Sunday, August 28, 2011

Domestic Courts and "Foreign" Infringement: What is the Law?- II

In the previous post, Mihir Naniwadekar had examined the background to the Mocambique rule, and he now analyses the decision of the UK Supreme Court where issues pertaining to the applicability of the rule to intellectual property arose.

By framing the issue thus, counsel was able to steer the Court away from concerns over the act of state doctrine, and concerns over comity. Indeed, in the facts, this narrow proposition would also be sufficient for the appellants, for on the facts (as emerging from Mann J’s judgment at first instance), the substantial dispute has always been about the ownership of the relevant copyrights and their infringement rather than about their subsistence.

[The detailed facts are interesting in their own right, especially for Star Wars fans, but for the purposes of our present discussion an elaboration of the facts would serve no purpose other than lengthening an already long post. The interested reader should refer to the judgment of Mann J. at first instance, which is reported in (2008) EWHC 1878 (Ch)]

The Supreme Court rejects this argument in an illuminating passage quoted below (from the combined judgment of Lord Walker and Lord Collins):

The basis for what remains of the rule was said by the House of Lords in the Moçambique case to be that controversies should be decided in the country of the situs of the property because the right of granting it was vested in ‘the ruler of the country’ and in the Hesperides case to be the maintenance of comity and the avoidance of conflict with foreign jurisdictions. It is possible to see how the rationale of the Mocambique rule can be applied to patents, at any rate where questions of validity are involved.

For example the claims might touch on the validity of patents in sensitive areas, such as armaments, and that no doubt is part of the rationale for article 22(4) of the Brussels I Regulation. But it is very difficult to see how it could apply to copyright. It is true that copyright can involve delicate political issues.

Thus in a very different context Brightman J had to deal with the international consequences for copyright protection of the samizdat circulation in the Soviet Union of Solzhenitsyn's August 1914 without having been passed by the Soviet censor: Bodley Head Ltd v Flegon [1972] 1 WLR 680.

The requirement to apply for copyright registration in the United States is limited to the "copyright in any United States work" which in practice means that published works first published outside the United States are exempted from compliance with US registration provisions.

In the present case the copyrights were treated as United States works and were registered. Registration is a pre-requisite to proceedings in the United States: United States Copyright Act, section 411. But the unchallenged evidence before the judge in this case was that registration was not a prerequisite to subsistence but only to suit, and it was possible to register at the time of suit. Consequently the provision is purely procedure…

The Court thus held that Tyburn was wrongly decided and that in personam jurisdiction could be sufficient to bring an action for infringement of a foreign copyright. The case also highlights the conceptual problems with applying real property based reasoning to intellectual property, and further indicates that the differences between the type of intellectual property in question require nuanced consideration.

Insofar as infringers are concerned, beware: in some cases, the long arm of the law is so long that it can extend to overseas infringement also!

Wednesday, August 17, 2011

Stale News: Supreme Court Rules on Rule 138 of Patent Rules

This April, I had blogged on a Special Leave Petition filed before the Supreme Court, which related to the power of the Controller under Rule 138 of the Patent Rules to permit extension of time in filing evidence in reply by an opponent in a post-grant opposition.

The issue central to the Special Leave Petition (filed by Mumbai-based Polydrug Laboratories) before the Court was as follows:

Does the Controller have the power under Rule 138 to extend the time period stipulated under Rule 59 for filing of evidence in Reply by the opponent?  

Yesterday i.e. on August 16, 2011, the Supreme Court categorically ruled in the affirmative stating that Rule 138 was unambiguous in its import and that it vested the Controller with the power to extend the time period stipulated under Rule 59. 

The Court observed that although Rule 59 did not explicitly envisage an extension, Rule 138 was wide enough in its ambit to provide for an extension of the time laid down in Rule 59.

As pointed out in my last post on this case, a clear reading of Rule 138 makes it apparent that extension of time under the Rule is available in every situation except those which are specifically precluded from its applicability, namely Rules 24B, 55(4) and 80(1A). In all other situations, including an extension sought for filing reply evidence under Rule 59, the Controller has the power to extend time.

The consequence of this decision of the Supreme Court is that the Petitioner i.e. Polydrug Laboratories, who is the post-grant opponent, can legitimately place its evidence in reply on record, and the evidence has to be considered by the Opposition Board when deciding the post-grant opposition filed by Polydrug against the Indian patent IN211104 held by IPCA Laboratories.

Hopefully, the law on this point is finally settled and there will be no further confusion in its application by the Patent Office.

Tuesday, August 16, 2011

Patent Validity- Where Do the High Court and IPAB Stand Vis-a-Vis Each Other?

Patents granted in India can be challenged by way of:
1.  a post-grant opposition within a year from the date of publication of grant; or
2. by way of a petition for revocation before the IPAB anytime after grant; or
3. by a counterclaim for revocation in a patent infringement suit before a Court. (When a counterclaim for revocation is filed by a defendant in a suit for patent infringement, the suit along with the counterclaim is transferred from the District Court to the High Court)

The funny thing about situations 2 and 3 is that in these cases, both the IPAB and the High Court exercise *original jurisdiction over the validity of the patent. (*original jurisdiction refers to the original power of a body to rule on an issue and examine it from scratch)

Since both IPAB and the HC have original powers with respect to patent validity, the sanctity of the IPAB’s jurisdiction in a petition for revocation is the same as the sanctity of the High Court’s power in a counterclaim for revocation. 

The conundrum posed by vesting two bodies with original powers over the same issue, namely validity, is that one of these bodies i.e. the High Court, may also reverse the decision of the IPAB on merits in a writ proceeding (strictly speaking this ought not to happen) or a counterclaim.

In a way, this erodes the very purpose of establishing an expert body such as the IPAB to rule on validity of patents. Simply put, the “Chevron Deference” which would otherwise be available to the IPAB’s decisions on patent validity is rendered less inviolable thanks to vestation of the same power in the High Court which can also overturn the IPAB’s decision in appeal or even in a counter-claim.

“Chevron Deference” is a US doctrine that traces its roots to the US Supreme Court’s decision in Chevron USA v. National Resources Defense Council. In this decision, the US Supreme Court formulated the “Chevron Deference” according to which, in cases where the language of the statute is ambiguous, Courts shall defer to the interpretation of an expert body constituted under the statute to carry out the express intent of the statute.

Applying this doctrine to the IPAB and the HC, in an ideal world if the power to rule on validity of patents had been vested in the IPAB alone, then the HC would have had to defer to the IPAB’s ruling on the issue of validity. This would have meant that the HC could rule only on the issue of infringement since validity wouldn’t have been within its realm of adjudication.  

However, we live in a not-so-ideal world where it is possible to file a counterclaim of revocation before the High Court even after the IPAB upholds the validity of the patent!

Imagine a situation where the IPAB upholds the validity of a patent X held by Patentee A in a petition for revocation filed by B. Subsequently, when A files a suit for infringement of patent X by B, B could again file a counterclaim for revocation before the HC notwithstanding IPAB's decision. Not just that, B could also file a writ against IPAB’s decision of validity.

What this translates to is that the High Court would be simultaneously exercising its original powers in B’s counterclaim for revocation, and would also be sitting in a writ over the decision of the IPAB. Does the Act provide a solution to this hypothetical? I am not sure...

The best way out is to amend the Act to do away with the provision for counterclaim before the High Court, and leave it to the sole jurisdiction of the IPAB...but then again, that would lead to bifurcated litigation i.e. validity would be decided by the IPAB, and infringement would be decided by a District Court. 

Monday, August 15, 2011

Is a Court the Best Forum to Decide Patent Infringement Suits?

Increasingly, I get the feeling that probably Civil Courts are not the best fora for patent matters. There are a host of reasons for holding such a view. The fact that Courts do not have the time that patent matters demand and deserve is just one aspect of the issue. 

Even if Courts did have or make the time for patent matters, do they have the requisite training to adjudicate patent suits?

This is not intended to denigrate any particular class of people or to take a condescending stand on the existing framework. I see this as an issue which needs to be addressed as early as possible in fledgling patent regimes like India, which can avoid going through the trial-and-error journey of other evolved regimes.

Patent matters require the adjudicator to possess three different kinds of training:
1. He must understand the history of the subject, its practice and its importance to the innovation community
2. He must be fairly at ease with the area of technology an invention relates to
3. He must possess considerable knowledge of application of the law in general, and principles of procedure/conduct of Court proceedings.

Assuming that the first and the third criteria are satisfied by an individual, it would be humanly impossible to expect him to be at ease with diverse branches of technology. Such being the case, how can one with negligible or no training in science preside over patent matters?

Would it not be better to instead tribunalize patent law? Why should the Intellectual Property Appellate Bard (IPAB) be vested with powers to decide only matters of patent validity? Would it not help to vest the IPAB with the power to entertain patent infringement suits as well?  

Tribunalization has served us well in niche areas of the law such as Telecommunication law (matters under TRAI are handled by TDSAT alone), company law and taxation law. In each of these branches of law, original jurisdiction is vested with the respective tribunals, with appellate tribunals entertaining appeals from the decisions of the tribunals.

In these areas of practice, Civil Courts do not have any kind of jurisdiction, except the plenary writ powers of High Courts under Article 226 of the Constitution.

Why should we not create such a structure for patent law? The composition of a three-member tribunal could be as follows:
1. The Chairman of the tribunal could be a retired High Court Judge or a patent practitioner with 10 or more years of practice behind him.
2. One member can be a retired Controller of Patents or a patent examiner with 5 or more years of experience at the Patent Office.
3. The other member would naturally be a technical member who can be selected depending on the area of technology in question. Just as the Patent Office has drawn up a list of scientific advisors under Section 115 of the Patents Act, a similar list of technical members too can be maintained who can be called upon to co-adjudicate patent matters.

One of the positives of such a framework could be the simultaneous adjudication of the issue of validity and infringement by the same forum, instead of a futile bifurcation which is possible under the current framework. I am not the first person to discuss the problems with “bifurcated patent litigation”. The issue has been discussed earlier in other regimes as well. In December 2010, two patent practitioners from Korea, Seong-Ki Kim and Kee-Hyo Kim, had expressed similar thoughts in an article published in MIP.

Also, the constitution of a tribunal ensures that procedural issues which consume precious time in Courts, can be done away with ease, and greater attention may be focussed on the merits of the case.

Not just that, today it is possible for parties/counsels to fib around in Courts on patent procedure because Courts aren’t very familiar with the practice of the patent office.  This kind of loose talk would be reduced to a minimum since the tribunal will have a member who has first-hand knowledge of office practice thanks to his experience.

Appointment of subject-specific technical members ensures that we don’t cut the head to fit the hat, i.e. standards applicable to one area of technology should not be force fit in other areas where definitions, metrics and indices differ. A classic example would be the debate on circumscribing the meaning of “efficacy” in the debate on Section 3(d) of the Patents Act.

Creation of such a tribunal will also ensure that evolution of patent jurisprudence/policy in India is contributed to by people who know what they are talking about, and whose opinions on the subject are grounded in their training in science/technology.

I shall continue with a few more thoughts on these lines in the next post. 

Thursday, August 11, 2011

Domestic Courts and "Foreign" Infringement: What is the Law?- I

I am happy to bring these series of guest posts from Mihir Naniwadekar, a good friend of mine whose mind I have immense regard for. Mihir passed out of National Law School, Bangalore last year and has been practicing before the Bombay High Court. 

Mihir is a prolific blogger himself who, besides running his own blog, is also a contributor to the Indian Corporate Law blog. Without much ado, here are Mihir’s thoughts on a domestic court’s power to exercise its jurisdiction over a person resident within its territory for acts of infringement committed in a foreign land.

Domestic Courts and "Foreign" Infringement: What is the Law? 

Does a domestic Court have the jurisdiction to enforce a foreign copyright on the basis of in personam jurisdiction over the alleged infringer? This seemingly straightforward question was at the heart of the matter in a recent decision of the United Kingdom Supreme Court in Lucasfilm v. Ainsworth [2011]UKSC 39.

The case also involved intricate issues over the interpretation of UK statutes; this series of posts, however, discusses only the private international law issue.

The issue was this: whether the English court may exercise jurisdiction in a claim against persons domiciled in England for infringement of copyright committed outside the European Union in breach of the copyright law of that country?” The Court of Appeal had held that foreign copyrights are not justiciable in an English court, on account of the Mocambique principle.

By way of some background, it will be useful to note that the Mocambique rule was one which developed in the context of land (thus, in a sense, Lucasfilm involved intricate questions over how far intellectual property is similar to other (real) types of property). The Mocambique rule refers to the rule in British South Africa Co v Companhia de Mocambique [1893] AC 602.

In the words of Dicey & Morris (Rule 39, 1st edition, 1896), this case was cited as the main authority for the proposition that an English Court has no jurisdiction to entertain an action for (1) the determination of the title to, or the right to the possession of, any immovable situate out of England … or (2) the recovery of damages for trespass to such immovable

Since then, the rule has been elevated to gospel – actions for enforcement of rights in relation to immovable property lie (subject to some exceptions) in the Court within whose jurisdiction the property is situated.

But, where is intellectual property situated? This question started troubling the Courts early in the 20th century, and cases such as Potter v Broken Hill Pty Co Ltd [1905] VLR 612 appeared to extend the Mocambique rule to actions for infringement of patents. Potter was a case where the question of title was involved; however, in Hesperides Hotels Ltd v Aegean Turkish Holidays Ltd [1979] AC 508, the Mocambique rule was applied in where no question of title to the property was involved.

Lord Wilberforce’s judgment in Hesperides effectively stated that it was for Parliament to change the law. This, Parliament did promptly: Section 30(1) of the Civil Jurisdiction and Judgments Act 1982 confirmed the jurisdiction of English Courts to entertain suits in relation to property outside England, “unless the proceedings are principally concerned with a question of the title to, or the right to possession of, that property.”

How far these Hesperides developments applied to intellectual property remained controversial, however, for Section 30(1) expressly dealt only with immovable property. By the early 1990s, the cases seemed to suggest that it was not possible to bring an action in England for enforcement of a foreign copyright.

For instance, Dicey & Morris stated in their 12th edition, “Nor can the holder of a French patent, trade mark or copyright sue in England for its infringement in France. Since the French patent, trade mark or copyright is territorial in its operation… the act complained of would not be a tort if committed in England…

This was confirmed in Tyburn Productions Ltd v Conan Doyle [1991] Ch 75, where it was held that it was not possible to sue in England for infringement of United States copyright. Now, it can be seen that the basis of the statement in Dicey & Morris (12th edition) is that “the act complained of would not be a tort in England…”

This implies that in such cases, the proper law is the law of England, and not the law of the place of infringement. This was changed by the Private International Law (Miscellaneous Provisions) Act, 1995. In principle, the law of the place of infringement would be the applicable law. Despite this, in Coin Controls Ltd v Suzo International (UK) Ltd [1999] Ch 33, Laddie J. held that “the court had no jurisdiction to try claims for infringement of German and Spanish patents…

One reason for this view is that a patent involves the grant of a right dependant on the grant of authority by a State. In such a case, a foreign Court examining the validity of the patent (as opposed to merely determining issues of infringement) would amount to an examination of the sovereign acts of a foreign state.

This would, perhaps, be seen as militating against the comity of nations, a principle of some importance in private international law.

Given this background, the next post will examine the decision of the Supreme Court in Lucasfilm

Monday, August 8, 2011

Stale News: US Federal Circuit Court Upholds Myriad’s Gene Patents

On July 29, 2011, the US Court of Appeals for Federal Circuit finally pronounced its long-awaited decision upholding patent eligibility of Myriad Genetics’ patent claims covering isolated DNA molecules and claims directed towards a method for screening potential cancer therapeutics.

However, the Court ruled as ineligible those claims which related to “comparison” or “analysis” of DNA sequences on grounds that such claims covered “mental steps” and did not satisfy the test of transformation.

Sometime last year, the US department of Justice expressed concern on patenting of DNA sequences which existed in nature. The Court however upheld Myriad’s patents stating that the claimed DNA sequences did not exist in nature in their isolated states.

Prominent American NGOs, American Civil Liberties Union (ACLU) and the Public Patent Foundation, which were opposed to the grant of patents to DNA sequences, were party to the proceedings.

The central issues in this case were:
i. the patent eligibility of the process or step of discovering the link between genetic mutations and cancer (mammarian and ovarian); and
ii. the patent eligibility of the diagnostic test claimed by Myriad Genetics

The consequence of the Court’s decision is that the first issue was ruled in favour of Myriad, but the diagnostic test, which was of “practical” value to Myriad was treated as ineligible subject-matter.

Considering this, there is a chance Myriad may prefer an appeal against the decision. It goes without saying that ACLU and Public Patent Foundation too are expected to knock the doors of the US Supreme Court challenging this decision.

The verdict is largely seen as a pro biotechology lobby verdict; whichever way this decision is seen, the one thing that stands out is that (patent) law is in an impossible race to “catch up” with technology and the conundra it poses.

I’ll shortly undertake a detailed discussion of the decision over a few posts. 

Thursday, August 4, 2011

Stale News: NATCO applies for a Compulsory License for Bayer’s Drug Nexavar

The Economic Times reported 2 days ago that NATCO pharma has applied for a compulsory license for Bayer’s patented drug Nexavar, which is used to treat liver and kidney cancer. 

This is not a surprising development because earlier this year there was talk in the air about generic drug makers like Cipla and Natco planning to actively explore the compulsory licensing mechanism.

This is expected to be a long-drawn affair (what’s new? Almost every patent proceeding is a long-drawn affair in India). We’ll keep our readers posted on any further developments on this front.

I thank Disha Jeswani for bringing this development to my attention!

Wednesday, August 3, 2011

Of Music and Lyrics Too...

The Delhi High Court, addressing a similar issue as the last post, rendered its concurrence with the decision of the Mumbai High Court, pronounced early last week.

Although the Mumbai High Court arrived at its decision by referring to several authorities, foreign judgments and statutory amendments, the Delhi High Court decision has given the issue a shop-floor approach.

The interim order, passed jointly in IPRS v. Aditya Kumar and PPL v. CRI Events Pvt. Ltd. & Ors., denied the grant of an order for interim injunction on the allegations of copyright infringement in the first suit, while issuing a temporary injunction order in favor of the Copyright society in the second.

The Court in arriving at the decision, touched upon multifarious factors. As pointed out in the comments to the related post, the Delhi High Court stated that:

There would be no reason for the sound recording producer to pay once for acquiring the right to make the master sound recording and then pay separately for each reproduction thereof or each communication to the public. It is urged that if the plaintiff’s argument were to be accepted, then for each reproduction of the sound recording a separate royalty would be due from the producer of the sound recording to the owner of the rights in the underlying musical works and lyrics.”

Further, in view of Copyright being a bundle of rights, the Court commented upon the unity of ownership, and suggested that the stand taken by IPRS, would lead to discrimination in regard to identical content of copyrights of two different “works”, prove illogical and undermines the purposes of the Act.

In other words, the Court, opined that if IPRS’ proposition were to be admitted, it would put the licensee in a compelling position to seek permission from the authors of the underlying work. If a stand otherwise be taken, the same would perhaps, render the entire scheme of broadcasting rights oblivious- thus causing a dent to a huge segment of the entertainment industry.

The Court also looked into another critical issue- where royalty payments ensued, and to whom. CRI Events, urged that the fact that, since, the audience were not expected to make a payment, they were not obliged to pay royalties. In response to this line of assertion, the Court observed that:

“The enactment uses the phrases “public performance” and “communication to the public” in relation to a copyrighted work. The question what is “public” ought not to be considered in the abstract, and in isolation, but in the context of the definition of “infringement” of a copyrighted work, under Section 51."

J. Bhatt’s view that “public” ought to be considered in view of infringement, also brings to my mind , an extremely impactful paragraph, from one of his earlier judgments, Univ. of Oxford v. Narendra Publishing House and Ors ,

Fair use provisions, then must be interpreted so as to strike a balance between the exclusive rights granted to the copyright holder, and the often competing interest of enriching the public domain. Section 52 therefore cannot be interpreted to stifle creativity, and the same time must discourage blatant plagiarism. It, therefore, must receive a liberal construction in harmony with the objectives of copyright law. Section 52 of the Act only details the broad heads, use under which would not amount to infringement. Resort, must, therefore be made to the principles enunciated by the courts to identify fair use."

By citing this paragraph, what I intend to communicate is that, it is clear (although not expressly stated) that at least in the Court’s mind, “communication to the public”, “public performance” and “performance or communication” per se, can be differentiated by the standards applied to personal use as enumerated under the constituents of fair use.

The judicial line of thought, from these two decisions, seems to be very clear- separation of rights between separate authors. Undoubtedly, the 1994 amendment of the Act brought about a change, that seems to affect the rights of the authors of the underlying works to a considerable degree, which, in today’s context I personally view to be one that is important and much necessitated.

My opinion is further influenced by the fact that the manner in which production houses function today, is similar to that of corporates- thus the notion of “work for hire” holding greater relevance, while also strengthening the economic rationale for producers to pay a lyricist or music director towards their contribution.

While music and lyrics are an inseperable part of Bollywood, and despite this decision having left a few stakeholders a bit unhappy, the decision is one which finds sufficient justification within the four corners of the law.

Tuesday, August 2, 2011

How Does the Patents Act Protect the Interests of the Patentee?

In the last post, I had hinted at certain provisions of the Patents Act, 1970 which protect the interests of the patentee. It’s surprising that Indian discussions on patents rarely discuss those aspects of the law which provide succour to the patentee. 

One provision whose complete import, in my humble opinion, has not been fully explored is Section 13(4) of the Patents Act.

Section 13 of the Patents Act deals with the investigation that a patent examiner is expected to undertake to check for anticipation of a patent application by prior publication or prior claim.

After enumerating the literature, patent and non-patent, that the examiner may review to assess the novelty of the invention claimed in an application, Section 13, in sub-section (4) states that the examination and investigation required under Sections 12 and 13 of the Act shall not warrant the validity of the patent.

Section 13(4) further states that no liability shall be incurred by the Central Government or any officer thereof by reason of, or in connection with, any examination or investigation or any report or other consequent proceedings.

This provision i.e.Section 13(4) has been commonly and rightly interpreted as denying any kind of presumptive validity to a patent granted under the Act. But I think there is more to the provision than merely denying presumptive validity...

Besides denying presumptive validity and shielding examiners from liability of any kind, Section 13(4) also ensures that the patentee does not suffer or is not penalised or held responsible for any act of commission or omission by the examiner during the examination of the application.

In other words, my point is that if the Act requires the examiner to perform a certain task or duty, which the examiner fails to perform, the validity of the patent shall not be impugned on grounds that the examiner did not perform such duty.

Simply put, the patentee shall not be denied a remedy citing an oversight or dereliction on the part of the examiner.

What is the basis for such a proposition? First, this is logical because if the patentee or the applicant for a patent has fulfilled all his obligations under the Act, he must not pay the price for an act of neglect by the examiner.

Not just that, if the legislature indeed wanted the patentee to take the rap on his knuckles for oversight or neglect on the part of the examiner, then Section 64 of the Act, which lists grounds of revocation, would have provided for an additional ground such as dereliction of duty or non-performance of mandatory tasks by the examiner.

None of the grounds for revocation provided in Section 64 permit assailing the validity of a patent on grounds of improper examination or incomplete search or improper preparation of reports by the examiner.

This is further supported  by the fact that both the IPAB or the High Court, which have the authority to entertain a petition or a counterclaim for revocation of a patent under Section 64, are vested with original powers to test the validity of the patent on substantive grounds, not administrative ones.

Stated otherwise, the scope of enquiry of the IPAB or the High Court is restricted to testing the validity of the patent solely on grounds detailed in Section 64, and no other. The very reason the IPAB and the High Court are vested with original powers is so that they may step into the shoes of the examiner as well as the arbiter of the law, and verify for themselves if the invention claimed indeed deserved the patent.

To capture the post in a nutshell, the effect of Section 13(4) is three-fold:

1. The patentee cannot claim to enjoy any presumptive validity merely on account of grant of the patent after due examination; 
2. The examiner shall not be exposed to liability of any kind for any act or omission performed in the course of his duty; and
3. The grant of the patent shall not be assailed citing non-performance of any obligation by the examiner. The patent’s validity may be challenged only and only on grounds mentioned in Section 64.

I am sure there are principles of administrative law, which support this interpretation. I’ll try and bring them to the attention of our readers in the next few days. Until then, corrections, opinions and assistance with case-laws are welcome!