Bowman v. Monsanto: The US Supreme Court Rules on Patent Exhaustion

Three days ago, the United States Supreme Court delivered the much awaited judgment in Bowman v. Monsanto Co. The court held that the patent-exhaustion doctrine which limits the extent to which patent holders can control an individual article of a patented product after an authorized sale, does not extend to permitting a farmer to reproduce seeds protected by a patent, without the patentee’s permission.

The Supreme Court, upholding the decision of the Federal Circuit, ruled in favour of Monsanto by rejecting Bowman’s argument that the exhaustion doctrine and the “self-replicating” nature of seeds makes such reproduction through planting and harvesting legal.

Limiting its scope, the court held that the doctrine only restricts the patentee’s rights with respect to the “particular article sold” and does not affect the patentee’s right to prevent a buyer from making new copies of the patented seeds. This reasoning effectively nullifies the fact that Bowman’s initial purchase of the patented seeds from a grain elevator was an authorised one, making Bowman guilty of infringement for having engaged in the practice of planting, watering and harvesting the Roundup Ready seeds.

If the court were to hold otherwise, it would only be going against its own judgment in the J. E. M. Ag Supply Inc. v Pioneer Hi-Bred Int’l Inc. case. In this case, the court looked at the Plant Variety Protection Act together with the Patents Act and held that the two statutes establish different but non-conflicting schemes and since the requirements under the latter are more stringent, protections under it are bound to be greater.  

In my opinion, the judgment upholds the true spirit of the doctrine as in this situation, the patentee has received a reward only for the particular article sold and not for its subsequent recreations. If a farmer is indeed allowed to buy seeds and replicate them in his farm, it would lead to what in the court’s view is “a mismatch between invention and reward”.  Through this interpretation of the first sale doctrine, one the one hand, farmers benefit through the consumption of the product by planting and harvesting the seed while on the other, the patentee benefits by solely holding the right of reproduction, through which his innovation stands to be rewarded.

Drawing a parallel with the first sale doctrine in the case of books as recently decided by the US Supreme Court and discussed here, the first sale doctrine only allows you to sell the books that have already been published and sold. It does not allow you to make copies of the book and sell them, which if done would be a clear case of infringement.

The court’s act of balancing invention and reward is a welcome one which perhaps ought to be done more frequently by Indian courts as well and not just in patent cases. The same needs to be examined in any case involving intellectual property. When the balance tilts excessively in favour of either, the option is to either increase the amount of protection given or contain abuse of monopoly. In this sense, too, I feel the judgment is a welcome one.

Full Bench Opinion of the Delhi High Court on Designs and Passing Off

On May 15, 2013, the Full Bench of the Delhi High Court delivered its 47-page majority opinion and 94-page minority opinion on three questions referred to it concerning the Designs Act, 2000 and passing off. Following were the questions referred to the full Bench:

(1) Whether the suit for infringement of registered design is maintainable against the another registered proprietor of the design under the Designs Act, 2000;

(2) Whether there can be availability of remedy of passing off in the absence of express saving or preservation of common law of Designs Act, 2000 and more so when the rights and remedies under the Act are statutory in nature; and

(3) Whether the conception of passing off as available under the trademarks can be joined with the action under the Designs Act when the same are mutually inconsistent with that of remedy under the Designs Act.

Following are the conclusions of the majority opinion delivered by Justice Rajiv Shakdher in Paras 34 and 35 

34. On various issues raised we may crystallize our opinion as follows:

(i) A plaintiff could institute a suit for infringement of a design against a defendant, who was also a holder of a registered design. The expression "any person" found in Section 22 of the Designs Act would not exclude a subsequent registrant as, according to us, no such words of limitation are found in said Section.

(ii) The plaintiff would be entitled to institute an action of passing off in respect of a design used by him as a trade mark provided the action contains the necessary ingredients to maintain such a proceeding. The argument that such a suit could be instituted only after the expiry of the statutory period provided under Section 11 of the Designs Act, does not find favour with us. This is for the reason that in a given fact situation the plaintiff may have commenced the use of the design as a trademark after its registration. While Section 2(d) of the Designs Act excludes from the definition of a design, any trademark which is defined as such in clause (v) of sub-Section (1) of Section 2 of the 1958 Act or property mark, as defined in Section 479 of the IPC, or any artistic work as defined in clause (c) of Section 2 of the Copyright Act -the use of the design as a trademark post its registration, is not stipulated as a ground for cancellation under Section 19 of the Designs Act.

(ii) (a) In this context we must note the argument of Ms Singh, learned amicus, that passing off action may perhaps be maintainable provided the mark has attained secondary meaning. In our opinion, the issue before us is limited to whether a remedy by way of passing off action would be available qua a registered design used as a trademark by the plaintiff - we are not inclined to comment on the quality of evidence which may be required, if at all, to be produced by the plaintiff to prove whether the mark has acquired the necessary secondary distinctive meaning, for him to secure success, in the action instituted in that behalf.

(iii) We are also of the view that a composite suit for infringement of a registered design and a passing off action would not lie. The Court could, however, try the suits together, if the two suits are filed in close proximity and/or it is of the view that there are aspects which are common to the two suits. The discretion of the court in this matter would necessarily be paramount.

36. Accordingly, our answers to the three issues are as follows:

ISSUE No.I: A holder of a registered design could institute a suit against a defendant who is also in possession of a registered design

ISSUE No.II: A holder of a registered design can institute an action for passing off.

ISSUE No.III: The two actions cannot be combined in one suit

Following are the conclusions of Justice Manmohan Singh in Para 134 of his minority opinion:

a) A suit by the registered proprietor of Design for infringement of the registered design is not maintainable against another registered proprietor under the Designs Act, 2000 in so far as the registration covers the same features of the shape and configuration of the same article under the Design.

b) The remedy of passing off in so far as it relates to claim of protection for shape of articles is not available for the purposes of enforcement of rights and remedies under the Design Act. The said remedy is clearly absent under the Designs Act considering the avowed objective of the Act of 2000 which is to provide limited protection with no unnecessary extension.

c) The remedy of passing off in so far as it relates to claim of protection for shape of articles cannot be joined with the suit for infringement of the registered Design. The said remedy of passing off is available in alternative to the statutory protection conferred by the Design Right. For the purposes of the same, the suitor has to elect between the two inconsistent rights and remedies having distinct objects and policies.

Following were the additional opinions expressed by Justice Singh:

a) Notwithstanding the above said conclusion in (b) and (c), the remedy of passing off would continue to be available along with the infringement of registered designs and can be joined with the same in order to prevent consumer confusion which may be caused by the use of trade mark, get up, trade dress or in any other manner excepting the shape of the goods which is or was forming the subject matter of the registration of the Design.

b) The remedy of the passing off in so far as the shape of the article is concerned shall also be available even during currency of the design monopoly or even after the expiry of same to the extent that the claim of the feature of the shape is not covered within the novelty claim under the Design monopoly rights and the said claim of the protection qualifies all the necessary ingredients of the Trade Mark.

c) A remedy of passing off in so far as the shape of the article is concerned shall not be available even after the expiry of the Design to the extent the said feature of the shape of the article is covered within the novelty claim as made under the Design Right as after expiration of the Design, the novel shape claimed under the Design Act goes in public domain.

We will shortly undertake an analysis of the opinion. I thank Ms.Sneha Jain for sharing the decision with me.

Need for a Strategic and Comprehensive Approach to Healthcare

On the 13^th of last month, a timely day-long panel discussion was conducted by NLU Delhi on the Novartis decision of the Supreme Court. Among the participants, the ones whose presentations I found particularly insightful were that of Adarsh Ramanujan of Lakshmikumaran and Sridharan, Dr.K.M.Gopakumar of Third World Network, Mr.Mark Heywood, Founder of Treatment Action Campaign (South Africa), Dr.Gopakumar G.Nair of Gopakumar Nair and Associates, and Mr.P.H.Kurian, former Controller General of Patents, Designs and Trademarks.

In the post-lunch session chaired by Mr.C.H.Unni, Deputy Chief of Bureau, Mint, I had the opportunity to present some of my views which went beyond the decision. This post captures some of those views.

With pharma patent litigation having taken centre stage, the one thing that we need to be wary of is the temptation to expect the patent system to solve all our healthcare challenges, including that of affordable access to medicines. This temptation becomes a necessity all the more in the absence of a clear-cut healthcare strategy, since the Government would want to be seen as doing something, and patent busting is probably the most public way that the government can probably think of to achieve that object, given the (un)popular perception of patents and innovator drug companies.

Patents are without a doubt relevant to the debate, and patents which add no value must definitely be weeded out. But the question is, apart from pitting innovator drug companies against generics and deriving a vicarious pleasure out of this slugfest, have we truly explored all plausible and available options under and outside the Patents Act, 1970?

For instance, if the Government is truly keen on weeding out frivolous patent applications or patents, it ought to have actively explored the pre and post-grant opposition mechanisms, besides revocation by filing oppositions and revocations. After all, the definition of “person” under the Act includes the government, so what has stopped the Ministry of Health from filing oppositions to frivolous patent applications?

Also, what has the stopped the Government from stocking adequate quantities of patented drugs in hospitals and dispensaries owned by the Government, thereby giving effect to Section 47(4) of the Act? Wouldn’t this help increase affordable access to drugs?

Apart from patent-related issues, one of the issues central to the discourse is elevating the quality of research undertaken by Indian pharma companies and providing impetus to the growth of home-grown entities in related areas such as clinical trials. Instead of investing efforts in this direction, the Government has in fact contributed to the potential decline of Indian clinical trial industry by implementing feckless provisions such as the new Rule 122DAB of the Drugs and Cosmetics Rules, 1945, which states that failure of an investigational product to provide the intended therapeutic effect shall be considered as having caused a clinical trial-related injury or death!

As argued in an earlier post, if the very purpose of the trial is to evaluate the drug, what sense does it make to hold the sponsor of a trial or the Clinical Trial Organization responsible for failure of the drug to provide the intended therapeutic effect?

Unfortunately, instead of addressing issues like these, the discourse seems to be focussing entirely on the system of patents. It would help to first formulate our healthcare goals in specific terms, and then explore options under multiple legislations, instead of putting all our eggs in the patent basket.

New Technology, New Law? - First Sale in the Digital Context

I recently blogged here on the boost given to the first sale doctrine by the decision of the US Supreme Court allowing parallel imports of books by rejecting a leading publisher’s contention that a book sold by it abroad could not legally be resold in the US.

While the doctrine may seem rather easy to apply in the case of material goods such as books, its applicability in the digital context is certainly tricky territory. The US District Court for the Southern District of New York in Capital Records v. ReDigi Inc was most recently faced with the issue and went on to hold  that the first sale doctrine is limited to material items.

When a book is purchased, the ownership of the copy of the book so purchased vests in the buyer. The first sale doctrine in this case means that the buyer who is now the owner of such a ‘lawfully made’ copy may sell or otherwise dispose of that particular copy in any manner that she wishes.

On the other hand, in the digital context, possession of a copyright protected work or a ‘lawfully made’ copy does not entail ownership of such work. To illustrate, if you buy a copy of The Godfather at a book store, you own the copy by virtue of such lawful possession and you are free to sell it or rent it or even throw it away. However, if you buy a song on itunes, you are only a licensee of the song and have no ownership rights on the song whatsoever. The owners of the original material are only providing you with a license to use such material. To put it simply, if it is digital, you don’t own it.

While it is true that the internet has enabled greater dissemination of copyrighted works across the globe, it has also led to widespread use and dissemination by non-owners without compensation to copyright owners. The dilemma is this- whether to give copyright owners the power to control all copies of their work in the digital sphere OR allow the operation of the first sale doctrine in the digital context and aim to regulate it through technology, by destroying/preventing making of copies.

ReDigi Inc, for instance, devised a system where users could buy or sell downloaded digital music. What was unique is that it allowed only those music files that were legally acquired from itunes to be uploaded using its service. Additionally, the system removed the uploaded file from the hard drive at the time of uploading thus ensuring that sharing and storing on a computer do not occur simultaneously.

Even as one hopes that India will take cue from the US and recognises the first sale doctrine in at least material goods such as books, the struggle faced by Indian courts in its application in the analogue context makes one wonder. There is bound to be a great level of difficulty which judges may face in making decisions where digital content is involved, using laws that were not even devised to be made applicable to such mediums.  

Apart from the much needed change in the law on its applicability to material goods, one also hopes that India undertakes a comprehensive review of its copyright law to fit the needs of an age where digital networks are dominant means of distributing copyrighted works.

Merck’s Appeal Transferred to Justice Ravindra Bhat, Will Hear on Interim Injunction, Notice Issued to Glenmark

I had reported two days ago that Merck had preferred an appeal against refusal by the Single Judge to grant interim injunction against Glenmark for alleged infringement of Merck’s patented drug Sitagliptin. I have been informed by a dear friend and a well-wisher of the blog, Ms.Sneha Jain, that the appeal which was listed before Justice Sanjay Kishan Kaul has been transferred to the Division Bench presided by Justice Ravindra Bhat.

Today when the appeal was listed before Justice Bhat, he appeared to take the view that the order passed by the Learned Single Judge was prima facie unsustainable because Merck could not have been expected to foresee the defenses of Glenmark and factor them in its Plaint. Justice Bhat has decided to hear the matter on merits on the issue of grant of interim injunction. Accordingly, notice has been issued to Glenmark directing it to file its reply to Merck’s application for interim injunction (under Order 39, Rules 1 and 2 of the CPC).

We will keep our readers posted on the developments in the matter.

Non-Science Grads as Patent Agents and the Patent Agent Examination

In my last post, I had briefly discussed the Madras High Court’s decision striking down the amendment to Section 126 of the Patents Act as unconstitutional. According to the Court, the requirement of a science/engg. degree to appear for the patent agent exam is “unreasonable and irrational”.

The Court’s argument was essentially this: Non-science grads are in no way inferior to science grads when it comes to performing the duties of a patent agent. Therefore, non-science grads too must be allowed to appear for the patent agent examination.

After the last post, friends, law students and a few readers wanted me to state my views on the issue. Before I do so, a statement of fact is necessary- I failed to clear the patent agent examination. The reason I have to state this is that may be for some, this information is necessary in order for them to decide if my thoughts on the issue are worth reading.

Now, moving to the issue at hand, I have articulated my views on this issue to a limited extent elsewhere. But maybe it is time to reconsider previously held positions.

Although my core competence is litigation, with patent litigation being one of my strong areas, I have put considerable effort in understanding patent drafting and prosecution to lend more value and conviction to my practice as a litigator. This effort has only strengthened my rather non-novel and obvious belief that although litigation and patent prosecution are two very different animals and therefore comparisons/generalizations may not be entirely justified, a patent drafter/prosecutor’s work requires greater technical depth, diligence and foresight. After all, the patent document must withstand challenges and also be capable of effective enforcement.

In that sense, the drafter is figuratively building in the shield and the sword in the same document. Therefore, to me, he is the most valuable link in the patent value chain, after the inventor of course.

The drafter needs to understand the inventor’s point of view, and apply his mind to deliver optimum value to the client within the bounds of the law. This calls for an ability to grasp the nuances of the invention, and the subtleties of the law as well. Therefore, ideally it would help if the drafter is a lawyer too- this, according to me, would be the ideal package.

The next best option would be for the drafter to have access to a lawyer who can act as an intelligent sounding board.

But the question is, can we have drafters who are non-science grads, but who have cleared the patent agent examination? Is clearing the patent agent examination sufficient proof of the candidate’s technical skills to the extent that the requirement of a science/engg. degree is altogether done away with?

There could be two ways of going about the issue- either taking the call that a science degree is a must to guarantee a minimum level of expertise, or leaving it for the market to decide the quality and worth of a drafter regardless of his educational qualifications.

There is no doubt that there are a few outstanding patent drafters in India (who I personally have had the privilege of working with) who do not have a science/engg. degree and who could probably give the science/engg grads a run for their money thanks to the sheer number of hours they have put in, besides their innate ability to digest anything under the sun. 

That said, when we discuss the way forward, it is important to address the norm with greater clarity and purpose than the exception. Consequently, I think for an evolving patent regime like India, quality control is important, particularly if we are interested in creating a reliable ecosystem for patent drafting, where work is farmed out to Indians for our quality first and cost-effectiveness second.

Clearing the patent agent exam may at best vouch (and that too not always) for a minimum level of knowledge of the Act and Rules, and the established norms of drafting. But clearing the exam is certainly no metric or index by which to assess the technical skills of an individual. Therefore, I do believe that a science/engg degree must be a condition precedent to appear for the patent agent examination.

One of the suggestions made by a friend was that science/engg graduates, who have a law degree as well, must be exempt from writing the patent agent exam, and must be allowed to register directly as patent agents. Although this was the position between 2002 and 2005, I don’t think such an exemption was and would be justified because having science and law degrees does not necessarily translate to knowing the basics of patent drafting or being familiar with the minutiae of the Act and Rules. If the counter to this is that clearing the exam too is no guarantee of the same, then by that logic no exam is a guarantee of future potential, and therefore non-science non-lawyers too must be permitted to register as patent agents directly.

Simply put, my point is if the exam is here to stay, then it must apply equally to lawyers with a science background, and non-lawyers with a science background.

If the exam is sought to be done away with altogether, I think that would be catastrophic because the exam does serve the object of quality control, albeit to a limited extent. The only way to ensure that the exam selects a better pool of agents is to restructure the exam, and not to consign it to the wheelie bin altogether.

I had written on this issue in an earlier post drawing lessons from the Singaporean model. In that post, I had said thus:

“To qualify in the examination, particularly the drafting part, one requires practice. I don’t think I am the first person to say that the art of patent drafting cannot be divinely acquired at the time of the examination; it needs consistent practice.

This being so, wouldn’t it help to have a mandatory provision in the law where a candidate who applies for the patent agent examination must have worked under a registered patent agent for at least a year or so?

This proposal isn’t new or radical; the Singaporean Patent law already envisages this. Rule 6 of the Patents (Patent Agents) Rules 2001 spells out the entitlements for registration as patent agent in Singapore. The said provision reads as follows:

6.  Subject to rules 7 and 8, an individual is entitled to be registered as a patent agent if he —

(a)  is resident in Singapore;

(b)  holds a university degree or equivalent qualification approved by the Registrar;

(c)  has passed the course specified in Part I of the Third Schedule;

(d)  has passed the examination specified in Part II of the Third Schedule; and

 (e)  has completed internship in patent agency work under the supervision of a registered patent agent, or an individual registered as a patent agent or its equivalent in a country or territory, or by a patent office, specified in the Fourth Schedule, for —

(i)  a continuous period of at least 12 months; or

(ii)  a total period of at least 12 months within a continuous period of 24 months.

The course referred to in clause (c) is the Graduate Certificate in Intellectual Property Law course conducted by the Faculty of Law, National University of Singapore. The examination referred to in clause (d) is the Patent Agents Qualifying Examinations conducted by the Registrar comprising 4 Papers. Clause (e) requires at least 12 months of continuous internship under a registered patent agent....

..........That said, what we could certainly take a leaf out of is the requirement of an internship. This way, we would know that a registered patent agent is not raw, but is at least semi-finished to handle patent applications and to advice clients with some degree of confidence, which is borne out of experience.

The other point to be noted is that there is no provision for a Viva Voce. The examination basically has 4 papers, the first relates to specification drafting, the second to amendment of a specification, the third relates to claim construction to determine validity and infringement and the fourth relates to knowledge of patent law and practice in Singapore.

Even the European Patent Office does not envisage a viva voce in the European Qualifying Examination. Of course, the exam is held over a marathon duration of 20.5 hours, which I think is a fairly rigorous way of filtering candidates!

Viva voce may or may not be an important issue, but the larger point in the big picture is that the quality of candidates who qualify for practice must not be sub-par.

Ultimately, patent jurisprudence is applied every time a claim or a specification is drafted, therefore it is imperative to ensure quality at the most fundamental level before we start asking for specialized IP benches.”

Comments and Corrections are welcome!

Breaking News: Merck Appeals Against Denial of Interim Injunction

I have been informed that Merck has appealed against the order denying interim injunction against Glenmark's drug "Zita", which allegedly infringes Merck's patented drug Sitagliptin (IN209816). The appeal, F.A.O.(O.S.) 190/2013, was listed before a Division Bench of the Delhi High Court presided by Justice Sanjay Kishan Kaul. We will keep our readers informed of the developments in the appeal.