Posted in IP Law, Technology

Use of Blockchain in Branding

While we talk about using blockchain in the context of the protection of transactions, the term itself has acquired the distinctive status of being associated with cryptocurrencies, especially with Bitcoin. However, it is important to shift the focus from an area where the law of the land does not allow the use of blockchain to an area where the technology can be utilised effectively.

What is Blockchain?

The blockchain technology was invented in 2009 by Satoshi Nakamoto (an anonymous person) for use as a public transaction ledger for Bitcoin, allowing users to make and receive payments without the involvement of a central bank or other financial institution.[1] Blockchain can be defined as “a shared database or digital ledger that automatically updates information across an entire network, without the need for a central intermediary”.[2] However, the definition is not completely self-explanatory.

The blockchain technology comprises a cluster of blocks which are used for recording entries. When a person enters a transaction in the system, the computers spread across the globe, known as “nodes”, perform the task of verifying the transaction, and once the transaction is verified, it is entered into a block and the same is linked with the blocks before and after this particular transaction. The blocks form a publicly (depending on the members to be using the ledger) accessible ledger which will get synchronised via the Internet every 10 minutes (on a standard basis).

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Use of Blockchain in Protecting Brands

The blockchain technology started off and has since been associated with the concept of Bitcoin. However, as time has passed, it has found its uses not only in the workings of the large companies, but also in the general election that took place in Sierra Leone last year. With such diverse uses, it is not a surprise that the technology will find its place in the protection of IP as well.

So, how is protection of IP through blockchain going to be effective? As we have already discussed, the blockchain technology is a synchronised ledger of transactions, which can record transaction entries from any field of the world. Moreover, each transaction entry is separately verified by nodes at different parts of the world. This feature ensures that the block entries are not only transparent, but also immutable, and almost unhackable. And this is the very characteristic of blockchain technology that every IP owner is looking to exploit.

Thus, there are two fields in which blockchain can provide protection for IP owners and users, i.e. supply chain and the monitoring of the intellectual property. And this makes the lives of brand owners a little easier.

1. Supply Chain

A supply chain refers to the chain of persons (natural and juridical) that a product passes through to reach the ultimate consumer. This chain is very important from the perspective that the genuine product that leaves the premises of the manufacturer also reaches the final consumer. Not only is this requirement important for the consumers who want to receive genuine products, but it is also important for the brand owners who do not want their brand to get diluted due to loss of reputation.

It is, thus, very important to bring about transparency in the supply chain, and blockchain can bring about more transparency to supply chains by providing information about the origin of the goods and by empowering governments to effectively request reliable data related to even the most distant supplier.[3] What makes the technology even better is that the data cannot be altered or destroyed once it is entered, and therefore, the genuineness of the supply chain will not be called into question.

The technology can also simplify the process of labeling, and one may soon be able to verify if the label on one’s new jacket, stating it was made in a particular country, is accurate,[4] merely by verifying the chain of transactions through which the jacket has passed.

2. Monitoring of Brands

Blockchain has the potential to enhance IP protection for the brand owners, since the branded goods can be easily tracked through the blockchain technology. Thus, their authenticity will be easily verifiable by the brand owners, the retailers and the consumers, reducing counterfeiting of branded products and fraud on consumers. Further, the brand owners, the sellers and the users of the products will be able to keep track of them even when the products are sold in a second-hand market or through discount-sellers.

Conclusion

Although blockchain is yet to be tested and verified in the field of IP, the use of this technology can revolutionise the measures of protection and enforcement in IP law by making it easier to monitor the genuineness of the branded products in any part of the world.

[1] Jeffrey H. Greene and Anne Marie Longobucco, What Can Blockchain Technology Do For The Fashion Industry?, Mondaq (July 11, 2018, 11 P.M.), http://www.mondaq.com/unitedstates/x/694170/Trademark/What+Can+Blockchain+Technology+Do+for+the+Fashion+Industry

[2] Id.

[3]  Losing to Win, The Economist (July 11, 2018, 11:30 P.M.), http://www.economist.com/blogs/schumpeter/2014/06/bitcoin.

[4] Anna Radke and Olivera Medenica, Blockchain and the Fashion Industry, Fashion Industry Law Blog (July 11, 2018, 10 P.M.) http://www.fashionindustrylawblog.com/blog/2016/12/15/blockchains-and-the-fashion-industry


ABOUT THE AUTHOR

Shreetama Ghosh

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Shreetama Ghosh is a fourth-year law student at the Rajiv Gandhi National University of Law, Punjab. A typical Bengali at heart, she is a creative mind-hiker in the land of knowledge, and enjoys living in the world of alphabets and punctuations. She has been a part of several editorial boards since school, and being a Grammar Nazi has helped in the selection process. Other than writing, movies, travelling and cuisines fascinate her as much as the ever-changing fashion does. It is, thus, her passion to blog, whether about a breaking news, a movie she hopes everyone gets to watch, the quietest place on earth, or even the homely taste of authentic Bengali cuisine.

Posted in Critical Analysis, IP Law

Patent on Human Embryonic Stem Cells: A Critical Legal Study

As time and science move forward, the law struggles to keep pace while, at the same time, resisting change in order to maintain stability.”[1]

Human embryonic stem cells (HES cells) is the most sensational discussed topic in present form not only by the biologists who discovered them but also by the medical professional, media, ethicists, governments, Lawyers and politicians etc. These ‘super cells’ have a major clinical potential in repairing tissues, with their proponents it is believed that they represent the future relief or cure of a wide range of common disabilities, such as replacement of defective cells in a patient by transplantation of the HES cells, which would restore the normal functioning of the defective cells.[2]

Associated patent law issues have been a growing concern with the invent of new developments in biotechnology, since the 1980s. Human embryonic stem cell research, as one of the most controversial among all the subcategories within the general field of biotechnology, is receiving different patent system treatment in different countries.[3] That stem cells that involve the destruction of human embryos are not patentable, which was held by the European Court of Justice in October 2011. This landmark judgment provides an interpretation of the term “human embryo” that takes account of current scientific developments. The case had its origin in Germany, where Dr. Oliver Brustle had applied for a patent on brain stem cells (neural or glial progenitor cells) and the processes for producing them from embryonic stem cells. He claimed that such cells could help treat neurological diseases such as Parkinson’s disease. The patent was granted by the German patent office.[4]

The clinical research environment in India is currently undergoing a tremendous change, with regulators coming under stern criticism from the press, public and the elected government. There are the new ICMR-DBT (Indian Council of Medical Research – Department of Biotechnology) draft guidelines on stem cell research which divided the research into three categories, this follows:

  1. Permissible Areas of Research:
    • In-vitro studies on established pluripotent stem cell lines may be carried out with review and approval of ICMR.
    • An Umbilical Cord stem cell bank could be established with the prior permission of the Competent Authority and following guidelines for collection, processing and storage etc.
  2. Restricted Areas of Research:
    • Studies on chimaeras where stem cells from two or more species are mixed and introduced into animals, including primates, at any stage of development and differentiation. This would require the proper approval of Concerned Authority.
    • The stem cells which were derived from the donors and identity of such donors should be readily accessible or might be known to the investigator.
  3. Prohibited Areas of Research:
    • Any kind of research related to human germline genetic engineering or reproductive cloning is prohibited.
    • Breeding of those animals should not be allowed in which any human stem cells have been introduced at any stage of the research development.
    • Research directly involving to any non-autologous donation of any stem cells is also prohibited by virtue of law to a particular individual.

To explore the possibilities of clinical applications using stem cells, through basic research on all types of stem cells i.e. embryonic, adult and tissue is essential. National agencies are pro-active in supporting and promoting this area.

However, there are many challenges in current stem cell research such as non-availability of human resources of adequate expertise. The laws and institutions that regulate the use and ownership of biotechnology in India are multifaceted and complex. Moreover, these laws and institutions are still very incipient and subject to contestation. The process of creating jurisprudence certainly transforms the meaning and interpretation of many of its provisions.

Nevertheless, it is possible to discern patterns in what concerns the protection of the public interest in the various laws that impact the use and ownership of biotechnology in India. Restrictions on patenting of pharmaceuticals and possibilities of opposition to such patenting are intended to ensure broad access to essential medicines and to protect public health.

[1] “Patentability of Human Embryonic Stem Cells: Finding the balance between the Moral Hazard in Europe and the wide scope in the U.S.”, Anna Thorstenson (Phd Thesis for “Faculty of Law, University of Lund”)

[2]  https://doi.org/10.1093/humrep/deg143  last accessed on 02/04/2017.

[3] “A Comparative Study on Human Embryonic Stem Cell Patent Law in the United States, the European Patent Organization, and China”, Huan Zhu (Phd Thesis for “School of Law, University of Kansas”).

[4] “Europe Prohibits Patents on Human Embroynic Stem Cells”, Sangeeta Udgaonkar; Published in “The Practical Lawyer”, January, 2012, page no: S–3.


ABOUT THE AUTHOR

Nijhum Seal

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Nijhum Seal completed his LL.M in Business Law from Calcutta University. He has been Legal Editor in some MNCs. He is presently practicing in Calcutta High Court and also he is the Founder of the Association namely “Law Legum Associates”, the Organisation is providing guidance to law aspirants in Competitive Examination such as C.L.A.T, Judiciary, A.I.B.E etc. In his leisure time, he plays tabla and he is also a Certified Martial Artist.

Posted in IP Law

Colour Marks: An Overview

The word trademark in common parlance means the identity of a particular entity. It is not only the conventional marks but also unconventional marks like sound, scent and colour that can be registered now. Today, consumers are looking for a good not only for its inherent use but also for other factors like its appeal and this is particularly true for the younger generation. While we grew up munching Chocolates like Cadbury, we now identify it not only by its name but the colour of the packet in which it comes wrapped. Shoe brand Louboutin red soles, New York-based jeweller Tiffany & Co’s trademarked blue box and Telecom brand T-Mobile specific shade of magenta are some examples of the colour marks. When there are goods entering the market with the same use, you need to distinguish your goods from other, so that it stands out. As a colour becomes an identity of the brand, People begin to associate the brands with its Color, and that’s where colour marks come into play.

“Trademark” is defined as a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include the shape of goods, their packaging and combination of colours.[1] A colour that appeals to consumers, and is easily spotable increases its commercial value. Color Marks is a valuable asset for any business entity and also an important marketing business strategy. It is also a strategy for brand identity and product differentiation in a competitive market. Thus, each entity tries to choose a colour that would help it stand out, make its brand different and easily distinguishable.

A colour can also be USP (unique selling point) of a brand.This can be illustrated by the recent case of Christian Louboutin v. Pawan Kumar, in which the Delhi High Court restrained Karol Bagh based sellers from selling footwear bearing his registered Red Sole trademark. The Deere & Co.[2], which manufactures agricultural equipment and vehicles sued the defendants, for using its word mark “John Deere”, the logo, the registered trademark including trade dress and the colour combination thereof in relation to their agricultural equipment and vehicles.

Because trademark is an exclusionary right, it has the effect of barring others from using it for the product for which it is registered. Applicant desirous of getting registration for a colour mark needs to explicitly mention it in their application along with formalities mentioned in Chapter II of the Trade Marks Rules, 2017 which provides the procedure for registering trademarks which includes the registration of combination of colours as a distinctive feature of the trademark. But, how to determine whether a colour can be registered or not?

Various test like the colour depletion test and the acquired distinctiveness (like Louboutin) are applied by the Courts to answer this question. The most common test of acquiring distinctiveness by use also has certain limitations. Therefore, the test seems to be that if the applicant can show that by virtue of its use, it has acquired goodwill and has come to be associated exclusively with the applicant’s trade to the satisfaction of the trademark officer, it can get the colour mark registered for itself. The colour depletion theory comes into play only in case of blanket prohibitions.[3]

The courts would not allow for registration the colours that are functional for various purposes. Further, a trademark is always used for a category of good or services and the act itself bars from registering a colour for a class.

Unconventional trademarks have now been used by the entity for a long time. On the surface, this might appear unfair but it also challenges to forge creativity among the upcoming entity, to form a unique identity by creating or choosing a colour mark keeping in mind the idea of their brand. The Trade Marks Act, 1999 provides for the registration of combination of colour but it is not very clear if a single shade can be registered or not. As of now, there has been no reported case where a single shade has been trademarked in India. In the absence of an explicit bar for registering a single shade and the broad definition of the trademark, it cannot be said that this cannot be done in near future.

References

 [1]   http://mentalfloss.com/article/27396/9-trademarked-colors

[2]   https://spicyip.com/2013/01/guest-post-colours-as-non-conventional.html

[3]   Trademark Rules, 2017

Footnotes

[1] Section 2(1) (i)(viii)(zb) in The Trade Marks Act, 1999.

[2] Deere & Co. & Anr. vs S. Harcharan Singh & Anr.

[3] Colgate Palmolive Company vs Anchor Health And Beauty Care Pvt., 108 (2003) DLT 51.


ABOUT THE AUTHOR

Mousomi Panda

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Mousomi is a third-year student pursuing B.A. L.L.B. from University School of Law and Legal Studies, (IP University). She has an active interest in issues that plague the society. She’s a thinker, writer, and reader, though more of a dreamer. She’s interested in legal research in the field of ADR as well as IPR.

Posted in Indian Law, IP Law

Intellectual Property Rights: Problems and Privilieges

The Intellectual Property Rights (IPR) have gained worldwide prominence since the TRIPS agreement of 1995, which mandated that all the WTO-member countries accord to uniform patent laws. India is also a signatory of the TRIPS agreement and as such has to follow all the guidelines set down by it.

On one hand, IPRs is a boon for creators and innovators, but on the other hand, it is a bane for the less privileged, who have to bear the added costs of such exclusive products. In India, the less privileged, which includes illiterate and poor people, now have to face commodification of their skills, knowledge and products, due to the global patent regime unleashed since 1995. Hence, it is important to consider how the patent laws have impacted their innate occupations and life-essentials.

Problems with Indian Patent System

In the years from 2005 to 2012, only 59,998 patents were filed by Indian residents.[1] Compare this to China where over 2 million patents were filed by Chinese residents in the same period of time. The reason for this disparity is not the lack of expertise or creativity amongst us. However, we Indians relatively lack the basic awareness, resources and infrastructure which will help us in asserting our intellectual property rights.

In India, most of the products are patented by government-sponsored educational institutes and foreign multinational companies. We do not see many patents originating from individuals like an ITI (Industrial Training Institute) trained mechanic or electrician. Even if someone is able to invent a product, the multinationals, with their large purses, purchase such innovations. The individual inventors also, willingly or unwillingly, sell their patents to multinationals because of their financial considerations.

There are very many people whose creativeness goes unnoticed because they lack patent expertise or lack the funds required to hire expensive patent drafting services of lawyers or due to general unawareness regarding the patent laws in India. Poorly drafted patents also make it difficult for the Indian Patent Office to find suitable applications to grant the patent. In such a scenario, it would be better for individual innovators if the government could establish special patent offices for them, just like the consumer courts, where the patent granting process could be more speedy, easy and efficient.

A country’s ability to research and innovate has been adjudged based on its ranking on the intellectual property index, a survey conducted by the United States’ Chamber of Commerce (USCC). India has consistently maintained a lowly rank in this ranking. A major problem cited by the index has been that of weak IPR infrastructure.[2]

India lacks patent examiners, both qualitatively and quantitatively, which leads to pendency and protracted application examination periods. Hence, it is necessary that the government proactively fill up the vacancies by appointing qualified people, especially those who have undergraduate or post-graduate degrees in the field of law or science, and in addition open more patent offices across India.

Further, we don’t have enough qualified lawyers and judges to protect innovations. In western countries like the United States and the United Kingdom, it is common for patent lawyers to have science and law degrees. To produce patent lawyers with similar qualifications, we must train more people in the skill of drafting and obtaining patents, especially engineering and science graduates.

IPR & the Less Privileged

In a developing country like India, the multitudes of less privileged people often find themselves in the dilemma of having to choose between an original, legal copy and a pirated, illegal copy. The less privileged, bound by their circumstances, lean towards the latter. Even the courts have stood by their side, as we have seen in the Delhi photocopy case.[3]

However, a right balance must be sought between the knowledge of the creators and the users of such knowledge. Users must respect the intellectual property rights of the creators, but in circumstances where basic human rights of food, shelter and clothing aren’t respected, it would be a travesty to. People will respect others’ rights when they are situated in a position to do so. But for that to happen we need to have holistic economic growth in our country.

It is important that food and medicines are available to all people at low costs. We have sui generis laws like The Protection of Plant Varieties and Farmers’ Rights Act, 2001 which were enacted to safeguard the rights of breeders as well as farmers.  But we have seen that over the years the Indian farmer has been dependent upon high-yielding seeds “patented” by companies like Monsanto.[4] Such kind of commodification of agriculture is hurting our farmers who have to purchase seeds from such multinational companies at a far higher price. Hence, the government must evaluate whether and up to what level has the PPVFR act of 2001 given impetus to farmer-led and farmer-centric research. There is also a need to evaluate whether the act has supported and fostered the small-scale seed industries and helped preserve the traditional knowledge of farmers.

Similar is the case with the pharmaceutical industry, where most of the Indian pharmaceutical companies are engaged in producing generic medicines which are available after the patent protections given to the original developer expires. All these years the pharmaceuticals industry has avoided investing in R&D on the back of relaxed IPR laws and significant government backing.

The generic medicine producing Indian pharmaceutical industry has been protected by section 3(d) of the Indian Patents Act, 1970 which prohibits ever-greening of patents.[5] But there is strong pressure on the Indian government to tighten the IPR laws in this regard from countries like the USA who wants to help its pharmaceutical industry by driving out competition from Indian firms. So, if in the future the government succumbs to such external pressure or decides to enter into an agreement like the Trans-Pacific Partnership (TPP), which prescribes its members to harmonize their IPR laws to global standards, the pharmaceutical industry will be at loss, since it won’t have any original innovations of its own.

Increase in standards will also increase the costs of medicines. It will seriously affect the health of the less-privileged as they will not be able to afford the high prices of medicines set by the multinationals. A balance must be sought between IPR and creativity to stimulate research and development of vital medical technologies. As a first step towards this, the government could start competitive funding schemes to encourage speedy and cost-effective development of new medicines.

IPR is a necessity in the present age of globalisation. It is especially necessary for the preservation of traditional knowledge like those of the saree weavers in Pochampally, A.P. or the Kani tribal people in the tropical forests of southern-western India. Possessors of traditional knowledge are particularly more vulnerable to their products getting copied by firms in countries like China and in Southeast Asia. Their exploitation also stems from their penury, illiteracy and low social status. The government must suo moto take cognizance of such communities’ traditional knowledge and document it and help them in acquiring patents for their knowledge.

In India, it is important that right equilibrium must be sought between new patented technologies and people’s power to purchase those. The government must focus on fostering creativity among Indians through ingenious educational policies and inspire students to take risks and develop their innovative ideas. The government, through its “Start-Up India” campaign, could help such genuinely innovative ideas by providing financial backup.

[1] Dipti Jain, India’s Patent Problems, LIVE MINT, (November 24, 2014), available at http://www.livemint.com/Politics/LkKhP62yJrhSRJZDoqDIiN/Indias-patent-problems.html (Last Visited on August 12, 2017)

[2] Maintaining a tricky balance on IPR, LIVE MINT, (February 14, 2017), available at http://www.livemint.com/Opinion/Hqc2ySVux5AGfK3P797qfI/Maintaining-a-tricky-balance-on-IPR.html (Last Visited on August 12, 2017)

[3] The Chancellor, Masters and Scholars of the University of Oxford and Ors. v. Rameshwari Photocopy Services and Anr., 2016 SCC OnLine Del 5128.

[4] Harish Damodaran, GM technology: Trait fee war between Monsanto and Indian seed firms intensifies, THE INDIAN EXPRESS, (December 22, 2016), available at http://indianexpress.com/article/india/gm-technology-trait-fee-war-between-monsanto-and-indian-seed-firms-intensifies-4439264/ (Last visited on August 12, 2017)

[5] Section 3(d), Indian Patents Act, 1970.


ABOUT THE AUTHOR

Pratik Dixit

PRATIK PRAKASH DIXIT

Law Student pursuing BA LLB (Hons) at NLSIU, Bangalore. Interested in social and political issues.

 

Posted in IP Law

Geographical Indications of goods in India: An insight

Creativity is the most productive and expensive fruit of human mind, thus every effort is being made to keep this fruit healthy and free from insects of plagiarism”

Geographical indication is one of the seven rights that are being conferred on the creators under Intellectual Property rights. Unlike other categories of IPR’s like Copyright, Trade marks, Industrial designs, Patents, Integrated circuits etc, Geographical Indications with its peculiar features is still in its nascent stage. A GI status is conferred on the goods originated from a particular region and possesses qualities, reputation or characteristics that are specifically attributable to that place of origin. In 1824, France became the first country to develop GI legislation to brand its wines and cheese. Some European countries also followed France example and in the year of 1994, TRIPS (Trade-related aspects of intellectual property rights) agreement under WTO gave a wide coverage to GIs and attracted maximum number of signatories including India. In 1999, Indian Parliament passed geographical indications of goods (Registration and protection) Act that came into effect in 2003.

After possessing GI Status, brand name of the product gets developed that give rise to prices, exports and also protects farmers/artisans against undue competition given by bogus products in the market. Darjeeling tea, Kanchipuram silk saree, Kohhlapari slippers, Meerut scissors are some of the examples of GIs in India. GI is not an exclusive right of the owner but collectively enjoyed by a group of producers, community or even by a nation. The term of a GI registration is ten years which can be renewed after the period of 10 years. Failure to renew the registration will lead to removal of GI sign from the register. Breach of GI right is a criminal offence in India attracting six months prison which may be extended to three years accompanied by fine. Being a cognizable offence, police may conduct search and seizure without any warrant. Thus it protects producer’s interest, boosts healthy competition in the market and safeguard consumers against misleading & bogus products. Present scenario has made it difficult to subscribe with Shakespeare who contemplate that what is there in name? For the sake of economic safety, legal blanket of GI rights is being circulated to keep the fruit of creativity fresh forever.

Country like India which is decorated with diverse culture, tradition and soil can be benefitted to a larger extent with the idea of GIs. No doubt, various challenges are still there which makes implementation of GIs a hard nut to crack. Thousands of goods will qualify for GIs by virtue of huge cultural, ethnic, social and food diversities. Producers of such products are small households and small units often in same area. Hence, it is often difficult to organise them into groups or communities and apply for a GI sign. People are not fully aware about this wonderful legal sword of intellectual property right which has marvellous potential to make their economic battle much easier and convenient.


ABOUT THE AUTHOR

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DEEPIKA SANGWAN

Deepika Sangwan is a second-year student at Army Institute of Law, Mohali. She is an Editor at college magazine ‘AILITE 2016-2017’. She believes that writing gives clarity & depth to one’s thoughts. Apart from decorating facts with reasoning, cycling is her favourite pass time.

Posted in Competition Law, IP Law

FRAND Licensing: Bridging the gap between Competition Act and Patent Act

Telefonaktiebolaget LM Ericsson (Public) (in short “Ericsson”) is a company having around 33,000 patents, and 400 of these patents have been granted in India. Most of these are Standard Essential Patents in the field of Mobile Communications like 2G, 3G and 4G which are used in the smartphones and such other devices, which are used for communication.[1]

Ericsson versus Micromax & Others

Lately, Ericsson filed a civil suit against many companies for infringements of its patents relating to the mobile communications, some of them were Mercury Electronics (Micromax),[2] Intex Technologies (India) Limited (Intex),[3] M/s. Best IT World (India) Private Limited (Iball),[4] Lava International Ltd (Lava),[5] Xiaomi Technology (Xiaomi)[6]. These companies in their defence asserted that Ericsson violated its FRAND commitment, made by Ericsson to the European Telecommunications Standards Institute (ETSI). ETSI made the patents of the Ericsson in the field of the mobile telecommunication as the Standard patents, and thus made them essential in nature. These patents are also recognised as standards within India by the Department of the Telecommunication, which recognises the standards adopted by ETSI.[7]

Most of the companies sell smartphones in India at a very reasonable price and common people who cannot afford the luxury of the Apple’s iPhone tend to buy such smartphones. Some of these companies being Intex,[8] Iball[9], and Micromax[10]and charged back on Ericsson by filing information under the Competition Act, 2002 against it, in which the investigations are pending.

Standard Essential Patents (SEPs) and FRAND Licensing

These disputes are becoming prevalent in the today’s market due to the lack of legal recognition of the FRAND Licensing in India. FRAND Licensing stands for Fair, Reasonable and Non-Discriminatory Licensing. They are sine qua non for widespread use of the Standard Essential Patents and hence, following the standards which are set by the Standard Setting Organizations (SSO).

The Jurisprudence of FRAND Licensing came to India with the filing of the civil suit by the Ericsson against Mercury and Micromax[11]. FRAND Licensing is a type of voluntary Licensing of the Intellectual Property, by the owner. The FRAND Licensing is done on the terms which are Fair, Reasonable and Non-Discriminatory. The Royalty set by such Licensing should be proportionate to the patented product and not exorbitant, it must be a reasonable one.[12]

The owner agree upon such terms to license the rights to the other persons, as the patent owned by the owner is a Standard Essential Patent (SEP) i.e. a patent which conforms to the standards set by the SSO, and without their compliance the products could not be sold in the market, because there are no non-infringing alternatives. Hence, SEPs are essential, to make a product conforming to the industry standards, and they face no competition unless and until that patent becomes obsolete.

These standards are set by a mutual agreement and consensus between the market players to reach upon compatibility between the services or products particular market under the aegis of the SSO.[13] These standards can also be fixed by statutory SSOs.

FRAND Licensing and Patents Act, 1970

FRAND Licensing tends to promote the objective for which patents are granted status of SEPS, as it allows the dissemination of the patent to the public, and fetches the appropriate amount of royalty to the companies who own SEPs. Section 83 of the Patent Act, which lays down the general principles which must be applicable to the working of the patented inventions, in its clause (a),(c),(f), and (g), includes within them certain objectives which are incorporates in the FRAND Commitment, which are as follows:

  1. that the inventions are worked on a commercial scale and to the fullest extent that is reasonably practicable without undue delay;
  2. that the protection and enforcement of patent rights contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations;
  3. that the patent right is not abused by the owner, and he does not resort to practices which unreasonably restrain trade;
  4. that patents are granted to make the benefit of the patented invention available at reasonably affordable prices to the public;

Further Section 84 which incorporates the provisions regarding the compulsory licensing, makes it a clear ground, that if the patented invention is not available to the public at a reasonably affordable price, one may apply for the Compulsory Licensing, after ascertaining, whether the applicant has made efforts to obtain a license from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period. Section 84 also provides for the Proviso to the above-mentioned condition that if any anticompetitive practices adopted by the patentee and same are established, then this condition shall not be applicable. Therefore, this section provides for the intersection with Competition Law, which is inevitable.

Competition Law Aspect of the FRAND Licensing

Section 3, of the Competition Act, 2002 which prohibits anti-competitive agreement, in its clause (5) clearly recognises “Reasonable” restriction which can be put on a party by the owner when a patent is being infringed or any of the rights which are conferred under the Patent Act, 1970. If the same is read with the Section 83 and 84 Compulsory License would be granted to the prospective Licensee if he is not getting License on FRAND terms.

Section 4 on the other side restricts the abuse of the dominant position. Once a patent gets the status of SEP, it is granted a dominant position in the particular market as, it hardly faces any competition, and enjoy such position of strength until it becomes obsolete. Clause (2), sub-clause (a) clearly, states that there would be the abuse of the dominant position if the enterprise imposes unfair and discriminatory prices on the consumers of its products. In the present case of Ericsson, it clearly has the Dominant Position in the market of the SEPs pertaining to the mobile telecommunications, and it abused it by charging unfair prices.[14] Hence, it was liable to grant a license, as compulsory license would have been granted after its establishment of Ericsson’s abusive conduct in the market.

Hence, FRAND Licensing is the combined product of the two aspects of the CompetitionLaw i.e. prohibition of anti-competitive agreement and prohibition of the abuse of the Dominant Position.FRAND Licensing, is a pro-competitive commitment by the SEP holders, as it provides irrevocable licenses to the market players, and in return, they tend to get a reasonable reward for their work. The persons owning the SEPs make FRAND commitment to the SSOs to License them on FRAND terms. FRAND Licensing protects the market from being exploited by the dominant player who owns the patent. It promotes the Standards as decided by the SSOs and demotes the Patent Hold-up.

Patent Hold-up

Patent Hold-up is another name for the abuse of dominant position by the SEPs owners.[15] They hold their patent with them after they are declared as SEP, unless the licensee does not give up to their conditions which may involve unfair pricing i.e. supra-competitive pricing, or more burdensome terms (as compared to previous licensing when they were not SEPs).[16] It undermines the competition in the market, by creating entry barriers and also subverts the authority of the SSO by playing fraud upon them i.e. gaining a status of SEP and committing to FRAND Licensing and then playing harsh upon the market player dependent upon such SEPs.

Conclusion

FRAND Licensing is field where the jurisdiction of Patent Act and Competition Act, intersect. They both have to be read in addition to each other, though Delhi High Court lately has held that Competition Act, is a general Act and Patent Act is a special Act in relation to it.[17] Though, the both Acts have to be read in consonance, and if necessary Competition Act, should given preference over the Patent Act in terms of Licensing Agreements, as Competition Act, represents “Public Interest”, which has been reflected in some instances, in Patent Act. FRAND Licensing is a softer version of the Compulsory Licensing, as it has all features of it, but lacks a legal backing. It is like mediation process in the era of litigation in court, which helps parties to decide terms on Fair, Reasonable and Non-Discriminatory terms. It is better this way as the prospective Licensee does not have to resort to the Controller unnecessarily and, he can approach to the SSO. A law should be brought in by the Legislature in India, which considers such situations.

Overall, there needs to be a co-ordination between, the statutory authorities especially between, Controller of Patents and Competition Commission of India, so that they could work towards the promotion of the “Public Interest” hence, implement the main objective of the Legislations and the Constitution of India.

[1] Micromax Informatics Limited v. Telefonaktiebolaget LM Ericsson (Publ), [2013] CCI 77.

[2] Telefonaktiebolaget LM Ericsson (Publ) v. Mercury Electronics & Anr, (2014) 206 DLT 423.

[3] Telefonaktiebolaget LM Ericsson (Publ) v. Intex Technologies (India) Limited, 2015 SCC OnLine Del 8229.

[4] Telefonaktiebolaget LM Ericsson (Publ) v. M/s. Best IT World (India) Private Limited (Iball), 2015 SCC OnLine Del 11684

[5] Telefonaktiebolaget LM Ericsson (Publ) v. Lava International Ltd., 2016 SCC OnLine Del 1354

[6] Telefonaktiebolaget LM Ericsson (Publ) v. Xiaomi Technology & Ors., 2016 SCC OnLine Del 2404

[7] Micromax Informatics Limited v. Telefonaktiebolaget LM Ericsson (Publ), [2013] CCI 77.

[8] Intex Technologies (India) Limited v. Telefonaktiebolaget LM Ericsson (Publ.), [2014] CCI 10

[9] M/s Best it World (India) Private Limited (iBall) v. M/s Telefonaktiebolaget L.M Ericsson (Publ) & Anr., [2015] CCI 104

[10] Micromax Informatics Limited v. Telefonaktiebolaget LM Ericsson (Publ), [2013] CCI 77.

[11] Telefonaktiebolaget LM Ericsson (Publ) v. Mercury Electronics & Anr, (2014) 206 DLT 423.

[12] Micromax Informatics Limited v. Telefonaktiebolaget LM Ericsson (Publ), [2013] CCI 77.

[13] Telefonaktiebolaget LM Ericsson (Publ) v. Intex Technologies (India) Limited, 2015 SCC OnLine Del 8229.

[14] Micromax Informatics Limited v. Telefonaktiebolaget LM Ericsson (Publ), [2013] CCI 77.

[15] Rambus, Inc., No. 9302, at 4 (F.T.C Aug.2, 2006)

[16] Micromax Informatics Limited v. Telefonaktiebolaget LM Ericsson (Publ), [2013] CCI 77.

[17] Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India and Another, 2016 SCC OnLine Del 1951



ABOUT THE AUTHOR

dhruv-chandora

DHRUV CHANDORA

Dhruv Chandora is currently pursuing 4th year of BA LLB (Hons) course at Rajiv Gandhi National University of Law, Punjab. A voracious reader and a keen learner, Dhruv is also a moot court enthusiast.