The last five years have witnessed a radical improvement in the intellectual property (IP) climate in
India. From IP cases being regarded as ‘luxury litigation’, not only are the judiciary and the policy makers now proud to be associated with the India IP boom, but even the lay person on the street is focusing on IP creation rather than counterfeiting. This is good news for foreign companies expanding into
India who are looking for reassurance that their intangible assets will be protected. Despite being limited to setting up joint ventures with Indian companies, the rate of international companies moving into
India is gathering pace. Record numbers of foreign brands have opened outlets in
India over the last five years and multi-brand retailers like Wal-Mart are now joining the fray. Many companies have set up research and development centres, including AstraZeneca and IBM.
Having joined the World Trade Organisation in 1995, India has implemented the majority of its obligations under the Agreement on Trade Related Aspects of IP Rights including legislating on geographical indications, e-commerce, semi-conductor integrated circuit layouts and protection of plant varieties. It has also amended its existing statutes governing trademarks, patents and designs.
Principles governing trademark protection and enforcement are well-established and the Indian courts’ readiness to find foreign brand owners’ marks to be well-known and to recognise trans-border reputation is striking. Volvo, Intel, Toshiba, Benz, Dunhill, and Sony have been held to be well-known marks by Indian courts.
The patent protection regime in India has not thrown up such positive results and has faced global scrutiny against the backdrop of the controversy over the Patents Act 2005, which provides that a new form/use of a known substance is not patentable unless it enhances its efficacy. This contrasts with the position in Europe which allows a patent in respect of a new form/use of a known substance provided what is claimed is novel/inventive without having to prove enhanced efficacy. The constitutional basis of this section was unsuccessfully challenged by Novartis in August 2007.
The Indian Civil Procedure Code was revised in 2002; a development which can be compared to the UK Woolf reforms. The Indian reforms have reduced the average lifespan of a case from seven to 10 years to two to three. Pursuant to a recent move towards popularising alternative dispute resolution (ADR), mediation cells have been set up in a number of district courts and High Courts in India. A recent spurt of referrals of IP disputes to mediation has seen unprecedented success. Like the UK courts in IP disputes, the Indian courts have stopped short of ordering parties to mediate but step in to provide the seal of approval every time an order is passed pursuant to mediation, so that the same merges with and becomes the order of the court. An interesting facet of Indian ADR is the possibility of obtaining novel orders. As counterfeiters often cite lack of funds as a reason for being unable to pay damages claimed, ADR provides an opportunity for trading off some part of the money claim with, for example, community service. In a recent case, Microsoft was able to secure an undertaking from ‘pirates’ that they would participate in Microsoft’s anti-counterfeiting campaign to talk about the futility of their experiences as counterfeiters and their reformation. Another example is where the proprietor of an establishment by the name of Brands R Us, faced with legal notices and the threat of impending lawsuits by international brand owners/retailers, consented to undertake community service, and chose to work for a children’s charity in a settlement of Polo Corporation v Jerry Arora.
The range of relief available from the courts for claimants in Indian IP enforcement actions is encouraging, with recent improvements in damages awards. Interim remedies include the Indian equivalent of ‘John Doe’ (‘Ashok Kumar’) orders against unknown infringers, ‘Anton Pillar’ orders to search a defendant’s premises for infringing goods and/or documents and their preservation and ‘Mareva’ injunctions to freeze accounts. There is no requirement for claimants to give a cross-undertaking in damages to the defendants to cover any losses if they eventually lose at trial, which may explain why interim remedies are sought and obtained as a matter of course in India in a majority of counterfeiting cases.
Since the first damages award in an IP matter in Time Incorporated v Lokesh Shrivastava [2005], awards by Indian courts have increased to sums such as $60,000 (£29,180) to Hilton International and $44,500 (£21,000) to Cartier in trademark infringement claims, as well as awards of $15,000-$50,000 (£7,300-£24,700) to Microsoft in anti-counterfeiting actions. These should be an incentive to foreign companies to take action, in the knowledge that it will bite financially and act as a deterrent for potential infringers. Only a limited recovery of legal costs is possible based on a fixed scale of awards. This is mitigated, however, by the fact that the costs of litigating are low. A straightforward trademark infringement action would cost $20,000-$30,000 (£9,900-£14,800) to take to a final decision. This is in marked contrast to the costs of litigating in the UK.
Foreign brand and patent owners can take comfort in the developed legal routes for enforcing IP. These are being deployed by rights-holders to considerable effect in conjunction with or instead of the administrative enforcement routes which have also recently been strengthened by a new Customs seizure regime.
Shwetasree Majumder is a partner in the New Delhi office of Anand and Anand, and Lucy Harrold is an IP partner in the commercial litigation group at Stephenson Harwood.
