India has made great strides in setting up its intellectual property infrastructure, but is it extensive enough to facilitate the effective ownership of IP assets?

The case of Time Incorporated v Lokesh Srivastava & Anr, decided by Delhi High Court in January 2005, was relatively uncomplicated. Yet it set the ball rolling for Indian courts to award punitive damages for the infringement of intellectual property (IP) rights. Time Incorporated, the publisher of Time and Time Asia, was awarded ₹500,000 (US$10,000) for damages to its reputation and goodwill and another ₹500,000 as punitive and exemplary damages “for flagrant infringement” of its trademark and copyrights.

Making the order, Justice Chopra said he had “no hesitation in saying that the time has come” for courts to award punitive damages to “discourage and dishearten law-breakers who indulge in violations with impunity”.

Since this landmark ruling, Delhi High Court – which some observers believe is the only court to have taken Justice Chopra’s words to heart – has awarded damages in no less than 126 cases and cemented its reputation as being India’s most IP-savvy court.

But has this translated into greater confidence that IP assets can be owned and effectively protected in India?

Patchy protection

An ongoing dispute between Nokia and the Hyderabad-based maker of a motion picture called Mr Nokia suggests that at least some of those intent on profiting from the IP assets of others are undaunted by the high court’s stand.

On 6 February, Nokia obtained an order from Delhi High Court restraining the filmmaker Movieexpress from advertising the film and offering it for viewing. Nokia told the court that it feared irreparable loss to its reputation from the film, in which 75% of the songs were to be based on its phones.

But this did not deter the filmmaker, which went ahead with plans to screen the movie in Hyderabad, albeit with a new name: Mr Nookayya. The director of the film, Ani Kanneganti, told the Times of India that “Nookayya” is the name of Shiva, an important god in the Hindu pantheon, and that “we have taken off the word ‘Nokia’ from all movie promotions”.

Kanneganti also said the filmmaker was “planning to sue Nokia to compensate for the loss of collections and for conspiring to sabotage” the film.

Nokia has since returned to Delhi High Court and obtained an order to stop the screening of the film, but news reports indicate that the high court in Hyderabad has intervened and given the movie the go-ahead. The tussle continues.

Incidents like this suggest that India’s judicial system does not provide uniformly robust protection for owners of IP assets. “Only the courts in the urban areas are IP savvy … the district courts are still a problem,” says Gunjan Paharia, the managing partner of Delhi-based IP boutique Zeus IP, which acts for Nokia in India. Paharia would not comment on the Nokia dispute while it remains sub judice. However, she notes the irony of Nokia having to initiate action against another company that is in the business of creating IP.

Gunjan Paharia Managing Partner Zeus IP

All of this points to a system where, according to Mohan Dewan, the managing partner of RK Dewan & Co, the “courts are continuously favouring the infringer”. Dewan believes there has been a “deterioration of confidence” over the past two to three years as far as the protection of IP rights in India is concerned.

Mohan Dewan Managing Partner RK Dewan & Co

The alleged use of a blurred picture of English football player John Terry without his knowledge on tobacco warnings issued in December 2011 by India’s Ministry of Health and Family Welfare is typical of the challenges faced by IP asset owners in India. The ministry has since announced that the pictorial warning is being withdrawn, while Terry is reported to be suing the Indian government.

The ministry blamed the designers of the warning, the government’s Directorate of Visual Publicity, for the fiasco.

Building infrastructure

While such incidents are worrying for owners of IP assets, observers also note that India has made rapid strides in recent years to update and upgrade its IP regime. Perhaps the most talked-about improvements are to be seen in the country’s Trade Marks Registry and Patent Office.

As a result of a series of changes – most notably the digitizing of records and upgrading of systems – the Patent Office and Trade Marks Registry are being transformed from bureaucratic black holes into easy-to-access organizations that are striving to be transparent and credible. Ritu Singh Ghumman, a lawyer at Dua Associates, appreciates the changes, which were introduced from early 2009 by PH Kurian, the former controller general of patents, designs and trademarks. “When I have a problem I can even phone the controller general,” Ghumman says. “This was unheard of before Mr Kurian took over.”

Chander Lall, the managing partner of Delhi-based IP firm Lall & Sethi, has also noticed improvements. He points out that India’s Trade Marks Registry is one of only a handful in the world that offers electronic services for trademark applications, retrievals of applications, registrations and documents and also free searches.

“These online resources are important,” says Lall. “They allow companies to do a lot of the basic searching and other tasks in house.”

One company that does all of its trademark registration in house is Dabur India, where BK Gupta, the deputy general manager, legal, is enthusiastic about the changes at the Trade Marks Registry.

“Now we get the trademark journal online, free of cost and that too on a weekly basis,” he says.

And more changes are in the pipeline. Chaitanya Prasad, who took over as controller general of patents, designs and trademarks on 12 March, intends to put in place a system that will enable applications to be processed faster. Writing in India Business Law Journal (see Vantage point, page 17), Prasad says he hopes that within four to five years the Patent Office – which is currently struggling under a backlog of 125,000 applications – will be able to dispose of applications within 30 months.

Key to achieving this goal will be increasing the number of applications that are filed online. And here there is certainly room for improvement: Prasad says that currently only 20% of patent and trademark applications are filed in this way.

Vikrant Rana, a partner at Delhi-based SS Rana & Co, is one of many IP lawyers who are yet to embrace online filing. “There are issues with online payment,” he says. “It is difficult to obtain a receipt and there is no credit card payment facility.”

Vikrant Rana Partner SS Rana & Co

Nevertheless, Rana recognizes the limitations of paper-based filing. He says that his firm is currently chasing up several trademark certificates that had to be returned to the Trade Marks Registry for corrections.

Here too service appears to be patchy, with some trademark offices returning certificates sent to them for correction within 15 days and others not responding even after a year. But hitches like this do little to dampen Rana’s appreciation for the new-look Trade Marks Registry.

“We don’t have to chase after applications,” he says, adding that earlier applications needed to be continually followed up if they were to make it through the registry’s systems.

However, Dewan is less impressed. “Identical marks are being accepted by the registry … that level is going from bad to worse each day,” he says, adding that his firm has had to oppose a number of marks that should not have been accepted in the first place. “Clients are getting fed up.”

Richard Baddeley, a Perth-based principal at Watermark, an Australian IP firm, says that many of the changes “are yet to become visible to a foreign patent attorney like me”. However, he remarks that “the Indian Patent Office makes information available online and that is a definite area of improvement”.

Richard Baddeley Principal Watermark 2

Patent trouble

But this has done little to reassure owners of IP assets in India – especially patents – that their rights are protected.

IP rights go up in smoke: This image, allegedly of English footballer John Terry, was used by the Indian government without Terry’s permission.
IP rights go up in smoke: This image, allegedly of English footballer John Terry, was used by the Indian government without Terry’s permission.

“IP holders are on the defensive,” says Dewan, pointing to a 2009 decision by the Intellectual Property Appellate Board denying a patent to Swiss pharmaceutical company Novartis for its anti-cancer drug Glivec on the grounds that it would create “public disorder among other things”. Novartis is currently challenging this much-criticized order in the Supreme Court.

Another recent development that has set alarm bells ringing among IP owners in India and around the world – particularly those with pharmaceutical patents in India – is a decision by the Patent Office to grant a compulsory licence for an anti-cancer drug patented in India by Bayer to an Indian generic drugs manufacturer (see Sharing the medicine, page 29).

Fast justice

Bayer says that it intends to appeal the order. And when it does, it might find that a recent development enables it to bypass many of the delays that often plague India’s court system. The development in question is a 2009 ruling by the Supreme Court in the case of Bajaj Auto Ltd v TVS Motor Company Ltd, where it was noted that courts should not be “merely granting or refusing to grant injunction”. The Supreme Court ordered all courts to “proceed on day-to-day basis” with IP cases and said that “the final judgment should be given normally within four months from the date of the filing of the suit”.

Lawyers are divided about the effect this ruling has had on the courts. Some say court procedure does not allow for such dramatic changes: “When we plead before the lower courts [district courts and high courts] they laugh and say go to the Supreme Court,” says Dewan.

Others believe that the effects of the Supreme Court’s intervention have been dramatic: “I have had more trials in 2011 and 2012 than in my entire career,” says Pravin Anand, the managing partner of Anand and Anand.

Anand believes that the four-month indication, combined with the greater willingness of Indian courts to award punitive damages, has contributed to creating a system in which IP rights are taken seriously. He says that in “about one-third” of the cases in which he was involved and where damages have been granted, clients have successfully collected awards.

However, not everyone is celebrating the new-found speed with which some IP cases are being conducted. For many patent and trademark owners, the sluggish nature of the judicial system has become the cornerstone of a tried-and-tested strategy for keeping infringers at bay.

If the case progresses slowly, IP owners can “use the system to make it more expensive for the other party,” explains Lall at Lall & Sethi. “The case moving quickly … is not the best thing to happen.”

Chander Lall Managing Partner Lall & Sethi

It may even be possible to enforce IP rights without having to resort to a full court case. “In 80% of cases, getting an ex parte injunction is enough to make [the infringer] back off,” says Mamta Jha, a partner at Inttl Advocare.

Mamta Jha Partner Inttl Advocare

A company that has used this strategy is Dabur India. “Courts are very effective … I have obtained injunctions in all the matters,” says Gupta, who handles litigation with respect to the company’s trademark, copyright and design portfolios.

BK Gupta Deputy General Manager, Legal Dabur India

But an air of scepticism persists. Anuradha Salhotra, the managing partner at Gurgaon-based Lall Lahiri & Salhotra, believes that obtaining protection of IP rights through India’s courts is like a game of dice. “There are three things that make a case: my hard work, the judge’s pen and the client’s luck,” she says.

Anuraha Salhotra Managing Partner Lall Lahiri & Salhotra

Border protection

Most lawyers, however, agree that as far as legislation is concerned, there is little doubt that IP can be effectively owned in India. Indeed, there are even examples of multinational companies turning to Indian laws to help protect their IP internationally.

L Badrinarayan, a Delhi-based partner at Lakshmikumaran & Sreedharan, points to instances where European telecom companies have been trying to use Indian regulations to stop imports into India of Chinese-made handsets and other devices that allegedly infringe their patents.

For this, these companies turn to India’s Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, under which it is possible to ensure that Indian customs does not clear goods coming into the country that allegedly infringe someone else’s IP rights .

In a still unfolding case before Delhi High Court, Ericsson is using these rules to try stop infringement of its patents by a Chinese phone maker, Kingtech Electronics. However, as revealed in a stay on the customs order obtained by Kingtech in Delhi High Court, there is some doubt about the competence of the customs authorities to decide IP infringement issues.

Robust laws?

Whatever the outcome, the case shows that India may have what Baddeley at Watermark refers to as an “excellent framework” as far as rules and regulations for most areas are concerned.

“The laws we have are adequate … although enforcement remains somewhat of a challenge,” says Nandan Kamath, the principal at Bangalore-based The Law Offices of Nandan Kamath – a sports, entertainment and IP law firm.

However, Kamath – who advised the governing body of the 2011 ICC Cricket World Cup on its anti-piracy and rights protection programme – says that the laws are yet to be framed for many IP protection requirements in the niche area of sports. As a result, the enforcement of IP rights in the sport industry depends significantly on common law principles. This is not ideal, but Kamath suggests that the sports industry has found ways around it for now.

Despite such lacunae, companies across India are gradually recognizing that there is value in the IP assets they own.

“There is a growing enthusiasm among IP owners,” says Badrinarayan. He adds that some asset owners are still unaware of the need to register their assets and that educating them is vital.

And although Indian companies generally are nowhere near as IP-savvy as their counterparts in the West, where a company may be bought and sold exclusively for its arsenal of IP assets – most notably patents – in this area too there has been change in recent years.

“Over the past four to five years there is a growing importance attached to IP assets as part of an M&A transaction in India,” says Nandan Pendsey, a Mumbai-based senior associate at AZB & Partners. “This is particularly so in high-technology areas, pharmaceuticals and in the FMCG [fast-moving consumer goods] business, where the intellectual property portfolio held by a target is extremely important.”

This growing trend to factor in the value of IP assets while companies are being acquired, points to a growing confidence that these assets can be protected effectively.

“Today creative talent is being recognized in India,” says Anand. “India is not a country where piracy flourishes and there is no recourse for creators of IP.”

Whether the world will be convinced of this, and India will be seen as a jurisdiction that provides more than merely patchy protection for IP rights, will depend on the outcome of disputes like that between Nokia and the makers of Mr Nookayya.