This article is written by Prachi Darji.

The assets of a company can be broadly divided into two main categories namely, tangible assets which consist of brick and mortar stores, land, machinery, etc., and intangible assets which include but are not limited to shares, rights and the brands of the company. Intellectual Properties (“IP”) are intangible assets of a company. While most companies consider it essential to invest initially intangible assets, investment in intangible assets like IPs may prove more fruitful in value addition and consumer attraction for the company.

From an Indian legal standpoint, the law identifies three types of IPs under three different legislations. They are trademarks under the Trade Marks Act, 1999, patents under the Patents Act, 1970, and copyrights under the Copyrights Act, 1957.

Defining Intellectual Properties in India

1. The Trademarks Act 

The Trademarks Act, 1999 defines a trademark as a mark represented in a graphical manner which can; 

(i) Distinguish the goods and services of one person from another (this includes a shape, packaging, and combination of colors); 

(ii) Indicate a connection in the course of trade between the goods and services and includes a registered trademark, and; 

(iii) Indicate that the proprietor or the permitted user has a right over the goods and services. 

It includes a certification trademark and a collective trademark within its ambit. A certification trademark is one which is used to distinguish the goods and services in a course of trade from that of another with respect to the origin, material, mode of manufacture of goods, quality of services performed, accuracy and other such characteristics. A collective trademark is one that distinguishes the goods and services of the members of an association from those of another.

2. The Patents Act

The Patents Act, 1970 defines patents to be any patent that is granted to an invention under the Act itself. It provides the patent holder the exclusive right to use, sell and make an invention for a specified number of years. The Patents Act goes on to define what inventions are patentable and which are not. A few inventions that are not patentable, for example, are; 

(i) Frivolous inventions; 

(ii) the mere discovery of a scientific principle; 

(iii) a method of agriculture or horticulture; 

(iv) a presentation of information, etc.

3. The Copyrights Act

The Copyrights Act, 1957 defines copyright to do a particular act in respect of a work or any substantial part thereof. The Act lists a number of acts that can be conducted with respect to the work, the work being; 

(i) a literary, dramatic, musical or artistic work; 

(ii) a cinematograph film, and; 

(iii) a sound recording.

4. The Design Act

The Design Act, 2000 defines “design” as the features of shape, pattern, the composition of colors or lines applied to any object whether in 2D or 3D or in both forms, configuration, ornament, but does not include any mode or principle of construction or anything which is in substance a mere mechanical device and does not include any trademark.

Registering Intellectual Properties

1. Procedure for Registering Trademarks

1. An application must be made to the Trademarks Registry Office by the person claiming to be the proprietor of the trademark.
2. The Registrar may accept or reject the trademark application or accept the same with amendments, modifications, conditions or limitations.
3. If the Registrar is satisfied that the trademark may be registered, the Registrar causes the same to be advertised.
4. Within 3 months of the advertisement, opposition to the registration application must be filed. 
5. The Applicant must provide his counter statement within two months of the receipt of the oppositions from the Registrar.
6. The Registrar after hearing both parties may accept or reject the registration of the Trademarks. If accepted, a certificate is issued with the seal of the Trademarks Registry regarding the registration of the trademark.
7. The Registration of a trademark lasts for 10 years and is subject to renewal every 10 years thereafter.

2. Procedure for Registering Patents

1. An Application must be made to the Controller General of Patents, Designs and Trademarks (“Controller”) for the registration of the patent. 
2. Upon proof to the title, the Controller may register the applicant as a proprietor or a co-proprietor and enter in the register the details of the instruments, the interest of the proprietor thereto and the manner in which the proprietor derives the title. 
3. The Controller may also refuse to register the patent in case of any pending litigation regarding the same.

3. Procedure for Registering Copyrights

1. An application must be made by the holder of the copyright to the Registrar of Copyrights for entering the particulars of the work into the Register of Copyrights. However, if the application is with respect to an artistic work which is used or capable of being used in relation to goods and services, a statement by the Registrar of Trademarks is required to the effect that no registered trademark or application thereof has been made which is identical or deceptively similar to the artistic work.
2. The Registrar of Copyrights on holding an inquiry may enter the particulars of the copyright in the Register.
3. Indexes of the Register of Copyrights are also kept with the Registrar of Copyrights.
4. On entry of the particulars of the copyright in the Register of Copyrights, the same is then published in the public domain.

4. Procedure for Registering Designs

1. An application has to be made to the Controller of Designs of the new design indicating the class of goods/articles in the same class.
2. The Application is filed along with a Representation Sheet, which showcases the various views of the new design, for example, top view, bottom view, side view, etc.
3. A brief statement explaining why the new design is novel and inventive.
4. The Controller then examines the application and if no objections are raised, the new design is entered in the design registry and a certificate of the grant is issued to the applicant. 
5. Post-grant the design is published in the official gazette with the Representation Sheet.

Benefits of Owning Intellectual Properties 

1. Innovations 

IPs provide legal protection to innovations thus preventing illegal product spin-offs and copies. IPs provide a platform for innovators to safeguard their inventions facilitating further innovation. This directly fosters the growth and development of the economy harnessed by well-protected innovations. 

2. Cognitive Value Addition

Yuval Noah Harari in his book “Sapiens: A Brief History of Humankind” speaks of a dual reality people began to live in as a product of cognitive evolution. This dual reality includes the actual visible, objective and tangible reality, and the imagined reality such as the elemental gods. He refers to the automobile company “Peugeot” and maintains that even if all the employees of the said company were to die, the company would still exist as an entity, an imagined entity. Thus the value affixed to such an imaginary entity in the form of IPs too can be a part of our cognitive evolution. Investing in the stock market itself is based on the value-added to IPs which in turn defines the value of the company. 

3. Habit Attribution Leading to Profitability 

IPs are legal fictions whereby people affix a particular understanding or familiarity with the IP as a means of understanding the company behind the IP. Habits may also be created through effective marketing of a product which leads to the attribution of the habit to the IP of the product itself. Charles Duhigg in his book “The Power of Habit: Why We Do What We Do And How To Change” makes a reference to a marketing strategy of “Procter and Gambles” product “Febreze” whereby the company highlighted a craving for a fragrant smell to the completion of cleaning activities in houses. When the product launched in the summer of 1998, users attributed cleanliness with the odor of Febreze, doubling sales within two months!

4. Consumer Trust and Loyalty

It flows as a natural corollary to the previous point that IPs create a sense of customer-to-company trust. It leads to further investments in well-known brands expanding the customer base and providing the company with a competitive edge. Without IPs, there would be no mechanism to create trust in a product that would garner the confidence of the customer. A typical example of customer loyalty is that of Coke and Pepsi during the “Cola Wars” of the 1970-80s. Despite flavor and price changes by both the companies, customers remained loyal to the initial brand of preference. 

5. Exclusive Rights of Usage 

Upon registration, the exclusive right to use a trademark is identified with respect to the proprietor. A holder of a registered patent has the power to grant licenses, assign or otherwise deal with the patent. By definition under the Copyright Act, 1957 the holder of the same is given the exclusive right to do particular acts with respect to a particular work. If an entry in the Register of Copyrights is prima facie evidence of the contents therein, that means registered copyright is prima facie evidence of the holder’s exclusive right to perform certain acts with respect to certain work that the copyright entails. This ensures that the company is consistently attributed to the IP once the same published.

6. Primary Evidence 

An entry in the Register of Trademarks, Patents, and Copyrights is considered primary evidence in a court of law without any further proof of the original document. The burden of proving the authenticity of registered trademarks, patents, and copyrights is thus relatively lighter than their unregistered counterparts.

Legal Remedies

The Trademarks Act, 1999 identifies only a registered trademark holder to have the right to take to legal proceedings in case of an infringement of a trademark. It prohibits any person from recovering damages for infringement of an unregistered trademark. Remedies do however exist in common law or tort actions in case of unregistered trademarks. In trademark infringement cases, the court may order for an injunction, award damages to the Plaintiff along with an account of profit or order for the destruction or erasure of any infringing labels or marks. 

The Trademarks Act, 1999 also dictates a number of criminal remedies that may be pursued which, to name a few, include; (i) falsely applying trademarks; (ii) falsely representing a trademark as registered; (iii) falsification of entries in the register, etc. The term of imprisonment and fine vary as per the offense.

The Patent Act, 1970 recognizes the right of an exclusive licensee to take proceedings against infringement. In patent infringement cases, the court may order for an injunction, damages to the Plaintiff, account of profit and seize, forfeit or destroy any of the infringing goods. Unauthorized claims of patent rights are punishable with a fine which may extend to one lakh rupees.

The Copyrights Act, 1957 the owner of the copyright may pursue civil remedies such as an injunction, damages, accounts or other such remedies as may be conferred by the law. The owner of the copyright also has the remedy of recovering the possession of infringing copies of the copyright. There are also criminal remedies that may be pursued. The offense of copyright infringement is punishable with imprisonment for not less than 6 months and not more than 3 years and with a fine of not less than fifty thousand and not more than two lakh rupees. 

Similarly under the Design Act, 2000, Design is also susceptible to infringement. It is an illegal act to make use of a registered design, or a fraudulent or obvious imitation of a registered design, without authorization from the registered owner of such design. In case of such an infringement, the registered owner may file a suit to recover a nominal sum as damages from the infringer, and also ask that the infringement stop taking place. 

Conclusion

It is thus quintessential that an IP must be registered as it makes it easier to protect in a court of law. It helps maintain the public image of the company without having to assert its authenticity via litigation. IPs garner investment and innovation which apart from adding value to the company creates a quid pro quo of trust between the company and its customers. 

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