A roundup of key IP developments of 2020

As we begin a new year, there is optimism and hope given the unprecedented challenges businesses and consumers faced during 2020. Our post provides a round-up of key developments in legislative, regulatory, and judicial arena that highlight the Indian IP environment remains vibrant.

  • Indian courts and IP offices adapt to the “new normal”

The IP office and courts stepped up to the disruption caused by Covid-19 by actively working virtually. The online portal of IP offices, including the Trademarks office, Patent office, and Copyright office, worked seamlessly, allowing IP owners to file applications, oppositions, and upload documents. The Trademarks Office and Patent offices appointed hearings through video conferencing.

The Intellectual Property Appellate Board (IPAB) initially listed urgent hearing cases through video conferencing and gradually appointed hearing in other cases. The IPAB has heard more than 600 instances virtually and passed numerous orders, including cases that had been pending for several years.

The Delhi High Court, a preferred forum for IP litigation, heard urgent cases through video conferencing and issued circulars to communicate with the public and litigants. The Delhi High Court issued detailed guidelines to lay down the procedure for virtual hearings. The opportunist counterfeiters taking advantage of the pandemic situation launched facemasks, medicines, sanitizers, and medical equipment bearing names identical or confusingly similar to well-known brand names. The court quickly passed injunction orders, award damages, and appointed court commissioners to seize the counterfeit goods.

It will be interesting to see if virtual hearings post Covid-19 vaccination drive are here to stay and becomes part of the “new normal”

  • Protecting consumers in an e-commerce transaction

The growing e-commerce has resulted in the Indian Government making specific rules to regulate e-commerce entities in the form of Consumer Protection (E-Commerce) Rules, 2020. These rules apply to all e-commerce transactions involving goods/services over digital/electronic networks, including e-commerce entities that are not established in India but offer the sale of goods/services to India’s consumers.

The Rules set out several compliance requirements, duties, and liabilities for the e-commerce entities. A few notable ones include a) commitment not to adopt unfair trade practices, b) establishing consumer grievance redressal mechanism with a timeline of 48 hours for acknowledgment and one month for redressal of consumer complaints c) complete details of the importer provided on the platform for imported goods d) no cancellation charges to be levied on consumers cancelling after confirming purchase unless the e-commerce entity also bears similar charges if they cancel the purchase e) recording the consent of a consumer for the purchase of any good or service offered on its platform to be done only where such consent is not automatically recorded f) no manipulation of the price of the goods/services offered to gain unreasonable profit; no discrimination between consumers of the same class or making any arbitrary classification of consumers g) compliance with the provisions of Information Technology (Intermediaries guidelines) Rules, 2011.

Among the advisory and compliance requirements outlined for the seller of a product on an e-platform/portal, the Rules provide that the seller will not adopt any unfair trade practices to promote their goods and ensure that advertisements are transparent, consistent with the goods or services. Also, aspects such as misrepresentation of facts, refusal to take back/withdraw goods or services, or refuse refunds for goods or services which are spurious, defective, have been made as crucial obligations of the seller.

Furthermore, sellers are required to execute a prior written contract, appoint a grievance officer, clearly specify terms of the refund, exchange, returns, guarantees, or warranties applicable, and provide adequate details about the country of origin of the goods and services. The focus seems to be to weed out rogue sellers that overpromise o quality and warranties and, further, make them liable for the quality of goods they offer.

The rules aim to bring transparency and accountability in providing information and disclosure by e-commerce platforms to consumers.

  • Clarity emerges on forming of Confidentiality Club in SEP disputes.

CS(COMM)- 295/2020 and I.A NO. 6441 of 2020.

A Single Judge of the Delhi High Court, in a patent infringement suit between Interdigital Technology Corporation and Xiaomi Corporation, ruled on a “two-tier” Confidentiality Club where documents were proposed to be classified by Interdigital as:

  1. “outer tier” where documents to be accessible to the advocates for both sides, experts appointed by them, as well as representatives of both parties and denoted as “Confidential Information”
  2. “inner tier” where documents to be accessible only to the advocates for both sides and experts appointed by them who would not be in-house counsel, and denoted as “Legal Eyes Only (LEO) Confidential Information”.

The objective of the proposed arrangement was to keep away from the Defendant (Xiaomi), as well as their officials, personnel and employees access to the “inner tier” documents, comprising third- party comparable patent license agreements. On objection of Xiaomi, the court held this arrangement to be violative of principles of natural justice and the Bar Council Rules.

The court noted that a civil litigation generally requires each party to be aware of the case of the other party that it is supposed to counter, and no surprises should, thus, be permitted in this regard. In the context of the instant dispute, the determination of whether licensing rates set by the SEP owner are FRAND requires assessment of license agreements with other licensees, considering the licensee’s identity and the scope of the license. This assessment cannot be carried out solely by advocates and external experts to the exclusion of party representatives.

The ruling, it is hoped, will provide much-needed clarity on the use of confidentiality clubs in SEP infringement cases.

  • IPAB lays out the statutory licensing rate for radio broadcasting

The Intellectual Property Appellate Board (IPAB), on December 31, 2020, just before we end the year, pronounced its order fixing royalties on the broadcast of sound recording through radio. The judgment was pronounced on several petitions from radio broadcasters and music owners through copyright collection societies to fix royalties for communication of sound recordings to the public through radio. The purpose behind setting a royalty rate and interfering with the free-market price negotiation process was primarily to balance the interest of copyright owners and broadcasters.

The judgment recognizes explicitly the rights of lyricists and music composers to claim royalties based on the 2012 amendments to the Copyright Act, 1957.

IPAB, in its order, analyzed the previous royalty rates fixed earlier by the Copyright Board and was of the view that “royalty rates proposed were lesser than rates fixed by the Copyright Board 18 years ago, but significantly higher than rates fixed by the Copyright 10 years ago. Thus observed that the proposed rates were fair for both music companies and radio broadcasters and sought to achieve a harmonious relationship between the concerned parties. The IPAB interpreted Section 31 (D) of the Copyright Act as:

“The provisions of Section 31D are meant to ensure that the economic benefits of the Copyright Owner are not diluted in any manner and there is no inroad of any nature whatsoever on the rights of the Copyright owner as conferred by the Act. The Broadcasters are entitled to broadcast the copyrighted work by making a payment of royalty at the rate fixed by the Board. A rate of royalty after considering the factors laid down by the Rules. Thus, the provisions of the sections achieve a balance between the economic rights of the owner of the copyright and the entitlement of the broadcasters to have access to the work by making a payment of royalty at a rate which ought to be in consonance and conformity with the other economic rights conferred by the Act.”

  • DPIIT eases local sourcing norm for Single brand owners

In a move to further relax local sourcing norms and attract foreign direct investment (FDI), the Government vide its consolidated FDI policy effective from October 15, 2020, made relaxation and changes concerning FDI in Single foreign Brand Retail Trade (SBRT). The policy allows companies to set up their online stores in India and later follow it up with the setting up of physical stores within two years from the online stores’ date of opening. According to the current Foreign Direct Investment (FDI) policy for SBRT, 100 % of overseas investments are allowed. However, SBRT, with foreign investment beyond 51% holding, is required to locally source 30% of the value of the goods sold. The provision/s to assess the 30% sales norm widened to include Indian domestic sales and goods exported from India. Further concessions are granted to entities undertaking single-brand retail trading of products with ‘state-of-art’ and ‘cutting-edge’ technology and where local sourcing is not possible. For such products, the local sourcing holiday is applicable up to three years from the commencement of the business.

The DPI, based upon numerous representations received from business entities, clarified that sourcing of goods by the SBRT from units located in SEZs in India would qualify as sourcing from India for (meeting) 30% mandatory norm. The Government further clarified a) that the goods that an SBRT proposes to source must be manufactured by SEZ’s in India b) compliance of conditions enumerated in the FDI policy and notified under the Foreign Exchange Management Act, 1999 (FEMA) would continue to be the responsibility of SEZ.

The clarification on local sourcing norms by the Indian Government provides a better vision for the SBRT entities. It will give impetus to India’s manufacturing activity, making it the hub to source global requirements.

  • Telemedicine becomes a reality in India.

NITI Aayog released the new Telemedicine Practice Guidelines enabling Registered Medical Practitioners (RMPs) to provide healthcare remotely on March 25, 2020. The guideline aims to address challenges in delivering health care and access to doctors on account of large geographical distances and limited resources in India. The guidelines come in at the opportune time with coronavirus spread, putting immense pressure on health care workers and doctors.

Until the Telemedicine guidelines became effective, there was no legislation or procedures that would regulate the practice of Telemedicine through video, phone, Internet-based platforms (web/chat/apps, etc). With the popularity of mobile devices and increasing internet penetration, it is a right move by the Government to have Telemedicine bridge the gap between low doctor and high patient ratio.

Telemedicine practice is evolving well. Although challenges remain in terms of patients and doctors getting used to online consultation as most elderly patients prefer visiting a doctor for personal contact. Further reimbursement of practitioner charges through health insurance and privacy issues need to be addressed. https://rnaip.com/telemedicine-becomes-reality-in-india/

  • Indian Patent Office rolls out a new Form for filing “Working Statement.”

Working Statement required to be filed by patentees every year continues to be a controversial subject. The Indian Patent Office has, after more than two years of the consultation process with stakeholders on a draft form that it rolled out in 2019, has now issued the final structure of Form 27 for submitting the working statement details of a patent.

Significant changes brought by the new Form 27 are the following:

A single request can now be filed in respect of multiple patents if the approximate revenue/value accrued from a particular patented invention cannot be derived separately from the approximate revenue/value accrued from related patents. The multiple patents should be related and belong to the same patentee.

The earlier Form 27 was required to be submitted at the end of the calendar year. However, the new form is required to be submitted at the end of the financial year (March 31). The data can be submitted within six months of the deadline that is until September 31 for each year.

The new form has been simplified and does not require the patentee to provide:

  1. Details of licenses and sub-licenses.
  2. Details of importation (country-wise details)- Only the approximate value/s required to be given
  3. The statement whether the public requirement has been met partly/adequately/ to the fullest extent at a reasonable price.

In case of multiple patents, the patentee would have to list all the patents regarding which the form is being filed and specify whether it is worked or not worked. https://rnaip.com/indian-patent-office-rolls-out-a-new-form-for-filing-working-statement/

  • ITC loses its magic in Masala Noodles battle

In a case brought by ITC Limited against Nestle India Limited, concerning the use of the words MAGIC/ MAGICAL MASALA (a mixture of different spices used in Indian cooking) for food products, The Madras High Court ruled against ITC. The conflict had arisen between ITC Limited (“ITC”) and Nestle India Limited (“Nestle”), where the adoption of “Magical Masala” by Nestle for instant noodles was allegedly phonetically similar to “Magic Masala” used by ITC for its “Sunfeast Yippee! noodles”. The primary question before the Court was whether ITC can claim exclusivity over common words MAGIC and MASALA alone or in combination.

The Court dismissed the suit while making the following main observations:

  • Although there is a phonetic similarity between the words “Magic” and “Magical”, they are incapable of being monopolized as they are laudatory and common to the trade.
  • The fact that ITC has not applied to register “Magic Masala” shows that it was not intended to be used as a trademark or a sub-brand by them.
  • The expressions “Magic Masala” and “Magical Masala” were used to distinguish different flavours offered by both parties under their respective brands “Sunfeast Yippee!” and “Maggi.”
  • As there is no visual similarity between the two wrappers in terms of their overall colour scheme and layout, there is no passing-off. Moreover, competing brands viz. “Sunfeast Yippee!” and “Maggi” printed on packaging(s) are entirely different from each other.

As brand jostles attract consumers and increase market share, the sub-brands role as a product differentiator is increasingly becoming important. The placement of a sub-brand and its font size on a product packaging, in our view, are primarily branding and marketing issues. The case highlights that the Court’s interpretation of branding from a legal stand point may be completely different from the intended purpose. One thing is clear while conceiving and adopting a brand, the businesses should avoid laudatory words.

  • ASCI move in to clamp misleading COVID-19 claims in India

As the virus has spread, a number of advertisements with misleading claims around COVID-19 have emerged, such as those referring to cures and preventions stemming from an ‘anti-corona’ mattress or through the application of tulsi (Indian basil) drops to apparel. Press reports suggest that the Advertising Standards Council of India (ASCI) has reviewed more than 500 advertisements with COVID-related claims since March 2020.

To curb these practices, the ASCI issued a press release listing out guidelines to promoters for the advertisement of various medicinal products and services.

The objective of these guidelines are to:

  1. Ensure better compliance of the ASCI code on distorted advertisements;
  2. Sensitise advertisers to be more mindful in creating advertisements and making claims related to COVID-19; and
  3. Safeguard consumers to ensure the highest standards of advertising.

The advice states that:

  • During the COVID-19 pandemic, advertisements should avoid claiming the destruction or removal of any virus other than coronavirus in order to avoid violating provisions of the ASCI Code.

In the case that advertisers opt to claim the removal of any other virus in their advertisement, they should include a disclaimer, for example “claim not applicable to coronavirus (COVID-19)”, or a similar message with the disclaimer size and position in accordance with the Disclaimer Guidelines of the ASCI.

The said order directs all concerned AYUSH regulatory authorities of the states/union territories to stop and prevent publicity and advertisement of AYUSH-related claims for COVID-19 treatment in print, television, and electronic media. It also directs authorities to take necessary action against the persons/agencies involved in contravening the relevant legal provisions of the Disaster Management Act 2005, which labels the making of false claims as a punishable offence.

  • Advertisers’ claims of reducing the chances of getting infected with COVID-19, or gaining immunity against it, should be supported, recognised or approved by health authorities such as the World Health Organization (WHO), the Indian Council of Medical Research (ICMR), the Ministry of Health and Family Welfare (MoHFW), Drugs Controller General of India (DCGI), the US Centers for Disease Control and Prevention (CDC), AYUSH, or other health organisations of a similar stature. Otherwise, it should be backed up by well recognised medical literature, or by regulatory-approved clinical research conducted by a recognised medical institute or laboratory.
  • The products which are not internally consumed or applied to bodies, i.e. those which do not require a license under the Drug and Cosmetics Act, should be particularly cautious while making claims regarding the prevention of, immunity against, or treatment for COVID-19, unless they have verified supporting data.

The COVID-19 pandemic has greatly impacted the dynamics of global healthcare systems, which in turn has resulted in the development of new drugs, medicinal formulations, sanitary products, and vaccines by several market players to cure or prevent infection, and boost immunity.

In a bid to increase sales and attract consumer attention, some brands have made misleading claims that may over-promise results without substantiation. Thus, the ASCI guidelines are a timely proactive step to regulate such claims and remind brands of their obligations.

  • USTR 301 Report places India on Priority Watch List

The Special 301 Report aims to identify trading partners that do not adequately or effectively protect and enforce Intellectual Property (IP) rights or otherwise deny market access to U.S. innovators and creators that rely on the protection of their IP rights. India is among the 33 countries/trading partners identified that currently present the most significant concerns to US companies regarding IP rights are placed on the Priority Watch List. In addition, a list of Notorious Markets has been compiled to highlights prominent and illustrative examples of online and physical markets that reportedly engage in or facilitate substantial piracy or counterfeiting. In India, the following markets have been identified:

  1. Tank Road, Delhi
  2. Millennium Centre, Aizawl, Mizoram
  3. Heera Panna, Mumbai

In the list of online markets, snapdeal.com has been named. The report mentions shopo.in and exclusively.com as related sites.

On the other hand, the engagement between the US and Indian government to strengthen and protect intellectual property regime was formalized with the signing of a Memorandum of Understanding (MoU) for cooperation on Intellectual Property Examination and to strengthen and protect the IP system in India for the next ten years. The MoU had received the Union Cabinet’s approval on February 19, 2020. The MoU aims to increase the exchange of information and best practices to register and examine applications for trademarks, patents, copyrights, geographical indications, and industrial designs. It also encapsulates the exchange of best practices for the protection of traditional knowledge and traditional knowledge databases. The MoU also aims to facilitate the exchange of best practices, knowledge, and IP experience for public, small and medium enterprises, industries, research, and development organizations.

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