The first quarter of the year 2022 saw key developments in the evolving sphere of intellectual property rights in India. Importantly, rules providing for smooth adjudication of disputes surrounding intellectual property rights were notified by the Delhi High Court. The US also released its National Trade Estimates Report on Foreign Trade Barriers highlighting the hurdles in the regulatory and enforcement framework of IP rights in India.
The Delhi High Court Rules for adjudication of Intellectual Property disputes
The Intellectual Property Rights Division Rules, 2022 (DHC IPD Rules) were notified on 24 February 2022 to streamline the adjudication of IP disputes before the Delhi High Court. The objective of the DHC IPD Rules is to facilitate and give effect to the Tribunal Reforms Act, 2021 abolishing the Intellectual Property Appellate Board (IPAB), by setting up a dedicated IP division within the Delhi High Court. The salient features of the DHC IPD Rules are as under:
- Jurisdiction of the IP Division - The High Court’s Intellectual Property Division (presided by Single Judges) has been empowered to entertain all matters pertaining to patents, copyrights, trademarks, geographical indications, plant varieties, designs, semiconductor integrated circuit layout-designs, traditional knowledge, trade secrets, confidential information, privacy and publicity rights, domain name disputes and all rights under common law associated with such intellectual property rights. Moreover, matters pertaining to the Information Technology Act, 2000 dealing with intermediaries, online marketplaces, and e-commerce platforms will also fall within the purview of intellectual property rights. This will also include all matters of the Delhi jurisdiction that were pending with the erstwhile IPAB.
- Assessment of quantum of damages - The DHC IPD Rules clearly articulate the factors to be taken into consideration by the court while determining the quantum of damages. These include lost profits of the injured party, profits earned by the infringing party, quantum of income that could have been earned by the injured party through licenses and royalties, duration of infringement, degree of intention/neglect underlying the infringement, and conduct of the infringing party to mitigate the damages being incurred by the injured party.
- Mandatory mediation - Another key development brought about by the DHC IPD Rules is the mandatory mediation and/or early neutral evaluation, that may be ordered by the Court, if deemed fit, to bring about an early resolution of the dispute, and which will operate concurrently with the legal proceedings to avoid delays.
Notably, the DHC IPD Rules clearly address most issues that arise during the course of intellectual property disputes (such as manner of recording evidence, taking expert evidence, calculation of damages, intervention by third parties, confidentiality clubs for preservation of commercially sensitive information etc.); and have clarified the procedure for transfer of cases from the IPAB.
Delhi High Court Rules for patent suits
The High Court of Delhi Rules Governing Patent Suits, 2022 (DHC Patent Rules) have been notified in addition to the Delhi High Court (Original Side) Rules 2018 (which apply to all original side suits), with effect from 24 February 2022, to clarify the procedure for patent suits filed before the Original Side of the Delhi High Court.
The rules seek to streamline the adjudication of an increasing number of patent infringement actions. As patent disputes include several complex technical considerations, these Rules clearly set out the scope of the briefs/manner in which specific claims such as invalidity, claim construction, infringement, damages, etc. must be uniformly documented and presented to the court by each litigant.
2022 National Trade Estimate Report on Foreign Trade Barriers by the United States Trade Representative
The US Trade Representative’s National Trade Estimate Report on Foreign Trade Barriers (Report) was published on 31 March 2022. To begin with, in respect of intellectual property protection, the Report acknowledges the improvements made by India on reducing delays and backlogs in the examination of patent and trademark applications. However, it continues to cite several trade barriers in respect of intellectual property protection in India such as:
- weak enforcement of intellectual property rights in India, especially at the State-level (given that India remains on the Priority Watch List and several of its physical and online marketplaces feature on the Notorious Markets List);
- delay in passing the Cinematograph (Amendment) Bill, 2019, which proposes to criminalise illicit recording of films;
- uncertainty regarding intellectual property royalties in respect of copyright protected works (as the IPAB stands abolished);
- pending amendments to the Copyright Act, 1957 that seek to broaden the scope of statutory licensing to include online broadcasting, which is likely to have a severe impact on holders of internet content-related rights;
- broad scope of disclosures (of commercially sensitive business information) required under the Statement of Working of Patents (Form 27);
- narrow patentability criteria and absence of the presumption of validity of a granted patent;
- absence of an effective system for protecting against misuse and unauthorised disclosure of undisclosed test or data generated to obtain marketing approval for pharmaceutical/agricultural products; and
- absence of a statutory regime for protecting trade secrets in India (despite having articulated a need for it in the 2016 National Intellectual Property Rights Policy).
While US and India have worked together on some of these issues, since the establishment of the United States-India Trade Policy Forum (the most recent meeting of which was held in November 2021), concerns such as India’s patentability criteria for pharmaceuticals, patent working disclosures, absence of a trade secret law, and weak intellectual property enforcement, have continued to feature in the US Trade Representative’s Reports published annually.
In the coming months, it is hoped that other Indian High Courts will take decisive action towards implementing the Tribunal Reforms Act of 2021 (specifically in relation to intellectual property rights challenges that were languishing before the IPAB), either by setting up independent intellectual property divisions like the Delhi High Court, or by initiating transfer mechanisms at the Registry level to assign erstwhile IPAB matters to the relevant benches of the High Court. This is critical for intellectual property rights holders to gain confidence in Indian institutional mechanisms, which are at the core of protection and enforcement of intellectual property rights in India.