & services as per agreement unless and until it is likely to
deceive or create confusion it does not create multiple rights in the same goods or services or if
they are associated with each other.
In Associated Electronics & Electrical Pvt. Ltd.v. DCIT, Income Tax Appellate Tribunal held
that trademark and goodwill are two different concepts and transfer of trademark does not mean
transfer of goodwill. Therefore, both Goodwill and trademark are different assets.
Similarly in Kwality Biscuit v. Assistant CIT, Bangalore Income Tax Appellate Tribunal court
held that right to manufacture biscuits was independent, separate and distinct right from right to
market, distribute and sell biscuits under the brand name 'kwality', That means right to
manufacture is still with assignor and will continue in the same business but under different
brand name. Trademark and goodwill is separable.

3.7.5 Assignment Procedure

To assign the trademark, application under sec 45(1) of the Act shall be required to be filed with
the Registrar of Trademark and shall be made either in form TM 24(by assignee only) or TM 23
(if applied by assignor & assignee both) with duly stamped original documents or attested copies
of instrument. The important points that needs consideration are as follows:
 When application is made for transfer of trademark along with goodwill, it must contain a
statement by assignor stating that all the rights vested in trademark with rights to use,
sell, assign, transfer, modify, delete or stop such or any kind of products or services in
respect of that trademark are completely transferred to assignee with no reservation. The
Assignment deed should specifically include the clause related to transfer of goodwill
along with trademark and it should also mention the amount of consideration for the
transfer.
 If the application is made for transfer of trademark without goodwill, then assignment
agreement should state that assignor has reserved his rights in respect of such trademark
in particular goods or services & has not absolutely transferred the trademark in all goods
or services. This means that assignor & assignee both can use the same trademark but in
dissimilar goods or services. The assignee has to apply to the Registrar for his direction
for publication of the assignment within six months from the date of assignment
otherwise same would be treated as null. After being satisfied with all the conditions the
Registrar would allow the assignment to be advertised for the public. After publication
the assignee will apply for the registration of assignment and leave a copy of direction of
Registrar for the publication together with a copy of publication at the Trademark Office.

74
 After considering all the facts and circumstance the Registrar may allow the assignment
and enter the particular in the Register.
 An affidavit for no legal proceeding pending against the trademark assigned from the
assignee or its representative shall also be required to be filed for the assignment.
 As the registration of trademark is optional, likewise the registration of assignment is also
optional and non registration of assignment does not affect the validity of assignment but
registration of assignment would be a valid proof in case of dispute related to the
trademark.
 The transfer of proprietary rights in trademark is similar to any other asset, the difference,
however, comes in reference to the goodwill attached to it. It is the goodwill which
creates the value of a trademark and in the contemporary period same is also a separable
part of trademark. Goodwill provides bargaining power in the hand of the seller and
therefore same is been recognized under the law in reference to the transfer of rights in a
TM. A trademark which is transferred with goodwill will get much higher value in
comparison to the trademark which is transferred without goodwill.

3.8 Infringement of Trademark

Any person who trespasses the rights conferred by registration of a trademark infringes the
registered trademark for example by adopting identical or deceptively similar trademark. In case
a trademark is not registered then the trademark can be protected under passing off.
An infringement should constitute the following essentials: (a) the infringing mark must be either
identical with or deceptively similar to the registered trade mark; (b) the goods or services in
respect of which it is used must be specifically covered by the registrar
In Parker Knoll,122 it was noted that the TM must be very similar in order to "nearly" resemble
the registered trademark and "likely" to deceive or confuse consumers. It is not necessary that it
is intended to deceive or cause confusion. It is the probable effect on ordinary people that must
be considered to detect deception or confusion.
The question of the similarity between two marks and the likelihood of deception or confusion
resulting from their use is not to be decided in a vacuum, but always set in the background of the
surrounding circumstances. The following factors are taken into account:123

 The type of trademarks, i.e., Whether they are words, embossed or descriptive or non-
descriptive names, surnames or geographical names, devices, letters or numbers, or a
combination of two or more of the above characters,

122
Parker-Knoll v Knoll International (1962) RPC 265 at 273-274.
123
Essco v. Mascot AIR 1982 Del 308 at 311.

75
  Degree of similarity between the marks and essential characteristics, i.e. similarity in
phonetic and/or visual.
 The type of good for which it is used or likely to be used as a trade mark,
 The similarity in the nature, character and purpose of the food of the competing traders,
 The class of buyers who are likely to buy the goods with the brands, their education and
their intelligence, and the degree of care they will exercise in purchasing the goods;
 The way of buying the goods or ordering the goods,
 Other surrounding circumstances

The court must consider all relevant circumstances in the comparison of the marks. The risk of
deception must be real. The factors taken into account are the degree of similarity of the two
marks in sight and sound, not only considering the registered mark as a whole, but also their
essential or distinguishing features or the essential idea behind it the full range of potential
customers for the goods protected by the registered trademark and not just the customers for the
goods of the kind marketed by the goods of the defendant, the way in which the buyers of the
goods are normally produced. All circumstances of the trade must be considered.124
The question of similarity and the likelihood of deception are considered by reference to the
entire mark and to the distinguishing essential feature. 125 Intent is not important to determine an
infringement,126but it helps further in determining the injury. It has also been found that each
mark must be large enough to be seen by the eye.127For example, unauthorized printing of labels
is considered to be a trademark infringement, 128 the use of the trademark on reconditioned 129
goods may also constitute an infringement, even if it is made clear that the product is not original
but only refurbished, imported or misidentified is goods for personal consumption, but not for
trading purposes, may not constitute an infringement. The importation of such goods for sale in
India is a violation in the country of origin. Also, the use of a registered mark as part of the trade
style of another trade in the same type of goods is considered a violation of the trade mark in
accordance with Section 29 (3) of the 1999 Law.130
In Amritdhara Pharmacy131 the question of phonetic similarity was discussed in detail. It was
alleged by the claimant that the two words Amritdhara and Lakshmandhara are so similar in
terms of sound that they cause confusion among consumers, which is why Lakshmandhara
should not be admitted. The names were adopted as trade names for the same type of medicines.
The applicant stated that it was a clear case of ‘going out’ because it was used because of the
124
Caudius Ash v. Invicta (1911)28 RPC 252 at 597; Lever Bros.v. Sunniwite (1949) 66 RPC 84; Electrolux v Electrix (1954) 71
RPC 23; Lancer Tm. (1987) RPC 303 at 324, 325.
125
Brooke Bond v. National Coffee Traders (1977) ALT 772, the defendants had imitated the colour scheme and design on the
label. It was held to be an infringement.
126
Parker-Knoll v.Knoll International (1962)RPC 265 at 273 (HL).
127
Unic v. Lyndean where the mark applied to the foods to identify a patent agreement subsisting between
the defendant and another company were held infringement of the mark.
128
Paterson Zochoris v. Merfarken (1966) RPC 7.
129
Rolls-Royce v. Dodd (1981) FSR 517.
130
Elora Industries v. Banarasi Dass AIR 1980 Del 254.
131
Amritdhara Pharmacy v. Satya Deo AIR 1963 SC 449 at 452

76
phonetic similarity for an average Indian consumer and a final consumer for the same type of
medicinal product. The court noted that the words “Amrit” and “Dhara” were common words in
Hindi and the combined word “Amritdhara” meant “stream of nectar” or “nectar flow”; the two
words “Lakshman” and “Dhara” were also known common words and taken together they meant
“river or river of Lakshman”. The Court has also ruled that it is not right to take a part of the
word and compare it to a part of the other word; a word must be considered as a whole and
compared to the other word as a whole. It also states that it is a dangerous method to divide the
word and distinguish part of it from one part of the other word. It took into account the ordinary
Indian villager or citizen who might perhaps know Lakshman, the story of the Ramayana, which
he is familiar with; but doubts if it would apply in cases as the present one. They would go more
by the similarity of the two names in connection with the well-known medical preparation that
he wishes for his complaints.
The court then ruled that both words are alike and similar in sound.
The examination of the infringement was set out in detail in the case of Durga Dutt132:
1. The duty would be to the applicant,
2. If the two marks are identical, there is no further question suggesting an infringement,
3. If the two marks are not identical, the applicant would have to prove that the mark
used by the defendant is so close to the applicant's registered trade mark that it may
confuse or confuse goods for which it is registered;
4. The court must compare the two marks; the degree of similarity. The purpose of the
comparison is to determine whether the defendant's essential characteristics of the
applicant's trade mark are used. The basis is to find out whether the mark used by the
defendant as a whole is deceptively similar to that of the registered mark of the
plaintiff.
The determination of the essential characteristics of the mark is, in essence, a question of fact
and depends on the judgment of the Court of First Instance, based on the evidence on which it is
based as to the use of the mark.
Protection of Cross-border / Trans-border Reputation
The concept of Trans -border reputation becomes the most debatable issue at international level
with the expansion of trade and business of the companies. Goods and services are not limited
only to the country of origin but crossed the territory of the state. In the era of globalization the
goodwill and reputation of a mark become significant.
The doctrine of Trans -border reputation lies at the root of well-known trademarks and the legal
protection of which is firmly entrenched in trademark jurisprudence.

Changing Scenario

132
Durga Dutt Sharma v. Navratna Pharmy Laboratories AIR 1965 SC 980.

77
Few year ago the  theories relating to acquisition of a trade mark was entirely different from now
that, the trademark must be used in respect of the goods in the concerned country and many suits
of the aggrieved person was refused on the above mention ground.
Now the scenario is completely changed, with the opening of economy and expansion of concept
of globalization the law of different jurisdiction has started to recognized action by foreign
plaintiff on the basis of reputation of his goods or services on the foreign soil and have departed
from the old theory of use of the mark in concerned country for the success in Passing-off action.
In order to get the protection of trademark in countries other than the origin, mark must have a
reputation or goodwill.
 Protection of trans-border reputation in India
 Though a product is not available in a particular territory but through electronic media or
other resources the people can identify the source of origin of the goods.
After taking into consideration of the above facts the concept of Trans -border reputation
evolved. In India his concept had its inception in 1995 with the case of How Par Bros
International v Tiger Balm Co.133
Trans-border reputation is contained under section 35 of Indian Trademark Act, 1999 and its
offers protection to foreign trade marks on the basis of their international reputation, thereby
complying the requirement of article 16 of TRIPs, which seeks better protection and treatment of
trademarks.

Section 35 Trade Marks Act, 1999 - Saving for use of name, address or description of goods or
services.-
Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to
interfere with any bona fide use by a person of his own name or that of his place of business, or
of the name, or of the name of the place of business, of any of his predecessors in business, or
the use by any person of any bona fide description of the character or quality of his goods or
services.

In the case of A. Bernardin et Cie,134 in order to argue that a trader acquired goodwill, the court
ruled that a trader cannot acquire goodwill for the purpose of an assignment without being an
actual user of any kind of his products. Although minor activities might be sufficient in certain
cases, the mere dissemination of material advertising for overseas business activities would not
constitute a user in the country that is eligible for exit protection. The additional territorial
reputation of a trademark is also recognized in the context of Vitamins LD's Application for
trademark.135
The Bombay High Court in Kamal Trading Co Bombay Gillette U.K. Limited, Middle Sex,
England,136 lay down as follows:
133
(1995) AIPC 79
134
A. Bernardin et Cie v. Pavillon Propretés Ltd.(1967) RPC 177.
135
In re Vitamins LD's Application, 1956 RPC 1
136
3988 PTC 1

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“...........It is necessary to note that the goodwill is not limited to a particular country because in
the present days, the trade is spread all over the world and the goods are transported from one
country to another very rapidly and on extensive scale. The goodwill acquired by the
manufacturer is not necessarily limited to the country where the goods are freely available
because the goods though not available are widely advertised in newspapers, periodicals, and
magazines and in other media. The result is that though the not available in the country, the
goods and the, mark under which they are sold acquire wide reputation. Take for example, the
Video Cassette Recorders manufactured by National, Sony or other well-known Japanese
Concerns. These televisions and V.C.R are not imported in India and sold in open market
because of trade restrictions, but is it possible even to suggest that the word National or Sony
has not acquired reputation in this country. In our judgment, the goodwill or reputation of goods
or marks does not depend upon its availability in a particular country.”
A Division Bench of the Madras Supreme Court decided at Caesar Park Hotel; and Resorts Inc.
v. Westinn Hospitality Services Ltd.137, as follows:
“Though the hotel business has not been carried on in India, the plaintiff could bank upon trans-
border reputation, so as to maintain a passing off action in India. The documents filed in this
case by the plaintiff prima facie establish that there has been trans-border reputation and
goodwill in India and the service mark 'Westin' had been advertised in magazines having
international circulation including India. In other words, the reputation of the plaintiff- company
was travelling trans-border to India as well through commercial publicity made in magazines
which are available in India.”
In the case of Taittinger v. Allbev Ltd.138 The notion of dilution is not to prevent customer
confusion, but to stop the erosion of the brand's advertising power. Then the logical conclusion is
that there is also a property in an unregistered brand.
In Jolen Inc. v. Doctor & Company139, with regard to the protection of good will the court
expressed its opinion as follows:
“To except a foreign trading company of repute copy of trademark from a non-decrepit, small
time trader is mind boggling and hard to ram down the throat. In a situation like this, the
inevitable conclusion is the adoption by a non-entity of a trademark of a party that has already
established widespread reputation and goodwill as on the one hand adopter encashes and
traders upon the goodwill of the trademark while on the other the established trademark suffers
dilution and earns bad name.”
It was concluded that it includes elements of misrepresentation and deception. The purpose of
taking over the TM or the deceptively similar name of another person is to derive and derive the
financial benefit of that person's reputation and goodwill. As a result, the other person's business
137
AIR 1999 Mad 396, (1998) IIIMLJ 172
138
[1993] 2 CMLR 741.
139
2002 IVAD Delhi 645, 98 (2002) DLT 76, 2002 (25) PTC 29 Del, 2004 52 SCL 46 Delhi

79
or goodwill suffers both a financial and a negative reputation. For this reason, the remedy is
independent of the infringement action resulting from the violation of the statutory trade mark
law.

3.9 Comparative Advertising

The purpose of the comparative advertising is for determining whether the essential features of
the plaintiff's trademark are to be found in that used by the defendant. The identification of the
essential features of the mark is in essence a question of fact and depends on the judgment of the
Court based on the evidence led before it as regards the usage of the trade. It should, however, be
borne in mind that the object of the enquiry in ultimate analysis is whether the mark used by the
defendant as a whole is deceptively similar to that of the registered mark of the plaintiff.140
In Pepsi Co. Inc. and Anr. v. Hindustan Coca Cola and Ors.141 the Court laid down the following
conditions in a case of comparative advertisement:
1. In order to decide the question of disparagement the Court has to come to the conclusion
as to how many customers so would be influenced by advertisement material into not
purchasing a particular product instead of purchasing the rival product.
2. Secondly, the prayer of damages is sought in respect of said comparative advertisement
in the contest of the continuing marketing wall between two companies, one had to ask
whether any substantial damages could properly be attributed to a particular comparative
advertising and, if so, how this could be proved and damages assessed.
3. It is well known law that merely puffing is not dishonest and mere 'poking fun' at a
competitor is a normal practice of comparative advertising and is acceptable in the
market. The comparative advertising is a part of people's nature, everyone starts very
young. They compare everything from their teams to their toys, and most everything in
between. It is fun and can be informative. Some of the most effective advertising is
comparative, but it is not without its risks.
4. Effective advertising delivers a message that it remembered. It can change the way the
world views a product or service and can generate sales. If the market for a service or
product is well-defined, comparative advertising can be held the product or service
distinguishes itself from the competition. Nothing seems to do this more efficiently than
comparative advertising.142

The Court laid down the following key elements, which have to be satisfied in order to succeed
in an action:
(1) A false or misleading statement of fact about a product.

140
Also see, Ruston and Hornby Limited v. Zamindara Engineering Company, Supreme Court
141
2003 (27) PTC 305 Del
142
See also, the law laid down in 1996 PTC 393 and the judgment of 1999 PTC 741.

80
 (2) That statement either deceived, or had the capacity to deceive, substantial segment of
potential consumer, and
(3) The deception was material, in that it was likely to influence consumers' purchasing
decisions.

3.10 Passing Off

In case of overriding of unregistered trademark the passing off can be used a common law
remedy of torts. The word infringement used in case of registered TM. The plaintiff has to prove
that his goods or services have a reputation and goodwill in the market. The basis of passing off
is false representation. In an action of passing off it is not necessary that there should be absolute
identity between the articles of the plaintiff and the defendant. The basis for an action is
deception and false representation.143 There has to be direct false representation, adoption of
trademark which is the same or colourable imitation of the trademark of the rival traders,
adoption of an essential part of the rival trader’s name, copying the get-up or colour scheme of
the label used by the trader, imitating the design or shape of he goods and adopting the word or
name by which the rival trader’s goods or business is known in the market.
The concept now has changed from protecting the manufacture’s goodwill and reputation to the
concept of protecting the manufacture’s monetary benefit and to bar unfair reaping by others of
what has been sowed by the manufacture. The ultimate concept remains same that is to protect
the consumers from the ultimate confusion while buying the goods, services etc. In the early
nineteenth century tort as a remedy was available for name, trademark or product or business but
now it is inclusive of television, radio programme, and other non-trading activities like
professional associations, business of looking after children, organizing exhibitions, beauty
contests, so on and so forth.
In the English case of Erven Warnink,144 which is also known as the Advocate case, the essential
characteristics which must be present in order to create a valid cause of action for passing off
are:
1. misrepresentation,
2. that is made by a person in the course of trade,
3. to prospective customers of his or ultimate consumers of goods or services,
4. supplied by him which is calculated to injure the business or good-will of another trader,
and
5. which causes actual damage to a business or goodwill of the trader by whom the action is
brought.

143
Cadila Health Care Ltd. v. Cadila Pharmaceutaicals Ltd., (2001) 5 SCC 73.
144
Erven Warnink v. Towned 1980 RPC 31.

81
3.11 Defenses of Trademark Infringement
If an action for infringement has been brought against a defendant, he may, in accordance with
the applicability of the relevant defense in his case, take one of the pleas provided in the file. He
may either claim that the claimant is not entitled to use it because he has no title or owner, or that
the use of the mark by the defendant does not constitute an infringement or is protected by the
provisions of Section 30 of the 1999 Law Represent injury.
A registered trade mark shall not be infringed if the use in relation to goods or services indicates
the nature, quality, quantity, intended purpose, value, geographical origin, date of manufacture of
goods or provision of services or other characteristics of goods or services.
a. A mark shall become subject to any conditions or limitations, the use of the mark in any
way with respect to goods which are to be sold or otherwise traded in any place, or in
respect of goods to be exported to or in relation to a market, registration services for use or
availability or acceptance in a place or country outside of India or under any
circumstances, taking into account these conditions or restrictions, the registration does not
extend;
b. the use by a person of a trademark-
 in respect of any goods connected to or in the course of business with the holder or a
registered consumer of a good, the registered user or the registered user confirming the
permitted use has registered the trade mark and has not subsequently removed or
unrecognizable it or has expressly or implicitly consented to the use of the mark at any
time; or
 in relation to services to which the owner of such a registered trademark or user has
applied the mark, provided that the purpose and effect of the use of the mark indicates
that these services were performed by the owner or a registered user of the mark;
c. The use of a mark by a person in relation to goods intended to form or be necessary for a
part of other goods or services in respect of which the mark was used without infringing
the right shall be made by registration in accordance with This law, or provisionally, may
be used where the use of the mark is reasonably required to indicate that the goods or
services are adapted and that neither the purpose nor effect of the use of the mark is
otherwise than in accordance with the fact that a connection exists in the course of business
between a person and the goods or services;
d. The use of a registered trademark, which is one or two or more marks registered under this
Act, which are identical or nearly identical in the exercise of the right to use this mark
conferred by the registration under this Law.

82
 If the goods, which claim the sale of the goods in the market or the other trade in these
goods by this person or by a person acting under or over them, only violate a trade for
reasons,
(a) the registered trade mark was transferred by the registered owner of another person after
the acquisition of those goods; or
(b) The goods have been marketed under the registered trademark by the owner or with his
consent.
Subsection 3 shall not apply if there are valid reasons or if the trader opposes, in particular,
further transactions with the goods, if the condition of the goods has changed or deteriorated
after the placing on the market.
a. The defendant is the pre-user of the contested mark;
b. The defendant was an honest co-user,
c. The defendant has the right to use the contested mark for simultaneous registration;
d. The trademark of the plaintiff became a common word; public juris,
e. The registration of the applicant's mark was invalid,
f. The claimant is excluded from the claim because of his own conduct, such as acquiescence,
delay or delay.

3.12 Remedies
The concept of counterfeiting and misappropriation of trademarks is dealt with in detail in the
law.145 Under that provision, a person is considered to be a counterfeit of a trade mark if, without
the consent of the proprietor of the trade mark, he makes the identical mark or falsifies a genuine
trade mark, so it is a exact replica of the TM. There is no chance of confusion, that is the
difference between the general understanding of infringement and counterfeit.
The penalty for selling, hiring or selling goods or providing services that use a false trade mark
or trade name is a minimum of six months imprisonment, but may not exceed three months, not
less than fifty thousand Rupees, but up to two lakh rupees.146
The law provides for an increased sentence for the second or subsequent conviction with a prison
sentence of at least one year, which may, however, extend to three years and a fine of at least 1
lakh rupee, which may amount to up to two lakh rupees.147
If a person removes or attempts to remove, sell, or sell or sell for sale, or to sell or manufacture
piece goods or cotton yarn or cotton thread that is not labeled as prescribed in Section 81, any
145
Section 102 of the Trademarks Act, 1999
146
Section 103 of the Trademarks Act, 1999
147
Section 104 of the Trademarks Act, 1999

83
item, cotton or cotton items and every such bundle of twine and all such threads and all that is
used for their packing will lapse to the government, and that person will be fined, which may
amount to rupees up to one thousand.148
The misrepresentation of an unregistered trademark as a registered trademark will result in a jail
sentence of up to three years' imprisonment or a fine or both.149
If a person uses words at his place of business or on a document issued by him which leads to a
false assumption that his place of business is in connection with 150 or officially linked to the
Trademark Office, he shall be punished with imprisonment for a term of office which can take
up to two years, or with fine or with both.151
Any person who makes an incorrect entry in the copyright register or who falsely copies or posts
a copy as a copy of an entry in such a register, or provides evidence of such false entry or
writing, is liable to jail terms of up to two years can, or with fine or with both.152
In the event of a breach by a company, the company as well as any person responsible and
responsible for conducting its business at the time the crime is committed is guilty and liable for
the conduct and punishment.153
Subject to a written complaint by the Registrar or any official duly authorized by him in writing,
no tribunal shall be aware of a criminal offense under section 107 or section 108 or section 109
of the Act. No court subordinate to that of a first-class magistrate or judge may attempt a
criminal offense under this law. The offenses under § 103 or § 104 or § 105 must be
recognizable. Any police officer who is not subordinate to the rank of Deputy Chief of Police
may search warrants and confiscate the goods, stamps, machines, plates, other instruments or
property belonging to the offense without warrant, and confiscate first-class judges or
Metropolitan Magistrates. Any person who has an interest in a confiscated article may, within
fifteen days of such seizure, file an application with the First Class Judge or the Metropolitan
Magistrate, which may reopen it to him and to the Magistrate after hearing the complainant and
the prosecutor is provided.154
In order to encourage the commission of an offense while the person is inside India to commit
the crime outside of India, which would be a criminal offense in India, it can provide such
assistance anywhere in India where they can be found to be charged and punished with the
punishment which he would be guilty for, if he had committed the crime in that place in which
he favored them.155

148
Section 105 of the Trademarks Act, 1999
149
Section 106 of the Trademarks Act, 1999
150
Section 107 of the Trademarks Act, 1999
151
Section 108 of the Trademarks Act, 1999
152
Section 109 of the Trademarks Act, 1999
153
Section 114 of the Trademarks Act, 1999
154
Section 115 of the Trademarks Act, 1999
155
Section 120 of the Trademarks Act, 1999

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3.13 Domain Name Protection
'Domain name' is very simply the address of a particular site on the Internet, not much different
than a phone number. The domain name itself serves as the front of a number string leading to
the site on the Internet. The domain names are mapped to unique Internet Protocol (IP) numbers
that serve as routing addresses on the Internet156. The Domain Name System (DNS) translates
Internet names into the IP numbers needed to transfer information over the network. On the
Internet, the domain name is the part of the Uniform Resource Locator (URL) that tells a domain
name server, using the Domain Name System (DNS), whether and where to submit a request for
a Web page. The request will obviously come from the person who accessed the Internet and
logged in to this site. The domain name is mapped to an IP address (which represents a physical
point on the Internet).
Without the domain name, a computer would have no idea where to look for a webpage, and e-
mail routers cannot send e-mail. Domain names are divided into hierarchies. The top level of the
hierarchy appears after the last period ('.') in a domain name. This domain is organized in layers.
The top level identifies the geographical or purpose commonality 157. For example, in "ford.com,"
".com" is the top-level domain name. Other common top-level domain names include .org (for
non-profit organizations), .net (for network and Internet-related organizations), .edu (for four-
year colleges and universities) and .gov (for government agencies), and the recently added .biz
and .info.
In addition to these generic domain names, each country has received a unique top-level domain
name. For example, ‘.in’ specifies a domain in India, and ‘.pak’ indicates Pakistan. The disputes
about domain names refer to "second level" domain names. The name of the second level is the
name immediately to the left of the top-level domain name in an Internet address. For example,
at www.ford.com, the second-level domain name is "ford."
There cannot be two identical second-level domain names under the same top-level domain
name. The second level identifies a unique location within the top-level domain and, in fact,
corresponds to a unique address on the Internet (an IP address). For example, although both the
Lee Cooper Company (a company that manufactures and sells shoes) and Lee (a company that
produces and sells clothing) would like the domain name "Lee.com", only one Lee Company can
Lee have .com. Another example is that although Orient Fans and Orient Longman Book both
like to have Orient.com as their domain name, only one can have the domain name. Lower levels
of the domain can also be used to become narrower and more site specific. Multiple domain
names can be assigned to the same Internet address. In this way, multiple individuals, businesses,
and organizations can have separate Internet identities while using the same Internet server.

156
E.g. 98.37.241.30
157
For example, the nation that the domain covers such as ‘in’ for India or a category such as ‘com’ for commercial

85
As more and more companies publish information and products on the Internet, Internet domain
name disputes become more common. These disputes pose a challenge to existing law, and there
is a need for the Internet community to develop new producers and legislation to meet the
challenges involved. This chapter discusses domain names and the resolution of domain name
disputes by the Internet community

3.13.1 Legal Definition of Domain Name

The meaning of the domain name has been extended and confirmed by court practice. So an
interpretation of a domain name can be given as:
(i) A common address depends on the location, while the web address is selected by an applicant
unless it is identical to another address name;
(ii) An Internet address can often be guessed because the name should be entered to enter a
company website. Therefore, a domain name is not a generic address. it is more like a sign that,
like a poster in a store, indicates the place "place" of goods and services for sale. A domain
receives characteristics that characterize the commercial property.

3.13.2 Domain Name and Intellectual Property

As the Internet evolved, the meaning of the domain name has increased dramatically, and the
concept of a domain name translates from a mere "address" indicator to an identifier of certain
people, services, and merchandise provided at that address. A domain name acquires the
characteristics of a trademark, trade name or trademark and is, in effect, a means of
individualizing a particular business entity, its goods and services. The value for the brand of
companies that already exist outside the Internet is in most cases transferred to the Internet and
expanded. In other cases, such as rediff.com, brand value is built from the ground up on the
Internet.
Out of 4,000 intellectual property experts in the US and Europe surveyed, 90 percent said they
have suffered a domain name violation and that they have increased in other types of online
abuse. The report says that copyright infringement involving the appropriation of material by
websites such as Napster has risen by 105 percent in the past three years, and that intellectual
property counterfeiting has increased by an astonishing 1,650 percent, including popular brand
names.
With new top-level domains like .biz and .info coming on the market, the problems are likely to
get worse as people try to register names in these new domains that could hurt others' brands.

3.13.3 The Organizations for Domain Name Registrations

It is true that the Internet began as a lawless and unregulated sphere, but this approach caused
many problems with various unexpected and undesirable consequences of the process. Especially
in the DNS area, cyber squatting and domain name disputes have become rampant and

86
counterproductive. The decline not only impacted the relevant industries, but also had a negative
impact on consumers and Internet users. Therefore, it becomes urgent to introduce a form of
licensing and regulation of DNS. This function was taken over by a unique non-governmental
organization and very interesting in practice, this organization has been recognized worldwide as
the authority and definitive organization in this field. The organization is called Internet
Corporation for Assigned Names and Numbers (ICANN).
ICANN is a nonprofit organization founded under the direction of the US Department of
Commerce. The goal of the organization is to facilitate the privatization of the technical
administration of Internet Names and Addresses, the Domain Name System (DNS). As part of
this privatization effort, ICANN announced on April 21, 1999, the selection of five companies to
participate in a two-month test of a new common registration system.
During and after the two-month trial period, Network Online Inc. (NSI) was joined by America
Online, CORE (Internet Council of Registrars), France Telecom / Oleane, Melbourne IT and
register.com as registrars for GTLD names158.
Prior to December 1999, a company called Network Solutions Inc. ("NSI") was almost solely
responsible for registering second-level domain names for the most popular top-level domains,
including .com, .net, and .org. Since the vast majority of domain names belong to one of these
top-level domains (most commonly .com domain names), Network Solutions had a great deal of
control over how domain names were registered and how disputes could be resolved. To avoid
being the arbitrator between two parties who both want the same domain name, NSI decided to
simply take on a first-come-first-serve agreement on the domain name. If the domain name was
available, the applicant received the name.
In December 1999, the registration of .com, .net and .org domains was distributed among many
registrars. ICANN and NSI continue to award domain names, but now they are just one of many
domain name registrars. After the precedence of the NSI, all these registrars give names in the
order of their first-come first-serve and do not check before assigning a new domain. Any
domain registered on the net today must be registered through one of these organizations. There
is considerable discussion as to whether this registration is binding and what happens when a
person places a website on the Internet without such registration. Legal arguments, except that it
makes sense for two reasons:
1. Most businesses on the Internet agree to be bound by the ICANN specifications, and it does
not make sense not to register the domain name. In particular for a business entity, this will lead
to unnecessary complications, including a remedial action in the event of a domain name dispute
otherwise available in the form of arbitration by the WIPO Arbitration and Mediation Center.
2. The root servers have accepted ICANN's Regulatory Authority and all that ICANN needs to
remove the unregistered site is an instruction to the server that will remove the site.

158
Generic Top Level Domains.

87
3.13.4 Registration of Domain Names
Register trademarks as domain names in same class of product or service

In the case of domain names in the same class of products or services, the problem is an
extension of the trademark infringement and the passing off. The products or services fall into
the same class and there is therefore a greater likelihood of confusion among users and the
infringer may benefit more from such confusion with the brand value of the original company.
Courts have been very active in passing injunction orders in such cases where there are increased
chances of violation and confusion.
In Bell Actimedia, Inc. v. Puzo, et al.,159 the Canadian court has pronounced a preliminary
injunction against the accused that had just set up a website under the domain
"lespagesjaunes.com" as a French language business directory. The prosecutor's phone giant has
long-established registered trademarks for 'yellow pages' and 'pagesjaunes'. The acts of the
defendant that infringe the plaintiff's trademarks, including the use of the domain name have
been forbidden and prohibited by the injunction orders.

In the case of Affair Sa Peso the defendants got the trademark of their competitors registered as a
.com domain name. The defendants were ordered by the French Court to take down its domain
name from the Internet and the company was prohibited from any further use of the trademark.
The Court ruled that the infringing activity (domain registration) was done outside France and
the fact that trademark rights are defined by territory; it was no restriction to the court’s power
since doing otherwise would permit trademark infringers to escape liability by simply registering
in a foreign jurisdiction.
In the “Ozu” case, Spain’s first search engine was created as “ozu.es” at Advernet. Advernet got
the trademark registration done for ‘ozu’ in Spain. In U.S.A some of the partners of Advernet
who had left Advernet , started their own company as Adbertnet’s competitor and got ‘ozu.com’
registered as domain name. The Spanish Court held that defendants had done infringement and
that trademark owner had exclusive right over ‘ozu’.
Therefore, it can be inferred that it is a common practice in different jurisdictions of prohibiting
registration of domain names which are identical or similar to the competitor’s trademark,
although the reasons might vary. The enforcements of an order that applies to an extra-territorial
domain name registration is still a problem.
Register trademarks as domain names in different classes of product or service
When the goods or services are from different classes, in such cases Courts refrain from granting
injunctions. In such a situation it is upon the plaintiff to prove a tangible link that the domain
name registrant has infringed the trademark and created confusion among the targeted audience.

159
(1999), 166 F.T.R. 202 (TD)

88
In case he fails to prove injunction would not be granted. Therefore, it can e said that if the
domain name users and plaintiff’s consumers don’t belong to same class of people then
injunction will not be granted.
In China, the plaintiff got “PDA” registered as a trademark in 1997 for the manufacture of
electronic goods. In late 1998 when the company decided to get domain name ‘pda.com.cn’
registered, it turned out that the defendant’s had already got a domain name over the same and
were using it to sell other’s goods. Suit was filed under China’s Trademark Law and Law
Against Unfair Competition. Due to plaintiff’s failure in showing any proof that the products of
defendants were similar, the court was unable to find actual infringement.
In Avery Dennison Corp. v. Sumpton,160 the trademarks ‘Avery’ and ‘Dennison’ of the plaintiff
had acquired distinctiveness but the defendant registered ‘avery.net’ and ‘dennison.net’ for sale
e-mail address. It was decided by the court that the customer base of the defendants is Internet
users who look for vanity e-mail address, while the plaintiff’s customer base comprises of
purchasers of office products. It was not proved that the plaintiff had any degree of recognition
among Internet users or the defendant directed e-mail service at the plaintiff’s customer base.
In France, the Court denied to apply the speciality (classification by type of good or service)
concept of trademark to domains and a computer Services Company was specifically restrained
from using “alice.fr” against a trademark owner in a totally non-competing class of products in
Affair Alice. However, the Court of appeal reversed this decision which applied the specialty test
and concluded that till the time there is no confusion between the goods or services, the two
trademarks can coexist. Traditional confusion analysis was therefore applied in most such cases.
Registration of well-known or famous trademarks as domain names
In USA, the Lanham Act has been successfully applied by the trademark owners to protect their
famous trademark. Under this Act in case of well known or famous trademarks as domain names
the degree of proof that was required for the goods which may belong to different classes and the
consumers who may belong to different classes of people has been sufficiently diluted. In such
cases also Courts have tried to look for some tangible link between trademarks and domain
names. For example, in Hasbro Inc, v. Internet Entertainment Group,161 an action was brought by
Hasbro after finding out that its trademark ‘candyland’, a most popular children’s games name,
was registered as ‘candyland.com’, for a pornographic website. The Court held that there can be
consumer confusion and trademark dilution by such use of mark as a domain name for
pornography.
In the case of Planned Parenthood Federation of America, Inc. v. Bucci, 162 the plaintiff’s
trademark was registered as a domain name by the defendant for the purpose of bringing target
consumers to the content to his non-commercial site. But the Court held that the trademark’s use
160
189 F.3d 868
161
1996 WL 84853, 40 U.S.P.Q.2d (BNA) 1479
162
42 USPQ 2d 1430

89
had the capacity to stop some Internet users from reaching plaintiff’s own website, and the use
resulted in unfair competition and dilution under the Lanham Act.
A new regulation was enforced by Brazil in 1998 as an attempt to clarify some domain name
conflicts. The registration of domain names by third-party creating conflict with well-known
trademarks and reputed trademarks was prohibited by the regulation. In Brazil well-known
trademarks are protected only to the extent that the trademark is used on identical or similar
goods. Reputed trademarks are those registered in Brazil but declared by the Patent & Trademark
Office as being well-being within Brazil and therefore entitled to protection across all classes of
goods and services.

3.13.5 Infringement
This refers to cases where the original registrant deliberately exchanges the similarity between
the domain name and another popular trademark. Thereafter, the registrant attempts to cash on
the goodwill and reputation of the trademark owner by running a business similar to that of the
trademark holder. To establish infringement under the conventional trademarks law the standard
factors includes:

 The strength of the trademark

 The deceptive similarity between the plaintiff’s and the defendant’s mark
 The likelihood of confusion in the minds of the public

Concurrent Claims
In such type of domain name disputes, there is more than one authorized user of the domain
name. Prima Facie, there is no motive to trade off a trademarked and title or no prospective for
confusion between the goods of the conflicting claimants. Both parties have their own trademark
or have a legitimate reason to use a certain domain name.

Cyber squatting
Cyber-squatting happens when domain names that show a similarity to well-known trademarks
are registered by persons who want to sell the registration to the corresponding trademark holder.
Typically, in such cases, individuals who have absolutely no work with the name, pirate the
name by obtaining an SLD registration from the .com TLD of a well-known company or brand.

3.13.6 Domain Name Disputes

In today’s time where the competition has increased in registration process, new rules and
procedures are being framed by ICANN for resolving domain name disputes. There are many
factors that lead to domain name disputes. Although in cases of identical or similar trademarks
for different goods or services (or in different geographic locations) their coexistence is allowed,
domain names are unique globally. To promote the acceptance of the internet by businesses and
consumers, NSI has registered domain names at relatively low costs (e.g., $70 for two years) on

90
a first-come-first-served basis and without an exclusion process comparable to the exclusion
process of a trademark registration. Ease of access and no exclusion process; have led to
increased domain name disputes.

Because of these conflicts, several times changes have been made to the NSI policy on dispute
between domain name registrants and owners of trademark. Therefore, ICANN has created and
recommended a new exclusion process for popular or well-known trademark. Such a process
would empower a mark’s owner to exclude others from getting a domain name identical to that
mark registered if “the mark is famous or well-known on a widespread geographical basis and
across different classes of goods or services.” It would be upon the registration authority to
decide whether a mark is famous or well-known with the help of a non-exhaustive list of criteria,
including “evidence of the mark being the subject of attempts by non-authorized third parties to
registrar the same or misleadingly similar names as domain names.” The issue of cyber squatting
is raised by the last criterion.
It is important to note that the exclusion process applies to non-US marks, as well as to American
marks. Consequently, the holder of a trademark that is considered to be famous in Europe may
be able to exclude registration by an American company with an identical or similar domain
name.

Domain Name Dispute Policies

Apart from visiting courts and filing a lawsuit for control of the domain name, which can be very
time-consuming, an alternative dispute resolution policy can be applied to resolve disputes. Prior
to December of 1999 disputes were handled under the domain name dispute policy created by
NSI.

This policy has now been replaced by a Uniform Dispute Resolution policy that ICANN has
made due to already stated shortcomings and used by all accredited registrars. According to this
new policy, an owner of a trademark can initiate a relatively cheap administration to challenge
existing domain name. In order to succeed, trademark holder shall have to show:

1. That the owner of the trademark has a trademark (registered or non-registered) that is the
same or confusingly similar to the registered domain name on the second level
2. That the party that registered the domain name does not have a legitimate right or interest
in the domain name; and
3. That the domain name was registered and used in bad faith.

Initially, the UDRP was intended to treat only those cases that were called malicious adoption
and / or misappropriation, by registering and using a domain name that violates or dilutes the
trademark or trademarks of another party.
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What can be considered as bad faith is of course determined on a case-to-case basis but the
following factors are to be taken into account. The reader should consider that the rights of the
party that claims that the other person is acting with malafide intention may in some cases
depend on the fact that that party owns a registered trademark. This is certainly true under the
Act and goes a long way towards establishing the primacy of the rights of the plaintiff under the
UDRP. "Bad faith" as used in the URDP means and consists of:
 If an owner of a domain name has acquired a domain name for the purpose of selling,
hiring or otherwise transferring it to a party that owns a registered trademark or a
competitor of that owner of the trademark
 Registering a domain name in order to prevent the owner of a registered trademark from
protecting that trademark in the form of a domain name.
 Adoption of a domain name for disrupting competitor’s business.
 Purposely attracting the users to the website of domain name by causing likelihood of
confusion between the domain and the trademark.

The owner of the domain has the right to defeat any claims of bad faith by showing that the
owner has legitimate right to use the domain

If the owner of the trademark successfully proves all four points during the administrative
proceedings, the domain name may be canceled or transferred to the holder of the trademark. If
the owner of the trademark failed to prove one of these points, the administrative panel will not
cancel or transfer the domain name.
The owner of the domain name can prove a legitimate right or interest in a domain name by
showing:

1) Use or preparations to use the domain name in connection with a bona fide offer of goods
or services prior to any notification of the dispute;
2) That the domain name owner has been commonly known by the second level domain
name; or
3) That the owner of the domain name makes legitimate non-commercial or fair use of the
domain name, without the intention of (i) commercial gain,(ii) misleadingly diverting
consumers, (iii) tarnishing the trademark at issue.

The landmark judgment on this point is that of Panavision International v. Toeppen.163 In this
case Toeppen obtained registration of the domain name “Panavision.com”. As a result of this
registration, Panavision International (plaintiff) got restricted from registering and using its own
trademark as its Internet domain name. Toeppen demanded $13,000/- to discontinue use of the
name. Panavision contended that the sole purpose of Toeppen in registering the ‘panavision.com’
as domain name was to extort money from Panavision. Panavision filed a suit in the Federal
163
141 F.3d 1316

92
Court against Toeppen for trademark dilution and trademark infringement, under the Federal
Trademarks and Dilution Act, 1995.164
A summary judgment was passed in favor of Panavision on its Federal and State trademark
dilution claims. The Trial Court found that the marks of Panavision were “famous” within the
meaning of the trademark dilution statutes, and therefore registration of the domain names, by
Toeppen, comprising of trademarks for reselling them to the owners of those names and marks
constituted a “commercial use” of the marks. As a result appeal was filed in Courts of Appeal by
Toeppen. The Trial Court’s findings were upheld by the Court of Appeal and it further added
that “the federal trademark dilution statute was broad enough to include situations potential
customers might be discouraged if they do not find a Web site by typing company’s registered
trade name followed by suffix .com”. It was also decided that unwillingly compelling a company
to withdraw its registered trade name and reputation to the mercy of a cyber squatter constituted
a “dilution” of the trade name.
Also in the Internatic165 there were more or less similar facts. Toeppen never actually used the
'internatic.com' domain name in connection with the sale of goods or services. Internatic has
filed a lawsuit against Toeppen for, among other things, violation of federal trademarks and
trademark dilution. On the basis of the statement made by Toeppen that he wanted to sell the
intermatic.com domain name, the Court found that Toeppen made commercial use of the
"internatic.com" domain name, Toeppen had the reduced the ability of Internatic to identify and
distinguish its goods by the use of his brands as his domain name on the internet.

The US has now adopted the United States Anti-Cyber squatting Consumer Protection Act
(ACPA). This statute contains a long list of factors that indicate "bad faith" to the owner of a
domain and the ability of a trademark owner to take direct action against offending domain
names. In fact, this suggests that bad faith goes far beyond the typical cyber squatting scenario.166

Jurisdictional Issue
In India, a trademark is associated with a particular product that is traded. An applicant wishing
to register a trademark for a particular product may apply for registration for all goods falling
within the class of goods (listed in the 4th scheme) of which the specified product is a part or
only the specified product representing its trademark. The above discussion leads to a detailed
study of various international trademark disputes. Each country has its own trademark, which

164
The said Act provides that the owner of famous marks are able to enjoin another’s commercial use of that mark even if the
mark is used in the non-competing market and there is no chance of consumer confusion, if such use first begins after the mark
has already become famous and causes dilution of the distinctive quality of the mark.
165
Internatic v. Toeppen 947 F.Supp 1227
166
The ACPA does not center on the fact that a cybersquatter offered to sell or transfer the domain name to the trademark owner.
It also includes factors such as whether a cybersquatter has any intellectual property rights in a domain name; whether a
cybersquatter has been engaging in a bonafied use of a domain name to offer his own goods or services; or whether a
cybersquatter intended to divert customers away from a trademark owner’s site either for commercial gain or with the intent to
disparage a trademark in a way that creates the likelihood of confusion among consumers.

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only works with regard to its territorial sphere. Usually, a person within that jurisdiction must be
able to use that name and register a trademark with respect to that name if a particular trademark
is not registered within a jurisdiction. But as soon as it is posted on the internet (which cuts
through geographical barriers), it is open to the risk of possible lawsuits.
These disputes spring up the cross border effects of the Internet which give rise to the problems
like personal jurisdiction, conflict of laws and the question of which substantive law would be
applicable.
The above decision lays open the question whether mere accessibility of a website from a
particular State, would make the hosts amenable to the jurisdiction of the Courts of the respective
Stat.
A US Court in Bensusan v. King167 has tried to provide a solution to the above exchange. The
facts are those of using a company logo on the homepage of a website. Richard King, who was
an operator of a jazz bar named ‘Blue Note’ in Columbia, Missouri had set up a website on the
internet with the term 'Blue Note' on the home page. Bensusan Restaurant Corp, the operator of
jazz bars in New York and other cities under the same name, relying on its registered trademark
for the name 'Blue Note', filed an action for trademark infringement and unfair competition laws
against King before the New York District Court. The Court ruled that the conditions for its
jurisdiction according to New York's "long arm statute" were not fulfilled. According to the
unlawful act of commercial infringements, it was sufficient only to substantiate a claim that only
one product infringing the plaintiff's trade mark was offered on the New York market. However,
the court ruled that this condition was not met by the simple accessibility of a web page with a
telephone number.
This line of reasoning was adopted by a US district court at New York in Playboy v. Chuckle-
berry168 where the plaintiff was the publisher of the famous 'Playboy Magazine'. The accused
was the publisher of the Italian men's magazine 'Playmen', whose home page was installed on the
Italian internet server. Playboy Inc. argued that the defendant's service violates the sale and
distribution of Playboy Magazine in the US. The Court ruled that no one should be prevented
from setting up a website under a certain name merely because this website is also accessible
from a country where the sale of the products advertised on the website is prohibited as a result
of an infringement on national trademark law.

These cases have given rise to interesting proposition of law, which can be well illustrated:
“Company X, a manufacturer of cosmetic products called 'FLAME' (with a registered
trademark), whose market extends only to Indian territory, with the intention of placing a website
on the internet, discovers that Company Y also has a similar product produces with the same
name. The distribution of the company Y product does not go beyond the UK. This company that
has registered a trademark in the United Kingdom already has a website to its name. The
167
126 F 3d 25
168
486 F. supp 414

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important question that needs to be addressed is whether company X would succeed in placing
its website on the internet”.
The Indian interpretation
The first Indian case is Yahoo Inc. v. Akash Arora169. In this case, the claimant, who is the
registered owner of the domain name "yahoo.com", has succeeded in obtaining an intermediate
order that obstructs defendants and agents from entering service or goods on the Internet or
otherwise under the domain name "yahooindia" .com "or any other trademark / domain name
that deceptively resembles the" yahoo "trademark of the claimant.
This case raises certain legal questions. If the argument is accepted where, the registration of
yahoo as a trademark in the US would provide a universal right to domain names such as yahoo
India and yahoo Australia. As long as yahooindia.com does not try to pass itself as yahoo, no
offense should be recognized. In recognition of Yahoo's position in the industry, yahoo India
may be forced to issue a prominent disclaimer that it is not part of Yahoo Inc, USA.

The issue of domain names entitled to trademark protection has been discussed in Rediff
Communication Limited v. Cyberbooth.170 The petitioner Rediff Communications Ltd., registered
the domain name "Rediff.com" at Network Solutions Inc. on 8.2.97. On 31.1.99 defendant,
Cyberbooth, registered the domain name "Rediff.com" with Network Solutions Inc. Encouraged
by the action of the defendant when registering the domain name "Rediff.com", the plaintiff
instituted proceedings under the Trade and Merchandise Marks Act. According to the petition,
the defendants had deliberately adopted the word "Radiff" as part of their trade style with the aim
of deleting their business services as that of the claimants. The petitioner also claimed that
Cyberbooth had deliberately done this to induce the public to believe that Cyberbooth was
associated with the rediffussion group and thereby illegally exchanged the plaintiff's reputation.
Therefore, the court ruled that there is every possibility that the internet user gets confused and is
misled by believing that both domain names belong to one common source and connection,
although the two belong to two different persons. The Court was convinced that the defendants
adopted the domain name "Radiff" with the intention of trading the claimant's reputation and
accordingly the suspect was forbidden to use the said domain name.

In Titan Industries Ltd. v. Prashant Kooapati171 case the defendant registered the domain name
"tanishq.com". The Plaintiff Company, using the trademark "tanishq" in respect of watches made
by her, was sued for passing off and claimed that the use of the domain name by the defendants
would lead to confusion and deception and the goodwill and reputation of the prosecutors. The
High Court of Delhi has issued an ex-parte ad interim order that prohibits the suspects from
169
1999 (2) AD (Del) 229
170
1999 (4) BomCR 278
171
http://www.indiaip.com/main/iplaw/caselawmain.html (accessed on 20.10.2018)

95
using the name "TANISHQ" on the Internet or otherwise and to perform another act likely to
lead to the abandonment of the company and goods of the defendants as the company and the
goods of the plaintiff.

3.14 Trademarks and Public Sector Undertakings

The provisions for application for trademark registration for PSUs and other government
organizations are prescribed in the Manual of Trade Marks. Section B of the Trade Mark Manual
discusses the rules for the filing of application for trademark registration wherein under Point
No. 2.5 and Point No. 2.6 the rules for trademark registration for government departments and
public sector undertakings respectively are mentioned. These rules are provided by virtue of
Section 18 of Trademarks Act172. The above mentioned points read as:173
1) Point No. 2.5 – In case of Government Departments
Where the applicant is a government department, the traditional form of the name of the
applicant is “the Government of India /State of ________ (followed by the name of the
department) represented by____________(name of the authorized person followed by the
name of department)”.
2) Point No. 2.6 - In case of statutory organizations/public sector undertakings
Reference should be made to the statute under which such organization/undertaking is
discharging its functions. The application can be made in the name of the
organization/undertaking as “Life Insurance Corporation of India (established under the
……. Act) through its authorised signatory and executed in the manner prescribed by the
rules regulating it.
Therefore, any government department or PSU that has to apply for trademark registration, the
above mentioned rules shall need to be observed.

172
Sec18: Application for Registration.
Available at http://www.ipindia.nic.in/writereaddata/Portal/IPOGuidelinesManuals/1_32_1_tmr-draft-manual.pdf (accessed on
173

20.10.2018)

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Unit 4 Copyright
4.1 Introduction

Copyright law creates a system of property rights for certain kinds of intangible creation
generally called works of authorship. Today copyright covers much broader perspective, not only
artistic, literary and musical works, but also computer software, some kinds of databases and
broadcasting. The protection has been accorded to original literary, dramatic, musical, & artistic
works, sound recording and cinematograph film under section 13(1) of the Indian Copyright Act,
1957. Copyright is a bundle of exclusive rights vested in the creator/author/owner. It protects the
expression of the idea and not the idea itself. The copyright system is the means of protection of
the legal rights of the owner of property in an ‘original work’ to prevent anyone else from
reproducing the work in any way. So, copyright protects the original works of authorship. The
propounders of the copyright concept believe that copyright protection is the way of rewarding
the author for his/her skill, judgment, and capital. The initiative in an individual that propels
him/her to generate literary, artistic, musical or other works must receive recognition and
protection. The world would suffer a great loss if the authors do not get compensated from
his/her original creation and stop creation because of the fear of rampant copying.

The private interest of the copyright owner is created by the system. The monopoly for limited
period provided by copyright statute gives the incentive for creation and investment. Apart from
serving the public interest concern in the production and contribution of social and cultural utility
commodities, it is one of the major agenda of copyright law to ensure the access of general
public to copyrighted work. Copyright law thus balances public benefit that arises from
widespread circulation, use and reuse of a copyright work with protection, incentive and reward
to the creator of the copyright by granting him/her a limited monopoly to exploit their creation.

4.2 Basic Concepts of Copyright Law

Idea-Expression Dichotomy

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There are four basics for the copyright concept, idea-expression, originality, fixation and fare
use. These concepts vary from country to country. An understanding of the boundaries between
the concept of ‘idea’ and ‘expression’ is necessary for copyright. There are various tests
formulated by courts to separate ‘idea’ and ‘expression’ present in a copyrightable work. 174 The
main element is that an idea is the mental element, and thus cannot be protected. It is only when
the work is put in some tangible form, that it gets protected as an expression. It remains an idea
till it is put in a tangible form. There emerges a corollary from this Dichotomy or Doctrine, that
when it is impossible to filter out the idea from the expression, then the work per se becomes
non-copyrightable. This is known as the doctrine of merger.175 India follows the dichotomy in the
sense that all original expressions are protected and the benefit of the dichotomy is that similar
ideas that can be expressed in different other ways, will receive copyright protection as long as
they satisfy the test of originality.

Originality/Creativity

Originality along with creativity is an essential requirement of copyright protection. Original

work, in the sense that it originates from a particular author and is not copied is protected in
India. Therefore the two subjective criteria of (i) independent creation and (ii) some minimal
degree of creativity are the requirements for copyright protection. Hence, work to get copyright
protection should have modicum of creativity. 176 In India, the Practical test is ‘what is worth
copying is prima facie worth practicing’. Any work that is not copied from any other work is
considered original. The stress is that the expression should be original, so even if two ideas are
similar, or identical or nearly identical, they shall be independently copyrightable. Where the two
artists working on same aspect, draw inspiration from common source and apply common
technique, may end up in similar works; but both the works are considered original and entitled
for protection if they are created independently.

One nice example is of the story of one boy and one girl who are in love with each other, whose
families are in enmity and hence never allow their romantic relationship and also not allow them
to be together; and both died at the end of the story. This idea is expressed by Shakespeare in his
great play of Romeo-Juliet. Later on the same idea expressed in different cinematograph film in
India namely ‘Ek duje ke liye’, ‘Qayamat se qayamat tak’, ‘Ramleela’, ‘Ishaqzade’ etc. If the
screenplay, background, societal aspects, portraying the characters is considered in all theses
cinematograph films, it will be evident that all the expressions are different, though they are all
based on the same idea. Hence, independently each and every work is having ‘originality’
because of the creative inputs and is eligible for copyright protection.

Fixation

174
Nicolas v. Universal Pictures [1930] 45 F (2d) 119 quoted in Ibcos Computers v. Barclays [1994] FSR 275 at p.291
175
Morrissey v. Procter & Gamble Co. 379 F.2d 675 (1st Cir.1967)
176
Kitchens of Sara Lee, Inc v. Nifty Foods Corp., 266 F. 2d 541 (2nd Cir.1959)

98
The concept of Fixation merely states that a work has to exist in some permanent form to gain
copyright. An act of creation and fixation are indivisible. 177 A literary, dramatic or musical work
has to be recorded, in writing or otherwise (tape-recorded or filmed), if it needs to be protected
and it is immaterial if author gave permission for the recording. Similar criteria exist for a
photograph, and any other work. Fixation is considered sufficient if the work can be perceived,
reproduced or otherwise communicated either directly or with the aid of a machine or device.

4.3 Subject-Matter of Copyright

Literary Works

‘Literary works,’ are generally described as ‘works’ which can be expressed in words, numbers
or other verbal or numerical symbols or indicia, regardless of the nature of the material objects,
such as books, periodicals, manuscripts, directory, greetings card in which they are embodied.
Section 2(o) of the Indian Copyright Act, however defines “literary work" to include ‘computer
programs, tables and compilations including computer databases’.178 Copyright subsists in
‘original’ literary work. A computer database is an accumulation of information stored in such a
way that it can systematically be searched and retrieved by computer. 179 The word literary in
terms of copyright law was akin to the word “literature” and referred to written or printed matter.
The merit of the work was not to be looked into and all the works expressed in writing were
under the ambit of the term literary work. 180 In a work of compilation, if there is sufficient effort
in the compilation of the work to give it new and original character then the work would qualify
as literary work.181 For the literary works which are not in material form i.e. the lecture of a
person or a recitation of a story by a person which is new, the copyright will be with the
performer.182

Computer Programs

Computer programs are considered to be literary works. Computer software is a “computer

program” within the meaning of the Copyright Act. Computer programs are included in the
definition of literary work under the Copyright Act. According to section 2(ffc) of the Copyright

177
Merchandising Corp. of America v. Harpbond[1983]FSR 32,CA
178
Definitions of Computer and Computer Programmes are given in Section 2 (ffb) and Sectiopn 2 (ffc) of the Indian Copyright
Act. Section 2 (ffb)- "computer" includes any electronic or similar device having information processing capabilities. Section 2
(ffc)- "computer programme" means a set of instructions expressed in words, codes, schemes or in any other form, including a
machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result.
179
As per Section 3A of UK Copyright Act, a database ‘means a collection of independent works data or other materials which -
(a) are arranged in a systematic or methodical way and, (b) are individually accessible by electronic or other means.
180
Agarwala Publishing House v. Board of High Schools and Intermediate Education, UP AIR 1967 All 91
181
Blacklok v. C. Arthur Pearson (1915) 2 Ch 376. According to this, a list of quotations, coupons or advertisements may also be
literary works if they fulfill this test
182
See Section 2(qq) and Chapter 12 of the Copyright Act. Section 2(qq)- "performer" includes an actor, singer, musician, dancer,
acrobat, juggler, conjurer, snake charmer, a person delivering a lecture or any other person who makes a performance

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Act, a computer program is a “set of instructions expressed in words, codes, schemes or in any
other form, including a machine readable medium, capable of causing a computer to perform a
particular task or achieve a particular results”.

The essential elements of a computer program are:

1. It is a set of instructions expressed in:

 words,

 codes,

 schemes, or

 in any other form, including a machine readable medium.

2. capable of causing a computer to:

 Perform a particular task, or

 Achieve a particular result.

Dramatic Works

Dramatic works include any piece of recitation, choreographic works or entertainment in dumb
shows, the scenic arrangement or acting form in which is fixed in writing or otherwise, but does
not include a cinematograph film. 183 The physical performance of the work is the necessary
condition of being a dramatic work, and it has to be in a material form which should be capable
of being performed by action.

Musical Work

Musical work means “a work consisting of music and includes any graphical notation of such
work, but does not include any works or any action, intended to be sung, spoken, or performed
with the music”.184 There is no copyright in a song but the words in a song and the music have
two separate rights and cannot be merged. The position may be different in a complicated work
comprising musical and literary components such as an opera.

Artistic Works

Artistic work:

183
Section 2(h) of the Copyright Act, 1957
184
Section 2(p) of the Copyright Act, 1957

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 (i) a painting, sculpture, a drawing (including a diagram, map, chart or plan), an
engraving or a photograph, devoid of artistic quality

(ii) a work of architecture and

(iii) any other work of artistic craftsmanship.185

A letter written in a particular style is also copyrightable.186

Charts of maps,187 conversion of work into a dramatic work by way of performance in public or
otherwise,188 works of sculpture that includes models and casts, 189 engravings that include
etchings, lithographs, woodcuts, prints and other similar works not being photographs, 190 plastic
moulds,191 die and moulds,192 label with sufficient artistic craftsmanship, 193 colour scheme, get-up
and layout,194 painting irrespective of artistic quality,195 a sculpture,196 an original drawing,197
circuit diagram,198 drawing derived in part from earlier drawings,199 industrial or engineering
drawings,200 works of artistic craftsmanship201 with sufficient skill and labour are copyrightable
as artistic works.

Cinematograph Films and Sound Recordings

“Any work of visual recording on any medium produced through a process from which a
moving image may be produced by any means and includes a sound recording accompanying
such visual recording and ‘cinematograph’ is construed as including any work produced by any
process analogous to cinematograph including video films”.202

Video cassette recorder,203 video tapes,204 and soundtrack in a film 205 all get included in the
definition and hence are copyrightable.

185
Section 2(c)
186
Mallappa& Co. v Mc.Donald’s Corp.(1999) PTC 9 (Karn)
187
Macmillan Publishers v. Thomas Reed Publication [1993]FSR 455.
188
Section 2(a)(ii) of the Copyright Act, 1957
189
Section 2 (a) of the Copyright Act, 1957
190
Section 2(i) of the Copyright Act, 1957
191
Whom-O Manufacturing Co.v Lincoln Industries[1982] at p.290(New Zealand)
192
James Arnold v. Miafern[1980]RPC 397
193
William Grant v. Mcdowell [1994] FSR 690(Delhi)
194
Castrol Ltd. v. V.O Muralidhar Reddy (2001)PTC 137 (Mad)
195
Section 2 (c)(i) and 13(1)(a) of the Copyright Act, 1957
196
Section 2(c)(i) of the Copyright Act, 1957
197
Section 2(c)(i) of the Copyright Act, 1957
198
Anacon Corp. v. Environmental Research [1994] FSR 659 at p.662
199
L.B.(Plastics) v. Swish [1979] RPC 551 at p.569
200
Dorling v. Honnor [1964] RPC 160 at p. 164(CA)
201
For statutory background of the expression please see George Hensher v. Restawile Upholstery (Lancs) [1975]RPC 31 at
pp.65-67(HL)
202
Section 2(f) of the Copyright Act, 1957
203
Section 2(6) of Tamil Nadu Exhibition of Fims on Television Screen thogh Video Cassette Recorders (Regualtion) Act 1984
204
Section 2(f) of the Copyright Act, 1957 Entertaining Enterprises v. State of TamilNadu AIR 1984 Mad 278 at p.290
205
Section 2 (f) Performing Right Societyv. Eastern India Motion Picture Association AIR 1977 SC 1433 at p.1450

101
Sound recording is essentially ‘a recording of sounds from which such sounds may be produced
regardless of the medium on which such recording is made or method by which the sounds are
produced.’206 Copyright shall not subsist in a sound recording made in respect of literary,
dramatic or musical work, if in the making of such sound recording copyright of the underlying
work has been infringed.207 The author of the sound-recording is the producer and hence the
subject-matter is different and has independent copyright.

Derivative work

A derivative work is a work, which is derived from another work. For example, a painting based
on a photograph; a collage made from different photographs or paintings; screenplay made from
a book; adaptation from a book; abridgment of a book. Requirement of making a derivative
work:

 Copyright owner has the right to authorize adaptation and reproduction of their work,
this include the making of a derivative work;208

 So legal permission is needed for the derivative work;

 Exception that do not require permission – if the copyright has expired, the work will be
in the public domain, and if the original work has a license that explicitly allows the
creation of a derivative work.

Copyright in a derivative work – if it is significantly different to the original work, the derivative
work will be subject to copyright on its own. So, the creator of derivative work owns copyright
to the new content which has been created as a result of his action. Minor alterations, that do not
substantially alter the original work, would not qualify as derivative work. No one can extend the
duration of copyright in a work by creating a derivative work. If the original work is in public
domain, it will remain in the public domain. Creator of the derivative work cannot prevent
anyone else using the original work which is already in public domain. Example is the film
‘Omkara’, which is the derivative work (adaptation) from the original Shakespeare play
‘Othello’.

4.4 Indian Copyright Law: Essentials

4.4.1 Term of protection in India

For literary, dramatic, musical and artistic works – Author’s life+ 60 years. (In case the work is
published within the lifetime of the author. (Section 22)

206
Section 2 (xx) of the Copyright Act, 1957
207
Section 13(3)(b) of the Copyright Act, 1957
208
Section 14(1)(v) of the Copyright Act, 1957

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For anonymous and pseudonymous works in case of literary, dramatic, musical or artistic work
(except photographic works) – 60 years from the beginning of the next calendar year in which
the work is published. (Section 22(1))

If the identity of the author is disclosed, then the old rule of author’s life + 60 years shall be
followed. (Section 23 (1) Proviso)

Where there are two or more authors then the protection is for sixty years from the date of death
of the last author whose identity is known. (Section 23(2))

For cinematograph films – 60 years from the next year in which the film is published. (Section
26)

For Sound Recording – 60 years from the next year in which the recording is published. (Section
27);

Similar period of sixty years is followed when a government, or public undertaking, or an

international organization is the first owner of the work.

Term of protection in posthumous work in the case of literary, dramatic or musical work or an
engraving - 60 years (Section 24) and in case of joint authorship the lifetime of the author who
last dies until sixty years from the date of first publication and in case of sound recording when
the work has been sold to the public or offered for sale to the public.

Right of performers – 50 years from the beginning of the calendar year following the year the
performance is made. (Section 38)

Broadcast reproduction right – 25 years from the beginning of the calendar year following the
year the broadcast is made. (Section 37)

4.4.2 Authorship and Ownership

Authors of Copyright as per the statute:

Under Section 2 (d) of the Copyright Act, 1957, an ‘Author’ means

 For a literary or dramatic work, the author of the work

 For a musical work, the composer

 For an artistic work other than a photograph, the artist

 For a photograph, the person taking the photograph

103
  For a cinematograph film or sound recording, the producer and

 For any literary, dramatic, musical or artistic work which is computer-generated, the
person who causes the work to be created

First Owner of Copyright

The author of work is the first owner of copyright therein. This is however subject to certain
exceptions:

(i) If the work is made in the course of employment, the employer is the first owner. If an
employee writes at home or during spare time without the direction of his employer, is
not work done in the course of employment. On termination of the employment the
employee is entitled for copyright for his future work, at that time the previous employer
has no right in such copyright.209

(ii) If the work is made in an author’s employment under a contract of service or

apprenticeship; where the first owner in a photograph taken, or a painting or portrait
drawn or an engraving or cinematograph film for valuable consideration for another
person such other person becomes the first owner of the copyright, provided there is no
express agreement to the contrary. However such work is done in the course of
employment by the proprietor of a newspaper, magazine, or similar periodical under a
contract of service or apprenticeship for the purpose of publication, the said proprietor in
the absence of any agreement to the contrary will become the first owner of the work so
far as it relates to the publication of the work in such periodical or the reproduction of the
work for such purpose. In all other respects the author becomes the owner of the
copyright.210 Where a managing director or a director does a work, the copyright issue
depends on the agreement between the parties.211

(iii) Works done as a government work – ‘Government work’ means a work which is made or
published by or under the direction or control of the government of any department of the
government; any legislature in India; any Court, tribunal or other judicial authority in
India. Where a government department gets a work done by its regular employees in the
course of employment, in such cases in the absence of any agreement to the contrary, the
government is the first owner of the copyright.212 This rule is the same in the case of the
work made on behalf of the public undertakings. In Rupendra Kashyap213 the Delhi High
Court held that the Central Board of Secondary Education (C.B.S.E) is a public
undertaking and in this case papers were said to be the exclusive property of the Board

209
Thomas v. Manorama AIR 1989 Ker 49.
210
Section 17, Copyright Act, 1957.
211
Gardexv.Sorota [1986] RPC 623 at pp. 640-641; Antocks v. Bloohn [1972] RPC 219
212
Section 17(d).
213
RupendraKashyap v. Jiwan Publishing House 1996 PTC 439 ( Del)

104
 and that the copyright also vest in it since they were made under the supervision and
control of the Board.

(iv) The first owner in speeches given in public or addresses delivered by any person is the
speeches given by the person himself. Where it is delivered on behalf of a person the
person on whose behalf the speech is delivered is the owner of the speech devoid of
whether the person delivering the speech is employed or not. 214 It can safely be said that
where a man employs another to do work for him under his control, so that he can direct
the time when the work shall be done, the means to be adopted to bring about the end and
the method in which the wok shall be arrived on, then the contract is a contract of service.
If on the other hand, a man employs another to do certain work but leaves it to that other
to decide how that work shall be done, what steps shall be taken to produce that desired
effect, then it is contract for service.215

(Refer to Section 17 of the Copyright Act for any further clarification.)

4.4.3 Commissioned Works

An author may create a work at the instance of another person for any consideration. Examples
are a person writing a report on a subject for a company, a composer composing a song for the
film company, or a photographer taking a photo at the instance of another person, a painter
drawing a portrait at the request of another person, all these works are done with consideration.
These are called ‘commissioned works’.216 Where a person accepts a commission to design
certain drawings for another person the equitable rights in the copyright subsists for the designer
to the person who commissioned the work. Even if equitable title in the copyright work did not
pass to the person who commissioned the wok, there is an implied license for him to use the
drawings. The passing of equitable title in copyright of the grant of an implied license to use a
copyright work does not mean that an author had waived this moral right under this Act.217

Only five of these factors were tested in a similar case of interpretation of employer employee
relationship. It was held that two of these factors were sufficient interpretation in nearly all cases
arising out of employer-employee relationship.218

a) The sculptors controlled the manner and means of producing the work;

b) The sculptural work requiring great skill;

214
Nicols v. Pitman (1884) 26 Ch D 374 where students were held not entitled to publish notes of lectures which they have
attended.
215
AryaPratinidhiSabha v. ArvindNiketanCharthwal 1979 ALL LJ 1220
216
Apple Computer v. Cooper (1993) FSR 280
217
Pasterfiled v. Denham (1999) FSR 168
218
Carter v. Melms,e-Spear, Inc., 71 F. 3d 77 (2nd Cir 1995)

105
 c) The building owner could and did assign additional projects without additional pay;

d) The defendants paid payroll and social security taxes;

e) They also paid the sculptors a weekly salary and provided benefits such as life and health
liability insurance, paid vacations and contributed to unemployment insurance and
worker’s compensation.

4.5 Rights

The whole point of intellectual property is gaining some rights, and copyright is no different.
Copyright law thus provides certain rights to the holder of the copyright. Unlike other
intellectual property, a copyright holder does not have to register his work to obtain the benefits
of copyright, these works will have inherent copyright, and this is known as the automatic right.

The bundle of rights can be enjoyed together or independently of one another, as per the wishes
of the holder. The ‘bundle of rights’ differs from work to work, and are both economic and moral
in nature.

4.5.1 Economic Rights

Literary works, dramatic works and musical works

According to the Indian Copyright Act, 1957 the works in relation to which the copyright exists
are literary works, dramatic works, musical works, artistic works, and cinematographic film and
sound recording.219 Similar exclusive rights are conferred on literary works, dramatic work and
musical works by Section 14 (a) of the Copyright Act, 1957. Although the definition of literary
work includes computer programmes, tables and compilations including computer databases, 220
distinct rights are recognized under Section 14(b) for computer programs.

Dramatic work is defined to include any piece of recitation, choreographic work or entertainment
in dumb show, the scenic arrangement or acting form of which is fixed in writing or otherwise. 221
Musical work is meant as a work of music including any graphical notation of such work, but not
including any words or any action intended to be sung, spoken or performed with the music.222

Under the Copyright Act, 1957, the rights of a copyright owner in literary, dramatic and musical
works are the following:223

219
Section 13(1) of the Copyright Act, 1957.
220
section2 (o) Copyright act, 1957
221
Section 2(o) Copyright act, 1957
222
Section 14(b) Copyright act, 1957
223
Section 2(h) Copyright act, 1957

106
 Reproducing the work in any material form which includes the storing of it in any medium
by the electronic means,

 Issuing the copies of the work to the public, the copies being not already in circulation,

 Performing the work in public or communicating it to the public,

 Making any cinematograph film or sound recording in respect of the work,

 Making any translation of the work,

 Making any adaptation for the work and

 Doing in relation to a translation or adaptation for the work, any of the above-specified acts.

Any person who does any of these acts without the authorization, license or consent of the
copyright owner is said to have committed an infringement of these rights.224

The act does not define reproduction; however there must be high similarity between the two
works if they are supposed to be called reproduction. To constitute reproduction it is sufficient if
one makes a substantial use of the characteristics of the original copyrighted work. 225 The nature
of the work and the importance of the content copies determined whether it is a reproduction in a
material form. However, storing of the work in any electronic media also constitutes
reproduction.

Communication to public

The importance of a work lies in its communication to public, the issue is often considered with
another term or phrase which is issuing of copies to public, this segment takes a look at these
terms to shed light upon them in context of works and the rights associated with them. The right
to issue copies of the work to public (the right to publish) has been interpreted by the court to
include the right to import the work.

In the case of Penguin Books226 the DHC held that importation of the particular work for
specified purpose might be necessary step in the process of issuing it to the public. The exclusive
right of Penguin to print, publish and sell books in India would extend to import copies in India
for selling. Distribution right as it is called extends to issue of each and every copy of the work.
‘Communication to the public’ is essentially making available to the public to be heard or
enjoyed directly. It also includes any means of display or diffusion other than by issuing copies

224
Section 51 of the Copyright Act, 1957.
225 ?
British Northdrop v. texteam Blackburn (1974) R.P.C. 57
226
Penguin Books ltd., England v. India Book Distributors and Others AIR 1985 Del. 29

107
of such work regardless of whether any member of public actually sees, hears or otherwise
enjoys the work so made available.227

The performance of a literary, dramatic or musical work in public without the consent of the
owner of the work would be an infringement. Public has however not been defined in the Act. It
would be general public, and subject to interpretation.

There are various criteria that define communication to public; the presence of guests in a
household, in relation to the audience, the number of people in the group sharing the private
viewing is also a factor. An amateur club performed a play “our boys” at Guy’s Hospital for
entertainment of nurses.228 It was held to be domestic performance. The importance of financial
considerations is also another factor when ‘communication to public’ is being determined.
Avoidance of unjust enrichment is the rationale behind this test. 229 The last test focuses on
whether the copyright owner’s right is public.230

Communication to public is generally very broadly interpreted, if there is communication

through satellite to one household, place of residence, hostel it will be deemed to be
communication to public. Thus, showing of a video film over a cable TV network is to
subscriber’s amounts to communication to public. The entire audience taken together cannot be
considered as members of a common household or as family members. They can be viewed only
as constituting public.231

The copyright owner has the exclusive right to make cinematograph films or sound recordings in
respect of musical and literary works.232 A cinematograph film or sound recording in respect of
literary or musical work cannot be made except with a license granted by the owner of the
copyright in the literary or musical work and subject to the conditions of the license so granted.

If a cinematograph film or a record is made without such license, the copyright in the literary or
musical work is infringed and also no copyright subsists in the film or recorded so made.

In case of a film/sound recording made on the basis of a literary/ dramatic work, the rights of the
author and the producer of the cinematograph film are thus different and shall mutually co exist.
They will have different sets of rights, communication to public is thus very important in this
scenario. The copyright owners respectively will have the right to perform the work in public.

One provision confers on the copyright owner the exclusive right to perform the work in public
or to communicate it to the public.233 Another provision gives the copyright owner the exclusive

227
Section 2 (ff) Copyright act, 1957
228
Duck v. Bates (1884) 13 QRD 843
229
Harms v. Martans (1927) 1 Ch. 526
230
Jennings v. Stephens (1936) 1 Ch. 469; PRS v. Harlequin Records Shops (1979) 2 All ER 828
231
Section 13(4) of the 1957 Act.
232
Section 14(a)(iv) Copyright act, 1957
233
Section 14 (a)(iii) Copyright act, 1957

108
right to make cinematograph film or sound recordings out of the copyrighted literary or musical
work.234

In the case of Indian Performing Right Society 235 wherein the Supreme Court upheld the decision
of Calcutta High Court that “a composer having a copyright over his musical work, by his
license authorizes its incorporation in the sound-track of a film, no further license was required
from him to perform that music in public by the exhibition of the film, as the exclusive right to
exhibit the film belonged to the owner of the copyright in the film.” The composer and the lyric
writer however, retain the right of performing it in public for profit otherwise than as a part of a
cinematograph film.

Artistic Works

The exclusive right interpreted is with regard to the nature of artistic work. The rights vested
with the owner of an artistic work are as follows:236

(a) To reproduce the work in any material form including the depiction in three dimensions of a
two dimensional work or in two dimensions of a three dimensional work;

(b) To communicate the work to the public;

(c) To issue copies to the public, the copies not in circulation;

(d) To make nay adaptations of the work;

(e) To include the work in any cinematographic film;

(f) To do in relation to an adaptation of the work of any acts in relation to the work in sub-clause
(i) to (iv).

Cinematograph Film

In respect of cinematograph film the owner of a copyright has the right:237

(a) To make a copy of the film, including a photograph of any image forming part thereof and to
store it any medium electronic or other means,

(b) To sell or give on hire or offer for sale or hire, any copy of the film, regardless of whether
such copy has been sold or given on hire on earlier occasions, and

(c) To communicate the film to the public.

234
Section 14 (a)(iv) Copyright act, 1957
235
Indian Performing Right Society Ltd. v. Eastern India Motion Picture Association AIR 177 SC 1443
236
Section 14 (c) Copyright Act, 1957
237
Section 14 (d) Copyright Act, 1957

109
Sound Recording

To make any sound recording embodying it;238

(a) To sell or give on hire, or offer for sale or offer for hire any copy of the sound recording
regardless of whether such copy has been sold or given on hire any copy of the recording
regardless of whether such copy has been sold or given on hire on earlier occasions;

(b) To communicate the sound recording to the public.

A little elaboration is required here, Musical works are not the same as sound recordings, and the
rights conferred on the two kinds of works are also different. Copyright is not given to
performers in cases of live performers of sporting events or musical events; they are however
given performers’ rights, which are elaborated under Section 38 and 39 of the copyright act.

Sound recordings are considered to be published when their copies are issued to the public,
communicated to the public, and they fulfill the conditions under section 13(2). Communication
is also there when it is done through satellite or cable. Private recordings are exempted.

Computer Programs

The Act authorizes the owner of a copyright to do any of the following acts:

(a) To do any of the act that can be done by the owner of a copyright of literary, dramatic or
musical work not being a computer program regardless of whether such copy has been sold
or given on hire on earlier occasions;239

(b) To sell or give on hire or offer for hire of sale for commercial rental of any copy of the
computer programme regardless of whether such copy has been sold or given on hire on
earlier occasions. This does not apply to commercial rental where the computer program
itself is not the object.240

Performer’s Rights

‘Performance’ in relation to performer’s right means any visual or acoustic presentation made
live by one or more performers.241 Performer includes an actor, singer, musician, dancer, acrobat
juggler, conjurer, snake charmer, a person delivering a lecture or any other person who makes a
performance.242

238
Section 14 (e) Copyright Act, 1957
239
Section 14 (b), Copyright act, 1957
240
Ibid.
241
Section 2 (q) Copyright act, 1957
242
Section 2 (qq) Copyright act, 1957

110
Initially Performers did not have any rights, the Copyright Amendment Act, 1994 brought about
certain recognition to the work of performers. Performance in relation to performers means any
visual or acoustic presentation made by a single or group of performers.243

Rights of performers’ are as follows:244

a) To make sound recording or visual recording of the performance,

b) To reproduce sound or visual recording of the performance,

c) To broadcast the performance, and

d) To communicate the performance to the public or otherwise than by broadcast.

There are certain acts which do not constitute infringement of the performer’s rights, elaborated
under section 39.

Making sound recording or visual recording for private use of the person such recording that is
solely for the purpose of bonafied teaching or research; fair dealing or performance in the
reporting of current events for bonafied review, teaching or research, other acts that are
necessary adaptations and modifications do not constitute infringements. The acts do not
constitute infringement, where reproduction is for judicial review, or reproduction is for the use
of the members of legislature, where the use is as a certified copy, where use is of a sound
recording or visual recording of the performance in the course of activities of an educational
institution if the audience are limited to the students, parents and guardians of the students and
person directly connected with the activities of the institute.245

Broadcast reproduction rights

Rights conferred upon broadcasting organizations are known as broadcasting rights.246

Any person who without the permission of the owner of the right does the following acts shall be
violating the rights of the broadcasting rights of the organisation:

(a) re-broadcasts the broadcast; or

(b) causes the broadcast to be heard or seen by the public on payment of any charges; or

(c) makes any sound recording or visual recording of the broadcast; or

243
Section 2 (q) Copyright act, 1957
244
Section 38A Copyright Act, 1957
245
Section 39, Copyright Act, 1957.
246
Section 37 Copyright Act, 1957

111
(d) makes any reproduction of such sound recording or visual recording where such initial
recording was done without license or, where it was licensed, for any purpose not envisaged by
such license; or

(e) sells or hires to the public, or offers for such sale or hire, any such sound recording or visual
recording referred to in clause (c) or clause (d), shall, subject to the provisions of section 39, be
deemed to have infringed the broadcast reproduction right.247

4.5.2 Moral Rights

India recognizes the moral rights of the author.

The moral rights are as follows:

 Paternity right i.e., right to claim authorship of the work, (Also known as the right of
attribution)

 The integrity right i.e., the right to protect his honour and reputation.

These two rights are recognized in the Indian Copyright Act under section 57.

The Mannu Bhandari case248 offers an insight into moral rights and their construction in case of
the transfer of copyrights, the respondent produced a motion picture, “samay ki dhara” after
assignment of the plaintiff’s novel, “Aap ka Bunty”, the plaintiff complained mutilation and
distortion, and this raised the question of the freedom of speech and expression of a producer
and the extent of rights under section 57; it was held that “the contract of assignment has to be
read subject to the provisions of section 57 and the terms of the contract cannot negate the
special rights and remedies guaranteed by section 57. It was also held that the remedy of a
restraint order or damages can be claimed even after the assignment either wholly or partially of
the said damages.” It was further held that the section clearly overrides the terms of the contract
of assignment of the copyright.

4.6 Registration of Copyright

A copyright can be acquired by the owner/author/creator of the copyrightable work or by license,

assignment, transmission or transfer. Copyright does not require registration to subsist, however
it does require registration in order to prove ownership. The registration provides proof of
ownership and a presumption that copyright subsists in the work.249

247
Section 37, copyright act, 1957.
248
Mannubhandari v. Kala Vikas Pictures Pvt. Ltd. And another AIR 1987 Del 13.
249
Section 53 of the Copyright Act, 1957.

112
Registration also helps in the case of innocent infringement. Copyright notices typically consist
of the word “copyright” and/or the symbol ©, the year of creation of the work, the name of the
copyright owner, they also carry warning signs, advising against reproduction of the work.
License agreements may have requirements of such notices.

Rule 16 provides details of procedure about application for registration of copyright.

Every application for registration shall be made in accordance with Form IV and every
application for registration of changes in the particulars of copyrights entered in the Register of
Copyrights shall be made in Form V.

Every application shall be on one work only and shall be made in triplicate. It has to be
accompanied with fees given in the second schedule of the Copyright Rules, 1958.

A copy of the application is to be given by the applicant to each interested person. If the
Registrar receives objection to such registration after he gives public notice, the Registrar enters
the particulars in the register. Objections are entertained within 30 days of the day of application.
If the registrar receives objections, he may, after holding such inquiry as he deems fit, enter such
particulars of the work in the Register. The aggrieved party may appeal to the Copyright Board
against the order of the Registrar within three months. [Section 72(1) of the Copyright Act,
1957].

The register is kept in four parts:

1. Literary, dramatic and musical works,

2. Artistic works,

3. Cinematograph films,

4. Records (Rule 5).

The benefit of this register is that with the seal of the registrar they are admissible evidence. The
register is open to public during the reasonable times. These can be copied or made extracts of on
payment of fees and subject to prescribed conditions.

In order to avoid double registration in the case of artistic works, or works which are capable of
being used for any goods, the application should include a statement to that effect. The
application should also be accompanied by a certificate from the Registrar of Trademarks Act,
1958 to the effect that no trademark identical with or deceptively similar to such artistic work has
been applied for by any person other than the applicant.

113
4.7 Transfer of Copyright

By the use of a license the interest in a copyright may be transferred by the owner of the
copyright. The transfer can be of the entire copyright or a part of it. A license is an authorization
of an act, which, without such authorization would amount to an infringement. 250 By and large
licensing is used to transfer a part of the copyright and not the whole interest in the copyright.
For example, an author may give the license of his novel to one person for publishing it in hard-
back while to the other to publish it in paperback. Similarly, the author may decide to give right
to make a film or serial to one and the translation rights to some other newspaper or magazine.
Licenses can be both exclusive and non-exclusive.

License and Assignment

A license and an assignment are two different things. A licensee only gets certain rights over the
licensed part and he does not become the owner of that part of the licensed copyright. Whereas,
in case of an assignment, the assignee becomes the owner of the assigned part.

A license is not a partial assignment of copyright; it is merely a leave to do something which

would otherwise be unlawful. A licensee has, however, the right to stake alterations except in so
far as his license expressly or impliedly restricts that right. A licensee, unless he is an exclusive
licensee, cannot sue for infringement of copyright unless he joins the copyright proprietor as co-
plaintiff in the action, and a purchaser in good faith and for value of the proprietor’s interest
without notice of a previous licensee. Nevertheless, the licensee can take legal action against the
licensor for losses from violation of contract if the latter does not takes care of the licensee’s
interests.

Where the doing of anything is authorized by the grantee of a licensee or a person deriving title
from the grantee, and it is within the terms or implied terms of the license for him to authorize it,
then, for the purposes of the Copyright Act, 1957, it is taken to be cone with the license of the
grantor and of every other person, if any, upon whom the license is binding.

In those cases where it is not certain whether the deed is a license or an assignment, the same can
be done by analyzing the document relating to the assignment or license. A very good example
of such confusion can be the case where an author gives exclusive license to a publisher. Where
in the agreement there is no specific reference to copyright and the consideration is the party
meant to the author of royalties for a share of the profits and not a lump sum payment the proper
inference is that the copyright is not assigned but the agreement is only an exclusive license.

License and Consent

250
Muskett v. Hill NC 694 TINDALL, CJ.Observed: “a dispensation or license properly passes no interest, but only makes an
action lawful which, without it would have been unlawful.”

114
Another important distinction to be made is between license and consent. Hence, incorporating
quotations from a copyright work in another work or printing at the photograph for a particular
use may need only consent.

Duration of a License

A license can be for both unspecified and specified time period. Subject to anything to the
opposite, a publisher will have a right to sell unsold copies of a book which he published during
the period of the license, if the license was for a definite period of time. In a license for an
infinite period between an author and a publisher which is based on payment of royalty the
termination of the license will depend on the terms of the contract.

Form and Content

Although there is no specific format for a license deed but it should be in writing and signed
either by the holder of the copyright or his agent. Further, a license can be given even for a work
which will get completed at a later date and not just for a current work. Also, the license will
only come into force when the work comes into actuality in the cases of a future license. In case
there is nothing to the contrary, legal heirs of the licensee will be allowed to get benefitted from
the license if the licensee dies before the future work comes to life.

The following details should be mentioned in a license deed:

 Identification of the work

 Duration of the license

 The rights licensed

 Territorial extent of the license

 The quantum of royalty payable and

 Terms regarding revision, extension and termination.

 If the rights licensed are not specified it is to be presumes that the licensor has licensed all
rights under the Act. If the license does not exercise the rights licensed to him within one
year from the date of license, the license in respect of such rights is deemed to have
lapsed after the expiry of one year unless otherwise specified in the license deed.

 If the period of license is not stated it will be deemed to be five years from the date of
license.

115
  If the territorial extent of the license is not specified it is to be presumed to extend within
India.

Disputes in Respect of License

If the license fails to make sufficient exercise of rights licensed to him and such failure is not
attributable to any act or commission of the licensor, the licensor may make a complaint to the
Copyright Board with after holding an enquiry may revoke the license.

If any dispute arises with respect to a license of a copyright the Copyright Board may on receipt
of a complaint from the aggrieved party and after the holding an enquiry as suitable orders
including an order for recovery of any royalty payable.

An order for revocation of the license will not be passed unless the terms of the license are harsh
to the licensor in the case where the licensor is also the author. Further, in any event no order for
revocation of the license will be made within a period of five years from the date of such license.

Types of licenses

 Exclusive and Non-Exclusive Licenses

The grant of an exclusive license can be given to only one person. It need not be to the whole
copyright but may be in respect of one the acts which the holder of the copyright is entitled to in
terms of Section14 of the Act.

The Act does not define a non-exclusive license. But its meaning can be inferred from the
definition of exclusive license. In the case of a non-exclusive license, the owner of the copyright
retains the right to grant licenses to more than one person or to exercise the right by himself.

A joint owner cannot, without the consent of the other co-owners, grant a license of any interest
in the copyright. If such a license is granted the other joint owners can sue the licensee and the
joint owner who had granted the license, for infringement of copyright.

A license granted without consideration may be revoked at any time, but when given for
consideration is irrevocable and conveys an interest in the copyright.

Licenses can be implied from the circumstances or by a course of conduct. Where an architect
has been engaged to prepare plans and was paid for the work, the landowner has an implied right
to build in accordance with the plan employing another architect to supervise the work. But if the
architect has been paid only a nominal fee license to build according to the plan by engaging
another architect, it will not be implied. If a person sends a letter to the editor of a newspaper or
magazine on a matter of public interest, license to publish the letter is implied. Submission of an
article to a magazine, subject to payment of royalty, implied license to publish.

116
The existence of an implied license and its scope may be inferred from the circumstances of the
case. Where a person grants to another an exclusive license to use manufacturing know-how
including all the designs, engineering information and other information even if the contract does
not in express terms confer an exclusive copyright license on the licensee, it is a necessary
implication that it confers on the license an exclusive right to use the drawings for the purpose of
manufacture of the articles to which the drawings relate.

 Compulsory License

(1) Many countries have provided in their copyright legislation for compulsory licenses because
new technology which has posed problems for the enforcement of copyright could only be
solved in a practical way by compulsory license schemes. These are especially true for some
fields where technology has opened up new uses for copyrighted works creating rights that can
be exercised effectively only under a compulsory license system.

(2) Equitable remuneration is provided for and the amount of which to be fixed either by
agreement of by ‘competent authority’ which is usually a government agency or a special
tribunal; and

(3) The compulsory license must be applicable only in the country which has provided for it.

 Compulsory license in respect of unpublished works

Section 31A in the case of an unpublished work, the author of which at the time of making the
work was a citizen of India, whether the author is dead, unknown or cannot be traced, or the
owner of the copyright cannot be found, any person may apply to the IPAB for a license to
publish the work or translation thereof in any language. Before making the application the
applicant should publish his proposal in one issue of a daily newspaper in English having
circulation in the major part of the India and where the application is for the publication of a
translation in any language, also in one issue of any daily newspaper in that language. The
application to the IPAB should be in the prescribed form and accompanied by the prescribed fee
and with a copy of the advertisement issued.

The IPAB may after making certain prescribed enquiries direct the registrar of copyrights to
grant a license to the applicant to publish the works or its translation subject to payment of
royalty in the public account or in any other account specified by the Board so as to enable the
owner of the Copyright or his legal heirs to claim such royalty at any time.

In the case of a work whose author is dead, the Central Government may require the heirs or
legal representatives or executors to publish the work within a prescribed period if it considers
the work to be of public interest. The exercise of this power is without prejudice within the
period specified by the Central Government may on an application from a person, permit the

117
person to publish the work on payment of a royalty determined by the IPAB in the prescribed
manner.

For a license to produce and publish translations of literary or dramatic work in any language and
applicant in certain circumstances and under certain terms and conditions may obtain it from the
IPAB, after the period of seven years from the first publication of the work.

Where the work is not an Indian work any person may apply to the IPAB for a license to produce
and publish a translation, in rated or analogous form of reproduction, of a literary or dramatic
work, in any language general use in India after a period of three years or the first publication of
such, if translation is required for the purposes of teaching, scholarship or research.

But where such translation is in a language not in general use in any developed country the
application for license may be made for periods of one year form such publication. The license
granted in respect of non-Indian work will not extend to the export of copies of the translation
outside India and every copy of such translation should contain a notice in the language to the
effect that the copy is available for distribution only in India. However the export of copies of
translation in a language other than English, French or Spanish may be effected by the
Government to any country if such copies are sent to citizens of India residing outside India or to
any association of such citizens outside India or where such copies are meant for purposes of
teaching, scholarship or research and not for any other purpose. The export is possible only if the
Government of that country to which it is exported permits it.

The circumstances necessary for the grant of such license by the IPAB are the following (see
section 32 for details):

(a) The application should be filed after a period of seven years, three years or one year, as the
case may be, from the date of first publication of the work.

(b) A translation of the work in the language has not been published by the owner of the
copyright or any person authorized by him within seven years, or three years or one year, as
the case may be, of the first publication of the work or if a translation has been so published,
it has been out of print.

(c) The applicant had requested and had been denied authorization by the owner of the copyright
to produce and publish such translation, or the applicant after due diligence on his part unable
to find the owner of the copyright.

(d) Where the owner of the copyright is not traceable the applicant had sent a copy of his request
for such authorization by registered air mail post to the publisher not less than two months
before the application for the license.

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(e) A period of six months in the case of an application relating to a non-Indian work (for
translation in a language in general use in India) or nine months in the case of an application
relating to non-Indian work (translation in a language not in general use in any developed
country) must have elapsed from the date of making the request or from the date of sending
the copy as the case may be. It is also necessary that a translation of the work have not been
published within the period of such six months or nine months as the case may be.

(f) (i) in the case of the translation of a non-Indian work the name of the author and the title of
the particular edition of the work proposed to be translated, should be printed in all the copies
of the translation. ii) where the work is composed mainly of illustrations the provisions of
section 32 A are also compiled with.

The applicant is competent to produce and publish a correct translation of the work and has the
means to pay to the owner of the royalty fixed by the Board.

4.8 Limitations/Exceptions

Where there are rights, there exist limitations for no right under copyright is absolute.

There are two kinds of limitations

1. First the category of work which cannot be copyrighted - official texts of a legislative,
administrative and legal nature, and of translations of such texts; and the Court orders

2. Certain acts, which are permitted by the law, that they do not require permission of the
author. Such acts are usually either: (a) Free use (b) Compulsory License (already
discussed)

These are allowances which are made for fair use or for provision of the copyrighted work in a
more socially benefitting way.

The three step test is the most important in consideration for limitations on copyrights. The three
step test is:251

In short, the test “sets limits to limitations on exclusive rights” and allows limitations

1. To certain special cases;

2. Where it does not conflict with the normal exploitation of the work; and

3. Where it does not unreasonably prejudice the legitimate interests of the holder.

Fair Use
251
Article 10bis of Berne Convention and Article 19(2) and 13 of TRIPS.

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The copyright holders hold a bundle of exclusive rights for a limited time period. Fair use is a
limitation to the said exclusive rights. A use, which is considered “fair”, does not infringe
copyright, even if it involves doing of any of the acts by others that constitute exclusive rights of
copyright holder. Uses of the copyrighted works for purposes such as criticism, comment, news
reporting, teaching, scholarship, or research without permission of the copyright holder, is
usually considered fair use. Copyright owners are deemed to consent to fair use of their works.

The Copyright Act does not define fair use. Instead, Copyright Act, 1957 of India enlists certain
acts, which do not constitute infringement of copyright, which is known as fair dealing.

Rationale for Fair Use

Copyright system accommodates mainly two interests: private interest and public interest. It tries
to draw a balance between the private interest of the copyright owners and public interest of
consumers of copyrighted works and the general public.

Firstly, the monopoly for limited period provided by copyright statutes gives the incentive for
creation and investment for production of copyrighted works by private individuals i.e. the
prospective copyright owners.

Secondly, it is one of the major agendas of copyright law to ensure the access of general public
to copyrighted works. Copyright bases is in the fundamental belief that socially important
endeavors like private use, criticism, news reporting, teaching, and research, should not be
restricted. Further such uses are not considered to negatively affect the economic interest of the
copyright holders.

Fair use provisions of the copyright law stand on the public interest part of the copyright law.
Fair use provisions are built into the copyright legislations world over. It could be either limited,
partial use of copyrighted work or use of the entire work, in certain limited circumstances. Such
fair exemptions are allowed under copyright law as it serves the purposes of spread of
information, knowledge, news; further development of social utility works; studies of the present
and next generation etc.

The basic purpose of Section 52 is to give the freedom of expression given under Article 19(1) of
the Constitution of India so that research, private study, criticism, review or reporting of current
events can be done. Section 52 is not for negative prescription of what constitutes
infringement.252 Section 52 gives a list of acts that do not constitute infringement of copyright
that has already been discussed in this module. The exceptions listed in Section 52(1) can be
applied for any act in relation to the translation of a literary, dramatic and musical work or the
adaptation of such work. The list is as follows:

252
Wiley Eastern Ltd. v. Indian Institute of management (1995)PTC 375 at p. 382 (Del DB).

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1) A fair dealing with a literary, dramatic, musical or artistic work, not being a computer
programme for the purpose of private use including research, criticism or review, making
copies of computer programme for certain purposes, reporting current events in
newspapers and magazines or by broadcasting or in a cinematograph film or by means of
photographs,

2) Reproduction for judicial proceedings and reports thereof, reproduction exclusively for
the use of members of legislature, reproduction (artistic work excluded) in a certified
copy supplied in accordance with law.

3) Reading or recitation in public of extracts (literary or dramatic work).

4) Publication in a collection for the use of educational institutions in certain circumstances.

5) Reproduction by teacher or pupil in the course of educational institutions in certain

circumstances.

6) Performance in the course of activities of educational institutions in certain

circumstances.

7) The making of sound recording under certain circumstances subject to certain conditions.

8) The playing of a sound recording to be heard in public by utilizing in an enclosed room or

in clubs in certain circumstances.

9) Performance in an amateur club given to a non-paying audience or for religious

institutions.

10) Reproduction in newspaper and magazine of an article on current economic, political,

social or religious topics in certain circumstances.

11) Publication in newspapers or magazines, a report of a lecture delivered in public.

12) Making a maximum of 3 copies for the use of a public library.

13) Reproduction of unpublished work kept in a museum or library for the purpose of
research of study or research.

14) Reproduction or publication of any matter published in official gazette or reports of

government commission or other bodies appointed by government.

15) Reproduction of nay judgment or order of court, tribunal or other judicial authority not
prohibited from publication.

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 16) Production or publication of a translation of Acts of legislature or rules.

17) Making or publishing of a painting, drawing or photographs of a work of architecture.

18) Making or publishing of a painting, drawings or photographs or engraving of sculpture or

other artistic work permanently situate in a public place.

19) Inclusion in a cinematograph film of any artistic work permanently situates in a public
place and other artistic work by way of background or incidental to the principal matter
represented in the film.

All these exceptions are applicable to adaptations and translations as well; apart from literary,
dramatic, musical or artistic work.

Computer programme

The provision on reverse engineering of computer programme was lifted in the 1994
Amendment Act. In 1999 it was reintroduced because of the fact that reverse engineering
became highly necessary in areas where the source code was not disclosed to the public. The
term literary work under the Act is now inclusive of computer programme except in case of
Section 52(1)(a).

In respect of computer programme the following acts do not constitute infringement:

The making of copies or adaptation of a computer programme by the lawful possessor of a copy
of such computer programme from such copy-

(i) In order to utilize the computer programme for the purpose for which it was
supplied, or

(ii) To make back-up copies purely as a temporary protection against loss, destruction or
damage in order only to utilize the computer programme for the purpose for which it
was supplied.

News, Current event reporting

The following cases deal with fair dealing in the context of news and current event reporting. In
Fraser253 the plaintiff, a consultant in public relations, made a report for the government of
Greece. Defendant, journalists, were about to publish an article in their newspaper. Lord
Denning held that “there is something which is of such public concern that the newspapers, the
press and indeed, everyone is entitled to make known the truth and to make fair comment on it.
This is an integral part of right of free speech and expression.” Injunction was denied.

253
Fraser v. Eavan and others (1969) 1 All E.R. 8

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In Beloff254 it was held that the publication of a confidential information which has been leaked
by a third party and which without the leak, could not have been published, cannot constitute fair
dealing for the purposes of criticism or review. In the instant case the defendant published
internal office memorandum written by plaintiff in an article in their magazine and ¼ of the
defendant’s article was quotation from the memorandum.

Further in Blackwood255 it was held that a summary that extracts and reproduces substantial parts
of the copyright work for the purpose of narrating a story is not criticism. In Romesh
Chouwdary256 the complainant, Assistant Registrar of J & K University, alleged that by
publishing ‘notes’ on certain books for which university has copyright, infringed the rights of
University. Accused took the defense of fair use. It was held that the title of the books (notes)
published by the petitioners (accused) clearly showed that they were merely in the nature of
notes and serve as a guide to the students to understand the books. In the notes certain quotations
from the books were given in order to explain their meaning and significance. Under these
circumstances, therefore, by no stretch of imagination, it can be said that the acts of petitioners
(accused) in preparing or publishing these notes amounted to the infringement of copyright. The
case of the petitioners (accused) in our opinion, clearly falls within the exceptions to Section 52
sub clause (a) and (a)(ii) of the Act.

Educational, Research, Library uses

The fair dealing with a literary, dramatic, musical or artistic work for the purpose of research
should contain the acknowledgement identifying the work by title or other description (unless
agreed to the contrary or in the case of anonymous work) is a must. Research is to be most
diligent protracted investigation especially for the purpose of adding to the human knowledge.
(Blackwood).257

In University of London press, Limited 258 it was held that the copying of copyrighted question
papers of university as it is by the defendants is not a fair dealing. It could not be said the mere
republication of a copyright work was a 'fair dealing' because it was intended for purposes of
private study; nor, if an author produced a book of questions for the use of students, could
another person with impunity republish the book with the answers to the questions.

In Romesh Chouwdary259 it was held that under the guise of copyright the authors cannot ask the
court to close all the doors of research and scholarship and all frontiers of human knowledge. In
the case it was held that the publication of a ‘notes’ on university books constituted a fair dealing
as contemplated under Section 52(1)(a).
254
Beloff v. Pressdram Ltd. (1973) 1 All E. R. 241
255
Blackwood v. Parasuraman AIR 1959 Madras 410). See Johnston v. Bernard Jones Publications Ltd. (1938) 2 All E.R. 37
256
RomeshChouwdary v. Ali Mohd. AIR 1965 J&K 101
257
Blackwood v. Parasuraman AIR 1959 Madras 410
258
University of London press, Limited? v. University Tutorial press, limited [1916] 2 Ch 601.
259
RomeshChouwdary v. Ali Mohd. AIR 1965 J&K 101 See also S.K.Dutta v. Law Book Co. AIR 1954 All. 570.

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Judicial proceedings / Legislative Texts

Fair use provisions also deal with the reproduction of a literary, dramatic, musical or artistic
work for the purpose of a judicial proceeding or for the purpose of a report of a judicial
proceeding; the reproduction or publication of a literary, dramatic, musical or artistic work in any
work prepared by the Secretariat of a Legislature or, where the Legislature consists of two
Houses, by the Secretariat of either House of the Legislature, exclusively for the use of the
members of that Legislature.

In Pandurangan260 the accused published forms of “certificate of landed property” and its Tamil
translation which the complaint was printing and selling. A combined reading of Section 52 (1)
& (2) would show that neither the official form or the translation of is entitled for copyright as
copyright cannot be acquired in such works, and so no offence is made.

Section 52(1) & (2) further state the following: -

 The reproduction or publication of any matter which has been published in any Official
Gazette except an Act of a Legislature.

 The reproduction or publication of any Act of a Legislature subject to the condition that
such Act is reproduced or published together with any commentary thereon or any other
original matter.

 The reproduction or publication of the report of any committee, commission, council,

board or other like body appointed by the government if such report has been laid on the
Table of the Legislature, unless the reproduction or publication of such report is
prohibited by the government.

 The reproduction or publication of any judgment or order of a Court, Tribunal or other

judicial authority, unless the reproduction or publication of such judgment or order is
prohibited by the Court, the Tribunal or other judicial authority, as the case may be.

 The production or publication of a translation in any Indian language of an Act of a

Legislature and of any rules or orders made there under if no translation of such Act or
rules or orders in that language has previously been produced or published by the
government. However, such translation should contain a statement at a prominent place to
the effect that the translation has not been authorized or accepted as authentic by the
government.

 The production or publication of a translation in any Indian language of an Act of a

Legislature and of any rules or orders made there under, where a translation of such Act

260
Pandurangan v. GovindaIyer 1971 Cri. L. J. 1399 (Mad)

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 or rules or orders in that language has produced or published by the government and if the
translation is not available for sale to the public. In this case also such translation should
contain a statement at a prominent place to the effect that the translation has not been
authorized or accepted as authentic by the government.

Further in Eastern Book Company261 it was not disputed that under Section 52(1)(q) of the
Copyright Act that the reproduction or publication of any judgment or order of a Court, Tribunal
or other judicial authority does not constitute infringement of copyright of the Government in
these works. It is because of the reason that orders and judgments of the Courts are in public
domain and everybody has a right to use and publish them.”

In making Adaptation/Translation/Derivative works262

1. Doing of any act in relation to the translation of a literary, dramatic or musical work
or the adaptation of a literary, dramatic, musical or artistic work as they apply in
relation to the work itself.

2. The making of a sound recording in respect of any literary, dramatic, or musical

work, if sound recordings of that work have been made by or with the license or
consent of the owner of the right in the work.

3. The making of a sound recording in respect of any literary, dramatic, or musical

work, if the person making the sound recordings has given a notice of his intention to
make the sound recordings, has provided copies of all covers or labels with which the
sound recordings are to be sold, and has paid in the prescribed manner to the owner
of rights in the work royalties in respect of all such sound recordings to be made by
him, at the rate fixed by the copyright Board in this behalf.

4. The above two acts are allowed only if no alterations are made which have not been
made previously by or with the consent of the owner of rights, or which are not
reasonably necessary for the adaptation of the work for the purpose of making the
sound recordings;

5. The sound recordings shall not be issued in any form of packaging or with any label
which is likely to mislead or confuse the public as to their identity;

6. No such sound recording shall be made until the expiration of two calendar years
after the end of the year in which the first sound recording of the work was made;
and

261
Eastern Book Company and Ors.v.D.B. Modak and Ors.and Mr. Navin J. Desai and Anr. NLS 2002 CR/Del. 2002 D.L. T. 205
(Delhi High Court)
262
Gramophone Company of India Ltd. v. Super Cassette Industries Ltd. 1995 PTR 64 [Delhi High Court].

125
 7. The person making such sound recordings shall allow the owner of rights or his duly
authorized agent or representative to inspect all records and books of account relating
to such sound recording.

Private Use

A fair dealing with a literary, dramatic, musical or artistic work for the purpose of private use is
exempted and is not an infringement of copyright. Private use is such a dealing that does not
involve any publication.263

In 1984 the Supreme Court of U.S. held in Sony Corporation of America 264 that space-shifting or
format-shifting - that is, taking content in one format and putting it into another format, for
personal, non-commercial use [private non-commercial home taping of television programs with
a VTR of (Sony corporation product) to permit later viewing] is fair use.

Public display of artistic works

The making or publishing of a painting, drawing, engraving or photograph of a work of

architecture or the display of a work of architecture. The making or publishing of a painting,
drawing, engraving or photograph of sculpture, or other artistic work , if such work permanently
situate in a public place or any premises to which the public has access.

The inclusion in a cinematograph film of any artistic work permanently situate in a public place
or any premises to which the public has access The inclusion in a cinematograph film of any
artistic work, if such inclusion is only by way of background or is otherwise incidental to the
principal matters represented in the film.

Use by the Author

The use by the author of an artistic work, where the author of such work is not the owner of the
copyright therein, of any mould, cast, sketch, plan, model or study made by him for the purpose
of the work. However, he is not allowed by the Act to repeat or imitate the main design of the
work in doing the above act.

Festivals/Religious or official Ceremonies

The performance of a literary, dramatic or musical work or communication to public of such

work or of a sound recording in the course of any bona fide religious ceremony or an official
ceremony held by the Central Government or the State Government or any local authority. The
benefit of this provision is available to marriage procession and other social festivities associated
with a marriage.

263
Blackwood v. Parasuraman AIR 1959 Madras 410
264
Sony Corporation of America v. Universal City Studios, 464 U.S. 417 (1984, S.C.)

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Other Justified Pubic Fair Uses are as follows

 The causing of a recording to be heard in public by utilizing it in an enclosed room or hall

meant for the common use of residents in any residential premises [not being a hotel or
similar commercial establishment] as part of the amenities provided exclusively or
mainly for residents therein.

 The causing of a recording to be heard in public by utilizing it as part of the activities of a

club or similar organization which is not established or conducted for profit.

 The reading or recitation in public of any reasonable extract from a published literary or
dramatic work. However, acknowledgement identifying the work by title or other
description, unless agreed to the contrary or anonymous, is a must.

 The performance of a literary, dramatic or musical work by an amateur club or society, if

the performance is given to a non-paying audience, or for the benefit of a religious
institution.

 In relation to a literary, dramatic or musical work recorded or reproduced in any

cinematograph film, the exhibition of such film after the expiration of the term of
copyright therein. However, acknowledgement of identifying the work by title or other
description, unless agreed to the contrary or anonymous work is a must.

 The reconstruction of a building or structure in accordance with the architectural

drawings or plans by reference to which the building or structure was originally
constructed. This is allowed by the Copyright Act only if the original construction was
made with the consent or license of the owner of the copyright in such drawings and
plans.

 The making of an ephemeral recording, by a broadcasting organization using its own

facilities for its own broadcast by a broadcasting organization of a work which it has the
right to broadcast; and the retention of such recording for archival purposes on the ground
of its exceptional documentary character.

 Ephemeral recording exception means making of ‘broadcastable’ adaptations or copies of

works. In the case of literary, dramatic or musical works, the broadcasters may make
sound recording or cinematograph film of the work. In the case of artistic work
broadcasters may take a photograph or make a film of the work. In the case of sound
recording or films the broadcasters may make copies of them. However, ephemeral
recording does not extend to making further reproduction from the original recording.

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In Video Master v. Nishi Productions265 the Bombay High Court held that the preparation of or
manufacturing of Betachem cassette that can be used for the purpose of satellite broadcasting
was a fair use as contemplated under Section 52 (1)(z).

Indian Fair use concept in case of copyrights is elaborated under section 52, clauses (aa), (ab),
(ac), and (ad). The fair use provisions are very blurred in a digital environment. Right holders
often use set of measures to prevent the use of their content which compromises with fair use
provisions. Digital rights management (DRM) is commonly defined as the set of technological
protection measures (TPM) by which rights holders prevent the use of digital content they
license in ways that could compromise the commercial value of their products. Restrictions on
such uses as downloading, printing, saving and emailing content are encoded directly in the
products or the hardware needed to use them and are therefore in immediate effect. This
automatic deployment challenges the fair use provisions of copyright law, which protect certain
uses and let judges determine the outcome of a dispute.266

Amendment after implementation of Marrakesh Treaty

Keeping conformity with the essential goals of equal opportunity, non-discrimination, access,
thorough individual progress, actual and comprehensive involvement in society, the Marrakesh
Treaty to Facilitate Access to Publish Works for Persons who are Blind, Visually Impaired or
otherwise Print Disabled (hereinafter, the Treaty) truly stabilizes human rights and intellectual
property rights (IPR), which was approved by representatives from World Intellectual Property
Organization's (WIPO) 186 member states including India on June 27, 2013. 267 This Treaty
guarantees visually impaired people speedier access to books by calling for the contracting
parties to implement domestic law provisions permitting reproduction, distribution and making
available of published works in accessible formats, such as Braille, with certain limitations and
exceptions to the rights of copyright right holders. The treaty also allows for the unlocking of
digital locks on e-books for the visually impaired to gain from. In other words, an Amazon
Kindle book or iBook with digital rights management (DRM) could now be unlocked and printed
in Braille without consultation from the right holder(s). At present, 182 countries have signed the
treaty making it the treaty with the largest number of countries to ever sign a WIPO-
administration treaty upon adoption.

The Indian Copyright Act was introduced vide the Copyright Amendment Act, 2012. Under the
same, Section 52 which deals exclusively with the fair use/fair dealings provision, that is, the
acts that would not amount to copyright infringement, contained the added provision Section 52
(1)(zb). It permits the conversion of a work into any accessible format exclusively for the benefit
of differently abled people. 
265
1998 PTC (18) 117
266
Perspectives on DRM: Between Digital Rights Management and Digital Restrictions Management, available at:
https://onlinelibrary.wiley.com/doi/epdf/10.1002/bult.2010.1720360313
267
(Marrakesh Treaty, Contracting Parties,  Available at: http://www.wipo.int/treaties/en/ShowResults.jsp?
lang=en&treaty_id=843. Last accessed Sept. 5, 2015.).

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4.9 Infringement of Copyright

The rationale behind making infringement punishable is that no person should draw benefit or
take credit for the work of another. Infringement means the interference with, or violation of the
right of copyright of another; it takes place when a person other than the owner/author does
something which is the exclusive right of the owner/author. Infringing copy means reproduction
without a license by the owner of a literary, dramatic, musical or artistic work, copy made of a
cinematograph film, recording of sound recording, or a cinematograph of such film of such
programs or performance in relation of which broadcasts, reproduction right or performer’s right
subsists. There can be two types of infringement: primary infringement and secondary
infringement.

Essentials of Infringement

To establish primary infringement, it must be shown that substantial part of the work is copied,
although only a degree of resemblance is sufficient to establish this and exact resemblance is not
necessary..268 Mere commonness of idea does not constitute copying. The test is to see if the
reader, spectator or the viewer after having read or seen both the works is clearly of the opinion
and gets an unmistakable impression that the subsequent works appears to be a copy of the other.

A regard is made for the function of a computer program while determining infringement. The
same performance of identical function might amount to resemblance between two computer
programs despite differences in physical appearance, form of reproduction and other outward
appearance.

Facts to be established by plaintiff in case of infringement

In case the plaintiff wants to succeed in an action of infringement the plaintiff has to establish –
(1) that there is a close similarity between the two works,

(2) that the defendant has directly or indirectly made an unlawful use of the plaintiffs work

(3) that there is a chain of causation linking the plaintiffs copyright work with the defendants
infringing work

(4) the defendant had access to the plaintiff work or an infringing work.269

Although the acknowledgement does not constitute infringement except in works of anonymous
or the author has agreed that no acknowledgement of his name be made.

Tests for infringement

268
C.Cunniah v & Co. v. Balrai& Co. AIR 1961 Mad. 111.
269
Mishra BandhuKaryalaya v. ShivratanLalKaushal AIR 1970 MP 261

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Substantial Similarity is required to prove the Infringement but the question leads to what may
be the substantial similarity. Three tests have been developed in the course of time through
various court practices to determine whether substantial similarity of expression exists between
works:

Abstraction test

Determination of a copyright dispute by Judge Lerner Hand in case Nichols v. Universal Pictures
Corp.,270 lead the stone of abstraction test.

In said case plaintiff was the author of a play whereas the defendants, in producing their motion
picture play were alleged to have infringed. Both plays featured a zealot father, a mother,
children of opposing families who get married, a conflict, a child born to the married couple, and
reconciliation. Judge Hand observed that the defendant had not copied literally from the plaintiff,
but that the asserted infringement was a “non-literal” copying of the whole. In assessing whether
this non-literal copying was infringement, Judge Hand stated the test in this way:

“Upon any work, and especially upon a play, a great number of patterns of increasing generality
will fit equally well, as more and more of the incident is left out. The last may perhaps be no
more than the most general statement of what the play is about, and at times might consist only
of its title; but there is a point in this series of abstractions where they are no longer protected,
since otherwise the playwright could prevent the use of his “ideas,” to which, apart from their
expression, his property is never extended.”

This test suffers from a fundamental flaw in that it is a test determining the amount of work
copied and not whether infringement has occurred.

Pattern Test

This test was laid down to determine at what point an allegedly infringing work copies the
original work beyond the domain of ideas and into the domain of particular expression. It
compares different elements and characters between the two works and the more similarity
between them, the more probability of infringement.

Professor Melville Nimmer and David Nimmer has given an example of the application of this
test. They compare Abie's Irish Rose, the play disputed in Nichols, with the musical and motion
picture West Side Story and Shakespeare's Romeo and Juliet. Abie's Irish Rose shares with
Romeo and Juliet only the basic idea of a romance between members of two hostile families.
Thus, under the pattern test no substantial similarity exists. Professor Nimmer points out that at
first glance, West Side Story has but the barest similarity with Shakespeare's classic. But, when
one applies the pattern test, not only the basic idea, but the sequence of events as well as the

270
34 F.2d 145 (S.D.N.Y. 1929)

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interplay of the characters, can be seen to be straight from Romeo and Juliet. Thirteen elements
are listed that can be found in both works:

       1. The boy and girl are members of hostile groups.

       2. They meet at a dance.

       3. They acknowledge their love in a nocturnal balcony (fire escape) scene.

       4. The girl is betrothed to another.

       5. The boy and girl assume the marriage vows.

       6. In an encounter between the hostile groups the girl's cousin (brother) kills the boy's best
friend.

       7. This occurs because the boy attempts to stay the hand of his best friend in order to avoid
violence.

       8. In retaliation, the boy kills the girl's cousin (brother).

       9. As a result the boy goes into exile (hiding).

       10. A message is sent to the boy at the retreat, explaining a plan for him to meet the girl.

       11. The message never reaches the boy.

       12. The boy receives erroneous information that the girl is dead.

       13. In grief the boy kills himself (or permits himself to be killed).

       Here, the pattern is common to both works and thus, the works are substantially similar.    

This test, like the one before, suffers from a flaw that not all works protected by copyright have a
pattern to be analyzed. For example, telecast of a live sports event cannot be analyzed under this
test. Therefore this should not be treated as the only test for determining infringement but rather
as a tool to help determine the same.

Total Concept and Feel Test – Ordinary Observer Test

The total concept and feel test of infringement is based on observation of an ordinary observer i.e
whether the work is recognizable by an ordinary observer as having been taken from the
copyrighted source. This test relies on the subjective evaluation of observers who consider the
question of whether the total concept and feel of one work is substantially similar to another. The
test is subdivided into the extrinsic and intrinsic test. The extrinsic test is objective in nature and

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requires the plaintiff to identify specific criteria which it alleges have been copied. The intrinsic
test is an examination of an ordinary person’ subjective impression of the similarities between
the two works.

Infringement in case of computer programs

Infringement of copyright is dealt with in Section 51 of the copyright Act. Accordingly, any
person who reproduces distributes or exercises any of the rights or the copyright owner, without
his authorization is said to have infringed the copyright.

The issues that arise in case of infringement are: whether copyright subsisted in the program of
the claimant by virtue of it being original expression;

Whether alleged infringer had access to the copyrighted work; whether the alleged infringing
work is substantially similar to the copyrighted work; what is the test to determine the
infringement.

In Whelan Associates Inc v. Jaslow Dental Laboratory,271 Whelan Associates was the developer
of a computer program for dental lab record-keeping for Jaslow. Later, Jaslow developed its own
program for the same purpose in a different language. The question whether structure and overall
organization was substantial similar was in issue. Jaslow lab argued that since the structure only
reflected the idea and it was not the expression and therefore it cannot be protected under the
copyright law.

The ‘ordinary observer’ test was not an appropriate for determining infringement in computer
program. The court stated that “the purpose or function of a utilitarian work would be the work’s
idea, and everything that is not necessary to that purpose or function would be part of the
expression of the idea .Where there are various means of achieving the desired purpose, then the
particular means chosen is not necessary to the purpose; hence, there is expression not idea.” The
Court found in this case that the structures of both the programs were similar and hence there
was copyright infringement. From this case it was clear that it was necessary to look beyond the
literal protection granted to computer software programs and protection should be given to their
structure, sequence and organization.

In Computer Associates v. Altai272 it was Alleged Computer Associate’s operating system

compatibility component program ‘Adapter’ was infringed by Altai’s Oscar 3.5 program. The
court applied the THREE STAGE TEST:

ABSTRACTION: Abstraction would involve examining the program in terms of its structure
rather than its specific sequence of code, and trying to identify its various modules, routines and

271
[1987] F.S. R. 1.(797 F. 2d 1222 (3rd Cir.1986).
272
982 F. 2d 693 (2ndCirc, 1992)

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sub-routines. Applied to the allegedly infringed computer program to separate the various
elements in order of increasing generality.

FILTRATION: Filtering out certain kinds of expressions which do not merit copyright
protection, due to doctrines such as scenes a fair and merger, or are part of the public domain, or
dictated by efficiency or industry concerns, in particular – Mechanical Specifications of the
Computer on which the program is to be used (hardware standards);Compatibility requirements
with other applications and operating systems (software standards);Computer manufacturer’s
design standards; and Computer industry programming standards.

COMPARISON: After filtering out the non-protectable elements of the non-infringed work,
what remains is a kernel or “golden nugget” of protectable expression in the plaintiff’s (allegedly
infringed) work. The Court then inquiries into whether the defendant has copied the protectable
expression from the defendant, and what is the relative importance of the copied portion to the
infringing work.

Applying the above three stage test the Court held that OSCAR 3.5 did not infringe the copyright
in CA-SCHEDULER. The test is now the benchmark in cases of computer programs and even
used other works, and is known as the ‘Altai Test’ or the ‘AFC Test’.

Protection of Technological measures

Section 65A - Any person who circumvents an effective technological measure applied for the
purpose of protecting any of the rights conferred by this Act, with the intention of infringing
such rights, shall be punishable with imprisonment which may extend to two years and shall also
be liable to fine. (2) Nothing in sub-section (1) shall prevent any person from,- ( a) doing
anything referred to therein for ·a purpose not expressly prohibited by this Act: Provided that any
person facilitating circumvention by another person of a technological measure for such a
purpose shall maintain a complete record of such other person including his name, address and
all relevant particulars necessary to identify him and the purpose for which he has been
facilitated; or (b) doing anything necessary to conduct encryption research using a lawfully
obtained encrypted copy; or (c) conducting any lawful investigation; or (d) doing anything
necessary for the purpose of testing the security of a computer system or a computer network
with the authorization of its owner; or (e) operator; or (f) doing anything necessary to circumvent
technological measures intended for identification or surveillance of a user; or (g) taking
measures necessary to the interest of national security.

Section 65B - Any person, who knowingly - (1) removes or alters any rights management
information without authority, or (2) distributes, imports for distribution, broadcasts or
communicates to the public without authority, copies of any work, or performance knowing that
electronic rights management information has been removed or altered without authority, shall
be punishable with imprisonment which may extend to two years and shall also be liable to fine:

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Provided that if the rights management information has been tampered with in any work, the
owner of copyright in such world may also avail of civil remedies provided under Chapter XII
against the persons indulging in such acts.

Secondary Infringement

In India, the laws relating to secondary liability are codified under the Copyright Act, 1957 in
Section 51 (a) (ii) and (b). They hold liable those acts that are done in the assistance of primary
infringement and those which add to the effect of the primary infringement that has occurred.
The act gives way for innocent infringement in this case and provides for fours instances where
the secondary liability can be imposed.

(a) Selling or letting for hire, or by way of trade, displaying or offering for sale or hire, the
infringing copies,

(b) Distributing either for the purpose of trade or to such an extent as to affect prejudicially the
owner of the copyright, such infringing copies,

(c) Exhibiting in public, by way of trade, such infringing copies, and

(d) Importing into India such infringing copies.

A recent example is Perfect 10 case.273 Perfect 10 was an adult website, and a number of
independent websites used its content from the subscription area on their websites and these sites
appeared in the search (because of Google crawl) and thus violated the rights of perfect 10. It
sent notice to Google, alleging first, that Google committed contributory infringement by
encouraging users to visit infringing sites; and second, that it committed contributory
infringement by profiting from infringement. In this case however Google was held to be not
liable, and its fair use defence was upheld.

4.10 Remedies against violation of Copyright

4.10.1 Civil Remedies

The Copyright Act, 1957 contains provisions dealing with civil remedies. 274 Section 55 provides
for the civil remedies for the infringement of copyright. Civil remedies include injunction,
damages or account of profit, delivery up of infringing copies and damages for conversion. But
in cases of innocent infringement, the plaintiff shall not be entitled to any remedy other than an
injunction in respect of the infringement and a decree for the whole or part of profits made by the
defendant by the sale of the infringing copies.

273
Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007)
274
Chapter XII, Sections 54 to 62 of the Copyright Act

134
If any person claiming to be the owner of copyright in any work, threatens any other person with
legal proceedings in respect of an alleged infringement of the copyright, the aggrieved person
may institute a declaratory suit that the alleged infringement to which the threats related was not
in fact an infringement and may obtain an injunction against the continuance of such threats and
may recover damages.275

Under Copyright Act, in case of infringement of moral rights, the author shall have the right to
restrain or claim damages in respect or any distortion, mutilation, modification or other act in
relation to his work, which would be prejudicial to his honour or reputation.276

4.10.2 Criminal Remedies

The Indian Copyright Act, 1957 provides for both imprisonment and fine which in the Indian
context would be a sufficient deterrent. It prescribes mandatory punishment for the piracy of
copyrighted matter commensurate with the gravity of the offense with an effect to deter
infringement.

It provides that an offense of infringement of copyright or other rights conferred by the Act shall
be punishable with imprisonment for a term which shall not be less than six months but which
may extend to three years and with fine which shall not be less than fifty thousand rupees but
which may extend to two lakh rupees. Thus any person who knowingly infringes or abets the
infringement of the copyright in a work or any other right conferred by this Act shall be punished
under this provision.277

Criminal proceedings are available in order to punish the persons who have violated the
copyright laws. The infringement of copyright is a cognizable offence and is punishable with
imprisonment for a period extending from six months to three years accompanied with or
without a fine ranging from Rs. 50,000/- to Rs. 2,00,000/- (approximately US $ 2000 to $ 8000).
The Act provides also for seizure of infringing copies and confiscation of all duplicating
equipments used for manufacturing pirated copies.

Copies of the work, which if produced in India would infringe the copyright of the owner, are
banned from being imported in India. Mere import of such material would result in the
infringement of the copyright law in India. For this purpose an application has to be made to the
Registrar of Copyrights, who after making such enquiry as deemed necessary, may pass an
appropriate order. This provision safeguards the rights of the copyright owner against import of
copies manufactured in other countries which infringe copyright laws in India.

Section 63A of the Act provides for enhanced penalty on second or subsequent convictions, i.e.
imprisonment for a term which shall not be less than one year but which may extend to three
275
Section 60 of the Copyright Act, 1957
276
Section 57 of the Copyright Act, 1957
277
Section 63 of the Copyright Act, 1957

135
years and with fine which shall not be less than one lakh rupees and which may extend up to two
lakh rupees.

Any person who knowingly makes use on a computer of an infringing copy of a computer
program shall be punishable with imprisonment for a term which shall not be less than seven
days but which may extend to three years and with fine which shall not be less than fifty
thousand rupees but which may extend to two lakh rupees.278

If the copyright or any other right conferred on the work by the Copyright Act, is infringed, or is
being, or is likely to be infringed, any police officer, not below the rank of a sub-inspector may
seize without warrant, all copies of such work and all materials used for making such work and
shall be produced before a Magistrate. These materials may be returned by the Magistrate on
application by any person within fifteen days of such seizure. Those will be restored only after
inquiry and hearing the applicant and the complainant.279

If any person knowingly makes, or possesses any plate for the purpose of making infringing
copies of any copyrighted work, he shall be punishable with imprisonment which may extend to
two years and shall also be liable to fine.280

The Court can order that all copies of the work or all plates in the possession of the alleged
offender which appears to be infringing copies, or appears for the purpose of making infringing
copies to be delivered up to the owner of the copyright, whether he is convicted or not.281

Any person who makes a false entry in the Register of Copyright, or makes a writing falsely
purporting to be a copy of any entry in such register, or produces or tenders evidence of such
wrong entry or writing, knowing it to be false, is punishable with imprisonment which may
extend to one year, or with fine, or with both.282

Making any false statement or representation for the purpose of deceiving or influencing any
authority or officer knowing the same to be false, shall be punishable with imprisonment which
may extend to one year, or with fine, or with both.283

Any person who publishes a sound recording or a video film without regard to the particulars to
be included in such a publication as given in Section 52A of the Act, shall be punishable with
imprisonment which may extend to three years and shall also be liable to fine.284

278
Section 63B of the Copyright Act, 1957
279
Section 64 of the Copyright Act, 1957
280
Section 65 of the Copyright Act, 1957
281
Section 66 of the Copyright Act, 1957
282
Section 67 of the Copyright Act, 1957
283
Section 68 of the Copyright Act, 1957
284
Section 68A of the Copyright Act, 1957

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In the case of offences by companies, the company as well as every person in charge of and
responsible to the company for the conduct of its business at the time of the commission of the
offence shall be deemed to be guilty and shall be liable to be proceeded against and punished.285

Only a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try the above-
mentioned offences.286

Appeals against the orders of the Magistrate shall be made to the Court to which appeals from
the Court making the order ordinarily lie within thirty days of such order and the appellate Court
may direct the stay of the execution of the order pending disposal of the appeal. 287 An appeal
from the order of the Registrar of Copyrights shall lie to the Copyright Board. From the order of
the Copyright, an appeal lies to the High Court within whose jurisdiction the appellant resides or
carries on business or personally works for gain.288

These being the criminal provisions incorporated in the Copyright Act, it acts as an efficient and
effective remedy against copyright infringement.

4.11 Special Provisions for Government, Security and Defense

2. Interpretation — In this Act, unless the context otherwise requires,—

(k) “Government work” means a work which is made or published by or under the direction or
control of—

(i) the Government or any department of the Government;

(ii) any Legislature in India;

(iii) any court, tribunal or other judicial authority in India;

17. First owner of copyright — Subject to the provisions of this Act, the author of a work shall
be the first owner of the copyright therein:

Provided that—

(d) in the case of a Government work, Government shall, in the absence of any agreement to
the contrary, be the first owner of the copyright therein;

285
Section 69 of the Copyright Act, 1957
286
Section 70 of the Copyright Act, 1957
287
Section 71 of the Copyright Act, 1957
288
Section 72 of the Copyright Act, 1957

137
 [(dd) in the case of a work made or first published by or under the direction or control of
any public undertaking, such public undertaking shall, in the absence of any agreement to
the contrary, be the first owner of the copyright therein.

Explanation — For the purposes of this clause and section 28A, “public undertaking” means
—

(i) An undertaking owned or controlled by Government; or

(ii) A Government company as defined in section 617 of the Companies Act, 1956 (1 of
1956); or

(iii) A body corporate established by or under any Central, Provincial or State Act;]

28. Term of copyright in Government works — In the case of a Government work, where
Government is the first owner of the copyright therein, copyright shall subsist until [sixty years]
from the beginning of the calendar year next following the year in which the work is first
published.

28A.Term of copyright in works of public undertakings — In the case of a work, where a public
undertaking is the first owner of the copyright therein, copyright shall subsist until [sixty years]
from the beginning of the calendar year next following the year in which the work is first
published.

31A. Compulsory licence in unpublished [or published works] —

(6) Without prejudice to the foregoing provisions of this section, in the case of a work referred to
in subsection (1), if the original author is dead, the Central Government may, if it considers that
the publication of the work is desirable in the national interest, require the heirs, executors or
legal representatives of the author to publish such work within such period as may be specified
by it.

Unit 5 Design

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5.1 Justification for Protecting Designs
Industrial designs are a unique combination of invention, creativity and design. It is the blending
of these elements that makes an industrial design exciting and new. Argument in favour of
Industrial design protection is being advanced is that a strong design protection will lead to
increased innovation and creativity by providing designers with an economic incentive to
develop better products.
The subject matter which is protected by the design system is the application of the design to an
article. At the outset, two characteristics of the design law could be identified. The first is that it
is concerned with the ‘visual aspects’ of the articles. This has an important impact on the types of
subject matter protected as registered designs. For example, the visual dimension of designs
operates to exclude function from the scope of protection. The second feature is that it concerns
designs applied to ‘articles’ The fact that protection is given only to design which is applied to
articles means that garden design, urban planning, and architectural design have been excluded
from the scope of design protection

5.2 Definition
The term ‘design’ has been defined to mean the features of shape, configuration, pattern,
ornament or composition of lines or colours applied to any article. The article can be either in
two- dimensional or three-dimensional or in both forms and it can be applied by any means,
whether it be through industrial process or means, whether manual, mechanical or chemical,
separate or combined. The finished article should be appealable to and judged solely by the eye,
but it should not include any mode or principle of construction or anything which is in substance
a mere mechanical device. It does not include any trade mark as defined in the Trade and
Merchandise Marks Act, 1958 or property mark as defined in the Indian Penal Code or any
artistic work, as defined in the Copyright Act, 1957.
Section 2(d) of the Designs Act, 2000
The following criteria has to be satisfied. They are:
 ‘Features of shape, configuration, pattern, or ornament or composition of lines or colour’,
 Which are ‘applied’,
 To an ‘article’,
 Which in the finished article ‘appeal to and are judged solely by the eye’.
A design shall be considered to be new when it has not been disclosed to the public, anywhere in
India or in any other Country, by publication or by use or in any other way, prior to the filing
date or priority date. A design shall be considered new if it is significantly distinguishable from
known designs or combination of known designs

139
5.3 Excluded Subject- matter
All designs will not qualify for protection. Section 2(d) of the Designs Act, 2000 excludes from
the meaning of design:
 Methods or principles of construction.
 Features dictated solely by function.
 A mechanical device.
 A trademark, or property mark or artistic work.
 Immoral designs or designs contrary to public order

5.4 Interface between Copyright and Design Law

Section 15(2) in the Copyright Act, 1957
(2) Copyright in any design, which is capable of being registered under the  1 [***] Designs Act, 1911
(2 of 1911) 2 , but which has not been so registered, shall cease as soon as any article to which the
design has been applied has been reproduced more than fifty times by an industrial process by the
owner of the copyright, or, with his licence, by any other person.

Special Provision related with Design for security of India

Section 46 in the Designs Act, 2000 - Protection of security of India.—Notwithstanding anything

contained in this Act, the Controller shall—

(a) not disclose any information relating to the registration of a design or any application relating to
the registration of a design under this Act, which he considers prejudicial to the interest of the
security of India; and

(b) take any action regarding the cancellation of registration of such designs registered under this Act
which the Central Government may, by notification in the Official Gazette, specify in the interest of
the security of India. 

Explanation.—For the purposes of this section, the expression “security of India” means any action
necessary for the security of India which relates to the application of any design registered under this
Act to any article used for war or applied directly or indirectly for the purposes of military
establishment or for the purposes of war or other emergency in international relations.

Term of Design Protection

The proprietor shall have copyright in the design for ten years from the date of registration. This
period of ten years can be extended by five years, if the registered proprietor applies for
extension in prescribed manner.

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Unit 6 Confidential Information

6.1 Introduction
The success of any corporation or organization mainly depends upon sensitive processes and
technological supremacy; but trade secret is another important matter which needs protection to
maintain the competitiveness in the market. The employers are keen to take all forms of
protective measures for safeguarding such confidential information from any kind of misuse. The
area of law which deals with laws of confidence is concerned with the secrecy of information
and tries to protect the same. Firstly that information must have a necessary quality of
confidence, so it should not be in the public domain. In a commercial or industrial context this
might be a trade secret. To test that the information has necessary quality of confidence there are
some elements that should be scrutinized, so there is a need to evaluate the value of the
information to the company and to its competitors and to capital and/or effort spent for
generating the information; and on the other hand the effort of the competitor to use that
information. Protection of Confidential Information in terms of employees in this age of
information technology is crucial to protect the new formula, product, technology, customer lists,
or future business plans. In the global marketplace, Indian corporations are often obligatory to
meet the terms with foreign laws and are likely to be exposed to responsibility for breach of
confidential information or trade secrets of their business partners or third parties. In India there
is no specific legislation for confidential information, but in this article provisions of UK and US
law are described elaborately to clear the concept of protection of confidential information under
employer and employee relationship.

6.2 Definition and Nature of confidential information

A new form of intellectual property has gained recognition in recent years is known as Trade
secrets and it is this form of IP with which we are concerned here. Trade secret can be defined as
a “information having commercial value, which is not in the public domain, and for which
reasonable steps have been taken to maintain its secrecy.” The TRIPS has given three essential
conditions which is to be fulfilled before considering an information as trade secret. These are,
i) Such information must be secret, i.e. not generally known or accessible to the persons
within the circles that deals with the kinds of information in question,
ii) Such information must have commercial value and
iii) Such information must be subject to reasonable steps by its owners to keep it secret.

The Uniform Trades Secrets Act, 1970 also provides for the definition of trade secrets, which is
as follows:- “Information, including a formula, pattern, compilation, program device, method,

141
technique, or process, that: (i) derives independent economic value, actual or potential, from no
being generally known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy”.
Importance of trade secrets in industrial economy is increasing rapidly with the industrial
inflation and this is because the quick change of technology involves more information and thus
stricter law is required to protect confidential information in the form of trade secrets for
maintenance of competitiveness as well as to encourage invention and innovation. Protection of
valuable trade related information from misuse by any employee is a big challenge for the
employers as well as for the lawmakers. Compared to other forms of intellectual property rights,
it has some practical positive factor; like there are no bureaucratic delays and no multiyear waits
for government grants, such as those for patents. Trade secret rights, in contrast, can be
established by the agreement between the interested parties. A trade secret right starts upon the
formation of the idea in some concrete form, and persists as long as secrecy is preserved.
Protection of information which does not qualify to be protected as intellectual property within
the legal framework of Intellectual Property Laws can also be protected by Trade Secrets. It also
has the advantage of being lasting forever, again, as long as secrecy is maintained. There are
some negative aspects of protection of information as a trade secret. It is a volatile form of
protection, and it terminates when secrecy is lost. Also, it requires constant vigilance for better
protection.
Now India also needs a structured provision to protect confidential information. In case of India
confidentiality agreement is already exist, but it should not be broader than necessity, otherwise
it will be counted as void. An employer can’t impose a restriction to the employee from utilizing
employer’s skill, aptitude and general technical knowledge. Even Section 27 of Indian Contracts
Act states any agreement in restraint of trade is void. According to judicial decision any
employer can’t prevent any employee from working with the competitor of previous employer.
Employer is entitled to put injunction to prevent misuse of confidential information. But if that
misuse has already happened, at that time injunction can’t be granted to protect the employer’s
interest, only in such cases employer is entitled for damages which go against fair competition.
Even no injunction should be granted if an employee obtained the information independently
from the market. Last few decades India witnessed a common acceptance of the concept of
‘Non- Compete Clause’ by employers, the origin of the concept can be tracked back since mid
nineteenth century.
Following instruments used to use by the employers to restrict the employees to enter into same
type of business or to join any competitor company with the important information.

 Restriction on starting a competing business;

 Restriction on working with enterprises operating in the relevant market;
 Restriction on working in the relevant geographic market;

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  Restriction on soliciting the clients of the employer;
 Restriction and in majority of cases, a complete prohibition
With these restrictions the clause also used to cover the time period after the cessation of the
employment contract.
In India this clause is regulated by the provisions of section 27 of the Indian Contract Act 1872.
But the Indian Courts have the view to treat such clauses as a concept of equity than a contract.
For better understanding, there is a need to consider the judicial precedent laid down by the
Indian Courts.

IP Indemnity
7.1 Concept of Indemnity

An indemnity is an obligation given by one party to another in a contractual relation to

compensate in terms of some defined loss. Typically, the obligation relates to a specific clause
within a wider commercial agreement e.g. within an IP licence agreement. Its chief purpose is to
appropriately allocate risk between the contracting parties – although the appropriateness of that
risk allocation will be coloured by the bargaining position of the parties. In other words

Indemnity means an acknowledgement and promise by one party to cover the potential liability
suffered by the other. 

Indemnity under Indian Contract Act, 1872

The term indemnity defined under ‘Section 124’ of the Indian Contract Act, 1872- “A contract
by which one party promises to save the other from loss caused to him by the conduct of the
promisor himself or by conduct of any other person”. So, we can see this provision incorporates
a contract where one party promises to save the other from loss which may be caused, either

i) By the conduct of the promisor himself; and

ii) By the conduct of any other person.

The Example of an indemnity clause for the above consideration would read as follows: “Mr. X
agrees to indemnify and hold harmless Z against loss or threatened loss or expense because of
the liability or potential responsibility of Z for arising out of any claims for damages.”

Why Indemnification is necessary

The inclusion of liability provisions that intend to limit the liability and exposure of parties for
certain types of claims and losses is common across business dealings and markets. It plays most
vital role in Intellectual Property regime.

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7.2 Rights of indemnity-holder

The rights of the indemnity holder are dependent on the terms of the contract of indemnity as a
general rule. Section 125 of the Indian Contract Act, 1872 comes into play when the indemnity
holder is sued i.e., under specific situation.

 The indemnity holder is entitled to recover the: if the act of indemnity holder is within the
scope of indemnifier or according to him-

 All the damages that he may have been compelled to pay in any suit in respect of any
matter to which the promise of the indemnifier applies.

For example, if a contracts to indemnify B against the consequences of any proceedings which C
may take against B in respect of a particular transaction? If C does institute legal proceeding
against B in that matter and B pays damages to C, A will be liable to make good all the damages
B had to pay in the case.

all the costs of suits that he may have had to pay to the third party provided he acted as a man of
ordinary prudence and he did not act in contravention of the directions of the indemnifier or if he
had acted under the authority of the indemnifier to contest such a suit.

In the case of Adamson vs. Jarvis [1827] 4 BING 66, Adamson was entitled to recover the
money he had to pay to the true owner of the cattle as well as any expenses incurred by him to
get a legal counsel, etc. Actually in this case Adamson  was an auctioneer who was given cattle
by Jervis. Adamson followed the instruction of Jervis and sold the cattle. But, Jervis was not a
real owner of that particular cattle. And there after the real owner filed a suit against Adamson.

Held- It was held that defendant was liable for loss of plaintiff and compel to compensate him as
per section 125 of 2nd rule.

All the sums that he may have paid under the terms of any compromise of any such suit provided
such compromise is not contrary to the indemnifier’s orders and was a prudent one or if he acted
under authority of the indemnifier to compromise the suit.

7.3 Rights of indemnifier

The rights of the indemnifier have not been mentioned expressly anywhere in the Act. In
Jaswant Singh vs. Section of State, it was decided that the rights of the indemnifier are similar to
the rights of a surety under Section 141 where he becomes entitled to the benefit of all securities
that the creditor has against the principal debtor whether he was aware of them or not. Where a
person agrees to indemnify, he will, upon such indemnification, be entitled to succeed to all the
ways and means by which the person originally indemnified might have protected himself
against loss or set up his compensation for the loss.
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The principle of subrogation i.e., substitution is founded in equitable principles. Once the
indemnifier pays for the loss or damage caused, he will step into the shoes of the indemnified.
Thus, he will have all the rights with which the original indemnifier protected himself against
loss or damage. The principle of subrogation is applicable due to both the ICA, 1872 itself and
principles of equity.

7.4 Indemnity & Intellectual Property

Indemnity for Intellectual Property infringement is a slightly newer concept, adopted by

companies of almost all sectors promising to indemnify their users, licensees, and other
customers against any third party claims on Intellectual Property infringement. Due to the ever
increasing importance of intellectual property, these companies realize the importance of
securing their intangible assets. Other than the rising phenomenon of infringement of third party
Intellectual Property rights, particularly in the field of distributing the technology products, the
reason behind this grant of indemnity by the company- indemnifier cannot be traced to any
statutory obligation, but to a simple business strategy that general public prefers products with
maximum security package.

The crux of any IP indemnification lies on which IP law is being upheld by the parties since
these laws vary from country to country. For the same reason, ‘it is very rarely that a contract
with global significance keeps its legal base at a third world country’s law, such as India or
China where IP infringement like piracy is not taken much seriously. Naturally, indemnifiers
prefer first world countries like US or UK, which not only have a well drafted IP law, but also
have an established enforcement system’. 

Further the justification of seeking indemnity from the vendor or licensor of the IP product is to
be understood. In most cases, it is logically simple that when you are selling something, you are
expected to be the owner of the same. Economically speaking though, it is to be seen that, in sale
or even perpetual license which is as good as a sale, the customer has already made total
payment for the product, and hence is entitled to protection against any excess payment as
damages in the event of it infringing any other party’s IPR.

The number of patent infringement suits between the big corporate entities keeps rising and has
been receiving global attention. Some examples are Microsoft filing patent infringement
complaints against Motorola and its Android phones, Motorola trying to invalidate Apple
patents, Nokia expanding patent lawsuit against Apple etc. Apart from this, it is to be realized
that any third party can directly sue the licensees and the customers claiming infringement of his
IPR. Under this scenario, IP indemnification comes to play a pivotal role.

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7.4.1 Need of IP Indemnity

Since most of the IP contracts are in accordance with laws wherein the damages awarded
constitute millions and billions, the common man needs to be protected against this financial
liability by way of an indemnity.

 It is highly probable that the licensor- vendor is expected by the licensee- buyer to
comply with the IP claim made; hence it is only prudent on their behalf to accept this
responsibility beforehand. 

 Taking responsibility for the protection of the customers increases the reputation of the
company- indemnifier. Thus provisions of IP indemnity can act as a stepping stone to
business expansion as well.

 The presence of an indemnity clause as a pre accepted liability also lessens the burden of
the Courts to some extent.

 The liability to indemnify compels the indemnifiers to take maximum efforts to avoid
potential third party claims; as a result it facilitates reducing the overall rate of IP
infringement

7.4.2 Patent and Indemnity

Patent indemnity allows for parties to agree to legal protection for one party if particular
situations concerning loss or breach occur. 

In case of IP indemnities, those concerning patent should be well scrutinized, and dealt with
utmost care. The reason is that the likelihood of infringement is more likely in patents than in
case of any other IPR. This is attributable to the fact that the confidentiality inherent in patent
system often makes it very difficult for the suppliers and licensors to learn about relevant patent
systems even after conducting exhaustive patent searches. 

Another reason of patent’s vulnerability to infringement is that ‘unlike a copyright or trademark,

which is violated by direct copying, a patent can be easily infringed, even innocently, without
knowledge of any third party rights. Further it is difficult to prevent a patent infringement due to
the expensive research it demands, which again will not always be successful, particularly if
overseas patent searches are required. The situation goes further out of hand because of the novel
ways of business such as online ordering processes’ , whereby it is expensive and impractical to
keep a track on products and its sale.

In cases of limited indemnity of contracts concerning products or inventions or any matter which
can infringe different forms of IP, the indemnified should beware. For reasons discussed above,
an indemnified would be wiser to seek a broad indemnity exclusively for patents, even if

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accepting limited indemnity for infringement of other IPR, in case of product or matter that may
infringe different forms of IPR.

The main fields in which IP indemnity is of relevance are in business merger and acquisition
agreements, asset purchase agreements, business entity formation agreements, patent licensing or
cross-licensing agreements, joint venture agreements, technology sharing or consultation
agreements, institutional research and development agreements, sales and distribution
agreements, franchise agreements, and in governmental contracts. 

Patent Indemnity & its Coverage

Patent indemnity coverage can be simple or complex depending on what the parties intend to
cover.  It is notable that for patent indemnity, resolution of the patent’s validity is not required
for a resolution of indemnity.  Other considerations unique to patent indemnity include the
consideration of willful patent infringement and punitive damages (availability varies by state).

7.4.3 Specifications required in IP Indemnity Clauses

The language of the indemnity clause is very crucial because Courts generally do not go beyond
the words used. In common law, strict construction is adhered to for the same.

General essentials of an indemnity clause can be put down as follows:

 A detailed specification should be given as to who exactly constitutes the indemnifier and
the indemnifier. For e.g., whether the indemnified forms the licensed entity along with its
employees, or also includes its affiliated entities etc.

 The nature of liability the indemnifier incurs to undertake against the indemnified should
be mentioned clearly. The standard broad indemnity clause states as ‘...Indemnify, hold
harmless and defend….’ In case of a limited indemnity, this language is better avoided.

 There should be a clear allocation of risk between the parties where the indemnifier
intends to enter into a liability sharing mechanism.

 Any cap on indemnity intended to be put by the indemnifier should be specifically and
conspicuously drafted. By putting a cap, the indemnifier would be monetarily restricting
his liability towards loss.

 The specific items of loss recoverable under the indemnity offered should be well drafted.
For example, either a broad indemnity may be provided which covers all of the
indemnified’s expenses including the final damages awarded, court costs, legal fees, loss
of profit etc or it may be restricted to only the actual damages.

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  The time period within which the indemnifier is to reimburse the indemnified may be
incorporated in the indemnity clause. Imposition of such a time period is hardly
practiced, however it would only secure the indemnified from having to unnecessarily
wait in order to be indemnified

 The time period for which the indemnity is in operation should be included, if such a
limitation is intended to be imposed by the indemnifier.

 The indemnifier should specify any exclusions he seeks to make in the indemnity clause
such as infringement caused by the licensee not following the instructions by the
indemnifier, modifications made in the product, use outside the specified scope etc.

 It is important to determine the country whose intellectual property law is to be upheld by

the parties, irrespective of the nationalities of the parties.

 The indemnity contract altogether should be clear and unambiguous.

7. 5 Case Studies

In Tenneco Oil Co. v. Gulsby289 the owner of a natural gas processing plant contracted with a
design and build firm, Gulsby Engi- neering, for a new plant. Prior to hiring Gulsby, the owner,
Tenneco, put the construction project out to bid and received a bid from a company that
developed a patented gas separation process. Tenneco then passed certain confidential
information received in that bid material on to Gul- sby and awarded the project to it. Gulsby
then employed the patented process at a lower price than the patent holder. The patent holder
sued both Tenneco and Gulsby for patent infringement, unfair competition and misappropriation
of confidential information. The case proceeded to bench trial against the two defendants, and
the court found defend- ants jointly and severally liable on all counts and awarded the patent
holder $835,000 in damages.

Gulsby specifically agreed to indemnify Tenneco for patent infringe- ment claims “occurring or
in any manner incident to, connected with or arising out of the work to be performed by
Contractor,” unless “Tenneco specified in writing the particular product or process [claimed to
be in- fringing].”The Texas Court of Appeals found that Gulsby was required to indemnify
Tenneco despite the fact that Tenneco appeared to be ac- tively involved in the infringing
conduct, and despite the absence of any apparent express reference to coverage for Tenneco’s
own infringement. The Court of Appeals did not apply, or even mention, strict construction
principles despite adoption in Texas of the “express negligence doctrine.”

289
846 S.W.2d 599 (Tex. Civ. App. 1993).

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7.5.1 Indian Cases & Patent Indemnity

 Madras High Court in the case of CIT v. Neyveli Lignite Corporation Ltd. [2000] 243
ITR 459, 463, where it was held as under : 

"In a contract for the design, manufacture, supply, erection and commissioning of machinery
which does not involve license of the patent concerning the machinery, or copyright of its
design, mere supply of drawings before the manufacture is commenced to ensure that the buyer's
requirements are fully taken care of and the supply of diagram and other details to enable the
buyer to operate the machines, and also to assure the buyer, that the machines will perform to the
specification required by the buyer, such supply is only incidental to the performance of the total
contract which includes design, manufacture and supply of the machinery. 

The price paid by the assessed to the supplier is a total contract price which covers all the stages
involved in the supply of machinery from the stage of design to the stage of commissioning. The
design supplied is not to enable the assessed to commence the manufacture of the machinery
itself with the aid of such design. The limited purpose of the design and drawings is only to
secure the consent of the assessed for the manner in which the machine is to be designed and
manufactured, as it was meant to meet the special design requirements of the buyer. 

The contract between the assessed and the manufacturer does not anywhere refer to any specific
patent owned by the supplier which the buyer is permitted to exploit. All that the contract
provides is an indemnity to the buyer, to protect the buyer against any action by a third party
claiming patent, trade mark or other rights in the equipment supplied.”

 Garware-Wall Ropes Ltd. vs A.I. Chopra And Anr. on 19 December, 2007 (2008) 3 MLJ
599

Court while recognising the concept of Patent indemnity observed that-

“On facts of the case, according to the appellant, the Indian Railways, while giving work, was
conversant about existence of the patent rights of the plaintiff. Therefore, in the tender document,
Railways made it abundantly clear that the product being supplied was-

(1) manufactured by Garware Wall Ropes Ltd., i.e., plaintiff, or any other manufacturer

(2) supply was to be backed up by proper indemnity by the defendant No. 1 to the Indian
Railways against all claims towards damages, cost, royalty in relation to any license that may be
necessary for manufacture and supply of the product, the subject-matter,

(3) duty to pay royalty was on the contractor, i.e., defendant.

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Meaning of all these stipulations is that not only that the Union of India wanted not to 'use the
patented product itself, but to buy it and for that purpose tender was floated and it was the duty of
the seller and supplier to abide by and be answerable to the responsibility/liability towards
royalty, license and consequent indemnity.”

7.6 Patent Insurance & Indemnification

Patent insurance is an insurance against infringement of patents and the costs associated with it.
With the increase in technological and industrial development, patents have risen substantially.

(a) Patent liability insurance which is a third party coverage enables the insured to fight against
an infringement law suit filed by a rival company. It is a kind of defensive insurance.

(b) Patent pursuance insurance also called ‘patent infringement defense insurance’ is a first party
coverage that enables the insured fight against a patent infringing company. It is also called
‘patent enforcement insurance’ and is a kind of offensive instrument to protect patents.

A patent infringement insurance generally covers legal attorney fees; damages covered,
including judgments and settlements, previous lost royalties and previous profits, interest and
costs and attorney fees assessed by the court.

In India no insurance company offers patent insurance. Only New India Assurance company has
issued a patent infringement insurance policy to an IT company. 290 This is despite the fact that
the post-TRIPS Agreement (Agreement on Trade Related Aspects of Intellectual Property
Rights) period has witnessed rapid increase in the number of patents filed and granted. There is
no reasonable explanation on offer by the Indian insurance industry which is more than 190
years old as to why no patent insurance policy is offered. That it is a high risk sector is reinforced
by the fact that a major chunk of patents is issued to pharmaceutical and IT industry. Not only
are no insurance patents applied for by the Indian insurance industry, there are also no insurance
offers on the block for patents thus ignoring this huge potential market.

Insurance & Indemnity: How different they are

Indemnity is the obligation that one party holds in paying compensation to another party that
suffered losses. A classic example would be an indemnity contract that was taken out by an
owner of an amusement park to pay compensation to any person who was injured at the park.
Rahul Sinha, Patent Insurance: A Roadmap, Journal of Intellectual Property Rights Vol 19, November 2014, pp
290

387-394

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Ex.- Indemnity contracts are also used by medical professionals, to pay compensation to any
patient who may suffer from medical malpractice.

However, Insurance is the guard against uncertain losses. An insurance policy will be taken by
an individual who wishes to guard themselves against the occurrence of a specific event and the
losses that may follow by making a periodic payment to an insurance company called an
insurance premium. In case the event occurs the insurance company will compensate the
insurance policy holder, restoring their financial standing back to the position it was before the
loss occurred. Therefore, taking out an insurance policy is essentially transferring a risk from one
party to another in exchange for a payment made.

Insurance is taken out against a variety of risks; some forms of insurance include vehicle
insurance, health insurance, life insurance, home insurance, credit insurance, etc. An example of
insurance is vehicle insurance, where in case the insurance policy holder faces an accident and
his vehicle gets damaged, he will be paid compensation for damages to his vehicle, so that his
vehicle can be restored.

Note- Insurance and indemnity are quite similar to each other and operate on similar concepts of
restoring the party that suffered a loss or injury back to their original position. The existence of
indemnity insurance contracts, which combine these two concepts, make understanding the
difference even more difficult. However, Insurance can be seen as a periodic payment that is
made to guard against any losses suffered, whilst indemnity is a contract between two parties for
which the injured party will receive compensation for losses.

The Supreme Court of India dealt with such a contractual issue in Superintendence Company of
India (P) Ltd. vs. Sh. Krishan Murgai,291in this case the question is raised that whether a post-
service restrictive covenant would come within the mischief of section 27 of the Contract Act.
The court held that such a contract was prima facie void because it was based on the object of the
restraint of trade.
Even the Delhi High Court in Foods Ltd. and Others vs. Bharat Coca-cola Holdings Pvt. Ltd. &
others292 observed, “It is well settled that such post termination restraint, under Indian Law, is in
violation of Section 27 of the Contract Act. Such contracts are unenforceable, void and against
the public policy. What is prohibited by law cannot be permitted by Court's injunction.”
The judgment of the Supreme Court in Percept D'Mark (India) Pvt. Ltd. vs. Zaheer Khan and
Anr.293 Clarify the legality of such clauses. The Court observed, “Under Section 27 of the
Contract Act (a) a restrictive covenant extending beyond the term of the contract is void and not
enforceable. (b) The doctrine of restraint of trade does not apply during the continuance of the
291
AIR 1980 SC 1717
292
1999 VAD (Delhi) 93
293
AIR 2006 SC 3426

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contract for employment and it applied only when the contract comes to an end. (c) As held by
this Court in Gujarat Bottling v. Coca Cola,294 this doctrine is not confined only to contracts of
employment, but is also applicable to all other contracts.”
In case of Alphamed v. Arriva,295Arriva stole Alphamed’s confidential documents and other trade
secrets by appointing secret detectives and used them for their business advantages. But in this
case because of lack of proof Alphamed couldn’t get actual or potential damages though its trade
secret theft by unfair means.
VPS Global v. Supreet Roy,296 in this case employee resigns to join another company and
employer suit against employee to get injunction on employee’s joining. Here, confidential
information was not defined, therefore suit was dismissed. So, inference is that, there is a need of
proper definition of confidential information in India; otherwise it is unfair to stop employees
from joining any other company. Not only that, in the contract or the memorandum the clauses of
confidential information which employee has to follow should be clearly specified.
In view of the aforesaid observations, it can be interpreted that while dealing with difference of
opinion relating to such non-compete clause under an employment agreement, the Indian courts
have regarded as the pre-termination period of the employment separate from the post
termination period of the employment. Whilst the courts have been understanding about the
application of the non-compete clause, they have marched some extra mile to make sure that
such clause supposed to have no effect after the ending of employment and have held that such
clause would fall within the mischief of section 27 of the Indian Contract Act, 1872.
However, the Supreme Court in Niranjan Shankar Golikari v. The Century Spinning and Mfg.
Co. Ltd.297 had given a broad explanation to section 27 of the Contract Act and clarified the
matter further that not all non-compete clause become useful after the termination of the
employment agreement are prima facie prohibited and held. Court held, “a negative covenant
that the employee would not engage himself in a trade or business or would not get himself
employed by any other master for whom he would perform similar or substantially similar duties
is not therefore a restraint of trade unless the contract as aforesaid is unconscionable or
excessively harsh or unreasonable or one-sided”. Therefore, in order to meet the criteria for
being enforceable by law, it is important to guarantee that restriction imposed by the employer is
logical and not harsh on the employees. It may not be out of place to specify that the restrictions
to the extent of ‘non-solicitation’ and/or ‘non-disclosure’ may be viewed as an exception to this
rule. Though the non-solicitation clause may be prima facie viewed as negative in nature, they
are valid and enforceable by law. The Delhi High Court in Wipro Limited v. Beckman Coulter
International S.A.298 held that a non-solicitation clause does not amount to a restraint of trade,
business or profession and would not be hit by Section 27 of the Indian Contract Act, 1872 as
294
Vide Supra
295
 LEXIS 24450, 2002 WL 31856951 (S.D.N.Y. Dec.19, 2002)
296
2008 (2) Bom CR 446
297
AIR 1967 SC 1098
298
131 (2006) DLT 681

152
being void. Similarly, in Mr. Diljeet Titus, Advocate v. Mr. Alfred A. Adebare and Ors. 299 the
Delhi High Court clarified that confidential information of the employer can be protected even in
the post employment period.
Protection of valuable information and trade secrets requires multi-disciplinary solutions,
because it is including intellectual property, labour and employment, privacy and data security
and commercial litigation. Moreover, different types of wrong doing is involved with it; like
theft, bribery, espionage, misrepresentation, breach of contract, inducement to breach a duty,
network attacks etc. In India, statutory provisions, apart from contract, are specific relief,
damages, arbitration and conciliation for dispute settlement, search and seize order,
precautionary impoundment.

Transfer of Technology
Defining Transfer of Technology

The transfer of technology (TOT) is regarded as “a key element for enabling developing
countries to integrate into and compete in the global economy as well as to meet their
development goals”. The UNCTAD draft International Code on the Transfer of Technology (the
draft TOT Code), in its definition of “technology transfer”, describes “technology” as
“systematic knowledge for the manufacture of a product, for the application of a process or for
the rendering of a service”, which Adoes not extend to the transactions involving the mere sale
or mere lease of goods” (UNCTAD, 1985, chapter 1, para.1.2.). This definition clearly excludes
goods that are sold or hired from the ambit of “technology”. Thus it is the knowledge that goes
into the creation and provision of the product or service that constitutes “technology”, not the
finished product or service as such.

Such knowledge should be seen as encompassing both the technical knowledge on which the end
product is based, and the organizational capacity to convert the relevant productive inputs into
the finished item or service, as the case may be. Consequently, “technology” includes not only
“knowledge or methods that are necessary to carry on or to improve the existing production and
distribution of goods and services” or indeed to develop entire new products or processes, but
also “entrepreneurial expertise and professional know-how” (Santikarn, 1981, p. 4.). The latter
two elements may often prove to be the essential competitive advantage possessed by the
technology owner.

According to Blakeney, “Technology transfer” is the process by which commercial technology is

disseminated. This takes the form of a technology transfer transaction, which may or may not be
covered by a legally binding contract (Blakeney, 1989, p. 136), but which involves the
communication, by the transferor, of the relevant knowledge to the recipient.

299
130 (2006) DLT 330

153
“WTO guideline on Transfer of Technology” defines “Transfer of technology” as “a logical
procedure that controls the transfer of any process together with its documentation and
professional expertise between development and manufacture or between manufacture sites”. It
is a systematic procedure that is followed in order to pass the documented knowledge and
experience gained during development and or commercialization to an appropriate, responsible
and authorized party. Technology transfer embodies both the transfer of documentation and the
demonstrated ability of the receiving unit (RU) to effectively perform the critical elements of the
transferred technology, to the satisfaction of all parties and any applicable regulatory bodies.

At the outset, technology transfer should be distinguished from technology diffusion. The latter
is better seen as another benefit that the transfer of technology may bring to a host economy.
This can be achieved by the fact that the introduction of a technology into a host country creates
an awareness of that technology. That awareness may spill over into the economy as a whole.

9.2 Why it is important from IPR perspective

Intellectual property rights take different forms, including patents, trademarks, copyright, and
industrial designs. In most cases, protection is awarded for a limited time period, after which the
intellectual property can be used freely by anyone. Trade secrets can also be used to protect
intellectual property, but these are not governed by IPR regulations. With respect to technology
transfer, two forms of IPRs are particularly important:

 Patents, which are used for industrially applicable products and processes, and which can
also be used for biological material such as plants, animals, microorganisms and
subcellular material like genes.

 Copyrights, which were developed to protect against unauthorized copying or

reproduction of literary and artistic works, but which are now also used for computer
programmes and databases.

Trademarks and other designations of origin are not directly related to TOT, but could be
instrumental in facilitating the commercialization of goods and services. The rationale of IPRs is
that they will stimulate innovation in that they:

 Provide an incentive to invest in inventive activity through the award of a temporary

monopoly over the right to exploit the invention commercially;

 In the case of patents, force disclosure of the protected knowledge so that it is in the
public domain and can be used freely by others in their own innovative endeavours once
the term of the patent has expired.

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Weak IPRs can act as a disincentive for foreign technology suppliers to transfer technology to a
country, but studies indicate that this may apply more to some sectors than others. For example,
IPRs are important in the chemical industry (including pharmaceuticals), but much less
important in the food and transport industries. Moreover, stronger IPRs are more important in
countries with sufficient technological capabilities for imitation: in countries where technological
capabilities are lacking, this in itself inhibits imitation; therefore, IPRs become less relevant.

Similarly, the type of technology to be transferred is important in determining the relevance of

strong IPR regimes. Where the technology can easily be imitated, IPRs become important, but
where the technology is very complex and/or relies on complementary inputs (including other
complex technologies) to function, then it will be difficult to imitate even without the protection
of IPRs.

Recent reports by UNCTAD, shows why importing and mastering technologies in developing
countries is not as easy as earlier assumed (UNCTAD, 1999a and 1998a). At an earlier stage in
the debate on technology transfer to developing countries, it was assumed that the main issue to
be resolved was the securing of access to new technology. What has become increasingly
apparent since that time is that the mere possession of technology does not result in improved
technical development or economic gain: the capacity to understand, interact with and learn from
that technology is critical. Thus, in the contemporary context, the design of policies must rely on
an understanding of the technology development process, the role of TNCs in this process, and
their interactions with local learning (UNCTAD, 1999a, pp. 196-197). Furthermore, TNCs play
an important role in the generation, transfer and diffusion of technology. This suggests the need
to consider the market for technology and the determinants of transfer.

9.3 Transfer of Defense Technology in India

Transfers of technology (ToT) have been an important contributing factor to the building of
capability in India’s defence industrial base. From as far back as the 1950s, numerous contracts
with foreign firms have enabled the production of vehicles and guns, followed by main battle
tanks and infantry combat vehicles, fighter and trainer aircraft, frigates and submarines, in the
state-run production agencies (PAs) comprising of ordnance factories (OFs) and defence public
sector undertakings (DPSUs).300 A sizeable thrust on developing indigenous defence technology
was simultaneously spearheaded by the Defence Research and Development Organisation
(DRDO) from the 1950s, although it has been constrained by a meagre budget. Despite this
thrust, however, progress towards self-reliance in defence technology has not reached the
milestones that were set apparently because global developments in defence technology
outstripped the pace at which DRDO was able to advance. 301 The Indian defence forces thus
300
Ron Matthews, Defence Production in India, New Delhi: ABC Publishing House, 1989, pp. 35–37.
301
Kevin A. Desouza, Transfer of Defence Technology to India: Prevalence, Significance and Insights, Journal of
Defence Studies, Vol. 10, No. 4 October-December 2016, pp. 31-32, available at
http://idsa.in/jds/jds_10_4_2016_transfer-of-defence-technology-to-india

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continue, as in the past, to depend on imported, globally competitive, defence systems. Given the
collusive threats from neighboring adversaries, one of which dwarfs India in economic and
military strength, India needs to have commensurate equipment to face down these threats. China
moreover is likely to possess in the future defence systems of high performance and lethality
based on technology close to the leading edge.

India’s march towards the acquisition of competitive defence technology and thus gain assured
capability against the military threats it confronts has essentially two routes. The first is
indigenous development and the second, import.302 The first route was adopted in the 1950s
when the Defence Research and Development Organisation (DRDO), Defence Public Sector
Undertakings (DPSUs) and additional Ordnance Factories (OFs) were established. 303 Despite
considerable thrust in that direction, albeit with an understandably limited budget, 304 progress
towards self-reliance in defence technology has not reached the milestones that were set. While
overall indigenous development and production has significantly increased in technology levels
and volumes over the decades, it has been offset by a faster evolution of defence technology in
the world. Consequently, the defence forces continue, as in the past, to depend on imports of
competitive defence technology systems. Today, India holds the embarrassing distinction of
being the largest importer of defence systems in the world.

The second route to acquire competitive defence technology is their import. Executed under the
rubric of ‘Transfer of Technology’ (ToT), this comprises of arrangements wherein foreign
supplier firms provide ‘technology’ for enabling the buyer to manufacture defence systems.
Since indigenous capability was limited, India has been using ToT to shore up its defence
production capabilities from as far back as the 1960s and 1970s.

Defence trade and technology, being highly controlled by a powerful few, is significantly more
vulnerable to restrictive trade practices. Foreign firms, which would, in the case of civil
technology, be expected to follow the code of conduct, have, in the case of defence systems, a
convenient justification for indulging in these restrictive trade practices.

302
Palhan, S.K. , H.C. Gandhi and Brig S. Bhalla (Retd), Defence Industrial Base 2025, New Delhi: Centre for Joint
Warfare Studies, 2010, p. 4. Collaborative arrangements form a third option which is essentially a combination of
the indigenous and import options.
303
Behera, Laxman Kumar, Indian Defence Industry – Issues of Self Reliance, New Delhi: IDSA, 2013.
304
Krishnan, Nabanita R., Critical Defence Technologies and National Security – The DRDO Perspective, Journal of
Defence Studies, Vol. 3, No. 3, July 2009, p. 92.

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