Price Control Mechanism under the Patents Act 1970

One of the popular myths that is frequently aired and entertained about the Patents Act is that the only way to control prices of patented products is to invoke the compulsory licensing mechanism. This, in my opinion, is based on an incomplete interpretation of the Act.

It is my opinion that if Section 107A(b) of the Patents Act is interpreted as a government-invoked/triggered mechanism to import patented products, it could serve as the first gear in controlling prices of patented products before switching gears to invoke the compulsory licensing mechanism.

The advantage offered by Section 107A(b) is that one need not wait for a period of three years to lapse as one has to under the compulsory licensing mechanism in Section 84 of the Act. Further, under Section 107A(b), it is possible for the government to choose a manufacturer in that jurisdiction where the cost of manufacturing the patented product is the cheapest and thereafter import or facilitate imports of the products into India.

In a way, this means that the Act envisages a two-step calibrated mechanism wherein Section 107A(b) is the first step which permits importation of the patented product from a foreign jurisdiction pursuant to Indian authorisation, and the second step being an application for a compulsory license under Section 84.

It must be noted that under Section 85 of the Act, a patent may be revoked for non-working only after expiration of two years from the date of the order granting the first compulsory license. It must be understood that it is theoretically possible and practically plausible that no interested person may come forward to apply for a compulsory license after the three-year period under Section 84.

Given that it may not be permissible for the government to fit the definition of "person interested", it must be possible under the Act to invoke an option which protects public interest. The interpretation of Section 107A(b) which I put forth ensures that in the absence of any party/"person interested" who can act as a compulsory licensee, the government is not bereft of options to secure public interest in critical areas such as health and nutrition.

It is my genuine belief that interpretation of Section 107A(b) which I put forth strikes a balance between achieving the larger goals of public interest and imposing reasonable restrictions on the rights of a patentee, without unduly eroding the sanctity of a State-granted right or discarding time-honoured principles of statutory interpretation.

Snippet: PIL Filed before Delhi HC Against Customs Clarification on Section 107A(b) of Patents Act

On May 21, 2012, I filed a Public Interest Litigation (PIL), which is basically a public-interest writ petition under Article 226 of the Constitution, challenging the legality of a Circular issued by the Central Board of Excise and Customs (CBEC) on May 8, 2012. The PIL is numbered W.P(C) 3165 of 2012 and is titled J.Sai Deepak v. Central Board of Excise and Customs and Union of India.

In the impugned circular, the CBEC, in consultation with the DIPP, has taken the position that Section 107A(b) of the Patents Act, 1970 allows “Parallel Imports” and therefore such imports do not fall within the scope of application of the IPR Enforcement Rules, 2007. Following is the portion of the Circular which states so:

“4.         In this regard, the Department of Industrial Policy and Promotion which is nodal authority for all matters relating to (i) Trade Marks Act, 1999 (ii) Patents Act, 1970 and (iii) Designs Act, 2000 has,interalia, stated that:

(i) Section 107A (b) of the Patents Act, 1970 provides that importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product shall not be considered as an infringement of patent rights. Hence, in so far as Patents are concerned, Section 107A (b) provides for parallel imports.”

Readers of our blog know that I have written frequently on Section 107A(b) stating that the provision does not relate to or permit parallel imports by way of international exhaustion. I have taken the same position in the PIL. I have also filed an application seeking stay of the Impugned Circular in so far as it relates to the clarification on Section 107A(b).

The PIL came up before the Chief Justice of the High Court of Delhi (I appeared for me). The Hon’ble High Court has issued notice to the respondents asking them to file their counter-affidavits in response to my Petition. The next date of hearing is July 25, 2012.

Snippet: Delhi HC on Ownership of Underlying Works

A few weeks ago, I had blogged on ownership of underlying works in a sound recording. I had taken the view that the owner of a sound recording does not need the consent of the owners of copyright in lyrics and musical composition for the communication of the sound recording to the public. A Division Bench of the Delhi High Court too has taken a similar view in the case of Indian Performing Right Society Ltd vs Aditya Pandey & Ors. 

The Division Bench has held that  no separate or additional permission needs to be obtained from the owners of underling works (lyrics and musical composition) for communication sound recording to the public. In other words, it is sufficient to obtain a license from Phonographic Performance Limited (PPL) alone, without there being a need to seek a license from IPRS. 

Snippet: Aamir Khan’s show “Satyamev Jayate” in Copyright trouble

Aamir Khan’s show, Satyamev Jayate, which I personally found extremely relevant and riveting, finds itself in copyright trouble. Popular physician-turned-singer Palash Sen has alleged that the title song of the show is similar to a track from Sen’s  popular album “Phir Dhoom”.

Here’s a youtube video where both numbers have been compared, and frankly one does not find much merit in the allegation. The allegation does not seem to satisfy the requirement of substantial reproduction, which forms an essential ingredient of infringement. We’ll keep our readers posted on the developments in the controversy.

Snippet: Bayer Challenges Controller’s CL Order

In an expected move, Bayer has filed an appeal before the Intellectual Property Appellate Board (IPAB) challenging the decision of the Controller of Patents granting compulsory license to NATCO in respect of its anti-cancer drug “Nexavar”.

Reportedly, the spokesperson of Bayer has expressed the following sentiments on the CL order:

"We strongly disagree with the conclusions of the Patent Controller of India and have appealed his order on May 4, 2012 with the Intellectual Property Appellate Board," 

He added:

"We will rigorously continue to defend our intellectual property rights which are a prerequisite for bringing innovative medicines to patients,"

According to the company:

“the order of the Patent Controller of India damages the international patent system and endangers pharmaceutical research,"

We eagerly await more details on this issue, which we shall share with our readers as and when we are informed of them.

IPAB Revisits considerations under the Trade Marks Act

A month old order from the IPAB, available here, has revisited aspects that we touched on in an earlier post. The dispute had two large newspaper publications involved, namely Financial Times (FT) and Times Publishing House Ltd (TPHL). 

The decision looks at five applications together, for rectification and cancellation of registration of “Financial Times”. 

The IPAB at the very outset took note that TPHL had included the Rhizome Distilleries decision in its written submissions, but did not give consideration to its ruling, under the wide discretion that the statutory power of rectification gives the IPAB. In other words, the IPAB decided in the interest of justice, not to throw out the case of TPHL merely because they have invoked Ss 9 and 11 of the Act. 

The Court substantiating its decision to entertain the case of TPHL stated that “[w]e have a duty to see whether the registration has been granted in accordance with law, whether the provisions of the Act have been violated or whether the public interest is affected by the said registration and while examining so, whether the entry in the register shall not remain.

We necessarily have to examine if the Registrar has performed his duty in accordance with the provisions of the Act". The grounds to file the rectification proceedings included descriptiveness, lack of distinctiveness, and that the mark was registered contrary to the provisions of the Press and Registration of Books Act, 1867 (PRB Act in short), which regulates the publication of a newspaper in India and also protects the grant of title.

According to TPHL, FT had not complied with the provisions of the PRB Act, and was not entitled to have the mark registered, or have the mark remaining on the register. According to TPHL, FT had not produced evidence to establish sufficient use, distinctiveness or trans-border reputation in India. They added that proof of trans-border reputation by itself will not dispense with the requirement of use of the mark in India without which the mark shall not remain in the register and ought not to have been granted registration. 

They also stated that the evidence adduced before the City Civil Court, in a prior suit, clearly showed that FT had no intention of printing or publishing newspaper in India. 

That apart, they stasted that there existed other contradictions between the statements of the witnesses before the Civil Court and the affidavit of the sole witness before the IPAB. FT stated that its circulation was not in violation of the PRB Act, since the scope of the Act was limited to printing and publishing, and did not cover ‘circulation’. They added that FT was established 125 years ago and had built an enviable reputation as one of the leading newspapers on economic affairs. 

They stated that the mark had been coined for the first time in 1888 and it had acquired distinctiveness and the adoption of the said mark by TPHL is dishonest. They added that the use of the newspaper could not be determined by numbers alone, the price , quality, target audience, etc. are factors which must determine the question. 

The Board looking at the overlap between the PRB Act and the legislation on Trade Marks observed that if an Examiner would be expected to look at whether every newspaper owner who seeks registration of his mark has complied with the provisions of the PRB Act, he would be transgressing his jurisdiction. 

The IPAB however noted that in case the applicant chooses to register a descriptive mark, he would have to depict, that as on the date of application, the mark had acquired distinctiveness. The IPAB noted that the PRB had no authority to go into this aspect. Looking at other aspects, FT was found to have trans-border reputation, however the IPAB did not find evidence substantiating FT’s claimed use since 1948, as had been vouched by them. On this count, the Board ordered that the mark was liable to be removed from the register. The Board in arriving at its conclusion looked at a plethora of decisions. 

Further, in careful consideration of the facts, the Board has come to careful conclusions on each of the applications. The decision, although may appear convoluted in terms of the number of applications it deals with, the same is definitely worth a read for all trademark practitioners!

Snippet: Supreme Court Rules Copyright Board Has No Power to Fix Interim Royalties

A short while ago, I was given to understand that today the Supreme Court of India has ruled that the Copyright Board does not have the power to pass interim orders in proceedings instituted under Section 31 of the Copyright Act, 1957. Section 31 deals with the power of the Copyright Board to grant compulsory license in respect of copyrighted works.

The said decision was passed in a Special Leave Petition against a decision of Justice Vikramjit Sen of the Delhi High Court delivered on September 1, 2011.

Justice Sen in his order of September 2011 had ruled thus:

“We make it clear that the Copyright Board is free to come to its own conclusion in respect of an interim arrangement as well as final terms of a compulsory licence, if it finds no impediment in doing so, without being influenced in any manner by the interim arrangement devised by us.”

I tend to agree with the decision of Justice Sen because a body such as the Copyright Board, which is vested with the power to fix final royalties must be logically deemed to have the power to decide interim royalties as well until a final decision is taken. It is surprising that the Supreme Court is of the opinion that the Board does not have the inherent equitable power to fix interim rates.

Before commenting any further, we will await the release of the final copy of the written order.