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Reviving Lapsed Intellectual Property

Reviving Lapsed Intellectual Property
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IP Wave 16 07 produced using ai narration via podcastle by ASIAMP3
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Intellectual property (IP) represents a critical economic asset, embodying innovations, ideas, and creative works that fuel technological advancement and economic growth. However, lapses in IP rights whether due to administrative oversight or strategic shifts can result in valuable assets being left underutilised. Reactivating these lapsed IP assets can unlock substantial economic opportunities, drive innovation, and enhance collaborative potential. This article explores the legal mechanisms for reviving lapsed IP, focusing on trademarks and patents, with detailed insights into relevant case laws and statutory provisions under Indian law.

Economic Implications of IP Revivals

The revival of lapsed IP has significant economic implications. Patents, trademarks, and designs that have lapsed due to non-payment or administrative errors represent untapped assets. Reactivating these IP rights can lead to various beneficial outcomes, including increased revenue generation and job creation. For instance, reactivated patents can facilitate the development of new products and technologies. In the pharmaceutical sector, a lapsed patent on a groundbreaking drug formulation could be revitalised, enabling other companies or research institutions to collaborate on further development. This could potentially bring the drug to market, addressing unmet medical needs and generating revenue.

Similarly, trademarks that lapse due to missed renewal deadlines can be reinstated to regain exclusive rights, thereby protecting brand identity and market presence. This allows for expansion into new markets and enhances brand equity, ultimately contributing to revenue growth. A fashion designer who overlooks the renewal deadline for a patented clothing design. Despite the lapse, the design retains its appeal and relevance in the fashion industry. By restoring the lapsed design, the designer can leverage the unique aesthetic and craftsmanship of the design to create a new line of clothing or accessories, attracting fashion-conscious consumers and revitalising their brand identity.

The process of reactivating lapsed IP can also significantly benefit startups and entrepreneurs. Startups, often at the forefront of innovation, can leverage reactivated IP to accelerate their development processes. Access to valuable intellectual assets that were previously out of reach can reduce time-to-market and provide a competitive edge. Moreover, lapsed IP can serve as a catalyst for new business ventures, empowering entrepreneurs to explore and commercialise innovative concepts. For instance, a fashion designer whose clothing design patent has lapsed can restore it and leverage the design's aesthetic appeal to create a new product line, thereby rejuvenating the brand and attracting fashion-conscious consumers.

Trademark Revivals: Legal Considerations

Trademarks serve as identifiers of brand origin and quality, and their protection requires regular renewal. When a trademark is not renewed, it can lapse, potentially allowing others to adopt similar marks. Reviving a trademark, especially a once-famous one, presents legal and commercial challenges.

The Concept of Bad Faith

The concept of "bad faith" plays a crucial role in trademark revivals. Under Indian law, Section 11(10)(ii) of the Trade Marks Act, 1999 refers to bad faith as a relative ground for refusing trademark registration. Though not explicitly defined, bad faith can result in the invalidation of a trademark if it is found that the revival was executed with dishonest intentions.

Case Study: Zdút v. EUIPO

A pivotal case in understanding bad faith in trademark revival is Zdút v. EUIPO. The case involved the revival of the Czech fashion brand NEHERA. Originally established in the 1930s, the brand's trademark lapsed after World War II. In 2006, Ladislav Zdút, a Slovak with no direct ties to the original Nehera family, revived the NEHERA trademark. The EUIPO initially invalidated the trademark, citing bad faith due to Zdút’s awareness of the brand’s historic reputation.

The General Court of the European Union, in its decision on July 6, 2023, overturned this ruling. The Court emphasized that bad faith should be assessed based on the filing date of the trademark and that good faith is presumed unless proven otherwise. The Court found that Zdút’s efforts to restore the NEHERA brand were legitimate and did not necessarily indicate bad faith. This case underscores the importance of evaluating the intent behind reviving a trademark and highlights that referencing a historic brand does not automatically constitute bad faith.

Implications for Indian Law

The NEHERA case provides valuable insights for Indian IP practitioners. While Section 11(10)(ii) of the Trade Marks Act, 1999 addresses bad faith, the Indian legal system also requires a nuanced approach. Reviving a trademark with a rich history must be executed with genuine commercial intent and respect for the original brand’s reputation.

IP Lapses and Restoration Mechanisms in India

India has a comprehensive legal framework to manage various forms of intellectual property (IP), including provisions on how IP rights can lapse and the procedures for restoring them. This overview will cover relevant provisions from the Indian Intellectual Property Acts concerning patents, trademarks, copyrights, designs, and geographical indications (GIs).

Patents: Patents in India are governed by the Patents Act of 1970. Patents have a duration of 20 years from the date of filing, with annual renewal fees required from the third year. If these fees are not paid, the patent lapses. Section 53 specifies the 20-year duration and annual renewal fees, while Section 142 details the fees required for maintaining a patent. Section 60 allows for the restoration of lapsed patents within 18 months from the date of lapse, provided the patentee demonstrates that the failure to pay was unintentional and pays the prescribed fee, subject to approval by the Controller of Patents. Section 61 outlines the procedure for processing restoration applications, requiring the patentee to provide evidence that the lapse was unintentional. Section 62 ensures that patentees regain their full rights upon restoration, including preventing others from making, using, selling, or importing the patented invention.

Trademarks: Trademarks are regulated by the Trade Marks Act of 1999. Trademark registration is initially valid for ten years and can be renewed indefinitely every ten years, provided the renewal fee is paid on time. According to Sections 25 and 26, if the renewal fee is not paid, the trademark lapses. However, the owner can apply for restoration within six months of expiration by paying the required fees and surcharge. The Registrar must confirm that there has been no bona fide use of the mark during the grace period to consider the restoration application.

Copyrights: Copyrights in India are governed by the Copyright Act of 1957. The duration of copyright protection varies based on the type of work. For literary, dramatic, musical, and artistic works, the copyright lasts for the lifetime of the author plus 60 years from the year following the author's death. For corporate authorship works, the duration is 60 years from the year of publication. There are no provisions for the restoration of lapsed copyrights; once the term expires, the work enters the public domain and can be freely used.

Designs: The Designs Act of 2000 governs the protection and maintenance of industrial designs. A registered design is valid for ten years from the date of registration, with the possibility of a five-year extension by filing an application before the original term expires. If the extension fee is not paid, the design will lapse. However, if a design lapses due to non-payment of the extension fee, the proprietor can apply for restoration within one year from the date of lapse. The proprietor must pay the prescribed fee and convince the Controller of Designs that the failure to pay was unintentional and that there has been no commercial exploitation of the design during the lapse period.

Geographical Indications: The Geographical Indications of Goods (Registration and Protection) Act of 1999 manages the registration and protection of GIs. Section 18 states that the registration of a geographical indication is valid for ten years and can be renewed indefinitely for further periods of ten years each. If a GI is not renewed, it will lapse. However, the Act provides a grace period of six months during which renewal can be done with a surcharge. If not renewed within this period, the registration can be removed from the register.

Addressing Errors and Administrative Challenges

Trademarks and patents may lapse due to errors by the patent office or clerical mistakes. Indian law provides remedies for such errors, allowing for the restoration of lapsed patents and extensions of deadlines under exceptional circumstances.

Technical errors by the patent office, including issues with online filing systems or clerical mistakes, can lead to the loss of patents or applications. When such errors are identified, the patent office typically takes corrective action. Extensions and restorations may be granted if the applicant can demonstrate that the errors were not their fault and that there was no intent to abandon the patent.

In the landmark case of BRY-AIR PROKON SAGL & Ors. v. UoI and Ors., the Delhi High Court examined the issue of patent lapses due to agent negligence. The Court ruled that a patent or patent application cannot be deemed abandoned without clear evidence of the owner’s intent to relinquish it. This decision underscored the principle that extensions for patent deadlines may be granted under extraordinary circumstances, provided there is no intent to abandon the patent and no contributory negligence by the patentee. The Court emphasised that abandonment requires a deliberate act indicating intent to abandon and that each case should be assessed based on its specific facts and circumstances.

In the significant case of Rubicon Research Pty Ltd. v. The Controller General of Patents, Designs and Trademarks and Ors. (2020), the Intellectual Property Appellate Board (IPAB) allowed the restoration of a patent beyond the 18-month period stipulated by Section 60. This decision was based on the appellant’s diligent efforts to maintain the patent, the negligence of the agent, and the potential harm to the patentee. The case highlights the necessity for flexibility in enforcing patent restoration, acknowledging that strict adherence to deadlines can sometimes impede justice. The IPAB’s decision reflects the importance of considering the patentee’s efforts and the impact of agent negligence when deciding on the restoration of a patent.

Handling Patent Restoration: A Global Scenario

Sale of a Patent Portfolio

When a business sells a patent or an entire patent portfolio to another entity, misunderstandings or miscommunications about who is responsible for renewal fee payments can lead to lapses. This risk is heightened if negotiations are prolonged if renewal payments are due during protracted negotiations and there is confusion about responsibility, the payments may be missed. This is particularly likely when both parties are focused on finalising the details of the deal.

Restoration of patents is often necessary when patents lapse due to an accidental failure to pay renewal fees (annuities).

Recent Grant of a European Patent Application

After the European Patent Office (EPO) grants a European Patent (EP) application, the patent must be validated in the designated countries. Before validation, the patent proprietor's records may only include the EP application and not the individual national validations. This can cause issues if the renewal fee falls due shortly after the grant, as reminders may not be set up yet. To avoid this, records for all national validations are created as soon as the validation countries are decided, ideally before the EP grant. If validation countries are determined only after the grant, it’s crucial to ensure that the due date for the first post-grant renewal fees is accurately docketed. A common error is for records systems to assume that the renewal fee due date has already passed if records are created after the due date, leading to potential confusion about whether the fee has been paid.

Japan's Changes to Restoration of IP Rights Procedures

On April 1st, 2023, Japan implemented significant changes to its procedures for restoring lapsed intellectual property (IP) rights. These modifications aim to streamline processes, reduce burdens on applicants, and enhance the predictability of applications.

The previous standard in Japan for reviving lapsed IP rights required the failure to act in a timely manner to be due to a “valid reason,” and the JPO’s interpretation of this “valid reason” has been extremely strict. This made revival of expired IP rights unlikely outside of extraordinary circumstances. However, the JPO has announced that instead of requiring the demonstration of a “valid reason,” a right holder will soon be able to revive expired IP by showing that the failure to act in a timely manner was “unintentional.” This proposed standard is similar to that used in the United States (see 27 U.S.C. § 27), indicating that the standard for revival has been relaxed.

The restoration rates for lapsed rights in Japan have been significantly lower (10-20%) compared to other countries (over 90%). Japan's strict requirements, especially regarding the submission of documentary evidence, have posed challenges for applicants. To improve approval rates, reduce the burden on applicants, and make the application process more predictable, the requirements have been relaxed.

Restoration in the UK

For both GB patents granted by the UK Intellectual Property Office (UKIPO) and EP(UK) patents validated in the UK, the restoration process is identical. If a patent lapses, apply for restoration at the UKIPO as soon as possible to prevent third-party claims on the invention. Supporting evidence for the restoration request (Patents Form 16) does not need to be submitted simultaneously, the UKIPO will provide a deadline, typically around eight weeks, for evidence submission.

The restoration application must be filed by the patent proprietor at the time the annuity was due. If the patent had been transferred but the assignment was not recorded, the application should be filed by the new owner, along with a request to record the assignment.

The evidence must demonstrate that the proprietor’s failure to pay the annuity was unintentional and provide an explanation for any delay in discovering the lapse and filing the application. This explanation must be full and frank, as failing to explain the delay or providing a vague statement may lead to the rejection of the restoration application. A misleading statement, if discovered, may lead to revocation even if the patent is initially restored.

Conclusion

Reactivating lapsed intellectual property is more than a procedural formality. It is a vital strategic manoeuvre with significant economic and innovative implications. The potential to revitalise dormant IP assets be it patents, trademarks, or designs can drive substantial technological advancement and economic growth. However, the current processes for IP restoration are fraught with challenges, including complex legal requirements and administrative inefficiencies.

Cases such as Zdút v. EUIPO and recent changes in Japan highlight the need for a more harmonised and transparent approach to IP revival. While these mechanisms offer a path to reclaim valuable assets, the inconsistencies and strict criteria can create barriers that hinder the effective use of lapsed IP.

Reforming these processes to address administrative errors, streamline procedures, and clarify legal standards is crucial. Such changes would not only make the revival of IP more accessible but also better support innovation and economic development. As stakeholders navigate this landscape, advocating for and implementing these reforms will be essential to unlocking the full potential of lapsed IP and fostering a more dynamic and equitable intellectual property environment.

IP Round-up

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IP Round Up produced using ai narration via podcastle by ASIAMP3
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Powerful record labels, including UMG Recordings, Warner Music, and Sony Music, have sued Verizon, accusing the company of intentionally ignoring customers' copyright violations for profit, reports Music Business Worldwide. The plaintiffs seek up to $150,000 per violation under the Digital Millennium Copyright Act (DMCA), potentially totaling $2.6 billion. The lawsuit includes a list of 17,335 tracks from artists like Elvis Presley, Matchbox Twenty, Goo Goo Dolls, and Brandy, and states that nearly 350,000 infringement notices have been sent to Verizon since 2020. The labels claim Verizon ignored repeat offenders because these customers paid more for better internet service. The suit alleges Verizon’s lax policies and high-speed internet attracted subscribers engaging in piracy, effectively creating a "safe haven" for infringement. Despite multiple notices, Verizon allegedly failed to terminate the accounts of known infringers, allowing continued illegal downloading of copyrighted works. (Source: Verge)
Verizon Image Source: Readwrite
YouTube has launched an updated Erase Song tool, enabling creators to remove copyrighted music from their videos without affecting other audio elements like dialogue or sound effects. Previously, users had to mute all audio or remove the entire copyrighted segment, but the new tool allows them to delete only the infringing portion without taking down the video. YouTube chief Neal Mohan announced this on X, highlighting the tool's use of an AI-powered algorithm for precise music removal. However, YouTube cautions that the algorithm might occasionally fail with difficult-to-remove songs, in which case users can trim, replace, or mute the segment. Once edited, YouTube will lift the content ID claim on the video. (Source: Business Standard)
YouTube LogoImage Source: YouTube
The Bombay High Court has ordered Patanjali Ayurved to deposit Rs 50 lakh for allegedly violating an interim order that barred the company from selling its camphor products, following a trademark infringement case filed by Mangalam Organics Ltd. In August 2023, the HC issued an interim injunction against Patanjali, which the company admitted to breaching in a June affidavit. Justice R.I. Chagla emphasised that such persistent violations could not be tolerated, directing the deposit before proceeding with contempt actions. Patanjali's director, Rajneesh Mishra, offered an apology and acknowledged that the company supplied camphor products worth Rs 49,57,861 post-injunction. The court has scheduled the next hearing for July 19 (Source: Business Standards)
Patanjali StoreImage Source: India Today
New Zealand has rejected India's application for a trademark certification equivalent to a geographical indication (GI) tag for basmati rice, following a similar decision by Australia. The Intellectual Property Office of New Zealand (IPONZ) declined the certification, noting that basmati rice is grown outside India and that other growers have the right to use the term. This decision echoes Australia’s rejection in January 2023, where IP Australia cited the same reason. India, through the Agricultural and Processed Food Products Export Development Authority (Apeda), sought to protect the term "Basmati" for its cultural and economic significance. The Trade Development Authority of Pakistan has also applied for the "Basmati" trademark, further complicating the issue. The decision is expected to spark legal challenges, and India has already appealed Australia’s decision. Meanwhile, negotiations with the European Union might lead to mutual recognition of GI tags for basmati rice and EU’s cheese and wines. (Source: Business Line)
Basmati RiceImage Source: LinkedIn Post
Chinese tech giant OPPO announced a significant global cooperation agreement with telecom equipment maker Ericsson, which includes a comprehensive patent cross-licensing arrangement, technical collaboration, market expansion initiatives, and other strategic ventures. The deal covers standard-essential patents (SEPs) vital for cellular communication technologies, including 5G. Feng Ying, OPPO's Chief Intellectual Property Officer, emphasised the partnership's importance in recognising and respecting each other’s intellectual property and promoting fair licensing practices. Since its inception nearly two decades ago, OPPO has prioritised research and development, filing over 103,000 patent applications and holding more than 57,000 granted patents globally. As of June 30, 2024, OPPO has filed over 6,200 patent families for 5G communication standards in more than 40 countries and declared over 3,700 5G families to the European Telecommunications Standards Institute (ETSI).
(Source: The New Indian Express)
Image Source: TelecomTalk

References:
BananaIP Counsels. (2022). Can you revive abandoned/lapsed patents and patent applications in India? BananaIP. Retrieved July 16, 2024, from https://www.bananaip.com/can-you-revive-abandoned-lapsed-patents-and-patent-applications-in-india/

Bar & Bench. (2022). Back from the dead: Is it lawful to revive lapsed or dormant well-known trademarks? Bar & Bench. Retrieved July 16, 2024, from https://www.barandbench.com/law-firms/view-point/back-from-the-dead-is-it-lawful-to-revive-lapsed-or-dormant-well-known-trademarks

Business Standard. (2024, July 8). YouTube updates audio eraser tool to help creators deal with copyrights. Business Standard. Retrieved from https://www.business-standard.com/technology/tech-news/youtube-updates-audio-eraser-tool-to-help-creators-deal-with-copyrights-124070800401_1.html

Mancombu, S. R. (2024, July 16). New Zealand rejects India's certification of trademark application for basmati rice. The Hindu BusinessLine. Retrieved from https://www.thehindubusinessline.com/economy/agri-business/new-zealand-rejects-indias-certification-of-trademark-application-for-basmati-rice/article68363212.ece

Invntree. (n.d.). Options to restore lapsed patents in India. Invntree. Retrieved July 16, 2024, from https://www.invntree.com/blogs/options-restore-lapsed-patents-india

Singhania & Partners. (2023). Addressing patent lapses due to agent's incapacity: A comprehensive review of revival remedies. Singhania & Partners. Retrieved July 16, 2024, from https://singhania.in/blog/addressing-patent-lapses-due-to-agent-s-incapacity-a-comprehensive-review-of-revival-remedies

Sullivan, M. (2024, July 15). Verizon faces $2.6 billion music copyright infringement lawsuit. The Verge. Retrieved from https://www.theverge.com/2024/7/15/24199236/verizon-music-copyright-infringement-lawsuit-2-6-billion

The Economic Times. (2024, July 15). Trademark infringement: Patanjali asked to deposit Rs 50 lakh for breach of HC order. The Economic Times. Retrieved from https://economictimes.indiatimes.com/news/india/trademark-infringement-patanjali-asked-to-deposit-rs-50-lakh-for-breach-of-hc-order/articleshow/111625966.cms?from=mdr

The New Indian Express. (2024, July 16). Oppo and Ericsson sign agreement for global 5G patent cross-licensing, business collaborations. The New Indian Express. Retrieved from https://www.newindianexpress.com/amp/story/business/2024/Jul/16/oppo-and-ericsson-sign-agreement-for-global-5g-patent-cross-licensing-business-collaborations

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Written by Shivani, Technical Assistance for audio generation and cover image by Khushi.

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