T N C Rajagopalan: Govt yet to amend patents law

EXIM MATTERS

India knew, as far back as 10 years, that the World Trade Organisation (WTO) agreement on Trade Related Intellectual Property Rights (TRIPS) has to be given legal effect under our national laws by January 1, 2005.

Yet, as this year-end approaches, the Third Patents Amendment Bill has not yet been presented in Parliament and indications are that the government will be left with little choice but to give effect to the provisions of the Bill through an Ordinance.

During the 10-year period, sections of industry, especially the pharmaceutical industry, have done everything possible to cope with emerging challenges that the TRIPS regime brings. But many other sections are not aware of the precise impact of the TRIPS agreement.

Importers and exporters, in particular, have to know precisely, as to how the "border measures" will be enforced by the Customs. They also need to know of the difficulties that they may face, in case an Intellectual Property Right (IPR) infringement is established.

The TRIPS agreement requires India to adopt procedures to enable an IPR holder, to lodge a complaint of infringement and ask for suspension of release of such imported goods for home consumption or export of such goods.

The complainant should furnish adequate evidence to satisfy the authorities about prima facie infringement of his rights and give detailed description of the goods, so that Customs can recognize the goods.

Within reasonable time, the IPR holder should know whether his request has been accepted. The authorities can ask for reasonable security to deter abuse of these rights.

If the authorities decide to suspend release of the goods, they should promptly notify the owner, importer or consignee of the goods, who can offer reasonable security and ask for release of the goods. The security should be enough to protect the interests of the complainant.

When the proceedings start on the merits of the complaint, injunctions can be issued to stop release of the goods. If the infringement is established, destruction of the goods in question can be ordered and severe penalties can be imposed.

If the infringement is not established, the complainant can be penalized and ordered to pay damages to the owner, importer or consignee for the damaging arising out of detention of the goods.

Under the Sale of Goods Act, the onus of making sure that the goods are not tainted by any illegality is on the seller. In other words, the seller must have an unfettered right to sell the goods and have appropriate title that he can pass on to the buyer.

This includes the onus to ensure that the rights of the IPR holder are not violated. In case the seller does not discharge the onus, the buyer can sue the seller for damages.

At a practical level, most importers or exporters buy in good faith that the seller has taken necessary actions to acquire title and due right to sell.

However, in case of problems, it is difficult for the buyer to resort to legal remedies because of prohibitive cost and practical realities of dispute settlement in international contracts.

Importers and exporters must, therefore, incorporate necessary clauses in the contracts and take necessary precautions to avoid detention of their goods at the Customs due to allegations of IPR infringement.

tncr@sify.com