More Details of the CPCB Patent Controversy

Yesterday, I had blogged on a patent controversy involving the Chairman of the Central Pollution Control Board (CPCB), Mr.S.P.Gautam, in which he is alleged to have pushed for the adoption of his own patented device by the CPCB.

Another Times of India report, which I seemed to have missed earlier, has a few more details on the controversy.

According to the report, the invention relates to preservation of animal hides by freeze drying without the use of salts. The invention was patented by the Chairman before he assumed the position at the CPCB. 

Upon taking the reins of the CPCB, the technology was transferred to the Board on a 50-50 revenue sharing basis.

The CPCB in turn licensed the technology to a private entity, Enertech Engineering Pvt. Ltd for a period of 10 years.

In February 2011, the Chairman passed a directive banning the use or transport of leather which had been treated using salts. The leather industry was left with no other option but to purchase units with the patented technology at a cost of Rupees One Crore (INR 10 million).

The disturbing part is that while Chairman claimed the technology had been tested for commercial use, Council for Scientific and Industrial Research (CSIR) and Central Leather Research Institute (CLRI) did not share the Chairman’s view nor did they approve the technology.

Subsequently, industry organizations voiced their concerns to the Ministry on the cost of using the technology, its ineffectiveness and the arbitrary ban against use or transport of salt-treated leather.

Here’s the Chairman’s response to a TOI query:

"This is not the first patent. Fourteen patents have been signed by the CPCB, including this one, and no issue of conflict of interest was raised in those cases. The CPCB only sets standards. It does not mandate a specific technology, so where is the case of conflict?”

According to the Chairman, the directive does not coerce people into using his technology since there were 6 other technologies, which could be employed. To this, voices from the leather industry say:

"It (the patented technology) processes only 5-10 hides at one time and needs 10-12 hours of constant high power. How many such machines are we supposed to put up? The cost of using this would be more than 60% of the cost of the industry. The other alternatives like refrigeration are costlier, so the industry is being forced to adopt the lyophilliser,"

M Rafeeq Ahmed, chairman of the All India Skin and Hides Tanners and Merchants Association, says that the ban on the use of salt treatment for leather was introduced without consulting members of the industry.

According to the Chairman, he was only doing what he was asked to by the Environment Minister...so far, there is no information on whether an enquiry has been ordered into the issue by the Ministry.

We will keep our readers posted on the issue.

Suing Unknown Defendants for Patent Infringement

Sometimes a patentee may have a good case on merits for infringement of his patent, but it’s important for him to know the procedural nitty-gritties of instituting the suit in order for him to secure the relief he seeks.

Among the first things a patentee may need to know to sue an infringer, is the constitution of the infringer i.e. whether the infringer is an individual or a partnership firm or proprietorship firm or company or a Hindu Undivided Family (HUF).

But then, it is possible that the patentee knows nothing about the infringer, except the name in which the infringer carries on his business. Can the patentee proceed to institute the suit by merely identifying the infringer by the name or the style in which the infringer represents himself to the world?

Fortunately, the answer is a yes.

Patent suits, like other civil suits, are governed by the Code of Civil Procedure, 1908 (CPC, as lawyers call it). The CPC makes sufficient room for institution of suits against infringers by merely identifying them by their ostensible business names/styles.

Order 30, Rule 10 of the CPC specifically provides for such identification. It says:

10. Suit against person carrying on business in name other than his own: Any person carrying on business in a name or style other than his own name, or a Hindu undivided family carrying on business under any name, may be sued in such name or style as if it were a firm name, and is no far as the nature of case permits, all rules under this Order shall apply accordingly.

Let’s probe this provision a bit more. This Rule forms part of Order 30 of the CPC, whose title is “Suits By or Against Firms and Persons Carrying on Business in Names Other Than Their Own”.

Considering the wording of Rule 10 and the title of Order 30, would it be a fairly logical proposition to state that this Rule is not applicable when the defendant is a company?

It has been argued in a few cases that Rule 10 cannot be used when the defendant is a company. This is because Order 29 of the CPC, which obviously precedes Order 30, specifically deals with “Suits By or Against Corporations”.

What this means is that Rule 10 applies to partnership firms or individuals or HUFs, but not to companies since there is no Rule in Order 29 which is identical or similar to Rule 10 of Order 30. Therefore, it could be argued that when the infringing entity is a company, it must be identified by its registered name, and no other.

To support this argument, sometimes Section 147 of the Companies Act has been marshalled. Section 147 of the Companies Act requires a company to conduct its business under its registered name, non-compliance of which has penal consequences for the company.

However, Courts have held otherwise.  The Rajasthan High Court in M.K.M. Moosa Bhai Amin, Kota vs Rajasthan Textile Mills (AIR 1974 Raj 194) observed as follows:

“Rule 10 enables a person to sue another in the assumed name. The underlying principle appears to be to facilitate suits against those who carry on business in the name other than their own. It is common experience that the business is carried on from one part of the world to another through post and goods are supplied on orders on credit.

The person residing at distant places and supplying goods on credit cannot be expected to know the names of the persons or the proprietors carrying on the business in the firm name which ordered the goods. It is to facilitate commercial transactions that Order 30, Rule 10 was enacted.”

A Full Bench decision of the Allahabad High Court in Rajendra prasad Oil Mills, Kanpur v. Smt. Chunni Devi, AIR 1969 All 1 (FB) was faced with the following issue:

"Whether a limited company falls within, the meaning of the expression 'person' as used in Rule 10 of Order 30 of the Code of Civil Procedure?"

The Full Bench after a review of a large number of decisions, answered the question as follows:

"A Limited Company falls within the meaning of the expression 'person' as used in Rule 10, Order 30 of the Code of Civil Procedure. This would be so even though the Limited Company may have been carrying on business in a name or style other than its own without any attempt to conceal its own corporate name and this fact was known to the party suing."

The Supreme Court has discussed the issue in Rashpal Malhotra vs Mrs. Satya Rajput And Another 1987 AIR 2235, however, this decision does not appear to put pause to the debate on the issue.

High Courts have even gone to the extent of saying that Rule 10 may also be used when the Plaintiff is aware of the Defendant’s constitution as a company. I am not sure the argument can be stretched to cover this situation because the premise underlying Rule 10 appears to be want of knowledge of the defendant’s details on the part of the Plaintiff.

Suffice it to say that where a defendant company conducts business under an assumed name, other than its registered name, Rule 10 of Order 30 may come to the aid of the Plaintiff. This is so because it is possible that certain companies may be conducting their business in violation of Section 147 of the Companies Act, and the Plaintiff may not be aware of this.

Further, there is no qualification or restriction in Rule 10, which says “Subject to other laws or the provisions of this Code”. If a qualification of this kind had been included, it would have seemed plausible to argue that the reference to other laws or the Code is a reference to the Companies Act or Order 29 of the CPC, thereby precluding the applicability of Rule 10 to a company or a juristic person.

Not just that, the beneficial intent of the provision must not be lost sight of, which is to allow plaintiffs to institute suits against parties whose constitution/antecedents he may not be aware of.

Corrections/opinions or case-laws on this issue are welcome! 

Indian Patent Office Rejects Google’s Patent Application for Targeted Advertising

Why do applicants apply for patents on ineligible subject-matter in India when the statutory proscriptions are so much more clearly worded than, let’s say, in the US? 

I couldn’t help asking myself this question after reading a decision of the Mumbai Patent Office rejecting Google’s patent application for a "computer-implemented" method for targeted advertising.

In a hearing held on April 8, 2011 under Section 14 of the Patents Act, Google’s application 1083/MUMNP/2007 for a patent on “Associating Features With Entities, Such As Categories Or Web Page Documents, And/Or Weighting Such Features” was rejected under Section 15.

The principal claim as originally filed read thus:

1. A computer-implemented method comprising:

accepting, by a computer system including at least one computer, a keyword-to-category association;

generating, by the computer system, at least one result using the keyword-to-category association;

serving, by the computer system, the generated at least one result to a user;

tracking, by the computer system, user behavior with respect to the served at least one result updating, by the computer system, a score of  the keyword-to-category association using the tracked user behavior; and

storing, by the computer system, the updated score of the keyword-to-category association in association with the keyword-to-category association

This was amended to read as follows:

1. A computer-implemented method comprising:

accepting, by a computer system including at least one computer, a keyword-to-Category association;

generating, by the computer system, at least one result using the keyword-to-category association

serving, by the computer system, the generated at least one result to a user;

tracking, by the computer system, user behavior with respect to the served at least one result

updating, by the computer system, a score of the keyword-to-category association using the tracked user behavior; and

storing, by the computer system, the updated score of the keyword-to-category association in association with the keyword-to-category association.

In the decision, the Patent Office seems to have primarily objected on grounds that the claim does not disclose an inventive step...but my question is, does this claim even satisfy the requirement of Indian law as far as eligibility of subject-matter is concerned??

Does the principal claim, in its original or amended forms, qualify as a system claim merely because the words “computer system” are present?

Para 1 of the Complete specification reads as follows:

"The present invention concerns advertising. In particular, the present invention concerns improving targeted advertising."

How does this invention not fall within the excluded/unpatentable subject-matter as spelt out in Section 3(k) of the Act? Where is the technical problem for which a technical solution is disclosed in the claim?

A further reading of the decision informs us that Section 3(k) was cited as the second ground of objection...shouldn’t patent-eligibility figure on the top of the priority list in examining a patent application?

That said, to give due credit to the Patent Office, the patent application was ultimately rejected citing Section 3(k) of the Act.

I am not against grant of patents to computer-implemented inventions (CII), but as the law stands today, my humble opinion is that the “invention” disclosed in Google’s application cannot be treated as a CII.

I think India should consider introducing preliminary examination of patent applications at the stage of filing to filter applications like these so that quality time may be invested in examining other applications. 

Stale News: Chairman of Central Pollution Control Board in a Patent Controversy

Yesterday, the Times of India carried a news report according to which, the Chairman of the Central Pollution Control Board (CPCB), Mr.S.P.Gautam, has been trying to push his own patent on lyophilliser, a device used for freeze drying, for use by the Board.

Apparently, a directive by the CPCB too was passed requiring the leather industry to buy the technology claimed in the CPCB Chairman’s patent, which has not been tested yet.

When this issue, which involves conflict of interest, was brought to the attention of the Minister for Environment and Forests, Ms.Jayanthi Natarajan, she promised to probe into the matter.

I wonder if in developing the invention, the CPCB Chairman used the resources of the government. If yes, how did he file and get a patent in his name? Does the Government have an IP policy for its employees? I’ll read up more on this and share my findings with the readers.

Appeals to IPAB: A Few Thoughts

The Intellectual Property Appellate Board (IPAB), although functional for some time now, its true powers are still in haze. What orders of the Controller are appealable before the IPAB?  

Can an interlocutory order passed by the Controller or the Opposition Board in a pre-grant or post-grant opposition be appealed before the IPAB?

Let me explain this question better with a plausible hypothetical. A patent X is granted to P and a post-grant opposition under Section 25(2) is filed by Q against the grant of the patent X. P files his counter-statement along with evidence within the stipulated time. 

Q wants a month’s extension under Rule 138 to file his reply evidence under Rule 59 of the Rules. The Controller denies extension on grounds that the reason tendered for the extension is frivolous or that the law does not permit him to extend time in the case of reply evidence being filed under Rule 59. An interim order to that effect is passed against Q.

Can Q appeal before the IPAB against this interim order? Does Section 117A, which deals with appeals to the IPAB, allow for such appeals? If no, is a writ petition the only recourse left against such interim orders?

How does Section 117A read? It says:

(1) Save as otherwise expressly provided in sub-section (2), no appeal shall lie from any decision, order or direction made or issued under this Act by the Central Goverment, or from any act or order of the Controller for the purpose of giving effect to any such decision, order or direction.

(2) An appeal shall lie to the Appellate Board from any decision, order or direction of the Controller or Central Govt under........ sub-section (4) of Section 25.......

To understand if an appeal lies from an interim order passed by the Controller in a post-grant opposition proceeding, it is important to understand the combined effect of the underlined portions of the Section.

A. Sub-section (1) states that the appealable order or decision or direction must be “expressly provided” for in sub-section (2).

B. Sub-section (2) in turn says an appeal shall lie from “any decision, order or direction of the Controller” under all provisions specifically mentioned therein, including Section 25(4).

C. Section 25(4) refers to an order of the Controller in the post-grant opposition to either “maintain or amend or to revoke” the patent.

Since Section 25(4) refers only to an order to maintain/amend/revoke the patent, how can it be said that an interim order passed in a post-grant opposition too is appealable under Section 117A?

A possible argument could be based on the wording of sub-section (2) of Section 117A. It reads “any decision or order or direction”. If the intention was to restrict appealability to only final orders passed, and not to interim orders/directions, where was the need to include the word “any”? and where was the need to include the words “decision or order or direction”?

Clearly, the conclusion tilts towards appealability of interim orders before the IPAB.

Not just that, one must also take into account the fundamentals of writ jurisprudence. In a writ jurisdiction, the Court’s power to deal with the merits of the case is very limited. This is because in a writ proceeding, the Court is entitled to reverse the decision only if there is an egregious error which is against the express provisions of the law or canons of natural justice.

In other words, a Court does not sit in appeal over the findings on merits in flexing its writ jurisdiction. Therefore, to file a writ against an interim order of the controller to challenge his findings on merits, would be impermissible under the law.

Consequently, the plausible conclusion is that the IPAB has to entertain an appeal from interim orders passed by the Controller in circumstances envisaged under Section 117A(2).

Another way of looking at it could be that the very constitution of the IPAB as an appellate authority would be rendered otiose if parties start approaching High Courts against interim orders of the Controller. 

Lesson for Applicants: No Room for Internal Docketing Errors

Deadlines are of the essence in patents, and I think patent prosecutors understand this better than anyone else (I wouldn’t call myself a patent prosecutor, I am a litigator). 

To avoid human error, most prosecuting firms and in-house IP teams have softwares to remind them of the deadlines, but there is still room for error when entries are made.

A decision of the Delhi Patent Office delivered in a hearing dated July 26, 2011 in connection with the application 5043/DELNP/2011 drives this point home better. The facts of the case in brief are as follows:

1. The application in question was a national phase PCT application filed by Durect Corporation, which claimed priorities from two US applications, the first of which was dated November 3, 2006 and the second was dated June 22, 2007.

2. The national phase application was recieved by the Indian Patent Office on February 8, 2010.

3. The application was returned by the patent office on grounds that the national phase application was filed beyond the stipulated period of 31 months from the date of priority.

4. Durect corp filed a writ petition in which the Delhi High Court directed the Patent Office to consider the patent application of Durect along with its petition under Rules 137 of the Patent Rules for condonation of irregularity.

Accordingly, a hearing was held by the Delhi Patent Office. Durect Corp attributed the delay in filing the national phase application to an error in the internal docket records of the company, wherein the later priority date of June 22, 2007 was entered and treated as the reference date to calculate the 31 month period for national phase entry.

The question before the Delhi Patent Office was if this delay could be condoned under a combined reading of Sections 80 and 81 and Rules 137 and 138.

It was submitted by Durect that docketing error has to be considered as sufficient cause for delay according to the PCT, and Rule 82bis was specifically cited to support this submission. Besides, Section 5 of the Indian Limitation Act too was marshalled to buttress Durect’s case.

In a surprisingly well-researched decision, the Patent Office rejected all the above submissions for the following reasons:

1. The PCT requires national law to provide for mailing delays, which Indian law duly provides for under Rule 7 of the Patent Rules. Docketing errors may or may not be permitted and this is left to the discretion of member nations of the PCT. Indian law does not recognize internal docketing errors as valid reason.

2. Not just that, even the PCT, at best, recognizes a two-month delay in case of docketing errors. In this case, the delay was 8 months

3. Rule 137 is to be employed by the Controller to condone procedural foibles such as filing of the wrong document or application, so long as a third party’s interest is not affected. However, this Rule did not have the potency to cure delayed national phase entry.

4. For Rule 138 to apply, extension must be sought within the stipulated period, which is 31 months in this case, and at best a month’s extension could have been granted, but not an 8-month extension.

Although it is unfortunate that the decision went against Durect, I think this case is a standing example for applicants to ensure that they take utmost care even when entering details in their internal docket management systems.

That aside, this decision, considering the detailed analysis of provisions undertaken by the Patent Office, is a welcome development and is hopefully a sign of better things to come.

Thanks are due to Sandeep Kanak Rathod for bringing this decision to my attention.

Kolkata High Court: Rule 138 of the Patents Act

Earlier last month I had blogged on the Supreme Court’s decision in the Polydrug case in which Rule 138 of the Patent Rules was in issue. The Supreme Court in that case categorically ruled that the Controller of patents has the power to extend the statutory period by one month under all provisions which have not been expressly excluded from the purview of Rule 138.

Sandeep Kanak Rathod of genericpharmaceuticals blog has been kind enough to share with me another matter relating to Rule 138 which is pending before the Kolkata High Court.

In this case, Hindustan Unilever filed a writ petition before the Kolkata HC challenging the acceptance of counter-statement filed in a post-grant opposition by a patentee beyond the two month period provided under Rule 58.

According to Hindustan Unilever, which is the post-grant opponent, notice of the opposition was issued to the Patentee by the Controller vide a letter dated June 30, 2008. The patentee filed his counter-statement on September 1, 2008 along with an application for extension of time under Rule 138.

No details of the date of receipt of the notice of opposition are mentioned in the Kolkata HC’s order, but if the notice was received after July 1, 2008, the patentee could be well within his rights to seek extension of time under Rule 138 since the application would be within the prescribed two-month period to file the counter-statement.

The Kolkata HC has issued an interim order holding that acceptance of the counter-statement of the patentee by the Controller was wrong prima facie and has stayed the post-grant proceedings until the disposal of the writ petition.