MUMBAI SI LI C O N VALLE Y BAN G A LO RE SI N G A P O RE MUMBAI BKC NEW DELHI MUNICH NE W YO RK

Intellectual Property
Law in India
Legal, Regulatory & Tax

January 2018

© Copyright 2018 Nishith Desai Associates www.nishithdesai.com

 Intellectual Property Law in India
Legal, Regulatory & Tax

January 2018

[email protected]

© Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

Contents
1. INTRODUCTION 01

2. LEGISLATION 02

3. TRADEMARKS 03

I. Unconventional Marks 03
II. Scope of ‘Graphical Representation’ 04
III. Who can Apply? 04
IV. Is Prior use Required? 04
V. Is a Prior Search Necessary? 04
VI. What is the Process of Registration? 05
VII. Can the Registration Process be Expedited? 06
VIII. What is the Term of Registration? 06
IX. How can the Registration of a Trademark be Cancelled? 06
X. Grounds for Cancellation / Revocation 06
XI. Assignment of Trademarks 07
XII. License of Trademarks 07
XIII. Rights Conferred by Registration 07
XIV. Paris Convention 07
XV. Infringement of Trademark 08
XVI. Who can sue for Infringement? 08
XVII. Passing Off 08
XVIII. Recognition of Foreign Well Known Marks & Trans-border Reputation 09
XIX. Orders in Infringement and Passing off Suits 09

4. DOMAIN NAMES 10

5. COPYRIGHTS 11

I. Is Copyright Registration Compulsory? 11

II. Berne Convention and Universal Copyright Convention 11
III. What Rights does Copyright Provide? 11
IV. What is the term of Copyright? 12
V. First Ownership of Copyright & ‘Work for Hire’ 12
VI. Special Monetary Rights in Underlying Works
in a Cinematograph Film / Sound Recordings. 12
VII. Assignment of Copyright 13
VIII. Moral Rights 13
IX. Rights Related to Copyright 13
X. International Confederation of Societies of Authors
and Composers (CISAC) v. Aditya Pandey & ors 14
XI. Infringement of a Copyright 16
XII. Importation of Infringing Copies 16

© Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

XIII. Copyright Protection of Software 16

XIV. Rights Conferred 16
XV. Infringement – Defenses 16
XVI. Registration 17
XVII. Offences 17
XVIII. Copyright Societies 17
XIX. Compulsory Licenses and Statutory Licenses 18
XX. Copyright vis-à-vis design 19
XXI. Statutory License for Cover Versions 19

6. PATENTS 20

I. Novelty 20
II. Inventive Step 21
III. Industrial Application 21
IV. Inventions That are Not “Inventions” 21
V. Business Method Patents 22
VI. Computer Programs Per Se 22
VII. Pharma and Agro-Chemical Patents 22
VIII. Section 3(d), Reads as Under 23
IX. Patent (Amendment) Rules, 2016. 25
X. Who can be the Applicant? 25
XI. What is the Process of Registration? 25
XII. Opposition Proceedings 27
XIII. What is the term of a Patent? 27
XIV. Secrecy Provisions 27
XV. Can the Patent be Surrendered? 28
XVI. How can the Patent be Cancelled / Revoked? 28
XVII. Assignment / Mortgage / License of Patent 28
XVIII. Working of a Patent 28
XIX. Compulsory Licensing 28
XX. Infringement 30
XXI. Patent Linkage 31

7. DESIGNS 33

I. What is the Meaning “Design” Within the Scope of the Designs Act? 33
II. Who can Apply for Registration of a Design? 33
III. What is the Process of Registration? 33
IV. What are the Rights Conferred by Registration? 34
V. Assignment 34
VI. Cancellation of Design 34
VII. Piracy 34
VIII. Remedies 35
IX. Paris Convention 35

© Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

8. GEOGRAPHICAL INDICATIONS OF GOODS

(REGISTRATION AND PROTECTION) ACT, 1999 36

I. Registration 36
II. Rights Conferred by Registration 36
III. Classes 36
IV. Duration and Renewal 36
V. Procedure for Registration 37
VI. Prohibition of Assignment or Transmission 37
VII. Infringement 37

9. SEMICONDUCTOR INTEGRATED CIRCUITS LAYOUT

DESIGN ACT, 2000 38

I. Definitions 38
II. IC layout Designs not Registrable in India 38
III. Procedure for Registration of Layout Designs 39
IV. What are the Rights Granted to the Registered Proprietor? 39
V. What is the Term of Registration? 39
VI. Infringement of Layout Designs 39
VII. Penalty for Infringement 39

10. THE PROTECTION OF PLANT AND VARIETIES

AND FARMERS RIGHTS ACT, 2001 40

I. Varieties Registerable under the Act 40

II. Term of Protection 40
III. Setting up of PPV & FRA 41
IV. Registration of Plant Varieties now Possible in India 41

11. THE BIOLOGICAL DIVERSITY ACT, 2002 42

12. CONFIDENTIAL INFORMATION & TRADE SECRETS 43

I. Protection of Confidential Information in the Hands of Employees 43

II. Non-Disclosure Agreements 43
III. Internal Processes 44
IV. An Exit-Interview 44

13. INTERNATIONAL CONVENTIONS 45

14. SPECIAL TRIBUNALS 46

© Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

15. TAX REGIME IN INDIA 47

I. Residency and Scope of Income 47

II. Deemed Indian Source Incomes 47
III. Tax Incentives 49
IV. Depreciation 49
V. Second tier Royalty 49
VI. CUB Pty Ltd. v. Union of India - Foster’s case 49

16. ENFORCEMENT 51

I. Place of Filing of Infringement Actions 51

II. Interim Injunctions 51
III. Interim Relief 51

17. MEASURES TO CHECK IMPORT OF INFRINGING GOODS 53

I. Features of the IPR Rules 53

II. Procedure for Procuring Registration under the IPR Rules 53

CONCLUSION 55

© Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

1. Introduction
With the advent of the knowledge and to mention here that India has complied with
information technology era, intellectual its obligations under the Agreement on Trade
capital has gained substantial importance. Related Intellectual Property Rights (“TRIPS”)
Consequently, Intellectual Property (“IP”) and by enacting the necessary statutes and amending
rights attached thereto have become precious the existing statues. Well-known international
commodities and are being fiercely protected. trademarks were afforded protection in India
In recent years, especially during the last decade, in the past by the Indian courts, however, with
the world has witnessed an increasing number the notification of the Trade Marks Rules, 2017
of cross-border transactions. Companies are (“New Trade Mark Rules”), applicants are
carrying on business in several countries and provided with the opportunity to apply for and
selling their goods and services to entities in obtain recognition of their marks as well-known
multiple locations across the world. Since trademarks statutorily. Computer databases and
Intellectual Property Rights (“IPRs”) are software programs have been protected under
country-specific, it is imperative, in a global the copyright laws in India and pursuant to this;
economy, to ascertain and analyze the nature of software companies have successfully curtailed
protection afforded to IPRs in each jurisdiction. piracy through judicial intervention. Although
This paper analyzes and deals with the IP law trade secrets and know-how are not protected
regime in India and the protections provided by any specific statutory law in India, they are
thereunder. protected under the common law. The courts,
under the doctrine of breach of confidentiality,
There are well-established statutory,
have granted protection to trade secrets.
administrative, and judicial frameworks for
safeguarding IPRs in India. It becomes pertinent

© Nishith Desai Associates 2018 1

 Provided upon request only

2. Legislation
The Trade and Merchandise Marks Act, 1958 ƒThe Geographical Indications of Goods
has been replaced by the Trade Marks Act, 1999, (Registration and protection) Act, 1999;
The Copyright Act, 1957 has been amended to
ƒThe Semiconductor Integrated Circuits
protect computer programs as “literary work”;
Layout-Design Act, 2000;
The Patent Act, 1970 has been amended by the
Amendment Acts of 1999 and 2002 and 2005. ƒThe Protection of Plants & Varieties and
The Designs Act of 1911 has been completely Farmers Rights Act, 2001; and
replaced by the Designs Act of 2000.
ƒThe Biological Diversity Act, 2002
The following laws have been enacted to
These acts, and particularly the impact of recent
protect newly recognized species of intellectual
amendments to the acts, are discussed in greater
property in India:
detail in the ensuing sections.

2 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

3. Trademarks
In India, trademarks are protected both under of such associations would be those
statutory law and common law. The Trade and representing accountants, engineers
Merchandise Marks Act, 1940 (“TM Act, 1940”) or architects.
was the first law in this regard in India, which
was replaced later by the Trade and Merchandise
Marks Act, 1958 (“TM Act, 1958”). The Trade
I. Unconventional Marks
Marks Act, 1999 (“TM Act”) which has
India’s Trade Mark Registry has begun to
replaced the TM Act, 1958 came into effect on
recognize “unconventional trademarks” and has
September 15, 2003 and is in compliance with
extended trademark protection to a sound mark.
the TRIPS obligations. The TM Act allows for the
On August 18, 2008, India’s first “sound mark”
registration of service marks three-dimensional
was granted to Sunnyvale, California-based
marks and sound marks as well. India follows
Internet firm Yahoo Inc.’s three-note Yahoo
the NICE Classification of goods and services,
yodel by the Delhi branch of the Trademark
which is incorporated in the Schedule to the
Registry. It was registered in classes 35, 38 and 42
New Trademark Rules under the TM Act.1 A
for a series of goods including email, advertising
Trade Marks Registry had been established for
and business services and managing websites.
the purposes of the TM Act, 1940, which has
continued to function under the TM Act, 1958 Under the TM Act, the term ‘mark’ is defined
and TM Act. The Trade Marks Registry is under to include ‘a device, brand, heading, label,
the charge of the Registrar of Trademarks. The ticket, name, signature, word, letter, numeral,
head office of the Trade Marks Registry is in shape of goods, packaging or, combination
Bombay (Mumbai) and its branches are at of colors, or any combination thereof.’ Thus,
Calcutta (Kolkata), Delhi, Madras (Chennai), the list of instances of marks is inclusive and
and Ahmedabad. The territorial jurisdiction of not exhaustive. Any mark capable of being
each office has also been allocated. ‘graphically represented’ and indicative of a
trade connection with the proprietor is entitled
In addition to trademarks, the following
to get registered as a trademark under the
categories of marks can also be registered under
TM Act. This interpretation opens the scope
the TM Act:
of trademark protection to unconventional
ƒCertification marks are given for compliance trademarks like sound marks provided they
with defined standards, but are not confined satisfy the ‘graphical representation’ test and
to any membership. Such marks are granted are not prohibited under Section 9 and 11 of the
to anyone who can certify that the products Act. The only way the mark may be described
involved meet certain established standards. in the application for trademark is by way of
The internationally accepted “ISO 9000” “graphical representation”.
quality standard is an example of a widely
recognized certification mark.

ƒCollective marks can be owned by

any association. The members of such
associations will be allowed to use the
collective mark to identify themselves with
a level of quality and other requirements and
standards set by the association. Examples

1. Classes of Goods and Services: Classes 1 to 34 covers goods

while classes 35 to 45 cover services.

© Nishith Desai Associates 2018 3

 Provided upon request only

II. Scope of ‘Graphical IV. Is Prior use Required?

Representation’
Prior use of the trademark is not a prerequisite
for filing application or its registration and an
Trademark Rules define “graphical
application may be made for registration even
representation” as representation of a trademark
if the intention of the applicants is bona fide use
for goods or services in paper form or in
of the trademark in the future. In such a case,
digitized form.2 Therefore, sound marks can be
the application can be filed on a “proposed to be
represented on paper either in descriptive form
used basis”. However, in the case of descriptive
e.g. kukelekuuuuu (registered as Dutch sound
marks, the Trade Marks Registry usually
mark - onomatopoeia which sounds like the
insists upon proof of use of the mark and the
call of a cock) as traditional musical notations
distinctiveness acquired through such use
e.g. D#, E etc or in an MP3 format recording
before granting a registration.
which does not exceed 30 (thirty) seconds.3
Such recordings are required to be in a medium
which allows for clear replaying and should V. Is a Prior Search
be accompanied by a graphical representation Necessary?
of its musical notations. Other alternative
methods for their visual representation have
Though a prior search for a conflicting
also emerged like depictions by oscillogram;
trademark is not a prerequisite for filing an
spectrum, spectrogram and sonogram are now
application, it is advisable to carry out a search
being accepted in other jurisdictions. However,
and maintain the search results. In opposition
such representations must be handled carefully
proceedings or in infringement / passing off
in order to meet the requirements of trademark
actions, such search reports act as proof of
offices in India. In the case of Yahoo’s Yodel
honesty and good faith in the adoption of
mark, they represented the mark using musical
the marks.
notation.
In a move to curb the spread and sale
of counterfeit drugs, the Drugs Control
III. Who can Apply? Department of the National Territory of Delhi
has made search reports from the Registrar of
Any person claiming to be the proprietor of
Trade Marks mandatory before approving any
a trademark used or proposed to be used by that
drug-manufacturing license under a particular
person can file an application for registration.
brand name.
The application may be made in the name of
the individual, partner(s) of a firm, a company, This initiative by the Delhi Drugs Authority is
any government department, a trust, or even in pursuance of the Indian Supreme Court’s
in name of joint applicants. Domestic and (“SC”) observations in the case of Cadila Health
international applicants are treated at par. Care Ltd. v. Cadila Pharmaceuticals Ltd. (decided
An application can also be filed on behalf of on March 26, 2001).5 If adopted in the other
a company that is about to be incorporated or states in India, this provision will eliminate the
registered under the Companies Act, 2013.4
5. (2001) SCL 534. In paragraph 41 of the judgment, the
Supreme Court observed:
“Keeping in view the provisions of Section 17-B of the Drugs and
Cosmetics Act, 1940 which, inter alia, indicates an imitation or
resemblance of another drug in a manner likely to deceive being
regarded as a spurious drug it is but proper that before granting
permission to manufacture a drug under a brand name the au-
thority under that Act is satisfied that there will be no confusion or
2. See Rule 2 (k), The Trademark Rules, 2017. deception in the market. The authorities should consider requiring
such an applicant to submit an official search report from the Trade
3. See Rule 26, The Trademarks Rules 2017
Mark office pertaining to the trade mark in question which will
4. Section 46 of the TM Act. enable the drug authority to arrive at a correct conclusion.”

4 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

chances of approval of a deceptively similar and certain conditions in order to be protected as a

look-alike brand of the existing products. trademark – or as another type of mark – and
must indicate the class of goods / services to
which it would apply. The TM Act has laid
VI. What is the Process of down absolute 6 and relative grounds of refusal 7
Registration? of trademark registration. These grounds are
akin to the provisions of the UK Trademark Act
The application for trademark registration of 1994.
must contain a clear reproduction of the
The process of registration of trademarks under
mark, including any colors, forms, or three-
the TM Act can be explained utilizing the
dimensional features along with a statement
following diagram on the following page:
of use and an affidavit evidencing or showing
usage in India, if the application is being made
on a prior usage basis. These forms need to be
filed with the appropriate office of the Trade
Marks Registry. The sign must fulfill

SELECTION OF THE MARK Mark should be distinctive and should not be in the prohibited category.

Carry out a search at the Trade Marks Registry, to find out if same
SEARCH BEFORE
APPLICATION
or similar marks are either registered or pending registration. This is
advisable although not compulsory.

FILING OF THE Under the Trade Marks Act, a single application with respect to multiple
APPLICATION classes can be filed.

The application is dated and numbered, and a copy is returned to the

NUMBERING OF THE
APPLICATION
applicant / attorney. Once the mark is registered, this number is deemed
to be the Registration Number.

The Trade Marks Registry sends the “Official Examination Report” asking
MEETING THE OFFICIAL for clarificatioans, if any, and also cites identical or deceptively similar
OBJECTIONS marks already registered or pending registration. The applicant has to
overcome the objections.

The application is thereafter published in the “Trade Marks Journal,”

ADVERTISING OF THE
APPLICATION
which is a Government of India publication, published by the Trade Marks
Registry.

6. Section 9 of the TM Act.

7. Section 11 of the TM Act.

© Nishith Desai Associates 2018 5

 Provided upon request only

After publication, if the application is not opposed within the specified

ACCEPTANCE OF THE opposition period (four months), then the registration is granted. On the
APPLICATION other hand, if it is opposed by a third party, the registration is granted only if
the matter is decided in favor of the applicant.

After the objections are successfully met and answers are provided to the
OPPOSITION
PROCEEDINGS
queries, the Trade Marks Registry issues an official letter intimating their
acceptance of the application.

Registration of a trademark normally takes four to five years. However, when

ISSUE OF CERTIFICATE OF
REGISTRATION
the registration certificate is issued, it is always effective from the date on
which the application is filed.

VII. Can the Registration VIII. What is the Term of

Process be Expedited? Registration?
After receipt of the official number of an The registration is valid for ten years and is
application, the applicant may request for renewable for a subsequent period of ten years.
expedited processing of trademark application. Nonrenewal leads to a lapse of registration.
This can be achieved by filing Form TM – M However, there is a procedure whereby a lapsed
and paying a fees of INR 20,000 (if the applicant registration can be restored.
is an individual/startup/small enterprise) or
INR 40,000 (if the applicant falls under none
of the earlier mentioned categories) for each
IX. How can the Registration
class in which the trademark application of a Trademark be
is being filed. Such an application shall be Cancelled?
examined expeditiously and ordinarily within
three months from the date of submission
An application for cancellation or rectification
of the application. Thereafter, the following
of registration of a trademark can only be filed
proceedings viz. the consideration of response
by the aggrieved person (e.g. prior users of the
to the examination report, scheduling of show
mark). Such an application must be filed with
cause hearing, if required, the publication of
the Registrar of Trade Marks or the Appellate
the application and the opposition thereto, if
Board.
any, till final disposal of the application shall
also be dealt with expeditiously subject to such
guidelines as may be published by the Trade X. Grounds for Cancellation
Marks Registry.8 / Revocation
The following are some of the grounds on which
the registration of a trademark can be removed
or cancelled:

8. Rule 34, The Trademarks Rules 2017

6 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

ƒThe trademark was registered without XII. License of Trademarks

any bona fide intention on the part of the
applicant to use the trademark and there has The TM Act provides for a registration
been no bona fide use of the trademark for the procedure of registered / licensed users of the
time being up to a date three months before registered trademark. The benefit of use by the
the date of the application for removal;9 or registered / license user accrues to the benefit of
the mark’s proprietor.13 The TM Act recognizes
ƒThat up to a date three months before the
non-registered licensed use if only such use is
date of application for removal, a continuous
with the consent of the proprietor as embodied
period of five years from the date on which
in a written agreement and if such user satisfies
the trademark is actually entered on the
the prescribed conditions.14 Owners of Indian
register or longer has elapsed during which
registered trademarks, who are located abroad,
the trademark was registered and during
having no presence in India, can use their
which there was no bona fide use thereof;10
trademarks in India by granting licenses to the
or
Indian parties.
ƒThe trademark was registered without
sufficient cause, or the trademark is wrongly
remaining on the Register.11
XIII. Rights Conferred by
Registration15
XI. Assignment of The registration of a trademark gives the
Trademarks 12 registered proprietor the exclusive right to
use the trademark in relation to the goods or
A registered trademark can be assigned or services for which it is registered and to obtain
transmitted with or without the goodwill of the relief with respect to infringement of the same.
business concerned, and in respect of either or Registration acts as a public notice to others,
all of the goods or services in respect of which informing them that they should not use the
the trademark is registered. An unregistered trademarks which are registered or pending for
trademark can be assigned or transmitted registration.
with or without the goodwill of the business
concerned. However, in respect of assignment
of trademarks (registered or unregistered)
XIV. Paris Convention
without goodwill of the business concerned,
Reciprocity for the purpose of claiming priority
the prescribed procedure has to be followed,
is allowed from the applications originating
which inter alia, includes advertisement of
from the Paris Convention countries if filed
the proposed assignment to be published in
within 6 months from the date of priority.
the newspapers. The Registrar of Trade Marks
could impose certain restrictions and conditions
for the assignment or transmission of the
trademark. To be effective, the assignment
or transmission must be recorded with the
Registrar of Trade Marks.

9. Section 47(1) (a) of the TM Act.

10. Section 47(1) (b) of the TM Act.
13. Section 48(2) of the TM Act
11. Section 57 of the TM Act.
14. Section 2(1) (r) read with Section 48(2) of the TM Act.
12. Sections 37 to 45 of the TM Act deal with the provisions of
the assignment and transmission of the trade mark. 15. Section 28 of the TM Act.

© Nishith Desai Associates 2018 7

 Provided upon request only

XV. Infringement of or is detrimental to the distinctive character or

Trademark repute of the registered trademark.18
Under the TM Act, the following acts would also
Registration of a trademark is a prerequisite for amount to an infringement of the registered
initiating an infringement action. The following trademark:
essential conditions must exist for initiation of
ƒUse of the registered trademark as a trade
an infringement action:16
name or part of the trade name dealing
ƒThe allegedly infringing mark must be in same goods or services for which the
either identical or deceptively similar to the registered trademark is registered;19 or
registered trademark;
ƒUse of the trademark in advertising if such
ƒThe goods / services in relation to which the advertising takes unfair advantage of and is
allegedly infringing mark is used must be contrary to the honest practice in industrial
specifically covered by the registration of the or commercial matters, or is detrimental
registered trademark; to its distinctive character; or against the
reputation of the trademark.20
ƒThe use of the allegedly infringing mark must
be in the course of trade; and ƒUnder the TM Act, even oral use of the mark
can constitute infringement.21
ƒThe use must be in such a manner as to render
the use likely to be taken as being used as a
trademark. XVI. Who can sue for
A registered trademark is also infringed by use of Infringement?
a mark when because of:
The registered proprietor, his heirs and the
ƒIts identity with registered trademark and
registered user(s) can sue for infringement.
similarity with goods / services covered by
An assignee of a registered trademark can
registration;
also sue for infringement. A passing off suit
ƒIts similarity with registered trademark and can be converted into a combined action of
identity with goods / services covered by infringement and passing off, if the registration
registration; or of the trademark is obtained before the final
hearing of the passing off suit.
ƒIts identity with registered trademark and
identity with goods / services covered by
registration. XVII. Passing Off
Is likely to cause confusion on the part of the
The user of an unregistered trademark is
public (in case 3 above, confusion is presumed),
barred from instituting an infringement action.
or which is likely to have an association with
However, if the mark in question has become
the registered trademark.17
well known in India, the user of such a trademark
If an identical or similar mark is used with is not without recourse and may seek a remedy
respect to goods or services which are not by means of a passing off action. The purpose of
similar to those for which a registered this tort is to protect commercial goodwill and
trademark is registered, such use amounts to to ensure that one’s business reputation is not
infringement if a registered trademark has exploited. Since business goodwill is an asset and
reputation in India and the use of the mark
without due cause takes unfair advantage of
18. Section 29(4) of the TM Act.
19. Section 29(5) of the TM Act.
16. Section 29(1) of the TM Act. 20. Section 29(8) of the TM Act.
17. Sections 29(2) and (3) of the TM Act. 21. Section 29(9) of the TM Act.

8 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

therefore a species of property, the law protects of the mark is the relevant section of the
it against encroachment as such. In a passing public/consumers in India and abroad. As per
off action, the plaintiff must establish that the the Guidelines, in addition to such evidence,
mark, name or get-up - the use of which by the an applicant is also required to submit the
defendant is subject of the action - is distinctive following documents, if available at the time
of his goods in the eyes of the public or class of of filing an application for recognition of a
public and that his goods are identified in the mark as a well-known trademark (i) copies of
market by a particular mark or symbol. judgments of any court in India or the Registry
wherein the said mark has been recognized
as a well-known trademark; and (ii) details of
XVIII. Recognition of Foreign successful enforcement of rights in relation
Well Known Marks & to the said mark wherein the mark has been
Trans-border Reputation recognized as a well-known trademark by any
court in India or the Trademarks Registry
The New Trade Marks Rules provide applicants Prior to the notification of the New Trade Marks
with the opportunity to apply for recognition Rules, such recognition was provided via a court
of their marks as “Well-Known Trademarks”22 order/judgment, whereas now such recognition
in India. To apply, an applicant is required is proposed to be provided by registration of
to file Form TM – M and pay a fees of INR 1, mark as a well-known mark
00,000 for each trademark.23 The applicant is
also mandatorily required to submit evidence/
documents supporting the claim that the
XIX. Orders in Infringement
applied mark is a well-known one. The New and Passing off Suits
Trade Marks Rules do not specify the kind
of documents that are required to be filed in In an action for infringement of a registered
support of such an application. However, the trademark, or in an action for passing off for
Trademarks Registry has issued guidelines either a registered or unregistered mark, the
regarding the procedure to file for recognition court may order an injunction.24 The court may
of a trademark as a Well-Known Trademark also award damages or an order for account of
(“Guidelines”) on May 22, 2017. The Guidelines profits along with the delivery of the infringing
state that an applicant may submit the marks, for destruction or erasure. In addition
following documents as evidence to support to the civil remedies, the TM Act contains
a claim for recognition of a mark as a well- stringent criminal provisions relating to
known trademark, (i) any applications made offenses and penalties.
or registrations obtained for the mark; (ii) duly
corroborated copy of the annual sales turnover
of the applicant’s business based on the mark;
(iii) number of actual or potential customers of
goods or services sold under the said mark;
(iv) publicity and advertisements in relation to
the said mark; and (v) evidence as to recognition

22. A “well- known trade mark” in relation to any goods or ser-

vices, means a mark which has become so to the substantial
segment of the public which uses such goods or receives
such services that the use of such mark in relation to other
goods or services would be likely to be taken as indicating
a connection in the course of trade or rendering of services
between those goods or services and a person using the mark
in relation to the first-mentioned goods or services.
24. Section 135 of the TM Act provides for identical reliefs for
23. Rule 124 of the Trademarks Rules, 2017 infringement and passing off.

© Nishith Desai Associates 2018 9

 Provided upon request only

4. Domain Names
Indian courts have been proactive in granting radiff.com.27 In the www.yahoo. com case it has
orders against the use of infringing domain been held that “the domain name serves the
names. Some of the cases in which injunctions same function as a trade mark, and is not a mere
against the use of conflicting domain names address or like finding number on the internet,
have been granted are: www.sifynet.com v. and therefore, it is entitled to equal protection as
www.siffynet.com25 www. yahoo.com v. www. a trademark”.
yahooindia.com26 and www. rediff.com v. www.

25. Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd. AIR 2004
SC 3540.
27. Rediff Communications Limited v. Cyberbooth AIR 2000
26. Yahoo India v. Akash Arora (1999) PTC 201 (Del). Bom 27.

10 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

5. Copyrights
The Copyright Act, 1957 (“Copyright Act”), the person in the Register is the actual author,
supported by the Copyright Rules, 1958 owner or right holder. The presumption is not
(“Copyright Rules”), is the governing law conclusive. But where contrary evidence is
for copyright protection in India. Substantial not forthcoming, it is not necessary to render
amendments were carried out to the Copyright further proof to show that the copyright vests
Act, in early 2012 (“Amendment”). Some of in the person mentioned in the Register. In
the salient amendments have been discussed infringement suits and criminal proceedings,
in this section. when time is of essence to obtain urgent orders,
registration is of tremendous help. Copyright
The Copyright Act provides that a copyright
notice is not necessary under the Indian law to
subsists in an original literary, dramatic, musical
claim protection.
or artistic work, cinematograph films, and
sound recordings.28 However, no copyright
subsists in a cinematograph film if a substantial II. Berne Convention and
part of the film is an infringement of the Universal Copyright
copyright in any other work or in a sound
recording, if in making the sound recording of Convention
a literary, dramatic or musical work, copyright
in such work is infringed.29 A computer India is a member of the above conventions.
programme is treated as a “literary work” and The Government of India has passed the
is protected as such. International Copyright Order, 1958. According
to this Order, any work first published in any
country - which is a member of any of the above
I. Is Copyright Registration conventions - is granted the same treatment as if
Compulsory? it was first published in India.

Under Indian law, registration is not a

prerequisite for acquiring a copyright in a work.
III. What Rights does
A copyright in a work is created when the work Copyright Provide?
is created and given a material form, provided
it is original. The Copyright Act provides for A copyright grants protection to the creator and
a copyright registration procedure. However, his representatives for the works and prevents
unlike the U.S. law, registration of a copyright such works from being copied or reproduced
in India does not confer any special rights without his/ their consent. The creator of a work
or privileges with respect to the registered can prohibit or authorize anyone to:
copyrighted work. The Register of Copyright
ƒreproduce the work in any form, such as print,
acts as prima facie evidence of the particulars
sound ,video, etc;
entered therein. The documents purporting to
be copies of the entries and extracts from the ƒuse the work for a public performance, such
Register certified by the Registrar of Copyright as a play or a musical work;
are admissible in evidence in all courts
ƒmake copies/recordings of the work, such as
without further proof of the original.30 Thus,
via compact discs, cassettes, etc.;
registration only raises a presumption that
ƒbroadcast it in various forms; or
28. Section 13 of the Copyright Act. ƒtranslate the same to other languages.
29. Ibid
30. Section 48 of the Copyright Act.

© Nishith Desai Associates 2018 11

 Provided upon request only

IV. What is the term of vest with the producer of the film i.e. the
person at whose instance the film was made
Copyright? for a valuable consideration.32

The term of copyright is, in most cases, the ƒIn case of a work made during the course of
lifetime of the author plus 60 years thereafter. employment or under a contract of service
or apprenticeship, (to which the instances
given under serial no. 1 do not apply), the
V. First Ownership of employer shall, in the absence of a contract
Copyright & ‘Work for Hire’ to the contrary shall be the first owner of
copyright.33
The author of a work is usually the ‘first owner’
ƒIn case of a government work, in the absence
of such work. In certain circumstances, Section
of a contract to the contrary, the copyright in
17 of the Copyright Act determines who may
the work shall vest with the government.34
be regarded as the ‘first owner’ of a copyrighted
work. The concept of ‘first owner’ under Indian The concept of ‘Work for Hire’ though not
copyright law is quite important and may be expressly covered under the Copyright Act,
determined as follows: it is implied under Section 17 whereby, the
copyright in any work created on commissioned
ƒIn the case of a literary, dramatic or artistic basis, shall vest with the person creating such
work (which includes a photograph, painting work. In order to vest the copyright with the
or a portrait) created during the course of person commissioning the work, an assignment
employment or, under a contract of service or in writing shall be necessary.
apprenticeship, for the purpose of publication
in a newspaper, magazine or similar periodical,
the proprietor of such a publication shall, in
VI. Special Monetary Rights
the absence of a contract to the contrary, be in Underlying Works in
the first owner of copyright. However, such a Cinematograph Film /
ownership shall vest with the proprietor of
the publication only for the limited purpose
Sound Recordings.
of publishing the work or a reproduction of
the work in a publication and, for all other The Amendment has introduced significant
purposes, the copyright shall vest with the monetary rights for authors of literary,
author of the work. musical works etc. that are incorporated in
cinematograph films and sound recordings.
ƒIf a photograph, painting or portrait has not
Authors of literary or musical works (i)
been made for the purposes of publication in
incorporated in films; or (ii) sound recordings
a periodical but has been made for any other
(which are not part of films) have the right to
purpose, then in the absence of a contract to
receive royalties equal to the royalties received
the contrary, the copyright in such work shall
by the assignee of such rights for exploitation
vest with the person at whose instance the
of their works (other than communication
work was created.31
to public of that film in cinema halls). These
ƒIn the case of a cinematograph film, in the rights cannot be assigned or waived by the
absence of a contract to the contrary, the right holders (except in favor of legal heirs and
copyright in the cinematograph film shall copyright societies). Any agreement that seeks
to assign or waive the above rights shall be

32. Proviso (b) to Section 17 of the Copyright Act.

33. Proviso (c) to Section 17 of the Copyright Act.
31. Proviso (a) and (b) to Section 17 of the Copyright Act. 34. Proviso (d) to Section 17 of the Copyright Act.

12 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

void. While the language in the Amendment specifically referred to such medium or mode of
is not very clear from the debates surrounding exploitation of the work.
the Amendment, it seems that scriptwriters/
screenplay writers are intended to be covered
within the scope of these provisions.
VIII. Moral Rights
ƒFurther, no assignment of the copyright in Section 57 of the Copyright Act grants an author
any work to make a cinematograph film “special rights,” which exist independently of
or sound recording can affect the right of the author’s copyright, and subsists even after
the author of the work to claim royalties or the assignment (whole or partial) of the said
any other consideration payable in case of copyright. The author has the right to (a) claim
utilization of the work in any form other than authorship of the work; and (b) restrain or
as part of the cinematograph film or sound claim damages with respect to any distortion,
recording. mutilation, modification, or other act in relation
to the said work if such distortion, mutilation,
ƒThe business of issuing or granting license
modification, or other act would be prejudicial
in respect of literary, dramatic, musical
to his honor or repute.These special rights can
and artistic works incorporated in a
be exercised by the legal representatives of the
cinematographic film or sound recordings
author. Before the Amendment the right to
post the amendment can be carried out only
claim authorship could not be exercised by legal
through a copyright society duly registered
representatives of the author. Now, post death of
under the Act.
the author, if he is not given credit for his work,
then even legal representatives, may be able to
VII. Assignment of Copyright take necessary action to remedy such breach.
As per the Amendment, the right against
As mandated by Section 19, no assignment of distortion is available even after the expiry of
copyright shall be valid unless such assignment the term of copyright. Earlier, it was available
is inwriting and signed by the assignee and the only against distortion, mutilation etc. done
assignee. Such assignment ought to identify: during the term of copyright of the work.

ƒthe work and the rights assigned;

ƒthe territorial extent and;
IX. Rights Related to
Copyright
ƒthe duration of the assignment.
Where, the territorial extent and the duration of A field of rights related to copyright has rapidly
the assignment has not been specified, it shall developed over the last 50 years. These related
be deemed that the assignment extends to the rights have developed around copyrighted
territory of India and the duration of assignment works and provide similar, though more limited
is for a period of five years respectively. protection. Such rights are:
Under Section 18 of the Copyright Act, even
the copyright in a future work can be assigned
A. Performers’ Right
in accordance with Section 19, however, such When any performer (e.g., an actor or
assignment shall come into effect only upon a musician) appears or engages in any
date of creation of the work. It has now been performance, he has this special right in
added by the Amendment that no assignment relation to his performance. The Amendment
shall be applied to any medium or mode of has modified the definition of “Performer” by
exploitation of the work, which did not exist or clarifying that that in a cinematograph film
was not in commercial use at the time when the a person whose performance is casual or
assignment was made, unless the assignment incidental in nature and is not acknowledged
in the credits of the film shall not be treated

© Nishith Desai Associates 2018 13

 Provided upon request only

as a performer except for the purpose of X. International

attributing moral rights. The term of this right Confederation of Societies
is 50 years from the beginning of the calendar
year following the year of performance.35 The of Authors and Composers
“Performer’s Right” is stated to be the exclusive (CISAC) v. Aditya Pandey &
right subject to the provisions of the Act, to do
or authorize for doing any of the following acts
ors37
in respect of the performance or any substantial
In the case of “International Confederation of
part thereof, namely:
Societies of Authors and Composers v Aditya
i. to make a sound recording or a visual Pandey & Ors” Civil Appeal Nos. 9414-9415 of
recording of the performance, including— 2016 (Arising out of S.L.P(c) nos. 21082-21083 of
2012), the Supreme Court upheld the decision
a. reproduction of it in any material
of the division bench of the Delhi High Court
form including the storing of it in any
in “IPRS v Aditya Pandey & Ors” (FAO(OS)
medium by electronic or any other
No.423-424/2011 ) and “IPRS v CRI Events & Ors”
means;
(FAO(OS) No.425/2011 and CM No.19128/2011 ).
b. issuance of copies of it to the public not The main issue involved in the appeal to the
being copies already in circulation; Supreme Court is as follows, “ Where lyric
written by ‘X’ (lyricist) and music composed
c. communication of it to the public;
by ‘Y’ (musician) are used to make sound
d. selling or giving it on commercial rental recording by ‘Z’ (Sound Recording Company),
or offer for sale or for commercial rental whether ‘A’ (Event Management Company/
any copy of the recording; Event Organizer) is required to seek license
from ‘X’ and ‘Y’ for subsequently playing the
ii. to broadcast or communicate the
song in public even after ‘A’ had paid for the
performance to the public except where
broadcasting of the song to ‘Z’ (Sound Recording
the performance is already broadcast. Once
Company) ?”
a performer has by written agreement
consented to the incorporation of his The division bench of the Delhi High Court
performance in a cinematograph film he had held that when a literary or musical work
shall not in the absence of any contract to is incorporated in a sound recording, the rights
the contrary object to the enjoyment by in the literary and musical works (i.e. the lyrics
the producer of the film of the performers and music) are effectively assumed by the owner
rights in the same film. However, the of the rights in the sound recording. As such, if
performer shall be entitled for royalties one were to publicly play a sound recording, one
in case of making of the performances for would only need to acquire the permission of
commercial use. the owner of the rights in the sound recording
and not the permission of the owners of the
B. Broadcast Reproduction Right rights in the underlying works.
Every broadcasting organization has this right IPRS, being the Appellant contended that
with respect to its broadcasts. The term of this authors of literary work and composers of
right is 25 years from the beginning of the musical work are the first owners of copyright
calendar year following the year in which the in lyric and musical work respectively under
broadcast is made. 36 the Copyright Act, 1957 (“Copyright Act”)
and resultantly they can restrain the event

37. International Confederation of Societies of Authors and Com-

35. Section 38 of the Copyright Act.
posers (CISAC) v. Aditya Pandey & ors, 2016 SCC OnLine SC
36. Section 37 of the Copyright Act. 967

14 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

management company (Respondent) from of the owner of the rights in the sound recording
infringing their copyright. Therefore the and not the permission of the owners of the
license given to the sound recording company rights in the underlying works.
does not affect the rights of lyricist or the
This judgment has effectively clarified that
musician. Reference was made to the definition
of expression “communication to the public” 1. There is no obligation on an individual
defined under Section 2(f) of the Copyright Act or body corporate (“Licensee”) to obtain
38 and that of ‘performance’ defined in Section a separate license from the owner of the
2(q) of the Copyright Act. 39 copyright in the underlying literary or
musical work that is incorporated in the
Further, reference was made to the amendment
sound recording at the time of obtaining
introduced in 1994 in the Copyright Act, 1957
a license from the copyright holder in the
and it was pleaded that the right created
sound recording.
under Section 14(a)(iv) of the Copyright Act 40
cannot be read in derogation of right created 2. As per the law after the Copyright
under Section 14(a)(iii) of the Copyright Amendment Act (2012) (“Copyright
Act. Additionally, it was contended that the Amendment Act”), copyright holders in
judgment of the Delhi High Court stands in the underlying works in sound recordings
direct conflict with India’s obligations under the or cinematographic films are still entitled
Berne Convention and the TRIPS Agreement to claim royalties at the time of economic
and it effectively places India out of step with exploitation of the sound recording or
international copyright norms and practice. cinematographic film even though they
had assigned their copyright in its entirety
The Respondent on the other hand contended
to the producer of such sound recording or
that the amendment made in the Copyright Act,
cinematographic film, it has been clarified
1957, in the year 2012, states that the producer of
that this obligation is not solely placed
sound recording has an independent copyright
on the Licensee at the time of obtaining
of his work. It relied effectively on the judgment
a license from the producer or copyright
of the Supreme Court in, “Indian Performing
holder in the sound recording or the
Right Society Ltd. v. Eastern Indian Motion Pictures
cinematographic film.
Association” 41 wherein it was held that “once the
author of a lyric or a musical work parts with 3. At the time of broadcasting of the sound
a portion of his copyright, by authorizing a film recordings, a license is only required
producer, or producer of sound recording in from the PPL/Phonographic Performance
respect of his work, a right exists with the latter Limited (which deals with sound
to exhibit his work to the public.” recordings public performance of sound
recordings requires a license only from)
The Supreme Court affirmed the decision of
and not from the IPRS/ Indian Performing
the division bench of the Delhi High Court and
Right Society Limited (which deals with
held that when a literary or musical work is
literary and musical works). On the
incorporated in a sound recording, the rights in
other hand, when the sound recording
the literary and musical works (i.e. the lyrics and
is publically performed wherein an
music) are effectively assumed by the owner of
individual is singing the song, then
the rights in the sound recording. As such,
a license is required from IPRS/ Indian
if one were to publicly play a sound recording,
Performing Right Society Limited or
one would only need to acquire the permission
any other such society which deals with
literary and musical works.
38. Section 2(ff) of the Copyright Act
39. Section 2(q) of the Copyright Act
40. Section 14(a)(iv) of the Copyright Act
41. 1977 SCR (3) 206

© Nishith Desai Associates 2018 15

 Provided upon request only

XI. Infringement of a Work” was inserted to read as: “Literary

Copyright Work includes computer 44 programmes 45,
tables and compilations including computer
databases”.46 The terms tables, compilations,
A copyright is infringed if a person without
and computer database have not been defined
an appropriate license does anything that the
in the Copyright Act.
owner of the copyright has an exclusive right to
do. 42 However, there are certain exceptions43 to
the above rule (e.g., fair dealing). The Copyright XIV. Rights Conferred
Act provides for both civil and criminal
remedies for copyright infringement. When an The owner of a computer programme (“CP”)
infringement is proved, the copyright owner has the exclusive right to do or authorize third
is entitled to remedies by way of injunction, parties to do the following acts: reproduction
damages, and order for seizure and destruction of the CP, issuing copies to public, perform /
of infringing articles. communicate it to public, to make translation
or adaptation47 of the work, to sell or give
India being a common law country, also accepts
on commercial rental or offer for sale or for
the common law principle of passing off of
commercial rental any copy of the CP. However,
works. While there is no statutory provision,
the commercial rental provision does not apply
if the courts find that the original work is well-
if the CP itself is not an essential part of the
known enough, a remedy may lie in an action
rental. Any violation of these exclusive rights
for passing off. The purpose of this tort is to
amounts to an infringement.
protect commercial goodwill created in that
work (eg. film or television serial) and to ensure
that one’s business reputation is not exploited. XV. Infringement – Defenses
A remedy in the form of an injunction or
damages would lie in such cases and may be Section 52 of the Copyright Act enlists
granted by the Courts. the acts that do not constitute copyright
infringement. If the lawful possessor of the CP
makes copies or adaptation of the CP in the
XII. Importation of Infringing following circumstances, they do not constitute
Copies infringement: (1) for utilizing the CP for the
purpose for which it was supplied; or (2) to make
The Amendment has introduced a revised backup copies purely as a temporary protection
Section 53, which provides a detailed procedure against loss, destruction or damage. Further,
where the owner of the copyright can make an to obtain information essential for operating
application to the Commissioner of Customs inter-operability of an independently created
(or any other authorised officer) for seizing of the CP with other the CP, the lawful possessor
infringing copies of works that are imported can do any act, provided such information is
into India. not readily available. Observation, study or test
of functioning of the CP to determine the ideas
XIII. Copyright Protection of
Software 44. Per Section 2 (ffb) of the Copyright Act: “Computer includes
any electronic or similar device having information process-
ing capabilities.”
By the 1994 amendment of the Copyright Act, 45. Per Section 2 (ffc) of the Copyright Act: “Computer
an inclusive definition of the term “Literary Programme means a set of instructions expressed in words,
codes, schemes or in any other form, including a machine
readable medium, capable of causing computer to perform a
particular task or achieve a particular result.”
42. Section 51 of the Copyright Act. 46. Section 2(o) of the Copyright Act.
43. Section 52 of the Copyright Act. 47. Any use of work involving rearrangement or alteration.

16 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

and principles that underline any elements of course of trade or business, the court may waive
the CP (while performing such acts necessary for imprisonment and grant a fine up to INR 50,000.
the function for which the CP is supplied), does
not amount to infringement. Making of copies
or adaptation of the CP from a personally legally
XVIII. Copyright Societies
obtained copy for non-commercial personal use
The primary function of a copyright society
is also allowed. The fair dealing defense is not
(also generally referred to as ‘collecting society’)
available in the case of a CP.
is to administer the rights on behalf of its
All in all, it is currently obvious that while members and grant licenses for the commercial
Plaintiffs have the choice of initiating a suit exploitation of these rights. Such a society
at a place where they carry out business, it is collect the license fee or the royalty on behalf
essential that this must be the principal place of its members, which is then conveyed to
of business or the place where the cause of the members after making deductions for the
action has emerged completely as opposed to, expenses borne for collection and distribution.
a branch office where no cause of action has
At present, in accordance with section 33 of the
emerged.
Copyright Act, the following are registered as
copyright societies:
XVI. Registration ƒIndian Performing Rights Society or IPRS,
which administers the rights relating to
For registration of CP, a practice has developed
musical and lyrical works on behalf of its
wherein the first 25 and last 25 pages of the
members which primarily include authors,
source code are deposited with the Registrar
composers and the publishers of musical and
of Copyright. There is no specific provision
lyrical works.
for the deposit of the source code on any
specified media. In any event, such deposit ƒThe Indian Singers’ Rights Association
is not advisable. Since the only advantage of (“ISRA”) which administers performers
registration is that it acts as prima facie proof, rights on behalf of its members, which
other means could be adopted to prove date include several notable Indian singers.
of creation, ownership of copyright, and other
The following are private copyright societies
details with respect to the same (e.g., deposit of
which act on behalf of the first owners of the
the CP in a safe deposit locker, posting of the
work:
CP to a lawyer or one’s own address). Further,
maintenance of logbooks recording the details
ƒPhonographic Performance Limited or PPL
of the development of CP could also act as proof
administers the commercial exploitation of
of date of creation and ownership.
phonograms or sound recordings on behalf of
its members.
XVII. Offences ƒSociety for Copyright Regulation of Indian
Knowingly making use on a computer of an Producers for Film and Television or SCRIPT,
infringing copy of CP is a punishable offence.48 which acts on behalf of the producers or the
The penalty for such an offence is imprisonment copyright owners of cinematograph and
(minimum of seven days and maximum of television films to protect their copyright
three years) and a fine (minimum INR49 50,000 therein.
and maximum INR 2,00,000). If the offender
ƒIndian Reprographic Rights Organization or
proves that such use was not for gain in the
IRRO, which administers the rights relating
to reprographic (photocopying) works on
48. Section 63B of the Copyright Act behalf of its members who are essentially
49. Indian Rupees. authors and publishers of printed works such

© Nishith Desai Associates 2018 17

 Provided upon request only

as books, newspapers, magazines, journals, High Court in its judgment in “M/S Event and
periodicals, etc. Entertainment Management Association v Union
of India” in December 2016 restrained IPRS, PPL
The Amendment has brought in significant
and Novex Communications from issuing or
changes to the provisions dealing with
granting copyright licenses by holding that
Copyright Societies. The Amendment permits
the aforementioned entities were in breach
authors of the work to be members of the
of Section 33 of the Copyright Act.50 The
Copyright Societies as opposed to only owners
interim order passed by the Delhi High Court
of works. Copyright Societies are required to
has restricted all three of the aforementioned
have governing bodies consisting of equal
entities from carrying out any actions violative
number of authors and owners of work for the
of Section 33 of the Copyright Act.51
purpose of administration of the society. All
members of the Copyright Society shall enjoy
equal membership rights and there shall be no XIX. Compulsory Licenses
discrimination between authors and owners in and Statutory Licenses
the distribution of royalties. The Amendment
also envisages the Copyright Societies registered
A compulsory license (CL) is an involuntary
under the Act to administer the rights of the
license issued for a copyrighted piece of work
performers and broadcasters. The provisions
that the copyright owner has to grant for the
applicable to the authors’ societies including the
use of their rights in the work against payment
new tariff related provision specified below are
as established under law in case the Copyright
applicable in relation to such societies.
Board concludes that the copyrighted piece of
The Amendment has also inserted a new Section work is withheld from the public. Under the Act,
33A providing for the following: the CL provisions under Section 31 (in relation
to published work) and 31A (in relation to
ƒEvery copyright society is required to publish
unpublished or anonymous work) were earlier
its Tariff Scheme in a prescribed manner;
restricted only to Indian works. The Amendment
ƒAny person who is aggrieved by the tariff seeks to remove this limitation. The provisions
scheme may appeal to the Copyright Board have now been made applicable to all works.
and the Board may, if satisfied after holding A new provision has been inserted where the
such inquiry as it may consider necessary, work may be made available under CL for the
make such orders as may be required to benefit of people suffering from disabilities.
remove any unreasonable element, anomaly
The Amendment has introduced the concept
or inconsistency therein;
of “statutory license” in relation to published
ƒHowever, the aggrieved person is required to works. Any broadcasting organization, that
pay to the copyright society any fee as may be proposes to communicate the a published work
prescribed that has fallen due before making to the public by way of broadcast (including
an appeal to the Copyright Board and shall television and radio) or a performance of any
continue to pay such fee until the appeal is published musical/ lyrical work and sound
decided. The Board has no authority to issue recording, may do so by giving prior notice of its
any order staying the collection of such fee intention to the owners of the rights. Such prior
pending disposal of the appeal; notice has to state the duration and territorial
coverage of the broadcast and pay royalties for
ƒThe Copyright Board may after hearing
each work at the rate and manner fixed by the
the parties fix an interim tariff and direct
Copyright Board. The rates fixed for television
the aggrieved parties to make the payment
broadcasting shall be different than that fixed
accordingly pending disposal of the appeal.
In light of the Amendment and the obligations
50. Section 33 of the Copyright Act
imposed on copyright societies, the Delhi
51. Id

18 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

for radio broadcasting. In fixing the manner XXI. Statutory License for
and the rate of royalty, the Copyright Board Cover Versions
may require the broadcasting organization to
pay an advance to the owners of rights. No fresh
The Act pursuant to the Amendment provides
alteration to any literary or musical work, which
for the grant of statutory licenses for making
is not technically necessary for the purpose of
“cover versions”. Cover version may be made
broadcasting, other than shortening the work
only of such literary, dramatic or musical
for convenience of broadcast, shall be made
work, in relation to which a sound recording
without the consent of the owners of rights.
has already been made by or with the license
The names of the author and the principal
or consent of the owner of the right in the
performer will have to be announced with
work. Cover version can be made only after the
the broadcast (unless communicated by way
expiration of five calendar years, after the end
of the performance itself). Records and books
of the year in which the first sound recordings
of accounts will have to be maintained by the
of the original work was made. Cover version
Broadcasting Organizations and reports will be
shall not contain any alteration in the literary
required to be given to the owners of the rights.
or musical work, which has not been made
The owners are also granted audit rights against
previously by or with the consent of the owner
the broadcasting organizations.
of rights, or which is not technically necessary
for the purpose of making the sound recordings.
XX. Copyright vis-à-vis
design Cover version shall not be sold or issued in any
form of packaging or with any cover or label
which is likely to mislead or confuse the public
When can something obtain protection under
as to their identity, and in particular shall not
the copyright act vis-a-vis the design act is
contain the name or depict in any way any
a predominant concern. Section 15 of the
performer of an earlier sound recording of the
Copyright act states that copyright cannot
same work or any cinematograph film in which
subsist in a registered design. Further, the same
such sound recording was incorporated. Cover
section details that a copyright would cease
version should state on the cover that it is
to exist in any work to which the design is
a cover version made under Section 31C of Act.
connected and has been imitated or replicated
more than 50 times by an industrial process.
The Supreme Court in Dart Industries Inc. &
Ors. v Techno Plast & Ors, had further clarified
that, unless a work of art is equipped for design
protection and has been registered as a design,
or ought to have been registered as a design, the
copyright in the basic artistic work subsists
independent of design rights. 52

52. Dart Industries Inc. & Ors. v Techno Plast & Ors, 2007 SCC
OnLine Del 892 : (2007) 141 DLT 777

© Nishith Desai Associates 2018 19

 Provided upon request only

6. Patents
In India, the law governing patents is industrial application.”55 Thus, the traditional
the Patents Act, 1970 (“Patents Act”). In aspects of novelty, inventive step, and
India’s continued efforts to comply with it’s industrial application/utility have been
commitment under TRIPS the Patents Act has specifically included in the definition of the
been amended thrice since 1995, by the Patents term “invention”.
(Amendment) Act, 1999 (“First Amendment”),
the Patents (Amendment) Act, 2002 (“Second
Amendment”) and Patents (Amendment)
I. Novelty
Act, 2005 (“Third Amendment”), Prior to the
If the invention was known or used by any
Third Amendment, the President of India had
other person, or used or sold by the applicant
promulgated Patents (Amendment) Ordinance,
to any person in India and/or outside India,
2004 (“Ordinance”), which was later replaced
then the applicant would not be entitled to
by the Third Amendment.53 The legislation is
the grant of a patent. Public use or publication
supported by the Patents Rule, 2003 (“Rules”),
of the invention will affect the validity of an
which were recently amended in 2016. The
application in India. The patent application
following outlines the current Indian patent
must be filed prior to any publication or public
law framework.
use. However, there is a 12-month grace period
permitted in India when a person has made
Which Inventions are Patentable? an application for a patent in a convention
country and if that person or his legal

Section 3
exclusions

Innovations Innovations

Section 4
exclusions

Not all innovations are “inventions” within

representative (or his assignee) makes an
the definition of the Patents Act. The term
application with respect to the same invention
“invention” is defined under Section 2(1) (j) of
in India. Although patent rights are essentially
the Patents Act as “a new product or process
territorial in nature, the criteria of novelty
involving an inventive step54 and capable of
and non-obviousness are to be considered on
/ compared with prior arts on a worldwide
basis. Any earlier patent, earlier publication,
53. Don’t take this for granted <eco-times/2005/Don%27t-take- document published in any country, earlier
this-for-granted-VV-GG(Apr10,05).pdf>, April 10, 2005.
54. Section 2(1) (ja) of the Patents Act: “inventive step means a
feature of an invention that involves technical advance as
compared to the existing knowledge or having economic sig- 55. Section 2(1) (ac) of the Patents Act: “capable of industrial
nificance or both and that makes the invention not obvious application in relation to an invention means that the
to a person skilled in the art.” invention is capable of being made or used in an industry.”

20 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

product disclosing the same invention, or earlier These may fall within the definition of the
disclosure or use by the inventor will prevent expression “invention,” but the Patents Act
the granting of a patent in India. expressly excludes them from the definition.
Innovations that are not inventions within the
meaning of the Patents Act, and accordingly are
II. Inventive Step not patentable in India, include: (i) a method of
agriculture or horticulture; (ii) a process for the
The Patent Act, under Section 2(1)(ja) defines
medicinal or other treatment of human beings
‘Inventive Step’ as “means a feature of an invention
and animals; (iii) a mere discovery of any new
that involves technical advance as compared to the
property, or new use for a known substance,
existing knowledge or having economic significance
or a mere use of a known process, machine, or
or both and that makes the invention not obvious
apparatus (unless such known process results
to a person skilled in the art”. Therefore for an
in a new product or employs at least one
invention to be non-obvious/ have an inventive
new reactant); and (iv) an invention which is
step, it should involve
frivolous or which claims anything obviously
i. technical advance when compared to the contrary to well established natural laws.
existing knowledge;
By the Second Amendment, the following
ii. having economic significance; or have been added to the innovations that are not
inventions within the meaning of the Patents
iii. both
Act:
and such an invention should not be obvious to
“j. plants and animals in whole or any part
a person skilled in the art.
thereof other than micro-organisms but
including seeds, varieties and species
For the purpose of this section, a person skilled
and essentially biological processes for
in the art is a is a hypothetical person who is
production or propagation of plants and
presumed to have practiced in the relevant field
animals;
of invention and have knowledge of the prior
arts as on the date of the application. k. a mathematical or business method or
a computer program per se or algorithms;
III. Industrial Application l. a literary, dramatic, musical or artistic work
or any other aesthetic creation whatsoever
The Act defines ‘capable of industrial including cinematographic works and
application’ in relation to an invention as television productions;
capable of being made or used in an industry.
m. a mere scheme or rule or method of
An invention is capable of industrial application performing mental act or method of playing
if it satisfies the three conditions cumulatively: game;
can be made; n. a presentation of information;
can be used in at least one field of activity;
o. a topography of integrated circuits;
can be reproduced with the same characteristics
as many as necessary. p. an invention which, in effect, is traditional
knowledge or which is an aggregation
or duplication of known properties
IV. Inventions That are Not of traditionally known component or
“Inventions” components.”
Section 3 of the Patents Act enlists the
innovations that are not classified as
“inventions” within the meaning of the Act.

© Nishith Desai Associates 2018 21

 Provided upon request only

Interesting omissions are those of business VI. Computer Programs Per

methods and computer programs per se. Se
V. Business Method Patents The 2002 Amendment to the Patents Act stated
that “computer programs per se” is not an
Historically, in nearly every country “business “invention” raising a debate whether a computer
methods” were dismissed as abstract and hence, program (“CP”) with any additional features such
were considered to be unpatentable. However, as technical features, would be patentable. In Sec
in the late 1990s, in what is known as the 3(k) of the Act, while maintaining that CP per se
State Street Bank case56 the US Federal Circuit is not an invention, the Ordinance had created
for the first time allowed a business method exclusion for certain CPs. CP, in its technical
patent and a patent for a computer program to application to industry and CP in combination
track mutual funds.In Bilskiv. Kappos,57 the with hardware were identified as patentable
US Supreme Court dwelled into the issue of inventions.60 This exclusion introduced by the
business method patents and held that the US Ordinance has been done away with by the Third
Patent Act does contemplate business method Amendment, once again creating an ambiguity
patent and thus business method patent are not in respect of grant of CP patents. ‘Computer
excluded subject matter.58 programs per se’ was interpreted, based on
similar UK law, that CP’s with a technical
However, traditional requirements of practical
effect could be patentable. Experts were already
utility, novelty, and non-obviousness have to
interpreting ‘computer programs per se’ on
be satisfied. The European Patent Convention
similar lines. Ordinance, made things even
(“EPC”) explicitly excludes business method
clearer. However, now it may be difficult to use
patents from patentability.59 However the
the same interpretation as it could be argued
EPC also states that business methods are
that if the intention of the statute was to allow
excluded from patentability only to the extent
patenting CP’s having a technical effect, why
to which a European patent application
did the lawmakers not retain the language of
relates to a business method i.e. “as such”. The
the Ordinance. Thus there is now additional
European Technical Board of Appeal has held
uncertainty in interpretation of ‘computer
time and again that if the subject matter of the
programme per se’.
application can be shown to have a technical
character i.e. it is not a mere business method.
In India, due to the express exclusion of
VII. Pharma and Agro-
“business method” from patentable inventions, Chemical Patents
business method patents cannot be granted.
The Third Amendment has deleted Section 5 of
the Act, which barred patent being granted in
respect of substances:

ƒintended for use or capable of being used as

food, medicine, or drugs; or,
56. 149 F.3d 1368.
ƒprepared or produced by chemical processes
57. 130 S. Ct. 3218.
(including alloys, optical glass, semi-
58. The court looked into the definition of “process” in § 100(b)
includes the word “method” which comprehends a presence conductors and inter-metallic compounds).
of a business method. Further, 35 U.S.C. § 273(b) (1) also
provides a defense to patent infringement for prior use of a
“method of conducting or doing business” this clearly shows
that the statute contemplates business method patents be-
cause it provides for a defense of patent infringement relating
to business method patents. - Id at page 10 and 11.
60. The New patents ordinance gives IT a breather <eco-
59. Article 52 (2) (c) of the EPC excludes methods for doing times/2005/New-patents-ordinance-Jan-16-2005.htm>,
business from patentability. January 16, 2005.

22 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

Thus, product patents for pharmaceutical considered the same substance, unless they differ
substances are allowed in India. Section 3 of significantly in properties with regard to efficacy.”
the Act, however, carves out certain exceptions.
This provision had caused quite a stir when
Under Section 3 (j) plants and animals in
it was enacted primarily by Big Pharma as this
whole or any part thereof (other than micro-
Section was enacted to prevent evergreening
organisms) including seeds, varieties and
of patents. Further, since there was not much
species and essentially biological processes for
clarity on how known substances are to be
the production of plants or animals – cannot
determined, what efficacy is and how to prove
be patented. This is in line with Article 27.3 of
enhancement of efficacy a lot of litigation
TRIPS. Thus micro-organisms, which satisfy the
surrounding this Section was being initiated at
patentability criteria, may be patented in India.
various judicial and quasi-judicial forums as the
Section 3(d) as amended by the Third patent office had rejected many pharmaceutical
Amendment clarifies that mere discovery patent application under Section 3 (d). The
of a new form of a known substance, which does most seminal case in this regard was the Swiss
not result in the enhancement of the known pharmaceutics giant, Novartis AG (“Novartis”)
efficacy of that substance is not an invention rejection of its Indian patent application for
and therefore not patentable. For the purposes the beta crystalline form of Imatinib Mesylate
of this clause, salts, esters, ethers, polymorphs, filed in July 1998 on the grounds of Section 3 (d)
metabolites, pure form, particle size, isomers, when the application was examined post 2005.
mixtures of isomers, complexes, combinations This case finally made it to the Indian Supreme
and other derivatives of known substances Court (“SC”) which delivered a landmark
are to be considered to be the same substances, judgment on April 1, 2013, rejecting Novartis
unless they differ significantly in properties Patent application.
with regard to efficacy. Therefore, “Swiss
Claims”are not allowed in India.61 A. Novartis AG vs. Union of India62
Novartis AG (“Novartis”) had filed an Indian
VIII. Section 3(d), Reads as patent application for the beta crystalline
Under form of Imatinib Mesylate in July 1998. Due
to the impending change in patent regime,
“Section 3- The following are not inventions
the application was “kept in mailbox”. The
within the meaning of this Act, (d)- the mere
application received five pre grant oppositions.
discovery of a new form of a known substance
In 2006, the application was rejected on the
which does not result in the enhancement of
basis that the application lacked novelty, was
known efficacy of that substance or the mere
obvious and was not an invention in view of
discovery of any new property or new use for
Section 3(d) of the Act. The Controller held
a known substance or that the mere use of
that the Product was a new version of an older
a known process, machine or apparatus unless
molecule that Novartis first patented in 1993
such known process results in a new product or
and the increment in efficacy is not substantial
employs atleast one new reactant.
enough to receive the grant of a patent. An
Explanation- For the purposes of this clause, appeal was preferred before the Madras High
salts, esters, ethers, polymorphs, metabolites, Court, during the pendency of which, the case
pure form, practical size, isomers, and mixtures was transferred to the Intellectual Property
of isomers, complexes, combinations and other Appellate Board (“IPAB”). The IPAB upheld
derivatives of a known substance shall be the decision of the Controller with respect to
the finding that the patentability of the drug
was barred under Section 3(d). A Special Leave
61. A ‘Swiss Claim’ is a claim wherein the use of a substance
or composition that has already been used for a medical
purpose is intended or specified to be used for a new medical
purpose. 62. AIR2013SC1311

© Nishith Desai Associates 2018 23

 Provided upon request only

Petition was filed by Novartis in the Indian given a strict interpretation under Section 3
Supreme Court (“SC”) appealing against the (d), that does not in any way mean that it bars
decision of the Controller. The SC made an all incremental inventions of chemical and
exception and admitted the Special Leave pharmaceutical substances. Essentially Section 3
Petition side-stepping the jurisdiction of the (d) provides a bar that incremental inventions of
Madras High Court, in view of the importance chemical and pharmaceutical substances need
of the case and the number of seminal issues to pass in order to be patentable.
that were involved in the case. The SC noted The SC had concluded that the known
that this was an exception and any attempt substance was Imatinib Mesylate and not
directly challenging an IPAB order. before the free base Imatinib. However, all the evidence
SC side-stepping the High Court, was strongly submitted by Novartis compared the efficacy
discouraged. of the Product with that of Imatinib, but there
was no evidence provided by Novartis which
The invention as claimed in the patent
compared the efficacy of the Product with that
application was the beta-crystalline form of
of Imatinib Mesylate.
Imatinib Mesylate. This was a derivative of the
free base form called Imatinib disclosed vide However, SC went on to examine the expert
example 21 of a patent application filed by affidavits submitted by Novartis according to
Novartis in US on April 2, 1993 (“Zimmermann which the following properties exhibited by the
patent”). Product demonstrated its enhanced efficacy over
Imatinib:
Novartis’ argument was that the known
substance was Imatinib as disclosed in i. more beneficial flow properties;
Zimmerman patent from which beta-crystalline
ii. better thermodynamic stability;
form of Imatinib Mesylate was derived and
that the substance immediately preceding iii. lower hygroscopicity; and
beta crystalline form of Imatinib Mesylate was
iv. 30 % increase in bio-availability.
Imatinib and not Imatinib Mesylate as the
Zimmerman patent did not disclose Imatinib The SC held that the first three properties of
Mesylate. The SC rejected this argument the Product related to improving processability
after examining the evidence on record and and storage, thus they did not in any way
concluded that the known substance was demonstrate enhancement of therapeutic
Imatinib Mesylate from which beta-crystalline efficacy over Imatinib Mesylate as required to
form of Imatinib Mesylate was derived. pass the test of Section 3(d). The SC came to this
conclusion even though the affidavits submitted
Since the term “efficacy” is not defined in the
by Novartis compared the Product over Imatinib.
Act, the SC referred to the Oxford Dictionary
and observed that Efficacy means “the ability The SC after this was left with 30 % increase
to produce a desired or intended result”. in bio-availability, with regard to this the SC
Accordingly the SC observed that the test of held that increase in bioavailability could lead
efficacy depends “upon the function, utility or to enhancement of efficacy but it has to be
the purpose of the product under consideration”. specifically claimed and established by research
Therefore, the SC held that in case of medicines, data. In this case the SC did not find any research
whose function is to cure disease, the test of data to this effect other than the submission of the
efficacy can only be “therapeutic efficacy”. counsel and material “to indicate that the beta-
crystalline form of Imatinib Mesylate will produce
In relation to “enhanced efficacy”, the SC held
an enhanced or superior efficacy (therapeutic) on
that the parameters for proving enhanced
molecular basis than that could be achieved with
therapeutic efficacy especially in case of
Imatinib free base in vivo animal”.
medicines should receive a narrow and a strict
interpretation. However, the SC pointed out In view of the above findings the SC held and
that just because the word ‘efficacy’ has to be concluded that Novartis claim for the Product

24 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

failed the test of patentability under Section 3 ƒExpedited examination of application: A new
form 18 A has been introduced in the rules for
(d) of the Act.
expediting the process.64

IX. Patent (Amendment) X. Who can be the

Rules, 2016. Applicant?
These Rules were issued by Ministry of India grants patent right on a first-to-apply
Commerce and Industry on October 26, 2015 basis. The application can be made by either
and invited comments. Further in 2016 (i) the inventor or (ii) the assignee65 or legal
amendment to Indian Patent Rules, 2003 came representative66 of the inventor. Foreign
into effect on May 2016. The amendment seeks applicants are given national treatment.
to have a huge impact on the patent filing and
prosecution strategy.
XI. What is the Process of
While the entire filing system has been digitized, Registration?
some of the other important changes brought
about by these rules are as follows:
Patent rights with respect to any invention
ƒ An additional category of “startups”63 has are created only upon grant of the patent by
been added for the type of applicant and the Patent Office following the procedure
specific legal assistance and monetary established by the Patents Act and the Rules.
benefits are also extended to such startups. India follows a declarative system for patent
rights. Below are the three types of applications
ƒReduction in filing Response to FER: The
that may be filed in the Indian Patent Office:
time to file response to FER is now reduced
by six months from the previous deadline of i. Regular Application
one year with a possibility of an extension of
ii. Convention Application
three months.
India has published a list of convention
ƒRemote Hearings: The hearings can be
countries under Section 133 of the Patents
conducted through video-conferencing
Act and is also a member of the Paris
or audio-visual communication.
Convention. The convention application
has to be filed within one year from the
date of priority and has to specify the date
63. Rule 2(fb) of the 2016 Rules: Startup means an entity, where-
on which, and the convention country
(i) more than five years have not lapsed from the date of its
incorporation or registration; in which the application for protection
(ii) the turnover for any of the financial years, out of the (first application) was made. The priority
aforementioned five years, did not exceed rupees twen- document has to be filed with the
ty-five crores; and
application.
(iii) it is working towards innovation, development, deploy-
ment or commercialisation of new products, processes or
services driven by technology or intellectual property:
Provided that any such entity formed by splitting up or 64. http://www.nishithdesai.com/information/news-storage/
reconstruction of a business already in existence shall not be news-details/article/expedited-grant-of-patent-in-india-a-
considered as a startup. myth-or-reality.html
Provided further that the mere act of developing: 65. Section 2(1) (ab) of the Patents Act: “Assignee includes an
a. products or services or processes which do not have assignee of the assignee and the legal representative of the de-
potential for commercialisation, or ceased assignee and references to the assignee of any person
include references to the assignee of the legal representative
b. undifferentiated products or services or processes, or or assignee of that person”.
c. products or services or processes with no or limited 66. Section 2(1) (k) of the Patents Act: “Legal representative
incremental value for customers or workflow, would not means a person who in law represents the estate of a
be covered under this definition. deceased person.”

© Nishith Desai Associates 2018 25

 Provided upon request only

iii. Patent Cooperation Treaty (PCT) Preliminary Examining Authorities (IPEA)

National Phase Application nominated by World Intellectual Property
Organization (WIPO). The office is expected
A National Phase Application may be filed
to soon start operations in this capacity.
in India as India is a PCT member country.
Since December 2007, the Indian Patent
The procedure for filing and obtaining patent in
Office has also been recognized as one of the
India is as shown overleaf.
many International Searching Authorities
(ISA) and International

FILING OF THE
On the date the application is filed, it is numbered.
APPLICATION

MEETING Generally within a month of filing the application, the Patent Office sends
PROCEDURAL a preliminary objection letter, which has to be complied with within a
OBJECTIONS specified time limit.

The application is published in the Official Gazette and is open to public

PUBLICATION OF THE after eighteen months from the date of filing of application or the date of
APPLICATION priority of the application, whichever is earlier. An application for earlier
publication could be filed by the applicant.

REQUEST FOR EXAMINATION PRE-GRANT OPPOSITION

Within 3 months from the date of publication

A request for examination to be filed by the
or before the grant of patent whichever is
applicant or any other interested person within
later - any person may file opposition on limited
36 months from the date of priority or filing of
grounds. Opposition is considered only when
the patent application, whichever is earlier.
request for examination filed.

The Examiner of Patents is required to issue a First Examination Report,

FIRST EXAMINATION within one month but not exceeding three months from the date of
REPORT the reference. This Report raises various substantive and procedural
objections.

The applicant has to comply with the objections to put the application in
MEETING
order for acceptance within 6 months from the date of the Report. This
THE OFFICIAL
period could be extended by another three months by filing an application
OBJECTIONS to that effect.

26 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

If the Applicant complies with objections raised in the First Statement of

GRANT OF THE Objections within the required timelines, the Controller if required, will
schedule a hearing and decide on the grant or rejection of the patent. If
PATENT the filing is not completed in the timelines, the application is deemed to
have been abandoned.

Within 1 year from the date of publication of grant of a patent, any person
POST-GRANT interested may file an Opposition on the grounds enlisted in Section
OPPOSITION 25(3).

XII. Opposition Proceedings XIV. Secrecy Provisions69

The Patents Act allows both pre-grant and Any person resident in India is not allowed
postgrant opposition. The pre-grant opposition to apply for grant of patent for any invention
can be filed anytime after the publication of the unless either of the following two conditions
patent application but before a patent is granted. is satisfied:
The postgrant opposition can be filed within
ƒObtaining written permission of the
a period of one year from the date of publication
Controller of Patents. The Controller is
of the granted patent. The grounds on which
required to obtain consent of the Central
pre-grant opposition and post-grant opposition
Government before granting such permission
can be filed are similar.
for invention relevant for defense purpose
/ atomic energy. The application is to be
XIII. What is the term of a disposed of within 3 months.
Patent? OR

ƒPatent application for the same invention

Every patent granted under the Act shall be
has been first filed in India at least six weeks
dated as of the date on which the complete
before the application outside India and
specification was filed. The Second Amendment
there is no direction passed under Section
prescribed a uniform term of 20 years from the
35 for prohibiting / restricting publication /
date of filling the patent application in India67
communication of information relating to
for all categories of patents in compliance
invention.
with Article 33 of TRIPS. There is no provision
for an extension of the patent term. Term of This section is not applicable in relation to
patent in case of applications filed under the an invention for which an application for
PCT designating India is twenty years from the protection has first been filed in a country
international filling date.68 outside India by a person resident outside India.
Inspite of this exclusion, this provision is likely
to delay the filing of US applications since
US applications are required to be filed by the
inventors and not assignees of the inventors.

69. Sections 35 to 43 of the Patents Act; Can you keep a secret?

67. Section 53 of the Patents Act.
<eco-times/2005/Can-you-keep-a-secret-Feb-14-2005.htm>,
68. Explanation to Section 53 of the Patents Act February 13, 2005.

© Nishith Desai Associates 2018 27

 Provided upon request only

XV. Can the Patent be Registration can be done at any time after the
Surrendered? assignment is done.
However, the agreement, when registered, is
A patentee may surrender his patent under effective as of the date of its execution.70 The
Section 63 at any time by giving notice to the consequence of non-registration is that the
Controller in the prescribed manner. agreement under which the patent rights are
transferred is not admissible as evidence in an
Indian court and therefore not enforceable in
XVI. How can the Patent be legal proceedings.71
Cancelled / Revoked?
Either the Intellectual Property Appellate Board
XVIII. Working of a Patent
(IPAB) by way of a revocation application filed
It is mandatory under Indian patent law to
under Section 64 of the Patent Act or the High
file a statement as to the extent of commercial
Court by way of a counter-claim in a suit for
working in the Indian territory of a patent
infringement of the patent may pass orders for
granted by Indian Patent Office.72 The statement
revocation of a patent. In a patent infringement
embodied in Form 27 of the Patents Rules,
action, the defendant can raise the grounds
2003 is required to be filed in respect of every
for cancellation as defenses and at the same
calendar year within three months of the end
time file a counterclaim for revocation. The
of each year (i.e. before March 31st of every
grounds on which the patent can be revoked
year). Non-compliance with this requirement
include wrongful procurement of invention,
may invite penalty of imprisonment which
false suggestion or representation in obtaining
may extend to six months, or with fine, or with
patent, failure to disclose corresponding foreign
both, as provided under section 122(1) (b) of the
applications, prior secret use, prior grant, lack
Patents Act. Section 83 of the Patents Act states
of novelty, or obviousness. The Controller of
“that patents are granted in India to encourage
Patents also has the power to revoke the patent
inventions and to secure those inventions are
if, despite the grant of a compulsory license,
worked in India on a commercial scale and to
the reasonable requirements of the public
the fullest extent reasonably practicable without
with respect to the patented invention remain
undue delay”.
unsatisfied or if the patented invention is not
available to the public at a reasonable price.
XIX. Compulsory Licensing
XVII. Assignment / Mortgage The Patent Act provides for the grounds on and
/ License of Patent procedures by which, a compulsory license can
be granted. The grounds on which a compulsory
An assignment of a patent or a share in a patent, license can be granted are:
a mortgage, license, or the creation of any other
ƒReasonable requirements of the public with
interest in a patent is only valid if the following
respect to the patented invention have not
conditions are satisfied:
been satisfied; or,
ƒThere is a written agreement embodying all
the terms and conditions governing rights
and obligations of parties; and,

ƒThe agreement is registered by filing Form 16 70. Section 68 of the Patents Act. Section 69 describes the proce-
under the Patents Rules, 2003 with the patent dure for the recording of interest.

office that has granted the patent. 71. Section 69(5) of the Patents Act.
72. Section 146 of the Patents Act and Rule 131(2) of Patents
Rules, 2003.

28 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

ƒThe patented invention is not available to the This provision will allow Indian companies to
public at a reasonably affordable price; or, produce and export AIDS drugs to African and
South East Asian countries.
ƒThe patented invention is not worked (i.e. not
used or performed) in the territory of India.
A. Natco v Bayer74 and
The following factors are also to be taken into Compulsory License cases in
account: a circumstance of national emergency;
a circumstance of extreme urgency; or a case of
India
public non-commercial use, which may arise or In March 2012, the Controller General of Patents
is required, as the case may be, including public created history with a landmark judgment
health crises such as those relating to Acquired granting the first ever Compulsory License to
Immuno Deficiency Syndrome (AIDS), Human an Indian generic company. It permitted Natco
Immunodeficiency Virus (HIV), Tuberculosis, Pharma to manufacture and sell a generic
Malaria, or other epidemics. version of Bayer Corporation’s patent protected
anti-cancer drug ‘Sorafenib Tosyalte’ (marketed
However, the Patents Act does not provide
as NEXAVAR). The drug was useful in treating
the definitions of the following expressions:
advanced liver and kidney cancer. Natco had
“circumstance of national emergency”; and
filed an application for Compulsory License
“a circumstance of extreme urgency.” Therefore,
under Section 84(1), Patents Act, 1970. It had
the courts would be required to interpret these
earlier approached Bayer with a request for
expressions on a case-by-case basis.
a voluntary license proposing to sell the drug
Any person interested in working the patented at a greatly reduced price, which Bayer did
invention may apply to the Controller of not allow. The Controller found that all the
Patents for a compulsory license at any time three conditions75 required for the grant of
after three years have elapsed from the date compulsory license were fulfilled and that this
of grant of the patent. While examining the case merited the award of compulsory license
application, the Controller also considers such to Natco. On appeal, the IPAB held that Bayer
aspects as the nature of the invention; the did not meet the reasonable requirement of
time that has elapsed since the grant of the the public (as only 2% patients are eligible for
patent and the measures already taken by the the same) and that the price of the drug (Rs. 2.8
patentee or any licensee to make full use of the lakhs per month) was not reasonably affordable
invention; the ability of the applicant to work in India when the purchasing power of the
the invention for public advantage; and the public is taken into consideration. This was the
capacity of the applicant to undertake the risk first case in which a request under Section 84
in providing capital and working the invention, of the Indian Patent Act, 1970 had been made,
if the application were granted. 73 seeking the grant of compulsory license.
Section 92A provides for grant of license to Since the Bayer-Natco decision, there have
manufacture and export the patented product been two more instances where Compulsory
to any country having insufficient or no Licenses have been applied for. In the first
manufacturing capacity in the pharmaceutical instance, the Health Ministry applied to the
sector to address public health problems, Department of Industrial Policy and Promotion
provided a compulsory license has been for the grant of Compulsory License for cancer
granted in that country or, if such country
has allowed importation of the patented
74. Compulsory Application No. 1 of 2011 available at http://
pharmaceutical products from India. The www.ipindia.nic.in/ipoNew/compulsory_License_12032012.
amendment seeks to implement the Para 6 of pdf

Doha Declaration on TRIPS and public health. 75. (a) that the reasonable requirements of the public with
respect to the patented invention have not been satisfied, or
(b) that the patented invention is not available to the public
at a reasonably affordable price, or (c) that the patented
73. Section 84 of the Patents Act. invention is not worked in the territory of India.

© Nishith Desai Associates 2018 29

 Provided upon request only

drug Trastuzumab, which was marketed in ƒoffering for sale,

India as Herceptin by Genentech and Herclon
ƒselling, or
by Roche. The request was made under Section
92 of the Patents Act, 1970, which allows the ƒimporting for these purposes, the product in
Government to file for a license in case of India without the permission of the patentee.
national emergency. This was on the ground
In the case of a process patent, the following
that the drug was not affordable. However, the
would amount to infringement:
DIPP rejected this request as it found that the
requirements for grant of compulsory license ƒusing,
under Section 92 of the Indian Patent Act, 1970
ƒoffering for sale,
was not satisfied.
ƒselling, or
A request was also made by Indian generic drug
manufacturer, BDR Pharmaceutical with respect ƒimporting for these purposes the product
to cancer drug Dacatinib, marketed by Bristol obtained directly by that process in India
Myers Squibb as Sprycel under Section 84 of without the permission of the patentee.
the Indian Patents Act for grant of compulsory
Any person without the consent of the patentee
license. An order was passed by the Controller
performs the above activities of the infringes
of Patents on 29th October, 2013 wherein the
the patent.
compulsory licensing application was rejected
on the basis that a prima facie case had not In patent infringement suits, the damages
been made out since BDR had not followed the are not granted for the use of the patented
procedural requirements as prescribed under invention during the period prior to the date of
the law before applying for the compulsory acceptance of the patent application.
license application. In view of this the
In a patent infringement action, the defendant
Controller of Patents did not go into the merits
can file a counterclaim for a revocation of the
and rejected the compulsory license application.
patent. Consequently, the main suit and the
counterclaim are heard together.
B. Rights of the Applicant Post
Publication A. What acts do not Constitute
From the date of publication of the application Infringement?
until the date of the grant of a patent, the
Section 107A in the Act, incorporates Bolar
applicant has the like privileges and rights as
provision and provision for parallel imports.
if a patent for the invention has been granted
Section 107A states that the following acts do
on the date of publication of the application.
not constitute infringement:
However, applicant is not entitled to institute
any proceedings for infringement until the ƒAny act of making, constructing, using, selling
patent has been granted. or importing a patented invention solely for
uses reasonably related to the development
and submission of information required under
XX. Infringement any Indian law, or law of a country other
than India, that regulates the manufacture,
Section 48 of the Act grants the following rights
construction, use, sale or import of any
to the patentee.
product;
In the case of a product patent, the following
ƒThe importation of patented products by any
actions would amount to infringement:
person from a person who is duly authorized
ƒmaking, by the patentee under the law to produce and
sell or distribute the products.
ƒusing,

30 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

i. Bolar Provision court, which may be a District Court or a High

Court. In case a patent infringement suit is filed
In view of introduction of the product patent
in a district court and counter claim is filed by
regime, this provision will gain importance.
a defendant, the patent infringement suit is
Bolar provision allows manufacturers to begin
transferred to a High Court. In the infringement
the research and development process in time
suit the plaintiff can seek an injunction and
to ensure that affordable equivalent generic
damages or order for an account for profits
medicines can be brought to market immediately
from the potential infringer of the patent.
upon the expiry of the product patent.
Where the defendant proves that at the time of
infringement he was not aware of and had no
ii. Parallel Imports reasonable ground to believe that the patent
A machine, though patented in India, can be existed, an order for damages or accounts for
imported (without the consent of the patentee) profits is not granted. Therefore, the patentee
from the patentee’s agent, say, in China, who should take steps to convey to the general public
manufactures it at a lower cost with the consent that his product or process is patented. In an
of the patentee. infringement suit, infringing goods, materials,
and equipment used for their production can
B. Reversal of Burden of Proof be seized, forfeited, or destroyed. The courts can
appoint suo motu, or on application of a party to
The Second Amendment also inserted Section
the suit, scientific advisors to assist the court or
104A concerning the burden of proof in
to submit a report on a specified question.77
infringement suits. The section provides that
in any suit for infringement of a process patent, The Patents Act does not provide for criminal
the defendant may be directed to prove that the action in case of patent infringement.
process used by him to obtain the product that is
identical to the product of the patented process,
is different from the patented process. Such
XXI. Patent Linkage
direction may be passed by the court, if:
Internationally recognized patent linkage is
ƒthe subject matter of the patent is a process for a process by which the drug regulatory authority
obtaining a new product; or, (the Drug Controller) delays or refuses to grant
marketing approval to a generic manufacturer
ƒthere is a substantial likelihood that the
to manufacture and sell the drug, if the drug
identical product is made by the process,
is patented. In effect it links the marketing
and the patentee or a person deriving title
approval to the lifetime of the patent. Such
or interest in the patent from him, has
a system would require the generic manufacturer
been unable through reasonable efforts to
to demonstrate before the Drug Controller that
determine the process actually used.
the drug for which the marketing approval is
However, before obtaining such a direction, the sought for is not covered by a patent.
plaintiff (claimant) has to prove that the product
In Bayer vs. Cipla 78, Bayer had filed a writ
is identical to the product directly obtained by
petition requesting the court to direct the Drug
the patented process.
Controller of India not to grant license to market
Cipla’s drug “Soranib” as it infringed Bayer’s
C. Remedies in the Case of Patent.
Infringement 76
Bayer contended that Section 48 of the Patents
In the case of infringement of the Indian patent, Act, which grants right to the patentee and
the patentee can file a suit in the appropriate

77. Section 115 of the Patents Act.

76. Section 108 of the Patents Act. 78. 2009(41)PTC634(Del)

© Nishith Desai Associates 2018 31

 Provided upon request only

Section 2 of the Drugs and Cosmetics Act to place patent superintendence, or policing
(DCA), should be read together. Section 2 of powers, with Drug authorities. If the Drugs
the DCA provides that the DCA shall not be in authorities, on a representation of the patentee
derogation of any other law and thus the DCA were to refuse licenses or approval, to applicants
cannot contravene the provisions of the Patent who otherwise satisfy the requirement of
Act. Therefore, any grant of license to CIPLA for the Drugs Act and its provisions, or even be
its drug “Soranib” by the drug controller would precluded from examining such applications, on
be in contravention of section 48 of the Patents assumed infringement, various provisions of the
Act and it is in contravention of Section 2 of Patent Act would be rendered a dead letter.
the DCA, when read together. Thus, the drug
The court also held that the requirement of
license should not be granted. Further, Form 44
indication of patent status in Form 44 is only
of the DCA79 also requires applicant to mention
to indicate bio availability and bio equivalence
the patent status of the drug in question in the
protocol and does not in any way suggest the
application, this shows a conscious effort by the
intention of the legislature to include patent
legislature to include patent linkage.
linkage.
The court held that the Patents Act and
the DCA are two separate legislations and
highlight distinct and disparate objectives. The
DCA prescribes standards of safety and good
manufacture practices, which are to be followed
by every pharmaceutical industry whereas,
Patent Act prescribes standards for conferring
private monopoly rights in favor of inventors.
Expertise that exist under the Patent Act to
adjudicate upon whether claimed products or
processes are patentable or not does not exist
with the officials under the DCA, who can only
test the safety of the product, and ensure that it
conforms to the therapeutic claim put forward.
The drug controller also lacks the jurisdiction
under the law to adjudicate on the issue of patent
infringement. Further the court held that there is
no intention on the part of the legislators

79. Form- 44:- Application for grant of permission to import or

manufacture a New Drug or to undertake clinical trial.

32 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

7. Designs
Industrial designs in India are protected under scene or its presentation on paper is not entitled
the Designs Act, 2000 (“Designs Act”), which for registration under the Designs Act.
replaced the Designs Act, 1911. The Designs
Act has been in effect since May 11, 2001. The
Designs Rules, 2001 have been framed under
II. Who can Apply for
the Designs Act. The Designs Act incorporates Registration of a Design?
the minimum standards for the protection of
industrial designs, in accordance with the TRIPS Any person claiming to be the “proprietor of
agreement. It provides for the introduction of any 81 new or original design” not previously
an international system of classification, as published in any country and is not contrary
per the Locarno Classification. The Designs to public order or morality can apply for the
Rules, 2001, were amended on 30th December registration of the design. The expressions
2014, to specifically include “small entity” as an “public order” or “morality” have not been defined
additional class of applicant. in the Designs Act.
The term “original,” with respect to design,
I. What is the Meaning means a design originating from the author
“Design” Within the Scope of of such a design and includes the cases that,
although old in themselves, are new in their
the Designs Act? application. Absolute novelty is now the
criterion for registration.
As per the Designs Act, “design” means only
the features of shape, configuration, pattern,
ornament or composition of lines or colours
III. What is the Process of
applied to any “article”80 whether in two Registration?
dimensional or three dimensional or in both
forms, by any industrial process or means, The process of registration of a design under the
whether manual, mechanical or chemical, Designs Act requires the following steps:
separate or combined, which in the finished
ƒFile an application for registration of design
article appeal to and are judged solely by the eye.
with the prescribed fee with the Controller
However, “design” does not include any mode or
of Patents and Designs. Photographs of the
principle of construction, or anything which is
articles from all angles must be filed along
in substance a mere mechanical device, and does
with the statement of novelty.
not include any trademark (as defined in section
2(1) (v) of the Trade and Merchandise Marks Act,
1958), or property mark (as defined in section 479
of the Indian Penal Code), or any artistic work (as
defined in Section 2 (c) of the Copyright Act, 1957). 81. Per Section 2(j) of the Designs Act: ”proprietor of a new or
original design”,-
In order to obtain registration under the Designs (i) where the author of the design, for good consideration,
executes the work for some other person, means the
Act, the design must be applied to an article. person for whom the design is so executed;
In other words, a mere painting of a natural (ii) where any person acquires the design or the right to
apply the design to any article, either exclusively of any
other person or otherwise, means, in the respect and to
the extent in and to which the design or right has been
so acquired, the person b whom the design or right is so
acquired; and
80. Per Section 2(a) of the Designs Act: “article” means any (iii) in any other case, means the author of the design; and
article of manufacture and any substance, artificial, or partly where the property in or the right to apply, the design
artificial and partly natural; and includes any part of an article has devolved from the original proprietor upon any other
capable of being made and sold separately. person, includes that other person.

© Nishith Desai Associates 2018 33

 Provided upon request only

ƒReply to the objections raised by the VI. Cancellation of Design

Controller.
Any person interested may present a petition
ƒUpon removal objections, the design is
for a cancellation of the design registration at
registered. When registered, a design is
any time after the registration, on the following
deemed to have been registered as of the date
grounds: that the design has been previously
of the application for registration.
registered in India; that it has been published
ƒAfter registration, the particulars of the design in India or in any other country prior to the
are published. registration date; that the design is not a new or
original design; that the design is not registrable
ƒIf the Controller rejects the application, the under the Designs Act or that it is not a design as
aggrieved person can appeal to the High Court. defined under Section 2(d) of the Designs Act.
An appeal from any order by the Controller can
There is no opposition procedure prior to be filed with the High Court.
registration.
Section 15 of the Copyright Act, 1957 states that
the copyright in any design, which is capable of
IV. What are the Rights being registered under the Designs Act, but is
Conferred by Registration? not, will lose its copyright as soon as the design
has been reproduced 50 times by an industrial
process by either the owner of the copyright or
Registration of a design confers upon the
his licensee.
registered proprietor a “copyright” with respect
to the design. Under the Designs Act, the word
“copyright” refers to the exclusive right to apply VII. Piracy
the design to any article in any class in which
the design has been registered. The first term Section 22 of the Designs Act lists the different
of registration is ten years after which it can be acts that amount to piracy of the registered design,
renewed for an additional five-year period. including: 1) any application of the registered
design for the purpose of sale during the
existence of the copyright in the design without
V. Assignment a license or the express consent of the registered
proprietor; 2) or the importation for sale without
When a person becomes entitled by assignment,
the consent of the registered proprietor of any
transmission, or other operation of law to the
article belonging to the class in which the design
copyright of a registered design, a record of the
has been registered and having applied to it the
title must be registered with 6 months of such
design or any fraudulent or obvious imitation;
assignment by an application to the Controller
or, 3) knowing that the design, or a fraudulent or
for the same, accompanied by the prescribed fee
obvious imitation has been applied to any article
and proof of title.
in any class of articles in which the design is
When a person becomes entitled to any right in registered, published, or exposed for sale, without
the registered design either by way of a mortgage, the consent of the registered proprietor of such
a license, or otherwise, an application in the an article. Any grounds on which the design can
prescribed form must be made to the Controller be cancelled can also be used as a defense in an
to register his title. infringement action.

34 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

VIII. Remedies IX. Paris Convention

The Designs Act provides for civil remedies in Reciprocity for the purpose of claiming priority
cases of infringement of copyright in a design, is now allowed from the applications originating
but does not provide for criminal actions. The from the Paris Convention countries.
civil remedies available in such cases are
injunctions, damages, compensation,
or delivery-up of the infringing articles.

© Nishith Desai Associates 2018 35

 Provided upon request only

8. Geographical Indications of Goods

(Registration and Protection) Act, 1999
Geographical Indications (“GI”) are those, representing the interest of the producers of
which identify a good as originating in the concerned goods.
a place where a given quality, reputation,
The office of the Geographical Indications
or other characteristic of the good is essentially
Registry is in Chennai.
attributable to its geographical origin. Some
better-known examples of GI are “Champagne,” To qualify as a GI, two requirements must be
“Bordeaux,” and “Chianti,” the first two being satisfied: (i) the territorial aspect i.e. as to how
regions in France and the third, a region in Italy, the GI serves to designate the goods originating
all famous for their wines. In the Indian context, from the concerned territory, (ii) a given quality,
‘Darjeeling Tea’ was the first GI registered under reputation, or other characteristic should be
the GI Act. This GI is registered in the name of the essentially attributable to the geographical origin.
Tea Board of India which also hold GI registrations
for ‘Nilgiri Tea’ and ‘Assam Tea’. Similarly, the
Coffee Board (under the Ministry of Commerce &
II. Rights Conferred by
Industry) has a subsisting registration for Malabar Registration
Coffee. Other well-known GIs include ‘Kashmiri
Pashmina’, ‘Mysore Silk’, ‘Lucknow Chicken Registration of a GI confers the following rights
Craft’ and ‘Feni’. The convention application for on the registered proprietor and the authorized
‘Champagne’ was filed in September 2008 and is in users:
the process of registration.
ƒRight to obtain relief in respect of the
The Geographical Indications of Goods infringement of the GI; and
(Registration and Protection) Act, 1999 came
ƒExclusive right to use the GI in relation to the
into effect on September 15, 2003. The Act was
goods for which GI is registered.
passed with the goal of providing protection, as a
GI, to any agricultural, natural, or manufactured Two or more authorized users of a registered GI
goods, or to any goods of handicraft or industry, shall have co-equal rights.
including foodstuffs.
III. Classes
I. Registration
All the goods have been classified in accordance
The Act provides for the registration of a GI with the International Classification of Goods for
and the ‘authorized user’ thereof. Any person the purposes of GI registration.
claiming to be the producer of goods in respect of
a registered GI can apply for registering him as
an authorized user. The authorized user is able to
IV. Duration and Renewal
bring an action against the wrongful users of GI.
GI registration is valid for a period of ten years,
Convention applications can also be filed under
and may be renewed thereafter from time to time.
this Act.
The registration of an authorized user is valid
An application for registration can be filed by any:- for a period of ten years or for the period until
the date on which the GI registration expires,
ƒorganisation of persons or producers, or
whichever is earlier.
ƒorganisation or authority established by or
under any law, such organisation or authority

36 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

V. Procedure for Registration VII. Infringement

The procedure for registering a GI and procedure The Act also provides for infringement and
for registering oneself as an authorized user passing off actions, thus recognizing the
are substantially the same. The procedure is as common law right in a GI, which includes civil
follows: as well as criminal remedies. Infringement has
been defined to include unfair competition.

FILE APPLICATION WITH THE GEOGRAPHICAL INDICATIONS REGISTRY

AFTER ACCEPTANCE, THE APPLICATION IS ADVERTISED FOR OPPOSITION

IF AFTER PUBLICATION THE APPLICATION HAS NOT BEEN OPPOSED AND THE OPPOSITION
PERIOD (3 MONTHS EXTENDABLE FOR 1 MONTH THEREAFTER) HAS EXPIRED, THEN
REGISTRATION IS GRANTED. THE DATE OF REGISTRATION IS THE DATE ON WHICH THE
APPLICATION IS FILED

An action for infringement of a GI may be

VI. Prohibition of Assignment initiated in a District Court or High Court
or Transmission having jurisdiction. Available relief includes
injunctions, discovery of documents, damages
GI, being a public proprietary right, is not or accounts of profits, delivery up of the
assignable or transmissible by any other means. infringing labels, and indications for destruction
Therefore, the Act prohibits the assignment, or erasure. The Act also provides for a sentence
transmission, licensing, pledge, or mortgage or of imprisonment for a period of 6 months to
any such other agreement in respect of a GI. 3 years and/or a fine of an amount between INR
50,000 to INR 2,00,000 in actions relating to
infringement of a GI.

© Nishith Desai Associates 2018 37

 Provided upon request only

9. Semiconductor Integrated Circuits Layout

Design Act, 2000
This Act was enacted in order to comply with I. Definitions
the provisions of TRIPS. The Semiconductor
Integrated Circuits Layout Design Act, 2000 A. Layout Design
received the assent of the President of India on
Layout design refers to a layout of transistors
September 4, 2000, after it was approved by
and other circuitry elements and includes lead
both Houses of the Indian Parliament. However,
wires connecting such elements and expressed
the Act has not come into effect yet. The
in any manner in a semiconductor integrated
obligations imposed under the TRIPS and the
circuit.
Washington Treaty, 1980 made it mandatory
for India to enact a law to protect the layout
designs of Integrated Circuits (“IC”). This form
B. Semiconductor Integrated
of protection is quite different from patents, Circuit
industrial designs, and copyrights, although the
Semiconductor Integrated Circuit means
principles of protection and enforcement stem
a product having transistors and other circuitry
from industrial design and copyright.
elements, which are inseparably formed on
As the Act has not come into effect yet, semiconductor material or insulating material,
the existing patent and copyright regime or inside the semiconductor material, and
does not appropriately accommodate the designed to perform an electronic circuitry
requirements of protection for the layout function.
design of IC. This is because in the context of
layout design of IC, the concept of “originality”
is of utmost significance, whether it is “novel
II. IC layout Designs not
or not”, whereas the patent law requires that Registrable in India
the idea should be original and novel. On the
other hand, the copyright law is too general to The following are layout-designs, which cannot
accommodate the original ideas of scientific be registered in India;
creation of layout designs of IC.
(a) those which are not original; or (b) those
In order to ascertain the nature of protection which have been commercially exploited
which will be conferred on layout designs of IC anywhere in India or in a convention country 82,
on the coming into force of this Act, we have or (c) those which are not inherently distinctive;
analyzed some of the salient features of the Act or (d) those which are not inherently capable of
in the following paragraphs. being distinguishable from any other registered
layout-design.

82. Per Section 7: A layout design which has been commercially

exploited for not more than two years from the date on
which an application for its registration has been filed either
in India or a convention country shall be treated as not
having been commercially exploited for the purposes of this
Act.

38 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

III. Procedure for Registration

of Layout Designs

FILE APPLICATION WITH THE SEMICONDUCTOR INTEGRATED CIRCUITS LAYOUT DESIGN

REGISTRY

AFTER ACCEPTANCE, THE APPLICATION IS ADVERTISED FOR OPPOSITION

IF AFTER PUBLICATION THE APPLICATION HAS NOT BEEN OPPOSED AND THE OPPOSITION
PERIOD (3 MONTHS EXTENDABLE FOR 1 MONTH THEREAFTER) HAS EXPIRED, THEN
REGISTRATION IS GRANTED. THE DATE OF REGISTRATION IS THE DATE ON WHICH THE
APPLICATION IS FILED

IV. What are the Rights VI. Infringement of Layout

Granted to the Registered Designs
Proprietor?
Reproducing, importing, selling, or distributing
for commercial purposes a registered layout
Registration provides the registered proprietor
design or a semiconductor IC incorporating
the exclusive right to use the layout design and
such a design constitutes infringement.
provides protection against infringement.
However, if reproduction of the layout design
is for purposes of scientific evaluation, analysis,
V. What is the Term of research or teaching, this shall not constitute
Registration? infringement.

The term of registration is for a period of ten VII. Penalty for Infringement
years from the date of filing an application
for registration or from the date of its first Any person found to be infringing a registered
commercial exploitation anywhere in India layout design can be punished by way of
or in any country, whichever is earlier. imprisonment for a maximum of three years
and/or a fine (minimum INR 50,000 and
maximum INR 1,000,000).

© Nishith Desai Associates 2018 39

 Provided upon request only

10. The Protection of Plant and Varieties and

Farmers Rights Act, 2001
This Act was enacted to give effect to Article I. Varieties Registerable
27.3(b)83 of the TRIPs Agreement relating to under the Act
protection of plant varieties. India opted to
protect them under a sui generis system and
The following are registerable under the Act:84
passed the Act.
i. a new variety if it confirms the criteria of
The Act includes:
novelty, distinctiveness, uniformity and
ƒProtection of varieties developed through stability; and
public and private sector research;
ii. an extant variety if it confirms the criteria
ƒProtection of varieties developed and of novelty, distinctiveness, uniformity
conserved by farmers and traditional and stability as specified under Protection
communities, providing them with legal of Plant Varieties and Farmers’ Rights
rights to save, use, sow, re-sow, exchange, Regulations, 2006.
share, or sell their farm seed, although farmer
‘Extant Variety’ has been defined under the Act
shall not be entitled to sell branded seed
to mean:85
of a variety protected under this Act ;
i. a variety notified under Section 5 of the
ƒEncouraging plant breeders and researchers
Seeds Act, 1966;
to develop new and improved varieties;
ii. a farmer’s variety (which has been defined
ƒEstablishment of the Protection of Plant
to mean a variety traditionally cultivated
Varieties and Farmers’ Rights Authority
and evolved by the framers in their fields
(“PPV&FRA”) for the registration of new
or a variety which is relative or land race of
varieties and determine claims of benefit
a variety about which the farmers possess
sharing to such varieties;
common knowledge);86
ƒProvision of civil and criminal relief for
iii. a variety about which there is common
infringement and passing off of protected
knowledge; or
plant varieties; and
iv. any other variety which is in public
ƒProvisions for granting compulsory licenses
domain
when reasonable requirements of the public
have not been satisfied.
The Act strikes a balance between the rights
II. Term of Protection
of farmers and breeders by rewarding the
As prescribed under Section 24 of the Act, the
farmers/local communities from the pool of
total period of validity of registration shall not
National Gene Fund for their conservation
exceed:
and development efforts and, at the same time,
ensuring reward for innovation by granting i. eighteen years, in case of trees and vines;
plant breeders’ rights.
ii. fifteen years, in case of extant varieties; and

84. Section 14 of the Act

83. Article 27.3(b) of TRIPs requires member countries to either
85. Section 2(1)(j) of the Act
grant patent protection plant varieties or to protect them
under a sui generis system. 86. Section 2(1)(l) of the Act.

40 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

iii. fifteen years, in any other case. IV. Registration of Plant

The certificate of registration issued under this Varieties now Possible in
Act is valid for nine years in case of trees and India
vines and six years in case of other crops and
a registrant is required to renew the same for the
The Act has started documentation and
remaining period of registration.
registration of varieties of 12 crops which
include the following: rice, wheat (bread wheat
III. Setting up of PPV & FRA types), maize, sorghum (jowar), pearl millet
(bajra), chickpea (chana), pigeon pea (arhar),
The PPV&FRA was set up in November, 2005 green gram (mung), blackgram (urad), lentil
for registration of new varieties and determine (masur), field pea (matar) and kidney bean
claims of benefit sharing to such varieties. (rajmah).
The Authority is located in New Delhi. This
Authority has already evolved the detailed rules
and regulations and crop specific guidelines for
seeking this protection. A National Plant Variety
Registry has been set up by PPV&FR under the
Union ministry of agriculture to register crop
varieties.

© Nishith Desai Associates 2018 41

 Provided upon request only

11. The Biological Diversity Act, 2002

India is a member of the Convention on Some of the salient provisions of the Act are as
Biological Diversity (“CBD”). To comply with follows:
its obligation under the CBD, this Act has
ƒAll foreign individuals, associations and
been enacted. This Act aims to ensure the
organizations would be required to seek
conservation of biological diversity in India,
the prior approval of the NBA to access any
sustainable use of its components and fair and
biological resource or the results of research
equitable sharing of the benefits arising out
occurring in India, for any use. The NBA’s
of the use of biological resources. “Biological
approval would also have to be obtained
diversity” means the variability among living
before biological resources can be exported
organisms from all sources and the ecological
out of India. Proposals have been made to
complexes of which they are part, and includes
set up biodiversity funds and management
diversity within species or between species
committees at national, state, and municipal
of eco-systems. “Biological resources” means
levels.
plants, animals and micro-organisms or parts
thereof, their genetic material and by-products ƒAll Indian citizens would have to seek the
(excluding value added products) with actual NBA’s prior approval to transfer the results of
or potential use or value, but does not include research relating to any biological resource
human genetic material. to foreigners. The term “foreigners” has been
defined as “individuals who are not Indian
Only selective provisions of the Biodiversity
citizens”.
Act, 2002 – namely, definition provisions,
provisions relating to the constitution of the ƒIndian citizens, including local people and
National Biodiversity Authority (“NBA”) and communities, vaids and hakims (native
rule-making powers of Government – have been Indian doctors) will have free access to
brought into force with effect from October biological resources for use within the
1, 2003. NBA regulates the commercial / other country for any purpose. However, the NBA’s
uses of biodiversity by both Indian and non- prior approval would be required before
Indian entities. Prior to seeking any form of IPR seeking any form of IPR on an invention
in respect of biological resources, the applicant based on a biological resource.
will be required to obtain approval of the NBA.
ƒThe NBA will have the power to impose
The Act confers extensive powers on the NBA conditions to ensure a share in the benefits
with regard to protection of biological resources. accruing from the acquisition of IPRs.
The NBA will consist of a chairperson, seven
ex-officio members representing ministries and
departments of the Federal Government, and
five non-official members who are specialists,
scientists and representatives from the industry.
The ex-officio members include representatives
from the tribal affairs ministry, biotechnology,
ocean development, the Indian systems of
medicine and homeopathy, and the ministries
of environment and agriculture.

42 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

12. Confidential Information & Trade Secrets

Confidential information and trade secrets are
protected under the common law and there
II. Non-Disclosure
are no statutes that specifically govern the Agreements
protection of the same. In order to protect trade
Sound and concise company policies and
secrets and confidential information, watertight
nondisclosure agreements with the employees
agreements should be agreed upon, and they
protecting confidential information and trade
should be supported by sound policies and
secrets are recommended so as to provide
procedures.
contractual remedy in addition to the one
under the common law. Such agreements
I. Protection of Confidential should define “confidential information” and
Information in the Hands of the exceptions to confidentiality. Agreements
should have clauses negating a grant of an
Employees implied license, restrictions on disclosure, use
and copy; restriction on use of confidential
In this information age, it’s imperative that information upon termination of the
a business protects its new formula, product, employment, return of information upon
technology, customer lists, or future business termination and right to withhold salary and
plans. In the global marketplace, Indian emoluments till such return.
corporations are often required to comply
Non-compete clauses, depending upon their
with foreign laws and are likely to be exposed
applicability in the Indian context, read with
to liabilities for violation of confidential
the confidentiality clauses would afford an
information or trade secrets of their business
organization added protection with respect to its
partners or third parties. For example, the
confidential information. Such provisions must
U.S. Economic Espionage Act, 1996 imposes
have a clear purpose, which is to restrict the use
criminal liability (including fines and prison
of confidential information and trade secrets
sentences) on any person who intentionally
obtained during employment and ensure that
or knowingly steals a trade secret, knowingly
employees do not compete unfairly. However,
receives, or purchases a wrongfully obtained
non-compete provisions would need to be
trade secret. The standards for protection have
reasonable, and the Indian courts may treat a
to be tailored to address the risks associated
tough non-compete provision as unenforceable.
with rapid advancement in technology and
communications. The standards accepted In order to ensure that the rights of third
today may become inadequate tomorrow. parties are not violated, the non-disclosure/
However, one constant factor is the presence of employment agreement should clearly impose
a corporate culture imbued with information an obligation on the employee not to integrate
protection values. into the organization’s data or intellectual
property, any confidential information of a
The employees of an organization are privy to
third party. Employees should be required to
confidential information and trade secrets on
indemnify the organization in case of violation of
a daily basis. In the absence of any specific
this clause. If the organization has not executed
Indian statute conferring protection on such
such agreements at the time of employment,
information in the hands of employees, recourse
subsequently executed agreements should
has to be taken to common law rights and
expressly cover the confidential information
contractual obligations.
obtained by the employee from the date of his
employment.

© Nishith Desai Associates 2018 43

 Provided upon request only

III. Internal Processes IV. An Exit-Interview

Strong internal controls and processes to During such an interview, an employee should
protect confidential information should be in be reminded of his obligations with respect to
place. Employees should be educated to identify the company’s confidential information and
information that is confidential or in the nature trade secrets and should be asked to sign
of a trade secret, to enable them to make an a document reaffirming his obligations.
informed decision. They should have a clear If an employment agreement was signed, the
understanding of their responsibilities to protect document to be signed upon termination
confidential matter and treat this as an on-going should be attached. A copy of the signed exit-
process that is integral to their work. Data that is interview form, including the employment
confidential should be clearly indicated as such agreement, must be given to the employee. Such
in all communications. Appropriate security an interview not only serves as a meaningful
procedures must be established and followed reminder but can also be valuable evidence of
by the company and access to specific sensitive employee’s knowledge of such obligations.
areas of workplace restricted or limited to certain
Success of suits for protection of confidential
senior employees only.
information and trade secrets depends upon
Third-party interaction and disclosures should production of satisfactory evidence to prove
be channeled only through specified personnel. confidentiality of the information, act of
disclosure and the damages caused thereby,
Wherever feasible, confidential information
as well as the reasonability of such restriction.
should only be shared with those employees
who have a legitimate need to know such Enactment of a strong statute for protection of
information, thus enabling the employees to confidential information and trade secrets would
perform the assigned tasks. certainly help the Indian industry. In any event,
strategies for protection of the organization’s
confidential information and trade secrets
have, in today’s economic scenario, become
a prerequisite to the organization’s survival.

44 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

13. International Conventions

India is a signatory to the following international
conventions:

Convention Date
Berne Convention April 1, 1928 (Party to convention)
Universal Copyright Convention January 7,1988 (Ratification)
Paris Convention December 7,1998 (Entry into force)
Convention on Biological Diversity June 5,1992 (Signature and ratification)
Patent Cooperation Treaty December 7,1998 (Entry into force)
Budapest Treaty on the International Recognition of December 17, 2001(Party to treaty)
Microorganisms for the Purposes of Patent Procedure
1977

By virtue of such membership, convention treaties; the Madrid Agreement concerning

applications for the registration of trademarks, the International Registration of Marks, which
patents, and designs are accepted with the was concluded in 1891 and came into force in
priority date claim; copyright infringement suits 1892, and the Protocol relating to the Madrid
can be instituted in India based on copyright Agreement, which came into operation on April 1,
created in the convention countries. 1996. India acceded to the relevant treaties in 2005
and in 2007.The new Trademarks (Amendment)
The Madrid Protocol Bill to amend the TM Act was introduced in the
Parliament to implement the Madrid System in
The Madrid System, administered by the
India in 2009. The Trade Marks (Amendment)
International Bureau of World Intellectual
Rules 2013, with provisions relating to the
Property Organization (WIPO), Geneva, permits
international registration of trademarks under the
the filing, registration and maintenance of
Madrid Protocol, came into force in India from 8th
trademark rights in more than one jurisdiction on
July, 2013.
a global basis. This system comprises two

© Nishith Desai Associates 2018 45

 Provided upon request only

14. Special Tribunals

Effective September 15, 2003, the Intellectual of trademarks and GIs. The cases, which were
Property Appellate Board (Board) has been set pending before various High Courts with respect
up in Chennai (in the state of Tamil Nadu, India) to the aforementioned matters stand transferred
with benches in Ahmedabad, Delhi, Mumbai to the Board with effect from October 6, 2003.
and Kolkata. The Board has the jurisdiction Setting up of the exclusive IP Board is expected
to consider appeals from the decisions of the to lead to an effective and speedy disposal of
Registrar of Trade Marks and Registrar of GI and cases. The cases with respect to infringement and
to consider cancellation / rectification cases passing off will continue to be instituted
in regular courts.

46 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

15. Tax Regime in India

Income tax in India is governed by the provisions treaty applies, the provisions of the ITA would
of the Income-tax Act, 1961 (“ITA”), which apply only to the extent they are more beneficial
lays down elaborate provisions in respect of to the tax payer.93
chargeability to tax, determination of residency,
computation of income, transfer pricing, etc.
All residents are subject to tax in India on their
II. Deemed Indian Source
worldwide income, whereas non-residents are Incomes
taxed only on Indian source income, i.e. income
that is received in India or accrues or arises to Royalties and fees for technical services (“FTS”)
them in India or is deemed to accrue or arise or is are taxable in India when they arise from
deemed to be received in India.87 Every company sources within India. 94 Royalties and FTS paid
that is chargeable to tax in India is required to file by a resident to a non-resident are generally
a tax return in India.88 taxable in India. However, if such royalties/FTS
are paid with respect to a business or profession
carried on by such resident outside India or for
I. Residency89 and Scope of earning income from any source outside India,
Income then such royalties and FTS are not taxable in
India. Further, even payments of royalties or
A company incorporated under the laws of India FTS made by one non-resident to another non-
is deemed to be a resident of India for Indian resident are brought within the Indian tax net,
tax purposes. A company incorporated outside if such royalties/FTS are payable with respect to
India is deemed to be resident in India if its any business or profession carried on by such
place of effective management (“POEM”)90 is nonresident in India or for earning any income
in India. Income of an Indian company (which from a source in India.
would include an Indian subsidiary of a foreign
Explanation 2 to section 9(1)(vi) and (vii) of ITA
company) is taxed in India at the rate of 30%.91
defines the terms “royalty” and FTS respectively
A foreign company is taxed at the rate of 40% on
to mean:
its business income earned in India, only if it has
a Permanent Establishment (“PE”) or business Royalty means consideration (including
connection92 in India. Section 90(2) of the ITA lump sum consideration but excluding any
provides that where India has entered into a consideration which would be the income of the
tax treaty with the Government of any other recipient chargeable under the head “Capital
country for granting relief from double taxation, Gains”) for:
in relation to such a tax payer to whom such tax
i. “the transfer of all or any rights (including the
granting of a license) in respect of a patent,
87. Section 4 and 5 of the ITA. invention, model, design, secret formula or
88. Section 139(1) of the ITA. process or trademark or similar property; (It is
89. Section 6 of the ITA. pertinent to note that the payment for transfer
90. Inserted by Finance Act, 2016, w.e.f. 1-4-2017. As per Expln. of all or any rights in respect of any right,
to Section 6(3) of the ITA – “place of effective management
means a place where key management and commercial
property or information includes transfer of
decisions that are necessary for the conduct of business of an all or any right for use or right to use
entity as a whole are, in substance made.”
91. The income tax rates mentioned in this paper are exclusive of
the currently applicable surcharge at the rate of 7% and a 2%
education cess on such income tax and surcharge.
92. Section 9(1)(i) of the ITA. The term ‘business connection’ is a
term, which is used in the ITA and is analogous to the term ‘PE’ 93. Section 90(2) of the ITA.
used in tax treaties. 94. Section 9(1) (vi), (vii) of the ITA

© Nishith Desai Associates 2018 47

 Provided upon request only

a computer software (including granting consideration for any construction, assembly,

of a licence) irrespective of the medium mining or like project undertaken by the
through which such right is transferred.) recipient or consideration which would be
income of the recipient chargeable under the
ii. the imparting of any information concerning
head “Salaries”.
the working of, or the use of, a patent,
invention, model, design, secret formula or Royalties and FTS, which are chargeable to
process or trademark or similar property; tax in India and are payable to non-residents
who do not have a PE in India, are subject to a
iii.the use of any patent, invention, model, design,
withholding tax at the rate 10% on gross basis.96
secret formula or process or trademark or
No deductions are allowed from the gross
similar property;
royalties or FTS. This rate may be reduced if there
is a favorable provision in the tax treaty between
iv. the imparting of any information concerning
India and the country of residence of the non-
technical, industrial, commercial or scientific
resident.
knowledge, experience or skill;
If the non-resident company having a PE in India
iv-a. the use or right to use any industrial,
receives royalties/FTS, which is chargeable to
commercial or scientific equipment;
tax in India and the payment of such royalties/
v. the transfer of all or any rights (including FTS is effectively connected to the PE in India,
the granting of a license) in respect of any then such royalties/FTS would be liable to tax in
copyright, literary, artistic or scientific work India as business income at the rate of 40% on
including films or video tapes for the use in net basis.97 In such cases, expenditure incurred
connection with television or tapes for the in this respect by the non-resident in earning the
use in connection with radio broadcasting, royalties/FTS would be allowable as a deduction.
but not including consideration for the sale,
India, does not have any special provisions for
distribution or exhibition of cinematograph
the taxation of computer software. Thus, the
films; or
general rules of taxation of business income,
vi. the rendering of any services in connection FTS or royalties, as the case may be, are applied.
with the activities referred to in sub-clauses The Central Board of Direct Taxes (“CBDT”) had
(i) to (v). constituted a High Powered Committee (“HPC”)
in the year 1999 to advise the government with
With respect to the aforesaid definition of royalty
respect to any changes that may be required
it is important to note that for the purposes
in the domestic law to address the taxation of
of determination of whether a payment for
electronic commerce. The HPC while making
right, property or information is in the nature
its recommendations had taken a different view
of royalty it is irrelevant whether the payer is
on the taxation of 13 out of the 28 categories
in possession or control of such right, property
of e-commerce transactions examined by
or information or whether such right, property
the Technical Advisory Group (“TAG”) in its
or information is used directly by the payer.
report on ”Treaty Characterisation of Electronic
Further, the location of such right, property or
Commerce Payments” dated February 1, 2001.
information is also not of essence.95
On account of several representations made
“Fees for technical services” means any by the industry and professionals98 , the
consideration (including any lump sum recommendations of the HPC have not yet been
consideration) for the rendering of any adopted.
managerial, technical or consultancy services
(including the provision of services of technical
or other personnel) but does not include 96. Section 115A(1)(b) of the ITA.
97. Section 44 DA of the ITA
98. Our recommendations can be found at www.nishithdesai.
95. Explanation 5 to Section 9 (1) (vi) com/eComTaxpert/ecomtaxpertnew.html

48 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

III. Tax Incentives V. Second tier Royalty

Tax incentives are available to a company As discussed above, payments of royalties/FTS
engaged in the manufacture and export of made by one non-resident to another non-
goods and services if the export is undertaken resident are brought within the Indian tax net,
via a facility set up in a Special Economic Zone. if such royalties/ FTS are payable with respect
In such a case, a tax exemption equivalent to to any business or profession carried on by such
100% of the profits derived by such unit from non-resident in India or for earning any income
export of goods and services is available for from any source in India. Thus, for example
the first 5 years of its operations and a 50% if any royalties/FTS are payable by a non-resident
tax exemption on such profits is available for sub-licensor to a non-resident licensor, the
subsequent five years. Subject to fulfillment of same could be subject to tax in India if they are
specific conditions regarding creation of payable by the sub-licensor in respect of any
a reserve and utilization of profits, a 50% tax business or profession carried on by him in India
exemption for an additional 5 years may also or for earning any income from any source in
be claimed.99 India. However, under certain tax treaties, which
India has entered into, such second tier royalty/
Some of the other tax incentives available
FTS can be taxed in India only if the sub-licensor
include incentives for a company engaged in the
has a PE in India and the royalties/FTS are borne
business of bio-technology or in any business
by the PE.
of manufacture or production (except certain
specified businesses), whereby such companies Recent landmark judgment in relation to situs of
can claim a deduction equivalent up to 200% Intangible Property.
of the expenditure incurred for in-house R&D
facilities (not being expense in the nature of cost
of land and building) that have been approved by
VI. CUB Pty Ltd. v. Union of
Department of Scientific and Industrial Research, India102 - Foster’s case
Ministry of Science and Technology, Govt. of
India.100 In other cases, a deduction shall be Foster’s Australia Limited (‘the Applicant’) was
allowed for any expenditure laid out on scientific owner of trade name, trade markbrand and other
research related to the business carried out by intellectual property related to Foster’s Beer.
the company is allowed.101 An exclusive license was granted by it to Foster’s
India Limited for the purposes of brewing,
packaging and using the trademark along with
IV. Depreciation using “Foster’s” as part of their corporate name.
Depreciation is allowed on intangible assets Foster’s Australia entered into a share transfer
in the nature of know-how, patents, copyrights, agreement with another foreign company
trade names, licenses, franchises or any other outside India to transfer the rights and title in
business or commercial rights of a similar trademarks, Foster’s brand intellectual property
nature acquired on or after April 1, 1998 at the and Foster’s brewing intellectual property.
rate of 25% as per written down value method.
The controversial issue in this case was whether
Computer software is entitled to depreciation
the consideration received on sale of trademark
at a higher rate i.e. 60%.
by the Company whose license has been
exclusively granted to an Indian Subsidiary
be taxed in India or not.

99. Section 10AA of the ITA

100. Section 35 (2AB) of the ITA.
101. Section 35 (1) of the ITA 102. [2016] 288 CTR 361 (Delhi)

© Nishith Desai Associates 2018 49

 Provided upon request only

A. Authority of Advance Ruling- C. GST – The way forward

It was decided that irrespective of the fact
Following the passage of the Constitution
that intellectual property is owned by Foster’s
Amendment Bill for Goods and Services Tax
Australia, it should be taxed in India as the sale
(“GST”) by both houses of the parliament and
transaction was about the trademarks that were
subsequent approval by the president, the GST
exclusively licensed and used in India therefore
regime is proposed to come into effect from
the sale consideration that flowed should be
April 2017. GST seeks to replace all indirect
taxed in India and not where the owner of the
taxes related to goods and services with a
intellectual property was seated.
single structured regime and is likely to have
far reaching effects on the Indian economy,
B. Delhi High Court including the intellectual property regime.
The High court did not employ the reasoning
In view of this, it must be noted that the
of the AAR. It opined that as per the internally
taxability of software and software related
accepted principle of mobilia sequuntur personam,
products had previously undergone extensive
the situs of the intangible asset would have closest
litigation. The controversy follows from the
proximity with the situs of the owner of the asset.
difficulty in determining whether a transaction
This rule has an exception too i.e. the principle
related to software leads to sale of goods or
would not apply if the domestic laws of any
provision of services, thereby leading to the
country is contrary to it but the Indian law in the
age old question of whether such transactions
present case does not have such a provision hence
should be subject to Value Added Tax (“VAT”)
the exception would not get triggered.
or service tax. However GST seeks to put an end
Basis the above principle the court passed the to this controversy by deeming that ‘temporary
judgment in the favor of taxpayer and said that transfer or permitting the use or enjoyment of any
situs of the intangible property would be said to intellectual property’ would be considered to be
be outside India as the owner of the said property supply of services and subject to a single rate
is Foster’s Australia and not Foster’s India. of tax which could range from 5 to 28 percent
depending upon the nature of services provided.

50 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

16. Enforcement
purposive manner. No doubt about it that a suit can
I. Place of Filing of be filed by the plaintiff at a place where he is residing
Infringement Actions or carrying on business or personally works for
gain. He need not travel to file a suit to a place where
In India, infringement and passing-off defendant is residing or cause of action wholly or in
actions can be instituted by filing a suit in part arises. However, if the plaintiff is residing or
the appropriate court. All IP laws state the carrying on business etc. at a place where cause of
appropriate court in which such suits can be action, wholly or in part, has also arisen, he has to
instituted. For example, under the TM Act, suits file a suit at that place.” 105
for trademark infringement or passing off can
be filed in the district court within the local
limits of whose jurisdiction, at the time of the
II. Interim Injunctions
institution of the suit / other proceedings, the
In India, court cases often reach a final hearing
plaintiff / one of the plaintiffs (for example,
after twelve to sixteen years from the date of
registered proprietor, registered user) actually
their filing. Therefore, obtaining an interim
and voluntarily resides or carries on business or
injunction becomes crucial for the plaintiffs,
personally works for gain. Under the Copyright
especially in intellectual property lawsuits. The
Act there is a similar provision as well.
damages are awarded only after the final hearing.
Section 62(1) of the Copyright Act clearly
Indian courts also grant injunctions in a quia
specifies that every suit instituted in relation to
timet (anticipatory) action if the plaintiff proves
the infringement of a copyright in any work or
that defendant’s activities or proposed activities
the infringement of any other right conferred by
would lead to violation of plaintiffs’ rights.
this Act shall be instituted in the district court
having jurisdiction.103 Therefore, any suit in
relation to the infringement of a copyright has III. Interim Relief
to be instituted in the relevant district court
having jurisdiction. However, as per section After filing the suit, the plaintiffs can seek ad
62(2) of the Copyright Act,104 the term “district interim and interim relief, including injunctions,
court” has been qualified for the purpose of the Mareva Injunctions, an appointment of the
Copyright Act to mean “a district court within commissioner or the court receiver, Anton Piller
whose jurisdiction the concerned plaintiff orders, John Doe (Ashok Kumar) orders, and
resides or carries on business”. Resultantly, other orders, such as discovery and inspection, or
an individual may file a suit regarding orders for interrogatories.
infringement of a copyright in the jurisdiction
Ad-interim and interim injunctions are granted
where he resides or primarily carries on his
under Order 39, Rules 1 and 2, read with Section
business, despite the fact that the actual
151 of the Code of Civil Procedure, 1908. The
infringement took place in another jurisdiction.
Supreme Court of India in Wander Ltd. v. Antox
However, the Supreme Court has clarified that India (P) Ltd. 106 laid down the principles for the
such provisions have to be given a purposive granting of an interim injunction. For the grant
interpretation while opining that “the provisions of such ad interim and interim orders,
of section 62 of the Copyright Act and section 134 of the plaintiff has to show that he has a prima facie
the Trade Marks Act have to be interpreted in the

105. Indian Performing Rights Society Ltd. v. Sanjay Dalmia & Anr.
103. Section 62(1) of the Copyright Act 1957 CA No.10643-10644 of 2010
104. Section 62(1) of the Copyright Act 1957 106. (1990) Supp. S.C.C. 727.

© Nishith Desai Associates 2018 51

 Provided upon request only

case, that the balance of convenience is in his The damages are awarded only after the final
favor, and the hardship suffered by the plaintiff hearing of the suit, which could take twelve
would be greater if the order is not granted. If the to sixteen years, as stated earlier. Traditionally
plaintiff is able to convince the Court of these Indian courts have been slow and conservative
points, then plaintiff can obtain an ad interim in granting damages in intellectual property
and interim injunction within a couple of days matters. However, recently the courts have
of filing of the suit. Some courts also grant ex started granting punitive and exemplary
parte injunctions if a strong case is made. damages in the intellectual property law matters.
In the matter of Time Incorporated v. Lokesh
Generally, a plaintiff is required to give at least
Srivastava and Anr. 107 the Delhi Court observed:
forty eight hours’ notice to the defendant for
a hearing of the interim application. If the “This Court has no hesitation in saying that the
defendant appears before the court, he may time has come when the Courts dealing actions for
be granted further time to file his reply and infringement of trademarks, copy rights, patents
the plaintiff in turn may be allowed to file his etc. should not only grant compensatory damages
response to the defendant’s reply. The hearing of but award punitive damages also with a view
the interim applications could go on for three to to discourage and dishearten law breakers who
four days, depending upon the complexity of the indulge in violations with impunity out of lust for
matter. Both the parties have the liberty to file an money so that they realize that in case they are
appeal from the interim order and subsequently caught, they would be liable not only to reimburse
the parties may have to fight the matter even the aggrieved party but would be liable to pay
up to the Supreme Court of India. The appellate punitive damages also, which may spell financial
court also has the power to grant interim orders disaster for them.”
pending the final hearing of appeal.
Indian courts have realized the importance of
protecting IP and have started granting innovative
orders. Recently, of India’s 40,000 cable operators,
only 3,500 had obtained licenses from the owners
of the rights to broadcast the World Cup (soccer)
in India. Given the transitory nature of both
the World Cup rights and the cable operators
themselves (and the normal time frame of the
Indian courts), the Delhi High Court granted an
order against anonymous defendants whereby the
rights owner, accompanied by a court-appointed
commissioner, were able to locate the unlicensed
cable operators and shut down the unauthorized
World Cup transmissions. Such orders are called
Ashok Kumar orders in India, equivalent to John
Doe orders.

107. 2005 (3) PTC 3 (Del)

52 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

17. Measures to Check Import of Infringing

Goods
In its circular dated October 29, 2007 play a crucial role in effective implementation of
(“Circular”), the Central Board of Excise & the IPR Rules. Abstention on the part of the right
Customs under the Ministry of Finance, issued holder would result in discontinuation of the
instructions to the relevant customs and proceedings and release of the goods.
excise authorities, for implementation of the
The other principle features of the IPR Rules are
Intellectual Property Rights (Imported Goods)
summarized below:
Enforcement Rules, 2007 (“IPR Rules”) dated
May 8, 2007. The IPR Rules emanate from Section ƒadequate protection to the rightful importer;
11 of the Customs Act, 1952 which empowers
ƒadequate protection to the Customs for bona
the Central Government to prohibit import or
fide act;
export of goods infringing intellectual property
rights. Before the notification of the IPR Rules, ƒsuo-moto action by the Customs in specified
the notification of January 18, 1964, prohibited circumstances;
import of goods infringing trademarks and
ƒdisposal of the confiscated goods;
design. The IPR Rules prohibit import of goods
infringing patent, copyright and geographical ƒno action against goods of non commercial
indications as well. nature contained in personal baggage or sent
in small consignments intended for personal
use of the importer.
I. Features of the IPR Rules
The Circular contemplates to implement II. Procedure for Procuring
a centralized web-enabled registration system. Registration under the IPR
The Circular emphasizes that under the IPR
Rules, the determination of whether the goods Rules
are infringing or not would be in accordance
with the applicable IP legislation. For smooth The IPR Rules read with the Circular lay down
implementation of the IPR regime, the Circular a detailed procedure to be followed by the right
stipulates establishment of an IPR Cell in each holders as also by the Customs authorities for
Custom House. The IPR Cell is vested with the seeking suspension or release of infringing goods.
responsibility of verifying the applications,
ƒA right holder would have to give a notice
completing web-enabled registration formalities
for registration requesting the Customs
and making correspondence with the Risk
Department to suspend clearance of infringing
Management Division and other Customs
goods at the port of such goods. Such notices
formations. Further, any import involving
can be filed online.
suspected infringement of IPRs would be
handled by the IPR Cell. Any instance of suo- ƒThe information submitted by the right holder
moto interdiction of the import consignments by is required to be cross verified by the Customs
the Customs, involving possible infringements, from the concerned authorities with whom
would also be referred to such IPR Cell. In view the rights are registered in accordance with
of the fact that these proceedings might require the parent IP enactments.
the customs to determine right in personam,
ƒIf the information is found to be wrong
participation of the rights holder is made
or false, then registration accorded to the
mandatory. The qualification and training
rights holder may be cancelled. Further, an
imparted to the members of the IPR Cell will
amendment to the registration would require

© Nishith Desai Associates 2018 53

 Provided upon request only

the rights holder to undergo the entire process ƒThere are certain conditions as to the
of registration as if it were a fresh application. provision of bond, surety and security that the
In relation to particular goods there are rights holder needs to satisfy. This is primarily
separate IP registrations, then a separate to avoid frivolous registrations.
registration is required to be done for each The bond amount is equal to 110% of the
type of IP. value of goods while the security deposit is
25% of the bond value.
ƒUpon satisfaction by the authorities, the
notice may be rejected or registered for a
minimum period of five years (or less if so
requested by the rights holder).

54 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

Conclusion
The importance of IPR and their protection agencies demonstrate that India is gearing up
is acknowledged the world over as essential for effective protection and enforcement of IPRs.
to business. In tune with the world scenario, The Indian police has established special IP cells
India too has recognized the value of IP, which where specially trained police officers have
recognition has been consistently upheld been appointed to monitor IP infringement and
by legislators, courts and the industry. India cyber crimes. Various Indian industries have
is now a signatory to various IP treaties and also become more proactive in protecting their
conventions. This has helped India become IPRs. For example, the Indian Music Industry,
more attuned to the world’s approaches an association of music companies, which is
and attitudes towards IP protection. India headed by a retired senior police official, has
has already taken steps to comply with its taken similar proactive steps to combat music
obligations under TRIPS, and the Indian IP piracy. All in all, India has taken many positive
law regime is almost at par with the regimes steps toward improving its IPR regime and is
of many developed nations. Historically, expected to do much more in the coming years
the enforcement of IPRs in India was not to streamline itself with the best practices in the
particularly effective. However, recent judicial field of intellectual property rights.
rulings and steps taken by various enforcement

© Nishith Desai Associates 2018 55

 Intellectual Property Law in India
Legal, Regulatory & Tax

About NDA
At Nishith Desai Associates, we have earned the reputation of being Asia’s most Innovative Law Firm
– and the go-to specialists for companies around the world, looking to conduct businesses in India
and for Indian companies considering business expansion abroad. In fact, we have conceptualized
and created a state-of-the-art Blue Sky Thinking and Research Campus, Imaginarium Aligunjan, an
international institution dedicated to designing a premeditated future with an embedded strategic
foresight capability.
We are a research and strategy driven international firm with offices in Mumbai, Palo Alto
(Silicon Valley), Bangalore, Singapore, New Delhi, Munich, and New York. Our team comprises
of specialists who provide strategic advice on legal, regulatory, and tax related matters in an
integrated manner basis key insights carefully culled from the allied industries.
As an active participant in shaping India’s regulatory environment, we at NDA, have the expertise and
more importantly – the VISION – to navigate its complexities. Our ongoing endeavors in conducting
and facilitating original research in emerging areas of law has helped us develop unparalleled
proficiency to anticipate legal obstacles, mitigate potential risks and identify new opportunities
for our clients on a global scale. Simply put, for conglomerates looking to conduct business in the
subcontinent, NDA takes the uncertainty out of new frontiers.
As a firm of doyens, we pride ourselves in working with select clients within select verticals on
complex matters. Our forte lies in providing innovative and strategic advice in futuristic areas of
law such as those relating to Blockchain and virtual currencies, Internet of Things (IOT), Aviation,
Artificial Intelligence, Privatization of Outer Space, Drones, Robotics, Virtual Reality, Ed-Tech, Med-
Tech & Medical Devices and Nanotechnology with our key clientele comprising of marquee Fortune
500 corporations.
The firm has been consistently ranked as one of the Most Innovative Law Firms, across the globe. In
fact, NDA has been the proud recipient of the Financial Times – RSG award 4 times in a row, (2014-
2017) as the Most Innovative Indian Law Firm.
We are a trust based, non-hierarchical, democratic organization that leverages research and knowledge
to deliver extraordinary value to our clients. Datum, our unique employer proposition has been
developed into a global case study, aptly titled ‘Management by Trust in a Democratic Enterprise,’
published by John Wiley & Sons, USA.
A brief chronicle our firm’s global acclaim for its achievements and prowess through the years -

ƒAsiaLaw 2019: Ranked ‘Outstanding’ for Technology, Labour & Employment, Private Equity,
Regulatory and Tax

ƒRSG-Financial Times: India’s Most Innovative Law Firm (2014-2017)

ƒMerger Market 2018: Fastest growing M&A Law Firm
ƒIFLR 1000 (International Financial Review - a Euromoney Publication): Tier 1 for TMT,
Private Equity

ƒIFLR: Indian Firm of the Year (2010-2013)

ƒLegal 500 2018: Tier 1 for Disputes, International Taxation, Investment Funds, Labour &
Employment, TMT

ƒLegal 500 (2011, 2012, 2013, 2014): No. 1 for International Tax, Investment Funds and TMT

© Nishith Desai Associates 2018 57

 Provided upon request only

ƒChambers and Partners Asia Pacific (2017 – 2018): Tier 1 for Labour & Employment, Tax, TMT
ƒIDEX Legal Awards 2015: Nishith Desai Associates won the “M&A Deal of the year”, “Best Dispute
Management lawyer”, “Best Use of Innovation and Technology in a law firm” and “Best Dispute
Management Firm”

58 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

Please see the last page of this paper for the most recent research papers by our experts.

Disclaimer
This report is a copy right of Nishith Desai Associates. No reader should act on the basis of any state-
ment contained herein without seeking professional advice. The authors and the firm expressly dis-
claim all and any liabilitytoanypersonwhohasreadthisreport,or otherwise, in respect of anything, and
of consequences of anything done, or omitted to be done by any such person in reliance upon the
contents of this report.

Contact
For any help or assistance please email us on [email protected]
or visit us at www.nishithdesai.com

© Nishith Desai Associates 2018 59

 Provided upon request only

The following research papers and much more are available on our Knowledge Site: www.nishithdesai.com

Fund Formation: Social Impact The Curious Case

Attracting Global Investing in India MUMBA I SI L IC O N VALLE Y BAN G ALORE SI N G AP ORE MU MBAI BKC NEW DELHI M U NIC H N E W YO RK

of the Indian
Investors Gaming Laws
The Curious Case
of the Indian
Gambling Laws
Legal Issues Demysitified

February 2018

March 2018 © Copyright 2018 Nishith Desai Associates www.nishithdesai.com

July 2018 February 2018

Corporate Social Incorporation of Outbound

Responsibility & Company LLP in Acquisitions by
MU M BA I SI LI C O N VALLE Y BAN G A LO RE SI N G A P O RE M UMBAI BKC NEW DELHI M UN I C H N E W YO RK

Corporate Social
Social Business India India-Inc
Responsibility & Social
Business Models in India Models in India
A Legal & Tax Perspective

March 2018

September 2014
© Copyright 2018 Nishith Desai Associates www.nishithdesai.com

March 2018 April 2017

Internet of Things Doing Business in Private Equity

India and Private Debt
Investments in
India

September 2018
January 2017 March 2018

NDA Insights
TITLE TYPE DATE
Blackstone’s Boldest Bet in India M&A Lab January 2017
Foreign Investment Into Indian Special Situation Assets M&A Lab November 2016
Recent Learnings from Deal Making in India M&A Lab June 2016
ING Vysya - Kotak Bank : Rising M&As in Banking Sector M&A Lab January 2016
Cairn – Vedanta : ‘Fair’ or Socializing Vedanta’s Debt? M&A Lab January 2016
Reliance – Pipavav : Anil Ambani scoops Pipavav Defence M&A Lab January 2016
Sun Pharma – Ranbaxy: A Panacea for Ranbaxy’s ills? M&A Lab January 2015
Reliance – Network18: Reliance tunes into Network18! M&A Lab January 2015
Thomas Cook – Sterling Holiday: Let’s Holiday Together! M&A Lab January 2015
Jet Etihad Jet Gets a Co-Pilot M&A Lab May 2014
Apollo’s Bumpy Ride in Pursuit of Cooper M&A Lab May 2014
Diageo-USL- ‘King of Good Times; Hands over Crown Jewel to Diageo M&A Lab May 2014
Copyright Amendment Bill 2012 receives Indian Parliament’s assent IP Lab September 2013
Public M&A’s in India: Takeover Code Dissected M&A Lab August 2013
File Foreign Application Prosecution History With Indian Patent
IP Lab April 2013
Office
Warburg - Future Capital - Deal Dissected M&A Lab January 2013
Real Financing - Onshore and Offshore Debt Funding Realty in India Realty Check May 2012

60 © Nishith Desai Associates 2018

 Intellectual Property Law in India
Legal, Regulatory & Tax

Research @ NDA
Research is the DNA of NDA. In early 1980s, our firm emerged from an extensive, and then pioneering,
research by Nishith M. Desai on the taxation of cross-border transactions. The research book written by him
provided the foundation for our international tax practice. Since then, we have relied upon research to be the
cornerstone of our practice development. Today, research is fully ingrained in the firm’s culture.
Our dedication to research has been instrumental in creating thought leadership in various areas of law and
public policy. Through research, we develop intellectual capital and leverage it actively for both our clients and
the development of our associates. We use research to discover new thinking, approaches, skills and reflections
on jurisprudence, and ultimately deliver superior value to our clients. Over time, we have embedded a culture
and built processes of learning through research that give us a robust edge in providing best quality advices and
services to our clients, to our fraternity and to the community at large.
Every member of the firm is required to participate in research activities. The seeds of research are typically sown
in hour-long continuing education sessions conducted every day as the first thing in the morning. Free interactions
in these sessions help associates identify new legal, regulatory, technological and business trends that require
intellectual investigation from the legal and tax perspectives. Then, one or few associates take up an emerging
trend or issue under the guidance of seniors and put it through our “Anticipate-Prepare-Deliver” research model.
As the first step, they would conduct a capsule research, which involves a quick analysis of readily available
secondary data. Often such basic research provides valuable insights and creates broader understanding of the
issue for the involved associates, who in turn would disseminate it to other associates through tacit and explicit
knowledge exchange processes. For us, knowledge sharing is as important an attribute as knowledge acquisition.
When the issue requires further investigation, we develop an extensive research paper. Often we collect our own
primary data when we feel the issue demands going deep to the root or when we find gaps in secondary data. In
some cases, we have even taken up multi-year research projects to investigate every aspect of the topic and build
unparallel mastery. Our TMT practice, IP practice, Pharma & Healthcare/Med-Tech and Medical Device, practice
and energy sector practice have emerged from such projects. Research in essence graduates to Knowledge, and
finally to Intellectual Property.
Over the years, we have produced some outstanding research papers, articles, webinars and talks. Almost on daily
basis, we analyze and offer our perspective on latest legal developments through our regular “Hotlines”, which go
out to our clients and fraternity. These Hotlines provide immediate awareness and quick reference, and have been
eagerly received. We also provide expanded commentary on issues through detailed articles for publication in
newspapers and periodicals for dissemination to wider audience. Our Lab Reports dissect and analyze a published,
distinctive legal transaction using multiple lenses and offer various perspectives, including some even overlooked
by the executors of the transaction. We regularly write extensive research articles and disseminate them through
our website. Our research has also contributed to public policy discourse, helped state and central governments in
drafting statutes, and provided regulators with much needed comparative research for rule making. Our discourses
on Taxation of eCommerce, Arbitration, and Direct Tax Code have been widely acknowledged. Although we invest
heavily in terms of time and expenses in our research activities, we are happy to provide unlimited access to our
research to our clients and the community for greater good.
As we continue to grow through our research-based approach, we now have established an exclusive four-acre,
state-of-the-art research center, just a 45-minute ferry ride from Mumbai but in the middle of verdant hills of
reclusive Alibaug-Raigadh district. Imaginarium AliGunjan is a platform for creative thinking; an apolitical eco-
system that connects multi-disciplinary threads of ideas, innovation and imagination. Designed to inspire ‘blue
sky’ thinking, research, exploration and synthesis, reflections and communication, it aims to bring in wholeness
– that leads to answers to the biggest challenges of our time and beyond. It seeks to be a bridge that connects the
futuristic advancements of diverse disciplines. It offers a space, both virtually and literally, for integration and
synthesis of knowhow and innovation from various streams and serves as a dais to internationally renowned
professionals to share their expertise and experience with our associates and select clients.

We would love to hear your suggestions on our research reports. Please feel free to contact us at
[email protected]

© Nishith Desai Associates 2018

MUMBAI S I L I C O N VA L L E Y BANGALORE

93 B, Mittal Court, Nariman Point 220 California Avenue, Suite 201 Prestige Loka, G01, 7/1 Brunton Rd
Mumbai 400 021, India Palo Alto, CA 94306-1636, USA Bangalore 560 025, India
tel +91 22 6669 5000 tel +1 650 325 7100 tel +91 80 6693 5000
fax +91 22 6669 5001 fax +1 650 325 7300 fax +91 80 6693 5001

S I N G A P O RE MUMBAI BKC NE W DELHI

Level 30, Six Battery Road 3, North Avenue, Maker Maxity C–5, Defence Colony
Singapore 049 909 Bandra–Kurla Complex New Delhi 110 024, India
Mumbai 400 051, India
tel + 65 65509855 tel +91 11 4906 5000
tel +91 22 6159 5000 fax +91 11 4906 5001
fax +91 22 6159 5001

MUNICH NE W YORK

Maximilianstraße 13 375 Park Ave Suite 2607

80539 Munich, Germany New York, NY 10152
tel +49 89 203 006 268 tel +1 212 763 0080
fax +49 89 203 006 450

Intellectual Property Law in India

© Copyright 2018 Nishith Desai Associates www.nishithdesai.com