Thursday, December 20, 2007

Indian drug majors in line for patent protection

It’s not just global drug discovery majors that are seeking patent protection. Out of the 8,000 drug patent applications in India filed between 1995 and 2004, about 40% are from Indian pharma companies. Domestic majors such as Ranbaxy Laboratories, Dr Reddy’s Laboratories and Cipla have filed over 100 patent applications each.

Between 1995 and 2004, the Indian patent office received over 8,000 patent applications related to medicine. Ranbaxy Laboratories, India’s largest drug maker, has claimed protection for 112 drugs during the period, including few which are at various stages of clinical development. In addition, Ranbaxy has also filed 30 patents in 2006, including seven for new drug delivery systems (NDDS), which are in advanced stages of development.

Similarly, other pharma majors such as Cipla and Dr Reddy’s Laboratories have each sought protection for over 100 drugs, says Dr Amit Sengupta who reviewed the mailbox applications in India in collaboration with the health ministry.
However, many of these applications, both from global MNCs and Indian companies, are frivolous which may not qualify as a candidate for a patent. According to Professor Carlos M Correa, a former member of the World Health Organisation (WHO) Commission on Intellectual Property, Innovation and Public Health (CIPIH), many of the patent applications worldwide are merely ‘new laboratory techniques’ and therefore would not qualify for patents.

“The pipeline of discovery drugs are drying up. While there are around a million applications in the US, only 20 new chemical entity (NCE) got US Food and Drug Administration’s approval in 2005 compared to 51 in 1997,“ he said.
Companies are now merely tinkering with the existing drug and seeking patent applications for the same. Only 2-3 application from each of the Indian companies are serious contenders for a patent, Dr Sengupta added.

However, some innovator companies feel that there are many innovations which deserve patent protection. “Innovations are either patentable or non-patentable. Patent offices are getting mature to weed out those inventions which do not merit a patent and one should look at the actual data of patents rejected before a claim like this is made, “ Novartis India vice-chairman and MD Ranjit Shahani said.

Since India became trade-related aspects of intellectual property rights (TRIPS)-compliant in 2005, both global and Indian companies have rushed to claimed protection for new drugs or innovations. If drugs get patented, the innovator company will get exclusive marketing right for 20 years. Few global companies have already got patent for drugs in cancer, anti-Aids and other therapeutic areas.

WIPO grants global search status to India Patent Office

Indian industrial and product innovators will be able to apply for global patents from the home country with World Intellectual Property Organisation granting Indian Patent Office the prestigious status of 'International Searching Authority'.
"The Indian Patent Office has been granted the status of International Searching Authority (ISA) and International Examining Authority a prestigious status given to a few countries," an official said.
India has been given the new status by Geneva-based WIPO after the proposal was cleared by the members of the Patent Committee Union Assembly recently.
As an ISA, major functions of the Indian Patent Office will be to approve or establish the title and conduct international searches.
India has modernised its patent offices using state-of-the-art information technology which has helped cut time in granting patents.

Patent Filings in India [Update]

The total number of patent filings by residents in India per million population was 3.40 in 2004-05 as compared to the world average of 250.72 worked out on the basis of the world population (6377.6 million) as per data given in the State of World Population 2004: United Nations Population Fund Report and the number of patents filed worldwide during 2004 (15,99,000) as per data given in World Intellectual Property Organisation (WIPO) Patent Report: Statistics on Worldwide Patent Activity, 2006 Edition.

The number of patents in force in India in 2004 was 6,406, while it was 1,82,385 in China. The world average of patents in force in 2004 was 846.71 worked out on the basis of the world population (6377.6 million) as per data given in the State of World Population 2004: United Nations Population Fund Report and the number of patents in force worldwide during 2004 (5.4 million) as per data given in World Intellectual Property Organisation (WIPO) Patent Report: Statistics on Worldwide Patent Activity, 2006 Edition.

There were a total of about 5.6 million patents in force worldwide in 2005 as per World Intellectual Property Organisation (WIPO) Patent Report: Statistics on Worldwide Patent Activity, 2007 Edition. However, this number includes patents obtained in different countries for the same invention also. Therefore, it will not be feasible to draw a conclusion on the proportion of patents in force in India vis-à-vis those in force worldwide. However, the number of Patents in India in force was 6857 in 2005.

The efforts made by the Government to strengthen the processes that help creation of Intellectual Property Rights in India are as under:

(i) A scheme of Modernisation of Intellectual Property offices at a cost of Rs.153.00 crore was implemented during the 9th and 10th Five Year Plans for Infrastructure development, computerization, human resource development and training and awareness.

(ii) Four new integrated Intellectual Property Offices were set up in Delhi, Kolkata, Chennai and Mumbai.

(iii) Work for the setting up of the National Institute of Intellectual Property Management at Nagpur has commenced.

(iv) E-filing of Patent applications has been made operational with effect from 20th July, 2007.

(v) Seminars/Conferences/Workshops at national and international level have been organized for creating awareness and promotion of Intellectual Property Rights.

Memoranda of Understanding (MoU) have been signed between India and France, United States of America, United Kingdom, European Patent Office, Japan, Switzerland and Germany for cooperation in the field of Intellectual Property Rights.

(vi) This information was given by Dr. Ashwani Kumar, Minister of State for Industry, in a written reply in the Rajya Sabha today.


n recognition of the efforts made by the Government of India in modernising its intellectual property systems as well as infusing transparency and openness in the system, the 170 plus Member States of the World Intellectual Property Organization (WIPO), in the recently concluded General Assemblies of WIPO, endorsed India’s recognition as an International Searching Authority (ISA) and an International Preliminary Examining Authority (IPEA). “The recognition of India as an ISA/IPEA puts India in a coveted league of only 15 nations and organization which are currently recognized at a global level by ISA/APEA”, Shri Kamal Nath, Union Minister of Commerce and Industry, informed in a press briefing here today. He further said that it is a recognition of our efforts to recognise the intellectual property system as well as lay down benchmark for future milestones that we need to achieve.

The status of ISA and IPEA would be beneficial for India in several ways. Apart from the international recognition that our IP system would get, it would also generate revenues in the form of fees that would be provided to us for functioning as an ISA/IPEA. Being the only English speaking nation in the Asian region to be recognized as an ISA/IPEA would mean that several international applications received by WIPO under the Patents Cooperation Treaty would be sent to the Indian Patent Offices for search and preliminary examination purposes.

E-filing facilities for patents and trade marks applications was launched in July this year. In the last 3 years, several important milestones have been achieved in the field of Intellectual Property rights in India. The Patent Act was amended in 2005 in order to meet our international obligations. A Rs.153 crore modernization programme for augmenting the infrastructure and human resources in Intellectual Property Office, creation of awareness regarding IPRs and introducing IT enabled efficient systems was completed on 31 March 2007.

During the briefing, Shri Kamal Nath also informed that India has retained the Second place in A.T. Kearney’s 2007 Foreign Direct Investment Confidence Index, a position it has held since displacing the US in 2005. “India continues to attract investors in the high value-added services industries like financial services and informed technology. India is the 2nd most preferred location for investors in Asia and USA. However, for European investors, India has claimed the top slot, displacing China”, he further informed.
Background on IP/Trademark/Design/GIs

The Foundation Stone for a National Institute of Intellectual Property Management was laid in August, 2007 at Nagpur. The Institute is expected to be of global standards and would cater to training, research, education and would serve as an IP think-tank. A Rs.20 crore project has been approved for this purpose. The Institute is expected to be operational by the end of next year. The impact of the modernization programme is already self-evident. In the last 3 years, the number of patent applications have gone up three-fold and more importantly, the patents granted by four-folds. Similarly, there has been a steady increase in the number of trademarks applications being filed. The revenues generated by the Intellectual Property Offices gone up eight-fold in the last 3 years. This is 10 times more than the expenditure on these offices.

The registration of trademarks per annum, which is close to 1 lakh, has kept a pace with the filing. In a major effort to clear the backlog of patent and trademark applications, a total of 44,000 patent applications and more than 4.5 lakh trademark applications were cleared. A major effort is under way to digitize the patent and trademark records. Our effort is to digitize all records pertaining to 2 lakh plus patent and 6 lakh plus trademarks that have been granted so far. This exercise is expected to be completed by the end of 2008.

The rising trend has also been witnessed in the area of industrial designs where a record number of over 5000 applications were received last year. In the area of geographical indications, as on date, 46 GIs have been registered and over 100 applications are in the pipeline. Some of the most important GIs registered are Darjeeling Tea, Chanderi Saree, Pochampalli Ikat and Kangara Tea.

Bearing in mind the significance of designs in the competitive economic scenario, the Government of India announced the National Design Policy earlier this year. This Policy envisages the strengthening of design infrastructure in the country as well as the spread of design education. Further, we intend to establish a design Council as well as undertake efforts to brand Indian designs. To establish 3 more Institutes of Designs in the Southern, Eastern and Northern region of the country on the pattern of the National Institute of Design, Ahmedabad. Given the premier character of the NID, Ahmedabad, we are proposed to give NID the status a deemed university.

The Government of India has taken a decision to accede to the Madrid Protocol – an international system for registration of trademarks. Accession to the Madrid Protocol would given the Indian business community an opportunity to register their trade marks through a single application in as many as 80 countries.

A more ambitious second phase of modernization at a cost of Rs.300 crores is proposed to be implemented during the 11th Plan period. Under this proposal, it is proposed to further augment the existing infrastructure, establish a state-of-the-art of Trade Marks Office at Ahmedabad, procure international databases, establish online processing of IP applications, manifold increase in human resources particularly of patent and trademark examiners, launch a massive awareness campaign and sensitization programme which would cover all major stakeholders including industry, academia, judiciary, enforcement agencies, policy makers and State Governments.

Tuesday, December 18, 2007

Google launches 'knol' beta

Google has announced that it is developing a content service that will one day be a rival to Wikipedia. The announcement by the Service Engine giant came a few days back when the company announced that ‘Knol’ the name of the content service will be launched shortly to the general public in the coming next year. ‘Knol’ the company’s term for a unit of knowledge would be a repository of knowledge where readers would be able to read articles from various experts on different topics.

The online encyclopaedia is somewhat different from its rival Wikipedia. Wikipedia on the one hand does not acknowledge its contributors and other readers can edit the original content but Knol on the other hand would acknowledge its contributors and only the contributors would be allowed to edit their articles. Wikipedia is a non-profit ad-free content service whereas Knol would not be ad-free and the authors would be able to benefit from the advertisements placed in their respective pages.

Knol is an ambitious attempt by Google to streamline and organize information on various topics. With this new service anyone would be able to write a webpage on any topic and have it indexed in Google’s search engine. The good thing about this new venture by Google is that the authors would be paid for their contributions. Knol would revolutionize content development and create a platform for expert writers to contribute authentic articles for the benefit of the readers.

Thursday, December 13, 2007

Five things one should know about Web Sites [General]

1. Who Is The Person Behind the Web Site?
For top level generic domain names such as .com, .net and .org, go to or similar web sites like and enter the domain name for the web site into their search/whois functions. They may not give you the name of the person or company who registered the domain name, but they will likely give you the name of the local registrar. If they do, go to the web site of the local registrar and enter the domain name in question into the local registrar's search function. This should produce the name of the person or company who registered the domain name for the web site. For country-specific top level domains (for example, .ca), use Google or another search engine to identify a registrar in the applicable country (for example, to find a registrar in Canada enter the following key words: "Canada", "domain name" and "registrar") and then use the local registrar's search/whois function.
2. Content Can Cause Problems

If the content you are incorporating into your web site is not your original content, you almost always need to get permission to use it. If you use any portion of a popular song (even five seconds) on your web site without getting the appropriate rights, you could be infringing one or more person's rights in the song. Not all clip art is released into the world on the same terms and conditions. For example, some clip art providers prohibit the use of their images for commercial purposes.
3. Linking

Typically, a text-based link to another party's web site which opens the other web site in a new window is not problematic. Still, you should check the terms and conditions of the web site to which you wish to link to make sure that they do not prohibit or restrict links.
Additionally, if you place links to web sites which you do not control on your web site, you should make sure that the terms and conditions for your web site make it clear that you are not responsible for anything related to those web sites.
4. Hosting Agreements Come in Different Shapes and Sizes

At its most basic a hosting agreement requires the service provider to provid server or co-location space and a connection to a network (typically, the Internet). From there, there are many types of services which may also be purchased such as back-ups, on-site assistance, server management or application management. The nature of the materials hosted (for example, do they need to be highly available or could they be down a few hours a month) and the volume of the materials to be hosted also vary from situation to situation.
Basic hosting services for a small web site such as one which provides information about an upcoming family reunion can be acquired for less than $20.00 per month. The hosting agreement for such services will typically be short, non-negotiable and very biased in favour of the service provider. Hosting services for a small business' web site (when the small business does not depend on the web site for any significant portion of its business) will be somewhat more involved, and the hosting agreement should be more detailed and somewhat less biased than a basic hosting agreement. For example, it may include some service level commitments and warranties from the service provider. Hosting agreements for high traffic, high volume, web-based businesses and other web sites which must be available at least 99.999% of the time tend to be long, detailed and aggressively negotiated.

5. Terms and Conditions - One Size Does Not Fit All

Although there are elements which are common to most sets of terms and conditions for web sites, there is no single set of terms and conditions which is appropriate for every web site. There are a number of factors which affect the contents of these documents including: (i) the types of content forming part of the web site; (ii) the ways in which visitors to the web site are encouraged to interact with it; (iii) the target audience for the web site; and (iv) the location of the server on which the web site resides.


In December 2004, Cheap Tickets Travel Inc. ("CTT") initiated a suit alleging that Inc. and Inc. carrying on business as (collectively, "") was infringing two of CTT's registered trademarks: (i) "Cheap Tickets"; and (ii) the combination of "Cheap Tickets" with a design. responded by commencing a proceeding for the expungement of both trademarks based on the following claims: (i) at the time of their registration, neither trademark was registrable because both were clearly descriptive; and (ii) at the time of the application, neither trademark distinguished CTT's services from other travel agencies selling discounted tickets. The first claim relies on section 12(1)(b) of the Trade-Marks Act which provides that a trademark is registrable if it is not: "clearly the English or French language of the character or quality of the wares or services in association with which it is used or proposed to be used". The second claim relies on section 18(1)(b) of the Trade-Marks Act which provides that a trademark is invalid if it "is not distinctive at the time proceedings bringing the validity of the registration into question are commenced".
Lending credence to the saying, "A good offense is the best defense", the court struck both trademarks. None of the arguments presented by CTT overcame the court's initial impression that both trademarks were clearly descriptive of a service the purpose of which was to provide travel services at discounted rates. In response to CTT's argument that the trademarks were not clearly descriptive because CTT provided other services, the court stated that a clearly descriptive trademark is still clearly descriptive even if the description is not absolutely complete or accurate. The court considered the fact that the word "tickets" had been disclaimed in both trademarks and the word "travel" had been disclaimed in the second trademark, but found the consequences of restricting the market's use of the word "cheap" inappropriate.
Having found that both trademarks were clearly descriptive, the court did not consider whether or not either had lost its distinctiveness.
Costs were awarded to
The original infringement action (Cheap Tickets and Travel (Canada) Inc. v. Inc. et al, 2005 BCSC 815 (CanLII)) can be found at: .

The application for expungement ( inc. ( v. Cheap Tickets and Travel Inc., 2007 FC 635 (CanLII)) can be found at:
A motion relating to costs can be found at:

The incompatibility problem - General Public License; New Release

The General Public License version 3 (GPLv3), released by the Free Software Foundation on June 29, 2007, is the latest version of the most widely used "open source" license. It is based on the open source movement which is predicated on the "free" sharing of source code. Prominent free software programs licensed under the General Public License include the Linux kernel and the GNU Compiler Collection (GCC).

While the GPLv3 (like General Public License version 2 (GPLv2)) is a license which requires a person who conveys a covered work (either the original program subject to GPLv3 or a work based on the program) to also convey the machine-readable corresponding source code under GPLv3, the GPLv3 differs from the GPLv2 in a number of ways. The GPLv3 includes an express rather than an implied patent license in connection with the open source code being licensed. Additionally, the GPLv3 includes amendments designed to counter certain practices. The first practice is "tivoization", designing a product so that it fails if the user makes any changes to the open source code included in it. Section 11 of the GPLv3 is intended to counter the practice of using "discriminatory patent licenses". A patent license is "discriminatory" if it prohibits the exercise of, or is conditioned upon the non-exercise of, one or more of the rights granted under GPLv3.

It should also be noted that since the GPLv2 contains a clause which requires programs which incorporate code licensed under the GPLv2 to be licensed under the GPLv2, and the GPLv3 does the same, the licenses are incompatible. It is not possible to combine code licensed under the GPLv2 with code licensed under the GPLv3 within a single program.

Networking, Technology, Nudity and Copyright [Google, Inc. v. Perfect 10, Inc.]

Perfect 10, Inc. ("Perfect 10") alleged that Google, Inc. ("Google") directly and secondarily infringed Perfect 10's copyrights in certain images of nude models. The allegations were based on the operation of Google Image Search, a search engine for images. The claim of direct infringement was based on Google Image Search's use of thumbnails of the copyrighted images. Specifically, using an automated process, Google identifies an image on a web site, captures a reduced-size and reduced-resolution copy of the image, caches the copy on its servers, presents the copy in response to user's searches and responds to a user clicking on a search result by creating a window with two frames: one which displays the search result including the reduced-size image and one which displays the web site where the full-sized version of the image is located. The allegations of secondary infringement were -two fold: (i) vicarious infringement based on the existence of and Google's failure to exercise a practical, legal right to stop or limit others from infringing Perfect 10's copyrights; and (ii) contributory infringement based on Google's distribution of a product which was not capable of a significant non-infringing use and Google's active encouragement of infringement.

The Court of Appeals concluded that Google was not responsible for displaying the full-sized images when a user clicked on a search result: the publisher of the web site which incorporated such images was. Consequently, Google did not directly infringe Perfect 10's copyrights with respect to the full-sized images.

The Court of Appeals found that Google's use of the cached copies of the images was a direct infringement, but it was also found to be a fair use partly because Google use of the copyrighted images was transformative (i.e. for a purpose other than the purpose for which Perfect 10 used the images) and of benefit to society.

Perfect 10's claim of vicarious infringement was unsuccessful. Google's contracts with its advertisers did not amount to a legal right to control their behaviour and Perfect 10 did not identify any other practical means for Google to do so.

Even though the Court of Appeals concluded that Google's search engine had significant uses beyond assisting others to infringe copyright, the question of contributory infringement was remanded to the District Court because it had not considered the following questions: (i) whether or not Google had actual knowledge that infringing materials were being made available through its search engine; (ii) whether or not there were simple measures which Google could take to prevent further damage to Perfect 10's copyrighted images; and (iii) if such measures existed, whether or not Google had failed to implement them.
The decision of the District Court is available at:$file/0655405.pdf?openelement.

The decision of the Court of Appeals is available at:

Tuesday, December 11, 2007

Disparities Seen In Developing Countries’ TRIPS Implementation

There are considerable differences in developing countries’ implementation of the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and their use of flexibilities in it, according to speakers at a recent South Centre event.

Although developing countries have strong concerns about the TRIPS agreement, a significant number of them have implemented even higher IP standards than those required by TRIPS, according to research on 107 countries presented by Carolyn Deere, director of the Global Trade Governance Project at the University of Oxford.

The 5 December panel entitled “The Implementation Game: Developing Countries; the TRIPS Agreement and the Global Politics of Intellectual Property” was part of a seminar series at the South Centre.

Deere classified the countries studied into three groups: the TRIPS-plus countries (countries that went beyond their TRIPS obligations); countries which made mixed use of TRIPS flexibilities; and countries that are still in the process of reforms to meet TRIPS commitments.

Based on analysis of TRIPS-based legislative reforms, the TRIPS-plus countries range from Mali and Cambodia to the Dominican Republic, Mexico and Peru. There were 14 least-developed countries in the list. Deere’s survey showed that there is no clear correlation between the strength of IP standards and the Gross Domestic Product per capita. Some of the poorest countries in the world, like Niger, are among the TRIPS-plus countries, Deere said.

The explanation for the variation between developing countries seems to lie in the interplay of domestic politics and international pressure, Deere said. Developing countries are influenced by the degree of pressure applied by international donors, investors and trading partners, she said, but added that this does not explain the range of variation. Some countries, such as Brazil, which have been subject to pressures from the United States are not in the TRIPS-plus cluster, but rather make mixed use of flexibilities, she said.

The Implementation Game: A Battle for Influence

Two sides have been debating on TRIPS implementation: one in favour of swift compliance and limited use of flexibilities, and the other advocating a more flexible approach tailored to specific national development priorities. The first group uses coercive pressures such as trade deals and threats, WTO disputes and diplomatic demands, she said. To foster a “pro-IP climate”, this group also used the “power of ideas”, turning to the media, public outreach, research, monitoring and capacity building. The second group lacks the means to exert coercive pressure, Deere said, but nonetheless harnesses “ideational” power, including for example by running campaigns for an end to “TRIPS-plus” pressures that impact health and access to knowledge. To win over developing country decision-makers, the two groups engaged in a “research war” and a “competition” in the area of capacity building, she said.

According to Deere, politics at the national level contribute to the variation, either amplifying or filtering the influence of external pressures. In most developing countries, a lack of expertise and consultation within government, and the small number of active local interest groups limit national debate about TRIPS implementation. Instead, most governments defer to national IP offices for direction, she said, which in turn are strongly influenced by the largest donors, such as the World Intellectual Property Organization (WIPO). There also is lack of coordination between the national capitals and international government representatives, she said.

Deere’s research is expected to be published in a book in 2008.

TRIPS Flexibilities Difficult to Implement

Boumediene Mahi from the permanent mission of Algeria to the UN and coordinator of the African Group to WIPO, invited to comment on Deere’s presentation, added that most African countries had inherited colonial IP systems and had joined the TRIPS Agreement without having participated in negotiations. Moreover, he said, “there was big pressure on the developing countries during the TRIPS negotiations and it is still the case.”

Ignorance of the flexibilities and the way to use them has prevented countries from benefiting from them. Sometimes, “sub-regional offices such as the African Intellectual Property Organization made a decision that was applied in individual countries without them having the possibility to discuss the decision at national level,” said Mahi.

He also noted that the technical assistance to use flexibilities was essential. “It is only over the last two years that WIPO has started to deliver technical assistance” that refers to the flexibilities but there is still a number of least developed countries that do not know how to use them. Mahi said that the new WIPO Development Agenda promotes the idea of balanced protection: encourage innovation while protecting the public interest, which he said is an encouraging first step toward more fairness.

For Christoph Spennemann, legal expert of the intellectual property team at UN Conference on Trade and Development, there is a strong link between the degree of expertise and the use of flexibilities in developing countries. The countries which participated in the Uruguay Round of WTO negotiations that led to TRIPS make use of flexibilities and are aware of their implications while in developing countries that played little role in the negotiations there is a higher protection level.

The TRIPS-plus countries are sometimes more familiar with the potential benefits of IP than the challenges it can present, Spennemann said. He cited the example of local producers in West African countries who are keen on pharmaceutical patents, but lack awareness of the impact of IP on the public domain. Spennemann noted these producers believe that stronger IP protection can attract foreign investment but ignore the importance of flexibilities as a potential attraction for investors in generic industries. As a result, the pre-TRIPS colonial laws remain untouched or are modified into TRIPS-plus, Spennemann said. Those countries also have to face a “race of technical assistance providers to win the game,” he said. To attain better results in the use of flexibilities, he stressed the importance of IP capacity building that takes into account both development objectives and flexibilities.

Are domain name registrars responsible for intellectual property infringement?

A recent case filed by Dell against a number of domain tasters and their registrars attempts to hold the registrars liable for infringing some of Dell’s intellectual property. The claims that are relevant to domain name registrars allege that at least 3 registrars created a chain of registrars who took advantage of the ICANN 5 day redemption period to profit off Dell’s trademarks. Dell alleges that these registrars allowed domain tasters to redeem domain names at one registrar and subsequently register it at an affiliated registrar. This would preserve the taster’s interest in the domain name, and allow the affiliated registrars to share in any click through revenue created by the registration of the name.

Without going into the technical legal arguments raised by this case, a suit against domain name registrars has serious implications for hosts and other internet infrastructure providers. Dell’s arguments are very similar to copyright infringement claims made in the early days of the web: that those who facilitated the infringement of the copyrighted work were liable as third parties since they facilitated the infringement, and profited from it through the fees they collected. While the facts in Dell’s case are pretty sensational (a chain of registrars profiting off a nuance in ICANN rules), the case shows that transparent attempts to exploit legal loopholes, are often only temporarily successful. In this case, setting up a chain of (allegedly) related registrars to profit off of a registered trademark merited a swift response from Dell.

So what does this mean for hosts and other Internet infrastructure providers? The first lesson is that the doctrine of third party liability for intellectual property infringement is alive and well. This means that you need to remain aware and vigilant about your business activities. This vigilance is important particularly in the area of trademarks, where, unlike copyrights, there is no “safe harbor” for businesses who are simply links in the chain of bad acts of customers or third parties. A second lesson relates to Domaining. While initially a suspect business, domaining has become a legitimate part of the Internet. Hosts and other Internet infrastructure providers need to be aware that registering domain names involves a different risk assessment than other business efforts. Because domainers tend to be very creative in their business, and business creativity often requires a higher level of legal analysis, those who provide business services to domainers need to examine whether the processes and procedures they have put into place effectively isolate the risk that these new customers may pose to their business.

Sunday, December 09, 2007

Indian patent filings lag behind global average

India lags behind the world average in patent filings, with its total number of filings by residents being just three per million people in its population, compared with the world average of 250, according to the World Intellectual Property Organization Patent Report: Statistics on Worldwide Patent Activity.

"The number of patents in force in India in 2004 was 6,406, while it was 182,385 in China, and the world average of patents in force in 2004 was 84,671, worked out on the basis of the world population (6,378 million), with the number of patents in force worldwide during 2004 being 5.4 million," according to the Indian federal ministry for commerce and industry.

The global patent numbers include those obtained in different countries for the same invention, therefore it is not possible to arrive at a conclusion on the proportion of patents in force in India vs. those in force worldwide. However, the number of patents in force in India was 6,857 in 2005, the ministry said in a statement.

The Indian government has in recent years tried to strengthen the processes that help create intellectual property rights with a scheme of modernization of intellectual property offices at a cost of nearly $40 million for infrastructure development, computerization, human resource development and training and awareness.

A National Institute of Intellectual Property Management is being set up in Nagpur in central India, with four regional offices and agreements reached with France, the United States, the U.K., the European Patent Office, Japan, Switzerland and Germany for cooperation in the field of intellectual property rights.

March-In Rights, Domestic Manufacture, and Inventor Royalties under Bayh-Dole

According to Stephen P. Rothman in "Investing in university spin-out companies," the U.S. Bayh-Dole Act allows a federal agency that funded an invention to require the patent holder to grant a license to a responsible applicant on reasonable terms. If the patent holder refuses, then the federal agency can grant a license itself under what are referred to as "march-in rights." However, "march-in rights have never been exercised and appear unlikely to be exercised in any realistic scenario,"writes Rothman, partly because the law directs federal agencies not to exercise march-in rights unless the action is necessary:
  • "Because the patent holder is not taking effective steps to achieve practical application of the invention,
  • "To alleviate health or safety needs which are not reasonably satisfied by the patent holder,
  • "To meet requirements for public use specified by federal regulations not reasonably satisfied by the patent holder; or
  • "Because an exclusive licensee has failed to give preference to U.S. manufacturing where that would be required."

Rothman goes on to concisely summarize several written decisions of the NIH that he says "display a keen awareness that exercise of march-in rights could disrupt the incentive for commercialization of federally funded research, and thereby undermine attainment of the principal purpose of the Bayh-Dole Act."

His artcle also sheds light on the law's preference for exclusive licensees to manufacture in the United States:

An exception applies if domestic manufacture is not commercially feasible, or if the university tried unsuccessfully to find a licensee that was likely to manufacture in the U.S. To take advantage of one of these exceptions, a waiver must be obtained from the agency that funded the research.

. . . There is some difference between the federal agencies, with NIH having a reputation for a streamlined waiver process, and a willingness to grant waivers fairly freely, particularly if there is reason to believe that foreign manufacturing will allow a medical product to be made available to patients at a lower cost. The Department of Defense, not surprisingly, may be somewhat less quick to agree to foreign manufacture, particularly for a sensitive military product.

. . . One could take the position that this is not an exclusive license, though the issue is not free from doubt. Another approach involves interpretation of the requirement to manufacture "substantially in the United States." There is no clear percentage requirement, nor is there guidance from the Department of Commerce or other sources on what "substantially" means. . . . [However, t]he two approaches described above leave some risk of challenge . . . .

Bayh-Dole further requires patent owners to share a portion of any royalty payments with the inventor or inventors. "The amount of the inventor's share is not set by law, and varies from one institution to the next." But Rothman cautions, "If the inventor is an officer of the spin-out company, there is a potential conflict between the interests of the inventor and the investors that needs to be managed."

Finally, Rothman gives his insight as to why universities typically will not agree to trade secret license terms that would prohibit publication of research findings:
A typical university license or joint development agreement provides a limited delay of publication (30 - 60 days) during which the licensee can determine whether to file for patent protection. Even if universities were willing to adopt restrictions on information flow (which they are not), university laboratories are generally not set up with the kind of procedures that commercial enterprises routinely use to establish trade secret status, such as: preparing and following a written trade secret protection policy; limiting access to the portion of the facility where trade secrets are stored; requiring visitors to sign in and out; requiring all participants to sign confidentiality agreements, etc.

Tuesday, December 04, 2007

China imposes stiff penalties for online piracy

New regulations go into effect July 1 in China targeting distributors of unauthorized content online. The regulations, which carry a maximum administrative fine of approximately US$12,000, target search engines like Baidu, which are the backbone of online file sharing in China, as millions of users can search the various Chinese search engines for links to thousands of unauthorized copies of songs and movies. quotes one analyst as saying that “Baidu will be under a lot of pressure to stop offering links to illegal MP3 files and may have to stop their MP3 search service.” Stop offering links to illegal MP3 files? I don’t see it. Providing links to unauthorized content is a cornerstone of Chinese search engine revenue–not just for Baidu, but for all the Chinese search engines. A $12,000 fine is not going to intimidate any search engine; they’ll just chalk it up to the cost of doing business.

But they’re painted into a corner, and effectively, copyright owners have forced their hand. These search engines want to go legit and play ball with copyright owners. But if Baidu were to give up its MP3 links, as the analyst quoted above suggests, they’d be committing suicide. The other Chinese search engines would gladly take Baidu’s share of the music search traffic, administrative fines and all. Copyright owners are not going to win a shoving match with search engines.

But, in the words of Obi Wan Kenobi, “You can’t win. But there are alternatives to fighting.” For example, search engines have offered to give copyright owners a portion of their ad revenue in return for licensing the content, but the major entertainment companies will have none of it. Some Chinese record companies–like Taihe Rye, a successful domestic Chinese label–recognize that online piracy is a fact of life and business, so Taihe has made special arrangements with Baidu to clamp down on pirate links for the first two weeks after a new release. This allows Taihe to capture the majority of its expected revenue from a release while not eviscerating Baidu’s revenue or market share. $12,000 fines won’t do it. Frankly, even bigger penalties are unlikely to have much effect. But copyright owners have alternatives.

Saturday, December 01, 2007

Property, on the decline

The implications are enormous and far-reaching. The capitalist economy was founded on the concept of possessing and exchanging property in the market. The word market first appeared in the English language in the twelfth century.

It referred to the physical space set aside for the sellers and buyers to exchange goods and livestock. By the late 18th century, the term came to be used to describe the abstract process of selling and buying.

The marketplace was a pervasive force in the lives of people. From their childhood years, people learnt that in the marketplace everything was for sale and that everything had a price. When people came of age, they were inducted into the dark side of the market with the warning caveat emptor, meaning �let the buyer beware�.

Buying cheaper, selling dear

People learnt to live by the rules of �the invisible hand� of the market; and they continually honed their lives to the task of buying cheaper and selling dear. People were indoctrinated to believe that their status in the society was determined by the extent of the property they possessed.

Now, the foundation of modern life is beginning to disintegrate. The institution that once drove men to ideological battles is slowly ebbing away in the wake of a new constellation of economic realities. In the new era, markets are making way to networks. Ownership is gradually being replaced by connectivity. The physical exchange of material goods is yielding place to the network access. Ownership of physical capital is increasingly being marginalised by the emerging economic process. Intellectual capital is the driving force of the new system. Concepts, ideas, and images - not things - are the intrinsic items of value in the new economy. Wealth is no longer related to physical capital. It lies and lives in human imagination and creativity. Businesses are already well along the way towards the transition from the collateral to connectivity. They are selling off their real estate, shrinking their inventories, leasing their equipment, and outsourcing their non-core activities in a race to rid and reduce needless and inessential physical property.

Owning things is outdated and out of place in the more ephemeral and fast-paced current economy. In the contemporary commercial world, most things required to run the business are borrowed. In the era of markets, people who amassed physical capital exercised control over the exchange of goods between sellers and buyers. In the era of networks, people who amass intellectual capital exercise control over the terms and conditions by which consumers secure access to critical ideas, knowledge, and skills.

Possession makes no sense

Perhaps, a few years from now even the very idea of property may become anachronistic. Ownership is inadequate to adjust to the lightning pace of the nanosecond culture. In a world of customised production, continuous innovation, constant upgrades, and ever narrowing product life-cycles, everything becomes obsolete and outdated almost as soon as it enters the market. Possession and property in an economy characterised by perpetual change make no sense. The time has come for business to realise and reconcile to the declining role of property.