Script it! ^TM The Essay Competition

Vidya Darshan Rana Charitable Trust in collaboration with S.S. Rana & Co. presents Script it! ^TM The Fifth All India Essay Writing Competition, to give young students an opportunity to understand the role played by intellectual property.

Young minds are encouraged to focus on the World IP Day theme i.e. "Digital Creativity: Culture Reimagined", for their essays and hence may contemplate writing on topics related to IP, cultural creativity, Geographical Indication, Legal Aspects of File sharing, etc

The last date for sending in entries is April 26, 2016, on the occasion of World IP Day. Three best essays will be selected by our panel of judges and the winners will be announced in our weekly newsletter, IPConnect. Winners of the competition will be awarded money prizes alongwith certificates.

The aim of the competition is to provide a platform to students to share their views on the relevant theme and enable them and their school(s) or college(s) in getting National and International recognition.

India: Union Budget 2016-17 Proposes Steps to Encourage Domestic Patent Regime

New Delhi                                                                                   February 29, 2016

The much awaited Indian Union Budget 2016-17 was presented by the Hon’ble Indian Finance Minister, Mr. Arun Jaitley in the Indian Parliament on February 29, 2016.

The Budget broadly focuses on issues regarding tax, healthcare, education, energy, investments, infrastructure, agriculture and banking. The Indian Government has proposed a nominal GDP growth rate of 11%, that is, real growth plus inflation, for the year 2016-17 in the Budget.  Direct and Indirect Tax Dispute Resolution Schemes are also being introduced for cases in litigation. It also proposed to provide a deduction of 100% of the profits and gains derived by start-ups involving innovation development and processes or services driven by technology or intellectual property. The benefit of a 100% tax exemption for 3 years will be available to all eligible startups, that is, those which are set up before April 1, 2019. As per the Start Up India: Action Plan, a startup is defined as an entity (private limited company, registered partnership firm or limited liability partnership) that aims to develop and commercialize a new product/service/process or a significantly improved existing product or service or process, that will create or add value for customers or workflow. The annual turnover should also be less than INR 25 crores. In order for a ‘Startup’ to be considered eligible, the Startup should be:

• Supported by a recommendation from an Incubator established in a post-graduate college in India or,
• Supported by an incubator which is funded by the Government as part of any specified scheme to promote innovation or,
• Supported by a recommendation from an Incubator recognized by the Government or,
• Funded by an Incubation Fund/Angel Fund/ Private Equity Fund/Accelerator/Angel Network registered with SEBI endorsing the innovative nature of the business or,
• Funded by the Government as part of any specified scheme to promote innovation or,
• Having a patent granted by the Indian Patent and Trademark Office in areas affiliated with the nature of business being promoted. 

Unfortunately, the last criteria of eligibility regarding patents proves to be a shortfall in the context of the 100% tax exemption. This is so because it takes years for a patent to get granted, by which time the entity would no longer be able to avail the tax exemption, hence, leaving a question mark on the practicality of the said provision.

Introduction of a New Section in the Income Tax Act for Income from Patents

A major highlight of the Budget is that it also proposes a special patent regime where the existing 30% tax is reduced to 10% on income from the worldwide commercial exploitation of patents developed and registered in India. For the same purpose, it has been proposed that a new Section, that is, Section 115BBF, should be inserted in the Indian Income Tax Act, 1961, to provide that where the total income of the eligible assessee’s income includes any income by way of royalty for a patent, developed and registered in India, such a royalty shall be taxable at the rate of 10% (plus applicable surcharge and cess) on the gross amount of the royalty. These amendments are stated to come into effect from April 1, 2017, and will apply from the assessment year 2017-18.

Current Situation

Currently, a tax of 30% is being levied on a person owning a patent registered in India and exploiting it abroad as per the existing corporate tax and income tax laws. This is a burden on innovators and hampers the innovation process. The Budget has tried to overcome this shortfall in the Indian laws in order to make India the ‘next big thing’ when it comes to patents and to bring India to a level playing field as all other advanced economies of the world.

Changes in the Existing System

The Budget proposes that, now an income tax of 10% will be levied on a resident of India owning a patent developed and registered in India and exploiting it abroad instead of 30 % as earlier. The move aims to encourage research and development (R&D) in the country and is in consonance with the Start Up India initiative that the ruling Government in India is trying to promote. As per the Budget, only a resident, that is an individual or a company can avail of such a benefit. As per the provisions of the Income Tax Act, 1961, a resident can either be a:

1. An individual - If in the previous year, he was either present in India for a period amounting in all to 182 days or more or was present in India for a period amounting in all to 60 days or more in the previous year, provided that he has been present in India for a period amounting in all to 365 days or more during the 4 years immediately preceding the previous year.
2. A company - If it is considered an Indian company, whether its control and management is in India or abroad, wholly or partially, or a foreign company, if its place of control and management is wholly situated in India only.

Push to Pharmaceutical Companies

Pharma companies are expected to benefit from the aforesaid push to patents. Large Indian and global drug makers are set to benefit from the Budget announcement of a 10% tax rebate on the earnings from global patent filings. The move may help Indian drug makers such as Sun Pharma, Dr. Reddy's, Lupin and Wockhardt, among others, who are expanding their global businesses through new drug filings. “Research is the driver of innovation and innovation provides a thrust to economic growth”, Mr. Arun Jaitley noted in his speech. Wockhardt Chairman, Mr. Habil Khorakiwala, also lauded the step by saying that it will spur innovation and manufacturing in India. Mr. D. G. Shah, Secretary General of the Indian Pharmaceutical Alliance (IPA) reportedly stated that the flat corporate tax structure of 25% on companies which commence production after 2016, will also give a boost to the drug manufacturers who might want to set up new manufacturing facilities.

Benefits of the Provisions

In order for an entity to gain the aforementioned advantage, it must fall within the definition of a ‘resident’ as per Section 6 of the Indian Income Tax act, 1961.  So, Indian individuals and companies will get an incentive to operate in India instead of moving abroad, hence, tackling the problem of brain drain, thus, creating employment opportunities and promoting economic growth. The introduction of the new provision will encourage indigenous R&D activities in order to make India a global R&D hub. Therefore, the Government has decided to introduce this new concessional taxation regime for income from patents. The aim of this provision is to provide an additional incentive for companies to retain and commercialize the existing patents and develop new innovative patented products. 

Budget and the E-Commerce Sector

India has allowed 100% foreign direct investment (FDI) in e-commerce with the restriction that companies can engage only in B2B e-commerce activities, that is, the trade taking place between a manufacturer and a wholesaler or a wholesaler and a retailer. The current FDI policy does not allow FDI in retail e-commerce activities, that is, B2C commerce, that is the trade taking place between a retailer and a consumer. The Department of Industrial Policy and Promotion had suggested that 100% FDI should be allowed in the market place model e-commerce activities and was reportedly working on guidelines for the same. The Budget was being eagerly awaited as it was expected that FDI would be introduced in retail e-commerce activities as well. But the Budget disappointed many e-commerce giants by not incorporating any provisions in this regard. This was one of the very few points of the otherwise pro-business Budget that were not received very well.

Concluding Remarks

The steps proposed in the Budget are pro-economic growth, giving special emphasis to the ‘Make In India’ vis-à-vis ‘Start Up India’ initiatives launched by Prime Minister Mr. Narendra Modi in recent times. If implemented effectively, India is sure to go up as a hot destination for business investments. 

India: Department of Industrial Policy and Promotion Releases Discussion Paper on SEPs

The Indian Ministry of Commerce and Industry, through the Department of Industrial Policy and Promotion (DIPP), has published a discussion paper on Standard Essential Patents (SEP) and their availability on fair, reasonable and non-discriminatory (FRAND) terms. The discussion paper can be accessed here.

An essential or standard essential patent (SEP) is any patent claiming an invention that must be used to comply with a standard, that is, a patent that protects a technology that is important to comply with a standard. All SEP owners are under an obligation to license their patented technology, setting a standard for the industry, and such a license must be granted on the FRAND terms. At present, Indian jurisprudence on the concept of FRAND licensing practices for SEPs is just starting to gain momentum. The rationale behind the FRAND terms is that it benefits the inclusion of patented technology in technical standards along with ensuring that the SEP holders do not abuse the dominant market position that they gain from the widespread adoption of a voluntary technical standard. 

The objective of the discussion paper is primarily to invite the views, comments and suggestions from the stakeholders and public in order to develop a suitable policy framework to define the obligations of the essential patent holders and their licensees. The last date to respond to the paper is March 31, 2016. This paper tries to sensitize stakeholders, organizations and citizens regarding the need and significance of regulating SEPs and facilitates their availability on the FRAND terms. It aims at discussing issues like whether the existing provisions of IPR legislations, especially the Patents Act, 1970, and anti-trust legislations are sufficient to address various issues related to SEPs and their availability on FRAND terms and if this is not possible, then whether these issues need to be addressed through appropriate amendments to the IPR related legislations. The paper contemplates the changes that need to be affected thereon. The other questions which the paper has dealt with for the stakeholders' views include what the IPR policy should be of an Indian standard setting organizations in the developing of standards for telecommunication sector and other sectors in India where the SEPs are used. Views are specifically invited for Section XI of the paper, titled ‘Issues for Resolution’, apart from other issues of concern relating to SEPs.

Suggestions are invited on the whether there is a need to prescribe guidelines on the working and operation of the standard setting organizations by the Government of India and what all areas of working should be covered. The paper aims to find out if there is a need to prescribe guidelines on the fixing of royalties for the SEPs and defining FRAND terms by the Government, and if not so, which would be the appropriate authority to issue the guidelines and what could be the possible FRAND terms. It also questions the basis on which the royalty rates should be fixed for SEPs, whether the total payment of royalty for numerous SEPs used in one product should be capped and if this limit should be fixed by the Government or a statutory body or left to the discretion of the parties. The paper then looks into the issue of the practice of non-disclosure agreements leading to the misuse of the dominant position and being against the FRAND terms.

Another point of discussion was what the appropriate mode and remedy for settlement of disputes in SEP matters should be and how it should be determined whether a patent declared as an SEP actually is an essential patent, particularly when bouquets of patents are used in one device. Lastly, it questions whether there is a need for setting up an independent expert body to determine the FRAND terms for SEPs and devising a methodology for this purpose.

An increasing pervasiveness of standardized technology in virtually all sectors, especially telecommunications, whether in India or worldwide, has led to issues associated with SEPs becoming increasingly disturbed. The 28-page discussion paper deliberates upon such issues, particularly in the telecom sector, and seeks the views and comments of all the stakeholders on all such issues. By initiating deliberations on this issue, DIPP aims at moving forward to achieve national development and technological goals by protecting the private intellectual property rights and securing the public interest along the way.

India: First National Conference on the Economics of Competition Law, 2016

New Delhi                                                                                         March 3-4, 2016

The Competition Commission of India (CCI) organized a two-day event for the First National Conference on the Economics of Competition Law, 2016, on March 3-4, 2016, at Gulmohar, Indian Habitat Centre, Lodhi Road, New Delhi. The goal of the Conference was to provide a forum to the scholars, practitioners and experts working in the area of competition law for the exchange of ideas, views and research findings on various economic theories, tools and applications relevant to anti-trust enforcement. 

The Conference had six technical sessions and two panel discussions.

Indian Union Minister, Mr. Jayant Sinha, delivered the inaugural address at the Conference. The Indian Minister of State for Finance and the Secretary of Ministry of Corporate Affairs, Mr. Tapan Ray, were also present at the occasion. 

Mr. Jayant Sinha noted that India must grab the opportunity to become the leader in competition law enforcement amongst younger jurisdictions and stressed on the fact that the role of the market and its importance in achieving the pro-poor objectives of the Government deserves better appreciation. He also stated that it was incumbent upon the CCI to build and create a community of experts including academia, consultants, legal practitioners and professionals within the organization. He urged the CCI to adopt the best global practices to enforce competition law as CCI, in existence since 2009, is relatively much younger than most competition jurisdictions in the developed economies.  

   

CCI Chairman, Mr. Devender Kumar Sikri, observed in his introductory remarks that the implementation of competition law should be judicious in nature. Apart from this, there must be a meaningful dialogue between law and economics so that the legal principles and economic perspectives can be harmonized towards an efficient, precise and prudent decision-making.

Speaking at this event, CCI Member, Mr. Augustine Peter, said that the focus of the present day competition assessment is on the use of more economics, that is, economic evidence and quality availability of data in competition law enforcement.

Indian Patent Office- Revised Guidelines for Examination of CRIs Issued

The Office of the Controller General of Patents, Designs and Trade Marks (CGPDTM) has re-issued a set of guidelines applicable to Examination of Computer Related Inventions (CRIs) on February 19, 2016. The aim of these guidelines are to “further foster uniformity and consistency in the examination of CRIs” and “bring out clarity in terms of exclusions expected under Section 3(k) so that eligible applications of patents relating to CRIs can be examined speedily”. The guidelines are being hailed as a welcome development by various IT think tanks who had opposed the August, 2015 guidelines issued by the Indian Patent Office (IPO) related to CRIs.

IPO in August, 2015 issued guidelines pertaining to Examination of CRIs which allowed patenting of software, a hitherto contentious issue for the software industry at large. The guidelines were met with heavy opposition from a lobby of various IT stakeholders who were concerned about the detrimental effect on IP innovators writing code against infringing action by multinational companies. The guidelines were also criticized for bypassing the explicit provisions of Section 3(k) of the Indian Patents Act which excludes: “a mathematical or business method or a computer program per se or algorithms” from patentability. However, in December, 2015, after significant pressure exerted by several IT groups, including appeals made to the Prime Minister’s Office, the Indian Patent Office stayed the guidelines, paving way for the current substantially amended revised guidelines.

The main provisions of the revised guidelines are highlighted below:

• Computer programs per se are excluded from patentability
• Three step test for determining patentability of CRI has been laid down which include:
1. Properly construe the claim and identify the actual contribution;
2. If the contribution lies only in mathematical method, business method or algorithm, deny the claims;
3. If the contribution lies in the field of computer programme, check whether it is claimed in conjunction with a novel hardware and proceed to other steps to determine patentability with respect to the invention. The computer programme in itself is never patentable. If the contribution lies solely in the computer programme, deny the claims. If the contribution lies in both the computer programme as well as hardware, proceed to other steps of patentability. 

• If the patent application relates to apparatus/system/device i.e. hardware based inventions, each and every feature of the invention shall be described with suitable illustrative drawings. If these system/device/apparatus claims are worded in such a way that they merely and only comprise of a memory which stores instructions to execute the previously claimed method and a processor to execute these instructions, then this set of claims claiming a system/device /apparatus may be deemed as conventional and may not fulfil the eligibility criteria of patentability.
• If, however, the invention relates to ‘method’, the necessary sequence of steps should clearly be described so as to distinguish the invention from the prior art with the help of the flowcharts and other information required to perform the invention together with their modes/ means of implementation.
• The working relationship of different components together with connectivity shall be described.  
• The desired result/output or the outcome of the invention as envisaged in the specification and of any intermediate applicable components/steps shall be clearly described.
• Claims which are directed towards computer programs per se are excluded from patentability such as, (i) Claims directed at computer programmes/ set of instructions/ Routines and/or Sub-routines. (ii) Claims directed at “computer programme products” / “Storage Medium having instructions” / “Database” / “Computer Memory with instruction” i.e. computer programmes per se stored in a computer readable medium.

The said guidelines as published on the website www.ipindia.nic.in can be accessed here.

India: Delhi High Court Clarifies Transfer Status of IPR Suits Vis-à-Vis Commercial Courts Act, 2015

The Delhi High Court, vide its judgment dated February 15, 2016, brought clarity to a few key issues regarding the status of transfer of pending and filed Intellectual Property Rights (IPR) cases vis-à-vis the Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Act, 2015 (hereinafter referred to as the “Commercial Courts Act”). Hon’ble Mr. Justice Valmiki J. Mehta came to the conclusion by clubbing numerous suits, transfer petitions and amendment applications before the Delhi High Court seeking enhancement of pecuniary jurisdiction, interpreting the Act with respect to the expression ‘filed or pending’ in the first proviso of Section 7. This expression came into controversy while deciding whether it means that the High Court would entertain all pending matters even if it does not have pecuniary jurisdiction to entertain the matters or not.

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance was intended to ensure that the commercial cases are disposed of expeditiously, fairly and at reasonable cost to the litigant. Along with improving the international image of the Indian justice delivery system but the same was in the middle of a controversy regarding the interpretation of certain provisions.

The Ordinance came into effect on October 23, 2015, and stated that the State Governments, in consultation with the respective High Courts, will constitute Commercial Courts at the District level, that is, where the District Courts have original civil jurisdiction. No Commercial Court will be constituted where the respective High Court has the original civil jurisdiction. The Chief Justices of the High Courts will constitute Commercial Divisions where the High Courts have original civil jurisdiction. The Chief Justices of the concerned High Courts will constitute Commercial Appellate Divisions where the High Courts have appellate jurisdiction. Thus, the High Courts at Delhi, Calcutta, Bombay, Madras and Himachal Pradesh will have Commercial Divisions and Commercial Appellate Divisions as they have original and appellate jurisdictions. In all other states, the District Courts will have Commercial Courts as they have original jurisdiction and the High Courts will have Commercial Appellate Divisions as they have appellate jurisdiction.   

It also laid down that all commercial disputes, that is, disputes related to mercantile issues, partnership agreements, intellectual property rights, insurance, etc. with a specified value of INR 2 crores and above lie with the Commercial Division of the respective High Court as the High Court has the original civil jurisdiction. All commercial disputes with a specified value of INR 1-2 crores lie with the Commercial Court of the respective District Court and all commercial disputes with a specified value of INR 1 crore and below lie with the District Court with original civil jurisdiction.

Section 7 and its proviso of the Ordinance was what created the confusion. It stated that all suits relating to commercial disputes with a specified value filed in the High Court having original jurisdiction shall be heard and disposed of by the Commercial Division of the High Court provided that such suits are filed on the original side of the High Court.

The words ‘and filed’ can be interpreted to mean that if a suit was originally filed in the High Court, High Court through its Commercial Division will hear the suit, even if specified value of the pending suit does not lie in the pecuniary jurisdiction of the Court. Another interpretation of the word can be that if a suit is filed in the High Court, High Court will hear the suit only if it continues to have pecuniary jurisdiction of the suit. Justice Mehta contemplated that something was left unsaid by the legislature in the expression.

To remove the possibility of having different interpretations to the words ‘and filed’, the Government of India and the Press Information Bureau issued a Press Note on December 16, 2015, saying an amendment was required to the proviso to clear out that the proviso will also apply to ‘pending cases’ so that ‘and filed’ could be construed to include pending cases. Subsequently, an amendment was made in the Act to change the said expression to ‘filed and pending’. The 78^th Report by the Department Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice contained the reason for changing the expression in the Act. It stated recommendations of the Standing Committee saying that the transfer of all pending commercial disputes to Commercial Courts and Divisions will overburden the Courts and defeat the purpose of establishing them, that is, swift disposal of cases. The committee suggested that instead of transferring pending cases to Commercial Courts, a sunset clause should be inserted so that only fresh cases in the pecuniary jurisdiction may be transferred.

Justice Mehta reiterated that the Report said that there was to be a sunset clause whereby only fresh cases with the pecuniary jurisdiction are to be filed in the Commercial Divisions of the High Courts and the pending cases would not be transferred and will be taken up by the Commercial Courts. Thus, the legislature has widened the expression ‘and filed’ to mean ‘filed and pending’, meaning thereby that any pending case will be continued to be tried by the Commercial Divisions of the High Courts even if it is below the specified value of INR 1 crore. This is the only interpretation possible.

Justice Mehta felt that the language of the proviso would have been better if the expression ‘irrespective of pecuniary jurisdiction’ was added even though the meaning of the legislature can be understood by the existing words. He also reiterated that Section 7 deals generally with IPR matters where such suits cannot be entertained by courts below the level of a District Court, meaning thereby that such suits can only be instituted in District Courts and High Courts. When it comes to IPR related suits, whether trademarks, copyrights, designs, patents or geographical indications, pending in the High Courts as on the date of introducing the Act, such suits will be entertained by the Commercial Divisions of the High Courts even if the specific value of the suits is above INR 20 lacs but below INR1crore, that is, not falling in the pecuniary jurisdiction. Justice Mehta has, thus, answered the issue regarding the first proviso to Section 7 of the Act of 2015 and cleared all doubts regarding the same.               

India: National Science Day celebrated countrywide on February 28th, 2016

National Science Day or Rashtrya Vigyan Diwas is celebrated in India on 28^th February, with events continuing till 29^th February, each year to celebrate the discovery of the Raman Effect by the famous Indian physicist, Sir Chandrasekhara Venkata Raman, on 28^th of February 1928, for which he was awarded the Nobel Prize in Physics in 1930.

It is a day that is celebrated every year with immense excitement at the Giant Metrewave Radio Telescope at Khodad, which is a the world’s most famous telescope operating at low radio frequencies, by the  National Centre for Radio Astrophysics under the Tata Institute of Fundamental Research. Department of Science and Technology presents awards every year at this event to recognize the efforts of individuals, government bodies and non-government bodies in popularizing science in the country.

Many scientific activities and programs are conducted that encourage the participation of scientists as well as students from schools and colleges. This celebration has provided a platform for new and young scientists to focus on and boost their career in the science profession. This is an initiative aiming to inculcate a scientific temper in the young minds and to make aware the general public so that take pride in the scientific achievements of the nation.

While the theme of the launch year, 1999, was ‘Our Changing Earth’, the theme of last year was ‘Science for Nation Building’. The Department of Science and Technology recently released the theme for this year as ‘Make in India: S&T Driven Innovations’.

The National Science Day is now celebrated with great enthusiasm as a science festival in India where students of schools and colleges, scientists and general public come together to take part in various events. The highlights of this event are:

• Students exhibit and demonstrate their science projects, at the end of which prizes are given for the best entries in different age groups.
• Programmes are organized to enable students to interact with well-known scientists and engineers.
• Radio-TV talk shows are held.
• Virtual tours and open houses are organized.
• Informative science movies are exhibited.
• A grand science exhibition is organized during the day to showcase science models by designed by the students.
• Students are engaged in enthralling events like watching the night sky and witnessing live projects.
• Quiz competitions, lectures, public debates, poster making and many more fun activities are also organized.

The Minister of Science and Technology also gives a message through his speech on this day every year to the students, scientists and general public of the nation to congratulate their efforts and encourage further innovation. The previous year, he laid emphasis on Science, Technology, Engineering and Mathematics (STEM) encouraging the youth to tap the vast potential available in these fields.

Hordes of people attend the National Science Day celebrations to participate in the events and witness the new projects and latest researches of various institutes that are displayed for the public. The National science Day is not only a fun and exciting event for the students but also a learning experience for them, along with an active participation from their parents and the general public.