INDIA (DOMESTIC FIRMS): An Introduction to Intellectual Property

Overview of Intellectual Property and Related Laws

The last 12-18 months saw Artificial Intelligence and Data Privacy as the main catalysts behind the development of Intellectual Property law and policy. New legislation, policies have been introduced on Artificial Intelligence (AI), Data Privacy. Judicial decisions have encouraged more software patents with visible urgency and have even suggested a review of existing law. Generative AI has been used to write portions of decisions, and yet, the judiciary has rightly, cautioned against its use to build evidence in support of one’s case.

In non-digital areas, the judiciary has refined concepts and notions in trademark, copyright and patent law, and has delivered a mature body of work which scores high on quality and quantity. 

AI and IP

India is expected to table a new Bill in Parliament called the “Digital India Act” sometime in 2024. When enacted, it will be India’s first legislation, which directly regulates Artificial Intelligence. Until then, individuals and corporations are guided by non-binding policies and judicial decisions on AI. Some of these are as follows:

• Government policies have set the ethical and legal foundation for the development of AI in India. Some policies include NITI Aayog’s “Responsible AI for all”; Indian Council of Medical Research (ICMR)’s Ethical guidelines on the use of Artificial Intelligence. They emphasise the prime importance of the use of human autonomy in decision making. They also place emphasis on fairness, safety, transparency and clarity of AI models, and suggest standards on how to avoid bias in data. 

• Deepfakes took the lion’s share of the government’s attention. In November 2023, the government advised intermediaries to identify and delete deepfakes, by themselves or within 36 hours of being informed. Recognising the potential of deepfakes to destabilise general elections, the government’s advisory in March 2024 recommended the use of labels to identify AI generated content, and unique identifiers to trace those who made deepfakes.

• On the patent front, most AI inventions will have to pass the threshold of Section 3(k) of the Patents Act, 1970 to secure registration, by demonstrating that the invention delivers a “technical effect”. The decision in Priya Randolph v Controller, said that an invention for concealing personal information in e-commerce was not inherently unpatentable. Microsoft v Controller of Patents saw the Court direct the Patents Office to provide an objective list of examples of what is patentable and what isn’t under Section 3(k), so that inventors have clarity before they file patents. OpenTV v Controllers suggested a serious need to relook patentability criteria so that patent law encourages digital innovation, instead of curtailing it.

• On the copyright front,the current practices of AI companies training their models on content, without authorisation from copyright holders does not seem to be a defence to infringement. “Fair dealing” under Section 52 of the Copyright Act, 1957 protects private, non-commercial use. This view is supported by the government’s emphasis on copyright holders’ right to authorise (or refuse) permission and receive royalty in exchange of the use of their content to train AI models.

• Litigation - The use of generative AI to violate personality rights was restrained in Anil Kapoor v Simply Life and Jaikishan Kakubhai Saraf v Peppy Store. The former saw the use of Midjourneyto portray a Bollywood actor in a cartoonish setting without his permission, besides using other software to make offensive deepfakes. The latter saw AI chatbots impersonating another actor’s unique and iconic style. The Court passed injunctions, recognising violating of personality rights, besides noting the potential of AI to deprive actors of their right to endorsement.

Data Privacy

The Digital Personal Data Protection Act 2023 (DPDPA) was enacted to balance the need of individuals’ (data principals) to protect their personal data, with those of businesses (data fiduciaries) to process such data. The legislation sets a strong consent-centric mechanism and enables the use of personal data only after a notice setting out the precise requirement for that data was provided and informed consent was secured from the individual. Stricter norms have been put in place for personal data of children, and tracking, behaviour monitoring, or targeted advertisements have been prohibited. Individuals have now been given the right to withdraw their consent, demand deletion of their data etc.

Strong technical and organisational measures must also be adopted to safeguard the data collected. 

The DPDPA gives a broad skeletal structure of the personal data privacy regime in India. The granular rules, dos and don’ts will come in the form of the DPDP Rules which are expected to be announced very soon.  

Patent Law

Standard Essential Patents

• The Delhi High Court’s final judgment in Ericsson v Lava saw India raise its SEP bar a couple of notches higher. Seven out of eight of Ericsson’s 2G, 3G SEPs were held valid and infringed, and the Court set the first-ever FRAND rate for a global portfolio license in India at 1.05% of Lava’s Net Selling Price (per mobile phone), which converted into a damages ward of nearly USD 27 million. Comparable license approach was upheld as the correct method for FRAND valuation, instead of the “top-down” method. The patent exhaustion defence was rejected because Ericsson’s license with Qualcomm concerned CDMA technology, which wasn’t being used by Lava. Lava itself didn’t have an agreement with Qualcomm, which indemnified it against a patent infringement claim from Ericsson. The decision also has definitive guidance on patent hold-out. Refusal to give a counteroffer, unsuccessful negotiation for two years, failure to license third-party SEPs, and a surprise lawsuit against the SEP holder for FRAND rate setting all constitute hold-out. 

• The recent decision in InterDigital v Oppo advances Indian law on discovery and relevance of patent license agreements in an SEP dispute. If a Defendant pleads patent exhaustion because of the use of Qualcomm chipsets in its phones, then it must disclose its agreement with Qualcomm. If the SEP holder too has licensed Qualcomm, then it must disclose its agreement too.

Pharmaceutical Patent Litigation

Reversing a first-instance judgment, the Delhi High Court’s lucid decision in Vifor v MSN (and others) aligns India with the UK and EP position, and away from the US position on product-by-process claims. The decision held that these are product claims and will be infringed no matter the process used to make the product. The process described in the claim is only illustrative and was necessitated because the product is so large and complex that it could not be described in any other way, apart from writing down the steps to make it.   

The Natco v Novartis appellate decision reversed an injunction in favour of the patent holder and has dealt a blow to Novartis. The validity of its species patent was in serious doubt. The Court held that it didn’t have therapeutic efficacy as required under Section 3(d). It also lacked novelty because it was covered and disclosed by the prior, genus patent. The Court’s findings present troubled waters for a lot of innovator companies who have both genus and species patents.

Damages in Patent Law

Ericsson v Lava saw the judicial validity of the principle that damages are grantable from the pre-grant publication of a patent under Section 11A of the Patents Act, 1970. The three-year bar of limitation has no role to play in assessment of damages in patent law.

Communication v Mobi Technologies saw the Court grant a whopping USD 25 million as damages. The court recognised “lost profits” and “reasonable royalties” as the two recognised theories of assessing compensatory damages. The Plaintiff based its case on the former theory and was able to quantify the profits it couldn’t earn on the sale of products that was blocked prevented due to infringing products of the Defendants.

Trademarks and Copyright

Google Adwords – Google v DRS birthed the principle that not every use of a trademark as keywords (as part of buying advertisement space on Google) automatically results in trademark infringement. The Court also held that the internet user isn’t illiterate and is quite aware of how search engines work. By inputting a trademark, the user can expect to have reviews about its proprietor, or even its competitor. However, on facts, Google was found to have infringed the trademarks in question.

Refurbished goods - Seagate v Daichi balanced rights of trademark proprietors with those of sellers of refurbished goods. The Court obligated refurbishes to make full disclosure that the product was manufactured by the proprietor, but it is used and refurbished. It should also disclose that the product is not under the proprietor’s warranty. Wordmarks can be used, but not logos.

Artists’ inalienable right to royalty - Vodafone v Saregama saw a much-needed end to the debate on whether artists (authors) are entitled to receive royalties for the commercial use of their sound recordings. The Court held in favour of artists, citing the amendments to the Copyright Act in 2012, and held that the right to receive royalties for exploitation of their work vested with artists for all times to come.