IPR Archives - GUJRAT INDIA

Enforcing IPR: An Imperative Need For Making India A Success

There is a huge brand value associated with the company IP. It gives investors, clients, and other stakeholders a tremendous confidence upon the company. Each type of IPR carries its own significance for the startup companies as shown below.

Today, almost one-third of all funded technology companies have a patent application filed, whereas almost 19% of these startups filed for a patent even before they were funded. There are several examples that show how intellectual property has played a crucial role in some businesses. The recent Canadian drug maker Valeant Pharmaceuticals acquisition of Sprout Pharmaceuticals was majorly based on the single drug patent (FLIBANSERIN) by Sprout Pharmaceuticals. It was Just days after FDA approval Valeant Pharmaceuticals paid jackpot of $1 billion in cash to buy Sprout Pharmaceuticals.

A startup’s negligence in securing the invention could end up as an expensive lesson for their business. For example, Xerox PARC did not patented their computer mouse and graphic user interface and later on companies like Apple Computer Inc. basically built their companies based on their innovative technologies, without paying any single penny to Xerox.

Roadblock for the startup company in investing IP

The major roadblock faced by startup company in investing IP is: lengthy judicial processes and weak IP enforcement mechanism in India. The delayed processing of applications and other actions in the IP offices is one of the major reasons for short enjoyment of patent rights by patent holders in India. It takes 6-7 years to receive a grant for a patent cutting short the life of a patent drastically. Considering that the patent term limitation for 20 years from the filing date of the patent application irrespective of any processing delay, this greatly reduces the patent term and puts the applicants at a loss. Though Indian Patent Office has taken initiatives by modernizing infrastructure and boost e- filing in the recent past, all the efforts will be of little help if the registration process is not completed in a timely.

In addition to that an equally strong enforcement mechanism is required to support strong IP laws. A weak enforcement of IP rights fails to provide relief against imitators and free riders, thereby acting as a major barrier to trade, investment in R&D and overall growth of a country’s economy. On contrary, a fair, strong and non-discriminatory IPR enforcement creates economic incentives that encourage innovation as well as helps attract new investment. Indian IP policy despite being in compliance with the International standards provided by the TRIPS Agreement is often alleged to be weak and ineffective, particularly with regard to patent protection. As per latest GIPC Index released by the US Chamber of Commerce in 2015, India ranks second last position in the rank. “Enforcement of patent laws in India is very disappointing and its harming India’s global image as an investment climate”.

Government Initiatives

Recently the concept of patent protection has garnered a flurry of attention by the announcement of Indian Government Start up action plan which also acknowledged the IPR role. “India’s future lies in innovation and creativity.” India Prime Minister Narendra Modi said while addressing at the Start-up India event. To encourage start ups new rules have been introduced to accelerate innovations including fast track examination, appointment of legal facilitator, IPR & patent funding and reduction in patent fees. Indian Government has also taken initiatives to enhance bilateral co-operation with other countries to improve the efficiency of Indian patent office. This initiative might enthuse Indian investors and creators to create IP assets in India and utilize them in manufacturing but having said that, a start up cannot avail the reap the benefit from IPR by merely creating intellectual assets.

How to Combat the Weak IP Enforcement?

Some of the recommendations could be:

Fast-track judicial process

IP specialized training for Judges, Customs and Police officials

Expanding the number of IPR cells that prioritize enforcement

Increase the number of independent IPR investigations

Adopt statutory damages in civil case

Giving political priority to IPR crimes

Creating awareness: It is important to create IP awareness amongst the stakeholders and public at large regarding IP rights and their enforcement. It would not only help the IP holders to enjoy their rights fully but also encourage others to create more and deter the infringers from violating the rights of others.

Conclusion

An invention or creation of an entrepreneur has value only if it is properly protected and safeguarded. Then only foreign companies will only be encouraged to invest their IP-protected inventions and establish their manufacturing, R&D and outsourcing bases in India. Startup India is a welcome step to foster innovation and credibility in Global markets but if India wants to project itself as Global Superpower we should not only modernize Patent Offices but also have a fair, strong and non-discriminatory IPR enforcement mechanism.

Landmark Judgement for Starbucks in Chinese IPR Case

The protection of intellectual property in china has long been high on the list of concerns for innovative foreign companies looking to do business there. What little legal framework existed around intellectual property rights (IPR) has been difficult and time-consuming to enforce. There are signs, however, that the situation may be improving for companies which use trademarks, logos and branding in the People’s Republic.

In a recent case, newly amended Chinese trademark legislation was put to the test when the American speciality coffee retailer Starbucks accused a local Shanghai company of copying their trading name and logo.

Starbucks opened its first Shanghai outlet on Huaihai Road on May 4, 2000, building on the success of its dozens of stores across Taiwan and the rest of mainland China. Shortly prior to this opening, a local company had registered its own business name – Xingbake Coffee Co. Ltd. – with the Shanghai authorities. By 2003, the Chinese firm had opened two outlets in Shanghai using the trade name ‘Xingbake’.

The legal dispute between Starbucks and their local competitor arose because ‘xing’ translates from Mandarin as ‘star’ and ‘ba-ke’ is an approximate phonetic rendition of ‘bucks’. Although Starbucks does not officially use this rough translation in China, the word ‘Xingbake’ has become synonymous with the US firm’s outlets amongst the public.

Starbucks considered that, by trading under a similar name and by the use of a very similar green and white logo, Shanghai Xingbake was competing unfairly. On this basis, Starbucks filed a law suit against Xingbake in Shanghai on December 23, 2003, alleging trademark infringement.

In reply to the accusation, Mao Yibo, General Manager of Xingbake, said that his company has registered its enterprise name with the Shanghai authorities in March 2000, before Starbucks was established in the region. By using the name ‘Xingbake’, he claimed that his company was simply using its legitimate title instead of a trademark.

Mao denied that the name of his company and its logo had been influenced by their Seattle-based rival. “We invented ‘Xingbake’ as our brand when we planned to start a café business in Shanghai and it is just a coincidence that our name is the same with Chinese version of Starbuck [sic]”, he said. “The logo was designed by our own staff. To be frank, I hadn’t heard of Starbucks at the time, so how could I imitate its brand or logo?”

Chen Naiwei, director of the Intellectual Property Research Centre of Shanghai’s Jiaotong University does not accept this, explaining that ‘Xingbake’ has been used as the sole translation of ‘Starbucks’ in Taiwan since 1998. This predates the registration of Xingbake’s enterprise name in Shanghai by two years.

Despite Mao Yibo’s claims and his further assertions that Xingbake’s serving style and target market differ substantially from those of Starbucks, Shanghai No. 2 Intermediate People’s Court found in favour of the American giant on December 31, 2005 – two years after the law suit was filed.

Shanghai Xingbake was ordered to stop using its name, issue an apology in a local newspaper and pay 500,000 Yuan (US$62,000) in compensation to Starbucks.

The basis of the Court’s decision was the relatively newly amended Trademark Laws of the People’s Republic of China, which came into force on October 27, 2001. The amendments form part of a raft of revised legislation introduced to protect the owners of intellectual property in China. Under the new laws, the Court determined that the name ‘Starbucks’, written in Chinese or English, was sufficiently well known to be deemed a famous trademark and was, therefore, entitled to protection.

This ruling is the first of its kind under the new legislation and may be an indication that China is responding to pressure from the European Union and the United States to crack down on IPR infringements and counterfeiting. China is believed to be the source of around 70% of the world’s pirated goods at a cost of around US$250bn each year to US companies alone.

In a statement released on January 18, Jiang Zian, the attorney for Shanghai Xingbake confirmed that the company had already begun an appeal against the judgement in the Shanghai Higher People’s Court. Jiang explained that Xingbake does not use the English translation ‘Starbucks’ and had no plans to counter claim against their competitor for using the same Chinese name. “The problem is they use Xingbake as the brand name in Chinese and we use it as our company name. We just want to keep our company name and run our own business”, Jiang said. A spokesperson for Starbucks later confirmed that it would be defending itself against the appeal.

Starbucks now has 156 outlets in mainland China and has a presence close to some of the country’s most iconic locations, including the Great Wall and the Forbidden City. At up to US$6 per cup, the company’s coffee costs more than the average Chinese worker makes in a day. Despite this, Starbucks coffee is increasingly popular with China’s emerging urban middle class.