Nishant Sharma examines the government’s efforts to build a conducive intellectual property eco-system that works for IP creators, buyers and the country at large

India has one of the most forward-looking sets of IP legislation in the world. However, a need has always been felt for a strong support framework that would provide a firm foundation to all IP creators and IP buyers alike. Bill Gates once remarked – “Intellectual Property has shelf life of a banana.” In this fast-paced techno-centric world it is imperative that India, which is one of the biggest test-beds for burgeoning intellectual capital, should have a conducive environment that supports the three arms of any IP regime – intellectual property protection, enforcement and monetization.

Realizing an ambitious dream

To begin with, a lot has been done to strengthen the IP protection arm by way of the Patent (Amendment) Rules, 2016, which introduced sweeping changes in reducing the time period for obtaining a patent in India, at least for a limited class of patent applicants. This makes one think – what is in store for strengthening the other two arms? Well, help is definitely in sight. A recent intriguing proposal by the government, according to various news reports, is to start an IP exchange under the auspices of Ministry of Science and Technology and National Research Development Corporation (NRDC). The announcement, which came in July 2017, was followed by a statement from the chairman and managing director of the NRDC as per which the IP exchange may be up and running in a period of eight-to-nine months until which time the NRDC shall be collecting relevant information regarding the existing IP pool in India. The inclusion of NRDC in this plan ticks all the right boxes as the organization is adept in facilitating commercialization of technical know-how in India, which is evident from the fact that NRDC has facilitated signing of close to 350 licenses in the last 10 years. This ambitious plan augurs well for the country’s IP eco-system in view of the National IPR Policy formulated by the government.

The proposed IP exchange appears to be a step towards realization of the aforesaid action points. While modalities and scope of work of the proposed IP exchange have not yet been divulged by the government, a quick review of the proposals in the National IPR Policy provides some insight. Specifically, the IP exchange may facilitate access to a database of Indian IP as well as a global database of creators/innovators, market analysts, funding agencies, IP intermediaries and the like; identify opportunities for marketing Indian IPR-based products, especially GIs and services to a global audience; and facilitate investments in IP-driven industries and services for bringing investors/funding agencies and IP owners/users together. In the coming few months it would be interesting to see how the NRDC gives a tangible form to this ambitious dream of the government. However, a tougher challenge would be to convert this proposition into a value chain that returns good financial results for all its stakeholders. Perhaps the NRDC could take cues from the successes/failures of some up and running, though smaller, IP exchanges like those started by the Federation of Indian Micro & Small and Medium Enterprises, and identify and smoothen out potential hurdles that may come their way. Additionally, IP creators and buyers would have to take an equal interest in this initiative, and collaborate with the government to suggest ways and means as also the best industry practices to effectively bring the IP exchange from paper to reality.

The US International Trade Commission (USITC) in a September 2015 report, reviewed the significant changes made to India’s trade and investment policies by the current Indian government. It made a categoric mention of the huge backlog of litigation suits in various Indian courts that impede the timely resolution of IP disputes. The USITC remarked that a weak IP environment in India was causing US and other foreign firms to move their IP out of the country rather than suffer at the hands of a weak IP system. Alarmed by such a critique from foreign countries and with a view to address the concerns of various IP stakeholders, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance 2015 was promulgated in October 2015. It was soon enacted as a law in the form of Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015 (Commercial Courts Act). The government’s seriousness to settle the issue of delays in adjudication of IPR matters is evident from the first draft of the National IPR Policy in December 2014, which had suggestions regarding specialised IP benches in various High Courts to expedite the adjudication of IP disputes.

Getting-inventive-table

Strengthening enforcement

The Commercial Courts Act promises to address the long-felt need of speedier adjudication of IP disputes. As a brief background, the Commercial Courts Act provides for creation of Commercial Courts at the district level as well as Commercial Divisions in High Courts to specifically deal with “commercial disputes.” Section 2(1)(c) of the Commercial Courts Act outlines the subject matters that would fall within the ambit of commercial disputes and includes “intellectual property rights relating to registered and unregistered trademarks, copyrights, patent, design, domain names, geographical indications and semiconductor integrated circuits.” In order to expedite processes towards adjudication of an IP matter, the Commercial Courts Act amends various existing provisions of the Civil Procedure Code 1908 (CPC) to the extent the same relate to commercial disputes. In particular, emphasis has been laid on strict adherence to deadlines and any non-compliance is severely penalized. For instance, in the event of a failure of the defendant, in the main suit or in a counter-claim, to file a written statement within the prescribed period of thirty days, any written statement presented belatedly, and not later than 120 days from service of summons, shall only be taken on record if it is accompanied by proper reasoning in writing and the payment of appropriate costs. On the expiry of a 120-day period, the defendant automatically forfeits his rights to submit a written statement. In addition, the plaintiffs and defendants are required to file all documents they wish to rely upon in the suit at the time of filing their pleadings, plaint or written statement as the case may be, along with an oath or declaration that they are not holding back any documents. In the event the plaintiff or the defendant wish to rely upon any additional documents that were not presented earlier before the court despite being in their possession, leave of the court has to be sought while providing reasonable cause for non-disclosure at the relevant time.

Besides this, there are certain unique provisions that have been included. One such concept is a case management hearing provided for the purpose of framing of issues and/or fixing a schedule for trial as well as oral arguments post-trial. Also, in addition to providing that courts have to endeavor to ensure that trials are conducted on a day-to-day basis, the amendments to CPC also fix the upper bounds for conclusion of oral arguments after the completion of trial, to six months from the first case management hearing. Moreover, the court is required to pronounce its judgment within 90 days of conclusion of the oral arguments.

Yet another new procedure that is worth mentioning is one pertaining to summary judgments, whereby courts may decide any claim pertaining to a commercial dispute without recording oral evidence, thereby paving the way for a faster adjudication. Summary judgment may be requested by any of the parties after summons has been issued but before the framing of issues.

The Commercial Courts Act envisages creating a separate league for commercial litigation matters by bringing them out of the precinct of traditional civil litigation. The act is still in its infancy and it would be interesting to see how the existing courts are able to streamline their backlog and administrative processes to give maximum effect to the provisions of the Commercial Courts Act and achieve the intended objective. Not long ago, the Supreme Court lamented on the issue of delays in concluding trials by the high courts and it will be interesting to see if the Supreme Court monitors the extent of application of Commercial Courts Act by the lower courts so that commercial disputes no longer suffer from the long pendency times of other litigation matters before the courts.

To conclude, it may be said that the aforesaid incremental steps taken by the government could go a long way in establishing India as an effective IP centric destination. It is imperative to understand that no system can function optimally unless stakeholders actively participate in it to smoothen out any bumps that would be encountered in practical implementation. Having said that, Confucius rightly said, “The man who moves a mountain begins by carrying away small stones.” The need of the hour is a close association between the government, the judiciary, IP creators and IP buyers that spawns sharing of ideas and ideal practices across the world so as to effectively pave the path towards a robust IP ecosystem in India that is fulfilling and at the same time forceful while being practical.

Nishant Sharma is the lead counsel (India) – IP & litigation at Dolby Laboratories