Friday, February 23, 2018

Towards Evolving a Culture of Damages: Analysing the Christian Louboutin Verdict of the Delhi High Court

On December 12, 2017, the Delhi High Court delivered a crisp 21-paragraph ex parte decree against the defendants in a suit for infringement of the “Red Sole” trademark instituted by the global luxury retail brand Christian Louboutin. Apart from granting injunctive reliefs to the brand owner/plaintiff against the defendants and declaring the Red Sole trademark well-known, the Court also awarded damages to the plaintiff to the tune of INR 1,63,000, and INR 8,63,790 as costs. While the judgement warrants analysis with respect to the Court’s reasons for declaring the Red Sole mark well-known, my primary interest is in understanding the Court’s approach to and basis for grant of damages and costs, an aspect of IP litigation I had discussed in brief almost two years ago.

The discussion on principles that govern award of damages begins at Paragraph 18 of the judgement, which extracts, for the most part, portions of a Division Bench’s judgement in Hindustan Unilever Limited Vs. Reckitt Benckiser India Limited (2014). The DB judgement in turn discussed the principles laid down in two English decisions, namely Rookes v. Barnard, [1964] 1 All ER 367 and Cassell & Co. Ltd. v. Broome, 1972 AC 1027. Both these English decisions, in effect, (a) clarified the object of award of exemplary/aggravated/punitive damages, (b) identified the circumstances for and condition precedents to grant of such damages so as to avoid ad hocism, and (b) diluted the vindictive/retributory character of such damages by underscoring the fact that ultimately the award benefited a private party.

While Rookes identified the categories of cases where award of exemplary damages was justified, the specifics of the considerations and their nuances were educatively articulated in Cassell. For instance, Cassell cautioned that in order to establish a case for exemplary damages, it wasn't sufficient for the plaintiff to merely peg his case under the categories identified in Rookes. Further, the first order of business in assessing damages was to compute actual or compensatory damages and then ask oneself whether such damages were adequate compensation to the plaintiff in light of the defendant’s conduct and the benefit it had accrued to the latter. Only when this question was answered in the negative, it would be appropriate for the Court to award exemplary damages.

Importantly, in assessing the adequacy of the exemplary damages and its intended deterrent character, the total sum i.e. damages inclusive of actual and exemplary components, must be considered, and not the exemplary component alone. In other words, computation of exemplary damages may be construed as an exercise in rounding off the final sum to an extent that the figure has a punitive punch to it, as opposed to a mere pinch. Clearly, these principles are meant to remind Courts of the nature and purpose of exemplary damages and temper any misplaced sense of retribution. In this regard, the clarification that damages remain a civil remedy, and not criminal, even when exemplary, is profound.

Notwithstanding the fact that the Hindustan Unilever judgement was delivered by the DB in the backdrop of a suit for commercial disparagement, the stellar principles distilled by it, with approval, from the two English decisions, lend themselves to general application to civil suits. Further, the DB’s express disapproval of the approach adopted in Times Incorporated v. Lokesh Srivastava makes Hindustan Unilever the new standard to be observed in award of exemplary damages, which is perhaps a banal observation as on date given that the judgement was delivered in 2014. One just hopes that the spirit of rigour and caution which typify this standard reflect in every suit where damages are awarded.

In the facts of the Christian Louboutin case, the Court did not award exemplary damages. Perhaps, the facts of the case did not warrant such an award, and to precisely drive home this point to the Plaintiff the Court chose to extract Hindustan Unilever. That being said, the computation of actual damages by the Court is based on quite a few assumptions, whose basis is unclear. Extracted below is Paragraph 19 of the judgement where computation of damages was undertaken by the Court based on affidavits filed on behalf of the Plaintiff:

19. As regards the relief of damages and costs, an affidavit has been filed by the Constituted Attorney of the plaintiff and considering the downloaded copies of facebook post of defendant No.5 exhibited as Ex.PW-1/28 (colly) it can safely be held that the defendants No.3 and 5 are carrying on the business in the infringing goods for at least 15 months. 23 and 22 pairs of infringing shoes have been recovered from the premises of defendant No.3 and 5 respectively which can be sought for in any given month of the year.

As per the independent Investigator, the pair of shoes from the shop of defendant No.3 was bought for ₹700/- and from the shop of defendant No.5 for ₹1,795/-. Thus, considering the turnover of defendant No.3 as ₹2,41,500/- for 15 months and that of defendant No.5 for ₹5,92,350/- and taking the margin of profit being 25% on the illegal turnover, the profit earned by defendant No.3 would be ₹15,093/- and that of defendant No.5 would be ₹1,48,088/-.”

Although this was an ex parte proceeding, perhaps the Court could have considered examining the Plaintiff’s Constituted Attorney and the “independent investigator” whose affidavits were relied upon for computation of damages. Further, since 23 and 22 infringing pairs of shoes were recovered from the premises of the Defendant No. 3 and Defendant No. 5 respectively, the Court assumed that the Defendants would have sold such numbers in any given month of the year. If only 10 infringing pairs each had been recovered, would the Court have treated these figures as the quantum of monthly infringing sales by the Defendants? The Court has also assumed the profit margin of the Defendants to be 25%, the basis for which has not been articulated in the decision. An ex parte proceeding may lack the adversarial push-back from the absent party, but that does not give the Court greater latitude with its assumptions either for or against the absent party or the party which is present. Or does it? Which takes us to a different, but important question of how does a Court render a balanced verdict in an ex parte proceeding. This is an issue I will address in a later post.

Coming back to the decision, while the DB’s exhortations on exemplary damages were perhaps not relevant to the case at hand, the underlying rigorous approach to award of damages advocated by the DB was certainly relevant, which, some might say, does not reflect in the Court’s application to the facts of the case. 

Sunday, April 2, 2017

The Shreya Singhal Judgement and Intermediary Liability: What is the Correct Legal Position?

About a week ago, on March 24, 2017, I was part of a panel discussion organised in New Delhi by the Centre for Communication Governance of NLU Delhi to commemorate the Shreya Singhal judgement. Since I led the team which challenged the intermediary liability regime on behalf of the Internet and Mobile Association of India as part of the batch of Shreya Singhal petitions, my views were sought on the actual impact of the judgement on intermediary liability regime in the two years that have passed since the verdict. In this post, I will expand on the views I expressed in the panel discussion on the legacy of Shreya SinghalOn a different note, those interested may read here the storified version of my live updates on Twitter on the arguments in Shreya Singhal.

In April 2015, I had written that while the judgement was certainly a welcome and necessary step forward in preserving the democratic nature of the internet and to ensure that unconstitutional limitations were not imposed on exercise of free speech and expression citing the nature of the medium, the Supreme Court did miss a historic  opportunity to strike a more comprehensive and nuanced position in so far as intermediary liability was concerned. This is evident from the cursory manner in which the Supreme Court dealt with the challenge to Section 79(3)(b) of the Information Technology Act, 2000 and Rule 3 of the Intermediary Guidelines, 2011. The entire discussion relating to these provisions is limited to the last six paragraphs of the decision i.e. Paras 112-118, apart from the holding in Para 119(c). The analysis of the parent provision i.e. Section 79(3)(b) itself is to be found only in Paras 116 and 117.

In Para 116, the Court observed that in contrast to the take-down mechanism under Section 79(3)(b), blocking of content on websites under Section 69A of the Act was possible (a) through issuance of a reasoned order by a Designated Officer applying the procedural safeguards provided under the Act and the 2009 Rules or (b) under the order of a competent court directing the Designated Officer to block a website or content on a website. Importantly, the Court noted that under Section 69A, unlike under Section 79(3)(b), an intermediary was not expected to adjudicate on blocking of content under the provision. This led the Court, in Para 117, to read down “actual knowledge” under Section 79(3)(b) to mean receipt of a Court order directing the intermediary to expeditiously remove or disable access to content. To this extent, the judgement provided some much-needed respite to intermediaries who were caught in the crossfire between the issuer of the notice and their users to whom they were bound by the terms of use of their portals.

However, what is pertinent is that in reading down what constitutes ‘actual knowledge’, the Court did not expressly state in its analysis that receipt of or constructive notice of a notification of an appropriate government or its agency too would amount to actual knowledge. The reference to government notification is to be found at the end of Para 117 and that too in the context of Article 19(2). Extracted below is the relevant excerpt:

Also, the Court order and/or the notification by the appropriate Government or its agency must strictly conform to the subject matters laid down in Article 19(2). Unlawful acts beyond what is laid down in Article 19(2) obviously cannot form any part of Section 79. With these two caveats, we refrain from striking down Section 79(3) (b).”

Extracted below is the conclusion of the Court in Para 119(c):

“(c) Section 79 is valid subject to Section 79(3)(b) being read down to mean that an intermediary upon receiving actual knowledge from a court order or on being notified by the appropriate government or its agency that unlawful acts relatable to Article 19(2) are going to be committed then fails to expeditiously remove or disable access to such material. Similarly, the Information Technology “Intermediary Guidelines” Rules, 2011 are valid subject to Rule 3 sub-rule (4) being read down in the same manner as indicated in the judgment.”

It could be inferred, based on the language of both excerpts, that receipt of or constructive notice of a notification of an appropriate government or its agency too would amount to actual knowledge. That being said, the further observation that Orders of the Court and Government Notifications must strictly conform to subject-matters laid down in Article 19(2) and that unlawful acts beyond what is laid down in Article 19(2) obviously cannot form any part of Section 79, has given rise to three different interpretations:

1.       Interpretation 1: Since Court Orders and government notifications must conform to Article 19(2), it must obviously only relate to content that attracts Article 19(1)(a). Therefore, receipt of court order or government notification as actual knowledge is a safeguard that applies only to content which falls under Article 19(1)(a). The consequence of this is that mere cease and desist notices would continue to constitute actual knowledge in relation to content which falls outside the ambit of Article 19(1)(a). This defeats the very ratio of the Supreme Court which was to not put the intermediary in the position of an adjudicator of the lawfulness of any content.

2.       Interpretation 2: Since, according to the Supreme Court, unlawful acts beyond what is laid down in Article 19(2) obviously cannot form any part of Section 79, the very applicability of Section 79 and the immunity granted thereunder to intermediaries does not extend to any unlawful act which falls outside Article 19(2). This obviously exposes intermediaries to legal action to unlawful acts which fall outside the ambit of Article 19(2) despite them playing the limited role of intermediaries.

3.       Interpretation 3: Court orders or government notifications constitute actual knowledge in all cases and in relation to all kinds of content. Where the content is relatable to Article 19(1)(a), the limitations and safeguards of Article 19(2) kick in and apply to Court orders as well as Government notifications.

In my view, the third interpretation is perhaps the most faithful to the language and intent of Section 79, as well as to the Supreme Court’s ratio behind reading down the meaning of actual knowledge and introducing Article 19(2) in the context of free speech. 

Sunday, March 26, 2017

It’s been almost a year…

It’s been almost a year since I last wrote here, and to say that this period has been “eventful” would be an understatement. After spending seven years in the profession as a litigator in a law firm (which was my first ever job), and dare I say having earned my stripes, I finally went independent as an arguing counsel late last June. These eight months of “independence” have been hectic in a good way and they have taught me quite a few things about myself and the profession.

For instance, despite having been part of a law firm setup for well over half a decade, I have come to realize that my conscious decision to not start a firm of my own and instead opt for a Chamber practice as an arguing counsel appears to have been a prudent one given that running a firm is perhaps more akin to running a business, in that it demands your attention 24*7*365. The significant managerial and administrative responsibilities that come with running a firm would have left me with little or no time to read widely and deeply on the law and outside of it on areas which interest me such as history, politics and economics, all of which I believe add to the practise of an arguing counsel. 

Importantly, the skill set needed to successfully run a law firm, I think, is very different from the one needed to be a good litigator or counsel. One perhaps needs to be a “systems” guy to manage a firm, whereas the practice of an arguing counsel is relatively more of a solo act. That’s not to say that you don’t need the support of a committed team to succeed as an arguing counsel. All I am trying to say is that there may be several gifted individuals who are capable of running a firm as well as appearing in Court day in and day out without there being a dip in their performance, but I don’t consider myself one of them. Therefore, given my love of the law and the Courtroom and my commitment to give them my all, I chose not to experiment with running a firm, and instead decided to focus on honing my craft as an arguing counsel.

The other thing I learnt was that, as an arguing counsel while you can have your areas of core competence, in India you are expected to go beyond your comfort zone(s) because after a point of time, what matters and is valued is your ability to quickly understand the broad framework of a new area of practice and the nature of the forum, assimilate the facts of a case and the issues at play, apply the legal framework to the case and articulate it in a lucid and convincing manner to the forum. In a nutshell, you can or are perhaps expected to be a jack of some and master of a few without being perceived as spreading yourself too thin. Therefore, adaptability at short notice (sometimes barely an hour’s notice) is something you pick up as an arguing counsel.

While one could go on and on, to cut a long story short, each day as an arguing counsel brings with it a unique experience and the opportunity to learn from tremendously gifted peers, regardless of which side they are on. Hopefully, I have a long way to go and don’t stop learning. I certainly hope to frequently share with the readers whatever I learn. 

Wednesday, April 27, 2016

Significance of Framing an Issue of Trademark Invalidity under Section 124 of the Trademarks Act, 1999

In the last post, I discussed the purpose and import of framing of issues in a civil suit under Order 14 of the Code of Civil procedure. I took the view that the framing of an issue under Order 14 does not tantamount to the Court taking a position with respect to the contentions of parties on a material question of fact or law. It is a mere act of charting the trajectory and contours of the trial so that the progress of the trial is not waylaid by irrelevant or immaterial issues which have no bearing on the adjudication of the rights and liabilities of the parties. 

The question that I shall address as part of this post is whether there is a difference between the framing of an issue under Order 14 of the CPC and framing of an issue with respect to the invalidity of a trademark registration under Section 124(1)(a or b)(ii) of the Trademarks Act, 1999. Under the said provision of the Trademarks Act, one of the condition precedents for the grant of a stay on a suit for trademark infringement is that a Court must form a prima facie opinion that a party’s contention regarding the invalidity of the other party’s trademark registration is tenable. Should such an opinion be formed, the Court shall raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the challenging party to apply to the IPAB for rectification/removal of the registered trademark.

This brings out the first distinction between an issue framed under Order 14 of the CPC and an issue framed under Section 124 of the Trademarks Act. While an issue under Order 14 is framed to merely identify material propositions of law or fact on which the parties differ so that the suit may be determined, an issue framed under Section 124 goes a step further because it requires the Court to form a prima facie opinion of the tenability of the contention of trademark invalidity. In other words, while under Order 14 a Court need not and cannot express its prima facie opinion on the strength of the parties’ contentions, it must necessarily do so under Section 124 on the question of trademark invalidity.

Secondly, it follows that in forming such a prima facie opinion under Section 124, the Court has to give reasons for holding in favour of either party, which is the settled law with respect to the standard of reasoning expected from prima facie findings. Although the Delhi High Court in its Full Bench decision in Data Infosys v. Infosys Technologies does not expressly endorse this view, a reading of Paragraphs 31 and 32 of the judgement reflects the Court’s implicit endorsement of the need for reasoning in assessing tenability.

Thirdly, while under Order 14 issues are framed when the stage arrives, an issue under Section 124 may be framed even before the stage of framing of issues for trial. This has been clarified by the Delhi High Court in Data Infosys. Extracted below is the relevant excerpt from Paragraph 31 of the judgement:

"31......The court is of the opinion that Parliamentary intendment is clear that if at the stage of filing of the suit, a rectification application is "pending" before IPAB, there is no choice for the court, but to adjourn the infringement suit. However, if no such application is pending, the court which is later approached with an infringement suit (which "tries" it) has to appraise prima facie tenability of the invalidity plea, whenever taken. It could be urged even by way of amendment. Nevertheless, there cannot be an automatic stay, in view of the express phraseology of Section 124 (1) (ii) which mandates exercise of discretion. To postpone the consideration at the stage of framing issues would be a narrow interpretation, undermining the broad basic distinction between the two contingencies envisioned by Section 124 (1) (b).

Finally, the consequence of an issue framed under Order 14 is vastly different from that of an issue framed under Section 124. While an issue under the former merely captures an aspect of the dispute on which evidence must be led by the parties in trial and judgement must be pronounced by the Court ultimately, an issue under Section 124 decides the very progress of the suit since if the Court does frame an issue of invalidity post a prima facie analysis, the inevitable consequence is a stay on the suit for infringement (unless the party challenging the trademark registration fails to approach the IPAB for rectification within three months from the framing of the issue).

Therefore, it is evident that not only is the object of Order 14 different from that of Section 124, the standard and rigour of analysis called for under the latter is significantly higher than the former.

In the next post, I will discuss a few more aspects of Section 124. 

Tuesday, April 26, 2016

What is the Purpose and Significance of framing of issues in Civil Suits?

Framing of issues in a civil suit seems like a routine thing and perhaps this is why its actual purpose and significance is sometimes lost or misunderstood in the “routine” of practice. Once in a while it helps to take a step back and ask oneself the true meaning of a certain procedure which is taken for granted. Setting aside preconceived notions as to the object of and procedure for framing of issues, let’s try to cull it out from Order 14 of the CPC.

The title of the Order reads “Settlement of Issues and Determination of Suit on Issues of Law or on Issues Agreed Upon”. Therefore, a suit is determined based on issues of law or other issues agreed upon by parties in a suit. But what is an “issue”? Although the CPC does not define the term, sub-rule 1 of Rule 1 of Order 14 says that issues arise when a material proposition of fact or law is affirmed by one party and denied by the other. In other words, both parties must disagree on a material proposition of fact or law.

Additionally, the Evidence Act also defines “Facts in issue” to mean and include any fact which, either by itself or in connection with other facts, has a bearing on a right or liability asserted or denied in a suit. The Explanation to the definition further says that when a Court records an issue of fact under the CPC, the fact to be asserted or denied in response to such as issue, too would be treated as a fact in issue.

As to what constitutes a material proposition giving rise to an issue, Sub-rule 2 of Rule 1 states that material propositions are those propositions of law or facts which a plaintiff must allege in order to show a right to sue or a defendant must allege in order to constitute his defence. Simply put, a material proposition is one which advances a party’s case factually or legally. Sub-rule 3 mandates that each material proposition on which the parties disagree shall be framed as a distinct issue. Therefore, it could be said that propositions of fact or law which do not further a party’s case are not material and therefore ought not to be framed as issues. However, what is the consequence when a proposition of fact or law, although material, is not framed as an issue despite the parties being at variance with each other?

On this, the Supreme Court has held that non-framing of an issue does not vitiate the proceedings as long as the pleadings of parties bear out that the issue exists and both parties have led evidence at trial to prove their respective contentions on the issue. In other words, a Court can rule on an issue even if it has not been specifically framed, so long as it is material to the determination of the suit.

How does a Court go about framing an issue? Sub-rule 5 of Rule 1 lays down the procedure for this. It says that at the first hearing of a suit, the Court shall, after reading the plaint and the written statement, and after examination under Order 10 Rule 2 and after hearing the parties or their counsels, ascertain upon what material propositions of fact or law the parties are at variance, and shall thereupon proceed to frame and record the issues on which the right decision of the case appears to depend. What does this mean? It simply means that a Court shall understand the respective contentions of parties based on their written pleadings and oral submissions (both being pleonasms) and distil only those propositions of fact and law on which the parties differ and which are “material” for the adjudication of the suit. It is to be understood that the materiality being referred to in sub-rule 5 does not mean evaluation of the tenability of the contentions of parties on factual or legal propositions. It simply refers to testing an issue for its relevance to the determination of the case.

For instance, in a suit for patent infringement, if there is no dispute between the parties as to the ownership of the patent by the plaintiff, there is no point in framing an issue on it since the parties are not at issue on the question of ownership. Therefore, the question of ownership is not a material proposition on which the parties disagree. If, however, in a given case the plaintiff claims to be an exclusive licensee of the patentee and the defendant disputes the assertion on factual and legal grounds, the maintainability of the plaintiff’s action against the defendant has to be framed as an issue (under the Patents Act only a patentee or the exclusive licensee may institute a suit for infringement). Clearly, the issue is material to the enforcement of the patent and hence the adjudication of the suit.

The procedure of framing of an issue needs to be understood with clarity since sometimes there is a tendency to read more into the mere framing of an issue under Order 14 than is warranted. Framing of an issue under Order 14 does not tantamount to the Court taking a position with respect to the contentions of parties on a material question of fact or law. It is a mere act of charting the trajectory and contours of the trial so that the progress of the trial is not waylaid by a slugfest on irrelevant or immaterial issues which have no bearing on the adjudication of the rights and liabilities of the parties. A good decision to read on framing of issues is Makhanlal Bangal v. Manas Bhunia which although delivered by the Supreme Court in the context of the Representation of the People Act, 1951, is relevant since the procedure under the CPC applies to the statute.

Having discussed the procedure and significance of framing of issues under Order 14 of the CPC, in the next post I will compare and contrast it with the framing of an issue under Section 124 of the Trademarks Act in relation to the invalidity of a trademark registration.

Friday, April 22, 2016

Evolving a Culture of Damages

On the first of this month, I had the opportunity to address IP academics and researchers as part of NLU Delhi’s Fifth Annual IP Teaching Workshop on criminal law and intellectual property. During the course of my talk, I happened to touch upon certain aspects of civil IP litigation, in particular the issue of damages in suits for IP infringement. In this post, I shall share the gist of my talk on the topic.

In suits for IP infringement, while parties routinely duke it out on interim injunctions and other interlocutory reliefs, the enthusiasm and appetite for earnest and expeditious prosecution of trial is largely found wanting. But then I guess this could be said of civil litigation in India in general, with contractual litigation being a possible exception to this norm. Perhaps an attitudinal change to civil litigation may be brought about if Indian Courts evolved a rigorous culture of damages. After all, if parties know that they are bound to recover their legal costs and more should they succeed, there is no reason to assume that their vision and legal strategy will not go beyond the T20 round of interim reliefs. So how does one bring about a culture of damages?

I believe that the best of judicial outcomes are the product of sound assistance from the Bar. Therefore, if parties, through counsels, lead cogent evidence on damages by practically applying the various theories of damages, instead of merely parroting a handful of oft-quoted principles or blindly reproducing their pleadings, Courts might find it easier to award damages on a rational basis. In the absence of hard evidence or a reasoned basis, a Court has no other option but to award an arbitrary and nominal figure or nothing. More often than not, evidence affidavits of parties contain very little by way of explanation and evidence for the damages sought. It is erroneously assumed that the evidentiary burden on parties is limited to proving their respective substantive contentions on validity and infringement of a right, even when damages have been prominently sought as one of the reliefs in the suit.

It is almost as though Section 12 of the Evidence Act, 1872 does not exist. According to the provision, in suits in which damages are claimed, any fact which enables the Court to determine the amount of damages which ought to be awarded, is relevant. And relevant facts on the relief of damages have to be proved by the party claiming it. One decision which discusses damages in some detail in the context of copyright infringement is IPRS v. Debashis Patnaik by the Delhi High Court. This judgement is a must-read since it contains a fair degree of discussion on nominal, compensatory and exemplary/punitive damages based on a host of decisions from the UK, US and a few Indian decisions. That said, the reality is that such judgements aren’t the norm and this needs to change. One possible reason as to why our damages jurisprudence hasn’t matured much is because our law schools do not equip students with the empirical tools they need to apply theories of damages to the factual matrix of a case. It would help if IP practitioners, academics and researchers could come together to find workable solutions for such practical challenges.

Comments and suggestions are welcome.

Thursday, March 31, 2016

Delhi High Court Rules on the CCI’s Jurisdiction over Patent-related Market Abuse

This is my first post of the year and I am happy that I get to start on a positive note. Yesterday i.e. March 30, 2016, Justice Vibhu Bakhru of the Delhi High Court delivered a 161-page decision in a batch of Writ Petitions wherein the central issue before the Court was the jurisdiction of the Competition Commission of India (CCI) on abuse of dominant position flowing from ownership and exercise of patent rights. Since I was part of the team which worked on the matter, I will not comment on the facts of the case. That said, one wouldn’t be wrong in saying that the Court’s findings on certain questions of law are significant milestones in the evolution of Indian Intellectual Property and anti-trust jurisprudence.

On a personal note, I can safely say that the Court’s findings on the interplay between (a) the jurisdictions of a civil court seized of a suit for patent infringement, (b) the Controller of Patents under the compulsory licensing mechanism (Section 84 of the Patents Act) and (c) the Competition Commission of India, resonate with my analysis in several posts in this blog, which were subsequently discussed by the Centre for Internet and Society. In fact, I had undertaken a comprehensive analysis of the statutory allocation of responsibilities between civil courts, Controller of patents and Competition Commission in my paper “Patents and Competition Law: Identifying Jurisdictional Metes and Bounds in the Indian Context” which was submitted last year for publication in the National Law School of India Review (NLSIR) and will hopefully be published in the next few days. This paper is based on my talk delivered last May in the 8th National Symposium on Competition Law at the National Law School, Bangalore.

Extracted below are a few excerpts from the paper:

“Abstract
The primary object of this article is to understand the relationship between patent rights and competition law under the existing Indian legal framework. It has become imperative to elucidate the legal position on the interplay between the two, in light of growing antitrust concerns arising out of the exercise of patent rights. The Author has employed conventional principles of statutory interpretation to the relevant provisions of the Patents Act, 1970 and the Competition Act, 2002 to arrive at his conclusions, with Expert Committee Reports playing a corroborative role, primarily because the nature of enquiry undertaken in this article is predominantly legal and not policy-related. Additionally, this is due to the fact that there is a lack of guidance on the issue from Indian Courts.

1. INTRODUCTION
Intellectual Property Rights (IPRs) and Competition law are usually perceived as sharing an uneasy relationship given their seemingly contrasting goals. However, to pit one against the other without qualifications and riders may not do justice to the nuances of their respective natures, roles and goals. The system of IPRs is premised on the assumption that grant of exclusive rights for a limited term is desirable to promote dynamic competition, which pushes the envelope of innovation and thereby contributes to enlarging the basket of choices available to consumers. In other words, in theory, incentivising innovation through IPRs elevates the level of competition from static to dynamic, which is in contrast to the adversarial perception of IPRs and competition law. That being said, in practice, even the most stringently regulated right is susceptible to abuse at the hands of a determined and motivated right owner to the detriment of healthy competition. This necessitates the existence of a safety valve in the form of competition law.

Simply put, the goal of competition law with respect to IPRs is to ensure that the said species of rights are exercised within the limits prescribed by law and in a manner which is beneficial to consumers and which promotes competition. Therefore, an IP owner runs into conflict with competition law only in the event of a transgression in his capacity as an IP owner if such transgression distorts competition. The validity of this general proposition in the Indian context will be examined and tested in specific relation to patent rights in the ensuing portions of this article. The aim is to ascertain if the Competition Act, 2002 (hereinafter referred to as “the Competition Act”) has indeed been vested with the power to check restrictive and abusive trade practices resorted to by a patentee, and if so, to what extent.

6. CONCLUSION

IP statutes, without a doubt, provide for internal corrective mechanisms to address inequities arising out of non-use or abuse of IP rights. However, the scope of analysis undertaken under these mechanisms is limited to verification/examination of achievement of the specific objectives of IP statutes. In other words, these mechanisms lack the sweep and depth of a market-based assessment of the actions of an IP owner under the Competition Act. No single IP regulator, be it the Controller of Patents or the Copyright Board, is charged with the duties of the Commission as reflected in Section 18 of the Competition Act, or is vested with the vast powers of the Commission to deal with market mischief. Therefore, given that the specific object of the Competition Act is to foster sustainable competition in the market, protect the interest of consumers and to ensure freedom of trade, the Competition Commission must be allowed to fulfil its mandate unhindered.”