August 2020

A rundown on strategic M&A in backdrop of Intellectual Properties

Intellectual Properties have become an integral part of Asset valuation while identifying the suitable target companies in the context of Mergers & Acquisitions (M&As). Identifying and locating of patent and other related Intellectual property asset counts to be the most crucial element of any strategic M&As. Often Technology-savvy companies with a promising experience in product and service expansions tend to acquire a specific technology along with the technical information which suits best for their area of Interest. However, once the company identifies the target companies, it further requires the acquiring company to determine whether the target’s technology as good as it is claimed to be? Is the company priced fairly? Who are the key inventors and will they stay with the merged or acquired company?

As a part of broad strategic plan, every expanding companies shall possibly determine these factor while entering into a M&A. In order to determine the particulars abovementioned, the acquiring company could ascertain the R&D capabilities and technical expertise possessed by the target company for the purpose of valuation of the technological claims made. This question of determining the technological capabilities and expertise could be discovered by either conducting a Patent technology search or by way of testing out the capability of licensing out the concerned technology or invention.

Further, the acquiring company should also discover the vital or Key inventors whose contributions were relevant for the development of the key technologies. This could assist the acquiring company in absorbing such researchers or developers and taking them on board as part of the acquisition.

This strategic analysis for the purpose of closing a successful M&A deal can only be achieved by way of utilising various relevant and key IP tools and techniques such as carrying an appropriate Patent Information Search, IP Valuation, IP Audits, Acquiring and Managing of Patent Portfolios, Analysing the technology trend in particular countries, Analysing the key inventors involved in the particular area of technology, Strategic Licensing, etc.

ABC of Patent pooling

Patent pooling has been observed to be exceedingly exercised when talking about the technological developments in major sectors. A Patent pool is defined as an agreement between two or more patent owners to license one or more of their patents to one another or to third parties. In simpler terms, Patent pool means accumulation of two or more patented subject matter in order to exploit the inventions for obtaining mutual benefits between the contracting parties or between third parties. Strategically, pooling of patent becomes necessary when an inventor gets stuck in complex technology which requires a complementary patent in order to achieve efficiency in the primary patent. Generally, these patent pools cover mature technologies. Patent Pooling is somewhat similar to a joint Venture with a primary objective of sharing one’s Intellectual property rights.

Some of the major players using the mode of Patent pooling are the Pharma and Telecommunication sectors. Many Pharmaceutical manufacturers took over the option of patent Pooling in order to make avail their drugs at an affordable price by reducing the Research and Development cost, amounting to low cost of selling.

Practically, however, Patent pooling has its own positive and negative consequences. The patent pools may have positive effects on competition and innovation by way of increasing efficiency of the developing technology in the concerned field, reducing litigation costs and reducing transactional cost occurred otherwise. On the other hand, under specific circumstances, patent pools may also lead to anti-competitive trade practices which ultimately distorts the competition.

Lastly, the viability of patent pools as a concept, in the endeavour to create better and cheaper means to achieve innovations, is quite sound. However, keeping in mind, such pool doesn’t raise any competitive concerns in future.

Custodial Violence and related provisions

Introduction:

The term “custodial violence” is in the news from the past few days. From the George Floyd case to Jayraj and Phoenix case various media platforms have been quite vocal about this issue. The people are killed in the custody of police officials and no question is raised over their act.

The term “custodial violence” means whenever violence takes place in the custody of a police officer. The third degree torture is adapted by the police officials to take the confession of the accused. The third degree torture force the person to claim those allegations as well which he didn’t even commit.

Legal position in India:

The UN has formed a convention on Human Rights. The charter of 1975 of UN deals with the provisions related to torture. They have even defined the term torture as “any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession, punishing him for an act he or a third person has committed or is suspected of having committed, or intimidating or coercing him or a third person, or for any reason based on discrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. It does not include pain or suffering arising only from, inherent in or incidental to lawful sanctions.”[1]

India has signed the Charter of 1975 but it is not ratified. In the year 2010, “Anti torture Bill” was brought in the Parliament for discussion where the bill didn’t get the assent from Rajya Sabha. No action was taken to pass the said bill and later on the bill got lapsed. India’s stand on custodial violence is not that firm where the rights of the accused can be protected. However, provisions have been laid down in different legislations where the rights of an accused person are discussed.

Laws in India:

Indian Penal Code:

Section 21: The term “public servant” has been defined where it is termed that any person who is discharging any public duty will be treated as a public servant which includes Judges, Arbitrators, Police officers, etc.

Section 330: The provision talks about voluntarily causing hurt to extort confession. It clearly suggests that no person can take confession from other person which may lead to detection of an offence. The person who is found guilty under this provision shall be punished with imprisonment which may extend to 7 years and shall also be liable to fine.

Section 348: If any person is wrongfully confined for the purpose of extorting confession which may lead to detection of an offence or misconduct, then the person who wrongfully confined the other person will be held liable for imprisonment which may extend to 3 years and shall be liable to fine.

Criminal Procedure Code:

Section 197: It acts as a shield for public servants where they have been given an immunity that while discharging any public duty if they commit anything wrong no court can take cognizance against them.

Rights of arrested person:

Right to know the grounds of arrest.

Medical examination of the accused after every 48 hours.

Health and safety to be maintained of the accused.

Accused to be produced before the Magistrate in 24 hours of arrest.

If the arrest is without warrant the written permission is required from the senior police officer.

If a person is arrested without warrant it is the duty of the police officer to intimate the arrested person that he may be released on bail (not applicable in non bailable offence) and may arrange for sureties on his behalf.

Indian Evidence Act:

Section 24: It states that in any case if confession is made by inducement, threat or promise then it will not be considered as a valid confession.

Section 25: If any confession is made to the police officer in his custody then it will not be considered as a valid confession.

Constitution of India:

Article 22(2): It states that the accused person needs to be produced in 24 hours of arrest before the Magistrate.

Case Laws:

In the case of D.K. Basu vs. State of West Bengal[1], the Hon’ble court laid down certain guidelines that were to be followed by the police officials while arresting a person. The guidelines are as follows:

Police officer to wear names and designations while making arrests.
Arrest memo to be made.
Information of the arrest to be given to relatives or friends of the accused.
Medical examination to be done every 48 hours.
Copy of all the documents to be given to the Magistrate.

In the case of Prakash Singh vs. Union of India[2], the Hon’ble court laid down that an authority should be created to keep a check on matters related to custodial violence.

However, no authority has been created till date.

Conclusion:

There has been a tremendous increase in the cases related to custodial violence in India. India shall ratify the relevant UN convention and the guidelines laid down in the D.K Basu case must be followed. It is the need of an hour that “Anti Torture Bill” shall be passed in India and also an authority must be created to keep an eye on the matters where the custodial violence took place. There should be an increase in human rights training given to police officials. Also, with so much technical advancements it is important to adapt technology in every filed which includes the police department as well.

[1] https://www.ohchr.org/en/professionalinterest/pages/cat.aspx, Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, 1984.

[2] AIR 1997 (1) SCC 416.

[3] Writ Petition (civil) 310 of 1996.

Phonetic Trademark Search: the Flawed facility (Part II)

“Any sufficiently advanced technology is indistinguishable from magic”
Arthur C. Clarke

Phonetic Trademark search is very useful if one’s trademark doesn’t pull out any relevant results in the wordmark search. Although this search is highly advisable to run in addition to the wordmark search type. With its useful results, one can select a new trademark with the minimum possibility of facing S.11 objection or opposition from a third party on the basis of its similarity with any registered mark.

For instance, if an applicant comes up with ‘REALLEAF’ word to register for a specific class of goods but there’s an existing trademark ‘RELIEF’ registered in the same class it would not be safe from any legal trouble to go for it.

Technically, the databases give search results on the basis of Vector Space Model algorithms. They are trained to cluster similar trademark in spelling as well as in pronunciation by encoding words & sentences as numeric vectors. This vector aims to capture the semantic properties of the word – words whose vectors are close together should be similar in terms of semantic meaning. In this model, a user enters a short free-text query, and documents are ranked based on their similarity to the query. The model assumes that the relevance of a document to a query is roughly equal to the document-query similarity. Both the documents and queries are represented using the bag-of-words model.

For example, consider a query “new new times”. A very small collection ‘C’ consists in the following documents. According to calculation of its vector, scores & the similarity values, the order in which the documents will be presented as result to the query will be

d1: “new york times”

d2: “new york post”

d3: “los angeles times”

Search incapability

Despite the Trademark public search database being efficient there continue to be flaws in this facility. Under the Phonetic type of search, the database is unable to actually compare the trademarks matching phonetically. The results are a mixed bag with a lot of useless results.

Following are some hypothetical examples:

When trademark ‘THE HERBIS’ is searched in class 5 as a fresh trademark you get 812 search results. TRIVAX, TRIOPAQUE, TROPHYSAN, TRIVISOL, TRAVASE are the first five and the list goes the same way. These names are undoubtedly and undeniably irrelevant to the searched name. They appear due to the sound of the letter ‘R’ but that doesn’t make it sound similar to ‘THE HERBIS’ in any way. There might be a few similar names in this unending list but to figure that out one has to go through ALL the names.
When ‘LaCarl’ is searched in class 25 the search result shows LUXER, LIGER, LEEZAR, LAUGH & WEAR, LEISURE in the list which does not match with LaCarl at all. The trademarks that can match are LA-CUER, LE CARLO, LEUCARLO. But to find out the matching ones, one has to check all the marks that appear in its search result.

Further, this kind of enormously unnecessary data becomes a challenge for a fresh applicant to pinpoint the trademarks that are similar to his trademark. As the search results are absolutely dissimilar to the searched name there arises no question of their conflict with it. The challenge of going through so much of data cause wastage of time and brings the applicant’s trademark registration at the risk of getting alleged as an infringement or passing off from business competitors.

Conclusion

The Trademark Amendment Rules, 2017 brought advancements in the e-filing system yet this problem continues to exist. Thus, it is highly recommended that the system should be updated to facilitate applicants finding out conflicting trademarks to ensure their trademark safely proceeds toward registration. This would help in reducing the number of objections by the trademark Registry as well as reducing the excess amount of show cause and opposition hearings which has become a burden on the Registrar of trademarks.

The Hunger Games: Catching Infringements

Due to large number of pending patent applications, increasing complexity of technology and Improper patent due diligence, often companies may ride towards undesirable consequences like Patent Infringement and losses in terms of damages.

Recently, one such similar challenge has been brought in front of Apple Inc. with an enormous Infringement suit for $1.43 billion by a Shanghai company Shanghai Zhizhen Network Technology Co. over Apple’s voice assistant technology Siri. Consequently, the suit also prays for stopping the manufacturing, using, promising to sell, selling and importing of products in china which comprises of the concerned smart assistant (Siri).

Usually such Infringement claims are based upon existing patents or any such active patents owned by the competitors. Simultaneously, such Infringement claims have often been resisted by challenging or invalidating the concerning active patent/s. Conducting a successful patent search (Freedom To Operate search or Validity Search) proves to be the best tool in challenging and defending the same in such situations.

Tattoos- Copyright Protection v. Fundamental Human Rights

The practice of body graphics and tattoos have existed from time immemorial. With the constant metamorphosis of technology and art forms and the emergence of new industries like the tattoo industry has raised the question of whether the current legal framework is prepared to effectively govern this budding industry? With a lack of explicit law relating to tattoos and the dearth of judicial precedents, there is a perplexing contradiction between who owns the tattoo and the fundamental freedom of an individual.

To begin with, in India, tattoos can be protected by copyrights under artistic work provided they satisfy the statutory conditions that are ‘original work’ and ‘fixed in tangible medium’ (in this case a human). A proof that tattoos are copyrightable was given by the Indian Copyright Office by registering the tattoo of the letter ’D’ in the name of Shahrukh Khan, for his film Don 2 in 2011.[1] Thus, a tattoo design can be protected by copyright, provided it shows sufficient originality and is fixed on a medium. Though there are no cases of disputes relating to copyright infringement in India yet, the S. Victor Whitmill Vs. Warner Bros’ case[2] threw light on the issues relating to the protection of tattoos. Warner Bros were sued by the tattoo artist from Missouri for the unauthorized use of Mike Tyson’s tattoo in the movie Hangover II. Though the case was settled discreetly, the question who owns the tattoo and who shall reap its benefits continues to persist.

Under the Indian Copyright Law, the owner of the copyright is the author of the work (in this case the tattoo artist). As the owner of the copyright, the tattoo artist has the right to exploit his work and to communicate the piece of work to the public. This could imply that the tattoo artist will control his artwork which would include the medium on which the tattoo is fixed, that is a human, which would violate the freedoms provided under Article 19 and 21 of the Constitution. For instance, in the Whitmills case, if the sole rights of communicating to the public or exploiting the work were vested in the tattoo artist, the professional boxer Mike Tyson would have to quit appearing in public or appear with his half face covered. For such celebrities, who derive income from public appearances, it would be against the fundamental rights to freedom as well as impact their earnings.

Furthermore, as the owner of the tattoo, the artist enjoys moral rights like the right to integrity that is the tattoo artist can restrict the tattoo bearer from altering, modifying, or doing anything prejudicial to the tattoo artist’s reputation. This would potentially have a negative impact on the human rights of the tattoo bearer. Thus, though the copyright law is well codified, it is quite ambiguous when it applied to the tattoo industry. Complete protection of tattoo artist will have dire consequences on the human rights of the tattoo bearer, while completely denying their rights would discourage the tattoo artists from displaying their creativity. Extending the scope and meaning of the law for example extending the definition of work for hire and a strong precedent to protect and execute the rights of the copyright holder without violating fundamental human rights could help solve the issues pertaining to the tattoo industry.

[1] Indian Express, http://archive.indianexpress.com/news/srk-registers-don-2-tattoo-in-his-name/817871/ 15 July 2011

[2] S. Victor Whitmill Vs. Warner Bros., Civil Action No. 4:11-cv-752