Feb 20, 2017 | Indian Patents Act 1970, IPR & Business
There is a myriad of factors to consider when it comes to licensing. For instance, the licensor should first recognize that simply creating IP does not result in revenue. Before it can be monetized, successfully generated intellectual property must be properly secured and managed. Accordingly, the licensor must ensure that the IP is registered, renewed, and protected against infringers incessantly. IP that is well-protected reflects with a high market value. For efficient and maximum revenue of its IP, the licensor should be extremely clear on provisions of exclusivity, royalties, whether sub-licensing is allowed, cost of maintaining the IP portfolio, provisions about quality inspections, and so on, when entering into the agreement.
The licensee, on the other hand, should be aware of a few requirements seeing as it will be the entity responsible for paying royalties and licensing fees to the licensor. The licensee is responsible for conducting due diligence on the intellectual property involved in the agreement. The agreement’s success hinges on the IP’s upkeep and maintenance. To avoid conflicts, it is imperative to document all of the purposes for which the IP will be used. To avoid additional expenditures or who would have the right to develop the IP, the licensee should insist on a clear demarcation of cost sharing. For better drafting of the terms and conditions, it is necessary to understand and articulate what is anticipated from the agreement.
Besides the fundamental aspects listed above, there are legal requirements that further protect the Intellectual Property which is mandated by law.
Is registration of a licensing agreement mandatory?
The laws governing various types of IP include caveats mandating the registration of a license agreement. When a statute requires the registration of a licensing agreement, both the licensor and the licensee must corroborate enforcing that it is executed within the specified period.
Patents
A license agreement must be registered, according to the Patents Act of 1970, and a licensee must apply in writing to the Controller of Patents for registration of his title. The Patents Act of 1970, Section 68, explicitly states that a patent assignment is not legitimate unless it is in written and duly executed. It additionally reiterates that an assignment of a patent or a share in a patent, a mortgage, a license, or the creation of any other interest in a patent is not valid unless it is in writing and the agreement between the parties is reduced to the form of a document comprising all of the terms and conditions governing their rights and obligations and duly executed.
The terms of a patent license are thus obvious, and they can be summarized as follows:
- It must be written down.
- It must be properly executed.
- Document embodying all terms and conditions regulating the parties’ rights and duties.
The provisions for registration of assignments, transmissions, and other similar acts are set forth in Section 69 of the Patents Act of 1970.
The Patent Rules, 2003, were also issued by the government, and they include the procedural aspects of patent license agreement registration. Here mentioned is a brief overview of the rule:
The application for registration of title and interest in patents must be made in Form 16 according to Rule 90 of the Patent Rules, 2003. The following documents must be presented with Form 16:
- The document presenting evidence of a patent transfer, or
- The document affecting proprietorship, or document producing interest, and
- Two copies of the assignment or other instrument certified to be true copies by the applicant or his agent,
The Controller may also request additional confirmation of title or written consent.
The form in which the Controller shall record the details in the register is prescribed by Rule 92 of the Patent Rules, 2003.
The courts in Sergi Transformer Explosion Prevention Technologies Pvt Ltd. vs. Kumar Pratap Anil and Ors[1], entertained the issue of legality of the license or assignment agreement as evidence will be recognized only when the document has been registered with the Controller, according to Section 69(5) of the Patents Act, 1970.
The agreement will only be considered if the Controller or Court permits or directs it with grounds stated in writing.
The judgment goes on to say that if the relevant sections are read together, there is no obstacle to the licensee filing a complaint for infringement even if the licensing agreement is not registered. The admission of an unregistered agreement, on the other hand, is only at the Controller’s or the Court’s discretion. Since, the Controller’s or Court’s instructions were missing in this case, hence the Delhi
The agreement will not be considered unless it is registered, ruled by the High Court.
Trademark
The Trade Marks Act of 1999 does not require the registration of a license agreement, but it does introduce the concept of a “registered user.” Provisions have been made to allow someone other than the registered proprietor to register as a registered user for the purposes of utilising the mark in commerce. A registered user can file infringement proceedings in his or her own name under the statute.
It is recommended that the Registered User Agreement/ License Agreement be registered with the Registrar of Trade Marks, even though recording of approved usage is optional. Only registered trademarks can be used to file an application for recordal of a License Agreement/Registered User Agreement with the Trade Marks Registry, and the application must be filed within six months of the date of the license agreement. When the Registrar is convinced with the application and the required particulars, he registers the intended registered user/licensee for the goods or services with which he is satisfied. The date on which the application for registration of a registered user was made must be recorded in the register. This is when agreement becomes effective and enforceable against third parties. Within two months of the registration date, the records will be published in the Trade Marks Journal. The Registrar is also required to notify other registered users/licensees of the concerned trade mark, if any, in the prescribed manner of such licensee’s registration. The Registrar, on the applicant’s request, will take steps to ensure that information provided for the purposes of an application under this section (other than facts put in the register) is not divulged to competitors in trade.
Copyright
The License Agreement is not mandatorily required to be registered under the Copyright Act of 1957.
Design
Under the Designs Act of 2000, an application for registration of title under a license agreement must be filed with the Controller within six months of the license agreement’s execution. Unless the court orders contrarily, a license agreement for which no entry has been made in the register cannot be entered in evidence in any court as proof of title to copyright in a design or any interest therein.
Are license agreements subject to stamp duty?
Stamp duty is a tax paid to the government on a transaction, and it is charged on the instrument that records the transaction. On license agreements, stamp duty is due, and the rate of stamp duty is different in each state. Prior to executing a license agreement, it is critical to determine whether there is a merit to executing the license agreement in a specific state and obtaining reduced stamp duty rates.
Consequences of not paying stamp duty
If sufficient stamp duty has not been paid on a document, the said agreement cannot be entered in evidence for any purpose, nor can it be acted upon, registered, or authenticated, according to the Indian Stamp Act of 1899.
Considering the intellectual property licensing attract the monetizing culture, here are certain mandatory provisions required by law regarding the registration and the stamp duty applicable on the same.
By: Vinita R. Gaud, Pravin Gandhi College of Law
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[1] I.A. No.16042/2010 in CS(OS) No.1610/2010
Sep 15, 2016 | General
Sexual harassment at the workplace affects women in India due to the structural patriarchy that still dominates our society. Different countries are dealing with the problem by either reacting or pro-acting to the salient situations of harassment at the workplace. Some of the reasons for sexual harassment of women at the workplace could be the male superiority complex, sexual perversion of mind among specific individuals, jealousy at the workplace, or feelings of contempt and disrespect for women. Women have long faced gender-based discrimination, and thus an Act was required to protect their rights.[i] The POSH law aims to empower women to fight sexual harassment in the workplace. Over the years, this law has assisted many women in obtaining justice for sexual harassment in the workplace.
The Vishaka v. State of Rajasthan
The Vishaka v State of Rajasthan[ii] also known as the Bhanwari Devi case was the first case that came up with Vishaka Guidelines to protect women from sexual harassment in the workplace.
Facts: Bhanwari Devi was a worker and activist who was employed in the Women’s Development Project by the government of Rajasthan. Bhanwari Devi tried to prevent the marriage of a one-year-old. Due to which the villagers harassed, threatened, and socially boycotted Bhanwari Devi. In September 1992, five villagers raped her in the presence of her husband. The trial court of Rajasthan acquitted the five accused, due to which a group of five NGOs under the name of Vishaka filed a PIL in the Supreme Court seeking detailed directions on how sexual harassment of women at the workplace could be prevented through the judicial process.
Issue: Whether, the strict passing of Vishaka guidelines is mandatory for the prevention of sexual harassment of women at the workplace?
Judgment: The Supreme Court gave out a few guidelines to protect women from sexual harassment at the workplace such as:
The person employing the employees must make sure that sexual harassment is prevented in the workplace at all times. It laid a specific definition of ‘Sexual harassment’ which included physical contact, demand for sexual favors, and so on. In case of Sexual Harassment, appropriate action must be taken under the Indian Penal Code and punishments must be given accordingly. There must be a complaints committee which should be headed by women and confidentiality must be maintained. If a third party is involved then there should be appropriate steps be taken to support the victim. The governments should ensure that the private sector employers are following the guidelines.
Gender Neutrality under the POSH Act
The POSH Act was constituted to protect women from any sexual harassment at the workplace. Although it was primarily made for women, it raised a bigger question that it may be discriminatory. If the other genders apart from women are faced with sexual harassment, the act does not provide them with any relief. There have been numerous debates about the gender-discriminatory nature of the POSH law and provides protection only to women, and the government and the judiciary are being biased in favoring women. There is also a lack in the system for men and the LGBTQ to file complaints on sexual harassment. This act could be more inclusive and expand the means of complaint redressal for other genders as well.
What can men facing Sexual Harassment in the Workplace do?
Male victims may also file complaints with the HR departments of their respective workplaces, and hold their ground for strict action against the perpetrators. While this cannot be equated to legal recourse, it is step towards ensuring that their ordeal stops. Similarly, organizations should take a progressive step and while implementing the Sexual Harassment at workplace Act, 2013 take note of not only building gender neutral policies but also include sensitization sessions on topics and incidents of sexual harassment against men in the workplace. Let us not forget that laws exist for guidance and not merely as a limitation[iii]
Gender Neutral POSH Policy by organizations
While the POSH Act needs amendments to address the concerns of people of all gender identities, there are still ways in which an organization and employer can ensure a safe workplace for all its employees irrespective of their gender identity.
Objectives of a gender-neutral POSH policy
The objectives of a gender-neutral POSH policy should be:
- To embrace the right to equality enshrined under Article 14 of the Constitution, and the right to decent living under Article 21[iv].
- To nurture a working environment that is socially and psychologically open and inviting for people of all gender identities, and
- To endeavour for gender justice on all institutional levels.
The preamble to the POSH policy
A POSH policy of an organization can be gender-neutral. In the policy, the organization can include a statement expressing no tolerance for the sexual harassment of employees of all gender identities.
The organization’s policy must strive to make all its employees aware of nurturing workplace culture. The policy should include a firm statement on the prohibition of the sexual harassment of all employees and not just cis women[v]. For instance:
“The policy prohibits sexual harassment in the workplace. The policy requires that all employees, partners, and associates of [Company Name] be sensitive to cultural differences. They should be mindful of their behavior towards the people they interact with in the workplace and in a work situation. Everyone in the workplace should recognize the cultural diversity and varied sensitivities of people. The policy discourages all acts and behavior that appear unnecessary to a person of ordinary prudence. The employees, partners, and associates of [Company Name] shall not act or behave in a manner that transcends the boundaries of cordiality expected in the workplace.”
Conclusion
The POSH Act does not mandate that an organization’s POSH policy needs to be gender neutral. However, there are other strategies that employers can adopt to make employees feel safe and comfortable in their working environment, in a gender-neutral manner. One way to do that is by incorporating a gender-neutral POSH policy. For example, many companies in India have adopted a POSH policy which clearly states that it is gender neutral and therefore, is based not just on the POSH Act, but on principles of Articles 14, 15, and 21 of the Indian Constitution. These Articles take into account a person’s right to equality, life, personal liberty, and discrimination.
Author: Isha Praneeth, School of law, Christ (Deemed to be University), Bangalore
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[i] Sexual Harassment at Workplace, 9 CPJLJ (2019) 256, http://www.scconline.com/DocumentLink/Ml0rruIW
[ii] AIR 1997 SC 2011
[iii] https://www.ungender.in/why-india-inc-needs-to-protect-men-against-sexual-harassment-at-workplaces-in-india-case-for-gender-neutral-policies/
[iv] The constitution of India
[v] https://www.ungender.in/how-to-draft-gender-neutral-posh-policy/
Sep 5, 2016 | Indian Patents Act 1970, IPR & Business
Merck Sharp & Dohme (hereinafter referred as MSD), an American pharmaceutical company and subsidiary of the German company Merck. MSD filed a suit against Glenmark Pharmaceutical Ltd. (hereinafter referred as Glenmark), an Indian Pharmaceutical company for permanent injunction in regards to salts of any form of SITAGLIPTIN, an anti-diabetic drug. Delhi High Court granted the first ever permanent injunction in a patent infringement suit and upheld the validity of the MSD’s patent. This judgement was first-of-its-kind order since the enactment of the Patents Act, 1970.
Brief facts of the case are as follows:
- MSD’s patent ‘Sitagliptin’ (Patent No. IN 209816) is directed to compounds, which are inhibitors of the dipeptidyl peptidase-IV enzyme (DPP-IV inhibitors) useful in the treatment of diabetes, especially type 2 diabetes.
- MSD along with its licensee, Sun Pharmaceutical Industries Ltd., (hereinafter referred as Sun Pharma) filed a patent infringement suit against Glenmark in April 2013 for making and marketing generic versions of MSD’s anti-diabetic drug ‘Januvia’(Sitagliptin) and ‘Janumet’ (combination of Sitagliptin and metformin)
- The molecule ‘Sitagliptin’ was invented by Merck. It claims the base molecule ‘Sitagliptin’ in free base form and also its pharmaceutically accepted salts thereof.
- On 28thMarch, 2008 the drug was approved for marketing in India. MSD also granted a license in India to Sun Pharma which sells the drug under the brand name Istavel & Istamet.
- Glenmark was restrained from manufacturing, selling, or dealing in “Sitagliptin Phosphate Monohydrate” or any salt of ‘Sitalgliptin’. They had launched the generic versions of “Januvia” and “Janumet” under the brand name “Zita” and “Zitamet” respectively.
- MSD launched “Sitagliptin” in India with a reduced price equivalent to 1/5 price of that was being charged in USA in accordance with the public interest at large.
- Initially the Single Judge of Delhi High Court disposed of MSD’s application seeking an interim injunction.
- On appeal, the Division Bench of Delhi High Court reversed this decision and held MSD’s patent to be prima-facie valid and infringed by Glenmark’s products.
- After that, Glenmark challenged this order before the Supreme Court.
Issues
The main issues before the Hon’ble Court were:
- Whether Glenmark’s manufacture and sale of Sitagliptin Phosphate Monohydrate infringe the said patent (Patent No. IN 209816)?
- Whether MSD’s patent ‘Sitagliptin’ (Patent No. IN 209816) is valid?
Arguments
By Plaintiff i.e., MSD
- MSD alleged that Glenmark’s products infringe its patent i.e., the Sitagliptin molecule. The sitagliptin phosphate monohydrate salt is sold under the trademarks Januvia, by MSD and Istavel, by its licensee Sun Pharma. Similarly, combination of metformin and Sitagliptin is sold under Janumet and Instamet respectively.
- Sitagliptin and its pharmaceutically acceptable salts are specifically claimed by Claim No. 19 of the suit. They further stated that ‘Januvia’ was launched at a very low price, roughly 1/5th of its price in the US paying special regards to public interest.
- They further contested that Section 48 of the Indian Patents Act, 1970 extends exclusive rights to exclude others from making, using or offering for sale of products which fall within the scope of a suit claim.
- They stated that Glenmark is selling Sitagliptin Phosphate Monohydrate under the brand name “ZITA” which cannot be prepared without the active ingredient Sitagliptin molecule. Hence, infringes the patent in question. (Patent No. IN 209816).
- They argued that Sitagliptin was the invention and Sitagliptin Phosphate was merely a derivative of the invention and therefore wasn’t eligible for patent protection under Section 3(d) of the Patents Act, 1970. Hence, MSD abandoned the phosphate salt application.
By defendant i.e., Glenmark
- They contended that the products sold by them are not covered by the said patent (Patent No. IN 209816). They claimed Sitagliptin Phosphate Monohydrate is a different chemical entity with different physical and chemical properties.
- MSD did not pursue the application in respect of Sitagliptin Phosphate Monohydrate in India and voluntarily abandoned the same, thus resulting in Sitagliptin Phosphate Monohydrate being in the public domain.
- They argued that the invention lacked an inventive step under Section 64(1) (f) of the Patents Act, 1970 and there was insufficient disclosure regarding the preparation of Sitagliptin base within the meaning of Section 64(1) (h).
- They contended that the drugs “Zita” and “Zitamet” are beneficial to the public at large because of their low price. They alleged MSD for overcharging the customers by charging same for “Janumet” and “Istamet” regardless of potential of tablets.
Judgement
Court relying on various judgements held that:
“On 7th Oct, 2015, the Hon’ble Supreme Court upheld the decision of Delhi High Court and also took cognizance of the “commercial” nature of the matter. An expedited trial ordered by Delhi HC resulted in disposal of the law suit within 5 months from the date of order. The whole case was decided within 2 years. The Delhi High Court judgement smothered Glenmark by a decree of permanent injunction from making, selling, distributing or using, etc. and any dealings in Sitagliptin Phosphate Monohydrate, infringing the patent in question. The Court held that since the patent relates to an invention of a chemical molecule/compound in the medical filed it must be analyzed by technical experts as well. The court conceded with MSD’s argument that the conversion of salt to a free base and then to another salt is a very basic chemical transformation and hence the patent claims Sitagliptin and all its pharmaceutically acceptable salts. It also observed that the disclosure in the suit patent is not for a lay person but is addressed to a person of ordinary skill. Further, the provisions under Section 64 of the Patents Act, 1970 make it clear that the court may or may not revoke the patent in the given facts and circumstances of the case. The court gave a lot of weightage to expert testimony in this highly technical matter. On the question of lack of industrial applicability the court holds that Sitagliptin free base is the moiety that possesses the therapeutic effects claimed. The court also stated that in Glenmark’s drug there is no material effect. The Delhi High Court conclusively held that all the three ingredients i.e., prima facie, irreparable injury and balance of convenience for passing the order of injunction were established by MSD and hence injuncted Glenmark from manufacturing and selling of Zita and Zitamet.”
One-of-its-kind order was passed by the Hon’ble Supreme Court, which involved cross-examination of seven witnesses. This decision indicates that the Indian judiciary enacted Commercial courts; Commercial division- is cognizant of the urgent need for a proper, effective and efficient system to safeguard all intellectual property.
By: Runjhun Sharma, School of Law, Mody University
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Apr 20, 2016 | Indian Patents Act 1970, IPR & Business
A patent landscape is an analysis of patent data for a particular technology, product company (ies) in specific countries within a given time frame that reveals valuable business, competitor, scientific and technological trends. Landscape reports generally focusses on a product, industry, competitors, technology, specific time period or geographic region.
Based on the output required, parameters are fixed for Patent Landscape and Patent Landscape Report (PLR) is prepared with pictorial and graphical representation of the data obtained. Patent landscape Report provides a comprehensive snapshot of the patent trends and hence useful for the businesses, especially when new markets are to be explored for the business or research in new areas is to be planned.
State of the art (SOA) or Patent Landscape Search are the terms which are used inter-changeably in the industry, however the main difference is that patent landscape report is more detailed and deeper. State of the art is the broadest among the other types of patent search, wherein a state-of-the-art search is essentially a market survey which is performed to identify the existence of similar technologies in the market. This search also provides findings regarding the competitors and indicates the trend of technology in the domain of interest.
Patent Landscape is specifically useful at the time of:
- Starting research in new areas of technology and companies need to understand the trends, active research areas and status of patents available.
- Exploring new markets for business, with respect to specific product (s). The patents so obtained to perform prepare patent landscape report may also help to give idea about potential patent infringement risk.
- Getting to know patent filing activities of the competitors because after filing patent application, it gets published on official website of patent office of given country. Compilation of published patent applications and granted patents helps companies to understand the patent filing trends and active research areas of their competitors.
- Innovations that are happening in a specific area of technology. This can be understood well with respect the a given period of time or based on specific country (ies).
- Assess the research happening in a given area of technology which also sometimes opens up opportunities in terms of IP licensing as well as Merging & Acquisition.
Depending upon findings of technology landscape analysis, an appropriate IP & business strategy which is compliant with the company’s business strategy may be devised and implemented. Technology landscape is performed in following steps:
Step 1: Before starting patent landscape it is important to define scope of landscape and the output expected. There is so much data available that if scope is not defined well, volume of the patents extracted becomes difficult to manage.
The timeline shall be fixed carefully depending upon how old patents are required to be analysed
List out the parameters required, such as, top patent filing companies, country wise trend for a product
Step 2: Formulate appropriate key words and search strategies to extract right and appropriate patents
Step 3: Categorize the extracted patents based on parameters and output expected.
Step 4: Compile the data obtained into graphical representation for easy understanding
Step 5: Write description of each parameter taken into consideration and prepare the final report
Origiin, with a skilled team of patent agents is one of the best patent companies in India offering patent services like, patent searching and patent filing in India and foreign countries.
Deliverables: Patent Landscape report in PDF along with all prior art search data in excel sheet
Timeline: 3 business days
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Apr 20, 2016 | Indian Patents Act 1970, IPR & Business
Patent valuation can be defined as a method to determine the real market value of patents. It is important as it plays a crucial role during many transactions such as negotiating deals, procuring investments, identifying strengths and weaknesses of the enterprise, technology transfers etc.
Important elements used to determine the value of a patent are –
- NPV (Net Present Value);
- Forecast of future value (growth options);
- Financial model to estimate cash flows from the patent.
The market today provides for three main approaches to value patents as provided in the table above. However, it has been acknowledged that factors such as the nature of the transaction (whether by assignment or licensing), desired result, realistic growth opportunities and the expenditure on research and development of the patent must be kept in mind while selecting which approach is most suitable.
The two broad classifications of valuing patents are through the quantitative and qualitative approach where one uses numeric and economic data. The other analyses the opportunities and the risks associated with the patent. A mixture of the two, or popularly known as the hybrid model of patent valuation, is in much demand. It provides for a holistic approach to understand all the aspects of income generation from a patent. The same will be discussed towards the end of this article.
The popular methods to assess value of the patent are as below:
- Market Approach Method
As the name suggests, this approach takes into consideration the amount of money that a buyer is willing to pay for a similar patent in an already existing market. This method is also known as the comparable transaction approach. The assumption that this approach is based upon which the value of the patent is equal to the amount that a buyer is willing pay to a seller of a similar patented product. The shortcomings of this approach are finding a comparable patent in the market and the ability of such a comparable patent in income generation would not be the same as the patent being valued.
The following components are required to use this approach of patent valuation –
- An active marketplace with available price information;
- An identical or a group of identical patents in the market;
- A method to control the variables or differences.
2. Income Approach Method
The income approach is also known as the Discounted Cash Flow (DCF) approach. It estimates the overall profit that a patent can generate. Most commonly, the value of the patent is based on company-specific profit projections and the use of a risk premium. The projected revenue inflow of the patented technology is discounted by variables such as the risk premium to ascertain the present value of the patent. The value attainted is considered to be the market value of the patent. The drawback of this approach is that the values used in the first place to derive at final market value can be clouded by subjective bias and manipulation.
The following components are essential to this approach:
- An estimate of the revenue inflows generated by the patent during its useful life;
- Measuring direct costs relating to the patent which are to be deducted against the revenue inflows;
- The amount of risk associated with the patent must be discounted or deducted from the present-day value of the patent.
3. Cost Approach Method
In this approach a patent is valued based on the amount of cost incurred to develop a similar patent either internally or externally. The historical rates trending in the market or the estimate of the cost of creation (based on current market conditions) serve as a basis to come up with the required cost estimate. It seeks to determine the value of a patent at a particular point in time by summing up the direct expenditures and opportunity costs involved in the development of the patent and considering its obsolescence. The most obvious shortcoming of this approach is that it does not consider the income-generating nature of a patent, which can and in most cases, is the primary reason to create a patent.
The following are the components required to carry out this approach:
- An estimate valuation of the cost of development of a patent;
- Value of expenditures, opportunity costs, inflation etc. at a particular point of time;
- Costs related to obsolescence of patent over a period of time.
4. Hybrid Model
A hybrid model would consist of factors envisaged in all of the above approaches. It included features of both qualitative and quantitative nature. This model aims to customize the patent valuation to the exact nature of the transaction that it aims to participate in. This approach has also been known to have the most practical use and has become an upcoming in the current market.
The following elements are essential to this model:
- The size of the market and the share of the technology concerned;
- The annual turnover that is generated by the patented technology;
- The profit derived after applying tax and other duties;
- The risk value that should be discounted;
- If the patent is a part of a product, then the value of how essential it is to the product.
Conclusion
No method of valuation can predict the value of a patent with 100% accuracy but valuing patents have become crucial to companies due to their ability to generate capital, attract profitable partners, enabling licensing and franchising business models and their relevance in solving disputes. Thus whichever mode of valuation that a company uses should have a nexus with the ultimate objective that the company has for the patent. Many companies often use two approaches together such as the income approach and the cost approach to obtain a more holistic view; further customization is possible and should be incorporated for such valuations in the future.
By: Aryashree Kunhambu, Shri Dharmasthala Manjunatheshwara Law College, Mangalore.
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