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Competition law, digital world and search advertising

Abir Roy

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Introduction

In our previous trend, we focused on the features of markets in the digital world with respect to high returns to scale and network externalities which went handin-hand with the rise in provision of free services. The exponential growth of this market is underscored by the fact that digital advertising has prevailed over traditional channels such as print and television advertising in many countries, to become the largest medium of advertisements. Targeted advertising is made possible only because of profiling of consumers based on search habits and insights gained from their data.

This data is an essential facet of advertising on the digital medium, as advertisers can choose to target advertisements based on based on browsing behaviour and interests (behavioural targeting), the theme and context of a website (contextual targeting); geographical location of an individual (geographical targeting); social, demographic and economic characteristics such as age, gender, income (sociodemographic targeting) or even based on time, day or week (time targeting). This wide array of options are available to advertisers because consumers increasingly rely on “free” services, such as maps, general search services, etc. in their daily lives, generating vast swathes of data in the process of doing so which allows for a rich development of targeting factors.

Digital Advertising: Establishing the trend

Since user data presents valuable behavioural insights, advertisers increasingly find spending on Digital Advertising gives higher returns on investments. While currently advertising revenues through traditional channels such as print and television advertising is still higher than digital advertising, market studies show that Digital Advertising revenues will eventually surpass print advertising revenues.

Google Story

If one must name a single enterprise that has revolutionised the internet, it must be Google. We cannot imagine a life without Google, and for this tech boom throughout the world, we all must thank Google. In 1995, Google began as a project of Larry Page who was later joined by Sergey Brin. While initially, it was only a search engine, Google family was to become much more than that in just two decades. Google has brought several innovations that has changed the world, such as Search Engine that has brought all the information on the fingertip of user, Android OS that eased access of smartphones to majority of population and making YouTube the streaming service that gave opportunity to creators to expand their reach globally.

Presently, Google is engaged in provision of number of product and services including Maps, YouTube, Chrome, Android, Play Store, Gmail, online advertisement services etc. which creates an ecosystem of Google around us. In fact, creating an ecosystem is one of the defining features of business model of Google, where integrating several services providers better consumer experience and that eventually eases expansion of the company. Google has established itself as the undisputed market leader in general search, as the global market share of the top 5 search engines across the last 10 years shows.

One of the factors that played a role in establishing Google as a market leader is their acquisition strategy. If one looks at the acquisition history of Google, Google has made close to USD 30 billion on its major acquisitions. Some of these acquisitions have converted into a huge success, such as Android, YouTube, Advertisement acquisitions and Waze for maps. Android has turned out to be one of the cheapest yet the most successful deal for Google. Consequently, such killer acquisitions also gives a strong market power to Google in several markets. Considering the same, there have been several competition law investigations against Google across multiple jurisdictions (EU, US, Turkey, Australia etc).

Google’s Story in India

 Google started its operation in India in 2004 with five employees but now has become one of the largest Google office outside USA. Seeing the potential that Indian market has in terms of population, Google has customised its services for Indian population, like providing search services in regional languages, answering queries over phones (in collaboration with Vodafone) etc, thus pioneering and championing the role of innovation in India’s growth story. Additionally, it has also contributed to increase the reach of internet in India by providing free public WiFi (more than 400 stations), Google is already a success in India and with increase in internet penetration, India is likely to become one of the biggest market for Google. There is absolutely no doubt that Google’s contribution to the tech boom in India is paramount and cannot be denied and we must all be thankful to Google for ushering it this boom which has benefited all of us.

Google Advertising business model

Google’s story brings several competition concerns. However, herein, we bring our focus only to Google’s conduct in online advertisement industry. Google acquired Double Click and AdMob at early stage to grow their revenue in advertisement industry. It can be noticed that most of the services offered by Google are for free, therefore business model of Google is such that advertisement revenue is primary revenue source for them.

Difference between Search and Display Advertising

Search advertising and display advertising are two major forms of online advertising. While search advertising is used by advertisers to target consumers who have made a general decision about what they are looking for, display advertising is usually intended to be used for increasing brand awareness. Participants also highlighted that while display advertising is associated with demand generation for a product, search advertising leads to more conversions in terms of actual sales. On other parameters such as creativity in advertising, stakeholders submitted that search advertising being text-based, display advertising provided more avenues in terms of innovative ads that may capture user attention.

In terms of strategies employed by advertisers, the study also found that advertisers were not likely to substitute display advertising with search advertising, and vice-versa. This was also substantiated by the fact that budget allocation for the two types of advertising were kept distinct. However, it was also revealed that depending on what the advertisement campaign objective are, the two methods of digital advertising could often be used in complement to each other. For instance, display advertising may make the consumer aware of the product offering, nudging him/ her towards searching for the product and encountering search advertisements.

Following chart (based on CMA Report) would help in understanding online advertising;

Google works in both segments of digital advertising, a) search advertising and b) display advertising. In this trend, we focus on how Google’s search advertising works.

Google’s Search advertising

‘Google Ads’ is advertising system where advertisers bid on certain keywords for which clickable ads appear on every search and google is paid per click by advertisers. However, this does not work like a usual auction and position of advertiser depends on two factors, viz. advertiser’s bid and ad quality. Herein, ad quality is an important factor because Google as a search engine is determined to provide the most accurate result, which is defining feature of Google. Ad quality is determined through quality core which takes into consideration Google’s expected clock through rate, past performance, quality and relevance of keywords, landing page and Ad text. On basis of these two factors, Google ranks ads on the page of search result.

Why Google does not face competitive constraints

Google provides its general search service free of cost to consumers as monetization of the service occurs through targeted advertisements. The ability to target advertisements towards a group of users come from insights which can be gleaned from consumer data generated from the search service. The attractiveness of a platform, for advertisers, therefore, lies in the reach that the platform commands in terms of number of users to whom the advertisements can be displayed. Therefore, in order to attract advertisers to the platform and compete effectively, it is imperative for the search service provider to acquire a sufficiently large consumer base which uses its search service.

Consumers place a very high value on the relevancy / quality of search results while opting for a search service. Therefore, the ability of a search engine to provide relevant search results and improve the relevancy of search results is a vital factor for competing against Google.

A survey conducted by DuckDuckGo of factors based on which users would switch search engines.

This brings us to the first reason why Google does not face any meaningful competitive pressure for other search service providers:

Significant Barriers to Entry

The key inputs for achieving relevant results include (i) access to necessary data in order to improve the algorithm or framework that returns search results (the “click-and-query data), and (ii) an extensive and updated index of the world wide web. Both these inputs are highly subject to scale-effects.

Firstly, as Google’s market share in general search services above pointed out, Google gets search queries which are orders of magnitude higher than its closest rivals. Google, therefore, benefits from a self-reinforcing process where it receives so many more queries (which are an essential input for making potential improvements in the search algorithm) because it is able to return increasingly relevant search results to its users, who in turn return to google for their general search queries. Secondly, the maintenance of an updated index requires prohibitively high investments because of which even large incumbents in the space had to give way to Google.

 It is worth noting that large incumbents such as Yahoo! and Ask.com have found it economically unfeasible to maintain independent search services. Yahoo had stopped investing in its general search technology, in 2009 and now relies on search service of Bing. Similarly, Ask.com also terminated investments in its general search technology in November 2010 and chose instead to adopt Google’s general search technology to power its search service.

Significant Barriers to Expansion

The second reason why Google does not face competitive threat is because of the significant barriers to expansion faced by its competitors in accessing customers and building into stronger competitors over time. This barrier to expansion comes from the default position Google has been able to secure on mobile devices. Mobile manufacturers choose Google as the default search application based on a mix of consumers’ perceived quality of service as well as the level of compensation that Google is able to pay due to its revenues generated from search advertising. This, coupled with the fact that consumers show very strong preference for defaults, especially in mobile devices, acts as a very significant barrier to expansion for existing rivals.

Limited Competitive Constraints from Specialised Search (like Amazon) & other Competition law concerns

Results from the CMA’s market study have confirmed that a major proportion of specialised search providers rely on Google as a point of entry. The difference between general search and specialised search services had been considered by the EC in the Google Search (Shopping) decision, wherein it was noted that the two types of search services operated as complements rather than substitutes. Analysis of traffic data by the CMA in its report has also confirmed that a substantial number of consumers access specialised search portals via general search rather than accessing them independently.

The finding of complementarity in these markets suggest that specialised search, rather than being a competitor to general search, is in fact in a vertical relationship with general search providers like Google. This can be better understood by way of taking an example of how Google acts as a “gatekeeper” to specialised search service providers in majority of the cases.

As a part of our research, we undertook an exercise in India which also shows vertical agreement between Amazon and Google. Take the example of a consumer who is in the (virtual) market for speakers. For the purpose of this illustration, we consider this consumer to fall in the majority category of consumers who use general search services to move towards a specialised search service, such as Amazon, eBay, etc. Since the market for speakers is highly fragmented with a large number of sellers offering various kinds of speakers at diverse price ranges, the consumer enters a search query appropriate to his needs.

 The top results that a consumer gets from his search query therefore points him to specialised search providers like Flipkart, Reliance Digital, Amazon, etc. These special search service providers, thus, rely on Google, which acts as a gatekeeper for most of the traffic to their own portals. Since most users do a general search and are then directed to special search services like Amazon, etc., from this page, the user clicks on the speaker that interests him.

Apart from this, users may also choose to use the comparison services that Google offers. Therefore, after entering the query, i.e., speaker, the user can compare the different speakers of offer. Clicking on one of the results on the shopping tab, once again takes user to Amazon’s page, as shown above.

This demonstrates that Google, as a dominant search service provider, becomes a necessary trading partner even for large platforms like Amazon, which are in a vertical relationship with Google and rely on it for majority of the traffic to their platforms and thus, a case may be there to look at their conduct under Section 3(4) of the Act, which deals with analysis of vertical agreements.

Below, we lay down some competition concerns that have already been observed or may come up in the future owing to the way the market is functioning.

Excessive Pricing- Google, being dominant in search advertisements, is in position to overcharge the advertisers. Since advertisement has been the primary source of revenue for Google, it gives it an incentive to increase its profit by charging more from advertisers. This is clubbed with Google’s market power, which is directly linked to access of consumer data, creates high entry barriers for competitors. The closest competitor Google is Bing, , average cost per click on Google is 30-40% more than that of Bing. Similarly, monthly average cost per click for mobile and desktop and average price bid ratio for top ad for Google is more than Bing.

Exclusionary practices-Google can engage in exclusionary practices by restricting its consumer base to engage with any other platform for advertisements. For example, there is always a possibility that Google may impose restrictive clauses in agreements with advertisers prohibiting them to engage with Microsoft Bing. This would, in turn, lead to denial of market access for competitors of Google.

Leveraging dominant position in search advertisement– Further, Google can leverage its dominant position in search advertisement market to expand their market power in open display advertising. Using strong customer base of search advertisements, Google can provide incentive to use Google’s services in another market of display advertisement. Further, as noted in CMA report, huge data collected by Google in search advertisement market may be used in open display advertisements to provide better targeted advertisements.

It may be another concern as Google puts itself in a position where it can always promote its own vertical product and services. There are several services of Google that may be promoted through advertisements, such as Google Pay, Google Meet or YouTube. This may affect the quality of organic search also.

Similarly, there may be products of Google in other markets for which there may be competitors like; in fintech services (Google Pay; competitors being PhonePe, PayTM, MobiKwik); social network (Google +, competitors being Twitter and FB); maps and navigation (Google Maps, competitors being Map Quest, Waze, Bing Maps, HereweGo, Maps.me etc), emailing (Gmail, competitors being Outlook, Zoho, Apple Mail etc.), calendar (Google Calendar; competitors being Outlook, iCal, Spike etc) and other products of Google for which there are competitors in the market. It must be seen as to whether Google is using their dominant position in the search advertising market to enter into or protect their position in the other market.

Tie-in agreement with manufacturers – It has bene noticed that Google has agreements with device manufactures that are exclusionary in nature. In order to make Google Chrome as default browser of such phones, Google offers some revenue share from search advertising. Thus, competitors of Google Chrome like Mozilla Firefox, Safari etc. may be foreclosed from entry and it has been seen that once a default setting has been adopted, consumers rarely change the same. Therefore, technically, Google uses its dominant position in search advertising to ensure that their browser remains a default in mobile devices.

Ad Ranking- It has been observed that Google essentially operates its ranking system in a “black-box” and does not completely disclose the way its algorithm operates. As noted earlier, ad ranking is completely dependent on the quality score of advertisers, the process which is substantially hidden. Therefore, it provides immense opportunity to Google to interfere with the Ad ranking list, and therefore, raising concerns for violation of Section 4(2)(a) (i) for advertisers.

In addition to the above, another concern of general import is the fact that Google’s super-dominance in search advertising presents a risk whereby Google may choose to start investing in creating barriers to entry and expansion rather than on innovating new and better products. In case of search advertisement, this may happen when excessive reliance on Google for advertising revenues comes to a point where Google may even impact the organic search results to the detriment of search quality where user may interact more with ads. This is important to consider because Google’s current position makes it immune to any competitive constraints. As a result of lack of effective competitors in the market., there would be no one to inflict competitive pressure on Google which may keep it on the path of innovation.

Adv. Abir Roy is Partner, Sarvada Legal.

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Legally Speaking

Custodial deaths: Banality of evil?

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Mahatma Gandhi in his journal Harijan once wrote- “The police of my conception will be servants, not masters of the people. The police force will have some kind of arms, but they will be rarely used, if at all. In fact, the police men will be reformers. Their police work will be confined primarily to robbers and dacoits.”

Gandhiji saw police as a tool to forge solidaritybased relations in his social project. The men who would enter the ranks of police will be believers in nonviolence. The malfeasance on the part of Thoothukudi police, which took place in Tamil Nadu draws a sharp contrast between the role that was envisaged and what was witnessed on the unfateful night of 19th June, 2020 . All the more baffling is the timing of it when there is a global outrage against the law enforcement agencies in general, following the death of George Floyd in the United States of America.

The Toothukudi atrocity led to the death of the father-son duo in the custody. The policemen who have the moral and legal duty to observe the rule of law strayed from performing that duty. If we try to create an imagery through the lens of Mahatma Gandhi’s eyes, we would fail because our vision will get clogged up by the filth from abuse of power and a blatant neglect to the rule of law.

 The alleged charge of lockdown violation would have attracted a maximum of three months imprisonment if they were proven guilty. The policemen were clearly hoodwinked into thinking they were super cops from a cop-centric blockbuster for it was so easy for them to strip away their moral accretions.

 They violated the basic fundamental right, Article 21 of Indian Constitution that, inter alia, guarantees protection from police atrocities under the ambit of right to life and personal liberty. The Supreme court in Kharak Singh v. State of held that ‘life’ meant something more than mere animal existence. In the Maneka Gandhi v. Union of India expanded its interpretation to rule that living is not merely restricted to physical existence but it also included within its ambit the right to live with human dignity. Thus, there is no dearth of precedents to understand what is a dignified life and what threatens it.

Torture is one such element that threatens a dignified living. The apex court in D.K. Basu v. State of West Bengal has prescribed guidelines to prevent any kind of violation of rights of prisoners. Any form of torture or inhuman or degrading treatment during the investigation, interrogation or otherwise is in violation of Article 21 of the Indian Constitution.

Despite such precedents, custodial violence in India is a reality we should not shy away from. The National Crime Records Bureau (NCRB) data pegs custodial deaths at 1,727 between 2001 and 2018. However, a paltry 26 policemen were convicted of custodial violence. The situation seems grimmer in the states of Tamil Nadu, West Bengal, Gujarat, Andhra Pradesh and Maharastra where there is nil conviction despite more than 100 deaths.

Another very marked evidence of the lackadaisical approach towards custodial violence and human rights in general, is the weak functioning of National Human Rights Commission. It remains a “toothless tiger” with role being limited to providing compensation to victims.

These are tell-tale signs of the dilution of ethos of human rights and justice. Keeping this article an easy read by not making it stolidly fact-laden, we would like to categorically state that police barbarity is becoming a new normal in India. The men who were tasked to serve, rescue and protect the common man and his rights are now perplexing him from inside.

Having said that, it is pertinent to discuss how this new normal has emerged which shows our tryst with non-violence as a hypocritic observance only. India is yet to have an anti-torture legislation that could criminalize custodial violence. We signed the UN Convention against Torture in 1997, but have not ratified it yet. Thus, the government is not obligated to fulfill the commitments under the convention as of now.

What this means for the citizenry in India is that it cannot sue a police officer for any wrongdoing and such a prerogative rest only with the government. Taking cognizance of this loophole, the Supreme Court in Prakash Singh v Union of India, directed the states to constitute independent complaint authority to inquire into the cases of police misconduct. But, a study by Commonwealth Human Rights Initiative (CHRI) shows that only 12 states had constituted a Police Complaints Authority (PCA) in accordance with the directive even after a decade. Moreover, not even a single state complies with the court’s directions with regards the composition, selection process and functioning of the PCAs which was the most perturbing revelation for us.

Way Forward

It must be categorically stated that the death of the duo is a ruthless exhibition of abuse of power and there ought to be no excuse for the perpetrators. But, we must also ask ourselves whether it will be enough to set things right. This incident is also a wake-up call for our law makers to devise a robust framework to counter the evil of custodial violence.

To begin with, India should ratify the UN convention against torture. The need for obtaining sanction under Section 197 of the Code of Criminal Procedure before pursuing charges against police misconduct should be done away with.

The magistrate in the Toothukudi case sanctioned the remand of Jayaraj and Bennix without checking on injuries and bleeding. Such incidents of judicial impropriety should not go unpunished. Judicial magistrates are the first line of protection from rogue police and thus, have immense responsibility in deliverance of justice.

 It goes without saying that human rights framework in our country needs an overhaul. This argument gains more credence when it is seen in the light of enactment of the Protection of Human Rights Act (1993) and the dip in the incidents of custodial violence thereafter, reflecting a negative correlation between the two. Moreover, it is high time to consider the recommendations of the NHRC on police reforms which include, inter alia, the constitution of a Police Security and Integrity Commission (PSIC) to lay down a concrete set of service guidelines for the police.

In addition to these, Law Commission in its 198th and 273rd report has iterated that there is an urgent need to strengthen the witness protection regime to protect the victims and witnesses of custodial killings.

Apart from these institutional measures, ethical luminaries make a case for reforming the behavioural aspects too. A report by Common Cause and CSDSLokniti shows that 12 per cent of the police personnel never receive human rights training. Also, the methods adopted by policemen that are against the ethos of Article 21, ignorance of rules, unnecessary arrests etc. reflect that the Code of Conduct for the police has failed to improve policing on the ground. So, there is a need to sensitize the lower-rung policemen and imbibe the values of public service in them. A landmark DK Basu judgment comes to our mind in which the apex court issued directions to increase transparency and due diligence while making arrests.

The modernisation of police is long overdue. CAG has highlighted the issue of underutlisation of funds allocated under the Modernisation of Police Forces (MPS) Scheme. The fund can be put to use to bring interventions like body cameras, CCTVs, narcoanalysis etc. These tools and techniques would go a long way towards striking a balance that sufficiently assuages skepticism about the negative role of the police without compromising the powers they need to carry out their duties.

 Lastly, the culture of impunity needs to go. The policemen involved in the incident must realize the gravity of their sins. Strict punishment and remorse is the only way forward for them. If those involved go scot-free again, a dangerous precedent will be set.

To sum up, the police is an extended arm of the state. As such, the aim of the police must align with that of state: governance and service. The Leviathan state is an outdated concept in the age of human rights and should not come back again. Constant police harassment of people will leave the victims and lay public alike in a constant state of fear. In addition to the Tamil Nadu incident, there have been a few incidents of display of high handedness by the police in recent times during the anti-CAA protests and otherwise in the lockdown too. In the long term, increased frequency of such altercations between the police and lay populace may give rise to retributive violence that will be detrimental for the society based on peace and order.

“Never react to an evil in such a way as to augment it,” wrote the great French philosopher, Simone Weil. He could not have been more correct. Any kind of overreaction is to be avoided at this time. The need of the hour is to act before the evil of custodial violence becomes banal in India. But, instead of reacting to this unfortunate incident by blaming the police as a failed institution in entirety as has been the trend on the social media these days, we must focus on bridging the trust deficit. The police have been on the war-footing in tackling the Corona-induced crisis and we must also be thankful to them for their efforts.

Pratiksha Priyadarsini is a final year law student at Bharati Vidyapeeth Deemed University, Pune. A rank holder, Nyayshastram National Article Writing Competition. Shubham Satyam is B.Tech, Vellore Institute of Technology (VIT), he had cleared SSC CGL 2017 in his first attempt. Currently he is preparing for Civil Services Examination.

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Legally Speaking

Dilution of Section 29A of the Insolvency and Bankruptcy Code in India: Is it a myth or reality?

Prof (Dr) R.K. Chopra & Abhijeet Srivastava

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Looking at the challenges in the Company Law , the Government of India came up with The Insolvency & Bankruptcy Code, 2016 (IBC), a robust mechanism for time bound resolution of dispute of corporate entities in financial distress. Since, this code has been an evolving legislation therefore, in past few years it is noticed that many ordinances and amendments have been brought in the code. Among all, Insolvency and Bankruptcy Code (Amendment) Act, 2017; played a crucial role by inserting section 29A in the code, which created a drastic change, so as far as implementation of the objective and spirit of this code is concerned i.e. timely resolution.

Before this amendment, IBC had no framework to prevent promoters to regain control over their companies in default. This could defeat the purpose and intent of the code. Therefore, to avoid such mishap, legislator introduced section 29A to disqualify such persons. The rationale behind this was to instil fear among promoters so that they take wise decision to avoid failure of their companies and must be at arm’s length to enable an independent entity to take control of their defaulting entity. In view of foregoing, whenever a resolution plan is submitted before Committee of Creditors (COC), the role and interest of promoters need to be seen with a magnifying glass.

It has been seen in recent times that the Adjudicating Authority in its few decisions has permitted the promoters to submit their resolution plan after the company has been declared insolvent. Although, such decisions were highly praised by many scholars as it safeguarded the revival of defaulting entity, however, authors verily believe that this will subsequently dilute the intent and purpose of section 29A and will ultimately defeat the objective of this code.

Jurisprudence of section 29A, Sec 12A and regulation 30A: Does it mean rolling the clock back or providing a new dimension?

As discussed above, section 29A was inserted in the code to disqualify certain persons from submitting resolution plan to avoid reoccurrence of default of the company. However, later on, this provision was criticized by many scholars as there were many cases wherein the insolvency proceedings were initiated not due to wrong business decisions of the promoters but due to happening of contingent events and the Adjudicating Authority felt prudent that such promoters should be given one more opportunity to regain the control over their companies.

Keeping above events in mind, section 12A in the code & regulation 30A in Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate person), 2016, were introduced which provided promoters to regain the control over their company but with the approval of ninty percent (90% )of COC. However, such withdrawal can only be permitted if it is requested before the bidding process. Therefore, these provisions provided a new dimension to the code, as it intended to provide a balanced solution for safeguarding the interest of the promoters and intention of the code. However, based on judgments discussed below, the authors share their own views.

 Judicial trends creating uncertainty

 Let us examine few cases on the subject:

 In Essar Steel India Limited v. Satish Kumar Gupta & Ors, initially COC raised question on the eligibility of the prospective bidder (Arcelor Mittal) & Nu-metal under section 29A of the code. In spite of the fact that, Arcelor Mittal offered 25% higher than other bidders devoid of this, the promoters were barred from offering a bid due to the ineligibility under section 29A. Promoters also attempted to invoke section 12A to withdraw their application from Corporate Insolvency Resolution Process (CIRP); however, failed to get approval of lenders. But later on, Supreme Court of India allowed promoters to submit resolution plan stating it to be an exceptional circumstances. Keeping aside the commercial viability of the plan, authors believe that this will dilute the intent and purpose of section 29A. As rationale behind inserting this section was to disallow promoters of the companies to submit the resolution plan.

Subsequently, the judgment of Brilliant Alloys Private Limited v. S. Rajagopal brought new dimension by interpreting that the introduction of regulation 30A is directory in the nature and Adjudicating Authorities may permit promoters to withdraw their application from insolvency proceedings with the approval of COC under section 12A, even after submission of Expression of Interest (EOI) but in exceptional circumstances.

Authors would like to shed light, that the Court did not clarified what is meant by, neither laid down any definitive test to determine the same; as it will provide opportunity to promoters to withdraw insolvency proceedings after EOI by stating it as exceptional circumstances.

The above judgments does not provide any rational basis and therefore the stop gate to promoters by section 29A is getting withered away. Later on, the effect of above decisions was also seen in the case of Andhra Bank v. Sterling Biotech; wherein the promoters of corporate debtor offered to creditors for a one time settlement proposal and requested for withdrawal of application under section 12A of the Code. Here, the moot question was; whether promoters can withdraw the insolvency application during CIRP because law permits such withdrawal before EOI only? But in the instant case, the National Company Law Appellant Tribunal (NCLAT) allowed promoters to withdraw the application under section 12A as COC has given approval of more than 90%. Appellate tribunal also held that section 29A is not applicable when promoters rely on section 12A.

 In view of foregoing, it seems section 12 A is uncontrolled by section 29A. Additionally, NCLAT ordered promoters to pay off the dues within thirty (30) days of the order of tribunal or failing which, liquidation proceedings will commence. This decision was highly praised by many scholars as it was considered to be a positive step towards safeguarding the interest of promoters and it was anticipated that creditors will be benefited by execution of the resolution plan. Months have been passed, but promoters have not yet paid the money and now requesting an additional time of six months (6) from the NCLAT to repay their dues. Ironically, NCLAT has not even initiated liquidation process against the company yet. This case has raised several questions regarding the sanctity of the withdrawal process. Moreover, this case has become a classic example about the implementation of section 29A in the code.

Conclusion

The above analysis suggests that the intention and objective of the code was revival of the corporate entities in a time bound manner. However, after going through above cases, it is evident that the IBC has failed to comply with the timeline of 330 days as envisaged under the code and this has impacted the confidence of investors intending to participate in the bidding process of such defaulting entities.

Keeping in mind the above objective, the introduction of section 29A to disqualify certain persons, who should not take benefit of their own wrong and therefore, should not be given another opportunity to regain control over the defaulting entities. However, with the introduction of section 12A and few decision discussed above, the dilution of section 29A is clearly evident. The consequences of such dilution can be easily witnessed in the case of Andhra Bank.

Moreover, authors believe that tribunal should be cautious enough not to interfere unless, it is a rarest of the rare case. But at the same time, tribunal should lay down the standard test to assess what comes under the category of exceptional circumstances. Merely, by giving rationale that a particular case falls under the above category; will open the door for arbitrariness which will prejudicially affect the interest of investors. Adjudicating Authority should comply with the intent and purpose of section 29A, 12A & regulation 30A along with the jurisprudence on the subject by complying the doctrine of Ejusdem Generis.

It is therefore, high time that even if a benefit is intended to be given to the bonafide promoter, the yardstick should be fixed by the legislature, wherein the above provisions be combined with section 29A as a genus and section 12A & regulation 30A as species so that the objectives of the code are achieved in its true spirit.

Prof (Dr.) R.K. Chopra is Professor at UPES, School of Law, Dehradun and Abhijeet Srivastava is a final year law student at UPES, School of Law, Dehradun.

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Legally Speaking

Madras High Court’s injunction against Patanjali’s Coronil

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Coronil, the much marketed and advertised product offered by Baba Ramdev’s Patanjali had run into many imbroglios and legal hurdles since it was unveiled and introduced as a medicine to fight the COVID-19 coronavirus. Already facing criminal complaints and restraining orders against offering the drug for sale coupled with executive oversight into the drug’s claims the much controversial Coronil has again met another legal action. This time however it is not the prophylactic or curative merit of the drug but rather the name by which it is marketed itself in question. Needless to go into the controversy of whether Coronil can work wonders against the pandemic let us head straight into the nonmedicinal dispute at hand.

Recently, Madras High Court passed an order restraining Patanjali from trading the drug under the name “Coronil” as it infringed upon another person’s trademark and proprietary rights in the name “Coronil”. However, a perusal of the order shows that the aggrieved party is not some competing pharmaceutical giant but a company which deals in chemical cleaning and manufacturing of material handling systems and polymeric epoxies for various factories in India and abroad. M/s Arudra Engineering Pvt Ltd. (the plaintiff) brought a suit against Patanjali and was successful in getting an interim injunction restraining the latter from infringing upon the former’s trademark. The plaintiff had registered its trademark ‘CORONIL -92 B’ for trading its products which were used for industrial cleaning and chemical preparations for industrial use in 1993 itself and the trademark was renewed from time to time. The trademark still subsists due to its timely renewal. The plaintiff has customers in India as well as abroad and its products are traded under the abovementioned trademark. It has also made a substantial amount of sales using the trademark.

The court was inclined to grant the injunction since the plaintiff was successful in fulfilling the ingredients as laid down in S. 29(4)(b) of the Trademarks Act, 1999 which states that even if the infringing trademark is used to trade goods or services which are unrelated to goods or services traded under the infringed trademark still it will amount to infringement of the trademark. In this case clearly the Coronil tablet offered by Patanjali is claimed to cure the ailment of coronavirus and thus is distinctly dissimilar and different from the trade of the plaintiff who deals in industrial cleaners and chemicals. However, after arriving at the observation that the spelling and name used by Patanjali is same as that of the plaintiff the interim injunction was granted keeping in mind the law as enumerated in S. 29(4)(b) of the Trademarks Act, 1999.

 In view of this ex parte adinterim injunction a very pertinent question is raised as to the due diligence and intellectual property management strategy which Indian companies need to undertake before launching a product especially if it is marketed and claimed to be a breakthrough like Coronil. It seems that Patanjali Ayurved had done too little or no due diligence before launching the product in the market. There seems to be a certain haste in launching the product not just in relation to its medicinal claims and merits but also its branding. For a product which has not made much headway in the medicine market vis a vis its curative and prophylactic claims the injunction granted against Patanjali has come as a great setback as both the inherent and overt claims in the name “Coronil” seem to be facing an existential crisis. A simple trademark availability search would have averted an impending crisis. If it was brought to the notice of the company’s management that the proprietary right in the trademark would be divested due to the rights of another party then probably the branding trajectory of Patanjali would have been surely different. It is a matter of trial and fact to see what was the original intent of the plaintiff to injunct Patanjali from using the trademark as in my opinion there does not appear to be an inadvertent confusion as to the origin and association of the Coronil tablet with some other/ competing proprietor among the public at large. Moreover, the imbroglio as to its medicinal efficacy has raised even more eyebrows and inextricably linked Coronil to Patanjali Ayurved. However, there can be other claims as to distortion and dilution of the trademark of the plaintiff.

A simple search on the Controller General of Patents, Designs and Trade Marks online registry shows that the trademark Coronil is not just a registered trademark of the plaintiff in class 1 but even a deceptively similar mark under the name “Coronill” is also pending registration before the Trade Marks registry under the same class (class 5) in which Patanjali has filed a trademark application for marketing its alleged cure. This shows a great lapse on the part of Patanjali in devising an intellectual property acquisition strategy and the hurdles faced at the outset set the ball rolling for much more potential litigations. Here, it would also be important to focus on the brand value which “Coronil” will acquire if it clears both the hurdles of its proprietary right in the name and the medicinal efficacy of the same. If a brand faces such an uphill task as soon as it is introduced then there would be a need to introduce much more corrective marketing strategies to be implemented by Patanjali. The customer trust and good will which Patanjali has enjoyed till now may also be jeopardized.

Since, there are concerted efforts on the part of the Indian industry to be self reliant and sufficient vis a vis decreasing its dependence on foreign imports and products in the light of the recent geo-political maneuvers the Indian industry needs to not just produce and manufacture products and offer services but also correct its IP strategy and take IP management seriously. A small step taken in the right direction may go a long way in enhancing and increasing the brand value and reputation of the products. Basic steps like due diligence and availability search may help to steer clear of potential legal disputes. It is worth noting the zealousness and proactive approach with which the plaintiff has succeeded in guarding and asserting its trademark rights. Indian FMCG giants and MSMEs have a leaf to take out of this trademark dispute in brand strategizing and value creation.

 Adv. Amar Patil practices at the Bombay High Court.

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Fault lines in the Indian criminal justice system

ASHOK BHAN

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“Injustice anywhere is a threat to justice everywhere”. -Martin Luthar King Jr.

“Law should not sit limply, while those who defy it go free and those who seek its protection lose hope”. (Jennison v. Baker (1972) 1 All ER 997).

The sovereign power of the Indian State is never felt as starkly as in interactions with the criminal justice system. Broadly stated, the influence of the police is all pervasive when it comes to enforcing penal statutes. In colonial India, the vast police powers enjoyed by the Government was the object of sharp criticism and ridicule insofar as there appeared to be no accountability or oversight and no form of redress. It is interesting note that the nationalists who strongly abjured the powers of the police were enthusiastic to retain them in the post-colonial nation and quickly thereafter paved the way for its rapid expansion.

Whatever views one holds about the penal law, no one will question its importance to society. This is the law on which men place their ultimate reliance for protection against all the deepest injuries that human conduct can inflict on individuals and institutions. By the same token, penal law governs the strongest force that we permit official agencies to bring to bear on individuals. Its promise as an instrument of safety is matched only by its power to destroy. Nowhere in the entire legal field is more at stake for the community or for the individual.

The early decades of independence were characterized by the ‘license-raj’ where innumerable statutes were introduced to curb economic offences. These included the various laws passed by state governments to implement the directive principle of prohibition, further various economic legislations were introduced to fortify the commodity control as pre-existent. Most of these statutes were enacted to be ‘special’ legislations and operated outside the bounds of ordinary criminal procedure. The need for warrants were done away with and securing bail was made particularly difficult. The criminal law jurisprudence that we see today, is undeniably a legacy of the colonial state and the early decisions made in the wake of post-colonial India.

While the scope and breadth of police powers have remained the same, they have suitably modified to deal with the more sophisticated offences of the 21st century. A laudable development in this regard is the introduction of the Letter Rogatory system where international governments pledge mutual legal assistance in relations to crimes which have been perpetrated across international boundaries.

There are always two sides to thinking about criminal reform. One the one hand, the state will have to ensure that the powers of the police and associated magistracy is not diluted, negatively impacting their ability to enforce the laws of the land. On the other hand, as various examples of custodial violence and extrajudicial killings have brought to fore, there is a need to protect the citizen from the abuse of police powers. It is in the junction between these two paradigms that the courts of the country have a important responsibility.

Chief Justices of India in periodic chief justices conferences have time and again warned about the the fault lines in Criminal Justice System in India. It is common knowledge that the two major problems besieging the Criminal Justice System are huge pendency of criminal cases and the inordinate delay in disposal of criminal cases on the one hand and the very low rate of conviction in cases involving serious crimes on the other. This has encouraged crime. Violent and organised crimes have become the order of the day. The white-collar crime has become a profitable business. Life has become unsafe and people live in constant fear. Law and order situation has deteriorated and the citizens are losing confidence in the Criminal Justice System.

The magistrate has been granted supervisory and corrective powers over the functioning of the police. The magistrate interacts with the police and the accuse person at various stages from the grant of remand to police custody and to extend from time to time as required. This also involves examining the accused to accurately discern their well-being to call for medical tests where it appears that the accused person is being subjected to violence, intimidation and torture. This is a particularly important functions since accused persons are usually powerless when in police custody. The Supreme Court of India has in various decisions stated that the magistrate is not to act as a post-office for the prosecution, merely reiterating the version of the police. We have seen that in various recent examples, the magistrates do not appear to be functioning as independent supervisors of the police. At a first level much needs to be done to liberate the magistrates from the veil of executive influence to better discipline and reign in the abuse of police powers.

Various reports have brought to the fore the despicable state of under-trials in India. It is appalling that over one-third of the people presently occupying the prisons. India is known to have the third largest under-trial population in the world. In such cases, the trials have been pending for decades and the accused person is condemned to suffer inordinate periods of imprisonments while still awaiting trial. Once again, the magistracy is called upon to act. The Supreme Court has reiterated time and again that pre-trial detention can only be justified if there is a real anticipation of the accused person prejudicing the trial, influencing witnesses or absconding. Even in this respect, the prosecution is happy to provide exaggerated versions of apprehensions and the magistrates continue to act as post-boxes.

It is in this juncture that there is also a need to address the fact that quality of legal representation makes a world of a difference of the accused person. While people with the means are able to approach higher courts in revisions or appeals to secure their rights, a vast section of the population who do not possess the means are to be provided free legal aid. While on paper, India appears to have a thriving legal aid system, the truth of the matter perks it ugly head out from newspapers are reports which show that most often the legal aid lawyer has never met with the accused to understand their case thereby making a mockery of the constitutional right to legal representation.

In this context it may also be relevant to note that the Indian police are one of the most powerful police forces in the democratic world insofar as they have wide powers under special legislations such the UAPA, NSA etc. to detain an individual without trial for an extremely long period of time. While there is no doubt that these legislations are meant to deal with a completely different category of offences, the system fails to provide any redress to those wrongly arrested. In such cases, the magistrate appears to be completely bereft of any powers or inclination to take the investigating agencies to task to demonstrate even a semblance of a case. The burden of proof is completely reversed in seeking bail, making it impossible for accused person to prove their innocence while still is custody and without being able to lead evidence. This is another area that need special attention from the courts and legislature alike. Offences under special legislations (PCA,PMLA,SCST Atrocities Act,UAPA )and even offences against women often see low conviction rates. This indicates that there are organisational and structural biases and inefficiencies that are to be ratified.

We have seen however a lot judicial reform when it comes to sentencing, mandatory minimum sentences for minor offences have been done away with and it has become a norm for courts to separately hear aggravating and mitigating circumstances prior to sentencing. While the sentencing procedure has seen a marked improvement in the last few decades, the issue of prison reform is a looming crisis that successive governments have simply failed to engage with. Prison is to serve not just a retributive role but is supposed to also help reform the convicted individual and to imbibe valuable skills. In this respect, prisons (save a few minor exceptions) seem to be violent and neglected den of vice, thereby increasing the convicted individual’s propensity for crime.

 We have adversarial system. The Adversarial System lacks dynamism because it has no lofty ideal to inspire. It has not been entrusted with a positive duty to discover truth as in the Inquisitorial System. When the investigation is perfunctory or ineffective, Judges seldom take any initiative to remedy the situation. During the trial, the Judges do not bother if relevant evidence is not produced and plays a passive role as he has no duty to search for truth. As the prosecution has to prove the case beyond reasonable doubt, the system appears to be skewed in favour of the accused. It is therefore necessary to strengthen the Adversarial System by adopting with suitable modifications some of the good and useful features of the Inquisitorial System.

 Inductions of more Judges may help in reducing the arrears, it is the competence and proficiency of the Judges that contributes to better quality of justice. Unfortunately, adequate attention is not paid to look for competent persons proficient to handle criminal cases. Anybody who sits and watches the proceedings in the Courts will not fail to note that the level of competence of the Judges of the Subordinate courts at different levels is not adequate possibly because the training did not give emphasis on professional skills and case/court management. If the Judge is not competent he will take longer time to understand the facts and the law and to decide the case. This is one of the reasons which has contributed to enormous delay and huge pendency of cases. Any lawyer with experience will be able to tell you which Judge is competent and which Judge is not, which Judge is quick and which Judge is slow, which Judge’s decisions are by and large sound and which Judges decisions are not satisfactory. Even now there are many good Judges in the subordinate Courts but that number is declining.

The quality of justice suffers when the Judge is not competent. People come to the Court complaining about the denial of rights by other individuals, institutions or the State itself. They expect the Judge to be experienced, knowing, competent, upright and possessing all the attributes required to render justice to the parties. It is a very onerous responsibility to sit in judgment over the conduct and affairs of other citizens. Deciding cases is a very complex exercise. It needs good knowledge of the substantive and procedural laws. It requires experience of men and matters, abundant commonsense, intelligence, logical and analytical mind. The Judge has to possess ability to do hard work and concentrate on the issues involved. Above all he must be a man of character having abiding faith in the values of life.

TRUTH AND JUSTICE

Swami Vivekananda has said: “Truth does not pay homage to any society ancient or modern. But society has to pay homage to truth or perish”

 The Indian ethos accords the highest importance to truth. The motto Satyameva Jayate (Truth alone succeeds) is inscribed in our National Emblem “Ashoka Sthambha”. Our epics extol the virtue of truth. Gandhiji gave us truth – as the righteous means to achieve independence by launching the movement of Satyagraha.

For the common man truth and justice are synonymous. So when truth fails, justice fails. What is the place accorded to ‘truth’ in the Criminal Justice System in India?

It is worthwhile to recall the observations of the President of India.

 “The Adversarial System is the opposite of our ancient ethos. In the panchayat justice, they were seeking the truth, while in adversarial procedure, the Judge does not seek the truth, but only decides whether the charge has been proved by the prosecution. The Judge is not concerned with the truth; he is only concerned with the proof. Those who know that the acquitted accused was in fact the offender, lose faith in the system”. Judges and emphasized the importance of finding truth in several cases.

The Supreme Court has criticised the passive role played by the

 In the case of Ram Chandra vs. State of Haryana, AIR 1981. SC 1036, the Supreme Court has said:

…there is an unfortunate tendency for a Judge presiding over a trial to assume the role of referee or umpire and to allow the trial to develop into a contest between the prosecution and the defence with the inevitable distortion flowing from combative and competitive elements entering the trial procedure.

The rights of the victim to participation and aid the investigation, right to prefer an appeal against acquittals and right to compensation becomes integral to ‘justice to victims’.

History of mankind is replete with instances where under every type of regime the accused in custody was tortured within the four corners of the cell for forcing him to confess or disclose information, when there is none to hear his cries or to come to his rescue.

The right not to be compelled to testify against himself is a universally recognised right of the accused under Art 14 of the International convention on civil and political rights and is a fundamental right conferred by Art 20 (3) of the Constitution. It says that “No person accused of any offence shall be compelled to be a witness against himself”. This is often described as right to silence. Such a compulsion is prohibited by of Article 20(3).

Huge pendency of cases and poor rate of convictions are the twin problems of the judiciary,that has direct impact on the criminal justice system. The major area that needs attention for improving the situation is providing adequate number of Judges who are proficient in dealing with different variety of criminal cases. The statistics reflect gross inadequacy of the Judge strength at all levels. The Supreme Court has examined this issue and given directions to increase the Judge strength from the existing Judge population ratio of 10.5 or 13 Judges per million of people to 50 Judges per million people in a phased manner within five years. there is a constitutional right in article 21 for right of speedy trial for the accused, that requires to be strictly followed. There is also a need to radically re-think the very need for certain offences which were framed close to two centuries ago and are no longer justifiable in the context of the 21st century morality. In this respect, reference could be made to the offence of sedition which is susceptible to overbroad definitions and resting uncomfortably with the constitutional right to freedom of expression. Since any incitement to violence as tangibly discernable may be punished and curbed through various other offences, sedition in this context appears to almost be a ‘thought-crime’ that may be used to extract political vendetta. Similarly, various studies have shown that convictions under criminal defamations are extremely low, however the mere registration of a FIR for defamation can lead to deleterious effects upon the accused persons. Similarly, there is also a need for sober re-evaluation on the use of the death penalty. It has been repeatedly affirmed that no exclusive deterrent effect that is achieved from retaining a barbaric 15th century form of punishment and the justification to retain it should be exhaustively considered, especially in light of the Constitution Bench of the Supreme Court’s ruling in Bachchan Singh.

All the above aspects require a detailed evaluation, sober assessment and robust reforms are to be introduced. It is hoped that the recently constituted committee for criminal justice reform constituted by the Union Government can address these fault lines before they yawn open to signify the abject failure of the Indian criminal justice system.

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The places of Worship Act 1991, decoloniality and indigenous rights

In all the years that the issue has been hotly debated in independent Bharat, it has been typically approached through the lens of ‘communal politics’, especially by those who have believed and continue to believe that the reconstruction of the Ram temple would cause fissures in the secular fabric of Bharat, or in their words ‘the idea of India’.

J. Sai Deepak

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The Bhoomi Pujan for the proposed Shri Ram Temple in Ayodhya is scheduled to take place in five days, marking the culmination of a five-century old indigenous movement to reclaim a site which is of both religious and civilizational importance. In all the years that the issue has been hotly debated in independent Bharat, it has been typically approached through the lens of “communal politics”, especially by those who have believed and continue to believe that the reconstruction of the Shri Ram Temple would cause fissures in the secular fabric of Bharat, or in their words “the idea of India”. Unfortunately, the issue has either never been adequately understood or perhaps clearly articulated from the perspective of indigeneity and through the framework of decoloniality in most circles which have an opinion on the issue and its history.

In fact, those who cite considerations of secularism and social harmony to countenance their opposition to the construction of the Temple at the hitherto disputed site, have rarely attempted to understand the issue from the perspective of decoloniality. Interestingly, such opposition has mostly come from colonialized elites and those who hold them in high regard, which pits them against the native who continues to believe in and practice her tradition despite lacking in suave and politically correct representation of her cause. Seldom has one come across a layered perspective from the opponents of the Temple which strikes a balance between the rights of adherents of faiths which are indigenous to the civilization and the legitimate interest in preserving communal harmony. Instead, invariably the approach has been to either question the very legitimacy of the indigenous claimants which is a textbook example of coloniality, or to adopt a patronizing approach towards them which categorically expects them to sacrifice their beliefs and rights at the altar of a false and uneasy peace even if their claims are supported by history. In both instances, it is a case of “talking down” to the native.

The stark irony in the attitude of the colonialized opponents of the Temple is the convenience in their application of moral standards and use of history. While colonial interpretations of indigenous sources of history are typically treated as reliable to address issues relating to caste to further the goal of social justice which is again defined unilaterally by the elites, sources of history which attest to the existence of indigenous religious sites and their occupation, are rejected as unreliable, apocryphal and even fabricated. The expedient reliance on or rejection of indigenous epistemology and voices depending on what fits the worldview and narrative of the colonialized elites has been the story of the better part of independent India, which negates the idea of Bharat. Unfortunately, such an attitude is not limited to thought or expression of thought, but has also translated to legislative action and judicial treatment of indigenous rights and expectations.

The Places of Worship Act 1991, aptly acronymized as PoW, is one such example of a manifestly unjust legislation passed by a colonialized State apparatus against the fundamental rights of adherents of indigenous faith systems. The statute is designed, as its Preamble states, to “prohibit conversion of any place of worship and to provide for the maintenance of the religious character of any place of worship as it existed on the 15th day of August, 1947…”. This object is further codified in Sections 3 and 4 of the Act subject to certain exceptions identified in Section 4. Broadly speaking, this legislation stands in the way of reclamation of religious sites of one community which, it believes, are occupied by another. While the statute does appear to be neutrally worded on the face if it, the backdrop of its passing and the exception it carves out make it abundantly clear that it forcibly forecloses the fundamental rights of indigenous communities at the altar of “secularism”. The only exception to the application of the statute is expressly identified in Section 5, namely the hitherto pending legal dispute surrounding the ownership of the Shri Ramjanmabhoomi in Ayodhya, which ultimately resulted in a final verdict dated November 9, 2019 of the Supreme Court in favour of the proponents of the Temple after decades of protracted legal battles.

However, in the said verdict, for some reason the Supreme Court deemed it fit to discuss the provisions of the PoW Act despite the non-application of the Act to the Shri Ramjanmabhoomi dispute. In fact, the Court has taken note of this legislative fact in Paragraph 80 of its judgement. Clearly, the legal consequence of the exception under Section 5 was to leave the then pending legal proceedings with respect to the site in Ayodhya untouched and uninfluenced by the express provisions of the PoW Act or its purported “secular” import. In other words, there was no need for the Supreme Court to discuss the Act in the context of the Shri Ramjanmabhoomi case since it was meant to be adjudicated on the basis of established legal principles which apply to property disputes. And yet, the Court discussed the Act in over ten pages with the central thrust being the Constitution’s commitment to “secularism”.

 This author has demonstrated elsewhere that the Court’s discussion of the statute and principles of secularism were superfluous to the Shri Ramjanmbhoomi dispute and therefore lack any precedential value. This naturally takes us to the question of the intent behind the Court’s discussion of the PoW Act and its purpose, because a Court of law is not an academic forum and it is not expected to answer questions which do not arise before it for its adjudication.

Perhaps, it could be argued that the intent behind the Court’s discussion was to dissuade any future constitutional challenge to the PoW Act given the impediment it poses to a just and legal reversion of occupied religious sites which belong to indigenous faiths and their adherents. If so, would it not be fair and reasonable to conclude that coloniality has made its presence felt even in recognition and enforcement of valid legal and fundamental rights? Simply put, the embargo under the PoW Act on one’s exercise of rights to reclaim one’s place of worship is directly at loggerheads with rights guaranteed under Articles 25 and 26. Even if a lone individual asserts the right of reclamation and the rest of the community has either forgiven, or worse, forgotten, no canon of secularism or principle of fairness or justice in any civilized jurisdiction can mandate that an individual or a community must sacrifice her or its right to legally reclaim the nerve centers of civilizational identity.

At the very least, members of the community must have the right to prove their case in a Court of law. To deprive that legal remedy through a legislation which was passed without any consultation with members of affected indigenous communities, is to add insult to injury. Decoloniality demands that no one other than a victim has the right to forgive on behalf of the victim, or presume that the victim has forgiven or forgotten. To do otherwise is to be insensitive to historical injustice. Since the Apex Court did not have the occasion to deal with any of these aspects, nor has it heard the parties directly aggrieved by the PoW Act, none of the observations of the Court on the intent behind the legislation and its significance to the Constitution’s commitment to secularism has any real legal value. Therefore, if the intention behind the Court’s exercise was to grant its imprimatur to the Act’s Constitutional vires, it does not even pass muster applying the first principles of law. Clearly, the PoW Act remains as vulnerable to a constitutional challenge as it was before the Ayodhya verdict, and is waiting to be struck down or better, repealed by the Legislature.

Finally, in the backdrop of the ongoing movement against coloniality in various parts of the world, it must not be forgotten that both the Indian Constitution and decoloniality put a premium on social justice and there can be no social justice at the expense of the truth, nor is lasting peace possible until the truth is demonstrably established, acknowledged and accounted for.

 J. Sai Deepak is an Advocate practising as an arguing counsel before the Supreme Court of India and the High Court of Delhi.

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‘Covid’ or ‘Corona’: Can they be trademarks for pharmaceutical industry?

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The pandemic, an unprecedented crisis, has turned out to be a business opportunity for the pharmaceutical industry, with the industry reaping benefits from its Intellectual Property. There has been a plethora of Trademark and Patent Applications being filed around the world for the formative names of the virus, also widely referred to as COVID-19 or CORONA, both globally as well as in India, for medicines and pharmaceutical products, hand sanitizers, etc.

Since the ending of the first quarter of 2020, we have witnessed a rapid increase in the number of trade mark applications filed with the Controller General of Patents, Designs, and Trademarks, for terms like ‘CORONA SANITIZER’, ‘CORONA SAFE’, COVID SANJEEVANI’ and ‘COVID RELIEF’. However, the question that lies before us is whether these formative marks using words ‘COVID’ and ‘CORONA’ can be registered under the Indian laws.

The paradox of safety

While this seems the best times for the pharmaceutical companies to cash on their resources by protecting their Intellectual Property Rights, we need to understand that when it comes to medicines in India, we have to be extra cautious. Granting a trademark for a COVID-19 or CORONA formative mark can be confusing and also a health hazard for the consumers, especially when medicines are sold over the counters in India. Adding to this, the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954, which provides checks and balances with regards to the advertisement of drugs in India, prohibits publication of any advertisement referring to any drug in terms which suggest or are calculated to lead to the use of that drug for the diagnosis, cure, mitigation, treatment or prevention of any disease, disorder or condition specified in the rules formulated under the aforesaid Act. The Apex Court of India observed in the Hamdard Dawakhana (Wakf) Lal Kuan, Delhi & Another vs. Union of India & Others (1960 AIR 554), that “the object of the Act as shown by the scheme of the act, is the prevention of selfmedication and self-treatment and a curb on such advertisements is a means to achieve that end”. Prohibition on advertisements and lack of knowledge regarding the name of the medicine and the salts present in it, can cause an average consumer to buy a drug from a local pharmacy that may have the words ‘COVID’ or ‘CORONA’ in its brand name but may have nothing to do with treating the aforesaid virus

Further, Section 13 of the Trade Marks Act, 1999 (TM Act) mandates that words that are names of chemical elements or International Non-proprietary Names (INNs) or any deceptively similar names shall not be registered under the TM Act. However, despite this provision, there is a need of a separate set of rules and regulations specifically for pharmaceutical trademarks in the interest of public health and in order to prevent confusion among consumers. Recently, a case of consumer confusion was seen, when an Ayurvedic Company in India – Patanjali – started advertising that their products could cure the novel virus without getting prior approvals of the government.

 Is ‘COVID’ or ‘CORONA’ descriptive?

Finally, when we see all the marks that are mentioned above, we see a descriptive element in each and every mark, as they are referring to either ‘COVID’ or ‘CORONA’. Descriptive trademarks are generally prohibited from being registered under Section 9 of the TM Act. But what is a descriptive mark? A descriptive trademark, as we can see above from the COVID and CORONA formative marks, draws direct reference to the products or services for which it seeks protection or is already registered. In this case the COVID and CORONA formative marks clearly make a direct reference to the pandemic, and can be argued to be descriptive.

 It is imperative to understand that in the pharmaceutical industry, there is a higher level of threshold to grant a registration to any trademark. This is so because of an important characteristic when it comes to the consumer, which is ‘health’. In a country like ours where the illiteracy rates are so high and at a time when public health is being prioritized above everything, there cannot be any scope for deception in medical products, as any confusion may lead to immense harm – maybe fatal – to the consumer. As drugs are available easily over the counter without any prescription, a simple confusion relating to the name of the drug can lead to another health hazard, perhaps even more severe than the pandemic itself. If the abovementioned potential trademarks are granted protection and are allowed to sell medicines, they may start a wave of confusion, as they are phonetically similar names.

 Various judicial decisions have been passed by the courts in India that have propounded on the ‘health’ threshold that one should consider before granting Intellectual Property Rights protection to pharmaceutical. The Apex Court of India in the landmark judgment of Cadila Healthcare Ltd. vs. Cadila Pharmaceutical Ltd., 2001 5 SCC 73 observed that the confusion in drugs could be life threatening and drugs should be treated as poison since any confusion in medicinal products can have harmful consequences on the purchasers of such medicinal products. When we talk about confusion and deception from the eyes of an average consumer, at times we are set in a dilemma as to what may or may not cause confusion. The question of ‘possibility’ and ‘probability’ of confusion was considered in the case of Wyeth Holdings Corporation and another vs. Sun Pharmaceuticals Industries Ltd., 2004 (28) PTC 423. In this case, two similar trade marks in the name of ‘PACITANE’ and ‘PARKITANE’ were considered which were used for treating Parkinson’s disease. The court held that the customers and the trade channels were the same, and that the defendant had adopted the plaintiff’s mark with a dishonest intention. There was a ‘possibility’ of confusion between both the marks and this could jeopardize the lives of the consumers. As the balance of convenience was in favour of the plaintiffs, the court granted injunction in favour of the plaintiffs. Thus, in each case one would have to see if there would be a ‘possibility’ of confusion if a COVID and CORONA formative mark was granted trademark registration.

Conclusion

At present, most of the ‘COVID’ and ‘CORONA’ formative marks that have been applied for a registration are at the examination stage. It will be interesting to see the scenario unfold once the examination reports with respect to these applications come out. We surely can expect a lot of marks being objected on the basis of descriptiveness as well as similarity to an existing application. Apart from this, we may also see invocation of Section 13 of the TM Act. No matter what the outcome of the examination report be, it will be interesting to see whether the registry grants a registration to any ‘COVID’ or ‘CORONA’ formative mark, and the interpretation of Courts on these issues when the matter comes up for enforcement. We are of the view that pharmaceutical companies should do a thorough legal analysis before finalizing a brand name for their medical products and not adopt the word ‘CORONA’ or ‘COVID’ simply because they feel that it may attract consumers.

Krrishan Singhania, Founder and Managing Partner, and Vanshaj Mehta, Associate, K Singhania & Co. (formerly Singhania & Co. Mumbai)

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