IP practitioners warn of dire consequences as Intellectual Property Appellate Board gets the chop. Gautam Kagalwala reports
After nearly 20 years marked as much by setbacks as achievements, the axe has fallen on the Intellectual Property Appellate Board (IPAB) with the passing of The Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021, which will abolish the board. Along with the IPAB, the ordinance abolishes four other tribunals. The government reasoned that the tribunals had not achieved their objectives of meting out faster delivery of justice. It also reasoned that many disputes did not achieve finality at the tribunal level, and decisions went on to be challenged at high courts and the Supreme Court, thus not reducing the burden on the courts.
However, some legal experts say the IPAB should not have been part of the ordinance, and that abolishing it will delay access to justice for IP holders. They also argue the IPAB was beginning to show real results. “[This] will deprive IP holders of a specialised tribunal that was created in the first instance to facilitate expeditious disposal of appeals,” says Krishna Sarma, the founder and managing partner of Corporate Law Group in New Delhi.
With the jurisdiction of the IPAB being returned to the courts, an additional burden will be placed on a judiciary that was already dealing with a large backlog of cases even prior to the arrival of the pandemic. The courts have said that their problems originate from the low ratio of judges to the country’s population – which is one of the lowest in the world – and the dismal amount of manpower and infrastructure provided to them.
“The five high courts that exercise jurisdiction over the existing Indian Patent Offices (IPO) have a huge pendency of over 1.3 million cases,” says Sarma, who calls the abolition move unproductive. “IP holders are rightly concerned that abolishing the IPAB will lead to delays in adjudication of time-sensitive patent cases, and thereby denial of justice.”
The IPAB came into creation with The Trade Marks Act, 1999, and was set up in 2003 with the powers and status of a civil court. The new ordinance scrubs the name of the appellate board from the Patents Act, 1970, and substitutes the name with “registrar or high court” in The Trade Marks Act.
“The abolition of the IPAB will not be taken positively by the international IP fraternity and IP rights holders,” says Vivek Singh, IP attorney and head of IP filing and prosecution practice at Sagacious IP in Gurugram. “[The move is] very counterproductive, as it will lead to increased costs as well as delays in the overall adjudica- tion process. Appeals to high courts against IPO orders will be very expensive for stakeholders, and will also lead to delays, along with other procedural challenges.”
Raj Davé, the president of Davé Law Group in the US state of Virginia who teaches IP law at Gujarat National Law University, agrees. “Such a move could be prejudicial to India’s credibility as an IP jurisdiction, and could lower India’s standing worldwide.”
Before the ordinance was passed, The India chapter of the International Association for Protection of Intellectual Property (AIPPI) had unsuccessfully approached the Supreme Court to permit the IPAB chairperson to remain in his duties until a replacement was found. His tenure had ended on 31 December 2020, but the court was not moved by the applicant’s plea that the chairperson was the sole judicial member of the body without whom the body would be unable to function.
The Supreme Court had also deprecated the trend towards tribunalisation of justice, as well as the functioning of tribunals, saying it left much to be desired. But IP practitioners say the criticism does not apply to the IPAB.
“Most of the appeals on refusal by controller/registrar are resolved by the IPAB,” says DPS Parmar, a special counsel at LexOrbis in New Delhi. “When other similarly placed tribunals were not part of this bill, closing the IPAB is a surprise move. It is a step backward to deal with technically complicated patent disputes, and will slow down the resolution of appeal cases based on controller/registrar decisions.” Parmar was formerly a technical member (patents) at the IPAB. He joined LexOrbis in 2017.
“The abolition has come at a time when the IPAB has once again been providing a speedy and user-friendly forum for appeals, revocations and cancellations,” says Shukadev Khuraijam, partner, patents and patent litigation, at Remfry & Sagar in New Delhi.
“After the appointment of a technical member in August 2020, the rate of disposal was about 50 cases a month, which is 600 cases on an annualised basis. In my view, the IPAB played a significant role of providing a system of checks and balances over the functioning of the IP offices. Decisions issued by the IPAB have also withstood judicial scrutiny from the Supreme Court successfully, proving its relevance to IP jurisprudence in the country.”
The appointment came after the Indian Drug Manufacturers Association sued the government over the IPAB’s functioning without a technical member.
Khuraijam says the decision to abolish the IPAB has taken the Indian IP fraternity by surprise. When it was still in the bill stage, representations were sent to the government by the AIPPI, Asian Patent Attorneys Association, Intellectual Property Attorneys’ Association and International Federation of Intellectual Property Attorneys for a reconsideration of the proposal.
Moving into reverse gear
The ordinance also abolishes the Plant Varieties Protection Appellate Tribunal, Airport Appellate Tribunal, Film Certification Appellate Tribunal, and the Authority for Advance Rulings formed under the Income Tax Act, 1961.
After establishing specialist tribunals over the years, things moved into reverse gear in 2015, with the government setting its sights on abolishing tribunals. With the Finance Act, 2017, seven tribunals were abolished or merged, and their total number was reduced from 26 to 19. The government’s rationale was to close down tribunals that were seen as unnecessary, and to merge those with similar functions.
Petitions have also been put before the Supreme Court to decide the constitutionality of various provisions concerning the selection, appointment, tenure and conditions of service relating to various tribunals. Unlike the judiciary, the IPAB is not an independent body, and appointments to positions such as chairman, vice chairman and technical members are made by the executive.
The petitions recommended the creation of a single umbrella organisation, which will be an independent supervisory body to oversee the working of the tribunals.
In November 2019, the Supreme Court struck down as unconstitutional the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017, in Rojer Mathew v South Indian Bank Limited. Later on, an updated version of the Tribunal Rules 2020 was challenged, although unsuccessfully, before the same court in Madras Bar Association v Union of India and another.
Periods of inactivity
Between 2010 and 2020, the IPAB disposed of an average of 246 matters per year. Some years were extreme, as the board did not dispose of any case in 2017, while 663 cases were disposed the following year (see chart). From 2016, the board also began disposing of matters relating to geographical indicators and copyright for the first time.
In one case that is demonstrative of the board’s challenges – Merck Sharp and Dohme Corp v Union of India and Ors – Justice Prathiba M Singh observed: “The non-functioning of the IPAB is a serious cause for concern inasmuch as cases like the present, which involve patent rights, which have a fixed term, are being unduly delayed due to non-constitution of the tribunal itself. This position has continued for the last several years and has repeatedly been the subject matter of various writ petitions filed before this court.”
The case was being heard at Delhi High Court in February 2020, with Merck and Pharmatop the petitioners. The pharma companies were unable to appeal a decision of the patent office relating to their patent application, as the IPAB was non-functional. One of the reasons for the holdup was that the approval for the extension of the chair’s term had been pending before the appointments committee of the cabinet.
“Difficulties in filling up vacancies could be attributed to reduced budgetary provisions,” says Sarma. She points to a report titled, 116th Report for Demand for Grants for DPIIT [Department for Promotion of Industry and Internal Trade] for 2021-22, made as recently as 17 March 2021. The report, by the parliamentary standing committee of commerce, raised concerns over reduction in budgetary provisions for the IPAB.
“There have been prolonged phases during which the IPAB bench has been non-functional due to the absence of a technical member and/or judicial member,” says Khuraijam. “Much of the delays in adjudication of appeals, applications or cancellations can be attributed to the absence of a quorum of the IPAB bench. However, during the phases when the IPAB bench was functional, it has done a commendable job in providing expeditious relief to affected parties.
The court, in the matter, further observed that there was no progress to strengthen the IPAB or expedite its appointments process. Besides being under-staffed, it also lacked the infrastructure to hear matters. It acknowledged that the delays had affected the rights of IP owners.
The road ahead
The jurisdiction for appeals for existing and new matters will be moved from the IPAB to the high courts and commercial courts, and IP disputes will be heard by judges who hear cases from various fields of law. As a result, the amount of time taken to dispose of these matters may increase. As per figures cited by Delhi High Court in February 2020, more than 4,000 cases, including 1,600 patent cases, were pending before the IPAB.
Parties may also have to wait longer to get their matters heard in court. “One of the reasons for the establishment of the IPAB was delays due to the pendency of proceedings before the courts, and this problem has only grown over the years,” says Singh.
For technical matters, the courts may have to enlist the assistance of subject matter experts to hear IP disputes. “In complicated cases, the help of a neutral expert can be taken by commercial courts,” says Parmar, “but this would be a more complicated and difficult preposition for patent matters where new technology is involved. This may delay the process of dispute resolution.”
No IP-specific benches currently exist within the high courts, but there are hopes that these developments will lead the courts to develop such capabilities. “It would be much needed now to have the specialised IP benches at the high court level,” says Singh.
Davé agrees. “If the effort to abolish the IPAB is geared toward the establishment of special IP courts within the high court’s commercial court structure, it would be a positive step toward improving India’s IP protection and enforcement system, consistent with the government’s 2016 National IPR Policy,” he says. “However, if it is unrelated to those goals, it will be a step backward, because it will take time for the commercial courts to adjudicate on matters currently handled by the IPAB.”