Protect or Perish

A new intellectual awakening is one way to describe it. In the last five years, Indian firms have begun to realise that they simply cannot ignore issues surrounding the intellectual property rights (IPR) related to their firm. Across industries that range from Bollywood to pharmaceuticals, companies are contesting copyright, trademark or patent infringement issues in Indian courts like never before. “We have always been a creative country, but along with IP awareness, there is now a passion to own and possess our own IP,” says Pravin Anand, Managing Partner, Anand & Anand.

In today’s ultra-competitive, globalised corporate environment, a firm’s failure to adopt a comprehensive IPR strategy could prove to be a costly omission, either because its own brand or product can be infringed upon or that it might unknowingly launch a product or an idea already conceived and copyrighted by someone else. Equally important is the acknowledgement that an IPR strategy could be a crucial competitive tool for businesses today. “IP provides that edge, that innovative thrust required so much in these competitive times to possibly try to stay neck and neck, if not ahead of the competition,” says Rahul Chaudhry, Partner, Lall Lahiri & Salhotra.

How so? An IPR strategy that includes a well-recognised brand or lucrative patent owned by the company can significantly boost revenues and profits. Moreover, for firms trying to raise money in the financial markets, the number and quality of intellectual property rights that the firm owns can dramatically enhance its valuations, say industry experts.

For companies like Bharti Airtel, whose corporate mission rests on the strength of its brand, issues surrounding intellectual property are taken very seriously. “IP counsel is sought in almost all marketing activity that’s undertaken today by most companies. This is to not just prevent the brand from being misused. Care also has to be exercised that marketers do not infringe upon one another,” says Sanjay Gupta, Chief Marketing Officer, Bharti Airtel. This philosophy has even percolated down to smaller firms anxious to remain in complete control of their brand identity. Luxor Writing Instruments, a Rs 300-crore business, which owns the rights for Parker and Pilot in addition to its own brand, is extremely vigilant on IP issues concerning their business: “We have registered our trademark ‘Luxor’ in 126 countries and have been active on IP front for the last 15 years,” says Puja Jain, Executive Director, Luxor Group.

Case files IPR judgments that have pushed the envelope. Trademarks William Grant v. McDowell & Co Grant, the maker of prestigious single malt label Glenfiddich contended that McDowell had been copying its label imprint featuring a stag, which had become uniquely associated with it, as well as a thistle device which indicated the origin of its product (Scotland). Verdict: The Delhi High Court granted an interim injunction restraining McDowell from dealing in alcoholic beverages marked “McDowell’s Single Malt Whisky” and from using packaging that was in imitation of the Glenfiddich label. Whirlpool Corp v. N.R. Dongre Whirlpool sued Dongre for using its name to sell products. An important question (in 1996) was whether Whirlpool could protect its trademark, when it was not present in the country. Verdict: The Court decided in favour of Whirlpool and banned the Indian firm from using its name. It held that prior use of the Whirlpool trademark had a “spillover” effect in India. Time Inc. v. Lokesh Srivastava Time Magazine sued an Indian magazine printed in Hindi for copying its distinctive red-bordered cover design. Plus, the magazine’s title was “Sanskaran,” a transliteration of the English word “Time.” Verdict: The Court ruled in favour of Time, and in one of the first instances of its kind in India, awarded punitive as well as compensatory damages. Total damages awarded included compensatory damages of Rs 5 lakh plus punitive damages amounting to Rs 6 lakh. Warner Bros v. Harminder Kohli Warner Brothers contended that the Hindi movie Hari Puttar was a trademark rights infringement of its Harry Potter series. Verdict: Delhi HC ruled that despite any structural or phonetic similarities between the two titles, both an illiterate movie goer (more likely to watch Hari Puttar) as well as someone from the educated elite (more likely to watch a Harry Potter movie) are unlikely to confuse the movies with each other. Warner Bros lost the case. Copyrights Taj Television Ltd v. Rajan Mandal Taj TV alleged that cable operators were illegally broadcasting the football World Cup 2002 while it had sole telecast rights. Verdict: The Delhi High Court granted a “John Doe” type order for the first time, empowering a court-appointed commissioner to enter the premises of any cable operator illegally airing the World Cup. It soon allowed for a seizure of equipment from a cable operator in a similar, related case filed by Taj against Channel Communication. Amar Nath Sehgal v. Union of India Sculptor Amar Nath Sehgal claimed that the sculpture commissioned by the Government of India was damaged considerably. This violated his moral rights as the author of the art work, he said. These rights of the author are recognised and protected under the Copyright Act. Verdict: The Delhi High Court, for the first time, awarded damages against the Government of India for violation of the moral rights of a famous sculptor. The government was directed to pay Rs 5 lakh to Sehgal and return the mural to him. Kanungo Media v. RGV Film Kanungo sued Ram Gopal Varma for infringing their rights of his own film also titled Nisshabd, which he claimed had won awards but had not been released in India. Verdict: A court held that Kanungo had lost his chance to contest by approaching it just as RGV’s version was about to be released. Patents Bayer Corp v. Union of India Bayer was granted a patent for Nexavar, a liver and kidney cancer drug. The firm became aware that Cipla had also filed an application for approval to market the same product in a generic version. Bayer sued to stop Cipla from marketing their drug. Verdict:The court directed the Drug Controller General of India (DCGI) not to give marketing authorisation to Cipla. The court appreciated the necessity of protecting patent rights even if the impugned product was not in the Indian market. F. Hoffman La Roche v. Cipla Roche filed a patent infringement suit against Cipla after it locally lauched Erlotinib (the generic version of Roche’s patented lung cancer drug Tarceva). Cipla filed a counter claim challenging Roche’s patent. The pricing of Tarceva came into focus as well as that it was not manufactured locally. Verdict: In its interim order, the Delhi High Court has allowed Cipla to continue selling its generic version. However, it also directed Cipla to maintain accounts of sales, which would be relevant to calculate damages to Roche, in case the latter eventually wins the case. BMS v. Hetero Drugs Bristol Myers-Squibb (BMS) holds a patent for Dasatinib in India. It sued Hetero Drugs when it found that Hetero was seeking marketing approval for a generic version of Dasatinib. Verdict: The Delhi High Court in its interim order (ex parte) has directed DCGI not to give marketing or manufacturing approval to generic drugmakers for drugs that have already been granted patents in India. This has prevented Hetero from manufacturing or selling its generic version. This case is a score for pro-patent groups. It also raises the question: Can a linkage be made between India’s Patent Office and the DCGI, which is mandated by the Drugs and Cosmetics Act to check only for safety and efficacy?

Enhanced awareness of IPR has resulted in a plethora of cases of wide ranging variety (see Case Files) being battled out in Indian courts. India has seen a complex range of issues dealing with trademark, geographical indications, copyrights, trade secrets and patents, and top law firms admit that trademark infringement cases are fairly frequent and an aware firm usually tends to file at least 50 in a year. These cases reflect the changing economic environment in India, where businesses are waking up to the fact that their content is now king, and should be safeguarded. For instance, music companies have demanded double the royalty payments that FM radio stations pay them, in a major lawsuit filed against them. They are also insisting that the channels treat sound recording rights and rights in musical lyrics separately.

IPR Movement A sampling of recent developments. If the Trade Marks Act is amended, companies can join the Madrid Protocol and speedily register trademarks globally A US Bayh-Dole-type act, which is in the works, is expected to speed up commercialisation of inventions Efforts are on to create a digital library to record traditional knowledge like yoga Move to amend IT Act 2000 to protect information theft, online fraud. Also includes right to privacy The Protection of Plant Varieties and Farmers... Rights Act, 2001 passed - CSIR is trying to monetise its patents

Bollywood, more than most industries, has also been roiled by high profile cases that have brought both trademark and copyright issues into the public consciousness. Producer Ram Gopal Varma was intent on using the name “Sholay” in his re-make of the same 1975 epic but was effectively stopped from doing so by the Sippy family. He was forced to change the name to Ram Gopal Varma Ki Aag. In fact, Varma was even prevented from using the names of the characters— Gabbar, Jai, Veeru and Basanti—in his re-make. Earlier, Varma was also sued by another filmmaker for using the title Nishabd, claiming that Varma had infringed on his own film that had the same title. The court ruled in favour of Varma, claiming that the plaintiff approached the court just as the film was about to be released, and was, therefore, too late.

Adding a new twist to the IPR landscape is the era of uber entrepreneurship, fueled by the boom in Internet-centric companies. Take the case of Jayant Agarwalla, who had launched the online game Scrabulous on popular networking site Facebook and was sued by Mattel. Mattel maintained that Agarwalla had copied both the board game as well as the accompanying rules. Also, Scrabulous infringed on the name of their product, said the US-based toy company. This proved to be a unique case as it involved both a copyright issue (copying of the Scrabble board) as well as a trademark violation (the name Scrabulous). The court eventually decided that the board, which was a three dimensional article, was not copyrightable and ruled in favour of Agarwalla. However, the court also found that Agarwalla’s Scrabulous was too close, phonetically and semantically, to Scrabble and he was disallowed from using the name.

Perhaps the most contentious debates and legal disputes that have taken place so far are in the pharmaceutical industry. Here, big money is at stake as foreign pharmaceutical companies, anxious to avail of the Indian market as well as talent for their R&D efforts, are increasingly flocking to the country. However, they have also encountered companies such as Cipla, who regularly introduce generic—and far cheaper—versions of the foreign firms’ drugs into the local market, and export them to countries like South Africa, which receive a large quantity of Cipla’s HIV drugs. “What is at stake is the debate on one hand that India should be giving weight to a development issue that seeks to offer medicines at affordable cost, and on the other that India should strictly adhere to the patent protection and preserve the cause of innovation,” says a top attorney, who did not wish to be named.

While that debate may not have a resolution anytime soon, what is a certainty, however, is the rash of lawsuits that have and will continue to take place in the industry, primarily over patent infringement. Much of the controversy rests on a provision known as Section 3 (d) of the Indian Patent Act that says that derivatives of a known substance are not considered worthy of a patent unless they enhance the efficacy of that substance—done in order to prevent western drug companies from making superficial changes in the drug in order to extend the run of their expensive, blockbuster products.

The Generic Argument
D.G.Shah Point	Tapan Ray  Counterpoint
Secretary General, Indian Pharmaceutical Alliance	Director General, Organisation of Pharmaceutical Producers of India
However, several pharma patents have been granted to new forms of known substances and combinations of old drugs.	Patent enforcement should not be linked with “affordability” of medicines.
Many leading law firms are unwilling to take briefs from Indian companies. They prefer to work for multinationals.	Patent infringement does not help address the core issue of “access to affordable medicines”.
Very few Indian companies can afford the exorbitant cost of prolonged litigation. This leads to a denial of justice.	Instead, it diverts attention from core healthcare issues, like healthcare delivery.
Under the Trade Related Intellectual Property Rights (TRIPS) Agreement, India decided to protect against ‘‘evergreening’’—where new forms of a known substance are not granted patents.	One of the major drawbacks of the new patent regime is the lack of effective product patent enforcement. A major issue is how the same government which grants patents to innovators gives marketing approval to generic equivalent of the same molecule.

Amongst the most bitterlyfought cases was Novartis’s attempts to patent its drug Gleevec in India, which was developed to treat chronic myeloid leukemia. Novartis says the drug met the standard since it allowed the body to absorb the drug 30 per cent faster. Indeed, Novartis won patents on Gleevec in nearly 40 countries. Nonetheless, India’s patent office turned down the request in 2006. In 2007, Novartis also lost a case in the Madras High Court where it had tried to prove that Section 3 (d) was unconstitutional. The company had stressed that innovation will thrive only if patents reliably reward major investments in research. For all the IPR-related activity across the business landscape, the notion that IP is a topic that can only be discussed in corporate board rooms is being shed rapidly.

Ever since the opening of the Geographical Indications Registry in September 2003, a number of applications have been filed for the benefit of stakeholders such as artisans, craftsmen and farmers. The poor man, after all, also has a stake in IP in India today. “The good news is that this evolving notion, if protected correctly, could help in the building of strong cottage industries and micro-industries in rural areas, which, in turn, could improve social and economic conditions,” says Latha R. Nair, Partner, K&S Partners. The message seems to be spreading. India has already registered Darjeeling Tea, Pochampalli saris, Ikkat fabric from Orissa and Aranmulla metal mirrors among many others.

Moreover, hundreds of scientists and researchers from the Council of Scientific and Industrial Research (CSIR) and Union Health Ministry’s Department of Ayush are coming together to create a digital data bank to document all known yogic postures and techniques. This initiative has been taken after USbased, high-profile, yoga guru Bikram Choudhury decided to apply a patent for his form of “hot yoga.” The state of Kerala has already initiated a move to protect its traditional knowledge on the basis of which many people earn their livelihood.

Not surprisingly, the latest World Intellectual Property Organisation Report suggests that there has been a rise in patent applications from the country, making it the third-largest patent applicant among developing countries across the world in 2008. But India is still a laggard when compared to China, which submitted 6,089 patents. “We are poor in patent applications for two reasons: One, of course, is the quality of work, the other is a lack of awareness. Among other things, many research organisations and individuals rush to publish their work, which automatically disqualifies them from filing patents,” says Calab Gabriel, Senior Partner, K&S Partners.

The Indian government, however, has rushed to the rescue with various initiatives to improve the playing field. Science and Technology Minister Kapil Sibal recently announced the plan to introduce a new legislation along the lines of the Bayh-Dole Act of the US, which seeks to allow the transfer of exclusive control of many government-funded inventions to universities and businesses operating with federal contracts for the purpose of further development and commercialisation. They’ve probably realised that if Indians don’t do it, someone else will. Already, global US fund Intellectual Ventures has entered India. It owns over 20,000 patents worldwide and is looking to shop for patents from the Indian Institute of Science, Bangalore and CSIR, among others.

Another major development: A move towards open source drug discovery with a focus on neglected diseases spearheaded by CSIR. “Usually, pharmaceutical companies invest in discovery only when they are sure of theirs returns on investment. TB, for instance, that affects mostly the poor from developing countries, is only a $300-million market—not an attractive business proposition,” says Samir Brahmachari, Director General, CSIR.

So what lies ahead for corporate India? What will be the impact of India’s relatively recent patent regime? Will onerous patent requirements hobble the pharma industry? Will there be repercussions from western nations? Will the legal system become clogged by an avalanche of frivolous copyright suits? None of these questions have clear answers. Suffice it to say, that the manner in which intellectual property rights evolve over the next decade—and the way in which Indian companies strategically manage their properties—will play an increasingly important role in the success of their businesses.

 

“Innovation is not about IP alone” India has done a tightrope walk on the patents issue. So, where are we headed? Leading patent expert Shamnad Basheer, the Ministry of HRD Chair in Intellectual Property Law at the National University of Juridical Sciences, Kolkata, speaks about the need for plural voices. On why India needs a calibrated patent regime... Every country needs to calibrate pharma patent protection depending on its national priorities, since patents have the potential to impact access to drugs and public health. Section 3(d) in many ways seeks to balance the issue of innovation with public health, by restricting the grant of patents to only those substances that are truly “inventive”. On why we should not look at patent debates through a pharmaceutical lens... Pharma patents are important, but we appear to be framing our entire IP/innovation debate around pharmaceuticals alone. Let’s examine other sectors such as software, electronics and biotechnology and ask what policy norms need to be evolved to encourage more innovation in these sectors. In fact, innovation is not about intellectual property (IP) alone, but depends on a host of factors such as levels of skill/education, infrastructure, venture capital funding and the like. In other words, a mere strengthening of the patent regime would not enable Ranbaxy and Dr. Reddy’s Laboratories to create new drugs. Perhaps the time is ripe to constitute another committee like the Ayyangar committee (appointed in 1957 to recommend patent law reforms) to determine what an optimal patent/innovation policy should look like. The government is taking steps; recently it unveiled the Innovation Act—a policy measure aimed at creating more “innovation zones”. This comes close on the heels of CSIR’s bold experiment to use open source norms to speed up biopharmaceutical drug discovery; a move that casts some doubt on the oftrepeated proposition that more innovation can only come with more patents. On why India should rethink its IP regime to cater to the informal sector... Creativity and innovation is not a prerogative of the rich. Rather, plenty of innovative/creative ideas come from the rural poor. We have to find ways to leverage the innovation potential of our villages and create wealth for them. On how to better protect our traditional knowledge... We must find innovative ways of leveraging our ancient wisdom/ traditional knowledge. Unfortunately, we have only had a reactive strategy, spending huge resources in foiling attempts by foreigners that sought to patent our traditional remedies, such as turmeric. On India’s voice in IP jurisprudence... Our IP regimes were colonial bequests and it was not until 1970 that we crafted our own distinct patent regime, which is largely responsible for the success of our generic industry. More recently, we’ve crafted Section 3(d) to balance out innovation and public health imperatives. Early court judgments did rely extensively on British and American cases—but courts today are sensitive to the Indian milieu and are not merely following foreign precedents blindly. But there is still a long way to go.