Insurance Article, The Insurance Times 2020, The Insurance Times February 2020

Intellectual Property and its relevance to Insurance

Introduction

Many Authors have defined“Intellectual Property.”

One of the definitions is that “Intellectual Property is an intangible property or proprietary asset which applies to any product of the human intellect that has commercial value”.

Innovative ideas, Creative Designs and Powerful brands have commercial values.

Enterprises worldwide are more & more acknowledging the value of Intellectual Property assets and it is recognized and valued so much that in the Balance Sheets of some of the Companies the monetary value of intellectual property is appearing as ”ASSETS”.

There is a need now to protect these Intellectual Properties so that  any infringement by others gives legal right to owners of the IPR to  claim compensation from the infringers.

Importance given by Government of India

The Union Cabinet has recently approved the “’National Intellectual Property Rights Policy, 2016.”to create awareness and protection of Intellectual property rights.

The National Intellectual Property Rights Policy, 2016 aims at creating awareness about the importance of Intellectual Property Right as marketable financial asset and economic tool.

 

Importance given by Supreme Court:

The Hon’ble Supreme Court while delivering judgement on Bajaj vs. TVS case issued the following guidelines to the Lower Courts in respect of IPR disputes:

  • Matters relating to infringement of of I.P. Rights involve many important aspects and therefore efforts should be made for speedy disposal of these matters.
  • Also hearings relating to I.P.Rights matters should be done on day to day basis and should be resolved within two to three months.

Objectives of National Intellectual Rights Policy, 2016

National Intellectual Property Rights Policy, 2016 besides giving details of various plans and programs have also set some objectives which are as follows.

  • To create public awareness about the economic, social and cultural benefits of Intellectual property rights among all sections of society.
  • To stimulate the generation of Intellectual Property
  • To have strong and effective I.P.R. laws which balance Rights of owners with larger public interest.
  • To modernize and strengthen service oriented I.P.R. administration
  • Get value for I.P.R. s through commercialization
  • To strengthen the enforcement and adjudicatory mechanisms for combating I.P.R. infringements
  • To strengthen and expand human resources, institutions and capacities for teaching, training, research ad skill building in I.P.R.s.

The Department of Industrial Policy and Promotion, Govt.of India shall be the nodal point to co-ordinate, guide and oversea the implementation of future developments of IPRs in India.

Relevance of Intellectual Property to Insurance:

Having seen the importance, the Intellectual Property has gained in the system, now let us see the relevance of this ” Intellectual Property rights” to the Insurance:

The Errors & Omissions insurance Policy as available today in the Indian Market basically covers the legal liability of an Individual or an Organization which arises due to operation of Law or a Contract.

One of the covers granted under this Errors & Omissions Insurance is

”ANY LIABILITY ARISING OUT OF ANY INFRINGEMENT OF INTELLECTUAL PROPERTY”

We have seen what is Intellectual Property, the importance of its monetary value, the steps taken by Government of India, the importance by given Supreme Court of India and the Insurance available covering the risks of “”infringement””.

Statues at present governing different kinds of IPRs in India are:

  • Patents Act, 1970
  • Trade Marks Act, 1999
  • Designs Act, 2000
  • Geographical Indication of Goods (Regn.&Protectionction) Act, 1999
  • Copy Right Act, 1957
  • Promotion of Plant Varieties and Farmers Rights Act, 2001
  • Semi Conductor Integral Circuits layout Design Act, 2000
  • Biological Diversity Act, 2002

Now let us see certain provisions of various Acts governing Intellectual Property Rights.

  1. What is infringement:

Sec.(2) of Copyright Act,1957

(m) 20 “infringing copy” means,-

(i) in relation to a literary, dramatic, musical or artistic work, a reproduction thereof otherwise than in the form of a cinematographic film;

(ii) in relation to a cinematographic film, a copy of the film made on any medium by any means;

(iii) in relation to a sound recording, any other recording embodying the same sound recording, madeby any means;

(iv) in relation to a programme or performance in which such a broadcast reproduction right or aperformer’s right subsists under the provisions of this Act, the sound recording or a cinematographicfilm of such program or performance, if such reproduction, copy or sound recording is made orimported in contravention of the provisions of this Act;

 Sec 14.of Copyright Act defines what is Meaning of copyright.

For the purposes of this Act, “copyright” means the exclusive rightsubject to the provisions of this Act, to do or authorise the doing of any of the following acts in respect of a work or any substantial part thereof, namely:-

  • in the case of a literary, dramatic or musical work, not being a computer programme, –

(i) to reproduce the work in any material form including the storing of it in any medium by electronicmeans;

(ii) to issue copies of the work to the public not being copies already in circulation;

(iii) to perform the work in public, or communicate it to the public;

(iv) to make any cinematograph film or sound recording in respect of the work;

(v) to make any translation of the work;

(vi) to make any adaptation of the work;

(vii) to do, in relation to a translation or an adaptation of the work, any of the acts specified in relationto the work in sub-clauses (i) to (vi)

;

(b) in the case of a computer program, –

  1. to do any of the acts specified in clause (a);

51A “(ii) to sell or give on commercial rental or offer for sale or for commercial rental any copy of the computer program

  • Promotion of Plant Varieties and Farmers Rights Act, 2001:

 Case Study:

Pepsi Co. India sued few farmers in Gujarat for cultivating a potato variety grown exclusively for its popular Lay’s potato chips claiming infringement of Intellectual Property Rights under the above Act.

Pepsi Co. India recently (May, 2019) have said that they will withdraw the case

Many legal issues and provisions of International Conventions have come up for debates because of this case.

  1. Geographical Indication of Goods (Registration & Protection) Act 1999:

Geographical indications has been defined as ‘an indication which identifies such goods as agricultural goods, natural goods or manufactured goods as originating or manufactured in the territory of the Country.

Eg.: Darjeeling Tea, Malabar Pepper, Pochampally Silk, Kanchipuram Silk, Madubani Paintings etc..

Any infringement attracts imprisonment & damages.

Registration is valid for ten years.

 

  1. Semi Conductor Integral Circuit Layout Design Act, 2000

Semi Conductor integrated circuit means a product having transistors and other circuitry elements which are inseparably formed on a semiconductor material or on insulating material or inside the semiconductor material and designed to perform an electronic circuitry function.

Registration is valid for ten years.

Any infringement is punishable with imprisonment and/or fines

 

  1. Designs Act, 2000:

 The Controller of Design grant a certificate of Registration. Like other I.P.s the design so registered is protected and any infringement is punishable under this Act.

Case Study I:

A Mumbai based Company manufactured Disney characters viz.Micky Mouse, Minnie Mouse, Donald Duck etc. Disney Enterprises sued the Mumbai based company.

Court directed the Mumbai based company to deliver all the infringed material to Disney Enterprises so that the same can be destroyed.

Case Study II

Bharat Glass Tubes Ltd. Vs. Gopal Gas Works:

The Asst.Controller of Patents, Kolkotta cancelled the Registration of a design by the Respondent under the Design Act, 2000.  But the Supreme Court passed judgement reversing the Order.

The standard E & Os Policies exclude the following under the above cover

 Patents and Trade Secrets Exclusion :

 Any liability arising out of, based upon or attributable to the breach of licenses concerning, infringement of or misappropriation of patents or Trade secrets is excluded.

“Patent” means a “Patent” for any invention granted under Patents Act, 1970 (amendedIn 1999, 2002 and 2005)

It is a grant from the Government which confers on the applicant for a limited period (20 years) of time the exclusive privilege of making, selling and using the invention for which the patent has been granted.

            Case study:

Bajaj vs. TVS Motors – case is regarding the spark plug technology used by Bajaj in their model (pulser) is infringed by TVS Motors and used in their model (TVS Flame).

Single judge of High C;ourt of Madras issued Temporary Injection Order stopping TVS Motors from manufacture of “FLAME”

TVS Motors appealed against the injection Order and a Division Bench vacated the Injection Order.

Bajaj appealed at the Supreme Court and the Supreme Court has issued an interim order allowing TVS to manufacture of “FLAME”.

 

Case Study 2

Toyota vs. Prius The Supreme Court decided that the I.P. Rights are territorial and not global.

 Trade secret:

Means information that derives independent economic value, actual or potential, form not being generally known and not being readily ascertainable through proper means by other persons who can obtain economic advantage from its disclosure or use.

No separate legislation in India for protection of Trade Secrets.  Trade Secrets are protected by Indian Courts under the provisions of Indian Contracts Act, 1872 or Common Law.

Conclusion:

One of the objectives of National Intellectual Property Rights Policy 2016 is

To strengthen the enforcement and adjudicatory mechanisms for combating I.P.R. infringements

Therefore we can expect that the demand for Errors & Omissions Insurance will grow significantly in Indian Market.

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