Share on facebook
Share on twitter
Share on linkedin

Delhi HC Draft Rules for Patent Suits, 2021: Streamlining the Procedure

The Delhi High Court has witnessed a surge in the number of patent infringement actions filed before it across various scientific and technological fields including pharmaceuticals, diagnostics, mechanical engineering, telecommunications, electrical /electronics, wind technology etc, since the past 10-15 years.

In a bid to address the growing complexities concerning patent suits and actions, the Delhi High Court vide its notification dated 10th December published the Rules governing Patent Suits, 2021 in the public domain and has invited inputs and suggestions of the relevant stakeholders, by 17th December 2021.  

The main objective of Drafting a new set of rules is to streamline the procedure for filing patent suits and establish a uniform structure of provisions and governing mandates concerning patent litigation in the city’s adversarial system, following the establishment of IPD.   

Key Highlights of the Draft Rules Governing Patent Suits, 2021

The Draft Rules clarify that the published rules will apply to all patent suits in India which lie before the Intellectual Property Division of the Delhi High Court. As per the issued notification, in case of any inconsistency occurs over the Delhi High Court (Original Side) Rules, 2018 and the Delhi High Court Intellectual Property Division Rules, then in that case the present rules will prevail.

Further, the General Clause of the Rules (Rule 17) states that “Procedures and definitions not specifically provided for in these Rules shall, in general, be governed by The Civil Procedure Code, 1908 as amended by The Commercial Courts Act, 2015 and the Delhi High Court (Original Side) Rules, 2018 as also the Delhi High Court Intellectual Property Rights Division Rules, 2021, to the extent they are not inconsistent with the present Rules.”

As per the Definition Clause Rule 2(b), it is maintained that all suits seeking relief under Section 48, Sections 105, 106 including counterclaims under Section 64, Section 108, 109, 114 in the Patent Act, 1970 are governed by the provisions of the Rule. Additionally, the provision of Priority Patent Application has also been provided for in the Rules. It is defined under Rule 2(j) as, “ A parent application, a Convention application or a Patent Cooperation Treaty application from which the suit patent claims priority.”

Rule 3 elaborates upon the mandated contents of the pleadings and Rule 4 provides the details of the documents to be attached with the respective pleadings discussed under Rule 3. It also highlights the specifications that are crucial to mention in the pleadings.

  1. The Plaint (Rule 3 A) shall discuss a brief background of the technology and relevant technical details, ownership details, corresponding suits/applications emanating from the innovation and the respective requisite details of the suit. An infringement analysis through a claim’s vs product chart, list of experts and details of the royalties received qua the suit/ patent portfolio also has to be mentioned.
  1. Written Statement (Rule 3 B) shall be inclusive of arguments comprehensively challenging the claim of infringement. Technical analysis with specifics of the product/process used by the defendant shall be included in the written statement while claiming non-infringement. Further, if the defendant is willing to obtain a license from the patentee, quantum for the same has to be elaborated upon. Details of the sales of the allegedly infringing product/process also have to be provided.
  1. Counter Claim (Rule 3 C) shall be precise as to the grounds that are raised under Section 64 of the Patent Act. The ground claiming lack of novelty or inventive step shall have to be supported by ‘art documents. If a counter-claim is filed seeking relief on the ground of noninfringement, then the requirements for a Suit under Section 105 of the Act shall be followed.
  1. Replication ( Rule 3 D) shall initially summarize Plaintiff’s case and Defendant’s case. Subsequently, it shall provide a para-wise reply to the written statement.
  1. A suit seeking a declaration of non-infringement under section 105 of the Act, shall specify the scope of the claims, the product/process being implemented by the Defendant claimed to be non-infringing and the technical/legal basis on which declaration is being sought
  1. A suit under section 106 of the Act for an injunction against groundless threats shall contain the nature of the threat, whether oral or documentary; details of any challenge made to the validity of the patent and an invalidity brief pursuant to the challenge and details pertaining to correspondence that may have taken place between the parties.

It is pertinent to note that, strict directions and guidelines for the governance of relief applications under the Patent Act, 1970 saves judicial time and resources and improve the quality of judgements delivered by the court.

Further, the Draft Rules segregate the suit adjudication into three case management hearings, apart from the first listing, namely First Case Management Hearing, Second Case Management Hearing, and Third Case Management Hearing. The Rules enumerates specific directions that may be given by the Court at each stage, and also provide guidelines on when certain specific documents may be filed, officers may be appointed, etc. 

A key concept of Hot-tubbing has been discussed under Rule 9 (iii) that provides that expert testimony can be directed by the Court if it deems fit, on its own motion or application by a party to be recorded by Hot Tubbing technique guided by Rule 6, Chapter XI, Delhi High Court (Original Side) Rules, 2018. Further, the rule also discusses the recording of evidence through video conferencing, by a Local Commissioner or at a venue outside the Court’s premises; all subjected to the discretion of the court.

The current Draft under Rule 12 has provided for “compulsory mediation”. It provides that at any stage of the proceedings if the court is of the opinion that the parties ought to explore mediation, it shall appoint a mediator/ a panel of mediators and technical experts to explore the pathway of amicable dispute resolution.

Under Rule 13 the court has been empowered to prepare a list of scientific advisors that shall assist the Court in the adjudication of patent suits. The list shall be subjected to periodical review. When the assistance of the expert is sought, they would have to submit a declaration of integrity and impartiality. 

Under Rule 16, In addition to the provisions in the Commercial Courts Act, 2015 for Summary judgment, Summary Adjudication of Patent suits can be undertaken in the following conditions;

(a) Where the remaining term of the patent is 5 years or less;

(b) A certificate of validity of the said patent has already been issued or upheld by the erstwhile Intellectual Property Appellate Board, any High Court or the Supreme Court;

(c) If the Defendant is a repeat infringer of the same or related Patent;

(d) If the validity of the Patent is admitted and only infringement is denied.

Conclusion

The Draft Rules present adaptability to the technological revolution that has enveloped the industry sectors across the world by simplifying litigation and increasing flexibility of the procedural aspect of the law. The contents of the pleadings are unambiguously discussed, leaving no room for confusion, as all the requisite information can be obtained by the parties at the first instance. Further, the clearly earmarked list of mandatory documents to be filed by the litigants saves judicial time wasted in adjournments owing to the lack of availability of documents.

Incorporation of methods of video conferences, hot-tubbing etc. for the purpose of collecting evidence while providing for the filing of technical primer, makes the case more comprehensible and streamlines judgment quality across the patent suit. The Draft has also successfully addressed the issue of a lengthy litigation process by providing for Summary adjudication of Patent suits.

Since the Rules are currently open to the opinion and suggestions of the stakeholders, it is yet to be seen how the final rules would shape up.

Image Credits:  Photo by Markus Winkler from Pexels

The Draft Rules present adaptability to the technological revolution that has enveloped the industry sectors across the world by simplifying litigation and increasing flexibility of the procedural aspect of the law. The contents of the pleadings are unambiguously discussed, leaving no room for confusion, as all the requisite information can be obtained by the parties at the first instance.

POST A COMMENT

Share on facebook
Share on twitter
Share on linkedin

Draft Delhi High Court IPR Division Rules, 2021: Observations and Concerns

On 10th October, 2021 the Delhi High Court had issued a Public Notice proposing the Draft “Delhi High Court Intellectual Property Rights Division Rules, ­ 2021”. The Court vide the said notice had invited comments from the members of the Bar by 24th October, 2021. In a much-anticipated development, following the incorporation of the inputs from the Bar, on 10th December 2021 the Hon’ble High Court released the finalised draft of the proposed Rules and has sought suggestions by the relevant stakeholders by December 17, 2021.

 

In July 2021, the Hon’ble Chief Justice of the Delhi High Court announced the constitution of IPD (Intellectual Property Division) following the abolition of IPAD. The Draft Rules seek to regulate the matters listed before the IPD with respect to practice and procedure for the exercise of its original and appellate jurisdiction, and for other miscellaneous petitions arising out of specific statutes[1].

 

The Structure

The Draft Intellectual Property Rights Division Rules, ­ 2021 has a framework of 41 Rules addressing and dealing with various procedures and definitions to be applied while adjudicating cases before the IPD. The General Clause under Rule 29 clarifies that “procedures not specifically provided for in these Rules shall, in general, be governed by The Civil Procedure Code, 1908 as amended by The Commercial Courts Act, 2015 and the Delhi High Court (Original Side) Rules, 2018.”

It is pertinent to note that, following the inputs by the Bar, the term “Acts” under Rule 2a is also now inclusive of the Information Technology Act, 2000. Consequently, under Rule 2d “Appeal” shall also include “an appeal filed before, or transferred to, the IPD” with the nomenclature [C.A. (Comm. IPD-IT)] Under Section 62 of the Information Technology Act, 2000.

The Draft Rules under rule 2i the “intellectual property subject matter” for the purpose of these rules concern the following:

  1. Matters pertaining to Patents, Copyrights, Trademarks, Geographical Indications, Plant Varieties, Designs, Semiconductor Integrated Circuit Layout-Designs, Traditional Knowledge, and all rights under common law, if any related to these.
  2. Matters relating to passing off, unfair competition, disparagement, comparative advertising, and other similar issues.
  3. Matters concerning the protection of trade secrets, confidential information, and other related subjects.
  4. Matters relating to tortious actions related to privacy and publicity rights involving intellectual property issues.
  5. Matters pertaining to data exclusivity, domain names, and other matters relating to data protection involving intellectual property issues, as well as those arising under the Acts.
  6. Matters involving internet violations relating to any of the subject matters under clauses (i) through (v).

Notably, the rights related to data protection, data inclusivity and other such related matters are also covered under the scope of the said “subject-matter’. The Explanation attached with the provision states that cases pertaining to the Information Technology Act, 2000 which deal with the rights and liabilities of the intermediaries, online market places and e-commerce platforms

And those “issues relating to any of the aforementioned rights, shall be deemed to be within the purview of intellectual property rights.” 

The final Draft Rules present a precise scope of jurisdiction of the Draft Rules under Rule 4, as compared to the earlier version. The Rule now states that “Every IPR subject matter or case or proceeding or dispute filed before or transferred to, the IPD, as defined in Rules 2(i), 2(j) and 2(l), shall be heard and adjudicated by a Single Judge of the IPD except those that are to be decided by a Division Bench as per Section 13 of the Commercial Courts Act, 2015.”

Rule 6 elaborates the procedure for filing an appeal before the IPD. As per Rule 6 (xii)

“Procedures applicable to Civil Appeals filed before the Single Judge: The Delhi High Court Rules and Orders as also the Practice directions issued from time to time, to the extent there is no inconsistency with these Rules, shall be applicable to appeals filed before the IPD.”

Procedures for filing original civil petitions, civil writ petitions and civil miscellaneous petitions are discussed under Rules 7, 8 and 9 respectively. Further, Rules 10 to 14 enumerate additional requisite procedures to be followed while addressing a suit to the IPD.

Subsequent to the comments by the members of the Bar, the final Draft Rules have incorporated additional provisions pertaining to the recording of the evidence, hot-tubbing or other such modes of recording evidence, discovery and disclosure, preservation of evidence by the parties, Confidentiality clubs and redaction of confidential information and, damages and accounts of profits; from Rules 15-20.

Under Rule 15, recording of evidence can be undertaken through video conferencing ( as per the High Court of Delhi Rules for Video Conferencing for Courts 2021). The use of videography and transcription technology or any other form of recording evidence can also be applied. Further, evidence can also be recorded at any venue outside the court or by a Local Commissioner. However, it is imperative to note that, the discussed methods shall only be applicable if the court is of the opinion that the same is expedient in the interest of justice.

Interestingly, Rule 18 puts an onus on the parties to the proceedings to “preserve all documentary, tangible and electronic material relating to the subject matter of the proceedings which is capable of being relied upon as evidence” upon the initiation of or receiving notice about the institution of the proceedings before the IPD. Prior to the initiation of the proceedings, a party may issue a Litigation Hold Notice that shall set in motion the evidence preservation liability of the party.

Rule 19 addresses the establishment of a ‘confidentiality club’ by the court at any stage of the proceedings for the preservation and exchange of confidential information filed before the Court including documents, as per the Delhi High Court (Original Side) Rules, 2018. Further, the rules state that upon a request by application the court may direct the redaction of such information. However, the rules fail to mention the party, legal practitioner, expert etc that shall have the Locus Standi to approach the court with such application.

Rule 20 elaborates upon the factors that the courts shall have to take into consideration while determining the quantum of damage for a party seeking to settle accounts of profits/damages. Notably, the rule provides that the courts may engage expert assistance (provided for in Rule 31) in the computation of such damages.

The final Draft Rules, 2021 also lay down provision for summary adjudication under Rule 27 on principles akin to those enumerated in Order XIIIA, Code of Civil Procedure, 1908 and as applicable to commercial suits under the Commercial Courts Act, 2015. It is interesting to note that, unlike the previous version the current rules do not have any provision for summary adjudication in Patent Cases.

With an objective to curb unnecessary delays in the disposal of suits, it is apparent that the High Court has ensured provisions relating to strict guidelines for a written and water-tight timeline for oral submissions are included under Rule 33 of the 2021 Division Rules.

 

Conclusion

The establishment of an independent Intellectual Property Division is an indication of acknowledgement of the importance of Intellectual Property in the country. The corresponding 2021 Division Rules is a concrete step forward, however, the following aspects demand a more sincere deliberation:

  1. Clarity with respect to the Locus Standi of parties, legal practitioners, agents, experts etc. to the case for extending an application to the ‘Confidentiality Club’ needs to be determined.
  2. Under Rule 31 constitution of a Panel of Experts is provided to extend advisory assistance to the court relating to the subject matter of the dispute, as and when necessary. While the provision is definitely in resonance with maintaining the quality adjudicatory function, it fails to elaborate upon the criteria of appointment of the experts. Additionally, the rule mentions ‘reviewing’ the expert panel from time to time, however, the nature and period of such review has not been discussed.

The establishment of an independent Intellectual Property Division is an indication of acknowledgement of the importance of Intellectual Property in the country. The corresponding 2021 Division Rules is a concrete step forward, however, some aspects demand a more sincere deliberation

POST A COMMENT

Share on facebook
Share on twitter
Share on linkedin

Small Entity Status- Can Foreign Companies Claim It?

The government of India has been aggressively pushing for the development and promotion of entrepreneurship in the country. In the Intellectual Property Domain, various concessions have been made for small and upcoming entities. Organizations claiming a ”small entity” status or a “start-up” status while applying for registration are entitled to some additional benefits pertaining to fees and filing requirements.  Here, we briefly look upon the small entity status as per the Indian patent and design rules. 

Intellectual Property Related Government Initiatives to Encourage Small Entities & Startups

In 2020, the Scheme for Facilitating Start-ups Intellectual Property Protection, was launched as an experimental initiative to encourage start-ups to develop and protect their intellectual property, which was extended for a period of three years (April 1, 2020 – March 31, 2023).

Further, the Patent (Amendment) Rules, 2020[1] were notified on October 19, 2020 to simplify the procedure of submitting priority applications and their translations and filing of working statements under form 27. These changes were introduced in consequence to the Delhi High Court’s order in the case of Shamnd Bashir v UOI[2], that resulted in a stakeholder’s consultation.

On November 4, 2020 the Ministry of commerce and Industry[3], notified Patents (2nd Amendment) Rules, 2020[4], making additional filing and prosecution concessions for start-ups and small entities.  The status of start-ups was discussed critically, extending their life for up to ten years. These amendments are set to make protection of intellectual property affordable to every category and class of business. Finally, the government also notified Design Amendment Rules 2021,[5] which recognized start-ups as applicants. The current Locarno classification system[6] and simplified fee structure were introduced specifically to benefit small entities.

 

Categorization of ‘Entities’

 

1.1 Natural Person

Under the Indian Patent Act, natural person includes an individual human being. In this context, the patent application can be filed in the name of one or a group of individuals. Here, the inventorship and ownership lies solely with the inventor and he is entitled to:

  1. Sell
  2. Transfer
  3. License, or
  4. Commercialize their patent as per their want.

1.2 Small Entity

The Indian Patents Rule, 2003 under Rule 2(fa)[7] define ‘small entity’ as:

  • in case of an enterprise engaged in the manufacture or production of goods, an enterprise where the investment in plant and machinery does not exceed the limit specified for a medium enterprise under clause (a) of sub-section (1) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006); and
  • in case of an enterprise engaged in providing or rendering of services, an enterprise where the investment in equipment is not more than the limit specified for medium enterprises under clause (b) of sub-section (1) of Section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).

In calculating the investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and such other things as may be specified by notification under the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), shall be excluded.

1.3 Start up:

A start-up is an entity recognized as a ‘startup’ by the competent authority under the Startup India initiative and fulfills all the criteria for the same.

A foreign entity shall fall under the category of start-up if it fulfills the criteria of turnover and specified period of incorporation/registration, and submission of a valid declaration to that effect as per the provisions of Start-up India initiative. (In calculating the turnover, reference rates of foreign currency of Reserve Bank of India shall prevail.)

As per the Notification of Department of Promotion of Industry and Internal Trade[8], an entity is considered a start-up  

  1. Up to a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
  1. Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees.
  2. Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.

How to apply for Small Entity Status in India:

 

Any business can apply for the status of small entity under the MSME Development Act, 2006 at udyamregistration.gov.in. Subsequent to a successful registration the business shall be issued a Udyam registration certificate, that can be furnished as proof for availing various government subsidies and benefits. 

A foreign company can also register as an MSME on the same government portal. However, as a preceding step such a company shall register itself as per the provisions of the Companies Act, 2013[9].

Any Indian entity wishing to declare themselves as small entity for the purpose of Patent registration has to furnish the following documents:

  1. Form 28 of the Indian Patent Act:
  2. Proof of Registration Under MSME Act 2006 (Micro, small and medium enterprise development Act, 2006).
  3. Form 1 of the Indian Patent Act (if Fresh Patent Application is being filed).

Any Indian entity wishing to declare themselves as small entity for the purpose of Design registration:

  1. For an Indian entity to claim the status of small entity, it must be registered under the MSME Development Act, 2006.
  2. To file an application as a start-up, the entity should be recognized as startup by a competent authority under the Union government’s Start-up India Initiative.

 

Can a Foreign Company claim Small Entity Status in India?

On a plain interpretation of the requirements under the Patent rules and Design rules, it is clear that a foreign enterprise can claim the status of a small entity or a start-up, provided it is registered and incorporated in India and is engaged in the manufacture of goods and services as specified in the first schedule of the 2006 Act.[10]

Under the MSME Development Act, 2006 an enterprise is defined as:

enterprise” means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (55 of 1951) or engaged in providing or rendering of any service or services;[11]

With an objective to incentivize the incorporation of OPC (One Person Companies), the Ministry of Corporate Affairs amended the Companies (Incorporation) Rules. The move empowers OPCs to grow without any restrictions on paid up capital and turnover, thereby facilitating their conversion into any other type of company at any time. Additionally, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allowing Non-Resident Indians (NRIs) to incorporate OPCs in India has paved the way for foreign entities to enter Indian markets[12] [13].

 

Application Process for Small Entity Status in India? (Foreign Company):

Patent Rules

A foreign applicant seeking the status of ‘small entity’ for the purpose of filing patent in India, has to submit duly filled Form 28[14], along with the requisite documents of proof.

As per the requirements of Form 28, a foreign applicant has to attach evidentiary documents that verify their status as ‘small entity’ for the want of Rule 2 (fa) of the Patent Rules, 2003. For this purpose, the said documents can include a certified copy of financial statement from a Chartered Accountant, that proves that the investment in plant and machinery and the annual turnover of the entity on the date of filing the application does not exceed the limitations specifications under the MSME Development Act, 2006.

Design Rules

For the purpose of recognitions as a start-up the foreign entity should satisfy the following criteria:

  1. The entity must be a private limited company, limited liability partnership, or partnership firm.
  2. Its turnover at any point during the course of its business (from inception) should not exceed INR 100 crores (approximately USD 13.7 million as on date)
  3. The entity would be considered a start-up only for a period of 10 years from the date of incorporation.
  4. An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Start-up”

For a foreign entity to claim the benefit of being a start-up, an affidavit (which under Indian practices would need to be notarized, although this has not been explicitly mentioned in the Amendment Rules) along with supporting documents must be submitted at the time of filing the application[15], to be submitted with Form 24[16] of the Designs Rules.

References:

[1] https://pib.gov.in/Pressreleaseshare.aspx?PRID=1668081

[2] writ petition No. WPC- 5590

https://www.scconline.com/blog/post/2020/10/28/patents-amendment-rules-2020-patentee-would-get-flexibility-to-file-a-single-form-27-in-respect-of-a-single-or-multiple-related-patents/

[3] https://ipindia.gov.in/writereaddata/Portal/Images/pdf/Patents__2nd_Amendment__Rules__2020.pdf

[4] https://ipindia.gov.in/writereaddata/Portal/Images/pdf/Patents__2nd_Amendment__Rules__2020.pdf

[5] https://www.foxmandal.in/wp-content/uploads/2021/08/Indian-Designs-Amendment-Rules-2021.pdf

[6] https://www.wipo.int/classifications/locarno/locpub/en/fr/

[7] https://ipindia.gov.in/writereaddata/Portal/IPORule/1_70_1_The_Patents_Rules_2003_-_Updated_till_1st_Dec_2017-_with_all_Forms.pdf

[8] https://dpncindia.com/blog/wp-content/uploads/2019/02/DIPP-Notification-dated-19-Feb-2019.pdf

[9] https://www.indiacode.nic.in/show-data?actid=AC_CEN_22_29_00008_201318_1517807327856&sectionId=185&sectionno=2&orderno=2

[10] https://www.startupindia.gov.in/content/sih/en/bloglist/blogs/How-a-foreign-national-from-China-can-start-and-register-company-in-India.html

[11] https://www.indiacode.nic.in/show-data?actid=AC_CEN_46_77_00002_200627_1517807324919&sectionId=9884&sectionno=2&orderno=2

[12] http://164.100.117.97/WriteReadData/userfiles/Notification%201.pdf

[13] http://164.100.117.97/WriteReadData/userfiles/Notification%202.pdf

[14] https://ipindia.gov.in/writereaddata/Portal/IPOFormUpload/1_40_1/form-28.pdf

[15] https://www.foxmandal.in/wp-content/uploads/2021/08/Indian-Designs-Amendment-Rules-2021.pdf

[16] https://www.ipindia.gov.in/writereaddata/Portal/IPOFormUpload/1_109_1/Form_24.pdf

Image Credits: Photo by Startup Stock Photos from Pexels

 

On a plain interpretation of the requirements under the Patent rules and Design rules, it is clear that a foreign enterprise can claim the status of a small entity or a start-up, provided it incorporates itself under the relevant schemes and statutes and is able to furnish documents for proof to the same effect

POST A COMMENT