Ending the Monopoly of Ideas: Compulsory Licensing in Intellectual Property

The term ‘intellectual property’ seems innocuous. If property just is ‘intellectual,’ how important could it be? The truth is that intellectual property law is easily one of the most destructive forces in our economy. Nearly one-fourth of scientists responding to a survey by the American Association for the Advancement of Science, the largest general scientific body in the world, reported that patents were hampering their research.[1] In the European Union, over €60 billion are wasted every year on research and development of products that are already protected by patent law.[2] An experiment using a virtual world to simulate the effects of the US patent system found that the “participants were more likely to innovate when there was no intellectual property system at all, or when they could open-source their innovations and share them with people.”[3]

Virtually every business that holds a dominant position in its field has gotten there not simply through good business practices, but also through the advantages afforded to them by intellectual property law. In 1998, Google filed patent number 6,285,999 on the “PageRank” system, laying the foundation for them to become the dominant force in internet search.[4] Monsanto has used its patents to control 95% of the soy and 80% of the corn markets, respectively. It used this power to increase the price of each by 28% and 25%, respectively, from 2008 to 2009.[5] “Patent pools” led to monopolies that had to be broken up using antitrust laws in the airplane [6], computer, and motion picture industries.[7]

Our society has not always been like this. In 1790, the year the US Patent Office first came into being, only three patents were granted.[8] Patents had to be deemed “sufficiently useful and important” by the three-person Patent Board, comprised of the Secretary of State, the Secretary of War, and the Attorney General. By July of 1836, only ten thousand patents had been granted.[9] In 2009 alone, 167,350 utility patents, the most common type of patent, were granted. IBM was granted 4,914 of these, a 17% increase over the previous year. Microsoft was granted 2,906, a 43% increase over the previous year and a 400% increase over 2003. Fifty companies received 29% of all patents granted in 2009.[10]

Patent and copyright terms have also expanded dramatically. The original US patent term was for fourteen years, should the Patent Board approve it. The patent term is now twenty years. “Under certain circumstances, patent term extensions or adjustments may be available.”[11] The original US copyright term was for fourteen years with an option to renew the copyright for another fourteen years if the author was still alive. The current copyright term is now for the life of the author plus another seventy years. For works of corporate authorship, the copyright term is now one hundred and twenty years after creation or ninety five years after publication, whichever endpoint is earlier. This means most works will be copyrighted for over a hundred years. Trademarks, which didn’t even exist in federal statute until 1905, are in force as long as they are in use.[12]

This isn’t even to mention all the costs associated with the intellectual property bureaucracy. The US Patent Office has approximately six years of patent applications, over one million filings, waiting to be evaluated.[13] Approximately, seven out of ten patents were approved at the start of the 2000’s. Today, the number is less than half.[14] The average patent lawsuit will cost between $3 million and $10 million to litigate, and take between two to three years.[15] This amounts to a litigation cost of, at the minimum, $15.6 billion a year.[16] Merely getting a patent approved can cost $10,000 for a domestic filing and $100,000 for an international filing.[17] This amounted to a cost of $25.8 billion in 2009.[18] This isn’t even to mention that, according to Barack Obama, the paper-based tracking system of the Patent Office is woefully “outdated.”[19] As far as I know, nothing has been done to correct the situation.

Clearly, there is a problem. Our system is bogged down in waste and innovation is stifled. How do we correct it? Is the solution simply to eliminate intellectual property rights? I don’t believe so. Piracy during the 1800’s was a profound source of frustration for many authors [20] and inventors.[21] It also doesn’t make sense that people shouldn’t be rewarded for their creative work. Rewarding creators helps encourage more creation, something most people want.

The solution is to eliminate the ability of one person or entity to have the sole right to use a piece of intellectual property, while still rewarding the original creator of the intellectual property. The system that does this is compulsory licensing. In this system, every piece of intellectual property can be used in a derivative work, yet the original creator of the work is still compensated. The rate of compensation is either determined by the parties privately, or if an agreement cannot be reached, by a court.

The government sometimes uses compulsory licensing in antitrust cases, but only when it considers a firm’s dominance to be a problem.[22] Moreover, when the government does use compulsory licensing, they do not use the market to determine rates. They simply determine the licensing rate themselves. In 1953, a district court used this power to order General Electric to license its light bulb patent for “free,” a price General Electric surely was not happy with.[23] There have also been times when the government only allows a small handful of companies to license a piece of intellectual property. It is not open to the market at large.[24]

The next step to solving our intellectual property crisis is to eliminate the Patent Office and to replace it with a single repository for intellectual property that people want protection for. This idea was actually put forth by Jefferson in a 1791 bill, but unfortunately, it did not pass.[25] Without the government deciding what ideas are able to be protected, private firms spring up to search the registered intellectual property and inform individuals if they believe an idea or invention infringes upon something already registered. This eliminates long wait times, as people could presumably pay for faster searches. Plus, if a company does not perform well, it will presumably go out of business.

The elimination of the Patent Office may not even affect the number of intellectual property infringement law suits. Even with the Patent Office, there are still over 5,000 patent, copyright, and trademark suits every year.[26] The Patent Office also does not ensure that only “sufficiently important” creations receive protection, as was in its original mandate. Well, unless you consider “the bird diaper,” “the pat on the back apparatus,” and the “initiation apparatus,” a “harmless” way to initiate a candidate into a fraternity by shocking him with electrodes, to be “sufficiently important.”[27]

These solutions are simple, but achieving them is difficult, because they would mean the government doing less. The government, and the powerful parties who benefit from government intervention into the economy, typically do not like the government to do less. Intellectual property law has also historically been a very important tool for government-sponsored censorship, an important tool of the state. This side of intellectual property law has started raising its ugly head again in recent years. Laws and treaties such as the ACTA treaty,[28] Britain’s Digital Millennium Copyright Act,[29] and Canada’s Copyright Modernization Act [30] all threaten to bring millions people across the world under the heel of a digital dictatorship. Clearly, our intellectual property system must be reformed before any more damage is done.

A commonly cited beginning to modern intellectual property is when Fillipo Brunelleschi was granted a three year patent for a barge with hoisting gear that carried marble along Italy’s Arno river in 1421.[31] This patent was given not only for technological innovation, but also because Brunelleschi was working on one of the most important projects of the day: building the dome on the Santa Maria del Fiore. This was like the Super Bowl to the people of Florence. People would gather to watch the dome being built. Santa Maria del Fiore was “the great spiritual center of the city,” and it “served as the venue for diplomatic visits, housed important political events, and welcomed within its walls many of the cultural, spiritual and intellectual leaders of the time.”[32] It had remained without a dome for over 100 years. Thus, the granting of the first patent had a decidedly political aspect to it.

The first patent in England was given by Henry VI in 1449 to John of Utynam for a technique on manufacturing stained glass.[33] This was the start of a long tradition whereby the Crown issued monopolies to “favoured persons,” or to people willing to pay. The granting of monopolies became a key source of revenue for the Crown. Soon, monopolies covered a whole range of known goods, such as salt,[34] and the right to provide services, such as the use of inns, ale houses and gold and silver thread.[35] The Statute of Monopolies of 1623 curtailed some of these abuses by stating that the Crown could only issue letters patent (a.k.a. monopolies) to the inventors or introducers of original inventions for a fixed number of years,[36] but the system was still far from without its flaws.

The most significant monopoly granted by the Crown from an intellectual property standpoint was the one given to the Stationers Company. In 1557, the Stationers were given a monopoly over printing in all of England. The Stationers Company was not a “company” so much as a guild. There was no stock to be owned. There were only positions of power to be attained within the guild. The guild was comprised primarily of bookbinders, booksellers, and printers,[37] although text writers and lymners (or illustrators) also played a role.[38]

At the head of the Stationers Company was the master, the principal officer. Below him were the upper and under warden. The master and wardens were given plenary powers of search at any time “in any place, shop, house, chamber, or building of any printer, binder or bookseller whatever […] for any books or things printed, or to be printed, and to seize, take, hold, burn, or turn to the proper use of the foresaid community.”[39] The master and upper and lower wardens were elected from the “Court of Assistants” and held their positions for a year.

The Court of Assistants was the real seat of power. They arbitrated disputes, collected dues, and decided admittance into the Company. They were supposed to be elected from the general body of the Company, which included apprentices and yeomanry, for a limited term, but in 1557, the year the Stationers were granted their monopoly, nine of the most senior members of the Company formed a court of eighteen assistants. They took control and membership in the court became for life unless the member was formally dismissed or retired.[40]

Although censorship may not have benefited the printing industry as a whole, it was clearly a motivation for Queen Mary in issuing the Stationers a monopoly. According to Lyman Patterson, “The charter itself, however, is dominated by the idea of suppressing prohibited books, and Mary’s motive in granting it, whatever the source of the initiative involved, was to obtain an effective agency for censorship.”[41] The Stationers became a de facto police squad.

The penalties for violating censorship rules were harsh. If someone was found importing a book from overseas, they could lose all their possessions and be put in prison. No book could be printed without examination by the Privy Council. No book of scripture could be printed without examination by the King, one member of the Privy Council, or a bishop. “If a person other than an allowed printer set up or worked at any press, he was to be set in the pillory, whipped through London, and suffer any other punishment deemed proper.”[42]

Despite all this, there was still a sizeable black market for books. “Only between sixty and seventy percent of London-printed books were regularly entered in the registers, and the proportion of printed books entered fluctuated violently from year to year.”[43] Even with the threat of public whipping, imprisonment, and the taking all of one’s possessions, a black market still arose to meet a demand. Some things never change.
As a British colony, America abided by the same intellectual property laws as Britain. There was no Stationers Company, but books did have to be licensed. There also was an “informal cartel” of publishers who colluded “to keep prices artificially high.”[44]

After the revolution, America continued to follow British intellectual property law closely. America copied much of Britain’s intellectual property law verbatim, and even used the same time limits for intellectual property protection. (Luckily, Britain didn’t sue for copyright infringement.) In fact, America followed British intellectual property law so closely that a misreading of British law led America to legalize the pirating of foreign books. The original British law had forbid “the importation, vending, or selling” of books in a foreign language printed beyond the sea; it didn’t legalize piracy.[45] America’s law was a constant thorn in the side of British authors, such as Dickens, who thought they were losing a fortune in America through piracy.[46]

As time went on, intellectual property law began to grow in importance in America. From 1860 to 1890, over 500,000 patents were issued for new inventions, ten times the number in the previous seventy years.[47] By 1904, more than two hundred copyright bills had been introduced into Congress.[48] Yet even with this growth, a popular movement never gathered enough steam to move intellectual property law from its foundation. Despite some minor disturbances, intellectual property law continued to grow into the monstrosity it is today.

Like with any good story (one that is not a tragedy anyway), there have been a few glimmers of hope. The first came in the rulings of Judge Learned Hand when he defined the concept the “web of expression.” The second came when Congress amended the Copyright Act in 1909 to allow for compulsory licenses in the music industry. When these two concepts are combined, I believe they lay the groundwork for where intellectual property law needs to go.

As Siva Vaidhyanathan writes, “No jurist or legal scholar has had a greater effect on the business and content of American culture than Judge Learned Hand. For most of his career, Hand served on the US Second Circuit Court of Appeals in New York City. A student of William James and George Santayana at Harvard, Hand was passionate about matters of freedom, creativity, and intellectual progress. […] Hand played a part in most of the major copyright decisions of the day.”[49]

Hand thought that the plot of a story itself could not be copyrighted, but that the “value added” to it could. Hand’s central point was that when judging the extent of infringement between works that tell similar stories, one must distill the “very web of the author’s dramatic expression.” This “web” he defines as “the sequence of the confluents of all these means (plot, character, means of revelation, setting, themes), bound together in an inseparable unity.”[50]

Hand broke down the whole down to its parts to help see what was original and what was not. This is exactly what needs to be done in all intellectual property cases. As Mark Twain said, “As if there was much of anything in any human utterance, oral or written except plagiarism. […] [S]ubstantially all ideas are second-hand, consciously and unconsciously drawn from a million outside sources.”[51] We all are dependent upon past ideas for present ones. The question is how much. Hand’s framework helps guide us for making those decisions.

It’s been shown that Steamboat Mickey, the first Mickey Mouse film, relied heavily on Steamboat Bill, Jr., a film by Buster Keaton, who was enormously popular at the time.[52] Did Walt Disney rely exclusively on Keaton’s material? No. Should we barred from seeing Walt Disney’s film because he relied on Keaton’s material? No. But we could have been. That is the situation we are currently in. We are in an “all or nothing” scenario: a judgment of guilty means a work that is “too” derivative and cannot be seen or profited from. A judgment of not guilty means it can. We need to move to a system where both the original creator and “second user” are compensated according to what they each contribute to a derivative work.

The second glimmer of hope was Congress’s amendment to the Copyright Act in 1909 to allow for compulsory licenses in the music industry. This was strictly to allow greater freedom of expression in the music industry. As Lawrence Lessig writes, “Congress was quite explicit about its reasons for granting this right. Its fear was the monopoly power of rights holders, and that that power would stifle follow-on creativity.”[53] It has worked. The music industry allows far greater rights to “second comers” than any other artistic field.

If a person wants to create a derivative work from a book, he or she must get permission from the original author. The original author may allow for derivative works to be created, but may require the “second comer” to sign over any profits, as is the case with the Star Wars franchise.[54] The only problem with the compulsory licensing in the music industry is that is that Congress determines the rate instead of letting individuals try to determine it first.[55] The author of a song may want to license a song to a celebrity at a lower rate, because the author might feel the celebrity may make them more money in the long run than the typical recording artist. The original author simply does not have the freedom to do that.

Why should compulsory licensing be good for the music industry and not good for every other field? Clearly, it shouldn’t. All genres of art and all scientific creations would benefit from compulsory licensing. An active “second user” culture can also lead to an even greater appreciation of the original product. In Japan, there is something called doujinshi, which is “second user” manga. There are over 33,000 “circles” of doujinshi creators across Japan. Two times a year more than 450,000 Japanese gather to exchange and sell doujinshi. According to Lessig, “[I]n the view of many, it is precisely because [doujinshi] exists that Japanese manga flourishes.”[56]

Some people may see a problem with compulsory licensing. They may ask, “If a person is able to use intellectual property at will, what is to keep that person from modifying an original creation just a slight bit and selling at a severely reduced price, thereby undercutting the competition?”

There is a solution to this. The “second user” is able to change the price only in accordance with how much they contributed to the derivative product. Let’s say either the originator and “second user” agree, or a judge decides, that a “second user” contributed 10% to the derivative product. Let’s say the “second user” contributed a new drum track to a song. If the original song was being sold for $5, then the “second user” would have the right to sell the derivative version for anywhere between $5 plus or minus 10% (i.e. $4.50 to $5.50.) 90% of the revenue generated from the derivative product would still have to go to whoever owned the rights to the original product.

Another objection someone may bring up is, “What if it is not in a company’s interest to release a piece of technology? Like let’s say something crazy happened, like Chevron owned the patent on the battery for the electric car.[57] What is to keep them from pricing a product so high it effectively removes the product from market?”

The government may be forced to have them re-price it. This can be done within limits. In the scenario painted, the intellectual property owner is pricing their product so high that if they decrease the price, they would actually make more. Because at a lower price, the owner would sell a higher quantity. The government could mandate the owner lower the price until the point when he or she stopped making more money through increased quantity sold. That is point is where the company is making the maximum amount of profit for that product.

I do not see a better scenario than this. We are being forced to either allow the domination of society by one individual, or the domination of the right to price this product by society. The rights of society must be respected too. This is not historically unprecedented. Before the ratification of the US Constitution, five of the original thirteen states, Connecticut, South Carolina, North Carolina, Georgia, and New York, all contained intellectual property-related price-control provisions in their state constitutions.[58] If the original party loses money by lowering the price, the party who initiated the suit could be liable for the losses.

Once this price is set, individuals or companies could license the intellectual property in its entirety. This would allow for competition based on production quality and customer service. If a company is able to charge more for an product based on superior brand recognition and/or customer service, that company should be able to keep whatever they earn beyond the price set by the original company.

I believe these provisions eliminate the need for time limits on copyright and patent protection. Time limits seem to be built upon the belief that intellectual property law causes prices to be higher and for there to be less competition than there should be. My suggestions, however, eliminate these concerns. Why, after all, after a certain point should a publishing house profit from an author’s work rather than the author’s estate, or to whomever the author ascribed the rights of his or her work?

We need to change to a compulsory licensing system and eliminate the Patent Office. Current intellectual property law and bureaucracy leaves us as peasants, looking up at the one dome being built in the city. Intellectual property law that has been reformed under the guidelines I have outlined will unleash the creativity of human spirit, and help fill the skyline with as many domes as we desire.

Source:http://www.globalresearch.ca/ending-the-monopoly-of-ideas-compulsory-licensing-in-intellectual-property/19959

The Anti-Counterfeit Trade Agreement (ACTA): U.S. Dictating Canada’s Intellectual Property Laws

In March, the Canadian government introduced a bill that would bring about sweeping changes to its copyright and trademark laws. This includes giving more power to customs and border protection agents without any judicial oversight. The move is intended to prevent counterfeit goods from entering the country, but has been criticized for being less about protecting Canadians and more about caving to American demands. With the U.S. dictating global intellectual property standards, the new legislation represents the return of ACTA and would pave the way for Canada to ratify the controversial international treaty.

Over the years, the U.S. has been critical of Canada’s efforts in addressing trade in counterfeit goods and has been pressing for intellectual property reform. In the 2009 United States Trade Representative (USTR) Special 301 Report, Canada was placed on a priority watch list of countries that do not provide adequate intellectual property enforcement. As part of its 2013 Trade Policy Agenda, the USTR is now pushing Canada to comply with the Anti-Counterfeit Trade Agreement(ACTA). The multinational treaty is designed to standardize intellectual property laws around the world. Although it has been signed by a number of countries, including Canada, so far only Japan has ratified ACTA. It was the result of public pressure associated with risks internet privacy and online freedom of speech which lead to ACTA being rejected by the European Parliament in July of 2012. At the time, many assumed that ACTA was dead, but it still remains a top priority for the U.S. and they are attempting to revive the discredited agreement by trying to get the six necessary ratifications for it to come into force. In an effort to satisfy U.S concerns, Canada recently announced legislation which is aimed at bringing them in line with ACTA.

Last month, the Conservative government introduced Bill C-56, also known as the Combating Counterfeit Products Act. Academic researcher and law professor Michael Geist explained how the proposed legislation would, “ensure that Canada is positioned to ratify ACTA by addressing border measures provisions. The core elements of the bill include the increased criminalization of copyright and trademark law as well as the introduction of new powers for Canadian border guards to detain shipments and work actively with rights holders to seize and destroy goods without court oversight or involvement.” He emphasized that, “Customs officials are not copyright and trademark experts, yet they may now be forced to assess infringement cases including determining whether any copyright exceptions apply.” Mike Masnick of techdirt acknowledged that, “For many years, Canada has strongly resisted U.S.-style copyright laws, despite tremendous pressure to do so. Watching them cave on ACTA is certainly a disappointment.” He went on to say, “It shows a Canadian government who doesn’t seem to care about what the public wants, but rather feels the need to kowtow to U.S. entertainment and pharmaceutical lobbying interests.”

The Council of Canadians have questioned whether the anti-counterfeiting bill, “is one of the conditions the U.S. government put on Canada joining the Trans-Pacific Partnership (TPP) trade negotiations.” The group is urging that intellectual property rights be taken out of the TPP and the Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA) talks. There have already been attempts to use CETA negotiations to sneak in parts of ACTA. Stuart Trew, trade campaigner with the Council of Canadians wondered since, “The Harper government seems to have just collapsed in front of U.S. demands for border enforcement of Hollywood’s intellectual property rights despite the global controversy with ACTA. Can we expect Harper to bend this easily to European demands in CETA and U.S. demands in the TPP that will increase the price of drugs and undermine access to affordable medicines?” ACTA also favours Big Pharma with patent protections that would limit generic competition and would lead to higher drug costs.

On March 20, the USTR officially notified Congress of its intention to enter into negotiations with the EU on a Transatlantic Trade and Investment Partnership (TTIP) agreement. In the letter, they also outlined specific goals in different areas such as intellectual property rights. As part of the transatlantic talks, the USTR, “Seek to obtain, consistent with U.S. priorities and objectives, appropriate commitments that reflect the shared U.S.-EU objective of high-level IPR protection and enforcement, and to sustain and enhance joint leadership on IPR issues.” A Civil Society Declarationsigned by European and U.S. groups is insisting that the upcoming negotiations, “exclude any provisions related to patents, copyright, trademarks, data protection, geographical indications, or other forms of so-called intellectual property. Such provisions could impede our rights to health, culture, and free expression and otherwise affect our daily lives.” Some have warned that the TTIP could be used as a way to implement ACTA through the backdoor.

ACTA is part of the international agenda of patent, trademark and copyright lobbies. The agreement favours big businesses over individual innovators and creators. It was designed to protect the interests of multinational corporations at the expense of fundamental civil rights. ACTA is being used by the U.S. to pressure other countries into adopting a new global standard for intellectual property enforcement. The supranational treaty would impose draconian laws which threaten the sovereignty of member nations.

Source:http://www.globalresearch.ca/the-anti-counterfeit-trade-agreement-acta-u-s-dictating-canadas-intellectual-property-laws/5332612

US Bullying at TPP Negotiations for Big Pharma Profits. Intellectual Property Rights and the Sale of Generic Drugs

Outrageous US bullying by US Trade Representative Stan McCoy on intellectual property and health. McCoy puts profits of pharmaceuticals ahead of the lives of people.

“The world should stand up to the United States.  US corporations are not more important than people’s lives.”

A key dispute in the TPP negotiations is the patents on pharmaceutical drugs and medical procedures.  Long patents inflate the profits of the pharmaceutical industry by not allowing less expensive generic drugs on the market.

This means that people around the world will not be able to afford critical, often life-saving, drugs and medical procedures.  It also means that countries like Japan, Australia and New Zealand that have national health care systems will see the cost of healthcare rise to a breaking point, undermining some of the best health systems in the world.

Stanford McCoy of the US Trade Rep. His bullying tactics seek to prop up inflated pharmaceutical profits at the expense of thousands of lives.

In order for the US to get its way,Stan McCoy, Assistant US Trade Representative for Intellectual Property and Innovation, is chairing the meetings on intellectual properties and medicines.  He has been using bullying tactics to force countries to agree to positions that will harm people in the countries negotiating the TPP, including the US.

“The US has adopted a strategy of exhaustion in its bullying of negotiators on the crucial intellectual property chapter to force countries to trade away health in the Trans-Pacific Partnership Agreement negotiations in Salt Lake City,” according to Professor Jane Kelsey from the University of Auckland, New Zealand, who is monitoring the negotiations. ”The US has stepped up its aggression as they move towards their ‘end point’ of the TPP ministerial meeting in Singapore from 7 to 10 December.”

Margaret Flowers, MD a health policy expert from the US says

“The Office of the US Trade Representative is putting the interests of trans-national health corporations before the needs of people. If the US position is forced through, the TPP will extend patents for medications, medical devices and even procedures for exorbitant lengths of times. This will inflate prices, keeping treatments out of reach for those who need them. This will cause unnecessary suffering and death, especially for the most vulnerable populations, and will undermine health systems around the world and at home.”

“This is a loaded game,” Professor Kelsey said. “McCoy sets the agenda and timetable. Negotiators are working from morning until late at night and preparing to work all night, if necessary. ”This is a crucial period for New Zealand and a number of other countries,” Kelsey observed. The text published by Wikileaks last week shows they have tabled an alternative to the US proposed text that has been repeatedly rejected.”

“New Zealand’s trade minister Tim Groser and his counterparts from the other ten countries must tell the US to stop this behaviour now,” Kelsey said. Flowers added: “Countries negotiating with the United States should not allow themselves to be bullied but should stand up to the United States.  It is looking very unlikely that President Obama will be able to get TPP through the Congress. Why would any country negotiate against the interests of their people?”

The US has around twenty people in Salt Lake City for the intellectual property chapter, who can rotate. Some countries have only one delegate for crucial talks on intellectual property on medicines. Their negotiations on medicines have been extended beyond the dates that were scheduled before negotiators came.  They have continued despite the fact that some health negotiators, especially from poor countries, could not extend their stay.

This follows a pattern of abuse over recent rounds reported in Inside US Trade and other media, where McCoy has acted as a gatekeeper, deciding what proposals from other countries are allowed into the text and what are not.

“This is an early warning of the extreme bullying that can be expected in when the trade ministers seek to close the deal off in December,” Professor Kelsey warned.

Source:http://www.globalresearch.ca/us-bullying-at-tpp-negotiations-for-big-pharma-profits-intellectual-property-rights-and-the-sale-of-generic-drugs/5359221

Cadbury loses trademark case on Eclairs

 In a win for ITC Ltd, the Intellectual Property Appellate Board (IPAB) last week said that Cadbury India is no longer the owner of three trademarks containing the word Eclairs, putting to rest over a decade-old battle.

The three trademarks—Choclate Éclairs, Orange flavoured chocolate éclairs and Chocolate Eclairs pop—were ordered to be removed from the trademarks registry as the patent board found that Cadbury could not provide evidence showing the use of the three trademarks after they were registered.

“The only defence of the respondent is that they are registered proprietors both in India and abroad. Though the respondents (Cadbury) claim use since 1972, there is no evidence for the same,” said the order, adding that registration alone will not help the respondents to prove use. Cadbury is a subsidiary of UK-based Mondelēz International.

“Section 47 of the Trademarks Act, 1999, provides for removal by IPAB of a trademark on the ground of non-use, or if there has been no proof of use for a period of five continuous years from the date of application for registration of the trademark,” said Suchindran B.N., a lawyer practising at the Madras high court.

The implication of this order is that Cadbury can no longer claim to be the owner of the trademarks, which means Cadbury in the future cannot hold anyone for infringement of these marks, said R. Satish Kumar of Chennai-based law firm IP Lead.

Cadbury said it does not plan to pursue this matter further as the Cadbury Eclairs label has not been used by the company for a long time.

“The label mark for Cadbury Eclairs, which formed the subject matter of the litigation, has not been used by Cadbury for many years and hence we do not plan to take this matter further,” said a Cadbury India spokesperson in an email. “We continue to retain other trademark rights in the Cadbury Dairy Milk Eclairs brand and the IPABs decision, if any, has no bearing on those trademark rights. We are yet to receive IPAB’s order in this matter, therefore we wouldn’t be in a position to comment further on this, at this stage.”

The battle began when Cadbury’s in April 2005 filed an injunction in Ahmedabad high court seeking to restrain the use of the trademark Eclairs by ITC against its product called Candyman Eclairs. Since other manufacturers, too, have been using the word Eclairs, the court allowed ITC to use the name Candyman Choco Eclairs.

ITC filed an application with the IPAB in 2005 for the removal of the trademark from the registry.

Source:http://www.livemint.com/Companies/v2om2cMruwjp1CPzvPDXyO/Cadbury-loses-trademark-case-on-Eclairs.html

Medical Negligence - Supreme Court

The Supreme Court’s judgement on October 24, 2013, with regard to Anuradha’s death because of ‘medical negligence’ was a landmark judgment. This judgment was path breaking, not because of the volume of compensation but because this will go a long way in acting as a deterrent against those errant doctors and hospitals who think that they can go scott-free with medical negligence.

There was a time when, if one was ill he was forced to travel miles to get himself admitted to a hospital. Today, after 66 years of independence, thing have changed. Multi-speciality hospitals are mushrooming in every nook and corner of all the major cities in India. Surely, the physical distance has been reduced, but these hospitals charge exorbitant amount of money for the services being provided by them, in essence still remaining far beyond the reach of the ordinary individual. However, if by any means they manage to gather the required amount, chances of death due to medical negligence are very high.

Unfortunately, the concessions that these hospitals get are not being passed on to the common man. These hospitals charge a hefty fee from a patient who comes to them for even a normal check up. Secondly, if the doctor prescribes medicines then hell breaks loose for this poor man because the medicines prescribed are not only costly, but they are out of reach for them and they have no choice but to purchase it from hospital’s medical store.

It is even more heart breaking when one loses his near and dear ones because of ‘medical negligence’ even after bearing the all the tantrums of these so-called multi-specialty hospitals. In 1998, Anuradha had just completed all requirements for becoming a ‘Child Psychologist’ from Columbia University and had come come down to Kolkatta to seek her mother’s blessing before starting her career in the United States. During her stay in the city of joy, she developed a simple skin rash and on April 25 in the same year consulted Dr Sukumar Mukherjee, who, without getting into the nitigrities of the cause, advised her to take rest and later prescribed Depomedrol injections (80 mg) to be taken twice a day.

Anuradha’s condition worsened after taking the prescribed dosage and on May 11, 1998, she was admitted at the Advanced Medicare and Research Institute (AMRI) under Dr Mukherjee’s supervision. When things got out of control, she was shifted to Breach Candy Hospital in Mumbai, where she was diagnosed with a rare and deadly skin disease called Toxic Epidermal Necrolysis.

The 29-year-old could not survive the ill effects of the disease and on May 28, 1998 she breathed her last. Anuradha’s death shook her husband Kunal Shah who is himself a practicing doctor in the United States. After 15 year long legal battle, the Supreme Court of India delivered a landmark judgement in his favour which has made the entire medical community to sit up and take note.

The condition in Government hospitals is even worse, as most of the time, doctors are absent in these hospitals and if by chance, the doctor is present, the medicine prescribed is not available in the market. In premier Government hospitals like AIIMS, several patients and some with deadly diseases like cancer wait for days outside the hospital to get a bed. Anuradha’s case is a one off case in the long list of medico-legal cases awaiting justice.

Source: http://www.niticentral.com/2013/10/28/medico-legal-cases-in-india-have-a-long-way-to-go-151552.html

Intellectual Property Rights - Patent

Year after year, many small and medium enterprises lose crores of rupees due to sheer misinformation or lack of awareness about intellectual property rights. In the last five years, on an average, nearly 40,000 patents have been filed every year, more than 80 per cent of them by large organisations.

The scenario is exactly the opposite in China, where more than 80 per cent of patent filings are by small enterprises. Without patent protection, a small business would not be able to compete with larger companies, which could seize upon their idea and produce it more efficiently and on a much larger scale. Yet, most revolutionary innovations have come from small businesses.

Despite the overwhelming case for early patenting, most Indian entrepreneurs shy away from applying for a patent early, for fear that the costs would be steep. They are unable to foresee that not only can it make them richer, but if done right, it could overshadow the perceivable benefits of running the business itself.

Here are some useful points to consider while assessing trademarks /copyrights / patents.

1. When is it the right time to patent your innovation?

It takes a minimum 18 months for a patent to come through. Once you have decided that your product / service is novel and are convinced that it needs to be patented, you should start the paperwork. A strong IP could make entry into the market significantly easier. It gives immediate, legally backed credibility to your product or service.

In the initial years, an IP can protect a company from competition. It is important to identify the focus of the IP for the organisation. Both product as well as process patents can be filed. A music label or a Bollywood movie would focus on copyright, whereas a technology or a pharmaceutical company should focus on patenting their products.

2. Do your homework, get down to basics

You have an idea, pick a brand name, go ahead with purchasing a domain, set up social media platform and the works. But someone out there has been watching your actions and files a trademark infringement. This is every entrepreneur's nightmare, and one of the primary reasons they hesitate to go ahead with IP protection. It is always important to do a full background check first. It is good to document the activities of competing brands. It is also a good idea to get a professional opinion that would help validate your research. It is also important to research international markets where competition is strong.

3. Invest in a non-disclosure agreement

Initially, companies may choose to work with vendors that are not employees or consultants of the company. To ensure that all confidential information stays within the company, make sure your employment agreements, licences, sales contracts and other contracts protect your intellectual property too, right from the word go.

4. Keep track internally and externally

It is advisable to keep an eye on your competitors' IP development, to assess the market for competition. At the very least, owners should establish an appropriate level of proactive monitoring of trademark registration applications. For example, technology companies like Google will track every competitor like Yahoo, Facebook, Amazon and Ebay. Similarly, FMCG companies like HUL will closely monitor the activities of Proctor & Gamble etc.

Also, patent procedures can be different for different countries. It is better not to limit yourself to your own market but also observe the competition outside. Sometimes, it is easier to get a patent registered in a foreign market than in India.

5. Finally, you cannot escape the bill but the cost is worth every penny

Ask the right questions to understand all the less obvious costs included in filing for patents. Administrative costs of printing, courier, etc will be part of your final legal fees, and these small costs can add up. When international filings take place, be sure that there will be additional fees.

As they say, no pain, no gain. Investing time, effort and money in patenting your innovation could save you a lot of pain in the long run. And the benefits go beyond protecting your intellectual property.

http:/www.moneycontrol.com/smementor/mentorade/legalinvestingintellectual-property-is-worth-every-penny-977889.html

An end to trademark grabbing in China

Will the introduction of a new Trademark Law in China address the issue of trademark grabbing by unauthorized Chinese parties, 

At the end of August, the Standing Committee of the National People’s Congress adopted the third amendment to the Trademark Law of the People’s Republic of China, which will enter into force on May 1, 2014.What is the implications of the new law and does it address the concerns of trademark holders as to the rampant instances of trademark grabbing by unauthorized Chinese parties?

Challenges under the current trademark law

The actual trademark law, and the related case law of Chinese civil courts as well as the practice of the relevant administrative bodies in charge of trademark protection in China have clearly failed in preventing and punishing a most common form of trademark infringement in China, namely that of the so called trademark grabbing together with the related fall out of trademark trolls actions against foreign investors in China.

Trademark Grabbing

Under Chinese trademark law, only a registered trademark enjoys protection and the first person or entity to register it becomes its lawful owner, even if that trademark has already been used by others in China. Known as “trademark trolls,” certain Chinese companies or individuals are known to actively follow a strategy of registering intellectual property rights in China that arguably belong to their foreign competitors. Aware of the very strict “first to file” principle, they identify, apply and register trademarks belonging to competitors who have forgotten or not yet taken steps to register them.

The actual law and the related practice of all relevant civil and administrative bodies cannot prevent such occurrences. The usurped right holder’s only actual recourse is that of filing a trademark cancellation action and wait years for the hostile trademark to be cancelled, if this is actually really going to happen. The problem for the rightful trademark owner is that in the meanwhile, any act of manufacturing, selling, importing and offering for sale of his products with that stolen trademark, will constitute an act of infringement. The result: the grabber, aware of this, may file a civil or administrative enforcement, thus damaging the foreign company’s business and reputation. There have been indeed several of such trademark troll cases in China in the last years.

No right to prior use

The current legal system does not recognize any legal right to the prior use the foreign holder has made in China of that trademark before the registration of the same obtained by the usurper. The system does lack indeed a legal structure to balance the possible injustice created by the strict observance of the principle of “first to file”.

Trademark grabbing particularly affects medium and small foreign enterprises in China. Lack of knowledge of the trademark system of this country leads often to ineffective trademark filing policies. The loopholes left by unsystematic trademark filings are cleverly exploited by individuals (professional grabbers), competitors, and by local business partners. The latter may initially even do it in good faith, but may later discover that this is a very good bargaining weapon and a preventive tool in case they decide to leave the partnership and become competitors.

Seen in this perspective, trademark grabbing can indeed cause a business to be prevented or to be forced to leave the Chinese market in consequence to the “legal” loss of its brand and the related goodwill.

What solutions does the new Trademark Law hold?

The fact that trademark grabbing has actually reached levels that negatively affect fair competition and distort the principles backing the first to file system upon which the Chinese trademark law is based, has been now fully acknowledged and concrete changes of policy are now visible in the new trademark law.

The first acknowledgement of the existence of an unfair exploitation and abuse of the rule of first to file is the first time ever embodiment of the principle of good faith/bad faith in the trademark Law. Article 7 of the Trademark Law now expressly provides that the application for registration and use of a trademark shall be based on the principle of good faith. Such principle alone can constitute now a solid legal ground to file a trademark cancellation. Such wasn’t the case in the past, due to the lack of a legal base upon which to support a bad faith registration claim.

Aside from reinforcing the legal grounds for filing cancellations against the grabbed trademarks and speeding up the timing for completion of cancellation procedures, a most important change of policy and an exception to the “first-to-file” principle, is now contained in the new trademark law. For the first time in the history of the trademark law of China, if we exclude the case of unregistered well-known trademark, a right of prior use of a trademark in China is recognized under certain conditions, with a positive fall-out for the rightful owner in cases of trademark grabbing.

Article 59 of the third amendment of the trademark law provides that if someone has used a mark identical or similar to a registered trademark, in respect to identical or similar goods, before the date of filing of the latter trademark, and under the condition that the prior mark has meanwhile obtained a certain degree of reputation in China due to its use, the trademark registrant has no right to prevent the prior user from further employing such mark within the original scope of its use. At most, the trademark registrant may impose to the prior user the addition of an indication of distinction to the prior mark.

The norm goes even further by protecting the prior use of designs and shapes which may later form the body of a registered trademark or 3D mark. According to the same article 59, the exclusive right owner of a registered trademark may not prohibit others from the rightful use of the generic names, models or designs of the goods as included in the registered trademark, including registered 3D marks.

Even if the trademark grabber dared filing an enforcement lawsuit against the prior user, not only he would face the risk of rejection of his claims based on art. 59, but will also be subject to another risk related to the non-use of the stolen trademark. In fact, article 64 of the new trademark law provides that the alleged infringer, in this case the prior user, can raise non-use as a defense in a civil lawsuit for trademark infringement and the plaintiff has the burden to prove that he has used the trademark during the last three years from the date of the lawsuit.

If the Plaintiff fails to prove the use of the trademark as requested, the defendant will be exempted from the payment of any damages. Considering that in force of article 59 the prior user can continue to use its mark within its original scope of use, a lawsuit in such a case would be of no consequence for the prior user. Such situation is actually the most typical in cases of trademark grabbing. Most grabbers will in fact not use the trademark, given that the only purpose of stealing is to prevent the filing and use of the trademark by the foreign prior user.

A welcome addition

These new norms are a welcome addition to the Trademark Law. The prior user will have thus the right to continue to use his unregistered marks in China while attempting the cancellation of the stolen trademarks. This will give to the prior user and rightful owner of that sign to prepare and implement cancellations strategies without stopping his business in China.

At the same time, this norm should also discourage the trademark grabbers, especially the professional ones since they normally just grab marks but do not use them. In this respect, a further restraint from grabbing is provided by the new article 64, especially considering that most grabbers never use their trademarks and with such awareness will likely refrain from civil enforcement.

Sourcehttp://www.globallegalpost.com/global-view/an-end-to-trademark-grabbing-60583530/#.UmtsQXCky9Q

Companies Act,2013

The new Companies Act (hereinafter referred as CA2013) is replacing old Companies Act, 1956 (hereinafter referred as CA1956). The CA2013 makes comprehensive provisions to govern all listed and unlisted companies in the country. The CA2013 is partially made effective w.e.f. 12^th September, 2013, by way of implementing 98 Sections and repealing the relevant sections corresponded with CA1956. Some of the Salient features of the CA2013 are as under:

1. Democracy of Shareholders: The CA2013 has introduced new concept of class action suits with a view of making shareholders and other stakeholders, more informed and knowledgeable about their rights.
2. Supremacy of Shareholders: The CA2013 focused and provide major aspect on approvals from shareholders on various significant transactions. The Government has rightly reduced the need for the companies to seek approvals to managerial remuneration and the shareholders have been vested with the power to sanction the limit.
3. Strengthening Women Contributions through Board Room:The CA2013 stipulates appointment of at least one woman Director on the Board of the prescribed class of Companies so as to widen the talent pool enabling big Corporates to benefit from diversified backgrounds with different viewpoints.
4. Corporate Social Responsibility: The CA2013 stipulates certain class of Companies to spend a certain amount of money every year on activities/initiatives reflecting Corporate Social Responsibility.  There may be difficulties in implementing in the initial years but this measure would help in improving the Under-privileged & backward sections of Society and the Corporate would in fact gain in terms of their reputation and image in the Society.
5. National Company Law Tribunal: The CA2013 introduced National Company Law Tribunal and the National Company Law Appellate Tribunal to replace the Company Law Board and Board for Industrial and Financial Reconstruction. They would relieve the Courts of their burden while simultaneously providing specialized justice.
6. Fast Track Mergers: The CA2013 proposes a fast track and simplified procedure for mergers and amalgamations of certain class of companies such as holding and subsidiary, and small companies after obtaining approval of the Indian government.
7. Cross Border Mergers:The CA2013 permits cross border mergers, both ways; a foreign company merging with an India Company and vice versa but with prior permission of RBI.
8. Prohibition on forward dealings and insider trading: The CA2013 prohibits directors and key managerial personnel from purchasing call and put options of shares of the company, its holding company and its subsidiary and associate companies as if such person is reasonably expected to have access to price-sensitive information (being information which, if published, is likely to affect the price of the company's securities).  Earlier these provisions were contained in regulations framed by SEBI, as the capital market regulator. Now, it has also been informed that SEBI is expected to discuss changes in certain norms for listed firms so as to make them in line with the rules in the new Act.
9. Increase in number of Shareholders: The CA 2013 increased the number of maximum shareholders in a private company from 50 to 200.
10. Limit on Maximum Partners: The maximum number of persons/partners in any association/partnership may be upto such number as may be prescribed but not exceeding one hundred. This restriction will not apply to an association or partnership, constituted by professionals like lawyer, chartered accountants, company secretaries, etc. who are governed by their special laws. Under the CA1956, there was a limit of maximum 20 persons/partners and there was no exemption granted to the professionals.
11. One Person Company: The CA2013 provides new form of private company, i.e., one person company is introduced that may have only one director and one shareholder. The CA1956 requires minimum two shareholders and two directors in case of a private company.
12. Entrenchment in Articles of Association: The CA2013 provides for entrenchment of articles of association have been introduced.
13. Electronic Mode: The CA2013 proposed E-Governance for various company processes like maintenance and inspection of documents in electronic form, option of keeping of books of accounts in electronic form, financial statements to be placed on company's website, etc.
14. Restriction on Composition: Every company shall have at least one director who has stayed in India for a total period of not less than 182 (one hundred and eighty two) days in the previous calendar year.
15. Independent Directors: The CA2013 provides that all listed companies should have at least one-third of the Board as independent directors. Such other class or classes of public companies as may be prescribed by the Central Government shall also be required to appoint independent directors. No independent director shall hold office for more than two consecutive terms of five years.
16. Serving Notice of Board Meeting: The CA2013 requires at least seven days' notice to call a board meeting. The notice may be sent by electronic means to every director at his address registered with the company. The CA1956 did not prescribe any notice period to call the board meeting of a company.
17. Duties of Director defined: Under the CA1956, a director had fiduciary duties towards a company. However, the CA2013 has NOW defined the duties of a director.
18. Liability on Directors and Officers: The CA2013 does not restrict an Indian company from indemnifying its directors and officers like the CA1956.
19. Rotation of Auditors: The CA2013 provides for rotation of auditors and audit firms in case of publicly traded companies.
20. Auditors performing Non-Audit Services: The CA2013 prohibits Auditors from performing non-audit services to the company where they are auditor to ensure independence and accountability of auditor.  
21. Financial Year: Every company's financial year will be the period ending on 31 March every year.
22. Rehabilitation and Liquidation Process: The entire rehabilitation and liquidation process of the companies in financial crisis has been made time bound under CA2013.

Source: .http://www.mondaq.com/india/x/270182/Corporate+Commercial+Law/Indian+Companies+Act+2013+A+New+Beginning

Software Patenting - Intellectual Property

The concept of “intellectual property” in India over the last few years has taken on some epic proportions for a number of reasons. One of the primary reasons, attributable to the growing awareness among the urban Indian population, is of the significance and, more importantly, the commercial benefits in protecting its intellectual property rights both within and outside India. And under traditional principles of intellectual property protection, patent law is to encourage scientific research, new technology and industrial progress. The fundamental principle of patent law is that the patent is granted only for an invention i.e. new and useful the said invention must have novelty and utility. The grant of patent thus becomes of industrial property and also called an intellectual property. And the computer software is a relatively new recipient of patent protection.

The term “Patent’’ has its origin from the term “Letter Patent’’. This expression ‘Letter Patent’ meant open letter and were instruments under the Great Seal of King of England addressed by the Crown to all the subjects at large in which the Crown conferred certain rights and privileges on one or more individuals in the kingdom. It was in the later part of the 19th century new inventions in the field of art, process, method or manner of manufacture, machinery and other substances produced by manufacturers were on increased and the inventors became very much interested that the inventions done by them should not be infringed by any one else by copying them or by adopting the methods used by them. To save the interests of inventors, the then British rulers enacted the Indian Patents and Design Act, 1911.

With respect to patentability of software -related inventions, it is currently one of the most heated areas of debate. Software has become patentable in recent years in most jurisdictions (although with restrictions in certain countries, notably those signatories of the European Patent Convention or EPC) and the number of software patents has risen rapidly.

Meaning Of Software Patenting

The term “software” does not have a precise definition and even the software industries fails to give an specific definition. But it is basically used to describe all of the different types of computer programs. Computer programs are basically divided into “application programs” and “operating system programs”. Application programs are designed to do specific tasks to be executed through the computer and the operating system programs are used to manage the internal functions of the computer to facilitate use of application program.

Though the term ‘Software patent’ does not have a universally accepted definition. One definition suggested by the Foundation for a Free Information Infrastructure is that a software patent is a "patent on any performance of a computer realized by means of a computer program".

According to Richard Stallman, the co-developer of the GNU-Linux operating system and proponent of Free Software says, “Software patents are patents which cover software ideas, ideas which you would use in developing software.

That is Software patents refer to patents that could be granted on products or processes (including methods) which include or may include software as a significant or at least necessary part of their implementation, i.e. the form in which they are put in practice (or used) to produce the effect they intend to provide.

Early example of a software patent

On 21st Sep 1962, a British patent application entitled "A Computer Arranged for the Automatic Solution of Linear Programming Problems" was filed. The invention was concerned with efficient memory management for the simplex algorithm, and may be implemented by purely software means. The patent was granted on August 17, 1966 and seems to be one of the first software patents.

Conceptual Difference Between Copyright And Patent

Software has traditionally been protected under copyright law since code fits quite easily into the description of a literary work. Thus, Software is protected as works of literature under the Berne Convention, and any software written is automatically covered by copyright. This allows the creator to prevent another entity from copying the program and there is generally no need to register code in order for it to be copyrighted. While Software Patenting has recently emerged (if only in the US, Japan and Europe) where, Patents give their owners the right to prevent others from using a claimed invention, even if it was independently developed and there was no copying involved.

Further, it should be noted that patents cover the underlying methodologies embodied in a given piece of software. On the other copyright prevents the direct copying of software, but do not prevent other authors from writing their own embodiments of the underlying methodologies.

The issues involved in conferring patent rights to software are, however, a lot more complex than taking out copyrights on them. Specifically, there are two challenges that one encounters when dealing with software patents. The first is about the instrument of patent itself and whether the manner of protection it confers is suited to the software industry. The second is the nature of software, and whether it should be subject to patenting.

However, issues involved in conferring patent rights to software are a lot more complex than taking out copyrights on them. Specifically, there are two challenges that one encounters when dealing with software patents. The first is about the instrument of patent itself and whether the manner of protection it confers is suited to the software industry. The second is the nature of software and whether it should be subject to patenting.

a) Different Subject Matters

Copyright protection extends to all original literary works (among them, computer programs), dramatic, musical and artistic works, including films. Under copyright, protection is given only to the particular expression of an idea that was adopted and not the idea itself. (For instance, a program to add numbers written in two different computer languages would count as two different expressions of one idea) Effectively, independent rendering of a copyrighted work by a third party would not infringe the copyright.

Generally patents are conferred on any 'new' and 'useful' art, process, method or manner of manufacture, machines, appliances or other articles or substances produced by manufacture. Worldwide, the attitude towards patentability of software has been skeptical

b) Who may claim the right to a patent /copyright?

Generally, the author of a literary, artistic, musical or dramatic work automatically becomes the owner of its copyright. The patent, on the other hand is granted to the first to apply for it, regardless of who the first to invent it was. Patents cost a lot of money. They cost even more paying the lawyers to write the application than they cost to actually apply. It takes typically some years for the application to get considered, even though patent offices do an extremely sloppy job of considering.

c) Rights conferred

Copyright law gives the owner the exclusive right to reproduce the material, issue copies, perform, adapt and translate the work. However, these rights are tempered by the rights of fair use which are available to the public. Under "fair use", certain uses of copyright material would not be infringing, such as use for academic purposes, news reporting etc. Further, independent recreation of a copyrighted work would not constitute infringement. Thus if the same piece of code were independently developed by two different companies, neither would have a claim against the other.

A patent confers on the owner an absolute monopoly which is the right to prevent others from making, using, offering for sale without his/her consent. In general, patent protection is a far stronger method of protection than copyright because the protection extends to the level of the idea embodied by a software and injuncts ancillary uses of an invention as well. It would weaken copyright in software that is the base of all European software development, because independent creations protected by copyright would be attackable by patents. Many patent applications cover very small and specific algorithms or techniques that are used in a wide variety of programs. Frequently the "inventions" mentioned in a patent application have been independently formulated and are already in use by other programmers when the application is filed.

d) Duration of protection

The TRIPS agreement mandates a period of at least 20 years for a product patent and 15 years in the case of a process patent. For Copyright, the agreement prescribes a minimum period of the lifetime of the author plus seventy years.

Jurisdictions Of Software Patenting

Substantive law regarding the patentability of software and computer-implemented inventions, and case law interpreting the legal provisions, are different under different jurisdictions.

Software patents under multilateral treaties:

• Software patents under TRIPs Agreement

• Software patents under the European Patent Convention

• Computer programs and the Patent Cooperation Treaty

Software patenting under TRIPs Agreement

The WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), particularly Article 27, are subject to debate on the international legal framework for the patentability of software, and on whether software and computer-implemented inventions should be considered as a field of technology.

According to Art. 27 of TRIPS Agreement, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. (...) patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced."

However, there have been no dispute settlement procedures regarding software patents. Its relevance for patentability in the computer-implemented business methods, and software information technology remains uncertain, since the TRIPs agreement is subject to interpretation.

Software patents under the European Patent Convention

Within European Union member states, the EPO and other national patent offices have issued many patents for inventions involving software since the European Patent Convention (EPC) came into force in the late 1970s. Article 52 EPC excludes "programs for computers" from patentability (Art. 52(2)) to the extent that a patent application relates to a computer program "as such" (Art. 52(3)). This has been interpreted to mean that any invention which makes a non-obvious "technical contribution" or solves a "technical problem" in a non-obvious way is patentable even if a computer program is used in the invention. Computer-implemented inventions which only solve a business problem using a computer, rather than a technical problem, are considered unpatentable as lacking an inventive step. Nevertheless, the fact that an invention is useful in business does not mean it is not patentable if it also solves a technical problem.

Computer programs and the Patent Cooperation Treaty

The Patent Cooperation Treaty (PCT) is an international patent law treaty, which provides a unified procedure for filing patent applications to protect inventions. A patent application filed under the PCT is called an international application or PCT application. Under the PCT, the international search and the preliminary examination are conducted by International Searching Authorities (ISA) and International Preliminary Examining Authority (IPEA).

Current Trend

However, before we start hailing the advent of a new era and equating the patenting of software in India it would be well worth our while to take a pause and examine the realities of software patenting. We could do this by looking at examples of countries in which software patenting has already become the order of the day, such as in the US and Japan

United States

The United States Patent and Trademark Office (USPTO) has traditionally not considered software to be patentable because by statute patents can only be granted to "processes, machines, articles of manufacture, and compositions of matter". i.e. In particular, patents cannot be granted to "scientific truths" or "mathematical expressions" of them. The USPTO maintained the position that software was in effect a mathematical algorithm, and therefore not patentable, into the 1980s. This position of the USPTO was challenged with a landmark 1981 Supreme Court case, Diamond v. Diehr. The case involved a device that used computer software to ensure the correct timing when heating, or curing, rubber. Although the software was the integral part of the device, it also had other functions that related to real world manipulation. The court then ruled that as a device to mold rubber, it was a patentable object. The court essentially ruled that while algorithms themselves could not be patented, devices that utilized them could.

But in 1982 the U.S. Congress created a new court i.e the Federal Circuit to hear patent cases. This court allowed patentability of software, to be treated uniformly throughout theUS. Due to a few landmark cases in this court, by the early 1990s the patentability of software was well established. Moreover, Several successful litigations show that software patents are now enforceable in the US. That is the reason, Patenting software has become widespread in the US. As of 2004, approximately 145,000 patents had issued in the 22 classes of patents covering computer implemented inventions.

Japan

Software is directly patentable in Japan. In various litigations in Japan, software patents have been successfully enforced. In 2005, for example, Matsushita won a court order barring Justsystem from infringing Matsuhita's Japanese patent 2,803,236 covering word processing software.

Indian Position

With respect to computer software, in Patents (Amendment) Act, 2002, the scope of non-patentable subject matter in the Act was amended to include the following: "a mathematical method or a business method or a computer programme per se or algorithms".

However, the recent amendment changes (Ordinance, 2004), which amends the Patents Act, 1970, has been promulgated after receiving assent from the President of India and has came into effect from 1st Jan., 2005. Apart from change in pharmaceuticals and agro chemicals, one of the seminal amendments this Ordinance seeks to bring is to permit the patenting of embedded software.

Hence, the amendment means that while a mathematical or a business method or an algorithm cannot be patented, a computer programme which has a technical application in any industry or which can be incorporated in hardware can be patented. Since any commercial software has some industry application and all applications can be construed as technical applications, obviously it opens all software patenting.
In any case, any company seeking to file a patent application for software under the Ordinance should ensure that its invention firstly, follows the three basic tests:

• Inventive Steps

• Novelty

• Usefulness

Therefore, it is important that the software sought to be protected is not merely a new version or an improvement over an existing code.

Further, in accordance with the specific requirements of the Ordinance with regard to patentability of software, the software should necessarily have a technical application to the industry or be intrinsic to or “embedded” in hardware. This is to prevent against any future litigation or claims of infringements being raised, which is a distinct probability even after a patent has been granted.

Conclusion

India for its part seems to have adopted the more conservative approach of the European patenting norms for software. But the Ordinance definitely has its use and relevance in today’s India, particularly for our growing domestic semi- conductor industry. This, along with judicial tempering might definitely ensure a judicious use of patent protection while allowing the industry to grow through innovations and inventions, thereby, mitigating the risks of trivial patents chocking the life out of real innovations and inventions. This is the reason a patent should always be treated as a “double edged sword”, to be wielded with caution and sensitivity. Now whether, in reality this will be implemented on a rigid basis or will become broad in scope through application (as in the U.S.), and, more importantly, whether the Ordinance would, in fact, result in increased innovation and inventions in the software industry, remains to be seen.

Source : ,http://www.legalserviceindia.com/article/l140-Software-Patenting.htm