IP - Module 3

MODULE 3: PROTECTION & ENFORCEMENT OF INTELLECTUAL
PROPERTY

3.1 INTRODUCTION

For some enterprises the ‘loss’ of IP is not a relevant event. Their business strategy may not
rely on its existence, maintenance or exploitation, but for those enterprises that do see IP as
important, the loss of IP and the consequent ability to pursue a competitive advantage can
prove to be a set-back.

The idea behind protection of IP is to secure a monopoly or near monopoly position. The
method for achieving this depends on the legislative environment and, in respect of certain
forms of IP, whether registration is required or not. This, however, is not always the most
effective or convenient means of protecting IP if the enterprise wishes to commercialise to
its full advantage.

Protection of IP necessarily involves educating the staff of the enterprise about the
principles of IP and the risks of failing to adequately protect the IP. This aspect is probably
one area in which Indian enterprises fail to implement either at all or adequately. Staff may
be trained about locking away files or keeping a ‘clean desk’. Far fewer are educated about
identifying IP and how to maintain records to enable its protection.

This chapter summarises the essential principles for obtaining protection for the various
forms of IP. These topics are complex and they have been the source of discrete texts in
themselves. The purpose of this chapter is to give the reader sufficient understanding to be
able to assist in managing the IP of the enterprise and to promote effective
commercialisation strategies.

3.2 WHAT INTELLECTUAL PROPERTY SHOULD THE ENTERPRISE PROTECT?

In an ideal world an enterprise may be faced with having to decide whether to protect all of
its IP, some of it or none of it. Whether this amounts to a dilemma will depend upon the
form of IP. As is commonly known, the protection of patents, particularly on a world wide
scale, raises significant cost issues. Where there are multiple forms of IP, the enterprise may
be faced with having to educate staff concerning the principles behind those forms of IP
which also can raise cost and resource issues. No enterprise has an unlimited amount of
revenue to spend on such activities like training employees. It may have other assets and
issues that require funding and management. How then, should an enterprise determine
which IP it should protect?

Some of the factors which the enterprise should determine while going in for protection are
as follows.

3.2.1 STRATEGIC OBJECTIVES OF THE ENTERPRISE

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The fundamental starting point must be the strategic objectives of the enterprise and the
position that IP has in that strategy. Applying this criteria will focus executives of an
enterprise on the role of IP in the existence and future direction of the enterprise and
encourage them to treat IP in the manner which is equivalent to (if not greater than) other
assets of the business of the enterprise. If the IP is the foundation for the generation of
significant revenue for the enterprise, either now or in the future, then protection of the IP
is a must and does not require any further debate.

3.2.2 THE DEGREE OF PROTECTION THAT CAN BE OBTAINED

One question an enterprise should always consider while going in for protection of an IP is
that whether is it easy for a competitor to reproduce it, reverse-engineer it or find a work-
around to it which may not only erode the competitive advantage of the enterprise but
provide a springboard for a competitor to get ahead of the enterprise and establish its own
dominant position?

3.2.2 THE TYPE OF PROTECTION THAT CAN BE OBTAINED

Under some circumstances it may prudent and better to treat the technological advance as
a secret without going through any formal protection process. Filing a patent application
opens the creativity and originality of the enterprise to the world. If the exploitation can
occur without practically giving away the genius in the product or process then a strategy
without patents can be effective and cheaper. If the technology rests upon software in an
environment where development proceeds at a rapid pace, copyright may be sufficient for
IP protection without obtaining a patent.

The value of protection of the IP will often be driven by the demands of customers and
clients. In these circumstances the enterprise can benefit from the views of a person who is
sensitive to the market. These may be people from the marketing division or a person from
outside the organisation. In either case it may prove fruitful to give that person an
opportunity to place the ‘view of the market’ into the decision-making process of whether
the enterprise should seek to protect the IP.

3.3 WHEN SHOULD THE INTELLECTUAL PROPERTY BE PROTECTED?

The simple answer is: ‘As early as possible’. This, however, is not always the complete
answer. Submitting a patent application gives rise to issues about disclosing the trade
secrets of an enterprise, which may not be the best commercialisation strategy.
Nevertheless, all of the Indian IP legislative schemes that provide for formal registration
processes are premised upon the ‘first cum- first served’ basis. Holding back on an
application runs the risk that somebody else who has independently developed the
technology will secure the monopoly position first.
Alternatively, the timing of the exploitation may be the trigger for seeking IP protection. If
software has been developed and is ready to be demonstrated to potential customers then
the initiating steps to protect the underlying IP become a significant milestone towards the
generation of profits.

2

As with any business activity that involves the use of resources and soaks up the funds of
the enterprise, the timing of protection of the IP will be affected by other objectives and
priorities of the enterprise. If protection of IP involves paying IP experts at a time when the
creditors are thumping the door then protection of IP may need to take a back seat. But
then, if the most likely way to generate the revenue to pay those creditors is to exploit the
IP, and that inherently requires the IP to be protected, then protection of the IP may be
expedited.

In any event the enterprise is best positioned if it obtains the advice of an IP expert as early
as possible. Knowledge of the IP position and a team analysis of the strengths and
weaknesses of the technology will enable the enterprise to better determine when to
proceed with IP protection.

3.4 INTELLECTUAL PROPERTY PROTECTION: PATENTS

3.4.1 WHY SEEK A PATENT – HEWLETT PACKARD’S RATIONALE?

Hewlett-Packard has described its rationale for obtaining patents as follows1:

• to protect the company’s ideas and innovations from being copied;
• to obtain design freedom, such as through patent licence agreement through other

companies;
• to preclude others from patenting inventions first developed within the company;
• to generate optimal return on the company’s R&D expenditures.

These reasons are compelling if the enterprise is concerned to generate revenue from its IP
and secure a position of competitive advantage. Nevertheless, the road is not entirely easy
or paved with gold.

The points which an enterprise needs to consider include:

• possible alternative forms of protection, which includes less complexity, cost and
resources. For example, software may be adequately protected by copyright,
particularly given the high rate of development in this technology which may make
the costs and time incurred in obtaining a patent inadequate;

• other possible barriers to entry to the target market which a patent may not
overcome. This would be of particular importance in a highly regulated market
where legislation or high infrastructure costs prevent the enterprise from obtaining a
competitive advantage, no matter how many patents or other forms of IP it may
have;

• the possibility that the disclosure of the idea or invention through the patent process
may outweigh the monopoly position that will eventually be gained by the enterprise
particularly if the lead time for the development of the technology is short;

1. See Fox S P, ‘How to Get the Patents Others Want’, Les Nouvelles, March 1999, p 4:
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• the fact that patents require a lot of time and money, especially if the Indian
enterprise is focused on driving business from foreign markets where IP protection
will be an essential part of its strategy;

• the realisation that obtaining a patent is only one part of the game. Effective IP
management means that the enterprise will also need to devote time, money and
resources to the detecting and management of infringements of the patent. If the
enterprise is not willing or able to commit to this aspect of IP management then the
effectiveness of the protection afforded by a registered patent may be minimal.

3.4.2 PATENT A LEGAL DOCUMENT FOR MONOPOLY

In the words of Prolific Inventor Stanley Mason2 patent is a legal document “giving you the
monopoly on your product.” In his opinion invention is more or less like a hobby but the
bottom line is that by inventing or developing a product a person tries to make money,
therefore it is important for him to take protection of his ideas and the way to do that is to
patent them.3

According to Mason, It may sound to some people as harsh that a patent is a license to sue
somebody, but the reality is just that.

3.4.3 CRITERIA FOR OBTAINING A PATENT

In order for a patent to be obtained in India, the following paragraphs need to be
considered. Unfortunately, in practice and in the law, there is more to it than what follows.

3.4.3.1 NEW MANUFACTURE

An invention must be an invention that is a manner of new manufacture. Essentially, the
invention must be useful and not something which is more relevant to the fine arts.
Invention covers both the process and product or article produced by the manufacturer. It
covers the use of a substance for a new purpose but does not include mere discoveries or a
bare principle. The distinction between an invention and a discovery is a fine one which has
challenged many great legal minds, not all of whom would apply the principles in a
consistent manner.

Under general patent law, the list of things excluded from ‘invention’ starts with discoveries,
scientific theories and mathematical methods. The distinction between ‘invention’ and
‘discovery’ is well known in many patent systems: discovery is the unearthing of causes,
property or phenomena already existing in nature; invention is the application of such
knowledge to the satisfaction of social needs. However, in the case of Genentech v.

2 Stanley Mason invented astonishing array of household items, including the disposable diaper, the

squeezable ketchup bottle, the granola bar, microwave cookware, Mentadent foaming toothpaste, self-

heating shaving cream, the "Wow" Playtex plastic underwire bra, and a cluttered attic of others. For

more information on Stanley Mason visit <http://www.nysun.com/obituaries/stanley-mason-84-prolific-

inventor/26170/>

3 Stanley I. Mason, Why Patent My Invention and Other Patent Information 2001 available at

<http://www.morebusiness.com/running_your_business/marketing/d1007343402.brc> 4

Wellcome Foundation,4 the Court of Appeal in the United Kingdom ruled that approach to
be incorrect. Discoveries concerning the structure of the DNA of a given protein could
contribute the element of inventiveness in a claim, to the employment of that knowledge in
producing the protein by genetic engineering.

3.4.3.2 NOVEL INVENTION

Invention must be novel and clearly distinguishable from the ‘prior art base’. In essence, the
question is whether the alleged invention is different from what currently exists, taking into
account all information from anywhere in the world. This is to be judged having regard to
what a person who is skilled in the art could have reasonably expected to find, understand
and regard as relevant.

It is important to note that the use of the invention before the priority date may cause the
application for a patent to be defeated. This is because the enterprise is effectively
extending its period of exclusivity. This qualification turns upon the type of ‘use’ of the
invention. If it is for a reasonable trial or experiments which lead to the invention then the
criteria of novelty will not be compromised.

Indian enterprises need to be aware that the patent law in the United States assesses
novelty by reference to the date of invention, rather than the date of lodgement of the
application for registration. This means that documentary proof of the research and
development relating to the technology becomes critical and the maintenance of laboratory
notebooks in particular can be the make or break for the early stages of a commercialisation
strategy.

One of the most often discussed dilemmas facing an enterprise and its research staff is the
balance between publication of the innovation, so as to enable researchers to achieve
notoriety and career advancement against the risk of failing to meet the novelty criteria
(which would destroy prospects of obtaining a patent). As mentioned previously, the Patent
Office will publish details of the specification 18 months after the earliest priority date. It is
tempting for researchers to publish their findings in this 18-month period under the belief
that the submission of the application for a patent automatically invokes protection. This
sense of security can be false. If there is a prospect that there may be further development
of the technology that itself could be patentable, it is advisable not to publish the first
invention until other applications for patents are lodged in respect of those further
developments. To do otherwise could destroy the prospects of obtaining a patent for the
further developments because the prior art base may now include the invention and so the
novelty criteria could not be met.

3.4.3.3 INVENTIVE STEP

The creation of the invention must involve an inventive step for a standard patent or an
innovative step for an innovation patent. An inventive step as defined under the Patents
(Amendment) Act is a feature of an invention that involves technical advance as compared

4 [1989] R.P.C. 147 5

to the existing knowledge or having economic significance or both and that makes the
invention not obvious to a person skilled in art. An invention is taken to involve an inventive
step when compared with the prior art base unless the invention would have been obvious
to a person skilled in the relevant art in the light of common general knowledge as it existed
in the patent area before the relevant priority date (having regard to knowledge obtained
from any kind of information either considered independently or together).

In relation to innovation patents, an invention is to be taken to involve an ‘innovative step’
when compared with the prior art base unless the invention would (to a person skilled in the
relevant art, in the light of the common general knowledge as it existed in the patent area
before the priority date of the relevant claim) only vary from the previously known
information in ways that make no substantial contribution to the working of the invention.

The difference between the tests for a standard patent and an innovation patent is not
clear. The difference relates to what was already known in a way that is not merely
superficial or peripheral to the invention. It must have some practical significance to the
way the invention works although it may be considered to be obvious.

3.4.3.4 USEFUL INVENTION

This is essentially a question of fact to be judged in each case but is designed to prevent the
Patents Office being sidelined into examining technology that no one would ever use or
would be considered to be in the fine arts area where visual attributes, rather than
functional ones, may be more important. Of course, the utility of an invention may not be
easily foreseen and so long as the applicant can show that the technology has some use
then this test will be met.

3.4.3.5 INVENTION SHOULD NOT BE SECRETLY USED

The invention must not have been secretly used in India by or with the authority of the
owner of the patent before the relevant priority date. The Patents Act sets out certain
situations that are not considered to be secret use, and thus will not defeat the grant of the
patent. They are:

• reasonable trials or experiments;
• use occurring in the course of a confidential disclosure of an invention;
• use for any purpose other than the purpose of trade or commerce;
• use of the invention by or on behalf of the country where the invention must be

disclosed.

The meaning of the ‘secret use’ criteria relies heavily on being able to establish retention of
confidentiality. Part of the task for an enterprise is being able to prove what subject matter
has been kept confidential. Patent specifications can comprise a vast range of information
not all of which will be confidential or will be able to be kept confidential. In the leading case
of Azuko Pty Ltd. v. Old Digger Pty Ltd.5, a test was implemented which is ‘by asking

5 (2001) 52 IPR 75 6

whether the alleged disclosure amounts to a de facto extension of the patent term.’ Much
will depend upon whether the patentee received a commercial benefit from what was done
before the priority date. Consequently, the commercial use of a patented product or
process, even if under strict confidentiality arrangements, will still constitute prior use.

The Patents Act appears to address the submission of the details of an invention to an
agency for the purpose of obtaining a grant. However, much is likely to depend upon the
use of the grant funds. If used solely for the purposes of research and development then it is
likely that the answer to the test implemented in above mentioned case would be ‘no’ and
patentability would not be prejudiced. It cannot be reasonably said that the disclosure to a
government agency of the invention was for the purposes of extending the patent term.
However, if the funds are to be used in order to facilitate the commercialisation then it is
arguable that the funding is just another form of venture capital injection for the enterprise.
In these circumstances it is arguable that the enterprise receives a commercial benefit.

The introduction of the Second Patents Amendment Act, 2002, has created a shift the onus
of information that must be provided by an applicant when seeking a patent. Now the
applicant is under an obligation to submit all information that is obtained in its own
searches.

The Patent Regulations have been amended in 2002 to introduce a ‘grace period’ of 12
months prior to the filing date of a complete application for a patent. If the invention is
published within 12 months before filing date of a complete application then that
publication will not invalidate the patent or be cause for rejection of the application for the
patent. This would be consistent with patent law in some 38 countries including the United
States and Japan. It will alleviate the tension encountered by researchers who are required
to publish the results of their research, and forgive inadvertent disclosures.
An enterprise will need to be careful as to whether it seeks to take advantage of that grace
period by publishing the invention. This is because some significant export markets, and in
particular the European community, do not allow for a grace period in respect of their own
patent law. If the enterprise publishes its invention in the 12-month grace period then
patent protection in Europe (or other equivalent jurisdiction) may not be able to be
obtained.

3.4.5.6 INTERNATIONAL PROTECTION

An Enterprise can obtain the same priority date for registration of a patent in other foreign
markets if it lodges an application to obtain a patent in India. The enterprise can take this
benefit only if it lodges the application within 12 months of the Indian application.

It is possible to lodge one application with IP India for filing in nominated international
patent offices (known as a ‘PCT Application’ in accordance with the Patent Co-operation
Treaty). Under this scheme an initial international search is undertaken to discover any
other prior art and if requested by the applicant, a preliminary examination can also be
undertaken to determine whether the invention meets the new, obviousness and industrial
application tests. However, the examination will not occur until 20 months has elapsed from
the original priority date. Although a PCT application has these advantages its utility is not as

7

great as it could be. International patent applications are examined in accordance with the
relevant laws of the applicable foreign country. Registration of a patent in India does not
automatically achieve registration in another country and vice versa. There has to be an
independent assessment under the relevant national laws together with payment of
separate official fees.

For this reason, it can be extremely important to understand the differences between Indian
patent law and patent laws of other target markets. An enterprise with its eye on
commercialising its patents overseas should obtain expert advice on these issues before it
seeks to lodge patents in India. The following is a brief summary of some of the essential
points relating to patent law in the United States and Europe. However, these laws are
susceptible to change and obtaining appropriate advice cannot be emphasised enough.
3.4.5.7 UNITED STATES

Perhaps the greatest difference with the Indian patent law it that the novelty test under
United States patent law is judged by reference to the date that the technology was first
invented rather than the date of Lodgement of the patent application. This can result in a
dispute between competitors about who was the first to invent. Such a dispute notified to
the United States Patents Office is referred to as an ‘interference action’. In these situations
the competitors will be asked to submit proof of their claims to have first invented the
technology. This presents an opportunity for the company that has established a lead
presence in a market to delay’ the entry of a competitor with potentially new advanced
technology.

It is also critical that the application for a patent in the United States specifies all of the
inventors. A failure to do so can be grounds for invalidating the patent application.

3.4.5.8 EUROPE

The invention must not be available to the public anywhere in the world before the priority
date. Enforcing the patent in Europe means that the patent owner must consider the laws of
each country in which the patent is registered. This of course can be expensive and the
results of enforcement strategy may not necessarily be consistent.

3.4.5.9 TYPES OF TECHNOLOGY

There are some types of technology which raise idiosyncratic issues in relation to protection
through patents. The following is a summary of some of the issues that are gaining or have
gained particular prominence.

3.4.5.10 BIOTECHNOLOGY

Genetic manipulation has raised the issue as to whether the alleged innovation is merely a
discovery or actually an invention. The method of isolating a substance is patentable and
the characterisation of the structure of a substance and applying a use to the substance is
also patentable. However, the mere finding of something occurring naturally in nature is not
patentable. Similarly, a living organism will not, by itself, be patentable.

8

A biological entity may be patentable if the technical intervention of man has resulted in an
artificial state of affairs which does not occur in nature. The isolation and cultivation of
naturally occurring micro-organisms which have some new use satisfy the requirement of
technical intervention.

Biological processes, not being micro-biological processes, for the production of animals or
plants are also not eligible to be an innovation patent as provided in section 18(3) of the
Patents Act. There have been some discussions as to whether there is any real difference
between a micro-organism that leads to the development of a food ingredient (which is
patentable) as opposed to the use for production of a plant. The Advisory Council on
Intellectual Property is examining the implications of excluding plants and animals (including
the biological processes for the generation of plant and animals) from the innovation patent
system.

Plant and animal varieties are excluded but are covered by the Plant Breeder’s Rights Act
but micro-biological processes and products of such processes are patentable as innovation
patents. The Patents Act requires an applicant for patent involving micro-organisms to
deposit the microorganisms with the prescribed depository institution.

Now if some one wants to know whether methods to treat the human body are patentable?
The answer is yes, they can be patented.

3.4.5.11 BUSINESS METHODS

Bronwyn H Hall of the Department of Economics, University Of California, Berkeley writes
“that there is no precise definition of a business method patents, and in reading the
literature it, becomes clear that many scholars make little distinction between business
method patents, internet patents, and software patents more broadly, at least when making
policy recommendations. This is inevitable in the present day, because many business
method patents are in fact patents on the transfer of a known business method to a
software and/or web-based implementation, so the distinction is hard to maintain. The
USPTO defines a business method patent narrowly, as a patent classified in US patent class
705, defined as “data processing: financial, business practice, management, or cost/price
determination.”6

Methods of conducting business were generally considered not to be patentable because
they lacked novelty or usefulness. However, they have gained increased importance due to
decisions in the United States granting patents for business processes in the late 1990s
including one of Amazon.com. Now the US courts have struck down the business methods
patent obtained by amazon.com for its one-click check-out system.7

6 Bronwyn H. Hall, Business Method Patents, Innovation, and Policy, May 2003 available at

<http://www.law.berkeley.edu/institutes/bclt/ipsc/papers/attendees/IPSC_2003_Hall2.pdf>

7 Eric Krangel, US Court Strikes Down "Business Method" Patents (Like Amazon's 1-Click) For Now,

October 30th 2008 available at <http://www.businessinsider.com/2008/10/us-court-strikes-down-

business-method-patents-like-amazon-s-1-click-for-now-amzn-> 9

There have been instances where the US courts have granted business methods patents For
E.g. In State Street Bank and Trust v Signature Financial Corporation, the Signature patent at
issue was a “pure” number - crunching type of application, which implemented financial
accounting functions. Street Bank had filed a patent application on a “hub and spoke”
software program for managing an investment structure for mutual funds. The software
facilitated the administration of mutual funds (the “spokes”) by pooling their investments
into a single portfolio organized as a partnership (the “hub”).8 The software determined
changes in hub investment assets and allocated the assets among the spokes. The US
Federal Circuit Court decision stated clearly that Section 101 of the US Code is unambiguous
where the word “any” means ALL. Therefore, mathematical algorithms are non-statutory
only when “disembodied” and thus lacking a useful application. The court went on to make
sure that the decision was precedent-setting by stating that with regard to the business
method exception, “We take this opportunity to lay this ill conceived exception to rest.”9

In another case in the US i.e. In AT&T v Excel, the patent at issue contained a method claim
about adding a data field to a record for use in a billing system, the US Federal Circuit Court
confirmed the State Street decision, saying that a physical transformation was not required
for a method claim to be statutory and that mathematical algorithms were patentable if
“embodied” in an invention. That is, the State Street decision applies to methods as well as
to machines. The success of the patent holder in these two cases has clearly emboldened
others who hold patents on internet-based methods of doing business.10

Though there are instances where business methods patents whose have been questioned
in the United States. The following Table 1 would give you a better idea.

8 Sirkka L. Jarvenpaa and Emerson H. Tiller, Protecting Internet Business Methods: amazon.com and

the 1-click checkout; Center for Business Technology and Law University of Texas at Austin available at

<http://btl.mccombs.utexas.edu/IBM%20Course%20modules/bizmethpatents1.pdf >

9 Supra note 4

10 Ibid 10

As far as India is concerned, ultimately it is a question as to whether the criteria set out in
section 18(1) of the Indian Patents Act are met or not. Indian courts have entertained the
prospect of business methods being patentable under Indian legislation. In We/come Real-
Time SA v. Catuity Inc (2001) 51 IPR 237, the process and device for operation of a smart
card concerning trader’s-loyalty programs was considered to be patentable and the court
applied the test expressed in the National Research Development Corp. v. Commissioner of
Patents (2001) 51 IPR 237 which is ‘Is there a mode or manner of achieving an end result
which is in an artificially created state of affairs of utility in the field of economic
endeavour?’

It remains to be seen just how far the Indian courts will permit protection of business
methods under the patent regime. There is already an inconsistency developing between
Indian law and the patent law as applied by the courts of India’s major trading partners.

3.4.5.12 COMPUTER PROGRAMS

Computer programs are now clearly patentable, if coupled with an industrial process. This
was decided in CCOM Pty Limited v Jiejing Pty Limited (1994) 28 IPR 481. The UK Court of
Appeal, on 8 October 2008, handed down a judgment11 opening the way for computer
software patents in the UK. This decision held that computer software would be patentable
where there is a technical contribution even if that contribution is within the computer and
not an external effect.

3.4.5.13 PRACTICAL ELEMENTS FOR PATENT PROTECTION

The process for submitting applications for patents is hardly straightforward. Getting it
wrong can be disastrous. Applying the right strategy can be invaluable. Therefore getting the
advice of an expert IP lawyer is prudent. The following principles will assist an enterprise to
co-operatively develop a patent strategy with its IP advisers.

3.4.5.14 PROVISIONAL APPLICATIONS AND PROVISIONAL SPECIFICATIONS

The submission of a provisional application is probably the most common form of patent
application. It may be for both the standard or innovation patent. Provisional application
will lapse after 12-months at which time the public may inspect it. An applicant must make a
complete application that is ‘associated with’ the provisional application within that 12-
month period. If it does so then the provisional application will not be published. The
provisional application merely describes the invention and does not set out the ‘claims’ that
the applicant desires.
A provisional application will allow the applicant to obtain more details concerning potential
impediments to obtaining a patent including time to undertake searches. This will not only
be likely to strengthen any patent eventually obtained but also, in the long run, prove to be
more cost effective. The greatest difficulty is to ensure that there is a sufficient description
in the provisional application to fulfil the test that the complete specification is associated
with the provisional application. Ultimately the complete specification must be ‘fairly

11 Symbian Ltd v Controller General of Patents [2008] EWCA Civ 1066. 11

based’. The meaning of ‘fairly based’ has been the subject of extensive judicial consideration
and it is beyond the scope of this material to delve into that topic.

3.4.5.15 IMPORTANT FORMALITIES

Protection of patents involves some important formal steps.

• Annual renewal fees must be paid. Patent protection is lost if they are not.
• The application must be accompanied by an abstract which summarises the technical

field, the technical problem, the substance of the solution and the principal uses of
the solution. This has been enshrined under Patent Regulations 1991 3.1(1) and (2).
• The professional patent attorney for the enterprise will, as part of their work for the
enterprise, ensure that these requirements are met.

3.4.5.16 SEARCHES

The applicant must inform the Patents Office of the results of any searches conducted
anywhere in the world. This applies for both standard patents and innovation patents. Prior
art searches are essential prior to lodgement of an application. This may be costly and it has
been suggested that applicants should budget for 10 per cent of the over-all preparation
and filing costs for those searches.12

3.4.5.17 TIMING

The typical time line from the date of lodgement of the application to the grant of the
patent is influenced by many factors. At the risk of providing an unreliable generalisation,
that period may range from anywhere between eight months to a few years.

3.4.5.18 EVIDENTIARY ISSUES – LABORATORY NOTEBOOKS

Evidence that is contemporaneous with the time of the invention and verified by an
independent person is critical to establishing the right to an invention. Laboratory
notebooks can be critical to establish patent protection in the United States having regard
to its ‘first to invent’ criteria. Laboratory notebooks can also assist with achieving
compliance with the United States Food and Drug Administration Standard and to identify
relevant inventors. They are also valuable to assist with the drafting of the patent
application and specifications.

Not surprisingly, a letter written by the inventor and posted to himself or herself will not be
sufficient proof because it lacks the characteristic of independent verification, even though
the letter may be post marked.

3.4.5.19 COALFACE EVALUATION

12 Brandt J L, ‘Capturing Innovation - Turning Intellectual Assets into Business Assets’, Ideas to Assets

p. 75 12

The description of issues contained in this chapter is merely a summary of the law relating
to the protection of innovations and inventions as they apply to patents. How then can an
enterprise sift through this quagmire of legal and commercial detail to provide its staff with
a simple test to determine whether the results of their work could be the subject of a
patent? Hewlett Packard has developed a useful set of tests. It suggests that staff should ask
themselves the following questions and if they answer ‘yes’ to anyone of them then there is
a potential candidate for a patent that may deserve further scrutiny.

3.4.5.20 GUIDE FOR DETERMINING PATENT CANDIDATES

Have I created something that is unique? √
√
Did I achieve something more than my colleagues or I expected? √
√
Did I use existing technology in a way that has not been done before?
√
Is my work or development a new step in an area, technology or field that is √
changing quickly? √
Is my work or development in an area where different technologies are
converging? √
Have I Improved an existing technology?

Did my colleagues indicate they were surprised by the results of my work or
development?
Did my work or development result in something that is better, faster or
cheaper than what existed beforehand?

3.4.5.21 PATENT STRATEGIES

It is one thing to set about the process of obtaining patent protection in respect’ of an
enterprise’s technology. It can ‘be an entirely different exercise for the enterprise to
consider how to strategically use the patent process in order to improve its competitive
advantage. Patents can be used in a variety of ways to exclude others from competing in the
market or from developing competitive technologies. These strategies have sometimes
been referred to as a ‘patent blitzkrieg’ and can include13:

‘Umbrella Patents’ – patents that are so broad as to prevent the development of similar
products;
‘Accordion Patents’ – patents that begin with the single invention but which expand to
include products and processes used in association with it;
‘Bottle Neck Patents’ – patents which control the use of invention without which the
industry cannot operate.

Obtaining patents need not be for proactive commercialisation. They may be obtained just
to keep people out as was the case with Bell Telephone Co in the 1920s when it was found

13. See Dunford, p. 123 citing B J Stern, ‘Science and War Production’ (1943) 7 Science &

SOC 97, 100-1. 13

that they had suppressed a huge number of patents to prevent competition.14 Alternatively,
a patent wall can be created. If the enterprise develops multiple designs that achieve the
same or substantially similar function the enterprise may choose to patent them all even
though its production may rely on only one of them. The patent that is exploited may be the
patent which is the most difficult to work around. This was the strategy implemented by
Gillette when it developed the twin blade sensor shaver.15

According to John Bush, Vice President, corporate R&D at Gillette - seven versions were
designed by Gillette for its twin blade sensor and a full patent search was made on all the
seven designs which was a difficult task, but eventually Gillette decided to go with the
design that potential competitors would have difficulty getting around. 16

We agree with Rivette and Kline when they write that “if you (enterprise) want dominant
products, buttress them with dominant patents”. Only then would an enterprise be rest
assured that the products would do well in the market.17 By creating a patent wall
companies feel protected from any law suits and its gives them the advantage to counter
sue in the eventuality of litigation. This is what Gillette did by creating a patent wall of 22
patents for its twin blade razor.

The market itself can present opportunities for patent strategies. Feedback from the market
on a prototype of existing patented products can present opportunities for improvements
to the innovation which in turn can result in an ability to extend the patent wall or, if there
is a sufficiently new invention, to create a new patent foundation.

3.5 INTELLECTUAL PROPERTY PROTECTION: COPYRIGHT

3.5.1 CRITERIA FOR PROTECTION

It is essential for us to keep in mind a few questions while establishing the key elements of
Copyright. The key elements of the test to establish the existence of copyright will vary
according to:

• What is the residency of the creator?
• Whether the work has been published?
• Where such publication has occurred? and
• When the work was created?

Before going for any test, one essential point for determining the existence of a copyright
would be whether the work is original. This means that there must be a sufficient degree of
skill, labour, judgment and expertise used in the creation of the work. Ultimately this is a
question of fact. It is not a question of novelty. The function or work may already exist. The

14 Kurt M. Saunders and Linda Levine, Better, faster, cheaper—later: What happens when technologies

are suppressed, 11th February 2005, Michigan Telecommunications and Technology Law Review, p. 53

also available at <http://www.mttlr.org/voleleven/saunders.pdf>

15 Kevin G Rivette and David Kline, Rembrandts in the Attic, Unlocking the Hidden Value of Patents,

Harvard Business School Press 2000, p.109

16 ibid

17 ibid 14

enterprise may acquire copyright because it has used its own skill and expertise in its
development. It should also be noted that if a creation has been due to copying of a
substantial part of another work, then the enterprise will not be able to claim a copyright on
that work.

3.6 INTELLECTUAL PROPERTY PROTECTION: REGISTERED DESIGNS

3.6.1 PROTECTION CRITERIA OF A DESIGN

The Designs Act 2000 states that the design must be applicable to an article and be apparent
to the eye. In addition to this it must be new or original as at the relevant priority date. This
is to be judged against articles of an analogous character and must be more than an
immaterial difference.

The Designs Act allows for a grace period for disclosures at officially recognised exhibitions
provided that an application for registration is lodged within six months of that disclosure.
Publication without the consent of the designer will not destroy eligibility to obtain
registration but it must be shown that the designer has used all reasonable diligence to seek
registration once he or she has become aware of the prior publication. As is with other
formal registration systems for IP, a process applies in relation to obtaining registration.

The prospect of a new Designs Act may see variations to these themes as the government
seeks to implement a registration system that is more streamlined and establish higher
thresholds.

3.7 INTELLECTUAL PROPERTY PROTECTION: CIRCUIT LAYOUTS

There is no formal registration process for the protection of circuit layouts. The
Semiconductor Designs Act defines ‘circuit layout’ to be a ‘representation fixed in a material
form of the three-dimensional location of the active and passive elements and
interconnections making up an integrated circuit’. To achieve protection the circuit layout
must:

• Be original: The legislation deals with this aspect by saying ‘what is not’ original. It
will not be original if the making of it involved no creative contribution from the
maker or it was commonplace at the time it was made.

• The circuit layout must be made by an Indian citizen or be first commercially
exploited in India or a country that is designated by the regulations. ‘Commercially
exploited’ is defined as if the circuit layout is sold, let for hire or otherwise
distributed by way of trade or imported or offered for sale and the like.

3.8 INTELLECTUAL PROPERTY PROTECTION: TRADEMARKS

The registration process of a trademark can be done by submitting an application for filing a
trademark to the Trade Marks office. Once an application has been filed, the formal process
of examination is conducted

15

3.8.1 CRITERIA FOR PROTECTION

The trademarks examiner must accept registration unless the grounds for rejecting the
application are met as required under the Trade Marks Act 1999.

The grounds for rejection of an application are:

• The mark is not able to be represented graphically.
• The mark is not capable of distinguishing the applicant’s goods or services. This is the

most common form of objection. Essentially the examiner must establish whether
the mark is distinctive. Nonetheless, it is possible to overcome this objection if the
enterprise presents sufficient evidence for the Registrar to decide that the mark is in
fact distinguishable from the designated goods or services.
• The mark is scandalous or its use is contrary to law. This has been clearly stated in
section 9 of the Trademarks Act 1999.
• If it is likely to deceive or cause confusion: In applying this test the examiner must
compare the mark against any existing registered trademarks and any general
information that may arise from a search such as through the Internet.
• Whether the trademark is identical to any prior registered mark or earlier application
for registration of a trademark in respect of similar goods or closely related services?
If this objection is raised, it is nevertheless still possible to have the application
accepted if the enterprise can show that it honestly and continuously used its mark
from a time before the priority date of the other trademark.

In general terms the choice of a name or logo can assist the enterprise to achieve its
commercialisation goals. Distinctiveness is often the key. Use of a logo in connection with a
name will also assist in being able to distinguish the mark from the designated goods or
services.

The enterprise must be alert to the risk of failing to use a trademark. Unlike the patent
system, a strategy that seeks registration of a mark in order to prevent others from using it
can fail if the enterprise does not use the mark for a continuous period of three years. In
those circumstances another organisation may seek to have the registered trademark
removed from the register. In any action for removal of the trademark on these grounds the
burden of proof lies with the owner of the registered trademark.

For these reasons it is important for the enterprise to establish the use and this is where
licence arrangements become so important. If the enterprise, being the owner of the
registered trademark, authorises another person to use the trademark, then that person’s
use may be recognised as used by the trademark owner and so prevent the removal of the
trademark from the register. In these circumstances the licensee is known as an ‘authorised
user’. However, in order for this strategy to be effective, the test for qualification of a
licensee as an ‘authorised user’ is necessary.

Protection of trademarks can also be lost in the way that the trademark is used. In relation
to a popular brand it is possible for the trademark to become generic to describe the

16

designated goods or services. A classic example is ‘ESKY’ which became generic for
describing an icebox. To avoid this, the enterprise should consider the following:

• When using the trademark in printed form, insert the name of the mark in upper
case such as ‘COCA-COLA’;

• When referring, to the designated goods or services never use the trademark to
describe those goods or services. The use of the trademark should be accompanied
by reference to the designated goods or services such as the ‘ESKY icebox’.

• Use the relevant designation notice.

3.8.2 INTERNATIONAL ISSUES

The adoption of the Madrid Protocol now enables an applicant to register with ease in the
European Union. This will have the advantage of saving time and money.

Nevertheless the acceptance of the registration still depends upon the domestic laws of
each of the international jurisdictions.

3.9 INTELLECTUAL PROPERTY PROTECTION: CONFIDENTIAL INFORMATION

3.9.1 CRITERIA FOR PROTECTION

Confidential information is one such area which still does not have any legal regime for its
protection. The principles which have been laid down for the protection of confidential
information have arisen from a large plethora of case law both in India and the United
Kingdom. An excellent criteria has been laid down in a well known English case Coco v. A. N.
Clarke (Engineers) Ltd. [1969] RPC 41), which more or less explains what Confidential
Information means in the field of Intellectual Property. The criteria are:

• The information must be of a confidential nature. There are no limits to the type of
information but generally it must be ascertainable.

• The circumstances in which the enterprise discloses the information must have been
such to impart an obligation of confidence upon the recipient of that information. In
these circumstances it is relevant to look at the extent to which the information was
known within and outside the enterprise, the steps taken by the enterprise to guard
the information and the value of the information to the enterprise. For these
reasons it would not be expected to cover trivia or gossip. The inventiveness of the
information is generally not relevant.

It is possible to place a limitation on the use of the confidential information or its further
disclosure. Disclosure of the confidential information outside those conditions can give the
enterprise grounds to obtain remedies from a court. This is not always clear-cut and in part
will also depend upon any public policy considerations as was the case in Smith Kline and
French Laboratories (Australia) Limited v. Secretary, Department of Community Services and
Health (1991) 20 IPR 643. In this case an applicant for a patent failed to restrict the Patent
Office from using the applicant’s confidential information submitted with a patent
application for the purpose of evaluating another person’s patent application. In that case

17

the court was influenced by ‘the substantial interference with vital functions of government,
in protecting the health and safety of the community, which could ensue if the (applicant’s)
claim for the restriction was accepted’.
It is yet to be settled whether a criteria for establishment of protection of confidential
information requires the enterprise to suffer detriment if the defendant were to use or
threaten to use the information.

The nature of the information may also trigger other laws. For example, if the information is
personal information about an individual then the tort of unlawful invasion of privacy may
also apply.

3.9.2 PRACTICAL ISSUES

There are a range of practical steps–that can be considered in order to protect confidential
information, such as:

• ensuring non disclosure agreements (NDAs) with employees. The non disclosure
agreements would spell out confidentiality obligations which have to be adhered to
by the employees;

• implementing a system that clearly identifies information that is considered to be
confidential and the level of security within the enterprise that applies to that
information;

• clearly setting out to staff and third parties the information that is considered to be
confidential and the purposes for which that information can be used;

• marking sensitive documents as being confidential and keeping records of the use
and disclosure of confidential information.

3.9.3 NON-DISCLOSURE AGREEMENTS

It is important to know when to use non-disclosure agreements (NDAs). Although they
provide a first base for protection, they are commercial agreements and the terms of the
NDAs need to be understood in a commercial environment.

In some circumstances the enterprise should also consider whether a contractual or other
agreement for securing the confidentiality of information is really necessary. If the above
criteria for protection are met in the strictest sense, then an express agreement may not be
required. Nonetheless, an NDA does give certainty about the state of knowledge of the
recipient and usually defines the rights of the enterprise in the event of a breach of
confidence. The scope of the restraint under an NDA also needs to be carefully considered.
If too wide it could amount to an unreasonable restraint of trade and be unenforceable.

Finally, the NDAs need to be carefully drafted so as not to give too much away to the
recipient. The NDAs are normally intended to set up the curtains behind which the ‘real’
information will be given to the recipient. If it is set out in the agreement, particularly in
drafts of the NDA, the effect of the NDA may well be lost.

3.9.4 EMAILS AND THE INTERNET

18

The Internet presents particular challenges for maintaining confidentiality. Companies
should have appropriate policies in relation to the use of emails and in particular attaching
documents to emails. The standard email texts should include a warning about
confidentiality of information.

Now if we look at the Internet as a whole, we find that there are a few problems posed by it
in relation to protecting confidential information.

By the means of Internet confidential information of an enterprise would disseminate
instantaneously. The recipient who posts this information on the web world may find
himself in a court case filed against him by the enterprise (the plaintiff) for a disseminating
that particular information.

This information might be used readily by third parties who would further disseminate the
information, who may be in different legal jurisdictions. This means that it may be difficult
for the plaintiff to bring an action against third parties who use the information. If an action
can be brought against the original recipient, however, this is not an over whelming
problem.

The enterprise should take necessary steps to ensure that confidential information of the
enterprise does not get published on the Internet. As a matter of precaution, the enterprise
should allocate passwords to senior level employees to access the confidential information.

It should be noted that once confidential information is part of the internet, then it becomes
public and will cease to be confidential. Protection of confidential information is generally
based on trust and employer employee contracts.

3.9.5 STAFF

It is prudent for the company to have policies which set out the expectations of the
enterprise so far as handling of that confidential information by staff. This can extend to
educating staff about the principles of confidentiality. This can be done by holding in house
seminars on Confidential Information, training of staff members on how to protect
information from leaking out.

The senior management of the enterprise should be allowed to access the information and
no one else should be allowed. The senior management should be given cards and
passwords to access information. The enterprise should have a Secure Information System
put up in place which should be monitored twenty four by seven.

3.10 MARKING AND NOTICES

A common feature of IP regimes is to notify the world at large of the ownership of those IP
rights. Generally this is for the purposes of ensuring that any alleged infringer of the IP rights
has constructive ‘notice’ which may enable the enterprise to overcome any defence of

19

innocent infringement. This is the case in respect of patents (section 123), PBR [section
57(2]) and circuit layouts [section 20. In respect of trademarks there are a number of
defences which require the defendant to establish that the trademark was used in good
faith (section 122). In respect of copyright the use of the relevant marking also enables
reciprocal rights to be exercised in foreign jurisdictions. The following table sets out the
nature of the markings that should be applied in respect of each form of IP:

3.10.1 MARKINGS AND NOTICES

Form of Intellectual Marking or Notice
Properly
Patents ‘Indian Patent Number xxx’
‘patent pending’ for applications for patents lodged with the
Copyright relevant patent office.

‘© [name of copyright owner] [country] [year of first publication]’

Trademarks ‘®’ for trademarks that are registered - it is an offence to use this

symbol for a mark that is not registered.

‘TM application pending’ for marks which are the subject of an

application for registration that is still on foot.

Designs ‘Registered Design number xxx’ - this is a matter of convention and

is not required or regulated under the Designs Act, 1906.

Plant breeder’s rights No official standard exists although there has be-en commentary

advocating a standard form marking.

Circuit layouts Topography notice T is recognised in Europe in accordance with Art.

9 of the European Council Directive 87/54 of December 16, 1986.

Legal Protection of Topographic of Semi-conductor Products.

However, it is not required or regulated under the Circuit Layouts

Act.

Confidential ‘confidential’ or ‘commercial in confidence’
information

It is optional and a sound practice when dealing with a copyright work, to insert ‘all rights

reserved’ on the article to designate that no licence is implied by the publication or

provision of the IP right.

Care should be taken in using the above markings. Some of the IP statutes have specific
provisions making it an offence for persons to represent that they are the owners of a
registered form of IP when they are not, or that the IP is registered. Such conduct may also
amount to misleading or deceptive conduct contrary to the Competition Act.

3.11 ENFORCEMENT OF INTELLECTUAL PROPERTY

3.11.1 ‘ENFORCEMENT IS A PART OF IP MANAGEMENT’

Anyone who has had the experience of dealing with the court systems would think twice
before approaching a court for any litigation. Any lawyer, who guarantees that he would win

20

a case for the enterprise, should stop practicing law. Litigation in almost all jurisdictions of
the world, requires time, patience and to top it all, money. But if litigation is handled more
cautiously and is a part of the enterprise’s business objective, then it is highly
recommended.

The average number of litigation cases filed in India as a percentage of the number of rights
registered in respect of patents, trademarks and designs for the period 1996 - 2004 was
approximately 0.04 per cent. A similar figure for the United States in 1988 was
approximately 1 per cent18. One of the reasons for this low percentage could be that
infringement of IP rights is not prevalent across businesses, but there are insufficient
statistics to determine whether this is so.

It is an accepted fact that because of the reason mentioned above, some IP owners get
discouraged from actively enforcing their rights. But we should not come to the conclusion
that all owners behave in the same manner. There is a silent majority of IP owners who
enforce their IP rights without having to file a court document or step into the witness box.
In many respects it is these business organisations that are maximising their IP enforcement
strategy.

The importance of enforcement of IP as part of IP management and supporting of IP
commercialisation cannot be doubted. Not only must an enterprise be confident that it can
enforce its IP rights but it may wish to be proactive and drive its business objectives by
seeking out infringers. As with many other aspects of managing a business, the trick is to
find the balance.

3.11.2 COMMON ISSUES CONCERCING ENFORCEMENT

Each of the pieces of legislation in India relating to IP rights address in some degree, the
aspects of enforcement of those respective IP rights. Here are some common themes.

3.11.2.1 UNAUTHORISED EXERCISE OF MONOPOLY RIGHTS

Enforcement of Intellectual Property is all about maintaining the enterprise’s monopoly
position or competitive advantage over its competitors. In this respect it is exercising the
fundamental economic right to ensure that no other person/enterprise takes advantage of
the effort that it took to acquire those rights. On every occasion where there are alleged
infringing acts it is a case of studying the alleged infringing act and comparing it against the
monopoly rights that are held by the enterprise. Only after comparing the infringing act
should the enterprise take the next step on how to deal with the infringer. Generally the
best and easiest option is filing a complaint in the court. There are other ways to handle
such infringing acts apart from filing a court case. This would be discussed in the coming
pages.

3.11.2.2 DEFENSIVE ACTION

18 Kevin G Rivette and David Kline, Rembrandts in the Attic, Unlocking the Hidden Value of Patents,

Harvard Business Review, p 47. 21

Each and every piece of IP legislation sets out various defences to infringement actions. This
is the second step in analysing the prospects for the enterprise enforcing its rights. For these
reasons use of disclaimers and notices becomes very important.

3.11.2.3 OPPOSING THE GRANT OF REGISTRATION

In relation to the forms of IP that involve a formal registration process there is an
opportunity for a competitor to oppose the grant of registration to the enterprise. This
enables a competitor to delay the grant of IP rights to the enterprise. Of course, there are
rules which preclude parties from running frivolous actions. However, IP has become so
intricate and complex that it would be rare for a court to conclude that an argument posed
by a competitor was frivolous or lacked substance. A competitor, like the enterprise itself, is
entitled to its day in court.

Now, if we see this in relation to patents, the information which is presented in opposition
proceedings is not guaranteed to be kept confidential.

In these circumstances the enterprise is left with a dilemma, and here two important
questions arise:

1) Should it bypass the hearing and take the case straight to court because the court will
have the power to suppress the release of confidential information?
2) Alternatively, does the enterprise proceed with the opposition without submitting the
relevant information? and thereby suffer the risk that it may lose the opposition proceeding
because critical information was not presented.

3.11.2.4 CHALLENGING THE REGISTRATION

It is open to the defendant in IP enforcement proceedings to challenge the validity of the IP
rights asserted by the enterprise. In relation to registered forms of IP this can involve
lodging a counter-claim that the registration should be revoked on the basis that the
relevant criterion for registration has not in fact been met. This has been of particular
concern in relation to patents until recent amendments. The threat of IP rights being lost in
the heat of battle adds to the complexity of enforcement of IP rights. An enterprise may find
more value in being able to assert the right rather than following through with an actual
action or proceeding. This is because, in many cases, letters of demand are sufficient to
achieve an acceptable outcome. Often this depends on the muscle that the enterprise is
able to flex.

3.11.2.5 INTERNATIONAL ISSUES

The true opportunity for catching the ‘big fish’ from commercialisation of IP lies in
penetrating the international markets. Not only is it often complex and costly to secure IP
rights in those markets, it is also complex and costly to enforce those IP rights in those
jurisdictions. Each country is entitled to rely upon its own sovereignty and its own laws. If
foreign IP rights are being infringed by an overseas competitor, the Indian enterprise is

22

faced with the dim prospect of litigating in another jurisdiction that is unfamiliar and also
the fear that the foreign courts might be hostile towards Indian enterprises. One more
important aspect which must be kept in mind is that countries such as the United States and
countries in Europe are significantly more expensive than India. Finally international IP
enforcement is often undertaken in the context of having to fight against an established
competitor. It is relatively rare for Indian IP owners to hold a strong market position in
overseas markets. Enforcing those IP rights in those overseas markets will often entail
having to litigate against a competitor who already has a competitive advantage and who
can enjoy significant advantages by using its financial muscle to delay the litigation and
manipulate the court system.

3.11.2.6 EXPERTISE OF COURTS

If an enterprise is going to make a sacrifice to litigate to enforce its IP rights it will want
confidence that the judge hearing the matter understands not only IP law but is able to pick
up the technicalities involved in this highly specialized field of law. The Indian legal system
does not enjoy a special division devoted to IP rights. Although the Judicial Academy is
seeking to establish specialist areas, the allocation of judges to hear IP matters has not
traditionally been undertaken on the basis of expertise. This can be compared with the
position in the United States where a particular court was established in order to deal with
IP issues and litigation because the Federal Government recognised the importance of an IP
system for the growing economy.

3.11.2.7 PRECEDENT VALUE

In order to proceed with the enforcement action, the enterprise must consider in
determining whether the marketplace in which the enterprise conducts business take note
of such an action? Or whether to proceed with an enforcement action is the precedent
value that the litigation will bestow? Of course this is a double-edged sword for the
enterprise. A success in the action may be enough to drive infringers and competitors away
from the market. The failure may see the collapse of its business together. For this reason, it
is imperative that the enterprise thoroughly assesses its IP enforcement strategy in the
context of its whole business. Where stakes are this high the IP advisers for the enterprise
will usually recommend the advice of senior barristers. Senior counsel experienced in IP
litigation are usually worth their weight in gold (and often there is a fair amount of weight).
They bring to bear on the decision process a wealth of experience in arguing the same or
similar cases before the courts and in particular the relevant judges on a regular basis. They
will not only be able to add value to determining prospects of success but also, as is the case
with most litigation, be able to greatly assist in determining the appropriate time to settle
and the terms of such settlement.

3.11.2.8 INSURANCE: DEFENSIVE AND OFFENSIVE

It will be evident from the above discussion that cost plays an important part in the strategy
for IP enforcement. To some degree this risk can be transferred in part by taking out
offensive and defensive IP insurance. This insurance itself has a cost and its usefulness
needs to be weighed against the perceived risk of IP enforcement having to occur.

23

3.11.2.9 ALTERNATIVE DISPUTE RESOLUTION

Enforcement of IP rights inherently raises the spectre of litigation. For those entrepreneurs
unfortunate enough to have encountered litigation the risks, in terms of results, time and
cost, are embedded in their memory. The drawbacks associated with litigation have
fostered alternative mechanisms to resolve disputes such as mediation and arbitration and
it is now common to find a standard clause in contracts requiring the parties to at least
attempt some form of ADR before resorting to litigation.

Mediation, which typically entails a mutually respected independent person facilitating a
settlement, will only succeed if all participants in the dispute are truly open-minded about
resolving the dispute. It is surprising to hear about the number of disputes which were
referred to a mediator that were not resolved by mediation because resolution short of a
judicial or1arbitral decision would not meet one party’s, objectives. Arbitration is-often
criticised as ‘being as risky as normal litigation because of the uncertainty of the result and
the costs involved. Despite this, arbitration can be a useful mechanism where the source of
dispute is a technical rather than legal matter, and where the’ dispute relates to an
international contract. In the latter circumstance it is common for the parties to invoke the
arbitration or conciliation rules declared by the United Nations Commission on International
Trade Law (UNCITRAL) or the rules of the International Chamber of Commerce (ICC).

3.11.2.10 REMEDIES

Each form of IP legislation sets out the remedies that are open to an enterprise for
successfully enforcing its IP rights. Those remedies include a right to be paid damages or an
account of profits (to be elected by the plaintiff) as enshrined under Section 111 of the
Patents Act, 1970. In addition, the owner of IP rights is able to seek interim and final
injunctions.

3.11.2.11 DAMAGES AND ACCOUNT OF PROFITS

The owner of IP rights who has established infringement of those rights must elect as to
whether to be compensated for that infringement by payment of damages or account of
profits. There is a doctrinal difference in these forms of compensation. Account of profits is
intended to prevent unjust enrichment to the defendant whereas damages is designed to
put the plaintiff in the same position as it would have held if the infringement had not
occurred. The difference in the amount of money that might be awarded by the court is
hard to define. Usually the plaintiff will seek to undertake an enquiry as to the profits that
may have been earned by the defendant.

3.11.2.12 ADDITIONAL DAMAGES

At least in relation to infringement of copyright and EL rights the owner of the IPR will be
able to seek an order that the infringers pay ‘additional damages’ where the court is
satisfied that there has been a flagrant infringement of the IP rights. The ACIP Report also
calls for similar rights to be available for registered designs, patents and trademarks.

24

3.11.2.13 INNOCENT INFRINGEMENT

Some of the IP legislation limits the remedies available where the defendant can establish
that the infringement was innocent.

3.11.2.14 LIMITATION PERIODS

Most of the forms of IP legalisation specify the periods within which an action for
infringement must have commenced (known as the ‘limitation period’). In all cases the
period is six years from the date in which the infringement occurred. A failure to commence
an action within that period means the right to enforce the IP rights in respect of the alleged
infringing act will be lost. The practical effect of such a significant delay in enforcing IP rights
is in most cases unlikely to be significant because the commercial imperative has probably
passed by.

3.12 LITIGATION STRATEGY

If the task of managing the IP were to be considered a project then one of the foreseeable
phases of that project is the enforcement of IP rights. As with any project management
exercise it is appropriate, if not best practice, to reassess the overall project at significant
milestones. This is certainly the case when an enterprise is at a stage of having to decide
whether to enforce its IP rights against a suspected infringer or not. In these circumstances
the enterprise should only proceed once it has taken stock of its risks in the context of its
overall business objectives. This entails considering the commercial, legal and, if relevant,
political risks in following through with an IP enforcement strategy. An analysis of risk entails
being able to identify the risks and this in turn relies upon the enterprise having obtained as
much relevant information as possible to help it identify and evaluate those risks.

The enterprise should obtain appropriate advice from an IP expert (which may include
barristers). The enterprise should have assessed, to the extent possible, the financial
implications of either winning or losing the case. The assessment should consider the impact
upon senior managers and staff because they will be required to assist in the preparation of
the case and to give evidence. Finally the enterprise needs to clearly understand the
ramifications if it were to win or lose the case.

All of these issues should be set out in an appropriate risk management plan which would
usually be prepared by its advisers. The enterprise should seek from its legal advisers a
budget for the conduct of the IP enforcement proceedings. The advisers to the enterprise
should also be able to specify the critical ‘break points’ in which an enterprise may seek to
reassess its position and, if thought appropriate, change tack. This may entail settling or not
continuing with the action.

3.12.1 A POSITIVE STRATEGY

If the enterprise wishes to implement an IP enforcement strategy that is proactive, it will be
usually seeking to achieve the following objectives:

25

• to prevent competitors from entering into the market for as long as possible; or
• to come out with a strategy to generate further licensing revenue.

The proactive IP enforcement strategy has been effectively implemented by Priceline.com
which obtained patents on its business methods like the reverse auction air tickets etc. and
took a giant corporation like Microsoft to court by challenging the patents held by Microsoft
and eventually settling the dispute in which Expedia (a Microsoft website) agreed to pay
royalties to Priceline (discussed later in this chapter).
Proactive IP enforcement strategy must fit with the business objectives of the enterprise.
Common elements include:

• Identifying potential infringement: This entails establishing a process and culture
within the enterprise that facilitates the identification of infringement. This may be
as simple as staff noting counterfeit products being sold at the local fete and
reporting that to relevant key managers on Monday morning;

• Establishing an ‘aura’ for the guarding of IP of the enterprise: Many of the major
technology companies achieve a well-known position in the industry for being
voracious in protecting their IP. Clothing companies such as Nike and Reebok protect
their brands by taking similar stringent efforts. Of course, this needs to be
undertaken in a balanced fashion otherwise a strategy can have a negative impact.
An example of this occurred in the lead up to the 2000 Sydney Olympics when
lawyers for the Olympic Committee sent letters of demand to a small ship that had
been using the word ‘Olympic’ as part of its business name only to find that the
letter of demand was waived on a national sports television show in an unflattering
manner;

• Searches of the IP registers to ascertain who is using similar technologies or brands:
In relation to patents, if the searches of the patents register reveal regular hits of the
enterprise’s technology it may give rise to potential infringement actions. If the
enterprise’s patent is regularly cited then it is probable that it is a fundamental piece
of technology which cannot be worked around. This presents a reservoir for licensing
opportunities.

“Several companies, including Texas Instruments, Intel, have established groups that
approach rivals to demand royalties on old patent awards. In many cases, they have been
successful in extracting license agreements and/or past royalties. For instance, Texas
Instruments is estimated to have netted close to one billion dollars annually from patent
licenses and settlements resulting from their general counsel's aggressive enforcement
policy.”19

3.12.2 MAREVA INJUNCTION

19 Josh Lerner , The Patent System and Competition available at

<http://www.ftc.gov/opp/intellect/lernerjosh.pdf> 26

A Mareva injunction is an ex-parte injunction20 that has the effect of freezing the assets of a party
pending further order or final resolution by the court.21 The Mareva injunction is aimed at a specific
defendant and not at his assets.22 It is to restrain him from taking his assets out of the court’s
jurisdiction.23 If the defendant is not stopped from taking his assets out of the Court’s jurisdiction
then there is a possibility that plaintiff despite getting a judgment in his favour would be left
remediless.

For example, let us imagine a situation where a court of Country Q is not empowered to pass a
Mareva injunction. This means that a defendant can take his assets outside the Court’s jurisdiction
without any problem. A suit is filed by Mr. X (plaintiff), a resident of Country Q against Mr. Y
(defendant), a resident of country P. Mr. Y, being aware of the possibility that his assets might be
attached if he loses the case removes them from the Court’s jurisdiction to his country P before the
trial begins. The court at the conclusion of trial considers it necessary to attach the assets of Mr. Y,
the defendant, in order to give proper relief to Mr. X, the plaintiff, and orders for the same.
However, since the assets that are sought to be attached are now no longer within the Court’s
jurisdiction, having been removed earlier by Mr. Y, they cannot be attached. And the Mr. X despite a
decision in his favour cannot get his desired relief. Mr. X cannot go to country P to get Mr. Y’s assets
to get his desired relief. The judgment has no value because it cannot be enforced. It is evident from
this that allowing defendants like Mr. Y to take away their assets or property from the Court’s
jurisdiction gave scope for rampant abuse. For a long time that the Mareva injunction did not exist,
this abuse did take place. Foreign companies, to evade possible adverse judgments, often removed
their assets from the Court’s jurisdiction before the trial.24 As a result, the plaintiff was left holding
nothing more than an empty judgment.25 So to prevent such irreparable harm to the plaintiff, the
court, through an ex-parte Mareva injunction, freezes the assets of the defendant. 26An ex-parte
injunction ensures that the defendant is not aware of the proceedings and this way, the plaintiff’s
right to a relief is protected. A Mareva injunction is like and akin to “attachment before judgment”.27
It is also analogous to the remedy of injunction under Order 39, Rule 1 and 2.28

In India, the court is empowered to grant an attachment before judgment or a Mareva injunction
under Order 38, Rule 5 of the Code of Civil Procedure, 1908. Rule 5(1) states that if at any stage of
the suit, the court is satisfied that the defendant with the intent to obstruct or delay the execution
of any decree that may be passed against him, is about to dispose of, or remove from the Court’s
jurisdiction, the whole or any part of his property, then the court may direct the defendant to
furnish security in a specified sum, and place at the court’s disposal the property or equivalent value,

20 An ex-parte injunction is an injunction which is granted without giving the other party a chance to be

heard.

21 Mareva Injunction Definition, available at

<http://www.duhaime.org/LegalDictionary/M/MarevaInjunction.aspx> (accessed on 5th October, 2012)

22Ibid

23Supra note 8

24Anonymous, The mareva injunction, available at <http://www.lawteacher.net/english-legal-

system/essays/mareva-injunction.php> (accessed on 5th October, 2012)

25Ibid

26Rite Approach Group Ltd v. Rosboron export,AIR 2007 Delhi 145

27Ibid

28Formosa Plastic Corporation Ltd.v Ashok Chauhan, MANU/DE/0259/1999 27

as maybe sufficient to satisfy the decree. This indicates that two essentials need to be met if the
court is to grant a Mareva injunction under the Rule 5, Order 38. They are:

• The defendant is about to dispose of the whole or any part of his property29 and
• The disposal of property is with the intention of obstructing or delaying the execution of any

decree that maybe passed against him.30

The words obstructing or delaying the execution of any decree that may be passed against him has
been interpreted by the Apex Court to mean that before exercising the power under Rule 5, Order
38, the court should be satisfied that there is a reasonable chance of a decree being passed in the
suit against the defendant.31

The Indian Courts have acknowledged that the Mareva injunction can be granted in India. In
Sundaram Finance Ltd. v. NEPC India Ltd32the Supreme court approved that the power to grant an
interim injunction extended to granting of a Mareva injunction in appropriate cases. The Bombay
High Court has also stated that the Mareva injunction, a well-known concept in English law is
recognized in India. 33

From the above it is established that one, the power of the Court to grant a Mareva injunction exists
in the Indian law and two, Indian courts acknowledge that it can be granted. Therefore, now it is
important to examine as to what the plaintiff has to show in order to get a Mareva injunction passed
in his favour.

A Mareva injunction is one type of temporary injunction. Therefore, the general criteria that are
taken into consideration by the Indian courts to grant a temporary injunction shall apply to Mareva
injunction as well. These criteria include the following-

1) Prima Facie Case- This means that the plaintiff must satisfy to the court that there is a bona
fide dispute, a strong case for trial which needs investigation and that if a decision is given on
the merits and facts of the case, there is a probability that the plaintiff would be entitled to the
relief that he claimed.34 In other words, the plaintiff must show that he has a good arguable
case.

2) Irreparable Injury- The plaintiff must further satisfy the court that if the injunction prayed for
is not granted then he will suffer irreparable injury.35 And that there is no other remedy open
to him by which he can protect himself from the consequences of the apprehended injury.36

29(Delhi) Uppal Engineering Limited Pvt. Ltd. v. Cimmco Birla Limited 2005 (2) ARBLR 404 (Delhi) at

¶12

30Ibid

31Raman Technology and Process Engineering Co. and Anr. v. Solanki Traders, (2008) 2 SCC 302 at ¶

4

32[1999]1SCR89

33Ecohidrotechnika LLCVs.Black Sea and Azov Sea Production and Operating Administration of

Shipping and Anr., 2010(4) BomCR 785

34C.K Takwani, Civil Procedure 6 Eastern Book Company (2009) p. 331

35Ibid at p. 332

36Ibid 28

The third general criteria for a temporary injunction is proving that the balance of convenience in
the favour of the plaintiff. However an English case has held that in the case of mareva injunction,
the third criteria is not see whether the balance of convenience is in the favour of plaintiff but to
examine whether it is just and convenient to grant the injunction.37

In Abheya Realtors Private Limited v Ssipl Retail Limited & Another38 the Calcutta High Court laid
down specific criteria for granting a Mareva injunction and held that the claimant must prove:

1) He must have a prima facie or good arguable case and
2) He must establish that the asset or assets within the jurisdictions were unlikely to remain at

the time when the judgement would be delivered and
3) Must show that as a result of the assets being taken out of the jurisdiction, he would have no

means to satisfy the decree

In Raman Technology and Process Engineering Co. and Anr.v. Solanki Traders39, the Apex Court has
held that in addition to a prima facie case, the plaintiff must establish that defendant is attempting
to remove or dispose of his assets with the intention of defeating the decree that maybe passed. In
Formosa Plastic Corporation Ltd.v Ashok Chauhan40 the court held that a Mareva injunction can be
granted to a plaintiff who has a proper claim in any case where there are grounds for fearing that
the defendant may defeat justice by transferring assets abroad or by concealing them in the country.
The court further stated that the purpose is to prevent a defendant from dissipating or concealing
his assets so as to make a judgment against him worthless or difficult to enforce.

The above cases highlight that the criteria for granting of Mareva injunction is only developing and
that India has not yet developed specific criteria for the grant of Mareva injunction.41 While all cases
do talk of a prima facie case being established and that the defendant must have assets within the
jurisdiction, factors beyond that have been subject to independent interpretations of the court.
Assistance with respect to this can be taken from foreign cases.

In the case of Dynasty Rangers v. SBSK Plantation42 the court laid down the following criteria for the
grant of a Mareva injunction- 1) A cause of action must exist at the time the order is to be granted
and the plaintiff must demonstrate a good arguable case; (2) the defendant must have assets within
the jurisdiction of the court; (3) the balance of convenience must be in favour of the plaintiff being
granted the injunction; (4) the plaintiff must establish that the defendant lacks probity and that
there is a real risk of dissipation of assets; and (5) there has been no delay in applying for the
injunction. Of the criteria mentioned above, determining what amounts to a real risk of dissipation
of assets has been extensively debated.43 The British Courts have held that the plaintiff should
through solid evidence show the risk of dissipating assets and that prior conduct and unreliability of

37Irish Response v. Direct Beauty Products,[2011] EWHC 37 (QB) at
38 Available at <http://www.indiankanoon.org/doc/372105/>(accessed on 4th October, 2012) 4th
39 (2008) 2 SCC 302
40MANU/DE/0259/1999 29
41Mihir Naniwadekar, Mareva Injunctions revisited, February 18, 2011 available

<http://legaldevelopments.blogspot.in/2011/02/mareva-injunctions-revisited.html>(accessed on

October, 2012)
42Supra note 11
43Ibid

the defendant is good evidence to show this risk.44 What form of evidence would be required in each
case cannot be precisely laid down and it shall depend on facts and circumstances of each case.45 In
light of this, despite the fact that criteria exist for the grant of Mareva injunction, the Indian Courts
need to develop far more specific criteria.

One point regarding the applicability of the Mareva injunction would like to be made. It has been
stated above that a Mareva injunction is targeted against a specific defendant. This raises the
question as to whether it shall also apply to anon-resident defendant whose assets are within the
jurisdiction of a particular court. Foreign courts have answered this question in the affirmative. The
Canadian Supreme Court in the case of Aetna Financial Services Ltd. v Fiegelman46 has stated that
the gist of a Mareva action is the right to freeze the assets of the defendant when they are found
within the jurisdiction of the court irrespective of the fact where the defendant resides.47In Rahman(
Prince Abdul) v Abu Taha48, the English court held that the Mareva injunction can be extended to
both resident and non-resident defendants.

However, in India the position on applicability of Mareva injunction to a non-resident defendant is
not conclusive. The Supreme Court of India in the case of M.V.A.L Quamar v. Tsavliris Salvage
(International) Ltd. &Ors49, in its obiter discussed a judgment of the New Zealand Supreme Court50
and an English case51 on this point.

In Black Clawson International Ltd. v Paperwork Waldorf Aschaffenburg52, the New Zealand Supreme
Court held that it had the jurisdiction to grant a Mareva injunction to a non-resident defendant.53It
stated that the old English procedure of foreign attachment was the perfect respectable ancestry for
this procedure.54 The court further held that granting a Mareva injunction to a non-resident
defendant was necessary if the court wanted to approach the modern problems associated with the
flexibility of the modern business.55 Explaining the flexibility of the modern business the Court stated
that in the present age vast amounts of money could be easily transferred from one country to
another in a matter of seconds as a result of a phone call or a telex message.56 It relied on facts of
reported Mareva cases and the number of Mareva injunctions granted in London to highlight that
the jurisdiction of Courts in Mareva injunction to non- resident defendants was wholesome and a
fulfilling need.57

44Ibid 30
45Ibid
46[1985] 1 S.C.R. 2,Alsoavailable at <http://scc.lexum.org/en/1985/1985scr1-2/1985scr1-2.pdf>
47Supra note 8
48 [1980] 1 WLR 1268
49AIR 2000 SC 2826
50Black Clawson Inter-national Ltd. v. Paperwork Waldhof Aschaffenburg, 1975 AC 591
51RasuMaritima case [1977] 3 All ER 324, 333-334
521975 AC 591
53AIR 2000 SC 2826 at ¶ 53
54Ibid
55Ibid
56Ibid
57Ibid

In the English case, Rasu Marimata58, the court explained the reasons why Mareva injunction should
apply to a non-resident defendant. The court said that if a Mareva injunction was not allowed then
the plaintiff would be faced with a series of difficulties. The plaintiff would need to take leave of the
court to serve the non-resident defendant. After being served the defendant would be given time to
enter appearance from that date. The defendant on being served would automatically, remove the
assets out of the jurisdiction if he feels the case can turn against him. If that happens, then the
plaintiff will not be able to enjoy the fruits of his judgment. Therefore, the court concluded that an
injunction on an ex-parte basis could be granted in favour of the plaintiff in these situations.
Granting this injunction caused little inconvenience to the defendant as he could discharge it at any
time on short notice.

Therefore, both these judgments were in the favour of granting a Mareva injunction against a non-
defendant. The Supreme Court of India in the M.V.A.L Quamar case expressed it inclination to agree
with these two decisions but since that was not the issue raised in the case, refrained from expressly
stating that it did agree.59

Therefore a Mareva Injunction suit can be filed where there is apprehension that the defendant may
remove the assets outside the jurisdiction of the court or may dissipate them before the trial
concludes. To ensure that none of this happens and the attachment does take place, the plaintiff
can file for a Mareva injunction.

3.12.3 ANTON PILLER ORDER

An Anton Piller order is an interim order that allows a plaintiff to enter the defendant’s premises to
search and seize evidence, if any, without prior warning.60The fact that such a search and seizure can
take place without any prior warning indicates that this order would most effective when it is issued
ex parte. Thus an Anton Piller order is an ex parte ad interim order.61 It is imposed on the defendant
to restrain him from interfering with a search and seizure that is conducted by the plaintiff.62These
orders are often used together with Mareva injunctions.63 The effectiveness of an Anton Piller order
under the Act is highlighted through the following example.

We consider a case under the Plant Varieties Act. Let us imagine a situation where a variety
registered under the Act is infringed through being sold by a breeder who is not registered under the
Act.64 The registered breeder of the variety is Mr X. He has registered variety ‘AZP’ under the Act.
‘AZP’ is being sold by a breeder, Mr. Y, who is not registered under the Act. Mr. X becomes aware of
this but to be successful in a suit of infringement he needs to make sure that the variety being sold

58[1977] 3 All ER 324
59AIR 2000 SC 2826 at ¶ 54
60SauravBhowmik, Anton Piller and implementation against Software Piracy, March 2012 available at
<http://www.psalegal.com/upload/publication/assocFile/IPR&TechnologyBulletin-IssueXXI.pdf>
(accessed on 6th October, 2012)
61Bucyrus Europe Limited and Anr, Vulcan Industries Engineering Company Private
Limited,2005(30)PTC279(Cal)
62Supra note 47
63Ibid
64Section 64(b), The Protection of Plant Varieties and Farmers’ Rights Act, 2001 available
at<http://agricoop.nic.in/PPV&FR%20Act,%202001.pdf>(accessed on 4th October 2012)

31

by Mr. Y, is ‘AZP and must collect any other evidence associated with it. Such evidence can be
collected by Mr. X if an Anton Piller order is issued in his favour against Mr. Y. So, is Mr. X allowed to
file for an Anton Piller order under the Act? Section 66(2) of the Act empowers Mr. X to apply for an
interlocutory order to preserve evidence, an infringing variety or any other evidence. For
preservation of evidence mentioned in this sub-section, first it is necessary to collect that evidence.
Thus, Mr. X can under the Act apply for an Anton Piller order. This order would allow Mr. X to enter
Mr. Y’s premises to search for the infringing variety and if found, to seize that variety along with the
other sales proceeds associated with it. Such search and seizure would only help in the preservation
of the infringing variety, documents or other evidence as enumerated in section 66(2) of the Act. So
we see that an Anton Piller order can be extremely effective in possible infringement suits that
would be filed under the Act.

The concept of Anton Piller Orders originated in the English case of Anton Piller K.G. v.
Manufacturing Process Ltd., and Ors.65The court explained that an Anton Piller order was only an
order on the defendant, permitting inspection.66 It commanded him to permit entry.67It was not
equivalent to a search warrant.68The defendant was open to refuse to comply with the order but he
could only do so at his peril of further proceeding for contempt.69Also, plaintiff’s agents could not
use force in the face of defendant’s denial of permission.70 In other words, great responsibility rested
with the solicitor of the plaintiff to ensure that the order is carried out meticulously with full
responsibility for the defendant’s right.71 Explaining the purpose of the order the Court held that
this order was only passed to ensure that vital evidence in the case was not destroyed and that
justice was done between the parties.72 It was an order based on equity that assisted the plaintiff to
establish its case and to prevent the destruction of evidence by the defendant.73

Courts in India have primarily treated Anton Piller orders as a form of injunctive relief.74 This implies
that all Anton Piller order applications shall be dealt under Order 39 of the Code of Civil Procedure
which deals with temporary injunctions and interim orders. It also means that generally the plaintiff
must show:

• A prima facie case
• Irreparable Injury
• Balance of convenience in his favour before such an order is granted

These 3 grounds have been explained in detail earlier in the note, in the part that deals with Mareva
injunctions. However, the specific criteria that the Indian courts have evolved with respect to Anton
Piller orders which, the plaintiff must show in order to get an order issued in his favour, is as follows:

65 1976 RPC 719 at
66Anton Piller K.G. v. Manufacturing Process Ltd., and Ors, 1976 RPC 719, 726 32
67Ridgewood case, see Anton Piller Order Definition available
<http://www.duhaime.org/LegalDictionary/A/AntonPillerOrder.aspx>(accessed on 6th October, 2012)
68Supra note 53
69Ibid
70Supra note 54
71Supra note 53
72Ibid
73Supranote 47
74Ibid

• There is an extremely strong prima facie case against the defendant75
• The damage, potential or actual, must be very serious for the plaintiff76 and
• There must be clear evidence that the defendants have in their possession relevant documents

or things and that there is a real possibility that they may destroy such material before an
inter-application can be made.77

The first two conditions are normally satisfied through proof of title to intellectual property rights
and clear evidence of infringement.78 The third condition, likelihood that an infringer will dispose of
important evidence, is normally the crucial element of proof required to obtain an Anton Piller
order.79

Anton Piller orders have been recognized in India for over the past 20 years.80 In Hindustan Pencils
(P) Ltd. vs. India Stationery Products Co. and Anr81 , the Delhi High Court, citing Kerly in Law of Trade
Marks and Trade Names, stated that in extremely urgent cases an “Anton Piller” order, for
inspection of defendant’s premises without prior warning and discovery of his records, maybe
obtainable.82 Such an order was similar to the ex parte interloctury order to take an inventory of
article etc. passed in an ordinary suit.83In Mohit Bhargava v. Bharat Bhushan Bhargava and Ors84 ,
the Apex Court held that an Anton Piller order could be issued even if the property or person
concerned is outside the jurisdiction of the Court.85The Delhi High Court in Autodesk Inc. and Anr v
Mr. A.V.T. Shankardass and Anr86while dealing with software piracy held that where the Court was
satisfied that the party is not able to produce the desired evidence for reasonable circumstances, it
may assist a party by appointing a Local Commissioner to get that evidence.87The Court stated that
the objective of appointment of Local Commissioner, in software piracy matter was to preserve and
protect the infringing evidence and not to collect it.88 The incriminating evidence could only be
obtained from the premises of the opposite party alone.89 And in the absence of an ex parte
appointment of a Local Commissioner, there was likelihood that such evidence may be lost, removed
or destroyed.90It further held that request for ex parte appointment of Local Commissioner was
intended to sub serve the ends of justice as it was imperative to have an element of surprise so that

75Supra note 47

76Ibid

77Supra note 47

78Viacom Ha! Holding Co. v. Persons Unknown, Available at

<http://reports.fja.gc.ca/eng/2001/2001fc27974.html>

79Ibid

80Supranote 47

81AIR 1990 Del 19 ( This particular case has been cited over 98 times)

82AIR 1990 Del 19 at ¶13

83National Garments, Kaloor, Cochin VsNational Apparels, Ernakulam, Cochin, AIR 1990 Ker 119 at ¶ 7

84 (2007) 4 SCC 295

85Mohit judgment at ¶10 (In this case, the executing court which had passed the Anton Piller order lost

jurisdiction over the case at a later point of time. The person against whom the Anton Piller order was

issued thus argued that this order should fall to the ground. The Apex Court rejected this argument and

held as stated)

86 AIR 2008 Del 167

87Supra note 73

88Ibid

89Supra note 73

90Ibid 33

the actual position is not altered.91Moreover, in cases of an action of infringement of software and
piracy, issuance of notice to opposite party regarding application for appointment of Local
Commissioner by Court take evidence and assess infringement was not mandatory.92

Thus, the Autodesk93case could possibly affect the manner in which an Anton Piller order may be
executed under the Act when such cases arise. All of this shows that an Anton Piller order is a viable
relief that can be claimed under the Act.

Therefore Anton Piller orders are particularly effective in cases of alleged trademark, copyright
or patent infringement. In order to obtain such an order, the applicant must prove that:
• it has a cause of action or has suffered damages;
• the offending party possesses specified documents or objects that constitute vital

evidence to substantiate the applicant's claim; and
• there is a well-founded belief that the evidence may be hidden, moved or destroyed

before the case comes to trial.

Anton Piller orders are often used together with Mareva injunctions, which are used to
restrain defendants from removing assets from the jurisdiction of the court. The genesis of
the Anton Piller order can be traced in India in the case of Anton Piller Vs Manufacturing
Processes (1976) RPC 719.

A court would generally bestow an Anton Piller order only if the following three conditions
are fulfilled:

• existence of a strong prima facie case
• potential or real damages
• Presence of clear evidence must exist that the defendants have in their possession

incriminating documents or things and that there is a real possibility that they may
destroy such material before any proceedings inter parties can be made.

3.12.4 JOHN DOE ORDER

A John Doe order is passed against nameless/unknown defendant(s), who have allegedly committed
some wrong and whose identity cannot be ascertained by the plaintiff.94 These are used in situations
where there is a great chance of infringement to take place and if the plaintiff seeks out an individual
infringer every single time, then there would be a financial loss, loss of time, and other types of
losses to the plaintiff. So a plaintiff applies for a John Doe order to avoid delay in the process of
justice due to anonymity of the potential infringer or defendant.95 The court names the defendant as

91Supra note 73

92Ibid

93Ibid

94 Gowree Gokhale, Payal Chaterjee, Aarushi Jain, John Doe Orders: A Boon for IP protection, available

at <http://www.legalera.in/Front-Page/john-doe-orders-a-boon-for-ip-protection.html> (accessed on 7th

October, 2012)

95 Ibid 34

John Doe until such time the defendant is identified.96 If after passing of this order, the plaintiff
comes across an infringer, then he can serve a copy of the same to the defendant/infringer and seek
adherence.97 If the defendant/infringer fails to comply with the order, then it can result in initiation
of contempt proceedings against him.98 It is however, open for the defendant to argue his case and
prove its innocence in a court of law.99

In another hypothetical example under the Plant Varieties Act. For example let us imagine a
situation where Monsanto comes into the Indian market with their registered variety ‘POQ’. Owing
to its popularity and quality, various people start producing or selling varieties, the denomination of
which is identical with or deceptively similar to denomination of registered variety ‘POQ’. Monsanto
is aware of the fact that such varieties are being sold or produced and that infringement as per
section 64(a) of the Act is taking place yet, it cannot do anything because it is not aware of any
specific infringer/defendant who is selling or producing the variety ‘POQ’. To take care of this
situation, Monsanto can get a John Doe order issued in its favour. This will be an order against all
infringers/defendants whose identity is unknown to Monsanto. And if Monsanto comes across an
infringer/defendant, then Monsanto shall serve the order to this particular infringer and seek
compliance failing which the defendant can face contempt proceedings.

The concept of John Doe orders can be traced back to the reign of England’s King Edward III (1312-
1377), when such orders were used to refer to unidentifiable defendant.100 A John Doe order being
an interim order, the court is empowered to grant such an order under Order 39 Rules 1 and 2 of the
Code of Civil Procedure, 1908.101 Therefore principles that are applicable for getting interim relief
are applicable for obtaining a John Doe order as well.102 The plaintiff must show

• A prima facie case
• Irreparable Injury
• Balance of convenience in his favour before such an order is granted

These 3 grounds have been explained in detail earlier in the note, in the part that deals with Mareva
injunctions.

These orders have been recognized and passed in India. The first John Doe order was granted in the
case of Taj Television v Rajan Mandal103. The Court referring to the Canadian judgments of Jackson v
Bubels104 and Dukoff v Teronto General Hospital105 observed that the act of naming a party is
considered a mere misnomer and as long as the litigating finger is pointed at a particular person,
then the misnomer is not fatal.106 In Luxottixa Group Limited vs. Ashok Kumar, the court passed an

96 Ibid
97 Ibid
98 Ibid
99 Ibid
100 Ibid
101 Ibid
102 Ibid
103 CS (OS) No. 1072/2002
104 28(1972) DLT.500 (B.C.C.A)
105 (1986) 54 O.R.50 (H.C.)
106 This was referred in ESPN Software India Private Limited vs. Tudo Enterprise, CS (OS) 384/2011

35

order against unknown counterfeiters restraining them from selling and manufacturing of
counterfeit optical eyewear bearing the famous trademark “RAY BAN”.107 The Delhi High Court also
restrained unidentified persons from infringing labels, packaging materials and artistic work of the
plaintiff, who was engaged in the sale and manufacture of cigarettes.108

John Doe orders have been issued in India to check piracy and unauthorized transmissions as well. In
Satellite Singapore PTE Ltd. Vs. Star Cable Network and Ors, the Delhi High Court passed orders
prohibiting the respondents from broadcasting/using unauthorized signals of the appellant for
downloading/telecasting purposes during the Indian Premier League cricket tournament.109 The
court further allowed seizure of signal transmitting devices, if channels were downloaded without
proper authorization.110 The same trend was followed in ESPN Software v Tudu Enterprises111. The
plaintiff in this particular case apprehended unauthorized cable transmission of his channel which
was telecasting the ICC Cricket World Cup.112 As this would lead to irreparable loss, damage, loss of
subscription and advertisement revenues the plaintiff filed for a John Doe order which was granted
by the Delhi High Court.113 John Doe orders have also been granted by other states. The District
Court of Andhra Pradesh granted one in 14 Rees Entertainment Pvt. Ltd. V P. Srinivasulu, for the
movie Dookudu.114 The Bombay High Court has also passed a John Doe order to Viacom 18 for the
movie “Gangs of Wasseypur”.115

John Doe orders were modified sometime around 2010 to be applied to the internet.116 The only
problem that arose out of this was that without any limitations as to how these orders would apply
over this very different medium, John Doe orders started being utilized by Plaintiffs in an increasingly
generalized fashions.117 To prevent any sort of copyright or other form of infringement over the
internet, instead of specifically targeting the URLs which contained the unauthorized copy, John Doe
orders for internet infringement started targeting all possible sources of infringement en masse.118
One of the first cases in this regard was the John Doe order granted to the producers of the movie
Singham.119 They were apprehensive of the fact that copies of the movie would be made and
sold/distributed in form of DVDs/CD in the market and/or shown on TV by cable operators.120
Apprehending huge financial losses and the fact that such distribution would prevent movie goers

107 Supra note 82

108 Ardath Tobacco Company Limited vs. Mr. Munna Bhai & Ors., 2009(39)PTC208(Del).

109 Supra note 82

110 Ibid

111 CS (OS) 384/2011

112 Payel Chatterjee, What’s in a name... John Doe arrives in India, available at

<http://www.nishithdesai.com/Research/Article/IPBA%20paper.pdf> (accessed on 7th October, 2012)

113 Ibid

114 Apar Gupta, Access to this site has been blocked as per Court Orders, June 25, 2012, available at

<http://barandbench.com/brief/3/2528/access-to-this-site-has-been-blocked-as-per-court-orders>

(accessed on 7th October, 2012)

115 Ibid

116 Ibid

117 Ibid

118 Ibid

119 Supra note 82, also see Apar Gupta, Access to this site has been blocked as per Court Orders, June

25, 2012, available at <http://barandbench.com/brief/3/2528/access-to-this-site-has-been-blocked-as-

per-court-orders> (accessed on 7th October, 2012)

120 Ibid 36

from going to the theatre, the producers contended for a John Doe order.121 The Delhi High Court,
even though the film had not been released, relying on the principles of Quia TImet passed a
restraining order against all defendants and other unnamed undisclosed persons from distributing,
displaying, duplicating, uploading, downloading or exhibiting the movie in any manner and infringing
the copyright of the plaintiff through different mediums without prior license from the plaintiff.122

Since a John Doe order has been passed on lines of a Quia Timet injunction, it is important to point
out what a Quia Timet injunction is. A Quia Timet Injunction is similar to a John Doe order in the
sense that it is passed against a defendant whose identity is unknown. However, the difference is
that, it is passed prior to when the infringement takes place. They are granted only upon proof of
imminent danger, threatened injury being practically irreparable and the impossibility to protect the
plaintiff’s interests in the event of injurious circumstances.123 How such an injunction can apply in
the context of the Act is illustrated above.

In the above stated example, let us further assume that Monsanto is planning to launch another
variety ‘POR’ in the market. However, in light of its experience with the registered variety ‘POQ’ it is
now apprehensive that when the variety ‘POR’ is introduced in the market, then owing to the
reputation, quality etc of Monsanto, various people may come up with varieties, the denomination
of which is identical or deceptively similar to that of variety ‘POR’. In order to avoid this, Monsanto
can apply for Quia Timet Injunction. Thus, we see that a Quia Timet injunction may also be
applicable.

While the scope of John Doe orders has been steadily increasing, there have been certain judgments
that have highlighted that such orders should be cautiously used. The Delhi High Court in the case of
Indian Performing Right v. Mr. Badal Dhar Chowdhry, held that the courts should be extremely
cautious in granting ‘John Doe’ orders.124 They must specify the extent of applicability of such orders,
the product or article concerned to which it relates to and the steps that can be taken by the
aggrieved party to enforce such order.125 With respect to infringement over the internet, the
Madras High Court in the case of Creative Commercials v. Bharat Sanchar Nigam Limited126 held that
the plaintiff is obliged to identify the particular URL where the infringing copy has been kept and the
block cannot extend to the entire website.

All of the above highlights that John Doe orders are granted extensively in the India. It has also been
pointed out how a John Doe order can be used under the Act. Thus it can be stated that in case of
infringement, it is a viable relief.

3.12.2.5 Norwich Pharmacal Order:

121 Ibid
122 Ibid
123 Fletcher v. Bealey (1884) 28 Ch.D. 688 at p. 698, available at Gowree Gokhale, Payal Chaterjee,
Aarushi Jain, John Doe Orders: A Boon for IP protection, available at <http://www.legalera.in/Front-
Page/john-doe-orders-a-boon-for-ip-protection.html> (accessed on 7th October, 2012)
124 Supra note 82
125 Ibid
126 C.S No. 294/2012

37

A Norwich Pharmacal order (NPO) requires a respondent to disclose certain documents or
information to the applicant. The respondent must be either involved or mixed up in a wrongdoing,
whether innocently or not, and is unlikely to be a party to the potential proceedings. An NPO will
only be granted where "necessary" in the interests of justice.127

Judicial order, in accessing further evidence if any and obtaining information critical to the ongoing
case, supplements the knowledge of the Court and thereby ensures transparency in the proceedings.
Norwich Pharmacal Order is one of the tools available to the applicant whose significance is growing
with judicial set-ups of different nations recognizing the import of availability of such an option.
When granted, Norwich Pharmacal orders compel pre-action disclosure, typically by third parties.

The Order was founded in Britain, in an appeal in the matter of Norwich Pharmacal Company &
Others v Commissioners of Customs and Excise128. The reason behind underlying such orders was
stated by Lord Reid in paragraph 12 of the case:

“if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate
their wrong-doing he may incur no personal liability but he comes under a duty to assist the person
who has been wronged by giving him full information and disclosing the identity of the
wrongdoers." In this case the applicants were aware that their patent was being infringed by illegal
importations, however they had no inkling as to who the importers were. They sued the customs
and excise commissioners. They further sought an order for disclosure of their names and contact
details, basing the claim on the equitable right to file a bill for discovery, which was a cause of action
seeking disclosure of information from the defendants. Overlooking the long standing “mere
witness” rule, the House of Lords noted that in the absence of the entire information, the ultimate
wrongdoer would never be brought to trial.

The Norwich Pharmacal jurisdiction is a means whereby a party may request the court to order the
disclosure of information where there has been or may have been wrongdoing by a third party and
where the information is required in order to seek justice in respect of that wrongdoing. The
jurisdiction originates in the field of patent law129 and was first and most famously invoked in the
context of national security in the Binyam Mohamed case.130

The Justice and Security Bill of the United Kingdom describes this jurisdiction in clause 13(1), in the
following terms—

"This section applies where, by way of civil proceedings, a person ("A") seeks the disclosure of
information by another person ("B") on the grounds that—

127 Norwich Pharmacal orders: a quick guide retrieved from http://ld.practicallaw.com/0-211-3137 , last

accessed on 22nd of October, 2012

128 [1973] 3 WLR 164

129 Ibid.

130 This was a complex case in which there were six judgments at first instance (i.e., in the Divisional

Court) and two judgments in the Court of Appeal. The latter are authoritatively reported at [2011] QB

218, where the full reference to the case is given as R (Mohamed) v Secretary of State for Foreign and

Commonwealth Affairs (No 2) [2010] EWCA Civ 65, [2010] EWCA Civ 158. 38

(a) wrongdoing by another person ("C") has, or may have, occurred,

(b) B was involved with the carrying out of the wrongdoing (whether innocently or not), and

(c) the disclosure is reasonably necessary to enable redress to be obtained or a defence to be relied
on in connection with the wrongdoing."131

Illustration:

Let us for instance say that a certain Mr. Hood, a man holding a position of paramount responsibility
is summoned by the head of the organization and is told that he’s been alleged of lack of proficiency
and misappropriation of the organization’s finance by an unidentified person, and the director
refuses to divulge the identity of the source. Consequently, Mr. Hood is subject to a series of
disciplinary hearings and is unable to disprove the charges slapped against him as he is ignorant of
quintessential information, the source. In such a situation, if an order of this caliber is made available
to Mr. Hood, by an understanding judiciary, the claimant will be better placed to argue for his
cause.132

The Canadian jurisprudence has willingly embraced and inducted the tool of NORWICH PHARMACAL
ORDER as a judicial endowment. In a matter before the Canadian Court, Glaxo Wellcome PLC v.
M.N.R133, the claimant, owner of a patented drug sought the disclosure of the people violating its
patent from the custom officials, which was rightfully granted to him.

Scope of the Order:

The Norwich Pharmacal order has been restricted in its scope to cover only tortuous offences, as
was observed by Sedley, L.J. in Interbrew v Financial Times.134 However, in Ashworth v MGN135 the
House of Lords in the voice of Lord Woolf, C.J. found no objection in expanding this relief to criminal
offences as long as the person seeking the order was a victim of the crime.

In Norwich Pharmacal the purpose of the information was to enable the applicant to commence
proceedings against the wrongdoer. This is no longer a prerequisite. The other question that arose in
respect to this order was whether a NPO can be made in one jurisdiction in order to identify a
defendant coming under another jurisdiction.136

The following years witnessed the widening of the ambit of the term “disclosure” and the grounds
for seeking the same. In Mitsui v. Nexen Petroleum137, Lightman, J. declared that a Norwich

131 Justice and Security Bill [HL]: Norwich Pharmacal jurisdiction - Constitution Committee Contents,
retrieved from http://www.publications.parliament.uk/pa/ld201213/ldselect/ldconst/31/3103.htm#n4 on
22nd October, 2012
132 See P v. T [1997] 1 W.L.R. 1309
133 (1998), 162 D.L.R. (4th) 433
134 [2002] EWCA Civ 274
135 Ashworth Hospital Authority v MGN Ltd [2002] UKHL 29
136 See BSC v Granada Television [1981] A.C. 1096
137 [2005] EWHC 625 (Ch)

39

Pharmacal order can be passed where “the claimant requires disclosure of crucial information in
order to be able to bring its claim or where the claimant requires a missing piece of the jigsaw”. This
judgment gave rise to the “missing piece of the jigsaw” test which was used most recently in R. (on
the application of Mohamed) v Secretary of State for Foreign and Commonwealth Affairs.138

The Digital Economy Act of 2010 established by the UK parliament for regulation of digital media
envisaged the incorporation of the norwich pharmacal orders. the primary concern of the law
makers in this regard is not issuance of information but the subsequent handling of it.

The availability of such enforcement is a judicial respite since an option for obtaining further
information is in any case better than limited information. In India, the principle of Norwich
Pharmacal order’s has not been put to use so far since the concept is relatively new. However, the
Plant Variety Protection and Farmer’s Rights Act, with the enshrinement of section 66, provides for
various reliefs available to the plaintiffs on account of infringement of any of his rights to market,
distribute, import or export the varieties.139 The Norwich Pharmacal order is an effective measure to
ensure that the ultimate wrongdoer is put to trial. Under this order, if a person is mixed up in a
wrong, irrespective of his involvement being voluntary or obligatory in nature, is immaterial. The fact
that he was involved is sufficient to bring him to action. However, as has been mentioned earlier, a
mere bystander cannot be brought to trial.

Illustration:

Let’s say Thiruma, a local farmer in Gujarat has learnt to cultivate rice by combining his traditional
knowledge and skills despite the paucity of water and has patented this technique. A certain Ms.
Chelluma comes to visit Thiruma from Rajasthan. Both being arid states, Chelluma is marveled by the
technique and Chelluma sells this piece of information to her Sarpanch in Rajasthan. Thiruma has
filed a suit against Thiruma after learning that her village in Rajasthan is now cultivating rice on the
basis of his technique. He sues her, for infringement. He is aware that someone bought the idea
from Chelluma but his knowledge ends here. He now, by virtue of Norwich Pharmacal order’s can
compel Chelluma to handover the name of the person she traded information with.

3.12.2.6 Cease and Desist Letter:

A cease and desist letter refers to an analogous demand letter, having no governmental authority
behind it but threatening legal action.140

Failure to take an action once it is apparent that there may have been an infringement of the patent
owner’s right could imply waiving of his right. The cease and desist letter usually denotes that the

138 [2008] EWHC 2048 (Admin).

139 Section 2(c),The Protection of Plant Varieties and Farmers’ Rights Act, 2001 available

at<http://agricoop.nic.in/PPV&FR%20Act,%202001.pdf> (last accessed on 22nd of October 2012)

140http://books.google.co.in/books?id=35dZpfMmxqsC&pg=PA141&lpg=PA141&dq=cease+and+desist+

order&source=bl&ots=k9tUZFogIa&sig=YNYFhApCmGbTWlFYW17SRs5Vqk&hl=en&sa=X&ei=fD2GUI

q-J4PjrAeB-YC4DA&ved=0CDsQ6AEwAg#v=onepage&q=cease%20and%20desist%20order&f=false

accessed on 23rd October, 2012; See also, A Dictionary of Modern Legal Usage, Bryan A Garner,

Oxford University Press 40

use of the subject matter in question is the standalone right of the owner who enjoys the right of
exclusivity over it. It then describes how the alleged infringer has used the prospective plaintiff’s
right and demands that the alleged infringer ceases and desists the further use of this property.141
Even if the cease and desist letter does not accomplish the object of convincing the infringer to
cease his or her actions, it nevertheless, provides an actual notice of the patent, thereby, enabling
the patent owner to recover the damages after the date of the cease and desist letter was sent. 142

In Dell Computer Corporation v. Arun Kumar and Ors., the plaintiff, an American who are
internationally recognized for their computer-related consulting, installation, maintenance, leasing
warranty and technical support services, have registered their trademark, both internationally, as
well as the their liaison with India. In March 2001, while flipping through Yellow Pages, they
encountered a company, Dell Technologies at Bangalore addressed through its proprietor Arun
Kumar, defendant No. 1. The plaintiffs sent a cease and desist letter, to the defendant intimating
them about the deception being meted out due to such an infringement of exclusive right in the
usage of the mark ‘Dell”. This triggered a series of telephonic negotiations between the two, which
however resulted in the initiation of a legal proceeding as the defendant sought to obtain more
money in order to drop the name “Dell” from his company. The defendants however did not turn up,
as a result of which it was an ex-parte hearing. The Delhi High Court held that in the absence of
concrete proof and evidence to the contrary, the plaintiffs’ rights are to be restored.

In Exphar Sa And Ors. vs Bharat Shah And Anr.143, while deciding the jurisdiction of the plaintiff,
observed that “the cause of action for the present suit first arose in the month of November, 1993
when the defendant's attorneys addressed a cease and desist letter to the plaintiff”, implying that
the legal engine to restore the infringed right is restored as soon as such a notice is sent.

In Mars Incorporated v. T. Raghulal and Anr.,144 the plaintiffs instituted a trial praying for a
permanent injunction against the defendants insofar as the use of goods under their trademark is
concerned. The Court held that the issue in question was not infringement of trademark but the
resentment of the plaintiffs for they were operating only in three states. The Court granted an
interim relief so the activities were compelled to be “ceased”, however not desisted.
In Sasken Communication Technologies Ltd. Vs. Mr. Anupam Aggarwal and Ors145, the defendants
were charged for the infringement of trademark under sections 11, 29(4) and 29(5), as the
defendants were using “Sasken”. Before instituting the proceedings, the plaintiff had already sent a

141http://books.google.co.in/books?id=LEzQiYQmPb8C&pg=PA70&lpg=PA70&dq=cease+and+desist+le

tter&source=bl&ots=JlvInmC4Kb&sig=subhRl9qACq2o9VQYmPkw4nW2M&hl=en&sa=X&ei=FS6GUM

PZFIzkrAeQ04GwCQ&ved=0CDQQ6AEwAQ#v=onepage&q=cease%20and%20desist%20letter&f=fals

e accessed on 23rd of October, 2012; See also, Protecting your company's intellectual property : a

practical guide to trademarks, copyrights, patents & trade secrets. Deborah E Bouchoux, AMACOM,

2001

142http://books.google.co.in/books?id=x4H0ulrSDIUC&pg=PA406&lpg=PA406&dq=cease+and+desist+o

rder&source=bl&ots=iYpKz_LUGa&sig=kcIRdHB60YMUxftJvtWQSmkAiCs&hl=en&sa=X&ei=fD2GUIq-

J4PjrAeB-YC4DA&ved=0CGMQ6AEwCA#v=onepage&q=cease%20and%20desist%20order&f=false

accessed on 23rd October, 2012; See also, The Securities Enforcement Manual, 2nd edition, Kirkpatrick

and Lockhart Pretson Gates, Ellis LLP.

143 2003 (26) PTC 461 Del

144 2009(40)PTC460(Del)

145 2009(41)PTC523(Del) 41

cease and desist notice to the defendants. The Court ruled in favour of the plaintiffs and granted the
order.

Therefore the cease and desist letter should address the following elements:

• It should specify the form of IP that is being infringed. In respect of registered IP this
includes identifying the registration details, which enables the recipient of the letter
to search the relevant register to confirm the IP rights that are being enforced.’

• It should set out a description of the alleged infringing act including the date on
which the act was considered to have occurred.

• It should clearly demand that the recipient of the letter cease to act in an infringing
manner and that if the recipient fails to do so then the enterprise may seek an
appropriate remedy from the court without further notice.

• It would usually identify the nature of remedies available. It is also open to the
enterprise to place other demands upon the infringer which could be otherwise
obtained from a court including:

• delivery up or destroying the infringing articles;
• providing documentation of sales or other exploitation of the infringing articles.
• It is usual to seek a response within a reasonable time frame from one to two weeks

although this will vary depending on the circumstances.

The IP adviser for the enterprise will most often issue a letter. There are two reasons for
this: 1) The IP adviser will be able to craft the letter in a manner which should avoid any
reasonable prospect of an action for unjustified threats. 2) A letter from a firm of lawyers
sends a message to the recipient that the enterprise is serious about protecting its IP rights
and has already taken advice on its legal position.

Before issuing the cease and desist letter it should be noted that a number of practical steps
be taken including:

• Obtaining evidence of the infringing act: This may entail purchasing articles and
obtaining a statement from the individual who purchased the infringing article
together with any supporting documentation such as receipts. Photographs and
videotape are also useful evidence to have in support of the enforcement action in
the event that the enterprise wishes to obtain orders from a court;

• the accurate details of the infringer should be obtained to the best of the ability of
the enterprise. This includes undertaking company and business name searches.

The cease and desist letter should be sent by registered post to the infringer and by
facsimile if a fax number of the infringer is known. Depending on the urgency of the matter
it may also be appropriate to have the letter of demand personally delivered.

The effect of the cease and desist letter is significant. First, it protects the enterprise against
an order for costs where the plaintiff would have otherwise argued that it would have
agreed to the demands had it been notified to them prior to any court action. Second, if the
infringer repeatedly infringes the IP rights after receiving a letter of demand it would be
evidence of a deliberate intention to infringe those IP rights. This may be persuasive for a

42

court in deciding whether to grant an injunction or consider whether there has been a
flagrant infringement that would entitle the enterprise to additional damages. Third, it will
also preserve the right of the enterprise to elect to obtain the order for an account of profits
because the infringer has been made aware of the enterprise’s IP rights.

Of course there are quite often circumstances where the enterprise believes it must act with
great speed in order to preserve evidence of the infringing activity. By issuing a letter of
demand the infringer has an opportunity to destroy that evidence. In these cases it is
possible to apply to the court for an ex parte hearing where the enterprise can put its case
and seek injunctions and/or an Anton Pillar order that enables it to preserve such evidence.
There are particular rules concerning ex parte hearings and the issuing of Anton Pillar orders
given the draconian nature of them, which will be well known to the enterprise’s legal
advisers.

Though Litigation is a very strong recourse which enterprises take to enforce their
Intellectual Property, but it should be the last resort. Preferable alternatives to Litigation
should be 1) Cross Licensing 2) Alliances 3) Royalty fee payments.

3.13 UNJUSTIFIED THREATS

Most of the IP legislations provide for a counter-attack from a party who has received a
threat that it will be sued for infringement of IP rights which is unjustified. Consequently any
enterprise purporting to enforce its IP rights needs to tread carefully otherwise it may face
having to pay damages and be the subject of injunctions. The terminology used in the Trade
Marks Act is in respect of ‘groundless threats’. The other Indian IP statutes contain
analogous provisions and the case law in respect of them helps present a series of principles
that should be considered before the issuing of a letter of demand.
A ‘threat’ is not defined in the IP legislation but it seems that it can be made in any manner,
whether oral or in writing. It has been found that it can be made under a ‘without prejudice
letter’. Till date there is yet to be a decided case dealing with a threat by way of email
although there is no reason as to why this could not be so.

The mere notification of the existence of a right to sue for infringement of IP rights does not
constitute a threat. There is a test to determine whether there is a threat or not, which is:
whether the language would convey to any reasonable person that the author of that
particular document is intending to bring proceedings for infringement against a person said
to be threatened. It should be noted that direct words are not necessary to determine that
an action would be taken. This test was applied in U and I Global Trading (India) Pty Limited
v. Tasman- Warajay Pty Limited, (1995) 32 IPR 494.

The mere citing of all relevant details of registration and priority will not constitute a threat.
This test was applied in Rosedale Associated Manufacturers Ltd. v. Airfix Products Limited
[1956] RPC 360. The issuing of a general warning concerning infringement would ordinarily
not constitute a ‘threat’.

An indication that the enterprise will protect its interest with 'utmost vigour' constitutes a
threat, this was held in Rosedale Associated Manufacturers Lts Case. Expressing an intention

43

to enforce rights in a reasonable manner also constitutes a threat, this was held in Bowden
Controls v. Acco Cable Controls Ltd., [1990] RPC 427 or an intention to 'do our best to throw
the dirt around regarding our patents' constitutes a threat, which was held in HVE (Electric)
Limited v. Cufflin Holdings Limited [1964] RPC 149. A clear statement that the enterprise
does not have the rights to issue legal proceedings will of course not constitute a threat. The
judiciary came to this conclusion in U and I Global Trading (India) Pty Limited v. Tasman -
Warajay Pt’y Limited (1995) 32 IPR 494.
The threat should be explicitly restricted to the jurisdiction in which the infringement has
allegedly occurred. Essentially if the alleged infringement acts are found to constitute
infringement then the threat is justified. Consequently the determination of whether an
unjustified threat has occurred will only be determined once the issue of infringement has
been settled.

The infringement action must be undertaken with ‘due diligence’. In other words, the
enterprise cannot wait too long to commence and pursue its action for infringement
otherwise there will be a risk of counter-action for the groundless threats.

The enterprise while dealing with unjustified threats should follow the following points
when dealing with cease and desist letters

• only assert actions that can be proved;
• only refer to multiple forms of IP rights if infringement can be proved of all of those

IP rights;
• only assert infringement where and when there is a will to actually institute

proceedings.

3.14 PATENTS AND INFRINGEMENT

The following activities have been held to be infringement activities over a registered
patent. These activities were laid down in the case of Raj Prakash v. Mangat Ram Chowdary
AIR 1978 Del 1:

• making a patented product;
• using the patented process to make a product;
• exporting a patented product for commercial purposes;
• importing when the goods are introduced into the jurisdiction;
• making, hiring, selling or otherwise disposing of a product resulting from the use of a

patented method.

Raj Prakash v. Mangat Ram Chowdary, “In the above mentioned case Raj Prakash the
appellant produced and marketed a toy called ‘Viewer’. The product used a 35 mm medially
cut positive film on which pictures could be viewed through a lens fitted in a viewer specially
designed for this product alone. He had obtained a patent bearing # 111926 and declared
that this ‘Viewer’ was his invention. It is important to note that the Viewer was quite
attractive enough for children and was also used for educational purposes. Raj Prakash had
found out that the defendant one Mangat Ram Chowdhary had infringed the ‘Viewer’
patent and was also manufacturing and selling his product out in the open market. The

44

defendants company was manufacturing and selling in the open market film strips viewer
which were identical to and a copy of the viewers manufactured by Ram Prakash for which
he already had a registered patent. The court decided in favour of the Ram Prakash and
ordered the defendant to restrain from using Patent # 111926.”

Actions for enforcement of patents invariably involve a challenge on the validity of the
patent. Under Indian patent law the sale of a patented product without conditions entitles
the purchaser to use the product freely although the patent owner may impose conditions
on the sale concerning its use and those conditions will apply to any person who has notice
of them. This is to be compared with the position in the United States where the sale is
taken to have exhausted the rights of the patent owner. Of course, there are some aspects
where the patent system can be used to the advantage of the enterprise seeking to enforce
its patent rights. If the enterprise is aware of a patent infringement it can request the Patent
Office to publish a complete application for a standard patent. This puts the infringer on
guard and entitles the applicant to the relevant remedies once the patent is granted: This
has been provided under section 54(1) of the Patents Act.

If the enterprise becomes aware of a competitor’s patent application, the enterprise is open
to lodge a notice with the Patents Office that it is concerned that the competitor’s invention
is not patentable. This has been provided under Section 55A of the Patent Act. The
competitor will then be notified of this notice and the Commissioner of Patents can consider
it in the course of examination of the application.

It is also open to an enterprise to pre-empt any infringement actions by a competitor. The
enterprise can seek a declaration from the court that its exploitation of an invention will not
constitute infringement of another person’s patent.

Before commencing any such action the enterprise must request from the competitor a
written admission that the proposed exploitation by the enterprise would not infringe the
competitor’s patent and give the competitor ‘full written particulars’ of the proposed
exploitation and undertake to pay a reasonable sum for the competitor’s expenses in
obtaining advice about whether the proposed exploitation would infringe the claim. These
preconditions pose some commercial difficulties for the enterprise. Informing a competitor
of its proposed commercialisation strategy and taking legal advice will usually not sit well
with the management of the enterprise. Not surprisingly any decision to seek a non-
infringement declaration needs to be weighed against the business objectives of the
enterprise.

The effect of obtaining a non-infringement declaration is that the enterprise is free to
exploit the invention in a manner that was disclosed to the competitor. This raises a
difficulty if the commercialisation strategy changes, as is often the case once the reality of
market conditions is felt by the enterprise. Nevertheless this can be a powerful tool for an
enterprise seeking to break into a new market which is dominated by one or few
competitors. The competitor may be able to use its financial muscle to manipulate the court
system by extending litigation against the enterprise to prevent its entry into the market. A
declaration for non-infringement will cut through this litigious play.

45

3.14.1 INTERNET AND BUSINESS METHODS

The Internet itself does not present any novel legal principles relating to the enforcement of
IP. However, the advent of patents for business methods particularly in an online
environment and for software raises the stakes for infringement of IP rights. The potential
damages that could be incurred are now potentially much greater than a decade or so ago.

Now if we look at how companies have enforced their IP on an infringer we should not miss
the case of Priceline.com suing Microsoft Inc. Priceline.com which allows consumers to bid
on the internet for plane tickets and hotel rooms had obtained a patent on software which
reverse-auctioned air tickets. Priceline said that Microsoft had violated this patent by
unveiling a service on Expedia.com (a Microsoft website)

The lawsuit by Priceline was centered on Expedia's ‘Price Matcher’ service pertaining to
hotel rooms and airline tickets. Eventually both Microsoft and Priceline.com settled their
dispute, with Expedia agreeing to pay royalties for its ‘Price Matcher’ service to Priceline.

3.14.2 USE OF DIVISIONAL APPLICATIONS

If the enterprise has filed a complete application for a standard patent and it is aware of
infringement activities it may wish to file a divisional application for an innovation patent.
This process is applied when petty patents were available and it has been suggested that the
same can now be done with innovation patents.

3.15 COPYRIGHT AND INFRINGEMENT

Infringement of copyright must relate to a protected work. There must be some connection
between the original work and the alleged infringement work. In relation to literary,
dramatic, musical or artistic works an infringement will be established if there is a
substantial part of the copyright work reproduced and considering comparing the alleged
infringing work against the copyright work. What also needs to be addressed is the issue of
quality rather than quantity. If a person authorises another person to perform an infringing
activity then that first person will be also liable for infringement.146

If the infringement is shown to be innocent then the copyright owner cannot seek damages
although it may be entitled to an order for account of profits. On the other hand, if an
enterprise can establish a flagrant infringement of its copyright then it may be able to obtain
an order for ‘additional damages’. For these reasons the use of appropriate copyright notice
and letters of demand are an important step in enforcing copyright.

3.15.1 DEFENCES

It is worth noting that not all copying of a substantial part of a copyright work will be
unlawful. The Copyright Act 1957 sets out a range of defences to an action for infringement

146. W.R. Cornish and David Llewelyn, Intellectual Property: Patents, Copyrights,

Trademarks and Allied Rights, Sweet & Maxwell; 5Rev Ed edition (4 Sep 2003) 46

of copyright including research and study or criticism or review. In respect of computer
programs, the copyright will not be infringed if a person:

• makes back-up copies of the software;
• develops inter-operable products by exercising one of the copyrights;
• copies to correct errors that prevent the original software from operating; or
• exercises those copyrights in the course of security testing computer systems of

which the original software is a part: see s. 43 (1) (ab) of the Indian Copyright Act,
1957.

This criterion has been laid down in John Richardson v.Flanders [1993] FSR 497.

3.15.2 LIMITATION PERIOD

The Copyright Act provides that the limitation period is six years from the date on which the
infringement took place.

3.15.3 GROUNDLESS THREATS

A person who has received a groundless threat of infringement of copyright can obtain a
declaration, injunction or recover damages. This is provided under section 60 of the
Copyright Act, 1957.

3.15.4 CUSTOMS SEIZURES

It is open to the enterprise to request Customs to seize any articles which may constitute
infringement of the enterprise’s copyright, as provided under section 55 and 58 of the
Copyright Act. The customs has the power to seize and destroy infringing articles.

3.16 TRADEMARKS AND INFRINGEMENT

The survey of Indian patent attorneys undertaken by us shows that trademarks is the most
common form of IP litigated in Indian courts. This is probably due to there being less risk of
a trademark being removed from the register than say a patent because the criteria for
registration is less problematic. It is easier for the human mind to determine whether
something is distinguishable than whether an invention is novel. An action for trademark
infringement will also be coupled with claims that the ‘infringer’ has committed the tort of
passing off and/or breached provisions of the Competition Act.
Infringement will occur if a person uses, as a trademark, a sign that is substantially identical
with or deceptively similar to, the registered trademark in relation to the designated goods
or services. Infringement will also occur if the use is substantially identical with or
deceptively similar to a trademark that is used in respect of goods or services that are
closely related to, or are of the same description as, the designated goods and services
unless the defendant can establish that such use is not likely to deceive or cause confusion.
Ancillary infringing acts include applying a trademark to damaged goods or altering or
obliterating a mark that has been applied to designated good. The essential feature of a
claim for infringement is that a comparison must be made of the marks. This is both visual

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and oral. The courts take account of what a reasonable person in the relevant market would
think.

A person will not be infringing a registered trademark if, amongst other things:

• it uses the person’s name in good faith;
• the use of a sign is in good faith and for the purpose of indicating quality, quantity,

purpose, value or geographic region of the goods or services;
• the use is for comparative advertising, although there are obvious risks in

undertaking a comparative advertising campaign particularly in respect of liability
under the Competition Act;
• parallel importation (where the trademark has been applied with the authorisation
of the owner of the registered trademark );

The use by another person of the mark must be ‘as a trademark’. If the mark does not
inherently distinguish the designated goods or services then there is a risk that the infringer
may claim that its use is not ‘as a trademark’ and that it is merely describing the goods or
services for which the mark is applied. This is perhaps one of the most common forms of
rebuttal in any action to enforce a registered trademark.

3.16.1 WHEN TO COMMENCE AN ACTION

An action can be commenced while the application is on foot but it is not possible to obtain
an order from a court until registration is granted. For this reason it is common for a party to
seek to expedite the examination of a trademark where there is suspected infringing
activity.

3.16.2 GROUNDLESS THREATS

The person may seek orders in relation to groundless threats of infringement of trademarks

3.16.3 LIMITATION PERIOD

The Trade Marks Act does not set out an express provision dealing with limitation periods
for commencement of infringement actions.

3.17 PLANT VARIETIES AND INFRINGEMENT

Once an application under Plant Varieties Act (PVA) is accepted, the applicant has a
provisional period of protection until the application is disposed of or the applicant is given
written notice that protection will cease to apply. This has been provided under section 21
and 23 of the Plant Varieties Act. Infringement will occur if there has been a performance of
any of the plant breeder’s rights without authorisation.

3.17.1 DEFENCES

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It is a defence to an action for infringement of PVA if the court is satisfied that the infringer
was not aware of, and had no reasonable grounds for suspecting, the existence of PVA.

3.17.2 GROUNDLESS THREATS

There is no provision in the Plant Varieties Act for groundless threats of an infringement
action.

3.18 REGISTERED DESIGN AND INFRINGEMENT

A registered design will be infringed if the design has been applied or an obvious fraudulent
imitation of it has been made. Additionally, infringement will occur if an article bearing the
design has been sold or imported for the purposes of trade.

3.18.1 DEFENCES

A defendant facing an action for infringement of a registered design must rely on
establishing the difference between its design and that of the registered design.
3.19 CIRCUIT LAYOUTS AND INFRINGEMENT

It is an infringement of rights if the circuit layout has been copied. There must be some
causal connection between the alleged infringing layout and the protected circuit layout.
Deconstruction of the layout will constitute infringement although independent creation of
it will not.

3.19.1 DEFENCES

The following will constitute defence to any action for infringement:

• innocent commercial exploitation. This will be established if the alleged infringer did
not know that the circuit was authorised;

• copying for private use, although such copying must not prejudice the interests of
the owner of the EL rights;

• research and teaching;
• reverse-engineering for the purposes of evaluation and analysis.

3.19.2 EXHAUSTION OF RIGHTS

The Circuit Layouts Act provides that the rights are exhausted if the purchaser of the circuit
layout exploits the copy of the engine’s greater circuit in India.

3.20 CONFIDENTIAL INFORMATION and INFRINGEMENT

An enterprise can restrain a third person who received the information from the initial
recipient if it can be shown that the third party was aware that the information was of a
confidential nature. The greatest practical difficulty with enforcement of confidential
information is that it is difficult to get the horse back in the yard. Once the information is

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released the damage is almost irreparable. In many circumstances damages will not be
adequate to compensate the enterprise for the loss of competitive advantage that the
confidential information would otherwise give.

3.20.1 HOW TO BRING AN ACTION FOR CONFIDENTIAL INFORMATION?

A right of action will lie for breach or infringement of confidential information where in an
enterprise can prove that the other party has used confidential information, directly or
indirectly obtained from it and without its consent.

“Four requirements have to be fulfilled:

• The claimant must identify clearly the information which is alleged to be
confidential.

• The information itself must have “the necessary quality of confidence about it”
• That the information must have been imparted in circumstances importing an

obligation of confidence and
• There must have been an unauthorised use of that information to the detriment of

the party communicating it.”147

3.20.2 DETERMINATION OF INFORMATION

Whether the information has the necessary quality of being confidential has to be
determined in all the circumstances. It must not be something which is a public property
and public knowledge, but it is perfectly possible to have a confidential document, be it a
formula, a plan, or sketch or something of that kind, which is the result of work done by the
maker on materials which may be available for the use of anybody.

In an English Case: Fraser v Thames Television [1983] 2 All E.R. 101 it was held that an idea
for something yet to be elaborated may attract legal protection as confidential information.
To attract such protection the information may be simplistic but must have a sufficient
degree of certainty, with a significant degree of originality and the idea must be clearly
identifiable.

147 How to bring an action for Confidential Information? 17th August 2007 available at

<http://www.lawdit.co.uk/reading_room/room/view_article.asp?name=../articles/Bringing%20an%20actio

n%20for%20breach%20of%20Confidential%20Information.htm> 50