Mitigating liability while copyright law catches up with Artificial Intelligence
Discover how Artificial Intelligence (AI) intersects with copyright law as recent court cases and global developments shape the ongoing debate. Gain insights into how different countries, including the UK, India, the US, the EU, and Japan, navigate the authorship of AI-generated works within their copyright frameworks. Explore the fair use argument put forth by AI companies and delve into four distinct schools of thought on fair use. Stay informed about the evolving legal landscape and find practical steps for corporations and individuals to protect their copyright interests in the age of rapid AI advancements.
According to a finding by PwC in its Global Artificial Intelligence Study, Artificial intelligence (AI) could contribute a staggering $15.7 trillion to the global economy by 2030. While AI has triggered many discussions, the confluence of AI and intellectual property rights (IPRs) is one of the most hotly debated topics today. On the one hand, AI can be a great enabler for IPR management and protection measures. On the other hand, the recent court cases emerging in the United States indicate that AI may be a threat to monetizable human creativity which is protected by IPR laws. In one such case, artists Kelly McKernan, Sarah Andersen, and Karla Ortiz sued AI companies, Midjourney, Stability AI, and DeviantArt for using their art to train the AI technologies of these companies. The case shot to such fame that in September 2023, Kelly McKernan was listed among the 100 most influential persons in AI in 2023 by the Times Magazine. In another case, American comedian and actress, Sarah Silverman sued OpenAI for using her published works for training AI models. More than 5,000 authors have signed a petition asking tech companies to get consent from and give credit and compensation to writers whose books were used in training data. It was submitted that mass scraping of art, writing and movies from the internet for AI training was never considered or consented to. And a few days before this article was going to print, the New York Times has sued OpenAI and Microsoft over the use of its copyrighted works in millions of articles for training chatbots that, according to the New York Times, are competing with it as a source of reliable information. These are just a few examples, and from the mounting numbers of such cases, it appears that AI is going to keep copyright lawyers busy in the coming years.
As is evident, there is widespread apprehension among artists, authors, and content creators about their future in the wake of generative AI (Gen AI) tools like ChatGPT. While the United States is witnessing an increasing number of law suits on copyright violation, European Union’s legislation to curb these conflicts is nearly out of the anvil. There are similar developments in other parts of the world as well where courts, policy makers and legislators are grappling with various issues such as human contribution versus AI contribution, copyright infringement of the works used as training material for input by the AI tool to get the desired output, issues of copyright ownership in prompts, the argument of fair use raised by AI companies, whether AI can own copyright etc.
This article seeks to examine the issues raised by the confluence of AI and copyright and the relevant legal developments around the world in that context. In the end, the authors attempt to list out certain interim practical measures that may be adopted by corporations and individuals to safeguard themselves from copyright violations till such time the law catches up with the dizzying pace of technological developments in this area.
An overview of the global developments
Based on the degree of human involvement, WIPO in its session on “WIPO Conversation on Intellectual Property and Artificial Intelligence”, categorized works created using AI as “AI-generated works” (where the output is generated without human intervention) and “AI-assisted works” (where the output is generated with material human intervention and/ or direction). Since copyright law globally recognizes authorship and protection for works conceived and created by humans, the advent of AI-generated and AI-assisted works has created a new set of challenges and uncertainties in this area.
So who is the author of works created by AI whether it is “AI-generated” or “AI-assisted”? The answer to this question varies in each jurisdiction. Below is a discussion of how this question may be answered in some parts of the world including some of the developments that have been taking place in these countries.
The United Kingdom
Section 9(3) of the UK Copyright, Designs and Patents Act, 1988 states that, the author, in the case of a literary, dramatic, musical, or artistic work, which is computer-generated, shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken. Further, Section 178 thereof states that “computer-generated”, in relation to a work, means that the work is generated by a computer in circumstances such that there is no human author of the work. There are two issues that are debated in respect of the UK law in this context. First is that AI-generated works is a recent phenomenon and hence the law did not contemplate it in the expression “computer-generated”. Secondly, the UK law also contradictorily insists on originality in literary, dramatic, musical, or artistic works, which is argued to be absent in “computer-generated” works.
Reports indicate that the Intellectual Property Office of the UK (UKIPO) is reviewing the current law to position itself as a global leader in AI. The UK government is also in the process of creating a code of practice on copyright and AI. The code aims to make licences for data mining more available. It is also hoped that the code will help to overcome barriers that AI firms and users currently face and ensure there are protections for rights holders. The code reflects the intent of the UK copyright framework to promote and reward investment in creativity.
India
India, an erstwhile colony of Britain, has its copyright statute, the Indian Copyright Act 1957, largely based on the UK statute. Section 2 (d)(vi) of the Indian statute defines an author “in relation to any literary, dramatic, musical or artistic work which is computer-generated” to be the person who causes such work to be created. The Indian Copyright Office’s Practice and Procedure Manual (2018) states that only the details of natural persons be provided as author of the work in any copyright application. Based on section 2(d)(vi) it can be argued that, in those cases where AI output is with significant human input and involves skill and creativity, such output may be eligible for copyright protection. However, when it comes to AI-generated outputs with no human intervention, the Indian legislative framework for copyright ownership is lacking.
In 2020, the Indian Copyright Office, for the first time recognized an AI tool, “Raghav”, as a joint author of an artwork produced by Raghav along with its human developer and granted a registration. However, subsequently the Copyright Office issued a notice withdrawing the grant of registration, stating that the onus was on the co-author and human developer to inform the Copyright Office about the legal status of Raghav. This move appears to arise out of the subsequent realisation of the Copyright Office that there is no provision for non-human authors to own copyright under the Indian statute.
The United States
The United States maintains the stance that copyright can be asserted only when a work is original in nature and that for a work to be qualified as original it requires independent creation plus a modicum of creativity and should be the fruits of intellectual labor which are founded in the creative powers of the mind. Also, Chapter 300 of the Compendium of U.S. Copyright Office Practices titled, “Copyrightable Authorship: What Can Be Registered”, clearly states under clause 306 dealing with ‘The Human Authorship Requirement’ that the U.S. Copyright Office will register an original work of authorship, provided that the work was created by a human being. Further, clause 313.2 that deals with ‘Works That Lack Human Authorship’ states that, to qualify as a work of “authorship” a work must be created by a human being.
In February 2023, the US Copyright Office decided one of the first cases on Gen AI involving the work “Zarya of the Dawn” a comic book by Kristina Kashtanova. The graphics of the said comic book were generated by Midjourney, an AI image generator. The Office held that the graphics were not eligible to be safeguarded but considered Kashtanova as the author of the work’s text as well as the selection, coordination, and arrangement of the work’s written and visual elements. The Office reaffirmed that human creativity is an essential requirement for copyright protection and that the most prominent AI systems are unlikely to produce copyrightable work. According to the Office, users do not have complete creative authority over how the Gen AI technologies comprehend prompts and develop work; what would be genuinely important is how much creative control the human had over the work’s expression and how well the conventional aspects of authorship were developed.
In June 2023, the US government announced a set of voluntary AI guidelines that several prominent companies agreed to follow. The commitments in these guidelines, namely, safety, security, and trust mark a critical step towards developing responsible AI. On October 30, 2023, the US president Biden signed an Executive Order which sets out several guiding principles and priorities, including standards to promote AI safety and security, consumer and worker protection, data privacy, equity and civil rights, innovation, competition, and responsible government use of AI.
The European Union
In April 2021, the European Commission proposed the first EU regulatory framework for AI, namely, Artificial Intelligence Act (AI Act), that can be analysed and classified according to the risk they pose to users. In December 2023, the European Parliament (representing the citizens) and the European Council (representing the Governments) reached a political agreement on the AI Act.
The objectives of the AI Act are reportedly to create a regulatory framework for AI technologies, mitigate risks associated with AI systems, and establish clear guidelines for developers, users, and regulators. It is intended to aim to ensure the responsible use of AI by protecting people’s safety, security and fundamental rights and promoting transparency in AI applications. The AI Act, it is said, classifies AI systems as high-risk and prohibited AI practices to ensure that AI systems that are not likely to cause serious fundamental rights violations or other significant risks are not captured. AI systems presenting only limited risk would be subject to very light transparency obligations, for example, disclosing that the content was AI-generated so users can make informed decisions on further use. Subject to a set of requirements and obligations to gain access to the EU market, the Act is reported to authorise a wide range of high-risk AI systems. These requirements have been clarified and adjusted to be technically feasible and less burdensome for stakeholders to comply with. Systems used exclusively for military or defence purposes, research and innovation, and persons using AI for non-professional reasons are exempt from the applicability of the AI Act. A full text of the new Act was still unavailable for further analysis when this article was going to print.
That being so, the legal protection of works produced with AI technology is governed by EU copyright laws. A work must be “original” and clearly and objectively distinguishable to be eligible for copyright protection under EU law. In its Final Report on Trends and Developments in Artificial Intelligence: Challenges to the Intellectual Property Rights Framework, the European Commission identifies four interrelated criteria to be met for an AI-assisted output to qualify as a protected work. Under these criteria, output must be:
- A production in the literary, scientific and or artistic domain;
- the product of human intellectual effort;
- the result of creative choices; and
- is expressed in the output.
The report states that since most AI artefacts belong to the “literary, scientific or artistic domain, and are the result of at least some “human intellectual effort” (however remote), in practice the focus of the copyright analysis is on the third and the fourth criteria. That, whether the AI-assisted output is the result of human creative choices that are “expressed” in the output.
It is interesting that several Copyright Offices across the globe recognizes human author and human creativity to bestow copyright registration for a work and hence AI generated work has still not been provided copyright protection.
Japan
A different stand was taken by the Japan government in May 2023 that it would not enforce copyrights on information used in AI training. Its policy generally permitted copyrighted material to be used for training AI models. However, in June 2023, in response to public feedback, the Government decided to address a clearer definition of copyright infringement associated with Gen AI technology to safeguard and protect the rights of creators. A recent report in December 2023 states that, in a draft report compiling the views on Gen AI and copyrighted material, a panel under Japan’s Agency for Cultural Affairs has indicated that unauthorized use of protected texts, images and other material to train artificial intelligence may qualify as a copyright violation. It is reported that the panel plans to wrap up discussions by March 2024 towards updating related guidelines.
Argument of fair use as a defence by AI companies
Most of the foundation models are trained on billions of data sourced from the internet like news articles, books, images, videos and blog posts scraped from the internet. A significant portion of this data is likely protected by copyright. However, most providers do not clarify the copyright status of the training data. The use of large amounts of copyrighted data is raising serious issues everywhere. Some of these instances are already discussed at the beginning of this article. Interestingly, AI companies are arguing that the use of copyrighted works to train AI falls under fair use, a concept in copyright law that creates an exception if the material is changed in a “transformative” way. Fair use is the right to use copyrighted work under certain conditions without permission of the copyright owner and is an affirmative defense to a claim of copyright infringement, meaning that the alleged infringer has the burden of proving that their use was a fair use.
Fair use is used as a strong defense by AI companies on the basis that most outputs from AI models do not and may not explicitly resemble the work of any specific human being and the output may be argued to be ‘transformative work’. The test to see if a work is transformative is to see if it is different in character, serves a different purpose than the prior work, and is not a mere substitute for superficial changes made in the work. Hence developers could argue that the outputs of responses to prompts are transformative in nature.
It will be interesting to see how the question of fair use will play out in the courts in the times to come as all information that is being taken to train the AI models from the internet without the permission of the copyright owner were never intended to be utilized by AI models. Artists and other creative professionals who can establish that their copyrighted works were used to train the AI models could have an argument against the entities using these.
Getty Images sued Stability AI in Getty Images (US), Inc. v. Stability AI, Inc., alleging that the latter illegally used millions of the former’s photos to train its image-generating bot as the watermark of Getty images was reflected in the output work. Though no order has been passed in the case yet, Stability AI CEO has been quoted as saying that he believes that Gen AI “transforms” the work product and hence is protected by fair use.
There are also discussions of four broad schools of thought regarding the scope of the fair use defence that consider whether outputs generated from the input used by Gen AI tools infringe copyright in the inputs. The four broad schools are fair use minimalism, fair use maximalism, conditional fair use maximalism and limited fair use maximalism. Fair use minimalists consider all output generated through Gen AI tools to be unoriginal and therefore derivative works of the inputs, even if the output work is not an exact copy of any single input work. Fair use maximalists argue that the fair use defence should cover output works because each output work is unique and is created by a sufficiently transformative process. The third school that advocates conditional fair use maximalism takes a middle path between the first two schools above. They argue that fair use protection should be extended only to those works generated from sufficiently diverse input works that do not copy the “heart” of the expression contained in the input works. The fourth school of thought, namely, limited fair use maximalism, requires Gen AI companies to comply with license restrictions of applicable works protected by copyright before using them as input works.
The jurisprudence and policies in this space are yet to evolve and it would be interesting to watch the related developments that are emerging globally.
Some general measures to ward off copyright liability and ensure copyright protection
Clearly, the world has just begun to grapple with the effects of AI on intellectual property rights. Courts and law makers around the world are in the process of churning the right approach and policies to accommodate these developments. But it would be some time before the dust settles on the legal side of things because historically technology has always been ahead of the law. And in this instance, the pace of technology seems a bit too fast, and law has clearly been caught off guard around the globe. However, corporations and individuals that are at the receiving end of these developments can take certain measures to mitigate the effects of the fast-paced developments in the AI field while the law and policies are still getting shaped on the anvil globally.
How to mitigate corporate liability
As far as corporations are concerned, the issue could be manyfold.
The employees of a corporation may use Gen AI tools for performing client services though the employer-corporation has not authorised it. The easy availability of Gen AI tools in the hands of employees who are ignorant of copyright laws must concern corporate entities, especially for corporates in the areas of entertainment, research and innovation, publishing, software, and other technical fields. When employees use the relatively new Gen AI tools unbeknownst to the employers to create work products to be delivered to the customers of the employers, it could put the employers at the receiving end of third-party IPR liability. Another situation is that the corporation may be having its own copyrighted content on its website. Despite a copyright notice, such content may be used by the Gen AI companies for training purposes. Then it is possible that a company could be at the risk of receiving products from their vendors which are created using Gen AI. Employers must be watchful of IPR liability arising from service and work products offered to them by their vendors as these could unwittingly land the employers as defendants in IPR lawsuits. Yet another issue could be arising from a corporation’s plans to use the content available with them for training of AI tools without verifying the copyright ownership of the works – this could be true for large consulting companies who may wish to use their existing materials for training of Gen AI tools. Such existing materials may also include work products delivered to clients, the copyrights of which would belong to the clients. Unless there are mechanisms to identify these, the corporation could be potentially infringing copyrights.
The following are some of the preventive measures that could be taken by corporations to mitigate the risk of copyright infringement in such situations:
- Incorporate provisions in employment contracts which prohibit employees from using Gen AI tools for creation of work products. This prohibition can be a general one as well because in some countries (for example, India) the copyright ownership in any work created in the course of employment vests with the employer. In addition to such clauses on prohibition, the employer could consider obtaining representations and warranties coupled with indemnification provisions from employees to cover such situations.
- Incorporate a provision in the terms of use of the website of the corporation using specific language that the content on its website shall not be used for the purposes of training Gen AI tools.
- In service contracts with outside vendors, corporations must get a warranty from their vendors that they or their employees will not employ Gen AI tools for the purpose of delivering the work products. There must also be an indemnification provision coupled with such warranties to protect corporations from legal liability.
- If a corporation intends to use its existing content for training Gen AI tools, they must first conduct a due diligence of all content which they propose to use for such training to ascertain their copyright title.
- Yet another point to bear in mind for companies creating AI tools is to consider protecting their uniquely original “prompts”. “Prompt engineering” is the practice of designing inputs for Gen AI tools that will produce optimal outputs. Recently, the word ‘prompt’ has been in the news for making it to the Oxford Dictionary as one of the words for 2023. The Dictionary considered ‘prompt’ for its relevance to AI, and defined it as “an instruction given to an artificial intelligence program, algorithm, etc., which determines or influences the content it generates.” While the question of copyrightability of prompts is currently hotly debated, there is no harm if copyright protection is employed on uniquely original prompts. If the jurisprudence that is evolving now favours copyright protection for original prompts in the future, then such a protection would come in handy.
How to mitigate individual liability
Artists, writers, composers, or those involved in any other kind of creative arts express their work in physical form. Besides communicating these works in the physical realm, they often exhibit their works to the world through social media platforms which heavily permeate our world today. Unlike corporations, individuals are often less informed about the means and ways to protect their copyrights online or offline. As such, they are seldom diligent to employ copyright protection methods on their works before exhibiting them to the world at large, online, or offline. This puts them in a highly disadvantageous situation vis-à-vis Gen AI companies who are looking for works to train AI tools. The fact that legal solutions currently existing are inadequate further exacerbates this situation.
One simple measure they could adopt is to indicate on the work that the copyright therein is owned by them and that all rights are reserved including the specific rights to use the work for training AI tools. Additionally, if the national laws require registration of copyright in the work, they may register the work for protection with the relevant office. This could help in blunting any defence by Gen AI companies that the work is not copyright protected in that specific jurisdiction.
Conclusion
AI and technological developments around the same cannot be wished away. The implications of AI for IPRs in general and copyrights in particular are manifest through the judicial and legislative developments emerging around the world almost daily. In this evolving and still fluid landscape, the rights of stakeholders of copyright need some interim protection, which currently appears to be in their hands alone. Taking preventive measures like the ones listed above should mitigate the risks of copyright protected works being accessed by Gen AI companies and entities and individuals incurring copyright infringement liability through their day-to-day business operations.
Court Rules Data Privacy Prevails Over Business Methods in E-Commerce
In a pivotal decision, in the case Priya Randolph v the Deputy Controller of Patents and Designs, the Madras High Court has significantly impacted the criterion of patentable inventions in India, safeguarding a privacy-focused technology amidst e-commerce giants.
Priya Randolph and Rohit Chaturvedi (inventors) sought patent protection for their system that selectively conceals user data, specifically physical addresses, during e-commerce transactions. However, after their application was dismissed as a non-patentable “business method” under Section 3(k) of the Indian Patents Act, 1970 (the Act), the inventors approached the Court.
The inventors primarily contended that the claimed invention, encompassing hardware, software and firmware, was a technological advancement that furthers privacy and data protection, not business method, as asserted by the Deputy Controller of Patents and Designs (Deputy Controller).
The Deputy Controller argued that since the invention has involvement in e-commerce, it naturally fell under business methods and Section 3(k) automatically applied, rendering it ineligible for patent protection.
The Court, guided by para 4.5.2 of the Guidelines for Examination of Computer Related Inventions of 2017 (CRI Guidelines), clarified that merely touching upon e-commerce doesn’t automatically classify an invention as a business method. It emphasized the importance of the invention’s substance, specifically in this case, the invention’s distinct technological contribution to data privacy beyond routine business processes.
Consequently, the initial rejection was set aside, and the matter remanded for reconsideration by a different officer. The inventors were granted a reasonable opportunity to further present their case, with a reasoned decision expected within four months.
This order re-emphasizes the important markers made in the CRI guidelines for business method that the substance of claims matter, not the form in which they are presented.
Patentability of Synergistic Combinations Yielding New and Improved Results
In a notable ruling in the case, Biomoneta Research Pvt ltd. v Controller General of Patents Designs, the Delhi High Court (Court) resolved an appeal by Biomoneta Research Pvt. Ltd. (Biomoenta) against the Controller General of Patents and Designs’ (Controller) rejection of their 2017 patent application for an ‘Air Decontamination Assembly.’
The case is significant for its detailed analysis of inventive step in patent law and the Court’s consideration of European patent guidelines.
Biomoneta contended the rejection of its patent application, which was previously followed by a PCT Application and subsequent national phase applications in the US Patent and Trademark Office and European Patent Office (EPO). The Indian Patent Office (IPO) had objected to the application, citing a lack of inventive step under Section 2(1)(ja) of the Indian Patents Act, 1970, (the Act) and referenced three prior art documents (D1 to D3).
In its defense, Biomoneta emphasized the uniqueness of its air decontamination technology, which utilized a low voltage electric field and conducting plates with 3D material, arguing its effectiveness against viruses like COVID-19 and features like filter-less operation and reduced power consumption.
The Court first referred to the judgement in F. Hoffmann-La Roche Ltd. v Cipla Ltd, for the “test to be followed for determining inventive step and lack of obviousness,” and Documents D1-D3. The Court noted that Biomoneta’s invention shared some features with existing technologies, such as the use of conducting plates and electric fields. However, Biomoneta’s unique combination of these elements with low voltage electric fields and 3D material-coated plates demonstrated an inventive step. This combination led to advancements like filter-free operation, reduced power consumption, and effective pathogen elimination, setting it apart from prior art and justifying the patent grant.
Further, the Court referenced the EPO guideline on combining features versus mere juxtaposition in patent claims; these guidelines emphasized that an invention should be assessed as a whole and not merely upon the combinations. Further, if the combination of features yields a new and improved result, it merits patentability. The Court found that Biomoneta’s device, addressing several disadvantages of existing technologies, wasn’t just a simple combination of known features but involved an inventive step. The Court also stated that while secondary considerations alone don’t make an invention patentable, combining existing results in a novel, beneficial way can justify a patent grant.
The Court’s decision was further influenced by the grant of a corresponding US patent, viewing it as corroborative of the invention’s novelty and inventiveness. As a result, the Court overturned the previous rejection, directing the patent application to proceed for grant.
This decision stands out for its detailed examination of inventive step, considering both Indian and European patent law principles. It emphasizes the importance of a holistic and comprehensive approach in patent adjudication, especially in complex technological fields, setting a valuable precedent for future patent assessments.
Inventiveness Test Should Be Applied to Entire Invention, Not Parts
In the matter of Groz-Beckert Kg v Union of India & Ors, the Calcutta High Court heard the appeal of Groz-Beckert KG (GBKG) against the rejection of their patent application by the Controller of Patents and Designs (Controller).
The case dealt with the issue of whether, can an invention be assessed on its constituent parts, while evaluating its patentability.
GBKG’s patent application was for a method and apparatus for processing textile materials, designed to improve the efficiency and functionality in the textile industry, granted in over 11 jurisdictions worldwide. However, the Controller rejected it stating it lacked an inventive step under Section 2(1)(ja) of the Indian Patents Act, 1970 (Act) and also formality issues concerning the submission of the Proof of Right.
GBKG argued that the Controller’s finding was based on an incorrect assessment of the invention by dividing it into two parts, rather than viewing it as an integrated invention comprising of multiple interlinked features.
The Court, referring to the guidance on this aspect provided by the Indian Manual of Patent Office Practice and Procedure (the Manual), agreed with GBKG’s contentions. Citing the precedent set in Bishwanath Prasad Radhey Shyam v Hindustan Metal Industries, the Court emphasized the necessity of strictly and objectively judging the “obviousness” of an invention and considering it in entirety, rather than as isolated parts. The Court also observed that the Controller had overlooked the technical advancements claimed by GBKG. Drawing from the principles outlined in State Bank of India v Ajay Kumar Sood, the Court noted that the rejection was based on incomplete facts and lacked reasoning.
Consequently, the Court overturned the Controller’s decision and directed a fresh evaluation of the patent application within three months, ensuring GBKG’s right to a hearing.
High Court Affirms Scotch Whisky Association’s GI Infringement Lawsuit Right
The Scotch Whisky Association (SWA), a company incorporated in the UK won an appeal (Scotch Whisky Association v J.K. Enterprises & Ors) before an Appellate Bench of the High Court of Madhya Pradesh in Indore.
The appeal arose from an order passed by the Commercial Court in District Indore. The Commercial Court held that SWA’s suit for infringement of its geographical indication (GI) Scotch Whisky, against the defendant JK Enterprises (JKE), was maintainable only if it impleaded an ‘authorised user’ of the GI as a necessary party.
The concept of ‘authorised user’ is unique to the Indian GI law. It essentially refers to any person claiming to be the producer of the goods in respect of which a GI has been registered. The Geographical Indications of Goods (Registration & Protection) Act, 1999 (the GI Act) permits authorized users to register themselves with the GI Registry. They can even sue for infringement, among other rights.
JKE defended the appeal and argued that SWA was not entitled to sue independently for infringement under Section 21(1) of the GI Act without impleading an authorized user as a necessary party. Section 21 (1) reads as follows:
21. Rights conferred by registration.
(1) Subject to the other provisions of this Act, the registration of a geographical indication shall, if valid, give,-
(a) to the registered proprietor of the geographical indication and the authorised user or users thereof the right to obtain relief in respect of infringement of the geographical indication in the manner provided by this Act;
(b) to the authorised user thereof the exclusive right to the use of the geographical indication in relation to the goods in respect of which the geographical indication is registered.
It was JKE’s argument that the ‘and’ in Section 21(1)(a) of the GI Act must be read conjunctively and not disjunctively. When done so, JKE argued, there would be a requirement to implead the authorized user along with the registered proprietor in a suit for infringement.
In examining this issue, the Court looked at India’s obligations under the WTO’s TRIPs Agreement. It noted that the interpretation of the provisions of the GI Act, enacted in pursuance of the obligations under the TRIPs Agreement, must be in tune with such obligations and such interpretation must be purposive. Thereafter, the Court reviewed the provisions of the GI Act to understand the role of the registered proprietor and the authorised user. The Court’s review indicated that there are various provisions under the GI Act where the registered proprietor can act in its own right, without involving the authorized user. Two such provisions cited by the Court pertain to renewal of the GI and seeking additional protection. The Court also referred to Section 68 of the GI Act which specifically lists certain proceedings where the authorised user must be impleaded. Based on these provisions, the Court concluded that the registered proprietor has an independent legal status and entitlement to relate itself to the GI.
Citing the principle of “ubi jus ibi remedium,” (if there is a right, there is a remedy,) the Court pointed out that the legislature could not have been presumed to have conferred exclusive rights on the authorized user to the exclusion of the registered proprietor, who is the originator of the GI registration. The Court thus concluded that the word ‘and’ used in Section 21(1)(a) of the GI Act must be treated as ‘or’, else it would lead to a situation where the status of a registered proprietor of a GI would be pushed below that of the authorised user.
This is the first court order in India that discusses the rights of registered proprietors of GIs vis-à-vis authorized users. K&S Partners represented SWA in the action.
Court Rules on Determining Diagnostic Criteria in Patent Applications
The Madras High Court, this year, ruled on the much-awaited cases pertaining to interpretation of the scope of patentability of diagnostic methods patentability under the Indian Patents Act, 1970 (Act). Section 3(i) of the Act prohibits the patenting of diagnostic methods aimed at treating diseases in humans or animals to make them disease-free.
The two cases were appeals filed against rejection orders of the Controller of Patents (Controller) the matters of The Chinese University of Hong Kong v the Assistant Controller of Patents and Designs .
Case 1 – The Chinese University of Hong Kong vs. the Assistant Controller of Patents and Design (Indian patent application number 4863/CHENP/2012).
The University approached the Court against the Controller’s order rejecting their patent application for a method to detect foetal chromosomal abnormalities, deeming the method as a diagnostic one, and hence non-patentable under Section 3(i).
Section 3(i) specifically precludes from patentability:
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.
The University argued the following key arguments in support of their contention:
- In Vivo Application Requirement: The invention involved an in vitro (in the laboratory) analysis of fragments of nucleic acid molecules taken from a biological sample containing both foetal and maternal DNA. For a method to be classified as diagnostic in terms of Section 3(i), it should involve an in vivo application (within the living).
- Interpretation of Section 3(i): The lack of a comma between “prophylactic” and “diagnostic,” implies a restriction only to diagnostic methods used for disease prevention.
- Scope of Section 3(i): Only diagnostic methods for the treatment of human beings to make them “free of disease” fall within the scope of Section 3(i).
- Four-Step Diagnostic Method: A method is ‘diagnostic’ only if it includes four specific steps – data collection, comparison with standard values, identification of significant deviations, and linking these to a specific clinical condition (as recommended by the Enlarged Board of Appeal’s (EBoA) interpretation under the European Patent Convention (EPC)).
In response, the IPO presented the following arguments:
- The invention diagnosed foetal chromosomal abnormalities by identifying sequence imbalances in samples from the human body, making it diagnostic,
- Section 3(i) should be read broadly to include both in vitro (in the laboratory) and in vivo (within the living) diagnostic methods,
- The EboA’s opinion on the four-step diagnosis is not binding in Indian courts, and
- Any method involved in diagnosis qualifies as a diagnostic method under Section 3(i).
The Court analysed the interpretation of “diagnostic” within the context of Section 3(i), and passed judgement on the following:
- “Prophylactic Diagnostic”: The lack of a comma between “prophylactic” and “diagnostic” in Section 3(i) is a minor printing error and therefore, does not limit diagnostic methods to those treating humans to be disease-free.
- Diagnosis for Humans vs Animals: Section 3(i) has two distinct parts for human beings and animals. The animal-related provision mentions “any process for a similar treatment of animals” with three purposes of treatment: curing disease, increasing their economic value, or improving their products. However, the part applying to humans does not confine the word “diagnostic” to treatment of human beings to “render them free from disease”.
- In vivo and in vitro diagnostic: Neither the language of Section 3(i) nor of Article 27(3) of TRIPS, an international agreement, restricts diagnostic methods to in-vivo; international agreements such as EPC also do not impose any limitation or restriction on the scope of the expression “diagnostic methods”. Besides, the Manual of Patent office Practice and Procedure 2019 also does not limit the word “diagnostic” to in-vitro.
- On the four-step method requirement: As regards the EBoA’s interpretation on applying the four-step method, the phrase “practised on human body” is key and is missing from Section 3(i). Thus, it cannot be applied to determine the scope of diagnostic method in Indian context.
- Determining “Diagnostic”: Patent eligibility for “diagnostic” processes requires assessment of the claims in the context of the specification. If a person skilled in the art, such as a medical doctor, concludes from this that the process leads to a diagnosis, it is non-patentable. Additionally, the test’s label alone doesn’t dictate patentability. If the test is used to diagnose a disease, disorder or condition for treatment of human beings, then it is diagnostic and patent ineligible, regardless of the patient’s symptoms. Conversely, if testing is for research or quality control, then the process is not diagnostic and patent eligible.
Therefore, the Court held that the University’s patent application claimed a diagnostic method, thus non-patentable under Section 3(i).
Case 2 – The Chinese University of Hong Kong vs. the Assistant Controller of Patents and Design (Indian patent application number 4863/CHENP/2012)
This case claimed a method for determining the foetal fraction in a maternal sample. Similar to Case 1, the University challenged the Controller’s refusal decision, deeming the method as a diagnostic one, and hence non-patentable under Section 3(i).
While making similar arguments as in Case 1, the University further emphasized that their method in this case was a preliminary step in prenatal testing, primarily focusing on the process of identifying foetal fraction, an indicator for further testing, rather than diagnosing a condition. Thus, the method, non-diagnostic in nature, should not be classified as non-patentable under the purview of Section 3(i).
The Controller held the same arguments as made in Case 1. Additionally, an independent lawyer appearing as amicus curiae (friend of the court) in the matter, also provided his expert views on Section 3(i), stating that:
- Section 3(i) contains a drafting error and the phrase “of treatment of human beings” should be read as “for treatment of human beings” for making sense of the provision,
- Based on legislative history of the provision, diagnostics are not limited to in vivo methods,
- The exclusions such as Section 3(i) were introduced as a matter of practicality and not as a matter of public policy, and
- That the Technical Board of Appeal at the European Patent Office follows the four-method requirement of EboA with caution and only grants patents if the claimed invention does not unambiguously point to a clinical diagnosis.
The Court applied the same principles as discussed in Case 1. Further the Court held that the method in Case 2 involved determining the foetal fraction in a biological sample, a process not inherently identifying a disease or condition, and further testing would be required for such purpose. Therefore, adopting the balanced approach of interpretation of the term “diagnostic”, the Court allowed the appeal.
Key takeaways:
- Broad Interpretation of “Diagnostic” in Section 3(i): The section does not exclude in vitro diagnostic methods. The definitive test is to see if the diagnosis discloses disease or pathology for the treatment of human beings.
- Distinct Treatment for Humans and Animals: The first part of Section 3(i) applies to human beings and the second part to animals exclusively.
- Non-restriction to Disease-free Diagnostic Methods: A diagnostic method need not render human beings free of disease to be non-patentable. If the method discloses disease or pathology for treatment, the bar of Section 3(i) shall apply.
- EboA’s Method Not Mandatory: The EboA’s four-step process for determining a diagnostic method is not universally applicable.
- Individual Assessment of “Diagnostic” Nature: Each patent application must be assessed individually to see if it leads to a diagnosis. If a skilled professional like a doctor determines it results in a diagnosis, it’s non-patentable. However, if it’s for research or quality control without leading to a diagnosis, it’s patent eligible
As a parting remark, the Court observed that given the recent patent approvals in favour of in vitro processes and technological advancements made in diagnosis, especially with genomic tools, the scope of the expression “diagnostic” in Section 3(i) might need to be restricted to in vivo processes. This change can be balanced by introducing compulsory licensing legislations.
The Court’s decisions in these cases set significant precedents for future patent applications in the biotechnology and biomedical diagnostics sectors. The rulings suggest that legislative amendments might be required to refine the scope of “diagnostic” in Section 3(i), potentially restricting its scope to in vivo processes.
Court Clarifies Patent Eligibility Criteria for Biochemical Inventions
In a landmark judgment, the Madras High Court brought significant clarity to the nuances of patent eligibility under the Indian Patent Act, 1970, (the Act) particularly concerning biochemical inventions.
In the case, Novozymes v Assistant Controller of Patents and Designs revolved around patentability of phytase variants with enhanced thermostability.
The Assistant Controller of Patents and Designs (Controller) had initially refused Novozymes’ patent application, invoking Sections 3(d) and 3(e) of the Act which address non-patentability of known substances without significant efficacy enhancement and mere admixtures, respectively. Novozymes challenged this decision, leading to an in-depth examination of these provisions in the context of biochemical substances.
Novozymes argued that Section 3(d) of the Act applies only to “pharmaceutical substances”, relying on precedents like Novartis AG v Union of India. Further, invoking the principle of ejusdem generis (of the same kind), Novozymes contended that the generic expression “and other derivatives of known substance” in Section 3(d) should be limited to derivatives of chemical substances only and not be extended to biochemical substances. Moreover, Novozymes asserted that their invention met the enhanced efficacy requirement through improved thermostability, and that Section 3(e) applies solely to independent claims.
In response, the Controller interpreted “known substance” in Section 3(d) broadly, including both pharmaceutical and biochemical substances. They insisted that enhanced efficacy required proof of improved enzyme activity. Furthermore, the Controller upheld Section 3(e), emphasizing the need for synergy in compositions.
Section 3(d) – Clarifying Applicability to Biochemical Inventions – The Court meticulously examined the two judgements relied by Novozymes and expanded the interpretation of Section 3(d) of the Act, extending its applicability to biochemical substances beyond pharmaceuticals and agrochemicals. The Court emphasized that “enhancement of efficacy” assessment should align with principles set in Novartis’ Supreme Court judgment, avoiding prescribing a one-size-fits-all numerical benchmark for efficacy. Instead, it upheld a flexible approach, evaluating efficacy based on a product’s function, purpose, or utility. This inclusive and nuanced perspective led the Court to validate Novozymes’ phytase variants with improved thermostability, ultimately overturning the Controller’s refusal and granting claims 1-7.
Scope of Section 3(e) – Scope of Applicability – The Court also addressed the applicability of Section 3(e), and further clarified that this section’s applicability is not confined to compositions of known ingredients or limited to independent claims. Thus, the Court upheld the Controller’s decision to deny claims 8 – 11, citing the absence of evidence that the composition offered more than the sum of its parts.
The ruling encourages a flexible approach to patent eligibility assessments in the biotechnology sector. It recognizes the diverse nature of substances, fostering innovation. The reaffirmation of Section 3(e) raises patent eligibility standards, promoting stronger evidence of synergy in compositions. This decision shapes a balanced patent evaluation landscape, impacting current and future innovations.
Disobeying interim injunction seen as Contempt of Court
In the case, Pfizer Inc & Ors. v Triveni Interchem Private Limited & Ors, the Delhi High Court (Court) came down heavily on Triveni Interchem Private Limited and Triveni Chemicals (together referred as Triveni) after Triveni was found guilty of “wilful” and “contumacious” contempt of the Court for disobeying an interim injunction against Pfizer Inc (Pfizer).
Consequently, the Court ordered Triveni to pay Pfizer, INR 2 crores (~USD 2,40,000) as damages within two weeks, failing which the contemnor shall be imprisoned for two weeks in Tihar Jail.
In 2021, Pfizer filed a case against Triveni, accusing them of infringing on Pfizer’s patent for a drug called Palbociclib, a breast cancer medication. The Court granted an ad interim injunction to Pfizer, restraining Triveni from various actions related to the patent-infringing product Palbociclib. These actions included making, selling, distributing, advertising, exporting, or importing Palbociclib or any pharmaceutically acceptable salt of it. Triveni was also instructed to remove all references to Palbociclib from its websites and third-party platforms, like IndiaMART. Sometime in July 2022, Pfizer again found the infringing products by Triveni to be available on IndiaMART in a new packaging (on the same impugned link as per suit and on a new link).
In 2022, Pfizer responded by filing a contempt application against Triveni for violating the Court’s injunction order. The Court found Triveni in contempt of the 2021 injunction and directed Triveni to provide an explanation for the altered packaging. In response, Triveni submitted affidavits; however, these affidavits lacked essential information as required by the Court’s instructions. Parallelly, the infringing products were still available for sale on another e-commerce platform called Connect2India.
In December 2022, the Court held Kamlesh Singh, guilty of wilful disobedience and contempt of the Court’s injunction order and moved the case to the sentencing phase in January 2023. However, once again Triveni’s affidavits filed on January 17, 2023, were found to be inadequate. Further, the affidavits claimed to have dealt with Palbociclib only in July 2022, contradicting their previous statements in the September 2022 affidavit and their statements before the Court in December 2022. Triveni argued that their January 2023 affidavit showed compliance with the Court’s orders, hence no further action or property attachment was necessary against them. The Court was left to assess these conflicting submissions and the continued disregard for its injunction.
The Court, relying on the principles of contempt, as previous precents in Samee Khan v Bindu Khan, and Citigroup Inc. v Citicorp Business & Finance Pvt. Ltd. observed the following:
- Contradictory Submissions: The Court noted Triveni’s inconsistent statements, initially admitting to advertising the patent-infringing product and later claiming they only dealt with it once.
- Insincere Apology: The Court was skeptical about Triveni’s claim of limited involvement with the drug and found their apology insincere, as Triveni did not provide a complete account of their dealings with the drug.
- Unbelievable Actions: The Court found it unbelievable that Triveni would advertise Palbociclib without possessing any stock of the product, which was deemed contrary to established trade norms.
Based on these observations, the Court concluded that Triveni had engaged in “wilful and contumacious disobedience” to the injunction order issued and imposed a fine of INR 2 crores (~USD 2,40,000) on Triveni. Triveni was given two weeks to pay this amount to Pfizer. Failure to comply within the stipulated timeframe would result in Kamlesh Singh (Director of Triveni Interchem Private Limited) being detained in a civil prison for two weeks, in accordance with the established legal principles.
Court Rules on SEP Infringement and Licensing Dynamics
In the landmark case of Nokia Technologies OY v Guangdong OPPO Mobile Telecommunications Ltd. & Ors., the Supreme Court of India addressed a crucial issue concerning the alleged infringement of Standard Essential Patents (SEPs) post the expiry of a licensing agreement.
This case was significant in the realm of intellectual property rights, particularly in the context of adhering to and interpreting FRAND (Fair, Reasonable, and Non-Discriminatory) commitments.
The dispute originated when Nokia Technologies OY (Nokia) accused Guangdong OPPO Mobile Telecommunications Ltd. (Oppo) of using three of its SEPs integral to mobile communication technologies, beyond the expiration of their licensing agreement in 2021. The contention arose after Oppo’s sales in India skyrocketed following the expiration of a licensing agreement between the two companies. Nokia alleged that Oppo continued to use its patented technology without requisite consent, prompting Nokia to seek legal recourse.
Meanwhile, Oppo had approached a Chinese court to fix a FRAND rate for Nokia’s SEPs, indirectly acknowledging the use of the patents in question.
Nokia’s demand for a pro-tem deposit from Oppo was based on the royalties outlined in their 2018 agreement. Oppo, however, argued this demand lacked legal basis, asserting that it contravened FRAND principles and cited the Indian Patent Act, 1970, particularly sections that allow challenging patent validity despite existing license agreements.
In July 2023, a divisional bench of the Delhi High Court directed Oppo to deposit 23% of its Indian sales revenue post the 2018 agreement’s expiry. This ruling was grounded in the interpretation of the obligations of SEP implementers during negotiation phases, as per the framework of FRAND. This ruling came after the Court determined that Oppo had been utilizing Nokia’s technology without proper authorization. Oppo subsequently challenged this judgement in the Supreme Court.
The Supreme Court also refused to stay the Divisional bench’s decision. This ruling emphasized the necessity for SEP implementers to provide adequate security during licensing disagreements.
Furthermore, the Supreme Court granted Oppo a grace period of 10 days to submit an affidavit of compliance with the order. This gesture underscores the Court’s willingness to provide reasonable opportunities for resolution and adherence to legal directives. Following the Supreme Court’s ruling, counsel for Oppo and Vivo (part of Oppo’s parent company) expressed willingness to comply with the Indian FRAND rate set by the Indian court, preserving their right to appeal.
For the tech industry and legal community, this case serves as a guide in balancing patent rights with licensing duties, setting a benchmark for future SEP disputes and negotiations.
On January 24, 2024, both Nokia and Oppo released press statements declaring agreements for cross licensing, thus setting this three-year long patent battle.
Court Overturns Patent Refusal Due to Inadequate Obviousness Evaluation
In Kuraray Co. Ltd. and Mebiol Inc. v The Assistant Controller of Patents & Designs, The Patent Office, the Madras High Court ruled in September that the Assistant Controller of Patents & Designs’ (Controller) refusal order lacked merit due to insufficient reasoning.
Kuraray Co. Ltd. and Mebiol Inc. (appellants), filed a patent application for an invention titled, “film for plant cultivation”, which related to a process involves using polyvinyl alcohol film (PVA film) of specification in plant cultivation. The Controller rejected the application. The Court specifically found the Controller’s reasoning insufficient in providing the obviousness of the subject matter, based on the information available in the claimed closest prior art, a single citation.The Court cited a precedent from the case, Agriboard International v The Controller of Patents and Designs; underscoring three key principles for evaluating obviousness: analyzing the invention disclosed in the prior art, assessing the invention disclosed in the application, and determining how the subject invention would be perceived as obvious by a person skilled in the art.Notably, the Court specified that if the identified prior art addresses a different problem, it would not lead a person skilled in the art to arrive at the claimed invention based on said document.Ultimately, the Court ruled in favour of the appellants, Kuraray Co. Ltd. and Mebiol Inc, overturning the refusal decision and allowing the appeal, subject to further amendments to the claims.