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.

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);

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.

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.

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.

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.

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.

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.

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.

What are the main features of the Madrid Agreement?

Main features of the Madrid Agreement are as follows :

1. An applicant must be a national of a member country. A person having his domicile or a real and effective industrial or commercial interest in such a country is also eligible. It may be noted that this would be governed by the national laws of the country in question:

2. A mark to be registered in member states should be first registered at the national level in the country of origin of the applicant. The first registration is called 'basic registration'.

3. The country having given the basic registration can only transmit there quest for international filing to the International Bureau of the World Intellectual Property Organization (WI PO) along with the list of the countries in which protection is being sought. There 'is no provision for directly filing a request under the Agreement.

4. It may be iterated that the country of origin has to be a member state. The role of the office of the country of origin is not only to send the application for international registration but also to certify that the mark which is the subject of the international registration, is the same mark which is the subject of the basic registration.

5. For each application fees has to be paid for each designated country and WIPO. The fees paid for the designated countries is called the 'complementary fee'.

6. The International Bureau notifies the international registration to the offices of the designated countries and publishes it in a monthly periodical called 'The WIPO Gazette of International Marks'.

7. If the basic registration is cancelled for some reasons, in the country of origin, during the first five years, the international registration automatically stands cancelled in all the designated countries. This also gives an advantage to a person to oppose the registration of a mark only in the country of origin and that person need not oppose it in all the designated countries. This possibility of challenging an international registration through a national registration is referred to as 'Central Attack' feature of the Agreement.

What is the Madrid Agreement?

The Madrid Agreement was adopted on April 14, 1891 to facilitate protection of a trademark or service mark in several countries by means of a single international registration. As on July 15, 1999, 54 countries are party to this Agreement mainly belonging to Europe, countries of Africa and four countries in the Far East namely, China, the Democratic People's Republic of Korea, Mongolia and Vietnam. The United Kingdom, The United States of America, most Latin American countries, Japan and India are not signatories to this agreement. The Agreement covers both trademarks and service marks.

How are the terms "Certification Trademarks" and "Collective Marks" defined in the Act?

Certification trade mark means a mark capable of distinguishing the goods or services in connection with which it is used in the course of trade which are certified by the proprietor of the mark in respect of origin, material, mode of manufacture of goods or performance of services, quality, accuracy or other characteristics from goods or services not so certified and registrable as such under Chapter IX in respect of those goods or services in the name as proprietor of the certification trade mark, of that person.

Collective Mark means a trademark

distinguishing the goods or services of members of an association of persons (not being a partnership within the meaning of the Indian Partnership Act, 1932) which is the proprietor of the mark from those of others.

What is the meaning of "Service" in the Trademark Act 1999?

Service means service of any description which is made available potential users and includes the provision of services in connection with business of any industrial or commercial matters such as banking, communication, education, financing, insurance, chit funds, real estate, transport, storage, material treatment, processing, supply of electrical or other energy, boarding, lodging, entertainment, amusement, construction, repair, conveying of news or information and advertising.

What are "Well-known Trademarks" and "Associated Trademarks"?

Well-known trademark in relation to any goods or services, means a mark which has become so to the substantial segment of the public which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first-mentioned goods or services.

Associated Trademarks means trademarks deemed to be, or required to be, registered as associated trademarks under this Act.

How is "Trademark" defined?

Trademark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of other and may include shape of goods, their packaging and combination of colours; and

(i) in relation to Chapter XII (other than section 107), a registered trade mark or a mark used in relation to goods or services for the purpose of indicating or so as to indicate a connection in the course of trade between the goods or services, as the case may be, and some person having the right as proprietor to use the mark and

(ii) in relation to other provisions of this Act, a mark used or proposed to be used in relation to goods or services for the purpose of indicating or so to indicate a connection in the course of trade between the goods or services, as the case may be, and some person having the right, either as proprietor or by way of permitted user, to use the mark whether with or without any indication of the identity of that person, and includes a certification trade mark or collective mark.

How is the Trademarks Act 1999 different from the Trade and Merchandising Marks Act 1958?

Enactment of the Trademarks Act 1999 is a big step forward from the Trade and Merchandise Marks Act 1958 and the Trademark Act 1940. The newly enacted Act has some features not present in the 1958 Act and these are:-

(i)Registration of service marks, collective marks and certification trademarks.

(ii)Increasing the period of registration and renewal from 7 years to 10 years.

(iii)Allowing filing of single application for registration in more than one class.

(iv)Enhanced punishment for offences related to trademarks.

(v)Exhaustive definitions for terms frequently used.

(vi)Simplified procedure for registration of registered users and enlarged scope of permitted use. (vii)Constitution of an Appellate Board for speedy disposal of appeals and rectification applications which at present lie before High Court.

Companies Act_Practical Problems_31

Mr. X was appointed as the Managing Director of XYZ Ltd. w.e.f. 1st October, 2006. The company made an application to the Central Government for approval, as the remuneration proposed to be paid to Mr. X was beyond the limits laid down in Schedule XIII to the Companies Act, 1956. The company started paying remuneration from the date of appointment and continued to do so till 31st March, 2007. The Central Government did not approve the remuneration as proposed by the company and restricted the same to a lower amount. On scrutiny of the accounts, it was noticed that the company, till 31st March, 2007 has paid to Mr. X, a total of Rs. 1.20 Lakhs in excess of the remuneration sanctioned by the Central Government, Explain with reference to the provisions of the Act whether Mr. X can keep the excess remuneration ? Draft a resolution for waiver of recovery of the excess remuneration so paid by the company.

Mr. Weldon was appointed as a non-executive director. He was paid monthly remuneration awaiting the approval of the Central Government. However, the remuneration sanctioned by the Central Government was lesser than the remuneration actually paid to Mr. Weldon. As per section 309, Mr. Weldon cannot keep remuneration drawn by him which is in excess of the remuneration sanctioned by the Central Government Accordingly, he shall refund to the company Rs. 1,20,000. Until such refund is made, he shall hold it in trust for the company. Further, the company cannot waive the recovery of excess remuneration.

However, if on an application made to the Central Government, the Central Government permits the waiver of recovery of such excess remuneration, the company may waive the recovery of excess remuneration, and then Mr. Weldon shall have a right to retain the excess remuneration drawn by him.

Waiver of recovery of excess remuneration
Passing Authority - General Meeting
Nature of the Resolution - Ordinary Resolution

RESOLVED that pursuant to the provisions of section 309 and other applicable provisions, if any, and subject to the approval of the Central Government, consent of the company be and is hereby given for waiving the recovery of an amount of Rs, 1,20,000 paid to Mr. Weldon, the director of the company, during the period 1st October, 2002 to 31st March, 2003, being in excess of the remuneration sanctioned by the Central Government vide Letter No. ................ dated ..................

RESOLVED FURTHER that an application be made to the Central Government and the company secretary be and is hereby authorised to take the necessary steps in this regard."

Companies Act_Practical Problems_30

M/s ABC Ltd. had power under its memorandum to sell its undertaking to another company having similar objects. The Articles of the company contained a provision by which directors were empowered to sell or otherwise deal with the property of the company. The Shareholders passed an ordinary resolution for the sale of its assets on certain terms and required the directors to carry out the sale. The Directors refused to comply with the wishes of the shareholders where upon it was contended on behalf of the shareholders that they were the principal and directors being their agents were bound to give effect to their decision. Based on the above facts, decide the following issues, having regard to the Provisions of the Companies Act, 1956 and case laws.

(i) Whether the contention of shareholders against the non-compliance of their wishes by the directors is tenable.
(ii) Can shareholders usurp the powers which by the articles are vested in the directors by passing a resolution in the general meeting?

(i) The Board is the supreme body having the management of the company. The Board has the absolute power to do all things except those that are expressly required to be done by the company in general meeting. The shareholders cannot interfere in the day to day management of the company. The shareholders cannot supersede or usurp the Board's powers, or instruct it as to how it shall exercise its powers.

Also, as per Sec. 293, the power to sell, lease or otherwise dispose of any undertaking of the company is vested with the Board, though the Board can exercise such power only with the consent of the shareholders in general meeting. Thus, it is evident that a direction by the shareholders does not make it obligatory for the Board to exercise such power.

If in the opinion of the Board, it is not in the best interest of the company to sell its assets, the Board is not bound to do so, notwithstanding the fact that the company in general meeting has resolved that the assets should be sold [Pothen v Hindustan Trading Corpn. (P) Ltd.].

Thus, the contention of the shareholders is not tenable.
(ii) The powers of management are vested in the Board of directors; the Board alone can exercise such powers Even a unanimous resolution of the shareholders will not enable the shareholders to exercise the powers of the Board. The shareholders cannot interfere in the day to day management of the company. Thus, the shareholders cannot usurp the powers vested in directors.

Sarbanes Oxley Act- Sec 802

This section is listed within Title VIII of the act (Corporate and Criminal Fraud Accountability), and pertains to 'Criminal Penalties for Altering Documents'.

This section imposes penalties of fines and/or up to 20 years imprisonment for altering, destroying, mutilating, concealing, falsifying records, documents or tangible objects with the intent to obstruct, impede or influence a legal investigation. This section also imposes penalties of fines and/or imprisonment up to 10 years on any accountant who knowingly and wilfully violates the requirements of maintenance of all audit or review papers for a period of 5 years

Sarbanes Oxley Act - Sec 409

This section is listed within Title IV of the act (Enhanced Financial Disclosures), and pertains to 'Real Time Issuer Disclosures'.

Issuers are required to disclose to the public, on an urgent basis, information on material changes in their financial condition or operations. These disclosures are to be presented in terms that are easy to understand supported by trend and qualitative information of graphic presentations as appropriate.

Sarbanes- Oxley Act- Sec 404

This section is listed under Title IV of the act (Enhanced Financial Disclosures), and pertains to 'Management Assessment of Internal Controls'.

Issuers are required to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. The registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.

Sarbanes-Oxley Act -Sec 401

This section is of course listed under Title IV of the act (Enhanced Financial Disclosures), and pertains to 'Disclosures in Periodic Reports'.

Financial statements are published by issuers are required to be accurate and presented in a manner that does not contain incorrect statements or admit to state material information. These financial statements shall also include all material off-balance sheet liabilities, obligations or transactions. The Commission was required to study and report on the extent of off-balance transactions resulting transparent reporting. The Commission is also required to determine whether generally accepted accounting principals or other regulations result in open and meaningful reporting by issuers.

Sarbanes-Oxley Act 2002 -Sec 302

Periodic statutory financial reports are to include certifications that:
• The signing officers have reviewed the report

• The report does not contain any material untrue statements or material omission or be considered misleading

• The financial statements and related information fairly present the financial condition and the results in all material respects

• The signing officers are responsible for internal controls and have evaluated these internal controls within the previous ninety days and have reported on their findings

• A list of all deficiencies in the internal controls and information on any fraud that involves employees who are involved with internal activities

• Any significant changes in internal controls or related factors that could have a negative impact on the internal controls

Organizations may not attempt to avoid these requirements by reincorporating their activities or transferring their activities outside of the United States

What is Six Sigma?

Six sigma is a statistical concept, coined by Phillip Crosby. It is used to describe the state of zero defects or a state, which is as close as possible to near perfection. Six Sigma quality means going from approximately 35,000 defects per million operations (which is the average for most companies, including GE) to less than 4 defects per million in every component, in every process that the company undertakes every day.

Many companies such as Motorola, Texas Instruments, Eastman Kodak and Allied Signal began Six Sigma before GE did. GE documented their discoveries and successes and adopted many concepts and disciplines of Motorola’s Six Sigma methodology.

Six Sigma demands an effective use of data to analyse business issues. The focus of Six Sigma is on thorough understanding of key processes and on the analysis of how the key process input affects the process output. After the key inputs that assure sustainability of any process are identified, quality enhancement is simplified by linking the quality control plan to controlling input rather than output.

Companies Act_Practical Problems_29

From the following information extracted from the balance sheet of VCD Ltd. as at 31st March, 2006, Board of directors of the company decide to grant a loan of Rs. 80 crores to another company JN Ltd.


Paid-up Share Capital:
Equity Share Capital Rs. 50 crores
Preference Share Capital Rs. 10 crores
General Reserves Rs. 100 crores
Debentures Rs. 5 crores
Debenture Redemption Reserve Rs. 5 crores

The company has already given loans to the following companies:
(i) Peters Ltd. Rs. 5 crores
(ii) Steel India Ltd Rs. 10 crores

The company has also given a corporate guarantee of Rs. 10 crores to NR & Co. Ltd. Advise whether the Board can go ahead with the above proposal.

Companies Act_Practical Problems_28

The Board of Directors of XYZ Ltd. has agreed in principle to grant loan worth Rs. 38 lakhs to MNC Ltd. on the basis of the following information.

Advise XYZ Ltd. about the requirements to be complied with under the Companies Act, 1956 for the proposed inter-corporate loan to MNC Ltd.
(i) Authorised share capital Rs. 1,00,00,000
(ii) Issued, subscribed and paid up capital Rs. 50,00,000
(iii) Free reserves Rs. 10,00,000