Wednesday, December 31, 2008

Nice Quotes

There are two primary choices in life: to accept conditions as they exist, or accept the responsibility for changing them.

Most of us know how to say nothing, but few of us know when.

Doing your best is more important than being the best.

A bad habit is nothing more than a mistake repeated.

There is only one small letter between the words can and can't............... and that one letter will T-OTALLY change your destiny.

Difficulties are meant to rouse, not discourage. The human spirit is to grow strong by difficulties.

Every time you get rejected, say "Next !!".

The greatest risk in the life is to risk NOTHING. The person who risks nothing, does nothing, has nothing, is nothing and becomes nothing.

Enthusiasm is the match that lights the candle of Achievement.

You have within you right now, everything you need to deal with whatever the world can throw at you.

Happiness is a butterfly, which, when pursued, is always just beyond your grasp, but which, if you sit down quitely, may alight upon you.

People often say that motivation doesn't last. Well, neither does bathing. That's why we recommend it daily.

Friday, December 26, 2008

Companies Act_Practical Problems_37

M/s. Raman Limited having a paid up share capital of Rs. 5 crores owns an agency of Cement Corportion of India Ltd. and proposes to supply cement, on credit, to M/s. Raman Enterprises Private Limited. Mr. Raman is a common Director in both the companies.

State the requirements of the Companies Act, 1956, if any, to be complied with by the company on the facts of this case.

Will it make any difference, if -
(i) M/s. Raman Enterprises Private Limited were a public company;
(ii) M/s. Raman Limited were carrying on real estate business and it proposes to sell a flat to M/s. Raman Enterprises Private Ltd. for Rs. 50 lakhs?

Wednesday, December 24, 2008

Practical Problems_Contract Act_91

I had made an offer to the other party. The other party accepted my offer. However, before the acceptance, which was sent by post, could reached me, I sent a letter to the other party revoking the said offer. The other party challenged my revocation of the offer, saying that the contract was completed. What is the correct legal position?

Monday, December 15, 2008

Comapnies Act_Practical Problems_36

A company was registered on 1.1.2005. But the date on its certificate was wrongly put as 1.1.2004. From which date shall the company be regarded as registered ?

Practical Problems_Sales of Goods Act_1

A sells his motor car to B, one cylinder of which is slightly cracked to A's knowledge. B examined the car but failed to detect the defect at the time of purchasing the car. Later on, the defect comes to the knowledge of B. Can he rescind the sale and get back the price paid by him?

Practical Problems_Partnership Act_7

A, B, C and D are partners in a firm which has not been registered. A is wrongfully expelled from the firm by the other partners. Can he successfully bring a suit' against the other partners for damages for wrongful expulsion and declaration that he continues to be a member of the firm? What remedies if any are open to A?

Thursday, December 11, 2008

Bonus Act_Practical Problems_34

Referring the provisions of the Payment of Bonus Act, 1965, state whether the following persons are entitled to bonus under the Act:
(i) An apprentice;
(ii) An employee dismissed on the ground of misconduct;
(iii) A temporary workman;
(iv) A piece-rated worker.

Bonus Act_Practical Problems_33

A workshop is employing 50 workmen. A shop-supervisor is drawing monthly wages of Rs. 9,000. HRD paid annual bonus to all employees except the supervisor. The Supervisor contends that he is also entitled to bonus. Referring to the provisions of the Payment of Bonus Act, 1965 decide whether the HRD’s action is correct.

Friday, December 05, 2008

Consumer Protection Act_Practical Problems_10

Bindu while traveling in a train fell down through the hole in the inter – connecting passage way between two compartments and died. Bindu’s dependant wants to lodge a complaint against the railways under the Consumer Protection Act, 1986. Advise.

Consumer Protection Act_Practical Problems_9

A CT scan machine is installed in Daya Ram Charitable Trust and Diagnostic Centre, 80% of the patients are required to pay charges for the services rendered by the trust whereas 20% patients are provided free services. On a complaint against the trust for deficiency in service, it contended that the trust did not engage in profit-making activity on a large scale. Will it succeed? Give reasons for your answer.

Friday, November 14, 2008


Ray Stone, CFA, follows the Amity Paving Company for his employer. Which of the following scenarios is Stone least likely to have to disclose to his employer.

A)The fact that Stone's son worked at Amity as a laborer during the summer while in school.
B)Stone's personal relationship with the CEO of Amity.
C)Stone's ownership of Amity securities.
D)Stone's participation on Amity's board of directors.

answer : A


Pamela Gee is a portfolio manager. She is planning to establish her own money management firm. She has already informed her employer, Branford, Inc., about her plans. In her remaining time at Branford, she can:

A)solicit Branford colleagues but not Branford clients.
B)inform her current clients about her resignation and let them know how to reach her, in case any problems arise in the future.
C)prepare a list of information from Branford files that she can use for future reference in client solicitation.
D)start the registration of her new company.

answer : D

Wednesday, November 12, 2008


Which of the following statements is most correct under the Code and Standards?

A)Consent from the employer is necessary to permit independent practice that could result in compensation or other benefits in competition with the member's employer.
B)CFA Institute members are prohibited from undertaking independent practice in competition with their employer.
C)Written consent from the outside prospective client is necessary to permit independent practice that could result in compensation or other benefits in competition with the member's employer.
D)Members are prohibited from making arrangements or preparations to go into competitive business before terminating their relationship with their employer.
answer : A


Jones, Inc., is attempting to qualify for Global Investment Performance Standards (GIPS) compliance. Regarding mandatory disclosures, which of the following disclosures will be insufficient and thus prevent Jones, Inc., from claiming compliance?
A)Jones' definition of the firm is that they are a brokerage/portfolio management firm registered with the Securities and Exchange Commission (SEC).
B)Jones discloses all firm assets under active management each period.
C)Jones makes available a complete list and description of all of the firm’s composites.
D)Jones discloses all non-fee paying portfolios that are included in composites and notes the percentage of composite assets that are non-fee paying portfolios.

answer : B


Calvin Doggett, CFA, has been contacted by the CFA Institute Professional Conduct Program (PCP) regarding allegations that he has taken investment actions that were unsuitable for his clients. Doggett is questioned by PCP concerning the identity of his clients he considered suitable for investing in a very risky start-up company that eventually went bankrupt. Doggett will:

A)not violate the Code and Standards only if he reveals the financial condition and investment objectives of his clients on an anonymous basis and does not reveal the names of his clients to PCP.
B)not violate the Code and Standards by refusing to reveal information concerning his client's investments to the PCP.
C)violate the Code and Standards by fully cooperating with a PCP investigation if it means revealing confidential information.
D)not violate the Code and Standards by revealing the names, financial condition and investment objectives of his clients to PCP.

answer : D

Monday, November 10, 2008


All of the following are violations of Standard I(D), Misconduct, EXCEPT:
A) conviction of a crime involving fraud.
B)conviction of a misdemeanor involving civil disobedience in support of one’s personal beliefs.
C)dishonest activities that reflect negatively on professional competence even if they do not result in criminal convictions.
D)any conduct that undermines confidence that the CFA charter represents a level of achievement based on merit and ethical conduct.
answer: B


According to CFA Institute Standards of Professional Conduct, which of the following is NOT a form of plagiarism?

A)Using charts and graphs without stating their sources.
B)Citing specific quotations supposedly attributable to "leading analysts" and "investment experts" without specific reference.
C)Presenting statistical estimates of forecasts prepared by others with the source identified, but without qualifying statements or caveats that may have been used.
D)Using factual information published by recognized financial and statistical reporting services or similar sources without an acknowledgment.

answer: D


Within the Global Investment Performance Standards (GIPS) are supplemental provisions which must be applied to which of the following asset classes?

A)Private equity and real estate.
B)Emerging markets and private equity.
C)Hedge funds and derivatives.
D)Alternative investments and derivatives.

answer: A


Bob Hatfield, CFA, has his own money management firm with two clients. The accounts of the two clients are equal in value. One of the clients gets married and the assets of the new spouse and the client are combined. With the larger portfolio of the now married client, Hatfield determines that they can assume a higher level of risk and begins a change in the policy concerning that portfolio. Which of the following would violate Standard III(C), Suitability?
A)Assess the time horizon of the newly married client and his spouse.
B)Assess the return objectives of the newly married client and his spouse.
C)Notify the client of the change in policy and why he is enacting it.
D)Implement a similar policy for the other client who did not just get married.
answer: D


Julie Stades retired several years ago and relinquished her membership in CFA Institute. She had the CFA designation up until then. She has decided to go back to work and puts the following statement on her resume: “I earned the CFA designation 10 years ago.” Is this a violation of Standard VII(B)?
A)No, because she uses "CFA" as a noun.
B)Yes, because she uses "CFA" as a noun.
C)Yes, she has used the letters "CFA" in an undignified manner.
D)No, as long as she does not indicate she currently has the designation.
answer: D

Sunday, November 09, 2008

Practical Probelms_Partnership Act_6

Rohit is not a partner in a particular firm. But, he represents himself or knowingly permits himself to be represented as a partner of that particular firm to Sanjay, who on the faith of such a representation gives credit to the firm. Is Rohit liable as a partner in the firm ?

Practical Problems_Contract Act_90

Anurag promises to pay Rs. 11,000 to the management committee of a school by way of a donation. The management committee, on the basis of Anurag's promise, gets a Water Purifier System (Acquaguard) installed in the school at a cost of Rs.8,000 on credit. Now, Anurag refuses to pay the donation. What is the remedy available to the management committee of the school ? Give reasons.

Thursday, November 06, 2008

Practical Problems_Contract Act_89

Ram sells the goodwill of his shop to Shyam for Rs. 4,00,000 and promises not to
carry on such business forever and anywhere in India. Is it valid agreement ? Why ?

Practical Problems_Contract Act_88

Kamala promises Ramesh to lend Rs. 50,000 in lieu of consideration that Ramesh
gets Kamala’s marriage dissolved and himself marries with her. Is it valid agreement why ?

Friday, October 24, 2008

What is restrictive & non-restrictive idorsement

A restrictive indorsement is an indorsement that contains some sort of instruction from the indorser.

A nonrestrictive indorsement is an indorsement that has no instructions or conditions attached to the payment of funds.

What is blank & special indorsement

A blank indorsement is an indorsement that does not specify a particular indorsee. It creates bearer paper.

A special indorsement is an indorsement that contains the signature of the indorser and specifies the person (indorsee) to whom the indorser intends the instrument to be payable. It creates order paper.

How order and bearer paper can be converted ?

Instruments can be converted from order paper to bearer paper, and vice versa, many times until the instrument is paid. The deciding factor is the type of indorsement placed on the instrument at the time of each subsequent transfer. An indorsement is the signature (and other directions) written by or on behalf of the holder somewhere on the instrument.

How order and bearer paper are negotiated ?

Order paper is negotiated by indorsement and delivery.
Bearer paper is negotiated by delivery; indorsement is not necessary.

Explain parties to check

Drawer to the check—the customer who has the checking account and writes (draws) the check
Drawee of the check—the financial institution where the drawer has his or her account
Payee of the check—the party to whom the check is written

What do you mean by orders to pay and promises to pay ?

  • Orders to pay are drafts or checks.
  • A draft is a three party instrument that is an unconditional written order by one party that orders the second party to pay money to a third party.
  • A check is a draft that is drawn on a financial institution and is payable on demand. Promises to pay are promissory notes and certificates of deposit.
  • A promissory note is a two party instrument that is an unconditional written promise by one party to pay money to another party.
  • A certificate of deposit is a special type of note where the maker is the financial institution that issues the certificate and the payee is the party to whom the certificate is made payable.

Difference between a negotiable and a nonnegotiable instrument

Negotiable instruments must meet certain requirements established by Article 3 of the Uniform Commercial Code. An instrument that does not meet these requirements is not a negotiable instrument and is subject to contract law.According to the UCC 3-104(a), a negotiable instrument must:

Be in writing
Be signed by the maker or drawer
Be an unconditional promise or order to pay
State a fixed amount of money
Not require any undertaking in addition to the payment of money
Be payable on demand or at a definite time
Be payable to order or bearer

Terminology of Negotiable Insturment (Commercial Paper)

allonge—A separate piece of paper attached to the instrument on which the indorsement is written.
assignee—The party to whom the right has been transferred.
assignment—The transfer of contractual rights by the obligee to another party.
assignor—The party who transfers the right.
bearer paper—Bearer paper is negotiated by delivery: indorsement is not necessary.
blank indorsement—An indorsement that does not specify a particular indorsee. It creates bearer paper.
certificate of deposit (CD)—A two-party negotiable instrument that is a special form of note created when a depositor deposits money at a financial institution in exchange for the institution's promise to pay back the amount of the deposit plus and agreed-upon rate of interest upon the expiration of a set time period agreed upon by the parties.
check—An order by the drawer to the drawee bank to pay a specified sum of money from the drawer's checking accounting to the named payee (or holder).
collateral—Security against repayment of the note that lenders sometimes require; can be a car, a house, or other property.
demand instrument—An instrument payable on demand.
demand note—A note payable on demand.
draft—A three-party instrument that is an unconditional written order by one party that orders the second party to pay money to a third party.
drawee of a check—The financial institution where the drawer has his or her account.
drawee of a draft—The party who must pay the money stated in the draft. Also called the acceptor of a draft.
drawer of a check—The checking account holder and writer of the check.
drawer of a draft—The party who writes the order for a draft.
drawer's negligence—The drawer is liable if his or her negligence led to his or her forged signature or the alteration of a check. The payor bank is not liable in such circumstances.
fictitious payee rule—A rule that says a drawer or maker is liable on a forged or unauthorized indorsement of a fictitious payee.
fixed amount—A requirement of a negotiable instrument that ensures that the value of the instrument can be determined with certainty.
fixed amount of money—A negotiable instrument must contain a promise or order to pay a fixed amount of money.
forged indorsement—The forged signature of a payee or holder on a negotiable instrument.
holder—A person who is in possession of a negotiable instrument that is drawn, issued, or indorsed to him or his order, or to bearer, or in blank.
imposter—A person who impersonates a payee and induces a maker or drawer to issue an instrument in the payee's name and to give it to the imposter.
imposter rule—A rule that says if an imposter forges the indorsement of the named payee, the drawer or maker is liable on the instrument and bears the loss.
indorsee—The person to whom negotiable instrument is indorsed.
indorsement for deposit or collection—An indorsement that makes the indorsee the indorser's collecting agent (e.g. for deposit only)
indorsement—The signature (and other directions) written by or on behalf of the holder somewhere on the instrument.
indorser—The person who indorses a negotiable instrument.
instrument—Term that means negotiable instrument.
maker of a CD—The bank (borrower).
maker of a note—The party who makes the promise to pay (borrower).
money—A "medium of exchange authorized or adopted by a domestic or foreign government."
negotiable instrument—A special form of contract that satisfies the requirements established by Article 3 of the UCC. Also called commercial paper.
negotiation—Transfer of a negotiable instrument by a person other than the issuer to a person who thereby becomes a holder.
nonnegotiable contract—Fails to meet the requirements of a negotiable instrument and, therefore, is not subject to the provisions of UCC Article 3.
nonrestrictive indorsement—An indorsement that has no instructions or conditions attached to the payment of the funds.
order paper—Order paper is negotiated by (1) delivery and (2) indorsement.
order to pay—A drawer's unconditional order to a drawee to pay a payee.
payable on demand or at a definite time requirement—A negotiable instrument must be payable either on demand or at a definite time.
payee of a CD—The depositor (lender).
payee of a check—The party to whom the check is written.
payee of a draft—The party who receives the money from a draft.
payee of a note—The party to whom the promise to pay is made (lender).
permanency requirement—A requirement of negotiable instruments that says they must be in permanent state, such as written on ordinary paper.
portability requirement—A requirement of negotiable instruments that says they must be able to be easily transported between areas.
promise to pay—A maker's (borrower's) unconditional and affirmative undertaking to repay a debt to a payee (lender).
promissory note—A two-party negotiable instrument that is an unconditional written promise by one party to pay money to another party.
restrictive indorsement—An indorsement that contains some sort of instruction from the indorser.
sight draft—A draft payable on sight. Also called a demand draft.
signature requirement—A negotiable instrument must be signed by the drawer or maker. Any symbol executed or adopted by a party with a present intent to authenticate a writing qualifies as his or her signature.
special indorsement—An indorsement that contains the signature of the indorser and specifies the person (indorsee) to whom the indorser intends the instrument to be payable. Creates order paper.
time draft—A draft payable at a designated future date.
time instrument—An instrument payable (1) at a fixed date, (2) on or before a stated date, (3) at a fixed period after sight, or (4) at a time readily ascertainable when the promise or order is issued.
time note—A note payable at a specific time.
trade acceptance—A sight draft that arises when credit is extended (by a seller to a buyer) with the sale of goods. The seller is both the drawer and the payee, and the buyer is the drawee.
unconditional—Promises to pay and orders to pay must be unconditional in order for them to be negotiable.
unconditional promise or order to pay requirement—A negotiable instrument must contain either an unconditional promise to pay (note or CD) or an unconditional order to pay (draft or check).
unqualified indorsement—An indorsement whereby the indorser promises to pay the holder or any subsequent indorser the amount of the instrument if the maker, drawer, or acceptor defaults on it.
unqualified indorser—An indorser who signs an unqualified indorsement to an instrument.

Tuesday, October 21, 2008


S retired several years ago and relinquished her membership in CFA Institute. She had the CFA designation up until then. She has decided to go back to work and puts the following statement on her resume: “I earned the CFA designation 10 years ago.” Is this a violation of Standard VII(B)?

A) No, because she uses "CFA" as a noun.
B) Yes, because she uses "CFA" as a noun.
C) Yes, she has used the letters "CFA" in an undignified manner.
D) No, as long as she does not indicate she currently has the designation.

Monday, October 20, 2008


Standard VI(B), Priority of Transactions, applies to transactions an analyst takes on behalf of:

A) his employer.
B) his clients.
C) personal accounts.
D) all of these.


Miller, CAIA, and Level II CFA candidate, heads the research department of a large brokerage firm. The firm has many analysts, some of whom are subjected to the CFA Institute Code of Ethics and Standards of Professional Conduct. If Miller delegates some of her supervisory duties, which statement best describes her responsibilities under the CFA Institute Code and Standards?
A) CFA Institute Standards prevent Miller from delegating supervisory duties to subordinates.
B) Miller's supervisory responsibilities do not apply to those subordinates who are not subjected to the CFA Institute Code and Standards.
C) Miller retains supervisory responsibilities for those duties delegated to her subordinates.
D) Miller no longer has supervisory responsibility for those duties delegated to her subordinates.


Which of the following is NOT expressly prohibited by Standard I(C), Misrepresentation?

A) misrepresenting the services a member is capable of performing.
B) misrepresenting a member’s qualifications or the qualifications of their firm.
C) misrepresenting a member’s academic or professional credentials.
D) providing information on guaranteed investment products.


An analyst who routinely purges the files that support his research and recommendations:

A) is acting in accordance to Standard III(E), Preservation of Confidentiality.
B) is acting in accordance to Standard IV(A), Loyalty to Employer.
C) may be violating Standard II(A), Material Nonpublic Information.
D) may be violating Standard V(C), Record Retention.

Saturday, October 18, 2008

Practical Problems_Contract Act_87

What would be consequences of breach of employment bond given by an employees: On the employee himself, On the company that employs him subsequently. If the bond states that the employees can be used for criminal breach of trust on breach of the bond, how enforceable is this clause?

As regard the breach of the employment bond given by an employee in this regard it is advised that if an employee has signed a bond after he get specialized training from the company then a civil case can be filed against him for recovery of the amount mentioned in the bond if there is any breach. As regard the company that employs him subsequently, there is no liability of the company, which employs him subsequently. Breach of bond is not criminal breach of trust it is of civil consequences and that also have to be proved in the Court of Law. In no manner it can be termed as criminal breach of trust.

Friday, October 17, 2008

Providend Fund Act_Practical Problems_21

What are the rights of person if a contract has no mention of salary breakups and the employers PF is included as part of the Gross Salary?
There is nothing illegal if there is no mention of salary breakup and employers PF included as part of the Gross Salary. The PF can be deducted as a Contribution of employee from the Gross Salary. In addition the employer has to contribute his share of PF subject to maximum privilege prescribed in Section 6 of Act.

Wednesday, October 15, 2008

Providend Fund Act_Practical Problems_20

Can any employer send his employee on forced leave for not to initiate disciplinary proceeding but to legally punish him?
The employer can not send an employee on forced leave without initiating any disciplinary proceedings against an employee. Only after necessary show cause or charge sheet has been issued and after holding disciplinary inquiry or proceedings, the employer can legally punish you. If the employee fails to receive the payment from the employer after having entered into full and final settlement of the account, the employee can file a civil suit for recovery of office dues. In case gratuity has not been paid then the employee can proceed under the provisions of Payment of Gratuity Act and then in case Provident Fund has not been released after the employee leaving, then he can proceed under the provisions of the Provident Fund Act.

Industrial Dispute Act_Practical Problems_1

I had been working in Pvt. Ltd. Company for 2 and half years as a permanent employee. As per the company rules I was eligible for medical and LTC benefits. When I leave the job they suppose to give me the whole Medical and LTC benefits plus 15 days salary. I had served one month notice also. They promised me to pay after some time since the financial condition of the company was not good at that time. After repeated telephonic reminder and subsequent letters they kept quiet. It is almost 2 years since then, and I came to know that this company continue to do such things with other employees also. What I can do now? Can I still get money back?

Yes, you can claim all the benefits, which the company has not paid you after your resignation. You can file a civil suit against the company and claim those dues. In case you are a "workman" within the definition of Industrial Disputes Act, you can file a petition under Section 33 (c) (ii) of the said Act and claim your benefits.

Tuesday, October 14, 2008

Bonus Act_Practical Problems_32

Is Bonus right of every employee. For calculating bonus does the interest earned by Company in FDRs is also to be counted.

Bonus is something given in addition to what is usual or strictly due; money or anything given in addition to an employee's usual pay or salary. The payment of Bonus Act 1965 provides for payment of bonus to persons employed in a factory and in every other establishment employing twenty or more persons. In calculating bonus, interest earned by a company on fixed deposits is to be excluded.

Friday, October 10, 2008

Payment of Gratuity_Practical Problems_1

An employee who is governed by the Payment of Gratuity Act, 1972 committed a theft in the course of his employment. And consequently his services was terminated. State in this connection, whether the gratuity payable to him shall be wholly or partly forfeited.

The gratuity payable to an employee may be wholly or partially forfeited, where the services of an employee are terminated on the ground of:
(i) riotous or disorderly conduct or act of violence; or
(ii) committing an offence involving moral turpitude in the course of his employment.
Theft is an offence involving moral turpitude and consequently, if the services of an employee had been terminated for committing theft in the course of his employment, the gratuity payable to him under the provisions of the Act shall be wholly forfeited in view of Section 4.

Tuesday, October 07, 2008

Bonus Act_Practical Problems_31

Star Ltd. suffered heavy losses during the current accounting year and hence was not able to pay minimum bonus to its workmen. Referring to the provisions of the Payment of Bonus Act, 1965 state whether the company is required to give the minimum bonus irrespective of losses and it can be exempted by from payment of Bonus.

Subject to the other provisions of the Payment of Bonus Act, every employer shall be bound to pay to every employee in respect of every accounting year, minimum bonus which shall be 8.33% of the salary or wage earned by the employee during the accounting year or Rs.100, whichever is higher, whether or not the employer has any allocable surplus in the accounting year. But if the employee has not completed 15 years of age at the beginning of the accounting year he will be entitled to a minimum bonus which shall be 8.33% of the salary or wage during the accounting year Rs.60/- whichever is higher.

Even if the employer suffers losses during the accounting year he is bound to pay minimum bonus as prescribed by Section 10

NI Act_Practical Problems_56

P owes money to Q. Therefore, he makes a promissory note for the amount in favour of Q, for safety of transmission he cuts the note in half and posts one half to Q. He then changes his mind and calls upon Q to return the half of the note which he had sent. Q requires P to send the other half of the promissory note. Decide how a rights of the parties are to be adjusted.

The question arising in this problem is whether the making of promissory note is complete when one half of the note was delivered to Q. Under Section 46 of the N.I. Act, 1881, the making of a P/N is completed by delivery, actual or constructive. Delivery refers to the whole of the instrument and not merely a part of it. Delivery of half instrument cannot be treated as constructive delivery of the whole. So the claim of Q to have the other half the P/N sent to him is not maintainable. P is justified in demanding the return of the first half sent by him. He can change his mind and refuse to send the other half of the P/N.

Saturday, October 04, 2008

NI Act_Practical problems_55

A promoter who has borrowed a loan on behalf of company, who is neither a director nor a person-in-charge, sent a cheque from the companies account to discharge its legal liability. Subsequently the cheque was dishonoured and the compliant was lodged against him. Does he liable for an offence under section 138?

According to Section 138 of the Negotiable Instruments Act, 1881 where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharging any debt or liability, and if it is dishonoured by banker on sufficient grounds, such person shall be deemed to have committed an offence and shall be liable. However, in this case, the promoter is neither a director nor a person-in-charge of the company and is not connected with the day-to-day affairs of the company and had neither opened nor is operating the bank account of the company. Further, the cheque, which was dishonoured, was also not drawn on an account maintained by him but was drawn on an account maintained by the company. Therefore, he has not committed an offence under section 138.

Thursday, October 02, 2008

Practical Problems_Contract Act_86

X advances to Y Rs.10,000 on the guarantee of Z. The loan carries interest at ten percent per annum. Subsequently, Y becomes financially embarrassed. On Y’s request, X reduces the interest to six per cent per annum and does not sue Y for one year after the loan becomes due. Y becomes insolvent. Can X sue Z?

X cannot sue Z, because a surety is discharged from liability when, without his consent, the creditor makes any change in the terms of his contract with the principal debtor, no matter whether the variation is beneficial to the surety or does not materially affect the position of the surety.

Practical Problems_Contract Act_85

Ajay induced Anil to buy his car saying that it was in a very good condition. After taking the car, Anil complained that there were many defects in the car. Ajay proposed to get it repaired and promised to pay 50% cost of repairs. After a few days, the car did not work at all. Now Anil wants to rescind the contract. Decide giving reasons.

The aggrieved party, in case of misrepresentation by the other party, can avoid or rescind the contract [Section 19, Indian Contract Act, 1872]. The aggrieved party loses the right to rescind the contract if he, after becoming aware of the misrepresentation, takes a benefit under the contract or in some way affirms it. Accordingly in the given case Anil could not rescind the contract, as his acceptance to the offer of Ajay to bear 50% of the cost of repairs impliedly amount to final acceptance of the sale

Practical Problems_Contract Act_84

A promised to pay B for his services at his (A) sole discretion which found to be fair and reasonable. However, B dissatisfied with the payment made by A and wanted to sue him. Decide whether B can sue A under the provisions of Indian Contract Act, 1872?

B’s suit will not be valid because the performance of a promise is contingent upon the mere will and pleasure of the promisor; hence, there is no contract. As per section 29 of the Indian Contract Act, 1872 – agreements, the meaning of which is not certain, or capable of being made certain, are void”.

Wednesday, September 24, 2008

Companies Act_Practical Problems_35

Company Y with a paid-up capital of Rs.50 lakhs entered into a contract with company Z in which a director of Y is holding equity shares of the nominal value of Rs.50,000. The director did not disclose his interest at the Board meeting under section 299 of the Companies Act, 1956. Is the director liable for his act?

As per Section 299, the disclosure of interest by directors do not apply to any contract or arrangement within two companies where any of the directors of one company or two or more of them together holds or hold not more than 2% of the paid up share capital in the other company. In the present case, if the holding is less than 2%, the director is not liable.

Companies Act_Practical Problems_34

Mr. Agent having ‘substantial interest’ in ABC Ltd is appointed as a Sole selling agent by the Board of Directors for a period of 5 years. The company’s paid-up share capital is Rs.49 crores. The Board did not place the matter in the AGM and communicated to Mr. Agent about his appointment, who in turn accepted the offer.
Examining the provisions of the Companies Act, 1956,
(a) Whether the appointment is in order?
(b) What course of action you would take as the Secretary of the company, in case Mr. Agent does not have substantial interest?

(i) the appointment of J is not in order, as there have been a number of violation on the part of the company as per the Companies Act, 1956. Appointment without the approval of the general meeting and without the approval of the Central Government is not valid since the company’s paid-up share capital is more than Rs.50 lakhs in this case. Moreover, since J has substantial interest in the company, approval of Central Government in Form 1 is must. Thus, the appointment of J is not in order.
(ii) the answer would not be different, as the capital (paid-up share capital) is more than 50 lakhs Rupees. In this case though the appointee (J) does not have substantial interest, but the company’s paid up share capital is more than 50 lakhs, consent of the company in general meeting (special resolution) and the approval of the Central Government is required.

Tuesday, September 23, 2008

Comapnies Act_Practical Problems_33

The Board meeting of Governance Ltd. has the following schedules:
1st Meeting - 1st January, 2005
2nd Meeting - 30th June, 2005
3rd Meeting - 1st July, 2005.
4th Meeting - 31st December, 2005.
State whether the Board Meetings are as per order/compliance of the provisions of the Companies Act, 1956. What would be your views if the meeting to be held on 30th June, 2005 is adjourned due to lack of quorum?

As per Section 285, in the case of every company, a meeting of the Board of Directors shall be held at least once in every three months and at least four such meetings shall be held in every year. The section does not state the gap between two board meetings. In the present case four meetings have been scheduled for the year 2005 even though the gap between two board meetings is more than 3 months. However, as per the section there appear to be no contravention.

If the Board meeting to be held on 30th June, is adjourned due to lack of quorum, again a meeting is held on some other date, the company shall not be deemed to have contravened the provisions of Section 285. If the said meeting is held on 30th June, 2005 and was adjourned for want of quorum, the meeting automatically stand adjourned by virtue of Section 288 (1) till the same day in the next week, at the same time and place. And if the same day is a public holiday, then the meeting stands adjourned till the next succeeding day which is not a public holiday.

Comapanies Act_Practical Problems_32

The financial year of a holding company ends on 31st March, while that of its subsidiary ends on 30th June. The subsidiary company wants to extend the financial year from 30th June to 31st March, so that the financial year of both the companies would coincide. Is it possible?

In this case, the financial year of the subsidiary precedes that of the holding company by 9 months. In case the subsidiary wants to extend the financial year from 30th June of one year to 31st March of the following year, the financial years of both the holding and subsidiary companies would coincide. But the extension sought for is for 9 months, i.e., from 30th June of one year to 31st March of the following year. Such an extension cannot be granted even by the Registrar under the proviso to sub-section (4) of section 210. It appears that the Central Government can, under this section, direct that the provisions of sub-section (4) of section 210 shall not apply in this case. Similarly, in order to ensure that the financial year of the subsidiary does not precede that of the holding company by more than six months, similar direction can be issued by the Central Government under sub-section (2) of this section, extending the financial year of the holding company from 31st march, 31st December. Here again, the extension will be for a period of nine months. The financial years of the holding and the subsidiary company
will not coincide. But, by virtue of direction under sub-section (2) the requirement of clause (c) of sub-section (2) of section 212 will be fulfilled.

Wednesday, September 17, 2008

Does IPO grading consider the price at which the shares are offered in the issue?

No. IPO grading is done without taking into account the price at which the security is offered in the IPO. Since IPO grading does not consider the issue price, the investor needs to make an independent judgment regarding the price at which to bid for/subscribe to the shares offered through the IPO.

Can the issuer company reject an IPO grade?

IPO grade/s cannot be rejected. Irrespective of whether the issuer finds the grade given by the rating agency acceptable or not, the grade has to be disclosed as required under the DIP Guidelines. However the issuer has the option of opting for another grading by a different agency. In such an event all grades obtained for the IPO will have to be disclosed in the offer documents, advertisements etc.

When am I required to obtain the grade for the IPO?

IPO grading can be done either before filing the draft offer documents with SEBI or thereafter. However, the Prospectus/Red Herring Prospectus, as the case may be, must contain the grade/s given to the IPO by all CRAs approached by the company for grading such IPO.Further information regarding the grading process may be obtained from the Credit Rating Agencies.

What is ‘IPO Grading’?

IPO grading is the grade assigned by a Credit Rating Agency registered with SEBI, to the initial public offering (IPO) of equity shares or any other security which may be converted into or exchanged with equity shares at a later date. The grade represents a relative assessment of the fundamentals of that issue in relation to the other listed equity securities in India. Such grading is generally assigned on a five-point point scale with a higher score indicating stronger fundamentals and vice versa as below.
IPO grade 1: Poor fundamentals
IPO grade 2: Below-average fundamentals
IPO grade 3: Average fundamentals
IPO grade 4: Above-average fundamentals
IPO grade 5: Strong fundamentals
IPO grading has been introduced as an endeavor to make additional information available for the investors in order to facilitate their assessment of equity issues offered through an IPO.

Thursday, September 11, 2008

Patent Act_43

Does India have provision for grant of EMR?

Yes. The necessary amendment to: the Patents Act, 1970 came into force on 26 March 1999. The provision is applicable with retrospective effect from 1 January 1995.

Patent Act_42

What is an EMR?

TRIPS requires that member countries of the WTO not having provision in their laws for granting product patents in respect of drugs and agrochemical, must introduce Exclusive Marketing Rights (EMR) for such products, if the following criteria are satisfied:

1. A patent application covering the new drug or agrochemical should have been filed in any of the WTO member countries after 1 January, 1995;

2. A patent on the product should have been obtained in any of the member countries (which provides for product patents in drugs and agrochemical) after 1 January 1995;

3. Marketing approvals for the product should have been obtained in any of the member countries;
4. A patent application covering the product should have been filed after 1 2. January 1995 in the country where the EMR is sought;

5. The applicant should apply seeking an EMR by making use of the prescribed form and paying requisite fee. EMR is only a right for exclusive marketing of the product and is quite different from a patent right. It is valid up to a maximum period of 5 years or until the time the product patent laws come into effect.

Patent Act_41

What is 'mail box' provision?

TRIPS requires that countries, not providing product patents in respect of pharmaceuticals and chemical inventions have to put in a mechanism for accepting product patent applications w.e.f. 1 January 1995. Such applications will only be examined for grant of patents, after suitable amendments in the national patent law have been made. This mechanism of accepting product patent applications is called the "mail box" mechanism.

Patent Act_40

What is 'mail box' provision?

TRIPS requires that countries, not providing product patents in respect of pharmaceuticals and chemical inventions have to put in a mechanism for accepting product patent applications w.e.f. 1 January 1995. Such applications will only be examined for grant of patents, after suitable amendments in the national patent law have been made. This mechanism of accepting product patent applications is called the "mail box" mechanism.

Patent Act_39

Does India have any law for protecting new plant varieties?

Yes, India has enacted the New Plant Variety and Farmers Rights. Protection Act in 2001 which, in addition to meeting the technical features of UPOV, provides rights to farmers to use the seeds from their own crops for planting the next crop. Further, there are provisions for benefit sharing with farmers and penalty for marketing spurious propagation material.

Patent Act_38

What is the criteria for deciding protection of a plant varieties ?

There are 5 main criteria to arrive at a decision whether a plant variety is really new or not. These have remained unchanged between 1978 and 1991 Acts of the Convention. These criteria are:

1. Distinctness : The variety shall be deemed to be distinct if it is clearly Discountable from any other variety whose existence is a matter of common knowledge at the time of filing of the application .The object of this criterion is to ensure that the candidate variety can be identified amongst all other varieties whose existence is known, whether or not they are protected. An application for protection or for the entry of a variety in an official register in any country causes the variety to be recorded as a matter of common knowledge. In other words, the application for the protection should be filed with UPOV before disclosing it to any other agency.

2. Uniformity: The variety shall be deemed to be uniform if, subject to the variation that may be accepted from the particular features of its propagation, it is sufficiently uniform in its relevant characteristics.The objective of this criterion is to ensure that the individuals representing the variety which is a candidate of protection, form a group which is identifiable on the basis of the description of its characteristics. In other words, the variation between individuals within a variety must be less than that within a species. In the absence of this condition it would become impossible to identify distinct varieties within species.
The degree of uniformity is determined taking into account the mode of reproduction of the species and all the genetic structure of varieties. The same levels of uniformity cannot be required for a strictly self pollinating species or for a species which is vegetatively propagated. An acceptable level of uniformity would ensure that it can be used for agricultural production. In this regard the difference between the protection, given by UPOV and patent system can be noted.

3. Stability: The variety shall be deemed to be stable if its relevant characteristics remain unchanged after repeated propagation or, in the case of a particular cycle of propagation at the end of each such cycle. The idea is to ensure that the variety will be identical to the description established at the moment of granting protection after repeated propagation.
Stability, as well as uniformity may be lost if the rights holder fails to maintain the variety true to the description established when the rights were granted.

4. Novelty: The variety shall be deemed to be new if, at the date of filing of the application for breeders right, propagating or harvesting material of the variety has not been sold or otherwise disposed of to others, by or with the consent of the breeder for the purpose of exploitation of the variety. It is also understood that a variety to which people have had free access in the past cannot be protected because then the interest of those who have relied on the free access, will suffer.
As it is some time necessary to see the response of the market to new varieties before deciding whether or not to apply for protection, grace period has been included. The period is one year prior to the date of application in the country where the application is filed and in countries other than that in which the application has been filed and six years in case of trees and vines and four years for all other species.

5. Appropriate denomination: The variety shall be designated by a denomination which will be its generic designation. The premise that the variety denomination must be its generic designation class for a requirement that 'denomination must enable the variety to be identified'. Users and consumers need to have some method of knowing that a sample is a sample of a particular identified plant variety; because it is often not possible to identify it from its appearance. This is facilitated by requiring that a specific denomination and only that denomination be used to identify a variety in trade.

Patent Act_37

What is UPOV?

UPOV is an abbreviation of Union Pour la Protection des Obtentionsw Vegetable (Union for protection for new varieties of plant). It is an international convention which provides a common basis for the examination of plant varieties in different member States of UPOV for determining whether a plant variety merits protection under UPOV or not

Tuesday, September 09, 2008

Patent Act_36

Is there any system for protecting new plant variety?

New plant varieties cannot be protected in India at present. However, in many countries such plants can be protected through Breeders Rights, patent and UPOV Convention India is under an obligation to introduce a system for protecting new plant variety. The protection can be through patent or a sui generis system or a combination of these two systems.

Patent Act_35

What is the cost of filing a PCT application?

The schedule of fees is as given below
1. (a) Basic fee up to 30 sheets of a patent application (Approx. Rs. 19,500) : 650 Swiss francs (b) Basic fee for a patent application having more than 30 sheets : 650 Swiss francs plus; sheet in excess of 30 sheets : 15 Swiss francs for each
2. (a) Designation fee if designation is less than 11 designation: 150 Swiss francs per (b) Designation fee if designation is more than 11: 1650 Swiss francs
3. Handling fee: 233 Swiss francs
4. Search fees are additionally payable
5 All fees payable are reduced by 75% for applications filed by any applicant who resides in a PCT Contracting State where the per capita national income is below 3000 US dollars. If there are several applicants, each must satisfy the criterion. It may be noted that no concessions are available in the national phase or regional phase applications; respective fees in these phases will have to be paid by the applicant.

Patent Act_34

Which is the appropriate office in India in relation to international applications?
An international application can be filed in any of the Branch Offices of the Patent Office located at New Delhi, Chennai, Mumbai and Kolkata (Head Office). Any of these Offices shall function as receiving office, designated office and elected office for the purpose of international applications filed under the Treaty.
An international application shall be filed in the Patent Office which would process the application in accordance with these rules and the provision under the PCT.

Patent Act_33

What is the benefit of the delayed processing?

(a) By the end of the 20th or the 30th month the applicant is in a better position to assess the quality of the invention being protected as a detailed search report or an examination report or both would be available to help making an assessment.
(b) Applicants can re-evaluate their decision about filing applications in all the designated countries after a long gap of 20 or 30 months.
(c ) If not satisfied, applicants may decide to drop a few countries from the list. This decision would also be influenced by the changing market conditions.
(d ) Applicants can delay their investment in respect of the national phase or the regional phase applications by 20 or 30 months without sacrificing priority.

Thursday, September 04, 2008

Patent Act_32

What is the meaning of delayed processing of the application by the national phase or the regional phase?

A search report on the patent application filed with a receiving office is received by the applicant/inventor 16 months after the priority date which is nothing but the date of submitting the application in the receiving office. The International Bureau of the WIPO publishes the application and the search report 18 months after the priority date. The original application is then sent to the designated offices indicated in the application. Within two months of this i.e. by the 20th month, the applicant will have to formally apply to the patent offices of these countries for grant of patents by paying official fees and completing other formalities stipulated by these offices . In case translated copies of the application are required, the same has to be furnished by the applicant. Inspite of submitting the request for grant of patents in designated countries in the 20th month after the priority date, the priority in these countries is the same as the date of filing the original PCT application.

If applicant/inventor has requested for an examination report, the report is usually received by the applicant /inventor about 28 months after the priority date. Within two months of this, the applicant/inventor will have to formally apply for grant of patents in designated countries .The priority of the application is maintained in the designated countries.
36. What is the benefit of the delayed processing?

Patent Act_31

How are patent applications under PCT handled?

The patent office or nay other office designated by each contracting state becomes a receiving office for receiving patent applications These applications are referred to International Searching Authorities (ISA) which usually the patent offices, appointed to carry out the patent search on a global basis. In case the receiving office is also an ISA, a separate referral is not required . There is also a provision to get a patent application examined by international preliminary Examining Authorities which, in most cases are ISA.

Patent Act_30

What is the need for PCT ?

In order to protect your invention in other countries, you are required to file an independent patent application in each country of interest; in some cases , within a stipulated time to obtain priority in these countries .This would entail a large investment, within a short time, to meet costs towards filing fees, translation, attorney charges etc. In addition you are making an assumption which, due to the short time available for making the decision on whether to file a patent application in a country or not , may not be well founded .

Inventors of contracting states of PCT on the other hand can simultaneously obtain priority for their inventions without having to file separate application in the countries of interest ; thus saving the initial investments towards filing fees, translation etc.

In addition the system provides much longer time for filing patent application in member countries.The time available under paris convention for securing priority in other countries is 12 months from the date of initial filing.Under the PCT system to be sure that the claimed invention is novel. the inventor could also opt for preliminary examination before filing in other countries to be doubly sure about the patentability of the invention .

Patent Act_29

What is patent cooperation treaty (PCT)?
The patent cooperation treaty (PCT) is a multilateral treaty entered into force in 1978. Through PCT, an inventor of a member country (Contracting state of PCT can simultaneously obtain priority for his/her Invention in all/ any of the member countries, without having to file a separate application in the countries of interest , by designating them in the PCT application .India joined the PCT on December 7, 1998.

Monday, September 01, 2008

Practical Problems_Contract Act_83

Because of disagreements, quarrels and disputes between an old father and his modern young son, father by written agreement duly attested by Notary promises to pay Rs. 15000/- p.m. to his son for living separately. Decide about its validity.

Practical Problems_Contract Act_82

Can a proposer whose bid at an auction had been provisionally accepted subject to approval by competent authority revoke his bid prior to approval of competent authority?

Practical Problems_Contract Act_81

A, while still a minor by fraudulently misrepresenting his age, agreed to sell his property to B. Having received full consideration amount, A refused to perform his part of the bargain on the plea of minority. Can B recover the amount from A?

Patent Act_28

What is the system for protecting microbiological inventions and microorganisms?

The Indian Patent Act has no specific provision for patenting of microorganisms and microbiological processes. However, as a matter of practice microorganisms per se are not patentable in India. (However, a recent decision of the Kolkata High Court has held that microbiological processes are patentable in India). In order to meet the obligation under TRIPS. India is required to introduce a patenting of microorganisms. Draft laws in this regards have been formulated. It may, however, be noted that many countries allow both process and product patents in regard to microbiological inventions and microorganism per se. all such countries allow patenting of genetically modified microorganisms but a few also allow patenting of naturally occurring microorganisms if isolated from nature for the first time and if other conditions of patentability are satisfied.

Patent Act_27

Are there any differences in the filing of patent applications in respect of microbiological inventions and other inventions?

An inventor is required to deposit the strain of a microorganism in a recognized depository which assigns a registration number to the deposited microorganism. This number needs to be quoted in the patent application. Obviously a strain of microorganism is required to be deposited before filing a patent application. It may be observed that this mechanism obviates the need of describing a microorganism in the patent application. Further, samples of strains can be obtained from the depository for further working on the patent. There are many international depositories in many countries, which are recognized under the Budapest Treaty.

Patent Act_26

What is the Budapest Treaty?

This is an international convention governing the recognition of deposits in officially approved culture collections for the purpose of patent applications in any country that is a party to it. Because of the difficulties and on occasion of virtual impossibility of reproducing a microorganism from a description of it in a patent specification, it is essential to deposit a strain in a culture collection centre for testing and examination by others. The Treaty was signed in Budapest in 1973 and later on amended in 1980. India has become a member of this Treaty, with effect from December 17, 2001.

Friday, August 29, 2008

Patent Act_25

What are the other advantages of joining the Paris Convention?

There are a number of international conventions and treaties, which are open only to the members of the Paris Convention. Some of these are:

Patent Cooperation Treaty (PCT)
Budapest Treaty (for deposition of microorganisms)UPOV (for protection of new varieties of plants)
Madrid Agreement (for repression of false or deceptive indications of source on goods)
Madrid Protocol (concerning registration of marks)
Hague Agreement (concerning deposits of industrial designs)

Patent Act_24

Is there any relationship between the Paris Convention and the TRIPS Agreement?
It has been made mandatory for the member countries of the TRIPS Agreement to comply with the Article 1 to 12 and Article 19 of the Paris Convention.

Patent Act_23

Is there a provision for compulsory license in the Paris Convention?

Yes, each member country shall have the right to provide for the grant of compulsory licenses to prevent the abuses resulting from the exclusive rights conferred by the patent. Compulsory licenses for failure to work or insufficient working of the invention may not be requested before the period of time of non-working or insufficient working has elapsed. This time limit is four years from the date of filing of the patent application or three years from the date of the grant. Such licenses will be a non-exclusive and non-transferable one.

Patent Act_22

What is implied by importation in relation to working of a patent under the Convention?

Importation is considered as working of patent, provided the patented product is manufactured in a member country and is imported into another member country which has also granted a patent on the same invention to the same applicant. Imagine that a product X has been patented in two member countries A and B. The product X is then manufactured in country A and imported into the country B. This product X shall enjoy the same patent protection in the country B even though it has been manufactured in the country A. This would also be considered as if the patent has been worked in country B.

Patent Act_21

What do you understand by the right of priority and what is its significance?

The date from which patent right is deemed to start is usually the date of filing of complete specification. To obtain rights in other member countries, the application must be filed on the same day in other member countries if it is desired to have the rights started from the same day. However, there are practical difficulties in synchronizing the activities. For facilitating simultaneous protection in member countries, the Convention provides that within 12 months of national filing, if patent applications are filed in those member countries, the patents, if granted in member countries, will be effective from the date of national filing. This right is known as the right of priority. In other words you maintain the priority or the same date of filing in all the member countries and no one else in those countries can obtain the patent rights on a similar/identical invention from the same or a later date.

In case the applicant after a second look at the patent application finds that the patent contains more than one invention or on his own accord wishes to divide the application, he can claim the initial date of priority for subsequent patent applications. The applicant may also, on his own initiative, divide a patent application and preserve as the date of each divisional application the date of the initial application and the benefit of the right of priority, if any. Each country of the Union shall have the right to determine the conditions under which such division shall be authorized.
Priority may not be refused on the ground that certain elements of the invention for which priority is claimed do not appear among the claims formulated in the application in the country of origin, provided that the application documents as a whole specifically disclose such elements.

Thursday, August 28, 2008

Patent Act_20

What is the meaning of national treatment under the Paris Convention?

This is a very important concept and is essential for successfully achieving the fundamental aim of the Paris Convention. The idea is to provide equal treatment to applications from member countries, in a given member country and not to differentiate between the nationals of your country and nationals of the other countries for the purpose of grant, and protection of industrial property in your country. Imagine that a national of country X applies for grant of a patent in India. According to the Paris Convention, the Indian Patent Office shall apply the same norms and rules, to the applicant from X, as applicable to an Indian applicant, for granting a patent. Similarly the applicant from X shall have the same protection after grant and identical legal remedies against any infringement shall be available to the applicant provided the conditions and formalities imposed upon Indians are complied with. No requirement as to domicile or establishment in the country where protection is claimed, may. be imposed.

Patent Act_19

What are the principal features of the Paris Convention?

The principal features of the Paris Convention have been listed below
National treatment

Right of priority

Independence of patents

Parallel importation

Protection against false indications and unfair competition

Patent Act_18

What is the Paris Convention?

The Paris Convention is an international convention for promoting trade among the member countries, devised to facilitate protection of industrial property simultaneously in the member countries without any loss in the priority date. All the member countries provide national treatment to all the applications from the other member countries for protection of industrial property rights. The Convention was first signed in 1883. Since then, the Convention has been revised several times, in 1900 at Brussels, in 1911 at Washington, in 1925 at the Hague, in 1934 at London, in 1958 at Lisbon and in 1967 at Stockholm. The last amendment took place in 1979. mdia became a member of the Paris Convention on December 7, 1998. (Readers may note the use of the phrase 'Industrial Property' and not Intellectual Property).

Patent Act_17

What is industrial property?

Industrial property includes:
(a) Patents
(b) Utility models
(c) Industrial designs
(d) Trademarks, service marks and trade names
(e) Indication of source or appellations of origin (this is same as the geographical indications adopted in TRIPS);

Tuesday, August 26, 2008

Patent Act_16

Does grant of a patent in one country affect its grant or refusal in another country?

Each country is free to grant or refuse a patent on the bases of scrutiny by its patent office. This means that granting a patent in one country of the Union does not force other countries to grant the patent for the same invention. Also, the refusal of the patent in one country does not mean that it will be terminated in all the countries.

Patent Act_15

Is a patent granted in one country enforceable in other countries?

No. There is nothing like a global patent or a world patent. Patent rights are essentially territorial in nature and are protected only in a country (or countries) which,has (have) granted these rights. In other words,-for obtaining patent rights in different countries one has to submit patent applications in all the countries of interest for grant of patents. This would entail payment of official fees and associated expenses, like the attorney fees, essential for obtaining patent rights in each country. However, there are some regional systems where by filing one application one could simultaneously obtain patents in the member countries of a regional system; European Patent Office is an example of a similar system.

Patent Act_14

What is the distinction between a patented invention and know how?

The law does not require that the information disclosed in the patent specification be sufficient for commercial exploitation of the invention. Thus, patent usually will not disclose sufficient information for commercialization. Know how on the other hand, covers all information necessary to commercialize the invention e.g. setting up a production plant. Such information would include, for example, details of the production methods, the design drawings etc. It is this know how which is traded while transferring technology. Know how is always kept as a trade secret and not shared with public. Know how is not protected through patents as most of it is non-patentable matter and one does not take patent on the remaining parts to avoid public disclosure. A know how developed around an existing patent and commercialized subsequently may be an infringement of the patent unless the patentee has agreed to commercialization on mutually agreed terms.

Patent Act_13

What is opposition under the Indian Patents Act 1970?

After the Patent Office has examined an application and found it in order forgrant of a patent, it publishes the title pf the invention, name of the inventor(s) and the applicant(s), abstract of the invention, drawings and claims in the Gazette of India, Part III Section 2, for interested parties to oppose the grant of the patent. An application for opposition may be filed at the concerned Patent Office branch within four months of the date of the issue of the concerned gazette. An extension of one month is possible; a request for extension has to be made within the first four months. Typed or photocopies of the specification together with photocopies of the drawings, if any, can be obtained from the Patent Office, Calcutta or the concerned branch office on payment of the prescribed fees. One would like to oppose if the idea of the accepted application infringes upon one's invention/existing patent, if the coverage of the proposed patent is very wide which may be detrimental to one's research or if the idea is not novel and so on.

Monday, August 25, 2008

Patent Act-12

What are the criteria for naming inventors in an application for patent?

The naming of inventors is normally decided on the basis of the following criteria:

i. All persons who contribute towards development of patentable features of an invention should be named inventor(s).

ii. All persons, who have made intellectual contribution in achieving the final results of the research work leading to a patent, should be named inventor(s).

iii. A person who has not contributed intellectually in the development of an invention is not entitled to be included as an inventor. iv. A person who provides ideas needed to produce the ‘germs of the invention’ need not himself / herself carry out the experiments, constructs the apparatus with his/her own hands or make the drawings himself/herself. The person may take the help or others. Such person who have helped in conducting the experiments, constructing apparatus or making the drawings or models without providing any intellectual inputs are not entitled to be named inventors.

Quite often difficulties are experienced in deciding the names of inventors. To avoid such a situation, it is very essential that all scientists engaged in research should keep factual, clear and accurate recorded of daily work done by them in the form of diary. The pages in the diary should be consecutively numbered and the entries made be signed both by the scientists and the concerned leader.

Patent Act_11

What are the essential patent documents to be generated and submitted by a potential patentee?
There are two types of patent documents usually known as patent specification, namely
(i) Provisional Specification and (ii) Complete Specification
Provisional Specification
A provisional specification is usually filed to establish priority of the invention in case the disclosed invention is only at a conceptual stage and a delay is expected in submitting full and specific description of the invention. Although, a patent application accompanied with provisional specification does not confer any legal patent rights to the applicants, it is, however, a very important document to establish the earliest ownership of an invention. The provisional specification is a permanent and independent scientific cum legal document and no amendment is allowed in this. No patent is granted on the basis of a provisional specification. It has to be a followed by a complete specification for obtaining a patent for the said invention. Complete specification must be submitted within 12 months of filing the provisional specification. This period can be extended by 3 months. It is not necessary to file an application with provisional specification before the complete specification. An application with complete specification can be filed right at the first instance.
Complete Specification
Submission of complete specification is necessary to obtain a patent The contents of a complete specification would include the following
1. Title of the invention.
2. Field to which the invention belongs .
3. Background of the invention including prior art giving drawbacks of the known inventions & practices.
4. Complete description of the invention along with experimental results.
5. Drawings etc. essential for understanding the invention.
6. Claims, which are statements, related to the invention on which legal proprietorship is being sought. Therefore the claims have to be drafted very carefully.

Patent Act_10

How does one keep a patent in force for the full patent term?

A patent has to be maintained by paying the maintenance fees every year. If the maintenance fees is not paid, the patent will cease to remain in force and the invention becomes open to public. Anyone can then utilize the patent without the danger of infringing the patent.

Patent Act_9

What is the term of a patent in the Indian system?

(a) Five years from the date of sealing of the patent or seven years from the date of the patent (i. e. the date of filing the complete specification), whichever period is shorter, for an invention claiming the method or process of manufacture of a substance, where the substance is intended or capable of being used as a drug, medicine or food.
(b)Fourteen years from the date of patent in respect of any other patentable invention.

Saturday, August 23, 2008

Patent Act_8

What is considered as the date of patent?

The date of patent is the date of filing the complete specification. This is an important date because it is from this date that the legal protection of an invention covered in the patent takes effect. The term of the patent is counted from this date.

Patent Act_7

Can a published or disclosed invention be patented?

No, publication of an invention in any form by the inventor before filing of a patent application would disqualify the invention to be patentable. Hence, inventors should not disclose their inventions before filing the patent application. The invention should be considered for publication after a patent application has been filed. Thus, it can be seen that there is no contradiction between publishing an inventive work and filing of patent application in respect of the invention.

Patent Act_6

When should an application for a patent be filed?

Filing of an application for a patent should be completed at the earliest possible date and should not be delayed. An application filed with provisional specification, disclosing the essence of the nature of the invention helps to register the priority by the applicant. Delay in filing an application may entail some risks like (i) other inventors might forestall the first inventor by applying for a patent for the said invention (ii) there may be either an inadvertent publication of the invention by the inventor himself/herself or by others independently of him/her.

Friday, August 22, 2008

Patent Act_5

What are the types of inventions which are not patentable in India?

An invention may satisfy the conditions of novelty, inventiveness and usefulness but it may not qualify for a patent under the following situations:
(i) An invention which is frivolous or which claims anything Obviously contrary to well established natural laws e.g. different types of perpetual motion machines.
(ii) An invention the primary or intended use of which would be contrary to law or morality or injurious to public health e.g. a process for the preparation of a beverage which involves use of a carcinogenic substance, although the beverage may have higher nourishment value.
(iii) The mere discovery of a scientific principal or formulation of an abstract theory e.g., Raman effect.
(iv) The mere discovery of any new property or new use of known substance or the mere use of a known process, machine or apparatus unless such a known process results in a new product or employs at least one new reactant.
(v) A substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance.
(vi) The mere arrangement or rearrangement or duplication of features of known devices each functioning independently of one another in a known way.
(vii) A method or process of testing applicable during the process of manufacture for rendering the machine, apparatus or other equipment more efficient.
(viii) A method of agriculture or horticulture .
(ix) Any process for medical, surgical, curative, prophylactic or other treatment of human beings, or any process for a similar treatment of animals or plants.
(x) Inventions relating to atomic energy.

Patent Act_4

What are patentable inventions under the Patents Act, 1970?

Invention means any new and useful
(a) Art, process, method or manner of manufacture (b) Machine, apparatus or other article (c)Substances produced by manufacture, and include any new and useful improvements of any of them and an alleged invention.

However, inventions claiming substance intended for use, or capable of being used, as food or as medicine or drug or relating to substances prepared or produced by chemical processes (including alloys, optical glass, semiconductors and inter-metallic compounds) are not patentable.

Patent Act_3

What are the conditions to be satisfied by an invention to be patentable?

An invention must satisfy the following three conditions of :
(i) Novelty (ii) Inventiveness (Non-obviousness) (iii) Usefulness

Novelty : An invention will be considered novel if it does not form a part of the global state of the art. Information appearing in magazines, technical journals, books, newspapers etc. constitute the state of the art. Oral description of the invention in a seminar/conference can also spoil novelty. Novelty is assessed in a global context. An invention will cease to be novel if it has been disclosed in the public through any type of publications anywhere in the world before filing a patent application in respect of the invention. Prior use of the invention in the country of interest before the filing date can also destroy the novelty. Novelty is determined through extensive literature and patent searches. It should be realized that patent search is essential and critical for ascertaining novelty as most of the information reported in patent documents does not get published any where else.

Inventiveness (Non-obviousness) : A patent application involves an inventive step if the proposed invention is not obvious to a person skilled in the art i.e., skilled in the subject matter of the patent application. The prior art should not point towards the invention implying that the practitioner of the subject matter could not have thought about the invention prior to filing of the patent application. Inventiveness cannot be decided on the material contained in unpublished patents. The complexity or the simplicity of an inventive step does not have any bearing on the grant of a patent. In other words a very simple invention can qualify for a patent. If there is an inventive step between the proposed patent and the prior art at that point of time, then an invention has taken place. A mere 'scintilla' of invention is sufficient to found a valid patent.

Usefulness: An invention must possess utility for the grant of patent No valid patent can be granted for an invention devoid of utility.

Patent Act_2

What is expected from patentee as an obligation to the state?

A patentee must disclose the invention in a patent document for anyone to practice it after the expiry of the patent or practice it with the consent of the patent holder during the life of the patent.

Patent Act_1

What is a patent?

A patent in an exclusive right granted by a country to the owner of an invention to make, use, manufacture and market the invention, provided the invention satisfies certain conditions stipulated in the law. Exclusivity of right implies that no one else can make, use, manufacture or market the invention without the consent of the patent holder. This right is available only for a limited period of time. However, the use or exploitation of a patent may be affected by other laws of the country which has awarded the patent.

These laws may relate to health, safety, food, security etc. Further, existing patents in similar area may also come in the way. A patent in the law is a property right and hence, can be gifted, inherited, assigned, sold or licensed. As the right is conferred by the State, it can be revoked by the State under very special circumstances even if the patent has been sold or licensed or manufactured or marketed in the meantime. The patent right is territorial in nature and inventors/their assignees will have to file separate patent applications in countries of their interest, along with necessary fees, for obtaining patents in those countries.

Thursday, August 21, 2008

Copy Right Act_28

What are the major provisions in the amended Copyright Act, 1999 with regards to computer programs?

The major provisions are :
(i) the doing of any act necessary to obtain information essential for operating inter-operability of an independently created computer program with other programs by a lawful possessor of a computer program provided that such information is not otherwise readily available;

(ii) the observation, study or test of functioning of the computer program in order to determine the ideas and principles which underline any elements of the program while performing such acts necessary for the functions for which the computer program was supplied;

(iii) the making of copies or adaptation of the computer program from a personally legally obtained copy for non-commercial personal use.

Copy Right Act_27

What notice needs to he put on computer program copies to seek copyright protection?

When a work is published by authority of the copyright owner, a notice of copyright may be placed on publicly distributed copies. As per the Berne Convention for protection of literary and artistic works, to which India is a signatory, use of copyright notice is optional. It is, however, a good idea to incorporate a copyright notice.

Copy Right Act_26

In some of the programs, the screens could be the most commercially significant aspect. Is it necessary to register the program screen separately from the underlying code?
Generally, all copyrightable expressions embodied in a computer program, including screen displays, are protectable. However, unlike a computer program, which is a literary work, screen displays are artistic work and cannot therefore be registered in the same application as that covering the computer program. A separate application giving graphic representation of all copyrightable elements of the screen display is necessary.

Copy Right Act_25

In order to further ensure that secrets are protected, is deposition of computer program in object code permissible?

Although the recent amendment (1994) in the Copyright Act enlarges the meaning of a computer program, it is still not very clear as to whether it includes both object code and source code. However, keeping in mind the proclaimed object of the amendment, presumably the benefit of the Copyright Act will be available to both. As per experts' opinion, it is easier to determine from source code whether the deposit represents copyrightable material. Deposit of object code may be possible, but registration presumably would be accepted pending on assurance that the code does represent copyrightable material. Procedures for these do not exist at present with the Copyright Office.

Copy Right Act_24

What is the rule for the transfer of copyright?

The owner of the copyright in an existing work or prospective owner of the copyright in a future work may assign to any person the copyright, either wholly or partially in the following manner.
for the entire world or for a specific country or territory; or
for the full term of copyright or part thereof ; or
relating to all the rights comprising the copyright or only part of such rights.

Wednesday, August 20, 2008

Copy Right Act_23

If an independent third party develops a program for a company, who owns the copyright?

Works created by third parties on commission do not automatically vest the copyright in the commissioning party. If the third party is an independent contractor, it is essential for the commissioning party to obtain the copyright through a written deed of assignment. It is a common misconception that the copyright automatically belongs to the commissioning party. Thus, it is only where the developer is an employee creating the work under a contract of service that the! Rights belong to the employer.

Copy Right Act_22

If an employee in a company develops a program, would this employee own the copyright?

No. In the case of a program made in the course of author's employment under a contract of service or apprenticeship, the employer shall, in the absence of any agreement to the contrary, be the first owner of the copyright.

Copy Right Act_21

If an employee in a company develops a program, would this employee own the copyright?

No. In the case of a program made in the course of author's employment under a contract of service or apprenticeship, the employer shall, in the absence of any agreement to the contrary, be the first owner of the copyright.

Copy Right Act_20

Is it necessary to deposit accompanying documents of the computer program for which copyright is being sought?

Documentation which normally accompanies the program is regarded as separate work and for this reason if the same has to be registered, it must be separately registered and not combined with the computer program in single application.

Copy Right Act_19

What is the term of a copyright?

a. If published within the life time of the author of a literary work the term is for the life time of the author plus 60 years.
b. For cinematography films, records, photographs, posthumous publications, anonymous' publication, works of government and international agencies the term is 60 years from the beginning of the calendar year following the year in which the work was published.
c. For broadcasting the term is 25 years from the beginning of the calendar year following the year, in which the broadcast was made.

Copy Right Act_18

What is the definition of a computer program?

Computer program means a set of instructions expressed in words, codes, schemes or any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result.

Thursday, August 14, 2008

What is the Madrid Protocol?

The Protocol relating to the Madrid Agreement concerning the International Registration of Marks was adopted at Madrid on June 27, 1989. The Protocol, which entered into force on December 1, 1995, retains the basic features of the Madrid Agreement. As on July 15, 1999, 39 countries have acceded to the Protocol. The Protocol was formed to remove some of the features of the Madrid Agreement, which posed some obstacles to accession by several countries. These features are:

1. For an international registration, it is essential to first register a mark at the national level. The time required for obtaining a mark at the national level varies from country to country. Hence some parties do suffer.
2. Within one year, a designated member country has to examine and issue a notice of refusal by giving all the grounds for refusal. The period was considered short.
3. A uniform fee is paid for the designation of a member country. This was found to be inappropriate for countries with high level of national fees.
4. An international registration is linked to the basic registration during the initial five years and the former gets cancelled if latter is cancelled. The fact, that grounds under which a mark is cancelled in the country of origin need not necessarily exist in every other designated country, is overlooked.
5. The only working language of the Madrid Agreement is French. Innovations introduced by the Madrid Protocol are :
1. An international application need not necessarily be based on a registration made by the Office of Origin but can also be based on an application filed with the Office of Origin. This makes it convenient for countries with full examination system where the national registration takes time. It also makes it possible to claim the right of priority of six months under the Paris Convention.
2. A Contracting Party can receive the fee under the existing Madrid Treaty system through its share in the international fees collected: for each designation made as in the Madrid Treaty. Alternatively, the member country can choose "Individual fee" system for each designation made, which should be an amount not more than the national fee for a ten-year registration. The "Individual fee" system makes an attractive proposition for countries with high level of national fees.
3. It is possible to transform an international registration into national or regional application in the designated Contracting Parties, if the basic registration is cancelled for some reasons, as in the case of "Central Attack".
4. An applicant may choose to base an international registration in any of the Contracting States with which he has connection through nationality, domicile or establishment.