US Supreme Court to decide on Patent–Eligibility of ‘Computer-Implemented Inventions’

Section 101 of US Patent Act (“35 U.S.C. § 101”) provides that one may obtain patent for invention or discovery of any new and useful subject-matter (process, machine, manufacture etc.) or for any new and useful improvement thereof. In a pending case before it, United States Supreme Court (“Supreme Court) has to decide whether claims related to ‘computer-implemented inventions’ are patent-eligible subject matter within the meaning of 35 U.S.C. § 101.

Invoking the writ jurisdiction (writ of certiorari) of the Supreme Court under 28 U.S. Code § 1254(1), Alice Corporation Pty. Ltd. (“Petitioner”) has filed a petition against the decision given in an en banc hearing. The disputed invention in the present case relates to a ‘computerised system for creating and exchanging financial instruments such as derivates’ (“INVENTCO system”). One aspect of INVENTCO system can be described as follows:

“.....specific computer system and computerized process for the execution of a previously agreed-upon exchange, known as “settlement”

To understand it more clearly, prior to the execution of an agreement to exchange financial instruments or assets, there is a stage where parties merely agree to execute the exchange. There may be situations where one of the parties, at the time of actual execution or settlement of the agreement, performs its obligation(s) but other party does not. So as to address this situation of risk, the disputed invention provides for a specifically programmed computer. Following are the features of this computerised system:

Enercon Case: Pro-Arbitration Approach and Determination of Arbitration ‘Seat’

In what can termed as an important development in Arbitration Law, the Supreme Court of India (“Supreme Court”) has delivered a 129-page judgment wherein issues such as ‘factors determining seat of arbitration’, ‘concurrent jurisdiction of foreign court’ etc. have been discussed. In Enercon (India) Ltd. & Ors v. Enercon GMBH & Anr. , the Supreme Court had to decide appeal(s) against two judgments of Bombay High Court – one judgment which allowed the application of the respondent under section 45 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and other  judgment vacating the anti-suit injunction issued against the respondent.

Before going to and discussing underlying issues, it would first be important to understand the factual background.

Factual Background: In 1994, Appellants no. 2 and 3 (“Members of Mehra Family”) entered into a Joint Venture Agreement (“JVA”) with Respondent no. 1 (“Enercon GMBH”) to incorporate Appellant no.1 [“Enercon (India) Ltd.”]. The objective behind incorporating Appellant no.1 was to manufacture and sell Wind Turbine Generators (“WTG”). In furtherance of JVA, both the parties executed certain agreements which included Share Holding Agreement and Technical Know How Agreement (“TKHA”) (these agreements were later amended). 

After the expiry of TKHA, there were further negotiations between the parties. These negotiations, which were recorded in a document titled ‘Heads of Agreement’, sought to explore the possibility of agreement to transfer future technology developed by the Respondents. Following these negotiations, parties entered into ‘Agreed Principles’, which were meant to be the basis of all the final agreements. On the same day when ‘Agreed Principles’ were executed, parties also executed and signed Intellectual Property License Agreement (“IPLA”). IPLA contained an arbitration clause (Clause 18) which can be read as follows:

17 GOVERNING LAW

17.1  This  Agreement  and  any  dispute  of  claims arising out of or in connection with its subject matter are  governed  by  and  construed  in  accordance  with the Law of India.

18. DISPUTES AND ARBITRATION

18.1 All disputes.....................any  Party  may refer  dispute(s), controversy(ies) or difference(s) for resolution  to  an  arbitral  tribunal  to  consist  of  three (3) arbitrators, of who one will be appointed by each of  the  Licensor  and  the  Licensee  and  the  arbitrator appointed by Licensor shall also act as the presiding arbitrator.

18.2 ....................

18.3  A  proceedings  in  such  arbitration  shall  be conducted  in  English.  The venue of the arbitration proceedings shall be in London. The arbitrators may (but  shall  not  be  obliged  to)  award  costs  and reasonable  expenses  (including  reasonable-fees  of counsel)  to  the  Party  (ies)  that  substantially  prevail on  merit.  The provisions of Indian Arbitration and Conciliation Act, 1996 shall apply........”

As disputes arose between the parties, Respondent(s) sought to initiate arbitration proceedings thereby nominating an arbitrator. Respondents further sought to file an ‘Arbitration Claim Form’ before the English High Court. This initiation of arbitration was resisted by the Appellants on the ground that there was no ‘concluded contract (IPLA)’ and hence there was no question of arbitration. While Appellants claimed that IPLA was not a concluded contract because of its non-conformity with ‘Agreed Principles’, Respondents claimed it to be a binding contract.

SC issues directions to the High Court(s) for Appointing Employees

Recognising the importance of a transparent procedure to be adopted by the High Courts in appointing employees, the Supreme Court of India (“Supreme Court”) has recently issued certain directions regarding the same (Renu & Ors. v. District & Sessions Judge, Tis Hazari & Anr.)

In the judgment delivered by Justice B.S. Chauhan (for three –judge bench which also included Justice J. Chelameswar and M.Y. Eqbal), it has been emphasised that the administrative power exercised by the Chief Justice of a High Court under Article 229 Constitution of India, 1950 (“Constitution”) should be in conformity with Articles 14 and 16. That is, Chief Justice cannot make appointments in contravention with Statutory Rules, and has to be in consonance with the Constitution.

Article 229 of the Constitution provides that ‘officers and servants’ of the High Court shall be made by the Chief Justice of that Court or such Judge or officer of the Court as he may direct. Article 235 of the Constitution confers power upon the concerned High Court to exercise administrative control over subordinate courts. Emphasising that employment (of all the classes) in the High Court or courts subordinate to it falls within the definition of ‘public employment’, it was held that the same should be carried through in a constitutional manner.

Following are the directions which were issued by the court in this judgment:

i)             All High Courts are requested to re-examine the statutory rules dealing with the appointment of staff in the High Court as well as in the subordinate courts and in case any of the rule is not in conformity and consonance with the provisions of Articles 14 and 16 of the Constitution, the same may be modified.

US to initiate WTO action against India’s ‘Domestic Content Requirement’ in Solar Mission

In a recent move, United States has sought to initiate World Trade Organisation (“WTO”) dispute settlement consultations with India concerning ‘domestic content requirement’ (“DCR”) in Phase-II of India’s national solar mission. This is the second time when US has initiated WTO action against India’s Jawaharlal Nehru National Solar Mission – the first action was brought in February 2013 against similar DCR in Phase-I of Jawaharlal Nehru National Solar Mission (“JNNSM”).

In a statement issued by the Office of United States Trade Representative (“USTR”), it has been contended that DCR under JNNSM is against the obligations contemplated under General Agreement on Trade and Tariffs, 1994 (“GATT”), Agreement on Trade Related Investment Measures (“TRIMs”) and Agreement on Subsidies and Countervailing Measures (“SCM”). Under WTO dispute settlement mechanism, consultation is the initial step which a member state can resorts to.

In this blog post, I have explained what DCR or domestic/local content requirements are, relevant description of JNNSM and relevant WTO provisions concerning the present case.

What is ‘Domestic’ or ‘Local’ Content Requirement?

‘Local Content Requirement’ can be understood as a regulation that requires a specified fraction of a final good, work or service to be sourced domestically. Article 7.2 of EU-Singapore Free Trade Agreement defines the phrase as a requirement for an enterprise to purchase or use goods of domestic origin. In other words, where a state imposes an obligation to have ‘local content’ in product or service, producers (both domestic and international) would mandatorily be required to source specified quantity of local content.

However, in a statement published by USTR, local content requirement or DCR has been described as the obligation to produce content locally. It has been described in the following terms:

“ ........require businesses to produce a certain level of content (materials, parts, etc.) within the country where the end product will be sold.”

The above description, as provided by USTR, has been doubted in a blog post. For the purpose of present dispute, DCR should be understood as a condition which requires developers to use specified quantity of domestically manufactured content.

Though the objective of DCR may vary, it is generally accepted that DCR measures seek to encourage domestic industry and further seek to increase employment. In fields such as solar energy, initial governmental support is required for the existence of firms and development of proper infrastructure. Usually, the government support is also required for the innovation at domestic level. Equally forceful arguments are available against the usage of measures such as DCR – one of them being that DCR increases the cost of solar energy.  

The usage of DCR measures vary from country to country depending on factors such as but not limited to technology, infrastructure, financial stability etc.

Copyright war for ‘Sherlock Holmes’!

For a person, irrespective of whether he is related or non-related to law, ‘Sherlock Homes’ is not an unfamiliar character. Being conceived by Sir Arthur Conan Doyle and first appearing in the year 1887 (A Study in Scarlet), the characters of Sherlock Holmes and his friend, Dr. John Watson, have made a distinct mark in novels, short stories, cinema, TV series etc.

(Image Source: BBC America)

Recently, a U.S. court, while delivering a ‘declaratory judgment’, has held that both the characters, Sherlock Holmes and Dr. John Watson, are among those elements of Doyle’s works which no longer enjoy copyright protection in United States. The action was brought by Leslie S. Klinger against Conan Doyle Estate Ltd. Klinger had claimed that ‘various characters, character traits and other story elements from Sir Arthur Conan Doyle’s Sherlock Holmes stories are free for the public to copy’. A large number of Doyle’s works (published prior to 1923), which consists of four novels and forty-six short stories out of a total of fifty-six, are now in public domain and no longer enjoy copyright protection. However, some of his works, i.e., ten short stories or ‘Ten Stories’ (published post-1923), still enjoy copyright protection.

Direct Selling Industry in India: Legal Issues and Challenges

Last month, I was reading a news-report wherein it was mentioned that the direct selling sector has registered a growth of 12.2% in financial year 2012-13. I was not surprised. Having spent quite some time in reading about the sector, I was sure that direct selling industry has a promising future. But then, there was a question that I asked to myself - whether there is a suitable legal regime which can protect the continuous growth of direct selling industry in India? To answer this question effectively, both for me and readers, I decided to write this post.

I will try to explain following key points pertaining to the existence of direct selling industry:

(i)            What actually a ‘Direct Selling’ Industry is? How is it different from other modes of selling?

(ii)          Whether Indian legal regime protects direct selling industry? What are the legal issues and challenges?

(iii)         What are the solutions which have until now been offered?

What is Direct Selling?

According to Black’s Law Dictionary (9^th Ed.), ‘direct’ means straight, undeviating etc. and ‘sell’ means to transfer (property) by sale.[1]In other words, a sale, which is channelled through a straight or undeviating medium, can be considered as direct selling. For instance, presence of a buyer and a seller would be sufficient to constitute this undeviating sale or direct selling. The presence of ordinary retail shop, which one usually comes across, is not required. In retail trading, retail shop act as a part of supply chain between the seller and the buyer and is distinct from direct selling.

For the sake of convenience, let me now refer to the explanation as provided by Indian Direct Selling Association (“IDSA”), an autonomous and self-regulatory body for direct selling industry in India. According to IDSA, ‘Direct Selling’ can be understood as:

When a Father was ‘Falsely Implicated’ on the Charge of ‘Raping’ his ‘Own Daughter’

That the relation between a daughter and her father is sacrosanct needs no reiteration. Unfortunately, when the society reaches an extreme level of depravity, even this relation is not left from being wrongly used. It is very difficult to think that a mother, in order to satisfy her personal wants, can falsely implicate her ex-husband on the charge of raping ‘their’ own daughter. But, this was what happened in a case which has recently been decided by the Delhi High Court (“High Court”). In Atendar Yadav v. State Govt of NCT of Delhi [judgment dated 29^th October, 2013], the appellant, Atendar Yadav, had challenged the order of trial court in which he was convicted him for committing an offence under section 376(2)(f) of the Indian Penal Code, 1860 (“IPC”). The appellant was convicted by the trail court on charge of raping of no one else but his own daughter.

In May, 2007, it so happened that a complaint was filed against the appellant on the charge that he had raped his daughter, the Prosecutrix, in November and December 2006. The complaint was made after the mother of the Prosecutrix, Geeta Anand, became aware of the incident. While the story of the prosecution was appreciated by the trial court, the High Court was not very much convinced with the same. In fact, the High Court considered this to be a case of false implication. Before I go into the crux of the case, let me highlight its factual background.

Due to poor marital relations between them, Geeta Anand and the appellant had agreed to divorce through mutual consent in February 2007. While the custody of children (Prosecutrix and her younger brother) was given to the appellant, Geeta was granted visitation rights. Prior to the divorce, both Geeta Anand and the appellant had filed several cases against each other (Maintenance, Kidnapping, Domestic Violence etc.). Immediately after the divorce, appellant married another woman. When Geeta Anand became aware of this fact, she was baffled.  She was also not satisfied when, under the settlement, she had agreed to withdraw the all the cases in return of Rs. 1 Lac.

According to Geeta Anand, she was informed by the Prosecutrix of the incident when she had gone to meet the latter at the house of appellant’s parents. Highlighting the pervert behaviour of the appellant, she opined as to how he used to watch blue movies at home. In her testimony before the court, Geeta Anand stated that she became aware of the menstruation period of the Prosecutrix and, according to her, the same started after the rape. On knowing this, she was perplexed as by that time her daughter was only 9 years old. However, in her cross-examination, she had admitted to have told the appellant to take care of the Prosecutrix when she is on periods in September 2006. This was only one of the contradictory evidences given by her.

Quest for a World free of Child Marriages

Recently, India invited the wrath of the international community as well as that of the domestic civil rights bodies when it refused to co-sponsor a United Nations Human Rights Council (UNHRC) resolution recognising child, early and forced marriage. Although the resolution was unanimously adopted with India's support, India refused to join over 100 countries in co-sponsoring the resolution. Perhaps, the harsh realization of the magnitude of commitment required to free herself of this diabolical social evil made her adopt such stance.

It is nevertheless ironical as India continues to be the country with the highest number of child brides. While there exists statues to curb the evil (Prohibition of Child Marriages Act), certain sections of the society such as the Khap Panchayats and certain Islamic religious bodies continue to endorse the practice. As law is rendered toothless without social sanction it is important to analyse the sociological perspective behind early marriages. I came across this wonderfully written editorial in Economic & Political Weekly that seeks to analyse the unfortunately widely prevalent nefarious practice in the Indian society and urges the administrators to be more pro-active in curbing it.

Section 50 of the NDPS Act, 1985 Should not be Ignored While Conducting a Search

In a decision concerning the interpretation of section 50 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (“NDPS Act”), it has been held by the Supreme Court of India (“Supreme Court”) that the provision should not be dealt by the courts in a lightly manner. Section 50 of the NDPS Act provides for the search to be conducted in the presence of a Gazetted Officer or a Magistrate. In the present case, it was contended by the appellant, Gurjan Singh, that the search of the impugned gunny bags was not conducted in the presence of a Gazetted Officer. Rather, it was conducted in the presence of an ‘acting DPS’, who cannot be equated with a Gazetted Officer. In this post, I am highlighted the important facts, contentions and findings of the court.

Facts: On 04.04.1996, after catching the appellant with some suspected gunny bags in a tractor, S.I. Darbara Singh (P.W. 6) informed the appellant of his intention to check the bags. P.W. 6 also told the appellant if the latter wants, the search could be conducted in front a Gazetted Officer. When the appellant consented for search in front of a Gazetted Officer, Baldev Singh (P.W. 3), acting DSP, was called. In front of Baldev Singh, the search was conducted and poppy husk was recovered from the gunny bags. Accordingly, proceedings were initiated against the appellant.

Before the trial court, it was contended on behalf of the appellant that there was clear violation of Sections 42 and 50 of the NDPS Act, in as much as, the search was not conducted in the presence of a Gazetted officer or a Magistrate. According to the appellant, P.W. 3 was not a Gazetted Officer since as he was as not a regularly promoted D.S.P. but was only an Inspector in the category of Own Rank Pay. Rejecting this, trail court held that there was no need to comply with section 50 of the NDPS Act. The appellant was therefore found guilty by the trial court. [Reliance was placed on State of Punjab vs. Balbir Singh, (1994) 3 SCC 299]. On appeal, the decision of the trail court was confirmed by the High Court.