Rectification Proceedings- Is a disjointed approach acceptable?

A recent writ petition adjudicated by the Madras High Court, opined its view on certain crucial principles governing proceedings in Trade Marks. 

The judgment of Rhizome Distilleries Pvt.Ltd vs Union Of India, addressed two questions, which can be generalized as:

(i) Whether an entity can claim an exclusive right over an individual element ('IMPERIAL' in this case), when a trade mark consists of several matters ?

(ii) Whether the Intellectual Property Appellate Board has committed any error in allowing the cancellation/rectification application filed by applying the provisions of section 11 of the Trade Marks Act?

While the first question is well settled, the Court reiterated the well established judicial principle of entirety, albeit in its own words.

As far as the second question goes, the Court concluded as below:

“But, all of a sudden, the 4th respondent filed an application under section 57 of the Act for rectification of the registration and the Board by applying the principles embodied under sections 9 and 11 i.e.the grounds for refusing the registration, allowed the application filed by the 4th respondent. … Further, in our considered opinion, the grounds embodied under sections 9 and 11 are available to the persons only at the time when they raise objection for registering the trade mark. The said principles cannot be applied for rectification of the registration”

This extract demand that one thoroughly revisit the statute, in order to adjudge the accuracy of the Hon’ble High Court’s opinion.

To revisit the provisions under a tug here, S. 57 of the Trade Marks Act, 1999 deals with the Power to cancel or vary registration and to rectify the register. Under Sub-section 2 of the provision, reads:

“Any person aggrieved by the absence or omission from the register of any entry, or by any entry made in the register without sufficient cause, or by any entry wrongly remaining on the register, or by any error or defect in any entry in the register, may apply in the prescribed manner to the Appellate Board or to the Registrar, and the tribunal may make such order for making, expunging or varying the entry as it may think fit.”

This provision, without limitation as to time (in contrast to opposition), allows a third party to have an entry pertaining to a mark rectified. As I read the provision, for removals, all that a third party needs to demosrate is that the mark remains or is entered either:

(a) without sufficient cause; or

(b) wrongly/in error; or

(c) exists a defect in the entry in the register.

With respect to S. 9 and S. 11, the two provisions constitute conditions for Registration. The former provision covers absolute grounds for refusal, while the latter governs relative grounds for refusal.

While these provisions, constitute vital conditions for registration,. How can they not be used to meet the demands of a rectification petition? It is strange, because if these conditions have by error, defect, without sufficient cause or, even deceit been shown to be satisfied, shouldn’t third parties be given an opportunity to challenge them?

Undoubtedly S. 9 and 11 come up as objections during Examination, but the Act, no where restricts these to be considerations to be looked at only during that stage of prosecution. Further, distinctiveness, which is the first consideration under Absolute grounds for refusal, is a volatile c oncept- volatile because a mark which is devoid of distinctiveness to start with, may become so vide extensive use; or, the use of an extremely distinctive mark, can make it generic! 

In light of this, shouldn’t the conditions for registration be given its due, throughout the course of enforcement of one’s rights in a trade mark?

In my view, the reading of the statute by the Hon’ble court is disjointed and fragmented, thus ignoring the basic tenets constituting the very foundations of Trade Mark law. To my eyes, the provision acts as a check, by giving third parties an opportunity beyond opposition, to rectify entries on the Trade Marks Register, after due consideration by the Registrar or the IPAB.

Bayer Compulsory Licensing Order: Are There Any Lessons to Learn?

As expected, the Bayer Compulsory Licensing Order has generated a lot of discussion in the relevant circles. In the last post, the issue of local manufacture was discussed. In this post, I intend to discuss a few other issues which interest me.

The primary defense on the issue of working that Bayer relied upon was that the manufacture of Nexavar by Cipla (against who Bayer has filed a suit for infringement of its patent) had to be treated as working of the patented invention by Bayer. 

On the face of it, this argument may not find favour with most people. But what exactly are the layers in this argument? Can a patentee rely on an alleged infringer’s activities to establish fulfilment of working requirements that the Act expects of a patentee?

To understand the position of the Act on this question, one must look at Section 84(7)(e). The provision reads thus:

84.(7)(e) For the purposes of this chapter, the reasonable requirements of the public shall be deemed not to have been satisfied, .....if the working of the patented invention in the territory of India on a commercial scale is being prevented or hindered by the importation from abroad of the patented article by-

(i) the patentee or persons claiming under him; or

(ii) persons directly or indirectly purchasing from him; or

(iii) other persons against whom the patentee is not taking or has not taken proceedings for infringement.

The presence of Section 84(7)(e) makes one thing very clear- alleged infringement of a patentee’s invention, and the steps taken by a patentee to restrain such infringement is a relevant fact to be taken into account in the grant of a compulsory license.

The Act, in fact, draws an adverse inference against the patentee if he has not taken reasonable steps to prevent hindrance to the working of the invention by “importation of those directly or indirectly purchasing under him” (Could this be an additional point to support my interpretation of Section 107A(b)?)

This means if the patentee has taken reasonable efforts to prevent infringement, and his efforts have not met the kind of success that he would ideally expect, should the fact that continued infringement hinders working of the invention by patentee, not be a relevant argument? After all, the patentee’s argument is-

“How am I expected to sell my patented invention if an infringer sells it at less than half the price and I have not been successful in securing an interim injunction against him? Why should I be penalized if my best efforts to enforce my statutory rights have not been successful?”

The fact that infringement of a patentee right hinders working of the invention is something the Act clearly recognizes in Section 84(7)(e). Therefore, I am surprised at the Controller’s take that the issue of infringement of the patentee’s right has no bearing on relevance on the patentee’s ability to fulfill the reasonable requirements of the public.

This actually raises the larger question of failure to grant interim injunctions and the adverse consequences it has on the ability of a patentee to fulfill critical obligations under the Act.

Also, without commenting on the facts of the Bayer case, I think it must be understood that commercial working of the patented invention is linked to several factors, most importantly to the demand for the patented invention in the market. A combination of circumstances could prevent a patentee from getting the best out of the market for his patented invention.

In such a situation, what do equity and fairness demand? Either that a compulsory license be not granted if the patentee has put his best foot forward, or if the patented invention actually addresses critical issues such as public health, a compulsory license may certainly be granted, but the terms of such license must be fair to the patentee and must adequately compensate him. Critically, any such order granting a compulsory license in the second situation must refrain from making unqualified adverse comments against the patentee.

In the facts of the Nexavar case, what does come as a surprise is the statistic on working of the invention. The patent was applied for in India in 2001 (National Phase Application), and was granted in 2008. Since Section 11A(7) grants “like and privileges” once an application for a patent is published, it is not incorrect to say that the patentee’s efforts to commercialize the patent assume importance after the publication of the application.

In other words, it is not just efforts after grant of the patent that are relevant, but also steps taken prior to grant but after publication of the application. Simply put, the Controller could have asked Bayer to show reasons for insufficient working of the patent since the publication of the Nexavar patent application.

These and other such issues could and ought to have been discussed in the Bayer Order to set out the first principles of compulsory licensing jurisprudence. It is not enough to arrive at conclusions, even if correct, since it is not conclusions, but the reasons of an order that are applied in the future. In the absence of reasons, the scope of an order’s applicability is restricted to the facts of the case in which it was delivered, with no long term value or utility.

Vision and thoroughness must not be sacrificed at the altar of speed, particularly where public interest is at stake.

Bayer Order: Local Working Requirements for Patents

In 2 earlier posts elsewhere, I had wondered if a patentee may cite un-workable circumstances to express his inability to domestically manufacture a patented invention. Also, what would happen if the Controller of patents has to choose between access to a life-saving drug by turning a blind eye to large scale importation of the drug to make it both affordable and available to people in India, and fulfillment of domestic working requirements under the Act? This issue too was broached briefly by several speakers in the Roundtable at NLU Jodhpur.

On the issue of “local manufacture” to satisfy working requirements under the Act, I am inclined to state that, TRIPS-compliance aside, the Patents Act exhorts domestic manufacture to prevent reliance on imports and to promote transfer of technical skills to the local population. After all, the idea is reduce the yawning technological deficit between India and the developed world.

The celebrated Ayyangar Committee report, which is the travaux preparatoires to the 1970 legislation, sheds great light on the wording of Section 83 of the Act with respect to working of a patented invention.

In particular, under Part II of the report titled “The Patent System in India”, Paragraphs 37 and 38 are of importance to the issue of working and compulsory licensing. A few lines from these paragraphs are educative and go a long way in understanding and clarifying the Act’s position on local manufacture:

“37. In the present decade under the impact of the national plans that have been formulated for the economic uplift of the country and the raising of the standard of living of its people, the conservation of foreign exchange is a matter of prime importance. In the context of this need, it would be seen that any increase in the price of the patented products imported into the country must, to that extent, be a disadvantage to the country’s economy..........

38. I have already set out the considerations which are said to constitute the quid pro quo for the grant of the patent monopoly, namely (1) the working of the invention within the country so as to result in the establishment in the country of a new industry or an improvement of an existing industry which would profitably employ the labour and capital of the country and thus increase national wealth, and (2) disclosure to the public of the invention and the manner of its working so that on the expiry of the life of the patent, the public are enabled to work the invention themselves and in competition with each other. 

Where the patentee has no intention of working the invention in this country either because he considers this is not profitable or because he prefers to expand the production in his home country so as to achieve there greater efficiency or more production, or is otherwise not interested in working the invention in India, the grant of the patent might tend to improve the patentee’s home country, but offers little advantage to us. Unless therefore the law provides for measures to compel the patentees to work the invention within the country, and these measures are effective to achieve their purpose, the social cost involved in the grant of the patent is not offset by any benefit to the community....”

Considering the unequivocal crystallisation of objectives sought to be achieved by and using the Patents Act, it could be said that local manufacture is an essential and mandatory requirement under the Act. However, should we make an exception when it comes to life-saving drugs? If yes, does the Act in its current form allow for such an exception?

Section 107A(b) Does Not Refer to International Exhaustion: Proof in Legislative Debates

Finally, I think I have what I need to settle the debate on Section 107A(b). I am still keeping an open mind and I am willing to be convinced otherwise, but this document which I just came across shows that Section 107A(b) does not refer to “international exhaustion” at all. In fact, it refers to “limited parallel import”, something I have argued over and over again in several posts here and elsewhere.

The document I refer to is the “Combined discussion on the Statutory Resolution regarding disapproval of Patents (Amendment) Ordinance, 2004 (No.7 of 2004) and the Patents (Amendment) Bill, 2005”. The title’s pretty much self-explanatory, the document records the legislative debates prior to the passing of the 2005 Amendment to the Patents Act.

I have always insisted on “duly authorized under the law” as being one of the critical pointers to the true meaning of Section 107A(b). I have stated my position of the provision in an ealier post as follows:

“It would be extremely repetitive to reiterate all that I have said in those 9-and-odd posts on the interpretation of this provision, but it is important that I briefly state the line of interpretation I have been inclined to take in those posts. In a line, my take on the provision is that contrary to popular assumed conclusion, Section 107A(b) does not seem to talking about, leave alone endorse, international exhaustion remotely.

Section 107A(b) requires due authorization, not for importation, but to produce and sell or distribute the patented product.

In other words, so long as the patented product is imported from a person who’s been “duly authorized under the law” to produce and sell or distribute, importation from such a person would not amount to infringement of the patent. Since the provision uses “duly authorized under the law”, I took the view that the provision probably does not refer to authorization under foreign law to produce and sell or distribute the product, because that would eviscerate the patentee’s rights under the Indian Act; the authorization to produce and sell or distribute must be under Indian law.

Stated otherwise, lawful production of the product outside India does not necessarily legitimize its import into India. Also, “duly authorized under the law” must be taken to mean specific authorization, as opposed to implied consent by way of international exhaustion. Not just that, the provision may not even be referring to international exhaustion because nowhere does it allude to first sale or exhaustion of rights post the first sale.”

This interpretation now receives support in light of the following portions of the legislative debates on Section 107A(b). Following is the statement of Mr.Pawan Kumar Bansal in the discussion held on March 22, 2005, the Minister for Parliamentary Affairs of the UPA regime between 2004-2009 who says thus in response to concerns raised by the Opposition on affordability of medicines:

“The second point, Madam, which has now been incorporated in the present Bill and as also in the Ordinance, is an amendment to Section 107A(b), providing for parallel import.  Here, this amendment says:  “On import of patented commodity from anywhere in the world, the Government reserves the right.”  Despite the fact that a particular medicine may be patented here by any other company, we have the right to import that patented commodity from anywhere in the world, where it is cheaper, even though it is patented here. Earlier however, this required that the foreign exporter was duly authorised by the patentee.  That was the condition earlier.  I may remind my hon. friends on the other side that it has been taken off. Now, the law would be, as it has been included here in the Bill before us now, that ‘no longer do we only need to stick to that condition that the foreign exporter was duly authorised by the patentee to sell and distribute the products.’  The position now would be that ‘the foreign exporter be authorised under the law, thus making the parallel imports easier.’  This mechanism, as you know, would help in price control.”

This statement leaves nothing to imagination since it clearly says that it is the Government of India which has the right to authorize a "foreign exporter" to facilitate imports into India. Simply put, under Section 107A(b), once a foreign entity is authorized to manufacture and sell the product by the Indian Government, importation of the product from the authorized foreign entity would not amount to infringement of the Indian patent. 


In a way, this is the reverse mechanism of Section 92A. Instead of compulsory license being issued for export, this is a license issued to a foreign manufacturer to sell and distribute the product, from whom the product may be imported.

Some might ask, is there a parallel to this provision anywhere in the world? Yes, there is! The amended Section 15C of the Medicines and Related Substances Control Act of South Africa provides for a similar mechanism which reads as follows:

Section 15C: The minister may prescribe conditions for the supply of more affordable medicines in certain circumstances so as to protect the health of the public, and in particular may-

(a) notwithstanding anything to the contrary contained in the Patents Act, 1978 (Act No. 57 of 1978), determine that the rights with regard to any medicine under a patent granted in the Republic shall not extend to acts in respect of such medicine which has been put onto the market by the owner of the medicine, or with his or her consent;

(b) prescribe the conditions on which any medicine which is identical in composition, meets the same quality standard and is intended to have the same proprietary name as that of another medicine already registered in the Republic, but which is imported by a person other than the person who is the holder of the registration certificate of the medicine already registered and which originates from any site of manufacture of the original manufacturer as approved by the council in the prescribed manner, may be imported:

(c) prescribe the registration procedure for, as well as the use of, the medicine referred to in paragraph (b).

I had the opportunity of presenting this very provision in my talk at NLU Jodhpur. Pawan Kumar Bansal also says in his speech that he received calls from South Africa! I had presented this as an alternative to compulsory licensing for price control. This is exactly what Section 107A(b) aims to achieve and this is exactly what I had said in my earlier post on India’s representations to GATT in the Uruguay Round. A paper of mine capturing these arguments will be shortly published.

With this, I fervently hope we stop reaching summary conclusions of “international exhaustion” without giving “due regard” to the wording of the statute. 

I look forward to comments and thoughts from readers.

“Inventive Step” under the Patents Act, 1970: Where Is the Confusion?

The definition of novelty, non- obviousness and industrial applicability criteria, despite conceptual similarities, may differ subtly from one jurisdiction to another. Consequently, it is necessary to keep an open mind when approaching the definitions to avoid unwarranted assumptions which have no basis in the statute.

The definition of “inventive step” is prone to such assumptions because it is assumed that the definition is universally the same. Inventive step under the Act in Section 2(ja) is defined as follows:

“inventive step” means a feature of an invention that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art

The abridged and incorrect interpretation of the definition is that inventive step is equated to “a non-obvious technical advance”. This, however, has no basis in the wording of the definition or the legislative policy that is reflected in the definition.

If inventive step were to only mean a “non-obvious technical advance”, it renders nugatory the use of “or having economic significance or both”. The simpler way of understanding the definition is to expand it as follows:

1. Inventive step means a feature of an invention that involves technical advance as compared to the existing knowledge and that (reference is to feature, not "technical advance") makes the invention not obvious to a person skilled in the art

2. Inventive step means a feature of an invention having economic significance and that (reference is to feature, not "technical advance") makes the invention not obvious to a person skilled in the art

3. Inventive step means a feature of an invention having technical advance and economic significance and that (reference is to feature, not "technical advance") makes the invention not obvious to a person skilled in the art.

In other words, inventive step refers to that feature of the invention which satisfies the following twin criteria:

1. The feature involve a technical advance or must have economic significance or both; and

2. The feature must be non-obvious to a person skilled in the art.

Therefore, inventive step does not refer solely to a “non-obvious technical advance”, but in fact refers to a “non-obvious feature” which involves either a technical advance or has economic significance or both.

The corollary is that the definition distinguishes “technical advance” from the requirement of non-obviousness. “Technical advance” is a misnomer owing to the presence of the word “advance”.  Under the definition, a technical advance by itself is not non-obvious, since if that were to be the case a “non-obvious technical advance” would be redundant.

One of the principles of statutory interpretation is that no word or term or phrase used in a statutory provision must be rendered redundant/repetitive. Applying this principle to the definition of inventive step, it bears out that a technical advance simply refers to a feature which is technical in nature, whose qualitative contribution is to be further assessed by the requirement of “that makes the invention not obvious to a person skilled in the art”.

The other important corollary is that the presence of technical advance is not the sole criterion to judge if an invention has an inventive step. Economic significance of a feature which is non-obvious too by itself could help the product or the process satisfy the “inventive step” requirement. Importantly, the criterion of economic significance is equally applicable to products and processes.

It is important to understand that a clearer and surer approach to the law applying time-tested principles of statutory interpretation is the best way to contribute to the shaping of an informed jurisprudence and formulation of policy initiatives. It is not possible to suggest what the law ought to be unless we understand with clarity what the law is. 

Correction in the Last Post

In the last post, the last para had a few errors. The edited Para is as follows:

"Similarly, in the case of the Patents Act, until the suit is transferred under Section 107A, all orders passed by the Court are not irrelevant. However, the Bombay High Court was of the view that all such orders would be treated as ad-interim, and consequently require to be re-heard by the High Court. This position appears to be correct since once the counter-claim is filed, it becomes necessary to assess the challenge to the validity of the patent which has a direct bearing on the sustainability of the ad interim injunction order passed earlier."

Snippet: Bombay High Court on Section 104A

On March 16, 2012, the Bombay High Court delivered an order which relates to Section 104A of the Patents Act, 1970. The said order was passed in a matter between CTR Manufacturing technologies Limited (Plaintiff) and Sergi Transformer Explosion Prevention (Defendant No.1) and 2 other defendants. In this case, the question before the Court was as follows:

When a counter-claim to a suit for infringement of patent is transferred along with the suit from the District Court to the High Court, are orders passed by the District Court prior to the admission of the counter-claim and transfer to the High Court infructuous?

The High Court held that merely because Section 104A requires transfer of a suit for infringement and its counter-claim from a District Court to the High Court, it does not follow that the orders or decisions passed by the District Court prior to the transfer of the case are rendered redundant.

According to the Court, the decision of a Court remains in force until set aside by the same court or reversed by a superior court or overruled by a subsequent legislation. This rule applies even when it is later proved that the Court never had the jurisdiction to entertain the matter.

Similarly, in the case of the Patents Act, until the suit is transferred under Section 107A, all orders passed by the Court are not irrelevant. However, the Bombay High Court was of the view that all such orders would be treated as ad-interim, and consequently require to be re-heard by the High Court. This position appears to be correct since once the counter-claim is filed, it becomes necessary to assess the challenge to the validity of the patent which has a direct bearing on the sustainability of the ad interim injunction order passed earlier.

I thank Sandeep K. Rathod for sharing the order with me!