Sunday, July 29, 2012

Licensing Agreement

A License is a contractual right that gives someone permission to do a certain activity or to use certain property that is owned by someone else. In an Intellectual property license, one company grants permission to another to use its Intellectual property, to which it has exclusive rights.
A License allows an intellectual property rights holder (the licensor) to create a business from an invention or creative work by charging a user (the licensee) for product use. It also helps to control, manage and protect the intellectual property.
In Intellectual property, Licensing agreement is a written contract under which the owner of a copyright, know how, patent, service mark, trademark, or other intellectual property, allows a licensee to use, make, or sell copies of the original. Such agreements usually limit the scope or field of the licensee, and specify whether the license is exclusive or non-exclusive, and whether the licensee will pay royalties or some other consideration in exchange. While licensing agreements are mainly used in commercialization of a technology, they are also used by franchisers to promote sales of goods and services.
A variety of such licensing agreements are available, which may be broadly categorized as follows:
·         Technology licensing agreement: By a technology licensing agreement the licensor authorizes the licensee to use the technology under certain agreed terms and conditions. It is, therefore, a contract freely entered into between two parties and contains terms and conditions so agreed. Therefore, if any Small and medium size enterprises (SME) is interested in improving the quality of its product or manufacturing a new product by using the rights owned by others in the form of a patent, utility model, or know how protected by a trade secret then acquiring such rights through a licensing agreement is the right solution.
·         Trademark licensing and franchising agreement: A trademark license is an arrangement by which the licensor consents to the use of its trademark by the licensee on agreed terms and conditions. A franchising agreement is granted by the franchisor to the franchisee to use its trademark and the franchised system. Therefore, if any SME is interested in marketing the product or service, and the brand (trademark) of that product, is owned by others or, entering and expanding the existing market for the product or service for which the SME owns the right conferred by a trademark then considering a trademark license or a franchise agreement is the right solution.
·         Copyright license agreements: The Copyright License Agreement is an agreement between the owner of the copyright in any existing work or the prospective owner of the copyright and the company or individual in any future work in writing to another person for a limited time. This license should not be mistaken with an assignment. Therefore, if any SME is interested in manufacturing, distributing or marketing the results of the literary and artistic efforts of creators or, entering a market or expanding or extending the existing market for the literary and artistic efforts of the enterprise, then considering a copyright license agreement is the right solution.
However, in practice, all or some of these agreements often form part of one single contract, since, it involves not only the intellectual property rights but many other rights also.
Under the Trademark Act 1999, the assignability and transmissibility of trademark are covered from Section 37 to Section 45.Section 37 of the said Act deals with the power of the registered proprietor to assign the trademark; and the assignability and transmissibility of registered and unregistered trademark whether with or without the goodwill of the business concerned is covered under Section 38 and Section 39 of the Act respectively. The registration of the assignment comes under the purview of Section 45 of the said Act.
In International context, a formal licensing agreement is possible only if the intellectual property right that is wish to license is also protected in the other country or countries, and, if the intellectual property is not protected in such other country or countries then the property would not be license and also there would be no legal right to put any restriction on its use by anyone else.

Sunday, July 22, 2012

In Re EMC: Another Blow to patent troll

Hardly one year after passing of the American Invents Act which addressed some of the irritating habits of patents trolls now it is the turn of US Court of appeal for Federal circuit to address the menace of patent owners who uses patent litigation as a tool to make money from companies rather than entering into actual business.

On May 4th 2012, the Court of Appeal issued a blow to all Non-practicing entities who files multi- defendant cases as an effort to avoid the requirements of the America Invents Act. The Court in this case held that “Joinder” is not appropriate in multi-defendant patent infringement cases where only commanlity is alleged infringement of same patents. 

Oasis Research LLC, the plaintiff in the original suit is the owner of four US patents which deals with off-site computer data storage by allowing home computer users to remotely connect to an online service system for purposes of external data storage. Oasis Research LLC files a Multi – defendant patent infringement claim against the petitioners (defendants in original suit) as they offer online backup and storage though various websites.

The petitioners filed motions before the Eastern Texas District Court to sever the claims and transfer them to various jurisdictions. The District court denied petitioners motions reasoning that claims of Oasis LLC satisfy the transaction or occurrence test of Rule 20 of Federal Rules of Civil Procedure.

Denying the reasoning given by the Texas Court, the Court of appeal points out that under the correct test of transaction or occurrence an existence of a single common question of law or fact alone is insufficient to satisfy the transaction- or- occurrence requirement. Thus mere fact that the infringement of same claims of the same patent does not support joinder, even though the claims would raise common questions of claim construction.

Further the joinder of independent defendants is only appropriate where the accused products are same in respect to the same patent. But commonality of patent alone is not sufficient to allow joinder. Commonality shall be supplemented with overlapping facts which give rise to each cause of action. Thus, if there is no actual link between underlying facts of each claim of infringement the independently developed products using differently sources are not to be considered as the part of the same transaction.

The 18 page ruling of the Court of Appeal is a serious financial blow upon the patent owners who count on using cheap litigation to win favourable settlements.

 By Nithin V Kumar

Tuesday, July 3, 2012

Intellectual Property Rights and its Relevance in India

In earlier times, the concept of property meant something tangible. Man used to be in possession of property and property became the source of wealth and status in the society for him. As time went by, property created by the scope of one’s intellect became what is known as Intellectual Property Right. The problem with Intellectual Property was that it was intangible in nature.

Property has always been a symbol of power and strength for every individual and that is why every individual tries to maximize his property.

A human being is the sole proprietor of his brains and even law gives him a proprietor right in it. Just as John Locke had pointed out, a person has his property, two things:-
  1.         The person himself or to say the human body.
  2.         The skill of doing labour with his body and the work of his hand.
Similarly, intellect too is an integral part of his personality and it plays vital role in deciding what works his body can engage into or what works his hands would do or in other words we can say that a person intellect is exclusively his own.

Every object whether it is material/ non material, owns its existence to ideas and hence to the origin of ideas, that is intellect. This also holds further that any property in the generic sense, which can claim a proprietary right, is called Intellectual Property.

Further, if intellect or intellectual works is one’s personal characteristic or property, then anything that is the outcome of this application of his intellect is equally his own. This provides the law to give a person the right to own what he has created or produced. And this proprietor right over a product produced out of his intellect is called Intellectual Property Right.

The Twenty First Century is a century of knowledge, indeed the centaury of the Intellect. A nation’s ability to translate knowledge into wealth and social good through innovation hold the key to creation as well as processing of knowledge consequently issues generation, evaluation, exploitation of Intellectual Property would become critically important all over the world. Intellectual Property can be characterized as the property in Idea or their expression. It’s a creation of mind for example:  A technological Innovation, a poem or a design. It protects the rights of individuals and business who have transformed their ideas into property by granting rights to the owner of those properties.

The need arose for laws to protect such kinds of Intellectual Property laws to protect the various forms of Intellectual Property like Trade Marks, copy Rights, Designs, Patent & Geographical Indication.

For instance Tata Nano car: The entire car and its innovative engineering are protected by patents. The name “TATA NANO is protected by Trade Marks”. The design of car has design protection and all the pamphlets made for advertisement of car are protected of copy right.

The rights have been modified and new provisions have been created in order to cover new areas of Science and Technology like Information Technology, Biotechnology and Non Service Sector.  It may be observed that World Trade Organization (WTO) agreement on Trade-Related Aspects of Intellectual Property Right( popularly known as TRIPS) has extended minimum standards for protection globally. Hence India is under a pressure to increase the level of Intellectual Property protection in its own regime, based on standards in developed countries.

There are various forms of IPR. The Trade Related Aspects of Intellectual Property Rights (popularly known as TRIPS) in the Agreement of the World Trade Organisation (WTO) recognises seven forms of IPR, namely, patents, designs, trademarks, copyrights, geographical indications, integrated circuits and trade secrets.

Patents: These are legal rights granted for new inventions employing scientific and technical knowledge. Example: A new drug for the treatment of AIDS and a new cell phone.

Industrial Designs: A design is an idea or conception as to the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article, two or three-dimensional or both, by any industrial process or means which in the finished article appeal to and are judged solely by the eye or product. Examples: Designs as applied to shoes, TV, textiles.

Trade Marks: A trade mark is a visual symbol in the form of a word, device or label applied to an article of manufacture or commerce with a view to indicating to the public the origin of manufacture of the goods affixed with that mark .It distinguishes such goods from others in the trade. Examples: Coca Cola in soft drinks, SONY in electronic goods.

Copyrights: A copyright is basically the right to copy and make use of literary, dramatic, musical, artistic works, cinematographic films, records and broadcasts. It is a proprietary right and comes into existence as soon as the work is created. The concept had its origin in the Common Law. Subsequently it came to be governed by the statutory laws of each country. Examples: Poems, artistic drawings, paintings, computer / programs.

Protection for new plant varieties: TRIPS provisions of the WTO Agreement make it mandatory for member countries to provide protection for new plant varieties. Examples: New variety of rice or wheat. The provisions have given member countries two options for providing protection to new plant varieties —:

(i) Under the patent law itself and;
(ii) By a separate system (called Sui generis system).

Geographical Indications: These are indications that identify goods as originating in the territory of a country, a region or a locality in that territory, where a specific quality, reputation or other characteristic of the goods is essentially attributed to their geographical origin. Examples: Darjeeling tea, Kancheepuram sari.

Indian Government has taken a comprehensive set of initiatives to modernize the intellectual property administration in the country in view of the strategic significance assumed by intellectual property in the context of globalisation and liberalization of the Indian economy and the increasing administrative steps to create a modern and facilitative set up. The Designs Act, 2000, the Trade Marks Act, 1999 and the Geographical Indications of Goods (Registration and Protection) Act 1999 have already been enacted to harmonize the Indian IP administration with the global system. In the Ministry of Commerce and Industry, the office of the 'Controller General of Patents, Designs and Trade Marks (CGPDTM)' has been set up under the Department of Industrial Policy and Promotion.

It administers all matters relating to patents, designs, trademarks and geographical indications and also directs and supervises the functioning of :-
  •     The Patent Office (including Designs Wing)
  •     The Patent Information System (PIS)
  •     The Trade Marks Registry (TMR), and
  •     The Geographical Indications Registry (GIR)
Besides, a 'Copyright Office' has been set up in the Department of Education of the Ministry of Human Resource Development, to provide all facilities including registration of copyrights and its neighbouring rights.

As far as issues relating to layout design of integrated circuits are concerned, 'Department of Information Technology' in the Ministry of Information Technology is the nodal organisation. While, 'Protection of Plant Varieties and Farmers' Rights Authority' in Ministry of Agriculture administers all measures and policies relating to plant varieties.

For complementing the administrative set up, several legislative initiatives have been taken. It includes, the Trade Marks Act, 1999; the Geographical Indications of Goods (Registration and Protection) Act 1999; the Designs Act, 2000; the Patents Act, 1970 and its subsequent amendments in 2002 and 2005; Indian Copyright Act, 1957 and its amendment Copyright (Amendment) Act, 1999; Semiconductor Integrated Circuit Layout Design Act, 2000; as well as the Protection of Plant varieties and Farmer's Rights Act, 2001.

A human endeavour which promotes Social, Economical, Scientifical or Cultural Development of the society must be encouraged and the creator or the innovator needs to be rewarded by suitable legal protection for his intellectual creation. Consequently Intellectual Property Right are those legal rights which govern the use of creation of Human Brains. Protection of Intellectual Properties is a very critical element in the offshore business model. There have been many cases where companies have lost their position in the market due to the loss of intellectual property. Understanding the country’s IP Rights and following the best practices described in this paper can drastically reduce the risk of losing the company’s intellectual property. Commitment to protect the intellectual property of a company should be developed and nurtured at all levels of the organization.

The bottom-line is that India considers itself a responsible member of the WTO which suggests that international class IPR protection should be in place. For instance even Bill Gates, the chief executive officer of Microsoft Corporation, has distinguished India as a most promising base for software development. If such an IPR-conscious business leader like Gates is of this opinion, one can only conclude that India's IPR scene is no deterrent. And in near future India will formulate more effective law in order to cope up with new areas which are yet to come in the field of IPR. Intellectual Property Rights (IPRs) play an important role in the social, economic and cultural development of a society. Intellectual Property Rights in India (IPRs in India) are gaining lot of attention and importance in India. India has begun to see some positive results as awareness of the need for greater IP protection has increased. India must continue to improve its IPR protection, or risk being left behind as other countries in the developing world implement protections and build their own knowledge based economies.what is a patent.

Biswajit Sarkar