The secondary meaning of trademarks in the fashion industry

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October 9, 2021

FashionDesigner_1920x1080 (1) — Image Source: https://rb.gy/rzc6yx

This article is written by Akhil G. Krishnan, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Dhruv Shah (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

“Who are you wearing?” is a frequent question asked to celebrities, dressed in fancy ensembles on countless red carpets. What if the clothing could be identified simply by looking at the pattern, texture, and design of the goods instead of having to ask such a question? Few industries are as competitive as the fashion industry. It is critical for the firm to preserve its design, pattern, or any other kind of intellectual property against theft, imitation, or any other fraudulent attempt to hurt the company by using the garment or its design in bad faith. Secondary Meaning of Trade Dress is defined as “the mental association by a substantial segment of consumers and potential consumers ‘between the alleged mark and a single source of the product.’”. If consumers cannot associate some designer/brand with a specific design, there is a lack of recognition and thus, this precludes many emerging designers from asserting protection under trade dress. Through this article, the author seeks to explore the difference between trademark and trade dress while emphasising the value of the secondary meaning of trademark in the fashion industry.

Intellectual property rights and its approaches regarding the fashion industry

Intellectual property rights assist businesses in preventing their valuable assets from being stolen or used in bad faith to earn illegitimate benefits, as well as assisting consumers in recognizing a product or service’s original source of creation. In the case of the fashion industry, it is the protection of their own items from those of competitors. Fashion designers rely on intellectual property laws to safeguard their creations.

There are four potential approaches to protecting IP rights in designs.

Copyrights

On the basis of the ‘Useful Article Doctrine,’ copyright protection for fashion designs is frequently unattainable. Clothing is generally exempt from protection since it is deemed a useful article under the law.

Utility and design patents

Patents, unlike copyrights, explicitly cover important materials. Utility patents are used to protect new inventions that include devices and processes. Design patents, on the other hand, protect an object’s appearance rather than its function. Design patents are often granted within a year and grant 14 years of protection.

Trademarks

Due to the limited protection provided by the Copyright Act and the high cost of obtaining a patent, most designers use trademarks to protect portions of their work. To successfully register a trademark, you must meet the following two requirements:

Distinctive: It can’t be descriptive or generic, and it has to be whimsical, random, or evocative.
Not confusingly similar: Similar in sound, appearance, meaning, impression and relatedness of goods/services.

Trade dress

Trade dress refers to aspects of a product’s visual or sensuous appeal, such as its packaging, shape, or colour combination that can be registered and protected from being exploited by competitors in connection with their business and services. The Coca-Cola bottle is the most recognised example of a trade dress. Even without reading the words “Coca-Cola,” anybody who sees that shape understands the bottle as belonging to that company. Trade dress can be used to protect product designs, parts of products, and packaging.

In the fashion industry, trade dress is the most effective tool for protecting one’s company’s designs and patterns.

Trademark and trade dress in the fashion industry

Fashion companies put a lot of money and work into building their brand’s attraction and draw, therefore branding is critical. Trademark law prevents others from using the mark without permission, which is critical considering the amount of time and money that goes into building a viable and well-known brand. That’s when the concept of trade dress comes into play. Trade dress is protected under trademark law since the design itself serves as a trademark, identifying the product as coming from a specific designer or fashion house. All aspects used to market a certain service or product are protected by trade dress. It refers to a product’s visual or sensuous look, which can include packaging, shape, and colour combinations, and which can be registered and protected from being utilised by competitors in connection with their company and services. It’s also meant to safeguard consumers against products with imitated packaging or appearances, so they don’t buy one thinking it’s another. While trade dress can be a powerful kind of legal protection, it comes with stringent legal restrictions, and a corporation seeking such protection must employ a well-thought-out plan to obtain and maintain it. For example, the registered trademark of Gucci is the Green-Red-Green stripe mark. However, designers, like Marc Jacobs, have filed suit for trade dress infringement to protect the overall physical appearance of their design.

The secondary meaning of trademark

If a design, mark, word, or logo is not naturally distinctive, it must develop distinctiveness in the minds of customers to be considered a trademark. A ‘secondary meaning’ is a term used to describe acquired distinctiveness. “The mental association made by a significant segment of consumers and potential consumers ‘between the asserted mark and a single supplier of the product,” according to secondary meaning. To put it another way, the consumer must be able to associate the fashion design with the designer. This prevents many young designers from claiming trade dress protection because they are likely unrecognized by customers and hence cannot be associated with a specific design in their minds due to this lack of recognition. A secondary meaning is a new meaning that is added to a mark. A mark, on the other hand, cannot reach a secondary meaning if it is not utilized to identify its source.

For example:

1. Louis Vuitton’s LV badging all over their products,

2. Adidas’ three stripes etc.

The difficulty of proving secondary meaning

The party claiming trade dress protection based on the secondary meaning test bears the burden of proof in litigation, and secondary meaning can be difficult and expensive to prove. Limiting trade dress protection to the secondary meaning test may make it impossible to provide protection for pattern and display designs that would otherwise be easily determined to be inherently distinctive. There are three basic methods for proving secondary meaning, and each has its own set of pitfalls and roadblocks to trade dress protection.

First, market survey data may be the most effective technique of determining secondary meaning if the survey demonstrates that the trade dress has formed the necessary link between the designer/producer and the product in the minds of the general public. The cost of a survey, on the other hand, can prevent a trade dress owner from obtaining protection. Even if a survey is feasible, it is difficult to design and may not be successful. A survey must be done in accordance with generally established market research principles, and the data must be analysed using correct statistical methods in order to be admitted as evidence.
If other evidence indicates that consumers will link the trade dress with a producer, a consumer survey may not be required. The second method of showing secondary meaning is by a big number of sales or extensive advertising that includes the trade dress. Advertisements and promotional efforts do not prominently display extensive trade dress.
Intentional attempts by one producer to profit from the secondary meaning of another’s trade dress by replicating it could be proof of secondary meaning. This technique of proof, on the other hand, has a flaw. Because the imitator’s primary purpose for imitating a trade dress may not have been to gain from the secondary meaning of another’s trade clothing, intentional copying alone may not be enough to establish secondary meaning. Competitors may replicate a product’s trade dress because of its appealing or creative design without intending to profit from customer awareness, or competitors may copy characteristics that have no secondary meaning.

In Louis Vuitton Malletier v. Dooney & Bourke, Inc., 454 F.3d 108, the Court considered the likelihood of confusion in trade dress. In that instance, Louis Vuitton attempted to safeguard a handbag line established in collaboration with artist Takashi Murakami. The handbags featured the “Toile Monogram,” which consisted of “entwined LV initials with three motifs—a curved diamond with a four-point star inset, its negative, and a circle with a four-leafed flower inset.” The Louis Vuitton Monogram Multicolore was a reworking of the traditional Toile monogram, consisting of 33 Murakami-selected bright colours printed on a white or black background. Dooney & Bourke, which also produced handbags displaying its initials in an interlocking pattern in a similar colour palette dubbed the “It Bag,” imitated Vuitton’s purses shortly after the Monogram Multicolore’s breakthrough, according to Vuitton. The court recognised the Vuitton mark as legitimate and proceeded to evaluate the possibility of confusion between the two bags. Using a side-by-side assessment, the district court determined that there was no risk of a mistake between the two bags. The Second Circuit, on the other hand, disagreed with the district court’s side-by-side assessment of the bags, finding that the court should instead consider whether buyers would be confused by their comparable appearances on the market. In the real world market, designs that are easily distinguishable when viewed side by side may nevertheless be mistaken, and this is the confusion at issue in trade dress infringement.

Conclusion

For all intellectual property rights, it is always highly advisable to invest early on in an effort to lay the foundation for securing those rights. That is especially the case for trade dress rights, which depend heavily on public recognition and association of the design with the designer or Fashion Company. The fact of the matter is, these days it is hard to imagine that there is a place in society, be it the sciences, arts, politics, business or even morality and law, that does not exhibit fashion in some manner. Fashion designers not only want but need protection and despite the tenable oppositions raised, this Comment concludes that this industry is no less deserving of protection than any other. Trade dress serves a crucial utility for franchises: identifying the source of goods and services. Every franchise has a trade dress, but all too often franchisors do not identify their trade dress until they are faced with a competitor that has copied it. The sooner a franchisor identifies those distinctive and nonfunctional features that identify its business, the better positioned it will be to protect this valuable asset.

References

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How can Indian students pursue US CPA

By

Diganth Raj Sehgal

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October 9, 2021

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This article is written by Smaranika Sen from Kolkata Police Law Institute. This article exhaustively deals with the procedure of how an Indian student can pursue US CPA.

Introduction

Certified Public Accountant is one of the most demanding and popular courses across the globe in the field of accountancy. CPA helps people in the field of accountancy to establish an illustrious career. Different countries across the world provide CPA courses like CPA Australia, CPA Canada, CPA US, etc. A burning question that comes to the mind of students is whether non-US or non-Australian or non-Canadian citizens can avail this course. The answer is a big YES! However, as this article only focuses on US CPA, we will be analysing how an Indian student can pursue US CPA.

Eligibility criteria

As already stated above, Indian students can pursue US CPA, provided some conditions are required to be fulfilled. The foremost and the important criterion is

Candidates wanting to pursue US CPA must have a 120 credit score in the field of commerce. According to the US, each year of university education in India is equivalent to a 30 credit score. As per the Indian education system for a Bachelor degree in commerce (B.Com) a student is entitled to a three-year program. The credit score as per the US is equivalent to 90 (3*30), therefore, the student becomes ineligible. A student must have a master degree in the field of commerce or MBA or be a member of the Institute of Chartered Accountants of India or a member of Institute of Company Secretaries of India to fulfill the criterion of 120 credit score.
In case a student has pursued a B.Com degree and has obtained a first division from a NAAC ‘A’ accredited university, such a student will get the benefit of an additional 30 credit score. Therefore, such students are eligible even with their three-year bachelor’s degree program.
It is also to be noted that the United States comprises 55 states. Each state has a different procedure of eligibility. The average credit score is considered to be 120. It is followed by most of the states. However, some states also require their candidate to complete a minimum of 150 credit scores. A bachelor’s degree of a three-year program and a master’s degree of a two-year program in an Indian university is equivalent to 150 college credit hours. Any other program which gives a total of 150 college credit hours also makes the candidate eligible.

The application procedure for an Indian student

After a candidate has scrutinized their eligibility criteria, the first step is to apply for CPA in the US. Before getting through the procedures of application, let us understand the two main institutions of the CPA examination.

AICPA

The American Institute of Certified Public Accountants is the world’s largest association of accounting departments. Out of various purposes, one of the important purposes is to conduct the CPA examination. It plays an important role in the US CPA exam in various ways. It is equivalent to a university body or institute.

NASBA

The National Association of State Boards of Accountancy is the apex body of all state boards of the United States. All 55 states of the United States have different boards conducting different procedures for the application and licensing of CPA. NASBA is considered the motherboard of all such state boards of the US.

Steps for application for an Indian student

A candidate has to apply for transcripts from one’s respective universities.
After the evaluation of transcripts has been completed by the state university, the transcript has to be sent for evaluation in the United States.
The evaluation of transcripts in the US can be sent to NASBA or World Education Services or any recognised evaluation agency.
After the evaluation process is completed in the US, the respective board or agency sends an evaluation report to the state university who in turn informs the candidate whether one is eligible or not.
It is to be noted that 55 jurisdictions of the US choose their evaluators for the evaluation process. Out of 55, 53 jurisdictions accept the evaluation of NASBA.

If a candidate is sure about the jurisdiction, one can apply for that particular jurisdiction through NASBA Decided Jurisdiction.
If the candidate is not sure about the jurisdiction, they can apply for NASBA Undecided Jurisdiction. In this process, NASBA evaluates the transcripts which had been sent by the candidate to the US and suggests three jurisdictions to the candidate as per the credit score or requirements of the candidate. After that, the candidate can choose one jurisdiction.

Examination procedure of CPA

Examination procedure and pattern is the same throughout the United States for CPA. For each paper, an examination fee has to be given every time. After the application of the candidate has been accepted, the competent authority will send a notice to the candidate.

Subjects

Four papers have to be cleared by a candidate in order to be CPA in the US. The papers are:

Auditing and attestation (AUD)
Businesses environment and concepts (BEC)
Financial Accounting and Reporting (FAR)
Regulation (REG)

Syllabus

Auditing and attestation

4-hour exam
Topics covered (mostly) – personal responsibility ethics and general principles, assessing risk and development processes, forming conclusions and reporting, performing procedures and obtaining evidence.

Business environment and concepts

4-hour exam
Topics included (mostly)- Corporate governance, economic concepts and analysis, financial modelling and management, information technology, operation management.

Financial accounting and reporting

4 hours exam
Topics included (mostly) – conceptual framework and financial reporting, select financial statement accounts, transactions, state and local government accounting.

Regulation exam

4-hour exam
Topics included(mostly) – professional ethics & Federal Tax procedures, Federal individual Tax, business law, entity taxation, property transaction taxation.

Time period

All four papers have to be completed within a time period of 18 months.

Pattern

The pattern of the examination is divided into Multiple Choice Questions (MCQ), Task-Based Simulations and one Written Component.

Mode of exam

The examination will be held in an online mode.

Examination Centre

For Indian students, the candidates have the following options:

Giving examination in the US
Giving examination in any such Middle East countries where there is a recognised examination centre for US CPA.
Due to the pandemic, the US has administered the CPA exam at eight centres in India. They are as follows:

1. Ahmedabad

2. Bangalore

3. Calcutta

4. Chennai

5. Hyderabad

6. Mumbai

7. New Delhi

8. Trivandrum

Study materials available for CPA

One can get various materials on the internet to prepare for the CPA exam. There are various sample papers available on the internet. While some are available free of cost, some require some monetary charges. Some of the websites which provide sample papers are:

From various researches, there are some suggestions of CPA courses for the candidate out there:

Becker
Roger
Surgent
Gleim
Ninja

How are these courses beneficial for the candidate?

As an average analysis of all the courses the structures of these courses are as follows:

Once a candidate opts for a course, the candidate will eventually receive a study timeline based on their exam date.
Various pre-tests will be taken to determine the candidate’s efficiency on the subject.
They provide online recorded lectures, recommend textbooks, etc.
They also take mock tests.

Licensing of CPA

Different states have different procedures and eligibility criteria for licensing. However, it is to be kept in mind that a 150 credit score is a must for obtaining a licensing certificate in most of the US states. In order to get the license of CPA, a candidate has to clear:

AICPA Ethics exam
Work experience requirements
Payment for licensure fees

Monetary expenditure

The overall expenditure for US CPA is at a higher end. It takes almost 4 lakhs approximately in India for a candidate to become a US CPA. This cost includes application expenses, examination fees, travel fees, subject material fees, licensing fees, etc.

Application expenditure

For transcripts, it requires almost 1500 INR for a bachelor degree and for a master degree or any other equivalent course it requires 1700 INR approx.
Application fees can be given only once, provided the student has filled in all the details of four papers.
The application fees differ from state to state.
The expenses for sending those transcripts to the US and evaluating them requires

Through NASBA Decided Jurisdiction – $225 approx
Through NASBA Undecided Jurisdiction – $350 approx
Through Joseph & Silny – $190 approx

There are also certain other foreign evaluators who more or less require this expenditure as stated above.

Examination expenses

Each subject requires examination fees (per 4 papers).
Examination fee differs from state to state.
In India, a candidate giving an examination of US CPA is required to spend approximately INR 2,00,000 without a training fee.

Licensing expenses

It differs from state to state.

Scope

There are multiple opportunities for a Certified Public Accountant. One can work in various fields starting from accounting, auditing, US taxation, consulting, etc. One can also opt for business, freelancing, etc. The average pay scale of a US CPA in India is 7 lacs approx. However, one can check their job requirements and payment scale on PayScale or any other website. The US CPA gives global exposure rather than concentrated US job opportunities. The two most established fields are auditing and taxation. These two fields are considered financially best both from India and an international perspective. However, other fields like accounting, consulting also give huge salaries and career growth to US CPA candidates.

In India

Indian based companies like KPMG, PwC, Deloitte, EY, etc have a large number of the US clients that require US CPA candidates for auditing, taxation etc. Certain other companies in India are US based and have offices in India. In such offices, the US CPA candidates are strongly recommended.

International

Popular US-based companies like Apple, Amazon, Capgemini, Cognizant, etc require US CPA candidates for US taxation, auditing etc. As already stated above, US CPA gives exposure globally, so it is suggested that a candidate wants to opt for US CPA must-have service choices not only in the US but also outside the US. The immigration laws for an Indian to the US only based on US CPA are quite different and complicated than other courses

Conclusion

CPA is a very promising component in one’s career growth. If a candidate wants to opt for CPA, one should research very well and choose their jurisdiction as per requirements. It helps in career development, gives career security, job satisfaction and various monetary benefits.

Join us for an exclusive 3-day boot camp on – International Opportunities for Chartered Accountants / Company Secretaries in US Corporate Law from 9th to 11th October, 6-9PM.
Click here to register.

References

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Looking for the authors behind works created autonomously by AI machines

By

Abanti Bose

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October 9, 2021

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This article is written by Md. Omar Faruque Munshi, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).

Table of Contents

Introduction

Earlier computers were seen as a tool programmed to provide output to input data and aiding only the process of human works. But at present, with unprecedented levels of technological development, scientists have been able to create computers programmed with artificial intelligence (AI) with which they are able to perform works like human thought creation. With the inserted data, these AI computers acquire cognitive power (i.e. learn by applying its machine learning software) and produce intellectual works. Now the AI-generated computers are being used to write analytical news, music composition, create paintings, compose literary creations, and many such intellectual works. This gives rise to the debate whether patent or copyright protection can be given to such AI-generated works. Under the Intellectual Property law (IP law) the said protection can be obtained for the “original intellectual work of the author” and the traditional legal notion of “intellectual work” is ascribed with human thinking only. Thus legal complexity arises with regards to the IP claim for those AI-generated works. This article examines the traditional position for IP rights to AI-generated works, the relevance of the claim, commercial necessity, the existing lack in formulating principles or standards granting or denying the IP rights, and possible way out.

Traditional legal position

Under the traditional legal formulation, copyright exists in the literary, dramatic, musical, or artistic work if they qualify originality of the author, and the traditional notion of “originality” refers broadly to the “creations of the human mind’. Whereas neither of the two major international laws on Intellectual property, the Berne Convention and the TRIPS Agreements, provided the standards for originality requirement, the formulation of this requirement has been largely vested upon the national laws of countries’ themselves based on their own legal system and their economic and social requirements. Under the laws of most of the countries of the European Union, Civil Law Legal System and Common Law Legal system the conception of the term originality is attached with the creation of “author’ intelligence”, in other words to “human mind”, and thus it excludes the copyrightability of the work produced by “artificial intelligence”. An example of this traditional root can be referred to the recent judgment published by the European Patent Office (hereinafter EPO) in “DABUS Case (filed November 2019, Judgment 27 January 2020)”. This judgment pertains to the patent application for AI invention; however, it is also applicable to copyright as both are granted on the same or similar criteria “the novelty or originality of the work”, and also that the legal issue decided in the case was the same for copyright also. In the “DABUS Case”, an individual filed two patent applications Nos. EP 18 275163 and EP 18 275174 which were refused by the EPO on the grounds of not fulfilling the requirement of the European Patent Convention (EPC) which required for “human inventor” to be designating the patent right.

In both the said applications, a machine “DABUS” is designated to the invention using its artificial intelligence (AI) for which the applicant claimed the patent right as the owner of the machine. In refusing the patent applications the EPO held that the interpretation of the legal framework of the European patent system requires the inventor must be the “natural person”, and such inference can also be concluded from the internationally applicable legal standard, as well as decisions of various national courts. The designation of an inventor also bears a series of rights and legal consequences which can be exercised by a natural or legal person only. The machine as the inventor for the patent cannot have such legal personality to exercise those rights.

In Japan, the judgment of the Tokyo High Court dated February 19, 1987, in the Election Tip Sheet case (Hanrei Jiho, No. 1225, p. 111 ) expressed the view that only human created works fall within the definition of copyrightability.

The “U.S. Reports: Trade-Mark Cases, 100 U.S. 82 (1879)” at page 94 stated that “while the word writings may be liberally construed, as it has been, to include original designs for engravings, prints, etc., it is only as original, and is founded in the creative powers of the mind”.

Article 2(2) of the Copyright law of Germany, 1965 (as amended up to 8 May 1998), defined the protected works for copyright purpose as the work of “personal intellectual creations alone”. Such a definition will also exclude the copyright to AI-generated works for its falling short of the creation of the human mind (i.e. individual’s intellectual creation).

The necessity for granting IP to AI-generated works

Since launched in the 1950s towards developing AI technology, now the increasing reality is the extensive use of AI in different fields of arts, literature, paintings, music composition, science, health, etc. We have seen the use of AI-generated Robot Sophia and Hanson in health services during the Covid-19 pandemic. The robotic system AARON (1995) can paint on canvas using the robotic hand by using artificial intelligence. In October 2018, an AI autonomously generated art was produced by Edmond de Belami which was Auctioned for 432.500 USD (The New York Times, Oct. 25, 2018). Earlier in 2016, another AI-generated 3D printed painting titled “The Next Rembrandt ” was presented which was made autonomously by the computer using AI algorithms based on 168,263 paintings of a 17th Century’s great artist Rembrandt. AI-generated music compositions are being used in creating games, videos, cartoons, video learning programs that are intended for commercial use and made with great investment behind those.

Now if by the simple reason of machine produced, these AI-generated works are denied IP rights and open to use by anyone, then what will be an incentive for those who might plan to invest their huge money, labour, and time in producing them? Thus it is in the social and economic interest that IP protection should be given to those works.

The said necessity for reforming the existing IPR policy has also been expressed in India the Report No. 161, dated 20 July 2021 of the Parliament of India. The report acknowledged the creativity of AI and its increasing influence at present time activities stating that “AI-based programs can produce music, draw paintings, write literature, conceive inventions and automate, speed up and ease day-to-day tasks for humans”. It is expressed that, “the benefits from AI-related innovations, if drawn in an optimal manner, would add USD 957 billion by 2035 to the Indian economy. However, in order to extract benefits from AI, revisiting IPR legislation and implementing a strong IPR framework is desirable”.

Finding the possible way-out for granting IP to AI-generated works

On the above-mentioned necessity of granting IP to AI-generated works, the question then arises to be resolved, to whom the IP right belongs. Certainly, the machine should not be eligible for IP protection whatever the autonomous nature exists or the least interference of human direction is in creating the work using the AI system. There are two ways to arrange IP protection for such machine produced works;

(i) Enact legal provision giving the IP protection for the AI-generated works to the programmer who has programmed the machine to produce such works using AI system; or

(ii) IP protection is given to the user who has planned and invested in such production. In the first case if the programmer is given IP rights for the AI-generated works, then the production will be limited to one who himself programmed the machine for use in the concerned field.

Then for the IP right in each and every item of the work produced by the user through the AI system is to be registered with the programmer or licensed from him. But it is not a commercially viable thing for the user and he will lose encouragement in investing and planning production using AI systems. In the second case, if the IP right on the AI-generated work is to be given to the user of the AI system, then the question remains to be decided as to what extent such IP right can be exercised by him (for example, whether the IP right shall be given over the single item of production; or to all such items that he may produce in the particular field using the AI system; and if so granted then what will be the rights of other user using the same programmed machine, etc.).

In this respect Section 9(3) of the UK Copyright, Designs, and Patent Act, 1988 is worth referable here which provides that “in the case of a literary, dramatic, musical or artistic work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken.” This provision although recognized the granting of copyright to the AI-generated works, but the term “author” for the purpose of granting copyright here is also not clear, i.e. whether it is the human user of the AI-system for the work created, or whether is the original programmer of the AI who has programmed the system for such creative works. The same lack of clarity is also found in Section 2(d)(vi) of the Copyright Act, 1957 of India which recognized the human authorship in AI-work providing that, “in relation to any literary, dramatic, musical or artistic work which is computer-generated, the person who causes the work to be created.”

The research by Daria Kim (2020) p.444, para 2), commented this obscurity led by the lack in the determination of some important issues, firstly, comparative to the legal debate towards granting IP rights and legal researches on this issue, seemingly there is “non-existence of technical inquiries on the very source of concerns, the phenomenon of ‘autonomous generation’ of inventions’ by computers”. In the same way taken to the context of the patent law, at the advent of AI system, towards the issue “how the patent law needs to be adjusted” to grant the patent to AI-generated inventions, the policymakers “neither provide an operative technical definition of such inventions, nor clarify how they differ from AI-aided inventions, nor review the technological state of the art.

Now apart from the said inquiries and related lack of information, here it is worth mentioning that, it has not always been the case that the ownership of copyright is granted to the creator or author himself only. There are some exceptions of circumstances in which the first ownership of copyright is given to another person other than the author himself. For example, Section 17 of the Indian Copyright Act, 1957 made several exceptions wherein the first owner of the copyright is given to a person excluding the author or creator, such as the employer shall be the first owner of the copyright of the work where it is produced upon a contract of employment and under the instruction of the employer. Similarly, provisions are made for providing copyright of any “address or speech” delivered in public to such other person on whose behalf such speech or address is delivered by someone; or to the person who arranges such address or speech to be delivered, or to the person on whose behalf or premises such address or speech is delivered. A similar provision is also found in the Japanese Copyright Act, 2018 (Section 2, Article 15) providing that where a work is commissioned, the employer or the organization (i.e. the juridical person) who had engaged such work to be made and makes public as a work of its own authorship shall be treated as the author for the purpose of copyright. Using this instance of granting copyright other than the author, the IP right in the AI-generated work should not be denied as a machine author (as held in DABUS Case), but to the person who has employed it to create. The copyright in the AI-generated works may be granted to the user who employed the system to produce the innovative work, whereas, the programmer can enjoy the patent of the system. Thus a harmonized balance may be arrived at for the IP right both for the programmer and the user.

Once again, Article 2 of the Berne Convention states that the expression ‘literary and artistic works shall include every production in the literary, scientific and artistic domain, whatever may be the mode or form of its expression. The Article thereafter provides a list of a number of modes or forms of such expression of literary and artistic works in which copyrights are available. But the said list is not exhaustive. The national copyrights laws of different countries protect other modes or forms of expression of works in the literary, scientific, and artistic domains. Computer programs are a good example of a type of work not included in the said list but it is protected under the copyright laws of a number of countries as well as under the WIPO Copyright Treaty (WCT) (1996).

Pioneering legal solution by the China Court to the issue

In a recent China case Shenzhen Tencent v. Shanghai Yingxun, (2019) (hereinafter referred to as “Tencent Case”), the court is found to have made a balance between the traditional legal requirement of copyright protection (i.e. the original creation produced by the labour of human intellect) to the work produced by AI system.

Facts of the Tencent Case

The plaintiff company “Shenzhen Tencent Computer System Co., Ltd.” (hereinafter referred to as “the plaintiff”), is the owner of an “AI writing assistant software” named “Dreamwriter”. The plaintiff in its website on 20 August 2018 published an AI-generated Article titled “Afternoon Comment: Shanghai Stock Index Rose Slightly by 0.11% to 2671.93 points, led by communications operations, oil exploration and other sectors”. The method applied for generating the Article was that the plaintiff used the software Dreamwriter to collect and analyze the text structure of stock market financial Articles. Based on the needs of different types of stockholder readers, the Dreamwriter formed the Article structure according to the plaintiff’s unique expression of wishes. Then it uses the stock market data collected to complete the writing and publish the Article in 2 minutes after receiving the data (that is, 2 minutes after the end of the stock market).

Thereafter, the defendant company, the Shanghai Yingxun (hereinafter referred to as “the defendant”), without the plaintiff’s permission and authorization, reprinted the article on its website on the day it was published. The plaintiff then sued Shanghai Yingxun Company for infringing its copyright and unfair competition.

The decision of the case centred on the issue of whether the said AI-generated Article can be treated as “creation” under copyright law to qualify copyright protection.

In deciding the case, the court did not go against the traditional notion of copyright eligibility, i.e. “the creation of the labour of intellect”, but made a balance between the said traditional notion with the new circumstances of the case. For granting the plaintiff the copyright on the said AI-generated work it based its finding on the reasoning pointed out below:

The human arrangement and selection of the data input, trigger conditions setting, as well as the template and corpus style selection by the Dreamwriter development team which were the main intellectual force directly related to the specific expression of said AI-generated Article.
It is not solely the Dreamwriter’s automatic operation, but the way that the software runs automatically reflects the choice of the plaintiff’s development team.
From the analysis of the generating process of the said AI-generated Article, its expression was dictated by the individualized arrangements and choices made by the relevant personnel of the plaintiff’s creative team, and thus the work in question involves a certain degree of originality and belonged to the written works protected by China’s Copyright Law.

In relation to AI-generated work for copyrightability, the UK Copyright, Designs and Patent Act, 1988, in Section 9(3) conferred the copyright to the person by whom the arrangements necessary for the creation of the work are undertaken. However, this provision is unclear as to the meaning of “the person” behind the arrangement of the work, whether it be the programmer or the user or the other, for example, organization. This obscurity has already been pointed out above in this paper.

Present steps by WIPO on developing the IP law for the AI-generated works

The conversation for reforming the current IP legal framework on the scope of extending IP rights to AI-generated works started with the initiative by the Intellectual Property Organization (WIPO). The First WIPO Session of this conversation was held on 27th September 2019 followed by the publication of “the Draft Issues Paper on IP Policy and AI” on 13 December 2019 (the First WIPO Issue Paper on IP Policy and AI). The said publication of the Issue Paper was a part of ongoing consultations towards reaching a principled formulation for IP law on AI-generated works. On May 21, 2020, it published the revised issues paper as part of said ongoing consultation. Thereafter the Second and Third Conversation Sessions were held on July 7-9, 2020, and November 4, 2020. The WIPO Conversation on IP and AI, the Fourth Session is stated to be held in 2021, the actual date is yet to be fixed.

The underlined issues in the said consultation papers of WIPO manifest that there are lots of questions to be resolved relating to the formulation of legal principles and policy for granting IP rights to AI-generated works. Some of these issues as quoted in the WIPO the revised issues paper dated May 21, 2020, are mentioned below.

IP issues on patents to AI-generated works

Do AI-generated inventions require patent protection or a similar incentive system at all?
Should the law require that a human being be named as the inventor or should the law permit an AI application to be named as the inventor?
If a human inventor is required to be named, should AI-generated inventions fall within the public domain or should the law give indications of the way in which the human inventor should be determined?
If an AI application is permitted to be an inventor should the AI application be considered a sole inventor or should joint inventorship with a human be required?

IP issues on copyright and related rights to AI-generated work

Do AI-generated works require copyright or a similar incentive system at all?
Should copyright be attributed to original AI-generated literary and artistic works or should a human creator be required?
If copyright can be attributed to AI-generated works, can the AI-generated works be considered original?
If copyright can be attributed to AI-generated works in whom should the copyright vest? Should consideration be given according to a legal personality to an AI application where it creates original works autonomously so that the copyright would vest in the personality and the personality could be governed and sold in a manner similar to a corporation? How would this interrelate with moral rights?
If copyright can be attributed to AI-generated works, should related rights extend to sound recordings, broadcasts, and performances?
If a human creator is required, who are the different parties involved in creating an AI-assisted work and how should the creator be determined?
Should a separate sui generis system of protection (for example, one offering a reduced term of protection and other limitations, or one treating AI-generated works as performances) be envisaged for original AI-generated literary and artistic works?
In the event copyright cannot be attributed to AI-generated works or that the works are protected by a sui generis system of protection, will this incentivize concealment of the involvement of AI? Should there be a system to prevent such behaviour? How could such behaviour be detected? Should each work have a log of acts of the creative process leading to a protectable work and transparently identify the acts of each participant?

Conclusion

For the modern necessity, the use of AI-generated works is an increasing reality in different fields. The ongoing initiative at both the national and international levels is expected to find the principled formulation for IP to AI-generated works very soon. This Article reflects that the complexity in finding the legal solution of the issue can be simplified with the legal interpretive approach adopted by the China court in the decision of Tencent Case (2019) reconciling the traditional notion for IP protection of the work “produced on the labour of human intellect” with the AI produced work. These AI works cannot be seen as the autonomous AI system, rather the output or expression as dictated by the individualized arrangements and choices of relevant personnel of the creative team behind the work. Thus, certainly, the originality of the work for IP protection cannot be denied. Further that, this article referred to the fact that under the existing law also it is not always the case that the copyright is issued only to the author or creator of the work himself, rather the law provided for exceptions granting copyright to the person behind the work created, the person who has employed the creator or made arrangement for the work to be produced, for example, Section 17 of the Indian Copyright Act, 1957; and Article 15 of Section 2 of Japanese Copyright Act, 2018.

References

World Intellectual Property Organization (WIPO) (2016), “Understanding Copyright and Related Rights”, page. 3, stating that “copyright legislation is part of the wider body of law known as intellectual property (IP) which refers broadly to the creations of the human mind.”
https://www.loc.gov/item/usrep100082/
https://rajyasabha.nic.in/rsnew/Committee_site/Committee_File/ReportFile/13/141/161_2021_7_15.pdf
https://doi.org/10.1093/grurint/ikaa061
Tencent v. Yingxun Tech 深圳市腾讯计算机系统有限公司与上海盈讯科技有限公司著作权权属、侵权纠纷、商业贿赂不正当竞争纠纷一审民事判决书 – China Laws Portal – CJO (china justice observer.com)
https://www.wipo.int/edocs/mdocs/mdocs/en/wipo_ip_ai_2_ge_20/wipo_ip_ai_2_ge_20_1_rev.pdf

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Analyse sole proprietorship as a business structure for startups in India

By

Abanti Bose

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October 8, 2021

0

This article is written by Muhammad Aslah pursuing Diploma in Business Laws for In-House Counsels from LawSikho. The article has been edited by Aatima Bhatia (Associate, LawSikho) and Dipshi Swara (Senior Associate, LawSikho).

Table of Contents

Introduction

People who are crazy enough to think that they can change the world are the ones who do. Have you ever heard of this famous quote by the pioneer of technology and the founder of Apple; Steve Jobs? If not, the statement is true in the real world. Entrepreneurs in this world create some magical things. Many of them have turned the impossible into possible. Success doesn’t come overnight. Like any entrepreneur, they also started creating or manufacturing with the available resources. It would be incorrect to say that these companies were MNCs from the beginning. We can take an example and prove it. Amazon initially started in a small room. Similarly, the founder of Adani Group only had Rs.100 to his name when the company was created. Hence, hard work and consistent preparation make an entrepreneur reach new heights.

A startup is a term used to describe a company started by an entrepreneur to execute a scalable business idea. For starting a business, many founders used the start-up model at their company’s initial stages of preparation. In India, we can see many startups coming into the picture. There are four categories of business structures. A business structure for an entrepreneur needs to be selected with utmost care or else it may lead to a disaster. One such example is the failure of Dhoodwala. Dhoodwala was a start-up that gave fresh bottles of milk to its customers via online bookings. Despite being able to raise funds through several investors, the start-up couldn’t last long. Hence, choosing the right business model is of immense importance for the startup. The author through this article talks about sole proprietorship and its usage as a business structure for various startups.

What is a sole proprietorship?

A sole proprietorship is one of the best kinds of start-ups in India. In a sole proprietorship, there exists only one owner. According to Investopedia, a sole proprietorship is an unincorporated business that has just one person who pays personal income tax on profits earned from the business. This type of business is most suited to newer startups due to limited legal compliances. It can help in reducing the extra financial requirements for the co-founders of a start-up. In a sole proprietorship, the income earned through businesses is paid as personal income. Thus, there is no requirement for a separate legal entity and income tax category. For example, if A and B start a small business selling natural tea, then their income from selling tea can be paid under personal income. Later on, if A and B expand their business structure into a large company, then it will be necessary to pay taxes as separate income. Hence, turning a startup into a sole proprietorship has its pros and cons.

Difference between a sole proprietorship and other business structures for startups

Setting up a business structure is the first step that the founders of a new idea decide upon. It commercializes its products or services. Commercialization of their products or services allows them to generate revenue and net profits. For any start-up, the first step is deciding on a business structure. The start-up needs to take this decision through meetings and discussions. Selecting a proper business structure is eminent for a startup. Any failure to do so shall result in failure. In India and globally, there are six main categories of business structures. A start-up can choose between any of the below mentioned through proper analysis and decision-making:

FEATURES	SOLE PROPRIETORSHIP	ONE PERSON COMPANY	PARTNERSHIP	LIMITED LIABILITY PARTNERSHIP
Registration	No separate registration is required.	It is necessary to register under the Companies Act 2013.	It is not necessary to register the partnership firm but it is recommended to get registered as per the Indian Partnership Act 1932.	The registration is mandatory along with the LLP Agreement as per the Limited Liability Partnership Act 2008.
Status of legal entity	No separate legal entity as the proprietor and the entity are the same.	A separate legal entity is required as the shareholders, one person company are considered as different.	A firm is not a legal entity. Therefore, it has no legal identity distinct from the personalities of its constituent members.	The limited liability partnership has a separate legal entity.
Status of conducting the meetings	There is no need to conduct general meetings and board meetings.	One person company is exempted from conducting general and board meetings.	A partnership firm is required to conduct the board and annual general meetings.	The limited liability partnership firm is not exempted from conducting the board and annual general meetings.
Liability	Unlimited liability as the liability of the proprietor extends to his or her assets.	Limited liability to the extent of holding shares in the company.	The partners of a partnership firm have unlimited liability as any debts of the firm can be incurred from the personal assets of the partners.	The partners of a limited liability partnership firm have limited liability to the extent of holding shares in the firm or the company.
Conduct of Audits	An audit is needed to be conducted only if the turnover threshold exceeds Rs. 1 crore in a financial year as per the Income Tax Act 1961.	One person in the Company is required to conduct the audits and file the financial statements to the Ministry of Corporate Affairs.	The conduct of auditing in a partnership firm is not compulsory but recommended to do the same if the total turnover threshold exceeds Rs. 1 crore.	It is mandatory to conduct the process of audits in a limited liability partnership firm or a company under Rule 24 of LLP Rules, 2009.
Status of the succession of the business	There is no succession in a sole proprietorship as the business comes to an end with the death of the owner or owners.	The death of the shareholder does not at any cost impact the existence of the company.	For the succession process, an explicit mentioning in the partnership deed is required to admit one person as the successor of the dead or insolvent partner.	The limited liability partnership firm has a perpetual succession with the legal heirs admitting into the firm via death, exit or insolvency of a shareholder or partner.
Securing of finances	The securing of a fund or finance is based upon the track record of the proprietor.	The securing of a fund or finance is based upon the track record of the one-person company.	The securing of finances or a fund is based upon the financial health of the partnership firm.	The securing of the finances or a fund is based upon the financial health of the limited liability partnership or the company.
Status of debt or loan repayment	The sole proprietor is responsible for repaying the debts and loans secured through banks, non-banking financial corporations and so on.	The one person company is required to pay the loans and other debts and not the sole shareholder.	The repayment of loans and debts is needed to be repaid from the form failing to do so can be extended to pay from the personal assets of the partners.	The repayment of debt or loan must be paid by the limited liability partnership firm to the extent of loans or debts taken failing to do shall not exceed the personal assets of the shareholders.
Legal compliances	In a sole proprietorship, there are fewer legal compliances.	In a one-person company, the legal compliances are much more compared to a sole proprietorship.	The legal compliances are much more; such as conducting of meetings, tax payments and so on.	The legal compliances are much more such as mandatory audits, registration, income tax return filings and so on.

How is a sole proprietorship business model beneficial for startups?

Selecting an appropriate business model for the start-up is quite risky. It takes time to think, rethink and arrive at a conclusion. Most of the startups in India and around the world had chosen the sole proprietorship model, initially, as a business structure. Some examples are Flipkart, Snapdeal, Coca-Cola, Apple, Hewlett-Packards, etc. They all started something small alone and made it grow into a giant company. The reasons why a sole proprietorship can be beneficial for a startup are as follows.

No registration is required

Registering a sole proprietorship firm is not necessary for India. It can be used as an added tool to test the services or products of a startup. Any person or a group of two persons can start a sole proprietorship within their comfort zones. Having a small office or room for a sole proprietorship is not mandatory. A start-up can start sole proprietorship by using their personal Permanent Account Number (PAN) and other personal details.

No additional operation costs

Operating a sole proprietorship firm is less expensive compared to other business structures. The co-founders of a start-up can start the business within their own homes. There is no separate legal entity in the business structure and this might mean that the owner faces unlimited liability but the operation costs are low. Moreover, it helps in saving some funds as a balance for other purposes of the startup.

No liability to others

A sole proprietorship is a business model in which there are no major liabilities. The nature of liability is unlimited owing to the absence of a separate legal entity. But that doesn’t mean that the start-up needs to bear the costs of others. It needs to only bear the costs incurred during the time of establishing the startup. Any liability that needs to be covered out of the sole proprietorship firm can be taken from the personal assets to the extent of the liability. Hence, mitigant liability costs are compared to other business models.

Secrecy

In a sole proprietorship company, the proprietor is in a position to keep his plans to himself as the entire management and control of the business is solely in his hands. This prevents the disclosure or leakage of any confidential information or ideas with respect to the business.

Conclusion

A startup is a method that can be used to convert new ideas into great ventures. The establishment of a company is not easy. It requires choosing a business model among the other business models. The business model of a sole proprietorship is one among them. It has its own added benefits as well as nuances. Therefore, start-up founders should choose their start-up model with care and caution to further reduce the risks for the start-up.

References

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Fashion and copyright : a thin line between inspired and copied

By

Rachit Garg

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October 8, 2021

0

Copyright Law — Image Source -https://rb.gy/omzllu

This article has Pancham Rathod, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Dhruv Shahame (Associate, LawSikho) and Ruchika Mohapatra (Senior Associate, LawSikho).

Table of Contents

Introduction

It is common knowledge for artisans that it is acceptable, in fact, it is appreciable to copy while learning and it is wrong to copy while selling. The evolution of any field of arts, especially fashion and designing, progresses from inspiration from the well known and popular pieces of art and creating something new out of it. The argument between “Who did it first?” and “Who did it better?” for getting the credit is ancient. In today’s market, striving to become fair, there are certain restrictions on copying designs that are copyrighted by the artists.

In the US, fashion designs aren’t protected by copyright laws and anything printed on a clothing item is no longer considered art. The reasoning for this is that apparels are too utilitarian to qualify for copyright protection. This gives free rein to manufacturers in the clothing industry to copy whatever is trending. This is not the case everywhere. In India, designs on clothes can be protected under the Design Act, 2000. Through this article, the author seeks to differentiate between inspired and copied, through exploration of the subject of fashion in terms of counterfeiting and how it is a deliberate attempt to profit from the original brand’s idea, things to be kept in mind while taking inspiration from someone else’s work of art, the impact of rampant copying in designs leading to dynamism in the trends of the fashion industry and what is there to lose for the designers.

Copied and inspired designs

A copied product can be either a knock-off or a counterfeit depending on how far the product is copied. Any fashion apparel can be called counterfeit if the product is the exact copy of a branded product also bearing the brand name or brand logo but not manufactured by the brand and is manufactured and sold illegally by a third party. This is not just in violation of the Copyrights Act 1957 and Design Act 2000 but also violates the Trademarks Act 1999 in India. Selling a look-alike product in another company’s name is universally a crime. In the year 2018, Forbes stated that counterfeiting is the world’s largest criminal enterprise. In developing countries, there is a popularity of famous brands while the majority of the population cannot afford them. The concept of “first copy” fashion is to provide the population with affordable clothing which looks exactly like the branded ones in trend, especially with the trademark.

There is no doubt in the fact that counterfeiting isn’t just a theft of intellectual property but is also a theft of identity as well which can cause the original brand significant commercial losses. It is a common sight to see the sale of counterfeit apparels , be it clothes, shoes or other accessories being sold by street vendors without any establishment at unbelievably cheap prices and it is common knowledge that these are not the original brand’s products but rather a first or second copy of the original product. Even though it does not sound like a very serious offence there must be awareness about the same.

On the other hand, we have knock-off brands, which can be described as real brands which claim their products have exactly the same designs and features as that of the original product. Knock-off brands often use the argument that their product is not copied but is merely inspired by the original. This is the epicentre of the entire debate of “copied” vs “inspired” and it is not really difficult to differentiate between them. This can be accomplished only if there is adequate awareness about what is inspired from what, which in reality is not the case.

There might be no infringement of trademark in the case of knock-off brands but lifting up the original designer’s work and showcasing them as their own is unethical and is a daunting experience for the designers. In most of the countries in Europe and India, fashion designs can be protected and the knock-off brands can be taken to court. In the United Kingdom there is a protection of 70 years on copyright for a design whereas in France the protection is for 100 years. In India, laws do exist which protect the designs of fashion designers but it appears that there are ways to work around these laws and the enforcement of them is inadequate.

In the case of Ritika Private Limited vs Biba Apparels Private limited ( 2016 ), the plaintiff Ritika Private Limited is a boutique apparel designer brand and was the first to copyright a design that was commercially in use by the defendant Biba Apparels Private Limited, a well-known brand for ethnic wear. The suit was to provide an injunction on production, selling, printing, publishing, or offering the prints or garments using the design by Biba Apparels. To the surprise of the Plaintiff, the court went in favour of the defendant stating that the copyright was granted under the Copyrights Act, 1957, and according to which as the reproduction of the design in question exceeds fifty times, the designer loses her copyright on the design.

The correct tool to be used to protect this design was the Designs Act 2000. The lawsuit was counterproductive for the plaintiff. Hence, awareness of ways to protect intellectual property is important to be understood by designers who would like to defend themselves from other brands to exploit them.

True inspiration

An artist doesn’t have to find inspiration in the same field, the inspiration comes organically from nature. Stella McCartney’s Spring 2020 was on the theme of the exquisite nature surrounding us and she brought it to the apparel in vivid colours.

The inspiration can also come from other forms of arts, exotic cultures, architecture. The most common source of inspiration for designers is the streets. Finding uniqueness in the mismatching attire worn by someone can be intriguing. The concept of worn-out jeans and rags became fashion trends because somewhere a designer got inspired by someone wearing torn jeans publicly calling it streetwear.

Designers who are considered to be artists can not just sell other designers’ work as their own. Art is believed to be original when an artist creates something beautiful out of nothing. There are innumerable instances when fashion designers from popular brands take inspiration from their fellow fashion designers and it is still acceptable if the inspired product is completely different from that of the one it is inspired from.

Fast fashion

The major cause of rampant copying of fashion designs in the industry is the recent concept of Fast Fashion. Fast fashion is the concept of increasing the number of seasons from 3 every year to 52, making every week a brand new season with a new collection. In order to come up with so many designs so frequently, the biggest two fast fashion houses Zara and H&M frequently copy the works of other fashion designers, big or small, changing the design maybe a little but the similarity is enough to make it look like the original. In the USA, the knock-off fashion products are ready within days of a fashion show, in fact even before the original design is brought to production for commercialisation.

For luxury brands, which function on the principles of Veblen goods (goods for which the demand increases as the prices go up in apparent contradiction to the law of demand) and conspicuous consumption (spending money to display economic power of income or accumulated wealth of the buyer), fast fashion is an imminent threat. As the saying goes “If everyone has it, no one wants it.”.

A British designer, Stella Maze came up with a design Stella Hues Nicholette booties in 2013 and launched it in 2016, which was evidently lifted up by the American Fast Fashion house Zara in December 2018, with the description “ocean blue leather shoes” as it is the selling point of Stella Hues Nicholette booties. If this happens to a designer starting out in the field of fashion designing, it would be devastating for his/her career and could lead to the shutting down of their company.

It is worth mentioning that Fast Fashion houses, while being extremely successful businesses, don’t just infringe upon the intellectual properties of the designers, it also has a detrimental impact on the environment. It takes 2720 litres of freshwater to manufacture a T-shirt and 10,850 to manufacture a pair of jeans. A single pair of Jeans takes more water to manufacture than a human can drink in over 2 decades. Due to Fast Fashion, no one wears one piece of clothing more than three times and just throws them away. Fast Fashion houses manufacture their clothes in poor developing countries where there are very weak labour policies. The clothes are often made by children who are prone to an extremely dangerous work environment due to no emphasis on safety standards. The infamous Rana Plaza incident in the year 2013 killed over a thousand garment factory workers. No amount of greenwashing can change this major flaw in their business model.

INSPIRED v. COPIED

“Good artists borrow, great artists steal” (mis)quoted by Steve Jobs was previously quoted by Pablo Picasso as “Lesser artists borrow; great artists steal” who simply rephrased Igor Stravinsky, even though all sayings can be said to have originated in T. S. Eliot’s dictum: “Immature poets imitate; mature poets steal”. Ironically, the origin of the quote in itself is an example of great artists stealing. The meaning of the quote iterated by so many great artists over a century is simple. An artist must be aware of what is specifically inspiring in other’s art and make it his/her own by building on to it or presenting it in an entirely different way.

Countries like the USA tend to make decisions based on what is healthy for the economy of creative industries rather than based on what artists deserve. Springman believes that it’s actually the ability to copy that promotes economic progress. Fashion designers take “inspiration” from existing designs and they do it in abundance. When the copying proceeds to a certain point, fashion-forward people would have had enough and they jump off to the next trend that copying itself has helped to set. This rapid cycle created by the freedom to copy actually forces the fashion industry to innovate new designs.

Conclusion

In the world of fashion, there are many challenges for the industry to be fair as the laws to recognise and protect intellectual property are not homogeneous, there is no sensitisation among the consumers about their choices and how it impacts the evolution of the fashion industry. As a designer, it is of the utmost importance to know what laws can be used to protect their intellectual property and how to not cross that thin line between copied and inspired.

References

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Career opportunities for Indian Chartered Accountants

By

Rachit Garg

-

October 8, 2021

0

professional-male-lawyer-judge-working-with-contract-papers-documents-gavel-scales-justice-table-courtroom-law-legal-services-concept_28283-1373 — Image source: https://bit.ly/3aDL6IL

This article is written by Anindita Deb, from Symbiosis Law School, NOIDA. Through this article, she discusses the scope of CA as a career option and the wide range of opportunities available to Indian Chartered Accountants within India and abroad.

Table of Contents

Introduction

Chartered Accountant (CA) is emerging as one of the most well-paying and reputed professions in India and abroad. All the big institutions and business organisations need a team of Chartered Accountants to handle their transactions and accounts. It is widely claimed that CA is an institution in itself. After becoming a CA, you not only get a good job yourself, you also become a job provider. You become a member of the Institute of Chartered Accountants in India (ICAI) after passing the CA Final exams and completing the required training. You can now add the CA prefix to your name. As a Chartered Accountant, you have virtually unlimited options when it comes to career opportunities. This article provides you with various opportunities that open up once you officially become a Chartered Accountant.

Functions performed by a Chartered Accountant

Chartered accountants are fully qualified accountants who have a wide range of responsibilities. They evaluate and give information on financial records, which generally include financial reports, taxes, corporate finance, business recovery, and insolvency. They are often in charge of reviewing accounts and providing financial advice that the client can use to save money or boost profitability.

A chartered accountant is a crucial pillar in a country’s economic development. Because of their experience and skill in the fields of finance, taxation, stock market, and company law matters, FOREX, and other financial issues, Chartered Accountants have a unique perspective on how to address financial problems. They assist even the average citizen or nation’s resident in comprehending the rules and regulations. Thus, Chartered Accountants are rightfully referred to as ‘partners in nation-building’.

Career scope for CAs in India

Chartered Accountants (CAs) are in high demand in India, with a variety of career opportunities ranging from entrepreneurship to working in private enterprises and government organisations. Furthermore, Chartered Accountants have a sense of job security and various opportunities in India for a variety of reasons. The types of jobs available in the private sector for CAs are largely determined by the company type and location. Job opportunities in more refined and specialised skill sets are more plentiful in large companies. Chartered Accountants’ ability to expand is also determined by their ability to keep up with new and emerging technologies and practices.

Furthermore, the scope of CA is broad, and there are numerous work opportunities. They are in high demand across all industries, and as a result, they have a diverse range of possibilities.

Career options and opportunities

CAs can find work in a variety of fields. They could serve as financial reporters, financial strategists, investment advisors, mergers and acquisitions advisors, and so on. Some of them are as follows:

Goods and services tax

Ever since the Goods and Services Tax (GST) was implemented in India, the number of job prospects for a Chartered Accountant, who is familiar with the new tax system, has expanded significantly. Providing GST services is a lucrative job for a CA and may be easily turned into a business.

Internal Audit

Because of the increase in rules and regulations for businesses, the demand for internal auditors is increasing. Auditors are needed to check records, procedures, paperwork, and asset and liability verification. Internal auditing is a profitable field for CAs.

Startups

With the rising number of startup enterprises in India, there is a greater demand for the financial management of these new businesses. CAs can engage with these startups to identify creative and new growth potential in these new concept companies.

Taxation

There are many CAs who help people and corporations with their taxation. They examine their clients’ enterprises and recommend a tax structure that is efficient based on their findings. As India’s population of income taxpayers grows, this sector continues to expand.

Mergers and acquisitions

As consultants, CAs oversee their clients’ mergers and acquisitions cases. Their responsibilities include determining the viability of procuring businesses depending on their performance. The position is a high-ranking one with numerous prospects for growth.

Wealth management

Financial and investment counselling, tax services, accounting, and retirement planning are all services provided by wealth management. Wealth management as a career is in high demand, and CAs that are well-versed with finances and management can effectively provide it.

Opportunities for a CA in the public sector

Chartered Accountants are highly qualified management, accounting, and auditing professionals. Professionals with the above skill set are required at all levels of government. As a result, CAs are in high demand and can land high-ranking government positions.

CAs can work with the Indian Revenue Service as tax specialists, which is an entry-level position. A CA may also be able to assist the Enforcement Directorate, which executes money laundering and other financial crimes raids. In forensic accounting, CAs can engage in a variety of ways. CAs can also serve as financial advisers, strategists, and reporters.

In addition, several ministries require CAs. Furthermore, because government banks require a specialist, a CA can serve as a specialist officer in public sector banks and regional rural banks. As a consequence, there are several job options for CAs in the government sector.

Salary offered

CA and associated job profiles offer a great salary or package due to their high potential. An accountant’s income and benefits vary depending on the company, qualifications, and area where you live and work.

In India, however, the average salary for a hired qualified CA is between Rs 7 and 8 lacs. There are never fewer alternatives for a CA because they can work in any industry, including commercial, public, and government companies. CAs can also benefit from a variety of perks as an employee.

Chartered Accountants’ compensation is determined by a variety of criteria. The city, firm type, industry, experience, skills, and gender are all major determining factors. Market demand has an impact on these elements as well. Nonetheless, most CA jobs pay well and offer lots of opportunities for advancement. As time goes on, the package of Chartered Accountants will grow as the government continues to impose more responsibilities on CAs as a result of the profession’s exposure. Chartered Accountants have bright prospects in high-growth businesses like finance, banking, and tax, among others; they may expect a diverse benefit package in each of these fields. Different incomes are associated with the mastery of various skills, and pay levels vary based on variances in the cost of living in big cities.

International opportunities available to a Chartered Accountant

CAs from India are in high demand all around the world. Indian Chartered Accountants are in high demand in West Asian countries, Singapore, and Australia. Every year, these countries attract numerous Indian CAs. Several nations have signed MoUs with the Institute of Chartered Accountants of India, allowing CAs to join the ICAI counterpart in such countries. ICAI has signed Memorandums of Understanding with Australia, Canada, England, United Arab Emirates and many other countries.

The scope of CA varies depending on the country in which you work. The specialisations that are valued highly in each country differ, as do the salaries and costs of living.

CAs who work for multinational corporations or the country’s central banks also have tremendous opportunities abroad. Their position involves a great deal of travel. Finance directors and accountants who work on Mergers and Acquisitions projects frequently travel abroad. CAs can also work in Indian companies whose operations are carried outside India.

Overall, there are numerous chances for CAs seeking work abroad. In May 2020, the average pay for accountants and auditors was $73,560, according to the United States Bureau of Labor Statistics (BLS).

Conclusion

To summarise, the benefits of taking a CA course are numerous. Furthermore, it is a well-known profession in India and internationally, and as a result, it provides high-ranking and high-paying work chances to individuals who possess the necessary qualifications. The fact that CAs can build their careers in a variety of ways, including beginning their own practice and setting their own clientele, working in the private sector, or working in various government agencies, is one of the main factors contributing to this.

Chartered accountants can specialise in a variety of roles, allowing them to operate in a variety of industries, including startups. The demand for CAs is only going to grow, and their options are only going to get better. Taking a CA course can be rewarding and lead to a variety of career opportunities.

Join us for an exclusive 3-day boot camp on – International Opportunities for Chartered Accountants / Company Secretaries in US Corporate Law from 9th to 11th October, 6-9PM.
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References

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Significance and effect of lock agreements in the USA

By

Abanti Bose

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October 8, 2021

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agreement (1) — Image Source: https://rb.gy/noldil

This article is written by Ashwin Balachandran, pursuing Diploma in US Contract Drafting and Paralegal Studies from LawSikho. The article has been edited by Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

With this article, we will briefly look into the significance and effect of lock agreements in the United States. Before getting into the details, it is essential to know what a lock-up agreement is. A lock-up agreement is an agreement that is entered between the insiders of a company and the underwriter of the company before the private company or a corporation issues its stocks to the public through Initial Public Offering (IPO). In essence, the lock-up agreement temporarily prohibits the insiders of a company from selling their shares for a specified time period. This prohibition ensures protection to the investors against any pressure to sell shares the insiders may generate. Insiders can be anyone associated with the company ranging from its top officials to employees. The most common duration of the Lock-Up Agreement is 180 days, and it is subject to change according to the market conditions and parties involved.

Fundamentals, significance, and effect of a lock-up agreement

The purpose of a ‘lock-up’ agreement is to keep the company’s stock stable for the first several months after the initial public offering. Following the IPO, the ‘Lock-Up’ Agreement ensures order in the market with respect to the company’s shares and it gives the market enough time to figure out the stock’s true value. Further, it also guarantees that the insiders act in accordance with the company’s goals.

In a situation wherein insiders make public, an exaggerated share, and issue the same to unsuspecting investors. It will likely result in investors losing their investment and insiders making a profit. The execution of the ‘lock-up’ agreement would prevent such a situation and would reduce fluctuations in a share price when the stock is issued to the market. Thus, lock-up agreements potentially reduce the risk of stock price plummets at an earlier interval. Further, when the lock period ends, the sale of stocks by the insiders would set a benchmark for the price of shares, that is if the insiders hold onto their shares, the market may perceive that the price of shares will rise and the dumping of shares would suggest a reduction in the price of the shares. So, diligent investors would only seek to invest after the ending of the lock-up period.

The lock-up agreement is not limited to shares of private companies/corporations but is also applicable to the controlled sale of stakes and companies under hostile takeovers. It is pertinent to note that there is no federal law in place that necessitates the requirement of a lock-up agreement when entering into the IPO process however US federal securities laws, as well as state securities law (known as the “Blue Sky Laws”), are always on a lookout for fraudulent practices and activities.

Important clauses of a lock-up agreement

Insiders Definition Clause. The agreement should define and identify the private company’s insiders who will be prohibited from selling shares during the lock-up period.
Duration Clause. The duration clause should detail the lock-up period that is the exact number of days the lock-up would last for.
Restrictions Clause. The agreement should list the actions that the insiders are prohibited from taking during the lock-up period.
Exceptions Clause. The exceptions to lock-up restrictions imposed during the lock-up period are known as carve-outs. The carve-outs or the exceptions to the lock-up period should be detailed in the lock-up agreement.
Release of Lock-Up period Clause. The agreement should specify the period upon which the lock-up ends and the subsequent compliances to be followed.
Rights and Duties Clause. The rights and duties clause would ensure that the insiders act in accordance with the company’s interests.

Things to be kept in mind while drafting a lock-up agreement

The following are the factors that need to be addressed by the drafter while drafting a lock-up agreement.

The drafting of the lock-up agreement. The drafting of the lock-up agreement should be customised to convey the specific situations pertaining to the company or around the facts surrounding it. The formation of the agreement should address the concerns, necessities of the insiders and the companies as well.
Duration of the lock-up period. The extent of the lock-up period can vary between different parties. Most investors may prefer shorter lockups as they can make a profit at the earliest. Whereas the underwriter may prefer long duration as it prevents a drop in share price.
Exceptions or carve-outs. The exceptions or carveouts need to be detailed exhaustively as the clause provides for permitted transfers during the lock-up period.
Releases from lock-up. The drafter should also explain the rights and responsibilities of the insiders once the lock period release.

Demo lock-up agreement

Lock-up agreement

This LOCK-UP Agreement (“the Agreement”) is entered on the 26^th day of September 2021 (“Effective Date”) by and between ROCKSTAR, INC a Delaware corporation (the “Company”) and ___________ (the “Stockholder”)

WHEREAS the Company is offering its shares through Initial Public Offering.

AND WHEREAS the Stockholder is prohibited from selling his 200,000 shares of the Company during the Lock-Up Period

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

LOCK-UP PERIOD. The Lock-Up period shall commence from the Effective Date and end 180 days from the Effective Date (the Lock-Up Period).
RELEASE OF LOCK-UP PERIOD. The Lock-Up Period shall end on ________.
RESTRICTION. The Stockholder here agrees that he will not during the Lock-Up Period sell, contract to sell, grant any option to purchase, transfer or dispose of any of the Company’s shares directly or indirectly to any other person. The Stockholder further agrees that by his action he will not take part in any economic activity that would result in the transfer of ownership of the shares.
PERMITTED TRANSFER. Notwithstanding the foregoing and upon ascertaining written consent of the Company the Stockholder may transfer shares during the Lock-Up Period as a gift, by will or for the benefit of family, subject to the condition that the transferee complies to the Lock-Up Period pending if any.
STANDSTILL. The Shareholder represents and warrants that he does not have any beneficial ownership of shares or rights or options there attached to acquire any such shares of the Company other than that which is retained.
RELEASES. The Lock-Up will come to end (i) if the company merges or consolidates with that of another company or any such entity and (ii) Dissolution, liquidation or winding up of the affairs of the Company.
RIGHTS OF THE SHAREHOLDER. The Shareholder shall retain ownership of the retained shares including the voting rights.
NO OTHER RIGHTS. The Stockholder acknowledges and agrees that the Company has no obligation to record or register any sale, or such disposition of shares under the Securities Act.
SPECIFIC PERFORMANCE. The Stock Holder agrees that a material breach in of any provisions of this Agreement could result in irreparable harm to the Company and in the instance of such an event of a breach monetary damages will be insufficient to compensate the Company then the Company shall be entitled to compel specific performance of the obligations provided under this Agreement or such other relief as the court deems appropriate to any other remedy that may be available to it.
JURISDICTION. The enforceability or interpretation of this Agreement shall be governed by the statutory laws of Delaware State, and the courts of Delaware shall have original jurisdiction in respect of any action to contest the validity, interpretation, enforceability of this Agreement. Notwithstanding the foregoing, the parties agree that prior to initiation of any proceeding, action, law or any such legal remedy in connection with the disputes arising out of this Agreement; the Parties shall first negotiate in good faith with each other regarding such dispute.
SEVERABILITY. If any terms of this Agreement are to be held invalid, illegal, unjust or unenforceable by the law then the remaining provisions shall be deemed to be written, construed, and enforced as so limited.
AMENDMENT. Any terms of the Agreement can be subject to Amendment with the written consent of the parties.
NOTICE. Every notice required or contemplated by this Agreement by any party shall be delivered by postage prepaid, registered airmail, addressed to the other party at its address specified below or at such other address as the intended recipient previously shall have designated by written notice and such notice shall become effective ten days after the date of dispatch of such notice.

Rockstar Inc

___________________

______________, Delaware.

Stock Holder

___________

____________, State

IN WITNESS WHEREOF, the parties hereto have duly executed this Lock-Up Agreement effective as of the first date set forth above

ROCKSTAR INC ` Mr/Mrs/Miss_________

Title: ________________ Title: _______________

Signature: ____________ Signature: ___________

Conclusion

The US legislature does not mandate the requirement of a lock-up agreement nor it is necessitated by any regulatory bodies or exchanges. The lock-up agreement entered into is thus voluntary, therefore, it is necessary to draft the lock-up agreement with utmost diligence. A well-drafted lock-up agreement would ensure safety to the investors as well as the company. Any variance in the interpretation would result in dire economic loss as the insiders may exploit the lacuna.

References

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Constitutional validity of the Deception Detection Tests (DDTs)

By

Rachit Garg

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October 8, 2021

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SPL2076_SciencePhotoLibrary_PolygraphTest-scaled — Image source: https://bit.ly/3oRbM2C

The article is written by Nikhil Thakur from Manav Rachna University. In this article, the author has briefly explained the constitutional validity of the deception detection test (DDTs).

Table of Contents

Introduction

The deception detection tests (DDT) such as polygraph, narco-analysis and brain-mapping have imperative clinical, logical, moral and legitimate suggestions. The DDTs are valuable to know the concealed data related to wrongdoing. This data, which is known as it were to self, is in some cases pivotal for criminal examination.

The DDTs have been utilized broadly by examining organizations or forensic experts. Besides this, DDTs are moreover utilized to pick up a lead within the case, or in cases when the potential witness is incapable to gather data, it is additionally utilized in some cases on the suspect, the utilization of DDTs on suspects can have different impacts. In a point of interest judgment, the Apex Court of India has clearly expressed that DDTs cannot be managed without assent.

Classification of DDTs

Predominantly, there are three categories within the Deception Detection Test, that are:

Narco-analysis test,
Polygraph test, and
Brain mapping test.

Narco-analysis test

The term narco-analysis was coined by Horseley. Narco-analysis is inferred from the Greek word narkç (meaning “anaesthesia” or “torpor”) and is utilized to portray a demonstrative and psychotherapeutic procedure that uses psychotropic drugs, especially barbiturates, to initiate a daze in which mental components with strongly related influences come to the surface, where they can be misused by the specialist.

Narco examination includes the infusion of a sedate, sodium pentothal, which actuates a trancelike or calmed state in which the subject’s creative ability is neutralized, and they are anticipated to unveil genuine data.

The medicate (sodium pentothal) alluded to as a “truth serum”, is utilized in bigger dosages as anaesthesia amid surgery, and is said to have been utilized during World War II for insights operations. Basically, within the sleep-inducing arrangement, the subject gets to be less hindered and is more likely to uncover data, which would usually not be uncovered within the cognizant state. The experts while examining the suspect may uncover all his/her fantasies, individual wishes, impulses, instinctual drive, figments, daydreams, clashes, misinterpretations, etc.

The loophole of this method is that some people can bloodstream hold their capacity to misdirect indeed within the trancelike state, whereas others can end up amazingly suggestible to addressing.

Narco-analysis “without consent” raises certain issues such as:

A physical ambush on the body by giving infusions additional excruciating boosts such as slapping, squeezing, pushing, hitting, shaking the body and so forth to wake an individual from a hypnotic state to reply to the questions.
Mental attack through the effect of the infusion of narco drugs.
Off-base dosage can send the subject into a coma or indeed result in passing off or death.
Further, this method is highly criticized by therapeutic society and consider it as not adequate in the treatment of psychiatric issues.

During the Telgi scam, the use of narcoanalysis came under the scanner, and then it was used in the Aarushi murder investigation.

Polygraph test

Typically, also called a lie detector test, but this term could be a misnomer. The hypothesis behind polygraph tests is that a blameworthy subject is more likely to be concerned with lying around the pertinent truths than the wrongdoing, which in turn produces a hyper-arousal state which is picked up by an individual trained in perusing polygraph results. The polygraph test is conducted in three phases- a pretest interview, chart recording and diagnosis.

It may be a strategy that measures and records a few physiological pointers such as blood weight, beat, breath, and skin conductivity whereas an individual is inquired and required to answer an arrangement of questions;

This test is based on the suspicion that physiological reactions are activated when an individual is lying.
Numerical esteem is relegated to each reaction to conclude whether the individual is telling the truth, is beguiling, or is uncertain.

A test comparable to a polygraph was first executed in the 19th century by an Italian criminologist Cesare Lombroso, who utilized a machine to determine changes within the blood pressure of criminal suspects amid cross-examination. Comparable gadgets along these lines were made by the American clinician William Marston in 1914, and by the California police officer John Larson in 1921.

In the polygraph technique, instruments like cardio-cuffs or delicate cathodes are connected to an individual, and factors such as blood weight, beat, breath, alteration in sweat gland movement, bloodstream, etc., are measured as questions are put to them.

The polygraph test was among the primary logical tests to be utilized by the investigators. It was Keeler who further refined the polygraph machine by including a psycho-galvanometer to record the electrical resistance of the skin.

Reliability of Polygraph

The primary issue connected to the polygraph test is that it cannot differentiate between the changes that have taken place in the body whether it is by way of a lie or something else.
Other factors just like the environment where the test is conducted are how the questions of the exploring officers were and what tone he has used, moreover play a noteworthy part in influencing the reading test.

Polygraphed test results can be beaten by people with the capacity to smother the excitement reaction, such capacity is picked up by those who perform unwinding works out like yoga or meditation.

Brain-mapping test

It measures the changes in the electrical field potentials produced by the sum of the neuronal activity in the brain by means of electrodes placed on the surface of the skin covering the head and face. This means it is based on the finding that the brain produces an interesting brain-wave design when an individual experiences a commonplace stimulus.

A commonly utilized strategy in India is called the Brain Electrical Activation Profile test, moreover known as the ‘P300 Waves test’.

In brain-mapping, sensors are connected to the suspect’s head and a person is made to sit before a computer screen. The suspect is at that point made to see pictures or listen to sounds. The sensors screen electrical movement within the brain and enlist certain waves which are produced as if on the off-chance that the suspect has any association with the same.

Reliability of brain mapping

In case a person was presented at the crime scene or has ambiguously taken note of the same, sometimes the said person may be brought under suspicion using this technique.
Such a method might not be utilized as a strategy to indict somebody but can be utilized as a strategy to demonstrate one’s guilt.

Constitutional validity

In India, the use of deception detecting tests (DDTs) has been questioned in courts. The main argument against it is the infringement of the fundamental right under Article 20(3) and Article 21 of the Indian Constitution, which provides for a privilege against self-incrimination and the right to health and privacy, respectively.

In a landmark judgment of Selvi & Ors vs State of Karnataka & Anr (2010), a Supreme Court bench comprising the then Chief Justice of India K G Balakrishnan and Judges R V Raveendran and J M Panchal ruled that no lie detector tests ought to be managed “except on the premise of assent of the accused”. Those who volunteer must have to get to an attorney and have the physical, passionate, and legitimate suggestions of the test clarified to them by the police and the legal counsellor.

Earlier in the case of Dinesh Dalmia v. State by Spe, CBI 2006, the Madras High court ruled that in case the accused fails to participate within the examination, at that point scientific methods can be utilized to discover the truth encompassing the wrongdoing. In the instant case, the Hon’ble Madras High Court resorted to an implied perspective of legitimizing the DDTs.

A comparable position was taken by the Court in Sh. Shailendra Sharma Vs State & Another 2008 and it was held that such scientific methods help with the examination and can be of great utility. Concerning constitutional legitimacy, the court is of the conclusion that by utilization of these scientific methods, no constitutional infirmity emerges. Such methods help within the examination, and in case any incriminatory explanation comes to the surface amid the examination, indeed at that point, the indictment cannot depend on that articulation and the same cannot be delivered as proof.

Violation of the individual rights of self-being

In case an individual is not willing to assent, it is being accepted or presumed by the people that he is not participating in the examination and might have committed or is guilty of the offence. But DDT has certain results which are unscrupulous as well as unlawful that are or may be violative of the individual rights of Self being or not to be questioned if he refuses the DDT of a person.

Violation of the right to be silent

Till the time a test is conducted voluntarily upon the suspect, there shall be no violation of the right to remain silent, but in case anyone is pressurised or forced to go through the deception detection test shall amount to a violation of the right to be silent and shall lead to an infringement of Article 20(3) of the Indian Constitution.

Self-incrimination

It is a well-settled common law tenet that each denounced individual is assumed innocent unless demonstrated guilty and it is for the prosecution to demonstrate or prove the blame of the accused and in the process, the accused cannot be compelled to make a self-incriminating explanation.

In Nandini Sathpathy vs P.L. Dani (1978), the Supreme Court held that no one can forcibly extract statements from the accused, who has the right to remain silent during interrogation or investigation.

In the Selvi vs State of Karnataka & Anr. (2010), the Supreme Court ruled that no lie detector test ought to be managed without the assent of the accused. Moreover, the court further observed the following things:

Further, those who volunteer must go to the attorney and have the physical, emotional, and lawful suggestions of the test clarified to them by police and the lawyer.
The results of the tests cannot be considered to be “confessions”, but any data or material subsequently found with the assistance of such a voluntarily-taken test can be conceded as a piece of evidence.
The Supreme Court cited Article 20 (3) of the Indian Constitution or right against self-incrimination and held that no person can be compelled to be a witness in his case.

In the D.K. Basu vs. State of West Bengal (1997), the Supreme Court ruled that an involuntary administration of the polygraph and narcosis test shall amount to brutal, inhuman, and degrading treatment within the setting of Article 21 or the right to Life and Liberty.

Violation of the right to health

DDTs have great repercussions on the body of the person being tested. A person is hypnotised to ask questions and that is accompanied by slapping, squeezing, pushing, hitting, shaking the body that has mental as well as physical repercussions. Further, higher dosages are administered during the test that have the capability of causing the person to move into a coma. These issues raise a concern over the right to health which is held as pivotal by few Conventions and judicial decisions.

Article 25 of the Universal Declaration of Human Rights, 1948 states “that everyone has the right to a standard of living adequate for the health, and wellbeing of himself and his family”.

The Supreme Court of India in Urjit Singh v. The State of Punjab (1996) concluded that law is in this manner well settled and that the right to wellbeing is a necessary portion of life ensured under Article 21 of the Indian Constitution.

Violation of the right to privacy

In Selvi and Ors Vs State of Karnataka (2010), the Supreme Court held that the utilization of narco examination, brain-mapping and polygraph tests on accused, suspects and witnesses without their assent, is unlawful and an infringement of the right to privacy.

Conclusion

These strategies cannot be utilized as strong proof or confessions due to their constrained unwavering quality and inefficient logical proofs. In any case, they can be utilized as valuable instruments to unravel complicated cases as investigative instruments. The government shall empower the use of scientific methods but shall come up with strict rules for their utilization in a conventional, and consensual way.

With the up-gradation, innovative changes are inescapable. Science and reason are bound to thrive, but will it develop towards advancement or devastation are still one of the major issues. With these scientific advancements, the impact on other areas is apparent, and in a field like law that touches nearly every circle of a citizen, it cannot stay protected.

“The issue is whether we require to think past the Constitution for genuine equity or the Constitution alone is the equity in genuine senses.”

Reference

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Relationship between Section 25 and 27 of the Indian Evidence Act

By

Diva Rai

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October 8, 2021

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847718-sc-042619 — Image source - https://bit.ly/2YtcOaF

This article has been written by Rishika Agarwal from NMIMS School of Law, Navi Mumbai. This article examines the co-relationship between Sections 25 and 27 of the Indian Evidence Act, 1872.

Table of Contents

Introduction

Evidence is an instrument used before a court of law to convince the court of the facts of a case. Evidence is anything brought before the court except documents and witnesses such as a confession of the accused during the trial.

As per Section 3 of the Indian Evidence Act, 1872, evidence is of 2 types:

The statements which are required to be made before the court by witnesses are called oral evidence.
The documentary proof or electronic recordings submitted to the court are called documentary evidence.

Without proper proof or evidence, any court would not be able to do justice to the parties of the case. The Indian Evidence Act, 1872 gives a comprehensive set of guidelines to determine what can be construed as evidence and what is not admissible in a court of law. The Act aids the court in identifying the best way to interpret legal evidence while giving a judgment. The Indian Evidence Act is hence, a very huge part of the judicial framework.

History

During the British Raj, all the administrative courts of India were asked to follow the English Principles of Law. This led to a large-scale disorder as the English Law had no specific act which dealt with the attestation and handling of evidence in court. The court enjoyed complete freedom with regards to evidence and attestation of proof.

The need to codify the laws of evidence was recognized and the first attempt was made in 1835. There were 11 acts passed between 1835 and 1853 related to the law of evidence but they were not found to be satisfactory.

Sir Henry Mayne led a commission in the year 1868 to draft the act but it was found to be unsuitable for India. Sir James Fitz James Stephen submitted another draft of the act in 1870 which was found to be satisfactory and presented before the legislature. After considering the opinions of the High Courts and the Bar Council, the Indian Evidence Act was enacted and came into force on 1st September, 1872.

During this time, India comprised around 500 princely states which were not under the jurisdiction of the colonizers. These states had their own laws concerning evidence. All these states were merged into the Indian union after independence and the laws were made uniformly applicable to all the states. The Indian Evidence Act, 1872 is now applicable to each and every state which is a part of the Union of India.

Analysis of Section 25

Section 25 of the Indian Evidence Act, 1872 says that “No confession made to a police officer, shall be proved as against a person accused of any offense.”

This Section completely rules out the admissibility of any sort of confession to the police officer as evidence. The confession cannot be used against the accused under absolutely any circumstances. The court does not take into account whether the statement was made during investigation of the case or whether the person was in police custody or not. It is irrelevant.

An exception to this Section is the draft of Kerala Control of Organised Crime Act (KCOCA). A confession made before a police officer with a level higher than that of Superintendent of Police (SP) will be considered as evidence against the individual who made the confession, according to the bill. According to legal experts, there is an exemption to Section 25 of the Indian Evidence Act, which states that no confession given to a police official will be admissible as evidence against a person accused of a crime.

The police officer must notify them before recording the confession that they are under no duty to make the confession and that the confession may be used against them as evidence in court. Confessions must be documented in a free atmosphere and in the same language in which the person is being examined, according to the Act.

In the case of Queen Empress v. Babu Lal (1898), It was noted that there have been several instances where police officers have used torture techniques to coerce confessions and to secure convictions. If these confessions were made admissible, the citizens would not be protected from the cruelty of police officers.

In the case of Narayan Rao v. State of Andhra Pradesh (1957), it was stated that the confession given to a police officer would not be admissible even if the officer is given the title and power of a Magistrate.

In the case of Pakala Narayana Swami v. King Emperor (1939), it was noted that the court does not differentiate between a statement made before, after or during an investigation. It is irrelevant when a statement is made. It is entirely inadmissible in a court of law.

However, this Section does not apply to cases which fall under the Narcotic Drugs and Psychotropic Substances Act, 1985. This was stated in Francis Stanley v. Intelligence Officer, Narcotic Control Bureau, Thiruvananthapuram (2006).

Analysis of Section 27

Section 27 of the Indian Evidence Act, 1872 reads as “Provided that, when any fact is deposed to as discovered inconsequence of information received from a person accused of any offence, in the custody of a police-officer, so much of such information, whether it amounts to a confession or not, as relates distinctly to the fact thereby discovered, may be proved.”

This Section lays down that if the accused makes a confession, it could be used to prove a fact or the discovery of new facts in the investigation. That would be admissible in the court of law. If a confession is obtained under threat or promise and it proves a fact, it would still be admissible.

In the case of the death of the accused, FIR can also be used as substantial evidence. This was observed in Damodar Prasad v. State of U.P (2019). The confessions which become inadmissible under Section 25 could lead to the discovery of new facts in the case and would become admissible under Section 27.

Doctrine of Confession

Even though the Indian Evidence Act, 1872 never mentions the word confession directly, its definition is given in Section 17. The Act defines confession as “any statement, whether oral or in the form of a documentary, which is put forward for the consideration of any conclusion to the fact in issue or to the relevant facts”.

Sections 24-27 of the act deal with admissibility of the confessions made to police officers during a court proceeding. Section 25 bars the confessions made to a police officer to be used in a criminal proceeding. Section 27 acts as an exception to this rule.

In the case of Champa Rani Mondal v. State of West Bengal (1998), the Supreme Court overturned the ruling of the trial court which had convicted the appellant solely on the basis of her confessional statement. The High Court had also affirmed her conviction. The Supreme Court pointed out that her confession was not valid and could not be taken into account.

In the case of Shabad Pulla Reddy & Ors v. State of Andhra Pradesh (1997), the Supreme Court ruled that since the accused had only confessed to being part of a conspiracy to commit a murder and not the party to the actual murder itself, the statement made to the Magistrate is exculpatory.

In the case of Lokeman Shah & Anr v. State of West Bengal (2001), it was ruled by the Supreme Court that the statement of the accused in front of the Magistrate can be taken into account only if it is read as a whole. It cannot be dissected into individual sentences.

In Rahim Beg & Anr v. State of Uttar Pradesh (1972), the Supreme Court stated that a confession must stand the test of reliability and the exact words should be mentioned. There should also be a clear motive for the confession.

In State of Uttar Pradesh v. M.K. Anthony (1984), the court stated that the testimony of a friend is reliable and much attention should not be given to technical and minor errors in the ambiguity of an extra-judicial confession.

In the case of Sivakumar v. State By Inspector of Police (2005), the Supreme Court stated that extra-judicial confession is not always strong evidence. Each case also has to be examined on its merits and facts.

In Piara Singh and Others v. State of Punjab (1977), the court ruled extra-judicial confession to be a very weak evidence. It observed that the law does not require extra-judicial confession to be corroborated in every case.

In the case of Chittar Lal v. State of Rajasthan (2003), the Supreme court stated that it is already established that extra-judicial confession is a very weak evidence. A belated confession in the light of medical evidence is even more dangerous to sustain a conviction on.

In the Supreme Court case Aloke Nath Dutta & Ors. v. State of West Bengal (2006), it was observed that Section 24 of the Indian Evidence Act deals with threat or inducement from a ‘person in authority’ to make a confession. Sections 25 and 26 deal with the situations where the person in authority is the police. It was noted that Sections 25 and 26 are corollaries flowing out of the general proposition contained in Section 24.

Relationship between Section 25 and 27

Section 27 acts as an exception to Section 25 of the Indian Evidence Act. The reasonable justification for this exception is that there is no reason to not take into account statements made to people other than police officers. Section 27 also discards the part of the confession which is self-incriminatory and only takes into account the part which leads to the discovery of new facts.

A few objections were raised that Section 27 validates the statements made to police officers during the investigation. The court stated otherwise in the case of Pakala Narayana swami v. Emperor (1939). Section 27 does not allow the admissibility of statements made to police officers in an investigation. It makes statements made to anyone except police officers admissible such as visitors, doctors, prison mates, etc. Section 27 is a misnomer since it is an exception for Section 25. It would be successful if the accused could be safeguarded from the police’s “persuasive forces” by allowing for remarks made to other persons.

This was reiterated in the case of Mehboob Ali v. State of Rajasthan (2015) which dealt with the inquiry regarding the admissibility of a confession under Section 27 of the Indian Evidence Act. It was stated that no confession made to a police officer is admissible in a criminal proceeding. Section 27 merely acts as a provision to Section 25 to lead to the discovery of new facts in a case in order to move further in an investigation.

The bench explained that for a confession to fall under the purview of Section 27, a part of the confession made to the police officer must be used for the discovery of a new fact in the case. The new fact would be admissible in the court of law. The rest of the confession would still be inadmissible. If some new information comes to light from the accused which was not stated in the confession, that would be admissible in the court.

Conclusion

Section 25 acts as an important tool to safeguard the citizens of India from the cruelty of police officers. If this Section was not incorporated into the Indian Evidence Act, the accused would be completely at the mercy of police officers and they could use any methods to coerce statements out of any accused. That could lead to innocent people getting charged for crimes they did not commit.

Section 27 is an exemption of Section 25 and is an important provision as a confession is necessary to move forward in an investigation. There is also no reasonable justification to bar confessions or statements made to other individuals except police officers.

References

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Ways to earn additional income as a CS

By

Rachit Garg

-

October 8, 2021

0

business-contracts-4-things (1) — Image Source: https://rb.gy/msix72

This article is written by Arya Mittal from Hidayatullah National Law University. The article tries to elucidate some additional sources of income for a company secretary.

Disclaimer : The figures mentioned in the article have been deduced and analyzed through opportunities mentioned on famous freelancing platforms such as Fiverr and Upwork.

Table of Contents

Introduction

A Company Secretary (CS) goes through years of hard work with such a well-structured curriculum, which helps in his/her holistic building and development. Certain modules relating to corporate laws of different countries (which seemed irrelevant in the first place) might come to your rescue now. Are you someone who wishes to make an international presence? Are you someone who wishes to continue working from home even after the pandemic subsides? Are you someone who is tired of a 9-5 job, which sometimes goes way beyond 5? Are you a fresher who is struggling to set up your own practice? If it is a yes for any of these questions, then do read further.

Opportunities for CS in the international arena

There are a plethora of opportunities for a CS in the international market since even the companies are eager to get their tasks done efficiently but for lesser professional fees. Below are some opportunities for a CS which one might get started with. Also, it is important to remember that these tasks are not exhaustive and there are much more lucrative opportunities available.

Advisory role

A Company Secretary has a fair knowledge of financial statements as well as the legal compliance which needs to be taken care of in a company. Therefore, advising is one of the most important functions of a CS. A CS has a comprehensive understanding of company law, securities law and other commercial and corporate laws. If you are a CS, you can take up the task of advising foreign startups and small-sized corporations with their financial and legal matters.

Compliance

Yet another important task of a CS is to ensure compliance with different laws. One can study the laws of a foreign jurisdiction and help different organisations with their legal compliances. In the US, every state has its own laws and having a grasp on the laws of just one or two states can be very beneficial. For instance, Delaware is among the most popular states where corporations always tend to incorporate their business. Thus, if a professional has a decent knowledge of the corporate laws of Delaware and compliances therein, it is possible for such a person to build a successful profile and clientele.

Filings

Filing assignments might not sound too good as it is usually the interns who are made to do annual filings in India. But, it is not the same outside. Filing a DBA (Doing Business As) i.e. trade name can sometimes be extremely tedious for companies, and they tend to outsource this work to professionals. The best part is, such a professional need not be a certified professional, and anyone can do it. Let us take an example of a startup in California that recently came into existence. It is trying to approach a professional who can register their trade name, but is reluctant to do it on its own to escape the hassles. You can be the person to do this for them you can charge a fee between USD 15 to USD 50 for the same.

Registration

Certain registrations can be done even without a certified US professional, and this can be the moment for you to grab such opportunities. You can help a corporation with its foreign qualification i.e. registration required to operate in states other than the home state. Further, you can even help a corporation with the issue of shares or a public offer. You can easily charge between USD 25 to USD 200 for the same, depending on the task.

Opportunities for LLB+CS in the international arena

If you are a CS+LLB, then the horizon expands for you. Apart from the aforementioned tasks, one might also indulge in assignments as stipulated hereafter.

Contract drafting

A CS, who is also a lawyer, can very well understand the legal and financial implications of any agreement between the parties. A professional who is skilled in contract drafting can earn lakhs. Corporations are ready to pay fees as high as USD 300 (lowest being USD 10-15) or sometimes even more for drafting agreements.

Content writing

One can also work as a content writer and can easily charge USD 10-50 for each article. He/she can write articles on financial and legal topics and even this area has immense growth, both in terms of money and career.

Why should you go for it?

Are you still wondering what is so special and different about working abroad? Here is the secret.

Be your own boss

Since you are working as a freelancer, you get all the privileges of being your own boss. You get to choose the kind of assignment which you would like to work on, which might not always be true for a person engaged in a job. Moreover, you will not be time-doctored anymore and will never be late for work since you are working for your own self. Also, this works well even if you are a fresher since you are able to secure a clientele, that too, internationally.

Earn in US Dollars

Everyone needs financial security and this route might help you to achieve one. It is not hidden that Indians often go and settle abroad in order to earn more income. However, in our case, this opportunity comes handy as one will be working for an international client from the comfort of his/her home. Therefore, even from a layman’s perspective, you will be earning a lot better but would not have to incur a proportionate expenditure as you will be working from home. Thus, you earn and even save a lot.

Need not change your biological clock

Since you are working for an international client on a freelancing basis, you need not change your biological clock. A person engaged in a job has to devote time as per the conditions of the employer, even if that’s not the time when he/she is most productive. However, the same is not true when you are working as a freelancer. You can choose to work at midnight or in the early morning, whenever you think is the most productive time of your day.

Work environment

Undoubtedly, some organisations do provide for a really good work environment, but it is also not possible to ignore the ones that do not. The work environment is directly proportional to the output of the environment. To simplify, the work environment plays a crucial role in the outcome that a professional gives in relation to any task or assignment. Working from home can help you escape a toxic work culture if you are in one. Moreover, there are no hassles of missing the locals or travelling in an overcrowded metro and getting a ‘half-day’. As mentioned earlier, you can work from the comfort of your home. If you are a wanderlust, you can even choose to work from your favourite destination in the world since you will be saving so much.

Flexibility in all aspects

It is obvious that when you are working for yourself, you get a lot of flexibility. You no longer need to miss family gatherings or burn the midnight oil on your birthdays. You can choose to work less or more as per your convenience since there is no commitment to any other person apart from your clients.

Exposure and growth

At this stage, it cannot be disputed how much exposure a person will get while working internationally. You can have the liberty of taking the kind of assignments you always wished to, which might not have been possible in a job or in your practice area, due to a large number of competitors and fewer clients. However, your scope for work gets largely multiplied since now you are flexible enough to work for a client from some other country. This can immensely boost your profile and you still have the liberty of doing a job at a later point in time, but now with more experience and skills.

Conclusion

To conclude, there are sufficient opportunities available for a CS and the same gets multiplied when such a person is a lawyer too. It is not possible to ignore the advantages that the international market offers. The opportunities can be accessed by a fresher looking to get new clients or an experienced professional looking for a change.
In order to understand how you can exactly grab and utilise such opportunities, register for the free 3-day Bootcamp being conducted by LawSikho on International Opportunities for Chartered Accountants / Company Secretaries in US Corporate Law from October 09 -11, 6-9 pm.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

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