India Business Law Journal – April 2012

One step forward, two steps back

All too often good laws are undermined by weak implementation and poor enforcement

Take intellectual property (IP), a field in which India is often praised for its well-developed laws and regulations. Is the robust legislative framework enough to make IP owners comfortable? Apparently not.

“IP holders are on the defensive,” laments Mohan Dewan, the managing partner at RK Dewan & Co in Mumbai. The “courts are continuously favouring the infringer,” he says.

“Only the courts in the urban areas are IP savvy,” adds Gunjan Paharia, the managing partner of Zeus IP. “The district courts are still a problem.”

This month’s Cover story investigates the plight of domestic and international IP owners and poses a fundamental question: can IP be owned in India?

On paper, the answer would appear to be yes. However, as our coverage reveals, problems creep in when it comes to the interpretation, implementation and enforcement of the various laws and regulations. This is not good news for IP owners – domestic or international – many of whom remain anxious about the level of protection afforded.

High profile blunders offer little in the way of reassurance and often overshadow any progress that is made. Last year, for example, the Trade Marks Registry was forced to admit that it had lost 44,000 files. This year, just as the country’s courts were finally winning praise for getting to grips with complex IP concepts and the Trade Marks Registry and Patent Office were upgrading and modernizing their systems, the Indian government’s own designers achieved global notoriety for a public health warning on cigarette packets that allegedly contained a picture of John Terry, an English football player, that was used without his permission.

Morale among IP owners may have suffered a fresh blow as a result of the Patent Office’s recent decision to grant a compulsory licence on an anti-cancer drug patented in India by Bayer to an Indian generic drugs manufacturer. Our coverage of this controversial move analyses the order in detail and asks whether it may have set a precedent for more similar moves (Sharing the medicine). The conclusion: India’s Patents Act does allow for such an eventuality.

This chilling reality will no doubt weigh heavily on the minds of delegates at the International Trademark Association’s (INTA’s) 134th annual meeting in Washington DC, between 5 and 9 May. India Business Law Journal and its sister magazine China Business Law Journal are proud to be media sponsors of this important event, at which both magazines will be distributed to delegates.

Of particular interest to INTA delegates will be this month’s double Vantage point , where India’s current and previous controllers general of patents, designs and trademarks share their opinions on the challenges facing the country’s IP institutions. Writing first is the former controller general, PH Kurian, who is widely credited with ushering in a series of improvements at the Trade Marks Registry and the Patent Office. Kurian’s insights are followed by those of his successor, Chaitanya Prasad, who took up the post on 12 March. Prasad has a hard act to follow, yet he is committed to delivering further improvements. In particular, he says that within four to five years he wants the Patent Office to be able to dispose of all applications within 30 months.

This month’s case study (Bridging the divide) investigates the considerable challenges encountered by Wockhardt, a troubled drugs maker, as it struggled through a corporate debt restructuring exercise. The company faced a winding-up petition, filed in Bombay High Court by a group of bond-holders. The resulting judgment reaffirmed that the unsecured rights of creditors are protected. Sonali Sharma at Juris Corp notes that this is good news for investors.

In a change of theme, we move to the contemporary issue of misconduct on the internet. What should a company do when facing the wrath of a disgruntled client or employee who turns to social networking tools in an attempt to defame it?

With such challenges rising exponentially, our coverage emphasizes the importance of having a well-thought-out social media policy in place. When designing such a policy, Manishi Pathak at Kochhar & Co advises companies to “look at case law in India … and use policies that are enforceable”. Failure to take precautions against this fast-growing threat can leave companies dangerously vulnerable.

This month’s Intelligence report offers a foretaste of the key changes that can be expected if 10 bills that are currently languishing before India’s parliament are passed. A total of 97 bills are in various stages of discussion and examination by parliament, but the 10 we highlight would have a significant impact on business and investment. They include the much talked about Companies Bill and the Direct Taxes Codes Bill, but others like the Copyright (Amendment) Bill, 2010, and the Commercial Division of High Courts Bill, 2009 will also usher in noteworthy change.

While domestic and international businesses may have adapted to cope with India’s slow legislative system, it is imperative that parliament gets down to the business of debating and enacting new legislation.

The country cannot afford more examples of weak implementation undermining good laws.