Intellectual Property Rights

Intellectual Property Rights
Introduction

The protection of intellectual property rights in India continues to be strengthened. There is a well-established statutory, administrative and judicial framework to safeguard rights, whether they relate to patents, trademarks, copyright or industrial designs. Well-known international trademarks have been protected in India even when they were not registered in India. The Indian Trademarks Law has been extended through court decisions to service marks in addition to trade marks for goods. Computer software companies have successfully curtailed piracy through court orders. Computer databases have been protected. The courts, under the doctrine of breach of confidentiality, accorded an extensive protection of trade secrets. Right to privacy, which is not protected even in all developed countries, has been recognized in India. At Annexure 1 is a note on the steps being taken by the Government of India to strengthen and modernize the intellectual property administration system, including patent information services, trademarks registration and patent offices in India.
With specific reference to the obligations under Article 70.8 and 70.9 of the TRIPS Agreement, where India was required to provide a means for receipt of applications for product patents for pharmaceuticals and agricultural chemicals and to grant exclusive marketing rights on fulfillment of certain conditions, the Embassy would like to state the following:

1. India has established a mailbox system through administrative instructions. More than 2200 applications have been filed in this mailbox. About 600 of these applications have been filed by US companies.
2. No Exclusive Marketing Rights (EMR) application has so far been filed.
3. In respect of Article 70.8, the dispute raised by US related only to the legal security of the patent applications filed in the mail box system established through administrative instructions;
4. In respect of Article 70.9, the US argues that India should have had the necessary legislation in place for grant of EMR with effect from 1.1.95. India's stand was that the obligation to grant EMR arises only after an application for EMR is filed after fulfilling all the prescribed conditions and that, therefore, India had flexibility with regard to the timing of legislation;
5. In view of (3) and (4) above, the points raised by the US relate to only how and when India should fulfill these obligations. Even the US has not claimed that India has not accepted these obligations.

1. Comments on the Submission of Pharmaceutical Research and Manufacturers Association
PhRMA has mentioned that India should adopt a patent law which offers immediate product patent protection for pharmaceuticals in line with the highest international standards, and offer protection for all products not yet available in the Indian market. It is submitted that this is a demand that goes beyond India's obligations under the TRIPS Agreement as India is availing the full transition period therein. The ten year transition period available for providing product patents to pharmaceutical products is within WTO rules and a unilateral examination on the part of USA should not be allowed to overrule this multilateral understanding. Regarding the provision of the mailbox and EMR facility, PhRMA is aware that the issue has been taken up in the WTO and India has committed itself to implementation of the recommendations of the panel/appellate body.
Regarding the lack of intellectual property protection in the pharmaceutical sector, it may be mentioned that India does provide for patents in the pharmaceutical sector. However, in terms of Section 5 of the Patents Act, the patents are restricted to the methods of process of manufacture and not to the substances themselves. In terms of the TRIPS Agreement, India has time till January 1, 2005 to extend the product patent protection to this area. Therefore, there is no reason why the US pharmaceutical industry should have reservations on this score.
As regards the drug pricing policy of India, PhRMA has alleged that the pharmaceutical industry is unable to attract investment and the research based pharmaceutical industry is either withdrawing from India or not expanding operations. It is submitted that after the commencement of the liberalization process in India i.e. from August 1991 to November 1997 a total of 249 approvals for foreign direct investment have been obtained in the drug and pharmaceutical sector. These investment approvals envisage a total investment of Rs.6220.27 million. It may be noted that the number of approvals has doubled in 1994-96 as compared to 1991-93. In respect of the PhRMA averment that drug prices are being fixed on outdated cost data, the Department of Chemicals and Petrochemicals, Government of India has stated that the pricing is done based on actual cost data at manufacturing plants. It may be mentioned that the Government of India has not accepted the offer in 'good faith' for abolition of drug price controls. As regards the interests of Indian patients mentioned by PhRMA, under the present socio-economic conditions prevailing in India, drug price controls are required, particularly when no social security or an effective insurance system is yet in place.
PhRMA has mentioned that foreign companies experience arbitrary pricing norms of the Bureau of Industrial Costs & Prices, arbitrary local FDA decisions, high (42%) import duties and complex import procedures. It is submitted that these have no real basis and that specific cases need to be pointed out. The BICP pricing norms are based on accepted principles of costing viz. Actual cost plus a reasonable return of 14% on net worth and 22% on capital employed. 4% is added if the production is undertaken from basic stage. Further, FDA decisions are based on provisions of the Drugs and Cosmetics Act and the rules made thereunder. In fact, the US FDA has stricter norms than those prevailing in India. With regard to import duties, for pharmaceutical products, they have been brought down from 40% (plus 2%) to 30% (plus 5%) in the 1997-98 budget. These tariff rates have declined and are within India's WTO bindings. As regards import procedures, very few pharmaceutical items require import licenses. Only Penicillin and its derivatives, 6APA, Tetracycline, Oxytetracycline, Vitamin B 1, B2, Rifampicin and its intermediates and Streptomycin are placed in the negative list, requiring import licenses. Nevertheless, anomalies, if any, in the price control order and measures for free pricing are continuously under consideration of the Government of India.
PhRMA has stated that Government regulations regarding equity holdings are stringent and non-transparent. This is incorrect. In fact, the thrust of the modifications effected in Drug Policy is on attracting more investment so as to ensure the availability of quality medicines at reasonable prices in the country. The delicensing, the simplified price control mechanism and allowing higher return on investments made for basic stage manufacture would ensure a strong base for indigenous manufacture, which in turn will enhance availability. Automatic approvals to foreign equity participation up to 5 1 % and treating such companies at par with wholly Indian companies would help in bringing in newer technologies and making available newer products. Thus, modifications have made the Drug Policy attractive for domestic as well as foreign investment so as to ensure availability of quality medicines at reasonable prices.
On the question of drug price liability there is now a three-member committee, headed by a retired Judge of High Court, which looks into the Drug Price Equalization Account (DPEA) cases. The committee makes recommendations after hearing all affected parties in the matter. The Government while taking decisions in respect to DPEA considers these recommendations.
Copyright Law and Related Issues
The IIPA has been appreciative of the Copyright Act of 1957 as amended in 1994. It has observed that overall, the new law is Trade Related Aspects of Intellectual Property (TRIPS) compatible from the stand point of substantive rights, except that the term of protection for performers should be increased from 25 to 50 years. IIPA has also observed that the criminal provisions in the Act are among the toughest in the world. It, however, suggested that the level of fines should be increased. At present the minimum fine for the first offence is Rs.50, 000 and the maximum Rs. 200,000. In dollar terms this comes to 1,400 and 5,500. The amount of fines, decided in 1994, on the basis of the per capita income in India are satisfactory, even if they should appear to be low when one considers them in US dollars and in the context of the US per capita income. For making the Copyright Act TRIPS-compatible, India has time till January 1, 2000, as per Article 65.2 of the TRIPS Agreement.
IIPA has also suggested that the lack of presumptions with respect to ownership and subsistence of rights, and the need to prove actual knowledge must be remedied in amendments to the Copyright Act to make the law fully TRIPs-compatible, and bring it into conformity with the WIPO Copyright Treaty and the Performances and Phonograms Treaty.
In regard to the presumption of ownership of copyright issue, it is observed that in 1996 the Supreme Court of India, in a major ruling aimed at curbing piracy in audio and video cassettes in the country, said that ownership evidence of the original work was not required to prove the charge of copyright violation. Thus, even if there is no explicit provision in the Act, the case law makes the presumption of ownership of copyright. In fact the IIPA has also referred to the Supreme Court ruling.
Justifying suggested amendments to the Copyright Act in regard to the need to prove actual knowledge for raising/confiscating equipment for piracy, the IIPA has stated, "while raids on cable systems have been successful to date, it has been necessary to catch the pirate in the act of broadcasting a particular film without a licence in order for the police to be able to seize the pirate's broadcasting equipment." In this connection it may be mentioned that, in Section 64(l) of the Copyright Act, it has been clearly provided as under:

"Any police officer not below the rank of a sub-inspector, may, if he is satisfied that an offence under Section 63 in respect of the infringement of copyright in any work has been, is being, or is likely to be committed, seize without warrant, all copies of the work, and all plates used for the purpose of making infringing copies of the work, wherever found, and all copies and plates so seized shall, as soon as practicable, be produced before a Magistrate"
It will thus be seen that law does not require that the police witness the act of infringement in order to seize the goods involved. The law only requires that the police officer be satisfied that an offence "in respect of the infringement of copyright in any work has been, is being, or is likely to be committed" for the purpose of seizing, without warrant, all copies of the work and the plates used for making the infringing copies. This can further be adduced from the fact that he has the power to seize an infringing work even when he is satisfied that an offence is likely to be committed, thereby ruling out the essentiality of witnessing use of the goods to be seized in an act of infringement. Thus, the powers vested with the police take care of not only the past and present cases of infringement but also future cases where there is a likelihood of infringement of copyright provisions.
The WIPO Copyright Treaty, 1996 and the WIPO Performances and Phonograms Treaty, 1996 have not yet come into force as the requisite number of countries have not yet ratified or acceded to the treaties. India has also not yet acceded to the treaties. Since the two treaties have not yet come into force, it is premature to discuss the compatibility of the Copyright Act with these treaties.
The IIPA has also observed that as cable-showing of pirated products has begun to diminish, there has been an increase in unauthorized showing of US films in student unions in universities. The Copyright Act provides an exception "to the performance, in the course of the activities of an education institution, of a cinematography film,...if the audience is limited to ... staff and students, the parents and guardians of the students and persons directly connected with the activities of the institution..." (Section 52 (1)). IIPA has suggested that his provision should be interpreted narrowly to make such showings an infringement. If not, the provision must be amended and narrowed to be Berne and TRIPS-compatible. It may be observed that the Indian Copyright Act is fully compatible with the Berne and the Berne provisions included in the TRIPS. As such, no amendment is needed in the Act. However, the enforcement agencies may ensure that the exemption provisions for educational purposes are not misused for copyright infringement.
The IIPA in their submissions have also stated, "on the recording side, RIAA is concerned about an apparently over board provision in section 33 which may limit the ability of authors, and composers, as well as producers, to licence their works individually, rather than through a registered collection society." IIPA has suggested that this should be clarified in favor of full rights of all right holders to licence their rights individually. Section 33 of the Copyright Act, which provides for copyright societies, does not take away the rights of individual copyright owners. As per proviso to Section 33 "an owner of copyright shall, in his individual capacity, continue to have the right to grant licences in respect of his own works consistent with his obligations as a member of the registered. copyright society."
IIPA have also demanded a narrower interpretation of provisions relating to educational use of copyrighted work. First of all, no such instance has been brought to the notice of the Department of Education, Ministry of Human Resource Development, Government of India, which is the nodal Ministry for copyright. Further, it is quite likely that instances, if any, do not involve any commercial losses.

Modernization of Intellectual Property Administration System
(Annexure 1)
Government of India has taken several measures to streamline and strengthen the intellectual property administration systems in the country. Two projects were recently implemented with the help of WIPO/UNDP for the modernization of patent information services and trademarks registry, details of which are given below:
Modernization of Patent Information Services

I . The Office of Patent Information System (PIS) was set up in 1980 with a view to provide scientific and technological information contained in patents documents to the users, namely scientists, researchers, universities, Indian Institutes of Technology and others for taking up further research and development. It is estimated that about 80% of the world's knowledge of viable and adaptable technology are contained in about 30 million patent documents. One million documents are being added every year, covering 400,000 inventions. If the information contained in these documents is made available to industry, it can provide information for further research, facilitate evaluation of technology to be purchased under licensing arrangements, and identify worldwide developments in specific fields.
2. It was, therefore, felt necessary to establish a modernized patent information service centre through upgrading and mechanization of procedures relating to collection, retrieval and dissemination of patent information, using state-of-the-art technology and trained personnel.
3. Accordingly, a project for modernization of PIS was taken up with the financial assistance of UPDP and Government of India (at a cost of US$1.22 million of which $0.69 million provided by LTNDP) and technical assistance of World Intellectual Property Organisation (WIPO) in January, 1992. This project has been completed in June 1996.
4. As a part of activities, several awareness/training programs were organized in India for the benefit of scientific and industrial communities. Additional manpower to PIS was provided along with modem office equipment such as computers, CD-ROMS and on-line access to external and internal databases. Computerized Indian patent databases have also been established. All these activities are expected to result in better and improved services to the users.

Modernization of Trade Marks Registry
1. The use and promotion of trademarks helps inform consumers about goods and services available in the market. The use of trademarks facilitates identifying those responsible for putting those goods in the market. An effective trademarks system would help protect consumers against misleading practices. Therefore, it was recognized that in the interest of consumers, the Government of India should promote the use and provide effective protection for trademarks.
2. Accordingly, a project for modernization of trademarks registry was taken up in April 1993 at a cost of US$1.24 million, out of which US$ 0.58 million were provided by the UNDP. The project has been implemented in May 1996 with the technical assistance of WIPO.
3. Under the project, the capability of the Registry has been enhanced by modernizing and streamlining trade marks registration procedures; posts of electronic data processing personnel have been created; awareness programs organized; Registry has been strengthened in terms of modem office equipment; networking established between Head and Branch Offices, etc. It is felt that it would now be possible to issue registration certificate in a shorter period than before.
4. Further strengthening of the capabilities of the trademark registry is also being taken up in the Ninth Plan and a provision has also been incorporated in the Annual Plan 1997-98.

Modernization of Patent Offices
1. A proposal is now under consideration for taking up modernization of Patent Offices.
2. The Patent Offices, apart from grant of patent, perform other functions like public information and guidance, maintenance of public library and search room, production of journals, publication of official gazette, etc.
3. In view of the economic initiatives and liberalization measures taken by the Government since mid-1991, the number of applications for patents are expected to increase significantly. From a level of 3552 in 1991-92, it has increased to 8562 in 1996-97 and is expected to rise further in coming years. Accordingly, a proposal is under consideration for modernization of patent offices incorporating the following elements:-

• Human Resource Development
• Infrastructure Support and Strengthening
• Computerization and Modernization
• Elimination of backlog of patent applications
4. The project will be implemented in a period of 5 years. A detailed project report has already been prepared and the project has been included in Ninth Five-Year Plan and Annual Plan 1998-99.