India: SEBI streamlines IPO process

Source: www.sebi.gov.in

Attributable to its global ranking for on ‘Ease to Business’ scale, India is increasingly being counted as a favoured business destination in the world. In order to facilitate the carrying out of business activities of varied nature, the Indian legal system allows a number of business structures such as proprietorship, partnership, companies and limited liability partnership. Incorporation of a company is a common mode for business transactions in the country.

Companies in India

Companies are the artificial legal entities having existence independent from its shareholders. Incorporated for the purpose of carrying out business activities as stated in its Memorandum of Association, the companies are often confronted by the requirement of capital with view to expand its operations and earn greater profits. The raising of capital for the said purpose is required to be done in accordance with the Companies Act, 2013 (hereinafter referred to as the “Companies Act”).

Investment in India

The Government is regularly devising schemes that boost the Indian market. The fastest growing economy not only encourages progress of business in India but also makes it an attractive investment option. With a view to secure investment for the Indian business sector, the Government has been making efforts with the help of introduction of investor friendly policies.

Regulated framework

Governed under the provisions of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the “SEBI Act”), the Securities and Exchange Board of India (hereinafter referred to as the “SEBI”) is the market regulator of India which aims to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected there with or incidental thereto.

Initial Public Offering

One of the mediums for the companies to raise capital is through initial public offer means an offer of specified securities by an unlisted issuer to the public for subscription and includes an offer for sale of specified securities to the public by any existing holders of such specified securities in an unlisted entity. It serves as the largest source of funds for a company to meet expenses for its projects and go public by being listed on a Stock Exchange.

IPO timeline reduction

SEBI, in its endeavour to provide an efficient mechanism for raising funds, has been continuously striving to regulate the process and methodologies associated with public issue fund raising process. In the said regard, the regulator issued a circular for streamlining the process of public issue of equity shares and convertibles dated November 1, 2018.[1]

With a view to free up the locked investor funds faster so as to benefit both issuers as well as investors, SEBI has initiated the process to reduce the timeline for public issues from the current 6 days to 3 days in a phased manner by making it mandatory for intermediaries to provide retail investors the option of bidding through the Unified Payments Interface as a payment mechanism with Application Supported Block Amount for applications in public issues.

In the second phase, the current mechanism of physically submitting bid forms from the intermediaries to the banks would be discontinued after 3 months. The said process would be effective April 1, 2019 onwards.

Subsequent third phase provides that final reduced timeline will be made effective using the Unified Payments Interface mechanism.

The proposed process is expected to increase efficiency, eliminate the need for manual intervention at various stages, and will reduce the time duration from issue closure to listing by up to 3 working days.

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[1] https://www.sebi.gov.in/sebi_data/attachdocs/nov-2018/1541067380564.pdf

India: NGT snaps power for controlling Pollution

Source: www.greentribunal.gov.in

As the festive season is approaching nearer, the air in the surroundings is deteriorating sharply to a great extent. A large part of the northern area is facing severely poor air quality shrouding it with a thick haze in the form smog made of tiny particulate matter which can penetrate deep into the lungs leading severe troubles. Sufficient contributions in this regard have been made by the setting fire to the crop residue by the farmers in the said region.

Pollution Problem

Pollution is the process of introduction of solid, liquid or gaseous contaminants in the environment in such a concentration, as may be, or tend to be injurious to environment results in hazardous consequences. Some of the sources of pollution include emissions from vehicular usage, industrial works, construction activities, burning of crops and garbage, firecracker burning, etc. releasing harmful poisonous constituents in the surrounding air.

Health impacts

Rising pollution levels are a source of number of problems such as chronic respiratory disorders, cardiovascular problems, retarded foetal growth, dermatological issues, etc. The problem of pollution not only affects humans but also other living creatures on the planet even resulting in their death and extinction thereby hampering the co-existence in the ecosystem.

Legal control

With the objective of conservation and improvement of environment, the Environment Protection Act, 1986 was enforced along with the other legislative provisions specifically dealing with the pollution of various components of the environment including the Air (Prevention and Control of Pollution) Act, 1981 introduced to prevent, control and abate air pollution.

In order to protect environment and creation of legal framework in this regard, the National Green Tribunal Act, 2010 (hereinafter referred to as the “NGT Act”) was brought into effect which established the regulatory body - the National Green Tribunal (hereinafter referred to as “NGT”) aiming to provide effective and expeditious disposal of cases relating to environmental protection and conservation of forests and other natural resources including enforcement of any legal right relating to environment and giving relief and compensation for damages to persons and property and for matters connected therewith or incidental thereto.

NGT snaps electric supply

In order to impose strict restrictions on those not obeying to the requirement of the law and instructions of the authorities working towards reducing the pollution, the Punjab State Power Corporation Limited on October 31, 2018, snapped the power connections of 57 industrial units in Derabassi after NGT directed adherence to its orders in this regard on October 25, 2018.[1]

The NGT ordered closure of 44 industrial units for non-compliance of the pollution controlling norms issued by the Central Pollution Control Board (hereinafter referred to as “CPCB”) and imposed a liability on them in the form of environment compensation. 9 units were found operating on the premises of a closed unit or non-operating industry and without consent of CPCB board and 4 others were not complying with the ground water standards. 

Taking a stringent measure to prevent the degradation of the already depleting standards of air present in the environment, orders have been made to curb the power supply to the industries flouting the environment protection guidelines.

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[1] https://timesofindia.indiatimes.com/city/chandigarh/power-connection-of-57-units-in-derabassi-snapped-on-national-green-tribunal-order/articleshow/66457577.cms

Draft Patents (Amendment) Rules, 2018 published for public comments.

Source: www.ipindia.gov.in

The Indian Patent space last week witnessed another important change. The Indian Patent Office on December 4, 2018 published Draft Patents (Amendment) Rules, 2018 (hereinafter refereed to as ‘Draft Rules’) for public comments.

The Draft Rules aim to further amend the Patents Rules, 2003 in twofold manner:

• Expansion of Rule 18 (2): A provision is proposed to be added that:
  

  “Provided that, in respect of international application, a patent agent shall file, leave, make or give all documents including scanned copies that are required to be submitted in original, only by electronic transmission duly authenticated;”

  
  

  “Provided further that the original documents, if required to be submitted in original, shall be submitted within a period of fifteen days; failing which such documents shall be deemed not to have been filed”.

• ·         Expansion of Expedited Examination of Applications i.e. Rule 24C: addition of SMEs and women inventors in the category of applicants for expedited examination purposes is proposed. The Draft Rules mentioned that

sub-rule (1) of rule 24 C, clause (b) shall be substituted, as follows: -

• b)      “ that the applicant is a startup; or
• c)      that the applicant is a small entity as defined in rule 2(fa) of the principal rules; or
• d)      that in case of natural persons only, the applicant or at least one of the applicants is a female; or
• e)      that the applicant is a government undertaking in accordance with clause (h) of sub-section (1) of section 2 of the Act in case of an Indian applicant, or is a similar entity in case of a foreign applicant. 
• Explanation:- The term ‘substantially financed’ in sub-clause (iv) of clause (h) of sub-section (1) of section 2 of the Act shall have the same meaning as in the Explanation to sub-section (1) of section 14 of the Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971, or
• f)       that the applicant is eligible under an arrangement for processing an international application pursuant to an agreement between Indian Patent Office with another participating patent office. Explanation: The patentability of patent applications filed under clause (f) above will be in accordance with the relevant provisions of the Act.”

Additionally, a proviso is proposed to be inserted in Rule 24 C (4) that ‘Provided that if such requirements are met before issuance of FER, the application shall be processed for expedited examination in accordance with the provisions of rule 24-C.’

The draft rules further propose to insert the sub-rules in the principle rule 55 of the Patent Rules and suggested to constitute an Opposition Bench in case of pre-grant opposition. The proposed sub-rules are as follows:

1.       After sub-rule 2: 2(A) the Controller shall constitute a bench comprising of two members who shall proceed to dispose of the application and the representation jointly. If in case, the members of the Opposition Bench differ in opinion on any issue, the Controller shall nominate a third member to the bench and subsequently the majority decision will be treated as final. 
2. The word “Controller” shall be substituted with the word “bench” in sub-rules (3) and (5) of the principle rule 55. Meaning thereby, the bench in the case of sub-rule (3) and (5) shall be responsible for the refusal or acceptance of the pre-grant opposition. 

The Draft Rules can be accessed here, which are open for public comments for 30 days from the date on which copies of the Gazette of India, in which this notification was published were made available to the public i.e. December 4, 2018. 

Commercialization of GI Tags by States in India

Source: www.deskgram.net

November 14, 2017 was an important day for West Bengal, as it marked the end of a long-standing legal battle between Odisha and West Bengal over a GI tag for the popular sweet ‘Rosogolla’. The dispute had ended on positive note for West Bengal, which including the Rosogolla, now possessed over 13 GI Tags. Recently, West Bengal announced that November 14 from 2018 onwards would be celebrated as the ‘World Rosogolla Day’, to commemorate the one-year anniversary of the largely political grant of the GI tag. The controversial grant raised a lot of questions regarding the Geographical Indication tag.

The Geographical Indication Tag, more popularly known as the GI tag was first pushed for at the WTO by the European Union in order to protect its regional products such as the Champagne, Scotch etc and grant monopoly for its trade in the international market. A GI has been defined under Article 22 (1) of the Trade Related Aspects of Intellectual Property Agreement as "Indications which identify a good as originating in the territory of a member, or a region or a locality in that territory, where a given quality, reputation or characteristic of the good is essentially attributable to its geographic origin. As a member of the WTO, India enacted its own Geographical Indications Act in 1999, which came into effect in 2003.

However, unlike the international scenario, GI Tags have turned into a ‘rat race’ between the states, which have to come to see Geographical Indications as a matter of pride and culture. Once received, the state is seen trying to capitalize the maximum out of these GI tags. The ‘World Rosogolla Day’ initiative of the West Bengal is just one such example.

The main problem in such commercialization is the threat it poses to the genuineness of the Geographical Indications granted. A hasty GI Registry may not look into all the necessary conditions, and hence products which may not have any value derived from the geographical area, or persons who are not truly representative of the community which originally produced the product may end up with a GI Tag. A real-life example of this is the ‘Rosogolla’ tag itself, which was granted to the West Bengal State Food Processing and Horticulture Development Corporation Limited (WSFPHDCL), which is neither involved in the manufacture and marketing of the product, nor did it represent the community which made it.

Further, such rampant commercialization would only increase such conflict between states, as states, seeing Geographical Indications as a purely commercial tag, may try to seize all opportunities to get these tags for themselves. This would only dilute the Indian GI Tag more. With the number of GI tags increasing year by year, the trend however seems to be indicating only more dilution.

ALSO READ : India: Rasgulla originated in West Bengal, rules the country’s GI authorities- http://ssrana.in/Admin/UploadDocument/IP%20Updates/Rasgulla-gets-GI-tag-in-India.htm

India: Disposal of goods confiscated by customs

Source: www.cbic.gov.in

Confiscation can be understood as seizing of any goods by an authority. In India, an officer of Customs can seize any goods, if he has reason to believe that the same are liable to confiscation, under the Customs Act, 1962. Chapter XIV of Customs Act, 1962 deals with Confiscation of goods and conveyances and imposition of penalties. In this article, the specific issue that is dealt with is how are the goods confiscated by customs authority disposed of?

The disposal of goods confiscated by customs is regulated vide Circular No 11/2012, amended by Circular No. 39/2016.  The circular lays down the following points for due disposal of confiscated goods -

• Sale of NCCF/KB/Consumer Cooperatives - Any lot of confiscated/seized consumer goods, which is ripe for disposal and whose value does not exceed INR 5 lakh, shall be offered to NCCF/KB/Other Central Government Employees Consumer Cooperative Society/Multi-State Consumer Cooperative Societies/State Consumer Cooperatives, at a uniform rebate/discount of 10% (superseding existing Board’s circulars/instructions to this effect only), subject to the specified conditions.
• Sale through e-auction / auction cum tender- goods of all types and confiscated/seized consumer goods whose value exceeds INR 5 lakhs shall not be sold directly to the aforesaid cooperative Societies/Federation and shall be sold by e-auction or auction-cum-tender basis. In such e-auction or   auction-cum-tender process, all stakeholders/persons including NCCF/KB/other Central Government employee’s consumer cooperatives/Multi-State/State cooperatives or National/State level Cooperative Federations can also participate, subject to the fulfilment of prescribed conditions
• Sale through Army Canteen/CSD- Confiscated goods, as much as can conveniently be made available, after meeting the earlier demands of Army authorities/Military Canteens/CSD and/or   the   consumer’s cooperative stores, are to be offered to the Central Government Employees Consumer Cooperative Society Ltd.

India: Scope of S.31D of the Copyright Act

Introduction

The Copyright Amendment Act was introduced in 2012 with the primary objective of establishing a just framework for the administration of copyright and sharing revenue to protect ownership rights over copyrights. One of the most important change brought in by this amendment was through S.31D, which provided that any broadcasting organization which wants to broadcast a literary, musical or sound recording already published may do so subject to various conditions mentioned in the section. The provision also provided the Appellate Board with the power to determine the royalty rates in cases of radio broadcasting, and also provided differential royalty rates for radio and television broadcasting and required the broadcaster to broadcast the work without any substantial alteration, giving credits to the original author of the work. The scope of the section was further expanded through a DIPP memorandum dated December 2016 by which online broadcasting too was brought under the scope of this section.

Controversy surrounding the section  

This section has been heavily criticized, and has been a matter of constitutional challenge on various grounds such as

• Not allowing commercial negotiations to determine royalty rates favors broadcasters at the expense of the copyright owners
• The copyright owners are not given the authority to negotiate terms of royalties with the broadcasters
• The provision is violative of Art. 19 (1) (g) of the Constitution as it provides the Appellate Board the power to fix rates for radio broadcasting. This is not a reasonable restriction.

The first challenge to the provision came in the matter of South Indian Music Companies v. UoI,[1] where an association of music companies laid a challenge to Sections 11, 12, 31 and 31D of the Copyright Act, where the Madras High Court, commenting on the constitutionality of Sections 31D upheld the validity, stating that it ‘protects public interest through private interest’. The High Court further said that the amendment is in line with India’s international obligations under the Berne Convention and the TRIPS Agreement.

While compulsory licensing under S.31D has been upheld, restrictions on royalty rates when expanded to online broadcasting would have far reaching effects, especially at this age of online streaming services. As no constitutional challenge has been raised as of yet, the area still remains a lacuna in Copyright law.

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[1] W.P.No. 6604 of 2015, Madras High Court

India: Calcutta High Court on Trademark Infringement

Source: www.calcuttahighcourt.gov.in

Recently, the Calcutta High Court in the case of La Opala R.G. Ltd vs Cello Plast & Ors, held that in any event it is no defense that since the infringing articles were sold in cartons there is no infringement

Brief Facts

• La Opala R.G. (hereinafter referred to as ‘the Plaintiff’) is a well-known and well-reputed manufacturer of opal glass tableware and was in business since 1980s.
• The products of the Plaintiff with their distinctive shape, configuration, surface pattern and artistic work on it were said to have a distinctive identity of their own and as a whole formed a trade dress of the product.
• The Plaintiff also referred to various trade dresses and/or marks sold under the brands Diva Classique, Ivory, as Mystrio Black, Crimson Bloom, Golden Fall and Dazzle Purple.
• The products that had the said trade dresses were identified as a mark by people common to the trade and public at large and it is the said trade dresses by which the people identify the products of the Plaintiff.
• The Plaintiff submitted that it conceived the said trade dresses and/or the marks, namely, the Dazzle Purple in 2009, the Mystrio Black in 2010, Golden Fall in 2012 and the Crimson Bloom in 2014.
• The Plaintiff submitted that it had been using the same since the date of conception of the said designs and all the brands in commercial manner continuously and extensively. It further submitted that there was no prior use of the same by any third party.
• It also submitted that it had applied for registration of the said trade dress before the Trade mark Registry in order to acquire statutory right of the said dress and/or the mark.
• The Plaintiff disclosed the annual sales figures of its products since 2013 which runs into crores and documents to show that the trade dress and/or mark had been advertised through all the publicity media both within and outside the jurisdiction of this Court.
• The Plaintiff contended that in July 2017, the representative of the Plaintiff while visiting one of its distributors and sellers of their goods in the locality of the Respondents came across the products of the Cello Plast.
• The Plaintiff contended that Cello Plast (hereinafter referred to as ‘the Respondent’) were surreptitiously seeking to represent the trade dress and the shape, pattern, artistic getup, motif and the design on their products identical or deceptively similar to that of the trade dress or the mark of the Plaintiff.

Issues

Whether the Respondent’s goods constituted an attempt of passing off his goods under the Plaintiff’s trademark and thereby infringement of the Plaintiff’s trademark?

Plaintiff’s Contentions

• It was contended that an unwary customer with imperfect recollection would identify the product of the Respondent as that of the Plaintiff.
• It was also submitted that it’s an undisputed fact that the Plaintiff’s products were in market prior to the infringing materials.
• It was further argued that both the products on visual examination appeared to be deceptively similar, if not identical. The infringing products were slavish imitation of that of the Plaintiff and cannot be said to be common to trade.
•  Respondent’s Contentions
• It was submitted that when these kinds of products are sold in a carton, the goods will be identified with the name of the manufacturer prominently displayed in the carton and not the product individually.
• It was submitted that the customers would buy such products on the basis of the name of the manufacturer and not of the product.

Court’s Decision

•  The Court took note of the fact that the cartons produced by the Respondents prominently displayed the name of the Respondent in relation to the product, and that the products can also be sold as in pieces and separately.
• It held that in any event it is no defense that since the infringing articles were sold in cartons there is no infringement.
• It was reiterated that in an action for passing off the Court is regarded to protect the 'trade mark' which is an intellectual property developed by the Plaintiff by its own skill and popularized it over a period of time. Since the Court was of the prima facie view that were lot of similarities in the trade dress of the two products, if not absolute identity, and the Plaintiff was able to prove that the infringing products were slavish imitation of their products, an ad-interim injunction was granted against the Respondent.

India: IP Licensing Trends in India: Special Reference to Indian Music Industry and Sushila V. Hungama Digital Entertainment Decision

In the span of the last 50 years, the music industry has become largely commercialized, with entertainment companies spearheading the transition. With the expansion of the industry to the internet and the so called ‘on demand online platforms’, new questions have arisen regarding licensing rights and payment of royalties, mainly with regard to rights of the artist.

Rights conferred over audio works under the Copyright Act

The rights that an artist enjoys over his/her musical work are two-fold. One is with regards to the ‘musical work’ defined under Section 2 (p) of the Copyright Act as a work consisting of music and includes and graphical notation of such work. The royalties for assignment of the work can be claimed under Section 18(1) of the Copyright Act which provides for assignment of a work.

The other right which the artist enjoys is the performance right, which is provided for under Section 38A of the Copyright Act, inserted vide the 2012 Copyright Amendment Act. This section provides a performer, in addition to the rights given by the author of a work to reproduce, issue copies, sell or rent, and broadcast any right over a live performance. This section further provides the right of a performer to claim royalties over the commercial use of the performance.

The distinction between the two was a matter of contention in the matter of Sushila vs Hungama Digital Media Entertainment Pvt Ltd & Super Cassettes Industries Pvt. Ltd[1]

Sushila vs Hungama Digital Media Entertainment Pvt Ltd & Super Cassettes Industries Pvt. Ltd.

This matter pertained whether an artist can claim a violation of performance rights over an audio recording, when the license over the musical work have already been licensed via agreements. The Plaintiff, a singer brought an action against Hungama Entertainment, which was a subsidiary of T-Series, and ran an online platform which streamed music on demand. The Plaintiff alleged that the Defendant had streamed a studio recorded song of the Plaintiff on their online platform without her permission, thereby violating the performance rights of the Plaintiff. The Defendant here contended that they had the legal authority to stream the recording, as the right over the same had already been licensed vide agreements dated 2015 to T Series, Hungama’s parent company.

The Court here decided to distinguish between the right over a musical work and a performance right and held that performance right exists only over ‘live performances’. Interpreting the literal wording of Section 2(q) and 2(qq) which defined ‘performance’ and ‘performer’ respectively, the Court stated that the word ‘performance’ is qualified by the term ‘live’, and the same studio recordings cannot be equated to the same. The Court further held that the right over the musical work is a primary right, and the right over a live performance is only a secondary right.

The judgment is significant in the sense that it laid down the scope of each of the rights conferred to an artist. Therefore, right over studio recording cannot be equated to a live performance, and royalties under Section 38A cannot be claimed if the right over musical work has already been conferred by a license.

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[1] http://iprmentlaw.com/wp-content/uploads/2018/11/Sushila-vs-Hungama.pdf