tag:blogger.com,1999:blog-59499225296311804072024-03-14T11:44:41.346+05:30The Demanding MistressI write here primarily on Civil commercial litigation. Follow @jsaideepak on Twitter for updates. Subscribe to thedemandingmistress@googlegroups.comJ.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.comBlogger410125tag:blogger.com,1999:blog-5949922529631180407.post-2952633761482721222020-05-11T20:58:00.000+05:302020-05-11T21:01:20.105+05:30Guest Post: Gillette Defence in India<div dir="ltr" style="text-align: left;" trbidi="on">
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<span lang="EN-GB" style="color: black; font-size: 11.0pt; line-height: 150%;">Here's a Guest Post on the
application of Gillette Defence in India by Avinash Kumar Sharma, a litigator from
the High Court of Delhi:<o:p></o:p></span></div>
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<span lang="EN-GB" style="color: black; font-size: 11.0pt; line-height: 150%;">The concept of a Gillette
Defence was put forth by Lord Moulton in the case of <a href="https://academic.oup.com/rpc/article/30/18/465/1580661"><b><i>Gillette
safety razor company v. Anglo American Trading Company Limited</i></b></a> in
the year 1913. The concept kicks in whenever a defendant in a suit for patent
infringement takes the plea that the product or process implemented by it is
covered by prior art. It is based on the premise that there can be no
infringement of a patent whose invention is covered by a lapsed patent or an
invalid patent. In fact, enforcement of such a patent would amount to
encroaching on the realm of commons and granting monopoly over it.<u1:p></u1:p><o:p></o:p></span></div>
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<span lang="EN-GB" style="color: black; font-size: 11.0pt; line-height: 150%;">Terrell on the Law of
Patents has summed up Gillette Defence as follows:<o:p></o:p></span></div>
<u1:p></u1:p>
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<span lang="EN-GB" style="color: black; font-size: 11.0pt; line-height: 150%;">"<i>Infringement not
novel" (Gillette defense) Since no relief could be obtained in respect of
an invalid patent, if the defendant could prove that the act complained of was
merely what was disclosed in a publication which could be relied on against the
validity of the patent, without any substantial of patentable variation having
been made, he had a good defense. This is the so-called Gillette defense arising
out of the world of Lord Moulton in Gillette Safety Razor Co. VS. Anglo
American Trading Co. where he said: "I am of the opinion that in this case
the defendant's right to succeed can be established without an examination of
the</i> <i>terms of the specification of the plaintiff's letters patent. I
am aware that such a mode of deciding a patent case is unusual, but from the
point of view of the public it is important that this method of viewing their
fights should not be overlooked. In practical life it is often the only
safeguard to the manufacturer. It is impossible for an ordinary member of the
public to keep watch on all the numerous patents which are taken out and to
ascertain the validity and scope of their claims. But he is entitled to feel
secure if he knows that that which he is doing differs from that which has been
done of old only in non- patentable variations such as the substitution of
mechanical equivalents or changes of material, shape or size. The defense that
'the alleged infringement was not novel at the date of the plaintiff's letters
patent,' is a good defense in law, and it would sometimes obviate the great
length and expense of patent cases if the defendant could and would put forth
his case in this form, and thus spare himself the trouble of demonstration on
which horn of the well-known dilemma the plaintiff had impaled himself,
invalidity or non-infringement."</i><o:p></o:p></span></div>
<u1:p></u1:p>
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<span lang="EN-GB" style="color: black; font-size: 11.0pt; line-height: 150%;">It appears that this
defence was invoked and endorsed for the first time in India in the case
of <a href="https://indiankanoon.org/doc/424262/"><b><i>Ravi Raj Gupta v.
Acme Glass Mosaic Industries</i></b></a><b><i>. </i></b>In the said
case, the principal defence invoked by the defendant was that it was using
a well-known process for manufacturing tiles, which was covered by a lapsed
patent. Holding that the patent sought to be enforced was <i>prima
facie </i>not an invention within the meaning of Section 2(j) of the
Patent Act 1970 in view of the defence, the Court refused to grant the
Plaintiff interim injunction.<u1:p></u1:p><o:p></o:p></span></div>
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<span lang="EN-GB" style="color: black; font-size: 11.0pt; line-height: 150%;">This defence has also been
accepted by the High Court of Calcutta in the case of <a href="https://indiankanoon.org/doc/1952311/"><b><i>Hindusthan Lever Limited v.
Godrej Soaps Limited</i></b></a><b><i> </i></b>and by the Delhi High Court
in<i> </i> <a href="https://indiankanoon.org/doc/947992/"><b><i>J
Mitra v Kesar Medicaments</i></b></a> in 2008. In the latter judgement,
the Delhi High Court held thus:<u1:p></u1:p><o:p></o:p></span></div>
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<i><span lang="EN-GB" style="color: black; font-size: 11.0pt; line-height: 150%;">“A perusal of the decision
in the cases of Ravi Raj Gupta and Gillette Safety Razor Co. cases (supra)
shows that where it is shown that the act complained of is what was disclosed
in a prior publication, which can be relied on against the validity of the patent,
and no patentable or substantial alteration has been made in respect thereof,
there is a good defense.”</span></i><span lang="EN-GB" style="color: black; font-size: 11.0pt; line-height: 150%;"><o:p></o:p></span></div>
<u1:p></u1:p>
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<span lang="EN-GB" style="color: black; font-size: 11.0pt; line-height: 150%;">In the facts of the case
though, the defendant was unable to show that the patented invention was
covered by the prior art cited by it. The practical consequence of invoking the
Gillette Defence is that the scope of the trial can be limited to the said
defence since it is assumed that but for the defence, the defendant does not
refute the allegation of infringement. This would effectively require the
defendant to lead evidence.</span></div>
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J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-15449789482139672762019-10-26T00:22:00.002+05:302019-10-26T00:36:46.030+05:30Requirements of a Representative Suit and Suits against Government<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: inherit;">I have <a href="https://thedemandingmistress.blogspot.com/2012/09/representative-suits-requirements-and.html">written</a>
<a href="https://thedemandingmistress.blogspot.com/2012/09/representative-suits-interest-cause-of.html">before</a>
on the essential requirements of institution of a representative suit under
Order 1, Rule 8. I recently came across two judgements of the Supreme Court
which shed more light on its nuances and scope. The first one was delivered in <a href="https://indiankanoon.org/doc/795303/">1963</a> and the second in <a href="https://indiankanoon.org/doc/150513/">1990</a>.</span></div>
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<span lang="EN-IN" style="mso-ansi-language: EN-IN; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-family: inherit;">In the first judgement, the issue before the Court involved a combined
interpretation of Section 80 of the CPC (suits against Government) and Order 1,
Rule 8. In this case, two individuals issued a notice under Section 80 to the then
State Government of Madras notifying the Government of their intention to the sue it and also highlighting the fact that their notice was on behalf
of other individuals with similar grievances as them. While the notice did not
identify all such individuals, it clearly identified the grievance, the cause of
action, names and places of residence of the two individuals issuing the notice
and the reliefs sought. Out of the said two individuals, however, only one of
them finally sued the Government. <o:p></o:p></span></span></div>
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<span lang="EN-IN" style="mso-ansi-language: EN-IN; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-family: inherit;">The Government objected to the maintainability of the suit on the ground
that (a) the Section 80 notice was not in accordance with the law since it
failed to specify the particulars of all individuals who had such a grievance; (b) that before issuing the Section 80 notice on behalf of others their consent
was not sought; and (c) that only one of the “noticers” finally sued the Government
instead of both of them, which according to the Government was not in accordance
with Order 1, Rule 8. <o:p></o:p></span></span></div>
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<span lang="EN-IN" style="mso-ansi-language: EN-IN; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-family: inherit;">The Supreme Court held that as long as the Section 80 notice clearly
identified the grievance along with the particulars of the issuers of the notice
and the reliefs claimed, and had a statement to the effect that the notice was
representative in nature, the fact that it did not specify the details of other
aggrieved individuals did not affect the legality of the notice. The Court
also clarified that the consent of the other affected parties was not needed to
issue a Section 80 notice on their behalf and categorically rejected the argument
that the leave of the Court was needed even before issuing the Section 80
notice. <o:p></o:p></span></span></div>
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<span lang="EN-IN" style="mso-ansi-language: EN-IN; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-family: inherit;">Keeping with this logic, the Court further held that it was not
necessary to seek the permission of all affected parties to sue on their behalf
under Order 1, Rule 8 since such permission to sue in representative capacity
was, in any case, <span style="mso-spacerun: yes;"> </span>to be sought from and
granted by the Court to the Plaintiff upon institution of the suit. The Court reasoned that since the provision itself envisaged issuance of a public notice by the trial court to similarly placed individuals/parties
at the expense of the Plaintiff, there was no need for the Plaintiff to seek permission
from such parties prior to the institution of the suit. The Court also pointed
out that there was nothing either in Section 80 or in Order 1, Rule 8 which mandated
institution of the suit by everyone who issued the Section 80 notice in order
for the suit to be maintainable. <o:p></o:p></span></span></div>
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<span lang="EN-IN" style="mso-ansi-language: EN-IN; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-family: inherit;">In the second judgement, delivered in 1990, the case involved demands for
additional payments issued by the State Housing Board of Tamil Nadu to allottees
of housing units. When a representative suit was instituted by the one of the
allottees, the State Government objected to its maintainability on the ground
that a representative suit could not be filed against monetary claims since the
claim amounts would differ from person to person, and that the demand made to
each person would give rise to a separate cause of action, thereby precluding
the application of Order 1, Rule 8. </span></span></div>
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<span lang="EN-IN" style="mso-ansi-language: EN-IN; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-family: inherit;"><br /></span></span></div>
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<span lang="EN-IN" style="mso-ansi-language: EN-IN; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-family: inherit;">The Apex Court dismissed these contentions on
the ground that there was nothing in Order 1, Rule 8 which precluded its application
to any class of claims or actions. Importantly, the Court reiterated the
position that the fundamental basis of a suit under the provision was a
commonality of interest, which in itself would arise from the nature of the
cause of action notwithstanding the differences in the quantum of claims. In
other words, it could either be argued that the cause of action i.e. the demand
for payment, need not be the same for Order 1, Rule 8, or it could be argued that
the cause of action in such a case would be the broad fact that similar demands
were issued to similarly placed parties/individuals. The net result would be
the same.<o:p></o:p></span></span></div>
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<span lang="EN-IN" style="mso-ansi-language: EN-IN; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-family: inherit;">The following extracts from the judgement capture the position with
great clarity:<o:p></o:p></span></span></div>
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<span style="font-family: inherit;"><i><span lang="EN-IN" style="mso-ansi-language: EN-IN; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">“</span></i><i><span style="color: black; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The provisions of Order 1 of Rule 8 have been included
in the Code in the public interest so as to avoid multiplicity of litigation.
The condition necessary for application of the provisions is that the persons
on whose behalf the suit is being brought must have the same interest. In other
word,s either the interest must be common or they must have a common grievances
which they seek to get redressed.</span></i></span></div>
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<span style="font-family: inherit;"><i><span style="color: black; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><br /></span></i></span></div>
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<span style="font-family: inherit;"><i><span style="color: black; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><a href="https://indiankanoon.org/doc/1134053/" id="a_4"><span style="color: #1100cc; text-decoration: none;">In Kodia Goundar and Another v.
Velandi Goundar and others, |LR</span></a> 1955 Madras 339, a Full Bench
of the Madras High Court observed that on the plain language of Order 1, Rule
8, the principal requirement to bring a suit within that Rule is the sameness
of interest of the numerous person on whose behalf or for whose benefit the
suit is instituted. </span></i></span><i style="font-family: inherit;">The Court, while considering whether leave under the Rule
should be granted or not, should examine whether there is sufficient community
of interest to justify the adoption of the procedure provided under the Rule. </i></div>
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<i style="font-family: inherit;"><br /></i></div>
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<i style="font-family: inherit;">The object for which this provision is enacted is really to facilitate the
decision of questions, in which a large number of persons are interested,
without recourse to the ordinary procedure. The provision must, therefore,
receive an interpretation which will subserve the object for its enactment.
There are no words in the Rule to limit its scope to any particular category of
suits or to exclude a suit in regard to a claim for money or for injunction as
the present one.</i></div>
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<i><span style="color: black; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="font-family: inherit;"><br /></span></span></i></div>
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<i><span style="color: black; font-size: 11pt;"><span style="font-family: inherit;">8. Coming to the relevant circumstances in the present case it
will be seen that all the allotments in Ashok Nagar were made under the same
Scheme and all the relevant facts are common. The basis of the impugned demand
of the appellant is equally applicable to all the allottees and the plea of the
plaintiff is available to all of them. The trial court was, therefore,
perfectly right in permitting the plaintiff to proceed under Order 1, Rule 8 of
the Code of Civil Procedure. Nobody in this situation can complain of any
inconvenience or injustice. On the other hand, the appellant is being saved
from being involved in unnecessary repeated litigation.<o:p></o:p></span></span></i></div>
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<i><span style="color: black; font-size: 11pt;"><span style="font-family: inherit;"><br /></span></span></i></div>
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<i><span style="color: black; font-size: 11pt;"><span style="font-family: inherit;">9. It is true that each of the allottees is interested
individually in fighting out the demand separately made or going to be made on
him and, thus, separate causes of action arise in the case, but, that does not
make Order 1. Rule 8 inapplicable. Earlier there was some doubt about the Rule
covering such a case which now stands clarified by the Explanation introduced
by the Code of <a href="https://indiankanoon.org/doc/1645922/" id="a_5"><span style="color: #1100cc; text-decoration: none;">Civil Procedure
(Amendment) Act</span></a>, 1976, which reads as follows:
"Explanation--For the purpose of determining whether the persons who sue
or are sued, or defend, have the same interest in one suit, it is not necessary
to establish that such persons have the same cause of action as the persons on
whose behalf, or for whose benefit, they sue or are sued, or defend the suit,
as the case may be."<o:p></o:p></span></span></i></div>
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<i><span style="color: black; font-size: 11pt;"><span style="font-family: inherit;"><br /></span></span></i></div>
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<i><span style="color: black; font-size: 11pt;"><span style="font-family: inherit;">The objects and reasons for the amendment were stated below:
"OBJECTS AND REASONS: Clause 55; sub-clause (iv),--Rule 8 of Order 1 deals
with representative suits. Under this rule, where there are numerous persons
having the same interest in one suit, one or more of them may, with the
permission of the Court, sue or be sued, on behalf of all of them. The rule has
created a doubt as to whether the party represent- ing others should have the
same cause of action as the persons represented by him. The rule is being
substituted by a new rule and an explanation is being added to clarify that such
persons need not have the same cause of action." There is, therefore, no
doubt that the persons who may be represented in a suit under Order 1, Rule 8
need not have the same cause of action."</span></span></i></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-62695292706925061212019-05-24T00:33:00.000+05:302019-05-24T00:34:12.834+05:30Section 13 of the Evidence Act- Part II<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: inherit;"><span style="background: white; color: #222222;">In the </span><span lang="EN-IN"><a href="https://thedemandingmistress.blogspot.com/2019/05/proving-existence-of-right-or-custom.html"><span lang="EN-US" style="background: white; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";">last post</span></a></span><span style="background: white; color: #222222;">, I had discussed the judgement of a Full Bench of the Calcutta High
Court delivered in 1880 on Section 13 of the Evidence Act. In stark contrast to
the <i>ratio </i>of the majority of the said
judgement, in </span><span lang="EN-IN"><a href="https://indiankanoon.org/doc/1733204/"><i><span lang="EN-US" style="background: white; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";">The Collector Of Gorakhpur vs Ram
Sundar Mal</span></i></a></span><i><span style="background: white; color: #222222;"> </span></i><span style="background: white; color: #222222;">(1934) and in judgements before that, the Privy
Council and the Calcutta High Court took the view that a judgement which is not <i>inter</i> <i>partes</i> is still
admissible as a transaction within the meaning of Section 13 in a subsequent
proceeding. Extracted below is the relevant portion of <i>The Collector</i> judgement:</span></span></div>
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<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: #222222;">“The question
whether statements in judgments and decrees are admissible under </span></i><span lang="EN-IN"><a href="https://indiankanoon.org/doc/808094/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="color: #222222; text-decoration: none;">Section 13</span></i></a></span><i style="mso-bidi-font-style: normal;"><span style="background: white; color: #222222;"> read with </span></i><span lang="EN-IN"><a href="https://indiankanoon.org/doc/43650/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="color: #222222; text-decoration: none;">Section
43</span></i></a></span><i style="mso-bidi-font-style: normal;"><span style="background: white; color: #222222;"> is elaborately discussed by Sir John Woodroffe
in his new edition of the </span></i><span lang="EN-IN"><a href="https://indiankanoon.org/doc/1953529/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="color: #222222; text-decoration: none;">Evidence
Act</span></i></a></span><i style="mso-bidi-font-style: normal;"><span style="background: white; color: #222222;">(1931), p. 181 et seq. <u>He would hold that they are
not admissible at all under </u></span></i><span lang="EN-IN"><a href="https://indiankanoon.org/doc/808094/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="color: #222222; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";">Section 13</span></i></a></span><i style="mso-bidi-font-style: normal;"><u><span style="background: white; color: #222222;"> ; but this view is not in
accordance with the decisions of the Board in </span></u></i><span lang="EN-IN"><a href="https://indiankanoon.org/doc/1024710/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="color: #222222; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";">Ram Ranjan
Chuckerbutty v. Ram Narain Singh</span></i></a></span><i style="mso-bidi-font-style: normal;"><u><span style="background: white; color: #222222;">(1894) L.R. 22 I.A. 60 and <a href="https://indiankanoon.org/doc/581411/"><span style="color: #222222;">Dinontoni
Chowdhrani v. Broja Mohini Chowdhrani</span></a> (1901) L.R. 29 I.A. 24 :
S.C. 4 Bom. L.R. 167</span></u></i><i style="mso-bidi-font-style: normal;"><span style="background: white; color: #222222;">. At the bottom of p. 194, however, the learned author
treats judgments as evidence of admissions by ancestors. <u>There are great
difficulties about </u></span></i><span lang="EN-IN"><a href="https://indiankanoon.org/doc/808094/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="color: #222222; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";">Section 13</span></i></a></span><i style="mso-bidi-font-style: normal;"><u><span style="background: white; color: #222222;">, but Dinomoni's case is express
authority for the proposition that " on general principles and under </span></u></i><span lang="EN-IN"><a href="https://indiankanoon.org/doc/808094/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="color: #222222; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";">Section 13</span></i></a></span><i style="mso-bidi-font-style: normal;"><u><span style="background: white; color: #222222;"> " orders
made under</span></u></i><span lang="EN-IN"><a href="https://indiankanoon.org/doc/445276/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="color: #222222; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";"> the Criminal Procedure Code</span></i></a></span><i style="mso-bidi-font-style: normal;"><u><span style="background: white; color: #222222;"> are admissible
for the purposes mentioned in the passage quoted at p. 191 from the Board's
judgment</span></u></i><i style="mso-bidi-font-style: normal;"><span style="background: white; color: #222222;">.”<o:p></o:p></span></i></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: inherit;"><span style="background: white; color: #222222;">This position was
reiterated by the Supreme Court in </span><span lang="EN-IN"><a href="https://indiankanoon.org/doc/1089401/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="background: white; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";">Shrinivas Krishnarao Kango vs Narayan
Devji Kango And Others</span></i></a></span><span class="MsoHyperlink"><i style="mso-bidi-font-style: normal;"><span style="background: white;"> </span></i></span><span class="MsoHyperlink"><span style="background: white;">(1954),</span></span><span style="background: white; color: #222222;"> and in </span><span lang="EN-IN"><a href="https://indiankanoon.org/doc/150069/"><i style="mso-bidi-font-style: normal;"><span lang="EN-US" style="mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman";">Sital Das vs Sant Ram And Ors.</span></i><b><span style="background: white;"> </span></b></a></span><span class="MsoHyperlink">(1954)<i style="mso-bidi-font-style: normal;">,</i> wherein the Court held as follows:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: inherit;"><span class="MsoHyperlink"><i style="mso-bidi-font-style: normal;">“</i></span><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;">We agree with the High Court that in
the absence of any evidence to show as to who propounded this pedigree which
the Subordinate Judge acted upon, it is not possible to say that it was an
admission by Kishore Das through whom Ishar Das lays his claim and consequently
the pedigree would not be an admission relevant under </span></i><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white;">section
21<span style="color: black;"> of the Indian Evidence Act. <u>But the
judgment itself, we think, can be received in evidence under </u></span><u>section
13<span style="color: black;"> of the Evidence Act as a <b style="mso-bidi-font-weight: normal;">transaction</b> in which Kishore Das, from whom Ishar Das purports to
derive his title, asserted his right as a spiritual collateral of Mangal Das
and on that footing got a decree. The decree also recognised the right of
Kishore Das to institute the suit as such collateral. We think therefore that
the judgment could be received in evidence and although it is not by any means
conclusive and has got to be weighed and appraised for what it is worth, it can
be used in support of the oral evidence adduced in the case. </span></u><span style="color: black;">It is to be noted that this part of the plaintiff's story
was not challenged by the defendants in their evidence at all. In our opinion
therefore on the evidence on the record it is fully established that Sital Das
was a spiritual collateral of Kishore Das.”<o:p></o:p></span></span></i></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN" style="background: white; color: black;">While these judgements were endorsed again by the Supreme Court in </span><u><span lang="EN-IN"><a href="https://indiankanoon.org/doc/1880790/"><i style="mso-bidi-font-style: normal;"><span style="background: white;">Tirumala
Tirupati Devasthanams vs K.M. Krishnaiah</span></i></a></span></u><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> </span></i><span lang="EN-IN" style="background: white; color: black;">(1998), which appears to have continued even until 2015 in <i style="mso-bidi-font-style: normal;"><a href="https://indiankanoon.org/doc/137193261/">K. Nanjappa (D) By Lrs vs R.A.
Hameed @ Ameersab (D)By Lrs.</a></i>, a much more nuanced opinion emerged in 1983 </span><span style="background: white; color: #222222;">in </span><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"><a href="https://indiankanoon.org/doc/275235/">State of Bihar vs Radha Krishna
Singh & Ors</a></span></i><span lang="EN-IN" style="background: white; color: black;">. which was delivered by a three-Judge Bench. Here are the
relevant portions of the said judgement, which I will deal with:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN" style="background: white; color: black;"><br /></span></span></div>
<div style="text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;">“…it is well settled that judgments of courts are
admissible in evidence under the provisions of </span></i><a href="https://indiankanoon.org/doc/103053/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">sections 40</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;">, </span></i><a href="https://indiankanoon.org/doc/1038208/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">41</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> and </span></i><a href="https://indiankanoon.org/doc/219456/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">42</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> of the Evidence Act. </span></i><a href="https://indiankanoon.org/doc/43650/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">Section 43</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> which is extracted below,
clearly provides that those judgments which do not fall within the four corners
of </span></i><a href="https://indiankanoon.org/doc/103053/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">sections 40</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> to </span></i><a href="https://indiankanoon.org/doc/219456/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">42</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> are inadmissible unless the
existence of such judgment, order or decree is itself a fact in issue or a relevant
fact under some other provisions of the </span></i><a href="https://indiankanoon.org/doc/1953529/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">Evidence Act</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;">:-<o:p></o:p></span></i></span></div>
<div style="text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"><br /></span></i></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; line-height: 107%;">"43.
Judgments, etc., other than those mentioned in </span></i><span lang="EN-IN" style="line-height: 107%;"><a href="https://indiankanoon.org/doc/103053/"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black; text-decoration: none;">sections 40</span></i></a><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;">
to </span></i><a href="https://indiankanoon.org/doc/219456/"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black; text-decoration: none;">42</span></i></a><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;">, when relevant- Judgments,
orders or decrees, other than those mentioned in </span></i><a href="https://indiankanoon.org/doc/103053/"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black; text-decoration: none;">sections
40</span></i></a><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;">, </span></i><a href="https://indiankanoon.org/doc/1038208/"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black; text-decoration: none;">41</span></i></a><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;"> and </span></i><a href="https://indiankanoon.org/doc/219456/"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black; text-decoration: none;">42</span></i></a><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;">,
are irrelevant, unless the existence of such judgment? order or decree is a
fact in issue, or is relevant under some other provision of this Act."<o:p></o:p></span></i></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN" style="line-height: 107%;"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;"><br /></span></i></span></span></div>
<div style="text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;">Some Courts have used </span></i><a href="https://indiankanoon.org/doc/808094/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">section 13</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> to prove the admissibility of a
judgment as coming under the provisions of</span></i><a href="https://indiankanoon.org/doc/43650/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;"> s. 43</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;">, referred to above. We are, however,
of the opinion that where there is a specific provision covering the
admissibility of a document, it is not open to the court to call into aid other
general provisions in order to make a particular document admissible. In order
words, if a judgment is not admissible as not falling within the ambit of </span></i><a href="https://indiankanoon.org/doc/103053/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">sections 40</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> to </span></i><a href="https://indiankanoon.org/doc/219456/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;">42</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;">, it must fulfil the conditions of</span></i><a href="https://indiankanoon.org/doc/43650/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;"> s. 43</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> otherwise it cannot be relevant
under</span></i><a href="https://indiankanoon.org/doc/808094/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;"> s. 13</span></i></a><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> of the Evidence Act. The words
"other provisions of this Act" cannot cover s. 13 because this
section does not deal with judgments at all It is also well settled that a
judgment in rem like judgments passed in probate, insolvency, matrimonial or
guardianship or other similar proceedings, is admissible in all cases whether
such judgments are inter parties or not. <b style="mso-bidi-font-weight: normal;">In
the instant case, however, all the documents consisting of judgments filed are
not judgments in rem and therefore, the question of their admissibility on that
basis does not arise, As mentioned earlier, the judgments filed as Exhibits in
the instant case, are judgments in personam and therefore, they do not fulfil
the conditions mentioned in</b></span></i><b style="mso-bidi-font-weight: normal;"><a href="https://indiankanoon.org/doc/1038208/"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; text-decoration: none;"> s. 41</span></i></a></b><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"> of the Evidence Act.”<o:p></o:p></span></i></b></span></div>
<div style="text-align: justify;">
<span style="font-family: inherit;"><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black;"><br /></span></i></b></span></div>
<div style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN" style="background: white; color: black;">The Bench also cited <i style="mso-bidi-font-style: normal;">Fatten Lall v. Guju Lall</i> to support its
position and then quoted a Calcutta High Court judgement and another Privy
Council judgement to hold as follows:</span><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;"><o:p></o:p></span></i></span></div>
<div style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN" style="background: white; color: black;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; line-height: 107%;">“</span></i><span lang="EN-IN" style="line-height: 107%;"><a href="https://indiankanoon.org/doc/120262/"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black; text-decoration: none;">In Gadadhar Chowdhury & Ors. v.
Sarat Chandra Chakravarty & Ors</span></i></a><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;">.(1) it was held that
findings in judgments not inter parties are not admissible in evidence. In this
connection a Division Bench of the Calcutta High Court observed as follows:<o:p></o:p></span></i></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN" style="line-height: 107%;"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;"><br /></span></i></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">"Though
the recitals and findings in a judgment not inter parties are not admissible in
evidence, such a judgment and decree are, in our opinion, admissible to prove
the fact that a decree was made in a suit between certain parties and for
finding out for what lands the suit had been decreed."<o:p></o:p></span></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; line-height: 107%;">This, in
our opinion, is the correct legal position regarding the admissibility of
judgments not inter parties, </span></i><span lang="EN-IN" style="line-height: 107%;"><a href="https://indiankanoon.org/doc/842120/"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black; text-decoration: none;">In
Maharaja Sir Kesho Prasad Singh Bahadur v. Bahuria Mt. Bhagjogna Kuer & Ors</span></i></a><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;">.(1)
the Privy Council made the following observations:<o:p></o:p></span></i></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN" style="line-height: 107%;"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;"><br /></span></i></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">"Whether
based upon sound general principle or merely supported by reasons of
convenience, the rule that so far as regards the truth of the matter decided a
judgment is not admissible evidence against one who is a stranger to the suit
has long been accepted as a general rule in English law."<o:p></o:p></span></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span lang="EN-IN" style="background: white; color: black; line-height: 107%;">The
cumulative effect of the decisions cited above on this point clearly is that
under the </span></i><span lang="EN-IN" style="line-height: 107%;"><a href="https://indiankanoon.org/doc/1953529/"><i style="mso-bidi-font-style: normal;"><span style="color: black; text-decoration: none;">Evidence
Act</span></i></a><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;"> a judgment which is not inter partes is
inadmissible in evidence except for the limited purpose of proving as to who
the parties were and what was the decree passed and the properties which were
the subject matter of the suit. In these circumstances, therefore, it is not
open to the plaintiff’s respondents to derive any support from some of the
judgments which they have filed in order to support their title and
relationship in which neither the plaintiffs nor the defendants were parties.
Indeed, if the judgments are used for the limited purpose mentioned above, they
do not take us anywhere so as to prove the plaintiff’s case.”<o:p></o:p></span></i></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN" style="line-height: 107%;"><i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;"><br /></span></i></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">What could all this mean and is it possible to reconcile all these judgements? <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">My take- In order to use a judgement under Section 13 to prove a right (public or private, corporeal or incorporeal) or a custom, reference must be made to Sections 40-43. This is because the fundamental
premise of Sections 40-43, especially Section 43, is that the said provisions are self-sufficient is so far as relevancy of
judgements, orders and decrees is concerned. If a judgement, which is sought to be used as evidence under Section 13, does not satisfy Sections 40-42, it can be introduced under Section 43 as being relevant only if “<i style="mso-bidi-font-style: normal;">the existence
of such judgment, order or decree, is a fact in issue, or <b style="mso-bidi-font-weight: normal;"><u>is relevant under some other provisions of this Act</u></b></i>”. </span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">The underscored portion may be misunderstood as the judgement itself being
relevant under some other provisions of the Act, when in fact if the sentence
is taken as a whole it reads “<i style="mso-bidi-font-style: normal;">the
<b><u>existence</u></b> of such judgment, order or decree <b style="mso-bidi-font-weight: normal;"><u>is relevant under some other provisions of this Act”</u></b></i><b style="mso-bidi-font-weight: normal;"><u>.</u></b> This means, that the window
provided under Section 43 does not deal with the admissibility of the contents
of the judgement, but allows it to the limited extent of proving its existence
if the existence itself is a fact in issue, or if such existence is relevant
under some other provisions of the Act. In relation to Section 43, t</span></span><span style="background-color: white; font-family: inherit;">his condition needs to be satisfied in order to prevent Section 13 from being used as an omnibus backdoor
to sneak in any and every judgement not <i>inter partes</i> as evidence which does not satisfy the requirements
of Sections 40-43.</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">In the context of
Section 13, this means, that the current position of Indian law differs from <i style="mso-bidi-font-style: normal;">Fatten Lall v Gujju Lall,</i> and treats
even previous judgements as transactions within the meaning of Clause (a) of
the said provision. However, for such judgements to be admissible as evidence as transactions,
they must satisfy the requirements of Sections 40-43 which are particularly
stringent when it comes to using judgements which are not <i style="mso-bidi-font-style: normal;">inter</i> <i style="mso-bidi-font-style: normal;">partes</i> and which do
not relate to rights <i style="mso-bidi-font-style: normal;">in rem. </i><o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">There’s a chance
my restatements are repetitive, but the idea was to capture what I have
understood, with a measure of clarity. I am not sure the law on Section 13 is
settled yet. In light of what has been discussed, what is the distinction between "transaction" in Clause (a) of Section 13 and "instance" in Clause (b)? Comments and suggestions are welcome!</span></span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-60611733123046205512019-05-20T23:57:00.000+05:302019-10-25T16:01:38.464+05:30Proving the Existence of a Right or a Custom<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span style="font-family: inherit;">How does one prove the existence of a right or
a custom in any proceeding before the Court? Is there a specific provision
which applies to such a circumstance? In what context does the exercise
become relevant? To address these and such questions, one must look to Section
13 of the Evidence Act, 1872, which is reproduced below:</span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span style="font-family: inherit;"><i style="text-indent: 0.25in;"><br /></i>
<i style="text-indent: 0.25in;"><span style="color: #323232;">13. Facts relevant when right or custom is in
question</span></i></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span style="color: #323232;">Where the question is as to the
existence of any right or custom, the following facts are relevant.</span></i><i style="mso-bidi-font-style: normal;"><span style="color: black;"><o:p></o:p></span></i></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span style="color: #323232;">(a) Any transaction by which the right
or custom in question was created, claimed, modified, recognized, asserted, or
denied, or which was inconsistent with its existence;</span></i><i style="mso-bidi-font-style: normal;"><span style="color: black;"><o:p></o:p></span></i></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span style="color: #323232;">(b) Particular instances in which the
right or custom was claimed, recognized, or exercised, or in which its exercise
was disputed, asserted or departed from.</span></i><i style="mso-bidi-font-style: normal;"><span style="color: black;"><o:p></o:p></span></i></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: justify; text-indent: .25in;">
<span style="font-family: inherit;"><i style="mso-bidi-font-style: normal;"><span style="color: #323232;">Illustration</span></i><i style="mso-bidi-font-style: normal;"><span style="color: black;"><o:p></o:p></span></i></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; text-align: justify;">
<span style="font-family: inherit;"><span style="font-family: "times" , "times new roman" , serif;"><i style="mso-bidi-font-style: normal;"><span style="color: #323232;"><br /></span></i></span>
<span style="font-family: "times" , "times new roman" , serif;"><i style="mso-bidi-font-style: normal;"><span style="color: #323232;">The question is, whether A has a right
to a fishery. A deed conferring the fishery on A’s ancestors, a mortgage of the
fishery by A’s father, a subsequent grant of the fishery by A’s father,
irreconcilable with the mortgage, instances in which A’s father exercised the
right, or in which the exercise of the right was stopped by A’s neighbors, are
relevant facts.</span></i><i style="mso-bidi-font-style: normal;"><span style="color: black;"><o:p></o:p></span></i></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="line-height: 107%;"><span style="font-family: inherit;">Does the provision apply to <i style="mso-bidi-font-style: normal;">inter partes </i><span style="mso-bidi-font-style: normal;">proceedings/</span><i style="mso-bidi-font-style: normal;">in</i> <i style="mso-bidi-font-style: normal;">personam </i>rights, or
does it apply only to rights which have a public or a <i style="mso-bidi-font-style: normal;">quasi</i>-public character? What would qualify as a “transaction”
within the meaning of Clause (a)? Would a judgement, wherein the right or custom
was discussed, qualify as a transaction? Or would <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>the
judgement, or the legal proceeding where the judgement was delivered, qualify
as an “instance” within the meaning of Clause (b)? <o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="line-height: 107%;"><span style="font-family: inherit;">One of the earliest judgements on the provision
was delivered by a Full Bench of the Calcutta High Court in 1880 in <i style="mso-bidi-font-style: normal;"><span style="background: white; color: black;"><a href="https://indiankanoon.org/doc/1743815/">Fatten
Lall vs Gujju Lall</a></span></i><span style="background: white; color: black;">. Compared to other statutes, given that the analysis
of judgements relating to the Evidence Act is even more guided by the facts of
the cases they were delivered in, it becomes important to understand the backdrop
in which the judgement was delivered. <o:p></o:p></span></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="line-height: 107%;"><span style="background: white; color: black;"><span style="font-family: inherit;"><br /></span></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">In the judgement under discussion, a person X sued Y with respect to title over an immoveable property P and
the issue of X’s succession from another person Z had a bearing on X’s right
with respect to the property. In a previous proceeding initiated by Y against
Q, it was established that X was indeed a successor of Z. Consequently, X
wanted to place reliance on the judgement delivered in the previous proceeding
(“earlier judgement”) in his current suit against Y on the ground that the said
judgement was a “transaction” within the meaning of Section 13, and was
therefore admissible. Y objected to the reliance on the judgement on the ground
that it was inadmissible in evidence in X’s suit against Y since X was not
party to the previous proceeding.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">By 4-1 majority, the Bench held that the previous judgement was
inadmissible in evidence. While the entire judgement makes for an extremely
enlightening read on Sections 11, 13, 32, 40-43 and 48 of the Evidence Act, the
quality of analysis in the minority and majority opinions is a treat for litigators.
<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="mso-spacerun: yes;"><span style="font-family: inherit;"><br /></span></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN" style="background: white; color: black; line-height: 107%;">The minority opinion of Justice Mitter discussed the possibility of pegging
the earlier judgement under Sections 40-42 of the Evidence Act, which deal with
relevancy of judgements, orders or decrees of Court, and concluded that the
earlier judgement while not attracting Sections 40-42, would certainly attract
the window provided under Section 43. Section 43 provides that </span><span lang="EN-IN" style="background: white; color: black; line-height: 107%;">"<i>judgments,
orders, or decree, other than those mentioned in </i></span><i><span lang="EN-IN" style="background: white; line-height: 107%;">Sections 40<span style="color: black;">, </span></span>41<span style="color: black;">, and </span>42</i><span style="color: black;"><i>, are irrelevant, unless the fact that such a judgment,
order, or decree existed is relevant</i> <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;">under some other provision of this Act</i></b>.</span>
He, therefore, concluded that the earlier judgement was relevant under Sections
11 and 13 of the Act. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;">According to
Justice Mitter, the word transaction was wide enough to take within its ambit
an earlier judgement and since there was no restriction on the nature of right
or custom referred to in Section 13, it included even <i style="mso-bidi-font-style: normal;">in personam </i>rights. He further added that the existence of the
earlier judgement was itself a relevant fact within the meaning of Section 11
since its existence would affect the fact in issue in the current suit. The
fact that X was not a party to the earlier judgement did not affect its admissibility
under Section 13, according to Justice Mitter. Also, he was of the
view that the Indian Evidence Act did not necessarily mirror the English law of evidence in
every way.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="background: white; color: black; line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="line-height: 107%;"><span style="font-family: inherit;">On these, the majority opinions disagreed with Justice
Mitter. One of the majority opinions observed that Section 13 did not relate to
the issue of ownership of property, but was limited in its application to
incorporeal rights, and that a judgement was not a transaction in any sense of
the word. As regards the applicability of Section 11, it was held that while the
existence of the earlier judgement could be treated as a fact, the judgement in itself was not a fact but an opinion and therefore did not attract Section 11. The
substance of the majority opinion is, perhaps, best expressed in the words of the
then Chief Justice who was part of the Bench:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="margin-left: .25in; text-align: justify;">
<span lang="EN-IN" style="line-height: 107%;"><span style="font-family: inherit;"><br /></span></span></div>
<div style="margin-left: .25in; text-align: justify;">
<span style="color: black;"><span style="font-family: inherit;">“<i style="mso-bidi-font-style: normal;">73. I suppose
it must be generally acknowledged, that, with some few exceptions, the Indian
Evidence Act was intended to, and did in fact, consolidate the English law
of evidence.<o:p></o:p></i></span></span></div>
<div style="margin-left: .25in; text-align: justify;">
<span style="color: black;"><i style="mso-bidi-font-style: normal;"><span style="font-family: inherit;"><br /></span></i></span></div>
<div id="p_84" style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-left: .25in; orphans: 2; text-align: justify; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<i style="mso-bidi-font-style: normal;"><span style="color: black;"><span style="font-family: inherit;">74. The different
chapters of the Act deal seriatim with the relevancy and consequent
admissibility of the different kinds of evidence, and upon this principle, Sections
5 to 16 deal with the admissibility of facts, whilst Sections
40 to 45 deal expressly with judgments; and I cannot help
thinking, with all deference to the opinions of those learned Judges who have
expressed a contrary opinion, that if it had been really the intention of the
Legislature to depart entirely from the English rule, and to make a very large
class of judgments admissible here, which had never been admissible before the
Act, either in England or in this country, they would have expressed their
intention more plainly, by means of suitable provisions introduced into that
portion of the Act which deals exclusively with judgments.<o:p></o:p></span></span></i></div>
<div id="p_84" style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-left: .25in; orphans: 2; text-align: justify; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<i style="mso-bidi-font-style: normal;"><span style="color: black;"><span style="font-family: inherit;"><br /></span></span></i></div>
<div id="p_85" style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-left: .25in; orphans: 2; text-align: justify; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span style="font-family: inherit;"><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="color: black;">75. If there is one rule of law which is better known and approved
than another, as being founded upon the most manifest justice and good sense,
it is this; that (except in the case of judgments in rem and judgments relating
to matters of a public nature, which are governed by a different principle) no
man ought to be bound by the decision of a Court of Justice, unless he or those
under whom he claims were parties to the proceedings in which it was given</span></i></b><i style="mso-bidi-font-style: normal;"><span style="color: black;">.”<o:p></o:p></span></i></span></div>
<div id="p_85" style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-left: .25in; orphans: 2; text-align: justify; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<i style="mso-bidi-font-style: normal;"><span style="color: black;"><span style="font-family: inherit;"><br /></span></span></i></div>
<div style="margin-left: .25in; text-align: justify;">
<span style="color: black;"><span style="font-family: inherit;">On the intent and purpose of Sections 40-43, following
were the findings of the Chief Justice:<o:p></o:p></span></span></div>
<div style="margin-left: .25in; text-align: justify;">
<span style="color: black;"><span style="font-family: inherit;"><br /></span></span></div>
<div style="margin-left: .25in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="font-family: inherit;"><span style="color: black;">“81<b style="mso-bidi-font-weight: normal;">. <a href="https://indiankanoon.org/doc/103053/" id="a_128" style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; widows: 2; word-spacing: 0px;"></a></b></span><b style="mso-bidi-font-weight: normal;"><span style="color: black;">Section 40</span><span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">, in my opinion, admits as evidence all judgments inter
partes which would operate as res judicata in a second suit. </span><span style="color: black;">Section 41</span><span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;"> admits judgments in rem as evidence in all subsequent
suits where the existence of the right is in issue, whether between the same
parties or not. And </span><span style="color: black;">Section 42</span><span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;"> admits all
judgments not as res judicata, but as evidence, although they may not be
between the same parties, provided they relate to matters of public nature
relevant to the enquiry.</span><o:p></o:p></b></span></i></div>
<div style="margin-left: .25in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><b style="mso-bidi-font-weight: normal;"><span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;"><span style="font-family: inherit;"><br /></span></span></b></i></div>
<div style="margin-left: .25in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="color: black;"><span style="font-family: inherit;">83. It is obvious that, if the construction which the respondent's
counsel would put upon <span style="color: black;">Section
13</span> is right, there would be no necessity for <span style="color: black;">Sections 40</span>, <span style="color: black;">41</span>, and <span style="color: black;">42</span> at all. Those
sections would then only tend to mislead, because the judgments which are made
admissible under them would all be equally admissible as
"transactions" under <span style="color: black;">Section 13</span>, and not only
those, but an infinite variety of other judgments which had never before been
admissible either in this country or in England. And it is difficult to
conceive why, under <span style="color: black;">Section
42</span>, judgments though not between the same parties should be declared
admissible so long as they related to matters of a public nature, if those very
same judgments had already been made admissible under <span style="color: black;">Section 13</span>, whether they
related to matters of a public nature or not.<o:p></o:p></span></span></i></div>
<div style="margin-left: .25in; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span style="color: black;"><span style="font-family: inherit;"><br /></span></span></i></div>
<div id="p_94" style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-left: .25in; orphans: 2; text-align: justify; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<i style="mso-bidi-font-style: normal;"><span style="color: black;"><span style="font-family: inherit;">84. But then it is
said, that <span style="color: black;">Section 43</span> expressly
contemplates cases in which judgments would be admissible under other sections
of the Act, which are not admissible under <span style="color: black;">Sections 40</span>, <span style="color: black;">41</span> or 42. This
is quite true. But then I take it, that the cases so contemplated by <span style="color: black;">Section 43</span> are those
where a judgment is used not as a res judicata or as evidence more or less
binding upon an opponent by reason of the adjudication which it contains,
(because judgments of that kind had already been dealt with under one or other
of the immediately preceding sections). <b style="mso-bidi-font-weight: normal;">But
the cases referred to in <span style="color: black;">Section
43</span> are such, I conceive, as the section itself illustrates,
viz., when the fact of any particular judgment having been given is a matter to
be proved in the case. As for instance, if A sued B for slander, in saying that
he had been convicted of forgery, and B justified upon the ground that the
alleged slander was true, the conviction of A for forgery would be a fact to be
proved by B like any other fact in the case, and quite irrespective of whether
A had been actually guilty of the forgery or not. This, I conceive, would be
one of the many cases alluded to in <span style="color: black;">Section 43</span></b>.”<o:p></o:p></span></span></i></div>
<div id="p_94" style="-webkit-text-stroke-width: 0px; font-variant-caps: normal; font-variant-ligatures: normal; margin-left: .25in; orphans: 2; text-align: justify; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<i style="mso-bidi-font-style: normal;"><span style="color: black;"><span style="font-family: inherit;"><br /></span></span></i></div>
<div style="margin-left: .25in; text-align: justify;">
<span style="color: black;"><span style="font-family: inherit;">In other words, under Section 43, a previous judgement
in an <i style="mso-bidi-font-style: normal;">inter</i> <i style="mso-bidi-font-style: normal;">partes</i> dispute between two or more parties cannot become admissible in
evidence against one of the parties in a subsequent proceeding involving that
party and a stranger to the earlier proceeding. In the next few posts, I will
continue with my discussion on Sections 11, 13 and 40-43 by referring to a few
more judgements.</span></span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-76836960206126917492018-02-23T02:27:00.000+05:302019-05-21T00:00:17.122+05:30Towards Evolving a Culture of Damages: Analysing the Christian Louboutin Verdict of the Delhi High Court<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN">On December 12, 2017, the Delhi High Court delivered a
crisp 21-paragraph <i>ex parte</i> 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 </span><a href="https://thedemandingmistress.blogspot.in/2016/04/evolving-culture-of-damages.html"><span lang="EN-IN">discussed in brief</span></a><span lang="EN-IN"> almost two years ago.</span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN">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 </span><i><span style="background: white;"><a href="https://indiankanoon.org/doc/64885934/">Hindustan Unilever Limited Vs.
Reckitt Benckiser India Limited</a> </span></i><span style="background: white;">(2014). The DB judgement in turn discussed the principles
laid down in two English decisions, namely <i>Rookes
v. Barnard</i>, [1964] 1 All ER 367</span> and <i>Cassell & Co. Ltd. v. Broome</i>, 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 <i>ad hocism</i>,
and (b) diluted the vindictive/retributory character of such damages by
underscoring the fact that ultimately the award benefited a private party. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="background: white; font-family: inherit;">While <i>Rookes </i>identified<i> </i>the categories of cases where award of exemplary damages was justified, the
specifics of the considerations and their nuances were educatively articulated in
<i>Cassell</i>. For instance, <i>Cassell </i>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 <i>Rookes</i>. 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. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="background: white; font-family: inherit;">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. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN">Notwithstanding the fact that the </span><i><span style="background: white;">Hindustan
Unilever </span></i><span style="background: white;">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 <i><a href="https://indiankanoon.org/doc/1152738/">Times Incorporated v. Lokesh
Srivastava</a> </i>makes <i>Hindustan
Unilever </i>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.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN">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 <i>Hindustan Unilever</i>. That being said, the computation of actual damages by the Court is based on quite a few assumptions, whose basis is unclear. </span>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:</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><i><span lang="EN-IN">“</span></i><i>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.<o:p></o:p></i></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: inherit;"><br /></span></i></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<i><span style="font-family: inherit;">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/-.”<o:p></o:p></span></i></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<i><span style="font-family: inherit;"><br /></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN" style="font-family: inherit;">Although this was an <i>ex parte </i>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 <i>ex parte </i>proceeding<i> </i>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 <i>ex parte </i>proceeding. This is an issue I will address in a later
post. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span lang="EN-IN">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.</span> </span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-73944646155967685072017-04-02T12:44:00.004+05:302018-02-09T01:07:39.580+05:30The Shreya Singhal Judgement and Intermediary Liability: What is the Correct Legal Position?<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
<div class="MsoNormal">
<span lang="EN-IN">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 <a href="http://supremecourtofindia.nic.in/FileServer/2015-03-24_1427183283.pdf">Shreya Singhal judgement</a>. 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. </span><span lang="EN-IN">In this post, I will expand on the views I expressed in
the panel discussion on the legacy of <i>Shreya
Singhal</i>. </span><span lang="EN-IN">On a different note, those interested may read </span><a href="https://storify.com/jsaideepak/shreya-singhal-v-union-of-india-as-it-happened"><span lang="EN-IN">here</span></a><span lang="EN-IN"> the storified version of my live updates on Twitter on the arguments in <i>Shreya Singhal</i>.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-IN">In April 2015, I had </span><a href="http://thedemandingmistress.blogspot.in/2015/04/intermediary-liability-regime-historic.html"><span lang="EN-IN">written</span></a><span lang="EN-IN"> 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.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-IN">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. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-IN">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:<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<i><span lang="EN-IN">“</span>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).”<o:p></o:p></i></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Extracted below is the conclusion
of the Court in Para 119(c):<br />
<br /></div>
<div class="MsoNormal">
<i>“(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.”<o:p></o:p></i></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It could be inferred, based on the language of
both excerpts, that <span lang="EN-IN">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 <i>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,</i> has given rise to three different interpretations:</span><br />
<span lang="EN-IN" style="text-indent: -0.25in;"><br /></span>
<span lang="EN-IN" style="text-indent: -0.25in;">1.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><b style="text-indent: -0.25in;"><span lang="EN-IN">Interpretation 1</span></b><span lang="EN-IN" style="text-indent: -0.25in;">: 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 <i>only</i> 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 <i>ratio </i>of the Supreme Court which was to
not put the intermediary in the position of an adjudicator of the lawfulness of
any content.</span><br />
<span lang="EN-IN" style="text-indent: -0.25in;"><br /></span>
<span lang="EN-IN" style="text-indent: -0.25in;">2.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><b style="text-indent: -0.25in;"><span lang="EN-IN">Interpretation 2</span></b><span lang="EN-IN" style="text-indent: -0.25in;">: 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.</span><br />
<span lang="EN-IN" style="text-indent: -0.25in;"><br /></span>
<span lang="EN-IN" style="text-indent: -0.25in;">3.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><b style="text-indent: -0.25in;"><span lang="EN-IN">Interpretation 3</span></b><span lang="EN-IN" style="text-indent: -0.25in;">: 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.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-IN">In my view, the third interpretation is </span>perhaps the most faithful to the language and intent of Section 79, as well as
to the Supreme Court’s <i>ratio</i> behind
reading down the meaning of actual knowledge and introducing Article 19(2) in
the context of free speech. </div>
</div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com4tag:blogger.com,1999:blog-5949922529631180407.post-8694510826648923202017-03-26T03:24:00.003+05:302017-03-26T03:24:42.499+05:30It’s been almost a year…<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdhhU8OK6rDbLZxmIIxcDLM8onZ0g6c-0AJLfqbu1Gxxi-2wAdto6d6AnDwtOmHdPrOylYVmLNpzHjvtN9RVrkOLMJkfmVCdJwPE4qqM5oS_u7-TGrgnuGUgff1f1jyohTzE2CJQ52w2Wu/s1600/barrister.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdhhU8OK6rDbLZxmIIxcDLM8onZ0g6c-0AJLfqbu1Gxxi-2wAdto6d6AnDwtOmHdPrOylYVmLNpzHjvtN9RVrkOLMJkfmVCdJwPE4qqM5oS_u7-TGrgnuGUgff1f1jyohTzE2CJQ52w2Wu/s320/barrister.gif" width="225" /></a></div>
<div class="MsoNormal" style="text-align: justify;">
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 <a href="https://spicyip.com/2017/01/delhi-hc-passes-landmark-first-order-on-summary-judgement-proceedings-under-order-13a-of-the-cpc.html">hectic</a>
in a <a href="http://blog.mylaw.net/civil-suit-disposed-without-trial-commercial-courts-law/">good
way</a> and they have taught me quite a few things about myself and the
profession.</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN">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. </span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN">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. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN">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. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-IN">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.</span> </div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com1tag:blogger.com,1999:blog-5949922529631180407.post-81735767366399163192016-04-27T01:05:00.002+05:302016-05-08T18:35:49.213+05:30Significance of Framing an Issue of Trademark Invalidity under Section 124 of the Trademarks Act, 1999<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
In the <a href="http://thedemandingmistress.blogspot.in/2016/04/what-is-purpose-and-significance-of.html">last post</a>, 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 f<span lang="EN-US">raming 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.<span class="apple-converted-space"> </span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span class="apple-converted-space"><span lang="EN-US">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 <a href="https://indiankanoon.org/doc/1331119/">Section 124(1)(a or b)(ii)</a> 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 <i>prima
facie </i>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 </span></span><span lang="EN-US" style="background: white;">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. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">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 <i>prima facie </i>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 <i>prima facie </i>opinion
on the strength of the parties’ contentions, it must necessarily do so under
Section 124 on the question of trademark invalidity. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">Secondly, it follows that in forming such
a <i>prima facie </i>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 <i>prima facie </i>findings. Although the Delhi
High Court in its Full Bench decision in <i><a href="https://indiankanoon.org/doc/69071842/">Data Infosys v. Infosys
Technologies</a> </i>does not expressly endorse this view, a reading of Paragraphs
31 and<i> </i>32 of the judgement reflects
the Court’s implicit endorsement of the need for reasoning in assessing
tenability. <o:p></o:p></span><br />
<span lang="EN-US" style="background: white;"><br /></span>
<span lang="EN-US" style="background: white;">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 <i>Data Infosys. </i>Extracted below is the relevant excerpt from Paragraph 31 of the judgement:</span><br />
<span lang="EN-US" style="background: white;"><br /></span>
<span style="font-family: inherit;"><i><span lang="EN-US" style="background: white;">"31......</span><span style="background-color: white; font-size: 16.25px; line-height: 24.375px;">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 </span><a href="https://indiankanoon.org/doc/1331119/" id="a_141" style="background-color: white; color: #1100cc; font-size: 16.25px; line-height: 24.375px; text-decoration: none;">Section 124</a><span style="background-color: white; font-size: 16.25px; line-height: 24.375px;"> (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 </span><a href="https://indiankanoon.org/doc/1331119/" id="a_142" style="background-color: white; color: #1100cc; font-size: 16.25px; line-height: 24.375px; text-decoration: none;">Section 124</a><span style="background-color: white; font-size: 16.25px; line-height: 24.375px;"> (1) (b).</span></i></span><br />
<span lang="EN-US" style="background: white;"><br /></span>
<span style="background-color: white;">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 </span><i>prima facie </i><span style="background-color: white;">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).</span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">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. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<span style="text-align: justify;">In the next post, I will discuss a few more aspects of
Section 124. </span></div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-53333474732395287552016-04-26T02:40:00.003+05:302017-06-02T22:34:14.595+05:30What is the Purpose and Significance of framing of issues in Civil Suits?<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
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.</div>
<div class="MsoNormal" style="text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
The title of the Order reads “<i>Settlement
of Issues and Determination of Suit on Issues of Law or on Issues Agreed Upon</i>”.
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. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
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. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
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? <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
On this, the <a href="https://indiankanoon.org/doc/1291693/">Supreme Court</a>
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. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
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. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
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. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
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 <i><a href="https://indiankanoon.org/doc/796123/">Makhanlal Bangal v.
Manas Bhunia</a></i> which although delivered by the Supreme Court in the
context of the <span lang="EN-US" style="background: white;">Representation
of the People Act, 1951</span>, is relevant since the procedure under the CPC
applies to the statute. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
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.</div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com2tag:blogger.com,1999:blog-5949922529631180407.post-1369045468723863512016-04-22T02:33:00.000+05:302016-04-27T12:22:03.570+05:30Evolving a Culture of Damages<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
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.</div>
<div class="MsoNormal" style="text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
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? <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
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.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
It is almost as though <a href="https://indiankanoon.org/doc/1882893/">Section
12</a> of the Evidence Act, 1872 does not exist. According to the
provision, <span lang="EN-US" style="background: white;">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.</span>
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 <i><a href="https://indiankanoon.org/doc/1983225/">IPRS v. Debashis Patnaik</a></i>
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. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">Comments and suggestions are welcome.</span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-16663455627234639902016-03-31T02:12:00.000+05:302016-09-15T14:04:17.815+05:30 Delhi High Court Rules on the CCI’s Jurisdiction over Patent-related Market Abuse<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span style="line-height: 150%;">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 </span><a href="http://lobis.nic.in/ddir/dhc/VIB/judgement/30-03-2016/VIB30032016CW4642014.pdf" style="line-height: 150%;">161-page
decision</a><span style="line-height: 150%;"> 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.</span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<span style="line-height: 150%;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
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 <a href="http://thedemandingmistress.blogspot.in/2013/09/the-overlap-between-patents-and.html">several</a>
<a href="http://thedemandingmistress.blogspot.in/2013/09/patent-litigation-and-competition-law-ii.html">posts</a>
in <a href="http://thedemandingmistress.blogspot.in/2013/09/sections-60-and-62-of-competition-act.html">this
blog</a>, which were subsequently <a href="http://cis-india.org/a2k/blogs/a-study-of-j-sai-deepaks-comments-on-competition-law-in-india">discussed</a>
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 “<i>Patents and Competition Law: Identifying Jurisdictional Metes and
Bounds in the Indian Context</i>” 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. <span style="line-height: 150%;">This paper is based on my talk delivered last
May in the 8</span><sup style="line-height: 150%;">th</sup><span style="line-height: 150%;"> National Symposium on Competition Law at the National
Law School, Bangalore.</span></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
Extracted below
are a few excerpts from the paper:<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<i>“Abstract<o:p></o:p></i></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<i>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.<o:p></o:p></i></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<i><br /></i></div>
<div class="MsoNormal" style="line-height: 150%; text-align: justify;">
<i>1. INTRODUCTION<o:p></o:p></i></div>
<div class="MsoNormal" style="background: white; line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;">
<i>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. <o:p></o:p></i></div>
<div class="MsoNormal" style="background: white; line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;">
<i>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. <o:p></o:p></i></div>
<div class="MsoNormal" style="line-height: 107%; margin-bottom: 8.0pt;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;">
<i>6. CONCLUSION <o:p></o:p></i></div>
<br />
<div class="MsoNormal" style="background: white; line-height: 150%; margin-bottom: .0001pt; margin-bottom: 0cm; text-align: justify;">
<i>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.”<o:p></o:p></i></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-85358287526955841852015-12-02T03:36:00.000+05:302016-02-10T12:16:16.808+05:30How Will the Commercial Courts Ordinance Affect Patent and Design Suits?<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
The <a href="http://lawmin.nic.in/la/commercial.pdf">Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts Ordinance, 2015</a>
came into force on October 23, 2015 and the <a href="http://www.prsindia.org/uploads/media/Delhi%20high%20court/Delhi%20High%20Court%20Act,%202015.pdf">Delhi
High Court (Amendment) Act, 2015</a> came into force on October 26, 2015. <i>Vide </i><a href="http://delhihighcourt.nic.in/writereaddata/Upload/PublicNotices/PublicNotice_2FEM6V27.PDF">notification</a>
dated November 24, 2015, the following directions were issued by the Delhi High
Court:</div>
<div class="MsoNormal" style="text-align: justify;">
<i style="text-indent: -18pt;"><span lang="EN-US"><br /></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i style="text-indent: -18pt;"><span lang="EN-US">1.<span style="font-size: 7pt; font-stretch: normal; font-style: normal;">
</span></span></i><i style="text-indent: -18pt;"><span lang="EN-US">All suits or other proceedings pending in the Delhi High Court on
the Original Side up to the value of rupees one crore, excepting those cases in
which final judgments have been reserved, shall be transferred to the
jurisdictional subordinate courts.</span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i style="text-indent: -18pt;"><span lang="EN-US">2.<span style="font-size: 7pt; font-stretch: normal; font-style: normal;">
</span></span></i><i style="text-indent: -18pt;"><span lang="EN-US">All suits or other proceedings the value of which exceeds rupees one
crore but does not exceed rupees two crores, other than those relating to
commercial disputes the specified value of which is not less than rupees one
crore (as defined in The Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts Ordinance, 2015), pending in the Delhi High
Court on the Original Side, excepting those cases in which final judgments have
been reserved, shall be transferred to the jurisdictional subordinate courts.</span></i></div>
<div class="MsoListParagraphCxSpLast" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">While the effect
of this notification on pending suits relating to Intellectual Property depends
on the interpretation of the First Proviso to Section 7 of the Ordinance (which
is pending in a writ petition filed before the High Court of Delhi), the
position with respect to certain patent and design suits appears to be
relatively clear thanks to the Second Proviso. Section 7 reads as under:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">All suits and applications relating to commercial
disputes of a Specified value filed in a High Court having ordinary original
civil jurisdiction shall be heard and disposed of by the Commercial Division of
that High Court. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">Provided that all suits and applications relating to
commercial disputes, stipulated by an Act to lie in a court not inferior to a
District Court, and filed on the original side of the High Court, shall be
heard and disposed of by the Commercial Division of the High Court. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">Provided further that all suits and applications
transferred to the High Court by virtue of sub-section (4) of Section 22 of the
Designs Act, 2000 or section 104 of the Patents Act, 1970 shall be heard and
disposed of by the Commercial Division of the High Court in all the areas over
which the High Court exercises ordinary original civil jurisdiction.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">The reference in
the Second Proviso is to suits and applications which have been “transferred”
to the High Court by virtue of Section 104 of the Patents Act and Section 22(4)
of the Designs Act, both of which relate to situations where the validity of
the patent and design have been challenged respectively. Simply put, suits which
have been transferred to a High Court by virtue of the said provisions will be
transferred to the Commercial Division of the High Court regardless of the
valuation of the Suit and counter-claim. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">This position
was recently taken by a Single Judge of the Delhi High Court in <i><a href="http://lobis.nic.in/ddir/dhc/MAN/judgement/28-11-2015/MAN27112015S38122014.pdf">Novartis
v. Cipla</a> </i>wherein it was held as under:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">“<i>22. It is an undisputed fact that the
present High Court exercises Ordinary Original Civil Jurisdiction. Before
passing of the Ordinance, the suit for infringement of patent and designs which
were being filed before the District Judge(s) of District Courts have been
transferred to this Court, once the patent is challenged in the written
statement by the defendants as a defence or by filing of the counter-claim
under the Patents Act, 1970 and under Section 22(4) of the Designs Act, 2000.
Various matters had been transferred by the District Courts from time to time
to the High Court, who had received the same after pleading the defence in the
written statement or a separate counter-claim filed by the defendants. Under
these circumstances, it is quite clear that under any circumstances, such
matters have to be heard and disposed of by the Commercial Division of the High
Court which has the Ordinary Original Civil Jurisdiction irrespective of their
pecuniary value.</i>”<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Although the law
appears to have been correctly applied in the facts of the decision, the
question that remains is this- the reference in the Second Proviso is to High
Courts which exercise ordinary original civil jurisdiction. Does this mean that
the Second Proviso does not apply to Courts which do not exercise such a
jurisdiction? What would be the consequence of such a reading? Would it mean
that in High Courts which do not exercise such jurisdiction, there will not be
a transfer of such suits to the commercial divisions of the High Courts? Then
what happens to such suits? Would they remain unaffected by the Commercial
Courts Ordinance and continue to be prosecuted the way they currently are? <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">It is important
to address this issue because according to Section 21 of the Ordinance, the
Ordinance shall prevail over any other law in force. Comments and corrections
are welcome!</span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com1tag:blogger.com,1999:blog-5949922529631180407.post-91553274158459920212015-08-23T21:55:00.001+05:302015-08-23T23:49:46.731+05:30Indian Patent Office Releases Guidelines for Examination of Computer Related Inventions<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
By an <a href="http://www.ipindia.nic.in/iponew/officeOrder_570001_21August2015.pdf">order</a>
dated August 21, 2015, the Controller General of Patents, Designs and
Trademarks released the latest guidelines for examination of patent
applications dealing with computer related inventions. The guidelines are
available <a href="http://www.ipindia.nic.in/iponew/CRI_Guidelines_21August2015.pdf">here</a>. This post is merely an update on this development. I hope to undertake an analysis of the Guidelines soon.<br />
<br />
Paragraph 3 of the Guidelines contains definitions of algorithm, computer, computer network, computer programme, computer system, data, firmware, function, hardware, "<i>per se</i>", software and a few more similar and relevant terms. Para 4.5 of the Guidelines deals with determination of excluded subject-matter in patent applications, with specific sub-heads separately dealing with determination of various categories of subject-matter excluded under Section 3(k) of the Patents Act, 1970. Extracted below are some of the relevant portions:<br />
<br />
<i><b>4.5 Determination of excluded subject matter relating to CRIs </b></i><br />
<i>Since patents are granted to inventions, whether products or processes, in all
fields of technology, it is important to ascertain from the nature of the
claimed CRI whether it is of a technical nature involving technical
advancement as compared to the existing knowledge or having economic
significance and is not subject to exclusion under Section 3 of the Patents Act.
The sub-section 3(k) excludes mathematical methods or business methods or
computer programme per se or algorithms from patentability. Computer
programmes are often claimed in the form of algorithms as method claims or
system claims with some „means‟ indicating the functions of flow charts or
process steps. It is well-established that, in patentability cases, the focus
should be on the underlying substance of the invention, not the particular
form in which it is claimed.
What is important is to judge the substance of claims taking whole of the
claim together. If the claims in any form such as method/process,
apparatus/system/device, computer program product/ computer readable
medium fall under the said excluded categories, they would not be patentable. However, if in substance, the claims, taken as whole, do not fall
in any of the excluded category, the patent should not be denied. </i><br />
<i><br /></i>
<i><b>4.5.4 Claims directed at Computer Programme per se: </b></i><br />
<i>The computer
programme per se is excluded from patentability under section 3 (k) apart
from mathematical or business method and algorithm. Claims which are
directed towards computer programs per se are excluded from patentability,
like
(i) Claims directed at computer programmes/ set of instructions/ Routines
and/or Sub-routines written in a specific language
(ii) Claims directed at “computer programme products” / “Storage Medium
having instructions” / “Database” / “Computer Memory with instruction”
i.e. computer programmes per se stored in a computer readable medium
The legislative intent to attach suffix per se to computer programme is
evident by the following view expressed by the Joint Parliamentary
Committee while introducing Patents (Amendments) Act, 2002:</i><br />
<i><br /></i>
<i>“In the new proposed clause (k) the words ''per se" have been
inserted. This change has been proposed because sometimes the
computer programme may include certain other things, ancillary
thereto or developed thereon. The intention here is not to reject them
for grant of patent if they are inventions. However, the computer
programmes as such are not intended to be granted patent. This
amendment has been proposed to clarify the purpose.” </i><br />
<i><br /></i>
<i>The JPC report holds that the computer programmes as such are not
intended to be granted patent. It uses the phrase “ … certain other things,
ancillary thereto or developed thereon…..”. The term “ancillary” indicates
something essential to give effect to the main subject. In respect of CRIs,
the term “ancillary thereto” would mean the “things” which are essential to
give effect to the computer programme. The clause “developed thereon” in
the JPC report may be understood as any improvement or technical
advancement achieved by such development. Therefore, if a computer
programme is not claimed by “in itself” rather, it has been claimed in such
manner so as to establish industrial applicability of the invention and fulfills
all other criterion of patentability, the patent should not be denied. In such
a scenario, the claims in question shall have to be considered taking in to
account whole of the claims. </i></div>
<div class="MsoNormal" style="text-align: justify;">
<o:p></o:p></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com1tag:blogger.com,1999:blog-5949922529631180407.post-5020540859482145312015-08-04T02:33:00.001+05:302015-10-28T13:15:36.467+05:30Supreme Court's Interpretation of Special Jurisdiction Provisions in IPRS v. Sanjay Dalia<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">On July 1, 2015, the Supreme
Court pronounced its <a href="http://www.scdecision.in/volume/42/753">verdict</a>
in the much awaited case of <i>IPRS v.
Sanjay Dalia </i>where the issue was the interpretation of the special
jurisdiction provisions, namely Section 62 of the Copyright Act, 1957 and 134
of the Trademarks Act, 1999. The Court held that if the cause of action
incidentally arises at a place where the principal office of the plaintiff is
located, the plaintiff cannot rely upon Sections 62/134 to institute a suit at
a place where its branch office is located.</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">Reproduced below are the
provisions in question:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: inherit;">62. Jurisdiction of court over
matters arising under this Chapter. -- <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: inherit;">(1) Every suit or other civil
proceeding arising under this Chapter in respect of the infringement of
copyright in any work or the infringement of any other right conferred by this
Act shall be instituted in the district court having jurisdiction. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: inherit;">(2) For the purpose of
sub-section (1), a "district court having jurisdiction" shall, <u>notwithstanding
anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or any
other law for the time being in force</u>, include a district court within the
local limits of whose jurisdiction, at the time of the institution of the suit
or other proceeding, the person instituting the suit or other proceeding or,
where there are more than one such persons, any of them actually and
voluntarily resides or <u>carries on business</u> or personally works for
gain.” <o:p></o:p></span></i></div>
<div class="MsoNormal" style="background: white; margin: 12pt 0cm; text-align: justify;">
<span style="font-family: inherit;"><i style="background-color: transparent;">134. Suit for infringement,
etc., to be instituted before District Court. -- </i><a href="https://www.blogger.com/null" name="TOC-Section-134-of-the-Trade-Marks-Act-i"></a></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: inherit;">(1) No suit-- (a) for the
infringement of a registered trade mark; or (b) relating to any right in a
registered trade mark; or (c) for passing off arising out of the use by the
defendant of any trade mark which is identical with or deceptively similar to
the plaintiff's trade mark, whether registered or unregistered, shall be
instituted in any court inferior to a District Court having jurisdiction to try
the suit. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: inherit;">(2) For the purpose of clauses
(a) and (b) of sub-section (1), a "District Court having
jurisdiction" shall, <u>notwithstanding anything contained in the Code of
Civil Procedure, 1908 (5 of 1908) or any other law for the time being in force</u>,
include a District Court within the local limits of whose jurisdiction, at the
time of the institution of the suit or other proceeding, the person instituting
the suit or proceeding, or, where there are more than one such persons any of
them, actually and voluntarily resides or <u>carries on business </u>or
personally works for gain. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: inherit;"><br /></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">It is clear from both provisions,
which are identical in all material respects, that they provide additional
jurisdictional remedies over and above the conventional options available to a plaintiff
under Section 20 of the Code of Civil Procedure, 1908. The central issue before
the Court was the interpretation of the phrase “carries on business” used in
both provisions, which has a bearing on the following scenarios:</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="text-indent: -18pt;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span style="text-indent: -18pt;">1.</span><span style="font-size: 7pt; font-stretch: normal; text-indent: -18pt;">
</span><span lang="EN-US" style="text-indent: -18pt;">Can a place where the branch office of the plaintiff is
located, in the absence of a cause of action which has arisen in such place, be
treated as a place where the plaintiff corporation “carries on business”?</span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span style="text-indent: -18pt;">2.</span><span style="font-size: 7pt; font-stretch: normal; text-indent: -18pt;">
</span><span lang="EN-US" style="text-indent: -18pt;">In a situation where a cause of action has arisen at the
place where the branch office is located, is the plaintiff barred from
instituting a suit at a place where he has his registered/principal office
because no cause of action has arisen there? In other words, does the Plaintiff
not have the option of choosing between the principal/registered place of
business, and the branch office where the cause of action has arisen in whole
or in part?</span></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l1 level1 lfo1; text-align: justify; text-indent: -18.0pt;">
<span style="font-family: inherit;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">In order to address these
scenarios, it is imperative to understand the construal of the Explanation to
Section 20 of the CPC since it spells out the meaning of “carries on business”.
Reproduced below is Section 20 with the Explanation:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div style="margin-bottom: .0001pt; margin: 0cm; text-align: justify;">
<span style="font-family: inherit;"><strong><i><span style="font-size: 11pt;">20. Other suits to be
instituted where defendants reside or cause of action arises.-</span></i></strong><span class="apple-converted-space"><i><span style="font-size: 11pt;"> </span></i></span><i><span style="font-size: 11pt;">Subject to the limitations aforesaid, every suit shall be
instituted in a Court within the local limits of whose jurisdiction—<o:p></o:p></span></i></span></div>
<div style="margin-bottom: .0001pt; margin: 0cm; text-align: justify;">
<i><span style="font-size: 11pt;"><span style="font-family: inherit;">(a) The defendant, or each
of the defendants where there are more than one, at the time of the
commencement of the Suit, actually and voluntarily resides, or carries on
business, or personally works for gain; or<o:p></o:p></span></span></i></div>
<div style="margin-bottom: .0001pt; margin: 0cm; text-align: justify;">
<i><span style="font-size: 11pt;"><span style="font-family: inherit;">(b) any of the defendants,
where there are more than one, at the time of the commencement of the suit,
actually and voluntarily resides, or carries on business, or personally works
for gain, provided that in such case either the leave of the Court is given, or
the defendants who do not reside, or carry on business, or personally work for
gain, as aforesaid, acquiesce in such institution; or<o:p></o:p></span></span></i></div>
<div style="margin-bottom: .0001pt; margin: 0cm; text-align: justify;">
<i><span style="font-size: 11pt;"><span style="font-family: inherit;">(c) the cause of action,
wholly or in part, arises.<o:p></o:p></span></span></i></div>
<div style="margin-bottom: .0001pt; margin: 0cm; text-align: justify;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0cm; text-align: justify;">
<span style="font-family: inherit;"><b><i><span style="font-size: 11pt;">Explanation</span></i></b><i><span style="font-size: 11pt;">: A corporation shall be deemed to carry on business at its sole
or principal office in India or, in respect of any cause of action arising at
any place where it has also a subordinate office, at such place.<o:p></o:p></span></i></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">The phrase “carries on business”
in the Explanation has been interpreted in two other decisions of the Supreme
Court, namely <i>Patel Roadways v. Prasad Trading </i>and <i>New Moga Transport v. United India Assurance</i>. In Para 10 of <i>New Moga Transport, </i>the Court held thus:</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="background: white;"><span style="font-family: inherit;">“10<b>.<span class="apple-converted-space"> </span></b>On a plain reading of the
Explanation to Section 20 CPC it is clear that the Explanation consists of two
parts: (i) before the word “or”
appearing between the words “office in India” and the words “in respect of”,
and (ii) the other thereafter.
The Explanation applies to a defendant which is a corporation, which term would
include even a company. The first part of the Explanation applies only to such
corporation which has its sole or principal office at a particular place. In
that event, the court within whose jurisdiction the sole or principal office of
the company is situate will also have jurisdiction inasmuch as even if the
defendant may not actually be carrying on business at that place, it will be
deemed to carry on business at that place because of the fiction created by the
Explanation. <b><u>The latter part of the
Explanation takes care of a case where the defendant does not have a sole
office but has a principal office at one place and has also a subordinate
office at another place. The expression “at such place” appearing in the
Explanation and the word “or” which is disjunctive clearly suggest that if the
case falls within the latter part of the Explanation it is not the court within
whose jurisdiction the principal office of the defendant is situate but the
court within whose jurisdiction it has a subordinate office which alone has the
jurisdiction “in respect of any cause of action arising at any place where it has
also a subordinate office</u></b>”.”<o:p></o:p></span></span></i></div>
<div class="MsoListParagraph" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">In light of this <i>ratio</i> and
after having extensively reviewed the object of Sections 62/134, the Supreme
Court in <i>IPRS </i>rightly observed that these
special jurisdiction provisions are exceptions to Section 20 of the CPC only in
so far as they permit the plaintiff to sue at a place of his residence or where
he works for gain or carries on business. In other words, the provisions are
not to be construed as granting <i>cartes
blanches </i>to the plaintiff since there are limitations/riders which apply to
the plaintiff’s ability to sue even under Sections 62/134. This sentiment finds
express endorsement in Para 16 of the decision. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">In reading in limitations into the
provisions, the Court relied upon the spirit of convenience of parties
which is embodied in the Explanation to Section 20. According to the
Court, keeping with the spirit of the Explanation, unless a cause of action
arises at a place where the branch office of the plaintiff is located, it cannot be deemed as a place where the plaintiff “carries on business” for the purposes of Sections 62/134. In the absence of such a qualification, plaintiff corporations with branch offices in far flung places could harass defendants by suing them at such places despite the cause of action not having arisen there. Simply put, the convenience
of defendants has not been entirely done away with by Sections 62/134 since balance
is struck by using cause of action as the parameter to determine jurisdiction
in so far as the branch office of the plaintiff is concerned. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span style="background: white;">Viewed from another angle, the underlying
rationale is that a branch office has not been accorded the same status under
law as a principal place of business for the purposes of jurisdiction.
Consequently, a branch office needs to be supplemented by a cause of action for
it to be deemed in law as a place where the plaintiff "carries on business". In fact, under Sections 62/134, the place where the branch office is located is the only appropriate place for the plaintiff to sue when the cause of action has
accrued there. This approach strikes a balance between the convenience of the
plaintiff and the defendant since the assumption is that the branch office
makes it convenient for the plaintiff to sue, and the accrual of the cause of
action in that place means the defendant’s goods are being sold there and
therefore it is not inconvenient for him to defend himself.</span><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="background: white;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span class="apple-converted-space"><span style="background: white;"><span style="font-family: inherit;">Based on this logic, following are the practical
jurisdictional consequences:</span></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span class="apple-converted-space" style="text-indent: -18pt;"><span lang="EN-US">1.<span style="font-size: 7pt; font-stretch: normal;"> </span></span></span><span class="apple-converted-space" style="text-indent: -18pt;"><span lang="EN-US" style="background: white;">If the principal place of business of the
plaintiff is at X, and the cause of action has arisen at <b><u>Y where there is no branch of office</u></b>, Plaintiff may sue at X
based on Sections 62/134, and at Y based on Section 20(c) of the CPC.</span></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span class="apple-converted-space" style="text-indent: -18pt;"><span lang="EN-US">2.<span style="font-size: 7pt; font-stretch: normal;"> </span></span></span><span class="apple-converted-space" style="text-indent: -18pt;"><span lang="EN-US" style="background: white;">If the principal place of business of the
plaintiff is at X, and the cause of action has arisen at <b><u>Y where there is a branch office</u></b>, Plaintiff may sue only at
Y, not X, if the suit relates to the said cause of action.</span></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span class="apple-converted-space" style="text-indent: -18pt;"><span lang="EN-US">3.<span style="font-size: 7pt; font-stretch: normal;"> </span></span></span><span class="apple-converted-space" style="text-indent: -18pt;"><span lang="EN-US" style="background: white;">If the principal place of business of the
plaintiff is at X, and the cause of action has arisen at Y, and branch office
is at Z, then plaintiff may rely on Sections 62/134 to sue at X and Section
20(c) of the CPC to sue at Y, but cannot sue at Z under any circumstances
invoking Sections 62/134 or Section 20.</span></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span class="apple-converted-space"><span style="background: white; color: #222222; mso-bidi-font-family: Arial;"><span style="font-family: inherit;"><br /></span></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span class="apple-converted-space"><span style="background: white; color: #222222; mso-bidi-font-family: Arial;">There is another scenario which is possible. The p</span></span><span style="background: white;">laintiff could have its principal place of business at
X and a single defendant may give rise to two causes of action simultaneously
at Y (where there is a branch office), and Z (where there is no branch office).
In so far as Y is concerned, the plaintiff cannot sue at X or Z, going by the <i>ratio </i>of the IPRS. Further, with respect
to the cause of action at Z, the plaintiff may sue either at X based on
Sections 62/134 or Z based on Section 20(c). However, both causes of action,
namely with respect to Y and Z, cannot be combined in a composite suit since
the <i>ratio </i>of the Supreme Court’s
decision in <i>Dhodha House</i> would come
in the way.</span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="background-color: white; color: #222222;"><span style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><span style="background-color: white; color: #222222;">Comments and clarifications are welcome.</span> </span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-10869595451129245732015-07-20T23:59:00.000+05:302016-02-10T12:41:47.558+05:30Standard Essential Patents: Reviewing the IEEE’s IPR Policy- Part II<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">In the <a href="http://thedemandingmistress.blogspot.in/2015/06/standard-essential-patents-reviewing.html">last
post</a>, I reviewed portions of the IEEE’s updated IPR policy for Standard
Essential Patents. I continue with the review in this post.</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">What is common between the IPR policies of IEEE and ETSI is that both
disclaim any verification or certification of validity or essentiality or
infringement of any patent claim declared as Essential by a patentee. The IEEE
policy further disclaims any enquiry into the FRAND-compliance of a patentee’s
licensing terms. Importantly, it states that “<i><span lang="EN-US">Nothing in this policy shall be interpreted as giving
rise to a duty to conduct a patent search</span></i><span lang="EN-US">”. This
could be interpreted to mean that the policy does not cast a burden on any
third party to undertake a search for patents which it infringes or may
potentially infringe, which is consistent with the extant practice of casting
the obligation of establishing infringement on the right holder. Simply stated,
a declaration of essentiality by a patentee remains a unilateral declaration by
the patentee, with no formal imprimatur by the IEEE. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="font-family: inherit;">This is further
corroborated by an express window in the Policy which permits a prospective
licensee (“Applicant”) and the patentee (“Submitter”) to litigate over patent
validity, enforceability, essentiality, or infringement; Reasonable Rates or
other reasonable licensing terms and conditions; compensation for unpaid past
royalties or a future royalty rate; any defenses or counterclaims; or any other
related issues. This is a thumping endorsement of the position that a prospective
licensee’s <i>bonafide</i> challenge to the
assertions of the patentee cannot result in an adverse inference of
unwillingness. As recognized last year by the England and Wales
High Court in <i><a href="http://www.bailii.org/ew/cases/EWHC/Patents/2014/3924.html">Vringo v. ZTE</a></i>,
a prospective licensee is well within its rights to challenge the validity and
essentiality of the patents asserted without being branded an “unwilling
licensee”. It must however be noted that if litigation is merely employed to
delay an inevitable payment, which must be demonstrated by the patentee from the conduct of the
prospective licensee and the lack of apparent merits in its challenge, the
prospective licensee may not be entitled to be treated as a “willing
licensee”. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="font-family: inherit;">As regards a
patentee’s access to exclusionary remedies such as injunctions, the Policy firstly
defines “Prohibitive Order” to mean an interim or permanent injunction,
exclusion order, or similar adjudicative directive that limits or prevents making,
having made, using, selling, offering to sell, or importing a Compliant
Implementation. Further, except for circumstances envisaged by and in the Policy, a
patentee who claims to own an Essential Patent Claim may not seek Prohibitive
Orders against prospective licensees. </span></span><br />
<span lang="EN-US"><span style="font-family: inherit;"><br /></span></span>
<span lang="EN-US"><span style="font-family: inherit;">That exceptional window is available when
the implementer of an IEEE Standard fails to participate in, or to comply with
the outcome of, an “adjudication”. Adjudication includes adjudication in a first
appeal by any party from the decision of the forum of first instance on any issue.
Importantly, the scope of the adjudication could relate to a host of issues
such as license terms, patent validity, essentiality and the like. Therefore, an injunctive remedy is available to a patentee only when an implementer fails to
abide by a Court’s finding, which includes the finding of an arbitral tribunal.
Until then, no such remedy may be sought against the implementer of a standard.
<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="font-family: inherit;">As for what
constitutes a “Reasonable Rate” of royalty, here’s the definition from the
Policy which is best reproduced:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US"><span style="font-family: inherit;">“Reasonable Rate” shall mean appropriate compensation
to the patent holder for the practice of an Essential Patent Claim <b><u>excluding the value, if any, resulting
from the inclusion of that Essential Patent Claim’s technology in the IEEE
Standard</u></b>. In addition, determination of such Reasonable Rates should
include, but need not be limited to, the consideration of: <o:p></o:p></span></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US"><span style="font-family: inherit;">• The value that the functionality of the claimed
invention or inventive feature within the Essential Patent Claim contributes to
the value of the relevant functionality of the <b><u>smallest saleable Compliant Implementation that practices the
Essential Patent Claim</u></b><u>. <o:p></o:p></u></span></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US"><span style="font-family: inherit;">• The value that the Essential Patent Claim
contributes to the smallest saleable Compliant Implementation that practices
that claim<b><u>, in light of the value
contributed by all Essential Patent Claims for the same IEEE Standard practiced
in that Compliant Implementation</u></b>.<o:p></o:p></span></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><i><span lang="EN-US">• Existing licenses covering use of the Essential
Patent Claim, where such licenses were not obtained under the explicit or
implicit threat of a Prohibitive Order, and <b><u>where the circumstances and resulting licenses are otherwise
sufficiently comparable to the circumstances of the contemplated license</u></b>.</span></i><span lang="EN-US"> <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="font-family: inherit;">So not only is
the patentee precluded from claiming royalty based on the <i>ex post </i>value of the patent i.e. post its inclusion in an IEEE
standard, the royalty must also be based on parameters attributable to the overall
contribution of the patent to the IEEE standard and must be a measure of the smallest
saleable component which implements the standard. These factors appear to have
been distilled from the <i>Microsoft v.
Motorola </i>and<i> Innovatio </i>decisions. <o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US"><span style="font-family: inherit;">Broadly
speaking, although there could be room for further refinement (as is always the
case), the Policy must be credited for clarifying quite a few issues which have
festered to the detriment of all stakeholders, particularly prospective licensees. Importantly, the Policy is a reasonably good template for other SSOs to draw from and build on. Let’s hope
the ETSI IPR Policy too is amended on similar lines given the room for exploitative
abuse by patentees under the current ETSI Policy.</span></span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-42925598743019535542015-06-30T04:33:00.000+05:302016-02-10T12:43:10.002+05:30Standard Essential Patents: Reviewing the IEEE’s IPR Policy- Part I<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="background: white; text-align: justify;">
<span style="font-family: inherit;">Earlier this year in March, the Institute of
Electrical and Electronics Engineers (IEEE) published the latest version of its
<a href="http://standards.ieee.org/develop/policies/bylaws/sb_bylaws.pdf">bylaws</a>
which shall apply to the licensing practices of its members in so far as they relate
to the technology standards prescribed by the IEEE. Given that a lot has
already been written about the policy, I am not sure if I can add a new perspective
to it. Therefore, these series of posts I intend to pen may be treated as my
on-going attempts to make sense of the policy given its relevance to my current
body of work. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="background: white; text-align: justify;">
<span style="font-family: inherit;">Articles 6 and
7 of the policy deal with the patent and copyright policies respectively. In this
post, I review certain aspects of the Patent policy, which I believe are significant
developments in SEP jurisprudence. Article 6.1 which contains the definitions
defines “Compliant Implementation” thus:<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="background: white; text-align: justify;">
<span style="font-family: inherit;"><i>“<span lang="EN-US">Compliant Implementation” shall mean any
product (<b><u>e.g., component,
sub-assembly, or end-product</u></b>) or service that conforms to any mandatory
or optional portion of a normative clause of an IEEE Standard.</span></i><i><o:p></o:p></i></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">At a time when there is little or no judicial guidance, much less
clarity, on whether the policy of the European Telecommunications Standards
Institute (ETSI) envisages an obligation on SEP owners to grant FRAND-encumbered
licenses to component manufacturers such as chipset makers, the IEEE’s definition
of “compliant implementation” must be welcomed for its expansive scope and clarity.
The definition expressly treats a component or sub-assembly, and not just the
end-product, as product for the purposes of standard compliant implementation. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">Although Intel has advanced a similar position in its <i><a href="http://www.intel.com/content/dam/www/public/us/en/documents/corporate-information/intel-apple-vs-motorola-amicus-brief-2012-1548-1549-statement.pdf">amicus
brief</a> </i>before the United States Court of Appeals for the Federal Circuit
in <i>Apple v. Motorola, </i>the brief does
not undertake a systematic interpretation of terms such as “Manufacture”, “Equipment”
and “Methods” which have been defined in the <a href="http://www.etsi.org/images/files/IPR/etsi-ipr-policy.pdf">ETSI IPR policy</a>.
This is not to say that Intel’s argument is without basis, but the reasoning in
the brief could have been more comprehensive so as to deal with and negate the
position that only end-product manufacturers are entitled to a FRAND license
under the ETSI IPR policy. Fortunately, the IEEE policy leaves very little to
imagination in this regard giving the impression that the framers of this
policy have drawn important lessons from the ongoing debate with respect to the
ETSI policy. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">The other important definition, perhaps a more critical one, is that of
an “Essential Patent Claim” which is defined as follows:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><i>“<span lang="EN-US">“Essential
Patent Claim” shall mean any Patent Claim the practice of which was necessary
to implement <b><u>either a mandatory or
optional portion</u></b> of a normative clause of the IEEE Standard when, at
the time of the IEEE Standard’s approval, there was no commercially and
technically feasible non-infringing alternative implementation method for such
mandatory or optional portion of the normative clause. An Essential Patent
Claim does not include any Patent Claim that was essential only for Enabling
Technology or any claim other than that set forth above even if contained in
the same patent as the Essential Patent Claim”</span></i><i><o:p></o:p></i></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="Default" style="text-align: justify;">
<span style="font-size: 11pt;"><span style="font-family: inherit;">It is pertinent to note that the definition includes both
mandatory and optional portions of an IEEE standard. In other words, even if a
patent claim covers an optional portion of an IEEE standard, it shall be deemed to be an Essential Patent Claim. It would be interesting to see a Court
interpret this definition in the future in light of <i><a href="http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1045.pdf">Fujitsu
v. Netgear</a></i>, where the subject-matter of the dispute related to IEEE standards. In this decision, the United States Court of Appeals for the Federal Circuit held that where a portion
of a standard is optional:</span></span><br />
<span style="font-size: 11pt;"><span style="font-family: inherit;"><br /></span></span>
<span style="font-size: 11pt;"><span style="font-family: inherit;"><i>…<b>standards
compliance alone would not establish that the accused infringer chooses to
implement the optional section. In these instances, it is not sufficient for
the patent owner to establish infringement by arguing that the product
admittedly practices the standard, therefore it infringes. In these cases, the
patent owner must com-pare the claims to the accused products or, if
appropriate, prove that the accused products implement any relevant optional
sections of the standard.</b> This should alleviate any concern about the use
of standard compliance in assessing patent infringement. <b>Only in the situation where a patent covers every possible
implementation of a standard will it be enough to prove infringement by showing
standard compliance</b>.”<o:p></o:p></i></span></span></div>
<div class="Default" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">In view of this test, can the updated definition of an Essential Patent Claim prevail over the Federal Circuit Court’s ruling? Given that ruling of the
Court, and not IEEE’s bylaws, has the force of law as to what constitutes "essential" and how essentiality may be established, the definition may not be of
much use to patentees who claim ownership of IEEE standards in circumventing the test laid down by the Court.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">The other interesting aspect of the definition of an Essential Patent
Claim is its express exclusion of any enabling technology. <span lang="EN-US">“Enabling Technology” has been defined thus:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><i><span lang="EN-US">““Enabling Technology” shall mean any technology that
may be necessary to make or use any product or portion thereof that complies
with the IEEE Standard but is neither explicitly required by nor expressly set
forth in the IEEE Standard (e.g., semiconductor manufacturing technology, compiler
technology, object oriented technology, basic operating system technology, and
the like)”</span></i><i><o:p></o:p></i></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">According to this definition, it appears that owners of essential patent
claims cannot extend their claim of essentiality over or treat as essential
those patent claims which are directed towards technologies/products that enable
the implementation of an IEEE standard. In other words, since an IEEE standard could be silent on the actual manner of its enablement, a patentee
which allegedly owns a Standard Essential Patent cannot claim that a specific
enabling technology is essential for the implementation of the standard since
there could be multiple ways of implementing the standard.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">This does not mean
that infringement cannot be alleged by the patentee. It only means that as
opposed to using the claim of essentiality to establish infringement, the
patentee would need to demonstrate a claim-based infringement </span>using the conventional claim-to-product comparison.<span style="font-family: inherit;"> Therefore, only if the patent contains a claim which covers a particular manner of enablement
of the standard or a product which facilitates enablement, it would be available for the patentee to allege infringement based on the claim since the essentiality of the patent cannot aid him in this regard. In this sense, the definitions of Essential Patent Claim and Enabling Technology strike a distinction between technology/product which enables the implementation of the Essential Patent Claim and technology/product which actually implements/uses the Essential Patent Claim. </span><span style="font-family: inherit;">This is yet another interesting aspect of the definitions whose
interpretation and application by Courts is bound to generate divergent views. </span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">In the next post, I shall continue with my review of the IEEE patent policy. </span></div>
<div class="MsoNormal" style="text-align: justify;">
<o:p></o:p></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-2590737973224533092015-06-05T03:05:00.002+05:302016-08-28T23:28:06.192+05:30Trademark Remedies under the Companies Act, 2013<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
The erstwhile <a href="http://www.mca.gov.in/Ministry/pdf/Companies_Act_1956_13jun2011.pdf">Companies
Act, 1956</a> provided for certain trademark remedies under Sections 20 and 22. Section 20 spelt out the criteria for names which were deemed “undesirable”
for registration as company names and <a href="http://indiankanoon.org/doc/601001/">Section
22</a> provided the mechanism for rectification of a company name. A more
rationalized framework for rectification is available under Section 16 of the
current Companies Act, 2013.</div>
<div class="MsoNormal" style="text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
Extracted below is Section 16 of the 2013 Act:<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">16. (1) If, through inadvertence or otherwise, a
company on its first registration or on its registration by a new name, is
registered by a name which,— <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">(a) in the opinion of the Central Government, is
identical with or too nearly resembles the name by which a company in existence
had been previously registered, whether under this Act or any previous company
law, it may direct the company to change its name and the company shall change
its name or new name, as the case may be, within a period of three months from
the issue of such direction, after adopting an ordinary resolution for the
purpose; <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">(b) on an application by a registered proprietor of a
trade mark that the name is identical with or too nearly resembles to a
registered trade mark of such proprietor under the Trade Marks Act, 1999, made
to the Central Government within three years of incorporation or registration
or change of name of the company, whether under this Act or any previous
company law, in the opinion of the Central Government, is identical with or too
nearly resembles to an existing trade mark, it may direct the company to change
its name and the company shall change its name or new name, as the case may be,
within a period of six months from the issue of such direction, after adopting
an ordinary resolution for the purpose. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">(2) Where a company changes its name or obtains a new
name under sub-section (1), it shall within a period of fifteen days from the
date of such change, give notice of the change to the Registrar along with the
order of the Central Government, who shall carry out necessary changes in the
certificate of incorporation and the memorandum. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">(3) If a company makes default in complying with any
direction given under sub-section (1), the company shall be punishable with
fine of one thousand rupees for every day during which the default continues
and every officer who is in default shall be punishable with fine which shall
not be less than five thousand rupees but which may extend to one lakh rupees.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
From the provision, it is clear that while Clause (b) of sub-Section (1)
allows only a registered proprietor of a trademark to apply to the Central
Government for rectification of the name of a company whose name is identical
to or “too nearly resembles” the registered trademark, the remedy under Clause (a)
is not limited to a registered proprietor of a trademark. In other words, a
company whose name is not a registered trademark too could invoke Clause (a) to seek rectification of the name of another company whose name is
identical or too nearly resembles its own. This is an additional expeditious remedy to a suit for passing off if the
trademark is used as a company name by a third party. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
The remedy under Clause (a), which was available even under Section
22 of the erstwhile 1956 Act (albeit through a circuitous procedure), has probably been provided for in recognition of and as a counterpart to the action for
passing off available to owners of unregistered trademarks under the Trademarks
Act, 1999. That said, it is to be borne that while Clause (b) permits a registered proprietor of a trademark to apply for rectification of a company's name even if the former does not use the registered trademark as a company name, the remedy under Clause (a) is available only if both the applicant for rectification and the company against whom rectification is sought, use the trademark as company names. In this sense, the remedy under Clause (a) is narrower. On the positive side, while under Clause (b) a registered proprietor is
required to make an application for rectification within three years of
incorporation or registration or change of name of the company with respect to
whom the rectification is sought, there appears to be no such limitation period
under Clause (a).<br />
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
The rule that corresponds to Section 16 is Rule 8 of the <a href="http://www.mca.gov.in/Ministry/pdf/NCARules_Chapter2.pdf">Companies
(Incorporation) Rules, 2014</a> (which came into force on April 1, 2014) that enumerates detailed criteria to be mandatorily considered in deeming a proposed
company name undesirable for registration under the Companies Act. Interestingly,
Rule 8(2)(a) also deems undesirable a name which includes <span lang="EN-US">a trade mark that is subject of an application for registration</span> under the Trademarks Act, 1999, unless <span lang="EN-US">the consent of the applicant for trademark registration has been
obtained and produced by the promoters of the company. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Rule 8(2)(b),
among other things, also bars a proposed company name which:</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="text-indent: -18pt;">A. </span><span lang="EN-US" style="text-indent: -18pt;">is identical with or too nearly
resembles the name of a limited liability partnership </span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="text-indent: -18pt;">B. </span><span lang="EN-US" style="text-indent: -18pt;">resembles closely the popular
or abbreviated description of an existing company or limited liability
partnership</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="text-indent: -18pt;">C. </span><span lang="EN-US" style="text-indent: -18pt;">is identical with or too nearly
resembles the name of a company or limited liability partnership incorporated
outside India and reserved by such company or limited liability partnership
with the Registrar of Companies under Section 4 of the Act (read with Rule 9)</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="text-indent: -18pt;">D. </span><span lang="EN-US" style="text-indent: -18pt;">is identical to the name of a
company dissolved as a result of liquidation proceeding and a period of two
years have not elapsed from the date of such dissolution</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="text-indent: -18pt;">E. i</span><span lang="EN-US" style="text-indent: -18pt;">s identical with or too nearly
resembles the name of a limited liability partnership in liquidation or the
name of a limited liability partnership which is struck off up to a period of
five years</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="text-indent: -18pt;">F.</span><span style="font-size: 7pt; font-stretch: normal; text-indent: -18pt;"> </span><span lang="EN-US" style="text-indent: -18pt;">is generic to the trade</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="text-indent: -18pt;">G. </span><span lang="EN-US" style="text-indent: -18pt;">contains only the name of a
continent, country, state, city</span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
Clearly, Section 16 and Rule 8 seem designed to provide expeditious
alternatives to suits for trademark infringement and passing off in so far as
the use of marks as company names in concerned. I haven’t thus far come across
an order passed by the Central Government in an application under Section 16 and I am not sure orders
passed under Section 22 of the erstwhile 1956 Act were or are available on the website
of the Ministry of Corporate Affairs. If they are not, they ought to be made
available because it is important to know the quality of reasoning adopted by
the Ministry in allowing or rejecting such applications. I request readers to share any such orders that they may be aware of. <o:p></o:p></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com1tag:blogger.com,1999:blog-5949922529631180407.post-57558966481547716832015-06-04T02:41:00.001+05:302016-05-08T18:47:28.834+05:30IP Licensing and Taxation: What is “transfer” in “transfer of right to use goods”?<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">In my <a href="http://thedemandingmistress.blogspot.in/2015/06/ip-licensing-and-taxation-reviewing.html">last
post</a> I reviewed and differed with the decision of the Bombay High Court in <i><a href="http://indiankanoon.org/doc/145449786/">Tata Sons & Anr. v. The State
of Maharashtra & Anr</a>.</i> wherein the central question was whether Tata
Sons’ Agreement for use of the Tata trademark with its group companies resulted
in transfer of right to use the mark to the latter. In this post, the idea is
to enquire deeper into the concept of “transfer” so as to understand the
distinction between a license to the use goods (including a trademark) and
transfer of right to use the goods.</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">Let’s start by breaking down “transfer of right to use the goods” into
its constituents. It cannot be denied that there is a clear distinction between
“right to use the goods” and “transfer of right to use the goods”. “Right to
use the goods” is perhaps synonymous with “permission to use the goods”, which
is very different from “transfer of the right to use goods”. In the case of “transfer”,
the common understanding of the term is that it results in conveyance of title
in the property, or one of the bundle of rights in the property to a third party.
Therefore, to equate transfer of right to use with a mere right to use would be
erroneous. A mere right to use the property with the consent of the owner of
the owner of the property is a license. However, if one of the rights in the
property, say the right of possession, were to be transferred by the owner of
the property to another party, it would result in transfer of the right of
possession, even if such transfer is for a limited period of time. It must also
be borne that transfer results in excluding the owner of the property as well
from exercising the right so transferred. It is for this reason that an
exclusive license (i.e. to the exclusion of the right owner and all third
parties) for howsoever a limited period of time, could qualify as transfer of
right to use. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">The above interpretation finds support in Para 32 of the Supreme Court’s
decision in <i><a href="http://indiankanoon.org/doc/767586/">Twentieth Century Finance
Corporation v. The State of Maharashtra</a></i>, which is extracted below:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: inherit;">“<span lang="EN-US" style="background: white;">(32) Coming to the question that a
transaction in question is in the nature of a contract of bailment, it is true
that the High Court of Bombay in the judgment under appeal has taken the view
that the transactions of the transfer of the right to use goods are in the
nature of bailment. If such a view is taken then the State would not have the
power to levy sales tax on such transactions. <b>Unless such transaction is held to be a sale or deemed sale in law and
it is only then the State legislature would be competent to enact law to levy
tax under Entry 54 of List II of Seventh Schedule. The levy of tax is not on
use of goods but on the transfer of right to use goods. </b>The High Court
proceeded on the footing that the transfer of right to use is different from
sale or deemed sale without considering the legal fiction engrafted in clause
(29A) of Article 366 of the Constitution. We are, therefore, of the view that
the reasoning of the High Court in upholding the Explanation to Section 2(10)
of the Act is not tenable in law.</span>”<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">As the Court rightly notes, in understanding the import of the words “transfer
of right to use goods”, it is important to understand the need for treating
such transfer of right to use as deemed sale for the purposes of taxation. Extracted
below is<span class="apple-converted-space"><span lang="EN-US"> Clause (29A) of Article 366 of the Constitution, which
enumerates transactions that are deemed sales and to which sales tax applies:<o:p></o:p></span></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span class="apple-converted-space"><span lang="EN-US" style="font-family: inherit;"><br /></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US" style="font-family: inherit;">(29A). Tax on the sale or purchase
of goods' includes –<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US" style="font-family: inherit;">(a) a tax on the transfer,
otherwise than in pursuance of a contract, of property in any goods for cash,
deferred payment or other valuable consideration;<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US" style="font-family: inherit;">(b) a tax on the transfer of
property in goods (whether as goods or in some other form) Involved in the
execution of a works contract;<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US" style="font-family: inherit;">(c) a tax on the delivery of goods
on hire-purchase or any system of payment by instalments;<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<b><i><span lang="EN-US" style="font-family: inherit;">(d) a tax on the transfer of the right to use any goods for
any purpose (whether or not for a specified period) for cash, deferred payment
or other valuable consideration;<o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US" style="font-family: inherit;">(e) a tax on the supply of goods
by any unincorporated association or body of persons to a member thereof for cash,
deferred payment or other valuable consideration;<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US" style="font-family: inherit;">(f) a tax on the supply, by way of
or as part of any service or in any other manner whatsoever, of goods, being
food or any other article for human consumption or any drink (whether or not
intoxicating), where such supply or service is for cash, deferred payment or
other valuable consideration, and such transfer, delivery or supply of any
goods shall be deemed to be a sale of those goods by the person making the
transfer, delivery or supply and a purchase of those goods by the person to
whom such transfer, delivery or supply is made.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;">It is evident from that above that Sub-clause (d) of Clause (29A) treats
transfer of right to use goods as deemed sale. As I said in the last post, <span lang="EN-US">the
purpose of the legal fiction created by the Constitution (or State legislations) to deem transfer of right to
use goods as “sale”, is to tax transfer of divisible rights (even if such
transfer is for a limited period) despite the title in the goods remaining with
the transferor. This fiction helps to prevent mischief in instances
where a transaction, which for all intents and purposes is a sale of a right
(if not the good itself), is sought to be couched as a license. However, the concept of transfer remains unaltered i.e. the
result of the transaction must be to the exclusion of the owner and all third
parties for it to acquire the status of a transfer. Simply stated, exclusivity, for howsoever limited a period, is inherent in transfer of any
kind</span><span lang="EN-US">. </span><span class="apple-converted-space">This
view finds resonance in the following observations of the Supreme Court in <i>Twentieth Century</i>:<o:p></o:p></span></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span class="apple-converted-space" style="font-family: inherit;"><br /></span></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">“64. A perusal of
Sub-clause (d) shows that the tax, envisaged therein, is on the transfer of the
right to use any goods for any purpose, the period of use may or may not be
specified, the consideration whereof may be cash, deferred payment or any other
valuable consideration (need not necessarily be cash consideration). As the tax
is on the transfer of right to use any goods, we shall ascertain the meaning of
the word 'transfer'.<o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;"><br /></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">65. In The New Shorter Oxford
English Dictionary 1993 Edition, Volume 2, Page 3367, its meaning is given,
inter alia, as follows: '(Law)-conveyance of property, especially of stock of
shares, from one person to another.' In Black's Law Dictionary Sixth Edition,
Page 1497, <b>the word 'transfer' is
defined to mean, inter alia, "every mode, direct or indirect, absolute or
conditional, voluntary or involuntary, of disposing of or parting with property
or with an interest in property..</b>.'. In Corpus Juris Secundum Volume 87,
Page 892, it is defined to mean, <b>"common
use of the word 'transfer' is, to denote the passing of title in property or an
interest therein from one person to another and in that sense the term means
that the owner of the property delivers it to another person with the intent of
passing the rights which he had in it to the latter</b>."<o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;"><br /></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span style="font-family: inherit;"><span lang="EN-US" style="background: white;">66. Our endeavour
here is to discern what transfer, in the context of Clause (d), means. Is it
simply signing of a document that brings about a transfer of right to use any
goods or is it also necessary to give control of the goods to complete the
transfer with the Intent of passing the right to use the goods to the hirer? A
combined reading of the first and the second limb of Clause (29A) suggests that
mere execution of a document de hors passing the domain of the goods does not
result in transfer of right to use any goods and will not constitute a 'deemed
sale' within the meaning of Clause (29A), The 'deemed sale' envisaged in
Sub-clause (d) involves not only a verbal or written transfer or right to use
any goods but also an overt act by which the transferor places the goods at the
disposal of the transferee to make their use possible. <b>On this construction, it is explicit that the transfer of right to use
any goods involves both passing of a right in as well as domain of the goods in
which right to use is transferred</b>.</span><span class="apple-converted-space"><span lang="EN-US"><o:p></o:p></span></span></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">72. Reverting to
Sub-clause (d) of Clause (29A), a perusal of the Statement of Objects and
Reasons appended to The Constitution (Forty-Sixth Amendment) Act, 1982, <b>shows that the Parliament has taken note of
the fact that the main right in regard to films relates to its exploitation and
after exploitation for a certain period of time, in most cases, the film ceases
to have any value, so instead of resorting to the outright sale of a film, only
a lease or transfer of the right to exploit the film is made. The device by way
of lease of films has been resulting in avoidance of sales tax so to curb that
device, Sub-clause (d) is inserted in Clause (29A). Even so, Sub-clause (d) is
wider import than a mere leasing of films. It applies to all kinds of
leasing/hiring of goods, for example, leases of plants, machinery, computers,
cars, planes, furniture etc,</b><o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;"><b><br /></b></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">73. A sale of any goods is
complete when the property in the goods passes to the purchaser pursuant to a
contract of sale of those goods. So also, a deemed sale of goods under
Sub-clause (d), as has been pointed out above, will be complete when the
control of the goods in which the right to use is transferred, passes to the
transferee under the contract of transfer. Such a transfer of right to use any
goods may be effected either by the execution of a written contract between the
parties indicating the mode by which giving the control or domain of the goods
to the hirer is contemplated or by an oral contract coupled with delivery of
the goods to the hirer. There can be no oral contract with regard to
unascertained goods because there can be no delivery of such goods. <b>Where a written contract exists whether in
regard to ascertained goods or unascertained goods, the intention of the
parties, as evidenced by the terms of the contract to 'transfer of right to use
the goods' is determinative of the fact as to when, how and where the right to
use the goods is transferred</b>. It is a well-settled principle of
interpretation of contracts that the contract must be construed as a whole.
When and where such a deemed sale, under Sub- clause (d), takes place is a
question of fact which has to be decided on the facts and circumstance of each
case, Including the terms and conditions of the contract evidencing the transaction.<o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;"><br /></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">74. It may also be pointed out
that though the ingredients of a sale of the goods as defined in the Sales of
Goods Act and a deemed sale of goods as defined in Clause (29A) of Article 366
are different there can be no difference in the incidence of tax and they
cannot be treated differently for the purpose of levy of sales tax.”<o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;"><br /></span></i></div>
<div style="text-align: justify;">
<span style="font-family: inherit; font-size: 11pt;">These findings of the Court are consistent with Justice Lakshmanan’s enumeration of the ingredients of
transfer of right to use goods in <i><a href="http://indiankanoon.org/doc/716582/">BSNL v. Union of India</a>, </i>which<i> </i>perhaps captures the spirit of the transaction best, as follows:<o:p></o:p></span></div>
<div style="text-align: justify;">
<span style="font-family: inherit; font-size: 11pt;"><br /></span></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">“To constitute a
transaction for the transfer of the right to use the goods the transaction must
have the following attributes:<o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">a. There must be
goods available for delivery;<o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">b. There must be a
consensus ad idem as to the identity of the goods; <o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">c. The transferee
should have a legal right to use the goods. Consequently all legal consequences
of such use including any permissions or licenses required therefor should be
available to the transferee; <o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">d. For the period
during which the transferee has such legal right, it has to be the exclusion to
the transferor. This is the necessary concomitant of the plain language of the
statute viz. a "transfer of the right to use" and not merely a
licence to use the goods;<o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;">e. Having transferred the right
to use the goods during the period for which it is to be transferred, the owner
cannot again transfer the same rights to others.”<o:p></o:p></span></i></div>
<div style="text-align: justify;">
<i><span style="font-family: inherit; font-size: 11pt;"><br /></span></i></div>
<div style="text-align: justify;">
<span style="font-family: inherit; font-size: 11pt;">From
these decisions of the Supreme Court, it is clear that the legal
fiction of “deemed sale” does not alter the character and ingredients of “transfer”.
Therefore, grant of a non-exclusive right to use a trademark does not, in my
opinion, amount to “transfer of right to use the mark”. One hopes the decision
of the Bombay High Court in the Tata Sons case is set aside by the Supreme
Court and the law relating to transfer of right to use incorporeal goods such
as IP is laid down with clarity.</span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-9500314101845033692015-06-02T23:41:00.002+05:302015-06-04T14:04:13.650+05:30IP Licensing and Taxation: Reviewing the Bombay High Court’s Decision in the Tata Sons case<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCqchChtoqJdahOQRJKMAz4MdF22N9wEpTqKFuTqfyGxrFi87QZ8-xlf8bE0EvsFYLVogVogu8-fhaqY7nrEXEgG-FsyTrHLDbMM8jsnyxb3fAcBTDoj2ud-6OTkFRaOkMjuonEL3imE_R/s1600/download.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCqchChtoqJdahOQRJKMAz4MdF22N9wEpTqKFuTqfyGxrFi87QZ8-xlf8bE0EvsFYLVogVogu8-fhaqY7nrEXEgG-FsyTrHLDbMM8jsnyxb3fAcBTDoj2ud-6OTkFRaOkMjuonEL3imE_R/s1600/download.png" /></a></div>
<div class="MsoNormal" style="text-align: justify;">
On January 20, 2015, a Division Bench of the Bombay High Court delivered
a <a href="http://indiankanoon.org/doc/145449786/">53-page decision</a> in <i>Tata Sons Limited & Anr. v. The State of
Maharashtra & Anr. </i>which assumes significance for IP licensing and taxation.
The broad issue before the Court was the applicability of the <span lang="EN-US"><i>Maharashtra Sales Tax on the Transfer of Right to use any Goods for any
Purpose Act, 1985 </i>to the <span style="background: white;">TATA
Brand Equity and Business Promotion Agreement</span> entered into by Tata Sons
with its group companies.</span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">As the name of the Agreement suggests, its
object was to protect, enforce and enhance the image and goodwill of the TATA
name and its brand equity</span>. In a nutshell, the Agreement permitted the
use of the TATA brand name and its trademarks by the Tata Group of companies,
subject to compliance with quality control conditions laid down in the
Agreement by Tata Sons. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">The specific issue before the Court was
whether the nature of the transaction between Tata Sons and its group companies
in relation to the permitted use of the brand amounted to “transfer of right to
use any goods for any purpose” within the meaning of the Act. According to the
tax authorities of the State of Maharashtra, Tata Sons was liable to pay sales
tax on the Agreement since the transaction resulted in transfer of right in the Tata trademark (and
therefore amounted to sale within the meaning of the Act), while Tata Sons
contended that there was no transfer of right under the Agreement. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">Apart from relying on several decisions of
the Maharashtra Sales Tax Tribunal in support of its contention, Tata Sons also
relied upon the landmark decision of the Supreme Court in <i>BSNL v. Union of India </i>(2006) (links <a href="http://indiankanoon.org/doc/6544121/">here</a> and <a href="http://indiankanoon.org/doc/716582/">here</a>) where the essential
ingredients of a transfer of right to use goods was spelt out by the Supremes. It
was Tata Sons’ contention that the issues considered and the conclusions
arrived at by the Supreme Court in the BSNL case squarely applied to its Agreement
with its group companies. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">Following are the ingredients of transfer
of right to use identified by Justice Lakshamanan in the BSNL decision:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US" style="background: white;">“</span><span lang="EN-US">To constitute a transaction for the transfer of
the right to use the goods the transaction must have the following attributes:<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">a. There must be goods available
for delivery;<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">b. There must be a consensus ad
idem as to the identity of the goods; <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">c. The transferee should have a
legal right to use the goods. Consequently all legal consequences of such use
including any permissions or licenses required therefor should be available to
the transferee; <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">d. For the period during which the
transferee has such legal right, it has to be the exclusion to the transferor.
This is the necessary concomitant of the plain language of the statute viz. a
"transfer of the right to use" and not merely a licence to use the
goods;<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">e. Having transferred the right to
use the goods during the period for which it is to be transferred, the owner
cannot again transfer the same rights to others.”<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Applying the above ingredients to its Agreement, Tata Sons
contended that it did not envisage any kind of transfer of right as required by
the Act for levying of sales tax. The limited purpose of the Agreement,
according to Tata Sons, was to permit its group companies to use the Tata mark
which was a mere license to use the mark, and not transfer of right to use the
mark. It was also submitted that the Agreement was not a composite
one for sale and service, consequently no part of the Agreement lent itself to
the levying of sales tax. Critically, given that non-exclusive rights to use the mark were
created in favour of 113 group companies, there was no
factual or legal basis to arrive at the conclusion that “transfer" of right to
use the mark was either provided by or was a consequence of the Agreement.<o:p></o:p></span><br />
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Despite these compelling arguments by Tata Sons,
surprisingly the Bombay High Court went on to hold that the transaction
provided for in the Agreement amounted to transfer of right to use goods. Although
it cannot be disputed that goods under the Act include goods of incorporeal or
intangible character such as patents and trademarks, the central issue is
whether the Agreement resulted in a “transfer” of right to use the Tata mark. This
issue, in my humble opinion, was not addressed convincingly by the Court. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">A perusal of Paras 40 and 41 of the judgment reveals that the
Court’s reasoning was based on the fallacious assumption that since the Act did
not expressly require “exclusive” transfer, multiple non-exclusive rights of
use being created in favour of third parties by Tata Sons too would amount to “transfer” within
the meaning of the Act. What is astounding is that the Court acknowledged that in
the facts of the case, the right to use the Tata mark was not granted to the group companies to the
exclusion of Tata Sons, and yet concluded that there was a “transfer”
of right to use. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">The clear impression that one gets based on a reading of
the judgment is that the Court was swayed entirely by the fact that (a) trademarks
constituted goods and (b) that Tata Sons had created rights in favour of third
parties to use the mark. The requirement of “transfer”, which is a condition
precedent for application of the Act to a transaction, appears to have been
given a complete go by. In the process, the Court has blurred a critical
distinction between a trademark license and the transfer of right to use a
trademark. Simply put, if an agreement between a trademark owner and a third
party which permits non-exclusive use of the trademark by such
third party in return for payment of royalty is <b><i>not a license</i></b> to use the
trademark, then what constitutes a license so as to not attract the levying of
sales tax? <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">In my opinion, the purpose of the legal fiction created by the Act to
deem transfer of right to use goods as “sale” is to tax transfer of divisible
rights (even if such transfer is for a limited period) despite the title in the
goods remaining with the transferor. Further, this fiction helps to prevent
mischief in instances where a transaction, which for all intents and purposes
is a sale of a right (if not the good itself), is sought to be couched as a
license. That said, I dont believe the concept of what constitutes transfer is altered
i.e. the result of the transaction must be to the exclusion of the owner and all
third parties for it to acquire the status of a transfer. Although the Act may not use the word “exclusive”, in my opinion, exclusivity </span>for howsoever limited a period is inherent in transfer of any kind. To delve deeper into the issue, in the next few posts I will look into what constitutes "transfer" in general and for the specific purpose of taxation. Fortunately, the Bombay High
Court’s decision is not final since Tata Sons has preferred an appeal before
the Supreme Court. It would be interesting to see how the Supreme Courts treats
IP licenses.<br />
<br />
Comments and corrections are welcome!</div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com2tag:blogger.com,1999:blog-5949922529631180407.post-88750056160161063282015-05-13T03:41:00.001+05:302015-05-29T11:47:15.675+05:30Delhi High Court Dismisses Writ Petition by AIDS NGO Seeking Directions against Abuse of Divisional Patent Applications<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
In a crisp <a href="http://indiankanoon.org/doc/101191201/">judgment</a>
dated May 7, 2015, the Chief Justice of the Delhi High Court dismissed a writ
petition filed by a Delhi-based HIV/AIDS NGO, The Delhi Network of Positive
People, in which directions were sought to amend the procedure under Patents
Act, 1970 to prevent abuse of the process of filing divisional patent
applications by patent applicants.</div>
<div class="MsoNormal" style="text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
As our readers are aware, Section 16 of the Patents Act, 1970 permits
filing a divisional patent application either <i>suo motu </i>by the applicant or in response to an objection raised or
direction issued by the Patent Office, only when the basic patent application
discloses multiple inventive concepts which are not cognate. The Petition
(rightly) raises the issue of abuse of the process of <i>suo motu</i> filing of divisional patent applications<i> </i>by applicants who anticipate rejection
of their patent applications, in the hope that they might get lucky the second time around,
even when they are fully aware that they do not satisfy the requirement of
Section 16 (this issue was dealt with in a <a href="http://spicyip.com/2010/04/appropriate-office-for-filing-patents.html">post</a>
I wrote four years ago elsewhere). <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
To remedy the mischief, the Petitioner prayed
for directions to the Ministry of Commerce requiring it to amend <span lang="EN-US" style="background: white;">Form 1 of the Patents Act so as
to include an undertaking by the patent applicant at the time of filing of a divisional application that the parent application discloses multiple
inventions not constituting one single inventive concept and that the claims of
the divisional application are not identical to those of the<span class="apple-converted-space"> </span></span>parent
application. A second direction was sought which required the Controller of
patents to take an <i>ex parte </i>decision on the
maintainability of a divisional application before examining it for
patentability. Finally, a provision for action against mischievous patent
applicants was sought. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
Although the Court recognized the validity of the concerns raised in the
petition, it was dismissed on grounds that <span lang="EN-US" style="background: white;">a Court could neither legislate nor issue
a direction to the Legislature to enact in a particular manner. Further, in the
absence of a constitutional challenge to the legislation, it would be equally
impermissible for a Court to expand the scope of the legislation or recast it
through interpretation. In this regard, reliance was placed on</span> the Supreme Court’s decision in <i><span lang="EN-US" style="background: white;">V.K. Naswa v. Home Secretary, Union of India</span></i><span lang="EN-US" style="background: white;"> (2012) 2 SCC 542</span>. The High
Court also observed that it could not direct the Controller of Patents to
exercise his power in a manner contrary to the framework of the Act.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">The other reason for dismissal of the
petition was the Court’s view that it could not adjudicate on the issue in
vacuum without their being a specific cause of action or without the
impleadment of an errant patent applicant as a respondent to the petition. I am
not sure the absence of these two ingredients is fatal to a writ petition which
challenges the Patent Office's handling of divisional applications as opposed to targeting any patent applicant in
particular. The Petitioner may seek consolation from the Court’s direction to
the Ministry of Commerce and the Controller of Patents to treat the petition as
a representation and consider taking appropriate measures to address the issue.
<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">I agree with the Court on the impropriety
of directing the Executive or the Legislature to amend a statute or to
interpret it in a manner not envisaged by it. That said, I think that the
current declarations sought from an applicant in Form 1 already have the effect
of declaring that a divisional application is not identical in its claims or
scope to the parent application. In Para 9 of Form 1, which is titled “Declarations”,
a patent applicant is required to declare that there is no lawful ground of
objection to the grant of the patent. Further, when a divisional application is
filed, the applicant has to furnish the details of the parent application and declare
that the divisional has been filed pursuant to Section 16 of the Act.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;"><br /></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">It could be argued that if an applicant
knowingly files a divisional patent application which is identical to the
parent, he is in violation of his own declarations in Para 9 for having
knowingly filed an application which does not satisfy the ingredients of Section 16. If a patent
is ultimately granted pursuant to the divisional, it may be revoked under
Section 64 on the same substantive grounds on which the parent was rejected,
apart from the ground of having obtained the patent on a false suggestion or
misrepresentation under Section 64(1)(j) of the Act. Upon revocation, the IPAB or
a Court in a counterclaim, as the case may be, could impose exemplary costs for
having committed fraud on the Patent Office. That said, the issue remains that there is no mechanism as on date to address the issue right at the stage of examination of the divisional application. One possible solution may be for the Controller General of Patents to issue
a practice direction requiring:</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="text-indent: -18pt;">A.<span style="font-size: 7pt; font-stretch: normal;">
</span></span><span lang="EN-US" style="background: white; text-indent: -18pt;">patent applicants to submit a copy of the parent application when a
divisional is filed;</span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="text-indent: -18pt;">B.<span style="font-size: 7pt; font-stretch: normal;">
</span></span><span lang="EN-US" style="background: white; text-indent: -18pt;">patent examiners to scrutinize the issue of maintainability of a
divisional before examining it for patentability</span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US" style="background: white;">Comments and corrections are welcome.</span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com1tag:blogger.com,1999:blog-5949922529631180407.post-18841152080358596352015-05-09T22:32:00.001+05:302016-05-08T18:48:42.419+05:30Compensatory Costs for False or Vexatious Claims or Defenses in IP Disputes<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgH4WLvaWasf9lw8g6z3SGqoEhxQlQdT2r4V9hA0T4sIyi_alyCtKBUablR_2rs9BDIfQAEV5M95fdpqNz479y5B3N86tzkptgZxq1IIFHKcNR6xR4SsE63lifgtX4KgnodJMfNHMVqgqFS/s1600/images.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgH4WLvaWasf9lw8g6z3SGqoEhxQlQdT2r4V9hA0T4sIyi_alyCtKBUablR_2rs9BDIfQAEV5M95fdpqNz479y5B3N86tzkptgZxq1IIFHKcNR6xR4SsE63lifgtX4KgnodJMfNHMVqgqFS/s1600/images.jpg" /></a></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span style="line-height: 115%;">Picture yourself as a new entrant to a field of
business who intends to launch a product which strikes the right balance
between performance and cost-effectiveness. Just a week before the launch of
your product, you get sued for infringement of a patent or a design by a
better-placed competitor (“X”) who succeeds in securing an </span><i style="line-height: 115%;">ex parte ad interim </i><span style="line-height: 115%;">injunction which kills the launch of your
product. During the course of the litigation, you manage to establish before the Court
that X’s suit was malicious and false/vexatious i.e. it was instituted with the
specific object of thwarting the launch of your product despite his knowledge
that he had no real cause of action against you. Does the law address this situation?</span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
Now put yourself in the shoes of an IP holder,
say a patentee, who discovers that a former licensee (“Y”) is continuing to
sell the patented invention despite the termination of the license (which has
not been challenged by the licensee). Upon being sued, the former licensee Y contests
infringement knowing fully well that his product is identical to the product
that was sold by him during the subsistence of the license. Further, Y challenges the validity of your patent on multiple substantive
grounds despite having satisfied himself of its validity prior to obtaining the
licensee from you. You, the patentee, ultimately convince the Court of the
false/vexatious nature of Y’s defense of non-infringement and patent invalidity
(notwithstanding the fact that Section 140 of the Patents Act does not prohibit Y
from the challenging your patent’s validity). Does the law address this
situation?<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
Section 35A of the Code of Civil Procedure,
1908, which governs the conduct of civil suits specifically provides a remedy.
Extracted below is the provision:<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<b><i>35A. <span lang="EN-US">Compensatory costs
in respect of false or vexatious claims or defenses.<o:p></o:p></span></i></b></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<i><span lang="EN-US">(1) If any suit or other proceedings<span class="apple-converted-space"><span style="color: #474747;"> </span></span>including
an execution proceedings but<span class="apple-converted-space"><span style="color: #474747;"> </span></span>excluding an appeal or a revision,
any party objects to the claim of defence on the ground that the claim or
defence or any part of it is, as against the objector, false or vexatious to
the knowledge of the party by whom it has been put forward, and if thereafter,
as against the objector, such claim or defence is disallowed, abandoned or
withdrawn in whole or in part, the Court,<span class="apple-converted-space"><span style="color: #474747;"> </span></span>if it so thinks fit may, after
recording its reasons for holding such claim or defence to be false or
vexatious, make an order for the payment the object or by the party by whom
such claim or defence has been put forward, of cost by way of compensation.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<i><span lang="EN-US">(2) No Court shall make any such order for the payment
of an amount exceeding<span class="apple-converted-space"><span style="color: #474747;"> </span></span>three thousand rupees or exceeding the limits of
it pecuniary jurisdiction, whichever amount is less:<o:p></o:p></span></i></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<i><span lang="EN-US">Provided that where the pecuniary limits of the
jurisdiction of any Court exercising the jurisdiction of a Court of Small
Causes under the Provincial Small Cause Courts Act, 1887 or under a
corresponding law in force in<span class="apple-converted-space"><span style="color: #474747;"> </span></span>any part of India to which the said
Act does not extend and not being a Court constituted<span class="apple-converted-space"><span style="color: #474747;"> </span></span>under
such Act or law, are less than two hundred and fifty rupees, the High Court may
empower such Court to award as costs under this section any amount not
exceeding two hundred and fifty rupees and not exceeding those limits by more
than one hundred rupees:<o:p></o:p></span></i></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<i><span lang="EN-US">Provided, further, that the High Court may limit the
amount or class of Courts is empowered to award as costs under this Section.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<i><span lang="EN-US">(3) No person against whom an order has been made
under this section shall, by reason thereof, be exempted from any criminal
liability in respect of any claim or defence made by him.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<i><span lang="EN-US">(4) The amount of any
compensation awarded under this section in respect of a false or vexatious
claim or defence shall be taken into account in any subsequent suit for damages
or compensation in respect of such claim or defence.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
A reading of the provision makes it clear that
the remedy of compensatory costs is equally available against a plaintiff’s false/vexatious
claim and a defendant’s false/vexatious defense. However, what renders the
remedy illusory is the paltry amount of INR 3000 prescribed as the upper limit.
This defect in the provision has been pointed by the Supreme Court in several
decisions and has been the subject-matter of cogitation by the Law Commission
of India in its <a href="http://lawcommissionofindia.nic.in/reports/report240.pdf">240<sup>th</sup>
Report</a>. <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
What is also to be noted is that unless the
affected party raises the objection of false/vexatious claim or defense, a
Court cannot <i>suo motu </i>embark on such
an enquiry or grant the remedy provided for under the provision. This aspect
too has been addressed by the Law Commission which, among other things, has
sought to rechristen ‘compensatory costs’ as ‘exemplary costs'. Following are
the amendments to the provision recommended by the Commission:</div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<i style="line-height: 115%; text-indent: -18pt;"><span lang="EN-US">(1)<span style="font-size: 7pt; font-stretch: normal; font-style: normal; line-height: normal;"> </span></span></i><i style="line-height: 115%; text-indent: -18pt;"><span lang="EN-US">Ceiling limit of Rs.
3,000/- prescribed in the year 1976 needs to be enhanced to Rs. 1,00,000/-.</span></i><br />
<i style="line-height: 115%; text-indent: -18pt;"><span lang="EN-US"><br /></span></i>
<i style="line-height: 115%; text-indent: -18pt;"><span lang="EN-US">(2)<span style="font-size: 7pt; font-stretch: normal; font-style: normal; line-height: normal;"> </span></span></i><i style="line-height: 115%; text-indent: -18pt;"><span lang="EN-US">Out of the costs awarded
under Section 35-A (maximum being Rs. 1,00,000/-), part of the costs should be
allowed in favour of the party who has been subjected to frivolous or vexatious
litigation and a part of the amount of costs should be directed to be deposited
in the Judicial Infrastructure Fund to be created by each High Court</span></i><br />
<i style="line-height: 115%; text-indent: -18pt;"><span lang="EN-US"><br /></span></i></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<i style="line-height: 115%; text-indent: -18pt;">(3)<span style="font-size: 7pt; font-stretch: normal; font-style: normal; line-height: normal;"> </span></i><i style="line-height: 115%; text-indent: -18pt;"><span lang="EN-US">The expression ‘exemplary’ should be substituted for the word
‘compensatory’ wherever it occurs in Section 35-A.</span></i><br />
<i style="line-height: 115%; text-indent: -18pt;"><span lang="EN-US"><br /></span></i></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<i style="line-height: 115%; text-indent: -18pt;">(4)</i><i style="line-height: 115%; text-indent: -18pt;"><span lang="EN-US"> Every Court, on its own, even without an application from one of
the parties, shall be empowered to award exemplary costs under section 35-A if
the Court is satisfied that the claim or defence is false or vexatious to the
knowledge of the party. However, before passing such order, opportunity of
hearing shall be given to the party against whom such order is proposed to be
passed on the date of pronouncement of judgment</span></i></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-24038399549509176932015-04-07T01:04:00.000+05:302017-04-02T11:01:58.460+05:30Intermediary liability regime- A Historic Opportunity Missed by the Supreme Court<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span style="line-height: 115%;">Ever since the pronouncement of the verdict by
the Supreme Court on March 24, 2015</span><span style="line-height: 115%;"> in what I prefer to
call the “IT Writ Petitions” (since they went beyond Section 66A of the
Information Technology Act, 2000), a lot has been written on mainstream and
alternative forums on the striking down of Section 66A. And rightly so because
its draconian nature, vagueness and unreasonableness were writ large. The
number of instances in which the now erstwhile provision had proven its
susceptibility to abuse, bears testimony to the dangers it posed to free speech
and hence its fundamental constitutional infirmity (readers may recall I have </span><a href="http://thedemandingmistress.blogspot.in/search/label/Section%2066A" style="line-height: 115%;">written</a><span style="line-height: 115%;">
on Section 66A earlier on the blog).</span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
In stark contrast, the other provision of the
IT Act, which has now been read down by the Supremes, namely <span lang="EN-US"><a href="http://indiankanoon.org/doc/844026/"><span lang="EN-IN">Section 79(3)(b),</span></a></span><span class="MsoHyperlink"> </span>has not received its due in popular discourse.
This is perhaps because this provision required and still requires attention to
nuances. The challenge to the provision was mounted on behalf of internet
intermediaries solely by the Internet and Mobile Association of India (IAMAI)
in W.P(C). 758/2014 in the same batch of IT Writ Petitions. This challenge was
critical owing to <span lang="EN-US">the
integral nature of intermediaries to the internet ecosystem and the role they
place as disseminators of free speech and expression of internet users. With
the internet increasingly becoming </span><span lang="EN-US">the medium of choice
for expression of social, cultural and political views outside of the
mainstream media, attention must be paid to the clamps imposed on
intermediaries which facilitate free speech. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
According to the IT Act, an intermediary <span lang="EN-US">“<i>means any person who on behalf of another person receives, stores or
transmits that record or provides any service with respect to that record and
includes telecom service providers, network service providers, internet service
providers, web hosting service providers, search engines, online payment sites,
online-auction sites, online market places and cyber cafes</i>”. Clearly, any
restrictions on the ability of intermediaries to host content would have an
immediate, direct and adverse bearing on the </span>the internet user’s freedoms under Article
19(1)(a). This is the pith and substance of IAMAI’s challenge to Section
79(3)(b). <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
Section 79(3)(b) which applies to internet
intermediaries, prior to being read down by the Court, used intermediaries as
proxies to impose constitutionally impermissible restrictions on free speech
i.e. restrictions which are beyond Article 19(2). Therefore, it was the contention of IAMAI that,
if Section 66A is liable to be struck down for imposing direct restrictions on
an internet user’s free speech and expression which are beyond the pale of
Article 19(2), it stands to reason that such or similar restrictions imposed on
the user indirectly through intermediaries under Section 79(3)(b), are equally <i>ultra vires </i>Article 19(2). In other
words, what cannot be done directly, cannot be done indirectly either, the
litmus test being the direct and immediate consequence of the restrictions
under Section 79(3)(b) on curtailment of the internet user’s freedoms under
Article 19(1)(a). <o:p></o:p></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span lang="EN-US">In order to lend perspective to the challenge to Section 79(3)(b),
it is important to understand that the internet as we know it today, is
increasingly driven by User Generated Content (the other UGC) which is
monumental in sheer diversity and scale. Numbers perhaps tell the story better-
every minute almost</span><span lang="EN-US" style="color: #222222; mso-bidi-font-family: Arial;"> </span><span lang="EN-US">360,000 tweets are published on
Twitter, 30,000 edits are made to Wikipedia, Facebook users share 684,478
pieces of content and more than 100 hours of video are added to YouTube. These
mind-boggling numbers are in fact responsible for contributing to an emerging
area in information management systems, namely Big Data.</span><span lang="EN-US" style="color: #222222; mso-bidi-font-family: Arial;"> </span><span lang="EN-US">Given these numbers, it is practically impossible for intermediaries
such as Google, Twitter or Facebook to pre-screen content or exercise any kind
of <i>ex ante</i> editorial control. This also means that intermediaries cannot vouch for
or take responsibility for the legality of the content being uploaded or
transmitted or published on their platforms.</span><span lang="EN-US" style="color: #222222; mso-bidi-font-family: Arial;"> And yet </span><span lang="EN-US">in 2004, no less than the Chief Executive Officer of Baazee.com,
Avnish Bajaj, was arrested for the offer of sale of an obscene video clip made
on the portal by a user. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span lang="EN-US">To address such instances and to ensure that intermediaries are not
held liable for content created/published by their users, the definition of
“intermediary” was effected (which is the current version) through the Information Technology
(Amendment) Act, 2008 and Section 79 of the Act was amended to carve out a safe
harbor for intermediaries from liability arising from User Generated Content. As part of the amendment, in return for the
safe harbor, a corresponding “takedown” (removal of content) obligation was
cast on intermediaries under Section 79(3)(b), which was challenged by IAMAI in
its petition that led to the provision being read down by the Court. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span lang="EN-US">Section 79(3)(b) has two prongs- the first relates to a takedown
notice upon receipt of ‘actual knowledge’ of the illegality of content hosted
by the intermediary, and the second envisages a takedown notice issued by a
Government or its authorised agency to the intermediary. Both prongs give rise
to different but equally grave concerns. The problem with the first prong is
that although it borrows the term ‘actual knowledge’ from the EU Directive on E-Commerce
2000/31/EC dated 8<sup>th</sup> June, 2000, it is nowhere defined in the Indian
statute. Importantly, the legal and operational challenges with the use of the
term have been clinically captured in a<a href="http://ec.europa.eu/internal_market/e-commerce/docs/study/liability/final_report_en.pdf"><span style="color: windowtext; text-decoration: none; text-underline: none;"> </span>study
undertaken in the European Union</a>. This
study correctly notes that the term is capable of being interpreted and has
been interpreted in a few jurisdictions to mean that intermediaries are
expected to sit in judgment over the legality/unlawfulness of content impugned
in a takedown notice. Clearly, this is beyond the wherewithal of
intermediaries, which establishes the unreasonableness of this mandate. Echoing
the validity of this contention, the Court read down ‘actual knowledge’ to mean
knowledge of a court order directing the intermediary to expeditiously remove
or disable access to the impugned content. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span lang="EN-US">The second prong of Section 79(3)(b) firstly suffers from vestation
of adjudicatory powers in the executive to determine illegality of content,
which is problematic. Secondly, the use of the term “unlawful” in Section
79(3)(b) enlarges the scope of restrictions to beyond the specific categories
identified in Article 19(2). In response to the second concern, the Court drew
parity between the executive’s (only the Central Government) power to block
content under Section 69A and the executive’s power to direct takedown on
content under Section 79(3)(b) and implicitly noted that the limitation of
Article 19(2) applied to the executive’s power under both provisions. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span lang="EN-US">This is perhaps the most positive outcome on the issue of
intermediary liability because by reading in Article 19(2) to restrictions
imposed on intermediaries under Sections 69A and 79(3)(b), the Court has
accepted the argument of the intermediaries that the test to be applied to any
law is whether it directly impacts free speech, regardless of who such
restrictions may be applied through (in this case through intermediaries). Importantly,
even if such restrictions are imposed in return for immunity to intermediaries
under Section 79(1), such perceived largesse to intermediaries does not
legitimize the transgression of the boundaries set by Article 19(2). This position
has received the thumping endorsement of the Supreme Court. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span lang="EN-US">That being said, although the Court has encumbered the executive’s
takedown power under Section 79(3)(b) by reading in Article 19(2), the
fundamental question of the executive’s constitutional competence to direct
such takedown was not addressed, perhaps because the Court was already convinced
of such competence during its analysis of Section 69A. Be that as it may, the
consistent thing to do would have been to include in Section 79(3)(b) the <i>de minimis</i> procedural<i> </i>safeguards provided for under Section
69A and the blocking Rules, or the safety vales under Sections 95 and 96 of the
Code of Criminal procedure, 1973 (which deal with the Government’s power to ban
books/publications). This is so because, unlike Section 69A, Section 79(3)(b)
does not provide for a hearing either to the intermediary or the creator of the
content prior to the takedown, nor is there a provision for appeal under the Act
from such a takedown (except for a Writ Petition). <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span lang="EN-US">It is surprising that after taking detailed cognizance of the
procedure laid down for blocking under Section 69A, the Court did not apply the
same yardstick and due process to Section 79(3)(b). Critically, having
recognized the reader’s right to receive information/content in its analysis of
Section 66A, the Court ought to have taken note of the adverse effect of a
summary executive takedown on the right of the internet audience to receive
content, even if such notice is within the metes and bounds of Article 19(2). Had
these concerns been addressed, the verdict would have been far more
comprehensive on Section 79(3)(b) is concerned.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span lang="EN-US">All in all, although the
Court has addressed some primary concerns of intermediaries relating to Section
79(3)(b), thereby rendering their immunity more meaningful, the Court could have
dealt with the other equally important concerns which have a concrete and
critical bearing on the intermediary liability regime in India. This would have
made India a much more attractive destination for investments by intermediaries
given the potential of the internet economy and e-commerce. Perhaps, the egregious
language and consequence of Section 66A drew the Court’s attention much more
than the layered issues posed by Section 79(3)(b) and the Intermediary Rules.
After all, out of 122 pages of the judgment, 109 pages have been devoted to Section
66A and a like provision of the Kerala State Police Act. Only the final
paragraphs of the verdict, paras 112-118, deal with the issue of intermediary
liability. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<span lang="EN-US">It is undeniable that the judgement is a welcome one and is expected
to further the cause of democratization of the internet in a tangible manner.
However, given the opportunity the IT Writ Petitions represented in undertaking
a comprehensive overhaul of the IT Act on a range of related issues, each of
which has a critical bearing on freedom of speech and expression on the
internet, it appears that the Supreme Court has passed up a wonderful
opportunity, which may not present itself in the future. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 115%; text-align: justify;">
<br /></div>
<i style="line-height: 115%; text-align: justify;"><span lang="EN-US">Disclosure: I led the team that represented a consortium of internet intermediaries, namely the
Internet and Mobile Association of India in the Supreme Court in W.P(C)
758/2014 which challenged Section 79(3)(b) and the Intermediary Rules. Mr. Saikrishna
Rajagopal of Saikrishna & Associates was the arguing counsel. All opinions
expressed here are personal and academic.</span></i></div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-85610414543373988532015-03-10T01:23:00.001+05:302015-03-10T18:42:49.455+05:30 A Review of the Competition (Amendment) Bill, 2012- II<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">In this post, I
shall continue with my review of the Competition (Amendment) Bill, 2012 from
the <a href="http://thedemandingmistress.blogspot.in/2015/03/a-review-of-competition-amendment-bill.html">last
post</a>. Clause 6 of the Bill introduces Section 5A which empowers the Central
Government to specify, by notification, different values of assets and
turnovers based on the class or classes of enterprise for the purposes of
Section 5 which defines a combination. The stated object of this proposed new
provision is to provide the Government with a tool which is much more attuned
to the dynamics of different market segments. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Unlike the current Section 20(3), </span>which envisages a modification in the thresholds for Section 5 only once every two years, the proposed Section 5A is not encumbered by any such restrictions. Also, the basis for change in thresholds as spelt out by Section
20(3), namely fluctuations in the wholesale price index or exchange rate of the
Rupee, is absent in the proposed Section 5A. This perhaps could mean that
thresholds may be altered with a specific view to address market anomalies and
not merely to adjust the thresholds for inflation.</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Critically, the
proposed Section 5A retains the aspect of consultation by the Government with
the CCI in altering the thresholds of assets and turnover. This raises an
interesting question regarding the nature of the CCI. Since the Government is
merely expected to consult the CCI and not seek its consent in changing the
thresholds, could it be argued that Sections 5 and 5A in particular, and the
Competition Act in general, are instrumentalities which further the economic
policy/vision of the Government of the day (the Executive)? If so, is the CCI
itself a part of the Executive despite performing several adjudicatory
functions? Questions such as these were left open-ended by the Supreme Court in
<a href="http://indiankanoon.org/doc/1029167/">Brahmdutt v. Union of India</a>
and will hopefully be answered in the on-going Writ Petitions </span>(W.P (C) Nos. 7638, 7087, 6634 and 6610 of 2014) before the Chief
Justice of the Delhi High Court filed by auto majors BMW, General
Motors, Mercedes Benz and other parties to the auto spare parts decision of the
CCI. Among other things, the
constitutionality of the CCI is under challenge in these petitions.</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">The next
proposed amendment is the one to Section 26 by Clause 11 of the Bill.
Here are the relevant extracts of Section 26 as they read currently:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><span lang="EN-US">Procedure for inquiry under section 19<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">26. (1) On receipt of a reference from the Central
Government or a State Government or a statutory authority or on its own
knowledge or information received under section 19, if the Commission is of the
opinion that there exists a prima facie case, it shall direct the Director
General to cause an investigation to be made into the matter: Provided that if
the subject matter of an information received is, in the opinion of the
Commission, substantially the same as or has been covered by any previous information
received, then the new information may be clubbed with the previous
information.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">(3) The Director General shall, on receipt of
direction under sub-section (1), submit a report on his findings within such
period as may be specified by the Commission. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">(5) If the report of the Director General referred to
in sub-section (3) recommends that there is no contravention of the provisions
of this Act, the Commission shall invite objections or suggestions from the
Central Government or the State Government or the statutory authority or the
parties concerned, as the case may be, on such report of the Director General. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US"><br /></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">(6) If, after consideration of the objections and
suggestions referred to in sub section (5), if any, the Commission agrees with
the recommendation of the Director General, it shall close the matter forthwith
and pass such orders as it deems fit and communicate its order to the Central
Government or the State Government or the statutory authority or the parties
concerned, as the case may be.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">(7) If, after consideration of the objections or
suggestions referred to in sub section (5), if any, the Commission is of the
opinion that further investigations is called for, it may direct further
investigation in the matter by the Director General or cause further inquiry to
be made by in the matter or itself proceed with further inquiry in the matter
in accordance with the provisions of this Act. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">(8) If the report of the Director General referred to
in sub-section (3) recommends that there is contravention of any of the
provisions of this Act, and the Commission is of the opinion that further
inquiry is called for, it shall inquire into such contravention in accordance
with the provisions of this Act.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">A reading of
Sub-section 6 reveals that if the CCI agrees with the finding of the DG that
there is no contravention of the Act, it shall close the matter. The language
of Sub-sections 7 and 8, however, seem incoherent and incomplete. Sub-section 7
alludes to a situation where the CCI does not agree with the DG that there is
no contravention of the Act, in which case it may direct further investigation
by the DG. The reference to “cause further inquiry to be made in the
matter or itself proceed with further inquiry in the matter” is to a situation where the CCI may choose not to seek the DG's assistance for further inquiry. I</span>f such further inquiry does not yield results, Sub-section 7 does not explicitly empower the CCI to close the matter, but practically speaking one would think the logical consequence would be for the CCI to agree with the DG’s finding of no contravention under Sub-Section 6. After all, the CCI cannot endlessly enquire into the matter. However, if further enquiry reveals contravention of the Act,
Section 26 and Regulation 21 of the CCI General Regulations are unclear if the
CCI has the power to pass orders based on its findings. </div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Similarly, under
Sub-section 8 which deals with a situation where the DG finds contravention of
the Act, it is unclear if the CCI may pass orders if it agrees with the DG
although this appears to be logical conclusion. If, however, the CCI does not
agree with the DG, Sub-section 8 does not appear to permit the CCI to close the
matter. Despite the absence of such
power to differ with the finding of contravention by the DG and to close matters,
the Standing Committee has observed that until February 2014, in 42 cases the
CCI differed with the DG’s finding of contravention. In order to avoid such
anomalies, the Bill proposed to insert “and make appropriate orders thereon
after hearing the concerned parties” in both Sub-sections 7 and 8. Further, one
of the recommendations of the Committee is to retrospectively provide a limited
window of appeal to parties which have suffered as a consequence of closure of
their matters by the CCI despite a finding of contravention by the DG. I am of the view that consequential amendments to CCI General Regulation 21 too must be effect to avoid any further voids.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">In addition to
the above amendments, the Bill also provides for a hearing to a party on which
penalty is sought to be imposed by the CCI. Finally, the Bill seeks to empower
the Chairperson of the CCI to approve search and seizure by the DG, who is
currently required to seek the approval of Chief Metropolitan Magistrate.
However, the Standing Committee has observed that such a change is premature
considering that no flaws have surfaced thus far with respect to the existing
mechanism. In its parting recommendation, the Committee has drawn the
Government’s attention to the following questions/issues:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">(i) Whether the
Commission should be a body comprising of only retired persons or it should be
a smaller multi-disciplinary body consisting of domain experts; <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">(ii) Whether
more substantive amendments are required to enable the CCI to play a more
vibrant and meaningful role in the economic development of the country like
creation of robust data-base and formulation of coherent norms/principles in
prevention/detection of cartels, price-manipulation/rigging and other market
practices inimical to competition and orderly functioning of markets; <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">(iii) Whether
the CCI should enhance its capacity to take cognizance of emerging trends and
developments in industry relating to “unfair dominance” or “monopolistic
practices”, such as cross-holdings in media ownership.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">(iv) Protection
of consumer interest through periodical studies/surveys on trends of consumer
prices in different sectors.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">(v) Whether the
law should be designed in a manner that is unduly restrictive with rigid
thresholds or should it be a facilitator for growth of business and industry
while promoting fair play and freedom in competition and reasonable prices for
consumers. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">In my opinion, these
are thought-provoking high-level issues which are worth ruminating over since they have a critical bearing on the role we expect the CCI to play in furthering
its mandate under Section 18 of the Act. <o:p></o:p></span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-60724188169328827642015-03-08T15:57:00.002+05:302015-03-09T00:27:45.204+05:30A Review of the Competition (Amendment) Bill, 2012- I<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
The <a href="http://www.prsindia.org/uploads/media/Competition%20(A)%20Bill,%202012/The%20Competition%20(A)%20Bill,%202012.pdf">Competition
(Amendment) Bill, 2012</a> was introduced in the Lok Sabha on December 7, 2012
and a <a href="http://164.100.47.134/lsscommittee/Finance/15_Finance_83.pdf">report
on the Bill</a> by the Standing Committee on Finance was submitted to the Lok
Sabha on February 17, 2014. However, the Bill has since lapsed due to the
dissolution of the 15<sup>th</sup> Lok Sabha.</div>
<div class="MsoNormal" style="text-align: justify;">
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
The Bill proposes significant changes to the Competition Act, 2002. For
instance, the applicability of the current Section 3(5), which permits an IP
owner to impose any “reasonable condition” to restrain infringement of his
rights, is restricted to copyrights, patents, trademarks, GIs and semi-conductor
design layout. The Bill proposes to add an omnibus clause to Section 3(5) which
extends its application to<span lang="EN-US"> any other law for the time
being in force which relates to the protection of other forms of intellectual
property rights. On a reading of the proposed amendment, it appears that the
said provision still does not apply to reasonable conditions applied for the
protection of trade secrets for it refers to “any other law for the time being
in force”. Perhaps, this is something the new dispensation can look into. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Also, for the
sake of abundant clarity and to avoid mischievous interpretations, it would
help to clarify that restrictive covenants which Section 140 of the Patents Act
frowns upon do not enjoy the safe harbour under Section 3(5) of the
Competition Act. That said, even in the absence of such a clarification, it
could be reasonably argued that proscriptions under Section 140 of the Patents
Act do not qualify as “reasonable restrictions” within the meaning of Section
3(5) of the Competition Act, and are therefore anti-competitive. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Yet another
critical amendment proposed by the Bill is the recognition of the concept of
joint dominance i.e. position of dominance enjoyed by one or more enterprises,
or one or more groups of enterprises. Industry groups have pointed to the
complications this concept may pose for it appears to impugn joint conduct even
if it does not satisfy the requirements/standards of Section 3 of the Act. It
has also been suggested that the introduction of this concept in Indian conditions
may even be premature. The CCI and the Ministry of Corporate Affairs have
however justified the introduction of joint dominance on grounds that it
provides the CCI with the necessary legal tool to deal with collusion between
players in an oligopolistic market where cartelization is otherwise difficult
to establish. The Standing Committee has recommended that in addition to
amending Section 4, consequential amendments must be undertaken to the
explanation to Section 4 and to Section 19(4) as well. The Committee has also
rightly recommended that the definition of “group” must be shifted to Section 2
so as to avoid confusion regarding the applicability of the definition to the
rest of the Act. <o:p></o:p></span> That said, given that the nature, scope and rigour of Sections 3 and 4 are yet to be understood with a reasonable degree of certainty, it is my personal opinion that the time is not yet ripe to introduce the concept of joint dominance.</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Another amendment
which is of particular interest to me is the amendments proposed to Sections 21
and 21A for it has a bearing on the interplay between the CCI and sectoral
regulators. Sector 21, as it reads currently, is set out below:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><i><span lang="EN-US">Reference by
statutory authority</span></i></b><i><span lang="EN-US"> 21. (1) Where in the course of a proceeding before any statutory
authority an issue is raised by any party that any decision which such
statutory authority has taken or proposes to take is or would be, contrary to
any of the provisions of this Act, then such statutory authority may make a
reference in respect of such issue to the Commission: <o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">Provided that any statutory authority, may, suo motu,
make such a reference to the Commission.<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Under the
current version, a statutory authority may, on its own or upon an issue being
raised by a party to a proceeding before it, refer the mater or issue to the CCI if the
decision the authority proposes to take or has taken is contrary to the scheme and
provisions of the Competition Act. In a way, this reinforces the overriding
effect of Competition Act as spelt out in Section 60 of the Act. That said, under the current version, the
decision to refer the issue to the CCI is left to the discretion of the
statutory authority. Consequently, if the authority opts not to refer to the
matter to the CCI and takes a decision which contravenes the Competition Act,
the affected party can only raise the issue in appeal (if available and
applicable under the relevant legislation which governs the authority) or may
file a writ before the appropriate High Court. Although this appears to be an
adverse consequence of the current version, this version does justice to the
inherent power of the statutory authority to decide on aspects of conflict of
jurisdiction. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">The Bill
proposes to alter this position by replacing the words “<i>is raised by any party”</i> with “arises” and by substituting “may” in
the provision with “shall”. The amendment also proposes to delete the proviso
thereby making it mandatory on the part of the statutory authority to refer the matter to the CCI if
an issues arises that the decision taken or sought to be taken by the authority runs counter to the Competition Act. Similar changes are proposed to
be effected to Sections 21A and 27 as well. Another proposed change is to render the
decision taken under Sections 21 and 21A appealable under Section 53A of the
Act. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">These proposed amendments could give rise to several complications. First, I am of the opinion that
the impact of such proposed changes on Sections 21 and 21A cannot be the same in
light of Sections 60 and 62 of the Competition Act which set out the position of
the Act vis-à-vis other legislations. Therefore, it would be incorrect to
mechanically apply the same set of changes to both Sections 21 and 21A. Second, the consequences of mandatory reference on the inherent jurisdiction
of a statutory authority to deal with conflict of jurisdictions and to address
issues relating to its governing legislation must be considered. Third, to provide
for an appeal under Section 53A for a decision taken by the statutory authority
under Section 21 could result in undermining the position of the appellate
authority which supervises the functioning and decisions of the statutory
authority, besides giving rise to multiplicity of litigation. Fourth, by
replacing “<i>is raised by any party”</i>
with “arises”, it appears that parties may not have the right to raise this as
an issue and it is left to the sole discretion of the statutory authority to
decide if a reference to the CCI is necessary. This also leads to the
conclusion that every statutory authority must have regard to the Competition
Act in addition to the specific legislation that applies to it, which does seem
onerous. Perhaps, the current version is best left untouched until more
instances of jurisdictional conflict surface. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">I will deal with
the rest of the proposed amendments in the next post. Look forward to comments
and corrections from readers.</span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0tag:blogger.com,1999:blog-5949922529631180407.post-462996145280548532015-02-16T02:26:00.000+05:302015-02-16T02:26:16.152+05:30Division Bench of the Delhi High Court Vacates Interim Injunction against Glenmark in Linezolid Patent Dispute<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
On February 5,
2015, a Division Bench of the Delhi High Court <a href="http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=26513&yr=2015">vacated</a>
the interim injunction granted on January 19, 2015 by a Single Judge of the Court
against Glenmark Pharma in respect of Symed Labs’ process patents on Linezolid
IN213062 and IN213063.</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">The reason for
the <i>ad </i>interim vacation of the interim
injunction of the Single Judge, according to the Division Bench, was the
failure on the part of the Single Judge to take into account Glenmark’s
contention that Symed Labs had failed to establish that the products of the
parties were identical, which is a mandatory requirement under Section 104A of
the Patents Act, 1970. Extracted below are the relevant portions of the DB’s
order:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i><span lang="EN-US">“According to Mr Chidambaram, a specific plea is taken
in the written statement and he has drawn our attention to certain paragraphs
thereof to show that the Linezolid API manufactured by the
appellants/defendants is different from that of the plaintiff/respondent.
Therefore, before the learned Single Judge could grant an injunction in favour
of the respondent/plaintiff, it was incumbent upon the learned Single Judge to,
prima facie, come to a conclusion that the Linezolid API manufactured by the
plaintiff using its patented processes was identical to the Linezolid API
manufactured by the defendants/appellants. This does not appear to have been
done. It is in these circumstances that we are vacating the interim order for
the time being and direct that the defendants/appellants shall maintain
accounts and shall file the same in this Court as also supply a copy to the
respondent/plaintiff”<o:p></o:p></span></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">Section 104A
envisages reversal of burden of proof on the defendant in limited circumstances
where the patentee is unable to establish that the defendant’s process is
identical to that of the former’s patented process, but has established the
limited fact that products of both parties are identical. In the facts of
Linezolid case, unless the patentee sought to place reliance on Section 104A to
seek reversal of burden of proof, I am not sure it is incumbent on it to establish
the identicality of the products. Since I haven’t had the chance to read the
Single Judge’s order of injunction, I shall reserve my comments on the issue. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-US">That being said,
the vacation of the interim injunction by the DB is only <i>ad interim </i>since it is yet to dispose the appeal. The next date in
the appeal April 6, 2015. <o:p></o:p></span></div>
</div>
J.Sai Deepakhttp://www.blogger.com/profile/08357301068067861565noreply@blogger.com0