Process For Transfer Of Shares

September 26, 2016

In this blog post, Shruti Sharma, a Legal Associate at BetterPlace Safety Solutions Pvt. Ltd. who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the process for transfer of shares.

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Basic Aspects of the Goods and Services Tax Act, 2016

Sylvine

September 24, 2016

In this blog post, Kaushik Neogi, a student pursuing his LL.B (4th year) from Delhi Metropolitan Education, affiliated to Guru Gobind Singh Indraprastha University and a Diploma in Entrepreneurship Administration and Business Laws from NUJS, gives a detailed analysis of the applicability of the GST Act, 2016 and the GST Valuation Rules, 2016.

Background

The first proposition for GST was made in 2011 in the Lok Sabha through the Constitution (115^th Amendment) Bill, 2011. The attempt was unsuccessful as the bill lapsed because of dissolution of the 15^th Lok Sabha.
The proposition of GST was again introduced in 2014 on the 19^th of December in the Lok Sabha through the Constitution (122^nd Amendment) Bill, 2014.
Lok Sabha passed the bill on the 6^th of May 2015.
The Bill gets referred to a Select Committee of Rajya Sabha on the 14^th of May 2015.
Rajya Sabha passes the Bill with amendments on the 3^rd of August 2016.
Lok Sabha unanimously passes the Bill with the amendments as suggested by Rajya Sabha with all the 443 members of the House voting for the Bill on the 8^th of August 2016.
The government wishes to bring the provisions of the Bill to effect from the 1^st of April 2017.

Introduction

The GST regime is the Indian government’s initiative to check and curtail the existing tax system of indirect taxes in India. Currently, the indirect taxes imposed in India are on goods and services, some levied by the Centre and some by the States.
The GST regime intends to classify most indirect taxes under a single taxation regime. GST is a value added tax levied on goods and services. The implementation of GST is aimed to increase tax compliance, broaden the tax base and to avoid leakages and distortions due to inter-state tax variations.[2]

The Finance Ministry in June 2016 released the Model GST Law[3] under which the following were released-
Goods and Services Tax Act, 2016, The Integrated Goods and Services Tax Act, 2016 & GST Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016.

Certain aspects of the Goods and Services Tax Act, 2016[4]

Extent and Applicability:

Section 1 provides for the Short title, extent, and commencement, as per 1(2) the Act will extend to the whole of India, meaning this tax regime for Indirect taxes will be applicable in the State of Jammu and Kashmir too.

This is the first time when an indirect tax law has been uniformly made applicable to the state of Jammu and Kashmir along with the rest of India.

Important definitions under Section 2:

Composite supply	Section 2(27)	“Means a supply consisting of – o two or more goods; o two or more services; or o a combination of goods and services provided in the course or furtherance of business, whether or not the same can be segregated.”
Continuous supply of goods	Section 2(30)	“Means a supply of goods which is provided, or agreed to be provided, continuously or on a recurrent basis, under a contract, whether or not using a wire, cable, pipeline or another conduit, and for which the supplier invoices the recipient on a regular or periodic basis.”
Continuous supply of services	Section 2(31)	“Means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such service as the Central or a State Government may, whether or not subject to any condition, by notification, specify”
Input service	Section 2(54)	“Means any goods other than capital goods, subject to exceptions as may be provided under this Act or the rules made thereunder, used or intended to be used by a supplier for making an outward supply in the course or furtherance of business.”
Input	Section 2(55)	“Means any service, subject to exceptions as may be provided under this Act or the rules made thereunder, used or intended to be used by a supplier for making an outward supply in the course or furtherance of business.”
Input Service Distributor	Section 2(56)	“Means an office of the supplier of goods and / or services which receives tax invoices issued under section 23 towards receipt of input services and issues tax invoice or such other document as prescribed for the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said services to a supplier of taxable goods and / or services having same PAN as that of the office referred to above” For distributing the credit of CGST (SGST in State Acts) and IGST, Input Service Distributor shall be deemed to be a supplier of services.
Input tax	Section 2(57)	“In relation to a taxable person, means the (IGST and CGST)/(IGST and SGST) charged on any supply of goods and/or services to him which are used, or are intended to be used, in the course or furtherance of his business and includes the tax payable under sub-section (3) of section 7”
Output tax	Section 2(72)	“In relation to a taxable person, means the CGST/SGST chargeable under this Act on taxable supply of goods and services made by him or by his agent and excludes tax payable by him on reverse charge basis.”
services	Section 2(88)	“Means anything other than goods.”

Meaning and Scope of Supply:

Section 3 of the Act provides for the meaning and scope of supply.

As per 3(1) Supply includes:

All forms of supply of services and/or goods such as:
barter;
transfer;
sale;
license;
exchange;
rental;
lease; or
disposal

made or agreed to be made for consideration by a person in the course or furtherance of business;

Importation of service, whether or not for a consideration and whether or not in the course or furtherance of business; and
A supply specified in Schedule I made or agreed to be made without consideration.

SCHEDULE I

MATTERS TO BE TREATED AS SUPPLY WITHOUT CONSIDERATION

When there is Permanent disposal or transfer of business assets.

When the business assets are Temporarily applied for a private or non-business use.

When Services are put to a non-business or private use.

When Assets are retained after the registration.

When there is a supply of services and goods by one taxable person to another taxable/nontaxable person in the course or furtherance of business.

Note* supply of goods by a registered taxable person to a job-worker in terms of section 43A shall not be treated as a supply of goods.

3(2) provides that the matters mentioned in Schedule II shall apply for determining what is, or is to be treated as a supply of goods or a supply of services.

SCHEDULE II

MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES

Transfer

Where there is any transfer of the title in goods, it is a supply of goods.
Where there is any:

§ transfer of goods or

§ of an undivided share in goods or

§ of right in goods
without the transfer of title thereof, it is a supply of services.

Where there is any transfer of title in goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed, it is a supply of goods.

Land and Building

Where there is any:

§ Tenancy;

§ easement;

§ lease; or

§ license
to occupy the land, it is a supply of services.

Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.

Treatment or process

Any treatment or process which is being applied to another person’s goods is a supply of services.

Transfer of business assets

Where goods are forming part of the assets of business by or under the directions of the person carrying on the business are transferred or disposed of so as no longer to form part of those assets, whether or not for consideration, such transfer or disposal is a supply of goods by the person.
Where, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, by or under the direction of a person carrying on a business, whether or not for a consideration, the usage or making available of such goods is a supply of services.
Where any goods, forming part of the business assets of a taxable person, are sold by any other person who has the power to do so to recover any debt owed by the taxable person, the goods shall be deemed to be supplied by the taxable person in the course or furtherance of his business.
Where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless—
- The business is transferred as a going concern to another person; or
- The business is carried on by a personal representative who is deemed to be a taxable person.

The following shall be treated as “supply of service.”

Renting of immovable property;

Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or before its first occupation, whichever is earlier.
As per clause (h) of the explanation, supply will exclude alcoholic liquor for human consumption.

The following shall be treated as supply of goods

Supply of goods by any unincorporated association or body of persons to a member thereof for cash deferred payment or other valuable consideration.

According to 3(2A) a person acting as an agent who, for an agreed commission or brokerage, either supplies or receives any goods and services on behalf of any principal, such transaction shall be deemed to be a supply.

3(3) provides that Subject to sub-section (2), the Central or a State Government may, upon recommendation of the Council, specify, by notification, the transactions that are to be treated as—

a supply of goods and not as a supply of services; or
a supply of services and not as a supply of goods; or
neither a supply of goods nor a supply of services.

3(4)provides that not contrary to anything contained in sub-section (1), the supply of any branded service by an aggregator, as defined in section 43B, under a brand name or trade name owned by him shall be deemed to be a supply of the said service by the said aggregator.

Levy of, and Exemption from, Tax:

Section 7 of the Act provides for levy and Collection of Central/State Goods and Services Tax on all intra-State supplies of goods and services at the rate to be specified later, and 7(2) provides that every taxable person shall pay the tax as per the provisions of the Act.

7(3) provides for the provision of reverse charge on certain categories of goods and services to be specified, where the tax shall be payable by the person receiving such mentioned goods and services.

Section 8 of the Act Provides for compounded Levy. Under which the Central or State government may permit a registered taxable person whose turnover in a financial year does not exceed 50 lacs of rupees, to pay, in lieu of the tax payable by him, an amount calculated at such rate, not less than 1%, of the turnover during the year.

Provided that no such permission shall be granted to a taxable person who effects any inter-state supplies of goods and services or to a person who is liable to pay tax under sub-section (3) of section 7 of the Act.

Section 9 of the Act defines a taxable person as a person who carries on any business at any place in India and who is registered or required to be registered under Schedule III of this Act for payment of tax.

Agriculturist has not been regarded as a taxable person under this Act.
A person who is required to be registered under paragraph 1 of Schedule III of this Act shall not be considered as a taxable person until his aggregate turnover in a financial year exceeds [Rs. 10 lakh]
A a person who is required to be registered under paragraph 1 of Schedule III of this Act shall not be considered as a taxable person until his aggregate turnover in a financial year exceeds [Rs. 5 lakh], this provision is only valid when the taxable person conducts his business in any of the North-Eastern States.

SCHEDULE III
Person to be registered under paragraph 1.

Every supplier is to be registered in the State from where he makes the supply of goods and services. Where the aggregate turnover in a financial year of the supplier does exceed Rs. 9 lakh.
*If the supplier is from the North-Eastern States then he shall register where the aggregate turnover in a financial year does exceed Rs. 4 lakh.

9(3) provides for the persons who are not to be considered as taxable persons under the act being-

any person who provides services as an employee of his employer in the course of, or about his employment, or by any other legal ties creating the relationship of employer and employee as regards working conditions, remunerations and employer’s liability.
any person engaged in the business of exclusively supplying goods and services that are not liable to tax under this Act.
any person, liable to pay tax under sub-section (3) of section 7, receiving services of not exceeding a value (to be mentioned later) in a year for personal use, other than for use in the course or furtherance of his business.

Under the provisions of Section 10 if the Central or a State Government is satisfied that it is necessary for the public interest, have the power to grant exemption from tax following certain recommendations and procedures. Section 11 provides for remission of tax on supplies found deficient in quantity.

Time and Value of Supply:

Section 12 provides for time of supply of goods. The main provisions of this section are explained in the table below-

12(2)

The time of supply of goods shall be the earliest of

In a case where the goods are required to be removed the date on which the supplier for supply removes the goods to the recipient, or
In a case where the goods are not required to be removed the date on which the goods are made available to the recipient, or
The date on which the supplier issues the invoice with respect to the supply or
The date on which the supplier receives the payment with respect to the supply or
The date on which the recipient shows the receipt of the goods in his books of account.

12(3)

In case of continuous supply of goods

where successive statements of accounts or successive payments are involved
The time of supply shall be the date of expiry of the period to which such successive statements of accounts or successive payments relate
If there are no successive statements of account
The date of issue of the invoice (or any other document) or

The date of receipt of payment, whichever is earlier, shall be the time of supply. 12(5)

In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of:

The date of the receipt of goods, or
The date on which the payment is made, or
The date of receipt of invoice, or
The date of debit in the books of accounts.12(6)

If the goods (being sent or taken on approval or sale or return or similar terms) are removed before it is known whether supply will take place, the time of supply shall be

At the time when it becomes known that the supply has taken place or
Six months from the date of removal, whichever is earlier.

Section 13 provides for time of supply of services. The main provisions of this section are explained in the table below-

13(2)	The time of supply of services shall be	If the invoice is issued within the prescribed period, the date of issue of invoice or the date of receipt of payment, whichever is earlier, or If the invoice is not issued within the prescribed period, the date of completion of the provision of service or the date of receipt of payment, whichever is earlier, or In a case where the provisions mentioned above do not apply. The date on which the recipient shows the receipt of services in his books of account.
13(3)	In case of continuous supply of services, the time of supply shall be	The date on which the payment is liable to be made by the recipient of service, where the due date of payment is ascertainable from the contract, whether or not any invoice has been issued or the supplier of service has received any payment; Each such time when the supplier of service receives the payment or issues an invoice, whichever is earlier, where the due date of payment is not ascertainable from the contract; The time of completion of that event, where the payment is linked to the completion of an event.
13(5)	In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of	The date of receipt of services, or The date on which the payment is made, or The date of receipt of invoice, or The date of debit in the books of accounts.
13(6)	In a case where the supply of services ceases under a contract before the completion of the supply, such services shall be deemed to have been provided at the time when the supply ceases.

Section 14 provides for Change in rate of tax in respect of the supply of services. The main provisions of this section are explained in the table below-

14(1)

Not contrary to anything contained in section 13

The time of supply, in cases where there is a change in the effective rate of tax in respect of services, shall be determined in the following manner, namely-
In case the taxable service has been provided before the change in effective rate of tax –

The time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier. Where the invoice for the same has been issued, and the payment is also received after the change in effective rate of tax; or
The time of supply shall be the date of issue of the invoice. Where the payment is received after the change in effective rate of tax but the invoice has been issued prior to change in effective rate of tax; or
The time of supply shall be the date of receipt of payment. Where the payment is received before the change in effective rate of tax, but the invoice for the same has been issued after the change in effective rate of tax; or
The time of supply shall be the date of receipt of payment. Where the payment is received before the change in effective rate of tax, but the invoice for the same has been issued after the change in effective rate of tax;

In case the taxable service has been provided after the change in effective rate of tax-

The time of supply shall be the date of receipt of payment. Where the invoice has been issued prior to the change in effective rate of tax but the payment is received after the change in effective rate of tax; or;
The time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier. Where the invoice has been issued, and the payment is received before the change in effective rate of tax; or
The time of supply shall be the date of issue of the invoice. Where the invoice has been issued after the change in effective rate of tax but the payment is received before the change in effective rate of tax.

For the purpose of this section, “the date of receipt of payment” shall be the date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier:

Provided that the date of receipt of payment shall be the date of credit in the bank account when such credit in the bank account is after 4 working days from the date of change in the effective rate of tax.

Section 15 provides for the Value of taxable supply. Under the provisions of this Section-

15(1)	The value of a supply of goods and/or services shall be the transaction value that	“Is the payable or price paid for the said supply of services and/or goods where the price is the sole consideration for the supply and the supplier, and the recipient of the supply is not related.”
15(2)	The transaction value under sub-section (1) shall include	§ “Any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods and/or services”; § “The value, apportioned as appropriate, of such goods and/or services as are supplied directly or indirectly by the recipient of the supply free of charge or at reduced cost for use in connection with the supply of goods and/or services being valued, to the extent that such value has not been included in the price actually paid or payable”; § “Royalties and license fees related to the supply of goods and/or services being valued that the recipient of supply must pay, either directly or indirectly, as a condition of the said supply, to the extent that such royalties and fees are not included in the price paid or payable”; § “Any taxes, duties, fees and charges levied under any statute other than the SGST Act or the CGST Act or the IGST Act”; § “Incidental expenses, such as, commission and packing, charged by the supplier to the recipient of a supply, including any amount charged for anything done by the supplier in respect of the supply of goods and/or services at the time of, or before delivery of the goods or, as the case may be, supply of the services”; § “Subsidies provided in any form or manner, linked to the supply”; § “Any reimbursable expenditure or cost incurred by or on behalf of the supplier and charged in relation to the supply of goods and/or services”; § “Any discount or incentive that may be allowed after the supply has been affected: Provided that such post-supply discount which is established as per the agreement and is known at or before the time of supply and specifically linked to relevant invoices shall not be included in the transaction value.”
15(3)	The transaction value under sub-section (1) shall not include	“Any discount allowed before or at the time of supply provided such discount is allowed in the course of normal trade practice and has been duly recorded in the invoice issued in respect of the supply.”
15(4)	The value of the supply of goods and/or services in the following situations which cannot be valued under sub-section (1)	“Shall be determined in such manner as may be prescribed in the rules. The consideration, whether paid or payable, is not money, wholly or partly; The supplier and the recipient of the supply are related; There is reason to doubt the truth or accuracy of the transaction value declared by the supplier; Business transactions are undertaken by a pure agent, money changer, insurer, air travel agent and distributor or selling agent of lottery; Such other supplies as may be notified by the Central or a State Government in this behalf on the recommendation of the Council

GST Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016[5]

Important definitions under Rule 2-

goods of like kind and quality	“Means goods which are identical or similar in physical characteristics, quality and reputation as the goods being valued, and perform the same functions or are commercially interchangeable with the goods being valued and supplied by the same person or by a different person.”
services of like kind and quality	“Means services which are identical or similar in nature, quality and reputation as the services being valued and supplied by the same person or by a different person.”
transaction value	“Means the value of goods and/or services within the meaning of section 15 of the CGST Act.”

Rule 3 Provides for methods of determination of value. Under this Rule-

Subject to rule 7, the value of goods and/or services shall be the transaction value.
The “transaction value” shall be the value determined in monetary terms.
Where the supply consists of both taxable and non-taxable supply, the taxable supply shall be deemed to be for such part of the monetary consideration as is attributable to it.
The transaction value shall be accepted even where the supplier and recipient of supply are related, provided that the relationship has not influenced the price.
Where goods are transferred from—
One place of business to another place of the same business
the principal to an agent or from an agent to the principal, whether or not situated in the same State, the value of such supply shall be the transaction value.
The value of supplies specified in sub-section (4) of section 15 of the Act shall be determined by proceeding sequentially through rules 4 to 6.

Rule 4 provides for determination of the value of supply by comparison. Under this rule-

Where the value of a supply cannot be determined under Rule 3, the value shall be determined on the basis of the transaction value of goods and/or services of like kind and quality supplied at or about the same time to other customers, adjusted in accordance with the provisions of sub-rule mentioned below.
In determining the value of goods and/or services under sub-rule mentioned above, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration the relevant factors, including-
- the difference in the dates of supply
- the difference in commercial levels and quantity levels
- the difference in composition, quality and design between the goods and/or services being valued and the goods and/or services with which they are compared
- the difference in freight and insurance charges depending on the place of supply.

Rule 5 provides for computed value method. Under this rule-

If the value cannot be determined under Rule 4, it shall be based on a computed value which shall include the following-
the cost of production, manufacture or processing of the goods or, the cost of provision of the services
charges, if any, for the design or brand
an amount towards profit and general expenses equal to that usually reflected in the supply of goods and/or services of the same class or kind as the goods and/or services being valued which are made by other suppliers.

Rule 6 provides for the residual method. Under this rule-

When the value of the services and/or goods is not able to be determined as per the provisions of rule 5, the value shall be determined using reasonable methods consistent with the principles and general provisions of these rules.

Rule 7 provides for rejection of declared value and Rule 8 provides for valuation in certain cases.

Conclusion

The provisions discussed in this post are covering the main aspects of the model law relating to definitions, taxability, and supply. The model law apart from these subjects provides for the procedures relating to assessment, audit, registration and various other guidelines. Along with provisions relating to input credit available to the taxpayers, offenses under the Act and transitional provisions provide for a smooth and hassle free implementation of this new tax regime.

Footnotes:
[1]http://www.prsindia.org/uploads/media/Constitution%20122nd/Brief–%20GST,%202014.pdf

[2]http://finmin.nic.in/workingpaper/gst%20reforms%20and%20intergovernmental%20considerations%20in%20india.pdf

[3]http://www.cbec.gov.in/htdocs-cbec/gst

[4]http://www.cbec.gov.in/resources//htdocs-cbec/deptt_offcr/model-gst-law.pdf

[5]http://www.cbec.gov.in/resources//htdocs-cbec/deptt_offcr/model-gst-law.pdf

A Detailed Note On Licenses By Owners Of Copyright

Sylvine

September 24, 2016

In this blog post, Yashika Joshi, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, writes a detained note on licenses issued by copyright owners.

A license is the transfer of interest in copyright. In a license, the right to use a copyright is given to another party with some restrictions on such usage. A license can grant the right in the copyright of work which is already in existence or copyright in some future work which is yet to come in existence. A licensee can use the copyrighted work without any claim of infringement or unauthorized use being brought by the owner of the copyright against the licensee.

A license agreement should contain the following details in order to be enforced:

Identification of the work and rights licensed
Duration of the license
Amount of royalty payable
Conditions relating to revision, extension and/or termination of the license.

The license should be in writing and should be duly signed by the owner of the copyright or his duly authorized agent. Details about the present or future copyright work where the licensee of a future work dies before such work comes into existence then his legal representatives will be entitled to the benefit of the license, provided there is nothing contrary to it.

A license can be of two types:

Voluntary License
Compulsory License

Voluntary license is covered under Section 30 of Indian Copyright Act, which defines voluntary licensing as:

The owner of copyright in any existing work or the prospective owner of copyright in any future work may grant any interest in the right by license in writing signed by him or by duly authorized agent.

Therefore, the owner of the copyright of an existing work or a prospective owner of a future copyright can grant an interest in the right by way of license, in a case of the copyright of a future work the license will come in force only when the work comes into existence.

A compulsory license is covered under Section 31 of Indian Copyright Act. It is a term used for the statutory license which gives an exclusive right to do an act without the prior permission of the owner of the copyright. Section 31 provides for compulsory licensing of copyrighted work which is withheld from the public.

In case a copyright owner has refused to:

Republish or allow for the republication of the work or has refused to allow the performance of the work in public due to which the work is withheld from the public;
Allow communication of the work to the public by way of a broadcast of such work, or in the case of a sound recording the work recorded in such sound recording on terms which the complainant considers reasonable.

The copyright board, can after providing a reasonable opportunity to the copyright owner to be heard, subsequently conducting an investigation and being satisfied, may order the Registrar of Copyrights to issue a compulsory license to the complainant so that he can republish the work, broadcast or communicate the work to the public, etc.

The primary objective of compulsory licensing is to make available the copyrighted work to the general public. The copyrights give protection to the work of writers, artists, etc. so that they can benefit from the results of their hard work and creativity. However, such work should be available to the people for access. Sometimes, the owners of copyright are not willing to part from their work so in such a case, in order to make the work available to the people, compulsory licenses are granted by the Registrar of Copyrights.

Licenses can be exclusive and non-exclusive

An exclusive license means a license which confers on the licensee or the licensee and the person authorized by him to the exclusion of all other persons (including the owner of the copyright), any right comprised in the copyright in work. An exclusive licensee is one who has got such a right [Sec 2(j)].

In the non-exclusive license, the owner of the copyright is not deprived of his right to grant a license to persons other than the licensee. He may use the copyright himself as well.

The license can be for an indefinite period or limited to a definite period. In case the license is to publish a literary or some other work, then the publisher cannot be restrained from selling the unsold copies published in the license period after the expiry of that period. This is subject to any agreement to the contrary.

There can be an implied license, i.e., licenses can be implied by the circumstances or by a course of conduct. If a person sends a letter to the editor of newspaper or magazine, then it is implied that the editor has the right to publish it as well. This might be subject to any royalty payment.

Validity of a license

If the licensee does not exercise the right granted to him in the license deed within one year, then the license with respect to such right will be deemed to be lapsed after the expiry of one year unless otherwise specified in the license deed.

If the period of the license is not mentioned in the deed, then it will be deemed to be for five years.

In the case of any dispute between the licensor and licensee, the aggrieved party can file a complaint with the Copyright Board, which will hold an inquiry and pass suitable orders which may include an order for any royalty payable.

An order for the revocation of the license cannot be passed before the expiry of a period of five years unless the terms of the agreement are too harsh for the licensor and where the licensor is also the author

Copyright might have more than one owner. In such a case, if a joint owner grants a license of the copyright or any part of it without the consent of other owners/co-owners, then the co-owner can sue that joint owner and the licensee to whom such right has been granted.

Consideration forms an important part of granting a license for copyright. If there is not a consideration, then the license is revocable, however, if there is some consideration then it is irrevocable as interest is created in the copyright.

Private Placement In Public

Sylvine

September 24, 2016

In this blog post, Abhishek Kumar, a student of law at Delhi University, who is currently also pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses he concept of private placement in public.

The private placement is funding of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors. It usually alludes to the non-public offering of shares in a public company. Private Investment in Public Equity deals is one type of private placement. Private placements may typically consist of offers of common stock or preferred stock or other forms of membership interests, warrants or promissory notes (convertible promissory notes included), bonds.

Types of Placements

Private placements fall into either of two categories:

Traditional private placements as long-term loans from a separate or groups of investors. Investors receive their investment money back, besides the agreed upon additional profit percentage, no sooner the company reaches the required profit margin and can pay them.

Structured private placements offer investors the opportunity to make additional income as the stock prices increase, all the while protecting them if the stock price falls. This protection, allows shareholders to gain additional stock up to the value of their original investment if the stock price falls.

Types of Private Placements

Stock option:

Pension funds and pension pools are often invited to participate in the non-public offering, making it possible for the issuing company to collect a great deal of money before any of the remaining shares of stock are offered to the public in some initial public offering. In this scenario, private investors can often secure a significant interest in options that are anticipated to provide steady returns over the long-term.

Bond:

As with the stocks, private investors have the opportunity to purchase the bond issues before they are offered to the general public. The bonds may be structured with a short-term maturity date (<3 years). It is also possible to obtain bonds that provide a steady amount of returns in the form of interest over a much longer period (as long as 20 years).

Promissory notes:

The terms of the notes are structured to comply with governmental regulations in the country of origin, with most providing some guidelines for when the note can be called, and the buyer can redeem the note. This particular type of investment opportunity may come with an attractive rate of interest that is paid when the note is settled in full, or it may provide periodic payments according to a schedule agreed upon by the buyer and the seller. Private placement investments are traded by industrial investors that specialize in private investments, rather than being offered to investors who buy smaller lots in the marketplace.

Advantages	Disadvantages
Staying private allows the company to choose its investors, unlike a public offering which is open to the general public.	The private placement, especially when structured, can have disadvantages in both the long and short term.
Because private investors often are more patient than public investors, with a private placement there is more time to arrive at the agreed upon return.	If only a few investors are interested, and they don’t want to invest a large amount of money it becomes difficult to raise the required amount of capital.
The options for type and amount of funding give more flexibility and get capital much faster than searching for venture capitalists, or waiting for shares to sell on the public market.	Sometimes, private investors only buy in when the shares cost substantially less than the projected cost of the company, requiring you to sell more shares for the same amount of income.
	The reset feature of structured private placement allows private investors to gain additional shares, thereby reducing the number of shares one can sell to new investors, especially if you decide to go public in the future.

Background and recent developments

The earlier version of the Companies Act, 1956 contained loopholes in the provisions relating to private placements. It can be very well illustrated in the case of Sahara Group (Sahara India Real Estate Corporation & Ors v. SEBI (2012) 10 SCC 603[1]).
SEBI found that under the garb of an OFCD, Sahara was running an extensive para-banking activity without conforming to regulatory disclosures and investor protection norms pertaining to public issues.
The court directed Sahara to furnish details of the OFCDs it had issued including subscriptions and refunds within a stipulated time and submit these to SEBI.

Companies took advantage of various such lacuna and overlapping powers of the Ministry of Corporate Affairs (MCA) and SEBI. The new provisions of the Companies Act, 2013 have now made the law more secure to prevent any malpractices.

Private Placement has been defined under Section 42 of the new Companies Act, 2013: “Private Placement means any offer of securities or invitation to subscribe securities to a select group of persons by a company (other than by way of a public offer) through the issue of a private placement public offer letter and which satisfies the conditions specified in this section.”This new Act of 2013 sets out the manner in which a company can raise capital in securities as follows[2]:

Qualified Institutional Placement (QIP)

A capital-raising tool, primarily used in India, whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants which are convertible to equity shares to a qualified institutional buyer.
Apart from the preferential allotment, this is the only other speedy method of private placement whereby a listed company can issue shares or convertible securities to a select group of persons.
QIP scores over other methods because the issuing firm does not have to undergo elaborate procedural requirements to raise this capital.

Regulations Governing a QIP

To be able to engage in a QIP, companies need to fulfill certain criteria.

The Company must be listed on an exchange which has trading terminals across the country and having the minimum public shareholding requirements which are specified in their listing agreement.

During the process of engaging in a QIP, the company needs to issue a minimum of 10% of the securities under the scheme to mutual funds.
It is mandatory for the company to ensure that there are at least two allottees if the size of the issue is up to Rs 250 crore and at least five allottees, if the company is issuing securities above Rs 250 crore.

No individual allottee is allowed to have more than 50% of the total amount issued. Also, no issue is allowed to a QIB who is related to the promoters of the company.

Who can participate in the issue?

The specified securities can be issued only to QIBs, who shall not be promoters or related to promoters of the issuer.

The issue is managed by an SEBI-registered merchant banker. There is no pre-issue filing of the placement document with SEBI.

The placement document is placed on the websites of the stock exchanges and the issuer, with an appropriate disclaimer to the effect that the placement is meant only QIBs on private placement basis and is not an offer to the public.

Qualified Institutional Buyers (QIBs)

‘Qualified Institutional Buyer’ shall mean:
a) Public financial institution as defined in section 4A of the Companies Act 1956
b) Scheduled commercial banks c) Mutual funds
d) Foreign institutional investor registered with SEBI
e) Multilateral and bilateral development financial institutions f) Venture capital funds registered with SEBI.
g) Foreign venture capital investors registered with SEBI.
h) State industrial development corporations.
i) Insurance companies registered with the Insurance Regulatory and Development Authority (IRDA).
j) Provident Funds and Pension Funds with minimum corpus of Rs.25 crores;

These are not required to be registered with SEBI as QIBs. Any entities falling under the categories specified above are considered as QIBs for the purpose of participating in primary issuance process.

Benefits of QIPs

Time saving: QIBs can be raised within a short span of time rather than in FPO, right Issue takes a long process.
Rules and regulations: There are fewer formalities with regard to rules and regulation, as compared to follow-on public issue (FPO) and rights Issue.
Cost-efficient: The cost differential in terms of legal fees, is huge.
Lock-in: It provides an opportunity to buy non-locking shares and as such is an easy mechanism if corporate governance and other required parameters are in place.

QIPs in India

The QIP Scheme is open to investments made by “Qualified Institutional Buyers” in any issue of equity shares/ fully convertible debentures/ partly convertible debentures or any securities other than warrants, which are convertible into or exchangeable for equity shares at a later date.

Under the QIP Scheme, the securities may be issued by the issuer at a price that shall be not lower than the higher of the average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the preceding six months; or the preceding two weeks.

The issuing company may issue the securities only by a placement document, and a merchant banker needs to be appointed for such purpose.

Footnotes:

[1] http://www.business-standard.com/article/companies/sebi-vs-sahara-5-things-you-need-to-know-113100400713_1.html

[2] FAQs on issues http://www.sebi.gov.in/faq/pubissuefaq.pdf

Stock Exchange: An Intermediary Between Companies And Investors

Sylvine

September 24, 2016

In this blog post, Prakhil Mishra, a student of Institute of Law, Nirma University, Ahmedabad, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, gives an insight into how a stock exchange works as an intermediary between companies and investors.

What is a stock exchange?

In the mid 16^th century when the Europeans started looking for business opportunities in Asia and America, the big people felt that they wanted a lot of money and this demand was not being fulfilled by the kings of that epoch. The wealthy guys demanded a lot of interest and taking a loan from them is always a very risky venture. Thus, they felt they need to raise money from a bunch of common people. Thus, in 1602, the Dutch East Indian company became the first company to issue shares of its company in the Amsterdam Stock Exchange and get traded on a continuous basis. This is how a very important segment of the secondary market has come into existence.

The stock exchange is a market where the securities are bought and sold. It is a place where the public companies’ shares are traded and issued through exchanges and over the counter markets. To understand stock exchange, it is essential to know about the stock market.

The stock market is a juncture which provides a scope for investors to contribute to the achievements related to finance of the companies whose shares they hold in equity. In a free market economy, stock market plays a vital role in selling the shares of the companies to the people which consequentially gets exchanged by a proportion of ownership in the hands of investors. It envisages its growth by collecting small initial sums and making it large over time. It involves minimal risk for them to do so. A stock exchange to that instance would be a more specific area where the trading is executed. It is the place where actual business is done. It is a very important figure in raising capital of the companies listed on it as it is a hub of the primary and secondary market. At present, there are 21 stock exchanges in the country of which National Stock Exchange and the Bombay stock exchange are the largest ones.

To invest through a stock exchange, people may either register themselves as the member of a particular stock exchange or they may do it indirectly through a broker. A stock exchange has a relevance of its own because for a company which is going for Initial Public Offerings; it is a pre-requisite to list its specified securities in at least one recognized stock exchange having nationwide trading terminals. The stock exchange is the backbone of Equity Market in India. The dominating players of this market are NSE and BSE. Their remarkable indices NIFTY of NSE and SENSEX of BSE is always keenly observed and monitored by the investors. This stock market helps several ways such as:

In raising capital of the companies
It helps in mobilizing savings for investment so that people may invest in diversified domain
It facilitates the growth of the company in several aspects by acquisition and fusion.
It is always a challenging task for any business to get listed on a stock exchange and it has to fulfill and comply with certain stringent rules which consequently give a wide range of corporate governance.
The stock exchange is a booth for small investments. It encourages through its schemes and incentives the small investors who are not willing to make a mammoth investment to make the investment in it. As it is seen that the number of small investors is much more so, it allows a wide range of small investments.
It helps in raising governmental money for the governmental projects related to different developmental activities.
Most importantly what a stock exchange does is that it provides current economic trend going on in the country. It acts as a barometer.

In this article, we are focusing on the importance of Stock exchange in raising capital of the businesses.

How does a stock exchange raise capital?

The Securities which are traded on a stock exchange are shares issued by the companies, unit trusts, and other pooled investment products and bonds. The stock exchange is a secondary market for Initial Public Offerings done by public companies. It is markets where in the first instance businesses crack their securities issuance. It helps secondary markets to facilitate companies, governments, and other groups to obtain finance through debt or equity based securities. For example, NSE’s vast network provides an imperative infrastructure backbone for conducting online IPOs through the Book Building process. Issuers can access the various markets situated in the most remote areas of the country, through the NSE’s Book Building process called NEAT IPO. NSE’s reverse Book building mechanism offer issuing company to buy back company stock from the market. The NSE system offers a nationwide bidding facility in securities.[1]

What a stock exchange does is that it provides investors with the quotations of the investment. It is being done by publishing the stocks of all the companies on a common portal for the convenience of the investors. With this, investors convey their wish to buy shares of a particular company, and that is being communicated to the respective company and lieu of that company provides a share certificate to that investor.

Stock exchanges are accurately named. They are organizations where money can be exchanged for securities or securities for money. It is for this reason that they are often referred to as capital markets since it is in the capital that their dealings consist. The Stock Exchange itself never buys or sells securities, but is an association which provides facilities and rules under which its members can deal in securities with each other. Its true function consequently consists in bringing buyers and sellers of securities together and thereby increasing the negotiability of the stocks and bonds in which dealings are allowed. Naturally, the Stock Exchange itself does not fix or establish security prices; these depend on the conditions of supply and demand expressed on the Stock Exchange, but originating from all parts of the country.

Conclusion

Stock exchange acts as an intermediary between the investors and the companies. It is a channel whereby all the securities are listed, issued and traded in a day to day business. It also provides the data related to financial statistics of the country. It gives a parameter to judge the economic status of the country. Therefore, stock exchange is very cardinal when it comes to the open market economy and government. It becomes incumbent to seek a platform whereby proper listing of the securities and trading of the same could be done, and Stock Exchange provides the said platform.

Can Debentures Be Converted Into Shares And Vice-Versa?

Sylvine

September 24, 2016

In this blog post, Pritishree Dash, a student of National University of Advanced Legal Studies, Kochi, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses if debentures can be converted into shares and vice versa.

What are shares?

Every company limited by shares must have a share capital which is the amount invested in the company to carry out its functions. The share capital can be divided into small shares of a different kind. A share is the interest of a member in a company measured for liability and dividend. Section 2(84) of the Companies Act, 2013 defines “share” which means a share in the share capital of a company and includes stock.

What are debentures?

A debenture is like a certificate of the loan or a loan bond evidencing the fact that the company is liable to pay a specified amount with interest and although the money raised by the debentures becomes a part of the company’s capital structure, it doesn’t become share capital. A debenture is a method of borrowing. Section 2 (30) of the Companies Act, 2013 defines inclusively debenture as debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not. The term debenture covers both secured and unsecured debentures. Section 71 of the Act enables that a company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption. The issue of debentures with an option to convert such debentures into shares, wholly or partly, has to be approved by a special resolution passed at a general meeting. On the basis of convertibility, Debentures may be classified into following categories:

(A) Non-Convertible Debentures (NCD): These instruments retain the debt character and cannot be converted into equity shares.

(B) Partly Convertible Debentures (PCD): A part of these instruments are converted into equity shares in the future at the notice of the issuer. The issuer decides the ratio for conversion. This is normally decided at the time of subscription.

(C) Fully convertible Debentures (FCD): These are fully convertible into Equity shares at the issuer’s notice. The issuer decides the ratio of conversion. Upon conversion, the investors enjoy the same status as ordinary shareholders of the company.

(D) Optionally Convertible Debentures (OCD): The investor has the option to either convert these debentures into shares at the price decided by the issuer/agreed upon at the time of issue.

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Conversion of shares into debentures

A company may issue debentures with an option to convert debentures into shares, either wholly or partly at the time of redemption, provided that the issue of debentures with an option to convert such debentures into shares shall be approved by a special resolution passed by the shareholders at a duly convened general meeting of the company. Under SEBI (ICDR) Regulations 2009, “specified securities” means equity shares and convertible securities. The “convertible security” has been defined to mean a security which is convertible into or exchangeable with equity shares of the issuer at a later date, with or without the option of the holder of the security and includes convertible debt instrument and convertible preference shares. Additionally, the issuer of convertible debt instruments has to be in compliance with the following:

(a) obtain a credit rating from one or more credit rating agencies;

(b) appoint one or more debenture trustees in accordance with the provisions of Section 117B of Companies Act, 1956 [new section 71(5) of the Companies Act, 2013] and Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993;

(c) create debenture redemption reserve in accordance with the provisions of Section 117C of Companies Act, 1956 [new section 71(4) of the Companies Act, 2013;]

(d) if the issuer proposes to create a charge or security on its assets in respect of secured convertible debt instruments, it shall ensure that:

such assets are sufficient to discharge the principal amount at all times;
such assets are free from any encumbrance;
where security is already created on such assets in favour of financial institutions or banks or the issue of convertible debt instruments is proposed to be secured by creation of security on a leasehold land, the consent of such financial institution, bank or lessor for a second or pari passu (it implies with equal step, equally treated, at the same rate, or at par with) charge has been obtained and submitted to the debenture trustee before the opening of the issue;
the security/asset cover shall be arrived at after reduction of the liabilities having a prior charge, in case the convertible debt instruments are secured by a second or subsequent charge.

The issuer shall redeem the convertible debt instruments in terms of the offer document. SEBI (Issue and Listing of Debt Securities) Regulations, 2008 deal with compliances with respect to non-convertible debt instruments and apply to (a) Public issue of debt securities and (b) listing of debt securities issued through public issue or on private placement basis on a recognized stock exchange. It deals with aspects which include the filing of offer documents, disclosures, price discovery mechanism through book building and other routine public issue aspects.

Debentures conversion into shares

Section 81(3) of the Companies Act, 2013 permits companies to issue convertible debentures. Convertible debentures are converted into equity shares on maturity. The conversion date and rate of conversion is stated in the prospectus. The company does not redeem convertible debentures. Convertible debentures can be classified into fully convertible and partly convertible debentures.

A resolution for conversion has to be approved at the board meeting. The shareholders, as well as the debenture holders’ approval, is taken for conversion. A special resolution is passed to that effect. A copy of the special resolution is filed with the Registrar of companies within the 30 days of its passing. A letter of the option is sent to the debentures holders, and one copy of the same is filed with SEBI. The secretary then verifies the consent sent by the debenture holders for conversion. A debenture is converted into equity shares. A notice of the conversion is sent, and the debenture holders are asked to return debenture certificates. Secretary carries out the process of allotment of the shares. After allotment, changes have to be made in the Register of charges. Shares certificate is issued to the holders, and their names are entered in the register. A return of the allotment has to be filed with the Register of Companies.

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Post-Grant Opposition Of Patent In India

Sylvine

September 23, 2016

In this blog post, Tanvi Amlani, a student of GGSIP University, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the concept of post-grant opposition of patent in India along with the laws that concern it.

Patents: Introduction

A patent is a government authority or a license which is granted to the originator for his creation generally for a specific period. This is a special exclusive right which is conferred as a privilege to the holder giving him or her the status of an inventor and prohibiting others to make use of the creation as their own.

Patents are attached with special public disclosures of the invention and come under the category of intellectual property. Laws regarding patents are wide and vary according to the national laws of the sovereign states in addition to the international agreements which define the extension and limits of various kinds of intellectual property rights.

Origin and Purpose of the Patent Law

Patents are granted to individuals who create new and useful products, designs, ideas and many other innovations which are new and distinguished to the society. They may include non-obvious inventions which may prove useful to the society.

There are certainly highlighted benefits which are granted by law to the patent holders in general such as:

Patent holders get dominance and authority over the creation which is originated by them and thus given an exclusive privilege regarding the same.
Patents promote Research and Development.
They result into the disclosure of imminent creations by individuals into the public domain and thus in furtherance of common good.
It is beneficial to small time inventors.
Issuing patents promote healthy competition among market players and help in the formation of a dynamic society. It can be said to be based on the principles laid down by the SEBI Act, 1994 and also The Competition Act 2002.

Keeping in mind the true spirit of patent law, patents being an exclusive right which confers special privilege must be granted only to inventors who truly deserve it.

Opposition Rules in Patent Law

The history of patent law in India starts from 1911 and with more advancement in the field due to technological advancements; the law in the year 2005 brought into its ambit almost all the required fields such as food, chemicals, drugs, and microorganisms.

After the amendments, a few provisions were repealed, and certain additions were made such as those enabling the grant of compulsory license. The provisions relating to pre and post grant oppositions laws were also added.

Understanding Pre-grant and Post-grant Opposition in Patent Laws: Two-Tier System of Opposition Laws

The term ‘post’ itself explains the meaning of the above-stated phrase. It reveals that the opposition or objection should be after the grant of the patent under this head. This is contradictory to what is termed as pre-grant opposition. The major difference between the two is the timing at which they are permitted to be claimed and also the person by whom such opposition is brought into consideration with respect to the concerned patent.

Any interested person may submit an objection to the patent delivered to the holder within 12 months of the grant of opposition. There is a special class of people who come under this category of interested persons such as those engaged in, or in promoting, research in the same field to which the invention relates. The interest must be commercial in nature and a reasonable, valid interest.

Section 25(2) of the Indian Patent Act, 1970 declares the grounds acceptable to approve post-grant opposition:-

Attainment of patent rights through wrongful means such as obtaining the knowledge of original creations by deceiving the creator.
Prior publications.
Prior claims attached to the patents already obtained.
Prior public knowledge and usage.
Lack of innovation.
Exceptions stated under some section.
Imitation of already published work.
Insufficient disclosures regarding inventions of the same category filed in foreign countries.
Late filing of the application.
Anticipated invention.

Conclusion

The pre and post grant opposition laws in patents provides a strong and zero error two tier system of opposition proceedings under patents law. The latter works as an additional filter resulting in optimum security to the original creator and protects the inventor from frivolous claims.

What Are The Major Provisions Contained In The SICLD Act, 2000?

Sylvine

September 23, 2016

In this blog post, Surbhi Agarwal, a student of UPES, Dehradun, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the the major provisions contained in the SICLD Act, 2000.

The Semiconductor integrated circuit is an integral part of every computer chip. The main idea behind the Semiconductor Integrated Circuits Layout-Design Act (SICLD), 2000 is to provide protection of Intellectual Property Right (IPR) in the area of Semiconductor Integrated Circuit Layout-Designs and for matters connected therewith or incidental thereto. The Act fulfills the obligations of TRIPS agreement (Art.35 to 38) regarding the protection of semiconductor integrated circuits layout-designs. Therefore, the major provisions contained in the SICLD Act are as follows:

Definitions:

SICLD Act defines the following as:

“Semiconductor Integrated Circuit” means a product having transistors and other circuitry elements, which are inseparably formed on a semiconductor material or an insulating material or of the semiconductor material and designed to perform an electronic circuitry function.[1]
“Layout–Design” means a layout of the transistor and other circuitry elements and includes lead wires connecting such elements and expressed in any manner in a semiconductor integrated circuit.[2]
“Commercial exploitation” in relation to the SLCLD means to sell, lease, offer or exhibit for sale or otherwise distribute such semiconductor integrated circuit for any commercial purpose.[3]

The Registration and Conditions of Registration:

The Central Government will appoint a Registrar by notifying in the Gazette of India and will also appoint such other officials for fulfilling the functions prescribed under the Act. The officers will be abided by the stipulations of the Act under the guidance and instructions of the registrar.[4]
The Act provides for the establishment of Semiconductor Integrated Circuits Layout- Design Registry, the main task of which is to assist registration of layout-designs.[5]
A register will be kept at the head office of the Registry in which the details of the proprietor of the registered design will be included as specified under the Act. The register will be maintained under the direction and administration of the Registrar. [6]
The Act prohibits the registration of certain layout designs which is not original, has been commercially exploited anywhere in India or in a convention country, which is not inherently distinctive and not differentiable from other designs registered. Where the design has been created by the intellectual labors of the inventor and is distinctive, such designs will be considered original under the Act.[7]

Procedure for and duration of registration:

For the purpose of registering the layout design in the manner specified under the Act, the inventor of the design shall file an application in writing in the registry where the business is carried on[8] and when the application is acknowledged, such acceptance shall within 14 days is to be published in the specified terms.[9]
Any person may, within three months from the date of the advertisement give notice in writing in a prescribed manner to the Registrar of opposition to the registration.[10]
The layout design has been legally protected under the Act for a term of ten years starting from the date of submitting the application or on the date when the design was first utilized for commercial purposes; either is in advance.[11]

Effect of Registration:

The Act specifically provides that an action for breach is not allowed for an unregistered design.[12]
The registered owner of the design will acquire exclusive right to utilize the layout design and to acquire relief in case of a breach in the mode specified by the Act.[13]

Assignment and Transmission:

The Act confers power on the registered owner to consign the right on the layout design and to furnish a receipt for every consideration for such transfer.
A registered layout-design shall be assignable and transmissible whether with or without the goodwill of the business concerned.[14]

Appellate Board:

The Act empowers the Central Government to constitute a Layout design Appellate Board to implement the jurisdiction, influence, and right as specified under the legislation.[15]
The Appellate Tribunal will entertain appeals against the orders made by the Registrar within three months from the date of order.[16]
The tribunal will be guided by the principles of natural justice and not bound to follow the procedure laid down under the Civil Procedure Code.[17]
An aggrieved person by order of the Tribunal will appeal before the concerned High Court as per the procedure stipulated under the Act.[18]

Offenses, Penalties, and Procedure:

The Act also provides for a penalty in case of breach of layout designs. The person will be punishable with imprisonment for a term which may extend to three years, or with fine which shall not be less than fifty thousand rupees but which may extend to ten lakh rupees or with both.[19]

Miscellaneous:

The Act confers power on the Central Government to formulate rules to execute the provisions of the legislation. This Act is a novel legislation to grant protection for the scientific and technological inventions and to prevent the exploitation of such works by an unauthorized user.

Any countries accord to the citizens of India similar privileges and rights as granted to its citizens; the Central Government may specify such country to be a convention country and provide the citizens of such convention countries the similar privileges as granted to citizens to India under the Act.[20]

Conclusion:

The intellectual property protection for Integrated Circuit Layout design is a key factor throughout the world, and more so in India, because it does not have a strong intellectual property protection policy in software. As integrated circuit layout designs are in its early years in India, it is important that the country boasts of a strong protection policy right in the beginning itself and SICLD Act provides such a strong protection policy.

The number of Indian companies focusing on integrated circuit design is beginning to grow, and this would force major semiconductor companies to set up their offices and address the needs of the domestic market. This will encourage a lot more companies to base their operations in India.

The Indian legislation, therefore, provides a comprehensive protection to the layout designs of semiconductor integrated circuits as recognized intellectual property and bundle of rights to the proprietor of the registered layout-design.

Footnotes:

[1] Section 2(r) of the Act.

[2] Section 2(h) of the Act.

[3] Section 2(e) of the Act.

[4] Sec 3 of the Act.

[5] Section 4 of the Act

[6] Section 5 and 6 of the Act

[7] Sec 7

[8] Sec 8

[9] Sec 10

[10] Sec 11.

[11] Sec 15.

[12] Sec 16

[13] Sec 17

[14] Sec 20

[15] Sec 32

[16] Sec 42

[17] Sec 43

[18] Sec 53

[19] Sec 56

[20] Sec 93

Remedies Available To A Person For Infringement Of Copyright

Sylvine

September 23, 2016

In this blog post, Shubham Khunteta, a student of National Law University Odisha, Cuttack, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, writes about the remedies available to a person for the infringement of his copyright.

Introduction on the need to prevent infringement of copyrights

The fundamental object of the copyright law is to energize creators, arrangers, and specialists to do unique works by remunerating them with a select good fit for a predefined period to recreate the works for distribution and offering them to public.

The law in this manner endeavors to prevent one from appropriating to himself what has been created by the works, aptitude, and capital of another. The copyright law is concerned with the negative right of avoiding replicating of physical material existing in the field of writing and craftsmanship.

The two essential schools of thought for copyright are the European framework translating copyright as Moral Right and the American framework keeping copyright as an Economic Right. Copyright as monetary right implies that copyright insurances are expected to empower development by securing what is legitimately the property of the maker in light of his work and “imaginative start” and is in this manner concerned more with adjusting the privileges of makers with business sector access[1].

Then again, Copyright as Moral Right view the work as being somehow an augmentation of the maker’s self and consequently sees a requirement for more far-reaching insurances. This distinction, for the most part, speaks to the contrast between the American (monetary) support and the European (good) defenses and is very much delineated by the varying methodologies of the United States and the European Union to the topic of securing privileges of the creators.

The teaching of Moral Right (every now and again found in French as Droit assurance), which is the basic premise of European school, is an altogether more extensive development of copyright. While financial rights can be purchased and sold, and are associated with the “work” as an item, moral rights are seen as something naturally controlled by the “writer” of the “works” due to his “virtuoso.” As one-course book phrases it, the ethical privileges of writers with deference to their works are understood as “basic, normal rights, emerging from an origination of the work as an expansion of the creator’s identity.[2]

Market financial aspects perceives licensed innovation as a public good which is:

(1) Non-excludable; and

(2) Non-rivalrous, implying that more than one individual can appreciate the property without barring each other from its advantages. Copyrights, however restraining infrastructures for a timeframe, are in this way endured in light of the fact that creators and designers would, seemingly, have no business sector motivating force to make truant the privilege to bar others from their works.

There has for some time been an open deliberation in the United States about whether one ought to hold all the more nearly to John Locke’s perspective of property as an unending right in personhood, which is a result of one’s blending his/her work with nature.

To be sure, numerous changes to copyright laws have been made that convey the United States nearer to European models

Remedies available against Infringement of copyright

Intellectual property rights are enforced by an action for infringement of those rights before the District Court or High Court. There are three kinds of remedies against infringement of copyright, namely:

Civil Remedies[4]:

This includes the injunction, damages, and an account of profits. A suit or other common procedures identifying with infringement of Copyright can be recorded in the District Court having a ward.”

The time of constraint for documenting of a suit for harms for infringement first of Copyright is three years from the date of infringement”. Section 5 read with Section 54 gives that an exclusive licensee can likewise document a suit for infringement. Be that as it may, where the suit is established by the exclusive licensee, unless the court coordinates, the proprietor of the copyright must be made as a respondent, and when such proprietor is made a litigant, he will have the privilege to question the case of the exclusive licensee.

Injunction[5]:

The essential cure looked for in most copyright suits is an order to control the respondent from keeping on doing acts which constitute infringement. The law relating to infringements is contained in Specific Relief Act, 1963.

Damages for infringement:

The proprietor of the copyright in a work is in the title to recuperate the harms for the misfortune or harm costs him by the infringement of the copyright. Get it is no arrangement in the represents the recompense of extra harms in exceptional circumstances, for example, the egregiousness of the infringement.

The Act additionally announces that all infringing duplicates of any work in which copyright subsists and all plates utilized or planned to be utilized for the creation of such duplicates should be considered to be the property of the proprietor of the copyright. It then qualifies him for taking procedures for the recuperation of ownership of the infringing duplicates and plates or in appreciation of the transformation thereof.

Remedy by way of accounts:

The plaintiff is also entitled to require the defendant to account for the profits made by him by his piracy instead of claiming damages for infringement or conversion.

Criminal Remedies:

This includes imprisonment and heavy fine and seizure of infringing copies of the work, which will be delivered to the copyright owner.

Administrative Remedies[6]:

This comprises of moving the Registrar of Copyrights to boycott the import of infringing duplicates into India when the infringement is by a method for such importation and conveyance of the reallocated infringing duplicates of the proprietor of the copyright and looking for the conveyance.

A compelling and speedy cure is made accessible by the Act to avoid importation into India the duplicates of a marketing specialist work made outside India, which is made in India, would encroach on copyright in the work.

Section 53 of the Copyright Act engages the Registrar of Copyrights in making a request precluding the importation into India of such duplicates for the utilization of the proprietor of the copyright in any work, party his obligation authorized agent in the wake of making such request as he esteems.

Footnotes:

[1] <http://shodhganga.inflibnet.ac.in/bitstream/10603/33710/3/chapter3.pdf>accessed on 30/08/2016

[2] <https://www.icsi.edu/Docs/Website/EconomicandCommercial%20Laws.pdf>accessed on 30/08/2016

[3]< http://shodhganga.inflibnet.ac.in/bitstream/10603/33710/3/chapter3.pdf>accessed on 29/08/2016

[4] <http://blog.ipleaders.in/remedies-available-copyright-infringement-india/>accesed on 30/8/2016

[5]http://www.mondaq.com/india/x/444510/Trademark/IPR+Criminal+Remedies+In+India+Civil+vs+Criminal+Remedy+In+IPR+Search+Seizure+Raids+By+Police>accessed on 29/08/2016

[6] <http://www.ssrana.in/Intellectual%20Property/IP-Enforcement-And-Litigation/Administrative-Remedies-in-India.aspx>accessed on 29/08/2016

What is the concept of Assignment of Copyright?

Sylvine

September 23, 2016

In this blog post, Sayan Mukherjee, a student of University of Calcutta, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the concept of assignment in copyright along with the most probable disputes related to it.

Introduction

Copyright, a unique intellectual property meant for the creative brothers and sisters around the world is res incorporalis. In that sense, it has no tangible existence but is a proprietary right and can be disposed of.

In modern life, every individual is aware of the concept of Copyright because of the expansion of media and communication throughout the world. Today’s world has no shortage of ideas, thoughts, modes of expression, and its distribution, which the world media has upheld through the gift of technology coupled with a wider scope of communication and share. This very thing has directed out attention towards the creative world, their rights and obligations, along with their grievances in the form of disputes faced by the creators.

The Copyright Act, 1957 as amended in 2012 is the current vehicle to settle and guide the creators towards betterment and give them some pecuniary opportunities so that they are further encouraged to bless the world with their creativity.

Assignment of Copyright

Nobody is entitled to copy, reproduce, publish or sell an original writing, painting, dramatic production, sculpture, etc. without the permission of the creator. Thus, law provides a right to the owner of the copyright (i.e. the creator) to transfer the ownership of the copyright to a third party. For instance, in the case of making a complete movie – all the creative persons with their idea turned into relevant works come to a producer, assign their rights that subsist in their work in return for a royalty. These works are then summed up to form a complete movie. Yes, the process isn’t that easy and involves many questions that arise both at the time of assignment and especially after it.

Facets of Copyright Assignment

It is a pecuniary opportunity for the first owner of copyright. The assignment must specify the amount of copyright [vide Section 19(3) of the Copyright Act]. The creator shall not assign or waive the right to receive royalties to be shared on an equal basis with the assignee of copyright, subject to certain conditions. [vide Section 18(1) proviso of The Copyright Act, 1957[1]]
In the case of an assignment of copyright in any future work, it shall take effect only when the work comes into existence. In this regard, “assignee” includes the legal representatives of the assignee, if he dies before the work comes into existence. [vide Section 18(1) proviso of the Copyright Act]
The ownership may be assigned either wholly or only for a part of the work in question. [vide Section 18(1) of the Act]
The Copyright Assignment must be in writing and signed by the assignor or by his duly authorized agent. [vide Section 19(1) of the Act]
The duration of assignment must also be specified. The Delhi High Court recognized Section 19(5) and stated that if the assignment deed is silent about the duration, it shall be deemed to be 5 years from the date of assignment[2].
The agreement deed may specify the territorial extent of such assignment. If silent, it shall be presumed to extend within India. [vide Section 19(6) of the Act]
The assignment shall be subject to revision, extension, or termination on terms mutually agreed upon by the parties. [vide Section 19(3) of the Act]
Where the assignee fails to exercise his rights within one year from the date of assignment, the assignment in respect of such right shall be deemed to have lapsed, unless otherwise specified in the assignment deed. [vide Section 19(4) of the Act]
If the assignment is in contrary to the terms and conditions of the rights already assigned to a copyright society to which the creator is a member, it shall be deemed void. [vide Section 19(8) of the Copyright Act[3]]
The creator is entitled to subsequent royalties in the course of future exploitation of a cinematographic film, which includes his work, other than by way of exhibitions in a cinema hall. For example, the creator will be entitled to subsequent royalties for satellite right, home video, internet rights, the etc. Similar clause has been added for the case of sound recording. [vide Section 19(9) and 19(10) of the Copyright Act[4]]
In the case of a manuscript, the copyright being a personal property of the owner can be transmitted by testamentary disposition. [vide Section 20 of the Act]
The equitable assignment is just the agreement to assign.
The assignee has the rights of- translation, abridgment, adaptation, dramatic and filmmaking in the work.
For relinquishment of work, the author has to give notice in prescribed form to the Registrar of Copyrights or by way of public notice. On its receipt, Registrar shall publish it in the Official Gazette. With 14 days of the publication, the Registrar shall post the notice on the official website of Copyright Office, so that such notice remains in the public domain for not less than three years. Such right shall cease to exist from the date of the notice. [vide section 21 of the Copyright Act]

It may be noted in this context, that the author has an alternative for the shortcomings or confusions of assignment of copyright. They can register their work with a copyright society and thereafter license it to whomsoever they desire.

Moral Rights involved in Copyright Assignment

Moral rights are independent of the author’s copyright and shall remain with the author even if he has assigned his copyright.

The creator of work has the right to claim ownership thereof;
In case of any distortion, modification or mutilation of the original work, he shall have the right to claim damages;
If harm is being caused to the goodwill of the creator by commission or omission of any act by the assignee, he shall have the right to damages provided such an act is done before the expiration of the term of assignment.

Foreseeable disputes

The first dispute which may arise is that as regards the period of copyright assignment. The statute is very particular that an assignment has to be for a specified period even if there is an agreement in contrary[5]. [vide Section 19(2) of the Copyright Act]
Again, in a situation where assignee fails to exercise his rights assigned to him, and the assignor’s actions do not influence such failure, then, the statute empowers the Copyright Board, on receipt of a complaint from the assignor, to take cognizance of the case and make necessary inquiries as it may deem fit. It further gives a discretionary power to the Board where it can revoke such assignment. [vide Section 19A(1) of the Copyright Act]
In the case of a monetary dispute over a copyright assignment, the Copyright Board has the power on of a complaint from the aggrieved party, to hold an inquiry and pass necessary order including an order for the recovery of any royalty payable [vide Section 19A(2) of the Copyright Act]. Any such final order must be passed within a period of six months from the date of receipt of the complaint. Delay in compliance shall oblige the Board to record the reasons thereof. [vide Section 19A(3) of the Copyright Act[6]]

Conclusion

The feasibility of Copyright Assignment is highly questioned because of the rising counts of Copyright Infringement cases. The sole objective of assignment process is to provide both pecuniary as well as distribution benefits to the original work of the creator. It cannot be used to deprive the original owner permanently from his creation.

Copyright Assignment is an inevitable necessity in this dynamic world. People can’t be self-sufficient in every respect. For the better frame of the Art, the ownership right of the creation needs to change hands and bring out the full potential of the original work by exploring various tiers of creativity.

Footnotes:

[2] Pine Labs Private Limited vs. Gemalto Terminals India Private Limited and others (FAO 635 of 2009 and FAO 636 of 2009)

[5] Saregama India Ltd. V. Suresh Jindal AIR 2006 Cal. 340.

[6] Inserted by 2012 Amendment.

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Background

Introduction

Certain aspects of the Goods and Services Tax Act, 2016[4]

Extent and Applicability:

Important definitions under Section 2:

Meaning and Scope of Supply:

Levy of, and Exemption from, Tax:

Time and Value of Supply:

GST Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016[5]

Important definitions under Rule 2-

Conclusion

Licenses can be exclusive and non-exclusive

Validity of a license

Types of Placements

Types of Private Placements

Stock option:

Bond:

Promissory notes:

Background and recent developments

Qualified Institutional Placement (QIP)

Regulations Governing a QIP

Who can participate in the issue?

Qualified Institutional Buyers (QIBs)

Benefits of QIPs

QIPs in India

What is a stock exchange?

How does a stock exchange raise capital?

Conclusion

What are shares?

What are debentures?

Conversion of shares into debentures

Debentures conversion into shares

Patents: Introduction

Origin and Purpose of the Patent Law

Opposition Rules in Patent Law

Understanding Pre-grant and Post-grant Opposition in Patent Laws: Two-Tier System of Opposition Laws

Conclusion

Definitions:

The Registration and Conditions of Registration:

Procedure for and duration of registration:

Effect of Registration:

Assignment and Transmission:

Appellate Board:

Offenses, Penalties, and Procedure:

Miscellaneous:

Conclusion:

Introduction on the need to prevent infringement of copyrights

Remedies available against Infringement of copyright

Civil Remedies[4]:

Injunction[5]:

Damages for infringement:

Remedy by way of accounts:

Criminal Remedies:

Administrative Remedies[6]:

Introduction

Assignment of Copyright

Facets of Copyright Assignment

Moral Rights involved in Copyright Assignment

Foreseeable disputes

Conclusion

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