DBB2101: Legal and Regulatory Framework Manipal University Jaipur (MUJ)

BACHELOR OF BUSINESS ADMINISTRATION

SEMESTER 3

DBB2101
LEGAL AND REGULATORY
FRAMEWORK

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Unit 12
Intellectual Property Rights
Table of Contents

SL Topic Fig No / Table SAQ / Page No

No / Graph Activity
1 Introduction
4
1.1 Objectives
2 Meaning and Scope of Patent Act and 1 5 - 10
Amendments of WTOAgreements
2.1 Background
2.2 Objects
2.3 Definition
2.4 Inventions
2.5 Patentee
2.6 True and first inventor
2.7 Procedure for grant of process and
product
2.8 WTO rules as to patents
3 Rights of Patentee 1 2 11 - 13
4 Trademarks 3 14 - 17
4.1 Trademark registration
4.2 Trademark logo
4.3 Trademark application
4.4 Trade secrets
4.5 Salient features of Trade Mark Act,
1999
5 Copyright 4 18 - 20
6 Summary 21

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7 Glossary
8 Terminal Questions
9 Answers 22 - 23

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1. INTRODUCTION

Intellectual Property (IP) is a creation from mind and an asset and as such it can be bought,
licensed, exchanged or gratuitously given away like any other form of property. The IP owner
has the right to prevent the unauthorized use or sale of the property. The most noticeable
difference between IP and other forms of property is that IP is intangible because it cannot
be defined or identified by its own physical parameters. Intellectual Property Rights have
been classified into patents, copy rights, trademarks and designs. However, it can be said
that these can be owned, controlled, leased and traded. There exist laws concerning
intellectual property with the main objective of protecting the interests of the owner.

Some of the kinds of intellectual property are -

a) Copy Rights
b) Trade Mark
c) Trade Secret
d) Patents
e) Geographical Indicators
f) Designs

1.1 Objectives:

After studying this unit, you should be able to:

❖ define the scope of various intellectual properties recognized by law

❖ discuss the provisions of the Patents Act, Trademarks Act, Copyright Act
❖ differentiate between trademarks and copyright

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2. PATENTS

2.1 Background

The history of patents and patent laws can be traced back to the Venetian Statute of 1474
which was issued by the Republic of Venice. It issued a decree by which new and inventive
devices had to be communicated to the Republic in order to obtain legal protection against
potential infringers once they had been put into practice. The period of protection was 10
years.

The word patent is derived from the word ‘patere’ which means ‘to open’. The Crown
conferred certain rights or privileges, on one or more individuals, including monopoly rights
in respect of inventions.

2.2 Objects

The main object of the patent law is protection of the invention. Following are certain other
objects -

• Encouragement to scientific research, new technology and industrial process

• Grant exclusive privilege to own, use or sell the method or the product patented for a
limited period
• Stimulate new inventions of commercial utility

If in any country where a patent is not in force, the technology can either be freely developed
and sold either domestically, or to countries where the patent in respect of the invention is
not in force.

2.3 Definition

A patent is an exclusive right granted in respect of an invention, which may be a product or

a process that provides a new and inventive way of doing something, or offers a new and
inventive technical solution to a problem. The owner can sell, or grant licenses to others for
its use, its form of industrial property. It should be noted that a patent is rather a negative or
exclusionary right which allows a holder to keep someone else from using an idea in
commerce.

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2.4 Inventions

The fundamental principle of the patent law is that the patent is granted only for an
invention, which must be new and useful. Thus, patent can be granted only for a new product
or process involving an inventive step and capable of industrial application.

An invention involving the following can be protected by a patent -

• it must be new or novel, that is, it must show some new characteristic which is not
known in the body of existing knowledge (called “prior art”) in its technical field.
• it must be non-obvious or involve an inventive step, that is, it could not be deduced by
a person with average knowledge in the technical field.
• it must be useful or capable of industrial application;
• finally, the invention must be part of the so-called “patentable subject matter” under
the applicable law. In many countries, scientific theories, mathematical methods, plant
or animal varieties, discoveries of natural substances, commercial methods, or methods
for medical treatment (as opposed to medical products) are not considered to be
patentable subject matter.

The following are not considered to be inventions under Section 3 of the Patents Act, 1970:

a) an invention which is frivolous or which claims anything obviously contrary to well

established natural laws;
b) an invention the primary or intended use or commercial exploitation of which could be
contrary to public order or morality or which causes serious prejudice to human,
animal or plant life or health or to the environment;
c) the mere discovery of a scientific principle or the formulation of an abstract theory or
discovery of any living thing or non-living substance occurring in nature;
d) the mere discovery of a new form of a known substance which does not result in the
enhancement of the known efficacy of that substance or the mere discovery of any new
property or new use for a known substance or of the mere use of a known process,
machine or apparatus unless such known process results in a new product or employs
at least one new reactant.

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e) a substance obtained by a mere admixture resulting only in the aggregation of the

properties of the components thereof or a process for producing such substance;
f) the mere arrangement or re-arrangement or duplication of known devices each
functioning independently of one another in a known way;
g) a method of agriculture or horticulture;
h) any process for the medicinal, surgical, curative, prophylactic diagnostic, therapeutic
or other treatment of human beings or any process for a similar treatment of animals
to render them free of disease or to increase their economic value or that of their
products.
i) plants and animals in whole or any part thereof other than micro organisms but
including seeds, varieties and species and essentially biological processes for
production or propagation of plants and animals;
j) a mathematical or business method or a computer programme per se or algorithms;
k) a literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever
including cinematographic works and television productions;
l) a mere scheme or rule or method of performing mental act or method of playing game;
m) a presentation of information;
n) topography of integrated circuits;
o) an invention which in effect, is traditional knowledge or which is an aggregation or
duplication of known properties of traditionally known component or components.
p) an invention relating to atomic energy falling within sub section (1) of section 20 of the
Atomic Energy Act, 1962.

2.5 Patentee

A patentee is a person to whom the patent has been granted. The person is authorised to use
the patent right similar to any other property.

The patent holder has the exclusive right to make, use, sell or distribute the invention. If
anybody uses or produces or sells the property or product without the consent or proper
authorisation of the patent holder, it can result in infringement or breach of trust or violation
of patent rights. When the original producer of the product or process does not give

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permission or authorisation to use or exercise or sell the product, he can approach the court
of law and stop the violation and can claim damages otherwise.

An application for a Patent can be made by the following -

(a) any person claiming to be the true and first inventor of the invention;
(b) any person being the assignee of the person claiming to be the true and first inventor
in respect of the right to make such an application;
(c) the legal representative of any deceased person who immediately before his death was
entitled to make such an application.

Such an application can either be made alone or jointly.

2.6 Process And Product

There is a distinction between product and process patent. In case there is an invention of
an antibiotic, it can be termed as process patent. The reason is that, in order to manufacture
a chemical substance like antibiotic, a series of chemical process needs to be performed.
Therefore, the process of making the substance is in itself an invention. Thus, in such cases
we could have both product and process patent. It can also be said that if a person invents a
new process, whether it is for making a new product or for an existing product, he can claim
a patent for the process. For example, the Indian pharmaceutical companies could examine
a drug, find out its chemical composition and invent a different process to make the product.
This was termed as ‘reverse engineering’ of medicine. This made it possible for drug
companies to develop rapidly and make medicine available to customers at a reasonable
price.

2.7 WTO Rules As To Patents

According to the WTO (World Trade Organisation) Agreement, patent protection must be
available for inventions for at least 20 years. Patent protection must be available for both
products and processes, in almost all fields of technology. Of these agreements, Trade-
Related Aspects of Intellectual Property Rights (TRIPS) has the greatest impact on the
pharmaceutical sector and also affects access to medicines. The TRIPS agreement has been
in force since 1995 and to date is the most comprehensive multilateral agreement on
intellectual property. The TRIPS agreement introduced global minimum standards for

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protecting and enforcing nearly all forms of intellectual property rights (IPR), including
those for patents. International conventions prior to TRIPS did not specify minimum
standards for patents. At the time that negotiations began, over 40 countries in the world did
not grant patent protection for pharmaceutical products. The TRIPS agreement now requires
all WTO members, with a few exceptions, to adapt their laws to the minimum standards of
IPR protection. In addition, the TRIPS agreement also introduced detailed obligations for the
enforcement of intellectual property rights.

However, TRIPS also contains provisions that allow a degree of flexibility and sufficient room
for countries to have a certain amount of freedom in modifying their regulations. Various
options exist for them in formulating their national legislation to ensure a proper balance
between the goals of providing incentives for future inventions of new drugs and affordable
access to existing medicines.

The TRIPS agreement requires that WTO members protect undisclosed test data submitted
to drug regulatory authorities for the purposes of obtaining marketing approval, against
unfair commercial use. As per the WTO agreement, patents shall be available for any
products or processes in all fields of technology, provided that they are new, involve an
inventive step and are capable of industrial application. It is necessary to protect the
morality, avoid danger to human, animal or plant life or health; or avoid serious prejudice to
the environment.

A patent shall confer on its owner the following exclusive rights:

(a) where the subject matter of a patent is a product, to prevent third parties from making,
using, offering for sale, selling, or importing that product without the patent holder’s
consent.
(b) where the subject matter of a patent is a process, to prevent third parties from using,
offering for sale, selling, or importing the product obtained directly by that process
without the consent of the patent holder.
(c) (c)Patent owners shall also have the right to assign, or transfer by succession the patent
and to enter into licensing contracts.

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Conditions on patent applicants

Members shall require that an applicant for a patent shall disclose the invention in a manner
sufficiently clear and complete for the invention to be carried out by a person. It may require
the applicant to indicate the best mode for carrying out the invention known to the inventor
at the filing date and at the priority date of the application.

Term of Protection

The term of protection available shall not end before the expiration of a period of 20 years
counted from the filing date.

Self-Assessment Questions - 1

1. Patent law was derived from the word _____________, which means ____________.
2. Patent is defined as a ________________ pleasure granted by governments to
_______________ and to other persons deriving their rights from the inventor.
3. Choose the correct options:

Patent is granted to inventions which is:

a. New but not useful

b. Practiced and used for increased economic value
c. Practiced for commercial exploitation
d. New and useful

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3. RIGHTS OF PATENTEE
As described earlier, the patentee has the right to sell, use exercise or even distribute the
patent to another person.. If a person violates or misuses or takes the invention forcefully or
starts business without license or authorisation, the patentee has the liberty to approach the
court and claim damages or stop the violation or use or sale of the product or process,

Infringement: The Act does not define what constitutes an infringement of a patent. In
deciding whether an act amounts to infringement of a patent, courts generally take into
account various factors, which include:

a) The scope of the claim

b) Whether the act amounts to any of the recognised rights under the scope of the patent
c) Whether the alleged act of infringement constitutes an infringement of the monopoly
recognised under the patent law.

The burden of establishing the infringement is on the applicant. Under certain

circumstances, the burden of proving an infringement of a process claim is shifted to the
defendant.

Apart from the actual infringer, a person who is indirectly connected with the manufacture
or sale of the article may also be construed as an infringer. The following are the acts that
would be taken into account for deciding whether an infringement has been committed or
not:

• Making
• Using
• Exercising
• Selling
• Distributing

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Fig. 12.1: Stages of filing grant for patent Source: Legislative Framework of IP
Administration

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Self-Assessment Questions - 2

State True and False:

4. Patent holder does not have the right to sell, make, use and distribute the
inventions in his own country.
5. The first inventor is also called the true inventor.
6. Patent can be issued for number of inventions together.
7. Patent holder has the right to conclude licensing contracts.
8. Infringement refers to misuse of inventions and forcefully starting a
business.
9. An infringer is a person who is indirectly related to manufacture of product.

Fill in the blanks:

10. Process patent is different from product patent if the substance produced is
_____________, whereas a product patent is the___________ and ____________ of the
product.
11. TRIPS is the abbreviation of___________ .
12. Choose the correct answer: TRIP was enforced through an agreement in the
year

a. 1948 b. 1920 c. 1995 d. 1960

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4. TRADEMARKS
A trademark generally refers to a ‘brand’ or ‘logo’. The Parliament enacted the Trade Marks
Act in 1999, replacing the Trade and Merchandise Marks Act 1958. The new Act came into
effect from September 2003 and it extends to the whole of India. This law was enforced to
honour the commitments made by India as a signatory to the Trade Related Aspects of
Intellectual Property Rights (TRIPS) agreement under the General Agreement on Trade and
Tariff. Putting or attaching marks on the merchandise has been a long practice from the olden
days to indicate the owner of the particular product. It dates back to the Indus valley
civilisation where such marks helped for identification of the product for taxation, levies and
shipment purposes. Trademark registration can also be obtained for a business name,
distinctive catch phrases, taglines or captions. If it is properly used and promoted, a
trademark may become the most valuable asset of a business. Trademarks such as Coca Cola,
HP, Canon, Nike and Adidas indicate the manufacturer of the goods as well as the quality.

4.1 Trademark Registration

Trademark registration is the most important piece of a company's intellectual property

protection program, which remains complex for most people. It can be registered only if it
meets certain criteria. Thus, it cannot be registered under the following situations, such as:

1. Use contrary to law: There are certain laws which prohibit the use of certain names and
marks, such as use of national emblem, national flag, ISI marks etc.
2. Descriptive words: As per the Act no one is allowed to use descriptive words as a mark
or indication of the product or services.
3. Confusion or deception: For registration of mark, another requirement is that it should
not deceive or cause confusion with another trademark. It should to be taken into
account that it must be an identical one and that the mark has not been registered
anywhere. In this connection, the trade mark registry goes through the register of the
class of trademarks concerned for a thorough check and if found satisfactory, the
registry clears the application for registration which is advertised in the trade mark
journal. It is done to let the public know about the trade mark and to grant an

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opportunity to others to oppose it if they think that the proposed mark would create
confusion or deception among them.
Company registration is very essential for any company to utilise the benefits of
trademark registrations in India. The initial registration of a trademark is for a period
of ten years but may be renewed from time to time for an unlimited period by payment
of the renewal fees.

4.2 Trademark Logo

The trademark logo is usually a graphical representation along with a logo type which forms
a trademark or a commercial brand. Trademark logo is an aspect of a company's commercial
brand. The logo is designed to be used for recognition, admiration, trust and loyalty. The logo
tailor is one which designs the shape, font, colour and images of the graphical representation.
These logos are usually different in size, shapes and structure which help the common
person to identify the organisation.

4.3 Trademark Application

This is a way to protect the trademarks of an institution. An institution may lose a trademark
if it stops using it or if proper renewal forms are not filed and if proper quality control is not
exercised over licenses.

4.4 Trade Secrets: It is classified as any information that may be used in the operation
of a business and that is sufficiently valuable to provide an actual or potential economic
advantage. It includes:

a) Financial information
b) Commercial information
c) Technical and scientific information

4.5 Salient Features Of Trade Mark Act, 1999

1. Multi class applications are allowed in India. However, statutory filing fees will be
applicable for each class.
2. Classification of goods and services is according to the Nice Classification of Goods and
Services (International Classification).

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3. Prior use of the trademark is not mandatory for filing. Therefore, applications can be
filed on a 'proposed to be used' basis.
4. Power of an attorney is required provided it is filed through an (agent / attorney).
5. Applications are examined as to registrability and availability based on existing filed
applications. Once accepted, it is published in the Trademarks Journal and any
opposition to it may be filed by a third party within 3 months (extendable by one
month). If no opposition is filed, the registration certificate is issued thereafter.
6. A trademark may be subject to removal on the grounds of non-use, if it is not used for
a continuous period of five years.
7. The registration is valid for 10 years from the date of application and can be
subsequently renewed after every 10 years by a payment of renewal fees.
8. Priority can be claimed in the convention country, provided the application is filed
within 6 months from the date of filing in the original country.

A Trademark is selected with certain precautions such as;

a) A trademark must be chosen carefully

b) If a product is going to be launched and is adopting a new trademark, it should bear in
mind the scope of legal protection it would have to obtain

Similarly, it depends on pending work upon which the type of trademark chosen. Descriptive
trademarks are difficult to register and enforce. Although it may be easier to market such
products at inception, such trademarks are offered the least amount of protection. In the long
term, it would be difficult to stop the competitors from using the same or similar trademarks.

Example: Amul is a registered trademark under the classification of Diary Product which falls
under class 29. Now, if another person uses the name but sells orange squash, it does not
deceive or confuse the customer. But, if he sells curd or clarified butter under the name
’Amul’ and maintains that it has got some relations with the original company, then it
becomes an act of infringement. It is thus mandatory to follow certain guidelines as
enumerated here:

• Avoid superlative or laudatory words e.g., premium, gold, deluxe etc.

• Avoid descriptive words e.g., coffee shop for coffee bars; cooler for refrigerators

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• Avoid trademarks that are similar and confusing with the existing trademarks
• Avoid words which have direct reference to the character or quality of the product or
service such as best choice, easy cook, super etc.
• Avoid common personal names or surnames. Such names are registrable only if it has
acquired distinctiveness through advertisements and long use.

Self-Assessment Questions - 3

Fill in the blanks:

13. Trademark originated from _________________.

14. Logo stands for a company’s _____________________ .
15. Trademark can be cancelled if it is not _______________ or if _____________is not
filed or if proper ___________________ is not exercised.
16. Trademark is valid for ______________ .
17. State True or False: In Trademark, describing a product by quality or quantity or
use of national logo is prohibited.

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5. COPYRIGHT
In simple words it means the right to copy. It is based on the notion that people who create
or produce creative work have the right to decide how the fruits of their talent, skill and
labour should be displayed. Copyright aims at providing protection to authors (writers,
artists, music composers, etc.) on their creations. Such creations are usually designated as
“works”. It is an exclusive right to reproduce an original work of authorship fixed in a
tangible medium of expression, to prepare derivative works based upon the original work
and to perform or display the work in case of musical, dramatic, choreography, art, literature
and sculptural works. It arises the moment the author creates the work and the act requires
it to get it registered with the government for its protection so that nobody can reproduce
the same without the creator’s permission. The holder of the copyright can sue the
unauthorised user and claim damage and compensation as well. Copyrights are protected in
India by the Copyright Act, 1957.

Copyrighted work: Works of authorship that fall within the definition of copyrightable
work includes:

1. Literary work which includes books and other writing, musical composition, paintings,
sculpture, computer programming and films, television recording of events and
television shows.
2. Musical works and accompanying lyrics.
3. Dramatic work.
4. Pictorial graphic and sculptural works.
5. Sound recordings.
6. Cinematograph.

Rights of the owner:

There are two types of rights available -

1. Economic Rights: These rights allow the owner to derive financial reward from the
use and exploitation of the work. The creator can use his/her work as he/she deems fit.
The creator can also authorize or prohibit the following acts in relation to a work:
- reproduction in various forms, for example in a printed publication or by

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recording the work in cassettes, compact disks or videodiscs, or by storing

it in computer memories;
- distribution, for example through sale to the public of copies of the work;
- public performance, for example by performing music during a concert,
or a play on stage;
- broadcasting and communication to the public, by radio or T.V, cable
or satellite;
- translation into other languages;
- adaptation, for example by converting a novel or a play into a screenplay
for a film

Term of Copyright

Copyright registration is valid for 60 years plus the life time of the author/artist who created
the work.

Advantages of copyright registration

• By registering the copyright work, a public record of the work and a concrete proof of
the ownership are established.
• If someone copies your work, you can sue them for copyright infringement.

Copyright owners have the exclusive right to either do or authorise the doing of any of the
following:

• to reproduce the work in any material form including the storing of it in any medium
by electronic means
• to issue copies of the work to the public where there are no copies in publication
• to perform the work in public or communicate it to the public to make any translation
or adaptation of the work

Copyright infringement: Copyright infringement occurs when someone other than the
copyright holder copies the ‘expression’ of a work or withoutthe expressed permission of
the owner. Copyright infringement can occur even if someone does not copy a work exactly.

Risk of Copyright infringement: Nowadays with the advancement of technology, virtually

anything can be copied easily and nearly perfectly. One way to combat potential copyright

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infringement is to occasionally do Google searches by entering some blocks of text and/or

images from the copyright work. If the infringers have displayed your work or posted for
sale on the Net, there are chances of locating it. After this you should report the copyright
infringement to the issuer of copyright immediately. Depending on the seriousness of the
copyright infringement, it may be decided whether to hire a lawyer to send a legal letter.

The scale of copyright abuse: The scale of copyright abuse is enormous. Based on some
recent industry estimates, the US dollar losses from illegal use of material are:

Music industry – $ 5 billion

Software industry – $ 13 billion

Movie industry – $ 4 billion

Standard industry – $ 1 billion

Self-Assessment Questions - 4
18. Copyright means exclusive right by the author to ___________ and express his
original work.
19. The minimum term for copyright is __________ .
20. Infringement in copyright occurs when somebody other than the copyright
holder copies the work.
21. State True or False: Copyright includes inventions which are new and
protected.

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6. SUMMARY
Let us review the following important concepts that have been discussed in this unit:

• In order to protect a new invention the patent rights have to be designed to protect the
inventor.
• The WTO has initiated reforms to protect the rights of the inventor through the
agreement of TRIPs.
• We have understood the definitions of trademarks, its necessity and its importance.
• To protect the owner of the literary work and other musical and artistic work the
copyright law is put into practice, otherwise the work can be copied, imitated or
reproduced by another.

7. TERMINAL QUESTIONS

1. What do you understand by intellectual property rights?

2. How does the word ‘invention’ play an important part or role in patent law?
3. State the difference between process patent and product patent.
4. How does the WTO protect rights of its members by the TRIPS agreement?
5. Is it important to have a trademark and trademark registration for a product? Explain.
6. Discuss the important features of trademark Act, 1999.
7. Copyright is an important part of IPR. Explain the definition of copyright and the rights
of the owner.
8. What do you mean by copyright infringement and the risk involved in it?

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8. ANSWERS
Self Assessment Questions

1. Patere, to open
2. Statutory, inventors
3. D
4. False
5. True
6. False
7. True
8. True
9. True
10. Invention, value, relevance
11. Trade-related aspects of intellectual property rights
12. C
13. Indus valley civilisation
14. Commercial brand
15. Used, renewal, quality control
16. 10 years
17. True
18. Produce
19. 60 years
20. True
21. True

Terminal Questions

1. IPR and its importance. For details, refer to Section 12.1.

2. Inventions as described in IPR, For details, refer to Section 12.2.
3. Procedure to grant process and product patent. For details, refer to Section 12.2.
4. WTO stands with respect to patent law. For details, refer to Section 12.2.

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5. Trade mark and its registration process. For details, refer

to Section 12.4.
6. Salient features of trademark. For details, refer to Section 12.4.
7. Copyright and ownership right of the owner. For details, refer to Section 12.5.
8. Infringement and the risk involved. For details, refer to Section 12.5.

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