Farhang v. IIT Kharagpur- I

In an earlier post, I had written on the suit filed in a Californian District Court by M.D.Farhang and MA Mobile against IIT Kharagpur. There appears to be some confusion in the air on the facts of the case and the central issues at dispute. In this post, I’ll discuss a few salient conclusions in the Californian Court’s order of June 1, 2010.

Farhang filed a suit in the US on May 27, 2008, and IIT Kgp filed a suit sometime in August 2009. Do both suits cover the same issues? If yes, do Courts in both countries need to initiate parallel judicial proceedings? If one of the Courts can resolve all issues at dispute, shouldn’t principles of private international law kick in? (meaning thereby the other Court will have to let go of the matter respecting the principle of comity)

The Californian Court’s take on this issue is clear, but is it complete?...the Court discusses US case law on “international comity” and re-states the principle calling it “international abstention”. The Court says that instead of applying the principle of comity of nations as a factor in deciding jurisdiction, the Court must look for “true conflict”, and not merely a possibility of such a conflict.

The Californian Court goes on to justify the restatement on grounds that if “international comity” is invoked without application of mind, then any defendant in a US proceeding could file a suit in a foreign jurisdiction, invoke comity and deprive the Plaintiff from availing relief from US federal Courts. Therefore, US federal Courts must abstain from matters only under extremely limited circumstances, since they have a “virtually unflagging obligation” to exercise their jurisdiction.

To decide if the narrow window for abstention is available in a particular case, the following factors need to be considered:

(1) whether either court has assumed jurisdiction over a res,

(2) the relative convenience of the forums,

(3) the desirability of avoiding piecemeal litigation,

(4) the order in which the forums obtained jurisdiction,

(5) what law controls, and

(6) whether the foreign proceeding is adequate to protect the parties' rights. 

Mind you, this isn’t an exhaustive or mechanical list. If there is a substantial doubt that a foreign proceeding  may not resolve all contentious issues, the US Court need not even undertake the above analysis. It can assume jurisdiction over the matter directly. Fair enough, one must say. Let’s see how this principle of abstention has been applied in the case.

Following is the relevant excerpt from the Order:

"Applying this analysis to this case, the court finds substantial doubt that the Indian proceedings would resolve all of the issues in this action. In its complaint filed with the High Court at Calcutta, IIT makes the following claims: (1) IIT never entered into a valid and enforceable nondisclosure agreement (“NDA”) with Farhang; (2) IIT expended time, money, and resources into developing the disputed IP; and (3) Farhang has wrongfully detained and utilized the IP. In the Indian proceeding, IIT seeks: (a) a declaration that there is no valid NDA between IIT and Farhang; (b) a declaration that IIT is the owner of the disputed IP; (c) a permanent injunction restraining Farhang and other defendants from utilizing the IP without IIT's written permission; (d) a decree for Farhang to return the IP; and (e) damages for wrongful detention of the IP. 

Meanwhile, in the instant action, plaintiffs Farhang and M.A. Mobile Ltd. bring claims against IIT and other defendants for: (1) breach of the NDA, (2) breach of joint venture agreements, (3) breach of fiduciary duty, (4) fraud, and (5) misappropriation of trade secrets.

Even if a ruling by the High Court in Calcutta in favor of IIT on all counts could completely dispose of all of plaintiffs' claims in the federal action, there can be no doubt that a ruling by the High Court in Calcutta against IIT would leave various issues for this court to adjudicate. Therefore, there is substantial doubt that the Indian proceedings would completely resolve the issues in this action. Under these circumstances, granting a stay would be “a serious abuse of discretion.” Therefore, the court denies IIT's motion to stay this action."

On the face of it, this conclusion seems consistent with the principles of international abstention. This is so because, even if the High Court of Calcutta were to rule against IIT in the suit filed by IIT, there would remain certain outstanding issues for which there would be no remedy as far as Farhang is concerned. But this seems like an incomplete proposition...why?

The US Court does not take into account the very real possibility of Farhang filing a counter-claim against IIT in the Calcutta suit proceedings. If both IIT’s suit and Farhang’s potential counter-claim were to be consolidated and decided together, all issues could be resolved by the Indian Court.

Of course, one could say the same argument could be applied to the US proceedings as well. Also, the US suit was filed well before the Indian suit. That being the case, the other possible technicality that needs to be looked into is a strictly jurisdictional one i.e. does Farhang have a remedy in the US, specifically before the Californian Court, in the first place?

IIT seems to have raised this issue before the US Court. We’ll discuss this along with other important findings in the order in the next post. 

Indian Achievements: Indian Academic Heads MIT’s AI Lab

The world-renowned Massachusetts Institute of Technology (MIT), which is often mistakenly referred to as an Ivy League university, has named an Indian, Dr.Anant Agarwal, the Director of the prestigious Computer Science and Artificial Intelligence Laboratory (CSAIL). CSAIL is the university’s largest inter-disciplinary lab.

A passout from IIT Madras (it is not IIT Chennai!) and Stanford University, Dr.Agarwal is a Professor in the Department of Electrical Engineering and Computer Science, and is currently the leader of the Carbon Research Group of CSAIL. He will assume his position as the Director of CSAIL on July 1, 2011. Dr.Agarwal is also a founder and CTO of Tilera Corporation, which developed the Tile multicore processor.

The CSAIL is MIT’s largest inter-departmental group with over 50 research groups which focus on artificial intelligence, systems and theory. The lab has also spawned 100 technology companies (shouldn’t we understand how MIT manages to retain its position as one of the leading academic institutions, and yet shows the way when it comes to commercial application of its work? This article on MIT in The Guardian makes for an extremely insightful read on the culture that has made MIT one of the most visible symbols of America’s technological prowess.)

Dr.Anant Agarwal’s appointment as the head of one of the world’s most advanced research labs shows we don’t lack in human capital; it’s got to do more with how we encourage them and keep them happy. We congratulate Dr.Agarwal on his appointment and wish him all success! 

Stale News: IIT Kharagpur in the Dock before a US Court

I am sure most Indian readers must have already read in today’s news reports that IIT Kharagpur, the first and the oldest of Indian Institutes of Technology (the famed ‘IITs’) is staring down the barrel in a suit in which it has been arrayed as one of the primary defendants by MA Mobile Limited and Mandana D Farhang, a US-based entrepreneur. 

The case, which was filed before the Northern District of California in May 2008, concerns alleged misuse of Farhang’s invention and trade secrets by the Technology Incubation and Entrepreneurship Training Society (TIETS) of IIT Kharagpur. The US suit alleges (1) breach of the NDA, (2) breach of joint venture agreements, (3) breach of fiduciary duty, (4) fraud, and (5) misappropriation of trade secrets, by IIT Kgp.

In her suit, Farhang states that in the year 2003, MA Mobile and she had entered into an agreement with the IIT Kgp for creation of a prototype of a mobile computing application which could be used by the Indian Railways. The application, along with trade secrets and customer information, was shared with IIT Kgp for the creation of the prototype by the latter. Allegedly, IITKgp subsequently shared the trade secret and the application with IBM and Indian Railways in breach of its agreement with Farhang.  

IIT Kgp, on its part, has claimed that Farhang did not have the right to file the suit in a US Court since provisions of the California Corporations Code had not been satisfied. Reportedly, Section 2105 of the Code requires foreign corporations to obtain a certificate of qualification from the Secretary of State prior to transacting intrastate business in California. M.A. Mobile is a foreign corporation chartered under the laws of the Commonwealth of Dominica.

Further, IIT Kgp too filed a suit before the High Court of Calcutta in April 2009 claiming that Farhang was using the institute’s technology without authorization. IIT Kgp had also prayed for an anti-suit injunction whereby the foreign suit instituted by Farhang was sought to be stayed until the Indian proceedings were concluded.

The High Court of Calcutta issued an interim injunction against Farhang which prevented her from using the disputed IP during the pendency of the suit.  I haven’t found th HC’s order on Manupatra or Indian Kanoon. If any of our readers have, I request them to share it with us.

From what I have gathered, three orders have been passed by the US Court dated June 1, 2010, September 3, 2010 and September 7, 2010. We’ll discuss them in the next few posts.

Recession and Industrial Innovation Policy Planning

The general theme of the last post was to emphasize on the need to focus on evolving a long-term innovation policy which gives the industrial sector its due, without necessarily marginalizing the business services sector entirely. In urging for such an approach, I had relied upon some of the recommendations in the 2009 report of the Commission of Experts (EFI), a German Government think-tank.

Among the report's recommendations, the one that was briefly discussed in the last post was the need to finance education, research and innovation in times of recession to ensure that the economy does not retreat into a “safe” mode, which could result in an ill-equipped or inadequately equipped technology workforce.

Innovation and SMEs

To finance innovation, the report implicitly recommends the creation of a vibrant and responsive equity market to fund innovation by Small and Medium-sized Enterprises (SMEs). What is interesting is that in the literature that one has come across thus far, the pervasive opinion is that innovation is primarily churned out of SMEs (and not behemoths, although it is behemoths which typically flaunt their patent filing statistics).

In Germany, the report says, 70% of its employees work in SMEs and 43 % of all SMEs in Germany are innovative. In the report, an SME is deemed as innovative if it brings new or improved products into the market.

The report further observes that investment in innovation by SMEs is integrally dependent on the state of the economy. To ensure that such investment remains insulated from the health of the economy in some measure, the report recommends an innovation-friendly tax system. Even if an innovation-friendly tax system is put in place and an active venture capital market is promoted, how does one generate demand for the products of such innovation?

The question is, what exactly is expected of such innovation? Is innovation during recession meant to create products/processes which can kick-start the economy? Or is it meant to bring back pre-recession growth figures once the recession dies its cyclical death? Or is it meant to reduce future vulnerability to recession by creating a strong post-recession technology base? Can a single approach bring about any or all of these outcomes? I guess that would be entering the realm of a trained economist, which I am not, hence opinions are welcome.

Anyways, the report recommends a combination of topic-independent R&D support in the tax system and project-specific funding, both of which are intended for SMEs.

The University Angle

Among the other recommendations, there are two which deal with universities. The first one is about creating an attractive science/technology labour market. This came as a surprise to me because I did not expect an advanced technology regime such as Germany to have trouble attracting scientific talent. 

Besides working on qualitative development of the German education system, the report recommends creating a framework to encourage retention of home-grown talent and relaxation of immigration norms for highly-skilled foreign nationals (recently, Australia welcomed highly-skilled human resources from India under its Global Non-discriminatory Immigration Programme).

The second recommendation relating to universities was to boost university-industry interaction to “intensify and improve knowledge and technology transfer”. One of the suggested steps, which I felt was nuanced, is to avoid imposing a universally binding technology transfer framework which spell out the minutiae for all research institutions and universities.

It is probably best to lay down a common policy which encourages a culture of research accountability and incentivization, without using a straitjacketed approach that is blind to the dialectics of individual technology sectors. But there is definitely a consensus on the need for universities to play a more active role in facilitating commercial application of their own research, and not restricting themselves to merely providing skilled manpower to the applied sciences industry.

Tapping the Knowledge-intensive Services Industry

The report seeks to tap the under-utilized knowledge-intensive services industry in Germany. “Knowledge-intensive services” refer to provision of services by way of high-end technology and engineering consultancy. This is one sub-sector of the services sector which ensures that there is an area of the economy which, although “soft”, still requires highly-qualified technology professionals, as opposed to other areas such as legal, business and financial consultancy services (the so-called Anglo-saxon model).

The reason knowledge-intensive services are a relatively untapped area in Germany is probably because its business houses are globally-renowned brands for product development, be it the chemicals industry or the auto industry. Considering the fact that exports drive the product-based industries of Germany, and the fact that the Chinese low-wage model makes it difficult to compete price-wise, it is strategically important for Germany to rapidly ramp up the scale of its knowledge-intensive services.

Lessons for India

From my limited understanding, most of the recommendations in the report for the German economy seem applicable to India as well. Given the on-going discussions on the need or otherwise for the Public-Funded Intellectual Property Bill (the so-called Indian Bayh-Dole), I now see the wisdom in  the calls for undertaking a thorough study on the nature of Indian research institutions and universities, and their core-strengths and weaknesses, before introducing a cut-and-dried legal framework.

As for the industrial policy, India must look at increasing the contribution of the manufacturing sector to the GDP, which is currently hovering at around 15%. Although knowledge-intensive services already form a respectable part of the Indian services sector (since quite a few Indian arms of foreign multinationals play the role of engineering services division), it is just not enough to remain content with our role as sidekicks to product developers.

India has the natural resources to play a prominent, if not dominant, role on the global manufacturing scene. Along with China, India too has embarked on a quest for more minerals in African markets; therefore, what now needs to be scaled up along with our quest for natural resources, is the ability to produce goods for domestic and global consumption.

Today our population and its increasing panache for diverse consumption give Indian players a chance to test their manufacturing capabilities before they venture into foreign markets. Indian SMEs in particular must seize the initiative, but I think the hurdle before them is to attract engineering talent which either opts for cushy management positions in business consultancy majors, or gravitates towards non-Indian manufacturing giants.

Is there a way around this challenge? Also, what is the Indian government's policy for promotion of SMEs? We’ll ruminate on these in future posts.

The Recession- Have We Drawn Lessons for Our National Innovation Policy?

There’s no dearth of lucubration on the World Wide Web on the reasons for the Great Collapse of 2007, and possible solutions for turning around bruised economies, which are still licking their wounds.

According to the literature, one of the patterns that major economies notices as they emerged from the abysmal depths of the recession was that the services sector not only turned the corner faster than the manufacturing sector, but also helped mop up languishing overall (sustainable?) growth figures.

This was particularly true of the UK, but the reason for this could be that the services industry contributes a whopping three quarters of UK’s GDP. That said, is it possible that the UK was vulnerable to the recession in the first place precisely because it was largely dependent on the services sector (which should no more be bracketed as the “tertiary sector”, but is best relegated to a tertiary role)? May be...

The obvious underlying suggestion is that the structure of economies and their reliance on a particular sector largely decide their resilience in the face of recession. But what is to be rigorously analysed is a country’s approach to innovation policy before and after recession, because that would tell us if the country has learnt anything at all from its darkest 'peacetime' hours.

One of the oft-discussed issues in America’s public debate today is the country’s departure from its industrial/manufacturing roots, which is seen as a major unnoticed and neglected cause for the vulnerability of the US economy, besides of course chronic and systemic fiscal myopia. 

For a nation whose industrial might was single-handedly responsible for turning it into a fearsome war machine and the sole hyper-military power when it was provoked into jumping into the yawning fire of the Second World War, it is sad that its manufacturing sector is staring down the barrel today.

As is wont, the situation today has a macroscopic perspective and a microscopic one. As far as the macroscopic view is concerned, the services sector is a tempting seductress which promises returns in a geometric progression within a narrow time window and is not as infrastructure-intensive as the manufacturing sector. This makes it an easier and “softer” option for economies which do not have the political will to invest in hard infrastructure (Indian economy being a case in point).  

The microscopic view, which is corollarial to the macroscopic one, is that investment in hard infrastructure requires a highly-skilled and reliable industrial workforce, which is willing to constantly learn and adapt to newer technologies and style of functioning (this calls for industry-friendly labour laws as well). This means, besides private enterprise, the government too needs to play a huge role in creating, training and nurturing a workforce, and in chalking out a comprehensive pan-nation industrial innovation policy.

Importantly, the latter again calls for establishment of well-networked innovative institutions which have collaboration-friendly structures to combine their research firepower in good times and in times of dire need to pull out the country’s economy from doldrums. One of the countries which has such an approach at the heart of its innovation policy-making is Germany. Not-so-incidentally, Germany happens to be those rare developed economies which did not buckle under the recession to the extent that US and UK have.

How has Germany’s industrial/innovation policy helped it cocoon itself to a significant extent from the harsh effects of the recession? There is an extremely informative and insightful paper covering the theme of this post and this specific issue. The paper entitled “Can the Relative Strength of the National Systems of Innovation Mitigate the Severity of the Global Recession on National Economies?  – The Case of Selected Developed Economies” was presented by A.Baskaran and M.Muchie this April at the DIME Final Conference at Maastricht, Germany.

On Page 11, the authors of the paper enumerate what they perceive to be the strengths and weaknesses of the German system of innovation vis-a-vis its ability to mitigate the effects of recession. Some of the strengths listed therein are relevant to the post, which are as follows:

(i) In contrast to ‘Anglo-Saxon model’ of growth based on financial services (e.g. the UK) and property market, the German economy is strongly rooted in manufacturing, companies invest in long-term growth, and workers-managers relationship is based more on close cooperation;

(ii) Structural reforms in the labour market and corporate sector before the recession helped the German economy to become more competitive;

(xiii) Germany has developed FDI strategies around incentives and clusters and developed world renowned centres of excellence and developed globally recognized position as leaders in certain growth sectors such as clean technology.  Germany has also developed well recognized excellence in innovation, and has created the best environment for R&D, which continues to attract companies from abroad to work close to the leading German companies and to access the best talents in the country

The above paper apart, what is even more educational is the recommendation of the Commission of Experts (EFI) (a commission established by the German government) to the German government in its 2009 Report. Under the head aptly titled “Education, research and innovation- a particular priority in recession”, the Commission recommends thus in no uncertain terms:

“The Expert Commission suggests that in the course of implementing the second recovery package, more attention should be paid to the concerns of education, research and innovation. If this is not done, there will be a severe shortfall in the funds available in future to improve the competitive position of Germany. Currently, the German innovation system is still competitive in an international comparison. However, competition is becoming considerably more intense as other industrialised countries and some key emerging economies redouble their efforts. Germany‘s position with respect to R&I will therefore come under pressure if the level of expenditure for research and innovation is only maintained at present levels. There is an urgent need to expand education, research and innovation.”

Most of us would think that financing education, research and innovation when there is a huge liquidity crunch is not just a tall order, but may not be sound policy as well. But not Germany; the recommendation is made bearing in mind the need for skilled manpower after the dust of the recession settles. The report goes on to chart the manner in which innovation must be financed during recession to retain Germany’s competitive edge in the manufacturing sector (I will discuss the report in detail in another post).

These sentiments reveal the psyche that drives the German economy and keeps its hearths burning, when elsewhere there is a beeline outside the employment exchange. What is encouraging to note is that Germany’s vision has certainly yielded positive results for all to see. Here are a few excerpts from articles in The New York Times (US) and The Guardian (UK):

“Germany’s booming growth, and the parallel recovery in the Netherlands and Austria, whose economies are intertwined with Germany’s, is based on long-term investments in high-quality manufacturing, he said.

“These are not low-wage countries,” Mr. Monks said. “They have privileged public servants, strong employment protection laws, strong collective agreements.”

“These are not short-term, shareholder, value-driven, flexibilized economies,” he added. “Their prosperity is driven by long-term investment in technology and innovation.”

Moreover, the German government subsidized companies to keep employees on the payroll working shorter hours when order books were empty, enabling them to retain a skilled work force for the recovery.”

From an Indian point of view, the German experience is an extremely valuable lesson because our investment in infrastructure and industrial innovation is laughable and we seem to suffer from an acute invincibility complex about our services sector. Together, they make for an ominous combination and act as perfect ingredients for a brittle economy with a “soft” foundation and a glass ceiling.

If we do not draw up comprehensive realistic time-bound plans to upgrade our manufacturing skills, and to create hard valuable intellectual property in the core industries, we will find it impossible to catch up, forget keeping up, with our “friendly” eastern neighbour’s frenetic pace who now has the confidence to match the developed nations “plant for plant, road for road, dam for dam, bullet train for bullet train, submarine for submarine and fighter jet for fighter jet”.  

I will continue with this line of thought in a few more posts. 

Breaking News: Kurian Puts in His Papers as Controller General of the IP Office

The Mint today reported that Mr.P.H.Kurian, the Controller General of Patents, Designs and Trademarks has put in his papers and is awaiting relieving orders from the Appointments Committee of the Cabinet (ACC). Although the reasons for his resignation, with half of his term left, are not immediately clear, Mr.Kurian has reportedly said that he had to face the wrath of “many” for reduced number of patent grants.

All said and done, Mr.Kurian’s tenure, in the opinion of many, was a refreshingly transparent one which was peppered with systemic changes to streamline the functioning of the IP Office. His intuitive grasp of IP issues and the stakes involved only added to his dynamic style of functioning.

Mr.Kurian will apparently assume office as the Principal Secretary to the State Government of Kerala. We wish him all the very best in his new stint!

So who will be the next Controller General?

Snippets: Draft Guidelines on Reporting Serious Adverse Events in Clinical Trials

A few days ago I was in a meeting as part of the Ethics Committee of the National Heart Institute, New Delhi and it struck me that drug laws and related issues, such as clinical trials, haven’t received rigorous critical attention, barring instances where the debate on pharmaceutical patents has stirred public interest occasionally.

Even in these debates, drug laws themselves have rarely been discussed and critiqued. This led me to decide that this is an issue which is best addressed holistically along with the Great Indian Pharma IP debate, instead of compartmentalizing different aspects of the pharma business.

To start with, early this May, draft guidelines on reportage of “Serious Adverse Events” in clinical trials were proposed by the Drugs Controller General of India (DCGI) and comments were invited on the draft guidelines. Only a fortnight was allotted for submission of comments, which I think is too narrow a time-window.

Ideally, submission of comments ought to have been allowed for 2 months, which would have given stakeholders sufficient time to get their organizations moving and to come up with meaningful suggestions. Nevertheless, one hopes the DCGI is not too rigid about the deadline.

We welcome our readers to share with us their suggestions on the draft guidelines.

Image Courtesy: www.cartoonstock.com

Non-Patent Agent Lawyers: Can they or Can they Not "Practice"?

In the last post, I raised a couple of questions on the status of non-patent agent lawyers with respect to their eligibility to advise clients on issues of validity and infringement of patents. These questions were raised in light of the explanation of "practice" under Section 129 of the Patents Act, 1970.

In this post, I intend to read Section 129 of the Act along with Section 132. Section 132 of the Act is a “Savings Clause” in respect of other persons authorized to act as agents. The first obvious saving is the right of the applicant to draft and prosecute his own application and appear before the Controller.

The second saving is with respect to an advocate, who is not a patent agent, being permitted to “take part in any hearing before the Controller on behalf of a party who is taking part in any proceeding under this Act”.

If an advocate, who is not a patent agent, can appear before the Controller in any proceeding under the Act, it is but natural that he is expected to be duly instructed on the facts and issues in the proceeding, which pertain to science as well as the law.

If so, is the saving clause for advocates in Section 132 inconsistent with the explanation of practise under Section 129, which stipulates that only a patent agent can give advice, other than of a scientific or technical nature, as to the validity and infringement of patents?

An advocate, who can appear before the Controller in any proceeding, can appear in pre-grant and post-grant oppositions as well. These are proceedings which involve layered and complex scientific and legal issues, and they pertain to validity of the patent/application. Such being the case, would it make sense to say that a non-patent agent lawyer cannot advice on issues of validity and infringement of patents?

I think the sensible position to take would be that someone who is neither a patent agent under the Act nor an advocate cannot advice on legal issues/”practice” as a patent agent. This could be a plausible middle path. That said, let’s consider another situation to probe Section 132 further.

If an advocate can take part in any hearing before the Controller under any proceeding in the Act, although the savings clause in Section 132 expressly mentions only “hearing”, would it mean that an advocate’s entitlement under the Act is restricted to taking part in a “hearing”?

Can he communicate with the Controller with respect to issues which are related to the hearing? If yes, can he correspond with the Controller with respect to a hearing in a pre-grant opposition? If yes (apologies for sounding repetitive), let’s take this argument a step further.  

A pre-grant opposition is a quasi-administrative process which basically aids the process of examination of an application (courtesy UCB Farchim v. Cipla and the WIPO Standing Committee Report on Opposition Systems, December 2009). This was the reason the Delhi High Court treated the rejection of a patent application as an order passed by the Controller under Section 15, which order was hence deemed appealable before the IPAB under Section 117A.

Such being the case, a pre-grant opposition too is part and parcel of the prosecution of the application. If a non-patent agent advocate can take part in a pre-grant opposition hearing, and if he can correspond with respect to issues related to the hearing or to which the hearing pertains to, he is basically prosecuting the application, in other words, he is “practising” as a patent agent.

Is this intended by the saving clause in Section 132? I would like to know the views of better-experienced practitioners. 

"Practise" as Patent Agents: Scope and Effect of Prohibitions

Section 129 of the Patents Act deals with restrictions on practise as patent agents. It reads as follows:

(1) No person, either alone or in partnership with any other person, shall practise, describe or hold himself out as a patent agent or permit himself to be so described or held out, unless he is registered as patent agent or, as the case may be, unless he and all his partners are so registered.

(2) No company or other body corporate shall practise, describe itself or hold itself out as patent agents or permit itself to be so described or held out.

Explanation: For the purposes of this section, practise, as a patent agent includes any of the following acts, namely,—

(a) applying for or obtaining patents in India or elsewhere;

(b) preparing specifications or other documents for the purposes of this Act or of the patent law of any other country;

(c) giving advice other than of than of scientific or technical nature as to the validity of patents or their infringement.

Sub-section (1) is fairly clear in its import- unless in a partnership firm, all partners are registered as patent agents, the partners cannot collectively hold out the firm as patent agents. Sub-section (2) expressly prohibits any company to hold itself out as a patent agent. There is no leeway even if every employee of the company is a patent agent.

To the extent that a company cannot hold itself out as a patent agent (whereas a partnership firm can), the use of “person” in Section 126, which deals with patent agents, appears to be limited to natural persons alone.

The explanation to the provision is the more interesting aspect of the provision. It says that “practise” includes preparation of specification or documents even for the purposes of the patent law of a foreign country. Why does the Indian Act speak of preparation of patent application documents for a foreign patent regime? Why is the Indian legislature concerned about someone preparing a document for a foreign patent regime?

Does this mean the process of preparation of patent specifications for foreign regimes cannot be outsourced to someone who is not a patent agent within the meaning of the Act? 

The other contentious aspect is that the explanation bars even “ giving advice other than of scientific or technical nature as to the validity of patents or their infringement.” Does this mean a lawyer who is not a patent agent cannot advice a client on issues of validity or infringement of patents?

Obviously these issues of validity (except for a post-grant opposition) and infringement of patents are not argued or agitated before the Patent Office. Such being the case, does the explanation of “practise” in the Act have the effect of barring all non-patent agent lawyers from tendering legal advice on validity and infringement of patents? If advice cannot be tendered, can such lawyers argue on these issues before the Court? Isn't this a question which is to be addressed under the Advocates Act?

I am sure senior practitioners have answers to these questions, I look forward to hearing from them.

“Duly Authorized under the Law”- Another look

“Duly Authorized under the law”- this phrase in Section 107A(b) of the Patents Act, 1970 has been the topic of quite a few of my posts on this blog and elsewhere. I was unable to find another legislation which uses this exact phrase, but I did find something in the mother of all Indian laws- the Constitution- which uses a phrase that captures the spirit of “duly authorized under the law”, namely Article 265 of the Constitution.

Article 265 reads thus:

“No tax shall be levied or collected except by authority of law”

Thanks to Mihir Naniwadekar, whose mind I deeply respect, I bought one of the most venerated commentaries on the law of income tax written by the Late Shri Jamshedji Kanga and Late Shri Nani Palkhivala. In this commentary, in a short exposition on Article 265, it is stated that the import of the Article is that “not only the levy but also the collection of a tax must be under the authority of some law”.

“Law” apparently, has been interpreted to mean law enacted by a competent legislature, and cannot include an executive order, or a rule without express statutory authority, or a custom. This seems to have been the position taken by the Indian Supreme Court in Ghulam Hussain v. State of Maharashtra, Krishi Utpadan v. Shree Mahalaxmi and State of Kerala v. Joseph.

I am yet to give these judgments a proper reading, but if the authors of the commentary, whose legal acumen and sagacity needs no introduction, are to be assumed as being true to the legislative intent, I think the interpretation of “except by authority of law” may apply to “duly authorized under the law” too.

If this be so, it would be extremely far-fetched to suggest that Section 107A(b) speaks of a "soft" principle such as international exhaustion...