Case BriefsHigh Courts

Kerala High Court: N. Nagresh, J., heard the instant petition wherein the petitioner had approached this Court seeking to set aside rejection letter and to direct the respondent-Asst. Registrar of Companies to process his application for incorporation of LLP without raising any dispute on the proposed name “Reef Wellness and Excellence LLP”.

The petitioner submitted that he had proposed to incorporate a Limited Liability Partnership (LLP) for doing business in Recreation and Wellness Centres, in the name and style “Reef Wellness and Excellence LLP”. Though, he had applied for reserving the proposed name and the name was reserved for the petitioner for three months, he could not make an application for registration of LLP within three months. However, the petitioner submitted an application for incorporation of LLP in the said name on 23-01-2020. Defects in the application were noted by the respondents in installments and the petitioner was made to file fresh applications time and again. However, in none of the mails, the respondent did point out that the proposed name of the LLP was not available. Furthermore, in mail pointing out certain defects, the respondents even stated that the proposed name can be given to the petitioner. Thereafter, the respondent pointed out only one defect relating to Subscribers Sheet.

However, in the end the respondent rejected the application stating that the proposed name of LLP could not be allowed as it is an existing trade mark.

It is evident that an LLP with identical or resembling name is not permitted in view of the regulations made in the Trade Marks Act, 1999. Section 28 of the Act grants an exclusive right to use a trade mark to a registered proprietor of a trade mark only in relation to the goods or services in respect of which the trade mark is registered. Noticeably, the word REEF is now included in the names of entities dealing in Class 05 goods in Fourth Schedule to Trade Marks Rules, 2002. The petitioner had proposed to deal in services and his activity may fall under Classes 44, 35 or 41 which was evident from communication of the respondents.

The Supreme Court had considered the issue of registering similar trade name by different entities for difference classes of products, in Nandhini Delux v. Karnataka Co-operative Milk Producers Federation Limited, AIR 2018 SC 3516, wherein it had held that as the products of the appellant and respondents fall in different classes, there is no question of confusion or deception in the matter of Trade Mark. The Supreme Court stated that,

If a trader or manufacturer actually trades in or manufactures only one or some of the articles coming under a broad classification and such trader or manufacturer has no bonafide intention to trade in or manufacture other goods or articles which also fall under the said broad classification, such trader or  manufacturer should not be permitted to enjoy monopoly in respect of all the articles which may come under the broad classification and by that process preclude the other traders or manufacturers from getting registration of separate and distinct goods which may also be grouped under the broad classification.”

The registration of word mark already granted by the respondents were “REEFLEC’, REEF”, “REEFIT FORTE”, “REEFER (HEMATANIC)” which were all for products falling under Class 05. While the petitioner sought the name “Reef Wellness and Excellence LLP”, not for any product but for a service, and that too which did not fall under Class 05.

Hence, the name proposed by the petitioner could not be said to be identical or deceptively similar. The respondents were not justified in rejecting the application of the petitioner for the reason that the proposed name include the work “REEF” which was existing trade mark under Class 05. Accordingly, the writ petition was allowed and the order of the respondent was set aside. The respondent was directed to incorporate the LLP without raising any dispute on the name proposed by the petitioner.

[Kunhi Muhammed Etayattil v. Registrar of Companies, WP(C). No.3057 of 2021, decided on 07-04-2021]


Kamini Sharma, Editorial Assistant has put this report together 

Appearance before the Court by:

For the Petitioner: Adv. M.P.Shameem Ahamed and Adv. Cyriac Tom

For the Respondents: Adv. P.Vijayakumar and Adv. P. R. Ajith Kumar

Op EdsOP. ED.

1. Intellectual Property Rights is an acronym that hardly needs to be expanded nowadays. Everyone, who matters in scientific circles, is talking about intellectual property rights, and the importance of protecting scientific discoveries, with commercial potential, in a tight maze of patents. Legitimacy of the global intellectual property right system is in question for its inability to generate symmetrical opportunities for traditional knowledge-holders vis-à-vis the inventors and innovators in the formal sector. The status accorded to traditional knowledge and folklore poses particularly profound moral, legal, social and political problems. Such knowledge is not limited to definable or articulate sets of knowable elements. Yet, inter-generational equities could be irreversibly impacted internationally depending on the way solutions to appropriate benefits are structured by vesting ownership or use rights in such knowledge because resource availability and resource use would both be impacted.

2. Liberalisation and globalisation have dramatically altered perceptions about science and its practice in India. The unabashed drive to patent and protect every conceivable scientific advance, no matter how incremental, has now reached a ridiculous level in the West. American and multinational companies, never known for moderation and thoughtfulness, when commercial interests are involved, have set out to fence vast areas of science under the guise of protecting intellectual property. Exponential growth of scientific knowledge, increasing demand for new forms of intellectual property protection as well as access to IP related information, increasing dominance of the new knowledge economy over the old ‘brick and mortar’ economy, complexities linked to IP in traditional knowledge, community knowledge and animate objects, will pose a challenge in setting the new 21st century IP agenda. In the context of trade and business, Trade Related Aspects of the Intellectual Property Rights (TRIPS) and the Convention on Bio-diversity (CBD), respectably, required the creation of new economic rights and obligations to complement the IPR system under World Intellectual Property Organisation (WIPO). Matters concerning traditional knowledge, hitherto pursued only in the form of cultural rights or heritage issues at the UN, UNESCO and WIPO are regarded relevant also for development rights for which the United Nations Conference on Trade and Development (UNCTAD) was created and economic rights for which earlier UN-ECOSOC and more recently, WTO have been mandated. Also, there are certain categories of traditional knowledge like traditional medicine which still are subserving the public health objectives under WHO’s Traditional Medicine Strategy for 2002-2005. Moreover, traditional knowledge is valued not because of antiquity but because more of it is transmitted orally, as part of knowledge necessary to sustain lives and livelihoods and it has an economic value which is variable.

HUMAN RIGHTS PROTECTION OF TRADITIONAL KNOWLEDGE

3. Two protective paradigms have been employed to protect traditional knowledge using intellectual property tools. The first protective paradigm seeks to prevent others from using or securing intellectual property rights over traditional knowledge. For example, some communities have created traditional knowledge databases to evidence their traditional knowledge as prior art in order to prevent perceived abuses such as biopiracy. Although traditional knowledge database may pre-empt some from securing rights over traditional knowledge, databases do disclose such traditional knowledge to the public. This becomes a problem since many communities would rather keep such traditional knowledge within their community. Many communities have their own traditional or customary laws that regulate the use of traditional knowledge that may differ substantially from their national system or the international system of intellectual property rights. Disclosure may violate these customs.

4. The second protective paradigm (often called “positive protection”) seeks to secure protective legal rights over traditional knowledge. This is achieved by either using the existing laws or using legislative means to enact new sui generis laws. Some have argued that some countries like the United States may face constitutional problems with granting perpetual rights to these communities. They also raise utilitarian concerns with granting legal rights to traditional knowledge. For instance, some forms of traditional knowledge (such as cures for disease) may be used to help others; and of exclusive rights were granted, some may go upheld. Other concerns deal with the equitable sharing of benefits and resources.

5. Indigenous and local communities have argued that they generally don’t use such incentives to innovate. Their use of knowledge is spiritually and culturally guided. Misappropriation and misuse of this knowledge may violate customary laws that are at the core of their collective and cultural identity. These beliefs are currently protected by a number of constitutional provisions and statutory laws, and are increasingly being recognised as a distinct human right within the United Nations.

Similarly, indigenous and local communities have argued that public claims in their knowledge without their consent amounts to a misappropriation of their identity and heritage, a violation of their fundamental, inalienable and collective human rights.

IPR AND TRADITIONAL MEDICINE

A. THE NEEM CASE

6. A controversy that can be tagged as a first for India and which rose doubts about strict patent system was the granting of patent to a company, namely, W.R. Grace. The company was granted a patent in the US and the European Union, for a formulation that held the active ingredient in the neem plant in the stable storage of azadirachtin, and the same was planned to be used for its pesticidal properties. It was admitted by the applicant regarding how the pesticidal uses of neem were known and he pointed out to the fact that storing azadirachtin for a longer duration is difficult without the use of neem. The US patent granted, covered a limited invention whereby the applicant was only given the exclusive right to use azadirachtin in the particular storage solution described in -the patent.

The grant of the said patent caused an uproar and it was challenged through re-examination and post-grant opposition proceedings before the United States Patent and Trade Mark Office (USPTO) and the European Patent Office (EPO), respectively. Though there was no success at the USPTO, the European Patent Office ruled in favour of the opposition stating the patent granted, lacked in novelty and inventive step.

B. THE ‘JEEVANI’ AND ‘KANI’ TRIBES

7. New experiments are beginning to emerge on benefit-sharing models for indigenous innovation. An example of India is worth sharing. It relates to a medicine which is developed from and based on active ingredients in a plant, Trichopus zeylanicus (Arogyapaacha), found in South-Western part of India. Scientists at the Tropical Botanic Garden and Research Institute (TBGRI) in Kerala learnt of the plant, which is claimed to bolster the immune system and provide the additional energy. The medicine is traditional knowledge used by Kani Tribe. These scientists isolated and tested the ingredient and incorporated it into a compound, which they christened ‘JEEVANI’, the giver of life. The tonic is being manufactured by a major Ayurvedic drug company in Kerala.

C. TURMERIC PATENT

8. Two US based Indians, Suman K. Das and Hari Har P. Cohly were granted a US Patent 5,40,504 on 28.03.1995 on use of turmeric in wound healing. The patent was assigned to University of Mississippi Medical Centre, USA. This patent claimed the administration of an effective amount of turmeric through local and oral route to enhance the wound healing process, a novel finding. Any patent, before it is granted, has to fulfil the basic requirements of novelty, non-obviousness and utility. Thus, if the claims have been covered by the relevant published art, then the patent becomes invalid. CSIR could locate 32 references (some of them being more than 100-year-old and in Sankrit, Urdu and Hindi), which showed that this finding was well-known in India prior to filing of this patent. The formal request for re-examination of the patent was filed by CSIR at USPTO on 28.10.1996. On 20.11.1997, the examiner rejected all the claims once again as being anticipated and obvious. The re-examination certificate was issued on this case on 21.04.1998 bringing the re-examination proceedings to a close.

PROTECTION AND PROMOTION OF TRADITIONAL KNOWLEDGE

A. RE-EXAMINATION OF US PATENT ON BASMATI

9. Rice Tec Inc. had applied for registration of a mark ‘TEXMATI’ before the UK Trademark Registry. It was successfully opposed by Agricultural and Processed Food Exports Authority (APEDA). One of the documents relied upon by Rice Tec as evidence in support of the registration of the said mark was the US Patent 5,663,484 (hereafter referred to as ‘484 patent’) granted by US Patent Office to Rice Tec on 02.09.1997 and this is how this patent became an issue for contest. The said patent covered 20 claims covering not only a novel rice plant but also various rice lines; resulting plants and grains, seed deposit claims, method for selecting a rice plant for breeding and propagation.

10. In the wake of this controversy, the Government of India set up a Task Force under the Chairmanship of Secretary, Ministry of Industrial Development, to examine the possibilities of filing a re-examination request against the above-mentioned US patent. The Task Force, in turn, set up a technical committee comprising primarily the ICAR and CSIR scientists to examine the patent specification in detail and to collect necessary documentary evidence that may be required to file the re-examination request against the US patent. Evidence from IARI Bulletin was used against Claims 1517. Eventually, a request for re-examination of this patent was filed on 28.04.2000. Soon after filing the re-examination request, Rice Tec chose to withdraw 15 claims and the threat of infringement by the export of Basmati grains to US has been averted. Now, with the surrender of all the other broad claims, even the alleged threat to the export of grains of insensitive rice lines from India has been averted.

B. RULINGS RELAVENT TO YOGA

11. In this regard, the applicant registered his copyright interest in the book regarding sequence of asanas with the Copyright Office, and then, in 2002 he filed a supplemental registration i.e. a correction filed when the original registration is incorrect or incomplete. According to the said supplemental registration, the applicant was not only claiming rights in the book itself but also on the sequence of 26 asanas taught in the book. An organisation called Open Source Yoga Unity, which, according to its website, is a non-profit collective to ensure the continued natural unfettered development of Yoga, challenged this supplemental registration and asked the US District Court for the Northern District of California to issue a declaratory judgment saying that the applicant could not have exclusive rights over the sequence of asanas as mentioned in the book. However, the said argument was rejected by the Court in 2005, stating that the sequence might be protectable as a compilation. Later, when a question was put to the Copyright Office for its opinion on the said matter, the agency in June 2012 issued its Policy Statement, which concluded that sequences of yoga asanas or any sequence of exercises or movements, excluding choreography, could not be protected as compilations, as they were not compilations of literary works, musical works, or any of the other kinds of works protected by the copyright law.

Within six months, the Policy Statement formed the basis of another court’s decision, when in December 2012, the US District Court for the Central District of California was faced with another dispute over Bikram Yoga. The dispute started when two yoga instructors in Buffalo, New York completed the certification course from the applicant and were authorised by his organisation to teach the basic Yoga system. They formed their own educational enterprise, Evolation Yoga LLC, and opened a series of yoga schools. The applicant sued Evolation Yoga LLCa lleging copyright infringement, however the court granted summary judgment for Evolation, stating that as a matter of law a sequence of yoga asanas cannot be copyrighted.

C. TRADITIONAL KNOWLEDGE DIGITAL LIBRARY

12. These cases were an eye opener and they triggered the Government of India to create Traditional Knowledge Digital Library (TKDL) and also to include traditional knowledge in the International Patent Clarification System. TKDL is an initiative by India to digitise and document knowledge available in the public domain to facilitate systematic arrangements, dissemination and retrieval of information. While granting patents, authorities check invention to prior art in public domain. Documentation of knowledge will help them trace invention in public domain and help them to know whether it is eligible for patents, thus preventing misappropriation of traditional knowledge.


* Advocate and qualified Chartered Accountant. Author is currently Senior Associate in the Dispute Resolution Practice at L&L Partners Law Offices, New Delhi. Author’s views are personal.

Hot Off The PressNews

The applicants of all Intellectual Property Rights (IPRs) can directly file a Special Leave Petition (SLP) before the Hon’ble Supreme Court against any order of Intellectual Property Appellate Board (IPAB). They can also prefer a writ petition before the High Court against orders of IPAB and IP offices by invoking Article 226 of the Constitution of India and then file SLP before the Supreme Court.

Ministry of Law & Justice only vets the amendments proposed by the concerned Ministry or Department. As provisions for filing SLP directly against orders of IPAB and also against writ petitions disposed of by High Court with respect to orders of IPAB and IP offices are in place and there is no proposal under consideration for such amendment by Department for Promotion of Industry and Internal Trade (DPIIT).

This information was given by the Minister of Commerce and Industry, Piyush Goyal, in a written reply in the Rajya Sabha today.

Foreign LegislationLegislation Updates

G.S.R. 581 (E).—In exercise of the powers conferred by sub-section (1) of Section 156 of the Customs Act, 1962 (52 of 1962), read with clauses (n) and (u) of sub-section (2) of Section 11 of the said Act, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following rules to amend the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, notified by the Government of India in the Ministry of Finance (Department of Revenue), Notification No. 47/2007-CUSTOMS (N.T.), dated the 8th May, 2007, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), vide number G.S.R. 331 (E), dated the 8th May, 2007, except as respects things done or omitted to be done before such amendment, namely:

1 (i) These rules may be called the Intellectual Property Rights (Imported Goods) Enforcement Amendment Rules, 2018.

(ii) They shall come into force on the date of their publication in the Official Gazette.

2. In the said rules,

(A) in Rule 2, –

(i) in clause (b), the words and figures “patent as defined in the Patents Act, 1970,” shall be omitted;

(ii) in clause (c), the words and figures “the Patents Act, 1970,” shall be omitted;

(B) in Rule 5, after condition (b), the following conditions shall be inserted, namely:

“(c) the right holder or his authorised representative shall inform the Commissioner of Customs at the time of giving notice about any amendment, cancellation, suspension, or revocation of the Intellectual Property Right by the authorities under the Intellectual Property Laws or any Court of Law or Appellate Board, subsequent to its registration with the authorities under the Intellectual Property Law and in case of any such amendment, cancellation, suspension or revocation of the Intellectual Property Right during the validity of the notice registered under Rule 4, the same shall be brought to the notice of the Commissioner of Customs by the right holder within a period of one month of the date of communication of any such amendment, cancellation, suspension or revocation of the Intellectual Property Right to the right holder or any person authorised by him in this regard;

(d) in the event of any amendment, cancellation, suspension or revocation of the Intellectual Property Right by the authorities under the Intellectual Property Law or by any Court of Law or Appellate Board, the Commissioner of Customs may accordingly amend, suspend or cancel the notice and the corresponding protection.”.

[F. No. 394/04/2018-Cus.(AS)]

Note: The Notification No. 47/2007-CUSTOMS (N.T.), dated the 8th May, 2007, was published in the Gazette of India, Extraordinary, vide number G.S.R. 33l (E), dated the 8th May, 2007.

Ministry of Finance

[Notification No. 56/2018 – Customs (N.T.)]

NewsTreaties/Conventions/International Agreements

The Union Cabinet has given its ex-post approval for the Memorandum of Understanding (MoU) between India and Canada. The MoU was signed on 23-02-2018 to establish bilateral cooperation activities in the field of Intellectual Property (IP) and is intended to promote innovation, creativity and economic growth in both countries.

The MoU establishes a broad and flexible framework through which both countries can exchange best practices and work together on training programs and technical exchanges to raise awareness on IPRs and better protect intellectual property rights (IPRs).

The priority initiatives under the MoU include

  1. Exchange of best practices, experiences and knowledge on how to raise IP awareness among the public, businesses and educational institutions of both countries;
  2. Exchange of experts for interacting with the human resources engaged in specialized IP fields;
  3. Exchange and dissemination of best practices, experiences and knowledge on IP with industry, Universities, research and development organizations and Small and Medium-Sized Enterprises (SMEs) through participation in programs, training, and events, organised singly or jointly by the participants;
  4. Cooperation in the development of automation arid implementation of modernization projects, new and existing documentation and information systems in IP and procedures for management of IP;
  5. Cooperation to understand how traditional knowledge is protected; and the exchange of best practices, including traditional knowledge related data bases and awareness raising of existing IP systems;
  6. Collaboration in IP related training for local IP and business communities, and
  7. Any other cooperation activities they  may  mutually decide upon within the scope of the MoU.

[Press Release no. 1526896, dt. 28-03-2018]

Cabinet

Op EdsOP. ED.

With globalisation and increasing competition, technological self-reliance has become a necessity. India has always believed in the middle path. It can be traced to the tendency in our cultural milieu to avoid extremes in any thought process. Intellectual property rights (IPR) management is no exception. However, while the law is evolving, the practices are changing even faster.  The companies which traditionally held our hands on technology and supplied us know-how (at a price), have started to see us as a competitor. As a result of which in the recent years there have been several cases filed by Indian companies against other Indian companies demonstrating increasing awareness among the inventors of their rights. At the same time the case for open source technologies has also become quite strong. It is not just in softwares that one ought to be concerned about open source technologies, but even in hard technologies, the Government can incentivise innovators to bring their technologies in public domain. One can hybridise both IP and open source system protection among corporations and other organised sector entities but freedom to copy, improve, and learn from each other at the community level. Open innovation contrasts with the traditional “closed innovation” model employed by the large vertically integrated firms which grew prominent during the twentieth century.[1]

The most closely linked intellectual property relating to the open innovation is patents, and that is where the column focuses on. Most patent jurisdictions in the world were designed keeping in mind the lone inventor who, through the marshaling of extraordinary insight and experimental toil, conceives a novel invention. As a reward, the inventor is given the right to profit from his contributions through personal commercial exploitation. Open innovation suggested that this model can no longer be successful because the growth of alternative models of technology development challenges the competitive advantage of integrated R&D.

Having established that intellectual property rights would often lock horns with the concept of open innovation, this column would like to explore how to manage one’s intellectual property in order to successfully implement an open innovation model.

What justifies an open innovation model?

Having established that the underlying philosophies of open innovation model and patent laws are polar opposites, it is safe to conclude that an open innovation model would be in conflict with existing patent laws. The question that needs to be asked is, what then, justifies the concept of open innovation model. Traditionally, patent doctrines look for a “flash of creative genius” in the invention as in Graham v. John Deere Co. of Kansas City Calmar Inc.[2] But it is largely accepted now that the process of innovation is not random. The creation of new ideas in the modern world often heavily relies on existing ideas and builds on them.

New technologies arose from the intersection of previously unconnected fields. Technology fusion describes the process whereby entirely new technologies, such as electro-mechanical manufacturing equipment, are spawned by the integration of different fields of art. New fields, such as biotechnology and nanotechnology, stem from the integration of existing disciplines.

There are an almost unlimited number of potential recombinations which an innovator may pursue. The process of finding and trying new technical inputs is often referred to as search. Search processes are often characterised as local and distant search. Local searches involve component with which the innovator is familiar. Distant search tap into unfamiliar fields.

An open innovation model need simplifies the distant searches for an innovator. This may help and tap into different solutions for the same problem developed by different entities and make a breakthrough innovation. Such innovations are beyond the abilities of any one firm to envision.

It is easy to see from the above that open innovation model is beneficial in many ways like maximising profit, avoiding unnecessary competition and, to innovate in the intersection of two different fileds of art.

Managing the open innovation model vis-à-vis patent laws

It is well established that traditional patent laws, offering monopoly rights to the innovator, discourage the very idea of open innovation. But the author would like to postulate that if the intellectual property of an innovator firm is managed in an intelligent manner, it would be helpful in developing innovation model, should they choose to do so. By systematically managing the open innovation and patent management processes a firm might optimise the benefits that are to be gained by these two seemingly conflicting systems.

Some of the world’s largest patent-holders (firms like Philips NV, IBM, and Microsoft) have embraced the open innovation model. As an example transformation of Microsoft’s IP strategy due to the increased demand for interoperability of their Linux and Windows systems has encouraged the move. And if we examine the patenting activities of Microsoft, we observe that it does not appear to have reduced its patenting activities in response to this strategic shift. Microsoft has maintained a constant patenting.[3]

Managing the open innovation process

The volatility and the conflict in the open innovation model make it difficult to manage especially in the light of patent laws. The facts that make management difficult are:

  • There are always multiple claim holders who have heterogeneous interests.
  • Open innovation requires openness in the communication and exchange which is not always forthcoming.
  • Joint ownership and management of intellectual property is complicated.

These demand formation of a governance structure that can decide how multiple claims be prioritised. The open innovation model requires an open exchange of communication, but at the same time an understanding of confidentiality. This becomes all the more important due to the sensitive nature acquired by patents with regard to the time and value. Such confidentiality can be achieved by either signing a formal non-disclosure agreement, or by informal means of community norms, trust and implicit corporate culture.

Managing the intellectual property

To foster the open innovation culture without letting go of the advantages brought by the patent laws, firms must be very intelligent in the management of their intellectual property.  This is not to suggest that one circumvent the patent laws but only that firms utilise it in such a way that it provides a harmonious environment for the open innovation model.[4]

First, in competitive field of technology, like pharmaceutical, the importance of earliest filing of a patent cannot be understood. Since patent rights are granted to the first person who files for it, the application must be made at the earliest. Firms wishing to foster an open innovation model must adapt to the existing patent laws. An application must be made at the earliest, even if it is just a provisional application. The pace of the application process must also not be relaxed. The goal is to get the patent granted as fast as possible.[5]

Second, if possible, the patent application should be filed before collaborating with the partner. This helps with the issue of non-confidentiality encountered while entering into an agreement with a partner. Therefore, this issue may be simply solved by filing a provisional application before making a partnership. Although the applicant must make sure, even with a provisional application, that it meets the legal standards set by the rules. This is so because mere filing of a patent application does not guarantee the grant of patent, it must satisfy all the requirements of law. Although it is better to file a complete specification from the very start, the author realises it may not be financially, economically and realistically feasible.[6]

Third, it is very important to refrain from making any public disclosures about the invention at least till the provisional specification has been filed. The need for secrecy in a competitive market must be stressed upon. The firms involved in the transfer of technology should try to avoid publishing any material by themselves, as it would adversely affect their later claims to joint ownership.[7]

Fourth, third party technology-based solutions with staged disclosure can perhaps ease the tension that arises from receiving ideas that are not yet patented or subject of patent application.

Conclusion

Innovation as a process has increasingly become dependent on many factors including external technologies. It has become so saturated that groundbreaking innovations are becoming more prominent in the intersection of two or more technologies rather than in the realm of one. This has led to the increasing need for firms to collaborate among themselves to continue to increase their innovative output. But at the same time the concept of sharing technologies is directly in contrast with the intellectual property regime built in most jurisdictions.

But we can conclude that with proper management of open innovation model and of the intellectual property, a harmonious environment, where both can survive, can be made. This can be achieved by adopting better mechanisms for technology transfer and by adopting proper licensing practices.

Also, it is imperative to speed up the patent application filing process to supplement the open innovation made adequately. Some problems faced by the open innovation model can be directly solved by optimally utilising the patent law. The two systems, though prima facie at loggerheads with each other, are actually beneficial to each other. Open innovation fosters radical innovation and the intellectual property regime helps to design a better open innovation model. Therefore, the two systems share a symbiotic relationship. They aid in each other’s growth, provided that both are managed in an intelligent manner.

*Vaishali Singh is Research Associate, GNLU-Microsoft IPR Chair, Gujarat National Law University.

[1]  Chesbrough, Henry W. (2003), Open Innovation: The New Imperative for Creating and Profiting from Technology, Boston: Harvard Business School Press.

[2]   1966 SCC OnLine US SC 19 : 15 LEd 2d 545 : 383 US 1 (1966).

[3]   Phelps, Marshall and David Kline (2009), Burning the Ships: Intellectual Property and the Transformation of Microsoft.

[4] The Open Innovation Model, © International Chamber of Commerce (ICC), 2014: <www.iccwbo.org/Innovation-and-intellectual-property>.

[5]    Ibid.

[6]    Ibid.

[7]    Ibid.

Case BriefsHigh Courts

Madras High Court: While relying upon the Supreme Court decision in Midas Hygiene Industries (P) Ltd. v. Sudhir Bhatia, (2004) 3 SCC 90, the Single Bench of K. Kalyanasundaram, J. has observed that an injunction would normally follow in the cases of infringement of  intellectual property rights, especially when the dishonesty qua the defendants was apparent, and a mere delay would not be a ground to deny an order of interim injunction in such cases.

The plaintiffs submitted that the defendants had deliberately copied their registered bottle design, and thereby had caused design infringement and passed off their bottles as that of the plaintiffs. The defendants contended that there was no novelty in the design of the plaintiffs since the curves on the bottles and the vertical projection on the caps were functional features, and similar designs were in public domain even prior to the plaintiffs’ design registration, hence, the design registration was invalid. The defendants also submitted that they had been selling the alleged infringing products from past five years to the knowledge of the plaintiffs, therefore, as per Section 41(g) of the Specific Relief Act, the plaintiffs had acquiesced their right.

The High Court noted that it was an admitted fact that the plaintiffs’ design was registered in 2008, whereas the defendants launched the impugned design only in 2011. Moreover, it was not the case of the defendants that they were prior user of the design. The defendants had also not produced any material to substantiate their submissions that the designs of the plaintiffs were not new and the similar bottled designs had been used previously. Also, since the defendants themselves claimed to be the registered proprietor of similar designs, hence, they could not be permitted to approbate and reprobate as to the registrability of the bottle design. The Court also noted that the utility of the grip of a bottle, or the feature to facilitate the opening of the cap, could also be attained by other design options, therefore, such features could not be considered as “essentially functional”. The Court, thus, concluded that the design of the plaintiffs had been copied and adopted by the defendants, and the plaintiffs had made out a strong prima facie case for the grant of interim injunction. [Dart Industries Inc v. Cello Plastotech, 2017 SCC OnLine Mad 1851, decided on 12.05.2017]

Case BriefsHigh Courts

Delhi High Court: In a case regarding Intellectual Property Rights, the plaintiffs-manufacturer of water purifiers sought protection by obtaining design registrations under the Designs Act, 2000 in respect of the aesthetic appearance of its water purifier systems stated that products covered by the plaintiffs registered designs are being marketed and sold by the defendant through e-commerce platform-Ebay constituting piracy under the Designs Act, 2000 and alleged that Ebay’s action of permitting the defendant to advertise, offer for sale and sell its products too amounts to infringement of the plaintiffs rights under Section 19 of the Designs Act.

The plaintiffs sought relief against Ebay to take down, remove, delist all products infringing the registered designs of the plaintiffs and issue of prohibitory injunction to from allowing products infringing the registered designs of the plaintiffs being offered for sale and sold from their portal. Plaintiffs contended that Ebay being an intermediary had a duty to do due diligence in order to ensure that before posting any information on its computer resources, it is important to satisfy itself that the same does not infringe the intellectual property rights of any person.

Ebay averred referring to Section 79 of the IT Act, 2000 which states that an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him. The Court accepted this contention observing that asking the intermediary e-commerce websites to screen the products they advertise for infringement of IPR would amount to an unreasonable interference with the rights of the intermediary to carry on its business.

The Court held that the intention of the Legislature has been to require the intermediaries to be vigilant and to only declare to all its users its policy and advise them not to host any infringing information on the website of the intermediary and to on receipt of complaint remove the same within 36 hours whereas no requirement of keeping a check upon the nature of products being advertised has been posed by the Legislature and did not pass any such directions to ebay as sought by the plaintiffs. [Kent RO Sytems v. Amit Kotak, 2017 SCC OnLine Del 7201, decided on 18.01.2017]

Case BriefsHigh Courts

Delhi High Court:  Dealing with the question of situs or location of intellectual property rights  in logos, trade marks and brands with reference to the income accruing in India from intangible assets, the Court held that income accruing from the transfer of intangible assets like intellectual property whose owners were not based in India cannot be taxed in India.

The issue related to the transfer of 16 trade marks and Foster’s brand intellectual property of the petitioner, Foster’s Australia Ltd. to SABMiller executed in Australia. By a brand licence agreement executed earlier, Foster’s India Ltd. had been permitted to use 4 trade marks in India. The licensed trade marks continued to remain the absolute property of the petitioner who received royalty and was subjected to withholding tax in India. The petitioner sought an advance ruling from the Authority for Advance Ruling (Income Tax) under Section 245-Q of the Income Tax Act regarding the issue of taxability in India having regard to the provisions of the Income Tax Act, 1961 and the Double Taxation Avoidance Agreement between India and Australia.

The AAR ruled that the income accruing to the applicant from the transfer of its right, title and interest in and to the trade marks and Foster’s brand intellectual property is taxable in India under the Income Tax Act, 1961 on the ground that the subject-matter of assignment/transfer were situate in India.

The petitioner’s plea was that in the case of intangible capital assets the situs thereof has to be determined by the situs of the owner. Because of the nature of an intangible capital asset, the common law principle ‘mobilia sequuntur personam’ had been evolved, whereby a fiction is created to the effect that the situs of an intangible capital asset would be the situs of the owner of that asset. In this backdrop, since the owner of the intangible assets in question was located in Australia, the petitioner, being an Australian company, the intangible assets, which include the intellectual property rights of the petitioner, were also located in Australia. Therefore, the transfer of those assets would not result in any income deemed to have accrued in India and would not be exigible to tax in India. The AAR was of the view that since the intellectual property rights pertain to India, as they were used and nurtured in India and some of them were registered in India, the same had taken roots in India and therefore, were completely situate in India.

Upholding the petitioner’s contention, the Division Bench of Badar Durrez Ahmed and Sanjeev Sachdeva, JJ. observed that in the absence of a specific provision regarding intangible assets, the well-accepted principle of ‘mobilia sequuntur personam’ would have to be followed. The situs of the owner of an intangible asset would be the closest  approximation of the situs of an  intangible asset. This is an internationally accepted rule, unless it is altered by local legislation. Since there is no such alteration in the Indian context, the situs of the trademarks and intellectual property rights, which were assigned pursuant to the ISPA, would not be in India. This is so because the owner thereof was not located in India at the time of the transaction.The Court held that the income accruing to the petitioner from the transfer of its right, title or interest in and to the trademarks in Foster’s brand intellectual property is not taxable in India. [CUB Pty Ltd. (formerly known as Foster’s Australia Ltd.)  v.  Union of India, 2016 SCC OnLine Del 4070, decided on July 25, 2016]