The rise of the phoenix

This article is as much about one of India’s most powerful quasi-judicial forums – the Intellectual Property Appellate Board (IPAB) – as it is about the person largely responsible for making it a force to reckon with: the IPAB’s former chairperson, Justice Prabha Sridevan, an ex-judge of Madras High Court, who was named for two years’ running as one of 50 most influential people in the field of intellectual property (IP) in the world.

In 2011, Justice Sridevan inherited the reins of a tribunal, which hears appeals against decisions made by India’s intellectual property office as well as petitions for trademark rectification and patent revocation. The tribunal, which is based in Chennai, is seriously underfunded and circuit bench hearings held in Mumbai, Delhi, Kolkata and Ahmedabad have at times been cancelled for want of resources. In addition, as the IPAB has no permanent place to function in some of these cities, when such hearings have taken place they have been held in ad hoc locations such as the Indian Law Institute in New Delhi. Sometimes written orders have been delayed due to a lack of secretarial staff.

Despite such hurdles, the judgments of the IPAB over the past two years have been remarkable not just for their far-reaching substantive content, but also for their scathing indictment of several practices of convenience followed by the Indian patent and trademark office, in clear disregard of rules of procedure and the law of the land.

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Tightening the noose

Commenting on the implementation of section 8 of the Patents Act, 1970 – which requires foreign applicants to disclose the prosecution history of “the same or substantially the same invention” in other jurisdictions – in a 27 July ruling in Fresenius Kabi Oncology Ltd v Glaxo Group Ltd, the IPAB began by saying that a request for information made in a December 2005 first examination report was “vague and gives room for manipulation”.

Then, commenting on a subsequent letter that stated that following a discussion between the patentee’s counsel and the patent office it had been settled that the patentee would submit prosecution details of any one of the major patent offices, the IPAB said: “We do not understand what ‘settled’ means. It is unfortunate that the office has failed to understand the importance of the S.8 requirement and leaves it to the Patentee to decide what he will give. We earnestly hope that this practice has died a natural death. It is important that the Patentee furnishes details of those search reports where there are objections like obviousness objections and shall not suppress them. If one of the major Patent Offices alone has raised an obviousness objection, it is the duty of the Patentee to disclose it, considering the Object of the Act”.

Poor practice triggers delays

Several orders of the IPAB highlight that a lion’s share of the blame for the backlog in cases at the patent office rests on the poor practices adopted during prosecution that trigger endless challenges and have no basis in either the law or rules of procedure.

In a previous ruling in Sugen v Cipla, made on 14 May, the IPAB, in a harshly worded indictment of the patent office, noted: “It is unfortunate that this patent litigation has been going back and forth only because there are procedural lapses in the IPO [Indian patent office]. It benefits neither the patentee nor the opponent. If the patent is good then the ongoing litigation is an unnecessary harassment for the patentee. If the patent is bad then in spite of being revoked twice having the appeal allowed on a technical plea which goes to the root of the matter, is unfair to the challenger and harmful to public interest. This is avoidable and must be avoided. We hope that in future such lapses do not arise and the main issue regarding the patentability of the invention is decided without delay.”

Little application of mind

The trademark office has not been spared either. In a 28 June order in M/s ITC Ltd v M/s Three-N Products Pvt Ltd, while directing the rectification of the mark AYUR, the IPAB said: “It is indeed unfortunate that the Registrar who registered the first mark AYUR for the respondent, had not endorsed that the respondent will not have an exclusive right to AYUR. If he had done that, the respondent may have come up with modifications.

Further, with such a registration, the respondent would not have ventured to launch an attack on anyone who ‘dared’ to use AYUR anywhere in their marks … The Registrars who are vested with the important duty of deciding which marks are registrable should make their decision wisely and correctly. We doubt if anyone in India can plead ignorance of the meaning of the words Ayu or Ayur. It is very unfortunate that by casually granting this registration, the Registrar has generated unwarranted litigation.”

The words Ayu and Ayur mean life and are associated with Ayurveda, a form of alternative medicine.

Opaque practices

The non-responsiveness of the trademark office to correspondence is a common grouse of practitioners. This and the often frustrating opacity in the prosecution of trademarks was also severely criticized in a 5 July order in NWL France Service SAS v KB Hiralal, in which the IPAB said: “The narration of events in this case will bring light to the lack of transparency, the failure on the part of the Trade Mark Registry to respond to letters from the counsel and absence of internal communication within the Registry itself regarding the developments in the registration proceedings; all leading to miscarriage of justice.”

In a further scathing comment the IPAB said: “We disapprove of this attitude of an authority vested with quasi-judicial powers. When letters are written on behalf of a party pursuing the statutory proceedings, it is in fact the duty of the Trade Marks Registry to give replies accurately and as early as possible. We do not understand how the web-site can show the mark as abandoned, even in July, 2008, as seen from the letter written by the Counsel for the appellant which shows that check-up of the application on the Online status facilities indicated that the application is treated as abandoned, when the order is passed only in 2009. Are we to understand that even before an order is passed treating the mark as abandoned, the online facility would anticipate that order? This indicates that there is some deep malaise.”

Bouquets and brickbats

It is no wonder therefore that the IPAB has as many admirers as it has detractors. Its refusal to endorse sanctions for repeated adjournment-seekers (imposing heavy costs and penalties such as changing the hearing venue), or initiate moves to come up with guidelines and notifications to enhance the quality of its decision making has been met with as much admiration as criticism.

Recently the IPAB said there was a need for independent court experts in the Fresenius Kabi v Glaxo case. It said that such experts ought to be given the copies of the complete specifications, the prior art and other evidence referred to by both sides and not the pleadings, in order that they may “examine the materials furnished and give their opinion on the novelty, obviousness, insufficiency as the case may be”.

In the same case, the IPAB recorded that the lack of consensus on the choice of the expert in the matter, coupled with the patentee’s unwillingness to name an Indian expert, resulted in the order being passed by them in the matter without the assistance of an expert. The prohibitive cost of appointing a foreign expert and the foreign exchange regulations on remuneration ruled out the option of using a foreign expert.

Questions about the tribunal’s status

Despite the strong messages being repeatedly sent out by the judgments of the IPAB on both patent and trademark issues, its constitutionality as a body and the scope of its authority have been mired in controversy since its inception.

A writ petition on this issue filed by Shamnad Basheer, an IP academic, before Madras High Court was admitted in January 2011, but is yet to be heard. Among other things, the petition challenges the lack of judicial oversight over the appointment of members of the IPAB, other than the chairperson, and points out that “it is not exactly clear” who the members of the selection committee are.

Basheer’s petition also assails the fact that technical members of the IPAB, who are not required to have a degree in law, are permitted to eventually become the chairperson of the IPAB, which is a position equivalent to that of a high court judge.

The petition points out that “under the current setup, two persons without law degrees can decide trademark and patent matters which were formerly being heard by Judges of the High Courts. This would also mean that once a former Registrar of Trade Marks qualifies as a Technical Member and subsequently qualifies to become a Vice-Chairperson, he or she may sit as a Judicial Member on a Bench, along with a ‘Technical Member’ appointed under the Patents Act and decide patent matters despite the fact that the person in question does not have a law degree or an expertise in science and technology.”

Statutory lacunae

While it remains to be seen how this petition will eventually be decided, there is little doubt that the amendments to the trademarks and patents statutes under which the IPAB was created are not appropriately worded. This is not just in relation to appointments to the IPAB but also on the substantive issue of its powers.

The most glaring among the numerous omissions in the amendments to the statutes is the lack of an appellate mechanism to challenge the orders of the IPAB with the result that writ remedies, which are meant to be sparingly used to challenge governmental excesses and unjustifiable acts of public authorities, have now become the established and only means of challenging an order of the IPAB.

In the same vein, the Trade Marks Act, 1999, (but not the Patents Act) categorically states that the IPAB is not procedurally bound by the Civil Procedure Code, 1908, and is to be governed by the principles of natural justice, and goes on to broadly discuss the manner in which cases will be filed, heard and decided.

However, in enumerating the powers of the IPAB, the Trade Marks Act fails to include the IPAB’s power to review its own decisions. A curious situation is created because the rules discuss the manner and means of filing a review petition, even though the act does not include such a power. The same is true of the Patents Act.

Both statutes are also silent on whether the IPAB has the power to pass interim orders staying the operation of a patent or a trademark.

Taking a stand

In view of this conundrum, the chairperson organized two full bench hearings of the IPAB, in May and June, to hear arguments on the power of the board to grant interim orders in rectification and revocation petitions and on the power of the board to review its own orders.

For the IPAB to attempt to interpret the extent of its own powers was both remarkable and unexpected. It was also a first in that the board invited all interested attorneys who practise before it, and who were likely to be affected by orders arising from the hearings, to address the issues as amicus curiae. Attorneys who had filed for interim stays or sought a review of various orders of the IPAB were also invited to present their arguments. Subsequently, by two orders, both dated 8 July, the IPAB held that it has the power to grant interim orders of stay and injunction at the application and appeal stage as well as the power of substantively reviewing its own decisions.

In the case of interim orders, its power was circumscribed by five conditions:

1. Before passing an interim order the IPAB would explore the possibility of deciding the main matter expeditiously, which would be the preferred alternative.
2. No interim stay orders would be granted ex parte.
3. If the trademark or patent has been in force for a considerable period of time then no interim relief would be granted.
4. The usual principles governing ex parte injunctions, i.e. prima facie case, balance of convenience and irreparable injury, would apply.
5. The order should preferably be worded such that it would only bind the parties and no one else.

The power of review appears to have either been contemplated already in or read into the provisions of other similar statutes as a power by which a judicial or quasi-judicial tribunal can rectify its own errors. However, it may be problematic for a tribunal to vest itself with the power to grant substantive relief in the form of interim stays and injunctions, in the absence of specific legislative intent to that effect.

Even if the power to grant interim stays and injunctions can be read into the existing powers of the IPAB, the condition that “the order should preferably be worded such that it would only bind the parties and no one else” may lead to problems.

Assuming a trademark or a patent was stayed during an appeal proceeding before the IPAB for prima facie reasons like fraud or misrepresentation, if the stay only applied to the parties while the patent or trademark remained valid for the rest of the world, it would be clearly unconscionable and would lead to chaos in litigation.

Given the number of opponents among practitioners to this order of the IPAB, challenges may well arise.

What lies ahead

In a small victory of sorts in the battle for resources, just three weeks before Justice Sridevan’s retirement on 8 August, a Delhi High Court order on 18 July (with the consent of the petitioner, the Asian Patent Attorneys’ Association, and the respondent, the Union of India) stated that the IPAB would be allotted a fixed location for sittings of its circuit bench in New Delhi in a new building that would house IP-related offices.

Meanwhile, as Justice Sridevan firms up her post-retirement plans and the community of IP owners and practitioners eagerly awaits the announcement of the name of the next chairperson of the IPAB, it remains to be seen whether this tribunal will return to its erstwhile comfortable complacence or continue to stir up a storm like the proverbial phoenix from the ashes.

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Shwetasree Majumder is the managing partner of Fidus Law Chambers, a boutique practice based in New Delhi that offers contentious and non-contentious solutions in the areas of IP and information technology law.