by Zen Webnet | Mar 11, 2024 | Blog
Article by Neelam Dahiya
In the realm of branding, suggestive exert a unique power, entrancing consumers’ imaginations while leaving room for interpretations. Unlike descriptive marks which directly convey qualities or characteristics of a product or service, suggestive marks hint to their nature, sparking curiosity and engagement. There is no specific definition for what constitutes a suggestive mark. However, the mark is most likely suggestive when consumers need to use their imaginations to make a mental connection between a trademark and a product or service.
A suggestive trademark is a unique mark that does not explicitly say or identify a good or service, but rather makes references to certain aspects of it. Although suggestive trademarks don’t explicitly state it, there is some relationship between them with a good or service, even though it isn’t instantly obvious. Customers must therefore use their imagination to make the connection between the mark and the product.
Suggestive trademarks do not directly or instantly convey the characteristics, attributes, or features of a good, service, or company. Trademarks that are suggestive use words or designs that make references to particular qualities and/or characteristics of the goods or services they represent, without explicitly stating them.
The test for whether a trademark is suggestive is:
Does the mark hint or allude to a quality, characteristic, or property of the product, service, or business that it brands so that thought or imagination is required to make the connection?
Trademarks that convey quality or characteristics of products or services directly or immediately are not considered suggestive trademarks.
At their core, suggestive trademarks strive a slight balance between clarity and intrigue. They have some association with a product or service, but that association or connection is not direct. The need imagination, thought to connect the mark to the nature or quality of the trademarks. By evoking an idea or concept related to the product or service without explicitly describing it, these marks invite consumers to participate in the brand’s narrative. Take “Netflix” for example. The name suggests a combination of “internet” and “flicks”, subtly indicating the platform’s focus on streaming movies and TV shows online without explicitly stating it.
Suggestive trademarks have the power to evoke emotions and create memorable experiences for consumers. Whether through clever wordplay, subtle imagery, or cultural references, these trademarks leave a lasting impression on the audiences on a deeper level. Consider the iconic Nike swoosh, the logo is derived from goddess’ wing, ‘swoosh’, which suggests movement and speed without explicitly stating it. This simple yet powerful symbol has become synonymous with athleticism, inspiring millions around the world to “just do it”.
Here are a few more examples of famous trademarks which are suggestive in nature:
- Microsoft: suggests software for microcomputers
- Jaguar (car): suggests speed and elegance, like the animal
- AIRBUS: is suggestive of air travel/airplanes
- PINTEREST: is suggestive as the name alludes to “pinned images of interest”
- Citibank: suggests financial (banking) services in cities
In India, suggestive trademarks have been recognized and upheld by the courts as valid and protectable. Here are a few notable case laws that highlight the significance of suggestive trademarks:
- Godfrey Phillips India Ltd. Vs Girnar Food & Beverages Pvt. Ltd. (2010): In this case, the Delhi High Court held that he trademark “FLYING SAUCER” for biscuits was suggestive rather than descriptive. The court emphasized that the mark did not directly describe the characteristics or qualities of the product but instead suggested an association with the product, the warranting protection.
- Himalaya Drug Company vs S.B.L. Ltd. (2013): The Delhi High Court ruled in favour of plaintiff, Himalaya Drug company stating that the trademark “LIV.52” for a liver tonic was suggestive and distinctive. The court held that while the mark hinted at the product’s purpose (liver health0, it did so indirectly are required consumers to exercise imagination and perception to make connection.
- Pernond Ricard SA vs Bacardi& Company Ltd. (2018): In this case, the Delhi High Court recognized the trademark “IMPERIAL BLUE” for whiskey as suggestive rather than descriptive. The court held that while the mark alluded to the product’s quality or character, it did not directly describe it, thus meriting protection under trademark law.
These cases illustrate the Indian judiciary’s stance on suggestive trademarks, emphasising the importance of creativity, distinctiveness, and consumer perception in determining trademark validity and protection.
Suggestive marks, which require consumers to make a mental leap to connect them with the associated products or services, are recognized as valuable assets deserving of legal protection in India’s trademark jurisprudence. In conclusion, suggestive trademarks represent a powerful tool for brands looking to make a lasting impression in the minds of consumers. In an ever-evolving marketplace, the ability to evoke emotion, spark curiosity, and foster connection is essential for building strong enduring brands.
by Zen Webnet | Mar 10, 2024 | Blog
Article by Priyanka Chemudupati and Jagrati Maru
Introduction
In commercial disputes there exists a heavy reliance on documents and consequently, it is a sine qua non for parties to establish the veracity of the same. The principles enshrined in the Code of Civil Procedure, 1908 (hereinafter, CPC) and the Indian Evidence Act, 1872 (hereinafter, Evidence Act) are generally adhered to in arbitration proceedings and therefore, production of evidence by way of Affidavit is followed after completion of pleadings in arbitration as a rule of general practice.
The Hon’ble Supreme Court in Srei Infrastructure Finance Ltd. v. Tuff Drilling Pvt. Ltd.[1] has clearly held that the Arbitral Tribunal can draw sustenance from any provisions of the Code of Civil Procedure. In para 17, the apex Court has held that Section 19 of the Arbitration and Conciliation Act, 1996 (hereinafter, Act) provides for determination of rules of procedure. Further, Section 19(1) provides that the Arbitral Tribunal shall not be bound by CPC or the Evidence Act. The Hon’ble Court clarified that the words “Arbitral Tribunal shall not be bound” are the words of amplitude and not of a restriction. These words do not prohibit the Arbitral Tribunal from drawing sustenance from the fundamental principles underlying the CPC or the Evidence Act but the Tribunal is not bound to observe the provisions of Code with all of its rigour. As per Section 19(2), the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting its proceedings. Therefore, the settled and fundamental principles enshrined in CPC and the Evidence Act are followed in arbitration proceedings and production of evidence by way of an Affidavit becomes a procedural mandate.
In this article, the authors will be providing a guide to what exactly would be tantamount to an Admission in arbitration proceedings and the judicial dicta on the same.
Provisions governing Admissions
Section 17 of the Evidence Act
Section 17 defines Admission as a statement oral or documentary or contained in electronic form which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons and under the circumstances mentioned in the Act.
Section 19 of the Arbitration and Conciliation Act, 1996
Section 19(3) of the Arbitration Act empowers the Arbitral Tribunal to conduct the proceedings in the manner it considers appropriate. Further, Section 19(4) of the Arbitration Act provides that the power of the Arbitral Tribunal under Section 19(3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence.
Order VIII of CPC
Order VIII Rule 3 Denial to be specific: This rule emphasizes that it is mandatory for the defendant to deal specifically with each allegation while denying the same. It focuses on the necessity of clear and explicit denial to counter allegations effectively.
Order VIII Rule 4 Evasive Denial: This rule amplifies the consequences for the failure to give a reasoned denial. It lays down that bare/evasive denials cannot be considered as denials.
Order VIII Rule 5 Specific Denial: Building up on the foundation laid down in Rule 3 and Rule 4, this rule lays down that if the denials are not specific in the pleading, they are deemed to be admitted.
Order XI, Rule 4 of CPC (Admission and denial of documents)
Sub-rule (1) of Rule 4 states that each party shall submit a statement of admissions or denials of all documents disclosed and of which inspection has been completed within 15 days of such inspection or at a later date as decided by the Court.
Sub-rule (2) of Rule 4 stipulates that the parties shall explicitly set out where they are admitting or denying,
- correctness of contents of a document.
- existence of a document.
- execution of a document.
- issuance or receipt of a document.
- custody of a document.
Sub-rule (3) of Rule 4 stipulates that bare and unsupported denials shall not be deemed to be denials of a document and proof of such documents may then be dispensed with at the discretion of the Court.
Sub-rule (4) of Rule 4 provides that for third party documents, parties may submit bare denials on account of no personal knowledge.
Sub-rule (5) of Rule 4 provides that an Affidavit in support of the statement of admissions and denials shall be filed confirming the correctness of the contents of the statement.
Section 30 read with Order XVIII, Rule 4 of CPC
Section 30 empowers the Court to,
- make such orders as may be necessary or reasonable in all matters relating to the delivery and answering of interrogatories, the admission of documents and facts, and the discovery, inspection, production, impounding and return of documents or other material objects producible as evidence;
- issue summonses to persons whose attendance is required either to give evidence or to produce documents or such other objects as aforesaid;
- order any fact to be proved by affidavit.
Order XVIII, Rule 4 provides that in every case, the examination-in-chief of a witness shall be on Affidavit and copies shall be supplied to the opposite party by the party who calls him for evidence.
Order XIX of CPC
Order XIX, Rule 1 provides that Court may order that any particular fact or facts may be proved by Affidavit.
Order XIX, Rule 2 provides that upon any application evidence may be given by affidavit, but the Court may, at the instance of either party, order the attendance for cross-examination of the deponent.
Order XIX, Rule 3 provides that Affidavits shall be confined to such facts as the deponent is able of his own knowledge to prove, except on interlocutory applications, on which statements of his belief may be admitted: provided that the grounds thereof are stated.
Order XIX, Rule 6 provides for guidelines of Affidavit of Evidence.
Since the evidence submitted through Affidavit cannot be relied upon without the cross-examination of the respective witness, the Evidence Act also attains equal importance in an arbitration proceeding.
What amounts to Admissions in Pleadings under Order VIII?
The precision of pleadings and strategic response to allegations in the pleadings hold paramount importance within the framework of any adjudication proceedings. The Civil Procedure Code, 1908 under Order VIII Rules 3, 4 and 5 emerge as crucial provisions in aspects governing the treatment of admission within pleadings. To understand the subtlety of these rules is essential for all legal practitioners. It is trite law that allegations not specifically denied shall amount to admissions.
The Hon’ble apex Court in Gian Chand and Brothers and Ors. v. Rattan Lal [2] while deciding on whether an attempt can be made to adduce evidence on pleadings that have only total an evasive denial has held that it is obligatory on the party to specifically deal with each allegation in the plaint and when the Defendant denies any such fact, he must not do so evasively but answer the point of substance. It is clearly postulated therein that it shall not be sufficient for a Defendant to deny generally the grounds alleged by the Plaintiffs, but he must be specific with each allegation of fact. The Court held that but where there is total evasive denial and an attempt has been made to make out a case in adducing the evidence, is not permissible.
What amounts to Admissions of contents of a Document?
The process of admissions simplified the process of proving certain legal facts and also in eliminating facts that are not a dispute amongst the parties that come for redressal. It is established under the Evidence act, that documentary evidence is paramount and oral evidence cannot controvert/deny the facts proved by the documentary evidence. The question that arises herein, is that when a party states a document to be “admitted” in the affidavit of Admission and Denial, submitted under Order XI Rule 4, also admits to all the content that such document contains. The following courts have clarified the said legal conundrum:
The Karnataka High Court in K.M. Venkataraman and Ors. vs. G. Narayana and Ors.[3] has held that “It is trite law that admission is the best piece of evidence and admission of a document means admission of facts contained in the document.”
The Calcutta High Court in Dalgreen Agro (P) Ltd. v. Sk. Asadur Rahman[4] has clarified that Section 58 read with the amended provisions of Order XI, Rule 4 leads to the inescapable conclusion that the objective of a detailed Statement of admission and denial accompanied by an Affidavit confirming the correctness of such Statement is to do away with the rigours of proving the documents which already form part of the affidavit of evidence. The five heads provided under sub-rule (2) of Order XI Rule 4 gives the right as well as sufficient opportunity to a party to decide whether a document should be admitted or denied under any of the heads provided. But once the party exercises that right and submits a statement together with an Affidavit vouching for the stand taken by it, that party cannot insist upon a further right to call for further proof of those documents in examination in-chief.
What amounts to Admission when the witness has not been cross-examined on facts?
The 1994 decision of the Bombay High Court in Bhika Cullianji and Co. v. Avon Electric Company and Ors. recognised that the challenge to oral evidence must be reflected in the course of cross-examination. As the Defendants therein declined to put the material setting out their case in the cross-examination, the Court observed that the same would be regarded as an admission and such uncontroverted evidence must be acted upon by the Court[5].
In Muddasani Venkata Narsaiah (D) through Legal Representatives v. Muddasani Sarojana[6], the apex Court has held that effect of non-cross-examination is that the statement of a witness has not been disputed and if no questions are put to a witness, the Court would presume that the witness account has been accepted. The Court has further recognised that the matters sworn to by one party in the pleadings not challenged either in pleadings or cross-examination by other party must be accepted as fully established[7].
Further, in Black Ticket Films v. Walter Philip & Ors.[8] the Bombay High Court has held that if there was no cross-examination of the witness on any part of the deposition of the witness examined by the plaintiff, it amounts to admission of those facts deposed by the witness and the other party. In this case, the Claimant’s witness was not cross-examined by the Defendant on various parts of examination in chief and cause of action. Although few suggestions were put to the witness, no independent evidence was led by the Defendants to prove the case of the defendants before the Court. In view of the same, it was held that the evidence of the Plaintiff stood admitted and proved.
Conclusion
Admissions both under the Civil Procedure Code, 1908 and the Indian Evidence Act, 1872 are pivotal in shaping the outcome of legal proceedings. Admissions serve as a key piece of evidence that can significantly influence the decision of the person adjudicating the dispute. Therefore, parties and especially legal practitioners must navigate admissions with mindfulness and attention to details and understand the complexities and consequences of such admissions.
[1] Srei Infrastructure Finance Ltd. v. Tuff Drilling Pvt. Ltd. (2018) 11 SCC 470 (Para 17, 26 and 27).
[2] Gian Chand and Brothers and Ors. v. Rattan Lal AIR 2013 SC 1078, para 22-24
[3] K.M. Venkataraman and Ors. v. G. Narayana and Ors. 2012 (94) ALR 895, Para 14.
[4] Dalgreen Agro (P) Ltd. v. Sk. Asadur Rahman 2020 SCC OnLine Cal 3284, Para 9, 10.
[5] Bhika Cullianji and Co. v. Avon Electric Company and Ors. 1994 SCC Online Bom 88, Para 3.
[6] Muddasani Venkata Narsaiah (D) Lrs. v. Muddasani Sarojana (2016) 12 SCC 288.
[7] Para 16, Muddasani Venkata Narsaiah (D) Lrs. v. Muddasani Sarojana (2016) 12 SCC 288.
[8] Black Ticket Films v. Walter Philip & Ors 2017 SCC ONLINE BOM 5368, Para 72.
by Zen Webnet | Mar 9, 2024 | Blog
Article by Suchi Rai
Introduction:
The idea that previously discovered chemicals and compositions may be used to discover novel functions, capacities, or medicinal applications is certainly intriguing. Patents can frequently be used to protect these, however not all states allow the protection of a known substance’s new medicinal uses. For instance, in India, the discovery of new qualities from known compounds is not regarded as “inventive,” so a new use for a recognized chemical is not covered by patent protection.
There is, however, some hope for applicants hoping to patent novel applications for already-approved medications in India, so long as the compositions are said to be synergistic combinations and bolstered by data disclosure in their specification. Applicants will be better able to develop claims in an application and increase the likelihood of a successful grant if they understand how protection for new medical uses of known substances or second medical uses can be pursued in India and how to draft effective claim forms that are more likely to be accepted by the government.
Provisions for examination:
In India, an existing substance cannot be patented for a novel medical purpose. Claims that describe a novel use of a well-known substance or method are not patentable in India. Furthermore, the Patents Act prohibits the use of methods of treatment. There isn’t a draft, proposal, or conversation regarding changing any of the clauses.
- Section 3(d)precludes patenting of “…mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant”. The applicant will have to demonstrate to the satisfaction of the controller that the set of claims that immediately fall under this exclusion pertain to a novel composition, procedure, or new form of a known substance that enhances the known efficacy of that substance. A patent would not be granted for any application of a known method, tool, apparatus, or material.
- Section 3(e)precludes patenting of “a substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance”.
- Section 3(i)precludes patenting of “any process for the medicinal, surgical, curative, prophylactic diagnostic, therapeutic or other treatment of human beings or any process for a similar treatment of animals to render them free of disease or to increase their economic value or that of their products”.
An invention must pass the efficacy test. Section 3(d) determines whether a new use or new form of a known compound/composition is patentable unless the new compound/composition increases the therapeutic efficacy of the existing compound/composition. Existing compound/composition derivative(s) are considered identical to existing substance(s), except where a significant property difference results in an equivalent difference in efficacy.
If the Applicant decides to amend the claims, one must ensure that the amended claims shall be supported from the original scope of protection sought under the disclosure, which most Controllers often interpret as the amendments should be within the scope of protection sought under the original claims.
“If the functional interaction between the features achieves a combined technical effect which is greater than the sum of the technical effects of the individual features, it indicates that such a composition is more than a mere aggregation of the features,” state the IPO Guidelines for Examination of Patent Applications in the field of Pharmaceuticals.
“Synergy” in this sense refers to an unexpected result or effect of the combinations, prior art bias, etc., which typically highlights the inventiveness of the work. Synergy in chemical composition claims refers to therapeutic activity; for instance, compound ‘A’ in the claimed range combined with excipients that are deemed safe by pharmaceuticals offers therapeutic activity. To illustrate the synergistic effect of compositions, experimental data must be presented. The experimental data may be submitted with the full specification when it is filed, or it may be submitted in response to a question the Controller may have raised while the application was being investigated. However, the filed specification must provide adequate support for such experimental data. It is important to make sure that no additional data is submitted that does not fit within the disclosed specification’s scope of contents.
Synergy and Second Medical Use:
Section 3(d) objections are certain to arise when an applicant files an invention pertaining to a second medical use of substances that are already known. Including a claim that the subject application relates to section 3(e) as it relates to a combination or composition of known substances rather than section 3(d) is the simplest method to get around a section 3(d) objection.
Drafting a formulation, composition, or combination claim has been a common tactic used by pharmaceutical invention applicants to get their applications out of section 3 scrutiny. In these situations, the outcome is referred to as “synergistic” when the combination claim’s overall effect results in an unpredictable change from the functions of the individual derivatives.
Section 3(e): If the claimed composition is a mere aggregation of the properties of its constituents, the same is not regarded as in invention under Section 3(e). To overcome this objection, the Applicant needs to establish to the satisfaction of the Controller that the claimed composition exhibits a property which is different from mere aggregation of properties of its constituents, in other words, the constituents shall show some synergistic effect resulting in a final property which is not a mere aggregation of constituents’ respective properties. In order to establish such synergistic effect Applicant should primarily rely upon the complete specification as filed, and further experimental data can also be produced to corroborate the synergism.
It is to be noted that the “test of enhanced efficacy” is not with respect to Section 3(e), however the same is applicable while assessing claims in light of Section 3(d). The experimental data demonstrating enhanced therapeutic efficacy will be helpful in contesting/overcoming the objection under Section 3(d).To overcome such objection, Applicant is required to establish to the satisfaction of the Controller that the claimed compound is not a mere new form of a known compound OR show by way of experimental data that the new form of known compound has enhanced efficacy or enhanced therapeutic efficacy for inventions relating to medicine/pharmaceuticals.
The concept of showing the synergy between constituents of the claimed compound and eventually showing new property or outcome of the claimed compound vis-à-vis mere aggregation of properties of its constituents is more applicable to overcome objections under Section 3(e) of the Act. Further, the concept of synergistic effect can also play a corroborative role towards establishing enhancement in known efficacy while attending to Section 3(d) objection. Therefore, if claims are reformulated to composition claims, and the same can be shown to be novel, inventive – and/or if found to be a new form of known compound attracting Section 3(d), one would be able to show enhance efficacy by way of experimental data, the chances to secure a patent in India would considerably improve.
Examples:
The first classic example of medicine which found its second use was aspirin the well-known out off the shelf drug for relieving head ache which was later found to be useful as Anticoagulant/Anti stroke/anti-ischemic drug. There are dozens of instances of existing medicines being developed for new uses. For instance, Sildenafil citrate primarily used for Heart and vascular disease later marketed as drug for Erectile dysfunction. Similarly, Finasteride meant for treatment of prostate disorders was also found to be effective in the treatment of androgenetic alopecia. Thalidomide found second use to relive morning sickness in pregnant women but it’s first use was for respiratory infections. Further, it was found to be useful in the treatment of leprosy and for cancer. Other known drug for second use are Daclizumab [transplant rejection] now used in treating certain types of multiple sclerosis; Aclasta [osteoporosis] ; Zometa [bone cancer] ; Ravatio [pulmonary Hypertension].
Conclusion:
The primary goal of refusing a patent for a new use is to prevent the issuance of two patents for the same invention. However, the IPO practice is not entirely clear when it comes to determining whether the prohibition against double patenting applies in connection with claims drafted as use claims. Occasionally, it clearly allows purpose-related product protection for medications already known to exist in combination, provided that these combinations work well together or yield unexpected outcomes. This demonstrates that there is no clear and convincing reason to reject the applicant’s rightful interest in pursuing newly drafted use claims that are part of purpose-limited product claims.
by Zen Webnet | Mar 8, 2024 | Blog
Article by Shivani Tandon & Anchit Baliyan
Introduction
A much-needed shift was brought about by the Arbitration and Conciliation Act (Amendment) Act, 2015 (“Amendment Act”), which aimed to bring in a new age of prompt and efficient arbitration together with a renewed emphasis on the impartiality and independence of arbitrators.
The 246th Law Commission Report aimed to enhance arbitration as a viable alternative to court disputes, stressing the importance of arbitrators’ independence and impartiality. It proposed adopting the Red and Orange Lists from the International Bar Association’s Guidelines on Conflicts of Interest in International Arbitration to assess arbitrators’ eligibility. These lists were integrated into the Fifth Schedule of the amended Arbitration & Conciliation Act. Per Section 26 of the Amendment Act, they were set to be effective from October 23, 2015, onwards. This Amendment was introduced in lieu of elucidating the principle of ‘Arbitrator’s Impartiality & Independence’ enshrined under Article 12 of the said act. The said amendment aimed at improving the neutrality of the arbitrator and strengthening the existing framework, which suffered from various lacunas.
Intricately woven within the amendment are critical criterions which raise justifiable doubts to an arbitrator’s independence and impartiality. One such criterion is listed in Entry 22 of Schedule 5 of said act. This provision notable flags situations where a justifiable doubt emerges when an arbitrator is nominated by the same party more than twice within a span of three years. This article embarks on an insightful analysis of how Entry 22 is interpreted and applied by Indian Courts and Arbitral Tribunals, shedding light on the evolving landscape of arbitration jurisprudence in the Country.
Rationale of amendment
Schedule 5
The inclusion of the Fifth Schedule acts as a clarifying element, elucidating the extensive scope of ‘justifiable doubts’ concerning an arbitrator’s impartiality and independence as outlined in Section 12 of the Act. This interpretation is supported not only by the marginal note labeling it as an explanation but also by the 246th Law Commission Report on Amendments to the Arbitration & Conciliation Act. The Commission suggested that the integration of the Schedule should be seen as a tool for assessing whether circumstances leading to such doubts exist.
Schedule 7
In accordance with Section 14 of the Act, the mandate of an arbitrator is designated to cease should they find themselves either de jure or de facto incapable of executing their responsibilities. Moreover, this provision affords parties the recourse to seek judicial intervention in determining such termination. Notably, the Law Commission, in its comprehensive report, advocated for an additional clarification – the Proposed Explanation – to be appended to Section 14. This proposed amendment explicitly stated that if an arbitrator’s relationship with the involved parties, legal counsel, or the subject matter of the dispute aligns with the categories delineated in the Seventh Schedule, they would be deemed ‘legally unable to perform their functions.’ However, despite the Commission’s recommendation, this explanatory provision did not find its way into the enacted amendments of the Act.
The omission of this suggested explanation to Section 14 consequently prompted questions regarding the interpretative scope of the Seventh Schedule. Parties involved in arbitration proceedings were left to ponder whether the criteria outlined within this schedule could indeed serve as substantive grounds for the termination of an arbitrator’s mandate under Section 14 of the Act. This ambiguity stemming from the non-inclusion of the proposed amendment underscored the importance of clarity and precision within the legislative framework governing arbitration proceedings, particularly in safeguarding the integrity and efficacy of the arbitration process.
Guiding Principles
In the realm of arbitration, the guiding principles for the appointment of arbitrators and the grounds for their challenge are a mosaic crafted from diverse sources, a legal tapestry that courts now meticulously weave when addressing matters under Schedule 5 of the Arbitration Act.
In the pivotal case of HRD Corporation (Marcus Oil and Chemical Division) v. GAIL (India) Limited, (2018) 12 SCC 471, the Supreme Court delved into the legislative intent behind Schedule 5 and Schedule 7 of the Act, drawing from the insights provided by the 246th Report of the Law Commission of India. The Court emphasized the contrasting roles of the Fifth Schedule and the Seventh Schedule. According to the Commission’s report, the Fifth Schedule encompasses a comprehensive list for disclosures to be made by arbitrators upon appointment, including circumstances outlined in the Red and Orange lists. Conversely, the Seventh Schedule incorporates a narrower subset, covering situations deemed egregious, as enumerated in the Red list, which automatically disqualify an arbitrator from appointment.
The Court noted that challenges based on circumstances identified under the Fifth Schedule necessitate a separate determination regarding the existence of justifiable doubts regarding the arbitrator’s independence and impartiality, based on the specific facts of the case. Conversely, situations outlined in the Seventh Schedule render an individual ineligible for appointment as an arbitrator. Challenges based on grounds mentioned in the Seventh Schedule can be directly raised before the court, while those stemming from circumstances under the Fifth Schedule can only be questioned post-award, at the stage of setting aside the award. Consequently, the Court ruled that challenges against the appointment of arbitrators based on the Fifth Schedule could not be entertained at the pre-award stage. Doubts concerning Entry 22 are deemed justifiable only if a reasonable third party, with knowledge of the relevant facts and circumstances, would conclude that there is a likelihood of the arbitrator being influenced by factors other than the merits of the case.
Crucially, the Court underscored that since the Fifth and Seventh Schedules are derived from the IBA Guidelines, they should be interpreted in light of the general principles contained therein. These principles include the requirement that every arbitrator be impartial and independent at the time of appointment, and doubts regarding the appointment’s fairness are justifiable only if a third party would conclude that the arbitrator is likely to be swayed by factors unrelated to the case’s merits. Consequently, the interpretation of the schedules should be fair, neither unduly enlarging nor restricting their scope. Against this backdrop, the Court meticulously examined the matters enumerated in the Seventh Schedule, considering the underlying facts of each case.
Trends in recent Judicial Pronouncements
In recent years, the Indian Courts have witnessed evolving trends in the interpretation and application of Entry 22 of Schedule 5 of the Arbitration Act. This pivotal aspect of arbitration law revolves around Section 13(2), which allows for the challenge of an arbitrator’s mandate. The procedure as delineated in Section 13(3), entrusts the adjudication of this challenge with the Arbitral Tribunal itself. Of utmost significance is Section 12(3)(a), which outlines the grounds for challenging an arbitrator’s mandate, primarily focusing on circumstances that may cast doubts upon their independence or impartiality. The delineation of these circumstances, encapsulated within Entry 22 of Schedule 5, forms the crux of analyzing this trend, illuminating the nuanced approach adopted by the courts in adjudicating upon them.
The Delhi High Court, in the matter of Dream Valley Farms Pvt. Ltd. v. Religare Finvest Ltd., 2016 SCC OnLine Del 5584, observed that an arbitrator had been appointed by a party more than 20 times, which is a clear violation of Entry 22 of Schedule 5 of Arbitration Act. The Hon’ble Court held that the misleading declaration by the arbitrator concealing the number of his appointments by the same party, was in violation of Entry 22 and was also unbecoming of an arbitrator. His appointment to the tune of 20 times defeated the very purpose of the amended act which sets out grounds that give rise to justifiable doubts as to the independence and impartiality of the arbitrator. This case supported the somewhat mandatory application of Entry 22 of Schedule 5. However, since the case is that of concealing the number of appointments in the declaration made, the cancellation of the arbitrator’s mandate is in lieu of both the concealment in declaration as well as having breached the limit of appointments set out in Entry 22, and not just a clear violation of Entry 22.
Akin to the aforementioned, is the case of Sawarmal Gadodia v. Tata Capital Financial Services Ltd., 2019 SCC OnLine Bom 849, wherein the arbitrator appointed by the Respondent had failed to make a correct disclosure of the number of times he had been appointed by the same party, which was proved to be in excess of 250 times. The Bombay High Court held that the same having been in violation of Section 12(1) and Entry 22 of Schedule 5 of Arbitration Act, is a clear ground to set aside the award made under Section 34 of the said act. Seemingly, the Bombay High Court’s ruling was not intended to be a constricted reading of Entry 22; it was swayed by the erstwhile arbitrator’s omission to give full and frank disclosure in this case.
Based on the analysis of the aforementioned cases, it appears that the threshold for triggering the application of Entry 22 in Schedule 5 is notably higher than the statutory provision, requiring two instances. In the case of Kunwer Sachdev v. Hero Fincorp Limited, O.M.P. (T) (COMM.) 9/2019, the Delhi High Court concluded that Entry 22 necessitates a cautionary signal to be raised when an individual has been appointed as an arbitrator on two or more occasions by one of the parties or its affiliate within the preceding three years. Hence, it is the third appointment as an arbitrator that effectively triggers the application of Entry 22 in Schedule 5.
Conversely, the Supreme Court’s elucidation in Panipat Jalandhar NH-1 Tollway Private Ltd. v. NHAI, SLP (C) No. 4115 of 2022 clarifies the positive application of Entry 22, Schedule 5. The Supreme Court carefully examined the circumstances involved in the case, wherein a nominee arbitrator had been appointed successively by NHAI with regard to disputes which had arisen from the same agreement. The Hon’ble court while dismissing the petition clarified that Entry 22 would not apply as a rule to appointment of the same Arbitral Tribunal to adjudicate multiple disputes between the same parties arising out of the same contract. However, Entry 22 of the Fifth Schedule would be attracted in case of multiple references by a party, of disputes relating to different contracts, to the same Arbitrator, in excess of the cap of Entry 22. It is immaterial whether the Arbitrator is biased in favor of the party making the nomination. Justice should not only be done, but manifestly be seen to have been done. The nomination of the same Arbitrator in successive arbitrations relating to different contracts may give rise to justifiable apprehension that the Arbitrator may be favorably disposed towards the party making the nomination.
Continuing to explore the legal terrain from another perspective, in the case of Sudesh Prabhakar and Ors. v. EMAAR Constructions Pvt. Ltd, Arb. P. 32/2018, the Delhi High Court, drawing from the Supreme Court’s ruling in HRD Corporation, determined that an arbitrator who has been appointed by a party or its affiliates on two or more occasions within the preceding three years may still remain eligible if it can be demonstrated that the arbitrator maintained impartiality and independence in the previous two arbitrations.
In consonance with this evolving narrative, the Delhi High Court, in Bharat Foundry and Engineering Works & Ors. v. INTEC Capital Ltd. & Ors., FAO no. 145/2021 held that the appellants neither pleaded nor proved any action of the Arbitrator that otherwise taints his neutrality making him unfit to act as an Arbitrator. Therefore, the sole reliance on Entry 22 of Schedule 5, to presume bias against the Arbitrator, is not in the spirit of what has been held in the case of HRD Corporation.
Conclusion
In summation, the kaleidoscope of interpretations surrounding Entry 22 has given rise to this mosaic of judgments, beckoning a balanced approach. The judicial pendulum, swinging between rigid application and flexible interpretation of Entry 22, gives rise to a discernible grey area. While the Panipat Jalandhar case erects a framework defining specific circumstances warranting the invocation of Entry 22, the HRD Corporation case and its progenies counsel against an uncritical reliance on this provision to presumptively assume bias. The evolving jurisprudence in this domain necessitates a balanced and discerning approach, one that contemplates individual arbitrator conduct simultaneously with the application of Entry 22, thereby fashioning a nuanced tapestry of legal precedent in the domain of appointment of an arbitrator.
by Zen Webnet | Feb 19, 2024 | Blog
Article by Vivek Pandey
INTRODUCTION
After India got independence on 15th August 1947, the Indian Constitution came into force on 26th January 1950. So, on 26th January 2024, we will be celebrating our 75th Republic Day. As law professionals, we also know that the Supreme Court of India had its first hearing was held on 28th January 1950. However, there are many more interesting facts about January which are related to the IP field.
INTERNATIONAL IP FACTS
– On 27th January 1880, Thomas Edison received a patent for the incandescent lamp that flagged the way for the household electric lights around the world.
– The World Trade Organization is an international organization created on 1st January 1995, with headquarters in Geneva, Switzerland. It facilitates and promotes international trade. India is a member of the WTO. Governments, in cooperation with the United Nations system, use this organization to establish, review and enforce laws that regulate international trade. The WTO administers:
o General Agreement on Tariffs and Trade (GATT),
o TRIPS Agreement,
o Paris Convention for the Protection of Industrial Property Rights,
o Patent Practices Treaty (PCT), and
o Budapest Treaty on the International Recognition of Microorganisms for the Purposes of Patent Proceedings, and similar.
– On 01st January 2013, the USPTO transitioned from the United States Patent Classification (USPC) system to the Cooperative Patent Classification (CPC) system.
[A classification system jointly developed by USPTO with the European Patent Office (EPO).]
– A updated version of the International Patent Classification (IPC), enters into force on the 1st day of January each year. The signatory countries must mention this classification for patents in their official publications. In PCT application, this classification is determined by the International Searching Authority (ISA).
[The International Patent Classification (IPC) is a classification system for patents and utility models is established as per provisions of the Strasbourg Agreement 1971.]
– On 31st October 2019, the European Patent Organization (EPO) and Georgia (GE) signed an agreement, allowing Georgia to be included as a Validating Country in European patent (EP) application. This agreement came into force on 15th January 2024.
– For ordinary EP applications, the filing date must be on or after 15th January 2024, to include Georgia as a Validating Country.
– For PCT applications having EP as ISA, to include Georgia as a Validating Country, the international filing date (PCT application) must also be on or after date 15th January 2024.
– The International Telecommunication Union (ITU) officially introduced changes to its Patent Policy, Forms & Guidelines – Patent statement and Licensing Declaration form on date 1st January 1999.
– The UK Patent office has changed the Patent Cooperation Treaty (PCT) fee structure on 1st January 2024.
DOMESTIC IP FACTS
– The Copyright Act, 1957 (the ‘Act’) came into effect in January 1958.
– The Patents (Amendment) Act 2005 effective from 1st January 2005.
– Regulations under the Patent Law Treaty came in force from 1st January 2006.
– The first amendment was made through the Patents (Amendment) Act, 1999, but came into effect retrospectively from 1st January 1995. The amendment included introduction of the filing of product Patents w.r.t drugs, pharmaceuticals and agrochemicals (previously not permitted).
– On 1st January 2000, a Second Amendment was introduced to bring the Indian patents law into line with all the important provisions of the TRIPS Agreement. The main issues are to redefine the concept of patentable subject matter, prevent the introduction of product patents, extend the period of patent protection up to 20 years and reform the compulsory licensing system.
– The third amendment to the Patents Act 1970 was introduced by the Patents (Amendment) Act 2005, which came into force on 1st January 2005. This amendment provides for product patents in all technical fields and introduces the concept of pre-grant opposition and post-grant opposition.
[As India has a prior commitment to apply the provisions of the TRIPS Agreement to the Indian patent’s laws.]
– On 26th January 2007, the Union Ministry of Chemicals and Fertilizers announced the formation of a committee to establish a price negotiation system for patented drugs to ensure such drugs are available at a reasonable price under the National Pharma Policy. The seven-member committee is chaired by the Director (Chemicals) and also includes representatives from the Department of Health and Commerce. If the committee’s recommendations are accepted, the legal requirements should be met through amendments to the Drugs and Cosmetics Act.
– Database on Indian Patents: Patent Facilitation Centre (PFC) has developed three CD-ROM databases on Indian Patents/applications:
o Ekaswa-A: Having patent database related to Patent applications filed in India as published in the issues of the Gazette of India (Part III, Section 2) from 1st January 1995 to 31st December 2004.
o Ekaswa-B: Having patent database related to Patent applications accepted and notified for the opposition in the Gazette of India (Part III, Section 2) published for the same period i.e. from 1st January 1995 to 31st December 2004.
o Ekaswa-C: Having patent database for Patent applications published in Official Journal of Patent Office from January 2005 till June 2008.
– Late Harivansh Rai Bachchan is a famous Hindi poet and writer. His most famous work was Madhushaala (1935), Hindi translations of Shakespeare‘s Macbeth and Othello. He died at the age of 95 years on 18th January 2003. Under provision of the Copyright Act, 1957, the copyright remains with the author for the lifetime of author plus 60 years after his/her death. This means, the rights over his work will be completed in the year 2063 and his son Mr. Amitabh Bachchan (actor) will lose copyrights protection over his late father’s works in January 2063.
– “National Youth Day” is celebrated every year on January 12 to celebrate the birthday of Swami Vivekananda. On this National Youth Day (12th January 2024), O/o CGPDTM launched the “IP Manthan” series. The objective of the “IP Manthan” series is to facilitate various discussions and activities focusing on the importance of Intellectual Property Rights (IPR) for the economic and cultural development of the country.
