02/02/2021

IPR derives its origin in the institution of property - got Europeanised after the Industrial Revolution.
Colonial legacy was perpetuated in India initially. 2 distinct categories of intangible property rights - 1.
Industrial property (patents, trademarks, industrial designs, preliminary GIs, principles of unfair
competition, trade secrets - industry/trade connection): Paris Convention governed them in their
broadest form - technologies or inventions. and 2. Copyright/other rights - naturalistic in their tendency,
reflected/found in authors’ works directly.

Different categories of IPR (varied subject matter like TM, copyright, patent etc.) have distinct criterias
for protection- for example, originality is a requirement for copyright protection whereas novelty is
required for patent protection. For trademark protection, distinctiveness is a sine qua non. The term of
protection is also different- different subject matter is dealt with by policy differently. Unique criteria
underlying different subject matters of IPR require law to provide distinct criteria/term for/of protection
and distinct provisions of public policy.

Most of these rights are negatively worded- for instance, preventing others from using TM. The right to exclude
is common to all IPRs- this right has two components- exclusion and alienation. The core pillar
running across various IPRs is the idea of a bundle of rights- primary and secondary. The second pillar is
remedies. Across all IPRs, there are usually the same set of remedies- like injunctions and damages.

IPRs can also be collective- belong to a group of individuals/organizations- for example, GIs are
inherently collective; ‘Star Alliance’ is a conglomerate of various airlines who collectively own the
trademark ‘Star Alliance’.

What is the normative focus of IPRs?

1. Copyright protects works- books, music, sound recordings, artistic works, sculpture,
cinematograph etc. The rights that arise from the exploitation of existing works are called
neighboring rights. For instance, performers may not own the music/sound recordings- but
they are recognized as singers in the ultimate product- they have distinct related rights. Except
for computer softwares, copyrights do not protect technologies because they are primarily literary
in nature.
2. Patent law protects technologies/inventions- chemical/mechanical/pharmaceutical etc.
3. The normative focus of trademarks is reputation/brand/goodwill. The primary reason is not
just to protect the owners of TM from infringement/incentive, it is also to protect the consumers
from confusion.
4. Industrial designs protect elements of products that have aesthetic appeal. If the design
becomes functional in nature, it will no longer be protected under industrial design.
5. Geographical indications do not necessarily protect geographical names (like Alphonso)- it
protects collective brands of producers in a particular geographical territory.
6. Plant variety protections- PVPFR Act (sui generis law)- affect farmers’ rights and have certain
historical and public policy considerations- uniformity and stability are important.
7. Semiconductor chip production- layout designs of chips (seen as representations). Only in
countries having fabrication facilities - less scope in India- most functional aspects are protected
by patent law.
8. Pseudo IPR- informal yet strong protection based on principles of unfair competition- trade
secrets. This cannot be an IPR protection because the moment is is required to be registered, it
will have to be disclosed. Trade secrets prevent someone from unjustifiably enriching themselves
by misappropriation of secret knowledge in their possession - secrets having commercial value.
Dividing IPR into conceptual categories for better understanding, on the basis of-

1. What qualifies for protection? (look at qualification requirements like novelty, distinctiveness etc.)
2. What subject matter is protected?
3. IP acquisition/prosecution- registration of IPR- the process differs. May be mandatory. The
registration authority may also refuse to grant IPR on various grounds.
4. What are the rights? Except in case of trademarks, which are based on common law, IPRs are
clearly defined. Further, most of these rights are negatively worded.
5. How are these rights transacted (transactional IP/assignment/licensing of IP)? IPRs are -
primary/secondary bundle of rights.
6. What are the exceptions to these rights? Exceptions to IPRs are with the aim to increase access.
Principle of first sale (applicable to all categories of IPRs)- owner of IP has right to reproduce,
exclude others from reproducing etc. The first sale doctrine creates a limited exception to the
rights of distribution/publication because by virtue of buying the book, I am the owner of the
book itself (not the IP)- whoever purchases the produced, has no IP barriers wrt re-selling the
product. This is a limited exception to IPRs.
7. What are the remedies available for infringement of IPR? All remedies are similarly worded-
injunction, accounts of profits and damages.
8. IP and public interest- third parties may intervene on certain grounds and require a particular
protected work to be covered under compulsory licensing. Since IP is an exclusionary right, the
owner has the power to refuse a license. In such cases, the protected work may not be available.
To expand output and make inventions available, IP holders may be subjected to
forced/involuntary licensing. The value of entitlement is also decided by the third party
(court/government/regulator).
9. How IP law intersects with other instruments like contract law, competition law, price regulation
etc.
10. Overlaps between different IPRs and their resolution.
11. Miscellaneous

You should be able to grasp IP provisions through the lens of these conceptual categories.

06/09/2021

Historical origins of IPR- Modern history of IP is closely related to inventions that led to copying. For
example, prior to the invention of the printing press, copying/printing was not easy. Naturally, there were
less opportunities for copying. In relation to patents, the core knowledge could not be kept in secrecy.
History is important to understand the relationship between IP and the socio-economic system of a
particular period.

1. Copyright-

Since writing began, one of the key questions to be addressed was ‘stealing of ideas’ (on an ethical level-
not a copyright issue since copying was difficult). Invention of Gutenberg’s movable printing press
revolutionized reproduction of literary works. Initially, copyright protections were rooted in censorship
(Monarch’s control over dissent). To control the circulation of printed material, the Monarch and Church
made necessary some kind of authorisation for printing. In the 16th Century, the King granted the
Charter of Stationers’ Company which empowered a group of printers in London to govern and regulate
printing.

The company was in effect given censorial control over publishing (de facto monopoly). However, this led
to a lot of resentment in the UK. in the early 1700s, the Parliament came up with the first modern
copyright statute- the Statute of Anne, 1709. The Statute limited protection of authors’ works to 14
years and 21 years for works published before the Statute. This effectively ended the publishers’
monopoly and works published way prior to the Statute entered the public domain.

This led to the battle of publishers- two landmark decisions of the HoL- Miller vs Taylor and
Donaldson vs Beckett. These decisions shifted the normative focus of copyright law from State
patronage and incentives to private enterprise. However, with newer formats of works emerging and
newer methods of publishing, the copyright law underwent drastic changes. [The system was primarily
developed in England, Europe]

In France, copyright law has been built on the conception of the natural rights of the author- and
publishers are mere intermediaries. Something additional to the economic perspective of IP was given
importance. Therefore, moral rights in the present copyright regime trace back to the French tradition.

What this history of copyright teaches us-

● Technology is a game changer- it led to the development of copyright

● Models of State patronage have been minimized and private initiatives have gained importance

2. Trademarks-

The Guild system was prevalent- source identification was necessary to ensure quality- symbols and
marks were used to trace the origin of a product. These marks were also used to protect the goodwill of
guilds and punish counterfeits. In the 18th/19th centuries, products started emerging from individuals
and not guilds.

One of the first common law decisions related to the mark “JD”- at that time, there was no Statute- so
the Courts granted remedies using the common law tort of unfair competition. More and more cases
started coming to Courts. This led to the jurisprudence of passing off action.

In the 1800s, people wanted to open companies and trade on the basis of marks- need for registration of
marks in relation to a class of products and subsequent protection. This is where the system of
trademarks began (shift from common law passing off action). This trademark system has been
developing parallel to passing off jurisprudence (for unregistered marks).

Key takeaways-

● Although the system of TMs can be traced back to common law remedies for torts, it developed
in the modern regime through Statutes.
● The modern trademark law protects not only marks, but also unconventional shapes, smells, 3D
marks etc. [trademark, trade name and trade dress are all protected]
3. Patents-

The history can be traced back to 15th Century Venice (monopolies were granted to ship makers, glass
makers etc.). However, this rudimentary form of patents was localized. By the middle ages, England
started granting letter patents to lure foreign inventions into England by granting them incentives in the
form of monopolies. These were granted as privileges by the Monarch to anyone who brought new
technologies into England. A part of this system of privileges was the requirement of training local
artisans.

This power to grant privileges was abused by the nobility- in Darcy vs Allen, the system of privileges was
challenged on the basis of restriction of trade and enterprise (since monopolies were also granted on
technologies of common knowledge)- however, the Court did not abolish the system and instead said that
it was a political decision. However, the decision galvanized public opposition to the system of letters
patent.

Eventually, the Parliament passed the Statute of Monopolies in 1623, which abolished the system of
monopolies in the form of patents. The system of incentives was formalized [section 6 of the Statute
conceptualized the core of the modern patent system - right to exclusion]. The Statute introduced novelty
criteria, the right of the first inventor and also public interest considerations. The institutional design of
the modern patent system can be traced back to the Statute of Monopolies.

07/09/2021

Economics of IP Law-

What does IP do? This question remains largely unresolved due to the difficulty in obtaining empirical
evidence. Then why do countries have IP laws?

Price competition based on output may become problematic, resulting in loss- producers may want to
take the risk of moving to a better form of competition- product differentiation. IP law allows you to
appropriate return on investment- which would otherwise be impossible unless you are able to keep
your IP a secret- running the risk of disclosure via reverse engineering. That is why one of the reasons for
justifying IP laws is to preserve the differentiation which creates competition.

IP laws- shift from static price competition to dynamic competition (and dynamic efficiency)- it stops
one kind of competition but promotes another (in innovation markets).

Therefore, to protect differentiation and hence competition, a positive IP law is required.

Problem of social cost- deadweight loss created by IP- sans IP, more people would have been able to buy
a certain product- some consumers may not be willing/able to pay the raised prices. Therefore, IP excludes.
How has society made the value judgment that despite exclusion, innovation is necessary? Because the
deadweight loss is not a permanent feature- IP laws are of limited nature.

Why do we make this value choice? Because this thing would eventually fall into the public domain,
whereby generic products would be manufactured on a large scale. In pharmaceuticals, we may not make
such a choice (especially during a pandemic) - but not for other entities. Balance out the deadweight loss
by putting a time limit - but still, why has society made this choice? Axiom that knowledge is a public
good - society would benefit if all its members make good use of this non-rivalrous and non-excludable
good.

IP knowledge is non-rivalrous and non-excludable- once someone possesses knowledge, it cannot be

taken back. The inherent characteristics of this knowledge are to be free. But this formulation applies only
to the consumption of knowledge. Therefore, because knowledge is a public good, there would be no
incentive for producers in the absence of IP law. IP laws act as an artificial legal barrier in the form of
property rights.

Why property rights and not contract/tort etc? Property rights are rights in rem. What do property rights
mean? What are alternatives to IP?

09/09/2021

Just because we say the IP is linked to innovation and incentive and competition, does not mean that it
has to achieve that. The IP system is only able to exhilarate in areas where there is a market. IP is an
instrument of the market- so in cases where there is very low demand (like medicines for genetic
disorders) or where there is very high demand but low ability to pay (like medicines for TB), there is very
little incentive to invest despite the patent system.

The IP system is only able to exhilarate in areas where there is a market. Its failure where there is no
market is not an afterthought. Everyone knows that IP is an instrument of the market. Therefore IP
behaves the way the market wants it to behave- this is a benefit as well as a disadvantage. Why? (Need to see
alternatives to IP)

Alternatives to IP- the incentive to innovate may also be in the form of subsidies, grants, prize
money etc. Universities, institutions receive money from the State for innovation.

However, these systems are different from IP in some significant ways-

1. Overcompensation/undercompensation- these alternatives have an inherent inefficiency

attached to them- IP has a market-signalling function (i.e. the market decides what is the
appropriate price/reward that you should receive on your investment)- in all other cases, the
reward is decided by the State/regulator- running the risks of overcompensation/
undercompensation.

For example, the State decides that 10 lakh is the appropriate amount and the firm will take this bait and
put their innovation into the public domain0 however, despite this prize fund, the innovation may be
successful/ a failure in the market- risk of loss.

These alternatives are useful in a situation where you want to accelerate what is being done by private
players- for example, vaccination acceleration programs.

2. How far should the State go? The government may decide to only invest in public
institutions- and a lot of people argue in favour of the public sector being the sole actor in innovation
and creation of knowledge because it is a ‘public good’- public institutions will work with the sole purpose
of innovating and putting innovations in the public domain. However, the issue is that the knowledge
needs to be converted to a physical/usable good. To take it from the lab stage to the market, there will be
no incentive in the absence of IP.

In spite of the fact that the RnD already exists, there will be no incentive to commercialize. One may
argue that the State can also commercialize. However, that would lead to a State-central economy along
with its inefficiencies. The State will act in public interest- therefore no profits.

Despite this, in India, RnD is funded majorly by the State (70%)- this is not due to absence of an IP
system- but because of other factors which affect the investment climate. In a bad investment climate,
even a strong IP system will not encourage private ventures into innovation.

Some States have a mix- where private institutions engage with public institutions to bring a product to
the market- however, this is with the promise of IP.

Private alternatives to IPR-

Google advocates for a strong trademark regime but a soft copyright regime. Example of Google heavily
relying on the ‘fair use’ exception to copyright wrt books, images etc- similarly, various OTT platforms
and other private players like Facebook, Spotify etc are in favour of a weak copyright regime where they
are able to obtain maximum content for free/at a royalty rate that is not voluntarily negotiated. This is
because a strong copyright regime acts as an input cost and private players want to maximize their profits.

Google’s business model is two-sided/multi-sided (a heavy chunk of their profits comes from
advertising)- therefore they would want the copyright regime to be based not on the notions of property
rights (fundamentally based on exclusivity and voluntary transaction decided by the market), but on
liability rules. Liability rules are where the law allows you to make free use of certain
copyrighted/protected works or where the IP owner does not have the right to refuse- like fair dealing
provisions (zero liability rules) and compulsory licensing (compensatory liability rule). Liability rules
are basically involuntary transactions.

Content aggregators/ platform markets prefer liability rules because their incentives are stuck in giving
away someone else’s IP for free (they do not need to monetize their own IP) whereas content creators
prefer property rules.

Similarly, some artists may be incentivized to provide their content for free because they earn money
through advertising and popularity. In the fashion industry, designers do not seek protection for each
design because by the time they obtain protection/sue for infringement, the style would have changed.

If you are able to survive in the market through alternative sources of income, you do not need to
monetize through IPR.

13/09/2021

Theories of IP- various justifications for IP- needed to show how intellectual property/labour can be
covered under general notions of property.

A. John Locke’s labour theory-

If not anything else in the world, the work of your hands/your labour is yours. By employing your labour
to something in the commons, you can make it your own. When you mix your own labour in the
property, and since your labour is your own, you can expropriate the property.

However, this theory has 2 provisos- i) sufficiency proviso- enough must be left in commons for others,
everyone should be able to utilize the commons; ii) spoilage principle- you can make beneficial use of
property until it starts spoiling. There is a third proviso, culled out from his writings by scholars- charity
proviso- even if you allow accumulation of property through fruit of the labour theory, if it leads to a
situation of destitution for some, intervention becomes necessary in the form of redistribution of
wealth.

Problems with Locke’s theory-

● Naturalist view of labour- that you own the work of your labour- however, there are varying
conceptions of labour- utilitarian, libertarian etc.
● How much can be appropriated from the commons?
● Nozick’s critique of Locke- what would happen when somebody adds tomato juice to the
ocean? Would the individual then own the ocean?
● Sometimes, what you can claim from the marketplace need not be through your labour but
through a social phenomenon- for example, the pandemic increased demand of certain objects
substantially. The pandemic is an external force driving the demand for vaccines- in this situation,
can we attribute the entire benefits to the pharmaceutical companies?
○ In any situation, demand can be seen as externally created.
○ Further, in all situations, the market cannot appropriately reward labour.
● How do you distinguish between the contributions made by various firms to the making of an
innovation- like 5G- where various firms contribute to the creation of a new standard,
implemented by various players in the market- in this case, additional demand is created for the
systems-level innovation- how much of one firm’s technical contribution is responsible for the
innovation?
● How is the sufficiency principle applied? IP is a property that is not based on granting something
which is existing, but creating a right. Enough is left in the market in terms of opportunity to
innovate- therefore the sufficiency principle ijs satisfied.
● However, the spoilage principle cannot be satisfied in case of certain technologies which act as
intermediate tools or platform technologies, which enable further downstream research.
Patenting of such technologies will prevent/block further crucial research. This is why various IP
regimes grant research exemptions and grant compulsory licenses (this solves the problem of
spoilage).
● The rational choice theory gives a contrary perspective- for instance, if the Harvard law school
knows that they cannot make full use of the specific research tool- they cannot come up with a
cancer drug- why would they not monetise their research tool by licensing it to other players? The
market would drive them to do so. How far can Locke’s spoilage principle be applied in case of
intermediate/platform research tools?
● That is why various countries, including India, grant research exemptions (no infringement if
used for scientific research) and compulsory licenses in favour of downstream research so that
research and innovation is not clocked. This is how Locke’s spoilage problem is resolved.
● In the context of IP, Locke’s charity principle would be applicable, especially for life-saving and
essential drugs- to ensure redistribution and equal access. Apart from this, he is a strict proponent
of the naturalistic perspective of property rights.
Ownership- Locke assumes that ownership comes from mixing of labour with property- then the STate
must provide protection to such ownership. However, he does not explain the extent/limits of such
ownership rights. He also does not explain specifically what rights and duties are created upon ownership,
therefore, it does not help in carving out rights/duties in the context of fair dealing provisions etc.

In companies where various individuals contribute to development of IP, labour and resulting property
rights, are negotiated simply via contractual bargaining.

16/09/2021

The sufficiency proviso may be easily satisfied in copyright law whereas not in the patent system- patents
are based on the idea of ‘first to file’- subsequent identical inventions would fall foul of the patent law-
however, in case of copyright law, independent creativity can co-exist.

The primary justification for IPR comes from the incentive theory (net social gain)- utilitarian conception.
However, various scholars/jurists (especially in the US) derive support from the Lockian theory- that if
somebody has invested time/labour, they are entitled to appropriate benefits.

2. Personhood/personality theory of property- Kant, Hegel

It is a metaphysical theory of property. It relies on the fundamental assumption that property is an

extension of human personality. Therefore, to justify property rights through personhood theory, one of
the central elements of this theory is ‘will’- combination of two moments of ego - you can make
something external ‘your own’ by exercising will over it- will means- i) pure thought of yourself
(self-preservation) and; ii) particularisation/actualisation of the ego. By this conception, property is
an embodiment of personality. The task of the will is to achieve freedom- by acquiring external objects.

Stages of will-

1. Will is conscious of itself as a personality and it seeks to impose itself on the external world
2. The will must exist in some form of subjective morality before the State starts to protect it (if it
has to find liberation, then the State has to intervene- but for the State to intervene, the will must
exist in subjective morality- otherwise there would be no justification for the State’s intervention)
3. State intervention to protect will

According to Kant, if human personality is central, then inner possessions like skills, aptitude etc.
become important. Once you externalize them, they become capable of possession. Therefore, one may
argue that this theory lends support to personal property and not property that is far away from human
personality.
Justin Hugh’s Critique of personhood theory-

● According to Kant and Hegel, we should presume that IP should be limited to fruits of more
creative activity rather than less creative activity. Take the example of genetic research vs writing
novels- the amount of subjectivity and creativity one exercises in writing novels is far greater than
that of a scientist doing genetic research- which involves SOPs and analysis etc- there is very little
scope for subjectivity. The Hegelian theory is better suited to justify copyrights more than
patents.
● Personality theory presupposes that if you have a particular background, persona and
mannerisms, that itself would allow you to exercise will over external objects. In such cases,
where creativity is linked to human personality, and not necessarily a product of any labor, granting of
IPRs may still be justified.
● If we strongly consider Hegelian conception in justifying IP (which focuses on personality)- only
those aspects of IP which are inalienable will be highly justified- like the right of the true and
first inventor to have their name mentioned (recognized in the Paris Convention), moral rights of
the author ike rights to maintain integrity of work, right to be recognized as the author
(recognized in the Berne Convention) etc. The personhood theory may help us here- in
recognising that certain rights can never be alienated.

Limitations of personality theory- more important in context of moral rights and not economic rights
(like broadcasting rights, for example, which have no relation to human personality)- it is inherent in the
theory- in spite of this major limitation, if you are able to articulate that in today’s environment, it is not
enough that you create something because the society has reached a stage of economic development,
specialisation and division of labour- you require economic/transactive rights also.

It also does not provide for any limits on what you can make your own by exercising will- there are no
restrictions on what can be appropriated.

In the Hegelian sense, if moral rights cannot be alienated, what would be the stand on ghostwriting? Can
the writers waive off their right to their work? The American worldview is that alienability of moral rights
should be permissible however the Continental view is different. The Hegelian conception, however,
requires a pure link between the work and the personality of the author, such alienation of moral
rights to the work would not be permissible.

C. Social planning theory/regulation theory- Harold Dennis

In some sense, it is a utilitarian theory- you allocate property rights- which leads to various social
interactions- and the society as a whole benefits. Social planning theory is concerned with how either by
granting/not granting IPRs, innovation can be improved. For instance, in the ongoing debate between
innovators/creators and content aggregators- social planning theorists would argue that
Google/facebook etc. are highly innovative companies- although content creators are also innovators, if
social welfare is expanded through liability rules/compulsory licensing etc., why not?

Opponents argue that property rights are socially beneficial and once property rights are allocated,
whatever the natural outcomes of property rights are, they should be acceptable. Therefore, they would be
opposed to expanding fair dealing provisions and liability rules.

The difference between these conceptions is whether IP is ‘property’ or ‘regulation’.

Social planning theorists bend towards planning creativity and innovation- in the utilitarian sense, they would
look at consequences of granting IP rights and plan IP theory in a way that maximizes innovation. In the
digital market, they would downplay IP rights of creators- as they just act as inputs for more creative
platforms.

The problem here is opportunity cost- the level of competition is best decided by the market.

Marxian theory on creative labour-

Marx’s sense of labour is derived from tangible objects- he says that there is a piano maker and a piano
player- he attributed creative labour to both, but said the creative labour of the piano maker is more useful to
the society than the piano player’s. He compares the creative labour of the pianist to a mad man’s delusional
ideas which do not benefit society. Therefore, Marx’s conception of creative labour/intellectual property
is quite weak.

When Marx was writing, the earliest strains of IP theory existed, however he still chose to prioritize the
labour of the piano maker. While Marx was against private property, he was not opposed to private
property (derived from the right to life). Can IP be justified from a personal property perspective? This
would be difficult to justify because Marx did not argue strongly in favour of creative labour.

20/09/2021

International IP Conventions-

● For the most part, international IP law was pan-European- there were various bilateral
agreements between European countries to overcome the concerns faced by authors/inventors
overseas. These bilateral treaties resolved the problem of discriminational between different
countries through the principle of national treatment.
● By 1870, some countries were not interested in being part of such bilateral treaties.

Paris Convention-

● The Paris Convention was the first international treaty establishing some basic principles of IP
law- marks, patents, copyrights etc. However, the standard of treatment required was not very
detailed-
● Primarily, it provided for the principle of national treatment (i.e. whatever treatment you mete
out to nationals in terms of IP, the same must extend to foreigners- so if you did not have a
national patent law, you did not need to provide patent protection to foreigners).
● Another important principle was the principle of priority- a person who has filed a patent
application in a member-state will receive the same treatment in other member-states wrt date of
filing for novelty purposes
● One major problem encountered at that time was that if a patent was rejected in the origin
country, it was de facto rejected in other countries. The Paris Convention established the principle
of independent protection- i.e. the grant of a patent in one country shall not affect the grant in
another country.
 ● There were other provisions like when a patent should be revoked, basic principles of trademark
protection etc.
● However, the Paris Convention did not specify the grounds of granting compulsory license.
● Principles of unfair competition- based on tort law actions- the Paris COnvention defined acts
of unfair competition and members were required to provide 3 things- these constitute dishonest
commercial practices-
○ Passing off action- unregistered trademarks must be protected
○ Misbranding etc.- saying something untrue about a product- to prevent consumer
confusion and deception
○ Comparative advertising- disparaging other’s products is prohibited
● Limitations-
○ The Paris Convention offered a lot of flexibility due to the principle of national
treatment- it did not prescribe any uniform substantial rules/standards of treatment
○ No enforcement provisions for domestic rights
○ Treaty enforcement- the ICJ had to be approached for violations of the treaty- problem
of no mandatory jurisdiction- in the entire history of the Paris COnvention, no case
was taken to the ICJ

Berne Convention-

● While it provided the principle of national treatment, it also talked about rights and standards
of treatment for IP holders.
● The Berne Convention pertained to literary and artistic works- it was established primarily to
protect the rights of the authors in other jurisdictions.
● One of the major exceptions to the national treatment principle was the term of protection- each
country was mandated to provide “life + 50 years” of protection. However, this led to an issue. If
a country granted a longer protection to domestic authors, the exception allowed it to provide
lesser protection to foreigners. Even today, the UK has a higher protection for domestic authors
and not for Indian authors.
● Since two independent and identical copyrights can co-exist, there is no need for
registration/substantial examination. Therefore, the Berne Convention provides the principle of
automatic protection to authors, without the requirement of formalities/registration.
Therefore, most countries have optional registration requirements- this allows copyright holders
to have prima facie evidence of copyright.
● However, this was a reason why the US opposed the convention …(missed)... 45 min-55
● The Berne Convention also prescribes certain minimum requirements pertaining to what is to be
protected, period of protection rights (to translate, to adapt, reproduction, broadcasting,
communication to public etc.)
● Moral rights of authors under the Berne Convention-
○ Right to paternity- to be called the author of the work
○ Right to integrity- to have the dignity/integrity of your work maintained

The Berne Convention also has a minimum mandatory protection (shall) for researchers’ rights to use
quotations. The Berne Convention allows certain limitations and exceptions on economic rights, that is,
cases in which protected works may be used without the authorization of the owner of the copyright, and
without payment of compensation. These limitations are commonly referred to as “free uses” of
protected works. Therefore, the Berne Convention offers robust protection.
However, in 1960-70, India said that under the Berne Appendix, an option must be included to make
rights of reproduction subject to compulsory licensing (because the IP holder may refuse to allow
translation of English works into local languages). This appendix was successfully negotiated and
included.

Another problem is- the Berne Convention does not prescribe remedies- like injunctions, damages etc.
Therefore, it is weak on domestic enforcement of rights. It had the similar problem of weak treaty
enforcement as well (ICJ). Therefore, developed countries wanted a stronger protection- postcolonialism,
developing countries formed a strong bloc in the WIPO- by the 1970s, developed countries started
pushing for stronger IP protection at the GATT? (last 5 min)

Therefore, two major limitations with both the Berne and Paris Conventions- domestic enforcement and
treaty enforcement.

21/09/2021

In the late 1970s, developed countries pushed for discussing counterfeits and trade related issues of IP-
therefore, at the Tokyo round, the committee arrived upon the consensus that the GATT was not the
right forum for this because it did not have any background in IP.

The Uruguay round (1986)- 12 companies lobbied with the USDR and pushed for a separate framework
to address IP and trade- there was a shift in focus from merely counterfeit goods to minimum standards
for IP protection. The initial reaction of India was to reject such a proposal, however liberalization of the
economy led to a change in its position. The TRIPS Agreement is Annex 1C of the Marrakesh
Agreement Establishing the World Trade Organization (WTO Agreement).

The TRIPS also brought a structural change in dispute settlement- through a panel of experts and a 7
member appellate body (whose decisions are final). This strengthened dispute settlement by changing the
consensus rules- further, if any country did not implement the decision within some time, the members
could call for suspension of concessions (imposition of tariffs- retaliation). This solved the issue of
enforcement.

Concessions are suspended within the WTO in the same area of trade- for instance, if India is imposing
tariffs on biscuits, the US will also retaliate in the same market. However, where retaliation in the same
market is not possible (due to insufficient business), the amount of harm is decided by arbitration
within the WTO framework- allowing retaliation in another market, like say pharmaceuticals. For
instance, Ecuador, Antigua and Barbados and Brazil- in these three cases, the countries were successful in
retaliating in terms of IPR (as a remedy- like suspending IP rights of Microsoft). The US agreed to pay
compensation to avoid such suspension.

Major revolution is the world trading regime- the dispute resolution system has acquired power of
enforcement and retaliation. This dispute settlement mechanism is linked to the GATT, GATS and the
Marrakesh Treaty (TRIPS)- it is the jewel in the crown of the WTO. We are concerned with TRIPS and its
interaction with the dispute settlement mechanism.
TRIPS- apart from the principle of national treatment, the TRIPS is also based on the “most favoured
nation” (MFN) principle- higher protection was given to one nation in comparison to another- article 4
of TRIPS, embodying the principle of most favoured nation prevents discriminatory treatment inter-se
foreign nations. This is the cornerstone of the treaty.

The TRIPS, in its preamble, also states that the rights are ‘private rights’- it also contains rights
standards of treatment that member States are supposed to implement, therefore, Article 1 codifies the
principle of pacta sund servanda- it takes the substantial principles of the Berne and Paris Conventions
mutatis mutandis- violation of substantive provisions of these conventions can now be enforced within the
framework of the WTO. Now, irrespective of membership of the Paris/Barne Conventions
independently, all members of the WTO are required to implement those conventions in their domestic
law.

All provisions of the Berne/Paris Convention, except the moral rights of authors (Article 6bis, Berne
Convention), has been cross-referenced in the TRIPS- this is because of US opposition- the US argued
that moral rights are not ‘trade related aspects’ since they are non-economic in nature. The US’s internal
reason was also that the US was ‘allergic to the Berne COnvention from the very beginning’ :P. They did not want
to implement moral rights in their domestic jurisdiction.

Apart from these Conventions, the TRIPS also says that these principles are common-minimum
standards- States are free to go beyond the minimum standard of protection. This is why various nations
have many Free-Trade Agreements strengthening IP- however, by application of the MFN principle, they
must extend the protection to all members of the WTO. Any advantageous treatment must be granted
unconditionally and immediately to all WTO trading partners because unless such treatment is granted to
everyone (granted only to select trending partners), it is seen as a trade-distorting measure.

The TRIPS Agreement gave original WTO members transition periods, which differed according to
their stage of development, to bring themselves into compliance with its rules. Developed country
members have had to comply with all of the provisions of the TRIPS Agreement in 1996. Developing
countries were given a transition period of 10 years - till 2005. This is why till 2005, India did not have a
product patent regime.

Countries like the US argued what would happen to applications in relation to product patents filed in
other jurisdictions during the transition period? They could be granted protection during the remainder
period but then they can be rejected on the grounds of prior publication/use- this led to establishment of
a mailbox facility- any member of the WTO should be able to file a patent application for
pharmaceuticals/agrochemicals during the transition period, however, they will be examined only after the
transition period- and the protection will then be 20 years thereafter.

The US also claimed exclusive marketing rights- for applications filed during the transition period,
exclusive marketing rights were granted for 5 years- as a stop-gap measure- not exactly a patent- based on
criteria such as- where the patent has been granted in many jurisdictions etc. These were just specially
negotiated stop-gap measures only for the transition period.

India did not implement these provisions- ordinance lapsed. However, India tried to grant mailbox
facilities through an administrative instruction to the patent office- but the US argued that this was in
violation of India’s own statute- ultra vires- India was taken to the WTO for non-compliance with these
provisions. The WTO dispute resolution body held that India was not in compliance- it was held that
members were free to determine means of implementation of the TRIPS- however, the means must be
consistent with the domestic legal system. They were implemented from 1998 onwards by way of an
Ordinance.

23/09/2021

Major outcome of TRIPS related to patents-

1. strengthening of rights- term of protection was also specified

2. non-discrimination in rleation of subject matter
3. limited exceptions narrowed down to the three-step test

Wrt copyrights, the Berne Convention was annexed to the TRIPS and it already provided for strong
protections therefore members were not inclined toward strengthening the protections. However, some
ideas were ingrained in the TRIPS-

1. Copyright protects works not ideas

2. Clarified that within the Berne COnvention, ‘literary works’ will now also include computer
programs- this is because the Berne Convention does not explicitly define computer codes as a
part of copyright regime- similarly, the US said that limited amount of protection for databases is
to be granted- this is because while data (facts) itself cannot be copyrighted, the compilation (if it
is original) may be protected- like yellow pages. Similarly, the TRIPS also incorporated some
minimum protection for the rental industry (like Netflix), producers of music/phonograms.

Therefore, the TRIPS incorporated stronger protections for patents. Wrt trademarks, since the Paris
Convention was annexed to the TRIPS, it only incorporated minor changes. One area that was not
protected under the Paris Convention was ‘trade secrets’- this was incorporated in the TRIPS as a fourth
variant of unfair competition.

Trade secrets are protected for as long as they remain secret- it is an aspect of unfair competition (already
provided under the Paris Convention).

Another are of protection introduced in theTRIPS agreement was test data protection- based on the
principles of unfair competition- especially in pharmaceutical and biotechnology industries- for instance,
clinical trials of drugs generate tons of data which is valuable- if the data is made public, it may be used
for unfair competition- the DGCA will not care about where the molecule is coming from as long as it is
safe and effective- they may rely on prior clinical trials conducted by someone else- under the
compensation principle.

But this data exclusivity principle is non-existent in India- because it enhances access. The TRIPS
requires that the test data should not be used for purposes of unfair commercial advantage. It concerns
how the government will use this data for granting subsequent patents. This is similar to trade secrets, but
the clinical trial data cannot remain in exclusive/secret possession of the holder- it has to be given to the
government- hence, it requires additional protection.

The TRIPS also protects new plant varieties- hybrids created through breeding techniques- in many
countries, NPVs are protected through patents and in some countries there is overlap between patent
systems and the special law protecting NPVs. Since the 1960s/70s, there has been development of
transgenic plant varieties- the TRIPS therefore requires sui generis protection of PVs.
TRIPS protects geographical indications as well- the EU wanted a higher level of protection for wines
and spirits (champagne, scotch)- even if it does not lead to consumer confusion- because they did not
want the meaning associated with the words to be diluted. This was accepted as part of the TRIPS.

Countries like the US (good with pharmaceuticals, biotechnology, music/movies) got strong patent and
copyright protections; the EU got GIs, Japan got protection for semiconductor chips.

India has largely incorporated the TRIPS requirements in its domestic legislations. One of the major
achievements for India through the TRIPS has been related to compulsory licenses for patents. India
did not want a strong patent protection because that would hit the pharmaceutical industry- the TRIPS
provides a lot of flexibility wrt compulsory licenses (as pushed by India and other developing countries).

27/09/2021

The TRIPS agreement requires us to protect pharmaceutical products through patents (this protection
did not exist earlier)- the regime came into existence in 2005. However, the Patents Act and Copyright
Act are remarkable because the discourse around access has shaped these laws.

History of laws pertaining to patents in India and how it interacts with international developments-

1. British Patents Act, 1856 (modified in 1857, 1872)- reflective colonial interests and needs
2. Indian Patents Act, 1911
3. 1947- introduction of compulsory licensing in the 1911 Act
4. However, there was a demand for reform in the patent system.
5. 1970 - Patents Act-
● It took decades for this new Act to come into existence because two important committees were
formed in that period- Rajagopala Ayyangar Committee (individual report- very important)
and Bakshi Tekchand Committee. In his report, Justice Ayyangar recommended that
pharmaceutical products should be excluded from patents because it would be difficult for Indian
manufacturers to copy pharmaceutical products. A study in the US (Kefauver Report) also
showed that pharmaceutical prices were the highest in the world. However, some companies
strongly opposed the withdrawal of product patent protection- they challenged the US study and
presented their own statistics- the bone of contention was section 5 (which prohibited patenting
of pharmaceutical products).
● India decided to grant process patents (section 91) (that protect the process of manufacturing
something) and not product patents- therefore, producing the same product was not an
infringement. In a few decades, therefore, India became one of the largest generic drug producers
in the world.
● The 1950s-70s were crucial because there were substantial discussions before the Parliamentary
Committee around product patents. Foreign pharma companies strongly opposed not granting
product patents- mainly on the grounds that India had a compulsory licensing regime.
● The 1970 Act also incorporated a system of license of rights- grounds need not be shown-
automatic license of rights wrt process patents for pharmaceuticals (overrules post TRIPS).
● This position meant that India would oppose any reform to the patent regime. In the Uruguay
ROund, therefore, India’s first attempt was to oppose introduction of any IP rights under the
TRIPS. However, by the 1990s, there was a change in position on account of factors like PSUs
going into losses, balance of payments crisis and the diplomacy of the US- from 1980s, when
the US realised that countries like India would oppose including IPRs in the TRIPS- it started
 relying on section 103 of its Trades Act- which allowed unilateral sanctions to be imposed in
cases of violation of US IPRs. This is famously called the surrender at Geneva.
● Also, India wanted to protect its textile industry- so it wanted the Paris Convention to be
included- trade-off- had to accept the product patent regime.
● After the 10 year transition period- India introduced the product patent regime in 2005- the
TRIPS required preservation of novelty in applications, mailbox facilities for 5 years and
exclusive marketing rights.
● Therefore, the first amendment happened in 1998- granting exclusive marketing rights. This
was amended in 2002 because the TRIPS only required these provisions for 5 years.
● India also implemented provisions wrt biotechnology, plant varieties, trademarks, geographical
indications etc- these were the outcomes of the 5 year deadline for implementation of the
provisions of the TRIPS agreement
● The final thing was the product patent regime- for this, a transition period of 10 years was given-
in 2005, section 5 was struck down- section 3(d) was amended and the product patent regime
was narrowed down to new forms / properties / uses. Some countries like the US argue that
India’s product patent regime violates article 27 of TRIPS.
● India also protects NPVs through a sui generis legislation. While the TRIPS does not require trade
secret protection, courts in India have developed a regime to protect trade secrets.

History of copyright protection in India-

● The Berne Convention, 1886- in 1888 the British decided (on behalf of India) to be a party- so
decolonized nations were given an opportunity to withdraw- India did not withdraw, however
India acceded to one of its revisions which strengthened the copyright protection.
● Some factions in the parliament were opposed to strengthening the copyright act (communists)-
on the other hand, some parliament members argued for a strong copyright regime. There was a
proposal that India should reduce protection period to life + 25 years and that registration should
be compulsory- it was argued that as a developing country, India did not have access to
copyrighted works- because most of the material was coming from the West.
● People who argued for stronger protection were authors themselves- like Ramdhari Singh
Dinkar- they argued that this would lead to end of freedom of expression of authors- if copyright
is diluted, the only alternative is State patronage and State patronage (like in Russia) leads to
erosion of freedom of speech and expression.
● The Copyright Act, 1957- incorporated strong protections (life + 50 years, and no mandatory
registration requirement)- so India was not in violation of the Berne Convention.
● In the 1960s, the MHRD thought that an amendment to the Berne Convention was needed wrt
rights of reproduction and translation- these must be made subject to compulsory licensing-
so that works in English could be translated into local languages. This led to an appendix being
added to the Berne Convention whereby rights of reproduction and translation were made
subject to compulsory licensing.

Status of IP laws wrt the Indian COnstitution- no decisions directly- however, in Entertainment Network vs.
Super Cassettes, the SC made an observation that IPRs are just like any other property rights protected
under Article 300A of the Constitution- which says that right to property may be taken away in larger
public interest by giving compensation. However this was obiter.
A few questions arise from a constitutional perspective- Is IP just like tangible property? Yes, because in
relation to IPRs, possession is hard to define. The possessional domain in IP is legal and less structural. In
relation to physical property, these are fixed boundaries- however this is not the case in IP.

30/09/2021

Trade Secret Protection -

Businesses often have to make a business decision- whether to protect their IP by way of patent or trade
secret- if the information is at the periphery of the product or very deep into the production process- if
reverse-engineering is easily possible then businesses would prefer patents- the most important
consideration is how your knowledge will be perceived by the competitors. Another risk associated with
patents is the risk of disclosure in case of rejection of patent application.

However, patent protection and trade secrets are not mutually exclusive- certain parts may be protected
by patents and certain parts by trade secrets. For instance, Moderna released some of its patents related to
MRNA vaccines to the public, however, nobody was effectively able to make use of the disclosure
because part of the knowledge required to produce them was protected by trade secrets.

As long as the information is secret, it is protected- the moment it is in public domain, it is not protected.
Then what exactly is ‘misappropriation of trade secrets’? In England, different remedies were granted by
common law and equity courts. However, after the merger of these courts, civil courts now have the
discretion to grant both common law and equitable remedies. These remedies are founded on the
principle of breach of confidence. Where a relationship based on duty not to disclose can be
established- this emerged from the tort of unfair competition.

If unfair competition is the basis for trade secret violation, how have courts construed information as
‘property’? Do trade secrets have aspects like tangible property? US Courts would answer this question in
the affirmative- trade secrets are protected as ‘property’. This has the following implications-

1. Scope of action- in a breach of confidence action, privity needs to be established between the
parties- a relationship of confidence. It cannot be protected against disclosure to third parties-
the remedy will not be applicable whether the relationship cannot be established- the standard is
high because you have to establish that the third party knew/should have known that the
information is confidential. If trade secrets are regarded as property, they become rights in rem.
2. Commercial nature of information- by granting property rights in trade secrets, the underlying
basis of these rights is commercial nature of the information- however, in breach of confidence
actions, courts have also granted remedies against disclosure of non-commercial/private
information.
3. Extension of criminal measures- in civil/tort based actions, criminal measures cannot be
applicable- however, if trade secrets are regarded as ‘property’, criminal law can be extended-
principles of theft etc.

Article 10 bis of the Paris Convention requires member states to prohibit-

1. Passing off
 2. Confusion/ misbranding
3. Comparative advertising

However, this does not protect trade secrets directly. Article 39 of the TRIPS Agreement provides
protection of trade secrets.

“2. Natural and legal persons shall have the possibility of preventing information lawfully within their
control from being disclosed to, acquired by, or used by others without their consent in a manner contrary
to honest commercial practices so long as such information:

(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its
components, generally known among or readily accessible to persons within the circles that normally deal
with the kind of information in question;

(b) has commercial value because it is secret; and

(c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the
information, to keep it secret.”

Does this protect forced technology transfer? Countries like China incorporate forced technology transfer
in investment conditions.

“Honest commercial practices”- contrary to breach of confidence, breach of contract and includes the
acquisition of undisclosed information by third parties who knew, or were grossly negligent in failing to
know, that such practices were involved in the acquisition of such information.

Three aspects for protection are important-

1. What is the subject matter of trade secret protection? Should be a trade secret
2. It must have commercial value
3. Reasonable steps must be taken to protect the information/keep it secret

Therefore, trade secret protection (even internationally) relies on unfair competition- in India this is called
the springboard doctrine- in English law what clearly needs to be shown is that the information was
confidential in nature and it was communicated in circumstances establishing a duty of confidence and
unauthorized disclosure.

In John Richard Brady v Chemical Process Equipments Pvt Ltd, the Court established the springboard
doctrine- the court laid down essentials for an action for breach of confidence-

1. Whether the information is confidential

2. Whether there is a duty of confidence
3. Whether there was unauthorized disclosure of information

The court relied on the landmark British case of Saltman Engineering.

In a lot of these cases, the action for breach of duty of confidence is coupled with copyright infringement
action- however, practically it is more difficult to establish copyright.
In Urmi Juvekar Chiang vs Global Broadcast News Limited, 2008 Bombay HC- in relation to
copyrighted information also, an independent action for breach of confidence may exist. It needs to be
proved that the information is confidential, clearly discernible, it was handed over in circumstances of
confidence and it was used without authorisation. Here, the mere intent/threat to use the information
without consent/license was enough for the court to find a breach of confidence. The threshold must be-
there is a chance that the information may be used in an unauthorized manner. At the preliminary stage,
what must be proved is that there is an arguable case on merits- prima facie case.

Similarly, in Zee Telefilms Ltd & Film & Others v Sundial Communications Pvt Ltd, the BHC granted
interim injunction on the grounds of breach of confidence (independent of copyright claim).

01/10/2021

Whether the remedy for breach of confidence can be extended to third parties? No- in India there are no
concrete cases on this point. In Vestergaard Frandsen A/s & Ors v M Sivasamy & Ors the Court did
grant an interim injunction against third parties also but there was no discussion on reasoning etc.

The international standard under TRIPS extends to third parties that were reckless not to know that
information is a trade secret. At the WTO’s 4-year review, this point has been raised- that India does not
provide remedies against third parties for breach of confidence.

In some cases, the CoA arises out of a contract between employer and employee- however this must be
read with section 27 of the Contracts Act- agreements in restraint of trade.

In Niranjan Shankar Golikari v The Century Spinning & Mfg Co, the employment contract was for a
term of five years and contained both trade secrecy and non-compete clauses. Clause 17, which was the
non-compete clause, prohibited an employee who resigned, from setting up or joining any competing
business for the original period of the contract. After one year, the defendant resigned and moved to a
competitor company- the issue was with regards to validity of the clause.
The SC concluded that upon absolutely interpreting section 27 of ICA, any agreement in restraint of trade
is not valid. However, in this case, the clause was reasonable restraint on section 27 and the employee may
be restrained for the original contract period.

In Superintendence Company of India v. Krishna Murgai, the employee was terminated- however, the
non-compete clause provided that if the employee “leaves the company”- the majority judgment held that
“leave” means voluntary- where the contract is terminated, the non-compete clause will not apply.
However, the minority judgment distinguished negative covenants during the course of employment from
negative covenants after employment. Under section 27 of ICA, only negative covenants during the
course of employment will be reasonable. This Judge here differed from Niranjan Golikari in saying that
the clause will be only reasonable during the course of employment.

These contradictory judgments have led to confusion in High Courts. Courts have been trying to
interpret negative covenants in a very strict manner

In American Express vs. Priya Puri - PP was an AE employee holding vital customer information- she
left employment and joined another company- AE sued her because she had information- just the fact
that she was aware of the key clientele- AE argues that she should not be allowed to join another
company. The Court rejected this argument because this information lacked that character of confidence-
the information was independently verifiable- therefore the negative covenant restricting the employees is
not reasonable. In Krishna Murugai, the clause was limited to 2 years and for a specific territory. In PP’s
case, the court said that the client details were easily verifiable and denied an injunction.

Similarly, in Jan Peters vs. Jet Airways, the argument was that if the company puts in their efforts and
resources to train the employees and then they leave and join a competitor, the competitor will benefit
from the training. However, here the DHC held that the training can be accessed by any company- there
are flying clubs which provide similar training to other airlines also- it was no special training. Therefore
the covenant was held to be restrictive.

Such litigation can be avoided by maintaining a strong paper trail of how you came across the
information. However, in India, the grant of ex-parte ad interim injunctions leads to an imbalance- the
former employee may be restrained from joining the company- Courts should provide such injunctions
only in case of strong cases.

In the US, courts interpret negative covenants strictly- they do not even look at reasonableness. Scholars
argue that if such covenants are not enforced, private companies will be forced to employ their own
relatives to build a fence around their trade secrets.

How does Trade Secret protection interact with public interest considerations? In Petronet LNG Ltd v
Indian Petro Group & Anr, the Defendant was a journalist who disclosed the details of a commercial
negotiation of the company- the company (50% government stake) brought an action against him- the
DHC was faced with the question- whether the duty of confidentiality could extend to a journalist who
received confidential information, knowing very well that the source who had shared the information was
under a duty of confidence and was disclosing the information in breach of such duty? Whether this can
be allowed on the grounds of public interest and free speech?
Considering the public interest implications (especially where the government is involved), the Court
refused to grant an injunction.

Another argument is related to disclosure of trade secrets in public interest- restriction of access. Cases
in the US have refused trade secret protection in such cases. Courts in India look into ‘public interest’ as a
factor to determine ‘balance of convenience’ for the purpose of granting interim injunctions- however
there is no jurisprudence on this in trade secret context.

Three essentials for granting interim injunctions-

1. Balance of convenience
2. Prima Facie case
3. Irreparable harm (not monetary)

Can India demand revelation of trade secrets on the grounds of public interest? Yes, but this may be
violative of Article 39 of TRIPS- this happened in 1970s wrt Coca-Cola- but as a result, coca-cola
withdrew from the Indian market.

For instance, Moderna and Pfiezer have manufacturing plants outside India- the actual technology does
not reside in India so these companies cannot be forced to reveal their trade secrets. China implements
forced technology transfers regularly as part of their investment policies.

Criminal measures- certains courts have been loose cannons in allowing such complaints- on grounds of
breach of trust, fraud etc. (IPC)- the provisions of the IPC are historically related to tangible property. In
Hemal R Shah, the Gujarat HC did not allow criminal measures on the ground that trade secrets are not
“property”- employers cannot use criminal action to enforce something not permissible under civil law. In
extreme cases, where there is breaking-in/theft of drives etc- such proceedings may be maintained.

Courts also employ the IT Act- section 66 etc- dealing with unauthorized access- this jurisprudence is
evolving. However, the IT Act may be useful in actions against third parties. These actions would be
difficult in employer-employee cases. In cases of third parties, the IT Act is especially useful for
companies like Facebook and Google which deal with large amounts of data. These companies protect
data in 2 ways-
1. Anti-hacking measures
2. Contractual provisions
3. Breach of confidence

In 2020, the government constituted a committee on protection of non-personal data- Gopalakrishnan

Committee- the preliminary report mentioned that all such data must be shared on FRAND terms- this
recommendation is based on a serious confusion regarding the IP status of such data- does this data
amount to a trade secret? The second report is also confused on the status of this data- whether it is
proprietary in nature or not? Another way of looking at this is through competition law lens- but India
wants an ex-ante legislation allowing sharing of such information.

04/10/2021

Test Data Protection- data generated through clinical trials for pharmaceutical/agro-chemical products-
taking a molecule from the lab to the market is an extremely complicated process- the molecule may be
invented by a public lub etc.- the process involves clinical trials which generate huge amount of data- the
firm must have incentive to conduct these trials because there is a risk (only 1 in 10000 molecules makes it
to the market)- the data is held exclusively by the firm but it has to be submitted to the regulatory
authority- no generic company would not have any incentive to conduct trials because for generic drugs,
the product is basically a copy of the original one.

In the US, a balance was struck by allowing a data exclusivity regime- data was kept exclusively in
possession of the regulator for a period of time. This allows data to be kept in confidentiality and the
USFDA cannot rely on the data to grant a patent to a subsequent drug.

In a case in the UK (French laboratories case), the Court was faced with the issue whether trade secret
protection extended to test data- the Court said no- the trade secret is anyone revealed when the data is
submitted to the regulator- the regulator could rely on that data to grant patent to copycat drugs- just
require a bioequivalence study- this must be allowed in public interest- this model came to be known as
permissive reliance- without proactively disclosing the test data, the regulator relies on it to grant to
subsequent permissions.

These two different approaches were prevalent but now even countries in Europe have moved to data
exclusivity. During the TRIPS negotiations, countries like India did not want a data exclusivity regime for
pharmaceuticals- Article 39.3 of the TRIPS agreement required States to protect test data against unfair
commercial use. While this is not a data exclusivity regime, it allows permissible reliance, but requires
States to obtain compensation from the subsequent companies to be paid to the originator. (No country
actually does this)

According to India, it complies with 39.3 because it relies on the standard of French laboratories case- it is,
however, doubtful whether India complies with ‘unfair commercial use’ standard. Under the Drugs and
Cosmetics Act, the government also relies on test data/trials conducted in foreign countries to grant
permissions to MNCs and allows them to enter the market- it also waives off requirement of conducting
trials on Indians- however, it does not provide exclusivity.

Generic companies in India had started launching generic drugs ‘at-risk’- the Court may or may not grant
injunction and the Indian company may be allowed to infringe the patent- when this became a strategy,
pharmaceuticals like Bayer approached the courts to make drug regulators respect patents- like in Bayer
vs Union of India- Bayer Corporation relied on section 156 of the Patents Act- “a patent shall have to all
intents the like effect as against Government as it has against any person”- they argued that where there is
a valid patent, the DCGI cannot grant subsequent permission to generic entrants- the fact that a patent
has been granted, section 156 would bind the government also to respect the patent- however, the Court
held that the government is only required to not infringe the patent directly. Section 156 only binds the
government when it directly infringes the patent- it does not require the DGCI to police patents- that
would lead to a system of patent linkage.
Patent linkage means that the DGCI would not grant permission to a generic entrant on a molecule
which is infringing a patent. Section 156 does not require this.

Therefore, as far as the pharmaceutical industry is concerned, there is no data exclusivity requirement
and there is a system of permissive reliance.

In the case of agro-chemicals, a strong lobby of generic companies which could not realise the
consequences of data exclusivity ended up supporting a 3-year data exclusivity regime. For a period of
three years (from the date of registration of the originator's agrochemical molecule), no subsequent
permission would be granted relying on the data. In spite of the Insecticides Act not requiring data
exclusivity, India still provides exclusivity for 3 years for insecticides- this was done by way of
notifications. These notifications have not yet been challenged.

This happened because generic companies were not in consensus regarding whether the data exclusivity
would benefit them or not. In 2008, the government came up with the Pesticides Management Bill which
also incorporates a 3-year exclusivity- to formalize the regime and codify it- but the Bill is still pending.

A similar issue in the context of agrochemicals erupted when some companies went to the Court saying
that the government should not grant subsequent permissions relying on their data under Insecticides
Act- the DHC in Syngenta vs UoI was very critical of a patent linkage system- it would end up bringing
data exclusivity through the backdoor and the Court is not to step into the policy domain. Justice Bhat
also noted that the notifications were in existence but the same had not been challenged in the case.

This leads to two distinct regimes in India with respect to test data protection- pharma (permissive
reliance- we do not provide data exclusivity) and agro-chemical (although the Act does not require it,
notifications issued by the ministry effectively provide a 3 year data exclusivity). A patent linkage system
has been denied by the courts in both cases (Bayer and Syngenta).

07/10/2021

Patents-

There are generally two kinds of criteria for registration and grant of patents. Substantial criteria- novelty,
industrial application and inventive step. There are other procedural criteria.
Patents are better than trade secrets due to risk of reverse engineering and revelation of secrets. However,
businesses want this information to be protected through a positive, exclusivity regime- patents. The
limitation, however, is that the protection is limited to 20 years (excluding loss of regulatory/approval
period). Patents are considered as net positive welfare instruments because the 20 year exclusivity is
provided in lieu of disclosure of the invention.

Patents create legal barriers to entry.

The process starts with the inventor/someone deriving title from her (company/individual/group). The
priority date is the date of filing- sometimes inventors file provisional applications (which may later be
turned into complete applications- which substantially relates to earlier filed claims) in order to get the
‘first to file’ benefit.

The Patent Law requires quid pro quo- i.e. the complete application will be published automatically 18
months after the date of filing- it essentially falls within the public domain. People may challenge the
grant of patent- pre-grant opposition (anytime before the grant of patent). The inventor must file a
request for examination of the application- this is forwarded to the examiner who may raise objections-
back and forth between the inventor and the examiner. During this process, pre-grant opposition may be
filed.

After the patent is granted, anyone may file a post-grant opposition within 1 year from the date of
granting the patent. The grounds are the same. The idea is that where the law grants exclusive rights, the
invention must meet the requirements laid down by law- therefore, opportunities for opposition are
provided both pre and post grant.

Post-grant also, anyone may file a revocation petition anytime during the period of grant of the patent.
Earlier, such petitions could be filed only with the IPAB- however, now they are filed with the HCs-
however, on pure questions of infringement, only district courts have jurisdiction. If, during an
infringement proceeding, the grant is challenged, the case will be transferred to the HC. (incomplete)

11/10/2021

Section 31 [Anticipation by Public Disclosure]- for instances where a product is displayed in an

exhibition by the inventor, prior to making of the patent application. Display at such exhibitions will not
constitute a lack of novelty. The conditions are-
● The timeline between the exhibition and the making of the patent application shall not be more
than 12 months- grace period.
● The provision must be extended to such inventions by the central government via a gazetted
notification.
● The description of the invention in a paper read by the inventor before a learned society or its
publication by with their consent in the transaction of such society- means if you publish the
invention in a journal, the disclosure (within 12 months) will not constitute lack of novelty.

Section 32 [Anticipation by Public Working]- this practically covers cases where the invention is
exposed to certain members of the public- like pharmaceuticals, agro-chemicals, which require the
invention to be working- this working must be within 1 year before the priority date. Further, this section
covers reasonably necessary instances only- it does not extend to commercial use. Such working may be
necessary-
 ● If a regulatory law requires efficacy and trial data
● Or if the nature of the invention requires it
Therefore, trials must be conducted within 1 year of priority date- however, practically the trial may be
conducted after filing as well.

Section 33 [Anticipation by use and publication after provisional Specification]- where the
application of provisional specification is filed, and a complete specification is filed in pursuance of it, the
patent will not be denied for the reason that anything contained in the provisional application was
published/used in India. The provision also gives flexibility to inventors of Convention countries-
disclosure/publication of anything contained in the domestic patent application will not invalidate novelty.

Asian Electronics vs. Havells- fluorescent tube lights- AE was granted a patent in 2007- then it starts
suing Havells, who had been using the technology worldwide before the application- the Patent had 4-5
elements- Havells claimed that the patent granted to AE existed in prior art in the US- Justice Bhat
applied a reverse-infringement test (i.e. prior art is compared with the patentEE’s claim- if it is covered
by the prior art in a way that it sufficiently enables its application, the patentee’s claim is held to be
anticipated). It must sufficiently describe the practice in a way that it permits application.

General Rubber Tire Co. vs. Firestone Tire and Rubber Co.- established the doctrine of reverse
infringement- relied on in Asian Electronics.

Inventive Step [Section 2(ja)- notional ‘person skilled in the art’- further, relevant date is the date of
filing- the ‘person skilled in the art’ must also be a normal person, who is predictable and not very
innovative- if the person is highly inventive, then the notional person is actually putting themselves in the
shoes of the inventor and would reject most of the applications. Inventive step is different from novelty-
whether the subjective elements of the patent are inventive (not obvious)?

This is a very controversial requirement because it looks at subjective elements of the patent. In 2002, a
very short definition of ‘inventive step’ was included- only 1 part was included, i.e. ‘Feature that makes the
invention non-obvious to a person skilled in the art’. Due to the push of the pharmaceutical industry, a
new definition was included to strengthen the criteria of inventive step. Three components of the
definition (which on analysis can lead to two steps)-
a. Technical advancement/economic significance in relation to a feature of the invention
b. Non-obvious to person skilled in the art in relation to the invention as a whole

12/10/2021

How is ‘feature of an invention’ different from the invention itself- the particular feature that is tested for
technical advance, and makes the entire product inventive. Therefore, if you challenge a patent, you must
show that either of the two steps is not satisfied. But to obtain a patent, both must be met.

Revocation measures-
a. Pre-grant- section 25(1)
b. Post-grant- section 25(2)
c. Any time during the subsistence of the period- section 64
All these list out similar grounds for revocation- the three grounds for grant of patent. However, there are
some issues in the Act.
Biswanath Radhey Shyam vs. Hindustan Metal Works (1978)- the machines had been in the industry
for a long time- the case arose in the Mirzapur belt because steel was a very lucrative business. The patent
in this case related to a means of holding utensils for turning purposes- the validity of the patent was
challenged on the grounds of lack of inventive step.

The Court noted that a fundamental principle of patent is that it is granted only for an invention- utility +
novelty. While the definition of inventive step was absent in the old Act, in England patents could be
revoked for lack of inventive step. The SC found that here, there was hardly any difference between
“invention” and the practice. The Court used novelty and inventiveness in a similar way. It held that in
order to be patentable, the step must be more than a mere workshop step- mere collection of more than
one integers is not enough- it is not enough that the purpose is new/there is novelty in application- there
must inventiveness in the mode of application. There must be an exercise of inventive faculty.
Combination of old elements in a new way, formally, merely constitutes a workshop
improvement and not invention, therefore, is not patentable.

Subsequent to this decision, this criteria has been included in the Act. In relation to combination
inventions today, the decision in Biswanath had been codified under section3(f). Therefore, the
precedential value of the case is a little less.
There was a case in the US in 2006- where the SC rejected this rule and went by the classic requirements ?

Roche vs Cipla (DHC)- related to an application filed and granted by and to Roche in India (2007) on a
molecule called erlotinib hydrochloride- which has therapeutic properties in relation to cervical cancer. It
stops the mutation of cancer cells- inhibits the mutation of the cells.

Roche had marketed polymorph B- while the patent included a combination of polymorphs A and B.
Cipla started infringement.

The defendant claimed that the patent lacked inventive step for two reasons-
a. There is a European patent (226) which cites example 51, which reveals that the structure in
relation to the patent (774) is similar to that of example (51)
b. It is not functionally different either- bioisosterism
Roche argued that mere structural similarity is not important- claimed inventive step. The DB held that
whether an invention involves inventive steps is a mixed question of law and fact- no straightjacket
formula- quotes Biswanath. The DB formulated a 5 part test.
a. Identify an ordinary person skilled in the art- however, must note that the statute does not say
‘ordinary’- the Court relies on various decisions that say person of ordinary skill in the art- this is
a highly unimaginative person with common general knowledge
b. Identify the inventive step/concept in the patent
c. To impute to the ordinary person what was common general knowledge in the art at the priority
date- level of knowledge required- cannot be highly imaginative- this is a notional person
d. Identify, if any, differences between the matter cited (prior art) and the patent- whether those
difference are a result of ordinary application of law (principles of science) or involve different
steps requiring multiple theoretical, practical applications- in case of the latter, inventiveness is
satisfied- what is there in prior art and what is there in invention- this has to be clearly identified
and examined- this is a common test of law and fact
e. Whether the differences constitute something non-obvious to the ordinary person skilled in the
art constituted by the judge- is it inventive enough
This is not a new test formulated by Indian jurisprudence. In Europe, there was a ‘problem-solution’ test-
inventions must solve a problem- but this does not address inventions that are accidental/serendipity/do
not anticipate any problem.

However, in applying the test, the court deviated.

18/11/2021

Inventive step (continued)

How far does the invention move away from existing knowledge- this is a qualitative and subjective
analysis. 1 + 1 combination of existing knowledge is not patentable- this rule has been codified in
section 3.

The new definition makes it clear that inventive step includes technical advance and economic efficiency-
should not be obvious to a person skilled in the field.

Roche v Cipla- initially, interim injunction was denied in public interest- because people already had
access to the drug at affordable prices.

During the trial, in its counterclaim, cipla sought to invalidate the patent for lack of inventive steps. It
claimed that Roche merely replaced the chemical group- the outcome remained the same.

The DB laid down the first test for inventive steps by looking into various judgments (including
Biswatnath). It laid down a 5 step-test.

In the fourth step, one thing most fireign courts do is that they allow mosaicing of prior art- they put
together pieces of prior art (prior publications and uses) to see whether there is any inventive step- this is
not done in the reverse engineering test where we need to see individual pieces of prior art- the
mosaicing is done in order to distinguish it from the novelty analysis.

In thai case, the judges looked for cases on structural similarity abroad- concluded that law has evolved
and broad structural similarities are okay if you have replaced chemical groups leading to different
outcomes and advantages (here Roche had replaced some chemical groups- so the court had to determine
whether the replacing led to bioisosterism). For this, the Court examined the D’s witness ( a chemistry
professor)- the witness was given all relevant documents including the prior art Cipla relied on. The Court
identified 8-10 factors to negate the D witness’ testimony.
● It said that the analysis should be from the perspective of ordinary person skilled in the art-
attribution of knowledge is important- however, here the D witness substituted himself as the
person skilled in art- being a professor of chemistry who has not been involved in drug discover,
he is not a person skilled in the art. He needs to have common general knowledge- his testimony
was simply based on documents provided- there could be hindsight bias as the witness relied on
other documents beyond what was relied on by Cipla- he based his theory of obviousness based
structural similarity only- that is not allowed. Mere structural similarity does not mean lack of
inventive step. The question of substitution of chemical groups was not addressed by him- he
looked into documents after the priority date- that is not allowed- D has googled to find out
recent developments.
● Therefore, the evidence was regarded as hindsight evidence- he was not aware whether example
51 went to clinical trial- his understanding of a person skilled in art was not sufficient-attributed a
 very high level of knowledge- his understanding of obviousness ignored law and focused only on
fact.
By virtue of denying the D’s witness, the COurt concluded that lack of inventive step has not been
proved. The COurt didn't even go to further steps in the test.

Issues with this approach-

● Dilution of his testimony because he is not person skilled in the art
● The Court did not show hindsight bias was there- causation not established- mere reading of
documents does not imply hindsight bias.
● In positive terms, the witness could not show how by virtue of substitution of chemical groups
the product led to the same result- this is what was established by his testimony.

In examining the first step itself, the Court rejected the D’s claim.

Apart from this technical analysis, another criteria in Indian law is economic significance- this is an
independent step in India- in the world no country grants patents on the grounds of economic
significance. Commercial success is considered as a secondary ground for finding out inventive steps- not
a primary test.

In India, commercial significance criteria was introduced in 2005 on account of lobbying by generic
pharmaceutical companies- it was expected that the dilution of inventive step by including economic
significance criteria would help Indian pharma companies.

In Gandhimathi Appliances v LG Varadaraju, the issue was whether conversion of a wet grinder into a
table-top wet grinder constituted inventive step- the table-top product saw great commercial success-
although the court did not use the economic significance test, it is not very clear from the judgment how
inventive step was established.

Apart from inventive step, the criteria of ‘industrial application’ is also important- the invention is
capable of being made or used in an industry- commercial viability is not important as long as practical
applicability can be shown- very minimum criteria- we are just trying to avoid frivolous or abstract
inventions being granted patents.

In Donald v patent office (UK), someone tried to patent a perpetual motion machine- however, this is
not possible as it goes against the principles of thermodynamics- the application was rejected on account
of lack of industrial application.

The only controversial thing about this requirement is that in relation to gene sequences, there is
consensus that granting patent on gene sequences would be problematic as it would prevent use for
subsequent downstream inventions another issue is that in case of molecules that are incorporated in
drugs- say people develop immunity after 10 years- it stops giving therapeutic effect. In this case, would
the patent be revoked for lack of industrial application?

Failure of the promise wrt performance of the invention- should the patent be revoked? No-
“Effectiveness” or “utility” is only determined upon clinical trials and is a regulatory issue- that does not
mean there is no invention.
In (1969) Unichem Laboratories case- anti-diabetic drug case- failure of the drug was claimed as it was
not performing in the same way- the Court says that failure of promise is a ground that can be considered
under lack of industrial application. This is of worry because recently the nodal agency for administering
IPR in India gave a show-cause notice to a pharma company to show cause why its patent should not be
revoked on the ground of failure of promise/technological failure.

India’s stand on failure of promise doctrine is not clear- but sir thinks this is a question for regulators to
consider.

19/11/2021

Last criteria- disclosure [section 10]- the invention must be disclosed in the patent application. The
reason is- quid pro quo for granting of a patent- it is an important normative criteria. Rule of first to file-
provisional specification may be filed.

The title must be clear- makes it easier to understand and search- patent specifications provide valuable
information to scientists, researchers- it gives notice to the public of claims in the invention. The
controller has a discretionary power to require drawings as part of the specification. The drawings help
understand scope of the patent.

Section 10(3)- historical basis- since the Statute of Monopolies, countries did not have a specification
requirement- they required models/samples- but after a fire at the US patent office, they moved to
written specifications- if the controller feels that a model is required to understand the patent, the same
may be required- but the model is not a part of the application/specification.

Section 10(4)- exact details of the specification- what is to be disclosed- ‘claim’ refers to the parts you are
asserting as your invention- abstract and title form prima facie description.
● (a) - sufficiency requirement- should not hide certain information relating to the invention- the
society must be able to produce the same invention after the expiration period- therefore,
sufficient disclosure is necessary- however, this does mean that the entire manufacturing process
needs to be disclosed- for instance, manufacturing of a vaccine is different from the
molecule/drug that forms its core. (check article by Arti K Rai)
● Alleppey v Controller of Patents- claim- the invention actually related to a bristle mat with
anti-skid mechanism- the person who challenged the patent alleged that the specification did not
lead to the same result (the patented invention). The IPAB looked at various cases relating to
disclosure- the claims were found to be not definitive enough resulting in ambiguity about the
patent- the invention was not clearly and fully defined- patent was revoked on this ground.
● In a similar example, a pharmaceutical composition was alleged to be insufficient- did not give
expected results- the Patent Office said that the values must be described correctly. What is
described, if performed, should give the same set of results.
● (b) - best method disclosure- known to the applicant at the time of filing the application
● (c) - Claims - define the boundaries of the invention- there is a main claim and then dependent
claims.
● The patent controller may amend your abstract to give proper information- it should reflect the
invention
● Proviso (ii) - biotechnology inventions- the issue is that the specification may not be sufficient-
it can only be known by examination in labs- very difficult to describe- new trend- Budapest
Treaty on deposit of biological materials- the material must be deposited with the depository- in
 India it’s in Chandigarh- this allows people to access it. Requirement (D) is very controversial-
disclosure of source and geographical origin of biological material- since this can be a ground for
revocation of patent- this requirement is unique to India- India has been arguing for inclusion of
this in the TRIPS as well- the background is biopiracy.
● Historically, countries like India have evolved their own traditional medicines- if a biotech
company produces products, they would have to go on a wild goose chase to find out therapeutic
effects of numerous plants etc- they try to work on existing traditional knowledge (open or
closed)
○ Intergenerational equity
○ Open or closed (secret- held by tribes, families)
○ May relate to biotechnology
○ The argument is that if companies are benefiting from our traditional knowledge, we
must benefit from disclosure- source and geographical origin is complicated as a source
of a gene/species cannot be easily identified- applicants mention their source but it is
extremely difficult to comply with.
○ India claims that we have sovereign rights over our biodiversity/genetic resources based
on the CBD- they are no longer seen as common resources- india enacted the
biodiversity act- benefit-sharing and prior informed consent are necessary- now there
is a mechanism between the Patent Office and the Board to make the process seamless
● (5)- single invention requirement- multiple applications cannot be filed for same inventive
● (6) - important for inventor- read with section 6- right to file flows from true and first inventor

Section 8 disclosure wrt foreign applications- burden is places on the applicant to supply this
information to the patent office-
● (1) - relates to the time of making an application
● (2) - relates to the time after making an application and before grant/refusal
● How much is to be disclosed? Phillips v Sukesh bansal and Ericsson v Intex- read with section
64- discretionary power- “may be '' revoked- if the information not disclosed is immaterial to
revocation application. Court concluded that it has discretionary power- consequences must be
material. The information not filed is immaterial- does not matter.
● This is a formal requirement- does not relate to the patented invention per se

In infringement matters- jurisdiction is vested with district courts- but in cases of Delhi, Mumbai etc, the
original side of the HC has the power- other district courts can only determine infringement and not
revocation- uncertainty- the district court passes the cases to the HC. Until recently, the IPAB had the
power to revoke- but they could not decide on consequences of infringement- now the IPAB has been
abolished- its cases transferred to the HCs.

Section 3- What are not inventions-

● On these grounds, a patent may be rejected/revoked - public policy reasons - ethical reasons -
industrial policy
● Section 3(d)- very hard hitting for the pharmaceutical industry- in the Novartis case- a UK based
inventor came up with a molecule called Imatinib- this molecule cannot be taken to the market as
is- but this molecule is an anticancer drug used in treating for Leukemia- extends life- when the
drug is made bio-available in the body, it acts as a jam to the mutation of cancerous cells- stops
spread- it works as a wrong key in the lock- blocks it- in 1993 a patent application was filed in the
US- however, not in India because in 1993 India did not grant product patents on
pharmaceuticals,
 ● As a strategy, Novartis took advantage of the mailbox system under the TRIPS. Novartis made an
application in 1998, not for the free based application, but the beta crystalline form of
imatinib mesylate- the crystalline form has specific properties- like it does not absorb water- it
is thermostable- between 1993 and 1998 Novartis discovered that the salt form was the best in
terms of efficacy- therefore the application was filed in India.
● The Patent Office denied its application on the grounds of 3(d)- it argued that the beta crystalline
form does not show how it is efficacious compared to what exists in prior art- Novartis went in
WP to the Madras HC challenging the constitutionality of section 3(d)- claimed it was violative of
TRIPS agreement.

26-11-2021 (Completed)
Section 3(d) - In relation to pharmaceutical industry

1. Section 3(d) talks in terms of exclusion of new forms of known substances, new properties and
new uses. The idea behind this exclusion is to eliminate ever-greening of patents.
2. History of this provision - Because of India’s implementation of product patent regime pursuant
to the TRIPS, the generic pharma companies alleged that the pharmaceuticals indulge in patent
ever-greening. Evergreening means that there is a blockbuster drug for which more than one
patents are filed, and then patents are also filed over their salts, derivatives, isomers, etc., but not
all at once. The latter patents are filed towards the end of the term of the original patent. So, that
used to effectively enlarge the patent life upto 40-45 years. So, once the original patent expired,
the generic companies would move to produce the drugs. But now, after the latter patents are
filed, the generic companies alleged that the pharmaceutical companies were able to influence the
doctors to prescribe the latter patented drugs. So, this way, the generic companies argued, that by
evergreening the patents, the pharma companies blocked the generic companies from bending
the market even after the expiry of the original patent. In the west, it is called, product hopping.
3. The pharmaceutical companies, instead of calling it evergreening, called it a product life cycle
management. They argued that once you come out with a new chemical entity on day 1 and file a
patent, then (a) it might not be palatable to the public for being toxic, (b) may not be easy to
produce, etc. This is why, they also come up with salt forms, derivatives, etc. So, that just makes
the process more efficient, the drug more safer, therapeutic, and easy to produce, etc.
4. So, caught between these two stands, the countries have, based on their economic interests,
adopted either of these stands in their laws. Developed countries have sought to provide patent
to even the new forms, new use, new properties. In the UK, they amended their law in 1980s to
specifically provide for new use patent. The logic was that it is very difficult to come out with a
new blockbuster drug frequently. So, it is important to allow them to test different uses of the
same drug.
5. India chose to exclude new patents, new use patents, patents on new properties of known
substances. However, putting a Carta blanche exclusion would be TRIPS inconsistent as you
cannot discriminate among different technologies, they put in an explanation that if the new use
differs significantly in properties with regard to efficacy, that would be protected. This trigger
criteria of ‘efficacy’ applies to new forms and new properties, and not to new use patents. New
use patents would be rejected straight away, because new uses are neither process. Other
 jurisdictions have positively provided for new use patents. However, India rejects them straight
away.
6. Now, the question is, how to interpret this section when the definitions of ‘known substances’,
‘new forms’, ‘efficacy’, etc. are not provided. So, the Patents Office gets a lot of discretion in this.
7. This is what that happened in Novartis Case. In Novartis v Union of India, In 1993, some US
scientist invented a molecule that when ingested in the body, it stops the cell mutation. Now, this
molecule is therapeutic, but you don’t know what is the efficacy of this therapeutic indication,
how much cancer mutation is stops, and whether it is safe. The molecule was patented, and was
assigned to Novartis who then developed a salt form of the drug, and then a beta crystalline
form of this molecule, whose patent was filed. The original drug was not patented in India
because India back then did not have a product patent regime. The patent that was filed was
examined in 2006 because India has a transition period before the implementation of the TRIPS
Agreement. In 2006, this patent was rejected on ground that this drug was not a substantial
improvement from the prior art of the beta crystalline form.
8. This rejection led to a writ petition before the Madras HC challenging the powers of the Patent
Office, arguing that section 3(d) gives arbitrary powers to the Patent Office to determine
‘efficacy’, and reject patents on that ground. It argued that the Patent Office considers efficacy
based on just the therapeutic advancement. Novartis argued that the beta crystalline was more
advantageous. It was 30% more bio-available (meaning the availability of this drug in blood was
30% more than the previous form). Further, it was less hydroscopic, due to which it was more
stable. Further, it was also more thermostable. So, they said that it may not be therapeutically very
different from the prior art, it had certain more efficacy.
9. Thus, Novartis argued that it was (a) excessive delegation, and (b) TRIPS inconsistent. On both
these grounds, the writ petition was rejected. On (a), it held that in pharma industry, efficacy only
means therapeutic efficacy. Looked at the definition of efficacy from medical dictionary. Held
that, the efficacy grounds the Novartis mentioned, did not increase the therapeutic efficacy, as in,
it did not increase the ability of the drug to attack the cancer cells in a better way. On (b), it held
that, we are a dualist country, and the Parliament has enough powers to make a law deviating
from international convention. If there is a violation of international law, domestic forum is not
the right place to allege that violation or inconsistency.
10. After losing this case, Novartis went to the IPAB as an appeal against the Patent Office’s
decision. The IPAB, based on the Madras HC’s decision, interpreted ‘efficacy’ to mean
therapeutic efficacy, and hence, dismissed the appeal. Novartis appealed before the Supreme
Court which delivering its verdict in 2013, and mirrored the Madras HC’s decision.
11. Before the Supreme Court, Novartis argued that court should look at the original 1993
application - free base molecule, as the ‘known substance’ and not any other development until
1998. Based on this, it argued that there was a substantial leap from the 1993 free base molecule
to the 1998 beta crystalline molecule. The court held that the known substance will not be the
free base molecule, but the salt form produced in between, that was published in some research
already. So, the court did not take the free base molecule as the known substance, and instead
took the salt form as the known substance. In a nutshell, the court held that for ‘efficacy’,
you have to show that it cures in a better way than the known substance.
12. After this decision, Prof. Shamnad Basheer argued that ‘therapeutic efficacy’, if there is an
evidence of lower toxicity, that should also qualify as ‘therapeutic efficacy’. But the Supreme
Court left this question open on therapeutic efficacy.
13. Now, the problem is, if the patent examiner has to ask the question of therapeutic efficacy at the
time of granting the patent, it is expected of the companies to create a data on that same, that
would take a substantial time. So, in practice, the patent office regularly rejects new forms patents
 unless data is submitted. Sometimes, they also reject patents, not using 3(d), but by holding that
in comparison to the prior art, there was no inventive steps.
14. The policy outcome of this decision is favourable for the consumers, and the generic pharma
industry. However, the problem with the legal reasoning of the Supreme Court’s decision is that
in terms of efficacy, the Supreme Court arbitrarily came to the conclusion that ‘efficacy’ means
‘therapeutic efficacy’ in context of pharmaceutical patents. It could have come to the same
conclusion by a different reasoning. It could have held that, if ‘efficacy’ were to mean all kinds of
efficacies, and not just therapeutic efficacy, then what is 3(d) trying to exclude? It would become
redundant, which is not permissible. Hence, ‘efficacy’ has to mean therapeutic efficacy.

Section 3(j) - In context of Biotech Industry

1. Monsanto came up with an invention that there were naturally occurring bacterium (Bt) in the
soil. This bacterium has toxicity. It identified the toxic molecule, extracted it, and created a Bt
hybrid variety of cotton. This Bt technology can be introduced in any non-Bt hybrid. This
invention of Monsanto was patented in India. It entered into licensing agreement with various
non-Bt hybrid seed manufacturers and infused Bt in them to make them Bt hybrid. The seed
manufacturers then used cross-hybridisation to produce more and more Bt hybrids. But
Monsanto was charging a huge amount of royalty. In 2014, a licensee wanted volume discounts
which Monsanto did not agree to contending the offering such discounts to it would lead to
market distortion due to heavy competition in the market.
2. It went to the CCI against Monsanto alleging abuse of dominance on ground that Monsanto is
charging royalty based on the price of the end-product, which shows that it is leveraging its
dominance in one market to enter into another.
3. They also challenged Monsanto’s patent on Bt technology (meanwhile, the licensing agreement
was terminated by Monsanto). This company claimed that Monsanto’s invention is in relation to
the seeds, that is excluded from patentability under section 3(j). The single judge, on the issue of
patentability said the question whether Monsanto’s invention is an ‘invention’ or whether it ought
to be allowed a separate registration as a transgenic variety under the Plants Variety Act, would
require a legal analysis of the intersections between the two laws. The court did not go into this
analysis, and instead granted an interim relief by restoring the contract holding that its
termination was illegal because the price control was imposed on the product, and since
Monsanto was not willing to slash the royalties, this refusal was against the public policy. Hence,
the termination was held to be illegal.
4. Both parties appealed. Before the division bench of the Delhi HC, the only question was whether
Monsanto’s invention was patentable or not. So, it was a legal question. One contention was that
Monsanto’s invention was neither product nor process, it was an event. The identification and
isolation of the genetic sequence and its introduction to the plants, was not a product or process,
that ought to be patentable, because these processes were well-known, and Monsanto just applied
them to Bt Cotton. Second thing was, once these genetic sequences were introduced to cotton,
toxicity property was natural, meaning, it is essentially a biological process, that is excluded as per
Section 3(j).
5. Accepting these arguments, the court held that it was registrable as a transgenic variety under the
PV Act, and not patentable.

Critiques of this decision:

 1. The division bench excessively relied upon the old reasonings, that were no longer used
by European Courts. In the EU, patents on transgenic varieties is allowed.
2. On the question of essential biological process also, a critique was raised that, EBP
means only those processes that do not require human intervention. Fermentation, for
example. But when cotton seed is developed into a Bt variety, it will not automatically
have toxic properties unless the injection is done at specific spots.
2. Appeal before the Supreme Court. It ordered a retrial, and remanded it back to the single judge.
But the retrial did not happen and the two parties settled in March 2021. So, we do not have a
final decision on this case, except for the decision of the division bench.

Epilogue

1. This is an interesting area in relation to agri-biotech because there are deeper consequences of
denying patents on agri-biotech. There are three generations of Bt invention. The third
generation invention is Ht-Bt. It is weed-resistant but would not kill the plant, and has the
potential to save a lot of cost associated in weed-removal. Monsanto withdrew its 3rd generation
invention from getting an Indian patent due to regulatory uncertainty.
2. Eventually, the government between 2016-18 used section 66 of the Act to issue a show cause
notice to Monsanto asking why its patent (Bt Gen-2) should not be revoked on public policy
ground because the ability of the pink ball worm to attack the cotton ball had diminished over
time. Basically, the cotton balls had become immune to the Bt technology [This happens, because
every bio-tech technologies, over a period of time, due to several mutations, become immune to
the toxicity].
3. Now, what is happening that the Ht-Bt seeds are being smuggled to India, and the seed
companies are cross-hybridising the seeds and introducing them to the Indian market. The
Andhra Pradesh government caught this and said that Ht-Bt seeds are not approved in India, so
their use in India is illegal. But other state governments have stayed silent on it, and Ht-Bt variety
is being used in India, because it benefits the farmers. The seed manufactures have not conducted
clinical trials in India. So, clinical trial data has not been produced because such data is only with
Monsanto (acquired by Bayer) that has withdrawn its application.
4. Other critiques of this decision
5. Section 3(j) says, plants, animals in whole or any part thereof. Any part would also include genetic
material, genetic sequences, etc. They are not naturally occurring substances, they are isolated,
purified, their properties are identified, why should patent not be allowed on them. So, it is a
controversial provision as it allows protection only to the micro-organisms. But if genetic
sequences, etc. are inserted, that may not be patented. So, this provision has been worded in a
way that leads to a lot of ambiguity.

Section 3(b) - rejection based on public order or morality

1. 3(b) - an invention the primary or intended use or commercial exploitation of which could be contrary to public
order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment;
2. This provision flows from Europe. This question came to India in two decisions - Novartis v
Union of India (IPAB decision). Even though neither party raised Section 3(b), the IPAB said
that if patent is granted to beta crystalline form, because the prices are too high, it would create a
lot of havoc in the market, it would cause some prejudice to human because of higher price.
 3. Second decision in relation to patent office’s rejection of a sex toy. It was in 2017 when the Patent
Office rejected a patent on B-Vibe’s sex toy that was very unique - U-shaped sex toys that could
hit the G-spot and clitoris in a way that earlier sex toys could not do. But the Patent Office
rejected this patent primarily on the ground that it was immoral. They used several grounds.
Using section 292 of the IPC, it was obscene, and hence, patent cannot be granted. But there are
critiques arguing that there are decisions that say that sex toys are not violative of Section 292.
Then section 377 - unnatural offences argument was given by the IPAB.
4. The problem with the structuring of this section is the amount of discretion granted to the
Patent Office to decide on morality considerations. Is the Patent Office the right forum to make
this decision? A European Paten Office decision - it clearly said that we do not want to rule on
the grounds of morality because the Patent Office is only meant to analyse the technical
invention, and not the implications of this invention. If such inventions are to be banned, you
should go to the relevant ministry, and the Patent Office is not the right forum for such
decisions. But in India, the discretion granted to the patent office to decide on morality issues is
still contentious.

Extra class - recorded lecture 1 and YP’s last lecture on 2nd December 2021 (incomplete)

Section 3(i)

1. This provision has some history in the west. Europeans had started rejecting patents for surgical
processes, dosage formula, process of incision, etc. The idea was that these processes are very
specific to specific doctors, so there was a lack of industrial application of these processes.
However, over time, it happened that dosage formula, and other such processes are customised
using huge amount of comprehensive data. So, the question is whether patent should be granted
over these processes or not.
2. Even for vaccine manufacturing process (prophylactic), the Patent Office guidelines say that the
process of vaccine making will not be patentable.
3. However, in the US, on these processes, they said that we will grant patent on these processes
and would see what happens. After the Paolin case, where a doctor was sued for using someone
else’s process, the US Patent Act was amended. The amendment was consequent to a huge outcry
that this provision is leading to a large number of suits against the doctors. It said that the
remedies that can be granted for these infringements, the doctors will not be sued, or be liable to
pay damages for using the processes. So, limited exclusion is provided.
4. India adopted Section 3(i), that even includes ‘prophylactic’ that is not provided under the TRIPS
Agreement.

Section 3(p) - Traditional knowledge

1. Traditional knowledge is a form of intergenerational equity - passes from one gen to another.
Open TK and Closed TK. Closed TKs are held by the indigenous communities in secrecy.
 2. The Patent Office had granted patent to the anti-diabetic property of jamun. But it was revoked
using section 66 of the Act on ground that it was a traditional knowledge that jamun had
anti-diabetic property. This was revoked on argument that this patent was granted wrongly, and
ought not have been granted.

Section 3(k) - Software Patents

1. Ultimately, softwares are matters of logic, because there is nothing physically tangible. Therefore,
they ought not be patentable. However, since 1971, software patenting started. But in India, …
2. However, if in an ATM, if a software causes some effect in relation to processing the cash, then
those may be allowed to be patented. But algorithms are not allowed to be patented. So, the bone
of contention is what are computer program per se.
3. Ferred Alani case - patent application by this foreign person was made long ago, and finally when
patent was awarded, there were barely some months left in the patent period. Invention was a
search syntax that tried to define logical steps towards optimising search query. The Patent
Officer rejected it holding that there was no technical effect….
4. This case was the one that held that software patent can be granted. Then, what is excluded
under S. 3(k)?
5. According to the above decision, even if the physical manifestation of the software are not
reflected in the hardware, but is reflected in search results, it can be patented.
6. This judgment was criticised because
7.
8.
9.
10.
11. One of the reasons why many countries do not grant software patents is because of the fussy
boundaries that the patent system creates. Because the boundaries are determined by the claims,
and claims when interpreted differently can fetch different meanings. Based on the examiners’
interpretation, the inventor is called to modify the claims. For example, in Monsanto’s
application, a lot of claims were made to be removed by Monsanto, and only the claim relating to
the DNA construct and the microbiological process survived.
12. So, claims define the patent boundaries, and they are also subject to different interpretations.
Even post-grant, someone can challenge the claims based on their interpretation, and if it is
established, the courts have the power to strike down the claims. So, unless a patent is challenged,
and is then consequently proved to be valid, till then, the existence of a patent remains uncertain.
13. Now, software patents pose some challenges. Softwares relate to an area that is highly intangible
in nature, i.e, it can be examined only in terms of its technical effects, and not in terms of a
product. For example, if a software is opened in source code, and the computer understands it in
object code, both are susceptible of copyright protection. So, copyright will protect if I copy the
code and reproduce. But no copyright protection would accrue if an infringer copies the
functions, write it in his own language and then uses it (non-literal copying) because courts have
limited the non-literal copying infringement claim only to those aspects of a computer program
which are excluded by functionality.
14. K
15. J
Exhaustion Rights

1. Once I invent something, say Roche is the inventor of a drug, and files for patent in different
different jurisdictions, in all of which, Roche is the patent holder. But Roche engages in price
discrimination in different jurisdictions to maximise its profits. For example, Uber offers different
prices to different people in the same locality. It bases its prices based on the value that the
person derives from its services. So, patent holders similarly, charge high in the jurisdictions
where the consumers value the products more, and vice versa. Because of the availability of
patent protected products at different prices in different countries, there is an incentive for the
businesses that operate in high price jurisdictions to import the products from another
jurisdiction where the prices are low and sell them at prices competitive to the ones prevalent in
that jurisdiction. Once this is allowed to be done through the exception created in law, the
countries adopt an international exhaustion regime under which you say that once the rights are
exhausted by the patent holder anywhere in the world, you will not stop the importation of that
product in your jurisdiction.
2. India follows the international exhaustion regime, as reflected in the objects and reasons of the
Act, and the parliamentary debates. But the Indian law says that, with respect to the first sale
abroad, i.e., if the patent holder has brought the products in a foreign market through his title,
that will not be the exhaustion criteria. We will allow the importation of any product that is legally
placed in any foreign market. So, this does not necessarily mean that the product placed in the
foreign market flows from the patent holder. So, in a jurisdiction, say, Bangladesh, that has no
patent law, and if any player places a patented product in its market by legally taking the approval
from the authorities, that would still allow the importation in India if there is a patent in India on
the same invention - Section 107A(b). This way, we have expanded the notion of exhaustion by
allowing even those products that do not flow from the patent holder, but are legally put in the
foreign market.
3. There is an argument that this kind of provision runs contrary to the rights of a patent holder,
because under section 48, right to import is also a right of the patent holder. It also goes contrary
to the international exhaustion regime because we are able to not limit exhaustion only to those
situations where there is a first sale buyer on behalf of the patent holder, but we allow first sale by
anyone who legally sells the products in another jurisdiction.
4. First sale doctrine is a common law doctrine. The only question is first sale territorially or
internationally. When first sale is recognised internationally, it means that parallel imports are
allowed, meaning that they run parallel to the rights of the patent holder in that jurisdiction. But a
country’s law has to specifically provide if it has to provide for international exhaustion, else, by
default, domestic exhaustion applies, meaning that, the rights of the patent holder are exhausted
territorially, and if you import it from abroad, that will be an infringement.

Extra class - recorded lecture 2

Patent revocation (S. 64)

1. All grounds mentioned under section 3 and section 4 are the grounds on which revocation can
be granted. Revocation on the ground of patentability (grounds on which the patent is granted -
 novelty, inventive step, industrial application, disclosure), and revocation on the subject matter
(patent eligibility - meaning, despite fulfilling the patentability criteria, it can be revoked on
section 3 and section 4 grounds).
2. The High Court or the IPAB can revoke a patent. However, in relation to any infringement, the
original jurisdiction is with the district courts. However, the moment there is a written submission
containing a counter-claim on revocation in the same suit, the case is going to be transferred to
the High Court. The only exception is in case of High Courts having original side (Delhi,
Bombay, Madras, Calcutta). In these jurisdictions, the infringement cases will directly go to the
high courts, and they will also have the jurisdiction to decide on counterclaims or revocation.
3. So, why this discrimination? When the law was drafted, it was understood that if the district
court comes to a wrong conclusion (due to its limited capacity) on infringement, there is always a
chance to appeal. However, if the district courts are given the power to revoke, then, if the patent
is revoked, it will become irreversible. In such case, every company will start infringing upon the
patent.
4. Apart from High Court, the erstwhile IPAB could also revoke the patent. Suppose, if there is no
infringement, you can’t go to the High Court for revocation. Then you will have to go to the
IPAB. However, the IPAB does not have the jurisdiction to decide upon infringement. What is
the situation now, after the abolition of the IPAB?

Extraordinary ground for revocation - Revocation on Public Interest ground

1. India’s patent law provides for extra-ordinary grounds for revocation. Section 64 is not very
broad, because it covers only patentability and eligibility criteria. But Section 66 in that sense is
very wide and gives extra-ordinary powers to the government.
2. 66. Revocation of patent in public interest.—Where the Central Government is of opinion that a patent or the
mode in which it is exercised is mischievous to the State or generally prejudicial to the public, it may, after giving
the patentee an opportunity to be heard, make a declaration to that effect in the Official Gazette and thereupon the
patent shall be deemed to be revoked.
3. This revocation can be made without the requirement to pay any compensation.
4. This provision has not been used very much. There have been five instances where it was used or
partially used.
1. First one was before the TRIPS Agreement, the government realised that a patent - on
cotton cell lines - may have an effect on the cotton farming in India. Hence, they
revoked it on ground that it would affect agriculture.
2. In 2012, a Bangalore company had a patent on anti-diabetic property of jamun. But it
was revoked on the ground that it was a traditional knowledge that jamun had
anti-diabetic property. This was revoked on argument that this patent was granted
wrongly, and ought not have been granted.
3. 3-4 years back, the UK amended its laws to have a provision under which the patents
that were wrongly granted, could be revoked. But India’s provision is worded so broadly
that even non-patentability and non-patent eligibility grounds can be used to revoke
patents. Now, the headline of Section 64 says that the central government can also make
a petition for revocation to the IPAB, then would Section 66 allow patents to be revoked
on much broader grounds. This came to be tested in the third Section 66 revocation
attempt. Cipla came before the central government requesting the revocation of a
Novartis’s patent that was crucial to treat lung cancer. The ground was that since the
 price was high and the demand of Indian consumers was not met, they patent should be
revoked. The government however, did not respond positively to it. This was in 2014.
4. Then came the Monsanto’s patent in 2016. A cognate patent application (a different
patent than the one that was challenged before the Del HC) in relation to a similar
invention that was required in the product of Bt Cotton seeds was subject to revocation
based on the recommendation of the Ministry of Agriculture to the DPIIT. It was
argued that this technology was not performing well and was failing as the pink ball
worms were developing resistance to it. Thus, patent revocation was sought to be
revoked by the Ministry of Agriculture. DPIIT issued a show cause notice to Monsanto
on this. The outcome of this revocation attempt is unknown.
5. The fifth instance was in relation to Remnidisivir, that is now adopted as standard
treatment protocol by various countries on various grounds. Remnidisivir was developed
as a response to the Ebola virus. However, it did not work well for Ebola treatment. The
Indian Patent Office granted this patent in Feb 2020, right before the COVID came to
India. In April 2020, the Cancer Aid Association made a submission to the DPIIT asking
it to revoke the patent on ground that it ought not have been granted. But the expert
view is that it is a very strong patent, that cannot be revoked on the grounds of
patentability and eligibility. However, the patent owner of Remnidisivir has licensed this
patent on zero royalty to various parties, which is why the government did not respond
to it. Interestingly, if the patent was to be challenged on eligibility/patentability, they
could have gone to the IPAB under Section 64 as the post-grant opposition period (1
year) was still active.
6. So, there is a larger question on whether the government would use Section 66 in as
broad manner as it is worded.

Compulsory Licensing (S. 83-94)

1. In form of compulsory licensing, the law provides for post-grant situations where say, price of
the invention is very high, public demand has not been met, the product is not manufactured in
India, etc.
2. Interestingly, revocation by central government can also happen on the failure of compulsory
licensing. So, that raises the concern that, the government can adopt Section 66 to revoke a
patent without even following the compulsory licensing route.
3. Section 83 - general principles applicable to working of patents. Section 83(b) is important as it
gives some indication that actual working of patents in India is required to some degree, and not
just working through importation.
4. Section 83 entries are non-actionable. They may help in interpreting the provisions on
compulsory licensing.
5. Indian patent law is not a property right in the strict sense. But there is also a burden on the
patentee to make the invention available to the Indian public at reasonable prices. The exclusivity
is granted only as long as you are charging reasonable prices. This is a bit weird because the
whole reason to grant patent is to allow the patentee to be an exclusivist. Failure to do so,
becomes a ground to invoke compulsory licensing. There are four kinds of compulsory licensing:
1. Section 84 - third party compulsory licensing - applied by any person interested can
make an application for compulsory licensing - but they are required to first negotiate
with the patentee to get a license himself for a reasonable period not exceeding six
months.
 2. Section 91 - another kind of compulsory licensing - licensing of related products -
research exemptions on the patented product is allowed, but not with the patented
product. Meaning that mere experimentation of patent is only applied to research, and
once it is commercialised, you need a license. But, what if the patentee refuses to grant a
license? In such situation, Section 91 provides for compulsory licensing of the related
patents, meaning that a downstream patent holder can go to the controller and ask for
license of the upstream primary patent if he refuses to grant a license.
3. Section 92 - special compulsory licensing - notification by central government - in cases
of emergency, when the government cannot wait for a third-party to come - they can
issue a notification that any party can come and apply for compulsory licensing. In that
case, the applicant will not have to approach the patentee to get a license first. Section
92A - another compulsory licensing - say, you do not have any emergency in your
country, but some other country that does not have the manufacturing capacity, or the
country is an LDC, you can issue compulsory licensing for export to that country. This is
a pure export-based compulsory licensing. This provision can kick in even if there is no
emergency, but that country need it. This provision is there because, a drug patented in
India cannot be exported without obtaining a license. Else it will be infringement. So,
compulsory license in required to export the drugs without causing any infringement.
4. S. 81, 82 and 82 have not been used until now, only s. 84 has been used.
6. Section 84(1) - reasonable requirements of public, reasonably affordable price, non-working in
India. ’Reasonable requirement’ defined under 84(7) - very broad. Reasonable requirement largely
relate to unmet demand of the public, not purely on the ground of price.
7. Even a licensee can apply for compulsory licensing, meaning that a licensee cannot be
contractually prohibited from applying for compulsory licensing. But the applicant should have
the capacity to manufacture.
8. The only instance of the invocation of Section 84. Bayer’s drug, Nexavar - an anti-cancer drug-
compulsory license in 2012. Applicant was Natco. Natco said that the reasonable requirement of
public was not met by Bayer because Bayer had supplied Nexavar only to 2% of the patient
population. Further, it was not available at a reasonably affordable price as Bayer charged over
Rs 2.8 lakhs per patient per month. Further, there was no working in India because Bayer
imported the drug from Europe and did not manufacture it in India. Based on this, the
Controller granted the compulsory license to Natco. Section 90 lays down the conditions on
which compulsory license is to be granted. The license is a non-exclusive license. Compulsory
license is not assignable. CL shall be predominantly granted for the Indian market (because for
exports, separate provision is made). However, export is also permitted in some circumstances
(clause ix).
9. The controller who granted the compulsory licensing, he fixed the royalty at 4% of Natco’s cost.
Bayer contented that you have to consider the economic value of authorisation which has to be in
accordance with the prevailing price, i.e., Rs. 2.8 lakhs. The Controller did not agree to this,
because doing so would jack the price of compulsory licensing products as well because of
increased royalty payment. Bayer said this is violative of Section 90(1). It argued that economic
value of authorisation is to be included in ‘other relevant factors’. The second ground of appeal
before the IPAB was that Bayer even though Bayer was satisfying the demand of only 2% of the
patient population in need of the drug, it was reaching to a large number of patients at low cost
by Cipla who was infringing the patent. Bayer had already sued Cipla for infringement but the
court had allowed it to continue manufacturing and not granted an injunction, and said that Bayer
would get some compensation for the losses in the past sales.
10. So, Bayer said that all the sales of Cipla should be added to Bayer’s sales to conclude whether the
demand in India has been met or not. The Controller said that since Cipla’s sales were infringing
 sales, so if tomorrow the court grants permanent injunction to Cipla, that would throw Cipla out
of the picture. So, Cipla’s sales cannot be counted in.
11. Third ground was that, the working requirement under the Patent Act can also be satisfied by
importation. The Controller said that working requirement, in light of Section 83 means
manufacture in India and import cannot substitute this requirement.
12. Appeal to the IPAB on the above grounds:
13. IPAB agreed with the Controller on the 4% royalty. But in the interest of equity, the royalty was
increased to 5%. On the ground of unmet demand, it said, ask the question, if Cipla was a friend
or foe. If Cipla was a friend, its name would be there as a licensee of Bayer and those sales would
have automatically been counted in. But since Cipla’s sales were infringing sales, Bayer cannot for
his convenience count its infringing sales in as well. It said that holding otherwise would have
consequences. Cipla can tomorrow, on its own decide to stop the production of the drug, or be
permanently injected by the court. Therefore, Cipla’s sales cannot be included.
14. On the third ground, the IPAB differed. The IPAB said though working means manufacturing in
inIda, import will not be excluded from the meaning of working in all cases. If the patentee is
able to show the reasons for non-manufacturing, then import may also be allowed as working.
15. Appeal to the Bombay HC - it upheld IPAB’s decision - appeal tot he Supreme Court - said, not
inclined to decide on this case, and confirmed the Bombay HC’s decision. But, in the order, in
one line, it said that, however, all the question of law are left open. The implication of this
decision is that the decision of the Bombay HC has no precedent value. Question - Does it also
have no precedental value before the Controller in Mumbai? Or the Single Benches of Bombay
HC? Since it was a division bench’s decision.

Epilogue to Compulsory Licensing

1. The major Indian pharmaceutical manufacturers have tie-ups with foreign MNCs as their licensees to manufacture
and market drugs in India. So, they don’t ask for compulsory licensing anymore because that would disturb their
business relations with the global MNC group who license their drugs to the Indian manufacturers. And as about
the smaller manufactures, they do not have the technical abilities to manufacture those drugs, or the capacity to file
such long litigation, hence they also do not ask for compulsory license.

Section 92 - Special Compulsory License

1. In 2013, a Committee was formed to see whether for three identified drugs, compulsory licenses
under Section 92 can be granted or not. But the Committee concluded that in respect to all three
drugs, no Indian manufacturer had the ability to reverse engineer the process and manufacture
the drug at least until the next 3-4 years.
2. Out of these three drugs, one drug was finally selected to consider whether to grant CL or not.
There was no emergency, but it was a circumstance of extreme urgency, due to which, a
compulsory license should be granted. A recommendation was made to the Ministry of
Commerce. At this time, there was a policy paralysis with the UPA government, so nothing could
happen. And when the Modi government came into power, it also did not go ahead with it, and it
was buried. Now, the companies are more focussed in maintaining their business relations with
the foreign MNCs than seeking compulsory licensing.
Patent Remedies (S. 108)

1. 108. Reliefs in suit for infringement.—(1) The reliefs which a court may grant in any suit for infringement include
an injunction (subject to such terms, if any, as the court thinks fit) and, at the option of the plaintiff, either
damages or an account of profits. (2) The court may also order that the goods which are found to be infringing and
materials and implements, the predominant use of which is in the creation of infringing goods shall be seized,
forfeited or destroyed, as the court deems fit under the circumstances of the case without payment of any
compensation.
2. Court may grant an injunction - this is one kind of remedy. Then there is a monetary remedy -
damages or accounts of profits. Clause 2 is an ancillary remedy - the infringing goods can be
seized, forfeited, etc.

Injunction

1. Patent Injunctions - four kinds - (a) ex-parte, (b) quia timat injunction, (c) ad-interim injunction,
(d) permanent injunction.
1. Ex-parte injunction - do we need ex-parte injunctions in patents when the potential
infringers are not fly-by-night infringers, unlike in Copyright law?
2. Quia timat injunction - this can also be granted ex-parte. This has been mostly used in
the pharmaceutical industry. Injunction based on the apprehension of infringement in
the near future. India does not have a data exclusivity regime. Therefore, the DCGI, that
grants marketing approvals to the drugs, does not act as a patent police. It will just look
at the bio-equivalence test date, and grant marketing approval of that drug to any person.
Pharmaceutical producers regularly file RTIs with the DCGI, get information, and argue
that these companies have got marketing approval from the DCGI based on their
bio-equivalence test date, and they may start infringing the patents soon. Quia timat
injunction practice was adopted by drug producers as a response to the at-risk launch
activities of Indian generic manufacturers.
3. Ad-interim injunction - they are disproportionate. Because it is granted when no final
determination on the patent validity is made and injunction is granted based on prima
facie invalidity of patent and irreparable harm, insufficiency of monetary damage,
balance of convenience, etc. - contradictory decisions of the Delhi HC on this issue.
Roche v Cipla - the court refused to grant ad-interim injunction where the court refused
to grant ad-interim injunction based on lack of prima facie validity of the patent, and
public interest. The second decision - [see the citation from sir’s article on
injunctions] - ad-interim injunction can be granted if continuance of the infringement
will cause price erosion. Meaning that, if infringement continues, the infringer would
continue selling the drug at low costs, so, he will not be able to pay sufficient damage to
the patentee if on the final determination, patent is proved to be valid. Some other cases
like Ajanta Pharma - in case of a lifestyle drug, injunction was not granted based on
public interest, cheap price, etc. So, the injunction jurisprudence is very fluid.
4. In cases involving Standard Essential Patents (SEPs), where the patentees have already
committed to grant a licenses on FRAND terms. In such cases also, ad-interim
injunctions have been granted by requiring the infringer to pay some royalty to the
patentee and depositing the remaining amount in an escrow amount, and also seek
counter-guarantee from the patent holder… - a conditional injunction
 5. Forced injunction - Mandatory injunction - the patentee is forced to transfer the
technology to the infringer.
6. Permanent injunction - no permanent injunction case so far. Only one, in Roche v
Cipla, Roche won the litigation on merits, but since the patent was to expire in some
months, the court held that there was no point in granting permanent injunction, and
rather asked Cipla to pay damages to Roche.

Damages

1. Only one case. Phillips v Rajesh Bansal - the Delhi HC came on a final determination of
damages. But the court did not elaborate much on this. Damages are difficult to grant because it
requires complex economic analysis.