Winding up of a company

Winding up of a company is the stage, where by the company takes its last breath. It is a process by which business of the company is wound up, and the company ceases to exist anymore. All the assets of the company are sold, and the proceedings collected are used to discharge the liabilities on a priority basis.

MODES OF WINDING UP:

There are three ways, in which a company may be wound up. They are:

A.   Winding up by the court.

B.    Voluntary winding up:

Members Voluntary winding up.

Creditors Voluntary winding up.

C.   Winding up subject to supervision of the court

A.  WINDING UP BY THE COURT:

 A company may be wound up by the court in following situations. Here, the court means "High Court".

i.    If the company itself, has passed a special resolution in the general meeting to wound up its affairs. Special resolution means, resolution passed by three-fourth (3/4") of the members present.

ii.    If there is a default, in holding the statutory meeting or in delivering the statutory report to the Registrar.

A company which is limited by shares, and a company limited by guarantee having share capital, is required to hold a " Statutory meeting" of its members, within six months, and after one month, from the date of commencement of it's business. A statutory report of the meeting so held shall also be forwarded to the registrar. [Sec 165 (1) & (5)]

iii.     If the company fails to commence its business within one year from the date of it's incorporation, or suspends its business for a whole year.

A company limited by shares, has to obtain a "certificate of commencement" of business from the registrar. Unless it obtains such certificate, it cannot carry on its business operation.

iv.     If the number of members, in a public company is reduced to less than seven, and in case of private company less than two.

The statutory requirement of minimum number of members in a public company is seven, and in case of private company, it is two (sec 12)

v.      If the company is unable to pay its debits; where the financial position of the company is, such, that it has more liabilities than assets, and after disposing off the assets, it is still unable to extinguish it's liabilities, it means that company is unable to pay it's debts.

 vi.     If the court, itself is of the opinion that the company should be wound up.

The court may form such an opinion, if it comes to the knowledge of court that, the company is mismanaged, or financially unsound, or carrying an illegal operations etc.

RELEVANT POINTS:

A. WHO CAN APPLY TO COURT, FOR WINDING UP PETITION? (SEC 439)

Following persons can apply to the court, for petition for winding up:

o        The company itself

o        The creditor

o        Any Contributory

o        Registrar

O      Any person authorized by central government, in case of oppression or mismanagement (397)

B. WHAT ORDERS, THE COURT MAY PASS? (SEC 443)

The court may pass any one of the following orders on hearing the winding up petition.

 i.     Dismiss it, with or without costs

 ii.    Make any interim order, as it thinks fit, or

 iii.   Pass an order for winding up of the company with or without costs.

Consequences of court passing an order for winding up:

If the court is satisfied, that sufficient reasons exist in the petition for winding up, then it will pass a winding up order. Once the winding up order is passed, following consequences follow:

i.     Court will send notice to an official liquidator, to take change of the company. He shall carry out the process of winding up, ( sec. 444)

ii.    The winding up order, shall be applicable on all the creditors and contributories, whether they have filed the winding up petition or not.

iii.   The official liquidator is appointed by central Government ( sec. 448)

iv.   The company shall relevant particulars, relating to, assets, cash in hand, bank balance, liabilities, particulars of creditors etc, to the official liquidator. ( sec. 454)

v.    The official liquidator shall within six months, from the date of winding up order, submit a preliminary report to the court regarding :

o        Particulars of Capital

o        Cash and negotiable securities

o        Liabilities

o        Movable and immovable properties

o        Unpaid calls, and

o        An opinion, whether further inquiry is required or not ( 455)

The Central Govt. shall keep a cognizance over the functioning of official liquidator, and may require him to answer any inquiry. (463)

C. STAY ORDER:

Where, the court has passed a winding up order, it may stay the proceedings of winding up , on an application filed by official liquidator, or creditor or any contributory. (466)

D. DISSOLUTION OF COMPANY (481)

Finally the court will order for dissolution of the company, when:

o        the affairs of the company are completely wound up, or

o        the official liquidator is unable to carry on the winding up procedure for want of funds.

E. APPEAL: 483

An appeal from the decision of court will lie before that court, before whom, appeals lie from any order or decision of the former court in cases within its ordinary jurisdiction.

B.  VOLUNTARY WINDING UP

A company may, voluntary wind up its affairs, if it is unable to carry on its business, or if it was formed only for a limited purpose, or if it is unable to meet its financial obligation, and etc. A company may voluntary wind up itself, under any of the two modes:

i.     Members voluntarily winding up

ii.    Creditors voluntarily winding up

A company may voluntarily wind up itself, either by passing:

An ordinary resolution, where the purpose for which the company was formed has completed, or the time limit for which the company was formed, has expired.

Or

By way of special resolution

Both types of resolution shall e passed in the general meeting of the company. (484)

Once the resolution of voluntarily winding up is passed, and then the company may be wound up, either through:

O     Members voluntarily winding up, or

o     Creditors voluntarily winding up

The only difference between the abate two, is that in case of members voluntarily winding up, Board of Directors have to make a declaration to the effect, that company has no debts. (488)

 

                   i.            MEMBERS VOLUNTARILY WINDING UP

Directors of the company shall call for a Board of Directors Meeting, and make a declaration  of winding up, accompanied by an Affidavit, stating that;

o        The company has no debts to pay, or

o        The company will repay it's debts; if any, within 3 years from the commencement of winding up, as specified in declaration (488)

WHO SHALL CARRY OUT THE WINDING UP PROCEDURE? & WHAT SHALL BE THE PROCEDURE?

· The Company shall appoint one or more liquidators, in a general meeting, who shall look after the affair of winding up procedure, and distribution of assets. [490 (1)]

· The liquidator so appointed, shall be paid remuneration for his services, which shall also be fixed in general meeting [490 (2)]

 · The Company shall also give notice of appointment of liquidator to the registrar within ten days of appointment (493)

· Once the company has appointed liquidator, the powers of Board of Directors, Managing Director, and Manager, shall cease to exist. (491)

· The liquidator is generally given a free hand, to carry out the winding up procedure, in such a manner, as he thinks best in the interest of creditors, and company.

· In case, the winding up procedure, takes more than one year, then liquidator will have to call a general meeting, at the end of each year, and he shall present, a complete account of the procedure, and position of liquidator (496)

WHEN AFFAIRS OF THE COMPANY ARE FULLY WOUND UP

The liquidator shall take the following steps, when affairs of the company are fully wound up : (497)

i.    Call a general meeting of the members of the company, a lay before it, complete picture of accounts, winding up procedure and how the properties of company are disposed of.

ii.    The meeting shall be called by advertisement, specifying the time, place and object of the meeting.

iii.  The liquidator shall send to, the Registrar and official Liquidator copy of account, within one week of the meeting.

iv.  If from the report, official liquidator comes to the conclusion, that affairs of the company are not being carried in manner prejudicial to the interest of it's members, or public, then the company shall be deemed to be dissolved from the date of report to the court.

v.     However, if official liquidator comes to a finding, that affair have been carried in a manner prejudicial to interest of member or public, then court may direct the liquidator to investigate furthers.

ii. CREDITORS VOLUNTARILY WINDING UP

· Where the resolution for winding up has been passed, but the Board of Directors are not in a position to give a declaration on the liability of company, they may call a meeting of creditors, for the purpose of winding up. (500)

· It is the duty of Board of Directors, to present a full statement of company’s affairs, and list of creditors along with their dues, before the meeting of creditors. [500 (3)]

· Whatever resolution, the company passes in creditor's meeting, shall be given to the Registrar within ten days of its passing. (501)

WHO SHALL CARRY OUT THE WINDING UP PROCEDURE ? & WHAT SHALL BE THE PROCEDURE?

· Company in the general meeting [in which resolution for winding up is passed], and the creditors in their meeting, appoint liquidator. They may either agree on one liquidator, or if two names are suggested, then liquidator appointed by creditor shall act. (502)

· Any director, member or creditor may approach the court, for direction that:

o        Liquidator appointed in general meeting shall act, or

o        He shall act jointly with liquidator appointed by creditor, or

o        Appointing official liquidator, or

o        Some other person to be appointed as liquidator. [502 (2)]

· The remuneration of liquidator shall be fixed by the creditors, or by the court. (504)

· On appointment of liquidator, all the power of Board of Directors shall cease. (505)

· In case, the winding up procedure, takes more than one year, then he will have to call a general meeting, and meeting of creditors, at the end of each year, and he shall present, a complete account of the procedure, and the status / position of liquidation (505).

WHEN AFFAIRS OF THE COMPANY ARE FULLY WOUND UP ( 509)

The liquidator shall take the following steps, when affair of the company are fully wound up:

I.            Call a general meeting, and meeting of creditors, and lay before it, complete picture of accounts, winding up procedure and how the properties of company are disposed of.

II.            The meeting shall be called by advertisement, specifying the time, place and object of the meeting.

 III.            The liquidator shall send to the Registrar and official liquidator copy of account, within one week after the meeting.

 IV.            If from the report, official liquidator comes to the conclusion, that affairs of the company are not being carried in manner prejudicial to the interest of it’s members or public, then the company shall be deemed to be dissolved, from the date of report to the court.

    V.            However, if official liquidator comes to a finding, that affairs have been carried in a manner prejudicial to intent of members or public, and then court may direct the liquidator to investigate further.

DISTRIBUTION OF PROPERTY OF COMPANY ON VOLUNTARILY WINDING UP [BOTH MEMBERS AND CREDITORS VOLUNTARILY WINDING UP]

Once the company is fully wound up, and assets of the company sold or distributed, the proceedings collected are utilized to pay off the liabilities. The proceedings so collected shall be utilized to pay off the creditors in equal proportion. Thereafter any money or property left may be distributed among members according to their rights and interests in the company.

C.  WINDING UP SUBJECT TO SUPERVISION OF COURT.

Winding up subject to supervision of court, is different from "Winding up by court."

Here the court only supervises the winding up procedure. Resolution for winding up is passed by members in the general meeting. It is only for some specific reasons, that court may supervise the winding up proceedings. The court may put up some special terms and conditions also.

However, liberty is granted to creditors, contributories or other to apply to court for some relief. (522)

· The court may also appoint liquidators, in addition to already appointed, or remove any such liquidator. The court may also appoint the official liquidator, as a liquidator to fill up the vacancy.

· Liquidator is entitled to do all such things and acts, as he thinks best in the interest of company. He shall enjoy the same powers, as if the company is being wound-up voluntarily.

· The court also may exercise powers to enforce calls made by the liquidators, and such other powers, as if an order has been made for winding up the company altogether by court. ( 526)

PRIORITY IN DISPOSING LIABILITIES [529 A & 530]

When the company is wound up, by any mode, the liabilities shall be discharged in following priority.

1.     Workman's dues.

2.     Debts due to secured creditors, in case of insolvency.

3.     All ---------, taxes, cesses and rates due from the company to the central government or a state govt.

4.     All wages and salary of any employee due within four months.

5.     All -------- holiday remuneration becoming payable to any employee.

· All such debts shall be paid in full. If assets are insufficient to meet them, they shall abate in equal proportions.

MONEY RECEIVED BY LIQUIDATOR: (553)

Apart from an official liquidator, every liquidator appointed by company or court to carry on the winding up procedure, shall deposit the money is received by him in a scheduled bank, to the credit of a special banking account opened by him.

Apart from a normal company, registered under the companies Act, 1956 there are other companies as well winding up procedure for these companies are bit different from a company registered under companies Act.

These companies are:

1.     UNREGISTERED COMPANIES : (583)

In simple words, an unregistered company is a company which is not registered or covered under provisions of companies Act. 1956 (582)

· An unregistered company cannot be wound up voluntarily, or, subject to super vision of court.

· However, the circumstances, in which unregistered company may be wound up, are as follows:

o         If the company, is dissolved, or has ceased to carry on business, or is carrying on business only for the purposes of winding up, it's affairs,

o         If the company is unable to pay it's debt

o         If the court is of opinion, that it is just and equitable, that the company should be wound up.

· A creditor, contributory, or company itself by filing a petition, or any person authorized by central government may institute winding up proceedings.

· In respect to other aspects, the same provisions and procedure shall follow, as in winding up of registered company.

· A foreign company, carrying on business in India, which has been dissolved, may be wound up, as unregistered company.

1.     FOREIGN COMPANY ( 584)

A foreign company is a company which is incorporated outside India, and having a place of business in India.

Winding up of such companies is only limited to the extent of it's assets in India. In respect of assets and business carried outside India, Indian courts have no jurisdiction.

· Winding up of a foreign company can only be made through court.

· Even if the company had been dissolved or ceased to exist in the country of its incorporation, winding up order in this country can be made.

· Even if a foreign company has been wound up according to foreign law, the courts in India still protect the Indian Creditors. The surplus assets, after paying the creditors, should be distributed among the share holders equally in the same proportion, as the assets ---- to the total issued and paid up capital.

· Pendency of a foreign liquidation does not affect the jurisdiction to make winding up order. The Assets can be of any nature and do not take to be in the ownership of the company and can come from any Source.

· As, for persons claiming to be creditors, their presence, itself is sufficient. It is not required to be shown, that company carried on business operations from any place of business in India.

2.     GOVERNMENT COMPANY

 A Govt. company, means a company, in which 51% or more of, shares are held by a govt. company

Winding up procedure for a government company registered under the companies Act, 1956, is nearly similar to normal winding up procedure.

However, courts, take interest of public into consideration, and priority is given to them, as a govt. company is main function is to provide services to public.

 

 Source http://www.companyliquidator.gov.in/12/windingup_data.htm#b

Google Takes Defamation Case to India’s Supreme Court

An Indian Supreme Court hearing starting Monday on whether the local unit of Google Inc. is liable for allegedly defamatory comments made on its blogging site, will help decide how Internet companies do business in the growing south Asian market.

The Supreme Court is scheduled to start hearing arguments from the U.S. tech giant on Monday in the case brought by Visaka Industries Ltd., a construction materials company, which claims an activist used the Google blogging site Blogspot.com to spread false information about Visaka

Google lost the case in a High Court and appealed to the Supreme Court, saying it should not be held responsible for everything on its sites as it cannot control what users post.

Other search engines, blog sites, social media sites and even online retailers could be affected by the outcome of the case, lawyers said. The hearing could take months before a final judgment is delivered.

“People may not even roll out new products,” in India, depending on the outcome of the case, said an executive at a global technology firm. “It’s not worth the effort of investing.”

Google India argues that it can’t be held liable for content posted by users on a platform which is hosted by its parent company Google Inc.

Google Inc. didn’t immediately respond to an email seeking comment on the case.

India represents one of the last great untapped markets for Internet companies. The number of Internet users in Asia’s third largest economy is likely to jump to more than 500 million by 2015 from around 200 million today, according to an estimate by consulting firm McKinsey and Co. 

The case against Google was brought by Visaka Industries–a company based in the southern Indian city of Hyderabad which makes corrugated cement and asbestos fiber sheets—after an anti-asbestos blog hosted by Google’s Blogspot.com contained allegations that Visaka was being protected because it was backed by leaders of the ruling Congress party.

The author of the post Gopala Krishna said he still stands by his post, though he hasn’t been formally informed of the charges or the case.

“Whatever Google has said (in court) has supported freedom of expression,” Mr. Krishna told The Wall Street Journal. “They have done the right thing by not removing the content.”

A spokesman for the Congress party could not be reached for immediate comment.

Visaka said it had no connection to the party and filed a case charging Google India with criminal conspiracy, defamation and publishing content which is defamatory.

Google India challenged the charges at the High Court in the Southern Indian State of Andhra Pradesh and lost in 2011. It appealed to the Supreme Court which is beginning hearings on Monday.

If Google loses again it will be “liable for criminal activities on its network,” and have to step up its monitoring of what goes on online in India “Exercising of due diligence is a critical aspect for limiting liability of intermediaries.”

Google managers could be punished with up to life imprisonment and fines from 100,000 rupees ($1,595) to 1.0 million rupees and could also be asked to pay damages of up to 50 million rupees per violation.

India has started restricting Internet freedom in recent years, raising concerns among free speech activists.

In 2009 it amended its laws to hold Internet firms liable for “offensive,” “defamatory” or “blasphemous” content.  The amendments have been challenged in the Supreme Court but it has yet to rule.

In 2011,  India’s technology and telecommunications minister Kapil Sibal urged Internet companies to take down derogatory content from their websites

India needs to loosen these rules, regulations and political pressures or risk missing out of the Internet revolution, said Mishi Choudhary executive director of the Software Freedom Law Center based in New Delhi.

Sourcehttp://blogs.wsj.com/indiarealtime/2014/01/24/google-takes-defamation-case-to-indias-supreme-court/

Why India needs to take intellectual property seriously

Without reform of IP law, Indian companies - and broader economic growth - will remain stunted

DR. Reddy's Laboratories' chairman, called for the Indian pharmaceutical industry to move up the value chain from generics through investing in research and innovation, reported the Business Standard last week. Mr Prasad's aspirational call to action is, however, a sad reminder of how the government's policies create a hostile environment for investment and hobble Indian creativity. A salient example of these counterproductive policies are the attacks on some 15 medicine patents over the past 18 months. While hailed often as victories, these manoeuvres jeopardise the investment India needs to build intellectual capital, foster growth and employment, and develop medicines relevant to Indian needs.

The idea underpinning intellectual property (IP) protections is to encourage innovation. With an assurance of temporary exclusivity, people will invest resources to create new products and technologies, knowing that if they achieve a breakthrough their efforts will be rewarded. (It typically takes a decade and over $1 billion to develop a successful new drug.)

Creating incentives for innovation is an idea reaching back hundreds of years. In the 18th century the framers of the US Constitution included a provision that calls on the Congress to grant authors and inventors "the exclusive Right to their respective Writings and Discoveries" in order to promote progress in science and the arts.

In the intervening years, robust IP rights have helped spark innovation and growth in countries - both developed and developing - throughout the world. As much as 40 per cent of US growth in the 20th century was a result of innovations, according to Nobel laureate Robert Solow. And one of India's most successful companies - Tata - has prospered on the strength of its IP. As of 2012, Tata Motors held 833 patents and Tata Steel had 1,230 patents.

Just as countries with strong IP rights have a foundation for prosperity, countries lacking such protections find innovation and growth more daunting. It is sadly unsurprising that India receives low marks on innovation scorecards. As President Pranab Mukherjee pointed out in his National Technology Day speech in May, "India's innovation bottom line is not very encouraging." He observed that the US and China receive 12 times as many patent applications as India.

Regrettably, he did not elaborate on how IP rights foster innovation - nor did he dwell on how these protections encourage foreign direct investment (FDI). It is well established that such investment brings with it new technologies, higher productivity and wages, and spillovers to other firms that spur modernisation. International businesses also bring R&D to countries that provide supportive environments. That increased R&D is often aimed at unmet local needs, such as drug company investment in tropical disease research. Weak IP protection directly discourages such R&D.

While India did revise its IP laws in 2005, enforcement has been inconsistent, at best, and carve-outs for generic drugs have compromised its integrity to the short-term benefit of the owners of generic companies. These shortcomings help explain why India attracts a mere three per cent of global R&D spending. (China, with its stronger IP law, attracts about 14 per cent and Japan about 11 per cent, reports the Battelle Institute.) These data reinforce the World Bank's findings that multinational firms locate R&D in developing countries with effective IP rights.

As noted, corporations consider IP protections when making decisions about where to direct their FDI. The Organisation for Economic Cooperation and Development has found that a one per cent change in the strength of a country's IP rights environment is associated with a 2.8 per cent increase in FDI inflows. That's bad news for India. From 2010 to 2012, the United Nations reports, India's stock of FDI totalled just 11.8 per cent of its GDP. The average for all developing economies was 30 per cent.

While these data underscore India's failure to attract foreign investment, some argue that IP conflicts with Indian interests. The reality is quite different, as explained by Kiran Mazumdar-Shaw, chairman of Bangalore-based Biocon. "We must understand that intellectual property is important for India to embrace and respect and protect," she told the Press Trust of India. "If you cannot demonstrate that IP is safe in the country, I think you are not sending the right message, you are not going to find people investing in India."

Moreover, IP is not the obstacle to access to healthcare that some officials and activists allege. The Supreme Court's recent decision denying Novartis's rights to Glivec, a patent recognised in over 40 countries, has been acclaimed as an advance in patient access. However, Novartis was already ensuring that 95 per cent of the Indians who were prescribed Glivec received the cancer medicine for free.

The very real obstacles to medical access in India stem principally from the government's failings. It devotes a mere 1.2 per cent of GDP to health care, a level lower than in Haiti, and India lacks the insurance, doctors, clinics and hospitals necessary to make use of the full potential of modern medicine. These monumental challenges won't be addressed by headline-catching patent revocations, but will require sustained investment and reform.

If India is serious about attracting FDI and becoming an innovation hub, it should reform its IP law to ensure the protections that are a mainstay of the world's advanced economies. Absent such protections, R&D will regrettably go elsewhere, India's "innovation bottom line" will continue to disappoint, and, most troubling, the Indian people will be denied new opportunities, new knowledge, and new medicines.

http://www.business-standard.com/article/opinion/rod-hunter-why-india-needs-to-take-intellectual-property-seriously-114011100711_1.html

 

Protecting patents: India worst in world

Despite the current decade being called Indias “decade of innovation”, the country has been ranked at the bottom of the list of 25 countries in terms of its intellectual property (IP) environment. According to the 2014 International Intellectual Property (IP) Index by the US Chamber of Commerce’s Global Intellectual Property Center (GIPC), India’s percentage score has fallen from 25 per cent in 2012 to 23 per cent.

“The continued use of compulsory licences, patent revocations, and weak legislative and enforcement mechanisms raise serious concerns about India’s commitment to promote innovation and protect creators,” the report said.

The index, titled Charting the Course, gives a snapshot of the IP environment of 25 countries.

David Hirschmann, president and Chief Executive Officer of GIPC, said: “Nations – big and small – are wrestling with domestic legislation, judicial proceedings, criminal proceedings, and other processes regarding IP. These are all opportunities to chart a course toward a strong IP environment.”

He said along with these opportunities, some countries are taking backward steps on IP. “India, which again finished last in the second edition of the Index, continues to allow for the deterioration in its IP climate.”

The US is the highest-ranking country, followed by the UK and France. The five BRICS economies — Brazil, Russia, India, China, and South Africa — continue to face serious challenges.

According to the report, several factors led to the deterioration of the IP environment in India. For instance, in the biopharmaceutical sector, “Indian policy continued to breach international standards of the protection of innovation and patent rights, revoking patents generally accepted around the world and announcing that other patented medicines are being considered for compulsory licences.”

The report also mentions the Supreme Court’s April 2013 ruling on the patentability of the anti-cancer drug, Glivec, that the drug does not meet patentability standards imposed by the Indian Patent Act.

India scored poorly in the areas of patents, copyrights, enforcement, membership and ratification of international treaties (in which it scores zero), among others.

“The continued use of compulsory licences, revocation of patents, and weak legislative and enforcement mechanisms across all IP rights raise serious concerns about India’s commitment to promoting innovation,” the report said.

Most high-income economies — with notable exceptions such as Canada, New Zealand, Chile, and the United Arab Emirates (UAE) — have robust national IP environments in place. The weakest national IP environments are in the lower-middle-income countries such as Vietnam, Indonesia, Thailand, and India.

Some of the developments, which are expected to improve the IP climate globally include the fact that currently 12 countries — the US, Japan, Australia, Peru, Malaysia, Vietnam, New Zealand, Chile, Singapore, Canada, Mexico, and Brunei Darussalam — are negotiating the Trans-Pacific Partnership Agreement, which is expected to set a higher standard in the Pacific region, and help in protecting and enforcing IP.

Moreover, the US is currently negotiating with the European Union on a trade and investment partnership agreement, which is supposed to promote competitiveness, growth, and jobs.

China continues to show strength in the patents arena, earning the highest score of all middle-income countries and even outperform high-income countries such as Chile and the UAE. While progress is being made, China’s overall IP environment continues to see challenges, particularly with regard to trademark and trade secrets as shown by its overall score.

According to a 2013 study by the European Patent Office and the Office of Harmonization for the Internal Market on the impact of IP rights and IP-based industries on the EU economy, IP-intensive industries generated almost 26 per cent of all direct and 35 per cent of indirect jobs.

The report also found that IP-intensive industries produced almost 39 per cent of EU-wide gross domestic product (GDP), worth almost euro 5 trillion.

Source: http://www.business-standard.com/article/current-affairs/india-ranks-at-the-bottom-in-terms-of-intellectual-property-114012900371_1.html

IPAB refers opposition to anti-cancer drug to patent office

The Intellectual Property Appellate Board (IPAB) has asked the patent office to consider afresh a matter related to the patent application of US-based Abraxis BioScience for its anti-cancer drug Abraxane, following pre-grant opposition by Hyderabad-based Natco Pharma.

Natco has developed a generic version of the drug under the brand name Albupax. Emails sent to Celgene, which acquired Abraxis BioScience in 2010, and Natco Pharma for comment on the order didn’t elicit a response till the time of going to press.

IPAB set aside an order of the Assistant Controller of Patents & Designs, saying it was passed in “flagrant violation of principles of natural justice”. An order issued by IPAB Chairman K N Basha and technical member (patents) DPS Parmar said it remanded the matter to the Assistant Controller of Patents & Designs for fresh consideration. It also directed the procedure be completed within three months from the date of the IPAB order.

On July 24, 2009, the assistant controller of patents & designs had refused to grant a patent to US-based Abraxis BioScience’s albumin-bound paclitaxel for an injectable suspension that had the brand name Abraxane and was used in the treatment of breast, lung and pancreatic cancers.

It has a net sales of $649 million and is expected to reach $1.5-2 billion by 2017, said the company's counsel. Abraxis Bioscience was acquired by New Jersey-based Celgene Corporation during 2010 and the upfront payment value of Abraxis BioSciences was at around $2.9 billion.

Natco Pharma complained that they were not offered a copy of an affidavit from Anindy Sircar who was a representative from Biocon, which was filed by Abraxis to establish enhanced efficacy. The bench ordered that the Assistant Controller should provide a copy of a particular affidavit to the generic manufacturer and they shall be given opportunity to give reply.

Justice Basha said that the bench is not going into the merits of the claim and contention of both the sides on merit and the order is only on the contention that there is a violation regarding principles of natural justice.

The first priority application for patent on the drug was filed by Abraxis on December 9, 2002 and the application was published under section 11 (A) on April 1, 2007, after which Natco Pharma has filed a pre-grant opposition against giving approval of patent to the drug. Natco has developed the generic version of the drug, under the brand name Albupax.

The originator firm argued in IPAB that the decision of Assistant Controller of Patents was wrong, and the order in dispute is liable to be set aside for gross violation of principles of natural justice. It contested that the Assistant Controller has heard and put in order on the grounds of insufficiency (which means the claims are not supported by the examples and description), which was not pleaded by Natco.

It also argued that the controller did not provide opportunity to the company to argue the dispute as per provision under Section 14 of the Patent Act, 1970, which is appealable. Instead, the petition was argued under section 25(1), which was not appealable during 2009. The counsel appeared for Abraxis informed that it was only after a Delhi High Court order observing that the pre-grant opposition is appealable, that the company could file an appeal with the IPAB.

The company also argued that during the procedure in the patent office, on March 10, 2009 Natco Pharma filed additional document and Abraxis objected taking this into consideration through an interlocutory petition. Without even looking into the said petition the controller proceeded to hear the matter, it alleged.

The counsel appeared for Natco argued that the impugned order does not cause any violation of principles of natural justice and said that the patent official was right in refusing patent for the drug.

The IPAB bench said that the finding and consideration on the ground of insufficiency, especially when it was not pleaded, “is illegal”.

Source:http://webcache.googleusercontent.com/search?q=cache:http://www.business-standard.com/article/companies/ipab-refers-opposition-to-anti-cancer-drug-to-patent-office-114012100719_1.html

No copyright or trademark in Yoga, pranic healing asanas, rules HC

Exclusive rights over yoga and pranic exercises, which are derivatives of ancient technique of yoga in India, cannot be claimed under the Copyright Act, the Delhi High Court has held.

The court made the observations while rejecting the plea of Philippines-based Institute for Inner Studies seeking to restrain some persons from teaching the 'asanas' (postures) claimed to be developed by the founder of the institute.

The court relied upon the position of law on the matter in the US and noted that the court there had denied protection to Yoga asanas in case of Bikram Choudhary who is also teaching modern yoga techniques in the US.

A bench of justice Manmohan Singh also held that the expression 'Pranic Healing' cannot be monopolised as trademark by the institute.

"The expression 'Pranic healing' as on the date of the application for the registration was prima facie non distinctive and was the name of the art or technique of doing exercise which was a facet of Yoga.

"The expression was not capable of distinguishing the services of the plaintiff from others due to its wide spread use in the field dating back from centuries ago," the bench said in its 150-page judgement.

The court delivered the judgement on a petition filed by the Institute, which was established by Late Samson Lim Choachuy, Master Choa Kok Sui, on April 27, 1987 and has trusts in various cities in India and the sub-continent.

The institute had moved the high court seeking prohibitory orders against one Charlotte Anderson and others from practicing pranic healing and conducting courses of the asanas adapted by the Master "without proper guidelines and issuing certificates or using literature" of the Master.

"The trade marks which have secured by the plaintiffs in India are all secured post the year 2000 as is evident from the list.

"If the expression Pranic Healing was the name of the art or technique of Yoga in the year 1906 finding place in the books in the field of Yoga, it prima facie appears to be highly doubtful as to how the expression is either inherently distinctive or for that matter capable of distinguishing the goods of one person from that of another.

"Having not made a truthful statement as to proprietorship of the mark pranic healing, the plaintiffs have secured the registration of the expression from the Registrar of the trade mark without informing about the correct proprietorship of the mark applied for on the date of the application."

 Source:http://ibnlive.in.com/news/no-copyright-or-trademark-in-yoga-pranic-healing-asanas-rules-hc/445376-3.html

Intellectual Property – Copyright, Patent, Trademark, Industrial Design, Geographical Indications

Intellectual property refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. Intellectual property is protected in law by, for example, patents, copyright and trademarks, which enable people to earn recognition or financial benefit from what they invent or create. By striking the right balance between the interests of innovators and the wider public interest, the Intellectual property system aims to foster an environment in which creativity and innovation can flourish.

Intellectual property

Copyright

Copyright is a legal term used to describe the rights that creators have over their literary and artistic works. Works covered by copyright range from books, music, paintings, sculpture and films, to computer programs, databases, advertisements, maps and technical drawings.

Patents

A patent is an exclusive right granted for an invention. Generally speaking, a patent provides the patent owner with the right to decide how - or whether - the invention can be used by others. In exchange for this right, the patent owner makes technical information about the invention publicly available in the published patent document.

Trademarks

A trademark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. Trademarks date back to ancient times when craftsmen used to put their signature or "mark" on their products.

Industrial designs

An industrial design constitutes the ornamental or aesthetic aspect of an article. A design may consist of three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns, lines or color.

Geographical indications

Geographical indications and appellations of origin are signs used on goods that have a specific geographical origin and possess qualities, a reputation or characteristics that are essentially attributable to that place of origin. Most commonly, a geographical indication includes the name of the place of origin of the goods.

Use of trademarks with same prefix by registered owners not infringement

The Bombay High Court has said if two parties got the registrations of trademarks done using identical prefix, they could use the same for all purposes and its exclusive use by only one owner was not allowed. While relying on the Trademarks Act, the court said use of such registered trademarks by another registered owner cannot be treated as "infringement".

The court was hearing a plea by Pune resident Pritikiran Katole against a district court's order restraining him from using the trademark of 'Godwa' tagged with his businesses. The lower court had observed that it was "breach of registered trademark" used by the applicant Harsha Katole. Pritikiran moved the High Court against the order.

Taking into consideration the Act's provisions, Justice Anoop V Mohta said, "The main objection with regard to the word 'Godwa' although both the parties got registration under the provisions of the Trademarks Act, 1999, just cannot be the issue to pass such injunction order against the registered trademark owner. Such two persons cannot prevent each other from using the same registered trademark. The section itself contemplates that such registered trademark need to be treated as in their individual capacity `the sole registered proprietor'."

Justice Mohta observed that both the parties had been using the word 'Godwa' for long and were aware of each other's usage in their respective publication businesses. The court observed that Harsha had been using the title since 2008 and Pritikiran since 2006. However, no steps were taken by the former.

Pritikiran's counsel gave an undertaking to the court that the his client would not use the word 'Godwa' in the style or the design of the words that he had been using and also the manner of writing. In addition, the emblem registered by Harsha would not be used.

http://www.indianexpress.com/news/use-of-trademarks-with-same-prefix-by-registered-owners-not-infringement-hc/1204876/

Foreigners can edit Indian newspapers: Delhi high court

The Delhi high court refused to intervene on a PIL seeking Indian citizenship should be the "pre-requisite qualification" for a person to be appointed as the editor of a publication in the country.

The HC said the issue must be settled by Parliament and hoped it will find time to take it up for discussion.

A division bench of Justices Pradeep Nandrajog and VK Rao rejected the plea of Subramanian Swamy. "Hoping that Parliament would find some time to consider the Press and Registration of Books and Publication Bill, 2011, which is pending consideration now for over two years, we dismiss the writ petition declining relief as prayed for," the court said.

Swamy had approached HC seeking a direction to the central government to rectify a lacuna in the Press and Registration of Books Act regarding the definition of editor. But the HC said it is not for the judiciary to wade into the debate.

"It may be true that even the legislature has so opined evidenced by the fact that the Press and Registration of Books and Publication Bill, 2011 which has been cleared by the select committee and is pending before parliament has suggested amendment to the act by defining editor to mean a person who is not only an ordinary resident in India but is also a citizen of India. But it is for the legislature to consider the bill at the floor of the House and not for the court to legislate," it said.

Swamy had argued that the foreign direct investment policy of the Indian government, in the domain of publications, allows 74% stake with the precondition that in the print media, at least three-fourth of the board of a print media company must be Indians and all key editorial posts must also lie with resident Indians.

http://articles.timesofindia.indiatimes.com/2013-12-18/india/45336343_1_subramanian-swamy-delhi-high-court-indian-citizenship

Intellectual Property Rights Contribution for Growth Of Foreign Direct Investment In India

India has become one of the sought after destinations for the investment in recent years due to the growing economy. As per reports, the Indian GDP is still growing at a rate of 6.5 percent in 2011-12 even after the recent slump in the economic growth. Being one of the biggest consumer markets in the world, it is always on the radar of investors and one of the sought after investment hub.

A new and growing brand is always looking for the market wherein its product has demand and India being a consumer market is always the best place to promote a new product. Many brands have established themselves in Indian market and are gaining out of it. Even with all these advantages, Indian markets also have certain challenges in terms of intellectual property rights which are required to be taken care of before entering the market.

Strong IP Regime Helps The Growth Of FDI In India:

A strong Intellectual Property rights regime would certainly lead to good market conditions for inviting FDI in India. The report 'India: International Outlier on IP' by the US chamber of Commerce said if India strengthens its intellectual property regime and increases its score on GIPC (Global Intellectual Property Centre) IP Index by 14.9 per cent, it can reach the level of FDI similar to Brazil, Russia and China. It has also been observed in the report that "India has been less able to attract FDI than its BRIC (Brazil, Russia, China) peers since the 1980s. Also in regards to FDI, India is noticeably weaker than other emerging economies, which started off at similarly low levels of investment and had similar IP rights environments to India's in the 1980s,"

A strong IP regime would certainly include realistic protection to intellectual property rights together with a mechanism for the enforcement of rights in case of misuse of the same. IP assets account for more than one-third of the net value of corporations in the United States and Europe, making protection of valuable IP critical for many would-be investing companies. In India the intellectual property like patents, trademark, copyright, design, geographical indication, plant variety, semiconductor and integrated circuits layout design have protection. Indian does not provide specific protection to trade secrets and also do not have a proper law for the data protection. These two are governed by the trademark law and information technology law and hence there is a requirement of specific law for these two as well in order to create a healthy environment wherein a creator of intellectual property right would feel comfortable to invest further. The current legislation on the IP laws should also be kept similar to the international standards in order to compete with other economies.

Challenges Regarding Intellectual Property Rights:

Trademark infringement/passing-off:

In this electronic age, the brands have acquired altogether a different meaning. Now a brand famous in one country can easily be recognizable in a country wherein the products of the brand have not yet marketed. This feature of modern market has led to the problem of infringement and passing-off of the brands which are known across the world but have not entered a particular market. Local merchant for taking advantages of the established reputation of the international brand, start manufacturing their own products under the same brand. Hence in order to curb this problem international brands can take action against the local merchants under the provision of trademark law wherein trans-border reputation has been recognized as one of the ingredients for taking action against infringement and passing-off.

Indian collaborat or treating the brand as its own:

One of the most common problems faced by the foreign collaborators in India is regarding the misuse of the brands by the Indian counterpart in the collaborations. More often than not in case of collaboration between a foreign corporation and an Indian corporation is regarding the dispute related to brand use. After a period of time Indian party to the collaboration starts claiming the brand of the foreign collaborator as their own even though it is clearly mentioned in the Act that the use made by the licensee of a trademark would always be counted as use of the licensor. Hence it is required by the foreign investor to always be aware of the misuse of its brand and should take timely action against any misuse by collaborator or any third party.

Compulsory licensing:

The recent grant of compulsory licensing to the generic pharmaceutical Natco Pharma has created a lot of wrong publicity to Indian IP environment even though Indian Patent Office had its own reasons to provide the same. As Patent is provided for a limited period of time of 20 years and out of these 20 years only few years are fruitful years for a patent to make money. An environment wherein the investor has the fear of loosing its patent due to compulsory licensing would certainly not improve the FDI in India. There are certain other challenges which an investor would face in India like counterfeiting, piracy, and data theft etc for which there is a need for a strong IP regime. A strong IP regime would help in gaining the confidence of foreign investors for inviting the FDI's.

The Relationship Between FDI And Economic Growth:

The FDI influx is an influential factor for economic growth. With the recent move by the Indian Government to relax the norm FDI norms will help the revival of the economy which was growing at the positive rate during the period of 2005-2010.

FDI involves not only the purchase of capital assets, including mergers and acquisitions, joint ventures, buying property, and investing in plants and equipment, but, perhaps more important to developing countries, FDI can include the transfer of managerial expertise, technological skills, and access to the investing company's global network¹. Technology transfers from developed to developing nations are one of the most important forces behind economic development². Experts argue that FDI is "the most important channel through which advanced technology is transferred to developing countries³."

In a communication to the World Trade Organization (WTO), the Organization for Economic Cooperation and Development (OECD) noted:

Direct investment by MNEs [multinational enterprises] has the potential rapidly to restructure industries at a regional or global level and to transform host economies into prodigious exporters of manufactured goods or services to the world market. In so doing, FDI can serve to integrate national markets into the world economy far more effectively than could have been achieved by traditional trade flows alone. As with private sector investment more generally, the benefits from FDI are enhanced in an environment characterized by an open trade and investment regime, an active competition policy, macroeconomic stability and privatization and deregulation. In this environment, FDI can play a key role in improving the capacity of the host country to respond to the opportunities offered by global economic integration, a goal increasingly recognized as one of the key aims of any development strategy⁴.

The move to allow 100% FDI in telecommunication sector and changes in the preposition of FDI in other sectors is a positive step for inviting the investors to invest in India although for the same, the policies regarding the grant and safeguard of intellectual property rights should also need to be parallel with international standards.

ttp://www.mondaq.com/india/x/278514/Contribution+Of+Ip+In+Growth+Of+Fdis+In+India