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Abuse of Intellectual Property Rights | Company Vakil

Abuse of Intellectual Property Rights


God has gifted humans wonderful thing called Brain. Application of brain by humans has given them imagination and creativity. With this imagination and creativity, man has been producing various articles or products for his needs, comfort and convenience. Intellectual Property Rights are the rights given to the person over the intellects of their minds and giving them exclusive right over the use of his/her creation for a certain period of time. Intellectual Property Rights are patents, copyrights, trademarks, geographical indication, layout designs of integrated circuits, industrial designs and traditional knowledge which are recognized by the Trade Related Intellectual Property Rights agreement (TRIPS) & governed by the WTO (World Trade Organization).

Development of Intellectual Property Law in India

Intellectual Property Rights in India was imported from the west.

The Indian Trade and Merchandise Marks Act 1884, was the first Indian Law regarding IPR.

First Indian Patent Law was enacted in 1856, they were Indian Patents and Designs Act 1911 & Indian Copyright Act in 1914.

Indian Trade and Merchandise Marks Act & Indian Copyright Act have been replaced by Trade and Merchandise Marks Act 1958 & Copyright Act 1957 respectively.

In 1948, Indian Government appointed first committee to review prevailing Patents & Designs legislation.

In 1957, Government appointed Justice Rajagobala Ayyangar Committee (RAC) to revise Patent Law.

Based on the report submitted by the Rajagobala Ayyangar Committee (RAC), a bill was introduced in year 1965 and bill was passed in the Lok Sabha but it lapsed in Rajya Sabha. Once again it lapsed in 1966 due to dissolution of Lok Sabha.

In 1967, it was reintroduced and passed in 1970.

Company Vakil provides services related to Patent Registration.

Types of Intellectual Property Rights in India



For any invention which is a new product or process for which an innovative step is taken and is applicable for industrial application is capable of granting of Patent Rights. Here

“New Invention” means the subject matter has not fallen in public domain or does not form part of state of art;

“Inventive step” means that the product or process should have technical advancement as compared to current knowledge or economic significance or which is not obvious to a person skilled in that art.

“Applicable for industrial application” means invention is capable of use in the industry.

Patents are given to encourage inventions by highlighting their promotion and utilization so as to contribute to the development of industries which contributes to the promotion of technological innovations and to the transfer and dissemination of technology.

Ministry Administering the Intellectual Property Rights:

Department of Industrial Policy and Promotion, Ministry of Commerce & Industry

Controller General of Patents, Designs and Trade Marks

Concerned IP Act

The Patents Act, 1970 (as amended in 2005)



It is a bundle of rights like rights of reproduction, communication to the public, adaption and translation of the work given by the law to the creators of literary, dramatic, musical and artistic works and producers of cinematograph films and sound recordings. Copyright is given for the minimum period of 50 years after the death of the author. The main social purpose of protection of copyright and related rights is to encourage and reward creative work. The performers must also have the right to prevent unauthorised recording, reproduction and broadcast of live performances for not less than 50 years. Producers of sound recordings must have the right to prevent the unauthorised reproduction of recordings for a period of 50 years.

Ministry Administering the Intellectual Property Rights:

Department of Industrial Policy & Promotion, Ministry of Commerce & Industry

Registrar of Copyrights

Concerned IP Act: The Copyright Act, 1957



It is a mark which helps in distinguishing the goods or services from other undertakings and is capable of representing graphically. The mark can be a sign, words, letters, numbers, drawings, pictures, emblem, colours or combination of colours, shape of goods, graphic representation or packaging or sound or any combination of these applied to goods and services can be granted trademark. Initial registration and each renewal of registration shall be for a term of not less than 7 years and registration shall be renewable indefinitely.

Ministry Administering the Intellectual Property Rights:

Department of Industrial Policy & Promotion, Ministry of Commerce & Industry

Controller General of Patents, Designs and Trade Marks

Concerned IP Act: Trade Marks Act 1999

(D) Design


A Design is shape, configuration, pattern, ornamentation, composition of colour or line or a combination thereof, applied to article, whether two or three dimensional or in both forms by any industrial process or means which, in the finished article, appeal to & are judged solely by the eye.

Ministry Administrating the Intellectual Property Rights:

Department of Industrial Policy and Promotion, Designs and Trade Marks

Controller General of Patents, Designs and Trade Marks

Concerned Intellectual Property Act

Designs Act 2000

(E) Geographical Indication


Geographical Indication is a name or sign used on products which corresponds to a specific geographical location or origin (e.g. a town, region or country). The use of a geographical indication, as a type of indication of source, may act as certification that the product possesses certain qualities, is made according to traditional methods, or enjoys a certain reputation, due to its geographical origin.

Ministry Administering the Intellectual Property Rights:

Department of Industrial policy & promotion, Ministry of Commerce & Industry

Controller General of Patents, designs and Trademarks

The Geographical Indications of Goods (Registration & Protection) Act, 1999

(F) Semiconductor Integrated Circuits Layout – Design


It provides protection of Intellectual Property Rights in the area of Semiconductor Integrated Circuit Layout – Designs & for matters connected therewith or incidental thereto.

Ministry Administering the Intellectual Property Rights:

Department of Industrial Policy, Ministry of Commerce & Industry

Semiconductor Integrated Circuits Layout-Design Registry

Concerned IP Act: Semiconductor Integrated Circuits Layout-Design Act, 2000

(G) Plant Variety Protection


Protection granted for plant varieties, the rights of farmers and plant breeders and to encourage the development of new varieties of plants. Herb should be new or novel, distinct, uniform, stable and have a satisfactory denomination.

Ministry Administering the Intellectual Property Rights:

Ministry of Agriculture

Protection of Plant Varieties & Framer’s Rights Authority

Concerned IP Act: The Protection of Plant Varieties & Farmer’s Rights (PPV&FR) Act, 2001

For Patent Registration in Mumbai, visit Company Vakil.

(H) Undisclosed information, including trade secrets

(I) Control of Anti-Competitive Practices in Contractual Licenses

Importance of Intellectual Property Rights

Free flow for energy for enhancing invention and research

Provides incentives to the individuals for new creations

Provides due recognition to creators and inventors

Provides means and incentive to create newer works, products and services

Enhance innovation and creativity by protecting rights of inventors and artists

It ensures availability of the genuine and original products.

It is helpful in solution to global challenges like in the field of alternate source of energy, new products to the farmers and development of low cost drugs for poor people

It is necessary to stimulate economic growth

They encourage fair trading which contributes to social development.

Infringement of Intellectual Property Rights

IPR distinguishes deliberate theft and innocent infringement. Law covers both civil and criminal infringements. Civil infringements against patent, trademarks, designs and copyright and criminal offences in the case of trade mark and copyright.

Infringement of Copyright

Copyright is infringed if the unauthorised use involves the whole or a ‘substantial part’ of the copyright work. Unauthorised use involves copying, issuing copies, renting or lending, showing, playing, communicating or adapting the copyright work.

Deliberate infringement of copyright work is intentional, is on a large scale and copies of a work are being made for sale, being imported, distributed, sold or put on the internet. Piracy and counterfeiting are often referred as intellectual property or IP crime.

Infringement of Patents

Infringement of Patent means manufacturing, using selling or importing patented product or process without owner’s permission. The owner can take legal actions and claim damages.

Infringement of Design

Infringement of Design is by third party who make, offer, put on market, import or export the design or stock for commercial gain without the permission of rights holder.

Infringement of Trademarks

Infringement of Trademark is when someone uses identical or similar trademark for identical or similar goods or services to a trademark already in use without owner’s consent

Abuse of Intellectual Property Rights

Intellectual property abuse is a defence for a suit of IP infringement. When such defence is justified, then the defendant is spared from liability of granting immediate relief to the plaintiff. Following are the IPR abuses:

Patent Misuse

Illegal trying of products and services to patent invention, price fixing, fraudulently making customers pay royalties on items expired are examples of Patent Abuse. Patent misuse is unjustified use of acquired rights. Essential condition for misuse of patent is that it should affect the competition in market.

Copyright misuse

Violating public policy according to Copyright Act, suppressing speech, using license agreement to extend length of its copyright monopoly are examples of Copyright misuse. Copyright misuse is when someone makes unjustified use of copyright which is beyond its legal capacity and in violating of Copyright Act.

Patent trolls

Patent trolls is the use of patent infringement claims to win court judgements for profit or to restrain competition. Patent trolling is not illegal, a patent troll has no intent of developing a product or service by utilising a patent. A patent troll may also be known as a “patent shark,” “dealer,” “marketer” or “pirate.” A patent troll operation may be called a “patent assertion company” or “entity” or a “non-manufacturing patentee.”

Patent troll practices

Patent trolling involves one or more following practices,

Enforcing a patent without any intent of manufacturing a product or providing a service based on that patent, or without using it to conduct research, or otherwise utilizing it for the greater good;

Pursuing patent infringement claims that are baseless, may stifle manufacturing at a competitor, and may be easier and cheaper to settle than to litigate;

Buying a patent (usually from a bankrupt company at auction) with the intent of suing a competing company under the claim that it has a product that infringes upon the newly purchased patent;

Any utilization of a patent to solely enforce patent rights;

Patent trolling may involve venue shopping. For example, in 2015 some 45% of patent cases in the U.S. were filed in the Eastern District of Texas, home to a judge with both patent expertise and a track record of favoring plaintiffs. This practice has since been limited by the U.S. Supreme Court. Tax Avoidance

MNC’s use Intellectual Property to avoid taxes on large scale by transferring their IP to tax havens for artificially low prices. There are two main reasons which acquired intellect; property rights ideal for tax evasion:

IP can be transferred to tax havens via mere paperwork unlike workers or physical assets like factories

The uniqueness of every piece of IP makes a precise fair market value nearly impossible to establish, allowing multinationals to justify low valuations that result in the least tax. Virtually all IP-based tax-avoidance schemes involve assigning an artificially low price to a piece of IP at some point in time

Competition Laws

Competition policy promotes free and fair competition in market and aims to prevent anti-competitive business practices & abuse of market power. As IPR promotes concentration of monopoly power, Competition Law also seeks to remove monopolisation of the production processes by encouraging new players. Both laws are contradictory in nature.

Harmonization of IPR and Competition Laws: TRIPS

There were discussions over regulation of unfair competition and abusive monopoly powers of the IP rights holder. After that Article 40 of the TRIPS agreement was inserted to address the issue of IPR misuse.

Article 40 states that:

1. Members agree that some licensing practices or conditions pertaining to intellectual property rights which restrain competition may have adverse effects on trade and may impede the transfer and dissemination of technology.

2. Nothing in this Agreement shall prevent Members from specifying in their legislation licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition in the relevant market. As provided above, a Member may adopt, consistently with the other provisions of this Agreement, appropriate measures to prevent or control such practices, which may include for example exclusive grantback conditions, conditions preventing challenges to validity and coercive package licensing, in the light of the relevant laws and regulations of that Member.

3. Each Member shall enter, upon request, into consultations with any other Member which has cause to believe that an intellectual property right owner that is a national or domiciliary of the Member to which the request for consultations has been addressed is undertaking practices in violation of the requesting Member’s laws and regulations on the subject matter of this Section, and which wishes to secure compliance with such legislation, without prejudice to any action under the law and to the full freedom of an ultimate decision of either Member. The Member addressed shall accord full and sympathetic consideration to, and shall afford adequate opportunity for, consultations with the requesting Member, and shall cooperate through supply of publicly available non-confidential information of relevance to the matter in question and of other information available to the Member, subject to domestic law and to the conclusion of mutually satisfactory agreements concerning the safeguarding of its confidentiality by the requesting Member.

4. A Member whose nationals or domiciliaries are subject to proceedings in another Member concerning alleged violation of that other Member’s laws and regulations on the subject matter of this Section shall, upon request, be granted an opportunity for consultations by the other Member under the same conditions as those foreseen in paragraph 3.

Article 40 of the Agreement empowers the member countries to specify exploitation of monopoly rights and adopt such laws that may be necessary to curb the abuse of IPR.

Compulsory Licensing

Compulsory Licensing are authorizations given to a third party by the Government to make, use or sell a particular product or use a particular process which has been patented, without the need of the patent owner. Generally, compulsory license are considered in national emergency and health crises. Provisions are given in Indian Patents Act, 1970 and in the TRIPS (Trade Related Aspects of Intellectual Property Rights) agreement.

Section 84

Under Indian Patents Act, 1970 Section 84, at any time after expiration of 3 years from grant of patent, any person who is interested or already the holder of the license can make request to Controller for grant of compulsory license.


IPR are considered to achieve economic, social and technological advancement that protects the ideas and stimulates innovation, design and helps to the creation of technology. The various types of IPR were designed to provide the formal basis of ownership of developed knowledge with benefit sharing between partners in innovation to create a niche of themselves. It also leads to wealth creation. The function of IPR regime is also to facilitate the transfer of technology in the form of joint ventures and licensing. Social purposes of IPR is to provide protection for the results of investment in the development of new technology, thus giving the incentive and means of finance for further research and development of knowledge base; while basic social objective of IPR protection is that the exclusive rights given to the inventor, aimed at the tuning the balance that has to be formed between the legitimate interests of rights holders.

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