Directorate of Distance Education

NALSAR University of Law, Hyderabad

Reading Material

Post-Graduate Diploma in Patents Law

1.1 Introduction to Intellectual Property

By:

Dr. Anindya Sircar

Intellectual Property Consultant
Visiting Professor – NALSAR
Former AVP and Head – IP of Infosys Group
Former Global Head – IP of Biocon Group

(For private circulation only)

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© NALSAR University of Law, Hyderabad (Print 2019)
(For private circulation only)
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Contents

1. Introduction 5

2. CHAPTER I

Understanding Intellectual Property Rights 7

3. CHAPTER II

Philosophical Foundation of Intellectual Property 11

4. CHAPTER III

Overview of the IP Regime

 Law of Patents 23

 Law of Copyright & Related Rights 43

 Law of Trademarks 62

 Law of Trade Secrets 99

5. CHAPTER IV

Emerging IP Regime

 Law of Geographical Indications 109

 Law of Industrial Designs 115

 Law of Semi-conductors & Integrated Circuits 122

 Protection of Plant Varieties & Plant Breeders Rights 128

6. CHAPTER V

IP Ecosystem in India 141

7. ANNEXURE

 National IPR Policy

 Schemes for IP Awareness

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4
Introduction

Intellectual property (IP) rights are valuable assets for any business - possibly among the most
important it possesses. One may be surprised at how many aspects of your business can be
protected - its name and logo, designs, inventions, works of creative or intellectual effort or
trademarks that distinguish a business can all be types of IP. Some IP rights are automatically
safeguarded by IP law, but there are also other types of legal protection you can apply for.

Moreover, globalization and advancement of technology has played an important role in

intellectual property protection for small and medium sized enterprises. The intangible nature
of intellectual property creates challenges for those businesses, to protect their inventions,
brands, and business in foreign markets. Intellectual property protection is necessary to the
success of most companies.

This Module is aimed to help the Patents Law students to familiarise with the major types of
intellectual property currently in use in the commercial world and understand the impact and
implications of each of them. Large sections of this book has been carefully compiled from
several important publications made by WTO (World Trade Organisation) and WIPO (World
Intellectual Property Organisation), other Government documents and published articles.

Lastly, the Indian IP Policy and Schemes of Awareness have been added as Annexures for
better understanding and in depth study.

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6
CHAPTER I

Understanding
Intellectual Property Rights

Concept of Intellectual Property

Intellectual property, very broadly, means the legal rights which result from intellectual activity
in the industrial, scientific, literary and artistic fields. Countries have laws to protect intellectual
property for two main reasons. One is to give statutory expression to the moral and economic
rights of creators in their creations and the rights of the public in access to those creations. The
second is to promote, as a deliberate act of Government policy, creativity and the dissemination
and application of its results and to encourage fair trading which would contribute to economic
and social development.

Generally speaking, intellectual property law aims at safeguarding creators and other producers
of intellectual goods and services by granting them certain time-limited rights to control the use
made of those productions. Those rights do not apply to the physical object in which the creation
may be embodied but instead to the intellectual creation as such. Intellectual property is
traditionally divided into two branches, ―industrial property‖ and ―copyright‖.

The Convention Establishing the World Intellectual Property Organization (WIPO), concluded
in Stockholm on July 14, 1967 provides that intellectual property shall include rights relating to:
• literary, artistic and scientific works,
• performances of performing artists, phonograms and broadcasts,
• inventions in all fields of human endeavor,
• scientific discoveries,
• industrial designs,
• trademarks, service marks and commercial names and designations,
• protection against unfair competition,
and all other rights resulting from intellectual activity in the industrial, scientific, literary or
artistic fields.

The areas mentioned as literary, artistic and scientific works belong to the copyright branch of
intellectual property. The areas mentioned as performances of performing artists, phonograms
and broadcasts are usually called ―related rights,‖ that is, rights related to copyright. The areas
mentioned as inventions, industrial designs, trademarks, service marks and commercial names

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and designations constitute the industrial property branch of intellectual property. The area
mentioned as protection against unfair competition may also be considered as belonging to that
branch, the more so as of the Paris Convention for the Protection of Industrial Property
(Stockholm Act of 1967) (the ―Paris Convention‖) includes ―the repression of unfair
competition‖ among the areas of ―the protection of industrial property‖; the said Convention
states that ―any act of competition contrary to honest practices in industrial and commercial
matters constitutes an act of unfair competition‖.

The expression “industrial property” covers inventions and industrial designs. Simply stated,
inventions are new solutions to technical problems and industrial designs are aesthetic
creations determining the appearance of industrial products. In addition, industrial property
includes trademarks, service marks, commercial names and designations, including indications
of source and appellations of origin, and protection against unfair competition. Here, the aspect
of intellectual creations—although existent—is less prominent, but what counts here is that
the object of industrial property typically consists of signs transmitting information to
consumers, in particular as regards products and services offered on the market, and that the
protection is directed against unauthorized use of such signs which is likely to mislead
consumers, and misleading practices in general.

Scientific discoveries, the remaining area mentioned in the WIPO Convention, are not the
same as inventions. The Geneva Treaty on the International Recording of Scientific
Discoveries (1978) defines a scientific discovery as ―the recognition of phenomena, properties
or laws of the material universe not hitherto recognized and capable of verification. Inventions
are new solutions to specific technical problems. Such solutions must, naturally, rely on the
properties or laws of the material universe (otherwise they could not be materially or
“technically” applied), but those properties or laws need not be properties or laws “not
hitherto recognized”. An invention puts to new use, to new technical use, the said properties or
laws, whether they are recognized (“discovered”) simultaneously with the making of the
invention or whether they were already recognized (“discovered”) before, and independently
of, the invention. Intellectual property (IP) law comprises a set of exclusive rights to exclude
others from making, copying, or using certain intangible creations of the human mind.

IP is a bundle of legal rights resulting from intellectual creativity in industrial, scientific,

artistic and literary fields. This definition is from the point of view of rights. IP is legal
protection accorded to works of the mind in distinction from manual work (result of physical
labour). It is a legal protection accorded to incorporeal ownership.

The World Intellectual Property Organization (WIPO) is one of the specialized agencies of the
United Nations (UN) system of organizations. The “Convention Establishing the World

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Intellectual Property Organization” was signed at Stockholm in 1967 and entered into force
in 1970. However, the origins of WIPO go back to 1883 and 1886, with the adoption of the
Paris Convention and the Berne Convention respectively. Both of these conventions provided
for the establishment of international secretariats, and both were placed under the supervision
of the Swiss Federal Government. The few officials who were needed to carry out the
administration of the two conventions were located in Berne, Switzerland. Initially there were
two secretariats (one for industrial property, one for copyright) for the administration of the
two conventions, but in 1893 the two secretariats united. The most recent name of the
organization, before it became WIPO, was BIRPI, the acronym of the French-language
version of the name: United International Bureaux for the Protection of Intellectual Property
(in English). In 1960, BIRPI moved from Berne to Geneva.

At the 1967 diplomatic conference in Stockholm, when WIPO was established, the
administrative and final clauses of all the then existing multilateral treaties administered by
BIRPI were revised. They had to be revised because member States wished to assume the
position of full governing body of the Organization (WIPO), thus removing the supervisory
authority of the Swiss Government, to give WIPO the same status as all the other comparable
intergovernmental organizations and to pave the way for it to become a specialized agency of
the United Nations system of organizations.
Most of the intergovernmental organizations now called specialized agencies did not exist
before the Second World War. They were created for the specific purpose of dealing with a
particular subject or field of activity at the international level.

Intellectual properties have their own peculiar features. These features of intellectual
properties may serve to identify intellectual properties from other types of properties. It is
pertinent to take a brief look at their common features. In other words, in spite of the different
branches, intellectual property has some common characteristics that distinguish them from
other rights. For instance, Intellectual property rights are, naturally, proprietary in nature. They
can be bought and sold, mortgaged and licensed just like any other type of property. A
valuation can be put on them for contractual or accounting purposes. Nevertheless, it is very
important to be able to distinguish between the property rights which exist in a tangible item
and the intangible intellectual property rights which may be embodied in that item.
Some of the major characteristics of intellectual property include:
1) Exclusive Right
2) Territorial
3) Independent
4) Assignable
5) Divisible
6) Volatility

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 7) Subject to Public Policy

Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic
works; designs; and symbols, names and images used in commerce. IP is protected in law
by, for example, patents, copyright and trademarks, which enable people to earn recognition
or financial benefit from what they invent or create. By striking the right balance between the
interests of innovators and the wider public interest, the IP system aims to foster an
environment in which creativity and innovation can flourish.

Intellectual property rights are like any other property right. They allow creators, or owners, of
patents, trademarks or copyrighted works to benefit from their own work or investment in a
creation. These rights are outlined in Article 27 of the Universal Declaration of Human Rights,
which provides for the right to benefit from the protection of moral and material interests
resulting from authorship of scientific, literary or artistic productions. The importance of
intellectual property was first recognized in the Paris Convention for the Protection of
Industrial Property (1883) and the Berne Convention for the Protection of Literary and
Artistic Works (1886). Both treaties are administered by the World Intellectual Property
Organization (WIPO).

There are several compelling reasons for the need to protect IP:
1) The progress and well-being of humanity rest on its capacity to create and invent new
works in the areas of technology and culture.
2) The legal protection of new creations encourages the commitment of additional
resources for further innovation.
3) The promotion and protection of intellectual property spurs economic growth, creates
new jobs and industries, and enhances the quality and enjoyment of life.

An efficient and equitable intellectual property system can help all countries to realize
intellectual property‘s potential as a catalyst for economic development and social and cultural
well-being. The intellectual property system helps strike a balance between the interests of
innovators and the public interest, providing an environment in which creativity and invention
can flourish, for the benefit of all.

****************

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 CHAPTER II
Philosophical Foundation of
Intellectual Property
In the IP literature, patents, copyrights, trademarks and trade secrets are considered to be
statutory and moral ways of increasing innovations and boosting technological development.
For this reason, individual rights to IP have been extended to almost all knowledge intensive
sectors, including health care. Recent studies have been carried out of the moral foundations of
IPRs, examining the plausibility of patents, copyrights, trademarks and trade secrets in relation
to four theories of liberal morality: natural law (Locke); personality development (Hegel); just
reward (Nozick); and social utility (Bentham).

In the contemporary era of economic globalization, an increasing number of theorists argue

that the world is fast moving towards an „intellectual capitalism‟. The main characteristic of
such an advanced system of social relations is the historical shift of priority from the social
division of labor to the social division of knowledge. This shift is clearly reflected in the
continuous creation of knowledge pools, clusters and networks at regional, national,
international and global levels. Therefore, intangible forms of property such as intellectual
property (IP) are increasingly becoming more important than traditional paradigms of tangible
property such as land and factories. In the IP literature, patents, copyrights, trademarks and
trade secrets are considered to be statutory and moral ways of increasing innovations and
boosting technological development. For this reason, individual rights to IP have been
extended to almost all knowledge intensive sectors.

Any attempt to approach the particular concept of IPRs presupposes adequate understanding
of the general concept of property. The meaning of property is neither abstract nor static.
Rather, it is concrete and changes through different historical moments of economic and social
development. These moments are linked with the various stages of development of the
division of labor. Different conceptions of property arose, historically, in connection with
tangible things1. These things can be physically held and are either movables or immovables.
Movables mainly include what Marx2 called „the miracles of industry and change‟ e.g.
movable capital. Immovables mainly include land-based products e.g. immovable capital.

1
Waldron, J. (1988) The Right to Private Property, Oxford: Clarendon Press.
2
Marx, K. (1975) Early Writings, London: Penguin.

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 Moral Justifications of Intellectual Property Rights

1. Natural Law
IPRs are moral-claim rights that each individual naturally has independently of the laws and
government of civil society. The concept of nature here does not imply that individuals are
born with IPRs but rather that these rights can be recognised as valid by moral and rational
human beings apart from any provisions of positive law3. The ability to claim IPRs or any
natural right depends on human reason. The moral conception of IPRs as natural rights plays
important role in justifying legislation for patents, copyrights, trademarks, etc.

The moral justification of IPRs on the grounds of natural law uses as an example the Lockean
theory of private property. In his Second Treatise of Government4, Locke5 introduces the
principle of self- ownership as a natural right of each individual to her own person and labor.
This principle is linked with negative liberty and not utility maximisation. Owning herself,
each person is free to do with her powers whatever she chooses so long as she does not cause
or threaten harm to non-consenting others. However, in the case of harm without prior
consent, the affected person has the right to full compensation. On the grounds of self-
ownership, Locke forms his mixing labor theory that justifies private property as a natural
right. According to him „The Labor of [Man‟s] Body and the Work of his Hands, we may say,
are properly his. Whatsoever then he removes out of the State that Nature hath provided and
left it in he hath mixed his Labor with, and joyned to it something that is his own, and thereby
makes it his Property.6

It is well known that Locke‘s theory of private property is theologically founded. Locke
argues that God gave the world to human beings in common and provided them with reason to
make use of it to the best advantage of their life. This argument theoretically leads to the
formation of two provisos. The first is the „no waste‟ proviso according to which appropriated
resources must be used, otherwise they become common again. The second is the „enough and
as good‟ proviso. As it is well known, for Locke private appropriation is morally justified only
if it leaves enough and as good to newcomers. Both provisos condition individual property
rights and develop presuppositions of social reproduction.

3
Waldron, J. (1988) The Right to Private Property, Oxford: Clarendon Press.
4
<https://www.earlymoderntexts.com/assets/pdfs/locke1689a.pdf>
5
John Locke (1632 – 1704) was an English philosopher and physician, widely regarded as one of the most
influential of
Enlightenment thinkers and commonly known as the "Father of Liberalism".
6
Locke, J. (1988) Two Treatises of Government, 3rd ed., Cambridge: Cambridge University Press.

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 Therefore, it can be said that Locke‘s theory justifies the transition from the ‗general‟ right of
common ownership in the state of nature to the „special‟ right of private ownership in civil
society.

Thinkers such as Bouckaert7 and Hughes8 tend to believe that the conception of IPRs as
moral-claim rights founded upon the principle of self-ownership is theoretically sustainable.
Bouckaert criticises the theological basis of the Lockean principle of self-ownership. In his
view, this principle needs to be reconstructed on a secular basis. Bouckaert9 suggests four
general ideas that a secular and moral argument of self-ownership must take into account in
order to be relevant to IPRs justification:
i. self-ownership must be linked with moral perfection;
ii. self-ownership requires a relative notion of the ‗good life‟;
iii. the „good life‟ requires self-knowledge; and
iv. self-knowledge requires self-ownership.

Hughes‘ defence of IPRs is more coherent than that of Bouckaert. Specifically, his argument
is based on three propositions10:
i. the production of ideas requires a person‘s labor;
ii. these ideas are appropriated from a “common” which is not significantly
devaluated by the ideas removal; and
iii. ideas can be made property without breaking the non-waste condition.

Hughes adopts Nozick‘s11 reformulation. Nozick12 accepts that Locke‘s „enough and as good‟
condition may be ineffective in modern societies because of the scarcity of resources and the
introduction of money.

It might be argued that IPRs also violate the „no waste‟ proviso. Thinkers such as Richards
argue that „The history of patents is rife with example of cases where new ideas and innovations
have been delayed or permanently lost by interests who used patents to prolong their

7
Boudewijn Bouckaert (1947 - ) is a Belgian law professor, a member of the Flemish Movement, and a
libertarian conservative thinker and politician. He chairs the academic board of the LIB-ERA! think tank and
serves as Member of the Flemish Parliament for the liberal party List Dedecker.
8
Justin Hughes is the William H. Hannon Professor of Law at Loyola Law School, Los Angeles, where
he teaches courses in intellectual property law, international trade, and internet law. He taught at the Benjamin
N. Cardozo School of Law from 2002 through 2013.
9
Bouckaert, B. (1990) ‗What is Property?‘ Harvard Journal of Law and Public Policy, Vol.13, pp.275- 816.
10
Hughes, J. (1988) ‗The Philosophy of Intellectual Property‘ The Georgetown Law Journal, Vol.77,
pp.287-366.
11
Robert Nozick (1938 – 2002) was an American philosopher. He held the Joseph Pellegrino University
Professorship at Harvard University, and was president of the American Philosophical Association.
12
Nozick, R. (1974) Anarchy State and Utopia, Oxford: Blackwell.

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 existing intellectual and physical capital stock‟13. In fact, appropriated ideas can be also
(temporally) wasted if they are not be fully used. The idea is temporally wasted and the ‗no
waste‘ proviso is violated. The application of the ‗no waste‘ condition to IP morally requires
owners to have enough resources to exploit their ideas and to ensure sufficient access to the
products/processes embodying their ideas.

2. Personality Development
IPRs constitute a moral necessity for the development of each individual‘s personality. The
latter can only be adequately expressed in ethical community. That is a liberal realm in which
contracts and exchange take place. IPRs are moral rights because facilitate the achievement of
each individual‘s personality in ethical community. This particular rationale is crucial for
justifying laws of copyright and patent protection. As Newman14 points out, the individual‘s
intellectual creation is considered to be part of her personality. Especially, the French and the
German law recognise the right of each creator to receive both public identification and
protection against any changes unapproved by the creator15.

The moral justification of IPRs in terms of personality development derives from Hegel‘s 16
theory of property. In his Philosophy of Right, Hegel17 conceives private property as an
abstract right related to human needs and freedom. In order to satisfy their physical needs and
develop their individuality and freedom, people need to have control of resources. As Ryan 18
argues „Hegel sees property rights as implicit in our first and basic entry into the world as
free agents…‟. In this respect, he differs from Locke who sees property rights depending on
mixing labor with unowned objects. As Waldron19 correctly observes „The Lockean theory
makes the general human right to property conditional whereas the Hegelian theory makes it
unconditional‟. Also, the concept of freedom here does not have any libertarian meaning e.g.
absence of coercion. In Hegel‘s theory freedom is conceived as each individual‘s ability to
form abstracted thoughts and to relate them straight back to particular needs and desires.
Personality is viewed as a part of the inner subjective world of each individual. Hegel stresses
that both freedom and personality must be translated into the external objective world by
means of private property. Hegel is idealist; he believes that abstract thought rules the

13
Richards, D. G. (2002) ‗The Ideology of Intellectual Property Rights in the International Economy‘, Review
of Social Economy, Vol. IX, No.4, pp.521-620.
14
Newman, S. (1997) ‗Rights, Freedoms and Phonograms: Moral Rights and Adaptation Rights in Music and
Other Copyright Works‘, Computer Law & Security Report, Vol.13, No.1, pp.22-28.
15
Hughes, J. (1988) ‗The Philosophy of Intellectual Property‘ The Georgetown Law Journal, Vol.77, pp.287-
366.
16
Georg Wilhelm Friedrich Hegel (1770 – 1831) was a German philosopher and an important figure of
German idealism. He achieved wide recognition in his day and - while primarily influential within the
continental tradition of philosophy - has become increasingly influential in the analytic tradition as well.
17
Hegel, G. W. F. (1942) Philosophy of Right, Oxford: Clarendon Press.
18
Rayan, A. (1984) Property and Political Theory, Oxford: Basil Blackwell.
19
Waldron, J. (1988) The Right to Private Property, Oxford: Clarendon Press.

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 world20. Therefore, in Hegel‘s theory, the individual who owns an object is able to abstract
herself in thought from any particular need and to embody her free will and personality into
that object. Denial of this personal link to an object results in alienation. In Philosophy of
Right, Hegel writes: „The reason I can alienate my property is that it is mine only in so far as I
put my will into it‟. Hegel‘s concept of alienation is crucial for his justification of private
property in ethical community. Hegel believes that those individuals who are alienated from
their property or those who have no property at all, fail to get recognition as persons in
community. In his view, only property owners can be recognised as persons entering into
several contractual relationships21. Hegel‘s concept of ethical community refers to the liberal
market place as one moment of ethical life. That is the specific social context rooted to custom
and tradition of the ancient city-states. In Hegel‘s theory the liberal realm of contracts and
exchange is regulated by the state. The latter constitutes another moment of ethical life. The
state intervenes to resolve antagonisms which threaten the stability of community.

The question, of course, is whether the moral justification of IPRs as a necessity for
personality development can be theoretically sustained. Hegel is clear that creators are rightfully
the owners of their intellectual products. He also argues that „Single products of my particular
and mental skill and of my power to act I can alienate to someone else and I can give him the
use of my abilities for restricted period, because, on the strength of this restriction, my
abilities acquire external relation to the totality and universality of my being‟.

IP can only satisfy epiphenomenal needs created within the capitalist market, taking the form
of individual needs. Essential needs outside that realm remain unsatisfied. These needs include
the development of presuppositions of social reproduction. IP is a form of private property
that is the product, the result and the consequence of alienated social labor. Therefore, IP
appears not to be justified on the grounds of the recognition of society as a whole.

3. Just Reward
This implies that IPRs constitute a just reward for enterprise and merit. Individual creators of
innovative ideas and inventors morally deserve to be rewarded for their qualities and talents.
Thinkers who favour the merit concept of justice abstract from the Hegelian conception of
individuality and personality. The reward-based rationale of IPRs played important role in the
19th century patent controversy. As Machlup and Penrose22 stress, one of the arguments for IPR
protection was advanced „…in the name of fairness to secure the inventor his just reward‟.
The moral justification of IPRs in terms of just reward derives from libertarianism.

20
Callinicos, A. (1999) Social Theory: A Historical Introduction, Cambridge: Polity.
21
Hegel, G. W. F. (1942) Philosophy of Right, Oxford: Clarendon Press.
22
Machlup, F. and Penrose, E. (1959) ‗The Patent Controversy in the Nineteenth Century‘ Journal of Economic
History, Vol. X, No.1, pp.1-29.

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 Libertarians propose principles of justice which recognise that each individual is

entitled to her talents and abilities. Whatever goods are acquired on the basis of natural talents
and abilities are just. Libertarians argue that just distribution results from people‘s free
exchanges. More precisely, Nozick, one of the most debated libertarians of the 20th century,
suggests an „entitlement theory‟ based on three principles of justice23:
i. A person who acquires a holding in accordance with the principle of justice in
acquisition is entitled to that holding.
ii. A person who acquires a holding in accordance with the principle of justice in
transfer, from someone else entitled to the holding, is entitled to the holding.
iii. No one is entitled to a holding except by (repeated) applications of 1 and 2.

Nozick‘s entitlement theory implies that if people‘s current ideas are justly acquired, then just
distribution can only take place in the free market. People have the right to sell and buy ideas,
benefiting from exchange. The state is not morally justified to intervene in order to
redistribute the benefits of innovative ideas to naturally disadvantaged or less creative people.
Only the owners of the ideas can decide on such distribution.

This intuitive argument ignores the intuition about dealing fairly with unequal circumstances.
The principle of fairness is a „self-evident‟ truth that requires social redistribution to remedy
unequal circumstances developed in the process of exchange. Secondly, the self-ownership
argument fails to comprehend the socio-economic presuppositions of natural talents and
abilities. The latter remain natural potentialities if individuals lack the economic and social
means of their development.

Certainly, most liberal critiques of the reward-foundation of IPRs reconstruct the egalitarian
theories of Rawls24 and Dworkin25. In contrast to libertarians such as Nozick, Rawls26 and
Dworkin27 consider distribution on the basis of „natural lottery‟ to be morally arbitrary. For
Rawls justice implies equal share of social goods (liberty and opportunity, income and wealth,
self-respect). This does not mean removal of all inequalities but only those which make the
position of someone worst off.

In Rawls‘ theory, „If certain inequalities benefit everyone, then they will be accepted by

23
Nozick, R. (1974) Anarchy State and Utopia, Oxford: Blackwell.
24
John Bordley Rawls (1921 – 2002) was an American moral and political philosopher in the liberal tradition.
Rawls received both the Schock Prize for Logic and Philosophy and the National Humanities Medal in 1999.
25
Ronald Myles Dworkin (1931 – 2013) was an American philosopher, jurist, and scholar of United States
constitutional law. At the time of his death, he was Frank Henry Sommer Professor of Law and
Philosophy at New York University and Professor of Jurisprudence at University College London.
26
Rawls, J. (1971) A Theory of Justice, Oxford: Oxford University Press.
27
Dworkin, R. (1981a) ‗What is Equality? Part I: Equality of Welfare‘, Philosophy and Public Affairs, Vol.10,
No.3.

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 everyone‟. This theory is illustrated in the principle of equal liberty and the difference
principle. Rawls‘ principles can justify IPRs on the grounds that in the long run, innovative
ideas make everyone better off. The term „natural lottery‟ was introduced by Rawls and refers
to talents and abilities that each individual naturally inherits. The problem of socio-economic
presuppositions of natural talents and capacities is targeted by Dworkin. In his theory,
Dworkin argues that people ought to be equal in resources at their command and not in their
welfare. Specifically, he proposes a „starting gate‟ distribution of equal resources through a
hypothetical auction device. The latter is combined with insurance schemes, free market
institutions and taxation. Initial distribution of resources according to people‘s choices ensures
that each individual gets equal means to develop her natural talents and capacities. Natural
disadvantages are compensated by insurance schemes. Taxation can be used to implement his
theory in practice. However, this theory is sensitive to the special character of liberal freedom -
it can only justify IPRs on the grounds of individual choice and ambition.

4. Social Welfare
Yet another theory is a consequentialist theory of social and political morality which holds
that moral and legal rules such as IPRs are justified to the extent that they promote happiness
in society28. Utilitarianism, especially in its hedonistic version formulated by Bentham29 and
Mill30 conceives happiness as a sum of pleasures. „Pleasure is good, and pain or displeasure
is bad‟31. Utilitarianism is a goal-based theory concerned with the social welfare of each
individual in so far as this contributes to a particular conception of the good. Therefore, this
theory is hostile towards right-based theories such as natural law, personality development and
reward-based theories of IPRs.

According to Bentham, the idea that there are moral rights which exist independently of social
recognition and enforcement and could be the starting point of morality is wild and pernicious
nonsense32. In his view, rights are legal obligations which contribute to maximisation of the
total social utility.

Critics of utilitarianism object to the conception of IPRs as legal arrangements for maximising
social welfare on the grounds that it is instrumental. IPRs are not intrinsically good. If IPRs fail
the utility test, then, they can no longer be justified in society. This implies that creators are

28
Rayan, A. (1987) Property, Milton Keynes: Open University Press.
29
Jeremy Bentham (1748 – 1832) was an English philosopher, jurist and social reformer regarded as the founder
of modern utilitarianism. Bentham defined as the "fundamental axiom" of his philosophy the principle that "it is
the greatest happiness of the greatest number that is the measure of right and wrong".
30
John Stuart Mill (1806 – 1873) was a British philosopher, political economist, and civil servant. One of the
most influential thinkers in the history of classical liberalism, he contributed widely to social
theory, political theory, and political economy.
31
Raphael, D. D. (1994) Moral Philosophy, Oxford: Oxford University Press.
32
Bentham, J. (1970) ‗An Introduction to the principles of Morals and Legislation‘ in J. H. Burns and
H. L. Hart (eds) The Collected Works of Jeremy Bentham, Oxford: Clarendon Press.

17
 entitled to their ideas only in so far as these ideas are valued as useful instruments for
maximising social welfare.

However, utilitarianism is a theory that does not necessarily justify IPRs. In certain cases,
utilitarianism requires common ownership of innovative ideas in order to contribute to total
maximisation of social welfare. Although there is an epistemological problem with measuring
welfare maximisation objectively, utilitarianism remains a widely accepted consequentialist
theory of morality. Utilitarianism requires political decisions about IPRs to take account of the
likely consequences for the happiness and unhappiness of all persons who will be affected33.
Therefore, according to that theory, justification of IPRs depends on their socio-economic
effects. Whether those effects are efficient and optimal determines the moral necessity of IPRs
in society.

Theoretically speaking, first of all, patents, copyright, trademarks and trade secrets cannot be
sustained as moral rights on the grounds of Locke‘s labor theory of property. The application
of the „no waste‟ and „enough and as good‟ provisos in the private appropriation of ideas
through a person‘s labor is problematical. The social character of intellectual creativity
philosophically weakens the position according to which the mixing-labor theory can be
plausibly used in the moral justification of IPRs. On the other hand, the purpose of intellectual
appropriation is to prevent free access to „enough and as good‟ ideas, at least, for a certain
period of time. This is also the reason why the „no waste‟ proviso cannot be satisfied by IPRs.
Patented inventions which are not fully exploited or used for a certain period of time can be
considered as being wasted in the Lockean sense. Second, IPRs and especially copyrights
cannot be justified as a necessity for personality development. The Hegelian theory of
intellectual property leaves open the epistemological question of personality embodiment in IP
products and fails to resolve the problem of social recognition of IP creators. Third, patents,
copyrights, trademarks and trade secrets cannot constitute just reward for enterprise and merit.

Individual creators of innovative ideas and inventors do not morally deserve to be rewarded
for their qualities and talents. Apart from the fact that these qualities and talents are to a
certain extent the outcome of an arbitrary „natural lottery‟ in the Rawlsian sense, they can only
be fully developed within particular economic and social conditions. Fourth, patents
copyrights, trademarks and trade secrets fail the universal test of social utility. Existing
research in the socio-economic costs and benefits of IPRs reveals that, in many cases, they
reduce growth and minimise social welfare. Therefore, utilitarianism does not necessarily
justify IPRs from the point of view of morality.

33
Raphael, D. D. (1994) Moral Philosophy, Oxford: Oxford University Press.

18
IPRs can be rather seen as political developments which aim to reproduce the capitalist
division of knowledge and labor at national, international and global levels.

In essence, „information feudalism‟ is nothing but another antinomy of capitalism through

which the division of knowledge and labor are reproduced as class divisions between
individuals and between nation states. This antinomy not only threatens equality but also
liberty and human welfare.

Economic Theory
Intellectual property rights are intimately related to markets. They play a crucial role in
constituting markets in information. Economic theory is too important a resource to ignore in
a philosophical treatment of intellectual property. Economics is a discipline which is rich in
approaches. There is nothing narrow about its scope. Information economics seems to play the
role of the dangerous supplement to the neoclassical paradigm. Institutional economics
recognises that power is a more complex notion than just market power. Public choice theory
has proved to be a fruitful venture, at least in the eyes of its exponents, into political theory.

Given the overtly economic character of much intellectual property legislation, one possibility
worth investigating is that economic theory of one kind or another provides a justification for
the enactment of intellectual property rights. Of course, these rights are very different from each
other in terms of legal detail and character. A patent monopoly gives the owner rights against
the independent inventor of the same invention, while copyright offers rights against copying
but does not prohibit the independent creation of the same work. Despite important differences
like these, intellectual property rights share a fundamental character - they are rights in
abstract objects.

Economists, like social and political theorists, are interested in power. Very often they are
most concerned with market power: in a nutshell, the capacity to price above marginal cost.
Within institutional economics, power seems to be more broadly conceived of as something
that shapes and creates markets rather than just something that is delivered through the pricing
mechanism.

There are many illustrations of this cost–benefit approach in intellectual property. The debate
over the optimal length of the patent term is one. Probably, the greatest service that economics
can perform in the area of intellectual property is to track empirically the consequences of
various intellectual property arrangements. Without the cost benefit approach intellectual
property would remain an opaque institution. Amongst other things, one would not know who
the real winners and losers are when states, legislatures and judges shift the boundaries of
abstract objects and draw new enclosure lines in the intellectual commons.

19
 Intellectual property protection is an important component of national economic policies.
Governments face complex choices on how to design an IP system that best serves their policy
objectives, and how to respond to changes in technology and in business models that
challenge the status quo.

Intellectual property rights have attracted increasing attention both in academic circles as well
as in public policy debates over the past decades. This has gone hand-in-hand with their
increasing use, particularly (but not only) patents, reforms in the national and international
legal frameworks that have resulted in the strengthening of IPRs and the fast growth of sectors
in which knowledge, innovation and appropriability play a key role (e.g. biotechnology,
information and communication technologies and the cultural industries). Intense debates
among researchers have taken place on a wide range of issues, including the reasons for the
growing use of IPRs; the impact of the strengthening of IPRs on innovation; the role of IPRs
in developing countries; whether there is a need for international harmonization of the laws
regulating the matter and the consequences of IPR legislative reforms on poor communities in
areas such as health or traditional knowledge.

Models and economic studies have obvious conclusions about the role of intellectual property
rights on economic development34. The issue is complex, the effectiveness of intellectual
property rights in the development and growth depends on the circumstances of each country.
Severe systems of intellectual property protection can either stimulate or restrict growth. The
effects on economic growth and technological progress are positive only if they are structured
in such a way as to promote competition. Consequently, the success of economic development
will be to reduce this gap.

Intellectual property regime, as part of the innovation system, aims to stimulate innovation by
allowing innovators to restrict the use of knowledge produced by imposing rewards in
exchange for the use of that knowledge and thus offers the possibility of a return on
investment. But one should bear in mind that the innovation system contains other elements,
too. There are other ways to finance and produce research, e.g. Universities and Research
Laboratories.

The innovation system is based on research and basic research occurs mainly in universities
and government-funded laboratories. It is obvious, however, that research must be funded and
the financial needs of research are huge, but "research funding through monopoly profits is
neither efficient nor equitable". Obviously, in the context of a market economy, an economy

34
Livia Ilie (2014) ‗Intellectual Property Rights: An Economic Approach‘ Procedia Economics and Finance
Volume 16, 2014, Pages 548-552.

20
which is based on profit, companies must be compensated in order to be stimulated to
innovate. Research, development and

innovation are expensive processes. Investing in R&D and innovation results will imply
further protection to give companies time to recover the investment made and to be motivated to
continue these investments.

Intellectual property protection system has two major economic goals:

i. to stimulate investment in knowledge creation and innovation by establishing
exclusive rights of use and exploitation of new technologies and products;
ii. absence of such protection would allow competitors to use the results for free and
would discourage companies to invest in research, development and innovation;
widespread dissemination of new knowledge.

Although intellectual property rights can foster the acquisition and dissemination of new
knowledge and information, this can be made at costs that are often very high. Information
and knowledge, intellectual creations have characteristics of public goods that are non-
competitive, and therefore it is difficult to exclude their use by others. The fact that it is
consumed by someone, does not prevent someone else to consume it. Knowledge and
information have this quality. In other words, there is no marginal cost associated with the
consumption of knowledge and information.

From an economic perspective, it is socially efficient to provide broad access to new

inventions. In a free market, where no intellectual property rights exist, new products and
technologies could be easily multiplied at marginal cost, which would benefit society.
According to the concept of public good, it can be said that it is more efficient to share
knowledge freely to all, but to restrict their use by setting a price for the use.

Between the two objectives there should be a trade-off: an overprotected system will limit
social gains by limiting the dissemination and use of results; a weak protection system will
reduce innovation due to the lack of an adequate return on investment.

The efficiency in the use of knowledge and information can be addressed statically and
dynamically. From a static point of view, to effectively use knowledge and information would
require their free distribution. Providing temporary exclusive rights through intellectual
property rights will lead to pricing above marginal cost and a return on investment made in
R&D and innovation. From this point of view, IPR introduce inefficiency in use, distortions,
the most problematic of which is the creation of monopoly power. Monopoly leads to both
inequalities in consumption and distortions in resource allocation.

21
On the other hand, the free distribution of knowledge and information would create problems
in stimulating innovation and here comes the dynamic efficiency. Therefore, the legal system
includes on the one hand intellectual proprietary rights system, on the other hand the anti-trust
system to limit abuses of monopoly power. Between competition policy and intellectual
property related policies must strike a balance: Competition Policy envisages improving
consumer welfare by constraining the behavior of companies that have market power;
intellectual property rights confer some monopoly power to those who hold these rights.

Economic theory demonstrates that intellectual property rights can play a role either positive or
negative on economic growth and development. The relationship is basically positive, but
dependent on other factors that promote the benefits of intellectual property protection.
Intellectual property protection systems should be based on market economy mechanisms and
overcome the problems imposed by the creation and dissemination of information.

****************

22
 CHAPTER III
Overview of IP Regime

I. Law of Patents
A patent is a document, issued, upon application, by a government office (or a regional office
acting for several countries), which describes an invention and creates a legal situation in
which the patented invention can normally only be exploited (manufactured, used, sold,
imported) with the authorization of the owner of the patent. ―Invention‖ means a solution to a
specific problem in the field of technology. An invention may relate to a product or a process.
The protection conferred by the patent is limited in time (generally 20 years).

In a number of countries, inventions are also protectable through registration under the name of
“utility model” or “short-term patent”. The requirements are somewhat less strict than for
patents, in particular in respect of inventive step, and in comparison, with patents the fees are
lower, and the duration of protection is shorter, but otherwise the rights under the utility model
or short-term patent are similar. Patents are frequently referred to as “monopolies”, but a
patent does not give the right to the inventor or the owner of a patented invention to make, use
or sell anything. The effects of the grant of a patent are that the patented invention may not be
exploited in the country by persons other than the owner of the patent unless the owner agrees
to such exploitation. Thus, while the owner is not given a statutory right to practice his
invention, he is given a statutory right to prevent others from commercially exploiting his
invention, which is frequently referred to as a right to exclude others from making, using or
selling the invention. The right to take action against any person exploiting the patented
invention in the country without his agreement constitutes the patent owner‘s most important
right, since it permits him to derive the material benefits to which he is entitled as a reward for
his intellectual effort and work, and compensation for the expenses which his research and
experimentation leading to the invention have entailed.

It should be emphasized, however, that while the State may grant patent rights, it does not
automatically enforce them, and it is up to the owner of a patent to bring an action, usually
under civil law, for any infringement of his patent rights. The patentee must therefore be his
own “policeman”.

Simply put, a patent is the right granted by the State to an inventor to exclude others from
commercially exploiting the invention for a limited period, in return for the disclosure of the
invention, so that others may gain the benefit of the invention. The disclosure of the invention is
thus an important consideration in any patent granting procedure.

23
 Conditions of Patentability
An invention must meet several criteria if it is to be eligible for patent protection. These
include, most significantly, that the invention must consist of patentable subject matter, the
invention must be industrially applicable (useful), it must be new (novel), it must exhibit a
sufficient “inventive step” (be non-obvious), and the disclosure of the invention in the patent
application must meet certain standards.

Patentable Subject Matter: In order to be eligible for patent protection, an invention must
fall within the scope of patentable subject matter. Patentable subject matter is established by
statute and is usually defined in terms of the exceptions to patentability, the general rule being
that patent protection shall be available for inventions in all fields of technology (Article 27.1
of the TRIPS Agreement35).

Subject matter which may be excluded from patentability includes the following (Article 27.3
of the TRIPS Agreement36). Examples of fields of technology which may be excluded from the
scope of patentable subject matter includes the following:
1) discoveries of materials or substances already existing in nature;
2) scientific theories or mathematical methods;
3) plants and animals other than microorganisms, and essentially biological processes for
the
4) production of plants and animals, other than non-biological and microbiological
processes;
5) schemes, rules or methods, such as those for doing business, performing purely mental
6) acts or playing games;
7) methods of treatment for humans or animals, or diagnostic methods practiced on humans
8) or animals (but not products for use in such methods).

The TRIPS Agreement (Article 27.237) further specifies that Members may exclude from
patent protection certain kinds of inventions, for instance inventions the commercial
exploitation of which would contravene public order or morality.

Industrial Applicability (Utility): An invention, in order to be patentable, must be of a kind

which can be applied for practical purposes not be purely theoretical. If the invention is
intended to be a product or part of a product, it should be possible to make that product. And if
the invention is intended to be a process or part of a process, it should be possible to carry that
process out or “use” it (the general term) in practice.

35
<https://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm>
36
< https://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm>
37
< https://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm>

24
“Applicability” and “industrial applicability” are expressions reflecting, respectively, the
possibility of making and manufacturing in practice, and that of carrying out or using in
practice. The term “industrial” should be considered in its broadest sense, including any kind
of industry. In common language, an “industrial” activity means a technical activity on a
certain scale, and the “industrial” applicability of an invention means the application (making
use) of an invention by technical means on a certain scale. National and regional laws and
practices concerning the industrial applicability requirement vary significantly. At one end of
the spectrum, the requirement of industrial applicability is met as long as the claimed
invention can be made in industry without taking into account the use of the invention. At the
other end of the spectrum, the “usefulness” of the claimed invention is taken into account for
the determination of the industrial applicability. On the other hand, some countries do not
require industrial applicability, but utility.

Novelty: Novelty is a fundamental requirement in any examination as to substance and is an

undisputed condition of patentability. It must be emphasized, however, that novelty is not
something which can be proved or established; only its absence can be proved.

An invention is new if it is not anticipated by the prior art. “Prior art” is, in general, all the
knowledge that existed prior to the relevant filing or priority date of a patent application,
whether it existed by way of written or oral disclosure. The question of what should constitute
“prior art” at a given time is one which has been the subject of debates.

One viewpoint is that the determination of prior art should be made against a background of
what is known only in the protecting country. This would exclude knowledge from other
countries, if it was not imported into the country before the making of the invention, even if
that knowledge was available abroad before the date of the making of the invention.

Another viewpoint is based on the differentiation between printed publications and other
disclosures such as oral disclosures and prior use, and where such publications or disclosures
occurred.

The disclosure of an invention so that it becomes part of the prior art may take place in three
ways, namely:
1) by a description of the invention in a published writing or publication in other form;
2) by a description of the invention in spoken words uttered in public, such a disclosure
being called an “oral disclosure”;
3) by the use of the invention in public, or by putting the public in a position that enables
any member of the public to use it, such a disclosure being a “disclosure by use”.

25
Publication in tangible form requires that there be some physical carrier for the information, a
document in the broad sense of the term, and that document must have been published, that is
to say, made available to the public in any manner such as by offering for sale or deposit in a
public collection. Publications include issued patents or published patent applications, writings
(whether they be manuscript, typescript, or printed matter), pictures including photographs,
drawings or films, and recording, whether they be discs or tapes in either spoken or coded
language. Today, publication on the Internet must increasingly be taken into consideration.

Oral disclosure, as the expression suggests, implies that the words or form of the disclosure
are not necessarily recorded as such and includes lectures and radio broadcasts.

Disclosure by use is essentially a public, visual disclosure such as by display, sale,

demonstration, unrecorded television broadcasts and actual public use.

A document will only destroy the novelty of any invention claimed if the subject matter is
explicitly contained in the document. The subject matter set forth in a claim of an application
under examination is thus compared element by element with the contents of each individual
publication.

Lack of novelty can only be found if the publication by itself contains all the characteristics of
that claim, that is, if it anticipates the subject matter of the claim. Lack of novelty may
however, be implicit in the publication in the sense that, in carrying out the “teaching” of the
publication, a person having ordinary skill in the art would inevitably arrive at a result falling
within the terms of the claim. Generally speaking, lack of novelty of this kind will only be
raised by the Patent Office where there is no reasonable doubt as to the practical effect of the
prior “teaching”.

It should be noted that in considering novelty, it is not permissible to combine separate items
of prior art together.

Inventive Step (Non-Obviousness): In relation to the requirement of inventive step (also

referred to as “non-obviousness”), the question as to whether or not the invention “would
have been obvious to a person having ordinary skill in the art” is perhaps the most difficult of
the standards to determine in the examination as to substance.

The inclusion of a requirement like this in patent legislation is based on the premise that
protection should not be given to what is already known as part of the prior art, or to anything
that the person with ordinary skill could deduce as an obvious consequence thereof.

26
The expression “ordinary skill” is intended to exclude the “best” expert that can be found. It is
intended that the person be limited to one having the average level of skill reached in the field
in the country concerned.

It should be noted that novelty and inventive step are different criteria. Novelty exists if there
is any difference between the invention and the prior art. The question, “is there inventive
step?” only arises if there is novelty. The expression “inventive step” conveys the idea that it
is not enough that the claimed invention is new, that is, different from what exists in the state of
the art, but that this difference must have two characteristics:
1) it must be “inventive”, that is, the result of a creative idea, and it must be a step, that is,
it must be noticeable.
There must be a clearly identifiable difference between the state of the art and the
claimed invention. This is why, in some jurisdictions, there is the concept of an
“advance” or “progress” over the prior art.
2) it is required that this advance or progress be significant and essential to the invention.
In order to assess the nature of the differences which are relied upon as constituting an
inventive step, account has to be taken of the prior art as a whole. Thus, as distinct
from the assessment of novelty, the subject matter of the claim under examination is
compared not with each publication or other disclosure separately, but with the
combinations thereof, insofar as each such combination is obvious to the person
having ordinary skill in the art. The combination may be global, whereas the claim
may define a set of subject matter known separately. For the inventive step to be
denied, it is necessary that not only the combination, but also the choice of the
combined elements, is obvious. It is the sum of the differences that have been
discovered which must be compared with the prior art and judged as to obviousness,
and not each of the new elements taken individually, except where there is no
technical link between them.

In most cases, it is useful to assess inventive step in relation to three aspects, namely:
1) the problem to be solved;
2) the solution to that problem; and
3) the advantageous effects, if any, of the invention with reference to the background art.

If the problem is known or obvious, the examination will bear on the originality of the solution
claimed. If no inventive step is found in the solution, the question becomes whether or not the
result is obvious or whether it is surprising either by its nature or by its extent. If a person
having ordinary skill in the art would have been able to pose the problem, solve it in the
manner claimed, and foresee the result, the inventive step is lacking.

27
Disclosure of the Invention: An additional requirement of patentability is whether or not the
invention is sufficiently disclosed in the application. The application must disclose the
invention in a manner sufficiently clear for the invention to be carried out by a person skilled
in the art.

The description should set out at least one mode for carrying out the invention claimed. This
should be done in terms of examples, where appropriate, and with reference to the drawings, if
any. In some countries, the description is required to disclose the best mode for carrying out
the invention known to the applicant.

Oppositions: Whether or not there is an examination as to substance, some jurisdictions

provide for an opposition procedure which may be instituted either before or after the grant of a
patent. An opposition procedure is designed to allow third parties to present objections to the
grant of a patent.

So that oppositions may be filed, the public must be informed of the content of the application,
and this is done by the Patent Office by publication of a notice in an official journal or gazette
to the effect that:
1) the application is open to public inspection; and/or
2) the Patent Office will, unless opposition is filed within a prescribed period, grant a
patent; or
3) a patent has been granted on the application.

The grounds upon which an opposition may be filed are prescribed by the relevant legislation.
Generally speaking, it should be possible for an opposition to be based on non-compliance
with any substantive requirement. However, the law in some countries restricts an opposition
to certain substantive requirements only. Typically, these grounds are lack of novelty,
inventive step or industrial applicability, insufficient disclosure of the invention, or the fact
that an amendment made to a patent application has gone beyond the original disclosure in the
application as filed. Some jurisdictions make it possible to file an opposition on the ground
that the applicant has no right to a patent.

Patent Infringement
Exclusive Right of a Patent Owner: Generally speaking, a patentee acquires the right,
enforceable at law, to decide who shall and who shall not exploit his patented invention. He
retains this right for the term of the patent, provided he pays any necessary renewal or
maintenance fees.

28
The patent owner‘s legal rights over his invention are usually limited in a number of quite
different ways:
1) the claims which define the monopoly may be subject to amendment or invalidation
by the courts in respect of defects which were not detected prior to the grant of the
patent.

2) where the invention is an improvement or development of an earlier subsisting patent,

the patent owner may need to obtain a license and pay royalties to the earlier patent
owner.
3) the patent owner‘s rights are usually limited by the patent law, quite apart from the
question of validity of his patent.
In most patent systems, for example, the patent owner is required to work his
invention, either on his own behalf, or by licensing others to use it, if he wishes to
retain his monopoly. A non- voluntary license may, for instance, be granted to third
parties if it can be demonstrated that the patented invention is not worked or is
insufficiently worked in the country.
4) a legal limitation on a patent owner‘s right to exploit his invention is that patented
inventions may often be used by Government or by third parties authorized by
Government, where the public interest so requires, on terms fixed by agreement or by
the courts.

With the exception of the limitations just referred to, the grant of a patent allows its owner to
exclude others from exploiting the patented invention. The right of the owner is called
exclusive because it allows the exclusion of others from exploiting the invention and because
the owner is the only one allowed to exploit the invention as long as others are not given an
authorization, for example, by way of license to do so. This exclusive right of the patent
owner has two main applications in practice, namely protection against infringement and the
possibility of assigning or licensing the right, in part or in whole.

An infringement of the exclusive right of a patent owner involves the unauthorized

exploitation of the patented invention by a third party. The making of the invention in
particular, and its development for industrial application, usually involve considerable expense
for the applicant and for the future owner of the patent for invention. The patent owner thus
wishes to recover this expense through exploitation of the patented invention, in particular
through the sale of products that incorporate the invention.

Enforcement of Rights: Initiative for enforcing a patent rests exclusively with the patent
owner. It is he who is responsible for detecting infringements and for bringing them to the
infringer‘s attention. In many jurisdictions there is a strict rule that the patent owner may not

29
threaten legal action without the possibility of incurring severe countermeasures, including
damages, if the threats prove to be on insufficient grounds. The main purpose of such
provisions in the law is to prevent patent owners from threatening the customers of alleged
infringers without pursuing the primary infringer. In practice, a polite letter pointing out the
existence of the patent carries the implication that the patentee will sue if the infringement
continues. Such a letter has proven to be quite effective in suppressing an infringement. If the
infringer is persistent, the patent owner may consider whether he wishes to offer a license.
Many incipient disputes are settled through license negotiations at an early stage, the terms of
the license reflecting the bargaining strength of the parties. But if the patent owner is reluctant
to license on terms

acceptable to the licensee, he may have recourse to legal action by suing for infringement and
seeking an injunction to restrain the infringement. The invariable legal response of an
infringer who wishes to pursue the contest is to petition for invalidation of the patent.

The great majority of patent infringement disputes never reach the stage of court action but are
settled through negotiation. Of those that do reach the stage at which official legal action is
taken, very few go beyond the pre-trial stage, the usual outcome being settlement before any
court hearing, possibly with the help of an unofficial arbitrator. Settlements of this nature can
take several years, especially in complicated cases, but they do not typically involve large
legal costs. Such settlements almost invariably involve a license and possibly damages as well.

Types of Infringement: There are several ways in which infringement of patent rights might
arise. Firstly, there is the situation where a patent is deliberately infringed by a third party
without any attempt to avoid the infringement. This will either be straight copying of the
invention or else involve minor variations or modifications thereof. This form of infringement
may occur because the third party is unscrupulous, or because he has been advised by his
patent agent that the patent in question, or one or more claims thereof, is invalid.

With this form of infringement there is generally no argument as to whether or not there is
infringement. If all the features of the patented invention have been copied, then there must be
infringement, and the only matter to be resolved is whether the claims of the patent are valid.

The second situation which arises is where the infringement is deliberate, but some attempt
has been made to avoid the appearance of infringement. It frequently happens that once an
invention is disclosed either by sale of the product incorporating the invention, or in a
published patent document, or in some other publication, third parties are given ideas. The
publication generally outlines the problem and shows a way of solving it. Third parties then
may endeavor to design an alternative to do the same thing. While third parties may be

30
genuinely trying to design around the patent whilst still making use of the basic idea of the
inventor, the result does not always clearly fall outside the scope of the claims of the patent.
This is probably the most common form of infringement faced by patent owners and it gives
rise to the most litigation.

The last situation that arises is the case of accidental infringement. As soon as a patent owner
comes across something which embodies his idea he naturally feels that his invention is being
copied. This is not necessarily so, since there may be many people working to solve a
particular problem at the same time. For example, research departments of different large
organizations may all be working on a similar problem. Similarly, there may be several
companies who have been asked to tender for a contract to solve a particular problem or to
achieve a certain result, and in so doing may come up with similar ideas to that which may have
been involved in the patented invention. Thus, although the patent owner may feel that his
invention has been copied, the third party has, in fact, arrived at a similar if not identical
solution via a different route.

Elements in Establishment of Infringement: To establish infringement the patent owner

must prove all the following elements:
1) the carrying out of a prohibited act;
2) the prohibited act must have been done after the publication of the patent application, or
3) the issuance of the patent where no early publication occurs;
4) the prohibited act must have been done in the country where the patent has been granted;
5) the prohibited act must be in relation to a product or process falling within the scope of
a claim of the patent.

Prohibited Acts: A prohibited act, the most important element in establishing an

infringement, is one which involves the making, using, selling or importing the patented
product, or the use of the patented process, or the making, using, selling or importing the
product directly obtained through the patented process.

To make the product means that the product described and claimed in the patent is carried out
in practice. Such making is also referred to as manufacturing especially when the product is
produced on a commercial scale. The method of manufacture and the quantity in which the
product is manufactured is irrelevant so far as infringement of a patented product is concerned.

There are however, three main exceptions in most laws to infringement of exclusive rights to
make a patented product, namely:
1) where the patented product is made for the sole purpose of scientific research and
experiment;

31
 2) where a third party had started making the product before the date when the patent
application for an invention incorporated in the product was filed; and
3) where the patented product is made under a non-voluntary license or under an
authorization granted by the Government on public interest grounds.

In respect of patented processes, only the making of products directly obtained through the
patented process is a prohibited act. “Directly” in this context means “immediately” or
“without further transformation or modification”.

One of the difficulties in establishing infringement in respect of products directly obtained

through a patented process, is that of proving that the patented process was used to produce
the product. Some laws partially solve this by providing for the reversal of the burden of proof
in respect of patents for processes by introducing the following presumption: if the product
resulting directly from the use of the patented process was new on the filing date or priority
date of the patent application, an identical product manufactured by a third party is presumed
to have been obtained by the same process. Some other laws go further and eliminate the
difficulty by not limiting the resulting product to one which has to be new.

The use of a patented product does not require that the use be repetitive or continuous. The
rule is that use is a prohibited act irrespective of who the user of the patented product is, and
for what purpose the patented product is used. The use of the patented product is a prohibited
act irrespective of whether the product actually being used was made by the patent owner, with
the authorization of that owner, or without the authorization of such owner.

There are, in most laws, five exceptions to infringement of exclusive rights to use a patented
product, namely:
1) where the use of the patented product is solely for purposes of scientific research and
experiment;
2) where the patented product that is used is a product which was put on the market in the
country by the owner of the patent for invention, or with his authorization;
3) where the use of the patented product occurs in vehicles in transit in the country;
4) where the patented product is used by third parties who have the special right to
continue to make the product; and
5) where the patented product is used under a non-voluntary license or under an
authorization granted by the Government on public interest grounds.

The sale of a patented product is a prohibited act irrespective of whether the product actually
sold was made by the patent owner, or with or without his authorization. Any product that
corresponds to the description of the invention and is claimed in the patent, even if made

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without the authorization of the owner, is a patented product.

Importing a product simply means that an article which constitutes or incorporates the patented
product is brought into the country where protection has been conferred. Thus, importation is
a physical act of transportation of the product across the border into the territory of the
country. It is irrelevant which other country the product is imported from. Furthermore, it does
not matter whether the importation takes place for purposes of use or sale, or for the
purposes of distribution free of charge. It is also irrelevant whether the imported product
enjoys patent protection in the country in which it was made or in the country from which it
was imported.

The principles relating to the use, sale and importation of patented products, as far as the
definitions of these acts are concerned, applies, mutatis mutandis, also to the use, sale and
importation of products directly obtained through a patented process.

After Publication of the Application or Issuance of the Patent: The second element in
establishing an infringement, namely that the prohibited act must have been done after the
publication of the invention in either a patent application or in the granted patent, needs little
comment. It would be contrary to natural justice if third parties could be charged with
committing an offense when details of the invention were not available to the public to see
what it is that could not be done.

In the Country where the Patent has been Granted: The third element in establishing an
infringement also requires little comment. Generally speaking, patents do not extend beyond
the boundaries of the country which granted the patent. The patent law of a country has no
effect in any other country. However, in a small number of countries, particularly U.K.
Dependent Territories, it is possible to extend the coverage of a United Kingdom patent to
those countries by the owner of the U.K. patent applying, generally within a period of three
years from the date of grant thereof, to register such patent in the country concerned.

Within the Scope of a Claim of the Patent: The fourth element in establishing an
infringement is one which is normally the decisive point in any patent litigation. The scope of
protection of the patent is determined in all countries by the claims. The meaning of the claims
is ultimately interpreted by the courts. The manner in which the courts will interpret a claim in
turn depends upon the domestic law and to a certain extent the rules or regulations. Therefore,
what a claim means will depend upon the jurisdiction in which it is being interpreted.

The courts, particularly in common law systems, attempt to determine what structure the
language of the claims defines, and whether or not the alleged infringing structure corresponds

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to the structure defined in the language of the claims. In attempting to answer the question as
to whether a particular structure infringes a particular claim of a patent for invention, the claim
should be broken down into its individual elements, and these compared with the elements of
the alleged infringement to see whether they fit. If the claim can, in fact, be made to
correspond to the alleged infringement without stretching the words of the claim too far, then
there may indeed be infringement. If, on the other hand, the claim contains a limitation to
something which is not found at all in the alleged infringement, there may be no infringement.

When comparing the individual elements of a claim against the corresponding elements of the
alleged infringement, the following questions have to be answered:
1) Are all the elements of the claim present in the alleged infringement?
2) Do all the elements have the same form?
3) Do all the elements perform the same function?
4) Do the elements have the same relationship to the other elements?

If the answer to each of these questions is “yes”, then infringement is established, depending of
course, on whether the claim in question is valid. An infringing product or process must include
each and every element of the invention defined in a claim.

Of course, the establishment of infringement is not always clear-cut. For example, changes in
form will not avoid infringement if there is no change in the result produced. Further changing
the order of steps in a process will not avoid infringement if the result is the same. Moreover
the presence of additional elements in an alleged infringement does not avoid infringement if
all the elements of the patent claim are also present.

One of the most difficult areas of patent claim interpretation is the determination as to whether
or not there has been a substitution of equivalent elements in the alleged infringement. This is
the so-called “doctrine of equivalents” which is well known in patent litigation practice in
many countries. Briefly stated, the doctrine indicates that an infringer should not be allowed to
continue his actions where he basically makes use of the patented invention while merely
substituting a variant for an element of the invention which is equivalent technically and
functionally to the element as contained in the patent claim, irrespective of whether the variant
used by the infringer turns out to be an improvement or otherwise. Equivalence is restricted to
those cases where the variant or variants used by the infringer function in substantially the
same manner and produce substantially the same result as the element or elements contained
in the claim or claims.

Remedies Available to the Patent Owner: The remedies which may be available to the
patent owner where infringement has been established are usually provided for in the national

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patent law and are generally in two forms, civil sanctions and criminal sanctions.
Broadly speaking, civil sanctions are available in all cases of infringement while criminal
sanctions are available only under particular circumstances, where the infringement was
committed intentionally.

Civil sanctions normally available include the award of damages, the grant of an injunction, or
any other remedy provided in the general law such as the seizure and destruction of the
infringing products or the tools used for the manufacture of those products.

If the patent owner establishes in court that infringement has occurred, or is occurring, he is
entitled to damages, which the court will assess. Damages will only be awarded against the
infringer for infringements committed since the date of publication of the invention by the
Patent Office in the patent application or the granted patent. The amount of damages may be
calculated in at least two different ways.
1) to set damages at the amount of the financial loss suffered as a result of the
infringement by the patent owner; or
2) use a method of calculation where damages would be based on an account of profits.

This does not mean that the patent owner will necessarily receive all the profits the infringer
has made on the infringing articles but, nevertheless, an account of profits can be very near to
the actual profits made. Damages may also be assessed by taking into account the royalty being
paid by any licensees. In this case a court may decide that damages should be no less than the
royalty payments per article and, as they are damages and not royalties, it is likely that
damages will be fixed at a higher figure.

Under some national laws, an infringer will not be liable to damages if he proves that at the
date of infringement, he was not aware, and had no reasonable ground for supposing, that the
patent existed.

An injunction is a prohibition of the infringing act. In such a case the court will issue an order
directing the infringer to stop making further copies or infringements of the patented
invention. Where the infringing act has not yet been committed but where preparations have
been made by a third party with a view to committing an infringing act (“imminent
infringement”) the injunction means that infringement may not be started.

Criminal sanctions depend on the structure of the criminal law and the procedures applicable
in the country. The usual forms of criminal sanction are punishment by imprisonment or by a
fine, or both.

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Exploitation of the Patented Invention
Selling an Invention: It is not enough to assess the product itself; the inventor should also
discover whether there is an adequate market for the product covered by his invention.

For some of the more sophisticated technology, research establishments, multinational

corporations and the like are showing increasing interest in taking up partially developed
technology with the object of completing development and thus gaining from the research
effort and securing a significant lead over competitors.

Basically, there are two methods the inventor can use to get his idea into production:
1) He can sell or license his product idea to a company equipped to manufacture it.
2) Alternatively, he can become a manufacturer himself, either establishing a factory or
contracting out production to a job or machine shop if appropriate.

Compulsory Licenses: Licenses that are granted by the owner of the patent are considered
“voluntary”, as distinguished from “compulsory‖ or “non-voluntary” licenses. The
beneficiary of a voluntary license has the right to perform acts covered by the exclusive right
under an authorization from the owner of the patent for invention. The authorization in a
contract is generally called a license contract concluded between the owner of the patent for
invention and the beneficiary of the license. In contrast, the beneficiary of a non-voluntary
license has the right to perform acts covered by the exclusive right under an authorization
given by a government authority against the will of the owner of the patent for invention.

In countries where the grant of non-voluntary licenses is provided for, such licenses generally
fall into two categories:
1. In the Event of Abuse of the Patent: Some countries provide for the grant of
compulsory licenses to prevent the abuses which might result from the exercise of the
exclusive rights conferred by the patent. Under Article 5A(2) of the Paris Convention,
failure to work is given as an example of such an abuse, and
2. In the Public Interest: Some countries provide for the grant of a non-voluntary
license in the case where a non-voluntary license is deemed necessary for reasons of
public welfare, including health, defense, and development of the economy.

Non-Working of a Patent: While the definition of “working” is generally a matter of

national law, it usually means at least, in the case of a patent directed to a product, the making
of the product and, in the case of a patent having been granted in respect of a process, the use
of the process. While the laws of some countries specifically provide that the importation of a
product that includes the invention does not constitute working, the current trend is away from

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this requirement. As a rule, the working requirement may be fulfilled through the working of
the patented invention either by the owner of the patent for invention or by another entity or
person under a license contract.

At the outset it should be recalled that a patent must disclose the invention in a manner such
that one skilled in the art can carry it out. Thus patents, even apart from their being worked,
are considered beneficial to industry, as their publication may inspire other inventions.
Moreover, the inventions described in patents fall into the public domain after the expiration
of their term. That is, after their

expiration, the technology disclosed in a patent can be freely used by anyone without
obtaining the patent owner‘s permission.

Despite these benefits, it is believed in some countries that, in order to be fully justified the
patented invention should be worked in the country where the patent is granted, and not serve
only as an exclusive right to prevent others from doing so or to control importation. The
principal goal of requiring local working of a patented invention is the transfer of technology,
the actual working of patented inventions in a given country being seen as the most efficient
way of accomplishing such a transfer to that country.

The arguments against compulsory working of an invention in a particular country are twofold:
1) such compulsory working of inventions may work against the goal of transferring
technology and
2) it may not be economically feasible to do so.

The first argument against non-voluntary licenses is that they are less effective than voluntary
licensing in encouraging the transfer of technology, and may, indeed, even be
counterproductive to that goal. Stated another way, voluntary licensing clearly offers one
means whereby the transfer of technology can be facilitated, whereas non-voluntary licensing
should not be viewed as playing such a role but should be limited to correcting abuses which
may arise in the exercise of patent rights.

The transfer of technology is best done in an atmosphere of cooperation between the transferor
and the transferee. In the present context, that means between the patent owner and the
potential licensee. That cooperation generally leads to the disclosure of non-patented
“knowhow” which is necessary to make a commercially viable product, but which was not
necessary to satisfy the disclosure requirement to obtain the patent. In the case of a non-
voluntary license the atmosphere of cooperation, and hence the disclosure of non-patented
know-how, is absent. Thus the grant of a non-voluntary license under a patent results in a bare

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 right to work the patented invention, which is likely to be an insufficient vehicle for the full
transfer of technology.

Moreover, it may not be economically feasible to require a patent owner to manufacture

products in accordance with his patent in every country in which patent protection has been
obtained. Such a requirement does not allow cognizance to be taken of regional or
international integration of markets or of comparative advantages of countries or regions. That
is, a patent owner may find that products incorporating a patented invention, or made by a
patented process, may be made cheaper if production is consolidated in one facility in one
country, with the demand in other countries being satisfied by importation. Indeed, the patent
owner may find that individual components of his product, which are

themselves protected by patents, may be best manufactured in several countries or regions,

with final assembly being conducted in one facility or on a regional or national basis.

In response to these criticisms of non-voluntary license provisions, two points are often made.
First, since in countries with such provisions they are seldom applied for and even less likely
to be granted, they are of little practical importance. Secondly, such provisions do serve as a
legal possibility which may encourage a patent owner to more readily enter into a voluntary
license agreement, even if those provisions are seldom applied. Nonetheless, the environment
of cooperation usually found in the case of voluntary licensing is more effective than the
environment of coercion in promoting the full and continuing transfer of technology.

Article 5A(2) of the Paris Convention38 specifically provides that countries of the Paris Union
may provide for the grant of non-voluntary licenses to prevent abuses resulting from the
exercise of patent rights, including failure to work. Article 5A(4)39 provides that compulsory
licenses for failure to work or insufficient working of the invention may not be requested
before a certain period of time of non- working or insufficient working has elapsed. This time
limit expires either four years from the date of filing of the patent application or three years
from the date of the grant of the patent for invention. The applicable time is the one which, in
the individual case, expires last.

The time limit of three or four years is a minimum time limit which recognizes that it may
take some time for the owner of a patent to begin working the patented invention in each
country where he has obtained patent protection. The patent owner must be given a longer time
limit, if he can give legitimate reasons for his inaction, for example, that legal, economic or
technical obstacles prevent working, or working more intensively, the invention in the

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 country. If that is proven, the request for a compulsory license must be rejected, at least for the
time being. The time limit of three or four years is a minimum time limit also in that sense that
national law can provide for a longer time limit.

Article 5A(4)40 further provides that the compulsory license for non-working or insufficient
working must be a non-exclusive license and can only be transferred together with the part of
the enterprise benefiting from the compulsory license. The patent owner must retain the right
to grant other non- exclusive licenses and to work the invention himself. Moreover, because
the compulsory license has been granted to a particular enterprise on the basis of its known
capacities, it is bound to that enterprise and cannot be transferred separately from that
enterprise. These limitations are intended to prevent a compulsory licensee from obtaining a
stronger position on the market than is warranted by the purpose of the compulsory license,
namely, to ensure sufficient working of the invention in the country.

Procedural Safeguards and Compensation: The grant of a non-voluntary license results in

the use of a very valuable property right of the patent owner. Since the grant of such a license
is without the consent of the patent owner, reasonable procedural safeguards, including an
effective appeal procedure, should be established to ensure that non-voluntary licenses are
properly granted and executed. Safeguards are also provided under Article 31 of the TRIPS
Agreement41.

In particular, the granting authority, such as a patent office, should ensure that the conditions
for the grant of a non-voluntary license are met, allowing the patent owner to state his position
in this regard. Moreover, the granting authority should ensure that adequate payment by the
beneficiary of the non- voluntary license is made to the patent owner, and should provide
means whereby the non-voluntary license may be cancelled if the grounds for the grant of the
non-voluntary license no longer exist or if the obligations under the non-voluntary license are
not met by the beneficiary thereof.

The grant of a non-voluntary license does not mean that the beneficiary (the licensee) need not
pay royalties. On the contrary, national laws dealing with this question generally require that
the licensee make payments to the patent owner on the basis of the working of the invention.

Forfeiture or Revocation of the Patents in the Event of Abuses: While it is anticipated that
the grant of a compulsory license would, in most instances, be sufficient to correct abuses,
Article 5A(3)42 envisages the forfeiture or revocation of the patent in cases where the grant of

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such compulsory licenses is not sufficient. That paragraph further provides that “No
proceedings for the forfeiture or revocation of a patent may be instituted before the expiration
of two years from the grant of the first compulsory license.”

The Grant of Non-Voluntary Licenses in the Public Interest: Some countries provide for a
compulsory license when there has been no “abuse” of the patent right but where the grant of
a non- voluntary license is deemed necessary to protect the public interest. In general, non-
voluntary licenses granted in the public interest can be divided into those that are granted in
favor of private parties and those that are granted in favor of the government itself, or in favor
of a person acting on behalf of the government.

Non-Voluntary Licenses Granted in the Public Interest in Favor of Private Parties: One
example of a non-voluntary license granted in the public interest, but in favor of private
parties, is in the case of the so-called “dependent patents”. Such non-voluntary licenses are
granted to remedy the situation that arises when it is not possible, without performing acts
covered by one patent (the “dominant patent”), to work an invention claimed in another patent
(the “dependent patent”). In such a situation, and if the owner of the dependent patent has not
been able to conclude a license contract with the owner of the dominant patent on reasonable
terms, the owner of the dependent patent may obtain a non-voluntary license under the
dominant patent. Without that possibility, the owner of the dominant patent could prevent the
working of the invention claimed in the dependent patent by refusing to grant a license. This
inability to work a dependent patent is seen, in some countries, as being contrary to the public
interest in having the unencumbered working of all patented inventions.

Some national laws grant such non-voluntary licenses any time a situation of dependency
arises. Other national laws require that the dependent patent must serve a different purpose from
that of the dominant patent or constitute a real technical advance in relation to the invention
claimed in the dominant patent. That latter condition serves the purpose of avoiding abuses
which could result from applicants filing patent applications on trifling inventions for the sole
purpose of being able, thanks to a compulsory license, to work an important invention.

In order to introduce a certain balance between the positions of the owners of the two patents
for invention, it is often provided in national laws that the owner of the dominant patent may
obtain a compulsory license under the dependent patent, if the owner of the dependent patent
has obtained a compulsory license under the dominant patent.
In addition to non-working, some countries provide that the use of a patent in violation of
competition (anti-trust) laws is contrary to the public interest, warranting the compulsory
licensing of that patent, its unenforceability or its invalidity, as a consequence of the anti-trust
violation.

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 Non-Voluntary Licenses Granted in the Public Interest in Favor of the Government: A
number of countries allow the government to exploit inventions without the consent of the
owner of the patent, or to have third parties exploit the invention on its behalf, in the public
interest. There are typically three fields in which this may occur: national defense, national
economy and public health.

In most cases of public interest, it should be sufficient for the State to authorize, against the
will of the owner of the patent for invention, any entity or person designated by the
Government, to perform any of the acts which are covered by the patent for invention. In each
specific case, the Government will decide which of those acts may be performed.

This kind of measure in the public interest suits situations that arise in cases of national
emergency particularly well. To take the example of medical equipment, it might be necessary
to import that equipment very quickly in case of a sudden epidemic. If the owner of the patent
is not willing to import or to conclude a license contract for importation on reasonable terms,
the Government might decide to ask another entity to import the apparatus or might decide to
import it itself. Once the epidemic has been brought under control, however, there is no reason
to maintain the measure, and the owner of the patent for invention will recover the full control
of the rights attached to the patent.

Procedural Safeguards and Compensation: Because the grant of non-voluntary licenses

confers the right to use a valuable property right of the patent owner, without his consent,
procedural safeguards should be established to ensure that the grant of such licenses is only
when, and for as long as, the conditions warrant it. Moreover, provisions should be made for
the compensation of the patent owner for the use of his property rights. Safeguards are also
provided under Article 3143 of the TRIPS Agreement.

Compulsory Licenses under the TRIPS Agreement: Article 3144 of the TRIPS Agreement
allows Members to authorize third persons to exploit a patented invention, even against the
will of the patent owner, provided certain conditions are respected. The Agreement does not
prescribe nor limit the grounds on which such authorizations may be granted.

Where the law of a Member allows for such compulsory licenses, including compulsory
licenses by or on behalf of the government, or provides for other uses of the patented
invention without the authorization of the patent owner, the following conditions must be

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complied with:
a) Authorization of a compulsory license must be considered on its individual merits.
This means that applications for compulsory licenses must be considered on a case-
by-case basis.
b) A compulsory license can only be granted if the proposed compulsory licensee has
made efforts to obtain authorization from the right holder on reasonable commercial
terms and conditions and if such efforts have not been successful within a reasonable
period of time. This requirement may be waived by a Member in the cases of a
national emergency or other circumstances of extreme urgency, or in cases of public
non-commercial use.
c) The scope and duration of a compulsory license must be limited to the purpose for
which it was authorized. However, in the case of semi-conductor technology a
compulsory license may only be granted for public non-commercial use, or to remedy
a practice determined to be anti- competitive.

d) A compulsory license must be non-exclusive.

e) A compulsory license may not be assigned without that part of the enterprise or
goodwill which produces the product under that license.
f) A compulsory license must be authorized predominantly for the supply of the domestic
market of the Member that grants the license.
g) A compulsory license must be liable to be terminated, subject to adequate protection
of the legitimate interests of the compulsory licensee, if the circumstances that justified
its grant have ceased to exist and are unlikely to recur.
h) The patent owner must be paid adequate remuneration in the circumstances of each
case, taking into account the economic value of the allowed use.
i) The legal validity of any decision relating to the grant of a compulsory license must be
subject to judicial review or other independent review by a distinct higher authority in
the Member that granted the license.
j) Any decision relating to the remuneration in respect of a compulsory license must be
subject to judicial review or other independent review by a distinct higher authority in
the Member that granted the license.
k) A Member is not obliged to apply the conditions set forth in items (b) and (f) above
where the compulsory license is granted to remedy a practice determined to be anti-
competitive. The need to correct anti-competitive practices may be taken into account
in determining the amount of remuneration in such cases. The competent authority of
the Member must have the power to refuse termination of a compulsory license if the
conditions that justified its grant are likely to recur.
l) In cases of dependency between two patents belonging to different owners, so that the
later patent cannot be exploited without infringing the earlier patent, the following

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 additional conditions must be applied:
i. the invention claimed in the second patent must involve an important technical
advance of considerable economic significance in relation to the invention
claimed in the first patent; the owner of the first patent is entitled to a cross-
license on reasonable terms to use the invention claimed in the second patent;
and
ii. the use authorized in respect of the first patent may not be assigned except
with the assignment of the second patent.

II. Law of Copyright & Related Rights

Copyright law is a branch of that part of the law which deals with the rights of intellectual
creators. Copyright law deals with particular forms of creativity, concerned primarily with mass
communication. It is concerned also with virtually all forms and methods of public
communication, not only printed publications but also such matters as sound and television
broadcasting, films for public exhibition in cinemas, etc. and even computerized systems for
the storage and retrieval of information.

Copyright deals with the rights of intellectual creators in their creation. Most works, for example
books, paintings or drawings, exist only once they are embodied in a physical object. But
some of them exist without embodiment in a physical object. For example, music or poems are
works even if they are not, or even before they are, written down by a musical notation or
words.

Copyright law, however, protects only the form of expression of ideas, not the ideas
themselves. The creativity protected by copyright law is creativity in the choice and
arrangement of words, musical notes, colors, shapes and so on. Copyright law protects the
owner of rights in artistic works against those who “copy”, that is to say those who take and
use the form in which the original work was expressed by the author.

Copyright Protection
Copyright protection is above all one of the means of promoting, enriching and disseminating
the national cultural heritage. A country‘s development depends to a very great extent on the
creativity of its people, and encouragement of individual creativity and its dissemination is a
sine qua non for progress.

Copyright constitutes an essential element in the development process. Experience has shown
that the enrichment of the national cultural heritage depends directly on the level of protection
afforded to literary and artistic works. The greater the number of a country‘s intellectual

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creations, the higher its renown; the greater the number of productions in literature and the
arts, the more numerous their so- called “auxiliaries” (the performers, producers of
phonograms and broadcasting organizations) in the book, record and entertainment industries;
and indeed, in the final analysis, encouragement of intellectual creation is one of the basic
prerequisites of all social, economic and cultural development. Legislation could provide for
the protection not only of the creators of intellectual works but also of the auxiliaries that help
in the dissemination of such works, in respect of their own rights. The protection of these
auxiliaries of intellectual creators is also of importance to developing countries since the
cultural achievement of some of these countries includes, in no small measure, performance,
sound recording and broadcasting of different creations of their folklore as well.

While developing countries are often in need of foreign books, especially in the field of
science, technology, education and research, they could offer to the world an abundance of their
national cultural heritage, which can be protected, within the framework of copyright
legislation, through protection of the rights of these auxiliaries or of related (or neighboring)
rights as they are called.

Adoption of the law is the first step. The practical value of the law depends on its effective and
efficient application. This can be achieved through setting up of appropriate authors‘
organizations for collection and distribution of authors‘ fees. Copyright, if effectively
implemented, serves as an incentive to authors and their assignees (the publishers) to create and
disseminate knowledge. It is something that society must necessarily accept if it wishes to
encourage intellectual creativity, to ensure the progress of the sciences, the arts and of
knowledge in general, to promote the industry using authors‘ works and to render it possible
to distribute such works in an organized manner among the widest possible circle of interested
persons.

Copyright protection, from the viewpoint of the creator of works, makes sense only if the
creator actually derives benefits from such works, and this cannot happen in the absence of
publication and dissemination of his works and the facilitation of such publication and
dissemination. This is the essential role of copyright in developing countries.

There are several factors influencing intellectual creativity in developing countries, apart from
the pecuniary condition of most of the authors and intellectual creators themselves, who need
to be offered incentives and subsidies. There is the shortage of paper for the production of
textbooks for the process of continuing education (both formal and non-formal), and for
production of prescribed and recommended books as also general books, which are to be placed
within the reach of the common man in these countries.

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The role of governments in this activity could include financial assistance in the creation and
production of textbooks and other educational literature, inputs for training and also help for
expansion of the library system, the creation of mobile libraries to serve far-flung and remote
rural areas, etc. In this whole chain, the various links, namely authorship, publishing,
distribution and fostering of the library movement on a broad base, cannot be underrated, and
need to be carefully nurtured and coordinated.

In the late nineteenth and in the twentieth century considerable socio-economic and political
changes on the one hand, and rapid strides in technological development on the other, have
brought about substantial changes of outlook in relation to copyright. The freedom and
expansion of the press, the gradual disappearance of the feudal order, the growth of adult
training and mass education schemes, the raising of standards in higher education, the increase
in the number of universities, institutions of higher learning and libraries, the emphasis on the
use of national languages, the development of science and technology, the changed map of the
world with the birth of a number of newly independent developing nations - all these factors
have caused conceptual changes.

The challenge in this new situation is to maintain a balance between provision of adequate
rewards to creators of works and ensuring that such rewards are in harmony with the public
interest and the needs of modern society.

Economic rights have a time limit, which can vary according to national law. In those
countries which are members of the Berne Convention, the time limit should be equal to or
longer than 50 years after the creator‘s death. Longer periods of protection may however be
provided at the national level.

Subject Matter of Copyright Protection

The subject-matter of copyright protection includes every production in the literary, scientific
and artistic domain, whatever the mode or form of expression. For a work to enjoy copyright
protection, however, it must be an original creation. The ideas in the work do not need to be
new but the form, be it literary or artistic, in which they are expressed must be an original
creation of the author. And, finally, protection is independent of the quality or the value
attaching to the work – it will be protected whether it be considered, according to taste, a good
or a bad literary or musical work - and even of the purpose for which it is intended, because
the use to which a work may be put has nothing to do with its protection.

Works eligible for copyright protection are, as a rule, all original intellectual creations. A non-
exhaustive, illustrative enumeration of these is contained in national copyright laws. To be
protected by copyright law, an author‘s works must originate from him; they must have their

45
origin in the labor of the author. But it is not necessary, to qualify for copyright protection,
that works should pass a test of imaginativeness, of inventiveness. The work is protected
irrespective of the quality thereof and also when it has little in common with literature, art or
science, such as purely technical guides or engineering drawings, or even maps. Exceptions to
the general rule are made in copyright laws by specific enumeration; thus laws and official
decisions or mere news of the day are generally excluded from copyright protection.

Practically all national copyright laws provide for the protection of the following types of work:
1) literary works: novels, short stories, poems, dramatic works and any other writings,
irrespective of their content (fiction or non-fiction), length, purpose (amusement,
education, information, advertisement, propaganda, etc.), form (handwritten, typed,
printed; book, pamphlet, single sheet, newspaper, magazine); whether published or
unpublished; in most

countries “oral works”, that is, works not reduced to writing, are also protected by the
copyright law;
2) musical works: whether serious or light; songs, choruses, operas, musicals, operettas;
if for instructions, whether for one instrument (solos), a few instruments (sonatas,
chamber music, etc.), or many (bands, orchestras);
3) artistic works: whether two-dimensional (drawings, paintings, etchings, lithographs,
etc.) or three-dimensional (sculptures, architectural works), irrespective of content
(representational or abstract) and destination (“pure” art, for advertisement, etc.);
maps and technical drawings;
4) photographic works: irrespective of the subject matter (portraits, landscapes, current
events, etc.) and the purpose for which they are made;
5) motion pictures (“cinematographic works”): whether silent or with a soundtrack,
and irrespective of their purpose (theatrical exhibition, television broadcasting, etc.),
their genre (film dramas, documentaries, newsreels, etc.), length, method employed
(filming “live”, cartoons, etc.), or technical process used (pictures on transparent film,
videotapes, DVDs, etc.).
6) computer programs (either as a literary work or independently).

Many copyright laws protect also “works of applied art” (artistic jewelry, lamps, wallpaper,
furniture, etc.) and choreographic works. Some regard phonograph records, tapes and
broadcasts also as works.

Rights Comprised in Copyright

The owner of copyright in a protected work may use the work as he wishes - but not without
regard to the legally recognized rights and interests of others - and may exclude others from
using it without his authorization.

46
 Therefore, the rights bestowed by law on the owner of copyright in a protected work are
frequently described as “exclusive rights” to authorize others to use the protected work. The
original authors of works protected by copyright also have “moral rights”, in addition to their
exclusive rights of an economic character.

What is meant by “using” a work protected by copyright? Most copyright laws define the acts
in relation to a work which cannot be performed by persons other than the copyright owner
without the authorization of the copyright owner. Such acts, requiring the authorization of the
copyright owner, normally are the following:
1) copying or reproducing the work; performing the work in public;
2) making a sound recording of the work;
3) making a motion picture of the work;
4) broadcasting the work; translating the work;
5) adapting the work.

Right of Reproduction and Related Rights

The right of the owner of copyright to prevent others from making copies of his works is the
most basic right under copyright. For example, the making of copies of a protected work is the
act performed by a publisher who wishes to distribute copies of a text-based work to the
public, whether in the form of printed copies or digital media such as CD-ROMs. Likewise,
the right of a phonogram producer to manufacture and distribute compact discs (CDs)
containing recorded performances of musical works is based, in part, on the authorization
given by the composers of such works to reproduce their compositions in the recording.
Therefore, the right to control the act of reproduction is the legal basis for many forms of
exploitation of protected works.

Other rights are recognized in national laws in order to ensure that the basic right of
reproduction is respected. For example, some laws include a right to authorize distribution of
copies of works. The right of distribution is usually subject to exhaustion upon first sale or
other transfer of ownership of a particular copy, which means that, after the copyright owner has
sold or otherwise transferred ownership of a particular copy of a work, the owner of that copy
may dispose of it without the copyright owner‘s further permission, for example, by giving it
away or even by reselling it. Another right which is achieving wider and wider recognition,
including in the TRIPS Agreement45, is the right to authorize rental of copies of certain
categories of works, such as musical works included in phonograms, audiovisual works, and
computer programs. The right of rental is justified because technological advances have made

45
<https://www.wto.org/english/docs_e/legal_e/27-trips.pdf>

47
it very easy to copy these types of works; experience in some countries has shown that copies
were made by customers of rental shops, and therefore, that the right to control rental practices
was necessary in order to prevent abuse of the copyright owner‘s right of reproduction.
Finally, some copyright laws include a right to control importation of copies as a means of
preventing erosion of the principle of territoriality of copyright; that is, the legitimate
economic interests of the copyright owner would be endangered if he could not exercise the
rights of reproduction and distribution on a territorial basis.

Performing Rights
Another act requiring authorization is the act of public performance - for example, public
readings, dramatic and musical performances before an audience. The right to control this act
of public performance is of interest not only to the owners of copyright in works originally
designed for public performance, but also to the owners of copyright, and to persons
authorized by them, when others may wish to arrange the public performance of works
originally intended to be used by being reproduced and published. For example, a work
written originally in a particular way in order to be read at home or in a library may be
transformed (“adapted”) into a drama designed to be performed in public on the stage of a
theater.

Recording Rights
The third act to be examined is the act of making a sound recording of a work protected by
copyright. So far as music is concerned, sound recording is the most favored means of
communicating a work to a wide public. This serves much the same purpose for musical works
as books serve for literary works. Sound recordings can incorporate music alone, words alone
or both music and words. The right to authorize the making of a sound recording belongs to
the owner of the copyright in the music and also to the owner of the copyright in the words. If
the two owners are different, then, in the case of a sound recording incorporating both music
and words, the maker of the sound recording must obtain the authorization of both owners.

Under the laws of some countries, the maker of a sound recording must also obtain the
authorization of the performers who play the music and who sing or recite the words. This is
another example of the fact that the owner of copyright in a work cannot use it or authorize the
use of it in a way which is contrary to the legal rights of others.

Motion Picture Rights

A “motion picture” is a visual recording, giving to viewers an impression of motion. In the
technical language of copyright law, it is often called a “cinematographic work” or an
“audiovisual work”. In some countries the word “film” is used instead of the expression
“motion picture”. The expression “motion picture” is perhaps preferable, because such

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productions are, today, frequently made with technological methods (such as magnetic tape)
which do not require the use of photographic film.

A drama originally written for performance by performers to an immediately present audience

(“live performance”) can be visually recorded and shown to audiences far larger in numbers
than those who can be present at the live performance; such audiences can see the motion
picture far away from the place of live performance and at times much later than the live
performance.

Broadcasting Rights
A major category of acts restricted by copyright consists of the acts of broadcasting works and
of communicating works to the public by means of wires or cables. When a work is broadcast,
a wireless signal is emitted into the air which can be received by any person, within range of
the signal, who possesses the equipment (radio or television receiver) necessary to convert the
signal into sounds or sounds and images.

When a work is communicated to the public by cable, a signal is diffused which can be
received only by persons who possess such equipment linked to the cables used to diffuse the
signal. In principle, according to the Berne Convention for the Protection of Literary and
Artistic Works, owners of copyright have the exclusive right of authorizing both the wireless
broadcasting and the diffusion by cable of their works.

The broadcasting and diffusion by cable of works protected by copyright have given rise to
new problems resulting from technological advances which may require a review by
governments of their national copyright legislation. The advances include the use of space
satellites to extend the range of wireless signals, the increasing possibilities of linking radio
and television receivers to signals diffused by cable, and the increasing use of equipment able
to record sound and visual images which are broadcast or diffused by cable.

Translation and Adaptation Rights

The acts of translating or of adapting a work protected by copyright require the authorization
of the copyright owner. “Translation” means the expression of a work in a language other
than that of the original version.

“Adaptation” is generally understood as the modification of a work from one type of work to
another, for example adapting a novel so as to make a motion picture, or the modification of a
work so as to make it suitable for different conditions of exploitation, for example adapting an
instructional textbook originally prepared for higher education into an instructional textbook

49
intended for students at a lower level.

Translations and adaptations are themselves works protected by copyright. Therefore, in order,
for example, to reproduce and publish a translation or adaptation, the publisher must have the
authorization both of the owner of the copyright in the original work and of the owner of
copyright in the translation or adaptation.

Moral Rights
The Berne Convention requires member countries to grant to authors:
1) the right to claim authorship of the work;
2) the right to object to any distortion, mutilation or other modification of, or other
derogatory action in relation to, the work which would be prejudicial to the author‘s
honor or reputation.

These rights, which are generally known as the moral rights of authors, are required to be
independent of the usual economic rights and to remain with the author even after he has
transferred his economic rights.

Related Rights
There exist rights related to, or “neighboring on”, copyright. These rights are generally referred
to as“related rights” (or “neighboring rights”) in an abbreviated expression.

It is generally understood that there are three kinds of related rights: the rights of performing
artists in their performances, the rights of producers of phonograms in their phonograms, and
the rights of broadcasting organizations in their radio and television programs. Protection of
those who assist intellectual creators to communicate their message and to disseminate their
works to the public at large, is attempted by means of related rights.

Works of the mind are created in order to be disseminated among as many people as possible.
This cannot be done generally by the author himself, for it requires intermediaries whose
professional capability gives to the works those forms of presentation that are appropriate to
make them accessible to a wide public. A play needs to be presented on the stage, a song
needs to be performed by artists, reproduced in the form of records or broadcast by means of
radio facilities.

All persons who make use of literary, artistic or scientific works in order to make them
publicly accessible to others require their own protection against the illegal use of their
contributions in the process of communicating the work to the public.

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The protection of authors‘ interests does not consist merely in preventing the use of their
creations and cannot be limited to prohibiting infringements of the rights that laws afford to the
authors. Their works are intended to be made available to the public at large. Various categories
of works are made accessible to the public in various ways. A publisher reproduces a
manuscript in its final form without adding to the expression of the work as created by the
author. The interests of book publishers are protected by means of copyright itself and laws do
recognize that copyright is essential as a stimulus to creative writing, as also to support the
economies of publishing.

The position is slightly different with regard to dramatic and musical works, pantomimes, or
other types of creative works intended for either auditive or visual reception. Where some of
such works are communicated to the public, they are produced or performed or recited with
the aid of performers. In such cases, there arises the interest of the performers themselves in
relation to the use of their individual interpretation in the performed work.

The problem in regard to this category of intermediaries has become more acute with rapid
technological developments. Where, at the very beginning of the 20th century, the
performance of dramatists, actors, or musicians ended with the play or concert in which they
performed, it is no longer so with the advent of the phonograph, the radio, the motion picture,
the television, the videogram and satellites.

These technological developments made possible the fixing of performances on a variety of

material, viz., records, cassettes, tapes, films, etc. What was earlier a localized and immediate
phase of a performance in a hall before a limited audience became an increasingly permanent
manifestation capable of unlimited and repeated reproduction and use before an equally
unlimited audience that went beyond national frontiers. The development of broadcasting and
more recently, television, also had similar effects.

These technological innovations, since they have made it possible to reproduce individual
performances by performing artists and to use them without their presence and without the
users being obliged to reach an agreement with them, have led to a reduction in the number of
live performances. This creates what has come to be known as technological unemployment
among professional artists, thus giving a new dimension to the protection of the interests of
performers.

Likewise by the very same token, the increasing technological development of phonograms
and cassettes and, more recently, compact discs (CDs), and their rapid proliferation, was
pointing to the need of protection of producers of phonograms. The appeal of the phonogram,

51
as also the easy availability in the market of the variety of increasingly sophisticated recording
devices, created the growing problem of piracy, which by now has become a worldwide
scourge. In addition, there is the increasing use of records and discs by broadcasting
organizations; while the use of these by the latter provides publicity for the phonograms and
for their producers, these also have, in turn, become an essential ingredient of the daily
programs of broadcasting organizations. Consequently, just as the performers were seeking
their own protection, the producers of phonograms began to pursue the case of their protection
against unauthorized duplication of their phonograms, as also for remuneration for the use of
phonograms for purposes of broadcasting or other forms of communication to the public.

Finally, there were the interests of broadcasting organizations as regards their individually
composed programs. The broadcasting organizations required their own protection for these as
well as against retransmission of their own programs by other similar organizations.

Thus the need was felt for special protection for performers, producers of phonograms and
broadcasting organizations. The performers through their organizations at the international
level sought a study leading to their protection. While a performer would be paid once for
recording a performance, and the recording of the performance could be played repeatedly for
the benefit of a third party, the performers felt that they would not only not derive any income
from such secondary use, but would also be placed in the awkward position of having to
compete with their own recordings in respect of their employment potential for live
performances in theaters, restaurants, cafés, etc.

Unlike most international conventions, which follow national legislation and provide a
synthesis of existing laws, the Rome Convention was an attempt to establish international
regulations in a new field where few national laws existed. This meant that most States would
have to draft and enact laws before adhering to the Convention. Since the adoption of the
Convention in 196l, a large number of States have legislated in matters related to the
Convention, and a number of others are considering such legislation. The notion of Related
Rights is understood as meaning rights granted in an increasing number of countries to protect
the interests of performers, producers of phonograms and broadcasting organizations in
relation to their activities in connection with the public use of authors‘ works, all kinds of
artists‘ presentations or the communication to the public of events, information, and any
sounds or images. The most important categories are: the right of performers to prevent
fixation and direct broadcasting or communication to the public of their performance without
their consent; the right of producers of phonograms to authorize or prohibit reproduction of
their phonograms and the import and distribution of unauthorized duplicates thereof; the right
of broadcasting organizations to authorize or prohibit rebroadcasting, fixation and
reproduction of their broadcasts. An increasing number of countries already protect some or

52
all of these rights by appropriate rules codified mainly within the framework of their copyright
laws. Several countries also grant a sort of moral right to performers to protect them against
distortion of their performances and grant them the right to claim the mention of their name in
connection with their performances. Some countries also protect the interests of broadcasting
organizations by preventing the distribution on or from their territory of any program-
carrying signal emitted to or passing through a satellite, by a distributor for whom the signal is
not intended. No protection of any related right can, however, be interpreted as limiting or
prejudicing the protection secured to authors or beneficiaries of other related rights under a
national law or an international convention.

Protection of performers is provided in order to safeguard the interests of actors, singers,

musicians, dancers, or other persons who act, sing, deliver, declaim, play in or otherwise
perform literary or artistic works, or expressions of folklore, against certain unlawful uses of
their performances. The term “producer of phonograms” denotes a person who, or a legal
entity which, first fixes the sounds of a performance or other sounds. A phonogram is any
exclusively aural fixation of sounds of a performance or of other sounds. A duplicate of a
phonogram is any article containing sounds taken directly or indirectly from a phonogram and
which embodies all or a substantial part of the sounds fixed in that phonogram. Gramophone
records (discs), magnetophone cassettes and compact discs are duplicates of a phonogram.
Broadcasting is usually understood as meaning telecommunication of sounds and/or images
by means of radio waves for reception by the public at large. A broadcast is any program
transmitted by broadcasting, in other words, transmitted by any wireless means (including
satellite transmissions) for public reception of sounds and of images and sounds.

Communication to the public by wire is generally understood as meaning the transmission of a

work, performance, phonogram or broadcast by sounds or images through a cable network to
receivers not restricted to specific individuals belonging to a private group.

By first fixation of sounds is meant the original embodiment of sounds of a live performance,
or of any other sounds not taken from another existing fixation, in some enduring material
form such as tapes, records or any other appropriate device permitting them to be perceived,
reproduced or otherwise repeatedly communicated. First fixation of sounds is not to be
confused with first publication of a phonogram.

Another notion that of rebroadcasting is either simultaneous transmission of a broadcast of a

program being received from another source, or a new, deferred broadcast of a formerly
recorded program transmitted or received earlier. Finally, it must be stated that since in the
cultural life of countries, including the developing countries, due importance is attached to the
artistic heritage, the protection of related rights affords rights to those who contribute to the

53
interpretation and dissemination of that heritage. It is particularly important for some
developing countries whose tradition is largely oral and where the author is often the
performer as well. In this context, the place occupied by works of folklore must be borne in
mind, and the interests of the artists performing and thus perpetuating them must be
safeguarded when use is made of their performances. By also protecting the producers of
phonograms, particularly in developing countries, the basis for setting up an industry in the
tertiary sector of the economy is ensured. Such an industry, while guaranteeing the
dissemination of national culture, both within the country and throughout the world, can
additionally constitute a substantial source of revenue for the country‘s economy and, in those
cases where its activities extend beyond the country‘s frontiers, can represent an inflow of
foreign currency. The part played by the broadcasting organizations in developing countries
should also not be forgotten, nor that such organizations have a natural interest in the protection
of their programs against rebroadcasting, reproduction and communication to the public.

Ownership of Copyright
The owner of copyright in a work is generally, at least in the first instance, the person who
created the work, that is to say, the author of the work. There can be exceptions to this general
principle. Such exceptions are regulated by the national law. For example, the national law
may provide that, when a work is created by an author who is employed for the purpose of
creating that work, then the employer, not the author, is the owner of the copyright in the
work. It is to be noted, however, that the “moral rights” always belong to the author of the
work, whoever may be the owner of the copyright.

In many countries, copyright (with the exception of moral rights) may be assigned. This means
that the owner of the copyright transfers it to another person or entity, who becomes the owner
of the copyright. In some other countries, an assignment of copyright is not legally possible.
However, very nearly the same practical effect as the effect of assignment can be achieved by
licensing. Licensing means that the owner of the copyright remains the owner but authorizes
someone else to exercise all or some of his rights subject to possible limitations. When such
authorization or license extends to the full period of copyright and when such authorization or
license extends to all the rights (except, of course, the moral rights) protected by copyright, the
licensee is, vis-à-vis third parties and for all practical purposes, in the same position as an
owner of copyright.

Limitations on Copyright Protection

Temporal: Copyright does not continue indefinitely. The law provides for a period of time, a
duration, during which the rights of the copyright owner exist. The period or duration of
copyright begins with the creation of the work. The period or duration continues until
sometime after the death of the author. The purpose of this provision in the law is to enable

54
the author‘s successors to have economic benefits after the author‘s death. It also safeguards
the investments made in the production and dissemination of works.

In countries which are party to the Berne Convention, and in many other countries, the
duration of copyright provided for by national law is the life of the author and not less than
fifty years after the death of the author. In recent years, a tendency has emerged towards
lengthening the term of protection.

Geographic: The second limitation or exception to be examined is a geographical limitation.

The owner of the copyright in a work is protected by the law of a country against acts restricted
by copyright which are done in that country. For protection against such acts done in another
country, he must refer to the law of that other country. If both countries are members of one of
the international conventions on copyright, the practical problems arising from this
geographical limitation are very much eased.

Permitted Use: Certain acts normally restricted by copyright may, in circumstances specified
in the law, be done without the authorization of the copyright owner. Some examples of such
exceptions are described as “fair use”. Such examples include reproduction of a work
exclusively for the personal and private use of the person who makes the reproduction;
another example is the making of quotations from a protected work, provided that the source
of the quotation, including the name of the author, is mentioned and that the extent of the
quotation is compatible with fair practice.

Non-Material Works: In some countries, works are excluded from protection if they are not
fixed in some material form. In some countries, the texts of laws and of decisions of courts
and administrative bodies are excluded from copyright protection. It is to be noted that in some
other countries such official texts are not excluded from copyright protection; the government
is the owner of copyright in such works and exercises those rights in accordance with the
public interest.

Miscellaneous: In addition to exceptions based on the principle of “fair use” other exceptions
are to be found in national laws and in the Berne Convention. For example, when the
broadcasting of a work has been authorized, many national laws permit the broadcasting
organization to make a temporary recording of the work for the purposes of broadcasting,
even if no specific authorization of the act of recording has been given. The laws of some
countries permit the broadcasting of protected works without authorization, provided that fair
remuneration is paid to the owner of copyright. This system, under which a right to
remuneration can be substituted for the exclusive right to authorize a particular act, is
frequently called a system of “compulsory licenses”. Such licenses are called “compulsory”

55
because they result from the operation of law and not from the exercise of the exclusive right
of the copyright owner to authorize particular acts.

Piracy and Infringement

The rights of an owner of copyright are infringed when one of the acts requiring authorization
of the owner is done by someone else without his consent. The unauthorized copying of
copyright materials for commercial purposes and the unauthorized commercial dealing in
copied materials is known as “piracy”.

Incidence of Piracy: An essential part of piracy is that the unauthorized activity is carried on
for commercial gain. This element of commercial gain implies that piracy will often be carried
out on an organized basis, since not only is the unauthorized reproduction of a work involved,
but also the subsequent sale or distribution of the illegally reproduced work, which will
require some form of organized distribution network or contact with potential purchasers. To
the consumer, often only the end of the chain of such a distribution network will be visible in
the form of one sales outlet selling a pirated product. It is important to bear in mind, however,
particularly when addressing the question of the means of dealing effectively with piracy, that
behind one such outlet will often lie a systematically organized illicit enterprise, which
illegally reproduces a copyrighted work and distributes it to the public via a number of such
sales outlets.

While piracy is not a recent phenomenon, two developments have occurred which have caused
it to assume alarming proportions, and to threaten the basis of the copyright system. The first
has been the advances in the means by which intellectual works may be communicated. The
medium of the printed word has been supplemented progressively by media for communicating
audio and visual recordings in the form of phonograms, music cassettes, films and videograms.
Similarly, widespread commercialization of the computer has added a further means of
recording and communicating information. Most recently, the advent of digital technology has
had a tremendous impact on the creation, dissemination and use of works.

The copyright system has responded to these developments by progressively enlarging the
subjects over which the creators of intellectual works are granted rights. These advances,
however, have increased the scope for pirates to interfere in the control which an author
exercises over the dissemination and use of his works by the public. Simultaneously with the
advances in the means of communicating intellectual works have been significant advances in
the means of reproducing tangible records of those works. Foremost amongst the latter
developments have been:
1) the development of the offset technique of printing and of duplicating and

56
 photocopying machines;
2) the invention of the magnetic tape, the advent of the compact disc, and the
development of higher quality and cheaper cassette recorders which enable not only the
playing of pre-recorded cassettes, but also the recording of music from live
performances, radio or gramophone records; and
3) the invention of the video recorder, which has extensively enlarged the means by
which films and other, principally visual, works may be received.

One consequence of these advances is the difference in cost between, on the one hand, the
making of the original recording by an author and his business partners and, on the other hand,
the reproduction of such a recording by others. In the case of a film, a producer must, through
his own and his partners investment, finance the script writer and any other literary author
involved, the musical composer, the actors, the support cast, the cost of location and site
facilities, and the use of sophisticated visual and sound recording equipment. Once a tangible
record has been made of the film, however, particularly if the record is contained in a
videogram recording, further records of the work can be reproduced with considerable ease
and at little cost. Thus, advances in recording technology have produced the means whereby
pirates can easily produce illegal versions of the original work. Since the pirate has not made,
and therefore does not need to recover the cost of, any investment in the production of the
original work, the pirated copies are usually sold at reduced prices, thereby undermining the
original author‘s, performer‘s, investor‘s and distributor‘s possibility of obtaining a just moral
and economic reward for their work and investment.

Effects of Piracy: While consumers may sometimes see short-term benefits in the availability
of cheaper works as a result of piracy, the quality of reproductions made by pirates is often
very inferior. Consumers are also disadvantaged in the long term by piracy as a result of the
absence of remuneration given to authors and performers by pirates, and of the
misappropriation of the economic returns to publishers and producers. This diversion of
economic rewards from authors and their business partners to pirates removes the incentive to
the investment of time, effort, skill and resources in the creation of new works.

Since piracy is a clandestine activity, the profits derived by pirates are not subject to tax
collection. Amongst the adverse consequences of this diminution in governmental revenue
may be a reduction in the amount of government sponsorship available for the arts, as the
level of such sponsorship may in part be determined by reference to the contribution which is
made to the government budget by taxation derived from the distribution or sale of works
subject to copyright protection.

57
Piracy can be seen to have detrimental effects, therefore, on each of the elements that make up
the copyright system. In consequence, piracy threatens to stultify the evolution and development
of national cultural identity which the copyright system is designed to promote.

Remedies
Remedies for infringement of copyright or for violation of related rights consist of civil
redress, as where infringers are obliged by court to cease the infringement and to undertake
reparatory action by any appropriate means, for example, rectification in the press or liability
for damages. Some laws also provide for penal remedies in the form of fines and/or
imprisonment. Infringing copies, receipts resulting from infringement and any implement used
for the same are usually subject to seizure.

The main remedies which are available to a copyright owner in respect of infringement in
common-law jurisdictions are an injunction to restrain the continuation of the infringement,
and damages to compensate the copyright owner for the depreciation caused by the
infringement to the value of his copyright. In the context of piracy, because it is often carried
out as an organized activity, the effectiveness of these remedies may be jeopardized for a
number of reasons.

In the first place, the organizer of the making and distribution of illegal reproductions may be
using a large number of sales outlets of an impermanent nature. The copyright owner may be
confronted with a situation in which it is possible to locate only a small proportion of these
outlets, without being able to prove any linkage between the outlets, or any common source of
supply for the outlets. Furthermore, the service of a writ commencing an action for
infringement, by giving notice to the pirate or to those distributing the works which he has
illegally reproduced, may precipitate the destruction of vital evidence required to indicate
the source of supply and the extent of sales which have taken place. In addition, since piracy
often involves an international dimension, there is a risk that the financial resources and other
assets of a pirate may be removed from the jurisdiction in which legal proceedings are
commenced against him, thereby depriving the copyright owner of the possibility of
recovering damages. These difficulties have accentuated the need for preliminary remedies
which may be obtained speedily, which will assist in the collection of evidence against a
pirate, and which will prevent the destruction of evidence and the removal of financial
resources against which damages may be claimed. In many common-law jurisdictions a number
of developments have occurred in recent years in response to this need.

Anton Piller Orders: Foremost among the new developments which have occurred in

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preliminary remedies has been the so-called Anton Piller order46. The Anton Piller order,
named after the case in which the English Court of Appeal sanctioned its use (Anton Piller
K.G. v Manufacturing Processes Ltd. [1976] RPC 719), is an order granted by the court
permitting the inspection of premises on which it is believed some activity is being carried on
which infringes the copyright of the plaintiff. The order has a number of features which make
it a particularly appropriate remedy in the context of piracy:
i. the order will be granted ex-parte, that is, on the application and in the presence
alone of the copyright owner, without prior warning being given to the defendant.
The essence of the order is thus that it takes the defendant by surprise and
precludes the defendant from destroying or removing vital evidence.
ii. the terms on which the order is granted enable the copyright owner to inspect the
premises of the defendant, and all documents (including business information, such
as bills, invoices, sources of supply and customer lists) relating to the alleged
infringement. By virtue of these terms, the copyright owner is given the means
whereby he may be able to establish the source of supply of pirated works, and
the extent of sales which have taken place, which will assist in turn in establishing
the amount of damages to which he may be entitled.
iii. the order for inspection will often be accompanied by an injunction restraining the
defendant from altering or removing in any way articles or documents referred to
in the order for inspection.

The Anton Piller order can undoubtedly constitute an important weapon in the armory against
piracy. Since it is granted on an ex-parte basis, however, care needs to be exercised to ensure
that the rights of persons against whom it is granted, and whose actions have not yet been
judged, are adequately protected. Two safeguards, in particular, which have been required by
courts in jurisdictions where it is available, should be noted. First, it will only be granted
where it is essential that the plaintiff should have inspection so that justice can be done
between the parties. In order to meet this criterion, usually a copyright owner will have to
prove that there is clear evidence that the defendants have in their possession incriminating
documents or material; that the circumstances are such that there is a real possibility or grave
danger that the incriminating materials will be destroyed or hidden if the defendant is
forewarned; and that the potential or actual damage to the plaintiff as a result of the
defendant‘s alleged wrongdoings is very serious.

The second safeguard which is often required is proper respect for the defendant‘s rights in the
execution of the order. In this respect, it may be required that, in executing the order, a

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 copyright owner be attended by his lawyer, give the defendant adequate opportunity of
considering the order, and not force entry into the defendant‘s premises against his will. Of
course, if a defendant were to refuse entry into his premises, this would cause extremely
adverse inferences to be drawn against him at the subsequent trial.

In relation to Anton Piller orders, it may finally be noted that the effectiveness of the orders was
brought into question in one case when a defendant, pleading the privilege against self-
incrimination, successfully applied to discharge orders on the ground that they would expose
him to a real risk of prosecution for a criminal offense47 (Rank Film Distributors Ltd. v Video
Information Center [1981] 2 All E.R. 76). In order to overcome the effects of this decision, it
may be necessary to pass legislation revoking the privilege against self-incrimination as a
basis for refusing to comply with an Anton Piller order, as was done in the Supreme Court Act
of 1981 in the United Kingdom.

Discovery against Third Parties: In certain common-law jurisdictions it has been decided
that an innocent third party, who becomes caught up in the wrongdoings of another, is liable to
furnish a plaintiff with evidence in his possession relevant to the prosecution of an action by
the plaintiff against the wrongdoer. This decision arose in the English case of Norwich
Pharmacal Co. v. Commissioners of Customs and Excise ([1972] RPC 743, [1974] AC 133)48
where the plaintiffs, the proprietors of a patent covering a chemical compound, discovered that
various persons were importing the compound into the country in contravention of their patent,
but were unable to establish the identity of these persons.

This information was in the possession of the Commissioners of Customs and Excise, since
the importers were required under the customs regulations to fill in a form of entry specifying
the name of the importer and a description of the goods. The customs authorities refused to
disclose the identity of the importers on the ground that the information had been given to
them in confidence.

Nevertheless, it was decided that an innocent third party, such as the customs authorities, who
inadvertently becomes involved in the wrongdoing of another, will be liable to furnish
information concerning the wrongdoer to a plaintiff. While this case was concerned with
patents, it also has an application to copyright and could be of particular use to copyright
owners who are unable to establish the identity of persons importing pirated works into a
country.

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 A related but more effective procedure is to be found in Section 5349 of the Indian Copyright
Act 1957. This provision enables the Registrar of Copyrights to order that copies made out of
India of a work which, if made in India, would infringe copyright, shall not be imported. The
section also authorizes the Registrar to enter any ship, dock or premises for the purpose of
examining allegedly infringing works. The use of the section in a case involving the
transportation of pirated audio cassettes over Indian territory was approved by the Indian
Supreme Court in Gramophone Company of India Ltd. v. Panday ([1984] 2 SCC 534)50.

Interlocutory Injunctions: In order to minimize the damage being inflicted by piracy, it will
be important for a copyright owner to take swift action in seeking to prevent its continuation.
For as long as piracy continues, he will be deprived of a portion of his potential market, and
thus of the capacity to recover the economic reward for his creativity or investment. The aim of
the interlocutory injunction is to meet this need by granting speedy and temporary relief
during the period before a full trial of an infringement action takes place, thus preventing
irreparable damage from occurring to the plaintiff‘s rights.

One of the difficulties which has been experienced with interlocutory proceedings is that they
have tended to become themselves lengthy inquiries involving rather full consideration of the
facts of the case, with the result that their effectiveness as a means of obtaining temporary
relief is prejudiced. In many common-law jurisdictions, this has caused a reassessment of the
principles on which interlocutory relief is granted and, in particular, of the standard of proof
which a plaintiff is required to establish in order to obtain interlocutory relief. Previously, a
plaintiff was required to establish a prima facie case that his copyright was being infringed,
that is, to establish on the balance of probabilities that his case for infringement could be
defended. In order to overcome the delays and the lengthy proceedings which this standard of
proof involved; many jurisdictions have now required that a plaintiff establish only that there is
a “serious question” to be tried. In other words, the merits of the legal issues involved in the
case need only be considered at the interlocutory stage to the point where the court is satisfied
that the plaintiff‘s claim for infringement is not frivolous. Thereafter, the decision as to
whether an injunction should be granted is taken on the basis of the factual circumstances of
the case, and whether, in particular, each party could be adequately compensated in damages
for the temporary impairment of his right were he to be unsuccessful at the interlocutory stage,
and later prove to be successful at the trial.

The adoption of this approach to interlocutory proceedings assists in avoiding excessive

delays in obtaining relief during the period, which is most important for the copyright owner,

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 namely, the period immediately following the initial publication and marketing of his work.

Final Remedies: The two usual remedies which are available for copyright owners in
common-law jurisdictions following the final trial of an infringement action are a perpetual
injunction and damages. The perpetual injunction is granted in order to prevent any further
repetition of the infringing action. In order to make the injunction effective, it is often coupled
with an order for the delivery by the infringer of all infringing copies of the copyright work,
which are then subject to destruction so as to ensure that they cannot be re-used or sold.

The object of an award of damages to a copyright owner is to restore the copyright owner to the
position he would have been in had his copyright not been infringed. A difficulty often
encountered in obtaining a satisfactory judgment in damages is the production of evidence as
to the extent of sales which have taken place and thus as to the extent of damage which has
been caused to the plaintiff‘s copyright. It is for this reason that the recent developments in
preliminary remedies, such as the Anton Piller order, which are aimed at enabling a plaintiff to
acquire evidence of infringement, are particularly important. Of particular relevance to piracy,
is the provision in some jurisdictions for additional damages in the case of a flagrant
infringement of copyright. Before an award of additional damages can be made in such
jurisdictions, however, it is necessary to establish that the infringer‘s conduct has been
deliberate and calculated, and that he has obtained a pecuniary advantage in excess of the
damages that he would otherwise have to pay.

III. Law of Trademarks

Trademarks already existed in the ancient world. Even at times when people either prepared
what they needed themselves or, more usually, acquired it from local craftsmen, there were
already creative entrepreneurs who marketed their goods beyond their localities and
sometimes over considerable distances. As long as 3,000 years ago, Indian craftsmen used to
engrave their signatures on their artistic creations before sending them to Iran. Manufacturers
from China sold goods bearing their marks in the Mediterranean area over 2,000 years ago and
at one time about a thousand different Roman pottery marks were in use, including the
FORTIS brand, which became so famous that it was copied and counterfeited. With the
flourishing trade of the Middle Ages, the use of signs to distinguish the goods of merchants
and manufacturers likewise expanded several hundred years ago. Their economic importance
was still limited, however.

Trademarks started to play an important role with industrialization, and they have since
become a key factor in the modern world of international trade and market-oriented
economies. Industrialization and the growth of the system of the market-oriented economy

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allow competing manufacturers and traders to offer consumers a variety of goods in the same
category. Often without any apparent differences for the consumer, they do generally differ in
quality, price and other characteristics. Clearly consumers need to be given the guidance that
will allow them to consider the alternatives and make their choice between the competing
goods. Consequently, the goods must be named. The medium for naming goods on the market
is precisely the trademark.

By enabling consumers to make their choice between the various goods available on the
market, trademarks encourage their owners to maintain and improve the quality of the
products sold under the trademark, in order to meet consumer expectations. Thus trademarks
reward the manufacturer who constantly produces high-quality goods, and as a result they
stimulate economic progress.

Definitions
Trademarks: “A trademark is any sign that individualizes the goods of a given enterprise
and distinguishes them from the goods of its competitors”. This definition comprises two
aspects, which are sometimes referred to as the different functions of the trademark, but which
are, however, interdependent and for all practical purposes should always be looked at
together.

In order to individualize a product for the consumer, the trademark must indicate its source.
This does not mean that it must inform the consumer of the actual person who has
manufactured the product or even the one who is trading in it. It is sufficient that the consumer
can trust in a given enterprise, not necessarily known to him, being responsible for the product
sold under the trademark.

The function of indicating the source as described above presupposes that the trademark
distinguishes the goods of a given enterprise from those of other enterprises; only if it allows
the consumer to distinguish a product sold under it from the goods of other enterprises offered
on the market can the trademark fulfill this function. This shows that the distinguishing function
and the function of indicating the source cannot really be separated. For practical purposes one
can even simply rely on the distinguishing function of the trademark and define it as “any
visible sign capable of distinguishing the goods or services of an enterprise from those of other
enterprises”.

Service Marks: In modern trade consumers are confronted not only with a vast choice of
goods of all kinds, but also with an increasing variety of services which tend more and more to
be offered on a national and even international scale. There is therefore also a need for signs

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 that enable the consumers to distinguish between the different services such as insurance
companies, car rental firms, airlines, etc. These signs are called service marks and fulfill
essentially the same origin-indicating and distinguishing function for services as trademarks do
for goods.

Since service marks are signs that are very similar in nature to trademarks, basically the same
criteria can be applied, so service mark protection has sometimes been introduced by a very
short amendment to the existing trademark law, simply providing for the application to service
marks, mutatis mutandis, of the provisions on the protection of trademarks. It follows from the
above principle that service marks can be registered, renewed and canceled in the same way as
trademarks; they can moreover be assigned and licensed under the same conditions. Rules
devised for trademarks therefore apply equally, in principle, to service marks.

Collective Marks and Certification Marks: Trademarks typically identify individual

enterprises as the origin of marked goods or services. Some countries provide for the
registration of collective and certification marks, which are used to indicate the affiliation of
enterprises using the mark or which refer to identifiable standards met by the products for
which a mark is used.

The following are the common features in the relevant provisions of national law on this topic.

Collective Marks: A collective mark may be owned by an association which itself does not
use the collective mark but whose members may use the collective mark; the members may
use the collective mark if they comply with the requirements fixed in the regulations
concerning the use of the collective mark. An enterprise entitled to use the collective mark
may in addition also use its own trademark.

The regulations concerning the use of the collective mark normally have to be included in an
application for the registration of the collective mark and any modifications to the regulations
have to be notified to the Trademark Office. In several countries (for example, the Federal
Republic of Germany, Finland, Norway, Sweden and Switzerland), the registration of a
collective mark may be canceled if that mark is used contrary to the provisions of the
regulations or in a manner which misleads the public. Collective marks, therefore, play an
important role in the protection of consumers against misleading practices.

The Paris Convention contains provisions on collective marks in its Article 751. Those
provisions, in particular, ensure that collective marks are to be admitted for registration and

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protection in countries other than the country where the association owning the collective
mark has been established. This means that the fact that the said association has not been
established in accordance with the law of the country where protection is sought is no reason
for refusing such protection. On the other hand, the Convention expressly states the right of
each member State to apply its own conditions of protection and to refuse protection if the
collective mark is contrary to the public interest.

Certification Marks: The certification mark may only be used in accordance with the defined
standards. The main difference between collective marks and certification marks is that the
former may be used only by particular enterprises, for example, members of the association
which owns the collective mark, while the latter may be used by anybody who complies with
the defined standards. Thus, the users of a collective mark form a “club” while, in respect of
certification marks, the “open shop” principle applies.

An important requirement for the registration of a certification mark is that the entity which
applies for registration is ―competent to certify‖ the products concerned. Thus, the owner of a
certification mark must be the representative for the products to which the certification mark
applies. This is an important safeguard for the protection of the public against misleading
practices.

The definition of “certification mark” is not the same in all countries. In the United States of
America, for instance, a certification mark may not be used by anybody who complies with the
defined standards, but only by enterprises which have been authorized by the owner of the
certification mark to use that mark. Thus, in the United States of America, the difference
between a certification mark and a collective mark is smaller than in other countries; it only
relates to the purpose of those two kinds of marks: the certification mark refers to certain
standards of products or services, while the collective mark refers to the membership of its
users in a particular organization.

Signs which May Serve as Trademarks: It follows from the purpose of the trademark that
virtually any sign that can serve to distinguish goods from other goods is capable of
constituting a trademark. Trademark laws should not therefore attempt to draw up an
exhaustive list of signs admitted for registration. If examples are given, they should be a
practical illustration of what can be registered, without being exhaustive. If there are to be
limitations, they should be based on practical considerations only, such as the need for a
workable register and the need for publication of the registered trademark. If we adhere
strictly to the principle that the sign must serve to distinguish the goods of a given enterprise
from those of others, the following types and categories of signs can be imagined:

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 1) Words: This category includes company names, surnames, forenames,
geographical names and any other words or sets of words, whether invented or
not, and slogans.
2) Letters and Numerals: Examples are one or more letters, one or more numerals
or any combination thereof.
3) Devices: This category includes fancy devices, drawings and symbols and also
two- dimensional representations of goods or containers.
4) Combinations of any of those listed above, including logotypes and labels.
5) Colored Marks: This category includes words, devices and any combinations
thereof in color, as well as color combinations and color as such.
6) Three-Dimensional Signs: A typical category of three-dimensional signs is the
shape of the goods or their packaging. However, other three-dimensional signs
such as the three- pointed Mercedes star can serve as a trademark.
7) Audible Signs (Sound Marks): Two typical categories of sound marks can be
distinguished, namely those that can be transcribed in musical notes or other
symbols and others (e.g. the cry of an animal).
8) Olfactory Marks (Smell Marks): Imagine that a company sells its goods (e.g.
writing paper) with a certain fragrance and the consumer becomes accustomed to
recognizing the goods by their smell.
9) Other (Invisible) Signs: Examples of these are signs recognized by touch.

As mentioned before, countries may set limits on registrability for practical purposes. The
majority of countries allow the registration only of signs that can be represented graphically,
since only they can be physically registered and published in a trademark journal to inform the
public of the registration of the trademark.

A number of countries allow the registration of three-dimensional trademarks, obliging the

applicant either to submit a two-dimensional representation of the three-dimensional sign
(drawing, picture or any other representation which can be printed) or a description, or both.
In practice, however, it is not always clear what is protected by the registration of a three-
dimensional sign. A similar problem exists for audible signs. A sequence of notes can of course
be registered as a device mark, but that registration does not normally give protection to the
actual musical phrases so expressed. What is protected is the sequence of notes, as registered,
against the use of similar devices. Sound marks clearly can serve as trademarks, however, and
the United States of America, for example, allows the registration of sound marks. In
practical terms, this means that the sound must be recorded, and the cassette submitted to the
U.S. Patent and Trademark Office for registration. The United States of America is the first
country to have recognized the registrability of a smell mark - fresh floral fragrance

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 reminiscent of Plumeria blossoms for sewing thread and embroidery yarn – TTAB (1990)52. In
a decision on February 11, 1999, the Board of Appeal of the Office for Harmonization in the
Internal Market (Trademarks and Designs) of the European Community53 supported the
registrability of the smell mark “the smell of fresh cut grass‖ for tennis balls (R 156/1998-2).

Criteria of Protectability
The requirements which a sign must fulfill in order to serve as a trademark are reasonably
standard throughout the world. Generally speaking, two different kinds of requirement are to be
distinguished. The first kind of requirement relates to the basic function of a trademark, namely,
its function to distinguish the products or services of one enterprise from the products or services
of other enterprises. From that function it follows that a trademark must be distinguishable
among different products. The second kind of requirement relates to the possible harmful effects
of a trademark if it has a misleading character or if it violates public order or morality.

These two kinds of requirement exist in practically all national trademark laws. They also
appear in Article 6quinquies B of the Paris Convention where it is stated that trademarks enjoying
protection under Article 6quinquies A may be denied registration only if “they are devoid of any
distinctive character” or if “they are contrary to morality or public order and, in particular,
of such a nature as to deceive the public”.

Requirement of Distinctiveness: A trademark, in order to function, must be distinctive. A

sign that is not distinctive cannot help the consumer to identify the goods of his choice. The
word “apple” or an apple device cannot be registered for apples, but it is highly distinctive for
computers. This shows that distinctive character must be evaluated in relation to the goods to
which the trademark is applied.

The test of whether a trademark is distinctive is bound to depend on the understanding of the
consumers, or at least the persons to whom the sign is addressed. A sign is distinctive for the
goods to which it is to be applied when it is recognized by those to whom it is addressed as
identifying goods from a particular trade source or is capable of being so recognized.

The distinctiveness of a sign is not an absolute and unchangeable factor. Depending on the
steps taken by the user of the sign or third parties, it can be acquired or increased or even lost.
Circumstances such as (possibly long and intensive) use of the sign have to be taken into
account when the registrar is of the opinion that the sign lacks the necessary distinctiveness,
that is, if it is regarded as being not in itself distinct enough for the purpose of distinguishing
between goods and services.

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There are, of course, different degrees of distinctiveness, and the question is how distinctive a
sign must be in order to be registrable. In that connection a distinction is generally made
between certain typical categories of marks - fanciful or coined trademarks which are
meaningless and the others. A famous example of the first category is the KODAK trademark.

These trademarks may not be the favorites of the marketing people, since they require heavy
advertising investment to become known to consumers. They inherently enjoy very strong
legal protection, however.

Common words from everyday language can also be highly distinctive if they communicate a
meaning that is arbitrary in relation to the products on which they are used. The same is true of
the corresponding devices. Examples are the famous CAMEL trademark for cigarettes (and
the equally famous device mark) and the previously-mentioned APPLE mark (both the word
and the device) for computers.

Marketing people are generally fond of brand names that generate a positive association with
the product in the mind of the consumer. They tend therefore to choose more or less
descriptive terms. If the sign is exclusively descriptive, it lacks distinctiveness and cannot be
registered as such as a trademark. However, not all signs that are neither meaningless nor
arbitrarily used necessarily lack distinctiveness: there is an intermediate category of signs that
are suggestive, by association, of the goods for which they are to be used, and of the nature,
quality, origin or any other characteristic, of those goods, without being actually descriptive.
Those signs are registrable. The crucial question in practice is whether a trademark is
suggestive or descriptive of the goods applied for. This question has to be judged according to
the local law and jurisprudence of the country and all the circumstances of the specific case.
As a general rule, it can be said that a descriptive term is distinctive for the goods concerned if
it has acquired a secondary meaning, that is, if those to whom it is addressed have come to
recognize it as indicating that the goods for which it is used are from a particular trade source. In
case of doubt as to whether a term is descriptive or suggestive, the very fact that the mark has
been used in the course of trade for a certain period of time may be sufficient for accepting it
for registration. However, the more descriptive the term is, the more difficult it will be to
prove secondary meaning, and a higher percentage of consumer awareness will be necessary.

Lack of Distinctiveness: If a sign is not distinguishable, it cannot function as a trademark and

its registration should be refused. The applicant normally need not prove distinctiveness. It is
up to the registrar to prove lack of distinctiveness, and in the case of doubt the trademark
should be registered. Some trademark laws put the onus on the applicant to show that his mark

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ought to be registered. This practice may be considered strict, however, and sometimes
prevents the registration of marks that are demonstrably capable of distinguishing their
proprietor‘s goods. And yet the modern trend, as reflected in Article 3 of the EC Harmonization
Directive is clearly to treat lack of distinctiveness as a ground for refusing an application for
registration of a trademark.

Generic Terms: A sign is generic when it defines a category or type to which the goods
belong. It is essential to the trade and also to consumers that nobody should be allowed to
monopolize such a generic term. Examples of generic terms are “furniture” (for furniture in
general, and also for tables, chairs, etc.) and “chair” (for chairs). Other examples would be
“drinks”, “coffee” and “instant coffee”, which shows that there are larger and narrower
categories and groups of goods, all having in common that the broad term consistently used to
describe them is generic. These signs are totally lacking in distinctiveness, and some
jurisdictions hold that, even if they are used intensively and may have acquired a secondary
meaning, they cannot be registered since, in view of the absolute need of the trade to be able to
use them, they must not be monopolized. For these reasons the High Court of Delhi, India, in
1972 refused registration of the JANTA trademark as in Hindi the word means cheap in price.

Descriptive Signs: Descriptive signs are those that serve in trade to designate the kind, quality,
intended purpose, value, place of origin, time of production or any other characteristic of the
goods for which the sign is intended to be used or is being used. In line with the definition of
the distinctive sign given earlier, the test to be applied must establish whether consumers are
likely to regard a sign as a reference to the origin of the product (distinctive sign) or whether
they will rather look on it as a reference to the characteristics of the goods or their
geographical origin (descriptive sign). The term “consumer” is used here as an abbreviation
denoting the relevant circles to be considered in a specific case, namely those to whom the
sign is addressed (and in certain cases also those who are otherwise reached by the sign). The
fact of other traders having a legitimate interest in the fair use of a term can therefore be used as
a kind of additional ground when making the decisive test of whether consumers are likely to
regard the sign as a reference to origin or as a reference to characteristics of the goods. It should
not, however, be used on its own as a basis for a decision to refuse the registration of a term
when it is not clear that consumers are also likely to regard the term as descriptive.

Other Signs Lacking Distinctiveness: Signs may lack distinctiveness for other reasons. This is
true of a device which, owing to its simplicity or pure illustrative or ornamental character, may
not capture the consumer‘s attention at all as a sign referring to the origin of the product, but
rather as a mere illustrative

part of the packaging of the goods offered to him. An example (with regard to words) would

69
be a relatively long advertising slogan recommending the goods to the consumer which, even
when reproduced on the packaging, would be much too complex to be understood by consumers
as a reference to the origin of the product.

In practice the authorities have to deal with certain other typical categories of cases which in
many laws are expressly listed as grounds for refusal, and which are dealt with below.

Reference to Geographical Origin: References to geographical origin (as opposed to the

origin of the goods in the sense of the origin-indicating function) are basically not distinctive.
They convey to the consumer an association with the geographical name, indicated either as
the place of manufacture of the goods in question or of ingredients used in their production, or -
depending on factual circumstances
- with certain characteristics of the goods attributable to their origin. For such an association to
be conveyed to the consumer, the geographical location referred to must of course - at least to
a certain extent - be first known to him. Signs referring to practically unknown localities are
therefore distinctive. References to areas where nobody would expect the goods concerned to
be manufactured are also distinctive.

Even if a geographical area is known to the consumer, a sign that makes a reference to it can
either be or become distinctive if there is no other manufacturer or trader in the same field of
activity, and no potential for competitors to settle there in the future. A geographical
denomination may also, through long and intensive use, be associated with a certain enterprise
to such an extent that it becomes distinctive as a trademark for it, even if competitors already
exist or establish themselves in the future.

Letters, Numerals and Basic Geometrical Shapes: These signs are often regarded as being
indistinctive and therefore unregistrable. Some trademark laws (such as the former German
trademark law) even expressly excluded them from registration or accepted them only if at least
three letters and/or numerals are combined, or in the case of letters, if the sequence is
pronounceable.

It is certainly true that consumers will not normally regard letters, numerals or simple
geometrical shapes as indications of the origin of the goods. Nevertheless, letters, numerals
and their combinations can become distinctive through use and the so-called legitimate
interest of other traders in making fair use of them should be no reason for refusal. The recent
international trend therefore goes towards accepting the registration of such signs more
liberally. Furthermore, even without any use, letters and numerals can be registrable if they
are applied for in a fanciful device.

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Foreign Script and Transliterations: Imagine the use of a Thai script mark in India or Sri
Lanka, the use of Chinese characters in Switzerland, Singhala characters in the United States
of America or Japanese characters (Katakana, Kandi) anywhere but in Japan. For the great
majority of ordinary consumers these marks are purely fanciful devices. Consequently, they
are in principle distinctive, except where the sign has no more than an ornamental effect,
depending on its graphic presentation. Since these marks are distinctive, they are basically
registrable. The registrar may, however, ask for a translation (a description of its meaning) in
local script.

Colors: The use of words and/or devices in colors or combined with colors generally
increases their distinctiveness. Consequently, applications for such signs claiming the colors
shown or described in the application are easier to register. The first trademark registered in
the United Kingdom in 1876 (and still on the register) was a triangle (a basic geometrical
shape) in red. However, protection is then in principle restricted to the actual colors in which
the mark is registered. Signs that might have been regarded as confusingly similar to the
registered mark, had it been in black and white, may therefore fall outside the scope of
protection in view of the use of different colors. Since signs registered in black and white are
protected against the registration and use of confusingly similar signs regardless of color, and
since the registered owners of such signs can normally use them in any color they may wish to
use, the usual practice is not to register signs in color. However, a given color or combination
of colors may be an important element of a trademark, constantly used by its owner, and
therefore liable to be imitated by competitors. This shows that a trademark owner may have a
real interest in registering his mark in the distinctive colors in which it is used, even where the
mark was distinctive enough to be registrable in black and white. In order to eliminate the
previously-mentioned risk of restricting the scope of protection of such a mark, its owner may
register the mark both in black and white and in the colors actually used.

Signs consisting exclusively of individual colors or of color combinations can be registrable

trademarks. It is a matter for practice in the various countries to determine whether they are
considered inherently distinguishable or basically descriptive with the possibility of becoming
distinctive through use.

Names, Surnames: Company names and trade names are registrable, except where they are
deceptive or not distinctive. Common surnames are not registrable in some countries, since
they are not distinctive. As for less common surnames, it is, in such countries, important to
establish whether another meaning in everyday language will be overwhelmingly recognized
by consumers. If there is such a dominant meaning, the sign is registrable on the condition that
the meaning in question is not descriptive of the goods for which the mark is to be used.

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Exclusions from Registration on other Grounds: Public Interest
Deceptiveness: Trademarks that are likely to deceive the public as to the nature, quality or
any other characteristics of the goods or their geographical origin do not, in the interest of the
public, qualify for registration. The test here is for intrinsic deception, inherent in the
trademark itself when associated with the goods for which it is proposed. This test should be
clearly distinguished from the test for the risk of confusing customers by the use of identical or
similar trademarks for identical or similar goods. It is true that fanciful trademarks or marks
with an arbitrary meaning for the goods proposed cannot be deceptive. And yet trademarks
that have a descriptive meaning, even if they are only evocative or suggestive and therefore
distinctive, may still be deceptive. Such trademarks have therefore to be examined from two
angles: first they must be distinctive, and secondly, they must not be deceptive. As a rule, it can
be said that the more descriptive a trademark is, the more easily it will deceive if it is not used
for the goods with the characteristics described.

Reference to Geographical Origin: Signs that are descriptive or indicative of geographical

origin are false for products that do not come from the region described or indicated. In such
cases the consumer will be deceived if the reference to the geographical origin has the wrong
connotations for him. This is particularly true if the region or locality has a reputation. Famous
examples of such signs are “Champagne” and “Swiss Chocolate”.

In practice, such cases of direct reference to geographical origin are relatively rare. More often
indirect references are made, and these cases are more problematic. A reference to a famous
Swiss mountain for chocolate would still deceive consumers, as would a device mark
consisting of a typical alpine landscape. Indeed, even the use of foreign words can, under
certain circumstances, be deceptive without any reference to a specific geographical origin.
The very fact that a word comes obviously from a particular foreign language may give
consumers the impression that the product comes from the country where that language is
spoken. Consumers will therefore be deceived if the country concerned has a reputation for
the goods concerned.

However, it should be realized that, in addition to being spoken in many different countries all
over the world, English is also the modern international marketing language, with the result
that many trademarks have an English-language connotation quite independent of the
geographical origin of the goods marked with it, and that consumers are generally aware of the
fact.

Partial Deceptiveness: We have seen that the question whether or not a trademark is
inherently deceptive must be examined in relation to the goods in respect of which the

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application is made. Depending on the list of goods, therefore, an application may be
distinctive for some, descriptive for others and/or deceptive for still others. In such cases the
examiner has to require a limitation of the list of goods. Should the applicant not agree to such
limitation, the examiner refuses the whole application in some countries. In others, he accepts
the application only for the goods for which, in his opinion, the mark is not deceptive and
refuses it for the others.

Signs Contrary to Morality or Public Policy: Trademark laws generally deny registration to
signs that are contrary to morality or public policy.

Signs Reserved for Use by the State, Public Institutions or International Organizations: A
country generally protects its national flag, its official name and the names of official
institutions in its own interest. Furthermore, countries are obliged by Article 6ter of the Paris
Convention also to protect the notified signs of other member States and international
intergovernmental organizations (such as the United Nations Organization).

Protection of Trademark Rights

A trademark can be protected on the basis of either use or registration. Both approaches have
developed historically, but today trademark protection systems generally combine both
elements. The Paris Convention places contracting countries under the obligation to provide
for a trademark register. Over one hundred and fifty States have adhered to the Paris
Convention. Nearly all countries today provide for a trademark register, and full trademark
protection is properly secured only by registration.

Use does still play an important role, however: first of all, in countries that have traditionally
based trademark protection on use, the registration of a trademark merely confirms the
trademark right that has been acquired by use. Consequently, the first user has priority in a
trademark dispute, not the one who first registered the trademark.

Use Requirements
Need for an Obligation to Use: Trademark protection is not an end in itself. Even though
trademark laws generally do not require use as a condition for the application for trademark
registration, or even the actual registration, the ultimate reason for trademark protection is the
function of distinguishing the goods on which the trademark is used from others. It makes no
economic sense, therefore, to protect trademarks by registration without imposing the
obligation to use them. Unused trademarks are an artificial barrier to the registration of new
marks. There is an absolute need to provide for a use obligation in trademark law.

At the same time trademark owners need a grace period after registration before the use

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obligation comes into effect. This is especially true of the many companies that are active in
international trade. In order to avoid loopholes in the protection of their new trademarks of
which competitors could take advantage, they must from the very beginning apply for the
registration of their new trademarks in all countries of potential future use. Even in their own
countries companies often need several years before they can properly launch a newly-
developed product on the market. This is especially true of pharmaceutical companies, which
have to make clinical tests and have to apply for approval of their product by the health
authorities. The grace period granted in trademark laws that provide for a use obligation is
sometimes three years, but more often five years.

Consequences of Non-Use: The principal consequence of unjustified non-use is that the

registration is open to cancellation at the request of a person with a legitimate interest. There is
moreover a tendency to require of the registered owner that he prove use, since it is very
difficult for the interested third party to prove non-use. In the interest of removing “deadwood”
from the register, such reversal of the burden of proof is justified.

The burden of proof should be on the trademark owner not only in cancellation proceedings but
also in any other proceedings where the owner is alleged to have taken advantage of his unused
trademark right (opposition procedure, infringement action). No evidence of use should be
required for the renewal of a trademark registration, however. This is an administrative
complication which is unnecessary in view of the fact that an interested person can at any time
at all take appropriate action against an unused trademark registration.

Non-use does not always lead to invalidation of the trademark right. Non-use can be justified
in the case of force majeure, and any other circumstance that is not due to fault or negligence
on the part of the proprietor of the mark, such as import restrictions or special legal
requirements within the country.

Proper Use of Trademarks: Non-use can lead to the loss of trademark rights. Improper use
can have the same result, however. A mark may become liable for removal from the Register
if the registered owner has provoked or tolerated its transformation into a generic name for one
or more of the goods or services in respect of which the mark is registered, so that, in trade
circles and in the eyes of the appropriate consumers and of the public in general, its
significance as a mark has been lost.

Basically, two things can cause genericness:

1) improper use by the owner, provoking transformation of the mark into a generic
term, and
2) improper use by third parties that is tolerated by the owner.

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In order to avoid improper use, everyone in the company owning the trademark, who is
involved in advertising or publicizing the brand, must follow some rules.

The basic rule is that the trademark should not be used as, or instead of, the product
designation. By systematically using a product designation in addition to the trademark, the
proprietor clearly informs the public that his mark identifies a specific product as one in a
certain category. This is especially important if the trademark proprietor has invented a totally
new product which at the outset is the only one in the category. Trademarks such as
FRIGIDAIRE, CELLOPHANE and LINOLEUM became generic terms because they were the
only product in their category, and no additional name was given to the category by its
proprietors. When instant coffee, also called soluble coffee, was invented in 1938, the first
product marketed by the company that invented it was called NESCAFÉ. However, from the
start the company systematically used a product designation such as “instant coffee” or
“soluble coffee” on its labels. A second important rule is that trademarks should always be used
as true adjectives and never as nouns, in other words the trademark should not be used with an
article, and the possessive “s” and the plural form should be avoided. It would be wrong to talk
about NESCAFÉ‘s flavor or about three NESCAFÉs instead of three varieties of NESCAFÉ.

Furthermore, it is advisable always to highlight the trademark, that is, to make it stand out
from its surroundings. Finally, a trademark should be identified as such by a trademark notice.
Only a few laws provide for such notices and making their use on goods compulsory is
prohibited by Article 5D of the Paris Convention. Trademark law in the United States of
America allows the use of a long statement (such as “Registered with the United States Patent
and Trademark Office”) to be replaced by a short symbol, namely, the circled R, or ®. Over
the years this symbol has spread throughout the world and become a widely recognized
symbol for a registered trademark. Its use is recommended for registered trademarks as a
warning to competitors not to engage in any act that would infringe the mark.

However, it is not enough just to follow these rules: the trademark owner must also ensure that
third parties and the public do not misuse his mark. It is specifically important that the
trademark should not be used as or instead of the product description in dictionaries, official
publications, journals, etc.

Trademark Registration
Application for Registration: Applications for registration of a trademark are to be filed with
the competent government authority which in most countries is the same as the authority
competent for processing patent applications. Usually, it is called “Industrial Property Office”

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 or “Patent and Trademark Office” or “Trademark Office”.

In general, countries provide for an application form, the use of which is mandatory in certain
countries. The application form has to be completed with the name and address of the
applicant. Foreigners have either to give an address for service in the country or to use an
agent holding a power of attorney to be signed by the applicant. Often further formalities are
imposed.

The Trademark Law Treaty (TLT)54 contains, in Article 355, an exhaustive list of information
which Trademark Offices of Contracting Parties may require for a trademark registration, and
expressly prohibits certain formalities, such as authentication or legalization, which are
considered unnecessary and particularly burdensome. The TLT also provides Model
International Forms which contain all relevant information, and which have to be accepted by
Offices of Contracting Parties. The sign filed for registration must appear in the application
form or in an annex to it. If it is intended that the sign should be registered in color, the colors
must be claimed and a specimen in color or the description of the color(s) must be submitted.
If a three-dimensional sign is filed for registration, it is necessary to claim protection of the
sign in its three-dimensional form. The sign must moreover be graphically represented in a
manner that allows it to be reproduced for a twofold purpose: it must be possible to register it
(regardless of the form in which the register is established, that is, whether the marks are
entered in a book, collected in a card index or integrated in a computerized system). Owners
of prior rights must be able to take note of the trademark application, which normally is
ensured by its publication in a trademark journal.

The applicant has also to list the goods for which the sign is to be registered. Trademark laws
provide generally for a classification of goods for the purposes of registration. In some
countries a separate application has to be made for each class, while in others one application is
sufficient for several classes. An important treaty for international trade is the Nice Agreement
Concerning the International Classification of Goods and Services for the Purposes of the
Registration of Marks56, which establishes an international classification of goods and services
for the purpose of registration of trademarks. The document in the back flap of this publication
shows the Contracting States of this treaty. Finally, one or more lots of fees have to be paid for
the registration of a trademark. A country may provide for a single, all-embracing fee or
several (application fee, class fee, examination fee, registration fee, etc.). Both systems have
advantages and disadvantages. On the one hand, it is simpler and more cost-efficient to charge a
single fee. On the other hand, this may lead to unjust consequences for applicants who decide
54
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55
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56
< https://www.wipo.int/treaties/en/text.jsp?file_id=294357#a3>

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to withdraw the application totally or partially during the registration procedure, for example,
because of an objection from the owner of a prior right, or because of insurmountable
objections from the registrar.

Examination as to Form: Countries generally accept an application for registration of a

trademark only if the formal requirements are fulfilled.

Examination as to Substance: Most countries examine trademark applications as to

substance in the interest of both the public and competitors. One has to make a clear
distinction between two types of grounds for refusal. Trademarks may be examined for
absolute, objective grounds for refusal, that is, whether they are sufficiently distinctive, not
deceptive, not immoral, etc. Such an examination is highly desirable in the interest of consumer
protection, but for competitors too, and for the trade in general, it is important that nobody
should be able to have an exclusive right in a descriptive or even a generic term by a simple
administrative act. The laws of many countries provide also for examination on relative grounds,
that is, whether the rights applied for are identical or similar to prior rights that have been
applied for or granted for identical or similar goods. Such examination may either be made ex
officio and/or on the basis of an opposition procedure.

In general, three typical approaches can be observed internationally.

1. The British system, providing for examination by the office for absolute and relative
grounds, and also for an opposition procedure. This system is also applied, in Europe,
by countries such as Portugal, Spain and the Northern European countries.
2. Under a second approach the office examines only for absolute grounds, the law
provides for no opposition procedure and it is left to the owner of the prior rights to
bring a cancellation or infringement action against the registration or use of a more
recent sign. This system has been used under the old trademark laws of France and
Switzerland—both countries introduced opposition procedures in their new laws.
3. The third system is the German one, which provides for examination by the office for
absolute grounds and also for an administrative opposition procedure, in which the
owner of prior rights can oppose the infringing trademark application by means of a
simplified and not too costly procedure. This system is a compromise between the
more extreme systems mentioned before, and follows a modern trend which is reflected
in the European Community Trade Mark system.

Industry in general prefers the latter system, since it is less time-consuming and much more
flexible. In view of the many trademarks on the registers of countries all over the world, it is in
any case advisable to carry out a search for prior rights before applying for registration of a
trademark, and even more so before beginning to use it. Most applicants do such searches

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regularly, while companies have at least their more important registered trademarks watched,
either by their trademark agents or by one of the international watching services, in order to
keep themselves informed of applications for registration of potentially conflicting similar
marks.

The standards to be applied by the registrar when examining whether a trademark application
is to be refused because of a prior right are the same, in principle, as those to be applied in an
opposition

procedure or by a judge in an infringement action, even though in the latter case the factual
circumstances of the infringement will play an additional role.

Refusal of Registration: Before issuing a total or partial refusal of the application, the office
should give the applicant an opportunity to make observations. The decision refusing an
application either partly or totally must be open to appeal. Depending on the legal system of
the country, the appeal may be lodged with the registrar, with an administrative appeal board
or with the court.

Date of Registration: If the application leads to registration, the office issues a certificate to the
owner. The owner‘s exclusive right exists from the date of registration. However, the priority of
the right should date back to the date of filing for registration. While it is true that the
application is not normally a sufficient basis for bringing an infringement action against a later
right, it must be a valid basis for an opposition procedure. And, even more importantly, the
date of the application for registration will be decisive in a later court case. The time that
passes before an application leads to registration varies a great deal, and in certain cases can
be very long. A later application can for various reasons lead to registration sooner (for
instance where the earlier application was refused by the examiner and finally granted on
appeal). Clearly, the owner of the earlier application must have the prior right in relation to the
owner of a later application. Furthermore, the applicant can claim the priority of his national
registration under Article 4 of the Paris Convention if the application in the foreign country is
made within six months of the filing date of the first application.

Duration and Renewal: Since trademarks do not grant an exclusive right that could be
exploited, there is no need to limit their validity. For administrative reasons, a time limit is
generally provided for in trademark laws, but it is possible to renew registrations when the time
limit expires. One of the reasons for imposing such time limits is that the office can charge a
fee for renewal, and this is a welcome source of revenue. Furthermore, the registration of
trademarks without a time limit would lead to an undesirable amount of trademark
registrations that are no longer of any interest to their owners. Even if unused marks may be

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removed from the register, such a procedure would be costly and time- consuming for the
interested party, and not always successful.

Consequently, the requirement of renewal and the payment of a renewal fee is a welcome
opportunity for a trademark owner to consider whether it is still worth having his registration
renewed, as the trademark may have been superseded in its graphic form, or may even be no
longer in use. Excessive fees should also be avoided, however. In any case, renewals should
be made simply on payment of the fee, without any new examination of the mark for absolute
or relative grounds for refusal. Of course, it should be possible for the owner to make a
voluntary restriction of the list of goods of the original registration, especially if he can save
fees by doing so.

Publication and Access to the Register

It is important for owners of prior rights and the public that all relevant data contained in the
register, concerning applications, registrations, renewals and changes of name, address and
ownership, should be published in an official gazette. This enables owners of prior rights to
take the necessary steps, including opposition (if provided for) or an action for cancellation.
The publication of applications and registrations should contain all the important data, such as
the name and address of the applicant, a representation of the mark, the goods grouped
according to the classification system, the colors claimed, where the mark is three-dimensional
a statement to that effect, and where the priority of any other mark is claimed (Paris
Convention, Article 4) a statement to that effect.

The register of marks should, moreover, be accessible to the public. To ensure that owners of
prior rights are properly informed it is indispensable that the register contain up to date
information, namely all recorded data not only on registrations, but also on the contents of
pending applications, regardless of the medium on which the data are stored.

Removal of the Trademark from the Register

The cancellation of a trademark registration is a serious matter for its owner, as it leads to a
loss of his rights under the registration. Nevertheless, there are a number of grounds on which
a trademark can be removed from the register.

Removal for Failure to Renew: It has been shown that, for administrative reasons, a
trademark is registered for a certain period of time only. If the owner fails to renew his
trademark registration and more specifically fails to pay the renewal fee, this leads to the
removal of the trademark from the register. Registries generally allow a period of grace for
payment of the renewal fee (usually with a surcharge) in accordance with Article 5bis of the

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Paris Convention.

If the law permits renewal of the trademark registration for just some of the registered goods
(to be encouraged as a means of removing ―deadwood‖ from the register), this leads to a
partial cancellation of the trademark registration for all the goods in respect of which it is not
renewed.

Removal at the Request of the Registered Owner: The registered owner can himself, at any
time, renounce his registration for either all or some of the goods for which the mark is
registered. At the request of the registered owner, therefore, the authorities will in principle
remove the mark from the register either wholly or in part.

Removal for Failure to Use: If the owner of a trademark fails to use his mark within the
grace period provided for in the law, any interested party can, in principle, ask for its
cancellation. If the owner

cannot justify the non-use, removal of the registration is ordered by the court. If the owner can
prove use or justify the non-use, but only for some of the registered goods, the court orders
partial cancellation. Partial cancellation extends either to all registered goods for which use
cannot be proved or at least to all those not similar to the goods that the registered owner has
used.

This does not mean that the registered owner‘s rights would be strictly limited to the goods
used, or even to a single product on which his trademark has been used. Even if his
registration is canceled for all but the one product for which he can prove use, he can still defend
his exclusive right to his registered trademark against the registration and use of an identical or
confusingly similar trademark by a competitor for all goods that are identical or similar to the
product for which his trademark is registered and used.

Cancellation on Account of Nullity: If a trademark consists of a sign that should not have
been registered, it can be declared null and void by the court at the request of any interested
party. Sometimes trademark laws also provide an ex officio procedure for that purpose. As a
consequence of the declaration, the trademark is removed from the register.

If the grounds for invalidity exist only with respect to some of the registered goods, the
registration is removed for those goods only. Normally, removal from the register is ordered
only if the grounds for invalidity already existed when the trademark was registered.
Moreover, even if the trademark should not have been registered owing to lack of
distinctiveness, its cancellation is excluded if in the meantime it has become distinctive by use.

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Such acquired distinctiveness cannot, however, prevent the removal from the register of
trademarks that consist of generic or deceptive terms. And yet there can be exceptional cases
in which the deceptive meaning that would have prevented trademark registration at the outset
has been lost in the meantime.

Removal of a Mark that has lost its Distinctiveness: If the registered owner has provoked or
tolerated the transformation of a mark into a generic name for one or more of the goods or
services in respect of which the mark is registered, the mark becomes liable for removal from
the register.

Rights Arising from Trademark Registration

The registered owner has the exclusive right to use the trademark. This short definition of the
specific subject matter of trademark rights encompasses two things:
1) the right to use the trademark and
2) the right to exclude others from using it.

The Right to Use the Trademark: This positive right of use belonging to the trademark
owner is recognized in most trademark laws. It would indeed be contradictory not to grant
such a positive right of use while imposing an obligation to use. Of course, the right of use is
subject to other laws and rights, as is any other right provided by law. What is allowed under
trademark law may be prohibited under competition law or by public enactment. It means first
the right of the owner of the mark to affix it on goods, containers, packaging, labels, etc. or to
use it in any other way in relation to the goods for which it is registered. It means also the right
to introduce the goods to the market under the trademark. It is important to make a distinction
between these two rights, both derived from the right to use a trademark. When the trademark
owner has launched a product on the market under his mark, he cannot object to further sales
of the product in the course of trade. This is the essence of the so-called principle of
exhaustion of the trademark right. Some countries do not allow objections to parallel imports
of products marketed in a foreign country by the trademark owner or by a third party with his
consent. Other countries do allow such parallel imports to be objected to, namely by applying
the principle of territoriality of rights. Still other countries make the decision on whether the
trademark owner can object to parallel imports dependent on whether consumers are likely to
be mistaken as to the characteristics or quality of the imported goods.

Apart from this special aspect of parallel imports of goods marketed for the first time in a
foreign country, the principle of exhaustion of trademark rights clearly applies within the
country. However, it is a principle that applies only to the right to launch the product bearing
the trademark on the market for the first time. The owner‘s exclusive right to affix the

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trademark on the goods and their packaging, containers, labels, etc. continues to exist.
Consequently, he can object to acts that infringe that right, such as the repacking of goods
bearing his mark, the destruction of his mark on the goods, or the alteration and subsequent
sale of his products under his mark. Altering the product and selling it under the same mark
has the same effect as affixing the mark to goods, that is, it gives the consumer the impression
that the genuine product has been marketed by the trademark owner under his mark. If that is
not true, the trademark owner has a right to intervene.

Finally, a third right out of the series of rights incorporated in the right to use a trademark is
the trademark owner‘s right to use his mark in advertising, on business papers, documents, etc.

The Right to Exclude Others from Using the Mark: It follows from the mark‘s basic
function of distinguishing the goods of its owner from those of others that he must be able to
object to the use of confusingly similar marks in order to prevent consumers and the public in
general from being misled. This is the essence of the exclusive right afforded to the trademark
owner by registration. He must be able to object to any use of his trademark by a third party
for goods for which it is protected, to the affixing of the mark on such goods, to its use in
relation to the goods and to the offering of the goods for sale under the mark, or the use of the
mark in advertising, business papers or any other kind of document. Furthermore, since
consumers are to be protected against confusion, protection generally extends to the use of
similar trademarks for similar goods, if such use is likely to confuse the consumer. It must be
underlined, however, that the trademark owner cannot unconditionally object to the use of his
trademark or a similar mark for the goods for which his trademark is registered or for similar
goods. His trademark must be protected for the goods specified in the registration. Such
protection operates automatically for all registered goods during the user‘s grace period,
which is generally laid down by law. When that period has expired, protection has to be
reduced to the goods on which the mark is actually used and goods similar to them. Any goods
for which the trademark was registered but which are not in use should no longer be a valid
basis for asserting exclusive trademark rights. Depending on the procedural system in the
country, the trademark owner may be able to rely on those formal rights for goods for which
the mark is registered but not used, but he could face a counterattack leading to partial
cancellation of his trademark for non-use.

The exclusive rights of the trademark owner can be exercised by means of an infringement
action. The trademark is infringed if, owing to the use of an identical or similar sign for
identical or similar goods, there is a risk, or a likelihood of the public being misled. The test is
not a hypothetical one but has to deal with the reality of infringement in the marketplace. Many
laws not only provide for an infringement action, but also offer an administrative opposition
procedure against an application for the registration of a confusingly similar trademark. In that

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case, the test is much broader, because allowance has to be made for the risk of confusion that
could arise from any use that the applicant might possibly make of his trademark if it were
registered. The test is in fact the same as is applied by the office in its examination for prior
third-party rights.

Together with the question whether a trademark is distinctive, the question whether a
trademark is confusingly similar to an earlier right is one of the cornerstones of practical
trademark protection.

Similarity of Goods: Trademarks are registered for goods in certain classes which have been
established for purely administrative purposes. The classification of goods cannot therefore be
decisive for the question of similarity. Sometimes totally different goods are listed in the same
class (for instance computers, eyeglasses, fire extinguishers and telephones in class 9), while
similar goods can clearly be listed in different classes (adhesives may fall into classes 1, 3, 5
and 16). The test of whether goods are similar is based on the assumption that identical marks
are used. Even identical marks are unlikely to create confusion as to the origin of the goods if
the goods are very different. As a general rule goods are similar if, when offered for sale under
an identical mark, the consuming public would be likely to believe that they came from the
same source. All the circumstances of the case must be taken into account, including the
nature of the goods, the purpose for which they are used and the trade channels

through which they are marketed, but especially the usual origin of the goods, and the usual
point of sale.

A further aspect is the nature and composition of goods. If they are largely made of the same
substance, they will generally be held to be similar, even if they are used for different purposes.
Raw materials and finished goods manufactured out of the raw materials are not normally
similar, however, since they are generally not marketed by the same enterprise.

Similarity of Trademarks: Trademarks can be more or less similar to each other. The test, of
course, is whether they are confusingly similar. A trademark is confusingly similar to a prior
mark if it is used for similar goods and so closely resembles the prior mark that there is a
likelihood of consumers being misled as to the origin of the goods. If the consumer is confused,
the distinguishing role of the trademark is not functioning, and the consumer may fail to buy
the product that he wants. This is bad for the consumer, but also for the trademark owner who
loses the sale.

No intention to confuse on the part of the infringer is necessary, nor is actual confusion. The
likelihood of confusion is the test. That is the only way for the system to function. Of course,

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phrases such as “likelihood of confusion of the consumer” (or “of the public”) have to be
interpreted. “The consumer” does not exist, and the public as such cannot be confused.
Confusion arises, or is likely to arise, always in a section of the public. It has to be determined
in the specific case what the relevant part of the public is that has to be considered, in other
words who are actually addressed or reached by the trademark.

Since it is very difficult to work in practice with the broad definition of confusing similarity,
some rules have been developed which help to define in specific cases whether, in view of the
similarity of the two marks, confusion is likely to arise. The most important point is that the
consumer does not compare trademarks side by side; he is generally confronted with the
infringing mark in the shop without seeing the product bearing the mark that he knows and
remembers more or less accurately. He mistakes the products offered under the infringing
mark for the genuine product that he actually wants to buy. In this context it must be taken into
account that the average consumer also has an average memory, and that it must be sufficient
for him to doubt whether the trademark with which he is confronted is the one he knows.

Since the average consumer generally does not at first glance recognize differences between
the marks that he might spot if he took his time to study the mark and the product offered under
it more carefully, the first impression that he gains must be decisive. This is especially true for
mass-consumption goods offered in self-service stores. Furthermore, unsophisticated, poorly-
educated consumers and also children are more liable to be confused. The purchaser of a
sophisticated and costly machine, car or aircraft will no doubt be more attentive than the
consumer in the self-service store. In those fields, therefore, very similar trademarks do
coexist, which would probably be easily confused if applied to mass-consumption goods.

Another interesting example of how the category of goods can influence the testing of
confusing similarity is to be found in the field of pharmaceuticals. Prescription drugs are
normally sold to the consumer (on prescription by doctors) by educated pharmacists, who are
less likely to be misled by relatively similar brand names used for medicines for different
indications, so the testing of similarity can be more generous. For drugs sold over the counter,
the contrary is true. In view of the potentially serious consequences for the uneducated
consumer if he buys a wrong product, the testing of similarity must be particularly strict.

The second important point when testing the similarity of trademarks is that they should be
compared as a whole, and that more weight should be given to common elements which may
lead to confusion, while differences overlooked by the average consumer should not be
emphasized. Notwithstanding this basic rule of comparing trademarks as a whole and not
dividing them into parts, the structure of the signs is important. Common prefixes are
normally more important than common suffixes; if two signs are very similar or identical at

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the beginning, they are more likely to be confused than if the similarity is in their endings.
Long words with common or similar beginnings are more likely to be confused than short
words with different initial letters.

The third important point is that highly distinctive marks (coined or arbitrarily used marks) are
more likely to be confused than marks with associative meanings in relation to the goods for
which they are registered. The same is true if a mark contains a highly distinctive part (part of
the word mark or one of several words forming the mark), and that highly distinctive element
is exactly or almost exactly duplicated by the infringing mark. If, on the other hand, the
common element of the two signs is descriptive, the consumer‘s attention tends to focus on the
rest of the mark.

When trademarks with a common element are compared, it also has to be established whether
there are other trademarks on the register and used by different owners that have the same
common element. If so the consumer will have become accustomed to the use of this element
by different proprietors, and will no longer pay special attention to it as a distinctive element
of the mark.

The situation is different, however, if all marks having such a common element (normally a
prefix or suffix) are registered and used by the same proprietor (or with his consent). This is
the special case of the series mark, where the consumers may have become accustomed to
associate the series with a common source and will tend to make the same assumption about
any new trademark containing the same element. However, the mere fact of somebody using a
series of trademarks that have a common element is not, as such, sufficient to exclude the use of
the same element by a competitor as a component of a mark which on the whole is very
different. The use of such a common element can only constitute infringement if consumers
really have come to recognize the common element of the series of marks used by the
registered owner as indicating the source of the goods offered by him under the different
marks containing that element.

The fourth important point is that confusion can arise from similarity in the writing, the
pronunciation and in the meaning of the sign, and that similarity in one of those areas is
sufficient for infringement if it misleads the public.

With regard to similarity in writing, the graphic presentation of the trademark plays an
important part. Similarity in pronunciation is important because trademarks that are written
differently may be pronounced in the same way, and pronunciation counts in oral
communication: even if similarity in writing is avoided by the use of very different graphic
presentations, this does not make any difference when the two trademarks are compared orally.

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A totally different meaning can preclude confusion between two marks that would normally be
regarded as confusingly similar. Independently of the above rules, some special aspects have
to be taken into account for figurative marks (devices).

For purely fanciful marks the graphical impression conveyed by the two marks is decisive. For
composite marks the similarity of the word part is normally sufficient, as similarity in
pronunciation constitutes trademark infringement. Similarity in the figurative part can only
lead to confusion if that figurative part is a distinctive element of the mark. Furthermore, in
the case of composite marks any similarity in the word parts of the two marks is likely to be
emphasized if the figurative parts of the marks are also similar. Even though the words might
not be confused in writing or pronunciation, the marks as a whole can be confusingly similar
in view of the similarity of their figurative elements.

A special case is the device that can be named by a word, such as a star device and the word
“star”. The question arises whether the corresponding word as a trademark should be
prohibited, and whether the owner of the word mark “star” should be able to object to all
possible graphic presentations of a star in a device mark. The situation is different when two
device marks are compared in which both features, for instance, the same animal. Two such
devices, for instance two tiger or lion or cow devices (there are numerous cow devices
registered for milk products) must be sufficiently similar for there to be confusion.

Influence of Use and Non-Use: Confusion in the marketplace can only arise from actual use on
similar goods. To prevent confusion, however, it is still necessary that the trademark
protection system allow the trademark owner to object to an application for registration of a
trademark which is based on mere intention to use the mark.

For the same preventive purpose, many trademark laws allow the owner of a registered
trademark to object in opposition procedures to the filing, and in infringement actions to the
use, of similar marks for goods identical or even similar to all goods covered by the existing
registration, regardless of the use of the latter. The defendant who is aware of the total or partial
non-use must therefore counterattack by introducing an invalidation action seeking partial or
total cancellation of the existing trademark registration for non-use.

More modern conceptions allow the trademark owner, after the grace period has expired, to
object by opposition or court action to an application for registration, or to the use, of an
identical or similar mark for goods identical or similar only to those on which the owner is
actually using his. If the owner is not using his trademark, the opposition is refused, and if he

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is using it on one or several of the goods for which it is registered, only those on which it is
used are taken into consideration for the test of confusing similarity. The burden of proof of use
in an opposition procedure is on the owner of the right.

Many laws also allow the defendant in trademark infringement actions to claim non-use of the
trademark on which the action is based, and the owner can then only succeed in his
infringement action if he can prove use of his mark. If the infringed trademark is being used,
the extent of the use can influence the test of confusing similarity. Intensive use increases the
distinctiveness of the mark, and confusion with well-known marks is more likely even if the
goods on which the infringing mark is used are less similar or if the similarity of the marks is
less apparent.

Protection Beyond the Scope of Confusing Similarity: Well-known or famous marks,

which are highly reputed, are in some countries given protection that goes beyond the scope of
similarity of the goods. Such far-reaching protection should only be given if the use of the
same mark or a nearly identical mark for other, dissimilar goods would be prejudicial to its
distinctiveness or its reputation. This extended protection does not necessarily cover all
possible goods. It could well be that the use of a mark identical to the well-known mark would
do unjustified harm in relation to a certain category of goods, whereas the same use on totally
dissimilar goods might not be against the interests of the registered owner of the well-known
mark. The decision has to be determined by all the circumstances of the specific case,
including the extent of reputation of the mark, the type of goods for which it is used by the
infringer, the manner in which he presents his goods, and so on.

Yet reputation is not sufficient on its own, of course; broader protection is justified only where
the use of a sign without due cause would take unfair advantage of, or be detrimental to, the
distinctive character or the reputation of the trademark.

In September 1999 the WIPO General Assembly and the Assembly of the Paris Union adopted
a Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks
which provides guidance for determining whether a particular mark is well-known, and
determines the scope of protection of well-known marks.

Restriction of the Exclusive Right in the Public Interest: In the same way as the owner‘s
right to use his trademark can be restricted by other rights, his right to prevent third parties from
using his mark can be restricted by the legitimate interests of others. A provision is contained
in many trademark laws which states that the registration of the mark does not confer on its
registered owner the right to preclude third parties from using bonafide, for example, their

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names, addresses, or pseudonyms.

The trademark owner also cannot prevent third parties who are not his competitors from
referring to his trademark by acts such as the listing of the mark in a compendium of
trademarks, or from using it in newspaper articles or in books or other publications.

Remedies for Trademark Infringement

A successful infringement action leads to prohibition of the use of the confusingly similar
mark. If the infringing mark is registered, cancellation of the registration is ordered. The
trademark owner can also, in principle, ask for compensation for damages. Damages are
difficult to prove in trademark infringement cases, however, so this remedy is not very
important in practice. The situation is of course different in cases of counterfeiting, which will
be dealt with below.

Trademark Piracy, Counterfeiting and Imitation of Labels and Packaging

Trademark Piracy: Trademark piracy means the registration or use of a generally well-known
foreign trademark that is not registered in the country or is invalid as a result of non-use. The
Paris Convention provides in its Article 6bis that a well-known trademark must be protected
even if it is not registered in the country. Article 6bis is restricted to identical and similar
goods, however. Often well-known trademarks are used by pirates on totally different goods, or
for services. Furthermore, courts sometimes require a trademark to be well-known in the
country where piracy is discovered, and deny protection, even if the true owner of the
trademark can prove that it is internationally well-known in a considerable number of other
countries. Improved protection against trademark piracy is therefore needed. The Joint
Recommendation Concerning Provisions of the Protection of Well-Known Marks which was
adopted by the WIPO General Assembly and the Assembly of the Paris Union in September
1999 provides some guidance in this respect.

Counterfeiting: Counterfeiting is first of all the imitation of a product. The counterfeit is not
only identical in the generic sense of the term. It also gives the impression of being the genuine
product (for instance a LOUIS VUITTON bag), originating from the genuine manufacturer or
trader. The offering of such a counterfeit product is only meaningful, of course, if the genuine
product is known to the consumer. Consequently, counterfeit goods often belong to the
category of luxury goods and bear a well-known trademark. In fact, however, this is only a
coincidence: counterfeit goods can just as well be mass-consumption goods, or goods not sold
under a trademark but protected by other intellectual property rights such as copyright or
design protection. They can also be known to a small group of specialized consumers only,
such as brakes to be used for cars, or aircraft, or pesticides known to clients in agriculture. These
examples show at the same time how dangerous the use of counterfeit goods can be - a whole

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year‘s crop in a large part of Africa was once destroyed by the use of a counterfeit pesticide.
Some very typical and widely-known examples of counterfeit goods, have been, for example,
the false LOUIS VUITTON bags, the false ROLEX, CARTIER and other luxury watches, the
false PUMA and REEBOK sports shoes, the false LACOSTE sports shirts and so on.
Worldwide sales of some counterfeit products may exceed those of the genuine products. This
shows that counterfeiting is an economic phenomenon of worldwide importance, which can
represent an alarming percentage of world trade. Indeed, it is important to recognize that
counterfeiting is an economic crime, comparable to theft. Counterfeiters not only deceive the
consumer but also damage the reputation of the genuine manufacturer, apart from which they
do not pay taxes and other duties to the State.

Legal Protection Against Counterfeiting: Although it is not a condition and not always the
case, counterfeit goods generally bear a trademark. This has the advantage of making
counterfeiting actionable as trademark infringement, which is generally easier than fighting
against infringement of other intellectual property rights, which may also be involved.
However, since counterfeiting is an economically serious and important problem, the remedies
specified in trademark laws are often not sufficient to serve as an effective deterrent. This is a
problem that concerns three areas of law enforcement, all of which are essential if
counterfeiting is to be successfully combated.

Laws must provide for severe criminal sanctions, including imprisonment. Most trademark
laws provide for criminal sanctions for trademark infringement, but they were often enacted
long ago and are no longer realistic. Counterfeiters pay fines, and imprisonment is rarely
ordered. Rapid, far-reaching remedies are necessary. Counterfeiters do not operate from a
normal business address, and in the event of prosecution are difficult to trace. Often, they can
only be found after a long and thorough investigation. There is therefore a pressing need for
provisional measures such as interim injunctions: in the United Kingdom the so-called Anton
Piller order is a very useful measure. By such provisional measures the counterfeit goods may
be confiscated and the person who has them in his possession is obliged to inform the genuine
trademark owner of their source. Since counterfeiting is a phenomenon that occurs in
international trade, it is also necessary to empower the customs authorities to check goods at the
border of their country and confiscate counterfeit goods at the request of the owner of the
trademark affixed to them.

Imitation of Labels and Packaging: The cases discussed in this section lie between normal
trademark infringement and counterfeiting, sometimes coming very close to counterfeiting. As
in the case of counterfeiting, the label or packaging of the competing product is imitated, but in
this case the imitation does not give the impression of being the genuine one. If one compares
the genuine product and the imitation side by side, although consumers seldom proceed in this

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way, one can distinguish them, and the imitator does not usually hide behind the manufacturer
of the genuine product; he trades under his own name. He is not a criminal, but rather a
competitor who uses unfair methods of competition. Instead of developing at his own expense a
label and packaging with an image of his own for his product, the imitator tries to take
advantage of the reputation of the competing product by giving his product an appearance so
similar to it that confusion arises in the marketplace.

Often the imitator uses a trademark (in the sense of a product name) which is confusingly
similar to that of his competitor. If he does that he is committing trademark infringement. In a
number of cases the word mark used by the imitator is somewhat, but not confusingly, similar
to the one used by his competitor, but may even be totally different from it. In such situations
the confusion in the marketplace arises only, or mainly, from the use of colors and graphic
elements that are identical or very similar to those of the competitor‘s label or packaging.
Labels and packaging are rarely registered as trademarks, which means that trademark law
mostly offers no basis for intervention in such cases. They have to be dealt with under the rules
of unfair competition. In principle, it is generally recognized as being unlawful (unfair
competition) to pass off one‘s own goods as being those of a competitor. If a label or the
packaging of a product is confusingly similar to that of a competitor‘s product, this
requirement is normally fulfilled.

Trademark Licensing
It is common practice for trademark owners to license third parties to use their trademarks
locally in the country where they exercise their own business. However, the main importance of
the possibility of licensing the use of trademarks lies in its usefulness in international business
relations. Licensing is indeed the principal means whereby the trademarks of foreign
companies are used by local businesses. Such license agreements are very common between
partners from different developed countries, and they do exist between partners who both
originate in developing countries, or even between a licensor in a developing country and a
licensee in a developed country. The most important role they play, however, is in the
relations between licensors in developed countries and licensees in developing countries. In
these situations, they are not normally simple trademark licenses, but general agreements
including the licensing of patents, trademarks, know-how and possibly other intellectual
property rights, as well as technical assistance to be given to the licensee. These agreements
are a key factor in the economic development of developing countries and are usually
characterized by the transfer of technology, the creation of jobs and the use of local raw
materials. They are often regulated by special provisions of local laws which provide for the
control or approval of the agreement by a local authority, such as a ministry responsible for
technology transfer.

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To the extent that such general agreements confer the right to use the licensor‘s trademarks,
they have to comply with the relevant licensing provisions of the trademark law of the
licensee‘s country (even though the above-mentioned special provisions may also apply). The
trademark laws of many countries contain provisions on trademark licensing. The general
guiding principles of trademark licensing are dealt with hereunder, independently of its
foreign ownership and technology transfer aspects.

Legal Protection
If a trade name or business name is distinctive it is protected by use, whether registered or not.
If it is not distinctive, it can be protected after distinctiveness has been acquired by use.
Distinctiveness in this context means that the consuming public recognizes the name as being a
reference to a particular trade source.

A trade name or a business name can also be afforded protection by registration as a trademark.
Usually, both the full corporate name and the short business name can be registered. To
safeguard such a registration, it is of course necessary actually to use the trade name as a
trademark. This requirement is normally not met by making a reference, somewhere on the
label or packaging of a product, to the manufacturing or trading company with its full address
in small print, as is often required by labelling regulations. It is therefore more adequate and
commoner in practice to register the shorter business name as a trademark, the more so as that
name is often at the same time an important trademark (such as the so-called “house mark”)
of the company.

In the same way as enterprises can register trade names and business names as trademarks,
they can and often do use them not only to distinguish themselves but also to distinguish the
goods or services that they offer and, as mentioned before, this is even necessary in connection
with the obligation to use if the name has been registered as a trademark. It is therefore
inevitable that conflicts between trade names, business names and trademarks arise. If a trade
name or business name is used as a trademark (whether registered or not), the general rules
of priority and the protection of consumers against confusion as to the origin of the goods or
services offered under the signs concerned will determine the outcome of any conflict with a
similar trademark.

Even if an enterprise uses a business name or trade name as such, in other words not as a
trademark for the goods or services it offers, it is nevertheless widely recognized that a prior
trademark is infringed if the use of the business name or trade name is likely to create
confusion as to the origin of the goods or services that the enterprise offers under its name.
Conversely, the use of a trademark, service mark or collective mark can in the same way

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infringe a prior (registered or unregistered) business name or trade name.

Franchising
Even if the term “franchising” is unfamiliar to most consumers, they are familiar with the
results of franchising. The most widely known results of franchising appear to be fast-food
restaurants, hotels or cosmetic retail shops. Franchising extends, however, to industries as
diverse as the hiring of formal wear, car tuning, the preparation of taxation statements or
returns, lawn care, day-care schools and dentistry. In short, it may apply to any economic
activity for which a system can be developed for the manufacture, processing and/or
distribution of goods or the rendering of services. It is this “system” that is the subject matter
of franchising.

In developed market economy countries, the sale of goods and services through franchising
has grown remarkably since the 1950s and can account for a very large proportion of all retail
sales in certain countries. This rapid growth and success of franchising has been attributed to a
number of factors, the most basic one being perhaps that franchising combines the depth of
knowledge and the strength of one entity, the franchisor, with the entrepreneurial spirit of a
businessman, the franchisee.

Whether there is government-mandated regulation of franchises or not, as in all commercial

activities, the best protection against the possibility of abuse is the knowledge held by
potential franchisees and their professional advisers as to what franchising is and how it
works.

In order to illustrate better the discussion on franchising, this chapter uses a fictional franchise
from time to time as an example - a restaurant selling Italian food and operating under the
name of VESPUCCI. While VESPUCCI is the mark (both for goods and services) and the
trade name under which the franchisees operate the restaurants, the company offering the
franchise (the franchisor) is referred to as Vespucci, Inc. Vespucci, Inc. has developed a
system for preparing and selling its food products, which are sold in large volume and in a
uniform manner. The system includes various factors that contribute to the success of
VESPUCCI restaurants, including recipes and methods of preparing food that produce a
product of consistent quality, good seating in the restaurant, the design of employees‘
uniforms, the design of the buildings and billboards, quality sources for supplies, the design of
packaging, an inventory of ingredients used in the preparation of the food, and management
and accounting systems. Vespucci, Inc. imparts its knowledge and experience to its
franchisees to assist them in developing a new business. Without the franchisor‘s guidance,
the local restaurant owner is liable to make serious mistakes which could cause the business to
fail. Moreover, Vespucci, Inc. retains the right to supervise and control the way in which the

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local franchisee is operating the local VESPUCCI restaurant, so that the goodwill of the
VESPUCCI mark and trade name is maintained and the value of the local restaurant, indeed of
the whole system under which VESPUCCI restaurants are operated, is not reduced. Vespucci,
Inc. receives a financial benefit in exchange, in the form of a payment by the local franchisee
to Vespucci, Inc. That payment may include an advance payment or “up-front fee” and some
form of continuing payment based, for example, on a percentage of the franchisee‘s total
sales. Payment in kind might also be envisaged. In addition, depending on the nature of the
agreement, the franchisee may have a number of other payments to make for items such as
special food spices, rental of equipment (e.g. ovens, cutting machines, etc.), purchase of
consumable goods and miscellaneous articles necessary for his business.

Although different definitions could be proposed, franchising may be described as an

arrangement whereby one person (the franchisor), who has developed a system for conducting
a particular business, allows another person (the franchisee) to use that system in accordance
with the prescriptions of the franchisor, in exchange for compensation. The relationship is a
continuing one, as the franchisee operates in accordance with standards and practices
established and monitored by the franchisor and with his continuing assistance and support.

The franchising arrangement therefore relates to a system, which the franchisor allows - or
licenses - the franchisee to exploit. This may be referred to as the franchised system, or simply
“the system”. The franchised system is a package comprising intellectual property rights
relating to one or more marks, trade names, industrial designs, inventions and works protected
by copyright, together with relevant know-how and trade secrets, to be exploited for the sale
of goods or the provision of services to end users.

A license to use the system: In return for an agreed payment, the franchisee is allowed to use
the franchised system. He is in effect given a license to use the franchisor‘s system to carry out
his business. Where the franchised system is to be exploited at a particular location, such as at a
franchised restaurant or shop, that location is usually referred to as the “franchised unit”. The
heart of a franchising arrangement is a license, granted by the franchisor to the franchisee, to
use the franchised system. This is essential to allow the franchisee to conduct his business in
the manner developed by the franchisor. In contrast, a retail sales arrangement involves the
simple sale of goods and does not necessarily require the grant of a license. In this regard the
distinction between a franchise arrangement and a standard license arrangement is a more
subtle one. It has been stated that franchising is merely a sophisticated form of a standard
license arrangement and that a franchising arrangement goes beyond the mere licensing of one
or more specific intellectual property rights, such as trademarks, because it is a license to use a
system that includes, but is not limited to, intellectual property rights. Indeed, under a franchise
arrangement, the franchisee does more than merely selling goods or providing services under

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another‘s mark, although he might not himself do any manufacturing at all. Franchising goes
further by allowing the franchisee to manufacture and sell goods or provide services as part of
a larger system.

In a retail sales arrangement, the manufacturer and the distributor are usually independent of
each other. In a standard licensing arrangement and in a franchising arrangement, the parties
are independent but have a close working relationship defined by the terms of the license
agreement and franchise agreement, respectively. The income of each party is dependent on the
combined efforts of both parties. The more successful the licensee‘s or franchisee‘s business
becomes, the greater the income for both parties. In contrast to a standard license arrangement,
however, the franchisee‘s success is also dependent on the franchisor‘s ability to develop a
profitable system, to train the franchisee in the proper operation of the system, to improve and
promote the system, to supervise or monitor the franchisee and to assist him during the term of
the franchise agreement in order to enhance the likelihood of success. In a franchise
arrangement, at least part of the ongoing nature of the relationship presupposes the franchisor
continuing to develop the franchised system and communicating the new developments to the
franchisee. Variations may consist of changes in the nature of the franchised system, the scope
and content of the license granted, the nature or object of the ongoing relationship and the scope
and degree of supervision exercised by the franchisor over the manner in which the franchise
is exercised. A business format type of franchise has been described as being characterized by
an ongoing business relationship between franchisor and franchisee that includes not only the
product, service and trademark, but the entire business format itself - a marketing strategy and
plan, operating manuals and standards, quality control, and continued two-way
communications.

Character Merchandising
Broadly speaking, the term “character” covers both fictional human beings (for example,
Tarzan or James Bond) or non-human characters (for example, Donald Duck or Bugs Bunny)
and real persons (for example, famous personalities in the film or music business, sportsmen).

In the context of the merchandising of characters, it is mainly the essential personality features
easily recognized by the public at large which will be relevant. Those personality features are,
for example, the name, image, appearance or voice of a character or symbols permitting the
recognition of such characters.

The main sources of fictional characters are:

1) literary works (such as Pinocchio by Collodi or Tarzan by E.R. Burroughs);
2) strip cartoons (such as Tintin by Hergé or Astérix by Uderzo and Goscinny);
3) artistic works (such as paintings, for example, Mona Lisa by Leonardo da Vinci,

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 or drawings, for example, the panda of the World Wide Fund for Nature);
4) cinematographic works (such as Crocodile Dundee, King Kong, Rambo or ET with
respect to movies, McGyver or Columbo with respect to television series or Bambi
with respect to motion picture cartoons).

It should be noted that, in the case of cinematographic works, the character may, and in fact
often does originate in a literary work (such as the character Oliver Twist by Charles Dickens)
or in a strip cartoon (such as the character Batman). As regards the primary use of a fictional
character, it can in most cases be referred to as an “entertainment function”. Such a character
may appear in a novel, a tale or a strip cartoon (for example, the character Tarzan in the novel
entitled “Tarzan, the Lord of the Jungle”, the character Mr. Brown in the tale entitled
“Squirrel Nutkin” or the characters named James Bond or Tintin), and the success gained by
the work depicting the character generally leads to new stories. Such primary use will be made
by the creator of the character, although, where a character has reached a high degree of
reputation and the creator has died, the heirs if any, or the holders of the publishing rights,
may organize by means of contracts the “survival” of the character in new stories (for
example the books featuring James Bond after the death of Ian Fleming). Other creators, on
the contrary, may wish that the characters they have created should not be the subject of new
stories after their death (for example, Hergé, the creator of Tintin). The situation is somewhat
different in the case of cinematographic works, where it is seldom the creator of a character (the
maker of the original drawings or scripts) who makes the primary use, but exceptions do exist,
such as the “little man” character created by Charlie Chaplin.

In other cases, the primary uses of a fictional character can sometimes be referred to as
“promotional, advertising and recognition functions”. This will concern, for example,
characters which are closely linked to a certain company (such as the “Michelin Man”, the
Exxon (Esso) tiger or the Peugeot lion), to a certain product (such as the character Johnnie
Walker to a Scotch whisky) or to a given event (such as the mascots used to personalize
Olympic Games or World Cup football). Those characters are created with a view to
popularizing legal entities, products or services, and activities. Generally, the primary use will
not originate from the creator of the character, i.e. the person entrusted with the task of creating
the character.

The main sources, where the character is a real person, are the movie and show businesses and
sporting activities. In the case of real persons, one should speak of “primary activity” in
preference to “primary use”. The difficulty with real persons is that actors, for example, may
enjoy a reputation both as persons and as the character they may have portrayed in a movie or
television series. In some cases, the real person is only referred to under the name of the
character portrayed.

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Character merchandising can be defined as the adaptation or secondary exploitation, by the
creator of a fictional character or by a real person or by one or several authorized third parties,
of the essential personality features (such as the name, image or appearance) of a character in
relation to various goods and/or services with a view to creating in prospective customers a
desire to acquire those goods and/or to use those services because of the customers‘ affinity
with that character. It should already be emphasized that the person or legal entity which will
organize the merchandising activity (the merchandiser) will very seldom be the creator of the
fictional character or the real person concerned. The various property or personality rights
vesting in the character will be the subject of contracts (such as transfer or license agreements
or product or service endorsement agreements) enabling one or several interested third parties
to be regarded as authorized users of the character.

The following examples of character merchandising can be given:

1) a toy is the three-dimensional reproduction of the fictional character Mickey Mouse;
2) a T-shirt bears the name or image of fictional characters;
3) the label attached to a perfume bottle bears the name of an actor or actress;
4) an advertising movie campaign for a drink shows a pop star drinking it.

As an organized system, character merchandising originated and was initiated in the United
States of America in the 1930s in the Walt Disney Studios in Burbank (California). When this
company created its cartoon characters (Mickey, Minnie, Donald), one of its employees, Kay
Kamen, established a department specialized in the secondary commercial exploitation of those
characters and, to the surprise of most, succeeded in granting an important number of licenses
for the manufacture and distribution of low-priced mass market merchandise (posters, T-shirts,
toys, buttons, badges, drinks). Of course, the idea of secondary exploitation of the reputation
of a character existed before the twentieth century, but the reasons were not directly
commercial. In South East Asia, for example, the religious characters of “Ramayana”, such as
Prince Rama, Vishnu and Sita, have for centuries been represented in the form of sculptures,
puppets or toys. Furthermore, in more recent times (late 19th century), some industrialists, with
a view to popularizing the goods they manufactured, decided to create fictional characters
which would be represented on the goods, the packaging or any documents and would be used
to generate secondary exploitation for functional or ornamental goods such as decorative plates,
articles of clothing, clocks, puppets, etc., for example in France, the character Pierrot
Gourmand (a famous mark for lollipops) or the Michelin Man of the tire manufacturer. This
phenomenon developed rapidly during the 20th century. In the 1950s, political, movie and
show-business personalities authorized, for example, the reproduction of their names or
images on articles of clothing (so-called “tie-in advertising”). The range of goods or services
covered by “merchandising” expanded considerably in the 20th Century, and, for example in

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the United States of America, it concerns at least 29 of the 42 classes of the International
Classification of Goods and Services established by the Nice Agreement.

From a commercial or marketing point of view, character merchandising can probably be dealt
with in a single category. However, from the legal point of view it is important to differentiate
between the various subjects of merchandising, since the scope and duration of legal protection
may vary according to the subject involved. Two main categories exist depending on whether
the merchandising involves the use of fictional characters or of real personalities (generally
referred to as “personality merchandising”). Between those two categories, a third hybrid
category exists which is generally referred to as “image merchandising”.

This is the oldest and the best-known form of merchandising. It involves the use of the
essential personality features (name, image, etc.) of fictional characters in the marketing
and/or advertising of goods or services.

Originally, the practice of character merchandising, as an organized system of promotion,

developed as a means of exploiting the popularity of cartoon characters, drawings of attractive
figures and the like. Such cartoon characters originated:
1) in a literary work being adapted to the cartoon form (for the purpose of a movie or
a comic strip) such as the characters Pinocchio or Alice in Wonderland;
2) in a work created as a cartoon character, originally for films (Mickey Mouse,
Donald Duck, Pluto) or for comic strips (Tintin, Snoopy, Astérix, Batman);
3) in a film character, later reproduced or adapted as a cartoon for advertising and
merchandising purposes (the character Zorro or even a real creature such as the
shark in the film “Jaws”);
4) in a cartoon character created mainly for the purpose of merchandising and not,
originally, intended for a movie or comic strip (for example, the numerous
mascots created and used in respect of various events, such as sports
competitions);
5) in a puppet or doll character designed for a film or a television show (for example,
the character ET, the Gremlins or the Muppets).

Character merchandising with cartoon characters involves mainly the use of the name, image
and appearance of the character. The appearance may involve two-dimensional reproduction
(drawings, stickers, etc.) or three-dimensional reproduction (dolls, key rings, etc.).

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The more recent form of merchandising involves the use of the essential attributes (name,
image, voice and other personality features) of real persons (in other words, the true identity of
an individual) in the marketing and/or advertising of goods and services. In general, the real
person whose attributes are “commercialized” is well known to the public at large; this is the
reason why this form of merchandising has sometimes been referred to as “reputation
merchandising”. In fact, from a commercial point of view, merchandisers believe that the
main reason for a person to buy low-priced mass goods (mugs, scarves, badges, T-shirts, etc.)
is not because of the product itself but because the name or image of a celebrity appealing to
that person is reproduced on the product. This category can be subdivided into two forms:
1) the use of the name, image (in two or three dimensions) or
2) symbol of a real person.

This form relates mainly to famous persons in the film or music industries. However, persons
connected with other fields of activity may be concerned (for example, members of a royal
family). As indicated above, it is not so much the product which is of principal importance to
the consumer, but rather the name or image that it bears is the main marketing and advertising
vehicle. The second form occurs where specialists in certain fields, such as famous sports or
music personalities, appear in advertising campaigns in relation to goods or services. The
appeal for the potential consumer is that the personality represented endorses the product or
service concerned and is regarded as an expert. Examples are advertising for tennis shoes or
rackets by a tennis champion, advertising for an energy drink by a cross- country runner or
advertising for high-fidelity equipment or musical instruments by a pop star.

The most recent form of merchandising involves the use of fictional film or television
characters, played by real actors, in the marketing and advertising of goods or services. In
those cases, the public sometimes finds it difficult to differentiate the actor (real person) from
the role he plays (character portrayed). Sometimes, however, there is a complete association
and the real person is referred to and known by the name of the character. The following
examples can be given to illustrate this notion: from the film industries, Laurel and Hardy, the
Marx Brothers, Frankenstein‘s monster by Boris Karloff and Tarzan by Johnny Weissmuller;
from television series, Columbo played by Peter Falk, or the character McGyver played by
Richard Dean Anderson. In the case of the latter, a T-shirt bearing the image of
R.D. Anderson would be referred to as a “McGyver T-shirt”, while packs of dairy products
reproducing the image of R.D. Anderson would mention the name McGyver, the purchasing of
such product giving the possibility of winning secondary “McGyver” products such as T-
shirts or travel bags.

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IV. Law of Trade Secrets
Introduction to Trade Secrets

In a highly competitive business environment, responding to the new and evolving needs and
wants of current and potential customers requires the creation of new or improved goods and
services. For an existing or new business to survive, grow and thrive in this environment, it
must be able to create itself or get the needed useful information to create and provide the new
or improved goods or services in the marketplace. Such useful information is a “trade secret”.
Often, competitors get access to such information rather easily, for example, by winning over or
merely hiring away your key employees who created or have access to such useful, confidential
information that gives your business a competitive edge. To prevent the erosion or loss of its
competitive edge provided by such information, a successful company has to safeguard its
proprietary or confidential information.

Broadly speaking, any confidential business information which provides an enterprise a

competitive edge may be considered a trade secret. Trade secrets encompass manufacturing or
industrial secrets and commercial secrets. The unauthorized use of such information by persons
other than the holder is regarded as an unfair practice and a violation of the trade secret.
Depending on the legal system, the protection of trade secrets forms part of the general concept
of protection against unfair competition or is based on specific provisions or case law on the
protection of confidential information.

The subject matter of trade secrets is usually defined in broad terms and includes sales
methods, distribution methods, consumer profiles, advertising strategies, lists of suppliers and
clients, and manufacturing processes. While a final determination of what information
constitutes a trade secret will depend on the circumstances of each individual case, clearly
unfair practices in respect of secret information include industrial or commercial espionage,
breach of contract and breach of confidence.

Definition of Trade Secret

A trade secret is defined as any information that is:
1) not generally known to the relevant business circles or to the public;
2) confers some sort of economic benefit on its owner. This benefit must derive
specifically from the fact that it is not generally known, and not just from the
value of the information itself; and
3) the subject of reasonable efforts to maintain its secrecy. A trade secret continues for
as long as the information is maintained as a trade secret.

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Type of information that could be a Trade Secret
Virtually any type of information may qualify as a trade secret.

1) A trade secret may consist of information relating to a formula, pattern, device or

other compilation of information that is used for a considerable period of time in a
business.
2) Often, a trade secret is technical information used in the manufacturing process
for production of goods.
3) A trade secret may relate to marketing, export or sales strategies, or a method of
bookkeeping or other business management routines or procedures, including
software used for various business purposes.

Other examples of potential trade secrets may include technical, scientific or financial
information, such as business plans, business processes, list of key customers, list of reliable or
special suppliers, product specifications, product characteristics, purchase prices of key raw
materials, test data, technical drawing or sketches, engineering specifications, proprietary
recipes, formulas, content of laboratory note books, salary structure of a company, product
pricing and advertising rates, source code, object code, databases and electronic data
compilations, agreements containing details of marketing tie‐ups, promotional or marketing
material under development.

Challenges and limitations of Trade Secret protection

A trade secret cannot be protected against being discovered by fair and honest means, such as
by independent invention or reverse engineering. If a person not having legal access to the
trade secret information, deciphers the information without taking recourse to any illegal
means, such as by reverse engineering or as by independent invention, then such a person
cannot be stopped from using the information so discovered. Under these types of
circumstances, the owner of a trade secret cannot take any legal action against the other
person.

Advantages of trade secret protection

1) Trade secrets involve no registration costs;
2) Trade secret protection does not require disclosure or registration;
3) Trade secret protection is not limited in time;
4) Trade secrets have immediate effect.

In the case of inventions that may be patentable the disadvantages of protecting such inventions
as trade secrets.
1) The secret embodied in an innovative product may be discovered through

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 “reverse engineering” and be legitimately used.
2) Trade secret protection only protects you against improper acquisition, use or
disclosure of the confidential information.

3) A trade secret is difficult to enforce, as the level of protection is considerably

weaker than for patents.
4) Another person may patent someone‘s trade secret if he has developed the same
invention by legitimate means.

Protection
Contrary to patents, trade secrets are protected without registration, that is, trade secrets are
protected without any procedural formalities. Consequently, a trade secret can be protected for
an unlimited period of time. For these reasons, the protection of trade secrets may appear to be
particularly attractive for SMEs. There are, however, some conditions for the information to
be considered a trade secret. Compliance with such conditions may turn out to be more
difficult and costly than it would appear at first glance. While these conditions vary from
country to country, some general standards exist which are referred to in Art. 39 of the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement):
1) The information must be secret (i.e. it is not generally known among, or readily
accessible to, circles that normally deal with the kind of information in question).
2) It must have commercial value because it is a secret.
3) It must have been subject to reasonable steps by the rightful holder of the
information to keep it secret (e.g., through confidentiality agreements).

For example, an SME develops a process for the manufacturing of its products that allows it to
produce its goods in a more cost-effective manner. Such a process provides the enterprise a
competitive edge over its competitors. The enterprise in question may therefore value its know-
how as a trade secret and would not want competitors to learn about it. It makes sure that only
a limited number of people know the secret, and those who know it are made well aware that it
is confidential. When dealing with third parties or licensing its know-how, the enterprise signs
confidentiality agreements to ensure that all parties know that the information is a secret. In
such circumstances, the misappropriation of the information by a competitor or by any third
party would be considered a violation of the enterprise's trade secrets.

Precautionary Measures
Trade secrets are widely used by SMEs. In fact, many SMEs rely almost exclusively on trade
secrets for the protection of their IP (although in many cases they may not even be aware that
trade secrets are legally protected). It is important, therefore, to make sure that enterprises take
all necessary measures to protect their trade secrets effectively. This includes:

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 1) considering whether the secret is patentable and, if so, whether it would not be
better protected by a patent.

2) making sure that a limited number of people know the secret and that all those
who do are well aware that it is confidential information.
3) including confidentiality agreements within employees' contracts. Under the law
of many countries, however, employees owe confidentiality to their employer
even without such agreements. The duty to maintain confidentiality on the
employer's secrets generally remains, at least for a certain period of time, even
after the employee has left the employment.
4) signing confidentiality agreements with business partners whenever disclosing
confidential information.

Benefits
While a decision will have to be taken on a case-by-case basis, in the following circumstances it
would be advisable to make use of trade secret protection:
1) When the secret is not patentable.
2) When the likelihood is high that the information can be kept secret for a
considerable period of time. If the secret information consists of a patentable
invention, trade secret protection would only be convenient if the secret can be
kept confidential for over 20 years (period of protection of a patent) and if others
are not likely to come up with the same invention in a legitimate way.
3) When the trade secret is not considered to be of such great value to be deemed
worth a patent (though a utility model may be a good alternative in countries
where utility model protection exists).
4) When the secret relates to a manufacturing process rather than to a product, as
products would be more likely to be reverse engineered.
5) When you have applied for a patent and are waiting for the patent to be granted.

It is important to bear in mind, however, that trade secret protection is generally weak in most
countries, that the conditions for, and scope of, its protection may vary significantly from
country to country depending on the existing statutory mechanisms and case law, and that the
courts may require very significant and possibly costly efforts to preserve secrecy. Patent or
utility model protection, wherever possible, will provide much stronger protection.

Trade Secret management program

It is absolutely important for companies – big, mid-sizes or small to build a proper trade secret
management program and monitor the same at regular frequency. The 10 major steps to build
up a trade secret management program include:

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1) Put in place a system for identifying trade secrets Identifying and categorizing the
trade secrets is a prerequisite for starting a trade secret protection program. The
steps taken to protect your trade secrets should be dictated by the nature of the
secrets themselves.
a) The basic questions to ask
- What information would hurt my business if my competitors get it?
- And how much will it hurt?
b) A related question to ask
- Do you have staff specifically assigned to record keeping, data security,
or for preservation of trade secrets?
Make a written list of the information to be protected and organize it into the
different types of information, depending on its value to the business and the type
of protection measures that would be needed to protect it.
2) Develop an information security policy that includes a trade secret protection
policy The information security policy encompasses systems and procedures
designed to protect the information assets from disclosure to any person or entity
not authorized to have access to that information, especially information that is
considered sensitive, proprietary, confidential, or classified (as in national
defence).
a) It is important to have a written information security or trade secret protection
policy. A written policy provides clarity on all aspects that need to be
addressed.
- It should explain the why and how of doing so.
- It should prescribe how to reveal or share such information in‐house or
with outsiders.
- It should articulate and demonstrate the commitment of the business to
protect its trade secrets as this would eventually play an important role in
any unavoidable litigation.
b) Information security can be implemented at various levels such as the
following:
- Physical controls
- Administrative controls
- Technical controls.
3) Educate all employees on issues related to information security
a) Always hire an employee on the basis of his competence knowledge and
skills and not because of his access to trade secrets of a former employer.
b) All employees should acknowledge that they have understood the policy and
that they agree to abide by it. Periodically, reiterate the policy.
c) Avoid hiring a person bound by a non‐compete agreement. If unavoidable

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 then do so only after taking advice from an independent and competent
lawyer.

d) Indemnifying a new employee, who is bound by a non‐compete agreement

to a previous employer, should be avoided, as doing so raises suspicion of
wrong doing and may result in a financial obligation if wrong doing is
proved in a court case.
e) Remind your employees not to disclose trade secrets to unauthorized
individuals or entities and to follow the security procedures; do so by way of
notices, memos, network e‐mails, newsletters, etc.
f) Hiring away more than one employee from a competitor would raise
suspicion of wrong doing, and, therefore, it should be avoided as far as
possible.
4) Importance of exercising care in hiring an employee of a competitor
a) Educate and train employees on information security policy.
b) Transform every employee into a potential security officer.
c) Every employee must contribute to create a secure environment.
d) Prevent inadvertent disclosure that may take place due to ignorance.
e) The employees should be trained to recognize and properly protect trade
secrets. Departing Employees: Make departing employees aware of their
obligations towards former employer. Do so by conducting exit interviews that
should also focus on issues related to confidentiality, trade secrets, etc. If
necessary or desired, they should be made to sign a new or updated confidentiality
agreement. You may write a letter to new employer informing him about the
relevant aspects of your trade secret concerns so that the departing employee is not
put by the new employer on projects or activities where inevitable disclosure of
your trade secrets would occur or is most likely to happen.
5) Include reasonable restrictions in writing, in all contracts Signing a good
confidentiality or non‐disclosure agreements with employees, suppliers,
contractors, business associates is of immense value in keeping information away
from competitors.
a) Non‐analysis clauses: Include non‐analysis clauses in agreements for
licensing trade secrets so that the other party agrees not to analyze or have
analyzed any material or sample supplied under the agreement to
determine its composition, qualities, characteristics, or specifications,
unless authorized in writing by a duly authorized representative of your
business.
b) No‐raiding, non‐recruitment or non‐solicitation clause: A no‐raiding,
non‐ recruitment or non‐solicitation clause in an employment agreement

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 prohibits a departing employee from soliciting co‐workers to leave with
him to join another business or set up a new rival business.
6) Restrict access to paper records To prevent unauthorized access to records
classified as confidential, sensitive, or secret, limit access to only those employees
who are duly approved, or cleared, to see them on a need to know basis.

This may be done more easily by proper labeling of records (e.g., with a stamp
such as confidential or secret) or using special colored folders (e.g., red or orange),
and by keeping such marked records physically isolated or segregated in a secure
area or in locked filing cabinets.
Depending on the size and nature of the trade secret, the location of the separated
information can vary from a locked file cabinet, to a security patrolled warehouse or
storage facility. There has to be proper access control through appropriate
authorization and accountability and tracking system for employees provided
access to classified information.
7) Mark documents - There are various types of useful ways for marking
confidential or trade secret information. Look at the following examples:
a) MAKE NO COPIES
b) THIRD PARTY CONFIDENTIAL
c) DISTRIBUTION LIMITED TO
d) COVERED BY A NON‐ANALYSIS AGREEMENT
The CRITICAL, MAXIMUM, MEDIUM, and MINIMUM labels are examples of
information classifications In general, the labels should provide brief but clear
direction to the user on how to handle the information.
8) Office management and keeping confidentiality
a) Mobile or cellular phones: Discussing sensitive topics over a cellular
phone is a dangerous practice. Confidential information may be “lost” if
there is unrestricted use of mobile or cellular telephones.
b) Fax machines: Often, the fax machine is located in a common area with
unrestricted access and it is typically unattended. The second problem with
fax transmissions is that they utilize phone lines, which can be tapped quite
easily.
c) Photocopying: It is not unusual for an employee to make copies of a secret
or confidential document, pick up the copies and walk away, leaving the
original in the copier for the next user to find. Extra care should be taken to
remember to retrieve those original secret or confidential records when the
copying is finished.
d) Shredding: A better method for disposition of all paper records, of course,
is shredding them. Shredding is a major element in most information security

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 programs. With a wide variety of machines on the market, businesses may
implement shredding in several ways.
e) Telephones: Callers posing as researchers, industry analysts, consultants, or
students ask for information about the organization and its employees–and
many times get it.
f) Internal literature: Newsletters, magazines, and other in‐house
publications often contain information useful to snoops, including new
product announcements, results of market testing, and names of employees
in sensitive areas (who are potential contacts).
g) Waste bins: It is not safe to put them into a nearby office waste paper or
trash bin, as anyone with access to the trash might make use of those records
for gathering competitive intelligence.
h) The compulsive talker and loose talk: Employees are deluding themselves
if they think their lunchtime or coffee break conversations and any
discussion of company business on the metro, subway, bus stop, train station,
or a restaurant is wholly private. It is not at all unusual for people nearby to
hear clearly these conversations.
9) Maintain computer secrecy For most computer systems at least two security
measures are built into them:
a) Use of passwords for a user to access the system
b) Automated audit trails to enable system security personnel to trace any
additions or changes back to whoever initiated them, and to indicate where
and when the change was carried out. Access control is a means of
enforcing authorizations.
There are a variety of access control methods that are based on different
types of policies and rely on different security mechanisms.
i. Rule based access control is based on policies that can be
algorithmically expressed.
ii. Identity based access control is based on a policy which applies
explicitly to an individual person or host entity, or to a defined group
of such entities. Once identity has been authenticated, if the identity is
verified to be on the access list, then access is granted.
10) Guarding secrets that are shared in partnerships
a) While employees can be the single biggest threat to secrecy, it is also
important to guard secrets in joint ventures, with consultants and even
with customers.
b) For many software companies, the most dangerous exposure is the sale of a
system because the software is then susceptible to reverse engineering. In
software and many other high‐tech industries, licensing of your

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 company's product is a secure way to guard against loss.

How Trade Secrets get stolen

Industrial espionage: Intense competition in domestic and export markets has also lead to an
alarming increase in theft by outsiders, known as industrial espionage. Such activities are on
the rise due to increasing global competition, shorter product cycles, thinning profit margins,
and declining employee loyalty.

External threats: External threats include corporate spying with professional criminals
targeting specific technology, initiating network attacks (hacks), laptop computer thefts: -
accessing source code, product designs, marketing plans, customer lists - approaching
employees to reveal company information etc. Businesses strive to protect their trade secrets
by enacting corporate security measures and confidentiality clauses in employment, technology
licensing, distributorship and joint venture agreement.
1) Internal theft: Internal theft by disgruntled workers or former employees is also
intentional. Some of these people allow themselves to be exploited by competitive
intelligence operatives, either for money or merely for spite. Example A fired or
retrenched employee might go directly to a competitor and offer, for seeking revenge
or for a fee, to disclose your trade secrets, marketing strategies, or new product
plans‐‐often despite signed nondisclosure or confidentiality agreements.
Sometimes, competitive intelligence operatives may tap phone lines, or regularly sift
through a company's garbage, break into computer systems. They may include
seemingly innocent persons such as research analysts, business analysts, information
specialists, and potential employees or customers, who gain employees' trust for
obtaining proprietary information by inducements, gifts or blackmail.

Protection of Trade Secrets

Generally, most countries do not have a specific law for trade secrets The owner of trade
secrets has to rely on relevant provisions of the national law against unfair competition and/or
by court action under the law of torts and by appropriate clauses or provisions in employment
agreements and other types of business agreements in accordance with the contract law of the
country.
1) Unfair competition law / Principles of tort: When misappropriation is done by
competitors who have no contractual relationship or indulge in an act of theft,
espionage, or of subversion by employees. The law of tort is judge‐made law in
'common law' countries.
Dealing with memorized trade secrets: The main difficulty is in separating a
protectable trade secret from non‐protectable knowledge and skills of former

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 employee that are retained in the person's memory. The courts of some countries have
dealt with this issue in the following ways:
a) whether an employer can stop a former employee from using trade secrets
retained in memory, i.e., "misappropriation by memory".
b) whether an employer can use trade secret law to enjoin a former employee
from working in a job that would inevitably result in the use of trade secrets,
i.e. "inevitable disclosure".
In fact, both protect against the use of a memorized trade secret, but they differ in the
type of injunctive relief available. The doctrine of inevitable disclosure should be
limited to the narrow factual situation where it is inevitable that a former employee will
use a specific trade secret in the course of performing an identified job responsibility
that is inherent in the person's new job.

2) Contract law: When the agreement between the parties seeks to protect the trade
secret by using a non‐disclosure clause or confidentiality clause, through an anti‐
reverse engineering clause, or where an implied confidential relationship exists, such
as between an attorney and his client, or an employer and his employee, etc.
3) Criminal law: When an employee steals trade secrets from a company or someone
does espionage or in involved in acts that may be considered as invasion of privacy,
etc., or circumvention of technical protection measures of IT / non‐IT systems.

****************

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CHAPTER IV

Emerging IP Regime

I. Law of Geographical Indications

Introduction to Geographical Indications
A geographical indication (GI) is a sign used on products that have a specific geographical
origin and possess qualities or a reputation that are due to that origin. In order to function as a
GI, a sign must identify a product as originating in a given place. In addition, the qualities,
characteristics or reputation of the product should be essentially due to the place of origin. Since
the qualities depend on the geographical place of production, there is a clear link between the
product and its original place of production.
“Champagne”, “Cognac”, “Roquefort”, “Chianti”, “Pilsen”, “Porto”, “Sheffield”,
“Havana”, “Tequila”, “Darjeeling” - are some well-known examples for names which are
associated throughout the world with products of a certain nature and quality. One common
feature of all those names is their geographical connotation, that is to say, their function of
designating existing places, towns, regions or countries. However, when we hear these names,
we think of products rather than the places they designate.

Those examples show that geographical indications can acquire a high reputation and thus
may be valuable commercial assets. For this very reason, they are often exposed to
misappropriation, counterfeiting or forgery, and their protection - national as well as
international - is highly desirable.

The Paris Convention for the Protection of Industrial Property does not contain the notion of
geographical indication. Article 1 paragraph (2) defines as subjects of industrial property, inter
alia, indications of source and appellations of origin. This is the terminology traditionally
applied and still officially used in the conventions and agreements administered by WIPO.
According to this terminology, the following distinction is made between indications of source
and appellations of origin: “indication of source” means any expression or sign used to indicate
that a product or service originates in a country, a region or a specific place, whereas
“appellation of origin” means the geographical name of a country, region or specific place
which serves to designate a product originating therein the characteristic qualities of which are
due exclusively or essentially to the geographical environment, including natural or human
factors or both natural and human factors.

The term “geographical indication” has been chosen by WIPO to describe the subject matter
of a new treaty for the international protection of names and symbols which indicate a certain

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geographical origin of a given product. In this connection, the term is intended to be used in its
widest possible meaning. It embraces all existing means of protection of such names and
symbols, regardless of whether they indicate that the qualities of a given product are due to its
geographical origin (such as appellations of origin), or they merely indicate the place of origin
of a product (such as indications of source). This definition also covers symbols, because
geographical indications are not only constituted by names, such as the name of a town, a
region or a country (“direct geographical indications”) but may also consist of symbols. Such
symbols may be capable of indicating the origin of goods without literally naming its place of
origin. Examples for such indirect geographical indications are the Eiffel Tower for Paris, the
Matterhorn for Switzerland or the Tower Bridge for London.

On the other hand, the term “geographical indication” is also used in the EC Council
Regulation No. 2081/92 of July 14, 1992, on the Protection of Geographical Indications and
Designations of Origin for Agricultural Products and Foodstuffs and in the Agreement on
TRIPS. In both texts, this term is applied to products whose quality and characteristics are
attributable to their geographical origin, an approach that closely resembles the appellation of
origin kind of protection. In other words, “mere” indications of source are not covered by the
specific notion of geographical indication used in those two legal texts.

Rights of a GI

A geographical indication right enables those who have the right to use the indication to prevent
its use by a third party whose product does not conform to the applicable standards. For
example, in the jurisdictions in which the Darjeeling geographical indication is protected,
producers of Darjeeling tea can exclude use of the term ―Darjeeling‖ for tea not grown in their
tea gardens or not produced according to the standards set out in the code of practice for the
geographical indication.

A sign must qualify as a geographical indication under the applicable law and not be subject to
any obstacles to registering a geographical indication. Generally, an important requirement
under the definition, is that the good identified by the GI needs to have a link to the geographical
origin. This link may be determined by a given quality, reputation or other characteristic
essentially due to the geographical origin. In many legislation a single criterion attributable to
geographical origin is sufficient, be it a quality or other characteristic of the product, or only its
reputation.

However, a protected geographical indication does not enable the holder to prevent someone
from making a product using the same techniques as those set out in the standards for that
indication. Protection for a geographical indication is usually obtained by acquiring a right over
the sign that constitutes the indication.

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Types of GI

Geographical indications are typically used for agricultural products, foodstuffs, wine and spirit
drinks, handicrafts, and industrial products. The right to use a protected geographical indication
belongs to producers in the geographical area defined, who comply with the specific conditions
of production for the product.

GI vs. Trademark: Geographical indications identify a good as originating from a particular

place. By contrast, a trademark identifies a good or service as originating from a particular
company. A trademark often consists of a fanciful or arbitrary sign. In contrast, the name used as
a geographical indication is usually predetermined by the name of a geographical area. Finally, a
trademark can be assigned or licensed to anyone, anywhere in the world, because it is linked to a
specific company and not to a particular place. In contrast, a GI may be used by any persons in
the area of origin, who produces the good according to specified standards, but because of its
link with the place of origin, a GI cannot be assigned or licensed to someone outside that place
or not belonging to the group of authorized producers.

GI vs Indication of Source: An indication of source can be defined as an indication referring to

a country (or to a place in that country) as being the country or place of origin of a product. In
contrast to a geographical indication, an indication of source does not imply the presence of any
special quality, reputation, or characteristic of the product essentially attributable to its place of
origin. Indications of source only require that the product on which the indication of source is
used originate in a certain geographical area. Examples of indications of source are the mention,
on a product, of the name of a country, or indications such as ―made in ….‖, ―product of ….‖,
etc.

GI vs Appellations of Origin: Appellations of origin are a special kind of geographical

indication. GIs and appellations of origin require a qualitative link between the product to which
they refer and its place of origin. Both inform consumers about a product‘s geographical origin
and a quality or characteristic of the product linked to its place of origin. The basic difference
between the two concepts is that the link with the place of origin must be stronger in the case of
an appellation of origin. The quality or characteristics of a product protected as
an appellation of origin must result exclusively or essentially from its geographical
origin. This generally means that the raw materials should be sourced in the place of origin and
that the processing of the product should also take place there. In the case of GIs, a single
criterion attributable to geographical origin is sufficient - be it a quality or other characteristic of
the product – or even just its reputation.

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GI vs Traditional Knowledge (TK): Products identified by a geographical indication are often
the result of traditional processes and knowledge carried forward by a community in a particular
region from generation to generation. Similarly, some products identified by a geographical
indication may embody characteristic elements of the traditional artistic heritage developed in a
given region, known as ―traditional cultural expressions‖ (TCEs). This is particularly true for
tangible products such as handicrafts, made using natural resources and having qualities derived
from their geographical origin. GIs do not directly protect the subject matter generally associated
with TK or TCEs, which remains in the public domain under conventional IP systems. However,
GIs may be used to indirectly contribute to their protection, for instance, by preserving them for
future generations. This can be done, for example, through the description of the production
standards for a GI product, which may include a description of a traditional process or traditional
knowledge.

Generic GI: In the context of geographical indications, generic terms are names which,
although they denote the place from where a product originates, have become the term
customary for such a product. An example of a GI that has become a generic term is Camembert
for cheese. This name can now be used to designate any camembert-type cheese.

The transformation of a geographical indication into a generic term may occur in different
countries and at different times. This may lead to situations where a specific indication is
considered to constitute a geographical indication in some countries, whereas the same
indication may be regarded as a generic term in other countries.

Homonymous GI: Homonymous geographical indications are those that are spelled or
pronounced alike, but which identify products originating in different places, usually in different
countries. In principle, these indications should coexist, but such coexistence may be subject to
certain conditions. For example, it may be required that they be used only together with
additional information as to the origin of the product in order to prevent consumers from being
misled. A GI may be refused protection if, due to the existence of another homonymous
indication, its use would be considered potentially misleading to consumers with regard to the
product‘s true origin.

Protection of GI
There are three main ways to protect a geographical indication:
1) so-called sui generis systems (i.e. special regimes of protection);
2) using collective or certification marks; and
3) methods focusing on business practices, including administrative product approval
schemes.

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These approaches involve differences with respect to important questions, such as the conditions
for protection or the scope of protection. On the other hand, two of the modes of protection -
namely sui generis systems and collective or certification mark systems — share some common
features, such as the fact that they set up rights for collective use by those who comply with
defined standards.

Broadly speaking geographical indications are protected in different countries and regional
systems through a wide variety of approaches and often using a combination of two or more of
the approaches outlined above. These approaches have been developed in accordance with
different legal traditions and within a framework of individual historical and economic
conditions.

Protection may be requested by a group of producers of the product identified by the

geographical indication. The producers may be organized as an entity, such as a cooperative or
association, which represents them and ensures that the product fulfils certain requirements
which they have agreed upon or adhered to. In some jurisdictions, protection may also be
requested by a national competent authority (for example, a local government authority).

Protection for a geographical indication is granted by a national (regional) competent authority

upon request. In some countries the function of granting GI protection is carried out by a special
body responsible for GI protection. In other countries, the national intellectual property office
carries out this function.

In many sui generis legislations, registrations for geographical indications are not subject to a
specific period of validity. This means that the protection for a registered geographical
indication will remain valid unless the registration is cancelled. Geographical
indications registered as collective and certification marks are generally protected for
renewable ten-year periods.

Like all intellectual property rights, the rights to geographical indications are enforced by the
application of national legislation, typically in a court of law. The right to take action could rest
with a competent authority, the public prosecutor, or to any interested party, whether a natural
person or a legal entity, whether public or private. The sanctions provided for in national
legislation could be civil (injunctions restraining or prohibiting unlawful acts, actions for
damages, etc.), criminal, or administrative.

Firstly the following are generally excluded from geographical indication protection: signs that
do not qualify as geographical indications under the applicable law.

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From a legal point of view, potential obstacles to successfully registering a geographical
indication may include the following:
1) Conflict with a prior mark.
2) Generic character of the term that constitutes the GI.
3) The existence of a homonymous geographical indication, the use of which would be
considered potentially misleading as to the product‘s true origin.
4) The indication‘s name being that of a plant variety or animal breed.
5) The lack of protection of the GI in its country of origin.

Protection of GI - National Level: As regards the various forms of protection of

geographical indications on the national level, three main categories can be distinguished:
1) The first category comprises all possibilities of protection which are not based on a
decision taken by the competent authority establishing protection with respect to a
particular geographical indication, but which result from the direct application of
legislative provisions or principles established by jurisprudence.
2) The second category covers the protection of geographical indications through
registration of collective marks (including agricultural labels) or certification marks
(or guarantee marks).
3) The third category includes all special titles of protection of geographical indications
which result from a decision made by the competent government authority establishing
the protection. This category, in particular, comprises the protection of appellations of
origin - whether they result from a registration with the industrial property office, as
under the new Russian law, or from the adoption of decrees, as is the practice in France
since the adoption, in 1919, of a special law for the protection of appellations of origin.

Protection of GI - Multilateral Treaties: Three multilateral treaties administered by WIPO

contain provisions for the protection of geographical indications:
1) the Paris Convention for the Protection of Industrial Property,
2) the Madrid Agreement for the Repression of False or Deceptive Indications of
Source on Goods, and
3) the Lisbon Agreement for the Protection of Appellations of Origin and their
International Registration.

Protection of GI - Bilateral Agreements: A further possibility of international protection of

geographical indications is the conclusion of bilateral agreements between two states. A
number of countries have entered into such agreements. In general, such bilateral agreements
consist of lists of geographical indications which were drawn up by the contracting parties and
an undertaking to protect the geographical indications of the respective contracting parties.

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 The agreement usually also specifies the kind of protection that is to be granted. Although in
general useful, bilateral agreements cannot constitute an entirely adequate solution to the
problem of the lack of international protection because of the multiplicity of negotiations
required and, resulting therefrom, an inevitable diversity of standards.

GI & Business
Consumers are paying more and more attention to the geographical origin of products and many cares
about specific characteristics present in the products they buy. In some cases, the ―place of origin‖
suggests to consumers that the product will have a particular quality or characteristic that they may
value. Geographical indications therefore function as product differentiators on the market, by
enabling consumers to distinguish between products with geographical origin-based characteristics
and others without those characteristics. Geographical indications can thus be a key element in
developing collective brands for quality-bound-to-origin products.

Protecting a geographical indication enables those who have the right to use the indication to take
measures against others who use it without permission and benefit from its reputation (―free-riders‖).
A geographical indication‘s reputation is a valuable, collective, and intangible asset. If not protected,
it could be used without restriction and its value diminished and eventually lost.

Protecting a GI is also a way to prevent registration of the indication as a trademark by a third party and
to limit the risk of the indication becoming a generic term. In general, GIs, backed up by solid business
management, can bring with them:
1) Competitive advantage
2) More added value to a product
3) Increased export opportunities
4) A strengthened brand

II. Law of Industrial Designs

Introduction to Industrial Designs

In a legal sense, an industrial design constitutes the ornamental or aesthetic aspect of an article. An
industrial design may consist of three dimensional features, such as the shape of an article, or two
dimensional features, such as patterns, lines or color.

In principle, the owner of a registered industrial design or of a design patent has the right to prevent
third parties from making, selling or importing articles bearing or embodying a design which is a

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copy, or substantially a copy, of the protected design, when such acts are undertaken for commercial
purposes. Industrial designs are applied to a wide variety of products of industry and handicraft items:
from packages and containers to furnishing and household goods, from lighting equipment to
jewellery, and from electronic devices to textiles. Industrial designs may also be relevant to graphic
symbols, graphical user interfaces (GUI), and logos.

Industrial design rights are territorial. This means that these rights are limited to the country (or
region) where protection is granted. An application for the registration of an industrial design or for
the grant of a patent for an industrial design can be filed with the intellectual property (IP) office of
the country (or region) in which protection is sought. Alternatively WIPO‘s Hague System 57 for the
International Registration of Industrial Designs provides a practical business solution for registering
up to 100 designs in a large number of territories through filing one single international application.
Historically, the emergence of protection for industrial designs is intimately connected with the
growth of industrialization and methods of mass production. In the United Kingdom, the first law
giving protection to industrial designs was the Designing and Printing of Linens, Cotton, Calicoes
and Muslins Act of 1787, which gave protection for a period of two months to “every person who
shall invent, design and print, or cause to be invented, designed and printed, and become the
Proprietor of any new and original pattern or patterns for printing Linens, Cottons, Calicoes or
Muslins”. The contribution and importance of design in the growing textile industries was thereby
recognized. A somewhat similar evolution of design protection took place in France. The Law on
Literary and Artistic Property of 1793 was applied in certain cases to the protection of designs. The
growth of the textile industries, in particular, soon led to the enactment in 1806 of a special law
dealing with industrial designs. The Law of March 18, 1806, established a special council
(Conciliation Board or Conseil de Prud‟hommes) in Lyon responsible for receiving deposits of
designs and for regulating disputes between manufacturers concerning designs. While initially
destined for industries in Lyon, particularly those manufacturing silk, the system of deposit and
regulation by special council was extended to other cities and, through judicial interpretation, to
two- and three-dimensional designs in all areas of industrial activity.

Protection
In most countries, an industrial design needs to be registered in order to be protected under
industrial design law as a “registered design”. In some countries, industrial designs are
protected under patent law as “design patents ”.

Industrial design laws in some countries grant - without registration - time and scope limited
protection to so-called “unregistered industrial designs”.

Industrial design rights are granted for a limited period. The duration of the protection of

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industrial designs varies from country to country, but it amounts at least to 10 years. In many
countries, the total duration of protection is divided into successive renewable periods.

Depending on the particular national law and the kind of design, industrial designs may also be
protected as works of art under copyright law.

Industrial design rights are usually enforced in a court, generally on the initiative of the owner
of the rights, as provided for by the applicable law. The remedies and penalties vary from
country to country and could be civil (injunctions to desist from an infringement, payment of
damages, etc.), criminal or administrative.

Industrial Design vs Patent: An industrial design right protects only the appearance or aesthetic
features of a product, whereas a patent protects an invention that offers a new technical solution
to a problem. In principle, an industrial design right does not protect the technical or functional
features of a product. Such features could, however, potentially be protected by a patent.

Industrial design registrations or design patents are granted by the IP office of the country (or
region) where an application is filed. Depending on the applicable laws, independently created
industrial designs must fulfil some or all of the following criteria: novelty/originality.

The assessment of novelty and originality varies from country to country. In general, an
industrial design is considered to be new or novel if it has not previously been disclosed to the
public and it may be considered original if it significantly differs from known designs or
combinations of known design features.

At present, no ―world‖ or ―international‖ industrial design right exists. In general, in order to

obtain protection in other countries, an application for the registration of an industrial design or
for the grant of a patent for an industrial design must be filed in each country where protection is
sought, in accordance with the law of that country. In other words, if protection is sought in
countries A and B, an application should be filed with the intellectual property office of country
A and another application with the IP office of country B.

To avoid having to submit applications in each and every country where protection is sought,
WIPO‘s Hague System provides a practical business solution for registering up to 100 designs
in a large number of territories - all through one single international application. India is not a
contracting party to this system, till date.

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 In certain regions, it is also possible to obtain protection for industrial designs in the region
concerned by filing an application with a regional IP office. This is the case in the African
Intellectual Property Organization (OAPI), which registers industrial designs in states party to
the Bangui Agreement58; the African Regional Intellectual Property Organization (ARIPO),
which registers industrial designs in states party to the Lusaka Agreement 59; the Benelux
Office for Intellectual Property (BOIP), which registers industrial designs in the three
―Benelux‖ countries60; and the European Union Intellectual Property Office (EUIPO), which
registers industrial designs in the member states of the European Union.

Timing is very important. Taking into account the novelty and/or originality requirement for
industrial designs in most legislation, it is in general crucial to file an application for
registration or for the grant of a patent before publicly disclosing it, so as to avoid destroying
its novelty/originality.

If the industrial design has already been disclosed to the public (for example, by an
advertisement published on the company‘s website), it may no longer be considered as ―new‖
or ―original‖ and may become part of the public domain. Some countries, however, allow for a
―grace period‖ to file after disclosure of the industrial design. Such a period provides a
safeguard for applicants who have disclosed their industrial design before filing an
application. Such a ―grace period‖ is usually 6 or 12 months.

Registration: Industrial design protection is usually granted pursuant to a procedure for the
registration of such designs. The most commonly adopted examination system provides for a
formal examination only of an application for a registered design. According to this system,
an application is examined to ensure that it meets with each of the formal requirements for an
application which are imposed by the relevant law (for example, whether the requisite number
of representations or specimens of the design are filed with the application), but no search is
made of the prior art to determine whether the substantive criterion of novelty or originality is
satisfied by the design for which registration is sought.

A system requiring only formal examination has the effect of shifting the burden of assessing
novelty to those interested persons in the market who may wish to use, or who may have used,
the design or a substantially similar design. Any person interested in using such a design will
have the opportunity either to oppose the registration of the design for which application has

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The Benelux Union is a politico-economic union of three neighbouring states in western Europe: Belgium,
Netherlands and Luxembourg.

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been made, if the relevant law provides for an opposition procedure, or of bringing
proceedings for the cancellation of a registration which it is alleged is invalid. The system thus
offers a means of reducing the administrative burden of the maintenance of a system of
registration of industrial designs. It also offers a solution to the problem of maintaining an
adequate search file to undertake a substantive examination of the novelty of designs. Such a
search file can very often be almost impossible to maintain, since, on the basis of a condition of
unqualified universal novelty, it would need to include all designs made at any time in any
part of the world since the commencement of recorded history.

The alternative system of examination provides for a search of past designs and an
examination of the design for which registration is sought to ascertain whether it satisfies the
required condition of novelty. It necessitates the maintenance of a search file and sufficient
skilled manpower to undertake the substantive examination.

Creation and Fixation: Rights in designs may, under certain laws, also be acquired by the act
of creation and fixation of the design, in a document or by embodying the design in an article.
These systems do not require any formal registration procedure for the acquisition of
exclusive rights in the design. Examples of this system are provided by the Law of France, and
the “design law” under the Copyright, Designs and Patents Act 1988, of the United Kingdom.

Novelty or Originality: It is a requirement of all industrial design laws that protection

through registration shall be granted only to designs which are novel or, as it is sometimes
expressed, original. The novelty of the design constitutes the fundamental reason for the grant
of a reward to the originator through protection by registration of the industrial design.

While the requirement of novelty is to be found in all laws, the nature of the novelty that is
required as a condition of protection differs amongst the laws of various countries. The
novelty required is sometimes absolute or universal, meaning that the design for which
registration is sought must be new against all other designs produced in all other parts of the
world at any previous time and disclosed by any tangible or oral means. On the other hand, a
qualified standard of novelty is sometimes required. In this latter situation, the qualification
may relate to time, meaning that novelty is judged by reference to designs published within a
limited preceding period of time; or may relate to territory, meaning that novelty is judged by
reference to all designs published within the relevant jurisdiction, as opposed to anywhere in
the world; or may relate to means of expression, meaning that novelty is assessed by reference
to written or tangible disclosures anywhere in the world and to oral disclosures only within the
relevant jurisdiction.

The broad policy argument in favor of a standard of unqualified universal novelty is that

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exclusive rights by registration should be granted only where the originator of the design has
produced something which is truly novel, and which therefore justifies the reward of exclusive
rights. The broad policy argument in favor of a qualified standard of novelty is that one
purpose of design registration is to encourage new design within the relevant jurisdiction, so
that a novel design registered within that jurisdiction should not be deprived of protection by
the publication elsewhere of a design which its originator did not introduce into the jurisdiction
to add to the designs available to industry. It should be noted, however, that it would not
necessarily follow from a qualified standard of novelty that a person could obtain valid rights
within the jurisdiction simply by registering a design which he had seen overseas and copied,
since it is often also a requirement of design law that the applicant be the author of the design.

Relation to Copyright: Objects qualifying for protection under the law of industrial designs
might equally well receive protection from the law of copyright. Thus, industrial designs law
has relations both with copyright law and with industrial property law. Cumulation of
protection means that the design is protected simultaneously and concurrently by both laws in
the sense that the creator can invoke the protection of either or both, the copyright law or the
industrial design law, as he chooses. It also means that if he has failed to obtain the protection
of the industrial design law by failing to register his design, he can claim the protection of
copyright law, which is available without compliance with any formality. Finally, it means that
after the term of protection of the registered design expires, the creator may still have the
protection of the copyright law.

The system of cumulation of protection by the industrial design law and the copyright law
exists in France and in Germany. And the system of co-existence of protection by both laws
prevails in most other countries. The difference between protection by the copyright law and
protection by the industrial design law is as follows. Under the industrial design law,
protection is lost unless the industrial design is registered by the applicant before publication or
public use anywhere, or at least in the country where protection is claimed. Copyright in most
countries subsists without formalities. Registration is not necessary. Industrial design
protection endures generally for a short period of three, five, ten or fifteen years. Copyright
endures in most countries for the life of the author and fifty years after his death. The right
conferred by registration of an industrial design is an absolute right in the sense that there is
infringement whether or not there has been deliberate copying. There is infringement even
though the infringer acted independently and without knowledge of the registered design.
Under copyright law, there is infringement only in the reproduction of the work in which
copyright subsists.

Rights
The right to prevent others from exploiting an industrial design usually encompasses the

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exclusive right to do any of the following things for industrial or commercial purposes:
1) make articles to which the design is applied or in which the design is embodied;
2) import articles to which the design is applied or in which it is embodied;
3) sell, hire or offer for sale any such articles.

In some laws, the exclusive rights of the proprietor also extend to preventing another from
stocking any articles to which the design has been applied or in which it is embodied. While
this right is sometimes considered as excessive in that it deals only with preparatory acts, it is
on the other hand often included in order to facilitate the enforcement of a proprietor‘s rights,
since it may often be easier to locate a stock of infringing articles than to apprehend a person
in the act of selling or offering for sale such articles.

As opposed to copyright, where the subject matter of the right is the work which is created by
the author and which is thus defined by the author, the subject matter of the rights of the
proprietor of an industrial design is defined by the design which has been registered. However,
it is usual to provide that the proprietor‘s rights extend not only to the unauthorized
exploitation of the exact design which has been registered, but also to the unauthorized
exploitation of any imitations of such a design which differ from the registered design only in
immaterial respects.

The term for an industrial design right varies from country to country. The usual maximum
term goes from 10 to 25 years, often divided into terms requiring the proprietor to renew the
registration in order to obtain an extension of the term. The relatively short period of
protection may be related to the association of designs with more general styles of fashions,
which tend to enjoy somewhat transient acceptance or success, particularly in highly fashion-
conscious areas, such as clothing or footwear.

Industrial Design & Business

Industrial designs make a product attractive and appealing to customers. Design drives
consumer‘s choice: the appearance of a product can be a key factor in the consumer‘s purchase
decision. In other words, the success or failure of a product may rest, at least partially, on how it
looks. Industrial designs can therefore be very important for both small- and medium sized
enterprises (SMEs) and larger companies alike, regardless of their sector of activity.

The protection of industrial designs should form an integral part of any business strategy. The
main reasons to protect industrial designs are the following:
1) Return on investments: Protection contributes to obtaining a return on investments made in
creating and marketing attractive and innovative products.
2) Exclusive rights: Protection provides exclusive rights for at least 10 years, so as to prevent or

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stop others from commercially exploiting or copying the industrial design.
3) Strengthen brands: Industrial designs can be an important element of a company‘s brand.
Protecting industrial designs contributes to protecting a company‘s brand.
4) Opportunity to license or sell: Protection provides rights that may be sold or licensed to
another enterprise, which will then be a source of income for the owner of the rights.
5) Positive image: Protection helps convey a positive image of a company, since industrial
designs are business assets which may increase the market value of a company and its products.
6) Reward: Protecting industrial designs rewards and encourages creativity.

If one doesn‘t protect the industrial designs then it follows that one may not enjoy exclusive
rights to them. Consequently, competitors may take a product to market, incorporating the
industrial design, without getting permission.

So if a competitor or anyone else makes, sells or imports products bearing or embodying a

design which is a copy (or substantially copy) of the industrial design without consent, one will
have no legal means to fight them. Moreover, it is likely that copies of the industrial design will
be sold at a lower price as competitors do not have to recoup the investments made in the
creative process. This could reduce the market share for the product in question and be harmful
both to the firm‘s reputation and to that of the products.

III. Law of Semi-conductors & Integrated Circuits

Introduction to Topographies of Integrated Circuits

Integrated circuits, commonly known as ―chips‖ or ―micro-chips‖ - are the electronic circuits in
which all the components (transistors, diodes and resistors) have been assembled in a certain
order on the surface of a thin semiconductor material (usually silicon).

In modern technology, integrated circuits are essential elements for a wide range of electrical
products, including articles of everyday use, such as watches, television sets, washing machines,
and cars, as well as sophisticated computers, smart phones, and other digital devices.
Developing innovative layout designs of integrated circuits is essential for the production of
ever-smaller digital devices with more functions.

While the creation of a new layout-design is usually the result of an enormous investment, both
in financial terms and in terms of the time required from highly qualified experts, the copying of
such a layout-design may cost only a fraction of the original investment. In order to prevent
unauthorized copying of layout designs and to provide incentives for investing in this field, the
layout design (topography) of integrated circuits is protected under a sui generis intellectual

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 property system.

For the purpose of intellectual property protection, the terms ―integrated circuits‖ and ―layout
design (topography)‖ are defined as follows61:
• An ―integrated circuit‖ means a product, in its final form or an intermediate form, in
which the elements, at least one of which is an active element, and some or all of the
interconnections are integrally formed in and/or on a piece of material and which is
intended to perform an electronic function.
• ―Layout-design (topography)‖ means the three-dimensional disposition, however
expressed, of the elements, at least one of which is an active element, and of some or all
of the interconnections of an integrated circuit, or such a three-dimensional disposition
prepared for an integrated circuit intended for manufacture.
• Layout-designs of integrated circuits are also called topographies of integrated circuits
or mask works of semiconductor chip products.

Integrated circuits are manufactured in accordance with very detailed plans or layout designs.
The layout designs of integrated circuits are creations of the human mind. They are usually the
result of vast investment, of both expertise and financial resources. There is a continuing need
for the creation of new layout designs that reduce the dimensions of existing integrated circuits
and simultaneously increase their functions.

Whilst creating a new layout design for an integrated circuit involves a major investment, it is
possible to copy such a layout design for a fraction of that cost. Copying may be done by
photographing each layer of an integrated circuit and preparing masks for the production of the
integrated circuit on the basis of the photographs obtained. The high cost of the creation of such
layout designs and the relative ease of copying are the main reasons why layout designs need
protection, in order to foster sustainable investment and innovation in the field.

While the exclusive right to the topography is intended to encourage creativity, the possibility of
―reverse engineering‖ by others for the purpose of evaluation, analysis, research or teaching is
meant to strike a balance in order to enable improvements of existing integrated circuits and their
compatibility.

Different from other forms of IP

In general, layout designs of integrated circuits are not considered to be industrial designs, since
they do not determine the external appearance of integrated circuits, but rather the physical
location, within the integrated circuit, of each element with an electronic function.

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Moreover, layout designs of integrated circuits are normally not patentable inventions, because
making them usually does not involve an inventive step, although it does requires a great deal of
work by an expert. The subject matter of layout design protection does not extend to the
inventive nature or function of a product or a process of making a product, but it does cover the
original designs of a three- dimensional disposition, which is the result of an intellectual effort.

Further, copyright protection may not apply if national law determines that layout designs cannot
be copyrighted, or that the concepts related to copyright protection might be too general to
provide specific protection of layout-designs and related integrated circuits and articles.

In order to effectively protect intellectual property with respect to integrated circuits, different
aspects of the integrated circuits can be protected by different types of intellectual property rights
in a complementary manner.

System Established by the Washington Treaty

A Diplomatic Conference was held at Washington, D.C., in 1989, which adopted a Treaty on
Intellectual Property in Respect of Integrated Circuits (IPIC Treaty). The Treaty is open to
States Members of WIPO or the United Nations and to intergovernmental organizations
meeting certain criteria. The Treaty has been incorporated by reference into the TRIPS
Agreement of the World Trade Organization (WTO), subject to the following modifications:
the term of protection is at least 10 (rather than eight) years from the date of filing an
application or of the first commercial exploitation in the world, but Members may provide a
term of protection of 15 years from the creation of the layout-design; the exclusive right of the
right-holder extends also to articles incorporating integrated circuits in which a protected
layout-design is incorporated, in so far as it continues to contain an unlawfully reproduced
layout-design; the circumstances in which layout designs may be used without the consent of
right- holders are more restricted; certain acts engaged in unknowingly will not constitute
infringement.

The layout-designs of integrated circuits are creations of the human mind. They are usually
the result of an enormous investment, both in terms of the time of highly qualified experts, and
financially. There is a continuing need for the creation of new layout-designs which reduce the
dimensions of existing integrated circuits and simultaneously increase their functions. The
smaller an integrated circuit, the less the material needed for its manufacture, and the smaller
the space needed to accommodate it. Integrated circuits are utilized in a large range of
products, including articles of everyday use, such as watches, television sets, washing
machines, automobiles, etc., as well as sophisticated data processing equipment.

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 Whereas the creation of a new layout-design for an integrated circuit involves an important
investment, the copying of such a layout-design may cost only a fraction of that investment.
Copying may be done by photographing each layer of an integrated circuit and preparing masks
for its production on the basis of the photographs obtained. The possibility of such copying is
the main reason for the introduction of legislation for the protection of layout-designs.

A Diplomatic Conference was held at Washington, D.C., in 1989, which adopted a Treaty on
Intellectual Property in Respect of Integrated Circuits (IPIC Treaty). The Treaty is open to
States Members of WIPO or the United Nations and to intergovernmental organizations
meeting certain criteria. The Treaty has been incorporated by reference into the TRIPS
Agreement of the World Trade Organization (WTO), subject to the following modifications:
the term of protection is at least 10 (rather than eight) years from the date of filing an
application or of the first commercial exploitation in the world, but Members may provide a
term of protection of 15 years from the creation of the layout-design; the exclusive right of the
right-holder extends also to articles incorporating integrated circuits in which a protected
layout-design is incorporated, in so far as it continues to contain an unlawfully reproduced

layout-design; the circumstances in which layout designs may be used without the consent of
right- holders are more restricted; certain acts engaged in unknowingly will not constitute
infringement.

Subject Matter of Protection62: A layout design of an integrated circuit can be protected if it is

original in the sense that it is the result of the creators‘ own intellectual effort and not
commonplace among creators of layout-designs and manufacturers of integrated circuits at the
time of the creation. In general, protection of the topography requires that an integrated circuit be
registered or commercially exploited.

Under the IPIC Treaty, each Contracting Party is obliged to secure, throughout its territory,
intellectual property protection of layout-designs (topographies) of integrated circuits, whether or
not the integrated circuit concerned is incorporated in an article. Such obligation applies to layout
designs that are original in the sense that they are the result of their creators‘ own intellectual
effort and are not commonplace among creators of layout designs and manufacturers of
integrated circuits at the time of their creation.

Protection: In general, a right holder has the exclusive right to prevent or stop others from
commercially using the protected layout designs. In other words, the original layout design
cannot be reproduced entirely or partly for commercial purposes by others, without the
authorization of the holder of the right. Further, without the authorization of the right holder, a

62
Article 2 of the IPIC Treaty.

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protected layout-design, an integrated circuit incorporating the layout design, or an article
incorporating such a layout design cannot be imported, sold or otherwise distributed, for
commercial purposes.

The term of protection varies from one country to another. According to the Agreement on
Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement), members must
provide for a minimum protection of at least ten years from the filing of the application for
registration or from the first commercial exploitation of integrated circuits.

The Contracting Parties must, as a minimum, consider the following acts to be unlawful if
performed without the authorization of the holder of the right: the reproduction of the lay-out
design, and the importation, sale or other distribution for commercial purposes of the layout-
design or an integrated circuit in which the layout-design is incorporated. However, certain
acts may be freely performed for private purposes or for the sole purpose of evaluation,
analysis, research or teaching.

Mention should be made, in this connection, of the concept of “reverse engineering” in the
context of the integrated circuits industry; reverse engineering is the use of an existing layout
design in order to improve upon it. It is considered desirable to permit reverse engineering even
if it involves the copying of an existing layout-design, provided that an improved layout-
design is thereby created - an advance of technology which is in the general public interest.
The Contracting Parties may make protection of layout-designs dependent on their
commercial exploitation or on the filing of an application for their registration, or on their
registration.

Conditions: In some countries, topographies of integrated circuits have to be registered in order

to obtain protection. In general, such registrations take place without extensive examination.
However in some countries, an application for registration must be filed within two years and
protection commences with the first commercial exploitation. In other countries, the protection
starts automatically with the first commercial exploitation, separately, or as incorporated in an
integrated circuit.

In general, an application for registration has to contain information on the owner, a title and a
drawing of the topography, and a detailed description or deposit of the topography of the
integrated circuit. In some countries, where the integrated circuit has been commercially
exploited, submission of a sample of that integrated circuit, along with information defining the
electronic function performed by the integrated circuit, may be also required. Registration is
usually subject to the payment of a fee.

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Rights & Remedies
The beneficiary of the protection is, typically, the creator of a layout design. However, if the
design is created during the course of an employment contract, most national laws provide for
an implied transfer of rights to the employer. Since layout designs of integrated circuits are
protected by sui generis intellectual property rights, they could be assigned or licensed to
others.

The extent of the exclusive rights varies from one country to another. In general, a right holder
has the exclusive right to prevent or stop others from commercially using the protected layout
design. In other words, the original topography cannot be reproduced entirely or partly for
commercial purposes by others, without the authorization of the holder of the right. Further,
without the authorization of the right holder, a protected layout design, an integrated circuit, or
an article which incorporates an unlawfully reproduced layout-design cannot be imported, sold
or otherwise distributed, for commercial purposes by others without the authorization of the
holder of the right.

However, the performance of an act by a third party for private use or for the sole purpose of
evaluation, analysis, research or teaching is not considered to require the authorization of the
right holder. Therefore, “reverse engineering” of an integrated circuit for such purposes is not
restricted.

In sum, layout designs of integrated circuits are protected against copying of the topographies
and against the distribution of products which integrate copied topographies, but the right holder
cannot prevent others from developing other original topographies which have the same
functions as those of protected topographies.

The right holder may enforce his or her rights against an infringer through civil action.
Remedies can include injunctions, damages and seizure of goods.

In most countries, topographies of integrated circuits are registered without substantive

examination. Therefore, lack of originality may be raised as a defence in infringement
proceedings. In some countries criminal sanctions against an infringement are also available.

Legal Framework
The Washington Treaty on Intellectual Property in Respect of Integrated Circuits (IPIC) was
adopted by WIPO member states in 1989. Although the Washington Treaty has not entered
into force, its substantive provisions have been incorporated by reference in the Agreement on
Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement), to a large extent.

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These provisions deal, among other things, with the definitions of “integrated circuit” and
“layout-design (topography)”; requirements for protection; exclusive rights conferred and
their limitations; as well as exploitation, registration and disclosure. The TRIPS Agreement
provides for additional provision, inter alia, on the scope and term of protection.

The international legal framework leaves it open to member states as to which legal form of
protection for the layout designs of integrated circuits is provided. In most countries, a special
law (sui generis law) on layout-designs (topographies) of integrated circuits (or sometimes
called “mask works”) exists. However, countries may provide protection of layout designs of
integrated circuits by the law on copyright, patents, utility models, industrial designs, unfair
competition or any other law (or a combination of any of those laws).

Each national law provides protection of layout designs of integrated circuits related to
activities in its territory. In countries where registration is required, an application for
registration has to be filed in each country in which protection is sought. In other countries,
the first commercial exploitation anywhere in the world is sufficient for obtaining protection.

IV. Protection of Plant Varieties & Plant Breeders Rights

Introduction to Protection of Plant Varieties

The availability to growers of improved, new plant varieties is critically important to the
agricultural and horticultural industries of all countries. Improved disease resistance, higher
yields and improvements in a host of other features of plants can dramatically affect the
economics of the production of a crop and its acceptability to its final consumers. Food
security for a rapidly growing world population, sustainable agricultural production, the need
to raise farm incomes and to enhance economic development call for sustained efforts in
breeding new varieties.

However, new varieties, developed after many years of patient work and heavy investment,
are frequently capable of self-reproduction, with the result that the release of a small quantity
of reproductive material of a plant variety can mean that it is thenceforth available to all. Since
the plant breeder is unable to secure a sufficient economic return from the initial release of
material of his variety, the granting to breeders of rights of exclusive exploitation of their
varieties has proved to be essential to provide an incentive for private investment in plant
breeding in many species.

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New varieties of plants with improved yields, higher quality or better resistance to pests and
diseases increase quality and productivity in agriculture, horticulture and forestry, while
minimizing the pressure on the environment. The tremendous progress in agricultural
productivity in various parts of the world is largely based on improved plant varieties. More
so, plant breeding has benefits that extend beyond increasing food production.

The development of new improved varieties with, for example, higher quality, increases the
value and marketability of crops. In addition, breeding programs for ornamental plants can be
of substantial economic importance for an exporting country. The breeding and exploitation of
new varieties is a decisive factor in improving rural income and overall economic
development. Furthermore, the development of breeding programs for certain endangered
species can remove the threat to their survival out in nature, as in the case of medicinal plants.

While the process of plant breeding requires substantial investments in terms of money and
time, once released, a new plant variety can be easily reproduced in a way that would deprive
its breeder of the opportunity to be rewarded for his investment. Clearly, few breeders are
willing to spend years making substantial economic investment in developing a new variety of
plants if there were no means of protecting and rewarding their commitment. Therefore, an
effective system for the protection of plant variety is essential to encourage breeders to invest
in plant breeding and contribute to the development of agriculture, horticulture and forestry
and for the benefit of society as a whole.

Plant Variety Protection

Plant variety protection, also called a "plant breeder's right" (PBR), is a form of intellectual
property right granted to the breeder of a new plant variety . According to this right, certain
acts concerning the exploitation of the protected variety require the prior authorization of the
breeder. Plant variety protection is an independent sui generis form of protection, tailored to
protect new plant varieties and has certain features in common with other intellectual property
rights.

Any person who creates, or discovers and develops, a plant variety may apply for PBR. Once
the PBR has been granted to the breeder , it means in practice that the title holder is the owner
of the variety and anyone else who wants to commercialise that protected variety requires the
authorisation of the holder of the PBR (i.e. the breeder of the variety). This authorisation is
normally in the form of a license agreement between the title holder and those who sell the
variety.

To be granted a PBR, it is necessary to file an application for examination by the designated

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authority. For a variety to be protected, it must be novel, distinct, uniform and stable, and
must have a suitable denomination. A PBR will be granted if the requirements are fulfilled.
The breeder is usually able to file an application without the services of an intellectual
property agent acting on his behalf, since the procedure is well defined.

Once granted under the 1991 Act of the UPOV Convention, the PBR is valid for a minimum of
25 years in the case of trees and vines and for 20 years in the case of other crops from the date
of granting the PBR. The PBR is valid in the territory where it was granted while in the case of
intergovernmental organisations which grant PBRs, validity applies in all the member states of
that organisation. For example, the Community Plant Variety Office (CPVO) grants PBR, which
are valid in all member states of the European Union.

UPOV
The International Union for the Protection of New Varieties of Plants, known as "UPOV", is
an intergovernmental organisation based in Geneva, Switzerland. The acronym UPOV is
derived from the French name of the organisation namely, “Union Internationale pour la
Protection des Obtentions Végétales".

UPOV Mission Statement: To provide and promote an effective system of plant variety
protection, with the aim of encouraging the development of new varieties of plants for the
benefit of society.

The UPOV system of plant variety protection came into being with the adoption of the
International Convention for the Protection of New Varieties of Plants at a Diplomatic
Conference in Paris, on

December 2, 1961. This was the point at which there was recognition of the intellectual
property rights of plant breeders in their varieties on an international basis. The UPOV
Convention was revised in 1972 and 1978; the most recent Act of the Convention dates from
1991. The UPOV Convention provides a sui generis form of intellectual property protection
which has been specifically adapted for the protection of plant varieties taking into account the
particular features of plant breeding and the circumstances under which plant varieties are
used. The Convention has been developed with the aim of encouraging breeders to develop
new varieties of plants. Innovations in other areas of technology concerning plants are covered
by other forms of intellectual property rights including, in particular, patents.

Residents of a country that is a member of UPOV can apply for PBR in that country and any
other member country of the Union. The application will be filed and examined, in the same
way as national applications.

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Variety

The species is considered as the lowest rank of botanical classification of the plant kingdom.
Nevertheless, plants within a species can be very different. Farmers and growers need plants
which are adapted to the environment in which they are grown and which are suited to the
cultivation practices employed. Therefore, farmers and growers use a more precisely defined
group of plants, selected from within a species, called a "plant variety". The UPOV
Convention's definition of a plant variety starts by stating that it is "a plant grouping within a
single botanical taxon of the lowest known rank, ..."

This confirms that a plant variety results from the lowest sub-division of the plant kingdom. The
UPOV Convention (Article 1(vi)) defines as a variety:
"a plant grouping within a single botanical taxon of the lowest known rank, which grouping,
irrespective of whether the conditions for the grant of a breeder's right are fully met, can be
▪ defined by the expression of the characteristics resulting from a given genotype or
combination of genotypes,
▪ distinguished from any other plant grouping by the expression of at least one of
the said characteristics and
▪ considered as a unit with regard to its suitability for being propagated unchanged;"

This full definition clarifies that a variety must be defined by its characteristics, different from
any other variety and remain unchanged during the process of propagation. If a plant grouping
does not meet these criteria, it is not considered to be a variety within the UPOV system.
However, the definition also makes clear that this is irrespective of whether the conditions for
the grant of a breeder's right are fully met. Thus, the definition applies also to plant groupings
that may not qualify for protection

Breeder
The UPOV Convention stipulates that the breeder is the one who is entitled to apply for
protection of a variety.

The 1991 Act of the UPOV Convention (Article 1(iv)) defines a breeder as:
▪ the person who bred, or discovered and developed, a variety,
▪ the person who is the employer of the aforementioned person or who has
commissioned the latter's work, where the laws of the relevant Contracting Party so
provide, or
▪ the successor in title of the first or second aforementioned person, as the case may be;

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 This simple definition contains some important information concerning the UPOV system. The
breeder, a natural or legal person, might be a plantsman, a farmer, a company or a scientist.
Thus, for example; farmers are potential breeders. It also clarifies that the breeder is considered
to be the one who bred the variety, i.e. created a plant variety by means of plant breeding
techniques. The plant breeding techniques can range from classic "crossing and selection",
through modern procedures, such as genetic engineering. As explained in the second and third
indents, the employer of the breeder and the successor in title of the breeder may also be entitled
to protection. The phrase "the person who bred, or discovered and developed", also clarifies
that a mere discovery or find would not entitle the person to protection, development is
necessary.

Benefits of the UPOV System

1) Lowering "barriers to entry" into the breeding sector
PBR, as mentioned above, has specific features tailored to provide a favourable balance
between scope and exceptions in the promotion of plant breeding. The "breeder's
exception" plays a key role for SMEs, by allowing all breeders to use protected
varieties for further breeding, thus reducing the "barriers to entry" for those SMEs
wishing to enter the plant breeding business. SMEs can benefit by sharing the
developments made by the whole breeding sector.
2) A simple and harmonised application system
UPOV has developed model application forms for PBR, denominations, technical
questionnaires, that UPOV members have incorporated into their own application
forms. This means that the information requested in PBR applications is the same or
very similar in all UPOV member states. Furthermore, this application system is
simple and does not require the service of special IP agents. For SMEs, this translates
into lower costs and simplified filing procedures in foreign countries.
3) Harmonised system of variety examination
In the pursuit of internationally harmonised PBR, UPOV has developed general
principles for distinctness, uniformity and stability (DUS) examination.

In addition, for many species or other plant groupings, UPOV has developed specific guidelines
(UPOV Test Guidelines) for the examination of DUS, which are followed by the authorities. It
has achieved a high degree of harmonisation in the variety examination of PBR applications,
making possible several ways of cooperation:
1. Purchase of DUS test reports: Once a UPOV member has examined a variety, it is possible
for the results to be used by the authority of another member.
2. Testing on behalf of another authority: by means of bilateral agreements, a UPOV member
can request another member to run the DUS testing on its behalf. This type of agreement is of
particular importance for testing crops for which there may not be technical expertise locally

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 or where only few applications are filed and a testing system has not been developed.
3. Mutual recognition of DUS test reports: this is another form of bilateral agreement which
allows two UPOV members, who have the technical capability to carry out DUS testing for a
given species, to mutually accept the technical report made by the other member, thus
avoiding unnecessary duplication of tests.
4. Centralized testing: In some cases, the designated authority may not run itself the DUS
testing. It can designate specific testing centers for this purpose to test the varieties under the
supervision of and following the Test Guidelines developed by the Authority based on
UPOV Test Guidelines. There could be more than one center for a given species in the same
UPOV member state. It is also possible that a central testing centre could be agreed upon
between several UPOV members.
5. Involvement of Breeders: As mentioned above, the breeder can be involved in different forms
of cooperation within DUS testing, ranging from a total breeder testing system to various
degrees of cooperation with the designated authority. As in other forms of cooperation, it
maximizes the use of all available information, minimizes the time spent on DUS
examination and can provide access to a breeder's specialist resources.

All these means of cooperation in testing procedures result in a significant saving of time and
costs for the breeders and ensure harmonised testing criteria.

Using PBRs
Return on Investment: PBR enables breeding companies to achieve a return on their
investment in breeding programs. The PBR system provides a legal framework that allows
breeders to recover their investments and thereby allows them to continue their breeding
activity. SMEs can take advantage of their empirical knowledge and create and protect their
new plant varieties. Furthermore, the breeder's exemption under the UPOV Convention allows
the breeder of a variety to enjoy the PBR of his variety whilst allowing other breeders to use
the material of the protected variety for further breeding.

Companies or individual breeders can use the protected varieties of other breeders freely and
incorporate them into their breeding programs. They can also exploit the resulting new
varieties freely. This is a unique feature of PBR under the UPOV Convention and it reduces
barriers for entering into the business and stimulating the development of the local breeding
industry. It recognizes that real progress in breeding for the benefit of society - the goal of
intellectual property rights in this field - relies on access to the latest improvements and new
variation.

Public agricultural research centres may use PBR as a tool to promote and finance their
activities.

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Investment: SMEs breeding companies can develop a licensing strategy to reinforce their
presence in the local market and expand their activity abroad by entering into a partnership with
foreign companies. PBR can provide the basis for the transfer of technology necessary to
compete in the market. Universities and National Agricultural Research Institutes may take
advantage of PBR and play a key role in the process. They may have the knowledge and
expertise for research but perhaps neither the infrastructure nor the experience required for
successful marketing. In this situation, seed producers and consumers, for example in the
milling industry and/or farmers/growers associations, can assist in the financing of a breeding
program and then be in charge of the multiplication and marketing of the resulting varieties.
Ownership could be shared in different ways according to the funding by the different parties
of the breeding activity. PBR sets up the legal framework enhancing the relationship between
researchers, PBR holders, licensees and users, hence creating a favorable environment for the
development and transfer of technology (i.e. the varieties) in agriculture.

Facilitating access to foreign markets: A basic principle of the UPOV Convention is that the
nationals and residents of any member of the Union receive the same treatment as accorded to
the nationals of all other members of the Union. Breeders can protect their varieties in other
countries and therefore broadens their market. The high degree of harmonisation in the
examination of PBR applications between UPOV members facilitates the filing of applications
in foreign countries. It is not necessary to set up one's own office - a local representative, in most
cases somebody who is licensed to commercialize the protected variety, can provide the service.

Development of SMEs in the plant/seed propagation sector: Seed multipliers benefit from
increased demand for the seed of new varieties. Due to the natural extensive coverage of
agricultural activity, breeders in many cases let seed multiplier companies handle the seed
multiplication and distribution of their protected varieties. Very often the seed producer is a
cooperative of farmers or a family-owned company working in the region where they have
settled. These SME seed multipliers can obtain a license from the holder of the PBR for
producing and marketing the new protected varieties bred by others.

Varieties can be protected independently, whether they will be locally marketed or not. The
multiplication of varieties for foreign markets is another activity that is enhanced by PBR.
Foreign breeders can protect their varieties and issue licences for multiplying them and exporting
the propagating material to foreign markets. Thus, local seed producers can take advantage of
this business opportunity.

Contracts with processors and distributors: Processors and distributors of vegetal farm
products, based on new varieties, can benefit from improved quality in terms of, for example,
better physical properties and improved content and composition of desired ingredients.

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Farmers/growers have access to varieties that are more suitable to specific agro-climatic
conditions and allow them to respond better to market requirements.

Developing the agricultural sector: A reliable legal framework is a very effective tool to attract
the best foreign varieties and rapidly enhance productivity, competitiveness and income in
national agriculture/horticulture. On some markets, there may be a demand for specific
agricultural products, such as ornamentals and exotic fruits. Sometimes an entirely new branch
within agriculture/horticulture may be created. In such cases, the cultivation of foreign
varieties is necessary to meet the demand of these markets. Agricultural/horticultural trade
companies or growers' associations can obtain licenses to exploit protected foreign varieties and
make commercial agreements with overseas traders to export their production. PBR again
provides an opportunity for the acquisition of technology for the development of new
agricultural and horticultural activities, benefiting the rural sector and diversifying the
production. Furthermore, it encourages the development of the necessary services (packaging,
transport, etc.) which bring economic benefits.

Requirements for grant of PBRs

A variety shall be granted protection if it is: new, distinct, uniform and stable. The grant of
protection shall not be subject to any further conditions, provided the variety is designated by
a suitable denomination and the applicant complies with all the formalities and pays the
required fees. The words in italics clarify that no other criteria or conditions can be used in
determining whether to grant protection to a variety.

Novelty: To be eligible for protection, a variety must not have been sold, or otherwise
disposed of, in the territory of the member of the Union concerned for more than one year
prior to the application for a breeder‘s right, or more than four years (six years for trees or
vines) in a territory other than that of this member of the Union. In the case of new members
of the Union, or members extending the plant genera or species for which protection is
offered, these novelty periods may be extended for varieties which have been created only
recently before the time that protection becomes available.

Distinctness: A variety is deemed to be distinct if it is clearly distinguishable from any other

variety whose existence is a matter of common knowledge at the time of filing of the
application. A variety whose existence is a matter of common knowledge (a “variety of common
knowledge”) must fall within the definition of a variety set out in Article 1(vi) of the 1991 Act
of the UPOV Convention, but this does not necessarily require fulfilment of the Distinctness,
Uniformity and Stability (DUS) criteria required for grant of a breeder‘s right under the
UPOV Convention. Thus, a variety of common knowledge does not have to be a protected

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variety and includes ecotypes or landraces which fall within the definition of variety.
Furthermore, if protection was wrongly granted to a variety that was not distinct, the breeder‘s
right shall be declared null and void, i.e. considered that the right was never granted.

Uniformity: A variety is deemed to be uniform if, subject to the variation that may be
expected from the particular features of its propagation, it is sufficiently uniform in its relevant
characteristics. The uniformity requirement within the Convention has been established to
ensure that the variety can be defined as far as is necessary for the purpose of protection. Thus,
the criterion for uniformity does not seek absolute uniformity and takes into account the nature
of the variety itself. Furthermore, it relates only to the characteristics relevant for the
protection of the variety.

Stability: A variety is deemed to be stable if its relevant characteristics remain unchanged after
repeated propagation or, in the case of a particular cycle of propagation, at the end of each
such cycle. As with the uniformity requirement, the criterion for stability has been established
to ensure that the identity of the variety, as the subject matter of protection, is kept throughout
the period of protection. Thus, the criterion for stability relates only to the relevant
characteristics of a variety. The distinctness, uniformity and stability (DUS) criteria are often
grouped together and referred to as the “technical criteria”. They are most easily understood by
considering the criteria together with the way in which they are examined.

Denomination: Each member of the Union must register the denomination of a new plant
variety at the same time as it issues the title of protection for the new variety. Anyone who,
within the territory of one of the members of the Union, offers material of the protected variety
for sale or markets propagating material of the variety is obliged to use the denomination, even
after the expiration of the breeder‘s right of that variety. The denomination is chosen by the
breeder of the new variety but it must conform with all the criteria set out in Article 20 of the
1991 Act. In summary:
1) it must be different from all other denominations used by other members of the
Union for the same, or a closely related, species;
2) it must not be liable to mislead or cause confusion concerning the characteristics,
value or identity of the variety or identity of the breeder; in particular,
3) it must enable the variety to be identified;
4) no rights in the denomination shall hamper its free use as the variety
denomination (even after expiry of the breeder‘s right);
5) prior rights of third persons must not be affected and such rights can require a
change of the variety denomination;
6) it may not consist solely of figures, unless this is an established practice.

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The breeder must submit the same denomination to all members of the Union and, unless this
is considered to be unsuitable within a particular territory, this same denomination will be
registered by all the members of the Union. A trademark, trade name or other similar
indication may be associated with the denomination for the purposes of marketing or selling,
but the denomination must be easily recognizable.

Exceptions to PBRs
The breeder‘s right does not extend to
(i) acts done privately and for non-commercial purposes, This exception means that,
for example, subsistence farming is excluded from the scope of the breeder‘s right.
(ii) acts done for experimental purposes and
(iii) acts done for the purpose of breeding other varieties and for the purpose of
exploiting these new varieties provided the new variety is not a variety essentially
derived from another protected variety (the initial variety).

This latter exception, for the purpose of breeding other varieties, is a fundamental aspect of the
UPOV system of plant variety protection and is known as the “breeder‟s exemption”. It
recognizes that real progress in breeding - which, for the benefit of society, must be the goal
of intellectual property rights in this field - relies on access to the latest improvements and
new variations. Access is needed to all breeding materials in the form of modern varieties, as
well as landraces and wild species, to achieve the greatest progress and is only possible if
protected varieties are available for breeding. The breeder‘s exemption optimizes variety
improvement by ensuring that germ plasm sources remain accessible to all the community of
breeders. However, it also helps to ensure that the genetic basis for plant improvement is
broadened and is actively conserved, thereby ensuring an overall approach to plant breeding
which is sustainable and productive in the long term. In short, it is an essential aspect of an
effective system of plant variety protection system which has the aim of encouraging the
development of new varieties of plants, for the benefit of society.

In addition, as an optional exception, each member of the Union may, “within reasonable
limits and subject to the safeguarding of the legitimate interests of the breeder, restrict the
breeder‟s right in relation to any variety in order to permit farmers to use for propagating
purposes, on their own

holdings, the product of the harvest which they have obtained by planting, on their own
holdings, the protected variety or other variety covered by the protection”. This provision
recognizes that, for some crops, there has been a common practice of farmers saving their own
seed, i.e. seed is produced on a farm for the purpose of re-sowing on the same farm and not for
the purpose of selling the seed. The provision allows each member of the Union to take

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account of this practice when providing variety protection. However, the purpose of plant
variety protection is to encourage the development of new varieties of plants, for the benefit of
society. Therefore, the Convention requires this optional exemption to be regulated “within
reasonable limits and subject to the safeguarding of the legitimate interests of the breeder, ...
”. Should this exemption be introduced in a way that failed to provide an incentive for
breeders to develop new varieties, then society would fail to benefit from the system.

Examination of the application of PBRs

According to Article 12 of the UPOV Convention, protection can only be granted in respect of
a new plant variety after examination of whether the variety complies with the conditions for
protection laid down in the UPOV Convention (Articles 5 to 9 and 20) and, in particular, that the
variety is distinct (D) from any other variety whose existence is a matter of common knowledge
at the time of the filing of the application, and that it is sufficiently uniform (U) and stable (S),
or ―DUS‖ in short. The DUS examination generates a description of the variety, using its
relevant characteristics (e.g. plant height, leaf shape, time of flowering), by which it can be
defined as a variety in terms of Article 1(vi) of the UPOV Convention. Article 12 states that “…
In the course of the examination, the authority may grow the variety or carry out other necessary
tests, cause the growing of the variety or the carrying out of other necessary tests, …” This
establishes that the authority may conduct growing trials, or other tests, itself (“Official
Testing”) or, alternatively, the authority may arrange for other parties to conduct the growing
trials or other tests e.g. an independent institute or the breeders themselves. Cooperation with
breeders has the advantage that it maximizes the use of all available information, minimizes the
time for DUS examination and can provide access to breeders‘ specialist resources.
Nevertheless, the involvement of the breeder is always under the control of the authority and
will always result in a decision being taken by the authority. Article 12 also provides that “… In
the course of the examination, the authority may … take into account the results of growing tests
or other trials which have already been carried out. …” This establishes the opportunity for the
authority to take into account the results from previous tests or trials conducted by, for example,
other authorities. This can take the form of: the purchase of DUS test reports; bilateral
arrangements; or centralized DUS testing. Such cooperation between authorities is important for
minimizing the time for DUS examination, minimizing the cost of DUS examination and
optimizing examination of distinctness in the growing trials. UPOV has developed a document
known as the “General Introduction to the Examination of Distinctness, Uniformity and Stability
and the Development of Harmonized Descriptions of New Varieties of Plants”, which sets out the
principles which are used in the examination of DUS. The identification of those principles
ensures that examination of new plant varieties is conducted in a harmonized way throughout the
members of the Union. This harmonization is important because it facilitates cooperation in
DUS testing and also helps to provide effective protection through the development of
harmonized, internationally recognized descriptions of protected varieties. In addition, UPOV

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has developed “Guidelines for the Conduct of Tests for Distinctness, Uniformity and Stability”,
or “Test Guidelines”, for many individual species or other variety groupings. The purpose of
these Test Guidelines is to elaborate certain of the principles contained in the General
Introduction into detailed practical guidance for the harmonized examination of DUS and, in
particular, to identify appropriate characteristics for the examination of DUS and production of
harmonized variety descriptions.

****************

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140
CHAPTER V
IP Ecosystem in India

National IPR Policy

The Union Cabinet has approved the National Intellectual Property Rights (IPR) Policy on
May 12, 2016 that shall lay the future roadmap for IPRs in India. The Policy recognises the
abundance of creative and innovative energies that flow in India, and the need to tap into and
channelize these energies towards a better and brighter future for all.

The National IPR Policy is a vision document that encompasses and brings to a single platform
all IPRs. It views IPRs holistically, taking into account all inter-linkages and thus aims to
create and exploit synergies between all forms of intellectual property (IP), concerned statutes
and agencies. It sets in place an institutional mechanism for implementation, monitoring and
review. It aims to incorporate and adapt global best practices to the Indian scenario.

The Policy recognizes that India has a well-established TRIPS-compliant legislative,

administrative and judicial framework to safeguard IPRs, which meets its international
obligations while utilizing the flexibilities provided in the international regime to address its
developmental concerns. It reiterates India‘s commitment to the Doha Development Agenda
and the TRIPS agreement.

With this document, India aims to place before the world a vibrant and predictable IP regime,
which stimulates creativity and innovation across sectors, as also facilitates a stable,
transparent and service- oriented IPR administration in the country.

An IPR Think Tank was constituted to undertake an in-depth study on the IPR scenario in the
country and prepare a draft National IPR Policy. It engaged actively with various stakeholders
from all over the world. Based on the comments received from the public, various Ministries/
Departments, in-depth deliberations and the inputs received from the Think Tank, the National
IPR policy was formulated.
The broad contours of the National IPR Policy are delineated below:

Vision Statement: An India where creativity and innovation are stimulated by Intellectual
Property for the benefit of all; an India where intellectual property promotes advancement in
science and technology, arts and culture, traditional knowledge and biodiversity resources; an
India where knowledge is the main driver of development, and knowledge owned is
transformed into knowledge shared.

141
Mission Statement: Stimulate a dynamic, vibrant and balanced intellectual property rights
system in India to:
1) foster creativity and innovation and thereby, promote entrepreneurship and
enhance socio-economic and cultural development, and
2) focus on enhancing access to healthcare, food security and environmental
protection, among other sectors of vital social, economic and technological
importance.

Objectives: The Policy lays down the following seven objectives:

1) IPR Awareness: Outreach and Promotion: To create public awareness about
the economic, social and cultural benefits of IPRs among all sections of society.
2) Generation of IPRs: To stimulate the generation of IPRs.
3) Legal and Legislative Framework: To have strong and effective IPR laws, which
balance the interests of rights owners with larger public interest.
4) Administration and Management: To modernize and strengthen service-
oriented IPR administration.
5) Commercialization of IPRs: Get value for IPRs through commercialization.
6) Enforcement and Adjudication: To strengthen the enforcement and adjudicatory
mechanisms for combating IPR infringements.
7) Human Capital Development: To strengthen and expand human resources,
institutions and capacities for teaching, training, research and skill building in
IPRs.

These objectives are sought to be achieved through detailed action points. The action by
different Ministries/ Departments shall be monitored by DIPP which shall be the nodal
department to coordinate, guide and oversee implementation and future development of IPRs
in India.

Salient Features:
i. Cell for IPR Promotion and Management (CIPAM): A Cell CIPAM shall be
created as a professional body under aegis of DIPP to address the 7 identified
objectives of the Policy. Among other aspects, it shall study IP processes to
simplify and streamline them, monitor public grievances, oversee capacity
building of human resources and institutions for outsourced search activities,
promote commercialization of IPRs and endeavor to provide a platform to connect
innovators and creators to potential users, buyers, investors and funding
institutions. It will coordinate with agencies at State level and with the various
Ministries/ Departments of the Union Government. The data generated at CIPAM

142
 shall serve as a valuable resource for future policy.

ii. Awareness Campaign: To be launched in schools, institutions of higher

education like engineering colleges and law schools, centres of skill development,
industry clusters etc, it aims to foster an IP culture in the country by creating
awareness about the economic, social and cultural benefits of IPRs among all
sections and enabling people to realize the value of their IPs as also respect for
other IPRs. Syllabi and suitable course materials to emphasize importance of
IPRs, shall be formulated for educational institutions at all levels.
iii. IP Cells: IP cells shall be created in key Ministries/ Departments of the Govt of
India, which are vital the field of IPRs, as well as in State Governments, Industry
associations and clusters and major academic institutions. CIPAM shall
coordinate with the Cells.
iv. Generation, registration and commercialization: The Policy aims to encourage
creativity and innovation, leading to generation of IPs and their protection through
IPRs. Registration of Geographical Indications (GIs) shall be encouraged through
support institutions. Action shall be taken to encourage R&D as well as to improve
IPR output from Govt laboratories and organizations, with special focus on
national priority areas.

Apart from creation of IPRs, for their effective commercialisation, it is essential to Identify
opportunities for marketing Indian IPR-based products, especially GIs, and services to a
global audience.
i. Traditional Knowledge Digital Library (TKDL): TKDL‘s ambit is to be
expanded to include other fields besides Ayurveda, Yoga, Unani & Siddha. The
possibility of using TKDL for furthering R&D by public research institutions and
private sector will be explored.
ii. The Policy recognizes the importance of effective coordination between Patent
office and National Biodiversity Authority for speeding up the disposal of
patent applications using biological resources and associated TK.
iii. Cadre Management in IP Offices: The Policy recognizes the crucial role of a
motivated work force in productivity enhancements. The organizational and cadre
structure of the Indian IP Offices shall be studied and reviewed with a view to
enhance efficiency and productivity.
iv. Access to Medicines: Access to affordable medicines and other healthcare
solutions is becoming a challenge for all countries. India too faces a growing
challenge on this count. The Policy recognises this and aims to enhance this by (a)
encouraging cross-sector partnerships between public sector, private sector,
universities and NGOs; (b) promoting novel licensing models, and (c) developing

143
 novel technology platforms.
v. Piracy/ Counterfeiting: Offline and online piracy is a serious concern and needs
to be combated through public awareness as also legal and enforcement
mechanisms.

vi. Assistance to smaller firms: Smaller firms need assistance for protection of their
IPRs internationally. Schemes such as DeitY's 63 Support for International Patent
Protection in Electronics and IT (SIP-EIT) are to be enhanced.
vii. Judicial Awareness & Resolution of IP disputes: Since IPRs are a specialised
discipline, awareness amongst the judiciary is crucial since judicial precedents set
the tone of the country‘s IP regime. For this, it is important that IP modules for
judges be formulated, including regular IP workshops / colloquia at the judicial
academies. Commercial Courts set up at appropriate levels will be responsible for
adjudicating IP disputes.

Resolution of IP cases through Alternate Dispute Resolution methods shall reduce burden on
judiciary and provide speed and inexpensive resolution of disputes. Mediation and conciliation
centres need strengthening, and ADR capabilities and skills in the field of IP developed.

Review: A detailed review of IPR Policy shall be undertaken every five years. Continuous and
regular Review will be done by a Committee to be constituted for this purpose under the
Secretary, DIPP64.

Indian Treaties Database

Legal and Treaties Division: Legal and Treaties Division of the Ministry of External Affairs
was created in 1957 as a nodal point to deal with all aspects of International law advise to the
Government of India. This Division is the sole source of legal advice for the Ministry of
External Affairs. In addition, it also advises other Ministries/Departments of the Government
of India on all matters concerning International law and conclusion and interpretation of
treaties.

Indian Treaties Database: The Database prepared and managed by the Legal and Treaties
Division of the Ministry of External Affairs strives to provide an accessible and searchable link
or series of links to the Treaties/Agreements/MoUs etc., which have been entered into by the

63
Department of Electronics and Information Technology (DeitY), Ministry of Communications and
Information Technology, Government of India.
64
The name of the Department of Industrial Policy and Promotion (DIPP)has been changed as
Department for Promotion of Industry and Internal Trade(DPIIT) vide Gazette Notification No. S.
O. 507 (E) Dated January 27, 2019, Department of Industrial Policy & Promotion DIPP was established in the
year 1995, and was reconstituted in the year 2000 with the merger of Department of Industrial Development.
The department functions under the Ministry of Commerce and Industry, Government of India.

144
Government of the Republic of India with Foreign Countries since the year 1950. The
database is being updated regularly.

Scheme for Facilitating Startups Intellectual Property Protection (SIPP)

Intellectual Property Rights (IPRs) are emerging as a strategic business tool for any business
organization to enhance industrial competitiveness. Startups, with limited resources and
manpower, can sustain in this highly competitive world only through continuous growth and
development-oriented innovations; for this, it is equally crucial that they protect their IPRs.
The scheme for Startups Intellectual Property Protection (SIPP) is envisaged to facilitate
protection of Patents, Trademark and Designs of innovative and interested startups.

Vision: To protect and promote Intellectual Property Rights of startups and thus encourage
innovation and creativity among them.

Objective: The scheme of SIPP aims to promote awareness and adoption of Intellectual
Property Rights amongst startups. Scheme is inclined to nurture and mentor innovative and
emerging technologies among Startups and assist them in protecting and commercialize it by
providing them access to high- quality IP services and resources.

Startup: An entity will be considered a startup as long as the below listed conditions are
met by the entity:
1) Entity has to be a Private Limited company (as defined in the Companies Act, 2013),
or a registered partnership firm registered u/s 59 of the Partnership Act, 1932 or a
limited liability partnership under the Limited Liability Partnership Act, 2002.
2) Five years should have not lapsed since the date of registration or incorporation of the
entity.
3) Turnover in any of the financial year should not be more than INR Twenty Five crores.
4) Entity should not have been formed by splitting up or reconstruction of a business
already in existence.

The patent office fees for startup, even though a legal entity, is the same as the fees charged for
natural persons (individuals). Hence, startup would pay 60% less in government fee compared
to the fee that was applicable prior to the amendment. A startup can also opt for expedited
examination instead of ordinary examination. In an ordinary examination process an examiner
has to prepare an examination report ordinarily in one month but not exceeding three months
from the date of reference of the application to him by the Controller. On the other hand, in an
expedited examination process, the examiner has to prepare an examination report in one
month but not exceeding two months from the date of reference of the application to him by
the Controller.

145
 Appointment of Facilitators: For effective implementation of the scheme, facilitators shall
be empaneled by the Controller General of Patent, Trademark and Design (CGPDTM)65. The
CGPDTM shall regulate conduct and functions of empaneled facilitators from time to time. In
case of any complaint by a startup about a facilitator or on getting information about
professional misconduct through any source, the CGPDTM can remove the facilitator from
the panel. The following can be a Facilitator:
1) Any Patent Agent registered with the CGPDTM.
2) Any Trademark Agent registered with the CGPDTM.
3) Any Advocate as defined under The Advocates Act" 1961 who is entitled to practice law as
per the rules laid down by Bar Council of India from time to time, who is well versed with
the provisions of the relevant Acts and Rules and is actively involved in filing and disposal
of applications for patents, trademarks and designs.
4) Government departments/ organizations/ agencies like TIFAC, NRDC, BIRAC, DEITY,
DSIR etc.

National Acts & Rules

Act is the law that is passed by the legislature. It is also called statute. However, most laws are not
complete code in themselves, i.e. certain provisions as to their application or enforcement etc are
deliberately left out by the legislature. That is where rules come into picture.

Rules help govern a law. They are secondary in nature, in the sense they don't have independent
existence of their own. They are made to make the parent Act work. The rules provide for the
details that have not been provided for in the Act, however Rules by no means can go beyond the
power conferred by the Act, or extend the same.

The major Indian Acts & Rules in the discipline of IP, including a brief chronology is listed below:

Patents:
The Patents Act, 1970
The Patent Rules, 2003
The Patent (Amendment) Rules, 2006
The Patent (Amendment) Rules, 2012
The Patent (Amendment) Rules, 2013
The Patent (Amendment) Rules, 2014
The Patent (Amendment) Rules, 2016
The Patent (Amendment) Rules, 2017

65
< https://www.cgpdtmrecruitment.in/>

146
Copyright:
The Copyright Act, 1957
The Copyright Rules, 1958
The Copyright Rules, 2013
The Copyright (Amendment) Rules, 2016

Trademarks:
The Trade Marks Act, 1999
The Trade Marks Rules, 2002
The Trade Marks (Amendment) Rules, 2013
The Trade Marks Rules, 2017
The Trade Marks (Applications & Appeals to IPAB) Rules, 2003

Geographical Indications:
The Geographical Indication of Goods (Registration & Protection) Act, 1999
The Geographical Indication of Goods (Registration & Protection) Rules, 2002
The Geographical Indication of Goods (Forms, Appeals & Fees) Rules, 2013

Industrial Designs:
The Design Act, 2000
The Design Rules, 2001
The Design (Amendment) Rules, 2008
The Design (Amendment) Rules, 2014

Semiconductors & Integrated Circuits:

The Semiconductor & Integrated Circuits Layout-Design Act, 2000
The Semiconductor & Integrated Circuits Layout-Design Rules, 2001
The Semiconductor & Integrated Circuits Layout-Design (Amendment) Rules, 2012

Plant Varieties & Plant Breeders:

The Protection of Plant Variety and Farmers Right (PPVFR) Act, 2001
The Protection of Plant Variety and Farmers Right (PPVFR) Rules, 2003

Biological Diversity:
The Biological Diversity Act, 2002
The Biological Diversity Rules, 2004

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Membership of Conventions
India is a member of almost all international conventions. The obligation of the member state
arising out of the conventions can be enforced on the basis of reciprocity only. No right or
obligation is enforceable unilaterally. Therefore to pass own laws on Intellectual property is in the
interest of every country. In 1999, a considerate passage of major legislations with regard to
protection of Intellectual property rights in harmony with international practices and in compliance
with India‘s obligations under TRIPS. Among others, India is a signatory to the following treaties /
agreements concerning IP:

Treaty / Agreements Accession Date

Berne Convention for the Protection of Literary and
01 April 1928
Artistic Works
General Agreement on Tariffs and Trade (GATT) 08 July 1948
Universal Copyright Convention (UCC) 06 September 1952
World Intellectual Property Organization (WIPO)
31 January 1975
Convention
Convention on Biological Diversity (CBD) 05 June 1992
World Trade Organization (WTO) 01 January 1995
Trade-Related Aspects of Intellectual Property Rights
01 January 1995
(TRIPS)

Paris Convention for the Protection of Industrial Property 07 September 1998

Patent Cooperation Treaty (PCT) 07 December 1998

Budapest Treaty 17 September 2001
Madrid Agreement Concerning the International
08 July 2013
Registration of Marks
WIPO Copyright Treaty (WCT) 25 September 2018
WIPO Performance and Phonograms Treaty (WPPT) 25 September 2018

****************
 Annexure I

NATIONAL

INTELLECTUAL PROPERTY RIGHTS

POLICY

12th May 2016

Government of India
Ministry of Commerce and Industry
Department of Industrial Policy & Promotion
 Government of
India Department of Industrial Policy &
Promotion

National IPR Policy

Table of Contents

EXECUTIVE SUMMARY ......................................................................................................................... 2

INTRODUCTION....................................................................................................................................... 5

OVERVIEW ................................................................................................................................................ 5

VISION STATEMENT .............................................................................................................................. 7

MISSION STATEMENT ........................................................................................................................... 7

OBJECTIVES ............................................................................................................................................. 7

OBJECTIVE 1: IPR Awareness: Outreach and Promotion.................................................................... 7

OBJECTIVE 2: Generation of IPRs ........................................................................................................ 10

OBJECTIVE 3: Legal and Legislative Framework ........................................................................... 14

OBJECTIVE 4: Administration and Management................................................................................ 16

OBJECTIVE 5: Commercialization of IPR ............................................................................................ 21

OBJECTIVE 6: Enforcement and Adjudication.................................................................................... 24

OBJECTIVE 7: Human Capital Development .................................................................................. 26

IMPLEMENTATION .............................................................................................................................. 28

Page 1 of 28
National IPR Policy

EXECUTIVE SUMMARY
Creativity and innovation have been a constant in growth and development of any knowledge
economy. There is an abundance of creative and innovative energies flowing in India. India has a
TRIPS compliant, robust, equitable and dynamic IPR regime. An all-encompassing IPR Policy will
promote a holistic and conducive ecosystem to catalyse the full potential of intellectual property for
India's economic growth and socio-cultural development, while protecting public interest. The
rationale for the National IPR Policy lies in the need to create awareness about the importance of IPRs
as a marketable financial asset and economic tool.

VISION STATEMENT

An India where creativity and innovation are stimulated by Intellectual Property for the benefit of all;
an India where intellectual property promotes advancement in science and technology, arts and
culture, traditional knowledge and biodiversity resources; an India where knowledge is the main driver
of development, and knowledge owned is transformed into knowledge shared.

MISSION STATEMENT

Stimulate a dynamic, vibrant and balanced intellectual property rights system in India to:

 foster creativity and innovation and thereby, promote entrepreneurship and enhance socio-
economic and cultural development, and

 focus on enhancing access to healthcare, food security and environmental protection, among
other sectors of vital social, economic and technological importance.
The Policy lays down seven Objectives which are elaborated with steps to be undertaken by the
identified nodal Ministry/ department. The Objectives are briefly mentioned below.

OBJECTIVE 1: IPR Awareness: Outreach and Promotion - To create public awareness

about the economic, social and cultural benefits of IPRs among all sections of society

The 21st century belongs to the knowledge era and is driven by the knowledge economy. A nation-
wide program of promotion should be launched with an aim to improve the awareness about the
benefits of IPRs and their value to the rights-holders and the public. Such a program will build an
atmosphere where creativity and innovation are encouraged in public and private sectors, R&D
centers, industry and academia, leading to generation of protectable IP that can be commercialized. It
is also necessary to reach out to the less-visible IP generators and holders, especially in rural and
remote areas. The clarion call of the program would be the holistic slogan “Creative India;
Innovative India: ;अ व ”.

Page 2 of 28
 Government of
India Department of Industrial Policy &
Promotion

OBJECTIVE 2: Generation of IPRs - To stimulate the generation of IPRs

India has a large talent pool of scientific and technological talent spread over R&D institutions,
enterprises, universities and technical institutes. There is a need to tap this fertile knowledge resource
and stimulate the creation of IP assets. A comprehensive base line survey or IP audit across sectors
will enable assessment and evaluation of the potential in specific sectors, and thus formulate and
implement targeted programmes. Focus will be placed on facilitating researchers and innovators
regarding areas of national priority. The corporate sector also needs to be encouraged to generate and
utilize IPRs. Steps also need to be taken to devise mechanisms so that benefits of the IPR regime reach
all inventors, especially MSMEs, start-ups and grassroot innovators.

OBJECTIVE 3: Legal and Legislative Framework - To have strong and effective IPR laws,
which balance the interests of rights owners with larger public interest

The existing IP laws in India were either enacted or revised after the TRIPS Agreement and are fully
compliant with it. These laws along with various judicial decisions provide a stable and effective legal
framework for protection and promotion of IPRs. India shall remain committed to the Doha
Declaration on TRIPS Agreement and Public Health. At the same time, India is rich in traditional
medicinal knowledge which exists in diverse forms in our country, and it is important to protect it
from misappropriation.

OBJECTIVE 4: Administration and Management - To modernize and strengthen service-

oriented IPR administration

The Offices that administer the different Intellectual Property Rights (IPOs) are the cornerstone of an
efficient and balanced IPR system. IPOs now have the twin challenges of making their operations
more efficient, streamlined and cost effective, with expanding work load and technological
complexity on one hand, and enhancing their user-friendliness by developing and providing value
added services to the user community on the other. The administration of the Copyright Act, 1957
and the Semiconductor Integrated Circuits Layout-Design Act, 2000 is being brought under the aegis
of DIPP, besides constituting a Cell for IPR Promotion and Management (CIPAM). This will
facilitate more effective and synergetic working between various IP offices, as also promotion,
creation and commercialization of IP assets.

OBJECTIVE 5: Commercialization of IPR - Get value for IPRs through commercialization

The value and economic reward for the owners of IP rights comes only from their
commercialization. Entrepreneurship should be encouraged so that the financial value of IPRs
maybe captured. It is necessary to connect investors and IP creators. Another constraint faced is
valuation of IP and assessment of the potential of the IPRs for the
Page 3 of 28
National IPR Policy

purpose of marketing it. Efforts should be made for creation of a public platform to connect creators
and innovators to potential users, buyers and funding institutions.

OBJECTIVE 6: Enforcement and Adjudication - To strengthen the enforcement and

adjudicatory mechanisms for combating IPR infringements

There is a need to build respect for IPR among the general public and to sensitize the inventors and
creators of IP on measures for protection and enforcement of their rights. At the same time, there is
also a need to build the capacity of the enforcement agencies at various levels, including strengthening
of IPR cells in State police forces. Measures to check counterfeiting and piracy also need to be
identified and undertaken. Regular IPR workshops / colloquia for judges would facilitate effective
adjudication of IPR disputes. It would be desirable to adjudicate on IPR disputes through specialised
commercial courts. Alternative Dispute Resolution mechanism may also be explored.

OBJECTIVE 7: Human Capital Development - To strengthen and expand human

resources, institutions and capacities for teaching, training, research and skill building in
IPRs

In order to harness the full potential of IPRs for economic growth, it is essential to develop an
increasing pool of IPR professionals and experts in spheres such as policy and law, strategy
development, administration and enforcement. Such a reservoir of experts will facilitate in increasing
generation of IP assets in the country and their utilization for development purposes.

IMPLEMENTATION

The present IP Policy aims to integrate IP as a policy and strategic tool in national development plans.
It foresees a coordinated and integrated development of IP system in India and the need for a holistic
approach to be taken on IP legal, administrative, institutional and enforcement related matters. While
DIPP shall be the nodal point to coordinate, guide and oversee implementation and future development
of IPRs in India, the responsibility for actual implementation of the plans of action will remain with
the Ministries/ Departments concerned in their assigned sphere of work. Public and private sector
institutions and other stakeholders, including State governments, will also be involved in the
implementation process.

Page 4 of 28
 Government of
India Department of Industrial Policy &
Promotion

INTRODUCTION
Creativity and innovation have been a constant in growth and development of any knowledge
economy. There is an abundance of creative and innovative energies flowing in India. The evolution of
the film and music industry; the contribution of the Indian pharmaceutical sector in enabling access to
affordable medicines globally and its transformation to being the pharmacy of the world; a strong and
dynamic software industry; a considerably diverse handicraft and textile industry; richness and
versatility of the Indian systems of medicines such as Ayurveda, Unani, Siddha and Yoga; the
advances made in the Indian space programme and the pioneering role of our scientists in keeping it
cost effective; these are but a few examples of these energies.
While India has always been an innovative society, much of the intellectual property (IP) created
remains unprotected both on account of lack of awareness and the perception that IP protection is
either not required or that the process to obtain it is unnecessarily complicated. The rationale for the
National IPR Policy lies in the need to create awareness about the importance of intellectual property
rights (IPRs) as a marketable financial asset and economic tool.
India has robust IP laws and a strong IP jurisprudence. The legal framework does reflect the
underlying policy orientation and national priorities, which have evolved over time, taking into
account development needs and international commitments.
An all-encompassing IPR Policy will promote a holistic and conducive ecosystem to catalyse the full
potential of intellectual property for India's economic growth and socio-cultural development, while
protecting public interest. Such a Policy will nurture the IP culture, guiding and enabling all creators
and inventors to realize their potential for generating, protecting and utilizing IPRs which would
contribute to wealth creation, employment opportunities and business development.
This policy shall weave in the strengths of the Government, research and development organizations,
educational institutions, corporate entities including MSMEs, start-ups and other stakeholders in the
creation of an innovation-conducive environment. It will complement the strengths of our substantive
laws with transparent, predictable and efficient administrative and procedural mechanisms as also
well-informed adjudicatory structure.

OVERVIEW
The concrete measures taken by the Government in the last two decades in consonance with national
development priorities and in conformity with international treaties, conventions and agreements to
which India is a party has created and established a TRIPS compliant, robust, equitable and dynamic
IPR regime. The continuous and unending improvements alongwith the

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National IPR Policy

sweeping and far-sighted changes at the legislative and administrative levels has resulted in
strengthening the administration, management and enforcement of IPRs.
The statutes governing different kinds of IPRs in India are Patents Act, 1970; Trade Marks Act, 1999;
Designs Act, 2000; Geographical Indications of Goods (Registration and Protection) Act, 1999;
Copyright Act, 1957; Protection of Plant Varieties and Farmers‘ Rights Act, 2001; Semiconductor
Integrated Circuits Layout-Design Act, 2000 and Biological Diversity Act, 2002.
The Department of Industrial Policy and Promotion (DIPP) is entrusted with matters concerning the
specialised UN agency on IPRs, the World Intellectual Property Organisation (WIPO), including
coordination with other concerned Ministries or Departments.
The Controller General of Patents, Designs and Trade Marks (CGPDTM) under the Department of
Industrial Policy and Promotion, Ministry of Commerce and Industry is entrusted with the
responsibility of administering the laws relating to Patents, Designs, Trade Marks and Geographical
Indications within the territory of India. The CGPDTM presently functions through Patent Offices at
four locations (Chennai, Delhi, Kolkata, and Mumbai), Trademarks Offices at five locations
(Ahmedabad, Chennai, Delhi, Kolkata, and Mumbai), a Geographical Indications Registry at Chennai
and a Designs Wing at Kolkata. The Office of CGPDTM is also in charge of the Rajiv Gandhi
National Institute of Intellectual Property Management at Nagpur.
Copyrights were administered by the Ministry of Human Resource Development. The Copyright Act
is comprehensive and with the recent amendments, the rights of creators have been strengthened.
The Protection of Plant Varieties and Farmers‘ Rights Act, 2001 is a sui generis legislation in India
providing protection for plant varieties and rights of farmers and is under the aegis of the Ministry of
Agriculture.
The Department of Information Technology was responsible for Semiconductor Integrated Circuits
Layout-designs; the first registration under the Semiconductor Integrated Circuits Layout-Design Act
was granted in October 2014.
The preservation of biological diversity in India is under the Ministry of Environment and Forests; the
Biological Diversity Act 2002 provides mechanism for regulating access and ensuring fair and
equitable sharing of benefits arising out of the use of biological resources and associated traditional
knowledge.
India has always been conscious of its obligations in the international arena, and has acceded to a
number of international conventions to further the cause of IPRs globally. India was the first country
to ratify the Marrakesh Treaty 2013 for Access to published works by visually impaired persons. The
accession to the Madrid Protocol in 2013 is a step towards global alignment for proprietors of marks.
The Indian Patent office has been recognized as an International Search Authority and an International
Preliminary Examination Authority.

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 Government of
India Department of Industrial Policy &
Promotion

The IPR regime in India has adequate safeguards in the form of judicial review and appellate
provisions. Indian courts have consistently enforced IPRs, with judgements clearly expressing the
intent and purpose of our laws. The Intellectual Property Appellate Board hears appeals arising from
the decisions of Controllers of Patents as also Registrars of Trade Marks and GIs.
In a slew of initiatives, the IP offices under the CGPDTM have been modernized and there is a
perceptible change for the better. Conscious efforts have been made to develop a robust e-service
delivery system, including real-time public dissemination of dynamic IP knowledge through e-
enabled innovative tools.

VISION STATEMENT
An India where creativity and innovation are stimulated by Intellectual Property for the benefit of all;
an India where intellectual property promotes advancement in science and technology, arts and
culture, traditional knowledge and biodiversity resources; an India where knowledge is the main driver
of development, and knowledge owned is transformed into knowledge shared.

MISSION STATEMENT
Stimulate a dynamic, vibrant and balanced intellectual property rights system in India to:

 foster creativity and innovation and thereby, promote entrepreneurship and enhance socio-
economic and cultural development, and

 focus on enhancing access to healthcare, food security and environmental protection, among
other sectors of vital social, economic and technological importance.

OBJECTIVES
The Policy lays down seven Objectives which are elaborated with steps to be undertaken by the
identified nodal Ministry/ department. The implementing or Nodal Ministry/ Department shall
coordinate with all other concerned stakeholders, including other Ministries/ departments, towards
attaining the objectives.

OBJECTIVE 1: IPR Awareness: Outreach and Promotion

To create public awareness about the economic, social and cultural
benefits of IPRs among all sections of society

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The 21st century belongs to the knowledge era and is driven by the knowledge economy- an economy
that creates, disseminates and uses knowledge to enhance its growth and development. Traditionally,
monetization of knowledge has never been the norm in India. While laudable and altruistic, this does
not fit with the global regime of zealously protected IPRs. Hence, there is a need to propagate the
value of transforming knowledge into IP assets. This requires a major paradigm shift of how
knowledge is viewed and valued - not for what it is, but for what it can become.
Many IP holders are unaware of the benefits of IP rights or of their own capabilities to create IP assets
or the value of their ideas. They are often discouraged by the complexities of the process of creating
defendable IP rights. Conversely, they may be unaware of the value of others‘ IP rights and the need to
respect the same. The policy proposes to tackle both perspectives through outreach and promotion
programs.
A nation-wide program of promotion should be launched with an aim to improve the awareness about
the benefits of IPRs and their value to the rights-holders and the public. Such a program will build an
atmosphere where creativity and innovation are encouraged in public and private sectors, R&D
centers, industry and academia, leading to generation of protectable IP that can be commercialized.
It is also necessary to reach out to the less-visible IP generators and holders, especially in rural and
remote areas. Emphasis would be laid on creating awareness regarding the rich heritage of India in
terms of our Geographical Indications, Traditional Knowledge, Genetic Resources, Traditional
Cultural Expressions and Folklore.
The immediate economic rationale for individuals and the community, as well as the pride in being
innovative, should be conveyed effectively to the public. The clarion call of the program would be the
holistic slogan “Creative India; Innovative India: ; अभभनव
”.

The steps to be taken towards attaining this objective are outlined below:

1.1. Adopt the national slogan "Creative India; Innovative India" and launch an associated
campaign on electronic, print and social media, including by linking the campaign
with other national initiatives such as ―Make in India‖, ―Digital India‖, ―Skill India‖,
―Start Up India‖, ―Smart Cities‖ and other new initiatives in the future;

1.2. Create a systematic campaign for promotion of India's IP strengths by conveying to all
stakeholders the value and benefits of IP by:

1.2.1. Customizing programs for specific needs o f industries, MSMEs, start-ups,

R&D institutions, science and technology institutes, universities and colleges,
inventors and creators, entrepreneurs;
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1.2.2. Reaching out to the less visible and silent IP generators and holders, especially
in the rural and remote areas, through campaigns tailored to their needs and
concerns. These would include small businesses, farmers/ plant variety users,
holders of traditional knowledge, traditional cultural expressions and
folklore, designers and artisans;

1.2.3. Including case studies of successful use of IPRs in campaigns to create value in
the respective domains;

1.2.4. Promoting the idea of high quality and cost-effective innovation as a particularly
Indian competence leading to competitive advantage;
1.2.5. Involving eminent personalities as 'ambassadors' to spread awareness and
importance of IP in India;

1.2.6. Using audio/ visual material in print/ electronic/ social media for propagation;
1.2.7. Creating moving exhibits (e.g. a train with a theme that will crisscross the nation,
road shows) that can travel to all parts of the country;

1.2.8. Creating materials for IP promotion in multiple languages and pictorial form for
those who cannot read;

1.2.9. Studying best practices and success stories in other countries to design and launch
public outreach programs.

1.3. Create a w ar e ne s s programs specifically targeting industry and R&D entities, both
private and public by:

1.3.1. Providing scientists/ researchers with a deeper level of understanding about the
need to protect their inventions even before publishing;

1.3.2. Engaging public funded research organizations and the private sector to
create campaigns highlighting the process of IP creation and the value
generated therefrom;

1.3.3. Encourage multi-national corporations and other large corporate entities to

develop IP programs for their employees and adapt and propagate them to
the public;

1.3.4. Creating materials for MSMEs highlighting special support mechanisms

for them to develop and protect IP.
1.4. Create well-publicized events and ongoing programs to emphasize the

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importance of IP by:

1.4.1. Partnering with industry bodies, large corporations and institutions of

R&D and higher learning for such events, and consider establishment of
Innovation, Creativity and IP museum(s);

1.4.2. Announcing with the help of State governments, Innovation and IP Days
especially in major industrial, innovation and university clusters; celebrate
'World IP Day' in different cities and institutions;

1.4.3. Setting up India's 'Hall of Fame' to celebrate IP innovators and creators;

1.4.4. Instituting prizes and awards to encourage IP creation activity in specific
sectors.

1.5. Create suitable course materials for:

1.5.1. Educational institutions at all l evels to emphasize the importance of IP
rights;

1.5.2. Online and distance learning programs for all categories of users;
1.5.3. Including IPRs in school curriculum at appropriate level.
1.6. Engage with the media to sensitize them regarding IP related issues.

OBJECTIVE 2: Generation of IPRs

To stimulate the generation of IPRs
The profile of IP filings and registrations/ grants is one of the parameters, though not the only one,
to assess the current status and potential of IP creation in a country. In India, the number of patent
filings has increased in the last few years, but the percentage of filings by Indians is relatively low. In
the case of trademarks, India is among the top five filers in the world, w i t h the majority being filed
by Indians. The number of design applications filed is nowhere near India's potential, given its vast
pool of designers, artisans and artists. India has a large talent pool of scientific and technological
talent spread over R&D institutions, enterprises, universities and technical institutes. There is a need to
tap this fertile knowledge resource and stimulate the creation of IP assets.
GIs is an area of strength and optimism for India, where it has accorded protection to a number of
hand-made and manufactured products, especially in the informal sector. The copyright based
sector contributes significantly to the Indian economy and its future potential is immense. In the
area of plant varieties and farmers' rights, the number of filings and registrations are very
encouraging. There is considerable unexplored potential for

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developing, promoting and utilizing traditional knowledge, which is a unique endowment of

India. Activities for promotion of traditional knowledge have to be conducted with effective
participation of holders of such knowledge.
A comprehensive base line survey or IP audit across sectors will enable assessment and evaluation of
the potential in specific sectors, and thus formulate and implement targeted programmes to tap this
vast potential and help develop new technologies, products and solutions. This would include
strengthening and spread of IPR facilitation centres and incubators, amongst other measures. Focus
will be placed on facilitating researchers and innovators regarding areas of national priority. The
corporate sector also needs to be encouraged to generate and utilize IPRs. It is also desirable to
introduce IPRs as part of academic curriculum in educational institutions, especially universities, law
and technical institutions.
Steps also need to be taken to devise mechanisms so that benefits of the IPR regime reach all
inventors, especially MSMEs, start-ups and grassroot innovators. Incentives may be built-in to
encourage filing by such targeted users. These may include schemes to facilitate domestic IPR filings,
for the entire value chain from IPR generation to commercialization. R&D needs to be promoted through
tax benefits available under various laws, through simplification of procedures for availing direct and indirect tax
benefits.

The ambit of Traditional Knowledge Digital Library (TKDL) should also be expanded, while the
possibility of using it for further R&D shall be explored.
The steps to be taken towards attaining this objective are outlined below:

2.1. Use the campaign "Creative India; Innovative India‖ to propagate the value of creativity
and innovation, and the resultant benefit to the public; to create a mindset and culture that
encourages knowledge generation and its application through IP;

2.2. Carry out a comprehensive IP audit or base line survey in various sectors in
cooperation with stakeholders to assess and evaluate areas of strength and potential,
prioritize target groups of inventors and creators, develop specific programs to address
their needs, provide resources to enable them to create IP assets and utilize them for
their own and social benefit;

2.3. Undertake studies to assess the contribution of IP content in different industries on the
economy, employment, exports and technology transfer;
2.4. Focus on improving IPR output of National Research Laboratories, Universities,
Technology Institutions and other researchers by encouraging and facilitating the
acquisition of Intellectual Property Rights by them;

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2.5. Encourage researchers in publ i c f unded academic and R&D institutions in IPR creation
by linking it with research funding & career progression;

2.6. Encourage researchers in p u b l i c f u nd e d academic and R&D institutions by having

uniform guidelines for division of royalties between the organizations and individual
researchers and innovators;

2.7. Include IP creation as a key performance metric for public funded R&D entities as well as
Technology Institutions, and gradually extend such evaluation from Tier-1 to Tier-2
Institutions;

2.8. Provide guidance to researchers and innovators about national priority areas to focus on,
for instance in energy and food security, healthcare and agriculture, as well as specific
sectors such as biotechnology, data analytics, nanotechnology, new materials and ICT;

2.9. Encourage public funded R&D institutes and industry to develop affordable drugs
relating to neglected diseases;
2.10. Encourage R&D including open source based research such as Open Source Drug
Discovery (OSDD) by the Council of Scientific and Industrial Research (CSIR) for new
inventions for prevention, diagnosis and treatment of diseases, especially those that are
life threatening and those that have high incidence in India;

2.11. Establish and strengthen IP facilitation centers as nodal points especially in industrial and
innovation university clusters;

2.12. Create an industry-academia interface for encouraging cross-fertilization of ideas and

IPR-driven research and innovation in jointly identified areas;
2.13. Stimulate large corporations, both Indian and foreign, that have R&D operations, to
create, protect and utilize IPRs in India;

2.14. Improve a wareness of the value of copyright for creators, the importance of their
economic and moral rights;

2.15. Introduce support systems for MSMEs, start-ups and grass root innovators to reduce
transaction costs linked to IP creation for the entire value chain from IPR generation
to commercialization, including schemes to facilitate domestic IPR filings;

2.16. Consider incentives to promote R&D, including the following steps:

2.16.1. Promote R&D through tax benefits available under various laws, through
simplification of procedures for availing direct and indirect tax benefits;

2.16.2. Consider financial support for a limited period on sale and export of products
based on IPRs generated from public funded research;
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2.16.3. Creation of an effective and simple loan guarantee scheme in order to

encourage start-ups and cover the risk of genuine failures in
commercialization based on IPRs as mortgage-able assets;
2.17. Promote ‗infusion of funds to public R&D units‘ as a part of Corporate Social
Responsibility to foster a culture of open innovation;

2.18. Provide special incentives for creation of IPRs in green technologies and
manufacture of energy efficient equipment;

2.19. The ambit of Traditional Knowledge Digital Library (TKDL) should also be expanded to
include other fields besides Ayurveda, Yoga, Unani and Siddha;

2.20. Public research institutions should be allowed access to TKDL for further R&D, while the
possibility of using TKDL for further R&D by private sector may also be explored,
provided necessary safeguards are in place to prevent misappropriation;

2.21. Document oral traditional knowledge, taking care that the integrity of the said
knowledge is preserved and traditional ways of life of communities are not
compromised;

2.22. Introduce IPRs as part of academic curriculum in educational institutions, especially

universities, law and technical institutions;

2.23. Increase awareness of international mechanisms and treaties (e.g. PCT, Madrid, Hague) to
encourage creation and protection of IPRs by Indian individuals and entities in global
markets;

2.24. Encourage and incentivize IP generation and utilization among students at all levels,
use awareness programs and educational materials to inculcate an appreciation for the
value of IP;

2.25. Encourage innovations in the agriculture and pisciculture sector through application of
IP for higher sustainable agricultural production;

2.26. Encourage the registration of Geographical Indications (GIs) through support

institutions; assist GI producers to define and maintain acceptable quality standards,
and providing better marketability;

2.27. Encourage creation of design related IP rights by identifying, nurturing and promoting
the aspects of innovation protectable under the design law and

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educating designers to utilize and benefit from their designs; involve the NIDs, NIFTs
and others institutions in sensitization campaigns;

2.28. IPR generation for ICT technologies, including those relating to cyber security for India,
will be encouraged;

2.29. Take steps to increase domestic filings of patent applications;

2.30. Promote India's rich heritage of traditional knowledge with the effective involvement and
participation of the holders of such knowledge. Traditional knowledge holders will be
provided necessary support and incentives for furthering the knowledge systems that they
have nurtured from the dawn of our civilization.

OBJECTIVE 3: Legal and Legislative Framework

To have strong and effective IPR laws, which balance the interests of rights owners
with larger public interest
It is an acknowledged fact that a strong and balanced legal framework encourages continuous flow of
innovation and is among the bare necessities to fuel a vibrant knowledge economy. India recognizes
that effective protection of IP rights is essential for making optimal use of the innovative and creative
capabilities of its people. India has a long history of IP laws which have evolved taking into
consideration national needs and international commitments. The existing laws were either enacted or
revised after the TRIPS Agreement and are fully compliant with it. These laws along with various
judicial decisions provide a stable and effective legal framework for protection and promotion of IPRs.
India will continue to utilize the legislative space and flexibilities available in international treaties and
the TRIPS Agreement, even as it continues to engage constructively in the negotiation of such
international treaties and agreements. India shall remain committed to the Doha Declaration on TRIPS
Agreement and Public Health.
At the same time, India is rich in traditional medicinal knowledge which exists in diverse forms in our
country. Amongst them, well developed systems like Ayurveda, Yoga & Naturopathy, Unani, Siddha,
Sowa-Rigpa and Homeopathy have immense economic value. It is important to protect such
knowledge, be it oral or in codified form, from misappropriation, while providing space and
environment for dynamic development of traditional knowledge for benefit of mankind.
Since it is difficult to predict the reach of existing laws in a changing and dynamic knowledge field, it
becomes necessary to carry out legislative changes, as may be required from time to time. For this
purpose, stakeholder consultation shall be done to keep the laws updated in consonance with national
needs and priorities. The legal framework may also be utilized to enhance transparency and efficiency
in the administration and enforcement of IPR laws.
The steps to be taken towards attaining this objective are outlined below:
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3.1. Review existing IP laws, where necessary, to update and improve them or to
remove anomalies and inconsistencies, if any, in consultation with stakeholders;

3.2. Engage constructively in the negotiation of international treaties and agreements in

consultation with stakeholders; examine accession to some multilateral treaties
which are in India's interest; and, become signatory to those treaties which India has
de facto implemented to enable it to participate in their decision making process;

3.3. Continue to engage actively and constructively in the deliberations at various

international fora to develop legally binding international instrument(s) to protect T r
a d i t i o n a l K n o w l e d g e ( TK), Genetic Resources (GR) and Traditional Cultural
Expressions (TCE);

3.4. Pursue transfer of clean technology and know-how from developed countries to India, as
per the provisions of Article 4 of the UNFCCC, in order to meet the objectives of reducing
anthropogenic emissions of GHGs and support activities of climate change adaptation;

3.5. Review and update IP related rules, guidelines, procedures and practices for clarity,
simplification, streamlining, transparency and time bound processes in administration
and enforcement of IP rights;
3.6. Undertake an in-depth study to determine the appropriateness and extent of a
pplying the existing laws to protecting TK,GR and TCE, and to propose changes
required, if any;

3.7. Indian Cinematography Act, 1952 may be suitably amended to provide for penal
provisions for illegal duplication of films;

3.8. Identify important areas o f study and research for future policy development, such as
(the list is indicative, and not exhaustive):
3.8.1. Interplay amongst IP laws; and between IP laws and other laws to remove
ambiguities and inconsistencies, if any;

3.8.2. IP interface with competition law and policy;

3.8.3. Guidelines for authorities whose jurisdictions impact administration or
enforcement of IPRs such as patents and Biodiversity;

3.8.4. Protection of Trade Secrets.

3.9. Examine the issues of technology transfer, know-how and licensing relating to SEPs
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on fair and reasonable terms and provide a suitable legal framework to address these
issues, as may be required.

OBJECTIVE 4: Administration and Management

To modernize and strengthen service-oriented IPR administration
The Offices that administer the different Intellectual Property Rights (IPOs) are the cornerstone of an
efficient and balanced IPR system, administering laws, granting or registering IP rights, providing
IPR related services to users, including dissemination of IPR related information for the benefit of
research & development and furthering of innovation in the country, as also serving as a bridge
between the government, IP support institutions and the user community. As IPRs increase in
significance and contribute to economic development, the importance and role of IP administration
and management has also expanded. The IPR infrastructure is one of the key elements of enhanced
competitiveness in the globalized international economic paradigm. This in turn, influences the
organization, structure and functions of modern IPOs.
IPOs now have the twin challenges of making their operations more efficient, streamlined and cost
effective, with expanding work load and technological complexity on one hand, and enhancing their
user-friendliness by developing and providing value added services to the user community on the
other. Steps will continue to be taken towards modernization of various IP offices, including
improvement of ICT infrastructure. Aiming towards a service oriented regime at IPOs, steps would
be taken to fix and adhere to timelines for disposal of IPR applications. There is also need to augment
manpower after analyzing the projected workload.
Sensitization of IPR officials at all levels with regard to the objects and reasons of our laws and
international obligations; their continuous education and training and regular audit of their work will
ensure a vibrant and service oriented IPR regime. The Rajiv Gandhi National Institute of Intellectual
Property Management, Nagpur (RGNIIPM) needs to be strengthened to cater to the training needs in
an evolving IP environment. Measures should also be taken to promote interaction between the IP
Offices and various R & D organizations and Universities.
The administration of the Copyright Act, 1957, hitherto under the Department of Higher Education,
and the Semiconductor Integrated Circuits Layout-Design Act, 2000, hitherto under the Department
of Electronics and Information Technology, is being brought under the aegis of the Department of
Industrial Policy and Promotion leading to synergetic linkage between various IP offices under one
umbrella, streamlining processes, and ensuring better services to the users. To facilitate promotion,
creation and commercialization of IP assets, a Cell for IPR Promotion and Management (CIPAM)
should be constituted under the aegis of DIPP.
Continued efforts should be made for promotion of technical cooperation with IP offices in other
countries in areas such as capacity building, human resource development, training, access to
databases, best practices in search and examinations, use of ICT and user oriented services.
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The steps to be taken towards attaining this objective are outlined below:

4.1. The administration of the Copyright Act 1957 alongwith the office of the Registrar of
Copyrights, under the Department of Higher Education, is being transferred to the
Department of Industrial Policy and Promotion;

4.2. The administration of the Semiconductor Integrated Circuits Layout-Design Act 2000
alongwith the office of the Semiconductor Integrated Circuits Layout-Design Registry
(SICLDR), under the Department of Electronics and Information Technology, is being
transferred to the Department of Industrial Policy and Promotion;

4.3. Restructure, upgrade and modernize IPOs taking into account the rapid growth and
diversity of IP users and services, higher responsibilities and increased workload;
4.4. Augment manpower after analyzing projected workload, speedy liquidation of backlog,
requirements of global protection systems and productivity parameters;

4.5. Study and review the organizational and cadre structure, processes of recruitment,
training, career development, performance based incentives to attract and retain the
best talent to enhance efficiency and productivity;

4.6. Modernize further the physical and ICT infrastructure taking into account the
expanding needs of the IPOs and to accelerate e-filings, e-processing and other e-
services;

4.7. Promote interaction between various IP offices and public R&D institutions for
sensitization of personnel and scientists;

4.8. Collaborate with various R&D Institutions, Universities, Funding Agencies,

Chambers of Industry and Commerce in providing advisory services to improve IP
creation, management and utilization;
4.9. Make efforts to include TKDL as a part of PCT minimum documentation;

4.10. Establish close cooperation between IPOs and create a common web portal for ease
of access to statutes, regulations, guidelines and for better coordination;

4.11. Promote cooperation with IP offices in other countries in areas of Capacity Building,
Human Resource Development, Training, Access to Databases, Best

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Practices in search and examinations, use of ICT and user oriented services;

4.12. Introduce approaches and mechanisms so that benefits of the IP system reach all
inventors including MSMEs, informal innovators and holders of traditional
knowledge;

4.13. Create a Cell for IPR Promotion and Management (CIPAM) under the aegis of DIPP to
facilitate promotion, creation and commercialization of IP assets;

4.14. Explore the possibility of expedited examination of patent applications to promote

manufacturing in India;

4.15. Enhance international and bilateral cooperation and coordinate with Indian Missions
abroad to follow IP developments and advice on IP related matters;

4.16. Office of the Controller General of Patents Designs and Trademarks

The office of CGPDTM, which administers patents, designs, trademarks and GIs, has
undergone a sea change in the past few years, in up gradation and use of ICT. These
changes shall be further advanced through such measures as:
4.16.1. Fix and adhere to timelines for grant of registrations and disposal of
opposition matters;

4.16.2. Adopt best practices with respect to filing and docketing of documents,
maintenance of records and digitizing the same including document workflow
and tracking systems;
4.16.3. Create a service-oriented culture to make the IP office user friendly;
4.16.4. Take steps t o expedite digitization of the Design office and enable online
search and filing;
4.16.5. Ensure that public records in the IP office are easily available and accessible
both online and offline;
4.16.6. Conduct periodic audits of processes being adopted in IP administration for
efficient grant and management of IP rights;

4.16.7. Implement quality standards at all stages of operations with the aim to obtain
ISO certification;

4.16.8. Establish effective coordination between its office and National Biodiversity
Authority to enable harmonious implementation of guidelines relating to
grant of patents on inventions using biological resources and associated TK;

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4.16.9. Provide continuous training to staff of the IP Office to update them of

developments in procedures (especially search and examination), substantive
laws and technologies, with the Rajiv Gandhi National Institute of Intellectual
Property Management, Nagpur (RGNIIPM);
4.16.10. Remove disparities, if any, among different branches of the trademark
registries and patent offices and adopt standardized procedures in
examination/grant of applications including maintenance of rights;
4.16.11. Implement centralized priority field-wise on a national basis for patent
applications;

4.16.12. Examine joining Centralized Access for Search and Examination (CASE) and
WIPO D igital Access Services (DAS);
4.16.13. Existing guidelines published by the Patent Office shall be reviewed periodically
and revised to reflect legislative provisions;

4.16.14. Value added services in the form of helpdesks, awareness and training
materials, ease of remote access of the international patent search mechanisms
and other IP related databases;
4.16.15. Implement incentives for MSMEs and grass root innovators to encourage filing by
the said sector;

4.16.16. Conduct patent and trademark agent examinations at regular intervals; arrange
training programs and involve them in capacity building activities.
4.17. Office of Registrar of Copyrights:
The office will:
4.17.1. Take measures to expedite modernization of the Copyright Office in terms of
office space and infrastructure, organizational structure, e-filing facility
including e-applications, processing and issue of final extracts of
registrations;

4.17.2. Digitize copyright records and introduce on-line search facility; Provide
necessary manpower and adequate training facilities to personnel in the
Copyright Office;

4.17.3. Take urgent measures for effective management and administration of

copyright societies to ensure transparency and efficiency in the collection
and disbursement of royalties in the best interest of the right holders;
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4.17.4. Provide user friendly services in the form of helpdesks, awareness and training
materials;

4.17.5. Streamline the processes to grant copyright permissions to individual

creators, enterprises and institutions for their creative work.
4.18. The Protection of Plant Varieties and Farmers‘ Rights Authority The
Protection of Plant Varieties and Farmers‘ Rights Authority will:
4.18.1. Support increased registration of new, extant and essentially derived varieties
of plants and streamline procedures;

4.18.2. Facilitate development of seeds and their commercialization by farmers;

4.18.3. Establish links between the Authority and Agricultural Universities, Research
Institutions, Technology Development & Management Centers and Krishi
Vigyan Kendras;
4.18.4. Coordinate with other IPOs for training, sharing expertise and adopting best
practices;

4.18.5. Augment awareness building, training and teaching programs;

4.18.6. Modernize office infrastructure and use of ICT

4.19. Registrar of Semiconductor Integrated Circuits Layout Design

4.19.1. The Registrar will study the reasons for lack of interest in filings under The
Semiconductor Integrated Circuits Layout Design Act, 2000 and suggest
appropriate remedial measures;

4.19.2. Liaise with the concerned Group in the Patent office and Design wing under
the CGPDTM for further working.

4.20. National Biodiversity Authority

4.20.1. The Government will formalize a consultation and coordination mechanism
between the NBA, IPOs and ot her co n c e r n e d M i n i s t r i e s/
d e p a r t me n t s l i ke A YU S H , with a view to harmonious implementation
of guidelines for grant of IP rights and access to biological resources and
associated traditional knowledge and benefit sharing;

4.20.2. The NBA will streamline approvals for expeditious grant of IP rights, monetary
and non-monetary benefit-sharing a n d introduce efficient and user friendly
mechanisms for a meaningful interface between the NBA and applicants.

4.21. Re-designate the institution of the Controller General of Patents, Designs and
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Trademarks as Controller General of Intellectual Property Rights to reflect its

mandate in view of the proposed change in its scope of responsibilities.

OBJECTIVE 5: Commercialization of IPR

Get value for IPRs through commercialization
The value and economic reward for the owners of IP rights comes only from their
commercialization. A concerted effort should be made for capitalizing the existing IP assets in
the country. Entrepreneurship should be encouraged so that the financial value of IPRs may be
captured. Existing mechanisms including Incubators and Accelerators set up to promote
entrepreneurship should be strengthened with IP-oriented services.
Financing is a major impediment for entrepreneurs and therefore it is necessary to connect
investors and IP creators. Another constraint faced is valuation of IP and assessment of the
potential of the IPRs for the purpose of marketing it.
There is an urgent need to take stock of existing IP funding by different departments and bodies of the
Government like BIRAC, NRDC and TIFAC, and take measures to consolidate the same, scaling up
successful models while avoiding duplication of efforts. Public – funded research laboratories,
academia and other institutions should stimulate commercialization of their research outcomes. They
ought to be suitably state-supported in the development and deployment of their IPRs.
While certain larger organizations have the intent and capabilities to commercialize their technology/
IPRs, several others do not. Hence, it becomes imperative to establish facilitative mechanisms that can
address such limitations, especially in terms of MSMEs, academic institutions and individual
innovators. One of the effective ways of achieving this would be by synergizing the activities of IP
facilitation centres with the industry, especially industrial clusters. This would also include
sensitization regarding licensing arrangements.
Efforts should be made for creation of a public platform to function as a common database of IPRs.
Such a platform can help creators and innovators connect to potential users, buyers and funding
institutions. It would also be helpful in scouting the technology landscape to identify white spaces and
thereby help promote innovative activities in uncovered areas. Significant potential for innovation
exists in new and emerging technologies like nano-technology, biotechnology, agri-biotech, life
sciences, green technologies, telecommunications, new materials, space technologies, etc.
The steps to be taken towards attaining this objective are outlined below:

5.1. CIPAM shall also undertake the following tasks:

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National IPR Policy

5.1.1. Provide a platform for IPR owners and users of IPRs b y a c t i n g as a facilitator
for creators and innovators to be connected with potential users, buyers and
funding agencies;

5.1.2. Undertake a study to examine the feasibility of an IPR Exchange;

5.1.3. Establish links among different organizations for exchange of information and
ideas as also to develop promotional/educational products and services;

5.1.4. Facilitate access to databases on Indian IP and global databases of creators/

innovators, market analysts, funding agencies, IP intermediaries;

5.1.5. Study and facilitate implementation of best practices for promotion and
commercialization of IP within the country and outside;

5.1.6. Promote public sector initiatives for IPR commercialization;

5.2. Promote licensing and technology transfer for IPRs; devising suitable contractual and
licensing guidelines to enable commercialization of IPRs; promote patent pooling
and cross licensing to create IPR based products and services;

5.3. Provide support for MSMEs, Individual Inventors and Innovators from the informal
sectors with enablers like facilitation centers for single window services to help them
commercialize their IPRs;
5.4. Incentivize Indian inventors, MSMEs, start-ups to acquire and commercialize IPRs in
other countries also;
5.5. Examine availability of Standard Essential Patents (SEPs) on fair, reasonable and
non-discriminatory (FRAND) terms ;

5.6. Identify opportunities for marketing Indian IPR-based products, especially GIs, and
services to a global audience;

5.7. Promote collaborative IP generation and commercialization efforts between R&D

institutions, Industry, Academia and Funding Agencies;

5.8. Ensure enhanced access to affordable medicines and other healthcare solutions by
(a) encouraging cross-sector partnerships between public sector, private sector,
universities and NGOs; (b) promoting novel licensing models, and (c) developing
novel technology platforms;

5.9. Streamline regulatory processes to ensure timely approval for manufacturing and
marketing of drugs while maintaining safety and efficacy standards;

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 Government of
India Department of Industrial Policy &
Promotion

5.10. Make efforts to reduce dependency on active pharmaceutical ingredients (API)

imports, including incentivizing manufacture of APIs in India and revitalizing
public sector undertakings in health care sector;
5.11. Support the financial aspects of IPR commercialization by:

5.11.1. Enabling valuation of IP rights as intangible assets by application of appropriate

methodologies and guidelines; facilitating securitization of IP rights and their
use as collateral by creation of enabling legislative, administrative and market
framework;

5.11.2. Facilitating investments in IP driven industries and services through the

proposed IP Exchange for bringing investors/ funding agencies and IP
owners/users together;

5.11.3. Providing financial support to the less empowered groups of IP owners or

creators like farmers, weavers, artisans, craftsmen, artists etc. through financial
institutions like rural banks or cooperative banks offering IP friendly loans;
5.11.4. Providing financial support for development and commercialization of IP
assets through links with financial institutions including banks, venture
capital funds, angel funds, crowd funding mechanisms;

5.11.5. Utilizing Technology Acquisition and Development Fund under the

Manufacturing Policy for licensing or procuring patented technologies;
5.11.6. Taking stock of all IP funding by the Government and suggesting measures
to consolidate the same to the extent possible; scaling up the funding as
needed and avoiding duplication; enhancing the visibility of IP and
innovation related funds so that utilization is increased; performance based
evaluation for continued funding;

5.12. Promote use of Free and Open Source Software along with adoption of open
standards; possibility of creating Indian standard operating environments will be
examined;

5.13. Promote going-to-market activities by:

5.13.1. Creating mechanisms to help MSMEs and research institutions to validate

pilots and scale up through market testing;

5.13.2. Providing seed funding for marketing activities such as participating in trade
fairs, industry standards bodies and other forums;

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National IPR Policy

5.13.3. Providing guidance and support to IPR owners about commercial opportunities
of e-commerce through Internet and mobile platforms;

5.13.4. Encouraging enterprises to create brand equity from their IP rights, such as
trademarks and GIs.

OBJECTIVE 6: Enforcement and Adjudication

To strengthen the enforcement and adjudicatory mechanisms for combating IPR
infringements
IP rights are essentially private rights. The primary obligation of protecting IP rights is on the IPR
owners who can seek legal remedies for enforcement of their rights. Along with providing an effective
mechanism for enforcement of IP rights, it is equally important to balance the rights of the public in a
manner conducive to social and economic welfare and to prevent misuse or abuse of IP rights.
There is a need to build respect for IPR among the general public and to sensitize the inventors and
creators of IP on measures for protection and enforcement of their rights. At the same time, there is
also a need to build the capacity of the enforcement agencies at various levels, including strengthening
of IPR cells in State police forces.
Measures to check counterfeiting and piracy also need to be identified and undertaken. In this regard,
the definitions of "counterfeit trademark goods" and "pirated copyright goods" as referred to in the
footnote of Article 51 of the TRIPS Agreement shall serve as the guiding principles.
Regular IPR workshops / colloquia at judicial academies and other fora for judges would facilitate
effective adjudication of IPR disputes. Multi-disciplinary IP courses / modules for other stakeholders
are also needed.
It would be desirable to adjudicate on IPR disputes through specialised commercial courts. Alternative
Dispute Resolution mechanism may also be explored.
The steps to be taken towards attaining this objective are outlined below:

6.1. Create awareness of the value of IP and respect for IP culture by:

6.1.1. Educating the general public, especially the youth and students, on ills of
counterfeit and pirated products;
6.1.2. Engaging with all levels of industry, including e-commerce, in order to create
respect for IP rights and devise collaborative strategies and tools;

6.1.3. Sensitizing inventors, c r e a t o r s of IP on measur es for pr ot ect i on and

Page 24 of 28
 Government of
India Department of Industrial Policy &
Promotion

enforcement of their rights.

6.2. Take strong measures against attempts to treat generic drugs as spurious or counterfeit;

6.3. Undertake stringent measures to curb manufacture and sale of misbranded, adulterated
and spurious drugs;

6.4. Public awareness as also legal and enforcement mechanisms, including technology
based measures, will be reinforced to combat offline and online piracy;

6.5. Small technology firms will be supported in safeguarding their IP rights; for instance,
support for IPR in ICT focus areas will be provided through easy-to-use portals;

6.6. Assistance to smaller firms for protection of their IPRs internationally will be enhanced,
such as DeitY's Support for International Patent Protection in Electronics and IT (SIP-
EIT);

6.7. Pursue incidents of misappropriation of TK, GR and TCE in other countries vigorously;

6.8. Strengthen the enforcement mechanisms for better protection of IP rights by:

6.8.1. Enhanced coordination between the various agencies and providing direction
and guidance on strengthening enforcement measures; coordinating with and
sharing of intelligence and best practices at the national and international level;
studying the extent of IP violations in various sectors; examining the
implications of jurisdictional difficulties among enforcement authorities; and
introducing appropriate technology based solutions f or curbing digital piracy;

6.8.2. Working closely with state governments for establishment of IP cells for curbing
IP offences;

6.8.3. Augmenting manpower, infrastructure facilities and technological capabilities of

the enforcement agencies and building capacity to check proliferation of digital
crimes;

6.8.4. Providing regular training, including refresher training, for officials in the
enforcement agencies at their academies;

6.8.5. Encouraging application of technology based solutions in the enforcement of

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National IPR Policy

IP rights;

6.8.6. Initiating fact-finding studies in collaboration with stakeholders concerned to assess

the extent of counterfeiting and piracy and the reasons behind it as well as
measures to combat it;

6.8.7. Taking up the issue of Indian works and products being pirated and
counterfeited abroad with countries concerned;

6.9. Licensing practices or conditions that may have an adverse effect on competition will be
addressed through appropriate measures, including regulation of anti- competitive conduct in
the market by the Competition Commission of India;

6.10. Facilitate effective adjudication of IP disputes through different measures including:

6.10.1. Adjudicate IP disputes through Commercial Courts, set up at appropriate level;

6.10.2. Creating IP modules including case laws for the benefit of judges who deal in
IP; conducting regular IP workshops / colloquia at the judicial academies;

6.10.3. Promoting ADRs in the resolution of IP cases by strengthening mediation and

conciliation centers, and developing ADR capabilities and skills in the field of IP;

OBJECTIVE 7: Human Capital Development

To strengthen and expand human resources, institutions and capacities for teaching, training,
research and skill building in IPRs
The IPR scenario is dynamic and fast changing with increasing globalization, advancement of
technologies, digital environment, development imperatives and global public policy issues. It is
important to build national capacity for providing thought leadership in the IPR field. Continuous
policy research is also needed on empirical and topical IPR areas of relevance with an interdisciplinary
perspective at the national and international level. This research would enrich the process of policy,
law, strategy development and international negotiations at the government and organizational levels.
While apex level institutes or bodies exist for most sectors of national importance, such an institution
has yet to be established for intellectual property rights development.

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 Government of
India Department of Industrial Policy &
Promotion

In order to harness the full potential of IPRs for economic growth, it is essential to develop an
increasing pool of IPR professionals and experts in spheres such as policy and law, strategy
development, administration and enforcement. IPR expertise would thus need to be developed and
increased in industry, academia, legal practitioners, judiciary, IP users and civil society. In addition,
there will be enhancement of multidisciplinary human and institutional capacity for policy
development, teaching, training, research and skill building. Such a reservoir of experts will facilitate
in increasing generation of IP assets in the country and their utilization for development purposes.

The steps to be taken towards attaining this objective are outlined below:

7.1. Strengthen and empower RGNIIPM, Nagpur to conduct training for IPR administrators and
managers in industry and business, academicians, R&D institutions; IP professionals;
inventors and civil society; train the trainers and develop training modules; develop links
with other similar entities at the international level; provide legal training for examiners;

7.2. Strengthen IP Chairs in educational institutes of higher learning to provide quality teaching
and research; develop teaching capacity and curricula and evaluate their work on performance
based criteria;

7.3. Introduce multi-disciplinary IP courses/ modules in all major training institutes such as
Judicial Academies, National Academy of Administration, Police and Customs
Academies, Institute for Foreign Service Training, Forest Training Institutes;

7.4. Making IPR an integral part of the curriculum in all legal, technical, medical and
management educational Institutions, NIFTs, NIDs, AYUSH Educational Institutes,
Agricultural Universities, centres of skill development and the like;

7.5. Strengthen existing and create new IPR cells and technology development and management
units in NIDs, NIFTs, Agricultural Universities, Technology and Management Institutes and
centres of skill development;

7.6. Encourage formulation of i n s t i t u t i o n a l IP P o l i c y / Strategy in Government

Departments, Higher Education, Research and Technical Institutions;

7.7. Progressively introduce IP teaching in Schools, Colleges and other Educational

Institutions and centres of skill development;

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National IPR Policy

7.8. Facilitate Industry Associations, Inventor and Creators Associations and IP Support
Institutions to raise awareness of IP issues and for Teaching, Training and Skill Building;

7.9. Develop distance learning and on-line courses on IP for all categories of users;
strengthen IP teaching in open universities and centres of skill development;

7.10. Strengthen IP Teaching, Research and Training in collaboration with WIPO, WTO, other
International Organizations and reputed Foreign Universities;

7.11. Encourage and support capacity building among Women Creators, Innovators,
Entrepreneurs, Practitioners, Teachers and Trainers.

IMPLEMENTATION
Intellectual property in India is regulated by several laws, rules and regulations under the jurisdiction
of different Ministries/ Departments. A number of authorities and offices administer the laws. The
legal provisions need to be implemented harmoniously so as to avoid conflict, overlap or
inconsistencies among them. It is necessary that the authorities concerned administer the laws in
coordination with each other in the interest of efficient administration and user satisfaction. Legal,
technological, economic and socio-cultural issues arise in different fields of IP which intersect with
each other and need to be addressed and resolved by consensus in the best public interest.
International, regional and bilateral negotiations require developing a common national position in
consultation with different Ministries, authorities and stakeholders.
The present IP Policy aims to integrate IP as a policy and strategic tool in national development plans.
It foresees a coordinated and integrated development of IP system in India and the need for a holistic
approach to be taken on IP legal, administrative, institutional and enforcement related matters.
Thus, the Department of Industrial Policy and Promotion shall be the nodal point to coordinate, guide
and oversee implementation and future development of IPRs in India. The responsibility for actual
implementation of the plans of action will remain with the Ministries/ Departments concerned in their
assigned sphere of work. Public and private sector institutions and other stakeholders, including State
governments, will also be involved in the implementation process.

Page 28 of 28
 Annexure II
Scheme for IPR
Awareness | CIPAM

IPR Awareness - Creative India, Innovative India!

Name of the Scheme/Project

Scheme for IPR Awareness – Creative India; Innovative India
Objective
In order to take forward the National IPR Policy and to enhance creativity,
innovation, competitiveness and economic growth in India, it is imperative to harness IP.
With phenomenal growth of the Indian Economy it is vital that IPRs are generated in India and
then legally protected and exploited. Inadequate knowledge about the rights of
individuals to protect their ideas and innovations and low awareness about the procedures
involved in obtaining an IPR has hindered India‘s growth in Intellectual Property. With
India‘s potential and its importance in the global arena, it‘s time we rise and become a leader
in innovation and Intellectual Property!

Cell for IPR Promotion and Management (CIPAM)

CIPAM, vide Order No. 12(09)/2016-IPR-III (Pt.-2) dated 09/08/2016,
has been created as a professional body under the aegis of DIPP. CIPAM
consists of verticals, which address the seven identified objectives of the
policy.
Allocation of Funds
Funds to implement this scheme will be made available from the head
„Intellectual Property‟ under the head „Awareness Campaign‟ which has already
been approved in CIPAM‘s DPR.

Area of Coverage
Pan India, including Tier 1, Tier 2, Tier 3 cities as well as rural areas.

Name of the Implementing Agency

The Cell for IPR Promotion and Management (CIPAM), Department of
Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of
India, Udyog Bhawan, Central Secretariat, New Delhi - 110011

Total Project Duration

The duration of the scheme is for 3 Years (April 2017 – March 2020)

Date of Commencement
01-04-2017
 Scheme for IPR Awareness
| CIPAM

Date of Completion
31-03-2020

Salient Features of the Scheme

I. The scheme targets to conduct IP awareness workshops/seminars in collaboration
with industry organizations, academic institutions and other stakeholders across the
country.
II. It is also proposed to undertake training programmes to create a resource pool of
trainers who would conduct the IP Awareness workshops/seminars for the public,
enforcement agencies andjudiciary.
III. These awareness programmes will be tailored for 4 categories: Primary School (up to
Grade 8), Secondary School (Grade 9 to Grade 12), University/ College and Industry,
including MSMEs and Startups. However, two or more categories may be combined
in any awareness programme.
IV. Workshops/Seminars for the industry will be further tailored for the Industry to
cover vital IP topics including all facets pertaining to inter-alia, Patents, Trademarks,
Copyrights, GIs, Designs, Plant Varieties, Genetic Resources and TK (including
international filing procedures in accordance with PCT and Madrid protocol)
among MSMEs, Startups, various IP generating sector-specific industries and R&D
entities (as mentioned in the National IPR Policy under action point 1.2.1 and
1.3.2).
V. Workshops/Seminars on promotion of GIs (as mentioned in the National IPR
Policy under point 1.2.2).
VI. Workshops/Seminars to highlight the ill effects of piracy and counterfeiting
(as mentioned in the National IPR Policy under point 6.1.1).
VII. Conduct IP training and sensitization programmes for enforcement agencies (Police,
Customs) and Judiciary. (as mentioned in the National IPR Policy under point 6.8.4).

Targets
➢ 4000 IP awareness workshops/seminars in academic institutions and the industry
across India
➢ 40 training programmes (Training of Trainers) to create a resource pool of persons
for conducting IPR Awareness workshops/seminars
➢ 5 workshops with eminent International speakers on IP in the global context
➢ 270 IP training and sensitization programmes for enforcement agencies and judiciary
 Scheme for IPR Awareness
| CIPAM

Outcome of the Scheme

This scheme will help in realizing the goals of the National IPR Policy. Enhanced
IPR awareness amongst the citizens of the country would result in an increased IP portfolio of
the country – this would mean an increase in the IP‘s generated domestically,
increased competiveness of the Indian industry both domestically and globally as well as
economic growth.
A concerted effort would stimulate a dynamic, vibrant and well balanced IPR system in India
to:
• Foster creativity and innovation and thereby, promote entrepreneurship
and enhance socio-economic and cultural development
• Focus on enhancing access to healthcare, food security and environmental
protection, among other

Background
IP activity in India is showing a remarkable upward movement in the last 15 years with the
number of Patents filed increasing nearly nine times, The Department of Industrial Policy
and Promotion (DIPP), Ministry of Commerce and Industry, Government of India, has taken
various initiatives to ensure that the intangible assets of the country are adequately protected
some of which are highlighted below:

• National IPR Policy

A comprehensive National IPR policy has been approved that will not only
stimulate innovation and creativity across sectors, but also provide a clear vision
regarding IPR issues. The Policy document is available on the website of the DIPP
http://dipp.nic.in.
• Cell for IPR Promotion and Management (CIPAM)
A professional body under the aegis of DIPP to ensure focused action on issues related to
IPRs to ensure effective implementation of the National IPR Policy. Assist in
simplifying and streamlining of IP processes, apart from undertaking steps for
furthering IPR awareness, commercialization and enforcement.
• IPR Awareness Programmes(Pilot)
On a pilot basis CIPAM/DIPP launched the IPR Awareness campaign across 18 states in
country in June-July 2016. These awareness programmes received a very warm
response from participants and various stakeholders. The Industry requested CIPAM to
conduct more of such awareness programmes across the country to encourage
creativity, innovation and awareness on protection of Intellectual Property.
Similarly, IP sensitizing programmes were conducted on a pilot basis for Andhra
Pradesh and Uttar Pradesh Police in various batches, CIPAM in association with FICCI has
made an IPR Enforcement Toolkit for Police.
 Scheme for IPR Awareness
| CIPAM

• International Scenario:
International scenario as regards to similar campaigns to raise IPR Awareness
conducted by other countries has also been taken into consideration while preparing
the scheme. In Canada, various Outreach campaigns: initiatives aimed at increasing
public awareness on IP issues among SMEs, entrepreneurs, consumers, law
enforcement officials and general public have been undertaken. Also, initiative
like Outreach research have been undertaken to enhance awareness and to study
attitudes and behavior of different audiences towards IP. Similarly, countries like
China, USA, Japan, Germany who are leaders in the World IP arena have conducted
effective outreach campaigns in recent years to enhance their global IP footprint.
Hong Kong, from 1997 to February, 2004, talked to 175,571 students through 494
visits to secondary schools as part of its IPR promotion programme. In April, 2003,
IPD published a comic series targeting youngsters and students. The series carries 30
stripsof crisp messages on different IP subjects withlivelyand attractive graphics.
India was placed at rank 66th in the Global Innovation Index 2016 which can
improved further given the country‘s booming economy and vast potential.

Inter-linkage with other Existing/Proposed Programmes Providing Similar

Benefits

A list of other programs/schemes providing support for IPR

Awareness are enumerated below:
(i) Scheme for "Building Awareness on Intellectual Property Rights‖ by
the Ministry of Micro, Small & Medium Enterprises provides support
IPR workshop and seminars.
(ii) Scheme on IPR Awareness by the Ministry of Electronics and
Information Technology for providing support for IPR workshops by
educational institutes and industry in the ICT sector.
(iii) Cluster level IP Awareness program ―An initiative of the office of the
Controller General of Patents, Designs and Trademarks (CGPDTM) in
association with Industry Associations (CII, FICCI, ASSOCHAM)‖
However, the above mentioned schemes are disjointed and sporadic
and their purview does not generally expand past the major cities. CIPAM being
the nodal agency for implementing the National IPR Policy aims to conduct
awareness programmes across the country including Tier 1, Tier 2, Tier 3 cities
and rural areas for school children, university students and specific industry
tailored workshops/seminars.

Screening of Applications

All the applications received by CIPAM will be processed in a time bound manner.
 Scheme for IPR Awareness
| CIPAM
Sanction of Funds

IPR specific awareness workshops promoting innovation and entrepreneurship will be supported
under the scheme as per details given below:
I. The Grant-in-Aid will be provided to eligible partner institutions/
organizations for organizing IPR workshops/seminars. The funding will be
as per following criterion:
a) Support for awareness programmes in Schools will be limited to Rs.25,000 per
programme. In case more funds are required, separate sanctions shall be
obtained.
Duration: 1-2 hours
Deliverables: Content approved by CIPAM may be delivered in the form of
presentations, lectures, recording, brochures & pamphlets, banners & posters
and games & quizzes by the speakers.
 Content will be printed and published for which the cost will be borne by
CIPAM. All costs related to logistics and speakers including their travel,
lodging & boarding and honorarium will be borne by the partnering
institution/ organization.
 It is expected that the venue/hall will be available in the academic
institution. If this has to be arranged by the partnering institution/
organization, then additional budget will be provided as per actuals.
b) Rs. 50,000 for awareness programmes to be organized by colleges and
universities. In case more funds are required, separate sanctions shall be
obtained.
Duration: 2-3 hours
Deliverables: Content approved by CIPAM may be delivered in the form of
presentations, lectures, recording, brochures & pamphlets, banners & posters
and games & quizzes by the speakers.
 Content will be printed and published for which the cost will be borne by
CIPAM. All costs related to logistics and speakers including their travel,
lodging & boarding and honorarium will be borne by the partnering
institution/ organization.
 It is expected that the venue/hall will be available in the academic
institution. If this has to be arranged by the partnering institution/
organization, then additional budget will be provided as per actuals.
c) Rs. 1.0 Lakh for awareness programmes in the Industry. In case more funds are
required, separate sanctions shall be obtained.
Duration: 1 day
Deliverables: Content approved by CIPAM may be delivered in the form of
presentations, lectures, recording, brochures & pamphlets, banners & posters
and games & quizzes by the speakers.
 Content will be printed and published for which the cost will be borne by
CIPAM. All costs related to logistics, booking of hall/venue and speakers
including their travel, lodging & boarding and honorarium will be borne
by the partnering institution/ organization.
 Scheme for IPR Awareness
| CIPAM

II. Following will be sanctioned on case to case basis as per actuals to

eligible partner institutions/ organizations:
a) Awareness programmes/ Workshops/ Seminars with eminent speakers from around
the globe will be dealt on actual basis.
b) Training of Trainers certificate course to create a resource pool of persons (up to 6
days).*
*There may be separate ToTs for IPR Awareness programmes for the public and IP
training and sensitization programmes for enforcement agencies and judiciary.
c) IP training and sensitization programmes for enforcement agencies and judiciary (up
to 3 days).

Total Fund Outlay

Awareness Campaign – Roadshows and Awareness Programs

Expenses per Event Total Estimated
Event Category Number of Events* (Rs.) Expenses (Rs.)
Industry roadshows 1100 1,00,000 11,00,00,000
Universities/
colleges 1000 50,000 5,00,00,000

Schools 1900 25,000 5,00,00,000

Workshops/Even
ts with eminent
5 50,00,000 2,50,00,000
International
speakers
Total 4005 - 23,50,00,000
IP training and sensitization programmes for Enforcement Agencies and Judiciary
Expenses per Event Total Estimated
Event Category Number of Events (Rs.) Expenses (Rs.)
Sensitizing of Police
Officials 90 2,00,000 1,80,00,000
Sensitizing of
Custom Officials 90 2,00,000 1,80,00,000
Sensitizing of
Judiciary 90 2,00,000 1,80,00,000

Total 270 - 5,40,00,000

Training of Trainers – IPR Awareness programmes + Enforcement Agencies and
Judiciary
Expenses per Event Total Estimated
Event Category Number of Events (Rs.) Expenses (Rs.)
 Scheme for IPR Awareness
| CIPAM

Training of Trainers
for IPR Awareness
for general public* 20 2,00,000 40,00,000
Training of
Trainers for IPR
Awareness for
enforcement 20 2,00,000 40,00,000
agencies and
judiciary
Total 40 - 80,00,000
Cumulative Expenditure under the Scheme**
Expenses per Event Total Estimated
Event Category Number of Events (Rs.) Expenses (Rs.)
Awareness
Campaign –
Roadshows and
4005 - 23,50,00,000
Awareness
Programs
IP sensitizing
programmes for
Enforcement
Agencies and
270 - 5,40,00,000
Judiciary
Training of Trainers 40 - 80,00,000
Total 29,70,00,000**

*The number of events in each category may vary.

**The total expenditure in the scheme has been estimated for the purpose of calculation and
may vary as payment for certain event categories will be done on actual basis.

The total project cost estimate under the scheme is Rs. 29,70,00,000 for 3 years.