June 23, 2021

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Abolition of Intellectual Property Appellate Board : was it a right move or a mistake by the legislature

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This article is written by Shrey Mohan.

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On 4th April 2021, the President of India promulgated the Tribunals Reforms (Rationalization and Conditions of Service) Ordinance, 2021 through which various Central Acts were amended and various Statutory bodies were abolished including the Intellectual Property Appellate Board which exercised original and appellate jurisdiction, by the way of an amendment into Copyright Act, 1957, Trademarks Act, 1999, Patents Act, 1970, Geographical Indications Act 2000 and Plant Variety and Farmer’s Rights Act 2001.[1]

As we know that the Legislature introduced the Tribunals Reforms (Rationalization and Conditions of Service) Bill, 2021 in order to abolish many tribunals which included IPAB, there was a much hustle between the fraternity of the IP Lawyers and the Society. The main intention of the Legislature behind the abolition of certain tribunals was to give impetus to speedy delivery of justice and to reduce the burden over the government’s exchequer. Therefore, the Tribunals adds an extra layer of an appeal and thereby causes delay in disposal of matters.

Since due to COVID-19, the bill was not taken up for consideration, the President of India exercised his powers under Article 123 of the Constitution of India an passed an ordinance which came into effect from 4th of April 2021. Therefore, certain provisions of the abovementioned acts have been substituted/amended/deleted/added which has effectively abolished the IPAB[2]. IPAB has become functus officio.

The Bill proposed to abolish five tribunals including the IPAB and to transfer the cases and transfer an appeal system directly with the commercial courts in the matter of copyrights and to the High Courts for rest IP Rights. The main reason which was given by the Finance Minister was that abolition of the tribunal will help in speedy delivery of Justice. As we have seen that there has been a backlog of many cases with IPAB, and it is not able to perform efficiently.

Therefore, as we know that the appointments made to the tribunal is made by the executive, while the appointments at the District and Subordinate Courts are made by the High Courts of the respective states with the consultation of the Governor of the State. Therefore, the High Courts have a certain degree of control over the lower courts and do not have any control over the tribunal.

It is to be noted that the efficiency of a tribunal can be judged by the people working there having expertise in the subject matter and the way they handle the cases. Section 12(3) of the Bill, proposes to constitute a Search-cum-Selection Committee chaired by either the CJI or a SC Judge for the appointment of the Chairpersons of the tribunal, having no effect as there is no IPAB and is proposed to be abolished.

There being IPAB to settle the IP matters in appeal, still people make appeals to the High Court if not satisfied by the decision passed by IPAB. So, what is the point of having an extra layer of litigation which makes delivery of justice time consuming and more cost expensive. Furthermore, High Courts being the constitutional courts can also the settle the disputes on constitutional aspect related to IP. The need for the speedy disposal of IP cases is very important as the owner of the IP gets less time to reap the benefits of the IP if there is a long-standing litigation[3].

As we know that technical expertise is required in case of Patents and Plant Varieties for which the High Courts can establish an IP bench to resolve these cases thereby paving a way for technically sound decisions on these complex matters.

The abolition of IPAB has been a subject of great debate as the constitutionality of the IPAB has been challenged in the past through two PIL’s filed before Madras High Court in 2011. In these PIL’s it was asserted that the modus operandi of the appointments of the members to the IPAB, and the general functioning of the IPAB amounts to the violation of Separation of powers doctrine[4]. So, Madras High Court while deciding the petitions focused on the Doctrine of Separation of Powers and passed directions to restore the primacy of the Judiciary in terms of IPAB appointments[5]

Since the creation of IPAB, it has not been able to perform efficiently as in the past 17 years of its existence, IPAB has not had a Chairperson for a cumulative total of 1130 days. Separate from the long gap between the appoint of Chairpersons of the IPAB, it did not have technical member for Patents since 2016. The law prescribes for a minimum number of quorum of members to hear any kind of case. Due to no technical member for patents, it has not been able to hear any case for revocation or appeal of Patents for 4 years in a row.

Similarly, when the functions of the Copyright Board were merged with the IPAB by the enactment of Finance Act, 2017, there has not been a single appointment of the promised technical members because of which the Copyright board has been paralysed and is unable to listen matters related to compulsory licensing. There has been a lack of technical members for the Trademarks as well on several occasions. This shows that IPAB failed to maintain its quorum and is not able dispense its duties efficiently and effectively.

There have been other problems faced by IPAB such as lack of infrastructure and resources to function efficiently. IPAB had an appalling office in Chennai from where the embers used to fly to Delhi and Mumbai for circuit hearings. After a long time, the IPAB was given an office in New Delhi and then most of the hearing were held in Delhi and Chennai thereby increasing the cost of litigation.

Another problem faced by IPAB was quality of appointment. Most of the members are not qualified as they did not have any experience practicing the law before courts and have never held a position of a judicial office except the Chairperson. All these members were appointed from the Trademarks Registry, Patents Registry, or Indian Legal Service.

Due to dysfunctional nature of IPAB, there are problems faced by the litigants, lawyers, general public as well as the IP bar. This cause delays in deciding the matters before IPAB and also before the High Courts and District cases which retain jurisdiction related to trademarks and patent infringement cases. Most of the cases cannot by law, proceed directly to the High Courts until IPAB has decided the revocation/rectification petitions for registered trademarks or patents. Litigants have suffered unnecessarily because of poor state of affairs at the IPAB[6]

All the issues were also highlighted by the Delhi High Court in the case of Mylan Laboratories Limited vs Union of India, wherein the Hon’ble Court observed that technical members for Copyrights have not been appointed at all and there is a lack of technical members for trademarks and patents since 2018 and 2016, respectively. Therefore, due to this there has been a backlog of cases and such delays in hearing the matters related to intellectual property could have serious implications on the rights of IP holders as they are given for a relatively shorter period to reap benefits. Accordingly, the Delhi High Court invoked the ‘Doctrine of Necessity’ so that the pending cases can be heard by the Chairman of IPAB with present technical members until the appointment of other technical members takes place[7].

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In a recent interview of the members of the legal fraternity including judges and senior lawyers, gave different opinions about the abolition of the IPAB.

In an interview Justice Manmohan Singh (Former Judge of DHC), who served as the Chairperson of the IPAB since 2018, criticised the governments move for scrapping the tribunal and stated that India had an obligation under the TRIPS Agreement to have a separate tribunal to deal with IP Cases and it will have a negative impact internationally. The IPAB was brought into existence by way of amendments in the law due to India’s commitment under the TRIPS Agreement. He also added that the pending cases of IP now will be transferred to the other Commercial Benches of the High Court thereby creating a lot of burden on the High Courts where there is lack of sitting Judges as per the sanctioned strength.

On the other hand, Justice Prabha Sridevan who served as the Judge of the Madras High Court and also as the Chairperson of the IPAB, welcomed the governments decision to scrap the tribunal. She quoted that how the scrapping of IPAB will allow for public interest to once again become and important consideration in handling of IP cases. She also mentioned that in cases of patents and pharma patents, public consideration is of huge importance and High Courts can with the inherent powers can enforce fundamentals related to the public health which tribunals cannot do so. She also said that every important case from the IPAB goes to the High Court as people are not satisfied with the orders passed by IPAB. Now people have the option directly approaching the High Court.

Senior Advocate Abhishek Manu Singhvi, criticised the Government’s move for scrapping the tribunal. He quoted, “This en masse and comprehensive elimination of disparate tribunals implies of arbitrariness and flagrant deficiency of application of mind. Secondly, that clog up has only increased because of over 33 per cent of all judicial posts at the high court level are at any given time vacant and unoccupied. Thirdly, matters of intellectual property are complex and expertise oriented and take much more time than normal other civil or criminal matters.” [8]

Trademarks

  1. Rectification proceedings can now be filed before the appropriate High Court having jurisdiction, in addition to the Registrar of Trademarks.
  2. Appeals from the orders of the Registrar of Trademarks will now directly be transferred to the respective High Courts and must be filed within 3 months of passing of such order communicated to the appellant[9]. Definition under Section 2(s) for term ‘prescribed’ has been expanded to include the rules made by the High Court, in addition to the rules made under the Trademarks Act[10].
  3. Under the Trademarks Act, 1999 in Sections 2, 10, 26, 46, 47, 55, 57, 71, 94, 97, 98, 113, 123, 124, 125, 130, 141, 144, 157 wherever the words “Tribunal” or “Appellate Board” appear, will be replaced with the words “Registrar or the High Court” as the context may require. Sections 83-90 and Section 92, 93, 95, 96, 99 and 100 have been omitted[11].
  4. Definitions under Section 2 clauses (a), (d), (f), (k), (n), (ze) and (zf) be omitted and in place of Section 94 the following section shall be substituted namely: On ceasing to hold the office, the erstwhile Chairperson, Vice-Chairperson, or other members shall not appear before the Registrar[12].
  5. Furthermore, the powers (inclusive in nature) such as imposing limitation to colour, distinctiveness of trademark, security for the costs of proceedings relating to oppositions/appeals, determination of whether use of a registered associated trademark is equivalent to the use of another registered mark direction to the Registrar to rectify entries in the register, now lie with the High Court[13].

Patents

  1. All provisions relating to appeals to the IPAB under the Patents Act 1970 have been omitted completely and now the appeals from the decision/order/direction from the Controller of Patents will be directly passed to the respective High Courts. A rectification/revocation action under the relevant provisions of the Patents Act would now have to be filed before the appropriate High Court. [14]
  2. Under the Patents Act Section 116, 117, 117B, 117C, 117D, 117F, 117G and 117H have been omitted completely. In Section 159 (2) clauses (xiia), (xiib), and (xiic) shall be omitted.
  3. Under Section 117A and 117E the words Appellate Board, wherever they occur shall be substituted by High Court. Under Section 151(1), for the words Appellate Board wherever they occur shall be omitted.
  4. Sections 52, 58, 59, 64, 76 and 113 omits the words Appellate Board. For Section 71, the words Appellate Board and Board, the words High Court shall be substituted.
  5. Definition of Appellate Board under Section 2(1)(a) has been omitted. Definition under Section 2(u), Sub-Clause (B) shall be omitted.
  6. Section 115(B)(3), for the words the Appellate Board or other Courts, as the case may be, the words “the Courts” shall be substituted[15].

Copyright

  1. All appeals from the decision/order of the Registrar of Copyrights, as well as rectifications of the Copyright registrar, shall now lie with the High Court. Since the office of Copyright is only in Delhi, so the Delhi High Court will only have jurisdiction over the matters of Copyright over such appeals and rectifications.
  2. Appeals may be filed within 3 months from the date of the order passed by the Registrar. For the purpose of calculating the time period, the time taken in granting the certified order will be excluded.
  3. The appeals will be heard by the Single Judge in the High Court and can also be referred to a bench if the Single Judge deems fit at any stage. A further appeal can be heard by the bench of the High Court within 3 months of the order passed by the Single Judge.
  4. Certain disputes which were heard by IPAB will now be heard by the appropriate Commercial Courts i.e., by a Commercial Court or the Commercial Bench of the High Court as per the Commercial Courts Act 2015. Unlike the amendments made under the Trademark Act, certain disputes related to Copyright will only be hard by the Commercial Courts which have been remained unclear as per the Ordinance and also how the jurisdiction for disputes/applications under the Copyright Act 1957 will be ascertained.[16]
  5. In Copyright Act 1957, under Sections 19A, 23, 31, 31A, 31B, 31C, 31D, 32, 32A, and 33A, the words Appellate Board wherever they occur shall be substituted by the “Commercial Courts”.
  6. Under Section 50, the words Appellate Board shall be substituted by the words High Court.
  7. Under Section 53A, the words Appellate Board shall be substituted with the words “Commercial Courts”. In Sub-Section (2), the words “and the decision of the Appellate Board in this behalf shall be final” be omitted. Under Section 54, the words Appellate Board be substituted with the words “Commercial Courts”.
  8. Sections 11 and 12 be omitted fully.
  9. Section 74 and 75, the words Appellate Board shall be omitted.
  10. Section 77, the words, “and every member of the Appellate Board” shall be omitted.
  11. Section 78 clauses (cA) and (ccB) shall be omitted and in sub-section (2) (ii)(f), the words “and Appellate Board” shall be omitted.
  12. Section 72 expressly provide for the appeal from the decision or order of the Registrar of the Copyrights will be made to the High Court within 3 months of the order passed.
  13. Under Section 6, the words “Commercial Courts” will be substituted in place of Appellate Board.
  14. Insertion of Section 2(fa), providing for the definite of the Commercial Courts for the purpose of any State, means a commercial court constituted under Section 3, or the Commercial Division of a High Court Constituted under Section 4 of the Commercial Courts Act 2015.
  15. Under Section 2(u), prescribed means the rules prescribed by the High Court in relation to proceedings before the High Court. Also, Section 2(i) clause (aa) shall be omitted; (ii) clause (fa) shall be re-lettered as clause (faa).[17]

Geographical Indications

  1. Section 2(1)(a) and (p) shall be omitted. Sections 32, 33, 36 and 87(2)(n) be omitted entirely.
  2. Under the Geographical Indications of Goods (Registration and Protection) Act, in Sections 2, 19, 23, 27, 31, 32, 33, 48, 57, 58, 63, 72, 75 and 87, the words “Tribunal” or “Appellate Board” shall be substituted by Registrar or High Court as the context may require[18].

Plant Varieties and Farmers Rights

  1. Under Section 2(i) clauses (d), (n), (o) shall be omitted. Under Section 2(q) the following clause shall be substituted namely “prescribed” means in relation to proceedings before a High Court, prescribed by rules made by the High Court and in other cases, prescribed by rules made under this Act.
  2. Under Section 2(iii) clause (y) and (z) shall be omitted. [19]
  3. Under Section 2, 44, 56, 57 and 89 the words “Tribunal” shall be omitted and substituted with the word High Court.   
  4. Sections 54, 55, 56(3), 58, and 59 be omitted entirely.
  5. Under Section 89, the words “or the tribunal” shall be omitted[20].

Before notifying about the Tribunals Reforms (Rationalization and Conditions of Service) Ordinance 2021, the Central Government amended the Copyright Rules through which the Copyright Board was replaced with IPAB so that the Copyright Rules are in consonance with the Copyright Act of 1957. The Rules entrusted IPAB with the powers and duties of Copyright Board granting compulsory and statutory licenses, determining royalty rates etc.

However, after scrapping up of the IPAB by the Central Government, the same functions have been transferred to the Commercial Courts and/or the Commercial Benches of the High Courts. Therefore, the objective which was to be achieved to bring in consonance the Copyright Rules and Copyright Act has again been lost, and has paved a way for an another amendment in Copyright Rules which has to be passed in future formally to enforce the transfer of powers away from IPAB (de facto shift of powers will take place as and when IPAB becomes functus officio[21]).   

[1] Intellectual Property Appellate Board Abolished, AZB and Partners, available at https://www.azbpartners.com/bank/intellectual-property-appellate-board-abolished/#:~:text=The%20Ordinance%20has%20been%20issued,burden%20on%20the%20public%20exchequer., last seen on 07/05/2021 at 1:26 am.
[2] Smriti Yadav & Shwetank Tripathi (Khaitan & Company), IPAB Ceases to exist in India, Mondaq, available at https://www.mondaq.com/india/trademark/1057114/ipab-ceases-to-exist-in-india?country_id=Thailand, last seen on 07/05/2021 at 1:35 am.
[3] Ishwarya Singh, Intellectualis Stock Taking: IPR Law and Policy Reforms, Christ University, Pg. 23-25, available at https://christuniversity.in/uploads/departmentactivities/Intellectualis-February%202021_20210408045122.pdf, last seen on 07/05/2021 at 3:22 am.
[4] Prashant Reddy, Breaking News: Madras High Court admits petitions challenging the constitutionality of the IPAB and the Copyright Board, Spicy IP, available at https://spicyip.com/2011/01/breaking-news-madras-high-court-admits.html, last seen on 10/05/2021 at 11:15 pm.
[5] Zoya Nafis, India: Few provisions on Constitution of IPAB held Unconstitutional, Mondaq, available at https://www.mondaq.com/india/trademark/381468/few-provisions-on-constitution-of-ipab-held-unconstitutional, last seen on 10/05/2021 at 11:30 pm.
[6] Prashant Reddy & Pranav Dhawan, The Case for Shutting Down the Intellectual Property Appellate Board, Spicy IP, available at https://spicyip.com/2020/04/the-case-for-shutting-down-the-intellectual-property-appellate-board-ipab.html, last seen on 07/05/2021 at 2:41 pm.
[7] Mylan Laboratories vs Union of India, W.P. (C) 5571/2019 & C.M. Application 24540/2019 & 26833/2019.
[8] Nalini Sharma, Scrapping of the IP Tribunal: The good, the bad and the Ugly, India Today, available at https://www.indiatoday.in/india/story/scrapping-of-the-ip-tribunal-the-good-the-bad-and-the-ugly-1790112-2021-04-12, last seen on 07/05/2021 at 3:18 pm.
[9] Dispute Resolution, Intellectual Property, Intellectual Property Appellate Board, AZB and Partners, available at https://www.azbpartners.com/bank/intellectual-property-appellate-board-abolished/#:~:text=The%20Ordinance%20has%20been%20issued,burden%20on%20the%20public%20exchequer., last seen on 07/05/2021 at 3:27 pm.
[10] India: President Promulgates Ordinance to abolish IPAB, SS Rana and Company, available at https://ssrana.in/articles/india-president-promulgates-ordinance-abolish-ipab/, last seen on 07/05/2021 at 3:30pm.
[11] BIP Patent Attorneys, President promulgates Tribunals Reforms Ordinance, IPAB goes Defunct with Immediate Effect, Banana IP Counsels, available at https://www.bananaip.com/ip-news-center/president-promulgates-tribunals-reforms-ordinance-ipab-goes-defunct-with-immediate-effect/, last seen on 07/05/2021 at 3:45 pm.
[12] Supra 7.
[13] Supra 6.
[14] Ibid.
[15] Section 6, The Tribunals Reforms (Rationalization and Conditions of Service) Bill, 2021. 
[16] Supra 6.
[17] Supra 7.
[18] Supra 8.
[19] Supra 7.
[20] Supra 8.
[21] Lokesh Vyas & Angad Makkar, Tribunal Ordinance, 2021 and the Scrapping of IPAB: An (UN?) Hurried Move?, IPRMENTLAW, available at https://iprmentlaw.com/2021/05/09/tribunal-ordinance-2021-and-the-scrapping-of-ipab-an-unhurried-move/, last seen on 10/05/2021 at 11:45 pm.


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